EXHIBIT 10(u)
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (the "Agreement and Release")
entered into on December 28, 2001, by and between DATA SYSTEMS ANALYSTS, INC.,
its parent, subsidiaries, divisions, principals, officers, directors, employees,
and agents, and THE NETPLEX GROUP, INC. and TECHNOLOGY DEVELOPMENTS SYSTEMS,
INC., their respective parents, subsidiaries, and divisions, and as to each,
their principals, officers, directors, employees and agents, successors and
assigns.
WHEREAS, Data Systems Analysts, Inc. ("DSA") filed a lawsuit against
The Netplex Group, Inc. ("Netplex"), Technology Development Systems, Inc.
("TDS") and XcelleNet, Inc. ("XcelleNet") on September 4, 1997, alleging, inter
alia, breach of contract and copyright infringement against Netplex and TDS
(hereinafter collectively referred to as "Netplex"); and
WHEREAS, Netplex filed certain counterclaims against DSA in response
to this lawsuit; and
WHEREAS, DSA and Netplex have now agreed to a settlement of all claims
between them regarding this lawsuit and to stipulate to entry of Joint Dismissal
with Prejudice;
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
A. PAYMENT PROVISIONS AND SCHEDULE
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1. Immediate Transfer of Tavve Stock
Upon the signing of this Settlement Agreement and Release,
Netplex shall transfer to DSA all right, title and interest in all of its shares
of the capital stock of Tavve Software Company (the "Tavve Stock"), including,
without limitation all dividends, rights to
dividends, repurchases, share-splits and all other rights of the shareowners
thereof as of May 10, 2001, free and clear of all encumbrances and liens, and
shall deliver to DSA one or more stock certificates representing such shares,
duly endorsed in blank by Netplex, or accompanied by stock powers duly endorsed
in blank by Netplex, and shall take any and all other necessary steps within its
power to cause DSA to become the owner of record of the Tavve Stock. Netplex
represents and warrants that the number of shares to be transferred are 125,000,
that the exact name of issuer is Tavve Software Company, and that shares are
free and clear of liens.
2. Payment Obligations of Netplex.
In addition to the transfer of the Tavve Stock pursuant to
paragraph A.1 hereof, Netplex hereby agrees to pay to DSA One Million Four
Hundred Thousand Dollars (US $1,400,000) (collectively referred to herein as the
"Obligations") as follows:
(a) Payment of $900,000 on or before December 31, 2001
On or before December 31, 2001, Netplex shall pay in cash to
DSA Nine Hundred Thousand Dollars (US $900,000), and, if Netplex fails to make
such payment by December 31, 2001, it shall pay in cash to DSA on or before
March 31, 2002, $900,000 plus interest, commencing January 1, 2002, at a per
annum rate equal to the Prime Rate as published in the "Money Rates" section of
the first edition, after January 1, 2002, of The Wall Street Journal, or any
successor publication, or in the event that such rate is no longer published in
The Wall Street Journal, a comparable index or reference selected by DSA, plus 3
percentage points (the "Interest Rate"); provided, however, that such interest
rate shall not be less than six percent (6%). Payment shall be made by Wire or
Cashier's or Certified Check made payable to "Data Systems Analysts, Inc." and
delivered to the undersigned counsel for DSA, or such bank
account as such counsel shall direct.
(b) Payment of Additional $250,000 on or before June 30, 2002
On or before June 30, 2002, Netplex shall pay in cash to DSA an
additional Two Hundred Fifty Thousand Dollars (US $250,000). Payment of the
additional $250,000 shall be made by Wire or Cashier's or Certified Check made
payable to "Data Systems Analysts, Inc." and delivered to the undersigned
counsel for DSA, or such bank account as such counsel shall direct.
(c) Payment of Additional $250,000 on or before December 31, 2002
On or before December 31, 2002, Netplex shall pay in cash to DSA
an additional Two Hundred Fifty Thousand Dollars (US $250,000). Payment of the
additional $250,000 shall be made by Wire or Cashier's or Certified Check made
payable to "Data Systems Analysts, Inc." and delivered to the undersigned
counsel for DSA, or such bank account as such counsel shall direct.
3. Acceleration of Payments
(a) Netplex represents, warrants, covenants and agrees that at
and upon the closing of any transaction involving any sale, transfer, pledge
or other disposition of all or any material amount of the assets of Netplex's
Systems Integration Business, currently based in Charlotte (the "SI Business"),
including, without limitation, the Rights Offering (hereinafter defined) (any ~
such transaction to be referred to herein as a "Sale of the SI Business"), the
payment schedule outlined in paragraph A.2 shall become immediately accelerated
and due and payable as described in paragraph A.3(b) hereof.
(b) Netplex has made DSA aware of Netplex's intention to issue a
rights offering to its existing shareholders (the "Rights Offering"), which will
enable these shareholders to purchase common stock in a new company that will be
named "Netplex Systems, Inc." (the "New Company") that will include, among other
assets, the SI Business. This Rights Offering is expected to be made as soon as
market conditions allow. With respect to any proceeds generated by the Rights
Offering or any other Sale of the SI Business, the parties agree as follows:
(i) Within twenty-four (24) hours of the receipt of the
proceeds of the Rights Offering or any other Sale of the SI Business into its
account, Netplex agrees to pay to DSA a sum equal to 50% of the cash proceeds,
less expenses and commissions in the event of the Rights Offering, excluding the
first One Million Dollars ($1,000,000) received by the New Company or Netplex,
as the case may be, up to a maximum cash payment to DSA of Seven Hundred
Thousand Dollars ($700,000). Payment of the amount referenced in this paragraph
shall be made by Wire or Cashier's or Certified Check made payable to "Data
Systems Analysts, Inc." and delivered to the undersigned counsel for DSA, or
such bank account as such counsel shall direct.
(ii) On or before Xxxxx 00, 0000, Xxxxxxx agrees to make a
further cash payment to DSA in the amount of the difference between the amount
received by DSA in accordance with paragraph A.3.(b)(i) hereof and Nine Hundred
Thousand Dollars ($900,000). On or before June 30, 2002 and December 31, 2002,
Netplex agrees to make the additional payments required in accordance with
paragraphs A.2(b) and A.2(c) hereof. Payment of the amount referenced in this
paragraph shall be made by Wire or Cashier's or Certified
Check made payable to "Data Systems Analysts, Inc." and delivered to the
undersigned counsel for DSA, or such bank account as such counsel shall direct.
(c) In the event that the Rights Offering is not completed or
fails to generate proceeds net of commissions and expenses of more than One
Million Dollars (US $1,000,000) or no other Sale of the SI Business occurs,
Netplex is bound to meet the payment schedule outlined in paragraph A.2 hereof.
4. Security Interest in Sale of SI Business
As a condition of this Agreement and Release, Netplex hereby grants to
DSA a security interest as follows:
(a) In the event that the Rights Offering is unsuccessful
pursuant to this paragraph A.4(a), Netplex and its affiliate, New Company,
individually, collectively and jointly and severally hereby grant to DSA a
security interest in and lien on all proceeds from the sale of the SI Business
which shall remain in effect throughout the period that Netplex's payment
obligations remain outstanding. For the purposes of this. Agreement and Release
and the Security Agreement, the Rights Offering shall be deemed "unsuccessful"
if any one of the following events occurs: (i) the Rights Offering is not
completed by 4:30 p.m. (Philadelphia, Pennsylvania time) on March 31, 2002; or
(ii) the Rights Offering for any reason does not generate proceeds net of
commissions and expenses of more than One Million Dollars ($1,000,000), and the
Rights Offering shall be deemed "successful" only if it is completed by 4:30
p.m. (Philadelphia, Pennsylvania time) on March 31, 2002 and generates proceeds
net of commissions and expenses of more than One Million Dollars ($1,000,000).
The security interest and lien on these proceeds shall be governed by the terms
and conditions set forth in the
Security Agreement attached hereto as Exhibit A and made a part hereof (the
"Security Agreement"), which the parties shall execute and deliver concurrently
with the execution and delivery of this Agreement and Release. Netplex hereby
represents, warrants, covenants and agrees that the Security Agreement duly
executed by Netplex and its affiliate, New Company, and the UCC-1 Financing
Statements, to be filed in connection therewith, will be sufficient to create in
favor of DSA a valid perfected security interest in the proceeds of sale of the
SI Business securing Netplex's repayment Obligations. Netplex further
represents, warrants, covenants and agrees that the security interest and lien
granted to DSA in this Agreement and Release will be a first priority security
interest, subject only to a prior security interest in favor of American
Commercial Finance Corporation ("ACFC"), pursuant to that certain Commercial
Revolving Loan, Demand Loan and Security Agreement dated as of April 27,2001, by
and between New Company and ACFC (the "ACFC Credit Facility"), securing
indebtedness (or successor lender indebtedness) not exceeding $3,000,000 as of
the date hereof, and a prior security interest granted by Netplex in favor of
Waterside Capital Corporation (or its successor) ("Waterside") not exceeding
$1,054,697.45, and a prior security interest granted by New Company in favor of
Waterside not exceeding $400,000, and any employment wages earned as of the date
hereof. Notwithstanding the foregoing, the security interest granted herein by
the New Company to DSA shall only become effective as to the New Company in the
event the Rights Offering is deemed unsuccessful pursuant to this paragraph
A.4(a).
(b) In the event that the Rights Offering is deemed successful
pursuant to paragraph A.4(a) hereof, Netplex agrees to deposit in escrow for the
benefit of DSA, pursuant to an Escrow Agreement with an independent third party
Escrow Agent in the form of Exhibit B attached hereto and made a part hereof,
within twenty-four (24) hours of the receipt of
the proceeds of the Rights Offering into Netplex's account, either, or a
combination of, the following, at Netplex's election:
(i) a cash amount equal to 100% of the total remaining
balance at that time due and owing to DSA (i.e., $1,400,000 less the amount paid
to DSA within twenty-four (24) hours of the receipt of the proceeds of the
Rights Offering into Netplex's account pursuant to paragraph A.3(b)(i) hereof)
or
(ii) certificate(s) representing duly authorized, validly
issued, fully paid and nonassessable shares of stock in the New Company with a
total market value equal to 110% of the total remaining balance at that time due
and owing to DSA, which certificates have been registered in the name of the
Lender or indorsed in the name of the Lender or in blank by an effective
indorsement (i.e., $1,400,000 less the amount paid to DSA within twenty-four
(24) hours of the receipt of the proceeds of the Rights Offering into Netplex's
account pursuant to paragraph A.3(b)(i) hereof multiplied by a factor of
110%)(the "New Company Stock").
(c) In the event that, pursuant to the paragraph A.4(b)(ii),
Netplex chooses to deposit some of the amount of the New Company Stock into
escrow as DSA's security, the parties agree to perform a quarterly revaluation
of the market value of the New Company Stock in escrow.
(i) For purposes of this Agreement and Release, "market
value" of the New Company Stock will be defined as the average of the closing
prices of the New Company Stock on the national market system in which it trades
for the last twenty (20) days of any quarter. If the New Company Stock is not
listed or traded on a national market system for the last four (4) days of any
quarter, then the market value will be
determined by an investment banker selected by the parties. If the parties
cannot agree on an investment banker, then each party will select one investment
banker, and these two investment bankers will together choose a third investment
banker who will determine the market value of the New Company Stock. The parties
hereto agree that each party shall bear all costs associated with the investment
banker selected by such party, and, if necessary, the parties shall also share
equally the cost of the third investment banker selected by the parties'
respective investment bankers, for the determination of the market value of the
New Company Stock pursuant to this paragraph A.4(b)(i).
(ii) If the market value of the New Company Stock decreases,
Netplex must add additional shares of the New Company Stock to the escrow
account so that the value of the New Company Stock plus any cash in DSA's escrow
account will begin each calendar quarter with a total market value equal to 110%
of the total remaining balance at that time due and owing to DSA. If the market
price of the New Company Stock increases, Netplex may remove shares of the New
Company Stock from the escrow account, but in no event may Netplex begin a
calendar quarter with the total value of the New Company Stock plus any cash in
DSA's escrow account being valued at less than 110% of the total remaining
balance at that time due and owing to DSA.
5. Assignment of Interest in Lawsuit Asserted Against Xxxxx Xxxxxxx
and/or law firm Xxxxxx Gundner Frome Xxxxxxxxxx & Xxxxxxx LLP
Netplex agrees to assign to DSA a one-half interest in the net proceeds of
any lawsuit asserted against Netplex's former counsel (the "Lawsuit"), Xxxxx
Xxxxxxx and/or his law firm Xxxxxx Gundner Frome Xxxxxxxxxx & Wolosky LLP
(collectively, the "Xxxxxx firm"), which
Netplex and DSA further agree shall be undertaken on a contingent fee basis. Net
proceeds shall be determined by deducting from gross proceeds all of the
following: (i) all receivable attorneys fees; (ii) the Lawsuit Cost and Expenses
(hereinafter defined); and (iii) and other fees, costs and expenses incurred as
a result of undertaking legal action whether expended as cash outlays or as time
spent by the individuals listed in this paragraph 5 (the "Net Proceeds"). The
expenses of such a lawsuit, including, but not limited to, consultant and expert
witness fees and reasonable and justified time spent by management of DSA, and
Xxxx Xxxxx on behalf of Netplex, will be deducted from the proceeds before any
net is distributed. Netplex and DSA hereby agree that any out-of-pocket costs
and expenses of the litigation (the "Lawsuit Costs and Expenses") shall be borne
by DSA but shall be repaid at a rate of $2 for every $1 expended by DSA as soon
as there is any recovery; provided, however, that the Lawsuit Costs and Expenses
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to be repaid to DSA from any recovery shall not include any attorneys fees
incurred by DSA in connection with the Lawsuit other than the fees of attorneys
who DSA retains solely for the purpose of rendering an expert opinion or giving
expert testimony in the Lawsuit. DSA management and Xxxx Xxxxx will be billed at
the following hourly rate:
Xxxx Xxxxxx: $275/hour
Xxxxx Xxxxxxx: $275/hour
Xxxx XxXxxx: $275/hour
Xxxx Xxxxx: $275/hour
Notwithstanding these rates, the parties agree that in no event will
DSA's claims for hourly reimbursement exceed two times that of Netplex's claim.
The parties agree that DSA will take the lead in the prosecution of such a
lawsuit and may retain such counsel as DSA selects. The parties further agree
that Xxxx Xxxxx and Netplex, as well as any successors and assigns,
will cooperate fully and participate as parties as deemed necessary by DSA in
its sole discretion. DSA agrees to send a demand letter to the Xxxxxx firm
within 45 days of the signing of this Agreement and Release, and further agrees
that it will commence the legal action within 180 days of the signing of this
Agreement and Release; otherwise the foregoing assignment shall be null and
void.
Notwithstanding the foregoing, Netplex shall receive no less than
forty percent (40%) of the Gross Proceeds less only reasonable attorneys' fees.
B. CONDITIONS PRECEDENT
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1. Conditions to Effectiveness.
The effectiveness of Agreement and Release is subject to the
satisfaction of the following conditions precedent:
(a) Settlement Documents. DSA shall have
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received, executed and delivered by a duly authorized officer of Netplex, the
following documents: (i) this Agreement and Release, (ii) the Security
Agreement, (iii) the Escrow Agreement, and (iv) such other documents as may be
reasonably required by DSA (referred to herein collectively as the "Settlement
Documents").
(b) Certifications. DSA shall also have received
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the following documents: (i) a Certification of Authority executed by the
Assistant Secretary of Netplex, dated as of the date hereof, certifying the
incumbency and signature of the officers of Netplex executing this Agreement and
Release and all other documents to be delivered by them pursuant hereto,
together with evidence of the incumbency of such Secretary and corporate
resolutions of Netplex, certified by the secretary, authorizing and approving
the Agreement and Release and
the other Settlement Documents; (ii) a certificate of the Secretary of State of
the State under the laws of which Netplex, New Company and TDS are respectively
organized, dated as of a date within 30 days of the date hereof, verifying that
each of Netplex, New Company and TDS are duly organized, validly existing and
subsisting, and in good standing under the laws of such State; (iii) a written
representation and warranty from Netplex that neither Netplex, New Company nor
TDS are currently in default on any tax obligation to any federal, state, or
local government, or on any other lease or other obligation.
C. EVENTS OF DEFAULT
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The occurrence of any one or more of the following shall constitute an
"Event of Default" hereunder, if, after being given written notice from DSA and
a subsequent fifteen (15) calendar day grace period, Netplex fails to cure the
event described below:
1. Netplex's Failure to Pay.
Netplex shall fail to pay any amount when due under this
Agreement and Release, whether upon stated maturity, acceleration, or otherwise.
2. Breach of Covenants or Conditions.
Netplex shall fail to perform or observe any other covenant,
term, agreement or condition in this Agreement and Release (other than those
described in paragraph C.1 hereof) or the Security Agreement or is in violation
of or non-compliance with any provision of this Agreement and Release or any
other Settlement Document after the expiration of any cure period, if any, set
forth herein or therein.
3. Defaults in Other Material Agreements.
There shall occur any default under, or as defined in, any
other material
agreement applicable to Netplex or by which Netplex is bound, including, without
limitation, the ACFC Credit Facility, which shall not be remedied within the
period of time (if any) within which such other agreement permits such default
to be remedied, unless such default is waived by the other party thereto or
excused as a matter of law. Netplex hereby agrees to notify DSA in writing
within five (5) calendar days of it learning of the occurrence of any of the
events described in this paragraph.
4. Agreements Invalid.
The validity, binding nature of, or enforceability of any
material term or provision of any of the Settlement Documents is disputed by, on
behalf of, or in the right or name of Netplex or any material term or provision
of any such Settlement Document is found or declared to be invalid, avoidable,
or non-enforceable by any court of competent jurisdiction. Netplex hereby agrees
to notify DSA in writing within five (5) calendar days of it learning of the
occurrence of any of the events described in this paragraph.
5. False Warranties; Breach of Representations.
Except as otherwise disclosed to DSA in writing prior to the
date hereof, any warranty or representation made by Netplex in this Agreement
and Release or any other Settlement Document or in any certificate or other
writing delivered under or pursuant to this Agreement and Release or any other
Settlement Document, or in connection with any provision
of this Agreement and Release or related to the transactions contemplated hereby
shall prove to have been false or breached in any material respect. Netplex
hereby agrees to notify DSA in writing within five (5) calendar days of it
learning of the occurrence of any of the events described in this paragraph.
6. Bankruptcy.
(a) Netplex, and/or any one or more of its
subsidiaries, commences any
bankruptcy, reorganization, debt arrangement, receivership, or other case or
proceeding under any bankruptcy, insolvency or receivership law, or any
dissolution or liquidation proceeding.
(b) Any bankruptcy, reorganization, debt
arrangement, receivership, or other case or proceeding under any bankruptcy,
insolvency or receivership law, or any dissolution or liquidation proceeding, is
involuntarily commenced against or in respect of Netplex, and/or any one or more
of its subsidiaries, or an order for relief is entered in any such proceeding
and such case or proceeding is not fully and finally dismissed within thirty
(30) days.
(c) A trustee, receiver, or other custodian is
appointed for Netplex, and/or any one or more of its subsidiaries, or a
substantial part of any of its or their assets.
(d) Netplex hereby agrees to notify DSA in
writing within five (5) calendar days of it learning of the occurrence of any of
the events described in this "Bankruptcy" section.
7. Failure to Pay Taxes.
Netplex shall fail to pay when due any tax, assessment or
other governmental charge as and when due (after any protest that might be made
to) to the appropriate governmental entity. Netplex hereby agrees to notify DSA
in writing within five (5) calendar days of it learning of the occurrence of any
of the events described in this paragraph
8. Event of Default Under Other Settlement Documents.
Any default or Event of Default shall occur under any of the
Settlement Documents. Netplex hereby agrees to notify DSA in writing within five
(5) calendar days of it learning of the occurrence of any of the events
described in this paragraph.
D. ACCELERATION CLAUSE
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1. Upon the occurrence of an Event of Default described
in Section C hereof, the Obligations of Netplex hereunder shall be accelerated
and shall become immediately due and payable, and
Netplex shall be immediately liable to pay to DSA the amount of any remaining
Obligations, plus a penalty of fifteen percent (15%) added to the sum due on the
date such Event of Default, plus the amount of DSA's counsel fees, costs,
damages and any other expenses incurred in enforcing the terms of this Agreement
and Release; upon the occurrence of an Event of Default, DSA may foreclose upon
its security interest in the collateral in order to recover the payments due.
2. No acceleration of the Obligations of Netplex in the
previous paragraph shall become due until DSA has given Netplex written notice
of an Event of Default and Netplex has been given fifteen (15) calendar days to
cure any such Default.
E. REMEDIES
Upon the occurrence of an Event of Default and at any time thereafter,
DSA shall have and may exercise any or all of the remedies provided for herein
and/or in any other Settlement Document or under applicable law.
F. CONFESSION OF JUDGEMENT
In order to ensure the prompt and timely payment of all monies due and
owing to DSA, as well as effective and prompt transfer of interests described
herein, the parties hereby agree that Netplex shall sign a Confession of
Judgment in the amount of One Million Four Hundred Thousand Dollars
(US$1,400,000) less any payments actually received by DSA from Netplex at the
time of the execution of the Confession of Judgment, plus a fifteen (15%)
percent penalty added to the sum due on the date such Event of Default, plus the
amount of DSA's counsel fees, costs, damages and any other expenses incurred in
enforcing the terms of this Agreement and Release. The parties agree that this
Confession of Judgment shall be held by DSA and shall not be filed with any
Court unless and until Netplex fails to perform any of its obligations as set
forth in this Agreement and Release, and that it shall be returned to Netplex
upon the satisfaction of all of its obligations under this Agreement and
Release. A copy of the Confession of Judgment is annexed hereto as
Exhibit "C".
NETPLEX IS FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND HEARING ON THE VALIDITY
OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY DSA BEFORE JUDGMENT CAN BE
ENTERED AND BEFORE ASSETS OF NETPLEX CAN BE GARNISHED AND ATTACHED; AND NETPLEX
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THESE RIGHTS AND
EXPRESSLY AGREES AND CONSENTS TO DSA, UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT, OR AT ANY TIME THEREAFTER, ENTERING JUDGMENT AGAINST NETPLEX BY
CONFESSION AND ATTACHING AND GARNISHING THE BANK ACCOUNTS AND OTHER ASSETS OF
NETPLEX, WITHOUT PRIOR NOTICE OR OPPORTUNITY FOR A HEARING.
NETPLEX ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF LEGAL COUNSEL OF ITS
CHOICE IN THE NEGOTIATION, DOCUMENTATION, REVIEW AND EXECUTION OF THIS AGREEMENT
AND RELEASE AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE
FOREGOING PROVISIONS CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED
TO NETPLEX BY SUCH LEGAL COUNSEL.
G. RELEASE OF CLAIMS
-----------------
Effective upon receipt of an original of this Agreement and Release
executed by Netplex, execution of the Joint Dismissal with Prejudice by a Judge
of the United States District Court for the District of New Jersey, and receipt
by DSA's attorneys of the transfer of interest described in paragraph A. 1, the
parties, on behalf of themselves and its officers, directors, shareholders,
employees, agents, administrators, successors and assigns, agree to
unconditionally and irrevocably mutually release, discharge, acquit, and forgive
each other from any and all actions, causes of action, suits, debts,
liabilities, contracts, obligations, controversies, judgments, executions,
claims, losses, costs and demands both in law and in equity which the parties
have against each other, known or unknown arising prior to the date hereof.
H. FILING OF STIPULATION TO ENTRY OF JOINT DISMISSAL
-------------------------------------------------
Upon execution of this Agreement and Release and the Stipulation to
Entry of Joint Dismissal by DSA and Netplex, the attorneys representing DSA
shall proceed to file in the United States District Court for the District of
New Jersey the following: (1) the Stipulation To A Joint Dismissal with
Prejudice, and (2) Joint Dismissal with Prejudice, which are both attached
hereto as Exhibit "D". The Stipulation and Joint
Dismissal are incorporated by reference herein.
I. NO ADMISSION OF LIABILITY
-------------------------
This Agreement and Release is a compromise of disputed claims and
shall not constitute or be asserted as constituting any admission of liability
or wrongdoing by any party to this Agreement and Release. The parties expressly
deny any such liability or wrongdoing on their parts. It is their wish simply to
settle their dispute.
J. BINDING ON SUCCESSORS
---------------------
This Agreement and Release is binding on, and inures to the benefit
of, the parties and their administrators, successors, assigns, officers, agents,
servants and employees.
K. ATTORNEYS' FEES
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In the event of any lawsuit arising out of this Agreement and Release,
the prevailing party shall be entitled to an award of attorneys' fees and costs
of litigation in addition to any other relief awarded.
L. INTEGRATED AGREEMENT
--------------------
This Agreement and Release, the Security Agreement and the Escrow
Agreement, together with all of the Exhibits hereto and thereto and all other
Settlement Documents, constitute the complete and integrated expression of the
world-wide settlement between the parties. No prior or contemporaneous agreement
exist relating to the subject matter of this Agreement and Release that are not
incorporated into this Agreement and Release.
M. MODIFICATION
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This Agreement and Release may only be modified by a writing signed by
both of the parties hereto.
N. SEVERABILITY
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In the event any term of this Agreement and Release is declared void
or unenforceable by a court, the remaining terms shall remain binding with the
same effect as though the void or unenforceable part had been severed or
deleted.
O. GOVERNING LAW AND VENUE
-----------------------
This Agreement and Release shall be governed by the laws of the State
of New Jersey. Unless both parties agree otherwise, any action arising out of
this Agreement and Release shall be venued in the United States District Court
for the District of New Jersey.
P. WAIVER
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Waiver of any term of this Agreement and Release shall not constitute
a waiver of any other term.
Q. REPRESENTATION BY COUNSEL
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DSA and Netplex each acknowledge that it is fully represented by and
is acting upon the advice of counsel of its choice in entering into this
Agreement and Release. Each party represents that it has been advised of the
effect of this Agreement and Release by its attorney, has investigated the facts
considered necessary, and is not relying on any representation or
acknowledgment, whether orally or in writing, of any other party hereto except
as contained herein.
R. AUTHORITY TO EXECUTE
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DSA and Netplex each acknowledge that the person executing this
Agreement and Release on its behalf has been duly authorized to do so and has
the authority to bind it to this Agreement and Release.
S. EXECUTION IN COUNTERPART
------------------------
This Agreement and Release may be executed by counterpart copies and
receipt by facsimile transmission of executed copies shall be legally binding.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties have executed and delivered, or caused to be executed and delivered,
this Settlement Agreement and Release as of the date first above written.
Data Systems Analysts, Inc.
By:
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Xxxxxxx Xxxxxx, President & CEO
The Netplex Group, Inc.
Technology Development Systems, Inc.
By:
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Xxxx Xxxxx, President & CEO
APPROVED AS TO FORM AND CONTENT:
Dated: 12/28/01
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DUANE, MORRIS & HECKSCHER LLP
By:
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Xxxxxxx X. Xxxxxx
Attorneys for
Data Systems Analysts, Inc.
APPROVED AS TO FORM AND CONTENT:
Dated:
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XXXX XXXXX, LLP
By:
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Attorney for
The Netplex Group, Inc. and
Technology Development Systems, Inc.
APPROVED:
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X. Xxxxxxxx
EXHIBIT "A"
Security Agreement
See attached.
EXHIBIT "B"
Escrow Agreement
See attached.
EXHIBIT "C"
Confession of Judgment
See attached
EXHIBIT "D"
Stipulation To Joint Dismissal With Prejudice
See attached.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
DATA SYSTEMS ANALYSTS, INC.
Plaintiff CIVIL ACTION NO.
97_4562 (JBS)
v.
THE NETPLEX GROUP, INC., ET AL.
Defendants
STIPULATION TO JOINT DISMISSAL WITH PREJUDICE
Plaintiff Data Systems Analysts ("DSA") and Defendants have agreed to
settle the claims between them in accordance with the enclosed Joint Dismissal
with Prejudice.
The undersigned counsel hereby stipulate to the entry of this Joint
Dismissal with Prejudice on behalf of DSA and Defendants.
Dated: 12/28/01 By:
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Xxxxxxx X. Xxxxxx
Xxxxx, Xxxxxx & Heckscher LLP
Attorneys for
Data Systems Analysts, Inc.
Dated: 12/28/01 By:
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Xxxxxxx X. Xxxxxxx
Xxxx Xxxxx,.LIP
Attorneys for
The Netplex Group, Inc. and
Technology Development Systems, Inc.
SECURITY AGREEMENT
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This SECURITY AGREEMENT (the "Agreement") is made and entered into
as of this 28th day of December 2001, by and between THE NETPLEX GROUP, INC.
("NETPLEX") and NETPLEX SYSTEMS, INC. ("SYSTEMS") (NETPLEX and SYSTEMS shall be
referred to herein individually, collectively and jointly and severally as the
"Borrower"), and DATA SYSTEMS ANALYSTS, INC.,. a Delaware corporation (the
"Secured Party").
BACKGROUND
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A. NETPLEX and the Secured Party have executed a Settlement
Agreement and Release of even date herewith (the "Settlement Agreement").
B. SYSTEMS was organized or caused to be organized by NETPLEX,
and, pursuant to the Rights Offering (as defined in the Settlement Agreement),
NETPLEX made available to its shareholders the right to buy shares of common
stock in SYSTEMS.
C. In connection with the Rights Offering and the organization of
SYSTEMS, NETPLEX transferred, or will soon transfer, certain of its assets to
SYSTEMS.
D. The Secured Party is willing to grant the extensions of credit,
or make the financial accommodations, contemplated by the Settlement Agreement
only on the condition that the both NETPLEX and SYSTEMS execute and deliver this
Security Agreement to the Secured Party, provided, however, that this Security
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Agreement: (i) is effective against NETPLEX immediately upon execution
regardless of the outcome of the Rights Offering; and (ii) shall also become
effective against SYSTEMS only if the Rights Offering is deemed unsuccessful,
pursuant to paragraph A.4(a) of the Settlement Agreement, upon the occurrence of
any one of the following events: (i) the Rights Offering is not completed by
4:30 p.m. (Philadelphia, Pennsylvania time) on March 31, 2002; or (ii) the
Rights Offering for any reason does not generate proceeds net of commissions and
expenses of more than One Million Dollars($1,000,000).
E. Capitalized terms contained in Section 1 of this Agreement and
used hereinafter shall have the meanings ascribed to them in the revised Article
9 of the Uniform Commercial Code in the form approved by the State of New Jersey
in July 2001 and codified at N.J. Rev. Stat.ss.l2A:1-101 et seq. (the "UCC"),
unless the context hereof requires otherwise. Other capitalized terms which are
used herein without definition shall have the meanings ascribed to them in the
Settlement Agreement.
NOW, THEREFORE, incorporating the aforementioned Background herein
by reference, and intending to be legally bound hereby, the Borrower and the
Secured Party hereby agree as follows:
Section 1. Creation of Security Interest. The Borrower hereby
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grants to the Secured Party a lien and security interest in and to the property
hereinafter described, whether now owned or hereafter acquired or arising and
wherever located (the "Collateral"):
(a) All Proceeds (as defined in the Settlement Agreement) from the
sale of the SI Business (or the portion that is fairly
apportioned to the proceeds of the SI Business if the SI
Business is sold as a component part of any sale), which lien
and security interest shall remain in effect throughout the
period that NETPLEX's payment obligations remain outstanding
under the Settlement Agreement. The term "proceeds from the
sale of the SI Business" as used herein
and in the Settlement Agreement shall be defined broadly to
include without limitation all tangible or intangible property
received or receivable by the Borrower in connection with any
sale, lease, or other disposition of the SI Business, whether
by sale, merger, consolidation or other type of corporate
reorganization or recapitalization, including, without
limitation, all such property received or receivable by the
Borrower from the sale of the SI Business that constitutes, or
shall constitute in the Borrower's possession, Deposit
Accounts, Documents, General Intangibles (including Payment
Intangibles), Goods (including without limitation Equipment,
Inventory, Fixtures and Accessions), Instruments (including
Promissory Notes), Investment Property and all Proceeds of the
aforementioned Collateral.
(b) Notwithstanding the foregoing section 1(a) of this Security
Agreement, the provisions of this Security Agreement, which are
binding upon SYSTEMS, and the lien and security interest in the
Collateral granted by SYSTEMS, shall not become effective
unless and until the occurrence of either of the following
conditions precedent: (i) the Rights Offering is not completed
by 4:30 p.m. (Philadelphia, Pennsylvania time) on March 31,
2002; or (ii) the Rights Offering for any reason does not
generate proceeds net of commissions and expenses of more than
One Million Dollars ($1,000,000). Upon the occurrence of either
of the conditions precedent described in subsection 1 (b)(i)
and l(b)(ii) hereof: (x) the provisions of this Security
Agreement, and the lien and security interest in the
Collateral granted by SYSTEMS, shall become immediately
effective with no further action required by the Lender or any
Borrower; and (y) the Lender may immediately file UCC-1
Financing Statements in the appropriate filing offices, as the
Lender in its sole discretion shall determine, to perfect the
security interest granted herein to the Lender by SYSTEMS.
(c) The Lender hereby covenants and agrees that it shall not file
any UCC-1 Financing Statements to perfect the security interest
in and to the assets of SYSTEMS granted to the Lender herein
unless and until the occurrence of either of the conditions
precedent described in subsection 1 (b)(i) and 1 (b)(ii)
hereof. The Lender is authorized to file UCC-1 Financing
Statements to perfect the `security interest in and to the
Collateral provided by NETPLEX immediately upon execution of
this Agreement.
Section 2. Secured Obligations. The security interest created
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herein is given as security for the prompt payment, performance, satisfaction
and discharge of the following obligations (the "Obligations") of the Borrower:
(a) to pay the principal, interest, fees, costs, and any other liabilities of
the Borrower to the Secured Party under the Settlement Agreement and the other
Settlement Documents in accordance with the terms thereof, and (b) to satisfy
all of the other liabilities of the Borrower to the Secured Party, whether
hereunder or otherwise, whether now existing or hereafter incurred, whether or
not evidenced by any note or other instrument, matured or unmatured, direct,
absolute or contingent, joint or several, including any extensions,
modifications, renewals thereof and substitutions therefor.
Section 3. Covenants and Agreements of the Borrower.
3.01 Notice of the Secured Party's Interests. If
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requested by the Secured Party, the Borrower shall give notice of the Secured
Party's security interests in the Collateral to any third person with whom the
Borrower has any actual or prospective contractual relationship or other
business dealings.
3.02 Existence. Each of the Borrowers shall preserve its
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existence and not merge into or consolidate with any other entity, or sell all
or substantially all of its assets, and shall not change the state of its
organization, its name, place of business or chief executive office without
obtaining the prior written
consent of the Secured Party.
3.03 Perfection of Secured Party's Interests.
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(a) The Borrower agrees to cooperate and join, at its
expense, with the Secured Party in taking such steps as are necessary, in the
Secured Party's judgment, to perfect or continue the perfected status of the
security interests granted hereunder, including, without limitation, the
execution and delivery of any financing statements, amendments thereto and
continuation and any other instruments requested by the Secured Party to perfect
its security interest in any and all of the Collateral.
(b) Subject to Section 1(b) above the Secured Party
may at any time and from time to time, file financing statements, continuation
statements and amendments thereto in Order to perfect and maintain the
perfection of the security interest granted in the Collateral. The Borrower
agrees to furnish any such information to the Secured Party reasonably needed
for filing such financing statements promptly upon request. Any such financing
statements, continuation statements or amendments may be signed by the Secured
Party on behalf of the Borrower, and may be filed at any time in any
jurisdiction whether or not Revised Article 9 is then in effect in that
jurisdiction.
3.04 Notification of Adverse Change in Collateral. The
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Borrower agrees immediately to notify the Secured Party if any event occurs or
is discovered which would cause a any material diminution in the value of any
significant item or type of Collateral.
3.05 Reimbursement and Indemnification. The Borrower
---------------------------------
agrees to reimburse the Secured Party on demand for out-of-pocket expenses
incurred in connection with the Secured Party's ex-ercise of its rights under
this Security Agreement. The Borrower agrees to indemnify the Secured Party and
hold it harmless against any costs, expenses, losses, damages and liabilities
(including reasonable attorney's fees and court costs) incurred in connection
with this Security Agreement, other than as a direct result of the Secured
Party's gross negligence or willful misconduct.
Section 4. Power of Attorney. The Borrower hereby appoints the
-----------------
Secured Party as its lawful attorney-in-fact to do, at the Secured Party's
option, and at the Borrower's expense and liability, all acts and things which
the Secured Party may deem necessary or desirable to effectuate its rights under
this Security Agreement, including without limitation, file financing statements
and otherwise perfect any security interest granted hereby.
Section 5. Event of Default. The occurrence of an Event of Default
----------------
under the Settlement Agreement or any of the other Settlement Documents shall
also be an Event of Default under this Agreement.
Section 6. Secured Party's Rights Upon Default. Upon the occurrence
-----------------------------------
of a Default hereunder, or at any time thereafter, the Secured Party may
immediately and without notice pursue any remedy available at law or in equity
(including all rights available under the UCC or other applicable state law) to
collect, enforce or satisfy any Obligations.
Section 7. Notices. Every notice and communication under this
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Security Agreement shall be in writing and shall be given in accordance with the
notice provision contained in the Settlement Agreement.
Section 8. Miscellaneous.
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8.01 No Waiver. No delay or omission by the Secured
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Party in exercising any right or remedy hereunder shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any further exercise thereof or the exercise of any other
right or remedy.
8.02 Successors. The provisions of this Security
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Agreement shall inure to the benefit of and be binding upon the Secured Party
and the Borrower and their respective successors and assigns, provided that the
Borrower's obligations hereunder may not be assigned without the written consent
of the Secured Party.
8.03 Amendments. No modification, rescission, waiver,
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release or amendment of any provisions of this Security Agreement shall be
effective unless set forth in a written agreement signed by each Borrower and an
authorized officer of the Secured Party.
8.04 Governing Law. This Security Agreement shall be
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construed under the internal laws of the State of New Jersey without reference
to conflict of laws principles.
8.05 Severability. In the event any term of this
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Security Agreement is declared void and unenforceable by a court, the remaining
terms shall remain binding with the same effect as though the void or
unenforceable part had been severed or deleted.
8.06 Judicial Proceedings. Unless each Borrower and the
---------------------
Secured Party otherwise agree in writing, any action arising out of this
Security Agreement shall be tried only by a court and not by a jury, and shall
be venued in the United States District Court for the District of New Jersey or,
at the option of the Secured Party, in any other jurisdiction where any Borrower
or part of the Collateral may be found. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. Further, each party waives any right it may have to claim or
recover, in any such suit, action or proceeding, any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages.
THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND
MATERIAL ASPECT OF THIS SECURITY AGREEMENT AND THAT THE SECURED PARTY WOULD NOT
EXTEND CREDIT TO THE BORROWER IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE
NOT A PART OF THIS SECURITY AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed and delivered by their authorized officers the day and
year first above written.
Attest: THE NETPLEX GROUP, INC.
By:
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Title:
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NETPLEX SYSTEMS, INC.
By:
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Title:
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DATA SYSTEMS ANALYSTS, INC.
By:
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Title:
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WARRANTY OF ATTORNEY TO CONFESS JUDGEMENT
-----------------------------------------
This Warrant of Attorney to Confess Judgment ("Warrant") is made and
entered into as of this 27th day of December 2001, by and among Netplex Group,
Inc., and Technology Development Systems, Inc. (collectively, the "Netplex"),
and Data Systems Analysts, Inc. (collectively, the "DSA").
BACKGROUND
----------
A. DSA and Netplex are parties to a Settlement and Release Agreement
dated as of December 20, 2001, pursuant to which DSA has extended credit or made
financial accommodations to Netplex (the "Settlement Agreement"), and other
Settlement Documents (as defined in the Settlement Agreement).
B. As a condition to entering into the Settlement Agreement and the
other Settlement Documents and extending credit and making financial
accommodations to Netplex, DSA has required that Netplex shall execute and
deliver this Warrant to DSA.
C. Capitalized terms which are used herein without definition shall
have the meanings ascribed to them in the Settlement Agreement and the other
Settlement Documents. Other terms used herein without definition that are
defined in the New Jersey Uniform Commercial Code shall have the meanings
ascribed to them therein, unless the context otherwise requires.
NOW, THEREFORE, for valuable consideration the receipt of which is
hereby acknowledged and intending to be legally bound, Netplex and DSA hereby
agree as follows:
1. Remedies Upon Default. Upon the occurrence of any one or more
---------------------
Events of Default, DSA may proceed to protect and enforce its rights under this
Warrant and the Settlement Agreement or any of the Settlement Documents by
exercising such remedies as are available to DSA in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any provision contained in this Warrant or the
Settlement Agreement or any of the Settlement Documents or in aid of the
exercise of any power granted in this Warrant or in the Settlement Agreement or
Settlement Document. NETPLEX HEREBY WAWES, TO THE EXTENT, THE SAME MAY BE WA WED
UNDER APPLICABLE LAW ALL CLAIMS, CAUSES OF ACTION, DEFENSES, RIGHTS OF
REDEMPTION, PRESENTMENT AND DEMAND FOR PAYMENT AND RIGHTS OF NETPLEX AGAINST DSA
ON ACCOUNT OF ACTIONS TAKEN OR NOT TAKEN BY DSA IN THE EXERCISE OF DSA'S RIGHTS
OR REMEDIES UNDER THE SETTLEMENT AGREEMENT AND THE SETTLEMENT DOCUMENTS ATTACHED
THERETO OR UNDER APPLICABLE LAW. EXCEPT FOR WILLFUL MISCONDUCT.
2. Confession of Judgment. NETPLEX HEREBY IRREVOCABLY AUTHORIZES AND
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EMPOWERS ANY ATTORNEY OR THE CLERK OF ANYCOURT iN THE STATE OF NEW JERSEY, OR
ELSEWHERE, TO APPEAR AT ANY TIME FOR NETPLEX IN ANY ACTION BROUGHT AGAINST
NETPLEX ON THE SETTLEMENT AGREEMENT AT THE SUIT OF DSA WITH OR WITHOUT
DECLARATION FILED, AS OF ANY TERM, AND THEREIN TO CONFESS OR ENTER JUDGMENT
AGAINST NETPLEX FOR THE ENTIRE UNPAID PRINCIPAL AND ALL OTHER SUMS PAYABLE BY
NETPLEX TO DSA UNDER THE SETTLEMENT AGREEMENT, AND ALL ARREARAGES OF INTEREST
THEREON, TOGETHER WITH COSTS OF SUIT AND ACTUAL COLLECTION FEES (INCLUDING
REASONABLE ATTORNEYS' FEES) AND FOR SO DOING, THIS AUTHORITY TO CONFESS JUDGMENT
OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
NETPLEX ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF LEGAL COUNSEL IN
THE REVIEW AND EXECUTION OF THIS WARRANT AND FURTHER ACKNOWLEDGES THAT THE
MEANING AND EFFECT OF THE FOREGOING PROVISIONS CONCERNING CONFESSION OF JUDGMENT
HAVE BEEN FULLY EXPLAINED TO NETPLEX BY SUCH COUNSEL.
The authority granted herein to confess judgment shall not be exhausted
by any exercise thereof but shall continue from time to time and at all times
until payment in full of all the amounts due hereunder.
3. Governing Law. This Warrant of Attorney to Confess Judgment
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shall be construed in accordance with and governed by the internal laws of the
State of New Jersey.
IN WITNESS WHEREOF, the undersigned has hereunto caused these presents
be executed and its corporate seal affixed hereto this 27th day of December,
2001.
ATTEST/WITNESS: NETPLEX GROUP, INC.
By: (SEAL)
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Xxxx Xxxxx, President & CEO
DATA SYSTEMS ANALYSTS, INC.
By: (SEAL)
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Xxxxxxx Xxxxxx, President & CEO
