Exhibit 10.1
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement And Mutual Release ("Agreement") is made and
entered into as of the 23rd day of December, 2003 by and between Trans Energy,
Inc. ("TEI"), a Nevada Corporation, Xxxxxx Xxxxxxxx and Xxxxx Xxxxxx on the one
hand and Xxxxx Xxxxxx Oilfield Operations, Inc. d/b/a Xxxxx Xxxxxx Inteq,
Western Geophysical, a division of Western Atlas International, Inc. and any of
their subsidiaries, affiliates or related entities (collectively the "Xxxxx
Entities") on the other hand.
1. RECITALS
--------
A. The Xxxxx Entities obtained a judgment against TEI in the amount of
$600,665.36 plus post-judgment interest at the rate of 10% per annum by entry of
an Agreed Final Judgment (the "Agreed Judgment") in the 189th Judicial District
Court of Xxxxxx County, Texas, Cause No. 1998- 48248. The Xxxxx Entities
obtained an additional judgment against TEI in the amount of $41,142.00 plus
post-judgment interest at the rate of 10% per annum by entry of a Final Judgment
(the "Judgment") in the 152nd Judicial District Court of Xxxxxx County, Texas,
Cause No. 1998-8777. Collectively both judgments are herein referred to as the
"Judgments."
B. The Xxxxx Entities and TEI entered into a Settlement Agreement dated
February 2, 2001 (the "February Agreement") concerning the terms of the payment
for the obligations owed by TEI to the Xxxxx Entities for the Judgments.
Pursuant to the February Agreement, TEI agreed to pay the Xxxxx Entities the
amount of $759,664.31, plus interest thereon at 10% from the date of the
"Initial Payment as defined in the February Agreement and in accordance with the
payment schedule contained in the February Agreement. As part of such
settlement, Xx. Xxxxxxxx (the "Xxxxxxxx Pledge") and Xx. Xxxxxx (the "Xxxxxx
Pledge") each delivered their Security Agreement/Pledge dated February 1, 2001
and TEI delivered to the Xxxxx Entities a Deed Of Trust dated February 1, 2001,
and recorded February 14, 2001, in Book 1646 at Page 478 - 479 in the Office of
the County Clerk, Xxxxxxxx County, Wyoming (the "Deed of Trust"). Subsequently,
TEI assigned to the Xxxxx Entities TEI's' right to certain production payments
by agreement dated February 28, 2002, and recorded March 15, 2002, in Book 1140
of Photos at Pages 346-349 in the Office of the County Clerk, Xxxxxxxx County,
Wyoming (the "Production Assignment").
C. TEI admits that it is in default of its payment obligations under
the February Agreement and the Judgments and that the unpaid balance of
$577,702.01 (representing principle and accrued interest through July 14, 2003)
is now past due and owing (the "Claims").
1
D. The Xxxxx Entities, Xx. Xxxxxxxx, Xx. Xxxxxx and TEI enter into this
Agreement to resolve fully and finally all TEI obligations to the Xxxxx Entities
arising from TEI's default of the February Agreement, the Judgments or
otherwise.
II. AGREEMENT
---------
In consideration of the covenants and agreements herein, and of the
payment of $350,000 in cash or by cashier(s) check made payable to Xxxxx Xxxxxx,
Inc. by Xxxxx Xxxxxx to the Xxxxx Entities, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby expressly
acknowledged by TEI, TEI, Xx. Xxxxxx, Xx. Xxxxxxxx and the Xxxxx Entities hereby
agree as follows:
A. Payment to the Xxxxx Entities from Trans Energy. Inc.
-----------------------------------------------------
Xx. Xxxxxx, for the benefit of TEI agrees to pay the Xxxxx Entities the
amount of $350,000 in cash or by cahier's check made payable to Xxxxx Xxxxxx,
Inc., contemporaneously with the delivery to the parties. (i) this Agreement,
(ii) the Release and Reassignment of Production Payment and Deed of Trust, (iii)
documents releasing any judgment liens against TEI by the Xxxxx Entities filed
in West Virginia and/or Texas, (iv) a UCC Termination Statement to be filed in
West Virginia, (v) cancelled originals of the Deed of Trust and the pledge
agreements of Xx. Xxxxxxxx and Xx. Xxxxxx and (vi) the original. stock
certificates and cancelled, blank stock powers certificates delivered with the
pledge agreements (collectively the "Settlement Documents").
B. Prior payments and production payments
--------------------------------------
The Xxxxx Entities will retain all prior payments received from TEI, or
on its behalf, in addition to all payments heretofore received or which may be
or become due under the Production Assignment on or before the date of this
Agreement. Any such payments received by TEI shall be immediately paid to the
Xxxxx Entities.
C. Delivery of the Settlement Documents
------------------------------------
Contemporaneously with the delivery of the $350,000. by TEI to the
Xxxxx Entities, the Xxxxx Entities shall deliver the Settlement Documents,
appropriately executed and notarized (as may be required). TEI shall be solely
responsible for filing any of the Settlement Documents with any state, federal,
county or other government entity, department or agency, as TEI may deem
appropriate, at TEI's sole cost and expense.
2
III. RELEASE AND INDEMNIFICATION
A. TEI's Release of the Xxxxx Entities
----------------------------------
For and in consideration of the covenants and agreements of the Xxxxx
Entities in this Agreement, each of TEI, Xx. Xxxxxxxx and Xx. Xxxxxx (the "TEI
Releasors") hereby RELEASES, DISCHARGES, AND ACQUITS the Xxxxx Entities, their
employees, agents, representatives, directors, shareholders, officers,
affiliates, subsidiaries, heirs, executors, administrators, insurers, assigns,
attorneys and legal representatives, and each of them (the "Xxxxx Releasees")
from any and all judgments and claims of any kind whatsoever, including without
limitation, demands, debts, dues, liens, or causes of action at law, in equity,
in contract, or in tort, under the common law or a statute, regulation, or law
of the State of Texas or any other state or jurisdiction, or the United States,
as well as claims for damages of any kind whatsoever, including without
limitation, lost profits, loss of income, any other economic losses or damages,
punitive, exemplary, consequential, treble, or additional damages of any kind,
attorneys fees, court costs, prejudgment interest, post-judgment interest, and
any other damages, that the TEI Releasors, or any of them, have or might have or
have incurred or might incur, irrespective of when or how any such arose or may
have arisen, whether now or in the future, including without limitation, in any
way arising from or related to the Claims, the Judgments, or either of them, the
collection and enforcement of the Judgments or either of them, the filing of the
2003 Bankruptcy and/or any involuntary bankruptcy petition and/or the entry of
any order for relief in any such bankruptcy case, including without limitation
claims related to venue or any other matter, whether now known or unknown, and
irrespective of whether any such could have, with the exercise of reasonable
diligence been discovered, it being the specific intention of the TEI Releasors
by this Agreement to release and discharge the Xxxxx Releasees from any and all
claims the TEI Releasor's, or any of them, have or may have, arising, or alleged
to have arisen, as a result of any conduct of any sort, of any person or entity,
including without limitation the Xxxxx Releasees, or any of them, on or before
the date of this Agreement or in connection with the filing of the 2003
Bankruptcy, the Judgments or the February Agreement, or otherwise, and excepting
from this release only claims for the breach of this Agreement. As further
consideration for this Agreement, TEI hereby stipulates that the Xxxxx Entities
properly and timely served the Involuntary Petition and the Summons on TEI in
the 2003 Bankruptcy.
B. TEI's Indemnification of the Xxxxx Entities
-------------------------------------------
FOR THE SAME CONSIDERATION AS HEREINABOVE GIVEN BY THE XXXXX ENTITIES,
THE TEI RELEASORS, AND EACH OF THEM, EXPRESSLY AGREE TO FULL Y DEFEND,
INDEMNIFY, AND HOLD HARMLESS THE XXXXX RELEASEES FROM ANY CLAIM, DEMAND,
LIABILITY, COST, OR EXPENSE OF ANY KIND OR CHARACTER, INCLUDING, WITHOUT
LIMITATION, FOR ATTORNEY'S FEES INCURRED, WHICH MAY ARISE, ARISE, AND/OR ARE
ALLEGED TO HAVE ARISEN AS A RESULT OF CLAIMS
3
AND/OR ALLEGATIONS MADE BY ANY PERSON OR ENTITY ARISING BY, THROUGH, OR UNDER
THE TEI RELEASORS, OR ANY OF THEM, IN CONNECTION WITH ANY MATTER RELEASED
HEREUNDER, REGARDLESS OF WHETHER SAID LIABILITY BE DIRECT OR BY WAY OF
INDEMNITY, CONTRIBUTION, OR SUBROGATION.
C. The Xxxxx Entities' Release of TEI. Xxxxxxxx and Xxxxxx
-------------------------------------------------------
For and in consideration of the covenants and agreements of TEI in this
Agreement, The Xxxxx Entities hereby RELEASE, DISCHARGE, AND ACQUIT TEI, its
employees, agents, representatives, directors, shareholders, officers,
affiliates, subsidiaries, heirs, executors, administrators, insurers, assigns,
attorneys and 1egal representatives, Xx. Xxxxxx and Xx. Xxxxxxxx, and each of
them, (the "TEI Releasees") from any and all judgments and claims of any kind
whatsoever, including without limitation, demands, debts, dues, liens, or causes
of action at law, in equity, in contract, or in tort, under the common law or a
statute, regulation, or law of the State of Texas or any other state or
jurisdiction, or the United States, as well as claims for damages of any kind
whatsoever, including without limitation, lost profits, loss of income, any
other economic losses or damages, punitive, exemplary, consequential, treble, or
additional damages of any kind, attorneys fees, court costs, prejudgment
interest, post-judgment interest, and any other damages, that the Xxxxx
Entities, or any of them, have or might have or have incurred, in any way
arising at any time prior to the effective date of this Agreement, irrespective
of how any such arose or may have arisen, including without limitation, in any
way arising from or related to the Claims, the Judgments, or either of them, or
any other matter, whether now known or unknown, and irrespective of whether any
such could have, with the exercise of reasonable diligence been discovered prior
to the execution of this Agreement, it being the specific intention of the Xxxxx
Entities by this Agreement to release and discharge the TEI Releasees from any
and all claims which could or may be made or brought by through or under the
Xxxxx Entities, or any of them, arising, or alleged to have arisen, as a result
of any conduct of any sort, of the TEI Releasees, or any of them, occurring on
or before the date of this Agreement, including without limitation all matters
in any way related to the Judgments and excepting from this release only claims
for the breach of this Agreement. The Deed of Trust, the Xxxxxxxx Pledge, the
Xxxxxx Pledge and the Production Assignment are hereby, in all things,
cancelled. The Judgments are hereby RELEASED.
D. Final Release.
-------------
1. It is the mutual intent of the Parties hereto that this Agreement is
and shall be final, conclusive, binding, enforceable and non-terminable as of,
from and after the Effective Date of this Agreement, and
2. Regardless of any change in the law (statutory, decisional or
otherwise) at any time after the date of this Agreement; and/or whether any of
the facts with respect to or otherwise on the basis of which any Party has
entered into and/or executed this Agreement, is at any time after the date of
4
this Agreement found or proven to be different in any manner whatsoever from the
facts now believed by any Party to be true as of the date of the execution of
this Agreement; and/or
3. The discovery after the date of the execution of this Agreement, of
any additional claims which any Party to this Agreement may have had against any
other Party and all related facts and circumstances.
E. Further Documents - No Liability
--------------------------------
Upon the reasonable request of TEI to the Xxxxx Entities, and the
delivery to the Xxxxx Entities by TEI of the appropriate document, the Xxxxx
Entities shall execute and deliver to TEI for filing, such other and further
releases as may be necessary to fully effectuate the intent of this Agreement.
All costs of preparation and filing shall be paid by TEI. Absent the
unreasonable failure of the Xxxxx Entities to execute and deliver such
documents, if any, within a reasonable time, which in no event shall be less
than sixty (60) days from the date the Xxxxx Entities receive the document, TEI
agrees that the Xxxxx Entities shall have no liability whatsoever to TEI for any
damages incurred by TEI with respect to any release delivered pursuant to this
paragraph.
IV. THE BANKRUPTCY DISMISSAL
------------------------
A. Motion to Dismiss the Bankruptcy Case.
-------------------------------------
After the execution and delivery of this Agreement, the Xxxxx Entities
agree to submit to the Bankruptcy Court a Motion to Dismiss the Bankruptcy Case
(the "Motion to Dismiss"). The motion to Dismiss shall provide, in part, that a
basis for the dismissal includes the settlement of the Claims. The parties may
also submit a request for expedited hearing on the Motion to Dismiss, and the
parties hereto shall consent to expedited consideration of the Motion to
Dismiss.
B. Payment of Bankruptcy Costs, Fees, Administrative Expenses,
Trustee's Fees and Trustee's Attorney's Fees
--------------------------------------------------------------
Contemporaneously with the dismissal of the Bankruptcy Case, TEI shall
pay all costs, fees, administrative expenses, Trustee's fees and Trustee's
attorney's fees incurred in connection with the Bankruptcy Case, excluding the
attorneys' fees of the Xxxxx Entities.
V. ARBITRATION
------------
Any dispute between the parties arising by virtue of this Agreement,
the Judgments, or otherwise, concerning any matter, at law, or in equity shall
be finally determined by arbitration before an arbitrator from the American
Arbitration Association, in accordance with the rules of the American
arbitration Association as promulgated from time to time. A party may request
three
5
arbitrators in which event TEI and the Xxxxx Entities shall each choose one
arbitrator who shall together choose a third, but the party requesting three
arbitrators shall pay for two of them in advance. The cost of arbitration and
attorneys fees incurred shall be paid by the non-prevailing party, which shall
be determined by the arbitrator. Any such arbitration shall be conducted in
Houston, Texas and the award shall. not be appealable in any state or federal
court and may be entered in any state or federal court as a final judgment of
said court.
VI. MISCELLANEOUS PROVISIONS
------------------------
A. The Xxxxx Entities and TEI expressly warrant and represent as part
of the consideration for the execution of this Agreement that they have
consulted with an attorney or advisor of their choosing prior to executing this
Agreement. The Parties, each for him or itself, further warrant that they are
fully competent to execute this Agreement and that this Agreement is executed
voluntarily and without reliance on any representation of any kind or character
not expressly herein set forth.
B. The Parties expressly understand and agree that the agreements
herein contained and the consideration transferred is to compromise disputed
claims, avoid further litigation, and buy peace, and that no payments made nor
releases or other consideration given shall be construed as an admission of
liability, all liability being expressly denied.
C. The Xxxxx Entities, TEI, Xx. Xxxxxxxx and Xx. Xxxxxx each expressly
warrant and represent that each for himself or itself, respectively, has not
assigned, pledged, or otherwise, in any manner whatsoever, sold or transferred
any right, title, interest, or claim which they have or may have, individually
or collectively, in connection with, related to, or arising out of the
Settlement Documents, Claims, the Judgments and/or the matters released by this
Agreement.
D. The terms of this Agreement are contractual and not mere recitals.
E. This Agreement may be executed in one or more counterparts, all of
which together shall constitute one instrument.
F. This Agreement constitutes the entire agreement between the parties.
Unless specifically set forth in this Agreement there are no understandings or
representations of any sort upon which any party hereto relies as an inducement
to execute this Agreement.
6
G. No provisions of this Agreement shall be amended, modified or waived
except by an express writing duly signed by the party against whom such
amendment, modification or waiver is asserted.
H. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT GIVING ANY EFFECT TO ANY LAWS OR PROVISIONS
CONCERNING CONFLICTS OR CHOICES OF LAWS.
I. All notices, requests, demands, and other communications under this
Agreement shall be deemed to have been duly given on the date of service and
served personally on the party to whom notice is to be given, or on the third
day after mailing if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid, and properly addressed as
follows:
To: Western Geophysical, a division
of Western Atlas International, Inc. and
Xxxxx Xxxxxx Oilfield Operations, Inc.
d/b/a Xxxxx Xxxxxx Inteq
c/o Xxxxxxx X. Xxx, P .C.
0000 Xxxxx Xx.
Xxxxxxx, Xxxxx 00000
To: Trans Energy, Inc.
x/x Xxxxx Xxxxxx
000 Xxxxxx Xxxxxx
X.X. Xxx 000
Xx. Xxxxx, Xxxx Xxxxxxxx 00000
J. The subject headings in this Agreement are included for purposes of
convenience only and shall not affect the construction or interpretation of any
of its provisions.
K. No consent or waiver expressed or implied by any Party to this
Agreement to or of any breach or default by any other Party to this Agreement in
the performance by such other Party of its or his obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any breach or default of
any other Party of the same or any subsequent obligations hereunder. Failure on
the part of any Party to this Agreement to complain of any act or failure to act
of any Party to this Agreement or to declare such Party in default, irrespective
of how long such failure continues, shall not constitute a waiver by the
non-defaulting Parties of their rights hereunder.
7
L. If any provision of this Agreement is held to be unlawful, invalid
or unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable, and this Agreement shall be construed
and enforced without giving effect to such unlawful, invalid or unenforceable
provision.
IN WITNESS WHEREOF, the parties sign this Agreement effective as of the
23rd day of December 2003.
XXXXX XXXXXX OILFIELD OPERATIONS,
INC. d/b/a XXXXX XXXXXX INTEQ and
WESTERN GEOPHYSICAL, a division of
WESTERN ATLAS INTERNATIONAL, INC.
BY: /s/ Xxxxxxxxxxx Xxxx
--------------------------------
Xxxxxxxxxxx Xxxx
ITS: Manager of Collections,
Authorized Agent
TRANS ENERGY, INC.
BY: /s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
ITS: Vice President
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx, Individually
/s/ Xxxxxxx Xxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxx, Individually
8
