Document:

EXHIBIT 10.16

 

AMENDED AND RESTATED CAPITALIZATION AGREEMENT

 

THIS AMENDED AND RESTATED CAPITALIZATION
AGREEMENT (the “Agreement”) is made and entered into as
of this 14th day of February, 2007, by and between Rawhide Management, LLC, a
South Dakota limited liability company (“Rawhide”) and Illini Bio-Energy, LLC,
an Illinois limited liability company (“Illini” or the “Company”).

 

RECITALS

 

WHEREAS, Illini
intends to develop and operate an ethanol plant capable of producing 100
million gallons of ethanol per year in Logan County, Illinois (the “Ethanol
Plant”);

 

WHEREAS, Rawhide
desires to invest in the Ethanol Plant;

 

WHEREAS, the Parties
desire to amend and restate in its entirety that certain Amended and Restated
Capitalization Agreement executed on January 9, 2007 to set forth in this
Agreement the terms and conditions under which the Rawhide shall invest in
Illini and under which Illini shall accept such investment.

 

NOW THEREFORE, for
and inconsideration of their respective obligations and undertakings as
hereinafter set forth, the receipt and sufficiency of which is hereby
acknowledged, the Parties do hereby agree to incorporate the above recitals as
part of this Agreement and amend and restate in its entirety the Amended and
Restated Capitalization Agreement executed on January 9, 2007 as follows:

 

ARTICLE I

Defined Terms

 

Each term defined in this Section, when used in this Agreement, shall,
unless the context otherwise requires, have the following meaning:

 

1.1          “Illini
Offering.”  The equity
offering (currently expected to be registered with the SEC) described in
Section 3.1 below.

 

1.2          “Effective
Date.”  The date after which
this Agreement has been fully executed by both of the parties hereto, and
ratified or adopted by resolution of each of their respective boards of
directors.

 

1.3          “Escrow
Closing Date.”  The day that
Illini releases proceeds from the Illini Offering from escrow in accordance
with and pursuant to the terms of the Illini Offering.

 

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1.4          “Fully
Diluted Basis.” All units outstanding and all existing warrants and
future warrants that may be issued at a future date.

 

1.5          “Initial
Credit Advances.”  The funds
advanced to Illini by Rawhide pursuant to Article II below.

 

1.6          “Capitalization.”  The amount that Illini agrees to allow
Rawhide to invest in the Illini Offering pursuant to Section 3.3 below.

 

1.7          “Rawhide
Offering.”  The private
placement offering described in Section 3.2 below.

 

1.8          “Seed
Capital Investors.”  Those
investors in Illini that are shown on attached Exhibit A and hold units in
Illini as of the date of this Agreement.

 

1.9          “Qualified
Expenses.”  Start-up costs,
included but not limited to the costs necessary to perform initial grading and
dirt work; complete permitting, engineering, surveying, and land acquisition;
commence initial construction and pay related legal and accounting costs.

 

1.10        “Unrelated
Third Party.”  A person, firm
or entity other than:  (i) Illini,
Rawhide and/or their successors in interest; (ii) a subsidiary of Illini,
Rawhide or their successors in interest; (iii) an officer, director, or
employee of Illini, Rawhide, any subsidiary of Illini or Rawhide or their
successors in interest; or (iv) an entity fifty one percent (51%) or more of
the equity of which is directly or indirectly owned by Illini, Rawhide or their
successors in interest and/or their subsidiaries and/or any one or more of
their respective officers, directors, or employees.

 

ARTICLE II

Initial Credit Advance

 

2.1          Initial
Credit Advance. Commencing on  the Effective
Date, Rawhide shall provide at least $10,800,000 in Initial Credit Advances to
Illini as set forth in this Article II and pursuant to a separate loan
agreement containing customary terms and conditions. Once advanced, said amounts
shall be credited with interest at the Applicable Federal Rate for short term
credit. The parties agree that Rawhide’s obligation to make Initial Credit
Advances is contingent upon Rawhide obtaining adequate financing, to be
determined in Rawhide’s sole discretion, to make the Initial Credit Advance and
that any failure by Rawhide to make a Initial Credit Advance due to inadequate
financing shall not give rise to a termination of this Agreement except as
specifically provided in Section 5.2(B) and (C). As a condition to Rawhide
making Initial Credit Advances, Illini shall agree that there shall be no
material changes to the business plan, capitalization or governance of Illini
without Rawhide’s prior written consent, except that Illini shall be entitled to
grant additional warrants to its directors pursuant to and in accordance with
the

 

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terms of the line of credit agreement with such directors in existence
prior to the date of this Agreement without the consent of Rawhide.

 

2.2          Funding
Requests. From time to time from and after the Effective Date, as
funds are required to pay for Qualified Expenses, Illini may request Initial
Credit Advances from Rawhide (a “Funding Request”). Each Funding Request shall
be in writing and be supported by a contract, invoice, or bill showing that the
Initial Credit Advance is required at that time to pay a Qualified Expense. Each
Funding Request shall be signed by an officer of Illini stating that it is a
Qualified Expense.

 

2.3          Payment. After
a Funding Request is received, Rawhide agrees to pay the amount requested in
the Funding Request to Illini subject to the provisions of Section 2.1. All
such payments to Illini shall be due and payable within five (5) business days
of receipt of the Funding Request applicable thereto, or if later, as specified
in the applicable contract, bill or invoice. Illini shall maintain a record of
all funds advanced by Rawhide pursuant to this Section, including, without
limitation, copies of all Funding Requests and supporting documentation, and
said records shall be open for inspection by Rawhide. Rawhide shall maintain a
record of all payments made pursuant to this Section, including all paid
receipts and cancelled checks applicable thereto, and said records shall be
open for inspection by Illini.

 

2.4          Application
Towards Subscription Price of Units. On such date that Rawhide
subscribes for units in the Illini Offering, the aggregate amount advanced to
Illini by Rawhide pursuant to this Article II, together with the interest
accrued thereon, shall be applied towards the down payment on the subscription
price, and thereafter, the amount of such advance so applied shall no longer be
considered a credit advance subject to repayment but shall instead be
considered a down payment on the subscription price which is subject to the
terms of the Illini Offering. In the event this Agreement is terminated for any
reason prior to that date or that Rawhide does not subscribe for units in the
Illini Offering for any reason, the aggregate amount advanced by Rawhide to
Illini pursuant to this Article II, together with interest accrued thereon,
shall be repaid to Rawhide on the earlier of the Escrow Closing Date, the date
upon which Illini or its unit holders receive alternate financing in the event
that the Illini Offering does not succeed, or March 1, 2008. In the event that
Rawhide subscribes for units and thereafter the Illini Offering fails, Illini
shall not be required to return the down payment to Rawhide in cash along with
other subscribers, but shall instead execute a promissory note providing that
amount shall accrue interest from that date at the Applicable Federal Rate for
short term credit and containing other customary terms and conditions. The
amounts due under that promissory note shall be repaid to Rawhide on the
earlier of the date upon which Illini or its unit holders receive alternate
financing or March 1, 2008.

 

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ARTICLE III

Capitalization

 

3.1          Illini Offering. As soon as reasonably
possible, Illini agrees, at its sole cost and expense, to initiate the Illini
Offering wherein they will make an offering of equity pursuant wherein Illini
shall offer a maximum of 36,000,000 units at a price of $2.50 each, and
thereafter, Illini agrees to use commercially reasonable efforts to obtain
subscriptions for units with a purchase price of at least $35,000,000. Provided,
however, that unless and until Rawhide’s right to subscribe for units in Illini
is terminated as hereinafter provided in Section 5.2 below, the parties agree
that Illini will not accept subscriptions for more than 49% of the total units
of Illini on a Fully Diluted Basis without first obtaining prior written
consent from Rawhide. The Parties acknowledge that the Illini Offering is
currently expected to be an offering registered with the Securities and
Exchange Commission (“SEC”). However, if for any reason, the Illini Offering is
instead conducted as a private placement, Rawhide’s right to subscribe for
units as described in this Article III shall survive, unless and until Rawhide’s
right to subscribe for units in Illini is terminated as hereinafter provided in
Section 5.2 below.

 

3.2          Rawhide Offering. As soon as is reasonably
possible, and in all events on or before March 1, 2007, Rawhide shall initiate,
at its sole cost and expense, the Rawhide Offering pursuant to which Rawhide
shall make a commercially reasonable effort to obtain sufficient subscriptions
to fund its capital investment in Illini as set forth in Section 3.3 below. It
is agreed that although the Rawhide Offering shall be designed to raise an
aggregate amount of approximately $250,000,000 for investment in Illini and two
other projects, it shall nevertheless be structured so as to allow the Rawhide
Offering to be closed in phases so as to permit Rawhide’s investment in Illini
once Rawhide has received subscriptions for a minimum of $200,000,000 if Illini
is either the first or the second project ready for construction.

 

3.3          Rawhide Capital Investment in Illini. Subject
to, and in accordance with, the terms and conditions of the Illini Offering and
effectiveness of the registration statement on Form SB-2, or in the event
Illini conducts a private placement, upon delivery to Rawhide of a private
placement memorandum and Rawhide’s representation that it is an accredited
investor, Rawhide agrees to then subscribe for a minimum of fifty-one percent
(51%) of the total units which are anticipated to be outstanding in Illini at
the end of the Illini Offering, in order to, along with debt financing, reach
the Escrow Closing Date (the “Initial Subscription”). In addition, provided
that Rawhide has subscribed for units in the Illini Offering pursuant to this
Agreement Rawhide agrees that on the later of 90 days following the
effectiveness of the registration statement on Form SB-2 or August 15, 2007, it
will subscribe for any units which remain unsold out of the total units in the
Illini Offering which are anticipated, along with debt financing, to be needed
to reach the Escrow Closing Date. This subscription shall also be subject to,
and in accordance with, the terms and conditions of the Illini Offering. Notwithstanding
anything in this Agreement to the contrary, Illini agrees that, provided
Rawhide makes the Initial Subscription as described in this section 3.3, then
at the closing of the Illini Offering, Rawhide shall own not less than 51% of
the total units of Illini on a Fully Diluted Basis and the subscription of
Rawhide shall be adjusted by the parties if necessary to reach that percentage.

 

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3.4          Payment to
Seed Capital Investors. On the Escrow Closing Date, Illini shall
deliver the following to the Seed Capital Investors from the proceeds of the Illini
Offering:

 

(A) a cash payment in an amount equal to
$4.00 per unit (for a total payment of $5,660,000 in the aggregate) for each
seed capital unit owned in Illini and set forth on Exhibit A; and

 

(B) at Illini’s option any one of the following:

 

(i) a total of 2,465,500 units in Illini to
be distributed among the Seed Capital Investors in accordance with their
percentage of ownership of seed capital units in Illini as set forth on Exhibit
A, or otherwise as determined by the Illini board of directors (provided,
however, that the warrants outstanding as of the Effective Date to purchase
807,500 Illini units at an exercise price of $1.00 per unit shall be
extinguished), or

 

 (ii) a
total of 1,981,000 units in Illini to be distributed among the Seed Capital
Investors in accordance with their percentage of ownership of seed capital
units in Illini as set forth on Exhibit A, or otherwise as determined by the
Illini board of directors, and the warrants outstanding as of the Effective
Date to purchase 807,500 Illini units at an exercise price of $1.00 per unit
shall not be extinguished;  or

 

(iii) a combination of options (i) and (ii)
above with the intent of economically balancing the value received whereby
Illini will receive 1,981,000 units in Illini to be distributed among the Seed
Capital Investors in accordance with their percentage of ownership of seed
capital units in Illini as set forth on Exhibit A, or otherwise as determined
by the Illini board of directors, and then choose to extinguish some portion of
the warrants for 807,500 units and, in exchange, receive units equal to the
number extinguished multiplied by $1.50 and divided by $2.50. In that event,
the remaining number of warrants shall not be extinguished.

 

(C) at Illini’s option any one of the following:

 

(i) an additional number of units in Illini
to be calculated on the Escrow Closing Date by taking the total number of any
additional warrants, if any, that may have been issued to Illini’s directors
pursuant to and in accordance with the terms of the line of credit agreement
with such directors in existence prior to the date of this Agreement,
multiplied by $1.50 and divided by $2.50 (provided, however, that the
additional warrants calculated on the Escrow Closing Date shall be
extinguished), or

 

(ii) the additional warrants calculated on
the Escrow Closing Date, if any, shall not be extinguished; or

 

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(iii) a combination of options (i) and (ii)
above with the intent of economically balancing the value received whereby
Illini will choose to extinguish some portion of the additional warrants
calculated on the Escrow Closing Date, if any, and, in exchange, receive units
equal to the number extinguished multiplied by $1.50 and divided by $2.50. In
that event, the remaining number of additional warrants, if any, shall not be
extinguished.

 

ARTICLE IV

Governance and Operating Agreement

 

4.1          Amendments
to the Existing Articles of Organization and Operating Agreement of Illini.
As soon as practical after the Effective Date and prior to the Illini Offering,
Illini shall cause its Articles of Organization and/or Operating Agreement (as
may be appropriate in the circumstances) to be amended and, so long thereafter
as this Agreement shall remain in effect, and thereafter in the event of
termination or expiration of this Agreement, Rawhide shall vote its units in
conformity with, the following:

 

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(A)          Composition
of Board of Directors. Between the Effective Date and the date upon which
the Illini operating agreement is next amended, the Board of Directors will be
composed of the current initial directors and three (3) advisory directors who
shall be appointed by Rawhide. Beginning upon the date upon which the Illini
operating agreement is next amended, the directors appointed by Rawhide shall
become actual directors with all of the rights of the other Illini directors
and any quorum required for the Illini board of directors to thereafter take
action shall require the presence of at least one director appointed by
Rawhide. Provided, however, that if Illini gives the Rawhide appointed
directors notice of two consecutive director meetings as provided in the Illini
operating agreement, and at least one Rawhide appointed director does not
attend either meeting, personally or telephonically, then thereafter no Rawhide
appointed director shall necessarily be required for purposes of a quorum. Notwithstanding
the foregoing, the Rawhide appointed directors shall continue to be counted
toward the minimum quorum requirement. Following the Escrow Closing Date, the
Board will be composed of a total of nine (9) directors, four (4) of whom will
be appointed by the initial directors of Illini to represent the Seed Capital
Investors (the “Illini Appointed Directors”), and five (5) of whom will be
appointed by Rawhide (the “Rawhide Appointed Directors”). Once appointed, a
director may only be removed “for cause,” and an individual who has previously
been removed for cause shall not at any time thereafter be eligible to serve as
a director of Illini. The Illini Appointed Directors shall serve until the
first special or annual meeting of the members following the date on which
substantial operations of the Illini ethanol plant commence. After the
expiration of the initial terms of the Illini Appointed Directors, four (4)
directors shall be elected by the members for staggered terms of three (3)
years at the first special or annual meeting; provided however, that Rawhide
shall not be entitled to vote for the election of any directors that the
members are entitled to elect. The five (5) Rawhide Appointed Directors shall
not be elected by the members and shall continue to be appointed by and serve
at the pleasure of Rawhide.

 

Additionally, the Illini directors, as elected by the members, shall
annually appoint a member, from among themselves, to the board of directors of
Rawhide. Ernest Moody shall be the first director so appointed. If Ernest Moody
resigns, the directors of Illini, as elected by the members, shall then appoint
a successor. Once appointed to the Rawhide board of directors, that director
may  be removed “for cause,” and an
individual who has previously been removed for cause shall not at any time
thereafter be eligible to serve as a director of Rawhide.

 

(B)          Anti-Dilution.
As of the Effective Date of this Agreement and except to the extent the same is
required in connection with an initial public offering or as required pursuant
to and in accordance with the terms of the line of credit agreement with the
Illini directors in existence prior to the date of this Agreement, Illini shall
not be authorized to issue any rights, warrants or options of any kind to
purchase or acquire any units of Illini or any other securities of any type having
a similar effect; Illini shall not be authorized to grant any unit bonuses; no
units shall be issued for a price that is less than $2.50 per unit.

 

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(C)          Required
Tax Distributions. Except as restricted by applicable loan covenants or
restrictions agreed to by Illini in connection with any loan, credit or other
financing, the Directors shall make reasonable efforts to provide for cash
distributions each year in amounts which are sufficient to permit the members
to make timely payment of the pro-rata share of the income tax attributable to
income and profit of Illini for such year.

 

(D)          Sale
of Control.

 

(i)            If
at any time one or more member(s) (the “Selling Group Members”) holding the
majority of voting units of Illini desires to sell or otherwise transfer fifty
percent (50%) or more of the voting units which they own in Illini to an
Unrelated Third Party (a “Proposed Transferee”), said member(s) shall require
the Proposed Transferee to provide a bona fide written offer that specifies a
price payable in cash, shares, ownership interests or other consideration for
the units and for specific terms and conditions of such transaction (a “Purchase
Offer”), the Selling Group of Member(s) shall not sell any units to such
Proposed Transferee unless the remaining members are first given the right to
participate in such sale on a pro rata basis (based on the relative ownership
interests held by each member) and at the same price per unit and otherwise
upon the same terms and conditions as are applicable to all of the Selling
Group Member(s).

 

(ii)           In
such event, each member wishing to participate shall notify the President of
Illini in writing of such intention within thirty (30) days of the Selling
Member(s)’ receipt of the Purchase Offer.

 

(iii)          The
Selling Member(s) and each participating Member shall sell to the Proposed
Transferee all, or at the option of the Proposed Transferee, any part (however,
if less that all, then such sale must be pro-rata among Selling Members and
participating Member(s)), of the ownership interests proposed to be sold by
them at not less than the price and upon other terms and conditions, if any,
not more favorable to the Proposed Transferee than those in the Purchase Offer.

 

(iv)          If
any units are sold pursuant to this Section 4.1(D) to any purchaser who is not
a party to this Agreement, such purchaser shall execute a counterpart of this
Agreement and Illini’s Operating Agreement as an express condition precedent to
the purchase of such units.

 

(E)           Right to Compel
Sale.

 

(i)            If
at any time a proposal for a sale of all or substantially all of the voting
units in Illini to, or a merger or consolidation of Illini with or into an
Unrelated Third Party for a specified price per unit payable in cash, shares,
ownership interests or any other consideration and on specified terms and
conditions (a “Sale Proposal”)  shall  have been approved by the requisite
number of

 

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members required to approve the Sale Proposal under the Articles of
Organization and Operating Agreement of Illini and any applicable law, then the
members who so approved the Sale Proposal (the “Approving Members”)  may  require all of the remaining
members (the “Remaining Members”) to sell all of the units held by them to the
party or parties whose Sale Proposal was accepted as hereinabove provided, for
the same  pro-rata consideration and
otherwise upon the same terms and conditions set forth in the Sale Proposal,
provided only that the price per unit and the terms and conditions applicable
to the remaining members are no less favorable than the per unit price and the
terms and conditions which apply to the Approving Members (a “Compelled Sale”).

 

(ii)           Illini, if so instructed in writing
by the Approving Members, shall send written notice (the “Compelled Sale
Notice”) of the exercise of the rights of the Approving Members to each of the
Remaining Members setting forth the consideration to be paid pursuant to the
Sale Proposal and the other terms and conditions of the transaction. In such
event, each Remaining Member, and, if applicable, Illini, upon receipt of the
Compelled Sale Notice, shall be obligated to (i) vote their units in favor of
such Sale Proposal at any meeting of members of Illini called to vote on or
approve such Sale Proposal, (ii) sell all of their units to such Unrelated
Third Party at the price and upon the terms and conditions set forth in the
Sale Proposal, and (iii) otherwise take all action necessary in the reasonable
opinion of the purchaser’s legal counsel to consummate the sale, including,
without limitation, providing access to documents and records of Illini,
entering into an agreement reflecting the terms of the Sale Proposal,
surrendering ownership certificates, giving any customary and reasonable
representations and warranties to the effect that such member has good title to
their units, that said member is duly authorized to transfer such unit to the
purchaser and that said units are, or will when delivered be free from all
taxes, liens or encumbrances, and executing and delivering any certificates or
other documents, reasonably requested by the Approving Members and their
counsel, to cause Illini and the Approving Members to consummate such Compelled
Sale. Any such Compelled Sale Notice may be rescinded by the Approving Members
by delivering written notice thereof to all of the Remaining Members.

 

(iii)          The obligations of
the members pursuant to this Section 4.1(E) are subject to the satisfaction of
the condition that, in the event that the members are required to provide any
representations, warranties or indemnities in connection with the Compelled
Sale (other than representations, warranties and indemnities concerning each
member’s valid ownership of its ownership interests, free of all liens and
encumbrances, and each member’s authority to enter into and consummate the
Compelled Sale), then each member shall not be liable for more than its pro
rata share (based upon the consideration received) of any liability for misrepresentation,
breach of warranty or indemnity and such liability shall not exceed the total
purchase price received by such member for its ownership interests and such
liability shall be satisfied solely out of any funds escrowed for such purpose.

 

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(iv)          In
the event of such a sale, all members shall bear their pro rata share (based
upon the amount of consideration received) of any costs incurred in connection
with the sale of units to the extent such costs are reasonably and necessarily
incurred for the benefit of all holders of all units and are not otherwise paid
by Illini or the purchaser. Costs incurred by any member on its own behalf will
not be considered costs of the Compelled Sale hereunder.

 

(F)           Waiver of
Dissenter’s Rights Except in Limited Circumstances. Except as otherwise
provided herein, each member shall disclaim, waive and agree, to the fullest
extent permitted by law, not to assert dissenters’ or similar rights. If at any
time the sale of all or substantially all of the assets of the Company to or
the merger or consolidation of the Company with or into a third party who/which
is not an Unrelated Third Party, is approved by the members as required by the
organizational documents of the Company and applicable law (a “Sale Proposal”),
then in that event and notwithstanding any other provisions of the Articles of
Organization and/or Operating Agreement of the Company to the contrary, any
member, excluding only members who have affirmatively voted in favor of such
Sale Proposal if a vote of the membership is required, shall be entitled to
dissent from such Sale Proposal and demand and receive payment of the fair
market value of their units without discount of any kind for minority interest
or lack of control.

 

(G)          Right to Participate in Rawhide Public
Offering or Private Sale of Majority Interest. In the event that
Rawhide or any direct or indirect owner or affiliate of Rawhide proposes to
offer its equity securities to the public, or in the event that Rawhide or any
direct or indirect owner or affiliate of Rawhide proposes to offer to the
public equity securities of another entity which is directly or indirectly
engaged in the production of ethanol, or in the event that one or more
member(s) holding the majority of voting units of Rawhide desires to sell or
otherwise transfer fifty percent (50%) or more of the voting units which they
own in Rawhide to an Unrelated Third Party in a private sale (“Liquidity Event”),
Rawhide agrees to include, or cause to be included, in such offering or private
sale, Illini or the outstanding equity securities (including derivatives) of
Illini in a manner which would permit the holders of the outstanding equity
securities of Illini, at their option, to participate in such offering or
private sale on a basis which would provide such holders the right to sell,
exchange or otherwise transfer or liquidate their interest in Illini on a
pro-rata or other equitable basis with other participants in such offering or
sale. In the event that the offering includes equity securities offered on
behalf of the issuer to provide funding for the operation or expansion of the
issuer’s business and equity securities offered by or on behalf of selling
equity holders, the obligation of the issuer to include equity securities held
by the holders of outstanding equity securities of Illini in such offering
shall be subject to the good faith judgment of the managing underwriter for
such offering provided that such holders are not treated differently, on a pro
rata or other equitable basis, from other selling equity holders in that
regard. Additionally, if Rawhide causes such Liquidity Event to occur, Rawhide
agrees to take all steps necessary immediately prior to the effective date of
the merger or consolidation to permit the

 

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acceleration of the exercise date of any outstanding warrants held by
members so that a member holding such a warrant may immediately exercise such
warrant.

 

(H)          Membership Voting.
As to any matter to which the members are entitled to vote, each member shall
have the right to one (1) vote for each unit registered in the name of such
member as shown in the unit ledger.

 

(I)            No Super
Majority Requirements. Actions requiring member consent shall be approved
with the affirmative vote of the members holding a majority of the voting units.
This shall include, but is not limited to, mergers and consolidations,
dispositions of all or substantially all of the assets of Illini, amendments to
the Operating Agreement, and dissolution of Illini. Notwithstanding the
foregoing provisions of this section 4.1(I), no amendment to Illini’s Operating
Agreement shall reduce any member’s rights provided in this Article IV unless
at least three-fourths of the units adversely affected consent.

 

ARTICLE V

Terms and Termination

 

5.1.         Term. This Agreement shall commence as of
the Effective Date and shall remain in effect thereafter unless and until the
same is provided in Section 5.2 below.

 

5.2.         Termination. This Agreement shall be
terminated as of the first to occur of the following events:

 

(A)          The written agreement
of the Parties hereto; or

 

(B)          Immediately in the
event Rawhide fails to make an Initial Credit Advance to Illini in the amount
of $500,000 upon the Effective Date; or

 

(C)          Immediately in the
event that Rawhide fails to make Initial Credit Advances to Illini in an
aggregate amount of $3,600,000 by May 15, 2007; or

 

(D)          Immediately in the
event Rawhide fails to make the Initial Subscription; or

 

(E)           Immediately in the
event Rawhide shall fail to pay, when due, any amounts required to be paid by
Rawhide to Illini in relation to the Illini Offering, or any subscription
agreement executed by the parties; or

 

(F)           Immediately, in the
event Rawhide enters into an assignment of all or substantially all of its
assets for the benefit of creditors; there is filed by or against Rawhide a
petition to have Rawhide declared bankrupt; there is filed by or against
Rawhide a petition for reorganization or other similar arrangement under any
bankruptcy

 

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or insolvency law or statute; or a trustee or receiver is appointed to
take possession of all or substantially all of Rawhide’s assets; or

 

(G)          Immediately, in the
event the existing Seed Capital Investors fail to ratify and approve this
Agreement and the amendment to the Articles of Organization and Operating
Agreement required herein on or before April 1, 2007.

 

5.3.         Effect of Termination. In the event this
Agreement is terminated, Rawhide shall have no further rights or obligations of
any kind to provide further funds to Illini including, without limitation, any
further right or obligation to provide funding pursuant to either Article II or
III hereof. In such event, this Agreement shall terminate and be of no further
force or effect whatsoever as between the parties hereto except that if this
Agreement is terminated, Rawhide shall be entitled to be repaid any funds
advanced by Rawhide to Illini pursuant to Article II above. For clarification
purposes, it is agreed that if this Agreement is terminated, Illini shall have
the absolute right to sell in whole or in part and/or to seek funding for its
project to or from any other source Illini may determine, in its sole
discretion, to be appropriate; and Rawhide expressly agrees that it will
execute any documents which Illini may reasonably request to acknowledge the
fact that its interest in the project has terminated and not take any action
whatsoever, specifically including, without limitation, any attempt to assign
its interest in this Agreement to any third party that is intended to interfere
with or impede any such effort by Illini.

 

ARTICLE VI

Conditions

 

6.1.         Conditions to Illini’s
Obligations. Illini shall be under no obligation
to accept Rawhide’s Initial Subscription as contemplated by this Agreement
unless on or prior to the subscription date, Rawhide has performed all of its
agreements and undertakings hereunder on or prior to that time, and the
following additional conditions have been fulfilled:

 

(A)          Rawhide is duly authorized to
subscribe to and purchase such units;

 

(B)          There are no actions, suits, or,
proceedings pending or, to the knowledge of Rawhide, threatened against
Rawhide, its properties or its assets in any court or before any governmental
or administrative agency that could have a material or adverse effect on the
Ethanol Plant or on the financial condition of Illini, and Rawhide is not in
default under any order, judgment or decree of any court or governmental or
administrative agency.

 

(C)          Rawhide has provided
to Illini a full disclosure as to the identity of all persons having a direct
or indirect record or beneficial interest in Rawhide, whether by the holding of
securities, by agreement, by the attributes of corporate or entity governance
or otherwise.

 

12

 

(D)          A written
representation is received by Illini from Rawhide that neither this Agreement
nor the transactions, investments and transfers of funds contemplated by this
Agreement will violate, or cause any person or entity having a direct or
indirect interest in this Agreement, in such transactions, investments or
transfers or in any party to this Agreement to violate any laws, rules or regulations
of the United States or the State of Illinois, including, without limitation,
the U.S. Patriot Act, applicable banking laws and regulations and other laws
and regulations relating to commerce, investments and securities.

 

(E)           A written
representation is received by Illini from Rawhide that is in good standing with
the state of its organization and that Rawhide is not an “Investment Company”
as defined by the Investment Company Act of 1940.

 

ARTICLE VII

Other Terms

 

7.1          Choice of Law. The Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois and the
exclusive venue shall be Sangamon County Circuit Court or the U.S. District
Court for the Central District of Illinois, Springfield Division.

 

7.2          Time of the
Essence. Time is of the essence of this Agreement, and each party
agrees to perform any acts herein required of such party and to execute and
deliver any documents required to carry out the provisions of this Agreement,
promptly within the time periods herein described.

 

7.3          Assignment.
Neither this Agreement nor any of the rights, privilege or obligations afforded
to or required by any of the parties hereto shall be assignable in whole or in
part without the prior written consent of all of the parties hereto, which
consent can be granted or withheld by a party in its sole discretion.

 

7.4          Entire
Agreement. This Agreement, including the other agreements and
documents referred to herein, contains the entire agreement among the parties
hereto with respect to the subject matters hereof and shall override and
replace any and all prior agreements or understandings (including, but not
limited to, the Amended and Restated Capitalization Agreement executed on
January 9, 2007), whether written or oral, and all negotiations leading up to
the execution of this Agreement.

 

7.5          Amendment.
This Agreement shall not be amended or modified except by written amendment
signed by each of the parties hereto.

 

7.6          Notices.
All notices, requests, demands or other communications hereunder shall be in
writing and shall be deemed to have been duly given upon personal delivery to
the other parties, or deposited in the United States mail, to the addressees at

 

13

 

the addresses herein designated or such other address as may be
designated in writing by notice given in the manner provided herein:

 

	
   

  	
  If to Illini:

  	
  Illini Bio-Energy, LLC

  
	
   

  	
   

  	
  3600 Wabash Avenue

  
	
   

  	
   

  	
  Suite C

  
	
   

  	
   

  	
  Springfield, Illinois 62711

  
	
   

  	
   

  	
  Attn: Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Rawhide:

  	
  Rawhide Management, LLC

  
	
   

  	
   

  	
  3500 S. Phillips Ave, Suite 241

  
	
   

  	
   

  	
  Sioux Falls, South Dakota 57105

  
	
   

  	
   

  	
  Attn: President

  

 

7.7          Waiver.
The waiver by any party hereto of any failure to perform hereunder, whether
intentional or not, must be in writing and signed by the waiving party and
shall not be deemed to extend to any prior or subsequent breach hereunder and
shall not affect in any way any rights arising by virtue of any such prior or
subsequent occurrence.

 

7.8          Captions.
The division of this Agreement into recitals, paragraphs, subparagraphs and
exhibits is for convenience of reference only and shall not affect the
interpretation or construction of this Agreement.

 

7.9          Severability.
Except to the extent the same would materially deprive any party to this
Agreement of the benefit of their bargain, in the event that one or more of the
terms, provisions, or covenants, or any portion of any of them, contained in
this Agreement are unenforceable or are declared invalid for any reason
whatsoever, such unenforceability or invalidity shall not affect the
enforceability or validity of the remaining terms, provisions or covenants, or
portions of any of them, contained in this Agreement, and except to the extent
the same would materially deprive any party to this Agreement of the benefit of
their bargain, each such unenforceable or invalid portion thereof shall be
severable from the remainder of this Agreement and the remainder of this
Agreement shall be interpreted as if such unenforceable or invalid term,
provision or covenant, or portion thereof, had not been included as a part
thereof.

 

7.10        Injunctive
Relief. The parties hereto acknowledge that breach of any of the
terms or provisions of this Agreement could cause irreparable injury which by
its nature would be continuing and substantial, but not capable of precise
measurement, and for which no adequate remedy at law exists. Accordingly, in
the event of an actual or threatened breach of any of the terms or provisions
of this Agreement, the parties hereto agree that the non-breaching parties
shall be entitled to equitable relief without the necessity of posting bond,
including without limitation, entry of preliminary, temporary and permanent
injunctions and orders of specific performance. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other legal or

 

14

 

equitable remedy or remedies which such non-breaching parties or any of
them may have, including the recovery of damages.

 

7.11        Incorporation
by Reference. The recitals contained at the beginning of this
Agreement and all exhibits which are referred to herein and attached hereto are
incorporated herein and expressly made a part hereof by this reference with the
same force and effect as if the same were set forth in the body of this
Agreement in their entirety.

 

7.12        Name Rights.
Rawhide agrees it shall not take any action to prevent the
assignment by Illini of the name “Illini Bio-Energy”, or any related logo or
trademark, to any person or entity, regardless of whether or not such person or
entity is an affiliate or member of Illini.

 

	
   

  	
  RAWHIDE:

  
	
   

  	
   

  
	
   

  	
  Rawhide Management, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
        John T. Porter

  
	
   

  	
  2/15/07

  
	
   

  	
   

  
	
   

  	
  ILLINI:

  
	
   

  	
   

  
	
   

  	
  Illini Bio-Energy, LLC

  

 

Signing of this document has been approved by the Executive Committee
of Illini Bio-Energy this 14th day of February, 2007 and is subject
to further approval of the Illini Bio-Energy Board of Directors and final
approval and adoption by the seedstock shareholders of Illini Bio-Energy.

 

Ermest D. Moody

Chairman

2/14/07

 

15Exhibit 10.1

EMPLOYMENT AGREEMENT

This
Employment Agreement (“Employment Agreement”) is made as of April 9, 2007, to
be effective as of April 9, 2007 (the “Effective Date”), by and among CLST-NAC,
Ltd., formerly known as CellStar, Ltd., a Texas limited partnership (collectively,
the “Company”) and Sherrian Gunn (the “Employee”).

WHEREAS, on March 30, 2007, the Company completed a
transaction (the “Transaction”) that resulted in the sale of substantially all
of the assets of the Company and will result in a subsequent liquidation of the
remaining assets of the Company and its affiliates;

WHEREAS,  the Company
desires to retain the services of Employee following the closing of the
Transaction;

NOW, THEREFORE, in consideration of the mutual promises and
agreements made in this Employment Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Employee and the Company hereby agree as follows:

1.                                       Employment.  The Parties acknowledge that the Company’s employment
of Employee constitutes an “at-will” employment relationship.  Upon the Effective Date, the Company will
provide Employee the opportunity to remain employed by the Company, subject to
the terms of this Employment Agreement, and pay Employee a signing bonus (“Signing
Bonus”) referenced in paragraph 2 below, conditioned on Employee’s execution of
a release agreement in the form attached as Exhibit A (the “Release”).  Employee will be required to accept a title of
officer if one is offered to her, and shall perform such duties and provide
such services as may be reasonably requested by the Company, on the terms and
conditions set forth herein.  The Company
shall name Employee as a beneficiary under all Director and Officers’ liability
policies in existence at the Effective Date. 
The term of Employee’s continued employment pursuant to this Employment
Agreement shall be twelve (12) months from the Effective Date (the “Term”).  If the Company wishes to extend the Term, the
Company shall provide Employee thirty (30) days notice prior to the end of the
Term, but both Parties must agree to extend the Term by mutual written
agreement (“Extended Term”).  For
purposes of the Completion Bonus, as defined in paragraph 3 hereto, the Company
may only request that Employee agree to one extension of the Term prior to
payment of the Completion Bonus.  Employee
will be paid $13,390.63 per month (“Wages”), in accordance with the Company’s
established payroll practice, through the Term, or Extended Term, and will be
provided paid time off (“PTO”), vacation and holidays normally available to
employees of the Company consistent with the Company’s established policies.  The Company shall have no obligation to
provide Employee with medical benefits. 
Notwithstanding the foregoing, in lieu of any health, dental or vision
insurance, the Company agrees to provide Employee with a benefits allowance
(the “Benefits Allowance”) in the amount of $1,500 per month during the Term of
this Agreement.  Such Benefits Allowance
shall be paid monthly on the first of every month.  Upon the termination of this Agreement
without cause by the Company, all payments of the Benefits

Allowance
shall cease and Consultant shall receive a lump sum equivalent to six (6)
months of the Benefits Allowance.

2.                                       Signing Bonus.  The Company will pay Employee, conditioned on
Employee’s execution of this Employment Agreement and Release referenced in
paragraph 1 of this Employment Agreement, a Signing Bonus in the amount of (a)
a lump-sum amount of $64,275, minus required withholdings and deductions, which
is the amount that would be payable to Employee by the Company as Severance Pay
in accordance with the Company’s customary practice in the event Employee’s
employment with the Company had been terminated as a result of the Transaction;
and (b) the amount of PTO the Employee had accrued for the calendar year 2006,
minus required withholdings and deductions. 
The Signing Bonus shall be paid in lieu of any severance obligation that
the Company may have following the termination of Employee’s Term or Extended
Term for any reason, except that Employee shall be entitled to any accrued but
unused PTO not paid pursuant to this Employment Agreement.  The Signing Bonus shall be paid to Employee
within fifteen (15) days following the Employee’s execution of the Release.

3.                                       Completion
Bonus.  Upon completion of the Term,
or any Extended Term, the Company will pay to Employee a bonus in an amount
equal to $257,100, which amount is twelve (12) times the monthly Wages of
Employee pursuant to this Employment Agreement, plus an additional amount
equivalent to two times the amount that is 30% of Employee’s annual salary pursuant
to this Agreement  (the “Completion Bonus”),
payable to Employee in a lump sum amount, minus required withholdings and
deductions, conditioned on Employee’s execution of a supplemental release
agreement in the form attached as Exhibit B (“Supplemental Release”).  If Employee declines to extend the Term and
proper notice has been given by the Company, Employee will forfeit the
Completion Bonus.  Employee is only
required to complete one Extended Term in order to receive the Completion
Bonus.  The Completion Bonus shall be
paid to Employee within fifteen (15) days following the Employee’s execution of
the Supplemental Release

4.                                       Termination.  The Term and any Extended Term may be
accelerated and this Employment Agreement and Employee’s employment terminated
by the Company for Cause, or without cause. 
At the end of the Term, or any Extended Term, or sooner if accelerated
by the Company, or voluntarily terminated by Employee prior to expiration of
the stated Term, or Extended Term, Employee’s employment with the Company and
this Employment Agreement (except those post termination obligations set forth
in paragraphs 7 and 8 of this Employment Agreement) will end, which shall be
referred to as the “Termination Date.”

Employee
may terminate this Employment Agreement upon sixty (60) days written notice to
the Company.  If Employee terminates this
Employment Agreement prior to the expiration of the Term, or any Extended Term,
Employee will no longer be eligible to receive the Completion Bonus described
in paragraph 3 hereof, will no longer receive Premium Reimbursements referred
to in paragraph 1 hereof beginning with the first day of the month following
the date of Termination Date, and will not be entitled to any compensation
other than his or her unpaid Wages earned through the Termination Date and
accrued, unused PTO consistent with Company policy.

 2
 

The
Company may accelerate and terminate this Employment Agreement and Employee’s
termination upon thirty (30) days written notice to the Employee during the
Term or Extended Term.  In the event that
this Employment Agreement and Employee’s employment is terminated by the Company
prior to the end of the Term, or any Extended Term, the Company shall pay
Employee for any unpaid Wages earned through the Termination Date.  In addition, if the Company terminates this Employment
Agreement “without Cause” at any time prior to the end of the original Term or
the Extended Term, the Company shall pay Employee, in a lump-sum, an amount
equal to the remaining Wages that Employee would have earned had Employee
completed the original Term, less required withholdings and deductions, plus
the Completion Bonus, conditioned on Employee’s execution of the Supplemental
Release.  Such payments shall be made to
Employee within fifteen (15) days following Employee’s execution of the
Supplemental Release.

5.                                       Change in
Control.

a.                                       Definition of
Change in Control.  For purposes of this
Agreement, a “Change in Control” shall mean the following:  the members of the board of directors (the “Board”)
of CLST Holdings, Inc., formerly known as CellStar Corporation (“Parent”) on
the date hereof (the “Incumbent Directors”) cease to be a majority of the
members of that Board; provided that any individual becoming a director
subsequent to the date hereof whose election or nomination for election by the
Parent’s stockholders was approved by a majority of the Incumbent Directors
shall be considered an Incumbent Director.

b.                                      Notwithstanding
the provisions of Paragraph 4 (Termination) hereof, during the ninety (90) day
period after a Change in Control, Employee may terminate her employment
hereunder for a Change in Control. In such event and in lieu of any payments
that Employee would be otherwise entitled to receive pursuant to this
Agreement, Employer shall pay to Employee as severance pay and as liquidated
damages (because actual damages are difficult to ascertain), in a lump sum, in
cash, within fifteen (15) days after termination and Employee’s execution of
the Supplemental Release, an amount which is equal to (1) the remaining Wages
that Employee would have earned had Employee completed the original Term or
Extended Term, (2) the Completion Bonus, and (3) six (6) months of the Benefits
Allowance, less required withholdings and deductions; provided, however,
that if such payment, either alone or together with other payments or benefits,
either cash or non-cash, that Employee has the right to receive from the
Company, including, but not limited to, accelerated vesting or payment of any
deferred compensation, options, stock appreciation rights or any benefits
payable to Employee under any plan for the benefit of employees, would
constitute an “excess parachute payment” (as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”)), then such payment or other benefit shall be reduced
to the largest amount that will not result in receipt by Employee of a
parachute payment. The determination of the amount of the payment described in
this Section shall be made by Parent’s independent auditors.

c.                                       In the event
Employee is required to take steps to enforce the provisions of this Paragraph
5 against the Company, Parent, or any of their affiliates, Employee shall
be entitled to recover from the Company for all reasonable costs and expenses
(including without limitation, attorneys’ fees) incurred by Employee as a
remedy in such action; and such costs and expenses shall be promptly paid to
Employee.

 3
 

6.                                       Cause.  For purposes hereof, “Cause” shall mean
termination because of the Employee’s (i) continued unsatisfactory performance
of or refusal to perform the duties that are assigned to her during the Term,
(ii) engaging in unethical or illegal behavior, (iii) failure to follow
established policies of the Company, (iv) conviction of or entry of a plea of
guilty or nolo contendere to any crime involving
moral turpitude or entry of an order duly issued by any federal or state
regulatory agency having jurisdiction in the matter permanently prohibiting
Employee from performing his or her duties under this Employment Agreement, or
(v) any other material breach of any provision of this Employment Agreement.  In the event Employee’s employment is
terminated for Cause, Employee will no longer be eligible to receive the
Completion Bonus, and will only be entitled to receive the unpaid Wages earned
through the Termination date.

7.                                       Confidentiality
Agreement.  Employee
acknowledges and agrees that she is subject to that certain Non-Competition and
Confidentiality Agreement (the “Confidentiality Agreement”) dated April 9, 2007,
between Employee and the Company, and Employee shall continue to be bound by
the terms and conditions of such Confidentiality Agreement

8.                                       Intellectual
Property and Works Made for Hire.  Employee acknowledges and agrees that she is
subject to that certain Agreement Regarding Inventions (the “IP Agreement”)
dated April 9, 2007, between Employee and the Company, and Employee shall
continue to be bound by the terms and conditions of such IP Agreement.

9.                                       Miscellaneous.

a.                                       CellStar’s
Remedies.  Employee
acknowledges that the restrictions contained in this Employment Agreement are
reasonable and necessary to protect the Company’s legitimate business interest
and that any violation of this Employment Agreement would result in irreparable
harm to the Company for which there is no adequate remedy at law.   Therefore, Employee agrees that, in addition
to any other remedies available, the Company shall be entitled to injunctive
relief, specific performance, and other equitable relief to secure the
enforcement of this Employment Agreement.

b.                                      Successors and
Assigns.  This Employment Agreement
shall bind and inure to the benefit of the parties hereto and their heirs,
successors and assigns.

c.                                       Governing Law.  This Employment Agreement shall be governed
by the laws of the State of Texas, without regard to conflict of laws
principles.   Employee also consents to the personal jurisdiction
of the state and/or federal courts in the State of Texas for any legal action
relating to the Services performed under this Employment Agreement.

d.                                      Entire
Agreement and Amendment.  This
document contains the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior discussions between the parties
with respect to the aforementioned topics. 
 Any failure to enforce any
provision(s) of this Employment Agreement shall not constitute a waiver thereof
or of any other provision hereof.   If any provision of this Employment Agreement
is deemed void

 4
 

as
a matter of law, all remaining provisions will continue in full force and
effect.   This Employment Agreement may not be amended,
nor any obligation waived, except by a writing signed by both parties hereto.

e.                                       Survival of
Confidentiality Obligation.  Notwithstanding any other provision in this Employment
Agreement, Employee’s obligation to hold and keep all Confidential Information
confidential shall survive the expiration or earlier termination of this Employment
Agreement for a period of five (5) years.

 5
 

IN WITNESS WHEREOF, the Parties hereto have
executed this Employment Agreement effective as of the 9th day of April, 2007.

	
  CLST-NAC, LTD.

  	
   

  	
  EMPLOYEE

  	
   

  	
   

  
	
    By:

  	
  National Auto Center, Inc.

  	
   

  	
   

  	
   

  
	
   

  	
  General Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Michael J. Farrell

  	
   

  	
  /s/ 
  Sherrian Gunn

  
	
  Michael J.
  Farrell

  	
   

  	
  Sherrian Gunn

  
	
  Chief Executive
  Officer

  	
   

  	
   

  	
   

  	
   

  
							

 

 6
 

EXHIBIT A

GENERAL
RELEASE AND SEVERANCE AGREEMENT

(“AGREEMENT”)

For
good and valuable consideration, receipt of which is hereby acknowledged, the
parties enter into this General Release and Severance Agreement (“Agreement”)
as follows:

1.                   Parties.  The parties to this Agreement are Sherrian
Gunn, his or her  heirs, spouse,
representatives, successors and assigns (hereinafter referred to collectively
as “Employee”), and CLST-NAC, Ltd., formerly known as CellStar, Ltd., and any
of their predecessors, successors, divisions, subsidiaries, affiliates or
related companies, organizations, joint venture partners, partners, including,
their present and former officers, directors, shareholders, agents,
fiduciaries, employees, attorneys, representatives, successors and assigns
(hereinafter referred to collectively as the “Company”).

2.                   Transaction.  The Company is considering a potential
transaction that would result in a sale of substantially all of the assets of
the Company and a subsequent liquidation of the remaining assets of the Company
and its affiliates (“Transaction”).

3.                   Consideration.  In consideration of Employee’s execution
of the Employment Agreement dated April 9, 2007, between Employee and the
Company, this Agreement and release of claims against the Company as described
in Paragraph 4 below, the Company agrees to retain Employee after the
Transaction as an employee of the Company. 
Employee will continue to receive his or her existing base salary for an
amount of time provided in the Employment Agreement, which shall be referred to
as the “Term.”  In addition, the Company
will pay a Signing Bonus in the amount of (a) a lump-sum amount of $64,275,
minus required withholdings and deductions, which is the amount that would be
payable to Employee by the Company as Severance Pay in accordance with the
Company’s customary practice in the event Employee’s employment with the
Company had been terminated as a result of the Transaction; and (b) the amount
of PTO the Employee had accrued for the calendar year 2006, minus required
withholdings and deductions (the “Signing Bonus”).  Furthermore, in the event Employee elects to
continue his or her health insurance under any group healthcare plan maintained
by Brightpoint, Inc. or its affiliates, the Company will reimburse Employee
during the Term or Extended Term, as such term is defined in the Employment
Agreement, for such premiums paid by Employee (“Premium Reimbursements”) at the
end of the month.

Employee
recognizes and agrees that (i) the payments set forth in this paragraph exceed
the amount to which he/she would otherwise be entitled under applicable Company
policies, (ii) he/she is not entitled to the benefits or payments set
forth in this paragraph, including the Signing Bonus and Premium
Reimbursements, and (iii) will only be eligible for the those benefits and
receive the payments set forth in this paragraph as a condition of signing this
Agreement.  The payments to Employee
pursuant to this paragraph constitute full and final

 7
 

resolution of any
and all potential claims by employee, whether known or unknown, as set forth in
Paragraph 4 below.

In further
consideration of this agreement, Employee will cooperate with the Company in
response to requests for information or assistance by the Company in connection
with any matters relating to or arising out of Employee’s employment with the
Company.  The Company shall reimburse
Employee for his/her reasonable, actual out-of-pocket expenses incurred while
providing such assistance, in accordance with the policies and procedures of
the Company.

4.                   Release
Of Claims.  In consideration of the
Term and/or Extended Term, payments and promises described in Paragraph 3,
Employee, on behalf of himself/herself, his/her heirs, spouse, representatives,
successors and assigns, hereby releases, discharges, and forever holds the
Company harmless from any and all claims, demands, actions, causes of action,
costs, fees, bonuses, commissions, compensation, severance pay, suits and all
liability whatsoever, whether known or unknown, fixed or contingent, liquidated
or unliquidated, civil or criminal, arising or existing on, or at any time
prior to, and through the date Employee signs this Agreement, as described in
paragraph 3 of this Agreement, except as provided in this Agreement.  Such released claims include, without
limitation, claims relating to or arising out of (i) Employee’s employment
and any employment contract with the Company, except for the Employment
Agreement referenced in paragraph 3 of this Agreement, (ii) any claim for
severance or other compensation, except as set forth in this Agreement,
(iii) Employee’s separation from employment with the Company, (iv) the
Company’s policies, and (iii) all claims known or unknown, through the
date of this Agreement, that could be asserted by Employee against the Company,
at law or equity or sounding in contract (express or implied) or tort, or
arising under any federal, state, or local laws of any jurisdiction that
prohibits age, sex, race, national origin, color, disability, religion,
veteran, military status, sexual orientation, or any other form of discrimination,
harassment, or retaliation (including, without limitation, claims under the
Americans with Disabilities Act (“ADA”), Title VII of the Civil Rights Act of
1964, as amended, age discrimination claims under the Age Discrimination in
Employment Act (“ADEA”), the Older Workers Benefit Protection Act, the
Rehabilitation Act, the Family and Medical Leave Act (“FMLA”), the
Sarbanes-Oxley Act, the Employee Polygraph Protection Act, the Uniform Services
Employment and Re-employment Rights Act of 1994, and the Texas Commission on
Human Rights Act and any other federal, state, local or municipal whistleblower
protection, discrimination or anti-retaliation statute or ordinance) or any
other federal, state, local or municipal laws in any jurisdiction, claims
arising under the Employee Retirement Income Security Act (“ERISA”), or any
other statutory, contractual or common law claims.

5.                   No Admission Of Liability This Agreement shall not in any way
be construed as an admission by the Company of any acts of wrongdoing or
violation of any statute, law, or legal right. 
Rather, the Company specifically denies and disclaims that it has any
liability to Employee, but is willing to pay the sum described above at this
time to definitively resolve once and forever this matter and to avoid the
costs, expense, and delay of litigation.

6.                   No
Assignment Of Claims.  Employee
represents that he/she has not transferred or assigned, to any person or
entity, any claim involving the Company, or any portion thereof or interest therein.

 8
 

7.                   Binding
Effect Of Agreement.  This Agreement
shall be binding upon the Company and upon Employee and his/her heirs, spouse,
representatives, successors and assigns.

8.                   Controlling
Law.  This Agreement shall in all
respects be interpreted, enforced, and governed under the laws of the State of
Texas.  The Company and Employee agree
that the language in this Agreement shall, in all cases, be construed as a
whole, according to its fair meaning, and not strictly for, or against, any of
the parties.

9.                   Severability.  Should any provision of this Agreement be
declared or determined to be illegal or invalid by any government agency or
court of competent jurisdiction, the validity of the remaining parts, terms or
provisions of this Agreement shall not be affected and such provisions shall
remain in full force and effect.

10.            Entire
Agreement.  This Agreement sets forth
the entire agreement between the Parties regarding Employee’s release of
claims.  Employee represents and
acknowledges that in executing this Agreement, he/she does not rely, and has
not relied, upon any representation(s) by the Company or its agents except as
expressly contained in this Agreement.

11.            Right To Consult Attorney And Voluntary
Nature Of Agreement.  Employee
acknowledges that he/she has had an opportunity to review all aspects of this
Agreement, has been advised to consult with an attorney if he/she chooses, and
has had the opportunity, if he/she so desires, to consult with an attorney of
his/her own choosing regarding the effect of this Agreement.  Employee further acknowledges that he/she has
been given a period of twenty-one (21) days from April 6, 2007, to review and
consider this Agreement before executing it, and has the right to use as much
or as little of the twenty-one (21) day period as he/she wishes before
executing this Agreement.  Employee may
revoke this Agreement within seven (7) days after signing it, in which event
this Agreement and the obligations herein, including the payments set forth in
paragraph 3 of this Agreement, are null and void.  Revocation is only effective if Employee
delivers a written notice of revocation to the Company, c/o Sherrian Gunn, 601
S. Royal, Coppell, Texas 75019, within seven (7) days after executing the
Agreement.  Employee understands that the
Company’s obligations under this Agreement do not become effective until after
the seven-day revocation period has expired. 
Employee represents and agrees that he/she is voluntarily entering into
this Agreement.

PLEASE
READ CAREFULLY – THIS AGREEMENT INCLUDES A RELEASE OF CLAIMS

[Signature
Page Follows]

 9
 

MY
SIGNATURE BELOW MEANS THAT I HAVE READ THIS RELEASE AND SEVERANCE AGREEMENT AND
AGREE AND CONSENT TO ALL THE TERMS AND CONDITIONS CONTAINED IN THE AGREEMENT.

	
        

  	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:    April
  9, 2007

  	
  /s/ Sherrian Gunn

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STATE OF TEXAS

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY
  OF DALLAS

  	
  §

  	
   

  

 

Before me, a Notary Public, on this day personally
appeared Sherrian Gunn, known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that he/she executed the
same for the purposes and consideration therein expressed.

Given under my
hand and seal this 9th day of April, 2007.

	
  

  	
  [signature of Notary Public]

  	
   

  
	
  (SEAL)

  	
  Notary Public in and for the State of Texas

  

 10
 

 

	
  

  	
  CLST-NAC, LTD.

  	
   

  	
   

  
	
   

  	
   By:

  	
  National Auto Center, Inc.

  	
   

  
	
   

  	
   

  	
  General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:  April
  9, 2007

  	
   By:

  	
  /s/ Michael J. Farrell

  	
    

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Michael J. Farrell

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  STATE
  OF TEXAS

  	
  §

  	
   

  	
   

  
	
   

  	
  §

  	
   

  	
   

  
	
  COUNTY
  OF DALLAS

  	
  §

  	
   

  	
   

  
								

 

Before
me, a Notary Public, on this day personally appeared Michael J. Farrell,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of
National Auto Center, Inc., acting in its capacity as General Partner for
CLST-NAC, Ltd., and that he/she has executed the same on behalf of said entities
for the purposes and consideration therein expressed, and in the capacity
therein stated.

Given under my hand and seal of office this 9th day of
April, 2007,

	
  (SEAL)

  	
  [Signature of Notary Public]

  	
   

  
	
   

  	
  Notary Public in and for the State of Texas

  

 

 11

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