EXHIBIT A
SECOND AMENDED AND RESTATED SETTLEMENT AGREEMENT
This Second Amended and Restated Settlement Agreement ("Agreement") is by
and among William R. Dunavant, 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, 434 Fayetteville St. Mall, Raleigh, North
Carolina 27601.
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 13, 1999
Agreement between William R. Dunavant 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-Dade County
Circuit Court, captioned Dunavant 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 S 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.
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D. Dunavant
"Dunavant" means William R. Dunavant, his assigns, successors-in-interest,
or any other entity of whatever form or characteristic which is now entitled to,
or which shall subsequently succeed to, the rights and obligations of William R.
Dunavant.
E. Currently Owned Shares
"Currently Owned Shares" shall mean the shares of common stock of HSNS that
Dunavant currently holds.
F. Additional Shares
"Additional Shares" shall mean the shares of common stock of HSNS to be
issued by HSNS to Dunavant as Restricted Securities pursuant to paragraph II.A
below.
G. Monthly Shares
"Monthly Shares" shall mean the shares to be delivered to Dunavant 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 Dunavant 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 Dunavant as Restricted Securities pursuant to paragraph
III.B 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.
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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.
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 Dunavant 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 Dunavant acknowledges that these
Additional Shares will be issued to Dunavant as Restricted Securities under the
relevant federal securities laws.
B. HSNS shall also deliver to Dunavant Monthly Shares, unencumbered with
any restrictions, covenants, loans, mortgages, security interests or other
devices or conditions (except that Dunavant acknowledges that these shares will
be issued to Dunavant 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.
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C. HSNS shall also deliver to Dunavant, 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 Dunavant acknowledges that these 1,000,000 New Restricted Shares will be
issued to Dunavant 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 Dunavant the 2,000,000 Shares then to be held by Dunavant, in exchange
for Dunavant's claims and his contractual rights, with the goal of enabling
Dunavant 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 Dunavant, within five days of the issuance
of the approval by the State of North Carolina, a written legal opinion
addressed to Dunavant from an attorney from a nationally-recognized law firm who
is reasonably experienced in handling SEC matters and who is reasonably
acceptable to Dunavant and HSNS that Dunavant is free to sell the 2,000,000
Shares without Legal Restrictions, then the following provisions shall apply.
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(i) Dunavant 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. Dunavant 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 Dunavant 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 Dunavant and HSNS, such opinion
stating that Dunavant is permitted under the law to sell 350,000 Shares held by
Dunavant since August 13, 1999. 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 Dunavant 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 Dunavant's
notice to HSNS under section II.E.i). In that event, Dunavant shall have the
right but not the obligation immediately to commence arbitration proceedings, as
hereunder described, against HSNS, provided that no delay by Dunavant in
commencing such proceedings shall be deemed a waiver of any rights that Dunavant
has under this Agreement.
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(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 Dunavant of all or some of the Shares under registration by arranging
for the delivery to Dunavant of one (1) written legal opinion each month
addressed to Dunavant from an attorney from a nationally-recognized law firm who
is reasonably experienced in handling SEC matters and who is reasonably
acceptable to Dunavant and HSNS, such opinion stating that Dunavant is permitted
under the law to sell shares and that, as of a particular date, Dunavant 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 Dunavant 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 Dunavant has been provided with an opinion as set forth herein. For
example, if a written legal opinion is provided that states that Dunavant is
free to sell 100,000 shares, and the number of shares under registration is
$2,100,000then the number of Shares under registration shall be reduced to
2,000,000.
F. To the extent permitted by law, Dunavant shall be free, but not
obligated, to sell any shares of HSNS common stock under SEC Rule 144.
G. HSNS shall pay Dunavant Twelve Thousand Five Hundred Dollars ($12,750)
on or before the fifth (5th) business day following the Execution Date, and
shall thereafter pay Dunavant 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 Dunavant from delays in resolving the
controversies surrounding HSNS' compliance with the August 13, 1999 Agreement.
I. Dunavant 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 Dunavant.
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 Dunavant
Dunavant 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 Dunavant 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.
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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
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 Dunavant, the notice shall be
addressed as follows:
William R. Dunavant
2461 Provence Circle
Weston, Florida 33327
With a copy to:
Richard E. Brodsky, P.A.
Suite 919, 25 SE Second Avenue
Miami, Florida 33131
If the notice is directed to HSNS, the notice shall be addressed as follows:
High Speed Network Solutions, Inc.
Suite 2120, 434 Fayetteville St. Mall
Raleigh, North Carolina 27601
Attn: President
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With a copy to:
Jim Verdonik
Kilpatrick Stockton LLP
3737 Glenwood Avenue
Raleigh, North Carolina 27612
The addresses for delivery of notice may be changed by any party by
providing written notice in the manner set forth above.
VIII. ACKNOWLEDGMENTS
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, Dunavant 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 Dunavant hereby terminate and have no obligations arising from the Selling
Shareholder Agreement dated as of July ___,2000.
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Subject to the provisions of paragraph III.A, this Agreement supersedes 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 Dunavant (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
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 supersede 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
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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.
H. Warranty of HSNS
HSNS warrants that, prior to the execution of this Agreement by Dunavant,
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.
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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.
William R. Dunavant High Speed Net Solutions, Inc.
/s/ /s/
_____________________ By: ______________________
Printed Name:
______________________
Title: ___________________
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