Form of Senior 8% Convertible Note


     

    Exhibit
      4.1

     

    
      NEITHER
        THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
        THE
        SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
        LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
        UNLESS (A) REGISTERED UNDER AN EFFECTIVE REGISTRATION STATEMENT FOR THE
        SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) PURSUANT
        TO
        AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT UPON THE REQUEST
        OF
        THE COMPANY THE SELLER DELIVERS TO THE COMPANY AN OPINION OF COUNSEL, IN
        A FORM
        REASONABLY ACCEPTABLE TO THE COMPANY, CONFIRMING THE AVAILABILITY OF SUCH
        EXEMPTION OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
        ACT.
        NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
        WITH
        A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
        BY THE
        SECURITIES.

       

      ORION
        ETHANOL, INC.

       

      CONVERTIBLE
        SENIOR
        NOTE

       

       

      
        	
                $_____________

              	
                November
                  __, 2006

                 

              
	 	
                Pratt,
                  Kansas

              


      

      


      


      FOR
        VALUE
        RECEIVED, Orion Ethanol, Inc. (formerly, RTO Holdings, Inc.) ("Company")
        promises to pay to [______________________] or its registered assigns
        ("Holder")
        the
        principal sum of ______________ ($__________), or such lesser amount as shall
        equal the outstanding principal amount hereof, together with interest from
        the
        date of this Note on the unpaid principal balance at an initial rate equal
        to
        eight percent (8.0%) per annum, computed on the basis of the actual number
        of
        days elapsed and a year of 365 days. The per annum interest rate shall increase
        by one percent (1.0%) to nine percent (9%) on April 1, 2007 and by an additional
        one percent (1.0%) on each Interest Payment Date thereafter. All unpaid
        principal, together with any then unpaid and accrued interest and other amounts
        payable hereunder, shall be due and payable on the earlier of (i) the
        Maturity Date (as defined below), or (ii) when, upon or after the
        occurrence of an Event of Default (as defined below), such amounts are declared
        due and payable by Holder or made automatically due and payable in accordance
        with the terms hereof. This Note is one of the "Notes"
        issued
        pursuant to the Subscription Agreement, as amended, modified or supplemented
        (the "Subscription
        Agreement"),
        between Company and Holder. Accrued and unpaid interest on the unpaid principal
        balance hereof shall be payable quarterly on each January 1, April 1, July
        1 and
        October 1 (each, an “Interest Payment Date”), commencing January 1, 2007, to the
        Person who is the registered holder at the close of business on such Interest
        Payment Date. Capitalized terms used herein that are not defined, shall have
        the
        meaning set forth in the Subscription Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      The
        following is a statement of the rights of Holder and the conditions to which
        this Note is subject, and to which Holder, by the acceptance of this Note,
        agrees:

       

      
        	
                1.

              	
                Definitions.
                  As used in this Note, the following capitalized terms have the
                  following
                  meanings:

              


      

       

      (a)   “Automatic Conversion
        Date”
        shall
        mean the closing date of a Qualified Financing (as defined in Section 5
        hereto).

       

      (b)   “Business
        Day”
        means
        any day other than Saturday, Sunday or other day on which commercial banks
        in
        the City of New York are authorized or required by law to remain
        closed.

       

      (c)   “Common
        Stock”
        means
        the common stock of the Company.

       

      (d)   “Company”
        includes
        the corporation initially executing this Note and any Person which shall
        succeed
        to or assume the obligations of Company under this Note.

       

      (e)   “Event
        of Default”
        has the
        meaning given in Section 3 hereof.

       

      (f)    “Holder”
        shall
        mean the Person specified in the introductory paragraph of this Note or any
        Person who shall at the time be the registered holder of this Note.

       

      (g)   “Maturity
        Date”
        shall
        mean October 31, 2008.

       

      (h)   “Obligations”
        shall
        mean and include all loans, advances, debts, liabilities and obligations,
        howsoever arising, owed by Company to Holder of every kind and description,
        now
        existing or hereafter arising under Transaction Documents, including, all
        interest, fees, charges, expenses, attorneys' fees and costs and accountants'
        fees and costs chargeable to and payable by Company hereunder and thereunder,
        in
        each case, whether direct or indirect, absolute or contingent, due or to
        become
        due, and whether or not arising after the commencement of a proceeding under
        Title 11 of the United States Code (11 U.S.C. Section 101 et seq.)
        (including post-petition interest) and whether or not allowed or allowable
        as a
        claim in any such proceeding.

       

      (i)   "Person"
        shall
        mean and include an individual, a partnership, a corporation (including a
        business trust), a joint stock company, a limited liability company, an
        unincorporated association, a joint venture or other entity or a governmental
        authority.

       

      (j)   “Registration
        Rights Agreement”
        means
        the Registration Rights Agreement dated as of November 1, 2006 among the
        Company
        and the initial purchasers of the Notes.

       

      (k)   "Transaction
        Documents"
        shall
        mean this Note, the Subscription Agreement, each of the other Notes issued
        under
        the Subscription Agreement and such other documents included in the definition
        of Transaction Documents set forth in the Subscription Agreement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                2.

              	
                Prepayment.
                  The Company may not prepay this Note in whole or in part without
                  the
                  consent of the Holders of a majority in principal amount of the
                  Notes.

              


      

       

      
        	
                3.

              	
                Events
                  of Default.
                  The occurrence of any of the following shall constitute an "Event
                  of Default"
                  under this Note and the other Transaction
                  Documents:

              


      

       

      (a)   Failure
        to Pay.
        Company
        shall fail to pay (i) when due any principal payment on the due date
        hereunder or (ii) any interest or other payment required under the terms of
        this Note or any other Transaction Document (including the Registration Delay
        Payments under the Registration Rights Agreement) within three (3) days of
        the
        date due;

       

      (b)   Representations
        and Warranties.
        Any
        representation, warranty, certificate, or other statement (financial or
        otherwise) made or furnished by or on behalf of Company to Holder in writing
        in
        connection with this Note or any of the other Transaction Documents, or as
        an
        inducement to Holder to enter into this Note and the other Transaction
        Documents, shall be false, incorrect, or misleading in any material respect
        when
        made or furnished;

       

      (c)   Voluntary
        Bankruptcy or Insolvency Proceedings.
        Pursuant to or within the meaning of the United States Bankruptcy Code or
        any
        other federal or state law relating to insolvency or relief of debtors
        ("Bankruptcy
        Law"),
        Company or any of its subsidiaries shall (i) apply for or consent to the
        appointment of a receiver, trustee, liquidator or similar official for itself
        or
        for all or a substantial part of its property, (ii) make a general
        assignment for the benefit of its or any of its creditors, (iii) be
        dissolved or liquidated, (iv) commence a voluntary case or other
        proceeding, consent to the entry of an order for relief against the Company,
        or
        in an involuntary case consent to the appointment of or taking possession
        of its
        property by any official, or (v) take any action for the purpose of effecting
        any of the foregoing; and

       

      (d)   Involuntary
        Bankruptcy or Insolvency Proceedings.
        Pursuant to or within the meaning of any Bankruptcy Law, proceedings shall
        be
        commenced against the Company or any of its subsidiaries or property for
        (i) the
        appointment of a receiver, trustee, liquidator or similar official, (ii)
        relief
        in an involuntary case, or (iii) liquidation or reorganization and, in each
        case
        an order for relief entered or such proceeding shall not be dismissed or
        discharged within sixty (60) days of commencement.

       

      (e)   The
        failure of the applicable Registration Statement required to be filed pursuant
        to the Registration Rights Agreement to be declared effective by the SEC
        on or
        prior to the date that is sixty (60) days after the applicable Effectiveness
        Deadline (as defined in the Registration Rights Agreement), or while the
        applicable Registration Statement is required to be maintained effective
        pursuant to the terms of the Registration Rights Agreement, the effectiveness
        of
        the applicable Registration Statement lapses for any reason (including, without
        limitation, the issuance of a stop order) or is unavailable to any holder
        of the
        Notes for sale of all of such holder’s Registrable Securities (as defined in the
        Registration Rights Agreement) in accordance with the terms of the Registration
        Rights Agreement, and such lapse or unavailability continues for a period
        of ten
        (10) consecutive days (other than days during an Allowable Grace Period (as
        defined in the Registration Rights Agreement) or for more than an aggregate
        of
        thirty (30) days in any 365 day period (other than days during an Allowable
        Grace Period);

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (f)   The
        Company’s (A) failure to deliver the required number of shares of Common Stock
        within ten (10) Business Days after the applicable Conversion Date or (B)
        notice, written or oral, to any holder of the Notes, including by way of
        public
        announcement, at any time, of its intention not to comply with a request
        for
        conversion of any Notes into shares of Common Stock that is tendered in
        accordance with the provisions of the Notes.

       

      
        	
                4.

              	
                Rights
                  of Holder upon Default.
                  Upon the occurrence or existence of any Event of Default (other
                  than an
                  Event of Default referred to in Sections 3(c) and 3(d)) and at
                  any time
                  thereafter during the continuance of such Event of Default, Holder
                  may, by
                  written notice to Company, declare all outstanding Obligations
                  of the
                  Company hereunder to be immediately due and payable without presentment,
                  demand, protest or any other notice of any kind, all of which are
                  hereby
                  expressly waived, anything contained herein or in the other Transaction
                  Documents to the contrary notwithstanding. Upon the occurrence
                  or
                  existence of any Event of Default described in Sections 3(c) and
                  3(d),
                  immediately and without notice, all outstanding Obligations payable
                  by
                  Company hereunder shall automatically become immediately due and
                  payable,
                  without presentment, demand, protest or any other notice of any
                  kind, all
                  of which are hereby expressly waived, anything contained herein
                  or in the
                  other Transaction Documents to the contrary notwithstanding. In
                  addition
                  to the foregoing remedies, upon the occurrence or existence of
                  any Event
                  of Default, Holder may exercise any other right power or remedy
                  granted to
                  it by the Transaction Documents or otherwise permitted to it by
                  law,
                  either by suit in equity or by action at law, or both.
                  

              


      

       

      
        	
                5.

              	
                Conversion.

              


      

       

      (a)   Automatic
        Conversion.
        Upon
        the closing of an equity financing consisting of Common Stock, preferred
        stock,
        warrants to purchase Common Stock or preferred stock, or any combination
        thereof, resulting in at least one hundred million dollars ($100,000,000)
        of
        gross cash proceeds to the Company, including the gross proceeds from the
        Notes
        (a "Qualified
        Financing"),
        the
        outstanding balance under the Note will automatically be converted in accordance
        with the provisions of Section 5(c)(i) hereof, into fully paid and nonassessable
        securities of the Company sold in such Qualified Financing (the "Conversion
        Securities").
        If
        more than one type of security is issued in the Qualified Financing, the
        Notes
        shall be converted into each of such securities in the same proportion of
        such
        securities as are issued in the aggregate in the Qualified Financing.


       

      (i)   The
        number of Conversion Securities into which this Note may be converted shall
        be
        determined by (A) multiplying the outstanding balance of principal and
        accumulated interest by a fraction, the numerator of which is the aggregate
        gross cash proceeds received by the Company in the Qualified Financing
        attributable to a particular security issued in the Qualified Financing and
        the
        denominator of which is the total gross cash proceeds received by the Company
        in
        the Qualified Financing (the “Proportionate Amount”) and (B) dividing the
        Proportionate Amount by the Conversion Price for such security. A Proportionate
        Amount shall be calculated in respect of each security issued in the Qualified
        Financing. The "Conversion
        Price"
        for a
        particular security issued in the Qualified Financing shall be equal to one
        hundred percent (100%) of the price per such security paid by the investors
        participating in the Qualified Financing; provided that if any options, warrants
        or other rights to purchase securities

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (collectively,
        “Warrants”) are granted or issued in the Qualified Financing, the Conversion
        Price for such Warrants shall be fifty percent (50%) of the price per Warrant
        paid by the investors participating in the Qualified Financing; provided
        further
        that if no value is attributable to the Warrants issued in the Qualified
        Financing, the Holders shall receive twice as many Warrants as the investors
        in
        the Qualified Financing.

       

      (b)   Optional
        Conversion.
        At any
        time on or after May 1, 2007, the outstanding balance under the Note may
        be
        converted, at the option of the Holder, in whole or in part from time to
        time,
        into fully paid and nonassessable shares of Common Stock (where appropriate,
        the
        "Conversion
        Securities.")

       

      (i)   The
        number of shares of Common Stock into which this Note may be converted shall
        be
        determined by dividing (A) the outstanding balance of principal and accumulated
        interest by (B) $1.00 (as adjusted for any stock splits, recapitalizations
        or
        similar transactions effected after the date hereof).

       

      (c)   Conversion
        Procedure.

       

      (i)   Conversion
        Pursuant to Section 5(a).
        In the
        event of conversion pursuant to Section 5(a) hereof, Holder shall surrender
        the
        Note, duly endorsed, at the office of the Company and shall also provide
        Company
        with the name or names in which the certificate or certificates for the
        Conversion Securities are to be issued. Company shall, as soon as practicable
        thereafter, issue and deliver at such office to Holder of this Note a
        certificate or certificates for the number of Conversion Securities to which
        Holder shall be entitled upon conversion (bearing such legends as are required
        by the Purchase Agreement and applicable state and federal securities laws
        in
        the opinion of counsel to Company), together with a check payable to Holder
        for
        any cash amounts payable as described in Section 5(c)(iii) below. The conversion
        shall be deemed to have been made as of the close of business on the date
        of
        such closing of the Qualified Financing, and the Person or Persons entitled
        to
        receive the Conversion Securities upon such conversion shall be treated for
        all
        purposes as the record holder or holders of such Conversion Securities as
        of the
        Automatic Conversion Date.

       

      (ii)   Conversion
        Pursuant to Section 5(b).
        To
        convert any Notes or portions thereof pursuant to Section 5(b) hereof into
        shares of Common Stock on any date (a “Conversion
        Date”),
        the
        Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
        on or
        prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice
        of conversion in the form attached hereto as Exhibit
        I
        (the
“Conversion
        Notice”)
        to the
        Company and (B) if required by Section 5(c)(v), surrender this Note to a
        nationally recognized overnight delivery service for delivery to the Company
        (or
        an indemnification undertaking with respect to this Note in the case of loss,
        theft or destruction). On or before the first (1st)
        Business Day following the date of receipt of a Conversion Notice, the Company
        shall transmit by a facsimile a confirmation of receipt of such Conversion
        Notice to the Holder and the Company’s transfer agent (the “Transfer
        Agent”).
        On or
        before the second Business Day following the date of receipt of a Conversion
        Notice (the “Share
        Delivery Date”),
        the
        Company shall (1) (X) if legends are not required to be placed on certificates
        of Common Stock pursuant to the Securities Purchase Agreement and provided
        that
        the Transfer Agent is participating in the Depository Trust Company’s
        (“DTC”)
        Fast
        Automated Securities Transfer Program, credit such aggregate

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      number
        of
        shares of Common Stock to which the Holder shall be entitled to the Holder’s or
        its designee’s balance account with DTC through its Deposit Withdrawal Agent
        Commission system or (Y) if the Transfer Agent is not participating in the
        DTC
        Fast Automated Securities Transfer Program, issue and deliver to the address
        as
        specified in the Conversion Notice, a certificate, registered in the name
        of the
        Holder or its designee, for the number of shares of Common Stock to which
        the
        Holder shall be entitled which certificates shall not bear any restrictive
        legends unless required pursuant to the Subscription Agreement and (2) pay
        to
        the Holder in cash the amount, if any, required by Section 5(c)(iii). If
        this
        Note is physically surrendered for conversion as required by Section 5(c)(v)
        and
        the outstanding balance of principal and interest of this Note is not being
        converted in full, then the Company shall as soon as practicable and in no
        event
        later than three (3) Business Days after receipt of this Note and at its
        own
        expense, issue and deliver to the holder a new Note representing the outstanding
        principal not converted. The Person or Persons entitled to receive the share
        of
        Common Stock issuable upon a conversion of this Note shall be treated for
        all
        purposes as the record holder or holders of such shares of Common Stock on
        the
        Conversion Date.

       

      (iii)   Fractional
        Shares; Interest; Effect of Conversion.
        No
        fractional shares shall be issued upon conversion of this Note. In lieu of
        Company issuing any fractional shares to Holder upon the conversion of this
        Note, Company shall either round up to the nearest full share or pay to Holder
        an amount equal to the product obtained by multiplying the conversion price
        by
        the fraction of a share not issued pursuant to the previous sentence. The
        Company shall pay any and all transfer, stamp and similar taxes that may
        be
        payable with respect to the issuance and delivery of Common Stock upon
        conversion. Upon conversion of this Note in full and the payment of the amounts
        specified in this Section 5(c)(iii), Company shall be forever released from
        all
        its obligations and liabilities under this Note.

       

      (iv)   In
        the
        event of Automatic Conversion, Holder shall become a party to any subscription
        agreement, purchase agreement, registration rights agreement or other document
        entered into by or for the benefit of the investors in the Qualified Financing
        and shall be entitled to all of the rights of such investors
        thereunder.

       

      (v)    Notwithstanding
        anything to the contrary set forth herein, upon conversion of any portion
        of
        this Note in accordance with the terms hereof (other than an automatic
        conversion) the Holder shall not be required to physically surrender this
        Note
        to the Company unless (A) the full balance of principal and interest represented
        by this Note is being converted or (B) the Holder has provided the Company
        with
        prior written notice (which notice may be included in a Conversion Notice)
        requesting reissuance of this Note upon physical surrender of this Note.
        The
        Holder and the Company shall maintain records showing the principal and interest
        converted and the dates of such conversions or shall use such other method,
        reasonably satisfactory to the Holder and the Company, so as not to require
        physical surrender of this Note upon conversion.

       

      
        	
                6.

              	
                Reservation
                  of Stock Issuable Upon Conversion.
                  In connection with any conversion of Notes, the Company shall reserve
                  and
                  keep available out of its authorized but unissued shares of Common
                  Stock
                  such number of its shares of Common Stock as shall be sufficient
                  to effect
                  the conversion of the Note.

              


      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                7.

              	
                Successors
                  and Assigns.
                  Subject to the restrictions on transfer described in Sections 9
                  and 10
                  below, the rights and obligations of Company and Holder of this
                  Note shall
                  be binding upon and benefit the successors, assigns, heirs, administrators
                  and transferees of the parties.

              


      

       

      
        	
                8.

              	
                Waiver
                  and Amendment.
                  Any provision of this Note may be amended, waived or modified only
                  upon
                  the written consent of Company and Holders of a majority in aggregate
                  principal amount of the Notes then
                  outstanding.

              


      

       

      
        	
                9.

              	
                Transfer
                  of this Note or Securities Issuable on Conversion
                  Hereof.
                  With respect to any offer, sale or other disposition of this Note
                  or
                  securities into which such Note may be converted, Holder will give
                  written
                  notice to Company prior thereto, describing briefly the manner
                  thereof, to
                  the effect that such offer, sale or other distribution may be effected
                  without registration or qualification (under any federal or state
                  law then
                  in effect). Each Note thus transferred and each certificate representing
                  the securities thus transferred shall bear a legend as to the applicable
                  restrictions on transferability in order to ensure compliance with
                  the
                  Securities Act of 1933, as amended (the "Act"),
                  unless such legend is not required in order to ensure compliance
                  with the
                  Act. Company may issue stop transfer instructions to its transfer
                  agent in
                  connection with such restrictions. Subject to the foregoing, transfers
                  of
                  this Note shall be registered upon registration books maintained
                  for such
                  purpose by or on behalf of Company. Prior to presentation of this
                  Note for
                  registration of transfer, Company shall treat the registered holder
                  hereof
                  as the owner and holder of this Note for the purpose of receiving
                  all
                  payments of principal and interest hereon and for all other purposes
                  whatsoever, whether or not this Note shall be overdue and Company
                  shall
                  not be affected by notice to the
                  contrary.

              


      

       

      
        	
                10.

              	
                Assignment
                  by Company.
                  Neither this Note nor any of the rights, interests or obligations
                  hereunder may be assigned, by operation of law or otherwise, in
                  whole or
                  in part, by Company without the prior written consent of
                  Holder.

              


      

       

      
        	
                11.

              	
                Notices.
                  Any notice, request or other communication required or permitted
                  hereunder
                  shall be in writing and shall be deemed to have been duly given
                  if
                  delivered in the manner set forth in the Purchase Agreement.
                  

              


      

       

      
        	
                12.

              	
                Usury.
                  In the event any interest is paid on this Note which is deemed
                  to be in
                  excess of the then legal maximum rate, then that portion of the
                  interest
                  payment representing an amount in excess of the then legal maximum
                  rate
                  shall be deemed a payment of principal and applied against the
                  principal
                  of this Note.

              


      

       

      
        	
                13.

              	
                Expenses;
                  Waivers.
                  If action is instituted to collect this Note, Company promises
                  to pay all
                  costs and expenses, including, without limitation, reasonable attorneys'
                  fees and costs, incurred in connection with such action. Company
                  hereby
                  waives notice of default, presentment or demand for payment, protest
                  or
                  notice of nonpayment or dishonor and all other notices or demands
                  relative
                  to this instrument.

              


      

       

      
        	
                14.

              	
                Governing
                  Law.
                  This Note and all actions arising out of or in connection with
                  this Note
                  shall be governed by and construed in accordance with the laws
                  of the
                  State of New

              


      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                York,
                  without regard to the conflicts of law provisions of the State
                  of New
                  York, or of any other state.

              


      

       

      
        	
                15.

              	
                Payments.
                  Whenever any payment of cash is to be made by the Company to any
                  Person
                  pursuant to this Note, such payment shall be made in lawful money
                  of the
                  United States of America by a check drawn on the account of the
                  Company
                  and sent via overnight courier service to such Person at such address
                  as
                  previously provided to the Company in writing (which address, in
                  the case
                  of each of the Buyers, shall initially be as set forth on the signature
                  page attached to the Subscription Agreement); provided that the
                  Holder may
                  elect to receive a payment of cash via wire transfer of immediately
                  available funds by providing the Company with prior written notice
                  setting
                  out such request and the Holder’s wire transfer instructions. Whenever any
                  amount expressed to be due by the terms of this Note is due on
                  any day
                  which is not a Business Day, the same shall instead be due on the
                  next
                  succeeding day which is a Business Day and, in the case of any
                  Interest
                  Date which is not the date on which this Note is paid in full,
                  the
                  extension of the due date thereof shall not be taken into account
                  for
                  purposes of determining the amount of interest due on such date.
                  

              


      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF,
        Company
        has caused this Note to be issued as of the date first written
        above.

      


       

      
        	 	
                ORION
                  ETHANOL, INC.

                 

                 

              
	 	
                By:

              	 
	 	 	
                Name:

                Title:

              


      

      


      
        
          SIGNATURE
            PAGE TO CONVERTIBLE PROMISSORY NOTE

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        I

       

      ORION
        ETHANOL, INC.

       

      CONVERSION
        NOTICE

       

      Reference
        is made to the Convertible Senior Note (the “Note”)
        issued
        to the undersigned by Orion Ethanol, Inc. (the “Company”).
        In
        accordance with and pursuant to this Note, the undersigned hereby elects
        to
        convert the Note or a portion thereof in the amount indicated below into
        shares
        of Common Stock, par value $0.001 per share (the “Common
        Stock”),
        of the
        Company, as of the date specified below:

      


      Date
        of
        Conversion: _________________________________________________________________________________________

      Aggregate
        amount to be converted: _____________________________________________________________________________

      


      Please
        confirm the following information:

      


      Conversion
        Price: ___________________________________________________________________________________________

      Number
        of
        shares of Common Stock to be issued: ___________________________________________________________________

      


      Please
        issue the Common stock into which the Note is being converted in the following
        name and to the following address:

      


      Issue
        to:       
___________________________________________________________________________________________

      ___________________________________________________________________________________________

      ___________________________________________________________________________________________

      


      Facsimile
        Number:          _______________________________________________________________________________________

      Authorization:         _______________________________________________________________________________________

      By:        
        _______________________________________________________________________________________

      Title:     
        _______________________________________________________________________________________

      


      Dated:           
        ____________________________________________________________________________________________

      Account
        Number:  _________________________________________________________________________________

      (if
        electronic book entry transfer)

      


      Transaction
        Code Number:  __________________________________________________________________________

      (if
        electronic book entry transfer)

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      


      ACKNOWLEDGMENT

       

      The
        Company hereby acknowledges this Conversion Notice and hereby directs [Transfer
        Agent] to issue the above indicated number of shares of Common
        Stock.

       

      
        	 	
                ORION
                  ETHANOL, INC.

                 

                 

              
	 	
                By:

              	 
	 	 	
                Name:

                Title:

              


      

      


      
        
          
          

        

        
          11