EXHIBIT 10.8
OPERATING AND
MEMBER CONTROL AGREEMENT
OF
NETIGNITE 2, LLC
This OPERATING AND MEMBER CONTROL AGREEMENT ("Agreement") is made this
9th day of March, 1999, by and among NetIgnite 2, LLC, a Colorado limited
liability company (the "Company"), Online System Services, Inc. a Colorado
corporation ("OSS") and NetIgnite, Inc., a Colorado corporation ("NetIgnite")
(collectively, the "Members" and each, individually, a "Member").
RECITALS
The undersigned constitute all of the current Members of the Company.
Each of the undersigned desires to enter into this Agreement, which is
intended to constitute an operating agreement within the meaning of Colorado
Revised Statutes Section 7-80-706.
Simultaneously herewith the Members are entering into a Buy-Sell
Agreement (the "Buy-Sell Agreement"). In addition, Xxxxx Xxxxx ("Xxxxx"), the
sole shareholder of NetIgnite, is also entering into an Employment Agreement
with OSS and the Company pursuant to which he will serve as the President of the
Company (the "Employment Agreement").
AGREEMENT
In consideration of the foregoing and the mutual promises and
agreements set forth below, the Members agree as follows:
ARTICLE 1
DEFINITIONS
The terms defined in this Article 1 (except as otherwise expressly
provided in this Agreement or unless the context clearly requires otherwise)
shall, for purposes of this Agreement, have the following respective meanings:
1.1 "ACT" means the Colorado Limited Liability Company Act, as
amended from time to time, and any successor statute.
1.2 "AGREEMENT" means this Operating and Member Control Agreement,
and all amendments, schedules, exhibits, and modifications hereto.
1.3 "ARTICLES OF ORGANIZATION" means the Articles of Organization of
the Company, as the same may be amended from time to time.
1.4 "CAPITAL ACCOUNT" means the account of a Member established and
maintained in accordance with the provisions of Section 4.1 hereof.
1.5 "CAPITAL CONTRIBUTION" means the total amount of cash and/or the
agreed upon fair market value of property contributed to the Company by any
Member or all of the Members in the aggregate (including contributions by
predecessor Members in the event of any assignment).
1.6 "CODE" means the Internal Revenue Code of 1986, as amended, and
any successor thereto. Any reference to specific sections of the Code shall be
to the Section as it now exists and to any successor provision.
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1.7 "COMMITTED AMOUNT" means the amount described in Schedule A.
1.8 "DISTRIBUTION" means the total amount of cash and/or the fair
market value of property distributed by the Company to a Member at any time or
from time to time with respect to his or her interest as a Member of the
Company.
1.9 "MEMBER" means a member of the Company as named herein and any
successor or additional member admitted pursuant to this Agreement.
1.10 "SALE GAIN OR LOSS" means the gain or loss on the sale of
substantially all of the assets of the Company.
1.11 "UNIT" means a fractional interest in the Company and its assets.
ARTICLE 2
FORMATION
2.1 FORMATION OF LIMITED LIABILITY COMPANY. By this Agreement and
upon filing Articles of Organization, the Members form a limited liability
company under the Act. The rights and liabilities of the Members shall be as
provided in the Act, except as otherwise expressly provided herein or in the
Articles of Organization.
2.2 MEMBERS. OSS and NetIgnite.
2.3 NAME. The name of the Company is "NetIgnite 2, LLC."
2.4 OFFICES. The Company's registered office shall be located at 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, or such other place as the
Members may from time to time determine. The Company's principal executive
office shall be located at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000,
or such other place as the Members may from time to time determine. The Company
may maintain such other offices at such other places as the Members deem
advisable.
2.5 PURPOSES. The Company is formed for purposes of transacting any
or all lawful business for which a limited liability company may be organized
under the laws of the State of Colorado.
2.6 TERM. Unless the Company is dissolved earlier in accordance with
law, the period of existence of the Company shall be forty (40) years from the
date of filing of the Articles of Organization.
2.7 MEMBERS' NAMES AND ADDRESSES. The names and addresses of the
Members as of the date hereof are as follows:
Online System Services, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
NetIgnite, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
2.8 TITLE TO COMPANY PROPERTY. All property owned by the Company,
whether real or personal, tangible or intangible, shall be deemed to be owned by
the Company as an entity, and no Member, individually, shall have any ownership
interest in any such property.
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2.9 WAIVER OF PARTITION. Each Member hereby waives any and all rights
such Member may have to a partition of any Company property or properties.
ARTICLE 3
CAPITAL CONTRIBUTIONS
3.1 INITIAL CAPITAL CONTRIBUTIONS. As their initial Capital
Contributions to the Company, the Members shall make the Capital Contributions
set forth on SCHEDULE A, which is attached hereto and made a part of this
Agreement, for which they shall receive the number of Units set forth on
SCHEDULE A.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS. If , after the Company has paid
in the Committed Amount, the Company needs additional working capital in
accordance with the requirements therefore set forth in the Proforma Statements
(as defined on Schedule A), OSS' obligation to make additional capital
contributions shall be as follows:
(a) OSS shall make such capital contributions equal to the amount of
distributions it receives under Section 4.5 hereof less OSS's
reasonable estimate of its income tax liability attributable to
the allocation of income to OSS under Section 4.3 hereof;
(b) In addition to amounts under Section 3.2(a) hereof, OSS shall
make additional capital contributions without modifying the
income and loss allocation to Members if (i) this increased need
is a result of realizable revenue or value (i.e., patent) in
excess of that identified in the Proforma Statements (as defined
on Schedule A), or (ii) is required to cover short-term (i.e.,
three months or less) working capital requirements, provided in
each case that OSS agrees to the decisions that would give rise
to the increased working capital need.
(c) OSS may, but is not obligated to, make additional capital
contributions in the event the Company requires more working
capital than the Committed Amount, or than that which is required
by the Company to achieve its pro forma revenue plan under 3.2(b)
above, with such amount referred to as the "Proforma Shortfall
Funding" subject to an increase in its income allocation as
provided in Section 4.3 hereof. NetIgnite may contribute up to a
proportionate share (measured by the then allocation of Sale Gain
and Loss) of any additional working capital provided by OSS
hereunder to reduce or avoid the income adjustment under Section
4.3 hereof.
NetIgnite is not obligated to make any additional capital
contributions.
3.3 NO RIGHT TO RETURN OF CAPITAL CONTRIBUTION. No Member shall have
the right to withdraw or to demand the return of all or any part of such
Member's Capital Contribution, except as otherwise expressly provided herein.
The Company shall not be liable to Members for repayment of their Capital
Contributions.
3.4 LOANS FROM MEMBERS TO COMPANY. Subject to any other restrictions
contained herein, the Company may borrow money from one or more Members at such
interest rate or rates and upon such other terms as are agreed upon by the
Company and the lending Member; provided that the interest rate on any such
loans shall not exceed the rate that would apply to Company borrowing on similar
terms from recognized banks or financial institutions.
3.5 NO INTEREST ON CONTRIBUTIONS. No interest shall be paid to any
Member on Capital Contributions.
3.6 NONASSESSABILITY. No Member shall be required to make any Capital
Contribution in excess of the amount stated in Section 3.1 unless agreed by all
Members.
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ARTICLE 4
ALLOCATIONS OF PROFITS
AND LOSSES; DISTRIBUTIONS
4.1 CAPITAL ACCOUNTS. A separate Capital Account shall be maintained
by the Company for each Member. The Capital Account for each Member shall be
increased by such Member's Capital Contributions and shall be decreased by
Distributions made to such Member. Each Member's Capital Account shall also be
increased or decreased, as the case may be, to account for allocations of
profits and losses to such Member. As of the date on which additional Capital
Contributions are made by any Member, or Distributions are made in liquidation
of any Member's interest in the Company, the Capital Account balances of the
Members may be restated to reflect the market values of the Company's properties
as of such date and the manner in which profits and losses would have been
allocated had the Company disposed of its properties on such date, all in
accordance with Treasury Regulations (S)(S) 1.704-1(b)(2)(iv)(f) and (r), as in
effect on the date hereof. Subsequent adjustments to Capital Accounts shall be
made so as to comply with the requirements of Treasury Regulations (S)(S) 1.704-
1(b)(2)(iv) and 1.704-1(b)(4)(i), as in effect on the date hereof. For example,
appreciation and depreciation of assets reflected in the Capital Accounts of the
Members by reason of the adjustments described above shall be taken into account
in making later Capital Account adjustments for profits and losses.
4.2 RESTATEMENT OF CAPITAL ACCOUNTS. If any additional Capital
Contributions are made to the Company, upon agreement of the Members the Capital
Accounts of the Members may be restated to reflect the Members' interests in
Company assets. Any such restatement shall reflect such increases or decreases
in the Capital Accounts of the Members as would reflect the manner in which
income, gains, losses, etc., would be allocated if there were a taxable
disposition of all Company property for its fair market value on the date of
such Capital Contributions.
4.3 ALLOCATIONS OF PROFITS AND LOSSES. Profits and losses of the
Company for a year shall be allocated to the members as follows:
(a) GENERALLY:
Net income (other than Sale Gain or Loss): 99.5% to OSS and .5%
to NetIgnite;
Net loss (Other than Sale Gain or Loss): 60% to OSS and 40% to
NetIgnite; and
Sale Gain or Loss: 60% to OSS and 40% to NetIgnite.
(b) UPON A FAILURE BY OSS TO PROVIDE THE COMMITTED AMOUNT WHEN
REQUIRED TO, THE ALLOCATION OF PROFITS AND LOSSES OF THE COMPANY SHALL BE
RECALCULATED AS FOLLOWS AND THEREAFTER, SUBJECT TO FURTHER CHANGE PURSUANT TO
THE TERMS OF THIS AGREEMENT, WILL BE AS SO RECALCULATED:
Net income (other than Sale Gain or Loss): 99.5% to OSS and .5%
to NetIgnite;
Net loss (Other than Sale Gain or Loss): x% to OSS and y% to
NetIgnite; and
Sale Gain or Loss: x% to OSS and y% to NetIgnite, where x is
equal to 100 times (i) the amount of the Committed Amount OSS actually
contributed, divided by (ii) the sum of the amount of the Committed
Amount OSS actually contributed plus $1 million (the value of the
technology transferred by NetIgnite), and y is 100 minus x.
(c) UPON A CAPITAL CONTRIBUTION BY OSS UNDER SECTION 3.2(C):
If OSS provides the Proforma Shortfall Funding and NetIgnite does not
contribute its proportionate amount under Section 3.2(c), NetIgnite's
interest in the Sale Gain and Loss shall be reduced (and OSS's shall
be correspondingly increased) based on the ratio of the Proforma
Shortfall Funding to the then calculated value of the Company based on
a value of the Company determined, subject to the minimum value for
1999 set forth below, by multiplying an
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annualization of three months trailing gross revenue at the time of
the Proforma Shortfall Funding by 2.8. The parties agree for the
purposes of this provision to value the Company during the period from
the date hereof through December 31, 1999 at the greater of $2.5
million or the multiple of annualized gross revenue set forth above.
For example, assuming an initial Proforma Shortfall Funding of
$500,000, at a time when three months trailing revenue equaled
$500,000, NetIgnite's interest in Sale Gain and Loss would be reduced
to 36.7% as follows:
Value of the Company at time of funding = 2.8 x ($500,000 x 4) =
$5,600,000
OSS percentage interest following funding = (.6 ($5,600,000) +
$500,000)/($5,600,000 + $500,000) = 63.3%
NetIgnite's percentage following funding = .4 ($5,600,000)/($5,600,000
+ $500,000) = 36.7%.
4.4 SECTION 704(C) ALLOCATION. To the extent required by Section
704(c) of the Code, items of income, gain, loss, or deduction with respect to
contributed properties shall be allocated among the Members in such manner as
takes into account any variations between the bases of such properties to the
Company upon contribution and the fair market values of such properties at the
time of contribution. Any allocations made solely to comply with this Section
4.4 and Section 704(c) of the Code shall not be reflected in Capital Account
adjustments.
4.5 DISTRIBUTIONS PRIOR TO LIQUIDATION. By no later than March 1st of
each year, the Company shall make a Distribution to its Members of its Net
Income (other than Sale Gain or Loss), if any, for the preceding tax year (to
the extent not distributed in the preceding year) in proportion the allocation
of such Net Income to the Members. To the extent reasonably possible, the
Company shall make a Distribution to its Members of its Net Income (other than
Sale Gain or Loss), if any, for any calendar quarter by the end of the first
month of the next calendar quarter in proportion to the allocation of such Net
Income to the Members. Except as provided in Section 4.8, all distributions to
Members prior to the liquidation, winding up, and dissolution of the Company
shall be in cash.
4.6 DISTRIBUTIONS UPON DISSOLUTION AND WINDING UP. At the time of the
dissolution and winding up of the Company, following the allocation of all net
income and net losses and the payment of all Company obligations, the remaining
assets shall be distributed to the Members in accordance with Section 9.2.
4.7 NO DISTRIBUTION BY REASON OF WITHDRAWAL. Neither withdrawal from
the Company, transfer of any membership interest, nor demand for the return of
capital shall entitle any Member to receive any Distribution from the Company
except AS PROVIDED IN ARTICLE 9.
4.8 DISTRIBUTIONS IN KIND. No Member shall have any right to demand
or receive a Distribution from the Company in any form other than cash, nor
shall any Member be compelled to accept any distribution of property in kind
except under circumstances where all Members receive undivided interests in
property or substantially equivalent interests in property on the basis of their
Capital Accounts. In the event of a Distribution of property in kind, such
property shall be assumed to have been sold at its fair market value at the time
of the Distribution, and the resulting gain or loss shall be allocated among the
Members according to their Capital Accounts, and their Capital Accounts shall be
adjusted accordingly.
ARTICLE 5
MANAGEMENT
5.1 MANAGEMENT. Except as otherwise specified herein, the right to
make decisions concerning the management of the Company is reserved to the
Managers, and the Managers shall have all of the rights, power, and authority
generally conferred under the Act or other applicable law, on behalf and in the
name of the Company to carry out any and all of the purposes of the Company and
to perform all acts and, enter into, perform, negotiate and
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execute any and all leases, documents, contracts and agreements on behalf of the
Company that the Mangers, exercising sole discretion, deems necessary or
desirable
5.2 MANAGER APPROVAL. Each Manager shall be entitled to one vote on
all matters submitted to Managers. Except as otherwise provided in this
Agreement, all matters submitted to the Managers shall require approval by the
affirmative vote of Managers representing a Majority of the Managers.
5.3 LIMITATIONS ON AUTHORITY OF THE MEMBERS AND MANAGERS. Except upon
the written consent of all of the Members, no action shall be taken by or on
behalf of the Company to:
(a) Adopt a Business and Implementation Plan for the Company, it
being the agreement of the Members that a Business and Implementation
Plan will be adopted annually and that the Company's business will be
conducted in accordance with such plan except as otherwise agreed in
writing by the Members;
(b) Merge with or into any other entity, exchange securities
with any other company, license intellectual property (including, but
not limited to licensing terms that contain conditions of exclusivity
or access to software code) or sell or lease more than ten percent
(10%) of its property and assets to any other entity in any one
transaction or series of related transactions or enter into any joint
venture or profit sharing agreements with others;
(c) Substantially change the present or now intended nature of
the Company's business operations.
(d) Dissolve or liquidate the Company;
(e) Issue, reissue or cause the issuance or reissuance of any
securities of the Company, or subscriptions, options, warrants, rights
or privileges, preemptive or otherwise, to acquire any securities of
the Company;
(f) Except as provided in Section 4.5 hereof, make any
distribution or declare or pay any dividend;
(g) Except as authorized in a Business and Implementation Plan
adopted by the Members, loan money or other assets to or guarantee the
obligations of any person or entity;
(h) Except as authorized in a Business and Implementation Plan
adopted by the Members, enter into any other contract, agreement or
similar arrangement that could have a material effect upon the Company
or its business or assets, including, but not limited to, any contract
with a term of more than one year which is not terminable by the
Company without penalty upon not more than thirty (30) days notice.
5.4 RIGHT OF PUBLIC TO RELY ON AUTHORITY OF MEMBERS; SIGNATORY
AUTHORITY. No person shall be required to determine the authority of the Members
or of a Member to make any undertaking on behalf of the Company, or to see to
the application or distribution of revenues or proceeds paid to the Members or
to a Member. Except as otherwise provided herein or as agreed by Members holding
a majority of the outstanding Units, all contracts, deeds, or other instruments
or documents shall require only one signature and may be signed on behalf of the
Company by the President.
5.5 MANAGERS.
(a) The Company shall have a President, who shall be the Company's
chief manager, as defined in the Act. The President shall have
primary authority to sign and deliver in the name of the Company
any deeds, mortgages, bonds, contracts, or other instruments
pertaining to the business of the Company, except in cases in
which the authority to sign and deliver is required by law to be
exercised by another person or is expressly delegated by the
Articles of Organization, this
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Agreement, or the Members to some other Member, manager, or agent
of the Company, and shall perform such other duties as may from
time to time be prescribed by the Members.
(b) The Company shall have a Treasurer, who shall serve as the
treasurer of the Company, and shall perform such other duties as
may from time to time be prescribed by the Members.
(c) A manager, as such, shall not be obligated to devote his or her
full time to the conduct of the Company affairs, but shall devote
only as much time as he or she deems necessary for the proper
conduct thereof, and provided further, that nothing in this
Agreement shall be deemed to restrict in any way the freedom of a
manager to conduct any other businesses or activities whatsoever
without any accountability to the Company.
5.6 INITIAL MANAGERS. The initial managers and their titles shall be
as follows:
President Xxxxx Xxxxx
Treasurer Xxxxxxx Xxxxx
5.7 ELECTION AND REMOVAL OF MANAGERS. The Members may elect or
appoint other managers or agents of the Company, with such titles, duties, and
authority as they shall designate. Subject to any limitations that the Members
may impose, the President may delegate authority and appoint other managers and
agents of the Company, with such titles, duties, and authority as the President
shall designate. The President, at any time, may remove or terminate the
authority of any manager or agent that was appointed by the President. Managers
shall be elected for one-year terms. From and after the date hereof, at all
regular, special and adjourned meetings of, and in all actions in writing by,
the Members, each Member agrees to vote its Units so as to elect as Mangers of
the Company (i) one nominee of each Member and, (ii) if, at the discretion of
OSS, one or more additional Managers are to be elected, the nominee or nominees
selected by OSS. In the event that a Member wishes to remove a Manager nominated
by it, each Member shall vote its Units in favor of such removal. A vacancy in
the number of Mangers to serve may be filled only by the Members and only in the
manner specifically authorized in this Section 5.7.
5.8 REIMBURSEMENT OF EXPENSES. Except to the extent otherwise
provided for herein, and except for items generally constituting Members'
overhead, the Company will pay all costs and expenses associated with the
Company business, and shall reimburse the Members for the actual costs incurred
for goods, materials, and services used by or for the Company.
5.9 INDEMNIFICATION AND LIABILITY OF MEMBERS AND MANAGERS. The
Company shall indemnify the Members and managers or any Member or manager
against any claim or liability incurred by the Members, managers, or any of them
in connection with the conduct of the business of the Company, and neither the
Company nor any Member shall have any claim against the Members, managers, or
any of them by reason of any such act or omission of the Members, managers, or
any of them; provided that, in each instance, a Member or manager shall not be
indemnified or exculpated if such act or failure to act was not in good faith or
constituted fraud, gross negligence, or willful misconduct. The provisions of
this Section regarding liability and indemnification shall apply with equal
force and effect to any manager, Member, agent or employee of a Member, and
their successors and assigns.
5.10 RETENTION OF COUNSEL, ETC. In engaging counsel, accountants, and
other professional advisors for the Company, the Members expressly acknowledge
that such advisors shall represent the Company and all Members, and they
expressly waive any personal claim of privilege or defense founded on any
alleged client relationship based upon the fact that a particular Member engaged
them for the Company.
ARTICLE 6
BOOKS AND RECORDS; TAX MATTERS
6.1 TAX CHARACTERIZATION. The Members intend that the Company be
treated as a "partnership" for tax purposes, and Members shall not take any
action inconsistent with that characterization.
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6.2 FISCAL YEAR. The fiscal year of the Company shall be the calendar
year.
6.3 BOOKS AND RECORDS. The Company's books and accounting records and
all other papers, records, and documents relating to the Company's affairs shall
be kept at the Company's principal executive office or such other place as the
Members may agree. Each Member shall have the absolute right to examine, in
person or by legal representatives, all Company records at any reasonable time,
subject only to such protection as may be necessary to prevent further
dissemination of the inventions, trade secrets and other confidential
information of the Company.
In addition to any other books and records of the Company required by statute,
the Company shall maintain the following records:
(a) a current list of the full name and last-known address of each
Member and the managers of the Company;
(b) a copy of the Articles of Organization of the Company and all
amendments thereto;
(c) a copy of any currently effective written operating agreement;
(d) copies of the Company's federal, state, and local income tax
returns and reports, if any, for the three most recent years;
(e) copies of any Company financial statements for the three (3) most
recent years;
(f) records of all actions and proceedings of Members for the last
three years;
(g) a copy of any effective member control agreements;
(h) a statement of all Capital Contributions or contributions of
services accepted by the Company; and
(i) any written consents obtained from Members pursuant to the Act.
6.4 ANNUAL FINANCIAL STATEMENTS. Within one hundred twenty (120) days
after the close of each fiscal year, annual financial statements for the
Company, including statements of assets and liabilities, income statements, and
such other statements as are commonly included in financial statements, or as
may be requested by the Members, shall be prepared and delivered to each of the
Members.
6.5 TAX RETURNS. As soon as practical following the close of each
year of the Company, the partnership income tax return for the Company shall be
prepared by such accountant or firm as may be selected by the President.
6.6 TAX ELECTIONS. In the sole discretion of the Members, the Company
may make or not make any and all tax elections deemed appropriate, including, in
the event of a transfer of all or part of any Member's interest in the Company,
the election under Section 754 of the Code to adjust the bases of the assets of
the Company.
ARTICLE 7
TRANSFERS OF MEMBERSHIP INTERESTS
7.1 LIMITATION ON SALE OR EXCHANGE. The rights of a Member to
transfer its interest in the Company are governed by a Buy-Sell Agreement
between the Company and its Members dated March 9, 1999 (the Buy-Sell
Agreement).
7.2 CONTINUATION OF ASSIGNOR'S STATUS. Anything herein to the
contrary notwithstanding, the Company, its managers, and the Members shall be
entitled to treat the assignor of a Member's interest in the Company as the
absolute owner thereof in all respects, and shall incur no liability for
distributions of cash made in good faith to him until such time as a written
assignment that conforms to all requirements of this Article 7 has been received
by and recorded on the books and records of the Company. Until such time, any
payments by the
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Company to an assigning Member or his executors, administrators, or
representatives shall, to the extent of such payments, acquit the Company of
liability to any other Person who may have an interest in such payment by reason
of an assignment by the Member, such Member's death, or otherwise.
7.3 ASSIGNEE'S RIGHTS. An assignee of any Member's interest shall be
entitled to receive Distributions of cash or other property from the Company and
to receive allocations of the gains, profits, and losses of the Company
attributable to such interest after the effective date of the assignment. The
"effective date" of an assignment shall be that date set forth on the written
instrument of assignment, which may in no event be any earlier than the date
upon which the requirements of this Article 7 have been satisfied.
7.4 REQUIREMENTS FOR ADMISSION AS A SUBSTITUTE OR ADDITIONAL MEMBER.
An assignee of an interest in the Company, if not already a Member, may become
an additional or substitute Member only with the consent of other Members
holding a majority of all Units held by such other Members, which consent may be
granted or withheld all in each Member's sole discretion. No assignee of any
Member's interest who is not already a Member shall become a substitute or
additional Member with respect to such interest without such consent.
7.5 DOCUMENTS AND EXPENSES. As a condition to admission as a
substitute or additional Member, an assignee of all or a part of any interest in
the Company or the legatee or distributee of all or part of any interest in the
Company shall execute and acknowledge such instruments, in form and substance
satisfactory to the Company, as the Company deems necessary or advisable to
effectuate such admission and to confirm the agreement of the person being
admitted as such substitute or additional Member to be bound by all of the terms
and provisions of this Agreement. Such assignee, legatee, or distributee shall
pay all reasonable expenses in connection with such admission as a substitute or
additional Member, including, but not limited to, legal fees and costs of
preparing and filing any amendment to the Articles of Organization of the
Company if necessary or desirable in connection therewith.
7.6 ACQUIT COMPANY. Until such time as a written assignment that
conforms to all requirements of this Article 7 has been received by and recorded
on the books of the Company, any payment by the Company to an assigning Member
or his executors, administrators, or representatives shall acquit the Company of
liability to the extent of such payments to any other person who may have an
interest in such payment by reason of an assignment by the Member, such Member's
death, or otherwise.
ARTICLE 8
ADDITIONAL MEMBERS
Additional Members may be admitted to the Company upon such terms and
conditions, and for such Capital Contributions, as are approved unanimously by
all Members.
ARTICLE 9
DISSOLUTION
9.1 DISSOLUTION EVENTS. The Company shall continue until the
occurrence of any of the following events (each a "Dissolution Event"):
(a) The expiration of the Company's period of existence, as set forth
in the Articles of Organization;
(b) The agreement of all Members of all Units to dissolve and
terminate the Company; and
(c) The decree of a court of competent jurisdiction that dissolution
and liquidation is required.
9.2 DISSOLUTION AND LIQUIDATION PROCEDURE. Except as otherwise
provided by the Act, upon the occurrence of a Dissolution Event, no further
business shall be done in the name of or on behalf of the Company except insofar
as may be necessary to wind up the business of the Company and distribute its
assets to the Members or their successors in interest, and the Company shall
execute and file a notice of dissolution as required by the Act.
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Upon dissolution and termination of the Company, except as otherwise provided in
any valid business continuation agreement and by applicable law, the Company's
assets shall be applied in the following order:
(a) To the payment of the debts and obligations of the Company,
including, to the extent permitted by law, obligations to Members
who are creditors, in the order prescribed by law;
(b) Next, to the setting up of any reserves deemed reasonably
necessary by the Members for any contingent or unforeseen
liabilities or obligations of the Company;
(c) Next, to the Members who are creditors for any debts and
liabilities not permitted to be paid under (a), above; and
(d) Next, to the Members in accordance with their respective Capital
Account balances.
For purpose of determining the rights of Members to Distributions in
dissolution, in the event of a distribution of property in kind, such property
shall be assumed to have been sold at its fair market value, with any gain or
loss allocated to the Members in accordance with Article 4. If a Member is
indebted to the Company, the Company shall, if possible, offset such
indebtedness to satisfy its obligations to said indebted Member rather than
distribute a portion of said indebtedness to the other Member(s).
ARTICLE 10
MEETINGS OF MEMBERS; VOTING
Meetings of the Members for any purpose may be called by any Member by
written notice to all Members. Such notice of any such meeting shall be given
personally or by first class mail, postage prepaid, to the Members not less than
thirty (30) days or more than sixty (60) days before the date of the meeting,
and shall state the place, date, hour, and purpose of the meeting. All meetings
shall be held at the principal office of the Company or at another location that
is reasonably convenient for the Members as a whole and is selected by agreement
of Members holding a majority of all outstanding Units. Members may take action
by the vote of Members holding a majority of all outstanding Units.
Each Member may authorize any other Member or Members to act for him
by written proxy in all matters in which a Member is entitled to act. In
addition, a Member may designate in writing the manner in which he desires that
his vote be cast, which writing must be received by the Company prior to the
meeting. Members of record on the date of the meeting shall be entitled to vote.
ARTICLE 11
AMENDMENTS
This Agreement may be amended at a meeting of the Members called for
such purpose upon the approval of Members; provided, however, that any change
that reasonably could be expected to materially and adversely affect the rights
of any Member shall require the consent of such Member and that any change that
may materially and adversely affect the ability of the Company to be taxed as a
partnership for federal income tax purposes shall require unanimous approval.
ARTICLE 12
ARBITRATION
Any controversy or dispute of any nature whatsoever between or among
Members or managers involving: (1) the formation, direction and all phases of
the operation of the Company, including but not limited to the election and
removal of managers, whether or not any of said managers, has been guilty of any
misconduct, and all matters of company business, management, purposes, policy,
employment and termination thereof, salaries, profits and dividends; (2)
termination of, or other change in the Company or its purposes or powers,
including but not limited to formal dissolution, merger, consolidation and
mortgage, pledge or sale of any or all of its assets, and any amendment of the
Articles of Organization; and (3) any change in the Members or their interests
in the Company,
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including but not limited to all questions involving the issuance, transfer,
repurchase, redemption and rights to subscribe to newly issued and reissued
interests of the Company and the payment of dividends, shall be settled by
arbitration in Denver, Colorado in accordance with the Commercial Arbitration
Rules of and by the American Arbitration Association, and judgment upon the
award rendered by the arbitrators may be entered in any Court having
jurisdiction thereof. The decision of the arbitrators shall be final and
conclusive. With respect to such arbitration:
(a) All questions as to the meaning of the above clause, or as to the
arbitrability of any dispute under said clause shall be resolved by the
arbitrators, and their decision thereon shall be binding and not subject to
judicial review.
(b) In addition to all methods for enforcement of their award
otherwise given by law (including all equitable remedies), the arbitrators
shall possess the irrevocable proxy of the parties to vote said parties'
Units in conformity with the decisions arrived at by said arbitrators in
accordance with the procedure above described.
(c) Every aspect of this arbitration clause is intended to be
severable. If any term or provision hereof, in general or with respect to
a specific situation, is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder
hereof.
ARTICLE 13
WAIVER OF DISSENTERS' RIGHTS
The Members waive any and all dissenters' rights under the Act to the
extent that the Act permits such waiver.
ARTICLE 14
MISCELLANEOUS
14.1 OTHER BUSINESS VENTURES. Any Member may engage in or possess an
interest in other business ventures of every nature and description,
independently or with others; and neither the Company nor the Members shall have
any right by virtue of this Agreement in or to such independent ventures or to
the income or profits derived therefrom. Except as provided above, no Member
shall have the obligation to bring any business opportunity to the Company or to
any other Member.
14.2 CONFLICTS OF INTEREST; CONFIDENTIALITY. The relationship between the
Members is one of confidence and trust. Neither Member will disclose
confidential information about the Company or the other Member to others without
first advising the other Member of its intent to do so and receiving such
Member's prior written consent thereto, and such consent will not be
unreasonably withheld. In connection with any such disclosure, the disclosing
Member will obtain a suitable confidentiality undertaking from the party to whom
the disclosures are to be made prior to making any such disclosure.
14.3 REIMBURSEMENT OF EXPENSES. Upon execution of this Agreement, OSS
shall pay NetIgnite $50,000 for reimbursement of expenses NetIgnite has incurred
in connection with the formation of the Company.
14.4 PRIOR LIMITED LICENSE OF TECHNOLOGY. NetIgnite has previously granted
OSS a limited license in certain events (as defined in Section 8.5 of the Buy-
Sell Agreement) to the technology NetIgnite is transferring to the Company. The
Company acknowledges the existence of such limited license and hereby agrees to
recognize and honor such limited license.
14.5 GOVERNING LAW. Notwithstanding the fact that the Company may conduct
business in states other than Colorado, and notwithstanding the fact that some
or all of the Members may be residents of states other than Colorado, this
Agreement and the rights of the parties hereunder will be governed by,
interpreted, and enforced in accordance with the laws of the State of Colorado.
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14.6 ARTICLES OF ORGANIZATION; AMENDMENT OF ARTICLES OF ORGANIZATION. The
Articles of Organization are incorporated by reference and hereby made a part of
this Agreement. In the event of any conflict between the Articles of
Organization and this Agreement, the provisions of this Agreement shall govern
to the extent not contrary to law. No Member shall vote its Units in favor of
any amendment to the Articles of Organization unless all of the Members have
agreed to so act.
14.7 BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the Members, and their respective heirs, executors, administrators,
personal representatives, successors and assigns.
14.8 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under the present or future laws effective
during the term of this Agreement, such provision will be fully severable, and
this Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid, or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision, there will be added automatically as a part
of this Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and enforceable.
14.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument. However, in making proof hereof it will
be necessary to produce only one copy hereof signed by the party to be charged.
14.10 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.
14.11 NO THIRD PARTY BENEFICIARY. This Agreement is made solely and
specifically among and for the benefit of the parties hereto, and their
respective successors and assigns, and no other person will have any rights,
interest, or claim hereunder or be entitled to any benefits under or on account
of this Agreement, whether as a third party beneficiary or otherwise.
14.12 NOTICES. Any notice to be given or to be served by a Member upon
the Company in connection with this Agreement must be in writing and will be
deemed to have been given when delivered personally or mailed to the Company at
its registered office or its principal executive office or to the Company's
President. Notice to a Member will be deemed to have been given when (i)
delivered personally to the Member or (ii) deposited in the United States mail,
postage prepaid and addressed to a Member at the address specified in Section
2.7 hereof. At any time, by giving five (5) days' prior written notice to the
Company, a Member may designate another address in substitution of the foregoing
address as the address to which notice is to be given.
14.13 HEADINGS AND TITLES. Article and Section headings and titles are
for descriptive purposes and convenience of reference only and shall not control
or alter the meaning of this Agreement as set forth in the text.
14.14 ENTIRE AGREEMENT. This Agreement is the final integration of the
agreement of the parties with respect to the matters covered by it and
supersedes any prior understanding or agreement, oral or written, with respect
thereto.
14.15 GENDER, ETC. Except where the context requires otherwise, the use
of terminology of any of the masculine, feminine, or neuter genders shall
include all such genders, and the use of the singular number shall include the
plural and vice versa.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
COMPANY:
NetIgnite 2, LLC
By:_______________________________
Its:____________________________
MEMBERS:
Online System Services, Inc.
By:_______________________________
Its:____________________________
NetIgnite, Inc.
By:_______________________________
Its:____________________________
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SCHEDULE A
Member Capital Contributions Number of Units
------ --------------------- ---------------
Online Service Systems, Inc. (1) 60
NetIgnite, Inc. (2) 40
(1) OSS agrees to provide as capital contributions cash of up to
$1,500,000 for working capital of the Company (the "Committed Amount) in
accordance with the requirements therefor set forth in the proforma financial
statements for the Company prepared by NetIgnite and a copy of which has been
furnished to OSS (the "Proforma Statements"). OSS's failure to provide the
Committed Amount shall not constitute a breach of this Agreement but shall (A)
result in a dilution of interest in profits and losses as provided in Section
4.3(b) hereof and (B) constitute a triggering event under Section 4 of the Buy-
Sell Agreement. If NetIgnite believes that OSS' funding is not being done in a
timely manner, it shall provide written notice thereof to OSS. OSS shall
respond to such notice in writing within 10 days of receipt of such notice. If
the Members cannot then reach agreement as to the timeliness of funding, the
matter will then be immediately submitted to arbitration pursuant Article 12 of
this Agreement.
(2) All of NetIgnite's rights and interests in certain property, as
set forth in Schedule B hereto, subject to certain rights of OSS in the
technology conditioned upon certain events. The Members agree that the value of
NetIgnite's capital contribution shall be $1 million and NetIgnite's initial
Capital Account shall be that amount.
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SCHEDULE B
ASSIGNMENT
This, Assignment, dated as of _____________________________, 1999, from
NetIgnite, Inc. a Colorado corporation (the "Assignor"), to NetIgnite2, L.L.P.,
a Colorado Limited Liability Company (the "Assignor"). For good and valuable
consideration paid to the Assignor, receipt of which is hereby acknowledged,
Assignor by these presents does hereby agree as follows:
1. Assignment of Assets and Properties. The Assignor does hereby sell,
-----------------------------------
assign, transfer, convey, grant, bargain, set over, release, deliver, and
confirm unto the Assignee, its successors and assigns, forever, all of the
assets of the Assignor set forth below:
(a) all intellectual property relating to the creation and
development of new XML-based internet local market advertising services,
including technical designs (including requirements, definitions, technical
architecture and development plans) relating thereto;
(b) business models (including pricing, service delivery strategies
and product packaging plans) relating to 1(a) above; and,
(c) data concerning prospective clients relating to 1(a) above.
2. Warranty of Title. Assignor hereby represents that the above described
-----------------
property is owned by it free and clear of all mortgages, liens and encumbrances
and includes all intellectual property of Xxxxx Xxxxx relating to 1(a) above.
Assignor and its officers, directors, shareholders and assigns, do hereby agree
to WARRANT and DEFEND the sale of the property to Assignee against all and every
person or persons. THERE IS NO WARRANTY OF MERCHANTIBILITY OR FITNESS FOR ANY
PURPOSE AND SAID WARRANTY IS EXCLUDED.
3. No Rights in Third Parties. Nothing expressed or implied in this
--------------------------
Assignment is intended to confer upon any Person, other than the Assignor and
the Assignee and their respective successors and assigns, any rights, remedies,
obligations or Liabilities under or by reason of this Assignment.
4. Successors and Assigns. This Assignment shall bind and inure to the
----------------------
benefit of the Assignor and the Assignee and their respective successors and
assigns.
5. Governing Law. This Assignment shall be governed by, and construed in
-------------
accordance with, the laws of the State of Colorado applicable to contracts
executed and to be performed entirely within that State.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be executed
as of the date first written above by its officer thereunto duly authorized.
NetIgnite, Inc.
By:___________________________
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BUY-SELL AGREEMENT
This BUY-SELL AGREEMENT (the "Agreement") is made effective the 9th day of
March, 1999 by and among NetIgnite 2, LLC, a Colorado limited liability company
(the "Company"), Online System Services, Inc., a Colorado corporation ("OSS")
and NetIgnite, Inc., a Colorado corporation ("NI"), OSS and NI are individually
referred to as a "Member" and collectively referred to as the "Members").
RECITALS
A. The Members own all of the issued and outstanding interests of the
Company. The Company and the Members have entered into an Operating and Member
Control Agreement dated March 9, 1999 (the "Operating and Member Control
Agreement").
B. The Members desire to preserve the continuity of corporate ownership
by restricting the ownership and transferability of interests, providing for the
purchase of interests in certain events, and as otherwise provided in this
Agreement.
C. Xxxxx Xxxxx, a Colorado resident ("Xxxxx"), is the sole shareholder of
NI and is entering into an Employment Agreement with OSS and the Company dated
as of the date hereof (the "Employment Agreement") pursuant to which he will
serve as President of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
contained in this Agreement, the parties agree as follows:
1. DEFINITIONS. The following terms, when capitalized, will have the
meanings indicated:
1.1 "Interest" or "Interests" means any one or more of the issued and
outstanding Interests of any class or series of securities of the Company
presently owned or hereafter acquired by or on behalf of a party to this
Agreement, any transferee, and any other person who in the future acquires
any such securities, by purchase, gift, or any other means.
1.2 "Transfer" means, with respect to any Interests, any sale, gift,
assignment, exchange, pledge, transfer or other disposition or change in
ownership thereof, the creation of a bankruptcy estate which includes such
Interests, the assignment for the benefit of creditors which includes such
Interests, the appointment of a trustee or receiver with respect thereto,
the grant or appointment of an irrevocable proxy coupled with an interest
with respect thereto, or the grant or imposition of a security interest or
lien thereon, whether voluntary or involuntary, and to "Transfer," when
used as a verb, means, with respect to any Interests, to sell, give,
assign, exchange, pledge, transfer or otherwise dispose or change ownership
thereof, create a bankruptcy estate which includes such Interests, assign
such Interests for the benefit of creditors, appoint a trustee or receiver
with respect thereto, grant or appoint an irrevocable proxy coupled with an
interest with respect thereto, or grant or act to permit the imposition of
a security interest or lien thereon, whether voluntarily or involuntarily.
2. RESTRICTIONS ON INTERESTS. All Interests are subject to the terms of
this Agreement. No Member may Transfer any Interests, and no Transfer of any
Interests will be valid or binding, except upon compliance with and pursuant to
the terms of this Agreement or with the express written consent of all other
Members. As a condition to the effectiveness of any Transfer of Interests, the
proposed transferee must agree to become a party to this Agreement by executing
a Consent in the form attached hereto as EXHIBIT A (a "Consent"). The Company
may not issue additional Interests of capital stock unless the subscriber
becomes a party to this Agreement by executing and delivering a Consent to the
Company.
3. TERMINATION OF EMPLOYMENT. If Xxxxx' Employment Agreement is
terminated pursuant to either Section 8.2 or 8.3 thereof or Xxxxx gives a notice
of non-extension of the Employment Agreement pursuant to Section 8.1 thereof,
OSS shall have the option of exercising the Put-Call Offer (defined in Section 7
below),
provided that the Put-Call Offer shall not be subject to any Minimum Price (as
defined in Section 7 below). In this event, the purchase price shall be the Fair
Market Value for Interests (as defined in Section 9 below).
4. CHANGE IN CONTROL; FAILURE TO FUND. If there is a "Change in Control"
of OSS as defined in Section 3 of Xxxxx' Option (Exhibit A to the Employment
Agreement) or if OSS shall fail to provide the Committed Amount (as defined in
Schedule A to the Operating and Member Control Agreement), either Member shall
have the option, in the event of a Change in Control, and NI shall have the
option, in the event of a failure to fund, of exercising the Put-Call Offer,
provided that the Put-Call Offer shall not be subject to any Minimum Price. In
this event, the purchase price shall be the Fair Market Value for Interests.
5. INVOLUNTARY TRANSFER. Upon any Transfer (or purported Transfer) of
Interests as a result of (i) the creation of a bankruptcy, (ii) the appointment
of a receiver or trustee with respect to the Interests, (iii) an order of any
court having jurisdiction, (iv) an assignment of the Interests for the benefit
of creditors, or (v) any other Transfer that arises out of the exercise of the
legal right or remedies of a third party (an "Involuntary Transfer"), the
remaining Member will have the option to exercise the Put-Call Offer provided
that in such event, there shall be no Minimum Price, the price to be paid in
connection therewith to be equal to the Fair Market Value. The Member whose
Interests are subject to the Involuntary Transfer must give written notice of
the Involuntary Transfer to the remaining Member at the earliest possible date.
The option granted by this Section 5 may be exercised commencing upon the
Involuntary Transfer and through the period of 90 days following the earlier of
the date of receipt of such notice or the receipt of written notice from a court
or other third party of the Involuntary Transfer.
6. SWITCHBOARD OPTION. At any time on or before September 30, 1999, NI
shall have the right to offer Switchboard Incorporated or its parent, Banyan
Systems Incorporated, the option (the "Switchboard Option") of acquiring all of
the outstanding Interests, provided that such option shall be subject to the
Minimum Price requirement for an offer made prior to December 31, 1999. The
exercise of the Switchboard Option shall be subject to the provisions of Section
8, to the extent applicable, and must be closed within 45 days of the exercise
thereof (but not later than November 14, 1999, in any event).
7. MEMBER PUT-CALL. Subject to the terms hereof, if a Member (the
"Offeror Member") desires to Transfer all of its Interests to the other Member
or to acquire all of the other Member's Interests prior to the occurrence of an
event that triggers the provisions of any of Sections 3 through 6, the Offeror
Member may give to the other Member (the "Offeree Member") written notice of an
offer to purchase all of the other's Interests or to sell all of its Interests,
which notice must include the price (such price to be based on each one percent
(1%) Interest in the Company) and all other material terms and conditions of the
offer (the "Put-Call Offer"). The Offeree Member will then have the option for
a period of 10 days after the Put-Call Offer is given to agree either to
purchase the Offeror Member's Interests or to sell its Interests to the Offeror
Member for the price set forth in the Put-Call Offer. If the Offeree Member
does not elect to purchase all of the Offeror Member's Interests within such 10
day period, in the case of an offer to sell, then the Offeree Member has the
obligation to sell, and the Offeror Member has the option to purchase, all of
Offeree Member's Interests, for the price set forth in the Put-Call Offer. If
the Offeree Member does not elect to sell all of its Interests within such 10-
day period, in the case of any offer to purchase, then the Offeree Member has
the option to purchase, and the Offeror Member has the obligation to sell, all
of the Offeror Member's Interest, for the price set forth in the Put-Call Offer.
In the event that the Member (the "First Member") who as a result of the Put-
Call Offer process has an option to purchase the other Member's (the "Second
Member") Interests does not close the purchase of such Interests within the 45-
day term of the option (the last day of the 45-day term being referred to herein
as the "Termination Date"), the First Member's option shall terminate and the
Second Member shall have an option to purchase all of the First Member's
Interests on the same basis as the terminated option. This secured option must
close within 45 days of the Termination Date or it also shall terminate.
To be effective, the Offeror Member's offered price for any offer made
prior to December 31, 2001 must meet or exceed a price (the "Minimum Price")
which for 100% of the Interests in the Company is at least: (i) from the date
hereof to December 31, 1999 -- $10 million; (ii) from January 1, 2000 to
December 31, 2000 -- $15 million; and (iii) from January 1, 2001 to December 31,
2001 -- $20 million. The Minimum Price requirement is not applicable in certain
events as provided herein and there shall be no Minimum Price requirement for
any offer made after December 31, 2001. Notwithstanding any proposed closing
date set forth in the Put-Call Offer, a closing must occur at the principal
offices of the Company no later than 55 days after delivery of the Put-Call
Offer by the Offeror Member.
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8. PROCEDURES. The following procedures govern options and obligations
to purchase Interests under this Agreement:
8.1 EXERCISE OF AN OPTION TO PURCHASE INTERESTS. If a Member has an
option to purchase or to sell Interests pursuant to this Agreement, the
option may be exercised at any time during the applicable option period.
8.2 CLOSING. The closing of a purchase and sale under this Agreement
is to be held at the principal offices of the Company no later than 10:00
a.m. on the date 45 days after the delivery of written notice of the
exercise of an option to purchase or to sell Interests, or at such other
place and on such other date as the parties to the purchase and sale agree.
If the closing date falls on a day other than a business day, the next
business day will be the closing date.
8.3 TRIGGERING DATES. If there occurs more than one event that,
under the provisions of Sections 3 through 7 of this Agreement, gives rise
to an option to purchase or to sell Interests under this Agreement, the
provisions that apply by reason of the first of such events to occur will
govern the purchase and sale of such Interests, provided that the effective
date of a Put-Call Offer by a Member pursuant to Section 7 given within 45
days of an option arising pursuant to Sections 3 through 6 shall be deemed
to be one day after the later to occur of the events specified in Sections
3 through 6. If such an event gave rise to an option, and Interests were
not purchased and sold because options were not exercised to purchase or
sell all Interests subject to such option, then, upon the expiration of
such option, the provisions applicable to the next in time of such multiple
events will be given effect.
8.4 CORPORATE ACTIONS/MEMBER VOTES. Except as otherwise specifically
provided herein, decisions of the Company with respect to this Agreement
will be determined by a vote of the Members, and will not require the
approval of the Managers of the Company. In the event of the exercise of a
Put-Call Offer or the Switchboard Option, each Member agrees to cooperate
with the other and the Company and to use its best efforts to see that the
transaction is completed as soon as reasonably possible.
8.5 TECHNOLOGY LICENSE. Should the Switchboard Option be offered and
exercised or should the exercise of a Put-Call Offer result in OSS selling
its Interests, the Company will grant to OSS, at no cost to OSS, a non-
exclusive royalty-free worldwide source code license to Company-owned or
developed technology (the "License"). The License shall be restricted to
use within or associated with OSS' products and services. It will be
provided in the License that any OSS product or service which integrates
Company technology must have substantial and demonstrable value derived
from other OSS software or Internet service. OSS will not have the right
to license or sub-license the Company-owned or developed technology,
although OSS may transfer its rights to the License in connection with a
sale of its business or substantially all of its assets, provided that the
License, as transferred, shall be limited to using the technology with OSS'
products, as such products exist at the time of any such event. Further,
in such event, the Company shall make available at cost, reasonable access
to its development resources to assist OSS in its use of the Licensed-
technology for a period of one year.
8.6 FAILURE TO EXERCISE PUT-CALL OFFER. If neither Member has
exercised the Put-Call Offer prior to January 1, 2002, NI shall have the
right to require OSS to acquire all of NI's Interest at their Fair Market
Value, the purchase price therefor to be paid in shares of OSS' common
stock. In this event, the OSS common stock shall be deemed to have a value
equal to the average of the closing sale price (or bid price in the event
that there is no sale of such stock on a given day) for the OSS common
stock for the 20 trading days immediately preceding the exercise of such
option. If exercised, NI shall sell and OSS shall purchase all of NI's
Interest. The shares of OSS common stock issued upon exercise of such
option shall be restricted shares as defined in Rule 144 promulgated by the
Securities and Exchange Commission. The Members may agree at any time, but
are under no obligation to do so, to convert NI's Interest into shares of
OSS common stock.
8.7 RETENTION OF CERTAIN PAYMENTS. In the event that OSS should
acquire NI's interests in the Company, Xxxxx has agreed to remain an
employee of the Company for one year thereafter, based upon the
compensation parameters in effect at the time of such acquisition. NI
hereby agrees that should OSS acquire its interests in the Company, that
OSS may retain 7% of the purchase price for NetIgnite's interests to
provide incentive for Xxxxx to remain employed by the Company or its
successor and assigns
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for two years after OSS' purchase of NetIgnite's interest in the Company.
If Xxxxx remains so employed for two years, or such employment is
terminated by the Company or its successors and assigns without cause prior
to the end of such two-year period, OSS will pay to NI the full retained
amount plus interest at the rate of 8% per annum. If Xxxxx does not remain
so employed for the full two-year period, OSS shall be entitled to retain
the full retained amount.
9. PURCHASE PRICE. Except for an offer pursuant to Section 7, the
purchase price of any Interests will be the "Fair Market Value" of the Interests
as of the date on which occurred the event giving rise to the option or
obligation to purchase the Interests (the "Valuation Date"). For this purpose
the "Fair Market Value" of Interests means the value of Interests of the Company
as of the last day of the most recent month ending on or prior to the Valuation
Date, without regard to any retained earnings of the Company and disregarding
any adjustments for minority or majority ownership, all determined in accordance
with this Section 9. In the event of an offer pursuant to Section 7, the
purchase price shall, subject to any Minimum Price requirement, be the price set
forth in the Offeror Member's offer.
9.1 ESTABLISHMENT BY STIPULATION. The Fair Market Value of an
Interest will be the purchase price per Interest stipulated by unanimous
agreement of the Members.
9.2 ESTABLISHMENT BY APPRAISAL. If the Members do not agree on a
Fair Market Value of an Interest, the Fair Market Value of an Interest will
be determined based on the criteria set forth above and using the following
process:
(a) The Members will attempt to mutually agree upon a single
appraiser who, if so selected, will establish the Fair Market Value of
an Interest. In such case the Members will share the cost of such
appraiser equally.
(b) If a single appraiser is not mutually selected pursuant to
paragraph (a) within 15 days after written demand from one Member to
the other, then, upon written demand of a Member, each Member will
have 10 days to select one appraiser. Each Member must pay the costs
of its respective appraiser. If only one appraiser is selected during
this 10-day period, such appraiser, at the cost of the party who
selected such appraiser, will establish the Fair Market Value of an
Interest.
(c) If two appraisers are selected within the 10-day period
provided for in paragraph (b), such appraisers are to attempt to agree
on the Fair Market Value of an Interest. If such appraisers do not
agree upon the Fair Market Value of an Interest within 30 days after
the appointment of the second of them, within 45 days after the
appointment of the second appraiser each must separately determine the
Fair Market Value of an Interest. If the higher of the two values is
no more than 110% of the lower of the two values, the Fair Market
Value of an Interest will be the average of the two values.
(d) If the higher of the two values is more than 110% of the
lower of the two values, the two appraisers must jointly appoint a
third appraiser within 15 days after the 45 day period provided for in
Section 9.2(c) above, the cost of which is to be shared equally by the
Members. If the two appraisers do not agree upon a third appraiser
within this time period, the District Court for Denver, Colorado will
appoint a third appraiser on petition of either Member. Within 15
days of appointment, the third appraiser must then separately
determine the Fair Market Value of an Interest. If the Fair Market
Value of an Interest as determined by the third appraiser is the same
as the Fair Market Value of an Interest as determined by either of the
other two appraisers, such value will be the Fair Market Value of an
Interest. In other cases the Fair Market Value of an Interest will be
determined as follows: The middle value of the three values will be
determined. If the two other values differ from the middle value by
an equal amount, the Fair Market Value of an Interest will be the
middle value. If the difference between each of the other two values
and the middle value is not identical, then the value with the
greatest difference from the middle value will be disregarded and the
Fair Market Value of an Interest will be the average of the two
remaining values. The Fair Market Value of an Interest, as so
determined, will be binding upon all parties.
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(e) Unless otherwise agreed, in order to be eligible to be an
appraiser under this Section, an individual or entity must be a
competent appraiser of businesses.
(f) Only appraisals completed in writing and delivered to the
Members within the specified time periods will be considered valid for
purpose of this Agreement. The Company will allow its books, records,
and operations to be available for review by all chosen appraisers for
the purposes of determining the Fair Market Value of an Interest.
9.3 CAPITAL CHANGES. The purchase price for Interests under this
Agreement is to take into account, as appropriate, any changes in the
capital of the Company occurring (a) after the event giving rise to the
purchase and sale and/or the establishment of the Fair Market Value of an
Interest and (b) before the closing of such purchase and sale.
10. TERMS AND CONDITIONS OF CLOSING.
10.1 PAYMENT OF PURCHASE PRICE. In the case of any purchase of
Interests by the remaining Member under this Agreement, the purchase price
for such Interests, is to be paid in cash at the closing by the purchasing
Member.
10.2 DELIVERY OF CERTIFICATES. At the closing, the transferring
Member must deliver to the purchaser transfer instruments, duly endorsed
for transfer, representing the Interests purchased.
11. TERMINATION. This Agreement will terminate automatically upon the
occurrence of any of the following:
11.1 AGREEMENT. An agreement in writing executed by all Members who
are parties to this Agreement and who own Interests;
11.2 ONE MEMBER. One Member becomes the owner of all of the
Interests which are then subject to this Agreement; or
11.3 DISSOLUTION. The dissolution of the Company.
12. ARBITRATION. In the event of a dispute, claim and/or disagreement
between the Members or between any of the Members and the Company arising out
of, under, in connection with, or in relation to, this Agreement or any
agreement, note, or other instrument or document executed or to be executed
pursuant to the terms and conditions of this Agreement, including any claims or
disputes involving fraud or fraud in the inducement, such disputes, claims
and/or disagreements must be submitted to binding arbitration by the American
Arbitration Association, in accordance with the rules of the American
Arbitration Association; provided that the valuation of Interests determined in
accordance with Section 9 will not be subject to arbitration. Any arbitration
hearing will be limited to not more than 10 day(s). Unless otherwise agreed by
the parties, such arbitration will occur in Denver, Colorado. A decision of the
arbitrator(s) will be final and binding upon all parties, and judgment upon the
award of the arbitrator(s) may be entered in any court having jurisdiction. The
arbitrator(s) is entitled to award or include in any award the specific
performance of the terms of this Agreement. The costs of any arbitration
proceeding will be paid equally by Members, and the parties will pay their own
attorneys' fees and expenses, but the prevailing party will be entitled to
recover its reasonable attorneys' fees and expenses from the losing party.
Notwithstanding the foregoing, any party to this Agreement may seek and obtain
injunctive or other appropriate equitable relief from a court of competent
jurisdiction to prevent or end a violation of this Agreement that would cause
irreparable harm to such party and for which it would be difficult or impossible
to determine the damages that would arise from such violation or the continuance
thereof; provided, however, that the substance of any dispute is to be resolved
through arbitration as provided in this Section and that the court's equitable
relief may include an order compelling such arbitration.
13. MISCELLANEOUS.
13.1 GOVERNING LAW; VENUE. This Agreement is made under and is to be
governed by, and construed in accordance with, the laws of the State of
Colorado (without regard to its conflicts of laws principles), and each of
the parties hereto consents to venue of any suit or action arising out of,
under, in
5
connection with, or in relation to this Agreement in an appropriate court
with jurisdiction in Denver, Colorado.
13.2 CONSTRUCTION; SEVERABILITY. Wherever possible each provision of
this Agreement is to be interpreted in such a manner as will be effective
and valid under applicable law, but if any provision of this Agreement is
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
13.3 BINDING AGREEMENT. This Agreement is binding not only upon the
parties hereto, but also upon their heirs, personal representatives,
successors, and assigns; and the parties hereby agree for themselves, their
heirs, personal representatives, successors, and assigns to execute any
instrument and to perform any acts that may be necessary or proper to carry
out the purposes of this Agreement.
13.4 LEGEND. Each Member agrees to cause the following legend to be
endorsed upon any instrument representing the Member's Interests, and that
all Interests hereafter issued to them will bear the same endorsement:
"These Interests are subject to, and are transferable only upon the
terms and conditions of, that certain Buy-Sell Agreement and Member
Control Agreement between the Company and its Members dated effective
March 9, 1999. Copies of said agreements are on file with the
Company. Any attempted transfer of these Interests other than in
accordance with said agreement, whether by or pursuant to a gift,
sale, pledge, or otherwise, and whether voluntarily or involuntarily,
is void and of no effect."
13.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of
which will constitute one and the same instrument.
13.6 EXTENSION OF TIME FOR PERFORMANCE. If a party's performance of
any obligation or exercise of any option under this Agreement might
reasonably be expected to be affected by the prior determination of the
purchase price and the purchase price cannot administratively be determined
within the period of time specified, then the period of time within which
such action must be taken will be extended to the date fifteen (15) days
after the date on which the purchase price is determined.
13.7 AMENDMENT. This Agreement may be amended or modified only by a
writing executed by all of the parties hereto.
13.8 INTEGRATION. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and replaces and
supersedes any and all prior oral or written agreements, representations
and discussions pertaining to the subject matter hereof or thereof.
13.9 NOTICES. Any notice, offer, acceptance of an offer or other
communication provided for by this Agreement must be in writing and will be
deemed given or delivered when delivered by hand or when deposited in the
United States mail, certified or registered, return receipt requested,
postage prepaid and properly addressed. The proper address of the Company
is its principal office address and the proper address of any other party
is the address on file with the Company, and the Company will make such
information available to any Member upon request. The address of a party
to whom notices or other communications is to be mailed may be changed from
time to time by giving written notice to all other parties to this
Agreement.
13.10 CAPTIONS. Captions and headings in this Agreement are for
convenience only and in no way define, limit, or describe the scope or
intent of the provisions hereof.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed effective as of the day and year first above written.
MEMBERS:
ONLINE SYSTEM SERVICES, INC.
By________________________________________
Its_____________________
NETIGNITE, INC.
By________________________________________
Its______________________
COMPANY:
NETIGNITE 2, LLC
By________________________________________
Its______________________
7
EXHIBIT A
CONSENT
This Consent is executed effective the ______ day of
__________________________, ________, by the undersigned as required by that
certain Buy-Sell Agreement by and among NetIgnite 2, LLC, Online System
Services, Inc. and NetIgnite, Inc., dated effective March 9, 1999, as the same
may have been thereafter amended (the "Agreement").
The undersigned hereby agrees to be subject to all terms and conditions of
the Agreement. The undersigned will hereafter be deemed to be a "Member" as set
forth in the Agreement. With the exception of the addition of the undersigned
as an additional party, all other provisions of the Agreement will remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Consent effective the
date first above written.
___________________________________
Signature
___________________________________
Print Name
___________________________________
___________________________________
Address
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") made March 9, 1999, by and between
ONLINE SYSTEM SERVICES, INC., a Colorado corporation ("OSS"), NETIGNITE 2, LLC,
a Colorado limited liability company ("NI"), and XXXXX XXXXX, an individual
residing in Denver, Colorado ("Executive").
RECITALS
WHEREAS, OSS and NI desire to hire and employ Executive as President of NI,
a 60% owned subsidiary of OSS.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. EMPLOYMENT. OSS, its subsidiaries and affiliate companies
(collectively, the "Company") agree to employ Executive and Executive hereby
agrees to be employed by the Company on a full-time basis. Executive represents
and warrant that the execution of this Agreement and his performance under this
Agreement does not breach any other agreement and does not require the consent
of any other person.
2. DUTIES. Executive shall be employed as NI's President and shall
perform the duties, bear the responsibilities commensurate with his position and
serve the Company faithfully and to the best of his ability, under the direction
of the Managers (for purposes of this Agreement, the term "Managers" shall mean
the Managers of NI). In addition, the Executive will hold, without additional
compensation, such other offices and directorships for the Company to which he
may be appointed or elected from time to time. Executive's conduct must promote
the best interests of the Company and must not discredit the Company, its
products or services.
3. EXCLUSIVITY. Executive shall devote his full business time, efforts,
attention, skill and energy to the NI's business. Executive shall disclose all
other business activities to the Managers and Executive shall not engage in any
other business activity that requires significant personal services by
Executive. After notifying the Managers, Executive may take reasonable personal
time for:
3.1. personal investments that do not require any significant
services by Executive;
3.2. participation in volunteer or charitable activities;
3.3. participation in industry-related organizations;
3.4. with the Managers' prior approval, serving as a Director for
other companies; and
3.5. activities approved in advance by the Managers;
except that Executive shall cease any such outside activity if the Managers
determine that such activity will interfere or conflict with the Company's
interests.
4. CONFLICTS OF INTEREST. Executive shall not engage in any activity
that, in the Managers' judgment, may interfere or conflict with the proper
performance of Executive's duties or the NI's interests. If Executive has any
interest in a proposed transaction involving the Company, that interest must be
fully disclosed to the Managers and the disinterested Managers must approve the
transaction.
5. CONFIDENTIALITY. The relationship between the Company and Executive
is one of confidence and trust. Executive agrees that the provisions of this
Section are fair and reasonable because as a result of his employment by the
Company he will have access to proprietary Company information and that such
information is a highly-valued asset of the Company. The provisions of this
Section 5 shall be interpreted in a manner that is consistent with the
provisions of Section 14.2 of the Operating and Member Control Agreement dated
Xxxxx 0, 0000 xxxxx XX, XXX and NetIgnite, Inc.
5.1. Confidential Information. The term "Confidential Information"
means all information relating to the Company, its affiliates, customers
and suppliers considered by the Company to be confidential, including,
without limitation:
5.1.1. the Company's plans, products, processes and personnel;
5.1.2. the nature of the Company's services and any area where
such services are performed or planned to be performed;
5.1.3. research, development, manufacturing, purchasing, and
engineering;
5.1.4. markets, marketing strategies, customer lists and
prospect lists;
5.1.5. merchandising, selling, pricing, tariffs or contractual
terms,
5.1.6. inventions, discoveries, concepts and ideas, whether
patentable or not, processes, methods, formulas, and techniques, trade
secrets, related improvements and knowledge;
5.1.7. financial and accounting information;
5.1.8. the Company's technology, expertise or business; and
5.1.9. any component of Confidential Information or anything
derived from Confidential Information.
The Company's determination that specific information constitutes
Confidential Information shall be binding, except for information already
in the public domain other than by Executive's act and except for
information which is no longer a trade secret as defined by the Uniform
Trade Secrets Act.
5.2. Non-disclosure. Executive agrees that, except as permitted by
Section 14.2 of the Operating and Member Control Agreement, he shall at no
time, whether during his employment or at any time thereafter, disclose or
use any Confidential Information for any purpose other than the conduct of
the Company's business. Upon the breach or threatened breach of this
covenant by Executive, the Company shall be entitled without notice to
obtain relief pursuant to Section 12 below.
5.3. Notice to Company. Executive will immediately notify the Company
if he learns that Confidential Information has been disclosed or is about
to be disclosed, whether by Executive's acts, acts of third parties, law,
regulation or court order. Executive will cooperate with the Company's
efforts to prevent or limit disclosure of Confidential Information.
5.4. Ownership. Any Confidential Information that is directly
originated, developed or perfected to any degree by Executive during his
employment hereunder shall be and remain the sole property of the Company
and shall be deemed trade secrets of the Company. To the extent that any
Confidential Information constitutes an original work of authorship by
Executive which is protectable by copyright, Executive acknowledges that
such work is a "work for hire" as defined by the U.S. Copyright Act (17
U.S.C. (S)101 et seq.).
5.5. Assignment. The Executive hereby assigns to NI all of his
intellectual property rights (including copyrights, patents, and
trademarks) that may exist due to his direct involvement in the Company.
10
5.6. Return of Confidential Information. Upon termination of
Executive's employment or upon request by the Managers, Executive or his
legal representative shall deliver to the Company all original and
duplicates and/or copies of all documents, records, notebooks, computer
records or media, and similar materials containing Confidential Information
then in his possession.
5.7. Further Assurances. Executive agrees to execute such separate and
further confidentiality agreements embodying and enlarging upon the
provisions of this Section as the Company may reasonably request.
further confidentiality agreements embodying and enlarging upon the
provisions of this Section as the Company may reasonably request.
6. COMPENSATION AND BENEFITS. In consideration of the services to be
rendered pursuant to this Agreement, Executive shall receive the following
compensation and benefits during the term of his employment:
6.1. Salary and Bonus. NI shall pay Executive an annual base salary,
payable semi-monthly in arrears. The annual base salary during the term
hereof shall be $190,000 with annual increases as approved by the Managers.
Executive will have an opportunity to earn an incentive bonus based upon
Executive's accomplishment of objectives that are mutually defined and
agreed upon between Executive and the Managers. The Managers shall annually
review the amounts of the base salary and bonus. The bonus for calendar
1999 shall be determined as follows. First, the actual net revenues for NI
for 1999 shall be determined, such determination to be consistent with the
assumptions made in the projection of net resources in the NI pro forma
financial statements previously delivered to OSS. Executive will be paid a
bonus based on the level of net revenues for NI in excess of the projected
net revenues set forth in the NI pro forma financial statements, the amount
of such bonus to be equal to:
Revenue Over Targeted Amount Percentage of Net Revenue
---------------------------- -------------------------
to be Paid as Bonus
-------------------
0% to 19.9% 0%
20%-49.9% 5% in excess of such 20%
50% and greater 7% in excess of such 50%
6.2. Benefits. The Company shall provide Executive with the benefits
of such insurance plans, hospitalization plans, retirement plans and other
employee benefits generally provided to executive employees of the Company
and for which Executive may be eligible under the terms and conditions
thereof.
6.3. Stock Options. Executive shall be granted an option to purchase
80,000 shares of OSS Common Stock (the "Option") pursuant to the OSS 1995
Stock Option Plan, the shares subject thereto to vest (subject to
acceleration as provided therein) one-third per year subject to Executive's
continuous employment by the Company, to have a term of five years and to
have an exercise price equal to the fair market value of OSS Common Stock
on the first day of Executive's employment by the Company. The Option shall
be in the form attached hereto as Exhibit A.
6.4. Annual Leave. Executive shall be entitled to vacations, sick
leaves, personal days and other tine off in accordance with the Company's
policies in effect for officers and executive employees of the Company.
6.5. Reimbursement of Expenses. Upon receipt of an itemized
accounting of such expenses with reasonable supporting documentation, the
Company shall reimburse Executive for
11
all reasonable and necessary out-of-pocket expenses incurred by Executive
in connection with the business of the Company and in performance of
Executive's duties under this Agreement.
7. DURATION. Executive's employment shall commence on the date of this
Agreement and continue until terminated in accordance with Section 8. The
initial term of Employee's employment shall be two years ("Initial Term"), with
renewal terms of one year. After termination of Executive's employment, the
applicable provisions of Sections 5, 8, and 9 shall remain in full force and
effect in accordance with the provisions of each such section.
In the event that the Company acquires NetIgnite, Inc.'s (a company owned
by Executive) interests in NI during the Term (as defined below) and the then
Term, unless adjusted, would expire within one year of the date of such
acquisition by the Company, the Term shall be extended to a date that is one
year after the date of such acquisition by the Company.
8. TERMINATION. Executive's employment may be terminated as follows:
8.1. Expiration of Term. Upon written notice by either party
delivered at least 30 days before the expiration of the Initial Term or
renewal term (collectively, "Term"), Executive's employment will terminate
at the expiration of the Term.
8.2. Death; Disability. If Executive dies or becomes disabled during
the Term of his employment, his employment shall be deemed terminated on
the date of his death or disability. The Company shall provide Executive
with any death or disability benefits generally provided to executive
employees of the Company.
8.3. Cause. The Company may immediately terminate Executive's
employment at any time for:
8.3.1. gross negligence or willful misconduct by Executive of
any material duties as an executive officer of the Company which
continues after 15 days written notice specifying such negligence or
willful misconduct; or
8.3.2. the commission of any theft, fraud, embezzlement or
similar crime involving the commission of any felony, for acts of
dishonesty or moral turpitude, for intentional violations of the
securities laws or for a material breach of any provision of this
Agreement which is not cured within 10 days after Executive has
received written notice of such breach from the Company.
9. COVENANT NOT TO COMPETE. Since Executive will be a key employee of
the Company, Executive shall have access to Confidential Information, and the
national scope of the Company's proposed business, Employee agrees that the
restrictions on his future activities contained in this Section are fair,
reasonable and necessary.
9.1. Covenant Period. The covenants contained in this Section shall
continue until the earlier of one year after the termination of Executive's
employment or at such time as OSS shall have sold and assigned its
ownership interests in NetIgnite to either Executive or the other Member of
NetIgnite (such Member being a corporation controlled by Executive (the
"Covenant Period").
9.2. Restrictions on Future Employment. In the event that Executive
gives a notice of nonrenewal of the Term of this Agreement in accordance
with Section 8.1 hereof, resigns his employment hereunder or is terminated
for cause in accordance with Section 8.3 hereof, then, until the Covenant
Period expires, Executive shall not own, manage, operate, control, be
employed by, assist or participate in the ownership, management, operation
or control of a business operating in the United States that is engaged in
a business which is in competition with NI's business as such business was
being conducted at the time of Executive's employment
12
hereunder. Nothing herein shall prohibit Executive from employment with or
providing consulting services to a business whose activities include as a
portion of its operations the business described in this subsection;
provided that Executive does not assist or otherwise provide services to
such business operations. In the event that Executive is terminated without
cause, this provision shall not apply.
9.3. Non-solicitation. Executive shall not directly or indirectly:
9.3.1. induce any employee of the Company to leave the employ
of the Company;
9.3.2. interfere with the relationship between the Company and
any employee;
9.3.3. hire any Company employee to work for any organization
of which Executive is an officer, director, employee, consultant,
independent contractor or owner of an equity or other financial
interest;
9.3.4. solicit or service any actual or prospective supplier,
client, customer of the Company who was solicited or serviced during
Executive's employment; or
9.3.5. interfere or attempt to interfere with any transaction
involving the Company;
until the Covenant Period expires.
10. SECURITIES MATTERS. Since the Executive will have access to
Confidential Information, his ability to engage in securities transactions
(including securities issued by the Company and by others) will be limited.
Executive agrees to:
10.1. not engage in any transactions that violate the securities
laws;
10.2. file all reports required by securities regulatory authorities;
10.3. provide information about securities transactions when
requested by the Company;
10.4. follow written Company policies concerning securities
transactions;
10.5. when requested by the Board, execute any "lock-up" agreements
or other restrictions on transactions, provided that all executive
employees of the Company are being requested to execute similar lock-up
agreements;
10.6. comply with securities law requirements for all transactions.
While Executive may request the Managers' permission for proposed securities
transactions, Executive is still responsible for compliance with legal
requirements.
11. SWITCHBOARD FINDER'S FEE. In the event that NI is sold to Switchboard
Incorporated or its parent, Banyan Systems Incorporated (such companies herein
referred to as "Switchboard"), Executive shall have the opportunity to earn a
finder's fee if Executive secures a relationship acceptable to OSS between OSS
and Switchboard which is distinct from the acquisition of NI by Switchboard and
offers measureable revenue to OSS. In such event, OSS will pay Executive a fee
based on the following formula:
Revenues to OSS Fee Paid, Based on % of Revenue
--------------- -------------------------------
$ 0 - $1,000,000 5%
$1,000,001 - $2,000,000 4%
$2,000,001 - $3,000,000 3%
$3,000,001 - $4,000,000 2%
$4,000,001 + 1%
12. INJUNCTIVE RELIEF. Upon a material breach or threatened material
breach by Executive of any of the provisions of Sections 3, 4, 5, 9 and 10 of
this Agreement, the Company shall be entitled to an injunction restraining
Executive from such breach, together with any other relief or remedy available,
for such breach or threatened breach, including the recovery of damages.
Nothing herein shall be construed as prohibiting the Company from pursuing any
other remedies for such breach or threatened breach. If the Company or
Executive takes legal action to enforce the provisions of this Agreement or to
enjoin Executive or the Company from violating this Agreement, the prevailing
party, as part of its damages, shall be entitled to recover its legal fees and
expenses incurred in such action from the losing party.
13. SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision or portion of
this Agreement shall be adjudicated to be invalid or unenforceable, this
Agreement shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such Section in the particular jurisdiction in which
such adjudication is made.
14. NOTICES. All communications, requests, consents and other notices
under this Agreement shall be given in writing and delivered by facsimile,
courier, registered or certified mail (postage prepaid) to the receiving party
at the address set forth below or the recipient's last known address. Notice
shall be deemed given on the date of delivery as shown by the facsimile
confirmation or delivery receipt.
15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Colorado.
16. ASSIGNMENT. The Company may assign its rights and obligations
under this Agreement to any successor corporation and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by or
against any such assignee. Neither this Agreement nor any rights or duties
hereunder may be assigned or delegated by Executive.
17. NO WAIVER. A waiver by the Company of a breach of any provision
of this Agreement by Executive shall not operate or be construed as a waiver of
any subsequent or other breach by Executive.
18. AMENDMENTS. No provision of this Agreement shall be altered,
amended, revoked or waived, except by an instrument in writing, signed by the
Company and Executive.
19. BINDING EFFECT. Except as otherwise provided herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal representatives, heirs, successors and
assigns.
20. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding of the parties with respect to the subject matter hereof and
supersedes all prior understandings, agreements or representations by or between
the parties, whether written or oral.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
14
ONLINE SYSTEM SERVICES, INC.,
a Colorado corporation
By:____________________________________________
Its__________________
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
NETIGNITE 2, LLC
By:____________________________________________
Its_________________
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
EXECUTIVE:
By:____________________________________________
XXXXX XXXXX
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
15
