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:
<TABLE>
<CAPTION>
<S> <C>
<C>
<C>
<C>
<C>
<C>
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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)
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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)
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</TABLE>
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:
1
<PAGE>
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.
2
<PAGE>
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,
