Exhibit 10(aj)
STOCK PURCHASE AGREEMENT
BY AND AMONG
THEATER RADIO NETWORK, INC. AND
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇,
AS SELLERS
AND
NCT GROUP, INC.,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
AND DMC CINEMA, INC.
AS BUYER
FOR THE PURCHASE OF
100% OF THE OUTSTANDING SHARES OF COMMON STOCK OF
THEATER RADIO NETWORK, INC.
DATED AS OF AUGUST 18th, 2000
TABLE OF CONTENTS
Page
ARTICLE I
Defined Terms..........................................................1
1.1 Defined Terms....................................................1
ARTICLE II
Purchase of Shares ...................................................1
2.1 Purchase and Sale of Shares .....................................1
2.2 Liabilities and Obligations......................................2
ARTICLE III
Purchase Consideration; Escrow Arrangements; Closing...................2
3.1 Purchase Consideration...........................................2
3.2 Restrictive Legends..............................................5
3.3 Deliveries.......................................................6
ARTICLE IV
Representations and Warranties by Sellers..............................7
4.1 Good and Marketable Title........................................7
4.2 Organization.....................................................8
4.3 Authority; Binding Effect; Performance...........................8
4.4 Capitalization....................................................
4.5 Financial Statements.............................................9
4.6 No Undiclosed Events, Liabilities, Develoments or Circumstances...
4.7 Absence of Certain Changes........................................
4.8 Title to Property; Sufficiency of Assets..........................
4.9 No Claims or Litigation..........................................9
4.10 Taxes............................................................9
4.11 Leased Real Property............................................10
4.12 Patents, Copyrights, Trademarks.................................10
4.13 Material Contracts..............................................10
4.14 Compliance with Applicable Laws; Permits........................10
4.15 Securities Law Matters..........................................11
4.16 Employee Relations..............................................__
4.17 No Untrue Statements............................................__
ARTICLE V
Representations and Warranties of Buyer...............................11
5.1 Consideration for Purchase......................................11
5.2 Corporations Duly Organized.....................................11
5.3 Requisite Corporate Authority...................................11
5.4 Nature of Transaction Contemplated..............................12
5.5 Delivery of Stock Consideration.................................12
5.6 Litigation......................................................12
5.7 SEC Reports and Financial Statements............................13
5.8 Investment Representation.......................................13
5.9 No Untrue Statements............................................13
ARTICLE VI
Miscellaneous Covenants...............................................14
6.1 Further Assurances..............................................14
6.2 Non-Disclosure of Confidential Information......................14
6.3 Infusion of Capital.............................................14
6.4 Consents and Approvals..........................................14
6.5 Employment Contracts............................................14
6.6 Resignation of Directors........................................15
6.7 Use of Name.....................................................15
6.8 No Unreasonable Interference....................................15
6.9 Closing Conditions..............................................__
ARTICLE VII
Indemnification; Survival of Representations and Warranties...........15
7.1 Indemnity Obligations of Sellers................................15
7.2 Indemnity Obligations of Buyer..................................15
7.3 Notification of Claims; Procedures..............................15
7.4 Duration........................................................18
7.5 Limitations.....................................................18
7.6 Settlement of Claims............................................18
7.7 Release of NCTI Stock Consideration.............................19
7.8 Remedies Not Affected by Investigation..........................19
7.9 Surplus Payable Claims..........................................20
7.10 Treatment of Indemnity Payments.................................20
7.11 Subrogation.....................................................20
7.12 Sole and Exclusive Remedy.......................................20
ARTICLE VIII
Registration Rights...................................................20
8.1 Registrable Securities..........................................20
8.2 Demand Registration.............................................21
8.3 Registration Procedures.........................................21
8.5 Special Indemnification Obligation..............................22
8.6 Termination of Registration Rights..............................23
ARTICLE IX
Miscellaneous Provisions..............................................23
9.1 Amendment.......................................................23
9.2 Waiver of Compliance............................................24
9.3 Notices.........................................................24
9.4 Assignment......................................................25
9.5 No Third Party Beneficiaries....................................25
9.6 Fees and Expenses...............................................25
9.7 Public Announcements............................................25
9.8 Counterparts....................................................25
9.9 Headings........................................................26
9.10 Entire Agreement; Severability..................................26
9.11 No Strict Construction..........................................26
9.12 Governing Law...................................................26
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") dated as of this 18th day
of August, 2000, is entered into by and among NCT Group, Inc. a corporation
organized under the laws of the State of Delaware ("NCTI"),
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a corporation organized under the laws of the State
of Delaware ("DMC") and a wholly owned subsidiary of NCTI, DMC Cinema, Inc., a
corporation organized under the laws of the State of Delaware ("Cinema" or the
"Buyer") and a wholly owned subsidiary of DMC, Theater Radio Network, Inc., a
corporation organized under the laws of the State of Florida, and ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ (individually a
"Seller" and collectively the "Sellers").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Sellers own all of the outstanding shares of capital stock of
Theater Radio Network, Inc. (the "Company");
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to sell
to Buyer, all of the outstanding capital stock of the Company, all upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in reliance upon the representations and warranties
contained herein and in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE I
Defined Terms
1.1 Defined Terms. Capitalized terms used herein shall have the meanings
given below, or as otherwise defined elsewhere in this Agreement:
a. "NCTI Signing Shares" is 7,094,195 restricted shares of NCTI Common
Stock based upon a Trailing Market Price of $0.3376 per share, for a
total value of $2,395,000.
b. "Cinema Consideration" is a 7.5% equity interest in Cinema.
c. "Closing Bid Price" means, for NCTI Common Stock as of any date, the
last closing bid price on the NASDAQ National Market System (the
"NASDAQ-NM") as reported by Bloomberg Financial Markets ("Bloomberg"),
or, if the NASDAQ-NM is not the principal trading market for such
security, the last closing bid price of NCTI Common Stock on the
principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price of NCTI Common Stock in the
over-the-counter market on the pink sheets or bulletin board for such
security as reported by Bloomberg, or, if no closing bid price is
reported for NCTI Common Stock by Bloomberg, the last closing trade
price of such security as reported by Bloomberg. If the Closing Bid
Price cannot be calculated for NCTI Common Stock on such date on any
of the foregoing bases, the Closing Bid Price of such security on such
date shall be the fair market value as reasonably determined in good
faith by the Board of Directors of NCTI (all as appropriately adjusted
for any stock dividend, stock split or other similar transaction
during such period).
d. "Trailing Market Price" shall mean on any given date the daily average
Closing Bid Price for a single share of NCTI Common Stock on the
twenty (20) Trading Days immediately prior to such date.
e. "NCTI Common Stock" means a share of the common stock of NCTI, par
value $0.01 per share."
f. "Accrued Revenue" shall mean revenue recognized by Cinema and the
Company or their successors on a consolidated, accrual basis as
determined in accordance with GAAP.
g. "GAAP" shall mean generally accepted accounting principles as may be
changed from time to time by the Financial Accounting Standards Board,
the Securities and Exchange Commission or other recognized authority.
If GAAP is subject to discretion as to any matter, GAAP shall refer to
the discretion then exercised by NCTI in the preparation of its
regularly prepared financial statements included in its filings under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
h. NCTI First Payment Shares is that number of shares of NCTI Common
Stock having a value of $1,220,000 based upon the Trailing Market
Price on December 31, 2001, assuming that Cinema has Accrued Revenue
of at least $3,300,000 between August 1, 2000 and December 31, 2001.
If the Accrued Revenue for such period is less than $3,300,000, then
the NCTI First Payment Shares shall be that number of shares of NCTI
Common Stock having a value (based upon the Trailing Market Price on
December 31, 2001) equal to the product of $1,250,000 multiplied by a
fraction which is the actual Accrued Revenue for such period divided
by $3,300,000.
i. NCTI Second Payment Shares is that number of shares of NCTI Common
Stock having a value of $1,225,000 based upon the Trailing Market
Price on June 30, 2002 assuming that Cinema has accrued revenue of at
least $4,700,000 between August 1, 2000 and June 30, 2002. If the
Accrued Revenue for such period is less than $4,700,000, then the NCTI
Second Payment Shares shall be that number of shares of NCTI Common
Stock having a value (based upon the Trailing Market Price on June 30,
2002) equal to the product of $1,250,000 multiplied by a fraction
which is the actual Accrued Revenue for such period divided by
$4,700,000.
j. Transaction Consideration is the NCTI Signing Shares, the NCTI First
Payment Shares, the NCTI Second Payment Shares and the Cinema
Consideration.
k. "Trading Day" shall mean (i) a day on which the NCTI Common Stock is
traded on The NASDAQ Small Cap Market, the NASDAQ National Market or
other registered national stock exchange on which the Common Stock has
been listed, or (ii) if the NCTI Common Stock is not listed on The
NASDAQ Small Cap Market, the NASDAQ National Market or any registered
national stock exchange, a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board.
l. Shares is the common stock of Theater Radio Network, Inc., par value
$1.00 per share.
m. "SSCM Payment Agreement" is that letter agreement between NCTI, the
Company and Sun State Capital Management, Inc. ("SSCM"), in
substantially the form attached hereto as Exhibit A by which NCTI
shall issue NCTI Common Stock having a total value of: (a) $105,000
based upon the Trailing Market Price per share on the Closing Date;
(b) $30,000 based upon the Trailing Market Price per share on December
31, 2001; and (c) $25,000 based upon the Trailing Market Price per
share on June 30, 2002, to SSCM on or as of the Closing Date
hereunder, on January 31, 2002, and on July 31, 2002, respectively,
all in discharge of the Company's obligations to SSCM arising under
that engagement letter (the "SSCM letter") dated as of March 27, 2000
between SSCM and the Company.
ARTICLE II
Purchase and Sale of Shares
On the date of this Agreement, upon the terms and subject to the conditions
set forth herein, at a closing ("Closing") to be conducted by the parties
hereto, Buyer agrees to purchase and accept delivery from each Seller of, and
each Seller agrees to sell, assign, transfer and deliver to Buyer, the shares of
the Company set forth below opposite such Seller's name, free and clear of all
liens, pledges, claims, charges, restrictions, equities or encumbrances of any
kind (collectively, "Encumbrances"):
Seller Shares Percentage
▇▇▇▇ ▇▇▇▇▇▇ 80.000 35.90%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 7.000 3.15%
▇▇▇▇▇▇ ▇▇▇▇▇ 17.827 8.00%
▇▇▇▇▇▇ ▇▇▇▇▇▇ 80.000 35.90%
▇▇▇▇▇ ▇▇▇▇▇▇ 38.000 17.05%
Total: 222.827 100.00%
The shares of the Company set forth above to be sold by Sellers to Buyer,
constituting all of the outstanding shares of capital stock of the Company, are
hereinafter collectively called the "Shares".
ARTICLE III
Purchase Consideration; Escrow Arrangements; Closing
3.1 Purchase Consideration.
(a) Subject to the terms and conditions of this Agreement, the total
consideration payable for the Shares consists of the Transaction
Consideration. The Transaction consideration shall be paid as follows:
(i) At the Closing the NCTI Signing Shares and the Cinema
Consideration will be shall be issued to each Seller in the amount set
forth below opposite such Seller's name:
Seller NCTI Signing Shares Cinema Consideration
▇▇▇▇ ▇▇▇▇▇▇ 2,546,816
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 223,467
▇▇▇▇▇▇ ▇▇▇▇▇ 567,536
▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,546,816
▇▇▇▇▇ ▇▇▇▇▇▇ 1,209,560
Total: 7,094,195
(ii) Future payouts will be made to the Sellers in accordance with the
percentages set forth next to their respective names in Section 2.1 as
follows:
1. NCTI First Payment Shares shall be due and issuable on January 31, 2002 and
NCTI Second Payment Shares shall be due and issuable on July 31, 2002.
(b) The NCTI Signing Shares shall be registered by Buyer for resale by
Sellers pursuant to a filed and declared effective registration statement
on Form S-1 or such other form as NCTI may be qualified to use. On the
second Trading Day, prior to NCTI submitting a written request to the
Securities and Exchange Commission (the "SEC") that such registration
statement be declared effective, if the product of the Trailing Market
Price on such Trading Day multiplied by the total number of NCTI Signing
Shares is less than $2,395,000, then NCTI shall issue to Sellers in
accordance with the respective percentages appearing next to their names in
Section 2.1, a sufficient number of shares of NCTI Common Stock (the
"Fill-Up Shares") such that the total number of shares of NCTI Common Stock
then held by Sellers pursuant to this Agreement (assuming Sellers have not
transferred or sold any NCTI Signing Shares) multiplied by the Trailing
Market Price on such day shall equal $2,395,000, and NCTI shall amend such
registration statement prior to it being declared effective to include the
Fill-Up Shares for resale by the Sellers pursuant to such registration
statement.
(c) On signing of this Agreement Sellers shall cause White & Case LLP, as
escrow agent pursuant to that Escrow Agreement dated May 18, 2000 among
NCTI, the Company and the escrow agent, to release from escrow and
surrender to NCTI _______ shares of NCTI Common Stock represented by NCTI
Stock Certificate No. ________, free and clear of all Encumbrances, which
NCTI may cancel as issued and outstanding notwithstanding any prior claims
or rights that may be asserted by any person or entity in respect thereof.
3.2 Restrictive Legends All certificates representing such NCTI Signing
Shares and Cinema Consideration shall bear a restrictive legend
incorporating any applicable securities laws restrictions, as provided for
in Section 8.2 hereof.
3.3 Deliveries.
(a) Documents to be Delivered by Company and Sellers to Buyer. Prior to the
Closing, Sellers will deliver to Buyer the following:
(i) executed copies of the Employment Agreements;
(ii) a certificate of Sellers in the form of Exhibit __ certifying as
to the accuracy of Sellers' representations and warranties at and as
of the Closing and that Sellers have performed and complied with all
of the terms, provisions and conditions to be performed and complied
with by Sellers at or before the Closing; and
(iii) such other certificates and documents as Buyer or its counsel
may reasonably request;
(iii) certificate of good standing of the Company;
(iv) stock certificates for the Shares, free and clear of all liens,
claims, charges, restrictions, equities or encumbrances of any kind,
which certificates shall be duly endorsed to Buyer or accompanied by
duly executed stock powers in form satisfactory to Buyer;
(v) all duly executed consents of third parties reasonably requested
by Buyer ; and
(vi) a copy, certified by an appropriate director of the Company of
the resolutions of Company's Board of Directors unanimously approving
the execution, delivery and performance of this Agreement.
(b) Documents to be Delivered by Buyer to Sellers. Prior to the Closing,
NCTI, DMC and Buyer will deliver to each of the Sellers the following:
(i) stock certificates or irrevocable stock transfer instructions to
American Stock Transfer Company, transfer agent for NCTI, evidencing
the issuance and delivery of the NCTI Stock Consideration and Cinema
Consideration to Sellers free and clear of all Encumbrances, except
for Encumbrances created or permitted to exist by Sellers and
restrictions on transfer imposed by this Agreement and under
applicable securities laws;
(ii) certificates of good standing of NCTI, DMC and Cinema;
(iii) resolutions of the board of directors of Buyer, NCTI and DMC
approving the execution of the agreements and transactions
contemplated hereby;
(iv) copies of all incorporation documents relating to Cinema;
(v) executed copies of the Employment Agreements;
(vi) officer's certificate authorizing the completion of the
transactions contemplated herein; and
(vii) such other certificates and documents as Seller or its counsel
may reasonably request.
ARTICLE IV
Representations and Warranties by Sellers
Sellers hereby represent and warrant to NCTI, DMC and Buyer as of the date
hereof that:
4.1 Good and Marketable Title. Sellers hold good and marketable title to
the Shares, free and clear of any Encumbrances. There are no agreements,
arrangements or undertakings (including without limitation, options or
rights of first refusal) to which Sellers is a party for the purchase, sale
or other disposition or voting of the Shares or any interest therein
(including, without limitation, voting trust arrangements) and there exist
no restrictions to Sellers' right to transfer the Shares in accordance with
the provisions of this Agreement. As of the Closing, Sellers shall convey
to Buyer good and marketable title to the Shares free and clear of any such
options, rights of first refusal, commitments or encumbrances.
4.2 Organization. Company is a corporation duly organized, validly existing
and in good standing under the laws of the Florida, and has all requisite
corporate power and authority to transfer, assign and sell the Shares.
Except as set forth in Schedule 4.2, the Company has no subsidiaries nor
holds (beneficially or of record of otherwise) any equity interest in any
corporation, partnership, limited liability company, joint venture,
business trust or any other entity.
4.3 Authority; Binding Effect; Performance. (a) Sellers has full right,
power, legal capacity and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby, and no spousal consent
thereto is required; ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ have full right, power,
legal capacity and authority to enter into their respective Employment
Agreements guaranteed by NCTI, between themselves and Cinema. The Board of
Directors of Company has unanimously approved the execution and delivery of
this Agreement and each of the Ancillary Agreements and the transactions
contemplated hereby and thereby. No further corporate action on the part of
Company is necessary to authorize and approve the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
This Agreement and the Ancillary Agreements have been duly and validly
executed and delivered by Sellers, and constitute the legal, valid and
binding obligations of Sellers, as applicable, enforceable in accordance
with their terms, except that such enforceability is subject to bankruptcy,
insolvency, reorganization and similar laws of general applicability
relating to or affecting creditors' rights and limitations on the
availability of the remedy of specific performance and other equitable
remedies. No action, consent or approval by or filing with any federal,
state, municipal, or other court or governmental or administrative body or
agency or any other regulatory or self-regulatory body of the United
States, is required in connection with the execution and delivery of this
Agreement and the Ancillary Agreements by Sellers or the Company, as
applicable. No claim, action, suit, proceeding, arbitration, investigation
or inquiry before any federal, state, municipal, foreign or other court or
governmental or administrative body or agency, any securities or
commodities exchange, other regulatory body or any private arbitration
tribunal of the United States, is now pending or, to the best knowledge of
Sellers, threatened against or relating to Sellers or the Company or its
assets which would adversely affect the ability of Sellers to consummate
the transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement and the
Ancillary Agreements by Sellers and the consummation of the
transactions contemplated hereby and thereby will not: (i) violate or
conflict with any provision of any joint venture contract, articles of
incorporation, by-laws, approvals, business licenses or other
constituent documents of Company; (ii) breach, violate or (whether
immediately or with the lapse of time or the giving of notice or both)
constitute an event of default under or an event which would give rise
to any right of termination, cancellation, modification, acceleration
or foreclosure under, or require any consent of or the giving of any
notice to any third party under, any note, bond, indenture, credit
facility, mortgage, security agreement, lease, license, franchise,
permit or other agreement, instrument or obligation to which Company
is a party, or by which Company or any of its properties or assets,
may be bound, or give rise to the creation of any Encumbrance upon the
properties or assets of Company; or to the knowledge of the Sellers
(i) violate or conflict with any law, statute, rule, regulation,
ordinance, code, judgment, order, writ, injunction, decree or other
requirement of any court or of any governmental body or agency thereof
in the United States, applicable to Company or Sellers or by which any
of their properties or assets may be bound; or (ii) require any
registration or filing by Company with, or any permit, license,
exemption, consent, authorization or approval of, or the giving of any
notice by Company to, any governmental or regulatory body, agency or
authority.
4.4 Capitalization. (a) As of the date hereof, the authorized capital stock
of the Company consists of 1,000 shares of Company common stock (the
"Company Common Stock") and no shares of Company preferred stock, of which
as of August 18, 2000, 222.827 shares of Company Common Stock were issued
and outstanding. All of such outstanding shares have been duly authorized
and validly issued and are fully paid and nonassessable. Except as set
forth in Schedule 4.4, as of the effective date of this Agreement:
(i) no shares of the Company's capital stock is subject to
preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company, nor is any
holder of capital stock of the Company entitled to preemptive or
similar rights arising out of any Agreement or understanding with
the Company by virtue of any other agreement;
(ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, any shares of capital stock of the Company, or
contracts, commitments, understandings or arrangements by which
the Company is or may become bound to issue additional shares of
capital stock of the Company;
(iii) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of its
securities under the Securities Act of 1933 (the "Securities
Act");
(iv) there are no outstanding securities of the Company which
contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which
the Company is or may become bound to redeem a security of the
Company;
(iv) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the
issuance of the securities as described in this Agreement; and
(v) Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or
agreement.
(b) Upon consummation of the Closing, Buyer shall hold all of the
issued and outstanding shares of capital stock of the Company.
4.5 Financial Statements. Attached hereto as Schedule 4.5 is a copy of each
of the following (collectively, the "Financial Statements"): (a) unaudited
financial statements of Company for the years ended December 31, 1998 and
1999; (b) unaudited financial statements of Company for the three-month
period ended June 30, 2000; and (c) specific schedules setting forth
accounts receivable, other receivables, deposits and prepayments, fixed
assets, trade payables, other payable accruals and taxes, as may be
reasonably requested by Buyer. The Financial Statements (i) have been
prepared from, and are consistent with, the books and records of Company,
as the case may be, (ii) are accurate and complete in all material
respects, and (iii) fairly present the financial condition and results of
operations of Company as at the dates, and for the periods, stated therein.
The books and records of Company are accurate and complete in all material
respects and are maintained in accordance with good business practices and
all applicable legal requirements.
4.6. No Undisclosed Events, Liabilities, Developments or Circumstances. To
the best knowledge of Sellers, no event, liability, development or
circumstance has occurred or exists, or is contemplated to occur, with
respect to the Company or its businesses, properties, prospects, operations
or financial condition, which could be material but which has not been
publicly announced or disclosed in writing to the Buyer. Except for
liabilities incurred in the ordinary course of business (none of which,
individually, or in the aggregate, would have a material adverse effect),
since June 30, 2000, the Company has not incurred any liabilities or
indebtedness of any nature (whether accrued, absolute, contingent or
otherwise).
4.7 Absence of Certain Changes. Except as contemplated by this Agreement or
as set forth on Schedule 4.7, since June 30, 2000, the Company has
conducted its business only in the ordinary course of business and
consistent with past practice, there has not been any material adverse
change in the business, assets, liabilities, financial condition, cash
flows, operations, licenses or results of operations of the Company, and
the Company has not:
(a) borrowed any amount or incurred or become subject to any
liability, except (i) current liabilities incurred in the ordinary
course of business and (ii) liabilities under contracts entered into
in the ordinary course of business;
(b) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any of the Assets, except liens for current property
taxes not yet due and payable or purchase money security interests
granted in the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid any
liability, other than current liabilities paid in the ordinary course
of business;
(d) sold, assigned or transferred (including, without limitation,
transfers to any employees or affiliates) any tangible assets, except
in the ordinary course of business, or canceled any debts or claims;
(e) sold, assigned or transferred (including, without limitation,
transfers to any employees or affiliates) any patents, trademarks,
trade names, copyrights, trade secrets, intellectual property or other
intangible assets, or disclosed any proprietary confidential
information to any other person or entity;
(f) waived any rights of material value or suffered any extraordinary
losses wrote off or extended any billed or unbilled receivable or work
in process, or unduly delayed the payment of any obligations, whether
or not in the ordinary course of business or consistent with past
practice;
(g) taken any other action or entered into any other transaction other
than in the ordinary course of business and in accordance with past
custom and practice, or entered into any transaction with any
affiliate;
(h) suffered any material theft, damage, destruction or loss of or to
any property or properties owned or used by the Company in the
operation of its business, whether or not covered by insurance;
(i) made or granted any bonus or any wage, salary or compensation
increase to any officer, employee or consultant; made or granted any
increase in any employee benefit plan or arrangement; amended or
terminated any existing employee benefit plan or arrangement; adopted
any new employee benefit plan or arrangement; or made any commitment
or incurred any liability to any labor organization;
(j) made any capital expenditures or commitments therefor in excess of
$1,000 individually or $5,000 in the aggregate;
(k) made any loans or advances to, or guarantees for the benefit of,
any shareholder or employee, or any other Persons other than in the
ordinary course of business consistent with past practices;
(l) declared, paid or set aside any dividend or distribution to or for
the benefit of any shareholder, or
(m) changed the Company's accounting principles or practices.
4.8 Title to Properties; Sufficiency of Assets.
(a) The Company does not own any real property. The real property
demised by the lease, described in Schedule 4.11, constitutes all of
the real property used or occupied by the Company in connection with
its business.
(b) The Company owns no equipment, machinery, furniture, fixtures,
furnishings and other tangible items of personal property having an
original purchase price in excess of $25,000 and which is used, or
usable, in connection with the operation of the business. Schedule 4.8
sets forth a description of all leases under which the Company is
lessee of equipment, machinery, furniture, fixtures, furnishings and
other tangible items of personal property used in connection with the
operation of the business. To the best knowledge of Sellers, all of
the equipment, machinery, furniture, fixtures, furnishings and other
tangible items of personal property whether owned or leased by the
Company that are necessary for the conduct of the business are, taken
as a whole, in operating condition and are usable in the ordinary
course of the business. There are no defects in such assets or other
condition relating thereto which, in the aggregate, adversely affect
the operation or value of the Company's assets or its business.
(c) The Company owns and has good title to each of the assets which
are owned by the Company, respectively, free and clear of any security
interests, mortgages, claims, liens or encumbrances of any nature
whatsoever, except for liens for taxes not yet due and payable. With
respect to assets which the Company leases, the Company is in material
compliance with such leases and, to the knowledge of Sellers, the
Company holds a valid leasehold interest thereunder.
4.9 No Claims or Litigation. Except as set forth in Schedule 4.9, (a) there
are no suits, actions, claims, proceedings (including, without limitation,
arbitration and administrative proceedings) or governmental investigations
against the Company, directly or indirectly, (b) there are no material
suits, actions, claims, proceedings (including without limitation,
arbitration and administrative proceedings) or governmental investigations
pending or threatened against the Company, directly or indirectly, nor are
there any such material suits, actions, claims, proceedings or governmental
investigations pending or to the knowledge of the Sellers, threatened,
challenging the validity or propriety of this Agreement or the transactions
contemplated hereby. There is no judgment, order, injunction, decree or
award issued by any court, arbitrator, governmental body or agency thereof
relating to Company to which Company is a party or by which Company is
bound, which is unsatisfied.
4.4.10 Taxes. (a) The Company has timely and properly filed an election to
be taxed as a Subchapter S Corporation under the Internal Revenue Code of
1986, as amended. All Tax returns and reports required to be filed by
Company on or before the Closing Date have been duly and timely filed and,
to the best knowledge of Sellers, all such returns and reports have been or
will be complete and correct. Company has paid when due any and all Taxes,
assessments, fees and other governmental charges arising with respect to
periods beginning on or before the Closing Date which are imposed on or
with respect to Company and with respect to its assets. To the best
knowledge of Sellers, as of the date hereof, Company has not waived any
statutes of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency; there are no pending
or, to the best knowledge of Sellers, threatened actions or proceedings for
the assessment or collection of Taxes against Company, and, to the best
knowledge of Sellers, no basis exists for any such assessments; and there
are no Tax liens on any of its assets, other than any lien for current
Taxes not yet due and payable. To the best knowledge of Sellers, no claim
has ever been made by an authority in a jurisdiction where Company does not
file Tax returns or reports that Company is or may be subject to taxation
by that jurisdiction.
(b) For purposes of this Agreement, the terms "Tax" and "Taxes" shall
mean and include any and all foreign, national, federal, state, local
or other income, franchise, sales, gross receipts, use, transfer,
value added, goods and services, withholding, employment, payroll,
social security, unemployment, real and personal property taxes, stamp
duty, customs duty and intangibles tax and all other taxes of any
nature, deficiencies, fees, assessments, interest, penalties or any
other governmental charges, duties, impositions and liabilities of
whatever nature, including, without limitation, any installment
payment for taxes and contributions or other amounts determined with
respect to compensation paid to directors or officers or employees
from time to time imposed by or required to be paid to any
governmental authority (including penalties and additions to Tax
thereon, penalties for failure to file a return or report and interest
on any of the foregoing).
4.11 Leased Real Property. Schedule 4.11, if necessary, sets forth a
complete and correct list and, in the case of oral agreements, a
description of all real property leased by Company, used or occupied by the
Sellers (collectively, the "Leased Real Property"). Sellers have previously
delivered or made available to Buyer complete and correct copies of each
such lease (and any amendments thereto). Except as set forth in Schedule11,
(i) each such lease is in full force and effect, (ii) all lease payments
due to date on any such lease have been paid and not any other party is in
default under any such lease, and no event has occurred which constitutes,
or with the lapse of time or the giving of notice or both would constitute,
a default by Company (iii) there are no disputes or disagreements between
Company and any other party with respect to any such lease.
4.12 Patents, Copyrights, Trademarks. Except as listed in Schedule 4.12,
(c) there are no copyrights (including, without limitation, copyrights with
respect to translations), trademarks and service marks, trademark and
service ▇▇▇▇ registrations (and applications therefor), patents, patent
applications, unpatented inventions, trade or business names and logos,
devices, insignias, formats, titles and subtitles and registrations issued
or applications pending, with respect to the foregoing, owned or used by
Company. To the best knowledge of Sellers, the Company has not infringed or
misappropriated the intellectual property rights of any other person or
entity. To the best knowledge of Sellers, no person or entity is infringing
or misappropriating the intellectual property rights of the Company.
(d) Sellers acknowledge that they do not possess any intellectual
property rights (including, without limitation, rights as an owner,
licensor or licensee) relating to the Company's business or its
assets.
4.13 Material Contracts. Forms of all material agreements and
understandings with respect to Company are set forth in Schedule 4.13
(collectively, the "Material Contracts"). Except as set forth on Schedule
4.13, the Material Contracts are in full force and effect and Company is in
compliance therewith with respect to the payment of all amounts due
thereunder, and, to the best knowledge of Sellers, no event has occurred
which constitutes, or with the lapse of time or giving of notice or both
would constitute, a default by Company. The Material Contracts constitute
all of the material agreements necessary for the operation of business of
Company as presently conducted.
4.14 Compliance with Applicable Laws; Permits. No material claims have been
filed against Company, nor have Sellers received any notice alleging any
violation under, nor is there any inquiry, investigation or proceedings
relating to, United States or other foreign or domestic laws, rules,
regulations, ordinances, codes, judgments, orders, injunctions, writs or
decrees of any court or governmental body or agency thereof to which it may
be subject which are applicable to or which could materially affect the
financial condition, business operations or prospects of Company. To the
best knowledge of Sellers, the Company is in compliance in all material
respects with all applicable laws and regulations affecting the assets or
the conduct or operation of its business, including, without limitation,
laws relating to the environment, discrimination, employment, occupational
health and safety, and no claims have been filed against the Company
alleging a violation of any such laws. To the best knowledge of Sellers,
the Company has, in full force and effect, all licenses, permits and
certificates from governmental authorities necessary to conduct its
business in the manner in which its business is presently conducted and to
own and operate its assets (collectively, the "Permits"). The Company has
conducted its business in compliance with all material terms and conditions
of the Permits.
4.15 Securities Law Matters.
(e) Sellers are acquiring the NCTI Stock Consideration and Cinema
Consideration for their own account for the purpose of investment and
not with a view to the resale or distribution of any part thereof,
except as otherwise set forth herein.
(f) Sellers can bear the economic risk and complete loss of the NCTI
Stock Consideration and Cinema Consideration and has such knowledge
and experience in financial or business matters that it is capable of
evaluating the merits and risks of owning the NCTI Stock Consideration
and Cinema Consideration. The Company has not been organized solely
for the purpose of acquiring the NCTI Stock Consideration or Cinema
Consideration.
(g) Sellers acknowledge that the NCTI Signing Shares, the NCTI First
Payment Shares, the NCTI Second Payment Shares and the Cinema
Consideration constitute "restricted securities" under the federal
securities laws of the United States of America inasmuch as they are
being or will be acquired from Buyer in a transaction not involving a
public offering and that under such laws and applicable regulations
thereunder such securities may be resold without registration under
the Securities Act only in certain limited circumstances. Sellers are
familiar with Rule 144 promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act ("Rule 144"),
as presently in effect, and understands the resale limitations imposed
on the NCTI Escrow Shares thereby and by applicable provisions of the
Securities Act.
4.16 Employee Relations. The Company is not involved in any labor dispute
nor, to the knowledge of Sellers, is any such dispute threatened. None of
the Company's employees is a member of a union and the Sellers believe the
Company's relations with its employees are satisfactory.
4.17 No Untrue Statements. No representation or warranty made by the
Sellers in this Agreement, nor any statement made by the Sellers or the
Company in the Disclosure Schedules or any certificate furnished by the
Company or the Sellers pursuant to this Agreement, contains or will contain
on the Closing Date, any untrue statement of a material fact, or omits or
will omit, on the Closing Date, to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE V
Representations and Warranties of NCTI, DMC and Buyer
Buyer represents and warrants to the Sellers as of the date that follows:
5.1 Consideration for Purchase. NCTI, DMC and Buyer acknowledges and agrees
that the consideration payable hereunder for the purchase of the Shares was
arrived at following arms-length negotiations and Buyer shall not have any
claim of any nature whatsoever with respect to such resulting valuation of
the Shares, assuming Sellers have disclosed all relevant facts concerning
the Company, its assets, liabilities, operations and prospects.
5.2 Corporations Duly Organized. NCTI, DMC and Cinema are each corporations
which are duly organized, validly existing and in good standing under the
laws of the State of Delaware and have all requisite corporate power and
authority to own, lease and operate its property and assets and to carry on
its business as presently conducted, and to acquire and own the Shares.
5.3 Requisite Corporate Authority. Buyer has all requisite corporate power
and authority to execute, deliver and perform their obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate actions on the part of
Buyer. This Agreement and the Ancillary Agreements have been duly executed
and delivered on behalf of Buyer and constitute the valid and binding
obligations of Buyer, enforceable against it in accordance with its terms,
except that further enforceability is subject to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights and limitations on the availability of the
remedy of specific performance and other equitable remedies. No action,
consent or approval by or filing with any federal, state, municipal, or
other court or governmental or administrative body or agency or any other
regulatory or self-regulatory body of the United States is required in
connection with the execution and delivery of this Agreement and the
Ancillary Agreements by Buyer. No claim, action, suit, proceeding,
arbitration, investigation or inquiry before any federal, state, municipal
or other court or governmental or administrative body or agency, any
securities or commodities exchange, other regulatory body or any private
arbitration tribunal of the United States is now pending or, to the
knowledge of Buyer, threatened against or relating to NCTI, DMC and Cinema
which would adversely affect the ability of Buyer to consummate the
transactions contemplated by this Agreement. Buyer has delivered to Sellers
copies of Certificate of Incorporation and all amendments thereto and a
copy of By-Laws, which are true and complete copies of such instruments as
in effect on the date of this Agreement.
5.4 Nature of Transaction Contemplated. The execution, delivery and
performance of this Agreement and the Ancillary Agreements by Buyer and the
consummation of the transactions contemplated hereby and thereby will not:
(i) violate or conflict with any provision of the joint venture contract,
articles of association, approval or business license or other constituent
documents of Buyer; (ii) breach, violate or (whether immediately or with
the lapse of time or the giving of notice or both) constitute an event of
default under or an event which would give rise to any right of
termination, cancellation, modification, acceleration or foreclosure under,
or require any consent of or the giving of any notice to any third party
under, any note, bond, indenture, credit facility, mortgage, security
agreement, lease, license, franchise, permit or other agreement, instrument
or obligation to which Buyer is a party, or by which Buyer or any of its
properties or assets may be bound, or give rise to the creation of any
Encumbrance upon the properties or assets of NCTI, DMC and Cinema; (iii)
violate or conflict with any law, statute, rule, regulation, ordinance,
code, judgment, order, writ, injunction, decree or other requirement of any
court or of any governmental body or agency thereof applicable to NCTI, DMC
and Cinema or by which any of its properties or assets may be bound; or
(iv) other than the filing of a Form D with the SEC, require any
registration or filing by Buyer with, or any permit, license, exemption,
consent, authorization or approval of, or the giving of any notice by Buyer
to, any governmental or regulatory body, agency or authority.
5.5 Delivery of Stock Consideration. Upon delivery of the Transaction
Consideration by Buyer in accordance with the terms of this Agreement, such
Transaction Consideration will be duly authorized, validly issued, fully
paid and nonassessable . Upon the delivery of the Transaction
Consideration, such stock certificates shall have been duly authorized and
assuming the accuracy and completeness of Sellers' representations in
Section 4.15, issued in accordance with applicable federal and state
securities laws.
5.6 Litigation. Except as disclosed in the NCTI SEC Reports (as defined
below) as filed as of the date hereof, there are no action, suits,
proceedings or investigations, either at law or in equity, or before any
commission or other administrative authority in any United States or
foreign jurisdiction, of any kind now pending or threatened or proposed in
any manner, or any circumstance which should or could reasonably form the
basis of any such action, suit, proceeding or investigation, involving
Buyer or any of its properties or assets that (i) questions the validity of
this Agreement or (ii) seeks to delay, prohibit or restrict in any manner
any action taken or to be taken by Buyer under this Agreement.
5.7 SEC Reports and Financial Statements. NCTI has filed with the SEC, and
has heretofore made available to Sellers, true and complete copies of all
reports required to be filed pursuant to the Securities Act and the
Exchange Act (the "NCTI SEC Reports"). As of their respective dates or, if
amended, as of the date of the last such amendment filed prior to the date
hereof, the NCTI SEC Reports, including, without limitation, any financial
statements or schedules included therein (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may
be, and the applicable rules and regulations of the SEC thereunder. The
Financial Statements have been prepared from, and are in accordance with,
the books and records of NCTI, comply in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited consolidated
quarterly financial statements, as permitted by the instructions to Form
10-Q promulgated pursuant to the Exchange Act) applied on a consistent
basis during the period involved (except as may be stated in the notes
thereto) and fairly present the consolidated financial position and the
consolidated results of operations and cash flows (and changes in financial
position, if any) of NCTI as of the times and for the periods referred to
therein.
5.8 Investment Representation. Buyer is acquiring the Shares for investment
and not with a view to the distribution, unless agreed to by the Sellers,
thereof or dividing all or any part of its interest therein with any other
person.
5.9 No Untrue Statements. No representation and warranty by NCTI, DMC or
Buyer contained in this Agreement and no written statement contained in any
certificate or other document required to be furnished by any officer,
employee, counsel or other agent of NCTI, DMC or Buyer to Sellers pursuant
to this Agreement contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary in
order to make the statements therein contained not misleading.
ARTICLE VI
Miscellaneous Covenants
6.1 Further Assurances. (a) Sellers shall, at any time and from time to
time after the Closing, upon the reasonable request of any party and at the
expense of Buyer but without further consideration, do, execute,
acknowledge, deliver and file, or shall cause to be done, executed,
acknowledged, delivered and filed, all such further acts, deeds, transfers,
conveyances, assignments or assurances as may be reasonably requested as
necessary to transfer good and marketable title to the Shares, and to
comply with all applicable legal requirements.
(b) As soon as commercially practicable but in no event later than
fourteen days (14) days after the Closing, Sellers shall deliver or
cause to be delivered to Buyer all material corporate records, seals,
documents, minute books and financial statements of the Company in
possession of Company or the Sellers or their agents in whatever
medium or format.
6.2 Non-Disclosure of Confidential Information. Sellers and Buyer agree to
not disclose any Confidential Information to anyone other than to their
respective executive employees, advisors and representatives. For purposes
of this Agreement, the term "Confidential Information" shall mean all
non-public proprietary information of Company and Sellers (including,
without limitation, client lists, products and advertising agreements)
relating to Company which is not generally available to the public or does
not become generally available to the public through any fault of Sellers.
In the event that any of the parties are required to disclose any
Confidential Information in a judicial, administrative or governmental
proceeding, such party shall give the other parties prompt notice of such
requirement and shall cooperate with the non-offering party desiring to
seek a protective order.
6.3 Infusion of Capital. The Sellers' 7.5% equity stake in Cinema shall not
be subject to dilution until such time as $10,000,000 of equity financing
capital has been infused into Cinema. Buyer will periodically advise the
Sellers of the status of Buyer's efforts to obtain the financing capital
for Cinema.
6.4 Consents and Approvals. Sellers and Buyer shall use their best efforts
to obtain prior to the Closing all consents, authorizations and approvals
under all statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any court or governmental agency, board, bureau,
body, department or authority or of any other person required to be
obtained by Sellers, [at Buyer's expense,] in connection with the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby.
6.5 Employment Contracts. Prior to or at the Closing, DMC will enter into
employment contracts guaranteed by NCTI with each of ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇ in the form of Exhibits ___.
6.6 Resignation of Directors. Prior to or at the Closing, Sellers will
cause each of the directors of the Company to resign as a director of the
Company effective at the Closing.
6.7 Use of Name. None of the Sellers will use the name "Theater Radio
Network, Inc." or any derivative thereof, or any other trademark of the
Company, in any way whatsoever at any time after the Closing, without
express written permission from the Buyer.
6.8 No Unreasonable Interference. Pending the Closing, neither NCTI, DMC
nor Buyer shall take any action which could reasonably be expected to
interfere with the business operations of the Company.
6.9 Closing Conditions. The representations and warranties of Sellers,
NCTI, DMC and Buyer shall be true and correct.
ARTICLE VII
Indemnification; Survival of Representations and Warranties
7.1 Indemnity Obligations of Sellers. Subject to the terms, conditions and
limitations set forth in this Article VII, Sellers, jointly and not
severally, will indemnify and hold NCTI, DMC and Buyer harmless against and
in respect of any loss, damage (including, without limitation, any punitive
damages), deficiency, diminution in value, claim, liability, obligation,
suit, proceeding, action, demand, fee, penalty, fine, interest, surcharge,
cost or expense of any nature whatsoever (including, without limitation,
out-of-pocket expenses, investigation costs and fees and disbursements of
accountants and counsel in investigating and contesting such claims or
otherwise) (collectively, "Damages") suffered or incurred by NCTI, DMC or
Buyer arising out of, based upon or resulting from (a) any inaccuracy in or
any breach of any representation and warranty of Sellers contained in this
Agreement or any disclosure schedule, certificate or other written
instrument or document delivered by Sellers pursuant hereto; (b) any breach
or nonfulfillment of, or any failure to perform, any of the covenants,
agreements or undertakings of Sellers contained in or made pursuant to this
Agreement; and (c) any breach or nonfulfillment of, or any failure to
perform, any of the covenants, agreements or undertakings of Company
contained in or made pursuant to this Agreement.
7.2 Indemnity Obligations of Buyer. Subject to the terms conditions and
limitations set forth in this Article VII, NCTI, DMC and Buyer hereby agree
jointly and severally to indemnify and hold Sellers or any successor in
interest to sellers, harmless from, and to reimburse Sellers for any
Damages arising out of, based upon or resulting from (a) any inaccuracy in
or any breach of any representation and warranty of NCTI, DMC and Buyer
contained in this Agreement or any disclosure schedule, certificate or
other written instrument or document delivered by NCTI, DMC and Buyer
pursuant hereto; (b) any breach or nonfulfillment of, or failure to
perform, any of the covenants, agreements or undertakings of NCTI, DMC and
Buyer contained in or made pursuant to the terms and conditions of this
Agreement; and (c) any matters relating to the SSCM Letter or the SSCM
Payment Agreement.
7.3 Notification of Claims; Procedures. (a) Subject to the remaining
provisions of this Article VII, a person entitled to seek indemnification
hereunder (the "Indemnified Party") shall provide the indemnifying party
(the "Indemnifying Party") with notice (a "Claim Notice") of the event or
matter giving rise to such claim and its good faith estimate of the amount
of Damages relating to such claim, and shall otherwise make available to
the Indemnifying Party all relevant information which is material to the
claim and which is in the possession of the Indemnified Party. In the event
any claim or demand in respect of which an Indemnified Party might seek
recovery of Damages under this Article VII is asserted against or sought to
be collected from such Indemnified Party by any third party (a "Third Party
Claim"), the Indemnified Party shall deliver the relevant Claim Notice with
reasonable promptness to the Indemnifying Party. The Indemnifying Party
will notify the Indemnified Party in writing as soon as practicable but in
any event within thirty (30) days following receipt of such Claim Notice
(the "Dispute Period") whether the Indemnifying Party disputes the claim of
the Indemnified Party in whole or in part and in the case of a Third Party
Claim, whether the Indemnifying Party desires, without cost or expense to
the Indemnified Party, to assume the defense of such Third Party Claim. If,
following the delivery of a Claim Notice the Indemnified Party determines,
in good faith, that the amount of potential Damages relating to such claim
exceeds the estimated Damages initially set forth in the Claim Notice, then
the Indemnified Party shall have the right to submit an amended Claim
Notice to the Indemnifying Party setting forth such additional amount of
estimated Damages. Notwithstanding the foregoing, if such amended Claim
Notice shall be delivered within the Dispute Period for the initial claim
relating to such Claim Notice, the Dispute Period shall automatically be
extended for a further thirty (30) days following the Indemnifying Party's
receipt of such amended Claim Notice.
(b) Except as is hereinafter provided in this Section 7.3(b), if the
Indemnifying Party notifies the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to assume the defense of
the Third Party Claim, then the Indemnifying Party will have the right
to defend such Third Party Claim by all appropriate proceedings, which
proceedings will be diligently prosecuted by the Indemnifying Party to
a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party
in the case of any settlement that provides for any relief other than
the payment of monetary damages, which consent will not be
unreasonably withheld or delayed). The Indemnifying Party (or its
insurers, as the case may be) will have full control of such defense
and proceedings, including any settlement thereof (subject to the
Indemnified Party's right to approve the settlement as provided in the
previous sentence; provided, however, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole expense of
the Indemnifying Party, cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying
Party elects to contest, or, if appropriate and related to the Third
Party Claim in question, in making any counterclaim against the person
asserting the Third Party Claim, or any cross-complaint against any
person (other than the Indemnified Party or any of its affiliates).
Notwithstanding the foregoing,
(i) the Indemnified Party may, at its sole cost and expense,
retain or take over the control of the defense or settlement of
any Third Party Claim, the defense of which the Indemnifying
Party has elected to control, if the Indemnified Party
irrevocably waives in writing its right to recover any Damages
hereunder with respect to such Third Party Claim;
(ii) the Indemnified Party may, at the sole cost and expense of
the Indemnifying Party, retain separate counsel to represent it
in, but not control, any defense or settlement undertaken by the
Indemnifying Party pursuant to this Section 7.3(b) if outside
counsel to the Indemnified Party reasonably advises the
Indemnified Party and the Indemnifying Party in a written opinion
that joint representation of such parties by a single counsel
raises a potential conflict of interest; and
(iii) if the proceeding involves, in addition to the claim for
which indemnification under this Article VII is being sought, a
matter solely of concern to the Indemnified Party, the
Indemnified Party shall have the right to control the defense and
settlement of such additional claim at its own cost and expense
and with its own counsel.
(c) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to
assume the defense of the Third Party Claim, or if the Indemnifying
Party shall not have the right to assume control of the dispute of
such claim pursuant to Section 7.3(b) above, then the Indemnified
Party will have the right and the obligation (at the sole cost of the
Indemnifying Party) to defend the Third Party Claim by all appropriate
proceedings, which proceedings will be diligently prosecuted by the
Indemnified Party to a final conclusion or will be settled at the
discretion of the Indemnified Party. The Indemnified Party will have
full control of such defense and proceedings, including any settlement
thereof. Subject to the foregoing, the Indemnifying Party may, at is
sole cost and expense, retain separate counsel to represent it in, but
not control, any defense or settlement controlled by the Indemnified
Party pursuant to this Section 7.3(c).
(d) If the Indemnifying Party notifies the Indemnified Party in
writing that it does not dispute the recoverability of any Damages by
the Indemnified Party with respect to the Third Party Claim or fails
to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the recoverability of any Damages with
respect to such Third Party Claim, all Damages arising from such Third
Party Claim will be conclusively deemed recoverable under this Article
VII. If the Indemnifying Party has timely disputed the recoverability
of any Damages with respect to such claim (a "Dispute Notice"), the
Indemnifying Party and the Indemnified Party will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the thirty (30) day period following
receipt by the Indemnified Party of the Dispute Notice or such longer
period as the parties may agree (the "Resolution Period"), such
dispute shall be resolved by arbitration pursuant to Section 9.14;
provided, however, that pending resolution of such dispute, the
Indemnifying Party will be obligated to defend the Third Party Claim
(or, if the Indemnified Party so elects, it may defend the Third Party
Claim at the sole cost of the Indemnified Party).
(e) In the event any Indemnified Party seeks to recover any Damages
under this Article VII that do not involve a Third Party Claim, the
Indemnified Party shall deliver a Claim Notice reasonably promptly to
the Indemnifying Party. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the recoverability of such
Damages or fails to notify the Indemnified Party within the Dispute
Period whether the Indemnifying Party disputes the recoverability of
such Damages, the Damages arising from the claim specified in such
Claim Notice will be conclusively deemed recoverable under this
Article VII. If the Indemnifying Party has timely disputed the
recoverability of any Damages with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the Resolution Period, such dispute shall
be resolved by arbitration pursuant to Section 9.14.
7.4 Duration. (a) The representations and warranties contained in Sections
4 and 5 of this Agreement shall survive the Merger as follows: (i) the
representations and warranties of the Sellers contained in Sections 4.1,
4.2, 4.3 and 4.4 hereof shall survive the Closing and shall expire on the
seventh anniversary of the Closing; (ii) the representations and warranties
of the Sellers contained in Section 4.10 hereof shall survive the Closing
until the expiration of the statute of limitations applicable to any claim
that is the subject of such representation or warranty, at which time they
shall expire; and (iii) all other representations and warranties of the
Sellers and all representations and warranties of the NCTI, DMC and Buyer
shall survive the Closing until the date that is two (2) years following
the Closing, at which time they shall expire. (a) Any claim for
indemnification under this Agreement which is made in good faith and in
writing prior to the expiration of such claim on the Indemnity Termination
Date shall survive such expiration until mutually resolved or otherwise
determined hereunder, as applicable, and the Indemnity Termination Date for
all purposes hereunder shall automatically be extended with respect to such
claim (but not any other claims) until such claim is so mutually resolved
or otherwise determined hereunder. Any such claim not so made in writing
prior to the expiration of such claim on the relevant Indemnity Termination
Date shall be deemed to have been waived.
7.5 Limitations. (a) Notwithstanding anything to the contrary herein, any
claim by an Indemnified Party against any Indemnifying Party under this
Agreement shall be payable by the Indemnifying Party only in the event and
to the extent that the accumulated amount of all "Settled Claims" (as
hereinafter defined) incurred by the Indemnified Party shall exceed the
amount of $25,000 in the aggregate (the "Indemnification Threshold"). At
such time as the aggregate amount of all Settled Claims incurred by the
Indemnified Party shall exceed the Indemnification Threshold, such
Indemnifying Party shall thereafter be liable on a dollar-for-dollar basis
for the amount of all Settled Claims beyond the Indemnification Threshold
and, in addition, shall reimburse the Indemnified Party for an amount equal
to the full amount of the settled Claims initially excluded under the
Indemnification Threshold.
(b) In no event shall the maximum aggregate liability of an
Indemnifying Party with respect to Settled Claims exceed the
consideration received by such Indemnifying Party.
7.6 Settlement of Claims. (a) For purposes hereof, any claim for
indemnification by any Indemnified Party shall be deemed to have been
"Definitively Resolved" when any of the following events has occurred:
(i) a claim is settled by mutual written agreement of Sellers and
Buyer;
(ii) a final judgment, order or award of a court of competent
jurisdiction or arbitrator deciding such claim has been rendered,
as evidenced by a certified copy of such judgment, order or
award, provided that such judgment, order or award is not
appealable or the time for making an appeal has expired;
(iii) during the Dispute Period the Indemnified Party has not
received a written Dispute Notice.
(a) For purposes hereof, any indemnity claim for which a Claim Notice
has been submitted but which has not been Definitively Resolved is
referred to herein as a "Pending Claim". For purposes hereof, any
indemnity claim that has been Definitively Resolved is referred to
herein as a "Settled Claim."
7.7 Remedies Not Affected by Investigation. The representations,
warranties, covenants and undertakings of Sellers, Company and Buyer
hereunder are made with, the knowledge that all parties are placing
complete reliance thereon in entering into and executing this Agreement,
and the same shall not be affected or deemed waived by reason of any
investigation made or knowledge gained by or on behalf of either party
(including, without limitation, by any of its advisors, consultants or
representatives) prior to the Closing or by reason of the fact that either
party or any of such advisors, consultants or representatives knew or
should have known that any such representation or warranty is or might be
inaccurate, or that any covenant or undertaking has been or might have been
breached, at or prior to the Closing.
7.8 Treatment of Indemnity Payments. Any indemnity payments made pursuant
to this Article VII shall, to the extent permitted by applicable law, be
treated as an adjustment to the Transaction Consideration.
7.9 Subrogation. The Indemnifying Party shall be subrogated to the rights
of any Indemnified Party against third parties for any Settled Claims
hereunder.
7.10 Sole and Exclusive Remedy. The indemnification obligations of Sellers
and Buyer under this Section 7 shall constitute the sole and exclusive
remedies of NCTI, DMC and Buyer and Sellers, respectively, for the recovery
of money damages with respect to the matters described herein. The terms of
this Section 7 shall not be construed as limiting in any way whatsoever any
remedy other than for the recovery of money damages to which NCTI, DMC and
Buyer or Sellers may be entitled.
ARTICLE VIII
Registration Rights
8.1 Registrable Securities. For purposes hereof, "Registrable Securities"
shall mean any NCTI Signing Shares, the NCTI First Payment Shares and the
NCTI Second Payment Shares owned beneficially and of record by Sellers and
any securities issued or issuable with respect to the NCTI shares by way of
a conversion, exchange, stock dividend, split in connection with a
combination of shares, recapitalization, merger, consolidation,
reorganization or otherwise. For the avoidance of doubt, it is acknowledged
and agreed that an NCTI Signing Shares shall cease to be considered to be a
"Registrable Security" when (a) it has been effectively registered under
the Securities Act or (b) it is eligible to be sold or distributed pursuant
to Rule 144(k) under the Securities Act. "Registration Expenses" shall mean
all expenses incident to NCTI's compliance with Section 8.2 hereof,
including, without limitation, all registration, qualification and filing
fees, printing expenses, fees and disbursements of legal counsel to Buyer,
Blue Sky fees and expenses, and the expense of any special audits incident
to or required by any such registration but excluding Selling Expenses.
"Selling Expenses" shall mean all discounts, selling commissions, share
transfer taxes and fees and disbursements of legal and other advisors to
Sellers.
8.2 Demand Registration. (a) Within sixty (60) days from the Closing Date,
NCTI shall file a registration statement with the SEC relating to the NCTI
Signing Shares and use commercially reasonable efforts to cause such
registration statement pertaining to the NCTI Shares to be declared
effective, provided that, Sellers shall be deemed to have notified NCTI as
of the Closing Date of one Demand Registration (as defined below) for all
of the NCTI Shares.
(b)(( On or after the Closing Date, Sellers may notify NCTI that it
intends to offer or cause to be offered for public sale all or any
portion of the Registrable Securities and request that NCTI file a
registration statement with the SEC covering such Shares (a "Demand
Registration"). Upon receipt of such notification referred to in the
preceding sentence, NCTI will use commercially reasonable efforts to
cause such Registrable Securities as may be requested by Sellers to be
registered under the Securities Act, pursuant to an effective
registration statement (the "Registration Statement") on such form as
may then be available to NCTI, as elected by NCTI, and to keep such
Registration Statement effective (subject to Section 8.4 hereof) until
the earlier of: (i) the date 180 days from the date of effectiveness
thereof, or (ii) the date on which all of the Registrable Securities
registered thereunder are sold or (iii) the date on which Registrable
Securities cease to be Registrable Securities; provided, however, that
Sellers must request registration in such Demand Registration of at
least such number of NCTI Common Stock (rounded up to the nearest
whole number) as is determined by dividing One Million Dollars (US
$1,000,000) by the Post-Closing Share Price. Sellers shall be entitled
to three (3) Demand Registrations (including the Demand Registration
deemed notified at Closing) as provided herein. Notwithstanding the
foregoing, NCTI may postpone its obligation to use commercially
reasonable efforts to cause such Registrable Securities to be
registered pursuant to a Registration Statement to be declared
effective by the SEC for a reasonable period of time not to exceed 180
days from the Closing Date, if the Board of Directors of NCTI
determines in good faith that (i) such registration may have a
material adverse effect on any plan or proposal by NCTI or any of
their affiliates (as defined under the Securities Act) with respect to
any financing, acquisition, sale, recapitalization, pending
registrations of securities, reorganization or other material
transaction, or (ii) NCTI is in possession of material non-public
information that, if publicly disclosed, could result in a material
disruption of a major corporate development or transaction then
pending or in other material adverse consequences to NCTI, or any of
their affiliates. NCTI shall provide prompt written notification to
Sellers of its exercise of such right to delay registration, and the
duration of the delay.
(c) Sellers shall not adversely effect the distribution of the
Registrable Securities by means of any manner of underwritten
offering.
(d) All Registration Expenses shall be borne solely by NCTI. All
Selling Expenses shall be borne solely by Sellers, unless in
connection with any commission-free sales program established by NCTI.
8.3 Registration Procedures. (a) With respect to the registration
obligation set forth in Section 8.2 hereof, for the period of effectiveness
of the Registration Statement, Buyer will keep Sellers advised in writing
as to the initiation of such filing and effectiveness of any such
Registration Statement. NCTI will:
(i) furnish such number of copies of prospectuses and other
documents incident thereto as Sellers from time to time may
reasonably request;
(ii) use commercially reasonable efforts to register and qualify
the Registrable Securities covered by the Registration Statement
under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by Sellers,
provided that NCTI shall not be required in connection therewith
or as a condition thereto to qualify to do business, to subject
itself to taxation in any jurisdiction where it is not so
subject, or to file a general consent to service of process in
any such state or jurisdiction.
(b) Sellers shall provide in writing all such information and
materials regarding Sellers and the plan of distribution of the
Registrable Securities and take all such corporate action as may be
required in order to permit NCTI to comply with all applicable
requirements of the SEC and any applicable requirements of state
securities laws.
8.4 Black-Out Periods for Registration Statement. (a) Notwithstanding
anything to the contrary in this Agreement, commencing thirty (30) days
after the effectiveness of the Registration Statement, NCTI shall have the
right, not more than once, to direct Sellers to suspend sales of
Registrable Securities registered thereunder for a period not to exceed
sixty (60) days, if the Board of Directors of Buyer determines in good
faith that (i) such sales may have a material adverse effect on any plan or
proposal by NCTI, or any of their respective affiliates (as defined under
the Securities Act) with respect to any financing, acquisition, sale,
recapitalization, reorganization or other material transaction, (ii) NCTI
possess of material non-public information that, if publicly disclosed,
could result in a material disruption of a major corporate development or
transaction then pending or in other material adverse consequences to NCTI,
or any of their respective affiliates or (iii) such sale would render NCTI
unable to comply with applicable law (including without limitation the
Securities Act or the Exchange Act) or Securities Exchange Commission
requirements or regulations.
(b) In the event that NCTI exercises their right pursuant to Section
8.4(a) hereof, NCTI shall give written notice (a "Suspension Notice")
to Sellers to suspend sales of the Registrable Securities. Upon
receipt of such notice, Sellers shall not effect any sales of the
Registrable Securities pursuant to such Registration Statement for the
period designated in the notice. If so directed by NCTI, Seller will
deliver to NCTI or Cinema all copies of the prospectus covering the
Registrable Securities held by them at the time of receipt of the
Suspension Notice. If NCTI shall give a Suspension Notice pursuant to
this Section 8.4(b), the period during which the Registration
Statement shall be maintained effective pursuant to Section 8.3(a)
shall be extended by such number of days equal to the number of days
from the date of receipt of the Suspension Notice until the date
specified in the Suspension Notice when Sellers may resume sales.
8.5 Special Indemnification Obligation. (a) In the event of any
registration of the Registrable Securities under the Securities Act
pursuant to this Article VIII, then to the extent permitted by law, NCTI
shall indemnify and hold harmless Sellers against any Damages, to the
extent that such Damages arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in such
Registration Statement, any preliminary prospectus or final prospectus
contained in such Registration Statement, or any amendment or supplement to
such Registration Statement, or arise out of or are based upon any omission
or alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading to the extent
that such untrue or alleged untrue statement is contained in, or such
omission or alleged omission is required to be contained in, any
information furnished in writing by or on behalf of NCTI for Sellers for
use in the preparation of such Registration Statement which is relied upon
by Sellers in conformity therewith.
(b) To the extent permitted by law, Sellers shall indemnify and hold
harmless the NCTI against Damages, to the extent that such Damages
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact made by Sellers contained in such
Registration Statement, any preliminary prospectus or final prospectus
contained in such Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are
based upon the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that Sellers shall not be
liable in any such case to the extent that any such Damages arise out
of or are based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement.
(c) Any claims pursuant to Section 8.5(a) or Section 8.5(b) shall be
referred to as "Special Indemnity Claims". The aforesaid indemnity
obligations of Sellers and NCTI shall remain in full force and effect
following any termination of this Agreement or any sale or transfer of
the Registrable Securities by Sellers pursuant to this Agreement.
(d) If the indemnification provided for in this Section 8.5 shall for
any reason be held by a court to be unavailable to an Indemnified
Party in respect of any Damages, then, in lieu of the amount paid or
payable pursuant to such indemnification, the Indemnified Party and
the Indemnifying Party shall contribute to the aggregate Damages
(including legal or other expenses reasonably incurred in connection
with investigating the same), (i) in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Party and
Indemnified Party which resulted in such Damages, as well as any other
relevant equitable considerations. Notwithstanding the foregoing, no
party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any party who was not guilty of such fraudulent
misrepresentation.
8.6 Termination of Registration Rights. Notwithstanding the foregoing, the
obligations imposed on NCTI pursuant to this Article VIII shall terminate
upon the earlier of: (i) the date all Registrable Securities have been sold
pursuant to the Registration Statement or (ii) the date the Sellers are
able to qualify all of the Registrable Securities for sale under Rule
144(k) under the Securities Act, or a successor rule, in any three-month
period.
ARTICLE IX
Miscellaneous Provisions
9.1 Amendment. This Agreement may not be amended, modified or changed,
except by a written instrument signed by each of the parties hereto.
9.2 Waiver of Compliance. Except as otherwise provided in this Agreement,
any failure of either of the parties to comply with any obligation,
covenant or agreement contained herein may be waived only by a written
notice from the party entitled to the benefits thereof. No failure by
either party hereto to exercise, and no delay in exercising, any right
hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of either right hereunder preclude any other or future
exercise of that right by that party.
9.3 Notices. All notices and other communications hereunder shall be deemed
given if given in writing and delivered personally, by courier or by
facsimile transmission, or mailed by registered or certified mail (return
receipt requested), fax, or postage fees prepaid, to the party to receive
the same at its respective address set forth below (or at such other
address as may from time to time be designated by such party to the others
in accordance with this Section 9.3):
(a) If to Sellers or Company, to:
Theater Radio Network
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
With a copy to:
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
And to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Steady P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
(b) if to NCTI, DMC or Buyer, to:
NCT Group, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Office
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Office
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, Esquire
All such notices and communications hereunder shall be deemed given when
received, as evidenced by the signed acknowledgment of receipt of the
person to whom such notice or communication shall have been personally
delivered, confirmed answer back or other evidence of transmission or the
acknowledgment of receipt returned to the sender by the applicable postal
authorities.
9.4 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, duties or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other and any attempted
assignment or transfer without such prior written consent shall be null and
void.
9.5 No Third Party Beneficiaries. Neither this Agreement or any provision
hereof nor any Schedule, certificate or other instrument delivered pursuant
hereto, nor any agreement to be entered into pursuant hereto or any
provision hereof, is intended to create any right, claim or remedy in favor
of any person or entity, other than the parties hereto or thereto and their
respective successors and permitted assigns.
9.6 Fees and Expenses: SSCM Payment. Except as otherwise provided herein,
NCTI shall pay at Closing any and all fees and expenses (including those of
the Sellers and Company) in connection with this Agreement and the
Employment Agreements to be entered into pursuant hereto and the
transactions contemplated hereby. NCTI shall enter into the SSCM Payment
Agreement with SSCM as of the Closing Date and perform and discharge all of
its obligations thereunder.
9.7 Public Announcements. Unless required by law, regulatory authority or
the rules of any applicable securities exchange, none of the parties hereto
nor any of their respective advisors, representatives, consultants or
employees shall issue any press release or make any other public
announcement with respect to this Agreement or the transactions
contemplated hereby, without the prior consent of all of the other parties,
which consent shall not be unreasonably withheld. The parties will
reasonably cooperate with each other in the development and distribution of
all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the
other with drafts of any such releases and announcements as far in advance
as practicable prior to release and announcement.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.9 Headings. The article and section headings contained in this Agreement
are solely for convenience of reference, are not part of the agreement of
the parties and shall not be used in construing this Agreement or in any
way affect the meaning or interpretation of this Agreement.
9.10 Entire Agreement; Severability. This Agreement, and the Schedules,
Exhibits, certificates and other instruments and documents delivered
pursuant hereto, together with the other agreements referred to herein and
to be entered into pursuant hereto, embody the entire agreement of the
parties hereto in respect of, and there are no other agreements or
understandings, written or oral, among the parties relating to, the subject
matter hereof. This Agreement supersedes all prior agreements and
understandings, written or oral, between the parties with respect to the
subject matter hereof. The invalidity, illegality or unenforceability for
any reason of any one or more provisions of this Agreement shall not affect
the validity, legality or enforceability of the remainder of this
Agreement. In the event of a conflict between the provisions of this
Agreement and those of any Ancillary Agreements, the provisions of this
Agreement shall control.
9.11 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event any
ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by all parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provision of this Agreement.
9.12 Governing Law. (a) This Agreement, and the respective rights, duties
and obligations of the Parties hereunder shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect
to principles of conflict of laws thereunder (provided that Section 5-1401
of the New York General Obligations Law shall apply). Any dispute arising
from, out of or in connection with this Agreement shall be settled through
friendly consultations between the parties. Such consultations shall begin
immediately after one party has delivered to the other party a written
request for such consultation. If within fifteen (15) days following the
date on which such notice is given, the dispute cannot be settled through
consultations, the dispute shall be submitted to arbitration in New York in
accordance with the rules of arbitration then in force upon the request of
either party with notice to the other party.
(b) Each party shall cooperate with the other party in making full
disclosure of and providing complete access to all information and
documents requested by the other party in connection with such
proceedings, subject only to any confidentiality obligations binding
on such party.
(c) The arbitral award shall be final and binding upon both parties.
The costs of the arbitration shall be as fixed by the arbitration
tribunal.
(d) During the period when a dispute is being resolved, the parties
shall in all other respects continue their implementation of this
Agreement.
[Remainder of this page left intentionally blank.]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
NCT GROUP, INC., as representative for each Buyer
By /s/▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
DISTRIBUTED ▇▇▇▇▇.▇▇▇, INC.
By /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
THEATER RADIO NETWORK, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer
- and -
as SELLERS,
/s/▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇