APPENDIX A-2
FIRST AMENDMENT TO
ASSET ACQUISITION AGREEMENT
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 9th 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:
1.26. "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.
1.27. "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.
1.28. "Effective Date" shall be September 1, 1998.
1.29. "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.
1.30. "Escrow Agreement" shall mean an agreement to be
executed to the mutual satisfaction of the
Parties at or prior to the Preliminary Closing
Date.
2. Amendment of Defined Terms:
2.1. 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
from the Escrow Agent the documents required to
be given by Seller hereunder. Closing shall
take place in Oklahoma City, Oklahoma.
2.2. 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.
2.3. "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.
3. Amendment of Delivery of Consideration.
3.1. Section 3.1 of the Agreement, including is subsections,
is deleted and replaced as follows:
Consideration to Seller:
3.1.1. 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.
3.1.2. 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.
3.1.3. 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 ▇▇▇▇ 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.
4. Effective Date
4.1. 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.
4.2. 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.
4.3. 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.
5. Transition between Effective Date and Closing
5.1. 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.
5.1.1. 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 direct
employees of Netplex and shall be placed on Netplex's benefit
plans, and Seller shall have no further obligation regarding the
same.
5.1.2. 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.
5.1.3. 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.
5.1.4. 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
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.
5.1.5. 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.
5.1.6. 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.
5.1.7. Netplex shall indemnify, defend and hold Seller
harmless from any Liabilities arising from the nonpayment of
any such expenses.
5.1.8. It is agreed and understood that, although ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇▇▇▇▇ 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.
5.2. 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.
5.3. 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.
5.4. Netplex shall make available to Seller all Business
Records of the Business covering the period of time between
the Effective Date and the Closing.
5.5. 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.
5.6. 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.
5.7. 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.
5.8. 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.
5.9. 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.
5.10. 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.
5.11. 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 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.
6. Modification of certain terms:
6.1. 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.
6.2. 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.
6.3. 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.
6.4. 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.
6.5. 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.
6.6. 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 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"
6.7. 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,".
6.8. In section 10.1(f) the term "Seller, Netplex" shall be
amended to read "Seller or Netplex".
6.9. 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."
6.10. 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.
7. Covenants of Seller.
7.1. Seller hereby covenants:
7.1.1. 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.
7.1.2. Seller shall comply with the terms of the Escrow
Agreement.
8. Covenants of Netplex.
8.1. Netplex hereby covenants:
8.1.1. 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.
8.1.2. 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.
8.1.3. 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.
8.1.4. Netplex shall comply with the Escrow Agreement.
9. Other Additional Covenants:
9.1. 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.
10. Conditions Precedent to Closing.
10.1. The respective obligations of each party to
consummate the Agreement are subject to the satisfaction at
Closing Date of the following conditions precedent:
10.1.1. 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.
10.1.2. 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.
10.2. 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:
10.2.1. 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.
10.3. 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:
10.3.1. 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.
11. Miscellaneous.
11.1. The Escrow Agreement shall be mutually agreed upon
and executed by Netplex and Seller at or prior to the
Preliminary Closing.
11.2. 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.
11.3. 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.
11.4. 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.
11.5. The term "Buyer" as used in sections 8.4(a) and
8.4(c) is amended to read "buyer".
11.6. The term "Buyer" as used in section 5.6 is amended
to read "Netplex".
11.7. 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".
11.8 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
THE NETPLEX GROUP, INC.
By: __________________________
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President and CEO
APPLIED INTELLIGENCE GROUP, INC.
By: ___________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and CEO