EXHIBIT 10.33
[EXECUTION COPY]
REAL QUEST, INC. SHAREHOLDERS' AGREEMENT
Shareholders' Agreement made this 23rd day of September, 1999, by and
among WORLDWIDE WEB NETWORX CORPORATION, a Delaware corporation ("WWWX"), and
NEW AMERICA NETWORK, INC., a Delaware corporation ("NAI"), and REAL QUEST, INC.,
a New Jersey corporation ("RQ").
BACKGROUND
WWWX engages in the business of providing internet technology. NAI is
engaged in the business of providing commercial real estate services. NAI's
wholly-owned subsidiary, RQ, is engaged in the business of developing and
providing commercial real estate management and transaction tracking software.
The parties desire to enter into this Agreement governing the operations of RQ
and its subsidiary NAI Direct, Inc., a Delaware corporation ("NAI DIRECT") in
order to create vertical and horizontal internet portals for the commercial real
estate industry. RQ is sometimes referred to herein as the "COMPANY ". WWWX and
NAI are sometimes referred to herein collectively as the "PARTIES".
Simultaneously, with the execution of this Agreement, NAI and WWWX have
entered into a Share Exchange Agreement (the "EXCHANGE AGREEMENT") pursuant to
which WWWX is acquiring 80% of the outstanding equity interest in RQ from NAI in
exchange for 1,500,000 shares of WWWX Common Stock and RQ and the other
shareholders of NAI Direct, Inc. have entered into the NAI Direct, Inc.
Shareholders' Agreement. Upon closing under this Agreement and the Exchange
Agreement, WWWX and NAI will be the sole shareholders of RQ.
1. ORGANIZATION
1.1 The Parties agree to take such steps as are reasonably
necessary to cause RQ to change its domicile from the State of
New Jersey to the State of Delaware.
1.2 The Parties will cause RQ to form NAI Direct as a Delaware
corporation. Attached hereto as EXHIBIT 1.2 are copies of the
Articles of Incorporation and Bylaws of NAI Direct.
1.3 The corporate records of the Company, including financial
records, shall be kept in its offices.
2. OWNERSHIP
2.1 Pursuant to the exchange of stock called for in the Exchange
Agreement, NAI will transfer 80% of the equity interest of RQ
to WWWX, and NAI will retain 20% of the equity interest of RQ.
2.2 RQ will initially own 80% of the equity interest in NAI
Direct; 20% of the equity interest in NAI Direct will
initially be available to NAI Direct for sale or delivery to
its officers, employees or others pursuant to the terms of the
NAI Direct Shareholders' Agreement, which may include current
officers, directors and employees of NAI or WWWX.
2.3 Subject to the terms hereof, including without limitation,
SECTION 3.3, the Parties may be diluted by future equity
investors at the discretion of RQ's then current Board of
Directors.
3. RESPONSIBILITIES
3.1 WWWX will provide or license internet e-commerce and asset
management software as listed on SCHEDULE 3.1 (the
"TECHNOLOGY"), or comparable technology, to NAI Direct in NAI
Direct's discretion. In addition, WWWX will use reasonable
efforts to develop or customize the Technology for application
to commercial real estate to be used by NAI Direct. A copy of
the form of License Agreement (the "WWWX LICENSE AGREEMENT")
is attached hereto as EXHIBIT 3.1.
3.2 WWWX will loan $1,000,000 to NAI Direct as required to meet
its working capital needs beginning on the Closing Date (as
defined in the Exchange Agreement.) At the time of Closing,
such funding will be deposited in a separate account in the
name of WWWX to be used only for NAI Direct. Disbursements
from that account, pursuant to the Loan Agreement, will be
made to NAI Direct on the authority of the President or CEO of
NAI Direct, or their designee, and the CFO of WWWX or his
designee. Such authority will be granted as long as the
subject disbursement is in accordance with the budgets adopted
by the Board of Directors of NAI Direct or is necessary for
actual expenses of NAI Direct which may vary not more than 20%
monthly and year-to-date from budgets approved by the Board of
Directors, without the additional approval by the Board of
Directors. A copy of the Loan Agreement (the "LOAN AGREEMENT")
is attached hereto as EXHIBIT 3.2.
3.3 In addition to its obligations under SECTION 3.2, within 18
months of the Closing Date, WWWX will provide or obtain
funding as required to meet NAI Direct's working capital needs
in a total amount equal to $4,000,000 in the form of a loan on
commercially reasonable terms, or otherwise
provided that NAI's equity interest may not be diluted until
after there has been an equity investment of at least
$5,000,000 in NAI Direct.
3.4 NAI will license software to NAI Direct as listed on SCHEDULE
3.4 (the "NAI LICENSED SOFTWARE") for which NAI Direct will
pay a monthly royalty fee in an amount equal to 5% of NAI
Direct's gross revenue for the preceding month. A copy of the
form of License Agreement (the "NAI LICENSE AGREEMENT") is
attached hereto as EXHIBIT 3.4.
3.5 Beginning on the Launch, NAI will place all of its member
listings, i.e., commercial real estate listings currently
available or that may become available to NAI Member Brokers
through NAI's Member Website, on NAI Direct's web site(s) and
will encourage all NAI Member Brokers to place all of their
local commercial real estate listings on NAI Direct's web
site(s). NAI's commitment to NAI Direct are contained in the
form of the agreement in EXHIBIT 3.4. For purposes of this
SECTION 3.5, "Launch" means that date on which NAI Direct's
Board of Directors has determined that NAI Direct's website
has achieved the level of functionality to meet the minimum
technical specifications for operation and is currently
available to the public.
3.6 All internet commercial real estate software developed by any
of the Parties shall be the property of NAI Direct or
exclusively licensed to NAI Direct when developed without
additional cost to NAI Direct. All improvements by the Parties
to the internet commercial real estate software or commercial
real estate software purchased shall be the property of NAI
Direct or exclusively licensed to NAI Direct without
additional cost to NAI Direct. Any other use of such software
must be pursuant to an arms-length license agreement with NAI
Direct.
4. MANAGEMENT OF REAL QUEST
4.1 The Board of Directors of RQ will consist of five Directors,
with two Directors to be designated by NAI and two Directors
to be designated by WWWX. The fifth Director will be selected
by agreement of NAI and WWWX and will serve until his or her
successor is elected and qualified.
4.2 The Parties agree to cause RQ to adopt By-laws in the form
attached as EXHIBIT 4.2.
4.3 The Board of Directors of RQ shall meet no less frequently
than every two months or as may be determined by the Board or
reflected in RQ's By-laws.
4.4 Xxxxxx X. Xxxx will be the initial Chief Executive Officer of
RQ; Xxxxxxx Xxxx will be the initial President of RQ. Other
initial officers will be elected by the Board of Directors of
RQ.
4.5 Employment agreements (the "EMPLOYMENT AGREEMENTS") shall be
executed between each of Xxxxxx X. Xxxx and Xxxxxxx Xxxx
(collectively the "KEY EMPLOYEES") and NAI Direct in the form
of EXHIBIT 4.5.
4.6 Except as otherwise contemplated by or discussed in this
Agreement, the following actions by RQ will require approval
of the Board of Directors of RQ:
(1) Amend, alter or repeal any of the provisions of the
Certificate of Incorporation or the By-Laws of RQ;
(2) Authorize or create, or increase the number of
authorized shares of any stock of any class, or any
security convertible into stock of a class;
(3) Adopt and implement any strategic and operating plans
that materially change the business of RQ or that
involve the entry of RQ into a business not currently
conducted by RQ, except as contemplated by this
Agreement;
(4) Make or commit any capital expenditures of amounts
exceeding in the aggregate 20% of RQ's net worth;
(5) Reorganize, recapitalize, register its stock under
the U.S. Federal securities laws, enter, offer or
sell, convey, or otherwise dispose of or encumber all
or substantially all of its property or business or
merge into or consolidate with any other corporation
(other than a wholly owned subsidiary corporation) or
effect any transaction or series of related
transactions in which more than 50% of the voting
power of RQ is disposed of;
(6) Redeem, purchase or otherwise acquire, directly or
indirectly any shares of RQ's capital stock or any
option, warrant or other right to purchase or acquire
any such shares;
(7) Grant or issue any stock options or other convertible
securities at below fair market value on the date of
grant;
(8) Declare or pay any dividend or other distribution
(whether in cash, stock or other property) with
respect to RQ's capital stock;
(9) Except in the ordinary course of RQ's business,
voluntarily sell, transfer, surrender, abandon or
dispose of any of its assets or property rights
(tangible or intangible) valued in excess of
$250,000;
(10) Except in the ordinary course of RQ's business, grant
or make any mortgage or pledge or subject RQ or any
of its properties or assets to any lien, charge or
encumbrance of any kind, except liens for taxes not
currently due;
(11) Create, incur, or assume any liability or
indebtedness in an aggregate amount exceeding 20% of
RQ's net worth;
(12) Guaranty the obligation of any third party;
(13) Grant any increase in the compensation payable or to
become payable to directors or officers (including,
without limitation, any such increase pursuant to any
bonus, pension, profit-sharing, incentive option or
other plan or commitment) that is 20% greater than
the prior year;
(14) Alter the manner of keeping its books, accounts or
records, or change in any manner the accounting
practices therein reflected;
(15) Enter into any commitment or transaction other than
in the ordinary course of business valued in excess
of $250,000;
(16) Amend or agree to any amendment of the NAI Direct
Shareholders' Agreement.
Approval of any of the actions listed in items 1, 2, 3, 5, 6,
7, 9, 10, 14, or 16 will require the approval of at least
3/4 of the Directors of RQ.
5. REVENUE GOAL
5.1 In the event that NAI Direct has not received cumulative gross
revenues of at least $2,000,000 within 24 months of the
Launch, (the "REVENUE GOAL"), the Escrow Agreement shall be
terminated and the WWWX shares held in escrow shall be
returned to WWWX. If the Revenue Goal is achieved, the Escrow
Agreement shall be terminated and the WWWX shares held in
escrow shall be distributed to NAI.
6. LOCK-UP
6.1 Until a date that is 18 months from the Closing Date, neither
Party may sell, transfer, assign or in any way encumber any
portion of its equity interest in RQ without the written
consent of the other.
6.2 In the event any shareholder receives a bona fide offer to
purchase its RQ shares from an independent third party, such
shareholder shall give the other shareholder notice of such an
offer and provide a copy thereof. Such other shareholder shall
have the option to elect within 10 days following such notice
to purchase such shareholder's shares under the same terms and
conditions as the offer.
6.3 In the event WWWX receives an offer for all or substantially
all of its shares in RQ, WWWX shall give prompt notice to NAI
of such offer and the terms thereof, and shall provide NAI
with a copy of any such offer. NAI shall have the option to
give notice (a "TAG-ALONG NOTICE") not later than 10 days
prior to the closing of the sale by WWWX, pursuant to which
NAI may require WWWX to give notice to the purchaser that as
part of the same transaction and as a condition thereto, NAI's
shares shall be purchased for the same consideration and
otherwise on the same terms and conditions upon which WWWX
will sell its shares to purchaser. If the
purchaser does not wish to purchase a greater interest in RQ
than contained in its offer to WWWX, then such purchaser must
purchase such interest on a pro rata basis in relation to each
shareholder's interest in RQ from WWWX and NAI. In the event
purchaser does not purchase NAI's shares as identified in the
Tag-Along Notice in accordance with this SECTION 6.3, the sale
by WWWX of its shares shall be voidable at the sole option of
NAI.
7. PROPRIETARY INFORMATION
7.1 The Parties to this Agreement have been or may be exposed to
patents, software, trade secrets, financial information,
vendor and supplier lists, personnel policies, methods of
doing business, and other confidential business information
(the "PROPRIETARY INFORMATION"). Each Party agrees to keep
such Proprietary Information confidential. Each Party agrees
not to use or disclose such Proprietary Information, except in
furtherance of the business of RQ or NAI Direct. The Parties
acknowledge that improper disclosure of use will cause the
other Party irreparable harm, and that the appropriate Party
is entitled to injunctive relief for any breach, as well as an
action for monetary damages for any loss.
8. RESTRICTIVE COVENANT
8.1 During the term of this Agreement and for a period of two (2)
years after a Party ceases to be a shareholder in RQ such
Party agrees to refrain from becoming a shareholder in,
consultant, employee, officer, director, owner, partner or in
any other manner, becoming connected with, a business that is
competitive with the internet-based commercial real estate
business of RQ or NAI Direct, except that neither Party shall
be barred by this provision from continuing its current
business activities. Nothing contained herein shall prevent
either Party from engaging or participating in any internet
based commercial real estate enterprise so long as such
enterprise does not compete with RQ or NAI Direct in any of
its principal activities. In particular, the parties recognize
that NAI listings currently appear on xxxxXxx.xxx, a
commercial real estate listing service and the appearance of
NAI listings on xxxxXxx.xxx shall not be construed to be
violative of the restrictive covenant in this SECTION 8.1.
This covenant shall terminate upon the dissolution of RQ.
8.2 The Parties acknowledge that a violation of this covenant will
cause RQ and/or NAI Direct irreparable harm, and that RQ or
NAI Direct is entitled to injunctive relief for any breach, as
well as an action for monetary damages for any loss.
8.3 In the event of a violation of the terms of ARTICLE 7 OR 8 of
this Agreement, the violating parties shall be liable to the
damaged party for reasonable attorneys fees, expert fees and
court costs.
9. DEFAULT
9.1 The following events shall constitute a default hereunder:
9.1.1 The failure of either Party to meet its obligations
as set out in ARTICLE 3 hereof, provided that the
other Party, RQ or NAI Direct shall have given
written notice of such default and the defaulting
party may cure such default within 30 days of the
delivery of notice;
9.1.2 Any material breach by WWWX of
(a) the WWWX License Agreement or
(b) the Loan Agreement
9.1.3 Any material breach by NAI of
(a) the NAI License Agreement or
(b) the NAI Agreement
9.1.4 Any action by WWWX which causes or constitutes Good
Reason (as such terms are defined in the Employment
Agreements) for either Key Employee to terminate
either Employment Agreement.
9.2 In the event of a default as defined above, and the defaulting
party shall have failed to cure the default within 30 days of
the delivery of notice to the defaulting party, in lieu of any
other remedies at law or in equity, the non-defaulting Party
may terminate this Agreement pursuant to this ARTICLE 9 and
neither Party will be bound further by the terms of ARTICLES 7
AND 8 hereof.
9.3 In the event of a default by WWWX under SECTION 9.1.1 or a
default under SECTION 9.1.2 OR 9.1.4 and the passage of the
time required by SECTION 9.2, following the payment by RQ and
NAI Direct of all debts to creditors other than the Parties,
RQ and NAI Direct will be dissolved and
(a) all assets other than those listed in SECTION 9.3(B),
including but not limited to all cash, accounts
receivable, furniture, fixtures, equipment, computer
hardware, and tangible property of RQ and NAI Direct
shall be distributed to WWWX;
(b) all computer software, trade names, trade marks,
copyrights, and other intellectual property of RQ and
NAI Direct, including but not limited to the names
"Real Quest" and "NAI Direct", shall be distributed
to and become the property of NAI;
(c) the WWWX License Agreement and the NAI License
Agreement shall be terminated, and each Party shall
retain its right to use the property licensed to NAI
Direct, except that if NAI chooses to continue the
operations of NAI Direct, the WWWX License shall
continue in full force and effect at no charge to NAI
Direct or NAI for a period of 6 months from the
dissolution, after which time NAI Direct or NAI will
pay a license fee of not more than $50,000 per annum
for a non-exclusive license of the Technology if it
elects to continue the License Agreement.
(d) The Escrow Agreement shall be terminated and the WWWX
shares held in escrow shall be distributed to NAI.
9.4 In the event of a default by NAI under SECTION 9.1.1 or a
default under SECTION 9.1.4 and the passage of the time
required by SECTION 9.2, following the payment by RQ and NAI
Direct of all debts to creditors other than Parties, RQ and
NAI Direct will be dissolved and
(a) all assets other than those listed in SECTION 9.4(B),
including but not limited to all cash, cash
equivalents, accounts receivable, furniture,
fixtures, equipment, computer hardware, and tangible
property of RQ and NAI Direct shall be distributed to
WWWX;
(b) all computer software, trade names, trademarks,
copyrights and other intellectual property of RQ and
NAI Direct that was contributed by NAI, including but
not limited to the names "Real Quest" and "NAI
Direct" shall be distributed to and become the
property of NAI;
(c) the WWWX License Agreement and the NAI License
Agreement shall be terminated, and each Party shall
retain its right to use the property licensed to NAI
Direct;
(d) the Escrow Agreement shall be terminated and the WWWX
shares held in escrow shall be returned to WWWX.
10. CHANGE IN CONTROL
10.1 In the event of a proposed change in control, acquisition or
merger of WWWX in a transaction or series of transactions
where 34% or more of the voting securities of WWWX is obtained
by a third party or third parties acting in concert, NAI shall
have the right (a) to repurchase WWWX or the surviving
company's RQ shares, as the case may be, or (b) to put its
equity interest in RQ to WWWX or the surviving company, as the
case may be, at their fair market value and WWWX shall
purchase such shares at their fair market value. If NAI
exercises its right to put pursuant to (b) of the previous
sentence, WWWX or the surviving company, as the case may be,
may elect to purchase NAI's equity interest
with either cash or its publicly-traded, unrestricted stock,
or a combination thereof.
If NAI exercises its rights under this SECTION 10.1, neither
Party will be bound by the provisions of SECTIONS 7 AND 8.
11. MISCELLANEOUS
11.1 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE . THE
PARTIES AGREE TO WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT
TO ENFORCE ANY OF THE TERMS OF THIS AGREEMENT.
11.2 TERM. The term of this agreement shall remain in effect until
the earlier of:
1. The consent of both parties;
2. The occurrence of a default and termination pursuant
to ARTICLE 9; or
3. The exercise by NAI of its rights under ARTICLE 10.
11.3. SURVIVAL. Nothing contained in this section shall affect or
impair any rights or obligations arising prior to the time of
termination of this Agreement or which may arise by an event
causing the termination of this Agreement. The covenants
contained in PARAGRAPHS 7 AND 8 above shall, except as
provided in ARTICLES 9 AND 10, survive the termination of this
Agreement.
11.4. NOTICE. Any notice or other communication shall be in writing
and shall be deemed effective:
(1) Upon personal delivery, if delivered by hand and
followed by notice by mail of facsimile transmission;
(2) Three (3) days after deposit in the United States
mail by certified or registered mail, return receipt
requested, postage prepaid;
(3) The date of delivery by Federal Express or other
nationally recognized courier service.
TO WWWX: WorldWide Web NetworX Corporation
000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attn: President and CEO
Fax Number: (000) 000-0000
with a copy to: Xxxxx X. Xxxxx, Esq.
General Counsel
Fax Number: (000) 000-0000
TO NAI: New America Network, Inc.
X.X. Xxx 000
000 XX Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Chairman and CEO
Fax Number: (000) 000-0000
with a copy to: Xxxxxx X. Xxxx, Esq.
General Counsel
Fax Number: (000) 000-0000
TO RQ: Real Quest, Inc.
X.X. Xxx 000
000 XX Xxxxx 000
Xxxxxxxxxx, XX 00000
with a copy to: Xxxxxx X. Xxxx, Esq.
General Counsel
Fax Number: (000) 000-0000
or to such other address of which any party may notify the other parties as
provided above.
11.5 AMENDMENT. This agreement may only be amended by an instrument
in writing signed by the Parties.
11.6 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstances shall for
any reason or to any extent, be invalid or unenforceable, the
remainder of this Agreement and the application of that
provision to other persons or circumstances shall not be
affected, but rather, shall be enforced to the extent
permitted by law.
11.7 ENTIRE AGREEMENT. This Agreement and the agreements
specifically referenced in this Agreement constitute the
entire agreement between the Parties and incorporate all prior
discussions, negotiations and agreements.
11.8 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement may not be assigned by either Party without the
prior written consent of the other Party. This Agreement shall
be binding upon and
inured to the benefit of the parties hereto, their respective
successors, heirs, permitted assigns and legal
representatives. In the event of a transfer of the shares of
stock in accordance with this Agreement, the selling
shareholder acknowledges that the transfer shall not be
effective until such time as the purchasing party acknowledges
that it shall be bound by the terms and conditions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date first
above written.
WORLDWIDE WEB NETWORX CORPORATION
BY: //S// XXXXXX X. XXXX
------------------------------
Name: Xxxxxx X. Xxxx
Title: President and CEO
NEW AMERICA NETWORK, INC.
BY: //S// XXXXXX X. XXXX
-------------------------------
Name: Xxxxxx X. Xxxx
Title: Chairman and CEO
REAL QUEST, INC.
BY: //S// XXXXXX X. XXXX
------------------------------
Name: Xxxxxx X. Xxxx
Title: President
