RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT (the "Agreement"), dated as of January 10, 2008, by
and between GS CleanTech Corporation, a Delaware corporation (the "Company"),
and YA Global Investments, L.P. (f/k/a Cornell Capital Partners, L.P.), a Cayman
Islands exempt limited partnership (the "Buyer")
A. As of the date hereof the Buyer is the holder or lender pursuant to the
following convertible debentures or convertible notes:
------------------- ------------------------- --------------- ------------------- ---------------- -------------------
Identifier Original Issuance Date Original Current Principal Accrued and Aggregate
Principal Balance unpaid Interest Principal Amount
Balance of Amended and
Restated
Debentures
------------------- ------------------------- --------------- ------------------- ---------------- -------------------
Debenture 1 February 8, 2006 $1,900,000 $1,900,000 $184,986 $2,084,986
------------------- ------------------------- --------------- ------------------- ---------------- -------------------
Debenture 2 April 13, 2006 $4,400,000 $2,400,000(*) $389,277 $2,789,277(*)
------------------- ------------------------- --------------- ------------------- ---------------- -------------------
Debenture 3 February 27, 2007 $1,125,000 $1,125,000 $99,062 $1,224,062
------------------- ------------------------- --------------- ------------------- ---------------- -------------------
Convertible Note March 31, 2004 $2,190,410 $617,510 $118,105 $735,615
------------------- ------------------------- --------------- ------------------- ---------------- -------------------
Debenture 0, Xxxxxxxxx 0, Xxxxxxxxx 3, and the Convertible Note shall be
collectively referred to herein as the "Existing Debentures." The Existing
Debentures were issued pursuant to those certain securities purchase agreements
and other related agreements listed on Schedule 1 attached hereto (collectively,
the "Transaction Documents").
B. In connection with the execution and delivery of a letter agreement, dated
as of November 9, 2007 (the "Letter of Intent"), by and between the Company
and the Buyer, the parties agreed in principal to amend and restate the
Existing Debentures and certain other agreements all of which shall be
contained in this Agreement;
C. The obligations of the Company under the Existing Debentures are secured by
certain existing security agreements, pledge agreements, and guaranty
agreements (collectively, the "Prior Security Documents"), and the parties
desire that the obligation be further secured by the Global Security
Agreement among the Company, the Buyer, and other parties dated on or about
the date hereof (the "Security Agreement"), the Global Pledge Agreement
among the Company, the Buyer, and other parties dated on or about the date
hereof (the "Pledge Agreement"), the Global IP Security Agreement among the
Company, the Buyer, and other parties dated on or about the date hereof
(the "IP Security Agreement") the Global Guaranty Agreement among the
Company, the Buyer, and other parties dated on or about the date hereof
(the "Guaranty Agreement" and along with the Security Agreement, the Pledge
Agreement, and the Prior Security Documents, the IP Security Agreement, any
mortgages granted to the Buyer, and all other documents, instruments, and
agreements granted to the Lender to secure the obligations of the Company
to the Buyer, the "Security Documents");
D. The Company and the Buyer desire to enter into this Agreement, pursuant to
which, among other things, (i) the Company and the Buyer shall amend and
restate all of the Existing Debentures each for a new debentures in the
form attached hereto as Exhibit A in the aggregate principal amount set
forth on the table above (the "Amended and Restated Debentures"), which
shall be convertible into Common Stock;
E. The amendment and restatement of the Existing Debentures for the Amended
and Restated Debentures are being made in reliance upon the exemption from
registration provided by Section 3(a)(9) of the 1933 Act.
F. Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings ascribed to them in the Amended and Restated
Debentures.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the Company and the Buyer hereby agree as
follows:
1. AMENDMENT AND RESTATEMENT OF EXISTING DEBENTURES AND EXISTING WARRANTS.
(a) Amendment and Restatement of Existing Debentures and Existing
Warrants. Subject to satisfaction (or waiver) of the conditions set
forth herein, at the closing contemplated by this Agreement (the
"Closing"), the Buyer shall surrender to the Company its Existing
Debentures and the Company shall issue and deliver to the Buyer (i)
the Amended and Restated Debentures in the aggregate principal amount
set forth in the table above.
(b) Closing Date. The date and time of the Closing (the "Closing Date")
shall be 10:00 a.m., Eastern Standard Time, on the date hereof,
subject to notification of satisfaction (or waiver) of the conditions
to the Closing set forth herein (or such other time and date as is
mutually agreed to by the Company and the Buyer). The Closing shall
occur on the Closing Date at the offices of the Buyer (or at such
other location as is mutually agreed to by the Company and the Buyer).
(c) Delivery. On the Closing Date, the Company shall deliver to the Buyer
the Amended and Restated Debentures duly executed on behalf of the
Company and registered in the name of the Buyer.
2. AGREEMENTS OF THE PARTIES.
(a) Full Force and Effect. Except as otherwise expressly provided herein,
effective as of the Closing Date, the Transaction Documents and the
Prior Security Documents are, and shall continue to be, in full force
and effect, except for amendments set forth herein.
(b) Reaffirmation of Security. The Company hereby acknowledges, confirms
and agrees that Buyer has and shall continue to have valid,
enforceable and perfected liens upon and security interests heretofore
granted pursuant to any and all of the Prior Security Documents.
Furthermore, the Company agrees that the security interests and
guaranties granted pursuant to the Security Agreement, the Guaranty
Agreement, the IP Security Agreement, any mortgages granted to the
Buyer, and the Pledge Agreement, are intended to be supplemental to,
and not in limitation of, the existing security interests or
guaranties granted to the Buyer to secure the Obligations, whether
under the Prior Security Documents or otherwise.
(c) All amounts owed, together with interest accrued and accruing thereon,
and fees, costs, expenses and other charges (collectively, the
"Obligations") now or hereafter payable by the Company to the Buyer
(including, without limitation, the amounts referenced in the table
above) under the Existing Debentures and all other agreements,
contracts, instruments or other items delivered in connection
therewith are unconditionally owing by the Company to Buyer, without
offset, setoff, defense or counterclaim of any kind, nature or
description whatsoever.
(d) Effective as of the Closing Date, the Registration Rights Agreement
shall be terminated in its entirety and of no further force or effect,
and the Buyer expressly releases the Company from any past or future
obligations or liabilities thereunder. With a view to making available
to the Buyer the benefits of Rule 144 promulgated under the Securities
Act or any similar rule or regulation of the SEC that may at any time
permit the Buyer to sell securities of the Company to the public
without registration ("Rule 144"), the Company represents, warrants,
and covenants that the Company is subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act and has filed
all required reports under section 13 or 15(d) of the Exchange Act
during the 12 months prior to the date hereof (or for such shorter
period that the issuer was required to file such reports), other than
Form 8-K reports and that from the date hereof until all the
Securities either have been sold by the Buyer, or may permanently be
sold by the Buyer without any restrictions pursuant to Rule 144, (the
"Registration Period") the Company shall file with the SEC in a timely
manner all required reports under section 13 or 15(d) of the Exchange
Act and such reports shall conform to the requirement of the Exchange
Act and the SEC for filing thereunder.
(e) On the date hereof, $2,000,000 of the principal amount outstanding
under Debenture 2 shall be reduced by the debenture in the principal
amount of $2,000,000 issued by GS EnviroServices to the Buyer as set
forth in the Securities Purchase Agreement between GS EnviroServices
and the Buyer of even date herewith.
3. REPRESENTATIONS AND WARRANTIES
(a) Buyer Representations and Warranties. The Buyer represents and
warrants as of the date hereof to the Company that:
(i) Investment Purpose. The Buyer is acquiring the Amended and
Restated Debentures and, upon conversion of the Amended and
Restated Debentures, the Buyer will acquire the conversion shares
then issuable, for its own account for investment only and not
with a view towards, or for resale in connection with, the public
sale or distribution thereof, except pursuant to sales registered
or exempted under the Securities Act; provided, however, that by
making the representations herein, the Buyer reserves the right
to dispose of the conversion shares at any time in accordance
with or pursuant to an effective registration statement covering
such shares or an available exemption under the Securities Act.
(ii) Accredited Investor Status. The Buyer is an "Accredited Investor"
as that term is defined in Rule 501(a)(3) of Regulation D.
(iii) Reliance on Exemptions. The Buyer understands that the Amended
and Restated Debentures are being offered and sold to it in
reliance on specific exemptions from the registration
requirements of United States federal and state securities law
and that the Company is relying in part upon the truth and
accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgements, and
understanding of the Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of the
Buyer to acquire such securities.
(iv) Transfer or Resale. The Buyer understands that: (i) the Amended
and Restated Debentures and the conversions shares thereunder
have not been and are not being registered under the Securities
Act or any state securities laws, and may not be offered for
sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) the Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to
the effect that such shares to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption
from such registration requirements, or (C) such Buyer provides
the Company with reasonable assurances (in the form of seller and
broker representation letters) that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under
the Securities Act, as amended (or a successor rule thereto)
(collectively, "Rule 144"), in each case following the applicable
holding period set forth therein; (ii) any sale of the ---------
Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances
in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other
exemption under the Securities Act or the rules and regulations
of the SEC thereunder; and (iii) neither the Company nor any
other person is under any obligation to register the Securities
under the Securities Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
(v) Legends. The Buyer understands that the certificates or other
instruments representing the the Amended and Restated Debentures
and the conversions shares thereunder shall bear a restrictive
legend in substantially the following form (and a stop transfer
order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company
within two (2) business days shall issue a certificate without
such legend to the holder of the Amended and Restated Debentures
or the conversions shares thereunder upon which it is stamped,
if, unless otherwise required by state securities laws, (A) in
connection with a sale transaction, provided the conversion
shares are registered under the Securities Act or (B) in
connection with a sale transaction, after such holder provides
the Company with an opinion of counsel, which opinion shall be in
form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale,
assignment or transfer of the conversion shares may be made
without registration under the Securities Act.
(vi) Authorization, Enforcement. This Agreement has been duly and
validly authorized, executed and delivered by the Buyer and is a
valid and binding agreement of the Buyer enforceable in
accordance with its terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, and other
similar laws relating to, or affecting generally, the enforcement
of applicable creditors' rights and remedies.
(b) Company Representations and Warranties. The Company represents and
warrants as of the date hereof to the Buyer that:
(i) Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of Delaware, and has the requisite corporate power to own its
properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which
the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company taken as a whole.
(ii) Authorization, Enforcement, Compliance with Other Instruments.
(A) The Company has the requisite corporate power and authority
to enter into and perform this Agreement, the Amended and
Restated Debentures and any related agreements executed and
delivered pursuant hereto or thereto and to issue the conversion
shares in accordance with the terms of the Amended and Restated
Debentures, (B) the execution and delivery of this Agreement by
the Company and the consummation by it of the transactions
contemplated hereby, including, without limitation, the issuance
of the Amended and Restated Debentures have been duly authorized
by the Company's Board of Direction and no further consent or
authorization is required by the Company, its Board of Directors
or its stockholders and (C) each of this Agreement and the
Amended and Restated Debentures constitutes the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies.
(iii) Issuance of Securities. The conversion shares issuable upon
conversion of the Amended and Restated Debentures have been duly
authorized and reserved for issuance. Upon conversion or exercise
in accordance with the Amended and Restated Debentures, the
conversion shares will be duly issued, fully paid and
nonassessable.
(iv) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of the
Amended and Restated Debentures.
(c) For the purposes of Rule 144, the Company acknowledges that the
holding period of the Amended and Restated Debentures (including the
underlying conversion shares) may be tacked onto the holding period of
the Existing Debentures, and the Company agrees not to take a position
contrary to this Section 3(c). The Company's acknowledgement and
agreement set forth in this Section 3(c) shall be subject in all
respects to Rule 144 and other applicable securities laws, as may be
in effect from time to time.
4. CERTAIN COVENANTS AND AGREEMENTS.
(a) The Buyer hereby consents to the following actions taken by or planned
to be taken by the Company and/or its affiliates:
(i) The contribution to the Company's capital by GreenShift
Corporation ("GSHF"), the Company's former majority shareholder,
of GSHF's stakes in GS AgriFuels Corporation and GS Energy
Corporation, provided that in connection with such contribution,
the Company adds the shares of GS AgriFuels Corporation and GS
Energy Corporation to the shares pledged by the Company to the
Buyer pursuant to the Pledge Agreement;
(ii) The distribution by GSHF of 1,000,000,000 common shares of GS
Energy and 2,000,000 common shares of GS EnviroServices, Inc. to
GSHF minority shareholders, and GSHF's entire 80% stake in the
Company to all of its shareholders on a pro-rata basis;
(iii) The cancellation by the Company of its previously planned merger
with GSHF;
(iv) The cancellation of the previously planned merger between the
Company's subsidiaries, GS AgriFuels and GS Energy;
(v) The filing of an amendment to the Company's Articles of
Incorporation, changing the Company's name to "GreenShift
Corporation," provided that the Company provides the Buyer with
thirty days advanced written notice. The Company herein confirms
that the Buyer shall have the authority to amend any UCC
financing statements to reflect the Company's change of name.
(vi) The filing of an amendment to the Articles of Incorporation of GS
Energy, reverse splitting its stock on a 1 for 500 basis and
changing its name to "GS EcoSystem Corporation," provided that
the GS Energy provides the Buyer with thirty days advanced
written notice. GS Energy herein confirms that the Buyer shall
have the authority to amend any UCC financing statements to
reflect GS Energy's change of name. ; and,
(vii) The transfer of the Company's interest in the capital stock of
GS AgriFuels to a new wholly-owned subsidiary of the Company,
which subsidiary will then merge GS AgriFuels into itself in
accordance with the short-form merger procedures provided in
Section 253 of the Delaware General Corporation Law and take GS
AgriFuels private on the basis of the terms of the terms and
conditions of that certain "[Go Private Agreement]" by and
between the Company and Buyer.
(b) The Buyer consents to the Company effectuating a split of its common
stock on a 1 for 50 basis ("Reverse Split"). The Amended and Restated
Debentures shall be issued with a conversion price that reflects the
Reverse Split.
(c) The Buyer hereby consents to the creation by the Company of a new
wholly owned subsidiary to be named "________________" (the "New Sub")
and organized in Delaware, provided that New Sub sign on as a
"Grantor" under the Security Agreement, a "Guarantor" under the
Guaranty Agreement, and a "Guarantor" under the IP Security Agreement.
Furthermore, the Company expressly agrees that all its shares in the
New Sub shall be included as part of the Pledged Collateral (as
defined in the Pledge Agreement) and shall promptly delivers into
escrow such Transfer Documents as provided for in the Pledge
Agreement.
(d) Debenture 1 was originally issued by GreenShift Corporation to the
Buyer and subsequently assigned to and assumed by the Company
effective as of July 1, 2006 as evidenced by the assignment agreement,
a copy of which is set forth on Exhibit B.
5. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey without regard to
its principles of conflict of laws. The parties further agree that any
action between them shall be heard in Xxxxxx County, New Jersey, and
expressly consent to the jurisdiction and venue of the Superior Court
of New Jersey, sitting in Xxxxxx County and the United States District
Court for the District of New Jersey sitting in Newark, New Jersey for
the adjudication of any civil action asserted pursuant to this
Agreement.
(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, each of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event
any signature page is delivered by facsimile transmission, the party
using such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery thereof.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of,
this Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of
this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.
(e) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(f) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(g) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
(h) Entire Agreement; Effect on Prior Agreements; Amendments. This
Agreement supersedes all other prior oral or written agreements
between the Buyer and the Company with respect to the matters set
forth herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the
matters covered herein and, except as specifically set forth herein,
neither the Company nor the Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in
writing signed by the party charged with enforcement.
(i) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(iii) one (1) Business Day after deposit with an overnight courier
service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
GS CleanTech Corporation
Xxx Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxx. Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer:
YA Global Investments, L.P.
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
With a copy to:
Xxxx Xxxxx, Esq.
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) Business Days prior
to the effectiveness of such change.
(j) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and
assigns.
(k) Survival. Unless this Agreement is terminated under Section 7, the
representations and warranties of the Company and the Buyer contained
herein and the agreements and covenants set forth herein shall survive
the Closing.
[Signature Page Follows]
IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.
COMPANY:
GS CLEANTECH CORPORATION
By: /s/ Xxxxx Xxxxxxxx
------------------------
Name: Xxxxx Xxxxxxxx
Title: President
GS ENERGY
By: /s/ Xxxxx Xxxxxxxx
------------------------
Name: Xxxxx Xxxxxxxx
Title: President
BUYER:
YA GLOBAL INVESTMENTS, L.P.
By: Yorkville Advisors, LLC,
its Investment Manager
By: /s/ Xxxx Xxxxx
-------------------------
Name: Xxxx Xxxxx
Title: Senior Managing Director
--------
* Note - Principal balance of Debenture 2 is reduced by $2,000,000 as set
forth in Section 2(e).
