EXHIBIT 10.1
▇▇▇▇▇▇.▇▇ LLC
AMENDED AND RESTATED
OPERATING AGREEMENT
BETWEEN
▇▇▇▇▇▇.▇▇ TECHNOLOGIES, INC.
AND
CZG MOBILE VENTURES, INC.
Execution Copy
BACKGROUND......................................................................... 1
ARTICLE I
GENERAL PROVISIONS
Section 1.1 Certain Definitions.............................................. 2
Section 1.2 The Company; Formation........................................... 9
Section 1.3 Company Name; Place of Business; Registered Office and Agent..... 9
Section 1.4 Term............................................................. 10
Section 1.5 Business of the Company; Powers.................................. 10
Section 1.6 Taxed as Partnership............................................. 11
Section 1.7 Fiscal Year...................................................... 11
Section 1.8 Membership Interests Uncertificated; Nature of Members' Interests 11
Section 1.9 Business Transactions of Member, Representative or
Alternate with the Company...................................... 11
Section 1.10 Capacity of the Members.......................................... 11
ARTICLE II
MEMBERS
Section 2.1 Members as of Effective Date..................................... 11
Section 2.2 Admission of New Members......................................... 12
Section 2.3 Manner of Acting................................................. 12
Section 2.4 Meetings of the Members.......................................... 12
(a) Timing; Notice............................................... 12
(b) Quorum....................................................... 12
(c) Attendance by Telephone, Etc................................. 13
(d) Action by Written Consent.................................... 13
Section 2.5 Record Date...................................................... 13
Section 2.6 Relationship of the Members...................................... 13
ARTICLE III
MANAGEMENT OF THE COMPANY
Section 3.1 Power and Authority of Members................................... 14
Section 3.2 Power and Authority of Representatives........................... 15
Section 3.3 Composition of Board of Representatives.......................... 15
(a) General...................................................... 15
(b) Representatives and Alternates............................... 15
(c) Chairman of the Board........................................ 16
(d) Initial Representatives...................................... 16
(e) Removal; Resignation; Vacancies.............................. 16
(f) Compensation................................................. 16
Section 3.4 Meetings of the Board of Representatives......................... 16
(a) Meeting Agendas.............................................. 16
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(b) Timing; Notice.............................................. 17
(c) Quorum...................................................... 17
(d) Attendance by Telephone, Etc................................ 17
(e) Action by Written Consent................................... 18
Section 3.5 Managers........................................................ 18
ARTICLE IV
APPROVAL OF CERTAIN MATTERS
Section 4.1 Approval of Certain Matters..................................... 19
(a) Conduct of Business......................................... 19
(b) Bankruptcy.................................................. 19
(c) Preservation of Existence................................... 19
(d) Acquisition or Disposition of Assets........................ 19
(e) Dealings with Affiliates.................................... 20
(f) Issuance of Membership Interests............................ 20
(g) Repurchase of Membership Interests.......................... 20
(h) Modification of Operating Agreement......................... 20
(i) Distributions............................................... 20
(j) Removal of Liquidating Trustee.............................. 20
Section 4.2 Procedure in Event of Deadlock.................................. 20
Section 4.3 Approval by Members............................................. 21
ARTICLE V
EXCULPATION AND INDEMNIFICATION
Section 5.1 Duties of Representatives....................................... 21
Section 5.2 Exculpation..................................................... 21
Section 5.3 Reliance on Reports and Information by Member, Representative,
Alternate or Manager........................................... 21
Section 5.4 Indemnification by the Company.................................. 22
Section 5.5 Proceedings Initiated by Indemnified Representatives............ 23
Section 5.6 Advancing Expenses.............................................. 23
Section 5.7 Payment of Indemnification...................................... 23
Section 5.8 Contribution.................................................... 23
Section 5.9 Mandatory Indemnification of Members and Managers............... 23
Section 5.10 Contract Rights; Amendment or Repeal............................ 24
Section 5.11 Scope of Article................................................ 24
Section 5.12 Reliance on Provisions.......................................... 24
ARTICLE VI
CAPITAL ACCOUNTS
Section 6.1 Capital Contributions........................................... 24
Section 6.2 Liability for Contribution...................................... 25
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Section 6.3 Capital Accounts.................................................. 26
Section 6.4 No Interest on or Return of Capital............................... 26
Section 6.5 Membership Interest............................................... 26
Section 6.6 Allocations of Profits and Losses Generally....................... 26
Section 6.7 Allocations Under Regulations..................................... 26
(a) Company Nonrecourse Deductions................................ 26
(b) Member Nonrecourse Deductions................................. 27
(c) Minimum Gain Chargeback....................................... 27
(d) Qualified Income Offset....................................... 27
Section 6.8 Other Allocations................................................. 27
(a) Allocations when Agreed Value Differs from Tax Basis.......... 27
(b) Change in Member's Interest................................... 27
ARTICLE VII
DISTRIBUTIONS
Section 7.1 Distributions..................................................... 28
(a) Tax Distributions............................................. 28
(b) Additional Distributions...................................... 28
Section 7.2 Limitations on Distributions...................................... 28
Section 7.3 Amounts of Tax Paid or Withheld................................... 28
Section 7.4 Distribution in Kind.............................................. 29
ARTICLE VIII
TRANSFER OF MEMBERSHIP INTERESTS
Section 8.1 Restriction on Transfers.......................................... 29
Section 8.2 Transfers of Membership Interests to Affiliates................... 29
Section 8.3 Buy-Sell Procedure................................................ 29
Section 8.4 Invalid Transfers Void............................................ 30
Section 8.5 Change in Ownership............................................... 31
Section 8.6 Effect of Transfer; Exclusions.................................... 31
Section 8.7 Redemption of Bravo Interest...................................... 32
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ARTICLE IX
DISSOLUTION; TERMINATION; REORGANIZATION
Section 9.1 Dissolution........................................................ 32
Section 9.2 Events of Bankruptcy of Member or Parent Entity.................... 32
Section 9.3 Withdrawal of Members.............................................. 33
Section 9.4 Winding Up......................................................... 33
Section 9.5 Liquidation and Distribution of Assets............................. 34
Section 9.6 Reorganization..................................................... 34
ARTICLE X
ADDITIONAL UNDERTAKINGS
Section 10.1 Confidentiality.................................................... 35
(a) Maintenance of Confidentiality................................. 34
(b) Permitted Disclosures.......................................... 35
Section 10.2 Return of Confidential Information................................. 36
Section 10.3 No License......................................................... 35
Section 10.4 No Hire............................................................ 36
Section 10.5 Release of Claims.................................................. 36
ARTICLE XI
BOOKS; REPORTS TO MEMBERS; TAX ELECTIONS
Section 11.1 Books and Records.................................................. 37
Section 11.2 Reports............................................................ 38
(a) Annual Statements.............................................. 38
(b) Monthly Statements............................................. 38
(c) Additional Financial Statements................................ 38
(d) Tax Information................................................ 38
Section 11.3 Tax Matters Member................................................. 38
Section 11.4 Tax Audits/Special Assessments..................................... 39
Section 11.5 Tax Elections...................................................... 39
Section 11.6 Taxes and Charges; Governmental Rules.............................. 39
ARTICLE XII
MISCELLANEOUS
Section 12.1 Binding Effect..................................................... 40
Section 12.2 Entire Agreement................................................... 40
Section 12.3 Amendments......................................................... 40
Section 12.4 Governing Law...................................................... 40
Section 12.5 Notices to Members................................................. 40
Section 12.6 Bank Accounts...................................................... 40
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Section 12.7 Headings......................................................... 41
Section 12.8 Waivers.......................................................... 41
Section 12.9 No Third Party Beneficiaries..................................... 41
Section 12.10 Interpretation................................................... 41
Section 12.11 Further Assurances............................................... 41
Section 12.12 Illegality and Severability...................................... 41
Section 12.13 Injunctive Relief................................................ 41
Section 12.14 Authority/No Conflicts........................................... 42
Section 12.15 Publicity........................................................ 42
Section 12.16 Expenses......................................................... 43
Section 12.17 Counterparts..................................................... 43
SCHEDULES
Schedule A Members; Agreed Values Of Company Assets; Capital Accounts
Schedule B Initial Representatives; Chairman Of The Board
Schedule C Business Plan
EXHIBITS
Exhibit A Contribution Agreement; ▇▇▇▇ Of Sale
Exhibit B Master Exclusive Distribution Agreement
Exhibit C Patent and Trademark License Agreements
Exhibit D Software Sale and Assignment Agreement
Exhibit E System Integration and Implementation Services Agreement
Exhibit F Transition Services Agreement
Exhibit G Warrants in Cotelligent, Inc.
Exhibit H Warrant in ▇▇▇▇▇▇.▇▇ Technologies, Inc.
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▇▇▇▇▇▇.▇▇ LLC
AMENDED AND RESTATED
OPERATING AGREEMENT
THIS AMENDED AND RESTATED OPERATING AGREEMENT is made and entered into as
of August 8, 2000 (the "Effective Date") by and between ▇▇▇▇▇▇.▇▇ Technologies,
Inc., a Delaware corporation ("Bravo"), and CZG Mobile Ventures, Inc., a
Delaware corporation ("Charlie Sub"), amending and restating that Certain
Operating Agreement between Bravo and Charlie Sub dated as of April 27, 2000
(the "Original Agreement").
BACKGROUND
▇. ▇▇▇▇▇ is in the business of using its patented technology and systems
architecture to facilitate real time information and communication for mobile
people over a micro-selection of delivery channels.
B. Charlie Sub is a wholly-owned subsidiary of Cotelligent USA, Inc., a
California corporation ("Charlie USA"), in the business of providing information
technology consulting and outsourcing services.
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Sub entered into the Original Agreement as of April
27, 2000 with respect to the Company.
▇. ▇▇▇▇▇ and Charlie Sub formed the Company by the execution and filing
on April 24, 2000 of a Certificate of Formation in accordance with the Delaware
Limited Liability Company Act for purposes of conducting the Business, with the
intent, inter alia, to exploit commercially the synergies between the respective
businesses of Bravo and Charlie USA and to develop the business of the Company
in each party's respective competencies to ensure the Company's commercial
success.
E. The Company has not engaged in any substantial business and has not
begun operations, nor have the Additional Agreements been executed or delivered,
nor have the initial Capital Contributions of the Members to the Company been
made.
F. The Members have determined that, certain changes should be made to
certain terms of certain of the Additional Agreements, as reflected in the
exhibits hereto, as well as to certain terms of this Operating Agreement,
including, inter alia, in connection with the manner in which the Company is to
be managed and its business conducted.
G. eMisis Infocom Group PLC, an Irish public limited company ("eMisis"),
eMcris Limited, an Anguilla corporation ("eMcris"), Bravo, Cotelligent, Inc., a
Delaware corporation ("Charlie"), Charlie USA and Charlie Sub, as appropriate,
are executing and delivering
contemporaneously herewith the Additional Agreements, which further describe
their rights and obligations in connection with each other or with the Company,
as the case may be.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
Bravo and Charlie Sub hereby agree that the Original Agreement be, and it hereby
is, amended and restated in its entirety as follows:
ARTICLE I
GENERAL PROVISIONS
Section 1.1 (A) CERTAIN DEFINITIONS. As used in this Operating
Agreement, the following terms have the respective meanings assigned to them
below (such terms, as well as other terms defined elsewhere in this Operating
Agreement, shall be equally applicable to both the singular and plural forms of
the defined terms):
"Act" means the Delaware Limited Liability Company Act, Title 6, Sections
18-101 et seq., and any successor statute, as may be amended from time to time.
"Additional Agreements" means each of the following agreements of even date
herewith and the agreements and documents executed and delivered pursuant
thereto:
(a) Contribution Agreement;
(b) ▇▇▇▇ of Sale;
(c) Master Exclusive Distribution Agreement;
(d) Patent and Trademark License Agreements;
(e) Software Sale and Assignment;
(f) System Integration and Implementation Services Agreement;
(g) Transition Services Agreement; and
(h) Warrants.
Except as may be expressly set forth in this Operating Agreement to the
contrary, any breach by a Member's Affiliate of an Additional Agreement or other
agreement between the Company and such Affiliate shall be attributed to the
applicable Member and shall be construed as a breach by such Member for all
purposes hereunder.
"Adjusted Capital Account" means, for any Member, its Capital Account
balance maintained and adjusted as required by Treasury Regulation Section
1.704-1(b)(2)(iv).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with, such Person;
and for purposes of the foregoing, "control" means (i) the ownership of more
than 50% of the voting securities or other voting interests of another Person,
or (ii) the possession, directly or indirectly, of the power to
2
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting shares, by contract or otherwise.
"Agreed Value" means, with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except as follows:
(a) The initial Agreed Value of any asset contributed by a Member to
the Company shall be the gross Fair Market Value of such asset;
(b) The Agreed Values of all Company assets shall be adjusted to equal
their respective gross Fair Market Values (taking IRC Section 7701(g) into
account) as of the following times: (i) the acquisition of an additional
interest in the Company by any new or existing Member in exchange for more
than a de minimis capital contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company property as
consideration for an interest in the Company; (iii) the liquidation of the
Company within the meaning of Treasury Regulation Section 1.704-
1(b)(2)(ii)(g); (iv) the dissolution of the Company in accordance with
Article IX; and (v) at such other times as the Tax Matters Member shall
reasonably determine necessary or advisable in order to comply with
Treasury Regulation Sections 1.704-1(b) and 1.704-2; provided that the
adjustments described in clauses (i) and (ii) of this paragraph shall be
made only if the Tax Matters Member reasonably determines that such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Members in the Company.
(c) The Agreed Value of any Company asset distributed to any Member
shall be the gross Fair Market Value (taking IRC Section 7701(g) into
account) of such asset on the date of distribution; and
(d) The Agreed Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to IRC Section 732(d), IRC Section 734(b) or IRC Section 743(b),
but only to the extent that such adjustments are taken into account in
determining capital accounts pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m); provided that Agreed Values shall not be adjusted
pursuant to this clause (d) to the extent that an adjustment pursuant to
clause (b) of this definition is made in connection with a transaction that
would otherwise result in an adjustment pursuant to this clause (d).
The Agreed Values of the Company's assets immediately following the
contributions under the Master Exclusive Distribution Agreement and the
Contribution Agreement are specified on SCHEDULE A to this Operating Agreement.
If the Agreed Value of an asset has been determined or adjusted pursuant to this
definition of Agreed Value, such Agreed Value shall thereafter be adjusted by
the Depreciation with respect to such asset taken into account in computing
Profits and Losses.
"▇▇▇▇ of Sale" means that certain Assignment, Assumption and ▇▇▇▇ of Sale
among Charlie USA, Charlie Sub and the Company in the form of EXHIBIT A-2,
pursuant to which Charlie USA
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shall transfer and convey certain assets pursuant to the Contribution Agreement
as detailed therein, upon the terms and conditions set forth therein.
"Board of Representatives" means the Board of Representatives of the
Company, as described in Section 3.3.
"Bravo System" has the meaning ascribed thereto in the Master Exclusive
Distribution Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means, with respect to a Member, such Member's capital
account established and maintained in accordance with the provisions of Section
6.3.
"Capital Contribution" means the amount in cash and the value of property
or services contributed or undertaken to be contributed by each Member to the
capital of the Company, whenever made. A loan by a Member of the Company shall
not be considered a Capital Contribution.
"CEO" means the Chief Executive Officer of the Company, as described in
Section 3.5(a).
"Chairman of the Board" means the Chairman of the Board of Representatives,
as described in Section 3.3(c).
"Company" means ▇▇▇▇▇▇.▇▇ LLC, a Delaware limited liability company.
"Contract" means any agreement, lease, evidence of indebtedness, mortgage,
indenture, security agreement or other contract or commitment, whether written
or oral.
"Contribution Agreement" means that certain Contribution Agreement among
Charlie USA, Charlie Sub and the Company in the form of EXHIBIT A-1, pursuant to
which Charlie USA and Charlie Sub shall contribute to the Company certain assets
as detailed therein, upon the terms and conditions set forth therein.
"Depreciation" means, for any relevant period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other relevant period, except that if the
Agreed Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year, Depreciation shall be an amount which
bears the same ratio to such beginning Agreed Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year bears
to such beginning adjusted tax basis (except as otherwise required under
Treasury Regulation Section 1.704-3(d)); provided that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Agreed
Value using any reasonable method selected by the Tax Matters Member.
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"Entity" means any corporation, firm, unincorporated organization,
association, partnership, limited liability company, business trust, joint stock
company, joint venture or other organization, entity or business.
"Fair Market Value" means, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such asset in an arms-length negotiated transaction
with an unaffiliated third party without time constraints, as conclusively
determined by a majority the Board of Representatives in good faith and subject
to their duties set forth in Section 5.1, except with respect to matters
governed by Section 8.3, which shall be determined in accordance with the
provisions set forth therein.
"GAAP" means United States generally accepted accounting principles applied
consistently with past practice.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Managers" means the CEO and such other individuals that may be appointed
by the Board of Representatives from time to time pursuant to Section 3.5(a) to
manage the affairs of the Company as directed by the Board of Representatives.
"Master Exclusive Distribution Agreement" means that certain Master
Exclusive Distribution Agreement between Bravo and the Company in the form of
EXHIBIT B, pursuant to which Bravo shall grant to the Company certain exclusive
and non-exclusive rights in and to the Bravo System, as further detailed
therein, upon the terms and conditions set forth therein.
"Members" means ▇▇▇▇▇, ▇▇▇▇▇▇▇ Sub and such other Persons who are admitted
to the Company in the future in accordance with the terms of this Operating
Agreement and shall have agreed to be bound hereby; and "Member" means any one
of the Members.
"Membership Interest" means, with respect to each Member, the entire
ownership interests and rights of such Member (expressed as a percentage) in the
Company. The sum of the Membership Interests for all Members shall equal one
hundred percent (100%).
"Operating Agreement" means this Amended and Restated Operating Agreement,
as it may be further amended or restated from time to time.
"Parent Entity" means, in the case of Bravo, ▇▇▇▇▇▇.▇▇ Capital Partners
L.P., an Anguilla limited partnership, or eMcris, as appropriate, and, in the
case of Charlie Sub, Charlie USA or Charlie, as appropriate.
"Patent and Trademark License Agreements" means, collectively, (i) that
certain Patent and Trademark License Agreement between Bravo and eMcris,
pursuant to which eMcris shall grant to Bravo certain exclusive and non-
exclusive rights in and to certain intellectual property
5
related to the Bravo System, as further detailed therein, and (ii) that certain
Patent and Trademark License Agreement between eMisis and eMcris, pursuant to
which eMisis shall grant to eMcris certain exclusive and non-exclusive rights in
and to certain intellectual property related to the Bravo System, as further
detailed therein; each in the relevant form of EXHIBIT C and upon the terms and
conditions set forth therein.
"Person" means any natural person or Entity.
"Profits" and "Losses" mean, for each Fiscal Year, an amount equal to the
Company's taxable income or loss for such Fiscal Year, determined in accordance
with IRC Section 703(a). For the purpose of this definition, all items of
income, gain, loss or deduction required to be stated separately pursuant to IRC
Section 703(a)(1) shall be included in taxable income or loss with the following
adjustments:
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in IRC Section
705(a)(2)(B) or treated as IRC Section 705(a)(2)(B) expenditures pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this
definition shall be subtracted from such taxable income or loss.
(c) If the Agreed Value of any Company asset is adjusted pursuant to
clause (b) or clause (c) of the definition of Agreed Value above, the
amount of such adjustment shall be taken into account as gain or loss from
the disposition of such asset for purposes of computing Profits or Losses;
(d) Gain or loss resulting from any disposition of Company property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Agreed Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Agreed Value;
(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or
other relevant period;
(f) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to IRC Section 734(b) is required, pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into
account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Member's interest in the Company, the amount of
such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis) from the disposition of such asset and shall be taken into account
for purposes of computing Profits or Losses; and
6
(g) Notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Section 6.8 shall not be taken
into account in computing Profits or Losses.
"Representatives" means the individuals comprising the Board of
Representatives. Each such individual shall be deemed a "manager" within the
meaning of the Act.
"Software Sale and Assignment" means that certain Software Sale and
Assignment between Bravo and eMcris in the form of EXHIBIT D, pursuant to which
eMcris shall transfer to Bravo certain proprietary rights in and to, inter alia,
the Bravo Software, as further detailed therein, upon the terms and conditions
set forth therein.
"Subsidiary" means any Entity in which a Person beneficially owns or
controls 50% or more of the outstanding voting power of such Entity.
"System Integration and Implementation Services Agreement" means that
certain System Integration and Implementation Services Agreement between Charlie
USA and the Company in the form of EXHIBIT E, pursuant to which the Company
shall grant to Charlie USA certain rights to provide system integration and
implementation services in connection with the Business as further detailed
therein, upon the terms and conditions set forth therein.
"Tax Rate" means 40%.
"Transition Services Agreement" means that certain Transition Services
Agreement between Charlie USA and the Company in the form of EXHIBIT F, pursuant
to which each of Charlie USA and the Company agree to provide certain services
to the other as further detailed therein, upon the terms and conditions set
forth therein.
"Treasury Regulations" include proposed, temporary and final regulations
promulgated under the IRC in effect as of the date of this Operating Agreement
and the corresponding sections of any regulations subsequently issued that amend
or supersede such regulations.
"Warrants in Cotelligent, Inc." means, collectively, (i) that certain
Warrant held by Bravo, pursuant to which Bravo may purchase shares of common
stock of Charlie at an exercise price as further detailed therein, and (ii) that
certain Warrant held by Gleacher & Co. LLC, pursuant to which Gleacher & Co. LLC
may purchase shares of common stock of Charlie at an exercise price as further
detailed therein; each in the relevant form of EXHIBIT G and upon the terms and
conditions set forth therein.
"Warrant in ▇▇▇▇▇▇.▇▇ Technologies, Inc." means that certain Warrant held
by Charlie in the form of EXHIBIT H, pursuant to which ▇▇▇▇▇▇▇ ▇▇▇ purchase
shares of common stock of Bravo at an exercise price to be further detailed
therein, upon the terms and conditions to be set forth therein.
7
"Warrants" shall mean, collectively, the Warrants in Cotelligent, Inc. and
the Warrant in ▇▇▇▇▇▇.▇▇ Technologies, Inc.
(b) The following terms, when used in this Operating Agreement, shall have
the meanings defined for such terms in the Section set forth below:
TERM SECTION
---- -------
"Alternate" 3.3(b)
"Appraisal Notice" 8.3(a)
"Appraiser" 8.3(a)
"Benefactor" 6.2(a)
"Bravo" introductory paragraph
"Bravo Representatives" 3.3(a)
"Business" 1.5
"Business Plan" 4.1(a)
"Change in Ownership" 8.5(a)
"Charlie" Background Section
"Charlie Representatives" 3.3(a)
"Charlie Sub" introductory paragraph
"Charlie USA" Background Section
"Claims" 10.5
"Confidential Information" 10.1(a)
"Control Entity" 8.5(a)
"Declining Member" 6.1(c)(ii)
"Disclosing Party" 10.1(b)
"Effective Date" introductory paragraph
"eMcris" Background Section
"eMisis" Background Section
"Fiscal Year" 1.7
"Liquidating Trustee" 9.4(a)
"Notice of Election" 8.3(a)
"Offering Member" 8.3(a)
"Original Agreement" introductory paragraph
"Receiving Party" 10.1(b)
"Recipient" 8.3(a)
"Redemption" 8.7
"Released Persons" 10.5
"Releasing Persons" 10.5
"Reorganized Company" 9.6
"Rollup" 9.6
"Sale Notice" 8.3(a)
"Section 704(c) Assets" 6.8(a)
"Tax Distributions" 7.1(a)
"Tax Matters Member" 11.3
8
"Unaffiliated Entity" 8.5(a)
"Wholly-Owned Subsidiary
Transferee" 8.2
(c) Unless the context of this Operating Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Operating Agreement; and (iv) the terms "Article", "Section" or
"subsection" refer to the specified Article, Section or subsection of this
Operating Agreement.
Section 1.2 THE COMPANY; FORMATION. The Company shall continue as a
limited liability company managed by its Board of Representatives. The
Membership Interests of the Members in the Company, and the rights and
obligations of the Members with respect thereto and the Company, are subject to
all of the provisions of this Operating Agreement and to the provisions of the
Act. Where any rights or obligations of a Member are different by reason of any
provision of this Operating Agreement than they would be without such provision,
this Operating Agreement shall control to the extent permitted by the Act.
Promptly following the execution hereof, and from time to time thereafter, the
Members shall execute and file or cause to be executed and filed (i) all
certificates and statements contemplated by the Act that are approved by the
Board of Representatives and are not inconsistent with the provisions of this
Operating Agreement and (ii) all other necessary certificates and documents, and
shall make all other such filings and recordings, and shall do all other acts as
may be reasonably necessary or appropriate from time to time to give effect to
this Operating Agreement.
Section 1.3 COMPANY NAME; PLACE OF BUSINESS; REGISTERED OFFICE AND AGENT.
(a) The Company shall do business under the name "▇▇▇▇▇▇.▇▇ LLC" or such
other name as the Board of Representatives may determine from time to time.
Such name shall be the exclusive property of the Company (subject to Bravo's and
its Affiliates' right to use the "▇▇▇▇▇▇.▇▇" appellation in forms other than the
name of the Company), and no Member shall have any right to use, and each Member
agrees not to use, such name other than on behalf of the Company, except as may
be permitted from time to time by the Board of Representatives. The Board of
Representatives shall promptly notify the Members of any change of name of the
Company. The Members shall from time to time execute and file or cause to be
executed and filed all necessary assumed or fictitious business name statements
as may be required by law for the operation of the Company in all jurisdictions
where the Company does business.
(b) The Company's principal place of business will be at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or such location as the Board of Representatives
may from time to time designate. The Company may also have offices at such
other places within or outside of the State of Delaware as the Board of
Representatives may from time to time determine. Prior to conducting business
in any jurisdiction other than Delaware, the Board of Representatives shall use
its reasonable efforts to cause the Company to comply with all requirements
necessary to qualify the Company as a foreign limited liability company in such
jurisdiction. At the request of the Board of Representatives, each Member shall
execute, acknowledge, swear to and deliver all certificates and other
instruments conforming with this Operating Agreement that are necessary or
9
appropriate from time to time to qualify, continue or terminate the Company as a
foreign limited liability company in each such jurisdiction in which the Company
may conduct business from time to time.
(c) The registered agent for service of process on the Company in the State
of Delaware shall be the initial registered agent named in the Certificate and
the registered office of the Company required by the Act to be maintained in the
State of Delaware shall be the offices of the registered agent. The registered
agent and the registered office of the Company may be changed from time to time
by action of the Board of Representatives by filing notice of such change with
the Secretary of State of the State of Delaware. The Board of Representatives
will promptly notify the Members of any such change.
Section 1.4 TERM. The term of the Company commenced on the date on which
the Certificate of Formation of the Company was filed with the Secretary of
State of the State of Delaware and shall continue in perpetuity until dissolved
pursuant to the provisions of this Operating Agreement or applicable law.
Section 1.5 BUSINESS OF THE COMPANY; POWERS.
(a) The purpose of the Company is to exploit commercially the rights to be
granted to it pursuant to the Master Exclusive Distribution Agreement and to
continue the operations of the ASP Business as defined in, and to be contributed
to the Company pursuant to, the Contribution Agreement, all as further detailed
in the Business Plan (collectively, the "Business"), to engage in any business
that is necessary, appropriate or incidental to the foregoing, and to engage in
any additional activity for which limited liability companies may be formed
under the Act and which is approved in accordance with the provisions of Section
4.1. The Company shall possess and may exercise all the powers and privileges
now or hereafter granted by the Act, by any other law or by this Operating
Agreement, together with any powers incidental thereto, so far as such powers
and privileges are necessary or convenient to the conduct, protection, benefit,
promotion or attainment of the business, purposes or activities of the Company.
(b) Subject to the provisions of this Operating Agreement, the Company may,
with the approval of the Board of Representatives, enter into and perform any
and all Contracts without any further act, vote or approval of either Member,
and the Board of Representatives may authorize any Person to enter into and
perform any Contract on behalf of the Company.
Section 1.6 TAXED AS PARTNERSHIP. The Members intend that the Company
shall be treated as a partnership solely for federal, state and local tax
purposes. Each Member and the Company shall file all tax returns and shall
otherwise take all tax and financial reporting positions in a manner consistent
with such treatment.
Section 1.7 FISCAL YEAR. The "Fiscal Year" of the Company shall be the
period commencing on April 1 in any year and ending on March 31 in such year,
except that the first Fiscal Year of the Company shall commence on the date of
formation of the Company and end on the first March 31 to occur following such
formation.
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Section 1.8 MEMBERSHIP INTERESTS UNCERTIFICATED; NATURE OF MEMBERS'
INTERESTS. The Membership Interests of the Members in the Company shall not be
certificated. The interests of the Members in the Company will be personal
property for all purposes. All property owned by the Company, whether real or
personal, tangible or intangible, will be owned by the Company as an entity, and
no Member, individually, will have any ownership of such property.
Section 1.9 BUSINESS TRANSACTIONS OF MEMBER, REPRESENTATIVE OR ALTERNATE
WITH THE COMPANY. A Member, Representative or Alternate may lend money to,
borrow money from, act as a surety, guarantor or endorser for, guarantee or
assume one or more obligations of, provide collateral for, and transact any and
all other business with the Company and, subject to other applicable law, has
the same rights and obligations with respect to any such matter as a Person who
is not a Member, Representative or Alternate, subject to any requirement under
this Operating Agreement or the Act that such business transaction be approved
by the Board of Representatives.
Section 1.10 CAPACITY OF THE MEMBERS. No Member shall have any authority
to act for, or to assume any obligation or responsibility on behalf of, any
other Member or the Company, except as expressly provided in this Operating
Agreement or as authorized by the Board of Representatives.
ARTICLE II
MEMBERS
Section 2.1 MEMBERS AS OF EFFECTIVE DATE. As of the Effective Date of
this Operating Agreement, the Members are set forth on SCHEDULE A and each such
Member shall have the Membership Interests set forth opposite its name on
SCHEDULE A.
Section 2.2 ADMISSION OF NEW MEMBERS. From and after the Effective Date,
a Person acquiring an interest in the Company is admitted as a Member upon the
satisfaction of all requirements set forth in this Operating Agreement.
Section 2.3 MANNER OF ACTING. Except as otherwise required by the Act or
this Operating Agreement, including, without limitation, Sections 3.2 and 4.1,
whenever any Company action is to be taken by vote of the Members of the
Company, it shall be authorized upon receiving the affirmative vote of Members
entitled to vote who own at least a majority of the Membership Interests then
held by Members. Each Member of the Company shall be entitled to a percentage
of the total votes equal to that Member's then current Membership Interest.
Section 2.4 MEETINGS OF THE MEMBERS.
(a) Timing; Notice. Meetings of the Members, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by any Member by giving
written notice thereof to each Member of record entitled to vote at the meeting
at least ten (10) but not more than sixty
11
(60) Business Days prior to the day named for the meeting. Each notice of
meeting shall specify the place, day and hour of the meeting. If no place is
designated, the place of meeting shall be the principal office of the Company.
The business to be transacted at, and the purpose of, a meeting need not be
specified in the notice of the meeting. Notice shall be given in accordance with
Section 12.5. Any required notice of a meeting to any Member may be waived by
such Member in writing at any time, whether before or after the holding of such
meeting. Attendance by a Member at a meeting shall constitute a waiver of any
required notice of such meeting by such Member, except when such Member attends
such meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting is
not properly called or convened.
(b) Quorum. A meeting of Members of the Company duly called shall not be
organized for the transaction of business unless a quorum is present. The
presence of each Member of record, represented in person or by proxy, shall
constitute a quorum at any meeting of Members; provided that if notice of a
meeting is provided to the Members, and such notice describes the business to be
considered, the actions to be taken and the matters to be voted on at the
meeting in reasonable detail, and insufficient Members attend the meeting to
constitute a quorum, the meeting may be adjourned by those Members attending
such meeting for a period not to exceed twenty (20) days. Such meeting may be
reconvened by providing notice of the reconvened meeting to the Members no less
than ten (10) days prior to the date of the meeting specifying that the business
to be considered, the actions to be taken and the matters to be voted upon are
those set forth in the notice of the original adjourned meeting. If, at the
reconvened meeting, a quorum of Members is not present, a majority of the
Members present and voting will constitute a quorum for purposes of the
reconvened meeting; provided that such Members may only consider the business,
take the actions or vote upon the matters set forth in the notice of the
original meeting. At an adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The Members present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal during the meeting of Members whose absence would cause less than a
quorum.
Notwithstanding the foregoing or any other provision in this Operating
Agreement, no Member shall have any power or authority to do or perform any act
with respect to any of the matters set forth in Section 4.1 unless such matter
has been approved in accordance with the provisions of Section 4.1.
(c) Attendance by Telephone, Etc. Members may, unless prohibited by
applicable law, rule or regulation, participate in a meeting of the Members by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting, except where
a Member participates in the meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business on the ground
that the meeting is not properly called or convened.
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(d) Action by Written Consent. Unless prohibited by applicable law, rules
and regulations, any action required or permitted to be taken at a meeting of
the Members may be taken without a meeting if a written consent setting forth
the action so taken is signed by the number of Members that would be necessary
to authorize the action at a meeting of the Members duly called and held, and
is filed with the minutes of the Company. Any consent shall have the same force
and effect as a vote of the Members at a meeting duly called and held at which a
quorum was present. Prompt notice of the taking of Company action without a
meeting by less than unanimous written consent shall be given to those Members
who have not consented in writing.
Section 2.5 RECORD DATE. For the purpose of determining Members entitled
to notice of, or to vote at, any meeting of Members or any adjournment of the
meeting, or Members entitled to receive payment of any distribution, or to make
a determination of Members for any other purpose, the date on which notice of
the meeting is sent or the date on which the resolution declaring the
distribution or relating to such other purpose is adopted, as the case may be,
shall be the record date for such determination. Only Members of record on the
date fixed shall be so entitled, notwithstanding any permitted transfer of a
Member's Membership Interest after any record date fixed as provided in this
Section. When a determination of Members entitled to vote at any meeting of
Members has been made as provided in this Section, the determination shall apply
to any adjournment of the meeting.
Section 2.6 RELATIONSHIP OF THE MEMBERS.
(a) The relationship of the Members shall be limited solely to the purpose
and scope of the Company as expressed in this Operating Agreement and the
Additional Agreements. This Operating Agreement shall not constitute the
appointment of any party to this Operating Agreement as the legal representative
or agent of any other party to this Operating Agreement. No party to this
Operating Agreement, by reason of such status, shall have any right or authority
to assume, create or incur any liability or any obligation of any kind, express
or implied, against or in the name of or on behalf of any other party to this
Operating Agreement. Except as may be specifically provided in this Operating
Agreement or any Additional Agreement, neither the Company nor any party to this
Operating Agreement shall assume or be responsible for any liability or
obligation of any nature of, or any liability or obligation that arises from any
act or omission to act of, any other party to this Operating Agreement however
or whenever arising.
(b) Nothing contained in this Operating Agreement (other than references to
the binding nature of the Additional Agreements) shall be deemed to restrict or
limit in any way the carrying on, directly or indirectly, of separate businesses
or activities by any Member or its Affiliates, now or in the future,
independently or with others, even if such businesses or activities are
competitive with the Company (it being understood that the Additional Agreements
may so restrict or limit such businesses or activities), and neither the Company
nor the other Members shall, by virtue of this Operating Agreement, have any
interest or rights in or to such other businesses or activities or any income,
profits, liabilities or obligations with respect thereto or derived therefrom.
No Member or any of its Affiliates or any of their respective officers,
directors, employees or former employees shall have any obligation, or be
liable, to the Company
13
or any other Member pursuant to this Operating Agreement, any Additional
Agreement or otherwise (i) for, or arising out of, the conduct described in this
Section 2.6(b), (ii) solely by reason of such conduct, for breach of any
fiduciary or similar duty to the Company or any Member or (iii) for exercising
or failing to exercise its rights as a Member; except in each case for a breach
of Sections 5.1, 10.1 or any other express provisions of this Operating
Agreement or any Additional Agreement. In the event that a Member, any of its
Affiliates or any of their respective officers, directors, employees or former
employees acquires knowledge of a potential transaction, agreement, arrangement
or other matter that may be a corporate opportunity for both the Company and the
Member or such Affiliate, or any of their respective officers, directors,
employees or former employees, except as may be expressly agreed in an
Additional Agreement, (x) neither the Member nor such Affiliate, officers,
directors, employees or former employees shall have any duty to communicate or
offer such corporate opportunity to the Company, (y) neither the Member nor such
Affiliate, officers, directors, employees or former employees shall be liable to
the Company for breach of any fiduciary or similar duty, as a Member or
otherwise, by reason of the fact that the Member or such Affiliate, officers,
directors, employees or former employees pursue or acquire such corporate
opportunity, direct such corporate opportunity to another Person or fail to
communicate such corporate opportunity or information regarding such corporate
opportunity to the Company, and (z) neither the Member nor such Affiliate,
officers, directors, employees or former employees shall be obligated to account
to the Company or any other Member for any property, profit or benefit derived
from such opportunity.
ARTICLE III
MANAGEMENT OF THE COMPANY
Section 3.1 POWER AND AUTHORITY OF MEMBERS. The Members shall manage the
Company only through their designated Representatives on the Board of
Representatives of the Company and the Members, in their capacity as such, shall
have no authority or right to act on behalf of or bind the Company in connection
with any matter. No Member shall take any action in the name of or on behalf of
the Company, including without limitation assuming any obligation or
responsibility on behalf of the Company, unless such action, and the taking
thereof by such Member, shall have been expressly authorized by the Board of
Representatives or shall be expressly and specifically authorized by this
Operating Agreement.
Section 3.2 POWER AND AUTHORITY OF REPRESENTATIVES.
(a) The business and affairs of the Company shall be managed by or under
the direction of the Board of Representatives, except as may otherwise be
provided in this Operating Agreement. The Board of Representatives shall have
the power on behalf and in the name of the Company to carry out any and all
objects and purposes of the Company contemplated by this Operating Agreement and
to perform all acts which they may deem necessary, advisable or appropriate in
connection therewith.
(b) The Members agree that all determinations, decisions and actions made
or taken by the Board of Representatives (or their designee(s)) shall be
conclusive and absolutely binding
14
upon the Company, the Members (but only in their capacity as such) and their
respective successors, assigns and personal representatives.
Section 3.3 COMPOSITION OF BOARD OF REPRESENTATIVES.
(a) General. The Board of Representatives shall consist of four (4)
Representatives, two (2) of whom shall be designated by Bravo so long as Bravo
is a Member (the "Bravo Representatives") and two (2) of whom shall be
designated by Charlie Sub so long as Charlie Sub is a Member (the "Charlie
Representatives"). Each Member agrees to vote its Membership Interest at all
times to cause the Board of Representatives to be composed as described in this
Section 3.3(a). Other than as set forth in Section 4.1, whenever any Company
action is to be taken by a vote of the Board of Representatives, it shall be
authorized upon receiving the affirmative vote of all of the Representatives (or
Alternates) present and voting at a duly constituted meeting of the Board of
Representatives at which a quorum is present. Each Representative (or
Alternate) present at a duly constituted meeting of the Board of Representatives
at which a quorum is present shall be entitled to cast one vote.
(b) Representatives and Alternates. Each Member shall also have the right
to designate one (1) alternate to each Representative designated by such Member
(each, an "Alternate"). In the event a Representative is unable to attend a
meeting of the Board of Representatives or otherwise participate in any action
to be taken by the Board of Representatives, or with respect to any meeting or
matter acted upon at a meeting or any other action to be taken by the Board of
Representatives, if directed by the Member who designated the Representative,
the Alternate named by the applicable Member for such Representative may, and if
directed by such Member or such Representative shall, act and vote in place of
such Representative. Each Member shall have the right, in its sole and absolute
discretion, to designate, remove and replace its Representatives and the
Alternates by written notice to the Company and each other Member.
(c) Chairman of the Board. The Representatives shall elect from among
themselves a Chairman of the Board, to serve until a successor has been elected
by the Board of Representatives and qualified or until his or her earlier death,
resignation or removal. The initial Chairman of the Board is set forth on
SCHEDULE B. The Chairman of the Board shall not be entitled to any greater
number of votes than any other Representative.
(d) Initial Representatives. The initial Representatives of each Member
are set forth on SCHEDULE B.
(e) Removal; Resignation; Vacancies. Except as otherwise provided in this
Operating Agreement, each Representative on the Board of Representatives shall
serve at the pleasure of the Member that designated him or her. Each Member
shall have the right at any time, exercisable by written notice to the other
Members and to the Board of Representatives, to remove (with or without cause)
any Representative or Alternate designated by such Member and to designate a new
Representative or Alternate. Subject to applicable law, rule or regulation, no
Representative or Alternate may be removed except by the Member designating the
same. Any Representative or
15
Alternate may resign at any time by giving written notice to the Member that
appointed such Representative and to the Board of Representatives. Such
resignation shall take effect on the date shown on or specified in such notice
or, if such notice is not dated and the date of resignation is not specified in
such notice, on the date of the receipt of such notice by the Board of
Representatives. No acceptance of such resignation shall be necessary to make it
effective. Any vacancy on the Board of Representatives or with respect to any
Alternates shall be filled only by the Member whose Representative or Alternate
caused the vacancy.
(f) Compensation. No person shall be entitled to any fee, remuneration or
compensation (except for reimbursement of properly authorized expenses in
accordance with such procedures as may be established by the Board of
Representatives) in connection with service as a Representative or Alternate.
Section 3.4 MEETINGS OF THE BOARD OF REPRESENTATIVES.
(a) Meeting Agendas. The Chairman of the Board of Representatives shall
prepare or direct the preparation of the agenda for, and preside over, meetings
of the Board of Representatives. The Chairman shall deliver such agenda to each
Representative at least five (5) Business Days prior to the giving of notice of
a regular or special meeting, and any Representative may add items to such
agenda. The Chairman of the Board may appoint any Person to act as secretary of
a meeting of the Board of Representatives.
(b) Timing; Notice. The Board of Representatives shall meet at least once
every three (3) months at such places and at such times as the Chairman of the
Board of Representatives may from time to time determine. Special meetings of
the Board of Representatives may be called by any Representative and shall be
held at such place as may be determined by the Chairman of the Board of
Representatives. Written notice of the time and place of each regular and
special meeting of the Board of Representatives shall be given by or at the
direction of the Chairman of the Board of Representatives to each Representative
at least three (3) Business Days before such meeting. Such notice need not
specify the purpose for which such meeting is called. Any required notice of a
meeting to any Representative may be waived by such Representative in writing at
any time, whether before or after the holding of such meeting. Attendance by a
Representative at a meeting shall constitute a waiver of any required notice of
such meeting by such Representative, except when such Representative attends
such meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the grounds that the meeting is
not properly called or convened.
(c) Quorum. The presence of Representatives (or Alternates) representing a
majority of the Representatives on the Board of Representatives shall be
required to constitute a quorum for the transaction of any business by the Board
of Representatives. If notice of a meeting is provided to the Representatives
and Alternates, and such notice describes the business to be considered, the
actions to be taken and the matters to be voted on at the meeting in reasonable
detail, and insufficient Representatives or Alternates attend the meeting to
constitute a quorum, the meeting may be adjourned by those Representatives or
Alternates attending such meeting for a period not to exceed twenty (20) days.
Such meeting may be reconvened by providing notice of
16
the reconvened meeting to the Representatives and Alternates no less than two
(2) Business Days prior to the date of the meeting specifying that the business
to be considered, the actions to be taken and the matters to be voted on are
those set forth in the notice of the original adjourned meeting. If, at the
reconvened meeting, a quorum of Representatives or Alternates is not present, a
majority of the Representatives and Alternates present and voting will
constitute a quorum for purposes of the reconvened meeting; provided that such
Representatives and Alternates may only consider the business, take the actions
and vote the matters set forth in the notice of the original meeting.
(d) Attendance by Telephone, Etc. Representatives on the Board of
Representatives may, unless prohibited by applicable law, rules or regulations,
participate in a meeting of the Board of Representatives by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting, except where a Representative
participates in the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not properly called or convened.
(e) Action by Written Consent. Unless prohibited by applicable law, rules
and regulations, any action required or permitted to be taken at a meeting of
the Board of Representatives may be taken without a meeting if a written consent
setting forth the action so taken is signed by the number of Representatives
that would be necessary to approve the action at a meeting of the Board of
Representatives duly called and held, and is filed with the minutes of the
Company. Each request for written consent of the Representatives shall be given
to each of the Representatives as far in advance as is reasonably practicable
under the circumstances. Any consent shall have the same force and effect as a
vote of the Representatives at a meeting of the Board of Representatives duly
called and held at which a quorum was present. Prompt notice of the taking of
Company action without a meeting by less than unanimous written consent shall be
given to those Representatives who have not consented in writing.
Section 3.5 MANAGERS.
(a) There shall be such number of Managers as may be determined from time
to time by the Board of Representatives so long as there is at least one (1)
Manager, who shall be designated the CEO. Each Manager of the Company shall be
a natural person of full age who need not be a resident of the State of
Delaware. The Board of Representatives shall have the right to confer upon any
Manager such titles as the Board deems appropriate, including, but not limited
to, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
President, Vice President, Secretary or Treasurer. The Board of Representatives
shall promptly give each Member notice of the designation of any new Manager.
Each Manager shall hold office until a successor has been designated by the
Board of Representatives and qualified or until his or her earlier death,
resignation or removal.
(b) The Board of Representatives shall have the right, in its sole and
absolute discretion, to (i) appoint, remove (with or without cause) and replace
the Managers of the
17
Company, (ii) define the duties and responsibilities of the Managers and (iii)
subject to the limitations set forth in Section 4.1, delegate specifically
defined duties to the Managers. Any delegation of authority to take any action
by the Board of Representatives must be approved in the same manner as would be
required for the Board of Representatives to directly approve such action.
Notwithstanding the foregoing or any other provision of this Operating Agreement
or of the Act to the contrary, no Manager of the Company shall have the power or
authority to do or perform any act with respect to any of the matters set forth
in Section 4.1 unless such matter has been approved in accordance with the
provisions of Section 4.1.
(c) A Manager of the Company may resign at any time by giving written
notice to the Board of Representatives. The resignation of a Manager shall be
effective upon receipt of such notice or at such later time as shall be
specified in the notice. Unless otherwise specified in the notice, the
acceptance of the resignation shall not be necessary to make such resignation
effective.
(d) The salaries of the Managers shall be fixed from time to time by the
Board of Representatives or by such Manager as may be designated by resolution
of the Board of Representatives; provided that any Manager who may be entitled
to vote on (by reason of his or her capacity as a Representative) or fix (by
reason of delegation) salaries shall not vote on or otherwise participate in the
fixing of his or her own salary. The salaries or other compensation of any
other employees and other agents shall be fixed from time to time by the Board
of Representatives or by such Manager as may be designated by resolution of the
Board of Representatives.
ARTICLE IV
APPROVAL OF CERTAIN MATTERS
Section 4.1 APPROVAL OF CERTAIN MATTERS. Notwithstanding any provision of
this Operating Agreement (other than Section 4.3) or the Act to the contrary,
and to the extent not agreed and set forth in an Additional Agreement, and
without being deemed to limit in any way the scope of authority of the Board of
Representatives as elsewhere provided in this Operating Agreement or under the
Act, in order for the Company to duly act on any of the following matters, the
Board of Representatives must approve the same at a meeting of the Board of
Representatives or by written consent, and the Managers shall have no power or
authority to do or perform any act with respect to any of the following matters
without such approval or consent given in accordance with the provisions of this
Operating Agreement:
(a) Conduct of Business. Any modification of the business plan of the
Company attached hereto as SCHEDULE C (the "Business Plan"), the engagement by
the Company in any line of business or activity other than the Business or as
set forth in the Business Plan, or any other business that is reasonably
necessary, appropriate or incidental to any of the foregoing.
(b) Bankruptcy. The voluntary dissolution or liquidation of the Company,
the making by the Company of a voluntary assignment for the benefit of
creditors, the filing of a petition in bankruptcy by the Company, the Company
petitioning or applying to any tribunal for any receiver
18
or trustee, the Company commencing any proceeding relating to itself under any
bankruptcy, reorganization, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, the Company indicating its consent to, approval
of or acquiescence in any such proceeding and failing to use its best efforts to
have discharged the appointment of any receiver of or trustee for the Company or
any substantial part of their respective properties.
(c) Preservation of Existence. Any action contrary to the preservation and
maintenance of the Company's existence, rights, franchises and privileges as a
limited liability company under the laws of the State of Delaware.
(d) Acquisition or Disposition of Assets. Any acquisition or disposition
of assets, properties or rights of the Company in one transaction or a series of
related transactions outside the ordinary course of business or which have a
Fair Market Value in excess of twenty percent (20%) of the Fair Market Value of
all of the assets on a consolidated basis of the Company.
(e) Dealings with Affiliates. Except pursuant to this Operating Agreement
or any Additional Agreement, the Company's entrance into, amendment of, waiver
of rights under, termination of, or permitting or causing the termination of,
any material business transaction, including, without limitation, any loans or
extensions of credit or royalty agreements, with any Member or any Affiliate of
any Member, except in the ordinary course of business and on terms not less
favorable to the Company than it would reasonably expect to obtain in a similar
business transaction between unrelated parties. The foregoing shall not be
deemed to limit in any manner the right of any Member or any of its Affiliates
from performing or exercising its rights under this Operating Agreement or any
Additional Agreement.
(f) Issuance of Membership Interests. (i) The authorization or issuance of
any Membership Interests in, or the admission of any Members to, the Company
(other than with respect to ▇▇▇▇▇, ▇▇▇▇▇▇▇ Sub, a Parent Entity or their
respective permitted transferees in accordance with Section 8.2) or (ii) any
merger, consolidation or similar business transaction that would require the
issuance of interests in the Company to Persons other than Members or any of
their respective wholly-owned subsidiaries; provided that this Section 4.1(f)
shall not be deemed to extend to any Member's sale, grant, assignment or
transfer of any of its rights to receive allocations or distributions under this
Operating Agreement, but such sale, grant, assignment or transfer shall not
constitute the recipient of such economic rights a Member.
(g) Repurchase of Membership Interests. The redemption or repurchase by
the Company of any Membership Interests in the Company, other than pursuant to
the provisions of this Operating Agreement.
(h) Modification of Operating Agreement. Any amendment, modification or
waiver of any provision (other than ministerial, non-substantive amendments,
modifications or waivers) of this Operating Agreement or any Additional
Agreement or other agreement between the Company and any Member or its
Affiliates.
19
(i) Distributions. Any distribution of profits of the Company to the
Members, other than a Tax Distribution.
(j) Removal of Liquidating Trustee. The removal of the Liquidating Trustee
as described in Section 9.4.
Section 4.2 PROCEDURE IN EVENT OF DEADLOCK. In the event of deadlock of
the Board of Representatives in connection with the matters set forth in Section
4.1 above or otherwise, the Members shall promptly meet and negotiate in good
faith to determine a mutually acceptable resolution, as evidenced by a unanimous
vote of the Members approving any such resolution. Each Member shall be
represented in such negotiations by one or more senior executive officers with
authority to bind such Member, subject only to the approval of such Member's
Board of Directors, Board of Representatives or similar governing body.
Section 4.3 APPROVAL BY MEMBERS. Notwithstanding anything to the contrary
set forth in this Operating Agreement, and to the extent permitted under the
Act, in the event the Members choose to consider any of the matters set forth in
Section 4.1 (whether or not the Board of Representatives has addressed or come
to deadlock in connection with such matter), such matter shall require the
unanimous approval of all the Members at a meeting or by written consent.
ARTICLE V
EXCULPATION AND INDEMNIFICATION
Section 5.1 DUTIES OF REPRESENTATIVES. Each Representative, Alternate and
Manager shall owe such duty of loyalty and due care to the Company as is
required of a director of a Delaware corporation under applicable Delaware law,
shall discharge his duties in good faith with the care an ordinary prudent
person in like position would exercise under similar circumstances and in a
manner he reasonably believes to be in the best interests of the Company, and in
so acting shall enjoy each and every protection afforded to the directors of a
Delaware corporation under applicable Delaware law, including without limitation
those afforded by the business judgment rule and the presumptions afforded
thereby and the limitation on personal liability to the maximum extent permitted
by Section 102(b) of the Delaware General Corporation Law as if the provisions
thereof were set forth in this Operating Agreement (and for all such purposes,
each Representative, Alternate and Manager shall be treated as not "interested"
for Delaware corporation law purposes).
Section 5.2 EXCULPATION. No Member, Representative, Alternate or Manager
of the Company shall be liable to the Company or to any Member for any losses,
claims, damages or liabilities arising from, related to, or in connection with,
this Operating Agreement or the business or affairs of the Company, except for
any losses, claims, damages or liabilities as are determined by final judgment
of a court of competent jurisdiction to have resulted from such Member,
Representative, Alternate or Manager's gross negligence, reckless conduct,
intentional misconduct, knowing violation of law, or breach of the provisions of
Section 5.1. The provisions
20
of this Operating Agreement, to the extent that they restrict the duties and
liabilities of any Member, Representative, Alternate or Manager otherwise
existing at law or in equity, are agreed by the Members to replace such other
duties and liabilities of such Member, Representative, Alternate or Manager.
Section 5.3 RELIANCE ON REPORTS AND INFORMATION BY MEMBER, REPRESENTATIVE,
ALTERNATE OR MANAGER. A Member, Representative, Alternate or Manager of the
Company shall be fully protected in relying in good faith upon the records of
the Company and upon such information, opinions, reports or statements presented
to the Company by any of its other Members, Representatives, Alternates,
Managers, officers, employees or committees of the Company, or by any other
Person, as to matters the Member, Representative, Alternate or Manager
reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits or losses of the Company or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
Section 5.4 INDEMNIFICATION BY THE COMPANY.
(a) The Company shall indemnify an indemnified representative, defined
herein, against any liability incurred in connection with any proceeding in
which the indemnified representative may be involved as a party or otherwise, as
and when incurred, by reason of the fact that such Person is or was serving in
an indemnified capacity, including, without limitation, liabilities resulting
from any actual or alleged breach or neglect of duty, error, misstatement or
misleading statement, negligence, gross negligence or act giving rise to
liability, except:
(i) where such indemnification is expressly prohibited by applicable
law;
(ii) where the conduct of the indemnified representative has been
finally determined:
(A) to constitute gross negligence, reckless conduct,
intentional misconduct or a knowing violation of law, sufficient in
the circumstances to bar indemnification against liabilities arising
from the conduct;
(B) to constitute a breach of Section 5.1; or
(C) to be based upon or attributable to the receipt by the
indemnified representative from the Company of a personal benefit to
which the indemnified representative is not legally entitled; or
(iii) to the extent such indemnification has been finally determined
in a final adjudication to be otherwise unlawful.
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(b) If an indemnified representative is entitled to indemnification in
respect of a portion, but not all, of any liabilities to which such Person may
be subject, the Company shall indemnify such indemnified representative to the
maximum extent for such portion of the liabilities.
(c) The termination of a proceeding by judgment, order, settlement or
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the indemnified representative is not entitled
to indemnification.
(d) Definitions. For purposes of this Article V:
(i) "indemnified capacity" means any and all past, present and future
service by an indemnified representative in one or more capacities as a
Member, Representative, Alternate, Manager or authorized agent of the
Company;
(ii) "indemnified representative" means any and all Members,
Representatives, Alternates, Managers and authorized agents of the Company
and any other Person designated as an indemnified representative by the
mutual consent of Bravo and Charlie Sub, given in accordance with the
provisions of this Operating Agreement;
(iii) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(iv) "proceeding" means any threatened, pending or completed action,
suit, appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether
brought by or in the right of the Company, a class of its Members or
security holders or otherwise.
Section 5.5 PROCEEDINGS INITIATED BY INDEMNIFIED REPRESENTATIVES.
Notwithstanding any other provision of this Article V, the Company shall not
indemnify under this Article V an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counterclaims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the Person seeking indemnification unless such initiation of or
participation in the proceeding is authorized, either before or after its
commencement, by the unanimous consent of the Board of Representatives. This
Section does not apply to reimbursement of expenses incurred in successfully
prosecuting or defending the rights of an indemnified representative granted by
or pursuant to this Article V.
Section 5.6 ADVANCING EXPENSES. The Company shall pay the expenses
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 5.4 or the initiation of or participation in which is
authorized pursuant to Section 5.5 upon receipt of an undertaking by or on
behalf of the indemnified representative to repay the amount if it is ultimately
determined that
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such Person is not entitled to be indemnified by the Company pursuant to this
Article V. The financial ability of an indemnified representative to repay an
advance shall not be a prerequisite to the making of such advance.
Section 5.7 PAYMENT OF INDEMNIFICATION. An indemnified representative
shall be entitled to indemnification within thirty (30) days after a written
request for indemnification has been delivered to the Chairman of the Board.
Section 5.8 CONTRIBUTION. If the indemnification provided for in this
Article V or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the Company shall contribute to the liabilities to which the
indemnified representative may be subject in such proportion as is appropriate
to reflect the intent of this Article V.
Section 5.9 MANDATORY INDEMNIFICATION OF MEMBERS AND MANAGERS. To the
extent that an indemnified representative of the Company has been successful on
the merits or otherwise in defense of any proceeding or in defense of any claim,
issue or matter therein, such Person shall be indemnified against expenses
(including attorneys' fees and disbursements) actually and reasonably incurred
by such Person in connection therewith.
Section 5.10 CONTRACT RIGHTS; AMENDMENT OR REPEAL. All rights under this
Article V shall be deemed a contract between the Company and the indemnified
representative pursuant to which the Company and each indemnified representative
intend to be legally bound. Any repeal, amendment or modification hereof shall
be prospective only and shall not affect any rights or obligations then
existing.
Section 5.11 SCOPE OF ARTICLE. The rights granted by this Article V shall
not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of disinterested Members or disinterested
Representatives or Alternates, both as to action in an indemnified capacity and
as to action in any other capacity. The indemnification, contribution and
advancement of expenses provided by or granted pursuant to this Article V shall
continue as to a Person who has ceased to be an indemnified representative in
respect of matters arising prior to such time, and shall inure to the benefit of
the heirs, executors, administrators, personal representatives, successors and
permitted assigns of such a Person.
Section 5.12 RELIANCE ON PROVISIONS. Each Person who shall act as an
indemnified representative of the Company shall be deemed to be doing so in
reliance upon the rights of indemnification, contribution and advancement of
expenses provided by this Article V.
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ARTICLE VI
CAPITAL ACCOUNTS
Section 6.1 CAPITAL CONTRIBUTIONS.
(a) The Capital Contributions to be made by the Members shall be cash,
property and/or a promise to contribute cash, property and/or to perform
services. The initial Capital Contributions of Bravo shall be the rights
granted to the Company pursuant to the Master Exclusive Distribution Agreement,
and the initial Capital Contributions of Charlie Sub shall be the Contributed
Assets and the Cash Contribution, each as defined in and pursuant to the
Contribution Agreement.
(b) The initial Capital Contributions of the Members shall be made upon the
execution and delivery of the Additional Agreements in accordance with the terms
and conditions set forth therein. Bravo and Charlie Sub are, and are causing
their respective Affiliates to, execute and deliver all the Additional
Agreements contemporaneously with the execution and delivery of this Operating
Agreement.
(c) Calls for additional Capital Contributions may be made by the Board of
Representatives or by either Member unilaterally, if such Member's capital call
is based on a reasonable determination that the Company requires such additional
funding in pursuit of the Business.
(i) Calls for additional Capital Contributions made by the Board of
Representatives shall constitute an obligation of each Member to the extent
of its proportionate share thereof.
(ii) Calls for additional Capital Contributions made by either Member
unilaterally, as provided above, shall be non-obligatory on the part of
each Member and shall be communicated in writing by the Member making the
capital call to each other Member. Each Member shall have 30 days
following the effective date of such notice within which to determine and
advise the other Member in writing whether it will contribute its
proportionate share to such Capital Contribution. If a Member declines to
contribute its proportionate share to such capital call (such Member being
a "Declining Member"), the other Member shall have the right to make an
unsecured loan to the Company in an amount equal to the Capital
Contribution specified in the call notice, which loan shall bear interest
from the date of its advance at a rate equal to two (2) percentage points
greater than the announced prime lending rate of Citibank, N.A. in New
York, New York to its largest and most creditworthy commercial borrowers
but in no event greater than the highest rate permitted by applicable law.
Such loan shall be repaid in full before Distributions (other than Tax
Distributions) are made by the Company. No loan shall be treated as
capital. Except as expressly provided herein, no Member shall have the
unilateral right to contribute capital or make a loan to the Company.
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(iii) For purposes of this Section 6.1(c), each Member's
proportionate share of a Capital Contribution shall be equal to its
Membership Interest percentage at the time such Capital Contribution is to
be made.
Section 6.2 LIABILITY FOR CONTRIBUTION.
(a) A Member of the Company is obligated to the Company to perform any
promise to contribute cash or property or to perform services made by, on behalf
of, or for the benefit of such Member, even if the Member (or the Person
promising on behalf of or for the benefit of the Member (a "Benefactor")) is
unable to perform because of death, disability or any other reason. If a Member
or Benefactor does not make the required contribution of property or services,
the Member is obligated at the option of the Company to contribute cash equal to
that portion of the Agreed Value (as stated in the records of the Company) of
the contribution that has not been made. The foregoing option shall be in
addition to, and not in lieu of, any other rights, including the right to
specific performance, that the Company may have against such Member or
Benefactor under applicable law.
(b) The obligation of a Member or a Benefactor of the Company to make a
contribution or return money or other property paid or distributed in violation
of the Act may be compromised only by consent of all the Members or Benefactors.
Notwithstanding the compromise, a creditor of the Company who extends credit,
after entering into this Operating Agreement or an amendment hereof which, in
either case, reflects the obligation, and before the amendment hereof to reflect
the compromise, may enforce the original obligation to the extent that, in
extending credit, the creditor reasonably relied on the obligation of a Member
or a Benefactor to make a contribution or return. A conditional obligation of a
Member or a Benefactor to make a contribution or return money or other property
to the Company may not be enforced unless the conditions of the obligation have
been satisfied or waived as to or by such Member or Benefactor. Conditional
obligations include contributions payable upon a discretionary call of the
Company prior to the time the call occurs.
Section 6.3 CAPITAL ACCOUNTS. A separate Capital Account will be
maintained for each Member. Notwithstanding any other provision hereof, the
Company shall determine and adjust the Capital Accounts in accordance with the
rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Upon the consummation
of the transactions contemplated by the Additional Agreements, the initial
Capital Accounts of the Members as of the Effective Date shall be as set forth
on SCHEDULE A. Except as otherwise required in the Act, no Member shall have
any liability to restore all or any portion of a deficit balance in the Member's
Capital Account.
Section 6.4 NO INTEREST ON OR RETURN OF CAPITAL. No Member shall be
entitled to interest on any Capital Contribution or Capital Account. No Member
shall have the right to demand or receive the return of all or any part of any
Capital Contribution or Capital Account except as may be expressly provided
herein, and no Member shall be personally liable for the return of the Capital
Contributions of any other Member.
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Section 6.5 MEMBERSHIP INTEREST. The Membership Interests of the Members
are as set forth on SCHEDULE A. Membership Interests will be varied only as
specifically agreed by the parties pursuant to this Operating Agreement and will
not be affected by allocations of Profits and Losses or other changes in
Members' Capital Accounts. The Membership Interests shall be updated by the
Managers to reflect any adjustment of Membership Interests, set forth on a
revised SCHEDULE A and filed with the records of the Company.
Section 6.6 ALLOCATIONS OF PROFITS AND LOSSES GENERALLY. After the
allocations in Section 6.7, at the end of each Fiscal Year (or shorter period if
necessary or longer period if agreed by all of the Members), Profits and Losses
shall be allocated to the Members in proportion to their respective Membership
Interests.
Section 6.7 ALLOCATIONS UNDER REGULATIONS.
(a) Company Nonrecourse Deductions. Loss attributable (under Treasury
Regulation Section 1.704-2(c)) to "partnership nonrecourse liabilities" (within
the meaning of Treasury Regulation Section 1.704-2(b)(1)) shall be allocated
among the Members in the same proportion as their respective Membership
Interests.
(b) Member Nonrecourse Deductions. Loss attributable (under Treasury
Regulation Section 1.704-2(i)(2)) to "partner nonrecourse debt" (within the
meaning of Treasury Regulation Section 1.704-2(b)(4)) shall be allocated, in
accordance with Treasury Regulation Section 1.704-2(i)(1), to the Member who
bears the economic risk of loss with respect to the debt to which the Loss is
attributable.
(c) Minimum Gain Chargeback. Each Member will be allocated Profits at such
times and in such amounts as necessary to satisfy the minimum gain chargeback
requirements of Treasury Regulation Sections 1.704-2(f) and 1.704-2(i)(4).
(d) Qualified Income Offset. Losses and items of income and gain shall be
specially allocated when and to the extent required to satisfy the "qualified
income offset" requirement within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(d).
Section 6.8 OTHER ALLOCATIONS.
(a) Allocations when Agreed Value Differs from Tax Basis. When the Agreed
Value of a Company asset is different from its adjusted tax basis for income tax
purposes, then, solely for federal, state and local income tax purposes and not
for purposes of computing Capital Accounts, income, gain, loss, deduction and
credit with respect to such assets ("Section 704(c) Assets") shall be allocated
among the Members to take this difference into account in accordance with the
principles of IRC Section 704(c), as set forth herein and in the Treasury
Regulations thereunder and under IRC Section 704(b). The calculation and
allocations eliminating the differences between Agreed Value and adjusted tax
basis of the Section 704(c) Assets shall be made on an asset-by-asset basis
using remedial allocations under Treasury Regulation Section 1.704-3(d).
26
(b) Change in Member's Interest.
(i) If during any Fiscal Year of the Company there is a change in any
Member's Membership Interest, then for purposes of complying with IRC
Section 706(d), the determination of Company items allocable to any period
shall be made by using the closing of the books method.
(ii) The Members agree to be bound by the provisions of this Section
6.8(b) in reporting their shares of Company income, gain, loss, and
deduction for tax purposes.
ARTICLE VII
DISTRIBUTIONS
Section 7.1 DISTRIBUTIONS.
(a) Tax Distributions. The Company shall distribute to the Members in
accordance with the Members' Membership Interests as promptly as practicable
(and in any event within forty-five (45) days) after the end of each fiscal
quarter an amount equal to the product of the Tax Rate and the amount of Profits
for such fiscal quarter ("Tax Distributions").
(b) Additional Distributions. The Company may distribute profits of the
Company to the Members in accordance with the Members' Membership Interests, at
such times and in such amounts as approved by the Board of Representatives in
accordance with the provisions of Section 4.1.
Section 7.2 LIMITATIONS ON DISTRIBUTIONS.
(a) The Company shall not make a distribution to a Member to the extent
that at the time of the distribution, after giving effect to the distribution,
all liabilities of the Company, other than liabilities to Members on account of
their interests in the Company and liabilities for which the recourse of
creditors is limited to specified property of the Company, exceed the Fair
Market Value of the assets of the Company, except that the Fair Market Value of
property that is subject to a liability for which the recourse of creditors is
limited shall be included in the assets of the Company only to the extent that
the Fair Market Value of that property exceeds that liability.
(b) A Member who receives a distribution in violation of subsection (a),
and who knew at the time of the distribution that the distribution violated
subsection (a), shall be liable to the Company for the amount of the
distribution. A Member who receives a distribution in violation of subsection
(a) and who did not know at the time of the distribution that the distribution
violated subsection (a), shall not be liable for the amount of the distribution.
Subject to subsection (c), this subsection shall not affect any obligation or
liability of a Member under other applicable law for the amount of a
distribution.
27
(c) A Member who receives a distribution from the Company shall have no
liability under this Section, the Act or other applicable law for the amount of
the distribution after the expiration of three (3) years from the date of the
distribution unless an action to recover the distribution from such Member is
commenced prior to the expiration of the said three (3)-year period and an
adjudication of liability against such Member is made in the action.
Section 7.3 AMOUNTS OF TAX PAID OR WITHHELD. All amounts paid or withheld
pursuant to the IRC or any provision of any state or local tax law with respect
to any Member shall be treated as amounts distributed to the Member pursuant to
this Article VII for all purposes under this Operating Agreement.
Section 7.4 DISTRIBUTION IN KIND. The Company shall not distribute any
assets in kind.
ARTICLE VIII
TRANSFER OF MEMBERSHIP INTERESTS
Section 8.1 RESTRICTION ON TRANSFERS. No Member shall have the right,
directly or indirectly, to sell, assign, transfer, pledge, hypothecate, mortgage
or dispose of, by gift or otherwise, or in any way encumber, voluntarily,
involuntarily or by operation of law (any such transaction being referred to as
a "transfer" under this Article VIII), any of the Membership Interest
(including, without limitation any of the economic interest associated
therewith) in the Company held by such Member, except (i) in accordance with the
provisions of Section 8.2, 8.3 or 8.7 or (ii) upon the written consent of the
other Members, which consent may be determined in their respective sole
discretion.
Section 8.2 TRANSFERS OF MEMBERSHIP INTERESTS TO AFFILIATES. Any Member
shall have the right, without the consent of the other Members, to transfer
ownership of all (but not part) of its Membership Interest to a direct or
indirect wholly-owned subsidiary of itself or its Parent Entity (a "Wholly-Owned
Subsidiary Transferee"). In the event of any such transfer, the Wholly-Owned
Subsidiary Transferee shall be entitled to the rights and privileges set forth
in this Operating Agreement and shall be bound and obligated by the provisions
hereof and thereof and shall, by a binding written instrument which shall be
enforceable by the Company and the other Members, assume all obligations and
liabilities hereunder of the transferring Member.
Section 8.3 BUY-SELL PROCEDURE.
(a) Each of Bravo and Charlie Sub (the "Offering Member") shall have the
right, at any time after the eighteenth (18th) month anniversary of the
Effective Date, exercisable by written notice (the "Sale Notice") to the other
(the "Recipient"), to offer to sell all of its Membership Interest at a purchase
price payable in cash at the closing and on such other reasonable terms and
conditions as may be specified in the Sale Notice. In the event the Offering
Member fails to name a price in its Sale Notice and fails to remedy such
omission within thirty (30) days following receipt of written notice thereof
from the Recipient, the Board of Representatives shall engage an
28
independent third Person reasonably known and respected in the field to
determine the fair market value of the Company (the "Appraiser"). The Appraiser
shall notify each of the Offering Member and the Recipient in writing of such
fair market value determination within thirty (30) days after its engagement
("Appraisal Notice").
(b) The Recipient shall elect, by written notice to the Offering Member
("Notice of Election") within sixty (60) days of receipt of the Sale Notice or
Appraisal Notice, as the case may be, either (i) to purchase all of such offered
Membership Interest at the purchase price and on the terms and conditions
specified in the Sale Notice or Appraisal Notice, as the case may be or (ii) to
sell all of its own Membership Interest to the Offering Member at a purchase
price which bears the same proportional relationship to its Membership Interest
as the purchase price set forth in the Sale Notice or Appraisal Notice, as the
case may be, bears to the Offering Member's Membership Interest.
(c) If the Recipient elects to proceed pursuant to clause (i) of Section
8.3(a), the Members shall, within thirty (30) days after receipt of the Notice
of Election, execute such documents and instruments reasonably required to cause
the purchase and sale of the Offering Member's Membership Interest at the
purchase price and the terms and conditions specified in the Sale Notice or
Appraisal Notice, as the case may be, and the closing of such sale shall take
place as soon as practicable, but in any event within thirty (30) days
thereafter. At the closing, the Offering Member shall transfer its Membership
Interest to the Recipient free and clear of any and all encumbrances.
(d) If the Recipient elects to proceed pursuant to clause (ii) of Section
8.3(a), the Members shall, within thirty (30) days after receipt of the Notice
of Election, execute such documents and instruments reasonably required to cause
the purchase and sale of the Recipient's Membership Interest at a purchase price
which bears the same proportional relationship to its Membership Interest as the
purchase price set forth in the Sale Notice or Appraisal Notice, as the case may
be, bears to the Offering Member's Membership Interest, and on such terms and
conditions that are equivalent to the terms and conditions specified in the Sale
Notice or Appraisal Notice, as the case may be. The closing of such sale shall
take place as soon as practicable, but in any event within thirty (30) days
thereafter. At the closing, the Recipient shall transfer its Membership
Interest to the Offering Member free and clear of any and all encumbrances.
Section 8.4 INVALID TRANSFERS VOID. Notwithstanding anything contained
herein to the contrary, no transfer of a Membership Interest may be made if such
transfer (i) would violate the registration requirements of then applicable
federal or state securities laws or rules and regulations of the Securities and
Exchange Commission, state securities commissions, or rules and regulations of
any other government agencies with jurisdiction over such transfer or (ii) would
affect the Company's existence or qualification under the Act. In the event a
transfer of a Membership Interest is otherwise permitted hereunder,
notwithstanding any provision hereof, no Member shall transfer all or any
portion of such Member's Membership Interest unless and until such Member, upon
the request of the Company, delivers to the Company an opinion of counsel,
addressed to the Company, reasonably satisfactory to the Company, to the effect
that (a) such Membership Interest has been registered under the Securities Act
and any applicable state
29
securities laws, or that the proposed transfer of such Membership Interest is
exempt from any registration requirements imposed by such laws and (b) that such
transfer will not result in the Company being taxed as a corporation or as an
association taxable as a corporation. Such opinion shall not be deemed delivered
until the Company confirms to such Member that such opinion is acceptable, which
confirmation will not be unreasonably withheld. Any purported transfer of any
Membership Interest or any part thereof not in compliance with this Article VIII
shall be void and of no force or effect and the transferring Member shall be
liable to the other Members and the Company for all liabilities, obligations,
damages, losses, costs and expenses (including reasonable attorneys' fees and
court costs) arising as a result of such noncomplying transfer.
Section 8.5 CHANGE IN OWNERSHIP.
(a) For purposes of this Operating Agreement, a "Change in Ownership" of a
Member shall be deemed to have occurred when (i) any Person that does not
beneficially own or control, directly or indirectly, 50% or more of the
outstanding voting power of such Member or is not a direct or indirect wholly-
owned subsidiary of a Person beneficially owning or controlling, directly or
indirectly, 50% or more of the outstanding voting power of such Member (an
"Unaffiliated Entity"), shall acquire (whether by merger, consolidation, sale,
assignment, lease, transfer or otherwise, in one transaction or series of
related transactions), or otherwise beneficially own or control 50% or more of
the outstanding voting power of such Member or any Entity which, directly or
indirectly, through the ownership of one or more majority-owned successive
subsidiary Entities, owns more than 50% of the outstanding voting power of or
controls such Member (a "Control Entity") or (ii) an Unaffiliated Entity, or
group or persons acting in concert therewith, shall acquire the power to direct
or cause the direction of the management and policies of such Member or a
Control Entity thereof; provided that the foregoing shall not be deemed to
extend to any grant or transfer of outstanding voting power in such Member
pursuant to a plan of internal reorganization undertaken solely for
administrative or tax purposes.
(b) Any Change in Ownership of a Member shall be deemed for all purposes
hereof to be a proposed transfer of the Membership Interest of such Member to
the Unaffiliated Entity and shall be subject to all of the terms, conditions and
restrictions set forth in Sections 8.1 and 8.4.
Section 8.6 EFFECT OF TRANSFER; EXCLUSIONS.
(a) In addition to satisfaction of Section 4.1 above, no assignee or
transferee of all or part of a Membership Interest in the Company shall have the
right to become admitted as a Member, unless and until:
(i) The assignee or transferee has executed an instrument reasonably
satisfactory to the Managers accepting and adopting the provisions of this
Operating Agreement; and
30
(ii) The assignee or transferee has paid all reasonable expenses of
the Company requested to be paid by the Managers in connection with the
admission of such assignee or transferee as a Member.
(b) A Person who is a permitted assignee or transferee of a Membership
Interest in the Company transferred in compliance with the provisions of this
Article VIII shall be admitted to the Company as a Member and shall receive a
Membership Interest in the Company without making a contribution or being
obligated to make a contribution to the Company and shall thereupon be bound by
the provisions of this Operating Agreement.
Section 8.7 REDEMPTION OF BRAVO INTEREST. In the event of a Default
under, and notice from Charlie Sub, on behalf of the Company, to Bravo pursuant
to, Section 2.1 of the Master Exclusive Distribution Agreement, (a) the Company
shall repurchase from Bravo its Membership Interest (the "Redemption"), (b) the
Redemption shall not require the approval of the Members or of the Board of
Representatives pursuant to Section 4.1(g) or otherwise, (c) the Master
Exclusive Distribution Agreement shall be deemed terminated and (d) such
termination shall be deemed a return in full of Bravo's Capital Contribution and
adequate consideration for the Redemption. Bravo agrees to execute such
documents and instruments reasonably required to cause the Redemption. The
closing of the Redemption shall take place as soon as practicable, but in any
event within thirty (30) days thereafter. During any interim period between the
declaration of Default and the closing of the Redemption, Bravo shall have no
rights to vote its Membership Interest hereunder, and no vote by Bravo shall be
required hereunder for any purpose, including without limitation, the approval
for any of the matters set forth in Section 4.1, except as may be required by
law.
ARTICLE IX
DISSOLUTION; TERMINATION; REORGANIZATION
Section 9.1 DISSOLUTION. The Company shall be dissolved only upon the
occurrence of any of the following events:
(a) By the written consent of all Members; or
(b) Upon the occurrence of any of the events set forth in Section 18-801 of
the Act, except as may be provided to the contrary in this Operating Agreement
as permitted by the Act.
Section 9.2 EVENTS OF BANKRUPTCY OF MEMBER OR PARENT ENTITY. Without
limiting the generality of Section 9.1, the occurrence of any of the events set
forth in this Section with respect to any Member shall not result in the
dissolution of the Company. The occurrence of any such events with respect to a
Member's Parent Entity shall be deemed to have occurred with respect to such
Member. Such Member shall cease to be a Member of the Company, but shall,
however, retain its interest in allocations and distributions, upon the
happening of any of the following bankruptcy events:
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(a) A Member or a Parent Entity takes any of the following actions:
(i) Makes an assignment for the benefit of creditors;
(ii) Files a voluntary petition in bankruptcy;
(iii) Is adjudged a bankrupt or insolvent, or has entered against the
Member or Parent Entity an order for relief, in any bankruptcy or
insolvency proceeding;
(iv) Files a petition or answer seeking for the Member or Parent
Entity any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation;
(v) Files an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against the Member or Parent
Entity in any proceeding of this nature; or
(vi) Seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator the Member or Parent Entity or of all or any
substantial part of the properties of the Member or Parent Entity; or
(b) One hundred twenty (120) days after the commencement of any proceeding
against the Member or Parent Entity seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, if the proceeding has not been dismissed, or if
within ninety (90) days after the appointment without the consent or
acquiescence of the Member or Parent Entity, of a trustee, receiver or
liquidator of the Member or Parent Entity or of all or any substantial part of
the properties of the Member or Parent Entity, the appointment is not vacated or
stayed, or within ninety (90) days after the expiration of any such stay, the
appointment is not vacated.
Section 9.3 WITHDRAWAL OF MEMBERS. No Member shall have the right to
withdraw from the Company except following a transfer of its Membership Interest
in accordance with Section 8.1. However, if despite such prohibition a Member
gives the Company notice (which must be in writing) of its desire to wrongfully
withdraw from the Company, upon the Company's receipt of such written notice
from such Member, such Member shall cease to be a Member of the Company, and
such withdrawal shall be deemed wrongful. The withdrawal of a Member (wrongful
or otherwise) shall not result in the dissolution of the Company.
Section 9.4 WINDING UP.
(a) Upon the dissolution of the Company, the Board of Representatives shall
engage an independent third Person reasonably known and respected in the field
to wind up the affairs of the Company (the "Liquidating Trustee"). All actions
taken by the Liquidating Trustee in respect of such winding up shall be taken in
accordance with this Section 9.4 and with Section 9.5. The Liquidating Trustee
shall be entitled to receive such compensation for its services as may be
32
approved by the Board of Representatives. The Liquidating Trustee may resign
only upon at least fifteen (15) days' notice to the Board of Representatives.
The Liquidating Trustee may be removed by the Board of Representatives in
accordance with Section 4.1(k) upon fifteen (15) days' notice. Within fifteen
(15) days of the effective date of such resignation or removal, the Board of
Representatives shall engage a replacement who shall succeed to all the rights,
powers and obligations of its predecessor.
(b) The Liquidating Trustee may, in the name of, and for and on behalf of,
the Company, prosecute and defend suits, whether civil, criminal or
administrative, gradually settle and close the business of the Company, dispose
of and convey the property of the Company, discharge or make reasonable
provision for the liabilities and obligations of the Company, including all
contingent, conditional or unmatured liabilities and obligations, and distribute
to the Members any remaining assets of the Company, all in accordance with
Section 9.5 and without affecting the liability of Members and Managers and
without imposing liability on the Liquidating Trustee.
(c) The Liquidating Trustee shall exercise all powers conferred upon the
Tax Matters Member to the extent necessary in its good faith judgment to effect
the liquidation, and the Tax Matters Member shall not interfere with or
duplicate the exercise of such powers.
Section 9.5 LIQUIDATION AND DISTRIBUTION OF ASSETS.
(a) In the event of a dissolution of the Company, the Liquidating Trustee
shall use all commercially reasonable efforts to effect a sale of the Company as
a going concern. In the event that no buyer can be found to purchase the
Company as a going concern, the Liquidating Trustee shall offer for sale the
separate assets of the Company. All sales, whether of the Company as a going
concern or of separate assets, shall be at the best price reasonably available.
(b) Any proceeds from a sale of the Company or its assets shall be
distributed as follows:
(i) First, to creditors, including Members and Managers who are creditors,
to the extent otherwise permitted by law, in satisfaction of liabilities of the
Company (whether by payment or the making of reasonable provision for payment
thereof) other than liabilities for which reasonable provision for payment has
been made; and
(ii) Then, to the Members in proportion to their positive Adjusted Capital
Accounts.
Section 9.6 REORGANIZATION. The Board of Representatives may, in
connection with an initial public offering of the Company, cause the Company to
convert (a "Rollup") from the limited liability company form to the corporate
form (such successor corporate form, whether effected by contribution of
Membership Interests, contribution of assets, merger, reorganization or
otherwise, the "Reorganized Company"). Each Member shall consent to and raise
no objections against, and shall take all actions reasonably necessary and
desirable (to the extent permissible in his, her or its capacity as such person)
to effect such an approved Rollup. It is the
33
intention of the Members that any Rollup shall be effected in a manner that (a)
does not modify the economic terms of this Operating Agreement and (b) avoids or
minimizes to the maximum extent possible (i) any limitations for purposes of
Rule 144 under the Securities Act of 1933 (as amended from time to time, and
including the rules and regulations of the Securities Exchange Commission
thereunder) on the tacking by a Member of the holding periods of Membership
Interests surrendered in such exchange to the holding periods of the new
securities respectively issued, and (ii) the recognition of taxable income by
the Company or the Members as a result of such exchange.
ARTICLE X
ADDITIONAL UNDERTAKINGS
Section 10.1 CONFIDENTIALITY.
(a) Maintenance of Confidentiality. Each of the Members shall, during the
term of this Operating Agreement and at all times thereafter, maintain in
confidence all confidential and proprietary information and data of the Company
and the other Members or its Affiliates disclosed to it (the "Confidential
Information"). Each of the Members further agrees that it shall not use the
Confidential Information during the term of this Operating Agreement or at any
time thereafter for any purpose other than the performance of its obligations or
the exercise of its rights under this Operating Agreement. The Company and each
Member shall take all reasonable measures necessary to prevent any unauthorized
disclosure of the Confidential Information by any of their Affiliates and their
respective officers, directors, employees, agents or consultants.
(b) Permitted Disclosures. Nothing herein shall prevent the Company, any
Member, or any employee, agent or consultant of the Company or any Member (in
such capacity, the "Receiving Party") from using, disclosing or authorizing the
disclosure of any information it receives in the course of the business of the
Company from the Company or another Member (in such capacity, the "Disclosing
Party") which:
(i) Becomes publicly available without default hereunder by the
Receiving Party;
(ii) Is lawfully acquired by the Receiving Party from a source not
known to the Receiving Party to be under any obligation to the Disclosing
Party regarding disclosure of such information;
(iii) Is in the possession of the Receiving Party in written or other
recorded form at the time of its disclosure hereunder;
(iv) Is non-confidentially disclosed to any third party by or with the
permission of the Disclosing Party; or
34
(v) The Receiving Party believes in good faith to be required by law
or by the terms of any listing agreement with a securities exchange;
provided that the Receiving Party consults with the other Members prior to
making such disclosure.
Section 10.2 RETURN OF CONFIDENTIAL INFORMATION. Upon expiration or
termination of this Operating Agreement, the Receiving Party shall return to the
Disclosing Party all requested Confidential Information of the Disclosing Party,
including all copies thereof, in the possession or under the control of it or
its Parent Entity, its Affiliates or any of their respective personnel, or, at
the Disclosing Party's option, destroy or purge all such Confidential
Information from its and its Affiliates' systems and files and deliver to the
Disclosing Party a written confirmation that such destruction and purging have
been carried out.
Section 10.3 NO LICENSE. The furnishing of Confidential Information of the
Disclosing Party to the Receiving Party shall not constitute any grant of
license to the Receiving Party except (i) for the purposes of performing under
this Operating Agreement, (ii) as otherwise expressly provided in this Operating
Agreement or (iii) as hereafter expressly agreed in writing by the Disclosing
Party.
Section 10.4 NO HIRE. During the term of this Operating Agreement, each
Member agrees, and for one (1) year after the withdrawal of a Member or transfer
of a Member's Membership Interest in accordance with this Operating Agreement or
otherwise, such withdrawing or transferring Member agrees, that it shall not,
and shall make its best efforts to cause its Affiliates to not, directly or
indirectly, (i) solicit, induce, recruit or encourage any of the Company's
employees or consultants to terminate their relationship with the Company in
favor of a relationship with such Member or Affiliate, as the case may be, or
any other Person or (ii) hire or retain the services of any such employees or
consultants; provided that this obligation shall not apply to consultants who
regularly provide services concurrently to multiple clients in the normal course
of their business, to the extent that the hiring or retention of such
consultants is not likely to materially impair the ability of such consultants
to provide services to the Company. In addition, the Company and each Member
agrees that, for one (1) year after the proper withdrawal of a Member or
transfer of a Member's Membership Interest in accordance with this Operating
Agreement, it shall comply with the foregoing restrictions applied with respect
to the employees and consultants of such withdrawing or transferring Member.
Section 10.5 RELEASE OF CLAIMS. Each of Bravo and Charlie Sub does
hereby for itself and its Affiliates, and their respective predecessors,
successors and assigns (collectively, the "Releasing Persons") release and
forever discharge the other and its Affiliates, predecessors, successors and
assigns, and its and their respective present and former officers, directors,
employees, stockholders, accountants, attorneys, agents and representatives, and
their respective heirs, executors, administrators, successors and assigns
(collectively, the "Released Persons") from any and all claims, debts, demands,
allegations, actions, causes of action, suits, duties, dues, sum and sums of
money, bills, accounts, reckoning, bonds, specialties, indemnities,
exonerations, covenants, contracts, controversies, agreements, promises, doings,
omissions, trespasses, variances, damages, judgments, extents, costs, expenses,
losses, exposures, executions, obligations and liabilities whatsoever, whether
in law, equity or otherwise and whether or not
35
presently known (including without limitation any unknown or unsuspected claims)
(collectively, "Claims"), arising from any action or inaction by either Bravo or
Charlie Sub in connection with the conditions to closing set forth in Section
6.1 of the Original Agreement, that any Releasing Person may have, or hereafter
can, shall or may have against any Released Person based upon, arising out of or
related to the Original Agreement, other than Claims relating to any breach or
alleged breach of any obligations set forth in Article X of the Original
Agreement.
ARTICLE XI
BOOKS; REPORTS TO MEMBERS; TAX ELECTIONS
Section 11.1 BOOKS AND RECORDS.
(a) The Company shall maintain or cause to be maintained proper and
complete books and records in which shall be entered fully and accurately all
transactions and other matters relating to the Company's business in the detail
and completeness customary and usual for businesses of the type engaged in by
the Company. The Company's financial statements shall be kept on the accrual
basis and in accordance with GAAP. The Company's financial statements shall be
audited annually by independent certified public accountants selected by the
Board of Representatives. The fact that such independent certified public
accountants may audit the financial statements of one or more of the Members or
their Affiliates shall not disqualify such accountants from auditing the
Company's financial statements.
(b) At a minimum, the Company shall keep such books and records as may be
required by the Act and such other books and records as are customary and usual
for businesses of the type engaged in by the Company.
(c) Each Member or its duly authorized representatives shall have the
right, during normal business hours, to inspect and copy the Company's books and
records at the requesting Member's expense.
(d) ▇▇▇▇▇, ▇▇▇▇▇▇▇ Sub and their respective Parent Entities shall have the
right to cause the Company to take all actions necessary to afford, at the
requesting party's expense, such party's independent certified public
accountants access to the Company's books, records, Managers, employees and
agents to the full extent reasonably determined by such party's independent
certified public accountants to be necessary in order to perform their audit or
review of such party's financial statements. In addition, the internal auditors
of each such party shall have full right of access to the Company's books,
records, Managers, employees and agents to the full extent reasonably determined
by such party's internal auditors to be necessary in order to perform their
audit or review of such party's financial statements; provided that in
exercising such right, such internal auditors to the extent reasonably
practicable shall coordinate their visits with those by internal auditors of
other parties requesting access under this subsection.
36
Section 11.2 REPORTS.
(a) Annual Statements. As soon as practicable following the end of each
Fiscal Year, but in any event within ninety (90) days after the end of the
Fiscal Year, the Company shall cause to be prepared and delivered to its
Members, the audited statement of income and statement of cash flows for such
Fiscal Year, Capital Account statements, audited balance sheet as of the end of
such Fiscal Year, and accompanying notes to financial statements for the
Company, on a consolidated basis, prepared in accordance with GAAP and Company
accounting practices.
(b) Monthly Statements. As soon as possible following the end of each
calendar month in each Fiscal Year, but in any event within thirty (30) days
after the end of such month, the Company shall cause to be prepared and
delivered to its Members, an unaudited statement of income and statement of cash
flows for such month and an unaudited balance sheet as of the end of such month
on a consolidated basis, prepared in accordance with GAAP and Company accounting
practices. The Company shall also provide the Members with a monthly report of
significant operating and financial statistics.
(c) Additional Financial Statements. The Company shall provide for each
Member such financial statements, including audited financial statements of the
Company, and as of such date and for such periods, as are necessary in the
determination of such Member in order for it to satisfy its own regulatory
financial reporting requirements; provided that the Company shall not be
required to translate any financial statement from GAAP to, or prepare any
financial statements on the basis of, the generally accepted accounting
principles of the United Kingdom.
(d) Tax Information. Within ninety (90) days after the end of each Fiscal
Year, the Company shall supply to each Member all information necessary and
appropriate to be included in each Member's and the Parent Entities' income tax
returns for that year.
Section 11.3 TAX MATTERS MEMBER.
(a) Subject to Section 9.4(c), Charlie Sub is hereby appointed and shall
serve as the tax matters Member of the Company (the "Tax Matters Member") within
the meaning of IRC Section 6231(a)(7) for so long as it is not the subject of a
bankruptcy event as defined in Section 9.2 and otherwise is entitled to act as
the Tax Matters Member. The Tax Matters Member may file a designation of itself
as such with the Internal Revenue Service. The Tax Matters Member shall (i)
furnish to each Member affected by an audit of the Company income tax returns a
copy of each notice or other communication received from the IRS or applicable
state authority, (ii) keep such Member informed of any administrative or
judicial proceeding, as required by Section 6223(g) of the Code, and (iii) allow
such Member an opportunity to participate in all such administrative and
judicial proceedings. The Tax Matters Member shall take such action as may be
reasonably necessary to constitute the other Member a "notice partner" within
the meaning of Section 6231(a)(8) of the Code; provided that the other Member
provides the Tax Matters Member with the information that is necessary to take
such action.
37
(b) The Company shall not be obligated to pay any fees or other
compensation to the Tax Matters Member in its capacity as such. However, the
Company shall reimburse the expenses (including reasonable attorneys' and other
professional fees) incurred by the Tax Matters Member in such capacity. Each
Member who elects to participate in Company administrative tax proceedings shall
be responsible for its own expenses incurred in connection with such
participation. In addition, the cost of any adjustments to a Member and the
cost of any resulting audits or adjustments of a Member's tax return shall be
borne solely by the affected Member.
(c) The Company shall indemnify and hold harmless the Tax Matters Member
from and against any loss, liability, damage, cost or expense (including
reasonable attorneys' fees) sustained or incurred as a result of any act or
decision concerning Company tax matters and within the scope of such Member's
responsibilities as Tax Matters Member, so long as such act or decision was not
the result of gross negligence, fraud, bad faith or willful misconduct by the
Tax Matters Member. The Tax Matters Member shall be entitled to rely on the
advice of legal counsel as to the nature and scope of its responsibilities and
authority as Tax Matters Member, and any act or omission of the Tax Matters
Member pursuant to such advice shall in no event subject the Tax Matters Member
to liability to the Company or any Member.
Section 11.4 TAX AUDITS/SPECIAL ASSESSMENTS. If a tax return of any of
the Company, an individual Member or a Parent Entity with respect to an item or
items of Company income, loss, deduction, etc., potentially affecting any tax
liability of the Members generally is subject to an audit by the Internal
Revenue Service (or other similar governmental agency), the Managers may, in the
exercise of their business judgment, determine that it is necessary to contest
proposed adjustments to such return or items.
Section 11.5 TAX ELECTIONS. The Company will elect to amortize
organizational costs. The Company may file an election under IRC Section 754,
in accordance with applicable Treasury Regulations, to cause the basis of the
Company's property to be adjusted for federal income tax purposes as provided by
IRC Section 734 and IRC Section 743. The determination whether to make and file
any such election shall be made by the Managers in their sole discretion.
Section 11.6 TAXES AND CHARGES; GOVERNMENTAL RULES. Each Member shall (a)
promptly pay all applicable taxes and other governmental charge imposed on or
against such Member, except to the extent (i) the failure to promptly pay such
taxes or other governmental charges will not have a material adverse effect on
the Company or its assets or (ii) any such taxes or other governmental charges
are being contested in good faith by appropriate proceedings, and (b) comply
with all applicable governmental rules, except to the extent that such
noncompliance will not have a material adverse effect on the Company.
38
ARTICLE XII
MISCELLANEOUS
Section 12.1 BINDING EFFECT. This Operating Agreement shall be binding
upon any Person who executes this Operating Agreement or any permitted
transferee or permitted assignee of an interest in the Company.
Section 12.2 ENTIRE AGREEMENT. This Operating Agreement and the
Additional Agreements, when executed and delivered, contain the entire agreement
of the parties hereto with respect to the subject matter hereof and supersede
all prior understandings and agreements of the parties with respect thereto.
Section 12.3 AMENDMENTS. This Operating Agreement may not be amended
except by the written agreement of all of the Members.
Section 12.4 GOVERNING LAW. This Operating Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
Section 12.5 NOTICES TO MEMBERS. Except as otherwise provided in this
Operating Agreement, any notice, demand or communication to a Member required or
permitted to be given by any provision of this Operating Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
personally, sent by facsimile transmission or electronic mail (with confirmation
of receipt), overnight express courier or registered or certified mail,
postage/charges-prepaid, return receipt requested, and addressed to the Member
as set forth on SCHEDULE A. All such notices, demands and other communications
will (i) if delivered personally to the address as provided in this Section, be
deemed given upon delivery, (ii) if delivered by facsimile or electronic mail
transmission to the facsimile number or electronic mail address, as the case may
be, as provided in this Section, be deemed given upon receipt, (iii) if
delivered by overnight or express courier to the address as provided in this
Section, be deemed given on the earlier of the second Business Day following the
date sent by such overnight or express courier or upon receipt and (iv) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given on the earlier of the sixth Business Day following
mailing or upon receipt, in each case regardless of whether such notice, demand
or other communication is received by any other Person to whom a copy of such
notice is to be delivered pursuant to this Section. Any party from time to time
may change its address or other information for the purpose of notices to that
party by giving notice in accordance with this Section 12.5 specifying such
change to the other party hereto at least ten (10) Business Days prior to the
effective date of such notice.
Section 12.6 BANK ACCOUNTS. The Company shall maintain appropriate
accounts at one or more financial institutions for all funds of the Company.
Such accounts shall be used solely for
39
the business of the Company. Withdrawal from such accounts shall be made only
upon the signature of those persons authorized by the Board of Representatives.
Section 12.7 HEADINGS. The titles of the Articles and the headings of the
Sections of this Operating Agreement are for convenience of reference only and
are not to be considered in construing the terms and provisions of this
Operating Agreement.
Section 12.8 WAIVERS. The failure of any party to seek redress for
violation of or to insist upon the strict performance of any covenant or
condition of this Operating Agreement shall not prevent a subsequent act, that
would have originally constituted a violation, from having the effect of an
original violation.
Section 12.9 NO THIRD PARTY BENEFICIARIES. None of the provisions of this
Operating Agreement shall be for the benefit of or enforceable by any Person
other than the parties to this Operating Agreement and their respective
permitted successors and permitted transferees and assigns and the Persons
entitled to the benefits of Article V of this Operating Agreement.
Section 12.10 INTERPRETATION. It is the intention of the Members that,
during the term of this Operating Agreement, the rights and obligations of the
Members and their successors-in-interest shall be governed by the terms of this
Operating Agreement, and that the right of any Member or successor-in-interest
to assign, transfer, sell or otherwise dispose of any interest in the Company
shall be subject to limitations and restrictions of this Operating Agreement.
This Operating Agreement shall be construed without regard to any presumption or
other rule requiring construction hereof against the party causing this
Operating Agreement to be drafted.
Section 12.11 FURTHER ASSURANCES. Each Member shall execute all such
certificates and other documents and shall do all such other acts as the
Managers deem reasonably appropriate to comply with the requirements of law for
the formation of the Company and to comply with any laws, rules, regulations and
third-party requests relating to the acquisition, operation or holding of the
property of the Company.
Section 12.12 ILLEGALITY AND SEVERABILITY. If application of any one or
more of the provisions of this Operating Agreement shall be unlawful under
applicable law and regulations, then the parties will attempt in good faith to
make such alternative arrangements as may be legally permissible and which carry
out as nearly as practicable the terms of this Operating Agreement. Should any
portion of this Operating Agreement be deemed unenforceable by a court of
competent jurisdiction, the remaining portion hereof shall remain unaffected and
be interpreted as if such unenforceable portions were initially deleted.
Section 12.13 INJUNCTIVE RELIEF. Each Member acknowledges that in the
event of any breach of this Operating Agreement, including without limitation,
of Article X, the non-breaching Member(s) shall suffer irreparable injury not
compensable by money damages and for which such non-breaching Member(s) shall
not have an adequate remedy available at law. The non-breaching Member(s) shall
be entitled to obtain, without the posting of any bond or other security, such
injunctive or other equitable relief as may be reasonably necessary to prevent
or curtail any such
40
breach, threatened or actual. The foregoing shall be in addition to and without
prejudice to such other rights as the non-breaching Member(s) may have under
this Operating Agreement or applicable law.
Section 12.14 AUTHORITY/NO CONFLICTS. Each Member represents and
warrants as follows:
(a) It, and to its best knowledge, each of its Control Entities, is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation or organization;
(b) It, and to its best knowledge, its Parent Entity, has full power
and authority and legal right to execute and deliver this Operating
Agreement and, when executed and delivered, any Additional Agreement, to
which such Entity may be a party;
(c) Its, and to its best knowledge, its Parent Entity's, execution,
delivery and performance of this Operating Agreement has been, and, when
executed and delivered, all Additional Agreements to which such Entity may
be a party will have been, duly authorized by all necessary action;
(d) This Operating Agreement and, when executed and delivered, each
Additional Agreement, to which it or its Parent Entity may be a party has
been duly executed and delivered by it or its Parent Entity, as the case
may be;
(e) This Operating Agreement and, when executed and delivered, each
Additional Agreement, to which it or its Parent Entity may be a party
constitutes its or its Parent Entity's, as the case may be, legal, valid
and binding obligation, enforceable in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights
of creditors generally and by the availability of the remedy of specific
performance; and
(f) None of the execution, delivery or performance by it, and to the
best of its knowledge, its Parent Entity, of this Operating Agreement and,
when executed and delivered, any Additional Agreement, to which such Entity
may be a party (i) will violate or conflict with the organizational
documents of such Entity, (ii) will result in any breach of or default
under any other Contract to which such Entity may be a party or (iii) is
prohibited or, except as expressly disclosed in this Operating Agreement or
any Additional Agreement to which such Entity may be a party, requires such
Entity to obtain any consent, approval or authorization or make any
registration or filing with any governmental authority or other Person.
Section 12.15 PUBLICITY. Without the prior written consent of the other
Members, no Member shall, and each will cause its Parent Entity and other
representatives not to, make any release to the press or other public
disclosure, or make any statement to any other Person other than their
respective representatives, with respect to either the fact that discussions or
41
negotiations are taking place concerning the collaboration between the Parties
or the existence or contents of this Agreement, except for such public
disclosure as may be necessary for the disclosing Person not to be in violation
of or in default under any applicable law, regulation, government order or
securities exchange rules, in which event the disclosing Person shall use its
commercially reasonable efforts to provide to the other Members in advance of
such disclosure a copy of such disclosure to be made so that the other Members
may comment upon such disclosure.
Section 12.16 EXPENSES. Each Member shall pay its own expenses incident
to the negotiation and preparation of this Operating Agreement and the
Additional Agreements and the consummation of the transactions provided for
herein and therein (including, without limitation, the fees of any accountant,
broker or financial advisor retained by such Member or its Parent Entity).
Section 12.17 COUNTERPARTS. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
Remainder of page intentionally left blank
42
IN WITNESS WHEREOF, the undersigned Members, intending to be legally
bound, have caused their authorized representatives to execute this Operating
Agreement as of the date first above written.
▇▇▇▇▇▇.▇▇ TECHNOLOGIES, INC.
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
Title: Director/Secretary
CZG MOBILE VENTURES, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Signature Page to Operating Agreement
SCHEDULE A
MEMBERS; AGREED VALUES OF COMPANY ASSETS; CAPITAL ACCOUNTS
MEMBERS
-------
MEMBER NAME MEMBERSHIP
AND NOTICE ADDRESS INTEREST
------------------ ----------
▇▇▇▇▇▇.▇▇ Technologies, Inc. 50%
c/o ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
CZG Mobile Ventures, Inc. 50%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
AGREED VALUES OF COMPANY ASSETS
Total: $27,000,000
Bravo: $13,500,000
Charlie Sub: $13,500,000 ($11,000,000 Contributed Assets;
$2,500,000 Cash Contribution)
CAPITAL ACCOUNTS OF THE MEMBERS
Bravo: $13,500,000
Charlie Sub: $13,500,000
SCHEDULE B
INITIAL REPRESENTATIVES;
CHAIRMAN OF THE BOARD
BRAVO REPRESENTATIVES:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇*
CHARLIE REPRESENTATIVES:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------
* Initial Chairman of the Board
SCHEDULE C
BUSINESS PLAN
See attached.
EXHIBIT A
CONTRIBUTION AGREEMENT
AMONG
COTELLIGENT USA, INC.,
CZG MOBILE VENTURES, INC.
AND
▇▇▇▇▇▇.▇▇ LLC
Execution Copy
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered into as of August 8, 2000
by and among Cotelligent USA, Inc., a California corporation ("Charlie USA"),
CZG Mobile Ventures, Inc., a Delaware corporation ("Charlie Sub"), and ▇▇▇▇▇▇.▇▇
LLC, a Delaware limited liability company (the "Company").
BACKGROUND
A. Charlie USA is a wholly-owned subsidiary of Cotelligent, Inc., a
Delaware corporation ("Charlie"), and Charlie Sub is a wholly-owned subsidiary
of Charlie USA. Charlie Sub is a Member of the Company pursuant to that certain
Operating Agreement dated as of April 27, 2000, as amended and restated as of
even date herewith (the "Operating Agreement").
B. On January 4, 1999 (the "Acquisition Date"), Charlie acquired Fastech,
Inc., an application service provider business located in Broomall,
Pennsylvania, the operations of which it subsequently transferred to Charlie
USA. Such business sold, on the Acquisition Date, and it currently sells,
customer relationship management (CRM) software and services to customers in the
United States, Canada and Europe. With respect to such CRM software, the
business sold, on the Acquisition Date, and it currently sells, a proprietary
software product, FastTrack, to which it owns all development and distribution
rights, and resold, on the Acquisition Date, and currently resells, software
from Cognos, Inc. and ▇▇▇ Concepts, Inc. with which it has reseller agreements.
With respect to services, the business provided, on the Acquisition Date, and it
currently provides, the following services to its customers: customization, ASP
host processing, help desk and equipment depot support. Such business, (i) as
described in this Section B, (ii) as conducted on the Acquisition Date, and as
such activities have been continued and are currently conducted for customers of
Fastech, Inc. as of the Acquisition Date (but not including any activities not
engaged in by Fastech, Inc. as of the Acquisition Date and not including any
customers acquired since the Acquisition Date) and (iii) to the extent supported
from facilities in Broomall, Pennsylvania, is hereinafter referred to as the
"ASP Business".
C. On the terms and conditions set forth in this Contribution Agreement,
Charlie Sub desires to contribute to the Company certain cash and Charlie USA
desires to contribute to the Company, on behalf and for the benefit of Charlie
Sub, the Contributed Assets (as defined below) in connection with the ASP
Business, all in consideration of the grant to Charlie Sub of a Membership
Interest in the Company, as further detailed in the Operating Agreement.
D. It is the intention of the parties hereto to develop the business
of the Company in each party's respective competencies to ensure the Company's
commercial success.
E. All capitalized terms used and not otherwise defined in this
Contribution Agreement shall have the meanings ascribed to them in the Operating
Agreement.
ARTICLE I
CAPITAL CONTRIBUTIONS
Section 1.1 CASH CONTRIBUTION. Upon the terms and subject to the
conditions set forth in this Contribution Agreement, Charlie Sub will deliver to
the Company as a capital contribution cash in the amount of two million five
hundred thousand dollars ($2,500,000) (the "Cash Contribution"), payable in
accordance with Section 2.2.
Section 1.2 ASSET CONTRIBUTION. Upon the terms and subject to the
conditions set forth in this Contribution Agreement, at the Closing the Company
shall acquire from Charlie USA and Charlie USA shall transfer, convey, assign
and deliver to the Company, as a capital contribution to the Company on behalf
of and for the benefit of Charlie Sub, valid and marketable title and interest
in and to the following assets, rights and properties held by Charlie USA and
used principally in or principally related to the ASP Business (collectively,
the "Contributed Assets") which have an Agreed Value as defined and set forth in
the Operating Agreement:
(a) All patents, patent applications, patent rights, trademarks,
trademark applications, trade names, service marks, service ▇▇▇▇ applications,
copyright, copyright applications, franchises, licenses, inventories, know-how,
trade secrets, customer lists, proprietary processes and formulae, source and
object code, algorithms, architectures, structures, display screens, layouts,
inventions, development tools and all documentation and media constituting,
describing or relating to the above (including, without limitation, manuals,
memoranda and records in any format, whether hard copy or machine-readable
copy), and all associated goodwill (the "Intellectual Property"), including,
without limitation, the Intellectual Property listed on ANNEX A;
(b) All software (the "Software"), including, without limitation,
the Software listed on ANNEX B;
(c) All equipment, machinery, supplies and other personal property
(the "Equipment"), including, without limitation, the Equipment listed on ANNEX
C;
(d) All contracts, leases and other agreements (the "Assigned
Contracts"), including, without limitation, the contracts with customers, real
property leases and other Assigned Contracts listed on ANNEX D;
(e) Those employees of Charlie USA listed on ANNEX E (the "Transferred
Employees");
(f) All work in process and deliverables to be furnished under any
Assigned Contract (the "WIP"); and
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(g) To the extent transferable by Law (as defined below), all
consents, registrations, approvals, permits, licenses, orders and authorizations
issued to Charlie USA by any Authority (as defined below) of the United States,
any state thereof or any foreign jurisdiction relating to the assets described
in subsections (a) through (d) and (f) above.
Section 1.3 EXCLUDED ASSETS. The Contributed Assets shall not include,
and Charlie USA shall not convey and the Company shall not acquire, any right,
title or interest of Charlie USA in or to any assets, rights or properties set
forth on ANNEX F (collectively, the "Excluded Assets").
Section 1.4 ASSUMED LIABILITIES. Upon the transfer of the Contributed
Assets to the Company, the Company shall assume and agree to pay or discharge
when due the obligations set forth on ANNEX G in connection with the Contributed
Assets to the extent such obligations arise on or after the Closing Date with
respect to events occurring on or after the date hereof (the "Assumed
Liabilities").
Section 1.5 EXCLUDED LIABILITIES. Notwithstanding anything contained
herein to the contrary, the Company shall not assume or be deemed to have
assumed, and shall not be liable for, any obligations or liabilities of Charlie
USA except those assumed pursuant to Section 1.4.
Section 1.6 VALUATION OF CONTRIBUTED ASSETS. The value of the Contributed
Assets shall be as set forth in the Operating Agreement.
Section 1.7 CONSTRUCTION OF TRANSFER. Any contribution to the Company
made pursuant to this Article I by Charlie USA is on behalf and for the benefit
of Charlie Sub, and shall for all purposes (including, without limitation, for
purposes of determining taxes and Capital Accounts in the Company) be construed
as a transfer from Charlie USA to Charlie Sub and from Charlie Sub to the
Company.
Section 1.8 NONASSIGNABLE AGREEMENTS.
(a) No Assignment. To the extent that any Assigned Contracts are not
assignable or transferrable without the consent or waiver of the other party or
parties thereto or any third party, this Contribution Agreement shall not
constitute an assignment or transfer, or an attempted assignment or transfer
thereof, until such consent or waiver has been obtained.
(b) Understandings of Charlie USA. Charlie USA shall use all
commercially reasonable efforts, and the Company shall reasonably cooperate
therewith, to obtain the consents and waivers referred to in Section 1.8(a). If
prior to Closing the parties shall have not received a consent or waiver
necessary for the transfer to the Company of any Assigned Contract, the failure
to obtain such consent or waiver shall not prevent the Closing. In such case,
the Closing of the transactions contemplated by this Contribution Agreement
shall not constitute a transfer or any attempted transfer thereof. Rather,
following the Closing, the parties shall use all commercially reasonable
efforts, and cooperate with each other, to obtain promptly such consent or
waiver,
3
provided that neither Charlie USA nor the Company shall be required to pay any
material consideration therefor or incur any material liability or obligation in
connection therewith. To the extent that any such Assigned Contract cannot be
transferred because a consent or waiver was not obtained, until such consent or
waiver is obtained, the Company and Charlie USA shall cooperate with each other
in any reasonable and lawful arrangements (including subleasing or
subcontracting if permitted) to provide to the Company the full economic (taking
into account Tax costs and benefits) and operational benefits and liabilities of
use of any such Assigned Contract (such arrangement being hereinafter referred
to as an "Alternative Arrangement"). Once such consent or waiver relating to the
transfer of an Assigned Contract not transferred at the Closing is obtained,
Charlie USA shall promptly transfer or cause to be transferred, such Assigned
Contract to the Company for no additional consideration. If a consent or waiver
relating to the transfer of an Assigned Contract is not obtained, and if Charlie
USA and the Company are unable to otherwise enter into an Alternative
Arrangement with respect thereto, the Capital Account of Charlie Sub shall be
adjusted to reflect the elimination of such Assigned Contract.
(c) Performance by the Company. To the extent that the Company is
provided the benefits pursuant to this Section 1.8 of any such Assigned
Contract, the Company shall perform for the benefit of the other party or
parties thereto, the obligations of Charlie USA thereunder or in connection
therewith, but only to the extent that (i) such performance would result in any
default thereunder or in connection therewith and (ii) such obligations would
have been Assumed Liabilities (as defined in Section 1.4) but for the
nonassignability or non-transferability thereof.
ARTICLE II
THE CLOSING
Section 2.1 CLOSING. The transfer and acquisition referred to in Article
I hereof (the "Closing") shall take place as of the date hereof (the "Closing
Date").
Section 2.2 PAYMENTS. At the Closing, Charlie Sub shall deliver to the
Company the Cash Contribution in the form of a cashier's or certified check, or,
at the Company's written request not less than two (2) Business Days prior to
the Closing, via wire transfer to an account designated by the Company in such
request.
Section 2.3 TRANSFER OF CONTRIBUTED ASSETS. The sale, conveyance,
transfer, assignment and delivery of the Contributed Assets shall be effected by
delivery at the Closing:
(a) By Charlie USA to the Company of such bills of sale, endorsements,
assurances, conveyances, releases, discharges, assignments, certificates or
other instruments of transfer and conveyance, duly executed by Charlie USA, as
the Company shall reasonably deem necessary to vest in the Company valid and
marketable title to the Contributed Assets free and clear of any Encumbrance (as
defined below) except Permitted Encumbrances (as defined below), and such other
documents as the Company may reasonably request to demonstrate satisfaction of
4
the terms and conditions of, and compliance with, this Contribution Agreement by
Charlie USA; and
(b) By the Company to Charlie USA of such assumption agreements or
other instruments as Charlie USA shall reasonably deem necessary to provide for
the assumption of the Assumed Liabilities by the Company, and such other
documents as Charlie USA may reasonably request to demonstrate satisfaction of
the terms and conditions of, and compliance with, this Contribution Agreement by
the Company.
Simultaneously with the Closing, Charlie USA shall take all steps necessary to
put the Company in actual possession and operating control of the Contributed
Assets.
ARTICLE III
ADDITIONAL AGREEMENTS
Section 3.1 SATISFACTION OF LIENS. Charlie USA covenants and agrees
that as of the Closing Date, no services, material or work will have been
supplied to or for any Contributed Asset for which payment has not been made in
full, other than customary services, material and work incident to the operation
of the ASP Business. If, subsequent to the Closing Date, any Encumbrance or
order for the payment of money shall be filed against the Contributed Assets or
any portion thereof or against the Company (or any such Encumbrance or order for
the payment of money shall otherwise exist) based upon any act or omission, or
alleged act or omission, before or after the Closing Date, of Charlie USA, its
agents, representatives or employees acting on its behalf, or (if based upon any
act or omission, or alleged act or omission, before the Closing Date) of any
contractor, subcontractor or other authorized agent (whether or not such
Encumbrance or order shall be valid or enforceable as such), within ten (10)
Business Days after notice to Charlie USA of the filing or other existence
thereof, Charlie USA shall take such action, by bonding, deposit, payment or
otherwise, as will be necessary to remove or satisfy in full such Encumbrance
against such Contributed Asset.
Section 3.2 TRANSFER TAXES. All stamp, transfer, documentary, sales,
use, registration and other use, registration, and other such taxes and fees
(including any penalties and interest) incurred, if any, in connection with this
Contribution Agreement and the transactions contemplated hereby (collectively,
the "Transfer Taxes") shall be timely paid by the Company.
Section 3.3 BOOKS AND RECORDS. (a) On the Closing Date, the Company
shall acquire and take possession of copies or originals of the books and
records relating directly and solely to the ASP Business and the Contributed
Assets (the "Books and Records"); provided that if any part of such Books and
Records cannot be separated from books, records, files and other data that do
not constitute Books and Records or relate to services or support to be provided
by Charlie USA or Charlie Sub under the Operating Agreement or any other
Additional Agreement, Charlie USA shall retain such part of the Books and
Records and make such part available to the Company as provided herein.
5
(b) Charlie USA, Charlie Sub and the Company each agrees that it
shall preserve and keep the Books and Records or the parts thereof in its
possession, as the case may be, in accordance with its records retention
policies or for any longer period as may be required by statute, ordinance,
rule, regulation, order or policy ("Law") of any governmental or regulatory
body, agency or authority ("Authority"). During such period and subject to
appropriate confidentiality undertakings, each party shall permit any of the
other parties or their respective counsel, accountants, officers, employees or
other representatives access to such Books and Records upon such other party's
reasonable request and during normal business hours for the purpose of examining
such Books and Records to the extent reasonably required by such party in
connection with (i) any insurance claims by, legal proceedings against or
governmental investigations of such party, (ii) the preparation of any tax
return required to be filed by such party, the defense of any audit,
examination, administrative appeal or litigation of any tax return in which the
results of operation of the ASP Business were included or (iii) any other
reasonable business purpose related to the Contributed Assets or the business of
the Company.
Section 3.4 ESTABLISHMENT OF CAPITAL ACCOUNT. On the Closing Date, in
consideration of the payment of the Cash Contribution and the transfer of the
Contributed Assets to the Company, the Capital Account of Charlie Sub shall be
as set forth in Schedule A of the Operating Agreement.
Section 3.5 FURTHER ASSURANCES. At any time or from time to time after
the Closing, each of Charlie USA, Charlie Sub and the Company shall, at the
reasonable request of any of the others, execute and deliver any further
instruments or documents and take any and all such further action as the
requesting party may reasonably request in order to consummate and make
effective the transactions contemplated by this Contribution Agreement and to
put the Company in operating control of the Contributed Assets.
Section 3.6 EMPLOYEE BENEFITS.
(a) As of the Closing Date and continuing through the first anniversary
thereof, the Company shall establish and maintain employee and fringe benefit
plans and arrangements (including, without limitation, "employee benefit plans"
within the meaning of Section 3(3) of ERISA) (the "Company Plans") covering all
the Transferred Employees. The Company Plans shall (i) provide benefits at
levels that are substantially comparable in the aggregate to those provided
under the employee benefit plans and arrangements covering such Transferred
Employees immediately prior to the Closing Date, (ii) with respect to the
Company Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA) (the "Company Welfare Plans"), not include a waiting or eligibility
period or preexisting condition limitation or restriction with respect to
Transferred Employees and their beneficiaries, and (iii) to the extent
Transferred Employees have satisfied any internal limits, deductibles or co-
payment requirements under any welfare benefit plans (as defined in Section 3(1)
of ERISA) sponsored or maintained by Charlie USA for the year that includes the
Closing Date, credit such amounts toward the satisfaction of any such
requirements under the Company Welfare Plans; provided that, notwithstanding the
6
foregoing, changes may be made to the Company Plans to the extent necessary to
comply with applicable law
(b) The Company and the Company Welfare Plans will be responsible for
(i) administering and paying claims incurred after the Closing Date by
Transferred Employees whether such claims relate to conditions or occurrences
arising prior to, on or after the Closing Date and (ii) workers' compensation
benefits that are payable on or after the Closing Date to Transferred Employees
for injury, accident or illness occurring after the Closing Date and shall pay
such benefits or promptly reimburse Charlie USA for any such benefits paid by
Charlie USA.
(c) Employment of Transferred Employees with Charlie USA shall be counted
for purposes of any Company Plan that is a pension benefit plan (as defined in
Section 3(2) of ERISA) and which is maintained by the Company for the benefit of
Transferred Employees after the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CHARLIE USA
Charlie USA hereby represents, warrants and agrees as follows:
Section 4.1 EXISTENCE AND GOOD STANDING. Charlie USA is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. Charlie USA has the power to own its property and to carry
on its business as presently being conducted. Charlie USA is duly qualified to
do business and is in good standing in the states set forth on SCHEDULE 4.1,
which are the only jurisdictions where the failure to be so qualified would have
a Material Adverse Effect. For the purposes of this Contribution Agreement,
"Material Adverse Effect" means any material adverse effect on the business,
properties, assets, operations, results of operations, liabilities, financial
condition or prospects of Charlie USA, Charlie Sub, the ASP Business or the
Company, as the case may be, and their subsidiaries, taken as a whole, or on the
transactions contemplated hereby.
Section 4.2 CORPORATE AUTHORITY. Charlie USA has all requisite
corporate power and authority to execute and deliver this Contribution
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Contribution Agreement has been duly and
validly executed and delivered by Charlie USA and constitutes the legal, valid
and binding obligation of Charlie USA, enforceable against Charlie USA in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by the availability of the
remedy of specific performance.
Section 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
on SCHEDULE 4.3, the execution and delivery by Charlie USA of this Contribution
Agreement, Charlie USA's performance of its obligations hereunder and the
consummation by Charlie USA of the
7
transactions contemplated hereby do not and will not, with or without the giving
of notice or the lapse of time or both (i) violate, conflict with or result in a
breach of or default by Charlie or Charlie USA under any provision of their
respective corporate organizational documents or of any agreement to which
Charlie or Charlie USA, as the case may be, is a party or by which it or any of
the Contributed Assets is bound, (ii) require Charlie or Charlie USA to obtain
any consent, approval or action of, make any filing with, or give any notice to,
any Person, (iii) to its knowledge, contravene any Law, judgment, decree or
order applicable to Charlie or Charlie USA or any of the Contributed Assets or
(iv) violate, conflict with, result in a breach of or default by Charlie or
Charlie USA (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the Contributed Assets under any provision of any note, bond, mortgage,
indenture, license or other similar instrument or obligation to which Charlie or
Charlie USA, as the case may be, is a party or by which it or any of the
Contributed Assets is bound; except, in the case of the foregoing clauses (i)
through (iv), where there would not exist a Material Adverse Effect.
Section 4.4 RESTRICTIVE DOCUMENTS. Charlie USA is not subject to, or a
party to, any charter, by-law, mortgage, lien, lease, license, permit,
agreement, contract, instrument, Law, judgment or decree, or any other
restriction of any kind or character, which materially and adversely affects any
of the Contributed Assets, or which conflicts with or would prevent (i)
consummation of the transactions contemplated by this Contribution Agreement,
(ii) compliance by Charlie USA with the terms, conditions and provisions hereof
or (iii) the continued operation of the ASP Business by the Company after the
date hereof on substantially the same basis as heretofore operated.
Section 4.5 TITLE TO PROPERTIES; ENCUMBRANCES; CONDITION. The
Contributed Assets are free of any Encumbrance of any kind except for
Encumbrances for current taxes, assessments or governmental charges or levies on
property not yet due and delinquent, or statutory Encumbrances of landlords,
carriers, mechanics and similar Encumbrances arising by operation of law in the
ordinary course of business for sums not yet delinquent (such liens
collectively, the "Permitted Encumbrances"), and upon the consummation of the
Closing the Company will acquire valid and marketable title to the Contributed
Assets free of Encumbrances other than Permitted Encumbrances. The Equipment is
in a state of good working condition and repair. For purposes of this
Contribution Agreement, "Encumbrances" shall mean liens, security interests,
options, rights of first refusal, easements, mortgages, charges, debentures,
indentures, deeds of trust, rights-of-way, restrictions, agreements,
encroachments, licenses, leases, permits, security agreements or any other
encumbrances and other restrictions or limitations on use of real or personal
property or irregularities in title thereto.
Section 4.6 ASSIGNED CONTRACTS. Each of the Assigned Contracts is in
full force and effect and is a valid and enforceable agreement, and there exists
no default thereunder by Charlie USA or event of default or event, occurrence,
condition or act (including without limitation the conveyance of the Contributed
Assets hereunder) by or with respect to Charlie USA which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would
8
become a default or event of default thereunder. To the knowledge of Charlie
USA, all of the covenants to be performed by any other party thereto have been
fully performed.
Section 4.7 PERMITS. Charlie USA holds all material governmental and
other third party permits (including occupancy permits), licenses, consents and
authorizations ("Permits") required in connection with the use, operation or
ownership of the Contributed Assets and the conduct of the ASP Business as
currently conducted. Each of such Permits are transferable with the Contributed
Assets to the Company. Any applications for the renewal of any such Permit due
prior to the Closing Date have been timely filed prior to the Closing Date. No
proceeding to modify, suspend, revoke, withdraw, terminate or otherwise limit
any such Permit is pending or, to the knowledge of Charlie USA, threatened. No
administrative or governmental action has been taken or, to the knowledge of
Charlie USA, threatened in connection with the expiration, continuance or
renewal of any such Permit. For purposes of this Section, "material Permit"
shall mean any permit the absence of which (including any costs and expenses
with respect to obtaining such permit) would have a Material Adverse Effect.
Costs and expenses which do not exceed $50,000 in the aggregate shall be deemed
not to have a Material Adverse Effect for purposes of this Section 4.7.
Section 4.8 LITIGATION. There is no action, suit, proceeding at law or
in equity, arbitration or administrative or other proceeding by or before (or,
to the knowledge of Charlie USA, any investigation by) any Authority pending or,
to the knowledge of Charlie USA, threatened, affecting the Contributed Assets or
affecting the ability of Charlie USA to carry out its obligations under this
Contribution Agreement or affecting the continued operation of the ASP Business
after the date hereof on substantially the same basis as heretofore operated.
Section 4.9 TAXES; ASSESSMENTS. All tax returns required to be filed by
Charlie USA with respect to the Contributed Assets have been duly and timely
filed. All federal, local and foreign taxes relating to the Contributed Assets
(other than taxes not yet due and payable), whether due on the tax returns
specified in the previous sentence or otherwise due from Charlie USA, have been
duly paid by Charlie USA and there are no liens for taxes payable by Charlie USA
on, or other disputes relating to taxes payable in respect of, any of the
Contributed Assets. To the knowledge of Charlie USA, there are no supplemental
taxes affecting the Contributed Assets, other than those that may arise from the
consummation of the transactions set forth in this Contribution Agreement. To
the knowledge of Charlie USA, the acquisition of the Contributed Assets pursuant
to this Contribution Agreement shall not result in a reassessment of the
Contributed Assets for the purposes of personal property taxes.
Section 4.10 COMPLIANCE WITH LAWS. Charlie USA is in compliance with
all Laws, judgments, licenses, Permits, certificates, approvals and decrees
applicable to the Contributed Assets, in each case the failure to comply with
which would have a Material Adverse Effect. Charlie USA is not in violation of
its Certificate of Incorporation or By-laws in any respect or in default in the
performance of any obligation, agreement or condition contained in any
debenture, note, other evidence of indebtedness, indenture, lease, loan or other
agreement or instrument in any respect that would have a Material Adverse
Effect.
9
Section 4.11 EMPLOYMENT RELATIONS. With respect to the Transferred
Employees, (i) to its knowledge, Charlie USA has satisfactory relationships with
such employees, (ii) Charlie USA is in all material respects in compliance with
all applicable Laws, agreements and contracts relating to employment practices,
terms and conditions of employment, including, without limitation, all such
Laws, agreements and contracts relating to wages, hours, collective bargaining,
employment discrimination, immigration, disability, civil rights, fair labor
standards, occupational safety and health, workers' compensation, pay equity and
wrongful discharge, and has timely prepared and filed all appropriate forms
required by any Authority (including, without limitation, Immigration and
Naturalization Service Form I-9), (iii) no collective bargaining agreement is
currently in effect or being negotiated, Charlie USA has no obligation to
negotiate any other collective bargaining agreement and, to its knowledge, there
is no indication that any Transferred Employees desire to be covered by a
collective bargaining agreement, (iv) no strike, slowdown or work stoppage
pending or, to the knowledge of Charlie USA, threatened against Charlie USA, nor
has any such strike, slowdown or work stoppage occurred since the Acquisition
Date, (v) there is no representation claim or petition pending before the United
States National Labor Relations Board or any similar foreign, state or local
labor agency of which Charlie USA has been notified and, to the knowledge of
Charlie USA, no question concerning representation has been raised or
threatened, (vi) no notice has been received by Charlie USA of any complaint
filed against Charlie USA claiming that Charlie USA has violated any applicable
employment standards, human rights or other labor legislation or of the intent
of any federal, state, local or foreign agency responsible for the enforcement
of labor or employment Laws to conduct an investigation of Charlie USA or any of
the Transferred Employees, and, to the knowledge of Charlie USA, no such
investigation is in progress and (vii) all agreements between Charlie USA and
any Transferred Employee (other than ▇▇▇▇ ▇▇▇▇▇) constitute Assigned Contracts
and are set forth on ANNEX D.
Section 4.12 INTELLECTUAL PROPERTIES. Except as set forth in SCHEDULE
4.12, Charlie USA owns exclusively all right, title and interest in and to, or
has a valid license to use, the Software and Intellectual Property. No claim
adverse to the interest of Charlie USA in the Software or the Intellectual
Property has been asserted or, to the knowledge of Charlie USA, threatened nor
is there any basis for any such claim and no Person has infringed or otherwise
violated Charlie USA's right in any of the Software or the Intellectual
Property. No litigation is pending against or involving Charlie USA wherein
Charlie USA is accused of infringing or otherwise violating the intellectual
property right of another or of breaching a contract conveying rights to the
Software or under any Intellectual Property. No such claim has been asserted
or, to the knowledge of Charlie USA, threatened against Charlie USA nor to the
knowledge of Charlie USA are there any facts that would give rise to such a
claim.
Section 4.13 SERVICE CONTRACTS. Except for the Assigned Contracts and
as set forth on ANNEX F, there are no service or maintenance contracts or
management agreements (written or oral) to which Charlie USA is a party that
directly affect the ASP Business or the Contributed Assets.
10
Section 4.14 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
4.14, no agent, broker, person or firm acting on behalf of Charlie USA is, or
will be, entitled to any commission or broker's or finder's fees from any party
hereto, or from any Affiliate (as defined in the Operating Agreement) of any
party hereto, in connection with any of the transactions contemplated by this
Contribution Agreement.
Section 4.15 NO MATERIAL ADVERSE CHANGE. Since the Acquisition Date,
Charlie USA has conducted the ASP Business only in the ordinary course and in a
manner consistent with prior business practices. Set forth as SCHEDULE 4.15 is
a balance sheet relating to the ASP Business since the Acquisition Date.
Section 4.16 LIABILITIES. Except as set forth in SCHEDULE 4.16, Charlie
USA does not have any outstanding claim, liability, indebtedness or obligation
in respect of the ASP Business or the Contributed Assets in excess of $50,000 in
any individual case or $250,000 in the aggregate, contingent or otherwise.
Section 4.17 SUPPLIERS AND CUSTOMERS. SCHEDULE 4.17 sets forth the
suppliers and the customers of Charlie USA in respect of the ASP Business, other
than those customers who are parties to the contracts set forth on ANNEX F.
Except as otherwise set forth on SCHEDULE 4.17, to Charlie USA's knowledge, the
relationship of Charlie USA with each of such suppliers and customers as of the
Closing Date are good commercial working relationships and no supplier or
customer of material importance to Charlie USA in respect of the ASP Business
has, since the Acquisition Date, cancelled or otherwise terminated, or
threatened in writing to cancel or otherwise terminate, its relationship with
Charlie USA. As of the Closing Date, Charlie USA does not have any knowledge
that any such supplier or customer intends to cancel or otherwise substantially
modify its relationship with Charlie USA or limit its services, supplies or
materials to Charlie USA or its use or purchase of the services and products of
Charlie USA either as a result of the transactions contemplated hereby or
otherwise.
Section 4.18 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. Neither Charlie,
Charlie USA nor any director or officer of Charlie or Charlie USA possesses,
directly or indirectly, any financial interest in, or is a director, officer or
employee of, any corporation, firm, association or business organization which
is a supplier, customer, lessor, lessee, or competitor of Charlie or Charlie USA
in respect of the ASP Business. Ownership of securities of a company whose
securities are registered under the Securities Act of 1933, as amended, not in
excess of five percent (5%) of any class of such securities shall not be deemed
to be a financial interest for purposes of this Section.
Section 4.19 REAL PROPERTY. Charlie USA owns no real property in
connection with the ASP Business and has no real property lease or sublease
other than those leases constituting Assigned Contracts and set forth on ANNEX
D. To its knowledge, Charlie USA is in compliance with all applicable
environmental and safety Laws in all material respects (including, without
limitation, all material permits and licenses required thereunder). Charlie USA
has received no written notice of any violation of or any liability arising
from, or of any facts or circumstances
11
with respect to the past or current operations of Charlie USA that would give
rise to, any investigatory, corrective or remedial obligation under any
environmental or safety Law. The consummation of the transactions contemplated
by this Contribution Agreement will not result in any obligations for site
investigation or cleanup, or notification to or consent of any Authority or
third Persons pursuant to any "transaction-triggered" or "responsible party
transfer" environmental or safety Law.
Section 4.20 SOLVENCY. Each of Charlie USA and ASP Business is Solvent as
of the Closing Date and will be Solvent immediately after the consummation of
the transactions contemplated by this Contribution Agreement. For the purposes
of this Contribution Agreement, "Solvent" means, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present saleable
value of the assets of such Person is not less than the amount that will be
required to pay the probably liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
Section 4.21 ASSETS COMPLETE. The Contributed Assets represent all assets
that are necessary to conduct the ASP Business as presently conducted.
Section 4.22 RIGHTS AGREEMENT. The transactions contemplated by this
Contribution Agreement do not constitute a "Triggering Event" under that certain
Rights Agreement, dated as of September 24, 1997, by and between Charlie and
BankBoston, N.A.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CHARLIE SUB
Charlie Sub hereby represents, warrants and agrees as follows:
Section 5.1 EXISTENCE AND GOOD STANDING. Charlie Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Charlie Sub is newly formed for purposes of consummating
the transactions contemplated in the Operating Agreement, this Contribution
Agreement and the other Additional Agreements and has no liabilities or
obligations other than in connection with such transactions.
Section 5.2 CORPORATE AUTHORITY. Charlie Sub has all requisite corporate
power and authority to execute and deliver this Contribution Agreement, to
perform its obligations hereunder
12
and to consummate the transactions contemplated hereby. Such execution,
delivery, performance and consummation by Charlie Sub have been duly and validly
authorized and approved by all required corporate action of Charlie Sub. This
Contribution Agreement has been duly and validly executed and delivered by
Charlie Sub and constitutes the legal, valid and binding obligation of Charlie
Sub, enforceable against Charlie Sub in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and by the availability of the remedy of specific performance.
Section 5.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery by Charlie Sub of this Contribution Agreement, Charlie Sub's
performance of its obligations hereunder and the consummation by Charlie Sub of
the transactions contemplated hereby do not and will not, with or without the
giving of notice or the lapse of time or both (i) violate, conflict with or
result in a breach of or default by Charlie or Charlie Sub under any provision
of their respective corporate organizational documents or of any agreement to
which Charlie or Charlie Sub, as the case may be, is a party or by which either
of them or any of their respective properties or assets are bound, (ii) require
Charlie or Charlie Sub to obtain any consent, approval or action of, make any
filing with, or give any notice to, any Person, (iii) to its knowledge,
contravene any Law, judgment, decree or order applicable to Charlie or Charlie
Sub or any of their respective properties or assets or (iv) violate, conflict
with, result in a breach of or default by Charlie or Charlie Sub (or give rise
to any right of termination, cancellation, payment or acceleration) under, or
result in the creation of any Encumbrance upon any of their respective
properties or assets under any provision of any note, bond, mortgage, indenture,
license or other similar instrument or obligation to which Charlie or Charlie
Sub, as the case may be, is a party or by which either of them or any of their
respective properties or assets are bound; except, in the case of the foregoing
clauses (i) through (iv), where there would not exist a Material Adverse Effect.
Section 5.4 RESTRICTIVE DOCUMENTS. Charlie Sub is not subject to, or a
party to, any charter, by-law, mortgage, lien, lease, license, permit,
agreement, contract, instrument, Law, judgment or decree, or any other
restriction of any kind or character, which would prevent (i) consummation of
the transactions contemplated by this Contribution Agreement or (ii) compliance
by Charlie Sub with the terms, conditions and provisions hereof.
Section 5.5 LITIGATION. There is no action, suit, proceeding at law or
in equity, arbitration or administrative or other proceeding by or before (or,
to the knowledge of Charlie Sub, any investigation by) any Authority pending or,
to the knowledge of Charlie Sub, threatened, affecting the Cash Contribution or
affecting the ability of Charlie Sub to carry out its obligations under this
Contribution Agreement or affecting the continued operation of the ASP Business
after the date hereof on substantially the same basis as heretofore operated.
Section 5.6 SOLVENCY. Charlie Sub is Solvent as of the Closing Date and
will be Solvent immediately after the consummation of the transactions
contemplated by this Contribution Agreement.
13
Section 5.7 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
4.14, no agent, broker, person or firm acting on behalf of Charlie Sub is, or
will be, entitled to any commission or broker's or finder's fees from any party
hereto, or from any Person controlling, controlled by or under common control
with any party hereto, in connection with any of the transactions contemplated
by this Contribution Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and agrees as follows:
Section 6.1 EXISTENCE AND GOOD STANDING. The Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. The Company is newly formed for purposes of
consummating the transactions contemplated in the Operating Agreement, this
Contribution Agreement and the other Additional Agreements and has no
liabilities or obligations other than in connection with such transactions.
Section 6.2 CORPORATE AUTHORITY. The Company has all requisite power
and authority to execute and deliver this Contribution Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Such execution, delivery, performance and consummation by the Company have been
duly and validly authorized and approved by all required action of the Company.
This Contribution Agreement has been duly and validly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and by the availability of the remedy of specific performance.
Section 6.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery by the Company of this Contribution Agreement, the Company's
performance of its obligations hereunder and the consummation by the Company of
the transactions contemplated hereby do not and will not, with or without the
giving of notice or the lapse of time or both (i) violate, conflict with or
result in a breach of or default by the Company under any provision of its
organizational documents or of any agreement to which the Company is a party or
by which it or any of its assets is bound, (ii) require the Company to obtain
any consent, approval or action of, make any filing with, or give any notice to,
any Person, (iii) to its knowledge, contravene any Law, judgment, decree or
order applicable to the Company or any of its assets or (iv) violate, conflict
with, result in a breach of or default by the Company (or give rise to any right
of termination, cancellation, payment or acceleration) under, or result in the
creation of any Encumbrance upon any of its assets under any provision of any
note, bond, mortgage, indenture, license or other similar instrument or
obligation to which the Company is a party or by which it or any of its assets
is bound; except, in the case of the foregoing clauses (i) through (iv), where
there would not exist a Material Adverse Effect.
14
Section 6.4 RESTRICTIVE DOCUMENTS. The Company is not subject to, or a
party to, any charter, by-law, mortgage, lien, lease, license, permit,
agreement, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character, which
would prevent (i) consummation of the transactions contemplated by this
Contribution Agreement or (ii) compliance by the Company with the terms,
conditions and provisions hereof.
Section 6.5 LITIGATION. There is no action, suit, proceeding at law or
in equity, arbitration or administrative or other proceeding by or before (or,
to the knowledge of the Company, any investigation by) any Authority pending or,
to the knowledge of the Company, threatened, affecting the Contributed Assets or
the Cash Contribution or affecting the ability of the Company to carry out its
obligations under this Contribution Agreement or affecting the continued
operation of the ASP Business after the date hereof on substantially the same
basis as heretofore operated.
Section 6.6 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
6.6, no agent, broker, person or firm acting on behalf of the Company is, or
will be, entitled to any commission or broker's or finder's fees from any party
hereto, or from any Person controlling, controlled by or under common control
with any party hereto, in connection with any of the transactions contemplated
by this Contribution Agreement.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY
Section 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of Charlie USA, Charlie Sub and the Company
contained in this Contribution Agreement or in any Annex or Schedule attached
hereto shall survive the transfer of the Contributed Assets contemplated hereby
for a period of eighteen (18) months. Each of the parties hereto shall be
entitled to rely on all such representations and warranties regardless of any
investigation by or on its behalf and regardless of whether it knew or should
have known that such representation or warranty was not true, correct or
complete.
Section 7.2 INDEMNIFICATION.
(a) Charlie USA agrees to indemnify and hold the Company and its members,
officers, directors, agents and their respective Affiliates harmless from any
and all damages, losses, liabilities, costs and expenses (including, without
limitation, reasonable counsel fees and expenses) (collectively, "Losses")
suffered or paid, directly or indirectly, as a result of or arising out of (i)
any breach of any representation, warranty, covenant or agreement by Charlie USA
contained herein or in any agreement or instrument in accordance with the terms
hereof, (ii) any obligation, liability, taxes, claim, judgment, award, suit,
proceeding or other action resulting from Charlie USA's ownership or operation
of the Contributed Assets or the ASP Business prior to the Closing, including,
without limitation, any of the foregoing relating to liabilities underlying
15
Permitted Encumbrances or (iii) any obligation, liability, taxes, claim,
judgment, award, suit, proceeding or other action relating to the Excluded
Assets or Excluded Liabilities.
(b) Charlie Sub agrees to indemnify and hold the Company and its members,
officers, directors, agents and their respective Affiliates harmless from any
and all Losses suffered or paid, directly or indirectly, as a result of or
arising out of any breach of any representation, warranty, covenant or agreement
by Charlie Sub contained herein or in any agreement or instrument delivered in
accordance with the terms hereof.
(c) The Company agrees to indemnify and hold Charlie USA, Charlie Sub and
their respective officers, directors, agents and Affiliates harmless from any
and all Losses suffered or paid, directly or indirectly, as a result of or
arising out of (i) any breach of any representation, warranty, covenant or
agreement by the Company contained herein or in any agreement or instrument
delivered in accordance with the terms hereof or (ii) any liability, claim,
judgment, award, suit, proceeding or other action resulting from the Company's
ownership of the Contributed Assets or obligations under the Assumed Liabilities
following the Closing.
(d) The obligations to indemnify and hold harmless pursuant to this
Section 7.2, other than pursuant to Section 7.2(a)(ii) and 7.2(c)(ii), shall
survive the consummation of the transactions contemplated by this Contribution
Agreement for a period of eighteen (18) months. The obligations to indemnify and
hold harmless pursuant to Sections 7.2(a)(ii), 7.2(a)(iii) and 7.2(c)(ii) shall
survive the consummation of the transactions contemplated by this Contribution
Agreement indefinitely.
(e) Notwithstanding anything to the contrary contained in this Contribution
Agreement, no amounts of indemnity shall be payable:
(i) by Charlie USA or Charlie Sub to the Company for any claim
arising under Sections 7.2(a) or 7.2(b) to the extent that, as a result of
such payment, the cumulative Losses payable by Charlie USA and Charlie Sub
in the aggregate would be in excess of two million five hundred thousand
dollars ($2,500,000); provided that the foregoing limitation shall not
apply to any claims relating to Excluded Assets or Excluded Liabilities;
(ii) by any party to another party unless and until the party
seeking indemnity has suffered or paid Losses in excess of two hundred
thousand dollars ($200,000), but upon reaching such amount, from the first
dollar to the full extent of all Losses (subject to the other terms and
conditions set forth in this Section 7.2);
(iii) to the extent the party seeking indemnity has been made
whole, net of tax obligations, with respect to the claimed Losses by
insurance or any non-refundable payment by any third Person.
16
ARTICLE VIII
MISCELLANEOUS
Section 8.1 ANNEXES AND SCHEDULES. The Annexes and Schedules to this
Contribution Agreement are deemed a part of this Agreement and are subject to
all of the provisions herein. Any fact or item that is clearly disclosed on any
Annex or Schedule in such a way as to make its relevance to any representation
made elsewhere in this Contribution Agreement or to the information called for
by any other Annex or Schedule readily apparent shall be deemed to be an
exception to such representation or to be disclosed on such other Annex or
Schedule, as the case may be, notwithstanding the omission of a reference or
cross-reference thereto. Any fact or item disclosed on any Annex or Schedule
shall not by reason only of such inclusion be deemed to be material and shall
not be employed as a point of reference in determining any standard of
materiality under this Contribution Agreement.
Section 8.2 NOTICE. Except as otherwise provided in this
Contribution Agreement, any notice, demand or communication to a party hereto
required or permitted to be given by any provision of this Contribution
Agreement shall be deemed to have been sufficiently given or served for all
purposes if delivered personally, sent by facsimile transmission or electronic
mail (with confirmation of receipt), overnight express courier or registered or
certified mail, postage/charges-prepaid, return receipt requested, and addressed
to the following:
17
NAME MAILING ADDRESS TELEPHONE, FAX AND
EMAIL ADDRESS
-------------------------------------------------------------------------------------------------------------
IF TO THE COMPANY:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Chief Executive Officer Suite 2050 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇.▇▇ LLC ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
-------------------------------------------------------------------------------------------------------------
WITH A COPY TO:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
& ▇▇▇▇▇▇▇ LLP ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-------------------------------------------------------------------------------------------------------------
IF TO CHARLIE, CHARLIE USA OR
CHARLIE SUB:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Tel: (▇▇▇) ▇▇▇-▇▇▇▇
President Suite 2050 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Cotelligent, Inc. ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
-------------------------------------------------------------------------------------------------------------
WITH A COPY TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-------------------------------------------------------------------------------------------------------------
All such notices, demands and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile or electronic mail transmission to the
facsimile number or electronic mail address, as the case may be, as provided in
this Section, be deemed given upon receipt, (iii) if delivered by overnight or
express courier to the address as provided in this Section, be deemed given on
the earlier of the second Business Day following the date sent by such overnight
or express courier or upon receipt and (iv) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed given on
the earlier of the sixth Business Day following mailing or upon receipt, in each
case regardless of whether such notice, demand or other communication is
received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section. Any party from time to time may change its address or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto at least ten (10) Business Days
prior to the effective date of such notice.
18
Section 8.3 OTHER PROVISIONS. The provisions of Article XII of the
Operating Agreement, other than Section 12.5 - Notices to Members, Section 12.6
- Bank Accounts and 12.15 - Authority/No Conflicts, are incorporated herein by
reference and made a part hereof, mutatis mutandis.
Remainder of page intentionally left blank
19
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
caused their authorized representatives to execute this Contribution Agreement
as of the date first above written.
▇▇▇▇▇▇.▇▇ LLC
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
COTELLIGENT USA, INC.
By:
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer & President
CZG MOBILE VENTURES, INC.
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Signature Page to Contribution Agreement
In consideration of and in order to induce the Company to enter into the above
Contribution Agreement with Charlie USA and Charlie Sub, the undersigned, which
directly owns all of the issued and outstanding capital stock of Charlie USA,
and indirectly owns all of the issued and outstanding stock of Charlie Sub,
hereby absolutely and unconditionally (i) agrees, on behalf of itself and its
Affiliates, to be bound by any provisions of the above Contribution Agreement
that impose any obligations upon the Affiliates of Charlie USA and Charlie Sub
and (ii) guarantees to the Company the full and timely performance by Charlie
USA and Charlie Sub of all their respective obligations under the above
Contribution Agreement, which shall be a continuing guaranty and remain in full
force and effect for so long as there shall remain any obligations of Charlie
USA or Charlie Sub, as the case may be, under the above Contribution Agreement.
COTELLIGENT, INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer & Chairman
Signature Page to Contribution Agreement
TABLE OF CONTENTS
PAGE
BACKGROUND.................................................... 1
ARTICLE I
CAPITAL CONTRIBUTIONS......................................... 2
SECTION 1.1 CASH CONTRIBUTION................................ 2
SECTION 1.2 ASSET CONTRIBUTION............................... 2
SECTION 1.3 EXCLUDED ASSETS.................................. 3
SECTION 1.4 ASSUMED LIABILITIES.............................. 3
SECTION 1.5 EXCLUDED LIABILITIES............................. 3
SECTION 1.6 VALUATION OF CONTRIBUTED ASSETS.................. 3
SECTION 1.7 CONSTRUCTION OF TRANSFER......................... 3
SECTION 1.8 NONASSIGNABLE AGREEMENTS......................... 3
(A) NO ASSIGNMENT............................... 3
(B) UNDERSTANDINGS OF CHARLIE USA............... 3
(C) PERFORMANCE BY THE COMPANY.................. 4
ARTICLE II
THE CLOSING................................................... 4
SECTION 2.1 CLOSING.......................................... 4
SECTION 2.2 PAYMENTS......................................... 4
SECTION 2.3 TRANSFER OF CONTRIBUTED ASSETS................... 4
ARTICLE III
ADDITIONAL AGREEMENTS......................................... 5
SECTION 3.1 SATISFACTION OF LIENS............................ 5
SECTION 3.2 TRANSFER TAXES................................... 5
SECTION 3.3 BOOKS AND RECORDS................................ 6
SECTION 3.4 ESTABLISHMENT OF CAPITAL ACCOUNT................. 6
SECTION 3.5 FURTHER ASSURANCES............................... 6
SECTION 3.6 EMPLOYEE BENEFITS................................ 6
i
TABLE OF CONTENTS
PAGE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CHARLIE USA................. 7
SECTION 4.1 EXISTENCE AND GOOD STANDING...................... 7
SECTION 4.2 CORPORATE AUTHORITY.............................. 8
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS............ 8
SECTION 4.4 RESTRICTIVE DOCUMENTS............................ 8
SECTION 4.5 TITLE TO PROPERTIES; ENCUMBRANCES; CONDITION..... 8
SECTION 4.6 ASSIGNED CONTRACTS............................... 9
SECTION 4.7 PERMITS.......................................... 9
SECTION 4.8 LITIGATION....................................... 9
SECTION 4.9 TAXES; ASSESSMENTS............................... 9
SECTION 4.10 COMPLIANCE WITH LAWS............................. 10
SECTION 4.11 EMPLOYMENT RELATIONS............................. 10
SECTION 4.12 INTELLECTUAL PROPERTIES.......................... 10
SECTION 4.13 SERVICE CONTRACTS................................ 11
SECTION 4.14 BROKER'S OR FINDER'S FEES........................ 11
SECTION 4.15 NO MATERIAL ADVERSE CHANGE....................... 11
SECTION 4.16 LIABILITIES...................................... 11
SECTION 4.17 SUPPLIERS AND CUSTOMERS.......................... 11
SECTION 4.18 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC........... 12
SECTION 4.19 REAL PROPERTY.................................... 12
SECTION 4.20 SOLVENCY......................................... 12
SECTION 4.21 ASSETS COMPLETE.................................. 12
SECTION 4.22 RIGHTS AGREEMENT................................. 13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CHARLIE SUB................. 13
SECTION 5.1 EXISTENCE AND GOOD STANDING...................... 13
SECTION 5.2 CORPORATE AUTHORITY.............................. 13
SECTION 5.3 CONSENTS AND APPROVALS; NO VIOLATIONS............ 13
SECTION 5.4 RESTRICTIVE DOCUMENTS............................ 14
SECTION 5.5 LITIGATION....................................... 14
SECTION 5.6 SOLVENCY......................................... 14
SECTION 5.7 BROKER'S OR FINDER'S FEES........................ 14
ii
TABLE OF CONTENTS
PAGE
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 14
SECTION 6.1 EXISTENCE AND GOOD STANDING...................... 14
SECTION 6.2 CORPORATE AUTHORITY.............................. 14
SECTION 6.3 CONSENTS AND APPROVALS; NO VIOLATIONS............ 15
SECTION 6.4 RESTRICTIVE DOCUMENTS............................ 15
SECTION 6.5 LITIGATION....................................... 15
SECTION 6.6 BROKER'S OR FINDER'S FEES........................ 15
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY......... 16
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES....... 16
SECTION 7.2 INDEMNIFICATION.................................. 16
ARTICLE VIII
MISCELLANEOUS................................................. 17
SECTION 8.1 ANNEXES AND SCHEDULES............................ 17
SECTION 8.2 NOTICE........................................... 17
SECTION 8.3 OTHER PROVISIONS................................. 18
ANNEXES
Annex A Intellectual Property
Annex B Software
Annex C Equipment
Annex D Assigned Contracts
Annex E Transferred Employees
Annex F Excluded Assets
Annex G Assumed Liabilities
iii
TABLE OF CONTENTS
PAGE
SCHEDULES
Schedule 4.1 Foreign Qualifications
Schedule 4.3 Consents and Approvals
Schedule 4.12 Intellectual Properties Impairments
Schedule 4.14 Charlie Broker's Fees
Schedule 4.15 No Material Adverse Change
Schedule 4.16 Liabilities
Schedule 4.17 Suppliers and Customers
Schedule 6.6 Bravo Broker's Fees
iv
EXHIBIT B
--------------------------------------------------------------------------------
MASTER EXCLUSIVE DISTRIBUTION AGREEMENT
BETWEEN
▇▇▇▇▇▇.▇▇ TECHNOLOGIES, INC.
AND
▇▇▇▇▇▇.▇▇ LLC
--------------------------------------------------------------------------------
Execution Copy
MASTER EXCLUSIVE DISTRIBUTION AGREEMENT
THIS MASTER EXCLUSIVE DISTRIBUTION AGREEMENT (this "Distribution Agreement")
is made and entered into as of August 8, 2000, between ▇▇▇▇▇▇.▇▇ Technologies,
Inc., a Delaware corporation ("Bravo"), and ▇▇▇▇▇▇.▇▇ LLC, a Delaware limited
liability company ("PIQ").
BACKGROUND
▇. ▇▇▇▇▇ owns or is licensed or otherwise possesses legally enforceable
rights to use, license, sublicense and grant distribution rights to third
parties with respect to the Bravo System and the Bravo Software (as each term is
hereinafter defined), which facilitate the real-time transmission of
communications and data through a variety of delivery channels, including
extranet, intranet and SMS (short message service), to personal digital
assistants ("PDAs") and the like including but not limited to mobile smartphones
and other wireless communication devices.
▇. ▇▇▇▇▇ and CZG Mobile Ventures, Inc., a Delaware corporation ("Charlie
Sub"), have formed PIQ pursuant to an Operating Agreement dated as of April 27,
2000, as amended and restated as of August 8, 2000 (the "Operating Agreement"),
as a joint venture whose business shall include the commercial exploitation of
the Bravo System and Bravo Software pursuant to the terms and conditions set
forth in this Distribution Agreement.
C. It is the intention of both Bravo and Charlie Sub to develop the business
of PIQ, in each of its respective competencies, to ensure PIQ's commercial
success.
D. PIQ desires to receive distribution rights from Bravo with respect to the
Bravo System and Bravo Software, and Bravo is willing to grant certain
distribution rights in the Bravo System and Bravo Software to PIQ pursuant to
the terms and conditions set forth in this Distribution Agreement.
E. As contemplated by Section 6.1(a) of the Operating Agreement, the rights
granted to PIQ pursuant to this Distribution Agreement shall constitute the
initial capital contribution of Bravo to PIQ pursuant to the Operating
Agreement.
F. All capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in Article VIII or in the Operating Agreement, as
the case may be.
ARTICLE I
EXCLUSIVE DISTRIBUTION RIGHTS
Section 1.1 DISTRIBUTION LICENSE.
(a) Upon the terms and subject to the conditions of this Distribution
Agreement, Bravo hereby grants to PIQ, and PIQ hereby accepts from Bravo, an
exclusive (even as to Bravo), irrevocable, perpetual and non-transferable
(except as expressly permitted under
this Distribution Agreement) right and license to directly or indirectly
(through one or more sub-distributorships established in its sole discretion)
market, promote, sublicense, resell and otherwise distribute the Bravo System
and the Bravo Software in the Territory to (i) any entity which resells or
further sublicenses for distribution the Bravo System and the Bravo Software to
others, and (ii) system integrators installing or implementing the Bravo System
and the Bravo Software for others.
(b) Upon the terms and subject to the conditions of this Distribution
Agreement, Bravo hereby grants to PIQ, and PIQ hereby accepts from Bravo, a
non-exclusive, irrevocable, perpetual and non-transferable (except as may be
expressly permitted under this Distribution Agreement) right and license to
directly or indirectly (through one or more sub-distributorships established in
its sole discretion) market, promote, sublicense for distribution, resell and
otherwise distribute the Bravo System and the Bravo Software in the Territory to
any entity other than (i) an entity which resells or further sublicenses for
distribution the Bravo System and the Bravo Software to others, or (ii) system
integrators installing or implementing the Bravo System and the Bravo Software
for others. It is understood by the parties that Bravo and its Affiliates shall
have the right to market, promote, sublicense, sell or otherwise distribute the
Bravo System and the Bravo Software only to any entity other than (i) an entity
which resells or further sublicenses for distribution the Bravo System and the
Bravo Software to others, or (ii) system integrators installing or implementing
the Bravo System and the Bravo Software for others.
(c) Upon the terms and subject to the conditions of this Distribution
Agreement, Bravo hereby grants to PIQ, and PIQ hereby accepts from Bravo, a
non-exclusive, irrevocable, perpetual and non-transferable (except as expressly
permitted under this Distribution Agreement) right and license to modify, adapt,
update, develop upgrades for and otherwise create derivative works and
improvements based on or related to the application program interfaces ("APIs")
providing access to the functionality of the Bravo System and the Bravo
Software.
(d) Upon the terms and subject to the conditions of this Distribution
Agreement, Bravo hereby grants to PIQ, and PIQ hereby accepts from Bravo, a
non-exclusive, irrevocable, perpetual and non-transferable (except as expressly
permitted under this Distribution Agreement) right and license to use for its
own purposes the Bravo System and the Bravo Software solely in support of
Sections 1.1(a), 1.1(b) and 1.1(c) above and to service (including, without
limitation, to provide systems integration service), install or implement the
Bravo System and the Bravo Software for others. Bravo agrees to use all
reasonable commercial efforts to promote PIQ to Bravo's customers as the
preferred provider of certain services (including, without limitation, systems
integration services) relating to installation or implementation of the Bravo
System and the Bravo Software. Any such services provided by PIQ to Bravo's
customers shall be on terms no less favorable than the best terms offered to
others.
(e) PIQ agrees to use all reasonable commercial efforts to promote the
sale and distribution of the Bravo System and Bravo Software, and the goodwill
of Bravo and its Affiliates, in the Territory, including, without limitation,
using all reasonable commercial efforts to promote the Bravo System and Bravo
Software to PIQ's customers and those former customers of Fastech, Inc., a
Pennsylvania corporation. For the avoidance of doubt, it shall not
2
be a breach of this Section 1(e) for PIQ to promote the sale and distribution of
third party software which does not facilitate the real-time transmission of
communications and data through a variety of delivery channels, including
extranet, intranet and SMS (short message service), to PDAs and the like
including but not limited to mobile smartphones and other wireless communication
devices.
(f) Neither Bravo nor any of its Affiliates shall knowingly, directly
or indirectly, take any action in contravention of the rights of PIQ granted by
Bravo pursuant to this Section 1.1. In the event that Bravo or any of its
Affiliates shall receive any inquiry with respect to the Bravo System or Bravo
Software within the Territory from an entity for which PIQ has an exclusive
right pursuant to Section 1.1(a), Bravo shall, or shall cause such Affiliate to,
refer such inquiry to PIQ.
Section 1.2 SUBLICENSING. Any sublicense of the Bravo System and Bravo
Software to an End-User shall be in writing and shall require the End-User to
agree to comply with and observe the terms of this Distribution Agreement
provided in Sections IV, V and VII.
Section 1.3 ROYALTY.
(a) Each End-User of the Bravo Software shall be required to obtain a
separate up-front per-user sublicense from PIQ to use the Bravo System and the
Bravo Software. Such up-front per-user sublicense may be purchased from PIQ for
an up-front per-user sublicense fee, which up-front per-user sublicense fee
shall be determined by PIQ in its sole discretion. For each such up-front
per-user sublicense sold by PIQ, a royalty of 50% of such up-front per-user
sublicense fee actually charged by PIQ shall be due to Bravo within 60 days of
the close of any calendar month in which any such up-front per-user sublicense
is sold.
(b) PIQ shall retain, and not be required to share with Bravo, any
other license, hosting service or other fees or revenues derived by PIQ in
connection with its sublicensing of the Bravo System and Bravo Software to End-
Users, all of which fees shall be determined by PIQ in its sole discretion. If
an End-User of the Bravo Software desires hosting services from PIQ, PIQ shall
charge such End-User a separate annual per-user service fee for such hosting
services, which annual per-user service fee shall be determined by PIQ in its
sole discretion.
(c) PIQ shall keep such records and allow Bravo to make reasonable
inspections of same in order to accurately track and confirm royalty amounts
payable from PIQ to Bravo pursuant to this Section 1.3.
Section 1.4 RIGHT OF FIRST REFUSAL. In the event that Bravo seeks to offer
to any Person the opportunity to provide system integration services or to
develop application software for the Bravo System and/or Bravo Software
("Requested Services"), Bravo shall first offer PIQ the right to provide the
Requested Services on the following terms; provided, however, that Bravo, in its
sole discretion, may decide to offer or not to offer such Requested Services to
PIQ in the event PIQ is unable to provide Requested Services of a quality
generally comparable to that obtained from a third Person.
3
(a) Bravo shall deliver a notice to PIQ setting forth, in reasonable
detail, all material terms and conditions relating to the proposed Requested
Services (each such notice, an "Offer"). Within five (5) business days when the
Requested Services relate to a jointly marketed field, or within thirty (30)
business days when such Requested Services do not relate to a jointly marketed
field after receipt of the Offer, PIQ shall provide Bravo with either (i) a
rejection of the Offer or (ii) a written estimate of the fees payable and other
terms and conditions relating to the provision of the Requested Services as set
forth in the Offer. If Bravo accepts PIQ's estimate and proposed terms and
conditions, the parties shall enter into appropriate definitive written
agreements with respect to such arrangement as soon as reasonably practicable.
(b) If (i) PIQ rejects the Offer, (ii) PIQ fails to reject the Offer or
to provide a written estimate within the applicable five-day or thirty-day
period or (iii) the parties fail to enter into definitive agreement(s) as
required by Section 1.4(a) above, then Bravo may enter into arrangements with a
third Person to obtain the Requested Services set forth in the relevant Offer,
so long as the terms and conditions of such arrangement (the "Third Party
Transaction Terms") are no less favorable (considered in their entirety) to
Bravo than those that Bravo would have been able to obtain in an arrangement
with PIQ (as determined by reference to the terms and conditions set forth in
the Offer and PIQ's written estimate) (the "PIQ Transaction Terms").
ARTICLE II
CERTAIN COVENANTS OF BRAVO
Section 2.1 DEVELOPMENT AND PROVISION OF BRAVO SYSTEM SOFTWARE.
(a) Attached hereto as Schedule 2.1 is a document entitled "bSmart
Sarina Messaging System Operational Readiness Work Estimates and Timeline" (the
"Work Plan"). The Work Plan includes a description of certain tasks itemized
therein under the heading "Production Continuum" as numbers 1, 4, 5, 7 (only to
the extent the tasks specified therein require changes to the Sarina System), 9,
10 (only to the extent the tasks are to be performed at the development site and
not extending to tasks performed at the ASP site or elsewhere), 12 (only to the
extent the tasks are to be performed at the development site and not extending
to tasks performed at the ASP site or elsewhere) and 13 (the "Tasks"). The Work
Plan also includes a description of the functional specifications associated
with each of the Tasks with which the Bravo System, Bravo Software and Bravo
operations do not presently conform and which are denoted throughout the Work
Plan under each of the Tasks under the heading "What need to be done:"
(collectively, the "Specifications") which the Bravo System, Bravo Software and
Bravo operations will be required to meet pursuant to the terms of this Section
2.1. Notwithstanding anything to the contrary set forth in this Agreement, those
portions of the Work Plan not expressly incorporated by reference above in this
subsection as the "Specifications" shall have no legal force or effect
whatsoever, and each party disclaims any and all warranties, representations or
covenants with respect thereto.
(b) The completion of development of the Bravo System, Bravo Software
and Bravo operations and the Documentation such that the same conform to the
Specifications shall be done in accordance with the Work Plan. Bravo shall enter
into a service agreement (with applicable work orders attached) with Charlie USA
which shall set forth detailed arrangements concerning the respective roles and
activities of such parties' personnel in completing
4
development in accordance with the Work Plan, which service agreement shall
include appropriate confidentiality undertakings by Charlie USA. A retainer fee
of $250,000 shall be paid to Charlie USA as of the date hereof in respect of
such service agreement. Charlie USA shall invoice Bravo monthly on a time and
materials basis for the services performed by its personnel under the Work Plan,
using a blended hourly rate for its personnel performing services which shall be
derived from its standard fee structure, and shall have the right to draw down
on the retainer amount in payment of each such monthly invoice. In each instance
where the retainer balance falls below $25,000, Charlie USA shall send written
notice to Bravo, requiring that Bravo replenish the retainer by paying Charlie
USA an additional $250,000 within 30 days of such notice.
(c) Within 300 days of the execution of this Distribution Agreement,
Bravo shall demonstrate that its operations conform to the applicable
Specifications and shall deliver to PIQ and the Third Party Mediator (as defined
in Section 2.1(f)), free of any charge to PIQ or the Third Party Mediator, one
master copy of the Bravo System and Bravo Software, including copies of the
Object Code versions of the Bravo Software and Source Code for the APIs and a
copy of the Documentation. Within 30 days of delivery of the Bravo System and
Bravo Software to PIQ and the Third Party Mediator, the Third Party Mediator
shall test all relevant aspects of the Bravo System and Bravo Software for
whether the same conform to the Specifications (the "Test Plan", and such test
being the "Initial Test"). Should the Third Party Mediator discover any material
non-conformity in the Bravo System and/or Bravo Software that causes the same to
fail to conform in all material respects with or perform substantially in
accordance with the Specifications (a "Defect"), the Third Party Mediator shall
inform Bravo and PIQ in writing of the presence of each such Defect. With
respect to each such Defect, Bravo shall work diligently to correct such Defect
within 15 days following such notice. Following any such correction, the Test
Plan shall be repeated by the Third Party Mediator. If and when the Third Party
Mediator confirms, through use of the Test Plan, that the Bravo System and Bravo
Software conform to the Specifications, the Third Party Mediator shall notify
Bravo and PIQ in writing within five Business Days, which notice shall
constitute PIQ's acceptance thereof ("Acceptance").
(d) If (i) Bravo does not replenish the retainer fee of Charlie USA as
required by Section 2.1(b), (ii) Bravo does not deliver the Bravo System and
Bravo Software within the 300 day period referred to in, and pursuant to the
other terms of, Section 2.1(c), (iii) Initial Testing reveals any Defect in the
Bravo System and/or Bravo Software such that the same does not perform
substantially in accordance with the Specifications or the warranties under
Section 6.1 and Bravo has not cured such Defect within the repair period
referred to in Section 2.1(c), as determined by the Third Party Mediator, or
(iv) Acceptance has not occurred on or before June 30, 2001 (the occurrence of
any event described in clauses (i), (ii), (iii) or (iv), a "Default"), then
Charlie Sub, acting on behalf of PIQ, may give notice thereof to Bravo and Bravo
shall not be given an opportunity to cure such Default pursuant to this
Distribution Agreement or otherwise, provided in each case that such Default has
not occurred due to the negligence or willful misconduct of Charlie USA in
performing services pursuant to Section 2.1(b).
(e) Bravo shall deliver to PIQ, free of any charge to PIQ, copies of
the Object Code versions of any modified, updated, upgraded or otherwise
enhanced Bravo System or Bravo Software and Source Code for the APIs developed
by or for Bravo or any of its Affiliates.
5
PIQ shall be responsible for making copies of the Bravo Software for End-Users
that sublicense the Bravo Software from PIQ.
(f) For purposes of this Agreement, the term "Third Party Mediator"
means a reputable, independent person or entity skilled in analyzing computer
software. The Third Party Mediator shall be appointed in accordance with the
following procedure: Within thirty (30) days of the date hereof, Bravo and
Charlie Sub, acting on behalf of PIQ, shall name the Third Party Mediator by
mutual agreement. If the parties are unable to agree on a Third Party Mediator,
each party shall, within thirty-five (35) days of the date hereof, appoint a
person or entity who is qualified to be a Third Party Mediator, and such two
persons or entities shall name the Third Party Mediator within forty (40) days
of the date hereof. Such decision shall be binding on the parties.
Section 2.2 PROVISION OF TRAINING. Bravo shall at no additional charge
provide PIQ with commercially reasonable technical and commercial training and
supervision with respect to the Bravo System and Bravo Software sufficient to
enable PIQ to train End-Users. PIQ shall be responsible for providing to
sublicensees any training that it elects to provide under agreements with End-
Users.
Section 2.3 PROVISION OF CONSULTING/TECHNICAL SUPPORT. Bravo shall at no
additional charge provide PIQ with commercially reasonable consulting and/or
technical support services with respect to the Bravo System and the Bravo
Software, sufficient to enable PIQ to provide consulting services and technical
support to End-Users. PIQ shall be responsible for providing to sublicensees
any support that it elects to provide under agreements with End-Users.
ARTICLE III
CERTAIN REPRESENTATIONS AND WARRANTIES
Section 3.1 CERTAIN REPRESENTATIONS AND WARRANTIES OF BRAVO. Bravo hereby
represents and warrants to PIQ as follows:
(a) Bravo has all requisite corporate power and authority to execute
and deliver this Distribution Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Distribution
Agreement has been duly and validly executed and delivered by Bravo and
constitutes the legal, valid and binding obligation of Bravo, enforceable
against Bravo in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally.
(b) The execution and delivery by Bravo of this Distribution Agreement,
Bravo's performance of its obligations hereunder and the consummation by Bravo
of the transactions contemplated hereby do not and will not, with or without the
giving of notice or the lapse of time or both, (i) violate, conflict with or
result in a breach of or default by ▇▇▇▇▇▇.▇▇ Capital Partners L.P. ("Bravo LP")
or Bravo under any provision of their respective organizational documents or of
any agreement to which Bravo LP or Bravo, as the case may be, is a party or by
which it or any of its properties or assets is bound, (ii) require Bravo LP or
Bravo to obtain any consent, approval or action of, make any filing with, or
give any notice to, any
6
Person, (iii) to its knowledge, contravene any statute, rule, regulation,
judgment, decree or order, applicable to Bravo LP or Bravo or any of their
respective properties or assets or (iv) violate, conflict with, result in a
breach of or default by Bravo LP or Bravo (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any Encumbrance upon the Bravo System or Bravo Software under any
provision of any note, bond, mortgage, indenture, license or other similar
instrument or obligation to which Bravo LP or Bravo, as the case may be, is a
party or by which it or any of its properties or assets is bound; except, in the
case of the foregoing clauses (i) through (iv), where there would not exist a
Material Adverse Effect. For the purposes of this Distribution Agreement,
"Material Adverse Effect" means any material adverse effect on the business,
properties, assets, operations, results of operations, liabilities, financial
condition or prospects of Bravo or PIQ, as the case may be, and their
subsidiaries, taken as a whole, or on the transactions contemplated hereby.
(c) Except as disclosed in Schedule 3.1(c), Bravo owns, or has the
right to grant the license on all Intellectual Property Rights related to the
Bravo System and the Bravo Software provided for in this Agreement.
(d) Except as disclosed in Schedule 3.1(d), the transactions
contemplated hereby do not violate any license or agreement between Bravo and
any third party or to Bravo's knowledge infringe any Intellectual Property Right
of any other Person, and there is no pending or, to the knowledge of Bravo,
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Intellectual Property Right relating to the
Bravo Software or the Bravo System.
(e) Except as disclosed in Schedule 3.1(e), to the knowledge of Bravo,
there is no unauthorized use, infringement or misappropriation of any
Intellectual Property Right relating to the Bravo System or the Bravo Software
by any third Person including any employee or former employee of Bravo.
(f) Except as disclosed in Schedule 3.1(f), to the knowledge of Bravo,
its relationship with each of the Persons participating in Bravo's pilot
programs in connection with the Bravo System as of the date of this Distribution
Agreement are good working relationships and no such strategic partner has
cancelled or otherwise terminated, or threatened in writing to cancel or
otherwise terminate, its relationship with Bravo.
(g) The Sarina Platform software implementing the Bravo System is the
only embodiment (commercial or otherwise) of the invention disclosed in British
patent application No. GB 9908782 entitled "Transfer of Electronic Messages to a
PDA" filed April 16, 1999.
Section 3.2 CERTAIN REPRESENTATIONS AND WARRANTIES OF PIQ. PIQ hereby
represents, warrants and covenants to Bravo as follows:
(a) PIQ has all requisite corporate power and authority to execute and
deliver this Distribution Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Distribution Agreement has
been duly and validly executed and delivered by PIQ and constitutes the legal,
valid and binding obligation of PIQ, enforceable against PIQ in accordance with
its terms, except as such enforcement may be limited
7
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally.
(b) The execution and delivery by PIQ of this Distribution Agreement,
PIQ's performance of its obligations hereunder and the consummation by PIQ of
the transactions contemplated hereby do not and will not, with or without the
giving of notice or the lapse of time or both (i) violate, conflict with or
result in a breach of or default by PIQ under any provision of its corporate
organizational documents or of any agreement to which PIQ is a party or by which
it or any of its assets is bound, (ii) require PIQ to obtain any permit,
consent, approval or action of, make any filing with, or give any notice to, any
Person, (iii) contravene any material statute, rule, regulation, judgment,
decree, order, franchise or permit applicable to PIQ or any of its assets or
(iv) violate, conflict with, result in a breach of or default by PIQ (or give
rise to any right of termination, cancellation, payment or acceleration) under,
or result in the creation of any Encumbrance upon the Bravo System or Bravo
Software under any provision of any note, bond, mortgage, indenture, license or
other similar instrument or obligation to which PIQ is a party or by which it or
any of its assets is bound; except, in the case of the foregoing clauses (i)
through (iv), where there would not exist a Material Adverse Effect.
(c) PIQ shall execute all documents and otherwise reasonably cooperate
in establishing, confirming and enforcing Bravo's ownership interests in the
Bravo System and Bravo Software.
ARTICLE IV
INTELLECTUAL PROPERTY MATTERS
Section 4.1 AUTHORIZED USE OF MARKS. Subject to the terms and conditions of
this Distribution Agreement, Bravo hereby grants to PIQ a non-exclusive,
perpetual, fully paid-up, non-transferable, royalty-free limited license to use
and display the Marks in connection with the marketing, distribution and
promotion of the Bravo System and Bravo Software in accordance with the terms of
this Distribution Agreement within the Territory. PIQ shall have the right to
indicate to the public that it is an authorized distributor of the Bravo System
and Bravo Software, and use (within the Territory) the Marks to advertise and
identify the Bravo System and Bravo Software in accordance with the terms of
this Distribution Agreement. Bravo shall have the right to exercise quality
control over the use of the Marks by PIQ, including, without limitation, the
right to approve the size, placement and appearance of the Marks. The Marks will
be displayed together with such copyright and/or trademark notices as are set
forth in Schedule VIII-3, or as otherwise provided by Bravo, and PIQ agrees not
to alter or delete any such notices without the prior written consent of Bravo.
Except as set forth in this Article IV, nothing contained in this Distribution
Agreement shall grant to PIQ any right, title or interest in the Marks. At no
time shall PIQ challenge or assist others to challenge Bravo's Intellectual
Property Rights in the Marks or the registration thereof or attempt to register
any trademarks, trade names or other proprietary indicia confusingly similar to
the Marks. PIQ acknowledges that the Marks are, and shall remain, the exclusive
property of Bravo, and PIQ agrees that it shall not, at any time, do or cause to
be done any action which in any way, contests, impairs or tends to impair any
part of such right, title or interest of Bravo in the Marks. PIQ acknowledges
and agrees that all use by PIQ of the Marks, and any goodwill which arises from
such use, shall inure solely to the benefit
8
of Bravo. Except pursuant to this Section 4.1, PIQ understands and agrees that
it may not use any copyright, trademark, trade name, logo or service ▇▇▇▇ of
Bravo, other than the Marks, in any advertising, marketing, promotion or
distribution of the Bravo System, without the prior written consent of Bravo.
Section 4.2 PROPRIETARY RIGHTS. PIQ acknowledges and agrees that the Bravo
System and Bravo Software constitute valuable trade secrets of Bravo and/or
proprietary and confidential information of Bravo and ownership thereto remains
solely in Bravo. PIQ shall not transfer, adapt, modify, otherwise copy, reverse
compile or otherwise translate or distribute the Bravo System or Bravo Software
or rent, lease, assign or attempt to license it except in connection with and
pursuant to this Distribution Agreement. Ownership of all Intellectual Property
Rights in the Bravo System and Bravo Software are and shall remain vested solely
in Bravo. All other aspects of the Bravo System and Bravo Software, including,
without limitation, programs (including changes, additions and enhancements in
the form of new or partial programs or documentation), methods of processing,
design and structure of individual programs and their interaction and
programming techniques employed therein shall remain the property of Bravo and
shall not be sold, revealed, disclosed or otherwise communicated, directly or
indirectly, by PIQ to any Person whatsoever other than as expressly set forth
herein. The copyright, patent, trademark and service ▇▇▇▇ notices and
restricted rights legends contained in the Bravo System and Bravo Software shall
appear on all media distributed by PIQ. PIQ agrees not to take a position
inconsistent with the foregoing and agrees to defend Bravo's sole right, title
and interest in and to all of the property described in this Section 4.2.
Section 4.3 PROSECUTION OF PATENT APPLICATIONS. Bravo shall from time to
time, in its reasonable judgment, diligently prosecute any patent applications
in any country within the Territory (the "Patent Applications") necessary in
order for PIQ to fully exercise its rights hereunder and shall maintain all of
such patents and all other patents hereafter acquired which relate to the Bravo
System (together, the "Patents"). Bravo shall inform PIQ of any such patent that
is issued.
Section 4.4 INFRINGEMENT. If any unlicensed third Person shall make, use,
sell, lease or license any product in any country within the Territory that may
infringe any Intellectual Property Right of Bravo concerning the Bravo System
and the Bravo Software, Bravo may, at its own expense, undertake to enforce such
Intellectual Property Right. PIQ agrees to cooperate fully with Bravo
(including giving its consent to being joined as a party in a legal proceeding)
in any such undertaking, at the sole expense of Bravo. With respect to any
legal proceeding in respect of enforcing such Intellectual Property Right, each
party shall each be entitled to retain any of its damages it recovers, provided
that (i) a reasonable portion of any such recovery by PIQ be used to reimburse
Bravo for a reasonable portion of Bravo's actual legal expenses; and (ii) to the
extent Bravo's recovery is properly attributable to harm sustained by PIQ in
connection with PIQ's exclusive rights under this agreement, PIQ shall be
entitled to a reasonable portion of any such recovery.
Section 4.5 ENFORCEMENT. In the event that Bravo shall fail to, after a
reasonable period of time, acquire or enforce any Intellectual Property Right
that is described in this Article IV or that otherwise may result in a Material
Adverse Effect on PIQ's rights granted hereunder, PIQ may provide notice to
Bravo of its desire to have Bravo acquire or enforce such Intellectual
9
Property Right. In such a case, if Bravo informs PIQ that it will not seek to
acquire or enforce such Intellectual Property Right, or Bravo has in fact not
undertaken to acquire or enforce such Intellectual Property Right within sixty
(60) days of the notice, then PIQ, at its option and at its own expense, may
undertake to acquire or enforce any such Intellectual Property Right for the
benefit of Bravo. Bravo agrees to cooperate fully with PIQ (including executing
documents and giving its consent to being joined as a party in a legal
proceeding) in any such undertaking, at the sole expense of PIQ. With respect to
any legal proceeding in respect of enforcing such Intellectual Property Right,
each party shall each be entitled to retain any of its damages it recovers.
ARTICLE V
CONFIDENTIAL INFORMATION
Section 5.1 MAINTENANCE OF CONFIDENTIALITY. Each of the parties hereto
acknowledges that in the course of dealings between them, they may acquire
information about each other, including but not limited to the Bravo System and
Bravo Software, each party's business activities and operations, its technical
information and trade secrets and Intellectual Property Rights, customer
information, and the terms of this Distribution Agreement, all of which are
confidential and proprietary to such party (the "Confidential Information").
Confidential Information shall not include information generally available to or
known by the public unless the information became so known or available as a
result of a party's breach of this Distribution Agreement. Each party shall
hold all such Confidential Information in strict confidence and shall not reveal
the same forever, except pursuant to a court order (in such case the disclosing
party shall advise the other party of such proceeding and cooperate with such
party, if such party so requests, in seeking to avert such order or obtain a
protective order for information disclosed) or upon the written request of the
party to which such Confidential Information relates. The Confidential
Information shall be safeguarded with at least as great a degree of care as a
party hereto uses to safeguard its own most confidential materials or data
relating to its own business, but in no event with less than a reasonable degree
of care.
Section 5.2 RETURN OF CONFIDENTIAL INFORMATION. Upon expiration or
termination of this Distribution Agreement, or upon request of the disclosing
party, the other party shall return to the disclosing party all requested
Confidential Information of the disclosing party, including all copies thereof,
in the possession or under the control of it or its Affiliates or any of their
respective personnel, representatives or agents, or, at the disclosing party's
option, destroy or purge all such Confidential Information from its and its
Affiliates' systems and files and deliver to the disclosing party a written
confirmation that such destruction and purging have been carried out.
Section 5.3 INJUNCTIVE RELIEF. Each party hereto acknowledges that in the
event of any breach of this Article V by a party, the disclosing party shall
suffer irreparable injury not compensable by money damages and for which the
disclosing party shall not have an adequate remedy available at law. The
disclosing party shall be entitled to obtain, without the posting of any bond or
other security and without proving that money damages would be an inadequate
remedy, such injunctive or other equitable relief to prevent or curtail any such
breach, threatened
10
or actual. The foregoing shall be in addition to and without prejudice to such
other rights as the disclosing party may have under this Distribution Agreement
or applicable law.
ARTICLE VI
LIMITED WARRANTY
Section 6.1 OTHER WARRANTIES. Without limiting in any manner the provisions
of Section 2.1, Bravo represents and warrants to PIQ that: (i) the Bravo System
and Bravo Software are provided hereunder free of all Encumbrances, except for
Encumbrances placed thereon by PIQ or by Persons claiming by, under or through
PIQ , (ii) the Bravo System and Bravo Software will conform in all material
respects to the applicable Documentation and/or other description and
specifications provided by Bravo hereunder, (iii) Bravo shall correct and
repair, at no cost to PIQ, any material defect, malfunction or non-conformity
with Documentation that prevents the Bravo System and Bravo Software from
materially conforming or performing substantially in accordance with the
specifications set forth in the Documentation except when such defects result
from the unauthorized modification of the Bravo System and Bravo Software by or
for PIQ or any use of the Bravo System and Bravo Software not in conformance
with the Documentation, (iv) to Bravo's knowledge the Bravo System and the Bravo
Software will be free of any "virus", "worm", "self destruction", "disabling",
"lock out" or "metering" device, as such terms are understood in the computer
industry, which could impair PIQ's and/or its customers' use of the same, and
(v) all services performed by Bravo hereunder will be performed in a timely,
competent and professional manner.
Section 6.2 DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN SECTIONS
3.1 AND 6.1 OF THIS DISTRIBUTION AGREEMENT, BRAVO MAKES NO REPRESENTATIONS OR
WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, REGARDING OR RELATING TO THE
BRAVO SYSTEM AND BRAVO SOFTWARE, THE SPECIFICATIONS THEREOF AND PERFORMANCE BY
BRAVO UNDER THIS DISTRIBUTION AGREEMENT. OTHER THAN AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, BRAVO SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS.
ARTICLE VII
INDEMNITY
Section 7.1 INDEMNIFICATION. Each of the parties hereto agrees to protect,
indemnify, and hold harmless the other, its respective Affiliates, employees,
officers and directors thereof and of such Affiliates, against any and all Loss
by whomsoever asserted, arising out of, connected with or resulting from (i) any
breach by such party of any of the terms, covenants, representations, warranties
or other provisions contained in this Distribution Agreement or any other
license, agreement, instrument or document delivered by such party in connection
herewith or (ii) in the case of Bravo as indemnitor only, any claim arising out
of or in connection with any third party claim alleging that the Bravo System or
the Bravo Software, as used in accordance with the terms and conditions of this
Distribution Agreement, infringes any Intellectual Property Rights of a third
Person. The liability of an indemnifying party pursuant to the terms of clause
11
(i) of the foregoing sentence shall be limited in the aggregate to $2,500,000,
provided that such limitation shall not be deemed to apply to the redemption
rights of PIQ set forth in the Operating Agreement. The liability of Bravo as
indemnitor pursuant to the terms of clause (ii) of the foregoing sentence shall
not apply to any Loss that arises from the unauthorized modification of the
Bravo System or the Bravo Software, or the combination or use of the Bravo
System or the Bravo Software with third party software products where such Loss
would be avoided but for such combination or use.
Section 7.2 NOTICE AND PROCEDURE. Each party shall promptly notify the other
party of any claim, demand, suit or threat of suit of which that party becomes
aware (except with respect to a threat of suit either party might institute
against the other) which may give rise to a right of indemnification pursuant to
this Distribution Agreement, but the failure of a party to so notify the other
party shall not relieve a party of its indemnification obligations hereunder
unless the indemnifying party is materially prejudiced as a result of the
failure to receive such notice. The indemnifying party shall be in control of
the settlement (so long as any such settlement does not involve an admission of
any wrongdoing on the part of the indemnified party, or restrict the indemnified
party's future actions and includes a full release of the indemnified party),
and defense of any claim which gives rise to indemnification (at no cost to the
indemnified party). The indemnifying party and the indemnified party shall
cooperate in the settlement or defense of any such claim, demand, suit or
proceeding. The indemnified party, at its own cost, may participate in such
settlement or defense; provided, that such indemnified party shall not control
such settlement or defense. The indemnified party shall not settle such claim,
demand, suit or proceeding without the consent of the indemnifying party.
Section 7.3 NO CONSEQUENTIAL DAMAGES. UNDER NO CIRCUMSTANCES WILL EITHER
PARTY HERETO BE LIABLE TO THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF USE,
BUSINESS INTERRUPTION, LOSS OF DATA, COST OF COVER OR SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OF ANY KIND, WHETHER
ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, NOR FOR ANY
FORM OF DAMAGES OTHER THAN DIRECT DAMAGES ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF. IN NO EVENT SHALL BRAVO BE LIABLE
TO PIQ OR ANY OTHER PERSON FOR ANY DAMAGES OR LOSS CAUSED BY DELAY IN DELIVERY
OR FURNISHING OF DATA USING THE BRAVO SYSTEM AND BRAVO SOFTWARE.
ARTICLE VIII
DEFINED TERMS
Section 8.1 DEFINED TERMS.
(a) As used in this Distribution Agreement, the following defined terms
shall have the respective meanings indicated below:
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with, that
Person.
12
"Bravo Software" means the Sarina Platform software implementing the
Bravo System, as more fully described in Schedule VIII-1, including all
modifications, updates, upgrades and other enhancements to such software
heretofore or hereinafter developed by or for Bravo or any of its Affiliates.
"Bravo System" means the subject invention and improvements, and any
software, architecture, or platform disclosed in British patent application No.
GB 9908782 titled "Transfer of Electronic Messages to a PDA" filed April 16,
1999 or in any related patent or patent application (including without
limitation, continuations, divisionals, continuations-in-part, reissues,
reexaminations, or other derivative applications or certificates of such
patents) owned by or licensed to Bravo or any of its Affiliates, and all
modifications, updates, upgrades and other enhancements heretofore or hereafter
developed by or for Bravo or any of its Affiliates with respect to the above.
"Distribution Agreement" means this Master Exclusive Distribution
Agreement, as the same may be amended, modified or restated from time to time in
accordance with the terms hereof.
"Documentation" means all materials relating to the Bravo System and
Bravo Software made available to End-Users, including system or software
specifications, documents, manuals and computer-readable files regarding
installation, customization, use, operation and interoperability with other
systems, functionality, troubleshooting and maintenance.
"Encumbrance" means any lien, security interest, option, right of
first refusal, restriction, agreement, license, lease, permit, security
agreement or any other encumbrance and other restrictions or limitations on use
or irregularities in title.
"End-User" means any party that sublicenses the Bravo System or Bravo
Software from PIQ in accordance with the provisions of this Distribution
Agreement.
"Intellectual Property Rights" shall mean all worldwide industrial and
intellectual property rights, including patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service marks, service
▇▇▇▇ applications, copyright, copyright applications, franchises, licenses,
inventories, know-how, trade secrets, customer lists, proprietary processes and
formulae, all source and object code, algorithm, architecture, structure,
display screens, layouts, inventions, development tools and all documentation
and media constituting, describing or relating to the above, including manuals,
memoranda and records, including, but not limited to British patent application
No. GB 9908782 titled "Transfer of Electronic Messages to the PDA" filed April
16, 1999 owned by Bravo and the subject invention and software described and
claimed therein, including all improvements and related patents and patent
applications.
"Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses, liabilities, costs and expenses, including without
limitation interest, court costs, reasonable fees and expense of attorneys,
accountants and other experts or other reasonable expenses of litigation or
other proceedings or of any claim, default or assessment (such fees and expenses
to include all fees and expenses incurred in connection with (i) the
investigation or defenses of any third party
13
or other claim with respect to which any indemnitee may be indemnified pursuant
to Article VII hereof or (ii) asserting or disputing any rights under this
Distribution Agreement against either party hereto or otherwise).
"Marks" means any trademarks, trade names, service marks, symbols or
logos relating to the Bravo System or Bravo Software used by Bravo as set forth
in Schedule VIII-2.
"Object Code" means machine readable program code.
"Person" means any natural person, corporation, limited liability
company, general partnership, limited partnership, limited liability
partnership, proprietorship, other business organization, trust, union,
association or governmental or regulatory authority.
"Source Code" means program code expressed in human-readable form.
"Territory" means worldwide.
(b) Unless the context of this Distribution Agreement otherwise
requires, (i) words of any gender include each other gender; (ii) words using
the singular or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Distribution Agreement; and (iv) the terms
"Article," "Section" or "Schedule" refer to the specified Article or Section of,
or Schedule to, this Distribution Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NO ASSIGNMENT; BINDING EFFECT.
(a) Except as expressly provided herein, neither this Distribution
Agreement nor any right, interest or obligation hereunder may be assigned by
either party hereto without the prior written consent of the other party hereto
(which consent shall not be unreasonably withheld or delayed) and any attempt to
do so will be void; provided that the merger or consolidation of one party into,
or the sale of assets of such party to, or the sale by Bravo of its Intellectual
Property Rights in the Bravo System or Bravo Software to, a third Person shall
not be deemed to be an assignment. As a condition precedent to consummating any
such merger, consolidation or asset sale or transfer transaction, Bravo shall
require the successor-in-interest of the business or assets of Bravo to assume
the obligations of Bravo hereunder and shall confirm that this Distribution
Agreement shall remain in full force and effect and binding upon such successor-
in-interest in accordance with its terms, a copy of which written instrument
shall be provided to PIQ.
(b) Subject to Section 9.1(a), this Distribution Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
14
Section 9.2 ENTIRE AGREEMENT. This Distribution Agreement contains the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior understandings and agreements of the parties with
respect thereto.
Section 9.3 AMENDMENTS AND WAIVERS. No amendment, modification, termination
or waiver of any provision of this Distribution Agreement shall in any event be
effective without the written concurrence of each party hereto.
Section 9.4 GOVERNING LAW. This Distribution Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
Section 9.5 NOTICES. Except as otherwise provided in this Distribution
Agreement, any notice, demand or communication to a party hereto required or
permitted to be given by any provision of this Distribution Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
personally, sent by facsimile transmission or electronic mail (with confirmation
of receipt), overnight express courier or registered or certified mail,
postage/charges-prepaid, return receipt requested, and addressed to the party as
set forth below:
--------------------------------------------------------------------------------------------------
NAME MAILING ADDRESS TELEPHONE, FAX AND
EMAIL ADDRESS
--------------------------------------------------------------------------------------------------
IF TO BRAVO:
▇▇▇▇▇▇.▇▇ Technologies, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇/▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇ LLP
--------------------------------------------------------------------------------------------------
WITH A COPY TO:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ LLP ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
--------------------------------------------------------------------------------------------------
IF TO PIQ:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Chief Executive Officer Suite 2050 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇.▇▇ LLC ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
--------------------------------------------------------------------------------------------------
15
--------------------------------------------------------------------------------------------------
NAME MAILING ADDRESS TELEPHONE, FAX AND
EMAIL ADDRESS
--------------------------------------------------------------------------------------------------
WITH A COPY TO: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
------------------------------------------------------------------------------------------------------
All such notices, demands and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile or electronic mail transmission to the
facsimile number or electronic mail address, as the case may be, as provided in
this Section, be deemed given upon receipt, (iii) if delivered by overnight or
express courier to the address as provided in this Section, be deemed given on
the earlier of the second business day following the date sent by such overnight
or express courier or upon receipt and (iv) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed given on
the earlier of the sixth business day following mailing or upon receipt, in each
case regardless of whether such notice, demand or other communication is
received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section. Any party from time to time may change its address or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto at least ten (10) business days
prior to the effective date of such notice.
Section 9.6 HEADINGS. The titles of the Articles and the headings of the
Sections of this Distribution Agreement are for convenience of reference only
and are not to be considered in construing the terms and provisions of this
Distribution Agreement.
Section 9.7 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Distribution Agreement are intended solely for the benefit of each party hereto
and their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights, and this
Distribution Agreement does not confer any such rights, upon any other Person,
other than any Person entitled to indemnity under Section 7.1.
Section 9.8 INTERPRETATION. It is the intention of the parties hereto that,
during the term of this Distribution Agreement, the rights and obligations of
the parties hereto and their successors-in-interest shall be governed by the
terms of this Distribution Agreement. This Distribution Agreement shall be
construed without regard to any presumption or other rule requiring construction
hereof against the party causing this Distribution Agreement to be drafted.
Section 9.9 INVALID PROVISIONS. If any provision of this Distribution
Agreement is held to be illegal, invalid or unenforceable, and if the rights or
obligations of any party hereto under this Distribution Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Distribution Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (c) the remaining provisions of this Distribution Agreement will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom
16
and (d) in lieu of such illegal, invalid or unenforceable provision, there will
be added automatically as a part of this Distribution Agreement a legal, valid
and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
Section 9.10 RELATIONSHIP. The parties hereto are independent contractors
with respect to each other, and nothing in this Distribution Agreement shall be
construed as constituting the parties hereto or as partners, joint venturers or
any other form of legal association that would impose liability on one party for
the act or failure to act of the other party, except as expressly provided in
this Distribution Agreement.
Section 9.11 FORCE MAJEURE. Neither party will be liable to the other party
for its failure to perform or for delay in performance of its obligations under
this Distribution Agreement to the extent such failure or delay results from
causes beyond its reasonable control, including, without limitation, acts of God
or fires; governmental regulations, prohibitions or restrictions; failures of
public utilities or providers of electronic communications; strikes or labor
stoppages; or transportation interruptions or embargoes.
Section 9.12 COUNTERPARTS. This Distribution Agreement may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
Remainder of page intentionally left blank
17
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
caused their authorized representatives to execute this Distribution Agreement
as of the date first above written.
▇▇▇▇▇▇.▇▇ TECHNOLOGIES, INC.
By:
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
Title: Director/Secretary
▇▇▇▇▇▇.▇▇ LLC
By:
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
In consideration of and in order to induce PIQ to enter into the above
Distribution Agreement with Bravo, the undersigned, hereby absolutely and
unconditionally (i) agrees, on behalf of itself, to be bound by those provisions
of the above Distribution Agreement (including, without limitation, Section
1.1(a)) that impose any obligations upon the Affiliates of Bravo and (ii)
guarantees to PIQ the full and timely performance by Bravo of all obligations of
Bravo under the above Distribution Agreement, which shall be a continuing
guaranty and remain in full force and effect for so long as there shall remain
any obligations of Bravo under the above Distribution Agreement.
▇▇▇▇▇▇.▇▇ CAPITAL PARTNERS L.P.
By:
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
Title:
Signature Page to Master Exclusive Distribution Agreement
Schedule 2.1
WORK PLAN
SEE ATTACHED.
Schedule 3.1(c)
INTELLECTUAL PROPERTY
NONE.
Schedule 3.1(d)
CONFLICTS WITH INTELLECTUAL PROPERTY
NONE.
Schedule 3.1(e)
INFRINGEMENT
NONE.
Schedule 3.1(f)
PILOT PROGRAM MATTERS
NONE.
Schedule VIII-1
BRAVO SOFTWARE
SARINA PLATFORM
The Sarina Platform enables micro selection and dissemination of electronic
messages to Personal Digital Assistants (PDA), notably the Nokia 9*** series of
Communicators.
To facilitate the receiving of messages using a PDA, the Sarina Platform
includes an SMS (short message service) browser. This SMS browser provides a
means of altering software within the PDA via a text data transmission over the
SMS channel. These messages are scripted using the Infocom Remote Screen
Language (IRSL) designed by bSmart. Each IRSL message is capable of displaying
a module (or screen) on the PDA containing familiar graphical user interface
components with which the user can interact.
Each module has a unique identifier and if a module received has an identifier
not already present, then the new module will be added to the PDA. Software
modules may be sent in several parts and the PDA is arranged to acknowledge
receipt of each part, to correctly order each part and to request retransmission
of missing parts. BSmart does not require any its software to be hard-coded on
the PDA.
The Sarina Platform allows modules to be transmitted to users by various message
direction or transmission means, also referred to as channels. These channels
currently include SMTP (Simple Mail Transfer Protocol) E-Mail, SMS (Short
Message Service), WAP (Wireless Access Protocol), WWW (World Wide Web) and
Voice. The choice of which channel to use is based on the message length, the
message priority and the availability of each protocol for the recipient. These
parameters as well as other user specific configuration choices are recorded in
the system Database. The format of each message is then arranged to be the most
appropriate for the chosen method of contacting the user.
If a message is to be converted prior to transmission then a log is arranged to
record parameters relating to that conversion operation. The cost of each
transmission can therefore be calculated on the basis of those recorded
parameters. If a cost exceeds a specific value recorded by a user in the
database then a cheaper transmission means will be selected by the system. If a
user has recorded no specific preferences then the system will perform a cost
calculation of each transmission means and will direct a message using the least
cost route.
The Sarina Platform will also select a transmission method based on itinerary
information that is held for a user in the Database. Therefore, different
transmission means may be used for predetermined days and/or times of day. If
multiple transmission means are available then they can be sorted in a priority-
ordered list. A subsequently listed means may then be used to contact the user
if the previously listed option fails.
The Sarina Platform is used to deliver timely intra-day information, mainly to
mobile workers. Using the SMS browser as a thin client it allows a PDA to
interact with client-server based applications.
As well as delivering information based services, the system also allows users
to set up and maintain their own services that can leverage the bSmart
architecture of multi-channel transmission and message redirection based on
cost, itinerary, priority and user preference.
Schedule VIII-2
MARKS
▇▇▇▇▇▇.▇▇
[▇▇▇▇▇▇.▇▇ LOGO]
TABLE OF CONTENTS
Page
----
BACKGROUND........................................................... 1
ARTICLE I EXCLUSIVE DISTRIBUTION RIGHTS.............................. 1
Section 1.1 Distribution License............................... 1
Section 1.2 Sublicensing....................................... 3
Section 1.3 Royalty............................................ 3
Section 1.4 Right of First Refusal............................. 3
ARTICLE II CERTAIN COVENANTS OF BRAVO................................ 4
Section 2.1 Provision of Bravo System Software................. 4
Section 2.2 Provision of Training.............................. 6
Section 2.3 Provision of Consulting/Technical Support.......... 6
ARTICLE III CERTAIN REPRESENTATIONS AND WARRANTIES................... 6
Section 3.1 Certain Representations and Warranties of Bravo.... 6
Section 3.2 Certain Representations and Warranties of PIQ...... 7
ARTICLE IV INTELLECTUAL PROPERTY MATTERS............................. 8
Section 4.1 Authorized Use of Marks............................ 8
Section 4.2 Proprietary Rights................................. 9
Section 4.3 Prosecution of Patent Applications................. 9
Section 4.4 Infringement....................................... 9
Section 4.5 Enforcement........................................ 9
ARTICLE V CONFIDENTIAL INFORMATION................................... 10
Section 5.1 Maintenance of Confidentiality..................... 10
Section 5.2 Return of Confidential Information................. 10
Section 5.3 Injunctive Relief.................................. 10
ARTICLE VI LIMITED WARRANTY.......................................... 11
Section 6.1 Other Warranties................................... 11
Section 6.2 Disclaimer......................................... 11
i
TABLE OF CONTENTS
(continued)
Page
----
ARTICLE VII INDEMNITY................................................ 11
Section 7.1 Indemnification.................................... 11
Section 7.2 Notice and Procedure............................... 12
Section 7.3 No Consequential Damages........................... 12
ARTICLE VIII DEFINED TERMS........................................... 12
Section 8.1 Defined Terms...................................... 12
ARTICLE IX MISCELLANEOUS............................................. 14
Section 9.1 No Assignment; Binding Effect...................... 14
Section 9.2 Entire Agreement................................... 15
Section 9.3 Amendments and Waivers............................. 15
Section 9.4 Governing Law...................................... 15
Section 9.5 Notices............................................ 15
Section 9.6 Headings........................................... 16
Section 9.7 No Third Party Beneficiary......................... 16
Section 9.8 Interpretation..................................... 16
Section 9.9 Invalid Provisions................................. 16
Section 9.10 Relationship...................................... 17
Section 9.11 Force Majeure..................................... 17
Section 9.12 Counterparts...................................... 17
SCHEDULES
Schedule 2.1 Work Plan
Schedule 3.1(c) Intellectual Property
Schedule 3.1(d) Conflicts with Intellectual Property
Schedule 3.1(e) Infringement
Schedule 3.1(f) Pilot Program Matters
Schedule VIII-1 Bravo Software
Schedule VIII-2 Marks
ii
EXHIBIT C
PATENT AND TRADEMARK LICENSE AGREEMENT
--------------------------------------
THIS AGREEMENT is made this 8th day of August, 2000 by and between
eMcris Limited, an Anguilla corporation having a place of business located at
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ("Licensor"), and
▇▇▇▇▇▇.▇▇ Technologies, Inc., a Delaware company having a place of business
located at c/o ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ("Licensee").
WHEREAS, Licensor has certain exclusive and non-exclusive rights,
pursuant to a Patent and Trademark License Agreement between eMisis Infocom
Group PLC, an Irish public limited company ("eMisis") and Licensor dated April
25, 2000, in certain Intellectual Property and Marks, as those terms are defined
therein; and
WHEREAS, Licensee desires to license the Intellectual Property and
Marks from Licensor, and Licensor is willing to grant to Licensee a license to
use, distribute and sublicense the Intellectual Property and Marks throughout
the world subject and pursuant to the terms and conditions herein.
NOW, THEREFORE, in consideration of the foregoing, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Grant of License and Distribution Rights.
a. Licensor hereby grants to Licensee an exclusive (even as to
Licensor), irrevocable right and license to market, promote, sublicense (subject
to Sections 2 and 3 below), sell and otherwise distribute products and services
covered by the Intellectual Property throughout the world to entities that
resell or further sublicense such products and services covered by the
Intellectual Property to others, and to system integrators that install or
implement such products and services covered by the Intellectual Property for
others.
b. Licensor hereby grants to Licensee a non-exclusive, irrevocable
right and license to market, promote, sublicense (subject to Sections 2 and 3
below), sell and otherwise distribute products and services covered by the
Intellectual Property throughout the world to entities other than (i) entities
that resell or further sublicense such products and services covered by the
Intellectual Property to others, and (ii) system integrators that install or
implement such products and services covered by the Intellectual Property for
others.
c. Licensor hereby grants to Licensee a non-exclusive, irrevocable
right and license (including the right, subject to Sections 2 and 3 below, to
sublicense) to modify, adapt, update, develop upgrades for and otherwise create
derivative works and improvements based on or related to the application program
interfaces ("APIs") providing access to the functionality of the Intellectual
Property.
d. Licensor hereby grants to Licensee a non-exclusive, irrevocable
right and license (including the right, subject to Sections 2 and 3 below, to
sublicense) to use the Intellectual Property for its own purposes solely in
support of Sections 1.a., 1.b. and 1.c. above.
e. Licensor hereby grants to Licensee a non-exclusive right and
license to use and sublicense the Marks in connection solely with products and
services provided by Licensee or any sublicensee that relate to or are covered
by the Intellectual Property. Use of the Marks by Licensee (and any sublicensee
pursuant to a written sublicense agreement) shall be generally of a nature and
quality equivalent to Licensor's present uses and shall be subject to Licensor's
right to exercise quality control over the use of the Marks by Licensee and any
sublicensee, including, without limitation, the right to approve the size,
placement and appearance of the Marks. Except pursuant to this Section 1.e.,
Licensee understands and agrees that it may not use any copyright, trademark,
trade name, logo or service ▇▇▇▇ of Licensor, other than the Marks, in any
advertising, marketing, promotion or distribution of products and services
provided by Licensee or any sublicensee that relate to or are covered by the
Intellectual Property, without the prior written consent of Licensor.
2. Sublicensing. Any sublicense of the Intellectual Property permitted
under Sections 1.a., 1.b., 1.c. and 1.d. above from Licensee to a third party
sublicensee ("Sublicensee") shall be in writing and shall require the
Sublicensee to agree to comply with and observe the terms applicable to
Sublicensees in this Agreement.
3. Royalty. Licensee shall pay a royalty to Licensor equivalent to 29%
of any revenue (in any form) received from any Sublicensee.
4. Ownership of Intellectual Property.
a. Licensee and any Sublicensee acknowledge that as between eMisis,
Licensor and Licensee or eMisis, Licensor and Sublicensee as the case may be,
eMisis and/or Licensor own all right, title and interest in and to the
Intellectual Property and Marks, and Licensee and any Sublicensee agree that all
use of the Intellectual Property and Marks shall inure to the benefit of and be
on behalf of eMisis. Other than as expressly provided in this Agreement, neither
Licensee nor Sublicensee shall acquire any rights in or to the Intellectual
Property or Marks.
b. Licensee and any Sublicensee shall, at Licensor's expense, execute
all documents and otherwise reasonably cooperate in establishing, confirming and
enforcing eMisis' or Licensor's ownership rights or other interests in and to
the Intellectual Property and Marks.
c. Licensor acknowledges that as between Licensor and Licensee or
Licensor and Sublicensee as the case may be, Licensee or Sublicensee own all
right, title and interest in and to any modification, adaptation, update,
upgrade and other derivative work (but not the underlying work) based on or
related to the APIs providing access to the functionality of the Intellectual
Property. Licensee and any Sublicensee hereby grant Licensor a non-exclusive,
royalty-free, irrevocable right and license to (i) use, (ii) market, promote,
sublicense, sell and otherwise distribute, subject to Section 1.a., and (iii)
modify, adapt, update, develop upgrades for and otherwise create derivative
works and improvements based on or related to such Licensee or
2
Sublicensee modification, adaptation, update, upgrade and other derivative work
throughout the world.
5. Confidentiality and Non-Disclosure.
a. Licensor, Licensee and any Sublicensee each agree that it shall not
use in an unauthorized manner, disclose, reproduce, publish, distribute or
disseminate, in whole or in part, to any third party, any proprietary or
confidential information received in connection with this Agreement, the
Intellectual Property or the performance of any obligations herein.
b. The above obligations of confidentiality and non-disclosure shall
not extend to proprietary or confidential information which: (a) was known to
the receiving party prior to receipt thereof from the disclosing party, (b) is
disclosed to the receiving party in good faith by a third party under no
obligation of confidence and with the right to make such disclosure, (c) is or
shall have become part of the public domain through no fault of the receiving
party or any other party with an obligation of confidentiality to the disclosing
party, or (d) is required to be disclosed by the receiving party by order of a
court of competent jurisdiction, administrative agency or governmental body, or
by any law, rule or regulation, or by subpoena, or any other administrative or
legal process, or by applicable regulatory standards; provided, however, that
the disclosing party is promptly informed of any such requirement and has a
reasonable opportunity to apply for protection from such disclosure, which
application will not be contested by the receiving party.
c. The foregoing confidentiality and non-disclosure obligations shall
survive the term of this Agreement.
6. Infringement by Third Parties.
a. Licensee agrees, promptly upon discovery, to notify Licensor in
writing of any unauthorized use or potential unauthorized use of the
Intellectual Property or Marks by third parties of which it becomes aware. As
between Licensor and Licensee, Licensor shall have the sole right and
discretion, subject to Section 6.b. below, to take appropriate legal action
involving the Intellectual Property and Marks. If Licensor decides that taking
legal action is appropriate, Licensor will be responsible for any costs incurred
and will be entitled to retain any of its damages it recovers. Licensee and any
Sublicensee agree to cooperate fully with Licensor (including giving its consent
to being joined as a party in any such legal action), at the sole expense of
Licensor, with respect to any such legal action and shall each be entitled to
retain any of its damages it recovers, provided that (i) a reasonable portion of
any such recovery by Licensee be used to reimburse Licensor for a reasonable
portion of Licensor's actual legal expenses; and (ii) to the extent Licensor's
recovery is properly attributable to harm sustained by Licensee in connection
with Licensee's exclusive rights under this Agreement, Licensee shall be
entitled to a reasonable portion of any such recovery.
b. In the event that Licensor elects not to take legal action pursuant
to Section 6.a. above, Licensee may do so, at its sole expense. In this case,
Licensor agrees to cooperate fully with Licensee (including giving its consent
to being joined as a party in any such legal action), at the sole expense of
Licensee, with respect to any such legal action.
3
7. Indemnity.
a. Licensor shall, at its sole expense, defend or settle any claim,
action or allegation brought against Licensee and any Sublicensee on the grounds
that the Intellectual Property or Marks, or use thereof (provided that such use
is consistent with this Agreement), infringes any patent, copyright, trademark
or trade secret or any intellectual property right of any third party so long as
Licensee and any Sublicensee give prompt written notice to Licensor of any such
claim, action or allegation of infringement. Licensor shall have the exclusive
right to defend any such claim, action or allegation and make settlements
thereof in its own discretion, provided that Licensor shall not impose any
obligation upon Licensee or any Sublicensee (other than to replace or substitute
software components) without the prior written approval of Licensee or such
Sublicensee. Licensee and any Sublicensee shall give such assistance and
information (including giving its consent to being joined as a party in any
legal action), at the sole expense of Licensor, as Licensor may reasonably
require to settle or oppose such claims.
b. The above obligation shall not apply to any claim, action or
allegation that arises from the unauthorized modification of the Intellectual
Property, or the combination or use of the Intellectual Property with third
party software products where such claim, action or allegation would be avoided
but for such combination or use.
8. No Contest. Licensee and any Sublicensee each agree that it shall
not challenge, dispute or otherwise contest, or assist others in challenging,
disputing or otherwise contesting, the validity, enforceability or ownership by
Licensor of the Intellectual Property and Marks.
9. Term. This Agreement, and the license and rights granted to
Licensee and any Sublicensee herein pursuant to Sections 1.a., 1.b., 1.c. and
1.d. shall continue during the life of any patent owned or licensed by Licensor
containing a claim covering the Intellectual Property or while any application
for patent owned or licensed by Licensor containing a claim covering the
Intellectual Property is pending, whichever is later. The license and rights
granted to Licensee and any Sublicensee herein pursuant to Section 1.e. shall
survive termination of this Agreement, but only while the Marks are used in
connection solely with products and services provided by Licensee or any
Sublicensee that relate to or are covered by the Intellectual Property.
10. Representations and Warranty.
a. Licensor represents that as of the date of this Agreement, Licensor
has sufficient rights, title and interest in and to the Intellectual Property
and Marks to provide the license contemplated herein; and that the grant of
license herein shall not violate, conflict with or result in a breach of or
default by Licensor of any other agreement.
b. Licensor represents that as of the date of this Agreement, Licensor
has no knowledge that the Intellectual Property or Marks (including the use
thereof in accordance with this Agreement) infringes any patents, copyrights,
trademarks, trade secrets or other intellectual property rights of any third
party.
4
c. Licensor represents and warrants that the Intellectual Property
and any documentation and/or training provided by Licensor shall be sufficient
and adequate to permit Licensee to use and access the Intellectual Property in
accordance with this Agreement; and to permit a reasonably skilled software
developer to make customizations to the APIs providing access to the
functionality of the Intellectual Property in accordance with this Agreement.
d. Licensor warrants that the media on which the Intellectual
Property is distributed will be free from defects in materials and workmanship
under normal use for a period of ninety (90) days from delivery. Licensor will
replace any defective media returned to Licensor within the ninety (90) day
period.
e. EXCEPT AS SET FORTH IN SECTIONS 10.A., 10.B., 10.C. AND 10.D.
ABOVE, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS,
IMPLIED, OR STATUTORY, REGARDING OR RELATING TO THE INTELLECTUAL PROPERTY AND
MARKS, OR ANY MATERIALS OR SERVICES FURNISHED OR PROVIDED TO LICENSEE UNDER THIS
AGREEMENT. OTHER THAN AS EXPRESSLY PROVIDED IN THIS AGREEMENT, LICENSOR
SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS AND
MARKS.
11. LIMITATION OF LIABILITIES. IN NO EVENT WILL LICENSOR BE LIABLE FOR
ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF DATA, COST OF
COVER OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
WHETHER ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING
NEGLIGENCE, EVEN IF LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. IN NO EVENT SHALL LICENSOR BE LIABLE TO LICENSEE OR ANY SUBLICENSEE OR
ANY OTHER ENTITY FOR ANY DAMAGES OR LOSS CAUSED BY DELAY IN DELIVERY OR
FURNISHING OF DATA USING THE INTELLECTUAL PROPERTY. IN ADDITION, LICENSOR SHALL
NOT BE LIABLE FOR DAMAGES OF ANY KIND WHATSOEVER IN EXCESS OF TWO MILLION FIVE
HUNDRED THOUSAND DOLLARS ($2,500,000.00). THE FOREGOING LIMITATIONS SHALL NOT
APPLY TO (I) INDEMNIFICATION OBLIGATIONS; (II) ANY CLAIMS FOR PERSONAL INJURY OR
DEATH, OR DAMAGE TO PROPERTY; OR (III) ANY CLAIMS BASED UPON LICENSOR'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT; OR (IV) BREACHES OF THE CONFIDENTIALITY
OBLIGATIONS.
12. Miscellaneous.
a. Complete Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to such subject matter.
b. Assignment; Transfer. This Agreement, and the obligations, rights
or license hereunder, may not be assigned or transferred by Licensee, other than
to an affiliate including,
5
without limitation, ▇▇▇▇▇▇.▇▇ LLC, a Delaware limited liability company, without
the prior written consent of Licensor.
c. Successors and Assigns. This Agreement is binding on and inures
to the benefit of the parties, and their respective successors and permitted
assigns.
d. Governing Law; Venue; Jurisdiction. This Agreement, and the
rights and obligations of the parties hereunder, shall be governed, including,
without limitation, as to validity, interpretation and effect, by the laws of
New York, United States without regard to the principles of conflict of laws.
e. Severability. In the event that any provision of this Agreement
conflicts with the law under which this Agreement is to be construed, or if any
such provision is held invalid by a court with jurisdiction over the parties to
this Agreement and the subject matter of this Agreement, (i) such provision will
be deemed to be restated to reflect as nearly as possible the original
intentions of the parties in accordance with applicable law, and (ii) the
remaining terms, provisions, covenants and restrictions of this Agreement will
remain in full force and effect.
f. Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original and all of which together will
constitute one and the same document.
g. Waiver; Amendment. No waiver of any term, condition or obligation
of this Agreement shall be valid unless in writing and signed by the waiving
party. No waiver of any one or several of the terms, conditions or obligations
of this Agreement, and no partial waiver thereof, shall be construed as a waiver
of any of the other terms, conditions or obligations of this Agreement. This
Agreement may not be amended, changed or modified in any fashion except by
written instrument signed by each of the parties hereto.
h. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto by its duly authorized
representative has caused this Agreement to be executed as of the date first
above written.
eMcris Limited ▇▇▇▇▇▇.▇▇ Technologies, Inc.
Licensor Licensee
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:________________________ Title:________________________
6
EXHIBIT D
SOFTWARE SALE AND ASSIGNMENT
----------------------------
THIS AGREEMENT is made this 8th day of August, 2000 by and between
eMcris Limited, an Anguilla corporation having a place of business located at
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ("Assignor") and
▇▇▇▇▇▇.▇▇ Technologies, Inc., a Delaware corporation having a place of business
located at c/o ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ("Assignee").
WHEREAS, Assignor owns certain computer software and documentation
related to wireless, database driven, interactive data communications as
described in Schedule A annexed hereto (the "Software"); and
WHEREAS, Assignee desires to acquire the Software from Assignor, and
Assignor is willing to sell the Software to Assignee pursuant to the terms and
conditions herein.
NOW, THEREFORE, in consideration of the foregoing, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Sale of Software.
a. In consideration of Section 1.b. below, as of the date of this
Agreement, Assignor hereby transfers, sells, assigns and delivers to Assignee
all right, title and interest in and to the Software (including Object Code and
Source Code).
b. In consideration of Section 1.a. above, and in consideration of a
purchase price of $1.00 per share of common stock, par value $.01 per share of
Assignee ("Common Stock"), as of the date of this Agreement, Assignee hereby
issues and delivers to Assignor a certificate registered in Assignor's name for
100 shares (the "Shares") of Common Stock, constituting all of the issued and
outstanding capital stock of Assignee. Delivery of such certificate shall be
made against receipt by the Assignee of a check payable to the order of the
Assignee in the full amount of the purchase price for the Shares being purchased
by Assignor.
2. Indemnity.
a. Assignor shall, at its sole expense, defend or settle any claim,
action or allegation brought against Assignee on the grounds that the Software,
or use thereof (provided that such use is consistent with Schedule A of this
Agreement), infringes any patent, copyright, trademark or trade secret or any
intellectual property right of any third party so long as Assignee gives prompt
written notice to Assignor of any such claim, action or allegation of
infringement. Assignor shall have the exclusive right to defend any such claim,
action or allegation and make settlements thereof in its own discretion,
provided that Assignor shall not impose any obligation upon Assignee (other than
to replace or substitute software components) without the prior written approval
of Assignee. Assignee shall give such assistance and information (including
giving its consent to being joined as a party in any legal action), at the sole
expense of Assignor, as Assignor may reasonably require to settle or oppose such
claims.
b. The above obligation shall not apply to any claim, action or
allegation that arises from the modification of the Software, or the combination
or use of the Software with third party software products where such claim,
action or allegation would be avoided but for such combination or use.
c. The obligations of Assignor under this Section 2 shall last for
two (2) years from the date of this Agreement.
3. Representations and Warranties.
a. Assignor represents that as of the date of this Agreement,
Assignor has sufficient rights, title and interest in and to the Software to
provide the assignment contemplated herein; and as of the execution and delivery
of this Agreement Assignee has good and marketable title to the Software free
and clear of all encumbrances and Assignor has no rights, title or interest
whatsoever in and to the Software.
b. Assignor represents that as of the date of this Agreement, the
assignment herein does not violate, conflict with or result in a breach of or
default by Assignor of any other agreement.
c. Assignor represents that as of the date of this Agreement,
Assignor has no knowledge that the Software (including the use thereof in
accordance with this Agreement) infringes any patents, copyrights, trademarks,
trade secrets or other intellectual property rights of any third party.
d. Assignor represents and warrants that the Software and any
documentation and/or training provided shall be sufficient and adequate to
permit Assignee to use and access the Software in accordance with this
Agreement; and to permit a reasonably skilled software developer to upgrade,
update and make customizations to the Software.
e. Assignor warrants that the media on which the Intellectual
Property is distributed will be free from defects in materials and workmanship
under normal use for a period of ninety (90) days from delivery. Assignor will
replace any defective media returned to Assignor within the ninety (90) day
period.
f. In respect of the Shares the Assignor represents the following:
(i) the Shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or any state securities law and the
Shares are being offered and sold pursuant to one or more exemptions from such
registration based in part upon Assignor's representations contained in this
letter.
(ii) Assignor is an "accredited" investor within the meaning of the
Securities Act and is acquiring the Shares for its own account for investment
only, and will not sell, transfer
2
or otherwise dispose of the Shares, or any portion thereof or interest therein,
in violation of the registration requirements of applicable federal and state
securities laws.
(iii) Each certificate issued to represent the Shares shall bear the
following (or a substantially equivalent) conspicuous legend on the face or
reverse side thereof:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS. NEITHER THESE SHARES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
g. EXCEPT AS SET FORTH IN SECTION 3 ABOVE, ASSIGNOR MAKES NO
REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, REGARDING
OR RELATING TO THE SOFTWARE, OR ANY MATERIALS OR SERVICES FURNISHED OR PROVIDED
TO ASSIGNEE UNDER THIS AGREEMENT. OTHER THAN AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, ASSIGNOR SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS.
4. LIMITATION OF LIABILITIES. IN NO EVENT WILL ASSIGNOR BE LIABLE FOR
ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF DATA, COST OF
COVER OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
WHETHER ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING
NEGLIGENCE, EVEN IF ASSIGNOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. IN NO EVENT SHALL ASSIGNOR BE LIABLE TO ASSIGNEE OR ANY OTHER ENTITY
FOR ANY DAMAGES OR LOSS CAUSED BY DELAY IN DELIVERY OR FURNISHING OF DATA USING
THE SOFTWARE. IN ADDITION, ASSIGNOR SHALL NOT BE LIABLE FOR DAMAGES OF ANY KIND
WHATSOEVER IN EXCESS OF TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($2,500,000.00). THE FOREGOING LIMITATIONS SHALL NOT APPLY TO (I)
INDEMNIFICATION OBLIGATIONS; (II) ANY CLAIMS FOR PERSONAL INJURY OR DEATH, OR
DAMAGE TO PROPERTY; OR (III) ANY CLAIMS BASED UPON ASSIGNOR'S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT; OR (IV) BREACHES OF THE CONFIDENTIALITY OBLIGATIONS.
3
5. Miscellaneous.
a. Complete Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to such subject matter.
b. Assignment; Transfer. This Agreement, may not be assigned or
transferred by Assignee, other than to an affiliate including, but not limited
to ▇▇▇▇▇▇.▇▇ LLC, a Delaware limited liability company, without the prior
written consent of Assignor. There are no third party beneficiaries to this
Agreement.
c. Successors and Assigns. This Agreement is binding on and inures
to the benefit of the parties, and their respective successors and permitted
assigns.
d. Governing Law; Venue; Jurisdiction. This Agreement, and the rights
and obligations of the parties hereunder, shall be governed, including, without
limitation, as to validity, interpretation and effect, by the laws of New York,
United States, without regard to the principles of conflict of laws.
e. Severability. In the event that any provision of this Agreement
conflicts with the law under which this Agreement is to be construed, or if any
such provision is held invalid by a court with jurisdiction over the parties to
this Agreement and the subject matter of this Agreement, (i) such provision will
be deemed to be restated to reflect as nearly as possible the original
intentions of the parties in accordance with applicable law, and (ii) the
remaining terms, provisions, covenants and restrictions of this Agreement will
remain in full force and effect.
f. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original and all of which together will constitute
one in the same document.
g. Waiver; Amendment. No waiver of any term, condition or obligation
of this Agreement shall be valid unless in writing and signed by the waiving
party. No waiver of any one or several of the terms, conditions or obligations
of this Agreement, and no partial waiver thereof, shall be construed as a waiver
of any of the other terms, conditions or obligations of this Agreement. This
Agreement may not be amended, changed or modified in any fashion except by
written instrument signed by each of the parties hereto.
h. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
4
IN WITNESS WHEREOF, each of the parties hereto by its duly authorized
representative has caused this Agreement to be executed as of the date first
above written.
eMcris Limited ▇▇▇▇▇▇.▇▇ Technologies, Inc.
Assignor Assignee
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:________________________ Title:________________________
5
Schedule A
Software
--------
Sarina Platform
The Sarina Platform enables micro selection and dissemination of electronic
messages to a Personal Digital Assistant (PDA), notably the Nokia 9*** series of
Communicators.
To facilitate the receiving of messages using a PDA, the Sarina Platform
includes an SMS (short message service) browser. This SMS browser provides a
means of altering software within the PDA via a text data transmission over the
SMS channel. These messages are scripted using the Infocom Remote Screen
Language (IRSL) designed by bSmart. Each IRSL message is capable of displaying a
module (or screen) on the PDA containing familiar graphical user interface
components with which the user can interact.
Each module has a unique identifier and if a module received has an identifier
not already present, then the new module will be added to the PDA. Software
modules may be sent in several parts and the PDA is arranged to acknowledge
receipt of each part, to correctly order each part and to request retransmission
of missing parts. BSmart does not require any its software to be hard-coded on
the PDA.
The Sarina Platform allows modules to be transmitted to users by various message
direction or transmission means, also referred to as channels. These channels
currently include SMTP (Simple Mail Transfer Protocol) E-Mail, SMS (Short
Message Service), WAP (Wireless Access Protocol), WWW (World Wide Web) and
Voice. The choice of which channel to use is based on the message length, the
message priority and the availability of each protocol for the recipient. These
parameters as well as other user specific configuration choices are recorded in
the system Database. The format of each message is then arranged to be the most
appropriate for the chosen method of contacting the user.
If a message is to be converted prior to transmission then a log is arranged to
record parameters relating to that conversion operation. The cost of each
transmission can therefore be calculated on the basis of those recorded
parameters. If a cost exceeds a specific value recorded by a user in the
database then a cheaper transmission means will be selected by the system. If a
user has recorded no specific preferences then the system will perform a cost
calculation of each transmission means and will direct a message using the least
cost route.
The Sarina Platform will also select a transmission method based on itinerary
information that is held for a user in the Database. Therefore, different
transmission means may be used for predetermined days and/or times of day. If
multiple transmission means are available then they can be sorted in a priority-
ordered list. A subsequently listed means may then be used to contact the user
if the previously listed option fails.
The Sarina Platform is used to deliver timely intra-day information, mainly to
mobile workers. Using the SMS browser as a thin client, it allows a PDA to
interact with client-server based applications.
As well as delivering information based services, the system also allows users
to set up and maintain their own services that can leverage the bSmart
architecture of multi-channel transmission and message redirection based on
cost, itinerary, priority and user preference.
EXHIBIT E
SYSTEM INTEGRATION AND IMPLEMENTATION SERVICES AGREEMENT
BETWEEN
▇▇▇▇▇▇.▇▇ LLC
AND
COTELLIGENT USA, INC.
SYSTEM INTEGRATION AND
IMPLEMENTATION SERVICES AGREEMENT
THIS SYSTEM INTEGRATION AND IMPLEMENTATION SERVICES AGREEMENT (this
"Services Agreement") is made and entered into as of August 8, 2000, ("Effective
Date") between ▇▇▇▇▇▇.▇▇ LLC, a Delaware limited liability company (the
"Company"), and Cotelligent USA, Inc., a California corporation ("Charlie USA").
BACKGROUND
A. The Company is being organized pursuant to that certain Operating
Agreement dated as of April 27, 2000, as amended and restated as of the date
hereof (the Operating Agreement"), as a joint venture between CZG Mobile
Ventures, Inc., a Delaware corporation and wholly-owned subsidiary of Charlie
USA, and ▇▇▇▇▇▇.▇▇ Technologies, Inc., a Delaware corporation ("Bravo").
B. Pursuant to that certain Master Exclusive Distribution Agreement
between Bravo and the Company of even date herewith (the "Distribution
Agreement"), Bravo has granted to the Company certain exclusive and non-
exclusive licenses to market, promote, sublicense, resell, distribute, modify,
adapt, update, develop upgrades for, operate and otherwise exploit the
commercial uses of the Bravo System (as defined in the Distribution Agreement).
C. The Company desires to ▇▇▇▇▇ ▇▇▇▇▇▇▇ USA certain non-exclusive
service rights with respect to the Bravo System (including, without limitation,
the Bravo Software, as defined in the Distribution Agreement) and other
wireless, interactive data communications systems of third parties (the "Third
Party Systems", together with Bravo System, hereinafter referred to as the
"Systems"), on the terms and conditions set forth in this Services Agreement.
D. It is the intention of the parties hereto to develop the business of
the Company in each party's respective competencies to ensure the Company's
commercial success.
E. All capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Operating Agreement or the
Distribution Agreement, as the case may be.
ARTICLE I
SERVICE RIGHTS
Section 1.1 SERVICE RIGHTS. Upon the terms and subject to the
conditions of this Services Agreement, the Company hereby grants to Charlie USA,
and Charlie USA hereby accepts from the Company, a non-exclusive, irrevocable,
perpetual, royalty-free and non-transferable (except as may be expressly
permitted under this Services Agreement) worldwide right, license and sublicense
to directly or indirectly (through one or more subcontractors in Charlie USA's
sole discretion) provide such system integration and implementation services as
may be requested by the Company from time to time ("Services") to the Company's,
and Bravo's and its Affiliates', clients/sublicensees of the Systems
("Clients"). Such Services will be provided in accordance with the terms and
conditions of written service agreements to be entered into between Charlie USA
and each Client receiving Services (each, a "Client Services Agreement").
Section 1.2 RIGHT OF FIRST REFUSAL. In the event that the Company or
any of its Affiliates seeks to offer to any Person the opportunity to provide
Services, the Company shall first offer, or cause to be offered, the right to
provide the Services on the following terms:
(a) The Company shall deliver a notice to Charlie USA setting forth,
in reasonable detail, all material terms and conditions relating to the proposed
Services, including, without limitation, anticipated scope of services,
specifications, time frames, personnel qualifications and the name and address
of the Client (each such notice, an "Offer"). Within five (5) Business Days
where the Services arise from joint marketing efforts of the Company and Charlie
USA, or within thirty (30) Business Days where the Services do not arise from
joint marketing efforts of the Company and Charlie USA, after receipt of the
Offer, Charlie USA shall provide the Company with either (i) a rejection of the
Offer or (ii) a written estimate of the fees payable and other terms and
conditions relating to the provision of the Services as set forth in the Offer.
If the Company does not accept Charlie USA's estimate and proposed terms and
conditions, the parties shall promptly enter into good faith negotiations with
the goal of arriving at a mutually agreeable pricing and terms and conditions
provided that the Company is also free to enter into an agreement with a third
Person for the provision of the Services on pricing and terms and conditions not
materially worse (considered in their entirety) than Charlie USA's original
estimate and proposed terms and conditions. If the Company accepts Charlie USA's
estimate and proposed terms and conditions, the parties shall cooperate in good
faith to cause the execution of a Client Services Agreement with respect to such
arrangement as soon as reasonably practicable.
(b) If (i) Charlie USA rejects the Offer, (ii) Charlie USA fails to
reject the Offer or to provide a written estimate within the applicable five-day
or thirty-day period or (iii) a Client Services Agreement is not executed on a
reasonably timely basis not due to the bad faith of the Company, then the
Company may enter into arrangements with a third Person to obtain the Services
set forth in the relevant Offer, so long as the terms and conditions of such
arrangement are no less favorable (considered in their entirety) to the Company
than those that the Company would have been able to obtain in an arrangement
with Charlie USA (as determined by reference to the terms and conditions set
forth in the Offer and Charlie USA's written estimate).
Section 1.3 COMMITMENT. Neither the Company nor any of its Affiliates
shall knowingly, directly or indirectly, take any action in contravention of the
rights of Charlie USA granted by the Company pursuant to Sections 1.1 and 1.2.
The Company, on behalf of itself and its Affiliates, acknowledges and agrees
that the remedy at law for any breach of this Section 1.2 will be inadequate and
that Charlie USA, in addition to any other relief available to it, shall be
entitled to temporary or permanent injunctive relief in enforcing this Section
1.2 without the necessity of proving actual damages.
2
ARTICLE II
ADDITIONAL UNDERTAKINGS
Section 2.1 DISCLOSURE OF TECHNICAL INFORMATION. Within ten (10) days
of receipt of the Systems, the Company shall disclose, or cause to be disclosed
directly from Bravo or any licensor of a Third Party System (the "Third Party
Licensor"), as the case may be, to Charlie USA, free of any charge to Charlie
USA, technical information as may be necessary for Charlie USA to perform the
Services, including, without limitation, one master copy of the Systems, one
master copy of the Object Code version of Systems software, one master copy of
the Source Code version of the APIs (as that term is defined in the Distribution
Agreement) and a copy of Systems documentation. The Company also shall deliver,
or cause to be delivered directly from Bravo or any Third Party Licensor, as the
case may be, to Charlie USA, free of any charge to Charlie USA, master copies of
the foregoing when the same has been modified, updated, upgraded or otherwise
enhanced by or for the Company and falling within the scope of the Systems
within thirty (30) days of development of the same.
Section 2.2 TECHNICAL ASSISTANCE. The Company shall use all reasonable
commercial efforts to provide, or cause to be provided directly from Bravo or
any Third Party Licensor, as the case may be, Charlie USA with such ongoing
technical and commercial training, supervision, consulting and/or technical
support services with respect to the Systems and the Services as Charlie USA
shall reasonably request from time to time. Without limiting the generality of
the foregoing, the Company shall cooperate, or use all reasonable commercial
efforts to cause Bravo and any Third Party Licensor, as the case may be, to
cooperate, with Charlie USA at all times to ensure that the Systems are
integrated or implemented as intended in each country and region including,
without limitation, by using all commercially reasonable efforts to modify and
improve the Systems to meet the specific reasonable requirements of any Client
as determined by Charlie USA. Charlie USA shall be responsible for providing to
Clients any training and support that it elects to provide under any Client
Services Agreement.
Section 2.3 COORDINATION AND COOPERATION. The Company and Charlie USA
shall use commercially reasonable efforts to coordinate with each other in the
marketing of the Systems to prospective Clients. The Company and Charlie USA
shall fully cooperate in the performance of the Services to the Client.
Section 2.4 SUBLICENSE AGREEMENTS. During the term of a Client Services
Agreement between Charlie USA and a Client, the Company shall have and maintain
a valid, enforceable, written and executed sublicense agreement with respect to
such Client's use of the relevant portions of the Systems between the Company
and such Client (each, a "Sublicense Agreement") on such terms and conditions as
agreed by the Company and such Client in their sole discretion. In the event
that the Company may reasonably expect that any such Sublicense Agreement will
terminate, or knows or becomes aware that any such Sublicense Agreement has in
fact terminated, for any reason while the Services are being rendered by Charlie
USA to such Client, the Company and Charlie USA shall use reasonable commercial
efforts to coordinate with each
3
other such that, if appropriate, the Client Services Agreement with such Client
shall be terminated at the same time as such Sublicense Agreement if such
Sublicense Agreement has not yet terminated, or, if such Sublicense Agreement
has already terminated, as soon as reasonably practicable thereafter.
Section 2.5 NO HIRE. During the term of this Services Agreement, each
party agrees that it shall not, and shall use all reasonable commercial efforts
to cause its Affiliates to not, directly or indirectly, (i) solicit, induce,
recruit or encourage any of the other party's employees or consultants to
terminate their relationship with such other party in favor of a relationship
with such party or its Affiliate, as the case may be, or any other Person or
(ii) hire or retain the services of any such employees or consultants; provided
that this obligation shall not apply to consultants who regularly provide
services concurrently to multiple clients in the normal course of their
business, to the extent that the hiring or retention of such consultants is not
likely to materially impair the ability of such consultants to provide services
to the other party.
ARTICLE III
TERM
Section 3.1 TERM. This Services Agreement shall commence as of the
Effective Date and shall thereafter continue in full force and effect until and
unless the Distribution Agreement shall have terminated or the Company shall
have been dissolved pursuant to the Operating Agreement; provided that a Rollup
(as defined in the Operating Agreement) shall have no effect on this Services
Agreement and, upon the consummation of a Rollup, the Reorganized Company (as
defined in the Operating Agreement) shall be deemed to have executed this
Services Agreement as of the Effective Date and shall fully assume and perform
the obligations of the Company hereunder.
ARTICLE IV
TRADEMARK MATTERS
Section 4.1 AUTHORIZED USE OF MARKS. Subject to the terms and
conditions of this Services Agreement, the Company hereby grants to Charlie USA
a worldwide, non-exclusive, perpetual, royalty-free license and sublicense to
use and display any trademarks, trade names, service marks, symbols or logos
used now or in the future by the Company on such terms as proscribe the
Company's use of same (the "Marks") solely in connection with the performance of
the Services. With respect to the ▇▇▇▇▇▇.▇▇ name and logo licensed by Bravo to
the Company pursuant to the Distribution Agreement, Charlie USA shall use such
▇▇▇▇▇▇.▇▇ name and logo only in connection with providing Services to a Client
relating to the Bravo Systems. The Company shall have the right to exercise
quality control over the use of the Marks. The Marks will be displayed together
with such copyright and/or trademark notices as are provided by the Company, and
Charlie USA agrees not to alter or delete any such notices without the prior
written consent of the Company. Except as set forth in this Article IV, nothing
contained in this Services Agreement shall grant to Charlie USA any right, title
or interest in the Marks. At no
4
time shall Charlie USA challenge or assist others to challenge the Company's or
its Affiliates' Intellectual Property Rights in the Marks or the registration
thereof or attempt to register any trademarks, trade names or other proprietary
indicia confusingly similar to the Marks. Charlie USA acknowledges that as
between the Company and Charlie USA, the Marks are, and shall remain, the
exclusive property of the Company, and Charlie USA agrees that it shall not, at
any time, do or cause to be done any action which in any way, contests, impairs
or tends to impair any part of such right, title or interest of the Company in
the Marks. Charlie USA acknowledges and agrees that all use by Charlie USA of
the Marks, and any goodwill which arises from such use, shall inure solely to
the benefit of the Company or any licensor of the Marks to the Company.
ARTICLE V
CONFIDENTIAL INFORMATION
Section 5.1 MAINTENANCE OF CONFIDENTIALITY. Each of the parties hereto
shall, during the term of this Services Agreement and at all times thereafter,
maintain in confidence all confidential and proprietary information and data of
the other party hereto or its Affiliates disclosed to it (the "Confidential
Information"). Neither party hereto shall use the Confidential Information of
the other party hereto or its Affiliates during the term of this Services
Agreement or at any time thereafter for any purpose other than the performance
of its obligations or the exercise of its rights under this Services Agreement
or any applicable Work Order. Each of the parties hereto shall take all
reasonable commercial measures necessary to prevent any unauthorized disclosure
of Confidential Information (which measures shall be at least as protective as
the measures taken by such party with respect to its own Confidential
Information) by any of it, its Affiliates and its respective officers,
directors, employees, agents or consultants.
Section 5.2 PERMITTED DISCLOSURES. Nothing herein shall prevent each
party hereto, or any employee, agent or consultant of such party (in such
capacity, the "Receiving Party") from using, disclosing or authorizing the
disclosure of any information it receives in the course of the performance
hereunder from the other party hereto (in such capacity, the "Disclosing Party")
which (i) becomes publicly available without restriction without default
hereunder by the Receiving Party, (ii) is lawfully acquired by the Receiving
Party from a source not known to the Receiving Party to be under any obligation
to the Disclosing Party regarding disclosure of such information, (iii) is in
the possession of the Receiving Party in written or other recorded form at the
time of its disclosure hereunder, (iv) is non-confidentially disclosed to any
third party by or with the permission of the Disclosing Party or (v) the
Receiving Party believes in good faith to be required by law or by the terms of
any listing agreement with a securities exchange; provided that the Receiving
Party consults with the Disclosing Party prior to making such disclosure.
Section 5.3 RETURN OF CONFIDENTIAL INFORMATION. Upon expiration or
termination of this Services Agreement, or upon request of the Disclosing Party,
the Receiving Party shall return to the Disclosing Party all requested
Confidential Information of the Disclosing Party, including all copies thereof,
in the possession or under the control of it or its Parent Entity, its
Affiliates or any of their respective personnel, or, at the Disclosing Party's
option, destroy or
5
purge all such Confidential Information from its and its Affiliates' systems and
files and deliver to the Disclosing Party a written confirmation that such
destruction and purging have been carried out.
Section 5.4 NO LICENSE. The furnishing of Confidential Information of
the Disclosing Party to the Receiving Party shall not constitute any grant of
license to the Receiving Party except (i) for the purposes of performing under
this Services Agreement, (ii) as otherwise expressly provided in this Services
Agreement or (iii) as hereafter expressly agreed in writing by the Disclosing
Party.
ARTICLE VI
LIMITED WARRANTY
Section 6.1 WARRANTIES. The Company represents and warrants to Charlie
USA that (i) the Company has a valid license to use and to sublicense the
Systems as necessary for Charlie USA to perform the Services, and (ii) the
Company has the right to grant to Charlie USA the rights, licenses and
sublicenses set forth in this Services Agreement.
Section 6.2 DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS
SERVICES AGREEMENT, THE COMPANY MAKES NO WARRANTY, WHETHER EXPRESS, IMPLIED OR
STATUTORY REGARDING OR RELATED TO THE SYSTEMS, THE SPECIFICATIONS AND
PERFORMANCE BY THE COMPANY UNDER THIS SERVICES AGREEMENT AND THE MARKS. OTHER
THAN AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE COMPANY SPECIFICALLY DISCLAIMS
ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.
ARTICLE VII
INDEMNITY
Section 7.1 INDEMNITY. Each of the parties hereto agrees to protect,
indemnify and hold harmless the other party, its respective Affiliates,
employees, officers and directors thereof and of such Affiliates against any and
all Loss by whomever asserted, arising out of, connected with or resulting from
(i) any breach by such party of any of the terms, covenants, representations,
warranties or other provisions contained in this Services Agreement or (ii) in
the case of the Company as indemnitor only, any claim arising out of or in
connection with any third party claim alleging that the Systems or Services, as
used or performed in accordance with the terms and conditions of this Services
Agreement, infringe any Intellectual Property Rights of a third Person. The
liability of an indemnifying party pursuant to the terms of clause (i) of the
foregoing sentence shall be limited to an aggregate of $2,500,000. The liability
of the Company as indemnitor pursuant to the terms of clause (ii) of the
foregoing sentence shall not apply to any Loss that arises from the unauthorized
modification of the Systems, or the combination or use of
6
the Systems with third party software products where such Loss would be avoided
but for such combination or use.
Section 7.2 NOTICE AND PROCEDURE. Each party shall promptly notify the
other party of any claim, demand, suit or threat of suit of which that party
becomes aware (except with respect to a threat of suit either party might
institute against the other) which may give rise to a right of indemnification
pursuant to this Services Agreement, but the failure of a party to so notify the
other party shall not relieve a party of its indemnification obligations
hereunder unless the indemnifying party is materially prejudiced as a result of
the failure to receive such notice. The indemnifying party shall be in control
of the settlement (so long as any such settlement does not involve an admission
of any wrongdoing on the part of the indemnified party, or restrict the
indemnified party's future actions and includes a full release of the
indemnified party), and defense of any claim which gives rise to indemnification
(at no cost to the indemnified party). The indemnifying party and the
indemnified party shall cooperate in the settlement or defense of any such
claim, demand, suit or proceeding. The indemnified party, at its own cost, may
participate in such settlement or defense; provided that such indemnified party
shall not control such settlement or defense. The indemnified party shall not
settle such claim, demand, suit or proceeding without the consent of the
indemnifying party.
Section 7.3 NO CONSEQUENTIAL DAMAGES. UNDER NO CIRCUMSTANCES WILL
EITHER PARTY HERETO BE LIABLE TO THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF USE,
BUSINESS INTERRUPTION, LOSS OF DATA, COST OF COVER OR SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OF ANY KIND, WHETHER
ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, NOR FOR ANY
FORM OF DAMAGES OTHER THAN DIRECT DAMAGES ARISING OUT OF OR IN CONNECTION WITH
THIS SERVICES AGREEMENT OR THE SUBJECT MATTER HEREOF. IN NO EVENT SHALL THE
COMPANY BE LIABLE TO CHARLIE USA OR ANY OTHER PERSON FOR ANY DAMAGES OR LOSS
CAUSED BY DELAY IN DELIVERY OR FURNISHING OF DATA USING THE SYSTEMS.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 AUTHORITY/NO CONFLICTS. Each party hereto represents and
warrants that (i) it has full power and authority and legal right to execute and
deliver this Services Agreement, (ii) its execution, delivery and performance of
this Services Agreement have been duly authorized by all necessary action, (iii)
this Services Agreement has been duly executed and delivered by it and (iv) this
Services Agreement constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by the availability
of the remedy of specific performance.
7
Section 8.2 NO ASSIGNMENT; BINDING EFFECT.
(a) Except as expressly provided herein, neither this Services
Agreement nor any right, interest or obligation hereunder may be assigned by
either party hereto without the prior written consent of the other party hereto
and any attempt to do so will be void; provided that the merger or consolidation
of one party into, or the sale of all or substantially all of the assets of such
party to, a third party shall not be deemed to be an assignment. As a condition
precedent to consummating any such merger, consolidation or asset sale or
transfer transaction, Charlie USA shall require the successor-in-interest of the
business or assets of Charlie USA to assume the obligations of Charlie USA
hereunder and shall confirm that this Services Agreement shall remain in full
force and effect and binding upon such successor-in-interest in accordance with
its terms, a copy of which written instrument shall be provided to the Company.
(b) Subject to Section 8.2(a), this Services Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
Section 8.3 ENTIRE AGREEMENT. This Services Agreement, the
Operating Agreement and the other Additional Agreements contain the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior understandings and agreements of the parties with respect
thereto.
Section 8.4 AMENDMENTS AND WAIVERS. No amendment, modification,
termination or waiver of any provision of this Services Agreement shall in any
event be effective without the written concurrence of each party hereto.
Section 8.5 GOVERNING LAW. This Services Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
Section 8.6 NOTICES. Except as otherwise provided in this Services
Agreement, any notice, demand or communication to a party hereto required or
permitted to be given by any provision of this Services Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
personally, sent by facsimile transmission or electronic mail (with confirmation
of receipt), overnight express courier or registered or certified mail,
postage/charges-prepaid, return receipt requested, and addressed to the party as
set forth below:
8
Name Mailing Address Telephone, Fax and
Email Address
-----------------------------------------------------------------------------------------------------
If to the Company:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Chief Executive Officer Suite 2050 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇.▇▇ LLC ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
-----------------------------------------------------------------------------------------------------
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
& ▇▇▇▇▇▇▇ LLP ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-----------------------------------------------------------------------------------------------------
If to Charlie USA:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
President Suite 2050 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Cotelligent, Inc. ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
-----------------------------------------------------------------------------------------------------
With a copy to:
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-----------------------------------------------------------------------------------------------------
All such notices, demands and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile or electronic mail transmission to the
facsimile number or electronic mail address, as the case may be, as provided in
this Section, be deemed given upon receipt, (iii) if delivered by overnight or
express courier to the address as provided in this Section, be deemed given on
the earlier of the second Business Day following the date sent by such overnight
or express courier or upon receipt and (iv) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed given on
the earlier of the sixth Business Day following mailing or upon receipt, in each
case regardless of whether such notice, demand or other communication is
received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section. Any party from time to time may change its address or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto at least ten (10) Business Days
prior to the effective date of such notice.
Section 8.7 HEADINGS. The titles of the Articles and the headings of
the Sections of this Services Agreement are for convenience of reference only
and are not to be considered in construing the terms and provisions of this
Services Agreement.
9
Section 8.8 NO THIRD PARTY BENEFICIARY. The terms and provisions of
this Services Agreement are intended solely for the benefit of each party hereto
and their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights, and this
Services Agreement does not confer any such rights, upon any other Person.
Section 8.9 INTERPRETATION. It is the intention of the parties hereto
that, during the term of this Services Agreement, the rights and obligations of
the parties hereto and their successors-in-interest shall be governed by the
terms of this Services Agreement. This Services Agreement shall be construed
without regard to any presumption or other rule requiring construction hereof
against the party causing this Services Agreement to be drafted.
Section 8.10 INVALID PROVISIONS. If any provision of this Services
Agreement is held to be illegal, invalid or unenforceable, and if the rights or
obligations of any party hereto under this Services Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Services Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Services Agreement will remain in
full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Services Agreement a legal, valid and enforceable provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible.
Section 8.11 INJUNCTIVE RELIEF. Each party hereto acknowledges that in
the event of any breach of this Services Agreement, including, without
limitation, of Article V or Section 2.5, by one party, the other party shall
suffer irreparable injury not compensable by money damages and for which such
party shall not have an adequate remedy available at law. Such other party shall
be entitled to obtain, without the posting of any bond or other security, such
injunctive or other equitable relief to prevent or curtail any such breach,
threatened or actual. The foregoing shall be in addition to and without
prejudice to such other rights as such other party may have under this Services
Agreement or applicable law.
Section 8.12 RELATIONSHIP. The parties hereto are independent
contractors with respect to each other, and nothing in this Services Agreement
shall be construed as constituting the parties hereto or as partners, joint
venturers or any other form of legal association that would impose liability on
one party for the act or failure to act of the other party, except as expressly
provided in this Services Agreement.
Section 8.13 FORCE MAJEURE. Neither party will be liable to the other
party for its failure to perform or for delay in performance of its obligations
under this Services Agreement to the extent such failure or delay results from
causes beyond its reasonable control, including, without limitation, acts of God
or fires; governmental regulations, prohibitions or restrictions; failures of
public utilities or providers of electronic communications; strikes or labor
stoppages; or transportation interruptions or embargoes
10
Section 8.14 COUNTERPARTS. This Services Agreement may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
Remainder of page intentionally left blank
11
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have caused their authorized representatives to execute this Services Agreement
as of the date first above written.
▇▇▇▇▇▇.▇▇ LLC
By: ___________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
COTELLIGENT USA, INC.
By: ___________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer & President
Signature Page to System Integration and Implementation Services Agreement
TABLE OF CONTENTS
Page
BACKGROUND........................................................... 1
ARTICLE I
SERVICE RIGHTS....................................................... 1
Section 1.1 Service Rights................................ 1
Section 1.2 Right of First Refusal........................ 2
Section 1.3 Commitment.................................... 2
ARTICLE II
ADDITIONAL UNDERTAKINGS.............................................. 2
Section 2.1 Disclosure of Technical Information........... 2
Section 2.2 Technical Assistance.......................... 3
Section 2.3 Coordination and Cooperation.................. 3
Section 2.4 Sublicense Agreements......................... 3
Section 2.5 No Hire....................................... 4
ARTICLE III
TERM................................................................. 4
Section 3.1 Term.......................................... 4
ARTICLE IV
TRADEMARK MATTERS.................................................... 4
Section 4.1 Authorized Use of Marks....................... 4
ARTICLE V
CONFIDENTIAL INFORMATION............................................. 5
Section 5.1 Maintenance of Confidentiality................ 5
Section 5.2 Permitted Disclosures......................... 5
Section 5.3 Return of Confidential Information............ 5
Section 5.4 No License.................................... 6
i
TABLE OF CONTENTS
(continued)
Page
ARTICLE VI
LIMITED WARRANTY................................................... 6
Section 6.1 Warranties.................................. 6
Section 6.2 Disclaimer.................................. 6
ARTICLE VII
INDEMNITY.......................................................... 6
Section 7.1 Indemnity................................... 6
Section 7.2 Notice and Procedure........................ 7
Section 7.3 No Consequential Damages.................... 7
ARTICLE VIII
MISCELLANEOUS...................................................... 7
Section 8.1 Authority/No Conflicts...................... 7
Section 8.2 No Assignment; Binding Effect............... 8
Section 8.3 Entire Agreement............................ 8
Section 8.4 Amendments and Waivers...................... 8
Section 8.5 Governing Law............................... 8
Section 8.6 Notices..................................... 8
Section 8.7 Headings.................................... 9
Section 8.8 No Third Party Beneficiary.................. 10
Section 8.9 Interpretation.............................. 10
Section 8.10 Invalid Provisions.......................... 10
Section 8.11 Injunctive Relief........................... 10
Section 8.12 Relationship................................ 10
Section 8.13 Force Majeure............................... 10
Section 8.14 Counterparts................................ 11
ii
EXHIBIT F
TRANSITION SERVICES AGREEMENT
BETWEEN
COTELLIGENT USA, INC.
AND
▇▇▇▇▇▇.▇▇ LLC
Execution Copy
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT is made and entered into as of August 8,
2000 (the "Effective Date") by and between Cotelligent USA, Inc., a California
corporation ("Charlie USA"), and ▇▇▇▇▇▇.▇▇ LLC, a Delaware limited liability
company (the "Company").
BACKGROUND
A. The Company has been organized pursuant to that certain Operating
Agreement dated as of April 27, 2000, amended and restated as of even date
herewith (the "Operating Agreement"), as a joint venture between CZG Mobile
Ventures, Inc., a Delaware corporation ("Charlie Sub") and wholly-owned
subsidiary of Charlie USA, and ▇▇▇▇▇▇.▇▇ Technologies, Inc., a Delaware
corporation.
B. Pursuant to that certain Contribution Agreement among Charlie USA,
Charlie Sub and the Company of even date herewith (the "Contribution
Agreement"), Charlie USA is contributing the Contributed Assets, which relate to
the ASP Business, (each as defined in the Contribution Agreement) as part of
Charlie Sub's initial capital contribution to the Company.
C. Charlie USA and the Company are entering into this Services
Agreement to establish the terms and conditions pursuant to which each party
shall provide certain transition services to the other party with respect to the
ASP Business.
D. It is the intention of the parties hereto to develop the business of the
Company in each party's respective competencies to ensure the Company's
commercial success.
E. All capitalized terms used and not defined herein shall have the
meanings ascribed to them in the Operating Agreement or the Contribution
Agreement, as the case may be.
ARTICLE I
PROVISION OF SERVICES
Section 1.1 Subject to the terms and conditions of this Services
Agreement, Charlie USA shall provide or cause to be provided to the Company
those transition services listed and described in Schedule A hereto (the
"Administrative Services") during the period set forth in Schedule A hereto in
respect of each such Service, unless the Service is earlier terminated or
extended in accordance with the terms hereof; and the Company shall provide or
cause to be provided to Charlie USA those transition services listed and
described in Schedule B hereto (the "ASP Services", and together with the
Administrative Services, the "Services") during the period
set forth in Schedule B hereto in respect of each such Service, unless the
Service is earlier terminated or extended in accordance with the terms hereof.
For purposes of this Services Agreement, the party providing Services in any
case is referred to as the "Providing Party" and the party receiving Services in
any case is referred to as the "Receiving Party."
ARTICLE II
PERFORMANCE OF SERVICES
Section 2.1 STANDARD OF PERFORMANCE. The Providing Party shall use
commercially reasonable efforts to provide, or cause to be provided, the
applicable Services in substantially the same manner and at substantially the
same levels (unless otherwise requested by the Receiving Party or set forth on
the applicable Schedule) as such Services were provided in connection with the
ASP Business prior to the date hereof; provided that the Providing Party shall
not be required by this Section 2.1 to, and shall not in fact, disclose to the
Receiving Party any information that it holds or has acquired subject to an
obligation of confidentiality to any Person which would be breached by such
disclosure.
Section 2.2 SUBCONTRACT. The Providing Party shall have the right to retain
one or more subcontractors to perform any of the applicable Services under this
Services Agreement; provided that the Providing Party shall be held jointly and
severally liable with such subcontractor in respect of performance by such
subcontractor(s).
ARTICLE III
REIMBURSEMENT OF EXPENSES AND PAYMENT
Section 3.1 NO SERVICE FEE; REIMBURSEMENT OF EXPENSES. The Providing Party
shall provide the applicable Services to the Receiving Party free of charge to
the Receiving Party; provided that the Providing Party shall be entitled to
reimbursement from the Receiving Party for all actual out of pocket costs and
expenses incurred by the Providing Party or on its behalf by third Persons in
connection with such provision of Services that are greater than a de minimis
amount, as determined in good faith by the Providing Party.
Section 3.2 PAYMENT. For all reimbursable expenses, the Providing Party
shall submit statements of account to the Receiving Party on a monthly basis (in
arrears) with respect to such expenses (the "Invoiced Amount"), setting out the
Services provided by reference to the applicable Schedule and the amount of
expenses reimbursable hereunder (together with any invoices for Services
provided by third Persons). The Receiving Party shall pay the Invoiced Amount to
the Providing Party by company check or wire transfer within thirty (30) days of
the Receiving Party's receipt of the Invoiced Amount.
Section 3.3 THIRD PERSON INVOICES. The Providing Party may cause any third
Person to which amounts are payable by or for the account of the Receiving Party
pursuant to any
2
subcontract established pursuant to Section 2.2 to issue a separate invoice for
such amounts. The Receiving Party shall pay or cause to be paid any such
separate third Person invoices directly in accordance with the payment terms
hereof.
Section 3.4 INTEREST ON DELAYED PAYMENT. All amounts due and owing to the
Providing Party hereunder but not paid by the Receiving Party on the due date
thereof shall bear interest at the prime rate established by Citibank, N.A. from
time to time. Such interest shall accrue on the balance of unpaid amounts from
time to time outstanding from the date on which portions of such amounts become
due and owing until payment thereof in full.
ARTICLE IV
COOPERATION; ACCESS; THIRD PERSON CONSENTS
Section 4.1 COOPERATION AND ACCESS. The Receiving Party shall fully
cooperate in good faith with the Providing Party in connection with the
provision of the applicable Services under this Services Agreement. The
Receiving Party shall permit the Providing Party and its employees, agents and
subcontractors access during regular business hours (or otherwise upon
reasonable prior notice) to such records, data and personnel of the Receiving
Party as are reasonably required for the Services to be performed. The Providing
Party shall permit the Receiving Party and its employees and agents access
during regular business hours (or otherwise upon reasonable prior notice) to
individuals responsible for the applicable Services and shall provide the
Receiving Party with such records and data as the Receiving Party may reasonably
request for the purposes of allowing the Receiving Party to exercise general
oversight and to monitor the performance of the applicable Services.
Section 4.2 THIRD PERSON CONSENTS. Each of the parties hereto shall use its
commercially reasonable efforts to cooperate with and assist the other party
hereto in obtaining any third Person consents or amendments necessary for the
performance of the Services hereunder, including, without limitation, any
required consent or amendment under any software license. The Receiving Party
shall pay for (pursuant to Article III) the costs and expenses of obtaining any
such consents or amendments. In the event that the parties hereto are unable to
obtain any required consent or amendment, they shall negotiate in good faith
reasonable modifications of the applicable Services such that such consents or
amendments are not required.
Section 4.3 COORDINATING MANAGER. On the Effective Date, each party hereto
shall designate a coordinating manager to report and discuss issues with respect
to the provision of Services under this Services Agreement. The coordinating
managers shall meet to discuss the performance of the Services as often as
reasonably necessary to ensure the orderly provision of the Services, and shall
have authority to address and remedy problems related to the provision of
Services to the extent consistent with this Services Agreement.
3
ARTICLE V
TERM AND TERMINATION
Section 5.1 TERM. Each Service shall be provided commencing on the
Effective Date until the expiration of the term for the provision of such
Service as set forth on Schedule A or Schedule B, as the case may be, or its
earlier termination in accordance with Section 5.2. This Services Agreement
shall commence on the Effective Date and shall continue in full force and effect
until the terms for the provision of all Services have expired or been earlier
terminated.
Section 5.2 TERMINATION. The Receiving Party may terminate this Services
Agreement with respect to any Service upon ten (10) Business Days' prior written
notice to the Providing Party, and the Providing Party may terminate this
Services Agreement with respect to any Service upon thirty (30) days' prior
written notice to the Receiving Party. Any requested termination of a Service
pursuant to this Section 5.2 shall become effective at the end of such ten-day
or thirty-day period; provided that if the Receiving Party is the terminating
party, it shall reimburse the Providing Party for all out-of-pocket expenses or
operating costs incurred by the Providing Party attributable to such early
termination (pursuant to Article III).
Section 5.3 EFFECT OF EXPIRATION OR TERMINATION. The expiration or
termination of this Services Agreement shall not affect any obligation of either
party hereunder that was incurred prior to the effective date of, or that by its
terms is intended to survive, the expiration or termination of this Services
Agreement.
ARTICLE VI
CONFIDENTIALITY
Section 6.1 MAINTENANCE OF CONFIDENTIALITY. Each of the parties hereto
shall, during the term of this Services Agreement and at all times thereafter,
maintain in confidence all confidential and proprietary information and data of
the other party hereto or its Affiliates disclosed to it (the "Confidential
Information"). Neither party hereto shall use the Confidential Information of
the other party hereto or its Affiliates during the term of this Services
Agreement or at any time thereafter for any purpose other than the performance
of its obligations or the exercise of its rights under this Services Agreement.
Each of the parties hereto shall take all reasonable measures necessary to
prevent any unauthorized disclosure of Confidential Information by any of it,
its Affiliates and its respective officers, directors, employees, agents or
consultants.
Section 6.2 PERMITTED DISCLOSURES. Nothing herein shall prevent each party
hereto, or any employee, agent or consultant of such party (in such capacity,
the "Recipient"), from using, disclosing or authorizing the disclosure of any
information it receives in the course of the performance hereunder from the
other party hereto (in such capacity, the "Disclosing Party") which: (i) becomes
publicly available without default hereunder by the Recipient; (ii) is lawfully
4
acquired by the Recipient from a source not known to the Recipient to be under
any obligation to the Disclosing Party regarding disclosure of such information;
(iii) is in the possession of the Recipient in written or other recorded form at
the time of its disclosure hereunder; (iv) is non-confidentially disclosed to
any third Person by or with the permission of the Disclosing Party; or (v) the
Recipient believes in good faith to be required by law or by the terms of any
listing agreement with a securities exchange; provided that the Recipient
consults with the Disclosing Party prior to making such disclosure.
Section 6.3 RETURN OF CONFIDENTIAL INFORMATION. Upon expiration or
termination of this Services Agreement, or upon request of the Disclosing Party,
the Recipient shall return to the Disclosing Party all requested Confidential
Information of the Disclosing Party, including all copies thereof, in the
possession or under the control of it or its Parent Entity, its Affiliates or
any of their respective personnel, or, at the Disclosing Party's option, destroy
or purge all such Confidential Information from its and its Affiliates' systems
and files and deliver to the Disclosing Party a written confirmation that such
destruction and purging have been carried out.
Section 6.4 NO LICENSE. The furnishing of Confidential Information of the
Disclosing Party to the Recipient shall not constitute any grant of license to
the Recipient except (i) for the purposes of performing under this Services
Agreement, (ii) as otherwise expressly provided in this Services Agreement or
(iii) as hereafter expressly agreed in writing by the Disclosing Party.
ARTICLE VII
WARRANTY; LIMITATION OF LIABILITY
Section 7.1 NO WARRANTY. EXCEPT AS SET FORTH IN SECTION 2.1, THE PROVIDING
PARTY MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES
PROVIDED HEREUNDER.
Section 7.2 LIMITATION OF LIABILITY. THE PROVIDING PARTY'S LIABILITY
ARISING OUT OF THIS SERVICES AGREEMENT SHALL BE LIMITED TO THE AMOUNTS PAID BY
THE RECEIVING PARTY HEREUNDER DURING THE PRIOR TWELVE (12) MONTH PERIOD. IN NO
EVENT SHALL THE PROVIDING PARTY BE LIABLE TO ANY OTHER ENTITY FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF
LIABILITY, AND WHETHER OR NOT THE PROVIDING PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. IN NO EVENT WILL THE
PROVIDING PARTY BE LIABLE TO THIRD PARTIES FOR ANY DAMAGES WHATSOEVER.
5
ARTICLE VIII
MISCELLANEOUS
Section 8.1 NO ASSIGNMENT; BINDING EFFECT.
(a) Except as expressly provided herein, neither this Services Agreement
nor any right, interest or obligation hereunder may be assigned by either party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void; provided that the merger or consolidation of one
party into, or the sale of all or substantially all of the assets of such party
to, a third Person shall not be deemed to be an assignment. As a condition
precedent to consummating any such merger, consolidation or asset sale or
transfer transaction, the Providing Party shall require the successor-in-
interest of the business or assets of the Providing Party to assume the
obligations of the Providing Party hereunder and shall confirm that this
Services Agreement shall remain in full force and effect and binding upon such
successor-in-interest in accordance with its terms, a copy of which written
instrument shall be provided to the Receiving Party.
(b) Subject to Section 8.1(a), this Services Agreement is binding upon,
inures to the benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
Section 8.2 ENTIRE AGREEMENT. This Services Agreement, the Operating
Agreement and the other Additional Agreements contain the entire agreement of
the parties hereto with respect to the subject matter hereof and supersede all
prior understandings and agreements of the parties with respect thereto.
Section 8.3 AMENDMENTS AND WAIVERS. No amendment, modification,
termination or waiver of any provision of this Services Agreement shall in any
event be effective without the written concurrence of each party hereto.
Section 8.4 GOVERNING LAW. This Services Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
Section 8.5 NOTICES. Except as otherwise provided in this Services
Agreement, any notice, demand or communication to a party hereto required or
permitted to be given by any provision of this Services Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
personally, sent by facsimile transmission or electronic mail (with confirmation
of receipt), overnight express courier or registered or certified mail,
postage/charges-prepaid, return receipt requested, and addressed to the party as
set forth below:
6
Name Mailing Address Telephone, Fax and
Email Address
------------------------------------------------------------------------------------------------
If to Charlie USA:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
President Suite 2050 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Cotelligent, Inc. ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
------------------------------------------------------------------------------------------------
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
------------------------------------------------------------------------------------------------
If to the Company:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Chief Executive Officer Suite 2050 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇.▇▇ LLC ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
------------------------------------------------------------------------------------------------
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
& ▇▇▇▇▇▇▇ LLP ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
------------------------------------------------------------------------------------------------
All such notices, demands and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile or electronic mail transmission to the
facsimile number or electronic mail address, as the case may be, as provided in
this Section, be deemed given upon receipt, (iii) if delivered by overnight or
express courier to the address as provided in this Section, be deemed given on
the earlier of the second Business Day following the date sent by such overnight
or express courier or upon receipt and (iv) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed given on
the earlier of the sixth Business Day following mailing or upon receipt, in each
case regardless of whether such notice, demand or other communication is
received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section. Any party from time to time may change its address or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto at least ten (10) Business Days
prior to the effective date of such notice.
7
Section 8.6 HEADINGS. The titles of the Articles and the headings of the
Sections of this Services Agreement are for convenience of reference only and
are not to be considered in construing the terms and provisions of this Services
Agreement.
Section 8.7 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Services Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights, and this Services
Agreement does not confer any such rights, upon any other Person.
Section 8.8 INTERPRETATION. It is the intention of the parties hereto
that, during the term of this Services Agreement, the rights and obligations of
the parties hereto and their successors-in-interest shall be governed by the
terms of this Services Agreement. This Services Agreement shall be construed
without regard to any presumption or other rule requiring construction hereof
against the party causing this Services Agreement to be drafted.
Section 8.9 INVALID PROVISIONS. If any provision of this Services
Agreement is held to be illegal, invalid or unenforceable, and if the rights or
obligations of any party hereto under this Services Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Services Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Services Agreement will remain in
full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Services Agreement a legal, valid and enforceable provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible.
Section 8.10 INJUNCTIVE RELIEF. Each party hereto acknowledges that in
the event of any breach of this Services Agreement, including, without
limitation, Article VI, by one party hereto, the other party shall suffer
irreparable injury not compensable by money damages and for which such party
shall not have an adequate remedy available at law. Such other party shall be
entitled to obtain, without the posting of any bond or other security, such
injunctive or other equitable relief to prevent or curtail any such breach,
threatened or actual. The foregoing shall be in addition to and without
prejudice to such other rights as such other party may have under this Services
Agreement or applicable law.
Section 8.11 RELATIONSHIP. The parties hereto are independent contractors
with respect to each other, and nothing in this Services Agreement shall be
construed as constituting the parties hereto or as partners, joint venturers or
any other form of legal association that would impose liability on one party for
the act or failure to act of the other party, except as expressly provided in
this Services Agreement.
Section 8.12 FORCE MAJEURE. Neither party will be liable to the other
party for its failure to perform or for delay in performance of its obligations
under this Services Agreement to the extent such failure or delay results from
causes beyond its reasonable control, including,
8
without limitation, acts of God or fires; governmental regulations, prohibitions
or restrictions; failures of public utilities or providers of electronic
communications; strikes or labor stoppages; or transportation interruptions or
embargoes
Section 8.13 COUNTERPARTS. This Services Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
Remainder of page intentionally left blank
9
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
caused their authorized representatives to execute this Services Agreement as of
the date first above written.
COTELLIGENT USA, INC.
By:
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer & President
▇▇▇▇▇▇.▇▇ LLC
By:
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
Signature Page of Transition Services Agreement
SCHEDULE A
ADMINISTRATIVE SERVICES
(1) Administration and Benefits Services. Until October 30, 2000.
- Administering each of the benefits and services referred to in this
Schedule A.
(2) Employee Benefits, Human Resources and Payroll Services. Until October 30,
2000.
- transitioning and maintaining employee benefits for Transferred
Employees;
- processing and tracking information with respect to Transferred
Employees;
- maintaining employee personnel records;
- disseminating information to Transferred Employees regarding fringe
benefits;
- administering and monitoring workers' compensation;
- monitoring labor relations;
- analyzing unemployment compensation costs;
- payroll services, including preparation of payroll checks for Transferred
Employees from an account of the Company and maintenance of payroll
records; and
- other employee-related services as reasonably requested by the Company.
(3) Financial and Operations Services. Until September 31, 2000.
- establishing and maintaining bank accounts;
- investing short-term funds;
- credit analysis and obtaining lines of credit; and
- other financial services as reasonably requested by the Company.
(4) Risk Management. Until October 30, 2000.
- assistance in attempting to obtain insurance programs and maintaining
contacts and relationships with insurance brokers and insurance carriers;
and
- other risk management-related services as reasonably requested by the
Company.
(5) Computer Software. Until September 31, 2000.
- providing services for use of Charlie USA computer hardware solely for
purpose of providing access to software licensed by Charlie USA under
applicable software license agreements that do not constitute Assigned
Contracts.
(6) Space and Communication Facilities. Until September 31, 2000.
- providing certain office space at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, and access to resident communications facilities
(leased telephone lines or other data transmission lines), and other
office equipment and property owned or leased by Charlie USA in such
office space.
(7) Facilities Management. Until September 31, 2000.
- providing facilities, management, maintenance and support services.
(8) Miscellaneous. Until October 30, 2000.
- providing such other services as the parties hereto may reasonably agree.
SCHEDULE B
ASP SERVICES
(1) Web Site Hosting Services. Until terminated in accordance with Section 5.2
of this Services Agreement, not including the proviso thereto.
- ASP support for ePortal development and demonstration servers as
currently conducted in connection with the ASP Business.
(2) Miscellaneous. Until October 30, 2000.
- providing such other services as the parties hereto may reasonably
agree.
TABLE OF CONTENTS
BACKGROUND................................................................... 1
ARTICLE I
PROVISION OF SERVICES........................................................ 1
ARTICLE II
PERFORMANCE OF SERVICES...................................................... 2
Section 2.1 Standard of Performance..................................... 2
Section 2.2 Subcontract................................................. 2
ARTICLE III
REIMBURSEMENT OF EXPENSES AND PAYMENT........................................ 2
Section 3.1 No Service Fee; Reimbursement of Expenses................... 2
Section 3.2 Payment..................................................... 2
Section 3.3 Third Person Invoices....................................... 2
Section 3.4 Interest on Delayed Payment................................. 3
ARTICLE IV
COOPERATION; ACCESS; THIRD PERSON CONSENTS................................... 3
Section 4.1 Cooperation and Access...................................... 3
Section 4.2 Third Person Consents....................................... 3
Section 4.3 Coordinating Manager........................................ 3
ARTICLE V
TERM AND TERMINATION......................................................... 4
Section 5.1 Term........................................................ 4
Section 5.2 Termination................................................. 4
Section 5.3 Effect of Expiration or Termination......................... 4
i
ARTICLE VI
CONFIDENTIALITY.............................................................. 4
Section 6.1 Maintenance of Confidentiality............................. 4
Section 6.2 Permitted Disclosures...................................... 4
Section 6.3 Return of Confidential Information......................... 5
Section 6.4 No License................................................. 5
ARTICLE VII
WARRANTY; LIMITATION OF LIABILITY............................................ 5
Section 7.1 No Warranty................................................ 5
Section 7.2 Limitation of Liability.................................... 5
ARTICLE VIII
MISCELLANEOUS................................................................ 6
Section 8.1 No Assignment; Binding Effect.............................. 6
Section 8.2 Entire Agreement........................................... 6
Section 8.3 Amendments and Waivers..................................... 6
Section 8.4 Governing Law.............................................. 6
Section 8.5 Notices.................................................... 6
Section 8.6 Headings................................................... 8
Section 8.7 No Third Party Beneficiary................................. 8
Section 8.8 Interpretation............................................. 8
Section 8.9 Invalid Provisions......................................... 8
Section 8.10 Injunctive Relief.......................................... 8
Section 8.11 Relationship............................................... 8
Section 8.12 Force Majeure.............................................. 8
Section 8.13 Counterparts............................................... 9
SCHEDULES
Schedule A Administrative Services
Schedule B ASP Services
ii
EXHIBIT G
WARRANT
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2)
THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH
SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
COTELLIGENT, INC.
Warrant for the Purchase of Shares of Common Stock, par value $0.01 per share
THIS WARRANT EXPIRES ON AUGUST 8, 2005
502,166.4 Shares
THIS CERTIFIES that, effective as of August 8, 2000 (the "Effective
Date"), for value received, ▇▇▇▇▇▇.▇▇ Technologies, Inc., with an address c/o
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇-▇▇▇▇ (in its individual capacity, "Bravo," and, including any transferee,
the "Holder"), is entitled to subscribe for and purchase from Cotelligent, Inc.,
a Delaware corporation (the "Company"), upon the terms and conditions set forth
herein, at any time or from time to time during the Exercise Period (as defined
in Section 1(d) below), 502,166.4 shares of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"), at a price equal to $8 per share,
subject to adjustment as provided herein (the "Exercise Price").
As used herein the term "this Warrant" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of this
Warrant (the "Warrant Shares") and the Exercise Price may be adjusted from time
to time as herein set forth.
1. (a) This Warrant may be exercised during the Exercise Period, as to
the whole or any lesser number of whole Warrant Shares, by the surrender of this
Warrant (with the election at the end hereof duly executed) to the Company at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ or at such
other place as is designated in writing by the Company. Subject to Section 1(b)
hereof, such executed election must be accompanied by payment in an amount equal
to the Exercise Price multiplied by the number of Warrant Shares for which this
Warrant is being exercised. Such payment may be made by wire transfer of
immediately available funds or by certified or bank cashier's check payable to
the order of the Company, or as otherwise provided in Section 1(b) hereof.
(b) All or any part of this Warrant may be exercised on a
"cashless" basis, by stating in the Exercise Notice such intention and the
maximum number (the "Maximum Number") of shares of Common Stock the Holder
desires to purchase in consideration of cancellation of Warrants in payment for
such exercise. The number of shares of Common Stock the Holder shall receive
(the "Cashless Exercise Number") upon such exercise pursuant to this Section
1(b) shall equal the difference between the Maximum Number and the quotient that
is obtained when the product of the Maximum Number and the then current Exercise
Price is divided by the then Current Market Price per share (as that term is
defined in Section 1(c) hereof).
(c) For the purpose of any computation under Section 1(b) hereof,
the Current Market Price per share of Common Stock as of the exercise date shall
be deemed to be the average of the daily "Market Price" (as that term is defined
in this Section 1(c)) during the ten (10) consecutive trading days before such
date of exercise, except that, if on any such date the Common Stock is not
listed or admitted for trading on any national securities exchange or quoted on
the over-the-counter market, the Current Market Price shall be the Market Price
on such date. As used herein, the term "Market Price" shall mean, on any day
specified herein, the amount per share of Common Stock equal to either (a) the
last reported sale price per share of such Common Stock, regular way, on such
day or, in case no such sale takes place on such day, the average of the closing
bid and asked prices thereof, regular way, on such day, in either case as
officially reported on the principal national securities exchange on which such
Common Stock is then listed or admitted for trading, (b) if such Common Stock is
not then listed or admitted for trading on any national securities exchange but
is designated as a National Market System security by The Nasdaq Stock Market,
the last reported trading price per share of Common Stock on such day, (c) if
there shall have been no trading on such day or if the Common Stock is not
designated as a National Market System security by The Nasdaq Stock Market but
has been designated as a Smallcap security by The Nasdaq Stock Market or is
quoted on The Nasdaq Stock Market's (or any successor market's) over-the-counter
market or on its electronic bulletin board, the average of the closing bid and
asked prices per share of Common Stock on such day as shown by The Nasdaq Stock
Market's (or any successor market's) automated quotation system, over-the-
counter market or electronic bulletin board, as the case may be, or (d) if such
Common Stock is not then listed or admitted for trading on any national exchange
or quoted on The Nasdaq Stock Market, over-the-counter market, or electronic
bulletin board, the fair value
2
thereof (as of a day which is within twenty (20) days of the day as of which the
determination is to be made) determined in good faith by the Board of Directors
of the Company.
(d) For purposes of this Warrant, the term "Exercise Period"
means the period commencing on the Effective Date and ending on the earlier to
occur of (i) 5:00 P.M., New York City time on August 8, 2005 or (ii) immediately
upon the consummation of a Redemption (as defined in that certain Amended and
Restated Operating Agreement between the Holder and CZG Mobile Ventures, Inc.
dated as of the date hereof).
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of
the Company shall then be closed or certificates representing such Warrant
Shares shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of this Warrant, the Company shall issue
and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part
of this Warrant shall be numbered and shall be registered in a Warrant Register
as they are issued. The Company shall be entitled to treat the registered holder
of any Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants which is registered or to be
registered in the name of a fiduciary or the nominee of a fiduciary unless made
with the actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration or transfer, or with the knowledge of such
facts that its participation therein amounts to bad faith. This Warrant shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, executor, administrator,
guardian or other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer, the Company
shall deliver a new Warrant or Warrants to the person entitled thereto. This
Warrant may be exchanged, at the option of the Holder thereof, for another
Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Warrant
Shares (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations promulgated thereunder.
(b) The Holder acknowledges that it has been advised by the
Company that neither this Warrant nor the Warrant Shares have been registered
under the Act, that this Warrant is being or has been issued and the Warrant
Shares may be issued on the basis of the statutory exemption provided by Section
4(2) of the Act or Regulation D promulgated
3
thereunder, or both, relating to transactions by an issuer not involving any
public offering. The Holder acknowledges that it is familiar with the nature of
the limitations imposed by the Act and the rules and regulations thereunder on
the transfer of Common Stock. In particular, the Holder agrees that no sale,
assignment or transfer of this Warrant or the Warrant Shares issuable upon
exercise hereof shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment or transfer, unless (i)
the sale, assignment or transfer of this Warrant or such Warrant Shares is
registered under the Act, it being understood that neither this Warrant nor such
Warrant Shares are currently registered for sale, or (ii) this Warrant or such
Warrant Shares are sold, assigned or transferred in accordance with all the
requirements and limitations of Rule 144 promulgated under the Act, it being
understood that Rule 144 is not available at the time of the original issuance
of this Warrant for the sale of this Warrant or such Warrant Shares and that
there can be no assurance that Rule 144 sales will be available at any
subsequent time, or (iii) such sale, assignment, or transfer is otherwise exempt
from registration under the Act.
4. The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of providing
for the exercise of the rights to purchase all Warrant Shares granted pursuant
to this Warrant, such number of shares of Common Stock as shall, from time to
time, be sufficient therefor. The Company covenants that all shares of Common
Stock are validly authorized and, if and when this Warrant is exercised in whole
or in part, the shares of Common Stock issued upon such exercise, upon receipt
by the Company of the full Exercise Price therefor, shall be validly issued,
fully paid, nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any preemptive or
other rights of stockholders.
5. (a) In case the Company shall at any time after the date this
Warrant is first issued (i) declare a dividend on the outstanding Common Stock
of the Company payable in shares of its Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then, in each case, the Exercise Price, and the number
of Warrant Shares issuable upon exercise of this Warrant, in effect at the time
of the record date for such dividend or of the effective date of such
subdivision or combination, shall be proportionately adjusted so that the Holder
after such time shall be entitled to receive the aggregate number and kind of
shares for such consideration which, if such Warrant had been exercised
immediately prior to such time at the then-current exercise price, such holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, or combination. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) Whenever there shall be an adjustment as provided in this
Section 5, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
4
(c) The Company shall not be required to issue fractions of
shares of Common Stock or other capital stock of the Company upon the exercise
of this Warrant. If any fraction of a share would be issuable on the exercise of
this Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant.
6. (a) In case of any consolidation with or merger of the Company
with or into another entity (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease or conveyance to another entity of the property and assets of any nature
of the Company as an entirety or substantially as an entirety, the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such consolidation, merger, sale, lease or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease or conveyance, and such successor, leasing or purchasing
entity, as the case may be, shall execute with the Holder an agreement and make
effective provisions in its certificate of incorporation or otherwise, if
necessary, to effect the foregoing. Such agreement shall provide for adjustments
which shall be as nearly equivalent as practicable to the adjustments in Section
5.
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another entity with or into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such reclassification, change, consolidation
or merger by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such reclassification,
change, consolidation or merger. Thereafter, appropriate provision shall be made
for adjustments which shall be as nearly equivalent as practicable to the
adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly
apply to successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales, leases or conveyances.
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution; or
5
(b) issue any rights, warrants or other securities to all
holders of Common Stock in such capacity entitling them to purchase any
additional shares of Common Stock or any other rights, warrants or other
securities; or
(c) effect any reclassification or change of outstanding shares
of Common Stock, or any consolidation, merger, sale, lease or conveyance of
property, described in Section 6 hereof; or
(d) effect any liquidation, dissolution or winding-up of the
Company; or
(e) take any other action which would cause an adjustment to
the Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least
fifteen (15) days prior to (i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such dividend,
distribution, rights, warrants or other securities are to be determined,
(ii) the date on which any such reclassification, change of outstanding shares
of Common Stock, consolidation, merger, sale, lease, conveyance of property,
liquidation, dissolution or winding-up is expected to become effective, and the
date as of which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange their shares for securities or other property, if
any, deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up, or (iii) the date of such other action which would
require an adjustment to the Exercise Price.
8. The issuance of any shares or other securities upon the exercise
of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge solely in respect of such issuance. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of any certificate in
a name other than that of the Holder and the Company shall not be required to
issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
9. The Warrant Shares issued upon exercise of this Warrant shall be
subject to a stop transfer order and the certificate or certificates evidencing
such Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER SUCH COMMON STOCK NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A
6
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF SUCH COMMON STOCK, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH COMMON
STOCK MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE
MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR APPLICABLE STATE SECURITIES LAWS."
10. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant (and upon surrender of
any Warrant if mutilated), including an affidavit of the Holder that this
Warrant has been lost, stolen, destroyed or mutilated, together with an
indemnity against any claim that may be made against the Company on account of
such lost, stolen, destroyed or mutilated Warrant, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder a new Warrant of like date, tenor, and denomination.
11. The Holder of this Warrant shall not have solely on account of
such status any rights of a stockholder of the Company, either at law or in
equity, or to any notice of meetings of stockholders or of any other proceedings
of the Company, except as provided in this Warrant.
12. This Warrant shall be construed in accordance with the laws of
the State of New York applicable to contracts made and performed within such
State, without regard to principles governing conflict of laws.
13. The Company irrevocably consents to the jurisdiction of the
courts of the State of New York and of any federal court located in New York
City, New York, in connection with any action or proceeding arising out of or
relating to this Warrant, any document or instrument delivered pursuant to, in
connection with or simultaneously with this Warrant, or a breach of this Warrant
or any such document or instrument. In any such action or proceeding, the
Company waives personal service of any summons, complaint or other process and
agrees that service thereof may be made in accordance with Section 14 hereof.
Within thirty (30) days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the Company shall appear to answer such summons, complaint or
other process.
14. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex or similar telecommunications equipment) against receipt to the party to
whom it is to be given, (i) if to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with copy
to ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-
0060, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., facsimile (▇▇▇) ▇▇▇-▇▇▇▇, (ii) if to
the Holder, at its address set forth on the first
7
page hereof, with copy to ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, facsimile
(▇▇▇) ▇▇▇-▇▇▇▇ or (iii) in either case, to such other address, facsimile number
or person's attention as the party shall have furnished in writing in accordance
with the provisions of this Section 14. Any notice or other communication given
by certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
Section 14 shall be deemed given at the time of receipt thereof.
15. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Warrant upon the Holder shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter available at law,
in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
16. The Company recognizes and acknowledges that a breach by it of
any covenants or agreements contained in this Warrant will cause the Holder to
sustain damages for which it would not have an adequate remedy at law for money
damages, and therefore the Company agrees that in the event of any such breach
the Holder shall be entitled to the remedy of specific performance of such
covenant and agreement and injunctive and other equitable relief in addition to
any other remedy to which the Holder may be entitled, at law or in equity,
without the posting of any bond and without proving that damages would be
inadequate.
8
17. This Warrant may be amended only by a written instrument
executed by the Company and the Holder hereof. Any amendment shall be endorsed
upon this Warrant, and all future Holders shall be bound thereby.
Dated: August 8, 2000
COTELLIGENT, INC.
By:________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer & Chairman
[SEAL]
____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
9
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfers unto _________________ a Warrant to purchase __________ shares of
Common Stock, par value $0.01 per share, of Cotelligent, Inc. (the "Company"),
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint ___________________ attorney to transfer such Warrant on
the books of the Company, with full power of substitution.
Dated: _________________
Signature____________________
-----------------------------
(Signature Guarantee)
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
10
To: Cotelligent, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FORM OF ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _______
Warrant Shares covered by the within Warrant, and tenders payment herewith in
the aggregate amount of $________, including (i) $_______ by certified or bank
cashier's check, and/or (ii) cancellation of Warrants to purchase Warrant Shares
based upon a Maximum Number (as therein defined) of ______, in accordance with
the terms thereof, and requests that certificates for such securities be issued
in the name of, and delivered to:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(Print Name, Address and Social Security or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant and the remaining portion of the within Warrant be
not cancelled in payment of the Exercise Price, that a new Warrant for the
balance of the Warrant Shares covered by the within Warrant be registered in the
name of, and delivered to, the undersigned at the address stated below.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(Print Name, Address and Social Security or Tax Identification Number)
Dated: _________________ Name:___________________
(Print)
Address:________________________________________________________
_____________________________
(Signature)
_____________________________
(Signature Guarantee)
_____________________________
(Signature Guarantee)
11
EXHIBIT H
WARRANT
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2)
THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH
SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
▇▇▇▇▇▇.▇▇ TECHNOLOGIES, INC.
Warrant for the Purchase of Shares of Common Stock, par value $0.01 per share
THIS WARRANT EXPIRES ON AUGUST 8, 2005
4.1667 Shares
THIS CERTIFIES that, effective as of August 8, 2000 (the "Effective
Date"), for value received, Cotelligent, Inc., with an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (in its individual capacity,
"Cotelligent," and, including any transferee, the "Holder"), is entitled to
subscribe for and purchase from ▇▇▇▇▇▇.▇▇ Technologies, Inc., a Delaware
corporation (the "Company"), upon the terms and conditions set forth herein, at
any time or from time to time during the Exercise Period (as defined in Section
1(g) below), 4.1667 shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), at a price equal to U.S. $2,000,000.00 per share,
subject to adjustment as provided herein (the "Exercise Price"); provided,
however, that in the event the Company consummates a "Liquidity Event" having a
Total Equity Value (prior to underwriter's, broker's and financial advisor's
fees, discounts and commissions, and other expenses of the transaction owing to
independent third parties in arm's length arrangements (collectively,
"Transaction Expenses")) of less than U.S. $400,000,000, the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to the Liquidity Event by a fraction (a) the numerator of which is the Total
Equity Value (prior to Transaction Expenses) of such Liquidity Event times one-
half
(0.5), and (b) the denominator of which is U.S. $200,000,000. For the purposes
of this Warrant, a "Liquidity Event" means the consummation of (i) a firm
commitment underwritten public offering of Common Stock of the Company (an
"IPO") that is registered under the Securities Act of 1933, as amended (the
"Act"), (ii) the sale, transfer or other disposition of all or substantially all
of the Company's properties or assets in an arm's length arrangement to a bona
fide purchaser for value (a "Sale"), or (iii) the merger or consolidation (a
"Merger") of the Company into or with another corporation, partnership, joint
venture, trust or other entity or the merger or consolidation of any other
corporation into or with the Company (in either case, in which consolidation or
merger (A) the stockholders of the Company receive distributions of cash or
securities as a result of such consolidation or merger in complete exchange for
their shares of capital stock of the Company and (B) is an arm's length
arrangement with a bona fide entity). For the purposes of this Warrant, "Total
Equity Value" equals, (w) for an IPO, the "fully diluted" (for the purposes of
this paragraph the term "fully diluted" shall mean the sum of the number of
shares of Company Common Stock issued and outstanding plus the number of shares
of Company Common Stock issuable upon the exercise of vested options and
warrants and the conversion of convertible instruments) number of shares of
Company Common Stock multiplied by the IPO initial price to the public; (x) for
a Sale, the aggregate value of the consideration paid by the purchaser(s) for
the assets and liabilities of the Company purchased and assumed by the
purchaser(s) less the amount of the Company's liabilities carried after the
consummation of such Sale; (y) for a Merger, the fully diluted number of shares
of Company Common Stock multiplied by the value per share of the consideration
into which the shares of Company Common Stock are converted as a result of such
Merger; and (z) for an investment of cash (or commitment to pay cash) or
property in the Company by a non-affiliated third party (an "Investment
Transaction"), the aggregate value of such cash (or commitment) and property
divided by the percentage of the fully diluted number of shares of Company
Common Stock purchased in such Investment Transaction. For purposes of this
paragraph the value of any consideration received by the Company in connection
with a Sale or Investment Transaction, or by a stockholder of the Company in
connection with a Merger, shall be computed as follows: the sum of (I) cash;
(II) in the event securities constitute consideration then, for publicly traded
securities, the value of such securities based upon the average trading price of
such securities over the prior ten (10) trading days for such securities or, in
the event the securities are not publicly traded, then the value of such
securities as determined in good faith by the Board of Directors of the Company;
and (III) in the event property constitutes consideration then, either the value
of such property as determined by a third party appraiser reasonably acceptable
to the Board of Directors of the Company or as determined in good faith by the
Board of Directors of the Company.
As used herein the term "this Warrant" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of this
Warrant (the "Warrant Shares") and the Exercise Price may be adjusted from time
to time as herein set forth.
1. (a) This Warrant may be exercised during the Exercise Period, as to
the whole or any lesser number of whole Warrant Shares, by the surrender of this
Warrant (with the election at the end hereof duly executed) to the Company, ▇/▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, or at such other place as is designated in writing by the Company.
Subject to Section 1(b) hereof, such executed election must be accompanied by
payment in an amount equal to the Exercise Price multiplied by the number of
Warrant Shares for which this Warrant is being exercised. Such payment may be
made by wire transfer of immediately available funds or by certified or bank
cashier's check payable to the order of the Company, or as otherwise provided in
Section 1(b) hereof.
(b) All or any part of this Warrant may be exercised on a "cashless"
basis, by stating in the Exercise Notice such intention and the maximum number
(the "Maximum Number") of shares of Common Stock the Holder desires to purchase
in consideration of cancellation of Warrants in payment for such exercise. The
number of shares of Common Stock the Holder shall receive (the "Cashless
Exercise Number") upon such exercise pursuant to this Section 1(b) shall equal
the difference between the Maximum Number and the quotient that is obtained when
the product of the Maximum Number and the then current Exercise Price is divided
by the then Current Market Price per share (as that term is defined in Section
1(c) hereof).
(c) For the purpose of any computation under Section 1(b) hereof, the
Current Market Price per share of Common Stock as of the exercise date shall be
deemed to be the average of the daily "Market Price" (as that term is defined in
this Section 1(c)) during the ten (10) consecutive trading days before such date
of exercise, except that, if on any such date the Common Stock is not listed or
admitted for trading on any national securities exchange or quoted on the over-
the-counter market, the Current Market Price shall be the Market Price on such
date. As used herein, the term "Market Price" shall mean, on any day specified
herein, the amount per share of Common Stock equal to either (a) the last
reported sale price per share of such Common Stock, regular way, on such day or,
in case no such sale takes place on such day, the average of the closing bid and
asked prices thereof, regular way, on such day, in either case as officially
reported on the principal national securities exchange on which such Common
Stock is then listed or admitted for trading, (b) if such Common Stock is not
then listed or admitted for trading on any national securities exchange but is
designated as a National Market System security by The Nasdaq Stock Market, the
last reported trading price per share of Common Stock on such day, (c) if there
shall have been no trading on such day or if the Common Stock is not designated
as a National Market System security by The Nasdaq Stock Market but has been
designated as a Smallcap security by The Nasdaq Stock Market or is quoted on The
Nasdaq Stock Market's (or any successor market's) over-the-counter market or on
its electronic bulletin board, the average of the closing bid and asked prices
per share of Common Stock on such day as shown by The Nasdaq Stock Market's (or
any successor market's) automated quotation system, over-the-counter market or
electronic bulletin board, as the case may be, or (d) if such Common Stock is
not then listed or admitted for trading on any national exchange or quoted on
The Nasdaq Stock Market, over-the-counter market, or electronic bulletin board,
the fair value thereof (as of a day which is within twenty (20) days of the day
as of which the determination is to be made) determined in good faith by the
Board of Directors of the Company.
(d) In the event a Liquidity Event has not occurred during the
Exercise Period, the Holder shall have the option to extend such Exercise Period
by delivering an irrevocable notice, no less than thirty (30) days and no more
than ninety (90) days prior to the
3
end of the Exercise Period, specifying the date, not later than the tenth
anniversary of the date hereof, on which the Exercise Period shall be
terminated.
(e) In the event the Company issues Common Stock (or other securities
convertible into Common Stock) to acquire all right, title and interest in the
software, architecture or platform disclosed in British patent application No.
GB 9908782 titled "Transfer of Electronic Messages to a PDA" filed April 16,
1999 (the "Patent"), the number of Warrant Shares shall be increased by an
amount equal to four percent (4%) of the number of shares of Common Stock
issued, or issuable upon the conversion or exercise of convertible securities,
to those persons or entities in exchange for all right, title and interest in
the Patent. As a result of such increase in the number of Warrant Shares
hereunder, there shall be a reduction in the Exercise Price hereunder to the
amount obtained by dividing $8,333,400 by the number of Warrant Shares as so
increased pursuant to the terms of this Section 1(e).
(f) For purposes of this Warrant, a "Valuation" means a Liquidity
Event or an Investment Transaction in which at least $10,000,000 is invested in
the Company by a non-affiliated third party. If, as a result of the first
Valuation, the Total Equity Value is less than U.S. $500,000,000, the Warrant
Shares shall be increased by an amount equal to one hundred and fifty percent
(150%) of the number of Warrant Shares that the Holder is then entitled to
purchase hereunder. If, as a result of the first Valuation, the Total Equity
Value is at least U.S. $500,000,000, but less than U.S. $1,000,000,000, the
Warrant Shares will be increased by an amount equal to seventy-five percent
(75%) of the number of Warrant Shares that the Holder is then entitled to
purchase hereunder. For example, if the Holder is entitled to purchase 4.1667
shares, and there is a Valuation of the Company in the amount of $750,000,000,
the Holder would then be entitled to purchase 7.291725 shares of Common Stock.
(g) For purposes of this Warrant, the term "Exercise Period" means the
period commencing on the Effective Date and ending on the earlier to occur of
(i) 5:00 P.M., New York City time on August 8, 2005 or (ii) immediately upon the
consummation of a Redemption (as defined in that certain Amended and Restated
Operating Agreement between the Company and CZG Mobile Ventures, Inc. dated as
of the date hereof).
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of
the Company shall then be closed or certificates representing such Warrant
Shares shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of this Warrant, the Company shall issue
and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant Register as
they are issued. The Company shall be entitled to treat the registered holder of
any Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or
4
other claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of Warrants which is
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment
or authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
registration requirements of the Act, and the rules and regulations promulgated
thereunder.
(b) The Holder acknowledges that it has been advised by the Company
that neither this Warrant nor the Warrant Shares have been registered under the
Act, that this Warrant is being or has been issued and the Warrant Shares may be
issued on the basis of the statutory exemption provided by Section 4(2) of the
Act or Regulation D promulgated thereunder, or both, relating to transactions by
an issuer not involving any public offering. The Holder acknowledges that it is
familiar with the nature of the limitations imposed by the Act and the rules and
regulations thereunder on the transfer of Common Stock. In particular, the
Holder agrees that no sale, assignment or transfer of this Warrant or the
Warrant Shares issuable upon exercise hereof shall be valid or effective, and
the Company shall not be required to give any effect to any such sale,
assignment or transfer, unless (i) the sale, assignment or transfer of this
Warrant or such Warrant Shares is registered under the Act, it being understood
that neither this Warrant nor such Warrant Shares are currently registered for
sale, or (ii) this Warrant or such Warrant Shares are sold, assigned or
transferred in accordance with all the requirements and limitations of Rule 144
promulgated under the Act, it being understood that Rule 144 is not available at
the time of the original issuance of this Warrant for the sale of this Warrant
or such Warrant Shares and that there can be no assurance that Rule 144 sales
will be available at any subsequent time, or (iii) such sale, assignment, or
transfer is otherwise exempt from registration under the Act.
4. The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of providing
for the exercise of the rights to purchase all Warrant Shares granted pursuant
to this Warrant, such number of shares of Common Stock as shall, from time to
time, be sufficient therefor. The Company covenants that all shares of Common
Stock are validly authorized and, if and when this Warrant is exercised in whole
or in part, the shares of Common Stock issued upon such exercise, upon receipt
by the Company of the full Exercise Price therefor, shall be validly issued,
fully paid, nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any preemptive or
other rights of stockholders.
5
5. (a) In case the Company shall at any time after the date this
Warrant is first issued (i) declare a dividend on the outstanding Common Stock
of the Company payable in shares of its Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then, in each case, the Exercise Price, and the number
of Warrant Shares issuable upon exercise of this Warrant, in effect at the time
of the record date for such dividend or of the effective date of such
subdivision or combination, shall be proportionately adjusted so that the Holder
after such time shall be entitled to receive the aggregate number and kind of
shares for such consideration which, if such Warrant had been exercised
immediately prior to such time at the then-current exercise price, such holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, or combination. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) Whenever there shall be an adjustment as provided in this
Section 5, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(c) The Company shall not be required to issue fractions of shares
of Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant.
6. (a) In case of any consolidation with or merger of the Company with
or into another entity (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease or conveyance to another entity of the property and assets of any nature
of the Company as an entirety or substantially as an entirety, the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such consolidation, merger, sale, lease or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease or conveyance, and such successor, leasing or purchasing
entity, as the case may be, shall execute with the Holder an agreement and make
effective provisions in its certificate of incorporation or otherwise, if
necessary, to effect the foregoing. Such agreement shall provide for adjustments
which shall be as nearly equivalent as practicable to the adjustments in
Sections 1(e) and 5.
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation
6
or merger of another entity with or into the Company in which the Company is the
continuing corporation and in which there is a reclassification or change
(including a change to the right to receive cash or other property) of the
shares of Common Stock (other than a change in par value, or from no par value
to a specified par value, or as a result of a subdivision or combination, but
including any change in the shares into two or more classes or series of
shares), the Holder shall have the right thereafter to receive upon exercise of
this Warrant solely the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such reclassification,
change, consolidation or merger by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately prior to such
reclassification, change, consolidation or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Sections 1(e) and 5.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases or conveyances.
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or make any other distribution; or
(b) issue any rights, warrants or other securities to all holders of
Common Stock in such capacity entitling them to purchase any additional shares
of Common Stock or any other rights, warrants or other securities; or
(c) effect any reclassification or change of outstanding shares of
Common Stock, or any consolidation, merger, sale, lease or conveyance of
property, described in Section 6 hereof; or
(d) effect any liquidation, dissolution or winding-up of the Company;
or
(e) take any other action which would cause an adjustment to the
Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least
fifteen (15) days prior to (i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such dividend,
distribution, rights, warrants or other securities are to be determined, (ii)
the date on which any such reclassification, change of outstanding shares of
Common Stock, consolidation, merger, sale, lease, conveyance of property,
liquidation, dissolution or winding-up is expected to become effective, and the
date as of which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange their shares for securities or other property, if
any, deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up, or (iii) the date of such other action which would
require an adjustment to the Exercise Price.
7
8. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge solely in respect of such issuance. The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. The Warrant Shares issued upon exercise of this Warrant shall be
subject to a stop transfer order and the certificate or certificates evidencing
such Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER SUCH COMMON STOCK NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH COMMON STOCK, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH COMMON STOCK MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS."
10. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant (and upon surrender of any
Warrant if mutilated), including an affidavit of the Holder that this Warrant
has been lost, stolen, destroyed or mutilated, together with an indemnity
against any claim that may be made against the Company on account of such lost,
stolen, destroyed or mutilated Warrant, and upon reimbursement of the Company's
reasonable incidental expenses, the Company shall execute and deliver to the
Holder a new Warrant of like date, tenor, and denomination.
11. The Holder of this Warrant shall not have solely on account of
such status any rights of a stockholder of the Company, either at law or in
equity, or to any notice of meetings of stockholders or of any other proceedings
of the Company, except as provided in this Warrant.
12. This Warrant shall be construed in accordance with the laws of the
State of New York applicable to contracts made and performed within such State,
without regard to principles governing conflict of laws.
8
13. The Company irrevocably consents to the jurisdiction of the courts
of the State of New York and of any federal court located in New York City, New
York, in connection with any action or proceeding arising out of or relating to
this Warrant, any document or instrument delivered pursuant to, in connection
with or simultaneously with this Warrant, or a breach of this Warrant or any
such document or instrument. In any such action or proceeding, the Company
waives personal service of any summons, complaint or other process and agrees
that service thereof may be made in accordance with Section 14 hereof. Within
thirty (30) days after such service, or such other time as may be mutually
agreed upon in writing by the attorneys for the parties to such action or
proceeding, the Company shall appear to answer such summons, complaint or other
process.
14. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex or similar telecommunications equipment) against receipt to the party to
whom it is to be given, (i) if to the Company, c/o ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇, (ii) if to the Holder, at its address set
forth on the first page hereof, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇, with copy to ▇▇▇▇▇▇,
▇▇▇▇▇ & Bockius LLP, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇ or
(iii) in either case, to such other address, facsimile number or person's
attention as the party shall have furnished in writing in accordance with the
provisions of this Section 14. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
Section 14 shall be deemed given at the time of receipt thereof.
15. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Warrant upon the Holder shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter available at law,
in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
16. The Company recognizes and acknowledges that a breach by it of any
covenants or agreements contained in this Warrant will cause the Holder to
sustain damages for which it would not have an adequate remedy at law for money
damages, and therefore the Company agrees that in the event of any such breach
the Holder shall be entitled to the remedy of specific performance of such
covenant and agreement and injunctive and other equitable relief in addition to
any other remedy to which the Holder may be entitled, at law or in equity,
without the posting of any bond and without proving that damages would be
inadequate.
9
17. This Warrant may be amended only by a written instrument executed
by the Company and the Holder hereof. Any amendment shall be endorsed upon this
Warrant, and all future Holders shall be bound thereby.
Dated: August 8, 2000
▇▇▇▇▇▇.▇▇ TECHNOLOGIES, INC.
By:
-----------------------------------
Name:
Title:
[SEAL]
---------------------------
Name:
Title: Secretary
10
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfers unto _________________ a Warrant to purchase __________ shares of
Common Stock, par value $0.01 per share, of ▇▇▇▇▇▇.▇▇ Technologies, Inc. (the
"Company"), together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint ___________________ attorney to transfer such
Warrant on the books of the Company, with full power of substitution.
Dated:
------------------
Signature
-------------------------------
----------------------------------------
(Signature Guarantee)
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
11
To: ▇▇▇▇▇▇.▇▇ Technologies, Inc.
▇/▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇.
Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FORM OF ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _______
Warrant Shares covered by the within Warrant, and tenders payment herewith in
the aggregate amount of $________, including (i) $_______ by certified or bank
cashier's check, and/or (ii) cancellation of Warrants to purchase Warrant Shares
based upon a Maximum Number (as therein defined) of ______, in accordance with
the terms thereof, and requests that certificates for such Common Stock be
issued in the name of, and delivered to:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Print Name, Address and Social Security or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant and the remaining portion of the within Warrant be
not cancelled in payment of the Exercise Price, that a new Warrant for the
balance of the Warrant Shares covered by the within Warrant be registered in the
name of, and delivered to, the undersigned at the address stated below.
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Print Name, Address and Social Security or Tax Identification Number)
Dated: Name:
------------------- -----------------------------
(Print)
Address:
--------------------------------------------------------
-------------------------------
(Signature)
-------------------------------
(Signature Guarantee)
-------------------------------
(Signature Guarantee)
12