UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Report for Event (date of earliest event reported): August 28, 1997
PETRO UNION, INC.
(Exact name of registrant as specified in its charter)
Colorado 0-20760 84-1091986
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
575 Madison Avenue, Suite 1006, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(812) 424-6745
123 Main Street, Suite 300, Evansville, Indiana 47708
(Former address)
Items 1 and 2.Changes in Control of Registrant and Acquisition and Disposition
of Assets.
The Registrant previously reported on a Form 8-K for an event dated
August 11, 1997, that the acquisition (the "Acquisition") by the Registrant of
Horizontal Ventures, Inc. ("HVI") and the change in control resulting
therefrom was probable to occur.
The Agreement and Plan of Acquisition dated June 13, 1997, contains a
condition to the obligation of HVI to close the Acquisition that the
Registrant maintain the listing of its common stock on the Nasdaq SmallCap(TM)
Market ("Nasdaq"). The Registrants's $.125 par value common stock was deleted
from Nasdaq effective on July 30, 1997 due to the failure of the Registrant to
meet Nasdaq's maintenance standard for net capital and surplus. The
Registrant re-applied for listing on Nasdaq on August 13, 1997 based upon its
pro forma financial structure following the confirmation of its plan of
reorganization by the bankruptcy court (described below) and the Acquisition.
That application remains pending with Nasdaq.
HVI has nonetheless agreed to close the Acquisition subject to an
Agreement to Close dated September 9, 1997. The Agreement to Close provides
that in the event that the Registrant's no par value common stock is not
approved for listing on Nasdaq within sixty days following the closing date,
the Agreement and Plan of Acquisition may be terminated at the sole option of
HVI and the parties put back into the same position as they were on the date
of closing to the degree and extent legally possible. Pending a determination
of whether the listing is obtained or HVI waives its rights under the
Agreement to Close, all stock certificates of no par value common stock to be
issued pursuant to the plan of reorganization (described below) and pursuant
to the Acquisition will be held by the Registrant. Closing subject to the
Agreement to Close occurred on September 9, 1997.
The Registrant will do business under the name Horizontal Ventures, Inc.
At Closing, the Registrant entered into employment agreements with Mr.
Randeep S. Grewal, the new Chief Executive Officer, and Mr. Richard D. Wedel,
the former President and now Chief Operating Officer of the Registrant. These
agreements were confirmed in the plan of reorganization described below.
Item 3. Bankruptcy or Receivership
On August 28, 1997, the Bankruptcy Court for the Southern District of
Indiana (the "Court") issued an order confirming the Registrant's First
Amended Plan of Reorganization (the "Plan"). The material features of the
Plan are as follows.
The Registrant will pay all of its administrative and priority claims in
full using the working capital of HVI. The reorganized Registrant will assume
the loans entered into with its two secured creditors, Ford Motor Credit
Company and National City Bank of Evansville. The unsecured creditors of the
Registrant will receive an aggregate of 100,000 shares of a new class of no
par value common stock of the Registrant ("New Common Stock"). The current
stockholders of the Registrant will receive one share of New Common Stock for
each 220 shares of $.125 par value common stock of the Registrant ("Old Common
Stock") currently held. Fractional shares will be rounded up. Accordingly,
17,537,945 outstanding shares of Old Common Stock will be converted into
approximately 80,000 shares of New Common Stock. The Plan further provides
for the acquisition of HVI by the reorganized Registrant upon terms described
in the Registrant's Form 8-K for the event dated August 11, 1997.
The Registrant will satisfy the claims of its two debtor-in-possession
financiers, Pembrooke Holding Corporation ("Pembrooke") and International
Publishing Holdings, S.A. ("IPH") as follows. Pembrooke will receive $100,000
in cash which has been escrowed for such purpose and 49,999 shares of New
Common Stock. IPH will receive 40,000 shares of New Common Stock and a call
option exercisable for a period of 36 months to acquire ninety percent of the
Company's wholly-owned subsidiary, Calox Corporation, which holds as its only
asset a limestone quarry in Monroe County, Indiana. The purchase price for
such ninety percent interest will be the book value of the interest at the
time of exercise.
The Plan further provides for the amendment and restatement of the
Registrant's Articles of Incorporation (i) to cancel the existing authorized
series of Old Common Stock and $.0001 par value preferred stock and to
authorize the New Common Stock as the sole class of voting stock; (ii) to fix
the number of directors at five and (iii) to eliminate the liability of
officers and directors to the extent allowed by Colorado law. Accordingly,
the reorganized Registrant now has authorized 50,000,000 shares of New Common
Stock, approximately 1,000,000 of which are currently issued and outstanding.
The initial Board of Directors consists of Randeep S. Grewal, Chairman of the
Board, Richard D. Wedel, Vice-Chairman of the Board, Dr. Jan F. Holtrop, Dirk
Van Keulen and Donald Christensen.
Financial information of the Registrant as of the confirmation date is
included in the Registrant's Form 8-K for the event dated August 11, 1997.
Item 7. Exhibits
2.1 First Amended Plan of Reorganization
10.1 Randeep S. Grewal Employment Agreement
10.2 Richard D. Wedel Employment Agreement
10.3 Post-Petition Loan Agreement
10.4 Agreement to Close
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PETRO UNION, INC.
Date: September 9, 1997 By: /s/ Randeep S. Grewal
Randeep S. Grewal
Its: Chief Executive Officer
Exhibit 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF INDIANA
IN RE:
PETRO UNION, INC. CASE NO. 96-70559-BHL-11
DEBTOR CHAPTER 11
FIRST AMENDED PLAN OF REORGANIZATION
The Debtor, Petro Union, Inc., (the "Debtor"), as Debtor and
Debtor-in-Possession and by and through its counsel, Boehl, Stopher & Graves,
proposes the following First Amended Plan of Reorganization pursuant to 11
United States Code Section 1121, et seq., in connection with the Chapter 11 Case
commenced by the Debtor.
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the following capitalized terms
shall have the following meanings in this Plan. Such meanings shall be
equally applicable to both the singular and plural forms of such terms. The
words "herein," "hereof," "hereunder" and other words of similar import refer
to this Plan as a whole and not to any particular section, subsection or
clause contained in this Plan unless the context requires otherwise. Whenever
it appears appropriate from the context, each term stated in either the
singular or the plural includes the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender include the masculine,
feminine and neuter. Any capitalized term in this Plan which is not defined
herein shall have the meaning assigned to such term by the Bankruptcy Code or
the Bankruptcy Rules.
1.01 Administrative Claim: A Claim for payment of an administrative
expense of a kind specified in Section 503(b) of the Bankruptcy Code and
referred to in Section 507(a)(1) of the Bankruptcy Code, including, without
limitation, the actual, necessary costs and expenses incurred after the
commencement of the Chapter 11 Case for preserving the Debtor's Chapter 11
estate and operating the business of the Debtor, including wages, salaries or
commissions for services, compensation for legal and other services and
reimbursement of expenses awarded under Sections 330(a) or 331 of the
Bankruptcy Code, and all fees and charges assessed against the Estate under
Section 586 of Title 28, United States Code.
1.02 Administrative Claimant: Any Person or entity entitled to payment
of an Administrative Claim.
1.03 Boehl, Stopher & Graves: Counsel for the Debtor as of May 23, 1997,
at which time Bruce D. Atherton, as approved counsel for the Debtor, moved his
practice from Weber & Rose, P.S.C.
1.04 Allowed Claim: Any Claim against the Debtor, proof of which was
filed on or before the Bar Date, or, if no proof of claim is filed, which has
been or hereafter is listed by the Debtor in its Schedules as liquidated in
amount and not disputed or contingent and, in either case, a Claim as to which
no objection to the allowance thereof has been interposed within the
applicable period of limitation fixed by this Plan, the Bankruptcy Code, the
Bankruptcy Rules, or the Bankruptcy Court. A disputed Claim shall be an
Allowed Claim if, and only to the extent that, such Disputed Claim has been
allowed by a Final Order. The term "Allowed", when used to modify a reference
in this Plan to any Claim or Class of Claims shall mean a Claim (or any Claim
in any such Class) that is so Allowed, e.g., an Allowed Secured Claim is a
Claim that has been Allowed to the extent of the value, as determined by the
Bankruptcy Court pursuant to section 506(a) of the Bankruptcy Code, of any
interest in property of the estate of the Debtor securing such Claim. Unless
otherwise specified in this Plan or in the Final Order of the Bankruptcy Court
allowing such Claim; "Allowed Claim" shall not include interest on the amount
of such Claim from and after the Petition Date. Administrative Claims, Other
Priority Claims, and Priority Tax Claims are Allowed only to the extent the
Debtor recognizes them as fixed, liquidated and Allowed and treats them as
such on the Effective Date or to the extent that they are otherwise Allowed by
a Final Order of the Bankruptcy Court.
1.05 Amended and/or Second Restated Articles of Incorporation: The
amended and/or restated Articles of Incorporation to be filed by the Debtor
pursuant to Article 18.
1.06 Amended and Restated By-Laws: The amended and restated by-laws to
be adopted by the Company pursuant to Article 18 of the Plan.
1.07 Assets: All right, title and interest in and to any and all
property of every kind or nature, owned by the Debtor as of the Effective
Date, including, but not limited to, property as defined in Section 541 of the
Bankruptcy Code (each identified item of property being herein sometimes
referred to as an "Asset").
1.08 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended and
codified in Title 11, United States Code.
1.09 Bankruptcy Court: The unit of the United States District Court for
the Southern District of Indiana, having jurisdiction over the Chapter 11
Case.
1.10 Bankruptcy Rules: The Rules of Bankruptcy Procedure, and the local
rules of the Bankruptcy Court, as applicable to this Chapter 11 Case.
1.11 Bar Date: The Debtor has made motion to the Bankruptcy Court to set
the date of July 11, 1997, at 4:30 p.m., E.S.T., as the final time and date
for filing proofs of claim for pre-petition Claims against the Debtor and for
filing applications for post-petition Claims against the Debtor, excepting the
final professional fee applications of Weber & Rose, P.S.C., Boehl, Stopher &
Graves, Cohen, Brame and Smith Professional Corporation, and any others
seeking professional fees. By order of the Bankruptcy Court, July 11, 1997,
or such other date as shall be set by the Bankruptcy Court, shall be the final
date for filing pre-petition Claims or post-petition applications pursuant to
Bankruptcy Rule 3003(c)(3).
1.12 Cash: Lawful currency of the United States of America.
1.13 Chapter 11 Case: This case No. 96-70559-BHL-11 under Chapter 11 of
the Bankruptcy Code.
1.14 Collateral: Any Asset in which a Secured Creditor claims a Lien.
1.15 Committee: The Official Committee of Unsecured Creditors appointed
in the Chapter 11 Case of the Debtor.
1.16 Common Stock: The common stock, with full right of voting under the
Colorado Business Corporation Act of the Reorganized Debtor.
1.17 Confirmation Date: The date when the Confirmation Order becomes a
Final Order.
1.18 Confirmation Order: The order of the Bankruptcy Court confirming
the Plan pursuant to Section 1129 of the Bankruptcy Code.
1.19 Creditor: Any Person that holds a Claim against the Debtor.
1.20 Debtor: Petro Union as Debtor-in- Possession.
1.21 Disclosure Statement: The Disclosure Statement in respect of the
Plan, approved by the Bankruptcy Court, together with any supplements thereto
approved by the Bankruptcy Court.
1.22 Disputed Claims: Claims against the Debtor as to which an objection
has been timely filed and which objection has not been withdrawn or resolved
by entry of a Final Order.
1.23 Distributions: The payments and distributions required by the Plan
to be made to the holders of Allowed Claims.
1.24 District Court: The United States District Court for the Southern
District of Indiana.
1.25 Effective Date: Shall be eleven (11) days after the Confirmation
Date and the date upon which the Plan will become effective.
1.26 Encumbrances: All reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions and other title
exceptions and encumbrances affecting the Collateral.
1.27 Equity Security: Any claim of any claimant based upon the
ownership, whether actual or constructive, of a share of stock in the Debtor,
prior to corporation, whether or not transferrable or denominated as "Stock"
or other similar security.
1.28 Equity Security Holder: A holder of an equity security of the
Debtor prior to the date of confirmation.
1.29 Estimated Claim: Any Claim estimated for voting purposes only
pursuant to Bankruptcy Rule 3018 and any applicable Articles of this Plan.
1.30 Final Order: An order which is no longer subject to appeal,
certiorari proceeding or other proceeding for review or rehearing, and as to
which no appeal, certiorari proceeding, or other proceeding for review or
rehearing shall then be pending.
1.31 First Distribution Date: The Date upon which the first of the
Distributions to be made pursuant to the Plan will be made, which date shall
be the thirtieth (30th) day following the Confirmation Date.
1.32 Green Coal Unsecured Creditors: Those persons making claim against
the Debtor as a result of the Debtor's execution of pre-petition Guarantees or
voluntary acquisition of debt on behalf of, or jointly with, Green Coal
Company.
1.33 Horizontal Ventures, Inc. ("HVI"): An Oklahoma corporation with its
principal place of business in Tulsa, Oklahoma. Upon confirmation, the stock
of HVI shall be acquired by the Reorganized Debtor.
1.34 Interest: Rights of the owners of the issued and outstanding shares
of the Common Stock.
1.35 Management Group: Those Persons who shall be employed by the
Reorganized Debtor after the Confirmation Date and who shall be responsible
for the day to day operation of the Reorganized Debtor.
1.36 Maturity Date: As to any Claim, the date on which such Claim and
all accrued and unpaid interest thereon which are provided to be paid
hereunder shall be fully due and payable.
1.37 New Common Stock: Shall be One Million (1,000,000) shares of Series
B common stock issued by the Reorganized Debtor after the acquisition
authorized by the Plan with Horizontal Ventures, Inc.
1.38 Person: An individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, an estate, a trust, an
unincorporated organization or a government or any particular subdivision
thereof or other entity.
1.39 Petition Date: May 13, 1996, the date of filing of the Chapter 11
Case by the Debtor.
1.40 Plan: This Plan of Reorganization, either in its present form or as
it may be altered, amended, or modified from time to time.
1.41 Priority Claim: Any Claim entitled to priority in payment under
Sections 507(a)(2) through 507(a)(6) of the Bankruptcy Code.
1.42 Priority Tax Claim: Any Claim entitled to priority in payment under
Section 507(a)(7) of the Bankruptcy Code, but excluding all claims for
post-petition interest and penalties, all of which interest and penalties
shall be (i) deemed disallowed and (ii) discharged on the Effective Date.
1.43 Reorganized Debtor: Petro Union once the Effective Date has
occurred.
1.44 Scheduled Debt Service: The regularly scheduled payments of
principal and/or interest to a particular class of Creditor(s).
1.45 Scheduled Payment Date: Any date on which Scheduled Debt Service is
due and payable.
1.46 Schedules: Schedules and Statement of Affairs filed by the Debtor
with the Bankruptcy Court listing liabilities and assets, as may be amended.
1.47 Secured Claim: A Claim secured by a Lien on Assets of the Debtor.
1.48 Secured Creditor: The owner or holder of a Secured Claim.
1.49 Security Instrument: Any mortgage, deed of trust, security
agreement, financing statement or other instrument that creates or evidences a
Lien.
1.50 Taxing Authorities: Federal, state or local governmental units
having jurisdiction and authority to assess, levy and collect taxes.
1.51 Unsecured Claims: Any and all Claims held by Creditors of the
Debtor which Claims are not secured by Assets of the Debtor, including, but
not limited to, Deficiency Claims, Claims arising from rejection of executory
contracts, leases, and Claims arising from litigation or suits against the
Debtor. For purposes of the definition, "Unsecured Claims" does not include
Administrative Claims, Priority Claims, Priority Tax Claims, and Secured
Claims.
1.52 Unsecured Creditor: Any Creditor that holds an Unsecured Claim.
1.53 Unsecured Vendors: Any Creditor holding an Unsecured Claim which is
not defined as a Green Coal Unsecured Creditor.
1.54 Weber & Rose, P.S.C.: Weber & Rose, P.S.C., was previous counsel
for the Debtor, until May 23, 1997, at which time Bruce D. Atherton, as
approved counsel for the Debtor, moved his practice to Boehl, Stopher &
Graves.
ARTICLE 2
EFFECT AND SUMMARY OF THE PLAN
The Debtor has proposed this Plan in good faith for the purpose of
creating a Reorganized Debtor which will enure to the benefit of the assets of
the Debtor, while restructuring its debt. Upon confirmation, the Reorganized
Debtor will pay administrative and priority claims in full. The existing
secured debt of the Debtor will be paid according to its terms and conditions
previously contracted for. The Unsecured Creditors will receive stock in the
Reorganized Debtor based upon the formula set forth in Article 8 of the Plan.
Finally, the Equity holders of the stock of the Debtor, existing as of the
date of confirmation, will receive new shares of stock in the Reorganized
Debtor at a reverse ratio of 220 shares of the stock in the Debtor to one (1)
share of stock in the Reorganized Debtor. Pursuant to the terms of the Plan,
after confirmation, the Reorganized Debtor will amend all corporate governance
documents, including, but not limited to, Articles of Incorporation (original,
amended and/or restated), By-Laws (original or amended), or any other
documentation necessary to create a new class of voting Common Stock with no
par value.
Upon the confirmation of the Plan of Reorganization and the amendment of
the affected corporate governance documentation, the Reorganized Debtor will
acquire all stock of its single largest competitor, Horizontal Ventures, Inc.,
("HVI"). HVI is an Oklahoma corporation with its principal place of business
located in Tulsa, Oklahoma. For the purpose of attracting the interest of
the Reorganized Debtor, HVI has multiple sets of rigs and personnel which will
enable the Reorganized Debtor to resume its horizontal drilling activities in
a more effective manner. HVI's net worth, resulting from its drilling units
and working capital, at the time of acquisition will result in the
Reorganized Debtor transferring Five Hundred Ninety Thousand (590,000) shares
of newly issued voting stock to the shareholders of HVI in consideration of
the stock acquired.
The ultimate effect of the Plan upon confirmation by the Bankruptcy
Court, will be the Reorganized Debtor having issued Common Stock of One
Million (1,000,000) shares at a book value in a minimum amount of Five Million
Dollars ($5,000,000.00). The Reorganized Debtor will also be capitalized in a
sufficient sum to allow it to engage in its horizontal drilling ventures,
which is the core business of the pre-petition Debtor.
ARTICLE 3
CLASSIFICATION OF CLAIMS AND INTERESTS
CLASSIFIED CLAIMS
Class A-1 - Administrative Claims
Class A-2 - Priority Claims
Class A-3 - Priority Tax Claims and Any Secured Claims of Taxing
Authorities
SECURED CLAIMS
Class B-1 - Allowed Secured Claim of Ford Motor Credit Company
Class B-2- Allowed Secured Claim of National City Bank of Evansville
UNSECURED CLAIMS
Class C-1 Allowed Claims
Class C-2 Allowed Claims
EQUITY SECURITIES
Class D-1 Equity Security Holders
ARTICLE 4
PROVISIONS FOR PAYMENT OF
ADMINISTRATIVE CLAIMS (CLASS A-1)
4.1 Full Payment to Administrative Claimants: Unless otherwise agreed,
each Allowed Claim under Class A-1 shall be fully paid in Cash on the later of
(a) eleven (11) days after the Effective Date or (b) the twenty-first (21st)
day after such Claim becomes an Allowed Claim or as agreed by the Debtor or
Reorganized Debtor and the respective Creditor; provided, however, that
Administrative Claims that represent liabilities incurred by the Debtor in the
ordinary course of business during the Chapter 11 Case for the purchase of
goods and/or services shall be paid in the ordinary course of business and in
accordance with any related agreements. All applications for Administrative
Claims shall be filed on or before the Bar Date set by the Court which may be
set after confirmation of the Plan.
4.2 Status of Creditor: Claimants in Class A-1 are unimpaired except to
the extent that such Claimants have agreed to treatment other than payment
after the Effective Date. Acceptance of the Plan from such Claimants will not
be solicited.
ARTICLE 5
PROVISIONS FOR PAYMENT OF
ALLOWED PRIORITY CLAIMS (CLASS A-2)
5.1 Full Payment to Priority Claimant: Unless otherwise agreed, each
Allowed Priority Claim shall be fully paid in Cash on the later of (a) thirty
(30) days after the Effective Date or (b) fifteen (15) days after the
allowance of such Claim by Final Order. Accrued vacation benefits for current
employees will not be discharged and will remain available to employees in due
course.
5.2 Status of Creditor: Claimants in Class A-2 are unimpaired.
Acceptance of the Plan from such Claimants will not be solicited.
ARTICLE 6
PROVISIONS FOR PAYMENT OF
ALLOWED PRIORITY TAX CLAIMS (CLASS A-3)
6.1 Payment on Terms for Priority Tax Claims: The Reorganized Debtor
shall pay Allowed Priority Tax Claims and any Allowed Secured Claims of Taxing
Authorities without interest or penalty within thirty (30) days after the
Effective Date.
6.2 Status of Creditor: Claimants in Class A-3 are unimpaired.
Acceptance of the Plan from such Claimants will not be solicited.
ARTICLE 7
PROVISIONS FOR PAYMENT OF
SECURED CLAIMS (CLASSES B-1 AND B-2)
7.1 Full Payment to Ford Motor Credit Company: The Allowed Secured Claim
of Ford Motor Credit Company is unimpaired. On the Effective Date, the
Reorganized Debtor shall assume the existing loan subject to the existing lien
of Ford Motor Credit Company, but free and clear of all other liens and
encumbrances. The terms of repayment of the assumed loan shall not be
modified, except as otherwise agreed by Ford Motor Credit Company after the
Effective Date. All payments on account of the Class B-1 Claim shall be made
from available cash.
7.2 Payment of Secured Claim of National City Bank of Evansville: On the
Effective Date, the Reorganized Debtor shall assume the existing loan subject
to the existing lien of National City Bank of Evansville, but free and clear
of all other liens and encumbrances. The terms of repayment of the assume
loan shall not be modified except as may be agreed upon by National City
Bank of Evansville after the Effective Date.
ARTICLE 8
PROVISIONS FOR TREATMENT OF
UNSECURED CLAIMS (CLASSES C-1 AND C-2)
8.1 Separation of Unsecured Claimants: The Debtor recognizes that the
claims of its creditors result from two (2) separate types of credit
facilities. The distinction between the credit facilities are: (a) the
Debtor's usual and customary vendors (the "Unsecured Vendors"); and (b) the
claims of the Green Coal Unsecured Creditors. The Reorganized Debtor shall
treat the Unsecured Vendors and the Green Coal Unsecured Creditors as
subclasses under the terms of the Plan and make a distribution to each
subclass as set forth in this Article 8.
8.2 Distribution of Stock to Unsecured Vendors (C-1): The Reorganized
Debtor shall deliver, within thirty (30) days from the Effective Date, to each
claimant having an allowed claim within the subclass of Unsecured Vendors such
claimant's pro-rata share of Twenty Thousand (20,000) shares of voting Common
Stock of the Reorganized Debtor.
8.3 Status of Creditor: Unsecured claims in Class C-1, being the
subclass of Unsecured Vendors, are impaired. Acceptance of the Plan from such
claimants will be solicited.
8.4 Distribution of Stock to Green Coal Unsecured Creditors (C-2): The
Reorganized Debtor shall deliver, within thirty (30) days from the Effective
Date, to each Claimant having an Allowed Claim within the subclass of Green
Coal Unsecured Creditors such Claimant's pro-rata share of Eighty Thousand
(80,000) shares of voting Common Stock of the Reorganized Debtor.
8.5 Status of Creditor: Claimants in Class C-2 are impaired. Acceptance
of the Plan from such claimants will be solicited.
ARTICLE 9
TREATMENT OF EQUITY SECURITIES (CLASS D-1)
9.1 Pro-Rata Replacement of Equity Securities (Class D-1): The
Reorganized Debtor shall deliver, within thirty (30) days from the Effective
Date, to each existing holder of an Equity Interest of the Debtor, prior to
the date of confirmation, such Equity holder's pro-rata share of Eighty
Thousand (80,000) shares of voting Common Stock of the Reorganized Debtor.
For every share of voting Common Stock held by an Equity holder of the Debtor,
such shareholder will receive one-two hundred twentieth (1/220th) of a share
in the Reorganized Debtor. In the event there are any fractional shares of
stock resulting from the determination of each Equity holder's interest, upon
the formula set forth above, such fractional shares will not be allowed by the
securities laws governing the Reorganized Debtor and said Equity holder's
interest shall be rounded up to the next highest single share of stock of the
Reorganized Debtor.
ARTICLE 10
THIRD PARTY OBLIGATIONS
10.1 Claims Against Insurance Carriers: The Plan is not intended to
affect the rights, if any, of any party to collect a Claim from or to assert a
Claim against any insurance carrier providing workers compensation, general
liability, or other insurance coverage for the Debtor that may exist under
applicable non-bankruptcy law and any applicable contractual provisions. To
the extent an allowed Claim either (i) elects not to seek compensation from
applicable insurance coverage, or (ii) is not satisfied by insurance carriers
as a result of deductible provisions, self-insurance limitations of coverage,
or any other reason shall be treated as a Class C-1 Claim.
ARTICLE 11
MEANS FOR IMPLEMENTATION OF PLAN
11.1 Cancellation of Stock and Issuance of Voting Common Stock and/or
Preferred Stock: On the Effective Date new certificates representing shares
of voting Common Stock under the Plan will be issued in accordance with
Articles 8 and 9 of the Plan and shall be exchanged or delivered to those
persons entitled to such shares of voting Common Stock in accordance with
Articles 8 and 9 of the Plan.
11.2 Assignment of Causes of Action: On the Effective Date, all rights
and causes of action pursuant to (i) Sections 502, 542, 544, 545, 546, 548,
550 and 553 of the Bankruptcy Code; (ii) preference claims pursuant to Section
547 of the Bankruptcy Code; (iii) fraudulent transfer claims pursuant to
Section 548 of the Bankruptcy Code; (iv) all other claims and causes of action
of the Debtor's Estate against any Person as of the Confirmation Date shall be
preserved and transferred and assigned to the Reorganized Debtor. On the
Effective Date, the Reorganized Debtor shall be appointed representative of
the Debtor's Chapter 11 estate under Section 1123(b) of the Bankruptcy Code
and will be authorized and shall have the power to bring any and all such
causes of action. The Reorganized Debtor, in its discretion, may pursue such
causes of action, and take all actions in connection with the prosecution,
defense, compromise or settlement thereof, and in such connection, may retain
such counsel, accountants or other Persons as the Reorganized Debtor shall
deem necessary in connection therewith. All recoveries, if any, received from
or in respect of the causes of action (whether by settlement, judgment or
otherwise) shall become and be property of the Reorganized Debtor. To the
extent permitted by law, all rights under Section 363(h) of the Bankruptcy
Code are also preserved for the benefit of the Debtor, and Reorganized Debtor
shall have the right to exercise those rights subject to Bankruptcy Court
approval.
11.3 Provisions Covering Distributions:
(a) Payments Made On The Effective Date: Payments and Distributions
to be made shall be made as provided for in the Plan or as may
be ordered by the Bankruptcy Court.
(b) Method of Payment: Payments to be made in Cash pursuant to the
Plan shall be made by check drawn on a domestic bank.
(c) Payment to be Made by the Reorganized Debtor: Except as
otherwise provided may be specified in the Plan, Distributions
to be made to Creditors under the Plan shall be made by the
Reorganized Debtor.
11.4 Authority to Acquire HVI Stock: On the Effective Date, the
Reorganized Debtor shall have all rights and authority, subject to the terms
of this Plan and the applicable law of the State of Colorado, to acquire the
shares of stock of HVI according to the terms of the Agreement and Plan of
Acquisition between Petro Union, Inc., and Horizontal Ventures, Inc., which
has been approved by the Bankruptcy Court and a copy of which is attached
hereto as Schedule 1.
11.5 Other Actions to Implement Plan: All Persons shall execute all such
documents and instruments and shall take all such other actions, from time to
time either prior or subsequent to the Effective Date, as may be necessary,
proper or advisable to implement this Plan.
ARTICLE 12
ACCEPTANCE OR REJECTION OF THE PLAN:
EFFECT OF REJECTION BY ONE OR MORE CLASSES OF CLAIMS
12.1 Impaired Classes to Vote: Each impaired class of Creditors with
Claims against the Debtor's estate shall be entitled to vote to accept or
reject the Plan.
12.2 Acceptance by Class of Creditors: A Class of Creditors shall have
accepted the Plan if the Plan is accepted by at least 2/3 in amount and more
than 1/2 in number of the Allowed Claims of such class that have filed a
ballot voting on the Plan.
12.3 Cramdown: As long as one non-insider impaired class of creditors
votes to accept the Plan, the Debtor shall request the Bankruptcy Court to
confirm the Plan in accordance with Section 1129(b) of the Bankruptcy Code.
ARTICLE 13
IDENTIFICATION OF CLAIMS AND
INTERESTS NOT IMPAIRED BY THE PLAN
13.1 Unimpaired Classes: Claims of Creditors specified in Class A-1,
A-2, A-3, B-1 and B-2, are not impaired under the Plan and, therefore, not
entitled to cast a vote pursuant to Bankruptcy Code Section 1126(f).
13.2 Impaired Classes to Vote on Plan: The holders of Claims or
Interests specified in Classes C-1, C-2, and D are impaired and are entitled
to cast votes to accept or reject the Plan.
ARTICLE 14
EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN
14.1 Assumption/Rejection of Executory Contracts Under the Plan: Any
executory contracts or unexpired leases not (a) assumed, (b) the subject of a
pending motion to assume as of the Confirmation Date, or (c) identified on the
attached Schedule 2 shall be deemed to have been rejected upon the
Confirmation Date in accordance with Section 365 of the Bankruptcy Code. This
Plan shall constitute a motion to assume and/or affirm (as to post-petition
contracts and leases) the executory contracts and leases identified on
Schedule 2. Confirmation of the Plan will effect the assumption and
affirmation of the identified executory contracts and leases and establish the
applicable cure payment, if any, of the amounts listed on Schedule 2.
14.2 Filing of Claims Under Rejected Contracts: All Claims arising from
the rejection of executory contracts must be evidenced by properly filed
proofs of claims. Such proofs of claim must be filed within any applicable
deadline previously established by the Bankruptcy Court or, if no previously
set deadline is applicable, within thirty (30) days of the later of the
rejection of the contract or the Effective Date. Such proofs of claim shall,
in addition to its filing with the Bankruptcy Court, be served upon the
Reorganized Debtor. Any objection to Claims filed pursuant to this provision
shall be governed by the procedures provided in Article 15 hereof.
ARTICLE 15
BAR DATE FOR CLAIMS AND
PROCEDURES FOR RESOLVING
DISPUTED CLAIMS UNDER THE PLAN
15.1 Bar Date for Objections to Claims: Except as otherwise set out
herein, objections to Claims shall be made and filed by the Debtor and/or any
party in interest and shall be served upon each holder of each of the Claims,
if any, to which objections are made and filed with the Bankruptcy Court as
soon as practicable. The Debtor or the Reorganized Debtor shall file any
objection to a Claim pursuant to this Plan or pursuant to any order entered
herein on a date no later than thirty (30) days after the Effective Date.
Objections filed by parties other than the Debtor, the Reorganized Debtor,
and/or their insurance carriers, shall be filed within thirty (30) days
subsequent to the Effective Date.
15.2 Prosecution of Objections to Claims: The Reorganized Debtor shall
use its best efforts to object to, compromise, and/or settle all Claims at
amounts accurately reflecting the amount of each respective Creditor's
allowable Claim, subject to reasonable litigation expense limits. The
Reorganized Debtor shall litigate to judgment, settle or withdraw objections
that the Debtor and/or the Reorganized Debtor may file to Disputed Claims.
Any other party filing an objection shall be responsible for prosecuting to
judgment or settling any such objections. Debtor and/or Reorganized Debtor
shall be permitted to settle any Disputed Claims without further notice or
Court approval. Any stipulations regarding a Claim filed by the Claimant and
either Debtor or Reorganized Debtor shall be deemed an amendment to any
previously filed proof of claim and shall be deemed an amendment by the Debtor
to its Schedules, and any modifications or supplements thereto. Any proposed
settlement of an objection filed by a party in interest other than the Debtor,
Reorganized Debtor, or their insurance carriers shall be consented to by the
Reorganized Debtor in writing or shall be approved by the Court.
15.3 No Distributions Until Claim Allowed: Except as may be otherwise
agreed to with respect to any Disputed Claim, no payments or Distributions
shall be made with respect to all or any portion of a Disputed Claim unless
and until all objections to such Disputed Claim have been determined by a
Final Order. Payments and Distributions to each holder of a Disputed Claim to
the extent that it ultimately becomes an Allowed Claim shall be pursuant to
the provisions of the Plan with respect to such Claim. Such payments and
Distributions shall be made as soon as practicable after the date that the
order or judgment allowing such Claim becomes a Final Order.
15.4 Voting Rights: Disputed Claims shall not be allowed to vote with
respect to the Plan unless such Claim is an Estimated Claim.
15.5 Estimation for Distribution: Debtor may seek an order estimating
the amount of any Disputed Claim pursuant to 11 U.S.C. Section 502(c) for the
purposes of distributions under the Plan.
ARTICLE 16
DISSOLUTION OF THE COMMITTEE
The Committee will be dissolved and will terminate upon the Effective Date.
ARTICLE 17
PROVISIONS FOR RETENTION OF JURISDICTION BY THE
BANKRUPTCY COURT FOR SUPERVISION OF THE PLAN
The Bankruptcy Court shall retain exclusive jurisdiction over all matters
arising under, or arising in, or relating to the Chapter 11 Case or this Plan
to the full extent permitted by 28 U.S.C. Section 1334, to hear, and to the
full extent permitted under 28 U.S.C. Section 157, to determine, all
proceedings in respect thereof, including, but not limited to, proceedings to
supervise the Plan. Specifically, but without limitation, and if applicable
law provides, the Bankruptcy Court shall have jurisdiction:
(a) to hear any and all objections or settlements relating to
the allowance of Claims;
(b) to hear any and all applications for payment of fees made by
attorneys and other professionals pursuant to Sections 330
or 503 of the Bankruptcy Code, or for payment of any other
fees or expenses authorized to be paid or reimbursed by the
Debtor under the Bankruptcy Code, and any and all objections
thereto;
(c) to hear any and all pending applications for rejection, the
assumption or the assumption and assignment, as the case
may be, of unexpired leases and executory contracts to which
the Debtor is a party or with respect to which they may be
liable, and any and all Claims arising therefrom;
(d) to hear any and all motions, applications, adversary
proceedings and contested or litigated matters properly
before the Bankruptcy Court;
(e) to approve modifications of or amendments to the Plan;
(f) to hear disputes regarding the implementation or
consummation of the Plan;
(g) to hear all controversies, disputes, settlements, and suits
which may arise in connection with the interpretation or
enforcement of this Plan, or in connection with the
enforcement of remedies under this Plan;
(h) to hear during the time period the Chapter 11 Case is open,
all controversies, disputes and issues dealing with the
discharge of the Debtor or the dischargeability of any
Claims;
(i) to approve compromises, settlements or adjudications of any
objections to Claims;
(j) to estimate disputed, contingent and unliquidated Claims for
purposes of distribution under the Plan;
(k) to correct any defect, cure any omission or reconcile any
inconsistency in the Plan;
(l) to resolve issues or disputes relating to the division,
title, sale or liquidation of the Assets;
(m) to enter a final decree closing this case; and
(n) to hear and determine such other matters as may arise in
connection with this Plan or the Confirmation Order.
ARTICLE 18
ARTICLES OF INCORPORATION AND BY-LAWS
OF THE DEBTOR/RESTRICTION ON TRANSFER OF SHARES
18.1 Amendments to Articles of Incorporation and By-Laws: The
Confirmation Order shall provide authorization pursuant to the applicable
provisions of the Colorado Business Corporation Act for the filing by the
Company of any Amended and/or Restated Articles of Incorporation and Amended
and/or Restated By-Laws. Any Restated Articles of Incorporation shall
substantially restate the existing Articles of Incorporation (to the extent
previously amended or restated and which do not conflict with the terms of the
Plan of Reorganization) and shall repeal any existing Certificate of
Designation of Rights, Preferences, Privileges and Restrictions, except that
any such Restated Articles shall be amended so as to (a) amend the provisions
for authorized Common Stock, cancel the existing classes of preferred stock,
and add provisions for the voting Common Stock, (b) amend the provisions for
the number and classification of the Board of Directors, to fix the number of
directors at five (5), and (c) include provisions granting limitation of
liability of directors to the full extent permitted under the laws of the
State of Colorado. The Amended and/or Restated By-laws will be amended to
provide, among other items, for limitation of liability and indemnification of
officers and directors to the full extent permitted under the laws of the
State of Colorado, and for such other amendments as necessary to effectuate
the amendments to the Articles of Incorporation as described above and to
otherwise implement this Plan.
18.2 Cancellation of Certificates: In the event of confirmation of the
Plan, all certificates evidencing the ownership of Common Stock and/or any
outstanding preferred stock shall be automatically cancelled. All interests
evidenced by or arising from the Common Stock shall be cancelled on the books
of the Debtor and shall be settled, compromised, and discharged as provided
herein.
18.3 Issuance of Common Stock: In the event of confirmation of the Plan,
the Amended and Second Restated Certificate of Incorporation of the
Reorganized Debtor will authorize the issuance of One Million (1,000,000)
shares of Common Stock. The voting Common Stock will have the attributes
described in the Amended and/or Restated Articles of Incorporation.
ARTICLE 19
PROVISIONS FOR MANAGEMENT
19.1 Directors: Pursuant to the provisions of 11 U.S.C. Section 1123,
the Directors of the corporation upon the Effective Date shall be:
1. Randeep S. Grewal;
2. Richard D. Wedel;
3. Dr. Jan F. Holtrop;
4. Dirk Van Keulen; and
5. Donald A. Christensen
19.2 Officers: Pursuant to the provisions of 11 U.S.C. Section 1123, the
Officers of the Reorganized Debtor upon the Effective Date shall be:
1. Randeep Grewal, Chief Executive Officer; and
2. Richard D. Wedel, Chief Operating Officer;
19.3 Employment Contracts and Incentive Programs: The Reorganized Debtor
shall enter into employment contracts as of the Effective Date with certain of
its officers pursuant to employment contracts approved by the Board of
Directors of the Reorganized Debtor after the acquisition of HVI.
ARTICLE 20
DISCHARGE OF DEBTOR; INJUNCTION; VESTING OF ASSETS
20.1 Discharge of Debtor: The Debtor shall receive a full and complete
discharge, pursuant to Section 1141(d)(1) of the Bankruptcy Code, of any debt
that arose prior to confirmation, including, but not limited to, a discharge
of any Claims of the kind specified in Section 502(g), (h) or (i) of the
Bankruptcy Code (including any fine, penalty, multiple or exemplary damages or
forfeitures). All Creditors and holders of Equity Interests shall be
precluded from asserting against the Debtor or its Assets any other or further
Claims based upon any act or omission, transaction or other activity of any
kind or nature that occurred prior to the Confirmation Date.
20.2 Injunction: Except as provided in the Plan or Confirmation Order,
as of the Confirmation Date, all entities that have held, currently hold or
may hold a Claim or other debt or liability that is discharged or an Equity
Interest or other right of an equity security holder that is cancelled
pursuant to the terms of the Plan are permanently enjoined from taking any of
the following actions on account of any such discharged Claims, debts or
liabilities or terminated Interests or rights: (a) commencing or continuing in
any manner any action or other proceeding against the Debtor, the Reorganized
Debtor, or their respective properties; (b) enforcing, attaching, collecting
or recovering in any manner any judgment, award, decree or order against the
Debtor, the Reorganized Debtor or their respective properties; (c) creating,
perfecting or enforcing any lien or encumbrance against the Debtor, the
Reorganized Debtor or their respective properties; (d) asserting a setoff,
right of subrogation or recoupment of any kind against any debt, liability or
obligation due to the Debtor, the Reorganized Debtor or their respective
properties; and (e) commencing or continuing any action, in any manner, in any
place that does not comply with or is inconsistent with the provisions of the
Plan.
20.3 Vesting of Assets: Except as otherwise provided by the Plan, on the
Confirmation Date of the Plan, the Assets of the Debtor shall vest in the
Reorganized Debtor, in accordance with Section 1141 of the Bankruptcy Code,
free and clear of all Liens, Claims and encumbrances of any kind or nature,
and the Confirmation Order shall be a judicial determination of discharge of
the Debtor's liabilities, except as provided in the Plan.
ARTICLE 21
MODIFICATIONS AND INTERPRETATION
OF THE PLAN; GENERAL PROVISIONS
21.1 Modification: This Plan may be altered, amended or modified by the
Debtor, in the manner provided for by Section 1127 of the Bankruptcy Code, or
otherwise permitted by law.
21.2 Headings: The headings used in this Plan are inserted for
convenience only and neither constitute a portion of this Plan nor in any
manner affect the provisions or interpretations of this Plan.
21.3 Severability: Should any provisions in this Plan be determined to
be unenforceable for any reason, such determination shall in no way limit or
affect the enforceability and operative effect of any other provision(s) of
this Plan.
21.4 Successors and Assigns; Transferability: The rights and obligations
of any Person named or referred to in this Plan shall be binding upon, and
shall inure to the benefit of, the successors and assigns of such Person.
21.5 Barred Claims: Except as otherwise specifically provided herein or
allowed by a Final Order of the Bankruptcy Court, all Claims against the
Debtor which were neither filed with the Bankruptcy Court on or before the Bar
Date nor scheduled by the Debtor as undisputed shall be forever waived and
discharged.
21.6 Unclaimed Property: Any property or benefit directly or indirectly
distributable pursuant to (i) this Plan or (ii) any instrument, document,
certificate or other paper or writing utilized in connection with its
implementation, which is not claimed by the Person entitled thereto within
ninety (90) days after the latest date when delivery is or was to be made
shall be treated as released and abandoned by such Person and, thereafter,
shall revert to the Reorganized Debtor for disposition pursuant to the
provisions of the Plan. Notice to a Creditor of the availability of a
distribution or payment under this Plan at its last known address as reflected
on Debtor's records, shall constitute full and complete notice to such
Creditor of the availability of such Distribution or payment and shall
commence the running of the ninety (90) day period set out above.
21.7 Notices: Except as otherwise specified, all notices and requests
hereunder shall be given by any written means, including, but not limited to,
telex, telecopy, telegram, first class mail, express mail or similar overnight
delivery service and hand-delivered letter; and any such notice or request
shall be deemed to have been given when received.
Notices shall be given as follows:
To Debtor:
Petro Union, Inc.
123 Main Street, Suite 300
Evansville, Indiana 47708
With copies to:
Bruce D. Atherton, Esq.
BOEHL, STOPHER & GRAVES
2300 Providian Center
400 West Market Street
Louisville, Kentucky 40202
Randeep S. Grewal
Horizontal Ventures, Inc.
4815 S. Harvard, Suite 470
Tulsa, Oklahoma 74135-3068
Dated: July 23, 1997
PETRO UNION, INC.
BY: /s/ Richard D. Wedel
RICHARD D. WEDEL
ITS: PRESIDENT
BOEHL, STOPHER & GRAVES
BY: /s/ Bruce D. Atherton
BRUCE D. ATHERTON
2300 PROVIDIAN CENTER
400 WEST MARKET STREET
LOUISVILLE, KENTUCKY 40202
(502) 589-5980
COUNSEL FOR DEBTOR
c:\atherton\petrobnk\Plan.002
Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into this 9th day of September, 1997
(the "Effective Date") by and between Petro Union, Inc., a Colorado
corporation ("Employer"), and Randeep Grewal ("Executive").
1. Employment. Employer hereby employs Executive and Executive hereby
accepts such employment, subject to the terms and conditions of this
Agreement. Executive shall serve in the capacity of Chairman and Chief
Executive Officer of Employer reporting solely to the Board of Directors and
shall perform such functions as the Board of Directors of Employer shall
reasonably determine from time to time, provided however that Executive's
duties shall be consistent with the foregoing capacity and with the training,
talent and ability of Executive.
2. Time Dedicated. Executive shall devote the time and attention
reasonable to run a drilling company and shall at all times perform all of his
obligations hereunder to the best of his ability, experience and talent.
3. Term and Termination. The term of this Agreement shall commence on
the Effective Date and shall continue uninterrupted for a period of five years
thereafter unless sooner terminated or extended by mutual agreement.
Executive's employment hereunder may be terminated as follows:
(a) Death. In the event the Executive dies prior to the expiration
of this Agreement, the Company shall pay to the beneficiary of the Executive
an amount equal to the Executive's total compensation for 270 days (the
"Severance Period"), such amount payable in a lump sum to the designated
beneficiary hereunder within sixty (60) days of the Executive's Death. In
addition, the Company shall pay to the beneficiary of the Executive, in a lump
sum within sixty (60) days of the end of the Company's fiscal year, an amount
(to the extent such amount is positive number) equal to the value of all
Company stock and stock options, as of the date of the Executive's death, in
accordance with the terms of any benefits to which the Executive would be
entitled in any plan in which he is a participant. The Executive's
beneficiary shall be designated in the manner provided in such benefit
program.
(b) Disability. If the Board of Directors of the Company
determines, in the reasonable exercise of its discretion, that the Executive,
through physical or mental illness or disability, whether or not connected to
his employment hereunder, has become incapacitated and is unable for a period
of six months during any continuous period of twelve (12) months, to discharge
the duties and responsibilities of his employment hereunder, the Board of
Directors of the Company shall have the right by written notice to the
Executive to place him on a disability status. In such event, the Company
shall pay to the Executive (or to his beneficiary if the Executive is no
longer alive) his Base Salary and all benefits for the Severance Period as
defined herein.
(c) Cause. The Company may terminate the Executive's employment for
"Cause". For purposes of this Agreement, "Cause" means:
(i) an act or acts of personal dishonesty taken by the Executive
and intended to result in substantial personal enrichment of the Executive at
the expense of the Company;
(ii) repeated failure to perform the duties assigned to the
Executive under Section 1 of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied in a reasonable
period of time after receipt of written notice from the Company;
(iii) the conviction of the Executive of a felony; or
(iv) failure to perform duties and meet goals mutually agreed
upon by the Executive and the Board of Directors to the reasonable
satisfaction of the Board of Directors.
(d) Good Reason. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
means any of the following:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities as
contemplated by this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Sections 7, 8 and 9 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than Evansville, Indiana except for travel reasonably
required in the performance of the Executive's responsibilities;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy the
successor obligations of this Agreement.
For purposes of this section, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(e) Notice of Termination. Any termination by the Company for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice). The failure by the
Executive to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
4. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall not terminate without fulfillment
of the obligations to the Executive's legal representatives under this
Agreement, including those obligations that would have been accrued or earned
by the Executive hereunder through the date of the Severance Period, including
any compensation previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the Company and any accrued
vacation pay not yet paid by the Company and any other amounts or benefits
owing to or accrued or vested for the account of the Executive under the then
applicable employee benefit plans or policies of the Company (such amounts are
hereinafter referred to as "Accrued Obligations"). All such Accrued
Obligations shall be paid to the Executive in a lump sum in immediately
available federal funds within thirty (30) days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive's
family shall be entitled to receive benefits at least equal to the most
favorable benefits provided by the Company to surviving families of executives
of the Company under such plans, programs and policies relating to family
death benefits, if any, in accordance with the most favorable policies of the
Company in effect, or, if more favorable to the Executive and/or the
Executive's family, as if effect on the date of the Executive's death with
respect to other key executives and their families.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability, this Agreement shall terminate without
further obligations to the Executive, other than those compensation and
benefit obligations accrued or to be earned by the Executive hereunder through
the date of the Severance Period. All such Accrued Obligations shall be paid
to the Executive in a lump sum in immediately available federal funds within
thirty (30) days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits at least
equal to the most favorable of those provided by the Company to disabled
employees and/or other families accordance with such plans, programs and
policies relating to disability, if any, in accordance with the most favorable
policies of the Company in effect at any time during the ninety (90) day
period immediately preceding the Disability Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter with respect to other key executives and their families.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause, this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay
to the Executive the Highest Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the Executive (together
with accrued interest thereon). If the Executive terminates employment other
than for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than those obligations accrued or earned
by the Executive through the Date of Termination, including for this purpose,
all Accrued Obligations.
(d) Good Reason; Other than for Cause or Disability of Death. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, Disability, or death or the Executive shall
terminate his employment for Good Reason:
(i) the Company shall pay to the executive in a lump sum in
immediately available federal funds within thirty (30) days after the Date of
Termination the aggregate of the following amounts:
A. to the extent not theretofore paid, the Executive's Base
Salary through the date of the Severance Period; and
B. the Executive's base salary for the balance of the term of
this Agreement if the Date of Termination is within the first three (3) years
of the Employment Agreement. The Base Salary rate shall be the rate in effect
at the Date of Termination.
C. the Annual Bonus paid to the Executive for the last full
fiscal year during the Employment Period; and
D. in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any accrued interest
thereon) and not yet paid by the Company; and
E. all other amounts accrued and earned by the Executive
through the Severance Period and amounts otherwise owing under the then
existing plans and policies at the Company; and
F. Executive or his legal representative shall be entitled to
receive a lump sum distribution on any and all Company stock and/or Company
stock options, and for remainder of the Severance Period, or such longer
period as any plan, program or policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs and policies described in this Agreement if the Executive's
employment had not been terminated, including health insurance and life
insurance, in accordance with the most favorable plans, programs or policies
of the Company, or , if more favorable to the Executive, as in effect at any
time thereafter with respect to other key executives and their families and
for purposes of eligibility for retiree benefits pursuant to such plans,
programs and policies, the Executive shall be considered to have remained
employed until the end of the Severance Period and to have retired on the last
day of such period.
5. Non-exclusivity of Rights.Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any stock option or other
agreements with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company (including company stock and stock
options) at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
6. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of outcome thereof) by the Company of others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to any Section of this
Agreement), plus in each case interest at the applicable Federal rate provided
for in Section 7872 (f) (2) of the Code.
7. Salary and Bonus. In consideration for his services, Employer shall
pay Executive a salary at the rate of $120,000 per annum. Such salary shall
be reviewed and increased not less than 15% annually in the good faith sole
discretion of the Board of Directors based upon Employer's and Executive's
performance during the prior year. Executive's salary hereunder shall be
payable in bi-monthly installments or on such other payment schedule as is
used to pay senior executives of Employer. Additionally, Executive shall
receive an assignment of 2% overriding royalty of all oil and gas production
received by the Employer.
8. Stock Grants. Upon the Effective Date, Executive shall be issued
30,000 shares of the Employer's Common Stock, no par value per share. These
shares shall be fully vested and non-forfeitable three years from the date of
their issuance.
9. Executive Benefits.
(a) Annual Bonus. In addition to Base Salary, the Executive shall
be awarded, for each fiscal year during the Employment Period, an annual bonus
(an "Annual Bonus") (either pursuant to the incentive compensation plan of the
Company or otherwise) in cash at least equal to the average bonus received by
the executive officers of the Company in respect of the fiscal year for which
the bonus is awarded.
(b) Stock Option, Incentive, Savings and Retirement Plans. In
addition to Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment Period in all
stock option plans, incentive, savings and retirement plans and programs
applicable to other key executives of the Company and its affiliates
(including Company's employee benefit plans, in each case comparable to those
in effect or as subsequently amended). Such plans and programs, in the
aggregate, shall provide the Executive with compensation, benefits and reward
opportunities at least as favorable as the most favorable of such
compensation, benefits and reward opportunities provided by the Company for
the Executive under such plans and programs.
(c) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, shall receive benefits under the
welfare benefit plans provided by the Company and its affiliates (including,
without limitation, medical, prescription, dental, disability, salary
continuance, executive life, group life, accidental death and travel accident
insurance plans and programs.)
(d) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for reasonable expenses incurred by
the Executive in accordance with the most favorable policies and procedures
of the Company and its affiliates.
(e) Fringe Benefits. During the Employment Period the Executive
shall be entitle to fringe benefits, including payment of an automobile
allowance of $350.00 per month for payment of related expenses.
(f) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance,
at least equal to the other executive officers of the Company.
(g) Vacation. Upon the Effective Date, Executive is entitled to
three weeks of paid vacation per year. Paid vacation shall increased by one
week per year of service up to a maximum of seven weeks. Vacation time may be
accrued up to a maximum of six weeks or 240 hours. Once vacation accrual
meets this maximum, vacation accruals will cease until the vacation
balance falls below the maximum.
10. Corporate Opportunity. For the purpose of determining the
Executive's responsibility for presenting corporate opportunities to the Board
of Directors, the business in which the Employer is engaged shall be defined
as the horizontal oil and gas well drilling service business. The Executive
shall be permitted on his own time to engage in other businesses and can be
rewarded for presenting opportunities to the Board of Directors of the
Employer outside of the current corporate opportunities which are approved by
and acted upon by the Employer.
11. Confidentiality and Proprietary Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent
of the Company, communicate or divulge any such information or data to anyone
other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
12. Board Membership. Executive shall be appointed to the Board of
Directors of Employer and shall subsequently be included for re-election on
management's proposed election slate, with such Board membership to terminate
when Executive's employment with Employer is terminated.
13. Arbitration. Any controversy or claim arising out of or relating
to any provision of this Agreement or the breach thereof, shall be settled by
binding arbitration in accordance with the rules then in effect of the
American Arbitration Association, to the extent consistent with the laws of
the State of New York. The award may include an award of costs and attorneys'
fees for the prevailing party. It is agreed that any party to any award
rendered in any such arbitration proceedings may seek a judgment upon the
award and that judgment may be entered thereon by any court having
jurisdiction.
14. Miscellaneous.
(a) Entire Agreement. This Agreement contains the complete
agreement between the parties with respect to the subject matter hereof and
supersedes any prior agreements or understandings, written or oral. No waiver
under this Agreement shall be valid unless it is in writing and duly executed
by the party to be charged therewith. This Agreement may be amended at any
time, provided that such amendment is in writing and is signed by each of the
parties hereto.
(b) Binding Effect. This Agreement may not be assigned by
Executive. Subject to that limitation, this Agreement shall be binding upon
and shall inure to the benefit of Executive, his heirs and personal
representatives, and shall be binding upon and shall inure to the benefit of
Employer, its successors and assigns.
(c) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE: EMPLOYER:
PETRO UNION, INC.
/s/ Randeep Grewal By: /s/ Richard D. Wedel
Randeep Grewal Title: Secretary
Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into this 9th day of September, 1997
(the "Effective Date") by and between Petro Union, Inc., a Colorado
corporation ("Employer"), and Richard D. Wedel ("Executive").
1. Employment. Employer hereby employs Executive and Executive hereby
accepts such employment, subject to the terms and conditions of this
Agreement. Executive shall serve in the capacity of Vice Chairman and Chief
Operating Officer of Employer reporting solely to the Board of Directors and
shall perform such functions as the Board of Directors of Employer shall
reasonably determine from time to time, provided however that Executive's
duties shall be consistent with the foregoing capacity and with the training,
talent and ability of Executive.
2. Time Dedicated. Executive shall devote the time and attention
reasonable to run a drilling company and shall at all times perform all of his
obligations hereunder to the best of his ability, experience and talent.
3. Term and Termination. The term of this Agreement shall commence on
the Effective Date and shall continue uninterrupted for a period of five years
thereafter unless sooner terminated or extended by mutual agreement.
Executive's employment hereunder may be terminated as follows:
(a) Death. In the event the Executive dies prior to the expiration
of this Agreement, the Company shall pay to the beneficiary of the Executive
an amount equal to the Executive's total compensation for 270 days (the
"Severance Period"), such amount payable in a lump sum to the designated
beneficiary hereunder within sixty (60) days of the Executive's Death. In
addition, the Company shall pay to the beneficiary of the Executive, in a lump
sum within sixty (60) days of the end of the Company's fiscal year, an amount
(to the extent such amount is positive number) equal to the value of all
Company stock and stock options, as of the date of the Executive's death, in
accordance with the terms of any benefits to which the Executive would be
entitled in any plan in which he is a participant. The Executive's
beneficiary shall be designated in the manner provided in such benefit
program.
(b) Disability. If the Board of Directors of the Company
determines, in the reasonable exercise of its discretion, that the Executive,
through physical or mental illness or disability, whether or not connected to
his employment hereunder, has become incapacitated and is unable for a period
of six months during any continuous period of twelve (12) months, to discharge
the duties and responsibilities of his employment hereunder, the Board of
Directors of the Company shall have the right by written notice to the
Executive to place him on a disability status. In such event, the Company
shall pay to the Executive (or to his beneficiary if the Executive is no
longer alive) his Base Salary and all benefits for the Severance Period as
defined herein.
(c) Cause. The Company may terminate the Executive's employment for
"Cause". For purposes of this Agreement, "Cause" means:
(i) an act or acts of personal dishonesty taken by the Executive
and intended to result in substantial personal enrichment of the Executive at
the expense of the Company;
(ii) repeated failure to perform the duties assigned to the
Executive under Section 1 of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied in a reasonable
period of time after receipt of written notice from the Company;
(iii) the conviction of the Executive of a felony; or
(iv)failure to perform duties and meet goals mutually agreed
upon by the Executive and the Board of Directors to the reasonable
satisfaction of the Board of Directors.
(d) Good Reason. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
means any of the following:
(i)the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Sections 7, 8 and 9 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than Evansville, Indiana except for travel reasonably
required in the performance of the Executive's responsibilities;
(iv)any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy the
successor obligations of this Agreement.
For purposes of this section, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(e) Notice of Termination. Any termination by the Company for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice). The failure by the
Executive to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
4. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall not terminate without fulfillment
of the obligations to the Executive's legal representatives under this
Agreement, including those obligations that would have been accrued or earned
by the Executive hereunder through the date of the Severance Period, including
any compensation previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the Company and any accrued
vacation pay not yet paid by the Company and any other amounts or benefits
owing to or accrued or vested for the account of the Executive under the then
applicable employee benefit plans or policies of the Company (such amounts are
hereinafter referred to as "Accrued Obligations"). All such Accrued
Obligations shall be paid to the Executive in a lump sum in immediately
available federal funds within thirty (30) days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive's
family shall be entitled to receive benefits at least equal to the most
favorable benefits provided by the Company to surviving families of executives
of the Company under such plans, programs and policies relating to family
death benefits, if any, in accordance with the most favorable policies of the
Company in effect, or, if more favorable to the Executive and/or the
Executive's family, as if effect on the date of the Executive's death with
respect to other key executives and their families.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability, this Agreement shall terminate without
further obligations to the Executive, other than those compensation and
benefit obligations accrued or to be earned by the Executive hereunder through
the date of the Severance Period. All such Accrued Obligations shall be paid
to the Executive in a lump sum in immediately available federal funds within
thirty (30) days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits at least
equal to the most favorable of those provided by the Company to disabled
employees and/or other families accordance with such plans, programs and
policies relating to disability, if any, in accordance with the most favorable
policies of the Company in effect at any time during the ninety (90) day
period immediately preceding the Disability Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter with respect to other key executives and their families.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause, this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay
to the Executive the Highest Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the Executive (together
with accrued interest thereon). If the Executive terminates employment other
than for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than those obligations accrued or earned
by the Executive through the Date of Termination, including for this purpose,
all Accrued Obligations.
(d) Good Reason; Other than for Cause or Disability of Death. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, Disability, or death or the Executive shall
terminate his employment for Good Reason:
(i) the Company shall pay to the executive in a lump sum in
immediately available federal funds within thirty (30) days after the Date of
Termination the aggregate of the following amounts:
A. to the extent not theretofore paid, the Executive's Base
Salary through the date of the Severance Period; and
B. the Executive's base salary for the balance of the term of
this Agreement if the Date of Termination is within the first three (3) years
of the Employment Agreement. The Base Salary rate shall be the rate in effect
at the Date of Termination.
C. the Annual Bonus paid to the Executive for the last full
fiscal year during the Employment Period; and
D. in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any accrued interest
thereon) and not yet paid by the Company; and
E. all other amounts accrued and earned by the Executive
through the Severance Period and amounts otherwise owing under the then
existing plans and policies at the Company; and
F. Executive or his legal representative shall be entitled to
receive a lump sum distribution on any and all Company stock and/or Company
stock options, and for remainder of the Severance Period, or such longer
period as any plan, program or policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs and policies described in this Agreement if the Executive's
employment had not been terminated, including health insurance and life
insurance, in accordance with the most favorable plans, programs or policies
of the Company, or , if more favorable to the Executive, as in effect at any
time thereafter with respect to other key executives and their families and
for purposes of eligibility for retiree benefits pursuant to such plans,
programs and policies, the Executive shall be considered to have remained
employed until the end of the Severance Period and to have retired on the last
day of such period.
5. Non-exclusivity of Rights.Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any stock option or other
agreements with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company (including company stock and stock
options) at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
6. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of outcome thereof) by the Company of others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to any Section of this
Agreement), plus in each case interest at the applicable Federal rate provided
for in Section 7872 (f) (2) of the Code.
7. Salary and Bonus. In consideration for his services, Employer shall
pay Executive a salary at the rate of $90,000 per annum. Such salary shall be
reviewed and increased not less than 15% annually in the good faith sole
discretion of the Board of Directors based upon Employer's and Executive's
performance during the prior year. Executive's salary hereunder shall be
payable in bi-monthly installments or on such other payment schedule as is
used to pay senior executives of Employer. Additionally, Executive shall
receive an assignment of 2% overriding royalty of all oil and gas production
received by the Employer.
8. Stock Grants. Upon the Effective Date, Executive shall be issued
30,000 shares of the Employer's Common Stock, no par value per share. These
shares shall be fully vested and non-forfeitable three years from the date of
their issuance.
9. Executive Benefits.
(a) Annual Bonus. In addition to Base Salary, the Executive shall
be awarded, for each fiscal year during the Employment Period, an annual bonus
(an "Annual Bonus") (either pursuant to the incentive compensation plan of the
Company or otherwise) in cash at least equal to the average bonus received by
the executive officers of the Company in respect of the fiscal year for which
the bonus is awarded.
(b) Stock Option, Incentive, Savings and Retirement Plans. In
addition to Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment Period in all
stock option plans, incentive, savings and retirement plans and programs
applicable to other key executives of the Company and its affiliates
(including Company's employee benefit plans, in each case comparable to those
in effect or as subsequently amended). Such plans and programs, in the
aggregate, shall provide the Executive with compensation, benefits and reward
opportunities at least as favorable as the most favorable of such
compensation, benefits and reward opportunities provided by the Company for
the Executive under such plans and programs.
(c) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, shall receive benefits under the
welfare benefit plans provided by the Company and its affiliates (including,
without limitation, medical, prescription, dental, disability, salary
continuance, executive life, group life, accidental death and travel accident
insurance plans and programs.)
(d) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for reasonable expenses incurred by
the Executive in accordance with the most favorable policies and procedures
of the Company and its affiliates.
(e) Fringe Benefits. During the Employment Period the Executive
shall be entitle to fringe benefits, including payment of an automobile
allowance of $350.00 per month for payment of related expenses.
(f) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance,
at least equal to the other executive officers of the Company.
(g) Vacation. Upon the Effective Date, Executive is entitled to
three weeks of paid vacation per year. Paid vacation shall increased by one
week per year of service up to a maximum of seven weeks. Vacation time may be
accrued up to a maximum of six weeks or 240 hours. Once vacation accrual
meets this maximum, vacation accruals will cease until the vacation balance
falls below the maximum.
10. Corporate Opportunity. For the purpose of determining the
Executive's responsibility for presenting corporate opportunities to the Board
of Directors, the business in which the Employer is engaged shall be defined
as the horizontal oil and gas well drilling service business. The Executive
shall be permitted on his own time to engage in other businesses and can be
rewarded for presenting opportunities to the Board of Directors of the
Employer outside of the current corporate opportunities which are approved by
and acted upon by the Employer.
11. Confidentiality and Proprietary Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent
of the Company, communicate or divulge any such information or data to anyone
other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
12. Board Membership. Executive shall be appointed to the Board of
Directors of Employer and shall subsequently be included for re-election on
management's proposed election slate, with such Board membership to terminate
when Executive's employment with Employer is terminated.
13. Arbitration. Any controversy or claim arising out of or relating to
any provision of this Agreement or the breach thereof, shall be settled by
binding arbitration in accordance with the rules then in effect of the
American Arbitration Association, to the extent consistent with the laws of
the State of New York. The award may include an award of costs and attorneys'
fees for the prevailing party. It is agreed that any party to any award
rendered in any such arbitration proceedings may seek a judgment upon the
award and that judgment may be entered thereon by any court having
jurisdiction.
14. Miscellaneous.
(a) Entire Agreement. This Agreement contains the complete
agreement between the parties with respect to the subject matter hereof and
supersedes any prior agreements or understandings, written or oral. No waiver
under this Agreement shall be valid unless it is in writing and duly executed
by the party to be charged therewith. This Agreement may be amended at any
time, provided that such amendment is in writing and is signed by each of the
parties hereto.
(b) Binding Effect. This Agreement may not be assigned by
Executive. Subject to that limitation, this Agreement shall be binding upon
and shall inure to the benefit of Executive, his heirs and personal
representatives, and shall be binding upon and shall inure to the benefit of
Employer, its successors and assigns.
(c) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE: EMPLOYER:
PETRO UNION, INC.
/s/ Richard D. Wedel By: /s/ Randeep Grewal
Richard D. Wedel Title: Chairman
Exhibit 10.3
POST-PETITION LOAN AGREEMENT
THIS POST-PETITION LOAN AGREEMENT (the "Agreement") is made this _____
day of June, 1997, by and between INTERNATIONAL PUBLISHING HOLDING S.A.
("IPH"), with offices located at 1 Place Dargent, 1413 Luxembourg, Grand Duchy
of Luxembourg, and PETRO UNION, INC. (the "Debtor"), with offices located at
123 Main Street, Suite 300, Evansville, Indiana 47708.
W I T N E S S E T H:
WHEREAS, the Debtor filed a voluntary petition under 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
several states and has been offered the opportunity to utilize its oil
drilling expertise in Michigan and other states, and has requested that IPH
provide a working capital loan for continued business operations and in order
to replace the original Post-Petition Loan and Sale Agreement entered into
between the Debtor and Pembrooke Holding Corporation, which was approved by
this Court on August 16, 1996; and
WHEREAS, IPH has indicated substantial interest in funding or
participating in the funding a Plan of Reorganization in order to allow the
Debtor to continue in its oil and gas drilling activities.
NOW, THEREFORE, in consideration of the promises and mutual obligations
herein 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, IPH shall loan to the
Debtor the sum of Two Hundred Thousand Dollars ($200,000.00) (the "Loan") as
follows:
1.02. Upon entry of a final Order approving this Agreement by the
Bankruptcy Court and confirming by such Order that Pembrooke Holding
Corporation has no further claim against the Debtor, IPH shall loan to the
Debtor the sum of Two Hundred Thousand Dollars ($200,000.00) for an initial
term of One Hundred Eighty (180) days (the "Initial Term") as evidenced by a
Promissory Note, a copy of which is attached hereto as Exhibit "A" and which
shall meet the requirements of the Uniform Commercial Code in terms of
negotiability. The proceeds of the Loan shall be used solely by the Debtor
for reasonable and necessary operating expenses as set forth on the Budget
attached hereto as Exhibit "B", based upon the terms and conditions of payment
set forth in this Agreement.
1.03. The Loan shall bear interest at the rate of Ten Percent (10%) per
annum from the date upon which IPH loans the sum of Two Hundred Thousand
Dollars ($200,000.00) until paid in full.
II. CONVERSION
2.01. The Debtor shall, on or before the 16th day of June, 1997, file a
Plan of Reorganization, which shall contain the provisions set forth below and
the Debtor shall utilize its best efforts to have the Bankruptcy Court confirm
the Plan of Reorganization within Seventy-Five (75) days after filing said
Plan of Reorganization by entry of a final Order of Confirmation. Such Plan
of Reorganization shall provide, inter alia, that this Agreement is reaffirmed
by the Debtor as a Reorganized Debtor in its entirety (hereinafter the Debtor
following the confirmation of the Plan of Reorganization is referred to as the
"Reorganized Debtor"), with the exception that the Loan shall be subject to
the following alternate treatment pursuant to the Plan of Reorganization:
(I). The Loan shall be converted upon the Effective Date of the Plan
of Reorganization of the Reorganized Debtor to provide IPH with Registered
Common Stock of the Reorganized Debtor in the sum of Forty Thousand (40,000)
shares of such stock at Five Dollars ($5.00) per share all within the
Reorganized Debtor.
(ii). By agreement of the parties, the Debtor cannot, under any
circumstances, terminate this Agreement by repaying the principle and any
accrued interest to IPH.
(iii). Until such time as IPH exercises the conversion option as
provided in subparagraph (i), above, the Promissory Note shall be secured by a
Real Property Mortgage in form and content satisfactory to IPH covering one
hundred (100%) percent of the interest in certain limestone reserves owned by
the Debtor's subsidiary, Calox Corporation ("Calox"), in Monroe County,
Indiana.
(iv). Until such time as IPH exercises the conversion option as
provided in paragraph (I), above, the Promissory Note shall further be secured
by a first and unencumbered security interest on any and all assets of the
Debtor, subordinated only to the extent of administrative claims of
professionals as set forth in paragraph 3.01 of this Agreement. The Debtor
shall execute any and all documentation necessary to provide a first security
interest in all of the Debtor's assets to IPH subsequent to the approval of
this Agreement.
(v). In addition to the other considerations set forth above for
IPH's post-petition Debtor-in-Possession financing, IPH shall be granted in
any Plan of Reorganization a call option upon ninety (90%) percent of the
shares of stock of Calox Corporation, which is the Debtor's wholly owned
subsidiary corporation. The call option on the ninety (90%) percent shares of
the authorized and issued shares of stock of Calox Corporation shall be
exercisable by written notice from IPH to the Debtor or any Reorganized Debtor
within thirty-six (36) months from the date of confirmation of the Debtor's
Plan of Reorganization. Within thirty (30) days, from the date written notice
is provided to the Reorganized Debtor, IPH shall pay to the Debtor no more
than the current book value for payment for ninety (90%) percent shares of
stock of Calox Corporation, which shall be determined as of the date written
notification of exercise of the call option is delivered to the Debtor. Calox
Corporation shall exclusively contain the Monroe County limestone reserves as
its only asset.
III. SUPER-PRIORITY EXPENSE CLAIM AND MORTGAGE
3.01. Upon approval of this Agreement and the Novation Agreement
between Pembrooke Holding Corporation and Petro Union, Inc., and the advance
of the Loan proceeds, the super-priority administration expense claim provided
to Pembrooke Holding Corporation shall be extinguished as set forth in the
Novation Agreement. Further, IPH shall be allowed a super-priority
administration expense claim pursuant to 11 U.S.C. Section 364(c)(1) equal to
the amount of the Loan plus any accrued interest. This super-priority
administration expense claim shall have priority and 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. Sections 503(b) or
507(b), subject only to the payment of professional fees incurred during the
Debtor's Title 11 case as fixed and determined by the Bankruptcy Court and any
quarterly fees owed to the Office of the United States Trustee under Title 28
of the United States Code.
3.02. In addition to the foregoing and as further security for the
prompt and full payment of the Loan, the Debtor shall cause its subsidiary,
Calox Corporation, to execute a Mortgage to IPH in form and content
satisfactory to IPH covering a one hundred (100%) percent interest in certain
limestone reserves owned by Calox Corporation in Monroe, Indiana (hereinafter
the "Monroe County Reserves"). The costs and expenses of preparing and filing
this Mortgage shall be the sole responsibility of the Debtor or Calox
Corporation.
IV. REPRESENTATIONS
In order to induce IPH to enter into this Agreement and to make the Loan
contemplated by this Agreement, the Debtor represents and warrants to IPH
that:
4.01. Corporate Authority. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby, including the
Mortgage with respect to the Monroe County Reserves are within the corporate
power and authority of the Debtor and its affiliate, Calox, 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;
(ii) contravene any provision of the charter documents or by-laws of the
Debtor or Calox, or any law, rule or regulation applicable to the Debtor or
Calox; (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; or (iv)
result in or require the imposition of any encumbrance on any of the
properties, assets or rights of the Debtor or Calox except as contemplated
hereby.
4.02. Valid Obligations. This Agreement as it affects the Mortgage
with respect to Monroe County Reserves are the legal, valid and binding
obligations of the Debtor or Calox 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 creditors' rights generally.
4.03. Consents or Approvals. The execution, delivery and performance
of this Agreement, and the transactions contemplated hereby including the
Loan, Promissory Note, and Mortgage with respect to the Monroe County Reserves
do not require any 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.
V. BORROWER'S COVENANTS
So long as the Loan remains outstanding the Debtor covenants that:
5.01. Information. The Debtor will deliver to IPH all information
concerning the business of the Debtor as IPH shall reasonably request and
provide IPH 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 and Exchange Commission
or otherwise shall be deemed confidential and shall not be released to any
third party without the written consent of the Debtor.
5.02. Compliance with Laws. The Debtor shall duly observe and comply in
all material respects with all applicable laws and requirements of any
governmental authorities and 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.
5.03. Maintain Properties and Insurance. The Debtor shall maintain its
equipment and machinery in good repair, working order and condition as
required for the normal conduct of its business and shall adequately insure
same and name IPH as an additional insured or loss payee (as the case may be)
on all such insurance and provide IPH with written confirmation of same.
5.04. Taxes. The Debtor shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or its properties on or
prior to the time when they become due arising subsequent to the assessment
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.
5.05. Inspection. The Debtor shall permit IPH or its designee(s), at
any reasonable time and at reasonable intervals of time, and upon reasonable
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.
5.06. Preservation of Corporate Existence. The Debtor shall maintain
the corporate existence of each of the Debtor and Calox, 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.
5.07. 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.
5.08. 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.
5.09. 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 IPH 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.
VI. CALOX CORPORATION'S COVENANTS
6.01. So long as IPH shall have a mortgage interest upon the property of
Calox, Calox covenants that it will not assign, encumber, hypothecate,
mortgage or otherwise dispose, sell and transfer any interest in the Monroe
County Reserves without the prior written consent and authorization of IPH.
VII. DEFAULT
7.01. The following shall constitute an "Event of Default":
(a) if there is a default in the payment of the Loan due IPH by
the Debtor as provided herein; or
(b) any violation or breach of the representation(s) and
covenant(s) made by the Debtor hereunder or with respect to
the mortgage 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;
(e) conversion of the Debtor's Chapter 11 case to a case under
Chapter 7 of the Bankruptcy Code;
(f) failure of the Debtor to maintain its listing on the National
Stock Exchange known as the Nasdaq market, or to successfully
appeal any decision of Nasdaq to delist the Debtor from its
market listing; or
(g) failure to confirm a Plan of Reorganization on or before the
31st day of August, 1997.
7.02. 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
non-monetary defaults which are not subject to cure), then the Loan shall
become immediately due and payable with all accrued interest (the "Accelerated
Debt") and IPH 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.
In the event there is an Event of Default which IPH does not waive, in
its sole discretion, IPH may, upon its filing notice with the Debtor and the
Bankruptcy Court, retain any and all assets in which it has a perfected
security interest under the terms of this Agreement in full and complete
satisfaction of the debt under the Note executed pursuant to this Agreement,
its stock rights under this Agreement, its super-priority administrative
claim, and any and all other claims IPH may have or would have under this
Agreement.
In the event there is any Event of Default which is not cured, IPH may,
at its sole discretion, and with no compunction to further proceed, waive such
default and elect to continue under the terms and conditions of this
Agreement, without any prejudice to any and all of its other rights hereunder.
VIII. BANKRUPTCY COURT APPROVAL
8.01. This 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.
8.02. This 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
Agreement and the transactions contemplated herein, and granting IPH a
super-priority administration expense claim pursuant to Section 364(c)(1) of
the Bankruptcy Code and Mortgage pertaining to the Monroe County Reserves.
IX. MISCELLANEOUS PROVISIONS
9.01. 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.
9.02. If any provision of this Agreement shall be determined to be
invalid or unenforceable, it shall be the intent and understanding of the
parties that the remainder of this Agreement shall continue in full force and
effect.
9.03. This 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.
9.04. This 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).
9.05. This Agreement may be signed in counterpart by facsimile
signature.
IN WITNESS WHEREOF, the parties hereto have executed this Post-Petition
Loan Agreement as of the day and year first above written.
INTERNATIONAL PUBLISHING HOLDING CORP.
BY: /s/ Rienk H. Kamer
ITS: Chairman of the Board of Directors
PETRO UNION, INC.
BY: /s/ Richard D. Wedel
ITS: President
CALOX CORPORATION
BY: /s/ Richard D. Wedel
ITS: President
Exhibit 10.4
AGREEMENT TO CLOSE
WITNESSETH:
WHEREAS, on the 13th day of June, 1997 Horizontal Ventures, Inc. ("HVI")
and Petro Union, Inc. ("Petro") entered into the Agreement and Plan of
Acquisition (the "Agreement") which provided among other things in Section
5.1(iii) that "Petro Union shall have maintained its listing on the Nasdaq
SmallCap Market" as a condition precedent to the obligations of HVI; and
WHEREAS, effective July 30, 1997 the Nasdaq Stock Market withdrew Petro's
listing; and
WHEREAS, Petro has reapplied for said listing but action with respect
thereto has not been completed; and
WHEREAS, the parties to this Agreement desire to close the acquisition of
HVI by Petro pursuant to the terms and conditions of the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
the parties hereto agree as follows:
1. Conditional Waiver of Condition Precedent. HVI hereby agrees to
close the Agreement (the "Closing") as defined in that Agreement and
conditionally waive the condition precedent to HVI's obligations pursuant to
the Agreement on the condition that if within sixty days of the closing Petro
has not obtained a re-listing or a new listing of its securities on the Nasdaq
Stock Market (the "Listing"), the Agreement may be terminated at the sole
option of HVI upon 10 days written notice to Petro and each party to the
Agreement shall be put back into the same position as they were on the date of
closing to the degree and extent legally possible.
2. Term of Agreement. This Agreement to Close shall be in effect for
sixty days from Closing or until a Listing has been approved whichever should
first occur or unless terminated or extended by mutual agreement.
3. Actions Taken Subsequent to Closing.
a. During the sixty days or such shorter period until the
Listing is confirmed, Cohen Brame & Smith Professional Corporation, counsel
to Petro ("Escrow"), shall hold all certificates representing exchanged
shares in safe keeping and not formally deliver same to the rightful
owners.
b. All transactions on behalf of Petro or HVI, its wholly owned
subsidiary, shall be specifically designated as being those of either of
the two corporations and there shall be no commingling of proceeds from
interim offerings or assets purchased by either company pending the
termination of this Agreement to Close.
c. To the extent that any capital is raised in the form of debt
or equity pending the termination of this Agreement to Close, the funds
shall be raised for specific projects designated for one of the two
constituent companies and raised only after full disclosure to the funding
source of the existence of this Agreement to Close and the terms thereof.
4. Actions at Termination.
a. Should the Agreement to Close terminate as a result of the
Listing being allowed or an election by HVI to waive the Listing condition,
all of the shares of common and preferred held by Escrow shall be delivered
as required by the terms of the Agreement either to Petro in the case of
the HVI exchanged shares and to the exchanging shareholders of HVI in the
case of the Petro common shares issued at Closing.
b. In the event HVI exercises its election to terminate pursuant
to Section 1, the parties will use their best efforts to "unwind" the
Agreement and return Petro and HVI to their status quo as of the date of
Closing. All shares of Petro common issued pursuant to the Agreement at
Closing shall be returned to the Petro treasury and all shares of HVI
common and preferred exchanged for Petro common pursuant to the Agreement
shall be returned to the original HVI shareholders. All management and
directors of Petro appointed as a result of the Closing shall resign and
all option and employment agreements shall terminate.
5. Miscellaneous.
a. The parties agree to cooperate in all respects and as per the
conditions precedent in the Agreement, Petro shall use its best efforts to
deliver all required agreements and documents to Nasdaq pursuant to
reasonable requests from Nasdaq for said documents.
b. The parties to the extent required shall disclose this
Agreement as required by the rules and regulations provided pursuant to the
Securities Exchange Act of 1934 and the Securities Act of 1933.
c. This Agreement to Close shall be deemed to the extent
required, a waiver of the applicable condition precedent to the Agreement,
subject to all the terms and conditions of this Agreement to Close.
d. Notwithstanding this temporary or partial waiver, all of the
balance of the terms and conditions of the Agreement not specifically
modified by this Agreement to Close shall be binding on the parties.
Dated this 9th day of September, 1997.
PETRO UNION, INC.
By: /s/ Richard D. Wedel
Richard D. Wedel, President
HORIZONTAL VENTURES, INC.
By: /s/ Randeep Grewal
Randeep Grewal,
Chief Executive Officer
