FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
EXHIBIT 10.1
FIRST
AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Amendment”) is executed
effective as of June 19, 2009, by and among INX Inc., a Delaware corporation
(“Buyer”),
NetTeks Technology Consultants, Inc., a Massachusetts corporation (“Seller”), and Xxxxx
X. Xxxxxxx, Xxxxxxx X. Field and Xxxxxxx X. XxXxxxx, each individuals (together,
the “Shareholders” and
each, individually, a “Shareholder”).
W I T N E S S E T
H
Reference
is made to that certain Asset Purchase Agreement, dated November 14, 2008, among
the Buyer, the Seller and the Shareholders, together with all exhibits,
schedules and annexes thereto (the “Asset Purchase
Agreement”);
The Seller has sold to the Buyer the
Purchased Assets previously owned by the Seller and the Buyer has paid the
Seller the Cash Consideration and the Stock Consideration;
The
Buyer, the Seller and the Shareholders seek to amend Section 1.7 of the Asset
Purchase Agreement effective as of June 12, 2009, in order to modify the terms
upon which Seller shall be entitled to Additional Purchase
Consideration.
AGREEMENT
NOW, THEREFORE, for and in
consideration of the mutual covenants and agreements herein contained and other
good and valuable consideration, the Buyer, the Seller and the Shareholders do
hereby agree that the Asset Purchase Agreement is modified and amended as
follows:
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1.
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SECTION
1.7. Section 1.7 of the Asset Purchase Agreement is hereby amended
by deleting Section 1.7 in its entirety and replacing it with the
following new Section 1.7.
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“1.7
Additional
Purchase Consideration As additional consideration for the
Purchase, the Buyer will pay additional purchase consideration to the Seller
following the Closing Date based on and contingent upon certain post-Closing
financial performance beginning on the first day of the first full calendar year
after the Closing (the “Additional Purchase
Consideration”) as set forth in this section 1.7.
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(a)
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Seller NetTeks
Business Operations Performance. Buyer will pay Seller a
variable contingent payment based on and contingent upon the financial
performance of the Buyer’s business unit that is comprised, after the
Closing Date, solely of the Buyer’s business activities performed by its
employees out of its current locations in Massachusetts and Connecticut
(the “NetTeks
Business Operations”) which operations shall include the Buyer’s
business operations located in the greater Boston-metro area immediately
prior to the Closing Date. As used in this Agreement, this
component of the Additional Purchase Consideration shall be referred to as
the “NetTeks
Business Operations Earn out”. For purposes of this
Agreement, the term “NetTeks Business
Operations Operating Income Contribution” means the Operating
Income (as defined by GAAP as applied by Buyer in operating its business)
contribution attributable to the NetTeks Business Operations before any
allocation of the Buyer’s corporate-level operations and administrative
expenses, all as determined by the Buyer using its normal accounting
methodologies and processes, and in accordance with Generally Accepted
Accounting Principles (“GAAP”);
provided, however, that certain costs are excluded from the earn out
calculation as detailed below. During the period from the date of this
amendment through August 31, 2009, any severance payments resulting from
employee terminations in the NetTeks Business Operations during such
periods. The remaining rent expense related to the downtown Boston office
once the space is vacated will be excluded for purposes of calculating
Business Operations Operating Income Contribution for the remaining earn
out period. Amortization of intangible assets related to the NetTeks
acquisition will also be excluded from the earn out calculation. The
NetTeks Business Operations Earn out will be calculated and paid in two
components, the first based on the third and fourth calendar quarters in
2009 (the “First
Measurement Period”) and the second based on the entire calendar
year 2010 (the “Second Measurement
Period”), as set forth
below.
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(i)
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First Measurement
Period. This component will be based on achievement of
NetTeks Business Operations Operating Income Contribution during the First
Measurement Period and will be equal to seven hundred fifty thousand
dollars ($750,000) times the Attainment Percentage (defined
below). As used in this Section 1.7(a)(i), the term “Performance
Ratio” shall mean the percentage resulting from dividing actual
Operating Income Contribution from NetTeks Business Operations during the
First Measurement Period by eight hundred and eighty one thousand and
fifty two dollars ($881,052). After establishing the Performance Ratio,
the percentage used to calculate this component of the Additional Purchase
Consideration shall be calculated (as used in this Section 1.7(a)(i), the
“Attainment
Percentage”) as follows: (A) The Attainment Percentage
shall be equal to one hundred and fifty percent (150%) if the Performance
Ratio is equal to 100%; (B) if the Performance Ratio is less than 100%,
the Attainment Percentage shall be one hundred and fifty percent (150%)
less 1% for each 1% that the Performance Ratio is less than 100% but in no
event shall the Attainment Percentage be reduced to an amount lower than
one hundred percent (100%); and (C) if the Performance Ratio is more than
100%, the Attainment Percentage shall be one hundred and fifty percent
(150%) plus 1% for each 1% that the Performance Ratio exceeds 100% but in
no event shall the Attainment Percentage be increased to an amount greater
than two hundred percent (200%).
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(ii)
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Second Measurement
Period. This component will be based on achievement of
NetTeks Business Operations Operating Income Contribution during the
Second Measurement Period and will be equal to eight hundred and fifty
thousand dollars ($850,000) times the Attainment Percentage (defined
below). As used in this Section 1.7(a)(ii), the term “Performance
Ratio” shall mean the percentage resulting from dividing actual
Operating Income Contribution from NetTeks Business Operations during the
Second Measurement Period by two million one hundred and thirty thousand
and twenty eight dollars ($2,130,028). After establishing the Performance
Ratio, the percentage used to calculate this component of the Additional
Purchase Consideration shall be calculated (as used in this Section
1.7(a)(ii), the “Attainment
Percentage”) as follows: The Attainment Percentage shall
be equal to the Performance Ratio if the Performance Ratio is 100%,
however, if the Performance Ratio is less than 100%, the Attainment
Percentage shall be reduced by 1% for each 1% that the Performance Ratio
is less than 100%, and if the Performance Ratio is more than 100%, the
Attainment Percentage shall be increased by 1% for each 1% that the
Performance Ratio exceeds 100% up to 150% and shall increase by 0.5% for
each 1% between 150% and up to 200%; provided, however, if the
above calculation results in an Attainment Percentage that is less than
50%, then the Attainment Percentage shall be zero, and if such calculation
results in an Attainment Percentage that is greater than 200%, the
Attainment Percentage shall be
200%.
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(b)
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Each
payment of Additional Purchase Consideration shall be calculated and paid
by Buyer to Seller within ninety (90) days of the end of the measurement
period for which such payment relates. In addition, 50% of all Additional
Purchase Consideration shall be paid in cash and the remainder shall be
paid to the Seller, at the Buyers option, by either cash or the issuance
to Seller of such number of shares of Buyer Common Stock determined by
dividing fifty percent (50%) of the Additional Purchase Consideration
payable for such payment by the price of Buyer’s Common Stock using the
average closing price per share for the Common Stock as reported by the
NASDAQ for the five (5) consecutive trading days ending prior to the
second day before the date of funding of such payment of Additional
Purchase Consideration.”
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2.
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All
capitalized terms used in this Amendment without being defined herein
shall have the meaning ascribed to such terms in the Asset Purchase
Agreement.
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3.
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Any
and all terms and provisions of the Asset Purchase Agreement are hereby
modified and amended wherever necessary, and even though not specifically
addressed herein, so as to conform to the amendments set forth in the
preceding paragraphs hereof.
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4.
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Any
and all of the terms and provisions of the Asset Purchase Agreement shall,
except as expressly modified and amended hereby, remain in full force and
effect.
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5.
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This
Amendment may be executed in any number of counterparts, any one of which
shall constitute an original and all counterparts being but one
instrument.
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[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement as of
the day and year first written above.
BUYER:
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SELLER:
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NETTEKS
TECHNOLOGY CONSULTANTS, INC.
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/s/ Xxxxx
Xxxxxxx
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/s/ Xxxxx X. Xxxxxxx
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Xxxxx
Xxxxxxx,
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Xxxxx
X. Xxxxxxx
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Vice
President & Chief Financial Officer
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President
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SHAREHOLDERS:
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/s/ Xxxxx X. Xxxxxxx
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/s/ Xxxxxxx X. XxXxxxx
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Xxxxx
X. Xxxxxxx, individually
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Xxxxxxx
X. XxXxxxx, individually
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/s/ Xxxxxxx X. Field
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Xxxxxxx
X. Field, individually
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