EXHIBIT 10

 

IN THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT

IN AND FOR LEON COUNTY, FLORIDA

 

ASC RECAP, LLC,

 

Plaintiff,

 

v.   CASE NO. 2014-CA-210

 

NUSTATE ENERGY HOLDINGS, INC.

 

Defendant.

__________________________________/

 

ORDER GRANTING APPROVAL OF SETTLEMENT

AGREEMENT AND STIPULATION

 

This matter came before the Court on March 12, 2014, for a hearing on
Plaintiff’s Motion for Approval of Settlement Agreement and Stipulation, and
Request for Fairness Hearing. The Parties have entered into a written Settlement
Agreement and Stipulation, a copy of which is attached hereto. The Court having
held a hearing as to the fairness of the terms and conditions of the Settlement
Agreement and Stipulation, and being otherwise fully advised in the premises,
the Court finds as follows:

 

1.               The Court has been advised that the Parties intend that the
sale of the “Settlement Shares” (as defined by the Settlement Agreement and
Stipulation) to and the resale of the Settlement Shares by Plaintiff in the
United States, assuming satisfaction of all other applicable securities laws and
regulations, will be exempt from registration under the Securities Act of 1933
(the “Securities Act”) in reliance upon Section 3(a)(10) of the Securities Act
based upon this Court’s finding herein that the terms and conditions of the
issuance of the Settlement Shares by Defendant to Plaintiff are fair to
Plaintiff.

 

 

2.               The hearing was scheduled upon the consent of Plaintiff and
Defendant, Plaintiff has had adequate notice of the hearing, and Plaintiff is
the only party to whom Shares will be issued pursuant to the Settlement
Agreement and Stipulation.

 

3.               The terms and conditions of the issuance of the Settlement
Shares in exchange for the release of certain claims as set forth in the
Settlement Agreement and Stipulation are fair to Plaintiff, the only party to
whom the Settlement Shares will be issued.

 

4.               The fairness hearing was open to Plaintiff and any other
interested parties. Plaintiff and Defendant were represented by counsel at the
hearing who acknowledged that adequate notice of the hearing was given and
consented to the entry of this Order.

 

5.               Based upon the above, the Court finds the Settlement Agreement
and Stipulation to be both procedurally and substantively fair to the Plaintiff,
and hereby approves same.

 

It is hereby ORDERED AND ADJUDGED that the Settlement Agreement and Stipulation
is hereby approved as fair to the party to whom the Settlement Shares will be
issued, within the meaning of Section 3(a)(10) of the Securities Act, and that
the sale of the Settlement Shares to Plaintiff and the resale of the Settlement
Shares in the United States by Plaintiff, assuming satisfaction of all other
applicable securities laws and regulations, will be exempt from registration
under the Securities Act of 1933.

 

DONE AND ORDERED at Tallahassee, Leon County, Florida, this 12th day of March,
2014.

 

  /s/ John C. Cooper   JOHN C. COOPER   CIRCUIT JUDGE

 

cc: E. Dylan Rivers, Esquire   Kevin Yates, CEO

2

 

SETTLEMENT AGREEMENT AND STIPULATION

 

THIS SETTLEMENT AGREEMENT and Stipulation dated as of February 6, 2014 by and
between plaintiff ASC Recap LLC (“ASC”), and defendant Nustate Energy Holdings,
Inc. (“COMPANY”).

 

BACKGROUND:

 

WHEREAS, there are bona fide outstanding Claims against the Company in the
principal amount of not less than $2,531,565.00; and

 

WHEREAS, these liabilities are past due; and

 

WHEREAS, ASC acquired such liabilities on the terms and conditions set forth in
the Claim Purchase Agreement(s), subject however to the agreement of the Company
and compliance with the provisions hereof; and

 

WHEREAS, ASC and the Company desire to resolve, settle, and compromise among
other things the liabilities as more particularly set forth on Schedule A
annexed hereto (hereinafter collectively referred to as the “Claims”).

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.               Defined Terms. As used in this Agreement, the following terms
shall have the following meanings specified or indicated (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):

 

“AGREEMENT” shall have the meaning specified in the preamble hereof.

 

“CLAIM AMOUNT” shall mean $2,531,565.00

3

 

“COMMON STOCK” shall mean the Company’s common stock, $0. 001 par value per
share, and any shares of any other class of common stock whether now or
hereafter authorized, having the right to participate in the distribution of
dividends (as and when declared) and assets (upon liquidation of the Company).

 

“COURT” shall mean the Circuit Court of the Second Judicial Circuit, Leon
County, Florida.

 

“DISCOUNT” shall mean twenty five (25%) percent.

 

“DTC” shall have the meaning specified in Section 3b.

 

“DWAC” shall have the meaning specified in Section 3b.

 

“FAST” shall have the meaning specified in Section 3b.

 

“GROSS PROCEEDS” shall mean proceeds from sales of Settlement Shares by ASC.

 

“NET PROCEEDS” shall mean Gross Proceeds less all brokerage, clearing and
delivery related fees and charges associated with the generation of such Gross
Proceeds, including but not limited to, commission and execution fees, ticket
and deposit fees, DTC and Non-DTC, transfer agent and clearing agent fees.

 

“PRINCIPAL MARKET” shall mean the Nasdaq National Market, the Nasdaq SmallCap
Market, the Over the Counter Bulletin Board, OTCXD, the American Stock Exchange
or the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.

 

“REMITTANCE AMOUNT” shall mean NET PROCEEDS multiplied by one minus the Discount
((1 – 0.25) or 0.75);

4

 

“SELLER” shall mean any individual or entity listed on Schedule A, who
originally owned the Claims.

 

“SETTLEMENT SHARES” shall have the meaning specified in Section 3a.

 

“TRADING DAY” shall mean any day during which the Principal Market shall be open
for business.

 

“TRANSFER AGENT” shall mean the transfer agent for the Common Stock (and to any
substitute or replacement transfer agent for the Common Stock upon the Company’s
appointment of any such substitute or replacement transfer agent).

 

               2.               Fairness Hearing. Upon the execution hereof,
Company and ASC agree, pursuant to Section 3(a) (10) of the Securities Act of
1933 (the “Act”) [and the applicable section of the General Statutes of
Florida], to promptly submit the terms and conditions of this Agreement to the
Court for a hearing on the fairness of such terms and conditions, and the
issuance exempt from registration of the Settlement Shares. This Agreement shall
become binding upon the parties only upon entry of an order by the Court
substantially in the form annexed hereto as Exhibit A (the “Order”).

5

 

               3.               Settlement Shares. a. Following entry of an
Order by the Court in accordance with Paragraph 2 herein and the delivery by ASC
and Company of the Stipulation of Dismissal (as defined below), in settlement of
the Claims, the Company shall issue and deliver to ASC shares of its Common
Stock (the “Settlement Shares”) in one or more tranches as necessary, and
subject to adjustment and ownership limitations as set forth below, sufficient
to generate proceeds such that the aggregate Remittance Amount equals the Claim
Amount. In addition, upon the execution of this Agreement, the Company shall
issue to ASC a convertible promissory note in the principal amount of One
Hundred Twenty Five Thousand Dollars ($125,000.00), maturing six (6) months from
the date of issuance. The convertible promissory note shall have no registration
rights and shall be convertible into the common stock of the Company at any time
at a conversion price equal to 50% of the low closing bid price for the twenty
days prior to conversion.

 

                                 b.            No later than the fifth Trading
Day following the date that the Court enters the Order, time being of the
essence, Company shall: (i) cause its legal counsel to issue an opinion to
Company’s transfer agent, in form and substance reasonably acceptable to ASC and
such transfer agent, that the shares of Common Stock to be issued as the Initial
Issuance and any additional issuance are legally issued, fully paid and
non-assessable, are exempt from registration under the Securities Act, may be
issued without restrictive legend, and may be resold by ASC without restriction
pursuant to the Court Order; and (ii) issue the Settlement Shares, in tranches
as necessary, by physical delivery, or as Direct Registration Systems (DRS)
shares to ASC’s account with The Depository Trust Company (DTC) or through the
Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal
Agent Commission (DWAC) system, without any legends or restriction on transfer
pursuant to the Court Order. The date upon which the first tranche of the
Settlement Shares has been received into ASC’s account and are available for
sale by ASC shall be referred to as the “Issuance Date”.

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                                 c.             The Company shall deliver to
ASC, through the initial tranche and any required additional tranches, that
number of Settlement Shares the proceeds of sales of which generate an aggregate
Remittance Amount equal to the Claim Amount. Following the sale and settlement
of each tranche of Settlement Shares issued by the Company to ASC, ASC shall
cause to be disbursed the Remittance Amount associated with such tranche to
Sellers in accordance with the Claim Purchase Agreement(s). To the extent that
the Company issues Settlement Shares in excess of that necessary to satisfy the
aggregate Claim Amount, ASC shall return any excess Settlement Shares to Company
for retirement to treasury stock. The parties reasonably estimate that the fair
market value of the Settlement Shares and all other amounts received or to be
received by ASC is equal to approximately $3,540,000.00. The parties acknowledge
that the number of Settlement Shares to be issued pursuant to this Agreement is
indeterminable as of the date of its execution, and could well exceed the
current existing number of shares outstanding as of the date of its execution.

 

                                 d.            Notwithstanding anything to the
contrary contained herein, the Settlement Shares beneficially owned by ASC at
any given time shall not exceed the number of such shares that, when aggregated
with all other shares of Company then beneficially owned by ASC, or deemed
beneficially owned by ASC, would result in ASC owning more than 9.99% of all of
such Common Stock as would be outstanding on such date, as determined in
accordance with Section 16 of the Exchange Act and the regulations promulgated
thereunder. In compliance therewith, the Company agrees to deliver the Initial
Issuance and any additional issuances in one or more tranches.

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               4.               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 necessary to effect and complete the transactions contemplated hereby.

 

               5.               Releases. Upon receipt of all of the Settlement
Shares required to be delivered hereby, in consideration of the terms and
conditions of this Agreement, and except for the obligations, representations
and covenants arising or made hereunder or a breach hereof, 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, cause 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
with respect to the Claims. Nothing contained herein shall be deemed to negate
or affect ASC’s right and title to any securities heretofore or hereafter issued
to it by Company or any subsidiary of Company.

8

 

               6.               Representations. Company hereby represents,
warrants and covenants to ASC as follows:

 

                                 a.             There are 750 million shares of
Common Stock of the Company authorized, of which 504.38 million Shares of Common
Stock are issued and outstanding as of February 6, 2014;

 

                                 b.             The shares of Common Stock to be
issued pursuant to the Order are duly authorized, and when issued will be duly
and validly issued, fully paid and non-assessable, free and clear of all liens,
encumbrances and preemptive and similar rights to subscribe for or purchase
securities;

 

                                 c.             Upon Court approval of this
Stipulation and entry of the Order, the shares will be exempt from registration
under the Securities Act and issuable without any restrictive legend;

 

                                 d.            The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock at least equal
to the number of shares that could be issued pursuant to the terms of the Order;

 

                                 e.             If at any time it appears
reasonably likely that there may be insufficient authorized shares to fully
comply with the Order, Company shall promptly increase its authorized shares to
ensure its ability to timely comply with the Order;

 

                                 f.             The execution of this Agreement
and performance of the Order by Company and ASC will not (1) conflict with,
violate or cause a breach or default under any agreements between Company and
any creditor (or any affiliate thereof) related to the account receivables
comprising the Claims, or (2) require any waiver, consent, or other action of
the Company or any creditor, or their respective affiliates, that has not
already been obtained;

9

 

                                 g.             Without limitation, the Company
hereby waives any provision in any agreement related to the account receivables
comprising the Claims requiring payments to be applied in a certain order,
manner, or fashion, or providing for exclusive jurisdiction in any court other
than this Court;

 

                                 h.             The Company has all necessary
power and authority to execute, deliver and perform all of its obligations under
this Agreement;

 

                                 i.              The execution, delivery and
performance of this Agreement by Company has been duly authorized by all
requisite action on the part of Company (including a majority of its independent
directors), and this Agreement has been duly executed and delivered by Company;

 

                                  j.             Company did not enter into the
transaction giving rise to the Claims in contemplation of any sale or
distribution of Company’s common stock or other securities;

 

                                 k.             There has been no modification,
compromise, forbearance, or waiver entered into or given by the Company with
respect to the Claims. There is no action based on the Claims by the Company
that is currently pending in any court or other legal venue, and no judgments
based upon the Claims have been previously entered in any legal proceeding;

 

                                  l.             There are no taxes due, payable
or withholdable as an incident of Seller’s provision of goods and services, and
no taxes will be due, payable or withholdable as a result of settlement of the
Claims;

10

 

                                  m.           Except as set forth on Exhibit 6
(m), no Seller within the past ninety (90) days has been directly or indirectly
through one or more intermediaries in control, controlled by, or under common
control with, the Company and is not an affiliate of the Company as defined in
Rule 144 promulgated under the Act;

 

                                 n.             To the best of the Company’s
knowledge, no Seller is, directly or indirectly, utilizing any of the proceeds
received from ASC for selling the Claims to provide any consideration to or
invest in any manner in the Company or any affiliate of the Company;

 

                                 o.             Company has not received any
notice (oral or written) from the SEC or Principal Market regarding a halt,
limitation or suspension of trading in the Common Stock; and

 

                                  p.            No Seller will, directly or
indirectly, receive any consideration from or be compensated in any manner by,
the Company, or any affiliate of the Company, in exchange for or in
consideration of selling the Claims.

 

                                 q.             Company acknowledges that ASC or
its affiliates may from time to time, hold outstanding securities of the
Company, including securities which may be convertible in shares of the
Company’s common stock at a floating conversion rate tied to the current market
price for the stock. The number of shares of Common Stock issuable pursuant to
this Agreement may increase substantially in certain circumstances, including,
but not necessarily limited to the circumstance wherein the trading price of the
Common Stock declines during the Valuation Period. The Company’s executive
officers and directors have studied and fully understand the nature of the
transaction contemplated by this Agreement and recognize that they have a
potential dilutive effect. The board of directors of the Company has concluded
in its good faith business judgment that such transaction is in the best
interests of the Company. The Company specifically acknowledges that its
obligation to issue the Settlement Shares is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

11

 

                                 ASC hereby represents, warrants and covenants
to Company as follows:

 

               a.                It is the owner of the Claims;

 

               b.               It is a limited liability company duly filed and
in good standing under the laws of Connecticut, and

 

               c.               The execution, delivery and performance of this
Stipulation by ASC has been duly authorized by all requisite action on the part
of ASC, and this Stipulation has been duly executed and delivered by ASC.

 

               7.               Continuing Jurisdiction. In order to enable the
Court to grant specific enforcement or other equitable relief in connection with
this Agreement, (a) the parties consent to the continuing jurisdiction of the
Court for purposes of enforcing this Agreement, and (b) each party to this
Agreement expressly waives any contention that there is an adequate remedy at
law or any like doctrine that might otherwise preclude injunctive relief to
enforce this Agreement.

12

 

               8.               Conditions Precedent/ Default.

 

                                 a.               If Company shall default in
promptly delivering the Settlement Shares to ASC in the form and mode of
delivery as required by Section 3 herein;

 

                                 b.               If the Order shall not have
been entered by the Court on or prior to March 31, 2014;

 

                                 c.               If the Company shall fail to
comply with the Covenants set forth in Paragraph 14 hereof;

 

                                 d.               If Bankruptcy, dissolution,
receivership, reorganization, insolvency or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Company; or if the trading of the
Common Stock shall have been halted, limited, or suspended by the SEC or on the
Principal Market; or trading in securities generally on the Principal Market
shall have been suspended or limited; or minimum prices shall been established
for securities traded on the Principal Market; or there shall have been any
material adverse change (i) in the Company’s finances or operations, or (ii) in
the financial markets such that, in the reasonable judgment of the ASC, makes it
impracticable or inadvisable to trade the Settlement Shares; and such
suspension, limitation or other action is not cured within ten (10) trading
days; then the Company shall be deemed in default of the Agreement and Order and
this Agreement shall be null and void, unless otherwise agreed by written
agreement of the parties.

 

               9.               Information. Company and ASC each represent that
prior to the execution of this Agreement, they have fully informed themselves of
its terms, contents, conditions and effects, and that no promise or
representation of any kind has been made to them except as expressly stated in
this Agreement.

13

 

               10.             Ownership and Authority. Company and ASC
represent and warrant that they have not sold, assigned, transferred, conveyed
or otherwise disposed of any or all of any claim, demand, right, or cause of
action, relating to any matter which is covered by this Agreement, that each is
the sole owner of such claim, demand, right or cause of action, and each has the
power and authority and has been duly authorized to enter into and perform this
Agreement and that this Agreement is the binding obligation of each, enforceable
in accordance with its terms.

 

               11.             No Admission. This Agreement is contractual and
it has been entered into in order to compromise disputed claims and to avoid the
uncertainty and expense of the litigation. This Agreement and each of its
provisions in any orders of the Court relating to it shall not be offered or
received in evidence in any action, proceeding or otherwise used as an admission
or concession as to the merits of the Action or the liability of any nature on
the part of any of the parties hereto except to enforce its terms.

 

               12.             Binding Nature. This Agreement shall be binding
on all parties executing this Agreement and their respective successors, assigns
and heirs.

 

               13.             Authority to Bind. Each 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 action of the respective entity and
that the person executing this Agreement on its behalf has the full capacity to
bind that entity. Each party further represents and warrants that it has been
represented by independent counsel of its choice in connection with the
negotiation and execution of this Agreement, and that counsel has reviewed this
Agreement.

14

 

               14.             Covenants.

 

                                 a.             For so long as ASC or any of its
affiliates holds any Settlement Shares, neither Company nor any of its
affiliates shall, without the prior written consent of ASC (which may not be
unreasonably withheld), vote any shares of Common Stock owned or controlled by
it (unless voting in favor of a proposal approved by a majority of Company’s
Board of Directors), or solicit any proxies or seek to advise or influence any
person with respect to any voting securities of Company; in favor of (1) causing
a class of securities of Defendant to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association, (2) causing a class of
equity securities of Company to become eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended,
(3) taking any action which would impede the purposes and objects of this
Settlement Agreement. The provisions of this paragraph may not be modified or
waived without further order of the Court.

                               

                                 b.            Immediately upon the signing of
the Settlement Order by the Court, the Company shall cause to be filed a Form
8-K with the Securities and Exchange Commission disclosing the settlement. The
Company shall file such additional SEC filings as may be required in respect of
the transactions.

15

 

               15.             Indemnification. Company shall indemnify, defend
and hold ASC and its affiliates harmless with respect to all obligations of
Company arising from or incident or related to this Agreement, including,
without limitation, any claim or action brought derivatively or directly by the
Seller or shareholders of Company.

 

               16.             Legal Effect. The parties to this Agreement
represent that each of them has been advised as to the terms and legal effect of
this Agreement and the Order provided for herein, and that the settlement and
compromise stated herein is final and conclusive forthwith, subject to the
conditions stated herein, and each attorney represents that his or her client
has freely consented to and authorized this Agreement after have been so
advised.

 

               17.             Waiver of Defense. Each party hereto waives a
statement of decision, and the right to appeal from the Order after its entry.
Company further waives any defense based on the rule against splitting causes of
action. The prevailing party in any motion to enforce the Order shall be awarded
its reasonably attorney fees and expenses in connection with such motion. Except
as expressly set forth herein, each party shall bear its own attorneys’ fees,
expenses and costs.

 

               18.            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. This Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement thereof. This Agreement supersedes
all prior agreements and understandings among the parties hereto with respect to
the subject matter hereof.

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               19.             Choice of Law, Etc. Notwithstanding the place
where this Agreement may be executed by either of the parties, or any other
factor, all terms and provisions hereof shall be governed by and construed in
accordance with the laws of the State of Florida, applicable to agreements made
and to be fully performed in that State and without regard to the principles of
conflicts of laws thereof. Any action brought to enforce, or otherwise arising
out of this Agreement shall be brought only in the Court (as defined in this
Agreement).

 

               20.              Exclusivity. For a period of thirty (30) days
from the date of the execution of this Agreement, (a) Company and its
representatives shall not directly or indirectly discuss, negotiate or consider
any proposal, plan or offer from any other party relating to any liabilities, or
any financial transaction having an effect or result similar to the transactions
contemplated hereby, and (b) ASC shall have the exclusive right to negotiate and
execute definitive documentation embodying the terms set forth herein and other
mutually acceptable terms.

 

               21.             Inconsistency. In the event of any inconsistency
between the terms of this Agreement and any other document executed in
connection herewith, the terms of this Agreement shall control to the extent
necessary to resolve such inconsistency.

 

               22.             NOTICES. Any notice required or permitted
hereunder shall be given in writing (unless otherwise specified herein) and
shall be deemed effectively given on the earliest of

 

                                 (a) the date delivered, if delivered by
personal delivery as against written receipt therefor or by confirmed facsimile
transmission,

 

                                 (b) the seventh business day after deposit,
postage prepaid, in the United States Postal Service by registered or certified
mail, or

 

                                 (c) the second business day after mailing by
domestic or international express courier, with delivery costs and fees prepaid,

17

 

in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days’ advance written notice similarly given to each of the other
parties hereto):

 

Company:

 

Nustate Energy Holdings, Inc.
Attn: Chief Executive Officer
Tel No.: 803-748-1309
Fax: 803-748-1288

 

and the copy should go to:

_____________________
_____________________
_____________________
_____________________
_____________________
T  ___________________  |  F _____________

 

ASC Recap LLC

 

c/o 90 Grove Street, Ste. 108

Ridgefield CT 06877

Telephone No.: 203-431-8300

 

and

 

Krieger & Prager llp

39 Broadway

Suite 920

New York, NY 10006

Attn: Samuel M. Krieger, Esq.

Telephone No.: (212) 363-2900

Telecopier No.: (212) 363-2999

E-mail : sk@kplawfirm.com

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IN WITNESS WHEREOF, the parties have duly executed this Settlement Agreement and
Stipulation as of the date first indicated above.

          ASC RECAP LLC         By: /s/ Stephen Hicks       Name: Stephen Hicks
    Title: Manager         NUSTATE ENERGY HOLDINGS, INC.         By:  /s/ Kevin
Yates       Name: Kevin Yates     Title:   Chief Executive Officer  

19