SETTLEMENT AGREEMENT
This
SETTLEMENT AGREEMENT (this "Agreement") is entered into by and between Titan
Global Holdings, Inc. (“Titan”), Xxxxx Xxxxxxxx (“Xxxxxxxx”), and NewGen
Technologies, Inc. (“NewGen”) (collectively, the “Parties”).
RECITALS
The
following introductory provisions are true and correct and form the basis of
this Agreement:
A.
NewGen
is
a Nevada corporation with its principal place of business in North
Carolina.
B. Titan
is
a Utah corporation with its principal place of business in Texas.
X. Xxxxxxxx
is an individual residing in the State of Florida.
D. Appalachian
Oil Company, Inc. (“APPCO”) is a Tennessee corporation with its principal place
of business in Tennessee.
E. On
June
7, 2006, NewGen executed a non-binding letter of intent with APPCO and its
shareholders. Among other conditions, the letter of intent required NewGen
to
secure and evidence a firm commitment to fund its purchase of APPCO before
completing a definitive agreement with APPCO and its shareholders.
F. On
January 16, 2007, NewGen, APPCO and APPCO’s shareholders entered into a Stock
Purchase Agreement (the “SPA”).
G. Pursuant
to the SPA, NewGen agreed to pay approximately $30 million for the purchase
of
APPCO’s stock. Subsequent amendments to the SPA extended the closing date
and required NewGen to close on or before June 7, 2007.
H. In
March
2007, NewGen engaged Xxxxxxxx as an independent contractor to assist in
procuring financing to enable NewGen to close on the SPA with APPCO and its
shareholders.
I. As
a
result of the financial condition of both APPCO and NewGen, the institutional
investor enlisted by Xxxxxxxx to finance the APPCO acquisition for NewGen
rejected the funding request in May 2007.
J. To
date,
NewGen has been unable to procure the financing necessary to close on the
amended SPA.
K. As
a
result of NewGen’s inability to procure financing, the SPA, as amended, expired
by its terms and, on June 7, 2007, APPCO and its shareholders provided written
notice to NewGen exercising their right to terminate the SPA on June 18,
2007.
L. On
June
20, 2007, NewGen, through its President, Xxx Xxxxxxxxxx, made certain demands
on
Xxxxxxxx and Titan with respect to Titan’s and Xxxxxxxx’x rights relating to
communications and/or negotiations with APPCO and its shareholders.
M. NewGen
acknowledges for purposes of entering into, effectuating, and enforcing this
Agreement that Titan and Xxxxxxxx owe no duties to NewGen with respect to the
Appco acquisition or the financing thereof, except as expressly set forth in
this Agreement.
N. On
June
25, 2007, Titan and Xxxxxxxx filed a lawsuit against NewGen in the United States
District Court for the Eastern District of Tennessee (the “Lawsuit”) seeking,
inter
alia,
a
declaration of Titan’s and Xxxxxxxx’x rights relating to APPCO and NewGen. As of
the date hereof, NewGen has not yet answered such complaint.
O. The
Parties desire to fully and finally settle, all pending or current disputes
and
controversies between them arising out of all dealings prior to the date of
this
Agreement in order to avoid the cost, inconvenience and uncertainty of
litigation.
TERMS
AND CONDITIONS
NOW
THEREFORE, the
Parties, upon the terms and for the consideration set forth herein and other
good and valuable consideration, the receipt and legal sufficiency of which
is
hereby agree as follows:
1. TITAN’S
EXCLUSIVE RIGHTS TO NEGOTIATE WITH APPCO. Titan
and
NewGen agree that Titan shall have the exclusive right (as between the Parties
hereto) to negotiate a definitive agreement with APPCO and its shareholders
to
purchase the outstanding shares of APPCO; provided, however, that if Titan
materially breaches this Agreement prior to the closing of the acquisition
of
APPCO, this paragraph shall be null and void and of no effect.
2. TITAN’S
RIGHTS AND NEWGEN’S OBLIGATIONS WITH
RESPECT TO APPCO.
Titan
shall have the following rights and NewGen shall have the following obligations;
provided, however, that if Titan materially breaches this Agreement prior to
the
closing of the acquisition of APPCO, this paragraph shall be null and void
and
of no effect:
A. Until
the
completion of the acquisition of APPCO by Titan, NewGen shall not, and shall
use
its best efforts to cause its officers and directors not to, contact or
communicate with APPCO or its shareholders, except as authorized or directed
by
Titan or Xxxxxxxx or otherwise in furtherance of the negotiation and closing
of
Titan’s acquisition of APPCO, including satisfying Titan’s closing
obligations under this Settlement Agreement.
B. Without
the need for execution of further documentation, to the fullest extent
permissible by applicable law, Titan shall immediately become the owner of
any
and all rights that NewGen may have (1) relating to APPCO and its shareholders
including any rights that may exist under any agreements executed by and between
NewGen, APPCO, and its shareholders; (2) relating to the possible acquisition
of
any real estate owned or controlled by APPCO or its shareholders; (3) relating
to any rights to any refund of or credits for deposits paid by NewGen to APPCO
or its shareholders under the SPA or its amendments; and (4) relating to any
due
diligence materials prepared by NewGen, Price Waterhouse, Skoda-Xxxxxxx,
Xxxxxxxxx Environmental, Inc., and Xxxxx Xxxxx, LLP.
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3. TITAN’S
REIMBURSEMENT OBLIGATIONS WITH RESPECT TO NEWGEN’S PROFESSIONAL
ADVISORS.
Titan
will reimburse NewGen $800,000 in total in respect of (i) any payments made
to
those third-party vendors set forth on Exhibit
A
(the
“Service Providers”) and (ii) any other billed, but unpaid amounts owed to such
Service Providers, representing in each case work relating to and arising out
of
NewGen’s proposed acquisition of the outstanding stock in APPCO. For the
avoidance of doubt, Titan will have no other reimbursement obligations to NewGen
or to the Service Providers with respect to amounts owed to the Service
Providers relating to and arising out of NewGen’s proposed acquisition of the
outstanding stock in APPCO other than this aggregate $800,000 payment (the
“Service Provider Amount”). NewGen will use commercially reasonable efforts to
cause the Service Providers to allow Titan to rely upon Service Providers’ work
product. Titan shall pay NewGen the Service Provider Amount on the following
payment schedule:
A. Titan
shall promptly pay NewGen $50,000 by wire transfer on each of the following
dates (the “Interim Payments”) until such date as Titan closes the definitive
agreement with APPCO (the “Definitive Agreement”) to purchase the outstanding
shares of APPCO (or a substantially similar transaction with APPCO) (the
“Closing Date”): (i) Wednesday August 8, 2007; (ii) Wednesday August 15, 2007;
(iii) Wednesday August 22, 2007; (iv) Wednesday August 29, 2007; (v) Wednesday
September 5, 2007; (vi) Wednesday September 12, 2007; (vii) Wednesday September
19, 2007; (viii) Wednesday September 26, 2007; (ix) Wednesday October 3, 2007;
(x) Wednesday October 10, 2007; and (xi) if the Closing Date shall not yet
have
occurred, each Wednesday thereafter until the total Interim Payments made to
NewGen are equal to the Service Provider Amount.
B. Immediately
prior to such time as Titan closes the acquisition of APPCO, Titan will pay
NewGen by wire transfer the remaining unpaid Service Provider Amount
(i.e.,
with a
deduction for any Interim Payments already made to NewGen pursuant to Section
5A. Titan will cause prior payment of the Service Provider Amount and the
$500,000 to be paid to NewGen under Sections 5A and 5B below to be closing
conditions of APPCO’s obligation to close under the Definitive Agreement and
shall permit NewGen’s counsel to verify the inclusion of such a closing
condition in the Definitive Agreement.
4. NEWGEN’S
GRANT OF WARRANTS TO TITAN.
Immediately upon the payment of the amounts set forth in Section 3 above, NewGen
shall execute and deliver to Titan a warrant document that is reasonably
satisfactory in form and substance to Titan, pursuant to which NewGen grants
to
Titan warrants to acquire 2.5 million shares of NewGen common stock, $0.001
par
value per share (“NewGen Commmon”). The warrant exercise price shall be
$0.35 per share and all warrants shall be fully vested upon execution and
delivery of the warrant document. The warrant document shall contain
customary provisions authorizing cashless exercise of the warrants and shall
provide that the warrants remain in effect (to the extent not previously
exercised) for a period of seven years. Prior to execution and delivery of
the warrant document to Titan the Board of Directors of NewGen shall authorize
said grant of warrants and the issuance of shares of NewGen Common upon exercise
of the warrants, and shall reserve sufficient shares of Common Stock to issue
the shares covered by the warrant document, upon exercise.
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5. TITAN’S
OBLIGATIONS UPON CLOSING OF TRANSACTION WITH APPCO.
A. APPCO
and
Titan acknowledge that Titan is entering into a Definitive Agreement with APPCO
that gives Titan credit for the deposits made by NewGen to APPCO under the
SPA
or its amendments. Upon the execution of such Definitive Agreement by Titan
and
Appco, Titan will promptly pay NewGen $250,000 by wire transfer in respect
of a
deposit previously paid by NewGen to APPCO and credited to Titan.
B. Following
the execution of such Definitive Agreement by Titan and Appco and in no event
later than August 1, 2007, Titan will promptly pay NewGen a further $250,000
by
wire transfer in respect of a deposit previously paid by NewGen to APPCO and
credited to Titan.
C. On
the
Closing Date, Titan will enter into a consulting agreement with NewGen relating
to APPCO simultaneously with the consummation of the acquisition of APPCO.
The
consulting agreement will provide for (i) monthly payments of $50,000, with
annual Consumer Price Index increases, and (ii) reimbursement of all business
expenses that meet specified criteria (e.g.,
travel,
lodging, meals and other expenses) or which expenses are pre-approved by Titan).
The consulting agreement will provide that either party is permitted to
terminate such agreement with cause on 30 days' prior notice. In addition,
Titan
can terminate NewGen, without cause, upon 30 day's prior notice; provided,
however, if Titan terminates the consulting agreement without cause during
the
first twelve months of the consulting agreement, Titan shall promptly pay NewGen
liquidated damages in the amount of $300,000 (i.e.,
six
months of fees at $50,000 per month). The intended scope of NewGen’s services to
Titan will include strategic and operational business matters related to APPCO
as mutually agreed between Titan and NewGen. In addition, Titan will cause
APPCO
to enter into a contract with NewGen for a term of 10 years providing Refuel
America, Inc., with the exclusive right to supply biofuel products to APPCO
or
its affiliates at the then prevailing market price for such biofuel products
at
the time an order was placed (the "Supply Contract"). Each of APPCO (or its
affiliates) and Refuel America, Inc., will be permitted to terminate the Supply
Contract solely with cause upon 60 days' prior notice.
6. RELEASE
OF ALL CLAIMS BY NEWGEN.
To the
fullest extent allowed by law, NewGen hereby fully, finally and completely
releases, and forever discharges and acquits Titan, Xxxxxxxx, and their past,
present, and future successors, affiliates, representatives, executors,
administrators, officers, directors, shareholders, partners, servants,
attorneys, employees, agents, purchasers, assigns and insurers (the “Released
Titan Parties”), of and from any and all demands, claims, obligations, actions,
causes of action, suits and controversies accruing prior to the effective date
of this Agreement that NewGen has or may have against the Released Titan
Parties. For the avoidance of doubt, all payments to be made by Titan to NewGen
under this Agreement, including but not limited to the Service Provider Amount,
shall be made directly to NewGen and not to any third parties unless such
payments are authorized to be so made in writing by at least two authorized
officers of NewGen prior to the date of such payment.
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7. RELEASE
OF ALL CLAIMS BY TITAN AND XXXXXXXX.
To the
fullest extent allowed by law, Titan and Xxxxxxxx fully, finally and completely
release, and forever discharge and acquit NewGen and its past, present, and
future successors, affiliates, representatives, executors, administrators,
officers, directors, shareholders, partners, servants, attorneys, employees,
agents, purchasers, assigns and insurers (the “Released NewGen Parties”), of and
from any and all demands, claims, obligations, actions, causes of action, suits
and controversies accruing prior to the effective date of this Agreement that
Titan and Xxxxxxxx (or their respective affiliates) has or may have against
the
Released NewGen Parties; provided, however, nothing herein shall constitute
a
release of any claims that Xxxxxxxx has or may have solely in his capacity
as a
shareholder of NewGen.
8. SOLE
OWNERS OF CLAIMS.
To the
fullest extent permitted by law and public policy, the
Parties represent and warrant that they are the only persons who are entitled
to
any recovery for any cause whatsoever for damages, expenses, or losses incurred
as a result of the circumstances that are made the basis of this Agreement.
To
the
fullest extent permitted by law and public policy, the Parties represent and
warrant that they have not assigned or transferred all or part of the claims,
demands, actions, or causes of action arising from or in any way relating to
the
circumstances and conditions that are made the basis of this action, to any
person, firm, or corporation. To the fullest extent permitted by law and public
policy, the Parties represent and warrant that they are the full and sole owners
of the claims, demands, actions, or causes of action arising from or in any
way
relating to the circumstances and conditions that are made the basis of this
Agreement.
9. TERMS.
The
Parties agree that the releases and agreements set forth herein are good,
valuable and valid consideration for this Agreement, failure of which shall
constitute a breach of this Agreement for which damages and specific performance
may be sought. Time is of the essence.
10. NO
ADMISSIONS.
It is
expressly understood and agreed that the Parties have entered into this
Agreement to settle the disputes and controversies referenced herein and the
Parties do not admit liability of any type for any claim asserted or which
could
have been asserted, but instead each deny any and all liability on each and
every claim which has been or which could have been asserted. The purpose of
this Agreement is to avoid the risks, costs, and burdens of further litigation
and is an alternative means of resolving the differences between the Parties.
To
that end, this Agreement shall not be admissible in any judicial, administrative
or other proceeding or cause of action as an admission of liability by the
Parties hereto.
11. DISMISSAL
OF THE LAWSUIT.
Within
three business days of the full execution of this Agreement, Titan and Xxxxxxxx
shall file a Stipulation of Dismissal of the Lawsuit in accordance with Rule
41(a)(1) of the Federal Rules of Civil Procedure.
12. ENTIRE
AGREEMENT.
This
Agreement contains the entire agreement among the Parties relating to the
pending or current disputes and controversies between the parties arising from
the Wholesale Agreement and supersedes any and all other negotiations,
representations, understandings and agreements relating to those disputes and
controversies. All prior and contemporaneous negotiations, understandings and
agreements between the Parties relating to those disputes and controversies
are
deemed abandoned and waived to the extent that they are not stated in this
Agreement. This Agreement may be amended only by a written agreement signed
by
each party, and a breach of this Agreement may be waived only by a written
waiver signed by the party granting the waiver. The waiver of any breach of
this
Agreement shall not operate or be construed as a waiver of any other similar,
prior or subsequent breach of this Agreement.
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13. REPRESENTATIONS
AND WARRANTIES.
As a
material inducement to enter into this Agreement, each party represents and
warrants that at the signing of this Agreement and delivery of any documents
hereunder:
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A.
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it
has been fully informed of the terms and conditions of this Agreement
and
has done all investigation deemed necessary prior to execution;
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B.
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no
threat, promise or representation of any kind has been made to it
by any
other party hereto or anyone acting on behalf of any party hereto,
except
as is expressly stated in this Agreement;
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C.
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it
has been represented by counsel of its choosing in connection with
the
negotiations and execution of the
Agreement;
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D.
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each
party has the sole right and exclusive authority to execute this
Agreement
on its behalf and receive the monies and credits set forth
herein;
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E.
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the
person executing this Agreement on behalf of each party is fully
competent
and authorized to execute this Agreement on behalf of the party,
and
his/her signature set forth on this Agreement is genuine and binding;
and
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F.
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this
Agreement and all other documents delivered in connection with this
Agreement have been or will be duly executed and delivered by such
party
and are valid and binding agreements and are enforceable in accordance
with their terms.
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14. ATTORNEY’S
FEES AND COSTS. With
respect to the drafting of this Agreement, all attorney’s fees and costs will be
borne by the party incurring same.
However, to the extent that either party files a lawsuit to enforce or interpret
the provisions of this Agreement, the prevailing party in that lawsuit shall
be
entitled to recover its attorney’s fees and costs.
15. BINDING
EFFECT.
The
terms hereof are contractual and not merely recitals. All agreements,
representations, covenants, terms and conditions of this Agreement shall survive
its execution and be fully binding upon the Parties, and their respective heirs,
personal representatives, successors and assigns.
16. SEVERABILITY.
In the
event that any one or more of the provisions contained in this Agreement shall,
for any reason, be held to be invalid, illegal or unenforceable, in any respect,
such invalidity, illegality or unenforceability shall not affect any of the
remaining provisions, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
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17. COUNTERPARTS. This
Agreement may be executed for all purposes in any number of identical
counterparts, and each party may execute any such counterpart, each of which
shall be deemed an original for all purposes. A photocopy or facsimile copy
of
this Agreement, and any signature to this Agreement, shall be deemed to be
as
effective as the original for all purposes.
18. GOVERNING
LAW AND EXCLUSIVE JURISDICTION.
This
Agreement shall in all respects be governed by, construed and enforced in
accordance with the laws of the State of Texas, its rules of conflict of laws
notwithstanding. The parties agree and consent to the exclusive jurisdiction
of
the courts of the State of Texas in any suit, action or proceeding seeking
to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement. Each party hereby irrevocably consents to the service
of
any and all process in any such suit, action or proceeding by registered or
certified mail addressed and sent to the chief executive officer of such party
at such party’s main or central office, or in the case of Xxxxxxxx to the
following address: 0000 Xxxxx Xxxx Xxxxxxx Xxxxx, Xxxxxxx 00000.
19. HEADINGS. The
paragraph headings of this Agreement are inserted for convenience of reference
only and shall not control or affect the meaning, intention, construction or
effect of the Agreement.
20.
EFFECTIVE
DATE.
The
Effective Date of this Agreement shall be the date on which the last party
signs
it.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
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SIGNED and
EFFECTIVE this 24th day of July, 2007.
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TITAN
GLOBAL HOLDINGS, INC.
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By:
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/S/
Xxxxx X. Xxxxx
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Title:
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Chairman
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XXXXX
XXXXXXXX
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/S/
Xxxxx Xxxxxxxx
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By:
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/S/
Xxxxx Xxxxxx
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Xxxxx
Xxxxxx
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Title:
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CEO
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EXHIBIT
A
SCHEDULE
OF CERTAIN PROFESSIONAL ADVISORS USED IN
CONNECTION
WITH OR RELATING TO THE APPCO ACQUISITTION
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Service
Provider
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Work
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PricewaterhouseCoopers
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Financialduediligence
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Xxxxxxxxx
Environ., Inc.
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Phase
I environmental reports
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Skoda-Xxxxxxx
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Audits
on APPCO
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Xxxxx
& Xxxxx LLP
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Due
diligence on APPCO real estate
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Xxxx
Xxxxx LLP
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Legal
services in connection with APPCO
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