Document:

Board of Directors

Somerset International Group, Inc.

90 Washington Valley Road

Bedminster, New Jersey 07921

 

Dear Board Members,

 

Effective on March 10, 2005, which is the day before the closing of the acquisition of Secure Systems, Inc. by Somerset and subject to the consummation of that closing, I hereby resign my position as Chairman of the Board of Directors and those of Executive Vice President, Principal Financial Officer, Secretary and Director.

 

Somerset International Group, Inc. hereby releases and forever discharges me and my successors and assigns from any and all debts, claims, demands, damages, actions, causes of action and liabilities of any nature whatsoever, relating to any act, event or omission occurring before the date of my resignation, and I hereby release and forever discharge Somerset International Group, Inc. and its successors and assigns from any and all debts, claims, demands, damages, actions, causes of action and liabilities of any nature whatsoever, relating to any act, event or omission occurring before the date of my resignation.

 

We each agree to refrain from making any untrue or disparaging statements to any other person or entity concerning or related to the other party. Nothing contained in this commitment is intended to prevent either party from making truthful statements in connection with any proceeding for the exercise or enforcement of any rights hereunder.

 

I acknowledge my personal guaranty of certain debt of Somerset International Group, Inc. to George and Mary Lou Berry. We agree that I will not be personally liable for any additional debt incurred by Somerset International Group, Inc. after the date of my resignation, and Somerset International Group, Inc. agrees to use commercially reasonable efforts to have me removed as a personal guarantor from its existing debt. In any case, Somerset International Group, Inc. will not permit John X. Adiletta to be removed as a personal guarantor on such debt unless I am removed as well.

 

In addition, I agree to return to the Treasury of Somerset one million two hundred eighty-nine thousand eight hundred and forty-three (1,289,843) shares of Common Stock issued to me by Somerset, in inverse order of my receipt of such shares.

	
            Very truly yours,
 	
             

	
            Somerset International Group, Inc.
 

 

	
             
	
            /s/ Paul Patrizio  
 	
             

	
             
	
            Paul Patrizio
 	
             

	
            Accepted
 	
            Executive Vice President
 
				

Somerset International Group, Inc.

 

	
            By:
 	
            /s/ John X. Adiletta
 
	
            Title:
 	
            PresidentAPPENDIX C

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITY IS RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

 

 

	
            Certificate No. ___
 	
            Participation Percentage: ____
 

 

SECURE SYSTEM, INC.

 

PROFIT PARTICIPATION CERTIFICATE

 

THIS CERTIFICATE is issued by SECURE SYSTEM, INC.,  a New Jersey corporation (the “Company”), pursuant to the terms of an Agreement and Plan of Merger dated as of June 15, 2004 (the “Merger Agreement”), between the Company and Somerset International Group, Inc.  All Profit Participation Certificates issued by the Company pursuant to the Merger Agreement are referred to herein as the “Certificates”. 

 

FOR VALUE RECEIVED, the Company promises to pay to the order of ____________________, or permitted assigns (the “Holder”), all amounts that become due pursuant to Sections 2 and 3 hereof. Payment shall be made quarterly on the tenth day following each calendar quarter (a “Payment Date”) with respect to amounts that become due during said calendar quarter. Payment shall be made by delivery of a personal check to the Holder at the address of the Holder appearing on the Certificate Register required to be maintained under Section 6 hereof, or at such other address as designated by the Holder in writing to the Company. The obligation created by this Certificate shall not
bear interest.  

 

	
            This Certificate is subject to the following additional provisions:
 

 

1.         Transfer of Certificate. This Certificate may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the “Securities Act”), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Certificate. In the event of any proposed transfer of this Certificate, the Company may require, prior to issuance of a new Certificate in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Certificate in such other name does not and will not cause a violation
of the Securities Act or any applicable state or foreign securities laws.  Prior to due presentment for transfer of this Certificate, the Company and any agent of the Company may treat the person in whose name this Certificate is duly registered on the Company’s Certificate Register as the 

 

1

 

 

owner hereof for the purpose of receiving payment as herein provided and for all other purposes,  and neither the Company nor any such agent shall be affected by notice to the contrary. 

 

2.         Profit Participation. In the event that the Company or an affiliate enters into a contract with either Duquesne University or The University of Illinois (a “Contract”) and, pursuant to that Contract, installs products, partially or completely, prior to June 30, 2006, then the Holders of the Certificates shall be entitled to be paid an amount equal to the Profit Participation. The “Profit Participation” shall equal thirty (30%) of Gross Profit received by the Company (or affiliate) from said sales. “Gross Profit” shall mean revenue less direct costs associated with the revenue (including commissions or fees
payable on account of the revenue), and shall be computed on a cash basis consistent with accounting practices utilized by the Company prior to June 30, 2004. Gross Profit shall include any revenue billed prior to June 30, 2006 and collected prior to August 31, 2006. 

 

3.         Allocation Among Holders. The payment due to the Holder of this Certificate on each Payment Date shall equal (a) the Profit Participation payable to all Holders on that Payment Date multiplied by (b) the Participation Percentage specified on the face of this Certificate. 

 

4.         Reports. On each Payment Date through and including September 30, 2006, regardless of whether any payment is due, the Company shall send to the Holder a statement containing a calculation of the Gross Profit, identifying with specificity revenue and direct costs associated with the Contracts.

 

5.         Record Owner. The Company may deem the person in whose name this Certificate shall be registered upon the registry books of the Company to be, and may treat it as, the absolute owner of this Certificate for all purposes, and the Company shall not be affected by any notice to the contrary. All payments shall be valid and effective to satisfy and discharge the liability upon this Certificate to the extent of the sum or sums so paid or the conversion so made.

 

6.         Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of the Certificates. Upon any transfer of this Certificate in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Certificate Register.

 

7.         Governing Law. This Certificate shall be governed by and construed in accordance with the laws of the State of New Jersey. Each of the parties consents to the jurisdiction of the courts of the State of New Jersey and the federal courts whose districts encompass any part of the State of New Jersey in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions.

 

 

 

2

 

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.

	
            Dated:  
 	
            July__, 2004
 	
            Secure System, Inc.
 

 

 

	
            By:______________________________________
 

 

	
            Name:____________________________________
 

 

	
            Title:_____________________________________
 

 

 

 

3IN WITNESS THEREOF, the party hereto have executed or approved this AGREEMENT on the dates below the signatures.

	
            Contract No. C008211
 

 

	
            CONTRACTOR
 	
            STATE AGENCY
 

 

	
            Secure Systems Inc.  
 	
            Office of Mental Health   
 

 

	
            __________________________
 	
            _____________________
 

 

 

	
            By: /s/ Gregory S. Lawson  
 	
            By: /s/ Barbara Miller  
 

 

	
            Gregory Lawson  
 	
            Barbara Miller  
 	
             

	
             
	
            Printed Name
 	
            Printed Name
 
					

 

	
            Title: President & CEO  
 	
            Title: Asst. Director Financial Admin.
 

 

	
            Date:  
 	
            6/4/03  
 	
            Date:  
 	
            6/4/03  
 

 

	
            State Agency Certification
 

“In addition to the acceptance of this contract, I also certify that original copies of this signature page will be attached to all other exact copies of this contract.”

	
            STATE OF NEW JERSEY)
 
	
             
	
            )SS.:
 	
             

	
            County of  
 	
            Monmouth  
 	
             

					

 

On this 19th day of May, 2003, before me personally came Gregory S. Lawson, to me known, who being by me duly sworn, did depose and say that he/she resides at 10 Kendels Pen St. and that he/she is  President & CEO of the corporation or municipality describes and which executed the above instrument, and that he/she executed the above instrument by order of the board of directors of the corporation and that he/she signed his/her name thereto by like order, or that he/she was duly authorized by the municipal corporation described in and which executed the above instrument, and that he/she executed the above instrument pursuant to authority vested in him/her. 

(Notary) _______________________

	
            ATTORNEY GENERAL’S SIGNATURE
 	
            STATE CONTROLLER’S SIGNATURE
 	
             

	
            _________________________________
 	
            ____________________________________
 

 

	
            Title:_____________________________
 	
            Title:_______________________________
 

 

	
            Date:______________________________
 	
            Date:_______________________________
 

 

 

 

 

STATE OF NEW YORK

AGREEMENT

 

This AGREEMENT is hereby made by and between the State of New York agency (STATE) and the public or private agency (CONTRACTOR) identified on the face page hereof.

 

WITNESSETH:

 

WHEREAS, the STATE has authority to regulate and provide funding for the establishment and operation of program services and desires to contract with skilled parties possessing the necessary resources to provide each services; and

 

WHEREAS, the CONTRACTOR is ready, willing and able to provide such program services and possesses or can make available all necessary qualified personnel, licenses, facilities and expertise to perform or have performed the services required pursuant to the terms of this AGREEMENT:

 

NOW THEREFORE, in consideration of the promises, responsibilities and covenants herein, the STATE and the CONTRACTOR agree as follows:

 

	
            I.
 	
            Conditions of Agreement
 

 

	
            A.
 	
            This AGREEMENT may consist of successive periods (PERIOD), as specified within the AGREEMENT or within a subsequent Modification Agreement (Appendix X). Each additional or superseding PERIOD shall be on the forms specified by the particular State agency, and shall be incorporated into this AGREEMENT.
 

 

	
            B.
 	
            Funding for the first PERIOD shall not exceed the contract amount specified on the face page hereof. Funding for each subsequent PERIOD, if any, shall not exceed the amount specified in the appropriate appendix for that PERIOD.
 

 

	
            C.
 	
            This AGREEMENT incorporates the face pages attached and all of the marked appendices identified on the face pager hereof.
 

 

	
            D.
 	
            For such succeeding PERIOD of this AGREEMENT, the parties shall prepare new appendices, to the extent that any require modification, and a Modified Agreement (The attached Appendix X is the blank form to be used). Any terms of this AGREEMENT not modified shall remain in effect for each PERIOD of the AGREEMENT.
 

 

To modify the AGREEMENT within an existing PERIOD, the parties shall revise or complete the appropriate appendix form(s). Any change in the amount of consideration to be paid, or change in the term, is subject to the approval of the Office of the State Controller. Any other modifications shall be processed in accordance with agency guidelines as stated in Appendix A1.

 

 

 

 

	
            A.
 	
            The CONTRACTOR shall perform all services to the satisfaction of the STATE. The CONTRACTOR shall provide services and meet the program objectives summarized in the Program Work plan (Appendix D) in accordance with: provisions of the AGREEMENT; relevant laws, rules and regulations, administrative and fiscal guidelines: and where applicable, operating certificates for facilities or licenses for an activity or program.
 

 

	
            B.
 	
            If the CONTRACTOR enters into subcontracts for the performance of work pursuant to this AGREEMENT, the CONTRACTOR shall take full responsibility for the acts and omissions of its subcontractors. Nothing in the subcontract shall impair the rights of the STATE under this AGREEMENT. No contractual relationship shall be deemed to exist between the subcontractor and the STATE.
 

 

	
            C.
 	
            Appendix A (Standard Clauses as required by the Attorney General for all State contracts) take precedence over all parts of the AGREEMENT.
 

 

	
            II.
 	
            Payment and Reporting
 

 

A.         The CONTRACTOR, to be eligible for payment, shall submit to the STATE’s designated payment office (identified in Appendix C) all appropriate documentation as required by the Payment and Reporting Schedule (Appendix C) and by agency fiscal guidelines, in a manner acceptable to the STATE.

 

B.         The STATE shall make payments and any reconciliations in accordance with the Payment and Recording Schedule (Appendix C). The STATE shall pay with the CONTRACTOR, in consideration of the contract services for a given PERIOD, a sum not to exceed the amount noted on the face page hereof or in the respective Appendix designing the payment amount for a given PERIOD. This sum shall not duplicate reimbursement from other sources for CONTRACTOR’s costs and services provided pursuant to This AGREEMENT. 

 

C.         The CONTRACTOR shall meet the audit requirements specified by the STATE. 

 

	
            III.
 	
            Terminations
 

 

A.        This AGREEMENT may be terminated at any time upon mutual written consent of the STATE and the CONTRACTOR. 

 

B.         The STATE may terminate the AGREEMENT immediately, upon written notice of termination to the CONTRACTOR, if the CONTRACTOR fails to comply with the terms and conditions of this AGREEMENT and/or with any laws, rules regulations, policies or procedures affecting this AGREEMENT. 

 

C.         The STATE may also terminate this AGREEMENT for any reason in accordance with provisions set forth in Appendix A1.

D.        Written notice of termination, where required, shall be sent by personal messenger service or by certified mail, return receipt request. The termination shall be effective in accordance with the terms of the notice. 

 

 

 

 

E.         Upon receipt of the notice of termination, the CONTRACTOR agrees to cancel, prior to the effective date of any prospective termination, as many outstanding obligations as possible, and agrees not to incur any new obligations as possible, and agrees not to incur any new obligations after receipt of the notice without approval by the STATE. 

 

	
            F.
 	
            The
 

and costs incurred pursuant to terms of the AGREEMENT. In no event shall the STATE be liable for expenses and obligations arising from paragraph(s) in this AGREEMENT after the termination date. 

 

	
            IV.
 	
            Indemnification
 

 

A.        The CONTRACTOR shall be solely responsible and answerable in damages for any and all accidents and/or injuries to persons (including death) or property arising out of or related to the services to be rendered by the CONTRACTOR subcontractors pursuant to this AGREEMENT. The CONTRACTOR indemnify suits, actions, damages and costs of every nature arising out of the provision of services pursuant to this AGREEMENT. 

 

B.         The claim to be an officer, employee or subdivision of the STATE nor make any claim, demand or application to or for based upon any different status. 

 

	
            V.
 	
            Property
 

 

Any equipment, furniture, supplies or other property purchased pursuant AGREEMENT is deemed to be the property of the STATE except as may otherwise be governed by Federal or State  laws, rules or regulations, or as stated in Appendix A1. 

 

	
            VI.
 	
            Safeguards for Service and Confidentiality
 

 

A.         Services performed pursuant to this AGREEMENT are secular in nature and shall be performed in a manner that does not discriminate on the basis of religious belief, or promote or discourage adherence to religion in general or particular religious beliefs. 

 

B.         Funds provided pursuant to this AGREEMENT shall not be used for any partisan political activity, or for activities that any influence legislation ot the election or defeat of any candidate for public office. 

 

C.         Information relating to individuals who may receive services pursuant to this AGREEMENT shall be maintained and used only for the purposes intended under the contract and in conformity with applicable provisions of laws and regulations, or specified in Appendix A1.

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