AGREEMENT TO SETTLE CERTAIN CLAIMS
THIS
AGREEMENT TO SETTLE CERTAIN CLAIMS (this “Agreement”)
is
hereby entered into and effective on the 13th day of June, 2008 (the
“Effective
Date”),
by
and among:
Allegro
Biodiesel Corporation,
a
Delaware corporation registered to do business in the State of Louisiana
(hereinafter referred to as “Allegro”);
and
the
former members of Vanguard Synfuels, L.L.C.,
a
Louisiana limited liability company (hereinafter referred to as the
“Members”),
represented herein by Xxxxxxx Xxxxxx in his capacity as Member Representative
(in such capacity, hereinafter referred to as “Member
Representative”).
The
parties entering this Agreement are hereinafter collectively referred to as
“Parties”
and
individually referred to as “Party”.
RECITALS
WHEREAS,
on
September 20, 2006, Allegro’s predecessor, Diametrics Medical, Inc. (hereinafter
referred to collectively as “Allegro”),
executed a Contribution Agreement wherein Allegro purchased all of the issued
and outstanding ownership interest of Vanguard Synfuels, L.L.C. (“Contribution
Agreement”;
capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Contribution Agreement) from the
Members;
WHEREAS,
on
September 20, 2006, as a part of the Contribution Agreement, Allegro, the
Members and
the
Escrow Agent, executed an Escrow Agreement (the “Escrow
Agreement”)
and
deposited the Escrow Amount and the Escrow Shares into the Escrow thereunder
for
the purpose of having funds available to Allegro to satisfy any claims by
Allegro for indemnification pursuant to Article XII of the Contribution
Agreement;
WHEREAS,
Allegro
has made various claims for indemnification under Article XII of the
Contribution Agreement and for the release of the Escrow Amount and the Escrow
Shares to Allegro (hereinafter, all claims Allegro has, had or may have against
the Members under Article VII of the Contribution Agreement, but excluding
any
future claims with respect to breaches of or inaccuracies in the Tax Warranties,
the Title and Authorization Warranties, the Environmental Warranties, the
Securities Warranties and claims for fraud are herein referred to as the
“Claims”);
WHEREAS,
cash in
the amount of Forty Seven Thousand Four Hundred Forty-Eight and 49/100 Dollars
($47,448.49) has been released from the Escrow Fund pursuant to the joint
written instructions of the Allegro and the Members dated May 16, 2008 in full
and complete satisfaction of an indemnification claim by Allegro relating to
an
Internal Revenue Service civil penalty assessed against Vanguard Synfuels,
L.L.C. (the “Tax
Penalty Claim”);
and
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WHEREAS,
all
Parties agree that the Claims will be settled pursuant to the following
procedures set forth in this Agreement.
NOW,
THEREFORE,
in
consideration of the foregoing and of the mutual promises contained herein,
intending to be legally bound and, for good and valuable consideration, the
Parties agree as follows:
1. Payment
of Claim; Subrogation.
All
Parties hereby acknowledge the payment, receipt and sufficiency of the cash
payment of Forty Seven Thousand Four Hundred Forty-Eight and 49/100 Dollars
($47,448.49) from the Escrow Fund in full and complete satisfaction of the
Tax
Penalty Claim. The Parties hereby agree that the Members shall be subrogated
to
all rights of Vanguard Synfuels, L.L.C. with respect to the Tax Penalty Claim
in
order to pursue all claims (if any) against third parties (other than Allegro,
its shareholders, officers, directors, employees, managers or agents) related
thereto.
2. Release
from Escrow Fund.
(a)
Upon
the execution of this Agreement, the Parties shall execute joint written escrow
instructions in the form attached hereto as Exhibit
A
which
shall:
(i)
authorize the release of Two Hundred One Thousand One Hundred Twenty Nine and
30/100 Dollars ($201,129.30) cash and 126,250 shares of Allegro common stock
from the Escrow Fund to the Members; and
(ii)
authorize the release of One Hundred Fifty One Thousand Six Hundred Twenty
Eight
and 08/100 Dollars ($151,628.08) cash and 124,961 shares of Allegro common
stock
from the Escrow Fund to Allegro.
(b)
The
Parties hereby agree and acknowledge that the cash payments and distributions
of
shares described above shall:
(i)
be
made
in
consideration of the Parties entering into this Agreement and such payments
and
distributions are not contingent upon the settlement of the Claims;
and
(ii)
notwithstanding anything in Section 2(b)(i) to the contrary, serve as a credit
toward any amount of cash or shares awarded to either Party pursuant to any
settlement agreement and/or Award (as defined below) relating to the Claims.
Such credit shall be dollar for dollar and share for share.
(c)
In
addition, upon the execution of this Agreement, the Parties shall execute joint
written escrow instruction in the form attached hereto as Exhibit
B,
directing the Escrow Agent to release all remaining Escrow Funds and Escrow
Shares from the Escrow in accordance with the Award of the Arbitrator (as each
such term is defined below), if any.
3. Amicable
Settlement.
The
Parties will use their good faith, commercially reasonable efforts to identify
and settle all Claims on or before July 15, 2008. In furtherance of their
attempts to settle the Claims, the Parties agree to hold an initial meeting
no
later than July 1, 2008 for the purpose of resolving all Claims. Such meeting
shall be held in Denver, Colorado, or at such other location or telephonically
as agreed by the Parties. Such meeting may be extended to future dates if the
Parties are not able to resolve all Claims during the initial meeting.
Negotiations for the settlement of the Claims, which may include mediation
by
mutual agreement of the Parties, shall continue until the later of the date
that
all Claims are resolved or July 15, 2008. If the Parties are able to settle
some, but not all of the Claims as a result of their negotiations, then the
Parties shall enter into a binding settlement agreement covering the resolved
Claims and submit the remaining Claims to arbitration pursuant to Section
4
below.
If the Parties are able to settle Claims as a result of their negotiations
then
the Parties shall enter into (i) a settlement agreement and release of any
and
all Claims that are resolved by the Parties and (ii) joint escrow instructions
that direct the Escrow Agent to release the Escrow Amount and Escrow Shares
as
are agreed to by the Parties in such settlement agreement. Unless otherwise
agreed by the Parties, the
participants in all settlement proceedings shall include no more than two
representatives of Allegro, the Member Representative, no more than one (1)
other Member and each Party’s attorneys.
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4. Arbitration.
(a) If
on
July 16, 2008, the Parties have not either entered into a binding settlement
or
release of all Claims, the Parties agree that all Claims shall be resolved
by
private arbitration (the “Arbitration”)
conducted by one arbitrator (the “Arbitrator”)
to be
selected as follows:
(i) On
or
prior to July 25, 2008, each Party may propose to the other a list of up to
five
persons to serve as the Arbitrator. Neither Party may include in their list
the
name of any person who (i) is or was an employee, officer, director, legal
counsel or other representative of such Party or any affiliate of such Party
or
any other person who has a direct or indirect personal or financial interest
in
the outcome of the Arbitration, (ii) does not have at least ten years experience
in either accounting or mergers and acquisitions or (iii) who is not located
in
the Denver, Colorado area.
(ii) If
there
are one or more names that overlap in the combined list, then the Parties will
pick the arbitrator from that set of overlaps. If there is only one overlap,
then that person is automatically the Parties' choice for arbitrator. If there
are more than one overlapping names, then the arbitrator shall be picked from
the list of overlapping names by alternately striking names until only one
name
remains on the overlapping list (with each such strike to take no more than
one
business day to complete). Allegro will strike the first name.
(iii) If
there
are no overlapping persons and if the Parties are unable to agree upon one
arbitrator from the combined list by August 4, 2008, then the arbitrator shall
be picked from the list of names by alternately striking names until only one
name remains on the overlapping list (with each such strike to take no more
than
one business day to complete). Allegro will strike the first name.
(b) The
Arbitrator shall set a hearing date for an arbitration (the "Hearing")
within
forty-five (45) days from the date the Arbitrator is selected, unless otherwise
agreed by the Parties, or unless otherwise ordered by the Arbitrator due to
conflicts with the Arbitrator’s schedule.
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(c) The
Parties agree that there shall be free and open discovery between the Parties
during the period from the Effective Date until the date of the Hearing. Neither
party shall deny or object to, any reasonable request reating to the Claims
that
are submitted by the opposing Party for the production of documents or
depositions and will otherwise cooperate in the discovery process; provided
that
the deponent in any deposition shall not be required to travel for purposes
of
his or her deposition. The Arbitrator shall have the authority to compel such
discovery and to order any further discovery, by way of deposition,
interrogatory, document production, or otherwise, as the Arbitrator considers
necessary to a full and fair exploration of the issues in dispute. Except as
otherwise provided herein, the Arbitrator shall administer the discovery process
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association.
(d) Unless
otherwise agreed by the Parties, within fifteen (15) days before the Hearing,
the Parties shall submit to the Arbitrator, with a copy to the other Party,
a
list of all witnesses and exhibits which it intends to present at the
Hearing.
(e) No
later
than ten (10) days before the scheduled Hearing, the Parties shall provide
to
the Arbitrator and to the other Party a short (not to exceed five (5)
single-spaced pages or such other page limit as the Arbitrator permits)
statement of its respective position with regard to the Claims.
(f) At
the
Hearing, each Party shall, unless it waives the opportunity, make an oral
opening statement, and an oral closing statement.
(g) When
testimony is complete and each Party has introduced its exhibits, subject to
the
provisions of this Agreement, and each has made a closing statement pursuant
to
the provisions of this Agreement or waived the opportunity to do so, the
Arbitrator shall declare the Hearing closed; provided, however, the Parties
may
submit post hearing briefs pursuant to an agreed upon schedule or one formulated
by the Arbitrator.
(h) The
Hearing shall be held at a location in, or near, the City of Denver, Colorado
agreed upon by the Parties and convenient for the Arbitrator, or if the Parties
cannot agree upon a location in the City of Denver, Colorado, designated by
the
Arbitrator.
(i) The
Hearing shall be conducted in private. Attendance at the Hearing shall be
limited to the following: (i) the Arbitrator; (ii) no more than two
representatives of Allegro, (iii) the Member Representative, (iv) no more than
one (1) other Member; (v) each Party's attorneys; (vi) a court reporter if
requested by either Party; and (vii) any witnesses, including expert
witnesses.
(j) The
Hearing shall be conducted in not more two (2) days, beginning at 10:00 AM,
local time; provided that the Arbitrator may, in his or her sole discretion,
order the continuance of the Hearing on consecutive succeeding business days
if
requested by a Party.
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(k) Within
thirty (30) days of the close of the Hearing, the Arbitrator shall issue a
written opinion and award (the "Award")
based
on evidence, arguments and post hearing briefs, if any. The Award shall be
a
decision of the Arbitrator, shall resolve the Claims submitted to the
Arbitration, and shall be final and binding on the Parties. The Award shall
state the amount of the Escrow Amount and the number of Escrow shares to be
released to Allegro, on the one hand, and the Members, on the other hand. The
fact that an opinion is issued does not enlarge or restrict the authority of
a
court provided in the AAA's Commercial Arbitration Rules to review the
arbitration proceedings or the Award. The Arbitrator shall then deliver a notice
to the Escrow Agent, directing the Escrow Agent to release Escrow Funds and
Escrow Shares in accordance with the Award.
(l) Except
as
otherwise provided in this Agreement, there shall be no ex parte communication
regarding the subject matter of the Hearing between a Party or its attorneys
and
the Arbitrator from the time the Arbitrator is appointed until after the Parties
receive the Award.
(m) The
Parties agree that the Award can be enforced by any court of competent
jurisdiction.
(n) Notwithstanding
any other provision of this Agreement, the Arbitrator shall have no power to
delete from, add to, or modify the terms of this Agreement, and may not award
any remedy which effectively conflicts directly or indirectly with any provision
of this Agreement.
(o) The
arbitration shall be governed by AAA's Commercial Rules of Arbitration, except
as otherwise provided in this Agreement.
(p) Each
Party shall bear its own expenses, costs and attorneys fees incurred in
connection with the Arbitration. The fees of any court reporter at the Hearing
shall be paid by the Party that requests the court reporter.
5. Limitation
on Claims.
All
Parties hereby agree that the aggregate maximum amount recoverable by any Party
pursuant to any settlement agreement and/or Award relating to the Claims shall
not exceed the balance of the sum of the Escrow Amount and the Escrow Shares
as
of the Effective Date (as approximated in Schedule
5
attached
hereto, the “Escrow Principal Balance”) plus any interest earned on the Escrow
Amount. This provision shall supersede any provision to the contrary in the
Contribution Agreement or the Escrow Agreement and shall be deemed to be a
written amendment or modification thereto as provided in such agreements.
6. Written
Agreement.
This
Agreement constitutes the agreement and understanding of the Parties relating
to
the subject matter contained herein. This Agreement may not be altered, amended
or modified in any respect whatsoever except by a writing duly executed by
each
of the Parties hereto.
7. Voluntariness.
The
Parties agree that they have carefully read this Agreement, that it has been
fully explained by their attorneys, that they fully understand its final and
binding effect that the only promises made to sign the Agreement are those
stated above and that such Agreement is being signed voluntarily.
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8. Capacity.
The
Parties each warrant and represent that each Party has the requisite power
and
authority to execute and deliver this Agreement and it has been duly executed
and delivered by each party and this Agreement is a valid and binding agreement,
enforceable against each Party in accordance with its terms.
9. Waiver
of Compliance.
The
failure by any Party at any time to require performance of any provision of
this
Agreement will not affect its right later to require such performance. No waiver
in any one or more instances will (except as stated therein) be deemed to be
a
further or continuing waiver of any such condition or breach in other instances
or a waiver of any condition or breach of any other term, covenant,
representation or warranty.
10.
Notices.
All
notices, requests, demands or other communications required or permitted by
this
Agreement will be in writing and effective when received, and delivery will
be
made personally or by registered or certified mail, return receipt requested,
postage prepaid, or overnight courier or confirmed facsimile transmission,
addressed to the Parties at as follows.
If
to the Member Representative:
000
Xxxxxx Xxxxxx
Xxxxx
#000
Xxxxxxxxxx,
XX 00000
Attn :
Xxxxxxx Xxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
with
a copy to:
Xxxxxx
Xxxxxx LLP
City
Plaza
000
Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx
Xxxxx , XX 00000
Attention:
Xxxxxxx Xxxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
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and
Xxxxxxxxx,
Xxxxxx & Xxxxxx, L.L.P.
23rd
Floor, One American Place
000
Xxxx Xxxxxx
Xxxxx
Xxxxx, XX 00000-0000
Attn:
B. Xxxx Xxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
If
to Allegro, addressed as follows:
Allegro
Biodiesel Corporation
0000
Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attention:
W. Xxxxx Xxxxx III
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
with
a copy to:
Sidley
Austin LLP
000
Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
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or
to
such other individual or address as a party hereto may designate for itself
by
notice given as herein provided.
11. Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which will be deemed an original, but all of which together will constitute
one
and the same instrument.
12. Facsimile
or Email Signatures.
Any
signature page delivered pursuant to this Agreement, any Related Agreement
or
any other document delivered pursuant hereto via facsimile or by email of pdf
signature pages shall be binding to the same extent as an original signature.
Any party who delivers such a signature page agrees to later deliver an original
counterpart to any party that requests it.
13. Headings.
The
headings of the Sections in this Agreement are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning
or
interpretation of this Agreement.
14. Severability.
If any
provision, clause or part of this Agreement, or the application thereof under
certain circumstances, is held invalid, the remainder of this Agreement, or
the
application of such provision, clause or part under other circumstances, shall
not be affected thereby.
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15. Interpretation.
Unless
the context requires otherwise, all words used in this Agreement in the singular
number shall extend to and include the plural, all words in the plural number
shall extend to and include the singular, and all words in either gender shall
extend to and include both genders.
16. Choice
of Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York exclusive of the conflicts of law provisions thereof.
[Signatures
on Following Pages]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.
ALLEGRO BIODIESEL CORPORATION | ||
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By: /s/ W. Xxxxx Xxxxx, XX | ||
Name: W.
Xxxxx Xxxxx, III
Title: Chief
Executive Officer
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MEMBERS: | ||
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By: /s/ Xxxxxxx Xxxxxx | ||
Xxxxxxx
Xxxxxx, as Member
Representative
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