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FORM OF
SHAREHOLDERS RIGHTS AGREEMENT
By
and between
NTR
ACQUISITION CO.,
NTR
PARTNERS LLC
and
OCCIDENTAL
PETROLEUM INVESTMENT CO.
Dated
_________________
Table of Contents
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1. RESTRICTIONS ON TRANSFERABILITY OF
SECURITIES.
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1
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1.2
Restrictions on Transfer.
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3
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2. COVENANTS OF THE COMPANY
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4
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2.1
Basic Financial Information.
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5
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2.2
Additional Information and Rights.
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5
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2.3
Right of First Refusal.
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6
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2.4
Exchange Right.
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7
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2.5
Tag Along Rights.
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8
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2.6
Prompt Payment of Taxes, etc.
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9
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2.7
Maintenance of Properties and Leases
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9
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2.8
Insurance
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9
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2.9
Accounts and Records
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9
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2.10
Compliance with Requirements of Government
Authorities
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9
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2.11
Maintenance of Corporate Existence, etc
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10
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2.12
Transactions with Affiliates.
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10
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2.13
Attendance at Board Meetings.
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10
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2.14
Restrictions on Corporate Actions.
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10
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3. MISCELLANEOUS
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11
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3.1
Governing Law.
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11
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3.2
Successors and Assigns.
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11
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3.3
Entire Agreement; Amendment; Waiver.
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12
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3.4
Notices, etc.
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12
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3.5
Delays or Omissions.
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12
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3.6
Rights; Separability.
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12
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3.7
Titles and Subtitles
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12
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3.8
Counterparts.
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12
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SHAREHOLDERS RIGHTS AGREEMENT
This
Shareholders Rights Agreement (this
“
Agreement
” )
is made and entered into as of the ______ day of __________, 200__
by and among NTR ACQUISITION CO, a Delaware corporation (the
“
Company
” ),
NTR PARTNERS LLC, a Delaware limited liability company
(“
Partners ”),
the other signers of this Agreement (“
Additional Holders ”)
and OCCIDENTAL PETROLEUM INVESTMENT CO., a California corporation
(“
Occidental ”).
Recitals
WHEREAS,
Partners and the Additional Holders hold warrants under the
Company’s Amended and Restated Warrant Agreement dated
January 28, 2007 between the Company and the persons named
therein and/or shares of the Company’s common stock, par
value $0.001 per share (“
Common Stock ”)
issued upon exercise thereof (the “
Warrants ”),
and shares of Common Stock and possess registration rights and
other rights pursuant to a Registration Rights Agreement dated as
of January 30, 2007 between the Company, Partners, Additional
Holders and the other persons named therein (the “
First Registration Rights Agreement
” );
WHEREAS,
Occidental is a party to the Series A Senior Convertible
Preferred Stock Purchase Agreement dated as of November 2,
2007 between the Company and Occidental (the “
Series A Agreement
” );
and
WHEREAS,
certain of the Company
’ s
and Occidental’s obligations under the Series A Agreement are
conditioned upon the execution and delivery by Occidental and the
Company of this Agreement;
NOW,
THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties hereto further agree
as follows:
1. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
.
1.1 Certain Definitions
. As
used in this Agreement, the following terms shall have the meanings
set forth below:
“
Business Day ”
shall mean any day, except a Saturday, Sunday or legal holiday on
which banking institutions in the City of New York are authorized
or obligated by law or executive order to close.
“
Closing ”
shall have the meaning provided to such term in the Series A
Agreement.
“
Exchange Act ”
shall mean the Securities Exchange Act of 1934, as amended, or any
similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to
time.
“
Exchange Debt ”
shall mean indebtedness for borrowed money issued by the Company or
any of its subsidiaries (including indebtedness to finance
acquisitions or other non-working capital needs), other than
indebtedness incurred to finance ordinary course working capital
needs of the Company and its subsidiaries, provided by an
institutional lender
whose
loans are regulated by law (such as banks, trust companies, credit
unions and commercial loan agencies) having
aggregate capital and surplus in excess of $1 billion.
“
Holder
” shall
mean Occidental (for so long as Occidental owns any Shares) and any
holder to whom any shares of Series A Preferred Stock have
been
transferred in compliance with
Section 1.2 .
“
Independent Third Party ”
means any Person that (i) did not beneficially own in excess of
five percent (5%) of the voting securities of the Company deemed
outstanding (on a fully diluted basis) as of the first anniversary
of the date hereof; and (ii) does not control and is not an
controlled by or under common control with, as defined under the
Exchange Act, any such owner.
“
New Securities ”
shall mean any capital stock (including Common Stock and preferred
stock) of the Company whether now authorized or not, and rights,
options or warrants to purchase such capital stock, and securities
of any
type whatsoever that are, or may become, convertible into, or
otherwise exercisable or exchangeable for, capital stock;
provided that
the term “New Securities” does not include (i)
securities purchased under the Series A Agreement; (ii) securities
issued upon conversion of the Series A Preferred Stock;
(iii)
securities
issued to employees, consultants, officers or directors of the
Company pursuant to any stock option, stock purchase or stock bonus
plan, agreement or arrangement approved by the Board
of Directors; (iv) securities issued in connection with any stock
split, stock dividend or recapitalization of the Company; (v)
securities issued in connection with an acquisition (whether by
stock sale, amalgamation, merger, recapitalization, asset sale or
similar transaction) of another Person; (vi) any right, option or
warrant to acquire any security convertible into the securities
excluded from the definition of New Securities pursuant to
subsections (i) through (vi) above; or (vii)
securities issued upon
exercise of the Warrants outstanding as of the date
hereof.
“
Person ”
shall be construed as broadly as possible and shall include an
individual, corporation, association, partnership (including a
limited liability partnership or a limited liability limited
partnership), limited liability company, estate, trust, joint
venture, unincorporated organization or a government or any
department, agency or political subdivision thereof.
“
Replacement Transaction ”
shall mean any replacement acquisition by the Company through a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination of one or more
businesses or assets in the energy business acceptable to
Occidental.
“
Securities Act ”
shall mean the Securities Act of 1933, as amended, or any similar
successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
“
Series A Preferred Stock ”
shall mean the Company’s Series A Senior Convertible
Preferred Stock, $0.0001 par value per share.
“
Shares ”
shall mean shares of the Company’s Series A Preferred Stock
or shares of Common Stock issued on conversion of the Series A
Preferred Stock.
“
Transaction ”
shall mean the acquisition, directly or indirectly, by the Company
of all outstanding shares of each class of common stock of Kern Oil
& Refining Co., a California corporation, from Casey Co., a
California Corporation pursuant to the Kern Purchase Agreement (as
defined in the Series A Agreement).
1.2 Restrictions on Transfer
.
(a)
Each
Holder agrees not to make any disposition of all or any
portion of the Shares prior to the date that is six (6) months
after the Closing, without the consent of the Company, except
to any transferee who, within
the meaning of the Securities Act, is controlling, controlled
by or under common control with, any such Holder
,
and shall not make any such disposition unless and until the
transferee has agreed in writing for the benefit of the
Company to be bound by this
Section 1.2 ,
provided and to the extent such Section is then applicable (i.e.
clause (i) below is not applicable), and:
(i)
There
is then in effect a registration statement under the
Securi ties
Act covering such proposed disposition and such disposition is
made in accordance
with such registration statement; or
(ii)
(A)
Such Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed
disposition, and (B) if reasonably requested by the Company,
such Holder shall have furnished the Company with an opinion
of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such Shares under
the Securities Act. It is agreed that the Company will not
require opinions of counsel for transactions made pursuant to
Rule 144.
(iii)
Notwithstanding
the provisions of paragraphs (i) and (ii) above, no
such registration
statement or opinion of counsel shall be necessary for a
transfer by a Holder to
a Person that is, within the meaning of the Securities Act,
controlling, controlled by or under common control with, any
such Holder;
provided the
transferee
will be subject to the terms of this
Section 1.2 to
the same extent as if such transferee were an original Holder
hereunder.
(b)
Each
certificate representing Shares shall (unless otherwise
permitted by the provisions of this Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable
state securities laws):
THE
TRANSFER OF THE SHARES REPRESENTED HEREBY IS RESTRICTED BY THE
TERMS OF A SHAREHOLDERS RIGHTS AGREEMENT, DATED AS OF
_________, 200_, A COPY OF WHICH IS ON FILE WITH THE COMPANY.
NO TRANSFER SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND
CONDITIONS OF SUCH SHAREHOLDERS RIGHTS AGREEMENT HAVE BEEN
COMPLIED WITH IN FULL.
THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
(c)
The
Company shall be obligated to promptly reissue unlegended
certificates at the request of any Holder thereof if the
Holder shall have obtained an opinion of counsel at such
Holder’s expense (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect
that the securities proposed to be disposed of may lawfully be
so disposed of without registration, qualification or
legend.
(d)
Any
legend endorsed on an instrument pursuant to applicable state
se curities
laws and the stop-transfer instructions with respect to such
securities shall be
removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such
removal.
2. COVENANTS OF THE COMPANY
The
Company hereby covenants and agrees, so long as any shares of
Series A Preferred Stock are outstanding, as
follows:
2.1 Basic Financial Information.
The
Company will furnish the following reports to each Holder that owns
at least ten percent (10%) of the Shares:
(a)
As
soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter,
a consolidated balance sheet
of the Company and its subsidiaries, if any, as at the end of
such fiscal year, and
consolidated statements of income and cash flows of the
Company and its subsidiaries, if any, for such year, prepared
in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all
in reasonable detail and certified by independent public
accountants of recognized national standing selected by the
Company.
(b)
As
soon as practicable after the end of the first, second, and
third quar terly
accounting periods in each fiscal year of the Company, and in
any event within forty-five (45) days thereafter, a
consolidated balance sheet of the Company and
its
subsidiaries, if any, as of the end of each such quarterly
period, and consoli dated
statements of income and cash flows of the Company and its
subsidiaries, if
any,
for such period and for the current fiscal year to date,
prepared in accordance with
generally accepted accounting principles consistently applied
and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to
changes resulting from normal year-end audit adjustments, all
in reasonable detail and certified by the principal financial
or accounting
officer of the Company, except that such financial statements
need not contain
the notes required by generally accepted accounting
principles.
(c)
The
Company may satisfy the provisions of
Sections 2.1(a) and
(b) by
filing its annual and quarterly reports using the Securities and
Exchange Commission’s EDGAR System as required, and at the
time required to be filed, by the Exchange Act.
2.2 Additional Information and Rights.
(a)
The
Company will permit any Holder that owns at least seventy-five
percent (75%) of the Shares (as presently constituted and
subject to subsequent adjustment for stock splits, stock
dividends, reverse stock splits, recapitalizations and the
like) (a “
Significant Holder ”),
or a representative of any Significant Holder, to visit and inspect
any of the properties of the Company, including its books of
account and other records (and make copies thereof and take
extracts therefrom), and to discuss its affairs, finances and
accounts with the Company’s officers and its independent
public accountants, upon reasonable advance notice, all at such
reasonable times and as often as any such person may reasonably
request.
(b)
The
Company will deliver the reports described below in
this
Section 2.2 to
each Significant Holder, who so requests in writing, with
reasonable promptness, such other information and data with respect
to the Company and its subsidiaries as any such Significant Holder
may from time to time reasonably request.
(c)
The
provisions of
Section 2.1 and
this
Section 2.2 shall
not be in limitation of any rights which any Holder or Significant
Holder may have with respect to the books and records of the
Company, or to inspect its properties or discuss its affairs,
finances and accounts, under the laws of the State of
Delaware.
(d)
Anything
in
Section 2.2 to
the contrary notwithstanding, no Holder by reason of this agreement
shall have access to any trade secrets or confidential information
of the Company. Each Holder hereby agrees to hold in confidence
and trust
and not to misuse or disclose any confidential information provided
pursuant to
this
Section 2.2,
provided
,
however
, (i)
that in the event a Holder or any of its representatives are
requested in a legal proceeding (by depositio
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