IMPERIAL PETROLEUM, INC.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
(000) 000-0000 - Phone
(000) 000-0000 - Facsimile
February 1, 2005
Xx. Xxxxxx X. Xxxx, President United Heritage Corporation UHC Petroleum
Corporation UHC New Mexico Corporation 0 X. Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Re: Change of Operator and Operations Management
Texas and New Mexico
Dear Xxxxxx:
United Heritage Corporation ("UHC") and Imperial Petroleum, Inc. ("Imperial")
have entered into a Merger Agreement dated October 14, 2004 (the "Merger
Agreement") under which Imperial will be merged into UHC. In order to facilitate
the anticipated merger, we have agreed that it would be helpful if UHC's
subsidiaries, UHC Petroleum Corporation and UHC New Mexico Corporation, become
the named operator of the Imperial xxxxx located in Texas and New Mexico and if
Xxxxxxx X. Xxxxxx began overseeing the operation of the properties owned by UHC
Petroleum Corporation in Texas, and UHC New Mexico Corporation in New Mexico
("UHC Properties"). The purpose of this letter is to reduce to writing our
agreement concerning these matters.
1
1. Change of Operator. Imperial, UHC Petroleum Corporation and UHC New Mexico
Corporation agree to execute and file with the appropriate agencies in Texas and
New Mexico the forms necessary to change the named operator of the xxxxx owned
by Imperial in Texas to UHC Petroleum Corporation and for the xxxxx owned by
Imperial in New Mexico to UHC New Mexico Corporation. UHC, or its respective
subsidiary, has the necessary plugging bonds or other financial surety
instruments filed with the respective state agencies to enable it to be named as
operator of the Imperial Xxxxx in Texas and New Mexico or will make arrangements
to file the appropriate bonds or other financial surety instruments necessary to
approve the transfer of operations. Notwithstanding the transfer of operations,
Imperial will continue to be responsible for the actual operations of the
properties including, but not limited to, the responsibility for filing of all
required forms and other information with the state agencies of Texas and New
Mexico, the payment of all costs and expenses incurred in operations, the
payment of all royalties and the performance of all obligations under its
leases, operating agreements and other agreements related to the properties,
provided, however, the filings with state agencies will be made in the names of
the respective UHC operating subsidiaries. UHC has guaranteed Imperial's
application for a plugging bond with the State of Louisiana in the amount of
$415,000. Xxxxxxxx agrees that if the "Merger Agreement" is not completed, for
any reason, that it will take the appropriate steps to remove UHC from any
responsibility, financial or otherwise, pertaining to this plugging bond with
the State of Louisiana. Imperial will do this within ten (10) days of
notification from UHC that the Merger Agreement will not be completed.
2
2. Imperial has approximately $325,000 on deposit with state agencies in Texas
and New Mexico in connection with it being named as operator of oil and gas
xxxxx in those states. The changing of the operator to UHC subsidiaries will
enable Imperial to obtain a refund of the money on deposit with those states.
3. Xxxxxxx X. Xxxxxx, President of Imperial ("Xxxxxx"), will assume the
responsibility for the management and supervision of the daily operations on all
"UHC Properties" until the merger is completed or this agreement is terminated.
His duties shall include, but shall not be limited to organizing and directing
daily field activities of UHC personnel, planning and implementing work efforts
on the properties, and in general making decisions with respect to the xxxxx of
UHC. Xxxxxx shall make recommendations to UHC for the utilization of the funds
available for work to be performed on UHC New Mexico Corporation's properties.
Xxxxxx may not authorize or undertake any single expenditure on the UHC
Properties costing in excess of $10,000 on a single property, or in the
aggregate exceeding $100,000 per month, without the approval of the appropriate
UHC subsidiary. The appropriate UHC subsidiary will be responsible for paying
for all operations on the UHC Properties and will be entitled to all income from
the UHC Properties during this period.
3
4. Imperial indemnifies and agrees to hold UHC, UHC Petroleum Corporation, UHC
New Mexico Corporation and their respective officers, directors, shareholders
and employees harmless from any and all claims, losses, and liabilities related
to, or connected with, the ownership and operation of the Imperial Properties.
Likewise, XXX agrees to indemnify and hold Imperial and Xxxxxx harmless from any
and all claims, losses, and liabilities with respect to the ownership and
operation of the UHC Properties.
5. Xxxxxxxx agrees to reimburse UHC for any expenses incurred in filing the
change of operator forms and for the increase in UHC's insurance premiums
resulting from it being named as operator of the Imperial Xxxxx. The
reimbursement shall be paid within 10 days from receipt of an invoice for the
premiums and expenses.
6. If the proposed merger is not completed by May 1, 2005, either Imperial or
UHC may terminate this agreement, and upon the termination of this agreement,
the following shall occur:
a. Imperial and UHC Petroleum Corporation or UHC New Mexico Corporation
shall execute and file with the appropriate agencies in the states of Texas and
New Mexico all forms necessary to change the operator of the Imperial xxxxx in
Texas and New Mexico from the respective UHC subsidiaries back to Imperial, and
Imperial shall file the appropriate and necessary bonds or other financial
surety instruments with the appropriate agencies to enable the approval of the
transfer of operations to occur.
4
b. UHC New Mexico Corporation shall repay Imperial any funds due them.
Repayment shall be made within 90 days from the date either party notifies the
other of the termination of this agreement.
7. The parties hereto agree to execute whatever additional instruments and take
whatever additional actions as may be reasonably necessary to carry out the
agreements of the parties set forth herein.
If the foregoing correctly sets forth our agreement, please sign and
return a copy of this letter. A signature sent by facsimile will be considered
binding.
Very truly yours,
Imperial Petroleum, Inc.
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
President
Agreed to and accepted this 1st day of February 2005.
United Heritage Corporation
/s/ Xxxxxx X. Xxxx
-----------------------------------
Xxxxxx X. Xxxx
President
5
UHC Petroleum Corporation
/s/ Xxxxxx X. Xxxx
-----------------------------------
Xxxxxx X. Xxxx
President
UHC New Mexico Corporation
/s/ Xxxxxx X. Xxxx
-----------------------------------
Xxxxxx X. Xxxx
President
6
