EXHIBIT 10.2
CONSIDERATION AGREEMENT
This is the Consideration Agreement (the "Consideration Agreement")
referenced in that certain AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of May 19, 2006, by and among Web Source Media, LLC, a limited
liability company organized under the laws of the state of Texas (the
"Company"), ▇▇▇▇ ▇▇▇▇▇, as the representative of the Members of the Company (the
"Members' Representative"), Web Astro Acquisition, L.P., a limited partnership
organized under the laws of the state of Delaware ("Merger Sub") and ▇▇▇.▇▇▇,
Inc., a Minnesota corporation ("WEB") with capitalized terms not otherwise
defined or limited herein having the meaning provided thereto in the Agreement.
This Consideration Agreement is made between Merger Sub, WEB and each of the
Members who signs this Consideration Agreement.
1. CONDITIONS.
(a) This Consideration Agreement entitles each Member who signs it to
receive Consideration to the extent, and in the manner, provided
herein.
(b) No Member may receive Consideration including securities of WEB unless
such Member also executes and delivers that certain Registration
Rights Agreement contemplated in the Agreement within thirty (30) days
after the Agreement Date.
(c) If any Member does not execute and deliver this Consideration
Agreement and the Registration Rights Agreement within thirty (30)
days after the Agreement Date, such Member may not receive any
Consideration under this Consideration Agreement unless such Member
signs an allonge to this Consideration Agreement, in form and
substance acceptable to WEB, providing that (i) such Member agrees to
perform all of the obligations required of Members under this
Consideration Agreement, (ii) such Member agrees to all of the terms
and conditions of this Consideration Agreement, (iii) such Member
acknowledges that any securities issued by WEB included in the
Consideration will be unregistered and that Member will have no right
to register such securities, (iv) such Member agrees to reimburse WEB
for its reasonable fees and expenses in preparing the allonge, and (v)
such Member agrees to release and hold harmless WEB, Merger Sub and
the other Members in respect of all prior acts and omissions taken or
omitted by any of them prior to the date of such allonge.
(d) With respect to any Member who does not execute and deliver this
Consideration Agreement and the Registration Rights Agreement within
thirty (30) days after the Agreement Date, WEB will hold any
disbursements of Consideration to which such Member would be entitled
(if such Member satisfied the conditions set forth in Section 1(c)
above) in a separate account for a period of two (2) years with such
Consideration to be disbursed to such Member if and when such Member
satisfies the conditions in Section 1(c).
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(e) By signing this Consideration Agreement, each Member hereby releases
and covenants not to ▇▇▇ Company (including its
successors-in-interest) and each other Member who signs this
Consideration Agreement, in respect of any dispute, claim, breach of
contract, tort, alleged violation of the Regulations or any other
cause of action pertaining in any way to the Company, the actions of
the Company and the Company's Managers taken prior to the Agreement
Date.
(f) By signing this Consideration Agreement, each Member reaffirms the
appointment of ▇▇▇▇ ▇▇▇▇▇ as the Member Representative and expressly
acknowledges those terms applicable to the Member Representative as
set forth in Section 7(f) of the Agreement.
2. REPRESENTATIONS AND WARRANTIES OF MEMBERS. Each Member hereby represents
and warrants to Merger Sub and WEB, as of the Agreement Date, as provided in
Section 4 of the Agreement.
3. EARN-OUT CONSIDERATION.
(a) Reports. For any Reporting Period in which any Consideration is to be
disbursed, WEB will provide a summary report to the Members that sets
forth the gross amount of such Consideration, together with the
calculations contemplated by this Consideration Agreement in
determining such Member's Portion.
(b) ▇▇▇▇▇▇▇ Brothers Fees. For any Reporting Period in which Consideration
(excluding any Minimum Consideration) is to be disbursed (or upon the
disbursement of any accelerated Consideration pursuant to Section 5 of
this Consideration Agreement), WEB will calculate the value of the
Consideration in accordance with that certain engagement agreement
dated February 22, 2005 among the Company and ▇▇▇▇▇▇▇ Bros., L.P. (as
amended from time to time, the "▇▇▇▇▇▇▇ Fee Agreement") and disburse
to ▇▇▇▇▇▇▇ Bros., L.P., in cash, the amount required to be paid under
the ▇▇▇▇▇▇▇ Fee Agreement.
(c) Merit Financial Fees. For any Reporting Period in which Consideration
is to be disbursed, WEB will deduct from any cash included in the
Consideration an amount equal to the aggregate amount previously paid
by Merger Sub to Merit Financial in respect of the Merit Financial
Fees to the extent not previously offset by a deduction under this
subsection.
(d) Member Portions - Base Consideration and Growth Consideration. For any
Reporting Period in which Base Consideration or Growth Consideration
is to be disbursed, WEB will deduct from the cash portion of the
Consideration the cash payments made pursuant to Sections 3(b) and (c)
above and then disburse the remaining Consideration to the Members in
the following proportions:
MEMBER PERCENTAGE
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▇▇▇▇ ▇▇▇▇▇ 39.51
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 22.66
▇▇▇▇▇ ▇▇▇▇▇▇▇ 17.86
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 16.31
▇▇▇ ▇▇▇▇▇▇ 3.16
▇▇▇▇ ▇▇▇▇▇ 0.50
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(e) Adjustment to Member Portions. If any Member receives an accelerated
disbursement of Consideration pursuant to Section 5 of this
Consideration Agreement, (i) the table in subsection (d) above and
subsection (e) below shall be adjusted so that the percentage ascribed
to such Member is eliminated and the percentages ascribed to the
remaining Members are increased, in proportion to their relative
amounts, so that the sum of the percentages of the remaining Members
is one hundred percent (100%), and (ii) the amounts disbursed in any
Reporting Period subsequent to the accelerated disbursement (in
respect of Growth Consideration, Base Consideration and Minimum
Consideration) are reduced by the amount that would have been
disbursed to the Member who received the accelerated disbursement. If
any Member suffers a forfeiture of Consideration pursuant to Section 5
of this Consideration Agreement, the table in subsection (d) above and
subsection (e) below shall be adjusted so that the percentage ascribed
to such Member is eliminated and the percentages ascribed to the
remaining Members are increased, in proportion to their relative
amounts, so that the sum of the percentages of the remaining Members
is one hundred percent (100%).
(f) Minimum Consideration. For any month in which Minimum Consideration is
to be disbursed, WEB will disburse the applicable Minimum
Consideration to the Members in the following proportions:
MEMBER PERCENTAGE
---------------------------- ---------------
▇▇▇▇ ▇▇▇▇▇ 39.51
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 22.66
▇▇▇▇▇ ▇▇▇▇▇▇▇ 17.86
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 16.31
▇▇▇ ▇▇▇▇▇▇ 3.16
▇▇▇▇ ▇▇▇▇▇ 0.50
4. MISCELLANEOUS. The provisions of Section 7 of the Agreement are
incorporated by this reference as if fully stated herein. The address at which
each Member may receive notice under this Consideration Agreement is set forth
beneath the name of such Member on the signature page hereto.
5. ACCELERATION OR FORFEITURE OF DISBURSEMENTS. With respect to those
Members who enter into Employment Agreements (each, an "Employment Agreement")
with WEB on the Agreement Date (each, an "Employed Member"), if WEB terminates
the employment of an Employed Member other than for "Cause" (as such term is
defined in the applicable Employment Agreement), or if the Employed Member
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terminates his employment for "Good Reason" (as such term is defined in the
applicable Employment Agreement) WEB will disburse to such Employed Member,
within thirty (30) days after the termination of the Employed Member,
Consideration equal to (a) 100% of such Member's Portion of the remaining
Undisbursed Base Consideration and (b) 75% of such Member's Portion of the
remaining Undisbursed Growth Consideration, minus (c) a cash amount equal to the
cash amount required to be paid to ▇▇▇▇▇▇▇ Brothers pursuant to Section 3(b)
above. If any Employed Member ceases to be employed by WEB for any reason other
than Good Reason, death or Disability (as such capitalized terms are defined in
the Employment Agreement), any right of such Employed Member to receive
Consideration hereunder will terminate as of the of such Member's employment
termination and no further Consideration will be disbursed to such Member
pursuant to this Consideration Agreement.
6. NO SIDE AGREEMENTS. Each Member agrees, for the duration of the Earn-out
Period, to enter into no contract, agreement or understanding with any other
Member, directly or through intermediaries, except any Agreement to which WEB is
a party or as to which WEB provides its prior written consent.
7. LEGAL REPRESENTATION. The Company retained the legal services of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇, P.C. (the "Firm") to provide legal representation
in the negotiation and documentation of the transactions contemplated hereby. By
their respective executions below, each Member acknowledges that the Firm has
not provided legal representation to the Members, individually or collectively,
and each Member is encouraged to obtain their own legal counsel before executing
this Consideration Agreement, or any other agreement ancillary hereto, including
the Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MEMBERS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
10102 Green Tree ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
MEMBERS' REPRESENTATIVE:
/s/ ▇▇▇▇ ▇▇▇▇▇
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MERGER SUB: WEB
WEB ASTRO ACQUISITION, L.P. ▇▇▇.▇▇▇, Inc.
By: Web Astro GP, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary Title: Senior Vice President
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