FIRST AMENDMENT TO
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ASSET ACQUISITION AGREEMENT
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This First Amendment (hereinafter "Amendment") to the Asset Acquisition
Agreement (hereinafter "Agreement") between Applied Intelligence Group, Inc.
("Seller") and The Netplex Group, Inc. ("Netplex") is entered into as of this __
day of September, 1998 by and between Seller and Netplex.
WHEREAS, on August 31, 1998 Seller and Netplex entered into
said Agreement, and
WHEREAS, the parties mutually desire to amend certain terms
and provisions of said Agreement.
WHEREUPON, in consideration of the above premises and in
consideration of other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Additional Defined Terms. The following terms are added to
Article 1 of the Agreement:
1 "Preliminary Closing Date" shall mean such date as the
consideration for this Agreement is transferred to the Escrow Agent pursuant to
the terms of Article 3 of the Agreement as amended hereby, which date shall not
be later than September 30, 1998.
0.2. "Preliminary Closing" shall mean the transaction at which
the consideration provided for by the Agreement will be
delivered to the Escrow Agent subject to the terms of the
Escrow Agreement.
0.3. "Effective Date" shall be September 1, 1998.
0.4. "Escrow Agent" shall mean such Person to whom the Parties
agree shall be delivered the consideration set forth in
Article 3 of the Agreement and this Amendment, pursuant to
the terms of the Escrow Agreement.
0.5. "Escrow Agreement" shall mean an agreement to be executed to
the mutual satisfaction of the Parties at or prior to the
Preliminary Closing Date.
1. Amendment of Defined Terms:
1.1. The definition of "Closing" in Section 1.13 of the Agreement
is amended as follows: "Closing" shall mean the actual
transaction at which the Seller receives from the Escrow
Agent the consideration and other documents required to be
given by Netplex hereunder, and at which Netplex receives
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from the Escrow Agent the documents required to be given by
Seller hereunder. Closing shall take place in Oklahoma City,
Oklahoma.
1.2. The definition of "Closing Date" in Section 1.14 of the
Agreement is amended as follows: "Closing Date" shall mean
such date after the 21st day following the giving of notice
to Seller's shareholders of the transaction contemplated by
the Agreement when Netplex and Seller submit the
documentation required by the Escrow Agreement to the Escrow
Agent to enable each of them to receive the consideration
held by the Escrow Agent.
1.3. "Agreement Documents" shall mean this Agreement and the
various Schedules, Exhibits, attachments, and other
documents, of which the exchange or execution between
Netplex and Seller is contemplated by this Agreement to
occur at or before the Closing escrow and any amendments or
modifications thereto executed by Seller and Netplex.
2. Amendment of Delivery of Consideration.
2.1. Section 3.1 of the Agreement, including is subsections, is
deleted and replaced as follows: Consideration to Seller:
2.1.1. At Preliminary Closing, Netplex shall deliver and
pay to the Escrow Agent (i) the Cash Consideration
of Three Million Dollars ($3,000,000) in certified
funds or bank wire transfer to an account
designated by the EscrowAgreement, less the
amounts loaned to Seller under Section 5.1.3
below; (ii) a stock certificate representing the
number of shares of Netplex Preferred Stock as
calculated below; (iii) the Certificate of
Designation of the Preferred Shares.
2.1.2. The number of shares of Netplex Preferred Stock
which Netplex shall deliver to the Escrow Agent at
the Preliminary Closing Date and which will be
delivered to Seller by the Escrow Agent at
Closing, shall be calculated by dividing one
million (1,000,000) by the average reported
closing price of the Netplex Common Stock on the
NASDAQ Small Cap Market for the twenty (20) days
immediately prior to September 1, 1998.
2.1.3. At Preliminary Closing, Seller and Netplex shall
deliver to the Escrow Agent the executed Earn-Out
Agreement in the form substantially as set forth
in Exhibit B hereto, and such other Agreements
Documents as are provided for by this Agreement,
all of which are incorporated by reference as if
fully set forth herein.
3.1.4. At Preliminary Closing, Netplex shall deliver to
the Escrow Agent such other documents as are
reasonably necessary to effect the transactions
contemplated by this Agreement.
3.2. Section 3.2 of the Agreement is deleted and replaced as
follows: Consideration to Netplex. At Preliminary Closing,
Seller shall, subject to the terms, covenants, and
conditions of this Agreement, convey, transfer and deliver
to the Escrow Agent by an executed xxxx of sale,
assignments, assignments of contracts, and such other
documents as are reasonably required to perfect the transfer
of the Business and the Assets to Netplex free and clear of
all Liens, Contracts and Liabilities, except to the extent
identified on Schedule 3.2 hereto, which Schedule identifies
the Liens, Contracts and Liabilities Netplex agrees to
assume.
3. Effective Date
3.1. Subject to the terms of this Amendment, the parties agree
and understand that Netplex shall assume the risks and
benefits of the Business as of the Effective Date as if the
parties had consummated the transaction contemplated hereby
on such date; subject however to the Closing of the
transaction contemplated by the Agreement as amended hereby.
3.2. The parties agree and understand that the Preliminary
Closing Date shall be such date when the parties deliver the
documents and money specified in the Agreement as amended
hereby to the Escrow Agent.
3.3. The parties agree and understand that the Closing Date shall
be the day when the Escrow Agent delivers to the respective
parties the money and documents delivered to the Escrow
Agent at the Preliminary Closing Date.
4. Transition between Effective Date and Closing
4.1. As of the Effective Date, Seller shall lease the employees
identified on Schedule 4.22 to the Agreement to Netplex as
of September 1, 1998 to allow Netplex to assume
responsibility for the operation of the Business between the
Effective Date and the Preliminary Closing Date of the
Agreement as amended. As of the Effective Date, Netplex
shall assume total responsibility for completing all Work in
Progress and shall assume responsibility for the operation
of the Business and all expenses associated therewith.
4.1.1. Seller shall continue to keep said employees on
its payroll and benefit plans through the
Preliminary Closing Date or September 30,
whichever occurs later. Netplex shall pay Seller
for all costs and expenses directly and indirectly
incurred by Seller for such payroll and benefits
as set forth in this Amendment. As of October 1,
1998, all employees identified on Schedule 4.22
shall become
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direct employees of Netplex and shall be placed on
Netplex's benefit plans, and Seller shall have no
further obligation regarding the same.
4.1.2. Although Netplex shall be responsible for all
expenses associated with the Business after the
Effective Date, it is anticipated that Seller
either has paid or will incur expenses for the
Business which are the obligation of Netplex to
pay. Such expenses include, without limitation,
payroll, benefits, rent, services and amounts paid
to third parties for or in relation to the
Business such as pagers, cellular phones travel,
etc. Netplex shall allow Seller to collect and
use, as Seller desires, the receivables invoiced
for revenue earned and expenses incurred during
September 1998 for the Business ("Invoiced
September Earnings"). To the extent that any
actual invoice(s) includes revenue earned or
expenses incurred during a month prior to
September, 1998, such revenue and/or expenses
shall not be included within said Invoiced
September Earnings. Netplex shall not make any
effort to collect or use the Invoiced September
Earnings. Netplex shall provide to Seller and/or
Trinity Capital, Inc. such documentation as is
necessary to allow Seller to continue to finance
said receivables for September, 1998 in Seller's
name. As of October 1, 1998, all expenses
associated with the Business shall become direct
obligations of Netplex, and Seller shall have no
further obligation regarding the same.
4.1.3. Additionally, on September 15, 1998, Netplex shall
loan Seller $125,000. On September 30, 1998,
Netplex shall loan Seller up to an additional
$375,000. The total of such sums loaned ("Loaned
Amount"), to the extent not withheld by Netplex
from the consideration paid to Seller at
Preliminary Closing pursuant to section 3.1.1 of
the Agreement as amended hereby, shall be repaid
by Seller to Netplex at Closing, without interest,
from the sums otherwise due at Closing. If the
transaction fails to close, the Loaned Amount
shall be due and payable to Netplex within 10 days
after the termination of the Agreement or
abandonment of the Closing.
4.1.4. On or before Closing, Seller shall submit to
Netplex an accounting for the actual disbursements
for expenses incurred by Seller for or on behalf
of the Business from the Effective Date through
September ("Actual September Expenses"). If the
Actual September Expenses exceed the Invoiced
September Earnings less any credits thereon or
reductions thereto ("Net Receivables"), then
Netplex shall forthwith pay Seller at Closing,
without interest, the difference between such
Actual September Expenses and the Net
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Receivables. If the Net Receivables exceed the
Actual September Expenses, then Seller shall
forthwith pay Netplex at Closing, without
interest, the difference between such Net
Receivables and the Actual September Expenses.
4.1.5. Seller shall provide such documentation as Netplex
reasonably requests to support the Actual Total
Expenses incurred by Seller for the Business for
which Seller seeks payment pursuant to Section
5.1.4 of this Amendment. In addition, prior to
paying any such expenses, Seller shall notify
Netplex of any individual payment in excess of
$1,000 each.
4.1.6. If any of the sums due pursuant to Section 5.1.4
of this Amendment are not paid when due, the party
owed such sum shall be entitled to interest at the
rate of 10 percent per year on any unpaid
principal amount from and after the date such
amount was due.
4.1.7. Netplex shall indemnify, defend and hold Seller
harmless from any Liabilities arising from the
nonpayment of any such expenses.
4.1.8. It is agreed and understood that, although Xxxxxx
Xxxxxx and Xxxxx Xxxxx will be leased to Netplex
pursuant to this Amendment, they will also retain
their positions as officers of Seller through the
Preliminary Closing Date and will continue to
report to Seller's Board of Directors and to
represent the interests of Seller on issues
relating to or arising out of the Agreement as
amended hereby between the Effective Date and the
Preliminary Closing Date. Moreover, Netplex agrees
that Xxxxxx Xxxxxx may retain his position as
Chairman of Seller's Board of Directors and may
continue to represent the interests of Seller on
the issues relating to or arising out of the
Agreement as amended hereby between the Effective
Date and the Closing thereof. It is also agreed
that, although Xxx Xxxxxxxxx will be leased to
Netplex pursuant to this Amendment, through the
Preliminary Closing Date she will also maintain
her responsibilities as Human Resources Director
of Seller and will continue to represent the
interests of Seller on issues relating to or
arising out of this Agreement as amended hereby
between the Effective Date and the Preliminary
Closing Date.
4.2. Subject to the terms of Schedule 3.2 to the Agreement,
Netplex shall indemnify, defend and hold Seller harmless
from any Liabilities related to or arising from Netplex's
operation of the Business from and after the Effective Date.
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4.3. Notwithstanding the terms of section 8.10 of the Agreement,
Netplex shall be entitled to receive any income earned by
the Business based on work performed after the Effective
Date. Seller shall account to Netplex for the same at the
Preliminary Closing Date and, to the extent the same is
received after Closing, Seller, upon receipt thereof, shall
pay to Netplex such sums received for income earned after
the Effective Date.
4.4. Netplex shall make available to Seller all Business Records
of the Business covering the period of time between the
Effective Date and the Closing.
4.5. As of the Effective Date and through the Closing, but
subject to the terms of the Agreement and this Amendment,
Netplex shall assume total responsibility for and control
over the employees leased to Netplex pursuant to this
Amendment or otherwise employed by Netplex and shall comply
with all federal, state and local laws, rules and
regulations relating to said employees. Netplex shall
indemnify, defend and hold Seller harmless from any
Liabilities arising out of Netplex's use and/or control of
such employees.
4.6. Between the Effective Date and the Closing, in addition to
its other obligations under Section 8.2 of the Agreement,
Netplex shall continue to maintain the confidentiality of
all Business Records of the Business regardless of when the
same were generated.
4.7. Seller shall cooperate with Netplex in providing Netplex
with such Business Records as it reasonably needs to operate
the Business between the Effective Date and Closing.
4.8. After the Effective Date, Netplex shall have the right to
use the AIG Marks only in relation to the operation of the
Business between the Effective Date and Closing as are
approved in writing by Seller.
4.9. Between the Effective Date and the Preliminary Closing Date,
Seller shall allow Netplex to use the Assets of the Business
and will provide Netplex space at its principal business
location to fulfill its obligations hereunder.
4.10. Subsequent to Closing, the parties shall make such periodic
accountings to one another as are reasonably necessary to
account for payments due to a party as a result of the
payment obligations of a party set forth in the Agreement
and/or this Amendment.
4.11. In the event that the Preliminary Closing fails to be
completed by September 30, 1998, or if the Closing is
abandoned, for whatever reason, the Agreement as amended
hereby, may be terminated by either party. In such event,
the lease of the employees shall be terminated and Seller
shall assume responsibility for all risks and benefits of
the Business. In the
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event of such termination, (i) Seller shall indemnify,
defend and hold Netplex harmless from any Liabilities
associated therewith after such termination; (ii) Netplex
shall deliver to Seller all Business Records, Assets and AIG
marks in its possession and Netplex shall forthwith
terminate the use thereof; (iii) the Confidentiality
Obligations of section 8.2 of the Agreement shall remain in
full force and effect; (iv) Netplex shall indemnify, defend
and hold Seller harmless from any Liabilities associated
with the Business between the Effective Date and such
termination; (v) Seller shall be entitled to receive any and
all income earned from the Business from and after the
Effective Date and Seller shall be responsible for any
expenses incurred by the Business from and after the
Effective Date.
5. Modification of certain terms:
5.1. The term "Closing" as used in sections 4.21 (f) and (g),
5.11, 6.2, 6.4, 7.1, 7.3, 8.5, 8.8, 8.10, 9.1, 9.1(b), 9.2,
9.2(b), 9.2(g), 9.2(k), 9.3, 9.3(a), 9.3(b), and 10.1(c) of
the Agreement is amended to "Preliminary Closing" as defined
in this Amendment. The term "Closing" as used in the
introductory clauses of Article 6 and Article 7 is amended
to "Preliminary Closing" as defined in this Amendment. The
heading of Article 9 of the Agreement is amended as follows:
Conditions Precedent to Preliminary Closing.
5.2. The term "Closing Date" as used in sections 1.25, 8.16, 11.1
and 11.2 of the Agreement is amended to "Effective Date" as
defined in this Amendment.
5.3. The term "Closing Date" as used in section 9.2(k) of the
Agreement is amended to "Preliminary Closing Date" as
defined in this Agreement.
5.4. Section 8.2 of the Agreement is amended as follows: The last
sentence of 8.2 is deleted and replaced by the following:
"This Section 8.2 shall survive the Closing or the
termination of this Agreement, as the case may be.
5.5. Section 10.1 is deleted and replaced as follows: "This
Agreement may be terminated without liability of any Party,
each to the other, at any time prior to the Preliminary
Closing and the Closing contemplated hereby may be
abandoned:". The provisions of sections 10.1(a)-10.1(f),
inclusive are not amended by the change to section 10.1
except as otherwise set forth in this Amendment.
5.6. Notwithstanding anything to the contrary in the Agreement or
in this Amendment, Section 10.1(b) is deleted and replaced
as follows: "(b) by Netplex, or Seller, if the Preliminary
Closing shall not have occurred on or
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before September 30, 1998 (provided that the right to
terminate this Agreement under this Section 10.1 shall not
be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or has
resulted in the failure of the Closing to occur on or before
such date); or"
5.7. The Introductory clauses of sections 8.4(a)(b) and (c) shall
be amended to read as follows: "For a period of fours years
after the Effective Date, if the Closing occurs,".
5.8. In section 10.1(f) the term "Seller, Netplex" shall be
amended to read "Seller or Netplex".
5.9. The following paragraph is added to Article 9 of the
Agreement as Section 9.3(l): "Netplex shall amend its
Certificate of Incorporation as set forth in the Certificate
of Designation."
5.10. The following paragraph is added as section 6.8 of the
Agreement: "No Person other than Seller and/or its
transferees or designees shall be eligible to hold the
Netplex Preferred Stock.
6. Covenants of Seller.
6.1. Seller hereby covenants:
6.1.1. That, unless the Agreement is terminated, from and
after the execution of the Agreement and through
Closing, it will refrain from, and will cause each
other Person acting for or on behalf of Seller, to
refrain, from taking, directly or indirectly, any
action (a) to merge, consolidate, or combine, or
to permit any other Person to merge, consolidate
or combine, with Seller in a manner which affects
the Business or the Assets; and (b) to seek or
encourage any offer or proposal from any Person to
acquire the Business or any Assets.
6.1.2. Seller shall comply with the terms of the Escrow
Agreement.
7. Covenants of Netplex.
7.1. Netplex hereby covenants:
7.1.1. That between the Effective Date and Closing, it
shall conduct the Business and use the Assets only
in the ordinary course of business, consistent
with the past practices of Seller, which shall
include, without limitation, compliance in all
respects with all Laws, regulations and
administrative orders of any federal, state or
local governmental authority that are applicable
to Netplex or Seller with respect to the Assets or
Business, with the intent of preserving the
ongoing operations of the Assets and Business and
which shall also include, without limitation, not
selling, transferring or disposing of any of the
Assets nor making any distributions of cash or
other property relating to the Assets to Netplex
shareholders or incurring any indebtedness other
than accounts payable consistent with past
practices.
7.1.2. That between the Effective Date and Closing, it
shall promptly notify Seller of any materially
adverse developments that occur prior to Closing
with respect to the Assets or the operation of the
Business. Netplex shall keep Seller informed of
all material operational matters and business
developments with respect to the Business and its
markets, including any competitive changes.
7.1.3. That between the Effective Date and Closing, it
will refrain from, and will cause each other
Person acting for or on behalf of Netplex, to
refrain, from taking, directly or indirectly, any
action (a) to merge, consolidate, or combine, or
to permit any other Person to merge, consolidate
or combine, with Netplex in a manner which affects
the Business or the Assets; and (b) to seek or
encourage any offer or proposal from any Person to
acquire the Business or any Assets.
7.1.4. Netplex shall comply with the Escrow Agreement.
8. Other Additional Covenants:
8.1 Non-solicitation by Netplex. For a period of four (4) years
after the Effective Date, if the Closing occurs, Netplex and
any of its subsidiaries, Affiliates, successors or assigns
shall not, directly or indirectly, alone, or as a partner,
partial owner, consultant, or agent of any other
corporation, partnership or other business organization,
knowingly solicit the employment of, or knowingly hire, any
employee of Seller, or any Seller subsidiary, or
intentionally cause any such employee to terminate the
employee's relationship with Seller or any Seller Affiliate,
without the prior written approval of Seller.
9. Conditions Precedent to Closing.
9.1. The respective obligations of each party to consummate the
Agreement are subject to the satisfaction at Closing Date of
the following conditions precedent:
9.1.1. No order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any
court of competent jurisdiction or any
governmental authority which prohibits the
Closing.
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9.1.2. No action, claim, suit or proceeding seeking to
enjoin, restrain, or prohibit the consummation of
this Agreement shall be pending before any court
or any other governmental authority.
9.2. The obligations of Netplex to consummate the Agreement are
subject to the satisfaction or waiver at or prior to the
Closing Date of the following condition precedent:
9.3.1. Netplex shall have received an opinion of Seller's
outside counsel, in form satisfactory to counsel
for Netplex, to the effect all necessary approvals
of shareholders and/or the Board of Directors of
Seller have been obtained for the transaction.
9.3. The obligation of Seller to consummate the Agreement is
subject to the satisfaction or waiver at or prior to the
Closing Date of the following condition precedent:
9.3.1. Seller shall have received an opinion of Netplex's
outside counsel, in form satisfactory to counsel
for Seller, to the effect that the Certificate of
Designation of the Preferred Stock of Netplex
fully complies with all applicable Laws and that
all necessary approvals of shareholders and/or the
Board of Directors of Netplex have been obtained
both for the Certificate of Designation and for
the transactions contemplated by the Agreement.
10. Miscellaneous.
10.1. The Escrow Agreement shall be mutually agreed upon and
executed by Netplex and Seller at or prior to the
Preliminary Closing.
10.2. Any terms defined in the Agreement used herein and not
otherwise defined in this Amendment shall have the meaning
for such term that is provided in the Agreement.
10.3. This Amendment is a material part of the Agreement and the
terms hereof supercede any conflicting terms of the
Agreement. However, nothing in this Amendment abrogates any
provision of the Agreement or the Agreement Documents except
as expressly set forth in this Amendment.
10.4. Captions and numbering. The captions and numbering of the
provisions of this Amendment are for convenience only, are
not to be interpreted as substantive terms, and are not to
be interpreted to signify replacement of similarly captioned
or numbered provisions of the Agreement, except where such
effect is expressly set forth in this Amendment.
10.5. The term "Buyer" as used in sections 8.4(a) and 8.4(c) is
amended to read "buyer".
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10.6. The term "Buyer" as used in section 5.6 is amended to read
"Netplex".
10.7. In section 3.2 of the Earnout Agreement, Exhibit B to the
Agreement, the date "March 1, 2000" shall be amended to read
"March 1, 2001". It is agreed and understood that Seller
shall be entitled to receive fifty percent (50%) of the Net
Profit from the Business between the Effective Date and
September 30, 1998. The Earnout Agreement and the Employment
Agreements shall be amended to reflect the same.
SIGNATURE PAGE FOLLOWS
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THE NETPLEX GROUP, INC.
By:
Name:
Title:
APPLIED INTELLIGENCE GROUP, INC.
By:
Name:
Title:
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