EXHIBIT 10.31
ASSET PURCHASE AGREEMENT
April 30, 1997
The parties to this agreement are Network Event Theater, Inc., a
Delaware corporation ("NET"); Pik:Nik Media, LLC, a Delaware limited liability
company and a wholly-owned subsidiary of NET ("Newco"); Pik:Nik, LLC, a
California limited liability company (the "Company"); and Xxxxx Xxxxxxxxx,
Xxxxxx Xxxxxxxx-Sell and Xxxxx Xxxxx (together, the "Members"), who own all of
the membership interests in the Company.
The Company is engaged in the business of producing, marketing
and distributing postcards containing advertisements (the "Business"). The
parties have agreed upon the sale by the Company to Newco of substantially all
of the assets and business of the Company, on the terms set forth in this
agreement.
It is agreed as follows:
1. Sale and Transfer of Assets.
1.1 Assets Being Sold. The Company hereby sells, assigns and
transfers to Newco, and Newco purchases and acquires from the Company, all of
the assets and business of the Company (but excluding the assets referred to in
section 1.2), including, but not limited to, the following:
(a) all rights under agreements, commitments and orders, to
the extent that they remain unperformed or unfulfilled on, or by their terms
continue after, the date of this agreement, including, but not limited to, all
agreements, commitments and orders with advertisers, customers, printers,
photographers, manufacturers, distributors, subcontractors, lessors, employees,
sales representatives and suppliers;
(b) all tangible assets, wherever located, including
fixtures and related equipment; distribution racks; inventory and work in
process; photographs, film, advertisements, art work, promotional materials and
archives; equipment (including office and computer equipment) and furniture; and
office supplies, stationery, forms and labels;
(c) all computer software and all rights in the trademarks,
trade names and logos (including registrations and applications for registration
of any of them), together with the good will of the business associated with
those trademarks, trade names and logos; all rights in copyrights (including
registrations and applications for registration of any copyrights); and all
other intangible property and proprietary rights, including, but not limited to,
the Company's rights to use the advertisements on its postcards and the rights
to prepare, reproduce and distribute copies, compilations and derivative works;
(d) all records, files, mailing lists, advertiser lists,
customer lists, accounting information and other information and data relating
to the Business;
(e) all claims against third parties, including claims under
manufacturers and vendors warranties;
(f) all rights to the post office boxes, telephone numbers
and facsimile numbers used in the Business; and
(g) all cash, investments, accounts receivable, notes
receivable, certificates of deposit, deposits, commercial paper, treasury bills
and notes, money market accounts and other marketable securities, prepaid
expenses and other current assets.
The assets being sold to Newco pursuant to this agreement are
collectively referred to below as the "Assets."
1.2 Excluded Assets. The following assets are being retained
by the Company and are not being sold, assigned or transferred to Newco:
(a) all rights under any agreement, commitment or order
as to which consent to assignment is required but has not been obtained; and (b)
the assets listed on schedule 1.2.
2. Amount and Payment of Purchase Price.
2.1 Purchase Price. As full consideration for the Assets,
the Company shall have the right to receive the amount of cash and number of
shares of NET common stock provided for in section 2.2 (the "Base Amount") plus
an additional amount, if any, determined and payable as provided in section 2.3,
and Newco shall assume the liabilities provided for in sections 2.4 and 2.5. The
Company directs Newco and NET to make any payments or stock issuances the
Company is entitled to receive directly to the Members in accordance with
section 2.8(c).
2.2 Payment of Base Amount. The Base Amount shall be paid as
follows:
(a) Upon the execution of this agreement (i) Newco
shall pay to Xxxxx X. Xxxxxxx ("Xxxxxxx"), on behalf of the Company, cash in the
aggregate amount of $20,000, (ii) NET shall issue to Jan-Xxxxx Xxxxx, Inc.
("JPF"), on behalf of the Company, 7,059 shares of its common stock, (iii) Newco
shall pay to the Members, by wire transfer of federal reserve funds, cash in the
aggregate amount of $68,750 (i.e., 93,750 less 50% of the $50,000 in cash and
stock paid to Xxxxxxx and JPF), and (iv) NET shall issue to the Members an
aggregate of 22,059 shares of its common stock.
(b) Promptly after determination pursuant to section
2.6 of Newco's EBIT (as defined in section 2.8) for the fiscal year ended June
30, 1998 (the "1998 EBIT"),
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Newco shall make cash payments to the Members and NET shall issue to the Members
shares of its common stock (subject to reduction as provided in section 2.4), as
follows:
(i) If the 1998 EBIT, as adjusted in accordance with
schedule 2.2(b) (the "Adjusted 1998 EBIT"), is equal to or greater than
$200,000, or if the 1998 EBIT is equal to or greater than 50% of $2,448,407 (the
"Projected 1998 EBIT"), Newco shall pay to the Members cash in the aggregate
amount of $93,750 and NET shall issue to the Members an aggregate number of
shares of its common stock equal to the number determined by dividing $93,750 by
the Market Price (as defined in section 2.8) as of the date of delivery of the
auditors' report pursuant to section 2.6; or
(ii) if the Adjusted 1998 EBIT is less than $200,000
and the 1998 EBIT is less than 50% of the Projected 1998 EBIT: Newco shall pay
to the Members cash in the aggregate amount of (A) a portion of $46,875 based on
the ratio of the Adjusted 1998 EBIT to $200,000, plus (B) a portion of $46,875
based on the ratio of the 1998 EBIT to the Projected 1998 EBIT; and NET shall
issue to the Members an aggregate number of shares of its common stock equal to
the (y) number determined by dividing the amount of cash payable under clause
(A) by the Market Price as of the date of delivery of the auditors' report
pursuant to section 2.6, plus (z) the number determined by dividing the amount
of cash payable under clause (B) by the Market Price as of the date of delivery
of the auditors' report pursuant to section 2.6.
If at any time during the fiscal year ended June 30, 1998 Newco's
chief financial officer determines that the targets set forth in section
2.2(b)(i) have been met and will likely be met as of the end of that fiscal
year, promptly after that determination Newco and NET shall make the full
payments and stock issuances (based on the Market Price as of the date of the
chief financial officer's determination) provided for in section 2.2(b)(i),
subject, however, to the provisions of section 2.4; if after any payment and
issuance of shares the report of Newco's independent auditors under section 2.6
for the fiscal year ended June 30, 1998 indicates that the targets specified in
section 2.2(b)(i) have not been met, the Members shall promptly return to Newco
and NET any payments or shares they received in excess of the amounts they would
have been entitled to receive under section 2.2(b)(ii) (unless the parties shall
then agree that, instead of returning the payments and shares, the excess shall
be applied to reduce subsequent payments or issuances of shares).
2.3 Additional Consideration. Promptly after determination
pursuant to section 2.6 of Newco's EBIT for each of the fiscal years ended June
30, 1999, 2000 and 2001, but subject to section 2.4, (i) Newco shall pay to the
Members an aggregate amount of cash equal to one-twelfth of an amount equal to
four times EBIT for that year and (ii) NET shall issue to the Members an
aggregate number of shares of its common stock equal to the number determined by
dividing the amount of cash payable under clause (i) by the Market Price as of
the date of delivery of the auditors' report pursuant to section 2.6. If,
however, the Members elect, by notice given to Newco no later than June 30,
1998, to receive the cash and stock provided for in the preceding sentence with
respect to each of the four fiscal years ended June 30, 1998, 1999, 2000 and
2001 (instead of the three fiscal years ended June 30, 1999, 2000 and 2001), the
fraction specified in clause (i) for calculating the amount of each of those
payments and issuances shall be one-sixteenth (instead of
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one-twelfth) and the payments shall be made and the shares shall be issued
promptly after determination of EBIT for each of the fiscal years ended June 30,
1998, 1999, 2000 and 2001. Notwithstanding anything to the contrary in this
provision, the Members shall not be entitled to receive any cash or stock with
respect to any fiscal year unless Xxxxx Xxxxxxxxx was employed by Newco during
that entire fiscal year, except that if his employment was terminated pursuant
to his employment agreement due to his disability or was terminated as a result
of his death, the Members shall be entitled to receive cash and stock based on
Newco's EBIT through the date of termination, and the cash payment shall be
made, and the stock delivered, as soon as practicable after termination based on
a determination of EBIT by Newco's chief financial officer (which shall be final
and binding on the parties).
2.4 Assumption of Obligations to Xxxxxxx and Xxxxx. Upon
execution of this agreement Newco is assuming the Company's obligations under
its agreements with Xxxxxxx and JPF, dated April 3, 1997, to pay Xxxxxxx the
amount of $70,000 in 18 equal monthly installments commencing June 1, 1997 and
to pay JPF the amount of $170,000 in 36 equal monthly installments commencing
June 1, 1997, in each case with interest at the rate of 8% a year from the date
of this agreement. It is intended, however, that the Members bear the Company's
obligations to Xxxxxxx and JPF and that Newco shall be reimbursed for payments
to Xxxxxxx and JPF out of the consideration otherwise payable to them under this
agreement, and, accordingly, until Newco has been reimbursed in full for those
payments, the cash amounts otherwise payable to the Members on any date under
sections 2.2(b) and 2.3 shall be reduced by the aggregate unreimbursed amounts
paid by Newco to Xxxxxxx and JPF prior to that date (including all interest and
the unreimbursed amount of $25,000 paid at the closing) and, if those amounts
are insufficient to reimburse Newco in full, the number of shares otherwise
issuable to the Members on that date shall be reduced (based on the Market Value
as of the date the shares otherwise would have been issued) to the extent of the
deficiency.
2.5 Assumption of Liabilities. Newco hereby assumes, and agrees
to pay, perform and discharge when due (i) all of the Company's trade accounts
payable and accrued expenses listed on schedule 3.6, (ii) all of the Company's
obligations under the agreements, commitments and orders listed on schedule
3.13, to the extent that they remain unperformed or unfulfilled on, or by their
terms continue in effect after, the date of this agreement, (iii) the Company's
obligations to Xxxxxxx and JPF referred to in section 2.4, and (iv) the
Company's outstanding promissory notes to NET in the aggregate principal amount
of $116,000. Except as specifically provided in the preceding sentence, Newco
has not assumed and shall have no responsibility for any liabilities or
obligations of the Company or the Members relating to the operations of the
Business, or otherwise, through the date of this agreement, and the Members
shall cause the Company to pay, perform and discharge all such liabilities and
obligations (except to the extent that any liability or obligation is being
contested in good faith). NET shall not have any liability or obligation with
respect to the Business and shall not have any liability or obligation to the
Company or the Members except for breach of any warranty or covenant of NET
contained in this agreement.
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2.6 Determination of EBIT. Newco shall cause its independent
auditors to determine its EBIT (and for the fiscal year ended June 30, 1998,
Adjusted 0000 XXXX) for each fiscal year through the year ended June 30, 2001
based on its audited financial statements for that year, and to deliver to the
Members not later than September 30 of each of those years a report setting
forth in reasonable detail the calculation of EBIT for that year (and any
reduction of EBIT pursuant to section 2.8(c)) and the calculation of any amounts
payable or shares issuable to the Members under sections 2.2(b) or 2.3 with
respect to that year. The number of shares issuable shall be calculated on the
basis of the Market Price as of the date of delivery of the report. The
determinations of Newco's independent auditors under this section shall be final
and binding on the parties.
2.7 Loans by NET. Until payment in full of the obligations to
Xxxxxxx and JPF referred to in section 2.4, upon each issuance to the Members of
shares of NET common stock pursuant to this agreement, NET shall lend to the
Members cash in the aggregate amount of 35% of the value of those shares (based
on the Market Price used for determining the number of shares issued). All loans
made to the Members under this section shall be evidenced by a promissory note
in the form of exhibit 2.7(a) and shall be secured pursuant to a pledge and
security agreement in the form of exhibit 2.7(b). Upon any sale by any of the
Members of shares of NET common stock acquired under this agreement, the Member
shall prepay his or her loan to the extent of the proceeds of the shares sold
(net of any brokerage commissions or capital gains taxes payable with respect to
the sale of those shares).
2.8 Definitions and General Provisions.
(a) As used in this agreement, the term "Market Price"
means, as of any date, the average closing price (computed and rounded to the
third decimal point) of NET's common shares on Nasdaq as of 4:00 p.m. (EST)
during the 15 trading days ending on the day preceding that date.
(b) As used in this agreement, the term "EBIT" with respect
to any period means an amount equal to Newco's net revenues for that period,
less all direct expenses (including direct full-time and part-time employee
expenses), depreciation, amortization, and overhead allocations calculated in
the same manner as those items are calculated for NET's other divisions and
subsidiaries (including overhead allocations for NET's employees that perform
services for the Business, but excluding overhead allocations for NET's
chairman, chief executive officer, president or chief financial officer) for
that period, determined in accordance with generally accepted accounting
principles consistently applied.
(c) If at any time prior to June 30, 2001 NET's loans and
capital contributions to fund Newco's operations shall exceed $300,000, for the
purpose of calculating the cash payable and stock issuable under section 2.3
EBIT for the year in which the excess loans or contributions are made (the
"First Excess Year) and for each subsequent year through June 30, 2001 shall be
reduced by a portion of the excess (without regard to any repayments) determined
by dividing the amount of the excess as of the last day of the First Excess Year
by the number of
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full or partial fiscal years from the First Excess Year through June 30, 2001
(excluding the fiscal year ending June 30, 1998 unless the Members make the
election provided for in the second sentence of section 2.3); if the excess is
increased in any year after the First Excess Year, EBIT for the year in which
the increase occurs and each subsequent year through June 30, 2001 shall be
reduced by a portion of the additional excess determined in the same manner.
(d) All cash payments, stock issuances and loans to the
Members under this agreement shall be made 47.5% to Xxxxx Xxxxxxxxx, 47.5% to
Xxxxxx Xxxxxxxx-Sell, and 5% to Xxxxx Xxxxx.
(e) Any calculation of shares that equates to a fractional
number of shares shall be rounded to the nearest whole number.
(f) Xxxxx Xxxxxxxxx and Xxxxxx-Xxxxxxxx -Sell shall be
responsible for the day-to-day operations of Newco's business pursuant to the
employment agreements referred to in section 5.1, but nothing in this agreement
or either of those agreements shall limit the right of the boards of directors
and officers of NET and Newco to manage the business and affairs of NET and
Newco or give the Members any claim against either NET or Newco with respect to
any decision relating to the conduct of their businesses, whether or not that
decision affects the amount of any consideration payable under this section 2.
3. Representations and Warranties by the Company and the Members.
The Company and the Members (other than Xxxxx Xxxxx) jointly and severally
represent and warrant to NET and Newco as follows:
3.1 Organization and Authority of the Company. The Company is a
limited liability company duly organized, validly existing and in good standing
under the law of the State of California and has the full limited liability
company power and authority to own, lease and operate its properties as it now
does and to carry on its business as it is presently being conducted. The
Company is duly qualified and in good standing as a foreign limited liability
company in all jurisdictions in which the property owned or leased by it or the
nature of the activities conducted by it requires qualification.
3.2 Authorization of Agreement. The execution, delivery and
performance of this agreement by the Company have been duly authorized by all
necessary action of the Company. Each of the Members has the full right to enter
into and perform his or her obligations under this agreement in accordance with
its terms. This agreement constitutes a valid and binding obligation of the
Company and each of the Members enforceable against each of them in accordance
with its terms, except as may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.3 Consents of Third Parties. The execution, delivery and
performance of this agreement by the Company and the Members do not and will not
(i) conflict with the
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certificate of formation or operating agreement of the Company or conflict with,
or result in the breach or termination of, or constitute a default under, or
increase or accelerate any obligation under, any lease, agreement, commitment or
other instrument, or any order, judgment or decree, to which the Company or any
of the Members is a party or by which the Company, the Business, any of the
Assets or any of the Members is bound; (ii) constitute a violation by the
Company or any of the Members of any law, regulation, order, writ, judgment,
injunction or decree applicable to any of them; (iii) result in the creation of
any claim, lien, security interest, charge or encumbrance ("Liens") upon any of
the Assets; or (iv) adversely affect the operation of the Business in any
material respect. No consent, approval or authorization of, or designation,
declaration or filing with, any court or governmental authority or any other
person or entity is required on the part of the Company or any of the Members in
connection with the execution, delivery and performance of this agreement.
3.4 Ownership of the Company. Xxxxx Xxxxxxxxx is the record and
beneficial owner of a 47.5% membership interest in the Company, Xxxxxxx
Xxxxxxxx-Sell is the record and beneficial owner of a 47.5% membership interest
in the Company, and Xxxxx Xxxxx is the record and beneficial owner of a 5%
membership interest in the Company; those interests represent all of the
outstanding equity interests in the Company and are owned free and clear of any
Liens. There are no outstanding options, warrants or rights of any kind to
acquire any interests, and there are no outstanding securities convertible into
any interests, in the Company, nor are there any obligations to issue any such
options, rights or securities. The Company does not own any capital stock or
other interest in any corporation or business entity, nor is the Company subject
to any obligation or requirement to make any investment in any corporation or
business entity.
3.5 Financial Statements. All of the books of account of the
Company have been exhibited or made available to NET, and those books of account
have been maintained in accordance with good business practice on a consistent
basis and accurately record all transactions of the Company during the periods
covered by them. All of the Company's accounts receivable outstanding as of the
date of this agreement arose from bona fide transactions in the ordinary course
of the business and none of them is subject to any defense, counterclaim or
setoff, and the Members have no reason to believe that any of them will not be
collected in full when due.
3.6 Absence of Undisclosed Liabilities. As of the date of this
agreement the Company does not have any liability or obligation of any kind,
whether accrued, absolute, contingent or otherwise, other than (a) liabilities
and obligations under leases, commitments and other agreements entered into in
the ordinary course of business (which, to the extent required by section 3.13,
are listed on schedule 3.13), (b) the trade accounts payable and accrued
expenses listed on schedule 3.6, each of which has been incurred in the ordinary
course of business, and (c) the obligations to Xxxxxxx and JPF referred to in
section 2.4. The Members do not know of any basis for the assertion against the
Company or the Business of any liability as of the date of this agreement that
is not listed on schedule 3.6.
3.7 Absence of Certain Changes. Since January 1, 1996, the
Company has operated its business in the ordinary course and consistent with
past practice, and, except as set forth on schedule 3.7:
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(a) the Company has not entered into any transaction or
incurred any liability or obligation other than in the ordinary course of
business;
(b) there has been no material adverse change in the
condition (financial or otherwise), business, operations, assets or prospects of
the Company;
(c) the Company has not sold or transferred any assets other
than in the ordinary course of business and other than assets that have been
replaced with other assets of equal or greater value;
(d) the Company has not incurred any liability that was
unusual in nature or amount or any indebtedness other than indebtedness to trade
creditors incurred in the ordinary course of business;
(e) the Company has not made any distribution on or acquired
any of its membership interests or, directly or indirectly, made any other
payment of any kind or any loan to any of the Members or their respective
affiliates;
(f) the Company has not granted or agreed to grant any
general increase in any rate or rates of salaries or compensation or in benefits
of any kind to its employees or any specific increase in the salary of or
compensation to any employee whose total salary and compensation after such
increase would be at an annual rate in excess of $25,000;
(g) the Company has not made any change in its accounting
methods or principles (or the application of those methods or principles) or
introduced any material new method of management, operations or accounting;
(h) the Company has not established any new employee benefit
plan (as defined in section 3.24), amended or modified any existing employee
benefit plan, or incurred any obligation or liability under any employee benefit
plan materially different in nature or amount from obligations or liabilities
incurred during similar periods in prior years; and
(i) the Company has not entered into any employment, bonus
or deferred compensation agreement with any of its directors, officers or other
employees.
3.8 Taxes. The Company has timely filed all foreign, federal,
state, local and other tax returns, reports and information returns (including
any related or supporting information) required by law to be filed by it; each
of those tax returns is correct and complete in all material respects. The
Company has paid all taxes required to be paid by it to date. None of the
Company's tax returns has been audited by any tax authority. There exist no
pending or, to the best of the knowledge of the Company and the Members,
proposed tax assessments, suits, actions, claims, audits, investigations or
inquiries by any tax authority with respect to the business or assets of the
Company or against the Company. There are no tax liens on any of the Company's
assets. The Company (including any person acting on behalf of the Company) has
not given nor been
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requested to give waivers or extensions of any statute of limitations relating
to payment of taxes of the Company or for which the Company may be liable and no
other party has given or been requested to give such waivers or extensions with
respect to taxes for which the Company may be liable. All taxes that are or were
required by law to be withheld or collected by the Company have been duly
withheld or collected and paid to the proper tax authority. To the best of the
knowledge of the Company and the Members, the Company is properly treated as a
partnership, and not an association taxable as a corporation, for federal income
tax purposes. The Company does not have any tax liability of any kind that could
result in a Lien on any of the Assets.
3.9 Title to Assets. Except as set forth on schedule 3.9 and
except for the lien, if any, of current taxes not yet due and payable, the
Company has, and upon execution and delivery of this agreement Newco is
acquiring, valid title, free and clear of any Liens, to all the Assets. Except
for the assets referred to in section 1.2, the Assets constitute all of the
assets, tangible and intangible, used in or needed to conduct the Business and
will be sufficient to enable Newco to continue to operate all aspects of the
Business in the manner in which it has been operated by the Company and JPF. The
Company does not owe any amount to, or have any contract with or commitment to,
or use any property (real or personal) in its business owned or leased by, any
of the Members or any director, officer, employee, agent or representative of
the Company, or any of their respective affiliates. Neither JPF nor Xxxxxxx, nor
any of their respective affiliates, owns any assets used or necessary for use in
the Business; all of those assets have been validly assigned to the Company,
free and clear of any Liens.
3.10 Personal Property. Schedule 3.10 lists all of the equipment,
machinery, computers, furniture, leasehold improvements, vehicles and other
personal property having an individual value greater than $500 owned or leased
by the Company and all interests therein. All equipment and other tangible
assets owned or used by the Company are in good operating condition and in good
condition of maintenance and repair, ordinary wear and tear excepted, are
suitable for their present uses and purposes, and conform with all applicable
ordinances, rules and regulations and all building, zoning and other laws.
3.11 Real Property. The Company does not own any real property.
Schedule 3.11 contains a list and brief description of all real properties used
by the Company and all structures located on those real properties. To the best
of the knowledge of the Company and the Members, all improvements on the real
properties used by the Company are in accordance with all applicable laws,
ordinances, regulations and orders, including, but not limited to, those
applicable to zoning, environment and the establishment and maintenance of
working conditions for labor, and all of the buildings and structures on those
properties are in good condition of maintenance and repair and are adequate,
sufficient and suitable for their present uses and purposes. The transactions
contemplated by this agreement will not adversely affect Newco's right to use
those properties for the same purpose and to the same extent as they were being
used by the Company or JPF prior to the date of this agreement. The Company has
the right to terminate its tenancy of the property listed on schedule 3.11 on
thirty days notice. The Company is not a party to any real property leases.
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3.12 Litigation; Compliance with Laws. Except as set forth on
schedule 3.12, there is no claim, litigation, proceeding or governmental
investigation pending or, to the best of the knowledge of the Company and the
Members, threatened, or any order, injunction or decree outstanding, against the
Business, the Company or any of its properties or assets. Neither the Company
nor any of the Members knows of any basis for future claims, litigations,
proceedings or investigations against the Business, the Company or any of its
properties or assets. Neither the Company nor the Business is in violation of
any law, regulation or ordinance, or any other requirement of any governmental
body or court, and no notice has been received by the Company or any of its
officers or directors alleging any such violation. The Company is not engaged in
any dispute with any of its advertisers, customers, suppliers or printers and
has good relationships with all of them.
3.13 Lists of Agreements, etc. Schedule 3.13 contains a true and
complete list of all orders, commitments and agreements (written or oral) to
which the Company is a party, including, but not limited to, orders, commitments
and agreements with advertisers and customers, agreements for the purchase of
materials, supplies, equipment or services, leases (as lessee or lessor),
license agreements (as licensee or licensor), distribution agreements, and
employment, consulting, sales representative and independent contractor
agreements. True and complete copies of the agreements, commitments and leases
referred to on schedule 3.13 have been delivered to NET. Except for the
agreement referred to in section 2.4, JPF is not a party to any agreement
relating to the Business.
3.14 Status of Agreements. All of the Company's agreements,
commitments and orders were entered into in the ordinary course of business.
Each of the agreements, commitments and orders referred to in section 3.13 is
presently in full force and effect in accordance with its terms and the Company
is not in default, and, to the best of the knowledge of the Company and the
Members, no other party is in default under any of the provision of any of those
agreements and no condition exists that, with notice or lapse of time or both,
would constitute a default by the Company or, to the best of the knowledge of
the Company and the Members, any other party to any of those agreements. Each of
the agreements, commitments or orders referred to in section 3.13 is valid and
binding upon and enforceable against each of the parties thereto in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
in general. No party to any of the agreements, commitments or orders referred to
in section 3.13 has made, asserted or has any defense, setoff or counterclaim
under any of those agreements, commitments or orders or has exercised any option
granted to it to cancel or terminate its agreement, to shorten the term of its
agreement, or to renew or extend the term of its agreement and neither the
Company nor any of its officers or directors has received any notice to that
effect.
3.15 Employees. No employee of the Company is represented by any
union or other collective bargaining agent and there are no collective
bargaining or other labor agreements with respect to those employees. Schedule
3.15 contains a true and complete list of the names, positions, hire dates and
annual or hourly compensation of all employees of the Company and a description
of vacation policies, sick leave policies, bonus, incentive compensation and
group
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insurance plans for the benefit of those employees. No employee of the Company
is owed any wages, benefits or other compensation for past services, other than
wages and benefits accrued in the ordinary course of business during the current
pay period and accrued vacation. Except as set forth on schedule 3.15, the
Company does not have any severance policy and no employee of the Company is
entitled to any severance payment, either by law or by agreement, upon the
termination of his or her employment. To the best of the knowledge of the
Company and the Members, the transactions provided for in this agreement will
not give rise to any liability of the Company or Newco for severance pay or
termination pay to any employee of the Company who is employed after this date
by Newco or trigger any payments of any kind to any employee of the Company or
JPF.
3.16 Labor Disagreements. Except as set forth on schedule 3.16,
(a) to the best of the knowledge of the Company and the Members, the Company and
the Business are in compliance with all applicable laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice;
(b) there is no (and has never been any) unfair labor practice charge or
complaint against the Company or the Business pending before the National Labor
Relations Board, any state labor relations board or any court or tribunal and,
to the best of the knowledge of the Company and the Members, none is or has been
threatened; (c) there is no labor strike, dispute, request for representation,
slowdown or stoppage actually pending against or affecting the Company or the
Business and, to the best of the knowledge of the Company and the Members, none
is or has been threatened; and (d) no grievance which might have an adverse
effect on the conduct of the operations of the Business or any arbitration
proceeding arising out of or under any collective bargaining agreement is
pending and, to the best of the knowledge of the Company and the Members, none
is or has been threatened.
3.17 Restrictive Documents, etc. Neither the Company nor the
Business is subject to, or a party to, any lease, license, permit, agreement or
other commitment, instrument, law, rule, ordinance, regulation, order, judgment
or decree, or any other restriction of any kind, that materially and adversely
affects its business practices or operations or any of the Assets or that would
prevent its compliance with the terms, conditions and provisions of this
agreement or the continued operation of the Business by Newco after the date of
this agreement on substantially the same basis as it has been operated since
January 1, 1996.
3.18 Environmental Matters. To the best of the knowledge of the
Company and the Members:
(a) the Company and all of the property used by the Company
is in compliance with all federal, state and local laws, regulations, rules,
orders, decrees, ordinances and common law relating to pollution, the protection
of human health or the environment, including, but not limited to, laws relating
to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products, and radiation ("Materials of Environmental Concern"), or otherwise
relating to the manufacture, processing,
11
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern;
(b) there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, but not limited to,
the release, emission, discharge or disposal of any Material of Environmental
Concern, that could form the basis of any claim against or violation by the
Company (or, after the closing, Newco), or against any person or entity whose
liability for any claim or violation the Company has (or may have) retained or
assumed either contractually or by operation of law; and
(c) there are no on-site or off-site locations where the
Company has stored, disposed or arranged for the disposal of Materials of
Environmental Concern; there are no underground storage tanks located on
property used by the Company; there is no asbestos contained in or forming part
of any building, building component, structure or office space used by the
Company; and no polychlorinated biphenyls (PCBs) are used or stored at any
property used by the Company.
3.19 Permits and Licenses. The Company has all permits, licenses,
franchises and other authorizations ("Licenses") necessary for the conduct of
its business and all such Licenses are valid and in full force and effect. All
Licenses held by the Company that are material to the Company or its business
are listed on schedule 3.19.
3.20 Banks; Powers of Attorney. Schedule 3.20 sets forth (a) the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which the Company maintains safe deposit
boxes or accounts of any nature and the names of all persons authorized to draw
thereon, make withdrawals therefrom or have access thereto and (b) the names of
all persons to whom the Company has granted a power of attorney, together with a
description thereof.
3.21 Intangible Property. Schedule 3.21 contains a complete list
of the trademarks, trade names, copyrights and logos used by the Company. The
Company owns, free and clear of any Liens, each of the trademarks, trade names,
copyrights and logos (including registrations and applications for registration
of any of them) listed on schedule 3.21, and they constitute all of the
trademarks, copyrights, trade names and logos necessary for the continued
operation of the Business in a manner consistent with past practices. The
Company is not infringing upon any trademark, trade name, copyright or other
rights of any third party; no proceedings are pending or threatened; and no
claim has been received by the Company alleging any such violation. To the best
of the knowledge of the Company and the Members, there is no violation by others
of any right of the Company with respect to any trademark, trade name or
copyright. The representations and warranties in this section do not apply to
the trademark "GoCard."
3.22 Software and Databases. The Company owns or possesses
adequate licenses or other rights to use all computer software used by it.
Schedule 3.22 contains a list of all such software. Any license of the Company
to use any software is valid and does not infringe on the property rights of any
third party. The Company has not granted to any person or entity any
12
interest, as licensee or otherwise, in any of its owned software or databases or
in any of its mailing lists, advertiser lists or customer lists. The Company has
the right to transfer all computer software, databases and lists used by it to
Newco without violating any agreement to which the Company is a part or any
rights of any third party.
3.23 Insurance. Schedule 3.23 contains a complete list of all of
the Company's insurance policies, specifying with respect to each policy the
policy limit, type of coverage, location of the property covered, annual
premium, premium payment date and expiration date. True and complete copies of
all of those policies have been delivered to NET.
3.24 ERISA. Except as set forth on schedule 3.24, the Company is
not a party to or bound by or liable with respect to any "employee benefit
plan", within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974.
3.25 Expenses Related to this Agreement. The Company has not paid
any expenses related to the negotiation or preparation of this agreement or any
broker's, finder's or similar fee relating to the transactions contemplated by
this agreement.
3.26 Transactions with Affiliates. Except as set forth on
schedule 3.26, during the twelve months preceding the date of this agreement the
Company has not engaged in any transaction with any of the Members of JPF or
Xxxxxxx, or any of their respective affiliates.
3.27 Distribution Racks. Schedule 3.27 contains a complete list
of the locations and installation dates of all of the Company's distribution
racks.
3.28 Projections. Schedule 3.28 contains projections with respect
to the Company's business that were prepared jointly by the Members and Newco.
The Members have reviewed those projections and believe that they are based on
assumptions that are valid and reasonable and are realistic and attainable by
the Company. The projections are based in part on the assumption that NET will
make the capital advances to Newco provided for in section 5.7.
3.29 Business Relationships. Except as set forth in the schedules
to this agreement, since January 1, 1996 the Company has enjoyed good
relationships with all suppliers of goods or services to the Business, the
operators of all of the venues in which its postcard advertising display racks
are located, and all of its advertisers, and neither the Company nor any of the
Members knows of any intention on the part of any such vendor, venue operator or
advertiser to substantially change its relationship with the Company and none of
them has any reason to believe that the relationship with any such vendor, venue
operator or advertiser will change after consummation of Newco's purchase of the
Business. Immediately prior to the execution of this agreement the Company
canvassed the operators of all of the venues in which its postcard display racks
are located and on the basis of that canvass the Company and the Members have
determined that Newco will retain after the closing under this agreement at
least 80% of the exisiting venues. Since January 1, 1997 the Company has not
lost more than five display rack venues to the Company's competitors.
13
3.30 No Misrepresentation. No representation or warranty by the
Company or the Members in this agreement (including the schedules and exhibits
to this agreement) contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained in this
agreement (including the schedules and exhibits to this agreement) not
misleading.
4. Representations and Warranties by Newco and NET. Newco and NET
jointly and severally represent and warrant to the Company and the Members as
follows:
4.1 Organization. NET is a corporation duly organized, validly
existing and in good standing under the law of the State of Delaware and has the
full corporate power to enter into and to perform this agreement. Newco is a
limited liability company duly organized, validly existing and in good standing
under the law of Delaware and has the full power under the Delaware Limited
Liability Company Act to execute and perform this agreement.
4.2 Authorization of Agreement. The execution, delivery and
performance of this agreement by Newco and NET have been duly authorized by all
requisite action of each of them. This agreement constitutes the valid and
binding obligation of Newco and NET, enforceable against each of them in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 Consents of Third Parties. The execution, delivery and
performance of this agreement by each of Newco and NET will not (a) conflict
with Newco's certificate of formation or limited liability company agreement or
NET's certificate of incorporation or by-laws and will not conflict with, result
in the breach or termination of, or constitute a default under, any lease,
agreement, commitment or other instrument, or any order, judgment or decree to
which it is a party by which it is bound, or (b) constitute a violation by it of
any law or regulation applicable to it. No consent, approval or authorization
of, or designation, declaration or filing with, any governmental authority is
required on the part of Newco or NET in connection with the execution, delivery
and performance of this agreement.
4.4 Validity of Issuance. The shares of NET common stock, when
issued to the Members under section 2, will be duly authorized, validly issued,
fully paid and non-assessable.
4.5 Financial Ability. NET and Newco have the financial ability
to satisfy their respective obligations to the Company and the Members under
this agreement.
4.6 No Misrepresentation. No representation or warranty by Newco
or NET in this agreement (including the schedules and exhibits to this
agreement) contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in this agreement
(including the schedules and exhibits to this agreement) not misleading.
14
5. Further Agreements of the Parties.
5.1 Employment Agreements. Contemporaneously with the execution
of this agreement, Xxxxx Xxxxxxxxx and Xxxxxx Xxxxxxxx-Sell are entering into
employment agreements with Newco in the forms of exhibit 5.1(a) and (b),
respectively.
5.2 Covenants Against Competition, Solicitation and Disclosure.
(a) To accord to Newco and NET the full value of their
purchase, for a period of five years after the date of this agreement neither
the Company nor any of the Members shall, directly or indirectly, engage or be
interested in (as owner, shareholder, partner, member, manager, lender, agent or
otherwise) any business or entity that engages, anywhere in the world, in (i)
any business in which the Company has engaged at any time during the two years
preceding the date of this agreement, including, but not limited to, the
production, reproduction, sale, distribution or other commercial exploitation of
postcards containing advertisements, or (ii) sales and marketing activities
targeting primarily college students, including, but not limited to, any
business or entity that derives substantial revenue either from advertisers
targeting the college student market or from student purchases.
(b) For a period of five years after the date of this
agreement, neither the Company nor any of the Members shall, directly or
indirectly, employ or solicit for employment or consulting, on its own behalf or
on behalf of any other person or entity, or otherwise encourage the resignation
of, any employee of Newco, NET or any of NET's other affiliates.
(c) Neither the Company nor any of the Members shall at any
time hereafter disclose to anyone, or use in competition with Newco, NET or any
of NET's other affiliates, any information with respect to any confidential or
secret aspect of the business or affairs of Newco, NET or any of NET's other
affiliates.
(d) The Company and Members acknowledge that the remedy at
law for breach of the provisions of this section 5.2 will be inadequate and
that, in addition to any other remedy NET and Newco may have, they shall be
entitled to an injunction restraining any breach or threatened breach, without
the necessity of showing actual damages. In any action brought by NET or Newco
for injunctive relief, if the Company and the Members fail to waive any
requirement that a bond or other security be posted, the Company and the Members
shall reimburse NET and Newco for any bond premium or security charge if the
injunctive relief is granted. If any court construes the covenant in this
section 5.2, or any part thereof, to be unenforceable in any respect, the court
may reduce the duration or area to the extent necessary so that the provision is
enforceable, and the provision, as reduced, shall then be enforceable.
(e) To the extent any provision of this section 5.2 is
inconsistent with any provision of the employment agreements referred to in
section 5.1, the provision of the employment agreement shall control.
15
5.3 Expenses. Except as expressly provided in this agreement, the
parties shall bear their own expenses incurred in connection with the
negotiation and preparation of this agreement and in connection with the
transactions contemplated by this agreement.
5.4 Securities Act Matters.
(a) The Company and the Members recognize that each issuance
of shares of NET common stock under section 2 (the "Shares") is intended to be
exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act"), by virtue of section 4(2) of the Securities Act and, in that
connection, jointly and severally represent and warrant to NET that (i) each of
them is acquiring his or her Shares for his or her own account, for investment
purposes only and not with a view to the resale or distribution of those Shares,
in whole or in part, and (ii) each of them understands that sales or transfers
of the Shares are restricted by the Securities Act and by certain state
securities laws and recognizes that a legend referencing that restriction will
be placed on the certificates representing the Shares.
(b) The Members shall not sell or otherwise transfer
the Shares without registration under the Securities Act and applicable state
securities laws or an exemption therefrom. The Members confirm that they
understand that NET is under no obligation to register the Shares on their
behalf or to assist them in complying with any exemption from registration.
5.5 Legal Opinions. Contemporaneously with the execution of this
agreement, (a) the Company and the Members are delivering to NET an opinion of
Xxxxxx, Schiffres & Xxxxx, counsel to the Company and the Members, in the form
of exhibit 5.5(a), and (b) Newco is delivering to the Members an opinion of
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP, counsel to Newco and NET, in the form of
exhibit 5.5(b).
5.6 Assignment of Agreements. Nothing in this agreement shall be
construed as an attempt to assign any agreement or other instrument that by its
terms is nonassignable without the consent of the other party.
5.7 Advances by NET. NET shall provide loans or capital
contributions to Newco to fund Newco's operations in an aggregate amount of up
to $300,000, in accordance with the projections contained in schedule 3.28, but
only to the extent funds are needed to fund Newco's operations. Newco shall not
repay any loan or make any distribution to NET prior to June 30, 2001 unless
Newco will have sufficient working capital after the repayment or distribution
to operate its business in accordance with the projections contained in schedule
3.28. The principal amount and accrued interest on the outstanding promissory
notes of the Company in favor of NET in the aggregate principal amount of
$116,000 that are being assumed by Newco upon the execution of this agreement
shall be credited to NET's $300,000 commitment under this provision and the
Company's obligations under those notes shall be considered extinguished.
5.8 Default by Newco or NET. If Newco or NET defaults in making
any payment or stock issuance required under section 2, and that default is not
cured within 30 days after
16
notice of the default is given to Newco or NET by the Members, the Members shall
have the right, exercisable by notice given to NET within 30 days after the
expiration of that cure period, to purchase from Newco all of the assets
relating to the Business, subject to all of the liabilities of the Business
(other than liabilities owed to NET and its affiliates), for a purchase price
equal to (a) the total amount of cash paid to the Members by Newco, the value of
the stock issued to the Members by NET (based on the valuation used at the time
of each issuance) under section 2 and the total amount of unpaid principal and
accrued interest on the notes referred to in section 2.7, plus (b) the total
amount of unpaid advances, whether equity or debt and including any accrued
interest, made to Newco by NET. The closing of a purchase by the Members (who
may assign their rights to any entity in which they have at least a 25% equity
interest) shall be held on a date and at a place designated by NET, but in no
event later than 90 days after the date the Members' notice of exercise is
given. At the closing, the purchaser shall pay to Newco 20% of the purchase
price by wire transfer of federal funds and shall deliver to Newco a promissory
note for the balance of the purchase price payable in three equal quarterly
installments over a one year period, Newco shall assign and transfer to the
purchaser all of the assets of the Business, and the purchaser shall assume all
of the liabilities of the Business (other than liabilities owed to NET and its
affiliates). Any obligations of any entity under this provision shall be
personally guaranteed by the Members.
5.9 Further Assurances. At any time and from time to time after
the date of this agreement, each party shall, without further consideration,
execute and deliver to the other parties such other instruments and take such
other action as the others may reasonably request to carry out the transactions
contemplated by this agreement.
5.10 Change in Name. Within 30 days after the date of this
agreement, the Company shall change its name to a name that does not include any
of the terms or words "Pik", "Nik", "Pick", "Nick", "Free", "Postcard", "Card",
"Wild", or "Go". 5.11 Sales Taxes. The Company shall pay any state or local
sales taxes payable in connection with the sale of Assets.
5.12 Bulk Sales. The parties waive compliance with the provisions
of any applicable bulk sales law. The Company and the Members jointly and
severally shall indemnify and hold Newco and NET harmless from any loss,
liability, damage, cost or expense (including reasonable attorney's fees and
expenses) incurred by Newco or NET as a result of any liability to which Newco
or NET may become subject because the transactions contemplated by this
agreement are being effected without compliance with the bulk sales law or any
similar statute in any jurisdiction.
5.13 Post-Closing Payments. The Company and the Members shall, as
promptly as practical, forward to Newco any amount received by any of them to
which Newco is entitled under this agreement and shall refer to Buyer any
telephone calls, letters and other communications that they may receive relating
to the Business.
6. Survival of Representations and Warranties; Indemnification.
17
6.1 Survival. All representations, warranties and agreements by
the Company and the Members shall survive the closing under this agreement
notwithstanding any investigation at any time by or on behalf of Newco or NET,
and shall not be considered waived by Newco's or NET's consummation of the
transactions contemplated by this agreement with knowledge of any breach of
misrepresentation by the Company or the Members. All representations, warranties
and agreements by Newco and NET shall survive the closing under this agreement
notwithstanding any investigation at any time by or on behalf of the Company or
the Members, and shall not be considered waived by the Company's consummation of
the transactions contemplated by this agreement with knowledge of any breach by
Newco or NET.
6.2 Indemnification.
(a) The Company and the Members (other than Xxxxx Xxxxx)
jointly and severally shall indemnify and hold harmless Newco and NET against
all loss, liability, damage or expense (including reasonable fees and expenses
of counsel, whether involving a third party or between the parties to this
agreement) Newco or NET may suffer, sustain or become subject to as a result of
(i) any breach of any warranty, covenant or other agreement of the Company or
the Members contained in this agreement, or any misrepresentation by the Company
or Members, or any claim by a third party which, without regard to the merits of
the claim, would constitute such a breach or misrepresentation, (ii) the
Company's failure to pay, perform or discharge when due any of the Company's
obligations, liabilities, agreements or commitments not expressly assumed by
Newco pursuant to this agreement, (iii) any other liability or obligation
arising out of the operations of the Business on or prior to the date of this
agreement and not expressly assumed by Newco pursuant to this agreement, (iv)
the failure to comply with any bulk sales law applicable to the sale of the
Assets, or (v) any liability for severance or otherwise to any employee of the
Company resulting from the transactions provided for in this agreement.
(b) In addition to any other rights and remedies they may
have, Newco and NET may reduce (i) the amounts to be paid or the number of
shares to be issued to the Members under section 2 (at a valuation, in the case
of the shares, at their then current closing price on Nasdaq), and (ii) then, up
to 20% in any year of the amounts payable to the Members under their employment
agreements referred to in section 5.1 (without affecting the obligations of the
Members under those agreements), to the extent of any amount payable to Newco or
NET pursuant to section 6.2(a), but no such set-off shall constitute an accord
and satisfaction or otherwise modify the rights or obligations of the Company
and the Members under this agreement or constitute a breach by Newco or NET of
its obligations under this agreement. Without limiting the generality of the
preceding sentence, the Company and the Members acknowledge and agree that
Newco's and NET's exercise of its rights pursuant to the preceding sentence
shall not limit Newco's and NET's rights to recover any amounts owed to them
that exceed the amount obtained by exercise of those rights and such exercise
shall not be in substitution of or in any way limit Newco's or NET's exercise of
its other rights and remedies under this agreement, any other agreement or
applicable law.
(c) Newco shall indemnify and hold harmless the Company and
the Members against all loss, liability, damage or expense (including reasonable
fees and expenses
18
of counsel, whether involving a third party or between the parties to this
agreement) the Company or the Members may suffer, sustain or become subject to
as a result of any breach of any warranty, covenant or other agreement of Newco
or NET contained in this agreement, or any misrepresentation by Newco or NET, or
any claim by a third party which, without regard to the merits of the claim,
would constitute such a breach or misrepresentation.
6.3 Defense of Claims. If any third-party claim is made against
any party that, if sustained, would give rise to a liability of the other party,
the party against whom the claim is made shall promptly cause notice of the
claim to be delivered to the other party and shall afford the other party and
its counsel, at the other party's sole expense, the opportunity to join in
defending or compromising the claim.
7. Miscellaneous.
7.1 Finders. The parties represent and warrant that they have not
employed or utilized the services of any broker or finder in connection with
this agreement or the transactions contemplated by it. The Members have utilized
the services of Xxxxxxxx Xxxxxx and shall be solely responsible for any
compensation payable to him.
7.2 Entire Agreement. This agreement (together with the
employment agreements referred to in section 5.1) contains, and is intended as,
a complete statement of all of the terms of the arrangements among the parties
with respect to the matters provided for, supersedes any previous agreements and
understandings among the parties with respect to those matters, and cannot be
changed or terminated orally.
7.3 Governing Law. This agreement shall be governed by and
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely in New York.
7.4 Headings. The section headings of this agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this agreement.
7.5 Notices. All notices and other communications under this
agreement shall be in writing and shall be deemed given when delivered
personally, one day after being sent by recognized overnight courier or four
days after being mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such other address as a party may
specify by notice given to the other pursuant to this provision):
(a) If to the Company or the Members, addressed to any of them
at:
c/o Pik:Nik LLC
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
19
Xxx Xxxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxx, Esq.
Xxxxxx, Schiffres & Xxxxx
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
(b) If to Newco or NET, addressed to either or both of them at:
Network Event Theater, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Don Leeds, President
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
7.6 Waiver. Any party may waive compliance by another with any of
the provisions of this agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and must be
signed by the party waiving the provision.
7.7 Separability. If any provision of this agreement is invalid
or unenforceable, the balance of this agreement shall remain in effect unless
such invalidity or unenforceability shall materially impair the purpose or
objectives of this agreement.
7.8 Assignment. No party may assign any of its or his rights or
delegate any of its or his duties under this agreement without the consent of
the other parties.
7.9 Publicity. No party shall issue any press release or other
public statement regarding the transactions contemplated by this agreement,
except that Newco and NET may release such information as they determine
necessary or appropriate.
7.10 Definition. As used in this agreement, the term "affiliate"
means any person or entity directly or indirectly controlled by, controlling, or
under common control with, any other person or entity, and when used with
respect to a Member shall include his or her family members.
20
7.11 No Third Party Beneficiaries. This agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this agreement.
7.12 Specific Performance. The Company and the Members
acknowledge that the Business is of a special, unique and extraordinary
character, and that any breach of this agreement by the Company or any of the
Members could not be compensated for by damages. Accordingly, if the Company or
any of the Members breaches its, his or her obligations under this agreement
Newco shall be entitled, in addition to any other remedies that it may have, to
enforcement of this agreement by a decree of specific performance requiring the
Company and the Members to fulfill their obligations under this agreement, and
no bond or other security shall be required.
7.13 Counterparts. This agreement may be executed in one or more
counterparts.
PIK:NIK LLC
By:/s/Xxxxxx Xxxxxxxx-Sell
---------------------------
Name:
Title:
/s/ Xxxxx Xxxxxxxxx
---------------------------
Xxxxx Xxxxxxxxx
/s/Xxxxxx Xxxxxxxx-Sell
---------------------------
Xxxxxx Xxxxxxxx-Sell
/s/Xxxxx Xxxxx
---------------------------
Xxxxx Xxxxx
PIK:NIK MEDIA, LLC
By:/s/Don Leeds
---------------------------
Don Leeds
21
President
NETWORK EVENT THEATER, INC.
/s/ Don Leeds
---------------------------
Don Leeds
President
22
