SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO.: 0-50469
Date of Report: January 25, 2008
GS CLEANTECH CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 59-3764931
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(State of other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
One Penn Plaza, Suite 1612, New York, NY 10019
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(Address of principal executive offices) (Zip Code)
(212) 994-5374
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(Registrant's telephone number including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
__Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
__ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
__ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
ITEM 2.01 COMPLETION OF DISPOSITION OF ASSETS
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION
ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES
GS COES (Yorkville I) Financing
On January 25, 2008, GS COES (Yorkville I), LLC, a subsidiary of GS CleanTech,
closed on the terms of a Credit Agreement with YA Global Investments, LP
("YAGI"). The Credit Agreement will make funds available to GS COES (Yorkville
I) for the purpose of constructing and installing corn oil extraction systems
that have been ordered by several ethanol manufacturers. The funds available
will equal $10 million less the outstanding balance due at the time of borrowing
from NextGen Fuels, Inc. (also a subsidiary of GS CleanTech) to Stillwater
Asset-Based Fund, LP. The current balance due to Stillwater Asset-Based Fund is
currently approximately $3.8 million. At the current rate of payment, the entire
balance due to Stillwater Asset-Based Fund will be satisfied by July 2008.
Amounts advanced by YAGI to GS COES (Yorkville I) LLC (the "Loans") will be
repayable on the following terms:
- All Loans must be repaid on or prior to August 31, 2009.
- Commencing on July 1, 2008, GS COES must pay to YAGI on account of the
principal amount of the Loans an amount equal to the greater of (a)
$100,000 and (b) 30% of its EBITDA for the month.
- GS COES may prepay the Loans without penalty.
GS COES (Yorkville I) is also required to pay to YAGI:
- Interest on the Loans at a rate of 20% per annum.
- A fee equal to $.10 per gallon of corn oil extracted at the GS COES
(Yorkville I) installations until the later of (a) the date on which
the Credit Agreement is terminated or (b) the date on which YAGI has
received the fee with respect to 20 million gallons.
To induce YAGI's entry into the Credit Agreement and in consideration of YAGI's
execution of the Restructuring Agreement described below, GS CleanTech issued
six million shares of its common stock to YAGI.
GS EnviroServices Stock Purchase
In connection with the other transactions described in this report, GS CleanTech
and its subsidiary, GS EnviroServices, Inc., entered into a Stock Purchase
Agreement, with the consent of YAGI. The Agreement provided that GS CleanTech
would surrender to GS EnviroServices 8,733,333 shares of GS EnviroServices
common stock (representing 31% of the outstanding shares). In exchange, GS
EnviroServices issued a $2,000,000 convertible debenture to YAGI, and YAGI
cancelled $2,000,000 of indebtedness owed to it by GS CleanTech.
The Stock Purchase Agreement, combined with a letter agreement between GS
EnviroServices and YAGI, further provides that if GS EnviroServices pays
$1,000,000 to YAGI on or before May 1, 2008, then the remaining 6,266,667 shares
of GS EnviroServices owned by GS CleanTech will be transferred to GS
EnviroServices.
As part of these transactions, GS CleanTech granted a proxy to the board of
directors of GS EnviroServices authorizing the board to vote the shares of GS
EnviroServices now in the name of GS CleanTech. The proxy with respect to the
8,733,333 exchanged for $2,000,000 terminates in the event of a default by GS
EnviroServices of its loan obligations to YAGI. The proxy with respect to the
6,266,667 shares will terminate on May 1, 2008.
Restructuring of Convertible Debentures
In connection with the GS COES (Yorkville I) financing, GS CleanTech and YAGI
entered into a Restructuring Agreement. The Restructuring Agreement provided for
the exchange of all convertible debentures issued by GS CleanTech to YAGI
(formerly known as "Cornell Capital Partners, LP) for four amended and restated
debentures. However, the principal balance of one of the debentures was reduced
by $2,000,000 pursuant to the stock purchase transaction between GS CleanTech
and GS EnviroServices, Inc. discussed above. The aggregate principal amount of
the restated debentures was $6,931,288.
The terms of the amended and restated debentures are:
- Principal and interest may be converted, at YAGI's option, into shares
of GS CleanTech common stock, at a conversion price of $1.25 per
share.
- On the first business day of each month, GS CleanTech must pay
$250,000 to YAGI. If GS CleanTech fails to make the payment, YAGI
shall be entitled to convert that amount of accrued interest and
Principal into common stock of GS CleanTech at a conversion price
equal to the lesser of (a) $1.25 or (b) 90% of the volume weighted
average price for the twenty trading days preceding conversion. If a
monthly payment is not made and YAGI does not opt to convert, then the
unpaid amount will be added to the amount due on the first day of the
following month.
- All unpaid interest and principal will be due and payable on December
31, 2011.
- The debentures bear interest at 10% per annum.
The following table shows the current status of the convertible debentures
issued by GS CleanTech and its affiliates to YAGI, after application of the
covenants in the Restructuring Agreement.
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Creditor Original Issuance Date Original Current Accrued and Principal Amount
Principal Balance Principal unpaid Interest of Amended and
Balance Restated
Debentures
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GS CleanTech Corporation
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February 8, 2006 $1,900,000 $1,900,000 $184,986 $2,084,986
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April 13, 2006 $4,400,000 $2,400,000 $389,277 $2,789,277
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February 27, 2007 $1,125,000 $1,125,000 $99,062 $1,224,062
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March 31, 2004 $2,190,410 $712,510 $120,453 $832,963
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GS AgriFuels Corporation (subsidiary of GS CleanTech)
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June , 2006 $5,500,000 $5,500,000 $863,425 N.A.
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October, 2006 $13,000,000 $13,000,000 $1,524,384 N.A.
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GS EnviroServices, Inc. (affiliate of GS CleanTech)
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January 11, 2008 $2,000,000
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GreenShift Corporation (previously parent of GS CleanTech)
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October 12, 2005 $1,475,000 $262,500 $258 N.A.
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February 8, 2006 $3,050,369 $1,150,369 $41,287 N.A.
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June 26, 2007 $575,000 $575,000 $35,231 N.A.
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Amended Forbearance Agreement
In connection with the financing transactions described in this Report, YAGI
entered into an Amended and Restated Forbearance Agreement with GS CleanTech,
GreenShift Corporation (its former parent), and Viridis Capital, LLC (its
majority shareholder). The Agreement recited that a default existed under
certain debentures issued to YAGI by GS CleanTech, which were guaranteed by
GreenShift and Viridis Capital. In order to secure the defaulted debentures, the
parties had, at the time of issuance of the debentures, pledged to YAGI the
following securities:
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Pledgor Pledged Shares Issuer
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Viridis 1,000,000 shares of Series C Preferred Stock GreenShift
convertible into common stock
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Viridis 750,000 shares of Series C Preferred Stock GS CleanTech
convertible into common stock
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GS CleanTech 1,000,000 shares of Series C
Preferred Stock convertible into common stock GS Energy Corporation
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GS CleanTech 6,266,666 shares of common stock of GS
EnviroServices (defined as "GS Pledged Shares GS EnviroServices
Pool 1")
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GS CleanTech 8,733,333 shares of common stock of GS
EnviroServices (defined as "GS Pledged Shares GS EnviroServices
Pool 2")
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In the Amended and Restated Forbearance Agreement, the parties agreed that in
order to remedy the default under the Debentures, YAGI will be entitled to
exercise the right of conversion under the pledged preferred stock, and to sell
any of the resulting common shares or the pledged common shares. GS Pledged
Shares Pool 2, however, may be foreclosed upon only in the event of a default
under the $2,000,000 debenture issued by GS EnviroServices, discussed above. The
Agreement stipulates that YAGI may not at any time own more than 4.99% of the
outstanding common shares of any of the issuers. Each time YAGI takes shares
under the Agreement, 90% of the volume weighted average market price for the
five trading days preceding the delivery will be applied against the principal
amount of the Debentures. YAGI agreed that, if no other defaults occur under the
Debentures, it would waive all other rights and penalties available to it as a
result of the present defaults.
Guarantees
Payment of all obligations with respect to the Loans and the Debentures has been
guaranteed by GS CleanTech, by its Chairman, Kevin Kreisler, by his holding
company, Viridis Capital, LLC, and by all of the subsidiaries of GS CleanTech.
The Loans and Debentures are also guaranteed up to $1.5 million by GS
EnviroServices, Inc., an affiliate of GS CleanTech. GS COES (Yorkville I) LLC
and each guarantor has pledged all of its assets to secure repayment of the
Loans and the Debentures.
Consent to Short-Form Merger of GS AgriFuels
In connection with the foregoing financing transactions, GS CleanTech, its
subsidiary, GS AgriFuels Corporation, and YAGI entered into an Agreement
relating to the previously announced plan of GS CleanTech to effect a short-form
merger of GS AgriFuels so as to redeem for cash all shares of GS AgriFuels not
owned by GS CleanTech.
Because GS AgriFuels is indebted to YAGI in the amount of $20,359,631, YAGI's
consent to the short-form merger was required. YAGI gave its consent in the
Agreement, subject to the following commitments by GS CleanTech and GS
AgriFuels:
- GS AgriFuels was required to amend the Certificate of Designations for
its Series C Preferred Stock to provide that it would be convertible
at a fixed rate of 32 common shares for each share of Series C stock,
and to provide that no Series C shares may be issued while any portion
of the debt to YAGI is outstanding.
- GS AgriFuels agreed to issue 3,329,630 common shares to YAGI after the
short-form merger is completed.
- The parties agreed that no more than 36,650,630 shares of GS AgriFuels
may be issued, on a fully-diluted basis.
- GS CleanTech agreed to obtain an independent appraisal of the value of
GS AgriFuels. The debentures issued by GS AgriFuels to YAGI will then
be modified to provide that the interest and principal are convertible
by YAGI into GS AgriFuels common stock at a price equal to the lesser
of (a) $0.255 or (b) 80% of the appraised value.
- GS AgriFuels agreed to pay to YAGI, on account of its debentures, 10%
of its cash receipts and 50% of free cash flows after regular debt
service.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibits
10-a Credit Agreement dated January 11, 2008 between GS COES (Yorkville I)
LLC and YA Global Investments, LP
10-b Stock Purchase Agreement between GS CleanTech Corporation and GS
EnviroServices, Inc.
10-c Restructuring Agreement dated January 10, 2008 between GS CleanTech
Corporation and YA Global Investments, LP.
10-d Form of Amended and Restated Secured Convertible Debenture issued by
GS CleanTech Corporation to YA Global Investments, LP. as of January
10, 2008.
10-e Amended and Restated Forbearance Agreement dated as of January 11,
2008 among GS CleanTech Corporation, GreenShift Corporation, Viridic
Capital, LLC and YA Global Investments, LP.
10-f Global Guaranty Agreement dated January 11, 2008 among Viridis Capital
LLC, Kevin Kreisler, GreenShift Corporation, GS AgriFuels Corporation,
GS CleanTech Corporation, each of their subsidiaries, and YA Global
Investments, LP.
10-g Agreement dated as of January 10, 2008 among GS CleanTech Corporation,
GS AgriFuels Corporation, and YA Global Investments, LP.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 29, 2008 GS CLEANTECH CORPORATION
By: /s/ Kevin Kreisler
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Kevin Kreisler, Chairman