EXHIBIT 10(h)

Memorandum of Agreement by and between Coastal Petroleum
Company, et al and the State of Florida Dated June 1, 2005.

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Exhibit 10(h)

MEMORANDUM OF SETTLEMENT

June 1, 2005

          The purpose of this memorandum is to set forth the essential terms of
the agreement between and among Coastal Petroleum Company (“Coastal”), and
Coastal Caribbean Oils & Minerals, Ltd. and certain individuals who claim
royalty interests in, to and under the Coastal Leases (the “Royalty Holders”),
and the State of Florida, the State of Florida Department of Environmental
Protection and Board of Trustees of the Internal Improvement Trust Fund of the
State of Florida (collectively the “State”) to finally settle and resolve all
claims between and among them arising out of Coastal’s Leases Nos. 224-A, 224-B
and 248 (the “Coastal Leases”).  The Royalty Holders included in this agreement
are Coastal Caribbean Oils & Minerals, Ltd. and members of two groups of
individuals, one represented by Susan W. Fox, Esquire, and the other by Robert
W. Clark, who are obtaining individual consents.  This transaction is consistent
with public policy regarding offshore oil and gas drilling as expressed in
Sections 377.06, 377.24 and 377.242, Florida Statutes.

          The closing of this settlement transaction, including payment of the
settlement proceeds and delivery of the required settlement documents, shall
take place in Tallahassee, Florida within 30 days after approval of the funding
of this settlement by the Florida Legislature and such funds are made available
to the Department of Environmental Protection, and this settlement is expressly
conditioned and contingent upon approval of the funding by the Florida
Legislature.  Current annual rentals for the Coastal Leases will be held in
abeyance pending the closing of this settlement transaction at which time the
settlement will take effect and the rentals will no longer be due.

          At the closing, the following payment and documents shall be
delivered:

 

 

 

 

  1.

The State shall pay to Ausley & McMullen Escrow Account, for and on behalf of
Coastal and the Royalty Holders, the total sum of $12,500,000.

 

  2.

Coastal and the Royalty Holders shall release and transfer to the Board of
Trustees of the Internal Improvement Trust Fund of the State of Florida all of
their right, title and interest in, to and under the Coastal Leases.

 

  3.

Each party shall dismiss with prejudice all pending litigation brought by any of
them against the other with respect to the Coastal Leases or their alleged
royalty interests in, to or under such leases, each party to bear its own costs.

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  4.

The parties shall exchange General Releases, declarations, certificates, legal
opinions and affidavits in form and content acceptable to the State; including,
but not limited to, those listed on Exhibit A attached hereto and by this
reference made a part hereof.

 

 

 

 

BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
OF THE STATE OF FLORIDA

 

 

(SEAL)
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND OF THE STATE
OF FLORIDA

     /S/  Jeb Bush

JEB BUSH
GOVERNOR

 

 

 

     /S/ Charlie Crist

   

 

CHARLIE CRIST
ATTORNEY GENERAL

 

 

 

     /S/ Tom Gallagher

 

 

 

TOM GALLAGHER
CHIEF FINANCIAL OFFICER

 

 

 

     /S/ Charles H. Bronson

 

 

 

CHARLES H. BRONSON
COMMISSIONER OF AGRICULTURE

 

 

 

STATE OF FLORIDA DEPARTMENT OF
ENVIRONMENTAL PROTECTION

 

 

 

By: 

/S/  Colleen M. Castille

 

 

 

 

COLLEEN M. CASTILLE, Secretary

 

 

 

 

 

/S/ John K. Aurell

 

   

 

JOHN K. AURELL,
On behalf of Coastal Petroleum Company and
The Royalty Holders

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EXHIBIT A
To Memorandum of Settlement

The boards of directors and officers of Coastal and Coastal Caribbean Oil and
Minerals shall provide the following schedules, certifications, declarations and
legal opinions at closing:

 

 

 

 

1.

A schedule of creditors and holders of interests or grants of Coastal and
Coastal Caribbean (the “Schedule”.)

 

 

 

 

2.

Certifications that the Schedule is complete and accurate to the best of the
knowledge and belief of the officers of the company and of the independent
auditors of the companies, regardless of whether the claims or interests are
contingent, disputed or liquidated.

 

 

 

 

3.

A declaration by the companies to prepare and submit to the Escrow Agent and to
the State an amendment to the schedule of creditors to include any creditor of
the companies not appearing on previously furnished lists upon demand for
payment by an alleged creditor or discovery of a claim (the “Amendment”.)

 

 

 

 

4.

A declaration authorizing the State to pay the funds from the settlement
directly to the Ausley & McMullen Escrow Account referenced in the Memorandum of
Settlement.

 

 

 

 

5.

Escrow instructions for the Escrow which include an irrevocable provision that
the escrowed funds be used first to satisfy all of the creditors of Coastal and
Coastal Caribbean in full, whether included on the Schedule or subsequently
discovered and added to the Amendment.

 

 

 

 

6.

A certification that all of the issued and outstanding stock of Coastal is
accounted for and represented among parties who will execute a release and
satisfaction of interest to the State as part of this settlement.

 

 

 

 

7.

A certification that following the contemplated transfers, Coastal will be a
wholly owned subsidiary of Coastal Caribbean.

 

 

 

 

8.

A certification that all guarantors of the debts or obligations of Coastal and
Coastal Caribbean have been disclosed and will execute a release and
satisfaction of claim in connection with the settlement.

 

 

 

 

9.

A certification that all creditors, contingency holders of interests or grants,
and parties who are to receive distributions from the Escrow have executed and
delivered to the Escrow Agent releases and satisfactions of claims to be
delivered to the State at closing.

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10.

Resolution of the Board of Directors for each of the companies at properly
noticed meetings approving the settlement transaction; specifically finding as
follows: i) the Boards find the consideration given by the State in exchange for
all consideration to be given by the companies and parties to be fair, for
reasonably equivalent value and not a product of duress, adhesion or sharp
practices; ii) the Boards have disclosed all compensation to be received by the
officers and directors of the companies and all distributions to be made under
the escrow agreement, and iii) the Boards have found that the companies will
receive sufficient compensation from the settlement, after paying all creditors
in full, to remain solvent thereafter.

 

 

 

 

11.

Resolution from the Board of Directors of Coastal at a properly noticed meeting
specifically authorizing its president to execute the Surrender of Leases and
Release of Claims releasing and surrendering to the Board of Trustees all of
Coastal’s right, title and interest in and to the Leases and any interest it may
have in the lands described in the Leases.

 

 

 

 

12.

Legal opinions of Florida and Bermuda counsel to the companies and the State
that the settlement transaction will not result in either an avoidable
fraudulent transfer or preferential transfer with regard to any creditor or
guarantor under the laws of the United States or Bermuda.

 

 

 

 

13.

Estoppel certificate from Coastal in which Coastal certifies that it has not
assigned, transferred, encumbered or hypothecated its interests in or under the
Leases or any interest it may have in the lands described in the Leases.

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