EXHIBIT 10.30
MEMORANDUM OF
COMPROMISE AND SETTLEMENT AGREEMENT
This memorandum of a compromise and settlement agreement entered herein
effective on the 4th day of January, 1999 by and between:
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION, a Colorado
corporation, with offices at Lafayette, Louisiana, herein represented by its
duly authorized counsel of record, Xxxxxxx X. Xxxxxx, Ltd., a professional law
corporation, through its chief executive officer, Xx. Xxxxxxx X. Xxxxxx, Xx.,
Esq., sometimes referred to herein as ("ERHC"):
PINE VALLEY EXPLORATION, INC., a corporation with offices at 00000
Xxxxxx Xx., # 000, Xxxxxxxxxx, Xxxxxxxx 00000, herein represented by its duly
authorized counsel of record, Sullivan, Ward, Bone, Tyler & Xxxxx, P.C., through
Mr. A. Xxxxxx Xxxxxxxx, Esq., sometimes referred to herein as ("PVE"):
COCONINO, S.M.A., INC., a corporation with offices at 0000 X. Xxxxxx
Xxxxxxx Xxxx, Xxxx Xxxx, Xxxx 00000, herein represented by its duly authorized
counsel of record, Fabian and Xxxxxxxxx, through Mr. Xxxxxx Xxxxxx Xxxx, Esq.,
sometimes referred to herein as ("COCONINO")
UNITA OIL & GAS, INC., a corporation with offices at 3954 East 000
Xxxxx Xxxx Xxxxxxx 00, Xxxxxxx, Xxxx 00000, herein represented by its duly
authorized counsel of record, Xxxxxx X. Xxx, P.C., through its chief executive
officer, Xx. Xxxxxx X. Xxx, Esq., sometimes referred to herein as ("UNITA")
XXXXX XXXXXXXX, of full age of majority and domiciled in Ballard, Utah,
herein represented by his duly authorized counsel of record, Xxxxxx X. Xxx,
P.C., through its chief executive officer, Xx. Xxxxxx X. Xxx, Esq., sometimes
referred to herein as ("XXXXXXXX"); and
XXXXXX X. XXXXXXX, of full age of majority and domiciled in
------------,----------, herein represented by his duly authorized counsel of
record, Xxxxx & Hosteler, through Xx. Xxxxxxx X. Xxxxxxx, Esq., sometimes
referred to herein as ("XXXXXXX")
all collectively referred to as the parties hereto.
WHEREAS, there is presently pending a binding arbitration proceeding
before the American Arbitration Association in the nature of a civil claim
between some of the parties hereto which has been docketed as Case No.
81-Y-115-0164-98 and in which some of the parties hereto have asserted claims
and/or counterclaims against certain of the other parties hereto all arising out
of that certain agreement between ERHC as Purchaser and COCONINO, UNITA and PVE
as Sellers dated September 29, 1997 as well as certain other subsequent oral and
written agreements between those same parties. The merits of such claims has
been set for hearing before the arbitrator in Salt Lake City, Utah beginning on
January 13, 1999. It is the desire of the parties hereto to compromise and
settle all claims pending between them and this agreement expressing the major
and all necessary terms of the compromise shall be binding upon the parties
hereto from the effective date first above written with the final detailed
version of the written compromise and settlement agreement prepared for the
signatures of the appropriate officers or individuals made parties hereto to be
executed as soon as practical hereafter. Said final settlement agreement shall
also contain general mutual release language to further specify the settlement
and releases effected hereby.
This memorandum of the compromise and settlement agreement shall not,
under any circumstances, be considered as an admission by any of the parties
hereto of any breach of an obligation owed to other parties or the liability of
one to the other for any prior actions or inactions which may have occurred as a
result of the agreement referred to hereinabove between the Purchaser and
Sellers dated September 29, 1997 as well as certain other subsequent oral and
written agreements between such parties.
TERMS OF THE COMPROMISE AND SETTLEMENT AGREEMENT
The foregoing prefatory language is incorporated herein as substantive
terms hereof as if fully restated herein.
1. COMMON OBLIGATIONS OF ERHC
TO COCONINO, PVE, UGO, and XXXXXXX
X.] ERHC has previously issued 500,000 shares of its common capital
stock as part performance of its obligations to purchase certain properties
under the purchase agreement between the Purchaser and Sellers dated September
29, 1997, which contained an SEC Rule 144 Restriction. Certificates for 250,000
shares were issued on October 13, 1997, representing the first installment under
the aforesaid contract and certificates for additional 250,000 shares were
issued December 30, 1997. The aforesaid certificates on each of the two
installments were issued in the proportions specified in the aforesaid purchase
agreement for the installment made at the closing of the purchase agreement as
follows:
12.5% of 99% (30,937.5 shares) to UOG 37.5% of 99% (92,812.5 shares) to
PVE 50.0% of 99% (123,750 shares) to COCONINO
1.0% (2,500 shares) to XXXXXXX
The aforesaid agreement further provided that ERHC guaranteed that each
such share issued would have a net trading value as of the earliest date when
pursuant to the legend and SEC Rule 144 such share would become tradable for at
least $2.00 per share. In the event that the net price for any of the shares
would be less that the guaranteed amount, the Sellers in the aforesaid agreement
at their option could accept sufficient additional SEC Rule 14 shares of ERHC
common capital stock to make up the shortfall, or could demand cash for such
shortfall.
[i] The parties have agreed that the value of the shares as of October
16, 1998, was $0.45 resulting in a $1.55 shortfall as of that date on the first
250,000 previously issued. ERHC agrees to cause this shortfall in the price of
the first 250,000 issued to the parties in the proportions mentioned hereinabove
to be paid and satisfied by the issuance and delivered on January 18, 1999
(effective as of October 16, 1998) of additional shares of SEC Rule 144 common
capital stock aggregating 861.111 shares. The selling parties have accepted this
option of payment of the calculated shortfall of 387,500 in the guaranteed
trading value of the 250,000 shares on October 16, 1998 in lieu of cash.
Additionally ERHC will cause its SEC counsel, Mintmire & Associates, Attn: Xx.
Xxxxxxxx Xxxxxx, 000 Xxxxxxx Xxxxxx Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 to
issue an opinion letter authorizing the transfer agent to lift the Rule 144
restrictive legend from the 250,000 shares previously issued on October 16, 1997
upon presentation to SEC counsel of a copy of the SEC Form 144. Seller's
Representation Letter and Broker's Rule 144 Compliance letter relative to the
transfer of such shares.
[ii] The second installment paid to Sellers by Purchaser consisting of
250,000 shares of common capital stock with a legend contain SEC Rule 144
Restriction dated December 30, 1997, has a shortfall in the guaranteed price as
of December 30, 1998. It is agreed among the parties hereto that the common
capital stock closed on December 30, 1998 at a price of thirty-two (.32) cents.
It is agreed between the parties that the shortfall in the price of the second
250,00 issued to the parties in the proportions mentioned hereinabove is to be
paid and satisfied by the issuance and delivery on January 18, 1999 (affective
as of December 30, 1998) of additional shares of SEC 144 restricted capital
stock aggregating 1,312,500 shares. The selling parties and commission agent
have accepted this option of payment of the calculated shortfall of $420,000 in
the guaranteed minimum trading value of the 250,000 shares on December 30, 1998
in lieu of cash. Additionally ERHC will cause its SEC counsel, Mintmire &
Associates, Attn: Xx. Xxxxxxxx Xxxxxx, 000 Xxxxxxx Xxxxxx Xxxxx 000, Xxxx Xxxxx,
Xxxxxxx 00000 to issue an opinion letter authorizing the transfer agent to lift
the Rule 144 restrictive legend from the 250,000 shares previously issued on
December 30, 1997 upon presentation to SEC counsel of a copy of the SEC Form
144. Seller's Representation Letter and Broker's Rule 144 Compliance letter
relative to the transfer of such shares.
[iii] On January 18, 1999, ERHC shall cause to be issued and delivered
to the Sellers and Xxxxxx X. Xxxxxxx, the commission agent, in the proportions
mentioned in the purchase agreement of September 29, 1997, the balance of
500,000 shares of its common capital stock remaining to be issued with a legend
of SEC Rule 144 restriction, but the same shall be issued so that the shares and
effective date for Rule 144 holding period purposes commences on March 30, 1998
for 250,000 shares and June 30, 1998 for the final 250,000 shares. The shares
issued pursuant to this paragraph shall have the registration rights set forth
in Paragraph 3 of the terms and conditions of this compromise and settlement
agreement.
[iv] On January 18, 1999, should there exist any shortfall in the
guaranteed price for the 500,000 shares of capital stock to be issued in
accordance with Paragraph 1(A)[iii] above, and its average market value (as
defined hereinafter), such shortfall shall be made up with the issuance and
delivery on January 18, 1999 of additional shares of common stock in ERHC in the
same proportions to the Sellers and Xx. Xxxxxx X. Xxxxxxx, the commission agent,
with an SEC Rule 144 Restriction contained in the legend of said certificates.
Average market price on January 18, 1999 shall be determined by an average
closing price using the dates of 1/11/99, 1/12/99, 1/13/99 1/14/99 and 1/15/99,
excluding the highest and lowest of such closing price.
[v] It is understood by and between all parties hereto that upon
conclusion of the signing of the final compromise and settlement agreement by
the parties hereto and closing thereof, the guarantees of minimum stock values
as of any date of trading by the holders thereof shall have been terminated and
satisfied in full by ERHC other than as set forth herein.
B.] [i] ERHC will reimburse COCONINO and PVE for the AAA filing fees of
Five Thousand ($5,000) Dollars and no more upon the date of signing by the
parties hereto and closing of the final settlement agreement. (Payment will be
made by two bank checks, one to COCONINO and one to PVE, each for Two Thousand
Five Hundred ($2,500) Dollars. If AAA does not refund XXXXXXX his AAA filing
fees of Seven Hundred Fifty Dollars ($750) by the date of signing by the parties
hereto and closing of the final settlement agreement, then ERHC will reimburse
XXXXXXX said $750 and no more by bank check (and ERHC shall thereupon be
assigned any right of XXXXXXX to receive such refund from AAA, and XXXXXXX shall
endorse and deliver to ERHC any such refund that he may subsequently receive
from AAA).
[ii] ERHC will, upon the date of signing by the parties hereto and closing
of the final settlement agreement, issue and deliver two unsecured promissory
notes, one to COCONINO and one to PVE, each in the sum of Twelve Thousand Five
Hundred Dollars ($12,500), as reimbursement toward attorneys fees they have paid
their respective attorneys. Said promissory notes shall be in the form of the
"Exhibit A". The notes shall mature and be due in full within six months from
their stated issuance date. The notes shall not bear interest if they paid in
full on or before their stated maturity date. If a note is not paid in full upon
maturity, that note shall bear interest at the rate of six percent (6%) per
annum, accruing from that note's stated maturity date and continuing thereafter
until that note is paid in full. Any partial payments made after a note's stated
maturity date shall first be applied to recoverable expenses, then interest,
then principal on account of that note. ERHC shall not make any payment to
XXXXXXX on account of attorneys fees XXXXXXX may have incurred.
C.] In addition to all of the above, COCONINO, upon the date of signing
by the parties hereto and closing of the final settlement agreement, will be
paid by ERHC by bank check the sum of Twelve thousand, and no/100 ($12,000)
Dollars representing the price for a color copier and fax machine in the
possession of ERHC.
D.] At the date of signing by the parties hereto and closing of the
final settlement agreement, COCONINO and PVE will cause quitclaim deeds and
assignment to be signed by them to ERHC in a reasonable form prepared and
approved by ERHC's counsel, relating to any and all mineral lease agreements
previously assigned to it by UINTA and further than COCONINO will cause a xxxx
of sale to be issued to ERHC relating to the color copier and fax machine in the
possession of ERHC.
E.] Upon signing of the final compromise and settlement agreement by
all parties hereto, the arbitration proceedings presently pending before the
American Arbitration Association shall be suspended by the joint motion of all
parties hereto and the arbitrator shall retain jurisdiction in this matter until
the settlement agreement has been performed in full (including payment of the
promissory notes issued for the attorneys' fees) as well as the expiration of
the applicable SEC Rule 144 holding period to have expired for the common
capital stock to be issued under the terms and conditions of this compromise and
settlement agreement. After all obligations and consideration agreed upon
mutually between the parties have been delivered and such obligations have bee
fully performed and discharged, then the arbitration proceedings shall be
dismissed with full prejudice to all parties.
2. SEPARATE OBLIGATIONS OF ERHC
TO UINTA OIL & GAS, INC., and
XXXXX XXXXXXXX
The Agreement to Purchase between ERHC, COCONINO, PVE AND UINTA dated
September 29, 1997 provided for ERHC to pay to an escrow account the sum of
$250,000 in certified, immediately available funds for the benefit of UNITA to
pay certain of its creditors. The source of the payment to this escrow account
by ERHC was to come from certain funding transactions in progress at the time of
the said agreement which did not close. ERHC was further to reserve in favor of
UINTA from the assignment of all of the Sellers' collective interest in
twenty-two (22) oil, gas and mineral leases a four percent (4%) overriding
royalty interest on the gross production receipts from said leases up to a
maximum sum of $677,000. As a consideration of this compromise and settlement
agreement and without which the same would not have been made, ERHC, UINTA and
XXXXX XXXXXXXX agree as follows:
A.] ERHC shall cause to be issued to UINTA from its authorized capital
stock, common capital stock in lieu of $125,000 cash, which shares shall have
the registration rights set forth in Paragraph 3 of the terms and conditions of
this compromise and settlement agreement, and shall cause to issued to UINTA
additional common capital stock with an SEC Rule 144 restriction in lieu of the
remaining $125,000 cash consideration. The number of shares to be issued shall
be determined by the average closing price on the market quoted for the five
trading days preceding January 18, 1999, (i.e. 1/11/99, 1/12/99, 1/13/99,
1/14/99 and 1/15/99) with elimination of the highest and lowest prices quoted.
The average market value calculated for the stock shall then be
divided into the sum of $250,000 to determine the actual number of free trading
and restricted stock to be issued of said shares as soon as practical following
January 18, 1998 or the signing of the final compromise and settlement agreement
by the parties and closing of the same which ever shall last occur.
B.] UNITA will cause to be assigned to ERHC, in the form approved by
its counsel, all overriding royalty interest (4% of gross production revenues)
in the 22 oil, gas and mineral leases previously assigned to ERHC by UNITA
located in Uintah and Duchesne Counties, Utah. ERHC will cause to be issued to
UNITA restricted (SEC Rule 144 Stock) common capital stock in ERHC having a
value of $677,000 as determined by the average market price under the same terms
and conditions as the restricted stock issued under the preceding paragraph. The
number of shares to be issued shall be determined by the average closing price
on the market quoted for the five trading days preceding January 18, 1999, (i.e.
1/11/99, 1/12/99, 1/13/99, 1/14/99 and 1/15/99) with elimination of the highest
and lowest prices quoted. The average market value calculated for the stock
shall then be divided into the sum of $677,000 to determine the actual number of
restricted stock t be issued in accordance with the terms of this paragraph of
the agreement. This capital stock would be placed in an escrow for the benefit
of UNITA and its creditors whose names and respective amounts due each were
annexed to the purchase agreement dated September 29, 1997. Withdrawals for
satisfaction of creditors would require the joint authorization of ERHC and
UINTA. Should the total of indebtedness be satisfied by payment of stock or its
proceeds, said transfer or sale shall be conducted in accordance with SEC Rule
144. Should the total of indebtedness be satisfied by payment of stock or its
proceeds in an amount less than the total of $677,000, the difference will be
released to UINTA and such transfer or sale shall be conducted in accordance
with SEC Rule 144.
C.] ERHC agrees to replace and release UINTA from all performance or
indemnity bonds which remain outstanding on the properties affected by this
settlement agreement including but not limited to the BLM bond and the twelve
mile wash property and will provide UNITA with proof of such replacement bonds
and release of UINTA as soon as practical following execution of the settlement
agreement by all parties and the closing of the final settlement agreement which
shall be no longer than thirty (30) days following closing. Furthermore, ERHC
agrees to hold UINTA harmless from any liability on such bonds presently
outstanding. In regard to the well on the twelve mile wash lease, which was lost
due to nonpayment of the lease obligation, the same would be bonded by ERHC
within thirty (30) days of the execution of the compromise and settlement
agreement by the parties and closing of the final settlement agreement. ERHC
agrees to hold harmless from all liability for required environmental
remediation services. ERHC will provide UINTA with proof of the bonding.
D.] In regard to the field office building, purchased by ERHC from
Xxxxx Xxxxxxxx and Xxxxxx Xxxxxx individually, ERHC agrees to assume the then
existing debt of approximately $30,000, plus a transfer of 24,000 free trading
shares of common stock of ERHC. At the time the transfer of capital stock was to
take place, the market value thereof was approximately $70,000 or $2.92 per
share. The purchase price for the field office was to be $100,000. The shares
were to be in a proportion of 60% to Xxxxx Xxxxxxxx and 40% to Xxxxxx Xxxxxx.
These transfers did not occur until March of 1998 when the market value of said
shares had dropped to $1.20 per share. ERHC will cause to be issued shares of
its common capital stock, which shares shall have the registration rights set
forth in Paragraph 3 of the terms and conditions of this proportions set forth
herein to make up the shortfall of the value of shares issued in the gross
amount of $41,200.
The number of shares to be issued shall be determined by the average closing
price on the market quoted for the five trading days preceding January 18, 1999,
(i.e. 1/11/99, 1/12/99, 1/13/99, 1/14/99 and 1/15/99) with elimination of the
highest and lowest prices quoted. The average market value calculated for the
stock shall then be divided into the sum of $41,200 to determine the final
number of shares to be issued to Xxxxx Xxxxxxxx and Xxx Xxxxxx.
E.] ERHC will reimburse UINTA for any court costs or filing fee paid by
it in the lawsuit filed in the Eighth District Court, Uintah County, Utah in
cash at the time of the signing of this compromise and settlement agreement b
the parties o the closing date which ever later occurs. ERHC will, upon the date
of signing by the parties hereto and closing of the final settlement agreement,
issue an unsecured promissory to UINTA and XXXXX XXXXXXXX jointly in the maximum
principal sum of $10,000 to be utilized as reimbursement of attorney fees paid
by them collectively to their attorney of record. Xxxxxx X. Xxx, P.C. The note
will be non interest bearing until its maturity and then only at six (6%) and
shall become due six months from its date.
F.] ERHC will cause to be paid to Stripper Operators, Inc., its
invoices for services performed for ERHC between December 1, 1997 to the present
time in the approximate current amount of $18,000 and to Production Service
Company invoices dated between February 1,1998 and to present in the approximate
current amount of $9,000 by transfer of common capital stock in ERHC, which
shares shall have the registration rights set forth in Paragraph 3 of the terms
and conditions of this compromise and settlement agreement in lieu of cash
payment. The number of shares to be issued shall be determined by the average
closing price on the market quoted for the five trading days preceding January
18, 1999, (i.e. 1/11/99, 1/12/99, 1/13/99, 1/14/99 and 1/15/99) with elimination
of the highest and lowest prices quoted. closing price on the market quoted for
the five trading days preceding January 18, 1999, (i.e. 1/11/99, 1/12/99,
1/13/99, 1/14/99 and 1/15/99) with elimination of the highest and lowest prices
quoted. The average market value calculated for the stock shall then be divided
into the sum of $18,000 to determine the final number of shares to be issued to
Stripper Operations, Inc. The average market value calculated for the stock
shall then be divided into the sum of $9,000 to determine the final number of
shares to be issued to Production Service Company. The transfer shall take place
a soon as practical after all filing requirements of SEC have been accomplished
and the shares have been registered in accordance with law by the SEC counsel
for ERHC
G.] Upon signing of the final compromise and settlement agreement by
all parties hereto and the delivery of all considerations mentioned hereinabove,
including receipts and releases of all parties hereto, in such form and content
approved by counsel for ERHC as well as counsel for all other parties hereto,
the arbitration proceeding presently pending before the American Arbitration
Association shall be suspended by joint motion of all parties without prejudice.
The final dismissal of the arbitration proceedings with full prejudice to all
parties therein shall be governed by the provisions of Paragraph 1(E) of this
compromise and settlement agreement. Additionally, if not already accomplished,
immediately upon signing of the final compromise and settlement agreement by all
parties hereto, the civil action pending or dismissed without prejudice in the
Eighth District Court, Uintah County, Utah entitled and bearing Docket Number on
the docket of said Court shall be subject of a complete release for all named
defendants therein by both UINTA and XXXXX XXXXXXXX and dismissed with full
prejudice to all parties named as defendants therein.
3. REGISTRATION RIGHTS
As to the shares of common capital stock to be issued pursuant to Paragraph
2(A), 2(D) and 2(F), ERHC shall cause to be issued as soon as practicable after
the date of signing by the parties and closing of the final settlement
agreement, shares of common capital stock bearing a Rule 144 restrictive legend.
Upon execution of this agreement, ERHC shall include the shares set forth in
Paragraph 1(A)(iii), 2(A), 2(D), and 2(F) in Amendment 3 to its registration
statement on SEC form S-1, Registration Number 333-43919 (the "Registration")
listing the holder thereof as selling shareholders. Upon the effectiveness of
such Registration, said shares will be fully registered and the holder shall be
entitled to submit such shares to the transfer agent for replacement shares
without legend, or notify the transfer agent at the time of sale that such
shares are fully registered and may be sold without restriction.
THIS MEMORANDUM IS INTENDED TO REPRESENT THE ENTIRE COMPROMISE AND SETTLEMENT
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE AMENDED, MODIFIED OR CHANGED IN ANY
SUBSTANTIAL AND SUBSTANTIVE MANNER WITHOUT THE WRITTEN CONSENT OF ALL PARTIES
HEREIN. THIS AGREEMENT IS FURTHER INTENDED TO BE BINDING ON ALL PARTIES HEREIN,
THEIR HEIRS, AGENTS, ASSIGNS, LEGAL REPRESENTATIVES AND SUCCESSORS.
This memorandum compromise and settlement agreement may be executed in
counterparts each of which shall be an original but all of which shall
constitute but one agreement.
THUS done and signed at Lafayette, Louisiana this day of January, 1999.
WITNESS: ENVIRONMENTAL REMEDIATION HOLDING
CORPORATION, through its counsel,
Xxxxxxx N, Xxxxxx
Ltd.
/S/ Xxxxxxxx L Desomiaux by: /S/ Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxxx, Xx.
/S/ Lulu L Bendila
THUS done and signed at Salt Lake City, Utah this day of January, 1999.
WITNESS: COCONINO, S.M.A., INC., through its counsel, Fabian
and Xxxxxxxxx, A Professional Law Corp.
/S/ Xxxxxx X Xxxxxx by: /S/ Xxxxxx Xxxxxx Xxxx
Xxxxxx Xxxxxx Xxxx, Esq.
/S/ Xxxxx X Xxxxxxxx
THUS done and signed at Southfield, Michigan this day of January, 1999.
WITNESS: PINE VALLEY EXPLORATION, INC., through its
counsel, Sullivan, Ward, Bone, Tyler & Xxxxx, P.C.
/S/ Xxxxx Xxx Xxxxxxx by: /S/ Xxxxxx Xxxxxxxx
A. Xxxxxx Xxxxxxxx, Esq.
/S/ Xxxxxxxxxx X Xxxxxxx
THUS done and signed at Vernal, Utah this day of January, 1999.
WITNESS: UINTA OIL AND GAS, INC., and XXXXX XXXXXXXX,
individually, through their counsel, Xxxxxx X. Xxx, P.C.
/S/ Xxxxx Xxxxx by: /S/ Xxxxxx X. Xxx
Xxxxxx S. Xxx, Esq..
/S/ Xxxxx Xxxxxxx
THUS done and signed at Denver, Colorado this day of January, 1999.
WITNESS: XXXXXX X. XXXXXXX, through his counsel of record,
Xxxxx & Xxxxxxxxx, LLP
/S/ Xxxx Xxxxx by: /S/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, Esq.
