Item 1. Legal Proceedings
Item
1. Legal Proceedings
On March
6, 2007, the Company entered into an Agreement of Sale and Purchase with Orbis
Operating, LLC ("Orbis"), in which it agreed to purchase a substantial portion
of the property Orbis acquired under a previous R&S Sale Agreement. Part of
the purchase price included a Promissory Note in the amount of $350,000.00.
After alleged numerous defaults by the Company, Orbis filed suit on March 10,
2008 in United States District Court in Bastrop County, Texas (Cause No.
26,952). The parties then entered into negotiations and reached agreement
through a Loan Workout and Security Agreement on April 11, 2008. Orbis filed a
Rule 11 Agreement with the Bastrop County court whereby it shall dismiss the
suit with prejudice upon the full performance of USA Superior.
The terms
of the settlement included:
¡¡è
The
Company paying $50,000 cash, in which all was allocated towards
Orbis'legal fees
¡¡è
Principal
Balance = $310,000
¡¡è
The
Company is to make monthly payments on the 15 th
day in the amount of $15,000 plus accrued interest, (6 payments for
May-Oct)
¡¡è
The
Company is to make a final payment of entire Principal ($202,000) on
October 15, 2008
¡¡è
Once
the Company fulfills obligation to plug the Gabriel wells it assumed (must
be done by July 31, 2008), it will be given a $60,000 credit towards final
Principal payment
Outside
of the Orbis settlement disclosures above, the Company knows of no material,
active or pending legal proceedings against the Company nor are we involved as a
plaintiff in any material proceeding or pending litigation. There are no
proceedings in which any directors, officers, or affiliates, or any registered
or beneficial shareholder, is an adverse party or has material interest adverse
to the Company's interest.
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