Document:

<PAGE>

                                                                   Exhibit 10.38

           AMENDMENT NUMBER FOUR (F) TO LOAN AND SECURITY AGREEMENT
           --------------------------------------------------------

          This AMENDMENT NUMBER FOUR (F) TO LOAN AND SECURITY AGREEMENT (this
"Amendment"), dated as of August 15, 2001, is entered into by and among WAM!NET
INC., a Minnesota corporation ("Parent"), each of Parent's Subsidiaries
identified on the signature pages hereof (such Subsidiaries, together with
Parent, are referred to hereinafter each individually as a "Borrower", and
individually and collectively, jointly and severally, as the "Borrowers"), each
of the financial institutions named on the signature pages hereto as Lenders
(such financial institutions, together with their respective successors and
assigns, each a "Lender" and collectively, the "Lenders"), and FOOTHILL CAPITAL
CORPORATION, a California corporation, as agent for the Lenders (in such
capacity, the "Agent").

          WHEREAS, the Borrowers have requested the Lender Group to amend
certain terms of that certain Loan and Security Agreement, dated as of February
13, 2001, as amended prior to the date hereof (as further amended, restated,
supplemented, or otherwise modified from time to time, the "Loan Agreement"),
and the Lender Group is willing to amend the Loan Agreement subject to the terms
and conditions of this Amendment.  All capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Loan Agreement,
as amended hereby.

          NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and conditions hereinafter set forth, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1.   Amendments.

     (a)  Section 1.1 of the Loan Agreement is hereby amended by adding the
          -----------
following definitions in alphabetical order:

          "Amendment 4(f)" means Amendment Number Four (F) to Loan and Security
           --------------
     Agreement, dated as of August 15, 2001, by and among the Borrowers and
     Lender Group.

          "Amendment 4(f) Closing Date" means the date that all conditions set
           ---------------------------
     forth in Section 3 of Amendment 4(f) have been satisfied.
              ---------

          "Amendment 4(f) Closing Fee" has the meaning set forth in Section
           --------------------------                               -------
     2.11(i)(1).
     ----------

          "Amendment 4(f) Use Fee" has the meaning set forth in Section
           ----------------------                               -------
2.11(i)(2).
----------

          "Sixth Term C Loan Tranche" has the meaning set forth in Section 2.14.
           -------------------------                               ------------

     (b)  Section 1.1 of the Loan Agreement is hereby amended by amending and
          -----------
restating the following definitions in their respective entirety to read as
follows:
<PAGE>

          "Amendment 4(e) Closing Date" means August 13, 2001.
           ---------------------------

          "Term C Loan Amount" means, as of any date, $25,286,152, plus the then
           ------------------                                      ----
     extant Term C Loan PIK Amount.

     (c)  Section 2.11 of the Loan Agreement is amended by inserting a new
          ------------
subsection (i) at the end of Section 2.11, to read as follows:
                                    -----

          (i)  Amendment 4(f) Fees. Borrowers shall pay to Agent the following
     fees and charges, which fees and charges shall be non-refundable when paid
     (irrespective of whether this Agreement is terminated thereafter) and shall
     be apportioned among the Term C Lenders in accordance with their Pro Rata
     Shares:

               (1)  Amendment 4(f) Closing Fee.  A closing fee of $106,680, due
               and payable on the Amendment 4(f) Closing Date (the "Amendment
               4(f) Closing Fee").

               (2)  Amendment 4(f) Use Fee.  A use fee of $35,560, due and
               payable on the Amendment 4(f) Closing Date (the "Amendment 4(f)
               Use Fee").

     (d)  Subsection (b) of Section 2.14 of the Loan Agreement is amended and
                            ------------
restated in its entirety to read as follows:

          (b)  On the Amendment 4(a) Closing Date, the Term C Lender made a term
     loan to the Borrowers in the principal amount of $1,300,000 (the "First
                                                                       -----
     Term C Loan Tranche").  On the Amendment 4(b) Closing Date, the Term C
     -------------------
     Lender made a term loan to the Borrowers in the principal amount of
     $3,386,880 (the "Second Term C Loan Tranche").  On the Amendment 4(c)
                      --------------------------
     Closing Date, the Term C Lender made a term loan to the Borrowers in the
     principal amount of $5,292,000 (the "Third Term C Loan Tranche").  Pursuant
                                          -------------------------
     to Amendment 4(d), the Term C Lender made a series of term loans to Parent
     in the aggregate principal amount of $7,138,800 (collectively, the "Fourth
                                                                         ------
     Term C Loan Tranche").  On the Amendment 4(e) Closing Date, the Term C
     -------------------
     Lender made a term loan to the Borrowers in the principal amount of
     $6,248,232 (the "Fifth Term C Loan Tranche").  Subject to the terms and
                      -------------------------
     conditions of this Agreement, on the Amendment 4(f) Closing Date, the Term
     C Lender agrees to make an addition term loan to the Borrowers in the
     principal amount of $1,920,240 (the "Sixth Term C Loan Tranche").  The
                                          -------------------------
     principal amount of the Sixth Term C Loan Tranche shall be added to the
     principal amount of the First Term C Loan Tranche, the Second Term C Loan
     Tranche, the Third Term C Loan Tranche, the Fourth Term C Loan Tranche and
     the Fifth Term C Loan Tranche and such loans shall be deemed a single term
     loan (hereinafter, the "Term C Loan").  The outstanding unpaid principal
                             -----------
     balance and all accrued and unpaid interest under the Term C Loan,
     including the Term C Loan PIK Amount, shall be due and payable on the date
     of termination of this Agreement, whether by its terms, by prepayment, or
     by acceleration.  All amounts outstanding under the Term C Loan, including
     all accrued and unpaid interest and including the Term C Loan PIK Amount,
     shall constitute Obligations.  Without limiting the foregoing sentence,
     each of the parties

                                       2
<PAGE>

     hereto hereby agrees that, notwithstanding the terms of Amendment 4(d), the
     Fourth Term C Loan Tranche and all related Obligations shall constitute the
     joint and several liability of all Borrowers and shall be secured by all of
     the Collateral.

     (e)  Schedule C-1 hereby is amended and restated in its entirety to read as
          ------------
set forth in Annex I attached hereto.

2.   Acknowledgement of the Obligations. Borrowers acknowledge that (i) as of
August 9, 2001, Borrowers owe the Original Lenders $15,410,852.27 in principal
for Advances plus accrued and unpaid interest, and (ii) as of August 14, 2001
(A) Borrowers owe the Term A Lender $2,400,000 in principal for the Term A Loan
plus accrued and unpaid interest, (B) Borrowers owe the Term B Lender $7,590,000
in principal for the Term B Loan plus accrued and unpaid interest, and (C)
Borrowers owe the Term C Lender $23,365,912 in principal for the First Term C
Loan Tranche, the Second Term C Loan Tranche, the Third Term C Loan Tranche, the
Fourth Term C Loan Tranche and the Fifth term C Loan Tranche, plus accrued and
unpaid interest.  The total amount of the Obligations, including without
limitation principal, interest and fees and reasonable expenses of Lenders'
counsel, is by the execution of this Amendment by Borrowers, ratified, confirmed
and approved by Borrowers in all respects.  Borrowers acknowledge and agree that
(a) the Obligations are valid and binding obligations of Borrowers, enforceable
against Borrowers in accordance with their terms, and (b) Borrowers are
presently obligated to pay these amounts and all of their other existing
Obligations in accordance with the terms of the Loan Documents, all without any
further demand, notice or claim.  In addition, Borrowers acknowledge and agree
with Lenders that (x) Borrowers have no known claim or cause of action against
Lenders (or Lenders' directors, officers, employees, agents, affiliates or
attorneys), (y) Borrowers have no known offset right, counterclaim or defense of
any kind against any Obligations, and (z) Lenders have heretofore properly
performed and satisfied in a timely manner all of Lenders' obligations to
Borrowers.

3.   Conditions. This Amendment shall become effective only upon satisfaction in
full of the following conditions precedent:

          (a)  Agent shall have received on or before the Amendment 4(f) Closing
Date the following, each in form and substance satisfactory to Agent (and, where
indicated, the applicable Lender) and, unless indicated otherwise, dated as of
the Amendment 4(f) Closing Date::

          (i)  counterparts of this Amendment, duly executed by the Borrowers
          and the Lender Group; and

          (ii) such other agreements, instruments, approvals, opinions and other
          documents as Agent or any Lender may reasonably request.

     (b)  Parent shall have paid to the Term C Lender the Amendment 4(f) Closing
Fee and the Amendment 4(f) Use Fee, which Amendment 4(f) Closing Fee and
Amendment 4(f) Use Fee shall be fully earned as of the date of this Amendment;
the parties hereto agree that the Amendment 4(f) Closing Fee and the Amendment
4(f) Use Fee shall be paid from the proceeds of the Sixth Term C Loan Tranche.

                                       3
<PAGE>

     (c)  The several counsel to the members of the Lender Group shall have
received payment, in immediately available funds, of all accrued and unpaid
attorneys fees and expenses constituting Lender Group Expenses incurred in
connection with this Amendment and the transactions contemplated hereunder or
reasonably ancillary hereto. Borrowers hereby direct the Term C Lender to pay
the current fees and charges of Schulte Roth & Zabel LLP, counsel to the Term B
Lender and the Term C Lender, from the proceeds of the Sixth Term C Loan Tranche
in accordance with the payment instructions attached hereto as Annex II.

     (d)  Parent, Winstar Wireless, Inc. ("Winstar") and certain affiliates of
Winstar shall have entered into a Settlement Agreement, the terms of which shall
be satisfactory to the Term C Lender, and Parent shall have paid to Winstar the
payment of $1,000,000 required under the terms of such Settlement Agreement;
such payment may be made from the proceeds of the Sixth Term C Loan Tranche.

     (e)  The representations and warranties in this Amendment, the Loan
Agreement as amended by this Amendment, and the other Loan Documents shall be
true and correct in all respects on and as of the date hereof, as though made on
such date (except to the extent that such representations and warranties relate
solely to an earlier date);

     (f)  No Default or Event of Default shall have occurred and be continuing
on the date hereof, nor shall result from the consummation of the transactions
contemplated herein;

     (g)  No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
governmental authority against Borrowers or the Lender Group; and

     (h)  All other documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to Agent
and its counsel.

4.   Representations and Warranties. Each Borrower hereby represents and
warrants to the Lender Group that (a) the execution, delivery, and performance
of this Amendment and any other documents delivered pursuant to Section 3(a)
above (each an "Amendment Document" and collectively, the "Amendment
Documents"), and the performance of the Loan Agreement, as amended by this
Amendment, are within its corporate or other organizational powers, have been
duly authorized by all necessary corporate action, and are not in contravention
of any law, rule, or regulation, or any order, judgment, decree, writ,
injunction, or award of any arbitrator, court, or governmental authority, or of
the terms of its charter or bylaws, or of any contract or undertaking to which
it is a party or by which any of its properties may be bound or affected, and
(b) each Amendment Document to which it is a party and the Loan Agreement, as
amended by this Amendment, constitute such Borrower's legal, valid, and binding
obligation, enforceable against such Borrower in accordance with its terms.

5.   Further Assurances. Borrowers shall execute and deliver all agreements,
documents, and instruments, in form and substance satisfactory to Agent, and
take all actions as Agent or any Lender may reasonably request from time to time
fully to consummate the transactions

                                       4
<PAGE>

contemplated under the Amendment Documents and the Loan Agreement, as amended by
this Amendment.

6.   Miscellaneous.

     (a)  This Amendment shall be effective as of the Amendment 4(f) Closing
Date.

     (b)  Upon the effectiveness of this Amendment, each reference in the Loan
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Loan Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.

     (c)  Upon the effectiveness of this Amendment, each reference in the Loan
Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words
of like import referring to the Loan Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.

     (d)  This Amendment shall be governed by and construed in accordance with
the laws of the State of New York.

     (e)  This Amendment may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Amendment.  Delivery of an
executed counterpart of this Amendment by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of this Amendment.  Any
party delivering an executed counterpart of this Amendment by telefacsimile also
shall deliver a manually executed counterpart of this Amendment but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment.

     (f)  This Amendment is a Loan Document.

                Remainder of this page intentionally left blank

                                       5
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.

                                          Borrowers:
                                          ---------
                                          WAM!NET INC., a
                                          Minnesota corporation

                                          By: __________________________________
                                          Title: _______________________________

                                          WAM!NET GOVERNMENT SERVICES, INC.,
                                          a Minnesota corporation

                                          By: __________________________________
                                          Title: _______________________________

                                          WAM!NET PROFESSIONAL SERVICES LLC,
                                          a Minnesota limited liability company

                                          By: __________________________________
                                          Title: _______________________________

                                          Agent:
                                          -----

                                          FOOTHILL CAPITAL CORPORATION,
                                          a California corporation, as Agent

                                          By: __________________________________
                                          Title: _______________________________

                      (Signature Page to Amendment 4(f))

                                       6
<PAGE>

                                          Lenders:
                                          -------

                                          FOOTHILL CAPITAL CORPORATION,
                                          a California corporation

                                          By: __________________________________
                                          Title: _______________________________

                                          ABLECO FINANCE LLC,
                                          a Delaware limited liability company
                                          (for itself and as agent for certain
                                          of its affiliates)

                                          By: __________________________________
                                          Title: _______________________________

                                          MADELEINE L.L.C.,
                                          a New York limited liability company
                                          (for itself and as agent for certain
                                          of its affiliates)

                                          By: __________________________________
                                          Title: _______________________________

                      (Signature Page to Amendment 4(f))

                                       7
<PAGE>

                                    ANNEX I

                                 Schedule C-1
                                 ------------

                                  Commitments

<TABLE>
<CAPTION>
============================================================================================================
                          Revolver          Term A Loan        Term B Loan     Term C Loan        Total
      Lender             Commitment          Commitment        Commitment       Commitment      Commitment
============================================================================================================
<S>                     <C>                 <C>                <C>             <C>             <C>
Foothill Capital        $15,000,000         $        0         $        0      $         0     $15,000,000
 Corporation
============================================================================================================
Ableco Finance LLC      $15,000,000         $2,400,000         $        0      $         0     $17,400,000
============================================================================================================
Madeleine L.L.C.        $         0         $        0         $7,590,000      $25,286,152     $32,876,152
============================================================================================================
All Lenders             $30,000,000         $2,400,000         $7,590,000      $25,286,152     $65,276,152
============================================================================================================
</TABLE>

                                       8
<PAGE>

                                   ANNEX II

                             Payment Instructions

Wire the following amount to Schulte Roth & Zabel LLP as indicated below:

Amount:                                   $478,000
Bank                                      Citibank N.A.
ABA Number                                021000089
Account Name                              Schulte Roth & Zabel LLP
Account Number                            43346802
Reference                                 009541/0056 Attn.: Stuart Freedman

                                       9EXHIBIT 10.1

                              SETTLEMENT AGREEMENT

     This SETTLEMENT AGREEMENT (this "Agreement") is dated this _____ day of
May, 2001, and is executed among Teltronics, Inc., a Delaware corporation
("Teltronics") and Interactive Solutions, Inc., ("Plaintiffs") and Kevin B.
Rogers, Michael P. Jonas, Intelliworxx, Inc., a Florida corporation
("Intelliworxx") and Wavelogic, Inc. ("Defendants"), collectively referred to
herein as the "Parties."

     1.   Plaintiffs have sued Defendants for damages as alleged in their
          complaint in a lawsuit filed in the United States District Court,
          Middle District of Florida, Tampa Division, Case No. 98-CIV-1392-T-23B
          (the "Lawsuit").

     2.   Defendants have been awarded a verdict against Plaintiffs in the
          Lawsuit, including a damage award which the Court has ruled excessive.
          The Court has encouraged the Parties to negotiate a settlement with
          regard to the amount of damages.

     3.   The Court has ordered a new trial on the issue of damages only.

     4.   After lengthy negotiations, the Parties have agreed to settle and
          release all claims by each and all of them against the others arising
          out of the actions of the Parties alleged in the Lawsuit to avoid the
          risk, expense and inconvenience of further litigation in accordance
          with the terms and conditions set forth below.

     NOW, THEREFORE, for good and valuable consideration, the Parties, intending
to be legally bound, agree as follows:

     1. Settlement of Action. The Lawsuit shall be and the same hereby is
settled under and subject to the terms and conditions set forth herein. The
Defendants hereby agree not to appeal or move to set aside the verdict in the
Lawsuit on the issue of liability, only.

     2. Settlement Amount.

          2.1 Settlement Amount. Subject to the terms and conditions herein
     stated, the Lawsuit shall be settled on the Closing Date, by Intelliworxx,
     Rogers, Jonas and Teltronics, performing the acts and delivering the
     documents set forth in Section 2.2.

          2.2 Payment of the Settlement Amount.

               (a) Intelliworxx shall execute and deliver to Teltronics a
          Promissory Note obligating Intelliworxx to pay Teltronics $700,000 in
          equal monthly installments of principal and interest, the payments to
          commence on August 1, 2001. Interest on the unpaid principal amount
          shall run from that date at 8% per annum simple interest for the first
          year, and 10% per annum simple interest for the second year. The
          Promissory Note shall be secured in accordance with the provisions of
          Section 4 of this agreement.

               (b) Certificates representing 570,000 shares of Intelliworxx
          stock shall be registered in the name of Teltronics (the Intelliworxx
          Shares), together with stock powers duly endorsed in blank by
          Teltronics shall be held in escrow by Sommer & Schneider LLP, pursuant
          to an escrow agreement in the form annexed hereto as Exhibit A (the
          "Escrow Agreement"). The Escrow Agreement shall provide that:

<PAGE>

               (i)  on or before January 2, 2002, Intelliworxx Shares having a
                    "Market Value" (as determined below) of $2,275,000 will be
                    released from escrow for sale by Teltronics;

               (ii) on or before October 27, 2002, additional Intelliworxx
                    Shares having a Market Value equal to $2,275,000 will be
                    released from escrow for sale by Teltronics.

               (iii) In the event and at such time as Teltronics realizes gross
                    proceeds of $4,550,000 from the sale of the Intelliworxx
                    Shares, or Intelliworxx exercises the repurchase option set
                    forth in Section 2.6 of this Agreement, unsold Intelliworxx
                    Shares will be returned to Intelliworxx for cancellation.

          2.3 Issuance of Additional Intelliworxx Shares. If, on January 2, 2002
     or October 27, 2002, the Market Value of the Intelliworxx Shares is less
     than $2,275,000, Intelliworxx shall issue to Teltronics additional shares
     of Intelliworxx Stock so that Teltronics shall realize $2,275,000 upon the
     resale of the Escrow Shares, provided that Intelliworxx shall not be
     required to issue more than 330,000 additional shares on January 2, 2002 or
     more than 600,000 additional shares on October 27, 2002 (plus any of the
     330,000 shares not issued on January 2, 2002.). The making of the payments
     required by Paragraphs 2.2(a) and 2.5(a), and delivery of the Shares
     required hereunder in accordance with the terms of this Agreement, shall
     constitute full payment and satisfaction of Intelliworxxes obligations
     under this Settlement Agreement, regardless of the market value of the
     stock.

          2.4 Market Value. As of any date set forth in this Section 2, "Market
     Value" shall equal the "Market Price" times the number of shares of
     Intelliworxx Stock. Market Price as of any such date shall equal the
     greater of: (X) the closing price of a share of Intelliworxx Stock one day
     prior to such date or (Y) the average closing price of shares of
     Intelliworxx Stock for the thirty (30) trading days prior to such date
     ("Valuation Formula").

          2.5 Additional Payments by Intelliworxx and Jonas.

               (a) In addition to the foregoing, Intelliworxx shall pay
          Teltronics $7,500.00 at closing, and shall execute a Promissory Note
          requiring six (6) additional equal monthly payments, the first of
          which shall be due on August 1, 2001 in the amount of $7,500. These
          payments shall also be secured as set forth in Paragraph 4 of this
          Agreement.

               (b) In addition to the foregoing, Jonas shall pay Teltronics
          $12,000 at closing, and shall execute and deliver a Promissory Note
          made payable to Teltronics which will require an additional payment of
          $5,250 thirty (30) days from closing, and a final payment of $5,250 to
          Teltronics sixty (60) days from closing. These payments shall all be
          secured in the same fashion as set forth in Section 4 of this
          agreement.

                                       2
<PAGE>

          2.6 Option to Repurchase Shares. Teltronics hereby grants Intelliworxx
     the option, exercisable upon not less than ten days written notice, to
     purchase all Intelliworxx Shares for a price equal to $4,550,000, less the
     market value realized by Teltronics from the sale of Intelliworxx Shares,
     and any payments made pursuant to Paragraph 2.5. If Intelliworxx gives
     Teltronics notice of it's intention to exercise this option, Teltronics
     shall provide to Intelliworxx copies of all original documents relating to
     the number of Intelliworxx Shares sold by Teltronics and the prices at
     which such Intelliworxx Shares were sold within 5 business days of such
     notice.

          2.7 Stipulated Final Judgments.

               (a) In addition to the foregoing, Intelliworxx and Teltronics
          shall execute a Stipulation at closing, authorizing Teltronics to file
          a Final Judgment in the pending court case against Intelliworxx in the
          total amount of $5,250,000, less any payments made hereunder, and less
          the value of any stock delivered to Teltronics hereunder, to be filed
          and recorded in the event of a default by Intelliworxx under this
          Agreement. The failure to make the payments required by Paragraph
          2.5(a) shall not constitute a default for purposes of this Paragraph.
          To the extent allowed by law, the Final Judgment shall not be
          dischargeable in bankruptcy. The filing, recording and enforcement of
          the Final Judgment shall be the sole remedy of Teltronics for default
          by Intelliworxx to comply with the terms and conditions of under this
          Settlement Agreement. Teltronics expressly waives the right to pursue
          any of the causes of action raised in the Court case or any causes of
          action that could have been raised in the Court case..

               (b) In addition to the foregoing, Intelliworxx, Rogers and
          Teltronics shall execute a stipulation at closing authorizing
          Teltronics to file a Final Judgment in the pending court case against
          Intelliworxx and Rogers in the amount of any payments not made in
          accordance with the provisions of the promissory note required by
          Paragraph 2.5(a). The judgment amount shall be in the amount of the
          unpaid payments and may be filed and recorded in the event of a
          default. To the extent allowed by law, the Final Judgment shall not be
          dischargeable in bankruptcy as to Rogers. The filing, recording and
          enforcement of a Final Judgment shall be the sole remedy of Teltronics
          for the failure of Intelliworxx to comply with the terms and
          conditions of Paragraph 2.5(a). Teltronics expressly waives the right
          to pursue any of the causes of action raised in the court case or any
          causes of action that could have been raised in the court case.

               (c) In addition to the foregoing, Jonas and Teltronics shall
          execute a stipulation at closing, authorizing Teltronics to file a
          Final Judgment in the pending court case against Jonas in the amount
          of any payments not made in accordance with the provisions of the
          Promissory note required by Paragraph 2.5(b). The Final Judgment shall
          be in the amount of the unpaid payments and may be filed and recorded
          in the event of default by Jonas under the promissory note. Any such
          judgment shall be dischargeable in bankruptcy. Filing, recording and
          enforcement of the Final Judgment shall be the sole remedy of
          Teltronics for the failure of Jonas to comply with the terms and
          conditions of Paragraph 2.5(b) Teltronics expressly waives the right
          to pursue any of the causes of action raised in the court case or any
          causes of action that could have been raised in the court case.

                                       3
<PAGE>

          2.8 Closing. The Closing shall take place at ___________ at the
     offices of Teltronics, (and may be by delivery of documents by overnight
     courier) not later than ___________________ or at such other time and date
     as Intelliworxx and Teltronics shall agree in writing. Such time and date
     are herein referred to as the "Closing Date."

     3. Registration Rights. On the Closing Date, Intelliworxx and Teltronics
shall enter into a Registration Rights Agreement, in the form annexed hereto as
Exhibit B.

     4. Security. In order to secure the obligations of Intelliworxx and Messrs.
Rogers and Jonas under this Agreement, the Escrow Agreement and the Registration
Rights Agreement, on the Closing Date, Rogers and Jonas will execute
non-recourse guarantees in the form annexed hereto as Exhibit C and will pledge
to Teltronics or its nominee 425,000 and 100,000 shares of Intelliworxx Stock
owned by them, respectively, free and clear of any and all liens, encumbrances,
options, or rights of others ("Pledged Shares") under a Pledge Agreement
substantially in the form annexed hereto as Exhibit D.

     5. Stipulation Discontinuing Action. On the Closing Date, and upon the
payment of $7,500 by Intelliworxx, $12,000 by Jonas and the delivery of the
Promissory Notes, executed Escrow Agreement, Registration Rights Agreement,
Non-Recourse Guaranties and Pledges, the Parties will execute and promptly file
with the Court, a Stipulation abating the Action pending performance of the
settlement agreement by Intelliworxx, Jonas and Rogers, and dismissing the
action with prejudice as to Wave Logic, Inc, providing that the Court shall, to
the extent it may determine to do so, retain jurisdiction to enforce the
remaining terms of this agreement. Upon full payment by Intelliworxx under
Paragraph 2.5(a) or in the case of Jonas, pursuant to Paragraph 2.5(b), Rogers
and Teltronics, or Jonas and Teltronics, respectively, will execute stipulations
of dismissals with prejudice of all claims against Jonas or Rogers as the case
may be. The dismissal of all claims against Rogers and Jonas shall not have the
effect of releasing any claim by Teltronics to enforce the terms of the Security
Agreements contemplated by Section 4 of this Agreement. Upon the performance of
all of the obligations of Intelliworxx under this Settlement Agreement,
Intelliworxx and Teltronics shall execute and file a dismissal of the Action
with prejudice. Each of the foregoing stipulations of dismissal shall provide
that each party shall bear its own attorney's fees and court costs.

     6. Mutual Releases. On the Closing Date, subject to the performance of
Defendants of their obligations under this Settlement Agreement, each Party
hereto, such Party's heirs, assigns and agents, do hereby fully and forever,
release, waive and discharge each of the Parties hereto, and their respective
officers, directors, shareholders, agents, employees, successors and assigns,
(hereinafter collectively referred to as the "Releasees") from and against each
and every claim, demand, cause of action, obligation, damage, complaint, expense
or action of any kind, description or nature whatsoever, known or unknown,
suspected or unsuspected, that each Party has or may hereafter have, against the
Releasees. This mutual release specifically excludes the rights and obligations
of the parties under this Agreement, the escrow agreement, the registration
rights agreement, the non-recourse guarantees and the pledges.

                                       4
<PAGE>

     7. Representations of Plaintiffs. The Plaintiffs, individually, represent,
warrant and agree as follows:

          7.1 Authority to Execute and Perform Agreement; No Breach. Each
     Plaintiff has the full legal right and power and all authority and approval
     required to enter into, execute and deliver this Agreement and to perform
     fully their respective obligations hereunder. This Agreement has been duly
     executed and delivered by such Plaintiff and, assuming due execution and
     delivery by, and enforceability against, Defendants, constitutes the valid
     and binding obligation of such Plaintiff enforceable in accordance with its
     terms, subject to the qualifications that enforcement of the rights and
     remedies created hereby is subject to (i) bankruptcy, insolvency,
     reorganization, moratorium and other laws of general application affecting
     the rights and remedies of creditors, and (ii) general principles of equity
     (regardless of whether such enforcement is considered in a proceeding in
     equity or at law). No approval or consent of, or filing with, any
     governmental or regulatory body, and no approval or consent of, or filing
     with, any other person is required to be obtained by such Plaintiffs or in
     connection with the execution and delivery by such Plaintiffs of this
     Agreement and consummation and performance by them of the transactions
     contemplated hereby. The execution, delivery and performance of this
     Agreement by such Plaintiffs and the consummation of the transactions
     contemplated hereby in accordance with the terms and conditions hereof by
     such Plaintiffs will not:

               (a) knowingly violate, conflict with or result in the breach of
          any of the material terms of, or constitute (or with notice or lapse
          of time or both would constitute) a material default under, any
          contract, lease, agreement or other instrument or obligation to which
          such Plaintiffs is a party or by or to which any of the properties and
          assets of such Plaintiffs may be bound or subject;

               (b) violate any order, judgment, injunction, award or decree of
          any court, arbitrator, governmental or regulatory body, by which
          either such Plaintiffs or the securities, assets, properties or
          business of such Plaintiffs is bound; or

               (c) knowingly violate any statute, law or regulation.

          7.2 Securities Acknowledgments. Teltronics hereby acknowledges that:

               (a) The Intelliworxx Shares have not been registered under the
          Securities Act of 1933, as amended (the "Securities Act"), or any
          state securities act in reliance on exemptions there from.

               (b) In connection with the purchase of the Intelliworxx Shares,
          that no representation has been made by representatives of
          Intelliworxx regarding its business, assets or prospects other than
          that set forth herein and as set forth in the filings made by
          Intelliworxx pursuant to Section 13 of the Securities Exchange Act of
          1934, as amended and such other representations and warranties as set
          forth in this Agreement.

                                       5
<PAGE>

               (c) The certificate or certificates representing the Intelliworxx
          Shares will be inscribed with the following legend:

               "The securities represented by this certificate have not been
               registered under the Securities Act of 1933. The securities have
               been acquired for investment and may not be sold, transferred
               assigned in the absence of an effective registration statement
               for these securities under the Securities Act of 1933 or an
               opinion of Teltronics' counsel, in form and substance reasonably
               acceptable to Intelliworxx' counsel, that registration is not
               required under said Act."

          7.3 Securities Representations. Teltronics hereby represents, warrants
     and agrees as follows:

               (a) The Intelliworxx Shares are being acquired solely for such
          Teltronics' own account, for investment and are not being acquired
          with a view to or for the resale or distribution thereof, except as
          contemplated by the Registration Rights Agreement, Teltronics has no
          present plans to enter into any such contract, undertaking, agreement
          or arrangement and Teltronics further understands that the
          Intelliworxx Shares, may only be resold pursuant to a registration
          statement under the Securities Act, or pursuant to some other
          available exemption;

               (b) Teltronics is an "accredited investor" as that term is
          defined in Regulation D of the Securities Act and through its officers
          and directors has sufficient knowledge and experience in financial and
          business matters to be capable of evaluating the merits and the risks
          of its investment in the Intelliworxx Shares and is able to bear the
          economic risk of its investment in the Intelliworxx Shares;

     8. Representations of Defendants. Each Defendant represents, warrants and
agrees as follows:

          8.1 Authorization. Each Defendant has full power, legal capacity and
     authority to enter into this Agreement, to execute all attendant documents
     and instruments necessary to consummate the transaction herein
     contemplated, and, as to Intelliworxx, to issue and sell the Intelliworxx
     Shares to Teltronics, and to perform all of its obligations hereunder. This
     Agreement and all other agreements, documents and instruments to be
     executed in connection herewith have been effectively authorized by all
     necessary action, corporate or otherwise, on the part of the Defendants,
     which authorizations remain in full force and effect, have been duly
     executed and delivered by the Defendants, and no other corporate
     proceedings on the part of the Defendants are required to authorize this
     Agreement and the transactions contemplated hereby, except as specifically
     set forth herein. This Agreement constitutes the legal, valid and binding
     obligation of the Defendants and is enforceable with respect to the
     Defendants in accordance with its terms, except as enforcement hereof may
     be limited by bankruptcy, insolvency, reorganization, priority or other
     laws of court decisions relating to or affecting generally the endorsements
     of creditors' rights or affecting generally the availability of equitable
     remedies. Neither the execution and delivery of this Agreement, nor the
     consummation by the Defendants of any of the transactions contemplated

                                       6
<PAGE>

     hereby, or compliance with any of the provisions hereof, will (i) conflict
     with or result in a breach or, violation of, or default under, any of the
     terms, conditions or provisions of any note, bond, mortgage, indenture,
     license, lease, credit agreement or other agreement, document, instrument
     or obligation (including, without limitation, any of its charter documents)
     to which the Defendants is a party or by which the Defendants or any of its
     assets or properties may be bound, or (ii) violate any judgment, order,
     injunction, decree, statute, rule or properties of the Defendants. No
     authorization, consent or approval of any public body of authority or any
     third party is necessary for the consummation by the Defendants of the
     transactions contemplated by this Agreement.

          8.2 Compliance with Law and Government Regulations. The Defendants are
     in compliance with all applicable statutes, regulations, decrees, orders,
     restrictions, guidelines and standards, whether mandatory or voluntary,
     imposed by the United States of America, any state, county, municipality or
     agency of any thereof, and any foreign country or government to which the
     Defendants are subject. Without limiting the generality of the foregoing,
     the Defendants have filed all reports and statements required to be filed
     pursuant to the Securities Act of 1933 (the "1933 Act") and Securities
     Exchange Act of 1934 (the "1934 Act") including all periodic reports
     required under the Section 13 or 15 of the Exchange Act. Each of such
     reports was complete, did not contain any material misstatement of or omit
     to state any material fact.

          8.3 Shares. The Intelliworxx Shares to be issued and delivered to
     Teltronics shall be fully paid, non-assessable and free and clear of any
     lien, claim, charge of encumbrance.

     9. No Admission. The Parties agree that the execution of this Agreement is
not an admission by any of them of liability with respect to damages, except as
set forth in this Agreement.

     10. Miscellaneous Provisions.

          10.1 Severability. In the event that any provision of this Agreement
     is found to be illegal or unenforceable by any court or tribunal of
     competent jurisdiction, then to the extent that such provision may be made
     enforceable by amendment to or modification thereof, the Parties agree to
     make such amendment or modification so that the same shall be made valid
     and enforceable to the fullest extent permissible under existing law and
     public policies in the jurisdiction where enforcement is sought, and in the
     event that the Parties cannot so agree, such provision shall be modified by
     such court or tribunal to conform, to the fullest extent permissible under
     applicable law, to the intent of the Parties in a valid and enforceable
     manner, if possible and if not possible, then be stricken entirely from the
     Agreement by such court or tribunal and the remainder of this Agreement
     shall remain binding on the parties hereto.

          10.2 Amendment. No amendment or modification of the terms or
     conditions of this Agreement shall be valid unless in writing and signed by
     the party or parties to be bound thereby.

                                       7
<PAGE>

          10.3 Governing Law. This Agreement shall be interpreted, construed,
     governed and enforced according to the internal laws of the State of
     Florida without regard to conflict or choice of law principles of Florida
     or any other jurisdiction. This Agreement shall be executed in Florida and
     is intended to be performed in Florida. In the event of litigation arising
     out of this Agreement, the parties hereto consent to the personal
     jurisdiction of the State of Florida, and agree to exclusively litigate
     said actions, in the court having jurisdiction over the Lawsuit.

          10.4 No Waiver. If any party to this Agreement fails to, or elects not
     to enforce any right or remedy to which it may be entitled hereunder or by
     law, such right or remedy shall not be waived, nor shall such nonaction be
     construed to confer a waiver as to any continued or future acts, nor shall
     any other right or remedy be waived as a result thereof. No right under
     this Agreement shall be waived except as evidenced by a written document
     signed by the party waiving such right, and any such waiver shall apply
     only to the act or acts expressly waived in said document.

          10.5 Counterparts. This Agreement may be executed in any number of
     counterparts, and each such counterpart will, for all purposes, be deemed
     an original instrument, but all such counterparts together will constitute
     but one and the same Agreement.

          10.6 Binding Agreement. This Agreement shall be binding upon and shall
     inure to the benefit of the parties hereto, and upon their respective
     heirs, successors, assigns and legal representatives.

          10.7 Counsel. Each of the parties hereto represents that it, she or he
     has consulted legal counsel in connection with this Agreement, or has been
     given full opportunity to review this Agreement with counsel of his, her or
     its choice prior to execution thereof and has elected not to seek such
     counsel. The parties hereto waive all claims that they were not adequately
     represented in connection with the negotiation, drafting and execution of
     this Agreement. Each party further agrees to bear its own costs and
     expenses, including attorneys' fees, in connection with the Action and this
     Agreement. If any Party initiates any legal action arising out of or in
     connection with enforcement of this Agreement, the prevailing Party in such
     legal action shall be entitled to recover from the other Party all
     reasonable attorneys' fees, expert witness fees and expenses incurred by
     the prevailing Party in connection therewith.

          10.8 Notices. All notices and demands permitted, required or provided
     for by this Agreement shall be made in writing, and shall be deemed
     adequately delivered if delivered by hand or by mailing the same via the
     United States Mail, prepaid certified or registered mail, return receipt
     requested, or by priority overnight courier for next business day delivery
     by a nationally recognized overnight courier service that regularly
     maintains records of its pick-ups and deliveries and has daily deliveries
     to the area to which the notice is sent, addressed to the parties at their
     respective addresses as shown below:

                                       8
<PAGE>

          Name                               Address
          ----                               -------

          To Company                         Intelliworxx, Inc.
                                             1819 Main Street, Suite 1101
                                             Sarasota, FL  34236
          Facsimile:                         (941) 365-1204

          With a Copy To:                    Sommer & Schneider LLP
                                             595 Stewart Avenue, Suite 710
                                             Garden City, NY  11530
          Facsimile:                         (516) 228-8211

          To Teltronics:                     Teltronics Inc.
                                             2150 Whitefield Industrial Way
                                             Sarasota, FL  34243
          Facsimile:                         (941) 751-7724

          With a Copy To:                    John N. Blair, Esq.
                                             Blair & Roach
                                             2645 Sheridan Drive
                                             Tonawanda, NY  14150
          Facsimile:                         (716) 834-9197

          To Interactive Solutions:          Interactive Solutions
                                             c/o Teltronics Inc.
                                             2150 Whitefield Industrial Way
                                             Sarasota, FL  34243
          Facsimile:                         (941) 751-7724

          To Kevin B. Rogers:                Kevin B. Rogers
                                             244 Shopping Avenue, Suite 320
                                             Sarasota, Florida 34237

          To Michael P. Jonas:               Michael P. Jonas
                                             c/o Intelliworxx, Inc.
                                             1819 Main Street, Suite 1101
                                             Sarasota, FL  34236
          Facsimile:                         (941) 365-1204

          To Wavelogic:                      Wavelogic, Inc.
                                             c/o Intelliworxx, Inc.
                                             1819 Main Street, Suite 1101
                                             Sarasota, FL  34236
          Facsimile:                         (941) 365-1204

          Notices delivered personally shall be deemed communicated as of the
     date of actual receipt. Notices mailed as set forth above shall be deemed
     communicated as of the date three (3) business days after mailing, and
     notices sent by overnight courier shall be deemed communicated as of the
     date one (1) business day after sending.

                                       9
<PAGE>

          10.9 Entire Agreement. This Agreement and the Exhibits hereto set
     forth the entire agreement and understanding of the parties hereto in
     respect of the subject matter contained herein, and supersedes all prior
     agreements, promises, understandings, letters of intent, covenants,
     arrangements, communications, representations or warranties, whether oral
     or written, by any party hereto or by any related or unrelated third party.
     All exhibits attached hereto, and all certificates, documents and other
     instruments delivered or to be delivered pursuant to the terms hereof are
     hereby expressly made a part of this Agreement, and all references herein
     to the terms "this Agreement", "hereunder", "herein", "hereby" or "hereto"
     shall be deemed to refer to this Agreement and to all such writings.

          10.10 Successors and Assigns. As used herein the term "the Parties"
     shall include their respective successors in interest, licensees or
     assigns, except that Defendants shall not assign any of their rights or
     delegate any of their obligations under this Agreement, except Intelliworxx
     repurchase option set forth in Section 2.6 of this Agreement, without the
     prior written consent of Teltronics.

          10.11 Documents. At the conclusion of the Action, each Party shall
     return to the other all documents and papers produced by the other in
     connection with the Action.

          10.12 Execution. Each person who signs this Agreement on behalf of a
     corporate entity represents and warrants that he has full and complete
     authority to execute this Agreement on behalf of such entity. Each party
     shall bear the fees and expenses of its counsel and its own out-of-pocket
     costs in connection with the Action and this Agreement.

          10.13 Captions. The captions appearing in this Agreement are for
     convenience only, and shall have no effect on the construction or
     interpretation of this Agreement.

          10.14 Facsimile Signatures. Facsimile copies of signatures shall be
     deemed original signatures, and this Agreement may be executed in
     counter-part.

     Executed by the Parties on this _____ day of May, 2001.

Intelliworxx, Inc.                          Teltronics, Inc.
By:                                         By:
Name: /s/ Oscar J. Williams                 Name:/s/ Ewen Cameron
---------------------------                 ---------------------
Title: CEO                                  Title: CEO
----------                                  ----------

Interactive Solutions, Inc.                 Wavelogic, Inc.
By:                                         By:
Name: /s/ Ewen Cameron                      Name: /s/ Kevin B. Rogers
----------------------                      -------------------------
Title: President                            Title: President

/s/ Kevin B. Rogers                         /s/ Michael P. Jonas
-------------------                         --------------------
KEVIN B. ROGERS                             MICHAEL P. JONAS

                                       10

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