January 11, 2008
GS Enviroservices, Inc.
Xxx Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Re: Agreement regarding Global Guaranty Agreement
and related documents
Gentlemen:
Reference is made to the following documents (collectively, the
"Transaction Documents"):
a. Global Guaranty Agreement dated January 9, 2008, executed and
delivered to YA Global Investments, L.P. (the "Secured Party") by
Viridis Capital LLC, Xxxxx Xxxxxxxx, GreenShift Corporation, GS
AgriFuels Corporation, GS CleanTech Corporation ("GS CleanTech"), and
their respective subsidiaries and affiliates listed therein (the
"Global Guaranty");
b. Global Security Agreement dated January 9, 2008, pursuant to which
Viridis Capital LLC, GreenShift Corporation, GS AgriFuels Corporation,
GS CleanTech Corporation, and their respective subsidiaries and
affiliates listed therein granted security interests in all of their
assets to the Secured Party (the "Global Security Agreement");
c. Global Pledge and Escrow Agreement dated January 9, 2008, pursuant to
which Viridis Capital LLC and its subsidiaries and affiliates listed
therein granted security interests in and pledged to the Secured Party
certain securities, stock, and/or other equity interests held by such
parties (the "Global Pledge Agreement"); and
d. Intellectual Property Security Agreement dated January 9, 2008,
pursuant to which Viridis Capital LLC, GreenShift Corporation, GS
AgriFuels Corporation, GS CleanTech Corporation, and their respective
subsidiaries and affiliates listed therein granted security interests
in all of their intellectual property to the Secured Party (the "IP
Security Agreement").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth in the Global Guaranty.
GS Enviroservices, Inc., Enviro-Safe Corp., and Enviro-Safe Corporation
(NE) (collectively, the "Enviro-Safe Entities") are parties to each of the
Transaction Documents. In addition, as of the date hereof, the Enviro-Safe
Entities have executed and delivered to the Secured Party a certain Secured
Convertible Debenture in the original principal amount of $2,000,000.00 (the
"$2,000,000 Debenture"), the proceeds of which were used to reduce the principal
balance of certain Secured Convertible Debentures issued by GS CleanTech to the
Secured Party by $2,000,000.00. As additional consideration for the Enviro-Safe
Entities to issue the $2,000,000 Debenture to the Secured Party, GS CleanTech
agrees that the issuance of the $2,000,000 Debenture shall be consideration for
the redemption of 8,733,333 shares of GS Enviroservices common stock from GS
CleanTech, provided that such redemption shall not be finally effective, and
such shares remain subject to the Global Pledge Agreement, until such shares are
released from the Global Pledge Agreement in accordance with the terms hereof.
Pursuant to the terms and conditions of the Transaction Documents, the
Enviro-Safe Entities are liable to the Secured Party for, and have granted
security interests in all of their business assets to the Secured Party to
secure, all Obligations of Viridis Capital LLC, GreenShift Corporation, GS
AgriFuels Corporation, GS CleanTech Corporation, and their respective
subsidiaries and affiliates, to the Secured Party. Notwithstanding the
foregoing, the Secured Party has agreed to certain limitations on the
Enviro-Safe Entities liability under the Global Guaranty, but only on the terms
expressly set forth herein.
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Secured Party and the Enviro-Safe
Entities, agree as follows:
1. The liability of the Enviro-Safe Entities under the Global Guaranty
shall be limited to $1,500,000 in the aggregate, plus costs of
collection incurred by the Secured Party in connection with the
enforcement of the Global Guaranty, or other Transaction Documents,
against the Enviro-Safe Entities. Further, the Enviro-Safe Entities
$1,500,000 liability under the Global Guaranty shall be reduced, on a
dollar for dollar basis, for the amounts realized by the Secured Party
after the date hereof from the sale of shares of GS Enviroservices,
Inc.(1) pursuant to Section 3 of that certain Amended and Restated
Forbearance Agreement of even date herewith (as amended and in effect,
the "Forbearance Agreement"). The amount realized by the Secured Party
from the sale of such shares shall be determined in accordance with
the formula set forth in Section 4 of the Forbearance Agreement. Upon
the Secured Party receiving payments from the sale of GS
Enviroservices, Inc. shares under Section 3 of the Forbearance
Agreement, and/or payments from the Enviro-Safe Entities under the
Global Guaranty in a total aggregate amount of $1,500,000, plus any
costs of collection incurred by the Secured Party in connection with
enforcing such Transaction Documents against the Enviro-Safe Entities,
then the Enviro-Safe Entities shall be released from the Global
Guaranty and have no further liability thereunder and any remaining
shares in the GS Pledged Shares Pool 1 (as defined in the Forbearance
Agreement) shall be released from the Global Pledge Agreement. In
addition to the foregoing, the Enviro-Safe Entities shall have the
right to obtain the release of any remaining shares in the GS Pledged
Shares Pool 1 from the Global Pledge Agreement, and to be released
from the Global Guaranty, if GS Enviroservices, Inc. pays the Secured
Party $1,000,000 on or before May 10, 2008. Such $1,000,000 shall be
in addition to any amounts realized by the Secured Party with respect
to the sale of pledged shares of GS EnviroServices, Inc. under
Sections 3 and 4 of the Forbearance Agreement prior to the date that
GS Enviroservices, Inc. makes such $1,000,000 payment. Nothing herein
is intended to, nor shall be construed to, release the Enviro-Safe
Entities from, or waive any of the provisions of, or release any
collateral granted by the Enviro-Safe Entities to the Secured Party
pursuant to, the Transaction Documents (other than the Global Guaranty
and the GS Pledged Shares Pool 1 upon the terms expressly set forth
above), which other Transaction Documents shall continue to secure the
$2,000,000 Debenture as set forth in Paragraph 2, below.
2. The obligations of the Enviro-Safe Entities under the $2,000,000
Debenture shall be separate and distinct from the Enviro-Safe
Entities' liability under the Global Guaranty, and shall not be
reduced by any amounts realized by the Secured Party under the
Forbearance Agreement or by any payments made by or on behalf of the
Enviro-Safe Entities with respect to the Global Guaranty. The
$2,000,000 Debenture shall constitute an Obligation under the
Transaction Documents, shall be guaranteed by each of the other
Guarantors under the Global Guaranty, and shall be secured by all of
the collateral granted to the Secured Party under the Transaction
Documents.
3. Upon the payment of the first $1,000,000 installment due under the
$2,000,000 Debenture as and when due thereunder, and provided no event
of default has occurred under the $2,000,000 Debenture, the Secured
Party shall release one half of the shares in GS Pledged Shares Pool 2
(as defined in the Forbearance Agreement) from the Global Pledge
Agreement. Upon the (i) the payment in full of the Enviro-Safe
Entities obligations under the Global Guaranty as set forth in
Paragraph 1, above, and (ii) payment in full of all amounts due under
the $2,000,000 Debenture, and the satisfaction of any other
obligations of the Enviro-Safe Entities thereunder, all in accordance
with the terms and conditions thereof, then the Enviro-Safe Entities
shall be released from the Transaction Documents, the security
interests granted by the Enviro-Safe Entities thereunder shall be
terminated, and any collateral delivered to the Secured Party by the
Enviro-Safe Entities shall be returned to them (including, without
limitation, all remaining pledged shares of GS Enviroservices, Inc.
referenced in Section 3(a) of the Forbearance Agreement). By way of
example, and for the purpose of clarity, if the Enviro-Safe Entities
pay $1,000,000 under Paragraph 1 above and repay the $2,000,000
Debenture in full, on or before May 10, --- 2008, then all remaining
pledged shares of GS Enviroservices, Inc. referenced in Section 3(a)
of the Forbearance Agreement shall be released, and the Enviro-Safe
Entities shall be released from the Transaction Documents. Similarly,
if after May 10, 2008, the Enviro-Safe Entities pay $1,500,000 under
Paragraph 1 above and repay the $2,000,000 Debenture in full, then all
remaining pledged shares of GS --- Enviroservices, Inc. referenced in
Section 3(a) of the Forbearance Agreement shall be released, and the
Enviro-Safe Entities shall be released from the Transaction Documents.
4. Notwithstanding the provisions of the Global Security Agreement to the
contrary, the Secured Party acknowledges and agrees that it shall not
require Enviro-Safe Corporation (NE) to grant the Secured Party a
mortgage on the real property located at 000-000 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx.
5. In consideration of the agreements of the Secured Party set forth
herein, GS Enviroservices, Inc. shall grant 2,000,000 shares of its
common stock to the Secured Party, which shares shall be validly
issued, fully paid and no-assessable. These shares shall be additional
consideration for the Secured Party, do not constitute collateral, and
any proceeds of the shares realized by the Secured Party shall be
retained by the Secured Party and not applied in reduction of any of
the Enviro-Safe Entities obligations to the Secured Party.
6. The Enviro-Safe Entities hereby acknowledge and agree that except as
specifically set forth herein, all terms and conditions of the
Transaction Documents shall remain in full force and effect.
If the foregoing correctly sets forth our understanding, please indicate
your assent below. This letter agreement is executed as a sealed instrument as
of the date first set forth above.
YA GLOBAL INVESTMENTS, L.P.
By: Yorkville Advisors, LLC
its Investment Manager
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
Title: Senior Managing Director
GS ENVIROSERVICES, INC.
By: /s/ Xxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxx
Title: President
ENVIRO-SAFE CORP.
By: /s/ Xxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxx
Title: President
ENVIRO-SAFE CORPORATION (NE)
By: /s/ Xxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxx
Title: President
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(1) The Enviro-Safe Entities liability under the Global Guaranty shall only be
reduced by the amounts realized from the sale of pledged shares of GS
Enviroservices, Inc., and not from the sale of any other shares referenced
in the Forbearance Agreement.
