Document:

exv10w14

Exhibit
10.14

     EXECUTION COPY

SECURITIES PURCHASE AGREEMENT

between

ASPIRE OIL SERVICES LIMITED

and

GREENHUNTER ENERGY, INC.

Dated as of October 28, 2008

i

 

Table of Contents

	 	 	 
	 	 	Page
	 
	ARTICLE I. SALE AND PURCHASE OF MEMBERSHIP INTERESTS

	 	- 1 -
	 
	 	 
	ARTICLE II. CLOSING AND PURCHASE PRICE

	 	- 1 -
	2.1 The Closing

	 	- 1 -
	2.2 Consideration

	 	- 2 -
	2.3 Purchase Price

	 	- 2 -
	2.3.1 Stated Consideration

	 	- 2 -
	2.3.2 Working Capital Adjustment

	 	- 2 -
	 
	 	 
	ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER

	 	- 3 -
	3.1 Representations and Warranties of Seller

	 	- 3 -
	3.1.1 Title to Membership Interests

	 	- 4 -
	3.1.2 Authority to Execute, Deliver and Perform this Agreement

	 	- 4 -
	3.1.3 No Violation of Laws

	 	- 4 -
	3.1.4 Organization of Company

	 	- 4 -
	3.1.5 Subsidiaries

	 	- 4 -
	3.1.6 Qualification

	 	- 5 -
	3.1.7 Litigation

	 	- 5 -
	3.1.8 Capitalization

	 	- 5 -
	3.1.9 Consents and Approvals; No Violation

	 	- 5 -
	3.1.10 Financial Statements

	 	- 6 -
	3.1.11 Books and Records

	 	- 6 -
	3.1.12 Accounts Receivable

	 	- 6 -
	3.1.13 Title to Assets

	 	- 7 -
	3.1.14 Inventory

	 	- 8 -
	3.1.15 No Undisclosed Liabilities

	 	- 8 -
	3.1.16 Contracts; No Defaults

	 	- 8 -
	3.1.17 Brokers and Finders

	 	- 9 -
	3.1.18 Insurance

	 	- 10 -
	3.1.19 Compliance with Applicable Laws

	 	- 10 -
	3.1.20 Tax Matters

	 	- 10 -
	3.1.21 Environmental Matters

	 	- 11 -
	3.1.22 Employee Plans

	 	- 14 -
	3.1.23 Employees

	 	- 15 -
	3.1.24 Labor Relations

	 	- 16 -
	3.1.25 Absence of Certain Changes

	 	- 16 -
	3.1.26 Customers and Suppliers

	 	- 17 -
	3.1.27 Discontinued Business

	 	- 17 -
	 
	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER

	 	- 17 -
	4.1 Representations and Warranties of Buyer

	 	- 17 -
	4.1.1 Organization of Buyer

	 	- 17 -

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Table of Contents
(continued)

	 	 	 
	 	 	Page
	 
	4.1.2 Authority to Execute, Deliver and Perform This Agreement

	 	- 18 -
	4.1.3 No Violation of Laws, Agreements; No Liens

	 	- 18 -
	4.1.4 No Governmental Consents

	 	- 18 -
	4.1.5 Brokers and Finders

	 	- 18 -
	4.1.6 No Litigation

	 	- 18 -
	4.2 Available Funds

	 	- 18 -
	4.3 Private Placement

	 	- 19 -
	4.4 Suitability

	 	- 19 -
	4.5 Access to Information

	 	- 19 -
	4.6 Investment Intent

	 	- 19 -
	 
	 	 
	ARTICLE V. CONDUCT PRIOR TO CLOSING

	 	- 20 -
	5.1 Rights of Inspection

	 	- 20 -
	5.2 Cooperation

	 	- 20 -
	5.2.1 Preservation of Business

	 	- 20 -
	5.2.2 Obtaining Consents and Approvals

	 	- 21 -
	5.2.3 Obtaining Insurance Policy

	 	- 21 -
	5.3 Conduct of Business Pending Closing

	 	- 22 -
	5.3.1 Business in the Ordinary Course

	 	- 22 -
	5.3.2 Encumbrance and Maintenance of Assets; Incurring Liabilities

	 	- 22 -
	5.4 No Solicitation

	 	- 22 -
	 
	 	 
	ARTICLE VI. OTHER AGREEMENTS AND COVENANTS

	 	- 23 -
	6.1 Delivery of Property Received after Closing

	 	- 23 -
	6.2 Cooperation on Claims

	 	- 23 -
	6.3 Records Retention

	 	- 23 -
	6.4 Access to Books and Records after Closing; Financial Statements

	 	- 23 -
	 
	 	 
	ARTICLE VII. TAX MATTERS

	 	- 24 -
	7.1 Responsibility for Filing Tax Returns and Paying Taxes

	 	- 24 -
	7.2 Responsibility for Tax Audits and Contests

	 	- 24 -
	7.3 Transfer Taxes

	 	- 24 -
	 
	 	 
	ARTICLE VIII. CONDITIONS TO CLOSING

	 	- 24 -
	8.1 Buyer’s Conditions

	 	- 24 -
	8.2 Seller’s Conditions

	 	- 27 -
	 
	 	 
	ARTICLE IX. INDEMNIFICATION

	 	- 28 -
	9.1 Indemnification by Seller

	 	- 28 -
	9.2 Indemnification by Buyer

	 	- 28 -
	9.3 Third-Party Claims

	 	- 29 -
	9.4 Certain Limitations

	 	- 29 -
	9.5 Exclusive Remedies

	 	- 31 -
	9.6 Waiver of Consequential Damages

	 	- 31 -

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Table of Contents
(continued)

	 	 	 
	 	 	Page
	 
	9.7 Tax Treatment of Indemnity Payments

	 	- 31 -
	 
	 	 
	ARTICLE X. TERMINATION

	 	- 31 -
	10.1 Termination

	 	- 31 -
	10.2 Procedure and Effect of Termination

	 	- 32 -
	 
	 	 
	ARTICLE XI. MISCELLANEOUS

	 	- 32 -
	11.1 Defined Terms

	 	- 32 -
	11.2 Further Assurances

	 	- 37 -
	11.3 Expenses

	 	- 37 -
	11.4 Notices

	 	- 37 -
	11.5 Assignment

	 	- 39 - 
	11.6 Waivers

	 	- 39 -
	11.7 Complete Agreement

	 	- 39 -
	11.8 Governing Law

	 	- 39 -
	11.9 Third Parties; Amendment and Termination

	 	- 39 -
	11.10 Remedies Upon Default

	 	- 39 -
	11.11 Consent to Jurisdiction; Venue

	 	- 40 -
	11.12 No Waiver

	 	- 40 -
	11.13 Separability of Provisions

	 	- 40 -
	11.14 Headings

	 	- 40 -
	11.15 Exhibits

	 	- 40 -
	11.16 Actual Knowledge or Knowledge

	 	- 40 -
	11.17 Counterparts

	 	- 40 -
	11.18 Press Releases; Confidentiality

	 	- 40 -
	11.19 Injunctive Relief

	 	- 41 -

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SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is entered into as of October 28, 2008 (the
“Effective Date”), by and between GreenHunter Energy, Inc., a Delaware corporation (“Buyer”), and
Aspire Oil Services Limited, a company organized under the laws of Scotland (“Seller”). (Each of
Buyer and Seller, a “Party” and, collectively, the “Parties”).

RECITALS

	 	A.	 	Seller is the sole member and owns 100% of the outstanding regular and
preferred membership interests of L&L Holdings (Louisiana), L.L.C., a Delaware limited
liability company (the “Company” and such membership interests, together with any
additional membership interests issued by the Company prior to Closing, the “Membership
Interests”);
	 
	 	B.	 	The Company, directly or indirectly, owns all of the membership interests or
stock of the companies set forth on Schedule 1.1 (other than Highland Marine,
LLC in which a subsidiary of the Company has a 25% interest), among them L&L Oil and
Gas Services, L.L.C., a Delaware limited liability company, that is engaged in the
providing of fuel and lubricant services, primarily to companies engaged in the oil and
gas industry in Louisiana, Texas and other states (the “Business”); and
	 
	 	C.	 	Seller has decided to sell all of the Membership Interests, and Buyer desires
to purchase the Membership Interests on the terms and conditions set forth in this
Agreement.

     NOW, THEREFORE, the Parties do hereby represent, warrant, covenant and agree as follows:

ARTICLE I.

SALE AND PURCHASE OF MEMBERSHIP INTERESTS

     Subject to, and upon the terms and conditions hereof, and on the basis of the agreements,
representations and covenants contained in this Agreement, Seller shall sell, transfer, assign,
convey, set over and deliver to Buyer, free and clear of all liens, claims and encumbrances, and
Buyer shall purchase and acquire from Seller at the Closing (as hereinafter defined), the
Membership Interests.

ARTICLE II.

CLOSING AND PURCHASE PRICE

     2.1 The Closing. The closing (the “Closing”) of the transactions contemplated hereby
shall take place at the offices of Fishman Haygood Phelps Walmsley Willis & Swanson, 201 St.
Charles Avenue, Suite 4600, New Orleans, Louisiana 70170 at 9:00 a.m. on (i) December 12, 2008, or
(ii) at such other time, date or place as the Parties may mutually agree in writing (the “Closing
Date”).

 

 

     2.2 Consideration. In consideration of the transfer of the Membership Interests and
the other undertakings of Seller hereunder, Buyer shall pay the Purchase Price (as hereinafter
defined) to Seller as hereinafter provided. Except as otherwise provided herein, the Purchase
Price and all other payments by Buyer hereunder shall be made by depositing, by bank wire transfer,
the required amounts (in immediately available funds) to Seller or as otherwise directed by Seller
in writing.

     2.3 Purchase Price.

          2.3.1 Stated Consideration. The consideration for the Membership Interests (the
“Purchase Price”) shall consist of cash in the amount of Twenty Seven Million Five Hundred Thousand
and no/100 Dollars ($27,500,000.00) which shall be paid to Seller as follows:

     (a) Buyer has previously deposited in an escrow account with PlainsCapital Bank the
amount of Two Hundred Thousand and no/100 Dollars ($200,000.00) cash (such deposit, plus any
interest or other amount accrued thereon, less any wiring or other fees associated
therewith, the “Good Faith Deposit”). The Good Faith Deposit shall be credited towards the
Purchase Price payable at Closing. The Parties shall direct PlainsCapital Bank to pay the
Good Faith Deposit to Seller by bank wire transfer of immediately available funds in
accordance with Seller’s instructions.

     (b) Buyer shall deposit in an escrow account with JP Morgan Chase Bank, National
Association (the “Escrow Agent”) on the Closing Date an amount equal to Two Million
Sixty-Two Thousand Five Hundred and no/100 Dollars ($2,062,500) (the “Escrow Amount”)
pursuant to the terms and conditions of the escrow agreement substantially in the form
attached hereto as Exhibit A (the “Escrow Agreement”). Subject to the terms and conditions
of the Escrow Agreement, the Escrow Amount, plus any interest or amount accrued thereon,
shall be applied or reserved for payment of any amounts owed by Seller pursuant to Section
2.3.2 and/or Article IX and the balance, if any, shall be returned to Seller after the
expiration of one year from the Closing Date.

     (c) Buyer shall pay to Seller on the Closing Date an amount equal to the Purchase Price
minus the sum of (i) the Good Faith Deposit and (ii) the Escrow Amount by bank wire
transfer of immediately available funds in accordance with Seller’s instructions delivered
to Buyer prior to Closing.

          2.3.2 Working Capital Adjustment.

     (a) Within sixty (60) calendar days after the Closing Date, Buyer shall deliver to
Seller a draft statement of the Working Capital of the Company as of the Closing Date
(“Final Working Capital”), prepared in accordance with GAAP applied on a consistent basis,
and otherwise consistent with the historical practices and methodology used to prepare the
financial statements of the Company (the “Final Seller Working Capital Statement”). Buyer
shall deliver to Seller the Final Seller Working Capital Statement, together with worksheets
and data that support the Final Seller Working Capital Statement and any other information
that Seller may reasonably request in order to verify the amounts reflected on the Final
Seller Working Capital Statement.

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     (b) The Final Working Capital as shown on the Final Seller Working Capital Statement
shall be final and binding on the Parties unless, within forty-five (45) calendar days after
delivery of the Final Seller Working Capital Statement by Buyer to Seller (the “Review
Period”), written notice is given by Seller to Buyer of Seller’s objection to the Final
Seller Working Capital Statement. If no notice of objection is given, the Final Working
Capital shall be equal to the amount shown on the Final Seller Working Capital Statement.
If a notice of objection is given by Seller to Buyer, the Parties shall consult with each
other with respect to the objection and attempt to settle their differences. If the Parties
are unable to reach agreement on the Final Working Capital within ten (10) Business Days
after the date of Seller’s notice of objection, then the dispute will be submitted as
promptly as practicable for resolution to a “Big Four” audit firm not engaged by either
Buyer or Seller, to be mutually agreed upon by the Parties (the “Accountants”). The
Accountant’s determination of matters in dispute will be based on presentations by Seller
and Buyer as to (and only as to) each of the items in dispute, which determination will be
(i) in writing, (ii) furnished to each of the Parties hereto as promptly as practicable
after the items in dispute have been referred to the Accountants, (iii) made in accordance
with this Agreement and (iv) conclusive and binding upon each of the Parties hereto for
purposes of determining the Final Working Capital as of the Closing. If the Accountants’
reconciliation of the Final Working Capital results a determination that the Final Working
Capital is equal to or in excess of $0, then Buyer will bear all of the Accountant’s fees
and expenses, and if the Accountant’s reconciliation of the Final Working Capital results in
a Working Capital amount of less than $0, then Seller will bear all of the Accountant’s fees
and expenses. Buyer and Seller will use their reasonable efforts to cause a decision to be
rendered as soon as reasonably practicable (but in no event later than thirty (30) Business
Days after the delivery by Buyer to the Accountants, if utilized, of the Final Seller
Working Capital Statement), including, without limitation, by promptly complying with all
reasonable requests made by the Accountants for information, books, records and similar
items.

     (c) If the Final Working Capital at Closing is a negative number (such amount, the
“Deficiency”), Seller shall pay to Buyer an amount equal to the Deficiency. The payments
(if any) to be made by Seller shall be made by wire transfer of immediately available funds
to an account designated by Buyer within ten (10) Business Days after the date the parties
agree to the Final Working Capital or the rendering of the decision by the Accountants,
whichever first occurs. No payment shall be due to Seller if the Final Seller Working
Capital at Closing is a positive number.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF SELLER

     3.1 Representations and Warranties of Seller. In order to induce Buyer to enter into
this Agreement, Seller hereby makes the following representations and warranties as of the date
hereof (except to the extent any such representation or warranty speaks as of a specific date other
than the date hereof, in which case such representation or warranty is made as of such specific
date) to Buyer, each of which, except as hereinafter provided, shall be deemed to be material, and
each of which is subject to such exceptions as are specifically identified and set forth in a

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disclosure schedule that has been delivered to Buyer in connection with this Agreement (the
“Disclosure Schedule”):

          3.1.1 Title to Membership Interests. Seller owns all right, title and interest in and
to the Membership Interests and shall assign, transfer and deliver good, valid and legal title to
such Membership Interests to Buyer pursuant to this Agreement, free and clear of all liens, claims,
encumbrances and restrictions whatsoever. The Membership Interests constitute 100% of the equity
interests in the Company. Seller is the sole owner of any equity interests in the Company. The
Membership Interests are validly issued and are not subject to, nor have been issued in violation
of, preemptive or similar rights. There are, and as of the Closing Date, there shall be, no
outstanding options, subscriptions, warrants, calls, commitments, pre-emptive rights or other
rights obligating the Company to issue or sell any of its membership interests or any securities
convertible into or exercisable for any membership interests, or otherwise requiring Seller or the
Company to give any Person the right to receive any benefits or rights similar to any rights
enjoyed by or accruing to the holders of membership interests in Seller or the Company or any
rights to participate in the equity or net income of Seller or the Company. On or before the
Closing Date, any and all rights of first refusal or first offer triggered upon the sale of the
Membership Interests to Buyer and/or the consummation of any of the transactions contemplated
hereby shall be duly satisfied or waived.

          3.1.2 Authority to Execute, Deliver and Perform this Agreement. Seller has all
necessary power and authority to execute, deliver and perform this Agreement. All corporate
proceedings of Seller including, without limitation, all requisite actions by the board of
directors of Seller required to authorize the legal and valid execution, delivery and performance
of this Agreement and the consummation of all of the transactions contemplated by this Agreement,
have been, or will be on or before the Closing Date, duly and validly completed. This Agreement
has been duly and validly authorized, executed and delivered by, and is the valid and binding
obligation of, Seller.

          3.1.3 No Violation of Laws. Seller’s execution and delivery of this Agreement and the
consummation by Seller of the transactions contemplated hereby are not prohibited by, and do not
violate any provision and will not result in the breach of any applicable law, rule, regulation,
judgment, decree, order or other requirement of (i) the United States, Scotland or the United
Kingdom, (ii) any State of the United States or (iii) any court, authority, department, commission,
board, bureau, agency or instrumentality of either (i) or (ii), in each case (i), (ii) and (iii),
as currently in effect (“Applicable Laws”) except, in each case (i), (ii) and (iii) breaches that
would not have a Material Adverse Effect on the Company or the consummation of the transactions set
forth herein.

          3.1.4 Organization of Company. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware.

          3.1.5 Subsidiaries. Schedule 3.1.5 contains a complete and accurate list of
each of the subsidiaries of the Company (each, a “Subsidiary” and collectively, the “Subsidiaries”)
and its name, jurisdiction of incorporation and jurisdictions in which it is authorized to do
business. Each Subsidiary is a corporation or limited liability company (as indicated on Schedule
3.1.5) duly organized, validly existing, and in good standing under the laws of its jurisdiction of

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incorporation, with full corporate or limited liability company power and authority to conduct
its business as it is now being conducted, to own or use the properties and assets that it purports
to own or use.

          3.1.6 Qualification. The Company and its Subsidiaries are duly qualified to do
business in Louisiana and Texas and are in good standing in all jurisdictions in the United States
in which it owns or leases real property, except where failure to qualify would not have a Material
Adverse Effect.

          3.1.7 Litigation. Except as set forth on Schedule 3.1.7, there is no legal
action or other proceeding or any investigation or inquiry pending or, to the knowledge of Seller,
threatened against or affecting the Company or its Subsidiaries (before any court, agency,
arbitrator or otherwise) that challenges, or that, if adversely decided, would have a Material
Adverse Effect or have the effect of delaying, preventing, making illegal or otherwise interfering
with the transactions contemplated hereby. Schedule 3.1.7 also sets forth Seller’s
estimate of the loss contingency with respect to each matter (the “Litigation Reserve Report”).

          3.1.8 Capitalization.

     (a) Schedule 3.1.8(a) sets forth the capitalization of the Company and each
Subsidiary. Except as set forth on Schedule 3.1.8(a), all of the outstanding equity
securities of the Company and each Subsidiary are owned of record and beneficially by one or more
of Seller, the Company or its Subsidiaries, free and clear of all encumbrances. All of the
outstanding equity securities of the Company and each Subsidiary have been duly authorized and
validly issued and, to the extent applicable, are fully paid and nonassessable. There are no
contracts relating to the issuance, sale, or transfer of any equity securities or other securities
of any Subsidiary other than the Highland Marine, L.L.C. Operating Agreement. Neither the Company
nor its Subsidiaries owns, or has any contract to acquire, any equity securities or any other
securities of other entity or any direct or indirect equity or ownership interest in any other
business.

     (b) Except as described on Schedule 3.1.8(b), there exists no obligation of the Company to pay
any employee or member of management of the Company or any Subsidiary in respect of any right
claimed by such employee or management member to participate in equity or net income of Seller or
the Company or any Subsidiary, including the Purchase Price payable by Buyer hereunder.

          3.1.9 Consents and Approvals; No Violation. Except as provided in Schedule
3.1.9, neither the execution and delivery of this Agreement by Seller nor the consummation of
the transactions contemplated hereby will:

     (a) conflict with or result in any breach of any provision of the articles of
incorporation or bylaws of Seller or any shareholder or similar agreement;

     (b) conflict with or result in a violation under any Applicable Law, except for such
conflicts or violations that would not have a Material Adverse Effect; or

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     (c) violate, result in a breach of, constitute (with due notice or lapse of time or
both) a default under, or require the consent of the counterparty to, any Material Contract
or under any other contract, lease, or other agreement or instrument (i) of any Seller or
(ii) relating to the Assets to which the Company is a party or by which it is bound or to
which the Assets are subject, except for such violations, breaches or conflicts that would
not have a Material Adverse Effect.

          3.1.10 Financial Statements. Buyer has been delivered (a) consolidated audited
special purpose balance sheets of the Company and the Subsidiaries as of December 31 in each of the
years 2005 through 2007, and the related consolidated audited special purpose statements of income
(including the notes thereto, the “Balance Sheet”) and cash flow for each of the fiscal years then
ended, including in each instance the notes thereto, together with the report thereon of
PriceWaterhouseCoopers, LLP, independent certified public accountants (the “Audited Financial
Statements”), and (b) an unaudited consolidated balance sheet of the Company and its Subsidiaries
as at August 31, 2008 (the “Interim Balance Sheet”) and the related unaudited consolidated
statements of income, and cash flow for the six months then ended (the “Unaudited Financial
Statements” and, together with the Audited Financial Statements, the “Financial Statements”). The
Financial Statements and notes fairly present the financial condition and the results of
operations, changes in stockholders’ equity, and cash flow of the Company and the Subsidiaries as
at the respective dates of and for the periods referred to in such Financial Statements, all in
accordance with GAAP , subject to the explanations included with Note 1 — “Significant Accounting
Policies” (“Basis of Presentation”) and in the Report of the Independent Auditors contained within
the Audited Financial Statements and subject, in the case of the Unaudited Financial Statements, to
normal recurring year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the Audited Financial Statements); the Financial Statements
referred to in this Section 3.1.10 reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such Financial Statements and
as set forth above. The figure for “goodwill” of $33,615,000 referenced in the Financial
Statements is not warranted by the Seller as the fair value thereof, as it reflects an historic
value that has not been updated in many years. Furthermore, Seller makes no representations or
warranties with regard to asset values arising from any fair value exercise undertaken, in
accordance with GAAP, by Buyer after the Closing Date, which may be impacted if “goodwill” is
valued in accordance with GAAP. No financial statements of any Person other than the Company and
its Subsidiaries are required by GAAP to be included in the consolidated financial statements of
the Company. On the Closing Date, there will exist no intercompany notes, balances or reserves
from any parent corporation of the Company that will not have been fully repaid.

          3.1.11 Books and Records. The books of account, minute books, stock record books, and
other records of the Company and the Subsidiaries, all of which have been or will be made available
to Buyer, are complete and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.

          3.1.12 Accounts Receivable. All accounts receivable reflected on the books and
records of the Company or applicable Subsidiary as of the Closing Date and properly reserved,

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as determined pursuant to generally accepted accounting principles (“GAAP”) consistently
applied (Accounts Receivable”).

          3.1.13 Title to Assets. Schedule 3.1.13 contains a complete and accurate list
of all real property, leaseholds, equipment, inventory, or other material property or interests
owned by the Company or any of its Subsidiaries (the “Assets”). The Company and its Subsidiaries
have good and marketable title to all Assets, free and clear of all liens, claims or encumbrances
other than (i) liens for taxes, assessments and other governmental charges which are not due and
payable, or which may thereafter be paid without penalty, or the validity of which shall
concurrently be contested in good faith; (ii) mechanics’, carriers’, lessors’, workmen’s,
repairmen’s or other like liens (inchoate or otherwise) arising or incurred in the ordinary course
of business of the Business in respect of obligations which are not overdue, other than those being
contested in good faith by appropriate proceedings, (iii) easements, servitudes, restrictions,
encroachments, covenants and conditions that do not materially affect the current use of the
Assets, and (iv) such other liens as are described on Schedule 3.1.13 hereto (collectively,
“Permitted Encumbrances”).

     (a) Owned Real Property. All rights and interests of the Company and its
Subsidiaries in and to real property and improvements thereto (“Owned Real Property”) and
appurtenances thereon are described on Schedule 3.1.13(a).

     (b) Leasehold Property Interests. All of the Company and its Subsidiaries’
leasehold rights and interests in leases (including the landlords, lease dates, expiration
dates, renewal options and rental rates) are described on Schedule 3.1.13(b), which
are all of the real estate leases for facilities used in the Business (each, a “Real
Property Lease” and collectively, the “Real Property Leases”). The Owned Real Property and
the Real Property Leases are together called the “Real Property.”

     (c) Improvements. All of the Company’s and its Subsidiaries’ buildings, tanks,
fixtures, component parts, other constructions and improvements on any owned or leased
property are listed on Schedule 3.1.13(c).

     (d) Highland. All of the Company’s and its Subsidiaries’ investments in, and
contracts with, Highland Marine, LLC, are described on Schedule 3.1.13(d).

     (e) Other Assets. All of Seller’s other interests in Assets, including
equipment, are listed on Schedule 3.1.13(e).

     (f) Except as indicated on Schedule 3.1.13(f), none of the Company or its
Subsidiaries has leased or sublet, as lessor or sublessor, and no third party is in
possession of, any of the Real Property and no portion of the Real Property has been
condemned, requisitioned or otherwise taken by any Governmental Authority and, to the
knowledge of Seller, no such condemnation, requisition or taking is threatened or
contemplated.

     (g) The buildings, structures, improvements, fixtures and facilities included in the
Real Property and all components thereof, considered in the aggregate, are sufficient for
the conduct of the Business.

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     (h) To the knowledge of Seller, none of the buildings, structures and other
improvements included in the Real Property or the appurtenances thereto or the equipment
therein or the operation or maintenance thereof, violates any Applicable Law, license or
contract, or any restrictive covenant, condition, easement, right of way or other
encumbrance or restriction affecting such Real Property, except to the extent that such
violation would not have a Material Adverse Effect.

     (i) To the knowledge of Seller (x) no easements currently exist on or with respect to
the Real Property or are required or necessary on or with respect to the Real Property for
the conduct of the Business as conducted by the Company or its Subsidiaries, and (y) no
easements are required or necessary for the full access and use of each item of Real
Property, except, in the case of (x), where any such easement and, in the case of (x) and
(y), where failure to have any such easement would not have a Material Adverse Effect.

          3.1.14 Inventory. All inventory of the Company and its Subsidiaries consists of a
quality and quantity usable and salable in the ordinary course of business, except for obsolete
items and items of below-standard quality, all of which have been written off or written down to
net realizable value in the accounting records of the Company and its Subsidiaries as of the
Closing Date, as the case may be. All inventories not written off have been priced on a first in,
first out basis except for lubricant packaging and delivery costs which are incorporated at
standard cost. The quantities of each item of inventory (whether raw materials, work-in-process,
or finished goods) are not excessive, but are reasonable in the present circumstances of the
Company and its Subsidiaries. Schedule 3.1.14 sets forth the inventory of the Company and
its Subsidiaries.

          3.1.15 No Undisclosed Liabilities. Except as set forth on Schedule 3.1.15,
the Company and its Subsidiaries have no material liabilities or material obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the financial statements of the Company
or otherwise incurred in the ordinary course of business.

          3.1.16 Contracts; No Defaults. Schedule 3.1.16 contains a complete and
accurate list of each of the following contracts, whether written or oral, to which the Company or
any of its Subsidiaries are bound (the “Material Contracts”), copies or written summaries of which,
together with all amendments, modifications or supplements thereto, have been delivered to Buyer:

     (a) All Real Property Leases;

     (b) Any employment agreement, contract or commitment with any employee other than such
as arises by operation of law with respect to at will employees;

     (c) Any agreement, contract, indenture or commitment relating to the borrowing or
lending or advancing of funds other than in the ordinary course of its business;

-8-

 

     (d) Except for any amounts described as unrecorded capital commitments and set forth on
Schedule 3.1.16(d), and except for any amounts paid in the ordinary course and scope
of business, any other agreement, contract, indenture or commitment, written or oral, that
involves an obligation on the part of the Company or a Subsidiary of Fifty Thousand Dollars
($50,000.00) or more;

     (e) Any customer contract for the customers set forth on Schedule 3.1.26;

     (f) Each collective bargaining agreement and other contract to or with any labor union
or other employee representative of a group of employees;

     (g) Each joint venture, partnership, and other contract (however named) involving a
sharing of profits, losses, costs, or liabilities by the Company or a Subsidiary with any
other person;

     (h) Each contract containing covenants that in any way purport to restrict the business
activity of the Company or limit the freedom of the Company or a Subsidiary to engage in any
line of business or to compete with any person; and

     (i) Any preferential purchase right, right of first refusal, option or similar right;

provided, however, that any such written Material Contract need not be listed on
Schedule 3.1.16 if such contract or commitment is cancelable by the Company or a Subsidiary
without penalty within thirty (30) days of providing notice of cancellation and does not involve
more than annual expenditures of more than Fifty Thousand Dollars ($50,000.00) in the aggregate.
Except as set forth on Schedule 3.1.16, each Material Contract is in full force and effect
and is valid and enforceable in accordance with its terms and, upon consummation of the
transactions contemplated by this Agreement shall continue in full force and effect without penalty
or other adverse consequence. Neither the Company nor any Subsidiary is in material default under
any Material Contract, nor, to the knowledge of Seller, is any other party to any Material Contract
in breach of or default thereunder, and no event has occurred that with the lapse of time or the
giving of notice or both would constitute a breach or default on the Company, any Subsidiary or, to
the knowledge of Seller, any other party thereunder. Neither the Company nor any Subsidiary has
exercised any termination rights with respect to any Material Contract nor, to the knowledge of
Seller, has any other party to any Material Contract exercised any such rights. Neither the
Company nor any Subsidiary has given notice of termination or cancellation of any Material Contract
or any significant dispute thereunder nor, to the knowledge of Seller, has any other party to any
Material Contract given notice of termination or cancellation of any Material Contract or any
significant dispute thereunder.

          3.1.17 Brokers and Finders. Neither Seller nor Company has taken any action that,
directly or indirectly, would obligate the Company or Buyer to anyone acting as broker, finder,
financial advisor or in any similar capacity in connection with this Agreement or any of the
transactions contemplated hereby. Seller has engaged Simmons & Company International and Seller
will be directly responsible for any fees and expenses payable to Simmons &

-9-

 

Company International for its services related to the transactions contemplated in this
Agreement.

          3.1.18 Insurance. Schedule 3.1.18 lists and summarizes all insurance policies
and state or federal insurance pools or programs covering the Assets, Business, equipment,
properties, operations, employees, officers and directors of the Company or its Subsidiaries, the
amounts of coverage under each such policy, pool or program and any pending unpaid claims
thereunder. Except as set forth on Schedule 3.1.18, all premiums payable under all such
policies, pools or programs have been paid, and the Company and Subsidiaries is otherwise in full
compliance with the terms of such policies, pools or programs.

          3.1.19 Compliance with Applicable Laws. The Company and its Subsidiaries are in
compliance in all material respects with any and all Applicable Laws with respect to the operation
of the Business, except in instances in which non-compliance with any such Applicable Law would not
have a Material Adverse Effect. The Company and its Subsidiaries possess and shall maintain in
effect until Closing Date all licenses, certificates of occupancy, permits and authorizations
required to operate and maintain the Business (collectively, the “Licenses”), except in instances
in which failure to possess and maintain any such License would not have a Material Adverse Effect.

          3.1.20 Tax Matters. Except as set forth on Schedule 3.1.20,

     (a) The Company and its Subsidiaries have filed within the required time periods all
Tax Returns required to have been filed by it or them, and has paid all Taxes which were due
and payable by it or them, prior to the Closing Date, other than Taxes that have been taken
into account in the calculation of Final Working Capital. All such Tax Returns are correct
and complete in all respects. Neither the Company nor any Subsidiary is currently the
beneficiary of any extension of time within which to file any Tax Return. No claim, or
notice of a claim, has ever been made by an authority in a jurisdiction where the Company or
any Subsidiary does not file Tax Returns that the Company or such Subsidiary is or may be
subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes
not yet due and payable) upon any of the assets of the Company or any Subsidiary.

     (b) The Company and each Subsidiary have withheld and paid and will withhold and pay
prior to the Closing Date all Taxes required to be withheld and paid by it in connection
with amounts paid or owing to any employee, creditor, partner or other third party.

     (c) (i) Neither the Company nor any Subsidiary has been or, to the knowledge of the
Company, is currently being audited by any Governmental Authority relating to any Taxes;
(ii) there are no agreements, waivers or other arrangements providing for an extension of
time with respect to the assessment of any Taxes or deficiency against the Company or any
Subsidiary; (iii) there are no disputes, actions, suits, proceedings or claims now pending
by or against the Company or any Subsidiary in respect of any Taxes or assessments; and (iv)
there is no pending or threatened audit or investigation of the Company or any Subsidiary by
any Governmental Authority relating to any Taxes.

-10-

 

     (d) Neither the Company nor any Subsidiary is a party to or bound by any tax sharing,
tax indemnity or tax allocation agreement or other similar arrangement.

     (e) Neither the Company nor any Subsidiary has ever been a member of a combined,
consolidated, affiliated or unitary group for Tax purposes other than the group of which it
is currently a member.

     (f) The Company and its Subsidiary have delivered or made available to Buyer true,
correct and complete copies of (i) all Tax Returns filed by or on behalf of such entity for
all completed Tax years of such entity that remain open for audit or review by the relevant
Taxing authority and (ii) all ruling requests, private letter rulings, notices of proposed
deficiencies, closing agreements, or settlement agreements, sent or received by such entity
relating to Taxes for all completed Tax years of such entity that remain open for audit or
review by the relevant Taxing authority.

     (g) Neither the Company nor any Subsidiary has been a distributing corporation or a
controlled corporation in a transaction intended to be governed by Section 355 of the Code.

     (h) Neither the Company nor any Subsidiary has participated in any “reportable
transaction” within the meaning of Section 1.6011-4 of the Treasury Regulations.

     (i) Neither the Company nor any Subsidiary has any taxable income or gain reportable
for a taxable period ending after the Closing Date attributable to (i) installment sales or
(ii) intercompany transactions (as defined in Treasury Regulation Section 1.1502-13 or any
similar rule under state or local Applicable Law) occurring in the Pre-Closing Tax Period
which resulted in a deferred reporting of income or gain from such transactions.

     (j) Neither the Company nor any Subsidiary has agreed to, or is required to, make any
adjustments or changes either on, before or after the Closing Date, to its accounting
methods pursuant to Section 481 of the Code (or similar provisions of state, local, or
foreign law), and neither the Internal Revenue Service nor any Taxing authority has proposed
any such adjustments or changes in the accounting methods of the Company or any Subsidiary.

     (k) No Tax asset or attribute of the Company or any Subsidiary is currently subject to
a limitation in Sections 382 or 383 of the Code or similar provision of state, local, or
foreign law.

     (l) The Company always has been and currently is taxed as a corporation as defined in
Code Section 7701(a)(3).

          3.1.21 Environmental Matters. Except as set forth on Schedule 3.1.21,

     (a) With respect to the operations of the Company and its Subsidiaries in connection
with the Business, the Company and its Subsidiaries have materially complied

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since December 31, 1998, and are in material compliance, with all Environmental Laws,
except to the extent that non-compliance would not result in a Material Adverse Effect.

     (b) To the knowledge of Seller, the Company and its Subsidiaries have not treated,
stored, disposed of, arranged for or permitted the disposal of, transported or released, or
exposed any person to, any Hazardous Materials in a manner that has given rise to any
material liability under any Environmental Law. For purposes of this Section 3.1.21,
“material liability” shall include any liability that, individually or in the aggregate,
exceeds Fifty Thousand Dollars ($50,000.00).

     (c) Seller has furnished to Buyer copies of all environmental audits, reports and other
material environmental documents relating to the operations of the Company and its
Subsidiaries since December 31, 1998 which are in its possession or under its reasonable
control.

     (d) (i) No written and pending notice, order, request for information, complaint or
penalty has been received by Seller or the Company or any of its Subsidiaries and (ii) there
are no judicial, administrative or other third party claims, demands, suits or proceedings
pending or threatened that, in the case of each of (i) and (ii), allege a violation of or
liability under any Environmental Law by the Company or any of its Subsidiaries or any
predecessor to the Company or any of its Subsidiaries that, in each instance, could have a
Material Adverse Effect.

     (e) No Hazardous Materials have been released, discharged, dumped or disposed of to (i)
soil in amounts that would reasonably be expected to impact groundwater or surface water,
(ii) groundwater, or (iii) surface water, in the case of each of (i), (ii) and (iii), at,
under, on or from Real Property currently, or, to Seller’s knowledge, formerly owned,
leased, and/or operated by the Company or any of its Subsidiaries or that would otherwise
violate any Applicable Law, except to the extent that any such release, discharge, dumping,
disposal or violation would not, in each instance, have a Material Adverse Effect.

     (f) The Company and its Subsidiaries have conducted their businesses and operated their
assets, and are conducting their businesses and operating their assets, and the condition of
all facilities and properties (including off site storage or disposal of any Hazardous
Materials from such facilities or properties) currently or formerly owned, leased, operated
or in which an interest is held by them (or was held by the Company or its Subsidiaries)
are, in material compliance with all Environmental Laws, except to the extent that
non-compliance would not have a Material Adverse Effect. Except as listed on Schedule
3.1.21(f), to the knowledge of Seller neither the Company nor its Subsidiaries have
owned or leased any real property other than the Real Property.

     (g) The Company and its Subsidiaries are, and have been, in possession of all
Environmental Permits required for their operations, and are, and have been, in compliance
with all of the requirements and limitations included in or applicable to such Environmental
Permits, except to the extent that not having any such Environmental Permit would not have a
Material Adverse Effect. The Company and its Subsidiaries

-12-

 

have timely filed applications for the renewal of such Environmental Permits as may be
necessary. There are no facts, circumstances or conditions that could reasonably be
expected to lead to the suspension, cancellation, or revocation of any existing
Environmental Permit or the denial of applications for the renewal of any such Environmental
Permits on terms less favorable than what are currently in effect. There are no pending
challenges to any Environmental Permits.

     (h) The Company has not been notified by any Governmental Authority or other Person
that any of the operations or assets of the Company or its Subsidiaries is the subject of
any investigation or inquiry by any Governmental Authority or other Person regarding the
violation of or liability under any Environmental Law or evaluating whether any material
remedial action is needed to respond to a release or threatened release of any Hazardous
Material or to the improper storage or disposal (including storage or disposal at offsite
locations) of any Hazardous Material.

     (i) Neither the Company nor, to the knowledge of the Company, any other Person has
filed, nor has the Company received any notice under any federal, state or local law
indicating that (i) the Company is responsible for the improper release into the
environment, or the improper storage or disposal, of any Hazardous Material, or (ii) any
Hazardous Material is improperly stored or disposed of upon any property of the Company or
its Subsidiaries.

     (j) The Company and its Subsidiaries do not have any material contingent liability in
connection with (i) the release or threatened release into the environment at, beneath or on
any property now or previously owned, leased, operated or in which an interest is or was
held by the Company or its Subsidiaries, or (ii) the storage or disposal of any Hazardous
Material that could give rise to a material liability (as defined above).

     (k) The Company has not received any claim, complaint, notice, inquiry or request for
information involving any matter which remains unresolved as of the date hereof with respect
to any alleged violation of any Environmental Law or regarding potential liability under any
Environmental Law relating to operations or conditions of any facilities or property
(including off site storage or disposal of any Hazardous Material from such facilities or
property) currently owned, leased or operated by the Company or its Subsidiaries or formerly
owned, leased or operated by the Company or its Subsidiaries except to the extent that the
existence of such matter would not have a Material Adverse Effect.

     (l) No property now or previously owned, leased, operated or in which an interest is or
was held by the Company is listed on the National Priorities List pursuant to CERCLA or on
the CERCLIS or on any other federal or state list as sites requiring investigation or
cleanup.

     (m) All underground storage tanks, above ground storage tanks, and solid waste disposal
facilities owned or operated by Company or its Subsidiaries are used and operated in
material compliance with Environmental Laws, and in such a way not to

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result in any liability under Environmental Laws, except to the extent that
non-compliance would not have a Material Adverse Effect.

     (n) Neither this Agreement nor the consummation of the transaction contemplated hereby
will result in any obligations for site investigation or cleanup, or for notification to, or
consent of, Governmental Authorities or third parties, pursuant to any “transaction
triggered” or “responsible party transfer” Environmental Law that, in each instance, would
have a Material Adverse Effect.

     (o) Since December 31, 1998 and, to Seller’s knowledge, prior thereto, the Company and
its Subsidiaries have not transported, or arranged for the transportation of, any Hazardous
Material to any location which is listed on the National Priorities List pursuant to CERCLA,
on the CERCLIS, or on any similar federal or state list or which is the subject of federal,
state or local enforcement actions or other investigations, except to the extent that such
transporting, or arranging for transportation, of any Hazardous Material would not have a
Material Adverse Effect.

     (p) To Seller’s knowledge, there are no physical or environmental conditions existing
on any property owned, leased or used by the Company or its Subsidiaries resulting from the
Company’s or its Subsidiaries’ operations or activities, past or present, at any location
that give rise to any on-site or off-site remedial obligations under any applicable
Environmental Laws.

     (q) Except as set forth on Schedule 3.1.21(q), to the knowledge of Seller,
there are no sites, locations or operations at which the Company or its Subsidiaries are
currently undertaking or have completed any remedial or response actions relating to any
disposal or release of Hazardous Materials, as required by Environmental Laws.

     (r) To the knowledge of Seller, none of the Company or any of its Subsidiaries has
contractually or otherwise assumed any Liabilities under any Environmental Laws from any
other party.

          3.1.22 Employee Plans. The term “Employee Plan” shall mean any pension, welfare,
retirement, profit sharing, deferred compensation, bonus or other incentive plan, any other
employee benefit program, arrangement, agreement or understanding, any medical, vision, dental or
other health plan, any life insurance plan, disability plan, severance pay plan, or any other
employee benefit plan or fringe benefit plan, including, without limitation, any “employee benefit
plan” as defined in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), to which the Company or its Subsidiaries contribute or are parties or are bound or under
which any of them may have liability. Set forth on Schedule 3.1.22 hereto is a list of all
Employee Plans. Buyer has been delivered true, correct and complete copies of these Employee Plans,
or in the case of any unwritten Employee Plans, true, correct and complete descriptions thereof,
and all trust agreements or funding agreements, including insurance contracts, and all amendments
thereto, and the three most recent Annual Reports (Form 5500 Series) filed for the Employee Plans,
including all applicable schedules and accountants’ reports. No plan listed on Schedule
3.1.22 is (i) subject to Title IV of ERISA, Section 302 of ERISA or Section 412 or 430 of the
Code, (ii) a multiemployer plan within the

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meaning of Section 3(37) of ERISA, (iii) a multiple employer plan described in Section 413(c)
of the Code, or (iv) a multiple employer welfare arrangement within the meaning of Section 3(40) of
ERISA. Each Employee Plan has been established, administered and operated in substantial
compliance with its governing documents and Applicable Laws. Each Employee Plan intended to be
qualified under Section 401(a) of the Code is so qualified. No Employee Plan provides life, health
or medical benefits to any individual, or the family members of any individual, for any period
extending beyond the termination of the individual’s employment, except to the extent required by
the COBRA provisions in ERISA or similar provisions of state law. There are no actions, suits,
investigations, or claims pending (other than routine claims for benefits) or, to the Company’s
knowledge, threatened against, or with respect to, any of the Employee Plans or their assets. No
act, omission or transaction has occurred which would result in imposition on the Company or any of
its Subsidiaries of (A) breach of fiduciary duty liability damages under Section 409 of ERISA, (B)
a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA, or (C) a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code. The consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former employee, independent
contractor, director or officer of the Company or its Subsidiaries to severance pay, any change in
control payment or any other payment, except as expressly provided in this Agreement, (ii)
accelerate the time of payment or vesting, change the time or method of payment or increase the
amount of compensation due, any such employee, independent contractor, director or officer, or
(iii) entitle any such employee, independent contractor, director or officer to any gross up or
similar payment with respect to the excise tax described in Section 4999 of the Code. Each
Employee Plan that is a nonqualified deferred compensation plan within the meaning of Section 409A
of the Code has been operated in good faith compliance with the requirements of Section 409A of the
Code and the regulations and guidance thereunder.

          3.1.23 Employees. Schedule 3.1.23 contains a complete and accurate list of
the name, date of hire, and position or job title, compensation, exempt or non-exempt status, and
leave status (i.e., whether active or on leave of absence) for each employee of the Company or its
Subsidiaries. Except as set forth on Schedule 3.1.23, none of the Company or any of its
Subsidiaries is a party to any employment or similar contract or agreement of employment with any
of their employees that cannot be terminated at will without notice by the Company. Except as
indicated on Schedule 3.1.23, the Company and its Subsidiaries have not entered into any
severance, change of control or similar arrangement with any employee or former employee that will
result in any obligations to make any severance or additional payment if employment is terminated
following the Closing or upon consummation of the transactions contemplated by this Agreement. The
Company and its Subsidiaries have timely paid all wages, salaries, commissions, bonuses, severance
pay, vacation pay, benefits, and other compensation or remuneration to employees on account of
employment. Except as set forth on Schedule 3.1.7, there are no pending, or to the
Company’s knowledge, threatened investigations, charges, complaints, actions, suits, or judicial or
administrative proceedings by any present or former employee of the Company or any of its
Subsidiaries or any applicant or person claiming to be an employee, or any classes of the
foregoing, alleging a violation of, or non-compliance with, statutory or common laws relating to
employment, employment practices, or terms and conditions of employment. The Company and its
Subsidiaries are, and have been within the past four (4) years, in material compliance with all
Applicable Laws relating to labor and employment, including without limitation, employment
practices, terms and conditions of

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employment, labor relations, wages, employment benefits, hours of work and overtime, worker
classification (either as exempt or non-exempt or as regular employee or independent contractor),
equal employment opportunity, non-discrimination, non-harassment, occupational safety and health,
workers’ compensation, notice of plant closings or mass layoffs, employee waivers of liability,
privacy of employee medical and health information, and employment-related immigration and
authorization to work in the Units States. The Company and its Subsidiaries have not experienced a
“plant closing” or “mass layoff” as defined by the Worker Adjustment and Retraining Notification
Act or any other similar Applicable Law within 90 days before the Closing. None of the Company or
any of its Subsidiaries is a party to, or otherwise bound by, any settlement, consent decree,
order, or injunction with respect any employees, the terms and conditions of employment of any
employees, or the working conditions of any employees. No former employee of the Company or any of
its Subsidiaries have the right to be recalled, reinstated, or restored to employment. To the
Company’s knowledge, none of the Employees or group thereof has any plans to terminate employment
with the Company or any of its Subsidiaries.

          3.1.24 Labor Relations. No employees of the Company or its Subsidiaries are
represented by any labor organization, union, or group of employees, and no labor organization,
union, or group of employees claims to represent a majority of any employees of the Company or any
of its Subsidiaries in any bargaining unit. Neither the Company nor any of its Subsidiaries has
experienced any labor strike, work stoppage, lockout, material grievance or other labor dispute,
claim of unfair labor practices, or other collective bargaining dispute. Neither the Company nor
any of its Subsidiaries has been threatened with any labor strike, work stoppage, lockout, material
grievance or unfair labor practice claim and no event has occurred that could provide a basis for
any work stoppage or labor dispute within the past four (4) years. Neither the Company nor any of
its Subsidiaries has committed any material unfair labor practice within the past four (4) years.
No organizational effort is presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company or any of its Subsidiaries. There have been no activities
or proceedings of any labor union to organize any employees of the Company or any of its
Subsidiaries in the past four (4) years. The Company has not received any written notification of
any material grievances, complaints or charges that have been filed against the Company or any of
its Subsidiaries with any governmental agency or other entity or under any dispute resolution
procedure (including, but not limited to, any proceedings under any dispute resolution procedure
under any collective bargaining agreement) and there is no basis for any such material grievances,
complaints or charges. No collective bargaining agreements are in effect or are currently being
negotiated by the Company or any of its Subsidiaries.

          3.1.25 Absence of Certain Changes. Except as disclosed in Schedule 3.1.25 or
as expressly contemplated by this Agreement, since the date of the Interim Balance Sheet, the
business of the Company and its Subsidiaries has been conducted in the ordinary course consistent
with past practices and since the date of the Interim Balance Sheet there has not been:

     (a) a Material Adverse Effect;

     (b) any amendment of any material term of any outstanding security of the Company or
any of its Subsidiaries, or any issuance of additional equity securities or

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grant of any option, warrant or right to acquire any equity securities or issue any
security convertible into or exchangeable for equity securities;

     (c) any incurrence, creation, renewal, assumption or guarantee by the Company or any of
its Subsidiaries of any (i) indebtedness for borrowed money, (ii) capitalized lease
arrangement, (iii) hedging transactions, or (iv) operating lease arrangements, in any case
other than in the ordinary course of business consistent with past practices and in all
cases not in excess of Two Hundred Thousand Dollars ($200,000.00) in the aggregate;

     (d) any making of any loan, advance or capital contributions to, or investment in, any
Person other than loans, advances or capital contributions to or investments made in the
ordinary course of business consistent with past practices;

     (e) any lease, contract, agreement, purchase or sale order or other transaction or
commitment made, including any capital expenditure or any contract or agreement entered into
by the Company or any of its Subsidiaries relating to the Assets or Business, in either case
material to the Company or any of its Subsidiaries, taken as a whole, other than in the
ordinary course of business consistent with past practices and those contemplated by this
Agreement;

     (f) any material change in any method of accounting or accounting practice by the
Company or any of its Subsidiaries except for any such change required by reason of a
concurrent change in GAAP; or

     (g) any action taken or any action agreed or committed to, that would violate Section
5.3.1 if taken prior to the Closing Date.

          3.1.26 Customers and Suppliers. Schedule 3.1.26 sets forth a list of the ten
(10) largest customers and the ten (10) largest suppliers of the Company and the Subsidiaries, as
measured by the dollar amount of purchases therefrom or thereby, during each of the fiscal years
ended December 31, 2005, 2006 and 2007, showing the approximate total sales by the Company and the
Subsidiaries to each such customer and the approximate total purchases by the Company and the
Subsidiaries from each such supplier, during such period.

          3.1.27 Discontinued Business. Except as set forth on Schedule 3.1.27, to the
knowledge of the Seller, there are no liabilities associated with the logistics, transportation and
environmental business lines or any other discontinued business of the Company.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF BUYER

     4.1 Representations and Warranties of Buyer. In order to induce Seller to enter into
this Agreement, Buyer hereby makes the following representations and warranties to Seller, each of
which shall be deemed to be material:

          4.1.1 Organization of Buyer. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, with all requisite power and authority

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to own, hold or lease the rights, properties and assets it will acquire, hold or lease
pursuant to the transactions contemplated by this Agreement, and to execute, deliver and perform
this Agreement and the other documents to be executed by Buyer in connection with this transaction.

          4.1.2 Authority to Execute, Deliver and Perform This Agreement. Buyer has all
necessary organizational power and authority to execute, deliver and perform this Agreement. All
corporate and other proceedings of Buyer, including, without limitation, all requisite actions by
Buyer required to authorize the legal and valid execution, delivery and performance of this
Agreement and the consummation of all of the transactions contemplated by this Agreement, have
been, or will be on or before the Closing Date, duly and validly completed. This Agreement has
been duly and validly authorized, executed and delivered by, and is the valid and binding
obligations of, Buyer.

          4.1.3 No Violation of Laws, Agreements; No Liens. The execution and delivery of this
Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby are not
prohibited by, and do not violate any provision and will not result in the breach of, or accelerate
or permit the acceleration of the performance required by the terms of, (i) any applicable law,
rule, regulation, judgment, decree, order or other requirement of (A) the United States or of (B)
any State of the United States, or of (C) any court, authority, department, commission, board,
bureau, agency or instrumentality of either (A) or (B), (ii) the certificate of incorporation and
bylaws of Buyer and any amendments to either of them, or (iii) any material contract, indenture,
agreement or commitment to which Buyer, or any affiliate thereof, is a party or is bound or which
is material to the operations of Buyer, and (iv) have not resulted, and will not result, in the
creation or imposition of any lien, encroachment, easement, encumbrance, mortgage, hypothecation,
equity, charge, restriction, possibility of reversion, or other similar conflicting ownership or
security interest, in favor of any third person or entity which would adversely affect Buyer in any
material respect or its performance of this Agreement.

          4.1.4 No Governmental Consents. No governmental consents, approvals, orders or
authorizations are required for the execution, delivery or performance by Buyer of this Agreement,
and other documents related to this transaction and the consummation of the transactions
contemplated hereby.

          4.1.5 Brokers and Finders. Buyer has not taken any action that, directly or
indirectly, would obligate Seller to anyone acting as a broker, finder, financial advisor or in any
similar capacity in connection with this Agreement or any of the transactions contemplated hereby.

          4.1.6 No Litigation. As of the date of this Agreement, there is no legal action or
other proceeding or any investigation or inquiry pending or, to the knowledge of the officers of
Buyer, threatened against or affecting Buyer (before any court, agency, arbitrator or otherwise)
which would have the effect of delaying, preventing, making illegal or otherwise interfering with
the transactions contemplated hereby.

     4.2 Available Funds. Buyer shall have at Closing available cash or cash equivalents
(including proceeds funded or under one or more committed credit facilities), to pay the

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Purchase Price and to pay any other amounts payable pursuant to this Agreement and to effect
the transactions contemplated hereby.

     4.3 Private Placement. Buyer acknowledges and understands that (a) the Membership
Interests being transferred under this Agreement have not been registered under the Securities Act
of 1933, as amended (the “Securities Act”), or the securities laws of any state and the Membership
Interests are sold in reliance on exemptions from the registration requirements of the Securities
Act and other such laws and regulations (“blue sky” or otherwise) applicable to securities
offerings (collectively, “Securities Laws”); (b) the Membership Interests have not been approved or
disapproved by the Securities and Exchange Commission (the “SEC”), any state securities commission,
or any other regulatory authority nor have any of the foregoing authorities passed upon or endorsed
the merits of the Membership Interests or the accuracy or adequacy of any information provided to
Buyer; and (c) any representation to the contrary is unlawful. Buyer recognizes and acknowledges
that the reliance by Seller, and its respective shareholders, officers, and directors upon such
exemptions from registration are, in part, based upon the accuracy of the representations and
warranties made by Buyer in this Agreement.

     4.4 Suitability. Buyer represents and warrants that it is an “accredited investor”
within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act and that it
is capable of evaluating the merits and risks of the Membership Interests, and has knowledge and
experience in financial and business matters in general and in evaluating the types of transactions
contemplated by this Agreement. Buyer understands that the Membership Interests have not been
registered under the Securities Act, and Buyer is acquiring the Membership Interests solely for the
purpose of investment, for its own account, and not with a view to any distribution thereof within
the meaning of Section 2(11) of the Securities Act.

     4.5 Access to Information. Buyer agrees to represent and warrant as of the Closing
Date that it has had access to all reports, analyses and other filings, together with any
amendments thereto, and has been afforded access to and has a full understanding of all such
documents, records, contracts and books, to the extent deemed necessary by Buyer in reaching the
decision to purchase the Membership Interests. Buyer further agrees to represent and warrant as of
the Closing Date that it has had an opportunity to ask questions of and receive answers from the
officers of Seller concerning the Membership Interests, and all such inquiries have been completed
to Buyer’s satisfaction.

     4.6 Investment Intent.

     (a) Buyer represents and warrants that it is acquiring the Membership Interests solely
for its own account for investment purposes only and not for distribution or resale to
others. Buyer shall not resell or offer to resell the Membership Interests, except in
strict accordance with the applicable terms of this Agreement, and in compliance with all
applicable securities and other laws.

     (b) Buyer understands that the Membership Interests are characterized as “Restricted
Securities” under the Securities Laws inasmuch they are being acquired from Buyer in a
transaction not involving a public offering and that under such Securities Laws such shares
may be resold without registration under the Securities Act only in certain

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limited circumstances. In this connection, Buyer hereby represents that it is familiar
with Rule 144 under the Securities Act, as currently in effect, and understands the resale
limitations imposed thereby and by the Securities Laws.

     (c) To the extent applicable, each certificate evidencing any of the Membership
Interests issued to Buyer shall be endorsed with a legend in substantially the form set
forth below, and Buyer covenants that, except to the extent any such restrictions that may
be waived are waived by Buyer, Buyer shall not transfer the Membership Interests represented
by any such certificate without complying with the restrictions on transfer described in the
legend endorsed on such certificate:

     THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
TRANSFERRED TO ANY PERSON OTHER THAN A SHAREHOLDER OF THE REGISTERED OWNER UPON A
LIQUIDATION OF SUCH OWNER UNLESS: (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING
SAID SECURITIES; OR (II) THIS COMPANY RECEIVES AN OPINION REASONABLY SATISFACTORY TO THE
COMPANY OF LEGAL COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION.

ARTICLE V.

CONDUCT PRIOR TO CLOSING

     5.1 Rights of Inspection. Prior to the Closing, Seller shall afford to the officers,
attorneys, accountants or other authorized representatives of Buyer reasonable access during
regular business hours to the Assets and books and records of the Company and its Subsidiaries
relating to the Business in order to afford such other of them full opportunity to make such
review, examination and investigation as it shall desire to make, and such other of them shall be
permitted to take extracts from, or to make copies of, such books and records as may be reasonably
necessary. Seller shall also authorize its environmental consultants to afford Buyer and its
representatives reasonable access to such consultants’ employees, records and reports pertaining to
the Company. Seller shall use commercially reasonable efforts to furnish or cause to be furnished
to Buyer such financial and operating data and other information regarding the Company and its
Subsidiaries as Buyer may reasonably request. All inspections by Buyer shall be at Buyer’s sole
cost and risk.

     5.2 Cooperation.

          5.2.1 Preservation of Business. From and after the date hereof until the Closing
Date, Seller shall in regard to the Business, cause the Company and its Subsidiaries to use their
reasonable best efforts to maintain and preserve relationships with its suppliers and customers.
Seller will permit Buyer to contact suppliers, customers and employees of the Company or its

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Subsidiaries, either in cooperation with Seller’s personnel or independently with the prior
consent of Seller in each instance. Seller acknowledges that Buyer will contact the Company’s or
its Subsidiaries’ suppliers and customers in the normal course of business. Seller will cooperate
fully, to the extent commercially reasonable, with Buyer in Buyer’s efforts to continue to employ
such employees of the Company or its Subsidiaries currently employed by the Company or its
Subsidiaries as Buyer may wish to continue to employ.

          5.2.2 Obtaining Consents and Approvals.

     (a) Subject to the terms and conditions herein provided, including, without limitation,
as set forth in Section 5.2.2(c), Seller and Buyer each agree to use commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and to cooperate with the other
in connection with the foregoing, including using all reasonable efforts (i) to obtain any
necessary waivers, consents and approvals from other parties to material leases and other
contracts, (ii) to obtain all consents, approvals, and authorizations that are required to
be obtained under any Applicable Law, (iii) to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the Parties to consummate the
transactions contemplated hereby, (iv) to effect all necessary registrations and filings
including submissions of information requested by Governmental Authorities, and (v) to
fulfill its closing conditions set forth in Article VIII of this Agreement. Seller and
Buyer further covenant and agree, with respect to a threatened or pending preliminary or
permanent injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the Parties to consummate the
transactions contemplated hereby, to use their respective reasonable efforts to prevent the
entry, enactment or promulgation thereof, as the case may be.

     (b) Each Party shall promptly notify the other Party of (i) any complaints, investigations, or
hearings (or communications indicating that the same may be contemplated) from or by any
Governmental Authorities with respect to the transactions contemplated hereby or (ii) the
institution or the threat of litigation involving this Agreement or the transactions contemplated
hereby.

     (c) Notwithstanding the foregoing, nothing in this Agreement shall create an obligation of
Seller to (x) lower or otherwise renegotiate the Purchase Price (y) take any action, corrective,
remedial or otherwise, with respect to the Company, its Subsidiaries or the Business in order to
make any representation or warranty accurate or (z) otherwise undertake any expense not normally
undertaking in the ordinary course of the business consistent with past practices.

          5.2.3 Obtaining Insurance Policy. From and after the date hereof until the Closing
Date, Seller shall provide all information reasonably available to it and take all other reasonable
steps requested by Buyer to assist Buyer in applying for and obtaining an environmental insurance
policy. Seller shall not be responsible for the payment of any expenses, including premiums,
associated with any such policy.

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     5.3 Conduct of Business Pending Closing.

          5.3.1 Business in the Ordinary Course. Seller hereby agrees that, unless it receives
the prior written consent of Buyer, from and after the date hereof until the Closing Date, the
Company and its Subsidiaries shall not (i) operate the Business otherwise than in a manner
materially consistent with past practices, (ii) grant any compensation increase to any officer or
employee of the Company or any of its Subsidiaries employed in the Business other than annual
bonuses and salary increases awarded, or such other adjustments made, in the ordinary course of
business and consistent with past practices, or (iii) authorize, recommend or propose any merger,
consolidation, acquisition or disposition of assets outside the ordinary course of business, (iv)
declare, set aside or pay any dividend or other distribution (whether in stock or property) with
respect to any of its equity securities, or make any issuance, reclassification, redemption,
purchase or other acquisition of any of its equity securities, except that without such consent,
the Company may issue additional Membership Interests to the Seller solely in connection with the
repayment of outstanding intercompany debt owed by the Company to Seller; (v) make any distribution
of Assets to any affiliate (whether as, dividends or otherwise) or any material change in
capitalization or any comparable event relating to the Company or its Subsidiaries or the Business
or (vi) use any cash (or cash equivalents) generated by the Business except to (x) purchase
inventory, (y) make necessary capital expenditures or essential repairs or (z) otherwise discharge
obligations of the Business that are (I) due in the ordinary course of business consistent with
past practices (including, without limitation, payroll) or (II) not in excess of $200,000.

          5.3.2 Encumbrance and Maintenance of Assets; Incurring Liabilities. Seller shall
cause the Company and its Subsidiaries not to, from and after the Effective Date and until the
Closing Date, without the prior written consent of Buyer:

     (a) except in the ordinary course of business consistent with past practices, incur,
assume or agree to any debt or other obligation to pay money or guarantee any debt or
obligation to pay money relating to the Business;

     (b) enter into any lease, contract, agreement, purchase or sale order or other
commitment relating to the Assets or the Business other than in the ordinary course of
business consistent with past practices;

     (c) modify, amend, cancel or terminate any of its existing leases, contracts,
agreements, purchase or sale orders or other commitments relating to the Business or Seller
other than in the ordinary course of business consistent with past practices; or

     (d) sell, transfer, dispose of or encumber Assets relating to the Business other than
inventories in the ordinary course of business consistent with past practices.

     5.4 No Solicitation. Except for the transactions contemplated by this Agreement,
until the Closing Date or the earlier termination of this Agreement, the Company and Seller shall
refrain, and shall cause their respective officers, directors, employees, investment bankers,
attorneys or other representatives to refrain from, directly or indirectly, soliciting or
initiating discussions, inquiries, offers or proposals, or participate in any discussions or
negotiations for the

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purpose or with the intention of leading to any proposal or offer from any Person that would
reasonably be expected to lead to any bona fide proposal made by a third party to effect an
acquisition of the Membership Interests (including pursuant to a merger, consolidation or other
business combination) or other similar transaction involving the Company.

ARTICLE VI.

OTHER AGREEMENTS AND COVENANTS

     6.1 Delivery of Property Received after Closing. From and after the Closing, (a)
Buyer shall promptly transfer and deliver to Seller from time to time any cash or other property,
including mail, which it may receive which belongs to Seller, and (b) Seller shall promptly
transfer and deliver to Buyer from time to time, any cash or other property, including mail, that
Seller may receive which belongs to Buyer.

     6.2 Cooperation on Claims. Buyer and Seller shall cooperate in good faith with one
another in connection with the defense or presentation by any of them of each product liability,
worker’s compensation, environmental, occupational safety or other lawsuit or claim arising out of
the Business. Such cooperation shall include, without limitation, (a) supplying, at the expense of
the other, such factual and technical information as it shall possess and the other may reasonably
require in connection with any such defense, (b) making available, at the expense of the other,
persons employed by it to testify as fact or expert witnesses at trial and on deposition in
connection with such suits, (c) informing the other, to the extent requested, of events affecting
the other arising in connection with such suits, and (d) providing, at the expense of the other,
such information as may be required by it to respond to discovery proceedings in any such lawsuits.
Payment of expenses hereunder shall be limited to reasonable out of pocket expenses and
reimbursement of salaries or wages for employee time.

     6.3 Records Retention. Buyer will retain, for a period of five years following the
Closing Date or for such longer period during which any claim for indemnification pursuant to
Article IX or any dispute involving the working capital adjustment under Section 2.3.2 is pending,
all of the books and records of the Company and its Subsidiaries. Without limiting the generality
of the foregoing, Buyer agrees to preserve, store, protect, maintain, and allow Seller timely and
reasonable access to all personnel and personnel-related records that relate to employees who are
employed by the Company or its Subsidiaries as of the Effective Date. These records will be
provided to Buyer upon the transfer of employees from Seller to Buyer, and Buyer agrees to execute
the duties described above at no charge or expense to Seller. Buyer and Seller agree that Seller
will have access to any and all personnel-related records that relate to former Seller employees.

     6.4 Access to Books and Records after Closing; Financial Statements. From and after
the Closing Date and upon reasonable prior notice, Buyer shall cause the Company and Subsidiaries
to afford to Seller and its accountants and other representatives reasonable access, during normal
business hours, to such books and records relating to the Company as may reasonably be required.
Buyer will, from time to time upon reasonable advance notice from Seller, provide Seller and its
representatives with reasonable access to Buyer’s information and documentation with respect to the
Company and the Subsidiaries that is reasonably necessary, in the opinion of Seller or Seller’s
independent accountants, to enable Seller to prepare and file

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financial statements for the Company and its Subsidiaries in accordance with the Company’s
historical accounting practices and in order to enable Seller to file financial statements in
accordance with GAAP (as in effect in the United Kingdom) similar to those prepared in prior years
for Seller. In addition, Buyer will afford Seller with reasonable rights to meet with and discuss
matters with respect to the accounts with Buyer’s independent accountants in order to facilitate
the preparation of any financial statements or other accounts that Seller may need to prepare with
respect to the Business. Within 60 days of the Closing Date, Buyer will arrange for Seller to be
provided with a completed financial return, in a form consistent to that completed by the Company
in prior years (including compliance with United Kingdom GAAP), which reports the consolidated
financial results of the Company to Completion date and its consolidated balance sheet at that
date, to enable Seller to file consolidated accounts in accordance with applicable laws in the
United Kingdom.

ARTICLE VII.

TAX MATTERS

     7.1 Responsibility for Filing Tax Returns and Paying Taxes.

     (a) Seller shall prepare and timely file prior to the Closing Date all Tax Returns that
are required to be filed prior to the Closing Date by or with respect to the Company and its
Subsidiaries. Buyer shall be responsible for all other Tax Returns required to be filed by
or with respect to the Company and its Subsidiaries.

     (b) Seller shall pay and be responsible for all Taxes owed by the Company and its
Subsidiaries due prior to the Closing Date, except to the extent that such Taxes were taken
into account in the calculation of the Final Working Capital. Subject to Section 7.3, Buyer
shall be responsible for the payment of all other Taxes owed by the Company and its
Subsidiaries.

     7.2 Responsibility for Tax Audits and Contests. Buyer shall control any audit or
contest after the Closing Date. Buyer shall keep Seller informed of the status of the audit or
controversy (including providing copies of correspondence and pleadings) with respect to any audit
or contest relating to Taxes payable prior to the Closing Date. Buyer shall not settle any such
audit or contest in a way that would adversely affect Seller without Seller’s written consent,
which consent Seller shall not unreasonably withhold.

     7.3 Transfer Taxes. Seller shall be responsible for all state or local transfer,
sales, use, stamp, registration or other similar Taxes resulting from the transactions contemplated
by this Agreement.

ARTICLE VIII.

CONDITIONS TO CLOSING

     8.1 Buyer’s Conditions. The obligations of Buyer to consummate the transactions
contemplated hereby at the Closing are subject to the satisfaction (unless waived by Buyer) of the
following conditions:

     (a) Seller shall have delivered to Buyer each of the following:

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     (i) (A) certified resolutions of Seller’s Board of Directors authorizing the
consummation of the transactions contemplated hereunder and (B) an opinion of
Scottish counsel that no action of the shareholders of Seller is necessary to
authorize the consummation of the transactions contemplated hereunder;

     (ii) an assignment of Membership Interests dated as of the Closing Date,
conveying and transferring to Buyer the entire right, title and interest in and to
the Membership Interests, in the form set forth as Exhibit B hereto together with
all certificates evidencing the Membership Interests along with all required
endorsements;

     (iii) a certificate of existence of the Company and each Subsidiary from the
secretary of state of each state in which they are incorporated or organized and a
certificate of the good standing of the Company and each Subsidiary from each state
in which they are incorporated or organized, and a certificate of qualification of
the Company and each Subsidiary as a foreign entity authorized to do business in
each state in which they are so qualified, in each case dated as of a date not
earlier than 15 days prior to the Closing Date;

     (iv) the originals of all minute books, stock transfer records, electronic data
and corporate and all other records of the Company and each Subsidiary;

     (v) the resignation of each of the present directors and officers of the
Company and each Subsidiary;

     (vi) evidence reasonably satisfactory to Buyer of the repayment of all
intercompany balances owed by the Company to Seller;

     (vii) releases, in form satisfactory to Buyer, from Danny M. Brown, Andrew
Mallett, Claude Littner and any other person entitled to payments under that certain
Incentive Agreement among ASCO USA LLC, ASCO Holdings (US) LLC, Aspire Oil Services
Limited, Senior Management, Danny Brown and The Banks dated November 7, 2007,
releasing the Company and any of its Subsidiaries from any further obligation in
respect thereto and acknowledging receipt from the Company and any of its
Subsidiaries of all sums due and to become due to each of them; and

     (viii) not more than thirty (30) calendar days prior to the Closing, (a) a
certification that meets the requirements of Sections 1.897-2(h) and 1.1445-2(c)(3)
of the Treasury Regulations to the effect that the Company is not, nor has it been
within the last five years of the date of such certification, a “United States real
property holding corporation” as defined in Section 897(c)(2) of the Code and (b)
evidence that the Company has provided documents meeting the requirements of Section
1.897-2(h) to the Internal Revenue Service (along with a copy of such documents);
and

     (b) Except for the representations and warranties set forth in Section 3.1.8(a), each
of the representations and warranties of Seller set forth in this Agreement shall be

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true and correct in all respects both on the date of this Agreement and on the Closing
Date as though made on and as of each such date (it being understood that, for purposes of
determining the accuracy of such representations and warranties, all “Material Adverse
Effect” qualifications, other materiality qualifications, “knowledge,” “actual knowledge”
and “best knowledge” qualifications and similar qualifications contained in such
representations and warranties shall be disregarded), except (x) for representations and
warranties made as of a specified date (which representations and warranties shall be true
and correct as of such date) and , and (y) where the failure to be true and correct, in the
aggregate, has not and would not have a Material Adverse Effect, and Seller shall deliver to
Buyer a certificate dated as of the Closing Date and executed by its directors or other
authorized officers, to that effect;

     (c) Each of the representations and warranties of Seller set forth in Section 3.1.8(a)
shall be true and correct (x) as of the date of this Agreement in all respects and (y) as of
the Closing Date except to the extent made untrue, incorrect or inaccurate by the issuance
of additional Membership Interests by the Company solely in connection with the repayment of
outstanding intercompany debt owed by the Company to Seller and Seller shall deliver to
Buyer a certificate dated as of the Closing Date and executed by its directors or authorized
officers to that effect.

     (d) Since the date of this Agreement, there shall not have occurred an event or
circumstance or series of events or circumstances relating to the Company or any Subsidiary
that has had, or is reasonably likely to have, a Material Adverse Effect on the Company and
its Subsidiaries. Such events or circumstances may be aggregated with any inaccuracies of
representations and warranties of the Company and Seller hereunder to determine the
existence of a Material Adverse Effect.

     (e) Seller shall have complied with all of its other covenants and agreements herein
contained to be performed by it at or prior to the time fixed for the Closing;

     (f) Danny Brown, Brian Carpenter, Mike Pryor, John Coutrado, Mike Hartsell and Jamie
Sinclair shall enter into employment agreements acceptable in form and content to Buyer (the
“Employment Agreements”).

     (g) Buyer, Seller and Escrow Agent shall have entered into, executed and delivered the
Escrow Agreement.

     (h) At Buyer’s sole discretion and expense, Buyer shall have received Phase I and Phase
II environmental and engineering reports satisfactory to Buyer in Buyer’s sole discretion.

     (i) No legal proceedings filed by any Person shall, on the Closing Date, be pending
seeking to restrain, prohibit, or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.

     (j) Buyer shall have received copies of the Real Property Leases (and if the applicable
lease is a sublease, then Buyer shall have received a copy of the master lease) and all
amendments thereto and assignments thereof, and Buyer shall have determined in

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Buyer’s sole discretion that Buyer has no reasonable objection to any material term of
the Real Property Leases.

     (k) Seller shall deliver to Buyer, with respect to no less than 75% of the Real
Property Leases, written instruments signed by landowners of the Real Property subject to
the Real Property Leases affirming that the obligations of the appropriate lessee Company or
its Subsidiary have been fully performed and are current through the Closing Date and no
event has occurred that with the passage of time and the giving of notice would constitute a
default under such Real Property Lease.

     (l) At Buyer’s sole discretion and expense, Buyer shall have obtained lien searches and
title reports covering the Real Property and such lien searches and title reports shall not
contain any material defects in Seller’s title to the Real Property or any material liens
and encumbrances on the Real Property.

     (m) The Company shall have received the consents referenced as items 1 through 4 on
Schedule 3.1.9.

     (n) Since the date of this Agreement, there shall not have occurred a Category Three or
higher hurricane that either (i) affects three (3) or more locations of the Business or (ii)
causes damages to the Business in excess of $2,750,000 that is not covered by the Company’s
property and/or casualty insurance.

     (o) The aggregate maximum line of credit under the Wells Fargo Credit Facility shall be
$85,000,000.

     8.2 Seller’s Conditions. The obligation of Seller to consummate the transactions
contemplated hereby at the Closing are subject to the satisfaction (unless waived by Seller) of the
following conditions:

     (a) Buyer shall have delivered to Seller a certified copy of resolutions with respect
to the due authorization of Buyer to consummate the transactions contemplated hereunder.

     (b) Buyer shall have delivered to Seller at the Closing the Purchase Price as provided
for in Section 2.3.

     (c) (c) Buyer shall have delivered to Seller evidence reasonably satisfactory to Seller
that it has directed PlainsCapital Bank to pay the Good Faith Deposit to Seller by bank wire
transfer of immediately available funds.

     (d) Each of the representations and warranties of Buyer set forth in this Agreement
shall be true and correct in all material respects both on the date of this Agreement and on
the Closing Date as though made on and as of each such date except (x) with respect to the
effect of transactions permitted by the provisions of this Agreement and (y) for
representations and warranties made as of a specified date (which representations and
warranties shall be true and correct as of such date) and Buyer shall

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deliver to Seller at the Closing a certificate dated the Closing Date and executed by a
duly authorized officer of Buyer to that effect.

     (e) Buyer, Seller and Escrow Agent shall have entered into, executed and delivered the
Escrow Agreement.

     (f) Buyer shall have complied with all of its other covenants and agreements herein
contained to be performed by it at or prior to the time fixed for the Closing.

ARTICLE IX.

INDEMNIFICATION

     9.1 Indemnification by Seller. From and after the Closing Date, but subject to the
conditions and limitations set forth in this Agreement, which shall be controlling, Seller shall
indemnify and hold Buyer and its affiliates, managers, directors, officers, partners, employees,
agents and representatives, and the successors and permitted assigns of any of the foregoing
(collectively, “Buyer Indemnitees”) harmless from and against any and all loss, cost, damage or
expense (including reasonable attorneys’ fees) resulting from or arising out of (i) any breach by
Seller of Section the representations and warranties in Section 3.1.1, 3.1.2, 3.1.4, 3.1.8(a) or
3.1.17 or (ii) any breach by Seller of (A) the representations and warranties in Section 3.1.8(b)
or 3.1.21 or (B) any covenant or obligation of Seller contained herein (collectively, “Damages”).
The Parties agree that the Seller will not be deemed to have breached any of the representations or
warranties set forth in Section 3.1.8(a) to the extent such representations or warranties are made
untrue, incorrect or inaccurate by the issuance of additional Membership Interests by the Company
solely in connection with the repayment of outstanding intercompany debt owed by the Company to
Seller. THE FOREGOING INDEMNIFICATION WILL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE
IN ANY WAY OR TO ANY EXTENT RELATED TO OR ARISING FROM, IN WHOLE OR IN PART, UNDER ANY CLAIM OR
THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY
KIND BY ANY BUYER INDEMNITEE, WHETHER UNDER STATUTE OR UNDER COMMON LAW.

     9.2 Indemnification by Buyer. From and after the Closing Date, but subject to the
conditions and limitations set forth in this Agreement, which shall be controlling, Buyer shall
defend, indemnify and hold Seller and its affiliates, managers, directors, officers, partners,
employees, agents and representatives, and the successors and permitted assigns of any of the
foregoing (collectively, “Seller Indemnitees”) harmless from and against any and all loss, cost,
damage or expense (including reasonable attorneys’ fees) whatsoever resulting from or arising out
of (i) any breach of any warranty or representation of Buyer, (ii) any breach of any covenant or
obligation of Buyer contained herein, and (iii) the conduct of the Business after the Closing.
THE FOREGOING INDEMNIFICATION WILL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY
WAY OR TO ANY EXTENT RELATED TO OR ARISING FROM, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF
STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
SELLER INDEMNITEE, WHETHER UNDER STATUTE OR UNDER COMMON LAW.

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     9.3 Third-Party Claims.

     (a) If either Buyer or Seller (the “Claimant”) receives notice of the assertion or
commencement by any third person or entity of any claim, investigation, proceeding or action
(each, a “Claim”) with respect to which an indemnification obligation may exist under
Section 9.1 or 9.2, the Claimant shall give prompt notice of such Claim to the other party
(the “Indemnitor”) and Claimant shall, at the time of giving such notice, if the Indemnitor
shall agree that it would have responsibility to indemnify under such Section 9.1 or 9.2 or
shall agree to undertake the Claimant’s defense subject to a reservation of the right to
later contest the obligation of indemnity other than for the expenses of such undertaken
defense, give the Indemnitor full authority to defend, adjust, compromise or settle the
action, suit, proceeding or demand of which such notice shall have been given, in the name
of the Claimant or otherwise as the Indemnitor shall elect; provided, however, that Claimant
may, at its own expense, retain such additional attorneys as it may deem necessary, which
attorneys will be permitted by Indemnitor and its attorneys to observe and/or participate in
all aspects of the defense of such action.

     (b) If the Indemnitor fails or does not assume the defense of any such claim within 15
days after written notice of such claim has been given by the Claimant to the Indemnitor,
the Claimant may defend against or, subject to Section 9.3(c), settle such claim with
counsel of its own choosing at the expense (to the extent reasonable under the
circumstances) of the Indemnitor.

     (c) Indemnitor shall have the right, after consultation with Claimant, to resolve and
settle any such claims or actions which result only in the payment of money damages by
Indemnitor, unless Claimant determines that such settlement would not be in its best
interests, in which event Claimant may at its own expense defend such claims or disputes and
shall promptly release Indemnitor from any and all liability with respect thereto in excess
of the amount of any payment which Claimant and Indemnitor reasonably determine would have
been required to be made by Indemnitor in connection with such settlement.

     (d) In the event of any claims under Section 9.1 or 9.2 for indemnification, the
Claimant shall advise the Indemnitor in writing of the amount and circumstances surrounding
said claim. With respect to liquidated claims, if within thirty (30) days the Indemnitor
has not contested said claim in writing, the Indemnitor will pay the full amount thereof in
cash within ten (10) days after the expiration of such period.

     (e) With respect to any disputes between the Parties regarding whether indemnification
is required hereunder, each Party shall be responsible for its own expenses in any
arbitration or litigation between the Parties hereto and any expenses not attributable to
either Party, such as the cost of a third arbitrator, shall be shared equally by the
Parties.

     9.4 Certain Limitations. The indemnification provided by Sections 9.1 and 9.2 is
subject to the following limitations:

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     (a) Subject to (d) below, Seller shall have no liability for indemnification under this
Article IX until the total amount of Damages suffered by Buyer exceeds an amount equal to the sum
of (i) one percent (1%) of the Purchase Price, and (ii) the Final Working Capital, to the extent a
positive number (such sum, the “Floor Amount”).

     (b) Subject to (d), (e), (f) and (g) below, with respect to claims for indemnification under
Section 9.1(i), Seller shall be liable only for the amount of Damages suffered by Buyer in excess
of the Floor Amount but only to the extent the total amount of all Damages has not exceeded the
Purchase Price.

     (c) Subject to (d), (e), (f) and (g) below, with respect to claims for indemnification under
Section 9.1(ii), Seller shall be liable only for the amount of Damages suffered by Buyer in excess
of the Floor Amount, up to a maximum equal to the lesser of (A) seven and one half percent (7.5%)
of the Purchase Price and (B) the difference between (x) the Purchase Price and (y) the sum of all
Damages suffered by Buyer in excess of the Floor Amount (which sum shall be deemed to be zero to
the extent a negative number).

     (d) Notwithstanding anything herein to the contrary, the limitations on liability set forth in
this Section 9.4 shall not apply to Damages resulting from fraud or the willful and intentional
breach of a representation or warranty or covenant or obligation contained in this Agreement.

     (e) Neither Party shall have any indemnification obligations under this Article IX unless the
other Party shall, on or before the date that is twelve months from the Closing, notify the other
Party of a Claim pursuant to this Article IX and specifies the factual basis of such Claim in
reasonable detail to the extent then known by the Party demanding indemnification.

     (f) Except for the representations and warranties of (i) Seller contained in Sections 3.1.1,
3.1.2, 3.1.4, 3.1.8, 3.1.17 and 3.1.21 and (ii) Buyer contained in Sections 4.1.2 and 4.1.5, the
respective representations and warranties of Seller and Buyer shall terminate upon the earlier to
occur of (A) the termination of this Agreement and (B) Closing, and, notwithstanding any applicable
statue of limitations, neither Party shall have any cause of action or claim for indemnification
with respect to such representations and warranties after their termination. The representations
and warranties of (i) Seller contained in Sections 3.1.1, 3.1.2, 3.1.4, 3.1.8, 3.1.17 and 3.1.21
and (ii) Buyer contained in Sections 4.1.2 and 4.1.5 shall terminate upon the earlier to occur of
(A) the termination of this Agreement and (B) the date that is twelve months from the date of
Closing, and, notwithstanding any applicable statute of limitations, neither Party shall have any
cause of action or claim for indemnification with respect to such representations and warranties
after their termination.

     (g) Notwithstanding any other provisions of this Agreement, (i) Buyer Indemnitees shall not be
entitled to indemnification pursuant to this Article IX with respect to any breach by Seller of any
representation or warranty to the extent that any Buyer Indemnitees had, at any time prior to the
Closing Date, actual knowledge of such breach and Constructive Knowledge of the Damages resulting
from such breach; and (ii) Seller Indemnitees shall not be entitled to indemnification pursuant to
this Article IX with respect to any breach by Buyer of any representation or warranty to the extent
that any Seller Indemnitees had, at any time prior to the

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Closing Date, actual knowledge of such breach and Constructive Knowledge of the Damages resulting
from such breach. A Party with actual knowledge of a breach of a representation or warranty prior
to the Closing Date shall have an affirmative duty to inquire of the other Party into such breach
as the circumstances would reasonably permit prior to the Closing. “Constructive Knowledge” shall
mean the knowledge that a reasonably prudent person would have obtained as a result of such inquiry
of the other party and as a result of such consultation by such prudent person with its consultants
and advisors with respect to the subject matter of such inquiry as the circumstances would
reasonably permit prior to the Closing.

     9.5 Exclusive Remedies. If a Closing shall occur, except in the case of fraud and
except for injunctive relief to which a Party may be entitled, including specific performance, the
remedies provided by this Article IX are intended to be, and are, the exclusive remedies of the
Parties under or by reason of this Agreement. If a Closing shall not occur, except (a) in the case
of fraud, (b) for injunctive relief to which a Party may be entitled, including specific
performance and (c) as provided in Section 10.2(b) and (c), the sole remedy of either Party for the
breach of a representation and warranty of the other Party shall be to terminate this Agreement.

     9.6 Waiver of Consequential Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, BUYER SHALL NOT BE LIABLE TO ANY OF SELLER INDEMNITEES AND, EXCEPT WITH RESPECT TO ANY
FRAUDULENT ACTS OR STATEMENTS OF SELLER, SELLER SHALL NOT BE LIABLE TO ANY OF BUYER INDEMNITEES,
FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE, OR SPECULATIVE DAMAGES
(INCLUDING ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES) RESULTING FROM OR ARISING OUT
OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     9.7 Tax Treatment of Indemnity Payments. The Parties shall treat payments made
pursuant to this Article IX as adjustments to the Purchase Price for all federal and state income
and franchise Tax purposes as appropriate or required under law.

ARTICLE X.

TERMINATION

     10.1 Termination. This Agreement and the purchase contemplated hereby may be
terminated at any time prior to the Closing by:

     (a) the mutual written consent of Seller and Buyer;

     (b) Buyer, upon a breach of any representation, warranty, covenant or agreement on the
part of Seller set forth in this Agreement such that the conditions set forth in Section 8.1
would be incapable of being satisfied by December 12, 2008 (or as otherwise extended by
written mutual agreement of the Parties);

     (c) Seller, upon a breach of any representation, warranty, covenant or agreement on the
part of Buyer set forth in this Agreement such that the conditions set

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forth in Section 8.2, would be incapable of being satisfied by December 12, 2008 (or as
otherwise extended by written mutual agreement of the Parties);

     (d) either Seller or Buyer, if a Governmental Authority shall issue an order, decree,
or other ruling or action which permanently restrains or otherwise prohibits the
transactions contemplated by this Agreement and such order, decree, or other ruling or
action is not subject to appeal; or

     (e) either Seller or Buyer if the Closing has not occurred by the close of business on
December 12, 2008 and if the failure to consummate the transactions contemplated hereby on
or before such date did not result from the failure by the Party seeking termination of this
Agreement to fulfill any undertaking or commitment provided for herein that is required to
be fulfilled by such Party or its affiliates at or prior to Closing.

     10.2 Procedure and Effect of Termination.

     (a) In the event of termination of this Agreement by either or both of Seller and Buyer
pursuant to Section 10.1, written notice thereof shall forthwith be given by the terminating
Party to the Party hereto, and this Agreement shall thereupon terminate and become void and
have no further effect, and the transactions contemplated hereby shall be abandoned without
further action by the Parties hereto, except that the obligations in Sections 11.3, 11.4,
11.5, 11.6, 11.7, 11.8, 11.9, 11.10, 11.11, 11.12, 11.18 and 11.19 shall survive such
termination. Such termination shall not relieve any Party hereto of any liability for any
breach of this Agreement. If this Agreement is terminated as provided herein, all filings,
applications, and other submissions made to Governmental Authority shall, to the extent
practicable, be withdrawn from the agency or other persons to which they were made.

     (b) In the event that this Agreement is terminated pursuant to Section 10.1(c) or (e),
the Parties shall direct PlainsCapital Bank to deliver the Good Faith Deposit to Seller.

     (c) In the event that this Agreement is terminated pursuant to Section 10.1(a), (b) or
(d), the Parties shall direct PlainsCapital Bank to deliver the Good Faith Deposit to Buyer.

ARTICLE XI.

MISCELLANEOUS

     11.1 Defined Terms. As used in this Agreement:

     “Accountants” has the meaning set forth in Section 2.3.2(b).

     “Accounts Receivable” has the meaning set forth in Section 3.1.12.

     “Agreement” has the meaning set forth in the Preamble.

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     “Applicable Laws” has the meaning set forth in Section 3.1.3.

     “Assets” has the meaning set forth in Section 3.1.13.

     “Business” has the meaning set forth in the Recitals.

     “Business Day” means any day other than a Saturday, Sunday or any federal holiday or day on
which banks are required or authorized to close in New Orleans, Louisiana.

     “Buyer” has the meaning set forth in the Preamble.

     “Buyer Indemnitees” has the meaning set forth in Section 9.1.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any successor statutes and any regulations promulgated thereunder.

     “CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability
Information System List.

     “Claim” has the meaning set forth in Section 9.3.

     “Claimant” has the meaning set forth in Section 9.3.

     “Closing” has the meaning set forth in Section 2.1.

     “Closing Date” has the meaning set forth in Section 2.1.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company” has the meaning set forth in the Recitals.

     “Company Transaction Costs” means all fees, costs and expenses of any brokers, financial
advisors, consultants, accountants, attorneys or other professionals engaged by the Company in
connection with the structuring, negotiation or consummation of the transactions contemplated by
this Agreement and the other Related Agreements.

     “Constructive Knowledge” has the meaning set forth in Section 9.4(g).

     “Damages” has the meaning set forth in Section 9.1.

     “Deficiency” has the meaning set forth in Section 2.3.2(c).

     “Disclosure Schedule” has the meaning set forth in Section 3.1.

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     “Employee Plan” has the meaning set forth in Section 3.1.22.

     “Employment Agreements” has the meaning set forth in Section 8.1(e).

     “Environmental Law” means any law, common law, ordinance, regulation or policy of any
Governmental Authority, as well as any order, decree, permit, judgment or injunction issued,
promulgated, approved, or entered thereunder, relating to the environment, health and safety,
Hazardous Material (including, without limitation, the use, handling, transportation, production,
disposal, discharge or storage thereof), industrial hygiene, the environmental conditions on, under
or about any real property owned, leased or operated at any time by the Company or any of its
Subsidiaries, including, without limitation, soil, groundwater and indoor and ambient air
conditions or the reporting or remediation of environmental contamination. Environmental Laws
include, without limitation, the Clean Air Act, as amended, the Federal Water Pollution Control
Act, as amended, the Rivers and Harbors Act of 1899, as amended, the Safe Drinking Water Act, as
amended, CERCLA, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Hazardous and Solid Waste Amendments Act of
1984, as amended, the Toxic Substances Control Act, as amended, the Occupational Safety and Health
Act (“OSHA”), as amended, the Hazardous Materials Transportation Act, as amended, and any other
federal, state and local law whose purpose is to conserve or protect human health, the environment,
wildlife or natural resources.

     “Environmental Permit” means any Permit required under Environmental Laws.

     “ERISA” has the meaning set forth in Section 3.1.22.

     “Escrow Agent” has the meaning set forth in Section 2.3.1(b).

     “Escrow Agreement” has the meaning set forth in Section 2.3.1(b).

     “Escrow Amount” has the meaning set forth in Section 2.3.1(b).

     “Final Working Capital” has the meaning set forth in Section 2.3.2(a).

     “Final Working Capital Statement” has the meaning set forth in Section 2.3.2(a).

     “Floor Amount” has the meaning set forth in Section 9.4(a).

     “Good Faith Deposit” has the meaning set forth in Section 2.3.1(a).

     “Governmental Authority” (any one or more of the following, collectively, “Governmental
Authorities”) means any U.S. federal, state, local or foreign government or governmental regulatory
body and any of their respective subdivisions, agencies, instrumentalities, authorities,
commissions, boards, bureaus, courts or tribunals.

     “Hazardous Material” means (a) any “hazardous substance,” as defined by CERCLA; (b) any
“hazardous waste” or “solid waste,” in either case as defined by the Resource Conservation

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and Recovery Act, as amended; (c) any solid, hazardous, dangerous, radioactive or toxic chemical,
material, waste or substance, within the meaning of and regulated by any Environmental Law; (d) any
asbestos containing materials in any form or condition; (e) any polychlorinated biphenyls in any
form or condition; (f) petroleum, petroleum hydrocarbons, or any fraction or byproducts thereof; or
(g) any air pollutant which is so designated by the U.S. EPA as authorized by the Clean Air Act.

     “Indemnitor” has the meaning set forth in Section 9.3.

     “Licenses” has the meaning set forth in Section 3.1.19.

     “Litigation Reserve Report” has the meaning set forth in Section 3.1.7.

     “Material Adverse Effect” means (i) any change, event or circumstance that has had or could
reasonably be expected to have a material and adverse effect on the business, assets, liabilities,
financial condition or operations (including results of operations) of the Company and its
Subsidiaries, taken as a whole or (ii) any change, event or circumstance which individually or in
the aggregate would materially impair the Company’s ability to consummate the transactions
contemplated by this Agreement; provided, that none of the following shall be deemed to
constitute, and none of the following changes, events or circumstances shall be taken into account
in determining whether there has been a Material Adverse Effect: (A) any adverse change, event,
development or effect arising from or relating to (I) compliance with the terms of, or taking any
action required by, this Agreement; (II) general business or economic conditions affecting the
industries in which the Company or its Subsidiaries operate; (III) financial, banking, credit or
securities markets (including any disruption thereof and any decline in the price of any security
or any market index or the increase of any benchmark interest rate); or (IV) changes in GAAP or any
law or industry standard; or (B) any action or omission of the Company or any of its Subsidiaries
taken with the express prior written consent of Buyer. For purposes of clause (i) of the
immediately preceding sentence, any adverse effect that is quantifiable in monetary terms and
exceeds, or is reasonably expected to exceed on a present value basis, $2,750,000 shall constitute
a Material Adverse Effect.

     “Material Contracts” has the meaning set forth in Section 3.1.16.

     “Membership Interests” has the meaning set forth in the Recitals.

     “Owned Real Property” has the meaning set forth in Section 3.1.13(a).

     “Party” and “Parties” have the meanings set forth in the Preamble.

     “Permits” means all permits, consents, authorizations, approvals, registrations, licenses,
certificates or variances granted by or obtained from any U.S. federal, state or local
governmental, administrative or regulatory authority.

     “Permitted Encumbrances” has the meaning set forth in Section 3.1.13.

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     “Person” means any natural person, corporation, partnership, limited liability company, trust,
unincorporated organization, Governmental Authority, or other entity.

     “Pre-Closing Tax Period” means any Tax period (or a portion thereof) ending on or before the
Closing Date.

     “Purchase Price” has the meaning set forth in Section 2.3.1.

     “Real Property” has the meaning set forth in Section 3.1.13(b).

     “Real Property Lease” and “Real Property Leases” have the meanings set forth in 3.1.13(b).

     “Related Agreement” means the Employment Agreements, the Escrow Agreement and all other
documents and instruments executed in connection herewith.

     “Review Period” has the meaning set forth in Section 2.3.2(b).

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

     “Securities Laws” means applicable federal and state (“blue sky”) laws and regulations,
including the Securities Act governing securities.

     “Seller” has the meaning set forth in the Preamble.

     “Seller Indemnitees” has the meaning set forth in Section 9.2.

     “Subsidiary” and “Subsidiaries” have the meanings set forth in Section 3.1.5.

     “Tax” or “Taxes” means all taxes, assessments, charges, duties, fees, levies, imposts or other
similar charges imposed by a Governmental Authority, including all income, franchise, profits,
margins, capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service,
occupation, ad valorem, real or personal property, excise, severance, windfall profits, customs,
premium, stamp, license, payroll, employment, social security, unemployment, disability,
environmental, alternative minimum, add-on, value-added, withholding and other taxes, assessments,
charges, duties, fees, levies, imposts or other similar charges of any kind, and all estimated
taxes, deficiency assessments, additions to tax, penalties and interest, whether disputed or
otherwise, and including any obligation to indemnify or otherwise assume or succeed to the
liability for Taxes of any other person whether or not shown as due or payable on any Tax Return.

     “Tax Returns” means any report, return, election, document, estimated tax filing, declaration,
claim for refund, information returns, or other filing with respect to any Taxes provided to any
Governmental Authority including any schedules or attachments thereto and any amendment thereof.

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     “Wells Fargo Credit Facility” means that certain Credit and Security Agreement by and between
ASCO USA, LLC, acting through its ASCO Fuel & Lube division, ASCO USA, LLC acting through its ASCO
Freight Management division and Wells Fargo Business Credit, Inc. dated October 15, 2004, and the
eleven amendments thereto between December 20, 2004 and May 28, 2008.

     “Working Capital” means an amount equal to the Company’s current assets minus current
liabilities (each expressed as a positive number in accordance with GAAP) as of the Closing Date as
determined in accordance with GAAP applied on a consistent basis, and otherwise consistent with the
historical practices and methodology used to prepare the financial statements of the Company;
provided, however, that (i) the Company’s current assets shall not be increased by any amounts
reserved for payments of litigation or other contingent liabilities, including, without limitation,
the amounts set forth in the Litigation Reserve Report in Schedule 3.1.7 and (ii) the
Company’s current liabilities shall be increased by (A) the Company Transaction Costs (even if such
Company Transaction Costs are incurred or otherwise become payable after the Closing Date) and (B)
all Taxes owed by the Company and its Subsidiaries that have accrued on or prior to the Closing
Date (even if such Taxes become payable subsequent to the Closing Date).

     11.2 Further Assurances.

     (a) After the Closing, Seller shall from time to time, at Buyer’s request and without
further cost or expense to Buyer, execute and deliver to Buyer such other documents and take
such other action as Buyer may reasonably request so as more effectively to consummate the
transactions contemplated by this Agreement.

     (b) After the Closing, Buyer shall from time to time, at Seller’s request and without
further cost or expense to Seller, execute and deliver to Seller such other documents and
take such other action as Seller may reasonably request so as more effectively to cause
Buyer to consummate the transactions contemplated by this Agreement.

     11.3 Expenses. Except as otherwise provided in this Agreement, each Party shall bear
and pay its own expenses and taxes incurred in connection with the transactions referred to in this
Agreement.

     11.4 Notices. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly given when personally delivered or five
(5) days after being mailed by registered or certified first class mail, return receipt requested,
postage prepaid, and in each case addressed:

     If to Seller, to:

L&L Holdings (Louisiana), L.L.C.

3421 N. Causeway Blvd., Suite 502

Metairie, Louisiana 70002

Telephone: (504) 832-8600

Telecopier: (504) 832-8066

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With copies to:

Fishman Haygood Phelps Walmsley Willis & Swanson, L.L.P.

Attention: Sterling Scott Willis

201 St. Charles Avenue, 46th Floor

New Orleans, Louisiana 70170

Telephone: (504) 586-5264

Telecopier: (504) 310-0264

Aspire Oil Services Limited

Attention: Andrew Mallett

29 St James’s Drive

London SW17 7RN

UK

Telephone/Telecopier: +44 (0) 208 672 9789

Claude Littner

1 Austell Gardens

Mill Hill

London NW7 4NS

UK

Telephone: +44 7770 333 003

Email: littnerfam@screaming.net

     If to Buyer to:

GreenHunter Energy, Inc.

Attention: Morgan Johnston

1048 Texas Trail

Grapevine, Texas 76051

Telephone: (972) 410-1044

Telecopier: (972) 410-1066

     With a copy to:

Thompson & Knight LLP

Attention: Ann Marie Cowdrey

1722 Routh Street, Suite 1500

Dallas, Texas 75201

Telephone: (214) 969-1221

Telecopier: (214) 999-9001

provided, however, that if any addressee shall have designated a different address by notice to the
other addressees, then to the last address so designated.

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     11.5 Assignment. This Agreement and the rights and duties hereunder shall be binding
upon and inure to the benefit of the successors and assigns of each of the Parties hereto, but
shall not be assigned or delegated by either Party without the prior written consent of the other
Party. No such assignment shall relieve the assigning Party of its obligations hereunder.

     11.6 Waivers. Any waiver by Seller or Buyer of any breach of or failure to comply
with any provision of this Agreement by the other Party must be in writing and shall not be
construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach
of, or failure to comply with, any other provision of this Agreement.

     11.7 Complete Agreement. Except as set forth in any contemporaneous written
instruments signed by each of the Parties hereto, this Agreement and the Exhibits hereto and the
Related Agreements set forth the entire understanding of the Parties hereto and supersede all prior
agreements, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party. There are no implied
representations or warranties.

     11.8 Governing Law. This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.

     11.9 Third Parties; Amendment and Termination. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity, other than the
Parties hereto, any rights or remedies under or by reason of this Agreement. This Agreement may
not be amended or terminated orally but only by an instrument in writing duly executed by the
Parties hereto.

     11.10 Remedies Upon Default.

     (a) Except in the case of fraud and except for injunctive relief to which a Party may
be entitled, including specific performance, in the event of a default by Buyer of any of
its obligations hereunder, or under other agreements or instruments delivered pursuant to
this Agreement, the sole and exclusive recourse and remedy of Seller or any person claiming
through Seller shall be against Buyer and its assets and under no circumstances shall any
affiliate, officer, director or stockholder of Buyer have any personal liability whatsoever
in law or equity for any obligations of Buyer hereunder or under such other agreements,
except to any extent to which obligations under this Agreement have been assigned to any
such person.

     (b) Except in the case of fraud and except for injunctive relief to which a Party may
be entitled, including specific performance, in the event of a default by Seller of any of
its obligations hereunder, or under other agreements or instruments delivered pursuant to
this Agreement, the sole and exclusive recourse and remedy of Buyer or any person claiming
through Buyer shall be against Seller and its assets and under no circumstances shall any
officer, director, stockholder or affiliate of Seller have any personal liability whatsoever
in law or equity for any obligations of Seller hereunder or

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under such other agreements, except to any extent to which obligations under this
Agreement have been assigned to any such person.

     11.11 Consent to Jurisdiction; Venue.

     (a) The Parties hereto submit to the personal jurisdiction of the federal District Court in
the Eastern District of Louisiana, and any appellate court from any such federal court, and hereby
irrevocably and unconditionally agree that all claims with respect to any such claim may be heard
and determined in such federal court. The Parties hereto agree that a final judgment in any such
claim shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any right that any
Party may otherwise have to bring any claim relating to this Agreement or any related matter
against any other Party or its assets or properties in the courts of any jurisdiction.

     (b) Each of the Parties hereto irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or
any related matter in the federal District Court in the Eastern District of Louisiana and the
defense of an inconvenient forum to the maintenance of such claim in any such court.

     11.12 No Waiver. Failure to exercise any power given either Party hereunder or to
insist upon strict compliance by the other Party shall not constitute a waiver of either Party’s
right to demand exact compliance with the terms hereof.

     11.13 Separability of Provisions. Each provision of this Agreement shall be
considered separable and if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Agreement is determined to be invalid or contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those provisions of this
Agreement which are valid.

     11.14 Headings. The headings of the Articles and Sections of this Agreement and of
the Exhibits to this Agreement are inserted for convenience of reference only and shall not be
deemed to constitute a part hereof.

     11.15 Exhibits. The Exhibits attached hereto and referred to herein are a part of
this Agreement for all purposes. Terms which are defined in this Agreement shall have the same
meanings when used in the Exhibits hereto.

     11.16 Actual Knowledge or Knowledge. Seller’s “Actual knowledge” or “knowledge” or
“best knowledge” as used in this Agreement shall mean actual knowledge of Danny M. Brown, Andrew
Mallett or Claude Littner without any duty of a special investigation or inquiry.

     11.17 Counterparts. More than one counterpart of this Agreement may be executed by
the Parties hereto, and each executed counterpart shall be deemed an original.

     11.18 Press Releases; Confidentiality. Each Party hereby agrees that all press
releases or other publications, relating to the existence or the content of this Agreement and the
transactions contemplated hereby, can only be made after consultation with, and approval by, the

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other Party. Each Party will maintain in confidence, and will cause its directors, officers,
employees, agents, and advisors to maintain in confidence, and not use to the detriment of another
Party any written, oral, or other information obtained in confidence from the other of them in
connection with this Agreement or the transactions contemplated herein, unless (a) such information
becomes publicly available through no fault of such Party, (b) the use of such information is
necessary or appropriate in making any filing or, obtaining any consent or approval required for
the consummation of the transactions contemplated hereby, or (c) the furnishing or use of such
information is required in connection with legal proceedings.

     11.19 Injunctive Relief. The Parties hereto acknowledge and agree that irreparable
damage would occur in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of
this Agreement, and shall be entitled to enforce specifically the provisions of this Agreement, in
any court of the United States or any state thereof having jurisdiction, in addition to any other
remedy to which the Parties may be entitled under this Agreement or at law or in equity.

[SIGNATURE PAGES TO FOLLOW]

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     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly
authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	BUYER:

GREENHUNTER ENERGY, INC.

 	 
	 	By:  	/s/ Gary C. Evans
 	 
	 	 	Name:  	Gary C. Evans 	 
	 	 	Title:  	Chairman, President and CEO 	 
	 
	 	SELLER:

ASPIRE OIL SERVICES LIMITED

 	 
	 	By:  	/s/ Claude Littner
 	 
	 	 	Name:  	Claude Littner 	 
	 	 	Title:  	Chairman 	 
	 
	 	 	 
	 	By:  	                                              /s/ A. H. Mallett
 	 
	 	 	Name:  	A. H. Mallett 	 
	 	 	Title:  	Director 	 
	 

-42-exv10w1

Exhibit 10.1

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.

RXI PHARMACEUTICALS CORPORATION

WARRANT

			
	 	 	 
	Warrant No. A- 1
	 	Dated: August 7, 2008

     RXi Pharmaceuticals Corporation, a Delaware corporation (the “Company”), hereby certifies
that, for value received, J.P. Turner Partners, LP or its registered Permitted Transferees
(together, the “Holder”), as registered owner of this warrant (the “Warrant”), is entitled to
purchase from the Company up to a total of 190,000 shares (as adjusted from time to time as
provided in Section 10) of Common Stock, at an exercise price equal to $7.036 per share (as
adjusted from time to time as provided in Section 10, the “Exercise Price”), upon such
shares becoming Vested Shares, at any time and from time to time from and after the date of this
Warrant (the “Initial Exercise Date”) to and including August 7, 2013 (the “Expiration Date” and
the period starting with the Initial Exercise Date and ending on the Expiration Date is referred to
as the “Term”), and subject to the following terms and conditions:

     1. Definitions. The capitalized terms used herein and not otherwise defined shall
have the meanings set forth below:

               “Affiliate” of any specified Person means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with such specified Person.
For purposes of this definition, “control” means the power to direct the management and policies of
such Person or firm, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

               “Commission” means the United States Securities and Exchange Commission.

               “Common Stock” means the common stock of the Company, $0.0001 par value per share.

               “Eligible Market” means any of the New York Stock Exchange, the American

 

 

Stock Exchange or Nasdaq (as defined below), and any successor markets thereto.

               “Exchange Act” means the Securities Exchange Act of 1934, as amended

               “Market Price” shall mean (i) if the principal trading market for such securities is an
exchange, the average of the last reported sale prices per share for the last ten previous Trading
Days in which a sale was reported, as officially reported on any consolidated tape or (ii) if
clause (i) is not applicable, the average of the closing bid price per share for the last ten
previous Trading Days as set forth in the National Quotation Bureau sheet listing for such
securities. Notwithstanding the foregoing, if there is no reported sales price or closing bid
price, as the case may be, on any of the ten Trading Days preceding the event requiring a
determination of Market Price hereunder, then the Market Price shall be determined in good faith
after reasonable investigation by resolution of the Board of Directors of the Company.

               “Nasdaq” means the Nasdaq Global Market or Nasdaq Capital Market, and any successor markets
thereto.

               “Permitted Transferees” means only Persons who are the directors, officers and employees of
the Holder.

               “Person” means any court or other federal, state, local or other governmental authority or
other individual or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

               “Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on
any Eligible Market or (b) if the Common Stock is not then quoted and traded on any Eligible
Market, then a day on which trading occurs on the Nasdaq Global Market (or any successor thereto).

               “Vested Shares” means Warrant Shares that have become vested as described in and pursuant to
Section 4 hereunder.

               “Warrant Shares” shall initially mean shares of Common Stock and in addition may include Other
Securities and Substituted Property (as defined in Section 10(e)(x)) issued or issuable
from time to time upon exercise of this Warrant.

     2. Registration of Warrant. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes.

 

 

     3. Registration of Transfers. The Company shall register the transfer of any portion
of this Warrant in the Warrant Register, which transfer shall only be made to a Permitted
Transferee and in accordance with applicable securities laws, upon surrender of this Warrant, with
the Form of Assignment attached hereto as Appendix A duly completed and signed, to the
Company at its address specified herein. Upon any such registration and transfer, a new warrant in
substantially the form of a Warrant (any such new warrant, a “New Warrant”), evidencing the portion
of this Warrant so transferred shall be issued to the Permitted Transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the
transferring Holder. The acceptance of the New Warrant by the Permitted Transferee thereof shall
be deemed the acceptance by such Permitted Transferee of all of the rights and obligations of a
holder of a Warrant.

     4. Vesting of Warrant Shares. The Warrant Shares issued hereunder shall vest in four
installments (the “Installments”) as described in this Section 4. The first Installment in the
amount of 94,000 shares shall vest on the Initial Exercise Date, and each of the three remaining
Installments, each in the amount of 32,000 shares, shall vest on each of December 6, 2008, January
6, 2009 and February 6, 2009 unless the letter agreement between J.P. Turner Partners, LP and the
Company dated August 7, 2008 has not been terminated prior to each such date.

     5. Exercise and Duration of Warrant.

          (a) The Vested Shares under this Warrant shall be exercisable, either in its entirety or for a
portion of the number of Vested Shares, by the registered Holder at any time and from time to time
from and after the Initial Exercise Date to and including the Expiration Date. At 5:00 P.M.
Boston, Massachusetts time on the Expiration Date, the portion of this Warrant not exercised prior
thereto shall be and become void and of no value, and the Holder hereof shall have no right to
purchase any additional Warrant Shares hereunder.

          (b) A Holder may exercise this Warrant by delivering to the Company, in accordance with
Section 13, this Warrant, together with (i) an exercise notice, in the form attached hereto
as Appendix B (the “Exercise Notice”), appropriately completed and duly signed, and (ii)
(A) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is
being exercised pursuant to a Cash Exercise (as set forth in Section 5(c) below) or (B) if
available pursuant to Section 5(d) below, by notifying the Company that this Warrant is
being exercised pursuant to a Cashless Exercise (as set forth in Section 5(d) below), and
the date such items are received by the Company is an “Exercise Date.” Execution and delivery of
an Exercise Notice in respect of less than all of the Warrant Shares issuable upon exercise of this
Warrant shall result in the cancellation of the original Warrant and issuance of a New Warrant
evidencing the right to purchase the remaining number of Warrant Shares.

          (c) Cash Exercise. In the event the Holder has elected to pay the Exercise Price in cash, it
shall pay the Exercise Price by certified bank check payable to the order of the Company or by wire
transfer of immediately available funds in accordance with the Company’s instructions (a “Cash
Exercise”).

          (d) Cashless Exercise. Notwithstanding anything contained herein to the contrary, the Holder
may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making

 

 

the cash payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Exercise Price, elect instead to receive upon such exercise the “Net Number” of
shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

	 	 	 	 	 	 	 
	 
	 	Net Number =	 	(A*B) — (A*C)	 	 
	 
	 	 	 

B	 	 

For purposes of the foregoing formula,

A = the total number of shares with respect to which this Warrant is then being
exercised.

B = the closing price per share of the Common Stock (as reported by Bloomberg) on
the Trading Day immediately preceding the date of the Exercise Notice.

C = the Exercise Price then in effect for the applicable Warrant Shares at the time
of such exercise.

          (e) Except as otherwise provided for herein, this Warrant shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company by virtue of the ownership hereof.

     6. Delivery of Warrant Shares.

          (a) Upon exercise of this Warrant, the Company shall promptly issue or cause to be issued and
deliver or cause to be delivered to the Holder, in such name or names as the Holder may designate,
a certificate for the Warrant Shares issuable upon such exercise (the “Certificate”) bearing no
restrictive legends. The Holder, or any Person so designated by the Holder to receive the Warrant
Shares, shall be deemed to have become holder of record of such Warrant Shares as of the Exercise
Date.

          (b) Neither these securities nor the securities for which these securities are exercisable
have been registered with the Commission or the securities commission of any state in reliance upon
an exemption from registration under the Securities Act of 1933 (the “Securities Act”), and,
accordingly, may not be offered or sold except pursuant to an effective registration statement
under the Securities Act or pursuant to an available exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and in accordance with applicable
state securities laws. The Holder acknowledges and agrees that the Warrant may be sold only
pursuant to an applicable exemption from the registration requirements of the Securities Act and
that the Warrant Shares may only be sold pursuant to an effective registration statement under the
Securities Act or in accordance with any applicable exemption from the registration requirements of
the Securities Act.

          (c) This Warrant is exercisable, either in its entirety or, from time to time, for a portion
of the number of Warrant Shares. Upon surrender of this Warrant following one or more

 

 

partial exercises, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of Warrant Shares.

     7. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue
or transfer tax, transfer agent fee or other incidental tax or expense in respect of the issuance
of such certificates, all of which taxes and expenses shall be paid by the Company; provided,
however, that the Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issue, delivery or registration of any certificates for Warrant Shares
or Warrant in a name other than that of the Holder and that the Holder will be required to pay any
tax with respect to cash received in lieu of fractional shares. The Holder shall be responsible
for all other tax liability that may arise as a result of holding or transferring this Warrant or
receiving Warrant Shares upon exercise hereof.

     8. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed,
the Company, at the sole expense of the Holder (such expenses, if any imposed by the Company to be
reasonable), shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and in substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction
and customary and reasonable indemnity, if requested by the Company.

     9. Reservation of Warrant Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable
and deliverable upon the exercise of this entire Warrant, free from all taxes, liens, claims,
encumbrances with respect to the issuance of such Warrant Shares and will not be subject to any
pre-emptive rights or similar rights (taking into account the adjustments and restrictions of
Section 10 hereof). The Company covenants that all Warrant Shares so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued, fully paid and nonassessable. The
Company will take all such action as may be necessary to assure that such shares of Common Stock
may be issued as provided herein without violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation system upon which the Common Stock
may be listed or quoted, as the case may be; provided, however, that such actions shall only
require the Company’s best efforts (or other specified standard) to the extent specifically
provided for in this Warrant.

     10. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as set forth in this
Section 10.

          (a) Stock Dividends. If the Company, at any time while this Warrant is outstanding, pays a
dividend on its Common Stock payable in additional shares of Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in shares of Common Stock, then in each
such case the Exercise Price shall be multiplied by a fraction, (A) the numerator of which shall be
the number of shares of Common Stock outstanding immediately

 

 

prior to the opening of business on the day after the record date for the determination of
stockholders entitled to receive such dividend or distribution and (B) the denominator of which
shall be the number of shares of Common Stock outstanding immediately after the distribution date
of such dividend or distribution. Any adjustment made pursuant to this Section 10(a) shall
become effective immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution; provided, however, that if following such record date the
Company rescinds or modifies such dividend or distribution, the Exercise Price shall be
appropriately adjusted (as of the date that the Company effectively rescinds or modifies such
dividend or distribution) to take into account the effect of such rescinded or modified dividend or
distribution on the Exercise Price pursuant to this Section 10(a).

          (b) Stock Splits. If the Company, at any time while this Warrant is outstanding, (i)
subdivides outstanding shares of Common Stock into a larger number of shares, or (ii) combines
outstanding shares of Common Stock into a smaller number of shares, then in each such case the
Exercise Price shall be multiplied by a fraction, (A) the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such event and (B) the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such event. Any
adjustment pursuant to this Section 10(b) shall become effective immediately after the
effective date of such subdivision or combination.

          (c) Reclassifications. A reclassification of the Common Stock (other than any such
reclassification in connection with a merger or consolidation to which Section 10(e)
applies) into shares of any other class of stock shall be deemed:

               (i) a distribution by the Company to the holders of its Common Stock of such shares of such
other class of stock for the purposes and within the meaning of this Section 10; and

               (ii) if the outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as part of such reclassification, such change shall be deemed a
subdivision or combination, as the case may be, of the outstanding shares of Common Stock for the
purposes and within the meaning of Section 10(b).

          (d) Other Distributions. If the Company, at any time while this Warrant is outstanding,
distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) shares of any class
of capital stock, (iii) rights or warrants to subscribe for or purchase any shares of any class of
capital stock or (iv) any other asset, other than a distribution of Common Stock covered by
Section 10(a), (in each case, “Distributed Property”), then in each such case the Exercise
Price in effect immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution (and the Exercise Price thereafter applicable) shall be
adjusted (effective on and after such record date) to equal the product of such Exercise Price
multiplied by a fraction, (A) the numerator of which shall be Market Price on such record date less
the then fair market value of the Distributed Property distributed in respect of one outstanding
share of Common Stock, which, if the Distributed Property is other than cash or marketable
securities, shall be as determined in good faith by the Board of Directors of the Company whose
determination shall be described in a board resolution, and (B) the denominator of which shall be
the Market Price on such record date; provided, however, that if following the

 

 

record date for such distribution the Company rescinds or modifies such distribution, the
Exercise Price shall be appropriately adjusted (as of the date that the Company effectively
rescinds or modifies such distribution) to take into account the effect of such rescinded or
modified distribution on the Exercise Price pursuant to this Section 10(d).

          (e) Fundamental Transactions. If, at any time following the Initial Exercise Date, (i) the
Company effects any merger or consolidation of the Company with or into another Person, (ii) the
Company effects any sale of all or substantially all of its assets in one or a series of related
transactions or (iii) there shall occur any merger of another Person into the Company whereby the
Common Stock is cancelled, converted or reclassified into or exchanged for other securities, cash
or property (in any such case, a “Fundamental Transaction”), then, as a condition to the
consummation of such Fundamental Transaction, the Company shall (or, in the case of any Fundamental
Transaction in which the Company is not the surviving entity, the Company shall take all reasonable
steps to cause such other Person to) shall, at its election in its sole discretion:

               (I) execute and deliver to the Holder of this Warrant a written instrument providing that:

                    (x) so long as this Warrant remains outstanding, upon the exercise hereof at any time on or
after the consummation of such Fundamental Transaction and on such terms and subject to such
conditions as shall be nearly equivalent as may be practicable to the provisions set forth in this
Warrant, this Warrant shall be exercisable into, in lieu of Common Stock issuable upon such
exercise prior to such consummation, the securities or other property (the “Substituted Property”)
that would have been received in connection with such Fundamental Transaction by a holder of the
number of shares of Common Stock into which this Warrant was exercisable immediately prior to such
Fundamental Transaction, assuming such holder of Common Stock:

                         (A) is not a Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the case may be (a
“Constituent Person”), or an Affiliate of a Constituent Person; and

                         (B) failed to exercise such Holder’s rights of election, if any, as to the kind or amount of
securities, cash and other property receivable in connection with such Fundamental Transaction
(provided, however, that if the kind or amount of securities, cash or other property receivable in
connection with such Fundamental Transaction is not the same for each share of Common Stock held
immediately prior to such Fundamental Transaction by a Person other than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have been exercised (a
“Non-Electing Share”), then, for the purposes of this Section 10(e), the kind and amount of
securities, cash and other property receivable in connection with such Fundamental Transaction by
each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a
plurality of the Non-Electing Shares); and

                    (y) the rights and obligations of the Company (or, in the event of a transaction in which the
Company is not the surviving Person, such other Person) and the Holder in respect of Substituted
Property shall be as nearly equivalent as may be practicable to the rights and obligations of the
Company and Holder in respect of Common Stock hereunder.

 

 

               Such written instrument shall provide for adjustments which, for events subsequent to the
effective date of such written instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 10. The above provisions of this Section
10(e) shall similarly apply to successive Fundamental Transactions, or

               (II) cause to be delivered to the Holder, as soon as practicable following the closing of the
Fundamental Transaction, the Substituted Property less such portion of the Substituted Property
with a value (determined in good faith by the Board of Directors of the Company or the other Person
in the Fundamental Transaction) equal to the aggregate Exercise Price of this Warrant.

          (f) Adjustment of Warrant Shares. Simultaneously with any adjustment to the Exercise Price
pursuant to paragraphs (a) through (d) of this Section 10, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for
the increased or decreased number of Warrant Shares shall be the same as the aggregate Exercise
Price payable for the Warrant Shares immediately prior to such adjustment.

          (g) Calculations. All calculations under this Section 10 shall be made to the nearest
cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.

          (h) Adjustments. Notwithstanding any provision of this Section 10, no adjustment of
the Exercise Price shall be required if such adjustment is less than $0.01; provided, however, that
any adjustments which by reason of this Section 10(h) are not required to be made shall be
carried forward and taken into account for purposes of any subsequent adjustment required to be
made hereunder.

          (i) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 10, the Company will promptly deliver to the Holder a certificate executed by the
Company’s Chief Financial Officer setting forth, in reasonable detail, the event requiring such
adjustment and the method by which such adjustment was calculated, the adjusted Exercise Price and
the adjusted number or type of Warrant Shares or other securities issuable upon exercise of this
Warrant (as applicable). The Company will retain at its office copies of all such certificates and
cause the same to be available for inspection at said office during normal business hours by the
Holder or any prospective purchaser of the Warrant designated by the Holder.

          (j) Notice of Corporate Events. If the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common Stock, including,
without limitation, any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any subsidiary of the Company, (ii) authorizes, approves, enters into any
agreement contemplating, or solicits stockholder approval for, any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then
the Company shall deliver to the Holder a notice describing the material terms and conditions of
such transaction at least 10 calendar days prior to the applicable record or

 

 

effective date on which a Person would need to hold Common Stock in order to participate in or
vote with respect to such transaction, and the Company will take all steps reasonably necessary in
order to ensure that the Holder is given the practical opportunity to exercise this Warrant prior
to such time so as to participate in or vote with respect to such transaction; provided, however,
that the failure to deliver such notice or any defect therein shall not affect the validity of the
corporate action required to be described in such notice.

     11. Registration Rights.

          (a) General. If at any time after the date hereof the Company proposes to register any of its
Common Stock under the Securities Act in connection with the public offering of such securities for
its own account or for the accounts of shareholders other than Holder, solely for cash on a form
that would also permit the registration of the Warrant Shares, the Company shall, each such time,
promptly give Holder written notice of such determination. Upon the written request of Holder
given within fifteen (15) days after the giving of any such notice by the Company, the Company
shall, subject to the limitations set forth in Section 11(e), use its best efforts to cause
to be registered under the Securities Act all of the Warrant Shares that Holder has requested be
registered; provided, that the Company shall have the right to postpone or withdraw any
registration statement relating to an offering in which the Holder is eligible to participate under
this Section 11 without any liability or obligation to the Holder under this Section
11. For the avoidance of doubt, the Company shall not be obligated to effect any registration
of Warrant Shares under this Section 11 incidental to the registration of any of its
securities in connection with the Company’s Registration Statement on Form S-1 filed by the Company
in connection with the private placement of the Company’s Common Stock in June of 2008.

               (i) Other Contractual Obligations of the Company. Each exercise of all or part of the
Warrant by the Holder pursuant to Section 5 herein shall serve as Holder’s acknowledgment
and acceptance that the Holder’s rights under this Section 11 as to the Warrant Shares
received as the result of such exercise are subject to the contractual obligations of the Company
as of the Effective Date, including the Company’s obligations to CytRx Corporation set out in the
Contribution Agreement dated as of April 30, 2007 between CytRx Corporation and the Company, as
amended on July 28, 2008.

          (b) Obligations of the Company. Whenever required under this Section 11 to use its
best efforts to effect the registration of any Warrant Shares, the Company shall, as expeditiously
as reasonably possible:

               (i) Prepare and file with the SEC a registration statement with respect to such Warrant
Shares and use its best efforts to cause such registration statement to become effective, and, upon
the request of the Holder, keep such registration statement effective for a period of up to one (1)
year or, if earlier, until the distribution contemplated in the registration statement has been
completed; provided, however, that (i) such one (1) year period shall be extended for a period of
time equal to the period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Warrant Shares on Form S-3 which are intended to be
offered on a continuous or delayed basis, subject to compliance with applicable

 

 

SEC rules, such one (1) year period shall be extended for up to ninety (90) days, if
necessary, to keep the registration statement effective until all such Warrant Shares are sold.

               (ii) Prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement.

               (iii) Furnish to the Holder such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of such Warrant Shares owned by
it.

               (iv) Use its best efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably
appropriate for the distribution of the securities covered by the registration statement, provided
that the Company shall not be required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in any such states or
jurisdictions, and further provided that (anything in this Section 11 to the contrary
notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the
securities shall be qualified shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne by shareholders, then such expenses
shall be payable by the Holder to the extent required by such jurisdiction.

               (v) Provide a transfer agent for the Common Stock no later than the effective date of the
first registration of any Warrant Shares.

               (vi) Otherwise use its best efforts to comply with all applicable rules and regulations of the
SEC.

               (vii) Use its best efforts to cause all such Warrant Shares to be listed on a national
securities exchange (if such securities are not already so listed) and on each additional national
securities exchange on which similar securities issued by the Company are then listed, if the
listing of such securities is then permitted under the rules of such exchange.

               (viii) Use every reasonable effort to prevent the issuance of any stop order suspending the
effectiveness of such registration statement or of any order preventing or suspending the use of
any preliminary prospectus and, if any such order is issued, to obtain the lifting thereof at the
earliest reasonable time.

          (c) Furnish Information. It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Section 11 with respect to the registration of any of
the Holder’s Warrant Shares that the Holder shall take such actions and furnish to the Company such
information regarding itself, the Warrant Shares held by it, and the intended method of disposition
of such securities, as the Company shall reasonably request and as shall be required in connection
with any registration, qualification or compliance referred to in this agreement, including,
without limitation (i) in connection with an underwritten offering, enter into an appropriate
underwriting agreement containing terms and provisions then customary in

 

 

agreements of that nature, (ii) enter into such custody agreements, powers of attorney and
related documents at such time and on such terms and conditions as may then be customarily required
in connection with such offering and (iii) distribute the Warrant Shares only in accordance with
and in the manner of the distribution contemplated by the applicable registration statement and
prospectus. In addition, the Holder shall promptly notify the Company of any request by the
Commission or any state securities commission or agency for additional information or for such
registration statement or prospectus to be amended or supplemented.

          (d) Registration Expenses. All expenses (excluding underwriters’ discounts and commissions)
incurred in connection with any registration pursuant to this Section 11 including, without
limitation, any additional registration and qualification fees and any additional fees and
disbursements of counsel to the Company that result from the inclusion of securities held by the
Holder in such registration, shall be borne by the Company whether or not the registration
statement to which such registration expenses relate becomes effective.

          (e) Underwriting Requirements.

               (i) In connection with any offering under this Section 11 involving an underwriting of
shares being issued by the Company, the Company shall not be required to include any Warrant Shares
in such underwriting unless the Holder accepts the terms of the underwriting as agreed upon between
the Company and the underwriters selected by it, and then only in such quantity as will not, in the
sole discretion of the underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities that the Holder requests to be included in an underwritten offering
under this Section 11 exceeds the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, the Company may exclude some or all of the
Warrant Shares from such registration and underwriting.

               (ii) With respect to any underwritings of shares to be registered under this Section
11, the Company shall have the right to designate the managing underwriter or underwriters.

          (f) Delay of Registration. The Holder shall not have any right to take any action to
restrain, enjoin, or otherwise delay any registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 11.

          (g) Indemnification. In the event any Warrant Shares are included in a registration statement
under this Section 11:

               (i) To the extent permitted by law, in connection with any registration statement in which
Warrant Shares are included, the Company will indemnify and hold harmless the Holder and its
officers, directors and stockholders, legal counsel and accountants for the Holder, any underwriter
(as defined in the Securities Act) for the Holder and each person, if any, who controls the Holder
or underwriter within the meaning of the Securities Act or the 1934 Act, against any losses,
claims, damages or liabilities, joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based on (i) any untrue or alleged untrue statement of any
material fact contained in such registration statement, including, without

 

 

limitation, any prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not misleading or (iii)
any violation by the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the Company in connection
with any such registration; and will promptly reimburse the Holder, and any underwriter,
controlling person or other aforementioned person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss, claim, damage,
liability, or action, provided, however, that the indemnity agreement contained in this Section
11g(i) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld or delayed) nor shall the Company be liable to the Holder, or any
underwriter, controlling person or other aforementioned person in any such case for any such loss,
claim, damage, liability or action to the extent that it (i) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission made in connection
with such registration statement, preliminary prospectus, final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written information furnished to the
Company expressly for use in connection with such registration by or on behalf of the Holder, or
any underwriter, controlling person or other aforementioned person, (ii) is caused by the failure
of the Holder to deliver a copy of the final prospectus relating to such Warrant Shares, as then
amended or supplemented, in connection with a purchase, if the Company had previously furnished
copies thereof to the Holder or (iii) is caused by the Holder’s disposition of Warrant Shares
during any period during which the Holder is obligated to discontinue any disposition of Warrant
Shares under Section 11(j).

               (ii) To the extent permitted by law, the Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration statement, each person,
if any, who controls the Company within the meaning of the Securities Act, and any underwriter
(within the meaning of the Securities Act) for the Company against any losses, claims, damages or
liabilities to which the Company or any such director, officer, controlling person or underwriter
may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in such registration
statement, including any prospectus or final prospectus contained therein or any amendments or
supplements thereto or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity with written
information relating to and furnished to the Company by the Holder expressly for use in connection
with such registration; and will promptly reimburse the Company or any such director, officer,
controlling person or underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 11(g)(ii) shall
not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Holder (which consent shall not be
unreasonably withheld or delayed) and provided further that the Holder shall not have any liability
under this Section 11(g)(ii) in excess of the net proceeds

 

 

actually received by the Holder in the relevant public offering.

               (iii) Promptly after receipt by an indemnified party under this Section 11(g) of
notice of the commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 11(g), notify the
indemnifying party in writing of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to his ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this Section 11(g),
but the omission so to notify the indemnifying party will not relieve him of any liability that he
may have to any indemnified party otherwise than under this Section 11(g).

               (iv) If the indemnification provided for in this Section 11(g) is required by its
terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party under Section 11(g)(i) or Section 11(g)(ii) in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to herein in such
proportion as is appropriate to reflect the relative fault of the Company and the Holder in
connection with the statements or omissions described in such Section 11(g)(i) or
Section 11(g)(ii) which resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The relative fault of the Company and the
Holder shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Holder and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the limitations set forth in this
Section 11(g), any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The provisions set forth in
Section 11(g)(iii) with respect to notice of commencement of any action shall apply if a
claim for contribution is to be made under this Section 11(g)(iv); provided, however, that
no additional notice shall be required with respect to any action for which notice has been given
under Section 11(g)(iii) for purposes of indemnification. The Company and the Holder agree
that it would not be just and equitable if contribution pursuant to this Section 11(g) were
determined solely by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this paragraph. Notwithstanding the
provisions of this Section 11(g)(iv), the Holder shall not be required to contribute an
amount in excess of the net proceeds actually received by the Holder in the relevant public
offering. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

          (h) Payment of Expenses. The Company shall pay all reasonable expenses of the Holder
(including the reasonable expenses of legal counsel for such Holder) incurred in connection with
each registration of Warrant Shares requested pursuant to this Section 11, other

 

 

than underwriting discount and commission, if any, and applicable transfer taxes, if any.

          (i) No Transfer of Registration Rights. The registration rights and obligations of the Holder
under this Exhibit with respect to any Warrant Shares may not be transferred to any third party
other than any acquirer of all or substantially all of the assets or outstanding shares of stock of
the Holder or any entity that merges with or into the Holder.

          (j) Future Events. If the Holder is at the time participating in a registration of Warrant
Shares requested pursuant to this Section 11, the Company will notify the Holder of the
occurrence of any of the following events of which the Company is actually aware, and when so
notified, the Holder will immediately discontinue any disposition of Warrant Shares until notified
by the Company that such event is no longer applicable:

               (i) the issuance by the Commission or any state securities commission or agency of any stop
order suspending the effectiveness of the registration statement or the initiation of any
proceedings for that purpose (in which case the Company will make reasonable efforts to obtain the
withdrawal of any such order or the cessation of any such proceedings); or

               (ii) the existence of any fact which makes untrue any material statement made in the
registration statement or prospectus or any document incorporated therein by reference or which
requires the making of any changes in the registration statement or prospectus or any document
incorporated therein by reference in order to make the statements therein not misleading (in which
case the Company will make reasonable efforts to amend the applicable document to correct the
deficiency).

          (k) Termination of Rights. The rights of the Holder pursuant to this Section 11 shall
terminate and be of no further force and effect on the earlier of (i) the date that all Warrant
Shares have been sold by the Holder or (ii) the date that all Warrant Shares may be sold in any
three month period pursuant to Rule 144(b) promulgated under the Securities Act of 1933, as
amended.

     12. Fractional Shares. The Company shall not be required to issue or cause to be
issued fractional Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant
Share would, except for the provisions of this Section 12, be issuable upon exercise of
this Warrant, the Company shall make a cash payment to the Holder equal to (a) such fraction
multiplied by (b) the Market Price on the Exercise Date of one full Warrant Share.

     13. Remedies. The Company stipulates that the remedies at law of the Holder of this
Warrant in the event of any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will not be adequate, and that such
terms may be specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

     14. Notices. Any and all notices or other communications or deliveries hereunder
(including without limitation any Exercise Notice) shall be in writing and shall be mailed by

 

 

certified mail, return receipt requested, or by a nationally recognized courier service or
delivered (in person or by facsimile), against receipt to the party to whom such notice or other
communication is to be given. Any notice or other communication given by means permitted by this
Section 14 shall be deemed given at the time of receipt thereof. The address for such
notices or communications shall be as set forth below:

	 	 	 
	If to the Company:

	 	Tod Woolf
	 

	 	Chief Executive Officer
	 

	 	RXi Pharmaceuticals Corporation
	 

	 	60 Prescott Street
	 

	 	Worcester, Massachusetts 01605
	 

	 	Fax: 508-767-3862
	 
	 	 
	If to the Holder:

	 	J.P. Turner Partners, LP
	 

	 	Attention: Patrick J. Power
	 

	 	3060 Peachtree Road, 11th FL
	 

	 	Atlanta, GA 30305
	 

	 	Phone: 404-479-8300
	 

	 	Fax: 888-704-7512

Or such other address as is provided to such other party in accordance with this Section
14.

     15. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon
a prompt written notice to the Holder, the Company may appoint a new warrant agent. Any Person
into which any new warrant agent may be merged, any Person resulting from any consolidation to
which any new warrant agent shall be a party or any Person to which any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall be a successor
warrant agent under this Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

     16. Miscellaneous.

          (a) This Warrant may not be assigned by the Holder except to a Permitted Transferee. This
Warrant may not be assigned by the Company, except to a successor in the event of a Fundamental
Transaction. This Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective permitted successors and assigns. Subject to the preceding sentence, nothing in
this Warrant shall be construed to give to any Person other than the Company and the Holder any
legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be
amended only in writing signed by the Company and the Holder and their permitted successors and
assigns.

          (b) The Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such

 

 

terms and in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount
payable therefor upon exercise thereof, and (ii) will take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant, free from all taxes, liens, claims
and encumbrances and (iii) will not close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.

          (c) This Warrant shall be governed by and construed and enforced in accordance with the laws
of the Commonwealth of Massachusetts. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and Federal courts sitting in the City of Boston, Massachusetts, for the
adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding that it is not personally subject to the jurisdiction of any such
court or that such suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Warrant
and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

          (d) Neither party shall be deemed in default of any provision of this Warrant, to the extent
that performance of its obligations or attempts to cure a breach hereof are delayed or prevented by
any event reasonably beyond the control of such party, including, without limitation, war,
hostilities, acts of terrorism, revolution, riot, civil commotion, national emergency, strike,
lockout, unavailability of supplies, epidemic, fire, flood, earthquake, force of nature, explosion,
embargo, or any other Act of God, or any law, proclamation, regulation, ordinance, or other act or
order of any court, government or governmental agency, provided that such party gives the other
party written notice thereof promptly upon discovery thereof and uses reasonable efforts to cure or
mitigate the delay or failure to perform.

          (e) The headings herein are for convenience only, do not constitute a part of this Warrant and
shall not be deemed to limit or affect any of the provisions hereof.

          (f) In case any one or more of the provisions of this Warrant shall be deemed invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision
in this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

 

 

          IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.

	 	 	 	 	 
	 	RXI PHARMACEUTICALS CORPORATION

 	 
	 	By:  	/s/ Tod Woolf
 	 
	 	 	Name:  	Tod Woolf 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

 

 

APPENDIX A

FORM OF ASSIGNMENT

(to be completed and signed only upon transfer of Warrant)

     FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________________________________
the right represented by the within Warrant to purchase
_____________________ shares
of Common Stock of RXi Pharmaceuticals Corporation to which the
within warrant relates and appoints __________________________
 attorney to transfer said right on the books of RXi Pharmaceuticals
Corporation with full power of substitution in the premises.

	 	 	 	 	 
	Dated:                     
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature must conform in all respects to
name of Holder as specified on face of the
Warrant)	 	 
	 
	 	 	 	 
	 

	 	Address of Transferee:
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	In the presence of:
	 	 	 	 
	 
	 	 	 	 
	                                        
	 	 	 	 

 

 

APPENDIX B

FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common Stock under the
foregoing Warrant)

To: RXi Pharmaceuticals Corporation

The undersigned is the Holder of Warrant No. [                    ] (the “Warrant”) issued by RXi
Pharmaceuticals Corporation, a Delaware corporation (the “Company”). Capitalized terms used herein
and not otherwise defined have the respective meanings set forth in the Warrant.

	 	1.	 	The Warrant is currently exercisable to purchase a total of                      Warrant
Shares.
	 
	 	2.	 	The undersigned Holder hereby exercises its right to purchase                      Warrant
Shares pursuant to the Warrant.
	 
	 	3.	 	The Holder intends that payment of the Exercise Price shall be made as:

	 	a.	 	A “Cash Exercise” with respect to                      Warrant
Shares; and/or
	 
	 	b.	 	A “Cashless Exercise” with respect to                     
Warrant Shares.

	 	4.	 	In the event that the Holder has elected a Cash Exercise with respect to some
or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay the sum
of $                     to the Company in accordance with the terms of the Warrant.
	 
	 	5.	 	Pursuant to this exercise, the Company shall deliver to the Holder                     
Warrant Shares in accordance with the terms of the Warrant
	 
	 	6.	 	Following this exercise, the Warrant shall be exercisable to purchase a total
of                      Warrant Shares.

	 	 	 	 	 
	Dated:                     

	 	Name of Holder:	 	 
	 
	 	 	 	 
	 

	 	(Print)
 
	 	 
	 
	 	 	 	 
	 

	 	By:
 

	 	 
	 
	 	 	 	 
	 

	 	Title:
 
	 	 
	 
	 	 	 	 
	 

	 	(Signature must conform in all respects to
name of Holder as specified on face of the
Warrant)

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