Settlement Agreement between New York City Transit Authority and AlphaNet Solutions, Inc.

        This Settlement Agreement (the “Agreement”) is entered into by and between the New York City Transit Authority (“Authority”), and AlphaNet Solutions, Inc. (“AlphaNet”) (jointly referred to as the “Parties”) this 25th day of March, 2003.

        WHEREAS, on December 16,1997 the Authority entered into Contract D-337437R (“Contract”) with AlphaNet in the amount of $20,433,382.53, and

        WHEREAS, Modification No. 1 was issued on September 29, 1998 in the amount of $171,055.60 making the total Contract amount $20,604,438.13.

        WHEREAS, on, or about May 5, 1999, AlphaNet submitted a request to the Authority for change order in the amount of $1,215,891 along with a request for thirteen month extension to the Contract’s duration, which was denied by the Authority’s Project Manager (“Claim”) after which AlphaNet submitted a dispute concerning the Claim to the Authority’s Dispute Resolution Officer which was denied; and

        WHEREAS, AlphaNet then challenged the denial in an Article 78 proceeding whose petition was captioned AlphaNet Solutions, Inc. v. New York City Transit Authority; bearing Index No. 8172/02 in the Supreme Court of the State of New York, Kings County, which petition was denied (“Article 78 proceeding”); and

        WHEREAS, AlphaNet filed a Notice of Appeal from the order denying the petition in the Appellate Division, Second Judicial Department (“Appeal”) bearing Docket No.: 2002-05198; and

        WHEREAS, the Authority has paid AlphaNet to date the sum of $16,400,142.01 and

        WHEREAS, the Authority has approved invoices in the amount of $1,646,014.74 for payment and which are identified on Schedule A annexed hereto (“Approved Invoices”); and

        WHEREAS, the Authority has approved additional invoices in the amount of $96,821.45 for payment and which are identified on Schedule B annexed hereto (“Accepted Invoices”); and

        WHEREAS, monies withheld for Warranties total $638,471.40 (“Warranty Monies”); and

        WHEREAS, AlphaNet has submitted requests for payment to the Authority through March 7, 2003, which have not yet been processed or approved for payment (“Open Invoices”) and which are identified on Schedule C annexed hereto; and

        WHEREAS, AlphaNet intends to submit additional invoices (“Additional Invoices”) to the Authority; and

        WHEREAS, the Authority is assessing liquidated damages in the amount of $300,000.00; and

        WHEREAS, the parties desire to settle all past, present and future claims or disputes between them.

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

        1)     The Authority will issue payment, within 30 days of the execution of this Agreement, for the Approved Invoices less a $150,000.00 deduction. That deduction, one half of the Authority’s liquidated damages assessment, will result in an Approved Invoice payment of $1,496,014.74. The parties agree that the balance of the Authority’s liquidated damages assessment ($150,000) will be deducted from AlphaNet’s invoice for monies withheld for warranty work which is $638,471.40 (“Warranty Monies”) and will be paid pursuant to Paragraph 4.

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        2)     The Authority acknowledges its receipt of Open Invoices from AlphaNet. The Authority shall process such invoices for payment in accordance with the Contract. The Authority will use its best efforts to process the Open Invoices expeditiously and the parties agree to use their efforts to meet weekly to review the status of all Open Invoices. The parties agree that the sum of $536,476.82, representing the balance of repayments owing by AlphaNet to the Authority in respect of advance payments made by the Authority to AlphaNet under the Contract, will be deducted from payments due for the Accepted Invoices and Open Invoices at the time payments of the Accepted Invoices and Open Invoices are made. The Authority will pay the full amount of the Accepted Invoices and the approved Open Invoices less the deduction of $536,476.82. In the event any portion of the Open Invoices is disputed by the Authority, such invoices will be deemed to be Additional Invoices which shall not delay payment of the remaining Open Invoices.

        3)     All payments due under this Agreement are subject to claims against monies due under the Contract arising under the Lien Law and Labor Law. The Authority represents and warrants to AlphaNet that the Authority is not aware, as of the day of the date of this Agreement, of any claims, liens or lawsuits asserted against the Contract or monies due under the Contract.

        4)     After the $150,000.00 deduction for liquidated damages from the Warranty Monies is made, monies withheld for the warranties shall be $488,471.00 which amount shall be invoiced by AlphaNet subject to any deductions made by the Authority for warranty work. The parties agree that no additional monies will be withheld for warranty retainage. After January 31, 2004, AlphaNet will invoice the Authority for the Warranty Monies.

        5)     The parties agree that the Contract was completed as of January 31, 2003; that any work after that date shall be performed pursuant to mutually agreed change orders; and that all warranties required by the Contract shall expire on January 31, 2004 with the exception of warranties for change order work identified on Schedule D attached hereto as mutually agreed by the Authority and AlphaNet and any other work performed after January 31, 2003.

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        6)     Simultaneously with the execution of this Agreement, AlphaNet will deliver to the Authority a stipulation discontinuing with prejudice its appeal from the decision, order and judgment of the Supreme Court, Kings County, in the form annexed hereto as Exhibit 1.

        7)     Except to the extent otherwise set forth herein, the terms of the Contract remain in full force and effect and nothing in this Agreement shall be deemed to be a waiver by the Authority of the provisions of the Contract, including Article 211 pursuant to which any dispute concerning this Agreement shall be adjudicated, except the Authority agrees to limit its assessment of liquidated damages to $300,000.00 and agrees not to assess any additional sums for liquidated damages. Without limiting the foregoing, AlphaNet hereby agrees to defend, indemnify and hold harmless the Authority from and against any and all claims and costs, regardless of nature or description (including counsel fees), arising from, or relating to, (i) any failure of AlphaNet to provide to the Authority the affidavits showing payment to AlphaNet’s employees, subcontractors and suppliers and (ii) any failure, in fact, by AlphaNet to have made all lawfully required payments to AlphaNet’s employees, subcontractors and suppliers for work performed on the Project.

        8)     For, and in consideration of, the mutual agreements set forth herein, AlphaNet does forever release, discharge and acquit the Authority and its subsidiaries, parents and affiliated entities, divisions, assigns, successors, officers, directors, employees, agents, and attorneys, and all other persons, individuals, turns, corporations, government, units, quasi-governmental units, companies, or associations of and from any and all past, present or future actions, causes of action, claims, counterclaims, or demands for damages, costs, loss of use, expenses, compensation, incidental or consequential damages or any other thing whatsoever on account of, whether presently known or acquired in the future or in any way arising out of or relating to the Contract to the day of the date of this Agreement, including but not limited to the Article 78 proceeding and Appeal; provided, however, nothing contained in this Agreement shall relieve the Authority from its obligation to pay AlphaNet any amounts owing to AlphaNet for the Approved Invoices, Accepted Invoices, Open Invoices and Additional Invoices.

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        9)     This Agreement is entered into for settlement purposes only, and neither the fact of nor any provision contained in this Agreement nor any action taken pursuant to this Agreement may constitute or be construed to be an admission of any liability or an admission of any claim or fact alleged by either party to this Agreement.

        10)     This Agreement may not be offered or admitted as evidence in any action or proceeding brought by any person, whether bound by this Agreement or not, except in a proceeding brought pursuant to Article 211 of the Contract to enforce the terms of this Agreement.

        11)     The Parties represent and warrant that the persons signing this Agreement have been authorized to do so by the Authority and AlphaNet respectively.

        12)     This Agreement shall inure to the benefit of, and be binding upon, any successor or assign of any Party.

        13)     No modification, amendment or waiver of any provisions of this Agreement shall be effective unless approved in writing by the Parties. The failure of a Party hereto any time to require performance by the other Party of any responsibility or obligation hereunder shall in no way affect the full right to require such performance at any time thereafter. A waiver by a Party of a breach of any provision hereof does not constitute a waiver of any succeeding breach of the same or any such provision nor constitute a waiver of the responsibility or obligation itself. If any provision of this Agreement is declared void, invalid, or unenforceable, it shall have no effect on the validity or enforceability of any other provision hereof.

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        14)     This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York.

        15)     This Agreement is the entire agreement between the Parties with respect to the subject matter hereof and merges and supersedes all prior discussions, correspondence, proposals, agreements and understandings.

        16)     The Parties further state that they jointly drafted this Agreement, consulted with their attorneys and carefully read each and every provision of the foregoing Agreement and understand the contents thereof, and execute the same freely and voluntarily.

        17)     The Parties agree to cooperate fully and execute any and all supplementary documents and to take all additional actions that may be necessary or appropriate to give full force and effect to the basic terms and intent of this Agreement.

        18)     The Parties represent and warrant that they have not transferred or assigned any of their rights of recovery against the released Parties.

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        19)        This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

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        Grounding of cabinets (Change Order 071602-1 and Change Order 010903-01).

        Upgrading Software Image on BCN, BLN, ASN, ANH Routers and BH5000 switches (Change Order 011402-01).

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        IT IS HEREBY STIPULATED AND AGREED, by and between the undersigned attorneys of record for all the parties to the above entitled proceeding that the above captioned proceeding be discontinued with prejudice without costs to either party against the other. This stipulation may be filed without further notice with the Clerk of the Court.

Dated:   Brooklyn, New York
             March __, 2003

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