EXHIBIT 10(i)
OPERATING AGREEMENT
OF
SMART SOLUTION, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Operating Agreement ("Agreement") is made as of this 7th day of
October, 1997, by and between Iconovex Corporation, a Minnesota corporation with
its principal office located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Iconovex") and Solutions Corporation of America,
Inc. a Tennessee corporation with its principal office located at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Solutions"). Iconovex and
Solutions are referred to in this Agreement as a "Member" or the "Members."
ARTICLE I
FORMATION, PURPOSE, SCOPE, EFFECTIVE DATE AND TERM
Section 1.01 Formation
The Members agree to organize and associate themselves as members in a
Delaware limited liability company to be known as Smart Solution, LLC (the
"Company") in accordance with the LLC Act, this Agreement and the Company's
Certificate of Formation attached as Exhibit 1.01. The Members shall form the
Company pursuant to the LLC Act by causing such Certificate of Formation to be
filed with the Delaware Secretary of State. The Members hereby authorize an
agent of Iconovex to execute and deliver the Certificate of Formation in the
form attached hereto as Exhibit 1.01 and to cause the same to be filed with the
Delaware Secretary of State.
Section 1.02 Purpose of the Company
The Company is formed for the purpose of engaging in the business of
developing, marketing, distributing and selling computer software, information
products and services which search, screen, summarize and index information
content for the corporate intranet, database and Internet markets (the "Core
Business") and any other lawful business its Members choose to pursue. The
Company may engage in all activities and transactions as the Committee or
Members may deem necessary or advisable to carry out the foregoing objects and
purposes. The Company shall not engage in any business other than its Core
Business without the unanimous written consent of the Members.
Section 1.03 Effective Date; Term
The Company shall commence on the date of filing of the Company's
Certificate of Formation with the Delaware Secretary of State (the "Effective
Date") and shall continue until the tenth (10th) anniversary date of such date
(the "Initial Term"), or the date of termination of the Company in accordance
with this Agreement; provided, if neither Member provides written notice to the
other Member at least six (6) months prior to end of the Initial Term or any
renewal term and the Company is not earlier terminated in accordance with this
Agreement, the Company shall continue for three successive five (5) year terms
beyond the Initial Term, subject to earlier termination as provided in this
Agreement (or further extension by agreement of the Members).
Section 1.04 Authorization of this Agreement
This Agreement is made under the Delaware Limited Liability Company Act
as set forth in Delaware Code ▇▇.▇▇. 18-101, et seq. ("LLC Act").
Section 1.05 Foreign Company Filings; Other Certificates
The officers of the Company shall, from time to time, register the
Company as a foreign limited liability company in such jurisdictions and such
offices as the Committee considers necessary or appropriate.
Section 1.06 Registered Agent; Registered Office
The initial registered agent of the Company is The Corporation Trust
Company. The address of the initial registered office of the Company is The
Corporation Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The registered agent and
registered office may be changed from time to time by action of the officers of
the Company following approval by the Committee in accordance with the LLC Act.
Section 1.07 Liability to Third Parties
Except as otherwise provided by the LLC Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Member, member of the Committee or officer of the Company shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member, or acting as a member of the Committee or as an
officer of the Company.
Section 1.08 Conflicting Services and Products
Except as provided in Schedule 1.08, each Member agrees that, so long
as it is a Member of the Company, it shall not, directly or indirectly, develop,
market, distribute or sell any product similar to or in competition with a
product sold or under development by the Company, except as consented to in
writing by all Members. Nothing in this Section 1.08 shall modify, limit or
waive any obligations of either Member set forth in Article XII.
ARTICLE II
DEFINITIONS
Section 2.01 Definitions
For purposes of this Agreement, the terms defined in this section have
the following meanings:
(a) "Affiliate" shall mean, as to any Person, any other Person
that, directly or indirectly, controls, is under common
control with or is controlled by that Person.
(b) "Capital Account" shall mean, with respect to any Member, the
capital account established and maintained for such Member by
the Company pursuant to Section 3.03.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Committee" shall mean the Members' Committee provided for in
Section 6.02 of this Agreement.
(e) "Financial Rights" shall mean a Member's financial interest in
the Member's Capital Account and any rights to share in
profits and losses of the Company and to receive
distributions.
(f) "Fiscal Year" shall mean the period specified in Section
10.04.
(g) ""GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
(h) "Initial Period" shall mean a period of two years after the
Effective Date.
(i) "Membership Interest" shall mean, as to any Member, such
Member's Capital Account and all other rights which such
Member has in the Company.
(j) "Net Cash Flow" shall mean, for any period of determination,
the net income (or net loss) of the Company determined in
accordance with GAAP, plus depreciation, amortization and
other non-cash expenses deducted in calculating net income,
less capital expenditures and any other cash disbursements not
resulting in a current period expense and less additions to
net income not resulting from cash receipts.
(k) "Percentage Interest" shall mean the undivided interest of a
Member in the Company, expressed as a percentage of the whole,
as provided in Section 3.02.
(l) "Person" shall include any natural person, domestic or foreign
limited liability company, corporation, partnership, limited
partnership, joint venture, association, business trust,
estate, trust, enterprise, or any other legal or commercial
entity.
(m) "Section 704(b) Regulations" shall mean the final Treasury
Regulations under Section 704(b) of the Code relating to the
determination of a Member's distributive share of the
Company's income, gain, loss, deduction or credit (or items
thereof), and any outstanding proposed Treasury Regulations
under Section 704(b) of the Code.
(n) "Subsidiary" shall mean, with respect to any Person, any
corporation of which more than fifty percent (50%) of the
outstanding voting securities are owned, directly or
indirectly, by such Person.
(o) "Tax Matters Member" shall have the meaning set forth in
Section 10.03.
(p) "Transfer" shall mean an assignment, sale, conveyance, lease,
mortgage, security interest, deed, encumbrance, or gift.
(q) "Treasury Regulations" shall mean the outstanding final,
temporary, or proposed income tax regulations promulgated
under the Code from time to time. References in this Agreement
to specific sections of the Treasury Regulations shall also
refer to the corresponding sections of succeeding Treasury
Regulations as they may be amended from time to time.
ARTICLE III
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
ALLOCATIONS; LOANS
Section 3.01 Capital Contributions
(a) Initial Capital Contributions. On the Effective Date, Iconovex and
Solutions shall contribute to the capital of the Company the property specified
below ("Initial Capital Contributions"):
(i) Iconovex shall contribute to the Company those items
specified in Schedule 3.01 hereto and designated "Iconovex
Intangibles."
(ii) Solutions shall contribute to the Company those items
specified in Schedule 3.01 hereto and designated "Solutions
Intangibles."
Iconovex and Solutions each acknowledge and agree that the fair market value of
the rights contributed by Iconovex pursuant to subsection (i) above is $51,000,
and the fair market value of the intangibles contributed by Solutions pursuant
to subsection (ii) above is $49,000.
(b) Additional Capital Contributions. Except as hereinafter provided,
no Member shall be required to contribute any capital to the Company in addition
to the contribution required by Section 3.01(a). Additional contributions to the
capital of the Company that any Member may elect to make may be made only at
such times, in such amounts and in such form and manner as the Members shall
approve.
Section 3.02 Percentage Interests
Upon receipt by the Company of the initial capital contributions
contemplated by Section 3.01(a), the Members shall have the following respective
undivided interests in the Company, expressed as a percentage of the whole
(each, a "Percentage Interest") which Percentage Interest shall not change for
any reason:
Member Percentage Interest
------ -------------------
Iconovex 51%
Solutions 49%
Section 3.03 Capital Accounts
(a) The Company shall establish and maintain a separate capital account
(each a "Capital Account") for each Member. The Capital Accounts of the Members
shall in all events be determined and maintained by the Members throughout the
full term of the Company in accordance with the capital accounting rules of
Treasury Regulation ss. 1.704-1(b)(2)(iv) (relating to the maintenance
of capital accounts). The initial Capital Account balance of Iconovex and
Solutions, following the initial capital contributions contemplated by Section
3.01(a), shall be $51,000 and $49,000, respectively.
(b) The Capital Account of each Member shall from time to time be
increased by:
(i) the amount of cash contributed or deemed contributed
by such Member to the Company and the agreed fair
market value of property other than cash contributed
by such Member to the Company (net of liabilities
secured by such contributed property that the Company
is considered to have assumed or taken subject to for
purposes of Section 752 of the Code);
(ii) the amount of the Company's profits or items thereof
allocated to such Member in accordance with the
Member's Percentage Interest; and
(iii) any other increases required to be made to the
Capital Account of such Member by the Section 704(b)
Regulations, to the extent not otherwise provided for
herein;
and shall from time to time be decreased by:
(i) the amount of the Company's losses or items thereof
allocated to such Member in accordance with the
Member's Percentage Interest;
(ii) the amount of cash paid, distributed or deemed
distributed by the Company to such Member pursuant to
Section 4.01 and the fair market value of property
other than cash distributed by the Company to such
member (net of liabilities secured by such
distributed property that the Member is considered to
have assumed or taken subject to for purposes of
Section 752 of the Code); and
(iii) any other reductions required to be made to the
Capital Account of such Member by the Section 704(b)
Regulations, to the extent not otherwise provided for
herein.
Section 3.04 Negative Capital Account
A negative or deficit balance in any Member's Capital Account shall not
be deemed to be an asset of the Company, and no Member with a negative or
deficit balance in such Member's Capital Account shall have any obligation to
the Company, to any other Member or to any third party or creditor to restore or
repay such negative or deficit balance.
Section 3.05 Allocation of Profit and Losses
The Company's profits and losses shall be allocated between the Members
in accordance with their Percentage Interests.
Section 3.06 Tax Allocations
Except as otherwise provided in Section 704(c) of the Code and the
Treasury Regulations, all items of income, gain, loss and deduction shall be
allocated to the Members for federal income tax purposes in the same manner as
the corresponding allocation of each such item for book purposes.
Section 3.07 Interest on and Return of Capital
No Member shall be liable for the return of the capital contributions
(or any portion thereof) of any other Member, it being expressly understood that
such return, to the extent permitted by this Agreement, shall be made solely
from the assets of the Company. No Member shall be entitled to withdraw any part
of such Member's capital contributions or Capital Account, to receive interest
on such Member's capital contributions or Capital Account, or to receive any
distribution from the Company, except as expressly provided for in this
Agreement. Any loan by a Member to the Company shall not be considered a
contribution to the capital of the Company and shall not increase the Capital
Account of the Member making the loan.
Section 3.08 Transfers of Membership Interests
In the event of a transfer by a Member of all or any portion of its
Membership Interest in the Company as permitted by and
in accordance with the terms of this Agreement, the transferee of such
Membership Interest shall succeed to the transferring Member's Capital Account
attributable to such transferred Membership Interest.
Section 3.09 Loans
(a) To ensure that the Company has sufficient funds during the Initial
Period, each Member shall loan the funds necessary to provide the cash
requirements of the employees, operations and facilities for which it is
responsible as provided in Article V. All loans shall be unsecured and shall
bear a rate of interest at prime as published in The Wall Street Journal and
shall be evidenced by a Master Note issued by the Company in the form of Exhibit
3.09. The principal amount of and accrued interest on all such loans shall be
repaid by the Company in the manner set forth in Section 4.01.
(b) Each Member agrees to make such funds readily available to the
Company. Each Member shall provide to the Company and the other Members a
reconciliation of the loan balance and interest accrued within ten business days
following the close of each month, together with a reconciliation of the
expenses paid for or on behalf of the Company. Each Member shall be provided
access to such books and records of the other Member reasonably necessary to
verify all expenses paid or incurred and the loan balance.
ARTICLE IV
DISTRIBUTIONS
Section 4.01 Distributions of Net Cash Flow
(a) Repayment of Member Loans. Any positive Net Cash Flow shall be
applied by the Company first to repay the outstanding principal amount of and
any accrued and unpaid interest on any loans which the Members have caused to be
made to the Company pursuant to Section 3.09. All loan payments shall be applied
first to any Member's funded loan balance (to include principal and accrued
interest) which, as a percentage of the Company's then total Member funded loan
balance, is greater than such Member's Percentage Interest and thereafter to all
Member funded loans pro rata in accordance with such Member's Percentage
Interest. The Company shall be prohibited from making any distributions of
positive Net Cash Flow to the Members with respect to their Membership Interests
until such time as all loans made to the Company directly by the Members
pursuant to Section 3.09 have been repaid in full.
(b) Distributions to the Members after the Payment of Loans. At any
time after all loans made by Members have been repaid, any positive Net Cash
Flow (after the establishment of such reserves as the Committee shall deem
necessary for anticipated Company needs, taking into account existing and
potential liabilities, obligations and other cash requirements) shall be
distributed to the Members on a quarterly basis or at such other times as the
Committee shall determine. All such distributions shall be made to the Members
in proportion to and in accordance with their respective Percentage Interests in
the Company.
Section 4.02 Method of Payment of Cash Distributions
All cash distributions to the Members shall be made directly to each
member in U.S. dollars at its respective address for notices pursuant to Section
12.04, or to such other address (or by wire transfer to an account of such
Member with any reputable financial institution) as such Member may specify to
the Company pursuant to a notice in accordance with Section 12.04.
Section 4.03 No Distributions in Kind
Unless otherwise approved by the Committee in each specific instance or
as provided in Section 8.02(d), no Member shall be entitled to demand and
receive property other than cash in return for its capital contributions to the
Company, the balance in its Capital Account or its Membership Interest.
Section 4.04 Distributions Subject to Set-Off by the Company
All distributions are subject to set-off by the Company
(a) in the case of a Member, for any past-due obligation of the Member
to make capital contribution to the Company; and
(b) in the case of an assignee of Financial Rights, for any past-due
obligation owed to the Company by the Member
who originally owned the Financial Rights.
ARTICLE V
OFFICE, FACILITIES, PERSONNEL, ADMINISTRATION
AND TECHNOLOGY
Section 5.01 Office
The principal places of business of the Company shall be located at the
leased facilities referenced in Section 5.02, or such other place as determined
by the Committee.
Section 5.02 Facilities
Until the Members may otherwise determine during the Initial Period,
Iconovex shall provide the Company the use of its leased facility at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and Solutions shall provide the
Company the use of its leased facility at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇. The Company agrees that its use shall be subject to the
additional terms set forth in Schedule 5.02.
Section 5.03 Leased Employees
(a) During the Initial Period, the Company desires to utilize, and
Iconovex and Solutions agree to make available on a leased basis, the services
of those employees at Iconovex and Solutions listed on Schedule 5.05, including
any additional or replacement employees of Iconovex and Solutions necessary to
carry out the Company's Core Business (the "Leased Employees"). Each Leased
Employee not subject to an existing Employment/Non-Compete Agreement with
Iconovex shall be required to execute and deliver to the Company a Non-Compete
Agreement in the form of Schedule 5.05.
(b) During the Initial Period, the Company shall reimburse each Member
(which amount shall be considered loans under Section 3.09) for all wages,
fringe benefits and other obligations paid by such Member to or on behalf of its
respective Leased Employees. These expenses shall include salaries, wages, FICA,
worker's and unemployment compensation premiums or charges, together with all
health insurance premiums and charges and other fringe benefits incurred.
(c) The Company shall at all times supervise and direct the work
activities of all Leased Employees, which employees shall devote substantially
all of their full time business activities to the Core Business of the Company.
(d) All Leased Employee expenses shall be pro rated by the parties on
and as of the Effective Date. All Leased Employee expenses or benefits to which
a Leased Employee would be entitled on or prior to the Effective Date shall be
for the account of the Member, while all such expenses which arise as a result
of service rendered by a Leased Employee to the Company during the Initial
Period shall be for the account of the Company.
(e) After the Initial Period, the Company shall make offers of
employment to such Leased Employees as determined by the Committee and will
provide such employee benefit plans as determined by the Committee.
Section 5.04 Administration and Direct Expenses
Until the Members may otherwise determine, Iconovex shall provide
accounting services to the Company at Iconovex' cost. Solutions shall invoice
customers of the Company for products sold or services provided by the Company.
Such invoice shall direct payment to Iconovex, which shall deposit such funds in
a bank account established for the benefit of the Company. In addition, all
direct expenses, including, without limitation, phone, travel and general
liability insurance shall be provided in advance by each Member. All such
administration and direct expenses will be considered loans under Section 3.09.
Section 5.05 Technology
Any discovery, idea, invention, improvement or development related to
the Iconovex Intangibles or the Solutions Intangibles and conceived by the
Company (the "Developments") shall be owned by the Company. The Company shall be
responsible for the payment of royalties, including minimum royalties, due to
any third party after the Effective Date under that Computer Program Purchase
Agreement dated November 8, 1993 by and between ZH Computer, Inc., Syntactic
Analyzer, Inc. and Innovex, Inc.. If the Company fails to pay such royalties,
Iconovex may, at its option, terminate the license to the Iconovex Intangibles
set forth on Schedule 3.01.
ARTICLE VI
GOVERNANCE BY MEMBERS
Section 6.01 General
Except as otherwise expressly provided in this Article VI, the
management and control of the business of the Company shall be vested in the
Members. No Member has the authority to make any contracts, to act or enter into
any transactions, or make any commitments on behalf of the Company, whether or
not in the ordinary course of the business of the Company without the prior
consent of the other Members, unless specifically authorized by this Agreement.
Subject to the provisions of Section 6.03, the day to day operations shall be
managed by such officers as the Members may from time to time appoint, subject,
however, to the control of the Members. The Members shall act in good faith in
performing their respective obligations under this Agreement.
Section 6.02 Members' Committee
(a) Member Designees. The Members shall manage the Company through a
five-person Members' Committee (the "Committee"), of whom three shall be
designated by Iconovex and two shall be designated by Solutions.
(b) Approval of Actions. Affirmative written consent of a majority of
the Member Designees is required to approve any action of the Committee.
Affirmative written consent of both Members is required to approve any action of
the Members. Consent of all Member Designees shall constitute consent of the
Members. The Committee will meet as often as the Members deem appropriate. In
lieu of meetings, business may be transacted via conference call or other means
of communication, as long as actions are approved by the written consent set
forth above. Any Member Designee may call a meeting of the Committee.
(c) Budget. The Committee shall cause to be prepared on or before the
first day of each Fiscal Year a budget for the Company's operations (the
"Budget"). The Budget shall cover one Fiscal year and shall include, among other
things, anticipated revenues, capital expenditures, operating expenses, and net
income for the Fiscal Year. The Budget may be revised by approval of the
Committee per Section 6.02(b).
(d) Expenses. Member Designees shall serve without remuneration. Each
Member shall bear the expenses of its respective Member Designees.
Section 6.03 Limitations on Managerial Authority
(a) Actions Which Require Member Approval. The following actions shall
not be taken by the Company without prior approval of the Members:
(i) amendment of this Agreement or the Company's
Certificate of Formation;
(ii) the sale, lease or exchange of all or substantially
all of the Company's property or assets;
(iii) the acquisition, merger with or into or consolidation
with another business or entity;
(iv) the admission of a Member or substitute Member or any
Transfer of a Member's Membership Interest or
Financial Rights;
(v) the undertaking of or participation in any activity
by the Company outside the Core Business;
(vi) any increase or decrease in the capital of the
Company;
(vii) adoption, approval and amendment of the budget and
forecast;
(viii) adoption or termination of any employee benefit plan;
(x) the establishment of or change in financial policies,
including balance sheet reserves;
(xi) capital expenditures in excess of any approved
capital expenditure plan;
(xii) guarantee of or act as surety for a Member's or a
third party's liability;
(xiii) except as provided in Section 3.09, the making or
acceptance of loans, other than trade payables or
trade receivables made in the ordinary course of
business;
(xiv) the granting or placing of any mortgage, pledge or
other encumbrance on assets of the Company;
(xv) bonuses for employees and salaries of key employees;
(xvi) distributions in excess of the amounts permitted in
Section 4.01;
(xvii) selection of independent auditors;
(xviii) commencement, defense or settlement of material
litigation;
(xix) any purchase of real estate;
(xx) creation of any subsidiaries;
(xxi) contracts or commitments involving licensing of
technology or other rights or restricting the Company
to compete;
(xxii) change in Fiscal Year; or
(xxiii) any determination to indemnify any person.
(b) Notwithstanding any provision of this Agreement to the contrary, no
amendment to this Agreement that adversely affects the Financial Rights of a
Member shall be made without the written consent of the affected Member or
Members.
Section 6.04 Officers of the Company
The Committee shall appoint such officers as they deem necessary. The
duties of the officers shall be as the Committee may from time to time
determine. All officers shall serve at the will of the Committee unless there is
an express written agreement to the contrary. The Company shall bear the
expenses of its officers.
ARTICLE VII
ADMISSION OF ADDITIONAL MEMBERS;
RESTRICTIONS ON TRANSFER; DEFAULT;
RIGHT OF FIRST REFUSAL; PUT RIGHT
Section 7.01 Admission of New Members
Except as provided to the contrary in this Agreement, new or additional
Members may be admitted from time to time only with the consent of all of the
Members. Each such admission of an additional Member shall be evidenced by a
supplemental written agreement amending this Agreement, containing the written
consent of the additional Member to be bound by the provisions of this Agreement
and such other terms and conditions as may be agreed upon by the Members.
Section 7.02 Limitations on Transfer
No Member shall Transfer its Membership Interest or Financial Rights or
a part thereof to any Person, whether voluntarily, by operation of law or
otherwise, without the prior written consent of all of the Members. Any
permitted transferee shall agree in writing to take the Membership Interest or
Financial Rights subject to this Agreement and subject to the rights and
obligations of the transferor Member.
Section 7.03 Further Restrictions on Transfer
Notwithstanding the other provisions of this Article VII, no Transfer
of any Member's Membership Interest shall be made if such Transfer (a) would
violate the then applicable Federal and state securities laws or rules and
regulations of the Securities and
Exchange Commission, any state securities commission or any other governmental
authorities with jurisdiction over such Transfer, or (b) would result in the
Company being treated as an association taxable as a corporation for Federal
income tax purposes (including Section 7704 of the Code) or being terminated
under Section 708(b) of the Code, unless in the case of a termination under
Section 708(b) of the Code, such termination would not have a material adverse
effect on any non-transferring Member's present or future allocable share of
profits or losses with respect to its Membership Interest (also taking into
account any recapture of credits) as compared to its present or future allocable
share of profits or losses if there had not been such a termination.
Section 7.04 Rights of Holders of Financial Rights
No holder of Financial Rights shall have the right to become a
substitute or additional Member except upon admission to the Company as a Member
pursuant to the provisions of Section 7.01. An assignment of Financial Rights
made in accordance with Section 7.02 shall only transfer to the assignee thereof
the assignor's right to the profits, losses, distributions and capital of the
Company with respect to the related Membership Interest and shall not transfer
to such assignee any interest in a Member's governance rights or any other
rights hereunder.
Section 7.05 Transfer During Taxable Year
In the case of the Transfer of a Member's Membership Interest (or
portion thereof or interests therein) at any time other than the end of a Fiscal
Year, all of the various items of the Company's income, gain, loss, deduction,
credit or allowance, (other than from sale of real property) shall be allocated
in accordance with Section 3.06. The effective date of a transfer shall be the
effective date stated in the assignment or such other date as is mutually agreed
between transferor and transferee.
Section 7.06 No Resignation
No Member shall resign from the Company prior to the dissolution and
winding up of the Company.
Section 7.07 Effect of Non-Permitted Transfer
No Transfer of all or any portion of any Membership Interests or
Financial Rights in violation of any provisions of this Agreement shall be
effective to pass any title to, or create any interest in favor of, any Person,
and the purported transferee shall have no right to participate in the
management of the business and affairs of the Company, but the Member who
attempted to so effect such Transfer or who otherwise violated any provision of
this Article VII shall be deemed to have committed a material breach of its
obligation to the other Member hereunder.
Section 7.08 Securities Laws
(a) Each Member understands and hereby acknowledges that (i) in
reliance upon their representations, warranties and covenants, the issuance of
the Membership Interests to them has not been and may not be registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon Section 4(2) of the Securities Act or
under any state securities or Blue Sky laws; and (ii) as a result, each Member
must hold its Membership Interest indefinitely, unless such Membership Interest
is transferred in a transaction subsequently registered under the Securities Act
or such laws, or an exemption from such registration is available with respect
to the transfer of such Membership Interest.
(b) Each Member hereby represents that it is acquiring its Membership
Interest pursuant to this Agreement for its own account and not with the view
to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act. Each Member is a sophisticated
investor for purposes of the Securities Act and has such knowledge and
experience in financial and business matters that is capable of evaluating the
merits and risks of the Membership Interest being acquired pursuant to this
Agreement.
Section 7.09 Default During Initial Period
(a) In the event a Member (the "Defaulting Member") shall be in default
of a material provision of this Agreement during the Initial Period and such
default shall continue for thirty (30) days after receiving notice of such
default from the other Member (the "Non-Defaulting Member") without cure, and
the Non-Defaulting Member does not waive the default, then the Non-Defaulting
Member shall be entitled at its sole option, and without limiting any other
remedies available to it to purchase the Defaulting Member's interest in the
Company. The Non-Defaulting Member may elect to purchase the Defaulting Member's
interest in the Company by written notice given to the Defaulting Member within
five (5) days following expiration of the 30-day cure period from its original
notice of default. If the Non-Defaulting Member elects to purchase the
Defaulting Member's interest in the
Company under this Section 7.09, the definitive agreements governing such
transfer and the transfer shall be completed within the 15-day period following
expiration of the 30-day cure period. The purchase price for the Defaulting
Member's interest shall be equal to a multiple of five (5) times the net income
of the Company determined in accordance with GAAP. The net income shall be
determined on a 12-month rolling average basis ending the end of the month
immediately prior to the notice of default (the "Determination Date"). If the
Determination Date is less than 12 months from the Effective Date, the net
income shall be determined on an annualized basis. The Defaulting Member shall
also be granted by the Company a non-exclusive, royalty-free right and license
to any Developments derived from such Member's respective Intangibles. Payment
of the purchase price shall be in cash at the closing.
(b) For purposes of this Agreement, during the Initial Period, the
following shall constitute a default for purposes of Section 7.09(a) above by
the Member specified below:
(i) by Iconovex, if a product is not developed meeting
the specifications as agreed to in writing by the
Members;
(ii) by Solutions, if the Company fails to meet at least
60% of the cumulative monthly revenue projections
(determined on a monthly basis) set forth in Schedule
7.09 during the year ended September 30, 1998 and 90%
thereafter.
Section 7.10 Right of First Refusal
(a) In the event at any time after the date which is two years from the
Effective Date, a Member receives from a third party a bona fide offer to
purchase its Membership Interest which that Member (the "Selling Member") is
willing to accept, the Selling Member shall provide the other Member notice in
writing specifying the price and other terms and conditions of the proposed
sale. For a period of thirty (30) days from and after receipt of such notice,
the other Member shall have the right to purchase the Selling Member's
Membership Interest upon the terms and conditions and for the price set forth in
the Selling Member's notice. In order for the terms of this Section 7.10 to
apply, the Selling Member must demonstrate to the other Member the third party's
financial ability to perform the Selling Member's obligations under this
Agreement.
(b) If the other Member exercises its right to purchase the Selling
Member's Membership Interest, it shall provide written notice of such exercise
within the 30-day period provided in Section 7.10(a). Closing of sale shall be
no more than thirty (30) days from the date of the exercise notice.
(c) If the other Member does not exercise its right to purchase the
Selling Member's Membership Interest within the 30-day period provided in
Section 7.10(a), the Selling Member may sell its Membership Interest to the
third party at a price and on terms no more favorable to the third party than
those specified in the Selling Member's notice. If the sale is not consummated
within sixty (60) days after expiration of the 30-day period provided in Section
7.10(a), the right to transfer under Section 7.10 shall terminate and any
subsequent sale shall again require compliance with this Section 7.10.
Section 7.11 Put Right
(a) In the event at any time after the date which is two years from the
Effective Date, a Member desires to sell its Membership Interest (the "Put
Member"), it shall provide the other Member notice in writing at least ninety
(90) days prior to the proposed transfer date.
(b) Upon receipt of such notice by the other Member, the Put Member
shall be obligated to sell and the other Member shall be obligated to purchase,
the Put Member's Membership Interest. Closing of the sale shall be the date
specified in the Put Member's notice, unless agreed to by the Members.
(c) The purchase price for the Put Member's Membership Interest shall
be the greater of (i) six (6) times the net income of the Company determined in
accordance with GAAP on a 12-month rolling average basis ending the month
immediately prior to the notice described in Section 7.11(a); or (ii) the price
determined by appraisal as provided in Section 7.11(d) below (the "Appraised
Value"). Payment of the purchase price shall be in cash at closing.
(d) The Appraised Value of the Membership Interest will be determined
by a recognized independent appraisal company agreeable by the Members (the
"Appraiser"). If the Members cannot agree on an Appraiser within fifteen (15)
days after notice required in Section 7.11(a), each Member shall select an
Appraiser and the two Appraisers shall select an independent
Appraiser to determine the fair market value of such Membership Interest,
without premium for control or discount for minority interest, illiquidity or
restriction on transfer. Such independent Appraiser shall be directed to
determine the fair market value of the Membership Interest as soon as
practicable, but in no event later than thirty (30) days from the date of its
selection. The determination by the Appraiser of the fair market value will be
conclusive and binding on all parties to this Agreement. The costs of the
Appraiser will be borne 50% by each Member.
ARTICLE VIII
DISSOLUTION, WINDING UP AND TERMINATION
Section 8.01 Events of Dissolution
The Company shall be dissolved upon the occurrence of any of the
following events:
(a) Expiration of the term of the Company as stated in Section 1.03
unless such term is extended as provided in said Section;
(b) Any order of court of competent jurisdiction requiring dissolution;
(c) The unanimous agreement of the Members; or
(d) Subject to Section 8.03, the bankruptcy (as defined in Sections
18-101(1) and 18-304 of the LLC Act) of a Member.
Section 8.02 Winding Up
In the event that the Company is dissolved and the remaining Members do
not or cannot unanimously consent to the continuation of the business of the
Company without the dissolution as provided in Section 8.03 hereof:
(a) No further business shall be done in the Company's name except the
completion of incomplete transactions and the taking of such action as may be
necessary to wind up the affairs of the Company.
(b) The affairs of the Company shall be wound up in accordance with the
following provisions:
(i) a full and general accounting of the Company's
financial affairs shall be prepared;
(ii) the Company shall attempt to collect all of its
accounts receivable;
(iii) the Company shall pay or provide for all debts and
liabilities to creditors of the Company, including
debts from loans by Members in the manner provided in
Section 4.01, in order of priority as provided by
law;
(iv) if a Member shall have any obligation to the Company
as of the effective date of the dissolution, such
obligation shall promptly be paid to the Company. In
lieu of such payment, the Company shall be entitled
to offset any such obligation against any payment or
distribution to be made to such Member hereunder; and
(v) if the Members deem it reasonably necessary, a
reserve shall be set up for any contingent or
unforeseen liabilities or obligations of the Company
arising out of or in connection with the Company's
business. Such reserve shall be paid over to an
escrow agent selected by the Members for such period
of time as the Members shall reasonably determine, to
be held for the purpose of disbursing such reserve in
payment of any such contingencies. At the expiration
of such period the balance of such funds shall be
distributed in the manner provided in Section 8.02.
A reasonable time as determined by the Members, not to exceed 12
months, shall be allowed for the orderly winding up of affairs of the Company,
including the liquidation or distribution of its assets and the discharge of its
liabilities to creditors, so as to enable the Company to minimize any losses
attendant upon such liquidation. Each Member shall be furnished with a statement
setting forth the assets and liabilities of the Company as of the date of
dissolution and the manner in which the assets of the Company are to be
distributed.
(c) The assets of the Company shall be applied in the following order:
(i) to the payment of the debts and liabilities of the
Company owing to creditors of the Company, including
debts from loans by Members in the manner provided in
Section 4.01, in the order of priority as provided by
law;
(ii) to the payment to the Members having positive
balances in their respective Capital Accounts, pro
rata, in proportion to such positive balances; and
(iii) to the payments to the Members of any surplus
remaining after the payments described in (i) and
(ii) above, in proportion to and in accordance with
their respective Percentage Interests in the Company.
No Member shall have any obligation to the Company, to any other Member
or to any third party or creditor to restore or repay any negative or deficit
balance in the Member's Capital Account or to make any additional capital
contributions to the capital of the Company in the event that the assets of the
Company are insufficient to make any of the payments provided for in this
Section 8.02(c). Any gains or losses on disposition of the Company's properties
in the process of liquidation shall be credited or charged to the Members in
accordance with their respective Percentage Interests.
(d) In winding up the affairs of the Company, the Members may either
sell the Company's assets and distribute the net proceeds therefrom, after the
payment of the Company's liabilities, or distribute the Company's assets to the
Members in kind. Notwithstanding the foregoing, the rights contributed to the
Company by Iconovex pursuant to Section 3.01(a)(i) shall be distributed in kind
to Iconovex and, for purposes of Section 8.02(c)(ii), Iconovex shall be credited
with receiving a payment in the amount of $51,000. In addition, the intangibles
contributed to the Company by Solutions pursuant to Section 3.01(a)(ii) shall be
distributed in kind to Solutions and, for purposes of Section 8.02(c)(ii),
Solutions shall be credited with receiving a payment in the amount of $49,000.
Section 8.03 Dissolution Avoidance
Upon the occurrence of an event described in Section 8.01(d) (a
"Terminating Event"), the Company shall promptly (but in any event within
fourteen (14) days after the Company has knowledge of such event), send a notice
of such fact to each Member. If the Members consent to the continuation of the
business of the Company without dissolution within ninety (90) days after the
Terminating Event, then the Company shall not dissolve and shall not be required
to be wound up.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Section 9.01 Representations of Iconovex and Solutions
In order to induce the other to enter into and perform this Agreement,
Iconovex and Solutions (each constituting a "Representing Party" for purposes of
this Article IX) each hereby represents and warrants to the other as follows:
(a) Organization. The Representing Party is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its organization and has full corporate power and authority to own and operate
its assets and properties and carry on its business as presently being conducted
and as presently proposed to be conducted (including in the manner contemplated
by this Agreement) and is duly qualified to do business and is in good standing
in all jurisdictions in which the ownership or occupancy of its properties or
its proposed activities make such qualification necessary.
(b) Authority. The Representing Party's Board of Directors has duly
authorized the execution and delivery of this Agreement and the transactions
contemplated hereby, and shareholder approval of this Agreement and the
transactions contemplated hereby is not required. The Representing Party has
full power and authority to execute and deliver, and to perform its obligations
under, this Agreement. This Agreement constitutes a valid and binding obligation
of the Representing Party, enforceable against the Representing Party in
accordance with its terms.
(c) No Violations. Neither the execution or delivery by the
Representing Party of this Agreement, nor the consummation by the Representing
Party of the transactions herein contemplated, nor the fulfillment by the
Representing Party of the terms and provisions hereof (i) will conflict with,
violate or result in a breach of any of the terms, conditions or provisions of
any law, regulation, order, writ, injunction, decree, determination or award of
any court, governmental department, board, agency or instrumentality or any
arbitrator, applicable to the Representing Party; (ii) will conflict with,
violate or result in a breach of, or
constitute a default under any terms, conditions or provisions of its charter
documents or by-laws or of any loan agreement, indenture, trust deed or other
agreement or instrument to which it is a party or by which it is bound; or (iii)
result in a creation or imposition of any lien, charge, security interest or
encumbrance of any nature whatsoever upon any of its property or assets. The
Representing Party is not in default under any agreement to which it is a party
which default could impair its ability to perform its obligations under this
Agreement.
(d) Litigation. There is no action, suit or proceeding pending or, to
the best of the Representing Party's knowledge, threatened (nor, to the best of
its knowledge, is there any pending investigation) against or affecting the
Representing Party or any of its properties in any court or before or by any
governmental department, board, agency or instrumentality or arbitrator which,
if adversely determined, would materially impair its ability to perform its
obligations under this Agreement, and it is not in default under any applicable
order, writ, injunction, decree or award of any court, any governmental
department, board, agency or instrumentality, or any arbitrator, other than such
violations, if any, which individually or in the aggregate, do not impair in any
material way or involve any substantial possibility, so far as it can foresee,
of impairing in any material way its ability to perform its obligations under
this Agreement.
Section 9.02 Survival
All representations and warranties made herein shall survive the
execution and delivery of this Agreement.
ARTICLE X
TAX MATTERS
Section 10.01 Tax Characterization and Returns
(a) The Members intend for the Company to be treated as a "partnership"
for Federal and state tax purposes. All provisions of this Agreement and the
Company's certificate of formation are to be construed so as to preserve that
tax status.
(b) Within ninety (90) days after the end of each Fiscal Year, the
Committee will cause to be delivered to each Person who was a Member at any time
during such Fiscal Year the balance sheets of the Company as at the end of each
such Fiscal Year and statements of income and changes in financial condition of
the Company for such Fiscal Year all prepared in accordance with GAAP and
accompanied by a report thereon of the Company's accounting firm.
(c) The Tax Matters Member shall arrange for the preparation and timely
filing for each Fiscal Year or other period of all federal, state and local tax
or information returns required to be filed by or on behalf of the Company. As
soon as practicable after the end of each Fiscal Year and in no event later than
December 15 of the immediately following Fiscal Year, the Tax Matters Member
shall cause to be furnished to each Member all information required by such
Member for federal and state income tax reporting purposes with respect to the
Company, including without limitation a copy of Schedule K-1 to the federal tax
return of the Company on Form 1065 (or any similar successor schedule or return)
showing the taxable income and loss of the Company for such Fiscal Year just
ended and the allocation thereof to each Member. The Members shall each take
reporting positions on their respective federal, state and local income tax
returns consistent with the positions determined for the Company.
Section 10.02 Accounting Decisions
(a) The Members will make all decisions as to accounting matters, and
(b) The Tax Matters Member shall, upon consent of Solutions, make all
applicable elections, determinations and decisions under the Code on behalf of
the Company, including the election referred to in Section 754 of the Code to
adjust the basis of Company assets.
Section 10.03 Tax Matters Member
The Members will designate Iconovex to act on behalf of the Company as
the "tax matters partner" within the meaning of Section 6231(a)(7) of the Code
(the "Tax Matters Member").
Section 10.04 Accounting
The fiscal year of the Company shall end on September 30 of each year
(the "Fiscal Year").
Section 10.05 Books of Account
True and accurate books of account of the Company shall be kept and
maintained at all times at its principal offices unless an alternative location
shall be approved in writing by the Members. The books of account of the Company
shall be maintained on an accrual basis in accordance with GAAP.
Section 10.06 Contents and Location of Required Records; Access to Accounts
The Company will maintain at its principal place of business, or at
some other location chosen by the Members, the records that Section 18-305 of
the LLC Act requires the Company to maintain. In addition to the requirements of
Section 18-305 of the LLC Act and subject to the provisions of Section 12.01,
the Company shall afford to each of the Members and their respective counsel,
accountants and other representatives, access to all properties of the Company,
books, records and other documents of the Company and shall furnish to each of
the Members such information concerning the Company and copies of such documents
as each of the Members in their respective reasonable judgment may request. Each
Member shall be entitled, at its own expense, to have a firm of independent
certified public accountants designated by it, or its own internal auditors,
review all properties, books, records and other documents of the Company as well
as all accountant's work papers with respect to any audit of the Company. The
Company shall provide on a timely basis to each of Iconovex and Solutions such
financial information as may be required for its consolidated financial
statements.
Section 10.07 Independent Auditors
The Company's independent certified public accountants shall be
selected and retained by the Members.
ARTICLE XI
INDEMNIFICATION
Section 11.01 Limitation on Liability; Indemnification - Member Designees,
Officers, Etc.
(a) No Member Designee or officer of the Company shall be liable,
responsible or accountable in damages or otherwise to the Company or any of the
Members for any act or omission performed or omitted by him or her in good faith
on behalf of the Company and in a manner reasonably believed by him or her to be
(i) within the scope of the authority granted to him or her pursuant to this
Agreement or by resolution of the Committee and (ii) in, or not opposed to, the
best interests of the Company. For purposes of this Section 11.01, any action or
omission taken on advice of counsel to the Company or the independent public
accountants for the Company shall be deemed to have been taken in good faith.
(b) Member Designees and any officer of the Company shall be entitled
to indemnification from the Company for any loss, damage or claim, (including
any attorney's fees incurred by such Member Designee or officer in connection
therewith that shall be advanced by the Company) due to any act or omission made
by him or her in good faith on behalf of the Company and in a manner reasonably
believed by him or her to be (i) within the scope of the authority conferred on
him or her pursuant to this Agreement or by resolution of the Committee and (ii)
in, or not opposed to, the best interests of the Company.
(c) The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith, in a manner reasonably believed to be in or not opposed to
the best interests of the Company, and in a manner reasonably believed to be
with the scope of the authority conferred on him or her by this Agreement or a
resolution of the Committee.
(d) Member Designees and the officers of the Company are intended to be
third party beneficiaries of the provisions of this Section 11.01. The
provisions of this Section 11.01 shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any agreement,
determination of the Committee or the Members or otherwise, and shall continue
as to any person who has ceased to be a Member Designee or an officer of the
Company and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(e) Any repeal or modification of this Section 11.01 by the Members
shall not adversely affect any right or protection of a Member Designee or
officer of the Company existing at the time of such repeal or modification.
Section 11.02 Insurance
The Company may purchase and maintain insurance against any liability
that may be asserted against any Person entitled to indemnification pursuant to
Section 11.01.
Section 11.03 Cross Indemnification
Each Member shall indemnify and hold harmless the Company and the other
Member, or any of them, from and against any and all claims, demands, actions,
suits, damages, liabilities, losses, costs and expenses (including attorney's
fees) caused by, resulting from or arising out of, resulting from or arising out
of (a) any failure by such Member to perform, or any default under, any
obligations required to be performed by such Member hereunder or (b) any breach
of the representations and warranties made by such Member hereunder or (c) any
tortious or unlawful act or omission related to the operation of the Company
caused by such Member. The foregoing indemnity shall survive any termination of
this Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Confidential Information
At all times during the Term of this Agreement and for a period of ten
(10) years thereafter, each Member shall keep strictly confidential and not
disclose, use, divulge, publish or otherwise reveal, directly or through another
Person, any confidential information regarding the Company or any other Member
including, but not limited to, documents and/or information regarding customers,
costs, profits, markets, sales, products, product development, key personnel,
pricing policies, operational methods, technology, know-how, technical
processes, formulae, or plans for future development of or concerning the
Company or any other Member or their respective Affiliates (collectively
"Confidential Information") except as may be necessary for the directors,
employees or agents to perform their respective obligations under this Agreement
or in connection with filings with governmental agencies or courts or otherwise
required under applicable law, unless the other Member gives prior written
consent to the disclosure. To the extent that such Confidential Information is
revealed, each party shall use its best efforts to have the Persons receiving
such information retain it in confidence. Upon termination of this Agreement,
each Member shall return to the other all memoranda, notes, records, reports and
other documents (including all copies thereof) relating to such Confidential
Information of the other which such Member may then possess or have under its
control.
For purposes of this Section 12.01, Confidential Information shall not
include any information which (a) is or become generally known to the public
other than as a result of disclosure by a Member (or any Affiliate, officer,
employee or agent of a Member), (b) is lawfully obtained from a third party
under no duty of confidentiality to the other party, or (c) is developed by a
Member or an Affiliate of a Member independently of the Company or the other
Member without reference to the disclosing party's Confidential Information.
Section 12.02 Entire Agreement; Waiver, Modifications
This Agreement shall constitute the entire agreement of the Members
with respect to the subject matter of this Agreement. No modification or any
claimed waiver of any of the provisions of this Agreement shall be effective
unless in writing and signed by a duly authorized officer of the Member against
whom such a modification or waiver is sought.
Section 12.03 Assignment; Successors
This Agreement shall inure to the benefit of, and be binding upon, the
Members hereto and any Person that acquires a Capital Account, Membership
Interest or Financial Rights of a Member as permitted by the terms hereof.
Otherwise, a Capital Account, Membership Interest or Financial Right of a Member
is not assignable.
Section 12.04 Notice
All notices and other communications hereunder shall be in writing and
shall be given, transmitted and delivered by telecopy, telex, or telegram, and a
copy thereof shall be mailed postage prepaid, return receipt requested, to the
parties at the addresses listed on the first page hereof (or such other address
as shall be specified by such party by like notice).
Section 12.05 Counterparts
This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed an original
and all of which taken together shall constitute one and the same instrument.
Section 12.06 Interpretation
Titles of articles and section are for convenience only and shall be
given no effect in the construction or interpretation of this Agreement. Unless
the context otherwise requires the singular includes the plural, and the plural
includes the singular.
Section 12.07 Severability
In the event that any provision of this Agreement is declared by a
court of competent jurisdiction to be void or unenforceable, the remainder of
this Agreement shall not be affected thereby and shall remain in full force and
effect to the extent feasible in the absence of the void and unenforceable
provision.
Section 12.08 Equitable Remedies
The rights and remedies of the Members under this Agreement shall not
be mutually exclusive i.e., the exercise of one or more of the rights under this
Agreement shall not preclude the exercise of rights under any other provision.
Each Member acknowledges that no adequate remedy of law would be available for a
breach of this Agreement, and that a breach of this Agreement by one would
irreparably injure the other and accordingly agrees that in the event of a
breach of any provision, the respective rights and obligations of the parties
hereunder shall be enforceable by specific performance, injunction or other
equitable remedy (without bond or security being required), and each Member
waives the defense in any action and/or proceeding brought to enforce this
Agreement that there exists an adequate remedy or that the other Member is not
irreparably injured. Nothing herein contained, however, is intended to, nor
shall it, limit or affect any rights at law or by statute or otherwise of any
Member as against the other for a breach of any provision, it being the
intention of this Section 12.08 to make clear the agreement of the Members that
the respective rights and obligations of the Members shall be enforceable in
equity as well as at law or otherwise.
Section 12.09 Expenses
The parties agree that the Company shall pay all of the fees and
expenses incurred in connection with its organization (other than legal and
accounting fees). Each Member shall pay all of its own fees and expenses
incurred in connection with this Agreement, the transactions contemplated
hereby, the negotiations leading to the same, the preparations made for carrying
the same into effect, including without limitation its organization and
registration costs and expenses, if any.
Section 12.10 Arbitration
Without prejudice to the rights of the parties to seek injunctive or
equitable relief in any appropriate court of law having jurisdiction over the
matter and the persons involved, all claims, disputes or disagreements arising
under or in connection with this Agreement shall be finally settled under the
then applicable rules of the American Arbitration Association by three (3)
arbitrators, as follows:
(a) The arbitrators shall apply the law (including the procedural law)
specified in Section 12.11 of this Agreement.
(b) The arbitration shall be held in Minneapolis, Minnesota; and
(c) The arbitrators shall award legal fees and costs (including
administrative expenses and arbitrators' fees and legal fees incurred in
connection with the arbitration) to each party in the proportion lost by each
party in the proceeding.
Section 12.11 Governing Law
This Agreement shall be governed by and construed in accordance with
the internal law of the State of Delaware without regard to its conflict of law
principles.
Section 12.12 Affiliate Transactions
All transactions between the Company and either Iconovex (or an
Affiliate of Iconovex) or Solutions (or an Affiliate of Solutions) shall be
conducted on an arm's-length basis.
Section 12.13 Further Assurances
Each Member shall perform all other acts and execute and deliver all
other documents as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.
Section 12.14 No Impairment
Nothing in this Agreement is intended to impair or lessen the fiduciary
duties of the Members to each other as they may exist at law or in equity.
Section 12.15 Survival
In the event that a Member ceases to be a Member in the Company, the
terms and provisions of this Agreement shall apply for a period of ten (10)
years unless, by the express provisions of this Agreement, an obligation or
covenant of a Member is intended to terminate on an earlier date.
Section 12.16 Third Party Rights
Nothing in this Agreement, either express or implied, is intended or
shall be construed to confer, directly or indirectly, upon or give to any Person
other than the Company, the Members and their Affiliates any legal or equitable
right, remedy or claim under or in respect of this Agreement or any covenant,
condition or other provisions contained herein, except that the Persons entitled
to indemnification under Section 11.01 are intended beneficiaries of Section
11.01.
Section 12.17 Relationship Between This Agreement and the Certificate of
Formation
If a provision of this Agreement differs from a provision of the
Company's certificate of formation, then to the extent allowed by law, this
Agreement shall govern.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound,
have caused this Agreement to be duly executed as of the day and year first
above written.
ICONOVEX CORPORATION
By
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Its
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SOLUTIONS CORPORATION OF AMERICA, INC.
By
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Its
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ACCEPTED AND AGREED TO BY:
SMART SOLUTION, LLC
By
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Its
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