COMPROMISE SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
EXHIBIT
10.20
COMPROMISE
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
This
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS (the “Agreement”)
is entered into by and between Chancellor Group, Inc., Gryphon Production
Company, LLC, and Gryphon Field Services, LLC (the “Chancellor Parties”) and New
Concept Energy, Inc. (“NCE”), each of whom stipulates and agrees to the
following:
I.
Recitals
A. The
Chancellor Parties filed bankruptcy in October 2007, in the Amarillo Division
of
the Bankruptcy Court for the Northern District of Texas under the following
case
numbers:
| 1. |
Case
No. 07-20512-RLJ-11, In
re Chancellor Group, Inc.;
|
| 2. |
Case
No. 07-20511-RLJ-11, In
re Gryphon Field Services, LLC;
and
|
| 3. |
Case
No. 07-20510-RLJ-11, In
re Gryphon Production Company,
LLC.
|
B. When
the
term “Parties” is used in this Agreement, it refers to:
| 1. |
Chancellor
Group, Inc.;
|
| 2. |
Gryphon
Production Company, LLC;
|
| 3. |
Gryphon
Field Services, LLC; and
|
| 4. |
New
Concept Energy, Inc.
|
C. Effective
on June 1, 2008, the Chancellor Parties entered into a Purchase and Sale
Agreement (the “PSA”) with Legacy Reserves Operating, L.P., a Delaware limited
partnership (“Legacy”), CapWest Resources, Inc., a Texas corporation
(“CapWest”), and Western National Bank, a national banking association (the
“Bank”), pursuant to which the Chancellor Parties sought to sell certain oil and
gas properties to Legacy and settle all disputes which the Chancellor Parties
had with CapWest and the Bank. The PSA also had provisions affecting interests
held by Axis Network, Pty Ltd. (“Axis”). Legacy, CapWest, the Bank, and Axis are
herein collectively referred to as the “PSA Parties.”
D. On
June
21, 2008, the Chancellor Parties filed Debtors’ Motion to Voluntarily Dismiss
Chapter 11 Cases (the “Motion to Dismiss”), seeking to dismiss the bankruptcy
proceedings so that the PSA Parties could close the transaction contemplated
by
the PSA.
E. Prior
to
June 2008, NCE had entered into discussions with the Chancellor Parties and
had
acquired one million shares of Chancellor Group, Inc. common stock (the “NCE
Stock”).
F. On
July
3, 2008, NCE filed its Objection to the Chancellor Parties’ Motion to
Dismiss.
G. On
August
1, 2008, a group of shareholders, collectively referred to as the “Supporting
Shareholders Group,” filed its Response in Support of Debtors’ Motion to
Voluntarily Dismiss Chapter 11 Cases. The Supporting Shareholders Group consists
of: Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, Forum Energy Inc., Xxxxxx Xxxxxx,
Xxxxx
Xxxxxx, Koala Pictures Pty. Ltd., Xxxx X. X. Xxx, Xxxxx XxXxxxxx, Xxxxxx Xxxx,
Xxxx Xxxxxxxx, A. Xxxxxx Xxxxxxxx, Xxxxx Xxxx, Xxxxx Xxxxxx, and Xxxxxxx Xxxxxx
Xxxxx.
H. On
August
11, 2008, a hearing was held on the Chancellor Parties’ Motion to
Dismiss.
I. On
August
14, 2008, the Court announced its decision in the case.
J. On
August
15, 2008, the “Order of Dismissal” dismissing the Chancellor Parties’ bankruptcy
cases was entered.
K. On
August
22, 2008, NCE filed its Motion for Reconsideration of the Orders Entered on
August 15, 2008 Dismissing Chapter 11 Cases (the “Motion for
Reconsideration”).
L. All
provisions of this Agreement are contractual in nature, and not mere recitals
only.
M. This
Agreement, and the execution thereof, does not, and is not intended to be,
an
admission of fault or wrongdoing by any party, and all Parties expressly
disclaim any liability to any other party.
N. The
current status of the Order of Dismissal, with the pending Motion for
Reconsideration, creates uncertainty with respect to the Chancellor Parties’
bankruptcy proceedings and the PSA, and the Parties have determined that they
wish to reach finality with respect to the Chancellor Parties’ bankruptcy
proceedings and the PSA. Issues between the Parties relating to the bankruptcy
proceedings of the Chancellor Parties, the Order of Dismissal, and the PSA
are
herein collectively referred to as the “Controversy.”
O. The
Chancellor Parties, the PSA Parties, and the Supporting Shareholders Group
are
collectively referred to herein as the “Released Parties.”
P. The
Parties desire to reach a full and final settlement and resolution, have agreed
to compromise and settle the Controversy, including any and all claims relating
to any damage of any kind or character whatsoever by NCE against the Released
Parties, or claims by the Chancellor Parties against NCE, whether now known
or
unknown, whether asserted in the Controversy or not. This includes claims which
NCE, or any other party in privity with NCE has or may have against the Released
Parties and their respective subsidiaries, affiliates, officers, directors,
insurers, agents, servants, employees, representatives, and attorneys, whether
herein named or not, for any damages, of any kind or character whatsoever,
arising out of or related to the acts and omissions alluded to documents or
pleadings related to the Controversy.
II.
Settlement
and Release
NOW,
THEREFORE, in consideration of the mutual agreements, covenants,
representations, stipulations, releases and terms contained in this Agreement,
the sufficiency of consideration is hereby mutually acknowledged, the Parties
to
this Agreement agree as follows:
1. Release
by NCE.
In
return for the consideration outlined below, NCE and any other party in privity
with it, including parent, subsidiaries, or any controlling persons or entities,
do hereby release, acquit, and forever discharge the Released Parties and their
respective subsidiaries, parent corporations, sister corporations, related
entities, affiliates, officers, directors, insurers, agents, servants,
employees, representatives, and attorneys, whether herein named or not, of
and
from any and all liability, actions, claims, obligations, demands, or lawsuits
whatsoever, which NCE now has or hereinafter may have on account of or in any
manner arising out of or relating to the damages, matters, and allegations
set
forth, alleged, or alluded to or which might have been set forth, alleged,
or
alluded to by NCE in documents or pleadings related to the Controversy and
to
which reference is made, including the consequences of such damages, including
any attorneys’ fees, costs, or interest, directly or indirectly, by reason of
any damages sustained by the Released Parties, it being the express intent
of
NCE to release the Released Parties and their respective subsidiaries,
affiliates, officers, directors, insurers, agents, servants, employees,
representatives, and attorneys, whether herein named or not, and all Parties
in
privity therewith, from all further liability to any person, firm, or
corporation on account of any alleged damages sustained by NCE.
2. Release
by Chancellor Parties.
In
return for the consideration outlined below, the Chancellor Parties and any
other party in privity with them, including parent, subsidiaries, or any
controlling persons or entities, do hereby release, acquit, and forever
discharge NCE and its respective subsidiaries, parent corporations, sister
corporations, related entities, affiliates, officers, directors, insurers,
agents, servants, employees, representatives, and attorneys, whether herein
named or not, of and from any and all liability, actions, claims, obligations,
demands, or lawsuits whatsoever, which the Chancellor Parties now have or
hereinafter may have on account of or in any manner arising out of or relating
to the damages, matters, and allegations set forth, alleged, or alluded to
or
which might have been set forth, alleged, or alluded to by the Chancellor
Parties in documents or pleadings related to the Controversy and to which
reference is made, including the consequences of such damages, including any
attorneys’ fees, costs, or interest, directly or indirectly, by reason of any
damages sustained by the Chancellor Parties, it being the express intent of
the
Chancellor Parties to release NCE and its respective subsidiaries, affiliates,
officers, directors, insurers, agents, servants, employees, representatives,
and
attorneys, whether herein named or not, and all Parties in privity therewith,
from all further liability to any person, firm, or corporation on account of
any
alleged damages sustained by the released parties.
3. No
Admission of Liability.
This
Agreement is a compromise and settlement. It is specifically understood and
agreed by the Parties that the execution of this Agreement is not an admission
of liability on the part of any person or entity, liability being expressly
denied. By entering into this Agreement, the Parties do not admit any legal
or
factual position or allegation that is or may be asserted in any pending or
future action or matter, or any liability, fault or wrongdoing of any nature
or
kind whatsoever.
4. Final
Dismissal.
As
consideration, it is agreed and understood that NCE will withdraw its Motion
for
Reconsideration within two (2) days of the execution of this Agreement and
the
receipt of the Settlement Payment of $110,000.00, and allow the Order of
Dismissal to become a final, non-appealable order.
5. Settlement
Payment.
In
consideration for the payment of ONE HUNDRED TEN THOUSAND DOLLARS ($110,000.00)
paid to the order of New Concepts Energy, Inc., the receipt of which is hereby
acknowledged by NCE, NCE agrees to release, acquit and forever discharge the
Released Parties, as outlined in Paragraph 1 above, and NCE agrees to convey
the
NCE Stock to the Chancellor Parties.
6. Attorneys’
Fees, Expenses, and Costs of Court.
The
Parties agree that they shall each bear their own attorneys’ fees, expenses, and
costs of court, and that this Agreement includes and releases any right to
claim
or recover such attorneys’ fees, expenses, and costs of court.
III.
Indemnity
7. Indemnity
Against All Related Claims.
As part
of the consideration for payment of the foregoing sum of money, the Chancellor
Parties agree to indemnify and hold harmless NCE, its affiliates, subsidiaries,
parent corporations, sister corporations, stockholders, officers, directors,
agents, servants, employees, representatives, and attorneys, whether they be
named herein or not, from any and all claims, demands, obligations, actions,
and
causes of action related in any way to the claims, allegations, or damages
referenced, alleged, or alluded to in documents or pleadings related to the
Controversy, of whatsoever nature or character, whether they be in law or in
equity, past, present, or future, which have been or which may hereinafter
be
asserted by any Released Party not executing this Agreement, including
specifically any member which is part of the Supporting Shareholders
Group.
IV.
Additional
Terms
8. Payment
of Money.
Upon
full execution of this Agreement, the Chancellor Parties will pay to NCE,
according to NCE’s instructions, funds in the amount of One Hundred Ten Thousand
Dollars ($110,000.00) as payment pursuant to, and proceeds of, this Agreement.
9. Conveyance
of Stock.
Upon
execution of this Agreement, and upon receiving the payment set forth in the
previous paragraph, NCE will deliver, according to the Chancellor Parties’
instructions, the NCE Stock in the form of 1,000,000 shares represented by
Stock
Certificate No. 3508. Because, and to the extent, this Agreement is a sale
of
shares (the NCE Stock) from NCE to Chancellor Group, Inc. (the “Company”), NCE
makes the following representation:
NCE
has
such knowledge and experience in financial and business matters that NCE is
capable of evaluating the merits and risks of the sale of the NCE Stock to
the
Company. NCE has carefully reviewed the following documents constituting the
periodic reports filed by the Company with the Securities and Exchange
Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended:
the Company’s Annual Report on Form 10-K for its fiscal year ended December 31,
2007, filed with the SEC on April 7, 2008; the Company’s Quarterly Report on
Form 10-Q for its fiscal quarter ended March 31, 2008, filed with the SEC on
May
14, 2008; the Company’s Quarterly Report on Form 10-Q for its fiscal quarter
ended June 30, 2008, filed with the SEC on August 14, 2008; and the Company’s
Current Reports on Form 8-K, filed with the SEC on June 20 and August 19,
2008.
10. Authorship
of Agreement.
This
Agreement was drafted jointly by the Parties and their respective legal counsel,
and is not to be construed or interpreted against any of the Parties on the
grounds of sole or primary authorship.
11. Certification
of Parties’ Attorneys.
The
Parties’ attorneys, by affixing their signatures hereon, certify that they have
fully read and explained this entire Agreement to their respective
clients.
12. Certification
by Parties.
The
Parties, by affixing their signatures hereon, certify that they have fully
read
this Agreement and fully understand its contents and effects
thereof.
13. Authority
and Non-Assignment.
As part
of the consideration of this Agreement, the Parties expressly represent and
warrant to each other that they are legally competent and authorized to execute
this Agreement. Each of the Parties represents and warrants to the other that
it
has not sold, assigned, granted, or transferred to any other person or entity
any claim, counterclaim, demand, action, or cause of action encompassed by
this
Agreement and that it is the real party in interest.
14. Modification
or Alteration of Agreement.
This
Agreement may not be modified, altered, revised, supplemented, or changed in
any
way, unless said change be evidenced by a single writing that is executed by
all
Parties to this Agreement or their heirs, successors, or assigns.
15. Headings.
The
headings used in this Agreement are inserted solely for convenience and shall
not be used to interpret the meaning of this document.
16. Counterparts.
This
instrument may be executed in multiple original counterparts, each of which
shall be deemed an original for all purposes. No single counterpart of this
Agreement need be executed by all of the Parties, so long as each of the Parties
shall have executed at least one counterpart. Facsimile signatures shall be
valid.
17. Governing
Law, Venue, and Jurisdiction.
The
rights and liabilities of the Parties under this Agreement shall be governed
as
to validity, interpretation, enforcement, effect, and damages by the laws of
the
State of Texas, without regard to any rules, statutes, or case law regarding
conflicts of law. Xxxx County, Texas shall be the appropriate and exclusive
venue for any suit arising out of this Agreement.
18. Entire
Agreement.
This
Agreement contains the entire agreement and all understandings between the
Parties relating to the resolution of the Controversy, and supersedes any and
all prior agreements, arrangements, or understandings of whatever nature between
the Parties.
19. References.
References herein to the singular or plural shall be deemed to include the
other
unless the circumstances eliminate such inclusion.
20. Effective
Date of Agreement.
This
Agreement is effective the first day that the Agreement bears the signature
of
all Parties and their representatives.
21. Binding
Agreement.
All of
the terms of this Agreement shall be binding upon the Parties’ heirs,
successors, and assigns. This agreement is intended to be fully binding and
is
not revocable. Any Party who unsuccessfully seeks to void, invalidate, or set
aside this Agreement shall be liable for attorneys’ fees and court costs
incurred by opposing Parties in connection therewith.
EXECUTED
this 4th day of September, 2008.
| CHANCELLOR GROUP, INC. | ||
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| By: |
/s/
Xxxxxx X. Xxxxxxxx
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Printed
Name: Xxxxxx X. Xxxxxxxx
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Title:
President
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| GRYPHON PRODUCTION COMPANY, LLC | ||
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| By: |
/s/
Xxxxxx X. Xxxxxxxx
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Printed
Name: Xxxxxx X. Xxxxxxxx
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Title:
President
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GRYPHON
FIELD SERVICES, LLC
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| By: |
/s/
Xxxxxx X. Xxxxxxxx
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Printed
Name: Xxxxxx X. Xxxxxxxx
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Title:
President
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NEW
CONCEPT ENERGY, INC.
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| By: |
/s/
Xxxx X. Xxxxxxxx
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Printed
Name: Xxxx X. Xxxxxxxx
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Title:
President
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APPROVED
AS TO FORM AND SUBSTANCE:
Xxxx
Xxxxxxx, Attorney
for the Chancellor Parties
/s/
Xxxxxx Xxxxx
Xxxxx
Xxxxx, Attorney
for New Concept Energy, Inc.
