CONDITIONAL FORBEARANCE AGREEMENT
Exhibit
10.32
This
Conditional Forbearance Agreement (the “Conditional Forbearance”) is
entered into as of August 23, 2010 (the “Effective Date”), by and
between Altima Central Asia Master Fund Ltd., a Cayman company (the “Lender”) and Caspian Services,
Inc., a Nevada corporation (the “Borrower,” and together with
the Lender, the “Parties”).
RECITALS
WHEREAS, the Lender and the
Borrower are parties to that certain Facility Agreement dated June 20, 2008 (the
“Facility Agreement”), a
copy of which is attached to this Conditional Forbearance as Exhibit A;
and
WHEREAS, pursuant to the
Facility Agreement, the Lender provided a loan of up to a maximum principal
amount of $15,000,000 to the Borrower (the “Loan”); and
WHEREAS, without limiting any
Event of Default (as this and other capitalized terms used herein and not
otherwise defined herein are defined in the Facility Agreement) the Borrower has
advised the Lender that:
(i) it
has defaulted under the terms of the Facility Agreement by failing to satisfy
the financial covenants contained in Clause 9.2 of the Facility
Agreement;
(ii) it
may have, as a result of the default discussed in (i) above, defaulted under the
provisions of Clause 9.1(f) of the Facility Agreement; and
(iii) it
is seeking to negotiate with other lenders and/or creditors of the Borrower,
including the EBRD and Great Circle Energy Services LLC (and or its legal
successors) with a view to restructuring or rescheduling its
indebtedness together with the Loan ((i), (ii) and (iii) are referred to herein
collectively as the “Existing Defaults”).
WHEREAS, by reason of the
Existing Defaults, the Lender has available to it numerous rights and remedies
under the Facility Agreement at law and in equity (collectively, the “Remedies”), including, without
limitation, the right to demand full and immediate payment of the
Loan;
WHEREAS, the Borrower has
requested that the Lender forbear for an agreed period of time from exercising
the Remedies against the Borrower;
WHEREAS, although the Lender
is under no obligation to do so, subject to the terms and conditions hereinafter
set forth, the Lender has agreed to such request;
WHEREAS, as of the
Effective Date, the aggregate unpaid principal balance of the Loan is
$15,000,000;
NOW THEREFORE, in
consideration of the above recitals and the mutual promises and benefits
contained herein, the Parties hereby agree as follows:
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1.
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CONDITIONAL
FORBEARANCE.
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1.1 The
Lender hereby conditionally agrees from the Effective Date to forbear from
exercising any Remedies until the earliest of:
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(a)
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the
occurrence or existence of any event or condition that constitutes and
Event of Default, other than an Existing
Default;
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(b)
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the
Lender determines that negotiations for agreeing on the terms of a
longer-term conditional forbearance or comprehensive restructuring plan
are not being carried out in good faith by the Borrower which includes
providing to the Lender:
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a.
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by
September 13, 2010 a comprehensive strategic restructuring plan (the
“Strategic Restructuring
Plan”) which shall include for the Borrower monthly financial
reports, including actual and projected profit and loss, balance sheet and
cash flow, for 36 months together with details of a proposed debt
restructuring which includes immediate repayment of all accrued interest
and a plan to repay the balance of the Loan over the projected period;
and
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b.
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by
September 20, 2010, conducting a meeting the purpose of which is to review
the Strategic Restructuring Plan by and among the management of the
Borrower, including Mirgaly Kunaev, the Lender, EBRD and Great Energy
Services LLC or its advisor Alfa Capital
Partners;
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(c)
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the
date on which any other lender or creditor of the Borrower, including but
not limited to EBRD and Altima Central Asia (Master) Fund
Ltd, declares a default under its lending or credit agreement
and declares such debt obligation of the Borrower immediately
due and payable;
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(d)
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the
date on which the Borrower, or any other member of the Group, without a
prior written consent by the Lender has agreed to sell, transfer or
dispose of any material asset (excluding
receivables);
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(e)
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the
date on which the Borrower, or any other member of the Group, without a
prior written consent by the Lender has agreed to sell, transfer or
dispose of receivables with a face value in excess of $100,000 in one or a
series of transactions;
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(f)
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the
date on which the Borrower, or any other member of the Group, without a
prior written consent by the Lender incurs, any capital expenditures in
excess of $100,000 in one or a series of
transactions;
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(g)
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the
Borrower takes any action whatsoever which adversely impacts or is
intended to adversely impact the Borrower, or any other member of the
Group; and
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(h)
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September
22, 2010
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(such
period of time from the Effective Date until the earliest to occur of the
foregoing events is hereinafter referred to as the “Forbearance
Period”). The Borrower covenants to immediately notify the
Lender of the occurrence of any of the event referred to in sub-clauses 1.1(a),
(c), (d), (e), (f) and (g).
1.2 Nothing
in the foregoing, or in any other provision of this Conditional Forbearance,
shall be construed to waive the Existing Defaults, which remain Events of
Default. From and after the termination or expiration of the
Forbearance Period, and without notice, the Lender may at any time and from time
to time exercise such of the Remedies as it deems appropriate
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2.
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BORROWER’S
REPRESENTATIONS AND WARRANTIES.
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(a)
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No Existing
Defaults. As of the Effective Date, no Default or Event of Default
(other than the Existing Defaults) has occurred and is continuing; after
giving effect to the Conditional Forbearance, no default or event of
default has occurred and is continuing with respect any other Financial
Indebtedness of the Borrower, nor will any default or event of default
result with respect any other Financial Indebtedness of the Borrower arise
from the effectiveness of this Conditional Forbearance or any transaction
contemplated hereunder.
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(b)
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No
Authorizations. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for the due execution and
delivery by the Borrower of this Conditional
Forbearance.
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(c)
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Due Execution.
This Conditional Forbearance has been duly executed and delivered by the
Borrower. The Facility Agreement, as modified hereby, is the
legal, valid and binding obligation of the Borrower, enforceable against
the Borrower in accordance with its
terms.
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(d)
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Confirmation of Debts;
Release. The Borrower hereby confirms that the Borrower
is indebted to the Lender for the Loan in the amount and as of the date
set forth in the Recitals above, and is also obligated to the Lender, in
respect of other obligations as set forth in the Facility
Agreement. The Borrower further acknowledges and agrees that as
of the Effective Date, it has no claim, defense or set-off right against
the Lender or its respective employees, officers, directors or agents of
any nature whatsoever, whether sounding in tort, contract or otherwise,
and has no claim, defense or set-off of any nature whatsoever to the
enforcement by the Lender of the full amount of the Loan under the
Facility Agreement.
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3.
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NO
GENERAL WAIVER.
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This
Conditional Forbearance shall in no way be construed or interpreted as
constituting a waiver of:
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(a)
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any
breach by the Borrower of any term or condition of the Facility Agreement;
or
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(b)
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any
right to exercise any Remedies under the Facility Agreement during the
Forbearance Period, excluding the conditional forbearance from the
exercise of Remedies as provided for herein with respect to the Existing
Defaults.
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4.
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INCONSISTENCY.
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The
Parties expressly agree that in the event of any conflict between this
Conditional Forbearance and the Facility Agreement, the terms of this
Conditional Forbearance shall govern.
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5.
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CONTINUATION
OF AGREEMENT.
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Except as
expressly amended and supplemented by this Conditional Forbearance, the Facility
Agreement shall continue to remain in full force and effect and the Parties
hereby ratify and confirm the terms and conditions of the Facility
Agreement.
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6.
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ENTIRE
AGREEMENT.
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This
Conditional Forbearance, together with the Facility Agreement, constitutes the
final, complete, and exclusive statement of the agreement of the Parties with
respect to the subject matter hereof, and supersedes any and all other prior and
contemporaneous agreements and understandings, both written and oral, between
the Parties.
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7.
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MODIFICATION.
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This
Conditional Forbearance may be supplemented, amended, or modified only by the
mutual agreement of the Parties, which agreement must be in writing and signed
by both Parties.
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8.
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GOVERNING
LAW.
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This
Conditional Forbearance shall be governed by the laws of the state of Nevada,
without regard to its conflicts of law provisions.
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9.
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VENUE
AND SERVICE OF PROCESS.
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Any
dispute arising out of or in connection with this Conditional Forbearance shall
be resolved in accordance with the procedure set out in clause 18 of the
Facility Agreement, which shall be deemed to be incorporated mutatis mutandis into this
Conditional Forbearance.
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10.
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COUNTERPARTS/ELECTRONIC
SIGNATURES.
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This
Conditional Forbearance may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument. For purposes of this Conditional Forbearance, use of
a facsimile, e-mail, or other electronic medium shall have the same force and
effect as an original signature.
[SIGNATURE
PAGE FOLLOWS]
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IN WITNESS WHEREOF, the
Parties hereto have executed this Conditional Forbearance as of the date first
above written.
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LENDER
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ALTIMA
CENTRAL ASIA MASTER FUND LTD.
By:
Name:
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
Title:
Authorized Signatory
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BORROWER
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CASPIAN
SERVICES, INC.
By:
Name:
▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief
Executive Officer
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