COST AND EXPENSE SHARING AGREEMENT
This Agreement is entered into effective August 7, 1997 by and between
Xxxxxx Mineral Group, Inc. ("BMG") and United States Exploration, Inc.
("Company") for the purpose of allocating costs and expenses which should be
allocated between the parties hereto.
WHEREAS, BMG currently rents office space at 0000 Xxxxxxxx, Xxxxxx,
Xxxxxxxx, for use as its corporate offices and Company may locate some of its
personnel at this office space;
WHEREAS, BMG employs office and field personnel who may perform services
for Company or for subsidiaries of Company;
WHEREAS, BMG and Company will make every effort to specifically identify
costs and expenses incurred so that each party will bear its own costs and
expenses; and
WHEREAS, it is recognized that some personnel costs and other costs and
expenses may not be capable of specific identification and a method of
allocating such personnel costs and other costs and expenses is desirable.
NOW, THEREFORE, the parties agree to follow the procedure described below
for allocating personnel costs and expenses and other costs and expenses which
cannot be specifically identified as being incurred by a particular party:
1. Company will pay BMG monthly for a pro-rata share of the Denver,
Colorado corporate office rent. Rents will be allocated based upon square
footage used by employees of Company compared to the square footage used by BMG
employees excluding, in each case, Xxxxx X. Xxxxxx. The square footage used by
Xxxxx X. Xxxxxx will be allocated 50% to Company and 50% to BMG. The portion of
the rent allocable to BMG employees, other than Xxxxx X. Xxxxxx, shall then be
allocated between the Company and BMG on the same basis as such employees'
compensation is allocated under 2. below. The square footage shall include a
pro-rata share of common area space within and without the demised premises for
which BMG pays monthly rent.
2. The Company will pay BMG monthly for any BMG employees, including
officers other than Xxxxx X. Xxxxxx, who work on Company business. The rate to
be paid will be a pro rata share of such employee's compensation, including
bonuses, if any, plus directly related personnel costs. Directly related
personnel costs shall include, without limitation, federal, state and local
payroll taxes, unemployment and workers' compensation insurance and employee
benefit plans such as health, life, disability, education and retirement. The
time spent on Company business shall be determined from the time sheets of BMG's
employees. The allocation of bonuses, if any, shall be based upon the time
sheets for the period to which the bonus is related.
3. Other Denver office costs and expenses which cannot be specifically
identified as pertaining to either BMG or Company shall be initially paid 50% by
each party and shall be adjusted on a calendar quarter basis based upon the
calendar quarter's allocation of rent pursuant to 1. above. Such expenses might
- 1 -
include, but are not limited to, the following categories of general and
administrative costs (as used in BMG's accounting system):
A. Auto expenses of BMG vehicles based in Denver.
B. Computer charges of BMG's software vendor and others.
C. Miscellaneous small contributions.
D. Dues and Subscriptions.
E. Copier expenses.
F. Education expenses.
G. Miscellaneous entertainment.
H. Insurance.
I. Legal.
J. Miscellaneous.
K. Office maintenance, supplies and equipment repairs.
L. Postage, fax and deliveries.
M. Telephone.
N. Travel and lodging.
BMG shall use reasonable efforts to specifically allocate all office costs and
expenses incurred on behalf of the Company or BMG.
4. Although it is not anticipated that any Company employees, office or
field, will perform any services for BMG, the provisions for 2. above shall
apply for allocation of Company personnel costs to BMG if such costs and
expenses occur. Xxxxx X. Xxxxxx will be paid by both Company and BMG, and there
will be no allocations of his personnel costs. Although it is not anticipated
that there will be Company office costs which cannot be specifically allocated,
the provisions of 3. above shall apply if there are any Company office costs
which cannot be specifically identified.
- 2 -
5. BMG shall xxxx the Company on a monthly basis for the Company's share of
costs and expenses hereunder. Each xxxx shall reflect in reasonable detail the
computation of the amount due. BMG shall provide the Company such additional
information regarding that computation as the Company shall reasonably request.
The Company shall pay each xxxx within 10 days of receipt.
6. Except as otherwise provided herein, each party shall pay its own costs
and expenses.
7. The parties shall meet annually within 90 days after the end of each
calendar year to review the operation of the allocation formulas set forth
herein and the overall fairness of the resulting allocations of costs and
expenses. The Company shall be represented in those discussions by two or more
members of the Company's Board of Directors who are not officers or employees of
the Company or BMG. In the course of those discussions, the parties shall
consider in good faith whether adjustments to the provisions of this Agreement
are appropriate.
8. This Agreement shall remain in effect until the termination of the
Executive Employment Agreement of even date herewith between Xxxxx X. Xxxxxx and
the Company. The obligations of the parties to pay amounts due hereunder in
respect of periods prior to such termination shall survive such termination.
This Agreement is not intended to obligate BMG to provide facilities, personnel,
equipment or services to the Company, but only to govern the sharing of costs
and expenses if and to the extent that BMG does so.
9. This Agreement may be modified only by a written amendment signed by
both parties. This Agreement shall be governed by Colorado law. If any amount
due hereunder is not paid when due, it shall bear interest at BMG's then current
cost of borrowing plus 1% per annum.
XXXXXX MINERAL GROUP, INC. UNITED STATES EXPLORATION, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------- ---------------------------------
Its: President Its: President
----------------------------- ---------------------------------
- 3 -
