Ex. 10.22
FORBEARANCE AGREEMENT
FORBEARANCE AGREEMENT, dated of as July 15, 2008 by and between GULF
COAST OIL & GAS, INC. (the "Company"), and TAIB BANK, B.S.C.(C) ("TAIB"). All
capitalized terms used herein shall have the respective meanings assigned
thereto in the Transaction Documents (as defined below) unless otherwise defined
herein.
W I T N E S S E T H:
WHEREAS, the Company and TAIB have entered into certain financing
arrangements set forth on SCHEDULE A attached hereto and referred to herein as
the "TRANSACTION DOCUMENTS" pursuant to which, TAIB is the holder of the
following secured convertible debentures (collectively, the "DEBENTURES") issued
by the Company:
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DEBENTURE DESCRIPTION PRINCIPAL OUTSTANDING ACCRUED AND UNPAID INTEREST
------------------------------------------- ----------------------------------- --------------------------------------
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10% Secured Convertible Debenture issued USD $ 187,165.00 $ 31,146.50
on February 1, 2006, due February 1, 2009
in the face amount of $250,000. (for both Debentures TAIB-1 and
(Debenture No. TAIB-1) TAIB-2)
------------------------------------------- ----------------------------------- --------------------------------------
------------------------------------------- ----------------------------------- --------------------------------------
10% Secured Convertible Debenture issued USD $ (see above)
on April 5, 2006, due April 5, 2009 in
the face amount of $250,000. (Debenture
No. TAIB-2)
------------------------------------------- ----------------------------------- --------------------------------------
The amounts referenced in this chart above are as of June 1, 2008 and
do not include any additional costs, charges, expenses, or liquidated damages.
WHEREAS, the Company has breached the terms of the Transaction
Documents as set forth in the default letter forwarded to the Company from YA
Global Investments, L.P. dated March 17, 2008 (the "EXISTING DEFAULTS") a copy
of which is attached hereto as Exhibit A; and
WHEREAS, TAIB is willing to agree to forbear from exercising certain of
its rights and remedies on the terms and conditions specified herein;
NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements, warranties and covenants contained herein, the parties hereto agree,
covenant and warrant as follows:
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1. ACKNOWLEDGMENTS.
a. ACKNOWLEDGEMENT OF OBLIGATIONS. The Company hereby acknowledges,
confirms and agrees that as of the date hereof, the Company is
indebted to TAIB under the Debentures and the Transaction
Documents in the outstanding principal amount plus accrued and
unpaid interest thereon set forth in the first Whereas clause
above. In addition to the principal and interest set forth
herein, all interest accrued and accruing hereafter and all
liquidated damaged, fees, costs, expenses and other charges now
or hereafter payable by the Company to TAIB under the Transaction
Documents (collectively, the "OBLIGATIONS"), are unconditionally
owing by the Company to TAIB, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
b. ACKNOWLEDGEMENT OF SECURITY INTERESTS. The Company hereby
acknowledges, confirms and agrees that TAIB has and shall
continue to have valid, enforceable and perfected first-priority
liens upon and security interests in the Pledged Property
heretofore granted to TAIB pursuant to the Security Agreement
between the Company and TAIB dated February 1, 2006 or otherwise
granted to or held by TAIB. The Company hereby acknowledges,
confirms and agrees that TAIB has and shall continue to have
valid, enforceable and perfected first-priority liens upon and
security interests in the Pledged Property heretofore granted to
TAIB pursuant to the Security Agreement between the Company and
TAIB dated February 1, 2006 or otherwise granted to or held by
the TAIB.
c. BINDING EFFECT OF DOCUMENTS. The Company hereto acknowledges,
confirms and agrees that: (a) each of the Transaction Documents
to which it is a party has been duly executed and delivered to
TAIB by the Company, and each is in full force and effect as of
the date hereof, (b) the agreements and obligations of the
Company contained in such documents and in this Agreement
constitute the legal, valid and binding obligations of the
Company, enforceable against each in accordance with their
respective terms, and the Company has no valid defense to the
enforcement of such obligations, and (c) TAIB is and shall be
entitled to the rights, remedies and benefits provided for in the
Transaction Documents and applicable law, without setoff, defense
or counterclaim of any kind, nature or descriptions whatsoever.
2. FORBEARANCE IN RESPECT OF CERTAIN EVENTS OF DEFAULT.
a. ACKNOWLEDGEMENT OF DEFAULT. The Company hereby acknowledges and
agrees that the Existing Defaults have occurred and are
continuing, and each constitutes an Event of Default and entitles
TAIB to exercise its rights and remedies under the Transaction
Documents, applicable law or otherwise. The Company further
represents and warrants that as of the date hereof no other Event
of Default under the Transaction Documents exist. TAIB has not
waived, presently do not intend to waive and may never waive such
Existing Defaults and nothing contained herein or the
transactions contemplated hereby shall be deemed to constitute
any such waiver. The Company hereby acknowledges and agrees that
TAIB has the presently exercisable right to declare the
Obligations to be immediately due and payable under the terms of
the Transaction Documents.
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b. FORBEARANCE.
i. In reliance upon the representations, warranties and
covenants of the Company contained in this Agreement, and
subject to the terms and conditions of this Agreement and
any documents or instruments executed in connection
herewith, TAIB agrees to forbear from exercising its rights
and remedies under the Transaction Documents or applicable
law in respect of or arising out of the Existing Defaults,
subject to the conditions, amendments and modifications
contained herein for the period (the "FORBEARANCE PERIOD")
commencing on the date hereof and ending on September 30,
2008, so long as the following conditions are met: (i) the
Company strictly complies with the terms of this Agreement,
and (ii) there is no occurrence or existence of any Event of
Default, other than the Existing Defaults.
ii. Upon the termination or expiration of the Forbearance
Period, the agreement of TAIB to forbear shall automatically
and without further action terminate and be of no force and
effect, it being expressly agreed that the effect of such
termination will be to permit TAIB to exercise such rights
and remedies immediately, including, but not limited to, the
acceleration of all of the Obligations without any further
notice, passage of time or forbearance of any kind. This
Agreement shall be deemed to satisfy any and all
requirements by TAIB to notify the Company of the occurrence
of the Existing Defaults and satisfies any obligation by
TAIB to give the Company an opportunity to cure the Existing
Defaults.
c. NO OTHER WAIVERS; RESERVATION OF RIGHTS.
i. TAIB has not waived, is not by this Agreement waiving, and
has no intentions of waiving, any Events of Default which
may be continuing on the date hereof or any Events of
Default which may occur after the date hereof (whether the
same or similar to the Existing Defaults or otherwise), and
TAIB has not agreed to forbear with respect to any of its
rights or remedies concerning any Events of Default (other
than, during the Forbearance Period, the Existing Defaults
to the extent expressly set forth herein), which may have
occurred or are continuing as of the date hereof or which
may occur after the date hereof.
ii. Subject to Section 2(b) above (solely with respect to the
Existing Defaults), TAIB reserves the right, in its
discretion, to exercise any or all of its rights and
remedies under the Transaction Documents as a result of any
Events of Default which may be continuing on the date hereof
or any Event of Default which may occur after the date
hereof, and TAIB has not waived any of such rights or
remedies, and nothing in this Agreement, and no delay on its
part in exercising any such rights or remedies, should be
construed as a waiver of any such rights or remedies.
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3. WARRANTS. In consideration of the agreements set forth herein,
the Company shall issue to TAIB five (5) warrants in
substantially the form attached hereto as EXHIBIT C to purchase
shares of Common Stock of the Company as follows, for a period of
seven (7) years from the issuance date:
a. Warrant to purchase 1,250,000 shares, at an exercise price
of $0.01 per share;
b. Warrant to purchase 1,166,666 shares at an exercise price of
$0.015 per share.
c. Warrant to purchase 1,125,000 shares at an exercise price of
$0.02 per share.
d. Warrant to purchase 1,200,000 shares at an exercise price of
$0.025 per share.
e. Warrant to purchase 1,416,666 shares at an exercise price of
$0.03 per share.
4. AMENDMENT OF DEBENTURES. Pursuant to the terms and conditions of
this Agreement, contemporaneously with the execution and delivery
of this Agreement, the Company will amend each of the Debentures
by executing an amendment (the "DEBENTURE AMENDMENTS") in
substantially the form attached hereto as EXHIBIT D for each
Debenture. Pursuant to the Debenture Amendments, the following
amendments will be made to the Debentures:
a. Interest will accrue on the outstanding principal balance of
the Debentures at an annual rate equal to eighteen percent
(18%) per annum effective as of June 1, 2008;
b. the Conversion Price as set forth in the Debentures shall be
equal to the lesser of (a) the Fixed Conversion Price, or
(b) an amount equal to seventy-five percent (75%) of the
lowest volume weighted average price (the "VWAP") of the
Common Stock as quoted by Bloomberg, LP during the ten (10)
trading days immediately preceding the Conversion Date.
c. All conversion calculations shall be rounded to the nearest
twelfth (12th) decimal, at the sole option of the holder.
5. COVENANTS
a. COMMON STOCK OF THE COMPANY. The Company shall, within
thirty (30) days of the date hereof, have filed the
appropriate paperwork with the Nevada Secretary of State and
the United States Securities and Exchange Commission and
increased the authorized shares of Common Stock the Company
to fifteen billion (15,000,000,000) and to provide for a par
value of no par value per share. Failure by the Company to
do so shall be considered an Event of Default.
b. FURTHER ASSURANCES. The Company shall, from and after the
execution of this Agreement, execute and deliver to TAIB
whatever additional documents, instruments, and agreements
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that TAIB may require in order to correct any document
deficiencies, or to vest or perfect the Transaction
Documents and the collateral granted therein more securely
in TAIB and/or to otherwise give effect to the terms and
conditions of this Agreement, and hereby authorize TAIB to
file any financing statements (including financing
statements with a generic description of the collateral such
as "all assets"), and take any other normal and customary
steps, TAIB deems necessary to perfect or evidence TAIB's
security interests and liens in any such collateral.
c. NON-INTERFERENCE. From and after the termination of the
Forbearance Period, the Company agrees not to interfere with
the exercise by TAIB of any of its rights and remedies. The
Company further agrees that it shall not seek to restrain or
otherwise hinder, delay, or impair TAIB's efforts to realize
upon any collateral granted to TAIB, or otherwise to enforce
its rights and remedies pursuant to the Transaction
Documents. The provisions of this Paragraph shall be
specifically enforceable by TAIB.
d. CROSS DEFAULT. The Company hereby acknowledges and agrees
that any default or Event of Default under this Agreement or
under any Transaction Document shall constitute an Event of
Default under each other Transaction Document.
6. RELEASE. In exchange for the accommodations made by TAIB herein,
the Company does hereby, on behalf of itself and its agents,
representatives, attorneys, assigns, heirs, subsidiaries,
executors and administrators (collectively, "COMPANY PARTIES")
RELEASE AND FOREVER DISCHARGE TAIB and its subsidiaries and its
respective affiliates, parents, joint ventures, officers,
directors, shareholders, interest holders, members, managers,
employees, consultants, representatives, successors and assigns,
heirs, executors and administrators (collectively, "BUYER
PARTIES") from all causes of action, suits, debts, claims and
demands whatsoever known or unknown, at law, in equity or
otherwise, which the Company Parties ever had, now has, or
hereafter may have on or prior to the date hereof, and any claims
for reasonable attorneys' fees and costs, and including, without
limitation, any claims relating to fees, penalties, liquidated
damages, and indemnification for losses, liabilities and
expenses. The release contained in this Section is effective
without regard to the legal nature of the claims raised and
without regard to whether any such claims are based upon tort,
equity, or implied or express contract. It is expressly
understood and agreed that this release shall operate as a clear
and unequivocal waiver by the Company Parties of any such claim
whatsoever.
7. PROVISIONS OF GENERAL APPLICATION
a. EFFECT OF THIS AGREEMENT. Except as modified pursuant
hereto, no other changes or modifications to the Transaction
Documents are intended or implied and in all other respects
the Transaction Documents are hereby specifically ratified,
restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the
terms of this Agreement and the other Transaction Documents,
the terms of this Agreement shall control. The Transaction
Documents and this Agreement shall be read and construed as
one agreement.
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b. GOVERNING LAW. This Agreement shall be interpreted according
to the laws of the State of New Jersey and shall inure to
the benefit of and be binding upon the parties hereto and
their respective successors and assigns. Any notices,
demands, consents, other writings or communications
permitted or required by this Agreement shall be given in
the manner and to the address as set forth in the
Transaction Documents.
c. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND
OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE
BETWEEN FACTOR AND CLIENT ARISING OUT OF, CONNECTED WITH,
RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER FACTORING DOCUMENTS OR THE TRANSACTIONS RELATED
THERETO.
[SIGNATURE PAGE IMMEDIATELY TO FOLLOW]
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IN WITNESS WHEREOF, this Agreement is executed and delivered as of the
day and year first above written.
GULF COAST OIL & GAS, INC.
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President & CEO
TAIB BANK, B.S.C. (C)
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Person
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SCHEDULE A
TRANSACTION DOCUMENTS
1. Securities Purchase Agreement dated February 1, 2006, entered into by
and between Gulf Coast Oil &Gas, Inc. (the "Company") and YA Global
Investments, L.P. (formerly, Cornell Capital Partners, LP) (herein "YA
GLOBAL") and Certain Wealth, Ltd. ("CERTAIN WEALTH") and TAIB Bank,
B.S.C. ("TAIB"). YA Global, Certain Wealth, and TAIB are collectively
referred to as the "BUYERS".
2. Investor Registration Rights Agreement dated February 1, 2006, entered
into by and between the Company and the Buyers, as amended.
3. Security Agreement dated February 1, 2006, entered into by and between
the Company and the Buyers.
4. Irrevocable Transfer Agent Instructions dated February 1, 2006 entered
into by and between the Company, the Buyers, and Worldwide Stock
Transfer, LLC.
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EXHIBIT A
DEFAULT NOTICE
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EXHIBIT B
FORM OF AMENDMENT TO WARRANTS
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EXHIBIT C
FORM OF WARRANT
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EXHIBIT D
FORM OF AMENDMENT TO DEBENTURES
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