EXHIBIT 10.52
THE XXXX
GROUP
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August 10, 2000
Xx. Xxxx Xxxxxx
Chief Executive Officer and President
Interliant, Inc.
Two Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Phone 000.000.0000
Fax 000.000.0000
Re: COO Services
Dear Herb,
This letter outlines the understanding between The Xxxx Group, Inc, a Delaware
corporation ("TFG"), and Interliant, Inc. ("INIT" or the "Company"), of the
objective, tasks, work product and compensation for the engagement of TFG to
provide Information consulting services to the Company and of the terms of the
strategic alliance between TFG and the Company.
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OBJECTIVE
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. To act as the Chief Operating Officer for the Company.
. To establish a strategic alliance between TFG and the Company.
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TASKS AND WORK PRODUCT
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Tasks
. Advise the Company's Senior Management and provide a leadership role
or roles in the day-to-day operations of the Company and its
subsidiaries.
. Perform such other tasks as may be mutually agreed upon and that are
within our expertise.
. To help define, architect, and select technology partners that will
help enable the Company and its affiliates to build its technology
infrastructure.
. To perform such other tasks as are reasonably requested by the CEO of
the Company and which are consistent with the role of a COO of a
company similar to the Company.
. Personal attendance at both internal and external meetings concerning
the Company as may be requested by the CEO, and visitation to Company
or customer sites as may be required to appropriately perform the
tasks of the COO of the Company.
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Work Products
. Information to be discussed with you and others, as you may direct.
. Written reports and analytical worksheets to support our suggestions
asyou may reasonably request.
. Provide COO related operational management as appropriate.
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STAFFING
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Xxxxx Xxxxxx will be assigned to the position of the Chief Operating Officer
reporting to the CEO and President. For planning purposes, to fulfill the
responsibilities of Chief Operating Officer, we expect Xxxxx to be assisted by
1.5 additional Xxxx Group consultants at various levels, all of whom have a wide
range of skills and abilities related to this type of assignment. In addition,
we have relationships with, and may retain, independent contractors with
specialized skills and abilities to assist us. These independent contractors
shall be billed to Interliant directly. Any such engagement of independent
contractors or consultants shall be subject to the prior approval of the CEO of
the Company.
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TIMING, FEES AND EXPENSES
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Monthly Fees: We will commence this agreement as of August 7, 2000 and end on
July 31, 2001.
We will xxxx the Company at the rate of $130,000.00 a month for services,
prorated for any portion of a month that is less than a complete calendar month.
For purposes of monthly xxxxxxxx, we will xxxx our fees monthly in advance and
will expect to be paid by the 20th of each month. We are also reimbursed for
directly related costs, such as travel, hotel, and production support, which
costs shall be payable to TFG in accordance with an expense budget (estimated at
10-15% of total professional fees) to be mutually determined by TFG and the CEO
of the Company. Unless not practical or not cost efficient in a particular
instance, TFG will use the Company's travel services.
In addition, we will receive a grant of warrants to purchase common stock of the
Company, in total, equal to 180,000 shares at current fair market value of no
more than $13.06 each, subject to the termination provisions below.
From time to time, subject to the Company's prior approval in each instance, we
may deploy additional resources above our planned staffing levels into the
Company. We will xxxx in arrears for any such additional resources at a monthly
rate of $83,000.00 for a full-time consultant.
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RELATIONSHIP OF THE PARTIES
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The parties intend that an independent contractor relationship will be created
by this agreement. The employees of TFG are not entitled to any of the benefits
that the Company provides for the Company's Employees such as, but not limited
to, vacation payment, retirement, health care or sick pay. Company shall not be
responsible for withholding income or other taxes from the payments made to TFG.
TFG shall be solely responsible for filing all returns and paying any income,
social security or other tax levied upon or determined with respect to the
payments made to TFG pursuant to this Agreement. As and if required by the laws
of the states in which it operates, TFG shall provide workers compensation
insurance and upon request provide to the Company a certificate of such
coverage.
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The Company and TFG each agree not to solicit, recruit or hire any employees or
agents of the other for a period of one year subsequent to the completion and/or
termination of this agreement.
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CONFIDENTIALITY
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TFG agrees to keep confidential all proprietary information obtained from or
created on behalf of the Company or its subsidiaries. TFG agrees that neither it
nor its directors, officers, principals, employees, consultants, agents or
attorneys will disclose to any other person or entity, or use for any purpose
other than specified herein, any information pertaining to the Company or any
affiliate thereof which is either non-public, confidential or proprietary in
nature ("Information") that it obtains or is given access to during the
performance of the services provided hereunder. TFG may make reasonable
disclosures of Information to third parties in connection with their performance
of their obligations and assignments hereunder on a "need to know" basis and
upon prior notice to Company's General Counsel; however, TFG shall not disclose
the Company's or its subsidiaries' business plans and forecasts to any party
that has not signed a confidentiality agreement nor any Information to any third
party from whom the Company has requested a signed confidentiality agreement,
until the Company receives such agreement. In addition, TFG will have the right
to disclose to others in the normal course of business its involvement with the
Company.
Information includes, but is not limited to, data, plans, reports, schedules,
drawings, accounts, records, calculations, specifications, flow sheets, computer
programs, source or Object codes, results, models, or any work product relating
to the business of the Company, its subsidiaries, distributors, affiliates,
vendors, customers, employees, contractors and consultants, and any other
material marked "confidential" by the Company.
The Company acknowledges that all advice (written or oral) given by TFG to the
Company in connection with TFG's engagement is intended solely for the benefit
and use of the Company and its affiliates (limited to its management and
employees) in considering the transactions to which it relates. The Company
agrees that no such advice shall be used for any other purpose or reproduced,
disseminated, quoted or referred to at any time in any manner or for any purpose
other than accomplishing the tasks and programs referred to herein or in
discussions with the Company's professional advisors, lenders or debt holders,
without TFG's prior approval (which shall not be unreasonably withheld,
conditioned or delayed) except as required by law. The confidentiality
obligations of both parties under this agreement will survive the termination of
the engagement. During the engagement, TFG shall provide the Company access to
all information or work product developed by or on behalf of TFG relating to the
Company or its subsidiaries and the engagement.
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STRATEGIC RELATIONSHIP
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During the term of this agreement, TFG and the Company shall establish a
meaningful strategic relationship which shall include, without limitation, the
following:
. TFG shall outsource to the Company, all of its internal web and application
hosting and IT solution and professional service needs related thereto,
provided the Company offers such services and its pricing is market
competitive.
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. The Company shall be TFG's exclusive web hosting and application service
provider ("ASP") partner for referrals or recommendations of such web
hosting or ASP business to other companies or organizations with whom TFG
is associated or performing services for. It is understood that
notwithstanding the foregoing, TFG shall not have an obligation to refer
such business to the Company in situations where TFG clients have
established pre-existing relationships with other such providers.
. The Company shall be TFG's preferred partner for referrals or
recommendations of IT consulting and professional services business to
other companies with whom TFG is associated or performing services for.
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INDEMNIFICATION
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For purposes of indemnification, Xxxxx Xxxxxx shall be deemed an officer of the
Company and shall, along with other TFG personnel who may serve as officers of
the Company, be individually covered by the same indemnification and officers'
liability insurance as is applicable to other officers of the Company.
In engagements where a TFG employee is acting as an officer of the Company, it
is our practice to receive indemnification. Accordingly, in consideration of our
agreement to act on behalf of the Company in connection with this engagement,
the Company agrees to indemnify, hold harmless, and defend TFG (including its
principals, employees and agents) from and against all claims, liabilities,
losses, damages and reasonable expenses as they are incurred, including
reasonable legal fees and disbursements of counsel, relating to or arising out
of the engagement, including any legal proceeding in which we may be required or
agree to participate but in which we are not a party (collectively "Claims").
TFG's principals, its employees, agents and TFG may, but are not required to,
engage a single firm of separate counsel of our choice in connection with any of
the matters to which this indemnification agreement relates. This
indemnification agreement does not apply to actions taken or omitted to be taken
by TFG, its principals, employees or agents which constitute negligence or
willful misconduct.
TFG shall similarly indemnify and hold harmless the Company, its affiliates, and
their respective officers, directors, shareholders and employees from any Claims
caused by the negligence or willful misconduct of TFG, its principals, employees
or agents.
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TERMINATION AND SURVIVAL
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The agreement may be terminated upon thirty (30) days' written notice at any
time given by one party to the other; provided, however, that notwithstanding
such termination TFG will be entitled to any fees, and expenses due under the
provisions of the agreement that otherwise would be payable to TFG through the
last day of the calendar month within which the termination date falls pursuant
to such notice ("Early Termination Date"). Unless terminated as provided above,
this agreement will terminate on July 31, 2001 ("Termination Date"). In the
event of such early termination, a number of warrants equal to the product of
15,000 and the number of calendar months between the Early Termination Date and
the Termination Date shall be automatically forfeited by TFG.
The obligations of the parties under the Indemnification, Confidentiality and
Termination and Survival sections of this agreement shall survive the
termination of the agreement as well as the other sections of this agreement,
which expressly provide that they shall survive termination of this agreement.
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GOVERNING LAW
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This letter agreement is governed by and construed in accordance with the laws
of the State of Texas with respect to contracts made and to be performed
entirely therein and without regard to choice of law or principles thereof.
If we have a dispute with respect to any of the provisions of this agreement and
are unable to agree on a mutually satisfactory resolution within 30 days, either
party may require the matter to be settled by binding arbitration. If such
arbitration shall occur, it shall be in the city of Dallas if brought by the
Company and the City and County of New York if brought by TFG. We shall attempt
for two weeks to agree on a single arbitrator. If that effort shall fail, each
party shall appoint one arbitrator. The two arbitrators so chosen shall attempt
for two weeks to select a third. If they are unable to agree, the American
Arbitration Association in New York City shall choose the third. The arbitration
shall occur using the rules and procedures of the American Arbitration
Association. The decision of the arbitrator(s) shall be final, binding and non-
appealable. The arbitrator shall have the right to allocate costs and expenses
of the arbitration proceeding among TFG and the Company based on who the
prevailing party is.
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DISCLOSURES
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We know of no fact or situation, which would represent a conflict of interest
for us with regard to this engagement. We do wish to disclose the following
information:
While we are not currently aware of any other relationships that connect us to
any party in interest, because TFG is a consulting firm that serves clients on a
national basis in numerous engagements, it is possible that TFG may have
rendered services to or have business associations with other entities which had
or have relationships with the Company, including creditors, vendors, and
customers of the Company. TFG has not and will not represent the interests of
any of these aforementioned entities in this engagement, involving the Company.
During the term of this agreement, the employees and consultants of TFG who are
staffing this engagement, including without limitation Xxxxx Xxxxxx, shall not
render services to any companies which are in businesses in competition with the
businesses in which the Company is engaged.
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SEVERABILITY
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The failure of either party to enforce any portion of this agreement shall not
be construed as a waiver or limitation of that party's right to subsequently
enforce and compel strict compliance with every provision of this agreement.
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ENTIRE AGREEMENT
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All of the above contains the entire understanding of the parties relating to
the services to be rendered by TFG and may not be amended or modified in any
respect except in writing signed by the parties. TFG will not be responsible for
performing any services not specifically described in this letter or in a
subsequent writing signed by the parties. This agreement supercedes any prior
written or oral agreement between the parties. This agreement may not be
modified except in a writing signed by both parties.
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SUCCESSORS AND ASSIGNS
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This agreement is personal in its nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this agreement or
any rights or obligations hereunder, except that the Company may assign this
agreement to any of its subsidiaries or to any successor entity resulting from a
merger, consolidation, sale of stock of the Company or sale of
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Ex.10.52
substantially all of the assets of the Company. The rights, privileges and
obligations of the parties hereto shall inure to the benefit of their respective
permitted successors and assigns.
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NOTICES
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All notices required or permitted to be delivered under this letter agreement
shall be sent, if to us, to the address set forth at the head of this letter, to
the attention of Xx. Xxxxxxx X. Xxxxxxx, and if to you, to the address for you
set forth above, to the attention of your General Counsel, or to such other name
or address as may be given in writing to the other party. All notices under the
agreement shall be sufficient if delivered by facsimile or overnight mail. Any
notice shall be deemed to be given only upon actual receipt. Any faxes to the
Company shall be sent to 000-000-0000 and to TFG shall be sent to 000-000-0000.
If these terms meet with your approval, please sign and return the enclosed copy
of this letter.
Sincerely yours,
The Xxxx Group
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
Chief Operating Officer
Acknowledged and Agreed to:
Interliant, Inc.
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx,
Chief Executive Officer and President
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