HOMESEEKERS/iQUALIFY, LLC
OPERATING AGREEMENT
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THIS OPERATING AGREEMENT for HOMESEEKERS/iQUALIFY, LLC, a Nevada
Limited Liability Company (hereinafter, the "Company"), is made and entered into
this 16th day of January, 1998, by and between NDS Software Inc., a Nevada
corporation ("NDS"), as one of the two Members of the Company, and Finet
Holdings Corporation, a Delaware corporation ("FINET"), as the other Member of
the Company.
For purposes of this Agreement, both parties may sometimes be referred
to as the "Members"; provided, however, that nothing herein shall be construed
as creating any more than two Members (NDS as one Member and FINET as the other
Member) with equal voting and control of the Company.
W I T N E S S E T H
1. COMPANY FORMATION. The Members shall form the Company pursuant to
Articles of Organization filed with the Nevada Secretary of State (hereinafter,
the "Articles"), and cause to be issued a Certificate of Authority. The
registered office of the Company shall be located at the office of the resident
agent as set forth in the Articles or as may be changed from time to time
according to law. The parties shall execute any and all documents to facilitate
the formation of the Company as may be needed.
2. PURPOSE OF BUSINESS. The purpose of the creation and continued
existence of the Company shall be to engage in and carry on any lawful business
or activity, without reservation or restriction except as may be imposed by law.
Specifically, it is the present intention of the Members that the Company shall
be concerned with establishment of an Internet web site (the "Site") for
consumers to view information pertaining to real estate properties and provide
the consumer an opportunity to prequalify for, apply for, and close residential
home loans. The Site may be a platform for multiple products and services
related to real estate sales, advertising, etc., and as may be mutually agreed
upon by the Members.
3. PRODUCT. The Site shall be a "co-branded" site with hyperlinks to
other web sites owned by the Members as otherwise provided herein. NDS shall
provide the database from its "CityNet" web site and create, host, develop,
evolve, operate, maintain, promote and manage the Site. FINET shall provide the
functionality of its "iQualify" web site and supply appropriate mortgage related
advertising copy for the Site.
The Members agree to provide the Company with new products or services
used in their operations that might help or facilitate the success and
competitiveness of the Site. The Members will also determine the structure,
products, and services presented on the Site which will be based upon and
similar to NDS's CityNet web site. As developed and accepted by the Members,
these products and services shall be more specifically
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described in an addendum to this Agreement and will be updated quarterly or at
such times as are mutually agreed upon by the Members. Any services provided by
the Members to the Company related to their respective industries shall be on a
"best price" basis to the consumer, which shall be defined as the same rate as
the best price realized by a consumer at either Member's business
4. CONTRIBUTIONS OF CAPITAL.
a. The Company's initial capital shall consist of the
contribution by the Members as described by the following:
i. NDS will contribute output from its CityNet web site exclusively to the Site,
a file server with sufficient capacity, an Internet line connection of
sufficient capacity (T1 or greater) and 300,000 shares of NDS common stock.
ii. FINET will contribute output from its iQualify web site or any other Finet
controlled site which markets the "Desktop Underwriter Program", which is the
multi lender platform for loan approval provided through Xxxxxx Xxx.
iii. Each Member agrees to diligently do all acts
necessary to transfer the above described contributions, as may be reasonably
required to carry out the intent and purpose of this Agreement.
b. The respective initial ownership interest in the Company
shall be:
i. NDS shall own 50% of the Company; and,
ii. FINET shall own 50% of the Company.
c. Except as is otherwise provided herein, no Member may
withdraw any portion of the capital of the Company and no Member shall be
entitled to the return of that member's contribution to the capital of the
Company except upon dissolution of the Company or the withdrawal of that Member
from the Company in accordance with the terms and conditions described herein.
d. Additional contributions of capital by the Members shall be
determined upon the mutual consent of the Members. Upon approval of additional
contribution to capital, the contribution shall be given within thirty (30) days
after the determination by the mutual consent of the Members. If within the time
period provided, any Member fails to make his additional capital contribution,
as was mutually agreed upon, the other Member may, within a period of thirty
(30) days after the end of the time the contribution was due, either:
i. Make an additional capital contribution in a sum
equal to that which the defaulting Member was required to make, in which case
the Members' capital and income accounts shall be adjusted accordingly, or
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ii. Cause the Company to be dissolved.
e. Except as otherwise provided herein, the capital of the
Company may be contributed in the form of cash, personal property, equipment,
personal services rendered or in any other manner which in the general course of
business affairs is recognized as representing valid legal consideration and is
mutually agreed upon by the Members. Upon establishment of the Company's Site to
the mutual satisfaction of the Members, the initial capital accounts of the
Members shall be deemed equal in amount.
5. RESERVATION OF INTERESTS. The Members acknowledge that each owns
proprietary interests in the software, data, and services presently being
produced and marketed by each respective Member and that each Member generates
revenues from such products and services. It is the intent of this Agreement,
that in the formation of the Company, each Member shall retain exclusive
ownership rights to their respective products and proprietary rights and nothing
herein is to be in any way construed as creating any right, title, claim, or
interest of one Member whatsoever in products and proprietary rights of the
other Member. The Members also intend to exclude the revenues generated by their
current products and services, to the extent that they are not contributed to
the Company as is provided for herein above, from the income or revenues which
constitute the Company's income or revenue as defined herein. Specifically, NDS
shall, at all times during this Agreement and any extensions hereof, retain and
be entitled to claim separately from the Company all its other revenues and
products, including without limitation, its CityNet and HomeSeekers web sites.
Similarly, FINET shall retain and be entitled to claim separately from the
Company all its other revenues and products, including without limitation, its
iQualify web site. Neither Member shall claim any right, title or interest to
the products and services of the other and shall notify the other if the Member
becomes aware of any adverse claim to the products or services of the other
Member.
6. CONFIDENTIALITY AND NON-DISCLOSURE.
(a) "Confidential Information" shall mean:
(i) Any information relating to the CityNet,
HomeSeekers and iQualify web sites technology;
(ii) Any information relating to the Site's
technology;
(iii) Any basic proprietary technology developed or
acquired by the Company; and
(iv) Any related products and technology of the
Members that are proprietary or confidential.
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By way of illustration, but not limitation, with respect to the
foregoing, Confidential Information of the Members shall include any
information, know-how, data, process, technique, algorithm, program, design,
drawing, formula or test data. Confidential Information shall also refer to any
part of the business affairs of the Members that are proprietary and
confidential including any future development, engineering, manufacturing,
marketing, business plan, servicing, financial or personnel matter relating to
the Members businesses, or either party's present or future products, sales,
suppliers, customers, employees, investors or business, whether communicated in
oral, written, graphic or electronic form, including without limitation,
concepts, techniques, processes, designs, cost data and other technical know-how
and financial, marketing, and other business information disclosed by either
Member to the other, or obtained by either Member through observation or
examination of the other party's facilities, customers or suppliers and any
information either Member has received from others which it is obligated to
treat as confidential or proprietary.
Whenever it is reasonably possible, information that is to be treated
as Confidential Information and that is in written form shall be marked
"confidential" or "proprietary," or with some similar legend, at the time of
disclosure, or the disclosing party shall inform the other party in writing of
the confidential nature thereof within a reasonable time following disclosure
(or within a reasonable time following the execution of this Agreement with
respect to any previously disclosed Confidential Information). Whenever it is
reasonably possible, information that is to be treated as Confidential
Information and that is disclosed orally shall be identified as Confidential
Information at the time of disclosure, or the disclosing party shall inform the
other party in writing of the confidential nature thereof within a reasonable
time following disclosure (or within a reasonable time following the execution
of this Agreement with respect to any previously disclosed confidential
Information).
(b) Each of the Members hereby acknowledge that irreparable
injury and damage to the other party will result from the unauthorized use or
disclosure to third parties of Confidential Information of the other party or
from uses of Confidential Information of the other party for any purpose other
than the business conducted or to be conducted by the Company. Each of the
Members hereby further acknowledge and agree that in the event of any breach of
this provision, including, without limitation, the actual or threatened
disclosure of any Confidential Information without the prior express written
consent of the other party, such other party will suffer irreparable injury and
damage, such that no remedy at law will afford it adequate protection against,
or appropriate compensation for, such injury. Accordingly, the Members each
hereby agree that the other party shall be entitled to specific performance of
the other's obligations under this provision, as well as such further injunctive
relief as may be granted by a court of competent jurisdiction.
(c) The Members shall not, without the prior written consent
of the other party, disclose any Confidential Information to any third party,
nor use any Confidential Information for any purpose. The Members, however,
shall have no liability
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to the other party, under this Article with respect to the disclosure and/or use
of any such Confidential Information that it can establish was:
(i) In the public domain at the time of such
disclosure or subsequently came into the public domain through no fault of the
recipient; or
(ii) Rightfully known to the recipient without a
binder of confidentiality prior to such disclosure; or
(iii) Lawfully received by the recipient without a
binder of confidentiality from a source other than the provider of such
information; or
(iv) Independently developed by the recipient by
persons who had not had access to the proprietary or confidential information;
or
(v) Disclosed without restriction by or with prior
written approval of the provider of such information; or
(vi) Disclosed to persons regularly employed by the
recipient who have previously agreed in writing not to disclose such information
or to use such information for any purpose other than to assist in the conduct
of the activities of the Company.
(d) The Members each agree that any disclosure of Confidential
Information within its own company shall be only such as is necessary to
accomplish the purposes of the Company. The Members shall each take reasonable
security precautions, at least as great as it employs to protect its own
confidential information, to protect from disclosure and to keep confidential
the Confidential Information, including without limitation, protection of
documents from discovery of contents, theft, unauthorized duplication, and
access by other persons to Confidential Information. Prior to disclosure of
Confidential Information to any of its employees, the Members each agree to
obtain an appropriate agreement from those of its employees to whom such
information is disclosed or who otherwise gain access to such information to
maintain the confidentiality of Confidential Information. The Members further
agree to indemnify the other party against any loss or liability resulting from,
or arising in connection with, unauthorized use or disclosure of Confidential
Information by it or its employees.
(e) Each of the Members shall promptly deliver to the other
party at such party's request any documents or other materials reflecting any
Confidential Information made available or supplied to it and any copies thereof
which it may have made, may have access to, or may receive or possess during the
period of the activities to be conducted by the Company. Upon termination of the
Company, for any reason or in any manner whatsoever, each of the Members shall
promptly deliver to the other party any Confidential Information and any other
property of the other party which it shall have in its possession or under its
control, except as the other party shall, by prior express
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written permission, allow it to retain, or to which it may otherwise be entitled
to retain under the terms of any other written agreement with respect thereto.
(f) The Members shall not make or use any copies or summaries,
of oral or written material, photographs, or any other documentation or
information made available or supplied by the other party, except such as are
necessary for its internal communications in connection with the purpose of the
Company or as are necessary to accomplish the purpose of the Company.
(g) Each of the Members shall retain all rights and remedies
afforded it under the patent and other laws of the United States, the states
thereof, or any other country or governmental unit thereof, including without
limitation any laws designed to protect proprietary or confidential information.
(h) This Article sets forth the entire agreement and
understanding of the parties and merges all prior discussions between them as to
Confidential Information. Neither party may be bound by a definition, condition,
representation or waiver other than as expressly stated in this Article or as
subsequently set forth in writing signed by the parties hereto. This Article
shall survive the termination of the Company and shall supplement any subsequent
agreement between the parties with respect to the subject matter hereof to the
extent that the terms contained herein are not inconsistent with any such
subsequent agreement.
(i) Nothing in this Article shall be construed to convey to
either Member any right, title or interest in any Confidential Information of
the other party, or any license to use, sell, exploit, copy or further develop
in any way any Confidential Information of the other party. No license is hereby
granted or implied under any patent, copyright or trademark, any application for
any of the foregoing, or any trade name, trade secret or other proprietary
information, in which either Member has any right, title or interest.
7. LIQUIDATED DAMAGES AND REMEDIES. The Members acknowledge that, in
the event either Member breaches the terms, promises or covenants of Article 5
(Reservation of Interests) or Article 6 (Confidentiality and Non-Disclosure),
such breach is material to this Agreement and the damages suffered by the
non-breaching Member could be substantial or may be irreparable, the exact
amount of which will be difficult to ascertain, and that the remedies at law for
any such breach will be inadequate. In such event, the non-breaching Member
shall provide written notice of the breach to the breaching Member who must cure
the breach within thirty (30) days thereof. If the breaching Member fails to
cure the breach within said time period, the non-breaching Member, in addition
to any other remedy that may be available at law or in equity, shall be entitled
to specific performance and injunctive relief, without posting bond or other
security, and without the necessity of proving actual damages.
8. REVENUE OF THE COMPANY.
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a. For purposes of this agreement "Revenues" shall mean all
revenues obtained by the Company from services and/or products offered by the
Company after all deductions have been effected for costs incurred by the
Members, which costs shall have been mutually agreed to in advance in writing by
the Members. The net profit of the Company in excess of the amounts deemed
necessary by the Managers to operate and grow the Company, after taking into
consideration those reserves that are reasonably necessary to maintain the
operations of the Company, shall be disbursed to the Members as described
hereinbelow and the net losses, if any, shall be borne equally by them. Such
profit and loss shall be distributed on a monthly basis. A Member is not
entitled to receive out of the Company property any part of his contributions to
capital until all liabilities of the Company, except liabilities to Members on
account of their contributions to capital, have been paid or there remains
property of the Company sufficient to pay them.
b. The revenue of the Company generated by consumer inquiries
to the Site is expected to be derived from three sources and shall be accounted
for as follows:
(i) Transaction Fees: As of the date of this Agreement, the
estimated fees payable to FINET for a qualified consumer loan lead,
processed through the iQualify web site and sold to a third party
lender is $250 ("Lead Revenue"); and the estimated fees payable to
FINET for a qualified consumer loan lead, processed through the
iQualify web site, which is closed through the Finet Call Center is
$2,000 ("Funding Revenue").
(ii) During the term of this Agreement Finet shall receive a
"base loan fee" of $500 for each qualified consumer loan lead,
processed through the iQualify web site, which is closed through the
Finet Call Center "Base Loan Fee".
(iii) In addition, during the first twelve months of operation
of the Site, for the first 450 transactions Finet shall receive the
remaining revenue from Lead Revenues and Funding Revenues, after the
payment of the Base Loan Fee ("Distribution Preference"). During the
Second twelve months of operation of the Site, for the first 585
transactions Finet shall receive the remaining revenue from Lead
Revenues and Funding Revenues, after the payment of the Base Loan Fee.
During the third twelve months of operation of the Site, for the first
765 transactions Finet shall receive the remaining revenue from Lead
Revenues and Funding Revenues, after the payment of the Base Loan Fee.
(iv) In the event there are less than 450 and 585 transactions
to permit Finet to receive the Distribution Preference in the first and
or second twelve month of operations of the Site, respectively, the
amount of the transaction short fall in each twelve month period shall
be carried forward to the next twelve month period on a cumulative
basis, up through and including the final (third) twelve month period
of operations of the Site.
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(v) Advertising Fees: NDS shall receive the first $500 of
"advertising revenues" that are paid by each customer/client for
advertising associated with the Site (Advertising Preference").
Advertising Preference revenue shall only be paid once for each
customer/client. Advertising Fees shall be distributed to NDS monthly.
c. After the payment of all Base Loan Fees, the Distribution
Preference and the Advertising Preference, all additional revenues shall be
retained by the Company for distribution in accordance with the terms of this
Agreement.
9. OBLIGATIONS OF THE MEMBERS.
x. XXXXX has the obligation of selling to third party lenders
sixty-six percent (66%) of qualified consumer loan leads, processed
through the iQualify web site and are not closed by Monument Mortgage,
Inc. ("MMI"). In addition, FINET has the obligation of funding through
MMI, sixty-six percent (66%) of the qualified consumer loan leads,
processed through the iQualify web site and which are submitted by the
consumer to MMI for closing.
b. NDS has the obligation of creating sufficient traffic on
the Site to generate qualified consumer loan leads at a rate of one
hundred and fifty percent (150%) of 450, 585 and 765 transactions in
the first, second and third twelve months, respectively.
c. During the initial thirty six months of operation of the
Site, in the event NDS fails to meet the obligation of bringing
sufficient traffic to the Site as outlined in subparagraph (b) of this
Article 9, and FINET has met the performance criteria in subparagraph
(a) of this Article 9, then in each twelve month period during the
initial thirty six months of operation of the Site, FINET will have the
right to withdraw from the Company a pro-rata amount of 100,000 NDS
shares of the stock contributed by NDS under Article 4. For example, in
the first twelve months of operation of the Site, if the Site provides
only 225 transactions (50% of the targeted transactions for the first
twelve months pursuant to subparagraph (b)), then FINET may remove
50,000 shares from the LLC (fifty percent (50%) of 100,000 shares). At
the end of the initial thirty six months of operation of the Site, if
the number shares of Stock issued to FINET under this Article 9 is less
than the total number of shares of the Stock contributed by NDS, the
Company shall issue and return to NDS all such remaining Stock not
issued to FINET during the initial thirty six months of operation of
the Site.
d. During the term of this Agreement, NDS agrees to provide a
mutually acceptable hyperlink on its CityNet web site to the Company
Site and FINET agrees to provide a mutually acceptable hyperlink on its
iQualify web site to the Company Site. As material consideration to
this Agreement, the Members agree not to offer advertising space on the
CityNet web site or the iQualify site to a competing business of either
Member. Notwithstanding the foregoing, the
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Members acknowledge that the iQualify web site is and shall remain a
"lender neutral" web site.
10. NDS STOCK.
x. XXXXX acknowledges that any NDS stock issued in accordance
with the provisions of this Agreement will be subject to the restrictions
imposed by the Securities and Exchange Commission pursuant to Rule 144, as
contained in the Securities Act of 1933, as amended and/or regulations
thereunder. No warranties or representations by NDS are made, nor shall be
implied herein that such restrictions will be removed except by compliance with
the applicable requirements of Rule 144, the Securities Act of 1933 and/or other
regulations.
x. XXXXX shall be entitled to "piggy-back" registration rights
on all registrations of the common stock of NDS. No shareholder of NDS shall be
granted piggy back registration rights superior to those of Finet.
11. MANAGEMENT AND DUTIES.
a. The conduct of the day-to-day operations and management of
the Company shall be by two (2) "Managers" who shall have equal rights in the
management and conduct of the Company. Each Member shall select one (1) Manager
who shall be competent in all respects to fulfill the duties of the Company
management. The Managers shall, on an annual basis or more often as the Members
may require, submit a business plan to the Members that shall encompass short
and long term budgeting, marketing, and product development ("Budget and
Business Plan"). The Members shall review and comment upon or approve the plan
within thirty (30) days from submittal.
b. During the initial thirty-six months of operation of the
Site, in the event the Members disagree with any aspect of any Budget and
Business Plan submitted by the Managers, Finet shall be empowered to resolve the
conflict as to the Budget and Business Plan. Thereafter, the Members shall
select a mutually agreeable third party with sufficient knowledge of the Company
and industry who will be considered as a third Manager for the sole purpose of
voting upon and resolving the conflict as to the Budget and Business Plan. Upon
a Budget and Business Plan being completed, the duties of the third Manager
shall be terminated.
c. Unless specifically authorized in the Budget and Business
Plan, no Member or Manager acting for or on behalf of the Company shall, without
the mutual consent of the other Members and Managers, execute any contract or
agreement, endorse any note, act as an accommodation party, become surety,
borrow or lend money; make or execute any mortgage, bond or lease; or purchase
or contract to purchase any real property or otherwise in any way obligate the
Company in any similar manner whatsoever.
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d. Unless specifically authorized in the Budget and Business
Plan, no Manager acting for or on behalf of the Company shall, without the
consent of the other Manager, employ any person; purchase any personal property,
or incur any liability or expend any money in excess of $1,000 cost. It is
intended by the parties that no decision other than the day-to-day operations or
management of the Company, shall be accomplished without the knowledge and
consent of both Managers.
e. No Member shall, without the written mutual consent of the
other Member, enter into any agreement as a result of which any person, firm or
organization shall obtain an equity or management interest in the Company.
Similarly, no Member shall do or perform any act that is materially detrimental
to the best interests of the Company or which materially interferes with or in
effect makes it impossible to carry on the ordinary business of the Company.
f. All Members and Managers shall institute reasonable
procedures so as to ensure that the identification "LLC" appears after the name
of the Company on all correspondence, stationary, checks, invoices and all
documents and papers executed by or on behalf of the Company. Further, each
Member and Manager, when transacting any business on behalf of the Company shall
identify themselves as either a "Member" or "Manager" of the Company.
g. The Members have the right to admit additional Members, on
terms and conditions acceptable to 100% of the current Members. The Members will
have final decision making authority of all actions of their mutually designated
and authorized Managers.
12. BOOKS AND RECORDS. The books and records of the Company required by
NRS ss.86.241 shall be maintained at the offices of FINET located at 0000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000, rather than the registered office of
the Company as identified in the Articles. All financial records shall be
maintained and reported based on generally acceptable accounting principles.
Each Member and Manager shall have full and complete access thereto. The
financial records of the Company shall be stored and maintained on the "Platinum
Software Program", which shall be regularly maintained by FINET and accessible
by Members, upon request.
13. CAPITAL ACCOUNT. A separate capital account shall be maintained for
each of the Members in accordance with the provisions of this Agreement. Each
Member's capital account shall consist of his original capital contribution
increased by (1) any additional contributions to capital, and (2) each Member's
share of company's profits; and decreased by (1) any distributions to such
Member in reduction of Company capital, and (2) each Member's share of Company
losses. No Member shall withdraw any part of his individual capital account
except as set forth herein or in the Articles of Organization, but should a
Member's capital account become impaired, that Member's share of subsequent
Company profits shall be first credited to his capital account until the account
is thereby restored before any profits are credited to his income account.
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14. INTEREST. No interest shall be paid on the initial contributions to
the capital of the Company or any subsequent contributions of capital.
15. INCOME ACCOUNT. A separate income account shall be maintained for
each Member. All Company profits shall be credited to the income accounts and
all losses, if any, shall be charged against the income accounts in the ratios
and amounts as otherwise provided herein. If a Member has no credit balance in
his income account, any losses sustained shall be charged against his capital
account.
16. INDEMNIFICATION BY COMPANY. Any indemnification under NRS 86.411
and 86.421, unless ordered by a court or advanced pursuant to NRS 86.441, may be
made by the Company only as mutually authorized by the Members in each specific
case and upon a determination that indemnification of the Manager, Member,
employee or agent is proper in the circumstances pursuant to NRS 86.431.
The determination must be made by the Members.
17. TERMINATION OF COMPANY. The parties agree to review the financial
status and success of the Company and the Site upon the third year anniversary
of operation of the Site as provided for in this Agreement, to determine if the
Company should be dissolved or continued. In the event either party desires to
dissolve, the Company shall be dissolved and liquidated according to the terms
herein; if the Members mutually decide to continue the Company, the Members
shall proceed with business according to the terms hereof or as may otherwise be
mutually agreed upon in writing.
18. LIQUIDATION. Upon termination and liquidation of the Company the
assets of the Company shall be used and distributed in the following order:
a. To pay for, or provide for the payment of, all Company
liabilities and liquidating expenses and obligations.
b. To return to NDS, on a first preference basis and
irrespective of the balance of either Member's capital or income accounts, any
and all of the remaining shares of stock not issued to FINET pursuant to Article
9 hereinabove.
c. To equalize the income accounts of the Members.
d. To discharge the balance of the income accounts of the
Members.
e. To equalize the balance of the capital accounts of the
Members.
f. To discharge the balance of the capital accounts of the
Members.
Nothing in this paragraph, however, shall preclude or prohibit a
different formula or method of liquidation from being used, if such method shall
be arrived at by the mutual consent of the Members. Similarly, nothing
hereinabove state shall preclude the
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sale of one Member's interest to the other Members at any time upon terms which
are mutually satisfactory and agreeable between the Members.
19. REPRESENTATIONS. Each Member hereby represents and warrants to the
other as of the date of this Agreement, the followings:
a. Corporate Status. The Member is a corporation duly
organized, validly existing, and in good standing under the laws of the state
of its incorporation.
b. Corporate Authority. The Member has full corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder, and this Agreement constitutes a valid and binding obligation and
performance hereunder will not violate any provision of the Member's Articles of
Incorporation, Bylaws, or other agreements or commitments.
c. Title to Rights. The Member has good and marketable title
or has the right under license to all properties and assets, real, personal, and
proprietary, being contributed by such Member hereunder; that all pertinent
patents, patent applications, copyrights, trade-marks and trade-names are valid
and in good standing; and, the use of such properties do not conflict in any way
with the trade-marks, trade-names, or other proprietary rights of any other
person or entity.
20. MEDIATION AND ARBITRATION. Initially all claims and controversies
of any kind relating to this Agreement shall be submitted to mediation pursuant
to the services of an established mediation service with the venue of the
mediation being San Francisco, California. In the event the matter cannot be
disposed of by mediation, all claims and controversies of any kind relating to
this Agreement shall be finally settled by binding arbitration before a panel of
three arbitrators in San Francisco, California, in accordance with the rules
then in effect from the American Arbitration Association. Each of the Members
shall select one arbitrator from a list provided by the American Arbitration
Association. The two arbitrators selected by the Members shall then select the
third arbitrator to complete the panel. All parties to this Agreement shall be
bound by the decisions in any such arbitration, and judgment upon such
arbitration may be entered by any court of proper jurisdiction. Attorney's fees
and costs shall be allocated by agreement in mediation or by the arbitrators in
arbitration.
21. MISCELLANEOUS.
a. Notice. Any notice required or permitted to be given by the
provisions of the Articles, this Operating Agreement or by law shall be
effective as of the date personally delivered, or if sent by mail, on the date
deposited with the United States Postal Service, prepaid and addressed to the
intended receiver at his last known address as shown in the records of the
Company.
b. Duality of Interest. Members of the Company have a duty of
undivided loyalty to the Company in all matters affecting the Company's
interests.
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c. Choice of Law. This Agreement shall be governed by and
construed under the laws of the State of Nevada.
d. Amendments. This Operating Agreement may be altered,
amended, restated, or repealed and a new Operating Agreement may be adopted by
unanimous consent of the Members.
e. Warranty/Indemnification. Each Member hereby warrants and
represents that it is the sole owner of the products and services being
contributed to the Company. Each Member agrees to indemnify, defend, and hold
harmless the Company and other Member for any and all damages, costs, and
attorney fees incurred arising out of any adverse claim or action commenced
regarding infringement of copyright, trademark, trade name, or other proprietary
interest pertaining to the Member's product or services.
THE UNDERSIGNED, being all the Members of HOMESEEKERS/iQUALIFY, LLC, a
Nevada Limited Liability Company, having set their hands on the date first above
written, hereby evidence their adoption and ratification of this Operating
Agreement.
MEMBERS
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NDS SOFTWARE, INC., FINET HOLDINGS CORPORATION,
a Nevada corporation, a Delaware corporation,
By: /s/ Xxxx Xxxxxxx By: /s/ L. Xxxxxx Xxxxxxx
-------------------------- -----------------------------
Xxxx Xxxxxxx, L. Xxxxxx Xxxxxxx
Chief Executive Officer Chief Executive Officer
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