Exhibit 10.1

 

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

 

This Settlement Agreement and Mutual Release (this “Agreement”) is entered into
as of April 4, 2019 (the “Effective Date”) by and among (i) Adler Hot Oil
Holdings, LLC, a Delaware limited liability company, and Adler Hot Oil Holdings
Liquidating Trust, a Minnesota trust, an assignee of Adler Hot Oil Holdings, LLC
(collectively, “Seller”), (ii) Adler Hot Oil Service, LLC, a Delaware limited
liability company (the “Company”), (iii) Enservco Corporation, a Delaware
corporation (“Buyer”) and (iv) Spell Capital Mezzanine Partners SBIC, LP, a
Delaware limited partnership (“Spell”), Aldine Capital Fund II, L.P., a Delaware
limited partnership (“Aldine Capital”), Aldine SBIC Fund, L.P., a Delaware
limited partnership (“Aldine SBIC”), EXMARQ Capital Partners, Inc., a Minnesota
corporation (“Exmarq”), and United Insurance Company of America, an Illinois
corporation (“Kemper” and together with Spell, Aldine Capital, Aldine SBIC and
Exmarq, collectively the “Members”). The Seller and the Members are collectively
referred to as the “Seller Parties” and Company and the Buyer are collectively
referred to herein as the “Buyer Parties”. The Seller Parties and the Buyer
Parties are collectively referred to herein as the “Parties”.

 

RECITALS

 

The Parties enter into this Agreement with reference to the following facts:

 

A.     The Parties (other than Adler Hot Oil Holdings Liquidating Trust) are the
parties to a Membership Interest Purchase Agreement dated as of October 26, 2018
(the “Purchase Agreement”) under which Adler Hot Oil Holdings, LLC sold to Buyer
all of the membership interests of the Company. The Purchase Agreement appoints
Spell as the “Seller/Member Representative” to act as the representative of the
Seller and the Members.

 

B.     Pursuant to the Purchase Agreement, the Buyer issued to Seller a
Subordinated Promissory Note dated October 26, 2018 in the face amount of
$4,800,000 (the “Subordinated Note”).

 

C.     Various disputes and disagreements have arisen between the Buyer Parties
on the one hand, and the Seller Parties on the other hand. Subject to and on the
terms of this Agreement, the Parties wish to resolve their disputes, to amend
the Purchase Agreement and the Subordinated Note, and to release all claims,
known and unknown, which any of the Seller Parties may have against any of the
Buyer Parties, or which any of the Buyer Parties may have against any of the
Seller Parties.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration and intending to be legally bound hereby,
the Parties agree as follows:

 

1.     Amendment of Purchase Agreement. As of the Effective Date, subject to
Spell’s receipt on behalf of the Seller Parties of the payment referred to in
the third paragraph of Section 2 below, the Purchase Agreement is hereby amended
as follows:

 

(a)     the existing text of Section 2.02(f), regarding the $1 million Indemnity
Holdback Payment, is hereby deleted and replaced by the words “[intentionally
deleted]”;

 

(b)     the existing text of Section 2.02(h), regarding an earn-out payment of
up to $1 million, is hereby deleted and replaced by the words “[intentionally
deleted]”;

 

(c)     the existing text of Section 2.07, regarding the earn-out, is hereby
deleted and replaced by the words “[intentionally deleted]”;

 

(d)     the existing text of Section 2.08, regarding the Indemnity Holdback
Payment, is hereby deleted and replaced by the words “[intentionally deleted]”;
and

 

(e)     in Section 2.02(g) of the Purchase Agreement, which refers to the
Subordinated Note, the existing text reading “the principal sum of $4,800,000”
is hereby amended to read “the principal sum of $4,500,000”.

 

2.     Amendment of Subordinated Note. As of the Effective Date, subject to
Spell’s receipt on behalf of the Seller Parties of the payment referred to in
the third paragraph of this Section 2, the Subordinated Note is hereby amended
to change all references to “$4,800,000” in the Subordinated Note to
“$4,500,000”, such that the provision in the second paragraph of the
Subordinated Note referring to payment on March 31, 2019 of “all remaining
outstanding principal” shall mean the principal sum of $3,500,000.

 

Spell acknowledges that on April 1, 2019 the Buyer paid to Spell for the account
of the Members the sum of $1,500,000, consisting of $1,475,111.11 in principal
and $24,888.89 in interest at the rate of 8% per annum on the sum of $3,500,000
from February 28, 2019 until April 1, 2019.

 

The Buyer agrees to pay Spell for the account of the Members on or before April
10, 2019 the remaining principal balance of $2,024,888.89, together with
interest at the rate of 8% per annum on that remaining principal balance from
April 1, 2019 until the date of the payment, and the Parties agree that such
payment, if made, will constitute timely payment in full of all remaining
amounts due under the Subordinated Note. Notwithstanding the previous sentence,
if the Buyer is unable because of limitations on its cash on hand and borrowing
availability to pay on or before April 10, 2019 the full amount of the remaining
unpaid principal and interest, then on April 10, 2019 the Buyer shall pay Spell
as much of the remaining unpaid principal and interest as the Buyer’s cash on
hand and borrowing availability shall then permit, and the Buyer shall pay Spell
all of the remaining unpaid principal and interest no later than the close of
business on Friday, April 19, 2019, which payment, if made, will constitute
timely payment in full of all remaining amounts due under the Subordinated Note.
If all remaining unpaid principal and interest has not been paid on or before
the close of business on April 19, 2019, this Agreement shall be void.

 

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3.     Release by the Seller Parties. Each of the Seller Parties, for itself,
its successors, assigns and affiliates, hereby releases each of the Buyer
Parties, and each of the Buyer Parties’ past or current employees, officers,
directors, stockholders, members, attorneys and agents, and their respective
successors, predecessors, assigns, heirs, executors, administrators, attorneys,
agents and representatives, from any and all demands, claims and causes of
action, known or unknown, existing or that may exist, whether matured or
unmatured, liquidated or unliquidated, absolute or contingent, suspected or
unsuspected, at law, in equity or otherwise, arising out of or related to (i)
the sale and purchase of the Company, (ii) the Purchase Agreement or the
Ancillary Documents referred to therein, (iii) the Company, (iv) loans by any
Seller Parties to the Company, or (v) the transactions or activities connected
with any of the foregoing or any prior dealings of any of the Seller Parties, on
the one hand, and the Buyer Parties on the other hand. Each of the Seller
Parties acknowledges that it may hereafter discover facts different from or in
addition to those now known or believed to be true with respect to such demands,
claims or causes of action, and agrees that this Agreement and the above release
are and will remain effective in all respects notwithstanding any such
differences or additional facts. Notwithstanding the foregoing, nothing in this
Section 3 of this Agreement shall release or discharge any claims arising from a
breach of this Agreement or of the provisions of Sections 5.01
(Confidentiality), 5.02 (Non-Competition; Non-Solicitation), 5.04 (Books and
Records), 5.06 (Employees and Employee Benefits), 5.07 (Further Assurances),
5.08 (Tail Policy) or Articles VI (Tax Matters) or IX (Miscellaneous) of the
Purchase Agreement.

 

4.     Releases by the Buyer Parties. Each of the Buyer Parties, for itself, its
successors, assigns and affiliates, hereby releases each of the Seller Parties,
and each of the Seller Parties’ past or current employees, officers, directors,
stockholders, members, attorneys and agents, and their respective successors,
predecessors, assigns, heirs, executors, administrators, attorneys, agents and
representatives, from any and all demands, claims and causes of action, known or
unknown, existing or that may exist, whether matured or unmatured, liquidated or
unliquidated, absolute or contingent, suspected or unsuspected, at law, in
equity or otherwise, arising out of or related to (i) the sale and purchase of
the Company, (ii) the Purchase Agreement or the Ancillary Documents referred to
therein, (iii) the Company, (iv) loans by any of the Seller Parties to the
Company, or (v) the transactions or activities connected with any of the
foregoing or any prior dealings of any of the Seller Parties, on the one hand,
and Buyer Parties on the other hand. Each of Buyer Parties acknowledges that it
may hereafter discover facts different from or in addition to those now known or
believed to be true with respect to such demands, claims or causes of action,
and agrees that this Agreement and the above release are and will remain
effective in all respects notwithstanding any such differences or additional
facts. Notwithstanding the foregoing, nothing in this Section 4 of this
Agreement shall release or discharge any claims arising from a breach of this
Agreement or of the provisions of Sections 5.01 (Confidentiality), 5.02
(Non-Competition; Non-Solicitation), 5.04 (Books and Records), 5.06 (Employees
and Employee Benefits), 5.07 (Further Assurances), 5.08 (Tail Policy) or
Articles VI (Tax Matters) or IX (Miscellaneous) of the Purchase Agreement.

 

5.     Acknowledgments and Representations of Seller Parties. The Seller Parties
each represent to each of the Buyer Parties that none of the Seller Parties has
filed or otherwise initiated any legal, administrative or other proceedings
against any of the Buyer Parties, or any of their respective stockholders,
members, officers, employees or directors, and that they have not assigned,
transferred or encumbered any of the rights waived or released hereunder. In the
event any of the Seller Parties institutes or files or causes to be instituted
or filed any action or proceeding to prosecute a claim that has been released by
this Agreement, the Seller Parties will defend and indemnify each of the Buyer
Parties from and against any loss or liability (including but not limited to
reasonable attorneys’ and expert fees incurred, costs incurred or assessed, and
judgments or settlements paid) incurred in connection with any such action or
proceeding.

 

6.     Acknowledgments and Representations of Buyer Parties. The Buyer Parties
each represent to each of the Seller Parties that none of the Buyer Parties has
filed or otherwise initiated any legal, administrative or other proceedings
against any of the Seller Parties, or any of their respective stockholders,
members, officers, employees or directors, and that they have not assigned,
transferred or encumbered any of the rights waived or released hereunder. In the
event any of the Buyer Parties institutes or files or causes to be instituted or
filed any action or proceeding to prosecute a claim that has been released by
this Agreement, the Buyer Parties will defend and indemnify each of the Seller
Parties from and against any loss or liability (including but not limited to
reasonable attorneys’ and expert fees incurred, costs incurred or assessed, and
judgments or settlements paid) incurred in connection with any such action or
proceeding.

 

7.     Confidentiality. Except that any of the Parties may disclose the fact
that the Parties have arrived at a mutually agreeable settlement, from and after
the Effective Date, each of the Parties expressly agrees to keep the nature,
terms and substance of this Agreement and all disputes among them to the date of
this Agreement, strictly confidential, and to refrain from disclosing the same
at any future time, or to any other person or party whatsoever, except: (a) to
the extent required by law (including federal or state securities laws); (b) as
may reasonably be necessary in the course of preparing and filing their income
tax returns; (c) as may reasonably be necessary in the course of any legal
proceedings; or (d) to actual or prospective lenders. Specifically exempted from
this provision will be disclosure to a Party’s legal counsel and individuals who
assist them in tax or financial advice and preparation, or disclosure pursuant
to compelled process of law; provided, however, that such exceptions are
conditioned upon the Parties instructing such individuals to abide by this
confidentiality provision and obtaining from each such individual a commitment
not to further disclose such information to any other person or entity
whatsoever, with the recognition that such individuals’ breaches of this
confidentiality provision could cause significant harm to the other Parties
hereto.

 

8.     Non-Disparagement. From and after the date hereof, no Party (or its
affiliates, stockholders, members, officers, directors, employees or agents)
shall, in any way or to any person, entity or governmental or regulatory body or
agency, denigrate or derogate any other Party or any of that other Party’s past
or present affiliates, stockholders, members, officers, directors, employees,
agents, products, services or procedures, whether or not such denigrating or
derogatory statements shall be true and whether or not such statements are based
on acts or omissions learned before or after the date hereof, or based on acts
or omissions which occurred before or occur after the date hereof, or otherwise.
A statement shall be deemed denigrating or derogatory to any person or entity if
it materially adversely affects the regard or esteem in which such person or
entity is held by others. This paragraph does not apply to the extent that any
such statements are contained in testimony required by legal process, and are
necessary to respond truthfully and accurately to a question posed pursuant to
such process.

 

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9.     Further Cooperation and Assurances. Each Party agrees to execute,
acknowledge and deliver any and all documents and to undertake all acts
reasonably necessary to carry out and perform its obligations hereunder.

 

10.     No Reliance on Representations by Other Parties. This Agreement is
executed without reliance upon any representation by any of the Parties or their
agents concerning the nature or extent of any damages or legal liability, and
each Party has read the contents hereof, has been fully advised by counsel as to
the consequences thereof, and has signed this Agreement as a free act. There are
no warranties, representations or other agreements between the Parties in
connection with the subject matter hereof, except as specifically set forth
herein, and the Parties have not relied on any statements, representations,
documents, agreements or warranties (other than those expressly set forth in
this document) in executing this Agreement.

 

11.     No Admission. This Agreement is entered into for purposes of settlement
and compromise only. Neither this Agreement nor anything contained herein, nor
any act or thing done in connection herewith, is intended to be or shall be
construed or deemed to be an admission or presumption by any Party of liability,
fault or wrongdoing, or the existence or amount of any claimed damages, or of
the admission or presumption by any party of any fact, allegation, claim or
defense whatsoever.

 

12.     No Assignments. The Parties represent and warrant that they have not
assigned any claim, right or interest relating to any of the released claims to
any other person or entity, and they are each fully entitled to release the
released claims in Sections 3 and 4 hereof.

 

13.     Independent Legal Advice and Authority. Each of the Parties to this
Agreement hereby severally represents, warrants and agrees as follows:

 

(a)     Such Party executing this Agreement has received, to whatever extent it
wishes, independent legal advice from its counsel regarding the meaning and
legal effect of this Agreement, and regarding the advisability of making the
agreements provided for herein, and executing this Agreement, and fully
understands the same.

 

(b)     Such Party executing this Agreement has the full right, power and
authority to enter into this Agreement, and this Agreement is a legal, valid and
binding obligation of such Party hereto, enforceable in accordance with its
terms.

 

14.     Tax Matters. Each of the Parties agrees that it will be solely liable
for all of its own tax obligations arising from this Agreement and shall
indemnify and hold harmless the other Parties from any tax obligations of the
indemnifying Party arising from this Agreement that are sought to be imposed on
any other Party.

 

15.     Costs and Attorneys’ Fees. The Parties shall bear their own respective
attorneys’ fees, costs and expenses incurred in connection with their dealings
with the other Parties, including but not limited to the negotiation of this
Agreement and the disputes that are the subject of this Agreement.

 

16.     Integrated Agreement. This Agreement constitutes and contains the entire
agreement and understanding among the Parties, and supersedes and replaces all
prior and contemporaneous negotiations and agreements, proposed or otherwise,
whether written or oral, concerning the subject matter hereof. There have been
no representations, warranties, covenants or undertakings other than as
expressly set forth herein.

 

17.     Waivers and Modifications Must Be in Writing. No waiver of any breach of
any term or provision of this Agreement shall be construed to be, nor shall be,
a waiver of any other breach of this Agreement. No waiver shall be binding
unless in writing and signed by the Party against whom such waiver is sought to
be enforced. No modification of this Agreement shall be effective unless in
writing and signed by authorized representatives of all Parties.

 

18.     Provisions Severable. Each provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason whatsoever by an arbitrator or a court of competent
jurisdiction, such illegality or invalidity shall not affect the balance of the
terms and provisions hereof, which terms and provisions shall remain binding and
enforceable.

 

19.     Captions. Captions used herein are for convenience only and shall not be
deemed to be a part of this Agreement or be used to construe any of the
provisions hereof.

 

20.     No Presumptions. Each Party agrees that, in any dispute regarding the
enforcement, interpretation or construction of this Agreement, no presumption
shall operate in favor of or against any Party hereto by virtue of its role in
drafting or not drafting the terms and conditions set forth herein. Each Party
and its attorney has had the opportunity to review and comment on drafts of this
Agreement, and this Agreement shall in all respects be deemed to have been
jointly drafted by the Parties.

 

21.     Binding on Successors. The provisions of this Agreement shall inure to
the benefit of, and shall be binding upon, the heirs, executors, estates,
administrators, assigns, and successors in interest of each of the Parties.

 

22.     Time of the Essence. The Parties understand and agree that time is of
the essence in connection with all of the obligations set forth in this
Agreement.

 

23.     Governing Law. This Agreement shall be construed according to and
governed by the laws of the State of Colorado.

 

24.     Consent to Jurisdiction. THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL
COURT OR COLORADO STATE COURT SITTING IN THE CITY AND COUNTY OF DENVER,
COLORADO; AND EACH PARTY HERETO CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT.
IN THE EVENT ANY PARTY COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THIS
AGREEMENT, ANY OF THE OTHER PARTIES AT ITS OPTION SHALL BE ENTITLED TO HAVE THE
CASE TRANSFERRED TO THE JURISDICTION AND VENUE ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

 

25.     Waiver of Trial by Jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREIN, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.

 

26.     Counterparts and Fax of PDF Signatures. This Agreement may be executed
in counterparts, each of which shall be deemed an original and all of which
taken together shall constitute a single instrument. Photographic copies of
signed counterparts may be used in lieu of the originals for any purpose. A
faxed or electronically transmitted signature shall have the same force and
effect as an original ink signature.

 

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IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement and
Mutual Release as of the date above stated.

 

ADLER HOT OIL SERVICE, LLC, a Delaware limited liability company

 

By:     /s/ Ian Dickinson                          

Name:    Ian Dickinson                           

Title:      Manager                                    

 

 

ADLER HOT OIL HOLDINGS, LLC, a Delaware limited liability company

 

By:__/s/ Stacy Harmsen_________

Name:     Stacy Harmsen                 

Title: President                                

 

 

ADLER HOT OIL HOLDINGS LIQUIDATING TRUST, a Minnesota trust

(assignee of ADLER HOT OIL HOLDINGS, LLC)

 

By:__/s/ Stacy Harmsen_________

Name:     Stacy Harmsen                 

Title: Trustee                                   

 

 

SPELL CAPITAL MEZZANINE PARTNERS SBIC, LP, a Delaware limited partnership

By: SCMP Management I, LLC, General Partner

 

By:__/s/ Stacy Harmsen_________

Name:     Stacy Harmsen                 

Title: Managing Director                

 

 

EXMARQ CAPITAL PARTNERS, INC., a Minnesota corporation

 

By:    /s/ Ryan McKinney                           

Name: Ryan McKinney

Title: President

 

 

ALDINE CAPITAL FUND II, L.P., a Delaware limited partnership

By: Aldine GP II, LLC, General Partner

 

By:   /s/ Albert L. Brahm                            

Name:    Albert L. Brahm                           

Title:     Vice President                           

 

ALDINE SBIC FUND, L.P., a Delaware limited partnership

By: Aldine SBIC Partners, LLC, General Partner

 

By:   /s/ Albert L. Brahm                            

Name:    Albert L. Brahm                           

Title:     Vice President                           

 

 

UNITED INSURANCE COMPANY OF AMERICA, an Illinois corporation

 

By:     /s/ Jonathan Wilson                          

Name:     Jonathan Wilson                          

Title:     Assistant Treasurer                          

 

 

ENSERVCO CORPORATION, a Delaware corporation

 

By:     /s/ Ian Dickinson                          

Name: Ian Dickinson                             

Title: President and Chief Executive Officer