Case O9-12509-EPK Doc 119 Filed 06/19/09 Page 1 of 12 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA West Palm Beach Division In re: Chapter 1 1 NEPTUNE INDUSTRIES, INC, Case No.: 09-12509-BKC-EPK Debtor. AGREED MOTION TO APPROVE SETTLEMENT AGREEMENT COMES NOW the duly appointed Trustee, Barry E. Mukamal (the ?Trustee?), by and through his undersigned counsel, and pursuant to Rule 9019 of Federal Rules of Bankruptcy Procedure, respectfully moves this Court for the entry of an Order approving the Trustee ?s Agreed Motion to Approve Settlement Agreement (the ?Motion?) between the Debtor, Neptune Industries, Inc. (the ?Debtor?), Ernest Papadoyianis and Sal Cherch, the inventors of technology currently referred to as ?Aqua Sphere? and are the owners of Closed Containment Systems, Inc. (the (acting as individuals, the ?Inventors?), and in support thereof states as follows: BACKGROUND 1. On February 13, 2009 (the ?Petition Date?), an involuntary petition under Chapter 11 of the Bankruptcy Code was ?led against the Debtor by Arms Reach Fisheries, LLC, Sandor Capital Master Fund, LP, and Charles F. Landahl, Jr. (the ?Petitioning Creditors?). Case 09-12509-EPK Doc 119 Filed 06/19/09 Page 2 of 12 2. On February 26, 2009, the Court granted the Petitioning Creditors? Motion to Appoint Chapter 11 Trustee, and Barry E. Mukamal was appointed Chapter 11 trustee that same day. 3. Only portions of the post-petition ?nancing approved by this Court were actually ?lnded. Without the proper funding, the Trustee has been unable to continue the Debtor?s business at normal capacity. 4. A?er consulting with the Petitioning Creditors, the Trustee is in the process of ?ling a Motion to Voluntarily Dismiss the Chapter 11 Proceeding since the most effective way to reorganize the Debtor?s business is to allow the creditors and the Debtor to negotiate a global settlement of their respective claims. THE STIPULATION 5. The Debtor and the Inventors have entered into a Settlement Agreement (the ?Agreement?) to allow the Debtor to exit Chapter 11 via a dismissal of the original bankruptcy ?ling. Since this bankruptcy case is in the process of being voluntarily dismissed, this Motion is being ?led on an expedited basis, prior to formalizing the Agreement in writing. Once the Agreement is signed by all parties, the Trustee will ?le a copy with this Court and will serve it on all interested parties. 6. The Debtor and the Inventors have agreed that the Agreement will not be binding until such time as the dismissal of the bankruptcy occurs either by the Trustee accepting, in writing, the terms and conditions agreed to in the Agreement, or the Bankruptcy Court enters an order dismissing this proceeding. 7. The material provisions of the Agreement are set forth below: Debtor consents and agrees to the following: Case O9-12509-EPK Doc 119 Filed 06/19/09 Page 3 of 12 8. The Debtor will not contest that the Aqua-Sphere technology, its patents, trademarks, ancillary intellectual Property, etc. are the sole and exclusive property of the Inventors, and that any and all prior rights of the Debtor have been terminated and neither the Note holders nor the Debtor have any rights or claims in any capacity, now or in the future, to the Aqua Sphere Technology unless such licensing rights are agreed to in a new agreement by the Debtor and the Inventors at a future date. 9. Debtor agrees to convey One Hundred (100) percent of the stock in Aqua Biologics, Inc., including all of the assets of the corporation including: the Ento Protein technologies, its patents, trademarks, research reports, bio-pod tanks, etc.; all corporate names, logos, websites, business plans, ancillary intellectual property, etc.; all equipment related to the Lake Linda site including but not limited to air blowers, ?oating docks, algae equipment, trailers, generators, solar panels, welding equipment, and tools; and any claim that Debtor might have to the Aqua?Sphere technology, but not including any debts or liabilities incurred after the Petition Date, to the Inventors. In exchange and as consideration for such conveyance, Inventors agree to surrender back to Debtor all ownership, including but not limited to: common and preferred shares, as well as, all Notes and Warrants they hold in Debtor. 10. While Debtor remains a public company, the Inventors shall receive shares equivalent to three (3) percent of the recapitalized Debtor stock after withdrawal from the Chapter 11 proceedings. This equity interest shall dilute on a pari passu basis to other equity in Debtor for all ?nancing. ll. Debtor shall issue a release to the Inventors from any claim or action on behalf of its company pertaining to this transaction or from the Inventor?s previous Case O9-12509-EPK Doc 119 Filed 06/19/09 Page 4 of 12 association as of?cers and directors of Debtor. 12. Debtor shall provide labor to assist the Inventors in securing and removing certain personal property of the Inventors, including a Siemens solar panel, two boat motors, and storage trailer currently located at the farm site known as Blue Heron Aquaculture, Inc., in Florida City, Florida. 13. The Debtor and the Inventors, mutually agree that the Investors, either individually or cumulatively, shall have the option of oining the Inventors and others in a lawsuit against Dawson James et al., a?er having reviewed documents and information pertaining to the suit. 14. Debtor?s credit cards, secured personally by the Inventors, shall be paid in full, and Inventors shall be reimbursed for monies paid personally on these cards from the time of the bankruptcy ?lings to present. In addition, the Debtor?s former directors incurred debts relating to three months of insurance payments. Such payments shall occur following the withdrawal of the bankruptcy, or alternatively the Chapter 11 reorganization plan. In addition, the payments shall be dispersed out of the proceeds of the ?rst Debtor?s offering as follows; payment of the current credit card balances due as of the date of this Agreement in an amount not to exceed $15,000.00 out of the ?rst $300,000.00 in proceeds raised; and the balance due once a total of $750,000.00 has been raised, or when cash ?ow permits, whichever occurs ?rst. Such total amount payable shall be in accordance with the actual credit cards bills, and insurance premiums, and should not exceed $43,200.00. This amount will be subject to audit and will be paid as veri?ed. Case O9-12509-EPK Doc 119 Filed 06/19/09 Page 5 of 12 Inventors consent and agree to the following: 15. The Inventors, Note holders, future directors and consultants shall work cooperatively on a best efforts basis to negotiate a new or extended lease for the blue Heron Farm from the South Florida Water Management District (the It is understood however, that none of the parties have control on the decisions of the and therefore cannot guarantee that such efforts will be successful. 16. The Inventors shall grant Debtor a three (3) percent ownership in CCS and Aqua Biologics, Inc. This equity interest shall dilute on a pari passu basis to other equity in CCS and Aqua Biologics, Inc. for all ?nancing. I 17. The Inventors shall grant a ten (10) year non-exclusive Licensing Agreement to Debtor for Aqua Sphere technology. Such agreement would allow Debtor to purchase Aqua Sphere systems from the Inventors at retail pricing, and without prejudice, for Debtor?s own use, on a worldwide basis. Additionally, the Licensing Agreement would grant the Debtor the right to act as a non-exclusive sales agent for the Inventors, and provide payment to the Debtor on a commission basis equal to ten (10) percent of the selling price of any Aqua Sphere systems delivered by the Inventors as a result of the efforts of the Debtor. 18. The Inventors shall tum over (if not done so already) all information collected during its due diligence regarding any acquisition it was pursuing. 19. The Inventors agree to provide the Debtor with a release or releases indemnifying the Debtor and the Note holders from any action arising from this Agreement, or from the Inventor previous association as of?cers and directors of the Debtor. Case O9-12509-EPK Doc 119 Filed 06/19/09 Page 6 of 12 20. The Inventors and the co-plaintiffs will dismiss and remove Torn Fox, Newbridge Securities Corporation, Gerard Michael Ioubert, and Steve Carbone, with prejudice in case #09?80297 now pending in the United States District Court for the Southern District of Florida, from any matters brought or which could have been brought in said case. The prior dismissal, dated April 9, 2009, will be amended, at the itme of the new dismissal ?ling, to dismiss and remove the listed parties ?with prejudice.? 21. Enrest Papadoyianis will agree to serve in the capacity of a management consultant under a contract to be negotiated subsequent to the signing of a formal agreement based on this Agreement. Ernest Papadoyianis would agree to serve as an of?cer or director of the new Debtor?s company, under such terms of a future consulting contract mutually agreeable to the Debtor and Ernest Papadoyianis. 22. The Inventors will cancel One Hundred (100) percent of their ownership in the Debtor?s company, except as otherwise speci?cally provided herein, including but not limited to all common stock, preferred stock (regardless of series), options, warrants, and stock rights. The Inventors will also cancel all notes, claims, debts or obligations they may have with the Debtor, except as may be speci?cally provided herein. The Inventors will execute irrevocable stock powers, satisfactions of notes or other documents as may be requested by the Debtor to accomplish the above within ten (10) days from the date hereof. 23. The Inventors agrees to forfeit any accrued salaries and interest, currently held or due or payables to Messrs Cherch and Ernest Papadoyianis by the Debtor and shall release the Debtor from any and all claims whatsoever. Case 09-12509-EPK Doc 119 Filed 06/19/09 Page 7 of 12 BASIS FOR RELIEF REQUESTED 24. Pursuant to Rule 9019, Federal Rules of Bankruptcy Procedure, this Court may approve a compromise or settlement. Approval of a settlement in bankruptcy proceedings is within the sound discretion of this Court, and will not be disturbed or modi?ed on appeal unless approval or disapproval is an abuse of discretion. In re Arrow, Inc., 85 BR. 886, 891 (Bankr. S.D. Fla. 1988). The test is whether the proposed settlement ?falls below the lowest point in the range of reasonableness.? Id. at 891. 25. The Trustee believes that the Agreement is reasonable and in the best interests of the Debtor, the Debtor?s estate and the Petitioning Creditors as it represents an arm?s length settlement of a dispute between this estate?s primary creditors and the Debtor. WHEREFORE, the parties hereby request that this Court enter an Order Granting the Trustee?s Agreed Motion to Approve Settlement Agreement, and for any other relief the Court deems just and equitable. I HEREBY CERTIFY that I am admitted to the Bar of the United States District Court for the Southern District of Florida and I am in compliance with the additional qualifications to practice in this court set forth in Local Rule 2090-] (A). Shraiberg, Ferrara Landau, P.A. Attorneys for Trustee 2385 NW. Executive Center Drive, #300 Boca Raton, Florida 33431 Telephone: (561) 443-0800 Facsimile: (561) 998-0047 Email: By: Bradley S. Shraiberg Bradley S. Shraiberg, Esq. Florida Bar No.121622 Case 09-12509-EPK Doc 119 Filed 06/19/09 Page 8 of 12 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on June 19th, 2009, I electronically ?led the foregoing document with the Clerk of the Court using I also certify that the foregoing document is being served this day by transmission of Notices of Electronic Filing generated by and US. Mail to those parties on the attached service and creditor matrix lists on June 19, 2009. I HEREBY CERTIFY that I am admitted to the Bar of the United States District Court for the Southern District of Florida and I am in compliance with the additional quali?cations to practice in this court set forth in Local Rule 2090-] (A). By: Bradley S. Shraiberg Bradley S. Shraiberg, Esq. Case 09-12509-EPK Doc 119 Filed 06/19/09 Page 9 of 12 SERVICE LIST Via Joey Grant* grant@padulagrant.com Barry Mukamal* bankruptcv@rachlin.corn, FL64@ecfcbis.com Of?ce of the US Trustee* USTPRegionZl .MM.ECF@usdoi . gov Luis Salazar* salazarl@gtlaw.com, Bradley S. Shraiberg* belliott@kpkb.com, anerez@kpkb.com, ipage@kpkb.com Via US Mail Lee H. Bessell on behalf of Creditor Zeigler Brothers, Inc. 900 N. Federal Highway #304 Hallandale Beach, FL 33009 Thomas Fox Representative for Lenders Newbridge Securities 1451 W. Cypress Creek Road Ft. Lauderdale, FL 33309-1953 Neptune Industries, Inc. c/o Ernest Papadoyianis, Registered Agent 21218 St. Andrews Boulevard, Ste. 645 Boca Raton, FL 33433 Kenneth M. Jones, Esq. Moody, Jones, Ingino Morehead PA Attorneys for GMAC 1333 S. University Drive, Suite 201 Plantation, FL 33324 Nissan?In?nity Lt. PO. Box 660366 Dallas, TX 7526 Case O9-12509-EPK Doc 119 Filed 06/19/09 Label Matrix for local noticing 1130-9 Case 09-12509-FPK Southern District of Florida West Palm Beach Fri Jun 19 11:54:40 EDT 2009 Neptune Industries, Inc. 21218 St. Andrews #645 Boca Raton, FL 33433-2449 Air Gas South PO Box 532609 Atlanta GA 30353-2609 Amex Corporate Card PO Box 901535 El Paso Tx 79990-1535 Arms Reach Fisheries LLC 757 SB 17 St Suite 10 Ft Lauderdale FL 33316-2960 Barman Hopkins Wright 400 Orlando Ave Suite 210 Winter Park FL 32709-2910 CF Consulting LLC 409 Brevard Ave Suite 7 Cocoa FL 32922-7966 Cargill Incorp PO Box 751992 Charlotte NC 20275-1992 Christopher Carter 2493 NW 46 St Boca Raton FL 33431-0432 EM Herr Farm 14 Herrville Rd Willow Street, PA 17504-9723 Arms Reach Fisheries, LLC 757 Southeast 17 Street #110 Fort Lauderdale, FL 33316?2960 AETNA PO Box 44129 Jacksonville FL 32231-4129 Alberta Management Inc. PO Box 219 Wallingford CT 06492-0219 Anthony Athanas Jr 24 Common Wealth Ave Boston MA 02116-3110 Attorney General of the U.S. 950 Ave NW Room 4400 Washington DC 20530-0001 Brian John 7020 Ranchito Ave Panorama City CA 91402-6524 Capital One PO Box 30205 Salt Lake City UT 04130-0205 Cargill, Inc. 15407 HcGinty Road 19 Wayzata MN 55391-2399 Citi Business Card PO Box 44100 Jacksonville FL 32231-4100 Ernst Papadoyianis 2401 NW 40 Circle Boca Raton FL 33431-5414 Page 10 of 12 GMAC c/o Kenneth M. Jones Moody, Jones, Montefusco a Ingino, P.A. 1333 S. University Dr. Suite 201 Plantation, FL 33324-4001 AT PO Box 105262 Atlanta GA 30340-5262 Allan Bradeen 219 Plantation Islamorada FL 33036-3006 Armen Hovnanian 1266 Ocean Ave Unit #1 Sea Bright NJ 07760-2274 a Installations Inc 246 SW 4 Ave Homestead FL 33030-7077 Broadridge PO Box 23487 Newark NJ 07109-0407 Cargill Animal Feed 1012 Pearl St Franklinton LA 70430-1004 Charles Landahl Jr. 1195 Saratoga Avenue Steamboat Springs CO 00407-4930 David A Carter PA 1900 Glades Road Suite 401 Boca Raton FL 33431-7333 FFVA Dade County Farm Bureau 1850 Old Dixie Hwy Homestead FL 33033-3298 FPL PO Box 025576 Miami FL 33102-5576 Florida Department of Revenue 6565 Taft St 4th Fl Hollywood FL 33024-4002 GMAC PO Box 130424 Roseville, MN 55113-0004 Geoffrey Oliver Read 17 Rose Road Johannesburg 2198 Africa Homestead Gas Company PO Box 025576 Homestead FL 33030 Internal Revenue Service Ogden UT 84201-0013 Ivon Jarel 7655 SW 135 St Pinecrest FL 33156-6853 Jose Antonio 7655 SW 135 St Pinecrest FL 33156-6853 Larry and Dorothy Lee 103 Ocean Bay Dr Key Largo FL 33037-2446 Office of the US Trustee 51 S.W. Ave. Suite 1204 Miami, FL 33130-1614 Case O9-12509-EPK Doc 119 Filed 06/19/09 Farm Bureau 1850 Old Dixie Hwy Homestead FL 33033-3298 Florida Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 GMAC PO Box 2182 Greeley CO 80632-2182 George A Naclauchlan 7 Watrous Point Road Old Saybrook CT 06475-1329 PO Box 660360 Dallas TX 75266-0360 REVENUE SERVICE CENTRALIZED INSOLVENCY OPERATIONS PO BOX 21126 PHILADELPHIA PA 19114-0326 Jan Arnett 42-07 30 Ave Astoria NY 11103-2910 Kaebel Wholesale Inc 2501 SW 31 St Ft Lauderdale FL 33312-4955 Lester Giegerich 10 Wright St Westport CT 06880-3115 Oretun Postboks 221 Sande 3071 Norway Page 11 of 12 Fish Farming News Mag PO Box 37 Stonington ME 04681-0037 Frank Garofalo One Devonshrie Place #3109 Boston MA 02109-3533 Gary Blum 2310 Southbay Circle Rowlett TX 75088-5530 Glen and Lori A Brown 8327 Misty Lake Circle Sarasota FL 34241-8502 Internal Revenue Service 7850 SW 6 Ct Ft Lauderdale FL 33324-3210 Interwest Transfer Co Inc PO Box 17135 Salt Lake City UT 84117-0136 John Christensen 2900 North Flagler Dr Nest Palm Beach FL 33407-5218 Keo Fish Farm Inc PO Box 166 Ken AR 72083-0166 Nissan-Infiniti LT POD 660366 Dallas TX 75266-0366 PC Medix Inc 6929 Houlton Circle Lake Worth FL 33467-8745 Packaging Products Corp Attn: Barbara Craveiro 198 Herman Melville Mew Bedford MA 02740-7344 Paychex Inc. 250 Australian Ave South Suite 300 West Palm Beach FL 33401-5012 Sandor Capital Master Fund 2828 Routh St #500 Dallas TX 75201-1438 State Farm Insurance 7401 Cypress Gardens Winter Haven FL 33888-0001 The Redland Company 144 NW 11 St Homestead FL 33030-4328 Webcast 1 Inc 6413 Congress Ave Suite 240 Boca Raton FL 33487-2839 Xavier Cherch 4510 Barwick Ranch Cir Delray FL 33445-3530 Harry Mukamal 1 SE 3 Ave Box 158 10th Floor Miami, FL 33131-1714 Case O9-12509-EPK Doc 119 Filed 06/19/09 Packaging Products Corp PO Box 845409 Boston MA 02284-5409 Peter Mat: 24 Cherry Tree Lane Kimmelin NJ 07405-2286 South Florida Water District PO Box 24680 West Palm Beach FL 33416-4680 Stepping Stones Partners LP 509 Madison Ave 15th Fl New York NY 10022?5537 Tom Pernice Jr 38390 Shoal Creek Drive Murrieta CA 92562-3069 Western-Southern Life PO Box 1119 Cincinnati OH 45201-1119 Zeigler Bros Inc P.0. Box 95 Gardners PA 17324-0095 Page 12 of 12 Paychex Inc 250 Australian Ave So Suite 300 West Palm Beach FL 33401-5012 Robert Douney PA 6751 Federal Hwy Suite 300 Boca Raton FL 33487-1647 State Farm Insurance 1126 SE Third Ave Ft Lauderdale FL 33316-1192 T2. 5930 Royal Lane H274 Dallas TX 75230-3849 Waste Management 3831 NW 21 Ave Pompano Beach FL 33073-3002 Windcrest Fund 4800 Main St Suite 600 Kansas City MO 64112-2509 Adam D. Marshall McDonald Hopkins LLC 505 S. Flagler Drive Suite 300 West Palm Beach, FL 33401-5942 The preferred mailing address above has been substituted for the following entity/entities as so specified by said entity/entities in a Notice of Address filed pursuant to 11 U.S.C. 342(f) and Fed.R.Bank.P. 2002 Internal Revenue Service c/o Central Insolvency Operation PO Box 21126 Philadelphia PA 19114