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EXHIBIT 10.14
LIMITED LIABILITY COMPANY AGREEMENT
OF
QWEST XXXXX.XXXXXXXXX LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
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LIMITED LIABILITY COMPANY AGREEMENT
OF
QWEST XXXXX.XXXXXXXXX LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Limited Liability Company Agreement of Qwest Xxxxx.Xxxxxxxxx LLC
(the "COMPANY"), is made effective as of June 3, 1999 by and among Qwest
Communications International Inc., a Delaware corporation, KPMG LLP, a Delaware
limited liability partnership, and Softline Consultants & Integrators, Inc., a
California corporation, and each other person who becomes a Member in accordance
with the terms of this Agreement.
WHEREAS, the Members wish to form a limited liability company pursuant
to the Act by filing a Certificate of Formation of the Company with the
Secretary of State of the State of Delaware and by entering into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein made and intending to be legally bound, the Members hereby agree as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS. When used in this Agreement, the
following capitalized terms have the meanings set forth below.
"Act" means the Delaware Limited Liability Act, Delaware Code Annotated
Title 6, Section 18-101 et seq., as amended from time to time.
"Additional Capital Contributions" is defined in Section 4.5.
"Affiliate" means any Person, directly or indirectly, through one or
more intermediaries, Controlling, Controlled by, or under common Control with a
Member.
"Agreed Upon Milestone" means any of the following:
(i) the Company having earned, on an accrual basis, at least * * *
million of cumulative * * * by the end of the * * * month
following the Formation Date;
(ii) the Company having earned, on an accrual basis, at least * * *
million of cumulative * * * by the end of the * * * month
following the Formation Date; and
(iii) the Company having earned, on an accrual basis, at least * * *
million of cumulative * * * by the end of the * * *
month following the Formation Date.
"Agreement" means this Limited Liability Company Agreement, as
originally executed and as amended from time to time.
"AHS" or "application hosting services" means the delivery of any
software application within the Application Categories to networked, multi-user
customers via a dedicated or remote access facility from the Company's
centralized data center infrastructure. AHS services may be
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delivered on a price-per-user model with the individual software application
licenses taking the form of perpetual use licenses held by the customer.
"AM" or "application management" services, means the ongoing management
of any software application within the Application Categories for a networked,
multi-user customer. In addition, AM services may include the ongoing management
of non-standard or customized APIs, custom developed client applications, end
user interfaces and tools, support tools, and other customized functionality of
the individual software applications.
"Ancillary Implementation Agreement" is defined in Section 2.4(1).
"API" or "application program interface" means the specific method
prescribed by an information system operating system or by an individual
software application by which a programmer or an end user writing or using an
individual software application can make requests of the operating system or
such application or input or receive data from the operating system or such
application.
"Application Categories" means each of * * *, and any database service,
database application, or database tool related thereto.
"Applicable Business Plan Period" is defined in Section 6.2.
"ASP" or "application service provider" services, means the management
and delivery of any software application within the Application Categories to
networked, multi-user customers via a dedicated or remote access facility from
the Company's centralized data center infrastructure. ASP services may be
delivered on a price-per-user model with the individual software application
licenses taking the form of non-perpetual use licenses which may remain with
either the Company or the software company and not with the ultimate end user.
"Assigned Contracts" is defined in Section 2.5.
"Bankruptcy" or "Bankruptcy Event" means, with respect to a Person,
that such Person
(i) becomes insolvent or fails to pay, is unable to pay, or admits in
writing its inability generally to pay its debts as they become due;
(ii) makes a general assignment, arrangement or composition with or for the
benefit of its creditors;
(iii) institutes or has instituted against it a proceeding seeking a judgment
of insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar Law affecting creditors' rights, or a
petition is presented for the winding-up or liquidation of such Person,
and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (a) results in a
judgment of insolvency or bankruptcy or the entry of an Order for
relief or the making of an Order for the winding-up or liquidation of
such Person or (b) is not dismissed, discharged, stayed or restrained
in each case within sixty days of the institution or presentation
thereof;
(iv) has a resolution passed for its winding-up or liquidation;
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(v) seeks or becomes subject to the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or for
all or substantially all of its assets (regardless of how brief such
appointment may be, or whether any obligations are promptly assumed by
another entity or whether any other event described in this clause (v)
has occurred and is continuing);
(vi) is the subject of any event which, under the applicable Laws of any
jurisdiction, has an analogous effect to any of the events specified in
clauses (i) through (v) (inclusive) of this definition; or
(vii) takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the foregoing acts.
"Benefit Arrangement" of an entity means each employment, severance,
continuation pay, termination pay, layoff, or other similar contract,
arrangement or policy and each plan or arrangement providing for health,
medical, life or other welfare benefit insurance coverage (including any
insured, self-insured or other arrangements), workers' compensation, disability
benefits, supplemental employment benefits, holiday, dependent care assistance,
education or vacation benefits, retirement benefits or deferred compensation,
profit-sharing, benefits in the event of a sale or other change in control,
management or ownership of the employer, bonuses, stock options, stock purchase,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is
or has been entered into, sponsored, maintained or contributed to, as the case
may be, by such entity, and (iii) covers any employee or former employee of such
entity.
"Business" means the provision of ASP, AHS, and AM products and
services by the Company to its Customers over public and private networks by
means of specified transmission and routing protocols (including TCP/IP
protocols) and using a variety of transmission media and methods, with the
intent of allowing its Customers to use such products and services to perform
any function within the Scope of Services, and ancillary products and services
in connection therewith.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday under the Laws of the States of Colorado or New York or any other day on
which banking institutions located in either of such states are authorized or
required by law or other governmental action to close.
"Business Plan Period" means the Initial Business Plan Period and each
subsequent one-year period during the term of this Agreement ending each
succeeding December 31.
"Buyer" is defined in Section 13.7
"Capital Account" is defined in Exhibit D.
"Capital Call Notice" is defined in Section 4.5(b).
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"Capital Contributions" means the sum of all contributions to the
Company by a Member or all the Members, as the case may be, including the
Initial Contributions and any Additional Capital Contributions.
"Cash Flow" means, for any period, the amount, if any, computed on a
cash basis, by which (a) the sum of (i) the gross cash receipts of the Company
for such period from all sources (other than proceeds of Capital Contributions
or Company borrowings) and (ii) the amount, if any, no longer needed in any
reserve fund maintained by the Company and withdrawn therefrom during such
period exceeds (b) the sum of (i) all cash expenditures of the Company during
such period (other than (x) expenditures the payment of which was made with the
proceeds of Capital Contributions or Company borrowings and (y) any withholding
taxes paid by the Company on behalf of a Member attributable to such Member's
interest in the Company) including, without limitation, all operating expenses
of the Company and payments of interest and principal on Company indebtedness
and (ii) all amounts deposited into a reserve fund during such period by the
Management Committee.
"Certificate of Formation" means the Certificate of Formation for the
Company, as originally filed with the Delaware Secretary of State and as amended
from time to time.
"Class A Manager" means each Manager nominated and appointed by the
Class A Member (or the Class A Members collectively, as applicable) pursuant to
Section 5.2.
"Class A Member" means the Initial Class A Member, and includes any
successor or permitted assign of such Initial Class A Member and each additional
and/or subsequent Class A Member.
"Class B Manager" means each Manager nominated and appointed by the
Class B Member (or the Class B Members collectively, as applicable) pursuant to
Section 5.2.
"Class B Member" means the Initial Class B Member, and includes any
successor or permitted assign of such Initial Class B Member and each additional
and/or subsequent Class B Member.
"Class C Member" means the Initial Class C Member, and includes any
successor or permitted assign of such Initial Class C Member and each additional
and/or subsequent Class C Member.
"Closing" is defined in Section 13.7.
"Closing Date" is defined in Section 13.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" is defined in the introductory paragraph of this Agreement.
"Control," "Controlling," or "Controlled by" means, when used with
respect to any Person, the power to direct the management and policies of such
Person, directly or indirectly,
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whether through the ownership of voting securities, by contract or otherwise,
and, for the purpose of clarifying the foregoing, the Class B Member will not be
deemed to Control any other member of KPMG International, unless and until
contractual provisions are put into force pursuant to which the management and
policies of any such entity and the Class B Member are established and directed
by a single governing entity or body.
"CRM" or "customer relationship management" means an information system
that integrates and unifies, and serves as an interface for, customer contact
with an enterprise and with the products and services it provides, and may
include online commerce, order tracking, customer service, and product or
company information dissemination.
"Customer," for the purpose of this definition, means an enterprise
purchaser of Hosting Services from the Company (including any public agency or
governmental entity).
"Deadlock" means a situation where:
(i) a Unanimous Consent Item has been properly presented to and considered
by the Management Committee and disapproved of by at least one Manager;
(ii) the Member all of whose appointed Managers approved such Unanimous
Consent Item has sought to reach agreement with the other Member
entitled to appoint Managers on such Unanimous Consent Item by engaging
in the procedures outlined in ARTICLE 16, through the mediation stage
described in Section 16.1(b) but excluding arbitration; and
(iii) the negotiation and mediation procedures failed to resolve such
Member's disagreement over the Unanimous Consent Item,
and such situation creates or evidences a systemic frustration of the
Company's fundamental business purposes in the reasonable judgment of
either the Class A Member or the Class B Member. For the purposes of this
definition, the Chief Executive Officer of the Company (in his or her
capacity as a Manager) will be deemed a Manager appointed by the Initial
Class A Member.
"Defaulting Member" is defined in Exhibit E-2.
"Discounted Services Contribution Agreement" is defined in Section
2.4(6).
"Distributable Assets" means that cash or those assets that the
Management Committee deems available for distribution to the Members from time
to time.
"Distribution" means any distribution of Distributable Assets made
pursuant to the direction of the Management Committee.
"Economic Interest" means a Member's share of the Company's net income,
net losses, and distributions of the Company's assets pursuant to this Agreement
and the Act, but does not include any other rights of a Member, including but
not limited to the right to vote or participate in the management or any right
to information concerning the business and affairs of the Company.
"Effective Date of Transfer" means June 1, 1999.
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"Employee Plan" of an entity means each "employee benefit plan", as
such term is defined in Section 3(3) of ERISA, which (i) is subject to any
provision of ERISA, (ii) is or has been entered into, sponsored, maintained or
contributed to, as the case may be, by such entity, and (iii) covers any
employee of former employee of such entity.
"Employee Loan-Out Agreements" is defined in Section 2.3(b).
"Encumbrance" means any mortgage, pledge, lien, other encumbrance,
claim, charge or other security interest, other than mechanics, materialmen's
and similar liens, liens for taxes not yet due and payable, liens securing
rental payments under capital lease arrangement, community property interest,
right of first refusal, or other restrictions of any kind.
"End of Exclusivity" means the date * * * years after the Effective
Date of Transfer, unless as of such date the Company has not effected a
Qualified Public Offering, in which case the "End of Exclusivity" will be
extended by * * * if (1) the Management Committee makes a determination that a
Qualified Public Offering could feasibly be completed within such period within
an acceptable price range and (2) the making of a resolution by the Management
Committee to commit, subject to market conditions and other relevant factors, to
effect a Qualified Public Offering within such * * * period.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code or Section 4001 of ERISA.
"ERP" or "enterprise resource planning" means an integrated information
system that serves multiple departments or business units within a single
enterprise by integrating a multi-module application software environment in
order to assist a customer in managing processes integral to its overall
business (e.g., product planning, parts purchasing, inventory maintenance,
supplier and customer interaction, customer service, order tracking, and finance
and human resources tasks).
"Europe" means the following countries and territories, and all
successor and new states which may be created or arise therefrom: Albania,
Andorra, Armenia, Austria, Azerbaijan, Xxxxxxx, Xxxxxxx, Xxxxxx & Xxxxxxxxxxx,
Xxxxxxxx, Xxxxxxx, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Gibraltar, Greece, Greenland, Hungary, Iceland, Ireland, Italy, Kosovo,
Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaco,
Montenegro, Netherlands, Norway, Poland, Portugal, Republic of Georgia, Republic
of Macedonia, Romania, Russia, San Marino, Serbia, Slovakia, Slovenia, Spain,
Sweden, Switzerland, Turkey, Ukraine, United Kingdom, Vatican City, and
Yugoslavia.
"Event of Default" is defined in Exhibit E-2.
"Exclusivity Period" means the period which begins on the Effective
Date of Transfer and ends on the earlier of (x) the End of Exclusivity or (y)
the * * *.
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"Fair Market Value" means the price at which a willing seller would
sell and a willing buyer would purchase the Member Interest or other equity
interest or asset(s) for which the determination is being made (provided, that a
Membership Interest or other equity interest will be valued with reference to
the going concern value of the relevant Person), having full knowledge of the
facts, and in an arm's length transaction without being under any compulsion to
buy or sell. In all cases, Fair Market Value will be determined after deducting,
without duplication of deduction, any liabilities, claims or Encumbrances to
which the asset is subject or that must be assumed by the transferee.
"First Closing Date" is defined in Section 2.3.
"Fiscal Year" means the Company's fiscal year, which will be the
calendar year.
"Formation Date" means June 3, 1999, the date of filing of the
Certificate of Formation of the Company with the Secretary of State of the State
of Delaware.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession.
"Hosting Services" means the delivery of software applications to
customers via a dedicated or remote access facility and services related
thereto, including the creation, maintenance and support of Virtual Private
Networks and Virtual Private Dial-Up Networks.
"Initial Business Plan Period" means the period commencing on the
Effective Date of Transfer and ending December 31, 1999.
"Initial Class A Member" means Qwest Communications International Inc.,
a Delaware corporation.
"Initial Class B Member" means KPMG LLP, a Delaware limited liability
partnership.
"Initial Class C Member" means Softline Consultants & Integrators,
Inc., a California corporation, an Affiliate of the Initial Class B Member.
"Initial Contributions" means all of the respective contributions of
the Initial Members to the Company set forth on Exhibit X-0, Xxxxxxx X-0 and
Exhibit A-3.
"Initial Members" means the Initial Class A Member, the Initial Class B
Member and the Initial Class C Member.
"Initial Member Group" means, as applicable, (a) the Initial Class A
Member, or (b) the Initial Class B Member and the Initial Class C Member,
together.
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"Initial Scope of Services" are activities related to the management,
delivery, enhancement, control or recordkeeping of the following: * * * payroll,
payroll interface, * * * sales (inside and field), sales support, marketing,
marketing support, * * * (together with any other functions agreed to from time
to time by both Initial Member Groups).
"IP OSS/BSS" means the Initial Class A Member's internet protocol
operations support system and business support system developed with the Initial
Class B Member pursuant to the arrangements contemplated by the IP OSS/BSS MOU.
"IP OSS/BSS MOU" is defined in Section 2.3(b).
"IP OSS/BSS Sublicense" is defined in Section 2.3(b).
"Law" means collectively, any constitutional provision, statute,
permit, order, ordinance or other law, rule or regulation of any governmental
entity, common law and any Order.
"Leased Line Agreement" is defined in Section 2.4(5).
"Manager" is defined in Section 5.2(b)(1).
"Management Committee" is defined in Section 5.1.
"Majority in Interest" means the Percentage Interests of one or more
Members having voting rights that, when taken together, exceed(s) fifty percent
of the aggregate of all Percentage Interests of Members having voting rights
relating to the matter in question.
"Material Adverse Effect" means a material adverse effect in the
business, financial condition, results of operations, properties, assets or
liabilities of the Company and its subsidiaries, if any, taken as a whole.
"Member" means each of the Class A Member, the Class B Member, the
Class C Member and each Person who is hereafter admitted as a member in
accordance with the terms of this Agreement; "Members" means all of the Members
of the Company as of a given date.
"Member Group" means any one or more Members that are Affiliates,
including but not limited to the Initial Member Groups.
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"Membership Interest" means a Member's entire interest in the Company,
including the Member's Economic Interest, the right to vote on or participate in
the management of the Company and the right to receive information concerning
the business and affairs of the Company.
"Offering Notice" is defined in Section 13.6.
"Order" means any decree, injunction, judgment, order, ruling or writ.
"Percentage Interest" means, with respect to a Member, each Member's
percentage interest of the total Membership Interests in the Company, as set
forth opposite each Member's name on Exhibit C hereto (as such Exhibit may be
amended from time to time).
"Person" means an individual, general partnership, limited partnership,
limited liability company, corporation, trust, estate, real estate investment
trust, association or any other entity.
"Qualified Public Offering" means a public offering of Membership
Interests in the Company or equity securities of a Resulting Corporation,
pursuant to a registration statement filed and declared effective with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
"Resulting Corporation" is defined in Section 12.1.
"Scope of Services" means the Initial Scope of Services, as modified
from time to time by the Management Committee.
"Seller" is defined in Section 13.7.
"Supply Chain Applications" means applications which assist in the
control, planning and/or scheduling of the sequence of an organization's
functions that mine, make, process, or assemble materials and products from
manufacturer to wholesaler to retailer to consumer.
"Target Market" means the market for the products and services
constituting the * * * ,and to other Customers. Such Customers may be located in
any jurisdiction, except for Europe, unless the Management Committee determines
otherwise.
"Tax Matters Member" means the Class A Member.
"Templates" is defined in Section 8.1.
"Term" is defined in Section 13.1.
"Terms of Sale" means all of the terms and conditions governing a
particular commercial transaction, including (a) price and other contract terms
and conditions of the transaction, and (b) other factors related to such
transaction or the provider of the products or services, including without
limitation timeliness of access, service level agreements and other factors
employed by the Management Committee from time to time.
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"Tier I Event" means one or more actions or omissions constituting bad
faith or willful misconduct which results in or substantially contributes to a
material breach by a Member Group of its obligations under this Agreement or
under any of the Transaction Documents and substantially impairs the Company's
ability to conduct its business in the ordinary course.
"Tier II Event" means the occurrence of any of the following:
(i) a material breach by a Member Group or any Member constituting part of
a Member Group (after written notice thereof from the other Member
Group and a reasonable opportunity to cure) of its obligations set
forth in this Agreement, or of any of the Transaction Documents, that
substantially impairs the Company's ability to conduct its business in
the ordinary course, except for a Tier I Event;
(ii) a failure by a Member to timely make any of its contributions set forth
on Exhibit X-0, Xxxxxxx X-0, or Exhibit A-3, as applicable, by the 15th
Business Day following the receipt of written notice from any other
Member of such failure;
(iii) a failure by a Member Group to cause the transfer to the Company of the
employees required to be so transferred prior to or upon a Qualified
Public Offering pursuant to the applicable Employee Loan-Out Agreements
(subject to the ability to make certain substitutions as set forth
therein); or
(iv) a Bankruptcy Event occurring with respect to a Member.
"Tier III Event" means the occurrence of any of the following:
(i) * * * ;
(ii) a failure to complete any of the transactions contemplated by Section
2.4 on or prior to the 15th Business Day following the receipt of
written notice from any Initial Member Group of such a failure;
(iii) a change in applicable Law requiring a Member to dispose of or transfer
any equity interest in the Company without respecting the approval
rights of the other Members provided herein;
(iv) a Deadlock;
(v) the Company experiencing a shortage of cash required to continue
operations in the normal course of business, and the following
conditions existing at such time: (1) a failure of the Member Groups to
approve Additional Capital Contributions, and (2) the Company's
inability to borrow the needed funds on commercially reasonably terms;
or
(vi) a failure to effect a Qualified Public Offering by the * * *
anniversary of the Effective Date of Transfer.
"Trademark License Agreement" is defined in Section 2.3(b).
"Transaction Documents" means the Ancillary Implementation Agreement,
the Web Hosting and Internet Access Service Agreement, the Employee Loan-Out
Agreements, the Leased Line Agreement, the IP OSS/BSS MOU, the IP OSS/BSS
Sublicense, the Trademark License Agreement, and the Transition Services
Agreement.
"Transfer" is defined in Section 11.1.
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"Transition Services Agreement" is defined in Section 2.4(2).
"Unanimous Consent Items" is defined in Section 5.3(f).
"Virtual Private Network" and "Virtual Private Dial-Up Network" means a
service which allows businesses to connect to their local area networks, hosting
sites, business partners, customers, branch offices, telecommuters, mobile
employees, and other entities in a secure manner.
"Web Hosting and Internet Access Service Agreement" is defined in
Section 2.4(2).
ARTICLE 2
ORGANIZATIONAL MATTERS
SECTION 2.1 FORMATION. Pursuant to the Act and subject to the
satisfaction of the conditions set forth in Section 2.3, the Initial Members
intend to form a limited liability company under the Laws of the State of
Delaware. On the Formation Date, the Initial Members have caused the Certificate
of Formation to be filed with the Secretary of State of the State of Delaware by
Delaware Corporate Services, Inc., an authorized Person. The Initial Members
hereby ratify and confirm the filing of the Company's Certificate of Formation.
The rights and liabilities of the Members will be determined pursuant to the Act
and this Agreement. To the extent that the rights or obligations of any Member
are different by reason of any provision of this Agreement than they would be in
the absence of such provision, this Agreement will, to the extent permitted by
the Act, control.
SECTION 2.2 NAME. The name of the Company is "QWEST XXXXX.XXXXXXXXX
LLC". The business of the Company may be conducted under that name or, upon
compliance with applicable Laws, any other name that the Management Committee
deems appropriate or advisable. The Management Committee, or any officer who is
delegated the ability to do so by the Management Committee, will file any
fictitious name certificates and similar filings, and any amendments thereto,
that the Management Committee considers appropriate.
SECTION 2.3 FIRST CLOSING DATE.
(a) On the date (the "FIRST CLOSING DATE") on which the last
of the conditions set forth in subsection (b) below are met, the
Initial Members will make those of its Initial Contributions required
to be made on or by such date; provided, that the Initial Members agree
that such Initial Contributions will be deemed to have been made as of
the Effective Date of Transfer and that the Company will be entitled to
receive all revenues and other benefits that would have accrued to the
Company and will be obligated to pay or otherwise discharge all
obligations that would have been assumed by the Company had such
Initial Contributions been made as of the Effective Date of Transfer.
To accomplish the foregoing, each Initial Member will provide a
statement to the Company within 60 days after the First Closing Date
setting forth in reasonable detail the relevant items of revenue and
expense and will transfer to the Company cash in the net amount
reflected in such statement. Each Initial Member will give full access
to the Company and its
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
representatives to examine and audit its books and records to verify
such statements. Any discrepancies or disputes arising under this
subsection (a) will be subject to the dispute resolution procedures
provided in ARTICLE 16.
(b) On or prior to the First Closing Date:
(1) Each Initial Member will have executed and delivered to
each other Initial Member a copy of this Agreement;
(2) The Initial Class A Member and the Initial Class B Member
will have entered into a Memorandum of Understanding (the "IP
OSS/BSS MOU"), acceptable in form and substance to each such
Initial Member, containing the general terms of an agreement
in principle whereby the Initial Class B Member will design
and implement the Initial Class A Member's IP OSS/BSS;
(3) The Initial Class A Member and the Company will have
entered into the "TRADEMARK LICENSE AGREEMENT" substantially
in the form attached hereto as Exhibit H, pursuant to which
the Initial Class A Member will license certain trademarks to
the Company on the terms and conditions set forth therein; and
(4) Notwithstanding Section 2.5(b) the Initial Class B Member
will have caused the Initial Class C Member's contract with
SAP America, Inc. to have been assigned to the Company, as of
the Effective Date of Transfer, including obtaining any
required consents thereto.
(c) On or as soon as reasonably practicable following the
First Closing Date, each Initial Member Group will deliver a legal
opinion to the other Initial Member Group, acceptable in form and
substance to such other Initial Member Group, opining as to the valid
existence and good standing of each Member of such Initial Member Group
under its state of organization and to the due authorization and valid
execution and delivery of this Agreement by each Member of such Initial
Member Group.
SECTION 2.4 SECOND CLOSING DATE.
As soon as reasonably practicable following the First Closing Date but
in no event later than thirty days after the First Closing Date (the "SECOND
CLOSING DATE"), the Initial Members will have caused the following events to
happen:
(1) The Initial Class A Member and the Initial Class B Member
will have entered into the "ANCILLARY IMPLEMENTATION
AGREEMENT," in form and substance reasonably satisfactory to
each such Initial Member, pursuant to which the Initial Class
B Member will perform ongoing implementation and adjustment of
certain "Peoplesoft" software (or an equivalent product)
licensed by the Initial Class A Member, and/or the initial and
ongoing implementation and adjustment of the Global Sales
Force Automation software (or an equivalent product) licensed
by the Initial Class A Member, on the terms and conditions set
forth therein but including the following: (i) the total
commitment by the Initial Class A Member to purchase services
from the Initial Class B Member will equal $5 million; (ii)
such commitment will be retired over time as determined by the
Initial Class A Member
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but will be fully retired prior to the third anniversary of
the Second Closing Date; and (iii) the Class B Member will
provide the relevant services based on an hourly blended rate
for personnel of $164 per hour.
(2) The Initial Members and the Company will have entered into
a "TRANSITION SERVICES AGREEMENT," in form and substance
reasonably satisfactory to each Initial Member Group, pursuant
to which each Initial Member will perform certain services for
the Company on the terms and conditions set forth therein and
will agree to provide such services for a period following a
termination of the Company or a sale by such Initial Member of
its Membership Interest.
(3) The Initial Class A Member and the Company will have
entered into an agreement (the "IP OSS/BSS SUBLICENSE") in
form and substance reasonably satisfactory to each Initial
Member Group, pursuant to which the Initial Class A Member
will make access to the IP OSS/BSS system available to the
Company (upon and after the completion of the IP OSS/BSS) on
the terms and conditions set forth therein.
(4) The Initial Class A Member and the Company will have
entered into a "WEB HOSTING AND INTERNET ACCESS SERVICE
AGREEMENT" in form and substance reasonably satisfactory to
each Initial Member Group, pursuant to which the Initial Class
A Member will provide broadband services, other
telecommunications services, and internet hosting services to
the Company on the terms and conditions set forth therein.
(5) The Initial Class A Member and the Company will have
entered into an agreement (the "LEASED LINE AGREEMENT"), in
form and substance reasonably satisfactory to each Initial
Member Group, pursuant to which the Initial Class A Member
will provide to the Company connectivity to the network
operated by the Initial Class A Member and its Affiliates and
to the internet on the terms and conditions set forth therein.
(6) The Initial Members and the Company will have entered into
a "DISCOUNTED SERVICES CONTRIBUTION AGREEMENT" in form and
substance reasonably satisfactory to each Initial Member
Group, pursuant to which the Initial Members will transfer
services and other items to the Company on a periodic basis
without charge or for a discounted charge as a capital
contribution as and when required by the Management Committee,
with an agreed value as set forth and on the terms and subject
to the conditions set forth therein, and further subject to
the allocation rules set forth in Paragraph 1.4(h) of Exhibit
D attached hereto.
(7) The Initial Class A Member and the Company will have
entered into an agreement, in form and substance reasonably
satisfactory to each Initial Member Group, pursuant to which
the Initial Class A Member will loan or continue to loan those
employees listed on Exhibit B-1 to the Company on an
exclusive, irrevocable basis, on the terms and conditions set
forth therein. (Such agreement, collectively with the
agreements discussed in subsections (8) and (9) are
collectively referred to as the "EMPLOYEE LOAN-OUT
AGREEMENTS.")
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(8) The Initial Class B Member and the Company will have
entered into an agreement, in form and substance reasonably
satisfactory to each Initial Member Group, pursuant to which
the Initial Class B Member will loan those employees listed on
Exhibit B-2 to the Company on an exclusive, irrevocable basis,
on the terms and conditions set forth therein.
(9) The Initial Class C Member and the Company will have
entered into an agreement, reasonably acceptable to each
Initial Member Group, pursuant to which the Initial Class C
Member will loan those employees listed on Exhibit B-3 to the
Company on an exclusive, irrevocable basis, on the terms and
conditions set forth therein.
(10) The Employee Loan-Out Agreements will provide that (i)
such employees will be transferred to the Company preceding
and in contemplation of a Qualified Public Offering, (ii)
until a listed employee is transferred to the Company, the
services of such employee (or any permitted replacement
employee) will be "loaned" to the Company and the Company will
pay the relevant Initial Member the fee set forth in the
applicable Employee Loan-Out Agreement, (iii) if, prior to a
transfer to the Company, any listed employee ceases to be
employed by the relevant Initial Member, such Initial Member
will substitute another employee of equivalent skills and
experience reasonably acceptable to the Management Committee,
and (iv) all costs of transfer of the employees, including
severance and other termination benefits, if any, and the
transfer of visas, will be borne by the transferring Initial
Member.
(11) Each of the Initial Member Groups will have provided
evidence to the other that each of the employees listed on
Exhibit X-0, Xxxxxxx X-0, or Exhibit B-3, as applicable, can
perform the services associated with the Company's job
classification to which such employee will be assigned.
(12) Each of the Initial Member Groups will agree with each
other, and the Initial Class A Member and the Initial Class B
Member will cause each of the Managers it has appointed to the
Management Committee, on behalf of the Company to agree with
each Initial Member, on the appropriate valuation of each
Initial Member's non-cash Initial Contributions.
SECTION 2.5 COVENANTS REGARDING TRANSITION SERVICES AND ASSIGNED
CONTRACTS
(a) Until the Company and each of the Initial Members which is
a party thereto have entered into the Transition Services Agreement:
(1) each Initial Member Group will provide to the Company all
services (and will allocate sufficient numbers of employees
and other resources to provide all services) which it
currently provides in respect of the activities relating to
the assets and assigned contracts and agreements comprising
the Initial Contributions, including, without limitation,
providing services relating to billing, recordkeeping and
customer service and other services to the Company, and to
employee benefits (including without limitation health
insurance, life insurance, retirement and
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savings plans, and incentive plans) and other services
directly to the employees engaged in such activities who are
listed on Exhibit X-0, Xxxxxxx X-0, or Exhibit B-3, as
applicable subject to an Employee Loan-Out Agreement, and such
services will be provided by each Initial Member Group * * *,
and will be performed at a level at least as high as that at
which they are currently performed;
(2) modifications to the services currently provided by the
Initial Members referenced in subsection (1), above, and
additional services which are necessitated by the structure of
the Company and the nature of the Initial Members' interests
therein will also be provided by each Initial Member * * *,
and at a level which the Company determines is reasonably
acceptable;
(3) the office facilities, clerical and administrative
support, and office infrastructure (including, without
limitation, access to and use of telephones, standalone
computers, computer networks, internet access, and secretarial
and receptionist services) which the employees listed on
Exhibit X-0, Xxxxxxx X-0, or Exhibit B-3 currently are
provided by any Initial Member will continue to be provided to
such employees, and the Company will reimburse each such
Member for all direct costs associated therewith, and
(4) all books, records, data, work product and other documents
relating to the such services, including, without limitation,
employee and client records, software, and manuals, will
become and remain the exclusive property of the Company, and
none of the Initial Members (nor any successor or assignee
thereof) will at any time, directly or indirectly, assert any
interest or property rights therein.
(b) With respect to each of the licenses and other agreements and
contracts (the "ASSIGNED CONTRACTS") listed on Exhibit A-2 or Exhibit
A-3 that is not assigned to the Company on the First Closing Date, the
Initial Class B Member or the Initial Class C Member, as applicable,
will continue to deal with the other contracting party or parties to
such Assigned Contract as the prime contracting party, and the
applicable Initial Member Group will use its best efforts to obtain the
consent of all required parties to the assignment of such Assigned
Contract. Such Assigned Contract will be promptly assigned by the
applicable Initial Member to the Company after the receipt of such
consent. Notwithstanding the absence of any such consent, the Company
will be entitled to the benefits of any such Assigned Contract accruing
from and after the Effective Date of Transfer net of the expenses
(consistent with the assumptions contained in the financial model
included in the Initial Business Plan) incurred by such Initial Member
in connection with servicing such Assigned Contract from and after the
Effective Date of Transfer (without duplication of any expense subject
to reimbursement by the Company pursuant to Section 2.5(a)) to the
extent that the Initial Class B Member or the Initial Class C Member,
as applicable, may provide the Company with such benefits without
violating the terms of such Assigned Contract.
SECTION 2.6 TERM. The term of this Agreement will be co-terminus with
the Term of the Company, unless extended or sooner terminated as hereinafter
provided.
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SECTION 2.7 OFFICE AND AGENT. The Company will continuously maintain an
office and a registered agent in the State of Delaware as required by the Act.
The registered and principal offices of the Company will be as the Management
Committee may determine. The Company also may have such offices, anywhere within
and without the State of Delaware, as the Management Committee from time to time
may determine, or as the business of the Company may require. The registered
agent will be as stated in the Certificate of Formation.
SECTION 2.8 ADDRESSES OF THE MEMBERS. The respective addresses of the
Members are set forth in Exhibit C hereto.
SECTION 2.9 PURPOSE OF THE COMPANY. The purpose of the Company is to
engage in the Business within the Target Market. The Company may, subject to
Section 5.3(f), engage in any other lawful act, business or activity that the
Management Committee approves. The Company will have the power to do any and all
acts necessary or advisable for the furtherance of its business and activities.
SECTION 2.10 FOREIGN QUALIFICATION. The Management Committee will cause
the Company to comply with all requirements necessary to qualify the Company as
a foreign limited liability company in any jurisdiction in which the Company
owns property or transacts business to the extent, in the reasonable judgment of
the Management Committee, such qualification or registration is necessary or
advisable for the protection of the limited liability of the Members or to
permit the Company lawfully to own property or transact business. The Management
Committee may, and, at the request of the Management Committee or any officer,
each Member will, execute, acknowledge, swear to and deliver any or all
certificates and other instruments conforming with this Agreement that are
necessary or appropriate to qualify, continue or terminate the Company as a
foreign limited liability company in all such jurisdictions in which the Company
may conduct business.
SECTION 2.11 NO STATE-LAW PARTNERSHIP. The Members intend that the
Company not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Member, holder of an Economic
Interest, Manager or officer will be a partner or joint venturer of any other
Member, holder of an Economic Interest, Manager or officer for any purposes
other than federal and, if applicable, state tax purposes, and this Agreement
will not be construed to the contrary. The Members intend that the Company will
be treated as a partnership for federal and, if applicable, state income tax
purposes, and each Member and the Company will file all tax returns and will
otherwise take all tax and financial reporting positions in a manner consistent
with such treatment.
ARTICLE 3
MEMBERS
SECTION 3.1 LIMITED LIABILITY. Except as expressly set forth in this
Agreement or required under the Act, no Member will be personally liable under
any judgment of a court, or in any other manner, for any debt, obligation, or
liability of the Company, whether that liability or
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obligation arises in contract, tort, or otherwise, solely by reason of being a
Member of the Company.
SECTION 3.2 REMUNERATION TO MEMBERS. Except as otherwise provided in
this Agreement or as provided by a separate written agreement signed by all
Members, no Member is entitled to remuneration for acting in the Company
business.
SECTION 3.3 VOTING RIGHTS. Except as provided in this Agreement or the
Certificate of Formation, Members will have no voting, approval or consent
rights.
SECTION 3.4 ADMISSION OF ADDITIONAL MEMBERS. The Management Committee
may, subject to Section 5.3(f), admit to the Company additional Members. Any
additional Members will obtain Membership Interests and will participate in the
management, net profits, net losses, and distributions of the Company on such
terms as are determined by the Management Committee.
SECTION 3.5 WITHDRAWALS OR RESIGNATIONS. No Member may withdraw or
resign from the Company except pursuant to ARTICLE 4 and Exhibit E-2, ARTICLE
11, ARTICLE 13 or ARTICLE 14.
SECTION 3.6 MEMBERS ARE NOT AGENTS; NO MANAGEMENT AUTHORITY. Pursuant
to ARTICLE 5 and the Certificate of Formation, the management of the Company is
vested in the Management Committee. No Member, acting solely in the capacity of
a Member, is an agent of the Company nor can any Member in such capacity bind or
execute any instrument on behalf of the Company. The Members will have no power
to participate in the management of the Company except as expressly authorized
by this Agreement or the Certificate of Formation and except as expressly
required by the Act.
SECTION 3.7 MEMBER GROUPS. Each Member Group comprised of more than one
Member will designate a "lead" Member, which designation will be subject to
approval by the Management Committee. The lead Member of a Member Group will
take all actions, make all decisions and give and receive all notices on behalf
of and regarding all Members comprising its Member Group. The lead Member for
the Initial Member Group comprised of the Initial Class B Member and the Initial
Class C Member will be the Initial Class B Member.
ARTICLE 4
OWNERSHIP INTERESTS, CONTRIBUTIONS AND CERTIFICATES
SECTION 4.1 INITIAL CONTRIBUTIONS.
(a) On the First Closing Date, the Initial Class A Member will
contribute the cash and any other assets set forth with respect to that
Member on Exhibit A-1 hereto as its Initial Contribution, except to the
extent such Exhibit indicates that any relevant asset(s) or contracts
are to be contributed or assigned at some later date.
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(b) On the First Closing Date, the Initial Class B Member will
contribute, and will cause the Initial Class C Member to contribute the
assets, and assign each of the Assigned Contracts, that are set forth
with respect to each such Initial Member on Exhibit A-2 and Exhibit A-3
hereto as its Initial Contribution, except to the extent such Exhibits
indicate that any relevant asset(s) or Assigned Contract(s) are to be
contributed or assigned at some later date.
(c) The Initial Contributions are comprised of contributions
to the Company of the assets set forth on Exhibit X-0, Xxxxxxx X-0 and
Exhibit A-3 and assignments to the Company of the Assigned Contracts.
The Company, except as set forth on such schedules, will not assume,
does not assume, and has not assumed any liabilities or obligations
(contingent or otherwise) in conjunction with the Initial Contributions
which arise from or are related to any period of time prior to the
Effective Date of Transfer.
(d) The Initial Members acknowledge and agree that the failure
by any Initial Member to timely make its Initial Contribution by any
Initial Member would result in damage to the other Initial Members
which would be difficult to calculate, and therefore agree that if any
contract or agreement to be assigned to the Company which is listed on
Exhibit A-2 or Exhibit A-3 is not assigned to the Company within 30
days after the First Closing Date the Initial Class B Member will pay
to the Company, as liquidated damages for the failure to assign such
contract or agreement, sums equal to the revenue assumed for purposes
of calculating the total revenue component of the financial model
included in the Initial Business Plan, net of the expenses (consistent
with the assumptions contained in the financial model) incurred by such
Initial Member and not the Company (whether by reimbursement pursuant
to Section 2.5(a) or otherwise) in connection with servicing such
Assigned Contract from and after the Effective Date of Transfer for
such period as the financial model included in the Initial Business
Plan assumes such revenue. Payments to the Company under this Section
shall be made at the time revenue would be paid to the Company under
the relevant contract or agreement.
SECTION 4.2 OWNERSHIP INTERESTS. Upon the making of the Initial
Contribution of each Initial Member as set forth above, the Company will issue
to each such Initial Member the percentage of Membership Interests in the
Company set forth in Exhibit C hereto. The Membership Interests will be
reflected in the books and records of the Company but will be uncertificated
unless certification is approved by the Management Committee.
SECTION 4.3 CAPITAL ACCOUNTS. On the Formation Date, a separate Capital
Account will be established for each Member. Thereafter, each Member's Capital
Account will be maintained in accordance with Exhibit D hereto.
SECTION 4.4 INTEREST. No interest will accrue on any Capital
Contribution and no Member will have the right to withdraw or be repaid any
Capital Contribution except as provided in this Agreement.
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SECTION 4.5 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) FINANCIAL SUPPORTS AND GUARANTEES. Except for the Initial
Contributions and Additional Capital Contributions unanimously agreed
to by the Members (other than the Class C Member, which agreement will
be deemed given together with the Class B Member's), no Member (nor any
Affiliate of any Member) will be obligated to extend any financial
support to the Company, nor to guarantee any obligation of the Company.
(b) CAPITAL CALL. Subject to the approval of the Class A
Member and the Class B Member (except as noted in paragraph (a) above)
and to the unanimous approval of the Management Committee pursuant to
Section 5.3(f), the Management Committee may from time to time, by the
delivery of written notice to the Members (a "CAPITAL CALL NOTICE")
require the Members, pro rata in accordance with their respective
Percentage Interests, to contribute cash or other assets with a value
assigned thereto which has been agreed to by all Members to the capital
of the Company ("ADDITIONAL CAPITAL CONTRIBUTIONS"), all as provided
for in this Section 4.5, and in accordance with the procedures set
forth in Exhibit E-1. No Member may voluntarily make any Additional
Capital Contributions.
(c) ADDITIONAL TRADEMARKS. At the request of the Company, the
Initial Class B Member and the Initial Class C Member will license
certain of their respective trademarks to the Company on terms
substantially similar to the terms included in the Trademark License
Agreement, with such changes thereto as are required to comply with
restrictions on use applicable to all licensees of the relevant
trademarks.
SECTION 4.6 DEFAULTING MEMBERS.
(a) GENERAL. Each Member agrees that timely payment or other
satisfaction of its obligations under this Agreement when due is of the
essence, that any failure by a Member to timely make any Initial
Contributions or Additional Capital Contributions to the Company when
required to be made by such Member would cause injury to the Company
and to the other Members, and that the amount of damages caused by any
such injury would be extremely difficult to calculate. Accordingly,
each Member agrees that upon any failure (an "EVENT OF DEFAULT") by a
Member to timely make any Initial Contributions or Additional Capital
Contributions to the Company when required to be made by such Member (a
"DEFAULTING MEMBER"), the remedies set forth in this Section 4.6 and
Exhibit E-2 will apply to it, except to the extent the Management
Committee, acting in its sole discretion (but without the vote of the
Managers appointed by the Defaulting Member), otherwise agrees in
writing with such Defaulting Member; provided, however, that the
Management Committee will provide a Defaulting Member with at least
five Business Days written notice prior to the application of such
provisions; and, provided, further, that if, during such period, the
Defaulting Member cures such Event of Default, including interest as
provided in Paragraph (b) of Exhibit E-2 on such amount from the date
such contribution was originally due until the actual date of
contribution, such provisions will not apply to the Defaulting Member.
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(b) NO WAIVER. The election of the Management Committee or the
non-Defaulting Member to pursue any remedy provided in this Section 4.6
or Exhibit E-2 will not be a waiver or limitation of the right of the
Management Committee, the Company or the non-Defaulting Members to
pursue an additional or different remedy available hereunder or at law
or in equity with respect to any subsequent default.
(c) ADDITIONAL CAPITAL CALL NOTICE. An Event of Default by any
Member will not relieve any other Member of its obligation to make its
Capital Contributions. After any Event of Default because of a failure
to make a Capital Contribution, the Management Committee may issue a
supplemental Capital Call Notice in the same manner, and subject to the
same limitations, as are set forth in Section 4.5.
(d) CONSENT TO AND NON-EXCLUSIVITY OF REMEDIES. Each Member
hereby consents to the application to it of the remedies provided in
this Section 4.6 and Exhibit E-2 in recognition of the risk and
speculative damages its default would cause the other Members, and
further agrees that the availability of such remedies will not preclude
any other remedies which may be available at law, in equity, by statute
or otherwise in respect of any default by such Member in the
performance of its other obligations under this Agreement.
ARTICLE 5
MANAGEMENT COMMITTEE AND OTHER GOVERNANCE MATTERS
SECTION 5.1 MANAGEMENT THROUGH THE MANAGEMENT COMMITTEE. The
management of the Company is vested in a Management Committee (the "MANAGEMENT
COMMITTEE"), which will have the power and authority to manage and direct the
business and affairs of the Company under the terms and conditions of this
Agreement. The Members will appoint a Management Committee as provided in
Section 5.2. Except as otherwise expressly provided in this Agreement, the
Members will not participate in the control of the Company and will have no
right, power or authority to act for or on behalf of, or otherwise bind, the
Company. Except as expressly provided in this Agreement or required by any
non-waivable provisions of applicable Law, Members will have no right to vote on
or consent to any other matter, act, decision or document involving the Company
or its business.
SECTION 5.2 MANAGEMENT COMMITTEE.
(a) SCOPE OF RESPONSIBILITY. Except as expressly provided
herein (including, without limitation, as provided in subsections
Section 5.3(f) and Section 5.4(a), below) the Management Committee has
full, exclusive and complete control of and responsibility for the
Company's activities. Without limiting the generality of the foregoing,
the Management Committee will be specifically vested with the power to
undertake the following actions:
(1) to appoint the officers of the Company;
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(2) except as set forth to the contrary herein, to make all
decisions regarding the disposition of the Company's assets
prior to a termination or expiration of the Company, regarding
any reorganizations of the Company, and in connection with a
Qualified Public Offering or termination of the Company; and
(3) to select, remove and replace the Company's accountants
and auditors.
(b) MANAGEMENT COMMITTEE COMPOSITION. The composition of the
Management Committee will be as follows:
(1) At all times when the Initial Members comprise all of the
Members, the Management Committee will be composed of seven
members (each, a "Manager") three of whom are appointed by the
Class A Member (which appointment is subject to the approval
of the Class B Member, and such approval will not be
unreasonably withheld) (the "CLASS A MANAGERS"), three of whom
are appointed by the Class B Member (which appointment is
subject to the approval of the Class A Member, and such
approval will not be unreasonably withheld) (the "CLASS B
MANAGERS") and the seventh being the Chief Executive Officer.
The initial Managers, all of whom have been approved as set
forth above, are listed on Exhibit G and are appointed
effective as of the First Closing Date.
(2) Subject to subsection (5) below, each Manager (other than
the Chief Executive Officer) will serve on the Management
Committee until such time as he or she resigns, retires, dies
or is removed. Notwithstanding anything to the contrary
contained in subsection (1), above, Managers may be removed
with or without cause at any time by the Member who appointed
such Manager. Upon the resignation, retirement, death or
removal of any Manager, the Member who appointed such Manager
will nominate and appoint a replacement Manager pursuant to
the procedure set forth in subsection (1), above.
(3) The Chief Executive Officer will serve as a Manager during
his or her tenure in such office. However, if the Management
Committee (including all of the Class A Managers but excluding
the Chief Executive Officer) commences deliberations to
consider removing the Chief Executive Officer from such
position, the Chief Executive Officer will immediately cease
to be a Manager. Each successor Chief Executive Officer will
automatically be appointed to serve as a Manager.
(4) Upon the admission of a new Member (other than an
additional or successor Class A Member, Class B Member or
Class C Member) in accordance with the terms of this
Agreement, such new Member will be entitled to appoint such
Managers, and the Management Committee will be so
reconstituted, as is required by the terms of such new
Member's admission to the Company.
(5) Any officer of the Company (other than the Chief Executive
Officer) who is nominated and appointed to serve as a Manager
and serves as a Manager at the same time he or she serves as
an officer will be removed from his or her position as a
Manager, automatically and without the need for any action by
any Member or any other Manager, if such Person ceases to
serve as an officer of the Company for
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any reason except for an unsolicited decision by such Person
to resign as an officer, which decision is freely and
voluntarily made.
SECTION 5.3 MANAGEMENT COMMITTEE MEETINGS.
(a) REGULAR MEETING. The Management Committee will hold
regular quarterly meetings without call or notice at such time as will
from time to time be fixed by standing resolution of the Management
Committee.
(b) SPECIAL MEETINGS. Special meetings of the Management
Committee may be called by any two Managers. All meetings will be held
upon ten days' notice by mail or 72 hours' notice delivered personally
or by telephone or facsimile. A notice need not specify the purpose of
any meeting; however, a special meeting may not be called to entertain
any Unanimous Consent Item without specifying such action in the notice
of the meeting. Notice of a special meeting need not be given to any
Manager who signs a waiver of notice or a consent to holding the
meeting or an approval of the minutes thereof, whether before or after
the meeting, or who attends the meeting without protesting, prior to
its commencement, the lack of notice to such Manager. All such waivers,
consents and approvals will be filed with the Company records or made a
part of the minutes of the meeting.
(c) LOCATION OF MEETINGS. Meetings of the Management Committee
may be held at any place within or without the State of Delaware that
has been designated in the notice of the meeting or at such place as
may be approved by the Management Committee. Managers may participate
in a meeting through use of conference telephone or similar
communications equipment, so long as all Managers participating in such
meeting can hear one another. Participation in a meeting in such manner
constitutes a presence in person at such meeting
(d) PARTICIPATION BY SENIOR EXECUTIVES. The Company's Chief
Executive Officer, Chief Operating Officer, and Chief Financial Officer
may attend and participate in Management Committee meetings, but only
the Chief Executive Officer (in his or her capacity as a Manager) will
be entitled to vote therein; provided, however, that:
(1) no officer of the Company (including any officer who
simultaneously serves as a Manager of the Company) may attend
or participate in any Management Committee meeting which is
convened, in whole or in part, to discuss (or during which
Management Committee decides to discuss) the continued tenure
or possible dismissal of such officer, and
(2) no Manager may attend or participate in any Management
Committee meeting which is convened, in whole or in part, to
discuss (or during which Management Committee decides to
discuss) any breach or alleged breach of the Member that
appointed such Manager to the Management Committee, or to
discuss any other failure or alleged failure of the Member
that appointed such Manager to the Management Committee to
fulfill any of its obligations hereunder or under any
Transaction Document.
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(e) APPROVAL THRESHOLDS. Except as set forth subsection (f),
below, decisions of the Management Committee will be taken by the
simple majority of all Managers.
(f) UNANIMOUS CONSENT ITEMS. The unanimous consent of all
Managers appointed by the Class A Member and all Managers appointed by
the Class B Member given during a meeting of the Management Committee
or in a unanimous written consent will be required to take any of the
following actions (the "UNANIMOUS CONSENT ITEMS"):
(1) any amendment to, restatement of, or substitution for this
Agreement, the Certificate of Formation, or any other
organizational or charter documents that may govern the
Company from time to time;
(2) a decision to cause or allow a Bankruptcy Event to occur
with respect to the Company;
(3) acquisitions and dispositions of assets in a transaction
or a series of transactions the aggregate value of which
constitutes more than * * * percent of the Fair Market Value
of the Company's total assets, or the merger of, consolidation
with, or any other business combination involving the Company;
(4) the decision to engage in a Qualified Public Offering, the
determination of whether a proposed course of action
constitutes a Qualified Public Offering, and the plan of
action to effect the Qualified Public Offering, as described
in ARTICLE 12;
(5) in conjunction with a Qualified Public Offering, the form
and content of the Certificate of Incorporation and Bylaws of
the Resulting Corporation or the organizational documents of
any other successor entity;
(6) any issuance of any additional Membership Interests, any
repurchase of Membership Interests, and the making of any
recommendation to the Members in favor of making an Additional
Capital Call;
(7) the development and sale of products or the provision of
services by the Company * * *, except for (i) products and
* * * which need only be approved by a majority of the
Management Committee, and (ii) products and services which
have previously been approved pursuant to this subsection (f);
or
(8) any * * * of the Company.
(g) MANAGEMENT COMMITTEE WRITTEN CONSENT. Any action required
or permitted to be taken by the Management Committee may be taken by
the Management Committee without a meeting, if all of the Managers
individually or collectively consent in writing to such action. Such
action by written consent will have the same force and effect as a
unanimous vote of such Managers.
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(h) MANAGEMENT COMMITTEE AS AGENT. The Management Committee
(and each Manager and/or officer authorized by the Management Committee
to act on behalf of the Management Committee) will be an agent of the
Company, and the actions of the Management Committee (or such Managers
and/or officers) taken in such capacity and in accordance with this
Agreement will bind the Company.
(i) DELEGATION. The Management Committee may appoint, employ
or otherwise contract with any Persons for the transaction of the
business of the Company or the performance of services for or on behalf
of the Company, and the Management Committee may delegate to any such
Persons such authority to act on behalf of the Company as the
Management Committee may from time to time deem appropriate in
accordance with (h).
(j) COMPENSATION. If approved by the Management Committee, a
Manager will be entitled to reimbursement on a monthly basis from the
Company for all reasonable and properly documented out-of-pocket costs
and expenses incurred by him or her, in his or her reasonable
discretion, for or on behalf of the Company.
SECTION 5.4 OFFICERS.
(a) APPOINTMENT OF OFFICERS.
(1) On or before the First Closing Date, the Initial Members
will jointly agree upon and appoint the Company's initial
Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer.
(2) Except for the initial appointment described in subsection
(1), the Management Committee has sole discretion to appoint
the Company's Chief Financial Officer, Chief Operating Officer
and other executive officers.
(3) Except for the initial appointment described in subsection
(1), the Class A Managers (other than the Chief Executive
Officer) have sole discretion to appoint and remove the
Company's Chief Executive Officer.
(4) The Management Committee may, at any time, appoint any
other officers if it deems such appointment would beneficial
to the Company, including but not limited to, one or more
vice-presidents, a secretary and assistant secretaries. The
officers will serve at the pleasure of the Management
Committee, subject to all rights, if any, of an officer under
any contract of employment. Any individual may hold any number
of offices. The officers will exercise such powers and perform
such duties as specified in this Agreement and as may be
determined from time to time by the Management Committee.
(5) Subject to the rights, if any, of an officer under a
contract of employment, any officer may be removed, either
with or without cause, by the Management Committee. Any
officer may resign at any time by giving written notice to the
Management Committee. Any resignation will take effect on the
date of the receipt of that notice or at any later time
specified in the notice; and, unless
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otherwise specified in such notice, the acceptance of the
resignation will not be necessary to make it effective. Each
officer will serve until his or her resignation, removal,
death or inability to serve. A vacancy in any office will be
filled by the Management Committee.
(b) SALARIES OF OFFICERS. The salaries of officers and agents
of the Company will be fixed by the Management Committee.
(c) DESCRIPTIONS OF POSITIONS. The officers set forth below
will, unless modified by the Management Committee, have the duties and
responsibilities described below:
(1) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer will
have ultimate oversight over the Company's operations and
staff and the creation and communication of the Company's
policies, will report directly to the Management Committee,
and will have such other powers and duties as the Management
Committee may prescribe.
(2) CHIEF OPERATING OFFICER. The Chief Operating Officer will
manage the Company's operations on a day-to-day basis and be
responsible for implementation of the Company's policies, will
report directly to the Chief Executive Officer, and will have
such other powers and duties as the Management Committee may
prescribe.
(3) CHIEF FINANCIAL OFFICER. The Chief Financial Officer will
manage the Company's finances on a day-to-day basis, manage
the Company's capital, and oversee the Company's staff, will
report directly to the Chief Executive Officer and will have
such other powers and duties as the Management Committee may
prescribe.
(d) SIGNING AUTHORITY OF OFFICERS. Any officer, acting alone,
is authorized to endorse checks, drafts, and other evidences of
indebtedness made payable to the order of the Company, but only for the
purpose of deposit into the Company's accounts. All checks, drafts,
instruments and contracts obligating the Company to pay money in an
amount of less than $250,000, with respect to operating expenses, or
$500,000, with respect to capital expenditures or obligations, and may
be signed by any one officer designated by the Management Committee as
generally having signatory authority, acting alone. All checks, drafts,
instruments and contracts obligating the Company to pay money in
amounts in excess of the foregoing amounts must be signed on behalf of
the Company by any two such officers acting together. The foregoing
restrictions may be modified by the Management Committee in its
discretion.
ARTICLE 6
BUSINESS PLAN
SECTION 6.1 ANNUAL BUSINESS PLAN. For each Business Plan Period, the
Management Committee will develop and approve an annual Business Plan. The
Business Plan will provide for
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operations through the next Fiscal Year. The Business Plan for the Initial
Business Plan Period of the Company is attached to this Agreement as Exhibit F.
SECTION 6.2 APPROVAL OF PROPOSED BUSINESS PLAN. At least 90 days prior
to the end of the Initial Business Plan Period and each succeeding Business Plan
Period thereafter, the Chief Executive Officer and Chief Financial Officer will
cause to be prepared and presented to the Management Committee a proposed
Business Plan for the next succeeding Business Plan Period (the "APPLICABLE
BUSINESS PLAN PERIOD") for consideration and approval by the Management
Committee. The proposed Business Plan will, among other things (including any
items requested by the Management Committee), contain:
(a) planned commitments, leases and capital expenditures for
such Business Plan Period, and all such commitments, leases and capital
expenditures which will extend into subsequent Business Plan Periods;
(b) profit and loss, balance sheet and Cash Flow projections
for such Business Plan Period;
(c) borrowings planned during such Business Plan Period;
(d) projected financial requirements and results of
activities, if any, to be undertaken by the Company during such
Business Plan Period;
(e) the proposed number of employees of the Company during
such Business Plan Period and the proposed cash compensation and
estimated benefit expense during such Business Plan Period;
(f) any other material information relating to the operating
and capital budgets of the Company for such Business Plan Period;
(g) a marketing assessment and sales plan for such Business
Plan Period; and
(h) a new product/business expansion strategic plan.
ARTICLE 7
RELATIONSHIP BETWEEN THE MEMBERS AND THE COMPANY
SECTION 7.1 THE CLASS B MEMBER'S RELATIONSHIP TO THE COMPANY.
(a) ***, unless the Class A Member otherwise agrees in
writing, the Class B Member will not, and will cause each of its
Affiliates (including, but not limited to, the Class C Member) to not,
engage in the provision of any products and/or services comprising all
or any part of the Business related to the Initial Scope of Services.
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(b) The Class B Member is specifically permitted to continue
to engage in the provision of services relating to * * *.
(c) The Class B Member is specifically permitted to provide
services relating to * * *, but is prohibited from * * *. For purposes
of this subsection:
(1) "Knowledge Management" means the harnessing,
identification, organization and use of business data to
strengthen a customer's competitive position by enabling
customers to manage their raw business data to create valuable
business "knowledge" that enhances the performance of their
organization. Knowledge Management services include program
design and development, building systems to capture data and
turn it into knowledge, and designing and building the
supporting systems architecture,
(2) "Management and Business Consulting" means consulting
services comprised of two specialties: strategy consulting,
which focuses on improving a customer's performance by helping
the customer align its business strategy to its industry's
particular business condition, and operations consulting,
which assesses the efficiency of the customer's operational
processes and alignment with its business strategy,
(3) "Systems Integration Services" means services which allow
or cause proprietary and commercial applications to share and
exchange information and to participate in each other's
processes through a variety of processes, including the
creation of a single user interface for a collection of
applications, and the design of software bridges and
translators which make data in one format accessible to
programs which read or access data in a different format,
(4) "World Class Finance" means the implementation of industry
best practices to manage the finance and accounting functions
of operations and to improve the ability of the customer to
measure and analyze operational performance. World Class
Finance services are applicable to areas such as budgeting,
planning, decision support, cost management and the
integration of financial and other customer operations and
analysis systems, and
(5) "World Class Human Resources" means the implementation of
industry best practices to manage the human resource side of
customers' operations, analyze and integrate their human
resources, payroll, retirement benefits, insurance benefits
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and welfare benefits and to improve the effectiveness, quality
and cost-efficiency of their human resources organization
through technology. World Class Human Resources services
include the valuation of the customer's organizational
structure, improving the effectiveness of the individual human
resources functions, systems integration and the
implementation of combined human resources functions.
(d) The Class B Member will, and will cause each of its
Affiliates (including, but not limited to, the Class C Member):
(1) to assign or transfer all of its existing and future
customers of products and/or services comprising all or part
of the Business related to the Initial Scope of Services to
the Company, and to make commercially reasonable efforts to
cause such customers to assent or consent to the substitution
of the Company as their provider of products and services that
constitute the Business related to the Initial Scope of
Services, and
(2) to not enter into future relationships or agreements with
customers which relate to any aspect of the Business related
to the Initial Scope of Services, but which prohibit or
require the customer's consent to transfer such agreements to
the Company.
(e) The Class B Member agrees and on behalf of its Affiliates
agrees that the Company will be the exclusive provider to the Class B
Member and its Affiliates of * * *.
SECTION 7.2 THE CLASS A MEMBER'S RELATIONSHIP TO THE COMPANY.
(a) * * * and unless the Class B Member otherwise agrees in
writing, the Class A Member will not, and will cause each of its
Affiliates to not:
(1) provide, within * * *, an * * * to end users; or
(2) take an equity position in any Person that directly
competes with the Company * * * (other than an investment not
in excess of 5% of any Person the securities of which are
listed on a nationally recognized securities exchange).
(b) The Class A Member is specifically permitted to provide to
any customer (including competitors of the Company), without
limitation, broadband and other telecommunications services, hosting
activities, communications and information infrastructure construction
and management, and to participate in or provide distribution channels
for products and services, * * *, during and beyond the Exclusivity
Period and the Term.
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during and beyond the Exclusivity Period and the Term.
(c) * * *, the Class A Member will name the Company as the
provider of products and services which constitute the Business related
to the Initial Scope of Services for each of the Class A Member's
customers who purchase such products and services from the Class A
Member and * * *.
SECTION 7.3 SUPPORT OBLIGATIONS.
(a) If the Class B Member or any of its Affiliates develop or
obtain rights to products or services that constitute the Business or
enhancements to the Business related to the Initial Scope of Services,
the Class B Member will promptly offer to sublicense such rights to the
Company or cause the Company to be a permitted participant in such
rights.
(b) If the Class A Member or any of its Affiliates develop or
obtain rights to products or services that constitute the Business or
enhancements to the Business related to the Initial Scope of Services,
the Class A Member will promptly offer to sublicense such rights to the
Company or cause the Company to be a permitted participant in such
rights; provided that the Class A Member will not be required to take
any action that would cause it to violate (i) any applicable Law, or
(ii) any provision of any contract or agreement to which the Class A
Member or any of its Affiliates is a party or by which any such Person
or its assets is bound.
SECTION 7.4 MEMBERS AS PROVIDERS TO THE COMPANY.
(a) Each Member, on an ongoing basis, will offer upon request
to provide to the Company any and all products or services which it
provides to its customers in the/ ordinary course of business. In
offering products or services to the Company, each Member will offer
such products and services * * * (for tariffed products or services),
or * * * (for all other products or services); provided, however, that
products and services to be provided by the Class A Member under the
agreements referenced in Section 2.4(4) and Section 2.4(5) will not be
subject to this paragraph until such agreements have expired; and
provided, further, that in no event will the terms of this subsection
(a) require a Member to offer or provide * * *.
(b) The Management Committee will make all decisions on the
Company's purchase of products and services on the basis of the Terms
of Sale of the transaction as a whole.
(1) If the Management Committee concludes that the Terms of
Sale, taken as a whole, of a Member's offer to provide to the
Company certain products or services that the Company
currently intends to purchase are, taken as a whole, at
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least as favorable as those offered to the Company by each
other Person (including another Member) that has offered to
provide the same or similar products or services to the
Company, then the Management Committee will designate such
Member as the provider of such product or service, even if the
discounted price, taken alone, offered by such Member to the
Company for providing such product or service is not lower
than the price offered by such other Person.
(2) If the Management Committee determines that the Terms of
Sale offered to the Company by a third party are the most
favorable to the Company, prior to awarding a contract for the
purchase of products or services to a third party, a Member
who had bid to provide such products or services will have a
right of first refusal to provide them on Terms of Sale
identical to those offered by such third party.
SECTION 7.5 SALES AND DISTRIBUTION CHANNELS.
(a) Each Member, on an ongoing basis, will cause sales and
distribution services that such Member and its Affiliates provide in
relation to the sale and distribution of such Member's and its
Affiliates' own products and services to be provided to the Company
according to the pricing described in Section 7.4(a), and otherwise on
customary terms and conditions. All sales and marketing efforts on
behalf of the Company's products and services will be subject to the
approval of the Management Committee.
(b) Each Member, together with the Company, will develop a
sales and marketing plan regarding the use of such Member's sales and
distribution channels and other resources to market and sell the
Company's products and services that is acceptable to such Member and
to the Company, and such plan will be subject to periodic review and
adjustment.
(c) Each Member will, upon the request of the Company, provide
to the Company all information regarding such Member's agreements with
third party providers of sales and distribution services (to the extent
such services are reasonably related to the Business) that is not
subject to a contractual or other obligation that would prohibit the
disclosure of such information to the Company. Upon the request of the
Company, each Member will exercise reasonable commercial efforts to
cause any one or more third-party providers of sales and distribution
services to such Member to offer the same or similar services to the
Company upon the terms and conditions then enjoyed by such Member.
SECTION 7.6 NON-SOLICITATION. Without the written consent of the other
Members, none of the Members may, prior to the first anniversary of a Qualified
Public Offering, solicit for employment any employee of another Member who is
providing services to the Company in accordance with an Employee Loan-Out
Agreement prior to the Qualified Public Offering, or any employee of the Company
following a Qualified Public Offering. The Members will take such actions during
the term of existence of the Company as are necessary to preserve the continuity
of services to the Company by the individuals listed on Exhibit B-1, Exhibit B-2
or Exhibit B-3 and any permitted substitutes for such individuals.
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SECTION 7.7 FUTURE LICENSES. Until a Qualified Public Offering, each
Member will use its commercially reasonable best efforts to cause any future
license for an individual software application within the Application Categories
to include the Company as an additional license or to otherwise make such
application available to the Company for use in its Business.
ARTICLE 8
OWNERSHIP AND CONTROL OF INTELLECTUAL PROPERTY
SECTION 8.1 INTELLECTUAL PROPERTY CONTRIBUTED BY THE CLASS B MEMBER.
(a) The Class B Member hereby grants a worldwide, irrevocable,
perpetual, non-assignable or sub-licensable, royalty-free license under
all of the Class B Member's and the Class C Member's intellectual
property to the Company for the use of the methodologies, templates and
software that are listed on Exhibit A-2 (collectively, the
"TEMPLATES").
(b) The Class B Member will grant a worldwide, irrevocable,
perpetual, non-assignable or sub-licensable, royalty-free license to
all improvements, modifications, and extensions of any part of the
Templates, and all products constituting successors to any part of the
Templates (or to any part of the Templates, as improved, modified, or
extended), promptly after each such improvement, modification,
extension or successor is employed, sold, or otherwise distributed by
the Class B Member or its Affiliates (including the Class C Member) on
other than an experimental or test basis. For purposes of this Section
8.1, "beta testing" (or any similar term denoting an advanced stage of
evaluation preceding a general release or use of a Template or other
item of software) will constitute a distribution on "other than an
experimental or test basis."
(c) Methodologies, templates or items of software other than
those listed on Exhibit A-2 that are owned or controlled by Class B
Member or its Affiliates (including the Class C Member) and are
reasonably related to the Business will, upon the request of the
Company, be licensed to the Company on terms substantially similar to
those governing the license of the Templates described in subsection
(a), above, for a fee computed according to the method described in
Section 7.4(a) to the extent offered or intended to be offered to third
party customers and otherwise based on an at least *** discount to the
fair market value of such license rights.
SECTION 8.2 INTELLECTUAL PROPERTY CONTRIBUTED BY THE CLASS A MEMBER.
(a) Pursuant to the IP OSS/BSS Sublicense Agreement, the Class
A Member will grant an irrevocable, non-assignable or sublicensable
license to the Company for the use of the IP OSS/BSS. With respect to
the Company's use of the IP OSS/BSS for its internal functions, such
license will be on a royalty-free basis until the earlier of a
Qualified Public Offering and the expiration of the Term. From and
after the Qualified Public Offering, such license will be at market
rates to be negotiated by the Class A Member and the Company. With
respect to the Company's use and resale of the IP OSS/BSS as a
component of the Company's products and services for use by the
Company's Customers,
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such license will require the payment of a license fee to the Class A
Member equal to * * * of the revenues received by the Company related
to that use (or a reasonable allocation thereof, as determined in good
faith by the Management Committee, if the applicable revenues are not
calculated separately by function).
(b) Pursuant to the Trademark License Agreement, the Class A
Member will grant an irrevocable, non-assignable or sublicensable
license to the Company, on a royalty-free basis, on terms and
conditions set forth therein.
SECTION 8.3 INTELLECTUAL PROPERTY DEVELOPED BY THE COMPANY.
(a) All methodologies, templates, software, and other
intellectual property developed by the Company or its agents (except
for the Templates and any other intellectual property licensed to the
Company under Section 8.1 or Section 8.2), will be and remain the
property of the Company, and the Management Committee will take all
actions necessary or useful, in its judgment, to protect such
intellectual property.
(b) * * *, the Company will, upon request of a Member, * * *
to each Member which * * * will require * * *.
(c) The Company will not assign or license any methodologies,
templates, software, or other intellectual property developed by the
Company or its agents in which the Company has ownership rights of
which the primary component, in the reasonable judgment of the
Management Committee, are instruction sets or other computer code that
are copied from or are directly derived (i.e., without a significant
investment of effort or originality) * * * one of the Initial Members
without the approval of such Initial Member.
(d) Each Member, upon request of the Company, will grant to
the Company a non-assignable or sub-licensable license of any or all of
the methodologies, templates, software, and other intellectual property
developed by such Member or its agents that are directly or indirectly
derived from intellectual property licensed to such Member by the
Company.
ARTICLE 9
DISTRIBUTIONS, TAX MATTERS, AND ALLOCATIONS OF PROFITS AND LOSSES
SECTION 9.1 DISTRIBUTION OF CASH FLOW. Distributions will be made to
Members in accordance with their Percentage Interests in such amounts and at
such times as determined by the Management Committee.
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 9.2 ALLOCATIONS OF NET INCOME AND NET LOSSES. All allocations
of net income, net losses and any other items of income, gain, loss, deductions
and credit of the Company will be made in accordance with the provisions of
Exhibit D hereto.
SECTION 9.3 TAX MATTERS FOR THE COMPANY HANDLED BY TAX MATTERS MEMBER.
The Tax Matters Member is authorized and required to represent the Company (at
the Company's expense) in connection with all examinations of the Company's
affairs by tax authorities, including administrative and judicial proceedings,
and to expend Company funds for professional services and costs associated
therewith. The Tax Matters Member will have the authority and responsibility to
arrange for the preparation of, and timely file, the Company's tax returns. The
Tax Matters Member will be entitled to receive reimbursement of its reasonable
out-of-pocket costs and expenses for such services.
ARTICLE 10
EXCULPATION AND INDEMNIFICATION; OTHER MATTERS
SECTION 10.1 PERFORMANCE OF DUTIES; LIABILITY OF MEMBERS. Except as
provided in this Agreement, the Members will not be liable to the Company or to
any other Member for any loss or damage sustained by the Company or a Member,
unless the loss or damage will have been the result of fraud, deceit, gross
negligence, reckless or intentional misconduct, or a knowing violation of Law by
such Member. The Managers will perform their managerial duties in good faith, in
a manner they reasonably believe to be in the best interests of the Company and
its Members, and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances.
SECTION 10.2 EXCULPATION AND INDEMNIFICATION BY THE COMPANY.
(a) The Company will indemnify any Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that such
Person is or was a Member, Manager, officer, employee or other agent of
the Company or that, being or having been such a Member, Manager,
officer, employee or agent, such Person is or was serving at the
request of the Company as a manager, director, officer, employee or
other agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise (all such persons
being referred to hereinafter as an "agent"), to the fullest extent
permitted by applicable Law in effect on the date hereof and to such
greater extent as applicable Law may hereafter from time to time
permit. The Management Committee is authorized, on behalf of the
Company, to enter into indemnity agreements from time to time with any
Person entitled to be indemnified by the Company hereunder, upon such
terms and conditions as the Management Committee deems appropriate in
its business judgment.
(b) The Company will have the power to purchase and maintain
insurance on behalf of any Person who is or was an agent of the Company
against any liability asserted against such Person and incurred by such
Person in any such capacity, or arising out of such Person's status as
an agent, whether or not the Company would have the power to
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
indemnify such Person against such liability under the provisions of
Section 10.2 or under applicable Law.
SECTION 10.3 INDEMNIFICATION BY THE INITIAL MEMBERS. Each Initial
Member (an "INDEMNIFYING PARTY") will remain fully liable to, and will indemnify
and hold harmless, the Company and each other Initial Member and such Persons'
directors, officers, shareholders, members, agents, representatives and
Affiliates (collectively, the "INDEMNIFIED PARTIES") from and against all
claims, losses, damages (including loss of profits and consequential damages
awarded to a third party, if any, but excluding loss of profits and
consequential damages otherwise suffered by the Indemnified Parties), expenses,
judgments, costs and liabilities (including reasonable attorneys' fees and
costs) incurred by the Indemnified Parties, or any of their respective
Affiliates, arising from (1) any breach of the Indemnifying Party's, or any of
its Affiliate's, representations or warranties under this Agreement or any of
the Transaction Documents, or (2) all obligations or liabilities that result
from or relate to the Initial Contributions that are not expressly assumed by
the Company.
ARTICLE 11
TRANSFER OF INTERESTS
SECTION 11.1 TRANSFER OF INTERESTS.
(a) Without the consent of each Member Group and except as
expressly provided in this Agreement, no Member may sell, assign,
pledge or otherwise transfer all or any portion of its Membership
Interest or Economic Interest (a "TRANSFER"). Any purported Transfer in
violation of this ARTICLE 11 will be void.
(b) For purposes of this Section 11.1, but subject to Section
11.2, any sale, assignment, pledge or other transfer of any of the
capital stock (or any other securities) of the Initial Class C Member
by the Initial Class B Member will constitute a sale of a portion of
the Initial Class B Member's Membership Interest.
SECTION 11.2 PERMITTED TRANSFERS.
(a) A Transfer by a Member to its ultimate parent entity or to
a wholly-owned direct or indirect subsidiary of its ultimate parent
entity is permitted, except that the Initial Class B Member may not
make such a Transfer until such ultimate parent company is changed
pursuant to paragraph (b) below.
(b) The Initial Class B Member is expressly allowed to
contribute all of the assets of its consulting division, "KPMG
Consulting" to a newly created corporation, including the Initial Class
B Member's Membership Interest in the Company, provided, however, that
the Initial Class B Member must have caused, simultaneously with or
prior to such contribution:
(1) all assets relating to the Initial Class B Member's
participation in the Company, including but not limited to all
products and services provided to or acquired from
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
the Company and all intellectual property rights licensed to
or licensed from the Company, to be simultaneously and
irrevocably sold, assigned, and transferred to such newly
created corporation;
(2) the Initial Class B Member and such newly created
corporation to have executed and delivered an assignment and
assumption agreement, reasonably satisfactory in form and
content to the Company, by which the initial Class B Member
will assign all rights under this Agreement and the
Transaction Documents to which the Initial Class B Member is a
party to such newly created corporation, and such newly
created corporation will have assumed all liabilities and
obligations under this Agreement and the Transaction Documents
to which the Initial Class B Member is a party; and
(3) all shares of securities of the Initial Class C Member,
beneficially held or held of record by the Initial Class B
Member to be simultaneously and irrevocably sold, assigned and
transferred to such newly-created corporation.
Upon the satisfaction of the conditions set forth in the immediately
preceding proviso, the Membership Interest of the Initial Class B
Member will be transferred to such corporation and such corporation
will be admitted to the Company as a substitute Member without further
action by the Management Committee or the Members.
(c) Sales, transfers, assignments, or pledges of interests in
a Member's ultimate parent company or of any intermediate parent
company will not constitute sales, transfers, assignments, or pledges
of any interest in the Company if, immediately following such event all
assets relating to the Company and such Member's obligations to the
Company, are owned or controlled by the resulting ultimate parent
company of such Member.
SECTION 11.3 RIGHTS OF ASSIGNEES. Until such time, if any, as a
transferee of any permitted Transfer under Section 11.1 or Section 11.2 is
admitted to the Company as a substitute Member, such transferee will be only a
holder of an Economic Interest.
SECTION 11.4 ACTIONS FOLLOWING TRANSFERS. Notwithstanding any other
provision of this Agreement, the Company will not recognize any Transfer of an
Economic Interest or Membership Interest unless all costs incurred by the
Company to effect such Transfer have been paid by the transferor and there is
filed with the Company a written and dated notification of such Transfer, in
form and substance satisfactory to the Company, executed and acknowledged by the
transferor and the transferee and such notification (i) contains the agreement
by the transferee to be bound by all the terms and conditions of this Agreement
and (ii) represents that such Transfer was made in accordance with all
applicable securities Laws and regulations.
ARTICLE 12
INITIAL PUBLIC OFFERING
SECTION 12.1 APPROVAL OF QUALIFIED PUBLIC OFFERING. The Management
Committee, subject to Section 5.3(f), must unanimously approve a Qualified
Public Offering of the securities of the Company (or of a Resulting Corporation,
as defined below). Such approval must include
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an approval of the Company's plan to effect the Qualified Public Offering, which
plan must include a determination, based upon consultation with the Company's
tax counsel as to the most tax-favored form of reorganization and with a
proposed managing underwriter or underwriters for such Qualified Public Offering
(including questions as to whether to contribute the assets of the Company, or
their Membership Interests, to a Resulting Corporation).
SECTION 12.2 CONVERSION TO CORPORATION. If the Company's plan to
initiate a Qualified Public Offering requires that the Company be restructured
into a corporation (the "RESULTING CORPORATION"), then, subject to the approval
of the Management Committee pursuant to Section 5.3(f) and Section 12.1:
(a) the Resulting Corporation will be organized and
incorporated under the Laws of the State of Delaware;
(b) subject to Section 12.4, the Certificate of Incorporation
and Bylaws of the Resulting Corporation will include standard and
customary provisions as will then be applicable to public corporations
incorporated under the Laws of the State of Delaware, and such other
provisions as will have been included in such plan or which may later
be agreed upon by the Management Committee pursuant to Section 5.3(f);
and
(c) the Members and the Company will negotiate in good faith
with the intent of entering into a shareholders' agreement which will
contain customary registration rights, rights of first offer, "drag
along," and "tag along" rights, which each Initial Member will enjoy as
long as their ownership percentages of the Company are in excess of
thresholds to be specified therein.
SECTION 12.3 CONSIDERATIONS REGARDING THE CLASS A MEMBER. Prior to a
Qualified Public Offering, the Members will consult with each other and
evaluate, in good faith, the viability under then-existing market conditions of
any options available to the Members that would allow the Class A Member to
retain the ability to consolidate the financial results of the Resulting
Corporation with itself under GAAP which are proposed by the Class A Member and
will cooperate with the Class A Member in implementing any reasonable mechanism
which is proposed by the Class A Member.
SECTION 12.4 EQUITY AND VOTING.
(a) Upon formation of the Resulting Corporation, the Members'
Membership Interests will be converted into the outstanding shares of
separate classes of stock, with an additional class of stock designated
as shares to be sold to the public in a Qualified Public Offering.
Subject to Section 12.3, the separate classes of stock of the Resulting
Corporation will have equivalent rights and designations except for
voting. The number of shares of the relevant class to be issued to each
Member will be calculated to maintain the relative ownership ratio of
the Members immediately preceding the formation of the Resulting
Corporation with pro rata dilution for the number of shares to be sold
to the public.
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(b) The voting rights will be allocated among the classes (1)
to ensure, prior to the Qualified Public Offering, that each Member's
rights with respect to its control over certain transactions and
certain aspects of the management of the business (including the
selection and appointment of Directors) will conform to the control
each Member enjoyed over such items (including the selection and
appointment of Managers) prior to such merger or other combination, and
(2) to preserve, after the Qualified Public Offering, those of the
Members' rights which explicitly survive the Qualified Public Offering,
including the right to elect a certain number of directors of the
Company, which number will be agreed to in good faith by the Members at
the time of formation of the Resulting Corporation.
SECTION 12.5 EFFECT OF OPERATING AGREEMENT.
Upon a Qualified Public Offering, unless otherwise specified therein,
the provisions of ARTICLE 6 and ARTICLE 7 will cease to have any effect.
ARTICLE 13
TERMINATION EVENTS, REMEDIES, DISSOLUTION AND WINDING UP
SECTION 13.1 TERM.
(a) The Company will have a *** year term (the "TERM").
(b) Each Member agrees that the Company will expire upon the
expiration of the Term, and its assets will then be distributed
pursuant ARTICLE 14.
SECTION 13.2 RELATIONSHIP OF CLASS B MEMBER AND CLASS C MEMBER.
For purposes of this ARTICLE 13, a default or breach by, or an
insolvency of, the Class B Member or the Class C Member will constitute a
default or breach by, or an insolvency of (as applicable) the Member Group
comprising the Class B Member and the Class C Member.
SECTION 13.3 EARLY TERMINATION. The Company may be terminated prior to
the end of the Term under the following circumstances:
(a) The election of the non-breaching Initial Member Group,
upon the occurrence of a Tier I Event;
(b) The election of the non-breaching (or solvent) Member
Group, upon the occurrence of a Tier II Event; or
(c) A Tier III Event; provided, however, that for a Tier III
Event to occur, the Member Group which believes that one of the events
listed in the definition of Tier III Event (except with respect to a
Deadlock, which is not subject to this proviso) has occurred and
determines that it may wish to exercise the remedies described in
Section 13.7, below, will deliver written notice thereof to the other
party and engage in good faith discussions for a 30 day period to
determine if a reasonable alternative can be agreed to.
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
If, at the end of the 30 day period, the Member Groups have not agreed
upon a reasonable alternative to such remedies, the Member Group that
delivered the notice may proceed to exercise any remedies available to
it.
SECTION 13.4 BUY-OUT UPON A TIER I EVENT.
(a) Upon the occurrence of a Tier I Event, the non-breaching
Member Group will have the right to cause each Member Group to choose
one appraiser, and the two appraisers so chosen will jointly agree on a
third appraiser.
(b) The three appraisers will each, within 30 days of their
respective appointment, independently calculate the Fair-Market Value
of the Company, and of each Member Group's Membership Interest(s). If
the breaching Member Group does not appoint an appraiser within 30 days
after the appointment of the non-breaching Member Group's appraiser,
the non-breaching Member Group's appraiser will determine the Fair
Market Value of the Company and of each Member Group's Membership
Interest(s) and the purchase and sale procedure described in Section
13.7 below will be based upon such appraiser's determination. If any
appraiser presents his or her appraisal as a range of values, the mean
of the upper and lower values of such range will constitute such
appraiser's "appraisal" for purposes of this ARTICLE 13.
(c) Following such calculation, the non-breaching Member Group
will have the right:
(1) to purchase the breaching Member Group's Membership
Interest(s), for a cash price which is * * * of the average of
the two closest appraisals of the Fair Market Value of the
breaching Member Group's Membership Interest(s), or
(2) to cause the breaching Member Group to purchase the
non-breaching Member Group's Membership Interest(s), for a
cash price which is * * * of the average of the two closest
appraisals of the Fair Market Value of the non-breaching
Member Group's Membership Interest(s), or
(3) to terminate the purchase and sale process.
(d) The exercise of the above remedy for a Tier I Event is
solely in the discretion of the non-breaching Member Group and the
breaching Member Group will not have the right (1) to cause a buy-out
or termination of the Company because of a failure of the non-breaching
Member Group to cause the determination discussed above to be made, or
(2) to initiate a transfer of Membership Interest(s)s by either Member
Group after such a determination has been made.
SECTION 13.5 BUY-OUT UPON A TIER II EVENT.
(a) Upon the occurrence of a Tier II Event, the non-breaching
(and solvent) Member Group may make a written request of the breaching
(or insolvent) Member Group directing the breaching (or insolvent)
Member Group to calculate a cash price at which it would sell its
Membership Interest(s) to the non-breaching (and solvent) Member
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Group. The breaching (or insolvent) Member Group will provide the
results of such calculation in a written notice delivered to the
non-breaching (and solvent) Member Group within 30 days of the date of
the written request.
(b) The non-breaching (and solvent) Member Group will have 30
days from the date of receipt of such notice to notify the breaching
(or insolvent) Member Group of (i) its agreement to purchase the
breaching (or insolvent) Member Group's Membership Interest(s) for the
price indicated in such notice, (ii) if the other Member Group has
breached but is solvent, its decision to sell its own Membership
Interest(s) to the breaching Member Group, on the terms and conditions
for the purchase of the breaching Member Group's Membership Interest(s)
specified in the notice received from the breaching Member Group,
except that if the Member Groups' Membership Interest(s)s are unequal,
the price will be adjusted appropriately by the agreement of both
Member Groups; provided, however, that if the Member Groups are unable
to agree upon an appropriate adjustment, an appraisal of only the Fair
Market Value of the premium or discount attributable to the difference
in equity ownership levels will be carried out at the election of
either Member Group pursuant to the procedure set forth in Section
13.4(b).
(c) The exercise of the above remedy for a Tier II Event is
solely in the discretion of the non-breaching (and solvent) Member
Group and the breaching (or insolvent) Member Group will not have the
right to cause a purchase or sale of any Membership Interest(s)s or a
termination of the Company because of a failure of the non-breaching
(and solvent) Member Group to cause the determination discussed above
to be made, or to initiate a purchase and sale of a Membership
Interest(s) by either Member Group after such a determination has been
made.
SECTION 13.6 BUY-OUT UPON A TIER III EVENT.
(a) Upon the occurrence of a Tier III Event (except for a
change in applicable Law requiring a Member Group to dispose of or
transfer any equity interest in the Company without respecting the
approval rights of the other Member Group provided herein):
(1) Either Member Group may give written notice to the other
Member Group of its intent to purchase all, but not less than
all, of such other Member Group's Membership Interest(s) for a
cash price and on the other terms and conditions specified in
its notice (the "OFFERING NOTICE").
(2) Such other Member Group will have 30 days from the date of
such notice to notify the offering Member Group of (i) its
agreement to sell its Membership Interest(s) to the offering
Member Group for a cash price and on the other terms and
conditions specified in its notice, or (ii) its desire to
purchase the offering Member Group's Membership Interest(s),
on the terms and conditions specified in the Offering Notice,
except that if the Member Groups' interests are unequal, the
price will be adjusted appropriately by the agreement of both
Member Groups; provided, however, that if the Member Groups
are unable to agree upon an
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appropriate adjustment, an appraisal of only the Fair Market
Value of the premium or discount attributable to the
difference in equity ownership levels will be carried out at
the election of either Member Group pursuant to the procedure
set forth in Section 13.4(b). Failure to respond to the
offering Member Group's original notice within the 30-day
period will be deemed an election to sell.
(b) Upon the occurrence of a Tier III Event caused by a change
in applicable Law requiring a Member Group to dispose of or transfer
any portion of its Membership Interest(s) without respecting the
approval rights of the other Member Group provided herein, the Member
Group which is not required to sell its Membership Interest(s) will
have a right of first refusal to purchase the interest of the other
Member Group in the Company as follows:
(1) If the selling Member Group has received a bona fide
third-party offer for the purchase of its Membership
Interest(s), the selling Member Group will send a written
notice thereof to the other Member Group and the Company,
setting forth in reasonable detail the terms and conditions of
the offer to purchase the selling Member Group's Membership
Interest(s), and the identity of the proposed purchaser. The
other Member Group will have the right of first refusal to
purchase all, but not less than all, of such selling Member
Group's Membership Interest(s) on the same terms and
conditions of the offer described in the notice sent by such
selling Member Group.
(2) Such right of first refusal will terminate as to such
proposed sale unless, within thirty days after the selling
Member Group gave its notice, the selling Member Group has
received a notice from the other Member Group of its intent to
purchase such offered Membership Interest(s). If no such
notice is delivered by the other Member Group within such
period, the selling Member Group will be free for a period of
ninety days thereafter, to consummate the proposed sale to the
identified third party or to any other third party, subject to
the approval of the identity of such third party by the other
Member Group, which approval will not be unreasonably
withheld, in each case, on terms and conditions no less
favorable to the selling Member Group than those set forth in
the aforesaid notice.
SECTION 13.7 BUY/SELL PROCEDURE.
(a) The closing (the "CLOSING") of a purchase and sale
transaction under this ARTICLE 13 will be held on the 90th day after
the price is determined as set forth for each event described above,
the last appraisal is completed and the results thereof are furnished
to the Member Groups (the "CLOSING DATE").
(b) At the Closing,
(1) the Member Group selling its Membership Interest(s) (the
"SELLER") will deliver to the Member Group purchasing the
Seller's Membership Interest(s) (the "BUYER") a duly executed
assignment of its Membership Interest(s) and will also, upon
the request of the Buyer, concurrently therewith (or at any
time and from
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
time to time thereafter) execute and deliver such other
documents and records as the Buyer determines are reasonably
necessary or desirable to conclude the Closing;
(2) the Buyer will deliver to the Seller cash in the full
amount of the purchase price (or, in the case of a purchase
and sale pursuant to Section 13.4, cash in the amount of at
least *** of the amount of the purchase price and an
executed note for the remainder of the purchase price due
payable in equal quarterly installments of principal with
accrued interest, and bearing interest at the rate per annum
of *** basis points above the referenced rate of the Bank of
America as in effect on the date of such sale, secured by the
non-breaching Member Group's Membership Interest(s), along
with such other security documents (including without
limitation a UCC-1 financing statement), each in a form
reasonably acceptable to the other Member Group); and
(3) if the Seller's Membership Interest(s) is subject to any
Encumbrance, the same will constitute a default and the Buyer
may elect (i) to cause the purchase price (or a portion
thereof) to be applied to discharge such Encumbrance, (ii) to
take the Seller's Membership Interest(s) subject to such lien,
claim or Encumbrance and to reduce the purchase price
otherwise payable to the Seller by the amount of such
Encumbrance, or (iii) to terminate the purchase and sale
proceedings under this Section 13.7 because of the existence
of such Encumbrance and in such event pursue any and all
remedies available at Law and equity.
(c) Notwithstanding anything in this Agreement to the
contrary, the Buyer will be entitled to designate any Affiliate or
third party to be the transferee of all or any portion of the Seller's
Membership Interest(s), or to obtain financing from any third party
with respect to such purchase, provided that, except in the case of a
purchase and sale pursuant to Section 13.4, the foregoing will not
delay the Closing of any sale and purchase transaction contemplated by
this Article. The reasonable costs of the Closing will be divided
equally between the Buyer and the Seller (except in the case of a
purchase and sale pursuant to Section 13.4, in which case the full
reasonable costs of the Closing will be paid by Seller), provided that
each of Buyer and Seller will bear its own attorneys' fees and costs.
ARTICLE 14
DISSOLUTION
SECTION 14.1 EVENTS OF DISSOLUTION. The Company will be dissolved, its
assets will be disposed of, and its affairs wound up upon the first to occur of
the following:
(a) the expiration of the Term of this Agreement;
(b) the entry of a decree of judicial dissolution pursuant to
the Act;
(c) the unanimous decision of the Management Committee;
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(d) the sale of all or substantially all of the assets of the
Company; and
(e) an election by the Management Committee to dissolve
pursuant to Exhibit E-2.
SECTION 14.2 CERTIFICATE OF DISSOLUTION. As soon as possible following
the occurrence of any of the events specified in Section 14.1, the Management
Committee will cause to be executed, or if the event causing dissolution is that
specified in Section 14.1(b), the Member overseeing the winding up of the
Company's affairs pursuant to Section 14.3 will execute a Certificate of
Dissolution in such form as will be prescribed by the Delaware Secretary of
State and file the Certificate as required by the Act.
SECTION 14.3 WINDING UP. Upon the occurrence of any event specified in
ARTICLE 14, the Company will continue solely for the purpose of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the claims
of its creditors. The Management Committee will be responsible for overseeing
the winding up and liquidation of the Company, will take full account of the
liabilities of the Company and its assets, will either cause its assets to be
sold or distributed, and if sold as promptly as is consistent with obtaining the
Fair Market Value thereof, will cause the proceeds therefrom, to the extent
sufficient therefor, to be applied and distributed as provided in Section 14.4.
The Person(s) winding up the affairs of the Company will give written notice of
the commencement of winding up by mail to all known creditors and claimants
whose addresses appear on the records of the Company. The Person(s) winding up
the affairs of the Company will be entitled to reasonable compensation for such
services.
SECTION 14.4 PAYMENT OF LIABILITIES AND LIQUIDATING DISTRIBUTIONS UPON
DISSOLUTION. After determining that all known debts and liabilities of the
Company in the process of winding up, including, without limitation, debts and
liabilities to Members who are creditors of the Company, have been paid or
adequately provided for, the remaining assets will be distributed to the Members
in accordance with Section 14.5.
SECTION 14.5 DISTRIBUTION OF ASSETS TO MEMBERS. The remaining assets of
the Company will be divided among the Members in accordance with Exhibit D;
provided, however, that each Member will have the right to direct that the
aggregate dollar value of the Company's assets to which it is entitled be first
directed to the distribution to such Member of the assets which constituted part
of its Initial Contributions, up to the aggregate dollar value of the Company's
assets to which it is entitled.
SECTION 14.6 COOPERATION AT END OF TERM. In conjunction with the
expiration of the Term of the Company, the Members will continue to cooperate
with each other in all matters related to the winding-up or the dissolution of
the Company, and to provide all assistance reasonably requested by any other
Member.
SECTION 14.7 DEFENSE. Following any expiration or termination of the
Company, the Members will continue to cooperate with each other in all matters
related to the defense of all rights and property (including intellectual
property) in which the Company holds or held an interest.
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 14.8 CERTIFICATE OF CANCELLATION. The Person(s) who filed the
Certificate of Dissolution will cause to be filed in the office of, and on a
form prescribed by, the Delaware Secretary of State, a certificate of
cancellation of the Certificate of Formation upon the completion of the winding
up of the affairs of the Company.
ARTICLE 15
REPRESENTATIONS, WARRANTIES, AND COVENANTS
SECTION 15.1 INITIAL CLASS A MEMBER. The Initial Class A Member
represents and warrants as follows:
(a) it is a corporation organized and in good standing under
the Laws of the state of Delaware, and is duly qualified to do business
in any jurisdiction in which such qualification is required other than
any jurisdiction in which a failure to qualify by the Initial Class A
Member would not be expected to have a material adverse effect on the
Initial Class A Member's ability to perform its obligations under this
Agreement and the Transaction Documents to which it is a party and
consummate the transactions contemplated hereby and thereby;
(b) it has full corporate power and authority to execute,
deliver and perform this Agreement and the Transaction Documents to
which it is a party;
(c) the execution, delivery and performance of this Agreement
(including, without limitation, the making of its Initial
Contributions) and the Transaction Documents to which it is a party by
the Initial Class A Member has been duly authorized by all necessary
corporate action;
(d) this Agreement and each of the Transaction Documents to
which it is a party has been (or, when delivered, will be) duly
executed and delivered and constitute (or, when delivered, constitute)
the legally valid and binding obligations of the Initial Class A
Member, enforceable against the Initial Class A Member in accordance
with their respective terms; and
(e) the execution, delivery and performance of this Agreement
(including, without limitation, when required hereunder, the making of
its Initial Contributions) and the Transaction Documents to which it is
a party by the Initial Class A Member, and the consummation of the
transactions contemplated hereby and thereby do not conflict with (or,
when delivered, will not conflict with) in any material way or result
in a breach, acceleration, or default under:
(1) the certificate of incorporation or bylaws of the Initial
Class A Member, or
(2) any contract or agreement (or any provision thereof) to
which the Initial Class A Member is a party, except for
contracts and agreements, the violation of which would not be
expected to have a material adverse effect on the Initial
Class A Member's ability to perform its obligations under this
Agreement and the
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Transaction Documents to which it is a party and consummate
the transactions contemplated hereby and thereby, or
(3) any material Law to which such Initial Member or any of
its properties are subject.
SECTION 15.2 INITIAL CLASS B MEMBER AND INITIAL CLASS C MEMBER. The
Initial Class B Member with respect to itself, and jointly and severally with
the Initial Class C Member with respect to the Initial Class C Member,
represent, warrant, and covenant as follows:
(a) the Initial Class B Member is a limited liability
partnership organized and in good standing under the Laws of the State
of Delaware, the Initial Class C Member is a corporation organized and
in good standing under the Laws of the State of California, and each of
them is duly qualified to do business in any jurisdiction in which such
qualification is required other than any jurisdiction in which a
failure to qualify by the Initial Class B Member or Initial Class C
Member would not be expected to have a material adverse effect on
either such Initial Member's ability to perform its obligations under
this Agreement and the Transaction Documents to which it is a party or
consummate the transactions contemplated hereby and thereby;
(b) each of the Initial Class B Member and the Initial Class C
Member has full power and authority to execute, deliver and perform
this Agreement and the Transaction Documents to which it is a party;
(c) the execution, delivery and performance of this Agreement
(including, without limitation, the making of its respective Initial
Contributions) and the Transaction Documents to which it is a party by
each of the Initial Class B Member and the Initial Class C Member and
has been duly authorized by all necessary action on the part of such
Initial Member;
(d) this Agreement and each of the Transaction Documents to
which it is a party has been (or, when delivered, will be) duly
executed and delivered and constitutes (or, when delivered, will
constitute) the legally valid and binding obligations of the Initial
Class B Member and the Initial Class C Member, enforceable against each
of the Initial Class B Member and the Initial Class C Member in
accordance with their respective terms;
(e) the execution, delivery and performance of this Agreement
(including, without limitation, when required hereunder, the making of
its respective Initial Contributions) and the Transaction Documents to
which it is a party by each of the Initial Class B Member and the
Initial Class C Member, and the consummation of the transactions
contemplated hereby and thereby do not conflict with (or, when
delivered, will not conflict with) in any material way or result in a
breach, acceleration, or default under:
(1) the limited liability partnership agreement, certificate
of limited partnership, or other charter documents of the
Initial Class B Member,
(2) the articles of incorporation or bylaws of the Initial
Class C Member,
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(3) any contract or agreement (or any provision thereof) to
which the Initial Class B Member or the Initial Class C Member
is a party, except for contracts and agreements, the violation
of which would not be expected to have a material adverse
effect on the Initial Class B Member's or the Initial Class C
Member's ability to perform its respective obligations under
this Agreement and consummate the transactions contemplated
hereby and thereby, or
(4) any material Law to which such Initial Members or any of
their respective properties are subject;
(f) the execution, delivery and performance of this Agreement
(including, without limitation, when required hereunder, the making of
its respective Initial Contributions) and the Transaction documents to
which it is a party by each of the Initial Class B Member and the
Initial Class C Member and the consummation of the transactions
contemplated hereby do not (or, when delivered, will not) conflict with
any Laws, regulations, or Orders that are applicable to the Initial
Class B Member or the Initial Class C Member or to the assets which
constitute either such Initial Member's Initial Contributions, except
for Laws, regulations, or Orders, the violation of which would not be
expected to have a material adverse effect on the Initial Class B
Member's or the Initial Class C Member's ability to perform its
respective obligations under this Agreement or the Transaction
Documents to which it is a party and consummate the transactions
contemplated hereby and thereby;
(g) the Initial Class B Member is the sole legal and
beneficial owner of all voting securities of the Initial Class C
Member;
(h) to the best knowledge of each of the Initial Class B
Member and the Initial Class C Member, its respective Initial
Contributions and its respective loan of certain employees pursuant to
each such Initial Member's Employee Loan-Out Agreement represent all of
its respective assets that are necessary to engage in or that are
directly related to the Business;
(i) all of the outstanding equity securities and other
securities of the Initial Class C Member are owned of record and
beneficially by the Initial Class B Member (except for shares of common
stock which do not enable the holders thereof to cast votes on any
matters placed before the shareholders), free and clear of all
Encumbrances; all of the outstanding equity securities of the Initial
Class C Member have been duly authorized and validly issued and are
fully paid and nonassessable; and there are no agreements, contracts,
obligations, promises or undertakings that are legally binding relating
to the issuance, sale or transfer of any equity securities or other
securities of the Initial Class C Member (except for agreements or
contracts with the Initial Class B Member);
(j) on or after the date hereof, the Class C Member will not
issue any securities (whether classified as equity or debt securities);
(k) each of the contracts and agreements listed on Exhibit
A-2, or Exhibit A-3, as applicable, is in full force and effect and no
default, event of default, or similar event
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
has occurred and is continuing, or could reasonably be expected to
occur as a result of the assignment to the Company on the date set
forth for such assignment herein or on any Exhibit hereto of any such
contract or agreement; and
(l) all computer software listed on Exhibit A-2 or Exhibit
A-3, as applicable, as part of the Initial Class B Member's or the
Initial Class C Member's Initial Contributions which is proprietary to
such Initial Member and is licensed to the Company by such Initial
Member does and will (i) handle date information before, during and
after January 1, 2000, including, but not limited to, accepting date
input, providing date output, and performing calculations on dates or
portions of dates; (ii) function accurately and without interruption
before, during, and after January 1, 2000, without any change in
operations associated with the advent of the new century, (iii) respond
to two-digit year-date input in a way that resolves ambiguity as to
century in a disclosed, defined and predetermined manner, and (iv)
store and provide output of date information in ways that are
unambiguous as to century.
SECTION 15.3 EACH INITIAL MEMBER. Each Initial Member represents and
warrants with respect to itself as follows (provided, that representations and
warranties with respect to the Initial Class C Member are made jointly and
severally by the Initial Class B Member and the Initial Class C Member):
(a) no action, proceeding, or investigation is pending or, to
the knowledge of such Initial Member threatened against such Initial
Member, in any court, government department, commission, board, agency,
or instrumentality relating to this Agreement or any Transaction
Document to which it is a party, any of the assets constituting its
Initial Contributions, or the transactions contemplated hereby and
thereby. Further, such Initial Member is not aware of any basis for any
action, proceeding, or investigation that would in any manner affect
such Initial Member's ability to transfer or assign the assets and
licenses constituting its Initial Contributions to the Company free and
clear of any Encumbrances other than mechanics, materialmen's and
similar liens, liens for taxes not yet due and payable and liens
securing rental payments under capital lease arrangements to be
assigned hereunder;
(b) such Initial Member has good and marketable title to each
of the assets and licenses and other agreements and contracts
constituting its Initial Contributions, free and clear of all
Encumbrances other than mechanics, materialmen's and similar liens,
liens for taxes not yet due and payable and liens securing rental
payments under capital lease arrangements to be assigned hereunder
except (i) for obligations accruing under contributed contracts and
licenses after the date hereof, and (ii) as indicated on Exhibit X-0,
Xxxxxxx X-0 or Exhibit A-3, as applicable;
(c) such Initial Member is not a party to, and no other Person
is a party to, any written or oral contract with any labor union or
other collective bargaining entity relating to the employment of any of
the of the individuals listed on Exhibit B-1, Exhibit B-2 or Exhibit
B-3, as applicable, and none of such individuals is represented by a
labor union or other collective bargaining entity for purposes of
collective bargaining;
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(d) such Initial Member is not a party to, and no other Person
is a party to, any written or oral contract relating to the employment
of any of the individuals listed on Exhibit B-1, Exhibit B-2 or Exhibit
B-3 (except for agreements substantially in the form of those attached
as Schedule 15.3), and no Member will enter into any written or oral
contract with any such individual respecting such individual's
employment during the Term without the written consent of the
Management Committee;
(e) no Member will take, or omit to take any action, the
effect of which would impair the Company's access to the services of
the individuals listed on Exhibit B-1, Exhibit B-2 or Exhibit B-3;
(f) there are no authorization, consents, Orders, permits,
licenses, or approvals of, or declarations, registrations or filings
with, any governmental or regulatory authority or any other person
required by such Initial Member or the Company in connection with the
valid execution, delivery or performance by such Initial Member of this
Agreement or the Transaction Documents to which it is a party or the
consummation of the transactions consummated hereby and thereby, except
where the failure to obtain or make any of the foregoing would not have
a Material Adverse Effect on the Company or on any Member's ability to
perform its obligation hereunder and thereunder; and
(g) there are no pending or, to the knowledge of such Initial
Member, threatened claims against such Initial Member or any other
Person alleging that any of the assets, software, processes, Templates,
or other intellectual property listed on Exhibit A-2 or Exhibit A-3, as
applicable, as part of such Initial Member's Initial Contributions
infringe or conflict with the rights of others, including rights under
patents, trademarks, copyrights, tradenames, service marks, licenses
and rights with respect to the foregoing necessary for the operation of
the business as now conducted, and the use of such assets, software,
processes, Templates, or other intellectual property will not infringe
the rights of any third Person.
SECTION 15.4 EMPLOYEES.
(a) The Initial Class B Member represents and warrants as
follows:
(1) Except as provided in the Employee Loan-Out Agreement
entered into in accordance with Section 2.3(b), the Company
will not be subject to any obligations or liabilities, whether
imposed by contract, applicable Law or otherwise, with respect
to any Employee Plan or Benefit Arrangement covering any
employee listed on Exhibit B-2 or Exhibit B-3 or with respect
to the compensation or pay of such employee for any period
before the employee is transferred to the Company.
(2) No employee listed on Exhibit B-2 or Exhibit B-3 will be
entitled to any severance or similar benefit solely as a
result of the transactions contemplated by this Agreement or
the Transaction Documents or by the termination of his or her
employment with the Class B Member.
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(b) No provision of this Section 15.4 shall create any
third-party beneficiary rights in any employee of any Member or of the
Company (including any beneficiary or dependent thereof).
ARTICLE 16
DISPUTE RESOLUTION
SECTION 16.1 DISPUTE RESOLUTION PROCESS. Any dispute arising out of or
relating to this Agreement will be resolved in accordance with the procedures
specified in this Section 16.1, which will be the sole and exclusive procedures
for the resolution of any such disputes, except for (x) the right to proceed
against a defaulting Member at law or in equity pursuant to Section 13.7(b)(3).
The Members intend that these provisions will be valid, binding, enforceable and
irrevocable. This Section 16.1 will survive any termination of this Agreement.
(a) The Members will promptly notify each other in writing of
any dispute arising out of or relating to this Agreement. The Members
will attempt in good faith to resolve any dispute arising out of or
relating to this Agreement promptly by negotiation between executives
who have authority to settle the controversy. All reasonable requests
for information made by one Member to the other will be honored. All
negotiations pursuant to this clause are confidential and will be
treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.
(b) If any such dispute remains unresolved within 30 days of
original notice thereof, the Members will endeavor to resolve any
dispute arising out of or relating to this agreement by mediation under
the CPR Mediation Procedure for Business Disputes. Unless the Members
agree otherwise, the mediator will be selected from the CPR Panel of
Neutrals with notification to the CPR Institute for Dispute Resolution.
(c) Any controversy or claim arising out of or relating to
this contract or the breach, termination or validity thereof, which
remains unresolved 45 days after appointment of a mediator (except for
the failure of the Managers appointed by a Member to consent to a
Unanimous Consent Item approved by each of the Managers appointed by
the other Member, which, if such dispute remains unresolved 45 days
after the appointment of a mediator, will allow either the Class A
Member or the Class B Member to declare a Deadlock if the other
conditions contained in the definition thereof are met), will be
settled by arbitration by the majority decision of at least two members
of a three-member arbitration tribunal in accordance with the CPR
Non-Administered Arbitration Rules; provided, however, that if any
Member will not participate in a non-binding procedure described above,
the other may initiate binding arbitration before expiration of the
above period. The Class A Member and the Class B Member will each
choose one arbitrator from the CPR Panels of Distinguished Neutrals,
and the two arbitrators so chosen will choose the third arbitrator. The
arbitration will be governed by the United States Arbitration Act, 9
U.S.C. Section 1-16, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. The
place of arbitration will be Denver, Colorado.
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(d) Except as expressly provided below, the arbitrator is not
empowered to award damages in excess of compensatory damages and each
Member hereby irrevocably waives any right to recover such damages with
respect to any dispute resolved by arbitration. The arbitrator will
have the authority to include, as an item of damages, the reasonable
costs of arbitration, including legal fees and expenses, incurred by
the prevailing Member and to apportion such costs among the Members on
a claim by claim basis as such Member prevails thereon. For purposes of
the foregoing, the "prevailing Member" will mean the Member whose final
settlement offer (or other position or monetary claim) prior to the
start of arbitration is closest to the judgment awarded by the
arbitrator, regardless of whether such judgment is entered into in
favor of or against such Member.
(e) The statute of limitations of the State of Colorado
applicable to the commencement of a lawsuit will apply to the
commencement of an arbitration hereunder, except that no defenses will
be available based upon the passage of time during any negotiation or
mediation called for by the preceding paragraphs of this Section.
(f) All negotiations pursuant to this Section 16.1 are
confidential and will be treated as compromise and settlement
negotiations for purposes of applicable rules of evidence.
(g) Each Member agrees that service by registered or certified
mail, return receipt requested, delivered to such Member at the notice
address provided herein, will be deemed in every respect effective
service of process upon such person for all purposes of these
provisions relating to mediation and arbitration. Each Member
irrevocably submits to the jurisdiction of the courts of the State of
Colorado and to any federal court located within such state for the
purpose of any action or judgment with respect to this Agreement,
regardless of where any alleged breach or other action, omission, fact
or occurrence giving rise thereto occurred. Each Member hereby
irrevocably waives any claim that any action or proceeding brought in
Colorado has been brought in any inconvenient forum.
(h) The Members will negotiate in good faith and agree on such
further or modified arbitration provisions as are reasonably necessary
for awards and other judgments resulting from the provisions set forth
above to be recognized and enforceable in other jurisdictions.
SECTION 16.2 DISPUTE RESOLUTION SCOPE. Actions within the scope of the
Management Committee's authority taken in accordance with the procedures
required by this Agreement that are not Unanimous Consent Items will not be
subject to the dispute resolution procedure set forth in Section 16.1, above,
notwithstanding any Member's objection to such actions. However, the
determination of whether an action was taken in accordance with the required
procedures or was properly classified as a Unanimous Consent Item for which the
required vote was not obtained is subject to the dispute resolution procedure
set forth in Section 16.1, above.
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
ARTICLE 17
MEMBER MEETINGS
SECTION 17.1 MEMBERS' MEETINGS.
(a) DATE, TIME AND PLACE OF MEETINGS OF MEMBERS; SECRETARY.
Meetings of Members may be held at such date, time and place within or
without the State of Delaware as the Management Committee may fix from
time to time. No annual or regular meetings of Members is required. At
any Members' meeting, the Management Committee will appoint a person to
preside at the meeting and a person to act as secretary of the meeting.
The secretary of the meeting will prepare minutes of the meeting, which
will be placed in the minute books of the Company.
(b) POWER TO CALL MEETINGS. Unless otherwise prescribed by the
Act or by the Certificate of Formation, meetings of the Members may be
called upon written demand of Members holding more than twenty percent
(20%) of the Percentage Interest of the Membership Interests of the
Company for the purpose of addressing any matters on which the Members
may vote.
(c) NOTICE OF MEETINGS.
(1) Upon written request to the Management Committee by any
Person entitled to call a meeting of Members, the Management
Committee will cause written notice to be given to the Members
entitled to vote that a meeting will be held at a time
requested by the Person calling the meeting, not less than ten
days nor more than sixty days after the receipt of such
request. If the notice is not given within twenty days after
the receipt of the request, the Person entitled to call the
meeting may give the notice.
(2) Written notice of a meeting of Members will be sent or
otherwise given to each Member in accordance with Section
17.1(d) not less than ten nor more than sixty days before the
date of such meeting. Such notice will specify the place, date
and time of the meeting and the general nature of the business
to be transacted. No other business may be transacted at this
meeting unless all Members agree to transact such other
business.
(d) MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
(1) Notice of any meeting of Members will be given either
personally, by nationally-recognized overnight courier, by a
confirmed facsimile, or by certified mail, addressed to each
Member at the address or facsimile number of such Member
appearing on the books of the Company or given by such Member
to the Company for the purpose of notice. If no such address
appears on the Company's books or is given, notice will be
deemed to have been given if addressed to such Member and sent
to the Company's principal executive office, or if published
at least once in a newspaper of general circulation in the
county where that office is
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located. Notice will be deemed to have been given at the time
when delivered personally, entrusted to a courier,
transmitted, or deposited in the mail.
(2) If any notice addressed to a Member at the address of such
Member appearing on the books of the Company is returned to
the Company by a nationally-recognized overnight courier, or
by the United States Postal Service marked to indicate that
the United States Postal Service is unable to deliver the
notice to the Member at that address, all future notices or
reports will be deemed to have been duly given without further
mailing if these are available to the Member on written demand
of the Member at the principal executive office of the Company
for a period of one year from the date of the giving of the
notice. An affidavit of the mailing or other means of giving
any notice of any meeting will be executed by the Management
Committee or any secretary, assistant secretary, or any
transfer agent of the Company giving the notice, and will be
filed and maintained in the minute book of the Company.
(e) VALIDITY OF ACTION. Any action approved at a meeting,
other than by unanimous approval of those entitled to vote, will be
valid only if the general nature of the proposal so approved was stated
in the notice of meeting or in any written waiver of notice.
(f) QUORUM. The presence in person or by proxy of a Majority
in Interest will constitute a quorum at a meeting of Members. The
Members present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding
the loss of a quorum, if any action taken after loss of a quorum (other
than adjournment) is approved by at least a Majority in Interest of the
Members entitled to vote thereon.
(g) ADJOURNED MEETING. Any Members' meeting, whether or not a
quorum is present, may be adjourned from time to time by the vote of
the majority of the Membership Interests represented at that meeting,
either in person or by proxy, but in the absence of a quorum, no other
business may be transacted at that meeting, except as provided in
Section 17.1(f). When any meeting of Members is adjourned to another
time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is
taken, unless a new record date for the adjourned meeting is
subsequently fixed, or unless the adjournment is for more than
forty-five days from the date set for the original meeting, in which
case the Management Committee will set a new record date. At any
adjourned meeting the Company may transact any business that might have
been transacted at the original meeting.
(h) WAIVER OF NOTICE OR CONSENT.
(1) The actions taken at any meeting of Members, however
called and noticed and wherever held, have the same validity
as if taken at a meeting duly held after regular call and
notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, each of the
Members entitled to vote who was not present in person or by
proxy, signs a written waiver of notice or consents to
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
the holding of the meeting or approves the minutes of the
meeting. All such waivers, consents or approvals will be filed
with the Company records or made a part of the minutes of the
meeting.
(2) Attendance of a person at a meeting will constitute a
waiver of notice of that meeting, except when the person
objects, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or
convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters
not included in the notice of the meeting if that objection is
expressly made at the meeting. Neither the business to be
transacted nor the purpose of any meeting of Members need be
specified in any written waiver of notice except as provided
in Section 17.1(e).
(i) ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
(1) Any action that may be taken at a meeting of Members may
be taken without a meeting, if a consent in writing setting
forth the action so taken, is signed and delivered to the
Company within sixty days of the record date for that action
by Members having not less than the minimum number of votes
that would be necessary to authorize or take that action at a
meeting at which all Members entitled to vote on that action
at a meeting were present and voted. All such consents will be
filed with the Management Committee or the secretary, if any,
of the Company and will be maintained in the Company records.
Any Member giving a written consent, or the Member's proxy
holders, may revoke the consent by a writing received by the
Management Committee or secretary, if any, of the Company
before written consents of the number of votes required to
authorize the proposed action have been filed.
(2) Unless the consents of all Members entitled to vote have
been solicited in writing, (i) notice of any Member approval
of an amendment to the Certificate of Formation or this
Agreement, a dissolution of the Company, or a merger of the
Company, without a meeting by less than unanimous written
consent, will be given at least ten days before the
consummation of the action authorized by such approval, and
(ii) prompt notice will be given of the taking of any other
action approved by Members without a meeting by less than
unanimous written consent, to those Members entitled to vote
who have not consented in writing.
(j) TELEPHONIC PARTICIPATION BY MEMBER AT MEETINGS. Members
may participate in any Members' meeting through the use of any means of
conference telephones or similar communications equipment as long as
all Members participating can hear one another. A Member so
participating is deemed to be present in person at the meeting.
(k) RECORD DATE.
(1) To enable the Company to determine the Members of record
entitled to notices of any meeting or to vote, or entitled to
receive any distribution or to exercise any rights in respect
of any distribution or to exercise any rights in respect of
any other
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
lawful action, the Management Committee may fix, in advance, a
record date that is not more than sixty days nor less than ten
days prior to the date of the meeting and not more than sixty
days prior to any other action.
(2) If no record date is fixed, the record date for
determining Members entitled to notice of or to vote at a
meeting of Members will be at the close of business on the
Business Day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is
held. The record date for determining Members entitled to give
consent to Company action in writing without a meeting will be
the day on which the first written consent is given. The
record date for determining Members for any other purpose will
be at the close of business on the day on which the Managers
adopt the resolution relating thereto, or the 60th day prior
to the date of the other action, whichever is later.
(3) The determination of Members of record entitled to notice
of or to vote at a meeting of Members will apply to any
adjournment of the meeting unless the Members who called the
meeting fix a new record date for the adjourned meeting, but
the Members who called the meeting will fix a new record date
if the meeting is adjourned for more than forty-five days from
the date set for the original meeting.
(l) PROXIES. Every Member entitled to vote on any matter will
have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the Member and filed with the
Management Committee or the secretary, if any, of the Company. A proxy
will be deemed signed if the Member's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission,
electronic transmission or otherwise) by the Member or the Member's
attorney in fact. A proxy may be transmitted by an oral telephonic
transmission if it is submitted with information from which it may be
determined that the proxy was authorized by the Member or the Member's
attorney in fact. A validly executed proxy that does not state that it
is irrevocable will continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that
proxy, by a writing delivered to the Company stating that the proxy is
revoked, or by a subsequent proxy executed by, or attendance at the
meeting and voting in person by, the person executing the proxy; or
(ii) written notice of the death or incapacity of the maker of that
proxy is received by the Company before the vote pursuant to that proxy
is counted; provided, however, that no proxy will be valid after the
expiration of eleven months from the date of the proxy, unless
otherwise provided in the proxy.
ARTICLE 18
ACCOUNTING, RECORDS, REPORTING BY MEMBERS
SECTION 18.1 DEPOSITS. All funds of the Company will be deposited from
time to time to the credit of the Company in such banks or other depositories as
the Management Committee may select.
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 18.2 CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, and all notes or other evidences of indebtedness
issued in the name of the Company will be signed by an officer or officers
authorized to do so under Section 5.4(d).
SECTION 18.3 ACCOUNTS. The Management Committee will maintain or cause
to be maintained books and records of account relating to the assets and income
of the Company and the payment of expenses of, and liabilities or claims against
or assumed by, the Company in such detail and for such period of time as may be
necessary to enable it to make full and proper accounting in respect thereof and
to comply with applicable provisions of law.
SECTION 18.4 ACCOUNTING. The Company will use the accrual method of
accounting in preparing its books and records of account and for tax purposes.
All books and records of account of the Company will be maintained and reported
based upon generally accepted accounting principles.
SECTION 18.5 BOOKS AND RECORDS. The books and records of the Company
will reflect all the Company transactions and will be appropriate and adequate
for the Company's business. The Company will maintain the Company's books and
records at its principal office.
SECTION 18.6 RIGHT OF INSPECTION. A Member will have the right to
examine, at any reasonable time for any purpose, the minutes and records of the
Management Committee and/or the Management Committee and the books and records
of account of the Company, and to make copies thereof. Upon the written request
of any Member of the Company, the Company will cause to be mailed to such Member
the most recent financial statements of the Company, showing in reasonable
detail its assets and liabilities and the results of its operations. Such
inspection may be made by any agent or duly appointed attorney of the Member
making such request.
SECTION 18.7 REPORTS. Beginning with the third fiscal quarter of the
1999 Fiscal Year, within 45 days after the end of each Fiscal Year and within 20
days after the end of each of the first 3 fiscal quarters of each Fiscal Year,
the Chief Financial Officer will cause each Member and each Manager to be
furnished with a copy of the balance sheet of the Company as of the last day of
the applicable period, a statement of income or loss for the Company for such
period and a statement of the Company's Cash Flow for such period. Annual
statements furnished pursuant to the preceding sentence will also include a
statement of the Members' Capital Accounts and changes therein for such Fiscal
Year.
ARTICLE 19
MISCELLANEOUS
SECTION 19.1 COMPLETE AGREEMENT. This Agreement and the Certificate of
Formation constitute the complete and exclusive statement of agreement among the
Members with respect to the subject matter herein and therein and replace and
supersede all prior written and oral agreements or statements by and among the
Members or any of them. No representation, statement, condition or warranty not
contained in this Agreement or the Certificate of Formation will be binding on
the Members or have any force or effect whatsoever. To the extent that any
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
provision of the Certificate of Formation conflicts with any provision of this
Agreement, the Certificate of Formation will control.
SECTION 19.2 PRONOUNS; STATUTORY REFERENCES. Unless the context
otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting
term not otherwise defined has the meaning assigned to it in accordance with
GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural,
and words in the plural include the singular; (e) "amended," with reference to a
law, statute, rule or regulation, is deemed to be followed by "from time to
time"; (f) "herein," "hereof" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section, subsection,
paragraph, clause, or other subdivision; (g) all references to "Appendix,'
"clause," "Exhibits," "Section," "subsection," "paragraph" or "Article" refer to
the particular Appendices, clauses, Exhibits, Sections, subsections, paragraphs
or Articles in or attached to this Agreement; (h) "desirable" includes
"necessary," "advisable" and "appropriate"; and (i) "including" or "includes,"
when following any general provision, sentence, clause, statement, term or
matter, will be deemed to be followed by ", but not limited to," and ",but is
not limited to," respectively.
SECTION 19.3 REFERENCES TO THIS AGREEMENT. Numbered articles and
sections herein contained refer to articles and sections of this Agreement
unless otherwise expressly stated. All Article, Section, subsection or paragraph
titles or other captions in this Agreement are for convenience only, are not
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any of its provisions.
SECTION 19.4 GOVERNING LAW. This Agreement will be governed by,
construed under and interpreted in accordance with the internal Laws of the
State of Delaware without regard to its conflicts of laws principles.
SECTION 19.5 JURISDICTION. Each Member hereby consents to the exclusive
jurisdiction of the state and federal courts sitting in Colorado in any action
on a claim arising out of, under or in connection with this Agreement or the
transactions contemplated by this Agreement. Each Member further agrees that
personal jurisdiction over him may be effected by service of process by
registered or certified mail addressed as provided in Section 15.11 of this
Agreement, and that when so made will be as if served upon him personally within
the State of Colorado.
SECTION 19.6 SUCCESSORS AND ASSIGNMENTS. This Agreement will bind and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. No assignment of the Agreement by any Member will relieve the
assigning Member of its liability hereunder absent the written consent of each
other Members.
SECTION 19.7 AMENDMENTS. All amendments to this Agreement will be in
writing and signed by all of the Members.
SECTION 19.8 EXHIBITS. All Exhibits attached to this Agreement are
incorporated and will be treated as if set forth herein.
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CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 19.9 SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstance will be held
invalid, the remainder of this Agreement will not be affected thereby so long as
such remainder continues to have the economic effect intended by this Agreement.
SECTION 19.10 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to
execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions, and conditions of this Agreement and
the transactions contemplated hereby.
SECTION 19.11 NOTICES. All notices or elections required or permitted
hereunder will be in writing and will be delivered in person by telecopy, telex
or equivalent form of written telecommunication, or sent by certified or
registered mail, return receipt requested, postage prepaid, to the address set
forth by each Member on Exhibit C hereto or such other party and/or address as
any of such parties may designate in a written notice served upon the other
parties in the manner provided for herein. All notices required or permitted
hereunder will be deemed duly given and received on the date of delivery, if
delivered in person or by telex, telecopy or other written telecommunications or
on the seventh day next succeeding the date of mailing if sent by certified or
registered mail.
SECTION 19.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in
two (2) or more counterparts, each of which will be deemed an original, but all
of which will constitute one and the same instrument.
SECTION 19.13 COMMUNICATIONS. Any press release or similar
communication intended for dissemination to the public concerning the formation
and/or operation of the Company will be approved in advance by both Initial
Members. Thereafter, the Management Committee (or any officer of the Company to
whom it delegates this responsibility) will make all decisions regarding the
Company's public announcements. However, if a Member notifies the Management
Committee that it is restricted in making public announcements, the Management
Committee will (or will instruct the relevant officers to) obtain such Member's
prior consent to a public announcement unless the Company is legally required to
release the relevant information.
SECTION 19.14 EQUITABLE RELIEF. Each Member acknowledges that any
material breach of this Agreement by any Member will result in irreparable harm
to the other Members for which there is no adequate remedy at law. In such
event, any non-breaching Member is entitled to preliminary or temporary
equitable relief in an appropriate court of law, pending a final determination
in accordance with ARTICLE 16, without the necessity of posting bond unless
otherwise required by applicable law.
SECTION 19.15 CONFIDENTIALITY. Each Member and, from and after the
Formation Date, the Company, will safeguard and protect all confidential
information of each Member or the Company which is made available or accessible
to it, and will cause such information to be treated in a manner no less
favorable to the provider of the confidential information than the manner such
Member would accord to its own confidential or proprietary material. In
addition, no Member will allow confidential material of another Member or of the
Company to be published or released
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
to any third person without the written permission of the Member who provided
such confidential information or (in the case of the Company) of the Management
Committee.
SECTION 19.16 COSTS. Each Member and, from and after the Formation
Date, the Company, will be solely responsible for and bear all of its respective
expenses, including, without limitation, expenses of lenders, legal counsel,
investment bankers, consultants, accountants and other advisors, incurred at any
time in connection with the transactions contemplated by this Agreement.
SECTION 19.17 DISCRETION. If in this Agreement a Person is permitted or
required to make a decision or determination: (a) in its "discretion" or "sole
discretion" or under a grant of similar authority or latitude, the Person will
be entitled to consider any interests and factors as its desires, including its
own interests; (b) in its "good faith," in a "commercially reasonable" manner,
using "reasonable best efforts," or under another express standard, the Person
will act under that express standard and will not be subject to any other or
different standards imposed by this Agreement or otherwise; or (c) and no
standard is expressed, the Person will apply relevant provisions of this
Agreement in making the decision or determination.
SECTION 19.18 INTERPRETATION. If any claim is made by a party relating
to any conflict, omission or ambiguity in the provisions of this Agreement, no
presumption or burden of proof or persuasion will be implied because this
Agreement was prepared by or at the request of any Member or its counsel. The
Members waive any statute or rule of law to the contrary.
SECTION 19.19 FURTHER ASSURANCES. Each Member agrees to execute and
deliver (at its own expense) to the other such reasonable and appropriate
additional documents, instruments or agreements as may be necessary or
appropriate, and to take (at its own expense) all actions reasonably necessary,
to effectuate the purposes of this Agreement.
[Remainder of page intentionally left blank.]
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
IN WITNESS WHEREOF, the Initial Members of Qwest Xxxxx.Xxxxxxxxx LLC, a
Delaware limited liability company, have executed this Agreement, effective as
of the date first written above.
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: President, Internet and Multimedia Markets
KPMG LLP
By: /s/ Xxxxxxxx X. XxXxxxx
------------------------------------------------
Name: Xxxxxxxx X. XxXxxxx
Title: Vice Chairman
SOFTLINE CONSULTANTS & INTEGRATORS, INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Partner
-1-
60
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-1
CAPITAL CONTRIBUTIONS OF INITIAL CLASS A MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
Capital Contributions
--------------------------------------------------------------------------------
Cash: * * * million on First Closing Date; * * * million on or before the
90th day after the First Closing Date; * * * million on or before the 180th
day after the First Closing Date
--------------------------------------------------------------------------------
Other tangible and intangible personal property contributed to the Company,
including a non-exclusive royalty-free license for certain know-how, trade
secrets and non-patented technical information and intellectual property with
respect to optical server integration, high-speed optical interconnecting
capabilities, hosting center operational capabilities and web interface
applications
--------------------------------------------------------------------------------
Other Obligations Assumed by the Company
All fees (including without limitation service fees) or other payments which are
payable pursuant to * * *.
Exhibit A-1-1
61
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-2
CAPITAL CONTRIBUTIONS OF INITIAL CLASS B MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
Capital Contributions
Operating Assets of KPMG LLP's Applications Outsourcing Business
|X| Client engagements and contracts--Exhibit A-2(a)
|X| Fixed assets--Exhibit A-2(b)
|X| Applications Outsourcing prospective clients--Exhibit A-2(c)
|X| All preconfigured templates and associated technology and intellectual
property for use with * * *software applications--Exhibit A-2(d)
Other tangible and intangible personal property contributed to the Company,
including royalty-free licenses to certain trademarks and tradenames, services
pursuant to other arrangements between the Initial Class B Member and the
Initial Class A Member, all methodology, processes, information, specifications,
formulae, instruction sets, routines, know-how, trade secrets and all
non-patented technical information and intellectual property developed or
obtained by the Initial Class B member with respect to the Business, including
any skill-based training curriculum developed or obtained by the Initial Class B
Member with respect to the application management business.
Other Obligations Assumed by the Company
Any and all liabilities associated with the client engagements and contracts
listed in Exhibits A-2(a) as of and from the date of the First Closing.
EXHIBIT A-1-1
62
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-2(a)
CAPITAL CONTRIBUTIONS OF INITIAL CLASS B MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
CLIENT ENGAGEMENTS AND CONTRACTS
* * *
EXHIBIT A-1-1
63
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-2(b)
CAPITAL CONTRIBUTIONS OF INITIAL CLASS B MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
FIXED ASSETS
1 Ascend Multiband VSX BRI MBV-BRI4U
1 Ascend Cable Assembly MB+ PictureTel MBHD-449PT
1 Sharp Color CCD Camera YH-7B50
1 PictureTel Live50 Videoconferencing set SPH-1
1 Compaq ProLiant 2500R
1 4.3 GB Wide-Ultra SCSI Hard Drives
1 APS Smart-UPS 2200
1 Compaq Keyboard/Mouse MX11800
1 Hewlett Packard Automatic Document C6265A
Feeder for 6100C Scanner
1 Hewlett Packard 6100C Scanner C6260A
1 SCSI Board (IDE)
1 US Robotics Courier V.Everything Modem
1 Procom Technology CD- Writer PCDR-4/6X-EK
1 NEC 15" Monitor JC-15W1VMA
1 Compaq 7142 Cabinet
1 Toshiba Satellite Laptop PA1217U V
3 Logitech Color QuickCam VC
1 Labtec C-110 deluxe PC Stereo Headset
1 Dell Optiplex GXM 5133 DPM
1 Hewlett-Packard LaserJet 3100 C3948A
1 Tektronix xxxxx 560 Z560
1 Microsoft Windows NT Server 4.0
4 IBM Thinkpad 380 ED
1 IBM Thinkpad 380 XD
47 IBM Thinkpad 600
1 Dell Desktop Optimax
1 Compaq Desktop Deskpro
2 Toshiba Tecra 8000
2 Demo- Toshiba Tecra 8000
1 Kodak Video Conferencing Camera
1 Connectix Video Conferencing Camera
1 Sharp Fax/Scanner UX 2200CM
1 Peoplesoft Application Suite ver. 7.5
1 Visio 5.0 Professional
1 Visio 5.0 Technical
Exhibit A-1-1
64
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-2(c)
CAPITAL CONTRIBUTIONS OF INITIAL CLASS B MEMBER AND
OBLIGATIONS ASSUMED BYTHE COMPANY
PROSPECTIVE CLIENTS
* * *
Exhibit A-2-1
65
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-2(d)
CAPITAL CONTRIBUTIONS OF INITIAL CLASS B MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
PRECONFIGURED TEMPLATES
* * *
Exhibit A-2-1
66
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-3
CAPITAL CONTRIBUTIONS OF INITIAL CLASS C MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
Capital Contributions
Operating Assets of Softline Consulting & Integrators, Inc.
|X| Client engagements and contracts--Exhibit A-3(a)
|X| Fixed assets--Exhibit A-3(b)
|X| Applications Management prospective clients--Exhibit A-3(c)
Other tangible and intangible personal property contributed to the Company,
including royalty-free licenses to certain trademarks and tradenames, services
pursuant to other arrangements between the Initial Class C Member and the
Initial Class A Member, all methodology, processes, information, specifications,
formulae, instruction sets, routines, know-how, trade secrets and all
non-patented technical information and intellectual property developed or
obtained by the Initial Class C member with respect to the Business, including
HelpDesk and HelpDesk process, procedures and know-how and any skill-based
training curriculum developed or obtained by the Initial Class C Member with
respect to the application management business.
Other Obligations Assumed by the Company
Any and all liabilities associated with the client engagements and contracts
listed in Exhibits A-3(a) as of and from the date of the First Closing.
Exhibit A-2-1
67
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-3
EXHIBIT A-3(a)
CAPITAL CONTRIBUTIONS OF INITIAL CLASS C MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
CLIENT ENGAGEMENTS AND CONTRACTS
* * *
EXHIBIT A-3(b)
CAPITAL CONTRIBUTIONS OF INITIAL CLASS C MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
FIXED ASSETS
IBM Thinkpad 770 9549-1AU 78-A0960 97/10
Toshiba Techra 550CDT/4.0 PA1268U XCD 385916226 -3
IBM Thinkpad 765D 9546-U9H 97-DZ5LH
IBM Thinkpad 765D 9546-U6H 97-DZ7EV
Toshiba 430CDT/1.3 PA1230U-T2C XCD 02-798948 -3
IBM Think Pad 760EL 97-F9ZC3
IBM Thinkpad 770 9549-1AU 78-H1259 03/98
Toshiba 70CT/1.6 (Libretto) PA1260U X 28590485 -1
Toshiba Techra 740CDT/5.1 PA1233U-XCD 06738442 -3
Toshiba Techra 750CDT/5.1 PA1253U-T2C 97291018 -3
IBM Thinkpad 770 9549-1AU 78-G4995 02/98
Toshiba Techra 550CDT/4.0 PA1268U XCD 28551379 -3
Toshiba Techra 740CDT/2.1 PA1229U XCD 03719618 -3
Toshiba Techra 740CDT/5.1 PA1233U-XCD
Toshiba Techra 550CDT/4.0 PA1268U XCD 38612588 -3
Toshiba 100CT Libretto 48658644A
IBM Thinkpad 560Z 2640-B0U 78-ZX382 08/98
Toshiba 100CT Libretto 48658645A
IBM Thinkpad 600 2645-45U 78-DHR95 10/98
Toshiba 100CT Libretto PA1254U X 48658549A
Toshiba 320 CDT Laptop PA1271U-T2C 48681350A
Toshiba 730XCDT/2.1 PA1238U XCD 11744979 -3
Toshiba 730XCDT/2.1 PA1238U XCD 11744916 -3
Toshiba 320 CDT Laptop PA1271U-T2C 78902568A -1
IBM Thinkpad 600 2645-45U 78-LG822 09/98
IBM Thinkpad 600 2645-45U
IBM Thinkpad 600 2645-45U 78-LF489 09/98
Toshiba 320 CDT Laptop PA1271U-T2C 48680509A
Toshiba 430CDT/1.3 PA1230U-T2C XCD 02798770 -3
Exhibit A-2-1
68
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Toshiba 730XCDT/2.1 PA1238U XCD 05738118 -3
Toshiba 430CDT/1.3 PA1230U-T2C XCD 02799060 -3
Loaner IBM Laptop Thinkpad 760EL 9547-U4H 97-F9ZC3
Toshiba 730XCDT/2.1 PA1238U XCD 11744422 -3
Toshiba 730XCDT/2.1 PA1238U XCD
Toshiba 430CDT/1.3 PA1230U-T2C XCD 05744272 -3
Toshiba 430CDT/1.3 PA1230U-T2C XCD 05744432 -3
AcerNuovo 9706x 0000000000
Toshiba Techra 550CDT/4.0 PA1268U XCD 28550154 -3
Toshib Techra 460 CDS
Toshiba Satellite 220CDS/1.4 PA1240U-S2C 67041328 -3
Commax Smartbook I-1100 NBI1100 D0EL407470632
IBM 380 XCDT 18515321
Toshiba 320 CDT Laptop PA1271U-T2C 78854080A -1
Toshiba 730XCDT/2.1 PA1238U XCD 11744984 -3
Toshiba 730XCDT/2.1 PA1238U XCD 11744970 -3
Toshiba 730XCDT/2.1 PA1238U XCD 11744959 -3
Toshiba 730XCDT/2.1 PA1238U XCD 05740409 -3
Toshiba Satellite Pro 480CDT 18515321 -3
Toshiba 480CDT PA1256U XCD Z7471041 -3
Toshiba 430CDT/1.3 PA1230U-T2C XCD 02798909 -3
Toshiba 730XCDT/2.1 PA1238U XCD 05740841 -3
Toshiba 320 CDT PA1271U-T2C 58727789A -1
Toshiba 320 CDT PA1271U-T2C 58727928A -1
Toshiba 320 CDT PA1271U-T2C 68818357A -1
Toshiba Satellite 220CDS/1.4 PA1240U-S2C 57014756 -3
Toshiba 320 CDT PA1271U-T2C 48685563A
Toshiba 320 CDT PA1271U-T2C 78853902A -1
Toshiba 320 CDT PA1271U-T2C 78853691A -1
Toshiba 320 CDT PA1271U-T2C 78901560A -1
IBM Thinkpad 770 9549-1AU 78-H4581
IBM Thinkpad 770 9549-1AU 78-H1574
IBM Thinkpad 770 9549-1AU 78-H4868
Toshiba 320 CDT PA1271U-T2C 58718541A-1
IBM Thinkpad 770ED 78-W2719 06/98
Toshiba Satellite 220CDS PA1240U-S2C 87214726 -3
Toshiba Tecra 500 CDT PA1221U XCD 12697514 -3
IBM Thinkpad 770 9548-40U 78- D6613 97/11
Toshiba 320 CDT PA1271U-T2C 68800838A -1
Toshiba 320 CDT PA1271U-T2C 78892313A -1
HP Omnibook 2100 F1581WT TW817D3223
HP Omnibook 2100 F1581WT TW818D3221
HP Omnibook 2100 F1581WT TW818D3242
HP Omnibook 2100 F1581WT TW818D3243
Toshiba Tecra 780 78839164A
Toshiba Satellite 320 CDS PA1271U VCD 48664008A -1
Toshiba Satellite 4000CDT /4.0 PA1273U XCD 98044958A -1
Toshiba Techra 750CDT/5.1 PA1253U-T2C 97291332 -3
Exhibit A-2-1
69
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Toshiba Satellite 4000CDT /4.0 PA1273U XCD Y8190803A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8189387A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8189724A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8189568A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8208963A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8209735A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8210580A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8189569A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8209920A
Toshiba Satellite 4000CDT /4.6 PA1273U -XCD Y8230082A -1
Toshiba Satellite 4000CDT /4.6 PA1273U XCD Y8231421A -1
Toshiba Satellite 4000CDT /4.6 PA1273U XCD Y8231394A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8209435A -1
HP OmniBook 2100 TW818D3241
Toshiba Satellite 4000CDT /4.6 PA1273U XCD
Toshiba Libretto 50CT/810 PA1249U X 97246509 -1
Toshiba Satellite 4000CDT /4.6 PA1273U XCD Y8231504A -1
Toshiba Satellite 4000CDT /4.6 PA1273U XCD Y8227329A -1
Toshiba Satellite 4000CDT /4.6 PA1273U XCD Y8230083A -1
Toshiba Satellite 4000CDT PA1273U XCD Y8230054A -1
(PA1273U-T2C)
Toshiba Satellite 4020CDT /6.4 PA5402U B
Toshiba 320 CDT PA1271U-T2C 78902872A -1
Toshiba Satellite 4020CDT /6.4 PA5402U B Y8191552A -1
Fujitsu Lifebook 900 Series FPC09002A (PA# 04271-A101) 84194018
Toshiba Satellite 4020CDT /6.4 PAS402U-T2CW8 Z8345252A -1
Toshiba Satellite 4020CDT /6.4 PAS402U-T2CW8 19379832A -1
Toshiba Satellite 4020CDT /6.4 PAS402U-T2CW8 29473559A -1
Toshiba Satellite 4020CDT /6.4 PAS402U-T2CW8 19398700A -1
Toshiba Satellite 4080XCDT /6.4 PAS408U-T2CW8 39562639A-1
Toshiba Satellite 4080XCDT /6.4 PAS408U-T2CW8 39562640A-1
Toshiba Satellite 4080XCDT /6.4 PAS408U-T2CW8 39566527A-1
Toshiba Satellite 4060CDT /4.02 PAS406U-T2CW8 39520211A-1
Toshiba Satellite 4030CDT /4.03 PAS403U-T2CW8 49625353A-1
Toshiba Satellite 4080XCDT /6.4 PAS408U-T2CW8 19417588A-1
Toshiba Satellite 4030CDT /4.03 PAS403U-T2CW8 49627003A-1
Toshiba Satellite 4030CDT /4.03 PAS403U-T2CW8 49627264A-1
Toshiba Satellite 730XCDT PA1238U-T2C 11744967-3
Compaq DP2000 5200MMX 3200CDS DOM 6736BK82S170
Compaq DP2000 M5166/2500CD DOM 6715HVYD833
Sony Sony PCV150 2619684
Sony Sony PCV-210 53601252
Compaq DP4000 5233MMX 3200CDS DOM 6752BXC3F769
Compaq DP2000 5200MMX 3200CDS DOM 6737BKB2D097
Compaq DP2000 5200MMX 3200CDS DOM 674BKB82Q126
Exhibit A-2-1
70
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Compaq DP2000 M5166/2500 DOM 6730HVU6Q240
Compaq DP2000 5200MMX 3200/CDS 6809BK82P857
DOM
Compaq DP2000 5200MMX 3200CDS DOM 6748BK82E171
Compaq DPEP C333/6.4/W5C US 6841CCP4K608
Compaq DP200 M5133 2500/CD DOM 6652HVX6J145
Compaq DP20005166MMX 3200/CDS DOM 6732BK72P533
Compaq DP2000 M5133 2500/CD DOM 6651HVX6J594
Sony Sony PCV-90 2115128
Compaq DP2000 M5166/2500CD DOM 6712HVY6D833
Compaq DP2000 M5200MMX 3200CDS 6748BK82E218
DOM
Compaq DP2000 M5133 2500/CD DOM 6652HVX6J148
Compaq DP2000 5200MMX 3200CDS DOM 6748BK82E219
Sony Sony PCV-120 2448236
Compaq DP2000 M5133 2500/CD DOM 6651HVX6G642
Compaq DP2000 M5133 2500/CD DOM 6702HVX6D621
Compaq DP2000 5200MMX 3200CDS DOM 6806BK82Q030
Compaq DP2000 5200MMX 3200CDS DOM 6744BK82Q152
Compaq DP2000 M5166/2500CD DOM 6713HVY6E989
Compaq DPEP C333/6.4/W5C US 6847CCP4B169
Compaq Presario 5050 1X8ABYF2656W
Compaq Presario 5050 1X8ABYF2C0XB
Compaq DPEP 6350/6.4DOM 6828BVD2L471
Compaq DP2000 5200MMX 3200CDS DOM 6736BK82S672
Compaq DP4000 5133 1620/LS DOM 6650BBK2E060
Compaq DP2000 5200MMX 3200CDS DOM 6736BK82S672
Compaq DP2000 M5133 2500/CD DOM 6703HVX6E375
Compaq DP200 M5133 2500/CD DOM 6703HVX6E367
Compaq Presario 5050 1X8ABYF2656Z
CCC Golf Ball Computer
Sony PCV-90 2114883
Compaq DP2000 5200MMX 3200CDS DOM 6736BK82Q729
Compaq DP2000 5200MMX 3200CDS DOM 674BK82Q072
Exhibit A-2-1
71
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Compaq DP2000 M5133 2500/CD DOM 6703HVX6E391
Compaq DP2000 5200MMX 3200CDS DOM 6809BK82P776
Compaq DP2000 5200MMX 3200CDS DOM 6806BK82P965
Compaq DP2000 5200MMX 3200CDS DOM 6806BK82Q000
Compaq DP2000 5200MMX 3200/CDS 6737BK82D088
DOM
Compaq DPEP C333/6.4/W5C US 6850CCP4B561
Compaq DP2000 5200MMX 3200CDS DOM 6744BK82Q164
Compaq DP2000 5200MMX 3200CDS DOM 6747BK82F138
Compaq DP2000 5200MMX 3200CDS DOM 6806BK82Q014
Compaq DP2000 M5166 2500/CDS 6712HVY6E030
Sony PCV-?? 2013976
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H339
Compaq DP4000 5233MMX 3200/CDS DOM 6752BXC3F811
Compaq DP2000 5200MMX 3200/CDS DOM 6806BK82Q485
Compaq DP4000 5233MMX 3200/CDS DOM 6752BXC3F843
Compaq DP4000 5233MMX 3200/CDS DOM 6752BXC3F758
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H343
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H362
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H388
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H318
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82F155
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H317
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H304
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H368
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H332
Compaq Presario 5050 1X89BYF2Y0FF
Compaq DP P 333/6.41 6845BZK2B147
Compaq Presario 5050 1X8ABYF2C0NF
Compaq Deskpro 6845BZK2A733
Compaq Presario 5050 1X8ABYF2C0TG
Compaq DP2000 5200MMX 3200/CDS DOM 9811BK82D514
Exhibit A-2-1
72
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Compaq DP4000 5133 1620/LS DOM 6702BBK2F480
Compaq Deskpro SB 6822BZG2J788
Compaq Presario 5170 A840BX25N403
Sony PCV-90 2115146
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK82H310
Compaq DP2000 5200MMX 3200CDS DOM 6806BK82Q511
Compaq DP2000 5200MMX 3200/CDS DOM 6810BK82R523
Compaq Deskpro SB 300/4.3 6834BZG2J269
Compaq DP2000 5200MMX 3200/CDS DOM 6807BK82P047
Compaq DP2000 5200MMX 3200/CDS DOM 6748bk82d197
Compaq Deskpro EN Series 633 640 6834BZK2K419
DOM
Compaq DP2000 5200MMX 3200CDS DOM 6809BK82P791
Compaq DP2000 5200MMX 3200CDS DOM 6806BK82T196
Compaq Presario 5050 1X89BYF2Y0FJ
Compaq EP Series 6300 6821BZG2J942
Compaq EP Series 6300 6822BZG2J931
Compaq DP2000 5200MMX 3200/CDS DOM 6748BK82D184
Compaq DP2000 5200MMX 3200CDS DOM 6809BK82P740
Compaq DP2000 5200MMX 3200CDS DOM 6809BK82P705
Compaq DP2000 5200MMX 3200/CDS DOM 6748BK82D194
Compaq DP2000 5200MMX 3200CDS DOM 6809bk82p767
Compaq Presario 5050 1X8ABYF2c089
Compaq DP2000 5200MMX 3200CDS DOM 6809BK82P769
DP4000 M5133/1630/LS 6704BBK2D217
Compaq DP2000 5200MMX 3200CDS DOM 6748BK82E176
Compaq DP2000 5200MMX 3200CDS DOM 6809BK82P817
Compaq Presario 5050 1X8ABYF2Y3CL
Compaq DP4000 5133 1620/LS DOM 8650BBK2D847
Compaq DP2000 5200MMX 3200/CDS DOM 6747BK02H303
Compaq DP2000 5200MMX 3200/CDS DOM 6806BK82Q726
Compaq DP2000 5200MMX 3200/CDS DOM 6806BK82Q529
Compaq EN Series 6333 6380BZK2J368
Exhibit A-2-1
73
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Compaq Deskpro EP Series 6821BZG2K073
6300/4.3DOM
Compaq DP2000 5200MMX 3200/CDS DOM 6748BK82D113
Compaq EN Series 6333 6829BZK2J764
Compaq EN Series 6333 6829BXK2J909
Compaq EN Series 6333 6829BZK2J662
Compaq EN Series 6333 6845BZK2A778
Compaq EN Series 6333 6847ccp4bi86
Compaq EN Series 6333 6850CCP4C079
Compaq EN Series 6333 6850CCP4C243
Compaq EN Series 6333 6850CCP4C967
Compaq EN Series 6333 6850CCP4C050
Compaq EN Series 6333 6850CCP4B915
Compaq EN Series 6333 6901CCP4A023
Compaq EN Series 6333 6847CCP4B194
Compaq EN Series 6333 6845BZK2B009
Compaq EN Series 6333 6850CCP4C073
Compaq EN Series 6333 6847CCP4B196
Compaq EN Series 6333 6845CCP4D832
Compaq EN Series 6333 6845CCP4D740
Compaq Deskpro 2000 6703hvx6e375
Compaq Deskpro 4000 6650bbk2d847
Compaq Deskpro C400 6911cl94a075
Compaq Deskpro C400 6909cl94a620
Compaq Deskpro C400 6909cl94a639
Compaq Deskpro C400 6910cl94a266
Compaq Deskpro C400 6910cl94a314
Compaq DeskproEP 6300/4.3DOM 6822BZG2K304
3com Super Stack II Switch 3000 7YDB020767
12 Port
0xxx Xxxxx Xxxxx XX Xxx 000 XX 0XXX000000
12 Port
0xxx Xxxxx Xxxxx XX Xxx 000 XX 0XXX000000
12 Port
0xxx Xxxxx Xxxxx XX Xxx 000 XX 0XXX000000
12 Port
0xxx Xxxxx Xxxxx XX Xxx 000 XX 0XXX000000
12 Port
3com Super Stack II PS Hub 40 7TRV28970C
12 Port
3com Super Stack II PS Hub 40 7TRV280249
12 Port
3com Super Stack II Hub 100 TX 6KZA0A302E
24 Port
Ascend Max200 Plus 7447123
Ascend Max200 Plus 8224862
Adtran TSU 120 743B2452
SuperScope VMS500 MZ009648050046
Sony Timelapse VCR SVT-124 0012549D7
Cisco Xxxxx0000X 45591044
Exhibit A-2-1
74
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Cisco Xxxxx0000X 45591041
Cisco Cisco2501 250721467
Cisco Cisco2924 FAA0246X080
Cisco Cisco2924 FAA0251Y14Z
Cisco Cisco766 5208557
Cisco Cisco7206 72640767
Cisco Cisco1924 FAA0247Z16Q
Cisco Cisco2501 250222794
Cisco Cisco2501 250721445
Cisco Cisco2501 250722736
Cisco Cisco2501 250731310
Cisco Cisco2501 250450525
Cisco Cisco2501 250464662
Cisco Cisco2501 250465856
Cisco Cisco2501 250464661
Cisco Cisco2501 250566173
0xxx Xxxxx Xxxxx XX Xxx 000 XX 0XXX000XX0
Compaq Keyboard/Monitor/Mouse-4
Compaq UPS E00077802
Compaq UPS E00094944
NEC Multisync A700 Monitor 7709403ED
Shamrock 14" Monitor 61TSA0015308
Belkin Omniview EC0F198373QS
Keyboard/Mouse/Monitor
Switch
Compaq DP2000 M5166/2500 6730HVU6Q326
DOM/64MB/2.4GB
Compaq Proliant 7000R D746BLC20086
Compaq Proliant 2500R D803BPV10281
Compaq Proliant 7000R D739BLC10525
Compaq Proliant 6000 D726BLB30743
Compaq Proliant 2500 D742HWB10026
Compaq Proliant 2500 D804BPT10994
Compaq Proliant 800 D712BJW11510
Compaq Proliant 7000R D744BLC20134
Compaq Proliant 7000R D745BLC20026
Compaq Proliant 3000
Compaq Proliant 3000 D851BVX10095
Compaq Proliant 2500 D739BJM10399
Compaq Proliant 7000R D840BWX10370
SUN SUN Enterprise 450 811F046D
StorageTek StorageTek 9710 230000005053
Compaq Proliant 1600 D829BWT10095
ProLiant 800 D712BJW10368
APC Smart-UPS 700 WS0000000000
APC Smart-UPS 1400 WS9746367029
APC Smart-UPS 1400 WS9738184245
Compaq Keyboard/Monitor/Mouse Switch-4
Compaq UPS E00206672
Compaq UPS E00205476
Exhibit A-2-1
75
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Compaq Keyboard/Monitor/Mouse Switch-4
Compaq UPS E00206716
Compaq UPS E00151705
Optiquest Q53 3D74600944
Optiquest Q53 3D74702572
Optiquest Q53 3D74404093
Compaq Proliant 400 D852CJS10035
Compaq Proliant 3000 D847BX610035
Hewlett Packard AdvanceStack J2600A 10BT SG62460424
Hub-12
Hewlett Packard AdvanceStack J2600A 10BT SG62360886
Hub-12
Hewlett Packard AdvanceStack Switching SG72260125
Hub-24R J3202A 10BT Hub
Hewlett Packard AdvanceStack Switching SG64531084
Hub-12R J3200A 10BT Hub
Hewlett Packard AdvanceStack Switching SG64932703
Hub-12R J3200A 10BT Hub
Hewlett Packard AdvanceStack Switch 208T US72900503
J3175A
Hewlett Packard AdvanceStack Hub-12TX TW73001092
J3234A
DigitalLink Prelude DSU (Internet DSU) 1277010684
Adtran 56/64 DSU (OSS DSU) 725A6153
Adtran TSU 000 (Xxxxx-xx-Xxxxx 000X0000
DSU)
Cisco 2501 Internet Router 25762337
Cisco 2501 Potin-to-Point Router 250219954
Ascend Max200 Plus 7135948
Linksys 8 Port Hub N/A
3Com PS Hub 40 12 Port 3C16405 7TRV1D1091
(Suite 580)
3Com PS Hub 40 24 Port 3C16406 7TSV298C3C
(Suite 590)
3Com PS Hub 40 12 Port 3C16405 7TRV28964C
(Suite 590)
Compaq Proliant 2500 8747HWA10192
Compaq Proliant 3000 D851BVX11036
Compaq Proliant 800 D736BJW30067
Compaq DP2000 5133/2500/CD DOM 6710HVX6F098
Compaq DP2000 5166/2500/CD DOM 6712HVY6E411
Compaq DP2000 5166/2500/CD DOM 6710HVY6D507
Compaq DP2000 5133/2500/CD DOM 6652HVX6J13
Compaq Proliant 2500 D747HWA30192
Compaq Proliant 800 D712BJW10368
Exhibit A-2-1
76
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Raritan Keyboard/Mouse/Monitor A965328
Switch
APC Smart-UPS 700 WS9721848735
APC Smart-UPS 700 WS9721848729
APC Smart-UPS 700 WS9722888172
APC Smart-UPS 700 WS9721848713
APC Smart-UPS 700 S96068800960
APC Smart-UPS 700 WS9721848686
APC Smart-UPS 700 WS9721848660
External Xxxxxx 4mm DAT DS02W24
External Seagate 4mm DAT GR02T2T
Hewlett Packard HP Office Jet 630 US78KA21FT
Hewlett Packard HP Laser Jet 3100
Hewlett Packard HP Office Jet 630 US78KA21F4
Hewlett Packard HP Laser Jet 3100
Hewlett Packard HP Laser Jet 6L JPHJ057486
Hewlett Packard HP LaserJet 4+ JPGK175289
Hewlett Packard HP LaserJet 4V JPFH034125
Hewlett Packard HP LaserJet 5N
Hewlett Packard HP LaserJet 4000 JPPG175947
Hewlett Packard HP LaserJet 5 USHB101215
Hewlett Packard HP LaserJet 4000N JPPA173708
Hewlett Packard HP LaserJet 4000TN JPGN040218
Hewlett Packard HP Color LaserJet 5 JPHF133452
Hewlett Packard HP LaserJet 5N USLC011885
Hewlett Packard HP LaserJet 5N USLB005610
Hewlett Packard HP LaserJet 4V
Hewlett Packard HP LaserJet 8000 C4087A USBB000307
CLIENT ENGAGEMENTS AND
CONTRACTS
* * *
Exhibit A-2-1
77
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT A-3(C)
CAPITAL CONTRIBUTIONS OF INITIAL CLASS C MEMBER AND
OBLIGATIONS ASSUMED BY THE COMPANY
PROSPECTIVE CLIENTS
* * *
Exhibit A-2-1
78
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT B-1
EMPLOYEES OF INITIAL CLASS A MEMBER SUBJECT TO LOAN-OUT AGREEMENT
XXXX XXXXXXXX
XXXX FREISIA
XXXXXXX XXXX
Exhibit B-2-1
79
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT B-2
EMPLOYEES AND PARTNERS OF INITIAL CLASS B MEMBER
SUBJECT TO LOAN-OUT AGREEMENT
* * *
Exhibit B-2-1
80
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT B-3
EMPLOYEES OF INITIAL CLASS C MEMBER SUBJECT TO LOAN-OUT AGREEMENT
* * *
Exhibit B-2-1
81
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT C
INITIAL MEMBERS, ADDRESSES AND PERCENTAGE INTERESTS AS OF EFFECTIVE DATE
------------------------------- ------------------------------------------ ------------------------
Member Class of Membership Interest Percentage
held Interest held by such
Member
------------------------------- ------------------------------------------ ------------------------
------------------------------- ------------------------------------------ ------------------------
Qwest Communications
International Inc. Class A 51%
1000 Quest Tower
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
------------------------------- ------------------------------------------ ------------------------
------------------------------- ------------------------------------------ ------------------------
KPMG LLP
000 Xxxx Xxxxxxxxxxx Xxxx Class B 9%
Xxxxxxxx Xxxx, XX 00000
------------------------------- ------------------------------------------ ------------------------
------------------------------- ------------------------------------------ ------------------------
Softline Consultants &
Integrators Inc. Class C 40%
c/o
KPMG LLP
000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
------------------------------- ------------------------------------------ ------------------------
*
Exhibit C-1
82
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT D
ALLOCATIONS
ARTICLE 1
ALLOCATION OF NET INCOME, NET LOSSES
AND OTHER ITEMS AMONG THE MEMBERS
1.1. CAPITAL ACCOUNTS.
(a) A separate capital account shall be maintained for each Member (a
"CAPITAL ACCOUNT"). Such Member's Capital Account shall from time to time be (i)
increased by (A) the amount of money and the Book Value of any property
contributed (or deemed contributed) by the Member to the Company (net of
liabilities secured by the property or to which the property is subject), and
(B) the Net Income and any other items of income and gain specially allocated to
the Member under Paragraph 1.4, and (ii) decreased by (A) the amount of money
and the Book Value of any property distributed to the Member (net of liabilities
secured by the property or to which the property is subject), and (B) the Net
Losses and any other items of deduction and loss specially allocated to the
Member under Paragraph 1.4.
(b) In the event that assets of the Company other than money are
distributed to a Member in liquidation of the Company, or in the event that
assets of the Company other than money are distributed to a Member in kind, in
order to reflect unrealized gain or loss, Capital Accounts for the Members shall
be adjusted for the hypothetical "book" gain or loss that would have been
realized by the Company if the distributed assets had been sold for their gross
fair market values in a cash sale. In the event of the liquidation of a Member's
interest in the Company, or in the event of a Qualified Public Offering
involving a transfer or deemed transfer of membership interests in the Company
in order to reflect unrealized gain or loss, Capital Accounts for the Members
shall be adjusted for the hypothetical "book" gain or loss that would have been
realized by the Company if all of the Company's assets had been sold for their
gross fair market values in a cash sale.
(c) Upon liquidation of the Company, or of an interest of a Member in the
Company, and following the allocation of all items of income and loss as set
forth in this Exhibit D, the assets of the Company shall be distributed to the
Member or Members in accordance with their Capital Account balances.
1.2. ALLOCATION OF NET LOSSES. After giving effect to the special allocations
set forth in Paragraph 1.4, Net Losses of the Company for each Fiscal Year shall
be allocated to the Members as follows:
(a) First, to the Members in proportion to their respective positive Adjusted
Capital Account balances, until such balances are reduced to zero; and
(b) Thereafter, to the Members in accordance with their Percentage
Interests.
Exhibit D-1
83
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
1.3. ALLOCATION OF NET INCOME. After giving effect to the special allocations
set forth in Paragraph 1.4 below, Net Income of the Company for each Fiscal Year
shall be allocated to the Members in the following order and priority: (a)
First, to the extent Net Losses have been allocated to the Members pursuant to
Paragraph 1.2 above in prior years, Net Income shall be allocated to the
Members, to offset their respective shares of any Net Losses allocated pursuant
to Paragraph 1.2(b); and
(b) Thereafter, to the Members in accordance with their respective Percentage
Interests.
1.4. SPECIAL ALLOCATIONS. The following special allocations shall be made
in the following order:
(a) Regulatory Allocations. Allocations shall be made as necessary so as to
insure that the Company complies with the provisions for "minimum gain
chargeback" as described in Treasury Regulations Section 1.7042(f), "partner
nonrecourse debt minimum gain chargeback" as described in Treasury Regulations
Section 1.7042(i)(4), and "qualified income offset" as described in Treasury
Regulations Section 1.7041(b)(2)(ii)(d).
(b) Extraordinary Gain or Loss. Gain or loss attributable to any Extraordinary
Transaction (including for this purpose, any hypothetical "book" gain or loss
associated with any revaluation of the Capital Accounts or the assets of the
Company pursuant to this Exhibit D) shall be specially allocated among the
Members (i) first, to eliminate any deficit balances in the Adjusted Capital
Accounts of the Members, and (ii) thereafter, in such manner as to cause the
ratios of each Member's Adjusted Capital Account to the aggregate Adjusted
Capital Accounts of all of the Members (following such special allocation) to
equal as nearly as possible their respective Percentage Interests.
(c) Items Recharacterized. If any payment to any person that is treated by the
Company as the payment of an expense is recharacterized by a taxing authority as
a distribution by the Company to the payee as a member, such payee shall be
specially allocated an amount of the Company's gross income and gain as quickly
as possible equal to the amount of the distribution.
(d) Nonrecourse Deductions. Any Nonrecourse Deductions shall be allocated to
the Members in accordance with their Percentage Interests.
(e) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions shall be
allocated to the Member that bears the Economic Risk of Loss for the member
nonrecourse debt to which such deductions relate as provided in Treasury
Regulation Section 1.7042(i)(1).
(f) Certain Section 754 Adjustment. To the extent any adjustment to the adjusted
tax basis of any the Company asset pursuant to Code Section 732(d), Code Section
734(b) or Code Section 743(b) is required, pursuant to Treasury Regulations
Section 1.7041(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
its interest in the Company, the amount of such adjustment to Capital Accounts
shall be treated as an item of gain (if the adjustment increases such basis) or
loss (if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Members in accordance with their interests in the
Company as determined under Treasury Regulations Section 1.7041(b)(3) in the
event Treasury Regulations Section 1.704
Exhibit D-2
84
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made
in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(g) Limit on Loss Allocations. Notwithstanding the provisions of Paragraph 1.2
or any other provision of this Agreement to the contrary, Net Losses (or items
thereof) will not be allocated to a Member if such allocation would cause or
increase a deficit balance in a Member's Adjusted Capital Account and will be
reallocated to the other Members in proportion to their Percentage Interests,
subject to the limitations of this subparagraph 1.4(g).
(h) Special Allocation of Income or Deductions or Losses Attributable to
Contributions. Notwithstanding the provisions of Paragraph 1.2 of this Exhibit
D, to the extent that a contribution or deemed contribution of a Member
(including any deemed contribution attributable to the agreements provided in
Subsections 2.4(2), (3), (4), (5), (6), (7), (8), and (9) gives rise in
connection with such contribution or deemed contribution to (i) a deduction or
loss (including a deduction for compensation or other ordinary and necessary
expense), or (ii) additional income (including income attributable to
royalties), and in either case is specifically attributable to such contribution
or deemed contribution, such deduction or income shall be specially allocated to
such Member as soon as practicable following such contribution or deemed
contribution, unless otherwise determined by the Management Committee.
(i) Liquidation Allocations. It is intended that immediately before any
distribution in liquidation to the Members pursuant to Section 14.5 of the
Agreement, each Member's Capital Account balance shall, when divided by the sum
of all Capital Account balances, yields a percentage equal to such Member's
Percentage Interest.. This intended Capital Account balance for a Member is
referred to as such Member's "TARGETED CAPITAL ACCOUNT Balance." Notwithstanding
anything to the contrary in this Exhibit D, if upon a termination and
liquidation of the Company, any Member's ending Capital Account balance,
determined without regard to this Paragraph 1.4(i), immediately before the
distributions to be made pursuant to Section 14.5 of the Agreement, would differ
from its Targeted Capital Account Balance, then the Members shall be specially
allocated items of income, gain, loss and deduction (including items of gross
income and deduction) for Capital Account purposes for such year in such manner
so as to minimize the differences between each Member's ending Capital Account
balance and its Targeted Capital Account Balance.
(j) In the event that any adjustment is made to any item of income, deduction,
credit or allowance (an "ADJUSTMENT") of the Company by a regulatory agency, and
a Member is a counterparty to such Adjustment, the Members agree that (i) all
allocations of income, gain, loss, deduction or credit shall be made, (ii) any
necessary deemed distributions and/or contributions shall be treated as having
occurred, and (iii) all capital account and other necessary adjustments shall be
made, such that the tax consequences of any Adjustment to the Company and the
Members subject to such Adjustment will be minimized to the extent possible. As
a result of the foregoing, it is anticipated that the existence of any such
Adjustment shall not alter the basic economic agreement of the parties as
reflected herein, which is the primary purpose of this section, and shall not in
any way have a net effect on the capital account balances of the Members in
relation to each other Member.
1.5. ALLOCATION OF CERTAIN TAX ITEMS.
Exhibit D-3
85
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(a) Except as otherwise provided in this Paragraph 1.5, all items of income,
gain, loss or deduction for federal, state and local income tax purposes shall
be allocated in the same manner as the corresponding "book" items are allocated
under Paragraphs 1.2 and 1.3 (as a component of Net Losses or Net Income), or
Paragraph 1.4.
(b) In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss and deduction with respect to any property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and the initial
Book Value thereof (computed in accordance with subparagraph (i) of the
definition of the term Book Value herein). Any such item of income, gain, loss
or deduction shall be allocated in a manner consistent with Treasury Regulations
Section 1.704-3, applying the method allowed under paragraph (b) thereof unless
the Management Committee agrees to an allocation method allowed under Section
1.704-3(c) or (d).
(c) In the event the Book Value of any asset of the Company is adjusted pursuant
to subparagraph (ii) or (iv) of the definition of the term Book Value (as set
forth below), subsequent allocations of income, gain, loss and deduction with
respect to such asset shall be determined using the principles specified in
Treasury Regulations Section 1.704-1(b)(2)(iv)(g) and shall take account of any
variation between the adjusted basis of the asset to the Company for income tax
purposes and its Book Value (excluding any portion of such variation subject to
subparagraph 1.5(b)) in the manner required under Treasury Regulations Section
1.704-1(b)(4)(i). Such allocations shall be made in a manner consistent with
Treasury Regulations Section 1.704-3(b) unless the Management Committee agrees
to an allocation method allowed under Section 1.704-3(c) or (d).
(d) The Tax Matters Member may, in its reasonable discretion, cause the Company
to make the election under Section 754 of the Code, in which event allocations
of income, gain, loss or deduction to affected Members for federal, state and
local tax purposes shall take into account the effect of such election pursuant
to applicable provisions of the Code.
(e) All other matters concerning allocations for United States federal, state
and local and non-U.S. income tax purposes, including accounting procedures, not
expressly provided for by the terms of this Agreement, shall be equitably
determined in good faith by the Tax Matters Member in any manner that reasonably
reflects the purpose and intention of this Agreement. Allocations pursuant to
this Paragraph 1.5 are solely for federal, state and local tax purposes. Except
to the extent allocations under this Paragraph 1.5 are reflected in the
allocations of the corresponding "book" items pursuant to Paragraphs 1.2 or 1.3
(as a component of Net Losses or Net Income), or Paragraph 1.4, allocations
under this Paragraph 1.5 shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Net Income, Net Losses,
other items or distributions pursuant to any provision of the Agreement.
1.6. ALLOCATION BETWEEN ASSIGNOR AND ASSIGNEE. The portion of the income, gain,
losses, credits, and deductions of the Company for any Fiscal Year during which
a membership interest in the Company is assigned by a Member (or by an assignee
or successor in interest to a Member), that is allocable with respect to such
interest shall be apportioned between the assignor and the assignee of the
interest on whatever reasonable, consistently applied basis is selected by
Exhibit D-4
86
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
the Tax Matters Member and permitted by the applicable Treasury Regulations
under Code Section 706.
1.7. TAX REPORTING. The Members are aware of the income tax consequences of
the allocations made by this Exhibit D and hereby agree to be bound by the
provisions of the Agreement and this Exhibit D to the Agreement in reporting
their shares of the Company income and loss for income tax purposes.
1.8. PROFIT SHARES. Solely for purposes of determining a Member's proportionate
share of the Company's "excess nonrecourse liabilities," as defined in Treasury
Regulation Section 1.7523(a), the Members' interests in profits of the Company
shall be deemed to be in accordance with their Percentage Interests.
ARTICLE 2
DEFINITIONS
As used in this Exhibit D, the following terms shall have the following
meaning:
"ADJUSTED CAPITAL ACCOUNT" means the balance in a Member's Capital Account after
giving effect to the following adjustments:
(i) debit or credit to such Capital Account, as applicable,
all capital contributions and distributions to the Member for the
relevant Fiscal Year;
(ii) credit to such Capital Account any amount that such
Member is deemed obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Sections 1.7042(g)(1) or
1.7042(i)(5); and
(iii) debit to such Capital Account the items described in
Treasury Regulations Sections 1.7041(b)(2)(ii)(d)(4),
1.7041(b)(2)(ii)(d)(5), and 1.7041(b)(2)(ii)(d)(6).
"BOOK VALUE" means, with respect to any asset, the asset's adjusted basis for
federal income tax purposes, except as follows:
(i) the initial Book Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such
asset, as determined by the contributing Member and the Management
Committee; and
(ii) the Book Value of all assets of the Company shall be
adjusted to equal their respective gross fair market values (taking
Code Section 7701(g) into account), as of the following times: (a) the
acquisition of an additional interest in the Company by any new or
existing Member in exchange for more than a de minimis capital
contribution; (b) the distribution by the Company to a Member of more
than a de minimis amount of property of the Company as consideration
for an interest in the Company, in the case of either (a) or (b), if
the Management Committee determines that such adjustment is necessary
or appropriate to reflect the relative economic interests of the
Members in the Company within the meaning of Treasury Regulations
Section 1.7041(b)(2)(i)(g); and (c) the liquidation of a Member's
interest in the Company or, liquidation of the Company within the
meaning of Treasury Regulations Section 1.7041(b)(2)(ii)(g);
(iii) the Book Value of any asset of the Company distributed
to any Member shall be the gross fair market value (taking Code Section
7701(g) into account) of such asset on the date of distribution;
Exhibit D-5
87
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(iv) the Book Values of the Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Section 732(d), Section 734(b) or Section 743(b) of
the Code, but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m) and Paragraph 1.4(i) hereof, provided,
however, that Book Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that the Management Committee
determines that an adjustment pursuant to subparagraph (ii) of this
definition is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this
subparagraph (iv); and
(v) if the Book Value of any asset has been determined or
adjusted pursuant to subparagraphs (i), (ii) or (iv) hereof, such Book
Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing gains or
losses from the disposition of such asset.
"DEPRECIATION" means, for each Fiscal Year or other period, an amount equal to
the depreciation, amortization, or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such year or other
period, except that if the Book Value of any asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year or other
period, Depreciation shall be an amount which bears the same ratio to such
beginning Book Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis, provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Book
Value using any reasonable method selected by the Tax Matters Member.
"EXTRAORDINARY TRANSACTION" means, any sale or refinancing of any substantial
portion of the assets of the Company.
"MEMBER NONRECOURSE DEDUCTIONS" in any year means deductions that are
characterized as "partner nonrecourse deductions" under Treasury Regulations
Sections 1.704-2(i)(1) and 1.704-2(i)(2).
"NET INCOME" and "NET LOSSES" mean, for each Fiscal Year or other period, an
amount equal to the Company's taxable income or loss, as the case may be for
such year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss and deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments: (i) any income of the Company
that is exempt from federal income tax and not otherwise taken into account in
computing Net Income or Net Losses pursuant to this paragraph shall be added to
such taxable income or loss; (ii) any expenditures of the Company described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv), and not otherwise
taken into account in computing Net Income or Net Losses pursuant to this
definitional paragraph shall be subtracted from such taxable income or loss;
(iii) in the event the Book Value of any asset of the Company is adjusted
pursuant to subparagraph (ii) or (iii) of the definition thereof, the amount of
such adjustment shall be taken into account as gain or loss from the disposition
of such asset for purposes of computing Net Income or Net Losses; (iv) gain or
loss resulting from the disposition of any asset of the Company with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Book Value of the asset disposed of,
notwithstanding that the adjusted tax basis of such asset differs from its
Exhibit D-6
88
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Book Value; (v) in lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period, computed in accordance with the definition thereof; and (vi)
notwithstanding any other provision of this Paragraph, any items which are
specially allocated pursuant to Paragraph 1.4 hereof shall not be taken into
account in computing Net Income and Net Losses.
"NONRECOURSE DEDUCTIONS" in any year means deductions that are characterized as
"nonrecourse deductions" under Treasury Regulations Sections 1.704-2(b)(1) and
1.704-2(c).
"QUALIFIED PUBLIC OFFERING" shall have the meaning set forth in Article 1 of the
Agreement.
OTHER DEFINITIONS. All other capitalized terms used in this Exhibit D
shall have the same meaning as inthe Agreement.
Exhibit D-7
89
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT E-1
CAPITAL CALL PROCEDURES
(A) CAPITAL CALL NOTICE. Each Capital Call Notice will
specify as of the date of such notice:
(1) the total Additional Capital Contributions of all Members
subject to such notice;
(2) the then current Percentage Interest and capital account
balance of each of the Members;
(3) the total amount of the Additional Capital Contribution
required to be funded by each Member pursuant to such Capital
Call Notice; and
(4) the identity of the depository financial institution
accounts of the Company into which the Additional Capital
Contributions of the agent to which such other are to be
delivered.
(B) FUNDING OF CAPITAL CALL. Subject to the provisions of Section 4.5,
-----------------------
each Member who is required to make an Additional Capital Contribution
will, not later than the date which is five Business Days after the date of
actual delivery thereto of a Capital Call Notice, contribute to the capital
of the Company cash made by wire transfer of immediately available funds to
the bank account of the Company, or deliver such other assets to the agent,
specified in the applicable Capital Call Notice an amount equal to the
Additional Capital Contribution required to be funded by such Member
pursuant to the applicable Capital Call Notice. Any Additional Capital
Contribution not made by such date will accrue interest at the rate of 1.5%
per month for the period commencing on the date such payment was due until
the day such payment is paid.
Exhibit E-1
90
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT E-2
REMEDIES
(A) REMEDIES. If the Defaulting Member does not contribute the
Additional Capital Contribution to the Company within the periods set
forth below, the Management Committee, acting for all purposes of
Section 4.6 and this Exhibit E-2 without the vote of the Managers
appointed by the Defaulting Member (i.e., by the Managers appointed by
the non-Defaulting Members) may elect any one or more of the remedies
set forth below. Notwithstanding the foregoing, in no event will a
non-Defaulting Member be entitled to elect more than one remedy if the
effect of doing so would be duplicative.
(1) ADVANCE FUNDS. If the Defaulting Member does not
contribute its Additional Capital Contribution within the 15
day period following the dispatch of written notice from the
Company of an Event of Default, the Management Committee may
elect to permit non-Defaulting Members to advance funds to the
Company to cover those amounts that the Defaulting Member
fails to contribute. Amounts that a non-Defaulting Member so
advances on behalf of the Defaulting Member will become a loan
due and owing from the Defaulting Member to such
non-Defaulting Member and bear interest at the rate per annum
of 150 basis points above the referenced rate of the Bank of
America (or any successor bank) as in effect on the date such
Additional Capital Contribution was originally due, with such
interest being payable monthly. All cash distributions
otherwise distributable to the Defaulting Member under this
Agreement will instead be paid to the non-Defaulting Members
making such advances until such advances and any accrued but
unpaid interest thereon are paid in full. Any amount repaid
will first be applied to interest and thereafter to principal.
Effective upon a Member becoming a Defaulting Member, such
Member shall grant to the non-Defaulting Members who advance
funds under this subsection (1) a security interest in such
Defaulting Member's Membership Interest to secure its
obligation to repay such advances, and hereby agrees to
execute and deliver a promissory note, a security agreement,
and such UCC-1 financing statements and assignments of
certificates of membership (or other documents of security or
transfer) in such form as such non-Defaulting Members may
reasonably request.
(2) ADJUST PERCENTAGE INTEREST. If the Defaulting
Member does not, within a further period of 60 days,
contribute such Additional Capital Contribution and/or repay
in full any advances made by the non-Defaulting Members, the
Management Committee may elect upon 30 days prior written
notice to the Defaulting Member to adjust the Percentage
Interests of the Company's Members at the end of such 30 day
period (unless, prior to such date, the Defaulting Member has
fully remedied such default) in which event each Member's
Percentage Interest will be a fraction, the numerator of which
represents the amount of such Member's Capital Account and the
denominator of which represents the sum of all Members'
Capital Accounts.
(3) DISSOLVE. If the Defaulting Member does not
contribute Additional Capital Contributions on three
occasions, whether or not consecutive, and the Defaulting
Member has failed to cure each such failure to contribute
within the fifteen day period specified in subsection (1)
above, the Management Committee may elect to dissolve the
Company, upon the approval of a majority of the
Exhibit E-2-1
91
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED
THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Percentage Interests of the non-Defaulting Members, in which
event the Company will be wound-up, liquidated and
terminated pursuant to ARTICLE 14.
(4) PURCHASE INTEREST. If the Defaulting Member does
not contribute Additional Capital Contributions on three
occasions, whether or not consecutive, and the Defaulting
Member has failed to cure each such failure to contribute
within the fifteen day period specified in subsection (1)
above, the Management Committee, upon the approval of a
majority of the Percentage Interests of the non-Defaulting
Members, may elect to permit the Company or the non-Defaulting
Members to purchase (and the Defaulting Member shall be
required to sell) the Defaulting Member's entire Membership
Interest for the book value thereof (i.e., for the positive
balance of such Member's Capital Account) less the total
amount owed by such Member to the Company and non-Defaulting
Members in respect of unpaid Additional Capital Contribution
or advances by non-Defaulting Members in respect thereof.
(b) OTHER EFFECTS.
(1) NO DISTRIBUTIONS. A Defaulting Member will have
no right to receive any Distributions from the Company until
the non-Defaulting Members have first received Distributions
in an amount equal to the additional capital contributed by
each non-Defaulting Member to the Company, including advances
as loans to the Defaulting Member, if any, plus a cumulative,
compounded return thereon at the rate per annum of 150 basis
points above the reference rate of the Bank of America as in
effect on the date such additional capital was contributed.
(2) NO VOTING. If the Management Committee exercises
any of the remedies set forth in subsections (a)(3) or (a)(4)
above, the Defaulting Member will lose its voting and approval
rights under this Agreement until completion of dissolution
and the winding up of the affairs of the Company, or such time
as the Defaulting Member cures (if the non-Defaulting Member
thereafter permits the Defaulting Member to cure) the default
or its Membership Interest is purchased. Notwithstanding the
foregoing, in the event the non-Defaulting Member elects to
exercise the remedy provided for in subsection (a)(4) above,
then pending the consummation of the purchase of the
Defaulting Member's entire Membership Interest pursuant to
such subsection, the Defaulting Member will, even if it no
longer has any Managers appointed by it to the Management
Committee, retain the right to approve all actions specified
anywhere in this Agreement as requiring the unanimous consent
or approval of the Management Committee until consummation of
such purchase. No reduction in a Member's Percentage Interest
pursuant to subsection (a) shall affect any of the Defaulting
Member's voting or approval rights under this Agreement (other
than to the extent such reduction reduces the voting power of
the Defaulting Member's representatives).
(3) NO PARTICIPATION IN MANAGEMENT. Except as
provided in subsection (2), if the Management Committee
exercises any of the remedies set forth in subsections (a)(3)
or (a)(4), the Defaulting Member will lose its ability
(whether as a Member or through the Managers appointed by it)
to actively participate in the management and operations of
the Company until the completion of dissolution and the
winding up of the affairs of the Company, or such time as the
Defaulting Member cures (if the non-Defaulting Member
thereafter permits the Defaulting Member to cure) the default
or its Membership Interest is purchased.
Exhibit E-2-2
92
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
EXHIBIT F
INITIAL BUSINESS PLAN
[KPMG LOGO]
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Project Opal Business Plan
Updated 06-03-99
93
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Project Opal Business Plan Sections
--------------------------------------------------------------------------------
I. Introduction to ASP Market
II. Market Assessment
III. Services
IV. Pro Forma Financials
V. Staffing, Contracts, and Pipeline
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Project Opal Business Plan Sections
--------------------------------------------------------------------------
I. Introduction to ASP Market
II. Market Assessment
III. Services
IV. Pro Forma Financials
V. Staffing, Contracts, and Pipeline
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Service Model Definitions
--------------------------------------------------------------------------------
Applications
Service Applications
Provider Management
---------------------------------------------------------------------------------------
Target Market low to middle mid to high
---------------------------------------------------------------------------------------
Degree of customization none to low medium to high
---------------------------------------------------------------------------------------
Prominent providers *** ***
---------------------------------------------------------------------------------------
Unit of pricing/term Subscription: contracts (5 year)
Per user/month based on scope
and service level
---------------------------------------------------------------------------------------
Delivery profile IP networks, remote post implementation
servers, browser-based, services for ERP,
VPN client/server
---------------------------------------------------------------------------------------
Typical applications Productivity, CRM, all ERP (HR, financials,
ERP manufacturing, distribution)
as well as legacy systems
of all kinds
---------------------------------------------------------------------------------------
Type of software license One to Many (ASP) held One to one, held by the
by ASP or ISV. One to one client
(Apps Hosting) held by
client
---------------------------------------------------------------------------------------
Data Center On ASP premises On provider premises, or
3rd party ITO, or client
site
---------------------------------------------------------------------------------------
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Why the ASP Market is Emerging
---------------------------------------------------------------------------
- Demand Drivers
Increasingly Complex Application Environment
Internet Imperative
Competitive Refocusing
Increased M&A Activity
Increased Acceptance of Outsourcing
- Supply Drivers
Advancements in Networking Technologies
Software Vendor Need to Increase Middle Market Presence
- Still Primarily Supply Driven at This Point
Source: IDC, 1999 [IDC LOGO]
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The ASP Business Model: Required Skill Sets
--------------------------------------------------------------------------------
From KPMG
&
Qwest
-------------------------------
Services
- Services Infrastructure
- Service Sales Expertise
- Project Management
- Customer Support
-------------------------------
From Qwest
-------------------------------
Networking
- Data Center
- WAN Infrastructure
- Managed Services
- Network Monitoring
- Network Security
-------------------------------
From KPMG
&
Qwest
-------------------------------
- License Administration
- Application Integration
- Application Management
- Application Support
- Application Sales Expertise
-------------------------------
From KPMG
-------------------------------
- License Administration
- Application Integration
- Application Management
- Application Support
- Application Sales Expertise
-------------------------------
Source: IDC, 1999
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Project Opal Business Plan Sections
--------------------------------------------------------------------------
I. Introduction to ASP Market
II. Market Assessment
III. Services
IV. Pro Forma Financials
V. Staffing, Contracts, and Pipeline
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Applications Management: Global Market Growth
--------------------------------------------------------------------------------
Applications Management: by Region
[PERFORMANCE GRAPH]
Source: G2
--------------------------------------------------------------------------------
Note: Xxxxxxxxx Research corroborates the G2 projections. Forrester projects
the applications outsourcing market to be $21 billion dollars by the year 2001
--------------------------------------------------------------------------------
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Global Enterprise ASP Market Opportunity
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- Reality is the Market is Small Today...
[PERFORMANCE GRAPH] - However Great Growth Potential
- U.S. Lead Market, Europe is Next
- 1999 Will Be Critical Year as ASPs Hit the Streets
Source: IDC, 1999
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Service Provider Value Chain
--------------------------------------------------------------------------------
Web-based Services Offered
***
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Competitive Snapshot
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--------------------------------------------------------------------------------
Company Mkt Segments Partners Services Advantage Weakness
--------------------------------------------------------------------------------
*** *** *** *** *** ***
Source: IDC, Psft internal
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ASP Technical Challenges
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Challenge Response
- App performance and security ***
- Apps not Web ready ***
- Managing a complex set of configurations ***
- SI Challenge ***
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ASP Business Challenges
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Challenge Response
*** ***
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Benefits to Users: Customer Value Proposition
---------------------------------------------------------------------------
- Lower Total Cost of Ownership
- Higher availability, redundancy, security
- Greater sophistication of software solution
- Greater rate of technology change
- Focus on core competencies
- Technical skills shortage is solved
- Because the apps are not installed at client site, there is no
compatibility issue
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ASP and Opal's Value Chain Components
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Components
Sales, Marketing & Distribution [KPMG, Opal, Qwest, ***]
[SAP, PeopleSoft,
Oracle, Siebel, etc.] Superior, Branded Applications
Implementation, Integration, and Business Mgmt [KPMG]
[Opal, Qwest] IP Network Management, Data Center
[Opal, Qwest] Daily Process Operations Capacity
[Opal, Qwest] Customer Care Capabilities (Web, Telephony)
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Project Opal Business Plan Sections
--------------------------------------------------------------------------
I. Introduction to ASP Market
II. Market Assessment
III. Services
IV. Pro Forma Financials
V. Staffing, Contracts, and Pipeline
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Enterprise Applications Management Services
--------------------------------------------------------------------------------
- Services provided by KPMG(1)
- Services provided by/through Project Opal(2)
- Services provided by Qwest(3)
- Upgrades
- Integrate 3rd party products
- Implement new tools & applications
- Customizations
- Build/modify Interfaces
- Database Administration
- Apps System Administration
- Security Administration
- Apps Design & Development
- Problem Resolution (Help Desk)
- Operating Systems Admin (Unix, NT)
- Network Administration
- Server Maintenance
- Disaster Recovery
- Backup, Retrieval, and Archival
- Business Advisory(1,2,3)
- Enhancements(2)
- Application Functional Support(2)
- Application Technical Support(2)
- Implementation(1,2)
- Software Licenses(2)
- IT Infrastructure Management(3)
- Telecommunications(3)
- Business/Technology Translation
- Applications (Project Opal)
- Infrastructure (KPMG, Qwest)
- Specialized Industry Consulting (KPMG)
- Change Management (Project Opal)
- Applications Configuration
- Table Maintenance
- Testing
- User Training
- Problem resolution (Help Desk)
- Design
- Build
- Implement
- ERP
- Supply Chain
- CRM
- Other
- Physical Network
- IP Backbone
- VPN
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Opal's Service Delivery Infrastructure
--------------------------------------------------------------------------------
Project Opal
Headquarters
Denver
Client
- Casual and concurrent use access to system
- KPMG onsite client presence
- Program management
- Business analysis
- Maintenance and enhancements (as required)
IT Infrastructure Operations
at Qwest CyberCenters
- Operating systems administration
- Network administration
- Server maintenance
- Disaster recovery
- Backup retrieval and archival
Applications Competency Centers
Wilmington, DE Atlanta, GA
Tysons Corner, VA Dallas, TX
San Jose, CA Chicago, IL
- Applications Support Desk
- Technical teams
- DBA/system/security administration
- Applications development
- Applications configuration teams
- Applications Knowledge Repository
ISV Help Desk
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Products
--------------------------------------------------------------------------------
Opal's services are focused on supporting the following products:
- Enterprise Resource Planning Systems
- SAP
- Oracle
- PeopleSoft
***
- Customer Relationships Management (CRM) Products
- Siebel
- ***
- Electronic Commerce (TBD)
- Other Point Solutions
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Project Opal Business Plan Sections
--------------------------------------------------------------------------
I. Introduction to ASP Market
II. Market Assessment
III. Services
IV. Pro Forma Financials
V. Staffing, Contracts, and Pipeline
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Opal Income Statement
--------------------------------------------------------------------------------
Income Statement
($ in thousands)
Q3-99 Q4-99 Q1-00 Q2-00 Q3-00 Q4-00
Revenue
Non-Recurring
Recurring
KPMG Contributed Revenue (No Growth)
-------------------------------------
Sum
Expenses
Implementation COGS
Support COGS
CyberCenter COGS
IP Transport COGS
Operating Systems
ISV License
SoftLine COGS
-------------------------------------
Sum COGS
Gross Income
Gross Margin
Sales & Marketing
General & Administrative
-------------------------------------
Sum
EBITDA * * *
Depreciation
Taxes
Net Income
Cash Flow
Net Income
Add Depreciation
Less Capex
Add Changes in Working Capital
-------------------------------------
Cash Flow
Discount Rate/Period
Present Value of Cash Flow
---------------------------------------
NPV of Cash Flow
---------------------------------------
Terminal Value
EBITDA Less Capex Multiple
Terminal Value PV/TV
---------------------------------------
Total Value
---------------------------------------
Income Statement
($ in thousands)
2 Quarters
1999 2000 2001 2002 2003 2004
Revenue
Non-Recurring
Recurring
KPMG Contributed Revenue (No Growth)
-------------------------------------
Sum
Expenses
Implementation COGS
Support COGS
CyberCenter COGS
IP Transport COGS
Operating Systems
ISV License
SoftLine COGS
-------------------------------------
Sum COGS
Gross Income
Gross Margin
Sales & Marketing
General & Administrative
-------------------------------------
Sum
EBITDA * * *
Depreciation
Taxes
Net Income
Cash Flow
Net Income
Add Depreciation
Less Capex
Add Changes in Working Capital
-------------------------------------
Cash Flow
Discount Rate/Period
Present Value of Cash Flow
---------------------------------------
NPV of Cash Flow
---------------------------------------
Terminal Value
EBITDA Less Capex Multiple
Terminal Value PV/TV
---------------------------------------
Total Value
---------------------------------------
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Opal Relative Income Statement
--------------------------------------------------------------------------------
Relative Income Statement (Percent of Total Revenue Unless Otherwise Stated)
Revenue
Non-Recurring
Recurring
SoftLine
--------------------------------------------------
Sum
Expenses
Implementation COGS (% of NR Revenue)
Support COGS (% of Recurring Revenue)
CyberCenter COGS (% of Recurring Revenue)
IP Transport COGS (% of Recurring Revenue)
Operating Systems (% of Recurring Revenue)
ISV License (% of Recurring Revenue)
--------------------------------------------------
Sum COGS
Gross Margin * * *
Sales & Marketing
General & Administrative
--------------------------------------------------
Sum
EBITDA
Depreciation
Taxes
Net Income
Additional Metrics
Market Size (Application Outsourcing - Forrester)
Growth
JV Revenue
--------------------------------------------------
% of total market
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Opal Monthly Cash Flow Statement
--------------------------------------------------------------------------------
Monthly Cash Flow Statement
($s in thousands)
Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00 Feb-00
Revenue
Growth
COGS
Sales & Marketing
General & Administrative
---------------------------------------------
Sum
% of Revenue
EBITDA
Depreciation * * *
Taxes
-----------------------------------------------
Net Income
Cash Flow
Net Income
Add Depreciation
Less Capex
Add Changes in Working Capital
---------------------------------------------
Cash Flow
Cumulative Cash Flow
Monthly Cash Flow Statement
($s in thousands)
Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00
Revenue
Growth
COGS
Sales & Marketing
General & Administrative
---------------------------------------------
Sum
% of Revenue
EBITDA
Depreciation * * *
Taxes
-----------------------------------------------
Net Income
Cash Flow
Net Income
Add Depreciation
Less Capex
Add Changes in Working Capital
---------------------------------------------
Cash Flow
Cumulative Cash Flow
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Revenue: CRM
--------------------------------------------------------------------------------
Revenue - Top Down Calculation
($s in thousands)
Q3-99 Q4-99 Q1-00 Q2-00 Q3-00 Q4-00 1999 2000 2001 2002 2003 2004
Customer Relationship Management - Siebel Or ***
----------------------------------------------------
Average number of users per client
NEW clients in period
NEW Users
Cum Clients before churn
Churn (% of client base)
----------------------------------------------------
Loss of Clients
CUM Clients
CUM Users
Integ & Enhance Rev per CLIENT
Man MONTHS per Client
% that is Up-Front * * *
Rate per man month
Installs
-----------------------------------------------
Up-Front Labor Cost
Spread Remainder over (years)
1999 Installs
2000 Installs
2001 Installs
2002 Installs
2003 Installs
2004 Installs
-----------------------------------------------
Direct labor impl and enhancements
Margin on Implementation labor
-----------------------------------------------
Revenue on Implementation
Recurring Revenue per User Mont
Months in period
Users
-----------------------------------------------
Recurring Revenue
Sum Revenue CRM
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Revenue: ERP
--------------------------------------------------------------------------------
Enterprise Resource Planning - SAP (Financials to begin with)
-------------------------------------------------------------
Average number of users per client
NEW clients in period
NEW Users
Cum Clients before churn
Churn (% of client base)
-------------------------------------------------------------
Loss of Clients
CUM Clients
CUM Users
Impl and enhance Rev/Client
Man MONTHS per Client
% that is Up-Front
Rate per man month
Installs * * *
--------------------------------------------------------
Up-Front Labor Cost
Spread Remainder over (years)
1999 Installs
2000 Installs
2001 Installs
2002 Installs
2003 Installs
2004 installs
--------------------------------------------------------
Direct Labor Cost of Install
Margin on Implementation
--------------------------------------------------------
Revenue on Implementation
Recurring Revenue per User Mont
Months in period
Users
--------------------------------------------------------
Recurring Revenue
Sum Revenue ERP - Venture Clients
KPMG Revenue
Total ERP Revenue
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Total Revenue
-----------------------------------------------
Total Revenue
CRM NRC
CRM RC
------------------------------------------
Sum CRM
ERP NRC
ERP RC
KPMG Revenue
------------------------------------------
Sum ERP
NRC Sum
RC Sum
KPMG Revenue
------------------------------------------
Total Revenue * * *
NRC % of total
RC % of total
KPMG Revenue
------------------------------------------
Total Revenue
Expenses Driven by this Revenue Sheet
CRM Implementation & Enhancement
ERP Implementation & Enhancement
------------------------------------------
Sum
Clients - Cumulative
CRM
ERP
KPMG
------------------------------------------
Sum
Users - Cumulative
CRM
ERP
KPMG
------------------------------------------
Sum
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Expenses
--------------------------------------------------------------------------------
Expense
($s in thousands)
Q3-99 Q4-99 Q1-00 Q2-00 Q3-00 Q4-00 1999 2000 2001 2002 2003 2004
Implementation & Enhancements
(from revenue sheet)
CRM Implementation & Enhancement
ERP Implementation & Enhancement
--------------------------------------------
Sum
Months in Period
--------------------------------------------
Implementation Annual FTEs
Post-Implementation Support
CRM
Support head per one(1) user
Tech Support Efficiency Factor
Tech Support
Functional Support Efficiency Factor
Functional Support
CRM Users - Cum
--------------------------------------------
Tech Support Heads
Functional Support Heads
CRM Support Expenses * * *
Tech Support Heads
Functional Support Heads
------------------------------------------
Sum
ERP
Support head per one(1) user
Tech Support Efficiency Factor
Tech Support
Functional Support Efficiency Factor
Functional Support
ERP Users
--------------------------------------------
Tech Support Heads
Functional Support Heads
ERP Support Expenses
Tech Support Heads
Functional Support Heads
------------------------------------------
Sum
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Expenses: Infrastructure Costs
--------------------------------------------------------------------------------
ERP
CUM Clients - ERP
Cum Users - ERP
Boxes per Client
Unix
Oracle
---------------------------------------------------------
Unix Boxes
Oracle boxes
---------------------------------------------------------
Unix
Capital Expense - See Capital Section
Oracle Database
NRC Charge to be capitalized - See Captial Section
Charge for Oracle per user per month
Oracle Expenses
User Based Expense
--------------------------------------------------------------
Total O/S Expense (No Capex)
--------------------------------------------------------------
Infrastructure Costs
Months per period
Hardware & Hardware Maintenace
CRM Users
Price per User per month for Hardware
----------------------------------------------------
Cost to JV
ERP Users
Price per User per month for Hardware
----------------------------------------------------
Cost to JV
* * *
Collocation
CRM Users
Price per User per month for Collocation
----------------------------------------------------
Cost to JV
ERP Clients
Price per User per month for Collocation
----------------------------------------------------
Cost to JV
IP Transport
CRM Clients
Price per T-1 (Assume 1 T-1 per Client) per month
Price per T-1 Local Loop per month
----------------------------------------------------
Price per Client per month
Cost to JV
ERP Clients
Price per T-1 (Assume 1 T-1 per Client) per month
Price per T-1 Local Loop per month
----------------------------------------------------
Price per Client per month
Cost to JV
---------------------------------------------------------
Sum Infrastructure Costs
---------------------------------------------------------
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Expenses: ISV License, Qwest Base Charges
--------------------------------------------------------------------------------
ISV License Costs
Months in period
CRM
Users
Cost per user Month
----------------------------------------
CRM ISV License Cost
ERP
Users
Cost per user Month
----------------------------------------
ERP ISV License Cost
Qwest Based Charges
CRM O/S
ERP O/S
CRM Hardware & Maintenance
ERP Hardware & Maintenance
CRM Collocation
ERP Collocation
CRM IP Transport (incl Loop)
ERP IP Transport (incl Loop)
CRM ISV License
ERP ISV License * * *
---------------------------------------------
Total Qwest Based Charges
---------------------------------------------
Overhead/ G&A
Revenue
G&A % of Revenue (no Caper/Depr)
---------------------------------------------
G&A
Sales and Marketing
Revenue
Marketing Blitz
S&M % of Revenue
----------------------------------------
S&M Revenue Driven
---------------------------------------------
Total S&M
---------------------------------------------
Add: Capex above the G&A assumptions, capex software licenses, associated depreciation.
Implementation COGS
Support COGS
CyberCenter COGS
IP Transport COGS * * *
Operating Systems
ISV License
Sales & Marketing
General & Administrative
--------------------------------------------------
Total
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SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Project Opal Business Plan Sections
--------------------------------------------------------------------------
I. Introduction to ASP Market
II. Market Assessment
III. Services
IV. Pro Forma Financials
V. Staffing, Contracts, and Pipeline
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Pipeline: AM/ASP Contracts and Pipeline*
--------------------------------------------------------------------------------
APPLICATIONS MANAGEMENT / ASP PROSPECTS SUMMARY
SAP ORACLE PeopleSoft
Sales Cycle Est Est Est * * * * * *
Status # Xxx Rev* # Xxx Rev* # Xxx Rev*
Under Contract *** *** *** *** *** *** _____ _____
Verbal Award *** *** *** *** *** *** _____ _____
Proposal Submitted *** *** *** *** *** *** * * _____
Qualified with Budget *** *** *** *** *** *** * * * *
*Note: Numbers do not include Qwest contracts and pipeline
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
AM/ASP Staffing
--------------------------------------------------------------------------------
- KPMG and Softline
- Our AM Staff averages 13.5 years of IT experience and 4 years of ERP
experience
- Staffing summary, as of June 1, 1999:
On-Board plus Offers
AM Staff Accepted
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Core Team ***
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SAP ***
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People Soft ***
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Oracle ***
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TOTALS ***
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32 Confidential
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Software Relationships
--------------------------------------------------------------------------------
- KPMG/Softline and Qwest are in the process of establishing outsourcing
agreements with ISVs. Following is status to date:
VENDOR STATUS
------ ------
*** ***
33 Confidential
125
EXHIBIT G
---------
INITIAL MANAGERS
Class A Managers: (1) Xxxxxx X. Xxxxxxx
----------------
(2) Xxxxx Xxxxx
(3) Xxxx X. Xxxxxxxx
Class B Managers: (1) Xxx XxXxxxx
----------------
(2) Xxxxxxx X. Xxxxxxxx
(3) Xxxxxx Xxxxxxx
Chief Executive Officer: Xxxx Xxxxxxxx
-----------------------
Exhibit G-1
126
EXHIBIT H
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
TRADEMARK LICENSE AGREEMENT
This TRADEMARK LICENSE AGREEMENT (this "Agreement") is entered into as
of June 3, 1999, by and between Quest Communications International Inc., a
Delaware corporation ("Licensor"), and Qwest Xxxxx.Xxxxxxxxx LLC, a Delaware
limited liability company ("Licensee").
RECITALS
WHEREAS, Licensor owns the marks identified on Exhibit A (the "Name")
and trade names, service marks, logos, trade dress, designs and other
identifying marks embodying the Name, including all other marks and all uses
consented to by West pursuant to Section 1(b) (collectively, the "Marks");
WHEREAS, Licensee desires a royalty-free, non-exclusive license to use
the Marks in connection with its corporate name and for use in all aspects of
the Licensee's business, including, without limitation, in connection with the
following trade materials: trade presentations, business cards, invoices,
stationery and other similar printed matter (collectively, the "Trade
Materials"); and
WHEREAS, Licensor desires to grant Licensee a license to use the Marks
subject to the conditions and terms in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and the
undertakings hereinafter set forth, Licensor and Licensee do hereby respectively
grant, covenant, and agree as follows:
1. Grant of License.
(a) Licensor hereby grants to Licensee, on the terms and conditions
hereinafter set forth (including, but not limited to the terms of Section 6
below), royalty-free non-exclusive license (the "License") to use the Marks
during the Term (as defined below) in connection with Licensee's corporate name
and Trade Materials within the Business (as defined in the Limited Liability
Company Agreement of Qwest Xxxxx.Xxxxxxxxx LLC, effective as of June 3, 1999,
by and among Licensor, KPMG LLP, and Softline Consultants & Integrators, Inc.)
(the "Licensed Use"). From time to time the Licensed Used may be expanded to
include additional uses requested by Licensee and approved in writing by
Licensor in the exercise of its sole discretion on a case by case basis.
Licensee acknowledges and agrees that Licensor is under no obligation to
approve any such additional uses of the Marks and that it will not use the
Marks in any way except as provided herein. All rights not expressly granted
to Licensee hereunder are reserved by Licensor. Without limiting the generality
of the foregoing, Licensee acknowledges and agree that Licensor may continue to
use and grant licenses to others of the rights to use the word "WEST" and any
trade names, service marks, logos, trade dress, designs and other
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
identifying marks embodying the word "WEST" in connection with any and all
activities, including the Licensed Use, without violating the terms of this
Agreement.
(b) Licensee acknowledges that Licensor is the owner of all right,
title and interest in and to the Marks in any form or embodiment thereof and is
also the sole owner of the goodwill attached and that becomes attached to the
Marks, including but not limited to the goodwill associated with the Marks
created through the use of the marks by Licensee. Licensee acknowledges and
agrees that it has not acquired any property rights in or to the Marks, will not
acquire any property rights in or to the Marks other than the License
specifically granted herein, and will not use the Marks or any copyright,
trademark, service xxxx, trade name, logo, slogan, trade dress, design or
proprietary item similar to any of the Marks at any time during or after the
Term except pursuant to this Agreement and any amendment or supplement hereto
executed by Licensor, including but not limited to (i) permutations of any of
the Marks; (ii) secondary or combination marks including or derived from any of
the Marks; or (iii) new copyrights, trademarks, service marks, trade names,
logos, slogans, trade dress, or designs derived from any of the Marks. Licensee
will never challenge, or assist any person or entity in challenging, Licensor's
and its affiliates' ownership of or the validity of the Marks or any application
for registration thereof, or any copyright or trademark registrations thereof,
or any rights of Licensor, or any of its affiliates or their respective
licensees, therein. Licensee will not, at any time, do, or cause or permit to be
done, any act or thing which will in any way jeopardize, dilute or adversely
affect any rights of Licensor in and to the Marks or any registrations thereof
or which, directly or indirectly, will reduce the value of the Marks.
(c) Licensee acknowledges that the Marks have acquired valuable
secondary meaning and goodwill with the public, and that products bearing the
Marks and services provided under the Marks have acquired a reputation of
highest quality. Accordingly, Licensee undertakes and agrees not to use the
Marks in any manner whatsoever which, directly or indirectly, would derogate or
detract from its repute or which would demean, ridicule or reflect adversely
upon the Marks or Licensor. Licensee recognizes that the undertaking on its part
set forth in this paragraph represents a major inducement and consideration for
Licensor to enter into this Agreement.
(d) Licensee acknowledges that the License is being granted on a
quitclaim basis and that Licensor makes no representations and warranties in
this Agreement of any kind (including, without limitation, as to Licensor's
rights in and to the Marks).
(e) Licensee will not in any way seek to avoid Licensee's duties or
obligations under this Agreement because of the assertion by any person or
entity that any or all of the Marks are invalid by reason of any contest
concerning the rights of or claimed by Licensor.
2. QUALITY CONTROL.
(a) Licensee agrees that its use of the Marks in connection with the
Licensed Use will meet or exceed quality standards reasonably acceptable to
Licensor. To ensure that the quality standards hereunder are satisfied, Licensee
will submit all proposed uses of the Marks to Licensor for Licensor's approval,
which approval must be made by an employee of Licensor
2
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who holds a position at or above the level of Senior Manager, and will be
granted in Licensor's sole and absolute discretion.
(b) Licensor and its authorized representatives have the right, at
Licensor's cost and expense and upon reasonable prior notice thereof, to inspect
the Trade Materials and any products or services related thereto, as may be
reasonably necessary in order to confirm that the quality standards are being
observed and that Licensee is using the Marks only for the Licensed Use.
(c) Licensee will faithfully and accurately reproduce the Marks. No
partial version of the Marks, or any fragments thereof, nor any modified or
derivative version of the Marks, may be used at any time for any purpose without
the express written consent of Licensor in each instance. Licensor acknowledges
and agrees that any materials supplied by Licensor to Licensee for Licensed Use
are deemed to meet the quality control requirements hereunder.
(d) Licensee will, at its own expense, apply trademark notices or
other markings as may be necessary or appropriate or as Licensor may request in
connection with each and every use of the Marks under the laws or regulations of
each country where the Marks are used.
(e) Licensee will be solely responsible for and will comply with all
laws, rules and regulations, if any, of governments and agencies and political
subdivisions thereof in connection with the Licensed Use.
3. TERM OF LICENSE. The term (the "Term") of the License will commence on
the date of this Agreement and will continue for perpetuity or until sooner
terminated pursuant to the provisions hereof.
4. REGISTRATION AND PROTECTION OF THE MARKS.
(a) Licensee will take all actions reasonably necessary to protect
all rights in and to the Marks for the Licensed Use. Licensor will have the
right to seek trademark or other intellectual property protection for the Marks,
and any and all expenses incurred in connection with the foregoing will be borne
by Licensee. Licensee, at Licensee's expense, will provide all assistance and
perform all services reasonably requested by Licensor, and will cooperate with
the Licensor, in connection with the foregoing. Sales by Licensee will be deemed
to have been made by Licensor for purposes of trademark registration and all
uses of the Marks by Licensee hereunder will inure to the benefit of Licensor.
(b) If Licensee learns of any infringement or imitation of the Marks
or of any use by any person of a copyright, trademark, service xxxx, trade name,
trade dress or proprietary item similar to the Marks, it will promptly notify
Licensor thereof. In such event, Licensor will have the sole right to determine
whether or not any action will be taken on account of such infringements or
imitations. Licensee agrees to assist Licensor to the extent necessary in the
procurement of any protection or to protect any of Licensor's rights to the
Marks, and Licensor if it so desires may commence or prosecute any claims or
suits in its own name or in the name of Licensee or join Licensee as a party
thereto at the sole expense of Licensor. Licensee will not institute any suit or
take any action on account of any such infringements or imitations without
3
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first obtaining the written consent of Licensor to do so. Licensor hereby agrees
that where such consent is given, Licensee will be entitled to take action for
infringement. All costs and expenses, including legal fees, incurred in
connection with any such suits which are so instituted by Licensee with the
consent of Licensor will be borne solely by Licensee. As to suits instituted by
Licensee with the consent of Licensor, Licensee will undertake and control the
prosecution of such suits using counsel approved by Licensor, and such counsel
will consult fully with Licensor concerning the strategy and tactics thereof.
Licensor will have the right to participate and represent its interests through
other counsel of its own choosing. If Licensor elects to participate through
other counsel of its own choosing, Licensor will pay the costs of such other
counsel. Licensee will not have any rights against Licensor for damages or any
other remedy by reason of any action filed by Licensor, any determination of
Licensor not to act or any settlement to which Licensor may agree with respect
to any alleged infringements or imitations by others of the Marks, nor will any
such action or determination of Licensor or such settlement by Licensor affect
the validity or enforceability of this Agreement. If Licensor and Licensee
desire to agree to joint participation in any litigation or other proceeding
with respect to the Marks, the respective responsibilities of the parties, and
their contributions to the cost and participation in any recoveries, will be
agreed upon in writing prior to undertaking such action.
(c) Licensor will at all times have the right, in its sole
discretion, provided it reasonably considers the rights of Licensee under this
Agreement in connection with the exercise of such discretion, to take whatever
steps it deems necessary or desirable to protect the Marks from harmful or
wrongful activities of third parties involving the Licensed Use or otherwise
and, subject to the provisions of subsection 4(b) above, will have the right to
control any litigation or other proceeding undertaken by it for any such
purpose.
5. INDEMNIFICATION.
(a) Licensor does hereby indemnify and agrees to save and hold
Licensee, its affiliates, successors, licensees and assigns, and the officers,
directors, agents and employees of each of them (the "LICENSEE INDEMNITEES"),
harmless of and from any and all liability, claims, causes of action, suits,
losses, settlements, damages, fines, penalties and expenses (including, but not
limited to, reasonable attorneys' fees and expenses) for which they or any of
them may become liable or may incur or be compelled to pay in any action or
claim against them or any of them, by reason of or in connection with any
material breach or alleged material breach by Licensor of this Agreement or any
of Licensor's representations, warranties or agreements hereunder. The Licensee
Indemnitees will give Licensor prompt written notice of any such action or
claim, and Licensor will take such action as is reasonably advisable to defend
such action or claim on behalf of the Licensee Indemnitees. The Licensee
Indemnitees and Licensor will keep each other fully advised of all developments
and will cooperate fully with each other in all respects in connection with any
such defense as is made.
(b) Licensee does hereby indemnify and agrees to save and hold
Licensor, its affiliates, successors, licensees and assigns, and the officers,
directors, agents and employees of each of them (the "LICENSOR INDEMNITEES"),
harmless of and from any and all liability, claims, causes of action, suits,
losses, settlements, damages, fines, penalties and expenses (including, but not
limited to, reasonable attorneys' fees and expenses) for which they or any of
them may become liable or may incur or be compelled to pay in any action or
claim against them or any of
4
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them, by reason of or in connection with (a) any breach or alleged breach by
Licensee of this Agreement or any of Licensee's representations, warranties or
agreements hereunder or (b) the Licensed Use. The Licensor Indemnitees will give
Licensee prompt written notice of any such action or claim, and Licensee will
take such action as is reasonably advisable to defend such action or claim on
behalf of the Licensor Indemnitees. The Licensor Indemnitees and Licensee will
keep each other fully advised of all developments and will cooperate fully with
each other in all respects in connection with any such defense as is made.
6. TERMINATION.
(a) Licensor has the right to terminate the License by written notice
to Licensee at any time if:
(i) Licensee's term of existence (as specified in the Limited
Liability Company Agreement of Licensee, dated as of June 3, 1999, as amended
from time to time, the "LIMITED LIABILITY COMPANY AGREEMENT") expires;
(ii) Licensee's existence is terminated pursuant to any
applicable law or to the provisions of the Limited Liability Company Agreement;
(iii) Licensor, or its successors collectively own less than
20% of the membership interests of Licensee (or of the shares of voting stock of
any corporation in to which Licensee is merged or combined) on an as converted
and fully diluted basis, or
(iv) KPMG LLP, or its successor, purchases any portion of the
Membership Interest of Licensor, pursuant to an election made pursuant to, or
any process conducted under, Article 13 of the LLC Agreement.
(b) Licensor will have the right to terminate the License without
prejudice to any rights which it may have under the provisions of this
Agreement, in law, or in equity, or otherwise, upon the occurrence of any one or
more of the following events:
(i) Licensee materially defaults in the performance of any of
its obligations under this Agreement;
(ii) Licensee abandons its use of the Marks by ceasing bona
fide commercial use thereof in the ordinary course of trade for a period of one
(1) consecutive year;
(iii) Licensee makes any assignment for the benefit of
creditors; or Licensee states in writing its inability to pay its debts as such
debts become due; or Licensee commences a voluntary case under the United States
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect in the United States or any foreign jurisdiction; or
the Executive Committee of Licensee (or any committee thereof) adopts any
resolution or otherwise authorizes action to approve any of the foregoing in
this subpart (iii); or
5
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(iv) Any order, judgment or decree is entered against Licensee
decreeing the dissolution or split up of Licensee and such order remains
undischarged or unstayed for a period in excess of thirty (30) days.
(c) If there is any dispute as to whether the termination of the
License was proper under this Section, the License will remain in effect until
the dispute has been finally resolved. A dispute will be finally resolved upon
mutual agreement of the parties or upon the issuance of a final written decision
of an arbitrator appointed pursuant to Section 10.
7. RIGHTS ON TERMINATION.
(a) On the expiration or termination of the License for any reason
whatsoever, all the rights of Licensee hereunder will forthwith terminate and
automatically revert to Licensor and Licensee will forthwith discontinue all use
of the Marks and will no longer have the right to use the Marks or any variation
or simulation thereof.
(b) Without limiting the foregoing, upon termination of the License,
the parties will perform all other acts which may be necessary or useful to
render effective the termination of the interest of Licensee in the Marks, and
Licensee will execute any assignment, conveyance, acknowledgment or other
document that Licensor requires, relinquishing or conveying to Licensor any and
all rights to or interest in the Marks that Licensee has, and any goodwill
associated therewith.
(c) Notwithstanding any termination in accordance with any provision
of this Agreement, Licensor has, and hereby reserves, all the rights and
remedies which it has or which are granted to it by operation of law with
respect to damages for breach of this Agreement by Licensee, to enjoin the
unlawful and unauthorized use of the Marks and otherwise.
(d) Upon termination of the License, Licensee will promptly destroy
all Trade Materials containing the Marks, or any portion or derivation thereof,
and will certify to Licensor that such destruction has occurred.
8. NOTICES. All notices, reports or documents required or permitted
hereunder must be in writing and delivered in person, by telecopy, telex or
equivalent form of written telecommunication, or sent by certified or registered
mail, return receipt requested, postage prepaid, as follows:
To Licensor: Qwest Communications International Inc.
0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile Number: 000-000-0000
and
Qwest Communications Corporation
0000 Xxxxxxxxx Xx.
0
000
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INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Xxxxxx, Xxxx 00000
Attention: Attorney-Trademarks
Facsimile Number: 000-000-0000
With Copy to: O'Melveny & Xxxxx LLP
1999 Avenue of the Stars, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile Number: 000-000-0000
To Licensee: Qwest Cyber. Solutions LLC
0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
or such other party and/or address as any of such parties may designate in a
written notice served upon the other party in the manner provided for herein.
All notices required or permitted hereunder by personal delivery or facsimile
will be deemed to be properly given only if delivered in person or by facsimile
transmission on any day other than a Saturday, Sunday or legal holiday under the
Laws of the States of California, Colorado or New York or any other day on which
banking institutions located in any such state are authorized or required by law
or other governmental action to close (a "BUSINESS DAY"). A notice will be
deemed conclusively to have been effectively delivered (a) if delivered in
person, then when delivered; or (b) if delivered by facsimile transmission, then
on the day the facsimile transmission was sent successfully to the relevant
facsimile number set forth above; provided, however, that if such facsimile
transmission was sent successfully on a non-Business Day, then such delivery
will be deemed to have been made on the next succeeding Business Day.
9. ASSIGNMENT AND SUBLICENSES. This Agreement and all of the provisions
hereof are binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. This Agreement and the rights granted
hereunder may be assigned, sublicensed, or transferred by Licensee, but only
with the prior written consent of Licensor, which consent may be granted by
Licensor in its sole and absolute discretion. Licensor may assign or transfer
its rights and obligations under this Agreement at any time.
10. ARBITRATION.
(a) Notwithstanding anything to the contrary contained in this
Section 10, any disputes as to the validity, ownership, or control of the Marks
will be litigated in an appropriate court of law.
(b) Each of Licensor and Licensee acknowledges that any material
breach of this Agreement by any such party will result in irreparable harm to
the other party for which there is no adequate remedy at law. In such event,
Licensor or Licensee, as the case may be, is entitled to preliminary or
temporary equitable relief in an appropriate court of law, pending a
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final determination in accordance with this Section 10, without the necessity of
posting bond unless otherwise required by applicable law.
(c) The parties hereto will promptly notify each other in writing of
any dispute arising out of or relating to this Agreement, and will attempt in
good faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between executives who have authority to settle the
controversy. All reasonable requests for information made by one party to the
other will be honored. All negotiations pursuant to this clause are confidential
and will be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.
(d) If any such dispute remains unresolved within 30 days of original
notice thereof, the Parties hereto will endeavor to resolve any dispute arising
out of or relating to this agreement by mediation under the CPR Mediation
Procedure for Business Disputes. Unless the Parties hereto agree otherwise, the
mediator will be selected from the CPR Panel of Neutrals with notification to
the CPR Institute for Dispute Resolution.
(e) Any controversy or claim arising out of or relating to this
contract or the breach, termination or validity thereof, which remains
unresolved 45 days after appointment of a mediator, will be settled by
arbitration by the majority decision of at least two members of a three-member
arbitration tribunal in accordance with the CPR Non-Administered Arbitration
Rules; provided, however, that if either party will not participate in a
non-binding procedure described above, the other may initiate binding
arbitration before expiration of the above period. Each party will choose one
arbitrator from the CPR Panels of Distinguished Neutrals, and the two
arbitrators so chosen will choose the third arbitrator. The arbitration will be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof.
(f) Except as expressly provided below, the arbitrator is not
empowered to award damages in excess of compensatory damages and each party
hereby irrevocably waives any right to recover such damages with respect to any
dispute resolved by arbitration.
(g) The statute of limitations of the State of Colorado applicable to
the commencement of a lawsuit will apply to the commencement of an arbitration
hereunder, except that no defenses will be available based upon the passage of
time during any negotiation or mediation called for by the preceding paragraphs
of this Section.
(h) All negotiations pursuant to this Section are confidential and
will be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.
(i) Each party agrees that service by registered or certified mail,
return receipt requested, delivered to such party at the notice address provided
herein, will be deemed in every respect effective service of process upon such
person for all purposes of these provisions relating to mediation and
arbitration. Each party irrevocably submits to the jurisdiction of the courts of
the State of Colorado and to any federal court located within such state for the
purpose of any action or judgement with respect to this Agreement, regardless of
where any alleged breach or other action, omission, fact or occurrence giving
rise thereto occurred. Each party hereby
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irrevocably waives any claim that any action or proceeding brought in Colorado
has been brought in any inconvenient forum.
(j) The parties hereto will negotiate in good faith and agree on such
further or modified arbitration provisions as are reasonably necessary for
awards and other judgments resulting from the provisions set forth above to be
recognized and enforceable in other jurisdictions.
(k) The fees and costs of the mediation process and the arbitration
process will be shared equally by all disputing parties. The arbitration
tribunal will award legal fees, disbursements and other expenses to the
prevailing party or parties for such amounts as determined by the arbitration
tribunal to be appropriate. Judgment upon the arbitration tribunal's award may
be entered as if after trial in accordance with the applicable law of this
Agreement set forth in Section 13. Should a party fail to pay fees as required,
the other party or parties may advance the same and will be entitled to a
judgment from the Arbitrator in the amount of such fees plus interest at the
prime rate as determined by the Bank of America, or any successor institution.
Any award issued by the Arbitrator will bear interest at the judgment rate in
effect in the State of California from the date determined by the Arbitrator.
11. RELATIONSHIP OF THE PARTIES.
(a) Except as may be expressly provided herein, this Agreement does
not constitute either party, and neither party will represent itself as, the
agent of the other, or create a partnership or joint venture between the
parties, and neither party will have the power to obligate or bind the other in
any manner whatsoever.
(b) Nothing contained herein is intended or will be construed as
prohibiting Licensor from entering into or competing with the business of
Licensee.
12. COMPLETE AGREEMENT. This Agreement constitutes the complete and
exclusive statement of agreement among the parties with respect to the subject
matter herein and replaces and supersedes all prior written and oral agreements
or statements by and among the parties or any of them. No representation,
statement, condition or warranty not contained in this Agreement will be binding
on the parties or have any force or effect whatsoever.
13. GOVERNING LAW. This Agreement and all amendments to it will be
governed by the internal laws (and not the laws relating to choice or conflict
of laws) of the State of New York. However, any and all disputes, controversies,
and claims pertaining to Licensor's ownership of or the validity of the Marks or
any registration thereof or any application for registration thereof will be
governed by and construed in accordance with the federal trademark and related
laws, statutes, rules, and regulations of the United States unless there are no
federal laws, statutes, rules, or regulations dispositive of such disputes,
controversies, and claims, in which case any and all such disputes,
controversies, and claims will be governed by and construed in accordance with
the laws of the State of California, without giving effect to conflict of laws.
14. JURISDICTION; SERVICE OF PROCESS; VENUE. Licensee agrees that any
legal action or proceeding with respect to this Agreement or any other document
executed in connection
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herewith, or any action or proceeding to execute or otherwise enforce any
judgment obtained against it or any of its properties, may be brought in the
courts of the State of Colorado or in the courts of the United States for the
District of Colorado or elsewhere, as Licensor may elect, provided always that
suit may be brought in the courts of any country or place where Licensee or any
of its assets may be found, and, by execution and delivery of this Agreement,
Licensee irrevocably submits to each such jurisdiction. Licensee irrevocably
waives any objection which it may now or hereafter have to the venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
document executed in connection herewith brought in the courts of the State of
Colorado or in the United States District Court for the District of Colorado,
and hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
15. WAIVER. Any waiver by Licensor of a breach of any provision of this
Agreement will not operate as or be construed to be a waiver of any other breach
of such provision or of any breach of any other provision of this Agreement. The
failure of Licensor to insist upon strict adherence to any term of this
Agreement on one or more occasions will not be considered a waiver or deprive
Licensor of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.
16. AMENDMENTS. All amendments to this Agreement must be in writing and
signed by Licensor and Licensee.
17. SEVERABILITY. If any provision of this Agreement or the application of
such provision to any person or circumstance is held invalid, the remainder of
this Agreement will not be affected thereby so long as such remainder continues
to have the economic effect intended by this Agreement.
18. INTERPRETATION. If any claim is made by a party relating to any
conflict, omission or ambiguity in the provisions of this Agreement, no
presumption or burden of proof or persuasion will be implied because this
Agreement was prepared by or at the request of any party or its counsel. The
parties waive any statute or rule of law to the contrary.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
constitute one and the same instrument.
20. ADDITIONAL DOCUMENTS AND ACTS. Each party agrees to execute and
deliver such additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to effectuate, carry out and
perform all of the terms, provisions, and conditions of this Agreement and the
transactions contemplated hereby.
[Remainder of page intentionally left blank.]
10
136
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
"LICENSOR"
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: _________________________________
Name:
Title:
"LICENSEE"
QWEST CYBER. SOLUTIONS LLC
By: _________________________________
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer
S-1
137
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED, AND RULE 406 PROMULGATED THEREUNDER. OMITTED
INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Exhibit A
Licensed Marks
1. "Qwest"
Exhibit A-1
