UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

Plaintiff,

Civil Action No. 06-CV-0037

Dynamic Network Services, Inc.

Timothy Wilde

Defendant

FIRST AMENDED COMPLAINT

NOW COMES the Plaintiff, Dynamic Network Services, Inc. ("DynDNS" or the

Company ), by and through its attorneys, Sheehan Phinney Bass + Green, Professional

Association, and complains against the Defendant Timothy Wilde ("Wilde ) as follows:

INTRODUCTION

This is an action to enforce an agreement between the Plaintiff corporation and one of its

shareholders, Wilde, to repurchase Wilde s shares pursuant to the terms set forth in the

Corporation s offer, which was agreed upon by the Defendant and the full DynDNS Board of

Directors. Approximately 

repurchase, in the case ofDynDNS, and to sell, in the case of Wilde, the shares for a substantial

consideration, the Defendant simply reneged on the deal and told the Company that he required a

very substantially higher consideration. The PlaintiffDynDNS 

for breach of contract and seeks specific performance of the terms and conditions agreed upon by

the parties and approved by the Board of Directors, including Wilde.
PARTIES. JURISDICTION AND VENUE

The Plaintiff, DynDNS, is a Delaware corporation with its principal place of

business at 1 Sundial Avenue, Suite 301 , Manchester, New Hampshire 03103.

The Defendant Wilde is an individual residing at 1175 Lake Boulevard, No. 105

Davis, California 95616. In addition to owning 56% of the stock ofDynDNS, Wilde is a member

of its Board of Directors and is a contract consultant to the Corporation, pursuant to a Consulting

Agreement with the PlaintiffDynDNS dated August 31 2005. The Defendant 

personam jurisdiction of this Court, because he is the majority shareholder, a contractual

consultant pursuant to an agreement that calls for the application of New Hampshire law, and

because of his consistent and substantial daily contact with the Plaintiff Company s headquarters

and personnel in Manchester, New Hampshire.

The remaining shareholders of the PlaintiffDynDNS are: Jeremy Hitchcock

Hitchcock"), the owner of 22% of the outstanding shares of the 

and Chief Executive Officer and the Chief Financial Officer of the Company; and Thomas 

Daly ), the owner of 22% of the outstanding shares of the , and

the Company s President and Chief Technology Officer.

The Court has subject matter jurisdiction over the matter pursuant to 28 U.S.

133 2( a)( 1) because 

parties are completely diverse. The matter in controversy exceeds $75 000. 00 exclusive of

interest and costs because the stock repurchase agreement called for the payment of more than

200 000. 00 to Wilde.

Venue is proper in this Court under 28 U.S.C. 1391 because a substantial part of

the events and transactions giving rise to the claims below occurred in this judicial 

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ALLEGA TIONS COMMON TO ALL COUNTS

Back2round

DynDNS provides domain name system services to its clients, allowing its clients

to maintain a stable domain name system address, thereby making it easier for its clients to be

identified on the Internet.

Wilde founded what was to become DynDNS in 1998 while he was in high 

In the fall of 1999 Wilde matriculated to Worcester Polytechnic Institute ("WPI") where he

became friends with another WPI student, Christian T. Reinhardt, IV ("Reinhardt"). Wilde and

Reinhardt began to operate the Company as a de facto partnership.

Daly and Hitchcock matriculated to WPI in August of 2000 where Daly,

Hitchcock and Wilde met and became friends. Shortly after the three became friends, Wilde

Daly, and Hitchcock discussed DynDNS and Daly and Hitchcock began to help Wilde with the

Company.

That fall, in October of 200 1 , without using counsel, Wilde and Reinhardt formed

Dynamic DNS Network Services, LLC. Hitchcock prepared the paperwork for the 

formation and trade name reservation. Wilde and Reinhardt each owned 50% of the LLC.

10. The next spring, in March of 2002, Wilde negotiated a lease and the Company

moved into its first office. In April 2002, Wilde began working as a full-time salaried employee

for the Company. During the summer of2002 Reinhardt began time salaried

employee for the Company.

11. In October of 2002, Wilde and Daly discussed Daly s role in the Company and

Daly became a paid staff member. After a similar 

Hitchcock became a paid staff member in November 2002.

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The 2003 Reor2anization

12. In April of 2003 Wilde, Reinhardt, Hitchcock and Daly began to discuss

reorganizing the Company to include Hitchcock and Daly as shareholders.

13. In these negotiations, Wilde, Reinhardt, Hitchcock and Daly, agreed inter alia

that the Company would reorganize as an S-Corporation, that Hitchcock and Daly would become

minority shareholders, and that the Company would enter into employment contracts with each of

Wilde, Reinhardt, Hitchcock and Daly. Neither the Company s corporate counsel, nor attorneys

for any of the individuals were present for the negotiations.

14. After Wilde, Reinhardt, Hitchcock and Daly reached an agreement on the essential

terms of the reorganization plan, Hitchcock was asked to consult with the Company s corporate

counsel on how to implement the plan that the four had agreed upon.

15. After consulting with the Company s corporate counsel, Hitchcock discussed the

recommendations of the Company s corporate counsel with Wilde, Reinhardt, and Daly. After

this discussion, the parties agreed that the Company s corporate counsel would draft the

documents necessary to accomplish the reorganization plan.

16. On July 31 , 2003 Wilde, Reinhardt, Hitchcock and Daly signed the legal

documents implementing and memorializing the reorganization plan.

17. By the fall of 2003 Daly and Hitchcock were full-time employees. In the Spring of

2004 the Company relocated its offices to Manchester, New Hampshire. By May 2004 Wilde

Daly and Hitchcock had all moved to Manchester and were working as full-time salaried

employees for the Company.

18. In the summer of 2004 Wilde, Daly and Hitchcock agreed that they needed to

terminate Reinhardt's employment with the Company. 

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informing him that he had been terminated for cause and making a settlement offer that would

compensate him for his interest in the Company.

The 2005 Restructurin2

19. In the fall of 2004 Wilde began to travel to California for personal reasons. After

the turn of the year, in January of2005, Wilde began working two weeks a month from Davis

California. In February 2005, Wilde for the first time raised the issue of his departure from the

Company.

20. In March 2005, Wilde made it known that he was seeking employment at other

companies, announced to the Company that he was "working on his resume " and had one or

more interviews with prospective new employers. At the same time, Wilde, Daly, and Hitchcock

meet with the Company s corporate counsel to discuss a buyout of Wilde s interest. However, in

late March 2005 Wilde went on vacation and, upon his return, let it be known that he was not

then ready to be bought out.

21. In the late spring of 2005 Wilde indicated that he would be moving to California

full-time. After this announcement, during the early summer of2005, Wilde, Hitchcock and Daly

began to discuss restructuring Wilde s role in the Company.

22. After negotiating for a few weeks in July 2005 , Wilde, Hitchcock and Daly

reached an agreement on a restructuring plan. Here again, neither the Company s attorney nor

any personal attorneys for Wilde, Daly or Hitchcock were involved in negotiating the plan. The

restructuring plan agreed upon by Wilde, Daly, and Hitchcock provided that inter alia, Wilde

would become a consultant to the Company; the Company s By-Laws would be amended to

allow Wilde to retain his position on the Company s Board of Directors; and the Company

Shareholders Agreement would be amended so as to allow Wilde to continue to hold his stock.

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23. In late July 2005, Hitchcock communicated the agreed-upon terms of the

restructuring plan to the Company s corporate counsel. The Company s corporate counsel

drafted the legal documents necessary to memorialize and implement the agreed-upon

restructuring plan and returned them to Wilde, Hitchcock, and Daly.

24. On August 4 2005 Wilde, Hitchcock and Daly executed the documents

memorializing and implementing the restructuring plan.

25. On August 5 , 2005 Wilde left New Hampshire for California. In early September

2005 Wilde moved into his new location in California and, by the end of that month, again began

working full-time for the Company as a consultant pursuant to the Consulting Agreement.

The Ne2otiations and A2reement to Reourchase Wilde s Shares

26. After Wilde s departure in August, during the fall of2005, the relationship

between Wilde and Daly and Hitchcock became increasingly strained. In late October, Wilde

Daly and Hitchcock gathered telephonically for a series of meetings with the Company

corporate counsel, during which they discussed their relationship and the direction of the

Company. In these teleconferences Daly and Hitchcock raised the issue of buying out Wilde.

Wilde indicated that he was not ready to be bought out of the Company.

27. Notwithstanding the October teleconferences, relations between Wilde and Daly

and Hitchcock continued to deteriorate. Eventually Wilde, Daly and Hitchcock agreed that Wilde

would return to New Hampshire for face-to-face meetings between December 19 and 23 2005 so

that the three of them - the Executive Officers, Directors and Shareholders of the Company -

could discuss a number of issues relating to the operation 

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28. On Tuesday, December 20 2005 , in a heated exchange, Wilde, Daly and

Hitchcock discussed whether Wilde, on the one hand, or Daly and Hitchcock, on the other

should leave the Company.

29. The following day, Wednesday, December 21 2005 , Wilde, Daly and Hitchcock

met with an accounting consultant and the Company s corporate counsel to discuss the fact that

the Company, for a variety of reasons, needed to alter the nature of Wilde s consulting contract or

make him an employee.

30. After the accountant left the teleconference, the discussion again turned to a

buyout of Wilde s interest in the Company. At that point, Wilde set forth terms under which he

would accept a buyout offer for his interest in the Company. Among other things, Wilde

indicated that he wanted between $1 600 000. 00 and $1 800 000. 00 for his interest in the

Company, that he wished the sum to be paid over six or seven years, and that he wished to have a

clean break" with the Company.

31. After further discussions of the buyout, Wilde, Hitchcock and Daly agreed that

they would revisit the issues under discussion after the holidays.

32. In early January 2006, Wilde e-mailed the Board to discuss the next steps for the

Company given their December discussions concerning a potential purchase of Wilde s shares in

the Company.

33. After Wilde s e-mail to the Board, Hitchcock, the Company s Chief Executive

Officer and Chief Financial Officer, and Daly, the Company s President and Chief Technology

Officer, discussed amongst themselves the potential terms of a buyout plan whereby the Company

would purchase Wilde s interest in the Company and Wilde would transition out of the Company.

On the evening of January 12, Daly sent Wilde a proposed buyout plan, which included many of

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the terms that Wilde had previously proposed. Wilde insisted that the draft buyout plan state at

the beginning that it was an offer by the Company to him to purchase his interests in the

Company. The draft buyout plan, entitled "Intent to Purchase " was extensive and exhaustive.

Among other things, the plan: (1) contained an offer by the Company to buy Wilde s shares for

275 523. 38; (2) called for a closing date of February 1 , 2006; (3) provided a detailed recitation

of the documents and things that would be brought to the closing by Wilde, as seller, and the

Company, as purchaser; and (4) included the details of a "transition phase" after which Wilde

would completely sever his relationship with the Company.

34. Between approximately 2:00 and 3:00 P.M. the following afternoon, January 13

2005 , Wilde, Daly and Hitchcock discussed by teleconference the draft buyout plan that the

Company had proposed. , Wilde made counter-offers on a number of the

material elements of the buyout plan. At 

the counteroffer he was about to present was his "final offer" and that he did not wish to

negotiate regarding his demands. In his counter-offer, which focused almost solely on financial

matters, Wilde asked for a total buyout consideration of$1 500 000. 00 (an amount in excess of

the current the fair market value agreed to by Wilde in the Amended and Restated Stockholders

Agreement dated August 31 , 2005) and for certain concessions on tax issues. In addition, he

presented three options, two during the telephone conversation and one via email, by which the

Company could reach the total buyout number. As was the case with the 2003 reorganization

negotiations and the 2005 restructuring negotiations, neither the Company s corporate counsel

nor attorneys for Wilde, Hitchcock, or Daly were present during these negotiations. Hitchcock

and Daly informed Wilde that they would review the terms of his counter offer and contact him

when they made a decision.

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35. After discussing Wilde s counter offer amongst themselves, Hitchcock and Daly

initiated another teleconference with Wilde at around 4: M on the afternoon of January 13

2006. In this 

terms of his counteroffer, including the demand that the Company pay Wilde an up-front

$55 000. 00 in cash at the closing and the demand that the overall buyout consideration total

500 000. 00 from the Company.

36. After Daly and Hitchcock informed Wilde of the Company s agreement to, or

capitulation on, these points, Wilde, Daly, and Hitchcock went through the rest of terms of the

draft buyout plan line by line. At the conclusion 

these would be the final terms of the buyout plan and Daly stated that he would revise the

document they were working with so that it would fully represent all the changes to which the

Company, Daly, Wilde and Hitchcock had agreed.

37. After making these revisions Daly sent out the terms of the agreed upon buyout

plan to Wilde and Hitchcock via the Company s Board of Directors emaillist serve (i.

board~dyndns. com) for Board memorialization of the agreement. Shortly thereafter, Hitchcock

responded stating, "That looks good to me. If it' , I'll send this

off to Michael asking him to begin drafting the necessary documents to reflect this plan. " Shortly

after Hitchcock sent this email, Wilde responded with an email to the Board 

list-serv that stated "This (the agreed upon buyout plan that was attached to the 

up correctly to our discussions, as I see it, so I am happy with it being sent to Michael (the

Company s corporate counselJ for him to begin preparing documents. " Wilde accepted the

Company s offer and formed a binding agreement.

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38. The "plan" agreed-upon contained all of the essential and material elements of the

Stock Repurchase Agreement, including the following:

A description of the phases of the Agreement, in which (1) the parties

agree to work with counsel to draft the final documentation; (2) the Agreement is

closed; and (3) there is a "transition" of Wilde' s responsibilities 

another employee in the Company;

Each party s specific responsibilities at the Closing (e.

, 

What Tim Wilde

will provide at Closing" and "What the Company will provide at Closing

including the delivery of cash and certain subsidiary agreements concerning, inter

alia, Wilde s retention of a security interest in the repurchased stock, and noncompetition and non-disclosure covenants from Wilde for a period of four years

two years less than the period of pay-out under the terms of the Agreement;

A detailed description of the "responsibilities" to be "documented and

transferred" upon Wilde s departure from the Company; and

A complete payment schedule for "cash at closing" and ensuing monthly

payments to be made to Wilde in accordance with the Agreement commencing

February 1 , 2006 through and including April 1 , 2012, yielding a total cash

compensation of $1 500, 189. 00.

See Exhibit A, annexed hereto. The Company s proposal and the resulting Agreement was

expressly intended to and did meet Wilde s expressed "final offer" and was intended to be, and

was in fact, a binding Agreement between the Company and Wilde.

39. On January 13 , 2006, approximately one half hour after Wilde s acceptance of the

proposal with the changes demanded by him, and after the Board' s unanimous approval and

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ratification of the buyout plan to which Wilde, Daly, and Hitchcock had personally agreed

Hitchcock emailed the Company s corporate counsel asking him to "draft up the necessary

agreement(s) ... in line 

40. In fact, in the days immediately following his acceptance of the Company s offer to

purchase his shares, Wilde began to carry out the terms of the Agreement by, inter alia, creating a

compilation of his duties with the Company as its System Administrator in accordance with the

transition phase" of the Agreement, and so informed the Company s President and Chief

Executive Officer.

Wilde s Attempt to Repudiate the A2reement

41. On Friday, January 20 2006 the Company s corporate counsel sent the documents

that would implement and memorialize the agreed upon and ratified buyout plan to Wilde, Daly

and Hitchcock.

42. On Sunday, January 22 2006 the Company s corporate counsel received a letter

from Attorney John Marlow informing him that Attorney Marlow represented Wilde and that

upon further review" Wilde had decided to "reject" the Agreement. In addition, the letter stated

that Wilde would continue to act as a consultant to the Company under the terms of his August

2005 consulting agreement.

43. On Tuesday, January 24 2006 Daly and Hitchcock had a conversation with Wilde

regarding Wilde s attempt to renege on the agreed-upon and ratified buyout agreement. Wilde

informed Daly and Hitchcock that if the Company still wished to buyout his interest in the

Company, that the Company would need to pay Wilde $5 000 000. , all of which would need to

be paid at closing.

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The Plaintiff is Readv. Willin2 and Able to Implement A2reement. and Has

Informed Wilde That It is Prepared to Do 

44. The Company is ready, willing and able to carry out the agreed 

Wilde s shares, pay him the agreed up front cash, deliver and execute the ancillary documents

required by the agreement, and begin paying Wilde the installment payments in accordance with

the agreement.

45. The Company has informed Wilde by letter dated January 31 , 2006 that it is

prepared to carry out the terms of the agreement and expects Wilde to do so as 

COUNT I

BREACH OF CONTRACT/ANTICIPATORY BREACH

46. The allegations contained in Paragraphs 

and incorporated by reference.

47. The Plaintiff Company, acting through its officers and with the agreement and

knowledge of all of its shareholders and a unanimous Board of Directors, and the Defendant had

and have a valid and enforceable Agreement under which the Company will purchase Wilde

shares in the Company and, in exchange, Wilde will deliver his shares to the Company and make

certain other undertakings. Specifically, the Plaintiff and the 

for his shares, the Defendant Wilde will be paid over a six-year period a total cash compensation

of$1 500 189. , in addition to other non-cash compensation.

48. The shares of stock in the Company to be delivered to the Company in accordance

with the Agreement are unique property that cannot be fully replicated or compensated by money

damages.

49. The Plaintiff Company is ready, willing and able to carry out the terms of the

Agreement as intended by the parties, and is in compliance with any and all conditions to its

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performance of the Agreement. Legal remedies, if any, are insufficient to place the Plaintiff in the

same position it would be in if the Defendant Wilde had not repudiated and breached the

Agreement.

50. Wilde materially breached his agreement by expressly repudiating the Agreement

and failing and/or refusing to carry out his obligations to, among other things, undertake the

duties and obligations set forth in the Agreement and deliver the shares in accordance with the

Agreement reached by the parties, and by demanding additional compensation therefore.

51. The Plaintiff has been harmed by the Defendant Wilde s repudiation and breach of

the Agreement, which harm can only be remedied and compensated by an order directing the

Defendant to specifically perform the terms and conditions agreed upon by the parties.

52. In the alternative, the Plaintiff is entitled to all of its damages.

COUNT 

PROMISSORY ESTOPPEL

53. The allegations contained in Paragraphs 

and incorporated by reference.

54. In the alternative, the Defendant made an express and specific promise to sell his

shares in the Company for a valuable consideration, which was intended to induce action on the

part of the Plaintiff Company.

55. The Company and its other shareholders relied upon the Defendant Wilde

promise to their detriment and/or to the benefit of the Defendant Wilde, as promisor, and acted in

furtherance of the promise or promises made by the Defendant.

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56. The promise or promises made by the Defendant Wilde are binding and

enforceable and injustice can only be avoided by the enforcement of the express and specific

promises made by the Defendant.

RELIEF REQUESTED

WHEREFORE, DynDNS respectfully requests that this Honorable Court:

Grant it an Order enforcing the Agreement and directing Wilde to specifically

perform the duties and actions called for in the Agreement;

In the alternative, grant it an Order enforcing the agreement to the extent of

directing the parties to negotiate and conclude a formal agreement within the scope of, and

consistent with, the preliminary agreement and plan agreed upon by the parties on January 13

2006;

Grant it an Order enforcing the promise or promises made by the Defendant and

relied upon to its detriment by the Company, as justice requires; and

Grant the Plaintiff such other and further relief as the Court deems just and

equitable.

Respectfully submitted

Dynamic Network Systems, Inc.

By Its Attorneys

SHEEHAN PHINNEY BASS + GREEN,

PROFESSIONAL ASSOCIATION

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Dated: March 15 , 2006 By: /s/ Christopher Cole

Christopher Cole, NH Bar No. 8725

John-Mark Turner, NH Bar No. 15610

1000 Elm Street

O. Box 3701

Manchester, New Hampshire 03105-3701

(603) 627-8223

ccole~sheehan. com

jturner~sheehan. com

CERTIFICA TE OF SERVICE

I HEREBY CERTIFY that a copy of the within First Amended Complaint was 

mailed conventionally by US. 

address of Timothy Wilde, 1175 Lake Boulevard, No. 105, Davis, CA 95616.

Dated: March 15 , 2006 By: /s/ Christopher Cole

Christopher Cole, NH Bar No. 8725

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