EXHIBIT 10.10
RELEASE AND TERMINATION AGREEMENT
This Release and Termination Agreement (the "Agreement") is executed as of
the 24th day of September, 1997, by and among South Coast Exploration Company
("South Coast"), Weisser, Johnson & Co. Capital Corporation ("Weisser Capital"),
Weisser, Johnson & Co. ("Weisser Co."), Ron A. Krenzke ("Krenzke"), Craig S.
Davis ("Davis") and Philip V. Duggan ("Duggan").
RECITALS
WHEREAS, as of September 1, 1995, South Coast, Weisser Co., Krenzke, Davis
and Duggan entered into an Option Agreement (the "Option Agreement") in which
Krenzke, Davis and Duggan granted Weisser Co. an option to purchase certain
shares of South Coast;
WHEREAS, as of December 16, 1996, South Coast and Weisser Capital entered
into a Letter Agreement (the "Letter Agreement") which specified agreements
between the parties concerning the assistance of Weisser Capital to South Coast
as its financial advisor in connection with possible business combinations and
transactions contemplated by South Coast;
WHEREAS, pursuant to Section 10.02(i) of the Acquisition Agreement and Plan
of Organization (the "Acquisition Agreement") dated as of August 19, 1997, by
and among Araxas Energy Corporation, an Oklahoma corporation, Araxas Holdings,
Inc., and the other parties named in the Acquisition Agreement, South Coast
agreed that prior to the closing of the Acquisition Agreement it would have the
Option Agreement and Letter Agreement waived, released, settled or discharged
without any payment or other consideration paid or incurred by the South Coast
Entities (as defined in the Acquisition Agreement) (except as contemplated in
the Disclosure Schedule of the South Coast Entities); and
WHEREAS, Weisser Co. and Weisser Capital have agreed to release and
terminate the Option Agreement and the Letter Agreement, respectively, subject
to the conditions of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Weisser Co. and Weisser Capital, respectively, hereby terminate the
Option Agreement and the Letter Agreement and release and discharge all of their
rights and interests held by them pursuant to the provisions of the Option
Agreement and the Letter Agreement and all documents relating to the
transactions contemplated by such agreements.
2. In exchange for the release of the Option Agreement and the Letter
Agreement Krenzke, Davis and Duggan agree to grant Weisser Co. an option (the
"Option") to purchase certain shares of Common Stock of XPLOR Energy, Inc.
("XPLOR") received by Krenzke, Davis and Duggan pursuant to the transactions
contemplated in the Acquisition Agreement. This Option expires on September 1,
2002 and represents the right to purchase an aggregate total of 8,658 shares of
the Common Stock of XPLOR from Krenzke, Davis and Duggan. The terms of the
Option are specifically set forth in a new option agreement executed by Krenzke,
Davis, Duggan and Weisser Co. attached to this Agreement as Exhibit "A."
3. South Coast shall also pay Weisser Capital a fee of $150,000 for
advising fees owed to Weisser Capital pursuant to the Letter Agreement, which
fee shall be payable at the closing of the Credit Agreement (the "Credit
Agreement") between Araxas SPV-1, Inc. and Credit Lyonnais New
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York Branch dated as of September 24, 1997, or at such other time as agreed to
between the parties to this Agreement.
4. South Coast shall also pay to Weisser Capital on each October 1,
January 1, April 1, and July 1, beginning on October 1, 1997 and until the
Common Stock of XPLOR is either traded on a public securities exchange or this
Section 4 is terminated upon reasonable notice to Weisser Capital: (a) $25,000
and (b) all reasonable out-of-pocket expenses incurred by Weisser Capital in
connection with its transactions with South Coast.
5. Weisser Co. agrees to grant its proxy to Krenzke to exercise voting
rights on any XPLOR Common Stock received by exercise of the Option until
December 15, 1998, or the date on which the Common Stock of XPLOR is traded on a
public securities exchange. Until the time XPLOR's Common stock is publicly
traded, Weisser Co. shall also grant to Krenzke, Davis and Duggan, in the event
that Weisser Co. decides to sell any or all of its interests in any XPLOR Common
Stock held by it, a right to purchase the interests offered for sale at the
sales price specified by Weisser Co. on a pro rata basis. Each of Krenzke,
Davis and Duggan will have thirty (30) days from Weisser Co.'s written notice of
the intention to sell and at least fifteen (15) days from Weisser Co.'s written
notice of the sale price to commit to purchase the interests, and an additional
thirty (30) days from such commitment to pay the purchase price to Weisser Co.
If any of Krenzke, Davis or Duggan declines to purchase his pro rata portion of
the offered interests, Weisser Co. may sell such interests left unpurchased at
or above the specified sales price, but not at a lower price.
6. South Coast agrees to continue to indemnify Weisser Capital in
accordance with the indemnification provision (the "Indemnification Provisions")
attached to this Agreement as
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Exhibit "B," which indemnification Provisions are incorporated herein and made a
part hereof for all purposes.
7. The parties agree that any dispute hereunder, other than matters
relating to the indemnification provisions attached hereto, shall be submitted
to arbitration under the commercial arbitration rules of the American
Arbitration Association. The decision of such arbitrator or panel of
arbitrators shall be conclusive and binding upon the parties. Such proceeding
shall be promptly entered into in Houston, Texas and may be governed by and
conducted in accordance with the laws of the State of Texas.
8. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE FULLY
PERFORMED THEREIN.
9. The benefits of this Agreement shall inure to the respective successors
and assigns of the parties hereto and of the indemnified parties hereunder and
their successors and assigns and representatives, and the obligations and
liabilities assumed in this Agreement by the parties hereto shall be binding
upon their respective successors and assigns.
10. For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. Each such counterpart shall
be, and shall be deemed to be, an original instrument, but all such counterparts
taken together shall constitute one and the same Agreement. This Agreement may
not be modified or amended except in writing signed by the parties hereto.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written by the parties or the authorized representative of the
parties.
WEISSER, JOHNSON & CO. CAPITAL CORPORATION
By: /s/ Frank M. Weisser
-----------------------------------
Frank M. Weisser, Managing Director
WEISSER, JOHNSON & CO.
By: /s/ Frank M. Weisser
-----------------------------------
Frank M. Weisser, Managing Director
SOUTH COAST EXPLORATION COMPANY
By: /s/ Ron A. Krenzke
-----------------------------------
Ron A. Krenzke, President
/s/ Craig S. Davis
-----------------------------------
Craig S. Davis
/s/ Ron A. Krenzke
-----------------------------------
Ron A. Krenzke
/s/ Philip V. Duggan
-----------------------------------
Philip V. Duggan
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EXHIBIT "B"
INDEMNIFICATION PROVISIONS
South Coast Exploration Company (the "Company") agrees to indemnify and
hold harmless, Weisser, Johnson & Co. Capital Corporation (the "Advisor")
against any and all losses, claims, damages, liabilities, obligations,
penalties, judgments, awards, costs, expenses and disbursements (and any and all
actions, suits, proceedings and investigations in respect thereof and any and
all legal and other costs, expenses or disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise), including, without
limitation, the costs, expenses and disbursements, as and when incurred, of
investigations, preparing or defending any such action, suit, proceeding or
investigation (whether or not in connection with litigation in which the Advisor
is a party), directly or indirectly, caused by, relating to, based upon, arising
out of or in connection with (a) the Advisor acting for the Company, including,
without limitation, any act or omission by the Advisor in connection with its
acceptance of or the performance or nonperformance of its obligations under the
agreement dated December 16, 1996, between the Advisor and the Company, as it
may be amended from time to time (the "Agreement"), (b) any untrue statement or
alleged untrue statement of a material fact contained in, or omissions or
alleged omissions from information furnished by the Company to the Advisor;
provided, however, such indemnity agreement shall not apply to any portion of
any such loss, claim, damage, obligation, penalty, judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of the
Advisor. The Company also agrees that the Advisor shall not have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company or
to any person (including, without limitation, Company shareholders) claiming
through the Company for or in connection with the engagement of the Advisor,
except to the extent of any such liability that is found in a final judgment by
a court of competent jurisdiction (not subject to further appeal) to have
resulted primarily and directly from the Advisor's gross negligence or willful
misconduct.
These Indemnification Provisions shall be in addition to any liability
which the Company may otherwise have to the Advisor and shall extend to
affiliated entities, directors, officers, employees, legal counsel, agents and
controlling persons (within the meaning of the federal securities laws). All
references to the Advisor in these Indemnification Provisions shall be
understood to include any and all of the foregoing.
If any action, suit, proceeding or investigation is commenced, as to which
the Advisor proposes to demand indemnification, it shall notify the Company with
reasonable promptness; provided, however, that any failure by the Advisor to
notify the Company shall not relieve the Company from its obligations hereunder.
The Advisor shall have the right to retain counsel of its own choice to
represent it, and the Company shall pay the fees, expenses and disbursements of
such counsel; and such counsel shall, to the extent consistent with its
professional responsibilities,
cooperate with the Company and any counsel designated by the Company. The
Company shall be liable for any settlement of any claims against the Advisor
made with the Company's written consent, which consent shall not be unreasonably
withheld. The Company shall not, without the prior written consent of the
Advisor, settle or compromise any claim, or permit a default or consent to the
entry of any judgment in respect thereof, unless such settlement, compromise or
consent includes, as an unconditional item thereof, the giving by the claimant
to the Advisor of an unconditional release from all liability in respect of such
claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one hand, and the Advisor, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the indemnified
person may be subject in accordance with the relative benefits received by the
Company, on the one hand, and the Advisor on the other hand, and also the
relative fault of the Company, on the one hand, and the Advisor on the other
hand, in connection with the statements, acts or omissions which resulted in
such losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements and the relevant equitable
considerations shall also be considered. No person found liable for a
fraudulent misrepresentation shall be entitled to contribution from any person
who is not also found liable for such fraudulent misrepresentation.
Notwithstanding the foregoing, the Advisor shall not be obligated to contribute
any amount hereunder that exceeds the amount of fees previously received by the
Advisor pursuant to the Agreement.
Neither termination nor completion of the engagement of the Advisor
referred to above shall affect these Indemnification Provisions which shall then
remain operative and in full force and effect.
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