Exhibit 10.19
FORBEARANCE AGREEMENT
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THIS FORBEARANCE
AGREEMENT (this
"Agreement") is
entered into as of
January 1, 2006, by and among IMPERIAL PETROLEUM RECOVERY
CORPORATION
("IPRC")
and SUCCESSOR IN INTEREST TO MOBIL OIL CORPORATION
("Successor").
BACKGROUND
A.
IPRC is indebted to Successor pursuant to an Agreement dated
October 6,
1999 (the "Original
Agreement") between
IPRC and Mobil Technology corporation
("MTC"), pursuant
to which MTC
provided IPRC with a security deposit of one
million United States Dollars (US $1,000,000) (the "Security Deposit"), which
Security Deposit IPRC
was obligated to repay on August 10, 2003, together with
accrued interest thereon as specified in the Original
Agreement.
B.
As security for its
obligation
to repay the
Security Deposit, IPRC
granted MTC
a security interest in the Torrance MST Equipment (the
"Collateral").
C.
On or about December
6, 2002, MTC assigned all of its rights and
remedies under the Original Agreement, including its security
interest in the
Collateral, to Successor .
D.
On or about June 8, 2004, Successor and IPRC entered into a Security
Deposit Payment
Forbearance
Agreement (the "First Forbearance Agreement"),
whereby, inter
alia, IPRC agreed to repay the Security Deposit in six
installments, and
Successor agreed to
forbear its immediate
collection of the
Security Deposit.
E.
IPRC has failed to honor its payment obligations under the First
Forbearance Agreement,
as a result of which
Successor is entitled to terminate
its agreement to forbear thereunder and take certain other actions,
as set forth
therein.
F.
IPRC has advised Successor that it is unable to repay the full
amount of
the Security
Deposit and that if full payment is required, IPRC it may be
compelled to liquidate
and/or seek protection
under the bankruptcy laws of the
United States.
IPRC has requested that Successor forgive a portion of the
Indebtedness (as
defined below) and
that it continue to forbear in accordance
with the terms and conditions set forth herein.
G.
Unless otherwise
defined herein,
all capitalized terms used but not
defined herein shall have the meaning ascribed to them in the
Original Agreement
and/or the First Forbearance Agreement.
NOW,
THEREFORE,
in consideration of the foregoing and of the
agreements and mutual
covenants set forth below, for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and
intending to be legally bound hereby, the parties hereto agree as
follows:
Section 1. Acknowledgement of Indebtedness. IPRC acknowledges and confirms
that it is justly
indebted to Successor in the total principal amount of U.S.
$1,000,000, together
with accrued, unpaid
interest thereon as
provided for in
the Original
Agreement (the "Indebtedness"); and IPRC is in default of its
obligations to
Successor under both the Original Agreement and the First
Forbearance Agreement.
<PAGE>
Section 2. Repayment. IPRC shall pay Successor the total sum of
$500,000 in
US. Dollars, in immediately available funds, remitted by wire transfer or
bank
draft as set forth in Section 11(1), as follows:
(a) On or before March
1, 2006, IPRC shall pay Successor the sum
of $200,000.
(b) On or before March
31, 2006, IPRC shall
pay Successor
the
sum of $75,000.
(c) On or before June
30, 2006, IPRC shall pay Successor the sum
of $75,000.
(d) On or before
September 30, 2006, IPRC shall pay Successor
the sum of $75,000.
(e) On or before
December 31, 2006, IPRC shall pay Successor the
sum of $75,000.
Section 3. Satisfaction of Indebtedness. So long as no Event of
Default has
occurred hereunder,
and all payments
required to be made
hereunder have
been
made as and when due, and in accordance with this Agreement (the "Termination
Date"), Successor
shall forgive the balance of the Indebtedness, including all
interest accrued and
accruing thereon,
and the Indebtedness shall be deemed
satisfied and released, and IPRC shall have no further
obligations to Successor
on account of the
Indebtedness, and
Successor shall release all liens on and
other security interests in the Collateral.
Section 4.
Forbearance.
So long as no
Event of Default has occurred
hereunder, Successor shall forbear in the exercise of its rights
and remedies to
collect the Indebtedness; provided, however, that if any
Event of Default under
this Agreement shall have occurred, this Agreement shall terminate
and Successor
shall be free to exercise immediately all of its rights and
remedies to collect
the Indebtedness, and any and all other amounts owed to Successor
for any reason
whatsoever, including
without limitation,
all applicable
interest, costs
and
fees, all of which Successor expressly reserves.
Section 5. Agreements and Covenants by IPRC.
(a) Limitations on Dividends. Until the Termination Date, IRPC
agrees
that, without
Successor 's express prior written consent, it shall not pay any
dividend or other distribution (whether in cash, securities or other property)
with respect to any
capital stock or other
equity interest of IPRC, or any
payment (whether in cash, securities or other property),
including any
sinking
fund or similar
deposit, on account of
the purchase,
redemption,
retirement,
acquisition,
cancellation or
termination
of any such capital
stock or other
equity interest,
or on account
of any return of
capital to the
stockholders,
partners or members of IPRC.
(b) Limitations on Security Interests. IPRC shall not grant any other
security interest or
enter into any further pledge or encumbrance of any of its
assets or properties without the prior written consent of Successor
.
(c) Other Information.
IPRC shall
deliver to
Successor in form
and
detail satisfactory
to Successor ,
promptly after any request, copies of such
additional information regarding the business, financial or
corporate affairs of
IPRC, or compliance with the terms of this Agreement, as Successor
may from time
to time reasonably request.
2
<PAGE>
(d) Preservation of Existence. IPRC shall preserve, renew and
maintain
in full force and effect its legal existence and good standing
under the laws of
the jurisdiction of its organization.
(e) Books
and Records. IPRC
shall maintain proper books of record and
account, in which
full, true and correct entries in conformity with GAAP
consistently applied
shall be made of all
financial transactions
and matters
involving its assets and business.
(f) Inspection
Rights. IPRC shall permit representatives and
independent
contractors of
Successor to examine its corporate, financial and
operating records,
and make copies thereof or abstracts therefrom, and to
discuss its affairs,
finances and accounts with its directors, officers, and
independent public accountants, at such reasonable times during
normal business
hours and as often as may be reasonably desired; provided,
however, that when
a
Default or Event of Default exists Successor (or any of its
representatives
or
independent
contractors) may do
any of the foregoing at the expense of IPRC at
any time and without advance notice.
Section 6.
Acknowledgments,
Representations and
Warranties. IPRC
hereby
acknowledges, agrees, warrants and represents that:
(a) It is a
corporation duly
organized and existing, and in good
standing, under the laws of the State of Nevada.
(b) It has full power and authority to execute, deliver and perform
this Agreement, and
this Agreement is a legal, valid and binding obligation
of
IPRC, enforceable against IPRC in accordance with its terms.
(c) This Agreement and all documents and agreements to be executed
and
delivered pursuant
to the terms hereof, have been duly authorized by all
requisite corporate action on the part of IPRC.
(d) Notwithstanding the stated amount of the Indebtedness as set
forth
in Section 1, IPRC further acknowledges that in the event any
payment made prior
to or after the date
hereof on account of
the Indebtedness
is subject to any
action to avoid or rescind same (whether as a preference
or otherwise), such
Indebtedness shall be
increased by the amount of any such avoided payment,
together with any costs incurred by Successor in connection with
such action(s).
(e) The Indebtedness is secured by a security interest (the "Security
Interest") in the Collateral. IPRC has g
