SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Earliest Reported Events March 17, 1998
ISRAMCO, INC.
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(Exact name of registrant as specified in charter)
Delaware
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(State of Incorporation)
1770 St. James Place, Houston, Texas 77056 Suite 607
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(Address of principal executive offices)
713-621-3882
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(Telephone number)
0-12500 13-3145265
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Commission File No. IRS Employer ID No.
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Item 5. Other Material Events
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An arbitration proceeding commenced before the American Arbitration
Association by Reuven Hollo, Jay Resources Corporation, Jay Natural Resources
Inc., Jay Petroleum LLC and Jay Management Company LLC, as Claimants against
Isramco, Inc., NIR Resources Inc., Jay Petroleum LLC and Jay Management Company
LLC, as Respondents, identified by Case No. 70 T 198 00227 97 has been resolved
pursuant to a Settlement Agreement and Release, a copy of which is attached
hereto as Exhibit A. The Claimants are hereinafter referred to as the "Hollo
Group" and the Respondents are hereinafter referred to as the "Isramco Group".
Pursuant to the terms of the Settlement Agreement and Release, the Hollo
Group has agreed to assign all of their right, title and interest in Jay
Petroleum LLC and Jay Management Company LLC including, without limitation,
their complete ownership interest and any and all rights to undistributed
profits to Isramco, Inc. in consideration for Isramco, Inc. (i) paying to Jay
Resources Corporation and Jay Natural Resources Inc. the sum of $255,000, (ii)
agreeing to assume any tax liabilities or tax burdens arising solely from such
undistributed profits, and (iii) agreeing to assume a debt of $69,754 reflected
as an accounts receivable of Jay Resources Corporation owed to Jay Petroleum
LLC.
In addition, the Isramco Group has agreed to use their best efforts,
without cost, to effect a removal of the Hollo Group as a guarantor and/or
co-maker of any loan of Jay Petroleum LLC and/or Jay Management Company LLC.
The effective date of the Settlement Agreement is December 31, 1997.
As a result of the Settlement Agreement and Release, Isramco, Inc. will
increase its membership interest in Jay Petroleum LLC to 100% and its membership
interest in Jay Management Company LLC to 65%.
The above description of the Settlement Agreement and Release is intended
solely to summarize the salient provisions of the Settlement Agreement and
Release. The Settlement Agreement and Release attached hereto as Exhibit A
should be read in its entirety for a complete statement of all of the terms and
conditions of said Agreement.
Item 7. Exhibits
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Exhibit A - Settlement Agreement and Release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Isramco, Inc.
(registrant)
March 25, 1998 By: /s/ Haim Tsuff
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(date) Haim Tsuff, Chairman of the Board
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BEFORE THE AMERICAN ARBITRATION ASSOCIATION
REUVEN HOLLO, ss.
JAY RESOURCES CORPORATION, ss.
JAY NATURAL RESOURCES, INC., ss.
JAY PETROLEUM, L.L.C., and ss.
JAY MANAGEMENT COMPANY, L.L.C., ss.
ss.
Claimants, CASE NO. 70 T 198 00227 97
ss.
vs. ss.
ss.
ISRAMCO, INC., ss.
NIR RESOURCES, INC., ss.
JAY PETROLEUM, L.L.C., and ss.
JAY MANAGEMENT COMPANY, L.L.C., ss.
ss.
Respondents. ss.
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SETTLEMENT AGREEMENT AND RELEASE
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FOR AND IN CONSIDERATION OF:
o A complete assignment by HOLLO GROUP, as defined below, of all of their
right, title, and interest in Jay Petroleum, L.L.C. and Jay Management
Company, L.L.C., including, without limitation, their complete
ownership interest, and any and all right to undistributed profits; and
o The sum of Two Hundred Fifty-five Thousand and No/100 Dollars
($255,000) payable at closing by ISRAMCO GROUP, as defined below, to
Jay Resources Corporation and Jay Natural Resources, Inc.; and
o The promises and covenants contained herein.
ISRAMCO GROUP, Jay Petroleum, L.L.C., Jay Management Company, L.L.C., and HOLLO
GROUP, as defined below, contract and agree as follows:
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1. Definitions. The following defined terms when used in this document shall
have the meaning stated:
a. The term "ISRAMCO GROUP" means Isramco, Inc., Naphtha Israel Petroleum
Corp., Ltd., NIR Resources, Inc., and their successors, assigns,
parent corporation(s), sister corporation(s), affiliate
corporation(s), subsidiary corporation(s), officers, directors,
employees, managers, attorneys, agents, general partners, limited
partners, shareholders, investors, joint venturers, insurers, and all
other persons or entities, natural or corporate, in privity with them
or any other person or entity deriving rights from them, and in all
other capacities in which they have or might have asserted claims
arising from the incident(s) set forth in the pleadings filed in "THE
SUIT," as defined below.
b. The term "HOLLO GROUP" means Reuven Hollo, Jay Resources Corporation,
Jay Natural Resources, Inc., Sigma Energy Corp., Sigma General
Partnership, and their successors, assigns, parent corporation(s),
sister corporation(s), affiliate corporation(s), subsidiary
corporation(s), officers, directors, employees, managers, attorneys,
agents, general partners, limited partners, shareholders, investors,
joint venturers, insurers, and all other persons or entities, natural
or corporate, in privity with them or any other person or entity
deriving rights from them, and in all other capacities in which they
have or might have asserted claims arising from the incident(s) set
forth in the pleadings filed in "THE SUIT," as defined below.
c. The term "ARIES GROUP" means Aries Resources, L.L.C., Ariadne
Minerals, Inc., Three L Minerals, Inc., Finger Interest No. 1, Ltd.,
Hamman General Partnership, and their successors, assigns, parent
corporation(s), sister corporation(s), affiliate corporation(s),
subsidiary corporation(s), officers, directors, employees, managers,
attorneys, agents, general partners, limited partners, shareholders,
investors, joint venturers, insurers, and all other persons or
entities, natural or corporate, in privity with them or any other
person or entity deriving rights from them.
d. The term "THE SUIT" means the lawsuit, including any cross-claims,
counter- claims, or interventions, in (i) Case No. 70 T 198 00227 97,
filed Before the American Arbitration Association and styled Reuven
Hollo, Jay Resources Corporation, Jay Natural Resources, Inc., Jay
Petroleum, L.L.C., and Jay Management Company, L.L.C. v. Isramco, Inc.
and NIR Resources, Inc., and (ii) Cause No. 97-45204; Isramco, Inc.,
N.I.R. Resources, Inc., Jay Petroleum, L.L.C. and Jay Management
Company, L.L.C. v. Reuven Hollo, Jay Resources Corporation, and Jay
Natural Resources , Inc.; in the 334th Judicial District Court of
Harris County, Texas.
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e. The term "CLAIMS" means any and all theories of recovery of whatever
nature, whether known or now unknown, whether past, present or future,
whether contingent, prospective or matured, recognized by the law of
any jurisdiction, domestic or foreign, and comprehensively includes,
but is not limited to, all causes of action, demands, claims, debts,
obligations, liens, actions, liability, suits, and judgments, whether
based in contract or tort, whether arising in equity or under the
common law or any contract or under any statute or otherwise, which
were asserted or might have been asserted in THE SUIT, and any other
dispute among the parties hereto. The term "CLAIMS" includes, for
example, but is not limited to (i) all theories pled or that might
have been pled arising from the incidents set forth in the pleadings
filed in THE SUIT; (ii) any claim of breach of the Regulations or
First Restated Regulations of Jay Petroleum, L.L.C. or Jay Management
Company, L.L.C.; (iii) any claim regarding usurpation of opportunity
or breach of oral contract related to the Bellwether Properties, as
the parties defined and understood that term in the pleadings and
discovery in the suit, or any other property; (iv) any claim of breach
of loyalty or fiduciary duty; (v) any claim regarding money owned by
HOLLO GROUP to Jay Petroleum, L.L.C.; (vi) any claim of improper
reduction of HOLLO GROUP's interest in Jay Petroleum, L.L.C. or Jay
Management Company, L.L.C.; (vii) any claim for wrongful termination
or termination without cause of HOLLO GROUP; (viii) any claim of
tortious interference against ARIES GROUP; (ix) any claim of failure
to distribute or disclose profits of Jay Petroleum, L.L.C. or Jay
Management Company, L.L.C.; (x) any claim of failure to provide
documents, reports, or information; (xi) any claim of failure to sell
Jay Petroleum, L.L.C. or Jay Management Company, L.L.C., or any
portion thereof, to any third-party buyer, or any claim of attaching
conditions to any such proposed sale; (xii) any claim of failure to
substitute HOLLO GROUP as tax matters member; and (xiii) any claim of
wrongful management. This term shall include any theories or rights of
recovery whether held directly, by assignment, or by judgment of any
court.
f. The term "DAMAGES" means any and all declaratory or monetary elements
of relief or recovery of whatsoever nature whether known or now
unknown, recognized by the law of any jurisdiction and comprehensively
includes, but is not limited to, actual damages of every description
(whether direct, consequential, incidental or otherwise), such as
economic loss, lost profits, diminution in value, property loss,
personal injury, mental or emotional injury, or reputation loss;
statutory, multiple, treble, punitive or exemplary damages; attorneys'
fees; prejudgment or post judgment or other interest; equitable,
declaratory or injunctive relief; expenses; and costs of court. The
term DAMAGES also includes, but is not limited to, all elements of
recovery or relief pled, or that might have been pled, in THE SUIT.
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2. Complete and General Mutual Release. The parties hereto presently, fully,
finally, and forever release, acquit, and discharge each other, ARIES
GROUP, Jay Petroleum, L.L.C. and Jay Management Company, L.L.C., from any
and all CLAIMS, and from any and all DAMAGES.
THIS RELEASE IS SPECIFICALLY INTENDED TO OPERATE AND BE APPLICABLE EVEN IF
IT IS ALLEGED, CHARGED OR PROVED THAT ALL OR SOME OF THE CLAIMS OR DAMAGES
RELEASED ARE SOLELY AND COMPLETELY CAUSED BY THE ACTS OR OMISSIONS OF ISRAMCO
GROUP, HOLLO GROUP, ARIES GROUP, JAY PETROLEUM, L.L.C. AND/OR JAY MANAGEMENT
COMPANY, L.L.C. REGARDLESS OF WHETHER SUCH ACTIONS OR OMISSIONS CONSTITUTE
NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL CONDUCT, BREACH OF CONTRACT, CONDUCT
SOUNDING IN STRICT TORT LIABILITY, OR OTHERWISE.
3. Covenant Not to Sue. The parties hereto agree and covenant not to sue,
bring any action, or prosecute each other, ARIES GROUP, Jay Petroleum,
L.L.C. and/or Jay Management Company, L.L.C. on any CLAIMS, or for any
DAMAGES, within the Release stated above.
4. Transfer of Documents and Operations. HOLLO GROUP agrees to search in good
faith its files, books, and records to determine if any original
operational, production, accounting, engineering, or any other documents
related to the management and operations of Jay Petroleum, L.L.C. and/or
Jay Management Company, L.L.C. remain in HOLLO GROUP's possession, custody,
or control. If so, HOLLO GROUP will deliver originals of any such documents
to the Manager of Jay Petroleum, L.L.C. immediately. Furthermore, HOLLO
GROUP agrees to do all acts and things necessary to complete and to
effectuate a full transfer of management and operations of Jay Petroleum,
L.L.C. and Jay Management Company, L.L.C. to the current manager. To the
extent an inspection or review of HOLLO GROUP's files, books, and records
or interview of HOLLO GROUP's employees is necessary to complete and to
effectuate the transfer of management and operations, for example, in
connection with an audit, HOLLO GROUP will, in good faith, make its files,
books, records, and employees available for such review and interview upon
five (5) day's notice. HOLLO GROUP will make such employees available for
six hours without charge and thereafter, if necessary, HOLLO GROUP will be
reimbursed for its time at the rate of $75 per hour.
5. Tax Liabilities and Burdens. As part of this settlement, all undistributed
profits of Jay Petroleum, L.L.C. and Jay Management Company, L.L.C. belong
to ISRAMCO GROUP and HOLLO GROUP waives any claim to same. ISRAMCO GROUP
agrees to assume any tax liabilities or tax burdens arising solely from any
such undistributed profits of fiscal years 1997 and 1998. This shall not be
construed as an assumption by ISRAMCO GROUP of any other tax liabilities or
tax burdens of HOLLO GROUP. Specifically, any other tax liabilities or tax
burdens resulting from related or unrelated profits of HOLLO GROUP are not
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<PAGE>
assumed by ISRAMCO GROUP. The parties agree to work in good faith to
minimize any tax liabilities or tax burdens of either party.
6. Transfer of HOLLO GROUP's Interests in Jay Petroleum, L.L.C. and Jay
Management Company, L.L.C. to Isramco, Inc.. The parties agree to effect a
full assignment and transfer of HOLLO GROUP's interests in Jay Petroleum,
L.L.C. and Jay Management Company, L.L.C. to Isramco, Inc. This assignment
will include all of HOLLO GROUP's legal, equitable, or beneficial ownership
interests and any claim to undistributed profits in Jay Petroleum, L.L.C.
and Jay Management Company, L.L.C. The parties agree to execute formal
documentation of this transfer. The formal documentation of this transfer
will include representations, warranties and indemnities regarding HOLLO
GROUP's interests being free of any and all mortgages, liens or other
encumbrances. The effective date of this transfer will be December 31,
1997.
7. Loan Guarantees. The parties will use their best efforts, excluding payment
of any related expenses, to effect a removal of HOLLO GROUP as a guarantor
and/or co-maker of any loan documents of Jay Petroleum, L.L.C. and/or Jay
Management Company, L.L.C. The parties recognize that the lender's consent
and approval must be obtained to effect this removal.
8. Assumption of Certain Debt. The December 31, 1996 audited financial
statements of Jay Petroleum, L.L.C. reflect an account receivable of Jay
Resources Corp. owed to Jay Petroleum, L.L.C. in the amount of $69,754. As
part of this settlement, Isramco, Inc. agrees to assume that debt.
9. Warranties. The parties agree, represent and warrant:
a. That the covenants herein are the sole consideration for this
Settlement Agreement and Release and are in full satisfaction of all
DAMAGES and of all CLAIMS, as described in the Complete Release above;
b. That the individuals signing below for the parties are legally and
mentally competent to sign this Settlement Agreement and Release and
are duly authorized and empowered to bind the parties;
c. That the parties will promptly cause an agreed take-nothing judgment
or other dismissal with prejudice to be entered in THE SUIT;
d. That this instrument is executed with the parties' full knowledge and
understanding of its terms and meanings;
e. That this instrument is executed on the parties' own judgment and upon
the advice of their respective attorneys of record;
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f. That before executing this agreement, the parties became fully
informed of its terms, contents, conditions, and effect;
g. That no promise or representation of any kind has been made, except as
is expressly stated in this Settlement Agreement and Release.
h. That the parties will bear their own costs and all other expenses
incurred in connection with THE SUIT, except as set forth in this
Settlement Agreement and Release or in the agreed Take-Nothing
Judgment or dismissal papers in connection herewith;
i. That the parties possess all requisite consents, approvals, or
authorizations to execute and deliver this Settlement Agreement and
Release.
j. That the parties have not assigned any portion of their causes of
action in connection with the occurrences and transactions made the
basis of THE SUIT or causes of action which have been asserted or
might have been asserted in THE SUIT to any persons other than their
attorneys of record shown below;
k. That this Settlement Agreement and Release is not and shall never be
construed as an admission of liability or fault or wrongdoing by any
party, each of whom specifically denies any liability or fault or
wrongdoing, but instead reflects a settlement, and accord and
satisfaction of contested, doubtful and disputed matters, by which the
parties have forever bought their peace; and
l. That the parties and their attorneys will hold confidential, and will
not disclose to any other person or entity, save only pursuant to
subpoena or court order or other legal requirement, such as disclosure
requirements of the U.S. Securities and Exchange Commission and/or any
similar foreign securities disclosure requirements, the fact of this
Settlement Agreement and Release, the sum paid in consideration
therefor, or the facts alleged in THE SUIT.
10. The date of this Agreement is March ______, 1998, and it is effective as of
December 31, 1997.
This Settlement Agreement and Release may be executed in multiple
counterparts all of which shall constitute a single agreement, and contains the
entire agreement of the parties, all prior negotiations, statements, or
representations being superseded and displaced hereby. All of the definitions,
provisions, and terms hereof are contractual and are not mere recitals.
EXECUTED this 17th day of March, 1998.
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<PAGE>
ISRAMCO, INC.
By: /s/ D. Avner
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Name: Daniel Avner
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Title: President
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NAPHTHA ISRAEL PETROLEUM CORP.,
LTD.
By: /s/
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Name:
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Title: Manager
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NIR RESOURCES, INC.
By: /s/
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Name:
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Title: Manger
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/s/ Reuven Hollo
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Reuven Hollo, Individually
JAY PETROLEUM, L.L.C.
By: /s/ J.M. Cutler
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Name: J.M. Cutler
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Title: Manager
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<PAGE>
JAY MANAGEMENT COMPANY, L.L.C.
By:
--------------------------------
Name:
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Title: Manager
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JAY RESOURCES CORPORATION
By: /s/ Reuven Hollo
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Name: Reuven Hollo
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Title: President
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JAY NATURAL RESOURCES, INC.
By: /s/ Reuven Hollo
--------------------------------
Name: Reuven Hollo
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Title: President
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