Exhibit 10.3
BUSINESS OPPORTUNITY ALLOCATION
AND MISCELLANEOUS SERVICES AGREEMENT
THIS AGREEMENT (the "Agreement"), made as of the 28th day of March,
2000, by and among Arinco Computer Systems Inc., a New Mexico corporation (the
"Company"), and Pangea Internet Advisors LLC, a Delaware limited liability
company ("Pangea").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Pangea desire to set forth their understanding
with respect to certain investment opportunities identified by Pangea and XX XX
Management Company, LLC, a Delaware limited liability company ("XX XX"). Pangea,
XX XX and/or their affiliates are collectively referred to herein as "Pangea
Affiliates".
WHEREAS, the Company and Pangea desire to set forth their understanding
with respect to the reimbursement by the Company of certain amounts that may be
incurred, paid or payable by Pangea with respect to corporate headquarters
expenses.
WHEREAS, it is a condition to the closing of that certain Securities
Purchase Agreement by and among the Company, Pangea and the investors who are
parties thereto (the "Investors"), dated as of March 9, 2000 (the "Securities
Purchase Agreement"), that the parties enter into this Agreement. The term
"Pangea Affiliates" shall not include the Investors solely as a result of their
participation in the investment under the Securities Purchase Agreement and the
other transactions contemplated thereby.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1. Investments in Target Businesses.
(a) Referral of Deals. Pangea will refer to the Company all
opportunities for the Company to acquire interests in business enterprises that
are or propose to be engaged in businesses relating primarily to the internet,
e-commerce and related technologies ("Target Businesses") that any Pangea
Affiliate may investigate or otherwise pursue for its own account or for funds
with which they are affiliated or other clients where either (i) the minimum
amount required to be allocated to the Company pursuant to Section 1(b) would be
$1,000,000 or more or (ii) where 50% of the amount of such opportunity could be
acquired for no less than $500,000 and such an acquisition would give the
Company "control" of the Target Business for purposes of Rule 3a-1(a)(4) under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
or any successor rule thereto ("Rule 3a-1(a)(4)"). The referral requirements of
this Section 1(a) (the "Referral Requirements") shall not apply to investments
in publicly traded securities not offered in a private placement. Any
opportunity for the Company to acquire interests in Target Businesses that any
Pangea Affiliate may so investigate and that do not fall within the Referral
Requirements is referred to as an "Other Opportunity". The Company
hereby renounces any interest it may have in any Other Opportunity and renounces
any expectancy that any Other Opportunity be offered to it, such that, as a
result of such renunciation, any Pangea Affiliate or any officer, director,
member or affiliate of any Pangea Affiliate who is also an officer or director
of the Company (A) shall have no duty to communicate or present such Other
Opportunity to the Company, shall have the right to hold such Other Opportunity
for its or its affiliates' (and the respective officers, directors, agents,
shareholders, members, partners, or subsidiaries of such affiliates) own
account, or to recommend, assign or transfer such Other Opportunity to persons
other than the Company and (B) shall not breach any duty it may have to the
Company by reason of the fact that such person pursues or acquires such Other
Opportunity for itself, directs, assigns or transfers such Other Opportunity to
another person, or does not communicate information regarding such Other
Opportunity to the Company.
(b) Allocation of Investment Opportunities. If an opportunity to
acquire a Target Business (or an interest therein) is presented to a Pangea
Affiliate which is within the Referral Requirements, Pangea will refer such
opportunity to the Company, and if one or more Pangea Affiliates or clients or
affiliates of such Pangea Affiliates (collectively, the "Pangea Group") wishes
to participate in such acquisition, Pangea shall allocate such opportunity
between the Company and the Pangea Group on an equitable basis which recognizes
the objective of the Company to avoid being classified as an investment company;
provided, however, that not less than 50% of the value of the opportunity
available to the Pangea Group and the Company shall be offered to the Company.
Any portion of such opportunity allocated to the Pangea Group shall be deemed to
be an "Other Opportunity" for purposes of Section 1(a). Pangea shall disclose in
advance all such proposed allocations to the Company and, to the extent
necessary for the Company to avoid classification as an investment company, use
good faith efforts to cause the members of the Pangea Group to whom any
allocation has been made to assign their voting rights to the Company. For
purposes of this Section 3(b), the term "Pangea Group" shall not include persons
who were solicited by any member of the Pangea Group to invest in a Target
Business but who are not clients or affiliates of any Pangea Affiliate.
(c) Failure to Approve Acquisitions. If Pangea refers to the Company an
opportunity to acquire a Target Business (or an interest therein) which is
within the Referral Requirements and the Company does not make such acquisition
(whether based on the merits of the opportunity, a disagreement with the portion
of the opportunity allocated to the Company or other factors), then Pangea and
the Pangea Group shall be free to pursue such Target Business for their own
account and such opportunity shall be deemed to be an "Other Opportunity" for
purposes of Section 1(a).
2. Office Services. Subject to the terms and conditions hereof, during
the term of this Agreement, Pangea will provide the Company with office space in
Pangea's offices in Greenwich, Connecticut for use by the Company's staff.
Pangea will also provide the Company's staff with access to secretarial support
services and to such communications, computer, photocopying and similar office
equipment as is located at such offices from time to time and will provide such
staff with reasonable office supplies, postage, overnight express courier and
similar services. (The foregoing provision of space, secretarial support, access
to office equipment and provision of office supplies is referred to herein as
"Office Services".) At least monthly the Company shall reimburse Pangea for the
cost of such Office Services, such
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reimbursement to be in such amounts as the Company and Pangea may reasonably
agree upon from time to time based upon an estimate of Pangea's actual costs for
providing such Office Services.
3. Legal Expenses. The Company shall also reimburse Pangea for all
reasonable legal fees and expenses incurred by Pangea in connection with the
transactions contemplated by the Securities Purchase Agreement, including,
without limitation, those relating to the preparation of this Agreement, the
Securities Purchase Agreement, the Transaction Documents (as defined in the
Securities Purchase Agreement), and the private placement memorandum relating to
the Securities Purchase Agreement.
4. Term. Section 1 of this Agreement shall remain in full force and
effect for so long as any Pangea Affiliate is serving as a director or as a
senior executive officer of the Company. Either party may terminate Section 2 of
this Agreement upon 90 days prior written notice to the other party. The
provisions of Sections 3 and 5 hereof shall survive indefinitely.
5. Liability; Indemnification.
(a) Liability. None of Pangea, the Pangea Affiliates, or any of their
respective principals, shareholders, members, directors, officers, employees or
agents (all of the foregoing, except for Pangea are collectively, the "Pangea
Parties") shall be liable to the Company or any of its shareholders, directors,
officers, employees or agents for any losses, damages, costs or expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
(collectively, "Losses"), in any way arising out of or incurred in connection
with the performance by Pangea or the Pangea Parties of any obligation herein
including, but not limited to, any claim arising out of a referral made pursuant
to Section 1 or the pursuit by any Pangea Party of any Other Opportunity, except
that Pangea may be liable to the Company to the extent that any such Losses are
directly caused by the gross negligence or willful misconduct of Pangea or any
of the Pangea Parties in the performance of their duties hereunder during the
term of this Agreement.
(b) Indemnification. The Company shall indemnify in the manner and to
the fullest extent permitted by applicable law and the bylaws of the Company,
each Pangea Party in the event that the Pangea Party (or his or her estate, as
the case may be), was or is a party to, or is threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether or not
by or in the right of the Company, and whether civil, criminal, administrative,
investigative or otherwise, by reason of the performance or alleged lack of
performance of any obligation in Sections 1 or 2, against Losses actually and
reasonably incurred by such person in connection with such action, suit or
proceeding (including, without limitation, in connection with the defense or
settlement of such action, suit or proceeding). To the extent and in the manner
provided by applicable law, any expenses (including attorneys' fees) shall be
paid by the Company in advance of the final disposition of such action, suit or
proceedings, even if the Pangea Party is alleged to have not met any applicable
standard of conduct or is alleged to have committed conduct so that, if true,
the Pangea Party (or the Pangea Party's estate) would not be entitled to
indemnification under this Section 5, upon receipt of an undertaking, which need
not be secured, by or on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Company as authorized in this Section
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5. The Company's obligations under this Section 5 shall survive any termination
of this Agreement.
(c) Nonexclusive Remedy. The indemnification remedy contained in this
Agreement shall not be deemed to be the exclusive remedy of the Indemnified
Party in connection with or arising from any failure by the Company to perform
any of its covenants or obligations in this Agreement, nor shall such
indemnification remedy be deemed to prejudice or to operate as a waiver of any
remedy to which the Indemnified Party may be entitled at law or equity.
6. Miscellaneous.
(a) Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement shall be in writing and
shall be deemed to have been delivered, given and received for all purposes (i)
if delivered personally, with a copy transmitted by telephonic facsimile, to the
party or to an officer of the party to whom the same is directed or (ii) whether
or not the same is actually received, if sent by registered or certified mail,
postage and charges prepaid, with a copy transmitted by telephonic facsimile
addressed as follows:
If to the Company:
Arinco Computer Systems Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Chief Executive Officer
With a copy to:
Xxxx Xxxxx Xxxxxxx, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telephone: 000-000-0000
Facsimile: 212-757-3990
Attention: Xxxxx Xxxxx, Esq.
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and
Xxxxxxxx & X'Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
If to Pangea:
Pangea Internet Advisors LLC
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxxx
Any such notice shall be deemed to be delivered, given and received as of the
date so delivered, if delivered personally, or as of the date on which the same
was deposited in a regularly maintained receptacle for the deposit of United
States mail, addressed and sent as aforesaid.
(b) Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of New York applicable to agreements
made and to be performed entirely within such State.
(c) Counterpart Execution. This Agreement may be executed in any number
of counterparts with the same effect as if all of the parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
(d) Amendments. This Agreement may only be amended upon the written
consent of all of the parties hereto.
(e) Entire Understanding; No Third Party Beneficiaries. This Agreement
and the Transaction Documents represent the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes any
and all other oral or written agreements heretofore made. Except as provided in
Section 1 with respect to the Pangea Group, and Section 5 with respect to the
Pangea Parties, nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
(f) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties hereto and any purported assignment in violation of this Section 6(f)
shall be void. Subject to the preceding sentence, this
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Assignment shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns.
(g) Specific Performance. The parties hereto agree that their
respective rights and obligations under this Agreement shall be enforceable in a
court of equity by decree of specific performance and that appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and nonexclusive and shall be in addition
to any other remedies which any party hereto may have under this Agreement or
otherwise.
(h) No Partnership Relationship. Nothing contained herein shall be
construed or deemed to create any partnership relationship between the Company,
on the one hand, and Pangea or any of its Affiliates, on the other hand.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ARINCO COMPUTER SYSTEMS INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive Officer
PANGEA INTERNET ADVISORS LLC
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Manager
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