UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 1, 1998
SYNAPTX WORLDWIDE, INC.
(Exact name of Registrant as Specified in its Charter)
UTAH 0-22969 87-0375342
(State or Other (Commission (IRS Employer
Jurisdiction) File Number) Identification Number)
168 East Highland Avenue, Suite 300, Elgin, IL 60120-5507
Registrant's Telephone Number, Including Area Code:(847) 622-0200
<PAGE>
FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 1, 1998, Synaptx Worldwide, Inc. (the "Company") entered into
an Agreement and Plan of Merger ("Agreement") with the Shareholders of Primus
Marketing Associates, Inc., a Minnesota Corporation ("Primus"), related to the
acquisition by the Company of one hundred percent (100%) of the issued and
outstanding shares of capital stock of Primus in exchange for 214,286 shares
of the Company's common stock, $.001 par value (the "Common Stock").
Additionally, the former shareholders of Primus may earn additional
Common Stock of the Company upon the attainment by Primus of specified annual
"commission revenues" and "earnings" for the two subsequent twelve month
periods. If Primus meets the specified "commission revenues" and "earnings"
amounts for both twelve month periods, the additional consideration could
amount to $375,000 divided by the market price at the time of issuance. The
additional consideration, if any, would be added to the costs in excess of net
assets acquired and will be amortized on the straight-line method over the
remaining life of the 10 year amortization period associated with these costs.
Primus is a sales representative firm based in Minnetonka, Minnesota
that provides field sales and business development support for specified product
lines and/or territories for clients under contract which include
telecommunications (both voice and data networking), electric utility, and cable
TV original equipment manufacturers, commonly referred to as OEMs, located
primarily in the north central section of the United States. Primus has been
active for the past eleven years. Primus's operations consist of sales
representatives who sell to the private network, public telephone network, cable
operating companies and alternate access provider communication markets. Primus
currently represents RELTEC, Alcoa Fujikara, Amp and Raytheon in addition to
approximately 20 other clients. Primus currently has nine employees.
Commissions earned by Primus range from 3% up to 8%, depending on the
sophistication of the customers' products and services represented.
Currently, Primus is generating average monthly commission revenues
of approximately $75,000 - $85,000. Management of the Company believes that
contractual relations by Primus with its existing clients, which allow for
termination by either party with minimal notification periods (standard in the
industry), are in good standing. Furthermore, management believes that the
opportunity of providing a national client sales representation focus will
allow for increased geographic service scope with existing Clients and an
opportunity of adding additional Clients.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
1. Financial statements of Primus Marketing Associates,
Inc. as of and for the twelve months ended May 31, 1998
(audited)
(b) Pro forma financial information
1. Pro forma condensed consolidated statement of
operations of Synaptx Worldwide, Inc. for
the year ended August 31, 1997
2. Pro forma condensed consolidated balance sheet as of May
31, 1998 and the proforma condensed consolidated statement
of operations of Synaptx Worldwide, Inc. for the nine
months ended May 31, 1998
3. (c) Exhibits included herewith:
10.1 Agreement and Plan of Stock for Stock Exchange,
dated June 1, 1998, between Synaptx Worldwide, Inc.
(the "Company") and John Primus and Jannine Primus.
10.2 Employment Agreement, dated June 1, 1998, between
Primus Marketing Associates, Inc. and John E. Primus.
10.3 Non-compete Agreement, dated June 1, 1998, between
the Company and John E. Primus.
10.4 Non-compete Agreement, dated June 1, 1998, between
the Company and Jannine Primus.
<PAGE>
INDEPENDENT AUDITORS' REPORT
PRIMUS MARKETING ASSOCIATES, INC.
MINNETONKA, MINNESOTA
We have audited the accompanying balance sheet of Primus Marketing Associates,
Inc. as of May 31, 1998 and the related statements of operations and retained
earnings and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Primus Marketing Associates,
Inc. as of May 31, 1998, and the results of their operations and cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ BDO Seidman, LLP
Chicago, Illinois
August 10, 1998
<PAGE>
PRIMUS MARKETING ASSOCIATES, INC.
BALANCE SHEET
AS OF MAY 31, 1998
ASSETS
CURRENT ASSETS:
Cash $ 625
Accounts receivable 118,386
---------
Total current assets 119,011
EQUIPMENT 141,055
Less accumulated depreciation (78,562)
---------
Net equipment 62,493
TOTAL ASSETS $ 181,504
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 13,216
Current portion of long term debt 3,180
Accrued expenses and taxes 33,533
---------
Total current liabilities 49,929
Long-term debt 6,126
---------
TOTAL LIABILITIES 56,055
COMMITMENTS -
STOCKHOLDERS' EQUITY
Common stock; $.01 par value; 100,000 shares
authorized, 200 issued and outstanding 2
Additional paid in capital 39,842
Retained earnings 85,605
---------
Total stockholders' equity 125,448
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 181,504
=========
See accompanying summary of accounting policies and
notes to financial statements.
<PAGE>
PRIMUS MARKETING ASSOCIATES, INC
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED MAY 31, 1998
Commissions earned $ 1,066,161
Cost of services 837,116
-----------
Gross Profit 229,045
Selling, general and administrative expenses 238,176
Depreciation 27,435
-----------
Net loss (36,566)
Retained earnings, at beginning of year 239,275
Distributions (117,104)
Retained earnings, at end of year $ 85,605
===========
See accompanying summary of accounting policies and
notes to financial statements.
<PAGE>
PRIMUS MARKETING ASSOCIATES, INC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MAY 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (36,566)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 27,435
Loss on disposal of fixed assets 8,418
Changes in assets and liabilities net of assets acquired:
Decrease in accounts receivable 53,906
Decrease in other current assets 5,891
Decrease in accounts payable (2,786)
Decrease in accrued expenses and taxes (14,536)
---------
Net cash provided by operating activities 41,762
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed asset additions (46,163)
Proceeds from sale of fixed assets 56,420
---------
Net cash from investing activities 10,257
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to shareholders (117,104)
Reductions in short-term debt (11,425)
Reductions in long-term debt (15,401)
---------
Net cash used in financing activities (143,930)
---------
NET DECREASE IN CASH (91,911)
Cash at beginning of year 92,536
---------
CASH AT END OF YEAR $ 625
=========
See accompanying summary of accounting policies and
notes to financial statements.
<PAGE>
PRIMUS MARKETING ASSOCIATES, INC.
SUMMARY OF ACCOUNTING POLICIES
NATURE OF OPERATIONS
Primus Marketing Associates, Inc. (the "Company"), founded in April,
1987, is a sales representative firm based in Minnetonka, Minnesota. The
Company also maintains a sales office in Bismarck, North Dakota. The
Company provides field sales and business development support for
specified product lines and/or territories for clients under contract.
Clients include telecommunications (both voice and data networking),
cable TV, and electric utility original equipment manufacturers, commonly
referred to as OEM's, located primarily in the upper north central United
States. These clients pay a negotiated commission on all sales associated
with the contracted coverage.
REVENUE RECOGNITION
Revenues consist of commissions earned on the sales of manufacturers'
goods to end use customers or distributors. Commissions are earned as a
percentage of sales made and generally range from 3.0% up to 8%,
depending on the sophistication of the customers' products and services
represented. Revenue is recognized when sales take place which precedes
the actual collection of the commission by approximately sixty days.
Therefore, approximately two months of estimated commissions earned but
not collected are recorded as accounts receivable.
FIXED ASSETS
Fixed assets, consisting of office equipment and automobiles, are stated
at cost. Depreciation is computed over the estimated useful lives of the
assets, ranging from five to seven years, using the straight line method.
INCOME TAXES
The Company, with the consent of its shareholders, elected to be taxed as
an "S" corporation in compliance with elections under the Internal
Revenue Code. In lieu of corporation income taxes, the shareholders of an
"S" corporation are taxed on their proportionate share of the company's
taxable income. Accordingly, no liability or provision for federal income
taxes is included in the accompanying financial statements nor are any
deferred taxes provided for temporary differences between the tax bases
of assets and liabilities and their financial reporting amounts at
year-end.
Since the acquisition date, the Company's results are included with
Synaptx Worldwide, Inc.'s results and will be reflected in a consolidated
federal income tax return. (See Note 1).
ESTIMATES
The accompanying financial statements include estimated amounts and
disclosures based on management's assumptions about future events. Actual
results may differ from those estimates.
FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to
concentrations of risk consist principally of accounts receivable. The
carrying values reflected in the balance sheet reasonably approximate the
fair values for accounts receivable and payable.
<PAGE>
PRIMUS MARKETING ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ACQUISITION
On June 1, 1998 the shareholders of the Company consummated an exchange
of all the outstanding common stock of the Company for 214,286 shares of
common stock of Synaptx Worldwide, Inc. ("Synaptx"). In addition, Synaptx
agreed to issue to the shareholders of the Company a maximum of $375,000
of Synaptx common stock over two years if certain pre-defined revenue and
income targets are met for the subsequent two years.
In conjunction with the acquisition, Synaptx entered into a thirty-five
month employment agreement with the Company's president. The agreement
shall be automatically renewed for two successive one year terms unless
canceled by either party at least thirty days prior to the then current
term's expiration. The agreement calls for an annual salary of $120,000.
The agreement also calls for additional commission based on revenues and
profitability.
NOTE 2. SIGNIFICANT CUSTOMERS
For the year ended May 31, 1998, two customers accounted for 33.3%, and
29.2% respectively of total commissions earned. These customers represent
approximately 28.5% and 27.6% respectively, of total accounts receivable
at May 31, 1998.
NOTE 3. OPERATING LEASE COMMITMENTS
The Company occupies its main office space under a lease expiring
February 28, 2001. Rentals are subject to annual escalation charges based
upon increases in operating expenses and real estate taxes.
The Company also leases automobiles under operating leases for the use of
its salespersons. The leases range from thirty-six to forty-eight months
at which time the Company has a purchase option.
As of May 31, 1998, the Company's future minimum lease payments under
operating leases are as follows:
Year ended May 31, 1999 $ 47,980
Year ended May 31, 2000 43,116
Year ended May 31, 2001 25,759
Year ended May 31, 2002 318
---------
Total future minimum
lease payments $ 117,173
=========
Office rent expense amounted to approximately $ 20,442 for the year ended
May 31, 1998, and auto lease expense amounted to approximately $18,475
for the year ended May 31, 1998.
NOTE 4. SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid during the year for interest was $ 1,600 for the year ended May 31,
1998.
<PAGE>
SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Financial Statement
Year Ended August 31, 1997
The following unaudited pro forma condensed consolidated statement of
operations for the year ended August 31, 1997 give effect to the acquisition of
Primus Marketing Associates, Inc. which was made as of June 1, 1998. The
acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of operations of the acquired entity have not been
reflected in the Company's statement of operations since the acquisition date
was subsequent to the Company's fiscal year end. The pro forma information has
been prepared as if the acquisition occurred on September 1, 1996 and is based
on historic financial statements of Synaptx Worldwide, Inc. from September 1,
1996 to August 31, 1997 and Primus Marketing Associates, Inc. from September 1,
1996 to August 31, 1997.
The unaudited pro forma statement of operations has been prepared by
management based upon the financial statements of Synaptx Worldwide, Inc. and
the acquired entity. These pro forma results may not be indicative of the
results that actually would have occurred if the combination had been in effect
since inception or which may be obtained in the future.
<PAGE>
SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Pro Forma Statement of Operations
Year Ended August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Synaptx Primus Pro forma
Worldwide Marketing Adjustments Pro forma
Inc. Associates Increase Consoli-
Inc. (Decrease) dation
<S> <C> <C> <C> <C>
REVENUES $ 3,601,124 $ 1,190,496 $ -- $ 4,791,620
COST OF REVENUES 2,571,467 913,817 25,500 3,510,784
----------- ----------- ----------- -----------
GROSS PROFIT 1,029,657 276,679 25,500 1,280,836
----------- ----------- ----------- -----------
EXPENSES
Selling, general
& administrative 1,384,481 228,050 1,612,531
Depreciation 67,915 24,083 91,998
Amortization 129,372 -- 27,329 156,701
Interest expense, net 50,444 -- 50,444
----------- ----------- ----------- -----------
Total expenses 1,632,212 252,133 27,329 1,911,674
----------- ----------- ----------- -----------
NET (LOSS) INCOME $ (602,555) $ 24,546 $ (52,829) $ (630,838)
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 4,339,640 214,286 4,553,926
=========== =========== ===========
NET LOSS PER SHARE OF
COMMON STOCK $ (0.14) $ (0.14)
=========== ===========
</TABLE>
<PAGE>
SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES
Note to Condensed Pro Forma Financial Statement
-----------------------------------------------
On June 1, 1998, Synaptx Worldwide, Inc. (the "Company") entered into
an Agreement and Plan of Merger ("Agreement") with Shareholders of Primus
Marketing Associates, Inc., Inc., a Minnesota Corporation, ("Primus") related to
the acquisition by the Company of one hundred percent (100%) of the issued and
outstanding shares of capital stock of Primus. In reliance upon and pursuant to
the basic terms of the Agreement, the Company and John Primus and Janine Primus,
the shareholders of Primus (collectively the "Primus Shareholders" and
individually the "Primus Shareholder") executed the Agreement whereby Primus
Shareholders exchanged all of their right, title and interest and obligations in
their Primus Common Stock to the Company. The Agreement provided for the
purchase by Synaptx Worldwide, Inc. of all the issued and outstanding capital
stock of Primus Common Stock for 214,286 shares of the Company's $ .001 par
value common stock.
The transaction was recorded under the purchase method of accounting.
The total cost of the acquisition was approximately $ 375,000, which exceeded
the fair value of assets acquired by approximately $ 273,000. This amount is
being amortized over ten years.
Pro forma adjustments related to the acquisition of the Acquiree
include (1) the increase in cost of revenues related to employee commissions and
salaries to reflect amounts contractually obligated under an employment
agreement with the President, and (2) amortization of the cost in excess of fair
value of assets acquired of $27,329.
<PAGE>
SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Financial Statements
Nine Months Ended May 31, 1998
The following unaudited pro forma condensed consolidated balance sheet
as of May 31, 1998 and statement of operations for the nine months ended May 31,
1998 give effect to the acquisition of Primus Marketing Associates, Inc. which
was made as of June 1, 1998. The acquisition was accounted for using the
purchase method of accounting. Accordingly, the results of operations of the
acquired entity have not been reflected in the Company's financial statements
since the acquisition date was subsequent to the Company's quarter end results.
The pro forma balance sheet information represents Synaptx Worldwide, Inc. and
subsidiaries as of May 31, 1998 and Primus Marketing Associates, Inc. as of the
acquisition date balance sheet, June 1, 1998. The pro forma operating results
have been prepared as if the acquisition occurred on September 1, 1997 and is
based on historic financial statements of Synaptx Worldwide, Inc. from September
1, 1997 to May 31, 1998 and, Primus Marketing Associates, Inc. from September 1,
1997 to May 31, 1998.
The unaudited pro forma consolidated balance sheets and statements of
operations, have been prepared by management based upon the financial statements
of Synaptx Worldwide, Inc. and the acquired entity. These pro forma results may
not be indicative of the results that actually would have occurred if the
combination had been in effect since inception or which may be obtained in the
future.
<PAGE>
SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Pro Forma Balance Sheets
As of May 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Synaptx Primus Pro forma
Worldwide Marketing Adjustments Pro forma
Inc. Associates Increase Consoli-
Inc. (Decrease) dation
<S> <C> <C> <C> <C>
ASSETS
Cash $ 122,478 $ 625 $ -- $ 123,103
Accounts receivable 814,173 118,386 932,559
Prepaid expenses and deposits 94,088 -- 94,088
----------- ----------- ----------- -----------
Total current assets 1,030,739 119,011 -- 1,149,750
----------- ----------- ----------- -----------
Property and equipment 380,828 141,055 (102,331) 419,552
Less accumulated depreciation (138,897) (102,331) 102,331 (138,897)
----------- ----------- ----------- -----------
Net property and equipment 241,931 38,724 -- 280,655
----------- ----------- ----------- -----------
Costs in excess of
net assets acquired 2,409,601 -- 273,281 2,682,882
Other assets 246,729 -- -- 246,729
----------- ----------- ----------- -----------
Total assets $ 3,929,000 $ 157,735 $ 273,281 $ 4,360,016
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 914,458 $ 13,216 $ 927,674
Accrued expenses and taxes 224,975 33,533 258,508
Notes payable 293,680 293,680
Current portion of long-term debt 206,000 3,180 209,180
Deferred revenue 148,427 -- -- 148,427
----------- ----------- ----------- -----------
Total current liabilities 1,787,540 49,929 -- 1,837,469
Long-term debt,
net of current portion 268,474 6,086 -- 274,560
Commitments -- -- -- --
Preferred stock 137 -- 137
Common stock 5,738 2 212 5,952
Additional paid-in capital 3,320,819 39,842 334,945 3,695,606
Retained earnings (1,453,708) 61,876 (61,876) (1,453,708)
----------- ----------- ----------- -----------
Total stockholders' equity 1,872,986 101,720 273,281 2,247,987
----------- ----------- ----------- -----------
Total liabilities and equity $ 3,929,000 $ 157,735 $ 273,281 $ 4,360,016
=========== =========== =========== ===========
</TABLE>
<PAGE>
SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Pro Forma Statements of Operations
Nine Months Ended May 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Primus Pro forma
Synaptx Marketing Adjustments Pro forma
Worldwide Associates, Increase Consoli-
Inc. Inc. (Decrease) dation
<S> <C> <C> <C> <C>
REVENUES $ 4,451,882 $ 751,563 $ -- $ 5,203,445
COST OF REVENUES 3,546,102 625,039 (27,500) 4,143,641
----------- ----------- ----------- -----------
GROSS PROFIT 905,780 126,524 27,500 1,059,804
----------- ----------- ----------- -----------
EXPENSES:
Selling, general &
administrative 1,412,805 186,647 (17,500) 1,581,952
Depreciation 65,984 25,900 -- 91,884
Amortization 150,531 -- 20,500 171,031
Interest expense, net 36,558 1,116 -- 37,674
----------- ----------- ----------- -----------
Total Expenses 1,665,878 213,663 3,000 1,882,541
----------- ----------- ----------- -----------
NET LOSS $ (760,098) $ (87,139) $ 24,500 $ (822,737)
Cumulative convertible preferred
stock dividend requirements 17,000 17,000
----------- -----------
Net loss applicable to
common shareholders $ (777,098) $ (839,737)
=========== ===========
Weighted Average Shares
Outstanding 5,398,846 214,286 5,613,132
=========== =========== ===========
NET (LOSS) PER SHARE OF
COMMON STOCK $ (0.14) $ (0.15)
=========== ===========
</TABLE>
<PAGE>
SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES
Note to Condensed Pro Forma Financial Statements
------------------------------------------------
On June 1, 1998, Synaptx Worldwide, Inc. (the "Company") entered into
an Agreement and Plan of Merger ("Agreement") with Shareholders of Primus
Marketing Associates, Inc., a Minnesota Corporation, ("Primus") related to the
acquisition by the Company of one hundred percent (100%) of the issued and
outstanding shares of capital stock of Primus. In reliance upon and pursuant to
the basic terms of the Agreement, the Company and John Primus and Janine Primus,
the shareholders of Primus (collectively the "Primus Shareholders" and
individually the "Primus Shareholder") executed the Agreement whereby Primus
Shareholders exchanged all of their right, title and interest and obligations in
their Primus Common Stock to the Company. The Agreement provided for the
purchase by Synaptx Worldwide, Inc. of all the issued and outstanding capital
stock of Primus Common Stock for 214,286 shares of the Company's $ .001 par
value common stock.
The transaction was recorded under the purchase method of accounting.
The total cost of the acquisition was approximately $ 375,000, which exceeded
the fair value of assets acquired by approximately $ 273,000. This amount is
being amortized over ten years.
Pro forma adjustments related to the acquisition of Primus
recorded in the consolidated condensed pro forma balance sheets include (1) the
restatement of fixed assets to estimated fair market value (2) the recording of
costs in excess of net assets acquired of $273,281 (3) the recording of entries
to reflect the acquisition of the stockholders' equity including the issuance of
the common stock at par value with the excess over par going to additional
paid-in capital net of the elimination of Primus common stock and retained
earnings to reflect the purchase accounting treatment of the acquisition.
Pro forma adjustments related to the acquisition of Primus as
recorded in the consolidated condensed pro forma statement of operations include
(1) the reduction of cost of revenues related to employee commissions and
salaries to reflect amounts contractually obligated under employment agreements
with key employees of $27,500, (2) amortization of costs in excess of fair value
of assets acquired of $20,500, and (3) the reduction of non-recurring selling,
general, and administrative expenses related to professional fees incurred by
Primus as a result of the Synaptx transaction of $17,500.
As of May 31, 1998, Synaptx Worldwide, Inc. had 5,737,661 shares of
common stock outstanding. The acquisition of Primus resulted in the issuance of
214,286 shares for a total of 5,951,947 shares outstanding on a pro-forma basis.
<PAGE>
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SYNAPTX WORLDWIDE, INC.
Date: August 14, 1998 /s/ Richard E. Hanik
-----------------------------------------------
RICHARD E. HANIK, Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
10.1 Agreement and Plan of Stock for Stock Exchange,
dated June 1, 1998, between Synaptx Worldwide, Inc.
(the "Company") and John Primus and Jannine Primus.
10.2 Employment Agreement, dated June 1, 1998, between
Primus Marketing Associates, Inc. and John E. Primus.
10.3 Non-compete Agreement, dated June 1, 1998, between
the Company and John E. Primus.
10.4 Non-compete Agreement, dated June 1, 1998, between
the Company and Jannine Primus.
Exhibit 10.1
AGREEMENT AND PLAN OF STOCK FOR STOCK EXCHANGE
THIS AGREEMENT is made as of the 1st day of June 1998, by and among
Synaptx Worldwide, Inc., a Utah corporation ("SYNAPTX") and Primus Marketing
Associates, Inc., a Minnesota corporation ("Primus" or "PRIMUS") and John Primus
and Jannine Primus collectively (the "SELLING SHAREHOLDERS" or individually the
"SELLING SHAREHOLDER"), Minnesota residents.
BACKGROUND
The SELLING SHAREHOLDERS own all the outstanding capital stock of
Primus, doing business at 6133 Blue Circle Drive, #180, Minnetonka, Minnesota
55343. SYNAPTX wishes to acquire all of the capital stock of Primus, and the
SELLING SHAREHOLDERS wish to own common stock in SYNAPTX, with the expectation
that Primus will thereafter continue to conduct its business as a subsidiary of
SYNAPTX.
Accordingly, in consideration of the mutual agreements set forth
herein, the parties agree as follows:
ARTICLE 1
STOCK FOR STOCK EXCHANGE
- ------------------------
1.1 Exchange of Primus STOCK for SYNAPTX STOCK. Subject to the terms
------------------------------------------
and conditions of this Agreement, SYNAPTX agrees to issue to the SELLING
SHAREHOLDERS a total of two hundred fourteen thousand, two hundred and
eighty-six (214,286) shares of SYNAPTX common stock (the "SYNAPTX Common Stock"
or "SYNAPTX stock"). Each SELLING SHAREHOLDER shall transfer to SYNAPTX at the
Closing (as hereinafter defined) the number of shares of Primus stock (the
"Primus Stock") shown opposite such person's name on Exhibit 1.1 and shall
receive in exchange therefore the number of shares of SYNAPTX Stock shown
opposite such person's name on Exhibit 1.1.
The parties hereto intend for this exchange of stock to be treated as a
tax free reorganization, as defined in Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
1.2 Common Stock. Subject to the terms and conditions of this Agreement,
------------
SYNAPTX agrees to issue shares of SYNAPTX Common Stock as an incentive to
achieve the mutually exclusive Level One, Level Two or Level Three Results (and
as hereinafter defined) as reflected on Exhibit 1.2 ("Earn-out Bonus"), with
actual results to be measured over the twelve (12) month period beginning with
the first full month subsequent to the closing (as hereinafter defined) ("First
Annual Measurement Period") and the second twelve (12) month period after the
First Annual Measurement Period ends (the "Second Annual Measurement Period"),
(individually, the "Earn-out Period" or collectively the "Earn-out Periods"), to
the SELLING SHAREHOLDERS as of a date after the Earn-Out Period ends ("Payout
Date" for each Earn-Out Period or collectively the "Payout Dates"). The Level
One, Level Two and Level Three Results represent mutually exclusive threshold
levels of amounts to be realized after the Closing covering the total of
Commission Revenues and the total Earnings before Taxes of Primus, both of which
must be achieved, as recorded on the books and records of Primus for each
Earn-out Period in accordance with generally accepted accounting principles
("Level One Results" and "Level Two Results" and "Level Three Results",
respectively). The Earn-out Bonus as reflected on Exhibit 1.2 represents the
absolute monetary value of the bonus payable by SYNAPTX in the event the
respective Level One Results, Level Two Results or Level Three Results specified
on Exhibit 1.2 are achieved ("Earn-out Bonus Realized"). Earn-out Bonus Realized
is payable in shares of Synaptx Common Stock based on the number of shares that
results from dividing (x) the of Earn-out Bonus Realized by (y) the greater of
(a) the average closing price of SYNAPTX Common Stock for every trading day in
the month of May preceding the respective Payout Date as published for the stock
exchange on which the SYNAPTX Common Stock is traded or as quoted on the
electronic bulletin board if the SYNAPTX Common Stock is not so traded, or, (b)
two dollars ($2.00) per share of Synaptx Common Stock, as adjusted for any
subdivision, combination, stock splits or stock dividends, with the
corresponding price per share shall be decreased or increased proportionately to
reflect such subdivision, combination, stock splits or stock dividends, rounded
up to the next whole share of SYNAPTX Common Stock. One-half of the total
aggregate amount of shares of SYNAPTX stock issuable in accordance with the
foregoing formula shall be issued to each of the SELLING SHAREHOLDERS on the
ninety-first (91) day following the respective applicable Payout Date. SYNAPTX
and SELLING SHAREHOLDERS agree that this Section 1.2 shall survive the Closing
(as defined below).
1.3 Closing. The exchange of SYNAPTX Stock for Primus Stock shall take
-------
place over the phone and through the mail, fax, and e-mail (the "Closing") on or
before May 1, 1998. The date on which the Closing takes place is referred to as
the "Closing Date."
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS
- ------------------------------------------------------
Except as set forth in the disclosure schedule (Exhibit 2.0)
accompanying this Agreement, the SELLING SHAREHOLDERS , jointly (except where
otherwise expressly indicated to the contrary) and severally, represent and
warrant as follows:
2.1 Organization. To the best of their knowledge, Primus is duly
------------
incorporated, validly existing and in good standing under the laws of the State
of Minnesota is qualified to do business as a foreign corporation in each other
jurisdiction wherein the nature of its activities or of its properties owned or
leased makes such qualification necessary and in which the failure to be so
qualified would have a material adverse effect on the business, financial
condition or results of operation of Primus, taken as a whole, and has full
corporate power and authority to conduct its business as presently conducted and
to enter into and perform this Agreement.
2.2 Authorization. He or she has full power, capacity and authority to
-------------
execute, deliver and perform this Agreement. This Agreement has been duly
executed and delivered by such SELLING SHAREHOLDER and (assuming the due
execution and delivery by the other parties hereto) constitutes the legal, valid
and binding agreement of such SELLING SHAREHOLDER enforceable against such
person in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or other laws affecting the enforcement of creditors'
rights and remedies generally and by general principles of equity, and will not
cause a breach under any agreement to which he or she is a party or may be
bound.
2.3 No Consents, Conflicts. That (a), except for any filings under federal
----------------------
and/or state securities laws required to be made by SYNAPTX to consummate the
transactions contemplated by this Agreement, no consent, approval or other
action by any governmental authority or third party is required in connection
with the execution, delivery and performance of this Agreement by such Primus
Shareholder; and (b) neither the execution, delivery or performance of this
Agreement by such SELLING SHAREHOLDER will (i) violate, conflict with or result
in a breach of any provision of or constitute a default or an event which with
or without notice or lapse of time or both, would constitute a default under
Primus articles of incorporation or by-laws or any agreement or obligation to
which Primus or such SELLING SHAREHOLDER are a party or by which either of such
persons may be bound or affected where such violation, conflict, breach or
default would have a material adverse effect on the business, financial
condition or results of operations of Primus, taken as a whole, or (ii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Primus or such SELLING SHAREHOLDER where such violation would have a material
adverse effect on the business, financial condition or results of operations of
Primus, taken as a whole.
2.4 Customers, Customer Relationships. Exhibit 2.4 sets forth a
---------------------------------
complete and correct list of customer relationships and customer commission
income for calendar year 1997 for Primus Marketing Associates, Inc., not
including income for Primus Datacom.
Selling Shareholders are not aware of any condition that would have a material
adverse effect upon the projected commission revenues. ACPC has suspended
operations, eliminating commission income. The 1997 income in Exhibit 2.4 is
typical based on past experience with the customer and current Primus customer
relationships subject to mergers, acquisitions and other unforeseen
circumstances.
2.5 Financial Statements. The SELLING SHAREHOLDERS have previously
--------------------
delivered to SYNAPTX the unaudited balance sheets and related unaudited
statements of income, shareholders' equity and cash flows for Primus as of and
for the calendar year period ended December 31, 1997 and for the two (2) months
ended February 28, 1998 reflecting the existing assets, liabilities, stockholder
equity, revenues and expenses of Primus exclusive of the Datacom business sold
as of March 17, 1998, as further described below. (the "Financial Statements").
The Financial Statements have been prepared in accordance with Primus books and
records, and present fairly in all material respects the financial position,
results of operations, shareholders' equity and cash flows as of or for the
periods then ended; provided, however, SYNAPTX acknowledges that the SELLING
SHAREHOLDERS do not represent that the Financial Statements have been prepared
in accordance with generally accepted accounting principles. There has been no
material adverse change in the business, financial condition, results of
operations or prospects of Primus since December 31, 1997. Except as referred to
in the Financial Statements, the SELLING SHAREHOLDERS have no actual knowledge
of any liabilities, commitments or obligations (whether accrued, absolute,
contingent or otherwise) of Primus, other than obligations incurred since the
date of the Financial Statements in the ordinary course of business and
consistent with past practice and none of which has or will have a material
adverse effect, on the business, financial condition, results of operations or
prospects of Primus, taken as a whole. On March 17, 1998, Primus completed the
sale of certain of its assets to Primus Datacom, Inc., a sales representative
organization providing services in the data wiring business ("Datacom Sale").
Any subsequent liabilities that may apply to the activities associated with such
sold assets are and shall be the responsibility of Primus Datacom, Inc. or the
Selling Shareholders, without regard to the indemnification limitation
provisions in Section 6.2.
2.6 Compliance, No Litigation. To the best of their knowledge, Primus
-------------------------
is in material compliance with all applicable federal, state, local and foreign
laws, ordinances, orders, rules and regulations and with all agreements,
commitments or obligations to which it is a party or by which it or any of its
assets may be bound. To the best of their knowledge, there is no proceeding,
investigation or inquiry pending or threatened against Primus, its business or
any of its assets, nor is there any basis for any such proceeding, investigation
or inquiry. Neither Primus nor, to the best of their knowledge, its business or
any of its assets is subject to any judgment, order, writ or injunction of any
court, arbitrator or governmental agents or instrumentality.
2.7 Authorized Capital Stock. The authorized capital stock of Primus
------------------------
consists of 100,000 shares of common stock, of which 200 shares are issued and
outstanding, all of which are owned by the SELLING SHAREHOLDERS . All the
outstanding shares of Primus Stock have been validly issued and are fully paid
and non assessable. There are no outstanding options, warrants, rights or other
commitments obligating Primus to issue any of its capital stock. The capital
stock held beneficially and of record by, the SELLING SHAREHOLDERS are not
pledged to any bank or to other lenders to support loans and debt provided to
either Primus or personally to any individual or multiple SELLING SHAREHOLDER.
2.8 Title to Primus Stock. Each of the SELLING SHAREHOLDERS owns the
---------------------
Primus Stock to be transferred to SYNAPTX at the Closing, free and clear of all
liens, claims and encumbrances, and at the Closing, SYNAPTX will acquire good
and valid title to such Primus Stock, free and clear of all liens, claims and
encumbrances.
2.9 Investment Representations. He or she has such knowledge and
--------------------------
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the SYNAPTX STOCK in exchange for the
Primus Stock owned by such SELLING SHAREHOLDER, and has been given the
opportunity to examine all documents and ask questions of, and receive answers
from representatives of SYNAPTX concerning the terms and conditions of such
exchange and the financial condition, business and prospects of SYNAPTX, and to
obtain such additional information as he or she deemed necessary in connection
with the transaction contemplated by this agreement. The SYNAPTX STOCK
(including any shares pursuant to Earn-Out Bonus) to be acquired by such SELLING
SHAREHOLDERS pursuant to this agreement is being acquired for such person's own
account for investment and not with a view to the public distribution thereof,
and such SELLING SHAREHOLDERS will not effect any transfer of such SYNAPTX STOCK
(including any shares pursuant to Earn-Out Bonus) except pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or exemptions from registration thereunder and in compliance with all applicable
state securities laws. Each SELLING SHAREHOLDER understands that the SYNAPTX
STOCK (including any shares pursuant to Earn-Out Bonus) to be received by such
person at the Closing will bear appropriate restrictive legends referring to the
foregoing transfer restrictions.
2.10 Reliance on Own Tax Advisors. The SELLING SHAREHOLDERS are relying
----------------------------
on their own tax advisors in connection with determining the tax consequences to
them of the transactions contemplated by this Agreement and the impact of its
sale of assets to Primus Datacom, Inc. and are not relying on SYNAPTX or
SYNAPTX's attorneys, accountants officers or advisors for any such advice.
2.11 Brokers and Finders. Neither the SELLING SHAREHOLDERS nor, to the
-------------------
knowledge of the SELLING SHAREHOLDERS, Primus has engaged any broker, finder or
other financial intermediary in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SYNAPTX
- -----------------------------------------
SYNAPTX represents and warrants as follows:
3.1 Organization. SYNAPTX is duly incorporated, validly existing and in
------------
good standing under the laws of the State of Utah, is qualified to do business
as a foreign corporation in each other jurisdiction wherein the nature of its
activities or of its properties owned or leased makes such qualification
necessary and in which the failure to be so qualified would have a material
adverse effect on the business, financial condition or results of operations of
SYNAPTX, taken as a whole, and has full corporate power and authority to conduct
its business as presently conducted and to enter into and perform this
Agreement.
3.2 Authorization. SYNAPTX has full power, capacity and authority to
-------------
execute, deliver and perform this Agreement. This Agreement has been duly
executed and delivered by SYNAPTX and (assuming the due execution and delivery
by the other parties hereto) constitutes the legal, valid and binding agreement
of SYNAPTX enforceable against SYNAPTX in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights and remedies generally and by general
principles of equity
3.3 No Consents, Conflicts. Except for any filing under federal and/or
----------------------
state securities laws required to be made by SYNAPTX to consummate the
transactions contemplated by the Agreement, no consent, approval or other action
by any governmental authority or third party is required in connection with the
execution, delivery and performance of this Agreement by SYNAPTX and neither the
execution, delivery or performance of this Agreement by SYNAPTX will (i)
violate, conflict with or result in a breach of any provision of, or constitute
a default or an event which with or without notice or lapse of time or both,
would constitute a default under SYNAPTX's articles of incorporation or by-laws
or any agreement or obligation to which SYNAPTX is a party or by which it may be
bound or affected where such violation, conflict, breach or default would have a
material adverse effect on the business, financial condition or results of
operations of SYNAPTX, taken as a whole, or (ii) violate any order, writ,
injunctions, decree, statue, rule or regulation applicable to SYNAPTX where such
violation would have a material adverse effect on the business, financial
condition or results of operations of SYNAPTX, taken as a whole.
3.4 Business of SYNAPTX. SYNAPTX has previously delivered to the
-------------------
SELLING SHAREHOLDERS the balance sheets and related statements of income,
shareholders' equity and cash flows for SYNAPTX as of and for the fiscal year
period ended August 31, 1997 and the condensed financial statement information
included for the six (6) months ended February 28, 1998 as filed with the
Securities and Exchange Commission on form 10-QSB. (the "Financial Statements").
The Financial Statements have been prepared in accordance with the SYNAPTX books
and records, and in accordance with generally accepted accounting principles
consistently applied, as set forth herein, and present fairly in all material
respects the financial position, results of operations, shareholders' equity and
cash flows for the periods then ended. There has been no material adverse change
in the business, financial condition, results of operations or prospects of
SYNAPTX since November 30, 1997. Except as referred to in the Financial
Statements, SYNAPTX does not have any liabilities, commitments or obligations
(whether accrued, absolute, contingent or otherwise), other than obligations
incurred since the date of the Financial Statements in the ordinary course of
business and consistent with past practice and none of which has or will have a
material adverse effect, on the business, financial conditions, results of
operations, or prospects of SYNAPTX, taken as a whole. On January 1, 1998,
SYNAPTX closed an acquisition of WG Controls, Inc. ("WG"), a sales
representative organization of whom SELLING SHAREHOLDERS are familiar, with the
plan that WG will operate in and provide sales representative services for
product and service companies in the upper Midwest.
3.5 Compliance, No Litigation. SYNAPTX is in material compliance with
-------------------------
all applicable federal, state, local and foreign laws, ordinances, orders, rules
and regulations and with all agreements, commitments or obligations to which it
is a party or by which it or any of its assets may be bound. There is no
proceeding, investigation or inquiry pending or threatened against SYNAPTX, its
business or any of its assets, nor is there any basis for any such proceeding,
investigation or inquiry. Neither SYNAPTX nor its business or any of its assets
is subject to any judgment, order, writ or injunction of any court, arbitrator
or governmental agency or instrumentality.
3.6 Authorized Capital Stock. The authorized capital stock of the
------------------------
Company is 35,000,000 shares, consisting of 10,000,000 shares of Preferred
Stock, $.001 par value per share, of which 137,143 of Series, A Convertible
Preferred Stock are issued or outstanding and 25,000,000 shares of Common Stock,
$.001 par value per share, of which 5,537,375 shares have been validly issued
and are outstanding, as of April 1, 1998. Additionally, the SYNAPTX Board of
Directors and a majority of the then Synaptx shareholders have approved a stock
option plan providing for the issuance of 1,450,000 shares of SYNAPTX Common
Stock of which options representing the right to purchase 877,867 shares of
SYNAPTX Common Stock are issued with exercise prices ranging from $0.091 to
$3.700 per share. Also, there are outstanding stock warrants representing the
right to purchase 230,006 shares of SYNAPTX Common Stock with exercise prices
from $0.454 to $2.30 per share.(moved from 3.7)
The Company has entered into an agreement with an equity
placement advisor who is assisting management to explore financing alternatives,
developing strategic plans with respect to future acquisitions, and putting in
place additional means of enhancing shareholder value. This agreement calls for
a monthly retainer of $3,000 plus the issuance of stock warrants exercisable
upon the completion of certain accomplishments, as follows:
Vesting of Warrants at
----------------------
$2.00 per share of
-----------------
Accomplishments Common Stock
--------------- ------------
() Supporting the raising of $1.75 million of new 100,000 shares
equity
() Common stock trading at $3.00 per share for 30
consecutive days 50,000 shares
() Common stock trading at $4.00 per share for 30
consecutive days 50,000 shares
() Common stock trading at $5.00 per share for 30
consecutive days 50,000 shares
() Common stock trading at $6.00 per share for 30
consecutive days 50,000 shares
Total 300,000 shares
All warrants vest immediately if there is a change in control or if Ronald L.
Weindruch is no longer CEO.
3.7 Title to SYNAPTX Stock. The SYNAPTX STOCK to be issued to each
----------------------
SELLING SHAREHOLDER will be duly and validly issued, fully paid and non
assessable, and each SELLING SHAREHOLDER will acquire title to the SYNAPTX
STOCK to be issued to such person hereunder free and clear of all liens,
claims and encumbrances, and no shareholder will have any preemptive right
of subscription or purchase in respect thereof.
3.8 Investment Representations. SYNAPTX represents and warrants that it
--------------------------
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Primus Stock
in exchange for the SYNAPTX STOCK, and has been given the opportunity to examine
all documents and ask questions of and receive answers from representatives of
Primus concerning the terms and conditions of such exchange and the financial
condition, business and prospects of Primus, and to obtain such additional
information as it deems necessary in connection with the transactions
contemplated by this Agreement the Primus Stock to be acquired by SYNAPTX
pursuant to this Agreement is being acquired for SYNAPTX's own account for
investment and not with a view to the public distribution thereof, and SYNAPTX
will not effect any transfer of such Primus Stock except pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or exemptions from registration thereunder and in compliance with all applicable
state securities laws. SYNAPTX understands that the Primus Stock to be received
by SYNAPTX at the Closing will bear appropriate restrictive legends referring to
the foregoing transfer restrictions. SYNAPTX agrees to comply with the state
securities or "Blue Sky" laws of the State of Minnesota.
3.9 Reliance on Own Tax Advisers. SYNAPTX is relying on its own tax
----------------------------
advisors in connection with determining the tax consequences to it of the
transactions contemplated by this Agreement and is not relying on Primus or
Primus' attorneys, accountants, officers or advisors for any such advice.
3.10 Brokers and Finders. SYNAPTX has not engaged any broker, finder or
-------------------
other financial intermediary in connection with this Agreement and the
transactions contemplated hereby.
3.11 Actions, Suits, Proceedings. Since June 1997, SYNAPTX has filed
---------------------------
all reports, statements and made all other filings (the "SYNAPTX Reports")
required to be made by it under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The SYNAPTX Reports accurately disclose as of the date
hereof all actions, claims, suits, proceedings and governmental investigations
pending or, to the knowledge of SYNAPTX, threatened, that are required to be
disclosed therein by the Exchange Act.
ARTICLE 4
Certain Actions to be Taken at Closing
- --------------------------------------
At the Closing, the following actions shall be taken (each of which
shall be deemed to occur simultaneously and each of which shall be dependent
upon the occurrence of each other action):
4.1 Each SELLING SHAREHOLDER shall deliver to SYNAPTX stock
certificates representing the Primus Stock owned by such SELLING SHAREHOLDER,
duly endorsed for transfer or with duly executed stock powers attached.
4.2 SYNAPTX shall deliver to each SELLING SHAREHOLDER a stock
certificate representing the SYNAPTX STOCK issued to such SELLING SHAREHOLDER
in exchange for his or her Primus Stock. (Moved from 1.4)
4.3 Employment Agreements. Primus shall enter into an employment
---------------------
agreement with each of the following Primus key employees in substantially the
forms set forth for each in Exhibit 4.3: John E. Primus, Greg Stavn, Sam Nelson,
Larry Donnelly, and Steve Brooks.
4.4 Non-Competition Agreements. Primus shall enter into a
--------------------------
non-competition agreement with each Primus key employee set forth in Section 4.3
above in substantially the form set forth for each in Exhibit 4.4.
4.5 Board Resolution. SYNAPTX shall, at the Closing, provide a fully
----------------
executed resolution of the SYNAPTX Board of Directors indicating that there
are no existing conditions that preclude the transaction as defined in
Section 1.1 and authorizing such exchange
4.6 Registration Rights Agreement. SYNAPTX and the SELLING SHAREHOLDERS
-----------------------------
shall enter into the Registration Rights Agreement attached hereto as Exhibit
4.6.
ARTICLE 5
POST-CLOSING COVENANTS
- ----------------------
5.1 Post-Closing Covenants of SYNAPTX. SYNAPTX covenants from and after
---------------------------------
the Closing as follows:
5.1.1 Stock Plans. SYNAPTX shall define and implement within one
-----------
hundred twenty (120) days after the Closing Date a stock purchase program for
the executives of Primus.
5.2 Operation of Primus' Business Following the Closing. The parties
---------------------------------------------------
agree as follows with respect to the operation of Primus' business following the
Closing:
5.2.1 Location. Primus shall continue to conduct its business at its
--------
present facilities in Minnetonka, Minnesota until such time as the Primus Board
of Directors and the SYNAPTX Board of Directors mutually agree that a change
would be beneficial to the business of SYNAPTX and its subsidiaries taken as a
whole.
5.2.2 Operations. SYNAPTX, in conjunction with the Primus Board of
----------
Directors, can use its business judgment relative to the operation of Primus
during the Earn-Out Period.
5.3 Covenant of Further Assurances. From and after the Closing, the
------------------------------
SELLING SHAREHOLDERS shall, from time to time, at the request of SYNAPTX and
without further consideration (but at SYNAPTX's expense) do, execute,
acknowledge and deliver all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably required to
confirm the conveyance and transfer of the Primus Stock to SYNAPTX.
ARTICLE 6
Survival of Representations, Warranties and Covenants; Indemnification.
6.1 Survival of Representations, Warranties and Covenants. The
-----------------------------------------------------
representations and warranties set forth in Articles 2 and 3 hereof and the
Covenants set forth in Article 5 hereof shall survive the execution of this
Agreement and the consummation of the transactions contemplated hereby for a
period of six (6) months following such execution, except obligations of Selling
Shareholders associated with the Datacom Sale as described in Section 2.5
hereof, which has no time limit.
6.2 Indemnification. Each SELLING SHAREHOLDER hereby agrees to
---------------
indemnify and hold SYNAPTX harmless from and after the date of this Agreement
against and with respect to (i) any and all loss, injury, damage or deficiency
resulting from any misrepresentation, breach of warranty or breach of covenant
on the part of such SELLING SHAREHOLDER under this Agreement; and (ii) any and
all demands, claims, actions, suits or proceedings, assessments, judgments,
costs and legal and other expenses incident to the foregoing. SYNAPTX hereby
agrees to indemnify and hold each SELLING SHAREHOLDER harmless from and after
the date of this Agreement against and with respect to (i) any and all loss,
injury, damage or deficiency resulting from any misrepresentation, breach of
warranty or breach of covenant on the part of SYNAPTX under this Agreement; and
(ii) any and all demands, claims, actions, suits or proceeds, assessments,
judgments, costs and legal and other expenses incident to the foregoing.
However, the obligations of the SELLING SHAREHOLDERS and SYNAPTX to indemnify
the other hereunder are subject to the following limitations:
(a) Limits. Except as provided below, the obligation to
indemnify will expire six (6) months after Closing, except obligations
of Selling Shareholders associated with the Datacom Sale as described
in Section 2.5 hereof, which has no time limit.. The six-month limit
shall not apply to indemnification claims theretofore asserted in
writing that remain unresolved, for which the obligation to indemnify
shall continue. Notwithstanding anything stated herein to the contrary,
each SELLING SHAREHOLDER'S total cumulative obligation to indemnify
under this Section 6.2 shall not exceed $160,715.
(b) Insurance. There will be no obligation to indemnify with
respect to any matter that is covered by any insurance.
(c) Notice and Defense. If any matter should arise that would
result in an obligation to indemnify a party, the indemnitee shall give
prompt notice thereof to the indemnitor, and shall give the indemnitor
the opportunity to defend against any claim, suit or action that would
result in liability to a third party that would give rise to an
indemnification right. Whether or not the indemnitor chooses to defend
such a claim, the indemnitee will not settle, compromise or otherwise
resolve the claim without the prior consent of the indemnitor.
(d) Dollar Threshold for Indemnification Claims by SYNAPTX. No
claims for indemnification shall be made by SYNAPTX unless and until
the aggregate amount of all claims for indemnification by SYNAPTX
exceeds $25,000, except obligations of Selling Shareholders associated
with the Datacom Sale as described in Section 2.5 hereof, which shall
be fully indemnified by Selling Shareholder. If the claims for
indemnification by SYNAPTX do exceed $25,000, the SELLING SHAREHOLDERS
shall be liable for all such amounts up to the aggregate total
limitation provided for in Clause (a) of this Section 6.2.
(c) Exclusive Remedy.
----------------
(i) SYNAPTX acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims relating
to the subject matter of this Agreement shall be pursuant to
the indemnification provisions set forth in this Section 6.2.
In furtherance of the foregoing, SYNAPTX waives, to the
fullest extent permitted under applicable law, any and all
rights, claims and causes of action that it may have against
the SELLING SHAREHOLDERS arising under or based upon any
federal, state or local statute, law, ordinance, rule or
regulation, or arising under or based upon common law or
otherwise, except to the extent provided in this section 6.2
(ii) The SELLING SHAREHOLDERS acknowledge and agree
that, except with respect to claims under Section 1.2, their
sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be
pursuant to the indemnification provisions set forth in this
Section 6.2. In furtherance of the foregoing, the SELLING
SHAREHOLDERS waive, except with respect to claims under
Section 1.2, to the fullest extent permitted under applicable
law, any and all rights, claims and causes of action that they
may have against SYNAPTX arising under or based upon any
federal, state or local statute, law, ordinance, rule or
regulation, or arising under or based upon common law or
otherwise, except to the extent provided in this Section 6.2.
ARTICLE 7
7.1 Miscellaneous. This Agreement may be amended only in writing signed
-------------
by the party against whom enforcement is sought. This Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties. This Agreement shall be governed and construed in accordance with the
laws of the State of Illinois, without regard to principles of conflicts of law.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original. The headings contained in this Agreement are only for
convenience and shall not affect the meaning or interpretation of this
Agreement. The invalidity or unenforceability of any provision of this Agreement
shall not affect any other provisions of this Agreement, which shall remain in
full force and effect. Each party agrees that the others would be irreparably
harmed in the event of any breach of this Agreement. Accordingly, the parties
agree that each shall be entitled to specific performance of this Agreement and
to injunctive relief to prevent any breach of this Agreement. In the event of
any litigation arising out of or relating to this Agreement, the prevailing
party shall be entitled to reasonable attorney's and expenses from the losing
party.
Company Signature Name and Title
------- --------- --------------
Synaptx Worldwide, Inc.
- ----------------------
Ronald L. Weindruch,
----------------------- Chairman, CEO
(Corporate Seal)
John E. Primus,
------------------------ Shareholder
Jannine G. Primus,
------------------------ Shareholder
<PAGE>
Exhibit 1.1
-----------
Exchange of Primus Marketing Associates, Inc. Stock
---------------------------------------------------
for Synaptx Worldwide Inc. Stock
--------------------------------
- ------------------------------------------------------------------------
SELLING SHAREHOLDERS Primus Common Stock SYNAPTX
-------------------- ------------------- -------
Common Stock*
------------
- ------------------------------------------------------------------------
John E. Primus, Shareholder
100 107,143
- ------------------------------------------------------------------------
Jannine G. Primus, Shareholder
100 107,143
- ------------------------------------------------------------------------
Totals
200 214,286
- ------------------------------------------------------------------------
* Does not include amounts to be issued pursuant to Section 1.2 for the Earn-out
---
Bonus.
<PAGE>
Exhibit 1.2
-----------
Contingent Issuance of Synaptx Worldwide Inc. Stock
---------------------------------------------------
EARN--OUT PERIOD PRIMUS PRIMUS EARN-OUT
---------------- ------ ------ --------
COMMISSION EARNINGS BEFORE BONUS
---------- --------------- -----
REVENUES TAXES AMOUNT
-------- ----- ------
FIRST ANNUAL MEASUREMENT PERIOD
- -------------------------------
Period starting with the
first full month subsequent to
the Closing Date and Ending
twelve (12) months thereafter:
Level One Results $1,000,000 $200,000 $100,000
Level Two Results $1,200,000 $250,000 $125,000
Level Three Results $1,650,000 $350,000 $175,000
SECOND ANNUAL MEASUREMENT PERIOD:
- --------------------------------
Twelve month period ending after
the First Annual Measurement
Period ends:
Level One Results $1,200,000 $250,000 $100,000
Level Two Results $1,650,000 $350,000 $150,000
Level Three Results $2,000,000 $450,000 $200,000
<PAGE>
Exhibit 2.0
-----------
DISCLOSURE SCHEDULE
-------------------
None
<PAGE>
Exhibit 2.4
-----------
Primus Marketing Associates, Inc.
CUSTOMER 1997 INCOME
--------- ------------
ABB $ 290,296
ADC $ 21,261
AFL $ 357,358
Alpha $ 2,112
AMP $ 36,202
Arnco $ 21,857
Bogen $ 12,359
Byron Labs $ 11
Chance $ 29,211
Cons. Products $ 1,299
Coretelco $ 14,047
CSP $ 712
Custom House $ 164
Devtek $ 2,691
EXFO $ 34,874
GS Metals $ 7,094
Halls Safety Equipment $ 4,293
Ideal $ 111
McCrea $ 400
Newell Porcelain $ 19,206
Panamax $ 1,018
Quickset $ 3,011
Rapid Power Transit $ 4,334
RELTEC $ 49,321
Shallbettor $ 2,371
Telenetics $ 2,383
-----------
TOTAL $ 917,996
=========
EXHIBIT 10.2
PRIMUS MARKETING ASSOCIATES, INC..
EMPLOYMENT AGREEMENT
--------------------
BY THIS AGREEMENT, made this 1st day of June, 1998, Primus
Marketing Associates, Inc., a Minnesota corporation ("Company")
and John E. Primus ("Employee"), in consideration of mutual
benefits set forth herein, hereby agree as follows:
1. Employment. The Company hereby employs the Employee
----------
and the Employee hereby accepts employment upon the terms and
conditions hereinafter set forth.
2. Term. Subject to the provisions for the termination as
----
hereafter provided, the term of this Agreement shall begin on the
date hereof and shall terminate on May 1, 2001. Thereafter, this
Agreement shall be automatically renewed for two (2) successive
one-year terms unless either party notifies the other of
non-renewal at least 30 days prior to the expiration of the then
current term. The compensation and other benefits provided for
herein shall be subject to annual review by the Company's Board
of Directors.
3. Compensation. For all services rendered by the
------------
Employee under this Agreement, the Company shall compensate the
Employee by paying the Employee the sum of the following (subject
to any applicable withholding):
(i) $120,000 per year payable in equal installments in
accordance with the Company's normal payroll policies (called
"Regular Compensation");
(ii) A bonus (the "Override Bonus") in each calendar month
during which Employee's employment continues. The amount of the
Override Bonus payable each month shall be the total amount of
the Company's Commission Receipts (as defined below) multiplied
by 5%, but only to the extent of fifty (50) percent of the GAAP
defined net profit earned by Company for such month.
"Commission Receipts" shall be (i) the total revenue (net of any
adjustments by customers) received by the Company in such month
(whether received with respect to such month, a previous month or
as a prepayment for a future month) from the Company's customers
located in Iowa, Minnesota, Montana, Nebraska, North Dakota,
South Dakota, Wyoming, Upper Michigan and North Western
Wisconsin (Southern Wisconsin for Electrical Utility only) and
(ii) the total revenue received by the Company (net of any
adjustments by customers) from power utility only in Oregon,
Idaho, Washington and Wyoming and South Eastern Wisconsin. The
Override Bonus shall be paid to Employee by the subsequent
month's end.
In the event of certain early terminations of this Agreement
as provided, compensation payable to the Employee shall (unless
otherwise stated in Section 9) be limited to amounts Fully
Accrued. The term "Fully Accrued" means (a) as to Regular
Compensation, the percentage of a year's Regular Compensation as
shall equal the percentage of the year which has expired on the
termination date, and (b) as to Override Bonus, only that
Override Bonus which has been earned as of the month end previous
to the termination date.
4. Duties. The Employee is engaged as President. As such
------
officer, Employee shall have the function of the chief executive
officer of the Company and shall have the general active
management of the business of the Company, subject to the
direction of the Board of Directors. The Employee also shall
perform such corporate development services for the Company's
parent corporation and affiliates as the Company's Board of
Directors may specify from time to time, without additional
compensation.
5. Extent of Services. The Employee shall devote the
------------------
Employee's entire time, attention and energy to the business of
the Company, and shall not, during the term of this Agreement,
engage in any other business activity whether or not such
business activity is pursued for gain, profit or other pecuniary
advantage; but this shall not be construed as preventing the
Employee from investing Employee's assets in such form or manner
as will not require services on the part of Employee in the
operation or the affairs of, or control of the entity in which
investments are made. The Company acknowledges that Employee has
entered into a Consulting Agreement with Primus Datacom, Inc.
under which Employee provides consulting services to Primus
Datacom, Inc.
6. Expenses. The Employee is authorized to incur
--------
reasonable expenses for promoting the business of the Company,
including expenses for travel and similar items. The Company
will reimburse the Employee for all such expenses upon
presentation by the Employee, from time to time, of an itemized
account of such expenditures in accordance with the Company's
expense reimbursement policies.
7. Fringe Benefits. The Employee shall enjoy to the
---------------
extent eligible the same fringe benefits as provided generally to
other senior executives of the Company and which shall not be
more than the fringe benefits offered by Synaptx Access to its
senior executives, including health and life insurance. The
Company will maintain such health and life insurance with
benefits at a minimum consistent with the existing Company health
and life insurance. Furthermore, the Company will develop a plan
offering the benefit of a deferred compensation arrangement,
commonly referred to as a "401(K) Plan" whose contributions and
benefits structure will at a minimum be consistent with the
existing Synaptx Impulse, Inc. (F/K/A Maxwell Partners, Inc.)
Retirement Savings Plan by June 15, 1998.
8. Vacation. The Employee shall be entitled, in
--------
accordance with policy, each year to 10 holidays, 10 vacation
days and 10 personal days, during which time the Employee's
compensation shall be paid in full. There are no carry-over
vacation or personal days from prior calendar years.
9. Termination.
-----------
(i) Without Cause. Without cause, the Company may
-------------
terminate this Agreement at any time upon 30 days' written notice
to the Employee. In such event, the Employee shall receive
six(6) months of Regular Compensation unless such termination
occurs during the original term of this Agreement (i.e. occurs
prior to March 1, 2001), in which case Employee shall receive one
(1) year of such Regular Compensation, but the Employee shall be
entitled to Override Bonus only to the extent Fully Accrued as of
the prior month's end on the date of termination.
(ii) With Cause. The Company may terminate the
----------
employment of the Employee hereunder immediately upon written
notice thereof in the event of (a) material fraud or material
dishonesty or (b) willful neglect of duties (unless cured within
30 days of notice by the Company), or (c) committing acts
detrimental to the Company or (d) breach of his obligations under
this Agreement by the Employee in connection with his employment,
or if the Employee is convicted of a felony. In such event, the
Company shall pay the Employee only such compensation as shall
have Fully Accrued on the date of termination, less reserves for
damages by reason of Employee's actions.
(iii) Termination by Employee. The Employee may
-----------------------
terminate this Agreement at any time upon 30 days' prior written
notice to the Company. In such event, the Employee shall be
entitled to receive his or her compensation only to the extent
Fully Accrued on the date of termination.
10. Death or Disability During Employment.
-------------------------------------
(i) Death. If the Employee dies during the term of
-----
this Employment Agreement, the Company shall pay to the estate of
the Employee the compensation which would be Fully Accrued as of
the end of the calendar month in which his death occurs.
(ii) Disability. If the Employee becomes disabled
----------
during the term of this Employment Agreement, the Company shall
continue to pay to the Employee regular compensation for three
(3) months, at which point the Company may terminate the
employment of the Employee.
11. Non-Disclosure. Employee hereby agrees with Company
--------------
that Employee will keep confidential any and all confidential
information of the Company, any future parent and such parent's
related subsidiaries ("Company and Affiliates"), including
Company and Affiliates know-how, trade secrets, customer lists,
and other information, data and proprietary information relating
to Company and Affiliates business (herein called "Proprietary
Information") and will not at any time, without prior written
consent of Company, disclose or make known or allow to be
disclosed or made known such Proprietary Information to any
person, firm, corporation, or other business entity other than
Company and Affiliates and persons or entities designed by
Company and Affiliates provided, however, that this Section 11
shall be inoperative as to information which (i) is or becomes
generally available to the public other than as a result of a
disclosure by Employee; (ii) becomes available to Employee on a
non-confidential basis from another source that has represented
that it is entitled to disclose it; (iii) was known to Employee
on a non-confidential basis prior to its disclosure; or (iv)
which Employee is required to disclose by law or regulatory or
judicial order. This provision shall survive the termination of
this Agreement.
12. Notices. Any notice required or permitted to be given
-------
under this Agreement shall be sufficient if in writing, and sent
by certified mail or hand delivery to the Employee's residence in
the case of the Employee, or to the principal office in case of
the Company.
13. Waiver of Breach. The waiving by the Company of a
----------------
breach of any provision in this Agreement by the Employee shall
not operate or be construed as a waiver of any subsequent breach
by the Employee.
14. Assignment. The rights and obligations of the Company
----------
under this Agreement shall inure to and be binding upon the
successors, assigns and corporate owners of the Company.
15. Entire Agreement. This instrument contains the entire
----------------
agreement of the parties. It may not be changed or altered
except by an Agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension
or discharge is sought.
16. Attorney's Fees. In the event of any litigation or
---------------
arbitration proceeding arising out of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees
and expenses from the losing party, whether incurred before suit
is brought, before or at trial or the arbitration proceeding, on
appeal or in insolvency proceedings.
17. Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State
of Minnesota, exclusive of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Primus Marketing Associates, Inc. Employee
-------------------------------- --------
("Company")
-----------
---------------------------------------- --------------------
, Director John Primus
---------------
EXHIBIT 10.3
SYNAPTX WORLDWIDE, INC.
NON-COMPETE AGREEMENT
---------------------
This agreement made and entered into this 1st day of June,
1998 between Synaptx Worldwide, Inc. corporation ("Purchaser")
and John E. Primus ("Seller").
WITNESSETH THAT:
WHEREAS, pursuant to an Agreement and Plan of Stock for
Stock Exchange (the "Purchase Agreement") among Purchaser and
Seller, a Minnesota resident, the Purchaser wishes to acquire all
the outstanding stock of Primus Marketing Associates, Inc.
("Primus");
WHEREAS, Seller is one of the founders of and has been a
principal of Primus and due to the nature of his employment and
his relationship with Primus, has had access to, and has acquired
and assisted in developing confidential and proprietary
information relating to the business and operations of Primus,
including information with respect to the present and prospective
plans, products, systems, processes, customers, suppliers and the
sales and marketing methods of Primus;
WHEREAS, Primus has an Employment Agreement ("Employment
Agreement") with Seller;
WHEREAS, Seller acknowledges that such information and
methods have been, and will continue to be, of central importance
to the business of Primus and that the use of such information
by, or its disclosure to, competitors of Primus or others could
cause substantial harm to Primus and Purchaser; and
WHEREAS, the obligation of Purchaser to consummate the
Closing is expressly conditioned on the execution and delivery of
this Non-Compete Agreement by Seller;
NOW, THEREFORE, the parties hereby agree as follows:
1. For two (2) years after the date that Seller's
employment with Primus is terminated, Seller agrees that he will
not, directly or indirectly (whether as an officer, director,
employee, agent, representative, consultant, proprietor, partner,
joint venturer, stockholder or otherwise), own, manage, operate,
join, control or participate in the ownership, management,
operation or control of, or be connected with, any business
enterprise which is engaged, directly or through a parent,
subsidiary or affiliate, anywhere in
(i) Minnesota, North Dakota, South Dakota, Iowa,
Wisconsin, Upper Michigan or Nebraska;
(ii) Montana, Wyoming, Idaho, Washington or Oregon; and
(iii) in any other area of the United States
in any line of business in which Purchaser and its subsidiaries
are engaged during the period from the Closing Date through the
day that Seller's employment with Purchaser is terminated,
provided that nothing herein contained shall be construed as
preventing Seller from investing his personal assets in such form
or manner as will not require any services on his part in the
operation of, or control of, the business of the companies in
which such investments are made. Purchaser acknowledges that
Seller has entered into a Consulting Agreement with Primus
Datacom, Inc. under which Seller provides services to Primus
Datacom, Inc. Purchaser acknowledges and agrees that this
Non-Compete Agreement shall not be construed to prevent or apply
in any way to Seller's provision of such services to Primus
Datacom, Inc.
2. If the Purchaser elects to terminate the employment
arrangement with Seller under the terms of Section 9 (i) of the
Employment Agreement, then Section 1 of this Non-Competition
Agreement shall be null and void.
3. Seller hereby agrees with Purchaser and Purchaser's
subsidiaries and affiliates (the "Company") that Seller will keep
confidential any and all confidential information of the Company,
including Company's know-how, trade secrets, customer lists, and
other information, data and proprietary information relating to
Company's business (herein called "Proprietary Information") and
will not at any time, without prior written consent of Company,
disclose or make known or allow to be disclosed or made known
such Proprietary Information to any person, firm, corporation, or
other business entity other than Company and persons or entities
designated by Company provided, however, that this Section 3
shall be inoperative as to information which (i) is or becomes
generally available to the public other than as a result of a
disclosure by Seller; (ii) becomes available to Seller on a
non-confidential basis from another source that has represented
that it is entitled to disclose it; (iii) was known to Seller on
a non-confidential basis prior to its disclosure; or (iv) which
Seller is required to disclose by law or regulatory or judicial
order. This provision shall survive the termination of this
Agreement.
4. The waiver by the Purchaser of a breach by Seller of
any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by him.
5. The rights of the Purchaser under this Agreement shall
inure to the benefit of the Purchaser and the successors and
assigns of the Purchaser and of Primus. The obligations of the
Purchaser under this Agreement shall be binding upon the
successors and assigns of the Purchaser.
6. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
7. The Seller agrees that any breach or threatened breach
by him of any provision of this Agreement shall entitle the
Purchaser, in addition to any other legal remedy available to it,
to apply to any court of competent jurisdiction to enjoin such
breach or threatened breach.
8. To the extent that any provision of this Agreement
shall be invalid or unenforceable, it shall be considered
deleted herefrom and the remainder of such provision and this
Agreement shall be unaffected and continue in full force and
effect. In furtherance and not in limitation of the foregoing,
should the duration, geographical extent or business activities
covering by the provisions of this Agreement be in excess of that
which is valid or enforceable under applicable law, then such
provision shall be construed to cover only that duration, extent
or activities which may be valid and enforceable. The Seller
acknowledges the uncertainty of the law in this respect and
expressly stipulates that this Agreement be given the
construction which renders its provisions valid and enforceable
to the maximum extent (not exceeding its express terms) possible
under applicable law.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
SYNAPTX WORLDWIDE, INC. (PURCHASER) JOHN PRIMUS (SELLER)
----------------------------------- --------------------
---------------------------------- ---------------------
By: Ronald L. Weindruch, By: John Primus
Chairman, CEO
EXHIBIT 10.4
SYNAPTX WORLDWIDE, INC.
NON-COMPETE AGREEMENT
---------------------
This agreement made and entered into this 1st day of June,
1998 between Synaptx Worldwide, Inc. corporation ("Purchaser")
and Jannine Primus ("Seller").
WITNESSETH THAT:
WHEREAS, pursuant to an Agreement and Plan of Stock for
Stock Exchange (the "Purchase Agreement") among Purchaser and
Seller, a Minnesota resident, the Purchaser wishes to acquire all
the outstanding stock of Primus Marketing Associates, Inc.
("Primus");
WHEREAS, Seller is one of the founders of and has been a
principal of Primus and due to the nature of and her relationship
with Primus, has had access to, and has acquired and assisted in
developing confidential and proprietary information relating to
the business and operations of Primus, including information with
respect to the present and prospective plans, products, systems,
processes, customers, suppliers and the sales and marketing
methods of Primus;
WHEREAS, Seller acknowledges that such information and
methods have been, and will continue to be, of central importance
to the business of Primus and that the use of such information
by, or its disclosure to, competitors of Primus or others could
cause substantial harm to Primus and Purchaser; and
WHEREAS, the obligation of Purchaser to consummate the
Closing is expressly conditioned on the execution and delivery of
this Non-Compete Agreement by Seller;
NOW, THEREFORE, the parties hereby agree as follows:
1. For five (5) years after the Closing date, Seller
agrees that she will not, directly or indirectly (whether as an
officer, director, employee, agent, representative, consultant,
proprietor, partner, joint venturer, stockholder or otherwise),
own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be connected
with, any business enterprise which is engaged, directly or
through a parent, subsidiary or affiliate, anywhere in
(i) Minnesota, North Dakota, South Dakota, Iowa,
Wisconsin, Upper Michigan or Nebraska;
(ii) Montana, Wyoming, Idaho, Washington or Oregon; and
(iii) in any other area of the United States
in any line of business in which Purchaser and its subsidiaries
are engaged during the period five (5) years after the Closing
that nothing herein contained shall be construed as preventing
Seller from investing his personal assets in such form or manner
as will not require any services on her part in the operation of,
or control of, the business of the companies in which such
investments are made.
2. If the Purchaser elects to terminate the employment
arrangement with John E. Primus under the terms of Section 9 (i)
of his Employment Agreement, then Section 1 of this
Non-Competition Agreement shall be null and void.
3. Seller hereby agrees with Purchaser and Purchaser's
subsidiaries and affiliates (the "Company") that Seller will keep
confidential any and all confidential information of the Company,
including Company's know-how, trade secrets, customer lists, and
other information, data and proprietary information relating to
Company's business (herein called "Proprietary Information") and
will not at any time, without prior written consent of Company,
disclose or make known or allow to be disclosed or made known
such Proprietary Information to any person, firm, corporation, or
other business entity other than Company and persons or entities
designated by Company provided, however, that this Section 3
shall be inoperative as to information which (i) is or becomes
generally available to the public other than as a result of a
disclosure by Seller; (ii) becomes available to Seller on a
non-confidential basis from another source that has represented
that it is entitled to disclose it; (iii) was known to Seller on
a non-confidential basis prior to its disclosure; or (iv) which
Seller is required to disclose by law or regulatory or judicial
order. This provision shall survive the termination of this
Agreement.
4. The waiver by the Purchaser of a breach by Seller of
any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by him.
5. The rights of the Purchaser under this Agreement shall
inure to the benefit of the Purchaser and the successors and
assigns of the Purchaser and of Primus. The obligations of the
Purchaser under this Agreement shall be binding upon the
successors and assigns of the Purchaser.
6. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
7. The Seller agrees that any breach or threatened breach
by her of any provision of this Agreement shall entitle the
Purchaser, in addition to any other legal remedy available to it,
to apply to any court of competent jurisdiction to enjoin such
breach or threatened breach.
8. To the extent that any provision of this Agreement
shall be invalid or unenforceable, it shall be considered
deleted herefrom and the remainder of such provision and this
Agreement shall be unaffected and continue in full force and
effect. In furtherance and not in limitation of the foregoing,
should the duration, geographical extent or business activities
covering by the provisions of this Agreement be in excess of that
which is valid or enforceable under applicable law, then such
provision shall be construed to cover only that duration, extent
or activities which may be valid and enforceable. The Seller
acknowledges the uncertainty of the law in this respect and
expressly stipulates that this Agreement be given the
construction which renders its provisions valid and enforceable
to the maximum extent (not exceeding its express terms) possible
under applicable law.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
SYNAPTX WORLDWIDE, INC. (PURCHASER) JANNINE PRIMUS (SELLER)
---------------------------------- -----------------------
----------------------------------- -------------------------
By: Ronald L. Weindruch, By: Jannine Primus
Chairman, CEO
