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:
----------------------
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.
------------------
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
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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.
-------------------------
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
<PAGE>
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
attach
