Exhibit 10.1

 

EXECUTION COPY

FORBEARANCE AGREEMENT

 

 

THIS FORBEARANCE AGREEMENT (the “Agreement”) is dated the 18th day of April,
2013 (the “Effective Date”) between AgFeed USA, LLC (formerly known as M2 P2,
LLC) (“AgFeed”); TS Finishing, LLC; New York Finishing, LLC; Pork Technologies,
LC; New Colony Farms, LLC; Heritage Farms, LLC; Heritage Land, LLC; Genetics
Operating, LLC; M2P2 Facilities, LLC; MGM, LLC; M2P2 General Operations, LLC;
New Colony Land Company, LLC; M2P2 AF JV, LLC; and Midwest Finishing, LLC
(hereinafter referred to as “Borrower”) and FARM CREDIT SERVICES OF AMERICA,
FLCA and FARM CREDIT SERVICES OF AMERICA, PCA (“Lender”).

 

RECITALS

 

A. The borrower is indebted to lender under the following loan facilities
(collectively the “Loans”) pursuant to that certain Credit Agreement dated as of
June 6, 2006, as the same has since been amended by nineteen separate amendments
executed prior to the date of this Agreement (the “Credit Agreement”):

 

Loan Facility A ($64,700,000.00); and

 

Loan Facility F ($8,911,086.55)

 

B. The Borrower’s obligations to the Lender under the Loans, as evidenced by the
Credit Agreement are secured as provided in one or more security agreements,
mortgages, and other related security documents between Borrower and Lender (the
Credit Agreement, the foregoing security documents together with all other
documents related thereto being collectively referred to herein as the “Credit
Documents”).

 

C. The Borrower acknowledges it is in default of its obligations to Lender under
provisions of the Credit Documents as follows: (i) maturity of all amounts due
under Credit Facility A on the date of this Agreement; (ii) use of loan funds
for the purchase of pigs feed and other expenses in connection with the hog
feeding operation of Midwest Finishing, LLC which is not a Borrower under the
Credit Agreement; (iii) after giving effect to the arbitration award in favor of
Hormel Foods Corporation on or about January 9, 2013 the Borrower is in default
of the following terms under the Credit Agreement: a) Section 6.11.3 Tangible
Net Worth requirements; b) Section 6.11.1 Working Capital requirement; and c)
Section 6.11.5 EBITDA requirement (collectively referred to herein as the
“Existing Events of Default”).

 

D. Borrower acknowledges it has received notice dated December 14, 2012 that
their Loans are distressed under provisions of the Farm Credit Act, as amended
(Distressed Loan Notice) and that Borrowers’ restructuring request submitted to
Lender on or about January 5, 2013 has been denied by Lenders written response
dated January 28, 2013.

 

 

 

 

NOW, THEREFORE, in consideration of the facts set forth in these Recitals, which
the parties agree are true and correct and incorporated herein, and in
consideration for entering into this Agreement the parties hereto agree as
follows:

 

1. Acknowledgment of Debt. The Borrower acknowledges that the principal balance
and accrued and unpaid interest (as of the date specified) is owed on each of
the Loans as identified on the attached Exhibit A. To the knowledge of the
Borrower, after diligent inquiry, Lender has performed all of its obligations
under the Loan Documents, and Borrower has no defenses, offsets, counterclaims,
claims or demands of any nature which can be asserted against Lender for damages
or to reduce or eliminate all or any part of the obligations of Borrower under
the Loan Documents. In addition to said principal and interest, the Lender has
incurred and in the future may incur costs and legal expense in connection with
the Loans, which amounts are or will be, due and payable by the Borrower in
accordance with the terms of the Credit Documents. The Borrower acknowledges due
execution and delivery of the Credit Documents, and acknowledges that the same
and the Loans are valid and enforceable by the Lender against the Borrower in
accordance with their terms.

 

2. Acknowledgment of Default. The Existing Events of Default have not been cured
and continue, the occurrence and continuance of which entitles Lender to
exercise all of the rights and remedies contained in the Credit Documents and
applicable law. Borrower does not have any defenses, counterclaims, or rights of
setoff with respect to the Existing Events of Default. The forbearance set forth
in this Agreement and the obligations of Lender pursuant to this Agreement will
be effective on the Effective Date.

 

3. Conditions of Forbearance. The obligations of Lender to forbear from
exercising any rights or remedies under the Credit Documents on account of the
Existing Defaults are subject to the Borrower’s satisfying each of the
conditions (each a “Forbearance Condition” and collectively, the “Forbearance
Conditions”) set forth in Sections 3(a)-(k). The failure of any Borrower to
satisfy any one or more of the Forbearance Conditions shall be a “Forbearance
Default.”

 

(a) Hormel Agreement and Payment. On or before April 25, 2013, Borrower shall
(i) enter into a definitive agreement with Hormel Foods Corporation that
contains each of the terms and conditions set forth on the attached Exhibit B;
and (ii) is acceptable to Lender (the “Hormel Settlement”). On or before April
18, 2013, Lender shall cause Hormel Foods Corporation to remit to Lender the sum
of $12,590,434.17 in payment for the Quarterly Settlement amount due from Hormel
for the first calendar quarter of 2013 which Borrower agrees that Lender shall,
upon receipt, apply to Borrower’s obligations to Lender in accordance with the
Credit Documents.

 

(b) CRO Engagement and LLC Agreement Amendment.

 

(i) On or before April 18, 2013, Borrower shall select a chief restructuring
officer (“CRO”) and employ such CRO pursuant to a written agreement. The CRO
selected and employed by Borrower must be approved by Lender, in its sole
discretion. Each holder of an equity interest in Borrower shall cause the CRO to
be duly elected or appointed to the office of Chief Restructuring Officer in
accordance with the governing documents of the Borrower and, if necessary, shall
cause proper resolutions of the Borrower to be adopted that authorize the CRO to
perform the powers and duties set forth herein. The terms and conditions of the
CRO engagement must include:

 

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(A)Borrower’s authorization and direction that CRO possess the powers and
authority normally given to a “Chief Executive Officer,” “Chief Operating
Officer,” and “Chief Financial Officer”;

 

(B)The express acknowledgement by Borrower and CRO that Borrower and CRO have a
duty to maximize the value of Borrower for the benefit of all stakeholders,
including Lender;

 

(C)An obligation for CRO to supervise and administer the March 25, 2013
engagement between AgFeed and BDA Advisors, Inc. such that on or before July 1,
2013 (or such later date as approved by Lender in writing) Borrower has
completed a transaction, with the Lender’s written consent, that will result in
a satisfaction of Lender’s claims in full (a “Transaction”);

 

(D)A term for CRO’s engagement that extends at least through July 1, 2013; and

 

(E)An obligation for CRO to provide, on a weekly basis, full and complete
reporting to Lender and its designated agents or representatives (including, at
Lender’s request, Carl Marks Advisory Group, LLC and McWilliams Agribusiness,
Inc.) regarding Borrower’s business operations, cash flow and status of a
Transaction.

 

(ii) On or before April 18, 2013, AgFeed shall cause AgFeed’s Amended and
Restated Limited Liability Company Agreement, dated as of September 13, 2010, as
amended, to be further amended pursuant to an amendment substantially in the
form attached hereto as Exhibit C (the “LLC Amendment”) that will provide (A)
that management of AgFeed shall be vested in a board of managers (the “Board of
Managers”) consisting of three (3) managers who shall be appointed by the sole
member of AgFeed in accordance with the LLC Amendment; (B) for the appointment
of CRO, Gerry Daignault, and Steven Price as the initial three (3) managers of
AgFeed; (C) that the Board of Managers shall have the sole and exclusive
authority to direct the actions of each Borrower in which AgFeed is the sole
direct or indirect member; and (D) that the Board of Managers shall have the
sole and exclusive authority to approve and consummated a Transaction.

 

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(iii) At all times during the Forbearance Period; (x) the LLC Amendment must
remain in full force and effect without alteration or amendment; and (y) the
Board of Managers shall be comprised of CRO, Gerry Daignault, and Steven Price
or such successors that may be appointed by the member of AgFeed that are
acceptable to Lender which acceptance may not be unreasonably withheld;
provided, however, each successor manager must not be a current or former owner
of an equity interest in AgFeed International, Inc. or a current or former
director of AgFeed International, Inc.

 

(c) Under the direction of the CRO and Board of Managers, Borrower shall
complete a Transaction pursuant to the following timetable:

 

(i) On or before May 15, 2013, Borrower shall deliver to Lender one or more
expressions of interest or letters of intent (each, a “Transaction Option”) that
demonstrate Borrower’s ability, on or before July 1, 2013 (or such later date as
approved by Lender in writing) to consummate a Transaction;

 

(ii) On or before May 22, 2103, Lender will inform Borrower in writing which
Transaction Option(s) are acceptable to Lender;

 

(iii) On or before June 8, 2013, Borrower shall deliver to Lender a definitive
agreement between Borrower and a third party that memorializes Borrower’s
agreement to consummate a Transaction with Lender’s consent; and

 

(iv) On or before July 1, 2013 (or such later date as agreed to by Lender),
Borrower shall have closed a Transaction.

 

(d) Lender acknowledges and agrees that CRO, the Board of Managers and Borrower
may be unable or unwilling to complete a Transaction pursuant to the timetable
set forth in Section 3(c)(i)-(iv) in the event such actions would result in
Borrower’s material breach of material contracts or governing law. In such
event, a Forbearance Default will nevertheless exist but Lender shall not have
an independent claim against CRO, Board of Managers or Borrower for the failure
to approve and consummate a Transaction. Instead, in such event, a Forbearance
Default will exist and Lender shall be free to exercise its rights and remedies
under the Credit Agreements and applicable law.

 

(e) Borrower shall comply in all respects with the Credit Agreements except that
Borrower shall, during the Forbearance Period, not be obligated to cure the
Existing Defaults. Specifically, without limitation:

 

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(i) Borrower shall pay interest on the Loans as and when due. For avoidance of
doubt, at all times during the Forbearance Period, interest shall accrue on the
Loans at the Default Rate.

 

(ii) Borrower shall submit a current Borrowing Base report calculated as of each
Friday which will be due on or before Wednesday of the week following the date
of each calculation.

 

(f) Concurrent with the effective date of this Agreement, Borrower will submit
(x) a thirteen week cash flow projection (the “Cash Flow Projection”) and (y) a
borrowing base projection (the “Borrowing Base Projection”), commencing the week
ending April 19, 2013, attached hereto as Exhibit D.

 

(g) Borrower agrees to submit an updated thirteen week Cash Flow Projection and
Borrowing Base Projection every fourth Wednesday, the first revision due on or
before May 15, 2013 for the thirteen week period commencing with the week ending
May 17, 2013, which is subject to Lender’s review and approval.

 

(h) The Borrower will submit, on or before Wednesday of the following week, a
report comparing the actual results for each week to the budgeted amounts for
that week. The total of the actual reported operating outflows and non-operating
outflows (“Cash Outflows”) on a rolling four week basis (calculated on the most
recent four week period completed) will not exceed the total amount of Cash
Outflows projected for the most recent 4 week period by more than 4%. The actual
borrowing base margin reported for each weekly Borrowing Base will not be more
than $400,000 less than the projected borrowing base margin for the same
reporting period as set forth in the then-current Borrowing Base Projection. For
the avoidance of doubt, Borrower shall be in compliance with the Borrowing Base
requirements and the borrowing base margin shall not at any time be less than
$0.

 

(i) Borrower shall promptly reimburse Lender for (x) Lender’s legal and
professional costs and expenses incurred by Lender in connection administering
the Loans including, without limitation, the costs and expenses incurred in
connection with this Agreement and Lender’s evaluation of the Hormel settlement;
and (y) Lender’s appraisal and collateral inspection costs.

 

(j) Except as provided in Section 5 below, Borrower shall not (x) distribute any
profits, make any loans, declare or pay any dividends, distribute earnings,
allow any draws, or make other distributions to any holders of equity interests
in Borrower; or (y) apply any assets to the redemption, retirement, purchase or
other acquisition of any such interests.

 

(k) Borrower shall comply with the terms and conditions of this Agreement.

 

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4. Forbearance. Subject to the terms and conditions set forth in this Agreement,
Lender shall forbear from exercising its rights and remedies on account of the
Existing Defaults from the date hereof until the earlier of (a) July 1, 2013;
(b) the occurrence of a Forbearance Default (the “Forbearance Period”).
Notwithstanding any provision in the Credit Documents requiring written notice
from Lender prior to Lender pursuing its rights or remedies under the Credit
Documents or applicable law, upon the earlier of the occurrence of a Forbearance
Default or July 1, 2013, Lender shall immediately be entitled to pursue its
rights and remedies under any or all of the Credit Documents and applicable law
without Borrower being entitled to a cure period or written notice of the
Forbearance Default.

 

5. Funding of Parent Overhead. In the event Borrower elects to use Collateral to
fund payment of expenses incurred by AgFeed Industries, Inc. (“Parent”), such
funding (i) may not exceed $967,788 (the “Forbearance Period Advance”) during
the Forbearance Period; and (ii) shall not exceed $365,000 during any calendar
month during the Forbearance Period. On or before the date hereof, Parent shall
execute a Guaranty Agreement in the form attached hereto as Exhibit E that will
irrevocably and absolutely obligate the Parent, following a Forbearance Default,
to pay and perform the Loans subject to a maximum payment obligation of
$2,374,038 which amount shall be equal to the sum of (x) the aggregate amount of
the Forbearance Period Advances; and (y) $1,406,250 (the amount of Borrower’s
prior use of Lender’s Collateral to fund Parent expenses).

 

6. Management of Business. Borrower acknowledges that it is the obligation of
Borrower, acting through its duly authorized representatives, to manage the
ongoing business of the Borrower and that Lender has not participated in or
directed any of the management of the Borrower.

 

7. Release. Borrower fully, finally and forever releases and discharges Lender
from any and all actions, causes of action, claims, debts, demands, liabilities,
obligations and suits, of whatever kind or nature, in law or equity, that
Borrower has or in the future may have, whether known or unknown (i) in respect
of the Loans, this Agreement, the other Credit Documents or the actions or
omissions of Lender in respect of the Loans or the Credit Documents and (ii)
arising from events occurring prior to the date of this Agreement. Nothing
contained in this Section 7 shall release obligations owing from Lender pursuant
to the Credit Documents.

 

8. Entire Agreement; Change; Discharge; Termination or Waiver. The Credit
Documents contain the entire understanding and agreement of Borrower and Lender
in respect of the Loans and supersede all prior representations, warranties,
agreements and understandings. No provision of the Credit Documents may be
changed, discharged, supplemented, terminated or waived except in a writing
signed by Lender and Borrower. This Agreement contains the entire understanding
and agreement of Borrower and Lender in respect of the forbearance of Borrower’s
obligations under the Credit Documents and supersedes all prior representations,
warranties, agreements and understandings between Borrower and Lender with
respect to the forbearance of Borrower’s obligations under the Credit Documents.

 

9. No Limitations. The description of the Credit Documents contained in this
Agreement is for informational and convenience purposes only and shall not be
deemed to limit, imply or modify the terms or otherwise affect the Credit
Documents. The description in this Agreement of the Acknowledged Defaults under
the Credit Documents shall not be to the exclusion of any other defaults now
existing or hereafter occurring under the Credit Documents. The description in
this Agreement of the specific rights of Lender shall not be deemed to limit or
exclude any other rights to which Lender may now be or may hereafter become
entitled to under the Credit Documents at law, in equity or otherwise.

 

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10. Time of the Essence. Time is of the essence in this Agreement.

 

11. Binding Effect. The Credit Documents shall be binding upon, and inure to the
benefit of, Borrower, and Lender and their respective successors and assigns.

 

12. Further Assurances. Borrower and Guarantors shall execute, acknowledge (as
appropriate) and deliver to Lender such additional agreements, documents and
instruments as reasonably required by Lender to carry out the intent of this
Agreement.

 

13. Counterpart Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document. Signature pages may be
detached from the counterparts and attached to a single copy of this Agreement
to physically form one document.

 

14. Limitation of Liability for Certain Damages. In no event shall Lender Party
be liable to Borrower on any theory of liability for any special, indirect,
consequential or punitive damages (including any loss of profits, business or
anticipated savings). BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE
UPON ANY SUCH CLAIM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.

 

15. Post-Default Waiver of Collateral Disposition Rights. A default and an event
of default have occurred under the Credit Documents and notwithstanding any
forbearance or other provision set forth herein, such default and event of
default remain as pre-existing events of default with respect to which the
Lender may send (any time after the forbearance hereunder ends) a notice of
disposition of collateral under Section 9-611 of the Uniform Commercial Code.

 

16. WAIVER OF JURY TRIAL. LENDER AND BORROWER, TO THE EXTENT PERMITTED BY LAW,
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT
OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY. THIS WAIVER
APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE. Lender and Borrower intend and agree that the immediately preceding
provision, in which such Persons waive their rights to a jury trial, is valid
and shall be given effect.

 

17. Construction. This Agreement shall not be construed more strictly against
Lender merely by virtue of the fact that the same has been prepared by Lender or
its counsel, it being recognized that Borrower is a sophisticated party
represented by counsel and Borrower acknowledges and waives any claim contesting
the existence and the adequacy of the consideration given by any of the other
parties hereto in entering into this Agreement.

 

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18. Consent to Agreement. Borrower acknowledges that it has thoroughly read and
reviewed the terms and provisions of this Agreement and is familiar with same,
that the terms and provisions contained herein are clearly understood by it and
have been fully and unconditionally consented to by it, and that Borrower has
had full benefit and advice of counsel of its own selection, or the opportunity
to obtain the benefit and advice of counsel of its own selection, in regard to
understanding the terms, meaning and effect of this Agreement and that this
Agreement has been entered into by Borrower freely, voluntarily, with full
knowledge and without duress, and that in executing this Agreement, Borrower is
relying on no other representations either written or oral, express or implied,
made to Borrower by any other party hereto, and that the consideration received
by Borrower hereunder has been actual and adequate.

 

19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nebraska.

 

20. Severability. If any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, such provision shall be severable from the remainder
of such agreement and the validity, legality and enforceability of the remaining
provisions shall not be adversely affected or impaired thereby and shall remain
in full force and effect.

 

Remainder of this page is intentionally blank

 

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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly
executed and delivered as of the date and year first above written.

 

BORROWER:           AgFeed USA, LLC (formerly known as M2 P2, LLC) By: AgFeed
Industries Inc., its Managing Member By: /s/ Gerry Daignault     Gerry
Daignault, Chief Financial Officer             TS Finishing, LLC           By:
AgFeed USA, LLC, its Managing Member     By: AgFeed Industries, Inc., its
Managing Member       By: /s/ Gerry Daignault         Gerry Daignault, Chief
Financial Officer           New York Finishing, LLC By: AgFeed USA, LLC, its
Managing Member   By: AgFeed Industries, Inc., its Managing Member       By: /s/
Gerry Daignault         Gerry Daignault, Chief Financial Officer           Pork
Technologies, LC By: M2P2 General Operations, LLC, its Managing Member   By:
AgFeed USA, LLC, its Managing Member   By: AgFeed Industries, Inc., its Managing
Member     By: /s/ Gerry Daignault         Gerry Daignault, Chief Financial
Officer           New Colony Farms, LLC By: M2P2 General Operations, LLC, its
Managing Member   By: AgFeed USA, LLC, its Managing Member   By: AgFeed
Industries, Inc., its Managing Member     By: /s/ Gerry Daignault         Gerry
Daignault, Chief Financial Officer

  

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Heritage Farms, LLC By: M2P2 General Operations, LLC, its Managing Member   By:
AgFeed USA, LLC, its Managing Member     By: AgFeed Industries, Inc., its
Managing Member       By: /s/ Gerry Daignault         Gerry Daignault, Chief
Financial Officer           Genetics Operating, LLC By: M2P2 General Operations,
LLC, its Managing Member   By: AgFeed USA, LLC, its Managing Member   By: AgFeed
Industries, Inc., its Managing Member     By: /s/ Gerry Daignault         Gerry
Daignault, Chief Financial Officer           M2P2 Facilities, LLC By: AgFeed
USA, LLC, its Managing Member   By: AgFeed Industries, Inc., its Managing Member
    By: /s/ Gerry Daignault         Gerry Daignault, Chief Financial Officer    
      MGM, LLC By: AgFeed USA, LLC, its Managing Member   By: AgFeed Industries,
Inc., its Managing Member     By: /s/ Gerry Daignault         Gerry Daignault,
Chief Financial Officer           M2P2 General Operations, LLC By: AgFeed USA,
LLC, its Managing Member   By: AgFeed Industries, Inc., its Managing Member    
By: /s/ Gerry Daignault         Gerry Daignault, Chief Financial Officer

  

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New Colony Land Company, LLC By: M2P2 Facilities, LLC, its Managing Member   By:
AgFeed USA, LLC, its Managing Member   By: AgFeed Industries, Inc., its Managing
Member     By: /s/ Gerry Daignault         Gerry Daignault, Chief Financial
Officer           Heritage Land, LLC By: M2P2 Facilities, LLC, its Managing
Member   By: AgFeed USA, LLC, its Managing Member   By: AgFeed Industries, Inc.,
its Managing Member     By: /s/ Gerry Daignault         Gerry Daignault, Chief
Financial Officer           M2P2 AF JV, LLC By: AgFeed USA, LLC, its Managing
Member   By: AgFeed Industries, Inc., its Managing Member     By: /s/ Gerry
Daignault         Gerry Daignault, Chief Financial Officer           Midwest
Finishing, LLC By: AgFeed USA, LLC, its Managing Member   By: AgFeed Industries,
Inc., its Managing Member     By: /s/ Gerry Daignault         Gerry Daignault,
Chief Financial Officer

 

LENDER:           Farm Credit Services of America, PCA Farm Credit Services of
America, FLCA           By: /s/ Brian Frevert     Brian Frevert, Vice President

 

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EXHIBIT A

 

LOAN FACILITY

CURRENT PRINCIPAL BALANCE (as of 4/16/13)

 

INTEREST PAYOFF

(as of 4/16/13)

FACILITY A $68,839,815.11 $256,608.94 FACILITY F $8,793,315.45 $28,461.61

 

 

 

 

EXHIBIT B

 

HORMEL SETTLEMENT AGREEMENT

 

Principal Terms

 

 

 

New Agreements

·Includes:

 

°Three new HPAs

 

°Amendment of the two weanling pig agreements

 

°Master agreement covering all agreements and including additional items noted
below

 

·Agreements will be tied together with a master agreement and cross default
clauses.

 

·Agreements will provide for default/termination in the event of a bankruptcy
proceeding.

 

·Agreements will represent a new relationship of a short duration, the prior
relationship having ended and all claims having been released.

 

Pricing Terms

·AgFeed pig flow: $ * + $ * + ( * x Corn price) + ( * x SBM price) = price per
cwt

 

·Hormel pig flow: $ * + $ * + ( * x Corn price) + ( * x SBM price) = price per
cwt

 

Timing

·New pricing terms will be effective retroactive to April 1.

 

·Current Weanling Agreements terminate on June 30, 2013; last weanling pig
delivered on or before that date.

 

·Herd is PRRS positive and unstable, weanling pigs recognized to be from such a
herd.

 

·Release includes all claims related to PRRS, historic and future.

 

·AgFeed will honor Weanling Agreement in terms of rejects during wind down.

 

·Revised Market Hog Agreements terminate on December 31, 2013; last market hog
delivered on or before December 31, 2013.

 

·AgFeed will honor HPAs in terms of sort and carcass quality.

 

2012 Addendum

·Hormel releases any claim it may have as to the 2012 Addendum Payment.

 

Pending Arbitration

·The pending arbitration will be dismissed with each side to bear its own costs,
fees and share of arbitrator fees.

 

* Material has been omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

 

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Ledger Balance

·Hormel will release its claim as to the ledger balance.

 

1st Quarter Payment and Issuance of Unsecured Note

·Hormel will issue payment in full of the first quarter settlement pursuant to
the terms of the existing agreements.

 

·AgFeed USA will issue Hormel an unsecured, non-interest bearing note equal to
the Q1 payment less $9,750,000. The note will mature on December 31, 2014.

 

Releases

·Full and Complete Mutual Releases of All Claims — new relationship during wind
down.

 

Conditional / Farm Credit

·Entire agreement is conditioned upon Farm Credit’s agreement to release any
claim it may have related to any set-off taken by Hormel and the final payment.

 

·Farm Credit (and related lenders) will execute a document confirming approval
of the transaction outlined above and its release of any claims against Hormel
related to the same.

 

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EXHIBIT C

 

LLC AMENDMENT

 

[See attached.]

 

 

 

 

AMENDMENT NO. 2 TO
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF AGFEED USA, LLC

 

THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this “Amendment”) is made and entered into as of the 16 day of April, 2013, by
AgFeed Industries, Inc., a Nevada corporation (“AgFeed”), the sole member of
AgFeed USA, LLC.

 

WHEREAS, AgFeed desires to amend its Amended and Restated Limited Liability
Company Agreement, dated September 13, 2010 (as amended from time to time in
accordance with the terms thereof, the “Agreement”), as set forth herein.

 

NOW THEREFORE, for good and valuable consideration, AgFeed, intending to be
legally bound, does hereby amend the Agreement and agrees as follows:

 

1. Capitalized Terms. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned thereto in the Agreement.

 

2. Defined Terms. Article I of the Agreement is hereby modified and amended, and
from and after the date hereof shall include the following additional defined
terms:

 

“Board” has the meaning set forth in Section 5.01(a).

 

“Manager” has the meaning set forth in Section 5.01(a).

 

“Officer” has the meaning set forth in Section 5.02.

 

“Subsidiary Entity” has the meaning set forth in Section 5.01(b)(ix).

 

“Transaction” has the meaning set forth in that certain Forbearance Agreement,
dated as of April 18, 2013, between the Company, TS Finishing, LLC; New York
Finishing, LLC; Pork Technologies, LC; New Colony Farms, LLC; Heritage Farms,
LLC; Heritage Land, LLC; Genetics Operating, LLC; M2P2 Facilities, LLC; MGM,
LLC; M2P2 General Operations, LLC; New Colony Land Company, LLC; M2P2 AF JV,
LLC; and Midwest Finishing, LLC, collectively as Borrower, and Farm Credit
Services Of America, FLCA and Farm Credit Services Of America, PCA, collectively
as Lender.

 

3. Management. Section 5.01 of the Agreement is hereby modified and amended, and
from and after the date hereof shall read in its entirety, as follows:

 

Section 5.01 Management.

 

(a) The business and affairs of the Company shall be managed under the direction
of a board of managers (the “Board”). A member of the Board shall be referred to
as a “Manager.” The Board shall consist of three Managers who will initially be
Keith Maib, Gerard Daignault and Steve Price. Each Manager shall be appointed by
and serve at the sole discretion of the Member. The Member shall have the right
to remove any Manager appointed by the Member and to appoint a substitute
Manager to replace any removed Manager.

 

2

 

 

(b) The Board shall act on behalf of the Company only as a body. No Manager
acting individually in the capacity of a Manager shall have the authority or
capacity to bind the Company or conduct its business. Any action of the Board
may be taken by a majority vote cast at a duly called meeting of the Board at
which a quorum of the Managers is present, or alternately, by a written consent
signed by all of the Managers that sets forth the action being taken. Decisions
of the Board within its scope of authority shall be binding upon the Company and
the Member. Such scope of authority shall specifically include but shall not be
limited to the power to:

 

(i) Authorize any Officer or Officers, agent or agents to sign all checks,
drafts or other orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the Company, which shall be signed by such
Officer or Officers, agent or agents of the Company and in such manner,
including by means of facsimile signatures, as shall from time to time be
determined by or under the authority of a resolution of the Board;

 

(ii) Select directly or under the authority of a resolution such banks, trust
companies or other depositories to which all funds of the Company not otherwise
employed shall be deposited from time to time to the credit of the Company;

 

(iii) Borrow and lend money at such rates of interest and from or to such
parties as is approved, such approval may be general or confined to specific
instances;

 

(iv) Take such actions as are consistent with the Company’s business and purpose
under Section 2.02 of this Agreement;

 

(v) Insure the Company’s activities and property;

 

(vi) Pay out of the Company’s funds all fees and expenses incurred in the
organization and operation of the Company;

 

(vii) Authorize the execution of all documents, instruments and agreements
reasonably deemed by the Board of Managers to be necessary, appropriate or
needed for the performance of its duties and the exercise of its powers under
this Agreement;

 

(viii) Retain attorneys, accountants and other professionals in the course of
the performance of the Managers’ duties and exercise of their powers;

 

(ix) to authorize and approve any Transaction on behalf of (A) the Company and
(B) on behalf of any entity in which the Company is a member or for which the
Company, directly or indirectly, has the authority to act as manager
(collectively, a “Subsidiary Entity”); and

 

3

 

 

(x) to authorize and approve the Company’s and any Subsidiary Entity’s execution
and delivery of any documents or instruments in connection with a Transaction,
and to cause the Company and any Subsidiary Entity to take any actions as may be
necessary to consummate a Transaction.

 

4. Indemnification. Section 5.02 of the Agreement is hereby renumbered as
Section 5.03 and modified and amended, and from and after the date hereof shall
read in its entirety, as follows:

 

Section 5.03 Liability and Indemnification.

 

(a) To the fullest extent permitted by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise
(including under a judgment, decree or order of a court), shall be solely the
debts, obligations and liabilities of the Company, and no member of the Company
(including the Member) or Manager shall be obligated personally for any such
debt, obligation or liability of the Company solely by reason of being a member
or Manager of the Company.

 

(b) Notwithstanding any provision in this Agreement or any other agreement or
writing to the contrary, no provision of this Agreement is intended to or shall:
(i) eliminate the implied contractual covenant of good faith and fair dealing,
or (ii) limit or eliminate liability for any act or omission that constitutes a
bad faith violation of the implied contractual covenant of good faith and fair
dealing.

 

(c) The Company shall indemnify and hold harmless the Managers for any losses,
judgments, liabilities, expenses and amounts paid in settlement of any claims
sustained by a Manager in connection with the Company, provided that the same
were not caused by the gross negligence or willful misconduct on the part of the
Manager. Any indemnity under this Section shall be provided out of and to the
extent of Company assets only, and no member of the Company or Manager shall
have any personal liability on account thereof.

 

5. Officers. A new Section 5.02 is hereby added to the Agreement, and from and
after the date hereof shall read in its entirety, as follows:

 

Section 5.02 Officers. The Officers of the Company (each, an “Officer”) shall be
chosen by the Board and may consist of a Chief Restructuring Officer, a
President, a Secretary and a Treasurer. The Board may also choose one or more
Vice Presidents, Assistant Secretaries and Assistant Treasurers. Any number of
offices may be held by the same person. The Board may appoint such other
Officers and agents as it shall deem necessary or advisable who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board. Unless the Board otherwise
specifies, if the title of an Officer is one commonly used for officers of a
business corporation, the assignment of such title shall constitute the
delegation to such Officer of the authority and duties that are normally
associated with that office, subject to any specific delegation of broader or
more narrow authority and duties made to such Officer by the Board pursuant to
this Agreement. The salaries of all Officers and agents of the Company shall be
fixed by or in the manner prescribed by the Board. The Officers of the Company
shall hold office until their successors are chosen and qualified. Any Officer
may be removed at any time, with or without cause, by the affirmative vote of a
majority of the Board. Any vacancy occurring in any office of the Company shall
be filled by the Board.

 

4

 

 

6. Amendment. The Agreement is hereby amended in all respects necessary to give
effect to the foregoing and the Agreement is otherwise ratified and confirmed
and remains in full force and effect. The Agreement as amended by this Amendment
constitutes the entire limited liability company agreement of the Company.

 

7. Governing Law. This Amendment and the rights, remedies, duties, powers,
authority, and authorization of the parties hereto and the Company hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware without regard to principles of conflict of laws.

 

[Signature page follows.]

 

5

 

 

IN WITNESS WHEREOF, the Member has executed this Amendment or caused this
Amendment to be executed as of the date set forth above.

 

  AGFEED INDUSTRIES, INC.   as sole member             Gerard Daignault, Chief
Financial Officer

 

6

 

 

EXHIBIT D

 

CASH FLOW AND BORROWING BASE PROJECTIONS

 

 

 

 

AgFeed USA, LLC                            

13 Wk Cash Flow Projections Beginning the Week Ending 4/19/13                

EXHIBIT D                            

 

Cash Inflows:   4/19/13    4/26/13    5/3/13    5/10/13    5/17/13    5/24/13  
 5/31/13    6/7/13    6/14/13    6/21/13    6/28/13    7/5/13    7/12/13    13
Week CF Total  Hormel Market Sales  $3,332,285   $4,326,825   $4,507,816  
$4,423,246   $4,302,843   $4,320,169   $3,744,383   $3,772,974   $3,865,777  
$3,934,111   $4,065,258   $3,433,103   $3,818,207   $51,846,997  Cull Sales-
Finishing   187,611    81,326    86,820    84,013    82,272    85,743  
 80,113    79,453    74,036    79,736    79,590    75,565    85,055  
 1,161,333  Cull Sales- Sows   189,331    57,000    57,000    57,000    57,000  
 57,000    57,000    57,000    57,000    57,000    57,000    57,000    57,000  
 873,331  Hormel Qtrly Settlement   12,590,434    3,000,000    -    -    -  
 -    -    -    -    -    -    -    -    15,590,434  Misc Income   -    -    -  
 -    -    -    -    -    -    -    -    -    -    -  External Feed Sales 
 308,661    215,000    150,000    150,000    150,000    -    -    -    -    -  
 -    -    -    973,661  Total Inflows  $16,608,322   $7,680,151   $4,801,636  
$4,714,258   $4,592,115   $4,462,912   $3,881,496   $3,909,427   $3,996,813  
$4,070,847   $4,201,848   $3,565,668   $3,960,262   $70,445,756              
                                                           Cash Outflows      
                                                                Payroll 
 302,948    -    308,230    -    350,284    -    308,230    -    350,284    -  
 308,230    -    350,284   $2,278,489  401k/H.S.A./Insurance   67,986    -  
 67,986    -    67,986    -    67,986    -    67,986    -    67,986    -  
 67,986    475,905  Purchased Wean Pigs (CH/MP/3rd Party)   617,009    635,605  
 621,634    612,320    502,415    612,320    612,320    612,320    612,320  
 612,320    502,415    612,320    60,000    7,225,320  Boar Purchases   -    -  
 22,500    -    -    -    -    22,500    -    -    -    -    -    45,000  Feed
Costs- Finishing   2,345,038    2,174,994    2,187,091    2,190,702  
 2,191,971    2,187,604    2,194,616    2,177,359    2,202,895    2,190,899  
 2,207,870    2,164,191    2,173,995    28,589,226  Feed Ingredient Costs-
Farrowing   165,134    438,565    398,565    398,565    248,565    248,565  
 248,565    248,565    248,565    248,565    286,365    298,965    298,965  
 3,776,511  Producer Fees   54,969    21,000    1,693,554    121,353    21,000  
 21,000    1,693,554    71,177    21,000    21,000    1,693,554    121,353  
 21,000    5,575,514  Vet/Meds   68,245    118,120    118,589    118,729  
 118,778    118,609    118,881    119,064    120,064    120,461    121,132  
 121,161    121,556    1,503,390  Rent- Offices   -    -    13,750    -    -  
 -    13,750    -    -    -    -    13,750    -    41,250  Lease Pmts
(TriOak/Bridenstine(OK)/RV(CO))   24,133    -    294,773    -    -    -  
 79,773    -    -    -    -    75,361    -    474,040  AF Parent Overhead 
 130,794    -    147,069    -    147,069    -    147,069    -    147,069    -  
 147,069    -    -    866,140  Trucking   162,533    161,261    169,515  
 169,798    165,943    159,861    165,776    144,105    160,955    153,962  
 161,021    151,771    133,299    2,059,801  Utilities   34,004    34,004  
 20,375    20,375    20,375    20,375    20,375    22,759    22,759    22,759  
 22,759    29,158    29,158    319,234  Repairs & Maintenance   19,466  
 19,466    19,466    19,466    19,466    19,466    19,466    19,466    19,466  
 19,466    19,466    19,466    19,466    253,058  Insurance   -    166,749  
 -    -    166,749    -    -    -    166,749    -    -    -    166,749  
 666,996  Vehicle/Fleet Costs   -    30,000    20,000    -    -    -    40,000  
 30,000    -    -    40,000    30,000    -    190,000  Truck Wash   7,809  
 5,000    5,000    5,000    5,000    5,000    5,000    5,000    5,000    5,000  
 5,000    5,000    5,000    67,809  Business Meals/Travel   212,294    500  
 500    500    500    300,000    500    500    500    50,000    500    500  
 500    567,294  Misc/Supplies   25,000    153,000    25,000    25,000  
 125,000    25,000    25,000    25,000    25,000    125,000    25,000  
 25,000    25,000    653,000  Total Operating Outflows  $4,237,362  
$3,958,263   $6,133,598   $3,681,809   $4,151,101   $3,717,800   $5,760,861  
$3,497,815   $4,170,613   $3,569,432   $5,608,368   $3,667,996   $3,472,958  
$55,627,978                                                                     
    Net Operating Cash Inflow (Outflow)  $12,370,960   $3,721,888  
$(1,331,962)  $1,032,450   $441,014   $745,112   $(1,879,365)  $411,611  
$(173,800)  $501,415   $(1,406,521)  $(102,328)  $487,304   $14,817,778         
                                                                Non Operating
Outflows                                                                      
Principal Payment Other Debt (NC)   -    -    120,874    -    -    -    -  
 119,894    -    -    -    122,886    -    363,655  Interest Payment - FCSA
Revolver   -    -    440,200    -    -    -    378,744    -    -    -    -  
 389,523    -    1,208,467  Interest Payment Other Debt (NC + HM)   -    -  
 60,635    -    -    -    -    61,615    -    -    -    58,623    -    180,873 
Capital Expenditures   10,600    10,600    10,600    10,600    10,600  
 10,600    10,600    10,600    10,600    10,600    10,600    10,600    10,600  
 137,800  Professional Fees   108,000    81,700    50,000    242,000    45,000  
 45,000    45,000    145,000    45,000    45,000    45,000    145,000  
 95,000    1,136,700  Total Non Operating Outflows  $118,600   $92,300  
$682,309   $252,600   $55,600   $55,600   $434,344   $337,109   $55,600  
$55,600   $55,600   $726,632   $105,600   $3,027,495                        
                                                 Total Cash Outflows 
$4,355,962   $4,050,563   $6,815,907   $3,934,409   $4,206,701   $3,773,400  
$6,195,205   $3,834,925   $4,226,213   $3,625,032   $5,663,968   $4,394,628  
$3,578,558   $58,655,473                                                      
                   Net Cash Inflow (Outflow)  $12,252,360   $3,629,588  
$(2,014,271)  $779,850   $385,414   $689,512   $(2,313,709)  $74,502  
$(229,400)  $445,815   $(1,462,121)  $(828,961)  $381,704   $11,790,283 

 

 

 

 

 

AgFeed USA, LLC                          

Borrowing Base Projections                          

EXHIBIT D                          

 

   Projection   Projection   Projection   Projection   Projection   Projection  
Projection   Projection   Projection   Projection   Projection   Projection  
Projection     4/19/13   4/26/13   5/3/13   5/10/13   5/17/13   5/24/13  
5/31/13   6/7/13   6/14/13   6/21/13   6/28/13   7/5/13   7/12/13  AgFeed USA
Operations                                                                  Sows
& Gilts over 7 months.  $5,224,975   $5,224,975   $5,224,975   $5,224,975  
$5,224,975   $5,224,975   $5,224,975   $5,224,975   $5,224,975   $5,224,975  
$5,224,975   $5,224,975   $5,224,975  Breeding Gilts under 7 months 
 1,458,450    1,458,450    1,458,450    1,458,450    1,458,450    1,458,450  
 1,458,450    1,458,450    1,458,450    1,458,450    1,458,450    1,458,450  
 1,458,450  Boars (A.I. Quality)   124,600    124,600    124,600    124,600  
 124,600    124,600    124,600    124,600    124,600    124,600    124,600  
 124,600    124,600  Boars (V-Boar Quality)   24,675    24,675    24,675  
 24,675    24,675    24,675    24,675    24,675    24,675    24,675    24,675  
 24,675    24,675  Pigs - Farrowing House   793,260    793,260    793,260  
 793,260    793,260    793,260    793,260    793,260    793,260    793,260  
 793,260    793,260    793,260  Total AgFeed USA Ops Livestock  $7,625,960  
$7,625,960   $7,625,960   $7,625,960   $7,625,960   $7,625,960   $7,625,960  
$7,625,960   $7,625,960   $7,625,960   $7,625,960   $7,625,960   $7,625,960    
                                                                Finishing
Inventory  $48,813,118   $48,893,712   $48,922,027   $48,824,568   $48,981,052  
$49,086,765   $49,662,463   $49,890,931   $50,277,392   $50,293,635  
$50,521,482   $50,175,939   $49,204,284  Head   549,945    550,853    551,172  
 550,074    551,837    553,028    559,514    562,088    566,442    566,625  
 569,192    565,299    554,352  Feed & Grain Inventory   876,345    841,605  
 806,865    772,125    737,385    702,645    667,905    633,165    598,425  
 563,685    555,000    555,000    555,000  Accounts Receivable (<30 Days) 
 701,702    496,490    381,615    330,759    329,454    219,557    102,835  
 102,340    98,277    102,552    102,443    99,424    106,541  Packer
Receivable/Hormel Ledger   3,332,914    1,730,730    1,803,126    1,769,298  
 1,721,137    1,728,068    1,497,753    1,509,189    1,546,311    1,573,644  
 1,626,103    1,373,241    1,527,283  Prepaid Yardage   384,891    1,203,925  
 1,037,059    745,044    453,028    1,203,925    1,203,925    911,910  
 619,894    1,203,925    1,203,925    995,343    703,327  Commodity Account 
 -    -    -    -    -    -    -    -    -    -    -    -    -  Cash   300,000  
 300,000    300,000    300,000    300,000    300,000    300,000    300,000  
 300,000    300,000    300,000    300,000    300,000  Total Borrowing Base 
$62,034,931   $61,092,423   $60,876,652   $60,367,755   $60,148,016  
$60,866,921   $61,060,841   $60,973,495   $61,066,259   $61,663,402  
$61,934,913   $61,124,907   $60,022,395                                       
                             FCSA LOC Balance (Operating)   55,141,358  
 51,511,770    53,526,041    52,746,192    52,360,778    51,671,265  
 53,984,974    53,910,472    54,139,872    53,694,057    55,156,178  
 55,985,139    55,603,435  Drafts Outstanding   4,050,563    6,239,734  
 3,934,409    3,709,348    3,773,400    5,739,906    3,715,030    3,728,860  
 3,625,032    5,208,669    4,271,742    3,228,275    3,147,626  Accounts
Payable   1,950,242    1,850,242    1,850,242    1,850,242    1,850,242  
 1,850,242    1,850,242    1,850,242    1,850,242    1,850,242    1,850,242  
 1,703,294    1,633,460  Accrued Expenses   100,000    100,000    100,000  
 100,000    100,000    100,000    100,000    100,000    100,000    100,000  
 100,000    100,000    100,000  Total Borrowing Base Liabilities  $61,242,164  
$59,701,746   $59,410,692   $58,405,782   $58,084,420   $59,361,413  
$59,650,247   $59,589,575   $59,715,147   $60,852,969   $61,378,162  
$61,016,707   $60,484,521                                                      
              Borrowing Base Margin (Deficit)  $792,767   $1,390,676  
$1,465,960   $1,961,973   $2,063,596   $1,505,507   $1,410,594   $1,383,920  
$1,351,112   $810,433   $556,751   $108,200   $(462,127)

 

 

 

 

 

EXHIBIT E

 

GUARANTY AGREEMENT

 

[See attached.]

 

 

 

 

GUARANTY

 

This GUARANTY (the “Guaranty”) is made as of April 18, 2013 by AgFeed
Industries, Inc. a Nevada corporation (“Guarantor”), to and for the benefit of
Farm Credit Services of America, FLCA and Farm Credit Services of America, PCA
(“Lender”).

 

RECITALS:

 

E. Lender is a party to that certain Credit Agreement dated as of June 6, 2006,
as the same has since been amended by nineteen separate amendments executed
prior to the date of this Agreement (the “Credit Agreement”) with AgFeed USA,
LLC (formerly known as M2 P2, LLC) (“AgFeed”); TS Finishing, LLC; New York
Finishing, LLC; Pork Technologies, LC; New Colony Farms, LLC; Heritage Farms,
LLC; Heritage Land, LLC; Genetics Operating, LLC; M2P2 Facilities, LLC; MGM,
LLC; M2P2 General Operations, LLC; New Colony Land Company, LLC; M2P2 AF JV,
LLC; and Midwest Finishing, LLC (collectively, hereinafter referred to as
“Borrower”).

 

F. As of [April 16, 2013], each Borrower is indebted to Lender pursuant to the
Credit Agreement in the following principal amounts (the “Principal
Indebtedness”):

 

LOAN FACILITY CURRENT PRINCIPAL BALANCE

FACILITY A

$68,839,815.11

FACILITY F $8,793,315.45

 

In addition to the Principal Indebtedness, interest, fees, charges and costs
have accrued and will accrue pursuant to the Credit Agreement and be payable
from Borrower to Lender (together, the “Interest, Fees and Costs”). Together,
the Principal Indebtedness and Accrued Interest Fees and Costs shall be referred
to hereinafter as the Credit Agreement Debt.

 

G. Each Borrower is in default of various obligations to Lender specified in the
Credit Documents including, without limitation, the failure to pay the Credit
Agreement Debt to Lender when and as due (together, as more fully set forth in
the Forbearance Agreement (as defined below), the “Existing Events of Default”).

 

H. Lender has agreed to enter into a Forbearance Agreement (the “Forbearance
Agreement”) with each Borrower as of the date hereof. Pursuant to the
Forbearance Agreement, Lender will forbear from exercising its rights and
remedies on account of the Existing Defaults, as more fully set forth in the
Forbearance Agreement, and Lender has agreed to permit Borrower to use Lender’s
Collateral to fund and pay for expenses incurred by Parent in the operation of
Parent’s business, as more fully set forth in the Forbearance Agreement. As a
condition of Lender’s agreement to execute the Forbearance Agreement, Lender
requires that Borrower obtain this Guaranty duly executed by Guarantor. Lender
is relying upon this Guaranty in providing forbearance to Borrower and
permitting Borrower to use Lender’s Collateral to fund Guarantor’s expenses as
set forth in the Forbearance Agreement (as specifically defined in the
Forbearance Agreement, the “Forbearance Period Advances”). The forbearance
provided by Lender to Borrower and Borrower’s use of Lender’s Collateral to fund
the Forbearance Period Advances is of value to Guarantor and is reasonably
expected to benefit Guarantor.

 

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AGREEMENT

 

In consideration of Lender executing the Forbearance Agreement, as an inducement
to Lender to do so, and for other valuable consideration, Guarantor agrees,
warrants, represents, and covenants as follows:

 

1. Definitions. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the Forbearance Agreement.

 

2. Guaranty. Guarantor unconditionally, absolutely and irrevocably guarantees:
(a) the full, prompt, and complete payment upon the occurrence of a Forbearance
Default of the entire amount of principal, accrued interest, and premiums due
from time to time under the Credit Agreement and all other Obligations of
Borrower to Lender under or in respect of any of the Credit Agreement, including
reimbursements, late charges, interest and default interest (including
post-petition interest to the extent a petition is filed by or against Borrower
under the Bankruptcy Code), damages, indemnity obligations, collection and court
costs, attorneys’ fees, advances, and all other expenses and charges of any
kind, in each case whether incurred prior to or after the execution of this
Guaranty and all without set-off, counterclaim, recoupment, or deduction of any
amounts owing or alleged to be owing by Lender to Borrower or Guarantor. All of
the indebtedness, obligations, and liabilities described in this Section are
referred to in this Guaranty as the “Guaranteed Obligations.” All payments made
pursuant to this Guaranty shall be in U.S. dollars.

 

3. Limitation on Amount Guaranteed. Notwithstanding the provisions of Section 2,
the obligations of Guarantor pursuant to this Guaranty shall not exceed an
amount (the “Guaranteed Amount”) equal to the sum of (a) the Forbearance Period
Advances; plus (b) $1,406,250. The Guaranteed Amount shall not be subject to
reduction by reason of (y) any payment of the Obligations, except that payments
by Guarantor pursuant to this Guaranty shall reduce the Guaranteed Amount. If
Guarantor is entitled to the benefits of any statute, law, decision, rule or
regulation that limits or reduces the monetary liability of guarantors (a
“Statutory Limitation”), the Statutory Limitation shall be determined without
regard to the limit of the Guaranteed Obligations set forth in this Section and
as if Guarantor had guaranteed 100% of the Guaranteed Obligations.

 

4. Guarantor’s Obligations Primary. Guarantor’s obligations under this Guaranty
are primary and are independent of the obligations of Borrower, and a separate
action or actions may be brought and executed against Guarantor, whether or not
such action is brought against Borrower and whether or not Borrower is joined in
such action or actions.

 

5. Representations and Warranties. Guarantor acknowledges and agrees that the
representations and warranties in this Section are a material consideration to
Lender; that Lender is relying on their correctness and completeness in entering
into the Forbearance Agreement and making the Forbearance Period Advances
available to Guarantor; that these representations and warranties are true and
accurate as of the date hereof regardless of any investigation or inspection by
Lender. Accordingly, each Guarantor represents, warrants, and certifies to and
covenants with Lender that:

 

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(a) No permits, consents, or approvals from any person or entity are required in
connection with the authorization, execution, delivery, consummation, or
performance by Guarantor of this Guaranty;

 

(b) The entry into and performance by Guarantor of this Guaranty does not and
will not violate any judgment, order, law or regulation applicable to Guarantor
or result in any breach of, constitute an event of default under, or result in
the creation of any lien, charge, security interest or other encumbrance upon
any collateral pursuant to any indenture, mortgage, deed of trust, bank loan or
credit agreement or other instrument to which Guarantor is a party or by which
Guarantor’s assets are bound;

 

(c) Upon execution by Guarantor of this Guaranty, the Guaranty shall constitute
the legal, valid and binding obligations of Guarantor, enforceable against
Guarantor in accordance with its respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, liquidation, reorganization and
other laws affecting the rights of creditors generally and general principles of
equity;

 

(d) Guarantor is and will remain in compliance in all material respects with all
U.S. economic sanctions laws, Executive Orders and implementing regulations
promulgated by OFAC and all applicable anti-money laundering and
counter-terrorism financing provisions of the Bank Secrecy Act and all
regulations issued pursuant to it. Neither Guarantor nor any Affiliate of
Guarantor is or will become a Person (i) designated by the U.S. government on
the SDN List or who is otherwise the target of U.S. economic sanctions laws,
such that, in either case, a U.S. Person cannot deal with or otherwise engage in
business transactions with such Person; or (ii) Controlled by, or acts, directly
or indirectly, for or on behalf of, any Person on the SDN List or a foreign
government that is the target of U.S. economic sanctions prohibitions, such that
the entry into, or performance under, this Guaranty or any other Loan Document
would violate Applicable Law. Guarantor and its Affiliates are and will remain
in compliance with the U.S. Patriot Act and other federal or state laws relating
to “know your customer” and anti-money laundering and anti-terrorism rules and
regulations. No proceeds of any Forbearance Period Advance will be used directly
or indirectly for any payments to any government official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977. For purposes of this subsection,
“Affiliate” does not include the shareholders of any entity that is publicly
traded on a recognized national United States stock exchange.

 

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(e) Guarantor is and will remain validly existing and in good standing under the
laws of the state of its formation and has and will continue to have full power
and capacity to enter into and perform its obligations hereunder;

 

(f) Guarantor has taken all necessary action to obtain the authorization,
execution, delivery, consummation, and performance of this Guaranty;

 

(g) The individual signing this Guaranty on behalf of Guarantor is duly
authorized to do so;

 

(h) The entry into and performance by Guarantor of this Guaranty does not and
will not violate any provision of Guarantor’s organizational documents.

 

6. Nature of Guaranty; Waivers. This is an absolute and unconditional guaranty
of payment and performance and not of collection. Guarantor unconditionally
waives: (a) any requirement that Lender first make demand upon, or seek to
enforce or exhaust remedies against, Borrower or any other Person or any of the
Collateral or other property of Borrower or such other Person before demanding
payment from or seeking to enforce any of the provisions of this Guaranty
against such Guarantor; (b) and agrees not to assert any and all rights,
benefits and defenses which might otherwise be available under any applicable
law that might operate to limit Guarantor’s liability under, or the enforcement
of, this Guaranty; (c) the benefits of any statutory or common law provision
limiting the right of Lender to recover a deficiency judgment, or to otherwise
proceed, against any Person obligated for the payment of the Guaranteed
Obligations, after any foreclosure or trustee’s sale of any collateral securing
payment of the Guaranteed Obligations; (d) any statute of limitations affecting
Guarantor’s liability under this Guaranty or Borrower’s obligations under the
Credit Agreement; and (e) diligence, presentment, protest, demand for
performance, notice of nonperformance, notice of intent to accelerate, notice of
acceleration, notice of protest, notice of dishonor, notice of extension,
renewal, alteration or amendment, notice of acceptance of this Guaranty, notice
of default under any of the Credit Agreement or any ancillary document, and all
other notices whatsoever. Guarantor agrees that this Guaranty shall remain in
full effect without regard to, and shall not be affected or impaired by, any
invalidity, irregularity or unenforceability in whole or in part of any of the
Credit Agreement or any ancillary documents or instruments, or any limitation of
the liability of Borrower under the Credit Agreement, including any claim that
the Credit Agreement or any ancillary agreement, document or instrument was not
duly authorized, executed, or delivered on behalf of any Borrower.

 

7. Duration; Indemnification. This Guaranty is effective when received by Lender
and, except as may otherwise be specifically provided herein, shall continue in
full force and effect, until all of the Guaranteed Obligations are fully and
finally paid and performed. The Guaranteed Obligations shall not be considered
fully and finally paid and performed unless and until all payments by Borrower
to Lender are no longer subject to any right on the part of any Person,
including Borrower, Borrower as a debtor-in-possession, or any trustee in
bankruptcy, to require Lender to disgorge such payments or to seek to recoup all
or any portion of such payments. Accordingly, this Guaranty shall continue to be
effective or be reinstated, as applicable, if at any time the payment or
performance of all or any portion of the Guaranteed Obligations is rescinded or
reduced in amount or must otherwise be restored or returned by Lender, whether
as a “voidable preference” or “fraudulent conveyance,” or under any federal or
state law, including the Bankruptcy Code or otherwise, all as though such
payment or performance had not been made, and Guarantor will indemnify, defend,
and hold Lender harmless for, from and against, any and all liabilities incurred
by Lender in connection with such remission, rescission or restoration;
provided, however, that Guarantor shall not have any liability under this
Section to Lender with respect to any indemnified matter to the extent such
liability has resulted primarily from the gross negligence or willful misconduct
of Lender, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order. This Guaranty shall remain in full force and
effect and continue to be effective if (a) any petition is filed by or against
Borrower or Guarantor for relief under the Bankruptcy Code; (b) Borrower or
Guarantor becomes insolvent or makes an assignment for the benefit of creditors;
or (c) a receiver or trustee is appointed for all or any significant part of
Borrower’s or Guarantor’s assets.

 

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8. Effect of Certain Matters. Guarantor’s obligations under this Guaranty shall
not be affected or impaired by reason of any of the following, all without
notice to, or the further consent of, Guarantor: (a) the waiver by Lender of the
observance or performance by Borrower of any of the obligations, conditions or
other provisions contained in any of the Credit Agreement, except to the extent
of such waiver; (b) the extension, in whole or in part, of the time for payment
of any amount owing or payable under the Credit Agreement; (c) the modification
or amendment (whether material or otherwise) of any of the obligations of
Borrower under, or any other provisions of, the Credit Agreement, except to the
extent of such modification or amendment; (d) the taking or the omission of any
of the actions referred to in any of the Credit Agreement (including the giving
of any consent, indulgences, or extensions); (e) any failure, omission, delay or
lack on the part of Lender to enforce, assert or exercise any right, power or
remedy conferred on Lender in any of the Credit Agreement; (f) the assignment to
or assumption by any third party of any or all of the rights or obligations of
Borrower under all or any of the Credit Agreement; (g) the release or discharge
of Borrower from the performance or observance of any obligation, undertaking or
condition to be performed by Borrower under any of the Credit Agreement by
operation of law, including any rejection or disaffirmance of any of the Credit
Agreement in any bankruptcy or similar proceedings; (h) the receipt and
acceptance by Lender or any other Person of notes, checks or other instruments
for the payment of money and extensions and renewals thereof; (i) any action,
inaction or election of remedies by Lender which results in any impairment or
destruction of any subrogation, indemnity, reimbursement or contribution rights
of Guarantor or of any rights of Guarantor to proceed against any other Person
for reimbursement; (j) any setoff, defense, counterclaim, abatement, recoupment,
reduction, change in law or any other event or circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
indemnitor or surety under Applicable Law; or (k) the termination or renewal of
any of the Guaranteed Obligations.

 

9. Waiver of Certain Rights Against Borrower and Others. Guarantor waives any
claim or other right which Guarantor may now have or hereafter acquire against
Borrower, any other obligor primarily or secondarily obligated with respect to
any of the Guaranteed Obligations or the Collateral that arises from the
existence or performance of the obligations of Guarantor under this Guaranty,
including any right of subrogation, reimbursement, exoneration, contribution,
indemnification or any right to participate in any claim or remedy of Lender
against Borrower or any property securing any of the Guaranteed Obligations
which Lender now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity or under contract, statute or common law.

 

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10. Access to Borrower Information. Guarantor now has and will continue to have
independent means of obtaining information concerning the affairs, financial
condition and business of Borrower. Lender shall have no obligation to provide
Guarantor with any credit or other information concerning the affairs, financial
condition or business of Borrower that is in, or may come into, Lender’s
possession.

 

11. Notices. All Notices shall be given as provided in the Credit Agreement, if
to Guarantor, at the address set forth below, and if to Lender, as provided in
the Credit Agreement.

 

12. Binding Nature. This Guaranty is binding on Guarantor and its successors and
assigns, including a debtor-in-possession on behalf of Guarantor, and shall
inure to the benefit of Lender, its successors and assigns.

 

13. Severability. Any provision of this Guaranty being held illegal, invalid or
unenforceable in any jurisdiction shall not affect any part of such provision
not held illegal, invalid or unenforceable, any other provision of any Loan
Document or any part of such provision in any other jurisdiction.

 

14. Remedies. No delay on the part of Lender in the exercise of any right or
remedy under this Guaranty shall operate as a waiver thereof. No single or
partial exercise by Lender of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy. No
modification or waiver of any of the provisions of this Guaranty shall be
binding upon Lender except as set forth in a writing executed by Lender.

 

15. Limitation of Liability for Certain Damages. In no event shall Lender be
liable to Guarantor or on any theory of liability for any special, indirect,
consequential or punitive damages (including any loss of profits, business or
anticipated savings). GUARANTOR, FOR ITSELF AND ITS AFFILIATES, HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT
KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR

 

16. Governing Law. THE LAWS OF THE STATE OF NEBRASKA (WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF) SHALL GOVERN ALL MATTERS ARISING OUT
OF, IN CONNECTION WITH OR RELATING TO THIS GUARANTY AND THE OTHER CREDIT
AGREEMENT, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND
ENFORCEMENT..

 

17. Jurisdiction and Service of Process. Any legal action or proceeding with
respect to this Guaranty shall be brought exclusively in the courts of the State
of Nebraska or of the United States for the District of Nebraska, sitting in
Omaha, Nebraska, and Guarantor accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Lender and Guarantor hereby irrevocably waive any objection, including
any objection to the laying of venue or based on the grounds of forum non
conveniens, that either of them may now or hereafter have to the bringing of any
such action or proceeding in such jurisdictions. Guarantor hereby irrevocably
waives personal service of any and all legal process, summons, notices and other
documents and other service of process of any kind and consents to such service
in any suit, action or proceeding brought in the United States of America with
respect to or otherwise arising out of or in connection with this Guaranty by
any means permitted by applicable law, including by the mailing thereof to the
address of Guarantor specified on the signature page hereto. Guarantor agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by applicable law.

 

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18. Waiver of July Trial. LENDER AND GUARANTOR, TO THE FULLEST EXTENT PERMITTED
BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS GUARANTY, THE OTHER
CREDIT AGREEMENT AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY. THIS
WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE.

 

19. Entire Agreement. This Guaranty embodies the entire agreement of the parties
and supersedes all prior agreements and understandings, oral or written,
relating to the subject matter hereof. Guarantor acknowledges and affirms that
Guarantor did not rely on any statement, oral or written, not contained in this
Guaranty or the Credit Agreement in making Guarantor’s decisions to enter into
this Guaranty.

 

[SIGNATURE PAGE FOLLOWS]

 

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EXECUTED effective as of the date first set forth above.

 

  GUARANTOR:       AgFeed Industries, Inc.               By:       Printed Name:
      Its:          Address for Notices:                       

  

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