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EXHIBIT 10.1
FORBEARANCE AGREEMENT
THIS AGREEMENT, made and entered by and between Agricultural
Production Credit Association ("AgPCA") and Phoenix Resources
Technologies, Inc. ("PRTI"):
WITNESS:
WHEREAS, AgPCA has entered and abstracted Judgment against
PRTI in several jurisdictions throughout the United States wherein
AgPCA obtained a Default Judgment against PRTI in the principal
amount of $3,177,300.74 in Cause No. 96-2451-B/A, Agricultural
Production Credit Association v. Phoenix Resources Technologies,
Inc., in the 114th Judicial District Court, Xxxxx County, Texas, and
has commenced subsequent litigation under the same cause number and
court wherein PRTI is also a named Defendant related to the
collection of the Judgment (collectively referred to as the
"Lawsuit"), and
WHEREAS, the current Officers and Directors of PRTI, Xxxxxxx
X. Xxxxxxx and Xxxxx Xxxxxxx, have represented to AgPCA that they
are newly appointed, were not involved in or associated with or
responsible for PRTI at the time the Judgment was entered, and were
not officers or directors or associated with PRTI or responsible
for any of the actions of PRTI at the times referred to in the
pending suit, and
WHEREAS the current officers, directors and shareholders are
desirous of attempting to bring a new business into PRTI by way of
merger or combination with a Private Investor (as defined below)
but are unable to do so due to the current Judgment and pending
suit, without the relief as set out herein, and
WHEREAS, the parties have agreed that under the conditions and
limitations as set out hereafter, that AgPCA will not pursue any
post-merger assets that may be brought into PRTI.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable consideration, the
receipt whereof is hereby acknowledged, the parties do agree as
follows:
1. PRTI agrees to pay AgPCA the total sum of ONE HUNDRED
THOUSAND DOLLARS ($100,000) prior to the effective date
of its merger or combination with a Private Investor (the
"Merger Date"). It is agreed that this payment is a
strict condition precedent to each and every promise made
by AgPCA in this Forbearance Agreement, and AgPCA shall
not be obligated in any way to perform any of the
promises contained in this Forbearance Agreement unless
PRTI makes full payment in a timely manner in accordance
with the terms of this paragraph.
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2. All assets of whatever nature ever owned by PRTI to the
Merger Date, including all proceeds, mutations,
accessions, and increases thereof, ("Prior Assets")
shall remain subject to the claims of AgPCA and nothing
contained in this Agreement shall prohibit, hinder or
otherwise defeat AgPCA's right of execution issued on
said Prior Assets, if any, to satisfy its current
Judgment or from obtaining any relief to which it may be
entitled under the pending Lawsuit with respect to such
Prior Assets that may be owned or that may have been
owned by PRTI.
The current officers and directors of PRTI agree to
cooperate with AgPCA in locating any Prior Assets of PRTI
that may exist or that may have existed and to provide
such information, as may be available to them, to AgPCA,
with respect to the Lawsuit. PRTI futher agrees to
provide to AgPCA copies of all documents and records
within its possession that relate to the Prior Assets and
the claims made by AgPCA in the Lawsuit within thirty
days of the execution of this Forbearance Agreement.
AgPCA agrees that it will limit its actions for recovery
of damages to only those Prior Assets of PRTI and that it
will not claim, attempt to lien, or otherwise interfere
with, or assert any claim to, any assets, of whatever
nature, of PRTI that may be or are actually brought into
PRTI, either by way of loan, capital contributions or
merger or other combination with a private group or
public company ("Private Investor") subsequent to the
Merger Date.
The parties agree that to the extent as may be required
by a Private Investor that they will furnish such other
documents as may reasonably be required to protect such
Private Investor from any current actions pending or
commenced by AgPCA.
The parties agree that PRTI shall have one year from the
date of this Forbearance Agreement to complete its merger
or combination with a Private Investor. In the event
that such merger or combination is not completed within
one year, the obligations of the parties set forth in
paragraphs 1 through 5 of this Forbearance Agreement
shall immediately and automatically terminate.
Nothing herein contained shall be construed to affect or
impair the validity of AgPCA's Judgment against PRTI,
AgPCA's rights to collect its Judgment against PRTI's
Prior Assets or its prior officers and directors, or
AgPCA's claims in the pending Lawsuit in Xxxxx County,
Texas, referred to above. PRTI affirmatively
acknowledges and agrees that AgPCA retains
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all rights and claims to enforce or collect the Judgment
against PRTI's Prior Assets and PRTI's pre-merger officers
and directors (even if such pre-merger officers and
directors remain or become officers or directors of PRTI
after the Merger Date).
PRTI will provide AgPCA with an opinion letter from a
qualified securities attorney certifying that the
transaction contained in this Forbearance Agreement will
not result in any liability to AgPCA from any source
within thirty days of the execution of this Forbearance
Agreement. PRTI further agrees to release and fully
indemnify AgPCA as to any and all potential liabilities,
known or unknown, arising from this transaction.
The parties agree that there are no third party
beneficiaries of this Forbearance Agreement, that only
AgPCA and PRTI and their heirs, successors and assigns
possess the right to enforce or otherwise claim the
benefits of this Agreement, and that no other person or
entity may enforce or otherwise claim the benefits of
this Agreement.
IN WITNESS WHEREOF, the parties have set their signatures the
day and year written below:
AGRICULTURAL PRODUCTION CREDIT ASSOCIATION
BY: /s/ Xxxxxxx Xxxxxxxx, CEO
Xxxxxxx Xxxxxxxx, CEO
DATE: July 27, 1999
PHOENIX RESOURCES TECHNOLOGIES, INC.
BY: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, President
DATE: July 22, 1999
BY: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Secretary
DATE: July 22, 1999
