Exhibit (d)(28)
SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (the "Agreement') is entered into
effective as of this 1st day of November, 2001 (the "Effective Date") by and
between (A) Interliant Texas, Inc., a Delaware corporation with offices at 0
Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000 ("Interliant Texas"), (B) Interliant,
Inc., a Delaware corporation with offices at 0 Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, XX
00000 ("Interliant"), and (C) Xxxxxx X. Xxxx, an individual residing at 0000
Xxxxx Xxxxxx, Xxxxx, Xxxxx 00000, Xxxxx X. Xxxxxx, an individual residing at
0000 Xxxxxx, Xxxxxx, Xxxxx 00000, Xxxxxxx Xxxxxx, an individual residing at 0000
Xxxxxxxxx, Xxxxxxxx, Xxxxx 00000, Xxxx Xxxxxx, an individual residing at 00000
Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxx 00000, and Xxxxxxxx Xxxx, an individual
residing at 000 Xxxxx 000 Xxxxxx, Xxxxx, Xxxxxxxx 00000 (collectively, the
"Shareholders" and individually, a "Shareholder").
WHEREAS, the parties hereto, together with Interactive Software, Inc.,
have previously entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated July, 27, 2000; and
WHEREAS, pursuant to section 4.02(a)(iii) of the Merger Agreement,
certain consideration was to be paid by Interliant Texas to the Shareholders
upon the occurrence of certain milestone events and net revenues targets
(singularly the "Earnout", collectively the "Earnouts"); and
WHEREAS, such milestone events and net revenue targets have been
satisfied subject to collection of certain accounts receivable and work in
process identified on Exhibit E attached hereto ("AR/WIP"); and
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WHEREAS, the parties wish to provide for the payment of the Earnouts in
the manner set forth in this Agreement; and
NOW THEREFORE, in exchange for the release set forth herein, and for
good and valuable consideration, including, but not limited to, the mutual
promises set forth herein, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Definitions. Unless otherwise defined or set forth in this
Agreement, capitalized terms used herein shall have the meaning set forth in the
Merger Agreement.
2. Settlement of Earnout. The parties agree that, subject to collection of
certain amounts of the AR/WIP, the amount due to the Shareholders as the
Consolidated Net Revenues Earnout under Section 4.02 (a)(iii) of the Merger
Agreement is $2,820,000, which is based on calculations previously submitted by
the Shareholders to Interliant by letter dated August 16, 2001, a copy of which
is annexed hereto as Exhibit A. Pursuant to Section 4.02 (b) of the Merger
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Agreement, the parties hereby agree that (i) 40% thereof or $1,128,000 (the
"Earnout Cash Portion"), shall be paid in accordance with the provisions of
Paragraph 3.1 below, and (ii) 60% thereof or $1,692,000, less $125,000 for
the Englewood Receivable which has never been collected by Interliant Texas,
leaving an amount due of $1,567,000 (the "Earnout Stock Portion"), shall be paid
in accordance with the provisions of Paragraph 3.2 below.
3. Payment by Interliant.
3.1 Earnout Cash Portion. Interliant, on behalf of Interliant Texas,
agrees to pay each Shareholder the amount set forth next to each
Shareholders' name on Exhibit B hereto and identified thereon as
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"Cash Portion Settlement Amount", in full settlement of all
obligations for the Earnout Cash Portion. Interliant shall pay
each Shareholder the "Initial Payment" as identified on Exhibit
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B, as of the date of the execution of this Agreement and the
-
balance thereof, or the amount identified on Exhibit B as the
"Principal Amount", in accordance with the terms of a promissory
note in the form attached as Exhibit C and to be delivered by
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Interliant concurrently with the execution of this Agreement
(collectively, the "Cash Notes" and each, a "Cash Note"), which
Cash Notes shall have a maturity date of December 1, 2002 and
shall bear interest from September 14, 2001 at the rate of seven
percent (7%) per annum which interest will be payable monthly.
3.2 Earnout Stock Portion. Interliant, on behalf of Interliant Texas,
agrees to pay each Shareholder the amount set forth next to each
Shareholders' name on Exhibit B hereto and identified thereon as
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"Stock Portion Settlement Amount", in full settlement of all
obligations for the Earnout Stock Portion. Interliant shall pay
each Shareholder the amount identified on Exhibit B as the
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"Principal Amount", in accordance with the terms of a promissory
note in the form attached as Exhibit D and to be delivered by
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Interliant concurrently with the execution of this Agreement
(collectively, the "Stock Notes" and each, a "Stock Note"), which
Stock Notes shall have a maturity date of May 1, 2005 and shall
bear interest from September 14, 2001 at the rate of seven
percent (7%) per annum which interest will be payable monthly
commencing January 1, 2003, except as otherwise provided in the
Stock Note.
4. Release by The Shareholders. (a) Upon receipt of the Initial Payment,
the Cash Notes and the Stock Notes by each Shareholder, the Shareholders hereby
irrevocably release and discharge Interliant Texas, Interliant and their
respective officers, directors, agents, employees, subsidiaries,
representatives, successors and assigns of and from any and all claims, demands,
debts, damages, duties, causes of action, actions, and suits whatsoever, in law
or equity, which they may now have or to which they may hereafter become
entitled, arising out of or relating to the obligation of Interliant Texas or
Interliant to pay the Earnout Cash Portion or the Earnout Stock Portion pursuant
to Section 4.02(a)(iii) of the Merger Agreement including claims and damages not
yet ascertainable, if there be any, as well as those known, except for
obligations of Interliant under the Cash Notes and the Stock Notes, any New
Notes (as such term is defined in the
Stock Notes) and the Shareholders do hereby acknowledge full satisfaction
thereof. Notwithstanding anything in this Agreement to the contrary, the
provisions of this Agreement, including without limitation, this Section 4 do
not release or discharge or purport to release or discharge any claims, demands,
debts, damages, duties, causes of action, actions, and suits whatsoever, in law
or equity, which they may now have or to which they may hereafter become
entitled, arising out of or relating to or pursuant to the Merger Agreement
other than those claims, demands, debts, damages, duties, causes of action,
actions, and suits whatsoever, in law or equity, related to Interliant Texas
and/or Interliant's obligations to pay the Earnouts pursuant to Section
4.02(a)(iii) of the Merger Agreement.
5. No Other Inducement or Admissions. Each party, in executing this Agreement,
does not rely on any inducements, promises, or representations made by the other
party hereto, with the exception of the consideration recited herein.
6. Confidentiality. The parties agree that the terms and conditions of this
Agreement, and any and all underlying communications, negotiations, documents,
correspondence or agreements relating thereto, are confidential. No party shall
publicize or disclose the terms and conditions of this Agreement or the
underlying circumstances to any other person or entity without the prior written
approval of the other parties, except with respect to that information which is
or becomes publicly known through no act or omission of the party charged with
confidentiality or to: (1) its accountants or attorneys for auditing purposes,
(2) its attorneys for purposes of enforcing compliance with this Agreement, or
(3) any person or governmental entity if such disclosure is required by the
terms of a duly-authorized and validly issued subpoena or other form of legal
process or is required by the reporting requirements of a duly-constituted
governmental entity.
7. Remedies. Upon any violation of this Agreement, any party aggrieved by the
violation shall be entitled immediately to seek and obtain from any appropriate
court all appropriate legal and equitable relief to enforce this Agreement,
including specific enforcement, temporary and permanent injunctive relief,
immediate dismissal of any legal action filed in violation of this Agreement,
and recovery of damages, reasonable attorneys' fees, expenses and costs incurred
by the aggrieved party because of the violation of this Agreement.
8. Adequate Time to Review. The parties acknowledge that each has had adequate
time to review this Agreement with its respective attorneys and that this
Agreement is fully understood by them.
9. General.
9.1. Entire Agreement. This Agreement and the Cash Note, the Stock Note and
the New Notes constitute the complete and exclusive agreement between
the parties concerning the subject matter of this Agreement and
supersedes all proposals, oral or written, and all negotiations,
conversations and other communications between the parties relating to
the subject matter of this Agreement. Changes to this Agreement may be
made only by a written amendment signed by both parties that references
this Agreement.
9.2. Governing Law; Actions. All rights, duties and obligations arising from
or relating in any manner to the subject matter of this Agreement shall
be governed by and construed under the laws of the State of New York
applicable to agreements made and fully performed therein, without
regard to its conflict of laws provisions. The parties submit to the
exclusive jurisdiction of (a) the State and Federal courts located in
Westchester and New York Counties, State of New York regarding any
action commenced by Interliant or Interliant Texas to enforce their
respective rights hereunder and (b) the State and Federal courts
located in Dallas County, State of Texas regarding any action commenced
by any Shareholder to enforce their respective rights hereunder.
9.3. Effect of default under this Agreement the Cash Notes, the Stock Notes
or the New Notes. The parties agree that upon the Default Date (as such
term is defined in the Cash Note and the Promissory Note) resulting
from a default by Interliant or Interliant Texas under the terms of
this Agreement, any Cash Note, Stock Note or any New Note, the
Shareholders shall no longer be bound by the following provisions and
such provisions shall terminate automatically upon the date such
default occurs without any further action of any of the Parties: (i)
the provisions of Section 6.01(a) of the Merger Agreement, and (ii) any
provision, obligation or agreement set forth in any employment
agreement, policy, employee handbook or other agreement to which any of
the Shareholders may be a party or subject to, including, without
limitation, that certain Employment Agreement, dated as of July 28,
2000, between Xxxxx X. Xxxxxx and Interliant Texas, that certain
Employment Agreement, dated as of July 28, 2000, between Xxxxxx X. Xxxx
and Interliant Texas, and those certain Intellectual Property,
Proprietary Information and Non-Solicitation Agreements between each of
Xxxxxx X. Xxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx, and Xxxxxxxx Xxxx,
respectively, and Interliant, which purports to prohibit or otherwise
restrict any Shareholder from competing again Interliant, Interliant
Texas or any of their respective subsidiaries or affiliates. Further,
the parties agree that from and after the Default Date of a default
described in the preceding sentence, if Interliant shall at any time
cease all of its operations, then the Shareholders shall no longer be
bound by the following provisions and such provisions shall terminate
automatically upon the Default Date without any further action of any
of the Parties: (i) the provisions of Section 6.01 (c) of the Merger
Agreement, and (ii) any other limitation on the Shareholders ability to
interfere with, hire, solicit or endeavor to entice away any employee,
subcontractor, consultant, client or customer of Interliant or
Interliant Texas or any of their respective subsidiaries or affiliates
set forth in any employment agreement, policy, employee handbook or
other agreement to which any of the Shareholders may be a party or
subject to, including, without limitation, that certain Employment
Agreement, dated as of July
28, 2000, between Xxxxx X. Xxxxxx and Interliant Texas, that certain
Employment Agreement, dated as of July 28, 2000, between Xxxxxx X. Xxxx
and Interliant Texas, and those certain Intellectual Property,
Proprietary Information and Non-Solicitation Agreements between each of
Xxxxxx X. Xxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx, and Xxxxxxxx Xxxx,
respectively, and Interliant; provided, however, that a sale, merger,
consolidation or combination or other consolidation of Interliant or
its business or assets with or into any other entity that continues to
operate the business of Interliant, in whole or in part, after giving
effect to such sale, merger, consolidation or combination, shall not be
considered a cessation of all operations of Interliant for purposes of
the foregoing.
9.4. Counterparts; Reproduction of Agreement. This Agreement may be signed
in one or more counterparts, each of which shall be considered an
original, but all of which together form one and the same instrument.
Once signed, any reproduction of this Agreement made by reliable means
(for example, photocopy or facsimile) is considered an original, unless
prohibited by local law; provided, however, that this shall not
preclude either party from requiring the exchange of original
signatures.
9.5. General Interpretative Provisions. Terms for which meanings are defined
in this Agreement shall apply equally to the singular and plural forms
of the terms defined. The term "including," whenever used in any
provision of this Agreement, means including but without limiting the
generality of any description preceding or succeeding such term. Each
reference to a party shall include a reference to such party's
permitted successors and assigns. The headings of this Agreement are
for reference only and shall not affect the meaning or interpretation
of this Agreement.
9.6. Effective Date. This Agreement shall be effective as of the date first
written above.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
INTERLIANT TEXAS, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx,
Vice President
INTERLIANT, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx,
Chief Financial Officer
SHAREHOLDERS:
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
By: /s/ Xxxxxxxx Xxxx
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Xxxxxxxx Xxxx
