AGREEMENT
AGREEMENT (the "Agreement"), dated as of January 22, 1997, by and among
International Post Limited, a Delaware corporation ("IPL"), Xxxxx Xxxxxx ("SW"),
Xxxxxxx Xxxxxxx ("MR"), Cognitive Communications, Inc., a Connecticut
corporation (the "Seller"), and Xxxxx Xxxxxx ("DL").
WHEREAS, concurrently herewith Cognitive Communications, LLC, a
Delaware limited liability company and a majority-owned indirect subsidiary of
IPL (the "Purchaser"), SW, MR and the Seller are entering into an Asset Purchase
Agreement (the "Purchase Agreement") pursuant to which the Purchaser is
acquiring from the Seller all rights, title and interests of the Seller in and
to certain assets as set forth therein;
WHEREAS, as of the date hereof, the Purchaser is entering into
employment agreements (individually, an "Employment Agreement" and collectively,
the "Employment Agreements") with each of SW, MR and DL (collectively, the
"Employees"); and
WHEREAS, in connection with the transactions contemplated by the
Purchase Agreement and the Employment Agreements, the Seller, SW, MR and DL have
requested that IPL enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agrees as follows:
1. Guarantee.
(a) IPL hereby fully and unconditionally guarantees the due
and punctual payment of all of the Purchaser's payment obligations under Section
2.1 of the Purchase Agreement and, subject to the next sentence, under Section
6.3 of each Employment Agreement when, and to the extent that, any of the same
shall become due and payable (including amounts which would be paid but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. 362(a) or any other provision of bankruptcy law) (collectively, the
"Guaranteed Obligations"). IPL's guarantee of the Purchaser's payment
obligations under Section 6.3 of the Employment Agreements shall only apply in
the event of the termination of the employment of at least two (2) Employees
pursuant to Section 6.3 of such Employee's Employment Agreement.
(b) IPL hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity or enforceability of any Guaranteed Obligation, the absence of any
action to enforce the same, any waiver or consent by the Seller, SW or MR with
respect to any provision of the Purchase Agreement or the Employment Agreements,
or any other circumstance which might otherwise constitute a legal or
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equitable discharge or defense of a guarantor. IPL hereby waives any right to
require a proceeding first against the Purchaser.
(c) IPL hereby acknowledges and agrees that the foregoing
guarantee constitutes a guarantee of payment by the Purchaser of the Guaranteed
Obligations when due under Section 2.1 of the Purchase Agreement or Section 6.3
of the Employment Agreements, as the case may be, and not of collection only.
(d) If a claim is ever made upon the Seller and/or SW, MR or
DL for repayment or recovery of any amount or amounts received in payment or on
account of any of the Guaranteed Obligations and they repay all or part of said
amount by reason of any judgment, decree or order of any court or administrative
body having jurisdiction over them or any of their respective properties, IPL
shall be and remain liable to the Seller, SW, MR and DL hereunder for the amount
so repaid or recovered to the same extent as if such amount had never originally
been received by them.
(e) IPL hereby waives absolutely and irrevocably any claim
which it may have against the Purchaser by reason of any payment to the Seller,
SW, MR or DL or to any other Person pursuant to or in respect of the foregoing
guarantee whether by subrogation or otherwise.
2. Asset Contribution. Simultaneously with the closing of the
transactions contemplated by the Purchase Agreement, IPL shall, and shall cause
its subsidiaries and affiliates to, assign, convey, transfer and deliver to the
Purchaser all of their respective rights, title and interest in and to all of
the properties and assets of Blue Highway, one of IPL's divisions, and each such
party shall deliver such instruments and documents as may be necessary or
reasonably desirable to evidence the assignment, conveyance and transfer of such
rights, title and interest.
3. Capital Contributions. Moreover, from January 1997 through July
2000, IPL agrees to, or cause its subsidiaries or affiliates to, fund the (i)
capital expenditures of the Purchaser (pursuant to operating leases or
otherwise) in the amounts set forth on Schedule 1 annexed hereto (at such times
during the applicable fiscal year noted on Schedule 1 as required in the
reasonable judgment of the executive officers of the Purchaser), and (ii)
operating expenses of the Purchaser in the amounts and at the times set forth on
Schedule 2 annexed hereto provided that, in each case, such funding is dependent
upon the Purchaser attaining at least 90% of the applicable projected "Operating
Income" reflected on Schedule 2. In the event the Operating Income of the
Purchaser for any month exceeds any such projected amount set forth on Schedule
2, then the related funding of operating expenses required by IPL pursuant to
the preceding sentence shall be increased if reasonably required for the conduct
of the Purchaser's business to an amount equal to the product of (i) such
required funding multiplied by a (ii) fraction, the numerator of which is the
realized Operating Income and the denominator of which is the projected
Operating Incomes set forth on Schedule 2. Up to $1,026,000 of such required
funding shall be treated as a capital contribution to the Purchaser, and any
excess shall be treated as an
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advance of funds payable upon substantially the same terms and subject to
substantially the same conditions as other advances made by IPL to its other
subsidiaries.
4. Managers. IPL agrees to vote, or cause to be voted, all ownership
interests in the Purchaser it or any of its subsidiaries or affiliates may own
in favor of the election of SW and MR as the Purchaser's Managers in accordance
with the provisions of Section 6.1 of the Purchase Agreement.
5. Non-Competition. From the date of the closing of the transactions
contemplated by the Purchase Agreement and as long as either SW or MR is
employed by the Purchaser under the terms of his/her Employment Agreement, IPL
agrees that neither it nor any of its subsidiaries, affiliates or divisions
(other than the Purchaser) shall, directly or indirectly, provide strategic
consultation in the area of communications and other content strategy for, or
research related to the implementation of, or the design and production of,
intranets, extranets or internets and further agrees that neither it nor any of
its subsidiaries, affiliates or divisions (other than the Purchaser) will enter
into any joint venture, partnership or other agreement with any entity that
competes with the Purchaser for the purpose of marketing such (or another)
entity as providing such strategic consultation to unrelated third parties;
provided, however, that nothing herein shall interfere with or otherwise
restrict the ability of IPL or its subsidiaries, affiliates and divisions to
provide post-production, editing or other design or production services to
customers that directly or indirectly approach it for a specific intranet,
extranet or internet project.
6. Successors and Assigns. This Agreement shall be binding upon IPL and
its successors and assigns (including purchasers of all or substantially all of
its assets and purchasers of all of the ownership interests of the Purchaser
owned by IPL or its subsidiaries or affiliates) and shall inure to the benefit
of the respective permitted successors and assigns of the Seller, SW, MR and DL.
7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
sent by facsimile transmission, overnight delivery service or certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed or sent by facsimile
transmission, or by overnight delivery service, one (1) day after the date of
deposit to such overnight delivery service of, if mailed, three (3) days after
the date of deposit in the United States mail, to:
If to IPL: International Post Limited
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Attention: President
Fax No.: (000) 000-0000
With a Copy to: Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to the
Seller, SW, MR or DL: Cognitive Communications, Inc.
0 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxx 00000
Fax No.:
With a Copy to: Xxxxxxx, Xxxxxxxx & Kotel
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the day and year first above written.
INTERNATIONAL POST LIMITED
By: ----------------------------
Xxxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
----------------------------
Xxxxx Xxxxxx
----------------------------
Xxxxxxx Xxxxxxx
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COGNITIVE COMMUNICATIONS, INC.
By: --------------------------
Name:
Title:
---------------------------
Xxxxx Xxxxxx
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SCHEDULE 1
COGNITIVE COMMUNICATIONS, LLC
CAPITAL EXPENDITURES
Fiscal 1997 (eight months) and 1998:
Office furniture $271,600
Personal computers 154,000
Software 25,000
Telephone system 100,000
Web site 20,000
--------
$570,600
========
Fiscal 1999 - Various office furniture, personal computers and software:
$300,000
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Fiscal 2000 - Various office furniture, personal computers and software:
$300,000
========
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