AMENDED AND RESTATED FORBEARANCE AGREEMENT
THIS AMENDMED AND RESTATED FORBEARANCE AGREEMENT (the Agreement") is made
this 11h day of January, 2008 between YA Global Investments, L.P. (formerly
known as Cornell Capital Partners, L.P.) ("YA Global"), Viridis Capital, LLC
("Viridis"), GreenShift Corporation ("GreenShift"), and GS CleanTech Corporation
("GS CleanTech") (Viridis, GreenShift, and GS CleanTech shall be collectively
referred to herein as the "GS Parties"). This Agreement shall supersede the
forbearance agreement (the "Forbearance Agreement") entered into on October 9,
2007 between YA Global and GreenShift.
WHEREAS, this Agreement is intended to amend, replace and supersede the
Forbearance Agreement and to add Viridis and GS CleanTech as a party to such
agreement.
WHEREAS, YA Global is the holder of the secured convertible debentures
issued by GreenShift (the "GreenShift Debentures") set forth on Schedule I
attached hereto, and YA Global has previously declared the GreenShift Debentures
to be in default for (i) failure to timely file a registration statement, (ii)
failure to obtain effectiveness of such registration statement, and (iii) the
CleanTech Default as set forth below (collectively, the "GreenShift Defaults");
and
WHEREAS, YA Global is the holder of the secured convertible debentures
issued by GS CleanTech (the "CleanTech Debentures") set forth on Schedule I
attached hereto, which CleanTech Debentures were in default for reasons set
forth below; and
WHEREAS, YA Global is the holder of the secured convertible debentures
issued by GS AgriFuels (the "AgriFuels Debentures") set forth on Schedule I
attached hereto (the GreenShift Debentures, CleanTech Debentures and AgriFuels
Debentures shall, where relevant, be collectively referred to herein as the
"Debentures"), which AgriFuels Debentures were in default for the failure to
timely register the shares issuable upon conversion of the AgriFuels Debentures
(the "AgriFuels Default"); and
WHEREAS, YA Global and GreenShift are parties to a letter agreement dated
June 27, 2007 (the "June Agreement") pursuant to which YA Global agreed to
forego exercise of its remedies for the defaults for a period terminating if a
further default were to arise after the date of the June Agreement; and
WHEREAS, on June 30, 2007, GS CleanTech, a subsidiary of GreenShift,
defaulted in its obligation to satisfy a $1,000,000 debenture issued to ▇▇▇▇▇
Manufacturing Corp. (the "CleanTech Default"), and said default by GS CleanTech
is an "event of default" by GreenShift and by GS CleanTech as defined in the
GreenShift Debentures and the CleanTech Debentures (the GreenShift Default, the
CleanTech Default, and the AgriFuels Default shall be collectively referred to
herein as the "Existing Defaults"); and
WHEREAS, YA Global has asserted its rights by reason of the CleanTech
Default, and has demanded assurances that its rights as a secured party will not
be diminished thereby; and
WHEREAS, for that reason the parties wish to make such arrangements as will
facilitate a liquidation of certain assets by YA Global to offset any adverse
impact of the CleanTech Default (but Greenshift (on behalf of itself and its
affiliated entities) agrees and acknowledges that it shall be prohibited from
using any cash or other assets that secure any YA Global collateral to pay all
or any part of the amounts owed to ▇▇▇▇▇).
NOW, THEREFORE, it is agreed:
1. Forbearance Agreement. In reliance upon the representations, warranties and
covenants of the GS Parties contained in this Agreement, and subject to the
terms and conditions of this Agreement, YA Global agrees to forbear from
exercising its rights and remedies under the Debentures or applicable law
in respect of or arising out of the Existing Defaults, subject to the
conditions, amendments, modifications contained herein for the period (the
"Remedy Period") commencing on the date hereof and continuing for so long
as (i) The GS Parties strictly comply with the terms of this Agreement,
(ii) there is no occurrence or existence of any Event of Default under any
of the Debentures, other than the Existing Defaults, and (iii) the GS
Party's comply with the condition in paragraph 5. Upon the expiration or
termination of the Remedy Period, the agreement of YA Global to forbear
shall automatically and without further action terminate and be of no force
and effect, andYA Global shall retain all of its rights under the
Debentures, including the right to enforce any remedies available to it
thereunder by reason of the Existing Defaults. This is a one-time only
forbearance.
2. Conversion Restrictions. The conversion restrictions set forth in Section
3(a)(ii) or 3(b) of the Debentures shall remain in full force and effect at
all times, notwithstanding the declaration of any default by YA Global.
Furthermore, in no event shall YA Global have the right to acquire, vote,
or receive from the GS CleanTech such number of shares of common stock of
GS EnviroServices, Inc. ("GS EnviroServices")which would cause YA Global,
together with its affiliates, to beneficially own (as determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934 and
the rules promulgated thereunder in excess of 9.99% of the common stock of
GS EnviroServices (the "Ownership Limitation") unless YA Global waives such
limitation by providing 65 days' advance written notice. This Ownership
Limitation of GS EnviroServices common stock shall replace and supersede
any prior limitations imposed upon YA Global.
3. Pledged Shares.
a. To secure the Debentures the following GS Parties have pledged to YA
Global, inter alia, the following shares (which shall collectively be
referred to herein as "Pledged Shares"):
------------------------ ------------------------------------------------- --------------------------------
GS Party Pledged Shares Issuer
------------------------ ------------------------------------------------- --------------------------------
Viridis 1,000,000 shares of Series C Preferred Stock GreenShift
Convertible into common stock
------------------------ ------------------------------------------------- --------------------------------
Viridis 750,000 shares of Series C Preferred Stock GS CleanTech
Convertible into common stock
------------------------ ------------------------------------------------- --------------------------------
GS CleanTech 1,000,000 shares of Series C
Preferred Stock GS Energy Corporation
Convertible into common stock
------------------------ ------------------------------------------------- --------------------------------
GS CleanTech 6,266,666 shares of common stock of GS GS EnviroServices
EnviroServices (defined as "GS Pledged Shares
Pool 1")
------------------------ ------------------------------------------------- --------------------------------
GS CleanTech 8,733,333 shares of common stock of GS GS EnviroServices
EnviroServices (defined as "GS Pledged Shares
Pool 2")
------------------------ ------------------------------------------------- --------------------------------
To remedy the Existing Defaults, YA Global shall be entitled to demand
conversion of the Pledged Shares (in the case of the shares of
Preferred Stock convertible into common stock) into common stock
issued in its name, or the transfer (in the case of the common stock)
of the common stock to its name. YA Global shall make such demands
from time to time in tranches such that at no time will YA Global own
more than 4.99% of the outstanding common stock in any of GreenShift,
GS CleanTech or GS Energy, and no more than the Ownership Limitation
of GS EnviroServices. The GS Parties will provide such assistance as
is necessary to cause GreenShift, GS CleanTech or GS Energy to honor
the conversions on the schedule set forth in the governing instruments
for its preferred stock. The Buyer shall not be entitled to demand the
transfer of the GS Pledged Shares Pool 2 unless and until there is a
default or event of default under the secured convertible debenture in
the original principal amount of $2,000,000 issued by GS
EnviroServices to the Buyer on the date hereof.
b. The shares of common stock issuable to YA Global upon the conversion
of the Pledged Shares and the Pledged Shares transferred to YA Global
are collectively referred to herein as the "Shares."
4. Application of Proceeds. In order to facilitate administration of the
liquidation of the Shares, the "Net Proceeds" of each conversion or
transfer into the Shares shall be deemed to equal to the product of (x) 90%
of the lowest volume weighted average price during the five trading days
preceding the conversion date or date YA Global provides notice to GS
CleanTech to transfer such Shares (as applicable) and (y) the number of
Shares comprising such conversion or transfer. The Net Proceeds shall be
applied by YA Global in its sole discretion to the outstanding principal,
interest, and other charges owed under the Debentures until all of the GS
Parties' obligations under the Debentures have been satisfied in full.
Promptly upon each application of Net Proceeds, YA Global shall notify the
GS Parties as to its application.
5. Further Agreements. The GS Parties covenant and agree the principal amount
outstanding under the Debentures shall be reduced by $13,500,000 by January
10, 2009 whether through reductions in accordance with this Agreement,
conversions, cash payments, or otherwise.
6. Nothing contained in this Agreement shall constitute a waiver by YA Global
of any default or event of default, whether now existing or hereafter
arising (including, without limitation, the Existing Defaults). Instead,
this Agreement shall only constitute an agreement by YA Global to forbear
from enforcing its rights and remedies with respect to the Existing
Defaults upon the terms and conditions expressly set forth herein. YA
Global reserves all of its rights and remedies, including, without
limitation, the right to declare an Event of Default in accordance with the
terms of the Debentures and other transaction documents except with respect
to the Existing Defaults during the Remedy Period as set forth herein.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
YA GLOBAL INVESTMENTS, L.P.
By: Yorkville Advisors, LLC
Its: Investment Manager
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇
Title: Senior Managing Director
GREENSHIFT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
GS CLEANTECH CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
VIRIDIS LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
Acknowledged and consented by:
GS AGRIFUELS CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman