ASSET PURCHASE AGREEMENT
BY AND BETWEEN
INTERNETWORKING SCIENCES CORPORATION,
AND
INTERNETWORK EXPERTS, INC.
Dated as of October 27, 2000
TABLE OF CONTENTS
LIST OF SCHEDULES
Schedule 2.1(a) - Inventory in Transit
Schedule 2.1(b) - Customer List
Schedule 2.1(c) - Transferred Engagements
Schedule 2.1(d) - Vendor Contracts
Schedule 2.2(a) - Retained Engagements
Schedule 2.2(f) - Real Property
Schedule 2.4(a)iv - Equipment Lease Obligations
Schedule 2.4(a)v - Office Lease Obligations
Schedule 2.8 - Warranty Obligations
Schedule 3.3 - Consents and Approvals
Schedule 3.5 - Liens
Schedule 3.6 - Investigation or Litigation
Schedule 3.10 - Contracts
Schedule 5.6 - Transferred Employees
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of October
27, 2000, by and among INTERNETWORKING SCIENCES CORPORATION, a Delaware
corporation ("Buyer"), and INTERNETWORK EXPERTS, INC., a Texas corporation
("Seller").
In consideration of the mutual covenants and agreements contained
herein, the parties covenant and agree as follows:
1. DEFINITIONS
1.1 General Definitions. Unless otherwise stated in this Agreement,
the following terms shall have the following meanings:
"Accounts Receivable": As defined in Section 5.8(a) hereof.
"Affiliate": Any Person that, directly or indirectly, controls, or is
controlled by or under common control with, another Person. For the purposes of
this definition, "control" (including the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or by
contract or otherwise.
"Assets": As defined in Section 2.1 hereof.
"Assumed Obligations": As defined in Section 2.4(a) hereof.
"Buyer Indemnities": As defined in Section 9.1 hereof.
"Closing": As defined in Section 7.1 hereof.
"Closing Date": As defined in Section 7.1 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Customer List": As defined in Section 2.1(b) hereof.
"Damages": As defined in Section 9 hereof.
"Environmental Requirements": All federal, state, foreign and local
laws, statutes, codes, rules, regulations, ordinances, judgments, orders,
decrees and obligations concerning public health and safety, worker health and
safety, pollution or protection of the environment, including all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, control or cleanup of any hazardous, toxic or otherwise regulated
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
"Excluded Assets": As defined in Section 2.2 hereof.
"Governmental Body": Any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency, authority or
instrumentality, domestic or foreign.
"Indemnification Cap": As defined in Section 9.3 hereof.
"Indemnification Notice": As defined in Section 9.4 hereof.
"Inventory in Transit": As defined in Section 2.1(a) hereof.
"Knowledge": In the case of knowledge of Seller, "Knowledge" shall
mean the actual knowledge of any director or officer of Seller.
"Lien": All mortgages, deeds of trust, claims, liens, security
interests, pledges, leases, conditional sale contracts, rights of first refusal,
options, charges, liabilities, obligations, agreements, easements,
rights-of-way, powers of attorney, limitations, reservations, restrictions and
other encumbrances of any kind, other than (a) liens for taxes not yet due and
payable and (b) liens securing rental payments under the Vehicle Leases.
"Material Adverse Effect": Any change (individually or in the
aggregate) in the general affairs, management, business, goodwill, results of
operations, condition (financial or otherwise), assets, liabilities or prospects
(whether or not the result thereof would be covered by insurance) that will or
can reasonably be expected to result in a cost, expense, charge, liability or
diminution in value of the Assets individually or in the aggregate, equal to or
greater than $25,000.00.
"Non-Competition Agreement": The Non-Competition Agreement in a form
acceptable to the buyer.
"Operative Documents": This Agreement and all other agreements,
instruments, documents, schedules and certificates executed and delivered by or
on behalf of Seller or Buyer at or before the Closing pursuant to this
Agreement.
"Order": Any order, writ, injunction, decree, judgment, award or
determination of any Governmental Body.
"Permits": All permits, authorizations, certificates, approvals,
registrations, variances, exemptions, rights-of-way, franchises, privileges,
immunities, grants, ordinances, licenses and other rights of every kind and
character (a) under any (1) federal, state, local or foreign statute, ordinance
or regulation, (2) Order or (3) contract with any Governmental Body or (b)
granted by any Governmental Body.
"Person": An individual, partnership, joint venture, corporation,
company, limited liability company, bank, trust, unincorporated organization,
Governmental Body or other entity or group.
"Proceeding": Any action, order, claim, suit, proceeding, litigation,
investigation, inquiry, review or notice.
"Public Announcement": As defined in Section 5.7 hereof.
"Purchase Price": As defined in Section 2.3 hereof.
"Retained Engagements": As defined in Section 2.2(a) hereof.
"Retained Liabilities": As defined in Section 2.4(b) hereof.
"SEC": The Securities and Exchange Commission.
"Seller Indemnities": As defined in Section 9.2 hereof.
"Subsidiary" or "Subsidiaries": With respect to any person shall mean
any other person of which at least a majority of the securities having by their
terms ordinary voting power to elect a majority of the Board of Directors of or
other governing body such other person is at the time directly or indirectly
owned or controlled by such first person, or by such first person and one or
more of its Subsidiaries.
"Tax Obligations": Any Taxes which are attributable or related to the
assets or the operations of Seller for any periods ending on or before the
Closing Date or which may be applicable because of the Transactions.
"Taxes": Any federal, state, local or foreign income, sales, excise,
real or personal property or other taxes, assessments, fees, levies, imposts,
duties, deductions or other charges of any nature whatsoever (including, without
limitation, interest and penalties) imposed by any law, rule, regulation or
order.
"Third Party Consents": As defined in Section 6.1(f) hereof.
"Threatened": Any matter or thing will be deemed to have been
Threatened when used herein with respect to any party if that party has received
notice, in writing, from the Person to whom the threat is attributable, or such
Person's agents, which makes specific reference to and clearly identifies the
matter or thing being threatened.
"Transaction" or "Transactions": The acquisition of the Assets and the
performance of the other covenants and transactions described in this Agreement.
"Transaction Expenses": The expenses incurred in connection with the
preparation, negotiation, execution, delivery, satisfaction, compliance,
consummation and performance of this Agreement and the Transactions, including
all fees and expenses of counsel and representatives.
"Transferred Engagements": As defined in Section 2.1(d) hereof.
"Transferred Engagement Contract": Any contract or agreement, whether
written or oral, relating to any Transferred Engagement.
"Unidentified Payment": As defined in Section 5.8(f) hereof.
"Vendor Contracts": As defined in Section 2.1 (e) hereof.
"Warranty Cap": As defined in Section 2.5 hereof.
"Warranty Obligations": As defined in Section 2.5 hereof.
Other defined terms shall have the meanings ascribed to such terms
elsewhere herein.
2. SALE OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES
2.1 Agreement to Purchase and Sell. Subject to the applicable terms
and conditions of this Agreement, at the Closing, Seller shall sell, transfer,
assign, convey and deliver to Buyer, and Buyer shall purchase from Seller, the
following assets (such assets, specifically excluding the Excluded Assets, being
collectively referred to as the "Assets"):
(a) Inventory in Transit. All inventory of equipment and
materials in transit as of the Closing Date from Seller's suppliers or
in transit from Seller's suppliers directly to (or as ordered by)
Seller's customers, including, without limitation, the equipment and
materials that are listed on Schedule 2.1(a) hereto (the "Inventory in
Transit");
(b) Customer List. The list of all past and current customers of
Seller, including, without limitation, those.customers listed on
Schedule 2.1(b) hereto (the "Customer List");
(c) Transferred Engagements. All outstanding engagements of
Seller, including, without limitation, all work-in-progress, labor,
parts, equipment, materials and Buyer orders, customer contracts and
other written agreements with customers for such engagements,
including, without limitation, the engagements described on Schedule
2.1(d) hereto (the "Transferred Engagements");
(d) Vendor Contracts. The vendor contracts of Seller described on
Schedule 2.1(e) hereto to the extent that an assignment is permitted
there under (the "Vendor Contracts"). No Vendor Contract shall be
assigned from Seller to Buyer until the applicable Third Party Consent
has been obtained and Buyer and Seller agree not to require any
assignment of such Vendor Contract to Buyer if the vendor requires
that Buyer enter into a new contract or if the required Third Party
Consent is not obtained;
(e) Documents and Plans. All documents, correspondence, lists,
plats, architectural plans, drawings and specifications, creative
materials, studies, reports, and other printed or written materials of
or used by Seller in connection with the Transferred Engagements;
(f) Warranty Rights. To the extent transferable, the benefit of
and the right to enforce warranties, if any, that Seller is entitled
to enforce covering all or any part of the Assets;
(g) Telephone Numbers. The telephone and facsimile numbers
specifically assigned for use by Seller, being 000-000-0000,
000-000-0000 and 000-000-0000; and
(h) Domain Names. The Domain names of xxxxx.xxx, xxxxx.xxx and
Xxxxxxxxxxx.xxx.
(i) Name. All right title and interest to the name Internetwork
Experts.
(j) Copy of Records. Seller hereby agrees to maintain a copy (but
not the originals of) all accounting and tax records and customer and
sales records of Seller, all supplier records of Seller, all personnel
records of Seller and all other books and records of Seller for a
period of three (3) years after Closing and shall permit Buyer to have
reasonable access to all such records and to make copies thereof to
the extent necessary and appropriate for its ownership and operation
of the Assets of Seller;
2.2 Excluded Assets. Seller shall retain, and the Assets shall not
include, any assets of Seller not expressly listed in Section 2.1 above (the
"Excluded Assets"), including, without limitation, the following:
(a) Retained Engagements. The retained engagements, including
without limitation, all work-in-progress, labor, parts, equipment,
materials and the purchase orders, contracts and other written
agreements for the retained engagements (the "Retained
Engagements")(as listed on Schedule 2.2(a);
(b) Inventory. All inventory, parts, raw materials, supplies and
other materials held or used by Seller other than Inventory in
Transit;
(c) Accounts Receivable. All of Seller's accounts receivable,
including receivables due from suppliers and rebates due from
suppliers and including receivables now and in the future under the
Retained Engagements except any rebates relating to Inventory in
Transit;
(d) Notes Receivable. All notes receivable;
(e) Cash. All cash and cash equivalents;
(f) Real Property. All real property (except to the extent of
Buyer's leasehold rights in the Subleased Real Property)(as listed on
Schedule 2.2(g));
(g) Records. Seller will provide within 60 days of closing, a
copy of all accounting, customer and sales records of Seller, a copy
of the Dell laptop leases, all supplier and Buyer records of Seller,
all personnel records of Seller and all other books and records of
Seller; and Seller hereby agrees to maintain such records for a period
of three (3) years after Closing and shall permit Buyer to have
reasonable access to all such records and to make copies thereof to
the extent necessary and appropriate for its ownership and operation
of the Assets of Seller;
(h) Insurance Matters. All insurance proceeds, insurance claims,
prepaid insurance premiums and claims for refunds of insurance
premiums; and
(i) Other Rights and Interests. All right, title and interest of
Seller in and to all claims, causes of action or proceedings relating
or pertaining to Seller to the extent accruing before the Closing
Date.
2.3 Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration for Buyer's acquisition of the Assets and transfer
of employees, Buyer shall pay Seller
(a) TWO HUNDRED THOUSAND DOLLARS ($200,000.00), payable at
Closing by certified or cashier's check; and
(b) TWENTY FIVE THOUSAND ($25,000.00), payable within sixty (60)
days after close of the sale provided that the Cisco Professional
Services Subcontractor(PSS) designation has been successfully
transferred to buyer and there are no transfer issues left outstanding
with Cisco and an additional TWENY FIVE THOUSAND ($25,000.00), payable
within ten (10) days after Buyer is designated a Cisco Professional
Services Consulting Partner(PSP) by Cisco for the United States
region, if such designation is obtained by Buyer within six (6) months
after the Closing Date.
2.4 Assumption of Liabilities.
(a) Assumed Obligations. Subject to and upon all of the terms and
conditions of this Agreement, at the Closing, Buyer shall assume and
agree to pay, perform and discharge the following obligations and
liabilities of Seller (collectively, the "Assumed Obligations"):
(i) Warranty Obligations. All warranty and service
obligations expressly set forth in the Transferred Engagement
Contracts;
(ii) Vendor Contracts. All executory obligations and related
liabilities accruing exclusively after Closing, and based solely
upon events occurring after Closing, under the Vendor Contracts
assigned to Buyer;
(iii) Transferred Engagements. All obligations and related
liabilities expressly set forth in the Transferred Engagement
Contracts to the extent related to, arising out of or
attributable to the period after the Closing Date;
(iv) Assumption of Laptop Leases. Obligations and
liabilities related to, arising out of or attributable to the
period after the Closing Date under the leases associated with
the Dell notebook computers used by the transferred employees
identified in Schedule 2.4(a)iv ("Equipment Lease Obligations");
and
(v) Assumption of a Portion of Office Lease. Obligations and
liabilities related to, arising out of or attributable to the
period after the Closing Date under the office lease that is
defined in Schedule 2.4(a)v ("Office Lease Obligations").
(b) Retained Liabilities. Except as provided in Section 2.5,
Buyer will not assume or agree to pay, perform or discharge, and shall
not be responsible for, any liabilities or obligations of Seller
(collectively, "Retained Liabilities"), whether accrued, absolute,
contingent or otherwise, including without limitation, liabilities or
obligations based on, arising out of, or in connection with:
(i) Transaction Expenses. Any Transaction Expenses incurred
by Seller;
(ii) Pre-Closing. Any events or circumstances related to,
arising out of, attributable to or occurring in the period prior
to the Closing Date;
(iii) Taxes. Any Taxes and Tax Obligations which are
attributable or relating to the Assets or Seller, for any periods
ending on or before the Closing Date, or which may be applicable
to Seller because of Seller's sale of any of the Assets to Buyer;
(iv) Leases and Indebtedness. Any lease obligations or
indebtedness of Seller other than those executory obligations and
related liabilities accruing exclusively, or based upon events
occurring solely, after Closing relating to the Equipment Lease
Obligations, the Office Lease Obligations or the Vendor
Contracts;
(v) Intellectual Property. Any unlicensed or unauthorized
use by Seller of any trademark, patent or other intellectual
property rights;
(vi) Other Obligations. Any note, account payable or other
obligation to any person, entity or Governmental Body, except to
the extent otherwise expressly assumed herein; and
(vii) Claims or Conditions. Any claims or conditions, to the
extent relating to accruing or arising out of the period on or
prior to the Closing Date, arising under any federal, state or
foreign statutes, laws, ordinances, regulations, rules, permits,
judgments, orders or decrees attributable or relating to the
Assets (including, without limitation, the operation thereof) or
Seller.
2.5 Warranty. For a period of twelve (12) months after Closing, Buyer
agrees to provide Seller with warranty service coverage on those standard
warranty, extended warranty and service contract obligations described on
Schedule 2.8 hereto relating to equipment sold and/or installed by Seller prior
to the Closing Date on those engagements also identified on Schedule 2.8 hereto
(the "Warranty Obligations"); provided, however, that Buyer's Warranty
Obligations shall not exceed $10,000.00 in the aggregate (the "Warranty Cap").
Buyer shall provide to Seller, at Seller's request, a statement containing the
amount of Warranty Obligations performed by Buyer for the preceding calendar
month, as well as the total amount of Warranty Obligations performed by Buyer
since Closing. Buyer shall charge Seller at the rate of $100.00 per hour or the
actual amount charged to Buyer if independent contractors are used to perform
such work, plus all out-of-pocket expenses incurred by Buyer (the "Warranty
Rate"). After the Warranty Cap is exceeded, Seller shall pay Buyer for all
additional work performed by Buyer on the Warranty Obligations in accordance
with Buyer's standard invoice terms at the Warranty Rate, plus an overhead
charge of ten percent (10%) on all labor, costs (other than costs of materials)
and expenses. Buyer agrees to obtain the consent of Seller prior to performing
any warranty work pursuant to this Section 2.5 that is expected to exceed
$500.00.
2.6 Further Assurances. At the Closing, and at all times thereafter as
may be reasonably necessary, Seller and Buyer shall each execute and deliver to
the other party such instruments of transfer and other documents as shall be
reasonably necessary or appropriate to vest in Buyer title of the type specified
herein to the Assets and to otherwise comply with the terms, purposes and intent
of this Agreement.
2.7 Transfer of Employees. Seller agrees that the amount of the
purchase price is significantly based on the transfer of all employees listed in
schedule(5.6). If any employees fail to transfer this would have a significant
effect on the purchase price.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the following are
true and correct as of the date of this Agreement and will be true and correct
through the Closing Date, regardless of what investigations, in any Buyer shall
have made prior to the date hereof or prior to the Closing:
3.1 Organization; Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller has full corporate power and authority to own and lease the Assets
and to carry on the business of Seller as it is now being conducted.
3.2 Authority Relative to this Agreement. Seller has full power and
authority (corporate and otherwise) to execute, deliver and perform this
Agreement (including, without limitation, execution, delivery and performance of
the Operative Documents to which it is a party) and to consummate the
Transactions. The execution and delivery by Seller of this Agreement, and the
consummation of the Transactions, have been duly and validly authorized by all
necessary corporate action on the part of Seller and no other corporate
proceedings on the part of Seller are necessary with respect thereto. This
Agreement has been duly and validly executed and delivered by Seller, and
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity. Seller will
take all corporate action that is necessary for Seller to complete the
Transactions to be completed by Seller pursuant to this Agreement.
3.3 Consents and Approvals. Except as set forth in Schedule 3.3, the
execution, delivery and performance by Seller of this Agreement and the
consummation of the Transactions by Seller requires no consent, approval, order
or authorization of, action by or in respect of, or registration or filing with,
any Governmental Body or other Person, except as for those consents, if any, the
failure of which to obtain could not reasonably be expected to have a Material
Adverse Effect.
3.4 No Violations. The execution, delivery and performance of this
Agreement by Seller, the consummation by Seller of the Transactions and
compliance by Seller with the provisions hereof do not and will not (a) conflict
with or result in any breach or violation of any provision of the Articles of
Incorporation or Bylaws of Seller, (b) result in a default, or give rise to any
right of termination, cancellation or acceleration or loss of any benefit under
any of the provisions of any note, bond, mortgage, indenture, license, trust,
agreement, lease or other instrument or obligation to which Seller is a party or
by which Seller may be bound, except to the extent that such result would not
have a Material Adverse Effect, (c) result in the creation or imposition of any
Lien on any of the Assets, (d) violate any Order, statute, rule or regulation
applicable to Seller, except to the extent that such violation would not have a
Material Adverse Effect, or (e) violate any territorial restriction on Seller or
any Non-Competition or similar agreement.
3.5 Title to and Condition of Assets and Property. Except as
specifically set forth in Schedule 3.5 hereto, Seller has good title to, or a
valid leasehold interest in, all of the Assets and the Assets are free and clear
of all Liens. To Seller's Knowledge, the Assets constitute all of the material
assets and properties, real and personal, tangible and intangible, that are held
or used by Seller in the conduct of Seller as presently being conducted.
3.6 Investigation or Litigation. Except as set forth on Schedule 3.6
hereto, there is no Proceeding pending or, to Seller's Knowledge, Threatened
against, relating to or affecting the Assets. Seller is not subject to any
currently existing Proceeding by any Governmental Body relating to or affecting
the Assets. To Seller's Knowledge, there is no basis for the assertion of any
Proceeding by any Governmental Body or any Person regarding any violation of
federal or state laws.
3.7 Taxes. All Taxes that are due and payable by Seller, other than
those presently payable without penalty or interest, have been paid, and Seller
has filed (and, through the Closing Date, will file) all Tax reports and returns
required by law to be filed by Seller. All such Tax reports and returns are
true, complete and correct in all material respects with regard to Seller for
the periods covered thereby. Seller is not delinquent in the payment of any
material amount of Tax. There is no Tax deficiency asserted against Seller, and
there is no unpaid assessment, proposal for additional Taxes, deficiency or
delinquency in the payment of any of the Taxes of Seller or any violation of any
Tax law that could be asserted by any taxing authority. There are no Tax related
Liens upon any properties or assets of Seller nor has notice been given of any
event which could lead to any such Lien. No Internal Revenue Service, state or
local, audit, investigation or Proceeding of Seller is pending or, to Seller's
knowledge, Threatened. Seller has not granted any extension to any taxing
authority of the limitation period during which any Tax liability may be
asserted. Seller has not committed any material violation of any Tax laws. All
monies required to be withheld by Seller from employees, if any, independent
contractors, or others or collected from customers for income taxes, social
security and unemployment insurance taxes and sales, excise and use taxes, and
the portion of any such taxes to be paid by Seller to governmental agencies or
set aside in accounts for such purpose have been approved, reserved against and
entered upon the books and records of Seller. Consummation of the Transactions
will not result in any Tax Obligations on the Assets.
3.8 No Brokers. Seller has no liability for any brokerage fees,
commissions or finders' fees in connection with the Transactions, except for
which Seller will be solely responsible.
3.9 Insurance. All the insurance policies maintained by Seller in
respect of the Assets and Seller are in full force and effect, and all insurance
premiums relating to such insurance policies have been paid.
3.10 Contracts. Schedule 3.10 hereto sets forth a true and correct
list of all of the Vendor Contracts and the Transferred Engagement Contracts
(and summaries of all oral commitments which, to Seller's Knowledge, have been
made by Seller) relating thereto (the "Transferred Contracts") and Seller has
made available for review by Buyer copies of such Transferred Contracts prior to
the date hereof. There exists no material breach or default under any of such
Transferred Contracts, Equipment Lease Obligations or Office Lease Obligations
by Seller, or, to the Knowledge of Seller, any other party thereto.
3.11 Permits. All permits to conduct business are valid, and Seller
has not received any notice that any Governmental Body intends to cancel,
terminate or not renew any such Permit. Seller has not been, and is not now, in
material breach of any Permit.
3.12 Environmental Matters.
(a) Compliance Generally. To Seller's Knowledge, Seller is in
material compliance with all Environmental Requirements.
(b) Claims. To Seller's Knowledge, Seller has not received any
claim, complaint, citation, report or other notice regarding any
liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, arising under the Environmental
Requirements.
(c) Scope of Environment Representations. This Section 3.12
contains the sole and exclusive representations and warranties of
Seller with respect to environmental, health and safety requirements.
3.13 Compliance with Laws. To Seller's Knowledge, Seller has complied
with and is in compliance with all federal, state, local and foreign statutes,
laws, ordinances, regulations, rules, permits, judgments, Orders or decrees
applicable to the Assets and Seller, except where the failure to comply would
not have a Material Adverse Effect, and, to Seller's Knowledge, there does not
exist any basis for any claim or default under or violation of any such statute,
law, ordinance, regulation, rule, judgment, Order or decree that would have a
Material Adverse Effect.
3.14 Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 3, SELLER MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF SELLER OR ANY
OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES
THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN THIS SECTION 3, BUYER IS
PURCHASING THE ASSETS ON AN "AS-IS, WHERE-IS" BASIS. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 3
SELLER MAKES NO REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER THAN THE
ASSETS OR ANY LIABILITIES OTHER THAN THE ASSUMED OBLIGATIONS, AND NONE SHALL BE
IMPLIED AT LAW OR IN EQUITY.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the following are
true and correct as of the date of this Agreement and will be true and correct
through the Closing Date, regardless of what investigations, if any, Seller
shall have made prior the date hereof or prior to the Closing:
4.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 Authority Relative to this Agreement. Buyer has full power and
authority (corporate and otherwise) to execute, deliver and perform this
Agreement (including, without limitation, execution, delivery and performance of
the Operative Documents to which it is a party) and to consummate the
Transactions. The execution and delivery by Buyer of this Agreement, and the
consummation of the Transactions, have been duly and validly authorized by all
necessary corporate action on the part of Buyer and no other corporate
proceedings on the part of Buyer are necessary with respect thereto. This
Agreement has been duly and validly executed and delivered by Buyer, and
constitutes a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity.
4.3 Consents and Approvals. Except as set forth in or otherwise
required by this Agreement or the Operative Documents, the execution, delivery
and performance by Buyer of this Agreement and the consummation of the
Transactions by it requires no consent, approval, order or authorization of,
action by or in respect of, or registration or filing with, any Governmental
Body or other Person.
4.4 No Brokers. Buyer has not employed any broker, agent or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Transactions.
5. ADDITIONAL AGREEMENTS
5.1 Further Assurances. At any time after the Closing Date, if any
further action is necessary, proper or advisable to carry out the purposes of
this Agreement, then, as soon as is reasonably practicable, each party to this
Agreement shall take, or cause its proper officers to take, such action. Each of
the parties hereto further agrees that it will cooperate with the other party
after the consummation of the Transactions for the purpose of providing Buyer
with the information and access to information necessary to ensure Buyer with a
reasonably smooth transition of the Assets and Assumed Obligations to Buyer.
5.2 Agreement Regarding Brokers. Each party agrees that it will pay or
dispute, and hold the other party harmless from, any claims of brokers or others
for finder's or brokerage fees asserted as a result of representations by such
party to such brokers or others, regardless of whether the existence of such
brokers or others are disclosed herein.
5.3 Notice. Seller and Buyer shall each promptly give notice to the
other party upon becoming aware of the occurrence or failure to occur, or the
impending or Threatened occurrence or failure to occur, of any event that would
cause or constitute any of its representations or warranties being or becoming
untrue.
5.4 Information for Tax Returns. Seller shall cooperate with Buyer
after the Closing by providing Buyer, within a reasonable time following Buyer's
request, such records and other information regarding the Assets and/or Seller
as may reasonably be requested from time to time by Buyer in connection with the
preparation or audit of Buyer's federal, state and local income and other Tax
returns, and audits, disputes, refund claims or litigation relating thereto. In
such connection, Seller will afford Buyer's representatives, including Buyer's
independent tax advisers and others, access to Seller's books and records
relating to the Assets.
5.5 Payment of Liabilities. Following the Closing, Seller shall
promptly pay or otherwise satisfy all claims or liabilities relating to the
Assets incurred through the Closing Date, other than the Assumed Obligations and
other than claims or liabilities being disputed by Seller in good faith.
5.6 Employment of Certain of Seller's Employees by Buyer. Schedule 5.6
lists the employees of Seller who may be offered employment by Buyer from and
after the Closing Date. The employees of Seller listed on Schedule 5.6 who
accept Buyer's offers of employment after Closing are referred to as
"Transferred Employees."
5.7 Confidentiality. It is agreed by Buyer that any information
concerning the business or operations of Seller (other than information relating
to the Assets or Assumed Obligations) disclosed to Buyer or its counsel,
accountants, lenders or other representatives prior to or after the date of this
Agreement shall be treated as confidential and proprietary information, shall
not be disclosed to any third party, and shall be safe-guarded by Buyer using
the same degree of care as it uses in protecting its own confidential
information, in each case, unless such information is or becomes available in
the public domain or public record or knowledge other than as a result of a
breach by Buyer of its obligations under this Section or the disclosure of which
is required by any applicable law, rule, regulation or Order or becomes
available to Buyer on a non-confidential basis from a source other than Seller
or its representatives. It is agreed by Seller that any information concerning
the business or operations of Buyer disclosed to Seller or its counsel,
accountants, lenders or other representatives prior to or after the date of this
Agreement shall be treated as confidential and proprietary information, shall
not be disclosed to any third party and shall be safeguarded by Seller using the
same degree of care as it uses in protecting its own confidential information,
in each case unless such information is or becomes available in the public
domain or public record or knowledge other than as a result of a breach by
Seller of its obligations under this Section or the disclosure of which is
required by any applicable law, rule, regulation or Order or becomes available
to Seller on a non-confidential basis from a source other than Buyer or its
representatives. At or immediately after Closing, Buyer and Seller shall
mutually agree upon a press release for the Proposed Transaction (the "Public
Announcement"). It is required that both parties not disclose the transaction
price unless required by law.
5.8 Accounts Receivable.
(a) Seller's Accounts. Seller and Buyer acknowledge and agree
that all customer accounts receivable of Seller that arose prior to
the Closing Date (including those arising from Retained Engagements),
and all trade accounts receivable of Seller and all rebates receivable
from vendors arising at any time (except the sales relating to
Inventory in Transit)(the "Accounts Receivable") are and shall remain
the assets of Seller. Seller represents and warrants to Buyer that
there are no Accounts Receivable relating to the Transferred
Engagements. Subject to the rights of Buyer contained in the last
sentence of this Section 5.8(a), Seller shall have sole and exclusive
authority to invoice and collect Accounts Receivable and to issue
correction invoices and credit memos with respect to such accounts,
and nothing in this Agreement shall prevent Seller from retaining all
rights of a creditor under applicable law, including, without
limitation, the right to take legal action against its account debtors
seeking to collect amounts owed. Seller shall use its commercially
reasonable efforts to keep Buyer reasonably informed of any disputes
with any customers relating to Accounts Receivable and Seller's denial
of any customer request for a credit or correction with respect to an
Account Receivable.
(b) Collection. Buyer and Seller shall cooperate with each other
and use commercially reasonable efforts to maximize the collection by
Seller of all Accounts Receivable. Buyer shall allow Seller reasonable
access to Transferred Employees for that purpose, but Seller shall not
disrupt the duties of Transferred Employees in so exercising its right
of access to Transferred Employees.
(c) Trust. Any payment received by one party to this Agreement
after the Closing Date that properly belongs to another party shall be
held in trust for the benefit of the party properly entitled to the
payment and shall be paid over by the receiving party to the proper
party as herein provided.
(d) Seller Payment. In the event that Buyer receives a payment on
an Account Receivable that is identified by Seller's invoice number,
or that is otherwise accompanied by information identifying it as a
payment belonging to Seller (a "Seller Payment"), Buyer, as the case
may be, shall turn such Seller Payment over to Seller. Such Seller
Payments shall be turned over to Seller without representation,
warranty or guaranty by, or recourse against, Buyer.
(e) Buyer Payment. Seller acknowledges that after the Closing,
Buyer will generate accounts receivable from former customers of
Seller, including, without limitation, customers under the Transferred
Engagements. In the event that Seller receives a payment that is
identified by Buyer's invoice number, or that is otherwise accompanied
by information identifying it as a payment belonging to Buyer (a
"Buyer Payment"), Seller shall turn such Buyer Payment over to Buyer.
Such Buyer Payments shall be turned over to Buyer without
representation, warranty or guaranty by, or recourse against, Seller.
(f) Unidentified Payment. In the event that either party to this
Agreement receives a payment from a former customer of Seller on or
after the Closing Date as to which the owner is not clearly indicated
on or with the payment (an "Unidentified Payment"), the party
receiving the payment shall, within five (5) business days after its
receipt, notify the other party hereto of the amount of the
Unidentified Payment and the customer from which it was received, and
the parties shall exchange pertinent records and otherwise cooperate
in good faith to determine the party to which the Unidentified Payment
belongs. If the parties are unable to resolve ownership of the
Unidentified Payment from their records, the party who received the
payment shall promptly contact the customer from whom the payment was
received to obtain instructions as to which invoice(s) the customer
intended its payment to be applied, and the instructions of the
customer shall be binding on the parties.
(g) Transfer of Funds. Each Seller Payment and each Buyer Payment
shall be paid over to the party to which it belongs within five (5)
business days after receipt. Each Unidentified Payment shall be paid
to the party to which it belongs within five (5) business days after
ownership of the payment is resolved. All payments belonging to
another party but not paid over to the proper party shall bear
interest from and after the next business day after the payment was
due until paid at the rate of ten percent (10%) per annum.
5.9 Name Change. Seller agrees to change Seller's corporate name to a
name that is not similar to Internetwork Experts within sixty (60) days after
the Closing Date by filing appropriate documents with the Texas Secretary of
State, copies of which will be supplied to Buyer by Seller upon filing of such.
5.10 Occasional Sale. Buyer and Seller believe that the purchase and
sale of the Assets constitutes an occasional sale of the entire operating assets
of a separate division of Seller within the meaning of Texas Tax Code ss.
151.304(b)(2) and Texas Administrative Code ss. 3.316(d).
5.11 Purchase Price Allocation Buyer and Seller agree that the sale
amount other than real property constitutes goodwill and that each other tax
returns will reflect that.
6. ITEMS DELIVERED AT CLOSING
6.1 Items Delivered at Closing. At Closing, the following items have
been executed and/or delivered:
(a) Buyer's Officers' Certificate. Buyer has delivered to Seller
an Officers' Certificate, dated the Closing Date, of Buyer certifying
to the incumbency of the President, Secretary and other officers of
Buyer executing any of the Operative Documents.
(b) Closing Consideration. Buyer has delivered to Seller the
Closing payment required by Section 2.3(a) hereof to be delivered at
Closing.
(c) Seller's Officers' Certificate. Seller has delivered to Buyer
an Officers' Certificate, dated the Closing Date, of the President and
Secretary of Seller certifying to (a) the Certificate of Incorporation
of Seller (as certified to by an appropriate officer of the State
issuing same), (b) the Bylaws of Seller, (c) the due adoption by the
Board of Directors and stockholders of Seller of the resolutions
attached hereto approving the execution and delivery of this
Agreement, and the consummation of the Transactions, (d) the
incumbency of the President, Secretary and other officers of Seller
executing any of the Operative Documents, and (e) a Certificate of
Good Standing of Seller for the State of Texas.
(d) Delivery of Documents. Seller has delivered to Buyer all
documents, instruments and schedules required hereunder.
(e) Third Party Consents. Seller has delivered copies of all
approvals and consents of third parties required on the part of Seller
for consummation of the Transaction (the "Third Party Consents") and
all necessary action has been taken to assign to Buyer the Transferred
Engagement Contracts, the Vendor Contracts, the Equipment Lease
Obligations, the Office Lease Obligations and any other material
agreements between Seller and their suppliers, customers and third
parties to the extent related to the Transactions in form and
substance reasonably satisfactory to Buyer.
(f) Resale Certificate. Buyer shall deliver to Seller a duly
executed Texas resale certificate, reflecting Buyer's Texas sales and
use tax permit, with respect to the Inventory in Transit
(g) Employment Agreements. All Transferred Employees shall have
executed Buyer's standard Employment Agreement.
(h) Confidentiality Agreements. All Transferred Employees shall
have executed Buyer's standard Confidentiality Agreement.
7. CLOSING AND TERMINATION
7.1 Closing Date. The closing for of the Transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Seller's
premises on October 27, 2000 (the "Closing Date").
8. SURVIVAL
8.1 Survival of Representations and Warranties. The respective
representations and warranties contained in this Agreement, and the Operative
Documents shall survive the consummation of the Transactions contemplated in
this Agreement and shall continue in full force and effect after the Closing for
a period of two (2) year from the Closing at which time they shall expire,
except as to claims made in respect thereof in writing by either party on or
before the expiration of such period; provided, however that (a) the
representations and warranties contained in Section 3.7 shall survive until the
expiration of the statutory period of limitations for assessment of Tax
deficiencies, including any extensions thereof, for each taxable year of Seller
which begins before the Closing, and (b) the representations and warranties
contained in Section 3.5 shall survive indefinitely. The covenants and
agreements hereunder shall not be affected by the expiration of any
representation or warranty pursuant to this Section 8.1 and shall survive
indefinitely.
9. INDEMNIFICATION
The parties shall be entitled to indemnification as provided in this
Section 9. As used herein, the term "Damages" shall mean all liabilities,
demands, claims, actions or causes of action, suits, regulatory, legislative or
judicial proceedings or investigations, assessments, levies, losses, fines,
penalties, awards, damages, costs and expenses, including, without limitation,
reasonable attorneys', accountants', investigators', and experts' fees and
expenses, sustained or incurred in connection with the defense or investigation
of any such claim, plus interest on any out-of-pocket losses, fines, penalties,
awards, damages, costs and expenses, at the per annum rate equal to the lesser
of (i) ten percent (10%) per annum, and (ii) the highest rate permitted by
applicable law.
9.1 Indemnification by Seller. Subject to the limitations contained in
Section 9.3, Seller shall indemnify and hold harmless Buyer, its Affiliates and
its and their respective partners, members, managers, officers, directors,
stockholders, agents and employees, and their respective heirs, successors and
assigns (each a "Buyer Indemnitee" and collectively, the "Buyer Indemnities")
against and from all Damages sustained or incurred by any Buyer Indemnitee, as a
result of or arising out of or by virtue of:
(a) any breach of any representation and warranty made by Seller
to Buyer herein or in any closing document delivered to Buyer in
connection herewith;
(b) the breach by Seller or failure of Seller, directly or
indirectly, including by virtue of action taken by its directors or
officers acting in their capacity as such, to comply with any of the
covenants or obligations of Seller under this Agreement;
(c) any Retained Liabilities or Retained Engagements; or
(d) the ownership, use or operation of the Assets or Seller on or
prior to the Closing Date.
9.2 Indemnification by Buyer Subject to the limitations contained in
Section 9.3, Buyer shall indemnify and hold harmless Seller, its Affiliates and
its and their respective officers, directors, stockholders, agents and employees
and their respective heirs, successors and assigns (each a "Seller Indemnitee"
and collectively, Seller Indemnities") against and from all Damages sustained or
incurred by any Seller Indemnitee, as a result of or arising out of or by virtue
of:
(a) any breach of any representation and warranty made by Buyer
to Seller herein or in any closing document delivered to Seller in
connection herewith;
(b) the breach by Buyer or failure of Buyer, directly or
indirectly, including by virtue of action taken by its directors or
officers acting in their capacity as such, to comply with any of the
covenants or obligations of Buyer under this Agreement;
(c) any Assumed Obligations to the extent any such Damage, is
attributed to, arises out of or is related to the period after the
Closing Date.; or
(d) the ownership, use or operation of the Assets or Buyer from
or after the Closing Date.
9.3 Indemnification Thresholds and Limits. Neither the Seller
Indemnities nor the Buyer Indemnities shall be entitled to indemnification
pursuant to the terms of this Section 9 until the aggregate amount of all claims
for indemnification by the Seller Indemnities, on the one hand, or the Buyer
Indemnities, on the other hand exceed $25,000, but once such claims exceed
$25,000, the Seller Indemnities, on the one hand, or the Buyer Indemnities, on
the other hand, shall be entitled to indemnification for all indemnification
claims over said amount up to a maximum of $250,000 (the "Indemnification Cap"),
which Indemnification Cap shall be exclusive of all reasonable attorneys' fees,
court costs and related expenses incurred by the party being indemnified
hereunder. Notwithstanding the foregoing, there shall be no threshold or time or
dollar limit on claims for indemnification pursuant to fraud or the breach by a
party hereto of its obligations to make payments to another party hereto. The
parties hereto acknowledge, agree and confirm that the Indemnification Cap is
intended by the parties to be the maximum amount that may be recovered against
any party hereto as a result of Damages arising out of this Agreement (other
than reasonable attorneys' fees, court costs and related expenses).
9.4 Indemnification Procedures. In the event an indemnified party
seeks or expects to seek indemnity for any Damage arising out of or in
connection with a claim, demand, cause of action or proceeding by a third party,
the indemnifying party shall promptly notify the indemnified party in writing of
the nature of the Damages (the "Indemnification Notice"). The indemnifying party
shall have the right to assume the defense thereof and the indemnifying party
shall not be liable to any indemnified parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such indemnified parties
in connection with the defense thereof, except that if the indemnifying party
elects not to assume in writing such defense within fifteen (15) days after the
Indemnification Notice or counsel for the indemnifying parties advise that
because of conflicts of interest between the indemnifying party and the
indemnified parties such counsel cannot, as a matter of professional
responsibility, represent both the indemnified parties and the identifying
parties (it being agreed by the parties that the indemnified party shall not be
obligated to waive any conflict of interest of such counsel), then the
indemnified parties may retain counsel satisfactory to them, and the
indemnifying party shall pay all reasonable fees and expenses of such counsel
for the indemnified parties promptly as statements therefore are received. In no
event shall an indemnifying party be liable for the fees and expenses of more
than one separate law firm for all indemnified parties. So long as the
indemnifying party is defending in good faith such third party Damage, the
indemnified party shall not settle or compromise such third party claim without
the indemnifying party's prior written consent. The indemnified party shall make
available to the indemnifying party or its representatives all personnel records
and other materials reasonably required by them for use in contesting any third
party Damage and shall cooperate fully with the indemnifying party in the
defense of such Damage. In case any event shall occur which would otherwise
entitle an indemnified party to assert a claim for indemnification hereunder, no
loss, damage or expense shall be deemed to have been sustained by such party to
the extent of (1) any tax savings realized by such party with respect thereto,
or (2) any proceeds received by such party from any insurance policies with
respect thereto.
10. GENERAL PROVISIONS AND OTHER AGREEMENTS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if and when delivered by certified mail
(return receipt requested) or sent by a recognized next business day courier
(with written acknowledgment of receipt by the recipient) to the following
persons at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Buyer:
Internetworking Sciences Corporation.
00000 Xxxxxx,
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxx, Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx
(b) If to Seller:
Xx. Xxxx Xxxxxxx
President and Chief Executive Officer
Internetwork Experts, Inc.
0000 Xxxxxxx Xxxx #000
Xxxxxx, Xxxxx 00000
with a copy to:
Liddell, Sapp, Zively, Hill and XxXxxx
0000 Xxxx Xxx, #0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxx
10.2 Fees and Expenses. Seller and Buyer shall each pay all of their
own Transaction Expenses.
10.3 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Terms such as "herein," "hereof," "hereinafter" refer to this
Agreement as a whole and not to the particular sentence or paragraph where they
appear, unless the context otherwise requires. Terms used in the plural include
the singular, and vice versa, unless the context otherwise requires.
10.4 Facsimile; Counterparts. This Agreement may be executed by
facsimile and in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.5 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable. This Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as part hereof a provision as
similar in terms, but in any event no more restrictive than, such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
10.6 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
10.7 Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
10.8 Attorneys' Fees. In the event that any Proceeding is commenced by
any party hereto for the purpose of enforcing any provision of this Agreement,
the party to such Proceeding shall be entitled to receive as part of any award,
judgment, decision or other resolution of such Proceeding its costs and
attorneys' fees as determined by the person or body making such award, judgment,
decision or resolution. Should any claim hereunder be settled short of the
commencement of any such Proceeding, the parties in such settlement may mutually
agree to include as part of the damages alleged to have been incurred reasonable
costs of attorneys or other professionals in investigation or counseling on such
claim.
10.9 Jurisdiction and Venue. Any judicial proceedings brought by or
against any party on any dispute arising out of this Agreement or any matter
related thereto shall be brought in the state or federal courts of Dallas
County, Texas and, by execution and delivery of this Agreement, each of the
parties accepts for itself the exclusive jurisdiction and venue of the aforesaid
courts as trial courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement after exhaustion of all
appeals taken (or by the appropriate appellate court if such appellate court
renders judgment).
10.10 Assignability. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto without the prior written consent of
the other party to this Agreement.
10.11 Entirety. This Agreement and the documents executed and
delivered pursuant hereto, executed on the date hereof or in connection
herewith, contain the entire agreement among the parties with respect to the
matters addressed herein and supersede all prior representations, inducements,
promises or agreements, oral or otherwise, which are not embodied herein or
therein.
10.12 Amendment. This Agreement and schedules hereto may be amended by
the parties hereto at any time; provided, however, that any amendment must be by
an instrument or instruments in writing signed and delivered on behalf of each
of the parties hereto.
10.13 Governing Law. This Agreement shall be governed by, construed
and entered in accordance with the substantive laws of the State of Texas
without regard to principles of choice or conflict of law.
10.14 Settlement of Disputes.
(a) Mediation; Arbitration. For a period of thirty (30) days
after any controversy or claim arises out of or relating to this
Agreement, or the breach hereof (the "Pre-Arbitration Period"), both
parties shall, as their sole and exclusive remedy, attempt in good
faith to negotiate the resolution of such controversy or claim. Such
negotiations shall include submitting the controversy or claim to
nonbinding mediation before a neutral third party. Mediation shall be
conducted and administered by the American Arbitration Association
("AAA") under its rules and the costs thereof shall be shared equally
by the parties to such mediation. If any such controversy or claim
remains unresolved after the expiration of the Pre-Arbitration Period,
then Buyer and Seller, as their sole and exclusive remedy, shall
submit such controversy or claim for settlement to arbitration
pursuant to the following procedures:
(i) After expiration of the Pre-Arbitration Period,
either party may, in a written notice delivered to the other
party, demand such arbitration. Such notice shall designate
the name of the arbitrator appointed by such party demanding
arbitration, together with a statement of the matter in
controversy;
(ii) Within thirty (30) days after receipt of such
demand, the other party shall, in a written notice delivered
to the other party, name such party's arbitrator. If such
party fails to name an arbitrator, then the second arbitrator
shall be named by the AAA. The two arbitrators selected shall
name a third arbitrator within thirty (30) days, or in lieu of
such agreement on a third arbitrator by the two arbitrators so
appointed, the third arbitrator shall be appointed by the AAA;
(iii) Each party shall bear its own arbitration costs
and expenses. The arbitration hearing shall be held in Dallas,
Texas at a location designated by a majority of the
arbitrators. The Commercial Arbitration Rules of the AAA shall
be used and the substantive laws of the State of Texas
(excluding conflict of laws provisions) shall apply;
(iv) The arbitration hearing shall be concluded
within ten (10) days unless otherwise ordered by the
arbitrators and the award thereon shall be made within fifteen
(15) days after the close of submission of evidence. An award
rendered by a majority of the arbitrators appointed pursuant
to this Agreement shall be final and binding on all parties to
the proceeding and judgment on such award may be entered by
either party in a court of competent jurisdiction; and
(v) The parties stipulate that the provisions of this
Section 10.14 shall be a complete defense to any suit, action
or proceeding instituted in any federal, state or local court
of before any administrative tribunal with respect to any
controversy or dispute arising out of this agreement. The
arbitration provisions hereof shall, with respect to such
controversy or dispute, survive the termination or expiration
of this Agreement.
Neither any party hereto nor the arbitrators may disclose the
existence or results of any arbitration hereunder without the prior written
consent of the other party; nor will any party hereto disclose to any third
party any confidential information disclosed by any other party hereto in the
course of any arbitration hereunder without the prior written consent of such
other party.
(b) Emergency Relief. Notwithstanding anything in Section
10.14(a) to the contrary, either party may seek from a court any
provisional remedy that may be necessary to protect any rights or
property of such party pending the establishment of the arbitral
tribunal or its determination of the merits of the controversy.
(i) Jurisdiction. In connection only with the provisions
of this Section 10.14(b), each party hereto hereby
irrevocably submits to the exclusive jurisdiction of
the United States District Court for the Northern
District of Texas and, if such court does not have
jurisdiction, of the courts of the State of Texas in
Dallas County, for the purposes of any action arising
out of this agreement, or the subject matter hereof
or thereof, brought by any other party under this
Section 10.14(b).
(ii) Waiver of Defenses. In connection only with the
provisions of this Section 10.14(b), to the extent
permitted by applicable law, each party hereby waives
and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action brought
under this Section 10.14(b), any claim (1) that it is
not personally subject to the jurisdiction of the
above-named courts, (2) that the action is brought in
an inconvenient forum, (3) that it is immune from any
legal process with respect to itself or its property,
(4) that the venue of the suit, action or proceeding
is improper, or (5) that this Agreement, or the
subject matter hereof, may not be enforced in or by
such courts.
10.15 Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, notwithstanding the provision of
Section 10.14 hereof, each of the parties agrees that the other party shall be
entitled to enforce specifically this Agreement and the terms and provisions
hereof.
Signature Page Follows
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers.
SELLER:
INTERNETWORK EXPERTS, INC.
By:____________________________________
Xxxx Xxxxxxx
President
BUYER:
INTERNETWORKING SCIENCES CORPORATION
By:____________________________________
Xxxx X. Xxxx
President and Chief Executive Officer
Board of Directors Resolution
October 26, 2000
The Board of Directors for Internet Experts, Inc., a Texas corporation, hereby
authorizes the delivery of Assets as defined in the "Asset Purchase Agreement"
to Internetworking Sciences Corp., a Delaware corporation, to be executed on
October 27, 2000.
X ____________________________ Date: _____________
Xxxxxxx X. Xxxxxxxx
Secretary
X ____________________________ Date: _____________
L. Xxxxxx Xxxxxxx
Chairman
Secretary's Certificate
The undersigned, Xxxxxxxx X. Xxxxxxxx, being duly elected and
qualified secretary of Internet Sciences Corporation, a Delaware corporation
(the "Company"), hereby certifies pursuant to Section 6.1(a) of that certain
Asset Purchase Agreement dated October 27, 2000 ("the Agreement"), among Company
and Internetwork Experts, inc. (Capitalized terms used herein are used as
defined in the Agreement).
The following individuals are the duly elected, qualified and acting
officers of the Company and hold the office set forth opposite their
respective names as of the date hereof, and the signatures set forth
opposite their respective names and titles of said officers are their
true and authentic signatures.
Name Title Specimen Signature
Xxxx X. Xxxx Chief Executive Officer
Xxxxxxxx X. Xxxxxxxx Secretary
-----------------------------------------------------------------
IN WITNESS HEREOF, the undersigned has executed this Certificate as of
October 27, 2000.
-----------------------
Xxxxxxxx X. Xxxxxxxx
Secretary
I, Xxxx X. Xxxx, the Chief Executive Officer of the Company, do hereby
certify that Xxxxxxxx X. Xxxxxxxx is the truly elected, qualified and acting
Secretary of the Company and that her signature set forth above is her true and
authentic signature.
-----------------------
Xxxx X. Xxxx
Chief Executive Officer
SECRETARY'S CERTIFICATE
The undersigned, Xxxxxxx X. Xxxxxxxx, being duly elected and qualified Secretary
of Interwork Experts, Inc., a Texas corporation (the "Company"), hereby
certifies pursuant to Section 6.1(d) of that certain Asset Purchase Agreement
dated October 27, 2000 ("the Agreement"), among Company and Internetworking
Science Corp. (Capitalized terms used herein are used as defined in the
Agreement).
The following individuals are the duly elected, qualified and acting
officers of the Company and hold the office set forth opposite their
respective names as of the date hereof, and the signatures set forth
opposite their respective names and titles of said officers are their
true and authentic signatures.
Name Title Specimen Signature
L. Xxxxxx Xxxxxxx Chief Executive Officer
Xxxxxxx X. Xxxxxxxx Secretary
-----------------------------------------------------------------
IN WITNESS HEREOF, the undersigned has executed this Certificate as of October
27, 2000.
-----------------------
Xxxxxxx X. Xxxxxxxx
Secretary
I, L. Xxxxxx Xxxxxxx, the Chief Executive Officer of the Company, do
hereby certify that Xxxxxxx X. Xxxxxxxx is the truly elected, qualified and
acting Secretary of the Company and that her signature set forth above is her
true and authentic signature.
-----------------------
L. Xxxxxx Xxxxxxx
Chief Executive Officer
Schedule 2.1 (a)
INVENTORY IN TRANSIT
The Seller claims the following Inventory in Transit:
NONE
Schedule 2.1 (d)
VENDOR CONTRACTS
The Seller has identified the following list of Vendor Contracts:
Cisco Systems Professional Services Subcontract
Schedule 2.2 (a)
RETAINED ENGAGEMENTS
The Seller has identified the following transferred engagements:
Verizon Communications Tampa, FL
Schedule 2.2 (f)
REAL PROPERTY
The Seller claims the following real Property to be sold to buyer:
NONE
Schedule 2.4 (a) iv
Equipment Lease Obligations
The Seller has identified the following Equipment Lease Obligations to be
transferred:
Description Leasing Company Monthly Obligation
Dell Inspiron 7000 Notebook Computers
(Qty 4; lease date 10/1999) Dell Financial Services $594.88
Dell Inspiron 7500 Notebook Computers
(Qty 1; lease date 3/2000) Dell Financial Services $163.23
Dell Inspiron 7500 Notebook Computers
(Qty 3; lease date 6/2000) Dell Financial Services $464.28
Schedule 2.4 (a) v
Office Lease Obligations
The Seller has identified the following Office Lease Obligations to be
transferred:
Description
Xxxxxxxxxx Xxxxxxxxx Xxxxxx, #000, 0000 Xxxxxxx Xx, Xxxxxx, XX
Months Remaining Monthly Obligation
4 $768.25
* Any/all refunded lease deposits shall return to Seller.
Schedule 2.8
Warranty Obligations
The Seller has identified the following Warranty Obligations to be transferred
to Buyer:
NONE
Schedule 3.3
Consents and Approvals
The Seller has identified the following Consents and Approvals to complete the
Asset Purchase:
NONE
Schedule 3.5
LIENS
The Seller has identified the following Xxxxx associated with any transferred
assets:
NONE
Schedule 3.6
INVESTIGATION AND LITIGATION
The Seller has identified the following pending Investigation and Litigation:
NONE
Schedule 3.10
CONTRACTS
The Seller has identified the following Vendor Contracts and Transferred
Engagement Contracts (and attached copies of):
Schedule 2.1 (C)
TRANSFERRED ENGAGEMENTS
The Seller has identified the following Transferred Engagements:
Anadarko (Union Pacific Resources) Ft. Worth (Houston) TX
Fujitsu BCS Dallas TX
IBM Global Services Austin TX
Metropolitan Regional Information Services Rockville MD
NextJet Dallas TX
SBC Austin TX / Dallas TX
Avaya Communications
DFW Airport thru able Communications
SCHEDULE 5.6
Transferred Employees
1. Xxxx Xxxxxxxx
2. Xxxxx Xxxxx.
3. Xxxxx Xxxxxxxxxxx.
4. Xxx Xxxx
5. Xxxx Xxxxxxx
6. Xxxx Xxxxxxx
7. Xxxxxxxxx Xxxxxx
8. Xxxxx Xxxxxxxx
Schedule 2.1 (b)
Customer List
The Seller has identified the following Customer List:
ABC RADIO NETWORKS DALLAS, TX
ABLE COMMUNICATIONS ARLINGTON, TX
ACCOR DALLAS, TX
ADVANCE PARADIGM DALLAS, TX
ALLEGIANCE TELECOM DALLAS, TX
ANADARKO (UNION PACIFIC RESOURCES) FT. WORTH (HOUSTON) TX
AUSTIN COMMERCIAL DALLAS, TX
AVAYA COMMUNICATIONS DALLAS, TX
CANTONI FURNITURE DALLAS, TX
CAPROCK COMMUNICATION DALLAS, TX
CCS DALLAS, TX
CHILLECOTHE MUNICIPLE UTILITIES (MO) Chillocothe, mo
CHOICE SOLUTIONS, INC. COLLEYVILLE, TX
COMACHE CTY TEL. FT. WORTH TX
COMPUTER TECH DALLAS, TX
CONVERGENT COMMUNICATIONS DALLAS, TX
DALLAS MORNING NEWS DALLAS, TX
DCS INFO SERVICE DALLAS, TX
DFW AIRPORT FT. WORTH, TX
EAST TEXAS MEDICAL CENTER (via SBC) TYLER, TX
XXXX XXXXXXXX DALLAS, TX
ENCENTRIS CORP. DALLAS, TX
ENVIROSAFE, PHEONIX, AZ PHEONIX, AZ
FIRST SAVINGS BANK ARLINGTON, TX
FRITO LAY PLANO, TX
FUJITSU BCS DALLAS, TX
GLOBAL COMPUTER CORP DALLAS, TX
GTE IRVING, TX / TAMPA, FL
XXXXXX XXXXXX DALLAS, TX
XXXXXXXXX.XXX, LOS ANGELES, CA LOS ANGELES, CA
HRC (HUMAN RESOURCES CORP) DALLAS, TX
IBM GLOBAL SERVICES AUSTIN, TX
INSIGHT ASSOCIATES DALLAS, TX
INTELINET SYSTEMS DALLAS, TX
IT GLOBAL SOLUTIONS TULSA, OK
JC PENNEY DALLAS, TX
JEFFERSON PROPERTIES, INC. DALLAS, TX
BAYLOR MEDICAL DALLAS, TX
JPI (JEFFERSON PROPERTIES, INC) IRVING, TX
LANCASTER ISD LANCASTER, TX
LEARN KEY ST. XXXXXX, UT
XXXXXXX CONSTRUCTION HOUSTON, TX
LINCOLN DALLAS, TX
MAILBOX, INC. DALLAS, TX
MATRIX TELECOM BEDFORD, TX
METROPOLITAN REGIONAL INFORMATION SERVICES ROCKVILLE, ND
MULTINET SOLUTIONS SAN ANTONIO, TX
Schedule 2.1 (b) CONTINUED
NEXTJET DALLAS, TX
NIS (NETWORK INTEGRATION SERVICES) DALLAS, TX
NORTEL RICHARDSON, TX
ORIGIN TECH BUSINESS ARLINGTON, TX
ORION PLANO, TX
XXXXXX FINANCIAL SERVICES DALLAS, TX
PRO-LINK TECH DALLAS, TX
PROSERVE IRVING, TX
PSI TECHNOLOGIES AUSTIN, TX
RADIOLOGIX DALLAS, TX
REXEL CCW (CABLE CONNECTION WAREHOUSE) DALLAS, TX
SABINE GROUP PLANO, TX
XXXXXXX DISTRIBUTION DALLAS, TX
SBC AUSTIN, TX (DALLAS, TX)
XXXXXXX000.XXX DALLAS, TX
SPECTRAPOINT WIRELESS RICHARDSON, TX
XXXXXXXXXXXXX.XXX DALLAS, TX
SUMMIT BANK FT. WORTH, TX
TELECOM TECHNOLOGIES INC. (TTI) RICHARDSON, TX
THE CONTAINER STORE DALLAS, TX
USAA SAN ANTONIO, TX
VA MEDICAL CENTER HOUSTON, TX
VERIZON COMMUNICATIONS IRVING, TX (TAMPA, FL)
VHB TECHNOLOGIES DALLAS, TX
VIRTUALLINC DALLAS, TX
ARTICLES OF INCORPORATION
1. Name of Corporation: Internetwork Experts, Inc.
2. Period of Duration: Perpetual
3. Lawful Purpose: to engage an any or all lawful business for
which Corporations may be incorporated under
the Texas Business Corporation Act.
4. Number of shares that the corporation is authorized to issue:
Ten Million (10,000,000) no par value
5. "The corporation will not commence until it has received for the
issuance of its shares consideration of the value of a stated sum which
be at least one thousand dollars ($1,000.00), consisting of money,
labor done, or property actually received."
6. Name of the registered agent: Xxx X. Xxxxxxx
Address of registered office: 00000 Xxxxxx Xx. #0000, Xxxxxx, XX 00000
7. Number of Directors: two (2)
Xxx Xxxxxx Xxxxxxx, 00000 Xxxxxx Xx. #0000, Xxxxxx, XX 00000
Xxxxxxx Xxxxx, 0000 Xxxx Xxxxx, Xxxxxxxx, XX 00000
8. Name (s) and Address (es) of incorporator (s):
Xxx Xxxxxx Xxxxxxx, 00000 Xxxxxx Xx. #0000, Xxxxxx, XX 00000
Xxxxxxx Xxxxx, 0000 Xxxx Xxxxx, Xxxxxxxx, XX 00000
THE STATE OF TEXAS
SECRETARY OF STATE
APRIL. 7, 1997
XXXX XXXXXXX
00000 XXXXXX XX. #0000
XXXXXX, XX 00000
RE:
INTERNET EXPERTS, INC.
CHARTER NUMBER: 01440622-00
IT HAS BEEN OUR PLEASURE TO APPROVE AND PLACE ON RECORD THE ARTICLES OF
INCORPORATION THAT CREATED YOUR CORPORATION.
AS A CORPORATION, YOU ARE SUBJECT TO STATE LAWS. SOME NON-PROFIT
CORPORATIONS ARE EXEMPT FROM THE PAYMENT OF FRANCHISE TAXES AND MAY ALSO BE
EXEMPT FROM THE PAYMENT OF SALES AND USE TAX ON THE PURCHASE OF TAXABLE
ITEMS. IF YOU FEEL THAT UNDER THE LAW YOUR CORPORATION IS ENTITLED TO BE
EXEMPT YOU MUST APPLY TO THE COMPTROLLER OF PUBLIC ACCOUNTS FOR THE
EXEMPTION. THE SECRETARY OF STATE CANNOT MAKE SUCH DETERMINATION FOR YOUR
CORPORATION.
IF WE CAN BE OF FURTHER SERVICE AT ANY TIME, PLEASE LET US KNOW.
VERY TRULY YOURS,
---------------------------
Xxxxxxx X. Xxxxx, Xx., Secretary of State
Texas Comptroller of Public Accounts
XXXXXX XXXXXX XXXXXXXX . COMPTROLLER. XXXXXX, XXXXX 00000
OCTOBER 27, 2000
Internetwork Experts Inc,.
00000 Xxxxxx Xxxxxxx #000
Xxxxxx, XX 00000-0000
CERTIFICATE OF ACCOUNT STATUS
THE STATE OF TEXAS
COUNTY OF XXXXXX
I, Xxxxxx Xxxxxx Xxxxxxxx, Comptroller of Public Accounts of the State of Texas,
DO HEREBY CERTIFY that according to the records of this office
INTERNETWORK EXPERTS
IS, AS OF THIS DATE, IN GOOD STANDING WITH THIS OFFICE HAVING NO FRANCHISE TAX
REPORTS OR PAYMENTS DUE AT THIS TIME. This certificate is valid through the date
that the next franchise tax report will be due, May 15, 2001.
This certificate is valid for purpose of conversion when the converted entity is
subject to franchise tax as required by law. This certificate is not valid for
the purpose of dissolution, merger, or withdrawal.
GIVEN UNDR MY HAND AND SEAL OF OFFICE in the City of Austin, this 27th day of
October, 2000 A.D.
XXXXXX XXXXXX XXXXXXXX
Comptroller of Public Accounts
Taxpayer number: 1-75-2699813-7
File number: 01440622-00
CONSULTING AND NONCOMPETITION AGREEMENT
THIS CONSULTING AND NONCOMPETITION AGREEMENT (this "Agreement") is
entered into effective as of the ___th day of October, 2000, by and between
INTERNETWORKING SCIENCES CORPORATION, a Delaware Corporation, ("Company"), and
XXXX XXXXXXX, an individual ("Consultant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, certain of the assets of Internetwork Experts, Inc.
("Seller"), a company in which Consultant is a significant stockholder, are
being sold and conveyed to Company pursuant to that certain Asset Purchase
Agreement dated the date hereof by and among Company and Seller (the "Asset
Purchase Agreement"); and
WHEREAS, Consultant will benefit from such above-described transaction
between Company and Seller; and
WHEREAS, as a condition to the consummation of the transactions
contemplated under the Asset Purchase Agreement, Consultant has agreed not to
compete with Company and to provide certain consulting services to Company as
set forth below;
NOW THEREFORE, in consideration of the premises, the mutual covenants
hereinafter contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed by and between
Company and Consultant as follows:
ARTICLE I
NONCOMPETITION; CONFIDENTIALITY
1.1 Noncompetition. In order to protect the Company and its
investments and in consideration of Company's agreement to acquire the Assets
(as defined in the Asset Purchase Agreement), Consultant hereby agrees that for
a period of two (2) years after the date of this Agreement, Consultant shall not
directly or indirectly, for itself or as a partner, officer, principal,
director, stockholder, holder of any equity security, employee, employer, agent,
consultant or in any other individual or representative capacity whatsoever:
(a) Contact, solicit, attempt to solicit, interfere with, divert or
take away any of the customers set out on the Customer List (as
such term is defined in the Asset Purchase Agreement) in
connection with any business similar to the Prohibited
Activities, nor interfere or compete with Company in connection
with such customers; or
(b) Induce or attempt to induce any employee of Company or its
Affiliates to leave the employ of Company or its Affiliates, or
in any way interfere with the relationship between Company or its
Affiliates and any employee, vendor, supplier or other business
relation of Company. For the purposes of this Section 1.1, the
term "Affiliates" shall mean I-Sector Corporation, the parent
organization of Company or any other wholly-owned subsidiary
companies owned by I-Sector Corporation or any subsidiary
companies owned by Company.
(c) Offer employment directly or indirectly to anyone of the
transferred employees listed below for a period of 18 months.
1. Xxxx Xxxxxxxx
2. Xxxxx Xxxxx.
3. Xxxxx Xxxxxxxxxxx.
4. Xxx Xxxx
5. Xxxx Xxxxxxx
6. Xxxx Xxxxxxx
7. Xxxxxxxxx Xxxxxx
8. Xxxxx Xxxxxxxx
1.2 Remedies. Consultant agrees that in the event of breach of this
Article I, Company would be irreparably injured and be without an adequate
remedy at law. Therefore, in the event of such a breach, or attempted breach of
any of the provisions hereof, Company shall be entitled to enforce, in addition
to any other remedies which are made available to it at law or in equity, to a
temporary and/or permanent injunction and a decree for the specific performance
of the terms of this Article I.
1.3 Invalid Provisions. To the extent permitted by applicable law, if
any provision of this Article I is held to be illegal, invalid or unenforceable
under present or future laws effective during the Term hereof, then such
provision shall be fully severable. However, this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by such illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of such illegal, invalid or unenforceable provision an arbitor shall
construct a new provision that shall be added automatically as a part hereof a
provision, as similar in the terms to such illegal, invalid or unenforceable
provision as is legal, valid and enforceable at such time.
This Agreement shall be deemed to consist of a series of separate
covenants. Consultant expressly agrees that the character, duration and
geographical scope of this Article I are reasonable in light of the
circumstances as they exist on the date upon which this Agreement has been
executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration and
geographical scope of this Agreement is unreasonable in light of the
circumstances as they then exist, then it is the intention and the agreement of
both Company and Consultant that this Agreement shall be construed by the court
in such a manner as to impose only those restrictions on the conduct of
Consultant which are necessary to assure Company of the intended benefit of this
Article I. If, in any judicial proceeding, a court shall refuse to enforce all
of the separate covenants deemed included herein, because taken together they
are more extensive than necessary to assure Company of the intended benefit of
this Agreement, it is expressly understood and agreed between the parties hereto
that those of such covenants which, if eliminated, would permit the remaining
separate covenants to be enforced in such proceeding shall, for the purpose of
such proceeding, be deemed eliminated from the provisions hereof in such
jurisdiction.
ARTICLE II
CONSULTING SERVICES
1.1 Consulting. Consultant agrees to use commercially reasonable best
efforts to provide consulting services as reasonably requested by Company to
assist with the transition of the customers on the Customer List and the
integration of the Transferred Employees within Company, provide other
information as may be needed by Company from time to time during the term of
this agreement to facilitate a smooth transition of the business of Seller to
Company, and such other matters as Company may reasonably request. Consultant
shall not be required to devote more than 20 hours to the performance of
Services hereunder during the term of this agreement.
1.2 Term. The term of this Agreement shall be from the date of the
Closing (as defined in the Asset Purchase Agreement) (the "Effective Date") for
a period of 150 days thereafter (the "Term").
1.3 Manner of Performance. During the Term, Consultant shall perform
the Services requested of him to the best of his ability to advance the business
and welfare of Company. Consultant will abide by all laws, rules and regulations
that apply to the performance of the Services and Company shall not request that
Consultant provide any Services that would violate any such laws, rules or
regulations.
1.4 Independent Contractor. The parties agree that Consultant is an
independent contractor and that Consultant shall not be considered under this
Agreement or otherwise to be an employee or agent of Company. Consultant shall
be legally responsible for his own taxes. Consultant shall not have the power to
legally bind Company and is not granted and shall not exercise the right or
authority to assume or create any obligation or responsibility, including,
without limitation, contractual obligations, on behalf of Company. If and when
Company requests in writing, Consultant agrees to provide Company with necessary
documentation to support Consultant's independent contractor status under all
applicable laws.
ARTICLE III
COMPENSATION
3.1 Performance Cash Payment. Company shall pay Consultant a single
cash payment (the "Performance Cash Payment") that will vary depending upon the
amount of professional services revenue (and excluding any product sales
revenues) generated by Company during the 150 days following the Closing
Date(the "Gross Revenue Period") to the specific group of customers on the
Customer List attached hereto as schedule 3.2. This Performance Cash Payment
will be payable within five (5) days after a final determination of Gross
Service Revenue as set forth in Section 3.5. This Performance Cash Payment will
vary in accordance with the amount of Gross Service Revenue. The amount of the
Gross Service Revenue Payment shall be zero (0) if Gross Service Revenue is less
than $350,000.00; or $30,000.00 if Gross Service Revenue is between $350,000.00
and $474,999.99; or $38,500.00 if Gross Service Revenue is between $475,000.00
and $599,999.99; or $47,000.00 if Gross Service Revenue is between $600,000.00
and $699,999.99; or $55,000.00 if Gross Service Revenue is between $700,000.00
and $799,999.00; or $72,000.00 if Gross Service Revenue is between $800,000.00
and $999,999.99; or $89,000.00 plus one percent (1%) of the amount of Gross
Service Revenue above $1,000,000.00 if Gross Service Revenue is more than
$1,000,000.00
3.2 Stock Options. Within 30 days following the determination of Gross
Service Revenue during the Gross Revenue Period as set forth in Section 3.3
below, Company will issue a stock option contract to Consultant. The number of
shares contained in such stock option contract shall vary depending upon the
amount of Gross Service Revenue. The number of shares shall be 7,500 if Gross
Service Revenue is less than $350,000.00; or 12,500 if Gross Service Revenue is
between $350,000.00 and $474,999.99; or 25,000 if Gross Service Revenue is
between $475,000.00 and $599,999.99; or 30,000 if Gross Service Revenue is
between $600,000.00 and $699,999.99; or 37,500.00 if Gross Service Revenue is
between $700,000.00 and $799,999.00; or 50,000 if Gross Service Revenue is equal
to or greater than $800,000.00.
3.3 Determination of Gross Service Revenue. Within thirty (30) days
after the Gross Service Revenue Period, Company shall deliver to Consultant a
written statement (the "Gross Service Revenue Statement") setting forth the
amount of total services revenues generated from the specific customers shown on
Schedule 2.1(b) during the Gross Service Revenue Period, and excluding any
product sales revenues (the "Gross Service Revenue"). The Gross Service Revenue
Statement shall be certified by an officer of Company to the effect that such
statement reflects the total Gross Service Revenue for the Gross Service Revenue
Period and that such Gross Service Revenue was determined consistent with
generally accepted accounting practices and with Company's normal revenue
recognition policies. Within five (5) days after its receipt of the Gross
Service Revenue Statement, Consultant shall deliver to Company a written
acceptance of the Gross Service Revenue reflected thereon or a written notice
that Consultant desires to review Company's books and records related to the
Gross Service Revenue Period. Consultant shall complete any such review within
thirty (30) days after its receipt of the Gross Service Revenue Statement. To
the extent that any such review indicates that the Gross Service Revenue
reflected on the Gross Service Revenue Statement was inaccurate, the Gross
Service Revenue and the Gross Service Revenue Payment shall be adjusted
accordingly. If Company and Consultant are unable to resolve any dispute
concerning the Gross Service Revenue for the Gross Service Revenue Period
through the procedure outlined above, such unresolved dispute shall be submitted
for further determination to a nationally or regionally recognized accounting
firm to be mutually selected by Company and Consultant, and the determination by
such accounting firm shall be made within thirty (30) days following the
submission to them of such dispute and shall be binding upon Consultant and
Company. Consultant and Company shall each bear fifty percent (50%) of the fees
and expenses of such accounting firm resolving such dispute.
ARTICLE IV
MISCELLANEOUS
4.1 Entire Agreement. This Agreement, the Asset Purchase Agreement and
other contemporaneously executed documents supersede all prior agreements
between the parties (written or oral) with respect to the subject matter hereof
and is intended as a complete and exclusive statement of the terms of this
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement may be amended only by a written instrument duly executed by the
parties hereto.
4.2 Notices. Any notice, demand, offer, exercise of an option or other
written instrument required or permitted to be given, made, or sent hereunder
shall be in writing, signed by the party giving or making the same, and shall be
sent in the manner prescribed in the Asset Purchase Agreement.
4.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.
4.4 Jurisdiction and Venue. Any judicial proceedings brought by or
against any party on any dispute arising out of this Agreement or any matter
related thereto shall be brought in the state or federal courts of Dallas
County, Texas, and, by execution and delivery of this Agreement, each of the
parties accepts for itself the exclusive jurisdiction and venue of the aforesaid
courts as trial courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement after exhaustion of all
appeals taken (or by the appropriate appellate court if such appellate court
renders judgment).
4.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
4.6 Assignability. This Agreement may not be assigned by either party
except with the prior written consent of the other party.
4.7 Invalid Provisions. If any provision hereof is held to be illegal,
invalid or unenforceable, such provisions shall be modified to the extent
necessary to render such provision enforceable and, if necessary, shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision was so modified as of the date hereof, or
never comprised a part hereof, as the case may be; and the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision.
4.8 Counterparts; Facsimiles. This Agreement may be executed by the
parties hereto in counterparts. Facsimile signatures shall be valid.
4.9 Attorneys' Fees. The prevailing party in any dispute arising out
of this Agreement shall be entitled to recover the costs and expenses, including
reasonable attorneys' fees, incurred by such party in enforcing this Agreement.
4.10 Defined Terms. Capitalized terms used herein that are not defined
herein shall have the meaning set forth in the Asset Purchase Agreement dated
the date hereof by and among Company and Seller.
Signature Page Follows
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date first written above.
COMPANY:
INTERNETWORKING SCIENCES CORPORATION
By:_________________________________
Xxxx X. Xxxx,
Chief Executive Officer
CONSULTANT:
By:_________________________________
Xxxx Xxxxxxx,
Individual
