UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION
EXHIBIT
10.1
UNITED
STATES DISTRICT COURT
SOUTHERN
DISTRICT OF TEXAS
HOUSTON
DIVISION
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QUICKSILVER
RESOURCES INC.,
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PLAINTIFF,
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vs.
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CIVIL
ACTION NO. H-08-868
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EAGLE
DRILLING, LLC AND EAGLE
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DOMESTIC
DRILLING OPERATIONS,
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LLC,
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DEFENDANTS.
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IN
RE:
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JOINTLY
ADMINISTERED
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CHAPTER 11
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EAGLE
DOMESTIC DRILLING
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UNDER BANKRUPTCY CASE
NO.
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OPERATIONS,
LLC,
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07-30424-H4-11
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DEBTORS.
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This
Compromise Settlement and Release Agreement (the “Agreement”) is executed on the
one hand by Quicksilver Resources Inc. (“Quicksilver”) and on the other hand by
Eagle Domestic Drilling Operations, LLC (“EDDO”) and Blast Energy Services, Inc.
(“Blast”) effective as of the date stated below. Quicksilver, EDDO
and Blast are sometimes referred to collectively as the “Parties” and
individually as a “Party.”
I. Quicksilver
Releasees.
The releasees who shall benefit from
the promises, covenants and/or warranties made by EDDO and Blast are as
follows:
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A.
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Quicksilver;
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B.
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All
agents, employees, shareholders, directors, officers, fiduciaries,
attorneys or other representatives of Quicksilver, specifically including
but not limited to Xxxx Xxxx; and
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C.
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All
subsidiaries, parent corporations, affiliated entities or sister
corporations of Quicksilver or any of their successors or assigns that
have in any way conducted any activity or been requested to have had any
activity associated with EDDO or
Blast.
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As used
in this Agreement, the term “Quicksilver Releasees” shall be construed as
broadly as possible to include all of the foregoing named or described persons
or entities.
II. EDDO
Releasees.
The releasees who shall benefit from
the promises, covenants and/or warranties made by Quicksilver are as
follows:
A. EDDO;
B. Blast
(EDDO’s parent company);
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C.
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All
agents, employees, shareholders, directors, officers, members, managers,
fiduciaries, attorneys or other representatives of EDDO and Blast;
and
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C.
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All
subsidiaries, parent corporations, affiliated entities or sister
corporations of EDDO or any of their successors or assigns that have in
any way conducted any activity or been requested to have had any activity
associated with Quicksilver.
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As used
in this Agreement, the term “EDDO Releasees” shall be construed as broadly as
possible to include all of the foregoing named or described persons or
entities. Expressly excluded from the definition of “EDDO Releasees”
are Eagle Drilling, LLC (“Eagle”) and any of its subsidiaries, parent
corporations, affiliated entities or sister corporations, agents, employees,
shareholders, directors, officers, members, managers, fiduciaries, attorneys or
other representatives, including but not limited to Xxxxxx Xxxxxxxx and Xxxxxxx
Xxxxxxxx (the “Eagle parties”).
III. Recitals.
A. In
March 2006, Quicksilver and Eagle entered into three International Association
of Drilling Contractors Daywork Drilling Contracts (collectively the
“Contracts”) relating to Eagle drilling rig numbers 14, 15 and 16 (collectively
the “Rigs”). Disputes arose as to whether one or more of the Rigs
comported with the specifications set forth in the Contracts and whether
Quicksilver improperly terminated or repudiated one or more of the
Contracts. As a result of said disputes, Quicksilver initiated suit
against EDDO and Eagle in Tarrant County, Texas, which suit and the claims made
therein ultimately became a part of the above-captioned action (the
“Lawsuit”). EDDO asserted counterclaims against Quicksilver in the
Lawsuit.
B. The
Court in the Lawsuit has found that Eagle assigned the Rigs and the Contracts to
EDDO.
C. As
a result of thorough discussions and negotiations, the Parties have determined
it is in their best interests to resolve their current disputes on the terms and
conditions set forth in this Agreement.
IV. Settlement
Provisions.
NOW, THEREFORE, KNOW ALL MEN BY THESE
PRESENTS that for the consideration stated in this Agreement, the receipt and
sufficiency of which is hereby acknowledged by each of the Parties, it is agreed
as follows:
A. Consideration.
1. As
consideration for this Agreement, Quicksilver shall pay or cause to be paid to
EDDO the total sum of Ten Million and No/100 Dollars ($10,000,000.00), to be
paid as follows:
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a.
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Five
Million and No/100 Dollars ($5,000,000.00) contemporaneously with EDDO’s
and Blast’s execution of this
Agreement;
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b.
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One
Million and No/100 Dollars ($1,000,000.00) on or before the first (1st)
anniversary of EDDO’s and Blast’s execution of this
Agreement;
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c.
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Two
Million and No/100 Dollars ($2,000,000.00) on or before the second (2nd)
anniversary of EDDO’s and Blast’s execution of this Agreement;
and
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d.
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Two
Million and No/100 Dollars ($2,000,000.00) on or before the third (3rd)
anniversary of EDDO’s and Blast’s execution of this
Agreement.
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2. If
either EDDO or Blast files a voluntary petition pursuant to the U.S. Bankruptcy
Code, 11 U.S.C., §101 et.
seq. (as amended or replaced), or if an involuntary bankruptcy petition
is filed against either EDDO or Blast pursuant to the U.S. Bankruptcy Code and
an order for relief is thereafter entered against either EDDO or Blast, then
Quicksilver shall be automatically relieved of any obligation to make any
payments under this Agreement which become due and payable on or after the date
on which any such bankruptcy petition (whether voluntary or involuntary) was
filed by or against either EDDO or Blast. In the case of an
involuntary petition, if a motion for reconsideration of the order for relief is
filed and granted, resulting in the order for relief being withdrawn or
dismissed, then Quicksilver’s payment obligations shall resume and/or any
payments not made as a result of the initial entry of the order for relief shall
be brought current. For example, if either EDDO or Blast files a
voluntary petition after the first anniversary, but before the second
anniversary, of EDDO’s execution of this Agreement, then Quicksilver will be
automatically relieved from making the payments 1.c. and 1.d.
above. Likewise, if an involuntary petition is filed
against
either
EDDO or Blast after the first anniversary, and an order for relief is thereafter
entered against either EDDO or Blast before the second anniversary of EDDO’s
execution of this Agreement, then Quicksilver will likewise be automatically
relieved from making the payments due in 1.c. and 1.d.; provided, however, for
purposes of this example, if the order for relief regarding an involuntary
petition is withdrawn or dismissed after reconsideration as referenced above,
then, in such event, Quicksilver’s obligations under 1.c. and 1.d. shall be
automatically reinstated and shall be due and payable on the dates referenced in
paragraph 1 above. However, the filing of a voluntary or involuntary
bankruptcy case by or against either EDDO or Blast shall not affect any other
relief granted in this agreement, including but not limited to the mutual
releases provided herein, which shall remain in effect and continue to be valid
and enforceable.
3. Unless
otherwise directed in writing, all of the foregoing payments shall be made
payable to “Eagle Domestic Drilling Operations, LLC” and tendered to its
attorneys, Xxxxxxx Xxxxxx, LLP, in trust for EDDO. A payment shall be
deemed timely if postmarked for mailing by first class United States mail on or
before the date on which it is due, or if wire transfer instructions are timely
provided, if a wire transfer is initiated on or before the date on which the
payment is due. In the event Quicksilver fails to make a timely
payment under this Agreement and if such failure has not been cured within ten
(10) days after receipt of written notice from EDDO, then all remaining payment
obligations to EDDO shall be accelerated and become due and owing.
4. In
consideration of Quicksilver’s promises, covenants and payments stated herein,
EDDO, and Blast completely RELEASE and forever discharge each and all of the
Quicksilver Releasees from any and all past or present claims, rights, damages,
costs, benefits,
expenses
and compensation of any nature whatsoever, whether based upon tort, contract,
statute, common law or any other theory or basis of recovery, and whether for
compensatory, statutory or exemplary damages or for equitable relief, which EDDO
or Blast now hold, in any way related to the Contracts, the Rigs, any claims
that have or could have been asserted in the Lawsuit or any other dealings among
the Parties up to and including the effective date of this
Agreement. This is intended to be and shall be construed as a general
release providing the Quicksilver Releasees the greatest protection allowable
under the law as to the released claims.
5. In
consideration of EDDO’s and Blast’s promises, covenants and payments stated
herein, Quicksilver completely RELEASES and forever discharges each and all of
the EDDO Releasees from any and all past or present claims, rights, damages,
costs, benefits, expenses and compensation of any nature whatsoever, whether
based upon tort, contract, statute, common law or any other theory or basis of
recovery, and whether for compensatory, statutory or exemplary damages or for
equitable relief, which Quicksilver now holds, in any way related to the
Contracts, the Rigs, any claims that have or could have been asserted in the
Lawsuit or any other dealings among the Parties up to and including the
effective date of this Agreement. This is intended to be and shall be
construed as a general release providing the EDDO Releasees the greatest
protection allowable under the law as to the released claims.
6. EDDO
shall not assign, sell or otherwise convey to any third party, other than Blast,
its right to receive payments from Quicksilver under this Agreement; provided,
however, EDDO may assign a portion of said payments to its attorneys as attorney
fees.
7. As
additional consideration for this Agreement, EDDO and Quicksilver, through their
respective counsel, shall request that the Court dismiss all of their claims in
the Lawsuit with prejudice. If necessary or appropriate, EDDO shall
seek any court approval of this Agreement and the settlement it evidences that
is required by its Amended Plan of
Reorganization
and EDDO’s counsel may also disclose the terms of this Agreement to the extent
necessary to seek court approval of their attorney fees.
8. As
additional consideration for this Agreement, each of the Parties agrees to pay
its respective costs and attorney fees related to the Lawsuit and this
Agreement.
9. This
Agreement is not intended to affect, and shall not affect, any claims or
defenses as between any Party on the one hand and the Eagle parties on the other
hand. It is further agreed that under no circumstances should any
action taken by or
on behalf of the Eagle parties have any effect on or in any way modify or reduce
Quicksilver’s obligations under the terms of this Agreement
B. Warranty
of Capacity to Execute Agreement and Release. Each Party
represents and warrants that the person signing this Agreement on its behalf has
the full legal right, capacity and authority to do so and to make the promises,
representations and warranties contained herein. Each Party further
represents that it has not sold, assigned, transferred, conveyed or otherwise
disposed of any of the claims, demands, obligations or causes of action referred
to in this Agreement, except to any extent an assignment has been made to any
Party’s attorney to cover attorney fees.
C. Indemnity.
1. Quicksilver
shall HOLD HARMLESS AND INDEMNIFY each of the EDDO Releasees from and against
any and all claims, demands, obligations or causes of action made by anyone
claiming by, through or under Quicksilver related to the claims released herein,
together with any costs, expenses or attorney fees incurred as a
result.
2. EDDO
and Blast shall HOLD HARMLESS AND INDEMNIFY each of the Quicksilver Releasees
from and against any and all claims, demands, obligations or causes of action
made by anyone claiming by, through or under EDDO or Blast or either of them
related to
the
claims released herein, together with any costs, expenses or attorney fees
incurred as a result. Notwithstanding the provisions of this clause,
it is specifically agreed that EDDO and the EDDO Releasees shall have no
obligation to indemnify or defend Quicksilver or the Quicksilver Releasees from
and against any and all claims, demands, obligations or causes of action made by
the Eagle parties.
D. Successors
and Assigns Bound. This Agreement
shall bind and benefit each Party’s successors, predecessors, agents, employees,
representatives, counsel, owners, directors, shareholders, members, managers,
insurers, assigns, subsidiaries, parent corporations, affiliated entities or
sister corporations, as the case may be, and all others claiming by, through or
under such Party.
E. Severability. Should any
provision of this Agreement be held invalid by a court of competent
jurisdiction, it is agreed that this shall not affect the validity or
enforceability of any other provision and that the Parties shall attempt in good
faith to renegotiate the failed provision so as to effectuate the purpose of and
to conform to the law regarding such provision. In the event the
Parties are unable to renegotiate the provision, then they hereby agree to waive
a jury such that the issue shall be resolved, if at all, by a court of competent
jurisdiction.
F. Controlling
Law. This Agreement is
entered into in Texas and shall be construed, interpreted and enforced in
accordance with Texas law without reference to choice-of-law rules.
G. Integration. This Agreement is
fully integrated, it represents the entire understanding of the Parties, there
are no other agreements, representations, promises or negotiations that have not
been expressly embodied herein and this Agreement supersedes any and all prior
agreements with respect to the subject matter hereof. The recitals of
this Agreement are contractual and are considered material.
H. Modification
in Writing. This Agreement
may be amended or modified only by a writing executed by the Party to be charged
with the modification.
I. Independent
Legal Advice. Each Party
acknowledges and represents that it has received independent legal advice and
has not relied upon any representations of any other Party or its agents,
employees, representatives or counsel on any subject contained in this Agreement
or otherwise, other than as expressly set forth in this Agreement.
J. No
Admissions. This Agreement is
entered into for the purpose of buying peace and settling disputed
claims. By entering into this Agreement, the Parties do not
acknowledge, but instead deny liability.
K. Captions. The paragraph
titles appearing in this Agreement are for convenience only and shall not by
themselves determine the construction of this Agreement.
L. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.
M. Terms to
be Read in Context. Singular and
plural terms, as well as terms stated in the masculine, feminine or neuter
gender, shall be read to include the other(s) as the context requires in order
to effectuate the full purposes of this Agreement.
N. Mutually
Drafted. The drafting of
this Agreement is a mutual effort among the Parties and their counsel; thus,
this Agreement is not to be construed against any Party as the
drafter.
O. Confidentiality. The terms of
this Agreement are strictly confidential and shall not be disclosed by any Party
except: (i) as necessary to enforce them, (ii) as otherwise required
by law or Court order, or (iii) to a Party’s auditors, legal counsel or other
advisors having a need to know. If required for enforceability, the
Party desiring to disclose the terms
shall take reasonable
steps to attempt to file under seal. The Parties shall not
issue or cause to be issued any press releases announcing or relating to the
Agreement. This provision does not preclude EDDO or Blast from
complying with disclosure regulations required by law, including any required
disclosure of the terms of this Agreement in any SEC Form 8-K
filing.
O. Confidentiality. The terms of
this Agreement are strictly confidential and shall not be disclosed by any Party
except: (i) as necessary to enforce them, (ii) as otherwise required
by law or Court order, or (iii) to a Party’s auditors, legal counsel or other
advisors having a need to know. If required for enforceability, the
Party desiring to disclose the terms shall
take reasonable steps to attempt to file under seal. The Parties
shall not issue or cause to be issued any press releases announcing or relating
to the Agreement. This provision does not preclude EDDO or Blast from
complying with disclosure regulations required by law, including any required
disclosure of the terms of this Agreement in any SEC Form 8-K
filing.
P. Notice. All notices,
requests or other communications required or permitted to be given under this
Agreement shall be in writing and shall be delivered by hand or courier or
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, and addressed to the party to whom notice is to be given at
such party’s address as set forth below. Any such notice, request or
other communication shall be considered received on the date of hand or courier
delivery or on the third day following deposit in the United States mail as
provided above. A carbon copy of all notices, requests or other
communications to Quicksilver shall be sent by facsimile or e-mail to the
attention of its attorneys, Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxx, at (000)
000-0000 or xxxxxx@xxx-xxx.xxx
and xxxxxxx@xxx-xxx.xxx. Likewise, a carbon copy of all notices,
requests or other communications to EDDO shall be sent by facsimile to the
attention of its attorneys, Xxxxxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxxxx, at (000)
000-0000 or xxxxxxxx@xxxxxx.xxx
and xx@xxxxxx.xxx.
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Address
for Quicksilver:
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Quicksilver
Resources Inc.
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Attn: Xxxx
Xxxxxx
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000
Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
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Xxxx
Xxxxx, Xxxxx 00000
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Address
for EDDO:
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Eagle
Domestic Drilling Operations, LLC
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00000
Xxxxxx Xxxxx Xxxx., Xxxxx 000
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Xxxxxxx,
Xxxxx 00000
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EACH
PARTY FURTHER STATES THAT IT HAS CAREFULLY READ THIS AGREEMENT; THAT THIS
AGREEMENT HAS BEEN FULLY EXPLAINED TO IT BY COUNSEL OF ITS CHOICE; THAT IT FULLY
UNDERSTANDS THE FINAL AND
BINDING
EFFECT OF THIS AGREEMENT; THAT THE ONLY PROMISES MADE TO IT TO SIGN THIS
AGREEMENT ARE THOSE STATED ABOVE; AND THAT IT IS SIGNING THIS AGREEMENT
VOLUNTARILY.
EXECUTED
to be effective as of September 17th,
2008.
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QUICKSILVER
RESOURCES INC.
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By:
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Printed
Name:
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Title:
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By:
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/s/
Xxxx X’Xxxxx
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Printed
Name:
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Xxxx
X’Xxxxx
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Title:
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CEO
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EAGLE
DOMESTIC DRILLING OPERATIONS, LLC
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By:
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/s/Xxxx
XxxXxxxxx
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Printed
Name:
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Xxxx
XxxXxxxxx
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Title:
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CFO
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STATE OF
TEXAS §
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COUNTY OF
TARRANT §
This instrument was acknowledged before
me on September ___, 2008, by ______________________________, the
______________________________ of Quicksilver Resources Inc., on behalf of said
entity.
__________________________________________
Notary Public, State of
Texas
STATE OF
Texas §
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COUNTY OF
Xxxxxx
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This instrument was acknowledged before
me on September 17th, 2008, by Xxxx X’Xxxxx, the CEO of Blast Energy Services,
Inc., on behalf of said entity.
/s/ Xxxxx
X. Xxxxx
Notary Public, State of
Texas
STATE OF
Texas
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COUNTY OF
Xxxxxx §
This instrument was acknowledged before
me on September 17th, 2008, by Xxxx XxxXxxxxx, the CFO of Eagle Domestic
Drilling Operations, LLC, on behalf of said entity.
/s/ Xxxxx
X. Xxxxx
Notary Public, State of
Texas
