Exhibit 10.1


 


LIMITED
WAIVER, CONSENT, AND MODIFICATION AGREEMENT


 


THIS LIMITED WAIVER,
CONSENT, AND MODIFICATION AGREEMENT, dated as of February 2, 2009 (this “Agreement”),
is entered into by and among PRB OIL & GAS,
INC., a Colorado corporation (the “Company”), BLACK RAVEN ENERGY, INC., a Nevada corporation (formerly
known as PRB Energy, Inc.) (“Parent”), and WEST COAST
OPPORTUNITY FUND, LLC (“Lender”).


 


RECITALS


 


A.            Pursuant to the
terms of that certain Securities Purchase Agreement, dated as of December 28,
2006 (as amended, modified, supplemented and/or restated from time to time, the
“Purchase Agreement”), by and among the Company, Parent, Lender, and DKR
Soundshore Oasis Holding Fund Ltd. (“DKR”), the Company has heretofore
executed and delivered two Senior Secured Debentures (collectively, the “Original
Debentures”), each dated December 28, 2006 and each in the original
principal amount of $7,500,000, one of which was originally payable to the
order of Lender and the other of which was originally payable to the order of
DKR. Lender is the current owner and holder of both of the Original Debentures,
having heretofore acquired all of the rights and interests under the Original
Debenture originally issued to DKR. Capitalized terms that are used, but not otherwise
defined, herein shall have the respective meanings ascribed to such terms in
the Amended and Restated Debenture (as such term is hereinafter defined).


 


B.            Parent and PRB
Gathering, Inc. (“Gathering”) have each heretofore executed and
delivered a certain Secured Guaranty (as amended and modified hereby and as
otherwise, modified, amended, supplemented, and/or restated from time to time,
the “Guaranty”), dated as of December 28, 2006, pursuant to which
each of Parent and Gathering guaranteed the payment and performance of all of
the indebtedness, obligations, and liabilities of the Company under, or in
connection with, the Original Debentures and/or the other Transaction Documents
(as such term is defined in the Purchase Agreement).


 


C.            The payment and
performance of all of the indebtedness, obligations, and liabilities of the
Company, Parent, and/or Gathering under, or in connection with, the Original Debentures,
the Amended and Restated Debenture, and/or the other Amended Transaction
Documents (as such term is hereinafter defined) (collectively, the “Obligations”)
are secured by, and entitled to the benefits of, various security agreements,
pledges, mortgages, deeds of trust, financing statements, and other documents,
instruments, and agreements, including, without limitation, those described or
referred to in Exhibit “A” attached hereto (collectively, the “Security
Documents”), covering real, personal, and other property, rights, and
interests of Company and/or Parent more specifically described therein
(collectively, the “Collateral”).


 


D.            The Company and
Parent have heretofore filed chapter 11 cases of In re PRB Energy, Inc.,
Case No. 08-12658, and In re PRB Oil & Gas, Inc., Case No. 08-12661,
both pending in the United States Bankruptcy Court for the District of Colorado
(collectively, the “Bankruptcy Proceedings”).


 


E.             The Bankruptcy
Court has confirmed a Joint Plan of Reorganization in the Bankruptcy
Proceedings (the “Plan of Reorganization”) with respect to the Company
and Parent, 


 

















 


and
this Agreement is being executed and delivered by each of the Company, Parent,
and Lender in order to further implement the Plan of Reorganization.


 


F.             In connection with
the Plan of Reorganization, the parties to this Agreement have agreed to grant
certain waivers and consents and amend, modify and terminate certain
Transaction Documents (as such term is defined in the Purchase Agreement) subject
to and in accordance with the terms of this Agreement.


 


NOW, THEREFORE, the parties
hereto agree as follows:


 


ARTICLE I


 


LIMITED WAIVER AND CONSENT


 


1.1           Limited Waiver
and Consent.  Lender hereby expressly
consents to the execution, delivery and implementation by the Company and by
Parent of the Plan of Reorganization and the transactions provided for in the
Plan of Reorganization. Lender also hereby expressly waives any and all Defaults
and Events of Default that may exist under any of the Transaction Documents immediately
prior to the Effective Date of the Plan of Reorganization and expressly agrees
that the implementation of the transactions provided for in the Plan of
Reorganization shall not constitute a Default and/or Event of Default under the
Purchase Agreement, the Original Debentures, the Amended and Restated
Debenture, any of the other Transaction Documents, and/or any of the Amended
Transaction Documents.


 


ARTICLE II


 


AMENDMENTS AND MODIFICATIONS TO ORIGINAL
DEBENTURES AND CERTAIN OTHER TRANSACTION DOCUMENTS; TERMINATION OF CERTAIN
TRANSACTION DOCUMENTS


 


2.1           Amendment and
Restatement of Original Debentures.  Effective as of the Effective Date of the Plan
of Reorganization, the Original Debentures, and the indebtedness evidenced
thereby, shall be superseded, renewed, extended, modified, amended, and
restated in their entirety pursuant to a certain Amended and Restated Senior
Secured Debenture, in the form of Exhibit “B” attached hereto, to
be issued, jointly and severally, by the Company and by Parent, payable to the
order of Lender (the “Amended and Restated Debenture”). The Amended and
Restated Debenture shall be executed by the Company and by Parent and shall be
delivered to Lender on the Effective Date of the Plan of Reorganization and
shall constitute, in part, a renewal, extension, increase, modification,
amendment, and restatement (but not an extinguishment, termination, or novation
of, or with respect to) of the outstanding indebtedness under the Original
Debentures.


 


2.2           Exit Financing
Under Plan of Reorganization.  Pursuant to the Plan of Reorganization, within
fifteen (15) days after the Effective Date of the Plan of Reorganization,
Lender shall make a single advance, in the principal amount of up to
$1,500,000, to the Company and Parent (the “Exit Financing”). The Exit
Financing shall be advanced by Lender to the Company and Parent under the
Amended and Restated Debenture, shall constitute a portion 


 


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of
the indebtedness evidenced by the Amended and Restated Debenture, shall be
governed and controlled by the Amended and Restated Debenture and the other Amended
Transaction Documents (as such term is hereinafter defined), and shall be
secured by, and entitled, on a pro-rata basis, to all of the benefits and
protections of, the Amended Transaction Documents.


 


2.3           Issuance of
Common Stock to Lender Under Plan of Reorganization.  Pursuant to the Plan of Reorganization,
Lender shall receive 13,500,000 shares of the common stock of Parent (the “Lender
Shares”). The Lender Shares and the Amended and Restated Debenture are
sometimes referred to herein collectively as the “Securities”.


 


2.4           Release of
Gathering and Existing Collateral Owned by Gathering.  Pursuant to the Plan of Reorganization, on the
Effective Date of the Plan of Reorganization, Lender shall execute and deliver
such releases and other documents as shall be necessary and/or appropriate in
order to evidence (i) the release by Lender of Gathering from its
obligations and liabilities to Lender under the Guaranty, and (ii) the
release by Lender of its liens on any and all collateral owned by Gathering
that secures the Original Debentures.


 


2.5           Amendments to
Transaction Documents with Respect to Gathering.  Effective as of the Effective Date of the Plan
of Reorganization, each of the Transaction Documents is amended so as to not
include Gathering as a “Mortgagor”, “Grantor”, “Debtor”,
or other term referring to the Company, Parent, and Gathering, or any
combination of such parties, collectively, in such Amended Transaction
Documents.


 


2.6           Additional
Security Documents.  All of the
documents, instruments, and agreements from time to time executed and delivered
by the Company and/or Parent to, or for the benefit of Lender, with respect to
the Collateral, or any portion thereof, whether pursuant to clause (iii) of
Section 3.1 hereof, pursuant to Section 4.47 hereof, or otherwise
shall also constitute “Security Documents” for purposes of this
Agreement and for purposes of all of the other Amended Transaction Documents.


 


2.7           Reaffirmation of
Certain Transaction Documents; Termination of Purchase Agreement and Registration
Rights Agreement.  The Original
Debentures (as amended and restated by the Amended and Restated Debenture) and
all of the other Transaction Documents other than the Purchase Agreement and
the Registration Rights Agreement (as such term is defined in the Purchase
Agreement) (as all of such Transaction Documents are modified and amended by
this Agreement, the Plan of Reorganization and/or the other documents
contemplated hereby, collectively, the “Amended Transaction Documents”),
and all of the obligations and liabilities of the Company and Parent thereunder
or in connection therewith, are hereby ratified, confirmed, and re-adopted by
each of the Company and Parent. As of the Effective Date of the Plan of
Reorganization, the Purchase Agreement and the Registration Rights Agreement
shall no longer be of any force and effect and shall not be deemed as or
included as Amended Transaction Documents herein or in any of the Amended
Transaction Documents.


 


2.8           Reaffirmation of Representations and
Warranties in Amended Transaction Documents.  Without limiting the generality of Section 2.7
hereof, except for breaches of representations or warranties in the Amended
Transaction Documents that have heretofore been, 


 


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or are herein being, waived,
the Company and Parent each hereby represents and warrants to Lender that all
of the representations and warranties of the Company and/or Parent under, or in
connection with, the Amended Transaction Documents are correct and accurate on,
and effective as of, the Effective Date of the Plan of Reorganization. Provided
further that the terms “Mortgaged Property” and “Collateral” in the Amended
Transaction Documents apply only to assets owned, or purported to be owned, by
Parent and/or the Company as of and after the Effective Date of the Plan of
Reorganization.


 


ARTICLE
III


 


CONDITIONS
TO EFFECTIVENESS


 


3.1           Conditions
Precedent.  The effectiveness of this
Agreement is subject to the satisfaction, as determined by Lender in its sole and
absolute discretion, of the following conditions precedent, unless specifically
waived in writing by Lender:


 


(i)            Lender shall have received multiple
executed counterparts of this Agreement executed by the Company and by Parent;


 


(ii)           Lender shall have received the
Amended and Restated Debenture, duly executed and delivered by each of the
Company and Parent;


 


(iii)          Lender shall have received any and all
amendments, supplements, restatements, and modifications to the existing
Security Documents, and any and all other or additional security or collateral
documents, in each case duly executed and delivered by the Company and/or
Parent, as applicable, as Lender shall have requested in order to evidence,
create, confirm, maintain, perfect, continue, or otherwise facilitate a valid,
perfected, first priority Lien in favor of Lender covering all of the
Collateral, as security for the Obligations, or to evidence or carry out the
intent of this Agreement and/or the other Amended Transaction Documents, or to
otherwise perfect or give further assurances of any right(s) and/or
remedies granted or provided to, or for the benefit of, Lender in this
Agreement and/or the other Amended Transaction Documents;


 


(iv)          Unless waived in writing by Lender, no
Default or Event of Default shall have occurred and be continuing and the
representations and warranties contained herein shall be true and correct as of
the date hereof as if made on the date hereof; and


 


(v)           All corporate proceedings and all
actions and proceedings in the Bankruptcy Court in the Bankruptcy Proceedings
taken, or deemed by Lender as being necessary and/or appropriate to be taken,
in connection with the transactions contemplated by this Agreement and all
documents, instruments and other legal matters incident thereto shall be
reasonably satisfactory to Lender and its legal counsel.


 


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ARTICLE IV


 


ADDITIONAL REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS


 


In order to induce Lender to
enter into this Agreement, the Company and Parent each represents and warrants
to Lender, and covenants and agrees with Lender, as follows:


 


4.1           Organization and Qualification,
 Parent and the Company are entities duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are formed, and have the requisite power and
authorization to own their properties and to carry on their business as now
being conducted.  Each of Parent and the
Company is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, properties,
assets, operations, results of operations, condition (financial or otherwise)
or prospects of Parent and the Company, taken as whole, or on the transactions
contemplated hereby and/or by the other Amended Transaction Documents, or on
the authority or ability of Parent and/or the Company to perform its respective
obligations under the Amended Transaction Documents.  Parent has no subsidiaries other than the
Company and Gathering.


 


4.2           Authorization; Enforcement;
Validity.   Each of Parent and the
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement, the Amended and Restated Debenture, each of
the other Amended Transaction Documents, and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement and to issue the Securities in accordance with
the terms hereof and thereof. The execution and delivery of the Amended Transaction
Documents by the Company and Parent have been duly authorized by each of the
Company’s and Parent’s Board of Directors and the consummation by the Company
and Parent of the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Amended and Restated Debenture by the
Company and the issuance of the Lender Shares by Parent, have been duly
authorized by the Company’s Board of Directors and Parent’s Board of Directors
and (other than as may be required by the Bankruptcy Court in the Bankruptcy
Proceedings) no further filing, consent, or authorization is required by the
Company, its Board of Directors or its stockholders or Parent, its Board of
Directors or its stockholders.  This
Agreement and the other Amended Transaction Documents have been duly executed
and delivered by each of the Company and Parent, and constitute the legal,
valid and binding obligations of each of the Company and Parent, enforceable
against the Company and Parent in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.


 


4.3           Issuance of Securities.  The issuance of the Securities is duly
authorized and is free from all taxes, liens and charges with respect to the
issue thereof.  Upon issuance, the Lender
Shares will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights, taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of common stock of Parent.  The
offer and issuance by the Company and Parent of the Securities is exempt from
registration under the Securities Act of 1933, as amended (the “1933 Act”).


 


5

















 


4.4           No Conflicts.  The execution, delivery and performance of the
Amended Transaction Documents by the Company and Parent and the consummation by
the Company and Parent of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Amended and Restated
Debenture and the Lender Shares) will not (i) result in a violation of
Parent’s Articles of Incorporation, Parent’s Bylaws, the Company’s Articles of
Incorporation or the Company’s Bylaws or the terms of any capital stock of
Parent or the Company; (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which Parent or the
Company is a party; or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree applicable to Parent or the Company or by
which any property or asset of Parent or the Company is bound or affected.


 


4.5           Consents.  Other than the appropriate approval(s) of
the Bankruptcy Court in the Bankruptcy Proceedings, neither the Company nor
Parent is required to obtain any consent, authorization or order of, or make
any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Amended Transaction Documents, in each case in accordance with the terms hereof
or thereof (other than (x) filing with the SEC of a Form 8-K, and (y) filings
required by the Security Documents).  All
consents, authorizations, orders, filings and registrations which the Company
and Parent are required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the Effective Date of the Plan of
Reorganization, and Parent and the Company are unaware of any facts or
circumstances which might prevent the Company or Parent from obtaining or
effecting any of the registration, application or filings pursuant to the
preceding sentence.


 


4.6           Placement Agent’s Fees.  Parent shall be responsible for the payment of
any placement agent’s fees, financial advisory fees, or brokers’ commissions
(other than for Persons engaged by Lender) relating to or arising out of the
transactions contemplated hereby.  Parent
shall pay, and hold Lender harmless against, any liability, loss or expense
(including, without limitation, attorney’s fees and out-of-pocket expenses)
arising in connection with any such claim.


 


4.7           No Integrated
Offering.  None of Parent, the
Company, any of their affiliates, or any Person acting on their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause this offering
of the Securities to be integrated with prior offerings by Parent or the
Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of
Parent or the Company are listed or designated. 
None of Parent, the Company, their affiliates or any Person acting on
their behalf will take any action or steps referred to in the preceding
sentence that would require registration of any of the Securities under the
1933 Act or cause the offering of the Securities to be integrated with any other
offerings.


 


4.8           U.S. Real
Property Holding Corporation.  Neither the Company nor Parent is, nor has it
ever been, a U.S. real property holding corporation within the meaning of Section 897
of 


 


6

















 


the
Internal Revenue Code of 1986, as amended, and the Company and Parent will so
certify upon the request of Lender.


 


4.9           Application of
Takeover Protections; Rights Agreement.  Each of the Company and Parent and its respective
board of directors has taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Articles of Incorporation or Parent’s
Articles of Incorporation or the laws of the jurisdiction of its formation
which is or could become applicable to Lender as a result of the transactions
contemplated by this Agreement, including, without limitation, the issuance of
the Amended and Restated Debenture, the issuance of the Lender Shares, and/or Lender’s
ownership of the Securities.  Parent has
not adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of common stock of Parent or a change in
control of Parent


 


4.10         SEC Documents;
Financial Statements.  Prior to December 31,
2007, Parent had filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”)
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC
Documents”). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.  As of their
respective dates, the financial statements of Parent included in the SEC
Documents, as amended, complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto.  Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or
the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of Parent as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).


 


4.11         Conduct of
Business; Regulatory Permits.  Neither Parent nor the Company is in violation
of any term of or in default under its Articles of Incorporation or Bylaws or
other governing documents.  Neither
Parent nor the Company is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to Parent or the Company,
except where such violations would not result, either individually or in the
aggregate, in a Material Adverse Effect. Except where the failure to do so
would not result, either individually or in the aggregate, in a Material
Adverse Effect, Parent and the Company possess all certificates, authorizations
and permits issued by the appropriate regulatory authorities necessary to conduct



 


7

















 


their
respective businesses, and neither Parent nor the Company has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.


 


4.12         Foreign Corrupt
Practices.  To the knowledge of the
current officers of Parent and the Company, neither Parent nor the Company, nor
any director, officer, agent, employee or other Person acting on behalf of
Parent or the Company has, in the course of its actions for, or on behalf of,
Parent or the Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political, activity; (ii) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds; (iii) violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made, any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.


 


4.13         Sarbanes-Oxley Act.
 Prior to December 31, 2007, Parent
was in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any
and all applicable rules and regulations promulgated by the SEC thereunder
that are effective as of the date hereof, except where the failure to be in
compliance would not have a Material Adverse Effect.


 


4.14         Transactions With
Affiliates.  As of the Effective Date
of the Plan of Reorganization and except as treated in the Plan of
Reorganization, none of the officers, directors or employees of Parent or the
Company is presently a party to any transaction with Parent or the Company
(other than for ordinary course services, as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of Parent or the Company,
any corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.


 


4.15         Equity
Capitalization.  As of the Effective
Date of the Plan of Reorganization, the authorized capital stock of Parent will
consist of (i) 250,000,000 shares of capital stock, $0.001 par value per
share (consisting of 150,000,000 shares of common stock and 100,000,000 shares
of preferred stock), none of which is subject to, or reserved for issuance
under, any stock option agreements, stock purchase agreements, warrant
agreements, or other agreements, except as expressly set forth in the Plan of
Reorganization and/or the disclosure statement relating thereto.    As of
the Effective Date of the Plan of Reorganization, the authorized capital stock
of the Company will consist of 1,000 shares of common stock, no par value per
share, of which 100 shares are issued and outstanding and are held by Parent.  All of such outstanding shares of Parent and
the Company have been validly issued and are fully paid and nonassessable.  Except as disclosed in the Plan of
Reorganization and/or the disclosure statement relating thereto: (i) none
of Parent’s or the Company’s share capital is subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
Parent or the Company; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or 


 


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exchangeable
for, any share capital of Parent or the Company, or contracts, commitments,
understandings or arrangements by which Parent or the Company is or may become
bound to issue additional share capital of Parent or the Company or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any share capital of Parent or the Company; (iii) except
as expressly set forth in the Plan of Reorganization and/or the disclosure
statement relating thereto, there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of Parent or the Company or by which Parent
or the Company is or may become bound; (iv) there are no currently
effective financing statements securing obligations in any amounts, filed in
connection with Parent or the Company; (v) there are no agreements or
arrangements under which Parent or the Company is obligated to register the
sale of any of its securities under the 1933 Act; (vi) there are no
outstanding securities or instruments of Parent or the Company which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which Parent or the Company is or may become
bound to redeem a security of Parent or the Company; (vii) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities; (viii) neither Parent
nor the Company has any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement; and (ix) Parent and the
Company have no liabilities or obligations required to be disclosed in the Plan
of Reorganization and/or the disclosure statement relating thereto that are not
so disclosed in the Plan of Reorganization and/or the disclosure statement
relating thereto, other than those incurred in the ordinary course of Parent’s
or the Company’s respective businesses.  Schedule
3(r) contains true, correct and complete copies of (i) the
Company’s Articles of Incorporation, as amended and as in effect on the date
hereof (“the Company’s Articles of Incorporation”), (ii) the
Company’s Bylaws, as amended and as in effect on the date hereof (“the
Company’s Bylaws”), (iii) Parent’s Articles of Incorporation, as
amended and as in effect an the date hereof (“Parent’s Articles of
Incorporation”), and (iv) Parent’s Bylaws, as amended and as in effect
on the date hereof (“Parent’s Bylaws”).


 


4.16         Indebtedness and
Other Contracts.  Except as expressly
set forth in the Plan of Reorganization and/or the disclosure statement
relating thereto, neither Parent nor the Company (i) has any outstanding Indebtedness,
(ii) is a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract,
agreement or instrument would result in a Material Adverse Effect, (iii) is
in violation of any term of or in default under any contract, agreement or
instrument relating to any Indebtedness, or (iv) is a party to any
contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of Parent’s officers, has or is expected to have a
Material Adverse Effect.  For purposes of
this Agreement: (x) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other similar instruments, (D) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as 


 


9

















 


financing,
in either case with respect to any property or assets acquired with the
proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any mortgage, lien,
pledge, charge, security interest or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by any Person, even
though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) “Contingent
Obligation” means, as to any Person, any direct or’ indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another. 
Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
of such liability will be protected (in whole or in part) against loss with
respect thereto; and (z) “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.


 


4.17         Absence of
Litigation.  Except as disclosed in
the Plan of Reorganization and/or the disclosure statement relating thereto, other
than the Bankruptcy Proceedings, there is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency
(including the SEC), self-regulatory organization or body pending or, to the
knowledge of Parent or the Company, threatened against or affecting Parent, the
Company, or any of Parent’s or the Company’s current officers or directors.


 


4.18         Insurance.  Parent and the Company are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as management of Parent believes to be prudent and customary in
the businesses in which the Parent and the Company.  Neither Parent nor the Company has been
refused any insurance coverage sought or applied for and neither Parent nor the
Company has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.


 


4.19         Employee Relations.
 Neither Parent nor the Company is a
party to any collective bargaining agreement or employs any member of a
union.  Parent and the Company believe
that their relations with their employees are good.  No executive officer of Parent or the Company
has notified Parent or the Company that such officer intends to leave Parent or
the Company or otherwise terminate such officer’s employment with Parent or the
Company.  No executive officer of Parent
or the Company, to the knowledge of Parent or the Company, is in violation of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, noncompetition agreement, or any other
contract or agreement or any 


 


10

















 


restrictive
covenant.  Parent and the Company are in
compliance with all federal, state, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.


 


4.20         Title.  As of the Effective Date of the Plan of
Reorganization, Parent and the Company have good and marketable title to all
real property and good title to all personal property owned by them which is
material to the business of Parent and the Company, in each case free and clear
of all liens, encumbrances and defects except Permitted Liens (as defined in
the Amended and Restated Debenture) and such as do not materially affect the
value of such property and do not interfere with the use made and proposed to
be made of such property by Parent and the Company.  Any real property and facilities held under
lease by Parent and the Company are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
facilities by Parent and the Company.


 


4.21         Intellectual
Property Rights.  Parent and the
Company own or possess adequate rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights (“Intellectual
Property Rights”) necessary to conduct their respective businesses as now
conducted.  None of Parent’s or the
Company’s Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate, within three years from the date of this
Agreement.  Neither Parent nor the
Company has any knowledge of any infringement by Parent or the Company of
Intellectual Property Rights of others. 
There is no claim, action or proceeding being made or brought, or to the
knowledge of Parent or the Company, being threatened, against Parent or the
Company regarding its Intellectual Property Rights.  Each of Parent and the Company is unaware of
any facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings.  Parent and the Company have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.


 


4.22         Environmental Laws.
 Parent and the Company (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. 
The term “Environmental Laws” means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, 


 


11

















 


notices
or notice letters, orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder.


 


4.23         Investment Company.
 Neither the Company nor Parent is, or is
an affiliate of, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.


 


4.24         Off Balance Sheet
Arrangements.  After the Effective
Date of the Plan of Reorganization, there is no transaction, arrangement, or
other relationship between Parent and an unconsolidated or other off balance
sheet entity.


 


4.25         Ranking of Amended
and Restated Debenture.  Except as
permitted by the Amended and Restated Debenture, no Indebtedness of the Company
will rank senior to or pari passu with
the Amended and Restated Debenture in right of payment, whether with respect to
payment of redemptions, interest, damages or upon liquidation or dissolution or
otherwise.


 


4.26         Transfer Taxes.
 On the Effective Date of the Plan of
Reorganization, all stock transfer or other taxes (other than income or similar
taxes) which are required to be paid in connection with the exchange of the
Securities to be issued to Lender under the Plan of Reorganization will be, or
will have been, fully paid or provided for by the Company or Parent, as
applicable, and all laws imposing such taxes will be or will have been complied
with.


 


4.27         Manipulation of
Price.  Neither Parent nor the
Company has, and to its knowledge no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of Parent or the
Company to facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or paid any compensation for soliciting purchases of, any
of the Securities (except for customary placement fees payable in connection
with this transaction), or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of Parent
or the Company (except for customary placement fees payable in connection with
this transaction).


 


4.28         Disclosure.  Each of Parent and the Company understands and
confirms that Lender will rely on the foregoing representations in effecting
transactions in securities of Parent and the Company.  All disclosure provided by Parent and/or the
Company to Lender, in writing, regarding Parent, the Company, their respective
businesses and the transactions contemplated hereby, furnished by or on behalf
of Parent and the Company is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Notwithstanding anything to the
contrary contained herein, neither Parent nor the Company makes any
representation or warranty as to any financial projection or other forward
looking statement regarding either Parent or the Company.


 


4.29         Reporting Status.
 Until the date on which the Lender shall
have sold all the Lender Shares and no portion of the Amended and Restated
Debenture is outstanding (the “Reporting Period”), Parent shall file all
reports required to be filed with the SEC pursuant to the 1934 Act, and Parent
shall not voluntarily terminate its status as an issuer required to file
reports


 


12
















 


under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.


 


4.30         Certain
Financial Information and Reports.


 


(i)            With
a view to making available to Lender the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may at any time permit Lender to sell securities of Parent to the public
without registration (“Rule 144”),
Parent agrees, as soon as practical after the Effective Date of the Plan of
Reorganization, to:


 


a.             make and keep public information
available, as those terms are understood and defined in Rule 144;


 


b.             file with the SEC in a timely
manner all reports and other documents required of Parent under the 1933 Act
and the 1934 Act so long as Parent remains subject to such requirements and the
filing of such reports and other documents is required for the applicable
provisions of Rule 144; and


 


c.             furnish to Lender so long as Lender
owns any of the Securities, promptly upon request, (i) a written statement
by Parent, if true, that it has complied with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, and (ii) such other information as may be
reasonably requested to permit Lender to sell such securities pursuant to Rule 144
without registration.


 


(ii)           Parent
agrees to send the following to Lender during the Reporting Period: (i) unless
filed with the SEC through its IDEA or EDGAR systems and available to the
public through the IDEA or EDGAR systems, within one business day after the
filing thereof with the SEC, a copy of all Annual Reports on Form 10-K or
10-KSB, any interim reports or any consolidated balance sheets, income
statements, stockholders’ equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act of Parent, (ii) on the same day as the release
thereof, copies of all press releases issued by Parent or the Company, and (iii) copies
of any notices and other information made available or given to the
stockholders of Parent generally, contemporaneously with the making available
or giving thereof to the stockholders.


 


4.31         Fees.
 Parent and the Company shall, jointly
and severally, reimburse Lender or its designee(s) for reasonable and
documented costs and expenses incurred after the Effective Date of the Plan of
Reorganization in connection with the transactions contemplated by this
Agreement and/or the other Amended Transaction Documents (including reasonable
legal fees and disbursements in connection therewith) and additional fees,
costs, and expenses incurred in connection with perfecting, maintaining,
continuing, and/or protecting Lender’s security interests and liens.  Parent shall be responsible for the payment
of, and shall pay, any placement agent’s 


 


13

















 


fees, financial advisory fees, or broker’s commissions (other than for
Persons engaged by Lender) relating to or arising out of the transactions
contemplated hereby, and shall hold Lender harmless against, any liability,
loss or expense (including, without limitation, reasonable attorney’s fees and
out-of- pocket expenses) arising in connection with any claim relating to any
such payment.


 


4.32         Pledge
of Securities.  Each of Parent and
the Company acknowledges and agrees that the Securities may be pledged by Lender
in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. 
The pledge of the Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and Lender effecting a pledge of
Securities shall not be required to provide Parent or the Company with any
notice thereof or otherwise make any delivery to Parent or the Company pursuant
to this Agreement or any other Amended Transaction Document, unless required in
connection with the registration of the Securities or by applicable law.  Each of Parent and the Company hereby agrees
to execute and deliver such documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to such
pledgee by Lender.


 


4.33         Additional
Debentures.  So long as Lender beneficially
owns the Amended and Restated Debenture, except as expressly set forth in the
Plan of Reorganization and/or the disclosure statement relating thereto, neither
Parent or the Company will issue any debentures (other than to Lender as
contemplated hereby) and neither Parent or the Company shall issue any other
securities that would cause a breach or default under the Amended and Restated
Debenture.


 


4.34         Corporate
Existence.  So long as Lender
beneficially owns any of the Securities, Parent and the Company shall not be
party to any Fundamental Transaction (as defined in the Amended and Restated
Debenture) unless each of Parent and the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the Amended
and Restated Debenture.


 


4.35         Incurrence
of Liens.  So long as the Amended and
Restated Debenture is outstanding, Parent and the Company shall not, directly
or indirectly, allow or suffer to exist any Lien, other than Permitted Liens
(as defined in the Amended and Restated Debenture), upon any property or assets
(including accounts and contract rights) owned by Parent and the Company.


 


4.36         Conduct
of Business.  The business of Parent
and the Company shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.


 


4.37         Allocation
of Consideration for Federal Income Tax Purposes.  In accordance with Treasury regulations
section 1.1273-2(h), the Company and Parent shall allocate the consideration for
the Amended and Restated Debenture and the Lender Shares based upon their
relative fair market values.  In making
such allocation, the parties hereto shall agree, based upon the advice of their
financial advisors, upon the appropriate methodology to be used for determining
the relative fair market values of the Amended and Restated Debenture and the Lender
Shares.


 


14

















 


4.38         Further
Assurances.  Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.


 


4.39         Indemnification.
 In consideration of Lender’s execution
and delivery of this Agreement and the other Amended Transaction Documents and consummating
the transactions contemplated hereby and by the Plan of Reorganization, and in
addition to all of the Company’s and Parent’s other obligations under the Amended
Transaction Documents, the Company and Parent shall jointly and severally
defend, protect, indemnify and hold harmless Lender and each other holder of any
of the Securities, or any portion thereof, and all of their respective stockholders,
partners, members, officers, directors, employees, and direct or indirect investors
and any of the foregoing Persons’ agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Indemnitees”) from
and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective, of whether any such Indemnitee is a party to the
action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company or Parent in the Amended Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company or Parent
contained in the Amended Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company or Parent) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Amended Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (iii) the
status of Lender or holder of the Securities as an investor in, or lender to,
the Company or Parent pursuant to the transactions contemplated by the Amended Transaction
Documents.  To the extent that the
foregoing undertakings by the Company and Parent may be unenforceable for any
reason, the Company and Parent shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.


 


4.40         Remedies.
 Lender and each holder of the Securities,
or any portion thereof, shall have all rights and remedies set forth in the Amended
Transaction Documents and all rights and remedies which such holders have been
granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. 
Any Person having any rights under any provision of this Agreement shall
be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.  Furthermore, each of the Company and Parent
recognizes that in the event that it fails to perform, observe, or discharge
any or all of its obligations under the Amended Transaction Documents, any
remedy at 


 


15

















 


law may prove to be inadequate relief to Lender or the other applicable
holder(s).  Each of the Company and
Parent therefore agrees that Lender or the other applicable holder(s) shall
be entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and without posting a bond or
other security.


 


4.41         Payment
Set Aside.  To the extent that the
Company or Parent makes a payment or payments to Lender hereunder or pursuant
to any of the other Amended Transaction Documents or Lender enforces or exercises
its rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, Parent, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.


 


4.42         Cross-Default.  If the Company or Parent, as applicable,
breaches, in any material respect, any representation, warranty, covenant,
agreement, or other term or provision contained herein or contained in any of
the other Amended Transaction Documents, such breach shall constitute a Default
and an Event of Default under the Amended and Restated Debenture and each of
the other Amended Transaction Documents; provided, however, that if such breach
(i) does not otherwise constitute a Default or an Event of Default under
another Amended Transaction Document, and (ii) such breach is curable, such
breach shall only constitute a Default and an Event of Default if such breach continues
for a period of at least five (5) consecutive business days after receipt
of written notice thereof by the Company or the Parent.


 


4.47         Reaffirmation of
Liens. The Company and Parent each hereby renews and affirms the liens and
security interests created and granted in the Security Documents and the other
Amended Transaction Documents, as modified on the date hereof.  The Company and Parent each agree that this
Agreement shall in no manner impair the liens and security interests securing
the Obligations, and that such liens and security interests shall not in any
manner be waived, the purposes of this Agreement being to modify the Amended
Transaction Documents as herein provided and to carry forward all liens and
security interests securing same, which are acknowledged by the Company and
Parent to be valid and subsisting. The Company and Parent each hereby further
covenants and agrees to hereafter, from time to time upon the reasonable
request of Lender, execute and deliver to Lender such writings and take such
other actions as Lender may request from time to time in order to create, evidence,
perfect, continue, maintain, or otherwise protect or assure unto Lender a
valid, perfected, first priority Lien in favor of Lender covering all of the
Collateral, as security for the Obligations, or to evidence or carry out the
intent of this Agreement and/or the other Amended Transaction Documents, or to
otherwise perfect or give further assurances of any right(s) and/or
remedies granted or provided to, or for the benefit of, Lender in this
Agreement and/or the other Amended Transaction Documents.


 


4.48         Maintenance of
Leases. Without limiting any covenants of the Company and/or Parent
contained in any of the Amended Transaction Documents, the Company and Parent 


 


16

















 


hereby
expressly agree, at their sole cost and expense, to hereafter at all times
maintain, in full force and effect, all oil, gas, and/or mineral or hydrocarbon
leases, interests, and rights included in, or constituting a part of, the
Collateral as of the Effective Date of the Plan of Reorganization and to not
allow any of such leases, interests or other rights to terminate, expire,
lapse, or otherwise be impaired or diminished in any manner whatsoever, in each
case without the prior written approval of Lender.


 


ARTICLE V


 


MISCELLANEOUS


 


5.1           Ratification
of Agreements.  The Amended
Transaction Documents, as hereby amended, are hereby ratified and confirmed in
all respects.  Any reference to any
Amended Transaction Document in any other Amended Transaction Document shall be
deemed to be a reference to such other Amended Transaction Document as hereby
amended.  The execution, delivery and
effectiveness of this Agreement shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of Lender under, or in
connection with, the Amended and Restated Debenture, the Guaranty, or any of
the other Amended Transaction Documents, nor constitute a waiver of any
provision of the Amended and Restated Debenture, the Guaranty, or any of the
other Amended Transaction Documents.


 


5.2           Survival
of Agreements.  Except to the extent
amended hereby, by any of the other Amended Transaction Documents, or by the
Plan of Reorganization, all representations, warranties, covenants, and
agreements of the Company or Parent contained herein or in any of the other
Amended Transaction Documents shall survive the execution and delivery of this
Agreement and the performance hereof and shall further survive until all of the
Obligations are finally and irrevocably paid in full.  All statements and agreements contained in
any certificate or instrument delivered by the Company or Parent hereunder or
under any other Amended Transaction Document to Lender shall be deemed to
constitute representations and warranties by, and agreements and covenants of,
the Company and Parent under this Agreement and the other Amended Transaction
Documents.


 


5.3           Amended
Transaction Documents.  This
Agreement and the Amended and Restated Debenture are Amended Transaction
Documents, and all provisions in any of the other Amended Transaction Documents
pertaining to Amended Transaction Documents apply to this Agreement and to the
Amended and Restated Debenture.


 


5.4           Governing
Law.  This Agreement shall be
governed by and construed in accordance the laws of the State of New York and
any applicable laws of the United States of America in all respects, including
construction, validity and performance.


 


5.5           Counterparts;
Fax.  This Agreement may be
separately executed in counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement. 
This Agreement may be validly executed by facsimile or other electronic
transmission.


 


17

















 


5.6           Release
of Claims by the Company and Parent.  Effective as of the Effective Date of the Plan
of Reorganization, each of the Company and the Parent fully and forever waives,
releases and discharges any and all actions, causes of action in law or in
equity, suits, adversary proceedings, contested matters, litigation,
objections, debts, liens, contracts, torts, liabilities, demands, rights,
obligations, damages, losses, fees, costs, expenses, set-offs, defenses,
counter-claims, cross-claims, third-party claims, or claims for recoupment, of
any nature whatsoever, known or unknown, fixed or contingent, whether arising
under contract, tort or statute, including any cause of action arising under
Chapter 5 of the Bankruptcy Code, against Lender, its officers, directors,
employees, partners, affiliates and attorneys, that are based, whether in whole
or in part, upon any act, omission, event, condition, or thing in existence or
that occurred, whether in whole or in part, prior to the Effective Date of the
Plan of Reorganization.


 


5.7           Release
of Claims by Lender.  Subject to the
exceptions set forth herein, effective as of the Effective Date of the Plan of
Reorganization, the Lender fully and forever waives, releases and discharges
any and all actions, causes of action in law or in equity, suits, adversary
proceedings, contested matters, litigation, objections, debts, liens,
contracts, torts, liabilities, demands, rights, obligations, damages, losses,
fees, costs, expenses, set-offs, defenses, counter-claims, cross-claims,
third-party claims, or claims for recoupment, of any nature whatsoever, known
or unknown, fixed or contingent, whether arising under contract, tort or
statute (collectively, “Lender Claims”), against each Person who was an
officer, director, employee, partner, affiliate, or attorney of the Company or
Parent on or after March 5, 2008, insofar as such Lender Claims are based,
whether in whole or in part, upon any act, omission, event, condition, or thing
in existence or that occurred, whether in whole or in part, prior to the
Effective Date of the Plan of Reorganization; provided, however, that
Lender express reserves and retains, and the foregoing release shall not be
deemed to cover or apply to, any and all Lender Claims against, or with respect
to, Robert Wright or any of his successors or personal representatives.


 


5.8           Presumptions.
 Each of the Company and Parent hereby
acknowledges that it has consulted with and been advised by its counsel and
such other experts and advisors as it has deemed necessary in connection with
the negotiation, execution and delivery of this Agreement and has participated
in the drafting hereof.  Therefore, this
Agreement shall be construed without regard to any presumption or rule requiring
that it be construed against any one party causing this Agreement or any part
hereof to be drafted. Each of the Company and Parent further represents,
warrants and agrees that in entering into this Agreement and the other Amended
Transaction Documents, it has not relied on any representation, promise, understanding
or agreement, oral or written, of, by or with, Lender or any of its agents,
employees, or counsel, except the representations, promises, understandings and
agreements specifically contained in or referred to in this Agreement or the
other Amended Transaction Documents.


 


THIS AGREEMENT AND THE OTHER AMENDED
TRANSACTION DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.


 


18

















 


IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective officers thereunto duly authorized as of the date first above
written.


 


 


COMPANY:


 


PRB OIL & GAS, INC.


 


 




	
  By:

  	
  /s/ William F. Hayworth

  	
   

  	
   

  
	
  Name:

  	
  William F. Hayworth

  	
   

  	
   

  
	
  Title:

  	
   President and Chief Executive Officer

  	
   

  	
   

  
						






 


 


PARENT:


 


BLACK RAVEN ENERGY, INC.


(formerly known as PRB Energy, Inc.)


 


 




	
  By:

  	
  /s/ William F. Hayworth

  	
   

  	
   

  
	
  Name:

  	
  William F. Hayworth

  	
   

  	
   

  
	
  Title:

  	
   President and Chief Executive Officer

  	
   

  	
   

  
						






 


 


LENDER:


 


WEST COAST OPPORTUNITY FUND, LLC


 


 




	
  By:

  	
  /s/ Atticus Lowe

  	
   

  	
   

  
	
  Name:

  	
  Atticus Lowe

  	
   

  	
   

  
	
  Title:

  	
   Chief Investment Officer

  	
   

  	
   

  
						






 


19