Exhibit 10
Waiver and Amendment Agreement
WAIVER AND AMENDMENT AGREEMENT
THIS WAIVER AND AMENDMENT AGREEMENT (this "Agreement"), dated as of
September 27, 2006 among Tidelands Oil & Gas Corporation, a Nevada corporation
(the "Company") and each of the Persons signatory hereto (each a "Holder" and
collectively the "Holders"). The Holders are the holders of the Company's
Original Issue Discount Convertible Debentures due January 20, 2008 (the
"Debentures") issued pursuant to that certain Securities Purchase Agreement,
dated January 20, 2006, by and among the Company and the Holders (the "Purchase
Agreement"), and those certain common stock purchase warrants issued pursuant to
the Purchase Agreement (the "Warrants"). Capitalized terms used herein and not
otherwise defined herein that are defined in the Purchase Agreement shall have
the same meaning herein as therein defined.
Preliminary Statement:
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A. Events of Default have occurred under Section 8(a) of the Debentures
solely as a result of (i) the untimely payments of liquidated damages prior to
the date hereof pursuant to the Transaction Documents, (ii) the failure to
comply with the Company's obligations to timely file the initial Registration
Statement and cause such Registration Statement to be declared effective, (iii)
the occurrence of an Event of Default under the Debenture held by RHP Master
Fund, Ltd. and the subsequent payment by the Company to RHP Master Fund, Ltd. of
all outstanding principal and interest on its Debenture, all as described in
detail as set forth in the Company's Current Report on Form 8-K filed on
September 20, 2006 and (iv) the failure of the Company to technically comply
with Section 4.17 of the Purchase Agreement (Events of Default solely caused by
the events described in clauses (i) through (iv) collectively, the "Existing
Defaults").
B. Subject to the terms and conditions set forth herein, Holders have
agreed to waive from exercising the available rights and remedies arising solely
as a result of the Existing Defaults (the "Available Remedies") in consideration
for the issuance of Common Stock to the Holders.
NOW, THEREFORE, the parties to this Agreement, for adequate and
sufficient consideration, the receipt of which is hereby acknowledged, do hereby
agree as follows:
Waiver by Holders.
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The Company hereby acknowledges the current and continuing
existence of the Existing Defaults. Each Holder, severally and not
jointly, agrees to waive from exercising the Available Remedies and any
rights and remedies that will be available to the Holders solely as a
result of the Existing Defaults and consents to the execution and
delivery of this Agreement and the transaction contemplated hereunder.
This Agreement constitutes a waiver only of the Available
Remedies as a result of the occurrence of the Existing Defaults. Except
to the extent of the Waiver contained in Sections 1(a) of this
Agreement, each Holder reserves all of its rights, remedies, powers and
privileges under the Purchase Agreement, the Debentures and Transaction
Documents and otherwise with respect to any existing or future Events
of Default (other than an Existing Defaults). Except as expressly set
forth in this Agreement, no waiver, consent, agreement, amendment,
renewal, extension, modification, standstill, release or understanding
of any kind or nature whatsoever shall be binding on any Holder unless
and until one or more counterparts of a document in writing
specifically affirming the same has been executed by each Holder. No
failure or delay by Holders with respect to exercising any right,
remedy, power or privilege under the Purchase Agreement, the
Transaction Documents or otherwise shall operate as a waiver thereof or
any acquiescence therein.
Issuance of Common Stock.
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In consideration of the waiver granted by each Holder pursuant
to Section 1 above, on or before September 29, 2006, each Holder shall
receive a number of shares of Common Stock (the "Shares") equal to the
number of shares set forth on Annex A attached hereto and applicable to
such Holder.
The rights and obligations of the Company with respect to the
Shares shall be identical in all respects to the rights and obligations
of the Company with respect to the Underlying Shares issued and
issuable pursuant to the Purchase Agreement. The Purchase Agreement is
hereby amended so that the term "Underlying Shares" includes the
Shares.
Conditions Precedent. Notwithstanding any contrary provisions,
Section 1 above shall not be effective unless and until:
the representations and warranties in this Agreement are true and
correct as of the date hereof; and
to the knowledge of the Company, no Event of Default (other than the
Existing Defaults) shall have occurred and be continuing and no
material event or condition shall have occurred, that with the giving
of notice or lapse of time or both would be an Event of Default (except
for the Existing Defaults).
Representations and Warranties of the Company. The Company hereby makes
to each Holder the following representations and warranties:
Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out
its obligations hereunder. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action
on the part of the Company and no further action is required by the
Company, its board of directors or its stockholders in connection
therewith other than in connection with the Required Approvals. This
Agreement has been duly executed by the Company and, when delivered in
accordance with the terms hereof will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors'
rights generally, (ii) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies
and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
No Conflicts. To the Company's knowledge or as would not have
a Material Adverse Effect on the Company, the execution, delivery and
performance of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby do not and will
not: (i) conflict with or violate any provision of the Company's or any
Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, result in the creation of any Lien
(except as contemplated by the Security Documents) upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any
material agreement (other than the Purchase Agreement), credit
facility, debt or other material instrument (evidencing a Company or
Subsidiary debt or otherwise) or other material understanding to which
the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii)
subject to the Required Approvals, conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to
which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or
asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect.
Issuance of the Shares. The Shares are duly authorized and,
upon the execution of this Agreement by a Holder, will be duly and
validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents.
Affirmation of Prior Representations and Warranties. Except as
will not have a Material Adverse Effect on the Company and except as
set forth under the corresponding section of the disclosure schedules
attached to the Purchase Agreements and except as set forth on Schedule
4 attached hereto, all representations and warranties of the Company
contained in the Purchase Agreement were true and correct when made and
remain true and correct as of the date hereof, as though made at and as
of the date hereof. To the knowledge of the Company and except as set
forth herein or on Schedule 4(iv) attached hereto and except as will
not have a materially adverse effect on the Company, the Company has
performed all of the material covenants of the Company contained in the
applicable Transaction Documents to be performed by the Company through
the date hereof.
Other Events of Defaults. As of the date of this Agreement, to the
knowledge of the Company, no Event of Default (other than the Existing Defaults)
exists.
Representations and Warranties of the Holders. Each Holder hereby, for
itself and for no other Holder, represents and warrants as of the date hereof to
the Company as follows:
Authority. The execution, delivery and performance by such Holder of
the transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or similar action on the part of such Holder. This Agreement
has been duly executed by such Holder, and when delivered by such Holder in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Holder, enforceable against it in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
Own Account. Such Holder understands that the Shares are "restricted
securities" and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Shares as principal for its
own account and not with a view to or for distributing or reselling such Shares
or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Shares in
violation of the Securities Act or any applicable state securities law and has
no arrangement or understanding with any other persons regarding the
distribution of such Shares (this representation and warranty not limiting such
Holder's right to sell the Shares pursuant to the Registration Statement or
otherwise in compliance with applicable federal and state securities laws) in
violation of the Securities Act or any applicable state securities law. Such
Holder is acquiring the Shares hereunder in the ordinary course of its business.
Such Holder does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Shares.
Holder Status. Such Holder is an "accredited investor" as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act. Such
Holder is not required to be registered as a broker-dealer under Section 15 of
the Exchange Act.
General Solicitation. Such Holder is not acquiring the Shares as a
result of any advertisement, article, notice or other communication regarding
the Shares published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
Affirmation of Prior Representations and Warranties. Such Holder hereby
represents and warrants to the Company that its representations and warranties
listed in Section 3.2 of the applicable Purchase Agreement are true and correct
as of the date hereof.
Other Events of Defaults. As of the date of this Agreement, to the
knowledge of the Holders, no Event of Default (other than the Existing Defaults
which are waived and/or cured hereunder) exists.
Delivery of Opinion. Concurrently herewith, the Company shall deliver
to the Holders an opinion of outside counsel in form and substance reasonably
acceptable to the Holders.
Effect on Transaction Documents. Except as expressly set forth above,
all of the terms and conditions of the Transaction Documents shall continue in
full force and effect after the execution of this Agreement and shall not be in
any way changed, modified, waived or superseded by the terms set forth herein,
including but not limited to, any other obligations the Company may have to the
Holders under the Transaction Documents. For purposes of clarification, the
issuance of the Shares does not offset the Principal Amount of Debentures in any
way nor does it waive the right of a Holder to receive a 30% default premium
upon the occurrence of any other Event of Default that is not an Existing
Default.
Release of all Claims. THE COMPANY HEREBY UNCONDITIONALLY RELEASES AND
FOREVER DISCHARGES EACH HOLDER AND ITS RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS,
DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, ACCOUNTANTS, CONSULTANTS, ADVISORS
AND ATTORNEYS (COLLECTIVELY, THE "BENEFITED PARTIES") FROM ALL CLAIMS (AS
DEFINED BELOW) AND AGREES TO INDEMNIFY THE BENEFITED PARTIES, AND HOLD THEM
HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES
OF EVERY KIND OR CHARACTER IN CONNECTION WITH THE CLAIMS. AS USED IN THIS
AGREEMENT, THE TERM "CLAIMS" MEANS ANY AND ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTIONS, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART IN CONNECTION WITH
SUCH HOLDERS OBLIGATIONS UNDER THE PURCHASE AGREEMENT, WHICH THE COMPANY, OR ANY
OF ITS AGENTS, EMPLOYEES OR AFFILIATES MAY NOW OR HEREAFTER HAVE OR CLAIM
AGAINST ANY OF THE BENEFITED PARTIES AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR OTHERWISE IN CONNECTION WITH
ANY OF THE TRANSACTION AGREEMENTS, INCLUDING ANY CONTRACTING FOR, CHARGING,
TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE MAXIMUM
RATE ON INTEREST CHARGEABLE UNDER APPLICABLE LAW AND ANY LOSS, COST OR DAMAGE,
OF ANY KIND OR CHARACTER, ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR IN ANY
WAY RESULTING FROM THE ACTIONS OR OMISSIONS OF THE BENEFITED PARTIES, INCLUDING
ANY BREACH OF FIDUCIARY DUTY, BREACH OF ANY DUTY OF GOOD FAITH OR FAIR DEALING,
UNDUE INFLUENCE, DURESS, ECONOMIC COERCION, CONFLICT OF INTEREST, NEGLIGENCE,
BAD FAITH, MALPRACTICE, VIOLATIONS . THE COMPANY AGREES THAT NONE OF THE
BENEFITED PARTIES HAS FIDUCIARY OR SIMILAR OBLIGATIONS TO THE COMPANY OR ANY
AGENTS, EMPLOYEES OR AFFILIATES OF THE COMPANY AND THAT THEIR RELATIONSHIPS ARE
STRICTLY THAT OF CREDITOR AND DEBTOR. THIS RELEASE IS ACCEPTED BY HOLDERS
PURSUANT TO THIS AGREEMENT AND SHALL NOT BE CONSTRUED AS AN ADMISSION OF
LIABILITY BY HOLDERS OR ANY OTHER BENEFITED PARTY.
THE COMPANY ACKNOWLEDGES THAT THE FOREGOING PROVISIONS ARE INTENDED TO RELEASE
HOLDERS FROM LIABILITY AND/OR INDEMNIFY AND HOLD HARMLESS HOLDERS FOR, AMONG
OTHER THINGS, THE ORDINARY NEGLIGENCE OF HOLDERS. THE COMPANY AGREES THAT THE
RELEASE AND/OR INDEMNITY PROVISIONS CONTAINED IN THIS AGREEMENT ARE CAPTIONED TO
CLEARLY IDENTIFY THE RELEASE AND/OR INDEMNITY PROVISIONS AND, THEREFORE, ARE SO
CONSPICUOUS THAT THE COMPANY HAS FAIR NOTICE OF THE EXISTENCE AND CONTENTS OF
SUCH PROVISIONS.
Public Dissemination. By 8:30 am Eastern Time on the Trading Day
immediately following the date hereof, the Company shall file with the
Commission on XXXXX a Current Report on Form 8-K disclosing the material terms
of this Amendment and attaching this Amendment as an exhibit thereto.
Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and each Holder.
Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.
Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign
(except by merger) its rights or obligations hereunder without the prior written
consent of all of the Holders of the then-outstanding Securities. Each Holder
may assign their respective rights hereunder in the manner and to the Persons as
permitted under the applicable Purchase Agreement.
Execution and Counterparts. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an original
thereof.
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreements.
Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
Headings. The headings in this Agreement are for convenience only, do
not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Independent Nature of Holders' Obligations and Rights. The obligations
of each Holder hereunder are several and not joint with the obligations of any
other Holders hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto, shall be deemed to constitute the
Holders as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Holders are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Holder shall be entitled to protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Waiver and
Amendment Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Address for Notice:
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TIDELANDS OIL & GAS CORPORATION
By:
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Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR HOLDER FOLLOWS]
[HOLDER SIGNATURE PAGES TO TIDE WAIVER AND AMENDMENT AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Waiver and
Amendment Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name of Holder: ________________________________________________________________
Signature of Authorized Signatory of Holder: ___________________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Wire Instructions of Holder:
[SIGNATURE PAGES CONTINUE]
ANNEX A
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Fund Shares
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Palisades Master Fund 2,000,000
Crescent International Ltd. 304,375
Double U Master Fund LP 152,179
JGB Capital LP 250,000
Nite Capital LP 121,750
