UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT …Release Agreement. 5 The project underlying the...

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

IN RE: * CHAPTER 11 *

* CASE NO. 19-34698 (DRJ) *

KP ENGINEERING, LP, et al1 * * (Jointly Administered) Debtor *

NOTICE OF SETTLEMENT

Michael D. Warner (the “Liquidation Trustee”), in his capacity as liquidation trustee for

the KP Engineering Liquidation Trust (the “Trust”) pursuant to the Third Amended Joint Chapter

11 Plan of Reorganization of KP Engineering, LP and KP Engineering, LLC2 (the “Plan”),

confirmed by the Court’s Order Confirming Third Amended Joint Chapter 11 Plan of

Reorganization of KP Engineering, LP and KP Engineering, LLC3 (the “Confirmation Order”),

and that certain Liquidation Trust Agreement dated June 22, 2020 (the “Trust Agreement”);

Saulsbury Industries, Inc. (the “Saulsbury”); Targa Channelview, LLC n/k/a Hartree

Channelview, LLC (the “Targa”); and Smith & Loveless, Inc. (the “S&L”) (collectively, the

Liquidation Trustee, Saulsbury, Targa, and S&L are referred to herein as the “Parties”), have

reached a settlement regarding the issues raised in Adversary Proceeding Number 20-03122 (the

“Channelview Adversary”) and the related proofs of claim filed in the above-captioned bankruptcy

cases by Saulsbury, Targa and S&L.

1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are KP Engineering, LP (7785) and KP Engineering, LLC (0294). The location of the Debtors’ corporate headquarters and the Debtors’ service address is: 5555 Old Jacksonville Hwy., Tyler, TX 75703 2 P-575. 3 Id.

Case 19-34698 Document 682 Filed in TXSB on 12/03/20 of 4

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While the terms of the settlement are fully and completely set forth in the Settlement and

Mutual Release Agreement attached hereto as Exhibit “A”, the salient terms are as follows:4

1. The Liquidation Trustee, on behalf of the Trust, will release all claims and interests in and

to the $6,425,109.98 retainage related to the Channelview Project5 withheld by and in

Targa’s possession (the “Retainage”);

2. Saulsbury will: (a) withdraw its $22,043,435.20 Proof of Claim No. 1, according to Omni’s

records, (Claim No. 1 according to the Claims Registry)6 filed against debtor KP

Engineering, LLC; and (b) amend its $22,043,435.20 Proof of Claim No. 6, according to

Omni’s records, (Claim No. 3 according to the Claims Registry) filed against debtor KP

Engineering, LP, so as to result in an allowed claim totaling $16,043,435.00, composed of

(i) an allowed Class 7 general unsecured claim of $3,314,447.76 and (ii) an allowed

subordinated Class 7 general unsecured claim of $12,728,987.44;

3. Targa will amend its $27,003,892.21 Proof of Claim No. 91, according to Omni’s records,

(Claim No. 62 according to the Claims Registry) to an allowed claim totaling

$4,438,931.51, composed of (a) an allowed Class 7 general unsecured claim of

$3,438,931.51, and (b) an allowed subordinated Class 7 unsecured claim of $1,000,000.00;

4. S&L will amend its $521,525.00 Proof of Claim No. 32, according to Omni’s records, to

reduce it to an allowed Class 7 general unsecured claim totaling $96,415.02;

5. Saulsbury will file a stipulation of dismissal of all of its claims against Targa and KP

Engineering, LP, including those asserted in the Channelview Adversary;

4 What follows is strictly a summary, and not intended to be a modification of the terms of the Settlement and Mutual Release Agreement. 5 The project underlying the Channelview Adversary, within which the Debtor KP Engineering, LP contracted with Targa for the design and construction of a crude oil splitter plant on real property belonging to Targa situated in Channelview, Texas (the “Channelview Project”). 6 Omni was the Debtors’ claims agent and assigned claims numbers to claims filed with Omni. In some instances claims were filed directly with the Clerk of the Court (the Claims Registry), and assigned different claim numbers.


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6. S&L will file a stipulation of dismissal of its Cross-Claim in the Channelview Adversary;

and

7. The Parties will execute mutual waivers and releases, including (a) a release of the

Liquidation Trustee and Trust from any and all claims, damages, liens and lawsuits of any

kind or description arising out of, or pertaining in any way to the dispute, the Channelview

Adversary, the Retainage, or the Channelview Project, and (b) the Liquidation Trustee, on

behalf of the Trust, release of claims against Targa, Saulsbury and S&L. Such releases

shall expressly exclude, inter alia, (1) Saulsbury’s claims in Cause No. 2020-05764

pending in the District Court of Harris County, Texas, 165th Judicial District against

certain non-debtors (the Liquidation Trustee will agree that the Trust will not assert that

such claims are property of the Trust); (2) the amended claims filed by Targa, Saulsbury

and S&L as required by the settlement; and (3) any claims or causes of action by and

between Targa Pipeline Mid-Continent Westtex, LLC, and its successors and assigns, on

the one hand, and the Liquidation Trustee and/or the Trust, on the other hand, arising out

of the Johnson Project7, the Johnson Interpleaded Funds, the Johnson Project Litigation (as

defined in the Debtor’s confirmed plan [Dkt.-568-1]), or relating to Targa Pipeline Mid-

Continent Westtex, LLC’s claim no. 84, according to Omni’s records, (claim no. 59

according to the Claim Registry).

The Liquidation Trustee files this Notice of Settlement pursuant to Sections VII(a)(2) of

the Plan and 6.1 of the Trust Agreement because the proposed settlement results in Allowed Claims

equal to and greater than $100,000.

CREDITORS AND PARTIES-IN-INTEREST HAVE 14 DAYS FROM THE DATE OF THIS NOTICE TO FILE AN OBJECTION TO THE PROPOSED SETTLEMENT WITH

7 The project wherein debtor KP Engineering, LP contracted with Targa Pipeline Mid-Continent Westtex LLC for the design and construction of a 200MM cf/day gas cryogenic plant.


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THE BANKRUPTCY COURT. IF NO OBJECTION IS FILED WITHIN 14 DAYS, THE TRUSTEE SHALL, WITHOUT FURTHER ORDER OF THE COURT, CONSUMATE AND IMPLEMENT THE PROPOSED SETTLEMENT.

Respectfully Submitted,

Dated: December 2, 2020

By: /s/ Brooke W. Altazan_____

STEWART ROBBINS BROWN & ALTAZAN, LLC

Brooke W. Altazan (TX Bar # 24101002) [email protected] Paul Douglas Stewart, Jr. (La. Bar # 24661, admitted to SDTX) [email protected] Baton Rouge, LA 70801-0016 Telephone: (225) 231-9998 Facsimile: (225) 709-9467 Attorneys for Michael D. Warner, Liquidation Trustee

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing was duly served by electronic transmission to all registered CM/ECF users appearing in the case on this 3rd day of December 2020. /s/ Brooke W. Altazan Brooke W. Altazan


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IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

IN RE KP ENGINEERING, LP, et al., § Case No. 19-34698§

Debtors. § § Chapter 11 §

SAULSBURY INDUSTRIES, INC., § (Jointly Administered)§

Plaintiff, § §

v. § Adversary No. 20-03122 §

KP ENGINEERING, LP, TARGA § CHANNELVIEW LLC, AND SMITH & §LOVELESS, INC., §

§ Defendants. §

SETTLEMENT AND MUTUAL RELEASE AGREEMENT

This Settlement and Mutual Release Agreement (the “Agreement”) is entered into on November __, 2020 by and among:

Parties

KP Engineering Liquidation Trustee (“KPE Liquidation Trustee”), the duly-appointed trustee of the KP Engineering Liquidation Trust, a trust vested with the authority to prosecute and settle certain claims of and against KP Engineering, LP, and KP Engineering, LLC, (collectively, the “Debtors”) and on behalf of which the KPE Liquidation Trustee is authorized to act (the “KPE Liquidation Trust”);

and

Targa Channelview LLC n/k/a Hartree Channelview LLC, together with its directors, officers, partners, members, managers, limited partners, general partners, employees, shareholders, consultants, agents, advisors, member affiliates, affiliates, predecessors, successors, assigns, representatives, subsidiaries, divisions, and joint venturers (collectively “Targa”);

and

Saulsbury Industries, Inc., together with its directors, officers, partners, members, managers, limited partners, general partners, employees, shareholders, consultants, agents,

Exhibit "A"

Case 19-34698 Document 682-1 Filed in TXSB on 12/03/20 Page 1 of 21

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advisors, member affiliates, affiliates, predecessors, successors, assigns, representatives, subsidiaries, divisions, and joint venturers (collectively, “Saulsbury”); and

Smith & Loveless, Inc., together with its directors, officers, partners, members, managers,

limited partners, general partners, employees, shareholders, consultants, agents, advisors, member affiliates, affiliates, predecessors, successors, assigns, representatives, subsidiaries, divisions, and joint venturers (collectively “Smith & Loveless”);

Each of the KPE Liquidation Trustee, Targa, Saulsbury, and Smith & Loveless, sometimes

being individually referred to as a “Party,” or collectively referred to as the “Parties.”

Recitals WHEREAS, pursuant to a contract by and between Targa Terminals, LLC and KP

Engineering, LP (the “Targa Contract”), KP Engineering LP was to perform the engineering, construction and installation of a Condensate Crude Oil Splitter, Flare and LPG Storage Area, and Tank Farm for Targa located in Harris County, Texas (the “Project”);

WHEREAS, pursuant to an assignment agreement by and between Targa and Targa

Terminals, LLC, Targa Terminals, LLC assigned to Targa all its rights, title and interests in, to and under, among other things, the Targa Contract;

WHEREAS, pursuant to a contract by and between Saulsbury and KP Engineering, LP,

Saulsbury was to provide certain construction materials and services in connection with the Project;

WHEREAS, pursuant to a contract by and between Smith & Loveless and KP Engineering,

LP, Smith & Loveless was to provide certain construction materials and services in connection with the Project;

WHEREAS, the Debtors filed Chapter 11 bankruptcy cases in the United States

Bankruptcy Court, for the Southern District of Texas, Houston Division (the “Bankruptcy Court”), styled Case No. 19-34698 (Jointly Administered); In re KP Engineering, LP (the “Bankruptcy Cases”);

WHEREAS, Saulsbury filed an Adversary Proceeding against KP Engineering, LP, Targa,

and Smith & Loveless, Inc., in the Bankruptcy Court styled Case No. 20-03122; Saulsbury Indus. Inc., v. KP Engineering, LP, Targa Channelview, LLC, and Smith & Loveless, Inc. (the “Adversary Proceeding”), seeking a determination of the validity, priority, and extent of the parties’ respective rights and interests in at least $6,425,109.98 in retainage held by Targa relating to the Project (the “Retainage”);

WHEREAS, Smith & Loveless filed a Cross-Claim in the Adversary Proceeding also

seeking a determination of the validity, priority, and extent of the parties’ respective rights and interests in the Retainage (“Smith & Loveless Cross-Claim”);


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WHEREAS, the Bankruptcy Court has confirmed a (Joint) Third Amended Chapter 11 Plan of KP Engineering, LP and KP Engineering, LLC (“Chapter 11 Plan”), which established the KPE Liquidation Trust and appointed the KP Engineering Trustee to, among other things, prosecute and resolve certain claims, including all claims held by the Debtors’ estates prior to the effective date of the Chapter 11 Plan related to the Adversary Proceeding, the Project, the Retainage, and the “Class 5 Claims” (which include the Targa Proof of Claim, Saulsbury Proofs of Claim 6 and 1, and the Smith & Loveless Proof of Claim);

WHEREAS, the Chapter 11 Plan provides for the appointment of the KP Engineering

Trustee to act as trustee of the KPE Liquidation Trust and be vested with the exclusive authority to, among other things, administer, investigate, prosecute, settle and abandon certain claims and causes of action held by the Debtors’ estates prior to the effective date of the Chapter 11 Plan, including claims and causes of action related to the Adversary Proceeding, the Project, the Retainage, and Class 5 Claims;

WHEREAS, on January 13, 2020, Targa filed Proof of Claim No. 91, according to the

records of the KPE Liquidation Trust’s claims and noticing agent, Omni Agent Solutions (“Omni”), (Proof of Claim No. 62 according to the Bankruptcy Court’s Claim Registry) in Case No. 19-34698 in the amount of $27,003,892.21 (“Targa Proof of Claim”);

WHEREAS, on September 6, 2019, Saulsbury filed Proof of Claim No. 6, according to

Omni’s records, (Claim No. 3 according to the Bankruptcy Court’s Claim Registry) in Case No. 19-34698 (“Saulsbury Proof of Claim 6”) and a duplicate Proof of Claim No. 1, according to both Omni’s records and the Bankruptcy Court’s Claim Registry, in related Case 19-34699 (“Saulsbury Proof of Claim 1”), in the amount of $22,043,435.20;

WHEREAS, on November 5, 2019, Smith & Loveless filed Proof of Claim No. 32 in Case

No. 19-34698 in the amount of $521,525.00 (“Smith & Loveless Proof of Claim”); WHEREAS, Targa and Saulsbury have entered into a separate settlement agreement dated

September 1, 2020 (“Saulsbury/Targa Settlement Agreement”) settling certain disputes related to the Project, and in which Targa agreed to pay Saulsbury a sum of $6,000,000.00 from the Retainage (the “Saulsbury Payment”), the effectiveness of which is expressly contingent upon the execution, Bankruptcy Court approval and completion of this Agreement;

WHEREAS, except as expressly excluded below under paragraphs 11 and 12, the Parties

desire to fully, finally and forever settle and compromise all claims and other matters between them pertaining to any and all events relating to the Adversary Proceeding and the Project, including but not limited to all lawsuits or other claims by and between the Parties relating to the Retainage (collectively, the “Dispute”), it being the express intent of the Parties that this Agreement be broadly interpreted to resolve all such matters and to buy peace;

WHEREAS, the Parties admit no liability by entering into this Agreement, and moreover,

expressly deny and disclaim any liability whatsoever to any other Party to this Agreement.


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Agreement of the Parties

NOW, THEREFORE, for and in consideration of the releases, covenants, representations, acknowledgements, warranties, indemnities, recitals and the other terms of this Agreement, the sufficiency of which the Parties acknowledge, the Parties agree as follows:

1. Effective Date. The Effective Date of this Agreement shall be the date that is the later of

(i) execution of the Agreement by all Parties and (ii) 15 days following the filing by the KPE Liquidation Trustee of a notice of this Agreement in the Bankruptcy Case pursuant to the Chapter 11 Plan and to which no objection is filed; or, if an objection is filed to such notice, the entry of an order that has become final and non-appealable and which is in full force and effect and has not been suspended, reserved, modified, vacated or stayed, and as to which (a) the time to appeal or move for a new trial, re-argument or rehearing or other relief has expired, and as to which no appeal, petition for certiorari or other proceedings for a new trial, re-argument or rehearing or other relief shall then be pending; or (b) if an appeal, new trial, re-argument, rehearing or motion for other relief has been sought or granted (i) such Settlement Order shall have been affirmed by the highest court to which such Settlement Order was or may be appealed, certiorari shall have been denied, or a new trial, re-argument or rehearing or other motion for relief shall have been denied, or if granted, shall have resulted in no modification or revision of such Settlement Order, and (ii) the time to take any further appeal, or move for a new trial, re-argument, rehearing or for other relief with respect to the Settlement Order shall have expired (a “Final Settlement Order”) and which Final Settlement Order shall be final, effective and fully enforceable.

2. Condition Precedent. Targa and Saulsbury acknowledge as of the Effective Date, all

conditions precedent necessary to obligate Targa and Saulsbury under the Targa/Saulsbury Settlement Agreement have been met.

3. Release of Interest in Retainage. As of the Effective Date the KPE Liquidation Trustee

on behalf of the KPE Liquidation Trust hereby relinquishes all claims and interests, whether asserted or otherwise, to the Retainage.

4. Smith & Loveless Lien Release. No later than five (5) business days after the Effective

Date, Smith & Loveless will provide to counsel for Smith & Loveless in trust a Final Release of Lien in the form attached hereto as Exhibit 1 (the “S&L Final Release of Lien”).

5. Targa Payment. Upon counsel for Smith & Loveless’s confirmation to counsel for Targa of its receipt of the S&L Final Release of Lien required in paragraph 4, Targa will, within 10 calendar days of such confirmation, make payment to Smith & Loveless from the Retainage of $425,109.98 by wire (the “S&L Payment”) to the account below:

Account Number: 110300218671 ABA/Routing: 101000925 Bank: Security Bank of Kansas City


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For the Benefit of: Smith & Loveless, Inc.

6. Dismissal of Proceedings. Within three (3) business days from the date of the S&L Payment and receipt by Saulsbury of the Saulsbury Payment, Saulsbury shall file a stipulation of dismissal with prejudice of its claims against Targa and KP Engineering, LP in the Adversary Proceeding. In this same time period, Smith & Loveless shall also file a stipulation of dismissal with prejudice of the Smith & Loveless Cross-Claim. Smith & Loveless will also, within this timeframe, provide to counsel for Targa the executed S&L Final Release of Lien. Upon receipt from Smith & Loveless, counsel for Targa will record the S&L Final Release of Lien.

7. Amendment of Proofs of Claim in Bankruptcy Proceeding. No later than ten (10)

business days after the Effective Date, Targa, Saulsbury, and Smith & Loveless shall file amended Proofs of Claim in the Bankruptcy Cases as follows:

Targa shall

o file an Amended Targa Proof of Claim reducing the amount of its Proof of Claim number 91 to $4,438,931.51, composed of the following amounts (“Amended Targa Proof of Claim”): $3,438,931.51 as a Class 7 general unsecured claim,

representing claims by Targa for defective work ($2,311,134.09); liquidated damages ($1,000,000.00); remaining lien claims ($69,589.40), and attorneys’ fees and costs incurred prior to the Bankruptcy Cases ($58,208.02); and

$1,000,000.00 as a Class 7 unsecured claim, representing Targa’s remaining claim for unpaid liquidated damages, which amount will be treated, by agreement of Targa, as subordinated to all other allowed Class 7 general unsecured claims; and

o after filing the Amended Targa Proof of Claim, solely for Omni’s administrative purposes, withdraw the Targa Proof of Claim.

o For the avoidance of doubt, the Amended Targa Proof of Claim will be deemed timely filed and allowed as provided herein. For the avoidance of doubt, upon the occurrence of the Effective Date, no party may object to or otherwise challenge the Amended Targa Proof of Claim.

o Should Targa receive payment from a source other than the KPE Liquidation Trust that reduces the amount due Targa under the Amended Targa Proof of Claim, Targa shall promptly file an amendment reducing the Amended Targa Proof of Claim accordingly, and applying such payments to the non-subordinated portion of its claim first.

o For the avoidance of doubt, the allowed Amended Targa Proof of Claim does not include an assertion of any trust or constructive trust


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claims under Chapter 162 of the Texas Property Code, or other such applicable law, against any recoveries or liquidation of assets by the KPE Liquidation Trust.

Saulsbury shall o file an Amended Saulsbury Proof of Claim number 6 reducing the

amount of its Proof of Claim to $16,043,435.20, composed of the following amounts: (“Amended Saulsbury Proof of Claim number 6”): $3,314,447.76 as a Class 7 general unsecured claim; and $12,728,987.44 as Class 7 unsecured claim, which amount

will be treated, by agreement of Saulsbury, as subordinated to all other allowed Class 7 general unsecured claims; and

o withdraw Saulsbury Proof of Claim number 1; o For the avoidance of doubt, the Amended Saulsbury Proof of Claim

number 6 will be deemed timely filed and allowed as provided herein and shall constitute Saulsbury’s only proof of claim. For the avoidance of doubt, upon the occurrence of the Effective Date, no party may object to or otherwise challenge the Amended Saulsbury Proof of Claim number 6.

o Should Saulsbury receive payment from a source other than the KPE Liquidation Trust that reduces the amount due Saulsbury under the Amended Saulsbury Proof of Claim number 6, Saulsbury shall promptly file an amendment reducing the Amended Saulsbury Proof of Claim number 6 accordingly, and applying such payments to the non-subordinated portion of its claim first.

o For the avoidance of doubt, the allowed Amended Saulsbury Proof of Claim number 6 does not include an assertion of any trust or constructive trust claims under Chapter 162 of the Texas Property Code, or other such applicable law, against any recoveries or liquidation of assets by the KPE Liquidation Trust.

Smith & Loveless shall

o file an Amended Smith & Loveless Proof of Claim reducing the amount of its Proof of Claim number 32 to $96,415.02, which will be a Class 7 general unsecured claim (“Amended Smith & Loveless Proof of Claim”);

o withdraw the Smith & Loveless Proof of Claim number 32. o For the avoidance of doubt, the Amended Smith & Loveless Proof

of Claim will be deemed timely filed and allowed as provided herein and shall constitute Smith & Loveless’s only proof of claim. For the avoidance of doubt, upon the occurrence of the Effective Date, no party may object to or otherwise challenge the Amended Smith & Loveless Proof of Claim.

o Should Smith & Loveless receive payment from a source other than the KPE Liquidation Trust that reduces the amount due Smith &


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Loveless under the Amended Smith & Loveless Proof of Claim, Smith & Loveless shall promptly file an amendment providing such credit.

o For the avoidance of doubt, the allowed Amended Smith & Loveless Proof of Claim does not include an assertion of any trust or constructive trust claims under Chapter 162 of the Texas Property Code, or other such applicable law, against any recoveries or liquidation of assets by the KPE Liquidation Trust.

8. Release of Claims by Smith & Loveless Against Targa. SMITH & LOVELESS

SHALL, WITHOUT FURTHER ACTION ON ITS PART, FOREVER RELEASE, ACQUIT, AND DISCHARGE TARGA FROM ANY AND ALL CLAIMS, DAMAGES, LIENS AND LAWSUITS OF ANY KIND OR DESCRIPTION ARISING OUT OF, OR PERTAINING IN ANY WAY TO THE DISPUTE, THE ADVERSARY PROCEEDING, THE RETAINAGE, OR THE PROJECT REGARDLESS OF WHETHER ANY SUCH CLAIMS HAVE ACCRUED, AND REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE ASCERTAINABLE, SUCH CLAIMS, DAMAGES, LIENS, AND LAWSUITS INCLUDING, BUT NOT BEING LIMITED TO, THOSE THAT WERE MADE, ALLEGED, OR BROUGHT, OR THAT COULD HAVE BEEN MADE, ALLEGED, OR BROUGHT EXCEPTING ONLY THE RESERVED RIGHTS AND OBLIGATIONS SET FORTH IN SECTION 11 (THE “RESERVED RIGHTS”).

9. Release of Claims by the KPE Liquidation Trustee. THE KPE LIQUIDATION

TRUSTEE SHALL, ON BEHALF OF THE KPE LIQUIDATION TRUST, WITHOUT FURTHER ACTION ON HIS PART, FOREVER RELEASE, ACQUIT, AND DISCHARGE TARGA, SAULSBURY, AND SMITH & LOVELESS FROM ANY AND ALL CLAIMS, DAMAGES, LIENS AND LAWSUITS OF ANY KIND OR DESCRIPTION ARISING OUT OF, OR PERTAINING IN ANY WAY TO THE DISPUTE, THE ADVERSARY PROCEEDING, THE RETAINAGE, OR THE PROJECT REGARDLESS OF WHETHER ANY SUCH CLAIMS HAVE ACCRUED, AND REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE ASCERTAINABLE, SUCH CLAIMS, DAMAGES, LIENS, AND LAWSUITS INCLUDING, BUT NOT BEING LIMITED TO, THOSE THAT WERE MADE, ALLEGED, OR BROUGHT, OR THAT COULD HAVE BEEN MADE, ALLEGED, OR BROUGHT EXCEPTING ONLY THE RESERVED RIGHTS.

10. Release of Claims Against the KPE Liquidation Trustee. TARGA, SAULSBURY,

AND SMITH & LOVELESS SHALL, WITHOUT FURTHER ACTION ON THEIR RESPECTIVE PARTS, FOREVER RELEASE, ACQUIT, AND DISCHARGE THE KPE LIQUIDATION TRUSTEE AND THE KPE LIQUIDATION TRUST (INCLUDING ALL OF ITS ASSETS, PROCEEDS, AND FUTURE RECOVERIES) FROM ANY AND ALL CLAIMS, DAMAGES, LIENS AND LAWSUITS OF ANY KIND OR DESCRIPTION ARISING OUT OF, OR PERTAINING IN ANY WAY TO THE DISPUTE, THE ADVERSARY PROCEEDING, THE RETAINAGE, OR THE PROJECT REGARDLESS OF WHETHER ANY SUCH CLAIMS HAVE ACCRUED, AND REGARDLESS OF


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WHETHER ANY SUCH DAMAGES ARE ASCERTAINABLE, SUCH CLAIMS, DAMAGES, LIENS, AND LAWSUITS INCLUDING, BUT NOT BEING LIMITED TO, THOSE THAT WERE MADE, ALLEGED, OR BROUGHT, OR THAT COULD HAVE BEEN MADE, ALLEGED, OR BROUGHT EXCEPTING ONLY THE RESERVED RIGHTS.

11. Reserved Rights. The following Reserved Rights are not released and shall survive

execution and consummation of this Agreement:

a. The unsecured claims asserted in the Amended Targa Proof of Claim as set forth herein;

b. The unsecured claims asserted in the Amended Saulsbury Proof of Claim number 6 as set forth herein;

c. The claims and causes of action currently asserted by Saulsbury in Saulsbury

Industries, Inc. v. Brandon Steele, William Preston, Doug Schnittker and Kyle McCoy, Cause No. 2020-05764 filed in the District Court of Harris County, Texas, 165th Judicial District are Saulsbury’s direct and exclusive claims. The Trustee agrees that the Trust will not assert that such claims are property of the KPE Liquidation Trust

d. The unsecured claims asserted in the Amended Smith & Loveless Proof of Claim

as set forth herein;

e. Any claims or causes of action by Targa against Smith & Loveless related to all warranties on the Project by Smith & Loveless, whether at contract or law, or any claims or causes of action by Targa against Smith & Loveless related to indemnity required at contract or law;

f. Any defenses Smith & Loveless has or may have, whether under contract, at law or otherwise, against claims by Targa that may arise in the future; and

g. Any claims or causes of action by and between Targa Pipeline Mid-Continent Westtex, LLC, and its successors and assigns, on the one hand, and the KP Engineering Trustee and/or the KPE Liquidation Trust, on the other hand, arising out of the Johnson Project, the Johnson Interpleaded Funds, the Johnson Project Litigation (as defined in the Debtor’s confirmed plan [Dkt.-568-1]), or relating to Targa Pipeline Mid-Continent Westtex, LLC’s claim no. 84, according to Omni’s records, (claim no. 59 according to the Bankruptcy Court’s claim registry).

12. Covenant Not to Sue. The Parties hereby covenant not to sue each other in the future with

respect to any released matter covered by this Agreement. Suit may be brought to enforce this Agreement in the event of a material breach. Nothing in this paragraph shall release any Party from any obligation, covenant, promise, representation, warranty, or indemnity set forth in this Agreement.


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13. Governing Law and Venue. This Agreement shall be governed by and construed in

accordance with the laws of the State of Texas, notwithstanding any choice of law principles or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of Texas. If any dispute arises out of or relates to this Agreement, venue is proper and exclusively fixed in the Bankruptcy Court.

14. Prevailing Party. In the event of any litigation arising from or related to this Agreement,

the prevailing party shall be entitled to recover from the non-prevailing party all reasonable costs incurred, including court costs, attorneys’ fees, and all other related expenses.

15. Warranties.

a. Each Party represents and warrants to the other Parties as follows:

i. The Chapter 11 Plan provides for the appointment of the KP Engineering

Trustee to act as trustee of the KPE Liquidation Trust and, pursuant to the Chapter 11 Plan, the KP Engineering Trustee was vested with the exclusive authority to, among other things, administer, investigate, prosecute, settle and abandon certain claims and causes of action, including the claims and causes of action held by the Debtors’ estates prior to the effective date of the Chapter 11 Plan, related to the Adversary Proceeding, the Project, the Retainage, and the Class 5 Claims. All such claims and causes of action continue to be held by the KP Engineering Trustee and have not been assigned or abandoned by the KP Engineering Trustee as of the Effective Date of this Agreement.

ii. As of the date and time each Party executes this Agreement, it owns the claims it has released and it has not assigned, granted, or transferred in any way to any other person or entity who is not a signatory party to this Agreement, any right, claim, cause of action, or demand, or any part thereof, which any Party has, claims to have, or ever claimed to have, which is the subject of this Agreement;

iii. No Party has relied on any inducements, promises, statements, conduct,

consideration, or representations made by any other Party, or any person or entity representing or serving them or persons/entities in privity with them, in executing this Agreement except as expressly stated in this Agreement;

iv. Each Party has read and understands this Agreement, that it has been and is

represented by counsel of choice in the negotiation and preparation of this Agreement, and that it executes this Agreement voluntarily and without duress or undue influence of any nature whatsoever;


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v. It is understood and agreed by and between the Parties hereto and their attorneys that no Party has relied upon any representations, express or implied, made by any other Party or their attorneys as to the tax consequences of this Agreement, and the Parties hereby release all other Parties from any and all liability in connection with such tax consequences, if any;

vi. Each Party is duly authorized to execute this Agreement according to its

terms; notwithstanding the foregoing, the KPE Liquidating Trustee’s execution of this Agreement is subject to the provisions of Paragraph number 1 hereof, and is not binding upon the KPE Liquidating Trustee and the KPE Liquidating Trust absent the provisions of Paragraph number 1 hereof being fully satisfied, and

vii. The person executing this Agreement on behalf of the Party for whom

he/she purports to act is duly authorized to execute this Agreement according to its terms.

16. Entire Agreement; Modification and Amendment. This Agreement represents the

entire and integrated Agreement between and among the Parties with respect to the subject matter of this Agreement. Any other agreements, promises, or covenants between and/or among the Parties to this Agreement are merged herein and extinguished. This Agreement may be modified or amended only upon a written agreement duly executed by the Parties.

17. Responsibility for Fees and Costs. Each Party shall bear and be responsible for its own

attorneys’ fees, expenses, expert witness fees, and any and all other costs associated with the Dispute.

18. Severability. If any portion of this Agreement is found, for whatever reason, to be

unenforceable under any law or circumstance, then such unenforceable portion shall be deemed stricken, and the remainder of the Agreement shall remain fully enforceable.

19. Successors. Each of the Parties agrees that this Agreement is binding upon and shall inure

to the benefit of each of the Parties and their respective predecessors in interest, successors, assigns, heirs, and personal representatives, but no others.

20. Time. Time is of the essence as to all obligations in this Agreement.

21. Counterparts. This Agreement may be executed in multiple counterparts, each of which

will be considered an original for all purposes, but which taken together will constitute one and the same document.

22. Signatures. A fax, electronic, or other copy of a signature to this Agreement will be as

effective as an original of that signature.

[Signature Pages Follow]


SIGNED the _3_ day of November, 2020.

SMITH & LOVELESS, INC.

Lanette M. Wickham Printed Name

Vice President Title


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EXHIBIT 1


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FINAL RELEASE OF LIEN STATE OF TEXAS § § COUNTY OF HARRIS § BEFORE ME, the undersigned authority, on this day personally appeared the undersigned,

who upon his oath did depose and state as follows: “My name is ________________. I am the ________________ of Smith & Loveless, Inc.

hereinafter sometimes referred to as “Claimant.” I am over 18 years of age, have personal knowledge of the facts set forth below and am competent and duly authorized to make this Final Release of Lien.

For good and valuable consideration, the receipt of which is hereby acknowledged,

Claimant releases, discharges, and acquits Targa Channelview LLC n/k/a Hartree Channelview LLC and the property located at 16514 De Zavalla Rd., Channelview, Texas 77530, and more particularly described in Exhibit A, from any and all liens recorded by Claimant in the Harris County Real Property Records, and specifically including the following:

Instrument Number RP-2019-75559, recorded February 26, 2019;

EXECUTED on this ____ day of _______________, 2020.

SMITH & LOVELESS, INC.

By: _______________________ (signature)

Name: _______________________ (print)

Title: _____________________


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THE STATE OF TEXAS § § COUNTY OF __________ §

This instrument was ACKNOWLEDGED AND, SWORN before me by __________________ as ____________________ of Smith & Loveless, Inc., known to me to be the person whose name is subscribed to the foregoing instrument, who after being duly sworn acknowledged to me that the same was the act of Smith & Loveless, Inc., and that he/she executed same as an act of such company for the purposes and consideration stated therein.

Given under my hand and seal of office, this the _____ day of ________________, 2020.

__________________________________________ NOTARY PUBLIC, STATE OF TEXAS

AFTER RECORDING, PLEASE RETURN TO: Amy K. Wolfshohl Porter Hedges LLP 1000 Main St., 36th Floor Houston, TX 77002


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EXHIBIT A


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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT …Release Agreement. 5 The project underlying the...

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