CREDIT AGREEMENT
BETWEEN
GS COES (YORKVILLE I), LLC, AS BORROWER
AND
YA GLOBAL INVESTMENTS, L.P., AS LENDER
As of January 11, 2008
SECTION 1. DEFINITIONS....................................................................................4
1.1 Definitions...........................................................................................4
1.2 Accounting Terms......................................................................................9
SECTION 2. REVOLVING CREDIT FACILITY.......................................................................9
2.1 Revolving Advances....................................................................................9
2.2 Interest.............................................................................................11
2.3 Cash Management; Prepayment; Payments................................................................11
2.4 Security and Guaranties..............................................................................13
2.5 Fees.................................................................................................13
2.6 Extension of Maturity Date; Termination..............................................................13
SECTION 3, CONDITIONS PRECEDENT.............................................................................14
3.1 Conditions to Closing................................................................................14
3.2 Conditions to the Funding Date Advances..............................................................15
3.3 Conditions to all Revolving Advances.................................................................15
SECTION 4. REPRESENTATIONS AND WARRANTIES...................................................................16
4.1 Organization.........................................................................................16
4.2 Authorization........................................................................................16
4.3 No Conflicts.........................................................................................16
4.4 Compliance and Other Agreements......................................................................16
4.5 ERISA................................................................................................17
4.6 Approvals and Consents...............................................................................17
4.7 Investment Company...................................................................................17
4.8 Regulation U; Securities Exchange Act of 1934........................................................17
4.9 Use of Funds.........................................................................................17
4.10 Financial Statements................................................................................18
4.11 Taxes...............................................................................................18
4.12 Title to Properties/Priority of Liens...............................................................18
4.13 Litigation..........................................................................................18
4.14 Insurance...........................................................................................18
4.15 Brokers.............................................................................................18
4.16 Disclosure..........................................................................................18
4.17 Bank Accounts.......................................................................................19
4.18 Subsidiaries; Affiliates; Solvency..................................................................19
4.19 Environmental Compliance............................................................................19
4.20 Intellectual Property; License Agreement............................................................19
4.21 No Event of Default.................................................................................20
4.22 Names...............................................................................................20
SECTION 5. AFFIRMATIVE COVENANTS............................................................................20
5.1 Preservation of Existence............................................................................20
5.2 Maintenance of Properties; Insurance.................................................................20
5.3 Payment of Taxes.....................................................................................20
5.4 Field Audit and Examinations.........................................................................20
5.5 Accounting; Financial Statements and Other Information...............................................21
5.6 Compliance...........................................................................................22
5.7 ERISA................................................................................................22
5.8 Ownership/Control....................................................................................22
5.9 Change in Business...................................................................................22
5.10 Notification to Lender..............................................................................23
5.11 Environmental Compliance............................................................................23
5.12 Further Assurances..................................................................................23
5.13 License Agreements..................................................................................23
5.14 Build Out Draw Schedule.............................................................................24
5.15 Compliance with Projections.........................................................................24
5.16 Minimum Production..................................................................................24
SECTION 6. NEGATIVE COVENANTS...............................................................................24
6.1 Investments and Guaranties...........................................................................24
6.2 Limitation on Liens..................................................................................25
6.3 Additional Obligations...............................................................................25
6.4 Mergers, Etc.........................................................................................25
6.5 Accounting Changes...................................................................................25
6.6 Negative Pledges, Etc................................................................................25
6.7 Recapitalization.....................................................................................25
6.8 Dividends and Redemptions............................................................................26
6.9 Transactions with Affiliates.........................................................................26
SECTION 7. EVENTS OF DEFAULT/REMEDIES.......................................................................26
7.1 Events of Default....................................................................................26
7.2 Remedies.............................................................................................28
SECTION 8. MISCELLANEOUS....................................................................................28
8.1 Expenses.............................................................................................28
8.2 Survival of Agreement................................................................................29
8.3 No Waiver; Cumulative Remedies.......................................................................29
8.4 Notices and Deliveries...............................................................................29
8.5 Amendments and Waivers...............................................................................30
8.6 Applicable Law.......................................................................................30
8.7 Successors...........................................................................................30
8.8 Partial Invalidity...................................................................................30
8.9 Headings and Word Meanings...........................................................................30
8.10 WAIVER OF JURY TRIAL................................................................................30
8.11 JURISDICTION; SERVICE OF PROCESS....................................................................30
8.12 Indemnity...........................................................................................31
8.13 Marshalling; Recourse to Security; Payments Set Aside...............................................31
8.14 Entire Agreement....................................................................................31
8.15 Set-off.............................................................................................31
8.16 Waiver of Notices...................................................................................32
8.17 Counterparts; Facsimile Signature...................................................................32
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of January 11, 2008, between GS COES
(YORKVILLE I), LLC, a New York limited liability company, having an office at
One Penn Plaza, Suite 1612, New York, New York 10119 (the "Borrower"), and YA
GLOBAL INVESTMENTS, L.P., a Cayman Island exempt limited partnership having an
office at 101 Hudson Street, Suite 3700, Jersey City, New Jersey 07303 (the
"Lender").
R E C I T A L S:
The Borrower desires the Lender, and the Lender is willing, subject to and
upon the terms and conditions set forth herein and in the other Financing
Agreements (as defined herein), to make a discretionary revolving credit
facility (the "Revolving Credit Facility") available to the Borrower.
Accordingly, the Borrower and the Lender hereby agree as follows:
NOW, THEREFORE, IT IS AGREED:
SECTION 1. DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall have the
following meanings, unless the context otherwise requires:
"Affiliate" shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with, such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with") when used with respect to any
specified Person, shall mean the power to direct or cause the direction of the
actions, management or policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise and whether
or not such power is actually exercised.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time in accordance with its terms.
"Availability" shall mean, as of the date calculated, the result of (a) the
Revolving Loan Ceiling, minus (b) the Collateral Limitation.
"Blocked Account" shall have the meaning set forth in Section 2.3.1 hereof.
"Board" shall have the meaning set forth in Section 4.8 hereof.
"Borrower" shall have the meaning set forth in the preamble to this
Agreement.
"Build Out Draw Schedule" shall mean that certain schedule setting forth
the timetable for, and costs of, installing COES Installations in various
locations, to be provided to the Lender by the Borrower prior to the Closing
Date, in a form and of a nature acceptable to the Lender in all respects, as the
same may be updated, modified and amended from time to time pursuant to the
mutual agreement, in writing, of the Borrower and the Lender.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
to close under the laws of the State of New York.
"Cash Equivalents" shall mean:
(i) demand deposits at, or certificates of deposit in Dollars of, any
Institutional Lender;
(ii) readily marketable direct obligations of the United States government
or any agency thereof which are backed by the full faith and credit of
the United States;
(iii) investments in money market mutual funds registered under the
Investment Company Act of 1940 having assets in excess of
$2,500,000,000;
(iv) commercial paper at the time of acquisition having the highest rating
obtainable from either Standard & Poor's Corporation or Moody's
Investor Service, Inc.; and
(v) federally tax exempt securities rated "A" or better by either Standard
& Poor's Corporation or Moody's Investor Service, Inc. provided that,
in each case mentioned in (i), (ii), and (iv) above, such obligations
shall mature not more than one year from the date of acquisition
thereof.
"Cash Flow Projections" shall mean the cash flow projections for the
Borrower's operations provided to the Lender by the Borrower prior to the date
of this Agreement.
"Closing Date" shall mean the date of this Agreement.
"COES Installations" shall mean the Corn Oil Extraction Systems installed
by the Borrower in the following locations, together with any other Corn Oil
Extraction Systems installed in any other locations which are financed with the
proceeds of the Revolving Advances: (i) Utica Energy, LLC, 4995 State Road 91,
Oshkosh, WI 54904, (ii) Western New York Energy, LLC, 40 Lackawanna Avenue,
Mount Morris, NY 14510, (iii) Global Ethanol, LLC, 11440 Cemetery Road, Riga, MI
49276, (iv) Global Ethanol, LLC, 1660 428th Street, Lakota, IA 50451, (v)
Central Indiana Ethanol, LLC, 2955 W. Delphi Pike, Marion, IN 46953, and (vi)
Northeast Biofuels, LP, 376 Owen Road, Fulton, NY 13069.
"COES License Agreement" shall have the meaning set forth in Section 4.20.
"Collateral" shall mean all of the property of the Borrower and the
Guarantors in which the Lender has been, or shall hereafter be, granted a lien
or security interest under the Security Agreement, the Pledge Agreement, the IP
Security Agreement, and/or the Mortgages.
"Collateral Access Agreement" shall mean an agreement in writing, in form
and substance satisfactory to Lender, from any lessor of premises to Borrower,
or any other person to whom any Collateral is consigned or who has custody,
control or possession of any such Collateral or is otherwise the owner or
operator of any premises on which any of such Collateral is located, in favor of
Lender with respect to the Collateral at such premises or otherwise in the
custody, control or possession of such lessor, consignee or other person.
"Collateral Limitation" shall mean the sum of (a) the aggregate unpaid
balance of the Loan Account, plus (b) the aggregate amount of outstanding loan
or loans owed by Borrower's affiliate NextGen Fuel to the Stillwater Asset
Backed Fund, L.P., which loan balance is currently approximately $3,800,000.00.
"Communication" shall have the meaning set forth in Section 8.4 hereof.
"Compliance Certificate" shall mean a certificate in a form acceptable to
the Lender in all respects executed by the president or chief executive officer
of the Borrower certifying to the Lender that (i) the Borrower is in compliance
with the terms and conditions of this Agreement and the other Financing
Agreements, (ii) the installation of the COES Installations is proceeding in
accordance with the Build Out Draw Schedule and Section 5.14 hereof, (iii) the
Borrower is in compliance with the covenants set forth in Sections 5.15 and
5.16hereof, and (iv) no Default or Event of Default has occurred and is
continuing.
"Default" shall mean any condition, act or event that, with notice or lapse
of time or both, would constitute an Event of Default.
"Deposit Account Control Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Lender, by and among Lender, Borrower and any
bank at which any deposit account of Borrower is at any time maintained which
provides that such bank will comply with instructions originated by Lender
directing disposition of the funds in the deposit account without further
consent by Borrower and has such other terms and conditions as Lender may
require.
"Dollars" or the symbol "$" shall mean dollars in lawful currency of the
United States of America.
"Environmental Laws" shall mean all foreign, Federal, State and local laws
(including common law), legislation, rules, codes, licenses, permits (including
any conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between Borrower and any Governmental
Authority, i) relating to pollution and the protection, preservation or
restoration of the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or to human health
or safety, ii) relating to the exposure to, or the use, storage, recycling,
treatment, generation, manufacture, processing, distribution, transportation,
handling, labeling, production, release or disposal, or threatened release, of
Hazardous Materials, or iii) relating to all laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Federal
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state counterparts to such laws, and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"ERISA Affiliate" shall mean an entity, whether or not incorporated, which
is under common control with the Borrower within the meaning of Section 414(b)
or 414(c) of the Internal Revenue Code of 1986, as amended.
"Event of Default" shall have the meaning assigned to such term in Section
7 hereof.
"Exchange Act" shall have the meaning assigned to such term in Section 4.8
hereof.
"Financing Agreements" shall mean the following agreements and instruments
(as such agreements and instruments may be hereafter amended, modified or
supplemented in accordance with their respective terms): (i) this Agreement,
(ii) the Security Agreement, (iii) the Revolving Note, (iv) the Guaranty
Agreement, (v) the Pledge Agreement, (vi) the Mortgages, (vii) the IP Security
Agreement, and (viii) any other supplementary security agreements or other
collateral documents or other related agreements now or hereafter delivered to
the Lender by the Borrower.
"Funding Date" shall have the meaning set forth in Section 2.1 hereof.
"Funding Date Advances" shall have the meaning set forth in Section 2.1.1
hereof.
GAAP" shall mean principles that are (i) consistent with those promulgated
or adopted by the Financial Accounting Standards Board and its predecessors (or
successors) in effect and applicable to that accounting period in respect of
which reference to GAAP is being made, and (ii) consistently applied with past
financial statements of the Borrower.
"Governmental Authority" shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GreenShift" shall mean GreenShift Corporation, a Delaware corporation.
"GS AgriFuels" shall mean GS AgriFuels Corporation a Delaware corporation.
"GS CleanTech" shall mean GS CleanTech Corporation, a Delaware corporation.
"GS Energy" shall mean GS Energy Corporation, a Delaware corporation.
"GS Ethanol" shall mean GS Ethanol Technologies, Inc., a Delaware
corporation.
"Guaranty Agreement" shall have the meaning set forth in Section 2.4.1
hereof.
"Guarantors" shall mean each of GreenShift, GS AgriFuels, GS CleanTech, GS
Energy, GS Ethanol, Viridis Capital, LLC, NexGen Fuel, Kevin Kreisler, and each
of their respective subsidiaries and Affiliates.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
"Indebtedness" shall mean, with respect to any specified Person, (i) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person for the deferred purchase price of property or services, except current
accounts payable arising in the ordinary course of business and payable in
accordance with customary trade practices, (iv) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (v) all payment obligations of such Person with
respect to interest rate or currency protection agreements, (vi) all obligations
of such Person as an account party under any letter of credit or in respect of
bankers' acceptances, (vii) all obligations of any third party secured by
property or assets of such Person (regardless of whether or not such Person is
liable for repayment of such obligations), and (viii) all guarantees or other
contingent liability of such Person.
"Institutional Lender" shall mean any savings bank, savings and loan
association, commercial bank or trust company, insurance company, or any holding
or service company of any of the foregoing, in each case having capital of not
less than $400,000,000 and authorized to do business in the United States.
"Intellectual Property" shall mean all of Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
applications, copyright registrations, trademarks, servicemarks, trade names,
trade styles, trademark and service mark applications, and licenses and rights
to use any of the foregoing and all applications, registrations and recordings
relating to any of the foregoing as may be filed in the United States Copyright
Office, the United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof, any political subdivision
thereof or in any other country or jurisdiction, together with all rights and
privileges arising under applicable law with respect to Borrower's use of any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or servicemark or the license of any trademark or
servicemark); customer and other lists in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, domain names and domain
name registration; software and contract rights relating to computer software
programs, in whatever form created or maintained.
"IP Security Agreement" shall have the meaning set forth in Section 2.4.2
hereof.
"Kerns Judgment" shall mean that certain judgment entered in favor of Kerns
Manufacturing Corp. in the amount of $1,020,265 against GS CleanTech.
"Lender" shall have the meaning set forth in the preamble to this
Agreement.
"Lien" shall mean, with respect to any asset, (i) any mortgage, lien,
pledge, encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities, or (iv) any other right of or arrangement with
any creditor to have such creditor's claim satisfied out of such assets, or the
proceeds therefrom, prior to the general creditors of the owner thereof.
"Loan Account" shall have the meaning set forth in Section 2.1.2 hereof.
"Maturity Date" shall mean August 31, 2009, unless extended in accordance
with the terms of Section 2.6 of this Agreement, in which case it shall mean
August 31, 2010.
"Mortgages" shall have the meaning set forth in Section 2.4.2 hereof.
"Multiemployer Plan" shall mean a Plan described in Section 4001(a)(3) of
ERISA.
"NextGen Fuel" shall mean NextGen Fuel, Inc., a Delaware corporation.
"Obligations" shall mean all obligations, liabilities and indebtedness of
the Borrower to the Lender, whether now existing or hereafter created, direct or
indirect, due or not, whether created directly or acquired by assignment or
otherwise, including, without limitation, all obligations, liabilities and
indebtedness of the Borrower with respect to the Revolving Credit Facility, and
the payment and performance of all other obligations, liabilities, and
indebtedness of the Borrower to the Lender hereunder, and/or under any one or
more of the other Financing Agreements, including, without limitation, all fees,
costs, expenses and indemnity obligations hereunder or thereunder.
"Operating Account" shall mean the Borrower's account number
________________ maintained with Bank of America, N.A.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any entity
succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, joint venture, firm,
corporation, limited liability company, trust, charitable institution or other
business or legal entity.
"Plan" shall mean any pension plan that is covered by Title IV of ERISA or
employee benefit plan (as defined in Section 3(3) of ERISA) and in respect of
which the Borrower or any ERISA Affiliate is an "employer" as defined in Section
3(5) of ERISA.
"Pledge Agreement" shall have the meaning set forth in Section 2.4.2
hereof.
"Prohibited Transaction" shall mean any transaction set forth in Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as amended or supplemented from time to time.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as amended or supplemented from time to time.
"Reportable Event" shall mean any of the events set forth in Section 4043
of ERISA.
"Revolving Advance" shall have the meaning set forth in Section 2.1 hereof.
"Revolving Credit Facility" shall have the meaning set forth in Recitals
section hereof.
"Revolving Loan Ceiling" shall mean $10,000,000.
"Revolving Note" means the Borrower's revolving promissory note, payable to
the order of the Lender in substantially the form of Exhibit A hereto.
"Security Agreement" shall have the meaning set forth in Section 2.4.2
hereof.
"Shares" shall have the meaning set forth in Section 2.5.3 hereof.
"Solvent" shall mean, at any time, that the Borrower (i) is able to pay its
debts as they mature and has (and has a reasonable basis to believe it will
continue to have) sufficient capital (and not unreasonably small capital) to
carry on its business consistent with its practices as of the date hereof, and
(ii) the assets and properties of the Borrower at a fair valuation (and
including as assets for this purpose at a fair valuation all rights of
subrogation, contribution or indemnification arising pursuant to any guarantees
given by the Borrower) are greater than the Indebtedness of the Borrower, and
including subordinated and contingent liabilities computed at the amount which,
the Borrower has a reasonable basis to believe, represents an amount which can
reasonably be expected to become an actual or matured liability (and including
as to contingent liabilities arising pursuant to any guarantee the face amount
of such liability as reduced to reflect the probability of it becoming a matured
liability).
"Subsidiary" shall mean a corporation, partnership or other entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by the Borrower.
"Termination Date" shall mean the earlier to occur of (i) the Maturity
Date, (ii) such date as Revolving Advances shall otherwise be payable in full in
accordance with the provisions of Section 7 of this Agreement, and (iii) the
termination of this Agreement pursuant to Section 2.6 hereof.
"Utica System" shall have the meaning set forth in Section 4.20 hereof.
1.2 Accounting Terms. Any accounting terms used in this Agreement that are not
specifically defined herein shall have the meanings customarily given to
such terms in accordance with GAAP. In the event that changes in GAAP shall
be mandated by the Financing Accounting Standards Board, and such changes
would materially modify the interpretation or computation of the financial
covenants contained in this Agreement at the time of execution hereof, then
in such event such changes shall not be followed in calculating the
financial covenants.
SECTION 2. REVOLVING CREDIT FACILITY
2.1 Revolving Advances. The Lender may, in its sole discretion, make advances to
the Borrower from time to time from the date all of the conditions set forth in
Sections 3.1, 3.2, and 3.3 are satisfied (the "Funding Date") to the Termination
Date, on the terms and subject to the conditions herein set forth (the
"Revolving Advances"). The Lender shall not consider any request for a Revolving
Advance to the extent the amount of the requested Revolving Advance exceeds
Availability. The Borrower's obligation to pay the Revolving Advances shall be
evidenced by the Revolving Note and shall be secured by the Collateral. Within
the limits set forth in this Section II, the Borrower may request Revolving
Advances, repay pursuant to Section II hereof and request additional Revolving
Advances.
2.1.1 Procedures for Requesting Revolving Advances. On the Funding Date, the
Lender shall make the following Revolving Advances (collectively, the
"Funding Date Advances"): (a) an initial Revolving Advance of $4,000,000 to
the Borrower, (b) a Revolving Advance of $250,000 to the Lender to pre-pay
estimated interest coming due under the Revolving Credit Facility for the
first three (3) months of the Revolving Credit Facility (the "Prepaid
Interest Advance"), (c) a Revolving Advance of $210,000 to the Lender to
pay the fees due to the Lender under Sections 2.5.1 and 2.5.2 hereof, and
(d) a Revolving Advance of $150,000.00 to the Lender's counsel to pay for
the estimated costs and expenses incurred by the Lender in connection with
the negotiation and preparation of this Agreement and the other Financing
Agreements. Thereafter, the Lender may, in its discretion, make additional
Revolving Advances from time to time at the request of the Borrower,
provided that (i) such Revolving Advances shall be made no more frequently
than once per month and no later than the fifth Business Day of each
calendar month, (ii) such request is made in writing at least ten (10) days
prior to the date on which such Revolving Advance is to be funded, and is
accompanied by an executed Compliance Certificate, (iii) such request shall
be for Revolving Advances to pay for costs and expenses incurred in
connection with the installation of the COES Installations in accordance
with the Build Out Draw Schedule, and (iv) all borrowings after the Funding
Date Advances shall be in multiples of $100,000. There shall not be any
recourse to, nor liability of, the Lender on account of any of the
following: (x) any delay in the Lender's making of, and/or any decline by
the Lender to make, any Revolving Advance, (y) any delay in the proceeds of
any such Revolving Advance constituting collected funds, and (z) any delay
in the receipt, and/or any loss, of funds which constitute a Revolving
Advance, the wire transfer of which was properly initiated by the Lender in
accordance with wire instructions provided to the Lender by the Borrower.
The Lender may rely on any request for a Revolving Advance which the
Lender, in good faith believes to have been made by a person duly authorized to
act on behalf of the Borrower and may decline to make any such requested
Revolving Advance pending the Lender's being furnished with such documentation
concerning that person's authority to act as may be satisfactory to the Lender.
2.1.2 Loan Account.
(a) An account (the "Loan Account") shall be opened on the books of the
Lender, in which Loan Account a record may be kept of all Revolving
Advances made by the Lender to the Borrower under or pursuant to this
Agreement and of all payments thereon.
(b) The Lender may also keep a record (either in the Loan Account or
elsewhere, as the Lender may from time to time elect) of all interest,
fees, service charges, costs, expenses, and other debits owed the
Lender on account of the Obligations and of all credits against such
amounts so owed.
(c) All credits against the Obligations shall be conditional upon final
payment to the Lender of the items giving rise to such credits. The
amount of any item credited against the Obligations which is charged
back against the Lender for any reason or is not so paid shall be an
Obligation and shall be added to the Loan Account, whether or not the
item so charged back or not so paid is returned.
(d) Except as otherwise provided herein, all fees, service charges, costs,
and expenses for which the Borrower is obligated hereunder are payable
on demand. In the determination of Availability, the Lender may deem
fees, service charges, accrued interest, and other payments as having
been advanced under the Revolving Credit Facility whether or not such
amounts are then due and payable.
(e) The Lender, without the request of the Borrower, may advance under the
Revolving Credit Facility any interest, fee, service charge, or other
payment to which the Lender is entitled from the Borrower pursuant
hereto and may charge the same to the Loan Account notwithstanding
that such amount so advanced may result in Availability's being
exceeded. Such action on the part of the Lender shall not constitute a
waiver of the Lender's rights under Section 2.1. Any amount which is
added to the principal balance of the Loan Account as provided in this
Subsection shall bear interest at the interest rate applicable from
time to time to the unpaid principal balance of the Revolving
Advances.
(f) Any written statement rendered by the Lender to the Borrower
concerning the Obligations shall be considered correct and accepted by
the Borrower and shall be conclusively binding upon the Borrower
unless the Borrower provides the Lender with written objection thereto
within twenty (20) days from the mailing of such statement, which
written objection shall indicate, with particularity, the reason for
such objection. The Loan Account and the Lender's books and records
concerning the loan arrangement contemplated herein and the
Obligations shall be prima facie evidence and proof of the items
described therein.
2.2 Interest. The Revolving Advances shall bear interest as follows:
2.2.1 Interest Rate. The outstanding principal amount of the Revolving Advances
shall bear interest at a rate of twenty percent (20%) per annum. The first
three months of interest payments due under the Revolving Credit Facility
shall have been prepaid to the Lender pursuant to the Prepaid Interest
Advance. Thereafter, the Borrower shall pay accrued interest on the
outstanding principal amount of the Revolving Advances at the foregoing
rate monthly in arrears on the first day of each month beginning on the
first day of the fourth month immediately following the Funding Date, and
at the Termination Date (whether by acceleration or otherwise). Interest
shall be computed on the basis of a 360-day year over the actual number of
days elapsed.
2.2.2 Interest Upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default (and whether or not the Lender
accelerates payment or exercises any of Lender's other rights on account
thereof), interest shall accrue, at the option of the Lender, on the unpaid
Obligations at a rate per annum equal to four (4%) percent in excess of the
rate otherwise applicable to such Obligations, but in no event in excess of
the maximum rate permitted by applicable law. Interest accruing at the
foregoing rate shall be due and payable upon demand by the Lender.
2.2.3 Maximum Rate. Notwithstanding anything otherwise in this Section 2.2 or
Section 2.3.2 to the contrary, the rate of interest payable by the Borrower
shall not exceed the maximum rate permitted by applicable law. In the event
the interest paid by the Borrower shall exceed the maximum lawful rate, at
the Lender's option, the excess shall be applied in reduction of the
principal balance of the Revolving Advances, or repaid to the Borrower.
2.3 Cash Management; Prepayment; Payments.
2.3.1 Cash Management.
(a) Borrower shall establish and maintain, at its expense, a lockbox and
related blocked account (the "Blocked Account"), as Lender may
specify, with bank which is acceptable to Lender into which Borrower
shall promptly deposit and direct its account debtors to directly
remit, on a daily basis, all payments and receipts in the identical
form in which such payments and receipts are made or received, whether
by cash, check or other manner. Borrower shall deliver, or cause to be
delivered to Lender, a Deposit Account Control Agreement duly
authorized, executed and delivered by such bank where the Blocked
Account is maintained and Borrower shall execute and deliver such
other agreements or documents as Lender may require in connection
therewith. In addition, Borrower shall take the necessary steps to
allow Lender "read only" online access to the Blocked Account so that
Lender may electronically monitor the Blocked Account at any time and
from time to time in its discretion.
(b) Borrower and its employees and agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Collateral
which come into their possession or under their control and
immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Account, or remit the same or cause the
same to be remitted, in kind, to Lender. In no event shall the same be
commingled with Borrower's own funds. Borrower agrees to reimburse
Lender on demand for any amounts owed or paid to any bank or other
financial institution at which a Blocked Account or any other deposit
account or investment account is established or any other bank,
financial institution or other person involved in the transfer of
funds to or from the Blocked Account arising out of Lender's payments
to or indemnification of such bank, financial institution or other
person. The obligation of Borrower to reimburse Lender for such
amounts pursuant to this Section shall survive the termination or
non-renewal of this Agreement.
(c) All amounts deposited in the Blocked Account shall be swept daily and
remitted as follows: (i) from and after the occurrence of an Event of
Default, 100% of such receipts shall be remitted to the Lender to be
applied in reduction of the Obligations in a manner determined by the
Lender in its sole and exclusive discretion, or, if no Event of
Default has occurred and is continuing, then as follows (x) prior to
July 1, 2008, 100% of such receipts shall be remitted to the
Borrower's Operating Account, and (y) from and after July 1, 2008, the
receipts shall be distributed as set forth in Section 2.3.3(c) below.
2.3.2 Prepayment. The Borrower may prepay all or any portion of the principal
balance of the Revolving Advances from time to time without penalty or
premium, provided, however, that in all events and circumstances the Lender
shall be entitled to a minimum interest payment under the Revolving Credit
Facility equal to the amount of the Prepaid Interest Advance, and therefore
shall retain the funds paid to the Lender pursuant to the Prepaid Interest
Advance even if the Borrower repays all of the outstanding Obligations
under the Revolving Credit Facility on or before the 90th day after the
Funding Date.
2.3.3 Repayment of Obligations. The Borrower shall repay the Obligations as
follows:
(a) The Borrower, without notice or demand from the Lender, shall pay the
Lender that amount, from time to time, which is necessary so that the
aggregate outstanding principal balance of the Revolving Advances does
not exceed Availability.
(b) Accrued interest shall be paid as set forth in Section 2.2, above.
(c) From and after July 1, 2008, on a daily basis an amount equal to
1/30th of the Borrower's estimated EBITDA (as set forth in the Cash
Flow Projections) for the then current month (the "Estimated EBITDA
Payments") shall be deducted from the Borrower's receipts deposited
into the Blocked Account and remitted to the Lender to be applied in
reduction of the Obligations, with the balance of such receipts being
remitted to the Borrower's Operating Account. On the fifth day of each
month, the Borrower shall provide the Lender with a "true up"
calculation of the Borrower's actual EBITDA for the prior month versus
the Estimated EBITDA Payments made during the prior month pursuant to
the foregoing sentence. If the "true up" calculation indicates that
the aggregate Estimated EBITDA Payments made by the Borrower were less
than 30% of its actual EBITDA for the prior month, then the Borrower
shall promptly pay the difference to the Lender. If the "true up"
calculation indicates that the aggregate Estimated EBITDA Payments
made by the Borrower were more than 30% of its actual EBITDA for the
prior month to the Lender, and the aggregate of such Estimated EBITDA
Payments exceed the minimum $100,000.00 monthly payment set forth in
Section 2.3.3(d) hereof, then the Estimated EBITDA Payments to be made
for the then current month shall be reduced by an appropriate amount
until such excess payment is returned to the Borrower. Unless an Event
of Default has occurred, such amounts shall be applied first in
reduction of the principal balance of the Obligations, and then in
reduction accrued interest, fees, and expenses. From and after the
occurrence of a Default or an Event of Default, at the Lender's
option, 100% of such receipts shall be applied in reduction of the
Obligations in a manner determined by the Lender in its sole and
exclusive discretion. Any payments received by the Lender hereunder
will not be deemed applied in reduction of the Obligations unless and
until such payments have been received in good and collected funds. In
the event that at any time or from time to time there are no
Obligations outstanding, 100% of such receipts shall be remitted to
the Borrower's Operating Account.
(d) Commencing on July 1, 2008, and continuing on the first day of each
month thereafter, the Borrower shall make monthly principal payments
to the Lender in an amount (if a positive number) equal to the
difference between (i) $100,000, and (ii) the amounts paid to the
Lender pursuant to Section 2.3.3(c) hereof.
(e) The Borrower shall repay all Obligations on the Termination Date.
2.3.4 Manner of Payment. Except as otherwise expressly set forth herein, all
payments required to be made by the Borrower hereunder on account of
principal, interest, or fees shall be made by wire transfer, in Dollars, in
immediately available funds as set forth herein. Whenever any payment
hereunder, or under any of the Financing Agreements, becomes due on a day
on which the Lender is closed (as required or permitted by law or
otherwise), such payment shall be made not later than the next succeeding
Business Day, and such extension of time shall be included in the
computation of interest. The Borrower authorizes (but shall not require)
the Lender to debit any account maintained by the Borrower on any date on
which a payment is due to the Lender hereunder or under any of the
Financing Agreements, in an amount equal to any unpaid portion of such
payment.
2.4 Security and Guaranties.
2.4.1 Guaranties. As a condition precedent to the making of the Revolving Credit
Facility available to the Borrower hereunder, each Guarantor shall
guarantee the Obligations of the Borrower to the Lender pursuant to a
certain Global Guaranty Agreement of even date herewith executed by each
such Guarantor (the "Guaranty Agreement").
2.4.2 Security. To secure repayment of all amounts due under the Revolving
Credit Facility, and all of the other Obligations, the Borrower and each
Guarantor shall grant valid and perfected security interests to the Lender
in the Collateral pursuant to a certain Global Security Agreement of even
date herewith (the "Security Agreement") and pledge to the Lender all of
their shares, membership interests, and/or other ownership interests in all
of their respective subsidiaries and affiliates pursuant to a certain
Global Pledge Agreement of even date herewith (the "Pledge Agreement"), and
grant valid and perfected security interests to the Lender in the portion
of the Collateral consisting of Intellectual Property pursuant to a certain
Intellectual Property Security Agreement of even date herewith (the "IP
Security Agreement") and grant mortgages (the "Mortgages") to the Lender on
any real property owned by the Borrower and/or each Guarantor.
2.5 Fees.
2.5.1 Monitoring Fee. On the Funding Date, the Borrower shall pay the Lender a
monitoring fee of $175,000, which fee shall be fully earned as of the
Funding Date, and used to compensate the Lender for monitoring and managing
the Revolving Credit Facility.
2.5.2 Structuring and Due Diligence Fee. The Borrower shall pay the Lender a fee
in the amount of $35,000, to reimburse the Lender for the costs, fees and
expenses incurred by the Lender in conducting its due diligence and
structuring this transaction. Such fee shall be fully earned and paid to
the Lender on or before the Funding Date regardless of whether or not the
transactions contemplated hereby are consummated. The fee shall be paid by
a Revolving Advance under the Revolving Credit Facility on the Funding
Date. The Borrower acknowledges and agrees that this fee is in addition to,
and shall not be applied against, the legal fees and expenses incurred by
the Lender in connection with the negotiation and preparation of the
Financing Agreements.
2.5.3 Grant of Shares. GS CleanTech, the parent of the Borrower, shall grant
6,000,000 shares of the common stock of GS CleanTech (the "Shares") to the
Lender on or before the Closing Date as additional consideration for the
Lender to make the Revolving Credit Facility available to the Borrower,
which shares shall be validly issued, fully paid and nonassessable.
2.5.4 Unused Line Fee. An Unused Line Fee shall be payable on the last day of
each month, at the rate of one-half of one percent (0.50%) per annum, on
the average daily Availability during such month.
2.5.5 Override. The Lender shall receive an override fee of $0.10 per gallon of
corn oil extracted by Borrower from the COES Installations, which fee shall
be payable monthly, on the first day of each month, until the later of (i)
the Termination Date, or (ii) the date upon which the Lender has received
such fee on a total of twenty million (20,000,000) gallons of corn oil.
2.6 Extension of Maturity Date; Termination. The Maturity Date of the Revolving
Credit Facility may be extended for twelve (12) months at the discretion of
the Lender, provided that (i) no Default or Event of Default has occurred
and is continuing, and (ii) the Borrower provides the Lender with at least
thirty (30) days prior written notice of its request to extend the Maturity
Date. This Agreement may be terminated by the Borrower at any time upon
thirty (30) days prior written notice to the Lender, provided that no
termination of this Agreement shall relieve, release, or discharge the
Borrower or Guarantors of their respective duties, obligations, and
covenants under this Agreement and the other Financing Agreements, or to
terminate any Liens or security interests granted to the Lender, or to
otherwise release any Collateral, unless and until all Obligations have
been fully and finally discharged and paid (in good and collected funds).
Notwithstanding the foregoing, all representations, warranties, covenants,
indemnifications, and agreements which by their express terms survive the
termination of this Agreement and/or the Financing Agreements shall not be
affected by such termination and shall remain in full force and effect.
SECTION 3. CONDITIONS PRECEDENT
3.1 Conditions to Closing. The obligation of the Lender to execute and deliver
this Agreement is subject to the conditions precedent that:
3.1.1 Evidence of Corporate Action; Certificate and Agreement. The Lender shall
have received (i) copies of all action taken by the Borrower and each
Guarantor to authorize the execution, delivery and performance of this
Agreement and the other Financing Agreements; (ii) a copy of the Borrower's
and each Guarantor's respective Articles of Incorporation (or similar
charter documentation), as amended to date; (iii) a copy of the By-Laws (or
similar documentation) of the Borrower and each Guarantor, as amended to
date, and (iv) an incumbency certificate from the Borrower and each
Guarantor. All of the documents listed in subsections (i) through (iv)
shall be in a form and substance acceptable to the Lender and certified by
the Secretary of the Borrower and each Guarantor in a certificate dated as
of even date herewith.
3.1.2 Delivery of Definitive Documentation. This Agreement and the other
Financing Agreements shall have been duly executed and delivered to the
Lender in a form and substance satisfactory to the Lender and its counsel.
3.1.3 Completion of Due Diligence. Satisfactory completion by the Lender of its
due diligence.
3.1.4 Legal Opinions. Legal opinions of counsel to the Borrower reasonably
satisfactory in form and substance to the Lender, including, without
limitation, with respect to the enforceability and perfection of the Liens
granted in the Collateral.
3.1.5 Solvency Certificate. The Lender shall have received a certificate from
the chief financial officer of the Borrower certifying that the Borrower,
after giving effect to the transactions contemplated hereby, is Solvent.
3.1.6 COES License. The COES License Agreement shall be in full force and
effect, in a form and of a substance acceptable to the Lender, and a fully
executed copy of the same delivered to the Lender.
3.1.7 Build Out Draw Schedule; Cash Flow Projections. The Borrower shall have
provided the Lender with the Build Out Draw Schedule and Cash Flow
Projections, both in a form and of a substance acceptable to the Lender.
3.1.8 Litigation; Investigations. Except as set forth on Schedule 4.13 hereto,
there shall not be any action, suit, investigation or proceeding pending
or, to the knowledge of the Borrower threatened in any court or before any
arbitrator or Governmental Authority that could reasonably be expected to
have a material adverse effect.
3.1.9 Consents and Approvals. All necessary consents and approvals to the
Financing Agreements shall have been obtained.
3.1.10 Material Adverse Change. No material adverse change in the condition
(financial or otherwise), operations, assets, income and/or prospects of
the Borrower or Guarantors other than what has already been disclosed to
Lender in writing shall have occurred since the date of the financial
statements delivered to the Lender pursuant to Section 4.10 hereof.
3.1.11 Fees; Costs; Expenses. All fees, costs, and expenses (including, without
limitation, legal fees and expenses) to be paid or delivered at or prior to
the closing shall have been paid or delivered (as applicable) to the
Lender, including, without limitation, the fees set forth in Sections 2.5.1
and 2.5.2 hereof and the legal fees and expenses of the Lender's counsel.
3.1.12 Delivery of the Shares. The Shares shall have been delivered to the
Lender.
3.1.13 COES Contracts. The equipment rental and license agreement for the Utica
System, and all other existing contracts held by any Guarantor for the
installation and/or use of COES Installations shall have been assigned to,
or otherwise transferred to, the Borrower pursuant to such assignments and
other transfer documents as are acceptable to the Lender in all respects.
3.2 Conditions to the Funding Date Advances. In addition to the conditions set
forth in Section 3.1 hereof, it shall be a condition precedent to the
Lender making the Funding Date Advances that:
3.2.1 Perfection of Security Interests and Liens. The Lender shall have received
evidence, in a form and substance satisfactory to the Lender, that the
Lender has valid, perfected first priority (except as otherwise expressly
set forth herein) Liens in all of the Collateral.
3.2.2 Third Party Consents. The Lender shall have received, in form and
substance acceptable to the Lender, all consents, waivers, acknowledgments,
Collateral Access Agreements, and other agreements from third persons which
Lender may deem necessary or desirable in order to permit, protect, and
perfect its security interests in, and liens upon, the Collateral, or to
effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, including, without limitation, Collateral Access
Agreements for the Utica System.
3.2.3 Lock Box; Deposit Account Control Agreements. The lockbox required by
Section 2.3.1 hereof shall have been established in a form and of a
substance acceptable to the Lender, and the Lender shall have received, in
form and substance acceptable to the Lender, Deposit Account Control
Agreements by and among the Borrower, the Lender, and each bank where
Borrower has a deposit account, in each case, duly authorized, executed and
delivered by such bank and Borrower (or Lender shall be the bank's customer
with respect to such deposit account, as Lender may specify).
3.2.4 Insurance. The Lender shall have received correct and complete copies of
all insurance policies of the Borrower in compliance with Section 5.2
hereof and the certificates required thereby.
3.2.5 Release of Kerns Judgment. The Kerns Judgment shall have been released,
discharged, satisfied, settled, or otherwise resolved in a manner
acceptable to the Lender.
3.2.6 Patriot Act Information. The Lender shall have received, at least five
business days prior to the Funding Date, all documentation and other
information required by regulatory authorities under applicable "know your
customer" and anti-money laundering rules and regulations, including
without limitation the PATRIOT Act, and the making of the Funding Date
Advances shall be subject to satisfactory verification of such
documentation and information.
3.3 Conditions to all Revolving Advances. In addition to the conditions set
forth in Sections 3.1 and 3.2 hereof, it shall be a condition precedent to
the Lender making any Revolving Advance that:
3.3.1 Lender shall have received the required written borrowing request and
Compliance Certificate in accordance with the provisions of Section 2.1.1,
and such borrowing request shall otherwise comply with the provisions of
Section 2.1.1.
3.3.2 All representations and warranties contained in the Financing Agreements
shall be true and correct in all material respects on and as of the date of
each borrowing request with the same effect as if made on and as of such
date, other than representations and warranties that relate solely to an
earlier date.
3.3.3 On the date of each borrowing and after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing.
3.3.4 The Lender shall have received Collateral Access Agreements in a form and
of a substance acceptable to the Lender for any COES Installation to be
funded from the proceeds of such Revolving Advance.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender as follows:
4.1 Organization. The Borrower and each Guarantor is a duly organized and
validly existing corporation or limited liability company in good standing
under the laws of its jurisdiction of formation with perpetual existence,
and has all requisite right, power and authority and all necessary licenses
and permits to own and operate its assets and properties and to carry on
all business activities now conducted and as presently proposed to be
conducted. The Borrower and each Guarantor has qualified and is in good
standing as a foreign corporation or limited liability company, as the case
may be, in each state or other jurisdiction where the nature of its
business or the ownership or use of its property requires such
qualification, except such jurisdictions, if any, in which the failure to
be so qualified will not have a material and adverse effect on either the
conduct of its business or the ownership of its properties.
4.2 Authorization. The Borrower and each Guarantor have all requisite legal
right, power and authority to execute, deliver and perform the terms and
provisions of this Agreement, the other Financing Agreements executed by
it, and all other instruments and documents delivered by it pursuant hereto
and thereto. The Borrower and each Guarantor have taken or caused to be
taken all necessary action to authorize the execution, delivery and
performance of this Agreement, the other Financing Agreements executed by
it and any other related agreements, instruments or documents delivered or
to be delivered by the Borrower or any Guarantor, respectively, pursuant
hereto and thereto. This Agreement, the other Financing Agreements executed
by the Borrower and each Guarantor and all related agreements, instruments
or documents delivered or to be delivered pursuant hereto or thereto
constitute and will constitute legal, valid and binding obligations of the
Borrower and each Guarantor, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally, and to the exercise of judicial discretion in accordance
with general principles of equity.
4.3 No Conflicts. Neither the execution and delivery of this Agreement, the
other Financing Agreements, or any of the instruments and documents
delivered or to be delivered pursuant hereto or thereto, by the Borrower or
any Guarantor, nor the consummation of the transactions herein or therein
contemplated, nor compliance with the provisions hereof or thereof, will
violate any law, statute or regulation, or any order, writ or decree of any
court or governmental instrumentality, or will conflict with, or result in
the breach of, or constitute a default in any respect under, any indenture,
mortgage, deed of trust, agreement or other instrument to which the
Borrower is a party, or by which it or any of its properties may be bound
or affected, or will result in the creation or imposition of any lien,
charge or encumbrance upon any of their respective properties (except as
contemplated hereunder or under the other Financing Agreements) or will
violate any provision of the Articles of Incorporation or By-Laws of the
Borrower and any Guarantor, in each case, as amended to date.
4.4 Compliance and Other Agreements. Except as set forth on Schedule 4.4.
hereto:
4.4.1 Neither the Borrower nor any Guarantor is in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which it is a
party, or by which it or any of its properties may be bound or affected,
except for such defaults which, individually or in the aggregate, will not
have a material and adverse effect on the business, operations, property or
assets or on the condition, financial or otherwise, of the Borrower or such
Guarantor.
4.4.2 Neither the Borrower nor any Guarantor is in default with respect to any
order, writ, injunction or decree of any court or of any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or authority, domestic or foreign, or in violation of any law,
statute or regulation, domestic or foreign, to which it is, or any of its
properties are, subject, except for such defaults or violations which, in
the aggregate, will not have a material and adverse effect on the business,
operations, property or assets or on the condition, financial or otherwise,
of the Borrower or such Guarantor.
4.4.3 Neither the Borrower nor any Guarantor is a party to or bound by, nor is
any of its properties bound or affected by, any agreement, deed, lease or
other instrument, or subject to any charter or other corporate restriction
or any judgment, order, writ, injunction, decree or award, or any law,
statute, rule or regulation, any of which materially and adversely affects
or in the future may (so far as the Borrower may now foresee) materially
and adversely affect the business, operations, prospects, properties or
assets, or the condition, financial or otherwise, of the Borrower or such
Guarantor.
4.4.4 Except for restrictions contained in this Agreement or any other agreement
with respect to Indebtedness of Borrower permitted hereunder as in effect
on the date hereof, there are no contractual or consensual restrictions on
Borrower or any of the Guarantors which prohibit or otherwise restrict the
transfer of cash or other assets (1) between Borrower and any of the
Guarantors or (2) between any Guarantor.
4.5 ERISA. The Borrower is in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan; no
notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstances exist which constitute grounds under Section
4042 of ERISA entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administrate, a Plan, nor has the PBGC instituted any
such proceedings; neither the Borrower nor any ERISA Affiliate thereof has
completely or partially withdrawn from a Multiemployer Plan; the Borrower
and each ERISA Affiliate have met their minimum funding requirements under
ERISA with respect to all of their Plans and the present fair market value
of all Plan assets exceeds the present value of all vested benefits under
each Plan, as determined on the most recent valuation date of the Plan and
in accordance with the provisions of ERISA and the regulations thereunder
for calculating the potential liability of the Borrower or any ERISA
Affiliate to PBGC or the Plan under Title IV of ERISA; and neither the
Borrower nor any ERISA Affiliate has incurred any liability to the PBGC
under ERISA.
4.6 Approvals and Consents. All authorizations, consents, registrations,
exemptions, approvals and licenses (governmental or otherwise) or the
taking of any other action (including, without limitation, by the
shareholders of the Borrower and each Guarantor) which are required as a
condition to the validity or enforceability of this Agreement, the other
Financing Agreements or any of the instruments or documents delivered or to
be delivered pursuant hereto or thereto, have been effected or obtained and
are in full force and effect.
4.7 Investment Company. The Borrower is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
4.8 Regulation U; Securities Exchange Act of 1934. The Borrower is not engaged
principally, or as one of its more important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation U or G of the Board of Governors (the
"Board") of the Federal Reserve System). None of the proceeds of the
Revolving Credit Facility will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for any other purpose
that might constitute this transaction a "purpose credit" within the
meaning of such Regulation U. The Borrower will not take, nor permit any
agent acting on its or his behalf to take, any action which might cause
this Agreement or any of the Financing Agreements to violate any regulation
of the Board or to violate the Securities Exchange Act of 1934 (the
"Exchange Act") in each case as in effect on the date hereof or as amended
hereafter.
4.9 Use of Funds. The proceeds of the Revolving Credit Facility shall be used
by the Borrower solely (i) to design, build and operate COES Installations,
(ii) to pay the fees, costs, and expenses incurred or due in connection
with the Revolving Credit Facility, (iii) to pay the Prepaid Interest
Advance, and (iv) for other purposes expressly permitted herein.
4.10 Financial Statements. The Borrower has heretofore delivered to the Lender
the financial statements of the Borrower for the fiscal year ended December
31, 2006 and the internal financial statements for the nine-month period
ended September 30, 2007 (consisting in each case of balance sheets and
related statements of income, retained earnings, shareholders' equity and
cash flows for the fiscal year or period then ended, including the related
schedules annexed thereto). Such financial statements were prepared in
accordance with GAAP and present fairly the financial position and results
of operations of the Borrower as of the dates of and for the periods
involved. There are no liabilities, direct or indirect, fixed or
contingent, of the Borrower as of the date of such financial statements
that were not reflected therein or in the notes thereto in accordance with
GAAP. There has been no material adverse change since September 30, 2007 in
the business, operations, property, or assets of the Borrower.
4.11 Taxes. The Borrower has filed or caused to be filed all tax returns
required to be filed by it. The Borrower has paid all taxes (including
interest and penalties) as shown on such returns or any assessment or
notice of tax claim or deficiency received by it or him to the extent that
such taxes have become due except as otherwise disclosed on Schedule 4.11.
The Borrower has no knowledge of any proposed material tax assessment
against or affecting it and is not otherwise obligated by any agreement,
instrument or otherwise to contribute to the payment of taxes owed by it or
him, or any other Person, except as is otherwise disclosed on Schedule
4.11. All material tax liabilities are adequately provided for or reserved
against on the books of the Borrower in accordance with GAAP.
4.12 Title to Properties/Priority of Liens.
4.12.1 The Borrower and each Guarantor have good and marketable title to, or
valid leasehold interests in, all of the properties and assets reflected on
the most recent of the financial statements delivered to the Lender
pursuant to Section 4.10 or acquired by it after the date of such financial
statement and prior to the date hereof, except for those properties and
assets which have been disposed of since such date in the ordinary course
of business. All such properties and assets are owned or leased by the
Borrower or any Guarantor, free and clear of all mortgages, pledges, liens,
security interests, encumbrances or charges of any kind, except (i) such as
are disclosed on Schedule 4.12 hereto, (ii) such as are in favor of the
Lender, and (iii) such as are permitted under the provisions of Section 6.2
hereof.
4.12.2 The liens and security interests granted to the Lender by the Borrower
and each Guarantor under the Security Agreement, the Pledge Agreement, the
IP Security Agreement, and the Mortgages, respectively, constitute valid
and perfected liens and security interests in the collateral secured
thereby and, except as disclosed on Schedule 4.12 hereto, such liens and
security interests shall be prior to all other liens and security interests
in such collateral.
4.13 Litigation. Except as set forth on Schedule 4.13 hereto, there are no
actions, suits, investigations or administrative proceedings of or before
any court, arbitrator or Governmental Authority pending or threatened
against the Borrower, each Guarantor or any of their respective properties
or assets which (i) either in any case or in the aggregate, if adversely
determined, would materially and adversely affect the business, operations,
prospects, properties or assets or the condition, financial or otherwise,
of the Borrower, or (ii) question the validity or enforceability of this
Agreement, the Financing Agreements, or any action to be taken in
connection with the transactions contemplated hereby or thereby.
4.14 Insurance. All physical properties and assets of the Borrower are insured
in accordance with the requirements of Section 5.2.2 hereof.
4.15 Brokers. No broker or finder acting on behalf of the Borrower has brought
about the consummation of the transactions contemplated hereby. The
Borrower has not taken, and will not take, any action which would cause the
Lender to have any obligation or liability to any Person for finders fees,
brokerage fees, agents' commissions or like payments in connection with the
execution and delivery of this Agreement, or the consummation of the
transactions contemplated hereby.
4.16 Disclosure. No certificate, statement, report or other document furnished
to the Lender by or on behalf of the Borrower in connection herewith or in
connection with any transaction contemplated hereby, or this Agreement, or
any Financing Agreement, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the
statements contained therein not misleading.
4.17 Bank Accounts. All of the deposit accounts, investment accounts or other
accounts in the name of or used by Borrower maintained at any bank or other
financial institution are set forth on Schedule 4.17 hereto.
4.18 Subsidiaries; Affiliates; Solvency.
4.18.1 Borrower does not have any direct or indirect Subsidiaries or Affiliates
and is not engaged in any joint venture or partnership except as set forth
in Schedule 4.18 hereto.
4.18.2 Borrower is Solvent and will continue to be Solvent after the creation of
the Revolving Credit Facility, the security interests of Lender and the
other transaction contemplated hereunder.
4.19 Environmental Compliance.
4.19.1 Except as set forth on Schedule 4.19 hereto, Borrower has not generated,
used, stored, treated, transported, manufactured, handled, produced or
disposed of any Hazardous Materials, on or off its premises (whether or not
owned by it) in any manner which at any time violates in any material
respect any applicable Environmental Law or permit, and the operations of
Borrower complies in all material respects with all Environmental Laws and
all permits.
4.19.2 Except as set forth on Schedule 4.19 hereto, there has been no
investigation by any Governmental Authority or any proceeding, complaint,
order, directive, claim, citation or notice by any Governmental Authority
or any other person nor is any pending or to the best of Borrower's
knowledge threatened, with respect to any non compliance with or violation
of the requirements of any Environmental Law by Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other
environmental, health or safety matter, which adversely affects or could
reasonably be expected to adversely affect in any material respect Borrower
or its business, operations or assets or any properties at which Borrower
has transported, stored or disposed of any Hazardous Materials.
4.19.3 Except as set forth on Schedule 4.19 hereto, Borrower has no material
liability (contingent or otherwise) in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
4.19.4 Borrower has all permits required to be obtained or filed in connection
with the operations of Borrower under any Environmental Law and all of such
licenses, certificates, approvals or similar authorizations and other
permits are valid and in full force and effect.
4.20 Intellectual Property; License Agreement. Borrower owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be
conducted. As of the date hereof, Borrower does not have any Intellectual
Property registered, or subject to pending applications, in the United
States Patent and Trademark Office or any similar office or agency in the
United States, any State thereof, any political subdivision thereof or in
any other country, other than those described in Schedule 4.20 hereto and
has not granted any licenses with respect thereto other than as set forth
in Schedule 4.20. No event has occurred which permits or would permit after
notice or passage of time or both, the revocation, suspension or
termination of such rights. To the best of Borrower's knowledge, no slogan
or other advertising device, product, process, method, substance or other
Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by Borrower infringes any
patent, trademark, servicemark, tradename, copyright, license or other
Intellectual Property owned by any other Person presently and no claim or
litigation is pending or threatened against or affecting Borrower
contesting its right to sell or use any such Intellectual Property.
Schedule 4.20 hereto sets forth all of the agreements or other arrangements
of Borrower pursuant to which Borrower has a license or other right to use
any trademarks, logos, designs, representations or other Intellectual
Property owned by another person as in effect on the date hereof and the
dates of the expiration of such agreements or other arrangements of
Borrower as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by Borrower after
the date hereof, collectively, the "License Agreements" and individually, a
"License Agreement"). No trademark, servicemark, copyright or other
Intellectual Property at any time used by Borrower which is owned by
another person, or owned by Borrower subject to any security interest,
lien, collateral assignment, pledge or other encumbrance in favor of any
person other than Lender. Without limiting the foregoing, Borrower is party
to that certain License Agreement dated December ___, 2007 (the "COES
License Agreement") executed by and between Borrower's parent company, GS
Ethanol, and pursuant thereto holds the intellectual property rights to
build and operate the COES Installations based on the Technology (as such
term is defined in the COES License Agreement), as well as that certain
COES Installation located at Utica Energy, LLC, 4995 State Road 91,
Oshkosh, WI 54904 (the "Utica System"). The COES License Agreement remains
in full force and effect, and neither the Borrower or GS Ethanol is in
default or breach of any of the terms thereof.
4.21 No Event of Default. After giving effect to the transactions contemplated
by this Agreement, the other Financing Agreements and the other instruments or
documents delivered in connection herewith and therewith, there does not exist
at the date hereof any Default or Event of Default.
4.22 Names. Neither the Borrower nor any Guarantor has been known by any other
corporate or fictitious name.
SECTION 5. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, until all of the Obligations are
paid and satisfied in full, it shall comply, or cause compliance with, the
following covenants:
5.1 Preservation of Existence. The Borrower and each Guarantor will each
preserve and maintain its existence, rights, franchises and privileges in
the jurisdiction of its formation and will qualify and remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or in view of
the ownership of its properties.
5.2 Maintenance of Properties; Insurance.
5.2.1 The Borrower and each Guarantor will each maintain in good repair, working
order and condition all properties used or useful in its business (ordinary
wear and tear excepted) and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements, additions and
improvements thereto to the extent necessary for the operation of their
respective businesses.
5.2.2 The Borrower and each Guarantor shall be a beneficiary of insurance, with
financially sound and reputable insurers reasonably acceptable to the
Lender, with respect to its properties and business, against loss or damage
of the kinds and in the amounts customarily insured against by businesses
of established reputation engaged in the same or a similar business and
similarly situated.
5.2.3 The Borrower shall provide the Lender with evidence satisfactory to the
Lender that each policy provided for in this Section 5.2 is in full force
and effect and that the Lender is named as loss payee, mortgagee, and
additional insured on such policies, and each such policy shall include a
non-contributory lender's loss payable endorsement and provide that the
Lender shall receive not less than thirty (30) days' notice of
cancellation.
5.3 Payment of Taxes. The Borrower and each Guarantor will each pay and
discharge promptly all taxes (including, without limitation, all payroll
withholdings), assessments and governmental charges or levies imposed upon
it or upon its income or profits or upon any of its property, real,
personal or mixed, or upon any part thereof, before the same shall become
in default; provided, however, that the Borrower and each Guarantor shall
not be required to pay any such tax, assessment, charge, levy or claim if
the validity or amount thereof shall be contested in good faith by proper
proceedings, and if the Borrower or any Guarantor it shall have set aside
on its books appropriate reserves.
5.4 Field Audit and Examinations.
5.4.1 Without limiting the rights of the Lender under any other Financing
Agreement, the Lender, or any Person designated by the Lender, shall have
the right, from time to time to call at the place or places of business of
the Borrower or any Guarantor (or any other place where the Collateral or
any information relating thereto is kept or located) during reasonable
business hours, and without hindrance or delay, and in the absence of a
Default or an Event of Default, upon one (1) Business Days notice, (i) to
inspect, audit, check and make copies of and extracts from the books,
records, journals, correspondence and other data relating to the business
of the Borrower and any Guarantor, (ii) to verify such matters concerning
the Collateral as the Lender (in its sole and absolute discretion) may
consider appropriate, and (iii) to discuss the affairs, finances and
business of the Borrower or any Guarantor and with their officers,
directors and accountants. Upon request, the Borrower will provide the
Lender with copies of such documents as the Lender may reasonably request.
The Borrower shall pay on demand all reasonable out-of-pocket expenses
incurred by the Lender in connection with such field audits. In addition to
the foregoing, the Borrower and NextGen Fuel shall provide the Lender with
electronic access to view their bank accounts, if such access is available.
5.5 Accounting; Financial Statements and Other Information. The Borrower will
maintain a system of accounting established and administered in accordance
with GAAP and will set aside on its books all such proper reserves for each
fiscal year for depreciation, obsolescence, amortization, bad debts and
other purposes as shall be required by GAAP. The Borrower will deliver, or
cause to be delivered, to the Lender:
5.5.1 As soon as practicable after the end of each fiscal year of the Borrower,
and in any event within ninety (90) days thereafter, a balance sheet of the
Borrower as at the end of such year and the related statements of income,
retained earnings, shareholders' equity and changes in financial position
of the Borrower for such year, all in reasonable detail and satisfactory in
scope to the Lender, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, which statements shall
be prepared in accordance with GAAP (subject to minor reclassifications)
and prepared by management and with in one hundred and eighty days (180),
Financial Statements in accordance with GAAP audited by an independent
certified public accounting firm of recognized standing selected by the
Borrower and acceptable to the Lender, and shall fairly present the
financial position and operations of the Borrower as of the end of such
year;
5.5.2 As soon as practicable, but in no event later than thirty (30) days prior
to end of each fiscal year, projected financial statements, business plan,
and cash flow forecasts for the next fiscal year, together with such
supporting information as the Lender may reasonably request.
5.5.3 As soon as practicable following the end of the each fiscal quarter of the
Borrower, but in any event not later than sixty (60) days thereafter, an
unaudited balance sheet of the Borrower as of the end of such quarter and
the related combined statements of income, retained earnings and
shareholders' equity of the Borrower for such quarter, all in reasonable
detail and satisfactory in scope to the Lender, setting forth for each such
period in comparative form the corresponding figures for the appropriate
period of the preceding fiscal year, which statements shall be prepared in
accordance with GAAP and, subject to normal year-end adjustments, shall
present fairly the financial position and operations of the Borrower as at
the end of the period involved;
5.5.4 Promptly upon receipt thereof, copies of any reports (including, without
limitation, any management letters) submitted to the Borrower by any
independent certified public accountant in connection with the examination
of the annual or interim financial statements of the Borrower by such
accountant;
5.5.5 Promptly upon the issuance thereof, copies of all reports, if any, sent by
the Borrower to the Securities and Exchange Commission or any other
governmental agency or any securities exchange;
5.5.6 On a monthly basis, a written update on the status of the registration of
equity securities by each of GreenShift, GS AgriFuels and GS CleanTech
pursuant to certain existing agreements with the Lender;
5.5.7 Concurrently with the delivery of the financial statements required to be
furnished by Sections 5.5.1 and 5.5.2 hereof, a certificate signed by the
chief executive officer of the Borrower stating (a) that a review of the
activities of each during such period has been made under his immediate
supervision with a view to determining whether such entity has observed,
performed and fulfilled all of its obligations under this Agreement, and
(b) that to his knowledge there existed during such period no Default or
Event of Default or if any such Default or Event of Default did exist,
specifying the nature thereof, the period of existence thereof and what
action such entity proposes to take, or has taken, with respect thereto;
5.5.8 Promptly upon learning of the occurrence of any Default or Event of
Default, a certificate signed by the chief executive officer of the
Borrower specifying the nature thereof and the action the Borrower propose
to take or has taken with respect thereto;
5.5.9 Immediately upon becoming aware of any development or other information
which may materially and adversely affect the properties, business,
profits, condition of the Collateral or financial condition of the Borrower
or the ability of the Borrower to perform or comply with this Agreement or
to pay any of the Obligations, telephonic or telegraphic notice specifying
the nature of such development or information and such anticipated effect;
5.5.10 Concurrently with the receipt thereof, copies of all signed sale
contracts with respect to any new COES Installation, including the price,
payment terms and expected delivery date thereof;
5.5.11 On the fifth day of each month, or more frequently upon the request of
the Lender, the Borrower shall provide the Lender with (i) a comparison of
the actual status of the Borrower's installation of the COES Installations
(including costs and expenses to date broken out by installation) to the
projections set forth in the Build Out Draw Schedule, (ii) an updated Build
Out Draw Schedule, in a form and of a nature acceptable to the Lender in
all respects, (iii) a comparison of the Borrower's actual operations to the
Cash Flow Projections for the prior month, and (iv) an executed Compliance
Certificate;
5.5.12 On the Monday of each week, a report, in a form acceptable to Lender,
setting forth all receipts into, and all disbursements from, the Blocked
Account for the prior week; and
5.5.13 With reasonable promptness, such other data and information as from time
to time may be reasonably requested by the Lender with respect to the
Borrower.
5.6 Compliance. The Borrower will comply with the requirements of all
applicable laws, rules, regulations or orders of any Governmental
Authority, and all agreements to which it is a party, the noncompliance
with which laws, rules, regulations, orders and agreements would materially
adversely affect the business operations, prospects or assets, or the
condition, financial or otherwise, of the Borrower.
5.7 ERISA. The Borrower shall maintain compliance in all material respects with
the applicable provisions of ERISA. The Borrower will deliver to the
Lender, promptly after the filing or receiving thereof, copies of all
reports, including annual reports and notices, which the Borrower files
with or receives from the PBGC or the U.S. Department of Labor under ERISA;
and as soon as possible and in any event within thirty (30) days after the
Borrower knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the
PBGC, the Borrower has instituted or will institute proceedings under Title
IV of ERISA to terminate any Plan, the Borrower will deliver to the Lender
a certificate of the chief executive officer or chief financial officer of
the Borrower setting forth the details as to such Reportable Event or
Prohibited Transaction or Plan termination and the action the Borrower
proposes to take with respect thereto.
5.8 Ownership/Control. Borrower shall continue to own not less than 100% of the
equipment and other assets associated with the Utica System as well as all
other COES Installations, provided, however, that if the customer utilizing
the Utica System opts to exercise the purchase option contained in its
equipment rental and license agreement with the Borrower, and 100% of the
proceeds from such purchase are delivered to the Lender to be applied in
reduction of the Obligations in a manner determined by the Lender in its
sole and exclusive discretion, then such sale of the Utica System to such
customer shall not constitute an Event of Default hereunder.
5.9 Change in Business. Neither the Borrower nor any Guarantor will make any
material change in the character of its business as carried on at the date
hereof.
5.10 Notification to Lender. The Borrower shall promptly notify the Lender of
(a) any Event of Default, (b) any Default, (c) any litigation or
proceedings that are instituted or threatened (to the knowledge of the
Borrower) against the Borrower, any Guarantor or any of their respective
assets, (d) each and every default by the Borrower under any obligation for
borrowed money which would permit the holder of such obligation to
accelerate its maturity, including the names and addresses of the holders
of such obligation and the amount thereof, (e) any change in the
jurisdiction of formation or chief executive office of the Borrower or
location of any of the Collateral from that listed in any of the Financing
Agreements, in each case, describing the nature thereof and the action the
Borrower or any Guarantor, as the case may be, proposes to take with
respect thereto, and (f) Borrower shall give written notice to Lender
immediately upon Borrower's receipt of any notice of, or Borrower's
otherwise obtaining knowledge of, (i) the occurrence of any event involving
the release, spill or discharge, threatened or actual, of any Hazardous
Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by Borrower or
(B) the release, spill or discharge, threatened or actual, of any Hazardous
Material other than in the ordinary course of business and other than as
permitted under any applicable Environmental Law.
5.11 Environmental Compliance. Borrower shall take prompt action to respond to
any material non-compliance with any of the Environmental Laws and shall
regularly report to Lender on such response. Without limiting the
generality of the foregoing, whenever Lender reasonably determines that
there is non-compliance, or any condition which requires any action by or
on behalf of Borrower in order to avoid any non compliance, with any
Environmental Law, Borrower shall, at Lender's request and Borrower's
expense: (a) cause an independent environmental engineer reasonably
acceptable to Lender to conduct such tests of the site where Borrower's
non-compliance or alleged non compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Lender a
report as to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems described
therein, and an estimate of the costs thereof and (b) provide to Lender a
supplemental report of such engineer whenever the scope of such
non-compliance, or Borrower's response thereto or the estimated costs
thereof, shall change in any material respect. Borrower shall indemnify and
hold harmless Lender, its directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including
reasonable attorneys' fees and expenses) directly or indirectly arising out
of or attributable to the use, generation, manufacture, reproduction,
storage, release, threatened release, spill, discharge, disposal or
presence of a Hazardous Material, including the costs of any required or
necessary repair, cleanup or other remedial work with respect to any
property of Borrower and the preparation and implementation of any closure,
remedial or other required plans. All representations, warranties,
covenants and indemnifications in this Section shall survive the payment of
the Obligations and the termination of this Agreement.
5.12 Further Assurances. The Borrower will duly execute and deliver, or will
cause to be duly executed and delivered, such further instruments and
documents, including, without limitation, any additional security
agreements, Uniform Commercial Code financing statements or amendments or
continuations thereof, and will do or use its best efforts to cause to be
done such further acts as may be necessary or proper in the Lender's
opinion to effectuate the provisions or purposes of this Agreement and the
other Financing Agreements.
5.13 License Agreements.
5.13.1 Borrower shall (i) promptly and faithfully observe and perform all of the
material terms, covenants, conditions and provisions of the material
License Agreements to be observed and performed by it, at the times set
forth therein, if any, (ii) not do, permit, suffer or refrain from doing
anything that could reasonably be expected to result in a default under or
breach of any of the terms of any material License Agreement, (iii) not
cancel, surrender, modify, amend, waive or release any material License
Agreement in any material respect or any term, provision or right of the
licensee thereunder in any material respect, or consent to or permit to
occur any of the foregoing; except, that, subject to Section 5.13.2 below,
Borrower may cancel, surrender or release any material License Agreement in
the ordinary course of the business of Borrower; provided, that, Borrower
shall give Lender not less than thirty (30) days prior written notice of
its intention to so cancel, surrender and release any such material License
Agreement, (iv) give Lender prompt written notice of any material License
Agreement entered into by Borrower after the date hereof, together with a
true, correct and complete copy thereof and such other information with
respect thereto as Lender may request, (v) give Lender prompt written
notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Lender (promptly
upon the receipt thereof by Borrower in the case of a notice to Borrower,
and concurrently with the sending thereof in the case of a notice from
Borrower) a copy of each notice of default and every other notice and other
communication received or delivered by Borrower in connection with any
material License Agreement which relates to the right of Borrower to
continue to use the property subject to such License Agreement, and (vi)
furnish to Lender, promptly upon the request of Lender, such information
and evidence as Lender may require from time to time concerning the
observance, performance and compliance by Borrower or the other party or
parties thereto with the terms, covenants or provisions of any material
License Agreement.
5.13.2 Borrower will either exercise any option to renew or extend the term of
each material License Agreement in such manner as will cause the term of
such material License Agreement to be effectively renewed or extended for
the period provided by such option and give prompt written notice thereof
to Lender or give Lender prior written notice that Borrower does not intend
to renew or extend the term of any such material License Agreement or that
the term thereof shall otherwise be expiring, not less than sixty (60) days
prior to the date of any such non-renewal or expiration. In the event of
the failure of any Borrower to extend or renew any material License
Agreement, Lender shall have, and is hereby granted, the irrevocable right
and authority, at its option, to renew or extend the term of such material
License Agreement, whether in its own name and behalf, or in the name and
behalf of a designee or nominee of Lender or in the name and behalf of
Borrower, as Lender shall determine at any time that an Event of Default
shall exist or have occurred and be continuing. Lender may, but shall not
be required to, perform any or all of such obligations of any Borrower
under any of the License Agreements, including, but not limited to, the
payment of any or all sums due from Borrower thereunder. Any sums so paid
by Lender shall constitute part of the Obligations.
5.13.3 For the purposes of this Section 5.13, the COES License Agreement
constitutes a material License Agreement.
5.14 Build Out Draw Schedule. The Borrower shall install the COES Installations
in accordance with, and subject to, the Build Out Draw Schedule. In
addition, the Borrower shall have installed no less than four (4) COES
Installations (in addition to the Utica System) on or before June 30, 2008
and no less than three (3) additional COES Installations on or before
September 30, 2008.
5.15 Compliance with Projections.
5.15.1 EBITDA Projections. The actual results of the Borrower's operations shall
not negatively vary from the Borrower's Cash Flow Projections for the line
item labeled "EBITDA" by more than ten percent (10%) on both a monthly
basis (commencing with the month of July, 2008), and on a cumulative basis
from July 1, 2008 through the last day of the month just ended prior to the
testing date. This covenant shall be tested monthly, on the fifth day of
each month.
5.15.2 Capex Projections. The actual costs and expenses of purchasing,
assembling, and installing each COES Installation shall not exceed the
amounts set forth for the same in the Borrower's Cash Flow Projections and
Build Out Draw Schedule by more than ten percent (10%) on a monthly basis
and on a cumulative basis from January 1, 2008 through the last day of the
month just ended prior to the testing date. This covenant shall be tested
monthly, on the fifth day of each month.
5.16 Minimum Production. Each COES Installation shall produce no less than an
average of 1,250,000 gallons of corn oil each year.
SECTION 6. NEGATIVE COVENANTS
The Borrower covenants and agrees that, until all of the Obligations are
paid and satisfied in full, it shall comply, or cause compliance, with the
following covenants:
6.1 Investments and Guaranties. The Borrower shall not, directly or indirectly,
assume, guarantee, endorse or otherwise be or become directly or
contingently responsible or liable for the obligations of any Person
(including, but not limited to, an agreement to purchase any obligation,
stock, assets, goods or services or to supply or advance any funds, assets,
goods, or services other than in the ordinary course of business, or
otherwise to assure the creditors of any Person against loss) other than
(a) guarantees by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business and
(b) guarantees in favor of the Lender, or make any investments other than
(i) investments in cash or Cash Equivalents, provided, that, (1) no Loans
are then outstanding and (2) the terms and conditions of Section 2.3 hereof
shall have been satisfied with respect to the deposit account, investment
account or other account in which such cash or Cash Equivalents are held,
and (ii) the existing equity investments of Borrower as of the date hereof,
provided, that such equity investments have been pledged to the Lender
pursuant to the Pledge Agreement.
6.2 Limitation on Liens. Neither the Borrower nor any Guarantor will create,
assume or suffer to exist any lien, mortgage, pledge or other encumbrance
of any kind with respect to its real or personal property, whether now
owned or hereafter acquired, except for: (i) liens in favor of the Lender,
(ii) liens for taxes or assessments or other government charges or levies
not yet due and payable or if due and payable being actively contested in
good faith by appropriate proceedings and for which appropriate reserves
are maintained; (iii) liens imposed by law, such as mechanics',
materialmen's, and landlords' liens, securing obligations incurred in the
ordinary course of business which are not past due or which are being
actively contested in good faith by appropriate proceedings and for which
appropriate reserves have been established; (iv) liens under workmen's
compensation, unemployment insurance, social security or similar
legislation arising in the ordinary course of business and for which the
underlying obligations are not yet due; (v) liens, deposits, or pledges to
secure the performance of leases, statutory obligations, surety and appeal
bonds or other similar obligations arising in the ordinary course of
business; (vi) judgment and other similar liens arising in connection with
court proceedings, provided the execution or other enforcement of such
liens is effectively stayed, and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings and for
which appropriate reserves have been established; and (vii) liens existing
on the date hereof and listed on Schedule 4.12 hereto (and extension,
renewal and replacement liens upon the same property subject to such listed
lien, provided that the amount secured by each such lien constituting such
an extension, renewal or replacement lien shall not exceed the amount
secured by the lien theretofore existing).
6.3 Additional Obligations. Neither the Borrower nor any Guarantor shall not
create, incur, assume or permit to exist any Indebtedness, except (i) all
Indebtedness incurred under this Agreement and the Financing Agreements or
any other agreement with the Lender; (ii) trade payables and current
operating liabilities (other than for borrowed money), in each case
incurred in the ordinary course of business and not more than thirty (30)
days past due (or if past due the obligation with respect thereto is being
actively contested in good faith and by appropriate proceedings), (iii)
Indebtedness secured by liens referred to in Section 6.2 and (iv) all other
obligations which are subordinate in right of payment to the Obligations of
the Borrower hereunder, provided that the terms of such obligations and
their subordination are previously approved by the Lender in writing, and
provided that no such obligations shall be paid or prepaid other than in
accordance with such terms as have been previously approved in writing by
the Lender. Neither the Borrower nor any Guarantor shall substitute any
collateral with respect to any obligations to any creditor without the
prior written consent of the Lender, which may be withheld in its sole
discretion.
6.4 Mergers, Etc.. Neither the Borrower, nor any Guarantor shall dissolve or
otherwise sell or dispose of all or any substantial part of its assets or
consolidate with or merge into another entity or business or permit one or
more entities to consolidate with or merge into it, without the prior
consent of the Lender.
6.5 Accounting Changes. The Borrower shall not make any change in its
accounting treatment or financial reporting practices except as required by
GAAP, and then only upon giving the Lender prior notice thereof.
6.6 Negative Pledges, Etc.. The Borrower shall not enter into any agreement
(other than this Agreement or any other Financing Agreement) which (i)
prohibits the creation or assumption of any Lien superior to the Lender's
Lien upon any of the Collateral, including, without limitation, any
hereafter acquired property or (ii) specifically prohibits the amendment or
other modification of this Agreement or any other Financing Agreement.
6.7 Recapitalization. The Borrower shall not sell, issue or agree to sell or
issue any capital stock of any class, except with the express written
consent of the Lender, which consent may be given or withheld in the
Lender's sole and exclusive discretion.
6.8 Dividends and Redemptions. Except as may be expressly permitted by written
agreement between the Borrower and the Lender, Borrower shall not directly
or indirectly, declare or pay any dividends on account of any membership
interests of the Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any membership interest (or set
aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution
(by reduction of capital or otherwise) in respect of any such shares or
agree to do any of the foregoing.
6.9 Transactions with Affiliates. Borrower shall not, directly or indirectly,
(i) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, director, agent or other person
affiliated with Borrower, except (x) in the ordinary course of and pursuant
to the reasonable requirements of Borrower's business and upon fair and
reasonable terms no less favorable to the Borrower than Borrower would
obtain in a comparable arm's length transaction with an unaffiliated
person, and (y) the assignment of the License Agreement and contracts for
COES Installations contemplated in Sections 3.1.13, 3.3.4, and 4.20 hereof,
or (ii) make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any
officer, employee, shareholder, director or other Affiliate of Borrower
except (x) reasonable compensation to officers, employees and directors for
services rendered to Borrower in the ordinary course of business, (y) up to
$400,000 from the $4,000,000 Funding Date Advance may be used to pay a
portion of the Borrower's parent company's overhead attributable to the
Borrower's operations and to make working capital advances to Affiliates,
and (z) provided that no Event of Default has occurred, or will occur as a
result of such payment, and the Borrower has sufficient cash flow after
paying all of the Borrower's then current expenses including its debt
service to the Lender, the Borrower may during the term of this Agreement,
make payments from such excess cash flow in an aggregate amount of not more
than $400,000 to pay a reasonable portion of its parent company's overhead
attributed to the Borrower's operations and/or to make working capital
advances to its Affiliates. In no event shall any proceeds of the Revolving
Advances be used to make any of the payments described in Section
6.9(ii)(z) above.
SECTION 7. EVENTS OF DEFAULT/REMEDIES
7.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
7.1.1 Payment Default. If the Borrower shall fail to pay any installment of
principal or interest due hereunder, or any fee or charge due and payable
hereunder or under any other Financing Agreement, as and when the same
shall become due and payable; or
7.1.2 Covenants (No Cure Period). If Borrower fails in the performance or
observance of, or a breach shall occur under, the covenants contained in
Sections 5.2, 5.8, and Section VI hereof; or
7.1.3 Covenants (Cure Period). If Borrower fails in the performance or
observance of, or a breach shall occur under, any covenant, agreement or
provision contained herein other than as described in the other
sub-sections of this Section 7.1, and such failure shall continue for a
period of thirty (30) days after the earlier to occur of (i) the Borrower
obtaining knowledge of such default and (ii) notice to the Borrower setting
forth the default or defaults, provided that such thirty (30) day period
shall not apply in the case of: (A) any failure to observe or perform any
such covenant which is not capable of being cured at all or within such
thirty (30) period, or which has been the subject of a prior failure within
a six (6) month period, or (B) the intentional breach by the Borrower of
any such covenant;
7.1.4 Representations. If any representation or warranty made by or on behalf of
the Borrower or any Guarantor, whether contained in this Agreement, in any
of the other Financing Agreements, or in any other document or instrument
referred to herein or therein or delivered in connection with any of the
transactions contemplated herein or therein, shall prove to have been false
or incorrect in any material respect when made; or
7.1.5 Voluntary Insolvency Proceedings. If the Borrower or any Guarantor, 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, (vi) fail to controvert in a timely or appropriate
manner, or acquiesce in writing to, any petition filed against itself in an
involuntary case under such bankruptcy laws of the United States of
America, or any similar foreign law, or (vii) take any action for the
purpose of effecting any of the foregoing; or
7.1.6 Involuntary Insolvency Proceedings. A proceeding or case shall be
commenced, without the application or consent of the Borrower or any
Guarantor in any court of competent jurisdiction, seeking (i) liquidation,
reorganization, dissolution, winding-up or composition or adjustment of
debts of the Borrower or any Guarantor, (ii) the appointment of a trustee,
receiver, liquidator, custodian or the like of the Borrower or any
Guarantor, 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 the Borrower or any Guarantor, 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
7.1.7 Divestiture of Assets. If any order, judgment, or decree shall be entered
in any proceeding requiring the Borrower or any Guarantor 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
7.1.8 Judgments and Tax Liens. If one or more judgments, attachments, or tax
liens exceeding $100,000 in the aggregate are entered against the Borrower
and/or any Guarantor, or against the Borrower's or Guarantor'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
the Borrower or any Guarantor; or
7.1.9 Other Defaults. If the Borrower or any Guarantor shall (i) fail to pay any
indebtedness for borrowed money or any interest or premium thereon, or any
obligation which is the substantive equivalent thereof (including, without
limitation, obligations under conditional sales contracts, finance leases
and the like) when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure to pay is not cured
within any applicable grace or cure period contained in such agreement; or
(ii) fail to perform or observe any term, covenant or condition on its part
to be performed or observed under any agreement or instrument relating to
any such indebtedness, when required to be performed or observed, if the
effect of such failure to perform or observe is to accelerate, or to permit
the acceleration after the giving of notice or passage of time, or both, of
such indebtedness, or any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; or
7.1.10 Dissolution; Suspension of Business. If the Borrower or any Guarantor
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 the Borrower or any Guarantor (other than
those Guarantors which are listed on Schedule 7.1.10 hereto or for which
the Borrower obtains the prior written consent of the Lender) dissolves or
otherwise ceases to exist; or
7.1.11 ERISA. If any of the following events shall occur or exist with respect
to the Borrower or any ERISA Affiliate under ERISA: any Reportable Event
shall occur; complete or partial withdrawal from any Multiemployer Plan
shall take place; any Prohibited Transaction shall occur; a notice of
intent to terminate a Plan shall be filed, or a Plan shall be terminated;
or circumstances shall exist which constitute grounds entitling the PBGC to
institute proceedings to terminate a Plan, or the PBGC shall institute such
proceedings; and in each case above, such event or condition, together with
all other events or conditions, if any, is not cured within thirty (30)
days of notice thereof to Borrower or subjects the Borrower or any ERISA
Affiliate to any tax penalty, or other liability which in the aggregate may
exceed $10,000; or
7.1.12 Change in Condition. Any change in the condition or affairs (financial or
otherwise) of the Borrower or any Guarantor shall occur which, in the
Lender's reasonable opinion, increases the material risk with respect to
the Revolving Credit Facility or impairs any of the Lender's security
therefore; or
7.1.13 Revocation of Guaranty. Any Guarantor revokes or terminates, or purports
to revoke or terminate, or fails to perform any of the terms, covenants,
conditions or provisions of, any Guaranty, endorsement or other agreement
of such party in favor of Lender; or
7.1.14 Indictment. The indictment of the Borrower or any Guarantor by any
Governmental Authority the effect of which could be to restrain in any
material way the conduct by the Borrower or such Guarantor of its business
in the ordinary course; or
7.1.15 Lack of Enforceability; Invalidity. Any material provision hereof or of
any of the other Financing Agreements shall for any reason cease to be
valid, binding and enforceable with respect to any party hereto or thereto
(other than Lender) 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 Agreements 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
Agreements 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
7.1.16 Title To Montana Property. The Borrower's affiliate, Sustainable Systems
LLC, shall fail to have closed upon the purchase of the real and personal
property set forth in that certain Installment Sale and Purchase Agreement
dated September 30, 2005, as amended and in effect, and to have title to
all such real and personal property fully vested in Sustainable Systems
LLC, subject only to a Deed of Trust and security interest in favor of the
Lender and such other encumbrances as are specifically set forth in such
Deed of Trust, all on or before June 30, 2008; or
7.1.17 Cross Default. The occurrence of any event of default under the other
Financing Agreements, or under any other agreement between the Lender and
the Borrower, or any agreement between the Lender and any Guarantor,
including, without limitation, any default or event of default under the
Convertible Debentures and Security Purchase Agreements (as those terms are
defined in the Security Agreement).
7.2 Remedies. Upon the occurrence of any one or more of such Events of Default,
the Lender may, at its option, without presentment for payment, demand,
notice of dishonor or notice of protest or any other notice, all of which
are hereby expressly waived by the Borrower, declare the Revolving Credit
Facility to be due and payable together with interest at the default rate
specified in the instruments or documents evidencing the Revolving Credit
Facility; provided, however, that if such event is an event specified in
Section 7.1.5 or 7.1.6, then the Revolving Credit Facility shall
automatically become due and payable together with interest at the default
rate specified in the instruments evidencing the Revolving Credit Facility.
The Lender shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code of the State of New Jersey and under the
Uniform Commercial Code of any other state in which any Collateral may be
situated, and, additionally, all of the rights and remedies set forth in
this Agreement and the other Financing Agreements, and in any instrument or
document referred to herein or therein, and under any other applicable law
relating to this Agreement or the other Financing Agreements. The Lender
may, at its option, cure any default by the Borrower under any agreement
with a third party which constitutes, or would with notice or lapse of time
or both constitute, an Event of Default hereunder, and may add the amount
expended in such cure to the Obligations and charge the Borrower's account
therefor, such amounts to be repayable by the Borrower on demand; the
Lender shall be under no obligation to effect such cure and shall not by
making any payment for the Borrower's account be deemed to have assumed any
obligation or liability of the Borrower. Notwithstanding the foregoing, the
Lender acknowledges and agrees that it shall not exercise its right to
sell, transfer, or assign the COES License Agreement unless and until an
Event of Default has occurred.
SECTION 8. MISCELLANEOUS
8.1 Expenses. The Borrower, whether or not the transactions contemplated hereby
are consummated, shall pay to the Lender, or reimburse the Lender for, all
out-of-pocket expenses incurred by the Lender in connection with the
negotiation, preparation, administration, and enforcement of this
Agreement, the other Financing Agreements, all other agreements,
instruments and documents executed and delivered in connection herewith and
therewith, and the transactions contemplated hereunder and thereunder,
together with any amendments, supplements, consents or modifications which
may be hereafter made or entered into in respect thereof, including, but
not limited to, filing fees, expenses for searches, and the reasonable fees
and disbursements of counsel to the Lender.
8.2 Survival of Agreement. All representations and warranties contained in this
Agreement or any of the other Financing Agreements shall survive the
execution and delivery of this Agreement and shall be deemed to have been
made again to Lender on the date of each additional borrowing or other
credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or
information possessed by Lender. The representations and warranties set
forth herein shall be cumulative and in addition to any other
representations or warranties which Borrower shall now or hereafter give,
or cause to be given, to Lender.
8.3 No Waiver; Cumulative Remedies. No failure to exercise, and no delay in
exercising on the part of the Lender, any right, power or privilege under
this Agreement or under any of the Financing Agreements or other documents
referred to herein or therein shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power and privilege. The rights and remedies
of the Lender hereunder and under the Financing Agreements and under any
other present and future agreements between the Lender and the Borrower are
cumulative and not exclusive of any rights or remedies provided by law, or
under any of said Financing Agreements or agreements and all such rights
and remedies may be exercised successively or concurrently.
8.4 Notices and Deliveries. All notices, approvals, consents, requests, demands
or other communications (collectively, "Communications") to or upon the
respective parties hereto shall be made in writing in one of the following
ways and shall be deemed to have been given, received and dated: if by hand
(with receipt acknowledged), immediately upon delivery; if by express mail
or any other overnight delivery service, one day after dispatch (unless the
delivery service publicly announces that due to events beyond its control
deliveries may not be made on the next day, then in accordance with the
delivery schedule so announced by the delivery service); and if by
certified mail, return receipt requested, four days after mailing. All
Communications are to be given to the following addresses (or to such other
address as any party may designate by Communication in accordance with this
Section):
If to the Lender:
YA Global Investments, L.P.
101 Hudson Street-Suite 3700
Jersey City, New Jersey 07302
Attention: Mr. Troy Rillo
with a copy to:
Douglas K. Clarke, Esquire
Riemer & Braunstein LLP
3 Center Plaza
Boston, Massachusetts 02108
and
If to Borrower:
c/o GS COES (Yorkville I), LLC
One Penn Plaza, Suite 1612
New York, New York 10119
Attn: Mr. Kevin Kreisler
with a copy to:
Sonageri & Fallon, LLC
411 Hackensack Plaza
Hackensack, New Jersey
Attn: James Sonageri, Esq.
8.5 Amendments and Waivers. Neither this Agreement, nor any of the other
Financing Agreements or any other instrument or document referred to herein
or therein may be changed, waived, discharged or terminated orally, except
by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
8.6 Applicable Law. The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (except as otherwise provided
therein) and any dispute arising out of the relationship between the
parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of New Jersey but excluding any
principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State
of New Jersey.
8.7 Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by the parties and their respective
heirs, successors and assigns, except that the Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
the Lender.
8.8 Partial Invalidity. If any provision of this Agreement or the other
Financing Agreements is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Agreement or the
other Financing Agreements as a whole but this Agreement or the particular
Financing Agreement, as the case may be, shall be construed as though it
did not contain the particular provision or provisions held to be invalid
or unenforceable and the rights and obligations of the parties shall be
construed and enforced only to such extent as shall be permitted by law.
8.9 Headings and Word Meanings. The headings used herein are for convenience
only and do not constitute matters to be considered in interpreting this
Agreement. The words "herein," "hereinabove," "hereof," and "hereunder,"
when used anywhere in this Agreement, refer to this Agreement as a whole
and not merely to a subdivision in which such words appear, unless the
context otherwise requires. The singular shall include the plural, the
masculine gender shall include the feminine and neuter and the disjunctive
shall include the conjunctive, and vice versa, unless the context otherwise
requires.
8.10 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT
OF THIS AGREEMENT, THE OTHER FINANCING AGREEMENTS OR ANY AGREEMENT,
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR THE
VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION, COLLECTION OR
ENFORCEMENT HEREOF OR THEREOF, OR ANY OTHER CLAIM OR DISPUTE HEREUNDER OR
THEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES'
ACCEPTANCE OF THIS AGREEMENT.
8.11 JURISDICTION; SERVICE OF PROCESS. Borrower and Lender irrevocably consent
and submit to the non-exclusive jurisdiction of the Superior Courts of the
State of New Jersey sitting in Hudson County, New Jersey, and the United
States District Court for the District of New Jersey sitting in Newark, New
Jersey, whichever Lender may elect, and waive any objection based on venue
or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in
any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against
Borrower or its property in the courts of any other jurisdiction which
Lender deems necessary or appropriate in order to realize on the Collateral
or to otherwise enforce its rights against Borrower or its property). In
any such litigation, the Borrower waives personal service of any summons,
complaint or other process and agrees that the service thereof may be made
by certified mail directed to it at its address set forth herein, or
designated in writing pursuant to, this Agreement or in any other manner
permitted by the rules of either of said courts.
8.12 Indemnity. Borrower shall indemnify and hold Lender, and its directors,
agents, employees and attorneys, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees and legal expenses) imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim
or proceeding commenced or threatened related to the negotiation,
preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant
thereto, including amounts paid in settlement, court costs, and the fees
and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrower shall pay the
maximum portion which it is permitted to pay under applicable law to Lender
in satisfaction of indemnified matters under this Section. To the extent
permitted by applicable law, Borrower shall not assert, and Borrower hereby
waives, any claim against Lender, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. No indemnitee referred to above shall be
liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or any of the other Financing Agreements or
the transaction contemplated hereby or thereby. All amounts due under this
Section shall be payable upon demand. The foregoing indemnity shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
8.13 Marshalling; Recourse to Security; Payments Set Aside. The Lender shall not
be under any obligation to marshal any assets in favor of the Borrower or
any other party or against or in payment of any or all of the Obligations
of the Borrower to the Lender hereunder or under the Financing Agreements
or otherwise. Recourse to security shall not be required at any time. To
the extent that the Borrower makes a payment or payments to the Lender, or
the Lender exercises its rights of set-off, and such payment or payments or
the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied, and all liens, rights and remedies therefor,
shall be revived and continued in full force and effect as if such payment
had not been made or such set-off had not occurred.
8.14 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered
or to be delivered in connection herewith or therewith represent the entire
agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the
subject matter hereof, whether oral or written. In the event of any
inconsistency between the terms of this Agreement and any schedule or
exhibit hereto, the terms of this Agreement shall govern.
8.15 Set-off. In addition to any rights and remedies of the Lender now or
hereafter provided by law, the Lender shall have the right, without prior
notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, on the occurrence and
during the continuation of any Event of Default to set off and apply
against any Obligation, whether matured or immature, of the Borrower any
amount owing from the Lender to the Borrower, at or at any time after the
happening of any such Event of Default, and such right of set-off may be
exercised by the Lender against the Borrower or against any trustee in
bankruptcy, debtor-in-possession, assignee for the benefit or creditors,
receiver, or execution, judgment or attachment creditor of any of them,
notwithstanding the fact that such right of set-off shall not have been
exercised by the Lender before the making, filing or issuance, or service
on the Lender, of, or of notice of, any such event or proceeding.
8.16 Waiver of Notices. Borrower hereby expressly waives demand, presentment,
protest and notice of protest and notice of dishonor with respect to any
and all instruments and chattel paper, included in or evidencing any of the
Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on Borrower which Lender may elect to give
shall entitle Borrower to any other or further notice or demand in the
same, similar or other circumstances.
8.17 Counterparts; Facsimile Signature. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective when copies hereof which, when taken together, bear the
signatures of each of the parties hereto shall be delivered to the Lender.
Delivery of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually executed
signature page hereto.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
GS COES (YORKVILLE I), LLC
By: /s/ Kevin Kreisler
------------------------------
Name: Kevin Kreisler
Title: Chairman and Chief Executive Officer
YA GLOBAL INVESTMENTS, L.P.
By: Yorkville Advisors, LLC
Its: Investment Manager
By: /s/ Troy Rillo
------------------------------
Name: Troy Rillo
Title: Senior Managing Director
Exhibit A
REVOLVING NOTE
$10,000,000.00 January 11, 2008
GS COES (YORKVILLE I), LLC (the "Borrower"), a New York limited liability
company, hereby promises to pay to the order of YA GLOBAL INVESTMENTS, L.P. (the
"Lender"), at the office of the Lender at 101 Hudson Street, Suite 3700, Jersey
City, New Jersey 07303, in lawful money of the United States and in immediately
available funds, the principal sum of TEN MILLION DOLLARS ($10,000,000.00), or,
if less, the unpaid principal amount of all Revolving Advances made pursuant to
the Credit Agreement (as defined below).
This Note is the Revolving Note referred to in that certain Credit
Agreement, dated as of the date hereof, between the Borrower and the Lender (as
such agreement may be further amended from time to time the "Credit Agreement"),
and is subject to prepayment and its maturity is subject to acceleration upon
the terms contained in the Credit Agreement. Capitalized terms used herein shall
be defined as in the Credit Agreement.
The outstanding unpaid principal balance of this Note shall bear interest
at the rate per annum provided for in the Credit Agreement. Interest on this
Note shall be payable monthly on the first day of each month commencing on the
date hereof, and shall be calculated on the basis of a year of 360 days, for the
actual number of days elapsed.
If any payment on this Note becomes due and payable on a day which is not a
Business Day, such payment shall be extended to the next succeeding day on which
those offices are open, and if the date for any payment of principal is so
extended, interest thereon shall be payable for the extended time.
The Borrower hereby waives diligence, presentment, protest and notice of
any kind, and assents to extensions of the time of payment, release, surrender
or substitution of security, or forbearance or other indulgence, without notice.
This Note may not be changed, modified or terminated orally, but only by an
agreement in writing signed by the Borrower and the Lender, or any holder
hereof.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New Jersey, and shall be binding upon the successors and assigns
of the Borrower and inure to the benefit of the Lender, its successors,
endorsees and assigns. If any term or provisions of this note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions thereof shall in no way be affected thereby.
GS COES (YORKVILLE I), LLC
By: ________________________________
Name: Kevin Kreisler
Title: Chairman and Chief Executive Officer