Settlement Agreement
SETTLEMENT AGREEMENT (this "Agreement") made as of June 23, 2005 by and
among: (a) Qwest Communications Corporation ("QCC"); (b) GlobalNet
International, LLC (the "Debtor") and (c) GlobalNet Corporation ("GlobalNet
Corp.", collectively with the Debtor, "GlobalNet"). QCC and GlobalNet are
hereinafter referred to as the "Parties" and each as a "Party".
WITNESSETH:
WHEREAS, on June 30, 2004 (the "Petition Date"), the Debtor filed a
voluntary petition for relief under chapter 11 of title 11 of the United States
Code (the "Bankruptcy Code");
WHEREAS, since the Petition Date, the Debtor has continued to manage its
property and operate its business as a debtor-in-possession under sections 1107
and 1108 of the Bankruptcy Code; and
WHEREAS, the Debtor and QCC were parties to certain wholesale services
agreements (the "QCC WSAs") pursuant to which QCC provided certain
telecommunications services to the Debtor (the "QCC Services"); and
WHEREAS, both prior and subsequent to the Petition Date, the Debtor
breached the QCC WSAs by failing to make payments due QCC thereunder; and
WHEREAS, in December 1998, QCC entered into a Carrier Service Agreement
(the "Carrier Service Agreement 1") with Loxley Business Information, Inc.
("Loxley"). In 1999, Loxley assigned its interest in the Carrier Service
Agreement 1 to Woodcomm International, Inc.("Woodcomm"). By August 2000 Woodcomm
owed QCC $436,920.00. To pay Woodcomm's debt and so that QCC would continue to
provide service, iDial Networks, Inc., as successor in interest to Loxley
Business Information, Inc. and Woodcomm International, Inc. signed a promissory
not (the "Note") backed by a confessed judgment (the "Confessed Judgment').
iDial did not make its payments pursuant to the Note nor did it pay for the
additional services QCC provided to iDial. On or about August 31, 2001,QCC filed
the Confessed Judgment in Virginia in the amount of $364,100.00 plus 8% interest
and costs (the "Virginia Judgment"). The Virginia Judgment was domesticated in
Texas; and
WHEREAS, QCC filed for AAA arbitration in Denver and also sued iDial in
state court in Arapahoe County. iDial moved the court to compel arbitration. The
arbitration is pending under Case No. 77 181 00172 03 VSS; Qwest Communications
Corporation and Woodcomm International Inc. and iDial Networks, Inc. In it, QCC
made claims for breach of contract, book account or account stated, and quantum
meruit. QCC seeks damages in the amount of $501,921.98. The state court case is
styled Qwest Corporation, Inc. v. iDial Networks, Inc.; Case No. 03CV4300, Div
301, in the District Court for Arapahoe County, Colorado (the "Colorado
Action"). QCC makes claims for breach of contract, account stated, quantum
meruit, and pursuant to tariffs. The damages sought are $503,921.98 (the "QCC
Litigation Debt").
WHEREAS, on January 28, 2005, the Debtor and QCC entered into a letter
agreement (the "Letter Agreement") regarding the terms and conditions of
discontinuance of the QCC Services; and
WHEREAS, the Debtor subsequently breached the Letter Agreement by, inter
alia, failing to fully pay QCC for the QCC Services provided to the Debtor under
the terms of the Letter Agreement; and
WHEREAS, QCC moved for an order enforcing the Letter Agreement or, in the
alternative, for an order converting this case to one under Chapter 7 of the
Bankruptcy Code (the "QCC Motion"); and
WHEREAS, there was due and owing $850,000 from the Debtor to QCC for the
QCC Services provided to the Debtor by QCC subsequent to the Petition Date (the
"QCC Amount Due"); and
WHEREAS, the Debtor, GlobalNet Corp. and QCC sought to resolve the QCC
Motion through an agreement reached on or about June 2, 2005 (the "June 2
Agreement") which provided for the payment of $800,000 to QCC by the Debtor
secured by equipment owned by GlobalNet Corp.; and
WHEREAS, the Debtor breached the June 2 Agreement and the QCC Motion was
rescheduled for June 23, 2005; and
WHEREAS, in order to avoid the time, delay, expense and uncertainties of
litigation, QCC and GlobalNet desire to settle their outstanding disputes; and
WHEREAS, the Parties have agreed to settle their disputes by, inter alia,
the payment of $575,000 to QCC; and
WHEREAS, GlobalNet represents and warrants that it has wired $575,000 to
an account maintained by Todtman, Nachamie, Spizz & Xxxxx, P.C. (the "Todtman
Account") which amount will be released and sent to QCC as set forth herein; and
AGREEMENT:
Now, therefore, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending to be legally bound, hereby
agree as follows:
1. Acknowledgement of Debt. Upon the execution of this Agreement, GlobalNet
shall conclusively be deemed to have acknowledged and agreed that the Debtor
owes QCC $850,000 without any setoffs, defenses, counterclaims, or any other
reductions and such amount is immediately due and payable.
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2. Payment of QCC Debt. No later than June 27, 2005, the Debtor shall cause
$500,000 (the "QCC Settlement Payment") to be wired to QCC from the Todtman
Account using the following instructions:
Account Name: Qwest Services Corporation
Account #: 0000000
Bank Name: Mellon Bank Pittsburgh, 000 Xxxx Xxxxxx, Xxxxxxxxxx,
XX 00000-0000
Bank Rtg./ABA #: 000000000
Swift#: XXXXXX0X
3. Payment of QCC Litigation Debt. No later than June 27, 2005, the Debtor shall
cause $75,000 to be wired to QCC from the Todtman Account using the following
instructions:
First Tennessee Bank
000 Xxxxxxx Xxx
Xxxxxxx, XX 00000
Tax ID: 000000000
DUNS: 000000000
ABA: 000000000
Qwest account number # 170660701
Qwest Communications
X.X. Xxx 000000
Xxxxxxxxxx, XX 00000
4. Release by GlobalNet of QCC and QCC Affiliates. Except to the extent provided
herein, GlobalNet and each of their affiliates fully, forever, irrevocably and
unconditionally, on and as of the date hereof, release and discharge QCC and
each QCC affiliate (and, solely in their capacity as such, their respective
officers, directors, employees, agents and other representatives) of and from
any and all actions, causes of actions, charges, suits, rights, liabilities,
other obligations, disputes, controversies, complaints, claims (as such term is
defined in section 101 of the Bankruptcy Code) or demands, other acts and/or
other omissions of any kind or nature, including any that are known or unknown,
billed or unbilled, matured or unmatured, accrued or nonaccrued, discoverable or
not discoverable and/or fixed or contingent, in law or in equity or otherwise
occurring at any time or times on or prior to the date hereof it ever had,
including any it may have had, now has or hereafter can, shall or may have.
5. Release by QCC of GlobalNet and Dismissal of Colorado Action. Except to the
extent provided herein, QCC does fully, forever, irrevocably and
unconditionally, on and as of the date hereof, release and discharge GlobalNet
(and, solely in their capacity as such, their respective officers, directors,
employees, agents or other representatives) of and from any and all actions,
causes of actions, charges, suits, rights, liabilities, other obligations,
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disputes, controversies, complaints, claims (as such term is defined in section
101 of the Bankruptcy Code) or demands, other acts and/or other omissions of any
kind or nature, including any that are known or unknown, billed or unbilled,
matured or unmatured, accrued or nonaccrued, discoverable or not discoverable
and/or fixed or contingent, in law or in equity or otherwise occurring at any
time or times on or prior to the date hereof it ever had, including any it may
have had, now has or hereafter can, shall or may have. QCC does not release any
covenants, liabilities or other obligations of GlobalNet provided in this
Agreement. This release includes a release of all claims asserted in the
Colorado Action. In addition, QCC shall take all steps necessary to effectuate a
satisfaction of the Virginia Judgment and the Texas Judgment and shall execute
any documents reasonably necessary to dismiss, with prejudice, the Colorado
Action.
6. Revocation of Release and Springing Claims. To the extent that GlobalNet or
their respective officers, directors, employees, agents or other representatives
start, continue, revive, restart or otherwise conduct business, in any capacity,
including as an owner, whereby such entity purchases services from QCC (a
"Business Continuity Event"), the release provisions of paragraph 5 (Release by
QCC of GlobalNet) shall be deemed null and void. Upon the occurrence of a
Business Continuity Event, the entity which purchases services from QCC shall
conclusively be determined to owe QCC $350,000 (representing the shortfall of
the QCC Settlement Payment from QCC Amount Due) and such amount shall be
immediately due and payable by such entity; and (ii) the QCC Litigation Debt
against GlobalNet shall be revived and spring back by operation of this
Agreement, but GlobalNet shall preserve any defenses to such claims. This
provision may be waived or modified only by express written agreement of the
parties which specifically waives or modifies this provision.
7. QCC Dismissal Support. To the extent that the Todtman Account has been
funded, QCC shall support the Debtor's request to have the bankruptcy case
dismissed. Any order dismissing the case shall not be final or effective unless
and until QCC receives the payments provided hereunder.
8. Representations and Warranties of the Parties. Except in each case as may be
a violation of applicable regulatory rule or law, GlobalNet represents and
warrants to QCC and QCC represents and warrants to GlobalNet, as follows:
1) It is an entity duly organized, validly existing and in good
standing under the laws in which it was organized. It has the power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement, including the consummation by such
party of the transactions contemplated hereby, has been duly authorized by all
necessary action on its part. It has duly and validly executed this Agreement.
This Agreement is its valid and binding obligation enforceable against it in
accordance with its terms.
2) The execution, delivery and performance of this Agreement by it,
including the consummation by it of the transactions contemplated hereby and
thereby, does not and will not (i) require the consent, license, permit, waiver,
approval, authorization or other action of, by or with respect to, or
registration, declaration or filing with, or notice to, any federal, state,
local or foreign governmental or regulatory authority, including any court, (ii)
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violate or conflict with the provisions of its articles of incorporation, by
laws, or other constituent documents or (iii) constitute a default (with or
without notice or lapse of time, or both) under, violate or conflict with, or
give rise to a right of termination, cancellation or acceleration or loss of a
material benefit under any law, or under any contract, permit or order to which
it is party or by which it or any of its assets is subject or bound.
3) No representation or warranty by it in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein not misleading.
GlobalNet represents and warrants to QCC that GlobalNet has the
power and authority to bind itself to the terms and conditions of this
Agreement. QCC represents and warrants to GlobalNet that it has the power and
authority to bind itself to the terms and conditions of this Agreement.
9. Other Provisions.
a. Entire Agreement; Amendments. This Agreement contains the entire
understanding of the Parties with respect to the subject matter hereof and
supersede any prior and/or conflicting understandings or agreements. No
amendment or modification of this Agreement shall be valid or binding upon the
Parties unless made in writing and executed by the Parties.
b. No Admission. This Agreement is the result of a compromise and shall
not be construed as an admission by any Party of any liability, wrongdoing, or
responsibility on their part or on the part of their Affiliates or their
respective attorneys, officers, directors, or employees. The Parties expressly
deny any such liability, wrongdoing, or responsibility. The Parties confirm, for
the purposes of completeness, that the foregoing provisions of this Section are
not intended to affect any liabilities, other obligations or rights of any kind
or nature provided for in this Agreement.
c. Third Party Beneficiaries. QCC's Affiliates are third party
beneficiaries of this Agreement, including that they are entitled to enforce its
provisions.
d. Costs and Expenses. The Parties will each bear their respective costs
and expenses in connection with the transactions contemplated hereby.
e. Further Assurances. Without limiting the generality of any provisions
of this Agreement, each Party agrees that upon request of any other Party, it
shall, from time to time, do any and all other acts and things as may reasonably
be required to carry out its obligations hereunder, to consummate the
transactions contemplated hereby, and to effectuate the purposes hereof.
f. Rights and Remedies. All rights and remedies of any Party under any
provision of this Agreement for any breach of this Agreement shall be in
addition to any other rights and remedies provided for by any law of any kind
(including specific performance). All rights and remedies contemplated in the
preceding sentence shall be independent and cumulative, and may, to the extent
permitted by law, be exercised concurrently or separately, and the exercise of
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any one right or remedy shall not be deemed to be an election of such right or
remedy or preclude or waive the exercise of any other right or remedy. Each
Party shall also have the right to enforce its rights and the obligations of any
breaching Party by an action or actions for specific performance, injunctive
relief and/or other equitable relief in order to enforce compliance with, or
prevent any actual or threatened breaches of, this Agreement. The exercise of
any such rights shall not require the posting of any bond or other consideration
or the proof of any actual damages.
g. Terminology. Titles of Articles and Sections are for convenience only,
and shall not modify rights and obligations created by this Agreement. All
references herein to Articles and Sections shall refer to the corresponding
Articles and Sections of this Agreement unless specific reference is made to
Articles and Sections of another document. Use of the words "hereby", "herein",
"hereto", "hereof", "hereunder" and similar words shall be deemed to refer to
this Agreement in its entirety and not merely to the Section wherein any such
word may appear. With respect to all defined terms and all pronouns, the
singular shall include the plural, and vice versa. The term "or" is used in the
inclusive sense of "and/or" notwithstanding that the phrase "and/or" is
specifically stated only in some cases. For all purposes of this Agreement, the
term covenants includes the indemnification obligations contained in this
Agreement.
h. Severability. If any provision of this Agreement or the application
thereof to any Person(s) or circumstance(s) shall not be enforceable in whole,
(i) the remainder of this Agreement and the application of such provision to
other Person(s) or circumstance(s) shall not be affected thereby and (ii) each
such provision shall be enforced to the greatest extent permitted by law.
i. Survival of Agreements. All of the representations, warranties,
covenants and agreements, including indemnities, of each of the Parties
contained in this Agreement shall survive without limit as to time, including
survival of the execution, delivery and performance of this Agreement.
j. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York exclusive of
conflicts of laws provisions.
k. Counterparts. This Agreement may be executed in two or more
counterparts and by fax, each of which shall constitute an original, but all of
which when taken together shall constitute but one Agreement. It shall not be
necessary that any one counterpart be signed by the Parties so long as each
Party shall have executed a counterpart.
l. Joint Efforts. This Agreement shall be deemed to constitute the joint
efforts of the Parties, including that no provision in this Agreement shall be
construed more severely against any Party that drafted such provision.
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m. Successors and Assigns. This Agreement shall inure to the benefit of,
be binding upon and be enforceable by and against the Parties and their
respective successors and assigns provided that any such assignment shall
require the prior written consent of the other Parties and any purported
assignment without such consent shall be void (provided further that, to avoid
doubt, the Parties confirm and agree that the releases provided herein shall not
extend to any permitted assignee or any other Person with whom a Party may merge
or otherwise enter into a transaction having any similar effect).
n. Consultation with Counsel. The Parties acknowledge that they have
consulted with legal counsel of their choosing before entering into this
Agreement, they have read this Agreement, they know and understand its contents,
and they execute this Agreement freely and voluntarily. In executing and
delivering this Agreement, each Party acknowledges that it has not relied on any
oral or written promise or representation that is not in this Agreement.
o. No Waiver. No consent or waiver, express or implied, by a Party to or
of any breach by any other Party in the performance by it of any of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of the breach in the performance by such Party of the same obligation or any
other obligation of such Party hereunder. Failure on the part of any Party to
complain of any act or failure to act of any other Party or to declare any other
Party in default, irrespective of how long such failure continues, shall not
constitute a waiver by a Party of its rights hereunder. All consents and waivers
shall be in writing and shall be strictly construed.
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Qwest Communications Corporation GlobalNet International, LLC
By: /s/ By: /s/ Xxxxxx Xxxxxxx
----------------------- -----------------------
Name: Name: Xxxxxx Xxxxxxx
Title: VP Title: CFO
GlobalNet Corporation WE HEREBY CONSENT AND AGREE
TO PARAGRAPH 6 HEREOF:
By: /s/ Xxxxxx Xxxxxxx XXXX XXXX
----------------------
Name: Xxxxxx Xxxxxxx BY:
Title: CFO -----------------------
Xxxxxx Xxxxxxx
By: /s/ Xxxxxx Xxxxxxx
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