FORBEARANCE AGREEMENT
AGREEMENT made this 2nd day of April, 2007 among Cornell Capital Partners,
LP ("Cornell"), GreenShift Corporation ("GreenShift") and Viridis Capital, LLC
("Viridis").
WHEREAS, Cornell has on this date declared four secured convertible
debentures issued to it by GreenShift (the "Debentures") to be in default; and
WHEREAS, Viridis has guaranteed payment by GreenShift of its obligations
under the Debentures; and
WHEREAS, the parties acknowledge that, due to the illiquidity of the
collateral securing the Debentures and for other reasons, an immediate
liquidation by Cornell of the collateral securing the Debentures would cause
irreparable injury to the interests of all three parties hereto; and
WHEREAS, for that reason the parties wish to make such arrangements as will
facilitate a liquidation of assets by Cornell in such a way as to minimize the
loss of value to the assets securing the Debentures.
NOW, THEREFORE, it is agreed:
1. Waiver. GreenShift and Viridis hereby waive such defenses as they may have
to Cornell's enforcement of its rights under the Debentures and the related
security agreements and stock pledge agreements (collectively, the
"Transaction Documents") in the event of default under the Debentures. The
aforesaid waiver shall automatically terminate upon the termination of this
Forbearance Agreement.
2. Forbearance. Cornell agrees that, during the Term of this Forbearance
Agreement, it will forbear from exercising any remedy available to it under
the Transaction Documents other than the remedies specifically contemplated
by this Forbearance Agreement.
3. Conversion Restrictions. The conversion restrictions set forth in Section
3(a)(ii) of each Debenture shall remain in full force and effect during the
Term of this Forbearance Agreement, notwithstanding the declaration of
default by Cornell.
4. Liquidation Shares. The "Liquidation Shares" shall be the GreenShift common
stock issued upon conversion of the Series C Preferred Stock pledged by
Viridis to secure the Debentures. Cornell shall convert the Series C shares
in tranches of 6,250 shares each, and shall not convert a tranche until it
has sold 80% of the Liquidation Shares issued on conversion of the previous
tranche. Any such conversions shall be subject to the ownership limitations
specified in the Debentures (i.e., limitations to ownership of no more than
4.9% of the outstanding capital stock of GreenShift).
5. Application of Proceeds. In order to facilitate administration of the
liquidation of the Liquidation Shares, the "Net Proceeds" of each tranche
of Liquidation Shares shall be deemed to equal 90% of the lowest closing
bid price during the five trading days preceding the conversion date of the
Series C shares. The Net Proceeds shall be applied in satisfaction of
GreenShift's obligations under the Debentures in the following priorities:
(a) first, to accrued interest on the most recently issued Debenture, (b)
then to principal on the most recently issued Debenture, (c) then to
accrued interest on the next most recently issued Debenture, (d) then to
principal on the next most recently issued Debenture, and so forth until
all of GreenShift's obligations under the Debentures have been satisfied in
full.
6. Term. The "Term" of this Agreement shall commence on the date set forth
above and shall end on the earlier of (a) the date on which all of
GreenShift's obligations under the Debentures have been satisfied in full,
(b) the date on which all Liquidation Shares have been sold or (c) the
effective date of any termination pursuant to Section 7 hereof.
7. Termination. Any party may terminate this Forbearance Agreement at will by
giving written notice to the other. The notice shall state the effective
date of the termination, which shall be no less than five days after the
actual receipt of notice by the non-terminating parties.
8. No Waiver. Cornell expressly reserves its rights, upon termination of this
Forbearance Agreement, to proceed against any other collateral (including,
without limitation, any and all shares of pledged stock). Nothing herein
shall constitute a release or waiver of Cornell's right to seek full
recourse against Greenshift and Viridis for any deficiency in the full
recovery of the amounts owed to Cornell by Greenshift or any affiliate
thereof as specified in the Transaction Documents.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
CORNELL CAPITAL PARTNERS, LP GREENSHIFT CORPORATION
By: Yorkville Advisors, LLC
Its General Partner By:
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Xxxxx Xxxxxxxx, Chairman
By:____________________________ VIRIDIS CAPITAL, LLC
Xxxx Xxxxxx, Portfolio Manager
By:
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Xxxxx Xxxxxxxx
Managing Member
