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EXHIBIT 10
CONSENT ORDER, SETTLEMENT AGREEMENT AND RELEASE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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CIVIL ACTION NO. 00CIV3467(RO)
JAMES LLC,
Plaintiff,
CONSENT ORDER
- against -
QUEST NET CORP.,
Defendant.
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THIS MATTER coming before the Court upon the consent of Plaintiff,
JAMES LLC. ("James"), by and through its counsel, Bondy & Schloss, LLP, and
Defendant, QUEST NET CORP. ("Quest Net"), by and through its counsel, Robert
Wayne Pearce, P.A.; and the parties to this Consent Order (the "Settling
Parties") having reported a settlement of the claims asserted in the action; and
having agreed to dismiss the claims asserted against each other in the action
with each party bearing their own fees and costs; and this Court having
conducted a hearing pursuant to 15 U.S.C. ss.77c(a)(10) and all parties having
participated in that hearing; and for good cause shown,
IT IS on this
ORDERED as follows:
1. The settlement agreement between the parties, attached hereto and
made a part of this order, is procedurally and substantively fair to the
security holders participating in the exchange under the requirements of 15
U.S.C. ss.77c(a)(10), and
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2. The action is dismissed with prejudice and without costs to either
party.
/s/ Richard Owen
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U.S.D.J.
CONSENT IS HEREBY GIVEN TO FORM, SUBSTANCE AND ENTRY OF THIS CONSENT ORDER:
Dated: October 3, 2000
BONDY & SCHLOSS LLP
Attorneys for Plaintiff,
JAMES LLC
By: /s/ Joel M. Wolosky
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Joel M. Wolosky, Esq.
ROBERT WAYNE PEARCE, P.A.
Attorneys for Defendant,
QUEST NET CORP.
By: /s/ Robert Wayne Pearce
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Robert Wayne Pearce, Esq.
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SETTLEMENT AGREEMENT AND RELEASE
THIS AGREEMENT is made by and among JAMES LLC ("James") and QUEST NET
CORP. ("Quest Net").
BACKGROUND
WHEREAS, on or about May 27, 1999, James entered into a Securities
Purchase Agreement and related agreements (the "Securities Agreement") with
Quest Net, whereby James purchased $5,000,000 of the Common Stock of Quest Net;
and
WHEREAS, pursuant to the Securities Agreement, Quest Net issued to
James 910,000 shares of Common Stock, which stock was to be registered with the
Securities and Exchange Commission pursuant to the Securities Agreement and a
Registration Rights Agreement dated as of May 27, 1999; and
WHEREAS, Quest Net has not registered said 910,000 shares of Common
Stock pursuant to the Securities Agreement and the Registration Rights
Agreement, nor has Quest Net issued additional shares due to James; and
WHEREAS, on or about May 5, 2000, James filed an action against Quest
Net entitled JAMES LLC V. QUEST NET CORP., Civil Action No. 00 CIV 3467, United
States District Court, Southern District of New York (the "Court"), whereby
James asserted claims against Quest Net under the Securities Agreement and the
Registration Rights Agreement; and
WHEREAS, on or about June 30, 2000, Quest Net filed an Answer and
Counterclaim to James' action; and
WHEREAS, James and Quest Net desire to resolve, settle and compromise
the claims that James has asserted against Quest Net, together with any other
claims that exist between James and Quest Net which rises out of, or relates to,
the purchase of the Common Stock by James under the Securities Agreement
("hereinafter referred to as the "Claim"),
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With this background incorporated herein, the parties hereby agree to
the following settlement:
TERMS OF SETTLEMENT
1.1 SETTLEMENT PAYMENT. In settlement and in satisfaction of the
obligations and claims of the parties, Quest Net will issue Twenty Five Million
Nine Hundred Shares (25,900,000) shares of its Common Stock to James (the
"Settlement Shares"), and a Note in the principal sum of Three Million Five
Hundred Dollars ($3,500,000) maturing December 31, 2001 and bearing interest at
the rate of eight percent (8%) per annum (the "Note). The Settlement Shares and
the Note shall be issued as follows:
(a) Upon the entry of an order by the court in accordance with
Paragraph 1.2 herein (the "Order"), and the delivery by James to Quest Net of a
stipulation dismissing, with prejudice, the action pending in the United States
District Court, Southern District of New York (Case No. 00 CIV. 3467) (the
"Stipulation"), Quest Net shall deliver to James the Settlement Shares, free of
restrictive legend or stop transfer order, and the Note.
1.2 FAIRNESS HEARING. Upon the execution hereof, James and Quest Net
agree, pursuant to 15 U.S.C.ss.77(a)(10), to immediately submit the terms and
conditions of this Agreement to the Court for a hearing on the fairness of such
terms and conditions, and to exempt from registration the Twenty-Five Million
Nine Hundred Thousand (25,900,000) shares of Common Stock of Quest Net to be
delivered pursuant to Paragraph 1.1 herein. This Agreement shall only become
binding upon the parties upon entry of an Order by the Court finding that the
terms and conditions of the Agreement are fair to the parties and the delivery
of the Settlement Shares and the Note. Upon entry of such an Order and the
delivery of the Stipulation by James to Quest Net, Quest Net shall immediately
deliver the Settlement Shares and the Note to James. Each party agrees to bear
their own fees and expenses.
1.3 LIABILITIES. Except as set forth in Schedule A, the Company has no
liabilities or obligations of a financial nature (whether accrued, absolute,
contingent or otherwise), which are material, individually or in the aggregate,
and which, individually or in the aggregate, do not or would not have a material
adverse effect on the Company.
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1.4 LITIGATION AND OTHER PROCEEDINGS. Except as may be set forth in
Schedule A, there are no lawsuits or proceedings pending or, to the best
knowledge of the Company, threatened, against the Company, nor has the Company
received any written or oral notice of any such action, suit, proceeding or
investigation, which might have a material adverse effect on the Company or
which likely would have a material adverse effect on the transactions
contemplated by this Agreement. Except as set forth in Schedule A, no judgment,
order, writ, injunction or decree or award has been issued by or, to the best
knowledge of the Company, requested of any court, arbitrator or governmental
agency which likely would have a material adverse effect on the transactions
contemplated by this Agreement.
1.5 NECESSARY ACTION. At all times after the execution of this
Agreement and entry of the Order by the Court, each party hereto agrees to take
or cause to be taken all such necessary action including, without limitation,
the execution and delivery of such further instruments and documents, as may be
reasonably requested by any party for such purposes or otherwise complete or
perfect the transactions contemplated hereby.
1.6 RELEASES. Upon receipt of the Settlement Shares and the Note, for
and in consideration of the terms and conditions of this Agreement, and except
for the obligations and representations arising or made hereunder, the parties
hereby release, acquit and forever discharge the other and each, every and all
of their current and past officers, directors, shareholders, affiliated
corporations, subsidiaries, agents, employees, representatives, attorneys,
predecessors, successors and assigns (the "Released Parties"), of and from any
and all claims, damages, causes of action, suits and costs, of whatever nature,
character or description, whether known or unknown, anticipated or
unanticipated, which the parties may now have or may hereafter have or claim to
have against each other and the parties covenant not to sue, directly or
indirectly, the Released Parties for any claim or cause of action that is the
subject of this Release.
1.7 CONFIDENTIALITY. James shall hold, and shall cause its respective
consultants and advisors to hold, in strict confidence, unless compelled to
disclose by judicial or administrative process or
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by other requirements of law, all documents and information concerning the terms
of this Agreement until such time that the terms of this Agreement have been
disclosed publicly by Quest Net.
1.8 CONDITIONS PRECEDENT. If Quest Net shall default in delivering the
Settlement Shares to James, as required by Paragraph 1.1 herein, or if such
Order shall not have been entered by the Court on or prior to October 31, 2000;
then this Settlement Agreement and Release shall be null and void.
1.9 BINDING EFFECT. The Settlement Documents shall be binding on all
parties executing the Settlement Documents and their respective successors,
assigns and heirs.
1.10 AUTHORITY TO BIND. Each corporate party to this Agreement
represents and warrants that the execution, delivery and performance of this
Agreement and the consummation of the transactions provided in this Agreement
have been duly authorized by all necessary corporate action of the respective
entity and that the person(s) executing this Agreement on its behalf and has the
full capacity to bind that entity. Each party further represents and warrants
that they have been represented by independent counsel of their choice in
connection with the negotiation and execution of this Agreement and that counsel
has reviewed and approved this Agreement.
1.11 SIGNATURES. This Agreement may be signed in counterparts and the
Agreement, together with its counterpart signature pages, shall be deemed valid
and binding on each party when duly executed by all parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date indicated.
JAMES LLC
By: Navigator Management Ltd.
Its Managing Director
QUEST NET CORP.
By: /s/ Charles Wainer
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Its President
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