EXHIBIT B
AGREEMENT
AGREEMENT made this 17 day of September, 1996, by and between the
following:
United States Exploration, Inc. A Colorado Corporation, and
its wholly owned subsidiaries, USX Operating Co., Inc., A
Kansas Corporation, Producers Service Incorporated, A Kansas
Corporation, Performance Petroleum Corporation, A Colorado
Corporation, and Pacific Osage, Inc., An Oklahoma
Corporation (hereinafter referred to collectively as "USX");
and
Xxxxx X. Xxxxxxx ("TLC") and Xxxxxx X. Xxxxxxx ("VMC"),
husband and wife, of Independence, Kansas; and
Argas, Inc., A Kansas Corporation ("Argas").
WHEREAS, TLC is a stockholder, and has heretofore served as an officer and
director of USX; and,
WHEREAS, VMC is a stockholder, and has heretofore served as an officer of
USX; and,
WHEREAS, TLC and VMC are the stockholders, officers and directors of Argas;
and,
WHEREAS, USX and Argas are the members of the USX-Argas 1996 Joint Venture;
and,
WHEREAS, other stockholders of USX have proposed to the Board of Directors
of USX certain substantial changes in the capitalization and scope of business
of USX which the parties agree may be beneficial to USX, and if such changes are
implemented the services of TLC will no longer be required for the conduct of
the business of USX; and,
WHEREAS, to facilitate the proposed changes, to settle and resolve
indebtedness due, and to segregate assets and liabilities of common interest to
the parties, the parties desire to make this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein made and
contained, the sufficiency of which are hereby acknowledged, parties as follows:
ARTICLE I
Directorships, Officerships, Employment Resigned
1.1 Directorships Resigned. Effective immediately upon execution hereof,
TLC resigns his positions as a director of United States Exploration, Inc., USX
Operating Co., Inc., Producers Service Incorporated, Performance Petroleum
Corporation and Pacific Osage, Inc., and any and all subsidiaries or affiliates
of USX, and such resignations are hereby accepted by USX.
1.2 Officerships Resigned.
1.2.1 Effective immediately upon execution hereof, TLC resigns his
positions as President of United States Exploration, Inc., USX
Operating Co., Inc., Producers Service Incorporated, Performance
Petroleum Corporation and Pacific Osage, Inc., and any and all
subsidiaries or affiliates of USX, and such resignations are hereby
accepted by USX.
1.2.2 Effective immediately upon execution hereof, VMC resigns her
positions as Secretary of USX Operating Co., Inc., Producers Service
Incorporated, Performance Petroleum Corporation, and Pacific Osage,
Inc., and any and all subsidiaries or affiliates of USX, and such
resignations are hereby accepted by USX.
1.3 Employment and Other Agency Positions Resigned. Effective immediately
upon execution hereof, TLC and VMC resign all other employment, agency or
fiduciary positions with USX, its subsidiaries and affiliates, and such
resignations are hereby accepted by USX. Provided, however, that VMC shall
retain her position as the Office Manager of USX at current level of
compensation and benefits, the further continuation of such employment to be at
the will of USX (i.e., subject to termination upon two (2) weeks notice).
1.4 Wage and Salary Settlements. TLC hereby releases, relinquishes and
discharges USX from any and all claims for wages, salaries or other compensation
for past services rendered.
1.5 Benefits Settlement. TLC hereby releases, relinquishes and discharges
USX from any and all claims for employee benefits, including "comp" time,
vacation time, personal leave time, profit sharing, life insurance, health
insurance benefits, except COBRA health insurance benefits available to TLC
under applicable law.
ARTICLE II
Use and Ownership of Certain Other Assets
2.1 Company Vehicle. The Company will transfer to TLC the 1994 Jeep Grand
Cherokee presently driven by TLC. In consideration thereof, TLC will assume the
indebtedness due thereon to Citizens National Bank in the amount ofapproximately
$8,985.00, and shall indemnify USX from any further liability thereon. The
agreed value of the vehicle is equal to the assumed indebtedness, approximately
$8,985.00.
2.2 Home Office Equipment. USX will transfer and assign to TLC the office
equipment and furniture presently located at 0000 Xxxxxx Xxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxx, consisting of the following:
Desk, Chair, Credenza, 000 XX XxXxxxxx XX with monitor and
keyboard,
at an agreed value of $1,757.00.
2.3 Building Lease. TLC and VMC, as lessors, and USX, as lessee, shall
enter into a lease agreement in mutually acceptable form covering the business
premises at 0000 Xxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxx, the essential terms of which
lease shall be as follows:
2.3.1 Monthly rent of $806.59, payable in advance each month;
2.3.2 The lease shall be triple net, with USX responsible for
insurance, taxes and repairs during the tenancy;
2.3.3 The lease shall be terminable by either party on 30 days
advance notice.
2.4 Residential Lease. TLC and VMC, as lessors, and USX, as lessee, shall
enter into a lease agreement in mutually acceptable form covering the
residential premises at XX #0, Xxxxxxxxxxxx, Xxxxxx, presently occupied by USX's
Operations Manager Xxxxx Xxxxxx. The essential terms of the lease shall be as
follows:
2.4.1 Monthly rent of $549.07, payable in advance each month;
2.4.2 The lease shall be triple net, with USX responsible for
insurance, taxes and repairs during the tenancy;
2.4.3 The lease shall be terminable by either party on 30 days
advance notice.
ARTICLE III
Argas-USX 1996 Joint Venture
3.1 Venture Assets. USX hereby sells, transfers, assigns and conveys unto
Argas all of USX's right, title and interest in the assets of the Argas-USX 1996
Joint Venture including, without limitation:
3.1.1 The assets as described in the Joint Venture Agreement dated March
26, 1996, less any interim sales or other dispositions;
3.1.2 The cash accounts and receivables of the Venture;
3.1.3 The compressor and associated equipment located at the point of
delivery of the Independence Gas Company;
3.1.4 The compressor and associated equipment located on the Xxxxxx and
Xxxxxxx leases, known as the "PKR Gas Compressor", and which was
previously leased by USX to Havana Gas Company;
3.1.5 The compressor and associated equipment located at the point of
delivery for Xxxxxx Pipeline, which compressor was previously leased
by Producers Service Incorporated.
3.2 Venture Liabilities. In consideration of the rights and interests in
assets assigned by USX, Argas shall assume, indemnify and defend USX from any
and all Venture debts, liabilities and obligations.
3.3 Sums Due USX. The provisions of paragraph 3.2 above, notwithstanding,
USX hereby releases, relinquishes and discharges Argas and the Venture from all
liabilities due to USX up to and through May 31, 1996 with respect to labor and
services performed and materials furnished by USX for or in connection with the
Venture's business and assets. Any sums due USX for labor, services and
materials furnished subsequent to May 31, 1996 and for which payment has not
previously been made shall remain due and owing to USX, payable on normal (30
day) terms.
3.4 Gas Contracts.
3.4.1 Argas shall cause Independence Gas Company to continue to sell its
natural gas volumes to Producers Service Incorporated under the
present terms, which purchasing arrangement shall be subject to
termination by either party on 60 days advance notice.
3.4.2 On June 28, 1996, Producers Service Incorporated, as "buyer" and
Argas-USX 1996 Joint Venture d/b/a Havana/Chautauqua Gathering
Systems, as "seller", entered into a Gas Purchase Contract for the
sale and purchase of gas from the Havana/Chautauqua Gathering
Systems, and such contract is hereby ratified and confirmed by USX
and Argas. It is provided, however, that such contract is hereby
deemed modified to provide that in the event of sale of the
Havana/Chautauqua Gathering Systems by Argas, such Gas Purchase
Contract shall thereafter be terminable by either "buyer" or
"seller" upon 60 days advance written notice.
3.5 Operating Agreements and Services. USX has previously furnished
operating and other services to the Venture or with respect to venture assets,
either upon express written terms or upon terms established by historical
precedent. Any such agreement shall be terminable by either USX or Argas upon 30
days advance notice. Further, no such agreement shall be subject to unilateral
modification by either party, except by means of termination.
ARTICLE IV
Claims and Causes of Action
4.1 History of USX. TLC and VMC have been actively involved as
stockholders, officers and/or directors of USX since May, 1990. Since that date
USX has been engaged in the energy production, transmission and processing
business, increasing its asset base from virtually zero to the present level of
approximately $14,000,000. Such growth has been accomplished largely through
leveraged transactions, equity exchanges, and a series of mergers and
acquisitions, including the mergers into USX of X.X. Xxxxxxx Enterprises, Inc.
and Producers Service Incorporated, corporations with which TLC and VMC were
previously affiliated. The industry in which USX is engaged is inherently risky
and speculative, and the levels of risks have been necessarily increased by
USX's efforts to achieve rapid growth.
4.2 Business Judgment. To the best information and belief of the parties,
the business and affairs of USX have been managed, supervised and conducted by
TLC in a honorable, efficient and effective manner, and business judgments made
by him have been made on a valid and business-like basis in conformity with good
standards of corporate governance. Likewise, the duties of VMC, which have been
principally clerical in nature, have been performed honorably, effectively and
efficiently. The parties have engaged in certain related party transactions
including as are herein described, and such transactions have been disclosed to,
have been fair to, and in the best interest of, USX.
4.3 Release by USX. In consideration of the making of this Agreement, USX
does hereby release, discharge TLC, VMC and Argas from any and all claims, suits
and causes of action whatsoever, known or unknown, arising from the performance
of their duties as directors, officers and employees of USX, or from any related
party transaction herein or otherwise disclosed and known to USX, provided that
this release shall not extend to any dealings or transactions not now disclosed
or known to USX and which are ultimately determined to involve dishonesty or
fraud committed by TLC, VMC or Argas as against USX (the claims to which this
release extends are hereinafter referred to as the "Claims Released by USX").
The Claims Released by USX shall not include any claims arising from any
subsequent breach of this Agreement by TLC, VMC or Argas.
4.4 Release by TLC, et al. In consideration of the making of this
Agreement, TLC, VMC and Argas hereby release, relinquish and discharge USX, and
its other officers and directors from any and all claims, suits and causes of
action whatsoever, known or unknown, arising from the employer-employee
relationship, the related party transactions herein or otherwise disclosed, or
otherwise pertaining to the governance and conduct of business of USX, provided
that this release shall not extend to any dealings or transactions not now
disclosed or known to TLC, VMC or Argas and which are ultimately determined to
involve dishonesty or fraud committed by USX or its other officers or directors
as against USX, TLC, VMC or Argas (the claims to which this release extends are
hereinafter referred to as the "Claims Released by TLC, et al."). The Claims
Released by TLC, et al. shall not include any claims arising from any subsequent
breach of this Agreement by USX.
4.5 Indemnification by USX. USX agrees to defend, indemnify and hold
harmless TLC, VMC and Argas from any and all loss, cost, expenses, liability and
attorneys fees arising from or relating to any claim, suit or cause of action
asserted, made or maintained against TLC, VMC or Argas by USX, its officers,
directors, stockholders, or their successors or assigns as may be within the
scope of the Claims Released by USX.
4.6 Indemnification by TL, et al. TLC, VMC and Argas agree to defend,
indemnify and hold harmless USX from any and all loss, cost, expense, liability
and attorneys fees arising from or relating to any claim, suit or cause of
action, asserted, made or maintained, by TLC, VMC, Argas, the former
stockholders of X.X. Xxxxxxx Enterprises, Inc., or their successors or assigns,
as may be within the scope of the Claims Released by TLC, et al.
ARTICLE V
Additional Terms
5.1 Option to Purchase. TLC and VMC hereby grant unto USX the right,
privilege and option to purchase 100% of the issued and outstanding capital
stock of Argas, which option is exercisable by USX as follows:
5.1.1 The option shall be exercised, if at all, on or before the 15th day
of November, 1996, unless the option date is extended by the written
agreement of TLC and VMC;
5.1.2 The option shall be exercised, if at all, by written notice received
by TLC and VMC within the option period specified in 5.1.1, above;
5.1.3 The purchase price payable by USX upon exercise of the option shall
be the sum of $160,000, payable in cash or certified funds at the
time of exercise of the option;
5.1.4 During the option period, TLC and VMC shall allow USX and its
representatives to have reasonable access to the assets, and to
books and records, of Argas for purposes of USX's "due diligence"
investigation;
5.1.5 During the option period, TLC and VMC shall cause Argas to conduct
its business in the ordinary course, and during such period Argas
shall not, without the express written consent of USX, sell the
Havana, Chautauqua or Elgin pipeline systems (which systems
constitute a portion of the Venture assets sold and transferred to
Argas pursuant to Article III, above);
5.1.6 It is specifically acknowledged and agreed that Argas, and its
assets, may be subject to indebtedness, liabilities and obligations
incurred in connection with its business, including, without
limitation, the debt due Citizens National Bank incurred to finance
the acquisition of the venture assets described in Article III, and
also including any claims of Xxxxxx X. XxXxxxxx pertaining to past
or present business of Argas, and if the option is exercised USX
shall procure an absolute release of TLC and VMC from any such
indebtedness, liabilities, obligations and claims;
5.1.7 Subject to the express limitations set forth in 5.1.5, above, TLC
and VMC shall have full business discretion in the interim conduct
of business of Argas and such discretion shall include the right to
conclude and settle a pending controversy and dispute with Xxxxxxxx
Natural Gas Company pertaining to a gas purchase contract for the
Havana and Chautauqua Systems, upon any terms and conditions as TLC
and VMC deem appropriate;
5.1.8 Exercise of the option shall be contingent upon the parties
execution of a mutually acceptable and definitive stock purchase
agreement upon customary terms (and for this purpose "customary"
shall be determined by reference to USX's agreements for acquisition
of Performance Petroleum and Pacific Osage).
The grant of this option is an after thought to the essential terms of the
parties' agreement as contained in Articles I through IV, above. No additional
consideration has been furnished for the granting of the option, and it is
specifically agreed that USX's sole remedy for any dispute or controversy
concerning the grant of option shall be to elect to not exercise the option.
5.2 Further Assurance. Each party to this Agreement agrees to execute and
deliver any assignment, xxxx of sale, certificate or other instrument as may
reasonably be required to effect the transactions herein contemplated.
5.3 Integration. This Agreement supersedes all prior negotiations,
understandings and agreements between the parties with respect to the subject
matter and constitutes the full and final agreement between the parties with
respect thereto.
5.4 Amendment. This Agreement may be amended only by written instrument
signed by the parties to be effected and bound thereby.
5.5 Controlling Law. This Agreement is made, and shall be interpreted in
accordance with, the laws of the State of Kansas.
5.6 Binding Effect. This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto, their successors and assigns.
IN WITNESS WHEREOF this Agreement is executed by the parties the 17th day
of September, 1996.
USX TLC, ET AL.
United States Exploration, Inc.
By: /S/ XXXXXX X. XX XXXXXX /S/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
USX Operating Co., Inc.
By: /S/ XXXXXX X. XX XXXXXX /S/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Producers Service Argas, Inc.
Incorporated
By: /S/ XXXXXX X. XX XXXXXX By: /S/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx,
President
Performance Petroleum
Corporation
By: /S/ XXXXXX X. XX XXXXXX
--------------------------------
Pacific Osage, Inc.
By: /S/ XXXXXX X. XX XXXXXX
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