Document:

kmaglobal10ksb060408ex1013.htm

     

     

    Exhibit
10.13

     

     

    SETTLEMENT
AGREEMENT AND MUTUAL RELEASE

     

     

    THIS
SETTLEMENT AGREEMENT AND MUTUAL RELEASE ("Agreement") is made and entered into
as of this 21st day of March 2008, by and among Incendia Management Group Inc.
(the "Agent"), a Canadian corporation, with offices located at 111 Grangeway
Avenue, Suite 404, Toronto, Ontario, M1H 3E9, as authorized agent for certain
buyers as listed on the signature page (collectively referred to as the
"PURCHASERS"), on the one hand, and KMA Global Solutions International, Inc.
("KMA"), a Nevada corporation, with offices located at 5570A Kennedy Rd,
Mississauga, Ontario, L4Z 2A9, on the other hand. (Each individually referred to
as a "Party" and collectively referred to as the "Parties").

     

     

    WHEREAS,
the Parties entered into a stock purchase transaction pursuant to a Securities
Purchase Agreement dated September 21, 2007 (the "Securities Purchase
Agreement"), and certain other documents related thereto and incorporated by
reference therein; and

     

     

    WHEREAS,
the Parties seek to rescind the Securities Purchase Agreement, and all documents
related thereto in effecting the contemplated stock purchase transaction (the
"Stock Purchase"), and the Parties hereby settle any dispute(s) arising
therefrom, without admitting any liability or fault, and to avoid the expense
and uncertainties of litigation;

     

     

    NOW
THEREFORE, in consideration of the premises, the mutual covenants and
obligations set forth in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:

     

     

    1
SUPERSEDED AGREEMENT. The Stock Purchase, including all agreements underlying
the transaction, is hereby terminated on the Effective Date of this Agreement by
both Parties. This Agreement shall supersede all prior agreements between the
Parties relating to the subject matter hereof.

     

     

    2
SETTLEMENT AMOUNT. The Parties agree as follows:

     

    
    

     

    
      	 (A)	
              KMA will
      pay to the total sum of Two Hundred Thousand US dollars (USD$200,000.00)
      to Incendia Management Group Inc., in accordance with the terms described
      in the attached Promissory Note, which is incorporated herein by
      reference, in repayment of the sum of $200,000.00 paid by Incendia
      Management Group Inc. to KMA; and

               

            
	(B)    	PURCHASERS will
      deliver via Federal Express to KMA's securities counsel, at the law firm
      of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, all share
      certificates in respect of common shares of KMA Global Solutions
      International, Inc. issued to the PURCHASERS to date, represented by stock
      certificate numbers 748, 749, 750, 751 and 752 (the "Stock
      Certificates"), within five (5) days of the execution of this
      Agreement by all Parties. 

    

     

     

    3 RELEASE
BY PURCHASERS AND AGENT. For and in consideration of the sum of Two Hundred
Thousand US dollars (USD $200,000.00) paid to AGENT by KMA in accordance with
the terms described in the attached Promissory Note, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by PURCHASERS and AGENT, PURCHASERS and AGENT do hereby fully and
forever remise, release and discharge, and by these presents, do for its agents,
servants, past, present or future officers, shareholders, directors, employees,
attorneys, representatives, parents, subsidiaries, affiliated or related
entities, affiliates, executors, administrators, predecessors, successors and
assigns, remise, release and discharge KMA and any of its agents, servants,
past, present or future officers, shareholders, directors, employees, attorneys,
representatives, parents, subsidiaries, affiliated or related entities,
affiliates, executors, administrators, predecessors, successors and assigns,
from any and all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims and demands whatsoever in law or in equity, under
federal or state constitutions, statutes, laws, ordinances or regulations, or
under common law,whether known or unknown, foreseen or unforeseen, which
PURCHASERS or AGENT ever had, has or could have against KMA in connection with
the subject matter relating to the aforementioned Securities Purchase Agreement,
but does not release KMA from claims arising from a breach of this
Agreement.

     

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    4 RELEASE
BY KMA. For and in consideration of the return of the Stock Certificates and the
release set forth above and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by KMA, KMA does hereby
fully and forever remise, release and discharge, and by these presents, does for
its agents, servants, past, present or future officers, shareholders, directors,
employees, attorneys, representatives, parents, subsidiaries, affiliated or
related entities, affiliates, executors, administrators, predecessors,
successors and assigns, remise, release and discharge, PURCHASERS and AGENT and
any of their respective agents, servants, past, present or future officers,
shareholders, directors, employees, attorneys, representatives, parents,
subsidiaries, affiliated or related entities, affiliates, executors,
administrators, predecessors, successors and assigns, from any and all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions, claims
and demands whatsoever in law or in equity, under federal or state
constitutions, statutes, laws, ordinances or regulations, or under common law,
whether known or unknown, foreseen or unforeseen, which KMA ever had, has or
could have against PURCHASERS or AGENT in connection with the subject matter
relating to the aforementioned Securities Purchase Agreement.

     

     

    5
EFFECTIVE TIME OF RELEASES. The releases described above shall become effective
immediately upon the execution of this Agreement, return of the Stock
Certificates by the PURCHASERS and full satisfaction of the Promissory Note by
KMA.

     

     

    6
SUCCESSORS. This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective heirs, successors and assigns.

     

     

    7
SEVERABILITY. If any provision of this Agreement is held illegal or
unenforceable by any court of competent jurisdiction, such provision shall be
modified to the minimal extent required to make it legal and enforceable,
consistent with the spirit and intent of the Agreement. If such provision cannot
be so modified, the provision shall be deemed separable from the remaining
provisions of this Agreement and shall not affect or impair the validity or
enforceability of the remaining provisions of this Agreement. Notwithstanding
the foregoing, the obligation to pay the settlement amount as described in
section 2 of this Agreement and the releases contained in sections 3 and 4 of
this Agreement are not separable obligations.

     

     

    8
GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of Ontario, without giving effect to any choice of law or conflict
of law provision or rule that would cause the application of the laws of any
jurisdictions other than the province of Ontario.

     

     

    9
AMENDMENTS. This Agreement shall not be amended except by a written agreement
signed by all Parties.

     

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    10
NOTICES. All notices under this Agreement shall be in writing and delivered by
certified mail, return receipt requested, to the following:

     

     

    If to
PURCHASERS or INCENDIA:

     

     

    Incendia
Management Group Inc.

    111
Grangeway Avenue, Suite 404

    Toronto,
Ontario M1H 3E9 Canada

    Attention:
Angelo Boujos

     

     

    If to
KMA:

     

     

    KMA
Global Solutions International, Inc.

    5570A
Kennedy Road

    Mississauga,
Ontario L4Z 2A9 Canada

    Attention:
Jeff Reid

     

     

    11 NOT
EVIDENTIARY. This Agreement shall not be introduced in evidence or otherwise be
used in litigation for the purposes of establishing or construing rights and
obligations of the Parties, except in an action to enforce the provisions of
this Agreement or the attached Promissory Note.

     

     

    12 ENTIRE
AGREEMENT. The Parties intend that this Agreement be a novation and not an
accord and satisfaction. As of the date of this Agreement, any and all prior
agreements with respect to the subject matter hereof, whether written or oral,
between the Parties are hereby fully discharged and this Agreement, together
with the attached Promissory Note, shall supersede all agreements and
negotiations between the Parties with respect to the subject matter
hereof.

     

     

    13
DISCLOSURE. The Parties each agree that, without the prior written consent of
the other Party hereto, neither of them will voluntarily disclose the existence
or content of this Agreement to any third party. This provision shall not
preclude such disclosure (a) to the independent accountants or attorneys for the
disclosing party, (b) in any regulatory filing, if counsel for the disclosing
party reasonably advises the disclosing party that such disclosure is necessary,
(c) to any existing or prospective lender or investor of the disclosing party,
(d) in any legal proceeding if required by judicial order or (e) pursuant to the
requirement of a governmental agency.

     

     

    14
COUNTERPARTS. This Agreement may be executed in counterparts, in which case each
executed counterpart will be deemed an original and all executed counterparts
will constitute one and the same instrument.

     

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    IN
WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have
executed this Agreement as of the date first above written.

     

     

    KMA
GLOBAL SOLUTIONS

    INTERNATIONAL,
INC.

     

     

    By: /s/ Jeff D. Reid

    Jeff D.
Reid

    Chief
Executive Officer

     

     

     

    PURCHASERS:

    NVD
INTERNATIONAL INC.

    V&P
TECHNOLOGIES INC.

    ADVANCED
VENDING TECHNOLOGIES INC.

    GREENOCK
EXPORT HOLDING AG INC.

    BRANT
FELLOWSHIP HOLDINGS INC.

     

     

    By: /s/ Angelo Boujos

    Incendia
Management Group Inc., as authorized

    Agent for
the Buyers

    Per:
Angelo Boujos, Managing Director of

    Incendia
Management Group Inc.

     

     

    AGENT:

    INCENDIA MANAGEMENT GROUP INC.

     

     

    By: /s/ Angelo Boujos

    Angelo
Boujos, Managing Director

     

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    PROMISSORY
NOTE

     

     

    USD
$200,000.00                                                                         Date:
March _____________, 2008

     

     

    FOR VALUE
RECEIVED, the undersigned, KMA GLOBAL SOLUTIONS INTERNATIONAL, INC., a Nevada
corporation (the "Debtor"), hereby promises to pay to Incendia Management Group
Inc. (the "Creditor"), pursuant to a Settlement Agreement and Mutual Release
dated March 21, 2008, at Creditor's offices at 111 Grangeway Avenue, Suite 404,
Toronto, Ontario, M1H 3E9, or such other place as Agent may designate, in lawful
money of the United States of America, the principal sum of Two Hundred Thousand
and 00/100 Dollars ($200,000.00) on or before March 31, 2008.

     

     

    This Note
shall bear interest from the date of April 1, 2008 on the unpaid principal
balance hereof at a rate of six percent (6%) per annum. Debtor may prepay the
principal balance hereof, in whole or in part, without paying any prepayment
penalty or finance charge.

     

     

    If Debtor
pays Agent the principal amount of $200,000.00, together with the applicable
interest, this Note shall have been discharged in full and Creditor shall mark
this Note "Paid" and return this Note to Debtor. This Note shall be governed by
and construed in accordance with the laws of the province of
Ontario.

     

     

    KMA
GLOBAL SOLUTIONS INTERNATIONAL,

    INC.

     

     

     

    By: /s/ Jeffrey D. Reid

    Jeffrey
D. Reid, Chief Executive Officer

     

     

    PROVINCE
OF ONTARIO

     

    CITY OF
TORONTO

     

     

    On this
_____ day of March, 2008, before me personally appeared , an authorized
representative of KMA GLOBAL SOLUTIONS INTERNATIONAL, INC., signer of the
foregoing instrument on behalf of KMA GLOBAL SOLUTIONS INTERNATIONAL, INC., and
acknowledged the same to be his free act and deed.

     

     

    Notary
Public:_________________________________

     

    My
Commission Expires:_________________________ex101.htm

Exhibit 10.1

     

    PROMISSORY
NOTE CONVERSION AGREEMENT

    

    This
Promissory Note Conversion Agreement (the “Agreement”), dated as of April 4,
2008, is entered into by and between Tao Minerals, Ltd (“Tao”) Outboard
Investments Ltd., (“Outboard”), with reference to the following:

    

    WHEREAS,
Outboard has purchased, and/or will be purchasing, certain Debt (as such term is
defined in a Debt Sale Agreement entered into by and between the parties and
Epsom Investment Services NV dated April 4, 2008) evidenced by a certain
Promissory Note (“Promissory Note”) issued by Tao to Outboard relating to a
certain Stock Subscription Agreement entered into by and between Tao and Epsom
Investment Services NV, as set forth in more detail on Exhibit A attached
hereto; and

    

    WHEREAS,
the parties desire to provide for certain conversion provisions relating to the
Promissory Note.

    

    NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

    

    1.    Conversion
Right.  Each of Outboard and Tao agree that the Promissory Note
shall be converted or exchanged (each a “Conversion”) through one or a series of
such Conversions, up to the full principal balance thereof, into shares of the
common stock of Tao (the “Tao Common Stock”) (calculated as to each such
conversion to the nearest 1/100th of a
share).  The number of shares of Tao Common Stock into which the
Promissory Note may be converted is equal to the dollar amount of the Promissory
Note, or portion thereof, being converted divided by the Conversion
Price.  The Conversion Price shall be equal to 30% of the lowest
closing bid price of the Tao Common Stock during the five trading days prior to
Outboard’s election to convert.  Upon the conversion of the full
principal balance and all accrued and unpaid interest of each Promissory Note
into shares of the Tao Common Stock, as set forth above, no further rights shall
exist under such Promissory Note with respect to the connection of interest or
other amounts under the Promissory Note by the holder thereof.

    

    For so
long as Tao honors the terms of each Conversion Notice delivered by Outboard to
Tao and effects each such Conversion as submitted by Outboard within the
applicable time periods set forth in this Agreement.  Outboard shall
not otherwise demand cash payment upon any outstanding sums of principal and
accrued and unpaid interest under the Promissory Note.  In the event
that Tao refuses or otherwise fails to honor any Conversion Notice submitted to
Tao by Outboard and/or Tao fails to effect such Conversion within the applicable
time period set forth herein,  Outboard shall  have the
right, at Outboard’s sole discretion, to declare any or all amounts, including
outstanding principal and accrued and unpaid interest, under the Promissory Note
immediately due and payable by Tao and Tao shall deliver such payment for all
such outstanding sums owed under the Promissory Note to Outboard within five
days of Outboard’s demand for payment thereof.”

    

    
      2.   
Exercise of Conversion
Privilege.

    

    
    

     

    (a)  Conversion
of a Promissory Note may be exercised, within the allotted time, by Outboard by
telecopying an executed and completed Conversion Notice to Tao. Each date on
which a Conversion Notice is telecopied to Tao in accordance with the provisions
of this Section shall constitute a Conversion Date. Tao shall convert or
exchange the Promissory Note and issue the Tao Common Stock in the manner
provided below in this Section, and all voting and other rights associated with
the beneficial ownership of the Tao Common Stock issued at Conversion shall vest
with Outboard, effective as of the Conversion Date at the time specified in the
Conversion Notice. The Conversion Notice also shall state the name or names
(with addresses) of the persons who are to become the holders of the Tao Common
Stock issued at Conversion in connection with such Conversion. As promptly as
practicable after the receipt of the Conversion Notice as aforesaid, but in any
event not more than two business days after Tao’s receipt of such Conversion
Notice, Tao shall (i) issue the Tao Common Stock in accordance with the
provisions of this Section and (ii) cause to be mailed for delivery by overnight
courier to Outboard a certificate or certificate(s) representing the number of
Tao Common Shares to which Outboard is entitled by virtue of such Conversion.
Such Conversion shall be deemed to have been effected at the time at which the
Conversion Notice indicates, and at such time the rights of Outboard as the
holder of the Promissory Note, as such (except if and to the extent that any
principal amount thereof remains unconverted), shall cease and the person and
persons in whose name or names the Tao Common Stock issued at conversion shall
be issuable shall be deemed to have become the holder or holders of record of
the shares of common stock represented thereby, and all voting and other rights
associated with the beneficial ownership of such shares of common stock shall at
such time vest with such person or persons. The Conversion Notice shall
constitute a contract between Outboard and Tao, whereby Outboard shall be deemed
to subscribe for the number of shares of Tao Common Stock which it will be
entitled to receive upon such Conversion and, in payment and satisfaction of
such subscription, to surrender the Promissory Note and to release Tao from all
liability thereon (except if and to the extent that any principal amount of the
Promissory Note remains unconverted).

     

    
      
        
        

      

      
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    (b)  If,
at any time after the date of this Agreement, (i) Tao challenges, disputes or
denies the right of Outboard to effect the Conversion of a Promissory Note into
shares of Tao Common Stock or otherwise dishonors or rejects any Conversion
Notice delivered in accordance with this Section or (ii) any third party who is
not and has never been an affiliate of Outboard commences any lawsuit or legal
proceeding or otherwise asserts any claim before any court or public or
governmental authority which seeks to challenge, deny, enjoin, limit, modify,
delay or dispute the right of Outboard hereof to effect any Conversion of the
Promissory Note into shares of Tao Common Stock, then Outboard shall have the
right, but not the obligation, by written notice to Tao, to require Tao to
promptly redeem the Promissory Note for cash at one hundred and ten percent
(110%) of the principal amount thereof, together with all accrued and unpaid
interest thereon to the date of redemption. Under any of the circumstances set
forth above, Tao shall be responsible for the payment of all costs and expenses
of Outboard, including reasonable legal fees and expenses, as and when incurred
in defending itself in any such action or pursuing its rights hereunder (in
addition to any other rights of Outboard).

     

    (c)  Outboard
shall be entitled to exercise its conversion privilege set forth herein
notwithstanding the commencement of any case under the Bankruptcy Code. In the
event Tao is a debtor under the Bankruptcy Code, Tao hereby waives to the
fullest extent permitted any rights to relief it may have under 11 U.S.C. § 362
in respect of Outboard’s conversion privilege. Tao hereby waives to the fullest
extent permitted any rights to relief it may have under 11 U.S.C. § 362 in
respect of the conversion of the Promissory Note. Tao agrees, without cost or
expense to Outboard, to take or consent to any and all action necessary to
effectuate relief under 11 U.S.C. § 362.

     

    (d)  Tao
shall provide Outboard, at its expense, any Rule 144 legal opinion in accordance
with customary rules and regulations as enforced by the SEC, and in form and
substance acceptable to Outboard that would be required to enable Outboard to
sell the shares of Tao Common Stock issued at any Conversion.

    

    (e)  Outboard
may effect a Conversion of all or any portion of any of the Promissory Note by
telecopying or otherwise delivering to Tao an executed notice setting forth the
amount and identity of all or any portion of the Promissory Note that is to be
so converted or exchanged for Tao Common Stock (the “Conversion
Notice”).  No other action on the part of Outboard shall be required
to so effect such Conversion

    

    3.    Adjustments.  The
Conversion Price and the number of shares deliverable upon conversion of the
Promissory Note are subject to adjustment from time to time as
follows:

     

    (a)  Reclassification,
Etc.  In case Tao shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another company (where Tao is
not the survivor or where there is a change in or distribution with respect to
the common stock of Tao), sell, convey, transfer or otherwise dispose of all or
substantially all its property, assets or business to another person or company,
or effectuate a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of Tao is disposed of (each, a “Fundamental Corporate
Change”) and, pursuant to the terms of such Fundamental Corporate Change,
shares of common stock of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation (“Other Property”) are to be
received by or distributed to the holders of Tao Common Stock, then Outboard
shall have the right thereafter, at its sole option, to (x) require Tao to
prepay the Promissory Note for cash at one hundred and ten percent (110%) of the
principal amount thereof, together with all accrued and unpaid interest thereon
to the date of prepayment, (y) receive the number of shares of common stock
of the successor or acquiring corporation or of Tao, if it is the surviving
corporation, and Other Property as is receivable upon or as a result of such Fundamental
Corporate Change by a holder of the number of shares of common stock into which
the outstanding portion of the Promissory Note may be converted at the
Conversion Price applicable immediately prior to such Fundamental Corporate
Change or (z) require Tao, or such successor, resulting or purchasing
corporation, as the case may be, to, without benefit of any additional
consideration therefor, execute and deliver to Outboard a debenture with
substantial identical rights, privileges, powers, restrictions and other terms
as the Promissory Note and the rights of conversion and/or exchange as set forth
in this Agreement in an amount equal to the amount outstanding under the
Promissory Note immediately prior to such Fundamental Corporate Change. For
purposes hereof, “common stock
of the successor or acquiring corporation” shall include stock of such
corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
prepayment and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions shall similarly apply to
successive Fundamental Corporate Changes.

     

    
      
        
        

      

      
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    4.    Certain Conversion
Limits.  For the period during which Outboard holds any of the
Promissory Note, if and to the extent that, on any date, the holding by Outboard
of the Promissory Note would result in Outboard being deemed the beneficial
owner of more than 4.99% of the then Outstanding shares of the common stock of
Tao, then Outboard shall not have the obligation, to convert or exchange any
portion of the Promissory Note as shall cause Outboard to be deemed the
beneficial owner of more than 4.99% of the then Outstanding shares of the common
stock of Tao.  If any court of competent jurisdiction shall determine
that the foregoing limitation is ineffective to prevent Outboard from being
deemed the beneficial owner of more than 4.99% of the then Outstanding shares of
the common stock of Tao, then Tao shall prepay such portion of the Promissory
Note as shall cause Outboard not to be deemed the beneficial owner of more than
4.99% if the then Outstanding shares of the common stock of Tao.  Upon
such determination by a court of competent jurisdiction, Outboard shall have no
interest in or rights under such portion of the Promissory Note that is so
prepaid.  Such prepayment shall be for cash at a prepayment price if
one hundred and ten percent (110%) of the principal amount thereof, together
with all accrued and unpaid interest thereon to the date of
prepayment.  For purposes of this Section, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.  “Outstanding” when used with references to the common
stock of Tao means, on any date of determination, all issued and outstanding
shares of the common stock of Tao , and includes all such shares of the common
stock of Tao issuable in respect of outstanding scrip or any certificates
representing fractional interests in such shares of the common stock of Tao;
provided,
however, that any such shares of the common stock of Tao directly or
indirectly owned or held by or for the account of Tao or any subsidiary of Tao
shall not be deemed “Outstanding” for purposes hereof.

     

    5.    Representations and
Warranties of Tao.  In connection with the transactions
provided for herein, Tao hereby represents and warrants to Outboard
that:

     

    (a)  Organization, Good Standing
and Qualification.  Tao is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Nevada and
has all requisite corporate power and authority to carry on its business as now
conducted. Tao is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on its business or properties.

     

    (b)  Authorization.  All
corporate action has been taken on the part of Tao, its officers, directors and
stockholders necessary for the authorization, execution and delivery of this
Agreement and the conversion or exchange of the Promissory Note. Except as may
be limited by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors’ rights, Tao has taken all
corporate action required to make all of the obligations of Tao reflected in the
provisions of this Agreement, and the Promissory Note, the valid and enforceable
obligations they purport to be. Except as otherwise indicated in this
Section 5, the conversion or exchange of the Promissory Note into shares of
Tao Common Stock as contemplated herein, will not be subject to the preemptive
rights of any stockholder of the Company. Tao has authorized
sufficient shares of Tao Common Stock to allow for conversion or exchange of the
Promissory Note as described in Section 1 and Section 2.

    

    (c)  Compliance with Other
Instruments.  Neither the authorization, execution and delivery
of this Agreement, nor the issuance and delivery of the shares of Tao Common
Stock upon the conversion or exchange of the Promissory Note, will constitute or
result in a material default or violation of any law or regulation applicable to
Tao or any material term or provision of Tao’s current Articles of Incorporation
or bylaws or any material agreement or instrument by which it is bound or to
which its properties or assets are subject.

     

    
      
        
        

      

      
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    (d)  Issuance of Common
Stock.  The shares of Tao Common Stock to be issued and
delivered upon Conversion of the Promissory Note will be duly and validly
issued, fully paid and nonassessable and will be issued in compliance with all
applicable federal and state securities laws. The offer, sale and issuance of
the shares of Tao Common Stock to be issued and delivered upon Conversion of the
Promissory Note will be exempt from the registration requirements of the
Securities Act, and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws and federal securities
laws. 

    

    (e)  Litigation.  There
is no action, suit, proceeding or investigation pending or currently threatened
against Tao that questions the validity of the Promissory Note or this
Agreement, or the right of Tao to convert or exchange the Promissory Note, or to
consummate the transactions contemplated hereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
business, properties, prospects, or financial condition of Tao. The foregoing
includes, without limitation, any action, suit, proceeding, or investigation
pending or currently threatened involving the negotiations by Tao with potential
backers of, or investors in, Tao or its proposed business. Tao is not a party
to, or to the best of its knowledge, named in the order, writ, injunction,
judgment, or decree of any court, government agency, or instrumentality. There
is no action, suit, or proceeding by Tao currently pending or that Tao currently
intends to initiate.

    

    6.    Governing
Law.  This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Florida, United States of America.

    

    7.    Consent to
Jurisdiction.  The parties (i) hereby irrevocably submit to the
jurisdiction of the State and Federal courts of the State of Florida for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereunder and (ii) hereby waive, and
agree not to assert in any such suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of such court, that the suit, action
or proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The parties consent to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party at
the address in effect for notices to it under this Agreement and agree that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this section shall affect or limit any right to serve
process in any other manner permitted by law.

     

    8.    Waiver of Jury
Trial.  To the fullest extent permitted by law, each of the
parties hereto hereby knowingly, voluntarily and intentionally waives its
respective rights to a jury trial of any claim or cause of action based upon or
arising out of this Agreement or any other document or any dealings between them
relating to the subject matter of this Agreement and other documents. Each party
hereto (i) certifies that neither of their respective representatives, agents or
attorneys has represented, expressly or otherwise, that such party would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications herein.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    9.    Attorneys'
Fees.  In the event of any legal action between the parties
with respect to this Agreement or the subject matter hereof, the prevailing
party shall be entitled to recover reasonable attorneys' fees in addition to
court costs and litigation expenses incurred in said legal action, regardless of
whether such legal action is prosecuted to judgment.

    

    10.  Notices.  Any
notice, demand or other communication required or permitted under this Agreement
shall be deemed given and delivered when in writing and (a) personally served
upon the receiving party, or (b) upon hand delivery by telex (with correct
answer back received), telecopy or facsimile at the address or number designated
below (if delivered on a business day during normal business hours where such
notice is to be received), or (c) upon the third (3rd) calendar day after
mailing to the receiving party by either United States registered or certified
mail, postage prepaid, or (d) the next delivery day after mailing to the
receiving party by FedEx or other comparable overnight delivery service,
delivery charges prepaid, and addressed as follows:

     

    
      	
              To:
      Tao Minerals, Ltd.

            	 
      

    

    Tao
Minerals, Ltd.

    Oficina
501 Edificio Colmena

    Carrera
43A NO1 A Sur 29

    Medellin
Antioquia

    Columbia

    

    

    
      	
              To
      Outboard Investments Ltd.:

            	 
      

    

    Outboard
Investments Ltd.

    BCM Cape
Building

    Leeward
Highway Providenciales

    Turks and
Caicos, BWI

    Facsimile:
(649) 946-4955

    

    

    11.    Severability.  In
the event that any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or invalid, then this
Agreement shall continue in full force and effect without said provision. If
this Agreement continues in full force and effect as provided above, the parties
shall replace the invalid provision with a valid provision which corresponds as
far as possible to the spirit and purpose of the invalid provision.

     

    12.    Counterparts.  This
Agreement may be executed in any number of counterparts, each of which may be
executed by less than all of the parties hereto, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one document. Facsimile execution shall be
deemed originals.

    

    13.    Entire
Agreement.  This Agreement constitute the entire agreement
between the parties with respect to the subject matter hereof, and supersede all
prior oral or written agreements, representations or warranties between the
parties other than those set forth herein or herein provided for.

    

    14.    Successors and
Assigns.  The provisions hereof shall inure to the benefit of,
and be binding upon, the permitted successors and assigns, heirs, executors, and
administrators of the parties hereto.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    15.    Amendment and
Waiver.  No modification or waiver of any provision of this
Agreement shall be binding upon the party against whom it is sought to be
enforced, unless specifically set forth in writing signed by an authorized
representative of that party. A waiver by any party of any of the terms or
conditions of this Agreement in any one instance shall not be deemed or
construed to be a waiver of such terms or conditions for the future, or of any
subsequent breach thereof. The failure by any party hereto at any time to
enforce any of the provisions of this Agreement, or to require at any time
performance of any of the provisions hereof, shall in no way to be construed to
be a waiver of such provisions or to affect either the validity of this
Agreement or the right of any party to thereafter enforce each and every
provision of this Agreement.

     

    IN
WITNESS WHEREOF, Tao and Outboard have duly executed this Agreement as of the
date first above written.

    

    
      	
              Tao
      Minerals, Ltd.

            	 
      	
              Outboard
      Investments Ltd.

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              By:
      /s/ James A. Sikora

            	 
      	
              By:  Hugh
      G. O’Neill

            	 
      
	 
      	 
      	 
      	 
      
	
              Name:
      James A. Sikora

            	 
      	
              Name:  Hugh
      G. O’Neill

            	 
      
	
              Title:
      President

            	 
      	
              Title:  Director

            	 
      

    

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    Promissory
Note

    

    Promissory
Note between Tao and Epsom Investment Services N.V. dated as of ____________,
2008 in the principal amount of $620,000.

     

     

    

    

     

     

     

     

     

     

     

     

     

     

    
7

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