Document:

exhibit10d.htm

GLOBAL GUARANTY AGREEMENT

 

This GLOBAL GUARANTY AGREEMENT dated as of June __, 2010 (the “Guaranty”), is given by each of the individuals and entities listed on Schedule 1 attached hereto following (jointly, severally, and collectively, the “Guarantors”) in favor of YA CORN OIL SYSTEMS, LLC (together with its successors and assigns, the “Secured Party”).  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Security Agreement (as defined below).

WHEREAS:

 

A. GreenShift Corporation (“GreenShift”) and the Secured Party have entered into a certain Management Agreement of even date herewith (the “Management Agreement”) pursuant to which GreenShift has agreed to perform management services in connection with certain corn oil extraction systems owned by the Secured Party in consideration for a monthly fee and, subject to the terms and conditions of the Management Agreement, the Secured Party making certain payments to YA Global Investments, L.P. (“YA Global”) for application in reduction of GreenShift’s and the Guarantors’ obligations and liabilities to YA Global.

 

B. Upon the mutual agreement of GS CleanTech Corporation (“CleanTech”) and the Secured Party, CleanTech may from time to time sell, pursuant to Sale and Assignment Agreements substantially in the form attached hereto as Exhibit A (the “Royalty Sale Agreement”) rights to receive royalties from licenses of certain patent rights granted by CleanTech to third parties (the “Royalties”).  Pursuant to the terms of each Royalty Sale Agreement,  Secured Party has a limited right to put the applicable Royalties back to the Assignor.

 

C. Each of the Guarantors has executed and delivered a Global Security Agreement, dated as of the date hereof (as may be amended and supplemented from time to time, the “Security Agreement”), pursuant to which the Guarantors pledged and granted to the Secured Party a security interest in and to all of the Guarantors’ assets and personal property;

 

D. The Guarantors will directly benefit from the Management Agreement, any sale of Royalties and from the financial accommodations made by the Secured Party to GreenShift pursuant to the Management Agreement and the various agreements and transactions referenced therein, and each Guarantor acknowledges that without this Guaranty, the Secured Party would not be willing to enter into the Management Agreement or make such accommodations.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, each Guarantor hereby agrees as follows:

 

SECTION 1                      Guaranty.

 

1.1 Guaranty.

 

(a) Each Guarantor, as direct obligor and not merely as surety, hereby unconditionally, absolutely, and irrevocably guarantees to the Secured Party the full payment and prompt performance of all of the Obligations.  Without limiting the foregoing, the Guarantors hereby agree that upon any Event of Default, the Guarantors shall immediately pay or perform any Obligations without notice, demand or formality of any kind.

 

(b) The term “Obligations” shall mean and include any and all debts, liabilities, obligations, covenants and duties owing by any Guarantor to the Secured Party, now existing or hereafter arising of every nature, type, and description, whether liquidated, unliquidated, primary, secondary, secured, unsecured, direct, indirect, absolute, or contingent, and whether or not evidenced by a note, guaranty or other instrument, and any amendments, extensions, renewals or increases thereof, including, without limitation, all those under (i) the Security Agreement; (ii) the Management Agreement; (iii) any agreement or document related to the Security Agreement and/or the Management Agreement; or (iv) any other or related documents, and including any interest accruing thereon after insolvency, reorganization or like proceeding relating to the Guarantors, whether or not a claim for post-petition interest is allowed in such proceeding, and all costs and expenses of the Secured Party incurred in the enforcement, collection or otherwise in connection with any of the foregoing, including, but not limited to, reasonable attorneys’ fees and expenses and all obligations of the Guarantors to the Secured Party to perform acts or refrain from taking any action.

 

1.2 Continuing Guaranty.

 

(a) The Obligations under this Guaranty are continuing, absolute, unconditional and irrevocable irrespective of the validity, regularity, enforceability or value of any of the Obligations and notwithstanding any claim, defense or right of set-off which the Guarantors may have against the Secured Party, including any such claim, defense or right based on any present or future applicable law and irrespective of any other circumstances which might otherwise constitute a legal or equitable release, defense or discharge of a surety or a guarantor.  Without limiting the generality of the foregoing, the Obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by:

 

(i) any rescission, waiver, amendment or modification of any terms or provisions of the Obligations or the documents evidencing the same.

 

(ii) any fraudulent, illegal, or improper act by any Guarantor or any failure, omission or delay on the part of any Guarantor to conform or comply with any term of the Obligations or of this Guaranty;

 

(iii) any failure of the Secured Party to assert a claim or demand or to enforce or exercise any right or remedy against any Guarantor or any other guarantor for any reason;

 

(iv) any release or discharge by operation of law or otherwise of any Guarantor from any Obligation or the documents evidencing the same;

 

(v) any change in the existence, structure or ownership of any Guarantor or the legal incapacity of any Guarantor;

 

(vi) any insolvency, bankruptcy, reorganization, arrangement, readjustment, composition, liquidation or other similar proceeding affecting any Guarantor or its/his assets or any resulting disallowance, release or discharge of all or any portion of the Obligations;

 

(vii) the failure by any Guarantor or any other person to sign this Guaranty; and

 

(viii) any other occurrence, circumstance, happening or event, whether similar or dissimilar to the foregoing and whether foreseen or unforeseen, which otherwise might constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which otherwise might limit recourse against any Guarantor.

 

(b) This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time payment or performance of the Obligations, or any part thereof, to the Secured Party is rescinded or must otherwise be returned by the Secured Party, whether in connection with the insolvency, bankruptcy or reorganization of any Guarantor, or otherwise, all as though such payment to the Secured Party has not been made.

 

1.3 Guaranty of Payment and Not of Collection; Subordination.

 

(a) The liability of each Guarantor shall be continuing, direct and immediate and not conditional or contingent upon either the pursuit of any remedies against GreenShift or any other Guarantor, or any other person or foreclosure of any security interests or liens available to the Secured Party, its successors, endorsees or assigns.  The Secured Party may accept any payment(s), plan for adjustment of debts, plan of reorganization or liquidation, or plan of composition or extension proposed by, or on behalf of, GreenShift or any Guarantor without in any way affecting or discharging the liability of any Guarantor. If the Obligations are partially paid, each Guarantor shall remain liable for any balance of such Obligations.  Without limiting any other provision of, impairing or affecting this Guaranty, the Secured Party may, at any time and from time to time, take or refrain from taking, all or any actions whatsoever, including the following actions: (a) retain or obtain a Lien (as defined in the Security Agreement) in any property to secure any of the Obligations; (b) amend, extend, renew, adjust, waive or release any Obligations or the terms thereof, (c) release or fail to perfect its interest in all or any property securing any of the Obligations or permit any substitution or exchange for any such property.

 

(b) With respect to any sum paid or payable by a Guarantor hereunder or in connection herewith or otherwise, all rights of such Guarantor against any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment or performance in full of all the Obligations.  In addition, any indebtedness of any Guarantor now or hereafter held by any Guarantor is hereby subordinated in right of payment to the prior payment or performance in full of the Obligations and no Guarantor shall demand, sue for, or otherwise attempt to collect any such indebtedness, or prove any claim in competition with the Secured Party in respect of any payment hereunder in bankruptcy or insolvency proceedings of any nature.  If any amount shall erroneously be paid to any Guarantor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Guarantor as borrower of a Guarantor, such amount shall be held in trust for the benefit of the Secured Party and shall forthwith be paid to the Secured Party to be credited against the payment of the Obligations.

 

1.4 Discharge. Each Guarantor covenants and agrees that this Guaranty will not be discharged, except by complete performance of the Obligations.

 

1.5 Interest.   Guarantors will pay on demand interest on all amounts due to the Secured Party under this Guaranty, or arising under any documents, instruments, or agreements relating to any collateral securing this Guaranty, from the time the Secured Party first demands payment of this Guaranty at a rate equal to the highest rate applicable to any of the Obligations after the earlier of (i) demand, or (ii) maturity, or (iii) the occurrence of any event of default under any instrument, document or agreement evidencing the Obligations (but in no event higher than the highest rate of interest which under the circumstances may be charged under applicable law).

 

1.6 Costs and Expenses. Without limiting any obligation of any Guarantor hereunder, each Guarantor agrees, jointly and severally, to pay all reasonable fees and costs (including, without limitation, reasonable attorneys’ fees and expenses, whether or not involving litigation and/or appellate or bankruptcy proceedings) incurred by Secured Party in (i) collecting or securing or attempting to collect or secure this Guaranty; and (ii) defending or prosecuting any actions or proceedings arising out of or relating to the Secured Party’s transactions with the Guarantors.

 

1.7 Indemnification.     For said good and valuable consideration, the Guarantors also shall, except with respect to the Secured Party’s gross negligence, willful misconduct or fraud, indemnify, defend, and hold the Secured Party, or any agent, employee, officer, attorney, or representative of the Secured Party, harmless of and from any claim brought or threatened against the Secured Party or any such person so indemnified by: any Guarantor, any other obligor or endorser of the Obligations or any other person (as well as from attorneys’ fees and expenses in connection therewith) on account of the Secured Party’s relationship with the Guarantors, or any other obligor or endorser of the Obligations (each of which may be defended, compromised, settled, or pursued by the Secured Party with counsel of the Secured Party’s selection, but at the expense of the undersigned).

 

SECTION 2                      Additional Guarantors.

 

Each subsidiary of the Guarantors that is formed or acquired after the execution of this Guaranty is required to execute the Guaranty.  Such subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding an additional Guarantor as a party to this Guaranty shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Guaranty.

 

SECTION 3                      Representations and Warranties.

Each Guarantor hereby represents and warrants to the Secured Party as follows:

 

(a) each corporate Guarantor has full power, right and authority to enter into and perform its obligations under this Guaranty, and this Guaranty has been duly executed and delivered by each Guarantor and constitutes the valid and binding obligation of each Guarantor and is enforceable against each Guarantor in accordance with its terms.

 

(b) No permits, approvals or consents of or notifications to (i) any governmental entities, or (ii) any other persons or entities are necessary in connection with the execution, delivery and performance by any Guarantor of this Guaranty and the consummation by each Guarantor of the transactions contemplated hereby.

(c) Neither the execution and delivery of this Guaranty by any Guarantor nor the performance by them of the transactions contemplated hereby will:

(i) violate or conflict with or result in a breach of any provision of any law, statute, rule, regulation, order, permit, judgment, ruling, injunction, decree or other decision of any court or other tribunal or any governmental entity or agency binding on a Guarantor or his properties, or conflict with or cause an event of default under any contract or agreement of a Guarantor; or

(ii) require any authorization, consent, approval, exemption or other action by or notice to any court, administrative or governmental body, person, entity or any other third party.

 

(d) The Guarantors have no pending or threatened litigation, arbitration, actions or proceedings which if adversely decided could reasonably be expected to result in a material adverse effect, individually or in the aggregate, except as set forth on the attached Schedule 2.

 

SECTION 4.                                Event of Default.

 

(a) For purposes of this Guaranty, an “Event of Default” shall be deemed to have occurred upon the occurrence of one or more of the following after the date hereof: (i) a default or Event of Default under the Security Agreement, or (ii) the occurrence of a default under the Management Agreement.

 

(b) Upon the occurrence of an Event of Default, at the option of the Secured Party, all of the obligations of each Guarantor hereunder shall be immediately due and payable without any action on the part of the Secured Party, and the Secured Party shall be entitled to seek and institute any and all remedies available to it.

 

SECTION 5                      Remedies, Other Obligations, Breaches and Injunctive Relief.

 

(a) No remedy conferred under this Guaranty upon the Secured Party is intended to be exclusive of any other remedy available to the Secured Party, pursuant to the terms of this Guaranty or otherwise, at law or in equity (including a decree of specific performance and/or other injunctive relief).  No single or partial exercise by the Secured Party of any right, power or remedy hereunder shall preclude any other or further exercise thereof.

 

(b) The failure of the Secured Party to exercise any right or remedy under this Guaranty or otherwise, or delay in exercising such right or remedy, shall not operate as a waiver thereof.

 

(c) Every right and remedy of the Guarantors under any document executed in connection with this transaction, including but not limited to this Guaranty, or under applicable law may be exercised from time to time and as often as may be deemed expedient by the Secured Party.

 

(d) The Guarantors acknowledge that a breach by a Guarantor of its/his obligations hereunder will cause irreparable harm to the Secured Party and that the remedy at law for any such breach may be inadequate. The Guarantors therefore agree that, in the event of any such breach or threatened breach by the Guarantors, the Secured Party shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, and specific performance without the necessity of showing economic loss and without any bond or other security being required.  Nothing herein shall limit Secured Party’s right to pursue actual damages for any failure by a Guarantor to comply with the terms of this Guaranty.

 

SECTION 6                      Maximum Liability.

 

Notwithstanding any provision herein contained to the contrary, each Guarantor’s liability under this Guaranty shall be limited to an amount not to exceed as of any date of determination the amount which could be claimed by any Secured Party from such Guarantor under this Guaranty without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy Code (11 U.S.C. §§ 101 et seq.) or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law (the “Avoidance Provisions”) after taking into account, among other things, such Guarantor’s right of contribution and indemnification from each other Guarantor, if any.  To the end set forth above, but only to the extent that the Obligations of a Guarantor hereunder (the “Guaranty Obligations”) would otherwise be subject to avoidance under the Avoidance Provisions, if such Guarantor is not deemed to have received valuable consideration, fair value, fair consideration or reasonably equivalent value for the Guaranty Obligations, or if the Guaranty Obligations would render such Guarantor insolvent, or leave such Guarantor with an unreasonably small capital to conduct its business, or cause such Guarantor to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the Guaranty Obligations is deemed to have been incurred for the purposes of the Avoidance Provisions, the maximum Guaranty Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the Guaranty Obligations as so reduced, to be subject to avoidance under the Avoidance Provisions.

 

SECTION 7                      Miscellaneous.

 

7.1           Notices, Consents, etc. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

If to any Guarantor:                                                             c/o GreenShift Corporation

One Penn Plaza, Suite 1612

New York, NY 10119

Attention:  Kevin Kreisler

Telephone:                   (212) 994-5374

Facsimile:                      (646) 572-6336

 

With Copies to:                                                                    Glenn Schoenfeld, Esquire

405 Park Avenue, Suite 502

New York, New York 10022

Telephone:                   (212) 754-7000

Facsimile:                      (212) 758-0143

If to Secured Party:                                                             YA Corn Oil Systems, LLC

c/o Yorkville Advisors, LLC

101 Hudson Street-Suite 3700

Jersey City, New Jersey 07302

Attention: Troy Rillo

Telephone:                   (201) 985-8300

Facsimile:                      (201) 985-1964

 

With Copies to:                                                                   Douglas K. Clarke, Esquire

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Telephone:                   (617) 880-3485

Facsimile:                      (617) 692-3485

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) business days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

 

7.2           Waiver of Presentment. To the fullest extent permitted by law and except as otherwise provided herein, the Guarantors waive demand, presentment, protest, notice of dishonor, suit against or joinder of any other person, and all other requirements necessary to charge or hold each Guarantor liable with respect to this Guaranty.

 

7.3           Severability. If any provision of this Guaranty is, for any reason, invalid or unenforceable, the remaining provisions of this Guaranty will nevertheless be valid and enforceable and will remain in full force and effect.  Any provision of this Guaranty that is held invalid or unenforceable by a court of competent jurisdiction will be deemed modified to the extent necessary to make it valid and enforceable and as so modified will remain in full force and effect.

 

7.4           Amendment and Waiver. This Guaranty may be amended, or any provision of this Guaranty may be waived, provided that any such amendment or waiver will be binding on a party hereto only if such amendment or waiver is set forth in a writing executed by the parties hereto. The waiver by any such party hereto of a breach of any provision of this Guaranty shall not operate or be construed as a waiver of any other breach.

7.5           Headings. The subject headings of Articles and Sections of this Guaranty are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions.

 

7.6           Assignment. This Guaranty will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but will not be assignable or delegable by the Guarantors. Except as otherwise provided herein, this Guaranty shall bind and inure to the benefit of and be enforceable by the parties and their permitted successors and assigns.  The Guarantors acknowledge and agree that the Secured Party has the right to assign and transfer this Guaranty, including without limitation, to YA Global Investments, L.P.

 

7.7           Further Assurances. Each party will execute all documents and take such other actions as the other parties may reasonably request in order to consummate the transactions provided for herein and to accomplish the purposes of this Guaranty.

 

7.8           Third Parties. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity, other than the stated beneficiaries of this Guaranty and their respective permitted successors and assigns, any rights or remedies under or by reason of this Guaranty.

 

7.9           Liability of Guarantors.  Notwithstanding any provision herein, the Guarantors, and each of them, are and shall be jointly and severally liable for any and all Obligations (whether any such Obligation is specified as an obligation of the Guarantors or of any of them).

 

7.10           No Strict Construction. The language used in this Guaranty will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any party hereto.

 

7.11           Governing Law; Jurisdiction. This Guaranty shall be governed by and interpreted in accordance with the laws of the State of New Jersey without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Hudson County, New Jersey, and expressly consent to the jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County and the United States District Court for the District of New Jersey sitting in Newark, New Jersey for the adjudication of any civil action asserted pursuant to this Paragraph, provided, however, that nothing herein shall prevent the Secured Party from enforcing its rights and remedies (including, without limitation, by filing a civil action) with respect to the Collateral and/or the Guarantors in any other jurisdiction in which the Collateral and/or the Guarantors may be located.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Guaranty and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

 

7.12           Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR THE SECURED PARTY TO MAKE FINANCIAL ACCOMMODATIONS TO GS COES OR ANY GUARANTOR, EACH GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS GUARANTY AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

 

7.13           Counterparts; Facsimile Signatures.  This Guaranty may be executed and delivered by exchange of facsimile signatures of the Secured Party and the Guarantors, and those signatures need not be affixed to the same copy.  This Guaranty may be executed in any number of counterparts.

 

7.14           Entire Agreement. This Guaranty (including the recitals hereto) and the other documents or agreements delivered in connection herewith set forth the entire understanding of the parties with respect to the subject matter hereof, and shall not be modified or affected by any offer, proposal, statement or representation, oral or written, made by or for any party in connection with the negotiation of the terms hereof, and may be modified only by instruments signed by all of the parties hereto.

 

7.15           Collateral.                      The Guarantors’ obligations to the Secured Party hereunder shall be secured by all collateral heretofore or hereafter granted to the Secured Party by the Guarantors, whether in connection with this Guaranty or otherwise.

 

7.16           Existing Guaranty.  The Guaranty is intended to be supplemental to, and not in limitation of, any existing guaranty in favor of the Secured Party to secure the Obligations.  All such existing guaranty, and any rights of the Secured Party in connection therewith, shall remain in full force and effect in accordance with their respective terms.

[remainder of page intentionally blank]

  

  

  

  

IN WITNESS WHEREOF, each Guarantor has caused this Global Guaranty Agreement to be signed as of the date first written above.

_________________________________

Kevin Kreisler, Individually

 

VIRIDIS CAPITAL LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

GREENSHIFT CORPORATION (f/k/a GS CleanTech Corporation)

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

GS CLEANTECH CORPORATION (f/k/a GS Ethanol Technologies, Inc.)

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

GS COES (YORKVILLE I), LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

GS CARBON DIOXIDE TECHNOLOGIES, INC.

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

 

GS GLOBAL BIODIESEL, LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

 

GS AGRIFUELS CORPORATION

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

NEXTGEN ACQUISITION, INC.

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

NEXTGEN FUEL INC.

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

SUSTAINABLE SYSTEMS, INC.

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

SUSTAINABLE SYSTEMS LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

GS DESIGN, INC. (f/k/a Warnecke Design Service, Inc.)

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

GS RENTALS LLC (f/k/a Warnecke Rentals, LLC)

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

[Signature Page to Global Guaranty Agreement]

[Signatures Continue on following page]

  

  

  

  

ECOSYSTEM TECHNOLOGIES, LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

GS BIG MANAGEMENT, LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

GS COES (ADRIAN I), LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Member

GS TECHNOLOGY, LLC

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Managing Memberexhibit10e.htm

 

GLOBAL SECURITY AGREEMENT

THIS GLOBAL SECURITY AGREEMENT (the “Agreement”), is entered into and made effective as of June __, 2010, by and among (i) VIRIDIS CAPITAL LLC, a New Jersey limited liability company (“Viridis”), (ii) GREENSHIFT CORPORATION, a Delaware corporation (“GreenShift”), (iii) GS AGRIFUELS CORPORATION, a Delaware corporation (“AgriFuels”), (iv) GS CLEANTECH CORPORATION, a Delaware corporation (“CleanTech,” collectively with Viridis, GreenShift and AgriFuels, the “Companies”), and (v) each subsidiary and affiliate of the Companies listed on Schedule 1 attached hereto (the “Subsidiaries,” collectively with the Companies, the “Grantors”) in favor of YA CORN OIL SYSTEMS, LLC (“the “Secured Party”).

WHEREAS, the Secured Party and GreenShift have entered into a certain Management Agreement of even date herewith (the “Management Agreement”);

 

WHEREAS, each of the Grantors has executed and delivered a Global Guaranty Agreement, dated as of the date hereof, in favor of the Secured Party pursuant to which the Grantors absolutely and unconditionally guaranteed to the Secured Party the payment and performance of all now existing and hereafter arising obligations and liabilities of each Guarantor to the Secured Party (the “Guaranty”); and

 

WHEREAS, in connection with the financial accommodations to GreenShift and the other Grantors by the Secured Party under the Management Agreement or otherwise, the Subsidiaries will directly benefit from the extension of such financial accommodations as part of the affiliated business operations of the Companies and the Subsidiaries.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained, and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1.

DEFINITIONS AND INTERPRETATIONS

 

Section 1.1.                      Recitals.  The above recitals are true and correct and are incorporated herein, in their entirety, by this reference.

 

Section 1.2.                      Interpretations.  Nothing herein expressed or implied is intended or shall be construed to confer upon any person other than the Secured Party any right, remedy or claim under or by reason hereof.

 

Section 1.3.                      Definitions.                      All capitalized terms used in this Agreement and the recitals hereto and not defined herein shall have the meanings set forth in the Management Agreement, or in Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of New Jersey (the “Code”).

ARTICLE 2.

COLLATERAL

 

	
  

	
Section 2.1.

	
Grant of Security Interest.

 

(a)           As collateral security for all of the Obligations (as defined in Section 2.2 hereof), the Grantors hereby pledge and assign to the Secured Party, and grant to the Secured Party for its benefit, a continuing security interest in and to the personal property described on Exhibit A attached hereto (collectively, the “Collateral”).

 

(b)           Simultaneously with the execution and delivery of this Agreement, the Grantors shall make, execute, acknowledge, file, record and deliver to the Secured Party such documents, instruments, and agreements, including, without limitation, financing statements, certificates, affidavits and forms as may, in the Secured Party’s sole and exclusive judgment, be reasonably necessary to effectuate, complete or perfect, or to continue and preserve, the security interest of the Secured Party in the Collateral.

 

Section 2.2                      Security for Obligations.  The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereinafter incurred (collectively, the “Obligations”):

 

any and all debts, liabilities, obligations, covenants and duties owing by any Grantors to the Secured Party, including without limitation, pursuant to the Guaranty, now existing or hereafter arising of every nature, type, and description, whether liquidated, unliquidated, primary, secondary, secured, unsecured, direct, indirect, absolute, or contingent, and whether or not evidenced by a note, guaranty or other instrument, and any amendments, extensions, renewals or increases thereof, and including any interest accruing thereon after insolvency, reorganization or like proceeding relating to the Grantors, whether or not a claim for post-petition interest is allowed in such proceeding, and all costs and expenses of the Secured Party incurred in the enforcement, collection or otherwise in connection with any of the foregoing, including, but not limited to, reasonable attorneys’ fees and expenses and all obligations of any Grantors to the Secured Party to perform acts or refrain from taking any action.

 

Section 2.3.  No Assumption of Liability.  The security interest in the Collateral is granted as security only and shall not subject the Secured Party to, or in any way alter or modify any obligation or liability of any Grantor with respect to or arising out of the Collateral.

 

ARTICLE 3.

ATTORNEY-IN-FACT; PERFORMANCE

 

	
  

	
Section 3.1.

	
Secured Party Appointed Attorney-In-Fact.

 

Each of the Grantors hereby appoints the Secured Party as its attorney-in-fact, with full authority in the place and stead of the Grantors and in the name of the Grantors or otherwise, exercisable after and during the continuance of an Event of Default, from time to time in the Secured Party’s discretion to take any action and to execute any instrument which the Secured Party may reasonably deem necessary to accomplish the purposes of this Agreement, including, without limitation, to (a) receive and collect all instruments made payable to the Grantors representing any payments in respect of the Collateral or any part thereof and to give full discharge for the same; (b) demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as and when the Secured Party may determine, and (c) to facilitate collection, the Secured Party may notify account debtors and obligors on any Collateral to make payments directly to the Secured Party.  The foregoing power of attorney is a power coupled with an interest and shall be irrevocable until all Obligations are paid and performed in full.  The Grantors agree that the powers conferred on the Secured Party hereunder are solely to protect the Secured Party’s interests in the Collateral and shall not impose any duty upon the Secured Party to exercise any such powers.

 

	
  

	
Section 3.2.

	
Secured Party May Perform.

 

If the Grantors fail to perform any agreement contained herein, the Secured Party, at its option, may itself perform, or cause performance of, such agreement, and the expenses of the Secured Party incurred in connection therewith shall be included in the Obligations secured hereby and payable by the Grantors under Section 8.3.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

 

	
  

	
Section 4.1.

	
Authorization; Enforceability.

 

Each of the Grantors represents and warrants that it has taken all action necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and binding obligation of the respective party, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights or by the principles governing the availability of equitable remedies.

 

	
  

	
Section 4.2.

	
Ownership of Collateral.

 

Each of the Grantors represents and warrants that it is the legal and beneficial owner of the Collateral free and clear of any lien, security interest, option or other charge or encumbrance (each, a “Lien”) except for Permitted Liens.  For purposes of this Agreement, “Permitted Liens” means: (a) the security interest created by this Agreement, (b) Liens in favor of the Secured Party and/or YA Global Investments, L.P.; (c) liens listed on the attached Schedule 4.2; and (d) inchoate Liens for taxes, assessments or governmental charges or levies not yet due, as to which the grace period, if any, related thereto has not yet expired, or being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles consistently applied (“GAAP”).

 

Section 4.3                      Location of Collateral.

 

The Collateral is or will be kept at the ethanol plants listed on Exhibit A or at the address(es) of each Grantor set forth on Schedule 4.3 attached hereto.  Unless otherwise provided herein, the Grantors will not remove any Collateral from such locations without the prior written consent of the Secured Party.

 

Section 4.4                      Location, State of Incorporation and Name of Grantors.

 

Each Grantor’s principal place of business; state of incorporation, organization or formation, organization id, and exact legal name is set forth on Schedule 4.4 attached hereto.

 

Section 4.5                      Priority of Security Interest.

 

Subject only to the Permitted Liens, the security interest granted to the Secured Party hereunder shall be a first priority security interest subject to no other Liens and no financing statement, other than those in favor of the Secured Party or one of its affiliates, covering any of the Collateral or any proceeds thereof is on file in any public office.

ARTICLE 5.

DEFAULT; REMEDIES

 

Section 5.1                      Events of Default.  For purposes of this Agreement, the occurrence of one or more of the following after the date hereof shall be deemed an “Event of Default”:

 

(a) Payment Default.  If the Grantors shall fail to pay any amount due under any Financing Document (as defined in subsection (k) below) as and when due, or any fee or charge due and payable under any Financing Document, as and when the same shall become due and payable; or

 

(b) Representations.  If any representation or warranty made by or on behalf of the Grantors, whether contained in this Agreement, or in any other document or instrument between one or more of the Grantors and the Secured Party shall prove to have been false or incorrect in any material respect when made; or

 

(c) Voluntary Insolvency Proceedings.  If a Grantor shall (i) apply for or consent to or acquiesce in the appointment of or the taking of possession by a receiver, liquidator, custodian or trustee of itself or of all or any part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as such debts become due, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the bankruptcy laws of the United States of America (as now or hereafter in effect) or any similar foreign law, (v) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, or (vi) take any action for the purpose of effecting any of the foregoing; or

 

(d) Involuntary Insolvency Proceedings.  A proceeding or case shall be commenced, without the application or consent of a Grantor in any court of competent jurisdiction, seeking (i) liquidation, reorganization, dissolution, winding-up or composition or adjustment of debts of a Grantor, (ii) the appointment of a trustee, receiver, liquidator, custodian or the like of a Grantor, or of all or any part of any of their assets, (iii) similar relief under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, and such proceeding or case shall continue undismissed, for a period of forty five (45) days; or (iv) any order for relief against a Grantor, shall be entered in an involuntary case under bankruptcy laws of the United States of America, or any similar foreign law, and shall continue undismissed for a period of forty five (45) days; or

 

(e) Divestiture of Assets.  If any order, judgment, or decree shall be entered in any proceeding requiring a Grantor to divest itself of any material part of its assets, and if, within forty-five (45) days after entry thereof (unless or until enforcement is sooner commenced), such order, judgment or decree shall not have been discharged or execution thereof stayed pending appeal; or if, within ten (10) days after the expiration of any such stay (unless or until enforcement is sooner commenced), such judgment, order or decree shall not have been discharged; or

 

(f) Judgments and Tax Liens.  If one or more judgments, attachments, or tax liens exceeding $100,000 in the aggregate are entered against a Grantor, or against the Grantor’s property, and remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of thirty (30) days, or enforcement proceedings are commenced with respect to any judgment, attachment, or tax lien against a Grantor; or

 

(g) Dissolution; Suspension of Business.  If a Grantor shall suspend or have suspended (voluntarily or involuntarily and for whatever reason) the operation of a material portion of its business for a period of twenty (20) days or a Grantor dissolves or otherwise ceases to exist; or

 

(h) Change in Condition.  Any change in the condition or affairs (financial or otherwise) of a Grantor shall occur which, in the Secured Party’s reasonable opinion, increases the material risk with respect to the Guaranty or impairs any of the Secured Party’s security therefore; or

 

(i) Revocation of Guaranty.  Any Grantor revokes or terminates, or purports to revoke or terminate, or fails to perform any of the terms, covenants, conditions or provisions of, any guaranty, including without limitation, the Guaranty, endorsement or other agreement of such party in favor of Secured Party; or

 

(j) Indictment.  The indictment of a Grantor by any Governmental Authority the effect of which could be to restrain in any material way the conduct by a Grantor of its business in the ordinary course; or

 

(k) Lack of Enforceability; Invalidity.  Any material provision hereof or of any of the other agreements, documents, or instruments between a Grantor and the Secured Party (together with this Agreement, collectively, the “Financing Documents”) shall for any reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than Secured Party) in accordance with its terms, or any such party shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Financing Documents has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for in any of the Financing Documents shall cease to be a valid and perfected first priority security interest in any of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein); or

 

(l) Cross Default.  The occurrence of (i) any default under the Management Agreement, or (ii)

 of any default or event of default under any other agreement between the Secured Party and the Grantors, including, without limitation, the Financing Documents.

 

	
  

	
Section 5.2

	
Method of Realizing Upon the Collateral: Other Remedies.

 

If any Event of Default shall have occurred and be continuing:

 

(a)           The Secured Party may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Secured Party’s name or into the name of its nominee or nominees (to the extent the Secured Party has not theretofore done so) and thereafter receive, for the benefit of the Secured Party, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require the Grantors to assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party at a place or places to be designated by the Secured Party that is reasonably convenient to both parties, and the Secured Party may enter into and occupy any premises owned or leased by a Grantor where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Secured Party’s rights and remedies hereunder or under law, without obligation to the Grantors in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (x) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable, (y) accept the Collateral in partial or full satisfaction of the Obligations in accordance with Sections 9-620 and 9-621 of the Code, and/or (z) lease, license or dispose of the Collateral or any part thereof upon such terms as the Secured Party may deem commercially reasonable.  The Grantors agree that, to the extent notice of sale or any other disposition of the Collateral shall be required by law, at least ten (10) days’ notice to the Grantors of the time and place of any public sale or the time after which any private sale or other disposition of the Collateral is to be made shall constitute commercially reasonable notification.  The Secured Party shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given.  The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each of the Grantors hereby waives any claims against the Secured Party arising by reason of the fact that the price at which the Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that the Grantors may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof.  Each of the Grantors hereby acknowledges that (i) any such sale of the Collateral by the Secured Party may be made without warranty, (ii) the Secured Party may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral.

 

(b)           Any cash held by the Secured Party as Collateral and all cash proceeds received by the Secured Party in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral shall be applied (after payment of any amounts payable to the Secured Party pursuant to Section 8.3 hereof) by the Secured Party against, all or any part of the Obligations in such order as the Secured Party shall elect in its sole and exclusive discretion.  Any surplus of such cash or cash proceeds held by the Secured Party and remaining after the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

 

(c)           In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Party is legally entitled, the Grantors shall be liable for the deficiency, together with interest thereon at the higher interest rate permitted by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Party to collect such deficiency.

 

(d)           Each of the Grantors hereby acknowledges that if the Secured Party complies with any applicable state, provincial, or federal law requirements in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.

 

(e)           The Secured Party shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Secured Party’s rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising.  To the extent that the Grantors lawfully may, the Grantors hereby agree that they will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Grantors hereby irrevocably waive the benefits of all such laws.

 

	
  

	
Section 5.3

	
Duties Regarding Collateral.

 

The Secured Party shall have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody and reasonable care of any of the Collateral actually in the Secured Party’s possession.

 

ARTICLE 6.

AFFIRMATIVE COVENANTS

 

So long as any of the Obligations shall remain outstanding, unless the Secured Party shall otherwise consent in writing:

 

	
  

	
Section 6.1.

	
Existence, Properties, Etc.

 

(a)           Each Grantor shall do, or cause to be done, all things, or proceed with due diligence with any actions or courses of action, that may be reasonably necessary (i) to maintain such Grantor’s due organization, valid existence and good standing under the laws of its state of incorporation, and (ii) to preserve and keep in full force and effect all qualifications, licenses and registrations in those jurisdictions in which the failure to do so could have a Material Adverse Effect (as defined below), as determined by the Secured Party in its sole and exclusive discretion; and

 

(b) the Grantors shall not do, or cause to be done, any act impairing the Grantors’ corporate power or authority (i) to carry on the Grantors’ respective business as now conducted, and (ii) to execute or deliver this Agreement or any other document delivered in connection herewith, including, without limitation, any UCC-1 Financing Statements required by the Secured Party (which other loan instruments collectively shall be referred to as the “Loan Instruments”) to which it is or will be a party, or perform any of its obligations hereunder or thereunder.  For purpose of this Agreement, the term “Material Adverse Effect” shall mean any material and adverse effect, as determined by the Secured Party in its reasonable discretion, whether individually or in the aggregate, upon (a) the Grantors’ assets, business, operations, properties or condition, financial or otherwise; (b) the Grantors’ ability to make payment as and when due of all or any part of the Obligations; or (c) the Collateral.

 

	
  

	
Section 6.2.

	
Financial Statements and Reports.

 

The Grantors shall furnish to the Secured Party within a reasonable time such financial data as the Secured Party may reasonably request.

	
  

	
Section 6.3.

	
Accounts and Reports.

 

The Grantors shall maintain a standard system of accounting in accordance with GAAP, and provide, at their sole expense, to the Secured Party the following:

 

(a)           as soon as available, a copy of any notice or other communication alleging any nonpayment or other material breach or default, or any foreclosure or other action respecting any material portion of its assets and properties, received respecting any of the indebtedness of the Grantors in excess of $100,000 (other than the Obligations), or any demand or other request for payment under any guaranty, assumption, purchase agreement or similar agreement or arrangement respecting the indebtedness or obligations of others in excess of $100,000; and

 

(b)           within fifteen (15) days after the making of each submission or filing, a copy of any report, financial statement, notice or other document, whether periodic or otherwise, submitted to the shareholders of a Grantor, or submitted to or filed by a Grantor with any governmental authority involving or affecting (i) a Grantor that could reasonably be expected to have a Material Adverse Effect; (ii) the Obligations; (iii) any part of the Collateral; or (iv) any of the transactions contemplated in this Agreement or the Loan Instruments (except, in each case, to the extent any such submission, filing, report, financial statement, notice or other document is posted on EDGAR Online).

 

	
  

	
Section 6.4.

	
Maintenance of Books and Records; Inspection.

 

Each of the Grantors shall maintain its books, accounts and records in accordance with GAAP, and permit the Secured Party, its officers and employees and any professionals designated by the Secured Party in writing, at any time during normal business hours and upon reasonable notice to visit and inspect any of its properties (including but not limited to the Collateral), corporate books and financial records, and to discuss its accounts, affairs and finances with any employee, officer or director thereof (it being agreed that, unless an Event of Default shall have occurred and be continuing, there shall be no more than two (2) such visits and inspections in any fiscal year).

 

	
  

	
Section 6.5.

	
Maintenance and Insurance.

 

(a)           Each of the Grantors shall maintain or cause to be maintained, at its own expense, all of its material assets and properties in good working order and condition, ordinary wear and tear excepted, making all necessary repairs thereto and renewals and replacements thereof.

 

(b)           The Grantors shall maintain or cause to be maintained, at their own expense, insurance in form, substance and amounts (including deductibles), which the Grantors deems reasonably necessary to the Grantors’ business, (i) adequate to insure all assets and properties of the Grantors of a character usually insured by persons engaged in the same or similar business against loss or damage resulting from fire or other risks included in an extended coverage policy; (ii) against public liability and other tort claims that may be incurred by the Grantors; (iii) as may be required by applicable law and (iv) as may be reasonably requested by Secured Party, all with financially sound and reputable insurers.

 

	
  

	
Section 6.6.

	
Contracts and Other Collateral.

 

Each of the Grantors shall perform all of its obligations under or with respect to each instrument, receivable, contract and other intangible included in the Collateral to which such Grantor is now or hereafter will be party on a timely basis and in the manner therein required, including, without limitation, this Agreement, except to the extent the failure to so perform such obligations would not reasonably be expected to have a Material Adverse Effect.

	
  

	
Section 6.7.

	
Defense of Collateral, Etc.

 

Each of the Grantors shall defend and enforce its right, title and interest in and to any part of: (a) the Collateral; and (b) if not included within the Collateral, those assets and properties whose loss would reasonably be expected to have a Material Adverse Effect, each against all manner of claims and demands on a timely basis to the full extent permitted by applicable law (other than any such claims and demands by holders of Permitted Liens).

	
  

	
Section 6.8.

	
Taxes and Assessments.

 

Each of the Grantors shall (a) file all material tax returns and appropriate schedules thereto that are required to be filed under applicable law, prior to the date of delinquency (taking into account any extensions of the original due date), (b) pay and discharge all material taxes, assessments and governmental charges or levies imposed upon a Grantor, upon its income and profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and (c) pay all material taxes, assessments and governmental charges or levies that, if unpaid, might become a lien or charge upon any of its properties; provided, however, that the Grantors in good faith may contest any such tax, assessment, governmental charge or levy described in the foregoing clauses (b) and (c) so long as appropriate reserves are maintained with respect thereto if and to the extent required by GAAP.

	
  

	
Section 6.9.

	
Compliance with Law and Other Agreements.

 

Each of the Grantors shall maintain its business operations and property owned or used in connection therewith in compliance with (a) all applicable federal, state and local laws, regulations and ordinances governing such business operations and the use and ownership of such property, and (b) all agreements, licenses, franchises, indentures and mortgages to which a Grantor is a party or by which such Grantor or any of its properties is bound, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect.

	
  

	
Section 6.10.

	
Notice of Default.

 

The Grantors will immediately notify the Secured Party of any event causing a substantial loss or diminution in the value of all or any material part of the Collateral and the amount or an estimate of the amount of such loss or diminution. The Grantors shall promptly notify the Secured Party of any condition or event which constitutes, or would constitute with the passage of time or giving of notice or both, an Event of Default, and promptly inform the Secured Party of any events or changes in the financial condition of any Grantor occurring since the date of the last financial statement of such Grantor delivered to the Secured Party, which individually or cumulatively when viewed in light of prior financial statements, which might reasonably be expected to have a Material Adverse Effect on the business operations or financial condition of the Grantors.

 

	
  

	
Section 6.11.

	
Notice of Litigation.

 

The Grantors shall give notice, in writing, to the Secured Party of (a) any actions, suits or proceedings wherein the amount at issue is in excess of $100,000, instituted by any persons against a Grantor, or affecting any of the assets of a Grantor, and (b) any dispute, not resolved within fifteen (15) days of the commencement thereof, between a Grantor on the one hand and any governmental or regulatory body on the other hand, which might reasonably be expected to have a Material Adverse Effect on the business operations or financial condition of such Grantor.

 

Section 6.12.                      Changes to Identity.

 

Each Grantor will (a) give the Secured Party at least 30 days’ prior written notice of any change in such Grantor’s name, identity or organizational structure, (b) maintain its jurisdiction of incorporation, organization or formation as set forth on Schedule 4.4 attached hereto, (c) immediately notify the Secured Party upon obtaining an organizational identification number, if on the date hereof such Grantor did not have such identification number.

 

Section 6.13.                      Perfection of Security Interests.

 

(a)           Financing Statements.  The Grantors hereby irrevocably authorize the Secured Party, at the sole cost and expense of the Grantors, at any time and from time to time to file in any filing office in any jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral (x) as all assets of the Grantors or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Code of such jurisdiction, or (y) as being of an equal or lesser scope or with greater detail, and (ii) contain any other information required by Part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement or amendment, including (x) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and (y) in the case of a financing statement filed as a fixture filing, a sufficient description of real property to which the Collateral relates.  The Grantors agree to furnish any such information to the Secured Party promptly upon request.  The Grantors also ratify their authorization for the Secured Party to have filed in any jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof. The Grantors acknowledge that they are not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of the Secured Party and agree that they will not do so without the prior written consent of the Secured Party.  The Grantors acknowledge and agree that this Agreement constitutes an authenticated record.

 

(b)           Possession.  The Grantors (i) shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where the Secured Party chooses to perfect its security interest by possession in addition to the filing of a financing statement; and (ii) will, where the Collateral is in the possession of a third party, join with the Secured Party in notifying the third party of the Secured Party’s security interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of the Secured Party.

 

(c)           Control.  The Grantors will cooperate with the Secured Party in obtaining control with respect to any portion of the Collateral consisting of (i) Investment Property, (ii) Letters of Credit and Letter-of-Credit Rights and (iii) electronic Chattel Paper.

 

(d)           Marking of Chattel Paper. The Grantors will not create any Chattel Paper without placing a legend on the Chattel Paper acceptable to the Secured Party in all respects indicating that the Secured Party has a security interest in the Chattel Paper.

 

Section 6.14                      Notice of Commercial Tort Claims. Attached as Schedule 6.14 is a list of all Commercial Tort Claims of the Grantors (as such Schedule may be amended, modified or supplemented from time to time). If any Grantor shall at any time acquire a Commercial Tort Claim, such Grantor shall immediately notify the Secured Party in a writing signed by such Grantor which shall (a) provide brief details of said claim and (b) grant to the Secured Party a security interest in said claim and in the proceeds thereof, all upon the terms of this Agreement, in such form and substance satisfactory to the Secured Party.

ARTICLE 7.

NEGATIVE COVENANTS

 

So long as any of the Obligations shall remain outstanding, unless the Secured Party shall otherwise consent in writing each Grantor covenants and agrees that it shall not:

 

Section 7.1.                      Transfers, Liens and Encumbrances.

 

(a)           Sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any of the Collateral, except the Grantors may (i) sell or dispose of Inventory in the ordinary course of business, and (ii) sell or dispose of assets the Grantors have determined, in good faith, not to be useful in the conduct of its business, and (iii) sell or dispose of accounts in the course of collection in the ordinary course of business consistent with past practice.

 

(b)           Directly or indirectly make, create, incur, assume or permit to exist any Lien in, to or against any part of the Collateral other than Permitted Liens.

 

Section 7.2.                      Restriction on Redemption and Cash Dividends

 

Directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on its capital stock without the prior express written consent of the Secured Party.

 

Section 7.3.                      Incurrence of Indebtedness.

 

Directly or indirectly, incur or guarantee, assume or suffer to exist any indebtedness, other than the indebtedness evidenced by the Permitted Indebtedness.  “Permitted Indebtedness” means: (i) indebtedness in favor of the Secured Party or one of its affiliates, including without limitation, YA Global Investments, L.P.; (ii) indebtedness which is not secured by any assets of the Grantors; and (iii) indebtedness solely between the Grantors and/or one of its domestic affiliates or subsidiaries, on the one hand, and the Grantors and/or one of its domestic affiliates or subsidiaries, on the other which indebtedness is not secured by any assets of the Grantors or any of its subsidiaries, provided that (x) in each case a majority of the equity of any such domestic subsidiary is directly or indirectly owned by the Grantors, such domestic subsidiary is controlled by the Grantors and such domestic subsidiary has executed a security agreement in the form of this Agreement and (y) any such loan shall be evidenced by an intercompany note that is pledged by a Grantor or its subsidiary, as applicable, as collateral pursuant to this Agreement.

 

Section 7.4.                      Places of Business.

 

Change the location of its chief place of business, chief executive office or any place of business disclosed to the Secured Party, unless such change in location is to a different location within the United States and the Grantors provides notice to the Secured Party of new location within 10 days’ of such change in location.

ARTICLE 8.

MISCELLANEOUS

 

	
  

	
Section 8.1.

	
Notices.

 

All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on:  (a) the date of delivery, if delivered in person or by nationally recognized overnight delivery service or (b) five (5) days after mailing if mailed from within the continental United States by certified mail, return receipt requested to the party entitled to receive the same:

 

If to the Grantors:                                                                c/o GreenShift Corporation

One Penn Plaza, Suite 1612

New York, NY 10119

Attention:  Kevin Kreisler

Telephone:                   (212) 994-5374

Facsimile:                      (646) 572-6336

With Copies to:                                                                

                         Glenn Schoenfeld, Esquire

405 Park Avenue, Suite 502

New York, New York 10022

Telephone:                   (212) 754-7000

Facsimile:                      (212) 758-0143

If to Secured Party:                                                              YA Corn Oil Systems, LLC

c/o Yorkville Advisors, LLC

101 Hudson Street-Suite 3700

Jersey City, New Jersey 07302

Attention: Troy Rillo

Telephone:                   (201) 985-8300

Facsimile:                      (201) 985-1964

 

With Copies to:                                                                Douglas K. Clarke, Esquire

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Telephone:                   (617) 880-3485

Facsimile:                      (617) 692-3485

Any party may change its address by giving notice to the other party stating its new address.  Commencing on the tenth (10th) day after the giving of such notice, such newly designated address shall be such party’s address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement.

 

	
  

	
Section 8.2.

	
Severability.

 

If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein.

 

	
  

	
Section 8.3.

	
Expenses.

 

In the event of an Event of Default, the Grantors will pay to the Secured Party the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and expenses of its counsel, which the Secured Party may incur in connection with:  (a) the custody or preservation of, or the sale, collection from, or other realization upon, any of the Collateral; (b) the exercise or enforcement of any of the rights of the Secured Party hereunder or (c) the failure by a Grantor to perform or observe any of the provisions hereof.

 

	
  

	
Section 8.4.

	
Waivers, Amendments, Etc.

 

The Secured Party’s delay or failure at any time or times hereafter to require strict performance by a Grantor of any undertakings, agreements or covenants shall not waive, affect, or diminish any right of the Secured Party under this Agreement to demand strict compliance and performance herewith.  Any waiver by the Secured Party of any Event of Default shall not waive or affect any other Event of Default, whether such Event of Default is prior or subsequent thereto and whether of the same or a different type.  None of the undertakings, agreements and covenants of a Grantor contained in this Agreement, and no Event of Default, shall be deemed to have been waived by the Secured Party, nor may this Agreement be amended, changed or modified, unless such waiver, amendment, change or modification is evidenced by an instrument in writing specifying such waiver, amendment, change or modification and signed by the Secured Party in the case of any such waiver, and signed by the Secured Party and the Grantors in the case of any such amendment, change or modification.  Further, no such document, instrument, and/or agreement purported to be executed on behalf of the Secured Party shall be binding upon the Secured Party unless executed by a duly authorized representative of the Secured Party.

 

	
  

	
Section 8.5.

	
Continuing Security Interest.

 

This Agreement shall create a continuing security interest in the Collateral and shall: (a) remain in full force and effect so long as any of the Obligations shall remain outstanding; (b) be binding upon each Grantor and its successors and assigns; and (c) inure to the benefit of the Secured Party and its successors and assigns.  Upon the payment or satisfaction in full of the Obligations, this Agreement and the security interest created hereby shall terminate, and, in connection therewith, each Grantor shall be entitled to the return, at its expense, of such of the Collateral as shall not have been sold in accordance with this Agreement or otherwise accepted or applied pursuant to the terms hereof and the Secured Party shall deliver to the Grantors such documents as the Grantors shall reasonably request to evidence such termination.

 

	
  

	
Section 8.6.

	
Independent Representation.

 

Each party hereto acknowledges and agrees that it has received or has had the opportunity to receive independent legal counsel of its own choice and that it has been sufficiently apprised of its rights and responsibilities with regard to the substance of this Agreement.

 

	
  

	
Section 8.7.

	
Applicable Law: Jurisdiction.

 

This Agreement shall be governed by and interpreted in accordance with the laws of the State of New Jersey without regard to the principles of conflict of laws.  The parties further agree that any action between them shall be heard in Hudson County, New Jersey, and expressly consent to the jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County and the United States District Court for the District of New Jersey sitting in Newark, New Jersey for the adjudication of any civil action asserted pursuant to this Paragraph, provided, however, that nothing herein shall prevent the Secured Party from enforcing its rights and remedies (including, without limitation, by filing a civil action) with respect to the Collateral and/or the Grantors in any other jurisdiction in which the Collateral and/or the Grantors may be located.

 

	
  

	
Section 8.8.

	
Waiver of Jury Trial.

 

AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO MAKE FINANCIAL ACCOMMODATIONS TO THE COMPANIES OR ANY GRANTOR, EACH GRANTOR HEREBY WAIVES, TO THE FULLEST PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.

 

Section 8.9.                      Indemnification.

 

Except with respect to the Secured Party’s gross negligence, willful misconduct or fraud, the Grantors shall indemnify, defend, and hold the Secured Party, or any agent, employee, officer, attorney, or representative of the Secured Party, harmless of and from any claim brought or threatened against the Secured Party or any such person so indemnified by: any Grantor; any other obligor or endorser of the Obligations or any other person (as well as from attorneys' fees and expenses in connection therewith) on account of the Secured Party's relationship with the Grantors, or any other obligor or endorser of the Obligations (each of which may be defended, compromised, settled, or pursued by the Secured Party with counsel of the Secured Party's selection, but at the expense of the undersigned).

 

Section 8.10.                      Right of Set Off.

 

The Grantors hereby grants to the Secured Party, a lien, security interest and right of setoff as security for all liabilities and obligations to the Secured Party, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Secured Party or any of its affiliates, or any entity under the control of the Secured Party, or in transit to any of them. At any time, without demand or notice, the Secured Party may set off the same or any part thereof and apply the same to any liability or obligation of the Grantors even though unmatured and regardless of the adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE THE SECURED PARTY TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE GRANTORS, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

Section 8.11.                      Secured Party’s Right to Assign Agreement.

 

The Grantors acknowledges and agrees that the Secured Party has the right to transfer and assign this Agreement and the Secured Party’s rights hereunder to a third party without prior notice to the Grantors, including without limitation, YA Global Investments, L.P.  The Grantors shall cooperate with the Secured Party in effecting any transfer and assignment of this Agreement and shall sign any documentation requested by the Secured Party in connection therewith.

 

Section 8.12.                      Liability of Grantors.

 

Notwithstanding any provision herein or in any other Loan Instrument, the Grantors, and each of them, are and shall be jointly and severally liable for any and all Obligations (whether any such Obligation is specified as an obligation of the Grantors or of any of them).

 

Section 8.13.                      Waiver of Claims.

 

The Grantors acknowledge and agree that they have no offsets, defenses, claims, or counterclaims against the Secured Party or its officers, directors, employees, attorneys, representatives, parents, affiliates, predecessors, successors, or assigns with respect to the Obligations or otherwise, and that if the Grantors now has, or ever did have, any offsets, defenses, claims, or counterclaims against the Secured Party or its officers, directors, employees, attorneys, representatives, affiliates, predecessors, successors, or assigns, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this Agreement, all of them are hereby expressly WAIVED, and the Grantors hereby RELEASE the Secured Party and its officers, directors, employees, attorneys, representatives, affiliates, predecessors, successors, and assigns from any liability therefor.

 

Section 8.14.                      Counterparts; Facsimile Signatures.  This Agreement may be executed and delivered by exchange of facsimile signatures of the Secured Party and the Grantors, and those signatures need not be affixed to the same copy.  This Agreement may be executed in any number of counterparts.

 

	
  

	
Section 8.15.

	
Entire Agreement.

 

This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof.

  

  

  

  

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

VIRIDIS CAPITAL LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

GREENSHIFT CORPORATION (f/k/a GS CleanTech Corporation)

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Chairman

GS CLEANTECH CORPORATION (f/k/a GS Ethanol Technologies, Inc.)

By_______________________________

Name:                 Kevin Kreisler

Title:                   Chairman

GS COES (YORKVILLE I), LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

GS CARBON DIOXIDE TECHNOLOGIES, INC.

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Chairman

 

GS GLOBAL BIODIESEL, LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

 

GS AGRIFUELS CORPORATION

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

NEXTGEN ACQUISITION, INC.

 

By_______________________________

Name:                Kevin Kreisler

Title:                  Chairman

NEXTGEN FUEL INC.

 

By_______________________________

Name:               Kevin Kreisler

Title:                 Chairman

SUSTAINABLE SYSTEMS, INC.

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Chairman

SUSTAINABLE SYSTEMS LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

GS DESIGN, INC. (f/k/a Warnecke Design Service, Inc.)

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Chairman

 

[Grantors’ Signature Page to Global Security Agreement]

[Signatures continued on following page]

  

  

  

  

GS RENTALS LLC

 

(f/k/a Warnecke Rentals, LLC)

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

ECOSYSTEM TECHNOLOGIES, LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

GS BIG MANAGEMENT, LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

GS COES (ADRIAN I), LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

GS TECHNOLOGY, LLC

 

By_______________________________

Name:                 Kevin Kreisler

Title:                   Managing Member

[Grantors’ Signature Page to Global Security Agreement]

  

  

  

  

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

 

	  	  
	  	
SECURED PARTY:

 

	  	
YA CORN OIL SYSTEMS, LLC,

as Secured Party,

 

	  	
By:                                                                

	  	
Name:

	  	
Title:

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