ACQUISITION AGREEMENT
ACQUISITION AGREEMENT dated as of December 13, 2001 between and among HouseHold
Xxxxxx.xxx, Inc., a Delaware corporation ("HHD"), Eqtima LLC ("Llcco"), and
those individuals owning all of membership interests in Llcco on the Closing
Date described on Exhibit "A" annexed hereto and made a part hereof who shall
execute this agreement (the "Shareholders") and Battle Creek Unlimited, Inc., a
Michigan nonprofit corporation ("BCU").
WITNESSETH:
WHEREAS, Llcco is engaged in the business described on Exhibit "B" annexed
hereto ("Business") and in connection therewith utilizes and owns those assets
(tangible and intangible) described on Exhibit "C" annexed hereto ("Operating
Assets") free and clear of all liens, claims and encumbrances and rights and
options of others except as set forth on the Schedule of Exceptions annexed
hereto as Exhibit "D" ("Exception Schedule"); and
WHEREAS, HHD desires to acquire all of the membership interests in Llcco in
exchange for shares of the Common Stock, $.001 par value, of HHD ("HHD Stock");
and the Shareholders desire to exchange their membership interests in Llcco for
shares of HHD Stock upon the terms and conditions hereinbelow set forth.
NOW THEREFORE, in consideration of the premises and the covenants, terms and
conditions hereinbelow set forth and for One ($1.00) Dollar and other good and
valuable consideration each to the other in hand paid, the parties hereto do
hereby agree as follows:
1. Subject to the terms and conditions of this agreement ("Agreement") the
Shareholders shall, at the Closing (as defined) exchange 100% of the membership
interests in Llcco ("Eqtima Stock") for shares of HHD Stock as hereinbelow
provided.
2. In consideration for the conveyance of the Eqtima Stock to HHD, HHD shall
issue and deliver to the Shareholders (as their respective interests may
appear): (A) at the Closing (as defined) the Initial Shares (as defined), (B)
within 90 days following the end of the First Measuring Period, the First
Measuring Period Shares, (C) within 90 days following the end of the Second
Measuring Period, the Second Measuring Period Shares and (D) within 90 days
following the end of the Third Measuring Period, the Third Measuring Period
Shares.
(a) For purposes of this Agreement the term:
(i) "EBITA" shall be and mean, with respect to each applicable measuring period,
the net pre tax income of Llcco determined in accordance with generally accepted
accounting principals applied on a consistent basis and on a basis consistent
with prior practices exclusive of income tax, depreciation and amortization;
(ii) "Initial Shares" shall be and mean 1,000,000 shares of HHD Stock;
(iii) "First Measuring Period" shall be and mean the period commencing on the
Closing and terminating on December 31, 2002;
(iv) " Second Measuring Period shall be and mean calendar year 2003;
(v) "Third Measuring Period shall be and mean calendar year 2004;
(vi) "First Measuring Period Income" shall be and mean the EBITA of Eqtima for
the First Measuring Period multiplied by 3;
(vii) "Second Measuring Period Income" shall be and mean the EBITA of Eqtima for
the Second Measuring Period multiplied by 3 and reduced by the First Measuring
Period Income;
(viii) "Third Measuring Period Income" shall be and mean the EBITA of Eqtima for
the Third Measuring Period multiplied by 3 and reduced by the sum of the First
Measuring Period Income and the Second Measuring Period Income;
(ix) "First Target Price" shall be and mean the average of the closing bid and
asked prices of the HHD Stock on its primary exchange during the last 10 trading
days in the month of December 2002;
(x) "Second Target Price" shall be and mean the average of the closing bid and
asked prices of the HHD Stock on its primary exchange during the last 10 trading
days in the month of December 2003;
(xi) "Third Target Price" shall be and mean the average of the closing bid and
asked prices of the HHD Stock on its primary exchange during the last 10 trading
days in the month of December 2004;
(xii) "First Measuring Period Shares" shall be and mean the number of shares of
HHD Stock determined by dividing the First Measuring Period Income by the First
Target Price;
(xiii) "Second Measuring Period Shares" shall be and mean the number of shares
of HHD Stock determined by dividing the Second Measuring Period Income by the
Second Target Price;
(ivx) "Third Measuring Period Shares" shall be and mean the number of shares of
HHD Stock determined by dividing the Third Measuring Period Income by the Third
Target Price;
(xv) "Operating Member" is a full-time Llcco employee and shareholder;
(xvi) "Shareholders" shall have the meaning of such term in the first paragraph
hereof and shall not include BCU.
(c) All of the shares of HHD Stock to be issued to the Shareholders pursuant to
this Agreement shall be "restricted securities" and may not be transferred,
sold, assigned, conveyed, mortgaged, pledged or hypothecated except in
accordance with the applicable provisions of the Securities Act of l933, as
amended (the "Act") and the rules and regulations promulgated thereunder by the
Securities and Exchange Commission; provided however that the Shareholders
shall, at the Closing, be granted the registration rights with respect to the
shares of HHD Stock acquired by the Shareholders hereunder as set forth on
Exhibit "E" annexed hereto;
(d) Any dispute as to any computation made pursuant to this Paragraph 2 shall be
submitted to and settled by arbitration to be held in the City of Stamford,
State of Connecticut in accordance with the commercial rules and regulations of
the American Arbitration Association then obtaining. The arbitrators shall, in
the award, have authority to allocate costs to the prevailing party.
3. Within 30 days of the date hereof the Shareholders shall deliver to HHD
audited financial statements for Llcco for the period from inception through
October 31, 2001 prepared in accordance with generally accepted accounting
principals applied on a consistent basis (the "Financial Statements") including,
without limitation a statement of the results of operations for the period ended
October 31, 2001, a source and application of funds and a balance sheet as of
October 31, 2001; and the date upon which such Financial Statements shall be
delivered to HHD shall be referred to herein as the "Delivery Date".
4. (a) The closing of the transaction contemplated by this Agreement (the
"Closing") shall take place at the offices of HHD at 10:00 A.M. in the forenoon
on a date ("Closing Date") designated by HHD in a written notice ("Closing
Notice") transmitted by HHD to the Shareholders within 30 days following the
Delivery Date; which Closing Date shall be no earlier than 10 days nor later
than 30 days following the transmittal of the Closing Notice.
(b) At the Closing each of the following deliveries shall be made by the parties
as hereinbelow indicated and each such delivery shall be and be deemed to be
made simultaneously:
(i) HHD shall deliver or cause to be delivered to the Shareholders:
(A) Certificates representing the Initial Shares registered in the name of the
Shareholders, as their respective interests may appear;
(B) Executed counterparts of the instruments and documents required to be
delivered at the Closing as set forth in Paragraph 10 hereof:
(ii) The Shareholders shall deliver or cause to be delivered to the HHD: (A)
Executed Assignments of 100% of the membership interests in Llcco in form and
content acceptable to HHD;
(B) Executed counterparts of the instruments and documents required to be
delivered at the Closing as set forth in Paragraph 9 hereof:
(C) Certificate of Good Standing of Llcco in its state of formation and in each
state where the conduct of its businesses or ownership of assets requires
qualification to do business;
(D) The books and records of Llcco; and
(E) Keys to all of the offices and filing cabinets of Llcco and all security
codes and devices; provided however that access to any office of Llcco
maintained in a personal residence shall be subject to access only during normal
business hours;
5. In order to induce HHD to execute and perform this Agreement each of, Llcco
and the Operating Members do hereby jointly and severally represent, warrant,
covenant and agree (which representations, warranties, covenants and agreements
shall be and be deemed to be continuing and survive the execution and delivery
of this Agreement and the Closing) as follows:
(a) Llcco is a limited liability company duly organized, validly existing and
in good standing under the laws of State of Delaware, with full power and
authority, and with all licenses, permits, certifications, registrations,
approvals, consents and franchises necessary to own or lease and operate
its properties and to conduct its business as presently being conducted.
Llcco is duly qualified to do business and is in good standing, in each
jurisdiction where the conduct of its business or the ownership of its
assets requires such qualification;
(b) (i) The Shareholders own and have good and marketable title in and to 100%
of the membership and/or other equity interests in Llcco, free and clear of
all liens, claims and encumbrances and rights and options of others; (ii)
Llcco owns and has good and marketable title in and to the Business and the
Operating Assets free and clear of all liens, claims and encumbrances and
rights and option of others; (iii) upon the acquisition by HHD of the
membership interests of the Shareholders as herein provided, HHD acquire
good and marketable title in and to the membership interests of the
Shareholders and each part and portion thereof free and clear of all liens,
claims and encumbrances and rights and option of others;
(c) (i) Each of the Shareholders and Llcco has the full power and authority,
corporate and otherwise, to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby; (ii) The execution,
delivery and performance of this Agreement and the consummation of the
transactions herein contemplated by Llcco and the Shareholders have been
duly authorized by all necessary corporate and other action, and this
Agreement has been duly and properly authorized, executed and delivered by
the Shareholders and Llcco as the case may be; (iii) This Agreement is the
valid and binding obligation of the Shareholders and Llcco enforceable in
accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and the discretion of
courts in granting equitable remedies; (iv) The execution, delivery and
performance of this Agreement does not, and will not, with or without the
giving of notice or the lapse of time, or both, (A) result in any violation
of the constitutional documents of Llcco, (B) result in a breach of or
conflict with any of the terms or provisions of, or constitute a default
under, or result in the modification or termination of, or result in the
creation or imposition of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Shareholders or
Llcco and/or pursuant to, any indenture, mortgage, note, contract,
commitment or other agreement or instrument to which the Shareholders or
Llcco is a party or by which the Shareholders or Llcco or any of their
respective properties or assets are or may be bound or affected; (C)
violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or department, domestic or foreign,
having jurisdiction over the Shareholders or Llcco or any of their
respective properties or businesses; or (D) have any effect on any permit,
certification, registration, approval, consent, license or franchise
necessary for Llcco to own or lease and operate its properties and to
conduct its businesses or the ability of Llcco to make use thereof. No
consent, approval, authorization or order of any court, governmental
agency, authority or body and/or any party to an agreement to which the
Shareholders or Llcco is a party and/or by which any of them is bound, is
required in connection with the execution, delivery and performance of this
Agreement, and/or the consummation of the transactions contemplated by this
Agreement;
(d) Llcco is not in violation of, or in default under, (i) any term or
provision of its constitutional documents; (ii) any material term or
provision or any financial covenant of any indenture, mortgage, contract,
commitment or other agreement or instrument to which it is a party or by
which it or any or its properties or business is or may be bound or
affected; or (iii) any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over it or any of its properties or business. Llcco
owns, possesses or has obtained all governmental and other licenses,
permits, certifications, registrations, approvals or consents and other
authorizations necessary to own or lease, as the case may be, and to
operate its properties and to conduct its business or operations as
presently conducted and all such governmental and other licenses, permits,
certifications, registrations, approvals, consents and other authorizations
are outstanding and in good standing, and there are no proceedings pending
or, to the best of its knowledge, threatened, or any basis therefor
existing, seeking to cancel, terminate or limit such licenses, permits,
certifications, registrations, approvals or consents or authorizations, or
related to the breach or failure to comply of Llcco with any law, rule,
regulation, judgment, order or decree;
(e) None of the Shareholders or Llcco has incurred any liability for any
finder's fees or similar payments in connection with the transactions
herein contemplated except as set forth herein;
(f) Except as set forth on the Exception Schedule, Llcco is not in default, in
any material respect, under the terms of any outstanding agreement relating
to the Business or Operating Assets or any part thereof, as the case may
be; and to the best knowledge and belief of the Shareholders and Llcco ,
there exists no event of default or event which, with notice and/or the
passage of time, or both, would constitute any such default;
(g) Except as set forth on the Schedule of Exceptions, there are no claims,
actions, suits, proceedings, arbitrations, investigations or inquiries
before any court or governmental agency, court or tribunal, domestic, or
foreign, or before any private arbitration tribunal, pending, or, to the
best of the knowledge of the Shareholders or Llcco, threatened against the
Shareholders or Llcco , as the case may be. As to those items listed on the
Schedule of Exceptions none, if determined adversely to Llcco, would,
individually or in the aggregate, have a material adverse effect on the
Business or Operating Assets of Llcco, as the case may be, or which
question the validity of this Agreement or of any action taken or to be
taken by the Shareholders or Llcco pursuant to, or in connection with, this
Agreement; nor, to the best of the knowledge of the Shareholders and Llcco
, after inquiry, is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry to be made by any person
and/or entity, including without limitation any customer, supplier, lender,
stockholder, former or current employee, agent or landlord. Other than as
set forth on the Schedule of Exceptions, there are no outstanding orders,
judgments or decrees of any court, governmental agency or other tribunal
specifically naming the Shareholders or Llcco and/or enjoining any of them
from taking, or requiring any of them to take, any action, and/or by which
any of them and/or their respective properties or businesses are bound or
subject;
(h) Llcco has paid and/or provided for the payment (at or prior to the Closing)
of all employment related taxes (including withholding taxes) with respect
to its employees;
(i) There are no benefit programs, collective bargaining agreements, or pension
plans applicable to Llcco's employees other than as set forth on the
Schedule of Exceptions;
(j) All compensation and benefit payments including vacation, holiday and
sickness payments (but exclusive of accruals) required to be paid to
employees of Llcco prior to the Closing has been paid;
(k) The Financial Statements fairly present the financial position of Llcco a
as of the respective dates thereof and the results of operations, and
changes in financial position of Llcco for each of the periods covered
thereby. The Financial Statements have been prepared in conformity with
generally accepted accounting principles, applied on a consistent basis
throughout the entire periods involved. As of the date of the balance sheet
forming a part of the Financial Statements, and except as and to the extent
reflected or reserved against therein, Llcco has no material liabilities,
debts, obligations or claims (absolute or contingent) asserted against it
and/or which should have been reflected in a balance sheet or the notes
thereto; and all assets reflected thereon are properly reported and present
fairly the value of the assets therein stated in accordance with generally
accepted accounting principles;
(l) The financial and other books and records of and Llcco (i) are in all
material respects true, complete and correct and have, at all times, been
maintained in accordance with good business and accounting practices; (ii)
contain a complete and accurate description, and specify the location, of
all trucks, automobiles, machinery, equipment, furniture, supplies, tools,
drawings and all other tangible property (collectively the " Property")
owned by, in the possession of, or used by Llcco in connection with the
operation of Business; (iii) except as set forth on Schedule of Exceptions,
none of such Property is leased or subject to a security agreement,
conditional sales contract or other title retention or security agreement
or is other than in the possession of, and under the control of Llcco; and
(iv) the Property reflected in such books and records constitutes all of
the tangible and intangible property necessary for the conduct of the
Business; and all of the same is in normal operating condition and the use
thereof as presently employed conforms to all applicable laws and
regulations;
(m) Llcco owns and has good and marketable title in and to all of its assets,
properties and interests in properties (both real and personal) which are
reflected in the balance sheet included in the Financial Statements and/or
utilized in connection with the operation of the Business and/or acquired
after that date (except to the extent any of the same were disposed of
since such date in the ordinary course of business), in all cases, free and
clear of all liens, security interests, claims and encumbrances of every
kind, nature and description and rights and options of others except as
expressly set forth in such balance sheet;
(n) Annexed hereto as Exhibit "F" is a schedule setting forth a description of
(i) each parcel of improved or unimproved real property owned by or leased
to Llcco; (ii) all buildings, fixtures and other improvements situated on
or affixed to each designated parcel; and (iii) each title insurance policy
insuring any of such parcels. Exhibit "F" is true correct and complete in
all respects; each of such leases are in full force and effect with no
event of default in existence or event or occurrence which, with the
passage of time and/or giving of notice, would or could mature into an
event of default thereunder;
(o) Llcco owns all trademarks, service marks, trade names, copyrights, similar
rights and their registrations, trade secrets, methods, practices, systems,
ideas, know how and confidential materials used or proposed to be used in
the conduct of Business (collectively the "Intangibles") free and clear of
all liens, claims and encumbrances and rights and options of third parties
(including, without limitation, former or present officers, directors,
shareholders, employees and agents); Llcco has not licensed or leased any
of the Intangibles and/or any interest therein to any person and/or entity;
Llcco has not infringed, nor is infringing, upon the rights of others with
respect to the Intangibles; and Llcco has not received any notice of
conflict with the asserted rights of others with respect to the Intangibles
which could, singly or in the aggregate, materially adversely affect its
business as presently conducted or prospects, financial condition or
results of operations, and neither Llcco nor the Shareholders knows of any
basis therefore; and, to the best of the knowledge of the Shareholders or
Llcco no others have infringed upon the Intangibles;
(p) Annexed hereto as Exhibit "G" is a true, correct and complete schedule of
all insurance policies maintained by Llcco; and Llcco has insured its
properties against loss or damage by fire or other casualty, including
liability insurance for acts or omissions of employees, in an amount
sufficient to preclude Llcco from being a co-insurer with respect to any
claim;
(q) Except as and to the extent reflected or reserved against in the Financial
Statements, Llcco did not have as at date of such Financial Statements, any
material liabilities, debts, obligations or claims asserted against it,
whether accrued, absolute, contingent or otherwise, and whether due or to
become due, including, but not limited to, liabilities on account of due
and unpaid taxes, other governmental charges or lawsuits;
(r) Llcco has filed all federal, state, municipal and local tax returns
(whether relating to income, sales, franchise, withholding, real or
personal property or otherwise) required to be filed under the laws of the
United States and all applicable states, and has paid in full all taxes
which are due pursuant to such returns or claimed to be due by any taxing
authority or otherwise due and owing. No penalties or other charges are or
will become due with respect to the late filing of any such return. To the
best of the knowledge of Llcco and the Shareholders, after due
investigation, each such tax return heretofore filed by Llcco correctly and
accurately reflects the amount of its tax liability thereunder. Llcco has
withheld, collected and paid all other levies, assessments, license fees
and taxes to the extent required and, with respect to payments, to the
extent that the same have become due and payable;
(s) Since December 31, 2000 Llcco has not sustained any material loss or
interference with its business of any kind, nature or description
including, without limitation, from fire, storm, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree; nor have there been, and
prior to the Closing, there will not be, any material adverse change in or
affecting the general affairs, management, financial condition, equity,
results of operations or properties of Llcco;
(t) Other than as set forth on Exhibit "H" annexed hereto and made a part
hereof, Llcco is not a party (i) to any contract or agreement calling for
the payment of more than $10,000 per annum or $25,000 in the aggregate
and/or which cannot be terminated on not more than 90 days' prior written
notice to the other party thereto; (ii) to any profit sharing, bonus,
deferred compensation, pension or retirement plan, severance policy or
other similar agreement or arrangement; (iii) to any collective bargaining
agreement; or (iv) to any agreement not entered into in the ordinary course
of business except those related to the transactions contemplated by this
Agreement;
(u) The authorized and outstanding capitalization and membership interests of
Llcco is as set forth on Exhibit "I" annexed hereto and made a part hereof;
as of the date hereof and the Closing there shall not be authorized and/or
issued and outstanding any membership interests in Llcco and/or rights to
purchase membership interests of Llcco except as set forth on Exhibit "I".
The issued and outstanding membership interests of Llcco have been duly
authorized and validly issued and are fully paid and nonassessable. There
are no preemptive rights.;
(v) The copies of the constitutional documents of Llcco heretofore delivered to
HHD are true, correct and complete in all respects; are, and shall remain,
in full force and effect; and shall not be altered, amended, modified,
terminated or rescinded prior to the Closing without the prior written
consent of HHD in each instance;
(w) Each of the Shareholders has adequate means for providing for his current
needs, has no need for liquidity of his investment in the HHD Stock
(collectively the "Securities") and has the financial capacity to bear the
economic risk of any investment in the Securities for an indefinite period
of time; and has sufficient means to bear the economic risk and/or entire
loss of his investment in the Securities; (x) Each of the Shareholders has
been afforded an opportunity to ask questions of and receive answers from
HHD and its counsel concerning the terms and conditions of an investment in
the Securities, and all such questions have been answered to the full
satisfaction of the Shareholders;
(y) Each of the Shareholders has examined and/or has had the opportunity to
examine, prior to the date hereof, all documents and such applicable
information as it has requested (to the extent such information and
documentation are (i) relevant to this transaction, and (ii) possessed by
HHD or obtainable by HHD without unreasonable effort or expense);
(z) Each of the Shareholders has sufficient knowledge and experience in
business matters to evaluate the merits and risks of an investment in the
Securities;
(aa) Each of the Shareholders is an accredited investor as such term is defined
in the Act and is acquiring the Securities for its own account and for
investment purposes only and without a view towards or agreement with
respect to the transfer, sale, assignment, or other disposition thereof,
and none of the Shareholders shall sell, assign, transfer, pledge,
hypothecate or deal in and with the Securities in violation of the Act or
the rules and regulations promulgated thereunder by the Securities and
Exchange Commission; and
(bb) The representations, warranties, covenants and agreements of the
Shareholders, Llcco and Eqtima contained in this Agreement, including,
without limitation, those contained in this Paragraph 5, are true, accurate
and correct in all respects as of the date hereof and shall be true,
accurate and correct and complete, in all respects, as of the Closing; and
at the Closing each of the Shareholders and Llcco shall deliver to HHD a
certificate, executed by the chief executive officer of Llcco and the
Shareholders, respectively, under oath, remaking, each of the
representations, warranties, covenants and agreements set forth in this
Agreement, including without limitation, those set forth in this Paragraph
5 hereof.
6. In order to induce the Shareholders and Llcco to execute and perform this
Agreement, HHD does hereby represent, warrant, covenant and agree (which
representations, warranties, covenants and agreements shall be and be
deemed to be continuing and survive the execution and delivery of this
Agreement and the Closing) as follows:
(a) HHD is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full power and authority,
corporate and otherwise, and with all licenses, permits, certifications,
registrations, approvals, consents and franchises necessary to own or lease
and operate its properties and to conduct its business as presently being
conducted;
(b) (i) HHD has the full power and authority, corporate and otherwise, to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby; (ii) The execution, delivery and
performance of this Agreement, the consummation by HHD of the transactions
herein contemplated and the compliance by it with the terms of this
Agreement have been duly authorized by all necessary corporate action, and
this Agreement has been duly and properly authorized, executed and
delivered by HHD; (iii) This Agreement is the valid and binding obligation
of HHD, enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally and the discretion of courts in granting equitable remedies; (iv)
The execution, delivery and performance of this Agreement by HHD and the
consummation by HHD of the transactions herein contemplated does not, and
will not, with or without the giving of notice or the lapse of time, or
both, (A) result in any violation of the Articles of Incorporation or
By-Laws of HHD, (B) result in a breach of or conflict with any of the terms
or provisions of, or constitute a default under, or result in the
modification or termination of, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any of the
properties or assets of HHD pursuant to any indenture, mortgage, note,
contract, commitment or other agreement or instrument to which HHD is a
party or by which it or its properties or assets are or may be bound or
affected; or (C) to the best knowledge of HHD, after due investigation,
violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over HHD or its assets. No consent, approval, authorization or
order of any court, governmental agency, authority or body and/or any party
to an agreement to which HHD is a party and/or by which it is bound, is
required in connection with the execution, delivery and performance of this
Agreement, and/or the consummation by HHD of the transactions contemplated
by this Agreement, which has not already been received or will be received
by the Closing;
(c) HHD is not in violation of, or in default under, (i) any term or provision
of its Articles of Incorporation or By-Laws; (ii) any material term or
provision or any financial covenant of any indenture, mortgage, contract,
commitment or other agreement or instrument to which it is a party or by
which it or any or its assets is or may be bound or affected; or (iii) to
the best knowledge of HHD, any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over it or any of its assets;
(d) Upon the execution and delivery of the certificates evidencing shares of
HHD Stock in accordance with the terms and conditions of this Agreement,
such shares and certificates shall be duly, properly and validly authorized
and issued, fully paid and non-assessable; and
(e) The representations, warranties, covenants and agreements of HHD contained
in this Agreement, including, without limitation, those contained in this
Paragraph 6, are true, accurate and correct in all respects as of the date
hereof and shall be true, accurate and correct and complete, in all
respects, as of the Closing; and at the Closing HHD shall deliver to the
Shareholders and the Shareholders a certificate, executed by the chief
executive officer of HHD, as the case may be, under oath, remaking, on
behalf of HHD each of the representations, warranties, covenants and
agreements set forth in this Agreement, including without limitation, those
set forth in this Paragraph 6 hereof.
7. During the period from the date hereof until the earlier to occur of the
Closing or the termination of this Agreement by HHD, the Shareholders and Llcco
shall:
(a) Permit the officers and other authorized representatives of HHD (i) full
and unrestricted access, from time to time and at one or more times, to the
offices and books and records of Llcco situated at their offices during
normal business hours, and in connection with such books and records, such
inspection shall be at the offices where such records are normally
maintained, and such parties shall be entitled to make copies of and
abstracts from any of such books and records; (ii) the opportunity to meet,
correspond and communicate with the officers, directors, employees, counsel
and accountants to Llcco, and to secure from each such information as such
parties shall deem necessary or appropriate; and (iii) to review and copy
such other, further and additional financial and operating date, materials
and information as to the business as may be requested by such parties.
(b) Take and perform any and all actions necessary to render accurate and/or
maintain the accuracy of, all of the representations and warranties of the
Shareholders and Llcco herein contained and/or satisfy each covenant or
condition required to be performed or satisfied by the Shareholders and
Llcco at or prior to the Closing and/or to cause or permit the
implementation of the within acquisition.
(c) Not take or perform any action which would or might cause any
representation or warranty made by the Shareholders and/or Llcco herein to
be rendered inaccurate, in whole or in part and/or which would prevent,
inhibit or preclude the satisfaction, in whole or in part of any covenant
required to be performed or satisfied by the Shareholders or Llcco at or
prior to the Closing and/or the implementation of the within acquisition.
(d) Carry on and maintain the Business in the ordinary course of business and
in substantially the same form, style and manner as heretofore operated by
Llcco; perform, in all material respects all of Llcco's obligations under
all material agreements, leases and documents; use its best efforts to
preserve, intact, the relationships with its suppliers, customers,
employees and others having business relations with Llcco; not voluntarily
engage in any material transaction not in the ordinary course of business
without the prior written consent of HHD; and not amend any benefit plans
to increase benefits or otherwise increase compensation of their employees
other than in the ordinary course of business. Without limiting the
generality of the foregoing Llcco shall not:
(i) change its business, operations or financial condition, or the manner of
managing or conducting its business and operations if such changes, if any,
have a material adverse effect on such business, operations or financial
condition, taken as a whole;
(ii) change its accounting methods or practices (including, without limitation,
any change in depreciation, amortization and/or good will policies or
rates;
(iii)incur any damage, destruction or loss (whether or not covered by
insurance) which materially and adversely affects its assets, business,
operations or financial condition;
(iv) make any declaration, setting, or payment of a dividend or other
distribution with respect to the membership interests of Llcco, or any
direct or indirect redemption, purchase or other acquisition by Llcco of
any of its membership;
(v) make any issuance or sale of any membership interest in Llcco and/or right
to acquire any of the same;
(vi) make any increase in the salary or other compensation payable or to become
payable to any of their respective officers, directors, employees or
agents, or the declaration, payment or commitment or obligation of any
kind, nature or description for the payment by any of them of a bonus or
other additional salary or compensation to any person;
(vii)make any loan to any person or entity and/or issue any guaranty for or
with respect to its own or another's obligations;
(viii) waive or release any right or claim;
(ix) sell, lease, abandon, assign, transfer, license or otherwise dispose
(including any agreement and/or option for or with respect to any of the
foregoing) of any real property or tangible or intangible assets, property
or rights (and/or interest therein);
(x) incur any material obligation or liability, absolute or contingent;
(xi) experience any labor problems and/or other events or conditions of any
character which materially and/or adversely affect, or which might
materially and/or adversely affect, its financial condition, business,
assets or prospects; and
(xii)amend, terminate or modify any material agreement or license to which it
is a party which has or may have a material affect on its financial
condition, business, assets or prospects;
(e) Use its best efforts in good faith, to obtain and/or maintain all licenses,
consents or approvals (from every governmental or regulatory body, or other
person) required to be obtained and/or held by Eqtima or Llcco for or with
respect to its (i) assets, businesses and/or operations; and/or (ii) in
connection with the implementation of the transactions herein contained;
and/or (iii) the continued operation, following the Closing, of its
business in the manner presently conducted;
(f) Immediately advise HHD of any event, condition or occurrence which inhibits
or limits or is likely to prevent, inhibit or limit the Shareholders or
Llcco from satisfying, in full and on a timely basis, any covenant, term or
condition herein contained and/or implementing this Agreement; and
(g) Not issue any public announcement dealing in or with this Agreement and/or
the transactions herein described without the prior written consent of HHD.
8. During the period from the date hereof until the earlier to occur of the
Closing or the termination of this Agreement by HHD, HHD shall:
(a) Use its best efforts in good faith take and perform any and all actions
necessary to render accurate and/or maintain the accuracy of, all of the
representations and warranties of HHD herein contained and/or satisfy each
covenant or condition required to be performed or satisfied by HHD at or
prior to the Closing and/or to cause or permit the implementation of the
within acquisition.
(b) Use its best efforts in good faith not to take or perform any action which
would or might cause any representation or warranty made by HHD herein to
be rendered inaccurate, in whole or in part and/or which would prevent,
inhibit or preclude the satisfaction, in whole or in part of any covenant
required to be performed or satisfied by HHD at or prior to the Closing
and/or the implementation of the within acquisition.
(c) Immediately advise the Shareholders and Llcco of any event, condition or
occurrence which constitutes or may, with the passage of time and/or giving
of notice constitute, a breach of any representation or warranty of HHD
herein contained and/or which prevents, inhibits or limits or is likely to
prevent, inhibit or limit HHD from satisfying, in full and on a timely
basis, any covenant, term or condition herein contained and/or implementing
this Agreement.
9. The obligation of HHD to implement this Agreement and consummate the subject
acquisition is, at its election, subject to and conditioned upon the
satisfaction (and/or written waiver) of each of the following conditions:
(a) At the Closing, HHD shall have received a certificate, executed by the
President and Secretary of Llcco and the Shareholders (effective as of the
Closing), and in form and content reasonably acceptable to HHD, certifying
the truth and accuracy of the representations and warranties of Llcco and
The Shareholders herein contained, including without limitation those set
forth in Paragraph 5 hereof and the complete and timely satisfaction by
Llcco and the Shareholders of all of their respective covenants and
obligations herein contained, including without limitation those set forth
in Paragraph 7 hereof.
(b) Prior to the Closing there shall not have occurred any material adverse
change in the Business and/or Operating Assets, nor shall any event have
occurred or condition exist which, with the passage of time or the giving
of notice, may cause or create any such adverse material change.
(c) Prior to the Closing, all corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be in the form annexed
hereto and/or in form acceptable to HHD and HHD and its counsel shall have
received all counterpart originals or certified or other copies of such
documents and instruments as they may reasonably request.
(d) No action or proceeding shall have been instituted and be pending by any
private party and/or governmental agency or authority challenging the
legality of this Agreement or the subject acquisition and/or seeking to
prevent or delay consummation of the transactions herein contemplated;
which action or proceeding shall have resulted in preliminary or permanent
injunctive relief prohibiting consummation of this Agreement and/or the
subject acquisition. (e) All statutory requirements (including, without
limitation "bulk sales") for the valid consummation by the Shareholder and
Llcco of the transactions herein described shall have been fully and timely
satisfied; all authorizations, consents and approvals of all Federal, state
and local governmental agencies and authorities required to be obtained in
order to permit consummation of the transactions herein described, and/or
to permit the Business to continue unimpaired in all material respects
immediately following the Closing shall have been obtained and shall be in
full force and effect; and no action or proceeding to suspend, revoke,
cancel, terminate, modify or alter any of such authorizations, consents or
approvals shall be pending or threatened.
(f) HHD shall have received all of the documentation required to be delivered
to it pursuant to the provisions of this Agreement.
(g) The satisfaction of the HHD with the Financial Statements.
(h) The satisfaction of HHD with the results of its due diligence investigation
of Llcco and its business, operations and financial condition.
(i) The individuals described on Exhibit "K" shall have executed employment
agreements with Llcco on terms and condition acceptable to HHD and an
executed counterpart of each of the same shall have been delivered to HHD.
10. The obligations of the Llcco and the Shareholders to implement this
Agreement and consummate the subject acquisition is subject to and conditioned
upon the satisfaction (and/or written waiver) of each of the following
conditions:
(a) At the Closing, the Shareholders shall have received a certificate,
executed by the President and Secretary of HHD (effective as of the
Closing), and in form and content reasonably acceptable to the
Shareholders, certifying, the truth and accuracy of the representations and
warranties of HHD herein contained, including without limitation those set
forth in Paragraph 6 hereof and the complete and timely satisfaction by HHD
of all of its covenants and obligations herein contained, including without
limitation those set forth in Paragraph 8 hereof.
(b) Prior to the Closing, all corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be in the form annexed
hereto or in form acceptable to the Shareholders, and the Shareholders and
their counsel shall have received all counterpart originals or certified or
other copies of such documents and instruments as they may reasonably
request.
(c) No action or proceeding shall have been instituted and be pending by any
private party and/or governmental agency or authority challenging the
legality of this Agreement or the subject merger and/or seeking to prevent
or delay consummation of the transactions herein contemplated; which action
or proceeding shall have resulted in preliminary or permanent injunctive
relief prohibiting consummation of this Agreement and/or the subject
acquisition.
(d) All statutory requirements for the valid consummation by HHD of the
transactions herein described shall have been fully and timely satisfied;
all authorizations, consents and approvals of all Federal, state and local
governmental agencies and authorities required to be obtained in order to
permit consummation by HHD of the transactions herein described, shall have
been obtained and shall be in full force and effect; and no action or
proceeding to suspend, revoke, cancel, terminate, modify or alter any of
such authorizations, consents or approvals shall be pending or threatened.
(e) The Shareholders shall have received all of the documentation required to
be delivered to them pursuant to the provisions of this Agreement.
(f) The individuals described on Exhibit "K" shall have executed employment
agreement with Llcco on terms and condition acceptable to such individuals.
11. This Agreement may be terminated by (a) HHD if at the Closing all of the
representations and covenants of the Shareholders and Llcco set forth in
Paragraphs 5 and 7 hereof shall not have been timely and fully satisfied, waived
or cured, or (c) the Shareholders if at the Closing all of the representations
and covenants of HHD set forth in Paragraphs 6 and 8 hereof, respectively, shall
not have been timely and fully satisfied, waived and/or cured. The rights of the
parties hereto for or with respect to any breach of this Agreement and/or
injunctive relief shall survive any termination.
12. The Operating Members shall not (a) during the three year period commencing
on the Closing from a location within 15 miles from any office, store or other
facility of the HHD (including for purposes of this Paragraph 12, its
subsidiaries) engage, directly or indirectly (whether as stockholder, owner,
partner, employee, agent, consultant, officer or director) in whole or in part
in any business activity in which the HHD is then involved and/or (b) at any
time utilize, or authorize another to utilize, any of the confidential
information, materials, systems, procedures and/or proprietary information or
materials of Llcco and/or HHD for any purpose other than in connection with the
business and operations of Llcco and/or HHD. Without limiting the generality of
the foregoing each of the Shareholders does hereby acknowledge and confirm that
all of the materials, systems and procedures of Llcco and HHD (including
customers, customer representatives and employees) are proprietary and were
communicated to him in the course of a confidential relationship.
13. Additional Covenants
(a) Subject to Llcco not exceeding Budget (as defined); satisfying its Pro
Forma (as defined); and not engaging in any business except as set forth in
the Business Plan (as defined) and/or undertaking any activity other than
in the ordinary course of business without the prior written consent of the
Board of Directors of HHD in each instance:
(i) the individuals described on Exhibit "K" shall be employed by Llcco
for the compensation respectively indicated and shall hold the
officerships and directorships similarly respectively indicated;
(ii) until no earlier than December 31, 2004, Llcco shall operate as an
independent entity(s);
(iii)Llcco shall utilize it existing assets to the extent possible within
the context of the Budget and the Business Plan and in a manner
consistent with achieving economies of scale;
(iv) HHD shall not prior to December 31, 2004 (A) pledge the membership
interests of Llcco and/or encumber the assets of Llcco and/or (B)
cause Llcco to guaranty any debt other than a debt of Llcco and/or (C)
cause Llcco to become a borrower or co borrower of any debt other than
debt the proceeds of which are utilized for the benefit of Llcco; and
the certificates evidencing the membership interests of Llcco shall be
legended with a reference to this paragraph 13;
(v) the Shareholders shall designate one member of the Board of Directors
of HHD; and
(vi) HHD shall establish an Executive Oversight Committee ("Committee") to
review and comment on any potential acquisition presented to HHD and
to review and evaluate all subsidiaries owned and operated by HHD. The
Committee may recommend to the Board of Directors the disposition of
any subsidiary which does not perform within 80% of its pro forma
operations for a period of more than 24 consecutive months; which
disposition may consist of either liquidation, sale or "spin off" to
the stockholders of HHD as their respective interests may appear. In
the latter case, the investment of HHD (equity and/or debt) in the
"spun off" entity may be reflected, at the option of HHD, in a
continued equity interest in the entity and/or debt secured by all of
the assets of the entity;
(b) Upon Closure, HHD shall provide $100,000 due no later than January 13, 2002
to Llcco. HHD and the Shareholders shall use their respective best efforts
to arrange for the sale of shares of HHD Stock for the aggregate amount of
not less than $2,750,000; of which HHD shall advance to Llcco (by capital
contribution and/or debt, from the proceeds of such sales) during the
period from the Closing through December 31, 2002, the aggregate amount of
not less than $2,500,000. Without limiting the generality of the foregoing
HHD shall advance to Llcco 100% (up to $2,500,000) of (i) the proceeds of
sales of HHD Stock to purchasers designated by the Shareholders; (ii) the
proceeds of the $10,000,000 equity line described in the pending HHD SB-2
Registration Statement; and (iii) HHD shall advance to Llcco $500,000
within 90 days of the Closing and such amounts thereafter on a monthly
basis as HHD and Llcco shall mutually agree upon;
(c) For purposes of this Agreement:
(i) "Budget" shall be and mean the budget for the operations of Llcco
during each of the First, Second and Third Measuring Periods delivered
by the management of Llcco to HHD at least 30 days prior to the
Closing and the commencement of each of the Second and Third Measuring
Periods, respectively;
(ii) "Pro Forma" shall be and mean the pro forma statement of operations of
Llcco for each of the First, Second and Third Measuring Periods,
respectively; and
(iii)"Business Plan" shall be and mean the business plan delivered by
Llcco to HHD at least 30 days prior to the Closing;
(d) The Shareholders shall have the right, exercisable (i) during the ten day
period commencing 100 days following the Closing to exchange all, but not
less than all of the shares of HHD Stock issued to them pursuant to the
provisions of this Agreement for 100% of the membership interests in Llcco
in the event HHD does not make the $500,000 advance described in
subparagraph 13(b)(iii) hereof, and (ii) during the 24 month period
following the Closing, subject to the provisions of applicable law, to
exchange all, but not less than all of the shares of HHD Stock issued to
them pursuant to the provisions of this Agreement for 100% of the
membership interests in Llcco in the event that HHD files a petition in
bankruptcy, has filed against it any involuntary petition in bankruptcy
which is not discharged within 90 days of filing, executes a general
assignment for the benefit of creditors or otherwise seeks protection of
pursuant to Federal or State bankruptcy statutes during such 24 month
period;
(e) HHD and Llcco shall, within 90 following the Closing, adopt a compensation
and bonus plan for employees of Llcco keyed to achieving operating results
in excess of the Pro Forma Statements;
(f) At the Closing the Stockholders will be granted warrants to purchase
1,000,000 shares of HHD Stock (as their respective interests may appear) at
any time during the 12 month period following the Closing at the following
exercise prices: (I) $.01 per share during the first 90 days following the
Closing, (ii) $.02 per share during the second 90 days following the
Closing, (iii) $.04 per share during the third 90 days following the
Closing and (iv) $.06 per share during the fourth 90 days following the
Closing; and,
(g) The Shareholders shall deliver to Neuralact IP 5% of the shares of HHD
Stock issued to the Shareholders pursuant to this Agreement.
(h) Notwithstanding anything to the contrary contained herein, at the Closing,
Llcco shall redeem from Battle Creek Unlimited, Inc. ("BCU") all of the
Eqtima Stock owned of record by BCU, in exchange for Four Hundred Seven
Thousand Dollars ($407,000) (the "Purchase Price") by delivery of the
Promissory Note in the form of Exhibit "?" attached hereto (the "Promissory
Note"). Pursuant to the terms of the Promissory Note HHD covenants and
agrees to guaranty BCU the timely payment and performance of all of the
obligations of Llcco under the terms of the Promissory Note.
14. (a) Llcco does hereby agree to indemnify and hold harmless HHD from and
against any and all costs, expenses, losses, claims, demands and liabilities of
every kind, nature and description (including without limitation reasonable
attorney's fees) arising out of or relating to any breach or anticipatory breach
of this Agreement by Llcco.
(b) HHD does hereby agree to indemnify and hold harmless each of Llcco and the
Shareholders s from and against any and all costs, expenses, losses,
claims, demands and liabilities of every kind, nature and description
(including without limitation reasonable attorney's fees) arising out of or
relating to any breach or anticipatory breach of this Agreement by HHD.
15. (a) Inasmuch as the damages which may accrue to HHD arising out of a breach
or anticipatory breach of this Agreement by the Shareholders or Llcco may be
irreparable and/or inascertainable, HHD shall have the right, in addition to and
not in lieu of any other right and/or remedy it may have, to seek and secure
equitable relief, including, without limitation, temporary and/or permanent
injunctive relief with respect to any breach or anticipatory breach of this
Agreement by Llcco or the Shareholders.
(b) Inasmuch as the damages which may accrue to Llcco or the Shareholders
arising out of a breach or anticipatory breach of this Agreement by HHD may
be irreparable and/or inascertainable, each of the Shareholders and Llcco
shall have the right, in addition to and not in lieu of any other right
and/or remedy it may have, to seek and secure equitable relief, including,
without limitation, temporary and/or permanent injunctive relief with
respect to any breach or anticipatory breach of this Agreement by the HHD.
16. Any and all notices, requests or instructions desired or required to be
given by any party hereto to any other party hereto shall be in writing and
shall either be hand delivered or mailed to the recipient first class, postage
prepaid, certified, return receipt requested at the following respective
addresses:
To: The Shareholders and Llcco ______________________________
00 Xxxx Xxxxxxxx - Xxxxx 000
Xxxxxx Xxxxx, XX 00000 ______________________________
______________________________
To: HHD ______________________________
0 Xxxx Xxxx
Xxxxx Xxxx, XX 00000 ______________________________
______________________________
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
00 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
or to such other address as any party hereto shall designate in a writing
complying with the provisions of this Paragraph 16.
17. Each of the parties hereto may, by written instrument to the party against
whom enforcement is sought (a) extend the time for the performance of any of the
obligations or other acts of any party hereto; (b) waive any inaccuracies of
such other party in the representations and warranties contained herein or in
any document delivered pursuant to this Agreement; (c) waive compliance with any
of the covenants of such other party contained in this Agreement; (d) waive such
other party's performance of any of such party's obligations set out in this
Agreement; and (e) waive any condition to its obligation to effect the within
acquisition.
18. Except to the extent required by applicable law no party shall make any
disclosure with respect to this Agreement and/or the within transactions without
the prior consent of all parties to this Agreement.
19. This Agreement may only be modified, altered or amended by a writing
executed by all of the parties hereto. Any waivers, consents or notices must be
in writing.
20. This Agreement shall be governed and construed in accordance with the laws
of the State of Connecticut applicable to contracts executed and to be fully
performed therein and without regard to principles of conflicts of laws.
21. This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors, transferees, heirs, assigns and
beneficiaries.
22. This Agreement (including the Exhibits hereto, the documents and instruments
delivered by the parties hereto and initialed for identification as herein
provided and any other documents executed and delivered and/or to be executed
and delivered pursuant to the provisions of this Agreement as herein provided)
sets forth the entire agreement among the parties hereto with respect to the
subject matter herein contained; and there are no covenants, promises,
agreements, conditions or understandings, either oral or written, between or
among the parties hereto with respect to the subject matter hereof except as
herein and in such ancillary documents provided.
23. This Agreement may be executed in multiple copies, each of which shall
constitute an original, but all of which shall constitute one and the same
agreement.
24. If any term, covenant or condition in this Agreement, or the application
thereof to any person or circumstance shall be invalid or unenforceable, the
remainder of this Agreement or the application of such term, covenant or
condition to persons or circumstances, other than those as to which it is held
invalid, shall be unaffected thereby and each term, covenant or condition of
this Agreement shall be enforced to the fullest extent permitted by law.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
HouseHold Xxxxxx.xxx, Inc.
By /S/Xxxx Xxxxxx
--------------
Xxxx Xxxxxx, President
Eqtima LLC
By ________________________
The Shareholders
/s/Xxxxx Xxxxx
--------------
Xxxxx Xxxxx
/s/Xxxxx Xxxxxx
---------------
Xxxxx Xxxxxx
/s/Xxxxx Xxxxxxx
----------------
Xxxxx Xxxxxxx
/s/Xxx Xxxx
-----------
Xxx Xxxx
/s/Xxxxxx Xxxxxx
----------------
Xxxxxx Xxxxxx
/s/Xxx Xxxxx
------------
Xxx Xxxxx
/s/Xxx Xxxxx
------------
Xxx Xxxxx
/s/Xxxx Xxxxxx
--------------
Xxxx Xxxxxx
/s/BCU
------
BCU
/s/Xxxx Xxxxxx
---------------
Xxxx Xxxxxx
/s/Xxxxxxxx Xxxxxxx
-------------------
Xxxxxxxx Xxxxxxx
/s/ Xxxxxxxx Xxxxx
------------------
Xxxxxxxx Xxxxx
ADDENDUM
Schedule
EXHIBIT A Individual Shareholder List
EXHIBIT B Business Description
EXHIBIT C Asset List
EXHIBIT D Schedule of Exceptions
EXHIBIT E Shareholder Registration Rights
EXHIBIT F Real Estate Titles or Leases with Insurance Policies
Notes for all Ideas, Patents, Practices, etal.
EXHIBIT G General Insurance
Liability
Errors and Omissions
EXHIBIT H Exceptions Regarding Contracts in Excess of $10,000
- $25,000
EXHIBIT I Authorized Outstanding Shares of Eqtima
EXHIBIT J Operating Agreement of Eqtima
EXHIBIT K Employee List
EXHIBIT L Promissory Note
EXHIBIT A
Individual Shareholder List
Member
Xxx Xxxxxxxx
Xxxxx Xxxxx
Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxx Xxxx
Xxxxx Xxxxxxx
Xxx Xxxxxx
Xxxxxxxx Xxxxx
Xxx Xxxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxx Xxxxxx
Xxx Xxxxx
EXHIBIT B
Business Description
Eqtima is the leading supplier of metrics-based Employee Relationship Management
(ERM) systems specifically targeted for contact centers. Llcco's ERM suite
(Value Agent) of products is designed to empower agents, analyze employee
behavior patterns, automate feedback, and lay the groundwork for a
performance-recognition business culture.
Our strategy for 2002 is to penetrate the mainstream Work Force Management
market by redefining Work Force Management in our favor. Work Force Management
has historically been nothing more than Forecasting and Scheduling. This is a
very limited vision. Llcco expands the vision to encompass the whole life cycle
of an agent's experience with the company. Beyond just forecasting and
scheduling, it includes agent development, virtual supervision, and
recognition/reward. It sets the stage for a performance-based culture.
Our markets include North America, Asia, Europe, South America, and Africa. We
currently have customers in Africa and North America with partnerships that also
include Asia.
Eqtima 1 Qtr 2 Qtr 3Qtr 4Qtr
Proforma Profit and Loss 2002 2002 2002 2002
Revenue from Products 278 952 652 863
Service Revenue 60 87 81 81
Maintenance and Service Agreements -- -- 13 10
Interest on Deposits -- -- -- --
----- ----- --- ---
Total Revenue 338 1,039 746 954
(Cost of Goods sold and Outsourcing) ( 48) ( 136) (114) (101)
Operating Expenses ( 444) ( 586) (635) (747)
Investment Interest Income (Expenses) -- 3 5 5
---- ---- --- ---
Income Before Tax ( 000) 000 0 000
---- ---- --- ---
Cumulative Income Before Tax ( 154) ( 123) (121) ( 10)
==== ==== === ===
Eqtima 0 Xxx 0 Xxx 0Xxx 0Xxx
Proforma Profit and Loss 2003 2003 2003 2003
Revenue from Products 823 934 1,073 1,238
Service Revenue 122 215 204 212
Maintenance and Service Agreements 28 95 65 53
Interest on Depoits -- -- -- --
----- ----- --- -----
Total Revenue 972 1,244 1,341 1,503
(Cost of Goods sold and Outsourcing) ( 97) ( 114) ( 132) ( 152)
Operating Expenses ( 878) ( 885) ( 907) ( 986)
Investment Interest Income (Expenses) 7 6 10 16
---- ----- ----- ----
Income Before Tax 4 251 312 381
---- ---- ----- ----
Cumulative Income Before Tax ( 6) 244 556 937
==== ==== ==== ====
Eqtima 0 Xxx 0 Xxx 0Xxx 0Xxx
Proforma Profit and Loss 2004 2004 2004 2004
Revenue from Products 1,347 1,403 1,485 1,568
Service Revenue 253 272 294 315
Maintenance and Service Agreements 82 93 107 124
Interest on Deposits -- -- -- --
----- ----- ----- -----
Total Revenue 1,683 1,767 1,886 2,007
(Cost of Goods sold and Outsourcing) ( 165) ( 171) ( 181) ( 189)
Operating Expenses (1,049) (1,040) (1,053) (1,043)
Investment Interest Income (Expenses) 23 32 40 49
----- ----- ----- -----
Income Before Tax 491 588 692 823
----- ----- ----- -----
Cumulative Income Before Tax 1,429 2,016 2,708 3,531
==== ===== ===== =====
EXHIBIT C
Asset List
o Exclusive Marketing Agreement for Value Agent (a.k.a. Call Center
Management System from Call Tech)
o Ownership of all enhancements and modifications to Value Agent
o 9 computers with corresponding licensed software
o Furniture in office and corporate apartments
EXHIBIT D
Schedule of Exceptions
1. Llcco and Call Tech LLC are parties to an exclusive marketing agreement dated
September 26, 2000 (the "Agreement"). A Copy of the Agreement has been forwarded
to HHD.
(a) Pursuant to the terms of the Agreement, Call Tech LLC has the right to
terminate the Agreement if Llcco fails to meet certain annual (September
through September) projections.
(b) Llcco did not meet first year projections.
(c) Call Tech LLC did not terminate the Agreement.
2. Call Tech LLC owns software known as CCMS, and Call Tech has licensed the
software to Llcco. Llcco owns all enhancements, modifications, and new
development.
EXHIBIT E
Shareholder Registration Rights
to be defined
EXHIBIT F
Real Estate Titles or Leases; Insurance Policies
- over $10,000 per year that cannot be canceled with a 90 day notice; bonus
plans, etc.
o Office lease with BC Tower
o Pending contract with SG Solutions in South Africa for on going support and
development of Agent Care and Value Agent (Value of contract is $30,000 per
month for 10 developers with bonus of up to $12,500 for meeting or
exceeding deliverables and timeframes)
o Pending contract with Ethos and IDC of South Africa for the acquisition of
the intellectual property formerly known as Agent Care version 5.4. (Value
of contract is $1,000,000)
o Undefined commitment to adopt a profit sharing plan for employees based on
exceeding forecast by 20%.
EXHIBIT G
General Insurance
None
EXHIBIT H
Exceptions Regarding Contracts
Contract for development services on Neuralact product line with SG Solutions
has an initial term of 16 months starting on 1 January 2002, and after 16 months
can be canceled with 120 day notice.
EXHIBIT I
Authorized and Outstanding Interests of Eqtima
As per Exhibit "A"
EXHIBIT J
Operating Agreement of Eqtima
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF EQTIMA, LLC
Dated as of July 25, 2001
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
This Amended and Restated Limited Liability Company Agreement ("Agreement") of
EQTIMA, LLC, a Delaware limited liability company (the "Company") is entered
into as of July 25, 2001, by and between the persons executing a signature page
hereto which is countersigned by the Company, whether executed on or at any time
after the date hereof (sometimes referred to herein as the "Parties").
W I T N E S S E T H:
WHEREAS, on September 26, 2000 the Company was established as a Delaware limited
liability company;
WHEREAS, in connection with the formation of the Company, the Parties desire to
provide for the operation of the Company, the allocation and distribution of the
profits and losses thereof, and such other matters as are set forth in this
Agreement;
WHEREAS, in furtherance thereof, the members of the Company entered into a
Limited Liability Company Agreement on October 10, 2000 (the "Former
Agreement");
WHEREAS, the members desire to admit ___________________________ as an expanded
member and revise the provisions of the Former Agreement;
NOW, THEREFORE, for and in consideration of the premises and of the mutual
undertakings and agreements set forth below, the Parties agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Definitions. For the purpose of this Agreement, the following capitalized
terms shall have the meanings set forth below (any terms not defined herein
shall have the meaning set forth in the Act):
(a) "Act" shall mean the Delaware Limited Liability Company Act, Del. Code Xxx.
tit. 6, sec. 18-101, et seq., as amended from time to time.
(b) "Agreement" shall mean this Amended and Restated Limited Liability Company
Agreement, as it may be amended or supplemented from time to time.
(c) "Assignee" means a transferee of a Membership Interest who has not been
admitted as a Substituted Member. An Assignee shall have the rights and
obligations of an Assignee as set forth in Section 3.6 hereof.
(d) "Available Cash Flow" means, with respect to any fiscal year or other
period, the sum of all cash receipts of the Company from any and all
sources plus amounts withdrawn from Reserves during such period, minus all
cash disbursements (including loan principal and interest payments, capital
improvements and replacements) and a reasonable allowance for Reserves,
contingencies and anticipated obligations as determined by the Board of
Managers.
(e) "BCU" means Battle Creek Unlimited, Inc., a Michigan nonprofit corporation.
(f) "BCU Put Option" means the option of BCU to put all (but not less than all)
of its Membership Interests to the Company, for the price described on
Exhibit C. BCU may exercise the BCU Put Option by delivering written notice
(the "Put Notice") to the Company of its intent to so exercise (i) within
30 days after a Change of Control has occurred, (ii) anytime before August
16, 2007 if the Company relocates its headquarters or principal
administrative office to any location other than Battle Creek, Michigan or
(iii) anytime after August 16, 2007. If a Change of Control occurs, the
Company shall provide BCU immediate written notice. Within five days after
the receipt of the Put Notice, the Company shall notify BCU of a time
during regular business hours on a regular business day within 15 days at a
location within Battle Creek, Michigan, where the Company and BCU shall
meet for the purpose of completing the sale of the BCU Membership
Interests. If the Put Notice was delivered pursuant to subsection (iii)
above, at such meeting the Company shall pay BCU the consideration as
required by Exhibit C to purchase the BCU Membership Interests by (A)
delivering to BCU a certified or bank check made payable to BCU in an
amount equal to at least 20% of the consideration stated on Exhibit C and
(B) completing, executing and delivering to BCU a promissory note in the
form of Exhibit D made payable to BCU with a principal balance equal to the
consideration stated on Exhibit C minus any amount paid pursuant to (A)
above, and BCU shall deliver the certificates representing the BCU
Membership Interests being put to the Company, duly endorsed for transfer
and free and clear of all adverse claims. If the Company issues a note to
BCU pursuant to (B) above, the Company shall pledge the BCU Membership
Interests as security for the debt represented by the note. Upon the
transfer of the BCU Membership Interests to the Company contemplated
hereby, BCU shall deliver the certificates representing the BCU Membership
Interests to the Company to have a legend placed thereon regarding the
pledge. The certificates representing the BCU Membership Interests shall
remain pledged to BCU until the debt is satisfied, at which time the
Company may remove the legend provided for herein. If the Put Notice was
delivered pursuant to subsection (i) or (ii) above, at such meeting the
Company shall pay BCU the consideration as required by Exhibit C to
purchase the BCU Membership Interests by delivering to BCU a certified or
bank check made payable to BCU in an amount equal to the consideration
stated on Exhibit C and BCU shall deliver the certificates representing the
BCU Membership Interests being put to the Company, duly endorsed for
transfer and free and clear of all adverse claims.
(f) "Business" shall mean developing, marketing, selling, and supporting Eqtima
products either acquired or built into the contact center marketplace, and
the engaging in any and all activities related or incidental thereto.
(g) "Capital Account" of a Member shall have the meaning set forth in Section
3.2 hereof.
(h) "Capital Contribution" of each Member shall mean the amount contributed
(or, in the case of BCU, to be contributed) to the Company by such Member
pursuant to Article 3 of this Agreement.
(i) "Change of Control" shall occur if: (a) there is a merger or consolidation
of the Company into or with any other entity in which more than fifty
percent (50%) of the voting power of the surviving entity is held, directly
or indirectly, by persons who are not Members of the Company prior to the
consummation of such transaction; or (b) there occurs a single transaction
or a series of transactions pursuant to which a person or persons who are
not Members of the Company prior to such transaction or transactions
acquire any of the following: (i) voting power to elect a majority of the
Company's Board of Managers (whether by merger, consolidation or sale or
transfer of the Company's Membership Interest); (ii) greater than fifty
percent (50%) of the outstanding Membership Interest of the Company; or
(iii) all or substantially all of the Company's assets.
(j) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor federal revenue code of the United States.
(k) "Company Call Options" means the options of the Company to purchase up to
50% of the Membership Interests of BCU (in increments equally divisible by
10%), for the price described on Exhibit C. The Company may exercise the
Company Call Option from time to time by delivering written notice (a "Call
Notice") to BCU of its intent to so exercise anytime before August 16,
2007. Within five days after the receipt of a Call Notice, the Company
shall notify BCU of a time during regular business hours on a regular
business day within 15 days at a location within Battle Creek, Michigan,
where the Company and BCU shall meet for the purpose of completing the sale
of the BCU Membership Interests specified in the Call Notice. At such
meeting the Company shall pay BCU the consideration as required by Exhibit
C to purchase the BCU Membership Interests specified in the Call Notice by
delivering to BCU a certified or bank check made payable to BCU in an
amount equal to the consideration stated on Exhibit C and BCU shall deliver
the certificates representing the BCU Membership Interests being called to
the Company, duly endorsed for transfer and free and clear of all adverse
claims.
(l) "Company Subscription Funding Call Right" means the right granted by Xxxxx
Xxxxx to the Company pursuant to which the Company may make calls for
Capital Contributions from Xxxxx Xxxxx in the manner described below. The
Company may make calls on Xxxxx Xxxxx for amounts up to an aggregate of
$150,000 (less any amounts that may have previously been paid to the
Company) in increments equally divisible by $25,000 until the total amount
is called. The Company may not make more than one call per calendar month,
and each call must be accompanied by a statement on how the proceeds of the
Capital Contribution will be used. The proceeds of each Capital
Contribution made by Xxxxx Xxxxx pursuant to the call of the Company must
be used to pay liabilities incurred by the Company. If the Company, does
not call for all $150,000 of Xxxxx Xxxxx'x maximum investment, BCU will not
have the right to acquire Membership Interests in the Company in such
uncalled for amounts. (m) "Depreciation" shall mean, for each fiscal year,
an amount equal to the depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such fiscal year, except
that if the Gross Asset Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such fiscal year,
Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such fiscal year bears to
such beginning adjusted tax basis; provided, however, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of such
fiscal year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by
the Board of Managers.
(n) "Fair Market Value" shall mean, with respect to any property, the value
that would be obtained therefor in an arm's length transaction or sale (for
cash) between an informed and willing purchaser and an informed and willing
seller, neither being under any compulsion to buy or sell (and being
determined without regard to any liabilities secured by or encumbering such
property), which value shall be determined by the Board of Managers or, in
the case of a transaction involving the Company and a Member, by the Board
of Managers and such Member, or failing such agreement, by an independent
appraiser.
(o) "Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Member to the
Company shall be the Net Agreed Value of such asset, as determined by the
contributing Member and the Company;
(ii) The Gross Asset Values of all Company assets shall be adjusted to equal
their respective gross fair market values, as determined by the Company as
of the following times: (a) the acquisition of an additional interest by
any new or existing Member in exchange for more than a de minimis
contribution of property (including money); (b) the distribution by the
Company to a Member of more than a de minimis amount of property as
consideration for a Membership Interest or Economic Interest; and (c) the
liquidation of the Company within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the Company reasonably
determines that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Members in the Company;
(iii)The Gross Asset Value of any Company asset distributed to any Member shall
be adjusted to equal the gross Fair Market Value of such asset on the date
of distribution as determined by the distributee and the Company; and
(iv) The Gross Asset Values of Company assets shall be increased (or decreased)
to reflect any adjustments to the adjusted basis of such assets pursuant to
Code Section 734(b) or Code Section 743(b), but only to the extent that
such adjustments are taken into account in determining Capital Accounts
pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and Section 3.2 of this
Agreement and subparagraph (vi) under the definition of Net Profits and Net
Losses; provided, however, that Gross Asset Values shall not be adjusted
pursuant to this subparagraph (iv) to the extent the Company determines
that an adjustment pursuant to subparagraph (ii) of this definition is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (i), (ii) or (iv) of this definition, then such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Net Profit and Net Loss.
(p) "Indemnified Parties" shall have the meaning set forth in Section 6.3 of
this Agreement.
(q) "Initial Capital Contribution" of each Member shall mean the amount
contributed to the Company as set forth opposite such Member's name on
Exhibit A hereto.
(r) "Majority of Members" shall mean Members holding more than 50% of the total
Percentage Interests.
(s) "Manager" shall mean a member of the Board of Managers.
(t) "Member" shall mean any Person which owns, and pursuant to this Agreement
is permitted to own, Membership Interests in the Company and who/that
executes this Agreement (or a counterpart hereof) and agrees to be subject
to and bound by the terms of this Agreement and is admitted as a Member
pursuant to the terms of this Agreement.
(u) "Membership Interest" shall mean, with respect to any Member, such Member's
entire ownership interest in the Company at any particular time, including,
without limitation, such Member's right to share in Net Profits and Net
Loss and to receive distributions of Available Cash Flow pursuant to this
Agreement and any and all benefits to which such Member may be entitled as
provided in this Agreement and the Act, including, without limitation, the
right to vote or participate in management of the Company to the extent
provided in this Agreement, and the right to information concerning the
business and affairs of the Company, together with the obligation of such
Member to comply with all the terms and provisions of this Agreement.
(v) "Net Agreed Value" shall mean (i) in the case of any Capital Contribution
other than cash, the Fair Market Value of such property at the time of
contribution reduced by any indebtedness secured by such property and
assumed or taken subject to by the Company upon such contribution under
Code Section 752; and (ii) in the case of any property (other than cash)
distributed to a Member, the Fair Market Value of such property at the time
of such distribution reduced by any indebtedness secured by such property
and assumed or taken subject to by such Member upon such distribution under
Code Section 752.
(w) "Net Profit" and "Net Loss" shall mean for each fiscal year or other
period, an amount equal to the Company's net taxable income or loss for
such year or period as determined for federal tax purposes (including
separately stated items) in accordance with the accounting method and rules
used by the Company and in accordance with Section 703 of the Code with the
following adjustments:
(i) Any items of income, gain, loss and deduction which are specifically
allocated to a Member shall not be taken into account in computing Net
Profit or Net Loss under this Agreement;
(ii) Any income of the Company that is exempt from federal income tax and
not otherwise taken into account in computing Net Profit and Net Loss
(pursuant to this definition) shall be included in determining Net
Profit or Net Loss hereunder by adding such amount of income to
taxable income or subtracting such amount of income from taxable loss;
(iii)Any expenditure of the Company described in Section 705(a)(2)(B) of
the Code and not otherwise taken into account in computing Net Profit
and Net Loss (pursuant to this definition) shall be included in
determining Net Profit or Net Loss hereunder by deducting such
expenditure from such taxable income or adding such expenditure to
taxable loss;
(iv) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to clause (ii) or (iii) of the definition of Gross Asset
Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of
computing Net Profit and Net Loss;
(v) 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 Gross Asset Value of
the Company property disposed of, notwithstanding that the adjusted
tax basis of such property differs from its Gross Asset Value;
(vi) 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; and
(vii)To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Section 734(b) of the Code or Section 743(b) of the
Code is required pursuant to Section 1.704-l(b)(2)(iv)(m)(4) of the
Treasury Regulations to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a
Membership Interest, the amount of such adjustment shall be treated as
an item of gain (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for
purposes of computing Net Profit or Net Loss.
(u) "Percentage Interest" shall mean, with respect to each Member, the
percentage set forth opposite such Member's name on Exhibit A to this
Agreement, as such Exhibit may be modified or supplemented from time
to time pursuant to this Agreement.
(x) "Person" shall mean any individual, sole proprietorship, partnership,
limited partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company,
limited liability partnership, institution, entity, party, or
government (whether national, federal, state, or local, and any
instrumentality, division, agency, body or department thereof).
(y) "Proprietary Information" shall mean any business, financial,
classified or other sensitive information of the Company, including,
without limitation, all commercial and business information and data
concerning the general business operations, financial information, and
business contacts of the Company.
(z) "Reserves" means funds set aside from Capital Contributions or gross
cash revenues and loan proceeds of the Company as reserves. Such
Reserves shall be maintained in amounts reasonably deemed sufficient
by the Board of Managers for working capital and the payment of taxes,
insurance, debt service, repairs, replacements, renewals, or other
costs or expenses incident to the business of the Company, or in the
alternative, the dissolution of the Company.
(aa) "Substituted Member" means a Person to whom a Membership Interest has
been transferred and who has been admitted to all of the rights of
membership pursuant to Section 3.5 of this Agreement.
(bb) "Transfer" shall mean a sale, assignment, alienation, gift, transfer,
exchange, mortgage, pledge, grant of a security interest, or other
disposition or encumbrance, whether voluntary or involuntary, or any
of the foregoing actions.
(cc) "Unit" shall mean the unit of ownership of a Member's Membership
Interest and the total of the Members' Units shall represent the
entire ownership of all of the Members' Membership Interests.
ARTICLE 2 - ORGANIZATION AND CAPITALIZATION OF THE COMPANY
2.1 Formation and Organization of the Company. The parties have formed the
Company and hereby enter into this Agreement under the provisions of the Act,
and the rights and liabilities of the Members shall be as provided in the Act
except as herein otherwise provided.
2.2 Purposes of the Company. The purposes of the Company shall be to:
(a) engage in the Business;
(b) engage in any other lawful business activities as the Members shall
determine in accordance with this Agreement; and
(c) do any and all things incident thereto or connected therewith as are
necessary or convenient to the conduct, promotion or attainment of the
Business, purposes or activities of the Company.
2.3 Principal Office of the Company/Registered Agent.
(a) The principal office of the Company shall be located in Battle Creek,
Michigan. The Company shall have such other offices as determined by
the Board of Managers from time to time. The Company shall maintain
its books and records at its principal office or at such other place
as determined by the Board of Managers from time to time.
(b) The Company's initial registered office in the State of Delaware shall
be at the office of its registered agent at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx and the name of its initial registered agent in
the State of Delaware shall be Corporation Trust Company. The
registered office and registered agent may be changed by filing the
address of the new registered office and/or the name of the new
registered agent with the appropriate authorities.
ARTICLE 3 - MEMBERS AND CAPITAL CONTRIBUTIONS
3.1 Membership Interests. The Members, and their respective Percentage
Interests, Units and Initial Capital Contributions are set forth on Exhibit A
attached hereto. Each Member has paid to the Company the Initial Capital
Contribution set forth on Exhibit A for such Member in cash within a reasonable
time after execution of this Agreement or has provided, or will provide,
services to the Company; provided, however that BCU shall pay the Initial
Capital Contribution, from time to time, pursuant to the terms of the Company
Subscription Funding Call Right. The Membership Interest of each Person admitted
as a Member shall vest, and its interest in the Net Profits and Net Loss shall
commence to accrue, on the date that such Person is admitted as a Member. No
Member shall have any interest in the property of the Company. Exhibit A shall
be amended from time to time to reflect changes in Percentage Interests and
Units that occurred in compliance with this Agreement and have been approved by
the Board of Managers. Membership Interests shall be evidenced by certificates
issued by the Company which shall set forth the Units of Membership Interest
evidenced thereby. Such certificates shall contain appropriate legends regarding
the restrictions on transfer applicable to such Membership Interests. The
Company and its Members hereby allocates 3,241,500 Membership Interests to an
Option Plan in a form to be approved by the Board of Managers (the "Option
Plan"), provided, however, that the exercise price per unit pursuant to the
Option Plan shall be no less than $.26 for all options granted. The Option Plan
will be administered by the Compensation Committee pursuant to the terms of the
Option Plan and this Agreement.
3.2 Capital Accounts.
(a) A capital account (the "Capital Account") shall be established for each
Member on the books and records of the Company and shall be maintained in
accordance with the rules for determining and maintaining capital accounts set
forth in Treasury Regulations Section 1.704-l(b)(2)(iv) or any successor
provision. Except as expressly provided in this Agreement, no interest shall be
paid or accrued at any time on a Member's Capital Account or on any Capital
Contribution. Each Member shall have a single Capital Account reflecting its
entire Membership Interest, regardless of the time or times and the manner in
which the Membership Interests were acquired by the Member. The Capital Account
of each Member shall be adjusted to reflect any additional contributions to the
capital of the Company made by such Member.
(b) A transferee of a Membership Interest will succeed to the Capital Account
(or such portion thereof) relating to the transferred Membership Interest, and
there shall be no adjustment to the Capital Accounts as a result of such
transfer except as otherwise required under Treasury Regulation Section 1.704-1.
If the transfer causes a termination of the Company, the Capital Account of the
transferee and the other Members of the terminated Company shall carry over to
the new Company that is formed as a result of the termination of the Company.
3.3 Return of Capital Contribution. No Member shall have the right or be
entitled to demand, withdraw or receive any return of its Capital Contribution,
except as may be otherwise specifically provided herein. In the event of
circumstances requiring the return of any Capital Contribution, no Member shall
have the right or be entitled to demand, withdraw or receive property other than
cash, except as may be otherwise specifically provided herein.
3.4 Lack of Transferability of Membership Interests.
(a) Except as otherwise permitted by this Agreement and any Member's Agreement
executed by the Members, during the term of this Agreement, no Member shall,
directly or indirectly, voluntarily or involuntarily, transfer, sell, assign,
pledge, hypothecate, give, encumber or otherwise dispose of all or any portion
of its Membership Interest in the Company without the express prior written
consent of the other Members, which may be denied or otherwise delayed or
conditioned in such Members' discretion. Any transfer in violation of this
Section 3.4 shall be void.
(b) Each Member hereby agrees not to petition any court for the
involuntary dissolution of the Company in the event that the other
Members refuse to approve the transfer or other disposition of
Membership Interests pursuant to Section 3.4(a) hereof.
3.5 Substituted Member.
(a) No Assignee shall become a Substituted Member or have any of the
rights of a Member, except that an Assignee shall be entitled to
receive the share of Net Profits and Net Loss of the Company,
distributions of Available Cash Flow, and any other payments to which
its assigning Member would have been entitled. The Assignee of a
Member's Membership Interest, or any portion thereof, may be admitted
to the Company as a Substituted Member in the place and stead of, or
together with, as the case may be, the Member who has assigned or
transferred all or part of his interest in the Company upon
satisfaction of all of the following conditions:
(i) A duly executed and acknowledged written instrument of assignment must
be filed with the Company.
(ii) The assignor and the Assignee must execute and deliver such other
instruments as the non-assigning Members may deem reasonably necessary
or desirable to effect such admission, including acceptance of and
agreement by the Assignee to be bound by the provisions of this
Agreement.
(iii)The written consent of the Majority of Members (other than the
assigning Member) to such substitution, the granting or denial of
which shall be within the sole discretion of such Members.
(iv) The assignee shall pay all reasonable expenses and counsel fees
incurred by the Company in connection with the transaction.
(b) After all of the foregoing conditions have been fulfilled and the
Assignee has been admitted to the Company as a Member, the Agreement
shall be amended to reflect the Assignee's admission to the Company as
a Member.
3.6 Obligations and Rights of Assignees.
(a) Any Person who acquires any Membership Interest (or any portion of any
Membership Interest) in any manner whatsoever, irrespective of whether
such Person has accepted and adopted in writing the terms and
provisions of this Agreement, shall be deemed by the acceptance of
such Membership Interest to have agreed to be subject to and bound by
all of the terms, conditions and obligations of this Agreement that
any predecessor in interest of such Person was subject to or bound by,
except that no Person who is a successor to a Member's Membership
Interest shall be subject to or liable for his predecessor's
obligations as a Member, unless such successor shall agree thereto in
writing.
(b) Any Person acquiring any Membership Interest (or any portion of any
Membership Interest), shall have only such rights as this Agreement
provides; and, without limiting the generality of the foregoing, such
Person shall not have any right to partition of the Company's assets
or to have the value of his Membership Interest ascertained or receive
the value of such Membership Interest, or, in lieu thereof, profits
attributable to any right in the Company, except as herein set forth.
(c) Notwithstanding anything set forth in this Agreement to the contrary,
an Assignee shall be entitled to receive only the share of Net
Profits, Net Loss and Available Cash Flow and the return of Capital
Contributions to which the assigning Member otherwise would be
entitled. An Assignee shall have no right to participate in the
management of the Company, either directly or through the appointment
of members to the Board of Managers or to vote on any matter voted on
by the Members.
(d) Obligations of Operating Member in case of termination. Operating
Members (as listed on Exhibit A) are responsible for day-to-day
operation, planning, and execution of the Business Plan approved by
the Board of Managers. In the event that an Operating Member is
terminated without cause, the Operating Member shall be entitled to
retain all Units of Membership Interest that have been earned by such
Operating Member by providing the services described on Exhibit A as
the Initial Capital Contribution (with the amount of Units earned
calculated on a proportional basis if only a portion of such services
have been provided). If an Operating Member resigns or is terminated
for cause prior to providing all the services described on Exhibit A
as the Initial Capital Contribution of such Operating Member, such
Units of Membership Interest shall be forfeited by such Operating
Member. For purpose hereof, cause shall mean an Operating Member's:
(i) willful engagement in any misconduct in the performance of his or
her duty that materially injures the Company; (ii) performance of any
act which ,if known to the customers of the Company would materially
and adversely impact on the business of the Company; or (iii) willful
and substantial nonperformance of his or her duties and such
nonperformance continues more than ten (10) days after the Company has
given written notice of such nonperformance.. If the Company sells all
or substantially all of its assets or enters into a Change of Control
approved by the Board of Managers, all Operating Members will be
deemed to have fully earned their respective Membership Interests
which interests were issued for services not yet rendered.
3.7 Preemptive Rights of BCU. From the date hereof until August 16, 2007, BCU
shall have the following rights:
(a) If the Board of Managers determines that it is in the best interest of the
Company to raise additional capital by issuing additional Membership
Interests ("Additional Membership Interests") for a cash consideration less
than $0.26 per Unit, then the Company will issue Additional Membership
Interests to BCU, without cost to BCU, in an amount necessary to allow BCU
to maintain the same percentage ownership of issued and outstanding
Membership Interests, calculated as if all Membership Interests awarded
under the Option Plan had been fully exercised and are outstanding (the
"Fully Diluted Membership Interests"), that BCU possessed before the sale
of Additional Membership Interests to such third party.
(b) If the Board of Managers determines that it is in the best interest of the
Company to raise additional capital by issuing Additional Membership
Interests for a cash consideration equal to or greater than $0.26 per Unit,
the Board of Managers shall determine the per Unit consideration for and
the number of Additional Membership Interests to be issued in such an
offering. Within five days after such determination, the Board of Managers
shall notify BCU of (a) its right to purchase a percentage of the
Additional Membership Interests, for the per Unit consideration established
by the Board of Managers, equal to BCU's then-current percentage ownership
of the Fully Diluted Membership Interests of the Company and (b) the time
during regular business hours on a regular business day within 15 days
after the giving of such notice that a meeting will be held at the
principal executive office of the Company for the purpose of completing the
sale of Additional Membership Interests. At such meeting and conditioned
upon the prior sale of the other Additional Membership Interests at the per
unit price previously approved by the Board of Managers, BCU may deliver to
the Company a certified or bank check payable to the Company in an amount
equal to the purchase price for the number of Additional Membership
Interests BCU desires to purchase; and the Company shall issue to BCU
certificates representing Additional Membership Interests duly executed and
free and clear of all adverse claims. Additional Membership Interests shall
be subject in all respects to the provisions of this Agreement.
ARTICLE 4 - PROFIT AND LOSS ALLOCATION; DISTRIBUTIONS
4.1 Profit and Loss Allocation.
(a) All Net Profits and Net Loss of the Company for any fiscal year or other
applicable period, determined in accordance with applicable provisions of
the Code and this Agreement, shall be allocated among the Members in
proportion to their Percentage Interests.
(b) Depreciation against all tangible assets of the Company shall be included
in the determination of Net Profits and Net Loss of the Company.
(c) The profit or loss allocable to any Membership Interest transferred during
any year shall be allocated among the transferor and the transferee of that
Membership Interest during that year in proportion to the number of
calendar days that each such holder was recognized as the owner of the
Membership Interest during the year, without regard to the date, amount or
recipient of any distribution which may have been made with respect to such
Membership Interest. However, notwithstanding the preceding sentence, gain
or loss from the disposition of any assets of the Company, whether at
liquidation or otherwise, shall be allocated only to those Members which
own Membership Interests on the date the event giving rise to such gain or
loss occurs.
4.2. Distributions. The Company shall distribute Available Cash Flow to the
Members as follows:
(a) First, an amount of cash necessary to allow the Members to pay any federal,
state and local income taxes payable by each Member allocable to such
Member's share of the items of taxable income allocable to such Member for
such fiscal year assuming (i) that such Member is required to pay income
tax and (ii) that each Member is subject to the highest effective tax rates
that could be applicable to it if it were an individual resident in the
State of Michigan, which amount shall be paid in four installments on or
before the last day of March, May, August and December of each year; and
(b) Second, in accordance with the Members' Percentage Interests, at such times
and in such amounts as determined by the Board of Managers.
Except as otherwise provided in this Agreement, no holder of a Membership
Interest shall have priority over any other holder of a Membership Interest,
either as to the return of Capital Contributions or as to Net Profits, Net Loss
or distributions under this Section 4.2.
4.3 Special Income Tax Allocations. During any fiscal period of the Company, the
following provisions shall apply:
(a) Qualified Income Offset. If any Member unexpectedly receives any
adjustments, allocation or distributions described in clauses (4), (5) or
(6) of Treasury Regulations Section 1.704-1(b)(2)(ii)(d), items of the
Company's income shall be specially allocated to such Member in an amount
and manner sufficient to eliminate the deficit in such Member's Capital
Account created by such adjustments, allocations or distributions as
quickly as possible. This Section 4.3(a) is intended to constitute a
"qualified income offset" within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(3).
(b) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes,
be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal
income tax purposes and its initial Gross Asset Value. If the Gross Asset
Value of a Company asset is adjusted pursuant to clause (ii) of the
definition of Gross Asset Value, subsequent allocations of income, gain,
loss, and deduction with respect to such asset for tax purposes shall take
account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Treasury Regulations thereunder.
Allocations pursuant to this Section 4.3(b) are solely for purposes of
federal, state, local and foreign taxes and shall not affect, or in any way
be taken into account in computing, any Member's Capital Account or share
of Net Profits and Net Loss or other items or distributions pursuant to any
provision of this Agreement.
(c) Allocation Required by Applicable Law. Notwithstanding the provisions of
this Article IV, if the applicable provisions of the Code and Treasury
Regulations require that any item of Net Income or Net Loss be allocated in
a manner different than as provided in this Article IV, then the allocation
shall be made in accordance with the applicable Code or Treasury Regulation
provision to the extent, and only to the extent, so required.
ARTICLE 5 - BOARD OF MANAGERS; MEMBERS; OFFICERS
5.1 Powers, Responsibilities and Procedures. The authority, power and
responsibility to manage the operations and affairs of the Company shall be
vested in the Board of Managers and the Members, respectively, as specified in
this Agreement and the Act.
5.2 Board of Managers.
(a) Management. The business of the Company shall be managed by or under the
direction of its Board of Managers. Except as otherwise provided in this
Agreement, the Board of Managers shall have full and complete authority,
power and discretion to manage and control the business, affairs and
properties of the Company, to make all decisions regarding those matters
and to perform any and all other acts or activities customary or incident
to the management of the Company's business.
(b) Number, Tenure and Qualifications. The Board of Managers shall initially
have three (3) members, and shall be increased to five (5) members upon the
investment by BCU exceeding $5,000.00. The number of members of the Board
of Managers may be increased or decreased from time to time by a Majority
of Members, provided that the number of members of the Board of Managers
shall not be less than three nor more than eleven. The names of the initial
members of the Board of Managers, and the members who will take their seats
on the expanded Board of Managers after BCU consummates its investment as
described above, are set forth on Exhibit B attached hereto. Each member of
the Board of Managers shall hold office until his successor shall have been
elected and qualified. Managers shall be elected by the affirmative vote of
a Majority of Members; provided, however, that Xxxx Xxxxx shall be a
permanent member of the Board of Managers until the earlier of (a) his
resignation therefrom, (b) his removal therefrom for cause by a vote of a
majority of the Membership Interests, (c) his death or permanent disability
that prevents him from serving or (d) the issuance of all authorized but
unissued Membership Interests of the Company pursuant to the Option Plan or
to new investors in transactions approved by either the Board of Managers
or the Compensation Committee of the Board of Managers; provided, further,
however, that a representative of BCU shall be a permanent member of the
Board of Managers so long as BCU continues to own any Membership Interest.
Managers need not be Members of the Company.
(c) Meetings. Meetings of the Board of Managers may be called by or at the
request of the Chief Executive Officer, any Manager, or any Member. The
place of the meeting shall be the principal place of business of the
Company in the State of Michigan, unless otherwise agreed by unanimous
consent of all Managers. Managers entitled to vote may participate in and
hold a meeting by conference telephone or similar communications equipment
by means of which all Managers participating in the meeting can hear each
other, and participation in such meeting shall constitute attendance and
presence in person at such meeting.
(d) Notice. Notice of any meeting of the Board of Managers shall be given at
least three days previous thereto by written notice to each Manager at his
business address. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with postage thereon
prepaid. The attendance of a Manager at any meeting shall constitute a
waiver of notice of such meeting except for a Manager who attends a meeting
for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the
business to be transacted at nor the purpose of any meeting of the Board of
Managers need to be specified in the notice or waiver of notice of such
meeting.
(e) Quorum. A majority of the number of Managers fixed by this Agreement shall
constitute a quorum for the transaction of business at any meeting of the
Board of Managers, provided that if less than a majority of such number of
Managers are present at said meeting, a majority of the number of Managers
present may adjourn the meeting at any time without further notice.
(f) Manner of Acting. The act of the majority of the number of Managers present
at a meeting at which a quorum is present shall be the act of the Board of
Managers unless the act of a greater number is required by this Agreement.
Issuance of Membership Interests pursuant to the Option Plan or to new
investors, other than those already reflected on Exhibit A attached hereto,
require the unanimous approval of the Board of Managers.
(g) Managers Have No Exclusive Duty to Company. A Manager shall not be required
to manage the Company as the Manager's sole and exclusive function and the
Manager may have other business interests and engage in activities in
addition to those relating to the Company. Neither the Company nor any
Member shall have any right, by virtue of this Agreement, to share or
participate in such other investments or activities of the Manager or to
the income or proceeds derived therefrom.
(h) Informal Action by Managers. The authority of the Board of Managers may be
exercised without a meeting if a consent in writing, setting forth the
action taken, is signed by the minimum number of Managers that would be
required to take such action at a meeting of the Board of Managers at which
all of the Managers entitled to vote were present and voted. Written notice
of any action taken by consent of the Board of Managers pursuant to this
Section 5.2(h) shall be given to all members of the Board of Managers who
did not participate in such consent within two days following the taking of
such action.
(i) Presumption of Assent. A Manager of the Company who is present at a meeting
of the Board of Managers at which action on any Company matter is taken
shall be conclusively presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting or unless
they shall file their written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered or certified mail to the secretary of
the Company immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a Manager who voted in favor of such action.
(j) Committees. The Board of Managers by unanimous action may create one or
more Committees of two or more Managers to exercise the appropriate
authority of the Board of Managers. A majority of such a Committee shall
constitute a quorum for the transaction of business and the act of the
majority of the members of the Committee present at a meeting at which a
quorum is present shall be the act of the Committee unless the act of a
greater number is required by this Agreement. A Committee may transact
business without a meeting by written consent of the minimum number of
members of such Committees that would be required to take such action at a
meeting of the Committee at which all of the members of the Committee
entitled to vote were present and voted. Written notice of any action taken
by consent of the Committee pursuant to this Section 5.2(j) shall be given
to all members of the Committee who did not participate in such consent
within two days following the taking of such action. A Compensation
Committee is hereby created to administer the Option Plan of the Company,
and the initial members of the Compensation Committee are Xxxxx Xxxxx, Xxxx
Xxxxx and Xxx Xxxxx. . (k) Resignation. Any Manager of the Company may
resign at any time by giving written notice to the Company. The resignation
of any Manager shall take effect upon receipt of Notice thereof or at such
later date specified in such notice; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make
it effective. The resignation of a Manager who is also a Member shall not
affect the Manager's rights as a Member and shall not constitute a
withdrawal of a Member.
(l) Removal. Except for the BCU elected Manager, all or any lesser number of
Managers may be removed with the consent of the holders of 75% of the
Membership Interests. The removal of a Manager who is also a Member shall
not affect the Manager's rights as a Member and shall not constitute a
withdrawal of a Member.
(m) Vacancies. Any vacancy occurring on the Board of Managers may be filled
with the consent of a Majority of Members. Any Manager's position to be
filled by reason of an increase in the number of Managers shall be filled
by election at a meeting of Members called for that purpose or by the
written consent of a Majority of Members. A Manager elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in
office and shall hold office until the expiration of such term and until
his successor shall be elected and qualified or until his earlier death,
resignation or removal. A Manager chosen to fill a position resulting from
an increase in the number of Managers shall hold office until his successor
shall be elected and qualified, or until his earlier death, resignation or
removal.
(n) Salaries. The salaries and other compensation of the Managers shall be
fixed from time to time by an affirmative vote of a Majority of Members. By
resolution of the Board of Managers, the Managers may be paid expenses, if
any, associated with their duties. No such payment previously mentioned in
this section shall preclude any Manager from serving the Company in any
other capacity and receiving compensation therefor.
(o) Waiver of Notice. When any notice is required to be given to any Manager, a
waiver thereof in writing signed by the person entitled to such notice,
whether before, at, or after the time stated therein, shall be equivalent
to the giving of such notice.
5.3. Members.
(a) Except as otherwise expressly permitted by this Agreement, no Member shall:
(i) apply to any court to decree termination, dissolution and/or
liquidation of the Company claiming it is not reasonably practicable to
carry on the Company's business in conformity with the Certificate of
Formation of the Company and/or this Agreement; or (ii) petition any court
for the involuntary dissolution of the Company on the grounds of division
or dissension of the Members.
(b) The withdrawal or resignation of a Member without the consent of a Majority
of Members prior to the dissolution, liquidation and winding up of the
Company as herein provided shall be wrongful.
(c) Unless otherwise provided under this Agreement, all decisions to be made by
the Members shall be made with the consent of a Majority of Members.
(d) No Member shall be an agent of the Company for purposes of its business, or
shall have any authority to bind the Company, except as such authority
shall be expressly delegated to such Member by the other Members or the
Board of Managers. No Member shall incur any expense on behalf of the
Company or otherwise obligate or bind the Company without first obtaining
the written consent of the Board of Managers for such expenditure or other
obligation.
5.4 Meetings of Members.
(a) Meetings of the Members shall be held at the principal office of the
Company, unless some other appropriate and convenient location shall be
designated for that purpose from time to time by the vote of the Members;
provided that the Members may participate in any such meeting by means of
conference telephone or similar communications equipment pursuant to
paragraph (j) below.
(b) An annual meeting of the Members shall be held, each year, on the
anniversary of the date of this Agreement or such other time as the Members
shall determine. If this day shall be a legal holiday, then the meeting
shall be held on the next succeeding business day, at the same time. At the
annual meeting, the Members shall appoint the Board of Managers and shall
transact such other business as may be properly brought before the meeting.
(c) Special meetings of the Members may be called by a Manager or a Majority of
Members. Notice of such special meeting shall be given not less than three
days before the date of such meeting. The notice of meeting shall set forth
the purposes of the meeting, but any business, including business other
than that set forth in the notice may be conducted at the Special Meeting.
(d) A Majority of Members, represented in person or by proxy, shall constitute
a quorum at any meeting of Members. In the absence of a quorum at any such
meeting, a majority of the Members so represented may adjourn the meeting
from time to time for a period not to exceed sixty days without further
notice. However, if the adjournment is for more than sixty days, or if
after the adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each Member of record
entitled to vote at the meeting. At such 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 such
meeting of that number of Percentage Interests whose absence would cause
loss of a quorum.
(e) If a quorum is present, the affirmative vote of a Majority of Members shall
be the act of the Members, unless this Agreement requires the vote of a
different proportion of Members to approve certain matters.
(f) Notice of meetings shall be given to the Members in writing not less than
three days before the date of the meeting. Notices for regular and special
meetings shall be given personally or by mail, and shall be sent to each
Member's last known address appearing on the books of the Company. Notice
of any meeting of Members shall specify the place, the day and the hour of
the meeting, and, in case of a special meeting, the general nature of the
business to be transacted, or, in the case of an annual meeting, those
matters which at that time are known will be presented for action by the
Members.
(g) The actions that are taken at a meeting of Members which was not called or
noticed pursuant to the provisions of paragraph (c) or (d) above shall be
valid as though transacted at a meeting duly held after regular call and
notice, if all of the Members are present.
(h) Any action which may be taken at any annual or special meeting of Members
may be taken without a meeting and without prior notice if a consent in
writing, setting forth the action so taken, is signed by the holder or
holders of not less than the minimum Percentage Interests that would be
necessary to take such action at a meeting at which the holders of all
Percentage Interests entitled to vote on the action were present and voted
and such consent is delivered to the Company. Delivery shall be by hand or
certified or registered mail, return receipt requested. A telegram, telex,
cablegram or similar transmission by a Member, or a photographic,
photostatic, facsimile or similar reproduction of a writing signed by a
Member, shall be regarded as signed by the Member for purpose of this
Section. Within two business days after receiving the consent provided for
in this Section, the Company shall deliver a copy of such consent or a
notice describing the action taken in such consent to all Members not
signing the consent.
(i) A Member may vote either in person or by proxy executed in writing by the
Member. A telegram, telex or similar transmission by the Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing
executed by the Member, shall be treated as an execution in writing for
purposes of this Section 5.4. Proxies for use at any meeting of Members or
in connection with the taking of any action by written consent shall be
filed with the Company before or at the time of the meeting or execution of
the written consent, as the case may be. No proxy shall be valid after
eleven months from the date of its execution unless otherwise provided in
the proxy. A proxy shall be revocable unless the proxy form conspicuously
states that the proxy is irrevocable and that the proxy is coupled with an
interest. Should a proxy designate two or more persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such
persons present at any meeting at which their powers thereunder are to be
exercised shall have and may exercise all the powers of voting or giving
consents thereby conferred; or if only one be present, then such powers may
be exercised by that one; or, if an even number attend and a majority do
not agree on any particular issue, the Company shall not be required to
recognize such proxy with respect to such issue if such proxy does not
specify how the Membership Interest that is the subject of such proxy is to
be voted with respect to such issue.
(j) Members entitled to vote may participate in and hold a meeting by
conference telephone or similar communications equipment by means of which
all Members participating in the meeting can hear each other, and
participation in such meeting shall constitute attendance and presence in
person at such meeting.
(k) When any notice is required to be given to any Member, a waiver thereof in
writing signed by the person entitled to such notice, whether before, at,
or after the time stated therein, shall be equivalent to the giving of such
notice.
5.5 Matters Requiring Approval of the Members. In addition to those actions or
decisions requiring approval of the Members pursuant to other provisions of this
Agreement, the following actions shall require the approval of the Members, in
addition to approval of the Board of Managers:
(a) the incurrence of the Company of any indebtedness in excess of $500,000 or
the making or guaranteeing of loans to any Member;
(b) the sale, lease or other disposition of all or a substantial portion of the
assets of the Company;
(c) the acquisition by the Company of any assets for an amount greater than
$500,000 in any single transaction;
(d) the redemption or repurchase of any Membership Interests;
(e) a liquidation of the Company, or a merger or consolidation of the Company
with another business or entity;
(g) the assignment of the property of the Company in trust for creditors or on
the assignee's promise to pay the debts of the Company;
(h) the disposition of the goodwill of the business of the Company;
(i) the confession of a judgment on behalf of the Company; or
(j) such other actions as may from time to time unanimously be designated by
the Members as requiring the prior written approval of the Members.
5.6 Independent Activities. The Members may, notwithstanding this Agreement,
engage in whatever activities they choose, so long as these activities are not
competitive with the Company or otherwise, without having or incurring any
obligation to offer any interest in such activities to the Company or any Member
Neither this Agreement nor any activity undertaken pursuant hereto shall prevent
any Member from engaging in such activities, or require any Member to permit the
Company or any Member to participate in any such activities, and as a material
part of the consideration for the execution of this Agreement by each Member,
each Member hereby waives, relinquishes, and renounces any such right or claim
of participation.
5.7 Officers.
(a) Number. The officers of the Company, if any, shall be a Chief Executive
Officer, a Vice President, a Chief Financial Officer (hereinafter "CFO"), a
Secretary, and such other officers as may be elected or appointed by the
Board of Managers. Any two or more offices may be held by the same person.
(b) Election and Term of Office. The officers of the Company shall be elected
by a majority of the Board of Managers at a duly called meeting of the
Board of Managers. Vacancies may be filled or new offices created and
filled at any meeting of the Board of Managers. Each officer shall hold
office until his successor shall have been duly elected and shall qualify,
or until such officer shall resign or shall have been removed in the manner
hereinafter provided. Election of any officer shall not of itself create
contract rights.
(c) Removal. Any officer elected or appointed by the Board of Managers may be
removed by the Board of Managers whenever in the Board's judgment the best
interest of the Company would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
(d) The Chief Executive Officer. The Chief Executive Officer shall be a
Manager, and shall preside at all meetings of the Members and the Board of
Managers, provided he is present throughout. The Chief Executive Officer
shall be the principal executive officer of the Company. Subject to the
direction and control of the Board of Managers, the Chief Executive Officer
shall be in charge of the business of the Company; the Chief Executive
Officer shall see that the resolutions and directions of the Board of
Managers are carried into effect except in those instances in which that
responsibility is specifically assigned to some other person by the Board
of Managers; and, in general, the Chief Executive Officer shall discharge
all duties incident to the office of Chief Executive Officer and such other
duties as may be prescribed by the Board of Managers from time to time.
(e) The Vice-President. The vice-president (or in the event there shall be more
than one vice-president, each of the vice-presidents) shall assist the
Chief Executive Officer in the discharge of his duties as the Chief
Executive Officer may direct and shall perform such other duties as from
time to time may be assigned to them by the Chief Executive Officer or by
the Board of Managers. In the absence of the Chief Executive Officer or in
the event of his inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the
order designated by the Board of Managers, or by the Chief Executive
Officer if the Board of Managers have not made such a designation, or in
the absence of any designation, then in the order of seniority of tenure as
vice-president) shall perform the duties of the Chief Executive Officer,
and when so acting, shall have the powers of and be subject to all the
restrictions upon the Chief Executive Officer.
(f) Document Execution. Except in those instances in which the authority to
execute is expressly delegated to another officer or agent of the Company
or a different mode of execution is expressly prescribed by the Board of
Managers or this Agreement, the Chief Executive Officer and the
vice-president (or each of them if there are more than one) may execute for
the Company any contracts, deeds, mortgages, bonds or other instruments
which the Board of Managers have authorized to be executed, and may
accomplish such execution either individually or with the secretary, any
assistant secretary, or any other officer authorized by the Board of
Managers.
(g) The Chief Financial Officer. The CFO shall be the principal accounting and
financial officer of the Company. The CFO shall: (i) have charge of and be
responsible for the maintenance of adequate books of account for the
Company; (ii) have charge and custody of all funds and securities of the
Company, and be responsible therefor and for the receipt and disbursement
thereof; and (iii) perform all the duties incident to the office of CFO and
such other duties as from time to time may be assigned to him by the Chief
Executive Officer or the Board of Managers. If required by the Board of
Managers, the CFO shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of
Managers may determine.
(h) The Secretary. The secretary shall: (i) record the minutes of the Members
and of the Board of Managers meetings in one or more books provided for
that purpose; (ii) see that all notices are duly given in accordance with
the provisions of the Agreement or as required by law; (iii) be custodian
of the Company records; (iv) keep a register of the post-office address of
each Member which shall be furnished to the secretary by such Member; (iv)
sign with the Chief Executive Officer, or a vice-president, or any other
officer thereunto authorized by the Board of Managers, certificates of
Membership Interest of the Company, and any contracts, deeds, mortgages,
bonds, or other instruments which the Board of Managers have authorized to
be executed, (vi) have authority to certify the resolutions of the Members
and Board of Managers and committees thereof, and other documents of the
Company as true and correct copies thereof, and (vii) perform all duties
incident to the office of secretary and such other duties as from time to
time may be assigned to the secretary, by the Chief Executive Officer or
the Board of Managers.
(i) Assistant Treasurers and Assistant Secretaries. The assistant treasurers
and assistant secretaries shall perform such duties as shall be assigned to
them by the treasurer or the secretary, respectively, or by the Chief
Executive Officer or the Board of Managers. The assistant secretaries may
sign with the Chief Executive Officer or a vice-president, or any other
officer thereunto authorized by the Board of Managers, contracts, deeds,
mortgages, bonds, or other instruments. The assistant treasurers shall
respectively, if required by the Board of Managers, give bonds for the
faithful discharge of their duties in such sums and with such sureties as
the Board of Managers shall determine.
(j) Salaries. The salaries of the officers, if any, shall be fixed from time to
time by the Board of Managers and no officer shall be prevented from
receiving such salary by reason of the fact that the officer is also a
Manager or Member of the Company.
ARTICLE 6 - LIABILITY, EXPENSES AND INDEMNIFICATION
6.1 Liability of Members. No Member shall be liable, responsible or accountable
in damages or otherwise to the Company or any other Member for any action taken
or failure to act on behalf of the Company within the scope of authority
conferred upon such Member, unless such action or omission was performed or
omitted fraudulently or in bad faith, or constituted wanton and willful
misconduct or gross negligence or recklessness, or was in violation of the Act.
No Member shall be liable for the debts, liabilities, contracts or any other
obligations of the Company beyond that Member's Capital Contribution. No Member
shall have any personal liability for the repayment of the Capital Contribution
of any other Member. Any obligation of a Member to return or repay funds to the
Company hereunder or under the Act shall be the obligation of such Member and
not of the remaining Members, and such obligation to return or repay funds to
the Company shall not exceed the amounts, if any, required by the Act to be
repaid or returned. Upon dissolution and termination of the Company, the Members
shall not be obligated to contribute to the Company any amount of any deficit in
their Capital Accounts.
6.2 Liability of the Company's Board of Managers, Officers and Agents. The
members of the Company's Board of Managers, the Company's officers and the
Company's other agents shall not be liable, responsible or accountable in
damages or otherwise to the Company or any Member for any action taken or
failure to act on behalf of the Company within the scope of authority conferred
upon them, unless such action or omission was performed or omitted fraudulently
or in bad faith, or constituted wanton and willful misconduct or gross
negligence or recklessness, or was in violation of the Act.
6.3 Indemnification of Members, Members of the Board of Managers, Officers and
Agents. The Company and its successors and assigns shall indemnify the Members,
the members of the Board of Managers, the Company's officers and the other
agents of the Company (collectively, the "Indemnified Parties") from and against
any losses, claims, demands, costs, damages, liabilities, expenses of any nature
(including reasonable attorneys' fees and disbursements), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which the Indemnified Party was involved or may be involved, or threatened to
be involved, as a party or otherwise, arising out of or incidental to the
business of the Company. The indemnification shall continue as to a Person
who/that has ceased to be a Member, member of the Board of Managers, officer or
agent of the Company, and shall inure to the benefit of the heirs, successors
and/or personal representatives of such former Member, member of the Board of
Managers, officer or agent.
6.4 Advance Payment of Expenses. The Company shall pay expenses incurred by an
Indemnified Party in defending a civil or criminal action, suit or proceeding as
they are incurred in advance of the final disposition of the action, suit or
proceeding, if it receives an undertaking by or on behalf of the Indemnified
Party to repay any portion of amounts advanced under this Section in excess of
the amount ultimately determined to be payable by the Company to the Indemnified
Party under Section 6.3 above. This provision shall not affect any other right
of any Person for advancement of expenses under any other provision of this
Agreement, any other agreement, or otherwise by law.
6.5 No Member Liability. Any indemnification under this Article 6 shall be
satisfied solely out of the assets of the Company. No Member shall be subject to
personal liability or required to fund or to cause to be funded any obligation
by reason of these indemnification provisions.
ARTICLE 7 - TITLE TO PROPERTY, BANK ACCOUNTS,
FISCAL YEAR, REPORTING AND TAX RETURNS
7.1 Title to Property: Bank Accounts. All property of the Company shall be held
in the name of the Company. Funds of the Company shall be deposited in the name
of the Company in such bank account or accounts as shall be designated by the
Board of Managers. All checks, drafts and other orders for the payment of money
issued in the name of the Company shall be signed by a designated member of the
Board of Managers, or such other Persons as shall be directed by the Board of
Managers.
7.2 Fiscal Year. The fiscal year of the Company shall begin on January 1 and end
on December 31.
7.3 Annual Reports. As soon as available, and in any event within 90 days after
the end of each fiscal year of the Company, the Company shall cause to be
furnished to each Member statements of income, retained earnings and cash flow
of the Company for such year, and a balance sheet of the Company as of the end
of such year, setting forth in each case, in comparative form, corresponding
figures for the preceding fiscal year, all in reasonable detail, prepared in
accordance with generally accepted accounting principles in all material
respects, reasonably satisfactory in scope to the Members and certified by the
Board of Managers.
7.4 Notice of Proceedings. As soon as practicable and in any event within thirty
days after receipt of written notice of any material litigation or other
proceeding against the Company or its property, the Company shall furnish to
each Member written notice of the nature and extent of such litigation or
proceeding.
7.5 Member Access to Records. Each Member, and any Person who is designated by a
Member and who has agreed in writing to be subject to confidentiality
obligations acceptable to the Board of Managers, shall have the right, from time
to time hereafter during normal business hours, following notice to the Board of
Managers, and to inspect, audit, check and make copies of and extracts from the
Company's books and records relating to the Company's business or to any
transactions between the parties hereto; provided, however, that all expenses
related thereto shall be paid by such requesting/inspecting Member.
7.6 Tax Returns and Elections. The Company shall cause to be prepared and timely
filed all tax returns and schedules required to be filed by the Company, and
shall furnish to the Members a Schedule K-1 and any additional or substitute
forms or schedules required to enable each Member to timely file such Member's
Federal income tax return for each taxable year (or portion thereof) of the
Company in which such Member holds a Membership Interest, and shall make all
necessary or appropriate tax elections, including, without limitation, any
election under Code Section 754 and related provisions, which shall be of
benefit to any of the Members; provided that any Member for which such an
election is made agrees to pay the annual costs to the Company attributable to
such an election.
7.7 Tax Matters Member. Pursuant to Code Section 6231, Xxxxxxx Xxxxx is hereby
designated as the Tax Matters Member of the Company. The Tax Matters Member
shall represent the Company (at the Company's expense) in connection with all
examinations of the Company's affairs by tax authorities, including resulting
judicial and administrative proceedings, and to expend Company funds for
professional services and costs associated therewith. The Tax Matters Member
shall, within five days of receipt thereof, forward to each Member a photocopy
of any notices received from the Internal Revenue Service and any other income
tax authority relating to the Company and shall seek the advice and counsel of
the Members with respect thereto. The Tax Matters Member shall oversee the
Company's tax affairs in the overall best interests of the Company and shall act
strictly in accordance with the advice and counsel provided to such Tax Matters
Member by such other Members. The Company shall be treated as a partnership for
federal income tax purposes. The Members are aware of the income tax
consequences of the allocations made by this Agreement and hereby agree to be
bound by the provisions of this Agreement in reporting their shares of Net
Profits and Net Loss for income tax purposes.
ARTICLE 8 - TERM OF THE COMPANY; TERMINATION OF THE COMPANY
8.1 Term. Unless the Company is earlier terminated as provided in Sections 8.2,
the Company shall continue in perpetuity. The Members may, however, amend this
Agreement to change the date of termination to a date determined by a Majority
of Members.
8.2 Events of Termination. The Company shall terminate (except for those
provisions of this Agreement governing the authority, rights, duties and
obligations of the Members and the members of the Board of Managers of the
Company to the extent necessary for them to conduct an orderly liquidation and
winding up of the Company in accordance with the terms of this Agreement and
except for Article 6 of this Agreement), and the dissolution of the Company and
the liquidation of the assets of the Company shall occur only upon the earliest
to occur of the written agreement of a Majority of Members to dissolve the
Company.
If a Member who is an individual dies or a court of competent jurisdiction
adjudges him to be incompetent to manage his person or his property, the
Member's executor, administrator, guardian, conservator, or other legal
representative may exercise all of the Member's rights for the purpose of
sealing his estate or administering his property. A Member shall not take any
voluntary action which directly causes a termination of the Company. Unless
otherwise approved by a Majority of Members, a Member who resigns (a "Resigning
Member") or whose Membership Interest is otherwise terminated, shall not be
entitled to receive any distributions in excess of those distributions to which
such Member would have been entitled had such Member remained a Member. Except
as otherwise expressly provided herein, a Resigning Member shall immediately
become and be treated for all purposes as an Assignee. Damages for breach of
this Section 8.2 shall be monetary damages only (and not specific performance),
and such damages may be offset against distributions by the Company to which the
Resigning Member would otherwise be entitled.
8.3 Liquidation and Winding Up. Upon the dissolution of the Company, the Board
of Managers shall carry out the liquidation and winding up of the Company in an
orderly manner; provided, however, that the Board of Managers may determine to
distribute any assets to the Members in kind; provided, however, that a
reasonable time shall be allowed for the orderly liquidation of the assets of
the Company and the satisfaction of liabilities to creditors so as to enable the
Board of Managers to minimize the normal losses attendant upon a liquidation;
and provided that the Board of Managers may establish Reserves in connection
with such liquidation process, which Reserves shall be paid to the appropriate
Persons or, if not otherwise paid, shall be distributed in accordance with this
Section 8.3. The Members shall continue to share Net Profits and Net Loss during
liquidation in the same proportions, as specified herein, as before liquidation.
The proceeds of liquidation and any remaining assets shall be distributed in the
following order and priority:
(a) first, to creditors of the Company, including Members who have made loans
to the Company, to the extent otherwise permitted by law, in satisfaction
of the liabilities of the Company;
(b) second, to the Members pro rata in accordance with their positive Capital
Account balances, after giving effect to all contributions, distributions
and allocations for all periods, until the Capital Accounts of all Members
are reduced to zero; and
(c) the remainder, to the Members in accordance with their Percentage
Interests.
The foregoing distribution priorities are intended to comply with the applicable
provisions of Treasury Regulation ss.1.704-1(b) and to the extent that there is
a failure to so comply, the applicable provisions of Treasury Regulation
ss.1.704-1(b) shall control the distributions described under this Section 8.3.
8.4 Termination. The Company shall terminate when all of the assets of the
Company, after payment of or due provision for all debts, liabilities and
obligations of the Company, shall have been distributed to the Members in the
manner provided for in this Article 8 and a Certificate of Dissolution shall
have been filed in the manner required by the Act.
8.5 Claims of Members. Upon dissolution of the Company, the Members and former
Members shall look solely to the Company's assets for the return of their
capital contributions, and if the assets of the Company remaining after payment
of or due provision for all debts, liabilities and obligations of the Company
are insufficient to return such capital contributions, the Members and former
Members shall have no recourse against the Company or any other Member, and
notwithstanding anything to the contrary contained in this Agreement, and
notwithstanding any custom or rule of law to the contrary, no Member shall be
obligated to contribute any amount of any deficit in such Member's Capital
Account.
ARTICLE 9 - ADDITIONAL COVENANTS
9.1 Joint Covenants. The Parties hereby covenant with each other as follows:
(a) Each Party shall take all actions required of such Party by the provisions
of this Agreement.
(b) Each Party shall advise the other Parties promptly if any event should
occur which would prevent the fulfillment of any conditions upon the
obligation of any Party to consummate the transactions contemplated by this
Agreement, or if any event should occur or has occurred which would or did
constitute a breach of any representation, warranty or covenant of an
Party. The Parties shall use their commercially reasonable best efforts to
correct the event as expeditiously as possible.
9.2 Confidentiality. Each Party agrees that (a) he will receive and hold all
Proprietary Information in the strictest confidence, (b) he will safeguard all
Proprietary Information, and (c) he will not disclose or permit the disclosure
of Proprietary Information to any Person other than pursuant to a valid business
purpose of the Company; provided, however, that these restrictions shall not
apply to information which (i) is publicly available through no wrongful act of
the Party; or (ii) is disclosed pursuant to valid legal process, provided,
however, that the Party shall provide the Company with not less than ten
business days prior written notice before such disclosure may occur, and such
disclosure shall be limited to the information expressly required to be
disclosed. Upon termination of an Party's association with the Company, the
Party will return to the Company all documents or other materials held by the
Party which contain Proprietary Information without retaining any copies,
excerpts or extracts therefrom.
9.3 Location of Corporate Headquarters. The Company shall relocate its
headquarters and principal administrative office to Battle Creek, Michigan by
March 1, 2001.
9.4. Flip Protection. If the Company exercises a Company Call Option at any time
within 365 days before all or substantially all the Membership Interests or
assets of the Company are sold to a third party, then the Company shall either
pay, or cause such third party to pay, to BCU the difference between (a) the per
Unit price BCU received from the Company for the Membership Interests acquired
pursuant to that particular Company Call Option and (b) the per Unit price the
third party is paying for all or substantially all the Membership Interests or
the per Unit price the Members have or will receive for sale of all or
substantially all of the assets of the Company.
9.5. Legal Fees. The Company will pay the legal fees and costs incurred by BCU
in connection with the execution of this Agreement and its equity investment in
the Company incurred on or prior to February 13, 2001.
ARTICLE 10 - REPRESENTATIONS AND WARRANTIES OF PARTIES
10.1 Authority. Each Party hereby represents and warrants, each on his own
behalf only that the execution and delivery by such Party of this Agreement and
all related agreements and the performance of such Party's obligations
hereunder: (a) are within such Party's power; (b) are not in contravention of
the terms of any indenture, agreement or undertaking to which such Party is a
party or by which such Party or any of his property is bound; (c) do not, as of
the date of execution hereof, require the consent, registration or approval of
or with any Person; and (d) do not contravene any contractual restriction or
restriction of any governmental authority binding upon such Party, or any
statute, regulation, judgment, order, writ, decree, or injunction currently
applicable to such Party. This Agreement is a duly authorized, valid and binding
agreement of such Party enforceable against him in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles.
ARTICLE 11 - AMENDMENT; ADDITIONAL MEMBERS
11.1 Amendments. Amendments to this Agreement may be proposed by any Member from
time to time. Any proposed amendment to this Agreement will be adopted and
effective only if: (a) it is approved in writing by the holders of 75% of the
Interests and (b) for so long as BCU is a Member, it is approved in writing by
BCU.
11.2 Additional Members. Subject to the terms and conditions of this Agreement,
any Person or Entity may become a Member either by the issuance by the Company
of Membership Interests for such consideration as the Board of Managers shall
determine, or as a transferee of a Member's Membership Interest or any portion
thereof. No new Members shall be entitled to any retroactive allocation of
losses, income or expense deductions incurred by the Company. Notwithstanding
any other provisions herein to the contrary, the addition of a Member shall not
constitute an amendment of this Agreement for which Member approval is required.
ARTICLE 12 - MISCELLANEOUS PROVISIONS
12.1 Notices. Any notice or writing required or desired to be served, given or
delivered hereunder shall be in writing and shall be given in person, by a
reputable courier or delivery service with expenses of delivery prepaid, or by
first-class certified or registered mail, return receipt requested and postage
prepaid, and shall become effective: (a) on delivery, if delivered in person or
by courier or delivery service; or (b) on the earlier of delivery or three
business days after deposited in the mails, if deposited in the mails, all of
which shall be properly addressed to the party to be notified. Notices or
writings to be delivered to the Parties shall be sent to the address set forth
on Exhibit A hereto for such Party, or to such other address as a Party shall
have designated by written notice to the other Parties in accordance with this
Section 12.1.
12.2 Relationship of the Parties/No Partnership Intended For Non-Tax Purposes.
(a) The Parties have formed the Company under the Act and expressly do not
intend hereby to form a partnership. None of the Parties intend to be
partners of the other Parties hereto, or partners as to any third party. To
the extent any Party, by word or action, represents to another Person that
any other Party is a partner or that the Company is a partnership other
than solely for federal or state income tax purposes, the Party making such
wrongful representation shall be liable to any other Party which incurs
personal liability or expense by reason of such wrongful representation.
(b) Except as otherwise expressly set forth in this Agreement, no Party has any
authority or right to assume or create any obligation or liability of any
nature, express or implied, in the name of or on behalf of any other Party
or the Company.
12.3 Assignability. Subject to Article 3 above, neither this Agreement nor any
of the benefits or rights hereunder shall directly or indirectly, in any manner
whatsoever or by operation of law, be assigned, transferred, divided, shared or
sublicensed by any Party to any other Person.
12.4 Construction of Agreement. This Agreement will be construed and enforced in
accordance with the internal laws of the State of Delaware, without application
of the conflict of laws provisions thereof.
12.5 Severability. In the event any provision of this Agreement shall be held to
be invalid, illegal or unenforceable in any respect by a court, arbitration
tribunal or administrative body of competent jurisdiction, then, unless
otherwise agreed, this Agreement shall continue in full force and effect except
for such provision, which shall be deemed to be excised from this Agreement ab
initio. In such event, the Parties agree to use their best efforts to agree on
substitute provisions which will achieve as closely as possible the same
economic effects for the Parties as the invalid provision(s) without being
invalid under applicable law.
12.6 Entire Agreement. This Agreement represents the entire understanding
between the Parties with respect to the subject matter hereof and supersedes all
other agreements, whether written or oral, with respect to the subject matter
hereof.
12.7 No Waiver. The failure of any Party to enforce this Agreement, to object to
the failure on the part of any other Party to perform any term or condition of
this Agreement, or to require the performance by any other Party of any term or
condition of this Agreement, or any delay in doing so, shall not constitute a
waiver thereof.
12.8 Exhibits. The Exhibits hereto are an integral part of this Agreement and
all references herein to this Agreement shall encompass such Exhibits.
12.9 Counterparts. This Agreement may be executed simultaneously in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Headings. The inserted headings are for convenience only and should not be
used to construe or interpret this Agreement.
12.11 Pronouns and Plurals. Whenever the context may require, any pronoun used
in this Agreement shall include the corresponding masculine, feminine and neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa.
12.12 Further Documents and Actions. Each of the Parties will, at the reasonable
request of the other Parties hereto, execute and deliver to such other Parties
all such further instruments, assignments, assurances and other documents, and
take such further actions, as such other Parties may reasonably request and
which are necessary for the consummation of the transactions contemplated by
this Agreement, provided that the duties, obligations and liabilities of the
Parties executing and delivering such instruments, assignments, assurances or
other documents thereunder shall be consistent with the terms of this Agreement.
12.13 Membership Interests Not Registered. The Parties acknowledge that the
Membership Interests have not been registered under the Securities Act of 1933,
as amended, or the securities laws of any state, and thus may not be offered for
sale or transfer or otherwise disposed of unless registered under the Securities
Act of 1933, as amended, or the securities laws of any state, or unless an
exemption from such registration is available.
12.14 Partition. The Parties agree that the property that the Company may own or
have an interest in is not suitable for partition. Each of the Parties hereby
irrevocably waives any and all rights that it may have to maintain any action
for partition of any property the Company may at any time have an interest in.
12.15 Creditors. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the Company.
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date first set forth above.
EQTIMA, LLC
By: _________________________________
MEMBERS: ( * = options on membership only )
/s/Xxxxx Xxxxx
--------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxxx
-----------------
Xxxxx Xxxxxx
/s/Xxxxx Xxxxxxx
----------------
Xxxxx Xxxxxxx
/s/Xxx Xxxx
-----------
Xxx Xxxx
/s/Xxxxxxxx Xxxxxxx
--------------------
Xxxxxxxx Xxxxxxx *
/s/ Xxxx Xxxxxx
-----------------
Xxxx Xxxxxx *
/s/Xxxx Xxxxxx
----------------
Xxxx Xxxxxx
/s/Xxxxxxxx Xxxxx
-----------------
Xxxxxxxx Xxxxx *
/s/ Xxx Xxxxx
-------------
Xxx Xxxxx
/s/Xxx Xxxxx
-------------
Xxx Xxxxx
/s/Xxxxxxx Xxxxxxx
------------------
Xxxxxx Xxxxxxx
Xxxx Xxxxx - resigned
Xxxxx Xxxx - resigned
BATTLE CREEK UNLIMITED, INC.
By: /s/Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxxxxx
Its: ________________________________
EXHIBIT A
PERCENTAGES INTERESTS; INITIAL CAPITAL CONTRIBUTIONS; UNITS
Shares Held Total After
Member Today % Options Options %
Xxxxx Xxxxx 2,510,231 40.20% 0 2,510,231 25.10%
Xxxxx Xxxxxx 420,000 6.73% 0 420,000 4.20%
Xxxxx Xxxxxxx 215,385 3.45% 496,000 711,385 7.11%
Xxx Xxxx 215,385 3.45% 409,000 624,385 6.24%
Xxx Xxxxxx* 25,000 0.40% 0 25,000 0.25%
Xxxxx Xxxxxxxx* 25,000 0.40% 0 25,000 0.25%
Xxxxxx Xxxxxx 15,385 0.25% 500,000 515,385 5.15%
Xxxx Xxxxx 1,376,923 22.05% 0 1,376,923 13.77%
Xxx Xxxxx 1,923 0.03% 100,000 101,923 1.02%
Xxx Xxxxx 146,154 2.34% 0 146,154 1.46%
Xxxx Xxxxxx 0 0.00% 100,000 100,000 1.00%
BCU 1,192,308 19.10% 0 1,192,308 11.92%
Xxxx Xxxxxx 0 0.00% 100,000 100,000 1.00%
Xxxxxxxx Xxxxxxx 0 0.00% 100,000 100,000 1.00%
Xxxxxxxx Xxxxx 0 0.00% 10,000 10,000 0.10%
Xxxxx Xxxx 100,000 1.60% 0 100,000 1.00%
Comitted 6,243,694 N/A 1,815,000 8,058,694 80.59%
Authorized
Interests
--------- ----- --------- ---------- ------
3,756,306 1,941,306 10,000,000 100%
--------- ----- --------- ---------- ------
* no longer an employee
Xxxx Xxxxx - resigned
Xxxxx Xxxx - resigned
EXHIBIT B
BOARD OF MANAGERS
Xxxxx Xxxxx
Xxxx Xxxxx *
Xxx Xxxxx
Xxxxxxx Xxxxxxxxxx
Xxxxx Xxxx (Corporate Counsel) *
* - resigned
EXHIBIT C
PRICING OF PUT AND CALL OPTIONS
Option Price
Year 1 (From August 16, 2001 to $338,000
August 16, 2002)
Year 2 (From August 17, 2002 to $446,160
August 16, 2003)
Year 3 (From August 17, 2003 to $597,854
August 16, 2004)
Year 4 (From August 17, 2004 to $813,082
August 16, 2005)
Year 5 (From August 17, 2005 to $1,122,053
August 16, 2006)
August 17, 2006 and thereafter $1,570,874
EXHIBIT D
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
[Address for Purchaser]
$ [Date]
For value received, the undersigned, EQTIMA, LLC (the "Maker"), hereby promises
to pay to the order of BATTLE CREEK UNLIMITED, INC. ("Member"), as further
provided herein, the principal amount of $ , together with interest on the
unpaid principal balance hereunder, in such amounts and at such times as are
specified herein.
Section 1. Rate of Interest. The unpaid principal balance of this Note shall
bear interest, computed for the period from the date of this Note until it is
paid in full (whether at stated maturity, by acceleration or otherwise) at a
fixed rate per annum equal to the Prime Rate on the basis of the actual number
of days elapsed in a 365 day year, not to exceed at any time the maximum rate of
interest permitted by law. As used in this Note the term "Prime Rate" means the
rate of interest publicly announced by Bank One, NA (or its successor) as its
prime or base rate, which rate shall not necessarily be the lowest rate quoted
by such bank, on the date this Note is issued.
Section 2. Payment of Interest. Interest accrued on this Note shall be paid by
the Maker to Member on the last day of each calendar quarter which occurs after
the date hereof. To the extent interest is not paid on this Note in accordance
with the preceding sentence such unpaid interest shall accrue interest and be
compounded annually at the same rate as the principal balance hereof.
Section 3. Payment of Principal. The principal balance of this Note shall be
paid by the Maker to Member in twelve annual installments, commencing on the
90th day after the issuance of this Note and continuing on the same day in each
of the next succeeding eleven months.
Section 4. Place of Payment. All payments hereunder shall be made to the Member
as payee at (address of Member) or at such other address of which the Member has
notified the Maker.
Section 5. Allocation of Payments, Prepayments. All payments received by the
Member from the Maker hereunder shall be applied first to the payment of accrued
but previously unpaid interest hereunder and then to the reduction of the
principal balance hereof and, subject to such application of payments, the Maker
shall have the option at any time and from time to time to prepay in whole or in
part, and without penalty, the outstanding principal balance of this Note.
Section 6. Endorsements. All payments made by the Maker on account of the
principal balance hereof shall, prior to any transfer hereof, be endorsed by the
Member on this Note.
Section 7. Acceleration. If:
7.l. The Maker does not pay any principal of or interest on this Note as and
when due and payable within 10 calendar days after the due date; or
7.2. The Maker (a) makes an assignment for the benefit of, or enters into any
composition or arrangement with, creditors, (b) becomes a debtor in a proceeding
under Title 11 of the United States Code, (c) dissolves, (d) generally does not
pay his debts as such debts become due, or (e) conceals, removes, or transfers
any part of his property with intent to hinder, delay or defraud his creditors
or makes or suffers a transfer of any of his property which is fraudulent under
any bankruptcy, fraudulent conveyance or similar law; or
7.3. The Maker dissolves or ceases to do business;the Member may declare the
then outstanding unpaid principal balance of this Note, together with all
interest accrued thereon, to be immediately due and payable, whereupon the same
will become immediately due and payable, without presentment, demand, protest,
or notice of any kind, all of which are hereby waived.
Section 8. Attorney's Fees. If this Note is collected by action or is not paid
at maturity (whether at its stated maturity, by acceleration or otherwise) and
is placed in the hands of an attorney for collection, then the Maker will pay
all reasonable attorney's fees, expenses or costs incurred in the collection of
this Note.
Section 9. Notices. Notice shall be deemed to have been properly given to the
Maker when in writing and delivered personally or deposited in the United States
mail, registered or certified, postage prepaid, and addressed to the Maker at
its address given first above. Any notice to Member shall be deemed properly
given if in writing and similarly mailed or delivered and addressed to Member at
the address given in Section 4 with a copy to . Either party may change its
address for notices by notice in the manner set forth above.
Section 10. Saturdays, Sundays and Holidays. Where this Note authorizes or
requires the payment of money or the performance of a condition or obligation on
a Saturday or Sunday or a public holiday, or authorizes or requires the payment
of money or the performance of a condition or obligation within or before or
after a period of time computed from a certain day, and such period of time ends
on a Saturday or Sunday or a public holiday, such payment may be made or
condition or obligations performed on the next succeeding business day, and if
the period ends at a specified hour, such payment may be made or condition
performed, at or before the same hour of such next succeeding business day, with
the same force and effect as if made or performed in accordance with the terms
of this Note.
Section 11. Governing Law. The validity, terms, performance and enforcement of
this Note shall be governed and construed by the provisions hereof and in
accordance with the laws of the State of Michigan applicable to agreements that
are negotiated, executed, delivered and performed solely in the State of
Michigan.
Section 12. Partial Invalidity. If any term or provision of this Note or the
application thereof to any person, firm or corporation, or circumstance, shall
be invalid or unenforceable, the remainder of this Note, or the application of
such term or provision to persons, firms or corporations, or circumstances,
other than those as to which it is held invalid, shall be unaffected thereby and
each term or provision of this Note shall be valid and be enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the
date first written above.
EQTIMA, LLC
By: ____________________________________
Name: ____________________________________
Its: ____________________________________
EXHIBIT K
Employee List with Compensation and Contracts
Employees
All employees with the exception of Anton De Plessis, and Xxxx XxXxxx are
members of the LLC and are bound by the terms of the LLC agreement - see
member's agreement attached. Anton De Plessi has an employment contract - see
attached.
Xxxx XxXxxx is a part time employee without any specific employment agreement
other than the e mail agreement on his pay rate.
MEMBERS AGREEMENT
THIS MEMBERS AGREEMENT (the "Agreement") is made effective the 16th day of
February by and among Eqtima, LLC, a Delaware limited liability company (the
"Company") and each of the members of the Company identified on the signature
pages hereto as the Members (each a "Member" and collectively, the "Members").
IN CONSIDERATION of the mutual covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings set
forth below:
1.1 Covered Interests. "Covered Interests" shall mean all units of Membership
Interests owned on the date of this Members Agreement, or acquired in any
manner after the date of this Members Agreement by any Member.
1.2 Membership Interests. "Membership Interests" shall mean the 10,000,000
authorized units of Membership Interests in and to the Company.
1.3 Operating Agreement. "Operating Agreement" shall mean the Amended and
Restated Limited Liability Company Agreement of even date herewith among
the Company and the Members, as such Agreement may be amended, from time to
time.
1.4 Permitted Transferee. "Permitted Transferee" shall have the meaning set
forth in Section 2.1 of this Members Agreement.
1.5 Person. "Person" shall mean and include an individual, partnership, limited
liability company, corporation, trust, incorporated organization and a
government or any department or agency thereof.
1.6 Transfer. "Transfer" shall mean any type of transfer of an interest in
Covered Interests, whether by gift, sale, exchange, by operation of law,
pledge, encumbrance or otherwise.
ARTICLE II
RESTRICTIONS ON TRANSFER, RIGHTS OF FIRST
REFUSAL AND CO-SALE RIGHTS
2.1 Restrictions on Transfer. Each Member agrees that he, she or it will not
Transfer all or any portion of the Covered Interests now owned or hereafter
acquired by him, her or it, except in connection with, and strictly in
compliance with the conditions of, any of the following:
(a) Transfers effected pursuant to Sections 2.2 , 2.3 or 2.4 hereof
and which are made strictly in accordance with the procedures set forth
therein;
(b) Transfers by a Member or to his or her spouse, children, parents or
grandchildren or to a trust of which he or she is the settlor and a trustee
for the benefit of his or her spouse, children, parents, grandchildren or
charitable foundations, provided that the transferee of any Member shall
have executed a Joinder Agreement in the form of Exhibit A attached hereto;
and
(c) Transfers upon the death of a Member to his or her heirs, executors or
administrators or to a trust under his or her will or Transfers between
such Member and his or her guardian or conservator, provided that the
transferee of any Member shall have executed a Joinder Agreement in the
form of Exhibit A attached.
Any permitted transferee described in the preceding clauses (b) and (c) shall be
referred to herein as a "Permitted Transferee." Notwithstanding anything to the
contrary in this Agreement or any failure to execute a Joinder Agreement as
contemplated hereby, Permitted Transferees shall take any Covered Interests so
Transferred subject to all provisions of this Agreement as if such Covered
Interests were still held by the transferor, whether or not they so agree with
the transferor and/or the Company.
2.2 Right of First Refusal. In the event that any Member or any of their
Permitted Transferees (a "Transferring Member") desires to Transfer all or any
portion of the Covered Interests held by such Transferring Member, other than to
a Permitted Transferee pursuant to Section 2.1 hereof, such Transferring Member
may, subject to Section 2.3 hereof, if applicable, Transfer such Covered
Interests only pursuant to and in accordance with the following provisions of
this Section 2.2:
(a) Such Transferring Member shall deliver written notice (the "Offer Notice")
to the Company and to all of the other Members of its desire to sell all or a
portion of its Covered Interests and shall otherwise comply with the provisions
of this Section 2.2. The Offer Notice shall specify (i) the number of units of
Membership Interests the Member desires to sell (the "Offered Units"), (ii) the
consideration that the Transferring Member desires to be paid for the Offered
Units and (iii) all other material terms and conditions pursuant to which the
Transferring Member desires to sell the Offered Units. The Transferring Member's
Offer Notice shall constitute an irrevocable offer to sell all such Offered
Units to the Company and the Members on the basis described below at a purchase
price equal to the price contained in, and on the same terms as set forth in,
the Offer Notice.
(b) The Company and the Members shall have the right (the "Right of First
Refusal") to accept the offer to purchase the Offered Units for the
consideration and on the terms and conditions specified in the Offer Notice in
the order of priority described below.
(i) The Company shall have the first right to accept the offer to purchase all
or any portion of the Offered Units for the consideration and on the terms and
conditions specified in the Offer Notice. The Company's decision to accept or
reject the offer shall be made by unanimous action of the Board of Managers of
the Company excepting any Manager who is the Transferring Member or a
representative of the Transferring Member. To exercise its Right of First
Refusal, the Company shall, within twenty (20) days of receipt of the Offer
Notice, communicate in writing such election to the Transferring Member (with
copies to the other Members). Such written election to purchase shall constitute
a valid, legally binding and enforceable agreement for the sale and purchase of
the Offered Units.
(ii) In the event the Company does not exercise its Right of First Refusal with
respect to all of the Offered Units, the Company shall notify the
Transferring Member and the other Members in writing of such fact (such
notice, the "Subsequent Offer Notice"). Each other Member shall then have
the right to accept the offer to purchase up to that number of remaining
Offered Units as shall be equal to the product obtained by multiplying (X)
the total number of remaining Offered Units by (Y) a fraction, the
numerator of which is the total number of units of Membership Interests
owned by such Member on the date of the Subsequent Offer Notice and the
denominator of which is the total number of units of Membership Interests
then held by all of the Members, subject to increase as hereinafter
provided. The number of units of Membership Interests that each such Member
is entitled to purchase under this Section 2.2 shall be referred to as a
"ROFR Fraction." In the event any such Member does not wish to purchase its
ROFR Fraction, then all other Members who so elect shall have the right to
accept the offer to purchase, on a pro rata basis with all who so elect (as
hereinafter provided), any ROFR Fraction not purchased by such Member. Each
Member electing to purchase a pro rata share of any outstanding ROFR
Fraction shall have the right to purchase an amount equal to the product
obtained by multiplying (X) the ROFR Fraction of the Member electing not to
purchase shares under this Section 2.2 by (Y) a fraction, the numerator of
which is the total number of units of Membership Interests owned by each
such other Member on the date of the Subsequent Offer Notice and the
denominator of which is the total number of units of Membership Interests
then held by all the other Members, excluding the units then held by any
Member electing not to purchase its ROFR Fraction. Each Member shall have
the right to accept the proposed transaction by giving notice of such
acceptance to the Company within twenty (20) days after receipt of the
Subsequent Offer Notice, which notice shall indicate the maximum number of
units of Membership Interests subject thereto which such Member is willing
to purchase in the event fewer than all Members elect to purchase their
ROFR Fractions. The Company shall notify the Transferring Member and the
other Members promptly following any lapse of the Right of First Refusal
without acceptance thereof or any rejection of the Right of First Refusal.
The closing for any purchase of Offered Units by the Members hereunder
shall take place within (i) thirty (30) days after the date on which the
Company elects to purchase all of the Offered Units, if applicable, or (ii)
thirty (30) days after the expiration of the twenty (20) day period
following the receipt of the Subsequent Offer Notice by the Members,
whichever comes first.
In the event that the Company and the other Members do not elect to
exercise the Right of First Refusal with respect to all of the Offered
Units, the Transferring Member may sell the remaining Offered Units to a
Person (a "Proposed Transferee") on terms and conditions not less favorable
to the Transferring Member than those set forth in the Offer Notice. If the
Transferring Member's Transfer to the Proposed Transferee is not
consummated in accordance with the terms and conditions contained in the
Offer Notice within the later of (i) ninety (90) days after the expiration
of the later of the Member's Right of First Refusal and the Co-Sale Option
set forth in Section 2.3, if applicable, and (ii) the satisfaction of all
governmental approval or filing requirements, the proposed sale of the
Offered Units to the Proposed Transferee shall be deemed to lapse, and any
Transfers of Offered Units shall be deemed to be in violation of the
provisions of this Agreement unless the Company and the Members are once
again afforded the Right of First Refusal provided for herein with respect
to such Offered Units.
2.3 Co-Sale Right. In the event that Xxxxx Xxxxx, or any Permitted Transferee of
Xxxxx Xxxxx ("Xxxxx") wishes to sell all or a portion of his Covered Interests
in a transaction involving aggregate net proceeds of $1,000,000, and such sale
does not constitute a Change in Control (as such term is defined in Section 2.4)
and the Rights of First Refusal are not exercised with respect to all of the
Offered Units proposed to be so sold, Xxxxx may Transfer such Offered Units only
pursuant to and in accordance with the following provisions:
(a) Battle Creek Unlimited, Inc. ("BCU") shall have the right to
participate in the sale of such Offered Units on the terms and conditions
stated herein (the "Co-Sale Option"), which shall be exercisable upon
written notice (the "Acceptance Notice") to Xxxxx within ten (10) days
after Xxxxx has notified BCU, in writing that the Company and the other
Members have not elected to exercise their Rights of First Refusal with
respect to all of the Offered Units. Each of BCU, shall have the right to
give an Acceptance Notice indicating whether it or he wishes to sell all of
its or his units of Membership Interest on the terms and conditions stated
in the Offer Notice.
(b) BCU shall have the right to exercise their Co-Sale Option and sell
all, but not less than all, of their respective units of Membership
Interests with each of BCU, exercising this right independently. Within ten
(10) days after the date by which BCU, are required to notify Xxxxx of an
intent to exercise the Co-Sale Option, Xxxxx shall notify BCU, of the date
on which such sale shall be consummated, if an option has been exercised.
BCU, shall effect any participation in such a sale by delivering to the
Proposed Transferee, or to Xxxxx for delivery for the Proposed Transferee,
of one or more instruments or certificates, properly endorsed for transfer,
representing the units of Membership Interests BCU, elects to sell, and by
executing any other documents that may be required to consummate the
transaction described in the Offer Notice. At the time of the consummation
of the sale, the Proposed Transferee shall remit directly to BCU, that
portion of the net sales proceeds to which BCU, is entitled by reason of
his participation therein.
2.4 Change In Control. In the event that the holders of 75% of the then
outstanding Membership Interests of the Company determine to sell or exchange
(in a business combination or otherwise) in one or more bona fide arms-length
transactions to an unaffiliated third party all of their Covered Interests (a
"Change in Control") then, upon thirty (30) days written notice from Xxxxx to
the other Members, which notice shall specify all material terms and conditions,
including the consideration to be received, of such proposed Change in Control,
each other Member shall be obligated to, and shall (i) sell, Transfer and
deliver or cause to be sold Transferred or delivered, to such third party, all
of their units of Membership Interests in the same Change in Control transaction
at the closing thereof (and will execute and deliver all documents required to
be executed pursuant to the terms of such Change in Control transaction and will
deliver certificates for all of its or his or her units at the closing, free and
clear of all claims, liens and encumbrances), and each such Member shall receive
the same consideration per unit of Membership Interest as to be received by
Xxxxx and (ii) if Membership approval is required for the transaction, to vote
in favor of such transaction. Notwithstanding the foregoing, BCU may, at its
option, exercise its BCU Put Option (as described in Section 1.1(f) of the
Operating Agreement) in lieu of selling its Membership Interest pursuant to this
Section 2.4.
2.5 Prohibited Transfers. If any Transfer is made or attempted contrary to the
provisions of this Agreement, such purported Transfer will be void ab intio; the
Company and the Members shall have, in addition to any other legal or equitable
remedies which they may have, the right to enforce the provisions of this
Agreement by actions for specific performance (to the extent permitted by law);
and the Company shall have the right to refuse to recognize any transferee as
one of its Members for any purpose.
2.6 Legend. The Company and the Members acknowledge and agree that a legend in
substantially the following form shall be typed on each certificate evidencing
any of the Covered Interests held at any time by any Member:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
UNDER THE LAWS OF ANY STATE, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION UNDER SUCH LAWS OR AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A MEMBERS AGREEMENT DATED AS OF
FEBRUARY 16, 2001, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, AMONG THE
ISSUER OF THESE SECURITIES (THE "COMPANY") AND CERTAIN OF ITS MEMBERS, WHICH
AGREEMENT INCLUDES CERTAIN RESTRICTIONS ON TRANSFER. A COMPLETE AND CORRECT COPY
OF THIS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST.
2.7 Substituted Members. A Permitted Transferee under Section 2.1 above or a
Proposed Transferee under Section 2.2 above may become a Substituted Member (as
defined in the Operating Agreement), only in compliance with Section 3.5 of the
Operating Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Termination. This Agreement shall terminate upon the earlier to occur of (i)
the termination, dissolution and liquidation of the Company or (ii) the
unanimous written consent of the Members.
3.2 Survival. All agreements, representations and warranties made in this
Agreement or in any document delivered pursuant to this Agreement shall survive
the execution of this Agreement and the delivery of any such document.
3.3 Governing Law. This Agreement shall be deemed to be a contract made under
and shall be construed in accordance with the internal laws of the State of
Delaware, without giving effect to the conflict of laws principals thereof.
3.4 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute one and the same agreement. The Article and Section
headings in this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
3.5 Entire Agreement. This Agreement and the Operating Agreement contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior negotiations, agreements and undertakings between the
parties with respect to such subject matter.
3.6 Notices. All communications or notices required or permitted by this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date when actually delivered to a party hereto or when deposited
in the United States mail, certified or registered mail, postage prepaid, and
addressed as follows, unless and until any of such parties notifies the others
in accordance with this Section of a change of address:
If to the Company: Eqtima, LLC
00 Xxxx Xxxxxxxx Xxx, 0xx Xxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Xxx Xxxxx
With a copy to: Eqtima, LLC
00 Xxxx Xxxxxxxx Xxx., 0xx Xxxxx
xxxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxx
If to any Members: To such Members at their last known address
as reflected in the Company's Member
ownership ledger.
3.7 Amendments. This Agreement may be amended if such amendment is in writing
and is signed by Members holding no less than Seventy-Five Percent (75%) of the
issued and outstanding units of Membership Interests of the Company and BCU for
so long as BCU is a Member, provided, however, that the execution of this
Agreement by additional parties shall not be considered an amendment for which
approval of parties other than the Company is required.
3.8 Equitable Relief. The Members and the Company recognize that the obligations
imposed on them in this Agreement are special, unique, and of extraordinary
character, and that in the event of breach by any party, damages will be an
insufficient remedy; consequently, it is agreed that the Members and the Company
may have specific performance, injunction, injunctive or other equitable relief
(in addition to damages) as a remedy for the enforcement hereof, without proving
damages.
3.9 Cumulative Rights. The rights of the Members and the Company under this
Agreement are cumulative and in addition to all similar and other rights of the
parties under other agreements.
3.10 Severability. Should any particular provision of this Agreement be
adjudicated to be invalid or unenforceable, such provision shall be deemed
deleted and the remainder of the Agreement, nevertheless, shall remain
unaffected and fully enforceable; further, to the extent any provision herewith
is deemed unenforceable by virtue of its scope but may be made enforceable by
limitation thereof, the parties hereto agree the same shall, nevertheless, be
enforceable to the fullest extent permissible.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
COMPANY:
Eqtima, LLC,
(a Delaware limited liability company)
By: ______________________
Its: ______________________
MEMBERS:
/s/Xxxxx Xxxxx
--------------
Xxxxx Xxxxx
/s/Xxxxx Xxxxxx
---------------
Xxxxx Xxxxxx
/c/Xxxxx Xxxxxxx
----------------
Xxxxx Xxxxxxx
/s/ Xxx Xxxx
------------
Xxx Xxxx
/s/Xxxx Xxxxxx
--------------
Xxxx Xxxxxx
/s/Xxxxxxxx Xxxxxxx
-------------------
Xxxxxxxx Xxxxxxx
/s/Xxx Xxxxx
------------
Xxx Xxxxx
/s/Xxx Xxxxx
------------
Xxx Xxxxx
/s/Xxxxxx Xxxxxxx
------------------
Xxxxxx Xxxxxxx
BATTLE CREEK UNLIMITED, INC.
By: ______________________________________
Name: ___________________________________
Its: _____________________________________
Form of Joinder Agreement
The undersigned hereby agrees, effective as of the date hereof, to become a
party to that certain Members Agreement (the "Agreement") dated as of
____________ 2001 by and among Eqtima, LLC (the "Company") and the other
parties named therein and for all purposes of the Agreement, the
undersigned shall be included within the term "Member" (as such term is
defined in the Agreement). The address and facsimile number to which notice
may be sent to the undersigned is as follows:
__________________________________________________________________________
Facsimile No.: ____________________
____________________________________
[Name of the Undersigned]
____________________________________
[Signature]
2002 Compensation Plan for Anton De Plessis
December 5, 2001
To: Anton Du Plessis:
It is my pleasure to offer you a position with Eqtima LLC, as a Regional Manager
with an annual salary of $48,000 per annum. Your start date will be effective
January 1, 2002. You will be reporting directly to me.
You will also receive as part of your compensation package a 10% commission on
the net sales value of Neuralact and Eqtima Value Agent products to those
accounts for which you are personally responsible. The commission will be
payable upon client acceptance of the product(s), and client remittance of the
amounts due and payable. Your specific goals will be sent under a separate
cover.
Additionally, there is a $2,000 monthly bonus if the entire team achieves
$40,000 of sales revenue per month. The bonus for the 1st quarter will pre-paid
on a monthly basis. If the team fails to achieve the 1st quarter target of
$120,000 in sales revenue, the Q2 bonus will be forfeit. I am confident that
with your participation the team will over-achieve every quarter.
I am looking forward to working with you and will assist you in any manner I can
to assure your success. This is an excellent opportunity for our company and I
am looking forward to a long and profitable relationship.
Please sign this letter and forward it to Xxxxxxxx Xxxxx at : Eqtima LLC 00 X.
Xxxxxxxx Xxx. Xxxxxx Xxxxx, XX 00000
Regards,
/S/Xxxxx X. Xxxx
----------------
Xxxxx X. Xxxx
VP Sales
EXHIBIT L
Promissory Note
Date: January __, 2002 Amount $407,000
Due Date: August 16, 2002
For value received, the undersigned, EQTIMA, LLC of 00 Xxxx Xxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000 (the "Maker"), hereby
promises to pay to the order of BATTLE CREEK UNLIMITED, INC. (the
"Member"), as further provided herein, the principal amount of Four Hundred
Seven Thousand Dollars ($407,000.00).
Section 1. Payment of Principal. The entire unpaid balance of
principal of this Note shall be payable in full on August 16, 2002.
Section 2. Place of Payment. All payments hereunder shall be made to
the Member as payee at 000 Xxxx Xxxxxxxx Xxxxxx #000, X.X. Xxx 0000, Xxxxxx
Xxxxx, Xxxxxxxx 00000 or at such other address of which the Member has
notified the Maker.
Section 3. Prepayments. The Maker shall have the option at any time
and from time to time to prepay in whole or in part, and without penalty,
the outstanding principal balance of this Note.
Section 4. Endorsements. All payments made by the Maker on account of
the principal balance hereof shall, prior to any transfer hereof, be
endorsed by the Member on this Note.
Section 5. Acceleration. If:
5.l. The Maker does not pay any principal on this Note as and when due
and payable within 10 calendar days after the due date; or
5.2. The Maker (a) makes an assignment for the benefit of, or enters
into any composition or arrangement with, creditors, (b) becomes a debtor
in a proceeding under Title 11 of the United States Code, (c) dissolves,
(d) generally does not pay its debts as such debts become due, (e)
conceals, removes, or transfers any part of its property with intent to
hinder, delay or defraud its creditors or makes or suffers a transfer of
any of its property which is fraudulent under any bankruptcy, fraudulent
conveyance or similar law or (f) the occurrence of an Event of Default as
defined under the terms of that certain promissory note made by the Maker
to the Member in the principal amount of $75,000 dated December __, 2001;
or
5.3. The Maker dissolves or ceases to do business; the Member may
declare the then outstanding unpaid principal balance of this Note to be
immediately due and payable, whereupon the same will become immediately due
and payable, without presentment, demand, protest, or notice of any kind,
all of which are hereby waived.
Section 6. Attorney's Fees. If this Note is collected by action or is
not paid at maturity (whether at its stated maturity, by acceleration or
otherwise) and is placed in the hands of an attorney for collection, then
the Maker will pay all reasonable attorney's fees, expenses or costs
incurred in the collection of this Note.
Section 7. Notices. Notice shall be deemed to have been properly given
to the Maker when in writing and delivered personally or deposited in the
United States mail, registered or certified, postage prepaid, and addressed
to the Maker at its address given first above. Any notice to the Member
shall be deemed properly given if in writing and similarly mailed or
delivered and addressed to the Member at the address given in Section 2
with a copy to Xxxx X. Xxxxx, Xx., Esq. Miller, Canfield, Paddock and
Stone, P.L.C., 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000. Either
party may change its address for notices by notice in the manner set forth
above.
Section 8. Saturdays, Sundays and Holidays. Where this Note authorizes
or requires the payment of money or the performance of a condition or
obligation on a Saturday or Sunday or a public holiday, or authorizes or
requires the payment of money or the performance of a condition or
obligation within or before or after a period of time computed from a
certain day, and such period of time ends on a Saturday or Sunday or a
public holiday, such payment may be made or condition or obligations
performed on the next succeeding business day, and if the period ends at a
specified hour, such payment may be made or condition performed, at or
before the same hour of such next succeeding business day, with the same
force and effect as if made or performed in accordance with the terms of
this Note.
Section 9. Governing Law. The validity, terms, performance and
enforcement of this Note shall be governed and construed by the provisions
hereof and in accordance with the laws of the State of Michigan applicable
to agreements that are negotiated, executed, delivered and performed solely
in the State of Michigan.
Section 10. Guaranty. This Note, and all renewals or extensions
thereof are secured by the Guaranty set forth below of HouseHold
Xxxxxx.xxx, Inc., a Delaware corporation.
Section 11. Partial Invalidity. If any term or provision of this Note
or the application thereof to any person, firm or corporation, or
circumstance, shall be invalid or unenforceable, the remainder of this
Note, or the application of such term or provision to persons, firms or
corporations, or circumstances, other than those as to which it is held
invalid, shall be unaffected thereby and each term or provision of this
Note shall be valid and be enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the
date first written above.
EQTIMA, LLC
By: /s/ Xxxxx Xxxxx
---------------
Name: Xxxxx Xxxxx
Its: CEO
GUARANTY
The undersigned irrevocably and unconditionally guarantees timely payment and
performance of all of the obligations of the Maker under the foregoing
Promissory Note. This guaranty shall become null and void if the Shareholders
(as defined in that certain Acquisition Agreement entered into on December 13,
2001 by and among the undersigned, the Maker and the parties named therein (the
"Agreement")) exercise their right to exchange all of their stock of the
undersigned for all of the membership interest of the Maker pursuant to Section
13(d) of the Agreement.
HOUSEHOLD XXXXXX.XXX, INC., a Delaware corporation
By: /s/ Xxxx Xxxxxx
------------------
Xxxx Xxxxxx, President
December 26, 2001
