INTERCOMPANY AND SEPARATION SERVICES AGREEMENT
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THIS INTERCOMPANY AND SEPERATION SERVICES AGREEMENT is entered into as of
January 1, 2001 ("Services Agreement") by and among THE NETPLEX GROUP, INC., a
Virginia corporation, 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000
("Netplex") and NETPLEX SYSTEMS, INC., a Delaware corporation, 0000 Xxxxxx
Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 ("Systems").
WHEREAS the parties agree that Netplex shall make available to Systems and
Systems shall compensate Netplex for, certain administrative services as
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the agreements herein
contained, the parties hereto agree as follows:
1. Definitions:
1.1 "Services" shall be the type of administrative services identified on
Schedule A which is attached hereto and incorporated herein by
reference.
1.2 "Term" shall mean the period of time from the Effective Date until
December 31, 2002, unless earlier terminated pursuant to the terms of
this Services Agreement.
1.3 "Effective Date" shall be January 1, 2001.
2. Services Provided:
2.1 Subject to the terms of this Service Agreement, during the Term hereof:
2.1.1 Netplex shall provide to Systems the types of services
identified on Schedule A hereto in a professional, business-like
manner consistent with its past practices. Such services shall
be identified in two categories as follows:
a. Direct Expenses. Direct expenses are those directly
attributable and for the exclusive benefit of Systems. They
include items such as audit fees, directors and officers
liability insurance, direct marketing campaign, public
company related costs, legal fees, bank fees, etc. These
expenses will be estimated for the year and accrued on a
monthly basis. On a quarterly basis the actual expenses will
be accumulated and a revision (increase or decrease) to the
prospective accrual will be determined and recorded. The
payment to Netplex will be based on the monthly accrual and
therefore will be effected as actual direct expense levels
change.
b. Allocated Expenses. Allocated expenses are those that are
not related in their entirety to Systems. These services are
more economical if they are combined and provided to more
than one entity. They include the CEO and CFO positions,
financial accounting services, tax administration, public
reporting, payroll, benefits and human resources services.
These expenses will be allocated based on an agreed upon
formula as follows:
a) For financial services activity including general
ledger, accounts payable, billing, accounts receivable,
and treasury processing; public filings processing,
investor relations and corporate governance:
Retail and Security - 5% of total revenues
Systems Integration - 4% of total revenues
b) Payroll processing, benefit and human resources: All
entities - 4% of the product of the number of employees
multiplied by an average compensation rate of $80,000.
These expenses will be estimated for the year and
accrued on a monthly basis. On a quarterly basis the
actual expense allocation will be determined and a
revision (increase or decrease) to the prospective
accrual will be determined and recorded. The payment to
Netplex will be based on the monthly accrual and
therefore will be effected as actual expense and
allocation amounts change.
2.1.2 Except as otherwise set forth in this Services Agreement,
Netplex shall not be obligated to increase the type of services,
the frequency of any of the services, or the terms or conditions
of any of the services unless Netplex and Systems agree to the
cost and scope of the same.
2.1.3 Notwithstanding anything to the contrary in this Services
Agreement, Netplex may upgrade, modify or otherwise change the
equipment, software, carrier, supplier or other means used to
provide the services so long as the nature and quality of the
services provided pursuant hereto remains substantially similar
to those originally contracted for by Systems pursuant to this
Services Agreement.
2.1.4 Costs will be reviewed with company's respective Board of
Directors on a quarterly basis.
3. Payment for Services:
3.1 For the Services rendered during the term of this Services
Agreement, Systems, shall pay Netplex the monthly Netplex
accrual cost rate.
3.2 The monthly service shall be due and payable at the Netplex
office on the last business day of each month for which the
service is performed.
3.3 Systems shall pay Netplex interest on any amount not paid when
due pursuant to this Services Agreement at the rate of eighteen
percent (18%) per year from the date any such payment was due
until such amount is paid in full.
3.4 If the actions of Systems or System's requested changes in any
services cause the cost of any of the services to increase,
Systems, in addition to the amount(s) billed, shall be solely
liable for all of such increase in cost.
3A. Separation Matters
3A.1 Liabilities; Indemnification. (a) It is agreed that each
liability of each party hereto occurring after the date of this
agreement shall be borne solely by such party, except to the
extent such liability was caused by the acts or omissions of the
other party. Each party shall indemnify and hold the other
harmless for the acts and omissions of such party in connection
with the services or received provided hereunder.
3A.3 Insurance. The parties hereto shall take such reasonable effort
to apply any insurance proceeds collected for matters occurring
prior to the date of this agreement to the party or operations
suffering the insured loss. Such application will be determined
upon the mutual agreement of Systems and Netplex.
3A.2 Tax Matters. All tax matters, including without limitation,
allocation of past losses, gains, amortization and deductions
shall be determined in accordance with the Internal Revenue
Service rules on Consolidated Financial Statements.
4. Expiration: The terms of the Services Agreement will expire on
December, 31,2002. Netplex and Systems will enter into a new Services
Agreement effective January 1, 2003 unless both parties
agree to cancel the agreement. This agreement can only be terminated
prior to December 31, 2002 based on the written agreement of both
parties.
5. Arbitration: Any controversy or claim arising out of or relating to
this Services Agreement, or its breach, or its validity or
interpretation, except claims involving necessary third parties who
refuse to participate or claims seeking injunctive or equitable relief,
shall be settled by binding arbitration in accordance with the then
current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). The arbitration award shall be binding on the
parties and may be enforced in any court of competent jurisdiction.
6. Other Terms:
6.1 Remedies. The remedies provided in this Services Agreement are
exclusive.
6.2 Modification. Any change in the services as permitted in this
Services Agreement shall be deemed an authorized modification of
this Services Agreement. No other modification of this Services
Agreement is permitted except with the written consent of both
parties. All modifications must be in writing and approved by
representatives of both parties.
6.3 Choice of Law, Venue. This Services Agreement shall be governed by
Virginia law. Any action to enforce any provision of this Services
Agreement shall be brought only in a court of appropriate
jurisdiction located in the State of Virginia.
6.4 Integration. This Services Agreement constitutes the entire
agreement between the parties hereto on the subject matter hereof
and supercedes and replaces any prior or contemporaneous agreement
on said subject.
6.5 Binding, Assignment. This Services Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and no other person
or entity shall have any right (whether third party beneficiary or
otherwise) hereunder. This Services Agreement may not be assigned
by any party without the prior written consent of the other party.
6.6 Notices. All notices, demands and other communications pertaining
to this Service Agreement ("Notices") shall be in writing
addressed as follows: If to Netplex.
The Netplex Group, Inc.
Chairman
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
If to Systems:
Netplex Systems, Inc.
Chairman
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Notices shall be deemed given five (5) business days after being
mailed by certified or registered United States mail, postage
prepaid, return receipt requested, or on the first business day
after being sent, prepaid, by nationally recognized overnight
courier that issues a receipt or other confirmation of delivery to
the appropriate recipient of such Notice. Any party may change the
address to which Notices under this Services
Agreement are to be sent to it by giving written notice of a
change of address in the manner provided in this Services
Agreement for giving Notice.
6.7 Counterparts; Facsimile. This Services Agreement may be signed in
any number of counterparts with the same effect as if the
signature on each such counterpart were on the same instrument.
This Services Agreement any counterparts may be executed by
facsimile with the same effect as if the signature were an
original.
6.8 Neither party may assign its rights or obligations under this
Services Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld. The use
of third parties to provide the services under this Services
Agreement shall not be deemed a violation of this Section.
6.9 Any arbitration arising out of this Services Agreement must be
commenced within one (1) year from the date upon which such cause
of action shall have first accrued. Any other actions arising out
of this Services Agreement to the extent that they are excluded
from the provisions of Section 6 of this Services Agreement must
be commenced with in the applicable Statute of Limitations
prescribed by law.
6.10 Netplex and Systems are strictly independent contractors. Neither
party has the right to bind the other in any manner, and nothing
in this Services Agreement shall be interpreted to make either
party the agent or legal representative of the other or to make
the parties joint ventures or partners, not shall either party
represent or imply to other persons or entities that any such
relationship exists.
6.11 Notwithstanding anything to the contrary in this Services
Agreement, Netplex shall not be responsible for failure of
performance due to any cause(s) beyond its reasonable control,
including, but not limited to, accidents, acts of God, labor
disputes, or the actions of any government agency or common
carrier or other third party over whom Netplex has no reasonable
control.
6.12 Systems and Netplex shall each keep confidential and not, directly
or indirectly, reveal, report, publish, disclose or transfer any
confidential information ("Confidential Information") obtained by
it with respect to the other in connection with this Services
Agreement. Notwithstanding the foregoing limitation, neither party
shall be required to keep confidential or return any Confidential
Information that (a) is known or available through other lawful
sources, not bound by a confidentiality agreement with the
disclosing party, (b) is or becomes publicly known or generally
known in the industry through no fault of the receiving party or
its agents, (c) is required to be disclosed pursuant to Law
(provided the other parties are given reasonable prior notice), or
(d) is developed by the receiving party independently of the
disclosure by the disclosing party. This section 6.12 shall
survive the termination of this Services Agreement.
6.13 The parties agree and acknowledge that they have read this
Services Agreement. The persons signing below on behalf of the
respective parties represent and warrant that they have the
authority to bind the party on whose behalf they have executed
this Services Agreement.
WHEREFORE, the parties have executed this Services Agreement
as of the date first above written.
THE NETPLEX GROUP, INC.
By:_________________________
Name: ______________________
Title: _____________________
NETPLEX SYSTEMS, INC.
By:_________________________
Name: ______________________
Title: _____________________
Schedule A
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Netplex Systems, Inc.
Services Provided by the Netplex Group, Inc.
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The Netplex Group, Inc. (Netplex) has and will continue to provide Netplex
Systems, Inc. (Systems) with corporate services as follows:
1. Executive Management:
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Executive management provides oversight to the Systems operations;
shareholders; interaction; financial analyst discussions; banking
relationship management; public company financing and capital management;
public company coordination with investors; public accountants, SEC and
lawyers; stock option program management; annual meeting coordination;
audit committee coordination; and public company marketing coordination
including the annual report to shareholders among others.
2. Benefits Administration:
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Benefits administration includes the following:
(1) coordinates and negotiates all benefits programs with the Company's
carriers including group insurance, 401-k Plan, life insurance, disability,
etc.;
(2) distributes all appropriate material to the entity human resource
groups and employees as appropriate;
(3) trains the related personnel;
(4) interacts with the employee population describing new programs and
general information through written communication to the employee groups;
(5) continuously analyzes the actual cost to determine trends and program
change opportunities through data evaluation, meeting with carriers, and
industry trends;
(6) audits the group insurance xxxxxxxx to determine their appropriations;
(7) maintains the human resources employee files;
(8) maintains the ADP on-line H/R system;
(9) coordinates all discrimination testing with outside plan
administrators and determines the method of compliance or communication to
affected participants when not in compliance; etc.
3. Financial Services:
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The financial services group are responsible for and provide the following:
(1) Maintaining a system of internal controls that are appropriate for a
public company and are acceptable to the Company's independent auditors.
(2) Prepare and coordinate all SEC related filings including the quarterly
Forms 10Q; Form 8-K when special events occur; Forms S-8 related to stock
options changes and programs; Form 10-K; S-1 updating, etc. This includes
close coordination with the Company's lawyers, independent auditors and
third party financial printers. This function also must remain current on
all SEC and accounting pronouncements which affect the company's reporting
and recording of financial transactions.
(3) Prepare, using the CostPoint financial system, financial statements and
monthly/weekly management reports. The reports include: monthly financial
statements, general ledger activity, accounts receivable trends, balance
sheet account detail, and backlog; etc. Weekly reports include metric
reports, utilization reports, accounts receivable aging reports, project
information reports
(unbilled hours held, billed hours written-off), etc. Provide information
and analytical evaluations to Systems management as necessary.
(4) Assist management in preparing and updating the annual business plan.
Develop and maintain the business planning model and distribute as
necessary.
Financial Services (con't)
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(5) Manage all banking, lock box and financing relationships and provide
cash management. Banking/Finance relationships require the daily transfer
of detail transactions to the finance company and the coordination of those
transactions with the Company's bank. This is required to determine daily
availability.
(6) Coordinate and process transactions. The transactions that are
currently coordinated and processes are:
(a) Receivable transactions and the related billing process;
(b) Cash receipts application;
(c) Coordination and monitoring of accounts receivable;
(d) Accounts payable processing;
(e) Payroll processing through the ADP system;
(f) General ledger reconciliation process;
(g) Month-end closings;
(h) Coordination of quarterly reviews, audits, and discussion with the
Company's independent auditors. New Board of Director Audit Committee
regulations require detail quarterly reviews by the Company's independent
auditors and sign-off before release of earnings and Form 10-Q's;
(i) Tax reporting including registration in states where the Company does
business or has nexus, preparation of monthly sales tax returns,
preparation of quarterly income tax filings, preparation of state and
federal tax returns, coordination of state tax credits for jobs credits,
preparation of property tax returns in appropriate county locations;
coordination with state agencies on annual doing business reporting,
coordination of information on form 5500 for each benefit program;
(7) Coordination of audits of each benefit plan with the Company's
independent auditing firm. ERISA requires an audit of each benefit plan
with more than 50 participants.
(8) Compliance with monthly financial reporting requirements in conjunction
with the Company's financing line of credit including the preparation of
financial statements for the subsidiary.
(9) Coordination of the directors and officers; property and liability
insurance programs.
4. Information Technology:
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Information Technology provides system maintenance of the Corporate Netplex
infrastructure, (CostPoint, Internet, Intranet, Finance, Human Resources,
ADP, etc.), oversight assistance to operating entities, telephone service
agreement negotiation and coordination, capital expenditure coordination
and approval, etc.
5. Investor Relations (Company for the benefits of Shareholders):
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The Investor Relations function provides a continuous stream of information
to the public (current and prospective shareholders, and investors) about
the Company that assists in establishing an appropriate market valuation.
This includes press releases, interviews, new articles, presentations,
periodic conference calls, etc.
