EXHIBIT 99.1
SETTLEMENT AND GENERAL RELEASE AGREEMENT
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THIS SETTLEMENT AND GENERAL RELEASE AGREEMENT ("the Agreement") is made
by and between CONTINENTAL INFORMATION SYSTEMS CORPORATION, a New York
corporation ("CIS"), and XXXX X. XXXXXX ("MJ") and XXXXXXXXX X. XXXXXX ("FJ",
and collectively with MJ, the "Jaindls") as of this 26th day of December, 2001.
WHEREAS, CIS is a publicly listed corporation with its shares traded on
NASDAQ;
WHEREAS, MJ owns 100,800 shares of common stock of CIS constituting
approximately 1.719% of the issued and outstanding common stock of CIS (the "MJ
Shares");
WHEREAS, FJ is the father of MJ and owns 592,534 shares of common stock
of CIS constituting approximately 10.1% of the issued and outstanding common
stock of CIS (the "FJ Shares", and together with the MJ Shares, the "Xxxxxx
Shares");
WHEREAS, disagreements have arisen between CIS and the Jaindls
concerning CIS, and after due consideration the Board of Directors of CIS has
unanimously determined (without the participation of MJ) that it is in the best
interests of CIS and its shareholders that such disputes be settled by execution
and delivery of this Agreement which includes, among other things, provisions
relating to the repurchase of the Jaindl Shares and delivery of mutual releases;
WHEREAS, each party hereby acknowledges and agrees that they are
represented by counsel and have had the opportunity to review this Agreement
with their respective counsel;
NOW THEREFORE, for good and valuable consideration, the parties hereby
agree as follows:
1. REPURCHASE OF THE XXXXXX SHARES. The Jaindls represent and warrant
to CIS that (i) the Xxxxxx Shares constitute all of the stock or other interests
of any kind in CIS owned directly or indirectly, of record or beneficially, by
the Jaindls, any other member of their respective families or any entity in
which the Jaindls have any interest (the "Xxxxxx Affiliates") and (ii) they have
good and marketable title to all of the Jaindl Shares, free and clear of any
lien, claim, option or encumbrance of any kind.
CIS agrees to repurchase all of the Xxxxxx Shares for an aggregate
purchase price of $475,000, payable in cash by wire transfer to an account
designated by the Jaindls upon execution and delivery of this Agreement and the
documents referenced herein, including the mutual release attached hereto as
Exhibit A by all parties (the date on which the payment to the Jaindls is
received in their account is referred to as the "Effective Date"). On the
Effective Date, the Jaindls shall deliver to CIS the Xxxxxx shares being
repurchased by CIS by delivery to CIS of the stock certificates representing
such shares, duly endorsed in blank by the Jaindls, or by electronic delivery of
such shares to a broker designated by CIS.
Subject to the next succeeding paragraph of this paragraph 1, as
further consideration for the Xxxxxx Shares, CIS agrees to pay the Jaindls ten
percent (10%) of the Net Amount (as hereinafter defined) received by CIS, if
any, on account of any sale or other disposition of CIS' interest in T1Xpert
Corp., a
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wholly owned indirect subsidiary of CIS ("T1Xpert") as and when such
amount is received by CIS. The "Net Amount" received by CIS shall mean the
amount received by CIS in cash from any sale or other disposition of any of its
interest in T1Xpert, whether by sale of the stock or a material amount of the
assets of T1Xpert, merger, spin-off or other similar transaction
("Transaction"), net of all fees, commissions, taxes and other expenses incurred
by CIS in connection with such sale or disposition. It is expressly understood
and agreed by the Jaindls, however, that no representations or warranties of any
kind have been made by CIS concerning T1Xpert, including but not limited to any
representations or warranties concerning T1Xpert's business, operations or
prospects. Moreover, the Jaindls acknowledge and agree that they understand that
CIS may not receive any amount for its interest in T1Xpert, CIS may discontinue
or liquidate T1Xpert without any proceeds being recovered thereafter and CIS has
not agreed to provide any further financing to T1Xpert without which T1Xpert may
be forced to discontinue operations. The Jaindls' rights with respect to
proceeds for any sale or disposition of T1Xpert in accordance with this
Paragraph 1 shall not include any voting or other rights with respect to T1Xpert
or any sale or other disposition of the stock or assets thereof. Through the
date of the last CIS board of directors meeting, Management of CIS has kept the
Board of Directors of CIS informed as to the status and terms of any
negotiations relating to a potential Transaction. CIS hereby represents that
there is no further material development regarding a potential Transaction since
the date of the last CIS board of directors meeting attended by MJ.
Notwithstanding the preceding paragraph, it is agreed that the
Jaindls shall not receive any portion of the Net Amount received by CIS in
connection with the sale or other disposition of its interest in T1Xpert unless
and until CIS has paid $2,525,000 in cash (whether from the sale or other
disposition of T1Xpert or otherwise) to the shareholders of CIS, other than the
Jaindls, after the date hereof as a dividend or distribution at which time the
Jaindls shall be entitled to receive the amounts owed to them with respect to
any sale or disposition of T1Xpert in accordance with the preceding paragraph to
the extent that CIS has funds legally available to pay such amount to the
Jaindls after payment of all creditors of CIS and T1Xpert.CIS shall not obligate
itself to pay more than $2,525,000 to the CIS shareholders before it pays 10% of
the Net Amount to the Jaindls. In the event CIS shall not have sufficient funds
to pay the Jaindls the amount owed with respect to T1Xpert (due to the failure
to receive sufficient proceeds in a Transaction), the Jaindls shall have no
further claim against CIS, T1Xpert or any of the CIS Releasees for any reason
whatsoever relating to the Net Amount.
2. CONFIDENTIAL INFORMATION. MJ has been furnished or has otherwise
received access to CIS' Confidential Information, defined for purposes of this
Agreement as information which relates to (i) CIS' or any of its subsidiaries' (
including but not limited to T1Xpert, CIS Corporation and CIS Air
Corporation)(collectively, the "CIS Companies") past, present or future
products, research, development, improvements, inventions, processes,
techniques, designs or other technical data, lists of authorized dealers or
distributors, customer information, customer lists, costs of provided services,
price lists, asset valuations, or other compilations for marketing or
development; (ii) administrative, management, financial, sales, marketing or
manufacturing activities of any of the CIS Companies or of a third party which
provided proprietary information to the CIS Companies on a confidential basis.
"Customer information" shall include the name, title and position of contact
personnel, needs, preferences, concerns, corporate personality and other
information that is useful in obtaining and maintaining the customer's repeat
business and good will. All such information, including any materials, software
or documents containing such information, is proprietary and confidential
("Confidential Information").
3. PROTECTION OF CONFIDENTIAL INFORMATION. MJ agrees to preserve and
protect the confidentiality of the Confidential Information and all physical
forms thereof. In addition, MJ represents and warrants that he has not, and
shall not, (i) disclose or disseminate the Confidential Information to any third
party, including, without limitation, FJ, any officer, director or employee of
any
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of the CIS Companies or any third party; (ii) copy, transmit (electronically or
otherwise), or remove Confidential Information from CIS' premises; or (iii) use
Confidential Information for his own benefit or the benefit of any third party.
4. INDEMNIFICATION CIS hereby acknowledges that MJ remains entitled to
indemnification pursuant to Article V of the CIS By-Laws as of the date hereof
and the laws of the State of New York, which right to indemnification includes
his right to receive an advancement of expenses as provided therein.
5. RESIGNATION. MJ has resigned from the Board of Directors of CIS and
T1Xpert, and shall execute and deliver to CIS his resignation in the form of
Exhibit B hereto as evidence thereof. MJ agrees that all stock options, warrants
and other rights with respect to the shares of any of the CIS Companies,
including the options to purchase 5,140 shares of common stock of CIS granted to
him in connection with his position as a member of the Board of Directors of
CIS, shall be deemed cancelled as of the date hereof and shall be of no further
force or effect.
6. NO SUITS. The Jaindls represent and warrant that they have not
commenced nor filed, and covenant and agree never to commence, file, aid, or in
any way prosecute or cause to be commenced or prosecuted against CIS or any of
the CIS Releasees (as defined in the Mutual Release attached as Exhibit A
hereto), any action, charge, complaint, or other proceeding, whether
administrative, judicial, legislative, or otherwise, including, but not limited
to, any action or proceeding for attorneys' fees, experts' fees, disbursements,
or costs. Neither this paragraph nor the Mutual Release attached hereto as
Exhibit A shall operate to prevent MJ from initiating any proceeding to enforce
rights and obligations relating to this Agreement, or relating to MJ's rights to
indemnification as a director of CIS.
7. NO ADMISSIONS. It is understood and agreed that neither the
execution of this Agreement, nor the terms of this Agreement, nor any payment
made pursuant to this Agreement constitutes any admission of liability and the
parties expressly deny any such liability. This Agreement constitutes an offer
of valuable consideration to compromise a disputed claim. In the event this
Agreement does not become effective and enforceable, it is understood and agreed
that it will not be admissible into evidence, for any purpose whatsoever, in any
administrative proceeding, trial or appeal, irrespective of the forum.
8. NO REPRESENTATIONS. The Jaindls expressly acknowledge, represent,
and warrant that the terms and provisions of this Agreement herein stated are
the only consideration for signing this Agreement; that no other promise or
agreement of any kind has been made to or with any person or entity whatsoever
to cause the signing of this Agreement; and that, except as provided herein, in
executing this Agreement, the Jaindls do not rely and have not relied upon any
representation or statement made by CIS or any of the CIS Releasees or by any of
their agents, representatives, or attorneys with regard to the subject matter,
basis, or effect of this Agreement, or the business operations or prospects of
CIS, T1Xpert, any of the other CIS Companies or otherwise.
9. INVALIDITY. In the event that any provision contained in this
Agreement, as between these parties, shall be determined to be invalid, illegal
or unenforceable in any respect for any reason, by a final order of a court of
competent jurisdiction, the validity, legality and enforceability of any such
provision in every other respect, and the remaining provisions of this
Agreement, shall not be in any way impaired. Notwithstanding the foregoing, if
any such provision determined to be invalid, illegal or unenforceable may be
valid, legal or enforceable by modification thereof, then the court may make
such modification as may be necessary to make such provision valid, legal or
enforceable.
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10. RELEASE. In further consideration of the covenants undertaken
herein by the parties, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties will execute and deliver a Mutual
Release in the form attached hereto as Exhibit A. This release is intended to
include all possible legal theories, including but not limited to any claim for
any intentional or unintentional tort, fraud or misrepresentation, breach of
fiduciary duty, the violation of any express or implied contract or any public
policy; the violation of any common law or any federal, state or local law; or
any claim for defamation; intentional infliction of emotional distress; injury
to reputation; or claim for damages or compensation of any kind.
11. REPRESENTATIONS AND COVENANTS. The Jaindls, jointly and severally,
represent, warrant, covenant and agree with CIS as follows: (a) that this
Settlement and General Release Agreement is contingent on the renunciation of
any and all claims that the Jaindls had or may have to ownership of shares in
CIS or any of the other CIS Companies or any rights relating thereto; (b) that
the Jaindls and the Jaindl Affiliates from this day forward and forever shall
cease from purchasing or holding (directly or indirectly, in their own name or
in any form of beneficial ownership) shares of CIS or any of its subsidiaries or
affiliates; and (c) that Jaindls from this day forward and forever shall not
disparage, denigrate or publicly make any misstatements of fact or otherwise
unflattering or pejorative remarks or statements of any nature whatsoever about
CIS, or any of CIS Companies, or any of their respective present, past or future
directors, officers, shareholders, subsidiaries, affiliates employees or
businesses in any way or through any means, whether verbal or in writing,
whether in person, in writing, by wire or via electronic means or any other
medium (including but not limited to the internet or chat room communications)
and shall not aid, abet or facilitate any such remarks and shall not initiate or
respond to any inquiries about CIS or any of the CIS Companies from the press or
from any third parties and (d) that the Jaindls shall not aid, assist, encourage
or participate in any way in any lawsuit or other action against CIS or any of
the CIS Releasees or in any proxy solicitation or proxy contest relating to CIS
or any of the CIS Companies. The Jaindls acknowledge that the payments being
made hereunder are predicated upon their agreement and compliance with the
foregoing, and without limitation of any other rights CIS may have, that such
payments shall be disgorged and returned to CIS in the event of a breach of this
paragraph 12.
12. NON-ASSIGNMENT OF CLAIMS. Each of the parties hereby represents and
warrants that it has not heretofore assigned or transferred to any person not a
party to this Agreement any released matter or any part or portion thereof, and
that it shall defend, indemnify, and hold the other parties harmless from any
claim (including payment of reasonable attorneys' fees and costs actually
incurred whether or not arbitration or litigation is commenced) based on or in
connection with or arising out of any such assignment or transfer made,
purported or claimed.
13. CONFIDENTIALITY. The parties shall maintain in confidence both the
terms and conditions of this Agreement and shall not disclose the same unless
(i) the other parties consent thereto in writing, (ii) any of the parties are
otherwise required by law (including but not limited to securities laws),
regulation, subpoena, or court order, (iii) as required by this Agreement, (iv)
provided to such parties' attorneys, accountants or like professionals, or (v)
in connection with the enforcement of this Agreement. The Jaindls understand and
agree that CIS will be filing a Form 8K with the Securities Exchange Commission
relating to this Agreement following execution of the Agreement, and CIS
understands and agrees that the Jaindls will be filing an amended Schedule 13D
relating to this Agreement following execution of this Agreement.
14. INTEGRATED AGREEMENT. This Agreement and the Mutual Release to be
executed by the parties constitute and contain the entire agreement between the
parties, and supersede and replace all prior negotiations and all agreements
proposed or otherwise, whether written or oral, concerning the subject matter
hereof. This is an integrated document.
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15. NOTICES. Any notice which Jaindls is required or may desire to give
to CIS hereunder shall be delivered personally, by overnight courier or by
telefax, charges prepaid, to:
Continental Information Systems Corporation
Broadway Atrium
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxx
Telefax: 000-000-0000
WITH COPIES TO:
Xxxxxxx X. Xxxxxxxxx, Esq.
Salisbury & Xxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Telefax: 000-000-0000
Xxxx Xxxxxxxxx, Esq.
Xxxxxxx Xxxxxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telefax 212-789-3500
Any notice which CIS is required or may desire to give to the Jaindls
hereunder shall be delivered personally, by overnight courier or by telefax
charges prepaid, to:
Xxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxx
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telefax: 000-000-0000
WITH A COPY TO:
Xxxx X. Xxxxxx, Esq.
Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx X.X. 00000
Telefax: 000-000-0000
16. SEVERABILITY. If any provision of this Agreement or the application
thereof is held invalid, such invalidation shall not affect other provisions or
applications of this Agreement and to this end the provisions of this Agreement
are declared to be severable.
17. DRAFTING. Each party has cooperated in the drafting and preparation
of this agreement. Hence, in any construction or interpretation of this
Agreement, the same shall not be construed against any party on the basis that
the party was the drafter.
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18. COPIES. This Agreement may be executed in counterparts, and each
counterpart, when executed, shall have the effect of a signed original.
Photographic and facsimile copies of such signed counterparts may be used in
lieu of the originals for any purpose.
19. MODIFICATION. This Agreement cannot be modified except in writing
signed by all parties.
20. VOLUNTARY AND KNOWING AGREEMENT. By their signatures below, CIS and
the Jaindls certify that they have carefully read and fully considered the terms
of this Agreement, that they have had an opportunity to discuss these terms with
attorneys or advisors of their own choosing, that they agree to all of the terms
of this Agreement, that they intend to be bound by them and to fulfill the
promises set forth herein, and that they voluntarily and knowingly enter into
this Agreement with full understanding of its binding legal consequences.
21. APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York to whose jurisdiction the
parties hereby consent. In the event of any dispute or controversy arising out
of or relating to this Agreement, it is agreed that United States District Court
for the Southern District of New York and the Supreme Court of the State of New
York, New York County, shall have exclusive jurisdiction to decide such dispute
and that service of process in any such action may be made by certified mail to
the Jaindls or to CIS at the addresses identified in paragraph 15 above. In the
event of any breach of this Agreement, the aggrieved party shall be entitled to
all remedies available under law and equity. In any proceeding brought to
enforce the terms of this Agreement, in addition to such other relief as is
appropriate, the prevailing party in such action shall be entitled to recover
its reasonable attorneys' fees and costs incurred in connection therewith.
22. NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
benefit any third party other than the CIS Releasees who are not a party hereto.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed as a sealed instrument as of the dates
set forth below.
XXXX X. XXXXXX
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Date
XXXXXXXXX X. XXXXXX
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Date
CONTINENTAL INFORMATION
SYSTEMS CORPORATION
By:
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Title:
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Date
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EXHIBIT A
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MUTUAL RELEASE
This Mutual Release is entered into as of the _____ day of December,
2001 between Xxxx X. Xxxxxx, Xxxxxxxxx X. Xxxxxx (collectively, the "Jaindls")
and Continental Information Systems Corporation, a New York corporation ("CIS").
1. RELEASE OF CIS. For good and valuable consideration, receipt of
which is hereby acknowledged, the Jaindls (the "XXXXXX RELEASORS"), jointly and
severally, hereby release, discharge, and covenant not to xxx CIS, its direct
and indirect parents, subsidiaries (including but not limited to CIS Corporation
and T1Xpert Corp.), affiliates, or related companies, and each and all of their
respective past, present or future employees, directors, officers, attorneys,
representatives, receivers, insurers, agents, shareholders, members, partners,
successors, and assigns (individually and collectively the "CIS RELEASEES"),
from and with respect to any and all claims, demands, liens, agreements,
contracts, covenants, actions, suits, causes of action, wages, obligations,
debts, expenses, attorneys' fees, damages, judgments, orders, and liabilities of
whatever kind or nature in law, equity, or otherwise, whether now known or
unknown, suspected or unsuspected, and whether or not concealed or hidden, which
any of the XXXXXX RELEASORS now owns or holds or has at any time heretofore
owned or held as against the CIS RELEASEES, or any of them. This release is
intended to include all possible legal theories, including but not limited to
any claim for any intentional or unintentional tort; fraud or misrepresentation;
breach of fiduciary duty; the violation of any express or implied contract or
any public policy; the violation of any common law or any federal, state or
local law; or any claim for defamation; intentional infliction of emotional
distress; injury to reputation; or claim for damages or compensation of any
kind.
2. RELEASE OF THE JAINDLS. For good and valuable consideration, receipt
of which is hereby acknowledged, CIS on behalf of itself and its direct and
indirect parents, subsidiaries (including, but not limited to, CIS Corporation
and T1Xpert Corp.), affiliates, and related companies (the "CIS RELEASORS")
hereby releases, discharges, and covenants not to xxx the Jaindls (the "XXXXXX
RELEASEES"), from and with respect to any and all claims, demands, liens,
agreements, contracts, covenants, actions, suits, causes of action, wages,
obligations, debts, expenses, attorneys' fees, damages, judgments, orders, and
liabilities of whatever kind or nature in law, equity, or otherwise, whether now
known or unknown, suspected or unsuspected, and whether or not concealed or
hidden, which any of the CIS RELEASORS now owns or holds or has at any time
heretofore owned or held as against the XXXXXX RELEASEES or either of them. This
release is intended to include all possible legal theories, including but not
limited to any claim for any intentional or unintentional tort; fraud or
misrepresentation; breach of fiduciary duty; the violation of any express or
implied contract or any public policy; the violation of any common law or any
federal, state or local law; or any claim for defamation; intentional infliction
of emotional distress; injury to reputation; or claim for damages or
compensation of any kind.
3. APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York to whose jurisdiction the
parties hereby consent. In the event of any dispute or controversy arising out
of or relating to this Agreement, it is agreed that United States District Court
for the Southern District of New York and the Supreme Court of the State of New
York, New York County, shall have exclusive jurisdiction to decide such dispute
and that service of process in any such action may be made by certified mail to
the Jaindls or to CIS at the addresses identified in the Settlement and General
Release Agreement between the parties. In the event of any breach of this
Agreement, the aggrieved party shall be entitled to all remedies available under
law and
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equity. In any proceeding brought to enforce the terms of this Agreement, in
addition to such other relief as is appropriate, the prevailing party in such
action shall be entitled to recover its reasonable attorneys' fees and costs
incurred in connection therewith.
4. NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
benefit any third party other than the CIS Releasees who are not a party hereto.
5. INTEGRATED AGREEMENT. This Agreement is an exhibit to an Agreement
between the parties dated the date hereof and is integrated therewith.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed as a sealed instrument as of the dates
set forth below.
CONTINENTAL INFORMATION SYSTEMS CORPORATION
By:
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Title:
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Date
XXXX X. XXXXXX
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Date
XXXXXXXXX X. XXXXXX
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Date
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EXHIBIT B
RESIGNATION
Xxxx X. Xxxxxx hereby resigns as a member of the Boards of Directors of
Continental Information Systems Corporation and T1Xpert Corp.
Dated: December 19, 2001 ------------------
XXXX X. XXXXXX
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