Exhibit No. EX-10.2
SETTLEMENT AGREEMENT AND GENERAL RELEASE
SETTLEMENT AGREEMENT AND GENERAL RELEASE (the "Settlement Agreement") dated
as of the 30th day of June, 2006 by and between KMA Capital Partners, Inc. and
KMA Capital Partners, Ltd. ("KMA"), Xxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxxx Xxxxxxxxx
("Xxxxxxxxx"), CF Holdings, LLC ("CF"), and Sovereign Exploration Associates
International, Inc., f/k/a CALI Holdings, Inc. ("SEAI" or "SVXA") (collectively,
KMA, Jenkins, Giannetto, CF, and SEAI referred to as the "Parties").
WHEREAS, KMA filed an arbitration matter against SEAI, American Arbitration
Association Case No.: 33-180-00463-05 (the "Arbitration"), relating to and
Investment & Exchange Agreement ("Agreement") dated October 17, 2005, and
whereas SEAI asserted counterclaims in the Arbitration against KMA, Xxxxxxx and
Xxxxxxxxx, and Xxxxxxx and Xxxxxxxxx, in turn, asserted third party
counterclaims against SEAI in the Arbitration.
WHEREAS, on April 26, 2006, Barley Xxxxxx LLC, on behalf of its clients KMA
Capital Partners, Inc. and CF Holdings, LLC, sent a letter to Sovereign
Exploration Associates International, Inc. (SEAI) setting forth certain
allegations and potential legal claims (including claims of a derivative nature)
of its clients against SEAI (the "Derivative Claim Letter"); and on May 5, 2006,
Prince, Lobel, Glovsky & Tye LLP, on behalf of its client SEAI, sent a response
to the April 26 letter wherein SEAI set forth certain of its defenses and
potential claims of its own (the "Derivative Claim Response");
WHEREAS, KMA currently owns 400,000 shares of SVXA common stock ("the
October Shares"), which represents the balance of the block of shares issues to
KMA by Cali Holdings, Inc. on or about October 5, 2005; whereas the October
Shares are represented by two certificates of 200,000 shares; whereas the
transfer agent, Transfer On-Line, currently has a
"stop" on the October Shares; whereas 200,000 of the October Shares are being
held at E*Trade, and the other 200,000 are in a certificate being held by KMA.
WHEREAS, the Parties, who were desirous of trying to resolve all disputes
between them, entered into a SETTLEMENT DISCUSSION AGREEMENT;
WHEREAS, on June 19, 2006, the Parties entered into a non-binding
Confidential and Privileged Settlement Term Sheet; and
WHEREAS, the Parties have agreed to resolve all disputes among them
including but not limited to those in the Arbitration and in the Derivative
Claim Letter and the Derivative Claim Response on the terms and conditions set
forth below.
AGREEMENT
NOW, THEREFORE, for the reasons set forth above, in consideration of the
terms and conditions set forth below, the receipt and adequacy of which is
hereby acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
1. In a exchange for the promises made by KMA, Xxxxxxx, Xxxxxxxxx and CF
herein, including but not limited to, the release of claims in paragraph 6
below, and the promises contained in the Leak Out Agreement referenced herein
and to he executed simultaneously herewith (attached as Exhibit A hereto):
a. SVXA shall issue the following shares of common stock of SVXA to the
following persons or entities: 303,333 shares to KMA, issue date of
January 18, 2006; 303,333 shares to Xxxxxxx, issue date of January 18,
2006; and 303,334 shares to Xxxxxxxxx, issue date of January 18, 2006
(collectively, the "January Shares"); The January Shares will be
issued promptly after execution of this Agreement (but the Parties
acknowledge that to get a certificate number(s) could take
approximately one week,
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with the certificates to follow thereafter). The January Shares will
be restricted securities under Rule 144, and the certificate(s)
representing the January Shares will be stamped with a "restricted"
legend indicating that they are Rule 144 stock certificates and that
they are also subject to the rights and restrictions set forth in the
Leak Out Agreement of even date herewith and attached hereto as
Exhibit A. The January Shares will be held in escrow, pursuant to an
escrow agreement in the form attached hereto as Exhibit C, by Lowndes,
Drosdick, Doster, Xxxxxx & Xxxx, P.A., 000, Xxxxx Xxxx Xxxxx, Xxxxxxx,
XX 00000 (the "Stock Escrow Agent"), until 35 days after the
expiration of the Rule 144 one year holding period.
b. SVXA shall instruct the transfer agent (Transfer On-Line), by no later
than July 5, 2006, to remove the "stops" placed on KMA's two
certificates of 200,000 shares of common stock of SVXA (400,000 shares
total, the "October Shares" defined above); provided however, the
October Shares are and will be subject to the rights and restrictions
set forth in the Leak Out Agreement of even date herewith and attached
hereto as Exhibit A. KMA represents and warranties that it owns the
October Shares in its own name and that it has not transferred,
assigned or otherwise hypothecated the October Shares. KMA represents
and warrants that 200,000 of the October Shares are being held in an
E*Trade brokerage account, and the other 200,000 are in a certificate
being held by KMA, which certificate KMA will immediately transfer to
E*Trade. The October Shares will be held by E*Trade until 35 days
after the execution of the Leak Out
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Agreement, and it is agreed that any buy back exchange under the Leak
Out will be made by the Stock Escrow Agent as provided by the escrow
agreement in the form attached hereto as Exhibit C.
2. Xxxxxxx and Xxxxxxxxx shall reasonably cooperate with and assist SEAI
with document and information requests from the Securities and Exchange
Commission (the "SEC"), including providing documentation and supporting
information requested by SVXA and/or the SEC. As part of Xxxxxxx' and
Xxxxxxxxx'x duty of reasonable cooperation, they shall immediately (by no later
than 10 business days after the execution of this agreement) provide to SERI the
information they have provided to the SEC concerning a) the valuation of the
Cali Holdings, Inc. portfolio companies upon divestiture as part of the Exchange
Agreement, and b) Cali Holdings, Inc.'s issuance, on or about October 5, 2005,
to KMA of 800,000,000 common shares of Cali Holdings, Inc. SEAI will agree to
defray any reasonable out of pocket costs associated with the reasonable
cooperation so long as Xxxxxxx and Xxxxxxxxx obtain prior approval of such
cost(s); Xxxxxxx and Xxxxxxxxx are, however, completely responsible for their
own attorney's fees.
3. Xxxxxxx and Xxxxxxxxx will reasonably cooperate with and assist SEAI in
its dispute with Golden Gate Investors, Inc. ("Golden Gate"), which filed a
complaint against SEAI and others in December 2005, in the Superior Court of the
State of California, and such reasonable cooperation and assistance will include
providing documentation and support to help SEAI resolve the dispute with Golden
Gate. As part of Xxxxxxx' and Xxxxxxxxx'x duty of reasonable cooperation, they
shall immediately (by no later than 10 business days after the execution of this
agreement) provide to SEAI whatever information they possess that shows or helps
show that Golden Gate is not due the money or stock it claims in the California
Superior Court action. SEAI will agree to defray any reasonable out of pocket
costs associated with the
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reasonable cooperation so long as Xxxxxxx and Xxxxxxxxx obtain prior approval of
such costs; Xxxxxxx and Xxxxxxxxx are, however, completely responsible for their
own attorney's fees.
4. Xxxxxxx and Xxxxxxxxx will reasonably cooperate with and assist SEAI in
its dispute with an individual named Xxxxx Xxxxxx, who entered into two
debentures with Cali Holdings, Inc. in May 2005, and has made demand on the
debentures by demanding that SEAI either convert his debentures to SEAI stock or
to be paid an alleged balance due. Such reasonable cooperation and assistance
will include providing documentation and support to help SEAI resolve the
dispute with Xxxxx Xxxxxx. As part of Xxxxxxx' and Xxxxxxxxx'x duty of
reasonable cooperation, they shall immediately (by no later than 10 business
days after the execution of this agreement) provide to SEAI whatever information
they possess that shows or helps show that Xxxxx Xxxxxx is not due the money or
stock he claims. SEAI will agree to defray any reasonable out of pocket costs
associated with the reasonable cooperation so long as Xxxxxxx and Xxxxxxxxx
obtain prior approval of such costs; Xxxxxxx and Xxxxxxxxx are, however,
completely responsible for their own attorney's fees.
5. SEAI shall deliver to KMA, by no later than 5 business days after the
execution of this Agreement, a letter in the form attached hereto as Exhibit B.
Provided however, the Parties acknowledge and agree that Exhibit B is not an
admission by SEAI of any liability to KMA, Xxxxxxx and Xxxxxxxxx with respect to
the second installment payment of $300,000 under the Exchange Agreement or
otherwise, which liabilities are released in their entirety by this Settlement
Agreement.
6. In further consideration for this Settlement Agreement, KMA, Jenkins,
Giannetto, and CF for themselves, and their heirs, successors, assigns, parents,
subsidiaries, affiliates, predecessors, partners, agents, representatives, and
attorneys (the "KMA/Xxxxxxx/Xxxxxxxxx
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Releasors") hereby release and forever discharge SEAI, its parents,
subsidiaries, affiliates, predecessors, successors, assigns, partners, agents,
representatives, and attorneys (the "SEAI Releasees"), of and from any and all
actions and manner of action, cause and causes of action, suits, debts,
promissory notes, dues, sums of money, claims for attorneys fees and costs and
prejudgment interest, accounts, reckonings, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims (including claims of a derivative nature)
and demands whatsoever, in law or in equity, which the KMA /Xxxxxxx/Xxxxxxxxx
Releasors now have, hereafter can, shall or may have against the SEAI Releasees
for, upon, or by reason of any matter, cause or thing from the beginning of the
world to the date of this Settlement Agreement, including but not limited to, a)
any and all claims asserted or which could have been asserted in the Arbitration
and in the Derivative Claim Letter and the Derivative Claim Response, and b) any
and all claims arising out of the Exchange Agreement Provided however, that
while this release is a complete a release of all claims of the
KMA/Xxxxxxx/Xxxxxxxxx Releasors relating to an October 17, 2005 Promissory Note
and Security Agreement (a copy of which is attached hereto as Exhibit D), it is
intended that the rights of the transferee of said note (MAC Partners, LP)
against Venture Planning Inc. and/or Xxxxx Xxxxxxxxxxx, the borrower under said
note, whatever those rights may be, are to be preserved and not negatively
impacted by this Settlement Agreement or this release; provided further, this
Release is not a release or waiver of any rights, obligations, claims, demands,
causes of action or liabilities relating to the enforcement of the terms and
covenants contained in this Settlement Agreement, the Leak Out Agreement
attached hereto as Exhibit A, and/or the Escrow Agreement attached hereto as
Exhibit C. It is specifically acknowledged and agreed that the
KMA/Xxxxxxx/Xxxxxxxxx Releasors include Intra Global LLC. The
KMA/Xxxxxxx/Xxxxxxxxx
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Releasors represent and warrant that they are not aware of any claims,
threatened claims or potential claims by any third parties against SEAI other
than the Golden Gate and Xxxxx Xxxxxx claims referenced in paragraphs 3 and 4
above.
7. In further consideration for this Settlement Agreement, SEAI for itself
and its successors, assigns, parents, subsidiaries, affiliates, predecessors,
partners, agents, representatives and attorneys (the "SEAI Releasors") hereby
release and forever discharge KMA, Jenkins, Giannetto, and CF, and their heirs,
successors, assigns, parents, subsidiaries, affiliates, predecessors, partners,
agents, representatives, and attorneys (the "KMA/Xxxxxxx/Xxxxxxxxx Releasees"),
of and from any and all actions and manner of action, cause and causes of
action, suits, debts, promissory notes, dues, sums of money, claims for
attorneys fees and costs and prejudgment interest, accounts, reckonings, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims
(including claims of a derivative nature) and demands whatsoever, in law or in
equity, which the SEAI Releasors now have, hereafter can, shall or may have
against the KMA/Xxxxxxx/Xxxxxxxxx Releasors for, upon, or by reason of any
matter, cause or thing from the beginning of the world to the date of this
Settlement Agreement, including but not limited to, a) any and all claims
asserted or which could have been asserted in the Arbitration and in the
Derivative Claim Letter and the Derivative Claim Response, and b) any and all
claims arising out of the Exchange Agreement. Provided however, this Release is
not a release or waiver of any rights, obligations, claims, demands, causes of
action or liabilities relating to the enforcement of the terms and covenants
contained in this Settlement Agreement, the Leak Out Agreement attached hereto
as Exhibit A, and/or the Escrow Agreement attached hereto as Exhibit C.
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8. Simultaneously herewith, KMA, Xxxxxxx, Xxxxxxxxx and SEAI or their
counsel will execute and file a joint stipulation of for entry of an Arbitration
Decree that provides for a dismissal with prejudice of all pending and
unasserted claims and counterclaims between KMA/Xxxxxxx/Xxxxxxxxx and SEAI and
expressly calls for a reservation of jurisdiction in the Florida Court that will
confirm the arbitration decree of the settlement. The arbitration decree shall
further call for the dismissal and closure of the arbitration, without costs or
attorney's fees being taxed to either side. The Patties acknowledge that the
prior pendency of the Arbitration in Florida confers jurisdiction upon the
Florida Courts to enforce the Settlement Agreement, at the option of either
party, and KMA/Xxxxxxx/Xxxxxxxxx agree to bear the Court filing fee associated
with the same. SEAI agrees to respond to the Petition to Confirm Arbitration
Decree by agreeing to entry of an Final Order Approving Arbitration Decree in a
form acceptable to counsel for the Parties, but SEAI shall otherwise not be
required to appear in that Florida proceeding unless and until a motion to
enforce the Court approval Settlement Agreement is brought by any Party.
9. By entering into this Settlement Agreement, the Parties are not
admitting liability or responsibility on the part of any party, and nothing
contained herein should be construed as an admission of liability, which is
expressly denied by all parties to this Settlement Agreement. The Parties are
entering into this Settlement Agreement to avoid the uncertainty, expense and
burden of further litigation.
10. The Parties agree that this Settlement Agreement constitutes the entire
agreement between them as to the subject matters addressed herein, and if any
provision of this Settlement Agreement is held to be invalid, the remaining
provisions shall remain in full force and effect.
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11. This Settlement Agreement has been prepared jointly by the Parties
hereto with the advice of their attorneys and no ambiguity in the language of
this Settlement Agreement shall be construed against either party.
12. This Settlement Agreement may not be changed, modified, altered or
terminated except by an agreement in writing executed by the parties hereto. Any
waiver of any party of any right under this Settlement Agreement or of any
breach of this Settlement Agreement shall not constitute a waiver of any other
right or of any other future breach.
13. This Agreement may be executed in counterparts and transmitted by
facsimile transmission, and each of such counterparts, whether an original or
facsimile of an original, will be deemed to be an original and all of such
counterparts together will constitute a single agreement.
14. The Parties to this Settlement Agreement represent that: (1) the
persons signing below have the right and authority to execute this Settlement
Agreement; (2) no action, suit or proceeding is pending or contemplated which
would seek to prevent the carrying out of this Settlement Agreement; and (3)
they have not heretofore assigned, transferred or purported to assign or
transfer any claims against any other party to this Settlement Agreement or
covered by the general releases herein except as specifically referenced herein.
15. KMA represents that KMA Capital Partners, Ltd. merged into KMA Capital
Partners, Inc. on March 10, 2006.
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IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement on
the date set forth above.
SOVEREIGN EXPLORATION ASSOCIATES
INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxx /s/ Xxxxx Xxxxxxx
Its: President XXX XXXXXXX
/s/ Xxxxxxx Xxxxxxxxx
XXXXXXX XXXXXXXXX
KMA Capital Partners, Inc.
By: /s/ Xxxxxxx Xxxxxxx
Its: President
KMA Capital Partners, Ltd.
By: Xxxxx Xxxxxxxxx
Its: General Partner
CF Holdings, LLC
By:
Its: Corporate Secretary
EXHIBIT A
LEAK OUT AGREEMENT
THIS AGREEMENT, made as of this 30th day of June, 2006 (this "Agreement")
by and between KMA Capital Partners, Inc. and KMA Capital Partners, Ltd., 0000
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000 (referred to as the "KMA"); and Xxxxxxx
Xxxxxxxxx, Orlando, Florida ("Xxxxxxxxx"); and Xxxxx X. Xxxxxxx, Orlando,
Florida ("Xxxxxxx"). KMA, Xxxxxxxxx, and Xxxxxxx collectively referred to as
Shareholders;
AND
Sovereign Exploration Associates International Inc., 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0X, Xxxxxxx, XX 00000 ("SEAI" or "SVXA"). Shareholders and SVXA
collectively referred to as Parties.
WHEREAS, the Parties entered into a Settlement Agreement and General
Release (the "Settlement Agreement") of even date whereby SVXA conveyed to the
Shareholders 910,000 shares of Rule 144 common shares of SVXA, with an issue
date of January 18, 2006 (collectively "the January Shares"),
AND
WHEREAS, KMA currently owns 400,000 shares of SVXA common stock ("the
October Shares"), which represents the balance of the block of shares issued to
KMA by Cali Holdings, Inc. on or about October 5, 2005; whereas the October
Shares are represented by two certificates of 200,000 shares each; whereas the
transfer agent, Transfer On-Line, currently has a "stop" on the October Shares;
whereas 200,000 of the October Shares are being held at E*Trade; and the other
200,000 are in a certificate being held by KMA, which certificate will be
delivered to E*Trade pursuant to the terms of the Settlement Agreement; and
WHEREAS, SVXA is a business development company governed under the 1940 Act
trading on the NASDAQ Bulletin Board Exchange, and
WHEREAS, the Parties agreed as part of the Settlement Agreement that it is
in the best interest of all Parties, and the shareholders of SVXA, to protect
the share price of SVXA, and
WHEREAS, the Parties further agreed to permit the Shareholders to liquidate
Shares in a controlled manner and the Parties wish to reduce said discussions to
writing in this Agreement.
NOW, THEREFORE, in consideration of Ten Dollars and other good and valuable
consideration, including the promises and covenants in this Agreement and the
Settlement Agreement; the sufficiency of which is acknowledged, the Parties
hereby agree as follows:
1. The Parties agree that the above mentioned October Shares may be sold as
follows:
A. SVXA is hereby granted an exclusive option to buy back any and all of
the October Shares at different times and in different amounts during
the thirty (30)
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
1
day period commencing upon the execution of this Agreement. The
purchase price for the October Shares under this buy back right shall
be the greater of $0.60 per share or the "market price per share." The
"market price per share" for purposes of this buy back right shall be
equal to the average of the Bid and ASK price of SVXA at the close of
the market as quoted on the Bulletin Board Exchange for the previous
five (5) business days prior to the purchase date. The "purchase date"
for the October Shares shall be defined as the day preceeding the last
business day before a wire transfer for said purchase is made to the
Stock Escrow Agent or the day preceeding the last business day before
a purchase check is sent registered mail to the Stock Escrow Agent.
This buy back right shall expire simply by the passage of time (i.e.
the expiration of thirty-day period described in this paragraph 1A.)
and without notice to either Party.
B. IF SVXA elects to exercise its buy back rights to the October shares,
SVXA must provide written notice(s) to KMA (and the Stock Escrow
Agent) of the number of shares being purchased, the purchase date, the
per share price, and the total purchase price for said shares. Said
written notice of repurchase must be provided prior to or
simultaneously with, the payment of the purchase price. SVXA's
purchase of the October Shares pursuant to the buy back right under
this Agreement must be paid by a wire transfer(s) to the Stock Escrow
Agent on or before thirty-days from the execution of this Agreement
and/or by check(s) (mailed registered mail to the Stock Escrow Agent
and post dated on or before thirty-days from the execution of this
Agreement) in the amount of the purchase price for the shares being
purchased. SVXA can purchase in multiple traunches up to the maximum
of 400,000 shares (the October Shares) during the buy back period
(i.e. during the 30 day period commencing upon execution of this
Agreement).
C. During the thirty (30) day buy back period set forth in paragraph 1A.
and 1B. above, and for five (5) days thereafter if notice of buy back
has been given, KMA will not sell, transfer, assign, pledge,
hypothecate or otherwise dispose of any of the October Shares except
to SVXA pursuant to the buy back provision in this Agreement. In the
event SVXA does not buy back the October Shares within the time period
provided under paragraph 1A. and 1B., then KMA shall be free to sell
or otherwise transfer the remaining October Shares not repurchased by
SVXA with the following restriction: Shareholders agree that they
shall be restricted from selling on any day more than 10% of the daily
trading volume of SVXA shares. The "daily trading volume" shall be
determined by the average number of shares sold over the twenty-day
trading period ending on the Friday of the week that precedes the
sale. The "daily trading volume" shall remain fixed for any subsequent
sale or successive sales of the October Shares except that it will be
recalculated if the Shareholders discontinue selling for five (5)
consecutive trading days. If the Shareholders sell or otherwise
transfer any of the October Shares in a private sale, the buyer or
other recipient of the shares in that private sale will be bound by
the above leak-out restrictions with respect to the shares
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
2
purchased in the private sale and the Shareholders will provide a copy
of this Leak Out Agreement to any such private buyer. The Shareholders
will provide SVXA weekly trading records for all SVXA transactions on
the Monday that follows any week that Shareholders sell any or all of
the October Shares (the Shareholders report of transactions shall be
provided by e-mail to SVXA's President Xxxxxx X. Xxxx at
xxxxx@xxx-xxx.xxx, and by a notice in accordance with the notice
provision of this Agreement).
D. As used in this Agreement, the term "Stock Escrow Agent" shall refer
to Lowndes, Drosdick, Doster, Xxxxxx & Xxxx, P.A., 000 Xxxxx Xxxx
Xxxxx, Xxxxxxx, XX 00000, under the escrow agreement attached to the
Settlement Agreement as Exhibit C (the "Escrow Agreement"). The Stock
Escrow Agent will be required to (i) cause KMA to order out from
E*Trade any and all shares purchased by SVXA pursuant to the buy back
right set forth in this paragraph 1, and (ii) to cause said shares to
be delivered to SVXA's offices at 000 Xxxxxxxxxx Xxx., Xxxxx 0X,
Xxxxxxx, XX 00000 in accordance with paragraph 4 of the Escrow
Agreement. In the event of any conflict between the terms of the
Escrow Agreement and this Agreement insofar as the duties,
responsibilities and liabilities of Stock Escrow Agent are concerned,
the Escrow Agreement shall control.
2. The Parties agree that the above mentioned January Shares may be sold as
follows:
A. SVXA is hereby granted an exclusive option to buy back any and all of
the January Shares at different times and in different amounts during
the thirty (30) day period commencing upon the expiration of the one
year Rule 144 holding period (i.e., commencing upon January 18, 2007).
The purchase price for the January Shares under this buy back right
shall be the greater of $0.60 per share or the "market price per
share." The "market price per share" for purposes of this buy back
right shall be equal to the average of the Bid and ASK price of SVXA
at the close of the market as quoted on the Bulletin Board Exchange
for the previous five (5) business days prior to the purchase date.
The "purchase date" for the January shares shall be defined as the day
preceding the last business day before a wire transfer for said
purchase is made to the Stock Escrow Agent or the day preceding the
last business day before a purchase check is sent registered mail to
the Stock Escrow Agent. This buy back right shall expire simply by the
passage of time (i.e., the expiration of the thirty-day period
described in this paragraph 2A.) and without notice to either Party.
Prior to January 18, 2007, SVXA has the Right of First Refusal
described below, but not a buy back right.
B. During the Rule 144 holding period (i.e., through January 17, 2007),
SVXA shall have the Right of First Refusal to match any bona-fide
private sale offers that KMA, Xxxxxxx or Xxxxxxxxx may receive for the
sale of the January Shares then held by them (it being understood that
because the January Shares are Rule 144 stock, no public sale can
occur during this period; and further, it being understood and agreed
that any private sale must be a permitted transaction under Rule 144).
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
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KMA, Xxxxxxx or Xxxxxxxxx must provide SVXA prompt notice of the terms
of a private sale-offer (the purchaser, the number of shares being
purchased, the purchase date, the per share price, and the total
purchase price for said shares) and a complete copy of said offer. If
SVXA elects to exercise this Right of First Refusal to purchase the
January Shares, it must provide written notice(s) to KMA, Xxxxxxx, or
Xxxxxxxxx within 10 days of its receipt of the notice of private sale
offer, of its intention to match the private sale offer, stating the
number of shares being purchased, the purchase date, the per share
price, and the total purchase price for said shares. SVXA's notice of
exercise of this right of first refusal must be provided prior to, or
simultaneously with, the payment of the purchase price. SVXA's
purchase of the January Shares pursuant to this Right of First Refusal
under this Agreement must be paid by a wire transfer(s) to the Stock
Escrow Agent within 10 days of the exercise notice.
C. If SVXA elects to exercise its buy back right to the January Shares
under 2A, SVXA must provide written notice(s) to KMA, Xxxxxxx and
Xxxxxxxxx (and the Stock Escrow Agent) of the number of shares being
purchased, the purchase date, the per share price, and the total
purchase price for said shares. Said written notice of repurchase must
be provided prior to, or simultaneously with, the payment of the
purchase price. SVXA's purchase of the January Shares pursuant to the
buy back right under this Agreement must be paid by a wire transfer(s)
to the Stock Escrow Agent on or before February 16, 2007, or by
check(s) (mailed registered mail to the Stock Escrow Agent and post
dated on or before February 16, 2007) in the amount of the purchase
price for the shares being purchased. SVXA can purchase in multiple
traunches up to the maximum of 910,000 shares (the January Shares)
during the buy back period (i.e. during the 30 day period commencing
upon January 18, 2007). The January Shares shall be purchased in equal
amounts from the Shareholders (e.g., if 30,000 shares are re-purchased
by SVXA, 10,000 of the January Shares will be bought from each of KMA,
Xxxxxxx and Xxxxxxxxx).
D. During the thirty (30) day buy back period set forth in paragraph 2A.
above, and for five (5) days thereafter if notice of buy back has been
given, the Shareholders will not sell, transfer, assign, pledge,
hypothecate or otherwise dispose of any of the January Shares except
to SVXA pursuant to the buy back provision in this Agreement. In the
event SVXA does not buy back the January Shares within the time period
provided under paragraph 2A. then Shareholders shall be free to sell
or otherwise transfer the remaining January Shares not repurchased by
SVXA with the following restriction: the Shareholders agree that they
shall be restricted from selling on any day more than 10% of the daily
trading volume of SVXA shares. The "daily trading volume" shall be
determined by the average number of shares sold over the twenty-day
trading period ending on the Friday of the week that proceeds the
sale. The "daily trading volume" shall remain fixed for any subsequent
sale or successive sales of the January Shares except that it will be
recalculated if the Shareholders discontinue selling for five (5)
consecutive
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
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trading days. If the Shareholders sell or otherwise transfer any of
the January Shares in a private sale, the buyer or other recipient of
the shares in that private sale will be bound by the above leak-out
restrictions with respect to the shares purchased in the private sale,
and the Shareholders will provide a copy of this Leak Out Agreement to
any such private buyer. Shareholders will provide SVXA weekly trading
records for all SVXA transactions the Monday that follows any week
that Shareholders sell SVXA shares (the Shareholders report of
transactions shall be provided by e-mail to SVXA's President Xxxxxx X.
Xxxx at xxxxx@xxx-xxx.xxx, and by a notice in accordance with the
notice provision of this Agreement).
E. Covenants Relating to Rule 144. With a view to making available the
benefits of certain rules and regulations of the Securities and
Exchange Commission (the "Commission") which permit the sale of the
SVXA's securities to the public without registration pursuant to Rule
144 under the Securities Act of 1933, as amended (the "Securities
Act"), SVXA agrees to do the following:
(i) To make and keep at all times public information available in
accordance with Rule 144 under the Securities Act;
(ii) To file with the Commission in a timely manner all reports and
other documents required to be filed by SVXA under the Securities
Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided, however, that the Company will not
take any action or file any form that would cause its securities
to be de-registered;
(iii) To furnish Shareholders promptly upon request a written
statement by SVXA as to its compliance with the reporting
requirements of said Rule 144 of the Securities Act and the
Exchange Act, and a copy of the most recent annual on quarterly
report of SVXA, and such other reports and documents of SVXA as
Shareholders may reasonably request in availing itself of any
rule or regulation of the Commission allowing Shareholders to
sell any such securities without registration; and
(iv) To cause its securities counsel to furnish the SVXA's transfer
agent on or promptly after February 16, 2007 (and in no event
after February 25, 2007) a legal opinion in customary form and
based upon customary assumptions (including, without limitation,
an assumption that the proposed sale is being made in a broker's
transaction and the sale does not exceed volume limitations of
Rule 144) to the effect that the sale by Shareholders of the
January Shares is permitted pursuant to Rule 144.
(v) In the event of a material breach by SEAI of any of the Rule 144
covenants in this paragraph 2.E. or any of the other covenants of
this Agreements, Shareholders reserve the right to seek to hold
the SEAI liable for damages established to have been caused
thereby, including by the
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
5
filing of a Motion to Enforce Settlement Agreement in the Florida
Court that reserves jurisdiction to enforce the Settlement
Agreement; provided that SEAI reserves all rights but does
acknowledge the Florida Court would have venue and jurisdiction
to adjudicate such claims. In the event of a material breach by
Shareholders of any of the covenants of this Agreement, SEAI
reserve the right to seek to hold the Shareholders liable for
damages established to have been caused thereby, including by the
filing of a Motion to Enforce Settlement Agreement in the Florida
Court that reserve jurisdiction to enforce the Settlement
Agreement, provided that Shareholders reserve all rights but do
acknowledge the Florida Court would have venue and jurisdiction
to adjudicate such claims. This provision is cumulative and does
not limit any of the Parties' rights with respect to any other
form of relief to which they are entitled in the event of a
breach of this Agreement by another party hereto.
F. The Stock Escrow Agent will be required to deliver any and all shares
purchased by SVXA pursuant to the buy back right and/or the right of
first refusal set forth in this paragraph 2 to SVXA's offices at 000
Xxxxxxxxxx Xxx., Xxxxx 0X, Xxxxxxx, XX 00000 in accordance with
paragraph 4 of the Escrow Agreement.
3. Miscellaneous
(a) Entire Agreement: Amendment. This Agreement contains the entire
agreement of the Parties hereto and supersedes any prior
communications, understandings, agreements between the Parties with
respect to the subject hereof. This Agreement may not be modified or
amended, not may any of its provisions be waived, except by a writing
signed by both parties hereto.
(b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its
conflict of laws provisions.
(c) Court Approval of Settlement. Simultaneously with the execution of
this Agreement, which is required to be accepted and signed by both
parties no later than close of business on June 30, 2006, the parties
have executed a Settlement Agreement that calls for Shareholders to
seek the entry of a Final Order Confirming Arbitration Decree that
includes a reservation of jurisdiction to enforce the Settlement
Agreement which incorporate this Agreement. The intent of the parties
is for the Court to reserve jurisdiction to enforce the Settlement
Agreement, which includes this Agreement. By agreeing to this
reservation of jurisdiction, the parties are empowering the Court to
insure that the covenants in the Settlement Agreement, which includes
this Agreement, are carried out.
(d) Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement or because of any
alleged dispute, breach, default, misrepresentation or fraud in
connection with any of the provisions of this
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
6
Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorneys fees and other costs
incurred, including expert witness fees, in that action or proceeding,
in addition to any other relief to which it or they may be entitled.
(e) Waiver. The failure of either Party at any time to require performance
by the other of any provisions hereunder shall not affect its rights
thereafter to enforce the same, nor shall a waiver by either Party or
any breach of any provision hereof constitute a waiver of any other
breach of any term or provision of this Agreement. No extension of
time for the performance of any obligation or act shall be deemed to
be an extension of time for the performance of other obligations or
acts hereunder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, or by facsimile, each of which shall be an original but
which counterparts together shall constitute one and the same
agreement.
(g) Binding Effect. This Agreement shall be binding upon the Parties
hereto, their heirs, legal representatives and successors, and shall
be binding on assigns permitted under this Agreement (who must agree
to be bound by this Agreement). Any purported assignment of this
Agreement not in compliance with this section shall be null and void
and of no effect. The Shareholders cannot at any time sell, transfer,
assign, pledge, hypothecate or otherwise dispose of any of the October
Shares or the January Shares except in accordance with this Agreement;
and the Shareholders acknowledge and agree that what the Shareholders
cannot do themselves under this Agreement, they cannot accomplish
through any agents or assigns, or by any means directly or indirectly.
(h) Authority. The Shareholders and SEAI have the full power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transaction contemplated hereby. This
execution and delivery by the Shareholders and SEAI of this Agreement
and the consummation of the transactions contemplated hereby have been
duly authorized by all required action on behalf of the Shareholders
and SEAI. This Agreement has been duly and validly executed and
delivered by the Shareholders and SEAI and constitutes a legal, valid
and binding obligations of the Shareholders and SEAI, enforceable
against the Shareholders and SEAI.
(i) Headings. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the
scope or intent of the provisions of this Agreement.
(j) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such a manner as to be effective and valid under
applicable law. But if any provision of this Agreement is held to be
invalid, illegal or unenforceable, in any respect under applicable law
or rule, such invalidity,
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
7
illegality or unenforceability will not effect any other provision or
any other jurisdiction, but this Agreement will be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
(k) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered by
facsimile, in person via overnight delivery, or sent by prepaid first
class registered or certified mail, return receipt to the following
address (unless timely notice of change of address is provided):
SVXA
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0X
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
KMA Capital Partners, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Xxxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Stock Escrow Agent:
T. Xxxx Xxxxxxxxx, Esquire
Lowndes, Drosdick, Doster,
Xxxxxx & Xxxx, P.A.
000 Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
8
IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound, have
executed this Agreement.
KMA
KMA Capital Partners, Inc.:
By: /s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Its: CEO
KMA Capital Partners, Ltd.
By: /s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
Its: General Partner
Xxxxxxxxx
By: /s/ Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx
Xxxxxxx
By: /s/ Xxxxx X. Jenkins_
Xxxxx X. Xxxxxxx
SVXA
Sovereign Exploration Associates
International, Inc.
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
Its: President
KMA initials___ SVXA initials___ Xxxxxxxxx initials___ Xxxxxxx initials___
9
EXHIBIT B
To Whom It May Concern:
In a matter filed in California Superior Court in December of 0000, Xxxxxx Xxxx
Xxxxxxxxx, Inc., ("Golden Gate"), alleges (in paragraph 31 of its Complaint)
that Xxxxx X. Xxxxxxx and Xxxxxxx Xxxxxxxxx diverted in excess of $600,000 in
corporate assets from SEAI. In fact, what actually occurred is that pursuant to
Investment & Exchange Agreement ("Exchange Agreement") dated October 17,2005,
SEAI agreed to pay to Xxxxxxx Xxxxxxxxx, Xxxxx X. Xxxxxxx and KMA Capital
Partners, Ltd. in total the sum of Six Hundred Thousand and no/100 dollars
($600,000) in complete termination and release of the Executive Management
contracts between Cali Holdings, Inc. and Messrs. Xxxxxxxxx and Xxxxxxx and the
consulting contract between Cali Holdings, Inc. to KMA. Three Hundred Thousand
($300,000) was paid by a third party at the closing of the Exchange Agreement
and the Exchange Agreement provided that the balance of $300,000 was to be paid
on or before March 31,2006.
EXHIBIT C
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of the
30th day of June, 2006 by and between LOWNDES, DROSDICK, DOSTER, XXXXXX & XXXX,
PA., a Florida professional corporation ("Stock Escrow Agent "), KMA CAPITAL
PARTNERS, INC. and KMA CAPITAL PARTNERS, LTD. ("KMA"), XXXXX XXXXXXX
("Xxxxxxx"), XXXXXXX XXXXXXXXX ("Xxxxxxxxx") (sometimes collectively referred to
as "KMA/Xxxxxxx/Xxxxxxxxx"), CF HOLDINGS, LLC, ("CF"), and SOVEREIGN EXPLORATION
ASSOCIATES INTERNATIONAL, INC., f/k/a CALI HOLDINGS, INC. ("SEAI" or "SVXA")
(collectively, KMA, Jenkins, Giannetto, CF and SVXA referred to as the
"Parties').
W I T N E S S E T H:
WHEREAS, the Parties entered into a Settlement Agreement and General
Release (the "Settlement Agreement") of even date whereby SVXA conveyed to the
Shareholders 910,000 shares of SVXA Common Stock, Rule 144 restricted, issue
date of January 18, 2006, the date upon which reverse split was effective
(hereinafter referred to as the "January Shares");
WHEREAS, the Parties have executed a Leak Out Agreement of even date
herewith (the "Leak Out Agreement"), and in the Leak Out Agreement
KMA/Xxxxxxx/Xxxxxxxxx have given SVXA a time-limited exclusive right to buy back
the January Shares at different times and in different amounts as defined in the
Leak Out Agreement; and whereas if SVXA does not purchase the January Shares,
KMA/Xxxxxxx/Xxxxxxxxx have agreed to sell no more than ten percent (10%) of the
daily volume as defined in the Leak Out Agreement.
WHEREAS, KMA currently owns 400,000 shares of SVXA common stock ("the
October Shares"), which represents the balance of the block of shares issued to
KMA by Cali Holdings, Inc. on or about October 5, 2005; whereas the October
Shares are represented by two certificates of 200,000 shares; whereas the
transfer agent, Transfer On-Line, currently has a "stop" on the October Shares;
whereas 200,000 of the October Shares are being held at E*Trade, and the other
200,000 are in a certificate being held by KMA, which certificate will be
delivered to E*Trade pursuant to the terms of the Settlement Agreement;
WHEREAS, KMA has given SVXA a time-limited right to buy back the October
Shares at different times and in different amounts as defined in the Leak Oct
Agreement; whereas, if SVXA does not purchase the October Shares, KMA has agreed
to sell no more than ten percent (10%) of the daily volume as defined in the
Leak Out Agreement; and whereas, SVXA will instruct the transfer agent to remove
any stop transfer orders as provided in the Settlement Agreement;
NOW, THEREFORE, for and in consideration of the foregoing premises, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. Recitals. The recitals are true and correct and incorporated by
reference herein.
2. Acceptance of Appointment. Stock Escrow Agent hereby accepts its
appointment as stock escrow agent pursuant to the terms of this Agreement and
undertakes to perform the duties expressly set forth herein. Stock Escrow Agent
will not have any implied duties or obligations arising from this Agreement or
the relationships created hereunder.
3. Deliveries to Stock Escrow Agent. In accordance with the Settlement
Agreement, SVXA shall deliver the 910,000 January Shares to Stock Escrow Agent
to be held, deposited, delivered and disbursed pursuant to the terms of this
Agreement. Stock Escrow Agent shall not assign, transfer, pledge, or in any
other way encumber the stock during the period this Agreement is in effect in
any way not intended by this Agreement.
4. Disposition by Stock Escrow Agent. SVXA has been granted an exclusive
option to buy back any and all of the January Shares at different times and in
different amounts as defined in the Leak Out Agreement. Stock Escrow Agent shall
deliver the January Shares to SVXA upon the occurrence of each and every one of
the following conditions: (i) Stock Escrow Agent and KMA/Xxxxxxx/Xxxxxxxxx must
receive timely (pursuant to the Leak Out Agreement) written notice of the number
of shares being purchased, the purchase date, the per share price, and the total
purchase price for the shares, the written notice being provided prior to, or
simultaneously with, the payment of the purchase price; (ii) Stock Escrow
Agent's timely (pursuant to the Leak Out Agreement) receipt of payment by wire
transfer or certified check in the amount of the total purchase price; (iii)
Stock Escrow Agent's receipt of proof that the appropriate changes have been
made to SVXA's official corporate records reflecting the transfer of stock; and
(iv) Stock Escrow Agent's receipt of new stock certificates issued to
KMA/Xxxxxxx/Xxxxxxxxx reflecting the remaining number of shares held by
KMA/Xxxxxxx/Xxxxxxxxx if any amount less than the full 910,000 January Shares
are purchased by SVXA. The Stock Escrow Agent will not disburse any purchase
funds to KMA/Xxxxxxx/Xxxxxxxxx or to anyone on their behalf, nor will Stock
Escrow Agent disburse any new SVXA stock certificates to KMA/Xxxxxxx/Xxxxxxxxx
or to anyone on their behalf, until delivery of the repurchased January Shares
to SVXA.
Under the terms of the Leak Out Agreement, SVXA has been granted an
exclusive Right of First Refusal through January 17, 2007, to match any bona
fida offers that KMA/Xxxxxxx/Xxxxxxxxx to may receive for the sale of any
January Shares. SVXA's purchase of any January Shares pursuant to the Right of
First Refusal must be paid by wire transfer(s) to the Stock Escrow Agent within
10 days of its exercise of the right of first refusal pursuant to the teams of
the Leak Out Agreement. The Stock Escrow Agent will not disburse any purchase
funds to KMA/Xxxxxxx/Xxxxxxxxx or to anyone on their behalf, nor will Steak
Escrow Agent disburse any new SVXA stock certificates to KMA/Xxxxxxx/Xxxxxxxxx
or to anyone on their behalf, until delivery to SVXA of the January Shares
purchased by SVXA pursuant to the Right of First Refusal.
In the event SVXA does not buy any or all of the January Shares pursuant to
the Leak Out Agreement, KMA/Xxxxxxx/Xxxxxxxxx are free to sell or otherwise
transfer the remaining January Shares not repurchased by SVXA with the
restriction that KMA/Xxxxxxx/Xxxxxxxxx not sell more than ten percent (10%) of
the daily trading volume of SVXA shares as more particularly described in the
Leak Out Agreement.
2
The October Shares will not be placed into escrow, but rather will be on
deposit in an E*Trade KMA brokerage account. Should SVXA wish to purchase
October Shares pursuant to the buy back provision in the Leak Out Agreement,
SVXA must provide written notice to Stock Escrow Agent and KMA of the number of
shares being purchased, the purchase date, the per share price, and the total
purchase price for the shares. SVXA's purchase of the October Shares must be
paid by wire transfer(s) or certified check(s) mailed by overnight mail to Stock
Escrow Agent on or before July 30, 2006, in the amount of the purchase price for
the shares being purchased. SVXA may purchase October Shares in multiple
transactions up to the maximum of 400,000 shares during the period ending July
30, 2006. The Stock Escrow Agent will be required to (i) cause KMA to order out
from E*Trade any and all of the October Shares purchased by SVXA pursuant to the
buy back right under the Leak Out Agreement to be delivered to the Stock Escrow
Agent, and (ii) to promptly cause said shares to be delivered to SVXA's offices
at 000 Xxxxxxxxxx Xxx, Xxxxx 0X, Xxxxxxx, XX after receipt of the shares from
E*Trade. Stock Escrow Agent will receive new stock certificates issued to KMA
reflecting the remaining number of shares held by KMA if any amount less than
the full 400,000 October Shares are purchased by SVXA. The Stock Escrow Agent
will not disburse any purchase funds to KMA/Xxxxxxx/Xxxxxxxxx or to anyone on
their behalf, nor will Stock Escrow Agent disburse any new SVXA stock
certificates to KMA/Xxxxxxx/Xxxxxxxxx or to anyone on their behalf, until
delivery of the repurchased October Shares to SVXA.
In the event SVXA does not buy back any or all of the October Shares
pursuant to the Leak Out Agreement, KMA is free to sell or otherwise transfer
the remaining October Shares not repurchased by SVXA with the restriction that
KMA not sell more than ten percent (10%) of the daily trading volume of SVXA
shares as more particularly described in the Leak Out Agreement.
5. Reliance of Stock Escrow Agent on Documents. Stock Escrow Agent may
act in reliance upon any writing, instrument or signature which it, in good
faith, believes to be genuine, may assume the validity and accuracy of any
statement or assertion contained in such writing or instrument, and may assume
that any person purporting to give any writing, notice, advice or instructions
in connection with the provisions hereof has the power and was duly authorized
to do so. Stock Escrow Agent shall not be liable in any manner as to the
identity, authority or right of any person executing any of such documents or
instruments and its duties hereunder shall be limited to those expressly stated
herein.
6. Indemnification of Stock Escrow Agent. KMA, Jenkins, Giannetto, CF,
and SVXA agree, jointly and severally, to indemnify, insure and hold Stock
Escrow Agent harmless from and against, and reimburse Stock Escrow Agent for,
any and all damages, losses, costs and expenses, including attorney fees and
costs at all levels of proceedings, paid or incurred by Stock Escrow Agent,
which arise by reason of or as a result of Stock Escrow Agent acting as escrow
agent under this Agreement except to the extent that any such damages, losses,
costs or expenses are the result of Stock Escrow Agent's gross negligence or
willful misconduct. The Escrow Agent's fees in the ordinary course of performing
its duties hereunder will be the responsibility of KMA, Xxxxxxx, and Xxxxxxxxx.
7. Interpleader Action in the Event of Dispute. If any of the parties
hereto at any time disagree about the interpretation of this Agreement, or about
the rights, duties or obligations of Stock Escrow Agent, or the propriety of any
action contemplated by Stock Escrow Agent
3
hereunder, Stock Escrow Agent may, but shall not be required to, file a Motion
in the Florida Court that reserves jurisdiction to enforce the Settlement
Agreement, or an independent action of interpleader (at Stock Escrow Agent's
option) in the Circuit Court of Orange County, Florida and deposit the stock
certificates in the registry of such court. KMA, Jenkins, Giannetto, CF, and
SVXA agree, jointly and severally, to indemnify, insure and hold Stock Escrow
Agent harmless from and against, and reimburse Stock Escrow Agent for, any and
all costs incurred by Stock Escrow Agent, in connection with the aforesaid
Motion or interpleader action, as the case may be, and Stock Escrow Agent shall
be fully protected in suspending all or part of its activities under this
Agreement until a final judgment or other appropriate order in the interpleader
action is received.
If Stock Escrow Agent is ever in doubt about any of its duties or
obligations hereunder as escrow agent, then it shall also have the right, but
not the duty, to so notify the other parties in writing and, thereafter, Stock
Escrow Agent shall not be obligated to take any action with respect thereto
unless and until (i) all parties have jointly directed Stock Escrow Agent in
writing to take such action with respect to the duties or obligations in
question, or (ii) a final order of a court of competent jurisdiction, from which
no appeal has been taken and the appeal time expired or, if taken, has become
final, to which Stock Escrow Agent and all other parties hereto are parties, has
been entered directing Stock Escrow Agent to take such action with respect to
the duties or obligations in question.
8. Liability of Stock Escrow Agent. Stock Escrow Agent shall not be
liable to any party or other person or entity for any mistakes of fact or errors
of judgment or for any acts or omissions of any kind unless the same constitute
gross negligence or willful misconduct. KMA, Jenkins, Giannetto, CF, and SVXA
further acknowledge that Stock Escrow Agent is not a guarantor of any the
parties carrying out of their respective obligations under the Settlement
Agreement or the Leak Out Agreement, Stock Escrow Agent's obligations hereunder
being limited to those enumerated in this Escrow Agreement.
9. Resignation of Stock Escrow Agent. Stock Escrow Agent may resign as
escrow agent hereunder upon ten (10) days written notice to the other parties
hereto. If a successor escrow agent is not appointed by the other parties within
this ten (10) day period, Stock Escrow Agent may, but shall have no duty to,
petition a court of competent jurisdiction to name a successor. If no successor
escrow agent is appointed by the parties by written notice to Stock Escrow Agent
within the ten (10) day period, Stock Escrow Agent shall have no further duties
or obligations whatsoever upon the expiration of said period until such time as
a successor escrow agent is appointed and, at such time, the sole duty of Stock
Escrow Agent shall be to deliver the stock or funds in its possession to the
successor escrow agent. If no successor is appointed, the Stock Escrow Agent
shall continue to hold all stock and/or funds in its possession at the time of
the resignation until (i) all parties have jointly directed Stock Escrow Agent
as to the disposition of the stock or funds, or (ii) a final order of a court of
competent jurisdiction, from which no appeal has been taken and the appeal time
expired or, if taken, has become final, to which Stock Escrow Agent and all
other parties hereto are parties, has been entered directing Stock Escrow Agent
as to the disposition of the stock or funds.
10. Jurisdiction and Venue. Jurisdiction of and venue for any action or
proceeding to enforce or interpret this Agreement shall lie exclusively in the
state courts of competent
4
jurisdiction in and for Orange County, Florida. Each of the parties hereto
expressly waives its rights as to any other jurisdiction and venue and agrees
that it shall be subject personally to the jurisdiction of the agreed-upon
courts.
11. Attorneys Fees. In any action or proceeding between any of the parties
regarding the enforcement or interpretation of this Agreement, the prevailing
party or parties in such action or proceeding shall be entitled to collect and
recover from the non-prevailing party or parties all costs of such action or
proceeding incurred by such prevailing party or parties, including, but not
limited to, reasonable attorney fees and costs through all levels of
proceedings, including appeals.
12. Termination. This Agreement shall terminate and the Stock Escrow Agent
shall be discharged of all responsibility hereunder pursuant to the order of a
court of competent jurisdiction or otherwise at such time as the Stock Escrow
Agent shall have completed its duties under Section 4 of this Agreement or has
resigned pursuant to the terms of Section 9 of this Agreement, as the case may
be. The rights of Stock Escrow Agent to indemnification and reimbursement
pursuant to the terms of this Agreement shall survive the termination of this
Agreement.
13. Stock Escrow Agent as Counsel for KMA/Xxxxxxx/Xxxxxxxxx. It is agreed
by all parties hereto that the Stock Escrow Agent has been and shall remain
counsel for KMA/Xxxxxxx/Xxxxxxxxx. Nothing in this Agreement shall be construed
to prohibit Stock Escrow Agent from representing KMA/Xxxxxxx/Xxxxxxxxx in any
litigation between KMA/Xxxxxxx/Xxxxxxxxx and SVXA which may arise out of this
Agreement, including in any dispute over amounts held in escrow, and SVXA
expressly waives the right to claim any conflict to preclude Stock Escrow
Agent's representation of KMA/Xxxxxxx/Xxxxxxxxx. However, Stock Escrow Agent
shall at all times comply with this Agreement notwithstanding Stock Escrow
Agent's representation of KMA/Xxxxxxx/Xxxxxxxxx as counsel to
KMA/Xxxxxxx/Xxxxxxxxx.
14. Notifications. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if delivered by facsimile, in
person via overnight delivery, or sent by prepaid first class registered or
certified mail, return receipt to the following addresses (unless timely notice
of change of address is provided):
SVXA
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0X
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
KMA Capital Partners, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
5
Xxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Xxxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Stock Escrow Agent:
T. Xxxx Xxxxxxxxx, Esquire
Lowndes, Drosdick, Doster,
Xxxxxx & Xxxx, P.A.
000 Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
15. Counterparts. This Agreement may be executed in counterparts and
transmitted by facsimile transmission, and each of such counterparts, whether an
original or facsimile of an original, will be deemed to be an original and all
of such counterparts together will constitute a single agreement.
16. No Third Party Beneficiary. It is the intent of the parties hereto
that this Agreement is solely among the parties to this Agreement and no person,
company or other legal entity not a party to this Agreement shall have any
rights or privileges hereunder as a third party beneficiary or otherwise.
17. Complete Agreement. This Agreement constitutes the complete agreement
between the parties in regard to the matters set forth herein, and may not be
amended, changed or modified except by a writing signed by the party to be
charged by such amendment, change or modification.
18. Construction Rules. In this Agreement, the use of any pronoun shall be
deemed to include all genders, and the use of a singular pronoun shall include
the plural, and vice versa, wherever, in either case, it appears appropriate
from the context. Titles of Sections in this Agreement are for convenience of
reference only, and shall neither limit nor amplify the provisions of this
Agreement. The words "hereof," "herein," "hereto" and "hereunder" shall refer to
this Agreement as a whole and not to any particular provision of this Agreement
unless otherwise specifically provided.
19. Effective Date. This Agreement shall be deemed effective for all
purposes as of the date first written above.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
dates specified below.
ESCROW AGENT:
LOWNDES, DROSDICK, DOSTER,
XXXXXX & XXXX, P.A.
Address: 000 X. Xxxx Xxxxx
Xxxxxxx, Xxxxxxx, 00000 By:T. Xxxx Xxxxxxxxx
Its: Shareholder and Vice President
KMA:
KMA CAPITAL PARTNERS, INC.
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000 By: Xxxxxxx Xxxxxxx
Its: President
XXXXXXX:
XXXXX XXXXXXX
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000 /s/ Xxxxx Xxxxxxx
XXXXXXXXX:
XXXXXXX XXXXXXXXX
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000 /s/ Xxxxxxx Xxxxxxxxx
CF:
CF HOLDINGS, LLC
Address ____________________
____________________ By: s/ Xxxxxxx Xxxxxxxxx
Its: Corp. Secretary
SVXA:
SOVEREIGN EXPLORATION ASSOCIATES
INTERNATIONAL, INC.
Address: 000 Xxxxxxxxxx Xxxxxx
Xxxxx 0X By:/s/ Xxxxxx X. Xxxx
Xxxxxxx, XX 00000 Its: President
7
KMA CAPITAL PARTNERS, LTD.
Address: ____________________
____________________ By:/s/ Xxxxx X. Xxxxxxxxx
Its: General Partner
8
EXHIBIT D
PROMISSORY NOTE AND SECURITY AGREEMENT
Principal Amount: $300,000,000
Date of This Note: October 17, 2005
Location of Execution: Orlando, Florida
Primary Note Rate: Eight (8%) percent per annum
Default Note Rate: Twelve (12%) percent per annum
Due Date: March 30, 2006
Borrower: Venture Planning Inc.
Borrower's Address: 000 Xxxxxx Xx.
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
For Value Received, the undersigned, being the above named "Borrower," and
affiliates, and successors (hereinafter, collectively the "Borrower"), with his,
her, its or their address of record as set forth above as "Borrower's Address,
promises to pay to the order of Xxxxxxx Xxxxxxxxx, and Intra Global LLC,
Orlando, Florida and having their principal place of business at 0000 Xxxxxx
Xxxxxxxxxx Xx., Xxxxxxx, XX 00000, or their successors and assigns,
(hereinafter, collectively with its endorsers, transferors, successors, nominees
and assigns, "Lender"), the above listed "Principal Amount" plus interest on the
unpaid balance of said Principal Amount outstanding from time to time from the
Date of This Note" until paid at the above at the "Primary Note Rate." The
principal and interest shall be due and payable, if not sooner paid on or
before, the above Due Date. Any payments made shall be first applied to interest
and any other charges due as described hereafter and then to the unpaid
principal balance. The above terms shall be used as defined terms and shall
govern and control this Promissory Note and Security Agreement (hereinafter,
this "Note").
Borrower may prepay the principal amount outstanding, plus interest, in whole or
in part at any time from the Date of this Note. If any payment of principal,
interest or any other charge under this Note is not paid within ten (10) days
from the date it is due or if bankruptcy proceedings, whether voluntary or
involuntary, are instituted against the Borrower, or any representation or
warranty of the Borrower in this Note shall prove to have been incorrect in any
material respect when made; or Borrower shall fail to observe or perform any of
its obligations hereunder for ten (10) days after receipt by the Borrower of
Notice of such failure from the Lender (each of the foregoing constituting a
"Default" for purposes hereunder), then all amounts due under this Note shall
commence accruing interest at the above "Default Note Rate," and the entire
unpaid balance of this Note shall at once become due and payable at the option
of the Lender.
As an inducement for the Lender to loan the Principal Amount and to secure the
complete and timely payment, performance and discharge in full, as the case may
be, of all of the obligations hereunder, the Borrower hereby, unconditionally
and irrevocably, pledges, grants and hypothecates to the Lender, a continuing
security interest in and a continuing lien upon, (the "Security Interest") and
an unqualified right to possession and disposition of and a right of setoff
against, in each case to the fullest extent permitted by law, all of the
Borrower's right, title and interest of whatsoever kind and nature in and to
that certain common stock evidenced by Certificate No. 2282 representing Three
Million (3,000,000) shares of common stock in Apollo
Borrower's Initials____
Resources, Inc., a Utah corporation, which interests shall include all rights
thereunder, all proceeds and profits therefrom and all rights accruing
(collectively, the "Collateral"). Borrower agrees that in the event Collateral
is not sufficient to pay the full amounts due under this Note, then in that
event Borrower shall within three (3) business days after Notice by Lender shall
supply such additional and substitute Collateral ("Additional Collateral")
sufficient to pay the amounts due under this Note. In the event that borrower
delivers Additional Collateral for the payment of the principal, interest and
any other charges on this Note, Lender waives personal recourse to the Borrower.
In the event that Borrower fails or refuses to deliver Additional Collateral
sufficient in Lender's opinion to satisfy the amounts dues under the Note, then
that failure or refusal shall constitute an Event of Default if this Default is
not cured within ten (10) business days. Collateral, and Additional Collateral
shall be collectively referred to herein as Collateral.
1. Representations, Warranties, Covenants and Agreements of the Borrower. The
Borrower represents and warrants to, and covenants and agrees with, the Lender
as follows:
a. The Borrower has the requisite power and authority to execute, deliver
this Note and perform the obligations under this Note. This Note
constitutes a legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms, except only as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor's rights generally.
b. The Borrower is the sole owner of the Collateral free and clear of any
liens, security interest, encumbrances, rights or claims, and is fully
authorized to grant the Security Interest in and to pledge the Collateral
encumbered thereby.
c. This Note creates in favor of the Lender a valid first priority
security interest in the Collateral securing the payment and performance of
the obligations hereunder and, upon making the filings permitted to Lender,
a perfected first priority security interest in such Collateral. On or
immediately after the date of execution of this Note, upon request by
Lender, the Borrower will deliver to the Lender one or more executed UCC
financing statements on Form-I with respect to the Security Interest for
filing with such jurisdictions as are requested. On or immediately after
the date of execution of this Note, upon request by Lender, the Borrower
will deliver to the Lender one or more executed irrevocable stock powers or
assignments separate from certificate allowing for the transfer of the
Collateral to Lender in the event of Default hereunder.
d. All information heretofore, herein or hereafter supplied to the Lender
by or on behalf of the Borrower with respect to the Collateral is accurate
and complete in all material respects as of the date furnished.
2. Rights and Remedies Upon Default. Upon occurrence of any Default and at any
time thereafter, the Lender shall have the right to exercise all of the remedies
conferred hereunder and the Lender shall have all the rights and remedies of a
lender under any other applicable law (including the Uniform Commercial Code of
any jurisdiction in which any collateral is then located). Without limitation,
the Lender shall have the right to take possession of the Collateral and remove
same, and Lender shall have the right to assign, sell, lease or otherwise
dispose of
Borrower's Initials____
and deliver all or any part of the Collateral, at public or private sale or
otherwise, either with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such manner on such terms and conditions
and at such times and at such places, as the Lender may deem commercially
reasonable, all without (except as shall be required by applicable statute and
cannot be waived) advertisement or demand upon or notice to the Borrower or
right of redemption of the Borrower, which are hereby expressly waived. Upon
each such sale, assignment or other transfer of Collateral, the Lender may,
unless prohibited by applicable law which cannot be waived, purchase all or any
part of the Collateral being sold, free from and discharged of all trusts,
claims, rights of redemption and equities of the Borrower, which are hereby
waived and released.
3. Application of Proceeds. The proceeds of any such sale or other disposition
of the Collateral hereunder shall be applied first, to the expenses of retaking,
holding, and preparing for sale, and, next to the payment of the Principal
Amount due and any Interest, fees and costs, added thereto and any other amounts
required by applicable law, after which the Lender shall pay to the Borrower any
surplus proceeds. To the extent permitted by applicable law, the Borrower waives
all claims, damages and demands against the Lender arising out of the
repossession, removal, retention or sale of the Collateral, unless due to the
gross negligence or willful misconduct of the Lender.
4. Costs and Expenses. The Borrower agrees to pay all out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
and all other claims and charges which in the reasonable opinion of the Lender
might prejudice, imperil or otherwise affect the Collateral or the Security
Interest therein. Until so paid, any fees payable hereunder shall be added to
the principal amount of the Note and shall bear interest at the Default Note
Rate.
5. Security Interest Absolute. All rights of the Lender and all obligations of
the Borrower hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any portion of this Note; (b) any
changes in the time, manner or place of payment or performance of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any depositions from the Note or any other agreement
entered into in connection with the foregoing; (c) any exchanges, releases or
non-perfection of any of the Collateral, or any releases or amendment or waiver
of or opposition to departure from any other collateral for, or any guaranty, or
any other security, for all of any of the Obligations; (d) any action by the
Lender to obtain, adjust, settle and cancel in its sole discretion any insurance
claims or matter made or arising in connection with the Collateral; or (e) any
other circumstances which might otherwise constitute any legal or equitable
defense available to the Borrower, or a discharge of all or any part of the
Security Interest granted hereby. The Borrower expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for
performance. The Borrower waives all rights to require the Lender to proceed
against any other person or to apply any Collateral which the Lender may hold at
any time, or to marshal assets, or to pursue any other remedy. The Borrower
waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.
6. Term of Agreement. This Note and the Security Interest conveyed hereunder
shall terminate on the date on which all payments under the Note have been made
in full and all other
Borrower's Initials____
obligations have been paid or discharged. Upon such termination, the Lender, at
the request and at the expense of the Borrower, will join in executing any
termination statement with respect to any financing statement executed and filed
pursuant to this Note.
7. Notices. All notices, requests, demands and other communications hereunder
shall be in writing, with copies to all the other parties hereto, and shall be
deemed to have been duly given when mailed by first-class certified mail, return
receipt requested, postage prepaid, four days after posting in the U.S. mails,
in each case if delivered to the addresses hereinabove given for each of the
parties hereto.
8. Miscellaneous.
a. No course of dealing between the Borrower and the Lender, nor any
failure to exercise, nor any delay in exercising, on the part of the
Lender, any right, power or privilege hereunder or under the Note shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. No waiver of any breach or default or any right under this Note
shall be considered valid unless in writing and signed by the party giving
such waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default or right, whether of the same or similar nature or
otherwise.
b. All of the rights and securities of the Lender with respect to the
Collateral, whether established hereby or by the Note or by any other
agreements, instruments or documents or by law shall be cumulative and may
be exercised singly or concurrently except that the election of remedies
and waiver of recourse is absolute and a material term hereof.
c. In the event that any provision of this Note is held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Note shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or unenforceable. If, notwithstanding the foregoing, any provision of this
Note is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other
provisions of this Note and without affecting the validity or
enforceability of such provision or the other provisions of this Note in
any other jurisdiction.
d. This Note shall be binding upon and inure to the benefit of each party
hereto and their heirs and successors. Borrower may not assign or transfer
this Note without the express Consent of Lender, and the assignment by
Borrower without such Consent shall constitute an Event of Default.
Borrower's Initials____
e. Each party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Note.
f. This Note shall be construed in accordance with the laws of the State
of Florida and each party parties hereto irrevocably submit to the
exclusive jurisdiction of any Florida State or United States Federal court
sitting in Orange County, Florida over any action or proceeding arising out
of or relating to this Note, and the parties hereto hereby irrevocably
agree that all claims in respect of such action or proceeding may be heard
and determined in such Florida State or Federal court.
g. Each party hereto hereby agrees to waive its respective rights to a
jury trial of any claim or cause of action based upon or arising out of
this Note. Each party hereto acknowledge that this waiver is a material
inducement for each party to enter into a business relationship and that
each party relies on this wavier in entering into this Note.
IN WITNESS WHEREOF, the parties hereto have caused this Note to be duly executed
as of the Date of this Note at the Location of Execution above written.
Borrower:
Venture Planning Inc.
By:/s/ Xxxxx Xxxxxxxxxxx
Xxxxx Xxxxxxxxxxx
Attest: /s/ Xxxxx Xxxxxxxxxxx
Its Corporate Secretary
Accepting same, for and in consideration of the consideration provided herein
and other good and valuable consideration:
Lenders:
InterGlobal LLC
By:/s/ Xxxxx X. Xxxxxxx
Its: Xxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx
Borrower's Initials____
