EXHIBIT 10.54
FORBEARANCE AGREEMENT BETWEEN GALAXY ENERGY CORPORATION AND
XXXXXX FAMILY TRUST UTD MARCH 28, 2005 DATED EFFECTIVE
DECEMBER 1, 2006
FORBEARANCE AGREEMENT
This Forbearance Agreement (this "Agreement") is dated to be effective
as of December 1, 2006, and is entered into by and between Galaxy Energy
Corporation, a Colorado corporation ("Borrower") and Xxxxxx Family Trust UTD
March 28, 2005 ("Note Holder").
RECITALS:
WHEREAS, Borrower and Note Holder are parties to that certain
Promissory Note in the principal amount of $2,600,000, dated January 14, 2004,
as amended by that certain Note Modification Agreement, dated April 1, 2006 (the
Promissory Note and the Note Modification Agreement are collectively referred to
herein as the "Note");
WHEREAS, Borrower has failed to make the mandatory payment of the
principal and interest owing as required under Section 1 of the Note (the
"Primary Payment"); and
WHEREAS, Note Holder is willing to forbear from enforcing its rights
that arise as a result of the failure by Borrower to make the Primary Payment
for a limited period of time, provided that Borrower complies with the terms of
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
I. AGREEMENT
Note Holder hereby agrees to refrain through 5:00 p.m. Mountain
Standard Time on June 30, 2007 (the "Termination Date") from exercising any of
its rights and remedies under the Note that may exist by virtue of the failure
by Borrower to make the Primary Payment and hereby waives any such rights until
the Termination Date.
1. Except as expressly provided herein, the execution and delivery
of this Agreement shall not: (a) constitute an extension or modification of any
aspect of the Note; (b) extend the terms of the Note or the due date of any of
the obligations set forth in the Note; (c) give rise to any obligation on the
part of the Note Holder to extend, modify or waive any term or condition of the
Note; (d) give rise to any defenses or counterclaims to the right of Note Holder
to otherwise enforce its rights and remedies under the Note; or (e) establish a
custom or course of dealing.
2. From and after the Termination Date, Note Holder shall be entitled
to enforce the Note according to the original terms thereof.
II. REPRESENTATIONS AND WARRANTIES
In consideration of the limited agreement of Note Holder to forbear
from the exercise of its rights and remedies as set forth above, Borrower hereby
represents and warrants to Note Holder as of the date hereof as follows:
1. The execution, delivery and performance of this Agreement by
Borrower are within Borrower's corporate power and have been duly authorized by
all necessary corporate action.
2. This Agreement constitutes a valid and legally binding Agreement
enforceable against Borrower in accordance with its terms subject to the effects
of bankruptcy, insolvency, fraudulent conveyance and other laws affecting
creditors' rights generally and to general equitable principles.
3. The Note constitutes a valid and legally binding obligation of
Borrower, enforceable against Borrower in accordance with the terms thereof
subject to the effects of bankruptcy, insolvency, fraudulent conveyance and
other laws affecting creditors' rights generally and to general equitable
principles.
III. MISCELLANEOUS
1. HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WYOMING
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
3. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
4. CONTINUED EFFECTIVENESS. Except as expressly set forth in this
Agreement, the terms of the Note remain unchanged, and shall remain in full
force and effect and are hereby confirmed and ratified.
5. NO NOVATION. This Agreement shall not be deemed or construed
to be a satisfaction, reinstatement, novation or release of the Note or, except
as expressly provided herein, a waiver by Note Holder of any of its rights and
remedies under the Note, or at law or in equity.
6. REAFFIRMATION. Borrower hereby reaffirms each and every covenant,
condition, obligation and provision set forth in the Note, as modified hereby.
7. CONSTRUCTION. Borrower acknowledges that it has been represented
by its own legal counsel in connection with its execution of this Agreement and
the Note, that it has exercised independent judgment with respect to this
Agreement and the Note, and that it has not
relied on Note Holder or Note Holder's counsel for any advice with respect to
this Agreement or the Note.
8. INTEGRATION; WAIVERS. This Agreement, the Note and the other
written agreements, instruments and documents entered into in connection
therewith (collectively, the "Borrower/Note Holder Documents") set forth in full
the terms of agreement between the parties with respect to the subject matter
thereof and are intended as the full, complete and exclusive contract governing
the relationship between the parties with respect thereto, superseding all other
discussions, promises, representations, warranties, agreements and
understandings between the parties with respect thereto. Any waiver of any
condition in, or breach of, any of the foregoing in a particular instance shall
not operate as a waiver of other or subsequent conditions or breaches of the
same or a different kind.
9. Note Holder's exercise or failure to exercise any rights under
any of the foregoing in a particular instance shall not operate as a waiver of
its right to exercise the same or different rights in other instances. Except as
expressly provided to the contrary in this Agreement, all the terms, conditions
and provisions of the Borrower/Note Holder Documents shall continue in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above, by their respective duly
authorized officers.
BORROWER NOTE HOLDER
GALAXY ENERGY CORPORATION XXXXXX FAMILY TRUST UTD MARCH 28, 2005
By: By: /s/ XXXX X. XXXXXX
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Name: Name: XXXX X. XXXXXX, TRUSTEE
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Title:
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By:
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Name: XXXXXXX X. XXXXXXX, TRUSTEE
