COMPROMISE SETTLEMENT AGREEMENT
AND MUTUAL RELEASE
1. Parties. This Compromise Settlement Agreement and Mutual Release (the
"Release) is dated this 20th day of December, 1999 (the "Effective Date") and is
by and between Power Exploration, Inc., a Nevada corporation formerly known as
Titan Energy Corp., Inc. a Colorado corporation ("Power"), Benchmark Equity
Group, Inc., a Delaware corporation ("Benchmark"), ▇▇▇▇ Oil Properties, Inc.
("▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Tomz") an individual and resident of Brazoria
County, Texas. Power, Benchmark, ▇▇▇▇ and Tomz represent, covenant, agree to,
and accept the statements, terms and conditions hereof as evidenced by their
respective signatures below.
2. Recitals. The alleged facts and circumstances giving rise to this Release are
as set forth hereinbelow.
2.1. Titan Energy Corp., Inc., ("Titan") predecessor-in-interest to Power
Exploration, Inc. and Benchmark executed a document entitled Loan Agreement
("Titan Loan Agreement") dated to be effective May 7, 1998. A true and correct
copy of the Titan Loan Agreement is attached hereto marked Exhibit "A" and
incorporated herein by reference for all purposes.
2.2. In connection with the Titan Loan Agreement, Titan and Benchmark
executed a document entitled Line of Credit Note ("Titan Note") dated to be
effective May 7, 1998. A true and correct copy of the Titan Note is attached
hereto as Exhibit "B" and incorporated herein by reference for all purposes.
Pursuant to the terms of the Titan Note, Titan promised to pay to Benchmark the
principal amount of $500,000 bearing interest and payable as therein provided.
2.3. Further in connection with the Titan Loan Agreement, Titan and
Benchmark executed a document entitled Security Agreement ("Titan Security
Agreement") dated to be effective May 7, 1998. A true and correct copy of the
unexecuted Titan Security Agreement is attached hereto marked Exhibit "C" and
incorporated herein by reference for all purposes. Pursuant to the terms of the
Titan Security Agreement, Titan granted to Benchmark a security interest in
certain assets of Titan as more fully described therein.
2.4. To secure repayment of the debt evidenced by the Titan Note,
Benchmark as pledgee and ▇▇▇▇ as Pledgor executed a document, together with
Titan, entitled Pledge Agreement ("Titan Pledge Agreement") dated to be
effective May 7, 1998 whereby ▇▇▇▇ was required to pledge to Benchmark 200,000
shares of Titan common stock. A true and correct copy of the Titan Pledge
Agreement is attached hereto marked Exhibit "D" and incorporated herein by
reference for all purposes. In performance of the Titan Pledge Agreement, ▇▇▇▇
delivered to Benchmark certificate number 91005 for 2,000,000 million shares of
Titan common stock of which 200,000 shares were to be pledged and the balance
returned to ▇▇▇▇.
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2.5. In connection with the Titan Loan Agreement, Titan and Benchmark
executed a document entitled Common Stock Warrant Agreement ("Titan Warrant")
dated to be effective May 7, 1998. A true and correct copy of the Titan Warrant
is attached hereto marked Exhibit "E" and incorporated herein by reference for
all purposes (with the executed Titan Warrant being identical to the document
attached at Exhibit "E" but for the inclusion of the signature of Benchmark).
Pursuant to the terms of the Titan Warrant, Benchmark was granted an option to
acquire 400,000 shares of unregistered common stock of Titan at an exercise
price of $2.50 per share.
2.6. Pursuant to agreement between Titan, Benchmark and Tomz, the Titan
Warrant was not exercised and rather was retired and warrants were to be
reissued in connection with the Titan Loan Agreement. Specifically, Power and
Benchmark executed a document entitled Common Stock Warrant Agreement ("Power
Benchmark Warrant") dated to be effective October 21, 1998. A true and correct
copy of the Power Benchmark Warrant is attached hereto at Exhibit "F" and
incorporated herein by reference for all purposes (with the executed Power
Benchmark Warrant being identical to the document at Exhibit "F" but for the
inclusion of signatures). Pursuant to the terms of the Power Benchmark Warrant,
Benchmark was granted an option to acquire 375,000 shares of unregistered common
stock of Power at an exercise price of $1.00 per share. Attached hereto at
Exhibit "G" is a true and correct copy of the election by Benchmark ("Benchmark
Election") to exercise its rights to acquire the stock pursuant to the Power
Benchmark Warrant under the cashless exercise provision described therein.
Further, Power and Tomz executed a document entitled Common Stock Warrant
Agreement ("Power Tomz Warrant") dated to be effective October 21, 1998. A true
and correct copy of the Power Tomz Warrant is attached hereto at Exhibit "H" and
incorporated herein by reference for all purposes (with the executed Power
Benchmark Warrant being identical to the document at Exhibit "G" but for the
inclusion of signatures). Pursuant to the terms of the Power Tomz Warrant, Tomz
was granted an option to acquire 50,000 shares of unregistered common stock of
Power at an exercise price of $1.00 per share. Attached hereto at Exhibit "I" is
a true and correct copy of the election by Tomz ("Tomz Election") to exercise
his rights to acquire the stock pursuant to the Power Tomz Warrant under the
cashless exercise provision described therein.
2.7. In connection with the Titan Loan Agreement, the following were issued
(collectively, the "Miscellaneous Titan Warrants"):
a. Warrant Certificate dated to be effective May 15, 1998, granting ▇▇▇▇ ▇.
▇▇▇▇▇▇ a right to acquire 30,000 shares of common stock of Titan;
b. Warrant Certificate dated to be effective May 15, 1998, granting ▇▇▇▇▇
▇▇▇▇▇▇ a right to acquire 30,000 shares of common stock of Titan;
c. Warrant Certificate dated to be effective May 15, 1998, granting to
▇▇▇▇▇ ▇▇▇▇▇ and Company, Inc. a right to acquire 15,000 shares of common stock
of Titan; and
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE
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d. The parties hereto hereby agree that any warrants or options issued to
either Benchmark, its affiliates, or any individuals related thereto, including,
without limitation, Tomz, are hereby extinguished.
2.8. Titan, Benchmark, ▇▇▇▇ and Tomz wish to settle the matters pertaining
to the Titan Loan Agreement, Titan Note, Titan Security Agreement, Titan Pledge
Agreement, Titan Warrant, Power Benchmark Warrant, Benchmark Election, Power
Tomz Warrant, Tomz Election and Miscellaneous Titan Warrants (collectively, the
"Transaction Documents") and have reached an agreement to that effect as set
forth herein.
3. Consideration. Consideration for this Release is the mutual promises herein
and each act done by the parties hereto pursuant hereto, the receipt and
sufficiency of which is acknowledged by the parties hereto, and the following:
a) The issuance to Benchmark of 500,000 shares of Power common stock,
restricted under Rule 144, by certificate in the form attached hereto at Exhibit
"J" and incorporated herein by reference for all purposes ("Power Restricted
Stock"), the delivery and receipt of which is hereby acknowledged; b) The
agreement by Power to register the 500,000 shares of Power Restricted Stock,
restricted under Rule 144, at the time that Power next files a SEC Registration
Statement; and c). If any of the stock acquired hereunder is not registered, is
held by the holder for the time required under Rule 144 and the legend is then
removed, then Benchmark agrees, with regard to the stock acquired hereunder, not
to sell more than 1% of the outstanding shares of Power every 90 days.
The parties hereto acknowledge that they will not be entitled to any additional
consideration for the execution of this Release other than as expressly set
forth and provided for herein. By their signatures below, the parties hereto
acknowledge the receipt and sufficiency of the consideration evidenced by this
Release, including Benchmark's receipt of the Power Restricted Stock.
4. No Pending Claims. Benchmark and Tomz warrant and represent that there are no
claims against any party hereto or any party in any way related hereto, which is
either pending, threatened or of which Benchmark, Tomz or Power are otherwise
aware. Benchmark and Tomz acknowledge that Power is relying upon this
representation and that this representation is a material inducement to the
execution of this Release by Power.
5. Mutual Releases. In consideration of the agreements and compromises set
forth herein, Benchmark, Tomz, ▇▇▇▇ and Power each agree, covenant and represent
as follows:
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE
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5.1. Except for the obligations of Benchmark and Tomz as set forth
herein, Power and ▇▇▇▇ hereby release, acquit and forever discharge Benchmark
and Tomz, and their respective current and former stockholders, successors,
assigns, agents, directors, officers, affiliates (as commonly used and as
defined in the Titan Loan Agreement), employees, representatives, attorneys,
divisions, subsidiaries, affiliates (and agents, directors, officers, employees,
representatives and attorneys of such divisions, subsidiaries and affiliates),
administrators, predecessors-in- interest and successors-in-interest, of and
from any and all claims, demands, actions and causes of action of whatever kind
or character which Power and ▇▇▇▇ may now have, whether known or unknown,
asserted or unasserted, arising out of or connected in any way with the
relationship between Benchmark, Power, Titan, ▇▇▇▇ and Tomz including, without
limitation, the Transaction Documents and any and all other matters from the
beginning of time until the date hereof, and excluding enforcement of this
release.
5.2. Benchmark and Tomz hereby release, acquit and forever discharge
Power, ▇▇▇▇ and Titan and their respective current and former stockholders,
successors, assigns, agents, directors, officers, affiliates (as commonly used
and as defined in the Titan Loan Agreement), employees, representatives,
attorneys, divisions, subsidiaries (and agents, directors, officers, employees,
representatives and attorneys of such divisions, subsidiaries and affiliates),
administrators, predecessors-in-interest and successors-in-interest, of and from
any and all claims, demands, actions and causes of action of whatever kind or
character which Benchmark and Tomz may now have, whether known or unknown,
asserted or unasserted, arising out of or connected in any way with the
relationship between Benchmark, Power, Titan, ▇▇▇▇ and Tomz including, without
limitation, the Transaction Documents and any and all other matters from the
beginning of time until the date hereof, and excluding enforcement of this
release.
6. Settlement of a Disputed Obligation. The agreements being made herein are
merely to settle disputed claims and are not to be construed as an admission of
any fault or liability of any party hereto, such being hereby specifically and
expressly denied by each party hereto.
7. Authorization. The making and performance of this Release has been duly
authorized and is approved by each party hereto. This Release constitutes the
legal, valid and binding obligation of each party hereto and is enforceable in
accordance with its terms. In addition, the undersigned are duly authorized by
the respective parties to execute this Release in their representative
capacities by all necessary proceedings.
8. Representation of Ownership and Indemnification. Each party hereto and/or
their subsidiaries represent and covenant that they are the owners of any and
all claims at issue herein or in any way relating to or involving the subject
matter set
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE
23
forth herein. Further, Benchmark and Tomz warrant and represent that there are
no warrants existing in favor of Benchmark, Tomz, or any entity or individual in
any way related thereto of which there are aware to acquire Power stock.
Benchmark agrees to indemnify and hold harmless Power for all matters in
connection with the Miscellaneous Titan Warrants. This provision shall survive
any termination of this Release.
9. Review and Understanding. Each party hereto has reviewed this Release and
they (a) understand fully the terms of this Release and its consequences and (b)
have had this Release reviewed by competent legal counsel of their choice.
10. No Other Representations. Execution of this Release is not based upon
reliance by any party hereto upon any representation, understanding or agreement
that is not expressly set forth herein, and no party hereto has made any
representations which are not expressly set forth herein; and further, but not
in limitation of the foregoing, no party hereto has made any representations
which affect the consideration or any condition for which the Release is
executed which has not been expressly embodied and fully set forth herein.
11. Binding Effect. This Release shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns, heirs, and legal
representatives, but shall not be binding upon any party until signed by all
parties. It is expressly understood and agreed that the terms hereof are
contractual in nature, including those set forth in the provisions designated
"Recitals," and are not mere recitals, that the agreements herein contained and
the consideration transferred hereby are to buy peace, and the consideration
transferred and conveyed hereby shall not be construed as an admission of
liability by any of the parties to this Release.
12. Modification. No modification or amendment of this Release shall be
effective unless such modification or amendment is in writing and signed by all
parties hereto.
13. Gender and Number. Throughout this Release, the singular number shall
include the plural, the plural shall include the singular, and the use of any
gender shall be applicable to all genders.
14. Governing Law. The interpretation, construction, and performance of this
Release shall be governed by the laws of the State of Texas, without giving
effect to conflict of laws principles, and this Release is performable in
Tarrant County, Texas.
15. Headings. The headings of this Release have been included only for ease of
reference for the subject covered by each provision and are not to be used in
construing this Release or in ascertaining its meaning.
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE
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16. Severability. If any portion of this Release shall be held to be invalid or
inoperative, then, so far as is reasonable and possible, the remainder of this
Release shall be considered valid and operative, and no effect shall be given to
the intent manifested by the portion held invalid or inoperative.
17. Execution of Necessary Documents. Each party hereto further covenants and
agrees to execute any and all documents necessary to effectuate the provisions
of this Release and to cooperate fully with each other in carrying out the
provisions of this Release.
18. Survival. Each and every provision of this Release shall survive the
execution hereof.
19. Entire Agreement. This Agreement and the Purchase Agreement of even date
herewith executed between Power and Benchmark incorporated herein by reference
for all purposes constitute the entire agreement between the parties hereto and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written. There are no warranties,
representations, or other agreements between the parties in connection with the
subject matter hereof, except as specifically set forth herein.
20. Attorneys' Fees. In the event of any litigation concerning any controversy,
claim or dispute between each party hereto arising out of or relating to this
Release or the breach hereof, or the interpretation hereof, the prevailing party
shall be entitled to recover from the losing party reasonable expenses,
attorneys' fees, and costs incurred therein or in the enforcement or collection
of any judgment or award rendered therein. The "prevailing party" means the
party determined by the court to have most nearly prevailed, even if such party
did not prevail in all matters, and is not necessarily the one in whose favor a
judgment is rendered.
21. Broadest Nature. Each party warrants that this Release is to be of the
broadest nature and is to be dispositive of all matters between the parties
hereto with respect to the Transaction Documents and all matters at issue in
each, directly and indirectly. Further, Benchmark warrants that it has not
recorded in any jurisdiction with any entity the Titan Security Agreement nor
any document in any way related thereto including, without limitation, any UCC-1
forms.
22. Joint Preparation. This Release was prepared jointly by the parties hereto
and not by any one to the exclusion of the other.
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IN WITNESS WHEREOF, the parties have caused this Release to be duly executed and
delivered as of the Effective Date.
Power Exploration, Inc. Benchmark Equity Group, Inc.
By:/s/ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------- ----------------
Printed Name: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Printed Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President Title: CEO
▇▇▇▇ Oil Properties, Inc.
By: /s/ M. O. ▇▇▇▇ III /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------- --------------------
Printed Name: M. O. ▇▇▇▇ III ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE
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