SETTLEMENT AGREEMENT
This
SETTLEMENT AGREEMENT (this "Agreement") is entered into by and
between Titan Global Holdings, Inc. (“Titan”),
Frank Crivello (“Crivello”), 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.
C.
Crivello
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 Crivello 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 Crivello 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, Ian Williamson,
made certain demands on Crivello and Titan with respect to
Titan’s and Crivello’s 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 Crivello 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 Crivello 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 Crivello’s 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 Crivello 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-Minotti, Wingfield
Environmental, Inc., and Baker Botts, LLP.
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 Com
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