Exhibit 10.28
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (this "Agreement"), is dated as of the 1st
day of August, 2006 (the "Effective Date"), and is by and among ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, an individual ("Creditor") and Gwenco, Inc. ("Gwenco"). Creditor and
Gwenco are sometimes hereinafter referred to as the "Parties" and singularly as
a "Party."
For and in consideration of the mutual covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed by the Parties, the Parties hereby agree as
follows:
1. Recitals.
(a) The Creditor is the assignee and holder of that
certain Agreed Judgment entered in favor of National City and against Gwenco,
Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by the Circuit Court of ▇▇▇▇ County, Kentucky in Case
No. 04-CI-00369 on May 20, 2005, which awards National City a judgment against
Gwenco, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, jointly and severally, under a Commercial
Installment Note, dated January 20, 1997, in the amount of $94,785.62 plus
interest on the principal portion thereof at the rate of 12.75% per annum from
March 15, 2004 until paid, and awards National City a judgment against Gwenco,
Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, jointly and severally, under a Commercial Time Note,
dated March 20, 2001, in the amount of $289,305.29 plus interest on the
principal portion thereof at the rate of 9% per annum from March 15, 2004 until
paid, plus any applicable late charges, attorney's fees, court costs and other
collection costs;
(b) The Creditor is the assignee and holder of that
certain Order Modifying Agreed Judgment entered in favor of National City
against Gwenco, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by the Circuit Court of ▇▇▇▇ County,
Kentucky in Case No. 04-CI-00369 on May 20, 2005, which amends the amount owed
to National City by Gwenco, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ under a Commercial
Installment Note, dated January 20, 1997, to $84,092.70, plus interest on the
principal portion thereof at the rate of 12.75% per annum from December 1, 2004
until paid and it amends the amount owed to National City by Gwenco, Inc. and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ under a Commercial Time Note, dated March 20, 2001, to
$280,311.11 plus interest on the principal portion thereof at the rate of 9% per
annum from December 1, 2004 until paid, plus any applicable late charges,
attorney's fees, court costs and other collection costs incurred (the Agreed
Judgment, as modified by the Order Modifying Agreed Judgment, being the "Gwenco
Judgment");
(c) The Creditor is the assignee and holder of that
certain Judgment entered in favor of National City against Quest Minerals &
Mining, Ltd. by the Circuit Court of ▇▇▇▇ County, Kentucky in Case No.
05-CI-01157 on December 22, 2005, which awards National City a judgment against
Quest Minerals & Mining, Ltd. in the amount of $37,366.83, plus $11.14 per diem
from October 21, 2005 until paid, and in the amount of $274,469.76, plus $71.17
per diem from October 21, 2005 until paid, plus any applicable late charges,
attorney's fees, court costs and other collection costs incurred (the "Quest
Judgment");
(d) The Creditor is the assignee and holder of that
certain Judgment Lien recorded in Encumbrance Book 44, Page 229 in the office of
the Pike County Clerk against Gwenco, Inc. in favor of National City. The
Judgment Lien recorded in Lien Book 46, Page 725 in the office of the ▇▇▇▇
County Clerk against Gwenco, Inc. in favor of National City (the "Gwenco
Judgment Lien");
(e) The Creditor is the assignee and holder of that
certain Judgment Lien recorded in Encumbrance Book 45, Page 327 in the office of
the Pike County Clerk against Quest Minerals & Mining, Ltd. in favor of National
City, and the Judgment Lien recorded in Lien Book 48, Page 31 in the office of
the ▇▇▇▇ County Clerk against Quest Minerals & Mining, Ltd. in favor of National
City (the "Quest Judgment Lien");
(f) The Creditor is the assignee and holder of those
certain Security Agreements executed by Gwenco, Inc., dated December 19, 1995
and January 20, 2002, and delivered to National City, which evidences security
or collateral for the loans to Gwenco, Inc., and with said security or
collateral having been noted on UCC financing statements recorded on March 6,
2000 in File No. 20551967 in the clerk's office of ▇▇▇▇ County, Kentucky and
recorded on November 27, 2003 in File No. ▇▇▇▇-▇▇▇▇▇▇▇-▇▇ in the office of the
Kentucky Secretary of State;
(g) The Creditor is the assignee and holder of that
certain Letter of Credit dated November 15, 2000, issued by National City for
the account of Gwenco, Inc. in favor of the Commonwealth of Kentucky in the
amount of $40,508.48 (including principal in the amount of $37,300.00 and
interest in the amount $3,208.48) as of July 14, 2006.
2. Agreement to Forbear.
(a) In order to induce Creditor to forbear further
collection and foreclosure actions or litigation against Gwenco and Quest,
Gwenco agrees to grant the Creditor a royalty pursuant to a royalty agreement
(the "Royalty Agreement") of even date herewith.
(b) In consideration of Gwenco's performance of its
covenants under Section 2(a) and under the Royalty Agreement, Creditor agrees:
(i) to forbear pursuing any remedies and collection
proceedings it is entitled to pursue against Gwenco or Quest under the
Gwenco Judgment or the Quest Judgment (the "Judgments"); provided,
however, nothing in this Agreement shall affect the right of Creditor
to pursue all remedies available to it (including, without limitation,
all rights of acceleration of maturity) in the event of a future
default by Creditor under the terms of this Agreement or the Royalty
Agreement; and
(ii) to forbear pursuing any remedies, execution or
litigation it is entitled to pursue against Gwenco under the Gwenco
Judgment Lien or Quest under the Quest Judgment Lien (the "Judgment
Liens"); provided, however, nothing in this Agreement shall affect the
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right of Creditor to pursue all remedies available to it in the event
of a future default by Gwenco under the terms of this Agreement or the
Royalty Agreement.
3. Default under Royalty Agreement; Remedies. In the event of a
future default by Gwenco under the terms of this Agreement or the Royalty
Agreement, Gwenco stipulates that the Leasehold Estate (as defined in the
Royalty Agreement) may be sold by the Master Commissioner of the Circuit Court
of Pike County, Kentucky (the "Court") under proper orders of the Court and the
proceeds of said sale be first applied to any costs and expenses of the sale and
then to all amounts owed to the Creditor by Gwenco, Quest Minerals & Mining,
Ltd., and Quest Minerals & Mining Corp.
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of
the date first written above.
"Creditor":
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
"Gwenco":
GWENCO, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
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By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: resident
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