Exhibit 10.2

 

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:

 

A. 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”).

 

B. 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.

 

C. 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”).

 

D. 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: /s/ K. Ivan
F. Gothner     Printed Name:  K. Ivan F. Gothner   Its: Chairman and CEO        
  Address for Notices:   100 Bluegrass Commons Blvd.   Suite 310  
Hendersonville, TN  37075

 

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