Exhibit 10.1


 


TRANSFER AND EXCHANGE AGREEMENT


 


THIS
TRANSFER AND EXCHANGE AGREEMENT (“Agreement”) is
entered into on December 7, 2005, but effective as of November 30,
2005 (the “Effective Date”), by and among the parties listed below:


 


	
  SELLER:

  	
  NEPTUNE LEASING, INC., a Texas corporation

  
	
   

  	
  8101 West 34th
  Avenue

  
	
   

  	
  Amarillo, Texas
  79159-1166

  
	
   

  	
  Attn: Ken Kelley

  
	
   

  	
  Telephone No.: (806)
  355-5679

  
	
   

  	
  Facsimile No.: (806)
  353-9611

  
	
   

  	
   

  
	
   

  	
  GOLDEN
  SPREAD ENERGY, INC., a Texas corporation

  
	
   

  	
  8101 West 34th
  Avenue

  
	
   

  	
  Amarillo, Texas
  79159-1166

  
	
   

  	
  Attn: Ken Kelley

  
	
   

  	
  Telephone No.: (806)
  355-5679

  
	
   

  	
  Facsimile No.: (806)
  353-9611

  
	
   

  	
   

  
	
  With a copy to:

  	
  Jeff Shrader

  
	
   

  	
  Joel Howard

  
	
   

  	
  Sprouse Shrader Smith,
  P.C.

  
	
   

  	
  701 South Taylor,
  Suite 600

  
	
   

  	
  P.O. Box 15008

  
	
   

  	
  Amarillo, Texas
  79105-5008

  
	
   

  	
  Telephone No.: (806)
  468-3300

  
	
   

  	
  Facsimile No.: (806)
  373-3454

  
	
   

  	
   

  
	
  APOLLO:

  	
  APOLLO RESOURCES INTERNATIONAL, INC.,

  
	
   

  	
  a Utah corporation

  
	
   

  	
  Mr. Dennis
  McLaughlin

  
	
   

  	
  3001 Knox,
  Suite 407

  
	
   

  	
  Dallas, Texas 75205

  
	
   

  	
  Telephone:  (214) 389-9800

  
	
   

  	
  Facsimile No.: (214) 389-9806

  
	
   

  	
   

  
	
  With a copy to:

  	
  George Lowrance

  
	
   

  	
  Chappell,
  Hill & Lowrance, L.L.P.

  
	
   

  	
  2501 Parkview,
  Suite 220

  
	
   

  	
  Fort Worth, Texas 76102

  
	
   

  	
  Telephone No.: (817)
  332-1800

  
	
   

  	
  Facsimile No.: (817)
  332-1956

  



 


1





















 


	
  With a copy to:

  	
  Roger Crabb

  
	
   

  	
  Scheef &
  Stone, LLP

  
	
   

  	
  5956 Sherry Lane,
  Suite 1400

  
	
   

  	
  Dallas, Texas 75225

  
	
   

  	
  Telephone No.: (214)
  706-4224

  
	
   

  	
  Facsimile No.: (214)
  706-4242

  
	
   

  	
   

  
	
  APOLLO LNG:

  	
  APOLLO LNG, INC., a Texas corporation

  
	
   

  	
  Mr. Dennis
  McLaughlin

  
	
   

  	
  3001 Knox, Suite 403

  
	
   

  	
  Dallas, Texas 75205

  
	
   

  	
  Telephone:  (214) 389-9800

  
	
   

  	
  Facsimile No.: (214)
  389-9806

  
	
   

  	
   

  
	
  With a copy to:

  	
  George Lowrance

  
	
   

  	
  Chappell,
  Hill & Lowrance, L.L.P.

  
	
   

  	
  2501 Parkview,
  Suite 220

  
	
   

  	
  Fort Worth, Texas 76102

  
	
   

  	
  Telephone No.: (817)
  332-1800

  
	
   

  	
  Facsimile No.: (817)
  332-1956

  
	
   

  	
   

  
	
  With a copy to:

  	
  Roger Crabb

  
	
   

  	
  Scheef &
  Stone, LLP

  
	
   

  	
  5956 Sherry Lane,
  Suite 1400

  
	
   

  	
  Dallas, Texas 75225

  
	
   

  	
  Telephone No.: (214)
  706-4224

  
	
   

  	
  Facsimile No.: (214)
  706-4242

  



 


RECITALS


 


WHEREAS, APPLIED
LNG TECHNOLOGIES USA, L.L.C. (“ALT”) is a limited liability company
organized under the laws of the State of Delaware; and


 


WHEREAS,
49% of the membership units of ALT are owned by Neptune Leasing, Inc. (“Neptune”);
and


 


WHEREAS,
51% of the membership units of ALT are owned by Golden Spread Energy, Inc.
(“Golden Spread”) (collectively, Neptune and Golden Spread may be
referred to herein as “Seller,”) (collectively, the membership units
owned by Neptune and the membership units owned by Golden Spread are referred
to herein as the “Units”); and


 


WHEREAS,
Apollo Resources International, Inc. (“Apollo”) is a corporation
organized under the laws of the State of Utah; and


 


WHEREAS,
Apollo LNG, Inc. (“Apollo LNG”)
is a corporation newly organized under the laws of the State of Texas, and
which, prior to the consummation of the transactions contemplated hereby, has
no shareholders, assets, or liabilities, and has conducted no business
activities; and


 


2





















 


WHEREAS,
this Agreement is being executed immediately prior to the Closing of the
transactions contemplated hereunder; and


 


WHEREAS,
pursuant to the Closing, Apollo LNG shall be formed in a transaction meeting
the requirements of Section 351 of the Internal Revenue Code, in which
Seller shall transfer to Apollo LNG the Units in exchange for 10,125,000 shares
of the Series A Preferred Stock of Apollo LNG, and 10,125,000 shares of
the Series B Preferred Stock of Apollo LNG, which shares, in the
aggregate, shall represent 81% of the issued and outstanding shares of Apollo
LNG Stock (as such term is defined below) immediately subsequent to the
transfer by Seller of the Units, Seller shall transfer to Ken Kelley 2,375,000
shares of Series A Preferred Stock of Apollo LNG and 2,375,000 shares of Series B
Preferred Stock of Apollo LNG, Apollo shall, contemporaneously transfer cash to
Apollo LNG in exchange for 100% of the issued and outstanding common stock of
Apollo LNG, and following such transactions no other shares of any class of
stock of Apollo LNG will be issued or outstanding; and


 


WHEREAS,
Apollo LNG wishes to acquire the Units and receive the cash contribution of
Apollo, and Seller wishes to transfer the Units to Apollo LNG and Apollo wishes
to make such cash contribution to Apollo LNG (hereinafter, Apollo LNG, Neptune
and Golden Spread may be referred to jointly as the “Parties,” and each
a “Party”).


 


NOW,
THEREFORE, subject to the terms and conditions herein
expressed, the Parties agree as follows:


 


AGREEMENT


 


1.             DEFINITIONS.


 


1.1.          Except as otherwise provided or unless
the context otherwise requires, and in addition to terms defined in other
provisions of this Agreement, the following terms shall have the meanings
specified in this Section 1.1 when capitalized and used in this
Agreement.


 


(a)           “Affiliate” of a specified Person
shall mean a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the Person specified, and in the case of a specified Person who is a natural
person, his/her spouse, his/her issue, his/her parents, his/her estate and any
trust entirely for the benefit of his/her spouse and/or issue.


 


(b)           “Agreement” shall mean this
Agreement, including the Disclosure Schedules attached hereto.


 


(c)           “Business Day” shall mean any day
during which the Citibank, NA office at 53rd and Park Avenue, New
York, New York is open for business.


 


(d)           “Collateral Agreements” shall mean
the Transition Services Agreement and the Registration Rights Agreement.


 


(e)           “Commercially Reasonable Efforts” shall
mean those efforts which a prudent business Person would exert using sound
business judgment in like circumstances.


 


3





















 


(f)            “Confidentiality Agreement” shall
mean the Confidentiality Agreement dated September 26, 2005, between ALT
and Apollo.


 


(g)           “Disclosure Schedule(s)” shall mean
the schedules attached to this Agreement.


 


(h)           “Effective Date” has the meaning
given to it in the introductory paragraph of this Agreement.


 


(i)            “Governmental Approvals” shall mean
any authorization, approval, consent, license, registration, lease, ruling,
permit, tariff, certification, exemption, filing or registration by or with any
Governmental Authority.


 


(j)            “Governmental Authority” shall mean
the United States, any state, county, or city, any political subdivision,
agency, court or instrumentality of any of the foregoing, and any governmental
or quasi-Governmental Authority, agency or body having jurisdiction over the
respective assets or the Person in question.


 


(k)           “HLDM Stock Purchase Agreement” shall
mean the Stock Purchase Agreement of even date herewith between Ken Kelley,
Apollo LNG, and Apollo.


 


(l)            “JBK Liens” shall mean the Liens of
Jack B. Kelley, Inc., on certain assets of ALT as more particularly described
in that certain Security Agreement, dated as of November 1, 2005, executed
by ALT, in favor of Jack B. Kelley, Inc., securing payment of that certain
Promissory Note dated November 1, 2005, in the original principal sum of
$8,000,000, executed by ALT, and payable to the order of Jack B. Kelley, Inc.


 


(m)          “Ken Kelley” shall mean Oliver Kendall
Kelley, a person and a resident of Potter County, Texas.


 


(n)           “Ken Kelley Goodwill” shall mean the
personal efforts and contributions of Ken Kelley to ALT, prior to the Closing
under this Agreement.


 


(o)           “Knowledge,” “known” and “knows,”
shall mean the knowledge, either actual or constructive (based upon what a
reasonable person in the applicable position with a Party should know), of (i) a
Responsible Officer of that Party and (ii) in the case of the knowledge of
Seller, and without limiting clause (i) above, the Responsible
Officers of ALT and each of Ken Kelley, Eric Alexander and Steve Bartlett and (iii) in
the case of the knowledge of Apollo LNG and of Apollo, and without limiting
clause (i) above, the Responsible Officers of Apollo LNG, Apollo and each
of Dennis McLaughlin, Mark Ariail, Lyle Justus, Wayne McPherson and Christopher
Chambers.


 


(p)           “Law” or “Laws” shall mean any
constitution, statute, code, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction (including applicable permits and Governmental
Approvals) of any applicable Governmental Authority.


 


4





















 


(q)           “Liens” shall mean any lien, charge,
hypothecation, pledge, mortgage, title retention agreement, security interest,
adverse claim, option, or pledge of any nature, kind or description whatsoever
and any agreement to create any of the foregoing.


 


(r)            “Losses” shall mean any and all
liabilities, payments, losses, suits, claims, costs, or expenses (including
attorneys fees and costs of investigation incurred in defending against such
liabilities, payments, losses, suits, claims, costs or expenses).


 


(s)           “Material Adverse Effect” or “Material
Adverse Change” shall mean any change in or effect on, ALT, Apollo LNG or
Apollo, as the case may be (including the businesses thereof) which is, or
reasonably could be expected to be, materially adverse to the business,
operations, assets, condition (financial or otherwise) or prospects of any such
entity.


 


(t)            “Mountain States Stock Purchase
Agreement” shall mean the Stock Purchase Agreement of even date herewith
between Seller, Apollo, and Apollo Production & Operating, Inc.


 


(u)           “Ordinary Course of Business” shall
mean the ordinary course of business consistent with past custom and practice
(including with respect to quantity, quality and frequency).


 


(v)           “Permitted Liens” shall mean any of
the following:  (i)  Liens for
current taxes,  assessments or government
charges not yet due and payable and clearly reflected on the appropriate
company balance sheet and adequately reserved for, (ii) Liens that, when
taken together, would not materially detract from the market value or
materially interfere with the present businesses of ALT, Apollo LNG or of
Apollo or otherwise have a Material Adverse Effect, (iii) and Liens set
forth on Schedule 1.1(v).


 


(w)          “Person” shall mean and include an
individual,  partnership,  limited partnership,  limited liability company,  corporation, 
association,  joint stock
company,  trust,  joint venture, unincorporated organization,
or a Governmental Authority.


 


(x)            “Registration Rights Agreement”
means the Registration Rights Agreement of even date herewith, entered into
between Neptune, Golden Spread, Ken Kelley, Apollo and Apollo LNG, providing
for certain registration rights of Golden Spread, Neptune, and Ken Kelley with
respect to the Apollo LNG Stock.


 


(y)           “Responsible Officer” shall mean,
with respect to any Person, the chief executive officer, the president, the
respective vice presidents in charge of operations, legal, finance, and
accounting of such Person and, in each case, any Person fulfilling
substantially the same role for such Person, however designated.


 


(z)            “Transition Services Agreement”
means the Transition Services Agreement of even date herewith, between Golden
Spread and Apollo.


 


1.2.          Rules of
Interpretation.


 


(a)           The singular includes the plural, and
the plural includes the singular.


 


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(b)           A reference to any Law includes any
amendment or modification thereto, all rules and regulations promulgated
under such Law and all administrative and judicial authority exercisable
thereunder.


 


(c)           A reference to any contract,
agreement or instrument includes any amendment or modification thereto
including by waiver or consent.


 


(d)           A reference to Person includes its
permitted successors and assigns.


 


(e)           Any date specified for any action
that is not a Business Day shall be deemed to mean the first Business Day after
such date.


 


(f)            This Agreement shall be deemed to
have been drafted by each Party hereto and this Agreement shall not be
construed against any Party as a principal drafts Person.


 


2.             AGREEMENT FOR TRANSFER AND EXCHANGE


 


2.1.          Transfer
and Exchange.  Upon the terms
and subject to the conditions set forth in this Agreement, Seller shall transfer
to Apollo LNG, and Apollo LNG shall acquire from Seller, the Units in exchange
for (the “Exchange Consideration”) (i) Twelve Million Five Hundred
Thousand Dollars ($12,500,000.00) in Series A $1.00 par value 8.5%
cumulative non-voting convertible preferred stock in Apollo LNG (the “Series A
Stock”); and (ii)  Twelve Million Five Hundred Thousand Dollars
($12,500,000.00) in Series B $1.00 par value 8.5% cumulative non-voting
convertible preferred stock in Apollo LNG (the “Series B Stock”)
(collectively, the Series A Stock and the Series B Stock shall be
referred to herein as the “Apollo LNG Stock”).


 


(a)           Seller shall assign, transfer and
deliver to Apollo LNG the Units representing 100% of the total membership units
in ALT and shall represent to Apollo LNG that there are no additional
membership units in ALT of any nature or of any category and shall deliver an assignment
of the Units in form and substance acceptable to counsel for Apollo LNG; and


 


(b)           Apollo LNG shall accept and acquire the
Units from Seller and in exchange therefor, shall deliver to Seller and to Ken
Kelley the Apollo LNG Stock, which shall be composed of 12,500,000 shares of Series A
Stock and 12,500,000 shares of Series B Stock, each of which is non-voting
and each share of which shall be convertible according to the terms in Section 2.2
hereof.


 


The Apollo LNG
Stock delivered by Apollo LNG shall be apportioned between Seller and Ken
Kelley as follows:  Series A Stock, 10,125,000
shares allocable to Seller and 2,375,000 shares allocable to Ken Kelley, in
consideration for the Ken Kelley Goodwill, and Series B Stock, 10,125,000
shares allocable to Seller, and 2,375,000 allocable to Ken Kelley, in
consideration for the Ken Kelley Goodwill.


 


(c)           Apollo shall deliver a cash payment
to Apollo LNG, and Apollo LNG shall deliver to Apollo, 25,000,000 shares of the
voting common stock of Apollo LNG, constituting 100% of the issued and
outstanding shares of common stock of Apollo LNG.


 


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2.2.          Rights,
Preferences, Privileges, and Attributes of Apollo LNG Preferred Stock.


 


(a)           The Apollo LNG Stock shall bear a cumulative
cash dividend in the amount of 8.50% annually, which dividend shall commence to
accrue upon the first anniversary of the Closing Date, and shall accrue from
day to day thereafter, whether or not earned or declared, it being understood
that no dividend shall accrue or shall be payable for the period from the
Closing Date until the first anniversary thereof.  The dividend shall be payable commencing on
the last day of the eighteenth (18th) month following the Closing
Date and shall be payable semi-annually thereafter (the “Dividend Payment
Dates”).  Dividends shall cease to
accrue upon Apollo LNG Stock that has been converted as provided for below.


 


(b)           Commencing upon the Closing and
continuing thereafter until the second (2nd) anniversary after the
Closing, Seller and Ken Kelley may, at their sole option and without an
obligation to do so, convert at any time all, but not less than all, of the Series A
Stock into voting common stock, par value $0.01, in Apollo LNG (the “Series A
Conversion Rights”), that shall represent forty-nine percent (49.00%) of
the total issued and outstanding common stock of Apollo LNG at the time of
conversion.


 


(c)           Commencing upon the Closing and
continuing thereafter until the second (2nd) anniversary after the
Closing, each Seller and Ken Kelley may, at their sole option and without an
obligation to do so, at any time and from time to time, convert all, or any
portion thereof, of the Series B Stock held by them into voting common
stock in Apollo (the “Series B Conversion Rights”) at a conversion
price of $0.40 per share of Apollo common stock, regardless of the actual
market price of such Apollo common stock (along with the time period as
described in Section 2.2(b) hereof, this period of time shall
be referred to herein as the “Conversion Period”)(collectively, the Series A
Conversion Rights and the Series B Conversion Rights shall be referred to
herein as the “Conversion Rights”). Therefore (for purposes of
illustration and assuming that all dividends payable as of the date of
conversion have been paid), each share of Series B Stock may be exchanged
for two and one-half (2-1/2) shares of Apollo voting common stock. Notwithstanding the foregoing, Seller and Ken Kelley may not
exercise their Series B Conversion Rights in a combined total of more than
five (5) increments during the Conversion Period. Upon the exercise by a Seller
or by Ken Kelley, or by either of them, as the case may be, of all or any
portion of their Conversion Rights, all accrued dividends then outstanding shall,
in the sole judgment and discretion of Apollo LNG, be promptly paid to such Seller
or to Ken Kelley, as the case may be, in either (i) cash; or (ii) Apollo
registered common stock valued at the average closing price of such stock over
the most immediate five (5) trading day period prior to the exercise of
the Conversion Rights by Apollo LNG and further discounted by a factor of
thirty percent (30%).


 


The initial Series B
Stock conversion price of $0.40 per share of Apollo common stock shall be
subject to adjustment as follows:


 


(i)            If Apollo shall effect a stock split
of its outstanding common stock, the conversion price per share of Apollo
common stock in effect immediately prior to the stock split shall be
proportionately decreased.  If Apollo
shall combine the outstanding shares of its common stock, the conversion price
per share of


 


7





















 


Apollo common stock in effect immediately prior to the combination
shall be proportionately increased.  Any
such adjustment shall be effective at the close of business on the date the
stock split or combination occurs.


 


(ii)           If Apollo shall make or issue or set
a record date for the determination of holders of its outstanding common stock
entitled to receive a dividend or other distribution payable in shares of
Apollo common stock, the conversion price per share of Apollo common stock in
effect immediately prior to such event shall be decreased as of the time of
such issuance or, in the event such record date shall have been fixed, as of
the close of business on such record date, by multiplying the conversion price
per share of Apollo common stock then in effect by a fraction:


 


(1)           the numerator of which shall be the
total number of shares of Apollo common stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date; and


 


(2)           the denominator of which shall be the
total number of shares of Apollo common stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Apollo common stock issuable in
payment of such dividend or distribution.


 


(iii)          If Apollo shall make or issue or set a
record date for the determination of holders of Apollo common stock entitled to
receive a dividend or other distribution payable in other than shares of Apollo
common stock, then, and in each event, an appropriate revision to the
conversion price per share of Apollo common stock shall be made and provision
shall be made (by adjustments of the conversion price or otherwise) so that the
holders of the Series B Stock shall receive upon conversions thereof, in
addition to the number of shares of Apollo common stock receivable thereon, the
number of securities of Apollo which they would have received had the Series B
Stock been converted into common stock on the date of such event; provided,
however, that if such record date shall have been fixed and such dividend is
not fully paid or if such distribution is not fully made on the date fixed
therefor, the conversion price per share of Apollo common stock shall be
adjusted as of the time of actual payment of such dividends or distributions


 


(iv)          If there shall be (1) a capital
reorganization of Apollo (other than by way of a stock split or combination of
shares or stock dividends or distributions provided for above), or (2) a
merger or consolidation of Apollo with or into another corporation where the
holders of outstanding Apollo voting securities prior to such merger or
consolidation do not own over fifty percent (50%) of the outstanding voting
securities of the merged or consolidated entity immediately after such merger
or consolidation, or (3) the sale of all or substantially all of Apollo’s
properties or assets to any other person (an “Organic Change”) then as a
part of such Organic Change, an appropriate adjustment to the


 


8





















 


conversion price shall be made so that the Series B Stock shall
thereafter convert into the kind and amount of shares of stock and other
securities or property of Apollo or any successor corporation resulting from
such Organic Change.


 


(v)           If the common stock issuable upon
conversion of Series B Stock at any time or from time to time after the issuance
date shall be changed to the same or different number of shares of any class or
classes of stock, whether by reclassification, exchange, substitution or
otherwise (other than by way of a stock split or combination of shares or stock
dividends provided for in Sections 2.2(c)(i), 2.2(c)(ii), and 2.2(c)(iii),
or a reorganization, merger, consolidation, or sale of assets provided for in Section 2.2(c)(iv)),
then, and in each event, an appropriate revision to the conversion price per
share shall be made and provisions shall be made (by adjustments of the
conversion price per share or otherwise) so that the Seller and Ken Kelley
shall have the right thereafter to convert the Series B Stock into the
kind and amount of shares of stock and other securities receivable upon
reclassification, exchange, substitution or other change, by holders of the
number of shares of common stock into which the Series B Stock might have
been converted immediately prior to such reclassification exchange,
substitution or other change.


 


(d)           In the event that Apollo LNG shall
default on the payment of any dividend as described in this Section 2.2,
upon written notice to Apollo LNG from Seller or Ken Kelley of such default,
Apollo LNG shall thereafter have a period of ten (10) days to cure such
default by making a cash payment to Seller and/or to Ken Kelley as may be
appropriate in the amount of the default ( the “Apollo LNG Cure Period”)
and thereafter (A) Apollo LNG may, for an additional period of five (5) Business
Days following the Apollo LNG Cure Period, cure the default by delivering to
Seller or to Ken Kelley as the case may be, Apollo common stock in the amount
of the default [the amount of Apollo stock to be delivered to Seller or to Ken
Kelley shall be determined by the average closing price of such stock over the
most immediate five (5) trading day period prior to the date of such
default discounted by thirty percent (30%) (the “Apollo LNG Cure”)];or (B) in
the event that Apollo LNG shall not have accomplished the Apollo LNG Cure
within five (5) Business Days after the expiration of the Apollo LNG Cure
Period, the Apollo LNG Stock shall immediately be vested with full voting
rights, in addition to the voting rights described in Section 2.2(e) below
(the “Additional Voting Rights”). 
In such event, the holders of the Apollo LNG Stock shall be vested with
full voting rights for ninety percent (90%) of the total voting rights in
Apollo LNG.  For the avoidance of doubt,
it is expressly understood and agreed that such 90% voting rights shall include
the right to remove and replace directors immediately, without cause, and to
elect directors, and to vote upon or approve any other matter that may be voted
on by the holders of common stock or other voting stock in Apollo LNG.  Notwithstanding the
foregoing, the financial default and the obligation to pay dividends
shall continue to be an obligation of Apollo LNG. If the default is fully cured
by the payment of all amounts due, within ninety (90) days from the expiration
of the Apollo LNG Cure Period, the Additional Voting Rights shall terminate.


 


(e)           In addition to the matters described
above, the designations, rights, preferences, privileges, and attributes of the
Apollo LNG Stock are as follows:


 


9





















 


(i)            If all dividends on the Apollo LNG
Stock from the date from which such dividends on such shares began to accrue
have not been paid when due, the deficiency must be fully paid, together with
additional dividends (the “Additional Dividends”) to reflect amounts
equivalent to interest on accrued but unpaid dividends at the rate of ten
percent (10%) per annum, before any dividends may be declared or any
distribution whatsoever made on or with respect to the Apollo LNG common stock
or any other capital stock of Apollo LNG. 
After full dividends on the Apollo LNG Stock shall have been paid, then
and not otherwise, dividends may be paid or declared and set apart for payment
upon the Apollo LNG common stock, or other capital stock of Apollo LNG, out of
any funds legally available for the declaration of dividends.


 


(ii)           Apollo LNG, at its option, may, but
is not so obligated, redeem, at any time or from time to time commencing on the
first day of the termination of the Conversion Period and continuing at all
times thereafter, the whole or any part of the Apollo LNG Stock outstanding by
paying in cash to the holders of such shares to be redeemed, $1.00 per share,
plus an amount in cash equivalent to the amount of all accrued and unpaid
dividends (including any Additional Dividends), computed from the date from
which dividends on each such share began to accrue and cumulate to the date
fixed for such redemption. Notice of redemption must be given at least ten (10) days
and not more than thirty (30) days prior to the date fixed for such redemption.  Such redemptions shall be made ratably
between the Series A Stock and the Series B Stock, and shall also be made
ratably with respect to the Apollo LNG Stock held by Ken Kelley and the Apollo
LNG Stock held by Seller.


 


(iii)          In the event of any termination,
liquidation, voluntary or involuntary dissolution, or winding up of the affairs
of Apollo LNG, then, before any payment or distribution may be made to the
holders of the common stock or any other capital stock of Apollo LNG, the
holders of the Apollo LNG Stock at the time outstanding must be paid, in cash,
$1.00 per share, plus an amount in cash equivalent to all accrued and unpaid
dividends (including Additional Dividends) computed from the date from which
dividends on each such share began to accrue and cumulate to the date fixed for
such payments or distributions to the holders of any other capital stock Apollo
LNG Stock.


 


(iv)          Except to the extent and in the cases
specifically required by Law or required or permitted by this Agreement, the
holders of the Apollo LNG Stock will have no voting rights and all voting
rights and power shall be vested exclusively in the holders of the common stock
of Apollo LNG.


 


(v)           So long as any shares of the Apollo
LNG Stock are outstanding, Apollo LNG shall not, without the affirmative
consent (given in writing without a meeting or by vote at a meeting duly called
for the purpose) of the holders of at least two-thirds (2/3) in aggregate par
value of the Apollo LNG Stock then outstanding:


 


10





















 


(1)           Alter, amend or repeal the terms of
the Apollo LNG Stock;


 


(2)           Issue or create any class of stock
which ranks on a parity with, or prior to the Apollo LNG Stock in respect of
dividends, assets, liquidation rights, preferences, privileges, or voting
rights;


 


(3)           Reclassify shares of any class
ranking junior to the Apollo LNG Stock in respect of dividends, assets,
liquidation rights, preferences, voting rights or privileges, wholly or
partially into shares of any class ranking on a parity with or prior to the
Apollo LNG Stock in respect of dividends, assets, liquidation rights,
preferences, voting rights, or privileges;


 


(4)           License on an exclusive basis or sell
all or substantially all of its property and assets to, or merge or consolidate
into or with, any other corporation or entity, or take any action which results
in a corporate reorganization or sale of control;


 


(5)           Redeem any shares of capital stock,
other than the Apollo LNG Stock, or authorize a payment of a dividend upon any
class of stock, other than the Apollo LNG Stock.


 


(vi)          Promptly following January 1,
2006, Apollo LNG shall file appropriate amendments to its articles of
incorporation setting forth, as contemplated under the Texas Business
Organizations Code, a description of the preferences, limitations, and rights
of the Apollo LNG Stock.


 


3.             CLOSING


 


3.1.          Closing
and Preparation Therefor.  The
closing of the transaction contemplated by this Agreement (“Closing”)
shall be transacted on the date five (5) days after all conditions set
forth in Section 5.1 and Section 5.2  have been satisfied or waived, or such other
date as may be mutually agreed to by Seller and Apollo, but, in no event, after
December 7, 2005 (the “Closing Date”) and shall occur at the
offices of Sprouse Shrader Smith, P.C., Amarillo, Texas or such other location
as the Parties may agree.  The effective
closing date (the “Effective Closing Date”) shall be deemed to be November 30,
2005.


 


3.2.          Closing
Obligations of Apollo.  At or
before the Closing, Apollo and/or Apollo LNG, as appropriate, shall deliver to
Seller (and Ken Kelley, with respect to the Apollo LNG Stock) the following:


 


(a)           The Apollo LNG Stock, free and clear
of all Liens.  The certificates
representing the Apollo LNG Stock shall bear the restrictive legend customarily
placed on securities that have not been registered under applicable federal and
state securities Laws and shall be accompanied by stock powers as required by
this Agreement, and any other documents that are necessary to transfer to
Seller good title to all the Apollo LNG Stock, all of which shall be in form
acceptable to counsel for Seller.


 


11





















 


(b)           Certified resolutions of the boards
of directors of Apollo and Apollo LNG authorizing or ratifying the execution,
delivery, guarantee and performance of this Agreement and all related documents
and instruments, duly certified by the respective secretaries of Apollo and
Apollo LNG.


 


(c)           The certificates, instruments, and
other documents provided for in Section 5.2 hereof.


 


(d)           Such other documents as Seller’s
counsel may reasonably request to consummate the transactions contemplated
hereby.


 


3.3.          Closing
Obligations of Seller.  At or
before the Closing, Seller shall deliver to Apollo and/or Apollo LNG, as
appropriate, the following:


 


(a)           The Units, free and clear of all Liens.
The assignment and transfer of the Units shall be accomplished by such
documents as are necessary and appropriate to transfer to Apollo LNG good title
to all of the Units, and which shall be approved by counsel for Apollo.


 


(b)           Certified resolutions of Neptune,
Golden Spread and ALT, authorizing or ratifying the execution, delivery and
performance of this Agreement and all related instruments.


 


(c)           A Certificate from the Arizona
Corporation Commission confirming that ALT is a limited liability company in
good standing in the State of Arizona, dated within five (5) business days
prior to the Closing Date.


 


(d)           Copies of letters from ALT to all
material vendors and suppliers advising them of the sale, which letters will be
mailed by Seller promptly following the Closing.


 


(e)           The certificates, instruments, and
other documents provided for in Section 5.1 hereof.


 


(f)            Releases of any Liens against any of
the Units or the assets of ALT, other than any expressly permitted by this
Agreement, including Permitted Liens.


 


(g)           Such other documents as Apollo’s
counsel may reasonably request to consummate the transactions contemplated
hereby.


 


3.4.          Risk
of Loss.  Pending the Closing,
ALT shall bear all risk of loss, damage or destruction suffered by ALT. In the
event of any material loss, damage or destruction to the assets of ALT prior to
the Closing, which cannot be repaired prior to the Closing, Apollo may, in the
exercise of its sole judgment (a) declare the Agreement to be null and
void; or (b) waive the loss, damage or destruction and accept the assets
of ALT in an “as is, how is, where is” condition. In such event, any insurance
proceeds received by ALT from such loss, damage or destruction shall be
retained in ALT. Pending the Closing Apollo shall bear all risk of loss, damage
or destruction suffered by Apollo.  In
the event of any material loss, damage or destruction to the assets of Apollo
prior to the Closing, which cannot be repaired prior to the Closing, Seller
may, in the exercise of its sole judgment (a) declare the Agreement to be
null and void; or (b) waive the loss, damage or destruction and close the
transactions contemplated


 


12





















 


hereby. 
Each Party shall immediately notify the other Party of any loss, damage
or destruction to its properties, as contemplated pursuant to this Section 3.4.


 


4.             OTHER AGREEMENTS


 


4.1.          Environmental.  It is specifically understood and agreed by
the Parties that, described on Schedule 4.1 and made a part hereof
by this reference, Seller has provided a true and complete copy of a Phase I
environmental survey (the “Environmental Survey”) of all of the real property
owned by ALT and to be transferred according to this Agreement. The Parties
agree that, as of the date of the Closing, the Environmental Survey shall be
conclusively presumed to be an accurate reflection of the environmental
conditions of all of the real property addressed by the Environmental Survey.  The Parties further agree that the
Environmental Surveys, whether they are fully executed or not, shall be
conclusively presumed by all Parties to be true and complete.


 


4.2.          Apollo
LNG’s Access to Records.  Upon
the mutual execution of this Agreement, Seller shall give Apollo, its counsel,
accountants, lenders, and other designated agents full access, at reasonable
times and on reasonable notice but without any unreasonable disruption to
Seller’s or ALT’s businesses, to all records, assets, properties and operations
pertaining to ALT.


 


The activities
described in Section 4.1 and Section 4.2 shall be
referred to in this Agreement as “Apollo’s Due Diligence Review.”


 


4.3.          Apollo’s
Due Diligence Review.  Apollo’s
Due Diligence Review shall also be subject to the following terms and
conditions:


 


(a)           Apollo’s Due Diligence Review shall
be scheduled through designated representative(s) of Seller and Seller shall
have the right to accompany Apollo’s employees, representatives and agents as
they perform Apollo’s Due Diligence Review;


 


(b)           Apollo shall not disclose or allow its
employees, representatives or agents to disclose the purposes for Apollo’s Due
Diligence Review, without the consent of Seller, which consent shall not be
unreasonably withheld or delayed;


 


(c)           Apollo shall obtain the prior
approval of Seller before conducting any discussions with Seller’s employees,
vendors, customers or service providers, which approval shall not be
unreasonably withheld or delayed;


 


(d)           Apollo shall indemnify Seller and ALT
against any physical damage or injury to property or persons or for any loss or
damage proximately arising from Apollo’s Due Diligence Review;


 


(e)           Except as otherwise required by Law,
any information concerning ALT’s properties gathered by Apollo as the result
of, or in connection with, Apollo’s Due Diligence Review shall be kept
confidential and shall not be revealed to, or discussed with, anyone other than
representatives of Apollo or representatives of Seller.;


 


13





















 


(f)            Apollo shall bear all costs and
expenses of Apollo’s Due Diligence Review.


 


(g)           From the Effective Date through the
Closing Date, Seller shall notify Apollo promptly of (i) any actions or
proceedings threatened or commenced against Seller or ALT or against any
officer, director, affiliate, employee, properties or assets of Seller or ALT
which could impair Seller’s ability to perform Seller’s obligations under this
Agreement, and (ii) any request for additional information or documentary
materials by any Governmental Authority in connection with the transactions
contemplated hereby.


 


(h)           Seller shall promptly upon request, deliver
to Apollo LNG copies or originals of minute books, property files, accounting
and tax records, and other material records in whatever form or medium that
relate to the business or assets of ALT, and that are in the possession or
control of Seller or ALT, and Apollo LNG shall receive possession of all
original records, to the extent they are in the possession of ALT or Seller
and, in the event such originals are not so possessed, then true, complete and
accurate copies thereof.


 


4.4.          Seller’s
Conduct of Business.  Without
in any way limiting any other obligation of the Seller pursuant to this
Agreement, from the Effective Date until the Closing, Seller shall cause ALT to
(a) maintain its books and records in accordance with past practices; (b) comply
in all material respects with all applicable Laws; (c) conduct its business
in the Ordinary Course of Business; (d) maintain insurance on the assets
and operations of its business in amounts and with coverage at least as great
as the amounts and coverage presently maintained by ALT; (e) not do any
act or omit to do any act, or permit any act or omission to act, which would
cause a breach of any contract, commitment or obligation for which Apollo LNG
or Apollo would be liable or which would have a Material Adverse Effect.  Seller will not take or permit any action to
be taken which would result in any representation or warranty of Seller or ALT
herein becoming untrue or incorrect in any material respect.


 


4.5.          ALT’S
Employee Compensation. 
Attached hereto as Schedule 4.5 is a complete and accurate record of (a) all of ALT’s employees, (b) each
employee’s current compensation plan (including base salary or hourly rate and
bonus or commission pay), title, length of employment, employment contract, if
any, (c) the number of hours of sick-time or vacation time which
each employee has available during the year, and (d) a list of each
Employee Benefit Plan as defined in Section 6.1(e) of this
Agreement.  ALT shall make appropriate
arrangements at or prior to Closing to pay or provide for all accrued vacation
pay, bonuses and other employee compensation or benefits earned but unpaid
through the Closing Date.


 


4.6.          ALT’S
Employee Termination.  Seller
covenants that, as of the Closing, ALT will terminate the employment of all
employees of ALT.  It is the present intention
of Seller that ALT will cause its employees to be transferred to an Affiliate
of ALT.  Seller agrees, in any event, to
provide continuation health coverage for all former employees of ALT and all of
ALT’s COBRA participants at the Closing date irrespective of the Seller’s
continuation or termination of Seller’s or ALT’s then existing group health
plan.  Seller shall provide ALT’s former
employees and COBRA participants with timely notice of their COBRA group health
plan continuation rights under the group health continuation plan, and shall
indemnify, defend, and hold harmless Apollo LNG and Apollo from any and all
obligations, claims, losses, or expenses


 


14





















 


associated in
any manner with ALT’s former employees and COBRA participants rights to group
health coverage benefits after their employment termination by ALT.


 


4.7.          Seller’s
Access to Records.  Upon the
mutual execution of this Agreement, Apollo shall give Seller, its counsel,
accountants, lenders, and other designated agents full access, at reasonable
times and on reasonable notice but without any unreasonable disruption to
Apollo’s business, to all records, assets, properties and operations pertaining
to Apollo or to Apollo LNG. The activities described in this Section shall
be referred to as the “Seller’s Due Diligence Review”.


 


4.8.          Seller’s
Due Diligence Review.  Seller’s
Due Diligence Review shall also be subject to the following terms and
conditions:


 


(a)           Seller’s Due Diligence Review shall
be scheduled through designated representative(s) of Apollo, and Apollo shall
have the right to accompany Seller’s employees, representatives and agents as
they perform Seller’s Due Diligence Review on Apollo’s respective properties
and assets;


 


(b)           Seller shall not disclose or allow
its employees, representatives or consultants to disclose the purposes for
Seller’s Due Diligence Review, without the consent of Apollo LNG and of Apollo,
which consent shall not be unreasonably withheld or delayed;


 


(c)           Seller shall obtain the prior approval
of Apollo before conducting any discussions with Apollo’s employees, vendors,
customers or service providers, which approval shall not be unreasonably
withheld or delayed;


 


(d)           Seller shall indemnify Apollo against
any physical damage or injury to property or persons or for any loss or damage
proximately arising from Sellers’ Due Diligence Review;


 


(e)           Except as otherwise required by Law,
any information concerning Apollo’s properties gathered by Seller as the result
of, or in connection with, Seller’s Due Diligence Review shall be kept
confidential and shall not be revealed to, or discussed with, anyone other than
representatives of Seller;


 


(f)            From the Effective Date through the
Closing Date, Apollo LNG and Apollo shall notify Seller promptly of (i) any
actions or proceedings threatened or commenced against Apollo LNG or Apollo or
against any officer, director, affiliate, employee, properties or assets of
Apollo or Apollo LNG which could impair Apollo’s or Apollo LNG’s ability to
perform their obligations under this Agreement, and (ii) any request for
additional information or documentary materials by any Governmental Authority
in connection with the transactions contemplated hereby.


 


4.9.          Apollo
LNG’s and Apollo’s Conduct of Business.  Without in any way limiting any other
obligation of the Seller pursuant to this Agreement, from the Effective Date
until the Closing, Apollo LNG and Apollo shall (a) maintain their books
and records in accordance with past practices; (b) comply in all material
respects with all applicable Laws; (c) conduct their business in the
Ordinary Course of Business; (d) maintain insurance on the assets and
operations


 


15





















 


of their
business in amounts and with coverage at least as great as the amounts and
coverage presently maintained by Apollo; (e) not do any act or omit to do
any act, or permit any act or omission to act, which would cause a breach of
any contract, commitment or obligation for which Seller would be liable or
which would have a Material Adverse Effect. 
Apollo LNG and Apollo will not take or permit any action to be taken
which would result in any representation or warranty of either or Apollo LNG or
Apollo herein becoming untrue or incorrect in any material respect.


 


4.10.        Records.  After the Closing, Apollo LNG shall maintain the
books and records relating to ALT in an orderly and businesslike fashion and
shall permit Sellers to have reasonable access at Seller’s expense to such
books and records in connection with the preparation of Seller’s financial
reports, tax returns, tax audits, the defense or prosecution of litigation
(including arbitration), or any other reasonable need of Seller to consult such
books and records.


 


4.11.        Certificates
of Clearance.  Seller shall
exercise Commercially Reasonable Efforts to obtain and deliver to Apollo LNG as
soon as reasonably practicable after the Closing, Certificates of Clearance
from the Arizona Department of Revenue, Mojave County, and the City of Phoenix,
as applicable, with respect to ALT, verifying the timely filing of and required
transaction privilege, sales, and/or use tax, income tax and unemployment and
withholding tax returns by ALT, and payment by ALT of all amounts due.


 


4.12.        Capitalization
of Apollo LNG.  Apollo LNG
shall be capitalized by Neptune, Golden Spread and Apollo immediately following
the execution and delivery by the Parties of this Agreement, and the closing of
the transactions contemplated hereby, in a transaction under Section 351
of the Internal Revenue Code, pursuant to which (i) Neptune and Golden
Spread shall transfer the Units to Apollo LNG, and Apollo shall contribute cash
to Apollo LNG, and Apollo LNG shall contemporaneously issue 81% of the Apollo
LNG Stock to Seller, 19% of the Apollo LNG Stock to Ken Kelley, and all of the
common stock of Apollo LNG to Apollo; and (ii) therefore, immediately
following such transactions, Seller will possess 81% of the ownership and
control of the Apollo LNG Stock, and Apollo will possess 100% of the ownership
and control of the common stock of Apollo LNG. 
Prior to such capitalization Apollo LNG shall have had no shareholders
or employees, shall have conducted no business activities, and shall have had no
assets, properties or liabilities of any nature whatsoever (whether due or to
become due, accrued, contingent, absolute or otherwise).


 


5.             CONDITIONS PRECEDENT TO THE
PARTIES’ OBLIGATIONS TO CLOSE


 


5.1.          Contingencies
of Apollo.  Apollo LNG’s
obligation to acquire the Units and Apollo LNG’s and Apollo’s obligation to
take the other actions required to be taken by Apollo LNG and by Apollo at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Apollo LNG or by
Apollo, in whole or in part, in writing).


 


(a)           Representations
and Warranties; Agreements; Covenants.  Each of the representations and warranties of
Seller shall be true and correct in all material respects on the date made and
shall be true and correct in all material respects as of the Closing. Each of
the


 


16





















 


obligations of Seller required by this
Agreement to be performed by it at or prior to the Closing shall have been duly
performed and complied with in all material respects as of the Closing. At the
Closing, Apollo LNG shall receive a certificate, dated the Closing date and
duly executed by Seller to the effect that the conditions set forth in this Section 5.1(a) have
been satisfied except as specified in such certificate.


 


(b)           Authorizations;
Consents.  All corporate and
limited liability company action necessary to authorize the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by Seller and by
ALT, and all notices to, and declarations, filings and registrations with, and
consents, authorizations, approvals and waivers from, Governmental Authorities
and third persons required to consummate the transactions contemplated hereby
shall have been made or obtained.


 


(c)           Absence of Litigation.  No order, stay, injunction or decree of any
Governmental Authority shall be in effect (i) that prevents or delays the
consummation of any of the transactions contemplated hereby; or (ii) would
impose any limitation on the ability of Apollo LNG effectively to exercise full
rights of ownership of the Units. No action, suit or proceeding before any
Governmental Authority shall be pending or threatened, and no investigation by
any Governmental Authority shall have been commenced (and be pending), seeking
to restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Agreement or seeking
damages in connection therewith which Apollo LNG and Apollo, in good faith and
with the advice of counsel, believe makes it undesirable to proceed with the
consummation of the transactions contemplated hereby.


 


(d)           No
Material Adverse Effect. 
During the period from September 30, 2005 to the Closing, there
shall not have been any Material Adverse Change with respect to ALT.


 


(e)           Organizational
Documents.  Seller and ALT, as applicable, shall
have delivered to Apollo and Apollo LNG each of the following documents:


 


(i)            certified copies of the articles of
incorporation and bylaws of Neptune and of Golden Spread, and a certified copy
of the certificate of formation and limited liability agreement of ALT;


 


(ii)           appropriate board, shareholder,
manager, and member resolutions, and other similar documents in order to
ratify, approve and implement further the transactions contemplated hereunder
in form reasonably satisfactory to counsel for Apollo and Apollo LNG.


 


(f)            Transfer Documents.  Seller shall have delivered to Apollo LNG
such transfer documents and other documents and instruments as shall be
reasonably necessary to transfer to Apollo LNG the Units.


 


(g)           Completion
of Due Diligence.  Apollo
shall have completed the Apollo Due Diligence Review and the results of the
Apollo Due Diligence Review shall be satisfactory to Apollo.


 


17





















 


(h)           Board
Approval.  The board of
directors of Apollo LNG and the board of directors of Apollo shall each have
approved the consummation of all of the transactions contemplated by this
Agreement.


 


(i)            Certificates.  Seller and ALT shall have furnished Apollo
and Apollo LNG with such certificates of their officers and others as Apollo
and Apollo LNG may reasonably request to evidence compliance with all of the
conditions set forth in this Section 5.1.


 


(j)            Legal
Matters.  All certificates,
instruments, opinions and other documents required to be executed or delivered
by or on behalf of Seller or ALT under the provisions of this Agreement, and
all other actions and proceedings required to be taken by or on behalf of
Seller or ALT in furtherance of the transactions contemplated hereby, shall be
reasonably satisfactory in form and substance to counsel for Apollo and Apollo
LNG.


 


(k)           Schedules.  ALT and Seller shall have delivered to Apollo
and Apollo LNG all schedules referred to in this Agreement and required to be
delivered by Seller or ALT and such schedules shall be acceptable in form and
substance to Apollo LNG.


 


(l)            Collateral
Agreements.  The Collateral Agreements
shall have been executed and delivered by the respective parties to such
Agreements.


 


(m)          Related
Transactions.  The
transactions contemplated by the HLDM Stock Purchase Agreement and the Mountain
States Stock Purchase Agreement shall close immediately following the Closing
under this Agreement, but, in no event later than December 7, 2005.


 


5.2.          Contingencies
of Seller.  Seller’s
obligations to sell the Units and to take the other actions required to be
taken by Seller and ALT at the Closing are subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by Seller, in whole or in part, in writing).


 


(a)           Representations
and Warranties; Agreements; Covenants.  Each of the representations and warranties of
Apollo LNG and of Apollo shall be true and correct in all material respects on
the date made and shall be true and correct in all material respects as of the
Closing. Each of the obligations of Apollo (and Apollo LNG) required by this
Agreement to be performed by them at or prior to the Closing shall have been
duly performed and complied with in all material respects as of the Closing. At
the Closing, Seller shall receive a certificate, dated the Closing date and
duly executed by Apollo LNG and by Apollo to the effect that the conditions set
forth in this Section 5.2(a) have been satisfied except as
specified in such certificate


 


(b)           Authorizations;
Consents.  All corporate
action necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been duly and validly taken by Apollo and by Apollo LNG, and all notices
to, and declarations, filings and registrations with, and consents,
authorizations, approvals and waivers from, Governmental Authorities and third
Persons required to consummate the transactions contemplated hereby shall have
been made or obtained.


 


18





















 


(c)           Organizational
Documents.  Apollo and Apollo LNG shall have delivered to
Seller each of the following documents:


 


(i)            certified copies of the articles of
incorporation and bylaws of Apollo and of Apollo LNG; and


 


(ii)           appropriate board and shareholder
resolutions, and other similar documents in order to approve and implement
further the transactions contemplated hereunder in form reasonably satisfactory
to counsel for Seller.


 


(d)           Absence of Litigation.  No order, stay, injunction or decree of any
Governmental Authority shall be in effect (i) that prevents or delays the
consummation of any of the transactions contemplated hereby; or (ii) would
impose any limitation on the ability of Seller effectively to exercise full
rights of ownership of the Apollo LNG Stock. No action, suit or proceeding
before any Governmental Authority shall be pending (or threatened by any
Governmental Authority), and no investigation by any Governmental Authority
shall have been commenced (and be pending), seeking to restrain or prohibit (or
questioning the validity or legality of) the consummation of the transactions
contemplated by this Agreement or seeking damages in connection therewith which
Seller, in good faith and with the advice of counsel, believes makes it
undesirable to proceed with the consummation of the transactions contemplated
hereby.


 


(e)           No
Material Adverse Effect. 
During the period from September 30, 2005 to the Closing, there
shall not have been any Material Adverse Change with respect to Apollo LNG or
of Apollo.


 


(f)            Completion
of Due Diligence.  Seller
shall have completed the Seller’s Due Diligence Review and the result of the
Seller’s Due Diligence Review shall be satisfactory to Seller.


 


(g)           Certificates.  Apollo and Apollo LNG shall have furnished
the Seller with such certificates of their officers and others as the Sellers
may reasonably request to evidence compliance with all of the conditions set
forth in this Section 5.2.


 


(h)           Legal
Matters.  All certificates,
instruments, opinions and other documents required to be executed or delivered
by or on behalf of Apollo or Apollo LNG under the provisions of this Agreement,
and all other actions and proceedings required to be taken by or on behalf of
Apollo or Apollo LNG in furtherance of the transactions contemplated hereby,
shall be reasonably satisfactory in form and substance to counsel for Seller.


 


(i)            Board
Approval.  The boards of
directors of Neptune, Golden Spread and of ALT shall have approved the
consummation of all of the transactions contemplated by this Agreement.


 


(j)            Schedules.  Apollo and Apollo LNG shall have delivered to
Seller all schedules referred to in this Agreement and required to be delivered
by Apollo LNG or by Apollo and such schedules shall be acceptable in form and
substance to Seller.


 


19





















 


(k)           Collateral
Agreements.  The Collateral Agreements
shall have been executed and delivered by the respective parties to such
Agreements.


 


(l)            Related
Transactions.  The
transactions contemplated under the HLDM Stock Purchase Agreement and the Mountain
States Stock Purchase Agreement shall close immediately following the Closing
under this Agreement, but in no event later than December 7, 2005.


 


6.             REPRESENTATIONS AND WARRANTIES


 


6.1.          Warranties
and Representations of Seller. 
In order to induce Apollo LNG to enter into this Agreement, Neptune and
Golden Spread, jointly and severally, covenant, warrant and represent to Apollo
and Apollo LNG that each of the following representations and warranties are
materially true and correct as of the date of this Agreement and will be materially
true on and as of the Closing Date:


 


(a)           Organization
and Licensing.  ALT is a
limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has the power to own,
lease and use the properties used in its business and to carry on its business
as now being conducted. ALT is duly qualified to do business and is in good
standing as a foreign corporation in each state and jurisdiction where
qualification as a foreign corporation is required, except to the extent that
any variation or failure thereof does not have a Material Adverse Effect .  Schedule 6.1(a) lists (i) the
states and other jurisdictions where ALT is so qualified; and (ii) the
assumed names under which ALT conducts business or has conducted business
during the past five (5) years. All permits, licenses and certificates
required by any Governmental Authority having jurisdiction over ALT or its
operations, are now and will be current and valid as of the Closing Date. ALT
has previously delivered or made available to Apollo complete and correct
copies of its certificate of formation, limited liability company agreement,
and other organizational documents as amended and presently in effect.


 


Each of
Neptune and Golden Spread has full power and authority to enter into this
Agreement, to consummate the transactions contemplated hereby and to perform,
or to cause ALT to perform, their or its obligations hereunder.  The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein by
Seller have been duly authorized by all requisite corporate action on the part
of Neptune and of Golden Spread.  This
Agreement has been (and the Collateral Agreements to which they are a party,
when executed and delivered shall be) duly executed and delivered by each of
Neptune and of Golden Spread and is, and the Collateral Agreements, when
executed and delivered, shall be, a valid and binding obligation of each of
them, enforceable against them and in accordance with their terms, except to
the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar Laws relating to
creditors’ rights generally, and (ii) is subject to general principles of
equity.


 


(b)           Subsidiaries.  Except as reflected on Schedule 6.1(b),
ALT has no subsidiaries.


 


20





















 


(c)           Capitalization.  The issued and outstanding Units of ALT are
set forth in Schedule 6.1(c) hereto. The Units listed on Schedule 6.1(c) hereto
constitute all the issued and outstanding membership interests of ALT and have
been validly authorized and issued, are fully paid and nonassessable, and have
not been issued in violation of any preemptive rights or of any federal or
state securities Law. There is no security, option, warrant, right, call,
subscription, agreement, commitment or understanding of any nature whatsoever,
fixed or contingent, that directly or indirectly (i) calls for the
issuance, sale, pledge or other disposition of any membership interests of ALT,
or any securities convertible into, or other rights to acquire, any membership
interests of ALT; or (ii) obligates ALT to grant, offer or enter into any
of the foregoing; or (iii) relates to the voting or control of such
membership interests, securities or rights, except as provided in this
Agreement or the limited liability company agreement of ALT.  ALT has not agreed to register any securities
under the Securities Act of 1933.


 


(d)           Governmental Approvals.  Schedule 6.1(d) sets forth
all Governmental Approvals held by ALT. 
To Seller’s Knowledge, no Governmental Approvals other than those listed
on Schedule 6.1(d) are necessary for the transaction of ALT’s
business as currently conducted.  All
such Governmental Approvals are currently in force.  No notice of any violation has been received
in respect of any such Governmental Approvals and Seller has no Knowledge of
any proceeding which is pending or threatened that would suspend or revoke or
limit any such Governmental Approvals.


 


(e)           Employee
Benefit Plans.  The term “Employee Benefit Plan” shall
mean any deferred compensation, stock, employee or retiree pension benefit,
welfare benefit or other similar fringe or employee benefit plan, program,
policy, contract or arrangement, written or oral, qualified or nonqualified,
funded or unfunded, foreign or domestic, or any other plan described in the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
covering employees or former employees of ALT and maintained or contributed to
by ALT.  Where applicable, each Employee Benefit Plan has been administered in material
compliance with the terms of such Employee Benefit Plan and the requirements of
ERISA and all other applicable regulations. 
Except as set forth on Schedule 6.1(e), ALT does not
maintain or contribute to, nor has ever maintained or contributed to, any
Employee Benefit Plan subject to Title IV of ERISA or a “multiemployer plan.”  There are no facts relating to any Employee
Benefit Plan that (i) have resulted in a “prohibited transaction” of a
material nature or have resulted or are reasonably likely to result in the
imposition of a material excise tax, penalty or liability pursuant to Section 4975
of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) have resulted in a material breach of
fiduciary duty or violation of Part 4 of Title I of ERISA, or (iii) have
resulted in or are reasonably likely to result in any material liability
(whether or not asserted as of the date hereof) of any ERISA affiliate pursuant
to Section 412 of the Code arising under or related to any event, act or
omission occurring on or prior to the date hereof and as of the Closing. Each
Employee Benefit Plan that is intended to qualify under Section 401(a) or
to be exempt under Section 501(c) of the Code is so qualified or
exempt.  No Employee Benefit Plan has an “accumulated
funding deficiency,” whether or not waived, and no waiver has been applied
for.  ALT has not made any promises or
incurred any liability under any Employee Benefit Plan or otherwise to provide
health or other welfare benefits to current or future retirees or other former
employees of ALT, except as set forth in Schedule 6.1(e).


 


21





















 


(f)            Financial
Statements.  Attached as Schedule 6.1(f),
are true and complete copies of (i) the audited balance sheet of ALT as of
September 30, 2004 and the related statements of income, members’ equity
and cash flow for the fiscal year ended September 30, 2004, together with
the notes thereto and accompanied by the report of independent certified public
accountants (the “Audited ALT Financial Statements”), and (ii) the preliminary,
unaudited, unconsolidated balance sheet and related statement of income of ALT
(the “Interim Financial Statements”) as of September 30, 2005 (the “Balance
Sheet Date”).  (The Audited ALT
Financial Statements and the Interim Financial Statements are collectively
referred to herein as the “ALT Financial Statements”).


 


The ALT
Financial Statements have been prepared in accordance with and are consistent
with the books and records of ALT, fairly present the financial positions and
results of operations of ALT (and, for the Audited ALT Financial Statements,
ALT’s consolidated subsidiaries) as of the dates and for the periods indicated,
are stated in material conformity with GAAP, consistently applied, except as
otherwise clearly and conspicuously stated, and except that the Interim
Financial Statements do not contain a full set of footnotes, and can be
legitimately reconciled with the financial statements and with the financial
records maintained and the accounting methods applied by ALT for federal income
tax purposes. Except as set forth on Schedule 6.1(f), the
statements of income included in the ALT Financial Statements do not contain
any material items of special or non-recurring income except as expressly
specified therein, and the balance sheets included in the ALT Financial
Statements do not reflect any write-up or revaluation increasing the book value
of any assets except as otherwise clearly and conspicuously stated therein. The
books and accounts of ALT are complete and correct in all material respects and
fairly reflect, to the extent required or permitted by GAAP, all of the transactions,
items of income and expense and all assets and liabilities of the business of
ALT consistent with prior practices of the company, including past accounting
treatments utilized by ALT.


 


(g)           Absence
of Undisclosed Tax Liabilities. 
To Seller’s Knowledge, ALT has no liability (whether due or to become
due, accrued, absolute, contingent or otherwise) for Taxes (as defined in Section 6.1(j)
hereof), except for (i) liabilities reflected or reserved against in the
most recent financial statements provided to Apollo by ALT; (ii) liabilities
incurred in the Ordinary Course of Business after the date of the last ALT
balance sheets as supplied to Apollo, or which, individually and in the
aggregate, do not have and cannot reasonably be expected to have a Material
Adverse Effect; and (iii) liabilities disclosed in Schedule 6.1(g) or
Schedule 6.1(j).


 


(h)           Projections.  ALT has previously supplied to Apollo in
conjunction with Apollo’s investigation of ALT certain forward-looking
financial estimates with respect to ALT (the “Projections”), a
description of which is attached here as Schedule 6.1(h).  The Projections (and accompanying supporting
information), were predicated upon assumptions and subjective judgments
(including those provided with the Projections) believed by Seller to be
reasonable at the time the Projections were prepared, but which may or may not,
in fact, prove to be correct.  No
representations or warranties are made as to the accuracy of such Projections.  The Projections and supporting data did not,
to Seller’s Knowledge, contain any material computational errors.  The Projections may in certain instances also
contain information regarding the projected potential financial performance of
assets and business activities in


 


22





















 


addition to those of ALT.  The Projections are subject to various risks,
uncertainties, and other variable and unpredictable factors and accordingly,
they are not intended to be construed as an assurance or guarantee that actual
financial performance will, in any respect, be as indicated therein.


 


(i)            Absence
of Material Adverse Effect; Conduct of Business.


 


(i)            Since the Balance Sheet Date, except
as set forth on Schedule 6.1(i) hereto, ALT has operated in
the Ordinary Course of Business and there has not been:


 


(1)           any material adverse change in the
assets, properties, business, operations, prospects, net income or financial
condition of ALT and, to the Knowledge of Seller, no factor, event, condition,
circumstance or prospective development exists which could reasonably be
expected to have a Material Adverse Effect;


 


(2)           any material loss, damage,
destruction or other casualty to the property or other assets of ALT, whether
or not covered by insurance;


 


(3)           any change in any method of
accounting or accounting practice of ALT; or


 


(4)           any loss of the employment, services
or benefits of any key employee of ALT.


 


(ii)           Since the Balance Sheet Date, except
as set forth in Schedule 6.1(j) hereto, ALT has not:


 


(1)           incurred any material obligation or
liability (whether absolute, accrued, contingent or otherwise), except in the
Ordinary Course of Business;


 


(2)           mortgaged, pledged or subjected to
any Lien any of its property or other assets except in the Ordinary Course of
Business, and except for mechanics and materialmen’s Liens and Liens for Taxes
not yet due and payable;


 


(3)           sold or transferred any material
assets or cancelled any debts or claims or waived any rights of material value,
except in the Ordinary Course of Business ;


 


(4)           defaulted on any material obligation;


 


(5)           entered into any material
transaction, except in the Ordinary Course of Business ;


 


23





















 


(6)           written down the value of any
inventory or written off as uncollectible any accounts receivable or any
portion thereof not reflected in the ALT Financial Statements except in the
Ordinary Course of Business;


 


(7)           granted any increase in the
compensation or benefits of employees other than increases in accordance with
past practice not exceeding 10% or entered into any employment or severance
agreement or arrangement with any of them;


 


(8)           incurred any obligation or liability
to any employee for the payment of severance benefits of more than $1,000; or


 


(9)           entered into any agreement or made
any commitment to do any of the foregoing.


 


(j)            Taxes.  Except as set forth on Schedule 6.1(g) or
Schedule 6.1(j), ALT and, for any period during all, or part of which,
the Tax liability of any other corporation or entity was determined on a
combined or consolidated basis with ALT any such other corporation or entity,
have filed timely all federal, state, local and foreign Tax returns, reports
and declarations required to be filed (or have obtained or timely applied for
an extension with respect to such filing) currently reflecting the Taxes (as
defined below) and all other information required to be reported thereon, and
have paid, or made adequate provision for the payment of, all Taxes which are
due pursuant to such returns or are pursuant to any assessments received by ALT
or any such other corporation or entity. As used herein, “Tax” or “Taxes”
shall mean all taxes, fees, levies or other assessments, including but not
limited to income, excise, property (including property taxes paid by ALT
pursuant to any lease), sales, franchise, withholding, social security and
unemployment taxes imposed by the United States, or any state, county, local or
foreign government, or any subdivision or agency thereof, or taxing authority
therein, and any interest, penalties or additions to tax relating to such
taxes, charges, fees, levies or other assessments. Copies of all Tax returns
for each fiscal year since the formation of ALT have been furnished or made
available to Apollo or to its representatives and such copies are accurate and
complete as of the date thereof. ALT has also furnished or made available to
Apollo or its representatives correct and complete copies of all notices and
correspondence sent or received since the formation of ALT by ALT to or from
any federal, state or local Tax authorities. ALT has adequately reserved for
the payment of all material Taxes with respect to periods ended on, prior to or
through the date of Closing for which Tax returns have not yet been filed. In
the ordinary course, ALT makes adequate provision on its books for the payment
of all Taxes (including for the current fiscal period) owed by ALT. Except as
disclosed on Schedule 6.1(j), ALT has not been subject to a federal
or state Tax audit of any kind and no adjustment has been proposed by the
Internal Revenue Service (“IRS”) with respect to any Tax return for any
subsequent year. With respect to the Tax audits referred to on Schedule 6.1(j)
hereto, no such audit has resulted in an adjustment in excess of $25,000.


 


(k)           Legal
Matters.  Except as set forth
on Schedule 6.1(k) hereto, ALT is not subject to any judgment,
decree, writ, injunction ruling or order (collectively, “Judgments”) of
any Governmental Authority.


 


24





















 


(i)            The business of ALT is being
conducted in compliance with all Laws applicable to ALT or any of its business
or properties, except for where the failure to be in such compliance could not
reasonably be expected to have a Material Adverse Effect.


 


(ii)           ALT owns or holds all Governmental
Approvals material to the conduct of its business. To Seller’s Knowledge, no
event has occurred and is continuing which permits, or after notice or the
lapse of time, or both, would permit, any modification or termination of any
such Governmental Approval.


 


(l)            Property.


 


(i)            Schedule 6.1(l) hereto
is a list of all real property owned by or leased to ALT (including all real
property owned by or leased to ALT and used in ALT’s business) and of all
options or other contracts to acquire any such real property (collectively, the
“Real Property”). Except as set forth on Schedule 6.1(l) or
in the Environmental Reports, to Seller’s Knowledge, all improvements to the
Real Property (“Improvements”) owned or leased by ALT conform in all
material respects with all applicable Laws and such Improvements do not
encroach in any material respect on the property of others. All Improvements
are supplied with utilities (including, without limitation, water, sewage,
disposal, electricity, gas, and telephone) necessary for the operation of such
Improvements as currently operated. 
Neither the whole nor any portion of the Improvements have been
condemned, requisitioned or otherwise taken by any Governmental Authority, and
Seller has not received any notice that any such condemnation, requisition, or
taking is threatened, which condemnation, requisition, or taking would preclude
or materially impair the current use thereof.


 


(ii)           The Real Property is zoned to permit
the conduct of the business of ALT as presently conducted and a certificate of
occupancy or other similar Governmental Approval to conduct its business has
been issued and is in good standing, and ALT is authorized to conduct its
business on all or any part of its Real Property.


 


(iii)          Except as set forth in Schedule 6.1(l),
Seller has not received any written notice that it is in violation of, and
Seller has no Knowledge that it is in material violation of, any zoning, use,
occupancy, building, wetlands, ordinance, or other Law relating to the
Improvements, including any Environmental Law.


 


(m)          Inventories.  The values at which inventories
are carried on the ALT Balance Sheets reflect the normal inventory valuation policies
of ALT.


 


(n)           Contracts, Etc.  As used in this Agreement, the term “Company
Agreements” shall mean all mortgages, indentures, notes, agreements,
contracts, leases, licenses, franchises, obligations, instruments or other
commitments, arrangements or understandings of any kind, whether written or
oral, binding or non-binding to which ALT is a party or by which ALT or any of
its properties may be bound or affected, including all amendments,
modifications,


 


25





















 


extensions or renewals of any of the
foregoing. Set forth on Schedule 6.1(n) is a complete and accurate
list of each Company Agreement which is material to the business, operations,
assets, condition (financial or otherwise) or prospects of ALT and involves the
payment or receipt of consideration in excess of $25,000 over the term of such
Company Agreement (the “Material Company Agreements”). True and correct
copies of all written Material Company Agreements and an accurate, complete and
written description of all verbal Material Company Agreements have been
provided to Apollo. Except as disclosed in Schedule 6.1(n), neither
ALT nor, to the Knowledge of Seller, any other party to any Material Company
Agreement, is in default thereunder, and no event has occurred which, with the
passage of time or the giving of notice, or both, would constitute a default by
ALT thereunder, or to Seller’s Knowledge, by any other party to any such
contract or agreement.


 


(o)           Transactions with
Affiliates.  Schedule 6.1(o)
is a true, correct, and complete list of all existing business relationships
between ALT and any of the Affiliates of ALT that relate in any material way to
the conduct of ALT’s business and that are expected to continue after the
Closing.


 


(p)           Environmental.  True, complete and correct copies of the
written reports of all environmental audits or assessments which have been
conducted with respect to any Real Property owned or leased by ALT and which
have been commissioned or received by Seller or ALT, have been delivered or
made available to Apollo (the “Environmental Reports”), and a list of
all such Environmental Reports is included in Schedule 6.1(p).  To Seller’s Knowledge, except as disclosed in
the Environmental Reports, the ALT Real Property contains no Hazardous
Substances and is not in violation of any Environmental Laws.  To Seller’s Knowledge, except as disclosed in
the Environmental Reports, neither Seller nor ALT has caused or allowed the
illegal or unauthorized use, generation, manufacture, production, treatment,
storage, release, discharge, or disposal of any Hazardous Substances on, under,
or about the Real Property, nor has caused or allowed the illegal or
unauthorized transportation to or from the Real Property of any Hazardous
Substance.  Except as set forth on Schedule 6.1(p)
or in the Environmental Reports, neither Seller nor ALT has received any
warning, notice of violation, administrative complaint, judicial complaint, or
other formal notice alleging that ALT or the Real Property is in violation of
any Environmental Laws, or informing Seller or ALT that ALT or the Real
Property is subject to investigation, inquiry, or threatened litigation
regarding the presence of Hazardous Substances on, under or about the Real
Property or the potential violation of any Environmental Laws.  There are no environmental Liens or “superfund
Liens” attached to the Real Property pursuant to any Environmental Laws.  The term “Environmental Laws” shall
mean any federal, state or local law, whether by common law, statute,
ordinance, or regulation, pertaining to health, industrial hygiene, or
environmental conditions on, under, or about the Real Property, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. 9601, et seq.; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901, et seq.;
the Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2604, et
seq.; the Superfund Amendments and Reauthorization Act of 1986, Title III,
42 U.S.C. §§ 11001, et seq.; the Clean Air Act, 42 U.S.C.
§§ 7401 et seq.; the Federal Water Pollution Control Act,
33 U.S.C. §§ 1251, et seq.; the Safe Drinking Water Act,
42 U.S.C. §§ 300f, et seq.; the Solid Waste Disposal Act,
42 U.S.C. §§ 3251, et seq.; and the storage tank requirements
in 40 C.F.R. Part 280.  The term “Hazardous
Substances” shall mean those substances included within the definitions of “hazardous
substance,” “hazardous waste,” “hazardous material,” “toxic


 


26





















 


substance,” “solid waste,” or “pollutant or
contaminant” in, or otherwise regulated by, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980; the Resource Conservation and
Recovery Act of 1976; the Toxic Substances Control Act of 1976; the Hazardous
Materials Transportation Act, 49 U.S.C. §§ 1801, et seq.; and
in the regulations promulgated pursuant to said Laws.


 


(q)           Effect of Agreement.  The execution, delivery and performance by
Neptune and Golden Spread of this Agreement, and the consummation by Neptune
and Golden Spread of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time, or both, (i) result in
a default, right to accelerate or loss of material rights under, or result in,
cause or create any material liability, charge or Lien pursuant to, any
franchise, mortgage, deed of trust, lease, license, agreement, or other
contractual relationship to which Neptune, Golden Spread, or ALT is a party or
by which any of them or their assets may be bound or affected; (ii) violate
any Judgment applicable to Neptune, Golden Spread, or ALT; or (iii) violate
any provision of the organizational documents of Neptune, Golden Spread or ALT.


 


(r)            Litigation.  Except as set forth on Schedule 6.1(r),
there is no legal action, suit, proceeding, grievance, arbitration,
investigation, audit or claim by, of or before any court, arbitration panel,
Governmental Authority, or other body acting in an adjudicative capacity
pending or, to the Seller’s Knowledge, threatened against either Seller or ALT,
(i) that involves or could reasonably be excepted to involve ALT or any of
its assets, properties, operations or business or (ii) that seeks to
enjoin or obtain material damages in respect of the consummation of the
transactions contemplated hereby.


 


6.2.          Warranties
and Representations of Apollo LNG and of Apollo.  In order to induce Seller to enter into this
Agreement, Apollo and Apollo LNG, jointly and severally, covenant, warrant and
represent to Seller that each of the following representations and warranties
is true as of the date of this Agreement and will be true on and as of the
Closing Date.


 


(a)           Organization
and Licensing.  Apollo and
Apollo LNG are corporations duly organized, validly existing, and in good
standing under the Laws of the States of Utah and Texas, respectively, and have
the power to own, lease and use the properties used in their businesses and to
carry on their businesses as now being conducted. They are each duly qualified to
do business and each is in good standing as a foreign corporation in each state
and jurisdiction where qualification as a foreign corporation is required,
except to the extent that any variation or failure thereof shall not be
material in its effect.  Schedule 6.2(a) lists
(a) the states and other jurisdictions where either Apollo or Apollo LNG
is so qualified; and (ii) the assumed names under which either conducts
business or has conducted business during the past five (5) years. Apollo
and Apollo LNG each have full power and authority to enter into this Agreement,
to consummate the transactions contemplated hereby and to perform their
respective obligations hereunder.  The
execution, delivery and performance of this Agreement and the Collateral
Agreements and the consummation of the transactions contemplated herein by
Apollo and Apollo LNG have been duly authorized by all requisite corporate
action on the part of Apollo and Apollo LNG. 
This Agreement has been (and the Collateral Agreements when executed and
delivered shall be) duly executed and delivered by Apollo and Apollo LNG and is
(and the Collateral Agreements shall be) a valid and binding obligation of
Apollo and Apollo LNG enforceable against them in accordance with their terms,
except to the extent that such


 


27





















 


enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors’ rights generally, and (ii) is subject to general
principles of equity.  All Governmental
Approvals required by any Governmental Authority having jurisdiction over
Apollo and Apollo LNG and their respective operations, are now and will be
current and valid as of the date of Closing. Apollo and Apollo LNG have previously
delivered or made available to Seller complete and correct copies of their
articles of incorporation, bylaws and other corporate documents as amended and
presently in effect.


 


(b)           Approvals;
Consents.  Except as set forth
on Schedule 6.2(b) hereto, no Governmental Approval is
necessary to be obtained or made by Apollo or by Apollo LNG to enable them to
continue to continue to conduct their businesses and operations and use their
properties after the Closing in a manner which is in all material respects
consistent with that in which they are currently conducted except for the
renewal of any permits in the Ordinary Course of Business (the renewal of which
is purely administrative in nature and does not call for a discretionary review
by any granting authority) and for which Apollo and Apollo LNG have no reason
to believe will not be routinely renewed.


 


(c)           Financial
Statements.  Attached as Schedule 6.2(c) are
true and complete copies of:


 


(i)            the audited balance sheet of Apollo
as of December 31, 2004 and the related statements of income, stockholders’
equity and cash flow for the fiscal year ended December 31, 2004, together
with the notes thereto, in each case examined by and accompanied by the report
of independent certified public accountants, and the unaudited balance sheet of
Apollo as of September 30, 2005, and the related statements of income,
stockholders’ equity and cash flow for the nine months ended September 30,
2005, together with the notes thereto (the “Apollo Financial Statements”).


 


(ii)           The Apollo Financial Statements have
been prepared in accordance with and are consistent with the books and records
of Apollo, fairly present the consolidated financial positions and results of
operations of Apollo as of the dates and for the periods indicated, are stated
in material conformity with GAAP, consistently applied, except as otherwise
clearly and conspicuously stated, and except that the unaudited financial
statements of Apollo do not contain a full set of footnotes, and can be
legitimately reconciled with the financial statements and with the financial
records maintained and the accounting methods applied by Apollo for federal
income tax purposes. The statements of income included in the Apollo Financial
Statements do not contain any material items of special or non-recurring income
except as expressly specified therein, and the balance sheets included in the
Apollo Financial Statements do not reflect any write-up or revaluation
increasing the book value of any assets except as otherwise clearly and
conspicuously stated therein. The books and accounts of Apollo are complete and
correct in all material respects and fairly reflect, to the extent required or
permitted by GAAP, all of the transactions, items of income and expense and all
assets and liabilities of the businesses of Apollo consistent with prior
practices of Apollo, including past accounting treatments utilized by Apollo.


 


28





















 


(d)           Absence
of Undisclosed Liabilities.  To
Apollo’s and Apollo LNG’s Knowledge, Apollo has no liability of any nature
whatsoever (whether known or unknown, due or to become due, accrued, absolute,
contingent or otherwise) for Taxes (as defined in Section 6.2(h) hereof),
except for (i) liabilities reflected or reserved against in the most
recent financial statements provided to Seller by Apollo; (ii) liabilities
incurred in the Ordinary Course of Business and consistent with past practice
after the date of the last Apollo balance sheets as supplied to Seller or
which, individually and in the aggregate, do not have and cannot reasonably be
expected to have a Material Adverse Effect; and (iii) liabilities
disclosed in Schedule 6.2(d) or Schedule 6.2(h) hereto.


 


(e)           Absence of Material
Adverse Effect; Conduct of Business.


 


(i)            Since September 30, 2005, except as set forth on Schedule 6.2(e) hereto,
Apollo has operated in the Ordinary Course of Business and there has not been:


 


(1)           any material adverse change in the
assets, properties, business, operations, prospects, net income or financial
condition of Apollo and no factor, event, condition, circumstance or
prospective development exists which could reasonably be expected to have a
Material Adverse Effect;


 


(2)           any material loss, damage,
destruction or other casualty to the property or other assets of Apollo,
whether or not covered by insurance;


 


(3)           any change in any method of
accounting or accounting practice of Apollo; or


 


(4)           any loss of the employment, services
or benefits of any key employee of Apollo.


 


(ii)           Since September 30, 2005, except
as set forth in Schedule 6.2(e)(ii) hereto, Apollo has not:


 


(1)           incurred any material obligation or
liability (whether absolute, accrued, contingent or otherwise), except in the
Ordinary Course of Business ;


 


(2)           mortgaged, pledged or subjected to
any Lien any of its property or other assets except in the Ordinary Course of
Business, and except for mechanics and materialmen’s Liens and Liens for Taxes
not yet due and payable;


 


(3)           sold or transferred any assets or
cancelled any debts or claims or waived any rights, except in the Ordinary
Course of Business ;


 


(4)           defaulted on any material obligation;


 


29





















 


(5)           entered into any material
transaction, except in the Ordinary Course of Business ;


 


(6)           written down the value of any
inventory or written off as uncollectible any accounts receivable or any
portion thereof not reflected in the Apollo Financial Statements except in the
Ordinary Course of Business;


 


(7)           granted any increase in the compensation
or benefits of employees other than the increases in accordance with past
practice not exceeding 10% or entered into any employment or severance
agreement or arrangement with any of them;


 


(8)           incurred any obligation or liability
to any employee for the payment of severance benefits of more than $1,000; or


 


(9)           entered into any agreement or made
any commitment to do any of the foregoing.


 


(f)            Legal
Matters.  Except as set forth
on Schedule 6.2(f) hereto, Apollo is not subject to any
judgment, decree, writ, injunction ruling or order (collectively, “Apollo
Judgments”) of any Governmental Authority. Schedule 6.2(f) identifies
each Apollo Judgment, each of which is fully covered by an insurance policy and
Apollo hereby represents and warrants to Seller that it shall be financially
responsible for the full satisfaction of any such Apollo Judgment, including
costs of defense and costs of court and attorney fees, to the extent that (i) any
such Apollo Judgment, including costs of defense and costs of court including
attorney fees, is not covered by insurance; and (ii) to the extent that
any such Apollo Judgment, including costs of defense and costs of court and
attorney fees, is not fully satisfied by insurance proceeds.


 


(i)            The business of Apollo is being
conducted in compliance with all Laws applicable to either Apollo or any of its
businesses or properties, except for where the failure to be in such compliance
could not reasonably be expected to have a Material Adverse Effect.


 


(ii)           Apollo owns or holds all Governmental
Approvals material to the conduct of its business. To Apollo’s Knowledge, no
event has occurred and is continuing which permits, or after notice or the
lapse of time, or both, would permit, any modification or termination of any
Governmental Approval.


 


(g)           Inventories.  The values at which inventories
are carried by Apollo on its balance sheets reflect the normal inventory
valuation policies of Apollo.


 


(h)           Taxes.  Apollo and, for any period during all or part
of which, the Tax liability of any other corporation or entity was determined
on a combined or consolidated basis with Apollo any such other corporation or
entity, have filed timely all federal, state, local and foreign Tax returns,
reports and declarations required to be filed (or have obtained or timely
applied for an extension with respect to such filing) currently reflecting the
Apollo Taxes (as defined below) and all other information required to be
reported thereon, and have paid, or made


 


30





















 


adequate provision for the payment of, all
Apollo Taxes which are due pursuant to such returns or are pursuant to any
assessments received by Apollo or any such other corporation or entity. As used
herein, “Apollo Taxes” shall mean all taxes, fees levies or other
assessments, including but not limited to income, excise, property (including
property taxes paid by Apollo pursuant to any lease), sales, franchise,
withholding, social security and unemployment taxes imposed by the United
States, or any state, county, local or foreign government, or any subdivision
or agency thereof, or taxing authority therein, and any interest, penalties or
additions to tax relating to such taxes, charges, fees, levies or other
assessments. Copies of all Tax returns for each fiscal year since the formation
of Apollo have been furnished or made available to the Seller or to its
representatives and such copies are accurate and complete as of the date
thereof. Apollo has also furnished or made available to the Seller or its
representatives correct and complete copies of all notices and correspondence
sent or received since the formation of Apollo by Apollo to or from any
federal, state or local Tax authorities. Apollo has adequately reserved for the
payment of all material Apollo Taxes with respect to periods ended on, prior to
or through the date Apollo’s balance sheets for which tax returns have not yet
been filed. In the ordinary course, Apollo makes adequate provision on its
books for the payment of all Apollo Taxes (including for the current fiscal
period) owed by Apollo. Except to the extent reserves therefore are reflected
on its balance sheet, Apollo is not liable or will not become liable, for any
Apollo Taxes for any period ending on, prior to or through the dates of those
balance sheets. Except as disclosed on Schedule 6.2(h), Apollo has
not been subject to a federal or state tax audit of any kind and no adjustment
has been proposed by the IRS with respect to any return for any subsequent
year. With respect to the audits referred to on Schedule 6.2(h) hereto,
no such audit has resulted in an adjustment in excess of $25,000.


 


(i)            Subsidiaries.  Apollo LNG is a subsidiary of Apollo.  Apollo LNG has no subsidiaries.


 


(j)            Apollo LNG Business
Activities.  Apollo LNG shall
be capitalized by Neptune, Golden Spread and Apollo immediately following the
execution and delivery by the Parties of this Agreement, in the manner provided
for herein.  Prior to such
capitalization, Apollo LNG had no shareholders and employees, conducted no
business activities, and possessed no assets, properties, or liabilities of any
nature whatsoever (whether due or to become due, accrued, contingent, absolute
or otherwise).


 


(k)           Capitalization of Apollo
and Apollo LNG.  The
authorized stock of Apollo or Apollo LNG and the number of shares of capital
stock that are issued and outstanding of Apollo and Apollo LNG (immediately
following its capitalization as described in Section 4.12 are set
forth in Schedule 6.2(k) hereto. The shares listed on Schedule 6.2(k)
hereto constitute all the issued and outstanding shares of capital stock of
Apollo and Apollo LNG and have been validly authorized and issued, are fully
paid and nonassessable, have not been issued in violation of any preemptive
rights or of any federal or state securities Law and no personal liability is attached
to the ownership thereof. Except as set forth on Schedule 6.2(k),
there is no security, option, warrant, right, call, subscription, agreement,
commitment or understanding of any nature whatsoever, fixed or contingent, that
directly or indirectly (i) calls for the issuance, sale, pledge or other
disposition of any shares of capital stock of Apollo or Apollo LNG, or any
securities convertible into, or other rights to acquire, any shares of capital
stock of Apollo or Apollo LNG; or (ii) obligates Apollo or Apollo LNG to
grant, offer or enter into any of the foregoing; or


 


31





















 


(iii) relates to the voting or control
of such capital stock, securities or rights, except as provided in this
Agreement, or in the articles of incorporation of Apollo or Apollo LNG. Apollo
LNG has not agreed to register any securities under the Securities Act.


 


(l)            Effect of Agreement.  The execution, delivery and performance by
Apollo and Apollo LNG of this Agreement, and the consummation by Apollo and
Apollo LNG of the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, (i) result in a
default, right to accelerate or loss of material rights under, or result in,
cause or create any material liability, charge or Lien pursuant to, any
franchise, mortgage, deed of trust, lease, license, agreement, or other
contractual relationship to which Apollo or Apollo LNG is a party or by which
any of them or their assets may be bound or affected; (ii) violate any
Judgment applicable to Apollo or Apollo LNG; or (iii) violate any
provision of the organizational documents of Apollo or Apollo LNG.


 


(m)          Litigation.  Except as set forth on Schedule 6.2(m)
there is no legal action, suit, proceeding, grievance, arbitration,
investigation, audit or claim by, of or before any court, arbitration panel,
Governmental Authority, or other body acting in an adjudicative capacity
pending or, to the Apollo’s or Apollo LNG’s Knowledge, threatened against any
of the Apollo or Apollo LNG, (i) that involves or could reasonably be
excepted to involve Apollo and Apollo LNG or any of its assets, properties,
operations or business or (ii) that seeks to enjoin or obtain material
damages in respect of the consummation of the transactions contemplated hereby.


 


(n)           Public Utility Holding
Company Act and Investment Company Act.  Neither Apollo nor Apollo LNG, is a “holding
company” or a “public utility company” as such terms are defined in the Public
Utility Holding Company Act of 1933 as amended. 
Neither Apollo nor Apollo LNG is, as a result of and immediately upon
the Closing will not be an “investment company” or company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940 as amended.


 


(o)           ERISA.  No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any benefit plan of Apollo or
Apollo LNG or any of their respective Affiliates which is or would be
materially adverse to Apollo, Apollo LNG or their Affiliates.  The execution and delivery of this Agreement
and the issuance and sale of the Apollo LNG Stock, or the common stock of
Apollo or Apollo LNG, will not involve any transaction which is subject to the
prohibitions of Section 406 of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”) or in connection with which a Tax could be
imposed thereto.


 


(p)           Securities Act of 1933.  Based in material part upon the representations
herein of the Seller, Apollo and Apollo LNG have complied and will comply with
all applicable federal and state securities Laws in connection with the offer,
issuance and sale of the Apollo LNG Stock, and the common stock of Apollo and
Apollo LNG hereunder.


 


(q)           Maintenance of Authorized
and Unissued Common Stock. 
Apollo and Apollo LNG shall each maintain authorized but unissued common
stock in amounts sufficient to


 


32





















 


provide for the conversion of the Apollo LNG
Stock into the common stock of each of Apollo and Apollo LNG hereunder.


 


7.             TERMINATION


 


7.1.          Termination
Events.  The transactions
contemplated herein may be terminated and/or abandoned prior to the Closing:


 


(a)           by the mutual consent of Apollo,
Apollo LNG, and Seller;


 


(b)           by Apollo and Apollo LNG, if any of
the conditions provided in Section 5.1 of this Agreement shall not
have been met or waived in writing by Apollo and Apollo LNG by the Closing Date;
or


 


(c)           by Seller, if any of the conditions
provided for in Section 5.2 of this Agreement shall not have been
met or waived in writing by Seller by the Closing date.


 


7.2.          Procedure
Upon Non-Default Termination. 
In the event of termination and/or abandonment by Apollo and Apollo LNG,
or by Seller, or both, pursuant to Section 7.1 hereof, written
notice thereof shall be given to the other Parties, and the transactions
contemplated by this Agreement shall be terminated without further action by
Apollo, Apollo LNG, or by Seller.  If the
transactions contemplated by this Agreement are terminated as provided herein:


 


(a)           each Party, upon request by another
Party, shall re-deliver all documents, work papers and other material,
including all copies thereof, provided by the other Party, to the Party furnishing
the same; and


 


(b)           no Party hereto shall have any
liability or further obligation to any other Party to this Agreement, with the
exception of any provisions hereof which expressly survive the termination;


 


(c)           the Parties expressly acknowledge and
agree that if the Closing fails to timely occur due to the wrongful action or
failure to act of Seller, Apollo LNG, or Apollo, then the sole remedy of the
non-defaulting or non-breaching Part(ies) shall be to terminate this Agreement.


 


8.             INDEMNIFICATION


 


8.1.          Survival
of Representations and Warranties. 
The representations and warranties made by the Parties under Sections
6.1 and 6.2 hereunder shall survive the Closing hereunder for a period of one
(1) year, with the exception of the representations and warranties made by
the Parties relative to matters of Taxes, which representations and warranties
shall survive the Closing hereunder for a period of seven (7) years.


 


8.2.          Indemnification
by Seller.  Seller shall
indemnify, defend and hold Apollo LNG and Apollo and each of Apollo LNG’s and
Apollo’s officers, directors, and shareholders harmless, from and against, and
shall reimburse Apollo LNG or Apollo (or, as the case may be, each of Apollo
LNG’s or Apollo’s officers, directors, and shareholders), on demand for any


 


33





















 


liabilities,
payments, losses, suits, claims, costs, or expenses (including attorney’s fees
and costs of investigation incurred in defending against such liabilities,
payments, losses, suits, claims, costs or expenses) made against or incurred by
or asserted against Apollo LNG or Apollo (and/or each of Apollo LNG’s and/or
Apollo’s officers, directors, and shareholders) after the Closing in respect of
(a) any breach of any representation, warranty, covenant or agreement made
by Seller or ALT in this Agreement or any certificate or other instrument
furnished by them pursuant to this Agreement, or (b) the failure of Seller
to convey to Apollo LNG good and marketable title to the Units, free and clear
of all Liens.


 


8.3.          Indemnification
by Apollo LNG and by Apollo. 
Apollo LNG and Apollo shall indemnify, defend and hold Seller and each
of Sellers’ officers, directors, and shareholders harmless, from and against,
and shall reimburse Seller (or, as the case may be, each of Sellers’ officers,
directors, and shareholders) on demand for any liabilities, payments, losses,
suits, claims, costs, or expenses (including attorney’s fees and costs of
investigation incurred in defending against such liabilities, payments, losses,
suits, claims, costs or expenses) made against or incurred by or asserted
against Seller (and/or each of Sellers’ officers, directors, and shareholders)
after the Closing in respect of (a) any breach of any representation,
warranty, covenant or agreement made by Apollo LNG or by Apollo in this
Agreement or any certificate or other instrument furnished by them pursuant to
this Agreement, or (b) the failure of Apollo to convey good and marketable
title to the Apollo LNG Stock, free and clear of all Liens.


 


8.4.          Claims
Subject to Indemnification. 
Each Party shall promptly notify the other of any claim for which
indemnification may be sought under this Agreement, and shall give the
indemnifying Party the opportunity to defend the claim with counsel of its
choice, subject to the approval of the Party against whom the claim is being
brought, which shall not be unreasonably withheld or delayed, at its sole cost
and expense.  The indemnifying Party
shall not settle or compromise such claim without the prior written consent of
the indemnified Party, which shall not be unreasonably withheld or
delayed.  Notwithstanding the foregoing,
in the event the subject matter underlying such claim is reasonably determined
by the indemnitee to be or reasonably anticipated to be materially and
adversely precedent setting to the indemnitee, or which may materially and
adversely affect the indemnitee’s future operations, the indemnitee may, in its
reasonable judgment, withhold its consent to indemnitor defending the claim
with its own counsel, or settling the claim, and upon written notice to
indemnitor, indemnitee shall proceed with its defense of the claim.  The indemnitor’s liability when indemnitee is
defending the claim shall not exceed that which indemnitor would have incurred
had indemnitor provided the claim defense.


 


8.5.          Limitation
on Seller’s Representations and Warranties. Independent Analysis.  APOLLO AND APOLLO LNG ACKNOWLEDGE THAT APOLLO
AND APOLLO LNG, EITHER ALONE OR TOGETHER WITH ANY INDIVIDUALS OR ENTITIES
APOLLO OR APOLLO LNG HAVE RETAINED TO ADVISE THEM WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY, EACH HAVE KNOWLEDGE AND EXPERIENCE IN
TRANSACTIONS OF THE TYPE CONTEMPLATED PURSUANT TO THIS AGREEMENT AND IN THE
BUSINESS OF ALT, AND ARE THEREFORE CAPABLE OF EVALUATING THE RISKS AND MERITS
OF ACQUIRING THE UNITS.  APOLLO AND
APOLLO LNG FURTHER ACKNOWLEDGE THAT NO SELLER NOR ANY OF THEIR RESPECTIVE DIRECTORS,
SHAREHOLDERS, EMPLOYEES, PARTNERS,


 


34





















 


MEMBERS,
MANAGERS, OR OWNERS, NOR ANY OF THEIR RESPECTIVE AFFILIATES, REPRESENTATIVES,
AGENTS OR CONSULTANTS HAS MADE ANY REPRESENTATION OR WARRANTY IN RESPECT OF THE
INTERPRETATIONS OR ECONOMIC EVALUATIONS RELATIVE TO ALT, INCLUDING WITH RESPECT
TO THE FUTURE OPERATION OF ALT OR ITS BUSINESS, OR AS TO THE PROSPECTS
(FINANCIAL OR OTHERWISE) OF ALT.  APOLLO AND
APOLLO LNG FURTHER ACKNOWLEDGE, AGREE AND RECOGNIZE THAT ANY COST ESTIMATES,
PROJECTIONS OR OTHER PREDICTIONS CONTAINED OR REFERRED TO IN ANY DOCUMENT PROVIDED
TO APOLLO, APOLLO LNG, OR ANY OF THEIR AFFILIATES, EMPLOYEES, AGENTS OR
REPRESENTATIVES, ARE PREPARED FOR INTERNAL PLANNING PURPOSES ONLY AND ARE NOT
DEEMED TO BE REPRESENTATIONS AND WARRANTIES OF SELLER, OR SELLER’S RESPECTIVE
SHAREHOLDERS, DIRECTORS, PARTNERS, EMPLOYEES, MEMBERS OR OWNERS, OR ANY OF
THEIR RESPECTIVE AFFILIATES, AGENTS, REPRESENTATIVES, OR CONSULTANTS.


 


IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT SELLER
MAKES NO WARRANTIES OF ANY KIND, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE ASSETS
OR PROPERTIES OF ALT, WHETHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE. UPON
CLOSING, APOLLO AND APOLLO LNG ACKNOWLEDGE THAT THEY HAVE HAD, OR WILL HAVE
HAD, PRIOR TO CLOSING, A REASONABLE OPPORTUNITY TO CONDUCT THEIR DUE DILIGENCE
ACTIVITIES AND TO INSPECT AND EXAMINE THE CONDITION OF EACH AND EVERY ASSET AND
PROPERTY OF ALT, INCLUDING THE ENVIRONMENTAL CONDITIONS OF THE ASSETS AND
PROPERTIES OF ALT, AND APOLLO AND APOLLO LNG ARE AWARE OF AND ACCEPT THE
CONDITION OF EACH AND EVERY ASSET AND PROPERTY OF ALT, INCLUDING THE
ENVIRONMENTAL CONDITIONS OF SUCH ASSETS AND PROPERTIES.


 


8.6.          Remedies.


 


(a)           The sole and exclusive remedy of
Apollo LNG or Apollo under this Agreement, for a breach by Seller of any
representation or warranty set forth in Section 6.1 of this
Agreement, shall be to receive from Seller (and/or Kelley, if required) such
amount of the Apollo LNG Stock (in equal measures of Series A Stock and Series B
Stock), conveyed to Seller and Kelley hereunder, which is equivalent to the
amounts for which Apollo LNG and/or Apollo are entitled to indemnification
pursuant to Section 8.2, valued at $1.00 per share.  If, after such application of Apollo LNG Stock
to such indemnification obligation, the Seller (and/or Kelley, if required) do
not possess sufficient amounts of Apollo LNG Stock to satisfy the
indemnification obligation of Seller, because of one or more conversions of the
Apollo LNG Stock, then the balance of the indemnification obligation shall be
satisfied by the delivery first, of Apollo common stock, and next, by the
delivery of Apollo LNG common stock.  The
value of the common stock of Apollo and of Apollo LNG, if it is then publicly
traded, shall be the average closing price of such stock over the most
immediate five day trading period prior to the date of satisfaction of the
indemnity obligation.  It is expressly
understood and agreed that the Seller shall have no obligation to satisfy any such
liability to Apollo LNG or Apollo in any manner (including the payment of
money) other than by the delivery of stock, as provided herein.


 


35





















 


(b)           The sole and exclusive remedy of
Seller under this Agreement, for a breach by Apollo or Apollo LNG of any
representation or warranty set forth in Section 6.2 of this
Agreement, shall be to receive from Apollo LNG additional shares of Series A
Stock and Series B Stock (in equal measures of Series A Stock and Series B
Stock), which is equivalent to the amount for which Seller is entitled to
indemnification pursuant to Section 8.3, valued at $1.00 per
share.  Apollo LNG Stock received by
Seller pursuant to this Section 8.6(b) may be converted by
Seller, upon the terms and conditions provided for in Section 2.2,
for a period of two (2) years following the date of issuance of such stock
to Seller.


 


(c)           The maximum aggregate liability of
Seller to Apollo and Apollo LNG, collectively, for the breach of a warranty or
representation under Section 6.1 of this Agreement shall not exceed
$2,500,000, and the maximum aggregate liability of Apollo and Apollo LNG for
the breach of a warranty or representation under Section 6.2 of
this Agreement shall not exceed $2,500,000, payable solely in stock as provided
for herein.


 


(d)           No Party will be required to
indemnify another Party unless the indemnified Party’s claims with respect to a
particular set of facts or circumstances exceed $50,000, and unless (and only
to the extent that) the aggregate amount of the agreed to or adjudicated
indemnification claims against such Party exceed $50,000.  IT IS ADDITIONALLY EXPRESSLY UNDERSTOOD AND
AGREED THAT KEN KELLEY SHALL HAVE NO PERSONAL OR OTHER LIABILITY UNDER THIS
AGREEMENT WHATSOEVER, AND THAT APOLLO AND APOLLO LNG SHALL HAVE NO RECOURSE TO
THE ASSETS OR PROPERTIES OF KEN KELLEY.


 


(e)           NO PARTY SHALL BE LIABLE OR OTHERWISE
RESPONSIBLE TO ANY OTHER PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
INCIDENTAL DAMAGES, INCLUDING LOST PROFITS, OR LOSS OF BUSINESS OPPORTUNITY OR
FOR PUNITIVE DAMAGES, AS TO ANY ACT OR OMISSION WHATSOEVER, AND CHARACTERIZED
AS A CONTRACT BREACH, TORT, OR OTHERWISE, WHICH ARISES OUT OF OR RELATES TO
THIS AGREEMENT OR ITS PERFORMANCE OR NON-PERFORMANCE; PROVIDED THAT THIS LIMITATION
ON LIABILITY SHALL NOT APPLY TO ANY CLAIMS WITH RESPECT TO WHICH A PARTY IS
FOUND BY A COURT OF COMPETENT JURISDICTION TO HAVE COMMITTED ACTUAL FRAUD.


 


(f)            Each indemnified Party shall be
obligated in connection with any claim for indemnification to exercise all
Commercially Reasonable Efforts to mitigate the Losses associated with such
claim upon and after becoming aware of any event which could reasonably be
expected to give rise to such Losses.


 


(g)           The amount of any Loss suffered by a Party,
including any Tax Losses, will be reduced by the amount, if any, of the
recovery or Tax benefit (net of reasonable expenses incurred in connection in
obtaining such recovery or benefit) such Party or its Affiliate has received, or
in the future receives, or may reasonably be expected to receive, or otherwise
enjoys with respect thereto from any other Person, including any Affiliate
(including the present value of any federal, state, or local income Tax benefit,
any recovery under any insurance policies paid for by ALT prior to the Closing
and any offsetting Tax deductions, losses, including net


 


36





















 


operating losses, credits or similar items).  The present value will be calculated
utilizing the prevailing interest rates established by the Internal Revenue
Code.


 


(h)           The obligations of the Parties for
indemnification for breach of a representation or warranty under Sections 6.1
or 6.2 shall terminate after the expiration of the periods indicated in Section 8.1,
except with respect to any Loss which has been the subject of written notice to
the Party against whom such claim of Loss is asserted prior to the expiration
of such period, which notice shall preserve such claim until it is liquidated
or otherwise finally resolved.


 


9.             TAX MATTERS


 


9.1.          Tax
Returns.  Apollo LNG shall
prepare or cause to be prepared and file or cause to be filed all Tax returns
with respect to ALT for all Tax periods beginning with and subsequent to the
2006 Taxable year.  Seller shall prepare
or cause to be prepared and file or cause to be filed all Tax returns with
respect to ALT for all Tax periods beginning prior to the 2006 Taxable year.


 


9.2.          Cooperation
on Tax Matters.


 


(a)           Apollo LNG and Seller shall cooperate
fully, as and to the extent reasonably requested by the other Party, in
connection with the filing of Tax returns pursuant to this Section and any
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.  Apollo
LNG and Seller shall (i) retain all books and records in their possession
with respect to Tax matters pertinent to ALT, its assets or business relating
to any whole or partial taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by
Apollo LNG or the Sellers, any extensions thereof) of the respective taxable
periods, and abide by all record retention agreements (if any) entered into
with any taxing authority, and (ii) give the other Party reasonable
written notice prior to transferring, destroying or discarding any such books
and records and, if the other Party so requests, Apollo LNG or Seller, as the
case may be, shall allow the other Party to take possession of such books and
records.


 


(b)           Apollo LNG and the Seller further
agree, upon request, to use their Commercially Reasonable Efforts to obtain any
certificate or other document from any Governmental Authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including, but not limited to, with respect to the transactions
contemplated hereby).


 


9.3.          Confidentiality.  Any information shared in connection with
Taxes shall be kept confidential, except as may otherwise be necessary in
connection with the filing of Tax returns or reports, refund claims, Tax
audits, Tax claims and Tax litigation, or as required by Law.


 


9.4.          Audits.  The Seller and Apollo LNG shall provide prompt
written notice to the other of any pending or written threat of a Tax audit,
assessment or proceeding that it receives related to ALT and its assets for
whole or partial periods for which it is indemnified by the other Party
hereunder.  Such notice shall contain
factual information (to the extent known) describing


 


37





















 


the asserted
Tax liability in reasonable detail and shall be accompanied by copies of any
notice or other document received from or with any Tax authority in respect of
any such matters.


 


9.5.          Control
of Proceedings. The Party responsible for preparing and filing the Tax
return under this Agreement shall control audits and disputes relating to such
Taxes (including action taken to pay, compromise or settle such Taxes).  Reasonable out-of-pocket expenses with
respect to such contest shall be borne by the Seller and Apollo LNG in
proportion to their responsibility for such Taxes as set forth in this Agreement.  Except as otherwise provided by this
Agreement, the non-controlling Party shall be afforded a reasonable opportunity
to participate in such proceedings at its own expense.


 


9.6.          Arizona
LNG Transaction.  Apollo and
Apollo LNG hereby agree to pay any Taxes payable by either HLDM, Neptune Leasing, Inc.,
or Golden Spread Energy, Inc., arising out of the transaction described in
item 4 of Schedule 6.1(j); it being expressly agreed, in this
respect, that if it is determined that the value of the settlement with El Paso
Field Services, and/or the acquisition of Arizona LNG, L.L.C. was or is, now or
in the future, taxable to HLDM or to Neptune Leasing, Inc. and Golden
Spread Energy, Inc., then Apollo and Apollo LNG shall be responsible for
the payment of such Taxes.


 


If Apollo LNG and Apollo are required to pay any such Tax, then, in
such event Apollo LNG shall have the right to encumber the assets of Arizona
LNG and ALT (the “Tax Lien”) for the purpose of borrowing the funds
necessary to pay such Taxes.  The Tax
Lien shall have priority over any Liens created upon the assets of Arizona LNG
or ALT securing the payment of the Purchase Note, but shall be inferior to the
JBK Liens.


 


10.          GENERAL PROVISIONS


 


10.1.        Further
Assurances.  Each Party hereto
shall execute and/or cause to be delivered to each other Party hereto such
instruments and other documents, and shall take such other actions, as such
other Party may reasonably request (prior to, at or after the Closing) for the
purpose of carrying out or evidencing any of the transactions contemplated pursuant
to this Agreement.


 


10.2.        Waiver.  Any waiver of any term or condition of this
Agreement shall not operate as a waiver of any prior or subsequent breach of
such term or condition other than the breach specifically intended to be
waived, nor shall any failure to enforce any provision hereof operate as a
waiver of such provision or of any other provision hereof.  Prior to this Agreement being terminated as a
result of the failure of a contingency or condition to be met, the Party in
whose favor such failed condition or contingency exists shall have the sole and
exclusive right, by written notice to the other, to waive any such condition or
contingency, and if waived, said condition or contingency shall be deemed
satisfied.


 


10.3.        Notices.  Any notices required or capable of being
rendered under the provisions of this Agreement shall be in writing and (a) hand
delivered in person, (b) sent by United States Postal Service certified
mail, postage prepaid, (c) sent by a recognized national overnight
delivery service, or local same day delivery or courier service, addressed as
shown on pages 1 and 2 of this Agreement, or (d) sent by
facsimile machine.  Any notice sent by
United States


 


38





















 


Postal Service
certified mail shall be deemed to be effective the earlier of the actual
delivery, if hand delivered in Person, or three (3) Business Days after
deposit in a post office operated by the United States Postal Service.  Any notice sent by a recognized national
overnight delivery service shall be deemed effective one (1) business day
after deposit with such service.  Any
notice personally delivered or delivered through a same-day delivery/courier
service shall be deemed effective upon its receipt or refusal to accept receipt
by the addressee.  Any notice sent by
facsimile machine shall be deemed effective one Business Day after confirmation
of the successful transmission by the sender’s facsimile machine.  Notices shall be addressed to the Parties in
accordance with the information provided on pages 1 and 2 of this
Agreement or to such other addresses as may be designated in writing from time
to time pursuant hereto.


 


10.4.        Time
is of the Essence.  Time is of
the essence with respect to all matters in this Agreement.  Except as expressly provided for in this
Agreement, the time for performance of any obligation or taking any action
under this Agreement will be deemed to expire at 12:00 o’clock midnight
(central time) on the last day of the applicable time period provided for in
this Agreement.


 


10.5.        Binding
Effect.  This Agreement shall
be binding upon and shall inure to the benefit of the Parties hereto and their
respective heirs, personal representatives, successors and permitted
assigns.  No Party may assign either this
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of the other Parties.


 


10.6.        No
Third Party Beneficiaries. 
Nothing in this Agreement or the attachments hereto, express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the Parties to it, nor is anything in this
Agreement intended to relieve or discharge the obligations or liabilities of
any third Person to any Party to this Agreement.


 


10.7.        Texas
Law and Jurisdiction.  This
Agreement shall be construed pursuant to the laws of the State of Texas.  The Parties hereby consent to the exclusive
personal jurisdiction of the courts in and for the State of Texas in the event
of litigation pertaining hereto, with venue to lie in Dallas County.


 


10.8.        Attorneys’
Fees.  If any action at Law or
in equity is brought to enforce or interpret the terms of this Agreement, the
prevailing Party shall be entitled to reasonable attorneys’ fees, costs and disbursements
from the non-prevailing Party, in addition to any other relief to which the
prevailing Party may be entitled pursuant to the court’s ruling.


 


10.9.        Counterparts
and Facsimile Execution.  This
Agreement may be executed in any number of counterparts, and by facsimile
signature, each of which will be an original but all of which will constitute
one and the same instrument.


 


10.10.      Severability.  If any provision or provisions of this
Agreement shall be held to be wholly or partially invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.


 


39





















 


10.11.      Headings.  The headings of the several Sections of this
Agreement are inserted solely for convenience of reference and are not a part
of and are not intended to govern, limit or aid in the construction of any term
or provision hereof.


 


10.12.      Other
Offers.  From and after the
mutual execution of this Agreement, and until its closure or termination as
herein provided, Seller shall not entertain any offers from any third party
with respect to the sale (outside the Ordinary Course of Business) of the
assets or the Units of ALT.  Apollo LNG
has been notified, in this respect, that ALT’s interest in the Willis LNG Plant
will be sold prior to the Closing of the transactions under this Agreement.


 


10.13.      No
Brokers.  Apollo LNG and
Apollo represent and warrant that neither of them has dealt with any sales
agents, finders, brokers or other consultants in connection with the
transaction contemplated hereunder, and has no financial obligation to any such
sales agents, finders, brokers or other consultants in connection with this
transaction.  Seller represents and
warrants that no broker, finder, investment banker, sales agent, or other
consultants, or other Person is or will be in connection with the transactions
contemplated by this Agreement, entitled to any brokerage, finder’s or other
fee or compensation based on any arrangement or agreement made by or on behalf
of Sellers for which Apollo LNG or Apollo will have any obligation or
liability.  Seller has engaged the
services of an investment banker, and Seller shall be responsible for the
payment of any fees, expenses, charges or other claims due to such Person as a
result of the transactions contemplated hereunder.  If any Person asserts a claim to a finder’s
fee, brokerage commission or other compensation on account of alleged
employment as a finder or broker, or the performance of services as a finder or
broker in connection with the transactions contemplated hereunder, the Party
under whom the finder or broker is claiming will indemnify, defend and hold the
other Party and the other Party’s affiliates harmless for, from, and against
any claims related thereto.  This
indemnity will survive the Closing or the cancellation of this Agreement.


 


10.14.      Seller’s
Representative.


 


(a)           Ken Kelley, acting alone, with full
power of substitution and re-substitution, is hereby designated as the
representative of the Sellers (“Seller’s Representative”) to serve, and
Apollo LNG hereby acknowledges that Seller’s Representative shall serve, as the
sole representative of the Sellers from and after the Effective Date with
respect to the matters set forth in this Agreement.  Seller’s Representative has accepted such
designation as of the date hereof. 
Notwithstanding anything to the contrary contained in this Agreement,
Seller’s Representative shall have no duties or responsibilities except those
expressly set forth herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on behalf of any Seller
shall otherwise exist against Sellers’ Representative.  IT IS EXPRESSLY UNDERSTOOD AND AGREED BY
SELLERS AND BY APOLLO AND APOLLO LNG, THAT KEN KELLEY SHALL HAVE NO PERSONAL
LIABILITY WHATSOEVER TO APOLLO OR APOLLO LNG WHATSOEVER, WITH RESPECT TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREUNDER.


 


(b)           Neptune and Golden Spread each hereby
irrevocably appoints Seller’s Representative as the agent, proxy and
attorney-in-fact for such party for all purposes of this Agreement, including
full power and authority on such party’s behalf (i) to take all actions
which


 


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Seller’s Representative considers necessary
or desirable in connection with the defense, pursuit or settlement of any
determinations relating to (x) the payment of the Purchase Price, and
(y) any Claims for indemnification, including determinations to sue,
defend, negotiate, settle and compromise any such Claims for indemnification
made by or against, and other dispute with Apollo or Apollo LNG pursuant to
this Agreement, or any of the agreements or transactions contemplated hereby, (ii) to
engage and employ agents and representatives (including accountants, legal
counsel and other professionals) and to incur such other expenses as he shall
deem necessary or prudent in connection with the administration of the
foregoing, (iii) to disburse to Neptune and Golden Spread all
indemnification payments, (iv) to accept and receive notices to Sellers
pursuant to this Agreement, and (v) to take all other actions and exercise
all other rights which Seller’s Representative (in his sole discretion)
considers necessary or appropriate in connection with this Agreement.  Each of Neptune and Golden Spread
acknowledges and agrees that such agency and proxy are coupled with an
interest, and are therefore irrevocable without the consent of Seller’s
Representative and shall survive the bankruptcy, dissolution or liquidation of
either or both of Neptune or Golden Spread. 
All decisions and acts by Seller’s Representative shall be binding upon
each of Neptune and Golden Spread, and neither Neptune nor Golden Spread shall
have the right to object, dissent and protest or otherwise contest the same.


 


(c)           In the event that the person
authorized hereunder as Seller’s Representative shall resign or otherwise fail
to act on behalf of Seller for any reason, a substitute Seller’s Representative
shall be elected by prompt action of Neptune and Golden Spread. Apollo LNG and
Apollo, however, shall be conclusively entitled to continue to rely upon the
authority herein granted to Kelley as Seller’s Representative until such time
as Neptune and Golden Spread shall have notified them, in writing, of his
removal from office.


 


(d)           Seller’s Representative is authorized
to act on behalf of the Seller notwithstanding any dispute or disagreement
among Neptune, Golden Spread, their officers, directors, employees,
shareholders, beneficiaries or the families thereof, and Apollo LNG shall be
entitled to rely on any and all action taken by Seller’s Representative without
any liability to, or obligation to make any inquiry of Neptune or Golden Spread
under any circumstances, even if Apollo LNG shall be aware of any actual or
potential dispute or disagreement among the aforementioned.  Apollo LNG is expressly authorized to rely on
the genuineness of the signature of Seller’s Representative and, upon receipt
of any writing which reasonably appears to have been signed by a representative
of Seller’s Representative may act upon the same without any further duty of
inquiry as to the genuineness of the writing.


 


(e)           Neither Seller’s Representative nor
any agent employed by him shall be liable to Neptune or Golden Spread relating
to the performance of his duties under this Agreement for any errors in
judgment, negligence, oversight, breach of duty or otherwise except to the
extent it is finally determined in a court of competent jurisdiction by clear
and convincing evidence that the actions taken or not taken by Seller’s
Representative constituted fraud or were taken or not taken willfully and in
bad faith.  Seller’s Representative shall
be indemnified and held harmless by Seller against all Claims paid or incurred
in connection with any action, suit, proceeding or Claim to which Seller’s
Representative is made a party by reason of the fact that it was acting as
Seller’s Representative pursuant to this Agreement; provided, however,
that Seller’s Representative shall not be entitled to indemnification hereunder
to the extent it is finally


 


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determined in a court of competent
jurisdiction by clear and convincing evidence that the actions taken or not
taken by Seller’s Representative constituted actual fraud or were taken or not
taken willfully in bad faith.  Seller’s
Representative shall be protected in acting upon any notice, statement or
certificate believed by it to be genuine and to have been furnished by the
appropriate Person and in acting or refusing to act in good faith or any
matter.


 


10.15.      Publicity.  All notices to third parties and other
publicity concerning the transactions contemplated by this Agreement, or any subsequent
termination of this Agreement, shall be jointly planned and coordinated by and
between Seller and Apollo LNG.  No Party
shall act unilaterally in this regard without the prior written approval of the
others; provided, however, that such approval shall
not be unreasonably withheld.  It is
understood that this provision shall never prevent any Party from complying
with any applicable public disclosure requirements; provided, however, that
neither Party may disclose or make public the work product of any certified
public accountants providing services for another party without giving such
certified public accountants the opportunity to review, comment upon, and
approve of any such disclosure or publication..


 


10.16.      Expenses.  Each Party to this Agreement shall pay all
expenses incurred by it or on its behalf in connection with the preparation,
authorization, execution and performance of this Agreement and the transactions
contemplated hereunder, including but not limited to, all fees and expenses of agents,
representatives, counsel, and accountants engaged by such Party.


 


10.17.      Confidentiality
Agreement.  The Parties agree
that the Confidentiality Agreement shall remain in full force and effect, and
each Party agrees to comply with its terms and conditions.


 


10.18.      Disclosure
Schedules; Interpretation. 
Any matter set forth in a Disclosure Schedule shall be deemed
disclosure also for purposes of any other Sections or Disclosure Schedules in
this Agreement to which it may relate. 
Failure to provide a cross reference to other applicable Sections
contained in the Agreement or Disclosure Schedules shall not, however, be
deemed a failure to disclose unless a reasonable person would be unable to
determine that the disclosure contained in such Section or Disclosure Schedule contains
enough information to qualify or otherwise apply to other representations,
Sections or Disclosure Schedules contained in this Agreement.


 


10.19.      Confidential
Information.  Prior to the
Closing Date and thereafter if the Closing fails to occur, Apollo and its
representatives and Sellers and their representatives will hold in strict
confidence , all data and information obtained regarding the other, their
assets, the operations, and financial status obtained in connection with this transaction
and the terms of this Agreement.  Except
as may be required by Law or any Governmental Authority, or to obtain any
consents or approvals required by this Agreement, or to their respective
attorneys, accountants, lenders, insurers, utility providers and consultants,
Seller and Apollo LNG will not, without the prior written consent of the other
Party, make any disclosure to third Persons or parties of the terms of this
Agreement or any other matter related to the transactions contemplated by this
Agreement.  Apollo LNG and Seller will
use their best efforts to avoid such publicity in any newspaper or magazine, or
on any radio or television station, or through any other medium of publication.


 


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10.20.      Joint
and Several Liability.  The
liability and obligations of Neptune and Golden Spread hereunder shall be joint
and several, and the liability and obligations of Apollo and Apollo LNG under
this Agreement shall be joint and several.


 


10.21.      Ken
Kelley Goodwill.  Ken Kelley
is entering into this Agreement solely for the purpose of conveying the Ken
Kelley Goodwill and receiving as consideration therefor, the Apollo Shares
allocable to Ken Kelley.  Ken Kelley
makes no representations, warranties, covenants, or agreements with respect to
the Units, or with respect to the obligations, representations, warranties,
covenants, and agreements of Seller hereunder, or otherwise with respect to
this Agreement and the matters contemplated hereunder; it being expressly
understood and agreed that Ken Kelley shall have no liability whatsoever with
respect to this Agreement or the transactions contemplated hereunder.  It is expressly understood and agreed,
however, that all of the obligations of Apollo and Apollo LNG hereunder, with
respect to the transactions contemplated hereunder, including all
representations, covenants, and agreements of Apollo and Apollo LNG, shall
inure directly to the benefit of Ken Kelley, in that either Ken Kelley or
Seller may enforce the obligations of Apollo and Apollo LNG, with respect to
the Apollo Shares received by Ken Kelley, directly against Apollo and Apollo
LNG on behalf of Ken Kelley.


 


10.22.      Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in this Agreement.  All
prior and contemporaneous agreements, representations and understandings of the
parties, oral or written, are superseded by and merged in this Agreement.  No supplement, modification or amendment of
this Agreement will be binding unless in writing and executed by Apollo LNG and
Seller.


 


WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date set
forth above.


 


 


	
   

  	
  APOLLO
  RESOURCES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


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  APOLLO LNG,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


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  NEPTUNE
  LEASING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


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  GOLDEN
  SPREAD ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


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  Ken Kelley

  



 


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