Exhibit 10.1
EXODUS CONFIDENTIAL
September 28, 2001
Xx. Xxxxxx X. Xxxx
Chief Executive Officer
TekInsight, Inc.
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Dear Xxxxx:
This letter (the "Letter") when countersigned below shall have the effective
date stated above ("Effective Date") and will confirm your intention to purchase
from Exodus Communications, Inc. ("Exodus") certain assets, obligations and
revenues related to the Exodus Gulf Services business unit (the "Business")
under the terms and conditions set forth below.
Purchaser: The company, TekInsight, Inc. ("TekInsight")
will execute all agreements related to this
transaction.
The Business: The "Business" is defined as the following
tangible and intangible assets directly used
and required to continue operations in the
Region and the related obligations and
liabilities.
1. Customer contracts and revenue;
2. Hardware, software, and equipment;
3. Employee contracts and obligations;
4. Intangible assets such as customer
information and goodwill; and
5. Any leases that TekInsight chooses
to assume.
Consideration: As consideration for the Business ("Purchase
Price"), TekInsight will provide Exodus with:
1. Initial payment for the business
shall be (i) One hundred and
seventy-five thousand dollars
($175,000), paid upon execution of
the Definitive Agreements plus (ii)
an amount equal to eighty (80%) of
invoices billed by TekInsight in
September, 2001 within 15 days of
their collection.
2. TekInsight will deduct from the
Purchase Price eighty seven
thousand five hundred dollars
($87,500) from the last payment(s)
due to Exodus;
3. TekInsight shall invoice the
customers that have not been billed
for September.
4. TekInsight will collect the
existing accounts receivable
balances existing at the time of
billing transfer. TekInsight will
pay to
Exodus eighty percent (80%) of the
cash collections. In the event
that the accounts receivable
balance is not collected by
TekInsight by October 1, 2001,
Exodus will have the right to
collect the remaining AR and keep
all such proceeds.
5. 10% of all net revenues TekInsight
collects from existing Exodus
customers for services provided
from October 1, 2001 through
September 30, 2003. Payments will
be made quarterly.
Liabilities and Account Exodus will be responsible for the accounts
Payable: payable balance as of September 30, 2001.
Thereafter, TekInsight will be responsible for
its accounts payable associated with the
Business. Exodus will assume the leases
related to the Business, unless TekInsight
chooses to assume such leases. Exodus will
assume all other known or unknown liabilities
related to the Business.
Customers: All existing customer contracts will be
assigned at closing from Exodus to TekInsight.
TekInsight will assume the service obligations
for the customer contracts and will ensure
that the services are delivered to the
customers.
Independent On the Effective Date of this Letter, the
Contractors: parties will enter into an Independent
Contractor Agreement which will stipulate the
terms of the services that TekInsight will
deliver to the Exodus customers.
Employees: On the Effective Date, Exodus will terminate
the employment of all employees of the
Business. TekInsight simultaneously will offer
employment to all such terminated employees,
XxxXxxxxxx further agrees that it will not
close down operations or terminate more than
30 employees in the sixty days following
closing.
Transition: The parties will work in good faith to
transition the Business from Exodus to
TekInsight as quickly as practicable and make
general provisions so no disruption of
services are necessary prior to signing the
Definitive Agreements.
Press Upon execution of this letter agreement
Release: TekInsight may issue a press release related
to this transaction, with specific language
and form to be mutually agreed upon prior to
its release.
Definitive The parties expect to enter into definitive
Agreements: agreements that will reflect the terms and
conditions set forth in this Letter and to
consummate the closing on or before September
30, 2001. Definitive agreements are expected
to include:
1. Asset Purchase Agreement
2. Employee Matters Agreement
3. Exodus Alliance Partner Agreement
Confidentiality: Each of the parties acknowledges that the
parties will disclose confidential information
for the purposes of evaluating and executing a
definitive transaction. Each of the parties
agrees to receive and maintain the
confidential information disclosed by the
other party in strictest confidence and shall
not use such confidential information in whole
or in part for its own
benefit or misuse or disclose same to any
third party. All such confidential information
shall remain the property of the disclosing
party and shall be returned by the other party
on demand by the disclosing party.
Non-Compete: TekInsight shall not, directly or indirectly,
carry on any business that is competitive with
Exodus' core business (which will be defined
in the definitive agreements). TekInsight
further agrees not to, directly or indirectly,
solicit or encourage any current or potential
Exodus customers to purchase services from
TekInsight or a competitor of Exodus if Exodus
could provide those services as its core
business.
Arbitration: The parties agree to settle any and all
disputes between and among them through final
and binding arbitration. The arbitration shall
be conducted in San Francisco, California
according to the rules and procedures of the
American Arbitration Association. The parties
shall split the costs of arbitration,
including any administrative fees and
arbitrator's fees, but each party shall bear
its own attorneys' fees and related costs,
such as exhibit preparation, discovery and
expert witness fees.
Non-Binding: The parties agree that the provisions of this
Letter shall not be binding on either party or
be deemed to create any legal rights or
obligations between Exodus and TekInsight,
except for the paragraph set forth above
entitled "Confidentiality." Neither party
shall have any liability whatsoever to the
other for its discontinuance of any
negotiations or its decision for any reason
not to enter into any form of definitive
agreement, and any actions taken by either
party in reliance on this Letter shall be at
such party's sole risk and expense.
Fees and Expenses: Each party will be responsible for its own
fees and expenses associated with this
transaction, including any legal, investment
banker or other fees and expenses.
We look forward to working with you and your team in order to complete a
transaction.
Sincerely,
ACKNOWLEDGED AND AGREED
EXODUS COMMUNICATIONS, INC. TEKINSIGHT, INC.
Signature Illegible /s/Xxxxx Xxxx
------------------------------- -----------------------------
Xxxxx Xxxx
Chief Executive Officer
