AGREEMENT
AGREEMENT, dated as of May 13, 1998 (this "Agreement"), by and between
Pivot Rules, Inc., a New York corporation ("Pivot Rules") and Xxxxxxx Patricof
Enterprises, a New York corporation ("KPE").
R E C I T A L S:
WHEREAS, KPE is in the business of constructing websites; and
WHEREAS, Pivot Rules desires to engage KPE to construct a commerce
enabled, online retail site for Pivot Rules, and KPE desires to provide such
services upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Services. KPE is hereby engaged to construct a commerce enabled,
online retail site (the "Site") for Pivot Rules in accordance with the
description, requisite functionality and timeline described on Schedule A
attached hereto. Pivot Rules shall furnish to KPE a letter of confirmation at
such time as Pivot Rules determines in its reasonable discretion that the Site
has been completed and performs with the functionality set forth on Schedule A
(the "Letter of Completion"). All services under the Agreement shall be
performed by KPE, and KPE shall not engage any other person to perform such
activities without the prior consent of Pivot Rules.
2. Timing. It is acknowledged that KPE has already commenced the
preparatory work for this engagement. KPE shall use its best efforts to
complete the Site by August 3, 1998.
3. Compensation. In consideration of the services to be rendered by
KPE hereunder, Pivot Rules shall pay to KPE the sum of $100,000 in cash and
$71,150 in consideration payable in the form of common stock, $.01 par value
("Common Stock") of Pivot Rules, valued at the last reported sales price of the
Common Stock as reported on The Nasdaq SmallCap Market on May 12, 1998. The
cash consideration shall be payable as follows: (i) $50,000 shall be payable
simultaneously with the execution of this Agreement, (ii) $42,787.50 shall be
payable on June 1, 1998 and (iii) $7,212.50 shall be payable on July 1, 1998.
The Common Stock consideration shall be delivered to KPE on the date hereof,
but half of such shares of Common Stock shall not vest until July 1, 1998 and
the remaining half of such shares of Common Stock shall not vest until the
Letter of Completion is delivered, all of which shall be forfeitable on the
terms of Section 8 hereof. Prior to vesting, KPE shall have no right to dispose
of the Common Stock and shall be voted in the same way as a majority of the
shares of Common Stock are voted on any matter put to a vote of the
shareholders of Pivot Rules.
4. Representations, Warranties and Covenants.
(a) KPE represents, warrants and covenants as follows:
(i) KPE has all necessary corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of KPE. This Agreement has been
duly executed and delivered by KPE and constitutes the legal, valid and binding
obligation of KPE, enforceable against KPE in accordance with its terms, except
as may be limited by bankruptcy, reorganization, moratorium, fraudulent
conveyance and insolvency laws and by other laws affecting the rights of
creditors generally and except as may be limited by the availability of
equitable remedies.
(ii) No consent, approval, order or authorization of any
third party (including any federal, state or local governmental authority) is
required by or with respect to KPE to validly execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
(iii) KPE is an accredited investor as defined in
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act") and it is acquiring the Common Stock for its own account for investment
and not with a view to the distribution thereof or with any present intention
of distribution or selling any of the Common Stock except in compliance with
the Securities Act. KPE understands and agrees that the Common Stock has not
been registered under the Securities Act and the Common Stock may be sold only
if registered pursuant to the provisions thereunder or if an exemption from
registration is available. The Common Stock issued pursuant to this Agreement
shall be stamped or otherwise imprinted with a legend to such effect.
(iv) KPE agrees to work with Pivot Rules in identifying
and seeking to ensure Year 2000 compliance of the Site.
(b) Pivot Rules represents and warrants as follows:
(i) Pivot Rules has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Pivot Rules. This
Agreement has been duly executed and delivered by Pivot Rules and constitutes
the legal, valid and binding obligation of Pivot Rules, enforceable against
Pivot Rules in accordance with its terms, except as may be limited by
bankruptcy, reorganization,
2
moratorium, fraudulent conveyance and insolvency laws and by other laws
affecting the rights of creditors generally and except as may be limited by the
availability of equitable remedies.
(ii) No consent, approval, order or authorization of any
third party (including any federal, state or local governmental authority) is
required by or with respect to Pivot Rules to validly execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
5. Registration. Pivot Rules will use its best efforts to register, at
its own expense (except for underwriting discounts or brokerage commissions and
fees of counsel to KPE, if any), the shares of Common Stock issuable to KPE
hereunder with the Securities and Exchange Commission as soon as practicable
following the vesting of the Common Stock as provided in Section 3 hereof.
Until the date of delivery of the Letter of Completion, KPE will not sell,
transfer, assign or otherwise dispose of any of its shares of Common Stock and
thereafter will not sell, transfer, assign or otherwise dispose of more than
10,000 shares of Common Stock in any calendar month without the prior written
consent of Pivot Rules unless at the time of such sale, transfer, assignment or
disposition the market price of such shares of Common Stock is less than $1.00
per share.
6. Maintenance; Future Development. Any maintenance to be performed
with regard to the Site after the delivery of the Letter of Completion shall be
at the sole responsibility and cost of Pivot Rules. KPE and Pivot Rules agree
that KPE's compensation for any subsequent development of the Site shall be
equally split between cash and shares of Common Stock.
7. Indemnification. Pivot Rules hereby agrees to indemnify and hold
harmless KPE and its officers, directors, shareholders, attorneys, agents and
successors and assigns from and against any and all damages, costs and expenses
(including legal fees) resulting from the use of the Site by Pivot Rules,
unless caused by the gross negligence or willful misconduct of KPE or the
breach by KPE of the intellectual property rights of any third party. KPE
hereby agrees to indemnify and hold harmless Pivot Rules and its officers,
directors, shareholders, attorneys, agents and successors and assigns from and
against any and all damages, costs and expenses (including legal fees)
resulting from (x) the gross negligence or willful misconduct of KPE in the
performance of its services hereunder or (y) the breach by KPE of the
intellectual property rights of any third party.
8. Termination. In the event that Pivot Rules elects to terminate this
Agreement for any reason on or prior to May 31, 1998, Pivot Rules shall not be
obligated to make any further payments to KPE, and the shares of Common Stock
issued to KPE hereunder shall immediately be forfeited by KPE and returned to
Pivot Rules. In the event of any such termination, KPE shall be entitled to
retain the $50,000 paid by Pivot Rules to KPE in accordance with Section 3 upon
the execution of this Agreement. In the event of termination of this Agreement
on or prior to such date, this Agreement shall forthwith become void and there
shall be no liability on the part of any party hereto. Neither party may
terminate this Agreement after May 31, 1998, except on the basis of a material
breach of this Agreement, which shall require notice and 10 business days to
cure.
3
9. Further Assurances. Each party hereto shall perform such further
acts and execute such further documents as may be required to carry out the
provisions of this Agreement.
10. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives and successors. This Agreement shall not be assignable by KPE.
11. Relationship. In performing the services provided for hereunder,
KPE is acting as an independent contractor, and KPE shall not be deemed by
virtue of this Agreement to be the servant, agent or employee of the Company
for any purpose whatsoever.
12. Entire Agreement; Termination of Prior Agreements. This Agreement
contains the entire agreement between the parties hereto with respect to the
matters contemplated herein and supersedes all prior agreements or
understandings between the parties related to such matters.
13. Headings. The headings contained in this Agreement are intended
solely for convenience of reference and shall not affect in any way the meaning
or interpretation of this Agreement.
14. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy, telex or similar
writing) and shall be deemed given or made as of the date delivered, if
delivered personally or by telecopy (provided that delivery by telecopy shall
be followed by delivery of an additional copy personally, by mail or overnight
courier), one day after being delivered by overnight courier or three days
after being mailed by registered or certified mail (postage prepaid, return
receipt requested), to the parties at the following addresses:
if to Pivot Rules:
Pivot Rules, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
with a copy to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
4
if to KPE:
Xxxxxxx Patricof Enterprises
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Fax: 000-000-0000
or such other address or telex or telecopy number as such party may hereafter
specify for the purpose by notice to the other party hereto.
15. Severability. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
16. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall
constitute a single agreement.
17. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of New York without regard to
principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
PIVOT RULES, INC.
By: /s/ E. Xxxxxxx Xxxxx
--------------------
Name: E. Xxxxxxx Xxxxx
Title: President
XXXXXXX PATRICOF ENTERPRISES
By: /s/ Xxxx Xxxxxxxx
--------------------
Name: Xxxx Xxxxxxxx
Title: President
5
