AMENDED POST-PETITION LOAN AGREEMENT
THIS AMENDED POST-PETITION LOAN AGREEMENT (the "Amended
Agreement"), made and entered into this _____ day of April, 1997,
by and between PEMBROOKE HOLDING CORPORATION ("Pembrooke"), with
offices located at 00 Xxxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, and
PETRO UNION, INC. (the "Debtor"), with offices located at 000
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Debtor filed a voluntary petition pursuant to
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code") on May 13, 1996 (the "Filing Date") in the United States
Bankruptcy Court for the Southern District of Indiana (the
"Bankruptcy Court"); and
WHEREAS, since the Filing Date, the Debtor has continued in
possession and management of its property as a
Debtor-in-Possession pursuant to 11 U.S.C. Sections 1107 and
1108; and
WHEREAS, the Debtor is currently engaged in oil drilling
activities in various states; and
WHEREAS, on the 16th day of July, 1996, Pembrooke and the
Debtor entered into a Post-Petition Loan and Sale Agreement (the
"Agreement") which was approved in part by the Bankruptcy Court
on the 15th day of August, 1996; and
WHEREAS, the Debtor has requested an extension of certain
terms and conditions of the Post-Petition Loan and Pembrooke has
agreed to such extension upon certain terms and conditions set
forth in this Amended Agreement; and
WHEREAS, the parties wish to restate the terms and
conditions of the Agreement upon which Pembrooke will agree to an
extension of payment on the original Promissory Note as approved
by the Bankruptcy Court, and to mutually seek immediate approval
of the terms and conditions of the modification of the original
Post-Petition Loan and Sale Agreement as approved by the
Bankruptcy Court on August 15, 1996.
NOW, THEREFORE, in consideration of the promises and mutual
obligations set forth and other good and valuable consideration,
the parties agree as follows:
I. The Loan.
1.01. Subject to the terms and conditions hereof,
Pembrooke shall extend the existing loan of One Hundred Fifty
Thousand Dollars ($150,000.00) (the "Loan").
1.02. From the 16th day of March, 1997, Pembrooke shall
extend the term of the Loan as evidenced by the Promissory Note,
which was executed pursuant to the terms and conditions of the
Agreement (the "Note"), for an initial term of ninety (90)
calendar days by a Renewal Promissory Note (the "Renewal Note")
in form and content substantially similar to that previously
executed by the Debtor to Pembrooke.
1.03. At the sole and exclusive election of the Debtor,
and under the express condition that there be no default as
defined in this Amended Agreement and no default by the Debtor
under its Consulting Agreement with the principal of Pembrooke,
the Debtor may extend for an additional ninety (90) calendar days
the term for the repayment of the Renewal Note. Notice of any
extension of the Renewal Note shall be provided by the Debtor, in
writing, to Pembrooke at least three (3) business days prior to
the ending date of the initial ninety (90) day extension.
1.04. The Note, subject to this Amended Agreement, shall
bear interest at the rate of eight (8%) percent per annum from
the 16th day of September, 1996, until paid in full.
1.05. Upon the entry of a final order confirming a Plan
of Reorganization for the Debtor by the Bankruptcy Court,
Pembrooke shall: (1) Have the Loan and any accrued interest
converted to common stock of the Debtor at the ratio of $0.125
Cents per share; (2) Have an agreed sum of Seventy-Five Thousand
Dollars ($75,000.00) converted to common stock of the Debtor at
the ratio of $0.25 Cents per share; and (3) Have a continuing
assignment (the "Assignment") of a ten (10%) percent interest in
any royalties, profits or proceeds derived from the development
or sale of the Monroe County Reserves (as defined in Sec. 202 of
this Amended Agreement) by the Debtor or Calox Corp., as provided
in the second sentence of Sec. 203 of the Agreement.
II. Continuation of Superpriority Expenses,
Claim and Mortgage.
2.01. Pembrooke shall continue to have a superpriority
administrative claim pursuant to 11 U.S.C. Sec.364(c)(1) equal to
the amount of the Loan plus any accrued interest. The
superpriority administrative claim shall have priority in payment
over all other obligations or liabilities now in existence or
incurred hereafter by the Debtor and all expenses of the kind
specified in 11 U.S.C. Sec.503(b) or 11 U.S.C. Sec.507(b),
subject only
to the payment of professional fees incurred by the Debtor's
Title 11 case as fixed and determined by the Bankruptcy Court and
quarterly fees owed to the Office of the United States Trustee
under Title 28 of the United States Code.
2.02. In addition to the foregoing, Pembrooke shall
continue to maintain as security for the prompt and full payment
of the Loan, the Mortgage previously executed in favor of
Pembrooke by Calox Corporation, the subsidiary of the Debtor.
Said Mortgage shall continue to cover the fifty (50%) percent
interest in certain limestone reserves owned by Calox Corporation
in Monroe County, Indiana (hereinafter the "Monroe County
Reserves"). Any further costs and expenses in preparing and
filing any security documentation, including extensions of
Mortgage, if any, shall be the sole responsibility of the Debtor
or Calox Corporation.
III. Representations.
In order to induce Pembrooke to provide the extension of the
Loan contemplated by this Amended Agreement, the Debtor reaffirms
the representations and warranties previously made to Pembrooke
solely to the extent set forth below:
3.01. Corporate Authority. The execution, delivery and
performance of this Agreement, the transactions contemplated
hereby, and the Mortgage and the Assignment with respect to the
Monroe County Reserves are within the corporate power and
authority of the Debtor and its affiliate, Calox Corporation, and
have been authorized by all necessary corporate proceedings, and
do not and will not (i) require any consent or approval of the
shareholders of the Debtor or Calox Corporation; (ii) contravene
any provision of the charter documents or by-laws of the Debtor
or Calox Corporation, or any law, rule regulation applicable to
the Debtor or Calox Corporation; (iii) contravene any provision
of, or constitute an event of default or event that, but for the
requirement that time elapse or notice be given, or both, would
constitute an event of default under, any other agreement,
instrument, order or undertaking binding on the Debtor or Calox
Corporation; or (iv) result in or require the imposition of any
encumbrance on any of the properties, assets or rights of the
Debtor or Calox Corporation except as contemplated hereby.
3.02. Valid Obligations. This Agreement, the Mortgage,
and the Assignment with respect to Monroe County Reserves are and
will be the legal, valid and binding obligations of the Debtor or
Calox Corporation as approved by the Bankruptcy Court,
enforceable in accordance with their respective terms,
notwithstanding any bankruptcy, insolvency, reorganization,
moratorium and/or other laws affecting the enforcement of the
creditors' rights generally.
3.03. Consents or Approvals. The execution, delivery
and performance of this Agreement, the transactions contemplated
hereby, including the Mortgage and the Assignment with respect to
the Monroe County Reserves do not require and will not require
approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other party,
other than the Bankruptcy Court.
IV. Borrower's Covenants.
So long as the Loan remains outstanding, the Debtor
covenants as follows:
4.01. Information. The Debtor will deliver to Pembrooke
all information concerning the business of the Debtor as
Pembrooke shall reasonably request and provide Pembrooke and
Pembrooke's counsel with copies of all operating reports as may
be filed with the Bankruptcy Court. All financial information
provided hereunder other than public filings with the Bankruptcy
Court, Securities Exchange Commission, or otherwise shall be
deemed confidential and shall not be released to any third party
without the written consent of the Debtor.
4.02. Compliance with Laws. The Debtor shall duly
observe and comply in all material respects with all applicable
laws and requirements of any governmental authorities relative
to: (i) its corporate existence, rights, licenses, and
franchises; (ii) the conduct of its business and its property and
assets; and (iii) shall maintain and keep in full force and
effect all licenses and permits necessary in any material respect
to the proper conduct of its business.
4.03. Maintain Properties and Insurance. The Debtor
shall maintain good and marketable title to the Monroe County
Reserves, and maintain its equipment and machinery in good
repair, working order and condition as required for the normal
conduct of its business, normal wear and tear accepted, and shall
adequately insure same and name Pembrooke as an additional
insured or loss payee (as the case may be) on all such insurance
and provide Pembrooke with written confirmation of same.
4.04. Taxes. The Debtor shall pay or cause to be paid
all taxes, assessments or governmental charges on or against it
or the properties on or prior to the date when they become due
arising subsequent to the Filing Date; provided, that this
covenant shall not apply to any tax, assessment or charge that is
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are
being maintained in accordance with generally accepted principles
if no lien shall have been filed to secure such tax, assessment
or charge.
4.05. Inspection. The Debtor shall permit Pembrooke or
its designee(s), at any reasonable time and at reasonable
intervals of time, and upon reasonable notice (or if an event of
default shall have occurred and is continuing at any time and
without prior notice) for the purpose of ascertaining compliance
with this Agreement, to (i) visit and inspect the properties of
the Debtor, (ii) examine and make copies of and take abstract
from the books and records of the Debtor and (iii) discuss the
affairs, finances and accounts of the Debtor with their
appropriate officers, employees and accountants.
4.06. Preservation of Corporate Existence. The Debtor
shall maintain the corporate existence of each of the Debtor and
Calox Corporation, their respective rights, franchises and
privileges, and cause each to qualify and remain qualified as a
foreign corporation in each jurisdiction in which qualification
is necessary in view of their respective business and operations.
4.07. Payment of Debts. The Debtor shall pay and
discharge all taxes, assessments and governmental charges or
levies imposed upon the Debtor, its income or profits and any
property belonging to it and make timely payment of its other
obligations and debts, and all lawful claims which if unpaid
might become a lien or a charge upon any properties of the
Debtor, other than the indebtedness existing immediately prior to
the Filing Date which is stayed by the bankruptcy proceeding.
4.08. Maintenance of Insurance. The Debtor shall
maintain insurance with reputable and licensed insurance
companies, in such amounts and covering such risks as are usually
carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Debtor
operates.
4.09. Records and Books of Account. The Debtor shall
keep accurate records and books of account in which complete
entries will be made in accordance with generally accepted
accounting principles consistently applied, reflecting all
transactions of the Debtor, and give Pembrooke and its
representatives access to all of the same and all other corporate
records of the Debtor during normal business hours and upon
reasonable prior notice.
4.10. Filing of a Plan of Reorganization and Disclosure
Statement. The Debtor shall proceed in a reasonable time and
manner to file a Plan of Reorganization and Disclosure Statement
with the Bankruptcy Court. Any such Plan of Reorganization or
Disclosure Statement shall expressly incorporate this Amended
Agreement in its entirety and be fully consistent with all of the
terms hereof.
V. Calox Corporation's Covenants.
5.01. So long as Pembrooke shall have any secured debt
with the Debtor, Calox Corporation covenants that it will not
assign, encumber, hypothecate, mortgage or otherwise dispose,
sell and/or transfer any interest in the Monroe County Reserves
without the prior written consent and authorization of Pembrooke.
Pembrooke shall have (i) the right of first refusal in the event
Calox Corporation proposes to sell the Monroe County Reserves to
a third party and (ii) the first option to purchase the Reserves
from Calox for a period of twenty-four (24) calendar months from
the Court's entry of an Order confirming a Plan of Reorganization
for the Debtor for a sum of not less than Three Million Five
Hundred Thousand Dollars ($3,500,000.00) nor more than Four
Million Five Hundred Thousand Dollars ($4,500,000.00).
Notwithstanding the foregoing, Calox Corporation may mortgage its
remaining fifty (50%) percent interest in the Monroe County
Reserves which is not subject to Pembrooke's Mortgage, without
Pembrooke's written consent, provided any such mortgage does not
violate the terms of the Assignment.
VI. Default.
6.01. The following shall constitute an "Event of
Default":
(a) if there is a default in: (i) the payment of the
Loan due Pembrooke by the Debtor as provided
herein, or (ii) Debtor's performance of its
Consulting Agreement described in Article 8 of
this Agreement; or
(b) any violation or breach of the representation(s)
and covenant(s) made by the Debtor hereunder or
with respect to the Mortgage or Assignment
pertaining to the Monroe County Reserves; or
(c) there shall occur any material adverse change in
the assets, liabilities, financial condition,
business or prospects of the Debtor, as determined
in good faith; or
(d) appointment of a Trustee or other fiduciary for
the Debtor or the property of the estate of the
Debtor; or
(e) conversion of the Debtor's Chapter 11 case to a
case under Chapter 7 of the Bankruptcy Code.
6.02. If an Event of Default occurs which is not cured
within ten (10) business days after written notice to the Debtor
and its counsel (other than (i) non-monetary defaults which are
not subject to cure and (ii) any defaults under the Consulting
Agreement, none of which are subject to cure), then the Loan
shall become immediately due and payable with all accrued
interest (the "Accelerated Debt") and Pembrooke shall be
authorized to move before the Bankruptcy Court on an expedited
basis to obtain payment of its super-priority claim granted
hereunder or foreclose on the Mortgage pertaining to the Monroe
County Reserves after providing three (3) days' notice to the
Debtor and its counsel, counsel to the Official Committee of
Unsecured Creditors if appointed in the Debtor's Chapter 11 case,
the Office of the United States Trustee and any other
party-in-interest filing a notice of appearance and request for
service of papers in the Debtor's bankruptcy case, by telefax or
overnight delivery.
VII. Bankruptcy Court Approval.
7.01. This Amended Agreement and the transactions
contemplated hereby are subject to the approval of the Bankruptcy
Court having jurisdiction over the Debtor's Chapter 11 case and
the Debtor shall move promptly to obtain such approval on notice
to all necessary creditors and other parties-in-interest as
required by applicable bankruptcy law and rules.
7.02. This Amended Agreement shall become binding and
effective upon the entry of a final Order of the Bankruptcy Court
having jurisdiction over the Debtor's Chapter 11 case,
authorizing, inter alia, the Debtor to enter into this Amended
Agreement and the transactions contemplated herein, and granting
Pembrooke a super-priority administration expense claim pursuant
to Sec. 364(c)(1) of the Bankruptcy Code and Mortgage pertaining
to
the Monroe County Reserves.
VIII. Consulting.
8.01. Xxxxxx Xxxxxx, the principal of Pembrooke, has
rendered certain services to the Debtor to aid in the completion
of a Plan of Reorganization which can be confirmed by the
Bankruptcy Court. Further, Xx. Xxxxxx, as the principal of
Pembrooke, covenants and warrants that he will continue to work
with the Debtor in the same capacity. Compensation for the
services rendered, and upon completion of the rendition of the
services to be performed shall be awarded a total of Four Hundred
Thousand (400,000) shares of the Debtor. Said shares shall be
transferred to Xx. Xxxxxx in the following manner:
(a) Within two (2) business days after the entry of a
final Order Approving this Amended Agreement, the
Debtor shall register under the Securities Act of
1933 on a form S-8 registration statement Four
Hundred Thousand (400,000) share of its common
stock and transfer Two Hundred Thousand (200,000)
of said shares of stock to Xx. Xxxxxx. When
issued, said shares of stock shall be deemed fully
paid and non-assessable for the services which Xx.
Xxxxxx has rendered as of the 16th day of March,
1997.
(b) At the end of ninety (90) days from the entry of
the final Order by the Bankruptcy Court, the
Debtor shall transfer the remaining Two Hundred
Thousand (200,000) of S-8 shares of stock to Xx.
Xxxxxx. When issued, said shares of stock shall
be deemed fully paid and non-assessable, for any
and all additional services rendered by Xx. Xxxxxx
after March 16, 1997 through the date of issuance.
IX. Termination of Other Terms and Conditions of
Original Agreement.
9.01. By the agreement between the Debtor and Pembrooke,
this Amended Agreement shall constitute the entirety of the terms
and conditions of their agreement and does hereby replace, in
full, the terms and conditions of the original Agreement, as
approved by the Bankruptcy Court on the 15th day of August, 1996,
except to the extent otherwise approved and continued herein. In
the event there is any discrepancy or alleged ambiguities between
the two (2) Agreements, the terms and conditions of this Amended
Agreement shall be deemed controlling.
9.02. Termination of All Other Interests. Upon the
execution of this Amended Agreement and the approval of this
Amended Agreement by the Bankruptcy Court by final Order, neither
Pembrooke, or its principal, Xxxxxx Xxxxxx, shall have any rights
to acquire any other shares of stock, debentures, warrants, or
any other interests of the Debtor, or any Reorganized Debtor,
except to the extent set forth in this Amended Agreement.
X. Miscellaneous Provisions.
10.01. All notices to be given hereunder shall be in
writing and deemed given if sent by a combination of overnight
mail and facsimile transmission addressed to the parties set
forth herein and their respective attorneys or such other
addresses as may be used from time to time.
10.02. If any provision of this Amended Agreement shall
be determined to be invalid or unenforceable, it shall be the
intent and understanding of the parties that the remainder of
this Amended Agreement shall continue in full force and effect.
10.03. This Amended Agreement embodies the entire
agreement and understanding between the parties with respect to
the subject matter hereof and there are no agreements,
representations, promises, inducements or warranties, by whomever
made, other than those set forth, provided for or referred to
herein.
10.04. This Amended Agreement is binding and enforceable
on the parties' respective successors or assigns (including any
trustee or other fiduciary appointed as a legal representative of
the Debtor or with respect to the property of the estate of the
Debtor).
10.05. This Amended Agreement may be signed in
counterpart by facsimile signature.
IN WITNESS WHEREOF, the parties hereto have executed this
Amended Post-Petition Loan and Sale Agreement as of the day and
year first above written.
PEMBROOKE HOLDING CORPORATION
BY:
ITS:
PETRO UNION, INC.
BY:
ITS:
