Subject: LLC/C corp merger Date: Tue, 06 Jun 2000 22:28:36 -0400 From: Roman Markowski To: managers@webwisdom.com According to current Operating Agreement + memos 1. Economic Interest Marek 21.00% Roman 14.00% GCF 7.00% Remek 3.50% Bart 3.50% Luk 3.50% Paul 3.50% Konrad 3.50% Greg 3.50% Tom 3.50% Stach 1.16(6)% -------------------- Total 67.(6)% 2. Section 9.4 of OA states: Admission of Additional Members. One (1) or more additional Members of the Company may be admitted to the Company upon the unanimous consent of the then current General Managers. Upon the admission of such new Member, the Economic Interests of the Members shall be recalculated by the General Managers acting in good faith. So we voted admitted unanimous Kim 7.00% memo signed and stored in our files Chuck 6.00% memo ready for signature 3. Section 7.1f states: (f) Removal of General Managers. A General Manager may resign as such upon 60 days written notice to the other General Managers, after which time the remaining General Managers may elect a new General Manager to fill the vacancy. So we elected Kim as a General Manager. Later we agreed to double Kims Economic Interest to 14 % 4. Other members were not informed about Chuck joining the LLC Kim's increase of Economic Interest 5. We will register C corp and issue the following amout of shares of the common stock 1) Let's assume that 1% in LLC = 10,000 shares = $10.00 210,000 shares (Marek) for $210 140,000 shares (Roman) for $140 140,000 shares (Kim) for $140 70,000 shares (GCF) for $70 60,000 shares (Chuck) for $60 35,000 shares (juniors) for $35 x 7 11,667 shares (Tom S) for $11.67 ------------------------------------------ Total 876,667 shares for $876.67 2) Economic Interest defines member's right to share profit's and losses, so it should be normalized to 100% by multiplying current percentage by 1.4778325 (for example it had to be done for tax purposes): Marek 21.00% -> 31.0345% Roman 14.00% -> 20.6897% GCF 7.00% -> 10.3448% Remek 3.50% -> 4.1724% Bart 3.50% -> 4.1724% Luk 3.50% -> 4.1724% Paul 3.50% -> 4.1724% Konrad 3.50% -> 4.1724% Greg 3.50% -> 4.1724% Tom 3.50% -> 4.1724% Stach 1.16(6)% -> 1.7241% -------------------- Total 67.(6)% -> 100.00% Now we can decide that 1.4778325% in LLC = 10,000 shares = $10.00 This gives the same: 210,000 shares (Marek) for $210 140,000 shares (Roman) for $140 70,000 shares (GCF) for $70 60,000 shares (Chuck) for $60 35,000 shares (juniors) for $35 x 7 11,667 shares (Tom S) for $11.67 and 140,000 shares (Kim) for $140 60,000 shares (Chuck) for $60 ------------------------------------------ Total 876,667 shares for $876.67 3) there is no treasury stock in LLC, we had unassigned economic interest to avoid immediate dilution. In C Corp we will sell initially 876,667 shares of common stock. Correct me if I am wrong: - shares soled by a corporation are called issued or outstanding - shares authorized but not yet issued are called unissued shares - outstanding shares reacquired by corporation are called treasury shares (they are essentially the same as unissued capital stock). Treasury shares have no voting rights nor participate in distribution of dividends - common stock shareholders are the owners of shares who bear the risk of loss and enjoy benefits of any profits in the form of dividend payment . Common shares vote for directors and have right to receive corporate assets in case of liquidation after all creditors have been paid. This common stock is for owners and employees - preferred shares has preferential rights as to dividends payments and in case of corporation liquidation. Preferred shares have certain rights and privileges but must sacrifice other rights (for example the right to vote for directors). This is for certain investors. So preferred stock shareholders have priority for dividend payouts, higher or guaranteed dividends but have no right to vote. 6. We have to call a meeting to vote for merger WebWisdom.com,LLC and WebWisdom.com,Inc. In a "merger" the acquired company (LLC) ceases to exist and the acquiring corporation survives. (In a "consolidation", both companies disappear and a new corporation is created) 7. According to Section 7.2 of OA: Member Voting. (a) A meeting of the Members may be called at any time by the General Managers or by Members holding a majority in interest of the Membership Interests. Meetings of Members shall be held at the Company's principal place of business or such other place as the Members may agree. Not less than 10 nor more than 60 days before each meeting, the person calling the meeting shall give written notice of the meeting to each Member entitled to vote at the meeting. The notice shall state the place, date, hour and purpose of the meeting. Notwithstanding the foregoing provisions, each Member who is entitled to notice will be deemed to have waived notice if before or after the meeting the Member signs a waiver of the notice which is filed with the records of Member's meetings, or is present at the meeting in person or by proxy without objecting to the lack of notice. Unless this Agreement provides otherwise, at a meeting of Members, the presence in person or by proxy of Members owning not less than a majority (over 50%) of the Membership Interests then held by Members constitutes a quorum. A Member may vote either in person or by written proxy signed by the Member or by the Member's duly authorized attorney-in-fact. (b) Except as otherwise provided in this Agreement or by law, the affirmative vote of Members holding a majority (over 50%) or more of the Membership Interests then held by Members shall be required to approve any matter coming before the Members. In all matters submitted to the Members for a vote, each Member shall vote in proportion to such Member's Membership Interest. (c) In lieu of holding a meeting, the Members may vote or otherwise take action by a written instrument indicating the consent of Members holding such Membership Interests then held by Members as would be required for Members to take action at a meeting under this Agreement. If such consent is not unanimous, prompt notice shall be given to those Members who have not consented in writing but who would have been entitled to vote thereon had such action been taken at a meeting. (d) Each of the Members agrees that if any actions have been properly authorized or consented to in accordance with the requirements of this Article 7, each of the Members will thereafter cooperate in the implementation of the decision or action so authorized and will execute any and all instruments and documents necessary to carry out such decisions or action, and in the event that any Member fails to do so, such Member hereby designates the General Managers as agent and attorney-in-fact to execute any and all instruments and documents necessary to carry out any of the agreements, decisions or action as hereinabove indicated. This appointment is intended to be a power coupled with an interest and shall be irrevocable. and Section 11.1 Notices. All notices, statements, requests, and demands given to or made upon any party hereto in accordance with the provisions of this Agreement shall be in writing and shall be deemed to have been given or made when delivered by hand or by facsimile (with the hard copy sent by registered or certified mail, return receipt requested, or by Federal Express or similar overnight courier), or when deposited in the mail, postage prepaid, registered or certified mail, return receipt requested, or when sent by Federal Express or similar overnight courier, in each case at the address first set forth above or at such other address as any party may from time to time furnish to the other parties by a notice given in accordance with the provisions of this Section 11.1. / Dr. Roman Markowski, COO WebWisdom.com roman@webwisdom.com \ | voice 315-443-3921 fax 315-443-1973 mobile 315-373-6346 | \ 111 College Place, Syracuse, NY 13244 office 3-187 /