PAYMENT AND RELEASE AGREEMENT
This PAYMENT AND RELEASE AGREEMENT ("Agreement") is made and
entered into this 1st day of February, 2002, by and among Pension
Benefit Guaranty Corporation (hereinafter "PBGC"), a United
States Government agency, through Pacholder Associates, Inc.,
("Pacholder") its agent, an Ohio corporation, and AMASYS
Corporation, a Delaware corporation (hereinafter "AMASYS").
RECITALS
R-1. In case number 91 B 10970 (FGC) in the United States
Bankruptcy Court for the Southern District of New York,
Infotechnology, Inc., a Delaware corporation ("Infotech"),
proposed a plan of reorganization (the "Plan"), which was
confirmed on June 21, 1994;
R-2. Pursuant to the Plan, Infotech transferred and assigned
to AMASYS a substantial portion of the assets of Infotech, and
certain obligations and liabilities of Infotech.
R-3. Included in the liabilities assumed by AMASYS are (i) a
memorandum of agreement with the PBGC, effective as of December
17, 1996 (the "Amended Term Sheet") and (ii) a Note issued
pursuant to the Plan in the principal amount of $1,500,000, dated
June 21, 1996, made by Infotech and payable to PBGC.
R-4. Pursuant to the Amended Term Sheet, PBGC received,
and is the beneficial owner of, 196,000 shares of Series A
Preferred stock in AMASYS, convertible into 1,960,000 common
shares, currently held by PBGC. These PBGC Shares, on an as-
converted, fully diluted basis, equate to 38.3% of the issued and
outstanding shares of AMASYS, as calculated by AMASYS'
independent certified public accountants.
R-5 The Board of Directors of AMASYS has determined that it
is in the best interest of AMASYS to enter into this Agreement,
and to consummate the transactions contemplated hereby, and that
the consideration to be paid for the satisfaction of the Note is
fair consideration.
R-6 PBGC and AMASYS desire fully and finally to resolve and
settle all claims and interests that PBGC has, or may have,
arising from or in any way related to the Note and the Amended
Term Sheet and the Plan, as they relate to the Note.
NOW, THEREFORE, IN CONSIDERATION of the payments to PBGC
provided for by this Agreement, and other good and valuable
consideration and the mutual promises and covenants contained
herein, the receipt and sufficiency of which the parties
acknowledge, the parties do hereby agree as follows:
1. DEFINITIONS
1.1 "Amended Term Sheet" has the meaning set out in R-
3.
1.2 "Claims" means any and all manner of claims,
demands, actions, causes of action, suits, damages,
liabilities, claims for injunctive relief, judgments, debts,
claims over, accounts, warranties, liens, damages, costs or
expenses, whether known or unknown, liquidated or fixed or
contingent, and whether based in contract, tort, equity,
statute or regulation and whether under the laws of the
United States or any other jurisdiction.
1.3 "Comtex" means Comtex News Network, Inc., a New
York corporation.
1.4 "Comtex Note" means that certain Amended,
Consolidated and Restated 10% Senior Subordinated Secured
Note dated May 16, 1995, made by Comtex and payable to
AMASYS, as amended by the First Allonge dated June 30, 1999,
and the Second Amendment dated August 31, 2001, in the
principal amount of $941,953.73 as of December 31, 2001.
1.5 "Hadron" means Hadron, Inc., a New York
Corporation.
1.6 "Merger" means the proposed merger of AMASYS into
Comtex or a wholly owned subsidiary of Comtex, in which
Comtex or its subsidiary would be the surviving entity, and
shareholders of AMASYS would receive shares of Comtex in
exchange for their shares of AMASYS.
1.7 "Note" means that certain promissory note in the
principal amount of $1,500,000 dated June 21, 1996, made by
Infotech and payable to PBGC.
1.8 "PBGC Payment" means the consideration to be paid
to PBGC, as more specifically identified in Section 2.3.
1.9 "PBGC Shares" means the 196,000 issued and
outstanding Series A Preferred shares of AMASYS beneficially
owned by the PBGC.
1.10 "Plan" means the plan of reorganization of
Infotech confirmed by the United States Bankruptcy Court for
the Southern District of New York on June 23, 1994.
1.11 "Transactions" means the payment and return of the
Note, all in accordance with the terms and conditions set
forth in this Agreement.
2. PAYMENT
2.1 The above Recitals are made part of this Payment
and Release Agreement.
2.2 AMASYS and PBGC agree to the full satisfaction of
the Note, which will be considered paid in full upon the
receipt by PBGC of the PBGC Payment. PBGC agrees to deliver
the Note to AMASYS at Closing, as provided below.
2.3 As payment in full for all principal and interest
due under the Note, at the Closing, as provided below,
AMASYS agrees to pay the PBGC the amount of One Hundred
Eighty-Nine Thousand, Nine Hundred Ninety-Eight Dollars
($189,998.00), constituting 38.3% of all payments of
principal and interest made by Comtex to AMASYS after
December 17,1996 through the date of this Agreement, under
the Comtex Note. Such payment shall be paid in cash, at
Closing, as hereafter provided.
3. CLOSING. The Closing of the transactions
contemplated by this Agreement (the "Closing") shall occur
at such time, not later than 5:00 p.m. on February 15, 2002,
and at such place as the parties shall agree; provided,
however, that if the parties are unable to agree otherwise,
the Closing shall occur at 2:00 p.m. local time on February
15, 2002 at Pacholder's office in Cincinnati, Ohio. At the
Closing the following shall occur:
3.1 PBGC shall deliver the original Note to AMASYS marked "Paid
in full and cancelled" and/or with such other endorsements and/or
notations as AMASYS may reasonably request.
3.2 AMASYS shall pay to PBGC, in immediately available
funds, the PBGC Payment described in Section 2.3, above.
4. MUTUAL RELEASES.
4.1 For and in consideration of the payments to be made and the
other agreements of AMASYS set forth herein, PBGC hereby
irrevocably releases and forever discharges AMASYS and its
directors, officers, employees, trustees, agents, attorneys and
assigns (individually a "Releasee" and collectively, the
"Releasees") from any and all Claims (as defined in Section 1.2)
arising out of or in any way related to the Note and the Plan and
the Amended Term Sheet as they relate to the Note (except as
provided below) and waives, releases and covenants not to xxx
AMASYS or any other Releasee with respect to matters which were
or might have been alleged in any Claim arising from or in any
way related to the Note, and the Plan and the Amended Term Sheet
as they relate to the Note. The PBGC expressly acknowledges that
this release is intended to include, without limitation, all
Claims related to the Note, the Plan and the Amended Term Sheet
as they relate to the Note which have arisen, of which PBGC knows
or does not know, should have known or has reason to know or
suspect to exist in its favor at the time of execution hereof and
that this Agreement contemplates the extinguishing of any such
Claims, except any claims to enforce the terms of this Agreement.
4.2 For and in consideration of the cancellation of
the Note and the other agreements of PBGC set forth herein,
AMASYS hereby irrevocably releases and forever discharges
PBGC and its directors, officers, employees, trustees,
agents, attorneys and assigns (individually a "Releasee" and
collectively the "Releasees") from any and all Claims (as
defined in Section 1.2) arising out of, or in any way
related to, the Note and the Plan and the Amended Term Sheet
as they relate to the Note (except as provided below) and
waives, releases, and covenants not to xxx PBGC or any other
Releasee with respect to matters which were or might have
been alleged in any Claim arising from or in any way related
to the Note and the Plan and the Amended Term Sheet as they
relate to the Note. AMASYS expressly acknowledges that this
release is intended to include in its effect, without
limitation, all Claims related to the Note and the Plan and
the Amended Term Sheet as they relate to the Note which have
arisen of which AMASYS knows or does not know, should have
known or has reason to know or suspect to exist in its favor
at the time of execution hereof and that this Agreement
contemplates the extinguishing of any such Claims, except
any Claims to enforce the terms of this Agreement.
4.3 Other than any conversion rights it may have with
respect to the PBGC Shares, PBGC hereby waives any and all
other options to purchase common stock in AMASYS. AMASYS
represents that it has no knowledge of any such purchase
options held or exercisable by PBGC and acknowledges that
PBGC has relied on such representation.
4.4. PBGC hereby waives and releases any rights
existing on or before the date hereof to name Directors of
AMASYS or Comtex and any limitations on the number of
Directors of AMASYS or Comtex as set forth in Section 5 of
the Amended Term Sheet. PBGC agrees that, from and after
the date hereof, Section 5 shall be deleted from the Amended
Term Sheet and shall be of no further force or effect.
5. REPRESENTATIONS OF THE PARTIES.
5.1 PBGC represents as follows:
(a) PBGC has the power and authority to enter
into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of
this Agreement and the consummation of the Transactions
contemplated hereby require no other corporate
proceedings on the part of PBGC to authorize the
execution and delivery of this Agreement and the
consummation of the Transactions contemplated hereby.
(b) This Agreement has been duly executed and
delivered by PBGC and constitutes a valid and binding
obligation of PBGC, enforceable against PBGC in
accordance with its terms, subject to the
qualifications that enforcement of the rights and
remedies created hereby is subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance,
moratorium and other laws of general application
affecting the rights and remedies of creditors, and
(ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in
equity or at law).
5.2 AMASYS represents as follows:
(a) AMASYS has the corporate power and authority
to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
Transactions contemplated hereby, have been duly and
validly authorized by the board of directors of AMASYS.
(b) This Agreement has been duly executed and
delivered by AMASYS and constitutes a valid and binding
obligation of AMASYS, enforceable against AMASYS in
accordance with its terms, subject to the
qualifications that enforcement of the rights and
remedies created hereby is subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance,
moratorium and other laws of general application
affecting the rights and remedies of creditors and (ii)
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or
at law).
(c) Neither the execution and delivery of this
Agreement by AMASYS, nor the performance by AMASYS of
its obligations hereunder, nor the consummation by it
of the Transactions contemplated hereby, to the extent
of its obligations hereunder, will (i) conflict with or
result in a violation of any provision of the charter
documents or by-laws of AMASYS; or (ii) with or without
the giving of notice or the lapse of time, or both,
conflict with, or result in any violation or breach of,
or constitute a default under, or result in any right
to accelerate or result in the creation of any lien,
charge or encumbrance pursuant to, or right of
termination under, any provision of any note, mortgage,
indenture, lease, instrument or other agreement,
permit, concession, grant, franchise, license,
judgment, order, decree, statute, ordinance, rule or
regulation to which AMASYS is a party or by which it or
any of its assets or properties is bound or which is
applicable to it or any of its assets or properties.
(d) Over the term of the Note, June 21, 1996 to
the effective date of this Agreement, Comtex paid
AMASYS $496,079 as the result of AMASYS holding the
Comtex Note.
(e) Over the term of the Note, June 21, 1996 to
the effective date of this Agreement, AMASYS did not
receive any proceeds from the Avacus Lawsuit as
described in the Note.
(f) Over the term of the Note, June 21, 1996 to
the effective date of this Agreement, AMASYS did not
sell any positions in Comtex or Hadron common stock.
(g) No payments to the PBGC under the Note were
made despite the $496,079 payments to AMASYS having
been made on the Comtex Note.
5.3 Each of the parties represent as follows:
(a) It has not made any representations
concerning the terms or effect of this Agreement other
than those contained herein.
(b) In executing this Agreement, it does not
rely, and has not relied upon, any representation or
statement not set forth in this Agreement with regard
to the subject matter, basis, or effect of this
Agreement or otherwise.
6. POST CLOSING ACTIONS.
It is contemplated that following the consummation of the
Transactions contemplated hereby, AMASYS will proceed to consider
a Merger between AMASYS and Comtex, based on the advice of an
independent committee of the Board of Directors of AMASYS. The
Merger will be subject to the approval of the boards of directors
and the shareholders of both AMASYS and Comtex. Upon the
execution of this Agreement, AMASYS shall promptly begin
negotiations of the Merger with Comtex, and at the appropriate
time, shall provide notice of a special meeting of shareholders,
and distribute a proxy with respect to the proposed Merger. The
parties shall cooperate in all respects regarding the
solicitation of votes for the proposed Merger, and PBGC agrees to
vote the PBGC Shares in favor of such Merger. As a result of the
Merger, all PBGC Shares shall be converted into common shares of
AMASYS, and exchanged for 38.3% of the shares of Comtex or other
Consideration received by the Shareholders of AMASYS in the
Merger. AMASYS will obtain a fairness opinion from Corporate
Finance of Washington, Inc. with respect to the exchange value of
the shares of AMASYS for the shares of Comtex.
7. GENERAL
7.1 This Agreement shall be binding upon and inure to
the benefit of PBGC and AMASYS and any of their respective
successors or assigns.
7.2 This Agreement shall in all respects be
interpreted, enforced and governed under the federal laws of
the United States of America and, to the extent not governed
thereby, by the laws of the State of Virginia.
7.3 This Agreement sets forth the entire agreement
among the parties hereto with respect to the subject matter
hereof, and fully supercedes any and all prior agreements or
understanding among the parties hereto pertaining to the
subject matter hereof.
7.4 Each party hereto shall be responsible for its own
costs and expenses in connection with this Agreement and the
transactions contemplated herein, including fees and
disbursements of consultants, investment bankers and other
financial advisors, counsel and accountants ("Expenses").
AMASYS shall bear all Expenses of the fairness opinion
referred to in Section 6 above.
IN WITNESS WHEREOF, and intending to be legally bound
hereby, the parties have executed the foregoing Agreement as of
the date first above written.
AMASYS CORPORATION PENSION BENEFIT GUARANTY
CORPORATION
by PACHOLDER ASSOCIATES, INC.
as agent
BY: /S/ X.X. XXXXXXX BY: /S/
President Senior V.P. & Assistant Gen. Counsel
