Document:

gcehsecuragrmnt.htm

 

Exhibit 10.12

 

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT is dated as of March 13, 2013 (as the same may from time to time be amended, supplemented or otherwise modified, this “Security Agreement”), by and between Targeted Growth, Inc., a Washington corporation (the “Secured Party”), and Global Clean Energy Holdings Inc., a Delaware corporation (the “Company”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Secured Party are parties to that certain Asset Purchase Agreement (the “Purchase Agreement”), dated as of March 12, 2013, pursuant to which the Company has agreed to purchase from the Secured Party, and the Secured Party has agreed to sell to the Purchaser, the rights and other assets listed on Annex A, all of which are related to its program of developing intellectual property and managing breeding activities for the development of Camelina sativa as a biofuels feedstock;

 

WHEREAS, a portion of the consideration for the purchase by the Company of the assets under the Purchase Agreement is in the form of the Company’s secured promissory note, dated as of the date hereof, in the aggregate principal amount of $1,300,000 (the “Note”); and

 

WHEREAS, pursuant to the Note and the Purchase Agreement, the Company has agreed to execute and deliver this Security Agreement to the Secured Party.

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

ARTICLE I

 

GRANT OF SECURITY INTEREST

 

As security for the prompt payment and performance of the Note (including principal, interest, fees and other amounts payable with respect to the Note), the Company hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to the Secured Party and hereby grants to the Secured Party a security interest in, and continuing lien on the Collateral (as such term is defined on Annex A hereto).

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

The Company hereby represents and warrants to the Secured Party, which representations and warranties shall survive execution and delivery of this Security Agreement, as follows:

 

2.1 Validity and Perfection.

 

(a) Each of this Agreement and the Note has been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,

 

  

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(b) reorganization, moratorium or other similar laws affecting creditors’ rights generally and subject to equitable principles (regardless of whether enforcement is sought in equity or at law).

 

(c) The security interest in the Collateral granted to the Secured Party hereunder constitutes a valid and continuing security interest in the Collateral, securing the payment and performance when due of the Note.

 

2.2 Predecessors-in-Interest.  During the three years ended on the date hereof, neither the Company nor any of its predecessors-in-interest has conducted any business or sold any goods under any name (including any fictitious business or trade name) other than its legal name which is correctly set forth at the beginning of this Security Agreement.

 

2.3 No Liens; Other Financing Statements.

 

(a) Upon consummation of the transactions contemplated by the Purchase Agreement, and subject to the validity and accuracy of the representations and covenants regarding title to the Collateral made by the Secured Party to the Company in the Purchase Agreement:

 

(i) the Company will be the sole, legal and equitable owner of the Collateral;

 

(ii) this Agreement creates a valid and enforceable security interest in the Collateral in favor of Secured Party.

 

(b) The Company will neither create nor permit the existence of any lien or security interest other than the security interest created hereby on the Collateral without the consent of the Secured Party, and no lien or security interest on the Company’s assets exists which would allow the creditor to have priority over the Secured Party with respect to the Collateral.

 

(c) When UCC financing statements including the information about the Company specified in Section 2.4 have been filed in the jurisdiction set forth on page 1 of this Security Agreement, the Secured Party will hold a perfected security interest in the Collateral to the extent that a security interest therein may be perfected by filing pursuant to the UCC.

 

2.4 Representations and Covenants Related to Perfection.  The Company represents and warrants to the Secured Party as follows:  (a) the Company’s exact legal name is as indicated on page 1 of this Security Agreement and on the signature page hereof, (b) the Company is an organization of the type and is organized in the jurisdiction set forth on page 1 of this Security Agreement, the chief executive office of the Company is located at 100 West Broadway, #650, Long Beach, California 90802, and the Company has no additional places of business.

 

  

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2.5 

 

COVENANTS

 

The Company covenants and agrees with the Secured Party that from and after the date of this Security Agreement:

 

2.6 Further Assurances.  The Company will from time to time execute, deliver, file and record all further instruments, endorsements and other documents, and take such further action as the Secured Party may deem reasonably necessary in obtaining the full benefits of this Security Agreement and of the rights, remedies and powers herein granted.

 

2.7 Change of Name; Identity; Corporate Structure; Chief Executive Office.  The Company will not change its name, identity, corporate structure or the location of its chief executive office without giving the Secured Party 15 days prior written notice and taking all action reasonably necessary to maintain the security interest of the Secured Party in the Collateral intended to be granted hereby at all times fully perfected with the same or better priority and in full force and effect.

 

2.8 Maintain Records.  The Company will keep and maintain at its own cost and expense reasonably satisfactory and complete records of the Collateral.  The Company expressly authorizes the Secured Party or its agent(s) to file UCC Financing Statements, Amendments or Continuation Statements as deemed appropriate by Secured Party until the obligations under the Note are paid in full.

 

2.9 Sale of Collateral.  The Company will not (i) sell or otherwise dispose of the Collateral other than in the ordinary course of business, or (ii) create, assume, incur or suffer to exist any lien, charge or encumbrance of any kind (whether senior, pari passu or subordinate) on the Collateral, other than Permitted Liens.

 

2.10 Maintenance of Collateral.  The Company will keep the Collateral, including, without limitation, all inventory and equipment, in good repair, working order and condition, subject to normal wear and tear.

 

2.11 Payment of Taxes.  The Company will pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon it or its income from the Collateral or upon any of the Collateral or any part of the Collateral, as well as all claims of any kind (including claims for labor, materials and supplies) which if unpaid might by law become a lien, encumbrance or charge upon the Collateral, in each case except as and to the extent that the Company is contesting any of the foregoing in good faith and as to which appropriate reserves are established in the Company’s financial statements.

 

2.12 Collections by Company.  From and after the occurrence and during the continuance of any Acceleration Event (as defined in the Note), all sums collected or received and all property recovered or possessed by the Company in respect of any of the Collateral, including, without limitation, all sums received in respect of the operation of the Camelina Assets (as defined in the Note), shall be received and held by the Company in trust for the Secured Party and shall be segregated from other assets and funds of the Company and upon the

 

  

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2.13 request of the Secured Party shall be immediately delivered to the Secured Party (or otherwise in accordance with the instructions of the Secured Party) for application to the payment of the Note.

 

2.14 Power of Attorney. Upon the occurrence and during the continuance of an Acceleration Event, the Company hereby constitutes and appoints the Secured Party its true and lawful attorney, with full power, in the name of the Company or otherwise, at the expense of the Company and without notice to or demand upon the Company, to grant, sell, convey, assign and transfer the Collateral in accordance with the UCC, free and clear of all liens.  The Company agrees to reimburse the Secured Party on demand for any payments made or expenses incurred by the Secured Party pursuant to the foregoing authorization and any unreimbursed amounts shall constitute amounts outstanding under the Note for all purposes hereof.

 

2.15 No Duty Regarding Collateral.  The powers conferred on the Secured Party by this Security Agreement are solely to protect the interests of the Secured Party and shall not impose any duty upon the Secured Party to exercise any such power, and if the Secured Party shall exercise any such power, such exercise shall not relieve the Company of any Acceleration Event, and the Secured Party shall be accountable only for amounts actually received as a result thereof.  The Secured Party shall be under no obligation to take steps necessary to preserve the rights in or value of or to collect any sums due in respect of any Collateral against any other person or entity but may do so at its option. All expenses reasonably incurred by the Secured Party upon or during the continuance of an Acceleration Event in connection with the application, protection, maintenance, renewal or preservation of any of the Collateral, shall be borne by the Company.

 

2.16 Insurance.  The Company will keep Collateral continuously insured by an insurer approved by Secured Party (which approval shall not be unreasonably withheld) against fire, theft and other hazards designated at any time by Secured Party, in an amount equal to the full insurable value thereof, with such form of loss payable clause as designated by and in favor of Secured Party, and will deliver the policies and receipts showing payment of premiums to the Secured Party.  In event of loss, unless the Collateral can be replaced, fully restored or repaired, Secured Party shall have full power to collect any and all insurance upon Collateral and to apply the same at its option to any obligation secured hereby, whether or not matured.

 

ARTICLE III

 

REMEDIES; RIGHTS UPON ACCELERATION

 

3.1 Rights and Remedies Generally.  Upon the occurrence and during the continuance of any Acceleration Event under the Note, then the Secured Party shall have all the rights of a secured party under the UCC, shall have all rights provided by this Security Agreement and shall have all rights now or hereafter existing under all other applicable laws.  “UCC” shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of Delaware; provided, however, in the event that any or all of the attachment, perfection or priority of the Secured Party’s security interest in the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the state of incorporation of the Company, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for

 

  

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3.2 purposes of the provisions hereof relating to such attachment, perfection of priority and for purposes of definitions related to such provisions.

 

3.3 Assembly and Disposition of Collateral.  Upon the occurrence and during the continuance of any Acceleration Event, (i) the Secured Party shall have the right and power to take possession of the Collateral in accordance with the applicable provisions of the UCC and (ii) upon at least five days’ notice to the Company, the Company shall at its own expense, assemble the Collateral (or from time to time any portion thereof) and make it available to the Secured Party at any place or places designated by the Secured Party which is reasonably convenient to both parties. The Secured Party will give the Company reasonable notice of the time and place of any public sale of the Collateral or the time after which any private sale or any other intended disposition thereof is to be made. The Company agrees that the requirements of reasonable notice to it shall be met if such notice is mailed, postage prepaid to its address specified on the signature page hereto (or such other address that the Company may provide to the Secured Party in writing) at least ten (10) days before the time of any public sale or after which any private sale may be made.  The proceeds of any sale, disposition or other realization upon the Collateral shall be distributed by the Secured Party in the following order of priorities: First, to the Secured Party in an amount sufficient to pay in full the reasonable costs of the Secured Party in connection with such sale, disposition or other realization; second, to the Secured Party in an amount equal to the then unpaid principal balance and accrued but unpaid interest on the Note; and finally, upon payment in full of the Note, to the Company or its representatives, in accordance with the UCC or as a court of competent jurisdiction may direct.

 

3.4 Recourse.  Subject to the limitations contained in Section 2 of the Note, the Company shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to satisfy the Note.  The Company shall also be liable for all expenses of the Secured Party reasonably incurred in connection with collecting such deficiency, including, without limitation, the reasonable fees and disbursements of counsel employed by the Secured Party to collect such deficiency.

 

ARTICLE IV

 

MISCELLANEOUS

 

4.1 Governing Law.  This Security Agreement is governed by and is to be construed in accordance with the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

4.2 Notices.  Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given if delivered as described in the Notices section of the Purchase Agreement and to the appropriate addresses listed therein.

 

4.3 Successors and Assigns.  This Security Agreement shall be binding upon and inure to the benefit of the Company, the Secured Party, and their respective heirs, representatives, successors and assigns; provided however the Company may not assign this Security Agreement without the Secured Party’s prior written consent.

 

  

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4.4 Waivers and Amendments.  None of the terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the party against whom enforcement is sought.

 

4.5 No Waiver.  No failure or delay on the part of the Secured Party in exercising any right, power or privilege hereunder and no course of dealing between the Secured Party and the Company shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Secured Party would otherwise have on any future occasion.  No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Secured Party to any other or future action in any circumstances without notice or demand.  Time is of the essence.

 

4.6 Termination; Release.  When the Note has been paid in full this Security Agreement shall terminate, and the Secured Party, at the request of the Company, will execute and deliver to the Company the proper instruments (including UCC termination statements) acknowledging the termination of this Security Agreement.  Notwithstanding anything else to the contrary contained herein, this Security Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by the Secured Party in respect of the Collateral or in respect of the Note is rescinded, annulled or must otherwise be restored or returned by the Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, or upon the appointment of an intervenor, receiver or conservator of, or trustee or similar official for, the Company, or any substantial part of its properties or assets, or otherwise, all as though such payment had not been made.

 

4.7 Headings Descriptive.  The headings of the several Sections and subsections of this Security Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Security Agreement.

 

4.8 Severability.  In case any provision in or obligation under this Security Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

  

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IN WITNESS WHEREOF, the Company and the Secured Party have caused this Security Agreement to be duly executed and delivered as of the date first above written.

 

	  	
GLOBAL CLEAN ENERGY HOLDINGS, INC.

 

By:   /s/ Richard Palmer

 

Name:   Richard Palmer

 

Title:  President and CEO

 

	  	
Address:

	100 West Broadway, #650	 
	 	 	Long Beach, California 90802	 
	 	Fax:	310.929.1139	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	SECURED PARTY

TARGETED GROWTH, INC.

 

 

	 	/s/ Margaret McCormick	 
	 	Name:	Margaret McCormick	 
	 	 	 	 
	 	
Address:

	2815 Eastlake Ave E, Suite 300	 
	 	 	
Seattle WA 98102

	 
	 	Fax:	206.336.5573	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

  

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ANNEX A

 

The Company hereby pledges and grants to and creates in favor of the Secured Party a continuing lien and security interest in and to all of the right, title and interest of the Company in, to and under the following, wherever located, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of thereof, and of insurance covering the same and all other property at any time and from time to time acquired, receivable or otherwise distributed in respect thereof (collectively, the “Collateral”):

 

1.           Interest (previously held by Sustainable Oils, LLC) in the following equipment:

	
(a)  

	
one (1) 2008 model L4740D Kubota four-wheel tractor, serial number 30670;

	
(b)  

	
one (1) Wintersteiger classic US combine, serial number 1540-4008-1786; and

	
(c)  

	
one (1) Hege Planting Machine, serial number 1009;

2.           Seed cleaner & cart, 324 Eclipse, 60HCMTR, purchased from A.T. Ferrel Company in September 2009.

3.           Oil-in-seed analyzer, MQ-CU20 control unit, MQ-MU20/25 magnet unit,

4.           Host computer for oil-in-seed analyzer.

5.           MQ-PA247 probe assembly; purchased from Burker Optics in October 2009.

6.           Seed mass/volume machine, purchased from Autopilot Inc. in November 2011.

7.           7x20 14K tilt trailer; VIN:  5M3BU2029A1044083; model year:  2010; make:  Mira; body style:  UT; model/series:  MUET720TA5; primary color:  black; license plate number:  618111A; issuing state:  Montana.

8.           Passenger car; VIN:  2GCEK19K4S1287411; model year:  1995; make:  Chevrolet; body style:  Extended Cab 2D; model/series:  C/K1500 Cheyenne Silverado; primary color:  white; license plate number:  621550A; issuing state:  Montana.

9.           Passenger car, VIN:  3GTEK23M69G104737; model year:  2009; make: GMC; body style:  Crew Cab 4D; model/series:  Sierra 1500 SLE; primary color: silver/stainless; license plate number:  ALC456; issuing state:  Montana.

10.           Lenovo Think Pad Tablet X61, Model 7767C4U, Serial Number LVB36A2.

 

4836-0030-4147.04

64774.00001 

  

8llcinterestpurchaseagmnt.htm

Exhibit 10.13

 

LLC INTEREST PURCHASE AGREEMENT

 

This LLC Interest Purchase Agreement (this ‘‘Agreement’’) is entered into effective as of March 12, 2013 by and between Global Clean Energy Holdings, Inc., a Delaware corporation (“Purchaser”), Targeted Growth, Inc., a Washington corporation (“TGI”) and Green Earth Fuels, LLC, a Delaware limited liability company (“GEF”, and collectively with TGI, “Sellers”).  Purchaser and Sellers are referred to collectively herein as the ‘‘Parties.’’

 

A.           This Agreement contemplates a transaction in which Purchaser will purchase from Sellers all of the outstanding limited liability company interests (the “Interests”) in Sustainable Oils, LLC, a Delaware limited liability company (“SusOils”).

 

B.           Concurrently with the execution of this Agreement, and as a condition to Purchaser’s agreement to enter into this Agreement, TGI and Purchaser are entering into an Asset Purchase Agreement (the “Asset Purchase Agreement”) under which Purchaser will purchase from TGI substantially all of TGI’s assets (and assume certain liabilities) related to the business of developing intellectual property and managing breeding activities for the development of Camelina sativa used for biofuels feedstock.

 

Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

 

1.      Basic Transaction.

 

(a)      Purchase and Sale of Units. On and subject to the terms and conditions of this Agreement, Purchaser agrees to purchase from each Seller, and each Seller severally agrees to sell, transfer, convey, and deliver to Purchaser, all of the Seller’s right, title and interest to the Interests for the Purchase Price (as defined in Section 1(b) below.

 

(b)      Purchase Price. In exchange for the Interests, Purchaser agrees to pay to Sellers at the Closing One Hundred Dollars ($100.00) (the “Purchase Price”), payable to each Seller in immediately available funds as follows:  To TGI, $82.75 and to GEF: $17.25.

 

(c)           The Closing.  The closing of the transactions contemplated by this Agreement (the ‘‘Closing’’) will take place 9:00 a.m. local time on March 13, 2013, or such other time as the Seller and Purchaser may mutually agree in writing.  The Closing shall take place through an exchange of consideration and documents using overnight courier service, electronic mail or facsimile.

 

(d)           Deliveries at the Closing.

 

(i)      Seller’s Deliverables. At the Closing, each Seller will deliver to Purchaser (1) any certificates or other instruments evidencing the ownership of the Interests, together with an assignment separate from certificate in the form attached hereto as Exhibit A, transferring its Interest to Purchaser, and (2) such other documents as Purchaser and its counsel may reasonably request in connection with the transfer of title to the Interests and the consummation of the transactions contemplated by this Agreement.  In addition, within twenty days after Closing,

 

  

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Sellers shall deliver to Purchaser all the books and records of SusOils, including all financial records, customer and vendor lists and records, all permits, and agreements, files, records or other data in their possession or under their control in respect of or relating to the prior operation SusOils, whether or not such permits, agreements and instruments are currently effective, provided, however, that Sellers shall be entitled to keep of copy of all of the foregoing.

 

(ii)      Purchaser’s Deliverables.  At the Closing, Purchaser will deliver to each Seller (1) its portion of the Purchase Price (as set forth in Section 1(c) above), and (2) such other documents as Seller and its counsel may reasonably request in connection with the consummation of the transactions contemplated by this Agreement.

 

2.      Representations and Warranties as to Sellers.

 

(a)      Representations and Warranties as to TGI.  TGI hereby represents and warrants to Purchaser that the statements contained in this Section 2(a) are correct and complete as of the date of Closing.

 

(i)      Ownership of Interests.  TGI is the owner, beneficially and of record, of 82.75% of the Interests, and has good, valid and marketable title to such Interests, free and clear of any liens, mortgages, pledges, security interests and other encumbrances.

 

(ii)      Authorization of Transaction.  TGI has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  This Agreement constitutes the valid and legally binding obligation of TGI, enforceable in accordance with its terms and conditions.  The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by TGI.

 

(iii)           Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which TGI is subject, or any provision of TGI’s Articles of Incorporation or Bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which TGI is a party or by which it is bound or to which any of its assets is subject, except where the violation, conflict, breach, default, acceleration, termination, modification cancellation or failure to give notice would not be material.  TGI is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.

 

(iv)           Disclaimer of Other Representations and Warranties.  Except as expressly set forth in this Agreement, TGI makes no other representation or warranty, express or implied, at law or in equity, in respect to the Interests, and any such other representations or warranties are hereby expressly disclaimed.

 

  

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(b)      Representations and Warranties as to GEF.  GEF hereby represents and warrants to Purchaser that the statements contained in this Section 2(b) are correct and complete as of the date of Closing.

 

(i)      Ownership of Interests.  GEF is the owner, beneficially and of record, of 17.25% of the Interests, and has good, valid and marketable title to such Interests, free and clear of any liens, mortgages, pledges, security interests and other encumbrances.

 

(ii)      Authorization of Transaction.  GEF has full limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of GEF, enforceable in accordance with its terms and conditions.  The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by GEF.

 

(iii)           Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which GEF is subject, or any provision of GEF’s Certificate of Formation or operating agreement, or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which GEF is a party or by which it is bound or to which any of its assets is subject, except where the violation, conflict, breach, default, acceleration, termination, modification cancellation or failure to give notice would not be material.  GEF is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.

 

(iv)           Disclaimer of Other Representations and Warranties.  Except as expressly set forth in this Agreement, GEF makes no other representation or warranty, express or implied, at law or in equity, in respect to the Interests, and any such other representations or warranties are hereby expressly disclaimed.

 

3.      Representations and Warranties as to SusOils. The Sellers hereby represent and warrant to Purchaser that the statements contained in this Section 3 are correct and complete as of the date of Closing, except as set forth in the disclosure schedule accompanying this Agreement (the ‘‘Disclosure Schedule’’) The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 3.

 

(a)      Organization.  SusOils is a limited liability company duly organized, validly existing, and in good standing under the laws of the state of Delaware.

 

(b)      Capital Structure.  All outstanding Interests of SusOils are owned by Sellers, with TGI holding a 82.75% interest and GEF holding a 17.25% interest.  All of the issued and outstanding Interests are duly authorized and validly issued, and were issued in compliance with all applicable federal, state and other laws regulating the offer, sale or issuance of such securities.  Except as set forth above, there are no other limited liability company interests, units, or other

 

  

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equity securities of SusOils outstanding, and there are no agreements or commitments that could require SusOils to issue or sell any of its limited liability company interests or other security.  Except for the Operating Agreement, the Interests are not subject to any voting agreement or other contract.

 

(c)      Title to Assets.  The assets of SusOils reflected on Schedule 3(c) are legally titled in the name of SusOils and are in the possession or control of SusOils.  Except as set forth on Schedule 3(c), SusOils has good, valid and marketable title to such assets, free and clear of any liens, mortgages, pledges, security interests and other encumbrances.

 

(d)      Balance Sheet; Liabilities.  Attached as Schedule 3(d) of the Disclosure Schedule are (i) the un-audited balance sheet of SusOils as of the year ended December 31, 2012 (the “Balance Sheet”), and (ii) a list of all of the creditors of SusOils that are included in the liabilities listed on the Balance Sheet.  To the Seller’s knowledge, (x) the liabilities set forth on the Balance Sheet are the only liabilities of SusOils as of the Balance Sheet Date that are required to be disclosed on the Balance Sheet in accordance with generally accepted accounting principles (“GAAP”) applied on a basis consistent with past practice, (y) the Balance Sheet fairly present in all material respects the liabilities SusOils in accordance with GAAP as of December 31, 2012, and (z) the list of creditors set forth on Schedule 3(d) is accurate and complete as limited by the terms of this Section.

 

4.      Purchaser’s Representations and Warranties. Purchaser represents and warrants to each Seller that the statements contained in this Section 4 are correct and complete as of the date of Closing.

 

(a)      Organization of Purchaser.  Purchaser is a corporation duly organized, validly existing, and in good standing under the laws of the state of Delaware.

 

(b)      Authorization of Transaction.  Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Purchaser, enforceable in accordance with its terms and conditions. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Purchaser.

 

(c)      Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject, or any provision of Purchaser’s Certificate of Incorporation or Bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Purchaser is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any lien upon any of its assets), except where the violation, conflict, breach, default, acceleration, termination, modification cancellation or failure to give notice would not be material.  Purchaser is not required to give any notice to, make any filing with, or obtain any authorization, consent, or

 

  

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approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.

 

5.       Survival of Representations and Warranties.  The representations and warranties of the parties contained in Sections 2, 3 and 4 will survive the Closing for fifteen (15) months (the “Survival Period”).   The Parties hereby agree that the foregoing is specifically intended to limit the time period within which a party may file a claim for indemnification under this Agreement, notwithstanding any applicable statute of limitations.  The covenants set forth in this Agreement that are to be performed at or after the Closing will survive until fully discharged and performed, and any claims for indemnification in respect of a breach of these covenants may be made at any time within the applicable statute of limitations.

 

6.      Remedies for Breaches of this Agreement.

 

(a)      Indemnification by TGI.  TGI will indemnify Purchaser and its officers, directors, stockholders, employees, affiliates, successors and permitted assigns (collectively, the “Purchaser Indemnified Parties”) from and against all penalties, fines, judgments, claims, assessments, losses, damages, liabilities, costs and reasonable expenses, including reasonable attorneys’ fees (collectively, “Losses”) that the Purchaser Indemnified Parties may suffer or sustain by reason of or arising out of any inaccuracy in any representation or warranty contained in Section 2(a) or 3 of this Agreement, or any breach of any covenant or agreement of TGI contained in this Agreement.

 

(b)      Indemnification by GEF.  GEF will indemnify the Purchaser Indemnified Parties from and against all Losses that the Purchaser Indemnified Parties may suffer or sustain by reason of or arising out of any inaccuracy in any representation or warranty contained in Section 2(b) of this Agreement, or any breach of any covenant or agreement of GEF contained in this Agreement.

 

(c)      Indemnification by Purchaser.  Purchaser will indemnify each Seller and its officers, directors, stockholders, employees, affiliates, successors and permitted assigns (collectively, the “Seller Indemnified Parties”) from and against all Losses that the Seller Indemnified Parties may suffer or sustain by reason of or arising out of any inaccuracy in any representation or warranty of Purchaser contained in this Agreement, or any breach of any covenant or agreement of Purchaser contained in this Agreement.

 

(d)      Process for Indemnification Claims.

 

(i)      If a Party wishes to assert an indemnification claim hereunder (a “Claim”), the Party will deliver to Seller, if a Purchaser Indemnified Party, or to Purchaser, if a Seller Indemnified Party, prior to the end of the Survival Period, a written notice (a “Claim Notice”) setting forth:

 

(1)           a description of the matter giving rise to the Claim,

 

(2)           a reasonably detailed description of the known facts and circumstances giving rise to the Claim, and

 

  

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(3)           to the extent determinable based on facts known at such date, an estimate of the Losses actually incurred or expected to be incurred for which indemnification is sought.

 

(ii)      The Purchaser Indemnified Parties and Seller Indemnified Parties are referred to herein as “Indemnified Parties,” and the persons from whom indemnification may be sought pursuant to this Section 6 are referred to as “Indemnifying Parties.”  Within thirty (30) days after receipt of any Claim Notice, the Indemnifying Parties will either (1) acknowledge in writing their responsibility for all or part of such matter for which indemnification is sought under this Section 6, and (a) pay or otherwise satisfy the portion of such matter as to which responsibility is acknowledged or (b) take such other action as is reasonably satisfactory to the Indemnified Party to provide reasonable security or other assurances for the performance of their obligations hereunder, or (2) give written notice to the Indemnified Party of their intention to dispute or contest all or part of such responsibility.  Upon delivery of such notice of intention to contest, the Parties will negotiate in good faith to resolve as promptly as possible any dispute as to responsibility for, or the amount of, any such matter.

 

(e)      Recovery of Indemnification Claims; Limitations.  Any breach of a representation or warranty contained in Section 2(a) or 3 of this Agreement, or any breach of any covenant or agreement of TGI contained in this Agreement shall be deemed to be a breach of the Asset Purchase Agreement by TGI and shall be subject to the indemnification provisions and limitations contained in Section 5(e) of the Asset Purchase Agreement.  Accordingly, provided Purchaser has established that it is entitled to recovery for a Claim by reason or arising out of this Agreement, and except in the event of fraud or intentional misrepresentation, the payment to Purchaser from TGI for a Claim and Losses associated therewith will be made in accordance with, and subject to the limitations contained in the indemnification provisions of Section 5(e) of the Asset Purchase Agreement.  With respect to any Claims for indemnification made by Purchaser against GEF, and except in the case of fraud or intentional misrepresentation, Purchaser will not be entitled to any recovery against GEF for any amount in excess of the portion of the Purchase Price paid to GEF.

 

(f)      Exclusive Remedy.  The indemnification remedy provided in this Section 6 is the exclusive remedy for any party for any Losses, except in the case of fraud or intentional misrepresentation (as opposed to negligent misrepresentation); provided that nothing herein will limit a Party’s ability to seek injunctive relief or specific performance.

 

7.      Additional Agreements and Covenants.

 

(a)      ICMS Monitoring.  Pursuant to that certain Monitoring Agreement between Sustainable Oils LLC and ICMS (Integrated Crop Management Services), Inc., dated November 28, 2012 (the “Monitoring Agreement”), Sustainable Oils LLC is obligated during 2013 and 2014 to provide certain remote monitoring services in support of a field trial test performed in Canada and other future obligations for post-harvest monitoring (the “ICMS Monitoring Services”).  Purchaser hereby agrees to cause SusOils to assume the remaining ICMS Monitoring Services in accordance with the terms of the ICMS Agreement.  Purchaser hereby further agrees that, if SusOils does not provide the ICMS Monitoring Services under the Monitoring Agreement

 

  

6

  

 

for post-harvest monitoring, Purchaser will either fulfill the monitoring obligations or engage a third party to complete the ICMS Monitoring Services.

 

(b)      Debt Forgiveness; Release of Security Interest.  Subject to, and effective upon the Closing, in order to induce Purchaser to enter into this Agreement, each Seller hereby forgives and cancels any and all debts and obligations of any kind that SusOils may, as of the Closing, owe to such Seller, and hereby waives all of its rights to collect or enforce such liabilities and obligations.  The liabilities and obligations forgiven shall include all remaining liabilities and obligations under that Secured Note Purchase Agreement, Secured Convertible Promissory Note in the initial amount of $300,000, and a Security Agreement, each dated as of March 19, 2010 entered into between SusOils and TGI.  In the event that, at the Closing, either Seller retains a security interest or lien in any of SusOils’ assets, whether or not under the March 19, 2010 TGI Security Agreement, each Seller hereby terminates and releases all such securities interests and liens.  Each Seller further agrees to deliver to SusOils any and all instruments and documents SusOils may, after the Closing, reasonably request to evidence the forgiveness of any liabilities and obligations, and the release of any security interests.

 

(c)      Further Assurances.  From time to time following the date hereof, and without any further consideration or other payment, each Party hereto will execute and deliver such other instruments of conveyance, assignment, assumption, transfer and delivery and execute and deliver such other documents and take or cause to be taken such other actions as the other Party reasonably may request in order to consummate, complete and carry out the transactions contemplated by this Agreement.

 

8.      Miscellaneous.

 

(a)      Press Releases and Public Announcements.  No Party will issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the other Party, which approval will not be unreasonably withheld; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party will advise the other Party prior to making the disclosure).  Sellers acknowledge and agree that Purchaser is required to disclose the transaction contemplated by this Agreement and the related transaction documents, including and the terms thereof, in its reports filed with the Securities and Exchange Commission (and that this Agreement and certain of the related transaction documents may have to be filed as exhibits to one of those reports).

 

(b)      No Third-Party Beneficiaries.  This Agreement does not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

 

(c)      Entire Agreement.  This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.

 

  

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(d)      Succession and Assignment.  This Agreement is binding upon and inures to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party.

 

(e)      Counterparts.  This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which will be deemed an original but all of which together will constitute one and the same instrument.

 

(f)      Headings.  The section headings contained in this Agreement are inserted for convenience only and do not affect the meaning or interpretation of this Agreement.

 

(g)      Notices.  Any notice required or permitted by this Agreement will be in writing, and will be considered to have been given (i) when delivered personally to the recipient, (ii) one business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) three business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:

 

	
If to TGI:

Targeted Growth, Inc.

2815 Eastlake Ave E, Suite 300

Seattle WA 98102

ATTN: Chief Operations Officer

Fax: 206.336.5573

	
Copy to

Erin Joyce Letey

Riddell Williams P.S.

1001 Fourth Avenue, Suite 4500

Seattle, WA 98154

Fax: 206.389.1708

 

	
If to GEF:

	
Copy to:

 

 

	
If to Purchaser:

Global Clean Energy Holdings, Inc.

100 West Broadway, #650

Long Beach, CA 90802

Attn: Richard Palmer, CEO

FAX: 310-641-4230

	
Copy to:

Istvan Benko

TroyGould PC

1801 Century Park East

16th Floor

Los Angeles, CA 90067

Fax: 310-789-1426

 

 

 

 

  

8

  

 

 

Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth.

 

(h)      Governing Law.  This Agreement is governed by and is to be construed in accordance with the laws of the State of Washington without giving effect to any choice or conflict of law provision or rule (whether of the State of Washington or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Washington.

 

(i)      Amendments and Waivers.  No amendment of any provision of this Agreement will be valid unless it is in writing and signed by both Purchaser and Seller. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder will be valid unless the waiver is in writing and signed by the Parties making the waiver, nor will any such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent occurrence.

 

(j)      Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

(k)      Expenses.  Each Party will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

 

(l)      Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. The word ‘‘including’’ means including without limitation.

 

(m)           Incorporation of Exhibits and Schedules.  The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

 

 

--Signature Page Follows--

 

  

9

  

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as of the date first above written.

 

 

SELLERS:

 

 

TARGETED GROWTH, INC.

 

By: /s/ Margaret McCormick

  

  

 

Title: COO

 

 

GREEN EARTH FUELS, LLC

 

By: /s/ Martin D. Beirne III

 

Title: President and CEO                                                                                               

 

 

 

PURCHASER:

 

 

GLOBAL CLEAN ENERGY, INC.

 

By: /s/ Richard Palmer

 

Title: President and CEO

  

10

  

 

DISCLOSURE SCHEDULE

to

LLC INTEREST PURCHASE AGREEMENT

by and between

GLOBAL CLEAN ENERGY HOLDINGS, INC.,

TARGETED GROWTH, INC.

and

GREEN EARTH FUELS, LLC

 

This Disclosure Schedule (this “Schedule”) is being furnished by Sellers to Purchaser in connection with the execution and delivery of that certain LLC Interest Purchase Agreement, dated as of March 12, 2013 (the “Agreement”), by and between Sellers and Purchaser.  All capitalized terms used, but not otherwise defined, herein have the meanings given them in the Agreement.

 

This Schedule and the information and disclosures contained in this Schedule are intended only to qualify and limit the representations and warranties of Sellers contained in the Agreement and shall not be deemed to expand in any way the scope of any such representation or warranty.  Certain information set forth in this Schedule is included solely for informational purposes and may not be required to be disclosed pursuant to the Agreement, and the inclusion of such information shall not be deemed to enlarge or enhance any of the representations of Sellers or otherwise alter in any way the terms of the Agreement.

 

  

11

  

 

Schedule 3(c)

 

Assets

 

 

Approximately 295,000 pounds of “certified” Camelina seeds which are currently being stored in the following third-party warehouses:

 

Northern Seed, LLC, Conrad, MT  - approximately 75,000 lbs

 

Barber Seed Service, Inc., Denton, MT – approximately 186,000 lbs

 

Chemurgic Agricultural Chemicals, Inc. – Turlock, CA – approximately 34,000 lbs

 

These assets may be subject to a lien of warehouse pursuant to the Uniform Commercial Code in effect in the states of Montana and California.

 

  

12

  

 

Schedule 3(d)

 

Balance Sheet; Liabilities

 

Balance Sheet:

 

(attached)

 

Creditors:

 

	
Sustainable Oils, LLC

	 
	
Summary of Creditors

	 
	
As of December 31, 2012

	 
	
Augment Services, LLC

	 	$	1,196.58	 	 	 	 
	
Cooley LLP

	 	$	37,212.15	 	 	 	 
	
Trinity Industries Leasing Company

	 	$	5,126.71	 	 	 	 
	
UOP LLC

 

	 	$	2,286,726.85	 	 	 	 
	
      Accounts payable & accrued expenses

	 	 	 	 	 	$	2,330,262.29 	 
	
Targeted Growth Canada Inc.

	 	$	281,884.90	 	 	 	 	 
	
Targeted Growth, Inc.

	 	$	553,697.16	 	 	 	 	 
	
Targeted Growth, Inc. (pursuant to Convertible Secured Promissory Notes)

	 	$	550,685.85	 	 	 	 	 
	
 

Due to Targeted Growth & Targeted Growth Canada

	 	 	 	 	 	$	1,386,267.91 	 
	
Augment Services, LLC (Accrued consulting bonus)

	 	$	10,000.00	 	 	 	 	 
	
 

      Accrued compensation

	 	 	 	 	 	$	10,000.00	 
	
 

Total liabilities

	 	 	 	 	 	$	3,726,530.20 	 

 

 

Future obligations:  SusOils has the following future obligations:

 

Approximately $103,300 (CAD) in future obligations for work to be performed in CY 2013 & CY 2014 by ICMS (Integrated Crop Management Services, Inc.) for remote monitoring services in support of a field trial test performed in Canada, and any future obligations for post-harvest monitoring that may arise.

 

  

13

  

 

EXHIBIT A

 

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

 FOR VALUE RECEIVED, the undersigned (the “Assignor”) hereby sells, transfers and assigns unto Global Clean Energy Holdings, Inc., a Delaware corporation (the “Assignee”) seventeen and one-quarter (17.25%) limited liability company interests of Sustainable Oils, LLC, a Delaware limited liability company (the “Company”), standing in the undersigned’s name on the books of the Company, and Assignor hereby irrevocably constitutes and appoints Assignee to be Assignor’s true and lawful attorney-in-fact, with full power of substitution, and empowers Assignee, for an in the name and stead of Assignor, to register said transfer on the books of the Company.

 

WITNESS WHEREOF, the undersigned has executed this assignment separate from certificate as of this 13 day of March, 2013

 

 

ASSIGNOR:

 

 

By: /s/ Steve Granda

 

Print name: Steve Granda

 

Title: CFO

 

 

4844-2451-3809.06

64774.00002 

  

14

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