INTERIM OPERATING AGREEMENT
THIS AGREEMENT ("this Agreement") is entered into this 22nd day of May,
2000, by and between SHANECY, INC., a Delaware corporation, with its principal
place of business located at 0000-000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0 ("Shanecy"), on the one hand, and THEMEWARE CORP., a California
corporation, with its principal place of business located at 0000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("ThemeWare"), on the other
hand. (Shanecy and ThemeWare are hereinafter collectively referred to as the
"Parties").
WHEREAS, the Parties have entered into a Term Sheet (the "Term Sheet")
which provides, in part, that Shanecy will acquire 100% of the outstanding
shares of common stock of Themeware (the "Transaction") (a true and correct copy
of the Term Sheet is hereby attached as Exhibit A and incorporated herein by
reference);
WHEREAS, the Parties are in the process of creating definitive
agreements which will evidence the Transaction, which will ultimately be
entitled "Agreement and Plan of Reorganization" or a similar title (the "Closing
Documents");
WHEREAS, the Parties have agreed that time is of the essence in the
closing of the Transaction (the "Closing") and the Parties have agreed to
proceed towards the Closing in a diligent and efficient manner during the period
beginning with the execution of the Term Sheet and ending with the date of the
Closing (the "Closing Date") (the "Interim Period");
WHEREAS, the Parties desire to facilitate the pending transition
resulting from the Closing, and wish for Shanecy to become familiar with the
management and operations of ThemeWare as soon as practicable;
WHEREAS, this Agreement is not intended to create a third-party
beneficiary contract, nor is it intended to benefit any parties other than the
parties to this Agreement;
WHEREAS, the Parties believe that it is in their mutual best interests
for Shanecy to have the opportunity to work with ThemeWare present management
prior to the Closing;
WHEREAS, Shanecy has agreed to dedicate time and management resources
to ThemeWare during the Interim Period (the "Management Services");
WHEREAS, certain of the consideration granted by ThemeWare in the Term
Sheet is being used to pay for the Management Services described herein; and
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NOW THEREFORE, it is agreed that the Parties enter into this Agreement
upon the following terms and conditions:
1. Management of ThemeWare: Shanecy will assume all management
responsibilities of ThemeWare, and will be responsible for its day to
day operations. ThemeWare's current management will remain in place,
but will act under the direction of Shanecy, or Shanecy's duly
authorized representative. Shanecy will act in the best interests of
ThemeWare, at all times during the course of this Agreement.
2. Daily Operations: ThemeWare will continue, under the direction of
Shanecy, to develop its current products consistent with its line of
business, and will continue to pursue the general business direction
currently pursued by ThemeWare present management.
3. ThemeWare Corporate Meetings: Shanecy, through its designated
representative, will attend all ThemeWare shareholder and Board of
Directors meetings, during the term of this Agreement, for purposes of
observation only, and Shanecy will not have the right to vote at the
meetings, and the purpose of attendance by Shanecy at the meetings will
be solely for the purpose of the Parties becoming more familiar with
each other and their respective operations. However, the Parties agree
that Shanecy's representative will not be entitled to be present in
connection with any discussions by ThemeWare's Board of Directors
regarding the transactions contemplated by the Term Sheet.
4. Shanecy Time Commitment: Shanecy shall devote that amount of time that
is reasonable and necessary to conduct the affairs of ThemeWare and to
attend to all matters concomitant to the business of ThemeWare.
5. Business Associations: Shanecy will maintain all of ThemeWare's current
business relationships, including those relationships with ThemeWare's
current manufacturers, distributors, producers, vendors, creditors, and
all other associates or affiliates of ThemeWare, and Shanecy will
continue to operate ThemeWare in its ordinary course of business with
its associates and affiliates.
6. Support Services: ThemeWare agrees to provide support services to
Shanecy, at all times during the term of this Agreement, at the
reasonable request of Shanecy, including in areas of management,
marketing, technical, production, distribution, and all other areas.
7. Limitations on Power of Shanecy: Shanecy will not incur any material
debt or obligation on behalf of ThemeWare during the term of this
Agreement, without the express approval of the ThemeWare Board of
Directors through a duly authorized resolution.
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8. ThemeWare Liabilities:
a) Payment: Shanecy will ensure payment of the liabilities of
ThemeWare when necessary, and Shanecy will contribute its own
funds, when needed, and at its discretion, towards the payment of
ThemeWare liabilities. All payments towards liabilities in excess
of $25,000 must be jointly approved by the Parties.
b) Administration: Shanecy will administer all of the liabilities of
ThemeWare, and will attempt to negotiate more desirable payment
terms with creditors on behalf of ThemeWare.
9. Relocation: Shanecy will endeavor to find a more suitable principal
office location for the operations of ThemeWare, where the parties can
conduct their respective businesses independently, while still
maintaining a close proximity to each other, so that the management of
the respective companies can assist each other when needed.
10. Revenue from Operations: The revenues from the operations of ThemeWare
will remain with ThemeWare and be administered by Shanecy pursuant to
this Agreement and the attached Term Sheet.
11. ThemeWare Assets and Liabilities: The Parties agree that the assets and
liabilities of ThemeWare will remain unchanged and unaltered, as of the
date of execution of this Agreement, and will not be modified or
adjusted by ThemeWare at any time, except for expenditures in the
ordinary course of business. The Parties agree that Shanecy will assume
control of the assets and liabilities of ThemeWare as of the date of
execution of this Agreement.
12. Cooperation of the Parties: The Parties will, and will continue to,
cooperate fully with each other, and will cause their respective
accountants, counsel, consultants and other representatives to
cooperate with each other, in connection with the various audits and
examinations to be conducted by any of them.
13. Due Diligence Materials: Each of the Parties will treat in confidence
all documents, materials and other information obtained regarding the
other during the course of the negotiations leading to the consummation
of the Transaction, the investigation of the other, and the preparation
of all agreements and other documents hereunder. If the Transaction is
not consummated, each Party will return to the other all copies of
non-public documents and materials that have been furnished in
connection therewith.
14. Accountants: The Parties agree to continue to retain their respective
accounting firms, with Shanecy retaining KPMG, and with ThemeWare
retaining Ernst & Young LLP, to provide all required accounting
services to the respective parties, including, without limitation,
those required in connection with the closing of the transaction.
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15. Closing Date: The Parties agree to use their commercially reasonable
efforts to cause the Closing to occur as soon as practicable after the
date hereof, at the Closing of the Transaction, this Agreement will be
superceded by the documents executed by the parties at the Closing of
the Transaction.
16. Failure to Close: In the event that the Closing of the Transaction does
not occur within 90 days of the date of execution of the Agreement, for
any reason other than the failure of the United States Securities and
Exchange Commission to declare effective any registration statement
filed as part of the Transaction, or the failure of any other
governmental agency to take action in a timely manner, that is not the
fault of either of the Parties to this Agreement, then this Agreement
will immediately terminate.
17. Additional Conditions: From the date hereof until the Closing, the
Parties will, among other things:
(a) continue to operate the business of ThemeWare, under the direction
of Shanecy, in the usual, regular and ordinary course and manner;
and not make any material changes in the business of ThemeWare or
incur any material obligations or liabilities with respect thereto
other than by the ordinary course of business;
(b) not make any changes in the authorized, issued or outstanding
capital stock of ThemeWare, and not declare, set aside, pay or
make any dividends on the capital stock of ThemeWare, except as
expressly contemplated by the Term Sheet;
(c) not grant any rights, warrants or options relating to the capital
stock of ThemeWare, without the express written consent of the
Parties;
(d) not pay, promise to pay or enter into any agreement, or other
arrangement to pay, any bonus or special or increased compensation
to directors, officers or employees other than in accordance with
presently existing compensation arrangements, without the express
written consent of the Parties;
(e) not disclose or communicate to any person, or use for the benefit
of any person, any secret, confidential or proprietary knowledge
or information with respect to ThemeWare;
(f) keep each other fully informed of all material events and
occurrences relevant to the business and operations of ThemeWare.
18. Confidential Information: During the term of this Agreement, the
Parties acknowledge that they will have access to and become familiar
with various confidential information and trade secrets about the
business of the other that is not generally known in its industry, and
that provides a competitive advantage to the other, including without
limitation, customer lists, trade secrets, information, records, and
other items which are used in the operation of the business of the
other. The Parties agree that they will not disclose any of these trade
secrets and confidential information, directly or indirectly, or use
them in any way, during the term of this Agreement
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19. Termination: This agreement will terminate upon the expiration of the
Interim Period, or upon the termination of the Term Sheet prior to the
expiration of the Interim Period, by either party giving written notice
to the other party.
20. Modification: No waiver or modification of this Agreement, or any
covenant, condition or provision thereof shall be valid unless in
writing and duly executed by the party to be charged therewith.
21. Non-Assignability: Neither party may assign any of its rights, duties
or obligations under this Agreement to any third party except as
provided herein, or with the prior written consent of the other
22. Governing Law: This Agreement and all disputes related hereto shall be
governed by the laws of the State of California, United States of
America, and subject to the exclusive jurisdiction and venue of the
Courts of the Xxxxx xx Xxxxxxxxxx, Xxxxxx xx Xxxxxx, Xxxxxx Xxxxxx of
America. If any of the Parties shall initiate illegal proceeding to
enforce its rights hereunder, the prevailing party in such legal
proceedings shall be entitled to recover from the other party all
costs, expenses and reasonable attorneys fees incurred in connection
with such proceedings
23. Integration: This Agreement is, and represents, the entire Agreement
between the Parties hereto with respect to the subject matter hereof
and supersedes any prior or contemporaneous discussions or agreements
related thereto.
24. Counterparts: This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which when taken
together constitute one and the same agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the date first written above.
THEMEWARE CORP. SHANECY, INC.
/s/ /s/
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By: By: Xxxxx Xxxxxxx
Its: Its: President
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