June 19, 1996
Xx. Xxxxxxx X. Xxxxxxxx
Interline Resources Corporation
000 X. Xxxxxx Xxxxx Xxxx
Xxxxxx, Xxxx 00000
Re: Letter Agreement - Termination of License and Technology
Disclosure Agreement and Related Agreements
Dear Xxxx:
This letter (hereinafter "Letter Agreement") will serve
as an agreement governing the termination of certain
agreements between Interline Resources Corporation
(hereinafter "Interline"), and Q Lube, Inc., a Delaware
corporation which assigned its interest therein to Quaker
State Resources, Inc., a Nevada corporation, which
subsequently changed its name to Genesis Petroleum, Inc.
(hereinafter "Genesis"), and Genesis Petroleum-Salt Lake,
L.L.C. (hereinafter "L.C.") including that certain License
and Technology Disclosure Agreement ("License Agreement")
dated September 13, 1994, the Unit Purchase Agreement dated
September 13, 1994, all Letters of Understanding or other
agreements between the parties, together with all amendments
and/or collateral agreements relating thereto. The date
Interline executes this Letter Agreement shall be referred
to herein as the "Effective Date."
With respect thereto, the parties agree as follows:
1. Sale of Unit and Equipment. Genesis agrees that
upon payment in full of the amounts set forth in Paragraph 2
below, Genesis and/or its affiliates shall transfer and
convey to Interline Resources, Inc., title in and to the
Unit and all other assets or improvements located at Xxxxx
Cross, Utah site (the "Premises") which are owned by Genesis
or its affiliates, including without limitation, the
following:
a. Unit (as defined in the Unit Purchase Agreement);
b. Distillation tower(s);
c. Flare;
d. All site improvements;
e. All ancillary equipment;
f. Lab and all lab equipment; and
g. All interest of Genesis as a member of the L.C.
2. Interline Payment. As payment for the assets
referenced in Paragraph 1, and as partial reimbursement for
exclusivity fees as provided in the License Agreement and
reimbursement of costs incurred by Genesis and its
affiliates in organizing the L.C., obtaining permits,
purchasing equipment and fixtures, completing improvements
at the site, and supplying operating capital which remains
in the L.C. account, Interline shall pay to Genesis the sum
of Two Million Six Hundred Twenty Seven Thousand Nine
Hundred Eleven Dollars ($2,627,911.00), less the offset
agreed upon in Paragraph 6 below. In addition, Interline
shall pay Genesis Rent in the amount of One Hundred Twenty
Five Thousand Dollars ($125,000.00), Accounting Fees in the
amount of Two Thousand Dollars ($2,000.00) and the current
balance for Intercompany Accounts net of capital
contributions as of May 31, 1996. As of May 31, 1996 the
Intercompany Account balance was One Hundred Sixty Five
Thousand Nine Hundred Twenty Five Dollars ($165,925.00).
Said Intercompany Account balance shall be adjusted to
account for L.C. activities and adjustments from June 1,
1996 through June 19, 1996. Such amount shall be payable
within one hundred twenty (120) days from the Effective
Date. If such amount is not paid when due, Genesis shall be
entitled to all remedies at law or equity, shall be entitled
to interest on the unpaid balance at the rate of Twelve
Percent (12%) per annum and shall be entitled to recover all
costs incurred in enforcing this agreement, including
reasonable attorneys fees.
3. Unit Operations. Notwithstanding the provisions
of Paragraph 2 above, the L.C. and/or its affiliates shall
continue to be the sole operator of all Unit operations
located on or about the Premises, until payment in full of
all amounts set forth in Paragraph 2 above has been received
by Genesis. Interline shall be entitled to all profits and
obligated for all loses incurred from June 19, 1996 forward.
In addition to the payment referenced in Paragraph 2,
Interline agrees to reimburse Genesis, the L.C. and/or their
affiliates for all reasonable expenses incurred by Genesis
and/or the L.C. and their affiliates in the operation of the
Unit, Unit related equipment, and all other assets at the
Premises from and after the Effective Date of this Letter
Agreement. Such expenses shall be reconciled on a monthly
basis, and all reimbursements shall also be made on a
monthly basis within Ten (10) days after Interline receives
notice of such expenses. Notwithstanding the foregoing
provision, Interline shall have the right to pre-approve
extraordinary expenses incurred by Genesis, the L.C. and
their affiliates in connection with the above-referenced
operations; however, Genesis and the L.C. will not be
required to seek the prior approval of Interline for
reasonable and/or standard operating expenses.
4. Indemnity. Interline hereby agrees to indemnify
and hold Genesis and its affiliates harmless from any or all
liabilities or claims, including all court costs and
attorney's fees, that may result from any claim arising from
or relating to the operations of the Unit, Unit related
equipment, and all other assets located at or about the
Premises, including, but not limited to, the handling, sale
and disposal of materials at the Premises from and after the
date Genesis or any of its affiliates transfers title in and
to the Unit and related equipment as provided in Paragraph 1
above, and transfers control of the Unit and its operation
to Interline. Genesis and its affiliates will give
Interline prompt written notice of the claim and the right
to defend and settle the claim. Genesis and its affiliates
will reasonably cooperate with Interline in the defense and
settlement of the claim. Interline shall be permitted to
select reasonable counsel of their choice, subject to the
approval of Genesis, which approval shall not be
unreasonably withheld. The Intercompany Accounts balance
referenced in Paragraph 2 already contains an accrual for
disposal of materials. As a result, Genesis will have no
further liability for any materials requiring disposal,
including, but not limited to, contaminated water and
solids.
5. Right to "Genesis" Name. Interline agrees that
prior to the transfer by Genesis of all of its membership
interest and other right and title in and to the L.C.,
Genesis shall cause the L.C. to return to Genesis all of the
L.C.'s rights in and to the name "Genesis Petroleum-Salt
Lake", and Interline shall have thirty (30) days from the
date of such transfer to acquire and register a new name for
the L.C.
6. Interline Stock. On the Effective Date, the
parties shall offset the sum of Six Hundred Thousand Dollars
($600,000.00) against the amounts due and owing from
Interline to Genesis pursuant to Paragraph 2 herein. In
exchange for this offset, on the Effective Date hereof,
Interline shall transfer to Genesis .769 percent of the
issued and outstanding common stock of Interline
(hereinafter "Stock".)
7. Termination of Agreements and License Rights. The
parties agree that the Unit Purchase Agreement shall be
terminated on the Effective Date hereof. The Parties
further agree that all rights of Genesis and its affiliates
in and to the licenses granted in the License Agreement
shall be terminated effective upon receipt of the payment of
all sums set forth in Paragraph 2 above. At such time, all
of the agreements referred to in the first paragraph of this
Letter Agreement shall be terminated and neither party or
its affiliates shall have any obligation or liability to the
other party or its affiliates, except as set forth in this
Letter Agreement. Provided, however, in the event such sums
are not timely paid, Genesis and its affiliates shall retain
all license rights in the License Agreement, specifically
including the right to operate the existing Unit. The
confidentiality provisions contained in Paragraph 13.1 of
the License Agreement shall survive termination.
8. Further Assurances. The parties agree to act in
good faith to accomplish the intent of this agreement and to
execute all further documents as may be hereafter required
to effectuate and carry out the intent and terms of this
Agreement.
In the event the foregoing is an acceptable recitation
of the facts and agreements of the parties, and if Interline
is in full agreement therewith, please execute this Letter
in the place duly provided below, and return the Letter to
me as soon as possible.
Sincerely,
GENESIS PETROLEUM, INC.
Xxxxx X. Xxxxx
ACKNOWLEDGMENT
Interline Resources Corporation has read the terms of
the foregoing Letter Agreement governing the terminating of
all prior agreements between the parties, and, with the
intent that such provisions and terms contained in the
Letter Agreement be legally binding, do hereby fully consent
and agree to the terms of the Letter Agreement.
INTERLINE RESOURCES CORPORATION
By:________________________________
Its:_______________________________
Date:______________________________
