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According to the schedule set forth in the debt service
agreement, PK Ventures agreed to pay the outstanding principal
balance of the $2.5 million revolving line of credit plus any
accrued interest within 5 days from the date of the debt service
agreement. Furthermore, PK Ventures agreed to make a $400,000
payment on the Summit Trust loan at the earlier of September 30,
1990, or the date that Rose acquired a majority interest in
PK Ventures. PK Ventures was to repay the remaining $600,000 of
the Summit Trust loan at the loan’s maturity date, 12 months from
the date of the debt service agreement or as extended by Summit
Trust. The debt service agreement also contained the following
provision:
3.3 Compensation. Until October 1, 1990, Robert
Rose’s salary, as Chief Executive Officer, will be
fixed at $80,000 per annum, payable bi-weekly.
The debt service agreement provided that PK Ventures was to
borrow funds from Rose if it did not have sufficient funds to
make the scheduled payments to Norstar and Summit Trust. If
PK Ventures borrowed any funds from Rose, it was required to
execute a promissory note in Rose’s favor and to secure repayment
of the loan by placing a priority lien (as permitted) on all of
its assets. In addition, any such loans between Rose and
PK Ventures were to be secured by an escalating pledge of the
shares of PK Ventures’ stock owned by Kane, Kane Jr., Krutoy, and
Mannello in an amount identified in a Pledge Agreement.
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