POST-DEFAULT SETTLEMENT AGREEMENT FORBEARANCE AGREEMENT TO POA
Exhibit
10.20
POST-DEFAULT
SETTLEMENT AGREEMENT
FORBEARANCE
AGREEMENT TO POA
This
forbearance agreement, otherwise referred to as the Post Default Settlement
Agreement ("PDSA") is entered into this _ day of October., 2005 by and between
Meteor
Energy. Inc., Xxxxxx Oil & Butane Co., Inc. ("GOBCO"), Sedco, Inc.
("Sedco"). Capco Energy, Inc., Meteor Enterprises, Inc., Meteor Marketing.,
Inc.. Xxxxx Xxxxxxxxx (sometimes
collectedly referred to as "Obligors"), and Xxxxxx Family Investments
Limited
Partnership ("GFILF"),
and
the Estate of Xxxxxx X. Xxxxxx ("Estate"). All parties referenced
above collectively referred to as the "Parties".
The
Parties stipulate as follows:
A.
The
Parties entered into that certain Pay-Off Agreement ("POA") on or about December
20, 2004.
B.
The
POA
amended, in-part, prior agreements between the various parties identified
above,
including, the Settlement and Debt Restructuring Agreement dated August
9,
2000 ("SDRA"}, and the First Amendment to the Settlement: and Debt Restructuring
Agreement dated October 23, 2001 ("FASDRA "). both attached as Exhibits
to
the
POA,
C.
Sedco,
as
Payer under the POA, acknowledges its breach, and default under
the
terms of the POA to complete the final payment due there under.
D.
Under
the
POA, Sedco is justly indebted to GFILP, in. an amount of no less
than
$3,896,701 .00 which includes, but is not limited to outstanding principal,
past
due
payments, penalties and interest and other consideration due as of December
15.
2004. Said value represents the combined amounts owing from four promissory
notes issued
by
GOB CO and payable to GFILP under the SDRA and as amended by the FASDRA
and the POA. The total amount owing under the POA shall be referred to as
the
"Indebtedness."
E.
GFILP
provided sufficient and proper notice to Sedco/Obligors that all amounts
owing under the POA were accelerated and then due and payable.
F.
The
Indebtedness, inclusive of all past penalties and interest, collection and
legal
costs in favor of GFILP, is folly enforceable and is not subject to any defense,
counterclaim,
or any claim of setoff or recoupment.
G.
In
prior
transactions and agreements between the Parties, Obligors have, individually
and collectively, guaranteed the payment of tike Indebtedness. Obligors have
also
previously executed promissory notes, mortgages, guaranties, security agreements
and other liens in favor of GFILP relating to various properties, equipment,
other assets and
promises to pay ("Security Interests"). Due to Sedco's default under the
POA,
all of GFILP's
Security Interests remain in full effect valid and enforceable by GFILP and
the
Estate,
subject to the terms of this PDSA.
H.
Sedco
represents that, because of its financial condition; at this time it is
unable
to
pay the full amount of the indebtedness. The Parties are entering into this
PDSA
because of Sedco's representations and warranties concerning its current
financial condition
and ability to pay a reduced amount
I.
The
POA
shall be modified to the extent that GFILP>
as Payee
under toe POA,
agrees to a discounted pay-off amount under the POA subject to the terms
and
conditions
provided below. The discounted pay-off amount under this PDSA shall be
$2,620,000,00,
so long as Sedco complies with the terms of this PDSA. The discounted
amount
consists of GFILP's forgiveness of $571,701.00 in accumulated interest plus
an.
additional credit of $705,000.00 consisting of tine following prior transactions
between the
Parties and corresponding amounts;
|
Xxxxxxx
Payment
|
$
|
100,000,00
|
||
|
2
Lubricar
Note credits
|
$
|
350,000.00
|
||
|
Lubricar
Cash credit
|
$
|
10,000.00
|
||
|
Payment
made under POA 2.B.
|
$
|
50,000.00
|
||
|
Payment
made under POA 2.C.
|
$
|
50,000.00
|
||
|
Southern
& Golf payment
|
$
|
95,000.00
|
||
|
5
payments of $10,000.00
|
$
|
50,000.00
|
| J. |
Sedco
has deposited Two Hundred Thousand Dollars ($200,000.00) of good
fluids ("Deposited Funds") in the trust account of its legal counsel,
Domenici Law Firm.,
P.C., as consideration to induce
GFI
|
| K. |
LP
to enter into this PDSA.
|
K.
As
part of the POA, Obligors deposited approximately 10,000,000 common
shares of Capco Energy, Inc., into the trust account of Domenici Law Firm,
P.C.
These
shares shall remain in the custody of Domenici Law Firm, P.C., subject to
the
terms
of
this PDSA.
L.
The
Parties shall immediately engage New Mexico Title Company of Farmington,
New Mexico (c/o Xxxxx Xxxx) to act as the escrow agent ("Escrow Agent"')
for
all
acts necessary to consummate the terns of this PDSA.
M.
GFILP
shall prepare and execute appropriate releases ("Releases") of all its
Security Interests payment guaranties previously executed in its favor by
any of
the Obligors
and deliver the Releases to Escrow Agent no later than October 17,2005.
Copies
of
the Releases shall be simultaneously delivered to die Domenici Law Firm.
P.C.
N.
Upon
receipt of the Releases, Escrow Agent shall notify the Domenici Law
Firm
by faxed letter (at 505-884-3424) or email transmission at i>doinenici@.dom&xxxxxxx.xxx
that the Releases have been received in escrow.
NOW
THEREFORE, for good and valuable consideration., the receipt and sufficiency
of which, are hereby acknowledged, the Parties agree as follows:
1,
Forbearance Period
Subject
to The express provisions of this PDSA, GFILP hereby agrees to forbear
from
exercising its rights and remedies related to the Indebtedness under the
POA
until the
earlier of (i) November 22, 2005, or (ii) the occurrence of a Termination
Event,
as defined
below. This period of forbearance is hereinafter referred to as the- Forbearance
Period.
2-.
Conditions of Forbearance.
GFILP's
agreement to forbear is conditioned upon and subject to timely satisfaction
of each of the following conditions ("Conditions of Forbearance").
a. The
Domenici Law Firm's receipt of notice from Escrow Agent that the Releases
have been received in escrow shall act as Sedco/Obligors' instruction, to
the
Domenici
Law
Firm
to wire transfer the Deposited Fluids to Escrow Agent payable to GFILP.
The wire transfer of the Deposited Funds shall occur no later than October
2i,
2005.
b. Sedco/Obligors
shall wire transfer an additional amount of Two Million Four Hundred
Twenty Thousand Dollars ($2,420,000.00) to Escrow Agent, payable to GF1LP,
no
later
than 5:00 P.M. MST on November 21,2005-
c. All
representations and warranties made by Obligors to GFILP under this Agreement
shall remain true and correct throughout the Forbearance Period.
d. During
the Forbearance Period, Obligors' obligation to make payments to GFILP
shall be governed by this PDSA
e. During
the Forbearance Period, Obligors shall not breach any promise or covenant
contained in this PDSA a»d promise not to be in default under any provision of
This
PDSA.
3.
Termination Events
The
following shall constitute a Termination Event and an Event of Default under
this
Agreement;
Obligors
fail to comply m a timely manner with arty of the Conditions of Forbearance
set
forth, above.
4,
Termination of Forbearance Period.
The
Parties agree that the Forbearance Period automatically, and without notice,
shall
be
terminated upon the earlier of:
| (a) |
November
22, 2005, or
|
| (b) |
The
occurrence of any Termination Event, as defined
above.
|
Upon
termination of the Forbearance Period, the entire amount of the Indebtedness,
plus any additional past-due penalties and interest accumulated under the
SDRA
and/or FASDRA, shall be immediately due and payable, and GFILP shall be under
no
obligation to forbear in any respect and shall be entitled immediately to
exercise all of its
rights and remedies \under this PDSA, the PDA, and any surviving provisions
of
the SDRA
and/or FASDRA, promissory notes, mortgages,, security agreements and
associated
guaranties relating to any of its Security Interests, all without further notice
to Obligors.
(i)
GFILP
agrees to extend the termination of the Forbearance Period to December
20, 2005 upon receipt of wired funds from Obligors payable to GFILP in the
amount
of
Twenty Five Thousand Dollars (525,000.110) no later than November 21,2005.
This
payment, if made, shall act only to extend the termination of the Forbearance
Period and
shall
riot reduce or offset the amount of the Indebtedness or discounted pay-off
amount, or modify any other provision of this PDSA.
5.
Forgiveness of Indebtedness
(a)
Provided that throughout the Forbearance Period, Obligors satisfy ail of the
Conditions of Forbearance set forth above and timely pays the entire amounts
contemplated herein, then:
(i)
at
the conclusion of the Forbearance Period, Escrow Agent shall release
all
funds
deposited into escrow by Sedco/Obligors to GFILP;
(ii)
GFILP wili discharge arid release the then remaining outstanding balance
of
the
Indebtedness according to the terms of the POA and this PDSA;
(iii)
GFILP shall instruct the Escrow Agent to record all Releases and deliver
the
recorded originals to the Domenici Law Firm with copies to the McAlester Law
Firm; and.
(iv) GFILP shall provide written notice to Obligors that all shares of Capco
Energy, Inc., may be released back to the appropriate Obligors.
(b).
If,
however, there shall ever occur a Termination Event, then:
(i)
GFILP
shall be under no obligation to forgive or discharge any portion of the
Indebtedness, including but not limited to the 5705,000-00 credit referenced
in
paragraph
I above, which Obligors agree shall be considered liquidated damages in favor
of
GFILP
for Obligors' failure to comply with the Conditions of Forbearance and shall
not
be
recognized, as a credit to or reduction of the Indebtedness;
(ii)
Escrow Agent, or Domenici Law Xxxx* P.C., whomever is the applicable
custodian
of the Deposited Funds at the time, stall immediately release to GFILP the
entire
amount of Deposited Funds which shall be forfeited by Sedco/Obligors as
non-refundable
and liquidated damages in favor of GFILP for failure to comply with the
Conditions
of Forbearance and shall not be recognized as a credit to or reduction of
the
Indebtedness; and,
(iii)
Domenici Law Xxxx, P.C,, shall immediately release to GFILP the 10,000,000
shares of Capco Energy, Inc. then held in its trust account without need
for
prior approval from any of the Obligors and according to the terms of the
POA,
6. Effectiveness
of POA, FASDRA and Underlying Agreements
This
Agreement shall not constitute a novation of any promissory note or promise
to
pay
arising under the POA or FASDRA, or invalidation of any other mortgage,
guaranty,
financing statement, security interest, or environmental indemnification
arising
there
from, and the promissory notes shall remain in full force and effect subject
only to GFILP's
agreement to forbear as set forth here in
7. Release
and Waiver
Upon
completion of the payment obligations set forth in 5.(a) above, Obligors
hereby
acknowledge and stipulate that they have no claims or causes of action against
GFILP of any kind whatsoever. Likewise, Obligors hereby release GFILP from
any
and ail
claims, causes of action, demands and liabilities of any kind whatsoever
whether
direct or
indirect, fixed or contingent, liquidated or non-liquidated, disputed or
undisputed, known
or
unknown, which Obligors have or may acquire in the future relating in any
way to
any event, circumstance, action or failure to act from the execution of the
SDRA
to the date
of
this Agreement.
8. No
Waiver
by GFILP
This
Agreement shall not constitute a waiver by GFILP of any of Obligors'
defaults
under any promissory note or the POA or FASDRA. Except as expressly provided
herein, GFILP reserves all of its rights and remedies under the POA and FASDRA
and all applicable promissory notes, guaranties, mortgages and security
agreements.
Upon, completion of the payment obligations set forth, in 5 .(a) above, this
paragraph
shall become void,
9.
Additional Warranties arid Representations by the parties
(a) No
later
than October 21,2005, Obligors shall provide GFILP and Estate a
separately
executed acknowledgment of their indemnification in favor of GFILP and
Estate
as
provided for in the SDRA and FASDRA as it pertains to any secured property
for
any dispute, claim or action on any disclosure or statement made as to the
environmental conditioning or any other condition affecting the properties
or
use of the properties.
The acknowledgment shall be, in a form acceptable to GFILP. Obligors'
future
failure to defend the indemnification or hold harmless in favor of GFILP
and
Estate. will
cause a penalty of $50,000.00 to be entered in favor of GFILP or Estate in
addition to any other judgment entered against Obligors arising from their
failure to defend or hold harmless.
(b) Obligors
promise that with any future initial sale of GOB CO assets, the initial
purchasers will be required to execute a waiver, in a form agreed to as attached
hereto,
of any rights or claims against GFILP and Estate of Xxxxxx Xxxxxx as part
of the
closing
documents. Copies of all waivers will be forwarded to the XxXxxxxxxx Law
Firm
prior
to
any closing. An initial sale shall be the first sale of any specific asset
to
any entity
or
person in which any Obligor has no ownership interest or family relation.
An
initial purchaser shall be any entity or person in which any Obligor has
no
ownership interest,
or family relation.
(c) To
the
extent needed in the discretion of Obligors, GFILP agrees to reasonably
cooperate in the closing of any future GOBCO asset sale that requires the
GFILP's
involvement.
(d) The
Parties shall pay equally all escrow and recording fees arising from
the
acts
or requirements of this PDSA.
(e) The
Parties agree that Escrow Agent shall have absolute and final discretion
to determine -whether any act, omission to act. or event contemplated herein
has
occurred
according to the terms of this PDSA. The Parties agree to hold Escrow Agent
harmless for its decisions and determinations with respect to its interpretation
of the PDSA.
10.
Governing Law and Arbitration
The
law
of the State of New Mexico shall govern this agreement. Any controversy
or claim arising out of or related to this PDSA, or the breach thereof shall
'be
settled by binding arbitration in accordance with the Commercial Arbitration
Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrators)
may be entered in any court having jurisdiction thereof. Any arbitration
hearings
shall be held in. Albuquerque, Haw Mexico within 60 days of the termination
of
the
forbearance Period.
11. Attorneys
Fees.
In
the
event litigation or arbitration proceedings relating to this Agreement,
the
party
prevailing in any such action 01 other proceeding shall be paid all reasonable
attorney's
.fees, costs and expenses by the- other party.
12. Amendments.
This
Agreement cannot be amended, rescinded, supplemented or modified except
in
writing signed by the parties hereto.
13. Miscellaneous
(a) The
parties agree to execute any further documents and do all other acts
necessary
or appropriate to complete this transaction, including without limitation
transfer of
titles
to equipment if required
(b) No
waiver
of any of the provisions of this Agreement shall be deemed or shall
constitute & waiver of any other provision hereof (whether or not similar),
nor shall such
waiver constitute a continuing waiver unless otherwise expressly
provided.
(c) This
Agreement may be executed in one or more counterparts, each of which shall
be
regarded as an original and all of which shall constitute but one and the
same
instrument.
(d) If
any
provision of this Agreement is determined by a court to be invalid or
unenforceable,
such determination shall not affect any of the other provisions, each of
which
shall be construed and enforced as if such invalid or unenforceable provision
-were not
contained herein.
(e) This
Agreement shall be binding upon and inure to the benefit of the successors
and assignees of the parties hereto. No other person shall have any right,
benefit or obligation hereunder.
(f) All
representations and warranties contained in this Agreement, and any of
the
other
closing documents, shall survive closing.
AGREED
AND ACCEPTED BY:
METEOR
ENERGY, INC/CAPCO ENERGY, INC.
Signature
Printed
Name:
AGREED
AND ACCEPTED BY;
SEDCO,
INC.
Signature
Printed
Name
AGREED
AND ACCEPTED BY;
XXXXX
XXXXXXXXX, Individually
Printed
Name:
AGREED
AND ACCEPTED BY:
XXXXXX
OIL & BUTANE CO, INC.
Signature
___________________________
Printed
Name: .. A—.
AGREED
AND ACCEPTED BY;
METEOR
MARKETING, INC
Signature
Printed
Name:
AGREED
AND ACCEPTED BY:
METEOR
ENTERPRISES, INC.
Signature
Printed.
AGREED
AND ACCEPTED BY: XXXXXX
FAMILY INVESTMENTS
ESTATE'
OF XXXXXX X. XXXXXX
