Wallen Settlement Agreement CAUSE NO. 11259
EXHIBIT
10.1
Xxxxxx
Settlement Agreement
CAUSE NO.
11259
QUEST OIL
CORPORATION § IN
THE DISTRICT COURT OF
§
Plaintiff §
§
v.
§ XXXXXXXXX
COUNTY, TEXAS
§
XXXXXX X.
XXXXXX AND B&B OIL,
INC. §
§
Defendants
§ 216th
JUDICIAL DISTRICT
This COMPROMISE SETTLEMENT AGREEMENT
entered into by and between Quest Oil Corporation (“Quest”) and Xxxxxx X. Xxxxxx and B&B Oil, Inc. and any and
all of his/its
affiliates (collectively referred to herein as “Xxxxxx”) is as
follows:
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1.
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This
agreement and all of the terms herein are binding upon and inure to the
benefit of Quest and Xxxxxx’x respective successors, heirs, assigns, and
personal representatives.
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2.
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Other
than the above-styled and numbered lawsuit filed by Quest against Xxxxxx
in Xxxxxxxxx County, Texas, Quest and Xxxxxx hereby represent to each
other that they have not filed any complaints, charges, actions,
administrative charges or legal proceedings against the other party with
any federal, state or local governmental agency or court. Quest
and Xxxxxx further represent to each other that they have not made any
promises to induce execution of this Release except for the promises or
agreement specifically set forth
herein.
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3.
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As
consideration for Quest dismissing and releasing its claims and demands in
the above-referenced lawsuit and thereby dissolving a Temporary
Restraining Order against Xxxxxx in connection therewith, Xxxxxx agrees to
the following: Upon execution of this Compromise Settlement Agreement,
Xxxxxx shall contemporaneously assume all debts and obligations (and/or
alleged debts and obligations) of Quest, PetroStar Oil Services, Inc.,
and/or Wallstin Petroleum, LLC with respect to the vendors/ creditors of
leases any such entities are or have been involved with in XxXxxxxxxx
County, Texas and Eastland County, Texas, including, but not limited to,
those vendors/ creditors listed on Exhibit “A” attached hereto and by this
reference incorporated herein. The list attached as Exhibit “A”
is not meant to be exhaustive and Xxxxxx agrees to contemporaneously
assume all debts and obligations, whether now known or unknown by Quest,
PetroStar Oil Services, Inc., Wallstin Petroleum, LLC or Xxxxxx with
regard to all leases Quest, PetroStar Oil Services, Inc., and/or Wallstin
Petroleum, LLC is or has been involved with in XxXxxxxxxx County, Texas
and Eastland County, Texas. Xxxxxx hereby specifically acknowledges the
ongoing litigation between Quest Oil Corporation and a former alleged
vendor, Cisco Pump, Inc. filed in the 00xx
Xxxxxxxx Xxxxx in and for Eastland County, Texas. Should any debt or
obligation (or alleged debt or obligation) of Quest, PetroStar Oil
Services, Inc., and/or Wallstin Petroleum, LLC with respect to the
vendors/ creditors of properties/leases any such entities are or have been
involved with in XxXxxxxxxx County, Texas and Eastland County, Texas,
including, but not limited to, those vendors/ creditors listed on Exhibit
“A” attached hereto and by this reference incorporated herein be asserted
against Quest, PetroStar Oil Services, Inc., and/or Wallstin Petroleum,
LLC or should any judgment be rendered against Quest, PetroStar Oil
Services, Inc., and/or Wallstin Petroleum, LLC related to same, Xxxxxx
agrees to fully and completely indemnify Quest, PetroStar Oil Services,
Inc., and/or Wallstin Petroleum, LLC from any and all claims made by any
such vendors/ creditors or any liens by way of subrogation or otherwise,
such indemnity to include the entity’s attorneys’ fees and costs. Further,
with regard to the foregoing, Xxxxxx specifically hereby agrees that
Quest, PetroStar Oil Services, Inc., and/or Wallstin Petroleum, LLC shall
be allowed to place a lien against any such properties/leases such
entities are or have been involved with in XxXxxxxxxx County, Texas and
Eastland County, Texas as a result of or with regard to any such debts or
obligations (or alleged debts or
obligations).
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a.
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Upon
execution of this Compromise Settlement Agreement, Xxxxxx shall
contemporaneously assume all previously existing, current and/or future
liabilities of Quest, PetroStar Oil Services, Inc., and/or Wallstin
Petroleum, LLC with regard to leases in XxXxxxxxxx County, Texas and
Eastland County, Texas, including, but not limited to, plug and
abandonment liabilities, all Texas Railroad Commission or other state or
federal fees, fines, or penalties, claims for personal injuries, or other
liabilities as a result of incidents, events or occurrences related to
such leases.
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b.
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Upon
execution of this Compromise Settlement Agreement, Xxxxxx shall
contemporaneously assume all previously existing, current and/or future
known and/or unknown liabilities related to a 2004 Ford F-250 registered
in the name of Wallstin Petroleum, LLC (VIN# 0XXXX00X0XXX00000),
including, but not limited to, an existing loan in Wallstin Petroleum,
LLC’s name with Xxxxx Fargo Bank
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c.
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Upon
execution of this Compromise Settlement Agreement, Xxxxxx hereby agrees to
release Quest, PetroStar Oil Services, Inc., and/or Wallstin Petroleum,
LLC from any and all previously existing and current amounts owed, due or
payable to Wallen
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d.
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For
the one (1) year following the date this agreement is executed, Quest
shall receive the right to participate in any debt or equity capital
raisings related to any properties Xxxxxx leases, purchases or is
otherwise involved with, whether same occurs contemporaneously with or
occurs after the execution of this Compromise Settlement Agreement. Xxxxxx
shall provide written notice of such debt or equity capital raising to
Quest via facsimile at (000) 000-0000 or overnight mail,
addressed to Quest Oil Corporation, 0000 Xxxxx xxx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000 or at a different address or facsimile
number provided to Xxxxxx by Quest after the date of the execution of this
Compromise Settlement Agreement. Quest shall be provided
fifteen (15) days after the date of receipt of such correspondence to make
a commitment for such capital raising and shall deposit funds related to
same in an escrow account of Quest’s choosing no later than twenty (20)
days after the date of receipt of such
correspondence.
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e.
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Quest
shall receive the right to participate in all future
operations, including drilling, derived from any lands, to the extent
that Xxxxxx is ever to secure such lands, in Eastland County, Texas and
XxXxxxxxxx County, Texas, that were previously under the control of Quest,
PetroStar Oil Services, Inc., and/or Wallstin Petroleum,
LLC. Xxxxxx shall provide written notice of such future
operations to Quest via facsimile at (000) 000-0000 or overnight mail,
addressed to Quest Oil Corporation, 0000 Xxxxx xxx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000 or at a different address or facsimile
number provided to Xxxxxx by Quest after the date of the execution of this
Compromise Settlement Agreement. Prior to each future
operation, including drilling opportunity, Quest shall be provided an
option period of no less than thirty (30) days from the date of receipt of
such notice in order to participate in such future operation in one of the
following forms:
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i.
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a
Gross Overriding Royalty (“XXXX”) and/or a Overriding Royalty Interest
(“ORRI”) in an amount equal to five percent (5%) with no additional
capital commitment for all properties Xxxxxx leases, purchases or is
otherwise involved with that were previously under the control of Quest,
PetroStar Oil Services, Inc., and/or Wallstin Petroleum, LLC., whether
same has occurred prior to, occurs contemporaneously with or occurs after
the execution of this Compromise Settlement
Agreement;
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ii.
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A
Working Interest (“WI”) in an amount equal to twelve and one half percent
(12.5%), with no additional capital commitment, for all properties Xxxxxx
leases, purchases or is otherwise involved with that were previously under
the control of Quest, PetroStar Oil Services, Inc., and/or Wallstin
Petroleum, LLC., whether same has occurred prior to, occurs
contemporaneously with or occurs after the execution of this Compromise
Settlement Agreement; or
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iii.
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as
an equal joint venture (50-50 split) for all properties Xxxxxx leases,
purchases or is otherwise involved with that were previously under the
control of Quest, PetroStar Oil Services, Inc., and/or Wallstin Petroleum,
LLC., between Xxxxxx and Quest and any other party or parties in which
Quest will provide fifty percent (50%) of the cash required to participate
in an AFE. In the event Quest elects to participate, Quest will be
notified by Xxxxxx in the manner set forth above within thirty (30) days
of spud. An Authority for Expenditure (“AFE”) will be provided
by Xxxxxx in the manner set forth above followed by Cash Call. Cash Call
must be paid by Quest within seven (7) business of receipt of an AFE
provided by Xxxxxx, which was sent in writing to Quest via facsimile at
(000) 000-0000 or overnight mail,
addressed to Quest Oil Corporation, 0000 Xxxxx xxx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000 or at a different address or facsimile number
provided to Xxxxxx by Quest after the date of the execution of this
Compromise Settlement Agreement.
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x.
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Xxxxxx
and its affiliates will assist Quest with obtaining a release of funds
underlying certain deposits held in connection with the Texas Railroad
Commission operator licenses held by Quest Oil Corporation and Wallstin
Petroleum, LLC that Xxxxxx X. Xxxxxx was responsible for setting up while
an employee of Quest. These funds include, but may not be
limited to; (i) funds held in connection with a bond posted with the Texas
Railroad Commission on behalf of Quest Oil Corporation; and (ii) funds
held in connection with a letter of credit provided to the Texas Railroad
Commission on behalf of Wallstin Petroleum, LLC. These funds will
immediately be provided and returned to Quest upon their
release.
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4.
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This
Agreement shall not be construed as an admission of wrongdoing or
liability by the parties. Any and all such wrongdoing or
liability is expressly denied. In respect of this Agreement,
the parties hereby agree not to disparage, criticize, insult, malign,
libel or slander the other party, its owners, officers, employees, agents
or services in any way from the date
hereof.
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5.
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All
of Quest’s expenses growing out of or resulting from the above-referenced
and styled action, including attorneys’ fees, and all other costs and
expenses, are the responsibility of and will be paid by
Quest. All of Xxxxxx’x expenses growing out of or resulting
from the above-referenced and styled action, including attorneys’ fees,
and all other costs and expenses, are the responsibility of and will be
paid by Xxxxxx.
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6.
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Each
individual executing this Agreement on behalf of any party represents and
warrants that he is fully authorized to execute and deliver this Agreement
on behalf of such party in accordance with its terms, and that this
Agreement is not in violation of, inconsistent with or contrary to the
provisions of any agreement to which it is a
party.
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7.
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This
Compromise Settlement Agreement contains the entire agreement of the
parties with respect to the matters contemplated hereby. This
Release may be amended or modified only by a written instrument executed
by the parties.
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8.
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If
any provision of this Compromise Settlement Agreement is held by a court
of competent jurisdiction to be unenforceable, the balance of this
Compromise Settlement Agreement shall nevertheless continue in full force
and effect unaffected by such holding and
determination
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9.
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This
Compromise Settlement Agreement shall be binding upon the parties and
their respective successors, assigns, heirs and
representatives.
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Upon execution below, the parties shall
have accepted all of the aforementioned terms and conditions and shall have
entered into a binding agreement.
XXXXXX
X. XXXXXX
/s/
Xxxxxx X. Xxxxxx
__________________________________
By: Xxxxxx X. Xxxxxx
An: Individual
B & B OIL COMPANY
/s/
Xxxxxx X. Xxxxxx
___________
By: Xxxxxx X. Xxxxxx
Its: President
QUEST OIL CORPORATION
/s/
Xxxxx X. Panther, II
________________
By: Xxxxx X. Panther, II
Its: Interim Chief Executive
Officer
EXHIBIT
A
QUEST
ACCOUNTS PAYABLE
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Vendor
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Amount
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3D
AG Services
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351.50
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AB
Well Service
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8,036.65
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Brenco
Well Service
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12,497.50
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Cap
Rock Energy
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28.90
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Cellular
One
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57.73
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Cisco
Pump
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20,658.25
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Dynochem
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595.38
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Xxxx
Xxxxx
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150.00
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Had
Drilling
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13,675.88
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Heart
S
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780.70
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Oilfield
Supply
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8,826.97
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Otex
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10,800.00
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Seller
Sales
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5,391.59
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Sequoia
Fossil Fuels
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320.00
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T&S
Services
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5,564.80
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Texas
Work Commission
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19.09
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Xxxxxxx
Roustabout Service
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13,425.20
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Xxxxxxx
Tank & Supply
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3,290.63
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Wheats
Oilfield Service
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550.00
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Comanche
Electric
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2,146.11
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Davidson
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2,620.00
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Digital
Mapping Services
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200.00
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Xxxxxxx
Engineering
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7,100.00
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JWS
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18,500.00
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Xxxxxxxxx County
Appraisal
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21.25
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Petroleum
Motor Transport
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100.00
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Xxxxxx
Xxxxxxx
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8,096.97
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Xxxxx
Xxxxxx Construction
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285.00
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Westar
Energy
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188.48
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