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EXHIBIT 10.19
SECOND AMENDED AND RESTATED SETTLEMENT AGREEMENT
This Second Amended and Restated Settlement Agreement ("Agreement") is
by and among Xxxxxxx X. Xxxxxxxx, a citizen and resident of the State of
Florida, and High Speed Net Solutions, Inc., a Florida corporation with its
principal place of business at Suite 2120, 000 Xxxxxxxxxxxx Xx. Xxxx, Xxxxxxx,
Xxxxx Xxxxxxxx 00000.
Under the terms and conditions stated below, the parties desire to
resolve the Litigation (as defined below), and any other claims between or among
any of the parties that are related to the Litigation or to the August 11, 1999
Agreement between Xxxxxxx X. Xxxxxxxx and High Speed Net Solutions, Inc.
The parties previously entered into an Amended and Restated Settlement
Agreement, dated June 6, 2000, and for reasons described in Section VIII, the
parties desire to terminate that agreement and enter into this Agreement.
I. DEFINITIONS
The terms set forth below shall have the following meanings in this
Agreement:
A. Execution Date
The "Execution Date" of this agreement is October 26, 2000.
B. The Litigation
The "Litigation" refers to the lawsuit filed in the Miami-Date
County Circuit Court, captioned Xxxxxxxx v. High Speed Net Solutions, Inc. [Case
No. 00-2229-CA 11].
C. HSNS
"HSNS" means High Speed Net Solutions, Inc., the corporation
that is the defendant in the Litigation, and all subsidiaries, related entities,
and successors, including but not limited to J&J Capital Corp., Inc. A
"successor" includes any company that is the survivor of any merger with HSNS,
any company that, as a result of a share exchange with HSNS, becomes HSNS's
parent, and any company that acquires as a result of any transaction all or
substantially all of the assets of HSNS.
X. Xxxxxxxx
"Xxxxxxxx" means Xxxxxxx X. Xxxxxxxx, his assigns,
successors-in-interest, or any other entity of whatever form or characteristic
which is now entitled
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to, or which shall subsequently succeed to, the rights and obligations of
Xxxxxxx X. Xxxxxxxx.
E. Currently Owned Shares
"Currently Owned Shares" shall mean the shares of common stock
of HSNS that Xxxxxxxx currently holds.
F. Additional Shares
"Additional Shares" shall mean the shares of common stock of
HSNS to be issued by HSNS to Xxxxxxxx as Restricted Securities pursuant to
paragraph II.A below.
G. Monthly Shares
"Monthly Shares" shall mean the shares to be delivered to
Xxxxxxxx as Restricted Securities pursuant to paragraph II.B below.
H. New Restricted Shares
"New Restricted Shares" shall mean the 1,000,000 shares of
common stock of HSNS to be issued by HSNS to Xxxxxxxx as Restricted Securities
pursuant to paragraph II.C below.
I. Adjustment Shares
"Adjustment Shares" shall mean the shares of common stock of
HSNS that may be issued by HSNS to Xxxxxxxx as Restricted Securities pursuant to
paragraph III.A below.
J. Restricted Securities
"Restricted Securities" shall refer to shares of stock that
may be resold without registration under the Securities Act of 1933 only in
certain limited circumstances, including without limitation, Securities and
Exchange Commission (SEC) Rule 144, as presently in effect.
K. Combination
"Combination" shall mean the business combination between HSNS
and Summus Ltd. to be effected as a purchase by HSNS of substantially all of the
assets of Summus Ltd. and in a form substantially similar to the terms of a
Letter of Intent, dated August 31, 2000 and subsequently made public by HSNS in
an SEC filing.
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L. Funding
"Funding" shall mean the closing and consummation of the
capital raising activities specified in the agreements that will govern the
Combination, in the amounts as specified in such agreements, and which are a
condition to the closing and final consummation of the Combination.
II. TERMS OF SETTLEMENT
A. HSNS shall deliver to Xxxxxxxx on or before the fifth (5th)
business day following the Execution Date, a sufficient number of Additional
Shares, such that the sum of the Currently Owned Shares and the Additional
Shares shall equal one million shares. The Additional Shares shall be
unencumbered with any restrictions, covenants, loans, mortgages, security
interests or other devices or conditions; provided, however, that Xxxxxxxx
acknowledges that these Additional Shares will be issued to Xxxxxxxx as
Restricted Securities under the relevant federal securities laws.
B. HSNS shall also deliver to Xxxxxxxx Monthly Shares,
unencumbered with any restrictions, covenants, loans, mortgages, security
interests or other devices or conditions (except that Xxxxxxxx acknowledges that
these shares will be issued to Xxxxxxxx as Restricted Securities under the
relevant federal securities laws), commencing with a first delivery of stock on
the first monthly anniversary after the Execution Date, and continuing each
month thereafter on the monthly anniversary of the Execution Date, in an amount
of Twenty Five Thousand (25,000) shares each month. HSNS' obligation to deliver
shares under this paragraph II.B shall terminate upon completion of the Funding.
C. HSNS shall also deliver to Xxxxxxxx, on or before the fifth
(5th) business day following the Execution Date, One Million (1,000,000) New
Restricted Shares, unencumbered with any restrictions, covenants, loans,
mortgages, security interests or other devices or conditions; provided, however,
that Xxxxxxxx acknowledges that these 1,000,000 New Restricted Shares will be
issued to Xxxxxxxx as Restricted Securities under the relevant federal
securities laws and further agrees that he shall not sell said 1,000,000 shares
for a period of twelve months from receipt.
D. On or before November 30, 2000, HSNS shall file with the State
of North Carolina the necessary documents to commence a fairness hearing by the
State of North Carolina on HSNS's application, to be filed with the State of
North Carolina, under section 78A-30 of the North Carolina Statutes, to allow
HSNS to issue to Xxxxxxxx the 2,000,000 Shares then to be held by Xxxxxxxx, in
exchange for Xxxxxxxx'x claims and his contractual rights, with the goal of
enabling
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Xxxxxxxx to sell the 2,000,000 Shares, pursuant to section 3(a)(10) of the
Securities Act of 1933 and the comparable provision of the North Carolina
Statutes, without legal restrictions, such restrictions not to include the
agreement not to sell 1,000,000 Shares set forth in this amended agreement (this
limiting definition of legal restrictions to be called herein "Legal
Restrictions"). HSNS shall thereafter use its best efforts and dispatch,
including but not limited to appearing at the hearing and responding to comments
from the hearing forum and filing documents to support the hearing process, to
enable the State of North Carolina to rule on the matters presented to the
hearing forum at the earliest possible date. All costs and expenses of the
hearing process, including but not limited to professional fees for preparing
hearing documents, appearing at the hearing, and assisting HSNS during the
hearing process, shall be borne by HSNS.
E. Unless the result of the hearing process described in
paragraph II.D is an approval by the State of North Carolina on HSNS's
application, and unless, further, HSNS is able to provide to Xxxxxxxx, within
five days of the issuance of the approval by the State of North Carolina, a
written legal opinion addressed to Xxxxxxxx from an attorney from a nationally
recognized law firm who is reasonably experienced in handling SEC matters and
who is reasonably acceptable to Xxxxxxxx and HSNS that Xxxxxxxx is free to sell
the 2,000,000 Shares without Legal Restrictions, then the following provisions
shall apply.
(i) Xxxxxxxx shall have the right to require that, on or
before March 15, 2001, HSNS file a registration statement with the SEC for all
2,000,000 Shares (plus Adjustment Shares, if any), and shall thereafter use all
reasonable efforts and dispatch, including but not limited to responding to SEC
comments and filing amendments to the registration statement, to enable the SEC
to declare the registration statement effective at the earliest possible date.
All costs and expenses of the registration process, including but not limited to
professional fees for preparing the registration statement and assisting HSNS
during the registration process, shall be borne by HSNS. Xxxxxxxx shall inform
HSNS by February 15, 2001 whether he wishes to exercise the right to require
registration, any delay in his providing notice shall extend the deadline for
the filing of the registration by the number of days after February 15, 2001
that Xxxxxxxx delays providing this notice.
(ii) Notwithstanding any other provisions of this amended
agreement, HSNS shall use its best efforts to obtain a written legal opinion
from an attorney from a nationally recognized law firm who is reasonably
experienced in handling SEC matters and who is reasonably acceptable to Xxxxxxxx
and HSNS, such opinion stating that Xxxxxxxx is permitted under the law to sell
350,000 Shares held by Xxxxxxxx since August 13, 1999. HSNS shall pay the
reasonable legal fees and expenses of such securities counsel. Upon delivery of
the opinion,
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HSNS shall issue transfer instructions to its agent to permit such sales as are
covered by such legal opinion and as Xxxxxxxx may direct. If the transfer agent
permits the sale, then 350,000 Shares shall be subtracted from the number of
Shares under registration.
(iii) It shall be deemed a material breach of this
Agreement by HSNS if for any reason the registration statement has not been
declared effective by the SEC by July 15, 2001 (or such later date as results
from any delay in Xxxxxxxx'x notice to HSNS under section II.E(i)). In that
event, Xxxxxxxx shall have the right but not the obligation immediately to
commence arbitration proceedings, as hereunder described, against HSNS, provided
that no delay by Xxxxxxxx in commencing such proceedings shall be deemed a
waiver of any rights that Xxxxxxxx has under this Agreement.
(iv) At its option and reasonable discretion, HSNS may,
instead of filing the registration statement discussed in paragraph II.E(i),
elect to facilitate sale by Xxxxxxxx of all or some of the Shares under
registration by arranging for the delivery to Xxxxxxxx of one (1) written legal
opinion each month addressed to Xxxxxxxx from an attorney from a nationally
recognized law firm who is reasonably experienced in handling SEC matters and
who is reasonably acceptable to Xxxxxxxx and HSNS, such opinion stating that
Xxxxxxxx is permitted under the law to sell shares and that, as of a particular
date, Xxxxxxxx is permitted under the law to sell, pursuant to SEC Rule 144,
whatever number of shares are allowed under this Agreement and/or SEC Rule 144.
HSNS shall pay the reasonable legal fees and expenses of such securities
counsel. Upon delivery of the opinion, HSNS shall issue transfer instructions to
its agent to permit such sales as are covered by such legal opinion and as
Xxxxxxxx may direct. If the transfer agent permits the sale, then that number of
Shares shall be subtracted from the number of Shares under registration. The
intent of this section II.E(iv) is to reduce the number of Shares to be
registered by the number of Shares as to which Xxxxxxxx has been provided with
an opinion as set forth herein. For example, if a written legal opinion is
provided that states that Xxxxxxxx is free to sell 100,000 shares, and the
number of shares under registration is $2,100,000 then the number of Shares
under registration shall be reduced to 2,000,000.
F. To the extent permitted by law, Xxxxxxxx shall be free, but
not obligated, to sell any shares of HSNS common stock under SEC Rule 144.
G. HSNS shall pay Xxxxxxxx Twelve Thousand Five Hundred Dollars
($12,750) on or before the fifth (5th) business day following the Execution
Date, and shall thereafter pay Xxxxxxxx Twenty-Five Thousand ($25,000) each
month on or before the monthly anniversary of the Effective Date during the
period commencing on the first monthly anniversary after the Execution Date and
ending on the date that either a registration statement becomes effective or he
has been provided a legal opinion, as described above, as to at least 1,000,000
Shares.
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H. The parties agree that the provisions of paragraphs II.A,
II.B, II.C, and II.G are not a penalty and that they represent a reasonable
attempt to remedy the economic harm accruing to Xxxxxxxx from delays in
resolving the controversies surrounding HSNS' compliance with the August 13,
1999 Agreement.
X. Xxxxxxxx shall not allow any HSNS stock owned by him to be
shorted on or before the date one (1) year after the Execution Date.
J. Upon the execution of this Agreement, HSNS may withdraw any
registration statement(s) currently on file with the SEC to register shares for
Xxxxxxxx.
III. POSSIBLE RESCISSION OF AMENDED AGREEMENT
A. If the Funding is not complete on or before the date 120 days
after the Execution Date, then this entire Agreement shall be null and void and
completely rescinded and the rights and obligations of the parties shall be
governed by the Amended and Restated Settlement Agreement, dated as of June 6,
2000, as if this Agreement had never existed; and such Amended and Restated
Settlement Agreement shall be considered to be in full force and effect.
IV. RELEASE OF CLAIMS
A. Release by Xxxxxxxx
Xxxxxxxx hereby releases HSNS, together with each of its
officers, directors, agents, employees, attorneys, and representatives, for any
and all claims, actions, causes of action, or liabilities of any sort or
character, whether known or unknown, arising from the beginning of time to the
Execution Date of this Agreement which were asserted in the Litigation or could
have been asserted in the Litigation or arising from the Amended and Restated
Settlement Agreement.
B. Release by HSNS
HSNS, together with its officers, directors, agents,
employees, attorneys, and representatives, hereby releases Xxxxxxxx for any and
all claims, actions, causes of action, or liabilities of any sort or character,
whether known or unknown, arising from the beginning of time to the Execution
Date of this Agreement which were asserted in the Litigation or could have been
asserted in the Litigation or arising from the Amended and Restated Settlement
Agreement.
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C. No Release of Obligations under this Agreement
Nothing herein shall constitute a release by any party of any
person of his or its obligations under this Agreement.
V. CONFIDENTIALITY
A. Confidentiality Obligation
The terms and conditions of this Agreement shall be kept
confidential by the parties, and shall not be disclosed to any third party
except as required by law (including SEC disclosure requirements) or as
otherwise provided herein. This Agreement may be provided to a party's attorney,
accountant, or financial advisor, subject to such party's agreement to maintain
the confidentiality of the agreement and its terms and conditions. This
Agreement may also be provided to a governmental authority or the public when
there is a legal obligation to provide the document to such authority. Except as
required by law, the parties shall make no comment to any third party, including
but not limited to any press release, about the settlement of the Litigation
other than stating that the claims in the Litigation have been dismissed with
prejudice and that the dispute has been settled to the mutual satisfaction of
all parties.
B. Third-Party Requests
In the event that the terms or conditions of this Agreement
shall be requested by a third party in a legal proceeding, by subpoena, document
request, or otherwise, the party receiving the request shall provide notice to
the other party pursuant to the notice provisions of this Agreement in
sufficient time to allow the other party the opportunity to intervene and limit
or prevent the disclosure in that legal proceeding. In any case, the producing
party shall make all reasonable efforts to obtain confidential treatment of the
Agreement or its terms and conditions in any legal proceeding, including but not
limited to, properly moving or petitioning for a protective order from, as the
context permits, the court or an arbitration panel.
VI. ARBITRATION
A. Controversies to be Arbitrated
Any dispute, controversy, or claim under this Agreement shall
be finally resolved by arbitration in Miami, Florida, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and
enforced by a single arbitrator who shall be an attorney experienced in
securities law matters and selected by the parties. If the parties are unable to
agree upon an
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attorney, an attorney experienced in securities law matters shall be appointed
by the American Arbitration Association in accordance with its rules.
B. Arbitration Award
The award of the arbitration shall be final and enforceable in
any court of competent jurisdiction and may include the cost of arbitration and
reasonable attorneys' fees.
VII. NOTICE
Any notice provided for under this agreement shall be made in writing
via overnight delivery. If the notice is directed to Xxxxxxxx, the notice shall
be addressed as follows:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
With a copy to:
Xxxxxxx X. Xxxxxxx, P.A.
Xxxxx 000, 00 XX Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
If the notice is directed to HSNS, the notice shall be addressed as follows:
High Speed Network Solutions, Inc.
Suite 2120, 000 Xxxxxxxxxxxx Xx. Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: President
With a copy to:
Xxx Xxxxxxxx
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
The addresses for delivery of notice may be changed by any party by
providing written notice in the manner set forth above.
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VIII. ACKNOWLEDGEMENTS
The parties previously entered into a Settlement Agreement, dated May
4, 2000 (the "Original Settlement Agreement"). The parties then later agreed to
amend and restate the Original Settlement Agreement because certain provisions
of the Original Settlement Agreement became impossible to perform due to the
discovery of a published SEC interpretation regarding an issue about which HSNS
was required to deliver a legal opinion. Without the legal opinion, the Original
Settlement Agreement could not be fully performed and the parties therefore
negotiated new terms and conditions as expressed in an Amended and Restated
Settlement Agreement dated June 6, 2000 (the "Amended and Restated Settlement
Agreement").
Due to the parties' desire to facilitate the Combination, the parties
negotiated this Agreement because certain provisions of the Amended and Restated
Settlement Agreement were impeding progress toward the Combination and the
Funding; and, Xxxxxxxx desires to support and facilitate the Combination in
exchange for the new issuances of additional shares of the common stock of HSNS
issued under this Agreement. The parties acknowledge and agree that, unless the
provisions of paragraph III.A take effect, this Agreement replaces entirely the
Amended and Restated Settlement Agreement, and the parties shall have no
obligations arising from the Amended and Restated Settlement Agreement, and HSNS
and Xxxxxxxx hereby terminate and have no obligations arising from the Selling
Shareholder Agreement dated as of July __, 2000.
Subject to the provisions of paragraph III.A, this Agreement supercedes
in full any and all previous conversations, understandings, tentative agreements
or actual agreements resolving or attempting to resolve the Litigation.
IX. MISCELLANEOUS
A. Binding Nature of Agreement
This Agreement shall be binding on HSNS (as defined above) and
Xxxxxxxx (as defined above), and their respective successors and assigns.
B. Application of Florida Law
This Agreement shall be construed in accordance with the laws
of the State of Florida without giving effect to principles of conflict of laws.
C. No Admission of Liability
This Agreement constitutes a compromise of disputed claims,
and is entered into to avoid the costs and uncertainties of litigation. By
entering into this
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Agreement, no party hereto admits any liability whatsoever, and any such
liability is expressly denied.
D. Severability
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
E. Entire Agreement
This Agreement and any exhibits hereto contain the entire
agreement of the parties. They are intended to supercede and replace any prior
or contemporaneous agreement of the parties with respect to the subject matter
of this Agreement and its exhibits, which includes, but is not necessarily
limited to, the settlement of the Litigation. No party has relied on any oral
representations whatsoever in entering into this Agreement or its exhibits, and
the only written representations that are or have been relied on are those
expressly made in this Agreement. This Agreement and its exhibits shall be
modified only in a writing executed by all parties thereto which specifically
and expressly refer to this Agreement.
F. Neutral Construction
This Agreement has been drafted with the cooperation and
participation of all parties and their attorneys. Accordingly, no part of this
Agreement shall be construed in favor of or against any party.
G. Additional Steps and Procedures
From time to time after the execution of this Agreement, each
of the parties hereto hereby agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper and advisable under applicable laws, rules and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its best efforts to obtain all necessary waivers, consents and
approvals. In case at any time after the execution of this Agreement further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each of the parties shall take all such
necessary action.
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H. Warranty of HSNS
HSNS warrants that, prior to the execution of this Agreement
by Xxxxxxxx, it has made public disclosure, by a disseminated press release, of
all material information concerning the status and terms of any negotiations and
discussions between HSNS and any other person or representative of any other
person concerning any merger, share exchange, or sale of all or substantially
all of HSNS's assets.
I. Execution in Counterparts
This Agreement may be executed in multiple counterparts, each
constituting an original document for all purposes for which an original
document may be required.
THIS AGREEMENT EXECUTED by the parties as of this 26th day of October 2000.
Xxxxxxx X. Xxxxxxxx High Speed Net Solutions, Inc.
/s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxx Xxx
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Printed Name:
Xxxx Xxx
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Title: President & CEO
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