CONSULTING AND NON-COMPETITION AGREEMENT
September 13, 1996
The parties to this agreement are American Passage
Media Corporation, a Washington corporation ("AP"), and American
Passage Media, Inc., a Delaware corporation ("Buyer").
Pursuant to an Asset Purchase Agreement dated September
13, 1996 (the "Asset Purchase Agreement"), AP has today sold to
Buyer substantially all of the business and assets relating to
sales and marketing activities involving the high school and
college student markets (the "Business"), excluding the business
of publishing and distributing Directory of Classes.
Buyer considers it essential to secure the full value
of its purchase that AP provide consulting services, and that AP
and its principal executives not compete with Buyer, in
connection with Buyer's operation of the Business.
Accordingly, it is agreed as follows:
1. Consulting Services.
(a) For the periods referred to in section 1(b),
AP shall provide consulting services to Buyer in connection with
(i) the transition of the Business to Buyer, (ii) the resolution
of problems that may arise in the Business from time to time
during the Term, and (iii) such other matters relating to the
Business as Buyer reasonably may request. The consulting
services to be provided by AP shall include assisting in the
operation and administration of the Business, providing marketing
advice and analysis, and providing contacts with suppliers and
customers.
(b) AP shall cause Gilbert Scherer and Carl
Bryant to be available to Buyer to perform the services provided
for in section 1(a) for a period of two years commencing on the
date of this agreement and shall cause Linda Naismith, Dan
Brillon, Dean Miles, JoAnn Turnbull and other persons reasonably
requested by Buyer to be available to Buyer to perform the
services provided for in section 1(a) for a period of one year
commencing on the date of this agreement. In the event such
persons are not available to provide such services, AP shall use
its reasonable efforts to substitute persons of comparable
experience, provided, however, AP shall not be required to hire
any persons. Buyer acknowledges that as long as those
individuals remain officers or employees of AP, they shall
continue to devote the major portion of their energies and
efforts to their responsibilities for AP, and that the consulting
services to be provided under this agreement are limited in scope
and not intended to materially interfere with those
responsibilities. AP recognizes that during the first several
months after this date those individuals may be required to
devote a significant amount of time to their services under this
agreement in connection with the transition of the Business.
Notwithstanding the foregoing, none of the individuals referred
to above shall be obligated to provide a minimum time commitment
to the provision of consulting services, to provide the
consulting services in a specific manner, whether in person or
otherwise, or to travel for the performance of the consulting
services.
2. Compensation.
(a) As full consideration for the performance by
AP of its obligations under this agreement, Buyer shall pay AP
the sum of $273,600, payable in equal quarterly installments
commencing on December 13, 1996.
(b) AP shall be reimbursed for all expenses
(other than the salaries and benefits associated with the persons
described in section 1(b)) incurred by AP in connection with the
performance of its services under this agreement, but any expense
anticipated to exceed $500 for which AP will seek reimbursement
must be authorized in advance by Buyer. Buyer shall reimburse AP
for its expenses within two weeks after Buyer's receipt of
invoices from AP accompanied by appropriate supporting
documentation.
3. Non-Competition; Non-Solicitation;
Confidentiality.
(a) For a period of five years commencing on the
date of this agreement (and, with respect to the sale of
advertising in college newspapers, for a period of seven years
after this date), neither AP nor Gilbert Scherer or Carl Bryant
(together with AP, the "Primary Consultants") shall, except as
provided herein, directly or indirectly, engage or be interested
in (as owner, stockholder, partner, member, manager, lender,
employee, agent, consultant or otherwise) any business or entity
that engages, anywhere in the world, in sales and marketing
activities targeting primarily high school and college-student
markets substantially similar to those engaged in by the Business
as of the date of this agreement, including, but not limited to,
the sale of advertising (in college newspapers and otherwise) and
of promotional and sponsorship opportunities, GymBoards, and
campus postering operations. However, this section shall not
prevent the Primary Consultants from (i) owning as an investment
up to 2% of a class of equity securities issued by any competitor
of Buyer or its affiliates that is publicly traded and registered
under the Securities Exchange Act of 1934 or subject to Section
15(d) of such Act, (ii) continuing to publish and distribute the
Directory of Classes, (iii) continuing to operate the GAPS
business, (iv) engaging in a business that recruits United States
students for Israeli corporations and the Israeli government, and
(v) college credit card marketing for MBNA and Kessler Financial
Services.
(b) For a period of five years commencing on the
date of this agreement, none of the Primary Consultants shall,
directly or indirectly, employ or solicit for employment or
consulting, on its or his own behalf or on behalf of any other
person or entity, or otherwise encourage the resignation of, any
employee of the Business, other than an employee of the Business
whose employment is terminated by Buyer or who terminates his or
her employment with Buyer after he or she refuses Buyer's request
to relocate to another city. For a period of five years
commencing on the date of this agreement, neither Buyer nor any
of its affiliates 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 AP who is not employed primarily
in the Business.
(c) For a period of five years commencing on the
date of this agreement, none of the Primary Consultants shall
disclose to anyone except to carry out their obligations
hereunder or unless authorized to do so by Buyer, or use in
competition with the Business, any confidential information
relating to the Business. Subject to section 3(a), the foregoing
shall not prohibit the Primary Consultants from using in their
other business ventures information in a non-tangible form,
including ideas, concepts, know-how and techniques, which they
obtained from their participation or experience in the
advertising or media industries.
(d) Each of the Primary Consultants and Buyer
acknowledges that the remedy at law for breach of the provisions
of this section 3 will be inadequate and that, in addition to any
other remedy Buyer or AP may have, it shall be entitled to an
injunction restraining any breach or threatened breach, without
any bond or other security being required and without the
necessity of showing actual damages. If any court construes the
covenant in this section 3 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.
4. Miscellaneous.
(a) Neither party may assign its rights under
this agreement without the prior written consent of the other
party, which consent may be withheld in the other party's sole
discretion.
(b) All notices and other communications under
this agreement shall be in writing and shall be deemed given when
delivered personally, sent by facsimile (with a copy by any other
means permitted for the giving of notices under this agreement)
or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such other address as a
party may have specified by notice given to the other party
pursuant to this provision):
If to AP:
American Passage Media Corporation
401 Second Avenue West
Seattle, Washington 98119-4107
Attention: Gilbert Scherer, President
Fax: (206) 281-5993
If to Buyer:
c/o Network Event Theater, Inc.
149 Fifth Avenue
New York, N.Y. 10010
Attention: Harlan D. Peltz, Chairman
Fax: (212) 779-3241
(c) This agreement shall be governed by and
construed in accordance with the law of the State of Washington
applicable to agreements made and to be performed in Washington.
(d) The failure of a party to insist upon strict
adherence to any term of this agreement on any occasion shall not
be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any
other term of this agreement. Any waiver must be in writing.
(e) This agreement, together with the Asset
Purchase Agreement, contains a complete statement of all of the
arrangements between the parties with respect to its subject
matter, supersedes all previous agreements and understandings
between or on behalf of them with respect to that subject matter
and cannot be changed or terminated orally.
(f) AP shall perform the services to be rendered
under this agreement as an independent contractor and neither it
nor any of its officers or employees shall have any authority to
assume or create any obligation or liability on behalf of or in
the name of Buyer or to bind
Buyer in any respect.
AMERICAN PASSAGE MEDIA CORPORATION
By: /s/ Gilbert Scherer
Gilbert Scherer
President and Chief
Executive Officer
AMERICAN PASSAGE MEDIA, INC.
By: /s/ Harlan D. Peltz
Harlan D. Peltz
Chairman and Chief
Executive Officer
The undersigned agree to perform the consulting services
provided for in section 1 and to be bound by the provisions of
section 3 of the foregoing agreement.
/s/ Gilbert Scherer
Gilbert Scherer
/s/ Carl Bryant
Carl Bryant