Series A Preferred Unit Purchase Agreement, dated as of December 20, 2018, by and among Aemetis Biogas LLC, Protair-X Americas, Inc. and Third Eye Capital Corporation

 

 

 

ARTICLE I. DEFINITIONS		1
Section 1.1	Defined Terms Used in this Agreement	1
Section 1.2	Terms Generally	13
ARTICLE II. PURCHASE AND SALE		13
Section 2.1	Sale and Purchase of Series A Preferred Units	13
Section 2.2	Closings	13
Section 2.3	Use of Proceeds	15
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF COMPANY		16
Section 3.1	Representations and Warranties of the Company	16
Section 3.2	Organization, Good Standing, Power and Qualification	16
Section 3.3	Capitalization	16
Section 3.4	No Subsidiaries	17
Section 3.5	Authorization	17
Section 3.6	Issuance of Series A Preferred Units	17
Section 3.7	Governmental Consents and Filings	17
Section 3.8	Litigation	18
Section 3.9	Intellectual Property	18
Section 3.10	Compliance with Other Instruments; No Conflict	18
Section 3.11	Project Contracts; Material Agreements; Other Actions	19
Section 3.12	Certain Transactions	19
Section 3.13	Rights of Registration and Voting Rights	20
Section 3.14	Title to Assets	20
Section 3.15	Projections	20
Section 3.16	Employee Matters	20
Section 3.17	Tax Returns and Payments	22
Section 3.18	Insurance	22
Section 3.19	Permits; DDRDP Grants	22
Section 3.20	Real Property Holding Company	22
Section 3.21	Environmental and Safety Laws	23
Section 3.22	Disclosure	23
Section 3.23	Foreign Corrupt Practices Act	23
Section 3.24	Money Laundering	23
Section 3.25	Contractors, Subcontractors and Suppliers	24
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER		24
Section 4.1	Representations and Warranties of the Purchaser	24
Section 4.2	Authorization	24
Section 4.3	Purchase for Own Account	25
Section 4.4	Restricted Securities	24
Section 4.5	No Public Market	24
Section 4.6	Legends	25
Section 4.7	Accredited Investor	26
Section 4.8	No General Solicitation	26
Section 4.9	Foreign Investors	26
Section 4.10	[Reserved]	26
Section 4.11	Reliance	26

ARTICLE V. CLOSING CONDITIONS		26
Section 5.1	Conditions to the Purchaser’s Obligations at Initial Closing and Each Other Closing of a Purchase Under the Initial Tranche	26
Section 5.2	Conditions to Purchaser’s Obligations at Subsequent Closing and Each Other Closing of a Purchase Under the Second Tranche	29
ARTICLE VI. COVENANTS		30
Section 6.1	Information Reporting and Monitoring	31
Section 6.2	Certain Notifications Until Final Redemption Date	34
Section 6.3	Preference Payments	35
Section 6.4	Liquidation; Deemed Liquidation.	35
Section 6.5	Conversion	36
Section 6.6	Voting Generally	38
Section 6.7	Board	39
Section 6.8	Series A Preferred Units Protective Provisions	39
Section 6.9	Redemption	41
Section 6.10	Preemptive Rights	42
Section 6.11	Closing Fee	43
Section 6.12	Unit Ownership Ledger	43
Section 6.13	D&O and Other Insurance	43
Section 6.14	Financial Covenants	44
Section 6.15	Operational Covenants	44
Section 6.16	Other Covenants	46
Section 6.17	Collateral	46
Section 6.18	Post-Closing Obligations	47
ARTICLE VII. TRIGGER EVENTS AND REMEDIES		47
Section 7.1	Trigger Events	48
Section 7.2	Redemption and other Remedies upon Trigger Event	49
Section 7.3	Mandatory Redemption on Bankruptcy Trigger Event	50
Section 7.4	Application of Funds	50
ARTICLE VIII. MISCELLANEOUS		50
Section 8.1	Survival of Warranties	50
Section 8.2	Successors and Assigns	51

Section 8.3	Governing Law	51
Section 8.4	Counterparts	51
Section 8.5	Titles and Subtitles	51
Section 8.6	Notices	51
Section 8.7	No Finder’s Fees	51
Section 8.8	Fees and Expenses; Taxes; Indemnification	52
Section 8.9	Time of the Essence	53
Section 8.10	Amendments and Waivers	54
Section 8.11	Severability	54
Section 8.12	Delays or Omissions; Independence of Covenants	54
Section 8.13	Entire Agreement	54
Section 8.14	Corporate Securities Law	54
Section 8.15	Termination of Closing Obligations	55
Section 8.16	Submission to Jurisdiction; Jury Trial Waiver	55
Section 8.17	No Commitment for Additional Financing	56
Section 8.18	Press Releases and Announcements	56
Section 8.19	Replacement of Certificates	56
Section 8.20	Remedies	56
Section 8.21	No Advisory or Fiduciary Responsibility	57
Section 8.22	Payments Set Aside	57
Section 8.23	Payments Generally	57
Section 8.24	Acknowledgments	58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Aemetis shall at any time fail to directly own, legally and beneficially (free and clear of all Liens except Liens created or permitted pursuant to the Note Purchase Agreement), at least one hundred percent (100%) of the issued and outstanding Common Units of the Company; or

 

(b) Eric McAfee shall cease to be active in the management of the Company; or

 

(c) a sale, lease, exclusive license or other disposition, in a single transaction or series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis; or

 

(d) any sale or other disposition of the Keyes Plant; or

 

(e) the Company shall consummate a Delaware LLC Division; or

 

(f) the consummation, whether through a single transaction or series of related transactions, of a merger or consolidation of the Company with or into another Person or any other reorganization or sale of Units or other Equity Securities, if Persons who were not Members (or Affiliates of Members) immediately prior to such merger, consolidation, reorganization or sale own immediately after such merger, consolidation, reorganization or sale a majority of the voting power of the outstanding Equity Securities of the continuing or surviving Person (or, if the continuing or surviving Person is a wholly owned Subsidiary of a Person, any direct or indirect parent of such continuing or surviving Person).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) First Closing Under Second Tranche. On the terms and subject to the conditions set forth in this Agreement, the first closing of a Purchase under the Second Tranche (the “Subsequent Closing”) will take place on the fifth Business Day following the date on which all of the conditions set forth in Section 5.2 have been fulfilled or waived (which shall be after the Initial Closing Date), or such other date and time as the Company, the Agent and the Purchaser may mutually agree. The Subsequent Closing shall take place at such place and in such manner as the Company, the Agent and the Purchaser may mutually agree. The time and date on which the Subsequent Closing occurs is referred to in this Agreement as the “Subsequent Closing Date”. At the Subsequent Closing and pursuant to the Second Tranche, (i) the Company agrees to sell and transfer a minimum of 200,000 Series A Preferred Units (to fund the WC Reserve) and such additional number of Series A Preferred Units (such number of Series A Preferred Units plus the 200,000 Series A Preferred Units, the “Subsequent Closing Units”) set forth in a Purchase Request (as defined below) delivered to Purchaser (with a copy to the Agent) and otherwise meeting the conditions set forth in the Gantt Chart, the Project Budget and Exhibit A hereto to Purchaser, free and clear of any Liens, as evidenced by one or more certificates dated the Subsequent Closing Date and bearing appropriate legends as hereinafter provided for, and (ii) Purchaser will pay the Company the Purchase Price with respect to the Subsequent Closing Units, by wire transfer of immediately available funds to an account designated by the Company. No more than 2,800,000 Series A Preferred Units in the aggregate may be purchased at the Subsequent Closing.

 

(c) Additional Purchase Requests.

 

(i) Additional Initial Tranche Purchase Requests. On the terms and subject to the conditions set forth in this Agreement, after the Initial Closing Date and completion and approval of the Gantt Chart and Project Budget by both the Agent and the Third Party Consultant, the Company may request that the Purchaser acquire, in one or more Purchases pursuant to the Initial Tranche, up to an aggregate of 1,600,000 additional Series A Preferred Units at the Purchase Price and in amounts in accordance with and subject to the Gantt Chart, the Project Budget and Exhibit A hereto, provided that the aggregate Purchases pursuant to Section 2.2(a) and this Section 2.2(c)(i) shall not exceed 3,200,000 Series A Preferred Units.

 

(ii) Additional Second Tranche Purchase Requests. On the terms and subject to the conditions set forth in this Agreement, after the Subsequent Closing Date, the Company may request that the Purchaser acquire, in one or more Purchases pursuant to the Second Tranche, up to an aggregate amount of Series A Preferred Units equal to 2,800,000 minus the Subsequent Closing Units at the Purchase Price and in amounts in accordance with and subject to the Gantt Chart, the Project Budget and Exhibit A hereto (each, a “Second Tranche Request”); provided that the aggregate Purchases pursuant to Section 2.2(b) and this Section 2.2(c)(ii) shall not exceed 2,800,000 Series A Preferred Units.

 

 

 

(iii) Maximum Number of Purchases. There will be a maximum of twenty-four (24) Purchases under this Agreement. No more than one (1) Purchase may be made during any calendar month, unless otherwise agreed by the Agent at its sole discretion.

 

(iv) Minimum Purchase Amounts. Purchases shall be made in minimum amounts of $1,000,000 and in minimum increments of $200,000, unless otherwise agreed by the Agent at its sole discretion.

 

(v) Satisfaction of Conditions Precedent. Each Purchase Request shall be deemed a representation and warranty by the Company that all of the conditions precedent specified in Section 5.1 with respect to each Initial Tranche Request and Section 5.2 with respect to each Second Tranche Request have been satisfied on and as of the Closing Date of the applicable Purchase.

 

(vi) Additional Items. At the applicable Closing of each Purchase Request, (i) the Company will deliver to the Purchaser the number of Series A Preferred Units purchased by the Purchaser at such Closing, free and clear of any Liens, as evidenced by one or more certificates dated the applicable Closing Date and bearing appropriate legends as hereinafter provided for, and (ii) the Purchaser will deliver to the Company the applicable Purchase Price with respect to such Series A Preferred Units, by wire transfer of immediately available funds to an account designated by the Company. The Company shall also deliver to the Agent any additional Collateral Documents requested by the Agent. Any fees, costs or expenses incurred by Purchaser and/or the Agent in connection with the Closing shall be reimbursed to Purchaser or the Agent, as applicable, by the Company, and the Purchaser and/or the Agent may withhold from the Purchase Price the aggregate amount of such fees, costs and expenses.

 

(vii) Reimbursement. Company shall reimburse the Agent and Purchaser and hold the Agent and Purchaser harmless from any loss or expense that they may sustain or incur as a consequence of the failure of the Company to issue the requested number of Series A Preferred Units in accordance with a Purchase Request, including any such loss or expense arising from the liquidation or re-employment of funds obtained by the Agent or Purchaser to purchase the applicable Units.

 

 

(a) Initial Purchase. The Company shall use the proceeds from the Initial Purchase solely for the following: (i) to pay up to $6,000,000 for the payment of management fees owed by the Company to Aemetis, to be applied in accordance with the Use of Proceeds Schedule, (ii) to pay to, or at the direction of, the Purchaser, for its own account, a closing fee in the amount of $900,000, (iii) up to $600,000 for third-party closing costs satisfactory to the Agent and (iv) up to $500,000 for mobilization, working capital and to complete the Project Budget and the Gantt Chart.

 

(b) Subsequent Purchases. The Company shall use the proceeds from each Purchase after the Initial Closing Date in the following order: (i) to pay any Obligations constituting accrued but unpaid Preference Payments, fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Agent) payable to the Purchaser or Agent; and (ii) the balance, if any, strictly for the development, design, construction and commissioning of the Initial Digesters and the Additional Digesters in accordance with the Gantt Chart and the Project Budget, which use of proceeds must be approved by the Agent.

 

 

 

(a) The authorized Units of the Company, immediately prior to the Initial Closing, consists of:

 

(i) 6,000,000 Common Units are issued and outstanding immediately prior to the Initial Closing and 5,000,000 Conversion Units have been reserved. Aemetis is the direct legal and beneficial owner of 6,000,000 Common Units. All of the outstanding Common Units have been duly authorized, are fully paid and nonassessable (to the extent applicable) and were issued in in accordance with the Company Agreement and in compliance with all Applicable Securities Laws. 

 

(ii) 6,000,000 Series A Preferred Units, none of which are issued and outstanding immediately prior to the Initial Closing. The rights, privileges and preferences of the Series A Preferred Units are as stated in this Agreement and the Company Agreement.

 

(iii) The Company holds no Common Units, Series A Preferred Units or other Units in its treasury.

 

(b) As of the date hereof and effective immediately prior to the Initial Closing, no Common Units are reserved by the Company for issuance except for 5,000,000 Conversion Units.

 

(c) Section 3.3(c) of the Disclosure Schedule sets forth the capitalization of the Company immediately following the Initial Closing including the number of Units of the following: (i) all issued and outstanding Common Units; (ii) all issued and outstanding Series A Preferred Units; (iii) all granted Unit options, including vesting schedule and exercise price; (iv) all Common Units reserved for future award grants under any equity or other incentive plan; (v) all Common Units issuable upon conversion of Series A Preferred Units; and (vi) all, options, warrants or Unit purchase rights, if any.  Except for (A) the conversion privileges of the Series A Preferred Units to be issued under this Agreement, and (B) the securities and rights described in Section 3.3(c) of the Disclosure Schedule, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from the Company any Common Units, Series A Preferred Units, or other Units or any Equity Securities convertible into or exchangeable for Common Units, Series A Preferred Units or other Units.

 

(d) Except as set forth in this Agreement and the Company Agreement, the Company has no obligation (contingent or otherwise) to purchase or redeem any of its Units.

 

 

 

 

(a) The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of any of the Series A Preferred Units, and the consummation by the Company of the Transaction do not and will not: (i) conflict with or violate any provision of the Company’s Certificate of Formation or the Company Agreement or any other organizational documents of the Company, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company (except Liens created in favor of the Agent pursuant to the Transaction Documents), or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a debt of the Company or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) conflict with or result in a violation of any Law or other restriction of any Governmental Authority to which the Company is subject (including Applicable Securities Laws), or by which any property or asset of the Company is bound or affected.

 

 

(a) Section 3.11(a) of the Disclosure Schedule sets forth all Project Contracts and all other material agreements and contracts to which the Company is a party or is bound. The Company is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any Project Contract or material agreement to which it is a party or (ii) any agreement or instrument evidencing or governing Indebtedness.

 

(b) The Company has not (i) declared or paid any dividends or distributions, or authorized or made any distribution upon or with respect to any class or series of its Units, provided that the Company has authorized dividends, distributions and redemptions with respect to the Series A Preferred Units as set forth in this Agreement, (ii) incurred any Indebtedness or incurred any other liabilities individually in excess of $25,000 or in excess of $100,000 in the aggregate, (iii) made any loans or advances to any Person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. For the purposes of (a) and (b) of this Section 3.11, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same Person (including Persons the Company has reason to believe are affiliated with each other) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsection.

 

(c) The Company is not a guarantor or indemnitor of any Indebtedness of any Person.

 

(d) The Company has not engaged in the past twelve (12) months in any discussion with any representative of any Person regarding (i) a sale or exclusive license of all or substantially all of the Company’s assets, or (ii) any merger, consolidation, business combination or other Change of Control transaction of the Company with or into another Person.

 

 

(a) Other than (i) standard employee benefits generally made available to all employees, and (ii) standard manager and officer indemnification agreements approved by the Board, in each instance, approved in the written minutes of the Board (previously provided to the Purchaser or its counsel), there are no agreements, understandings or proposed transactions between the Company and any of its officers, managers, consultants or employees, or any Affiliate thereof.

 

(b) The Company is not indebted, directly or indirectly, to any of its managers, officers or employees or to their respective spouses or children or to any Affiliate of any of the foregoing, other than in connection with expenses or advances of expenses incurred in the ordinary course of business or employee relocation expenses and for other customary employee benefits made generally available to all employees. None of the Company’s managers, officers or employees, or any members of their immediate families, or any Affiliate of the foregoing are, directly or indirectly, indebted to the Company or have any (i) material commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship with any of the Company’s customers, suppliers, service providers, joint venture partners, licensees and competitors, (ii) direct or indirect ownership interest in any Person with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company except that directors, officers, employees or Unitholders of the Company may own equity interests in (but not exceeding two percent (2%) of the outstanding equity interests of) publicly traded companies that may compete with the Company; or (iii) financial interest in any material contract with the Company.

 

 

(a) The Company is not delinquent in payments to any of its employees, consultants, or independent contractors for any wages, salaries, commissions, bonuses, or other direct compensation for any service performed for it to the date hereof or amounts required to be reimbursed to such employees, consultants or independent contractors. The Company has withheld and paid to the appropriate Governmental Authority or is holding for payment not yet due to such Governmental Authority all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, Taxes, penalties or other sums for failure to comply with any of the foregoing.

 

(b) The Company is not, and has not been, a party to, bound by, or negotiating any collective bargaining agreement or other contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has not been, any Union representing or purporting to represent any employee of the Company, and no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting the Company or any of its employees. The Company has no duty to bargain with any Union.

 

(c) The Company is and has been in compliance with all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance. All individuals characterized and treated by the Company as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees classified as exempt under the Fair Labor Standards Act and state and local wage and hour Laws are properly classified. There are no Actions against the Company pending, or to the Company’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant or independent contractor of the Company, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wage and hours or any other employment related matter arising under applicable Laws.

 

(d) None of the Company’s employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with such employee’s ability to promote the interest of the Company or that would conflict with the Company’s business. Neither the execution or delivery of the Transaction Documents, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as now conducted and as presently proposed to be conducted, will, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which any such employee is now obligated.

 

(e) Section 3.16(e) of the Disclosure Schedule sets forth each employee benefit plan maintained, established or sponsored by the Company, or which the Company participates in or contributes to, which is subject to ERISA. The Company has made all required contributions and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title I(B) of ERISA, and has complied in all material respects with all applicable Laws for any such employee benefit plan.

 

 

 

(a) All Permits required for the Company to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 3.19(a) of the Disclosure Schedule lists: (a) all Permits issued to the Company for the Development of the Project and the operation of its business, including the names of the Permits and their respective dates of issuance and expiration, and (b) all Permits that the Company expects to require or request, to the best of its Knowledge after due inquiry, for the Development of the Project and the operation of its business, including the names of the Permits and the anticipated timing for issuance. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 3.19(a) of the Disclosure Schedule.

 

(b) Section 3.11(b) of the Disclosure Schedule sets forth all DDRDP grants with respect to the Initial Digesters and the Additional Digesters which, as of the Initial Closing Date, (i) the Company has obtained, (ii) have been approved by the DDRDP, (iii) have been submitted and are pending approval by the DDRDP, or (iv) the Company anticipates submitting.

 

 

 

(a) To the Company’s Knowledge, there is not now, and there has never been, any employment by the Company of, or beneficial ownership in the Company by, any governmental or political official in any country in the world.

 

(b) The Company and, to the Knowledge of the Company, the directors, managers, officers, agent, employees, affiliates or Persons acting on behalf of the Company has not been nor is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department (“OFAC”) and the Company will not directly or indirectly use any proceeds of any Purchase, or lend, contribute or otherwise make available such proceeds to the Company or to any affiliated entity, joint venture partner or other Person to finance any investments in, or make payments to, any country or Person targeted by any of the sanctions of the United Sates administered by OFAC.

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Representations and Warranties. The representations and warranties of the Company contained in this Agreement and the other Transaction Documents shall be true and correct in all respects on and as of the date of such Closing (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct as of such date).

 

(b) No Trigger Event. No Trigger Event or Potential Trigger Event shall exist.

 

(c) Qualifications. All Permits, if any, of any Governmental Authority that are required in connection with the consummation of the Transaction shall be obtained and effective as of the Initial Closing.

 

(d) Material Adverse Effect. Since the Signing Date, no fact, circumstance, event, change, occurrence, condition or development shall have occurred that, individually or in the aggregate, has had or could be reasonably likely to have a Material Adverse Effect.

 

(e) Litigation; Illegality. None of the Transactions shall have been enjoined by any Governmental Authority, no Action challenging any of the Transactions shall have been threatened or instituted and no investigation or other demand shall have been made by any Governmental Authority, and no Law shall have been enacted that prohibits, restrains or makes illegal the consummation of any the Transactions.

 

(f) Lien Searches. The Agent shall have received the results of a recent Lien search in the jurisdiction of organization of the Company and each jurisdiction where assets of the Company are located, and such searches shall reveal no Liens on any of the assets of the Company.

 

(g) Indemnification Agreement. The Agent shall have received the Indemnification Agreement duly executed by the Company.

 

(h) Security Agreement. The Agent shall have received the Security Agreement, duly executed by the Company.

 

(i) Mortgages. The Agent shall have received Mortgages covering the Leases for the Initial Digesters, the leasehold estates created thereby and the improvements thereon, duly executed by the Company (the “Initial Mortgages”). This condition does not apply to the Initial Closing.

 

(j) Surveys. The Agent shall have received ALTA surveys with respect to the Leases for the Initial Digesters, which shall be prepared and certified to the Agent by a surveyor acceptable to the Agent.

 

(k) Mortgage Title Policies. The Agent shall have received an ALTA mortgagee’s title policy for each of the Initial Mortgages, which shall be satisfactory to the Agent.

 

(l) Fee Owner, Lessor and Mortgagee Agreements. The Agent shall have received such (i) non-disturbance agreements and other agreements as it may request from the lessors and/or fee owners with respect to the Leases of the Initial Digesters and the mortgagees of such lessors and/or fee owners, and (ii) such lien waivers and other agreements from third parties as it may request with respect to the Collateral.

 

(m) Filings, Registrations and Recordings. The Agent shall have received each document (including any Uniform Commercial Code financing statement) required by the Collateral Documents or under applicable Law or requested by the Agent to be filed, registered or recorded in order to create in favor of the Agent, for the benefit of itself and the Purchaser, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person.

 

(n) Legal Opinions. The Purchaser and the Agent shall have received a satisfactory legal opinion, dated the Initial Closing Date, from the Structure Law Group, LLC, counsel for the Company, substantially in the form of Exhibit C

 

(o) Insurance. The Agent shall have received evidence of insurance coverage for the Company and its assets in form, scope, and substance reasonably satisfactory to the Agent and otherwise in compliance with the terms of this Agreement.

 

(p) Board. The authorized size of the Board shall be three (3) Managers.

 

(q) Closing Certificate. The Secretary of the Company shall have delivered to the Purchaser a certificate executed by the Secretary of the Company, in form and substance satisfactory to the Purchaser, certifying (i) a certified copy of the Company’s Certificate of Formation and all amendments thereto, (ii) the Company’s Company Agreement in effect at the time of such Closing, (iii) resolutions of the Board authorizing the Transaction Documents and the Transaction, (iv) a good standing certificate from the Secretary of the State of the State of Delaware, dated a recent date before such Closing, (v) a certificate from the Secretary of State of California as to the good standing of the Company as a foreign limited liability company in the State of California, and (vi) a certification as to the incumbency of the officers of the Company.

 

(r) Reservation of Units. The Company shall have duly authorized and reserved for issuance 5,000,000 Conversion Units.

 

(s) Delivery of Certificates Representing Series A Preferred Units. The Company shall have executed and delivered to the Agent one or more Unit certificates, registered in the name of the Purchaser, representing the number of Series A Preferred Units to be purchased at such Closing.

 

(t) Company Agreement. The Company and Aemetis shall have executed and delivered to the Purchaser a counterpart of the Company Agreement in the form attached hereto as Exhibit F, and the Company Agreement shall be in full force and effect as of each Closing Date in accordance with its terms.

 

(u) Gantt Chart. The Gantt Chart in effect on the Initial Closing Date, which shall have been approved by the both the Agent and the Third Party Consultant, certified by the Company.

 

(v) Project Budget. The Project Budget in effect on the Initial Closing Date, which shall have been approved by both the Agent and the Third Party Consultant, certified by the Company.

 

(w) Revenue Memorandum. The Agent shall have received a satisfactory revenue memorandum addressed to it and the Company with respect to the Project from EcoEngineers.

 

(x) Consultant’s Agreement. The Agent shall have received a copy of the consultant’s agreement between the Company and the Third Party Consultant.

 

(y) Management Agreement. The Agent shall have received a copy of the Management Agreement.

 

(z) Project Contracts. The Agent shall have received executed copies of all Project Contracts in effect on the Initial Closing Date, including Leases for the Initial Digesters and memoranda of such Leases that have been recorded in the appropriate real property records.

 

(aa) Consents to Security Interests. The Agent shall have received from each of Maas Energy and the Third Party Consultant a consent to the security interests created pursuant to the Collateral Documents in each Project Contract to which it is a party.

 

(bb) Permits. The Agent shall have received a list of (i) all Permits that the Company has obtained as of the Initial Closing Date, and (ii) all Permits that will be required for the Development of the Project and the anticipated dates of receipt.

 

(cc) Due Diligence. The Agent shall have completed its due diligence with respect to the Transaction.

 

(dd) Common Units. The Agent shall have received evidence satisfactory to it that Aemetis directly owns 6,000,000 Common Units.

 

(ee) Closing Fee. With respect to the Initial Closing, Company shall have paid to the Purchaser, for its own account, in immediately available funds, a closing fee equal to $900,000 to an account designated by the Agent or the Purchaser, or a signed direction to withhold such closing fee from the Subscription Amount payable at the Initial Closing.

 

(ff) Expenses. The Agent shall have received payment of all expenses for which invoices have been presented (including the fees and expenses of legal counsel, including local and special counsel), on or before the date of such Closing. All such amounts will be paid with proceeds of the Purchase on the Closing Date for such Closing and will be reflected in the instructions given by the Company to the Agent on or before such Closing Date.

 

(gg) Final Use of Proceeds. The Agent shall have received a final use of proceeds for the Subscription Amount, together with the consolidated balance sheets for the Company.

 

(hh) Additional Conditions. On or before the Initial Closing, each of the conditions precedent identified on Annex I hereto shall have been satisfied.

 

(ii) Additional Documents. The Agent shall have received copies of such other documents and agreements as the Agent may request.

 

(jj) Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Initial Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Agent, and the Agent (or its counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested.

 

 

(a) Representations and Warranties. The representations and warranties of the Company contained in this Agreement and the other Transaction Documents shall be true and correct in all respects as of such Closing (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct as of such date).

 

(b) No Trigger Event. No Trigger Event or Potential Trigger Event shall exist.

 

(c) Collateral Documents. The Agent shall have received such Collateral Documents as it may request.

 

(d) Additional Digesters. The Company shall have entered into the Additional Digester Contracts and delivered to the Agent certified copies of the Additional Digester Contracts and all amendments thereto.

(e) Mortgages. The Agent shall have received Mortgages covering the Leases for the Additional Digesters, the leasehold estates created thereby and the improvements thereon, duly executed by the Company (the “Additional Mortgages”).

 

(f) Surveys. The Agent shall have received ALTA surveys with respect to the Leases for the Additional Digesters, which shall be prepared and certified to the Agent by a surveyor acceptable to the Agent.

 

(g) Mortgage Title Policies. The Agent shall have received an ALTA mortgagee’s title policy for each of the Additional Mortgages, which shall be satisfactory to the Agent.

 

(h) Fee Owner, Lessor and Mortgagee Agreements. The Agent shall have received such (i) non-disturbance agreements and other agreements as it may request from the lessors and/or fee owners with respect to the Leases of the Additional Digesters and the mortgagees of such lessors and/or fee owners, and (ii) such lien waivers and other agreements from third parties as it may request with respect to the Collateral.

 

(i) Output Stabilization and Maximization of Initial Digesters. The output of the Initial Digesters shall have been stabilized and maximized in accordance with their design, and such stabilization and maximization of output shall be acceptable to the Agent in its sole discretion.

 

(j) DDRP Government Grants. The Agent shall have received within ten (10) months after the Initial Closing Date in accordance with the Gantt Chart evidence that the Company has received the approval of DDRDP government grants for: (i) the Initial Digesters, and (ii) the Additional Digesters with applications for the Additional Digesters to have been filed by no later than the immediately next deadline for grant applications following the Signing Date (and as set out on the DDRDP website https://www.cdfa.ca.gov/oefi/ddrdp/ on the Signing Date) for total DDRDP grant amounts equal to at least 50% of the related capital expenditures in the Project Budget.

 

(k) Completion of Engineering, Etc. The Agent shall have received within ten (10) months after the Initial Closing Date in accordance with the Gantt Chart (i) evidence of the completion of all engineering work, (ii) evidence of the approval of all construction drawings by Hartman Engineering, Inc., (iii) copies of the comprehensive and detailed work program and activity schedule, (iv) copies of bill of materials/services estimates, (v) a final list of vendors, and (vi) evidence of the ordering of long lead time items, all in accordance with the Project Budget.

 

(l) Project Budget Update. The Agent shall have received an update to the Project Budget showing all variances from the Project Budget with respect to the Initial Digesters and, in the event of any cost overruns from the Project Budget with respect to the completion of the Initial Digesters, the Agent shall have received evidence that the Company has satisfied all of the USDA Loan Conditions.

 

(m) Permits. The Agent shall have received within ten (10) months after the Initial Closing Date, in accordance with the Gantt Chart, evidence that the Company has received all Permits required for installing, constructing, building, connecting, completing, commissioning, and operationalizing the Project.

 

(n) Delivery of Certificates Representing Series A Preferred Units. The Company shall have executed and delivered to the Agent Unit certificates, registered in the name of the Purchaser, representing the number of Series A Preferred Units purchased at such Closing.

 

(o) Project Contracts. The Agent shall have received executed copies of all of the Project Contracts for the Additional Digesters, including the Leases for the Additional Digesters and memoranda thereof that have been recorded in the appropriate real property records.

 

(p) Material Adverse Change. Since the date of delivery of the most recent audited financial statements of the Company, no fact, circumstance, event, change, occurrence, condition or development shall have occurred that, individually or in the aggregate, has had or could be reasonably likely to have a Material Adverse Effect.

 

(q) Lien Searches. The Agent shall have received satisfactory Lien searches with respect to the fee owner(s) and operator of each dairy on which each Additional Digester will be located.

 

(r) Additional Documents. The Agent shall have received copies of such other documents and agreements as the Agent may request.

 

(s) Proceedings and Documents. All corporate and other proceedings in connection with the Transactions contemplated at such Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Agent, and the Agent (or its counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested.

 

 

 

 

(a) The Company shall deliver to the Purchaser and the Agent:

 

(ii) Annual Reporting.

 

(x) Financial Statements. As soon as available, but in any event within ninety (90) days after the end of each fiscal year of the Company (i) an unaudited balance sheet as of the end of such year, (ii) unaudited statements of income and of cash flows for such year, and a comparison between (x) the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year and as included in the Budget (as defined in Section 6.1(a)(y)) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and applications of funds for such year, (iii) an unaudited statement of members’ equity as of the end of such year, all such financial statements to be prepared in accordance with GAAP and certified by independent public accountants of nationally recognized standing selected by the Company and reasonably acceptable to the Agent, and (iv) audited financial statements of Aemetis, Inc. as delivered under the Note Purchase Agreement, containing an audit opinion on supplemental financial statements of the Company.

 

(y) Budget. As soon as practicable, but in any event thirty (30) days before the end of each fiscal year of the Company, a budget and business plan of the Company for the next fiscal year (collectively, the “Budget”), approved by the Board (including the Series A Preferred Units Manager) and prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company.

 

(ii) Quarterly Reporting.

 

(x) Financial Statements. As soon as available, but in any event within forty five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of members’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP and certified by an officer of the Company as being true, correct and complete (except that such financial statements may (i) be subject to normal period-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP).

 

(y) Capital Structure. As soon as available, but in any event within forty-five (45) days after the end of each of quarter of each fiscal year of the Company, a statement showing the number of shares of each class and series of Units and Equity Securities convertible into or exercisable for Units of the Company at the end of such quarter, the Common Units issuable upon conversion or exercise of any outstanding Equity Securities convertible or exercisable for Common Units and the exchange ratio or exercise price applicable thereto, and the number of Units of issued Unit options and Unit options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit the Purchaser and the Agent to calculate the Purchaser’s percentage equity ownership in the Company, and certified by an officer of the Company as being true, complete, and correct.

 

(iii) Monthly Reporting.

 

(x) Progress Reports. As soon as available, and in any event within ten (10) days after the end of each calendar month ending after the Initial Closing Date, a monthly report prepared by the Company, as certified by the Third Party Consultant on the progress of Development of the Project and achievement of Milestones in substantially the form of Exhibit E and in detail reasonably satisfactory to the Agent, including: (i) Milestone schedules, Milestones met and not met and, in the case of Milestones not met, the reasons why such Milestones were not met, targeted Milestones for the next month, and targeted Milestones for the next ninety (90) days, (ii) a report as to the progress of the Project, (iii) in the event of any material deviation or variance from the Gantt Chart and/or the Project Budget, the reason for such material deviation and such other information reasonably requested by the Purchaser and/or the Agent in connection therewith; (iv) any factors or events which have had, are having or could reasonably be expected to have a Material Adverse Effect; (v) the status of all Permits necessary for the Development of the Project, including with respect to Permits which have not been obtained, the dates of applications submitted or to be submitted and the anticipated dates of actions by applicable Governmental Authorities with respect to such Permits; and (vi) the status of all grants (including DDRDP grants) by Governmental Authorities for the Development of the Project, including with respect to grants that have not been obtained, the dates of applications submitted or to be submitted and the anticipated dates of action by applicable Governmental Authorities with respect to such grants.

 

 

(x) As soon as available, and in any event by no later than 12pm (Pacific Standard Time) on Friday of each week, following the Stabilization Period, a weekly report prepared by the Company in substantially the form of Exhibit K and in detail reasonably satisfactory to the Agent, of (i) all construction activities, highlighting any delays and deviations from the Gantt Chart together with timelines, underlying causes and remedies and corrective action proposed, (ii) a weekly log of daily biogas production for each of the Initial Digesters and Additional Digesters (once operational); (iii) a weekly log of daily average temperature of manure in each lagoon (at the surface and the bottom) for each Digester; (iii) a weekly log of daily measurement of volume of influents and effluents for each Digester; and (iv) weekly checks on the number of WCE for each of the dairies, manure collection methods and quantum of supply to each Digester, as per the Leases or other contracts signed with each of the related dairies.

 

 

 

 

 

(b) Bank Account Reporting. Unless the Agent has electronic viewing access to the Company’s bank accounts, within five (5) Business Days after the end of each calendar month, a statement issued by each bank for bank accounts held by the Company showing balances and account history, including the amount of cash and cash equivalents held in such bank account.

 

(c) Inspection Rights. The Company will, and will cause each Subsidiary to, (a) keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities, and (b) permit any representatives designated by the Agent (including employees of Agent or any consultants, accountants, lawyers, auditors, engineers and appraisers retained by the Agent), upon reasonable prior notice, to visit and inspect the Project, conduct at the Project field examinations of the Project, the Company’s assets, liabilities, books and records, including examining and making extracts from its books and records, environmental assessment reports and Phase I or Phase II studies, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. All such inspections and examinations shall be at the sole cost and expense of the Company.

 

(d) Monitoring. The Agent may conduct monthly reviews of the Development of the Project with the Third Party Consultant in consultation with such other engineer, consultant or advisor, in Agent’s sole and reasonable discretion, at the sole cost and expense of the Company.

 

(e) Notices. The Company shall give prompt written notice to the Agent of:

 

(i) the occurrence of any Trigger Event or Potential Trigger Event;

 

(ii) any (A) default or event of default under any contractual obligation of the Company or any Subsidiary or (ii) any Action, that in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

 

(iii) any Action affecting the Company or any Subsidiary or the Project (A) in which the amount involved is $50,000 or more and not covered by insurance, (B) in which injunctive or similar relief is sought or (C) which relates to any Transaction Document;

 

(iv) any resignation or termination of any director, manager or any senior officer of the Company, or the project manager hired for the Project;

 

(v) any damage or casualty to the Project or any part thereof;

 

(vi) the commencement of any condemnation proceeding with respect to the Project or any part thereof;

 

(vii) any amendment, modification or termination of any DDRDP government grant for or relating to the Project;

 

(viii) each Additional Digester Contract entered into by the Company; and

 

(ix) any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

 

(f) Other Information. Upon the request of the Agent, the Company shall promptly deliver he following to the Agent (to the extent permitted by applicable Law): (i) asset purchase reports and supporting invoices; (ii) detailed production statistics; (iii) copies of all Project Contracts and all other material contracts and authorizations; (iv) organizational charts and compensation of all of the Company’s personnel; (v) copies of reports sent to Unitholders and the Board; and (vi) such further schedules, reports, documents, and information as the Agent may require.

 

 

 

Section 6.4 Liquidation; Deemed Liquidation.

 

(a) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (collectively with a Deemed Liquidation, a “Liquidation”), the holders of Series A Preferred Units then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its Unitholders, before any payment shall be made to the holders of Junior Securities by reason of their ownership thereof, an amount in cash equal to the aggregate Liquidation Value of all Series A Preferred Units held by such holder, plus all unpaid accrued and accumulated Preference Payments on all Series A Preferred Units.

 

(b) Deemed Liquidation. The occurrence of either a Change of Control or a Qualified Public Offering (either such event, a “Deemed Liquidation”) shall be deemed a Liquidation for purposes of this Section 6.4. Upon the consummation of any such Deemed Liquidation, the holders of the Series A Preferred Units shall, in consideration for cancellation of their Series A Preferred Units, be entitled to the same rights such holders are entitled to under this Section 6.4 upon the occurrence of a Liquidation, including the right to receive the full preferential payment from the Company of the amounts payable with respect to the Series A Preferred Units under Section 6.4(a) hereof.

 

(c) Deemed Liquidation Procedures. In furtherance of the foregoing, the Company shall take such actions as are necessary to give effect to the provisions of Section 6.4(a) and Section 6.4(b), including, without limitation, (i) in the case of a Change of Control structured as a merger, consolidation or similar reorganization, causing the definitive agreement relating to such transaction to provide for a rate at which Series A Preferred Units are converted into or exchanged for cash, or (ii) in the case of a Change of Control structured as an asset sale, as promptly as practicable following such transaction, either dissolving the Company and distributing the assets of the Company in accordance with applicable Law or redeeming all outstanding Series A Preferred Units and, in the case of both (i) and (ii), giving effect to the preferences and priorities set forth in this Section 6.4. The Company shall promptly provide to the holders of Series A Preferred Units such information concerning the terms of such Change of Control, and the value of the assets of the Company as may reasonably be requested by the holders of Series A Preferred Units.

 

 

 

(d) Notice Requirement. In the event of any Liquidation (or Deemed Liquidation), the Company shall, within ten (10) days of the date the Board approves such action, or no later than twenty (20) days of any Unitholders’ meeting called to approve such action, or within twenty (20) days of the commencement of any involuntary proceeding, whichever is earlier, give the Agent and each holder of Series A Preferred Units written notice of the proposed action. Such written notice shall describe the material terms and conditions of such proposed action, including a description of the stock, cash and property to be received by the holders of Series A Preferred Units upon consummation of the proposed action and the date of delivery thereof. If any material change in the facts set forth in the initial notice shall occur, the Company shall promptly give written notice to each holder of Series A Preferred Units of such material change.

 

 

(a) Right to Convert. Each Series A Preferred Unit shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into one (1) fully paid and non-assessable Common Unit, provided that (i) the total number of Common Units into which Series A Preferred Units may be converted shall not exceed 1,200,000 Common Units or, subject to Section 7.2, 5,000,000 Common Units (subject in each case to appropriate adjustment in the event of any distributions, Common Unit split, reclassification, combination or other similar recapitalization affecting such Units), and (ii) the Common Units into which Series A Preferred Units are converted shall have terms and conditions that are identical to the terms of the Common Units held by Aemetis.

 

(b) Fractional Units. No fractional Common Units shall be issued upon conversion of a Series A Preferred Unit. In lieu of any fractional Units to which the holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the Fair Market Value of a Common Unit. Whether or not fractional Units would be issuable upon such conversion shall be determined on the basis of the total number of Series A Preferred Units the holder is at the time converting into Common Units and the aggregate number of Commons Units issuable upon such conversion.

 

(c) Notice of Conversion. In order for a holder of Series A Preferred Units to voluntarily convert Series A Preferred Units into shares of Common Units, such holder shall provide written notice to the Company that such holder elects to convert a number of such holder’s Series A Preferred Units and, if applicable, any event on which such conversion is contingent. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the Common Units to be issued. The close of business on the date of receipt by the Company shall be the time of conversion (the “Conversion Time”), and the Common Unit issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Company shall, as soon as practicable after the Conversion Time pay in cash such amount as provided in Section 6.5(b) in lieu of any fraction of a Common Unit otherwise issuable upon such conversion. Any accrued but unpaid Preference Payments or distribution with respect to each Series A Preferred Unit so converted shall become payable to the holder as of the Conversion Time.

 

(d) Reservation of Units. The Company shall at all times when any Series A Preferred Units shall be outstanding, reserve and keep available out of its authorized but unissued Units, for the purpose of effecting the conversion of the Series A Preferred Units, such number of its duly authorized Common Units as shall from time to time be sufficient to effect the conversion of all outstanding Series A Preferred Units entitled to conversion; and if at any time the number of authorized but unissued Common Units shall not be sufficient to effect the conversion of all then outstanding Series A Preferred Units entitled to conversion, the Company and the Unitholders shall take such action as may be necessary to increase its authorized but unissued Common Units to such number of Common Units as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite approval of any necessary amendment to the Company Agreement.

 

(e) Adjustments for Certain Diluting Issues.

 

(i) Adjustments for Splits and Combinations. If the Company shall at any time or from time to time after the Initial Closing Date effect a subdivision of the outstanding Common Units, the number of Common Units issuable on conversion of the Series A Preferred Units shall be increased in proportion to such increase in the aggregate number of Common Units outstanding. If the Company shall at any time or from time to time after the Initial Closing Date combine the outstanding Common Units, the number of Common Units issuable on conversion of the Series A Preferred Units shall be decreased in proportion to such decrease in the aggregate number of Common Units outstanding.

 

(ii) Adjustments for Distributions. In the event the Company at any time or from time to time after the Initial Closing Date shall make a distribution payable in securities of the Company (including a distribution of Common Units in respect of outstanding Common Units) or in other property, then and in each such event the holders of Series A Preferred Units shall receive, simultaneously with the distribution, a distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding Series A Preferred Units entitled to convert into Common Units had been converted into Common Units on the date of such event.

 

(iii) Adjustment for Merger or Reorganization, etc. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Units (but not the Series A Preferred Units) are converted into or exchanged for securities, cash or other property (other than a transaction covered by Section 6.5(e)(ii)), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each Series A Preferred Unit entitled to be converted shall thereafter be convertible in lieu of the Common Unit into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of Common Units issuable upon conversion of one Series A Preferred Unit immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 6.5 with respect to the rights and interests thereafter of the holders of the Series A Preferred Units, to the end that the provisions set forth in this Section 6.5 shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Units.

 

(iv) Certificate as to Adjustments. Upon the occurrence of each adjustment pursuant to this Section 6.5(e), the Company at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred Units a certificate setting forth such adjustment (including the kind and amount of securities, cash or other property into which the Series A Preferred Units are convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, as promptly as reasonably practicable after the written request at any time of any holder of Series A Preferred Units (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth the number of Common Units and the amount, if any, of other securities, cash or property which then would be received upon the conversion of a Series A Preferred Unit.

 

(v) Notice. In the event: (A) the Company intends to take any action entitling or enabling Unitholders to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any securities, or to receive any other security; (B) the Company intends to effect any capital reorganization of the Company, any reclassification of the Common Units, or any Change of Control; or (C) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will send or cause to be sent to the holders of the Series A Preferred Units a notice specifying, as the case may be, (i) the date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Units (or such other capital stock or securities at the time issuable upon the conversion of the Series A Preferred Unit) shall, or shall be entitled to, exchange their Common Units (or such other Equity Securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A Preferred Units and the Common Units. Such notice shall be sent at least twenty (20) days prior to the effective date for the event specified in such notice.

 

(f) No Charge or Payment. The Company shall pay any and all issue and other similar Taxes that may be payable in respect of any issuance or delivery of Common Units upon conversion of Series A Preferred Units pursuant to this Section 6.5. The issuance of certificates for Common Units upon conversion of Series A Preferred Units pursuant to Section 6.5 shall be made without payment of additional consideration by, or other charge, cost or Tax to, the holder in respect thereof.

 

 

(a) Each holder of outstanding Series A Preferred Units shall be entitled to one vote per Series A Preferred Unit and to vote with holders of outstanding Common Units, voting together as a single class, with respect to any and all matters presented to the Unitholders of the Company for their action or consideration (whether at a meeting of Unitholders of the Company, by written action of Unitholders in lieu of a meeting or otherwise), except as provided by Law or by the provisions of Section 6.8 below. Each holder of outstanding Series A Preferred Units shall be entitled to notice of all Unitholder meetings (or requests for written consent) in accordance with the Company’s Company Agreement.

 

(b) Any of the rights, powers, preferences and other terms of the Series A Preferred Units set forth herein may be waived on behalf of all holders of Series A Preferred Units by the affirmative written consent or vote of the holders of at least a majority of the Series A Preferred Units then outstanding.

 

 

(a) The Company shall at all times have three (3) Managers. The holders of record of a majority of the Series A Preferred Units (or if no Series A Preferred Units are outstanding, but Series A Preferred Units have been converted into Common Units, then a majority of the holders of such Common Units resulting from such conversion), exclusively and as a separate class, shall be entitled to elect one (1) Manager of the Company (the “Series A Preferred Units Manager”). The holders of record of Common Units and the Series A Preferred Units, exclusively and voting together as a single class, shall be entitled to elect the two remaining Managers of the Company. Any Manager elected as provided in the preceding sentence may be removed without cause by, and only by, the affirmative vote of a majority of the holders of the Units of the class or series of Units entitled to elect such Manager, given either at a special meeting of such Unitholders duly called for that purpose or pursuant to a written consent of the relevant Unitholders. If the holders of Series A Preferred Units or Common Units, as the case may be, fail to elect a sufficient number of Managers to fill the Board for which they are entitled to elect Managers, voting exclusively and as a separate class pursuant to the first sentence of this Section 6.5, then any Manager position not so filled shall remain vacant until such time as the holders of the Series A Preferred Units or Common Units, as the case may be, elect a person to fill such Manager position by vote or written consent in lieu of a meeting; and no such Manager position may be filled by Unitholders of the Company other than by the Unitholders of the Company that are entitled to elect a person to fill such Manager Position, voting exclusively and as a separate class. Except as otherwise provided in this Section 6.7, a vacancy in any Manager position filled by the holders of any class or series of Units shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or series of Units. The Company shall execute and deliver or cause to be executed and delivered such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Purchaser to effectually carry out this provision.

 

(b) The Company shall notify the Agent of the date and time for each regular and special meeting of the Board or any committee thereof or of the adoption of any resolutions by written consent (describing in reasonable detail the nature and substance of such action) at the same time and in the same manner that notice is provided to Managers of the Company and provide to the Agent any materials delivered to the Managers of the Company at the same time such materials are provided to such Managers. The Board shall meet at least once per quarter. The Agent shall be free to contact the Managers of the Company and discuss the pending actions to be taken.

 

 

(a) liquidate, dissolve or wind-up the business and affairs of the Company or any Subsidiary, or consent to or otherwise approve any of the foregoing;

 

(b) take any action that would result in a Bankruptcy Event; adopt a plan of liquidation of the Company or any of its Subsidiaries; take any action to commence any suit, case, proceeding or other action under any existing or future Law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors seeking to have an order for relief entered with respect to the Company or any of its Subsidiaries, or seeking to adjudicate the Company or any of its Subsidiaries as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to the Company or any of its Subsidiaries; appoint a receiver, trustee, custodian or other similar official for the Company or any of its Subsidiaries, or for all or any material portion of the assets of the Company or any of its Subsidiaries; or make a general assignment for the benefit of the creditors of the Company or any of its Subsidiaries;

 

(c) amend, modify, alter or repeal any provision of the Certificate of Formation, the Company Agreement or this Agreement in a manner that affects the powers, preferences or rights of the Series A Preferred Units or that increases or decreases the number of authorized Series A Preferred Units;

 

(d) create, or authorize the creation of, any additional class or series of Units or reclassify or authorize the reclassification of any class or series of Units (unless the same ranks junior in all respects to the Series A Preferred Units with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and distributions, and redemption rights) or increase or decrease the authorized number of Series A Preferred Units or increase the authorized number of shares of any additional class or series of Units (unless the same ranks junior to the Series A Preferred Units with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and distributions, and redemption rights);

 

(e) purchase, redeem or otherwise acquire (or permit any Subsidiary to purchase, redeem or otherwise acquire), or pay, declare or make any dividend or distribution on, any Common Units;

 

(f) create any bonds, notes or Equity Securities that are convertible into, or exchangeable for, or have option rights to purchase or otherwise acquire, any Units (or other ownership or profits interests) in the Company that would rank senior to or pari passu with the Series A Preferred Units with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and distributions, and redemption rights;

 

(g) create, incur, assume, guarantee or authorize the creation, incurrence, guarantee, or assumption of, or issue, or authorize the issuance of any Indebtedness, or permit any Subsidiary to take any such action with respect to any Indebtedness, except for current trade payables incurred in the ordinary course of business, or amend, renew, increase or otherwise alter in any material respect the terms of any Indebtedness previously approved or required to be approved by holders of Series A Preferred Units;

 

(h) increase or decrease the authorized number of Managers constituting the Board from three (3) or otherwise affects the composition or appointment of the Board;

 

(i) engage in any line of business other than the business conducted or proposed to be conducted by the Company as of the Effective Date or use, or permit the use of, the proceeds from the issuance of the Series A Preferred Units for any purpose other than the purposes specified in Section 2.3;

 

(j) enter into, or become subject to or bound by, any agreement or instrument or other obligation which by its terms restricts the Company’s ability to perform any of its obligations under the Company Agreement and/or this Agreement, including the ability of the Company to pay dividends or distributions or make any redemption or liquidation payments with respect to the Series A Preferred Units required hereunder and/or under the Company Agreement;

 

(k) effect any recapitalization, restructuring or reorganization or split or combination of any Unit, Preferred Unit, or Common Unit;

 

(l) effect or enter into any agreement to effect any Change of Control;

 

(m) sell, transfer, license, lease or otherwise dispose of, in any transaction or series of related transactions, any assets of the Company or any Subsidiary having a Fair Market Value in excess of $100,000, other than inventory in the ordinary course of business;

 

(n) create, form or acquire any Subsidiary; or

 

(o) take any action, authorize or approve, or enter into any binding agreement with respect to or otherwise commit to do any of the foregoing.

 

 

(a) Quarterly Mandatory Redemption. On the last day of April, July, October and January of each calendar year (each a “Quarterly Redemption Date”), the Company shall mandatorily redeem, at their Liquidation Value, the number of Series A Preferred Units equal to seventy-five percent (75%) of Free Cash Flow (if positive) generated by the Company during the calendar quarter then most recently ended divided by the Liquidation Value (the aggregate redemption price on any such date being a “Quarterly Redemption Price”). In connection with the payment of each such mandatory redemption, the Company shall provide a statement setting forth the calculation of the Quarterly Redemption Price, along with such supporting documentation as may be reasonably requested by the Agent. To the extent that the Quarterly Redemption Price is subject to a subsequent period-end audit adjustment, and either too little or too much was redeemed, Company will either promptly pay additional funds to the applicable Members, or Company will offset present or future redemptions payable to Members. Mandatory redemptions pursuant to this Section 6.9(a) shall be made in immediately available funds and shall not exceed $90,000,000 in the aggregate. If any Series A Preferred Units are not timely redeemed pursuant to this Section 6.9(a), the unpaid Quarterly Redemption Price for such unredeemed Units will bear interest at 10% per annum, compounded daily, and any unpaid interest shall accrue and shall be due and payable no later than the next Quarterly Redemption Date (irrespective of whether the Company generates positive Free Cash Flow on such next Quarterly Redemption Date or is required to redeem any other Series A Preferred Units on such date).

 

(b) Full Redemption. On the sixth anniversary of the Signing Date (the “Final Redemption Date”), the Company shall redeem all of the outstanding Series A Preferred Units by paying to the Purchaser, in immediately available funds, an aggregate amount equal to the Liquidation Value of all issued and outstanding Series A Preferred Units plus all accrued and unpaid Preference Payments on the Series A Preferred Units (the “Final Redemption Price”).

 

(c) Interest. If any Series A Preferred Units required to be redeemed on any Redemption Date are not redeemed in accordance with this Agreement, (i) all such unredeemed Series A Preferred Units shall remain outstanding and continue to have the rights, preferences and privileges provided in this Agreement, including the accrual and accumulation of Preference Payments, and (ii) the Company shall pay interest on the Redemption Price applicable to such unredeemed Series A Preferred Units at a per annum rate equal to ten percent (10%), compounded daily; provided, however, that in no event shall such interest exceed the maximum permitted rate of interest under applicable law (the “Maximum Permitted Rate”), provided, however, that the Company shall take all such actions as may be necessary, including without limitation, making any applicable governmental filings, to cause the Maximum Permitted Rate to be the highest possible rate. In the event any provision hereof would result in the rate of interest payable hereunder being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided, however, that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the applicable Redemption Date to the extent permitted by law. Subject to Section 6.9(a), accrued and unpaid interest on any past due Redemption Price shall be due and payable when such Redemption Price is paid.

 

 

(a) The Company shall give notice (the “Offer Notice”) to each Preemptive Right Member, stating (i) its bona fide intention to offer such Equity Securities, (ii) the number of such Equity Securities to be offered, (iii) the price and terms, if any, upon which it proposes to offer such Equity Securities, and (iv) if the consideration to be paid for such Equity Securities includes non-cash consideration, the Fair Market Value thereof.

 

(b) By notification to the Company within twenty (20) days after the Offer Notice is given, each Preemptive Right Member may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such Equity Securities which equals the proportion that the Series A Preferred Units then held by such Preemptive Right Member bears to the total Series A Preferred Units then outstanding; provided that if the consideration to be paid for such Equity Securities includes non-cash consideration, each Preemptive Right Member shall be entitled, at its option, to pay the price in cash in lieu of such non-cash consideration. At the expiration of such twenty (20) day period, the Company shall promptly notify each Preemptive Right Member that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Member”) of any other Preemptive Right Member’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Member may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the Equity Securities for which Preemptive Right Members were entitled to subscribe but that were not subscribed for by the Preemptive Right Members which is equal to the proportion that the Series A Preferred Units then held by such Fully Exercising Member bears to the Series A Preferred Units then held by all Fully Exercising Members who wish to purchase such unsubscribed shares. The closing of any sale pursuant to this Section 6.9(c) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of Equity Securities pursuant to Section 6.10(d).

 

(c) If all Equity Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 6.10(c), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 6.10(c), offer and sell the remaining unsubscribed portion of such Equity Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the Equity Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Equity Securities shall not be offered unless first reoffered to the Preemptive Right Members in accordance with this Section 6.10.

 

(d) Subject to the terms and conditions of this Section 6.9 and Applicable Securities Laws, if any Subsidiary of the Company proposes to offer or sell any Equity Securities, such Subsidiary shall first offer such Equity Securities to each Member holding Series A Preferred Units in accordance with the terms and conditions of this Section 6.10, mutatis mutandis.

 

 

 

 

(a) The Company shall obtain and maintain from financially sound and reputable insurers directors and officers liability insurance in an amount and on terms and conditions satisfactory to the Board (which shall include Side A Coverage), and will use commercially reasonable efforts to cause such insurance policies to be maintained until such time as the Board determines that such insurance should be discontinued. Notwithstanding any other provision of this Section 6.13 to the contrary, for so long as the Series A Preferred Units Manager is serving on the Board, the Company shall maintain a directors and officers liability insurance policy in an amount of at least $3,000,000 (with additional Side A coverage of at least $2,000,000) and otherwise satisfactory to the Series A Preferred Units Manager, and the Company shall annually, within one hundred twenty (120) days after the end of each fiscal year of the Company, deliver to the Purchaser and the Agent a certification that such a directors and officers liability insurance policy remains in effect.

 

(b) The Company shall maintain with financially sound and reputable carriers having a financial strength rating of at least A- by A.M. Best Company (a) insurance in such amounts (with no greater risk retention) and against such risks (including, without limitation, loss, casualty or damage by fire and loss in transit; theft, burglary, pilferage, larceny, embezzlement, and other criminal activities; business interruption; and general liability) and such other hazards, as is customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (b) all insurance required pursuant to the Collateral Documents. Such insurance must be satisfactory to the Agent. The Company will from time to time furnish to the Agent information in reasonable detail as to the insurance so maintained.

 

(c) The Company shall cause each contractor and subcontractor, prior to performing work on the Project, to supply proper evidence of the types of insurance as set forth in their respective contracts and will include, where applicable, professional liability insurance. Such insurance supplied by each contractor and subcontractor shall, with the exception of workers compensation, where contractually able: (i) add the Company and the Agent as additional insured; (ii) be primary with respect to insurance provided the Company, the Purchaser and the Agent as additional insured; (iii) waive rights of subrogation against the Company and the Agent as additional insured; and (iv) continue in force until all obligations of the contractor or subcontractor are fulfilled.

 

 

(a) Operating Cash Flow per Digester. Following the Stabilization Period of each Digester, such Digester shall have minimum quarterly Operating Cash Flow of $300,000.

 

(b) Total Operating Cash Flow. The Company will cause minimum quarterly Operating Cash Flow on a cumulative basis to be not less than the amounts specified below for the periods specified below:

 

Calendar Months following Initial Closing Date	Cumulative Operating Cash Flow
15 months	$1,500,000
18 months	$2,300,000
21 months	$3,200,000
24 months	$7,900,000
27 months	$15,600,000
30 months	$21,100,000
33 months	$26,500,000
36 months	$32,900,000
39 months	$39,900,000
42 months	$46,000,000
45 months	$52,100,000
48 months	$59,300,000
51 months	$67,000,000
54 months	$73,000,000
57 months	$79,000,000
60 months	$86,000,000

 

(c) Minimum Biogas Output. Commencing on October 18, 2019, the Company will cause the average biogas output generated by the Digesters from cow manure and reported monthly to be not less than 11 MMBTU per WCE per year on a seasonally adjusted, annualized basis.

 

 

(a) The Company shall comply with and shall enforce all of the terms of the Project Contracts.

 

(b) The Company shall not (i) cancel or terminate any Project Contract or consent to or accept any cancellation or termination thereof; (ii) amend, modify or change in any manner any term or condition of any Project Contract or give any consent, waiver or approval thereunder; (iii) waive any default under or any breach of any term or condition of any Project Contract; or (iv) take any other action in connection with any Project Contract that would impair the value of the interest or rights of the Company thereunder or that would impair the rights or interests of the Agent or the Purchaser therein.

 

(c) The Company shall comply with all applicable Laws and all of its contractual obligations.

 

(d) The Company shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Company.

 

(e) The Company shall maintain a centralized monitoring and control system for data collection comprising all key performance indicators and measured parameters, with primary data feeds connected to a control console to be located at the Keyes Plant with a connecting feed to Maas Energy’s offices until such time as the Maas Energy Contract expires in accordance with its terms.

 

(f) The Company may transition operation and maintenance of the Project from Maas Energy to another contractor, acceptable to the Agent, after the first anniversary following the end of the Stabilization Period.

 

(g) The Company shall maintain regular contact with each dairy farmer to monitor and notify the Agent of any changes in the feed to the cows at each dairy.

 

(h) The Company shall maintain an inventory of required spares and long lead time items to ensure uninterrupted operations of the Digesters.

 

(i) At the Agent’s request, and the Company’s sole expense, the Company will engage and maintain a California- approved specialist bioenergy consultant to maximize proceeds from the Company’s LCFS and RIN credits.

 

(j) The Company shall not create or acquire any Subsidiaries.

 

(k) The Company shall not make any loans or advances to, or investments in, any other Person, outside of prepaid or trade account arrangements typical and reasonable to operate the business.

 

(l) The Company shall not amend, restate, supplement or otherwise modify the Gantt chart or the Project Budget without the prior written approval of the Agent and the Third Party Consultant.

 

(m) The Company shall maintain in full force and effect all Permits necessary or desirable for the Development of the Project.

 

(n) The Company shall establish and maintain proper procedures in accordance with applicable law for obtaining conditional and final lien waivers from all contractors and subcontractors performing work on the Project, and the Company shall obtain, or cause to be obtained, sworn lien waivers concurrently with each payment to each contractor and subcontractor performing work on the Project. All such lien waivers shall comply with applicable law and shall evidence receipt of all payments made prior to the date thereof or that are then due and payable.

 

(o) The Company shall not make any payments to Aemetis pursuant to the Management Agreement without the Agent’s prior written consent nor during or following a Trigger Event.

 

(p) After the date hereof, any DDRDP grants applied for by the Company with respect to the Project shall be applied for by the Company and shall be awarded directly to the Company.

 

 

(a) The Company shall provide the Agent as soon as practicable with all engineering drawings in connection with construction and completion of the Project, Project Contracts, materials estimates and takeoffs, plans and specifications, Permits and approvals, the Project Budget, Milestone and construction schedules, and bonding insurance, in each case to be prepared or approved by Maas Energy and confirmed by the Third Party Consultant.

 

(b) The Company agrees to enter into, at least ninety (90) days prior to the end of the Stabilization Period of the Initial Digesters, CNG and/or natural gas supply agreements with one or more transportation and/or energy companies (“CNG Transportation Agreements”), including G&G and Al Gilbert, satisfactory to the Agent, that allow for transport of 100% of biogas generated from the Project for a minimum term of six (6) years.

 

(c) Upon completion of the Initial Digesters, the Company agrees to cover any cost overrun in the Project Budget, from time to time, by arranging USDA guaranteed, low interest rate loans up to $20,000,0000 to avoid any work stoppages during execution of the Project (the “USDA Loan Condition”), on terms acceptable to the Agent.

 

 

(a) Collateral Documents Generally. To secure full and complete payment and performance of the Obligations, the Company shall from time to time execute and deliver, or cause to be executed and delivered, all Collateral Documents required by the Agent to grant to the Agent, for the benefit of the Secured Parties, a perfected, first priority lien on and security interest in all present and future property of the Company. The Company shall execute and cause to be executed such further documents and instruments, including without limitation, UCC financing statements, as the Agent, in its sole discretion, deems necessary or desirable to create, evidence, preserve, protect, and perfect its liens and security interests in the Collateral.

 

(b) Mortgages. Promptly after entering into a Lease with respect to each Additional Digester, the Company shall, at the Company’s sole cost and expense, promptly execute and deliver to the Agent a first priority Mortgage in recordable form covering such Lease, the related leasehold estate, all improvements on the leasehold estate and all appurtenances thereto, together with the following documents, all of which must be satisfactory in form and substance to the Agent:

 

(i) an ALTA mortgagee’s title policy with respect to such Mortgage;

 

(ii) an ALTA survey with respect to the real property covered by such Mortgage, prepared and certified to the Agent by a surveyor acceptable to the Agent;

 

(iii) evidence satisfactory to the Agent that the property covered by such Mortgage is not in a flood zone;

 

(iv) if requested by the Agent, an environmental assessment of the real property covered by such Mortgage prepared by an environmental engineer reasonably acceptable to the Agent, and accompanied by such reports, certificates, studies or data as the Agent may reasonably require, which shall all be in form and substance satisfactory to the Agent;

 

(v) an acknowledgement and agreement in recordable form, in favor of the Agent, executed by the lessor under such Lease and, if different from such lessor, the owner and operator of the relevant dairy, with respect to such Mortgage and such Lease;

 

(vi) a consent and nondisturbance agreement executed by each prior mortgagee of the premises covered by the Lease; and

 

(vii) such other information, documents, and certificates as may be reasonably required by the Agent.

 

(c) Further Assurances.   Promptly upon request by the Agent, the Company shall (a) correct any defect or error that may be discovered in any Transaction Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Agent may require from time to time in order to (i) carry out more effectively the purposes of the Transaction Document, (ii) subject the Company’s or any of its Subsidiaries' properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Transaction Document or under any other instrument executed in connection with any Transaction Document to which the Company or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

 

(d) Obligations Secured by Collateral. Notwithstanding anything to the contrary contained in the Collateral Documents, the aggregate amount of the Obligations secured by the Collateral shall be limited to an amount equal to the sum of (i) $30,000,000, plus (ii) all interest, fees, charges, expenses, reimbursement obligations and indemnification obligations of the Company under the Transaction Documents, whether absolute or contingent, due or to become due, or now existing or hereafter arising or incurred, including, without limitation, all fees, charges and disbursements of counsel to the Agent or to any other Secured Party that are required to be paid by the Company pursuant to any Transaction Document. Nothing contained in this Section 6.17(d) shall limit or affect the absolute and unconditional obligation of the Company to pay and perform when due all of the Obligations.

 

(e) As-Built Surveys. Within thirty (30) after the completion of construction of each Digester, the Company, at the Company’s sole cost and expense, shall deliver to the Agent a final “as-built” survey of such Digester, certified to the Agent and the relevant title insurance company, showing the completed Digester, which survey shall be in form and substance satisfactory to the Agent and the title insurance company, and shall disclose no easements, rights-of-way or other encumbrances, except for those that are acceptable to the Agent.

 

 

 

 

(a) Non-Payment. The Company fails to (i) redeem any of the Series A Preferred Units on the applicable Redemption Date in accordance with this Agreement, or (ii) pay when due, any interest or fee due hereunder, or (iii) pay when due any other amount payable hereunder or under any other Transaction Document; or

 

(b) Covenants. The Company fails to perform or observe any term, covenant or agreement contained in any of the Transaction Documents; or

 

(c) Other Defaults. The Company ceases to carry on its business in the ordinary course, except where such cessation occurs in connection with a sale of all or substantially all of the assets of the Company, or a restructuring or reorganization of the Company, which has been approved in writing by the Agent; or

 

(d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Company herein, in any other Transaction Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

 

(e) Cross-Default. (i) The Company (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee having an aggregate principal amount of more than $100,000, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Company or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Company is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Company as a result thereof is greater than $100,000; or

 

(f) Insolvency Proceedings, Etc. The Company institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

 

(g) Inability to Pay Debts; Attachment. (i) The Company becomes insolvent or unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or

 

(h) Judgments. There is entered against the Company (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $100,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of ten (10) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $100,000, or (ii) the Company or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $100,000; or

 

(j) Invalidity of Transaction Documents. Any provision of any Transaction Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or the Company or any other Person contests in any manner the validity or enforceability of any provision of any Transaction Document; or the Company or any Affiliate of the Company denies that it has any or further liability or obligation under any provision of any Transaction Document, or purports to revoke, terminate or rescind any provision of any Transaction Document; or

 

(k) Change of Control. There occurs any Change of Control; or

 

(l) Collateral Documents. Any of the Collateral Documents shall cease, for any reason, to be in full force and effect, or the Company or any Affiliate of the Company shall so assert, or any Lien created by any of the Collateral Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby; or

 

(m) Project Contracts. The Company shall fail to perform or observe any term, covenant or agreement contained in any Project Contract on its part to be performed or observed where such failure could reasonably be expected to have a Material Adverse Effect; or

 

(n) Material Adverse Effect. There shall occur any event, condition or development that could, in the sole opinion of the Agent, reasonably be expected to have a Material Adverse Effect; or

 

(o) Note Purchase Agreement. A default or event of default shall occur under the Note Purchase Agreement.

 

 

(a) terminate any obligation of the Purchaser to purchase Series A Preferred Units under this Agreement or otherwise;

 

(b) increase the percentage in Section 6.9(a) from seventy-five percent (75%) to one hundred percent (100%);

 

(c) increase the total number of Common Units into which Preferred Units may be converted from 1,200,000 Common Units to 5,000,000 Common Units; and/or

 

(d) exercise any and all rights and remedies available to it and the Purchaser under the Transaction Documents.

 

 

 

 

 

 

 

 

 

 

 

(a) Whether or not any Closing occurs, the Company shall pay on demand (i) all expenses incurred by the Agent, the Purchaser and their respective Affiliates, including the reasonable fees, charges and disbursements of counsel (including local counsel) for the Agent, in connection with the preparation, negotiation, execution, delivery and administration of the Transaction Documents or any amendments, modifications or waivers of the provisions of the Transaction Documents (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all expenses incurred by the Agent, the Purchaser and their respective Affiliates, including the fees, charges and disbursements of any counsel (including local counsel) for the Agent, the Purchaser, and their respective Affiliates in connection with the enforcement, preservation or protection of their rights under or in connection with the Transaction Documents, including all such expenses incurred in connection with any Trigger Event or Potential Trigger Event. Expenses being reimbursed by the Company under this Section include, without limiting the generality of the foregoing, costs and expenses incurred in connection with:

 

(i) appraisals, asset valuations, and insurance reviews;

 

(ii) field examinations and Collateral audits;

 

(iii) auditing, monitoring and evaluating the Development of the Project;

 

(iv) background checks regarding senior management of the Company, as deemed necessary or appropriate in the sole discretion of the Agent;

 

(v) Taxes, fees and other charges for (A) Lien and title searches and title insurance, (B) surveys of property encumbered by the Mortgages, (C) environmental audits, and (D) recording the Mortgages, filing financing statements and continuations, and other actions to perfect, protect, and continue the Agent's Liens;

 

(vi) sums paid or incurred to take any action required of the Company under the Transaction Documents that the Company fails to pay or take; and

 

(vii) retaining engineers, auditors, accountants, consultants, valuation experts, and other advisors.

 

(b) All Units issued hereunder by the Company shall be duly and validly issued, fully paid and nonassessable, free and clear of all Taxes, Liens, and charges with respect to the issuance thereof.

 

(c) All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement shall be paid by the Company when due, and the Company will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by applicable Law, the Investor will, and will cause their Affiliates to, join in the execution of any such Tax Returns and other documentation.

 

(d) The Company shall indemnify the Agent (and any sub-agent thereof) and the Purchaser and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Company or any Affiliate of the Company arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Transaction Documents, (ii) any Purchase or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Substance on or from any property owned or operated by the Company or any of its Subsidiaries, or any environmental liability related in any way to the Company or any of its Subsidiaries, (iv) the Development of the Project, or (v) any actual or prospective Action relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company or any or any of the Company’s Affiliates, managers, directors, members, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee 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 the other Transaction Documents or the transactions contemplated hereby or thereby.

 

(e) To the fullest extent permitted by applicable law, the Company shall not assert, and hereby waives, any claim against any Indemnitee, 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 other Transaction Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Purchase or the use of the proceeds thereof. No Indemnitee referred to in subsection (d) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

(f) The provisions of this Section shall survive any termination of this Agreement and any redemption of the Series A Preferred Units.

 

(g) All amounts due under this Section shall be payable not later than ten (10) days after demand therefor.

 

 

(a) No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by Law or otherwise afforded to any party, shall be cumulative and not alternative.

 

(b) All covenants of the Company hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Trigger Event or a Potential Trigger Event if such action is taken or condition exists.

 

 

 

(a) the Company consummates a Deemed Liquidation Event; or

 

(b) a Trigger Event or Potential Trigger Event exists.

 

 

(a) THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE. THE COMPANY AND MEMBERS EACH HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF THE CHANCERY COURT OF THE STATE OF DELAWARE FOR ALL PURPOSES IN CONNECTION WITH ANY ACTION OR PROCEEDING WHICH ARISES OUT OF OR RELATES TO THIS AGREEMENT AND AGREE THAT ANY ACTION INSTITUTED UNDER THIS AGREEMENT SHALL BE BROUGHT ONLY IN THE CHANCERY COURT OF THE STATE OF DELAWARE. IN THE EVENT OF A DIRECT CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND ANY PROVISION OF THE CERTIFICATE OF FORMATION OR ANY MANDATORY PROVISION OF THE DELAWARE ACT, THE APPLICABLE PROVISION OF THE CERTIFICATE OF FORMATION OR THE DELAWARE ACT SHALL CONTROL.

 

(b) EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE PURCHASED UNITS OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

 

 

 

(a) it has been advised by its own legal counsel in the negotiation, execution and delivery of the Transaction Documents;

 

(b) it has made an independent decision to enter into this Agreement and the other Transaction Documents to which it is a party, without reliance on any representation, warranty, covenant or undertaking by the Agent or the Purchaser, whether written, oral or implicit, other than as expressly set out in this Agreement;

 

(c) there are no representations, warranties, covenants, undertakings or agreements by the Agent or the Purchaser as to the Transaction Documents except as expressly set out in this Agreement;

 

(d) Condon Tobin Sladek Thornton PLLC is counsel for the Agent only and is not counsel for the Company or any of its Affiliates;

 

(e) should any Trigger Event or Potential Trigger Event occur or exist, each of the Agent and the Purchaser will determine in its discretion and for its own reasons what remedies and actions it will or will not exercise or take at that time;

 

(f) without limiting any of the foregoing, the Company is not relying upon any representation or covenant by the Agent or the Purchaser, or any representative thereof, and no such representation or covenant has been made, that the Agent or the Purchaser will, at the time of any Trigger Event or Potential Trigger Event, or at any other time, waive, negotiate, discuss, or take or refrain from taking any action permitted under the Transaction Documents with respect to any such Trigger Event or Potential Trigger Event or any other provision of the Transaction Documents; and

 

(g) the Agent and the Purchaser have all relied upon the truthfulness of the acknowledgments in this Section in deciding to enter into this Agreement.