16-Dec-2008
Unregistered Sale of Equity Securities
ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES EQUITY CAPITAL CONTRIBUTION AGREEMENT
On December 11, 2008, GreenShift Corporation entered into a Membership Interest Purchase and Equity Capital Contribution Agreement (the "ECCA Agreement"). The other parties to the ECCA Agreement include:
>> GS COES (Adrian I), LLC ("GS Adrian"), a newly formed GreenShift subsidiary;
>> Biofuel Industries Group, LLC ("BIG"), a Michigan limited liability company that was purchased by GreenShift in 2008;
>> GS (NextDiesel I), LLC ("GS NextDiesel"), a newly formed GreenShift subsidiary; and,
>> CleanBioenergy Partners, LLC, a Delaware limited liability company ("CleanBioenergy"), a newly formed joint venture company owned by two members: one is an affiliate of GE Energy Financial Services, a unit of General Electric Company, and the other member is an affiliate of YA Global Investments, L.P., a private investment firm managed by Yorkville Advisors, LLC.
Under the terms of the ECCA Agreement, CleanBioenergy agreed to invest up to $38 million in GS NextDiesel to help deploy twelve corn oil extraction facilities ("COES Facilities") and to double the capacity of GreenShift's 10 million gallon per year Michigan-based NextDiesel biodiesel refinery to 20 million gallons per year.
The ECCA Agreement provides that 70% of the membership units in GS NextDiesel will be issued to CleanBioenergy, and that the remaining 30% of the membership units will be issued to GS Adrian.
At the time of the initial contribution of cash by CleanBioenergy (the "Initial Equity Contribution Date"), GreenShift will contribute to GS NextDiesel all of its existing COES Facilities and its membership interest in BIG. CleanBioenergy may terminate the ECCA Agreement if the Initial Equity Contribution Date has not occurred by January 31, 2009. GreenShift believes that the Initial Equity Contribution Date will occur in January 2009. Thereafter, CleanBioenergy will continue to make cash contributions as additional COES Facilities reach specified production thresholds.
The following are among the conditions precedent to the completion of funding on the Initial Equity Contribution Date:
>> GreenShift will issue directly to the members of CleanBioenergy warrants to purchase 17,413,871 shares of GreenShift common stock for a term of ten years for a price of $0.001 per share beginning from the Initial Equity Contribution Date. The holders of the warrants will have demand and piggy-back registration rights.
>> CleanBioenergy shall have been granted board observation rights as well as certain financing rights by GreenShift relative to the development of any corn oil extraction, biodiesel or any other GreenShift project commencing from the Initial Equity Contribution Date.
>> Kevin Kreisler, the Company's Chairman and Chief Executive Officer, and Ed Carroll, the Company's President and Chief Financial Officer, shall have entered into lock-up agreements restricting the sale of 50% of each of their respective equity holdings in GreenShift for two years.
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