SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): January 28, 1999
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SYMPOSIUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-25435 13-4042921
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
410 Park Avenue Suite 830
New York, New York 10022
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 754-9901
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Item 2. Acquisition or Disposition of Assets.
DSI Asset Purchase Agreement
On January 28, 2000 (the "Closing Date"), pursuant to an Asset Purchase
Agreement made and entered into as of January 28, 2000 (the "DSI Agreement"), by
and among Symposium Corporation, a Delaware corporation ("Symposium" or the
"Company"), Direct Sales International L.P., a Georgia Limited Partnership
("DSI"), Direct Sales International, Inc., a recently formed Delaware
corporation wholly owned by Symposium ("Direct Sales"), and Richard Prochnow,
the sole stockholder of the general partner of DSI and the owner of over 90% of
the partnership interests in DSI, Symposium and Direct Sales completed the
acquisition of substantially all of the assets and certain liabilities of DSI.
The purchase price paid by Symposium in order to acquire the DSI assets
was: (i) $25 million dollars in cash; and (ii) assumption of the liabilities of
DSI, subject to certain exclusions. The purchase price was arrived at through an
arms-length negotiation between Symposium, DSI and Richard Prochnow. The
purchase price increased from that provided under the Option A
greement described in the Symposium Form 10QSB, dated August 16, 1999 due to a
dispute between the parties with regards to the terms of the Asset Purchase
Agreement and whether the purchase was concluded within the time set forth in
the Option Agreement. Symposium financed the cash portion of the purchase price
by borrowing $16 million dollars through a credit facility provided by Coast
Business Credit and using the proceeds (approximately $9 million dollars) of the
issuance by Symposium of Common Stock, warrants for the purchase of Common
Stock, convertible preferred securities and the convertible debenture.
Symposium has agreed to register, under the Securities Act of 1933, as
amended, the Common Stock and the Common Stock underlying the warrants,
convertible preferred securities and the convertible debenture.
In connection with the acquisition of DSI, Symposium issued 2,500,000
shares of its Common Stock to Mr. Prochnow on June 19, 1999 for a note, as
described in Note 3 of Symposium's Form 10-QSB for the period ended September
30, 1999. On the Closing Date, the Note was amended as follows: the maturity
date was extended to January 14, 2003 (provided that one-third of the net
proceeds of any sale of his Symposium Common Stock must be applied to repay the
Note); the requirement to pay interest on outstanding amounts not yet due was
rescinded, and in lieu thereof, the amended Note provides for interest at 10%
per annum, commencing on the date of any payment default under the amended Note.
Symposium has entered into a Registration Rights Agreement with Mr. Prochnow
which provides that Mr. Prochnow may sell up to 600,000 shares of Symposium
Common Stock to Symposium at $3.00 per share between January 15, 2001 and March
13, 2001, and also requires the Company to register 1,000,000 of the 2,500,000
shares within 120 days after January 28, 2000. 600,000 shares were released from
the Pledge Agreement executed by Mr. Prochow on June 6, 1999.
Direct Sales has entered into a three-year Consulting Agreement with
Mr. Prochnow pursuant to which Mr. Prochnow is entitled to receive $50,000 per
month plus benefits. Such amount has been guaranteed by Symposium.
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DSI is an independent and subscription sales agent
involved in direct marketing. At the time of the acquisition, it owned a
database of over 600,000 subscribers.
The Company recently announced that it had decided not to exercise its
option to acquire 50.1% of the outstanding stock of AmeriNet, Inc. ("AmeriNet"),
but had agreed to provide a $1,500,000 credit facility to AmeriNet in addition
to the $500,000 of loans already advanced. Mr. Prochnow owns 50% of the common
stock of AmeriNet.
The foregoing description of the terms and provisions of the above
described acquisition is qualified in its entirety by reference to the full text
of the exhibits filed herewith and incorporated by this reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired. It is presently
impracticable to provide the financial statements required to be included in
this Current Report on Form 8-K with respect to the businesses acquired. Such
financial statements will be filed by amendment as soon as practicable, but in
no event more than 60 days after the date of this filing.
(b) Pro forma financial information. It is presently impracticable to
provide the pro forma financial information required to be included in this
Current Report on Form 8-K. Symposium intends to file the financial statements
as soon as practicable, but in no event more than 60 days after the date of this
filing.
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Item 7.
Exhibit No. Description
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2.1 Asset Purchase Agreement made and entered into as of January
28, 2000, by and among Direct Sales International, Inc.,
Symposium Corporation and Richard Prochnow.
2.2 Option Agreement dated June 9, 1999 by and among Symposium
Corporation, Direct Sales International L.P. and Richard
Prochnow, incorporated herein by reference to Exhibit 2.2 to
the Registrant's quarterly report on Form 10QSB for the period
ended June 3, 1999.
99.1 Registration Rights Agreement made and entered into as of
January 28, 2000 by and between Symposium Corporation and
Richard Prochnow.
99.2 Amended Non-Negotiable Secured Promissory Note made by Richard
Procknow payable to the order of Symposium Corporation, dated
January 28, 2000.
99.3 Consulting Agreement between Symposium Corporation, Direct
Sales International, Inc. and Richard Prochnow.
99.4 Loan Agreement made and entered into as of January 28, 2000,
between Symposium Corporation and AmeriNet.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Symposium Corporation has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: Symposium Corporation
By: /s/ Ronald Altbach
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Index to Exhibits
Exhibit No. Description
2.1 Asset Purchase Agreement made and entered into as of January
28, 2000, by and among Direct Sales International, Inc.,
Symposium Corporation and Richard Prochnow.
2.2 Option Agreement dated June 9, 1999 by and among Symposium
Corporation, Direct Sales International L.P. and Richard
Prochnow, incorporated herein by reference to Exhibit 2.2 to
the Registrant's quarterly report on Form 10QSB for the period
ended June 3, 1999.
99.1 Registration Rights Agreement made and entered into as of
January 28, 2000 by and between Symposium Corporation and
Richard Prochnow.
99.2 Amended Non-Negotiable Secured Promissory Note made by Richard
Procknow payable to the order of Symposium Corporation, dated
January 28, 2000.
99.3 Consulting Agreement between Symposium Corporation, Direct
Sales International, Inc. and Richard Prochnow.
99.4 Loan Agreement made and entered into as of January 28, 2000,
between Symposium Corporation and AmeriNet.
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of January 28, 2000, by and among DIRECT SALES INTERNATIONAL, INC., a
Delaware corporation (the "Purchaser"), SYMPOSIUM CORPORATION, a Delaware
corporation ("Symposium"), DIRECT SALES INTERNATIONAL L.P., a Georgia limited
partnership ("Seller"), and RICHARD PROCHNOW, an individual ("Prochnow"), with
reference to the following facts:
A. Prochnow is the sole shareholder of Direct Sales, Inc., the general
partner of Seller, and directly owns limited partnership interests representing
93% of the profits, losses and distributions of Seller.
B. Symposium, Seller and Prochnow are parties to an Option Agreement
dated as of June 9, 1999 (the "Option Agreement"). Pursuant to the Option
Agreement, Seller sold to Symposium an option (the "Option") to purchase the
Assets from Seller on the terms and subject to the conditions set forth in the
Option Agreement.
C. The Option Agreement provides that Symposium's purchase of the
Assets pursuant to its exercise of the Option shall be pursuant to a Long Form
Agreement (as defined in the Option Agreement).
D. The Purchaser is a wholly-owned subsidiary of Symposium formed for
the purpose of acquiring the Assets and assuming the Assumed Liabilities as
contemplated by this Agreement.
E. Symposium has exercised the Option, and the parties intend that this
Agreement shall constitute the Long Form Agreement referenced in the Option
Agreement.
NOW, THEREFORE, with reference to the foregoing facts, the parties
agree as follows:
Definitions.
A. Certain Definitions. All terms defined in this Agreement shall
have the defined meanings when used in this Agreement or in
any agreement, note, certificate, report or other document
made or delivered pursuant to this Agreement, unless otherwise
defined or the context otherwise requires. The following terms
shall have the following meanings:
"Action" means any litigation, action, suit, proceeding or arbitration
before any court or Governmental Authority, or any investigation by any
Governmental Authority.
"Affiliate" shall mean, with respect to any specified Person, (i) any
other Person who, directly or indirectly, owns or controls, is under common
partnership or control
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with, or is owned or controlled by, such specified Person, (ii) any other Person
who is a director, officer, manager, member, partner or trustee of the specified
Person or a Person described in clause (i) of this definition or any spouse of
the specified Person or any such other Person, (iii) any relative of the
specified Person or any other Person described in clause (ii) of this
definition, or (iv) any Person of which the specified Person and/or any one or
more of the Persons specified in clause (i), (ii) or (iii) of this definition,
individually or in the aggregate, beneficially own 10% or more of any class of
voting securities or otherwise have a substantial beneficial interest.
"Annual Financial Statements" shall mean the audited consolidated
balance sheet of Seller as at December 31, 1998 and the related audited
consolidated statements of operations, changes in partners' capital and cash
flows for the fiscal year then ended, including, without limitation, the notes
and schedules to these financial statements.
"Assumed Employment Liabilities" shall mean (i) any liabilities or
obligations of Seller and the DSI Subsidiaries with respect to employee
compensation or employee benefits owed as accrued salary, wages, commissions,
vacation pay or sick pay to any Current Seller Employee that have arisen in the
ordinary course of business and consistent with rates in effect as of July 1,
1999 as disclosed by Seller on Section 1 of the Seller Disclosure Letter and
(ii) any payroll taxes payable by Seller on behalf of a Current Seller Employee
as of the Closing or as a result of any adjustment in such compensation since
July 1, 1999 in the ordinary course of business or with respect to employees
employed since July 1, 1999.
"Best Efforts" shall mean the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that the result
is achieved as expeditiously as practicable under the circumstances; provided,
however, that an obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to (i) take actions that would
result in a material adverse change in the benefits to such Person under this
Agreement or the transactions contemplated by this Agreement, (ii) make any
significant cash payments or (iii) incur any significant liability or
obligation.
"Broker" shall mean Transactional Marketing Consultants.
"Business" means the marketing and sale of magazine subscriptions by
Seller, whether directly or through third Persons, and all business activities
of Seller relating thereto.
"Business Condition" of any Person shall mean the financial condition,
results of operations, business, properties or prospects of such Person.
"Charter Documents" shall mean (i) with respect to Seller, the Limited
Partnership Agreement dated June 1, 1995 of Seller, (ii) with respect to each
Subsidiary, the Articles or Certificate of Incorporation, By-Laws, Articles of
Organization, Operating Agreement or other organizational documents, as
applicable, of such party, and (iii) with
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respect to the Purchaser and Symposium, the Certificate of Incorporation and
By-Laws of the Purchaser and Symposium, respectively.
"Common Stock" shall mean the common stock, par value $0.001 per share,
of Symposium.
"Consulting Agreement" shall mean the consulting agreement to be
entered into between Symposium, Purchaser and Prochnow.
"Contract" shall mean any written or oral note, bond, debenture,
mortgage, license, agreement, commitment, contract or understanding other than
those agreements forming the basis of accounts receivable.
"Copyrights" shall mean all United States and foreign copyrights,
whether or not registered.
"Current Balance Sheet" shall mean the unaudited consolidated balance
sheet of Seller as at November 30, 1999.
"Current Financial Statements" shall mean the Current Balance Sheet and
the related unaudited consolidated statement of operations of the Seller for the
eleven months ended November 30, 1999.
"Current Seller Employee" shall mean an employee of Seller and/or any
DSI Subsidiary immediately prior to the Closing.
"DSI Subsidiaries" shall mean National Readers Service, Inc., DSI
Communications, LLC and Media Outsourcing, LLC.
"Employee Plans" with respect to any Person shall mean any plan,
arrangement or Contract providing compensation or benefits to, for or on behalf
of employees and/or directors of such Person, including employment, deferred
compensation, retirement or severance Contracts; plans pursuant to which Equity
Securities are issued, including, without limitation, stock purchase, stock
option and stock appreciation rights plans; and bonus, thrift, pension, savings,
insurance, profit sharing, severance, loan guaranty, employee loan or incentive
compensation plans or arrangements; and supplemental unemployment benefit,
hospitalization or other medical, life, dental, vision, health care or other
insurance.
"Environmental Laws" shall mean all applicable present laws, licenses
and permits of all Governmental Authorities and all applicable judicial,
administrative, and regulatory decrees, judgments, and orders relating to
Hazardous Substances or the protection of the environment in any respect,
including, without limitation: (i) all requirements, including, without
limitation, those pertaining to notification, reporting, licensing, permitting,
investigation, and remediation of Hazardous Substances; (ii) all requirements
pertaining to the protection of the public from exposure to Hazardous Substances
or injuries or harm associated therewith; and (iii) the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss.9601 et
seq.), the
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Resource Conservation and Recovery Act (49 U.S.C. ss.6901 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss.1801 et seq.), the Clean
Air Act (42 U.S.C. ss.7401 et seq.), and all similar federal, state, local and
municipal Laws.
"Equity Securities" of any Person shall mean the capital stock,
partnership interests or membership interests of such Person and/or any Stock
Equivalents of such Person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Employment Liabilities" shall mean (i) any pending,
threatened or future claims or Actions by or on behalf of any Current Seller
Employee or former employee of Seller or any DSI Subsidiary alleging that Seller
or any DSI Subsidiary violated any law, rule or regulation prior to the Closing
in connection with the employment relationship between such person and Seller or
the DSI Subsidiary, (ii) any severance or change of control liability or
obligation of Seller or any DSI Subsidiary to any Person, including any Current
Seller Employee or (iii) any of the following liabilities that is not set forth
on Section 6(p)(viii) of the Seller Disclosure Letter: (1) any retirement
benefits or severance pay and (2) any unpaid bonus arrangements or other
perquisites paid to or agreed to be provided to any Current Seller Employee.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"General Partner" shall mean Direct Sales, Inc., a Georgia corporation
and the general partner of Seller.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Substance" means those substances defined as hazardous
substances in 42 U.S.C. ss. 9601(14) and all other substances defined as
hazardous under other applicable Laws.
"Indebtedness" means, with respect to any Person, (i) any liability,
contingent or otherwise, for borrowed money, and (ii) any liability for borrowed
money of Persons other than Seller for which Seller has guaranteed or which
otherwise is such Person's legal liability.
"IP" shall mean Patents, Trademarks, Copyrights, Know-How and other
rights and property commonly referred to as intellectual property, and rights or
licenses to use the same, and any and all applications therefor.
"Know-How" shall mean all inventions, processes, systems,
methodologies, controls, trade secrets, know-how (including, without limitation,
proprietary know-how and use and application know-how), product designs,
drawings, technology, other intangibles, technical information, safety
information, engineering data and design and
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engineering specifications, research records, market surveys, promotional
literature, supplier and customer lists, similar data and formulas and
processes.
"Knowledge" shall mean the actual knowledge of Richard E. Prochnow,
following reasonable inquiry of Sally Smith, Dennis Gougion and Lucille Simoni
and the review of this Agreement with legal counsel.
"Law" shall mean any federal, state or local statute, law, rule,
regulation, ordinance, code or rule of common law, now in effect, and in each
case as amended, including, without limitation, any judicial or administrative
order, consent, decree or judgment.
"Lease Agreement" shall mean the Lease Agreement dated October 1, 1997,
as amended by First Amendment to Lease Agreement dated January 1, 1999, as
amended by Second Amendment to Lease Agreement dated as of January 14, 2000,
entered into between the Purchaser and Lessor for the Premises.
"Lessor" shall mean P&T Properties, LLC.
"Lien" shall mean any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority, or other security agreement or
preferential arrangement, charge, or encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction to evidence
any of the foregoing).
"Material Oral Contracts" shall mean all oral Contract(s) which Seller
or any DSI Subsidiary is a party or by which either is bound that are material
to the financial condition of the Business or Assets.
"Patents" shall mean all patents (including, without limitation, all
reissues, divisions, continuations, continuations in part and extensions
thereof), patent applications and patent disclosures docketed and all other
patent rights.
"Permitted Liens" shall mean installments of general property taxes and
special assessments not yet delinquent and other statutory liens (if any) and
those liens described in Schedule 1(a) of the Seller Disclosure Letter.
"Person" shall mean an individual or a partnership, corporation, trust,
association, limited liability company, Governmental Authority or other entity.
"Premises" shall mean 2550 Heritage Court, Suite 106, Atlanta, Georgia
30339.
"Seller IP" shall mean all IP that Seller or any DSI Subsidiary owns,
licenses and/or uses.
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"Stock Equivalents" of any Person shall mean options, warrants, calls,
rights, commitments, convertible securities and other securities pursuant to
which the holder, directly or indirectly, has the right to acquire (with or
without additional consideration) capital stock, partnership interests or
membership interests of such Person.
"Subsidiary" of any Person shall mean any entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are owned
directly or indirectly by such Person.
"Systems" shall mean all items, products or systems of Seller or any
DSI Subsidiary used in the operation of the Business which incorporate the
processing of dates and date-related data (including, without limitation,
calculating, comparing and sequencing) that are operationally material to the
Business as conducted by Seller or any Subsidiary or its agents or other third
Persons, including, without limitation, computer systems, infrastructure items,
software applications, hardware, and related equipment and utilities.
"Trademarks" shall mean all trademark, service mark and trade name
rights (including, without limitation, all registrations of trademarks and of
other marks, all registrations of trade names, labels and other trade rights and
applications for any of the foregoing), the names "Direct Sales International,"
"DSI" and any variation thereof, and all associated goodwill symbolized thereby
or connected therewith.
"Transaction Contracts" shall mean this Agreement, the Lease, the
Consulting Agreement and each other Contract executed and delivered by any party
hereto in connection with the transactions contemplated by this Agreement.
"Transfer" shall mean sell, assign, transfer, pledge, license, grant a
security interest in, or otherwise dispose of, with or without consideration,
and "Transferred" shall have a correlative meaning.
"Year 2000 Compliant" shall mean that all Systems accurately process
dates and date-related data (including, without limitation, calculating,
comparing and sequencing) in all material respects before, during and after the
year 2000.
B. Other Definitions. The following terms shall have the meanings
given the terms in the Sections set forth below:
Term Section
Accounts Receivable......................... 2(a)(ii)
Acquisition Proposal........................ 8(c)
Act......................................... 7(f)
Assets...................................... 2(a)
Assumed Contracts........................... 2(a)(vi)
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Assumed Liabilities......................... 3(a)
Claim....................................... 12(e)
Claim Notice................................ 12(e)
Closing..................................... 5(a)
Closing Date................................ 5(a)
Damages..................................... 12(c)
Direct Claim................................ 12(e)
Employees................................... 6(q)
Excluded Assets............................. 2(b)
Excluded Contracts.......................... 2(a)(vi)
Excluded Liabilities........................ 3(c)
Indemnified Party........................... 12(e)
Indemnifying Party.......................... 12(e)
Notices..................................... 16(a)
Permits..................................... 2(a)(viii)
Public Reports.............................. 7(f)
Purchase Price.............................. 4
Purchaser Indemnified Party................. 12(c)
Records..................................... 11(e)
Seller Disclosure Letter.................... 6
Seller Indemnified Party.................... 12(d)
Software.................................... 2(a)(v)
Stock....................................... 12(h)
Tangible Personal Property.................. 2(a)(i)
Third Party Claim........................... 12(e)
Transferred Employees....................... 11(f)(i)
Unpaid Liability............................ 3(d)
1999 Tax Liability Statement................ 13(d)
Sale and Purchase of Assets.
C. Transfer of Assets. On the terms and subject to the conditions
of this Agreement, at the Closing, Seller shall sell, assign,
transfer, convey and
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deliver to the Purchaser, and the Purchaser shall purchase
from Seller, all of the Seller's right, title and interest in,
under and to all of its assets, properties and rights of every
kind, nature and description, tangible or intangible, real or
personal, and the goodwill of and relating to the Business,
but excluding the Excluded Assets (the "Assets"), including,
but not limited to, the following:
all furniture, fixtures, machinery, equipment, office materials and supplies,
vehicles, computer hardware, data processing equipment and other tangible
personal property of-Seller and all related warranties and similar rights,
including, without limitation, all such items listed on Schedule 2(a)(i) (the
"Tangible Personal Property");
all accounts, notes or other receivables of Seller (collectively, the "Accounts
Receivable"), all cash on hand and cash equivalents of Seller and all accounts,
deposits and items in process of collection of Seller maintained with financial
institutions or other Persons relating thereto;
all prepaid and deferred expenses and deposits relating to the Business or the
Assets except for prepaid state income or franchise taxes, prepaid federal
income taxes and prepaid insurance;
all Seller IP;
all computer databases and software owned by, or licensed to, Seller and each
Subsidiary ("Software");
all Contracts identified on Schedule 2(a)(vi) (the "Assumed Contracts");
provided, however, that Purchaser shall have the right to assume (but may
reject) any Contract of Seller which should have been, but was not, identified
on Schedule 2(a)(vi) as an Assumed Contract or a Material Oral Contract;
all lists, records, files, books and documents (including, without limitation,
credit information) in whatever form or medium (electronic, paper or otherwise)
relating to past, current or prospective customers, suppliers, subscribers,
agents, publishers, clearing houses and other Persons relating to the Business
or the Assets, and other business and financial records, files, books and
documents in whatever form or medium (electronic, paper or otherwise) held by
Seller relating to the Business or the Assets, but excluding all relating to
Excluded Liabilities or minute books, capital records and other documents of
Seller that are not reasonably of use to the Purchaser in the conduct of the
Business;
the Equity Securities of the DSI Subsidiaries;
all governmental franchises, licenses, approvals, authorizations and permits
(collectively, "Permits") which are assignable that are held or used by Seller
in connection with the Business or the Assets;
all claims, causes of action, rights of recovery and rights of set-off of any
kind of Seller relating to the Business or the Assets, including, without
limitation, any Liens
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for the benefit of or any rights to payment or to enforce payment in connection
with the Business or the Assets;
all rights to and under any noncompetition, confidentiality, trade secret or
other similar agreements or arrangements of Seller and relating to the Business
or the Assets, including, without limitation, all causes of action or rights to
sue for past infringement or breaches thereunder possessed by Seller; and
all other assets of the Business (except the Excluded Assets), wherever located,
tangible or intangible.
D. Excluded Assets. The parties to this Agreement expressly
understand and agree that the Assets shall not include, and
Seller is not under this Agreement selling, assigning,
transferring or conveying to the Purchaser, the following
assets (the "Excluded Assets"):
prepaid state income or franchise taxes, prepaid federal income taxes;
any right, title or interest of Seller in any refunds or credits of income taxes
receivable after the Closing;
all rights of the Seller under any Transaction Contract;
the records relating to the organization of Seller and the operation of Seller
as a limited partnership that are not reasonably of use to the Purchaser in the
conduct of the Business;
all rights of the Seller under any Contracts which are identified as "Excluded
Contracts" on Schedule 2(b)(v) or relate to Indebtedness of Seller; and
the assets identified on Schedule 2(b)(vi).
E. Delivery of Possession of Assets. At the Closing, the Seller
shall, at the Seller's expense, deliver possession of the
Assets being transferred by the Seller to the Purchaser at the
Premises.
F. Right of Endorsement. After the Closing Date, the Purchaser
shall have the absolute and unconditional right and authority
to endorse, without recourse, the name of Seller on any check
or any other evidence of indebtedness received by the
Purchaser on account of any of the Assets, and Seller shall
deliver to the Purchaser at the Closing a letter of
instruction executed by Seller sufficient to permit the
Purchaser to deposit such checks or other evidences of
indebtedness in bank accounts in the name of the Purchaser.
G. Consent to Assignment. This Agreement shall not constitute an
agreement to assign any interest in any Contract or Permit or
any claim, right or benefit arising thereunder or resulting
therefrom, if an attempted assignment thereof without the
consent required or necessary of any third
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Person would constitute a breach or violation thereof or
affect adversely the rights of the Purchaser or Seller
thereunder. If a consent of any third Person which is required
in order to assign any such interest is not obtained prior to
the Closing Date, or if an attempted assignment would be
ineffective or would adversely affect the ability of Seller to
convey its interest to the Purchaser or the rights of the
Purchaser thereunder, Seller and Prochnow shall cooperate with
the Purchaser in any lawful arrangement but without cost to
Seller, to provide that the Purchaser shall receive the
Seller's entire interest in the benefits under any such
Contract or Permit, including, without limitation, enforcement
for the benefit of the Purchaser of any and all rights of the
Seller against any other party thereto arising out of the
breach or cancellation thereof by such party or otherwise;
provided, however, that nothing contained in this Section 2(e)
shall obligate the Purchaser to waive the satisfaction of the
conditions precedent set forth in Section 9 of this Agreement,
including, without limitation, Section 9(d) of this Agreement.
Assumed Liabilities.
H. Assumed Liabilities. Subject to the provisions of this
Agreement, the Purchaser agrees that upon transfer of the
Assets on the Closing Date, it shall assume, perform and
fulfill as they become due, to the extent not paid, satisfied,
performed, discharged or fulfilled by Seller on or before the
Closing Date, only the following liabilities and obligations
of Seller which are not in default (the "Assumed
Liabilities"), and none other:
(i) all liabilities of DSI and its Subsidiaries incurred
in the ordinary course of the Business consistent
with past practice, including the liabilities secured
by the Permitted Liens, but excluding the Excluded
Liabilities; and
(iii) the executory obligations of Seller to be
performed on or after the Closing Date under the Assumed Contracts, excluding
any obligations or liabilities arising from any breach or default thereunder or
noncompliance therewith by Seller or any DSI Subsidiary.
I. It is not the intention of either the Purchaser or Seller that
the assumption by the Purchaser of the Assumed Liabilities
shall in any way enlarge the rights of third Persons under any
Contracts with the Purchaser, Seller or any DSI Subsidiary.
Nothing contained in this Agreement shall in any
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way prevent the Purchaser from contesting in good faith any of
the Assumed Liabilities; provided no such contest shall
relieve the Purchaser of its obligations under this Agreement
to Seller with respect thereto.
J. Liabilities Not Assumed. The Purchaser shall not and does not
assume any liabilities, obligations or commitments of Seller
of any kind, known or unknown, contingent or otherwise, of
whatsoever kind or nature, not specifically included within
the Assumed Liabilities, and the same shall remain the sole
responsibility of Seller (which liabilities, obligations and
commitments are referred to in this Agreement as the "Excluded
Liabilities"). The Excluded Liabilities include, without
limitation, the following liabilities that are expressly
excluded from the liabilities, obligations, and commitments
being assumed by the Purchaser pursuant to Section 3(a):
any Indebtedness of Seller;
any liabilities or obligations of Seller or any DSI Subsidiary for the fees and
expenses of counsel, accountants and other agents and representatives and all
other expenses incurred by the Seller or any DSI Subsidiary (including, without
limitation, broker's fees) incident to the negotiation, preparation and
execution of the Transaction Contracts and the performance by the Seller of its
obligations thereunder; provided that Symposium shall assume $500,000 of the
$1,000,000 obligation of Seller to Broker;
any liabilities or obligations of Seller or any DSI Subsidiary arising out of or
related to local, state, federal or foreign income taxes or assessments,
including, without limitation, any such taxes arising by virtue of the
transactions contemplated by this Agreement;
all sales taxes, including, without limitation, sales and other transfer taxes
(including, without limitation, penalties and interest) attributable to, arising
out of or resulting from the sale of the Assets, which taxes shall be borne
solely by the Seller;
any regulatory orders and directives applicable to Seller except as specifically
applicable to Seller's successors and assigns as may be provided in such
regulatory orders and directives applicable to Seller;
any Excluded Employment Liabilities; and
any obligations and liabilities under Contracts which are identified as
"Excluded Contracts" on Schedule 2(b)(v) or relate to Indebtedness of Seller.
K. Right of Enforcement and Settlement. From and after the
Closing Date, the Purchaser shall have complete control over
the payment, settlement or other disposition of the Assumed
Liabilities and the right to commence, conduct and control all
negotiations and proceedings with respect thereto. Seller
shall notify the Purchaser promptly of any claim made with
respect to any Assumed Liability, and Seller shall not, except
with the Purchaser's prior written consent, which consent may
be withheld by the Purchaser in
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its absolute discretion, voluntarily make any payment of,
settle or offer to settle, or consent to any compromise or
admit liability with respect to, any Assumed Liability. Seller
shall cooperate with the Purchaser in any reasonable manner
requested by the Purchaser in connection with any negotiations
or proceedings involving any Assumed Liabilities.
Purchase Price.
The purchase price to be paid by the Purchaser for the Assets (the
"Purchase Price") shall consist of: (a) cash in the amount of $25,000,000 and
(b) the assumption of the Assumed Liabilities.
Closing and Deliveries.
L. The Closing. The closing of the purchase and sale of the
Assets and the assumption of the Assumed Liabilities pursuant
to Sections 2 and 3 of this Agreement (the "Closing") shall be
deemed to have taken place on January 14, 2000, at Arnall
Golden & Gregory, LLP, 2800 One Atlantic Center, 1201 West
Peachtree Street, Atlanta, Georgia 30309. The date of the
Closing is referred to in this Agreement as the "Closing
Date".
M. Deliveries by the Purchaser at the Closing. At the Closing,
the Purchaser shall deliver to Seller:
the cash portion of the Purchase Price by wire transfer;
such documents and instruments as Seller may reasonably request to evidence the
assumption by the Purchaser of the Assumed Liabilities; and
such documents and instruments as Seller may reasonably request to evidence the
satisfaction of all conditions precedent set forth in Section 10 of this
Agreement.
N. Deliveries by Seller and Prochnow at the Closing. At the
Closing, Seller and/or Prochnow shall deliver or cause to be
delivered to the Purchaser:
such bills of sale, endorsements, assignments, subleases, and other good and
sufficient instruments of conveyance, transfer and assignment, including,
without limitation, a bill of sale, as shall be necessary to vest in the
Purchaser good title in and to the Assets free and clear of any and all Liens
except Permitted Liens;
possession of the Assets in accordance with Section 2(c); and
such documents and instruments as the Purchaser may reasonably request to
evidence the satisfaction of all conditions precedent set forth in Section 9 of
this Agreement.
O. Further Assurances. At the Closing, each party to this
Agreement shall deliver or cause to be delivered, as
appropriate, such further certificates,
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consents and other documents as may be necessary to carry out
the terms of this Agreement.
Representations and Warranties of Seller and Prochnow.
Except as set forth in the disclosure letter and Schedules attached
thereto delivered by Seller and Prochnow to the Purchaser and Symposium
concurrently with the execution and delivery of this Agreement, which letter
shall refer to the relevant Sections of this Agreement (the "Seller Disclosure
Letter"), Seller and Prochnow, jointly and severally, represent and warrant to
the Purchaser and Symposium as follows:
P. Organization, Standing and Power; Capitalization. Seller is a
limited partnership duly organized, validly existing and in
good standing in the laws in the state of Georgia and has all
requisite partnership power and partnership authority to own,
lease and operate its properties and assets and to carry on
its business as now being conducted. Each Subsidiary is a
corporation or limited liability company duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite
corporate or limited liability company power and authority to
own, lease and operate its properties and assets and to carry
on its business as now being conducted. Neither Seller nor any
DSI Subsidiary is qualified or licensed as a foreign
partnership, corporation or limited liability company in any
jurisdiction other than its state of incorporation (and
Georgia insofar as National Readers Service, Inc. is
concerned) and Seller does not believe that qualification is
necessary in any other jurisdiction; however, Seller is
registered as a telemarketer in the state(s) set forth on
Schedule 6(a). Prochnow owns the General Partner, and directly
or indirectly owns 94% of the profits, losses and
distributions of Seller.
Q. Authority; Enforceability; Effect of Agreement.
Seller has full power and authority to enter into, execute and deliver each
Transaction Contract to which it is a party and perform its obligations
thereunder. Prochnow has the requisite capacity to enter into, execute and
deliver each Transaction Contract to which he is a party and perform his
obligations thereunder. Each Transaction Contract to which Seller is a party has
been duly authorized by all necessary partnership, action, including, without
limitation, the authorization and approval by Prochnow. This Agreement has been,
and at the Closing each other Transaction Contract to which Seller or Prochnow
is a party will be, duly executed and delivered by Seller on Prochnow,
respectively. Assuming each Transaction Contract to which Seller or Prochnow is
a party is duly executed and delivered by Symposium and the Purchaser to the
extent they are parties thereto, this Agreement constitutes and, at the Closing,
each other Transaction Contract to which Seller or Prochnow is a party will
constitute, a valid and legally binding obligation of Seller or Prochnow,
respectively, enforceable against Seller or Prochnow, respectively, in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
relating to or
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affecting creditors' rights generally, or the availability of equitable
remedies. Seller makes no representation as to the enforceability under Georgia
law of the covenant not to compete in Section 14 hereof.
The execution and delivery by Seller or Prochnow of each Transaction Contract to
which Seller or Prochnow is a party do not, and compliance by Seller or Prochnow
with the provisions of each such Transaction Contract will not, (A) conflict
with or result in a breach or default under the Charter Documents of Seller or
any of the terms, conditions or provisions of any Contract to which Seller or
Prochnow is a party or otherwise bound, or to which any property or asset of
Seller or Prochnow is subject; (B) violate any Law applicable to Seller or
Prochnow; or (C) result in the creation or imposition of any Lien on any Asset.
R. Assets.
Seller has good and marketable title to all of the Assets and at the Closing,
the Purchaser shall receive good and marketable title to the material Assets,
free and clear of all Liens, except Permitted Liens; provided, that the
foregoing representation shall not apply to immaterial assets which are easily
replaceable with a value under $2,500 individually and $25,000 in the aggregate,
the absence of which would not impair the ability of Purchaser to conduct the
Business as it has been conducted in the past.
The Assets consist of all of the assets reflected on the Current Balance Sheet.
Seller and the DSI Subsidiaries own or have a lease or license for all assets
and properties used in their respective businesses necessary to conduct their
business as presently conducted (and all such leases and licenses are identified
on Schedule 2(a)(vi)). Each item of Tangible Personal Property included in the
Assets is in good operating condition and repair, ordinary wear and tear
excepted, for the requirements of the Business as currently conducted.
S. Accounts Receivable. The Accounts Receivable, whether
reflected on the Current Balance Sheet or subsequently
created, and all books, records and documents relating to such
Accounts Receivable, are accurate in all material respects.
All Accounts Receivable of Seller and each DSI Subsidiary,
whether reflected on the Current Balance Sheet or subsequently
created: (i) constitute sales transactions in the ordinary
course of business and valid rights of the Seller or DSI
Subsidiary to collect payments from other Persons; and (ii)
are not subject to any counterclaim or offset but are subject
to cancellation pursuant to Seller's policy as set forth in
the Seller Disclosure Letter or as provided by applicable laws
or court orders. Since the date of the Current Balance Sheet:
(i) there have not been any write-offs as uncollectable of any
Accounts Receivable of Seller or any DSI Subsidiary; and (ii)
neither Seller nor any DSI Subsidiary has taken, or caused to
be taken, any action (other than its customary programs) to
accelerate collection of any of its Accounts Receivable. No
warranty is made with respect to the collectibility of any
Accounts Receivable; however, except as may be
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limited by other provisions of this Section 6(d), Prochnow has
no reason to believe the Accounts Receivable, subject to the
reserves for bad debts, will not be collected pursuant to past
practice.
T. Assumed Contracts. Schedule 2(a)(vi) sets forth a true and
complete list and description of all written Contracts and all
Material Oral Contracts to which Seller is a party related to
the Business and operations thereof. True and correct copies
of each written Assumed Contract so identified on Schedule
2(a)(vi), including, without limitation, all amendments and
modifications thereof and waivers thereunder, have been
delivered to the Purchaser. To the Knowledge of Seller, each
Assumed Contract is in full force and effect, and is the valid
and binding obligation of each party to the Assumed Contract.
Seller and each DSI Subsidiary has performed all of the
obligations required to be performed by it to date under each
Assumed Contract to which it is a party or is otherwise
subject, and neither Seller nor any DSI Subsidiary is in
breach of or default under any Assumed Contract, and to the
Seller's Knowledge no event has occurred or circumstance
exists which, with notice or lapse of time or both, would
constitute a breach of or default by Seller or any DSI
Subsidiary under any Assumed Contract. To the Seller's
Knowledge, each other party to each Assumed Contract has
performed all of the obligations required to be performed by
it to date under each Assumed Contract and is not in breach of
or in default under such Assumed Contract, and no event has
occurred or circumstance exists which, with notice or lapse of
time or both, would constitute a breach of or default by such
other party under any Assumed Contract.
U. Intellectual Property.
The Seller Disclosure Letter contains a true and complete list of all Patents,
Trademarks and registered Copyrights of Seller and the DSI Subsidiaries. The
Seller IP constitutes all IP that is required to enable Seller and the DSI
Subsidiaries to conduct the Business relating to the Assets as now conducted.
Neither Seller nor any DSI Subsidiary has received any written notice of
infringement or other written complaint or is otherwise aware of any complaint
to the effect that Seller or any DSI Subsidiary or any of its Affiliates has
violated or infringed the IP or any other proprietary rights of others. Each of
Seller and each DSI Subsidiary has full right and authority to utilize the
Seller IP in the manner currently utilized. No royalties, honoraria, damages or
fees are payable by Seller or any DSI Subsidiary to other Persons by reason of
the ownership or use by any Seller and the DSI Subsidiaries of any Seller IP. To
the Seller's Knowledge, no Person has interfered with, infringed upon,
misappropriated, or otherwise violated any IP right of Seller and the DSI
Subsidiaries.
Seller is the sole and exclusive owner (legal and beneficial) of the Trademarks
identified on Section 6(f)(ii) of the Seller Disclosure Letter in any and all
forms and embodiments thereof in each Jurisdiction, and to the goodwill attached
to such Trademarks in each Jurisdiction, in the class or classes identified on
Section 6(f)(ii) of the Seller Disclosure Letter with respect to such
Jurisdiction. Section 6(f)(ii) of the Seller Disclosure
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Letter sets forth a list of all countries, states or other jurisdictions in
which each such Trademark is registered or in which registration applications
are pending (the "Jurisdictions"), the date(s) of registration (or application),
the class(es) of registration and the name of the Person in which each such
Trademark is registered.
At or immediately after the Closing, Seller shall at all times hereafter change
its name and use a name which does not include the words "Direct", "Sales" or
"International" or any words which are similar with the name of Purchaser,
Symposium or any Subsidiary thereof. Prochnow and Seller agree for the express
benefit of Purchaser, that he or it has no continuing right, title or interest
in or to the name of Seller or any derivation thereof; and subject to the
applicable laws, Purchaser may continue to use the name.
V. Financial Statements.
Seller has delivered the Annual Financial Statements and the Current Financial
Statements to the Purchaser. The Annual Financial Statements have been prepared
from the books and records of Seller in accordance with GAAP consistently
applied throughout the periods involved and fairly present the financial
position, results of operations and cash flows of Seller as at the dates of and
for the periods set forth in the Annual Financial Statements in accordance with
GAAP. The Current Financial Statements have been prepared from the books and
records of Seller on an accrual basis consistent with other financial statements
prepared by management and do not include all information and footnotes required
by generally accepted accounting principles, but do include all adjustments
consisting of normal recurring accruals considered necessary for a fair
presentation of the financial statements consistent with management's past
practices.
Neither Seller nor any DSI Subsidiary has any material liabilities or
obligations, either accrued, absolute, contingent or otherwise, which have not
been reflected on the Current Balance Sheet, other than account payables and
obligations incurred in the ordinary course of business consistent with past
practice after the date of the Current Balance Sheet. The Current Balance Sheet
reflects adequate reserves for all losses computed in accordance with GAAP.
W. Absence of Certain Changes and Events. Since January 1, 1999,
Seller and each of the DSI Subsidiary has conducted its
business relating to the Assets only in the ordinary course of
business consistent with past practice and (i) there has not
been any material damage, destruction or loss relating to the
Tangible Personal Property of the Seller or any DSI
Subsidiary, whether or not insured, (ii) any liability created
or incurred included in the Assumed Liabilities other than
accounts payable, accrued expenses and deferred revenues
created or incurred in the ordinary course of business
consistent with past practice and in amounts not unusual in
respect of the business of Seller or any DSI Subsidiary as
customarily conducted, or disclosed in other sections of this
Agreement, including the Seller Disclosure Letter, (iii) any
Lien created on any Asset except Permitted Liens, (iv) except
in the ordinary course of business consistent with past
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practice, any increase in, or commitment or plan adopted to
increase, the wages, salaries, compensation, pension or other
benefits or payments to any Employees, (v) any material
capital expenditures or commitment to make any such
expenditures with respect to the Assets or the Business, (vi)
any rights of substantial value waived with respect to the
Assets or the Business, (vii) any transfer of any Assets other
than in the ordinary course of business consistent with past
practice or (viii) any material adverse change in the Business
Condition of Seller and the DSI Subsidiaries, token as a
whole. Seller has made no distributions to any of its partners
since December 31, 1999 except for a distributions which in
the aggregate do not exceed $1,500,000.
X. Litigation and Proceedings. There is no pending or, to the
Knowledge of Seller, threatened Action to which Seller or any
DSI Subsidiary is a party or involving the Business or any of
the Assets. Neither Seller nor any DSI Subsidiary nor the
Business nor the Assets is subject to any judgment, order,
writ, injunction, decree or regulatory directive or agreement
of any Governmental Authority.
Y. Brokers. Neither Seller nor Prochnow has retained or otherwise
engaged or employed any broker, finder or any other Person, or
paid or agreed to pay any fee or commission to any agent,
broker, finder or other Person, for or on account of acting as
a finder or broker in connection with this Agreement or the
transactions contemplated hereby.
Z. Creditor Issues. The transfer of the Assets to the Purchaser
is not being made with the actual intent to hinder, delay or
defraud any creditor of Seller. Seller believes it is
receiving reasonably equivalent value in exchange for the
transfer of the Assets. Seller is not engaged or about to
engage in a business or a transaction following the Closing
for which the remaining assets of the Seller would be
unreasonably small in relation to the business or transaction,
and Seller has not incurred, nor shall it incur debts beyond
its ability to pay them as they become due. Seller is not
insolvent nor shall it become insolvent as a result of the
transactions contemplated by this Agreement.
AA. No Consents Required. There are no approvals, authorizations,
consents, orders or other actions of, or filings with, any
Person that are required to be obtained or made by Seller in
connection with the execution of, and the consummation of the
transactions contemplated under, this Agreement, including,
but not limited to, the assignment of the Assumed Contracts.
BB. Environmental Compliance Matters.
To the knowledge of Seller, Seller and each Subsidiary is, and at all times has
been, in material compliance with, and has not been and is not in material
violation of or liable in any material respect under, any Environmental Law.
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The Premises constitute all of the real property used or occupied by Seller
during the past 10 years;
the Premises have never been used by Seller or the DSI Subsidiaries as a waste
disposal site or a storage site for petroleum products or chemicals in material
violation of Environmental Laws;
neither Seller nor any DSI Subsidiary has knowingly allowed any Person occupying
the Premises to bring Hazardous Substances onto the Premises or to process or
store any Hazardous Substances on the Premises in such manner as to cause Seller
to incur a material liability under Environmental Law and, to Seller's
Knowledge, no Hazardous Substance has been released into the environment by
Seller or any DSI Subsidiary that may present an imminent and substantial
endangerment to human health;
to Seller's Knowledge, there are no complaints on file or matters pending in any
federal or state environmental protection offices involving any allegation that
Seller has unlawfully released or disposed of any Hazardous Substances on the
Premises or other violations of Environmental Laws; and
neither Seller nor any DSI Subsidiary has received notice from any environmental
board, agency or authority requiring the removal of any Hazardous Substances or
other alleged harmful materials or wastes, or advising of any pending or
contemplated search or investigation of the Premises or any portion of the
Premises with respect the removal of any Hazardous Substances or other alleged
harmful materials or wastes or the violation of any Environmental Law.
CC. Permits. The Seller Disclosure Letter lists all material
federal, state, local and foreign Permits issued by any
Governmental Authority in respect of the Business or the
Assets. Seller and the DSI Subsidiaries have all Permits and
other rights which are required in order for Seller and the
DSI Subsidiaries to conduct the Business as presently
conducted, and to the Seller's Knowledge there is no basis for
the denial of any Permits or other rights in the future.
DD. Employee Benefits. Each Employee Benefit Plan is in material
compliance with the provisions of the Employee Retirement
Income Security Act of 1974, as amended, and the provisions of
the Internal Revenue Code of 1986, as amended. Neither
Purchaser nor Symposium shall, as a result of the transactions
contemplated by this Agreement, (i) become liable for any
liability or expense with regard to any Employee Benefit Plan
or (ii) be or become a party to any Employee Benefit Plan
unless expressly assumed or adopted by Purchaser.
EE. Employees.
Neither the Seller nor any of its Subsidiaries is a party to any collective
bargaining agreement or any employment, consulting, or similar agreement or any
agreement or arrangement providing for severance payments to any employee of
Seller or its
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Subsidiaries upon termination of employment or which provide benefits upon a
change in control of the Seller. There is no basis for any unfair labor practice
charge or complaint against the Seller or any of its Subsidiaries arising out of
the Seller's or such Subsidiary's activities (including, without limitation,
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining, and the payment of social security and other taxes) nor is there any
labor strike, work stoppage, grievance, or other labor dispute pending or, to
Seller's knowledge are there any organizational efforts with respect to any
employees of the Seller or its Subsidiaries. Neither the Seller nor any of its
Subsidiaries has received written notice of the intent of any Governmental
Agency responsible for the enforcement of labor or employment laws to conduct an
investigation of or relating to the Company or any Subsidiaries, and to Seller's
knowledge, no such investigation is in progress or threatened; and there is no
reasonable basis for any of the foregoing.
There is no request for union representation, labor strike, dispute, slowdown or
stoppage pending or, to the Seller's Knowledge, threatened against or directly
affecting Seller or any DSI Subsidiary.
No grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending and no claims therefor exist before any
Governmental Authority.
The employment of Seller's and DSI Subsidiaries' employees is terminable at will
without cost to Seller except for payment of accrued salaries or wages and
vacation pay.
There is no collective bargaining agreement which is binding on Seller or any
DSI Subsidiary or other written or oral agreement with respect to collective
bargaining with any union or group of employees.
None of Seller or any DSI Subsidiary has experienced any material work stoppage
in the last 36 months.
Neither the Seller nor any DSI Subsidiary is delinquent in payments to any of
its employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to the date hereof or amounts
required to be reimbursed to such employees.
The Seller Disclosure Letter lists as of December 31, 1999 the name, job title,
current base salary or hourly wage, date of hire and social security number of
all employees employed by Seller and the DSI Subsidiaries, including, without
limitation, individuals on short-term disability who were so employed
immediately before their disability (collectively, the "Employees"). As to any
individual on short-term disability, the Seller Disclosure Letter indicates the
reason for such absence and the date the individual is reasonably expected to
return to active employment. The Seller Disclosure Letter also indicates the
accumulated accrued vacation pay projected for each Employee as of the Closing
Date. None of Seller or any DSI Subsidiary has taken any actions which were
calculated to dissuade, or have the effect of dissuading, any present employees,
representatives or agents of Seller or any DSI Subsidiary from commencing an
association with the Purchaser after the Closing Date. To Seller's Knowledge, no
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executive officer intends to terminate his or her employment with Purchaser or
any DSI Subsidiary. The Seller Disclosure Letter also includes a list of all
persons with whom Seller or any DSI Subsidiary has a written or oral obligation
to pay any bonus, severance or retirement benefit or any other benefits.
FF. Tax Matters. All tax returns required to be filed by Seller or
any DSI Subsidiary have been filed and to the knowledge of
Seller all such returns are true, complete, and correct in all
material respects, and (b) all taxes that are due or claimed
to be due from Seller or any DSI Subsidiary have been paid
other than those (i) currently payable without penalty or
interest or (ii) being contested in good faith and by
appropriate proceedings and for which adequate reserves, if
necessary, have been established in accordance with prior
practice (and, if being contested, such contests are described
in the Seller Disclosure Letter). None of the tax returns of
Seller or any DSI Subsidiary is currently being examined by
the United States Internal Revenue Service or any other
Governmental Authority.
GG. Other Relationships. Prochnow has no interest, either directly
or indirectly, in any Person, including, without limitation,
any Person (whether as an employee, officer, director,
shareholder, partner, member, agent, independent contractor,
security holder, creditor, consultant, or otherwise) that
presently (i) provides any services or designs, produces
and/or sells any products or product lines, or engages in any
activity which is the same, similar to or competitive with the
Business; (ii) is a supplier of, customer of, creditor of, or
has an existing contractual relationship with Seller or any
DSI Subsidiary; or (iii) has any direct or indirect interest
in any asset or property used by Seller or any DSI Subsidiary
or any property, real or personal, tangible or intangible,
that is necessary or desirable for the conduct of the business
of Seller or any DSI Subsidiary. No current or former
stockholder, partner, member, director or officer of Seller or
any DSI Subsidiary nor any Affiliate of any such Person, is at
present, or since January 1, 1996, has been, directly or
indirectly through his affiliation with any other Person, a
party to any transaction (other than as an employee) with
Seller or any DSI Subsidiary providing for the furnishing of
services by, or rental of real or personal property from, or
otherwise requiring cash payments to, any such Person.
HH. Conflicts of Interest. Neither Seller nor any DSI Subsidiary
nor any officer, employee, agent or any other Person acting on
behalf of Seller or any DSI Subsidiary has, directly or
indirectly, given or agreed to give or receive any money, gift
or similar benefit (other than legal price concessions, price
adjustments or cancellations to customers in the ordinary
course of business consistent with past practice) to or from
any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any Governmental
Authority or other Person who was, is, or may be in a position
to help or hinder the business of Seller or any DSI Subsidiary
(or assist in connection with any actual or proposed
transaction
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therewith) which (i) might subject Purchaser, Seller or any
DSI Subsidiary to any Damages in any Action, (ii) if not given
in the past, might have had a material adverse effect on the
Business Condition of Seller and the DSI Subsidiary taken as a
whole or (iii) if not continued in the future, might have a
material adverse effect on the Business Condition of Seller
and the DSI Subsidiary taken as a whole.
II. Year 2000. All Systems are Year 2000 Compliant.
JJ. Material Misstatements and Omissions. No representations and
warranties by Seller or Prochnow in this Agreement, or any
exhibit, schedule or certificate furnished by Seller or
Prochnow to the Purchaser or Symposium pursuant to this
Agreement, contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Representations and Warranties of the Purchaser and Symposium.
The Purchaser and Symposium, jointly and severally, represent and
warrant to Seller and Prochnow as follows:
KK. Organization, Standing and Corporate Power. The Purchaser and
Symposium each is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and corporate
authority to own, lease and operate its properties and assets
and to carry on its business as now being conducted and the
Business of Seller following the Closing. The Purchaser and
Symposium each is duly qualified or licensed as a foreign
corporation and is in good standing in each jurisdiction where
the nature of its properties owned or held under lease or the
nature of the business conducted by it make such qualification
necessary.
LL. Authority; Enforceability.; Effect of Agreement.
The Purchaser and Symposium each has full corporate power and corporate
authority to enter into, execute and deliver each Transaction Contract to which
it is a party and perform its obligations thereunder. Each Transaction Contract
to which the Purchaser or Symposium is a party has been duly authorized by all
necessary corporate action of the Purchaser or Symposium, respectively. This
Agreement has been, and at the Closing each other Transaction Contract to which
the Purchaser or Symposium is a party will be, duly executed and delivered by
the Purchaser or Symposium, respectively. Assuming each Transaction Contract to
which the Purchaser or Symposium is a party is duly executed and delivered by
Seller and Prochnow to the extent they are parties thereto, this Agreement
constitutes and, at the Closing, each other Transaction Contract to which the
Purchaser or Symposium is a party will constitute, a valid and legally binding
obligation of the Purchaser or Symposium, respectively, enforceable against the
Purchaser or
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Symposium, respectively, in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally, or the
availability of equitable remedies.
The execution and delivery by the Purchaser or Symposium of each Transaction
Contract to which it is a party do not, and compliance by the Purchaser and
Symposium with the provisions thereof will not, (A) conflict with or result in a
breach or default under the Charter Documents of the Purchaser or Symposium or
any of the terms, conditions or provisions of any Contract to which the
Purchaser or Symposium is a party or otherwise bound, or to which any asset or
property of the Purchaser or Symposium is subject; or (B) violate any Law
applicable to the Purchaser or Symposium; or (C) result in the creation or
imposition of any Lien on any asset of the Purchaser or Symposium.
MM. Creditor Issues. Symposium and Purchaser believe Purchaser is
receiving reasonably equivalent value in exchange for the
Purchase Price being paid for the transfer of the Assets and
has sufficient working capital for the continued operation of
the Business following the Closing. Neither Symposium nor
Purchaser is engaged or about to engage in a business or a
transaction following the Closing for which the remaining
Assets of Purchaser and Symposium would be unreasonably small
in relation to the business or transaction, and neither
Symposium nor Purchaser has incurred, nor shall they incur
debts beyond their ability to pay as they become due. Neither
Symposium nor Purchaser is insolvent nor shall either of them
become insolvent as a result of the transactions contemplated
by this Agreement.
NN. Brokers. Except for Transactional Marketing Consultants and
Wilshire Boulevard Partners LLC, neither the Purchaser nor
Symposium has retained or otherwise engaged or employed any
broker, finder or any other Person, or paid or agreed to pay
any fee or commission to any agent, broker, finder or other
Person, for or on account of acting as a finder or broker in
connection with this Agreement or the transactions
contemplated hereby.
OO. No Consents Required. There are no approvals, authorizations,
consents, orders or other actions of, or filings with, any
Person that are required to be obtained or made by the
Purchaser or Symposium in connection with the execution of,
and the consummation of the transactions contemplated under,
this Agreement.
PP. Filings. As of the date hereof, Symposium has made all
necessary filings pursuant to the applicable requirements of
the Securities Act of 1933, as amended (the "Act"), and the
Securities Exchange Act of 1934, as amended (collectively, the
"Public Reports"). The Symposium Public Reports which have
been delivered to Prochnow complied at the respective times of
filing thereof in all material respects with the
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applicable requirements of the Act and the Exchange Act and,
as of the dates thereof, did not contain any untrue statement
of any material fact or omit to state a material fact required
therein to be stated or omit to state a material fact in order
to make the statements therein misleading in light of the
circumstances in which they were made. All financial
statements included in the Public Filings present fairly the
consolidated financial condition of Symposium and its
affiliates as of their respective dates.
QQ. Financing. Schedule 7(g) to this Agreement summarizes the
contemplated financing to obtained by Symposium and Purchaser
to finance the Purchase Price.
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Conduct and Transactions Prior to the Closing.
RR. Conduct of Business. Prior to the Closing, except as
contemplated by the Transaction Contracts or with the prior
written consent of Symposium, Seller agrees, and Prochnow
agrees to cause Seller and each DSI Subsidiary:
to conduct its operations according to its ordinary and usual course of business
consistent with past practice; however, Purchaser acknowledges that from time to
time Seller may modify the information disclosed to customers either in the
materials mailed to customers or in the scripts used in telephone communications
with customers, or modify its dealings with its Lead Brokers;
not to Transfer any Assets except in the ordinary course of business similar to
prior practice except for the distribution by the Seller of $1.5 million to its
partners;
not to declare or pay any dividend or other distribution on its Equity
Securities, and not to purchase, redeem, retire or otherwise acquire any of its
Equity Securities;
except in the ordinary course of business, not to amend, modify or terminate, or
grant any waiver of any right under, any Assumed Contract, and not to make any
payment under any Assumed Contract which is not required to be made strictly in
accordance with the terms of the Assumed Contract;
to comply with all of its obligations and duties under each Assumed Contract and
not to create or permit to exist any default or event of default on behalf of
the Seller or any DSI Subsidiary under any Assumed Contract, or any event or
circumstance which, with lapse of time or notice, or both, would constitute a
default under an Assumed Contract;
to use its Best Efforts to preserve intact its business organization and
goodwill, keep available the services of its officers and employees and maintain
satisfactory relationships with those Persons having business relationships with
the Seller and the DSI Subsidiaries;
to maintain the tangible Assets in a reasonably good condition and state of
repair (normal wear and tear excepted);
not to incur any fixed or contingent obligation or enter into any Contract or
other transaction or arrangement relating to the Business or the Assets which
(i) may not be terminated by the Seller or any DSI Subsidiary on 30 days' notice
or less without cost or liability, (ii) which is not in the ordinary course of
the business consistent with past practice, and (iii) which is not transferable
or assignable to the Purchaser;
not to commit any act or omit to do any act which would be or result in a breach
of any of its obligations, duties, agreements or representations under any
Contract to which it is a party or to which it enters into subsequent to the
date of this Agreement which would reasonably be expected to have a material
adverse effect on the Business Condition of the Seller and the DSI Subsidiaries
taken as a whole;
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to bear the risk of loss or damage to the Assets on and prior to the Closing
Date; and, if any Asset is damaged on or prior to the Closing Date by any
casualty, Seller shall give Symposium immediate written notice of such damage,
and, if such damage or destruction is material, shall afford Symposium, in its
sole and absolute discretion, the right to cancel, terminate or delay the
Closing under this Agreement; provided, however, if Symposium does not elect to
cancel, terminate or delay the Closing, Seller shall pay to Purchaser any
insurance proceeds received by Seller;
to maintain the books, records and accounts of the Seller and the DSI
Subsidiaries in the ordinary course of business consistent with past practice;
not to enter into any Contract of any kind or nature with any Affiliate of the
Seller; and
not to enter into any transaction or perform any act which would make any of the
representations, warranties or agreements of the Seller or Prochnow contained in
this Agreement (including, without limitation, Section 6(h)) false or misleading
in any material respect if made again immediately after such transaction or act.
SS. Inspection of Records. Between the date of this Agreement and
the Closing, Seller and each DSI Subsidiary shall allow the
duly authorized officers, attorneys, accountants and other
representatives of the Purchaser access at all reasonable
times to the records and files, correspondence, audits and
properties, as well as to all information in each case
relating to the business and affairs of the Seller and each
DSI Subsidiary.
TT. Acquisition Proposals. During the period from the date of this
Agreement and extending through the earlier of termination of
this Agreement or the Closing, Seller, each DSI Subsidiary and
Prochnow agree that (i) neither Seller nor any DSI Subsidiary
nor Prochnow shall, and Seller and each DSI Subsidiary shall
direct and cause its officers, directors, employees, agents
and representatives (including, without limitation, any
investment banker, attorney or accountant) not to, initiate,
solicit, intentionally encourage or accept the submission of
any proposal or offer with respect to a merger, acquisition,
sale, consolidation or similar transaction involving all or
any significant portion of the Assets or any Equity Securities
of Seller or any DSI Subsidiary (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or
engage in any negotiations or discussions concerning, or
provide any confidential information or data to, any Person
relating to an Acquisition Proposal, and (ii) Seller will
notify Symposium immediately if any Acquisition Proposal is
received by Seller or any DSI Subsidiary and/or Prochnow or
any negotiations or discussions relating to a potential
Acquisition Proposal are sought to be initiated or continued
with Seller or any DSI Subsidiary and/or Prochnow.
UU. Consulting Agreements. Prochnow, Purchaser and Symposium agree
to enter into the Consulting Agreement at the Closing.
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VV. Best Efforts. Between the date of this Agreement and the
Closing, each of the parties to this Agreement will use its or
his Best Efforts to cause the conditions to the obligations of
the other parties set forth in Sections 9 or 10 of this
Agreement, as the case may be, to be satisfied.
WW. Notices by Seller. Between the date of this Agreement and the
Closing, Seller shall promptly notify Symposium of (i) any
material development concerning the Business; (ii) any
material change in the Assets or the financial condition of
Seller or any DSI Subsidiary or any event which Seller
believes could cause a material change in the Assets or the
financial condition of Seller or any DSI Subsidiary; and (iii)
any Action regarding Seller or any DSI Subsidiary.
XX. Notices by Symposium. Between the date of this Agreement and
the Closing, Symposium shall promptly notify Seller and
Prochnow of (i) any material development concerning the
financial condition of Symposium or Purchaser or the terms of
the financings it contemplates closing in order to consummate
the Transaction Contracts; (ii) any event which Symposium
believes could prevent Symposium and Purchaser from closing
the transactions as contemplated by this Agreement; or (iii)
any Action regarding Symposium or Purchaser.
Conditions to the Obligations of the Purchaser and Symposium.
The obligation of the Purchaser and Symposium to take the actions
required to be taken by either or both of them at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Symposium in writing, in whole or in part):
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YY. Representations and Warranties. The representations and
warranties of Seller and Prochnow (contained in this
Agreement, any exhibit or schedule hereto, or any certificate,
instrument or other writing delivered to Symposium or its
representatives by Seller or Prochnow or any of their
respective representatives) subject to Knowledge, materiality
or material adverse effect qualifications, shall be true and
correct, and those not so qualified shall be true and correct
in all material respects, on the Closing Date with the same
force and effect as though made on and as of the Closing Date,
except that any such representation or warranty made as of a
specified date (other than the date of this Agreement) shall
only need to have been true on and as of such date.
ZZ. Performance. Seller and Prochnow shall have performed in all
material respects all obligations and complied in all material
respects with all covenants required by any Transaction
Contract to be performed or complied with by Seller or
Prochnow, respectively, on or prior to the Closing Date.
AAA. Release of Liens. Seller shall have delivered to the Purchaser
any required releases and/or termination statements, releasing
all Liens (except Permitted Liens) in favor of any Person in
or to any of the Assets, except those which relate to the
Assumed Liabilities.
BBB. Consents. Seller shall have delivered to the Purchaser all
consents and approvals of Governmental Authorities and other
Persons necessary for the unconditional consummation of the
transactions contemplated hereby.
CCC. Certificate. Seller and Prochnow shall have delivered to the
Purchaser and Symposium a certificate, dated the Closing Date
and executed by each of Seller and Prochnow, certifying that
the conditions specified in Sections 9(a), (b), (c) and (d)
have been satisfied.
DDD. No Actions. No Action pertaining to the transactions
contemplated by this Agreement or to their consummation shall
have been instituted or threatened on or prior to the Closing
Date.
EEE. Consulting Agreement. Prochnow shall have executed and
delivered to Purchaser the Consulting Agreement.
FFF. Opinion Letter. The Purchaser and Symposium shall have
received from Arnall Golden & Gregory, LLP, counsel to Seller
and Prochnow, an opinion letter, dated as of the Closing Date
and addressed to the Purchaser and Symposium, in form and
substance satisfactory to the Purchaser and Symposium.
Conditions to the Obligations of Seller and Prochnow.
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The obligation of Seller and Prochnow to take the actions required to
be taken by any or all of them at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller in writing, in whole or in part):
GGG. Representations and Warranties. The representations and
warranties of the Purchaser and Symposium (contained in this
Agreement, any exhibit or schedule hereto, or any certificate,
instrument or other writing delivered to Seller, Prochnow or
their respective representatives by the Purchaser or Symposium
or any of their respective representatives) subject to
materiality or material adverse effect qualifications shall be
true and correct, and those not so qualified shall be true and
correct in all material respects, on the Closing Date with the
same force and effect as though made on and as of the Closing
Date, except that any such representation or warranty made as
of a specified date (other than the date of this Agreement)
shall only need to have been true on and as of such date.
HHH. Performance. The Purchaser and Symposium each shall have
performed all obligations and complied with all covenants
required by any Transaction Contract to be performed or
complied with by it on or prior to the Closing Date.
III. Certificate. The Purchaser and Symposium shall have delivered
to Seller a certificate, dated the Closing Date and executed
by each of the Purchaser and Symposium, certifying that the
conditions specified in Sections 9(a) and (b) have been
satisfied and that neither the Chief Executive Officer nor
Chief Financial Officer of Symposium has any conscious
awareness that Seller and Prochnow are in breach of any
representation, warranty or agreement under this Agreement or,
if they have such awareness, identifying such breach (in which
event, if the Closing occurs, such breached shall be deemed
waived).
JJJ. Consulting Agreement. Purchaser and Symposium shall have
executed and delivered the Consulting Agreement to Prochnow.
KKK. Employment Agreements. Purchaser shall have entered into
employment agreements with each of Dennis Gougion and Sally
Smith.
LLL. No Action. No action shall have been initiated or threatened
against Symposium or Purchaser on or prior to the Closing Date
pertaining to the financial condition of Symposium which if
successful would prevent Symposium or Purchaser from
consummating the transaction herein contemplated.
MMM. Broker's Agreement. Prochnow shall have received from Broker
an acknowledgement that Symposium has assumed $500,000 of the
liability owed by Seller to Broker in connection the
transactions contemplated by
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this Agreement and that Broker releases Seller from $500,000
of such liability.
NNN. Opinion Letter. Seller and Prochnow shall have received from
Troop Steuber Pasich Reddick & Tobey, LLP, counsel to
Symposium and Purchaser, an opinion letter, dated as of the
Closing Date and addressed to Seller and Prochnow, in form and
substance satisfactory to the Seller and Prochnow.
Further Agreements of the Parties.
OOO. Further Agreements of the Seller. Seller shall upon the
request of the Purchaser from time to time execute and deliver
to the Purchaser such further bills of sales, endorsements and
other good and sufficient instruments of title, conveyance,
transfer and assignment as may be necessary or desirable in
order to vest in the Purchaser, free and clear of all Liens
except for Permitted Liens, all right, title and interest in
and to any and all of the Assets.
PPP. Purchase Price Allocation. Seller and the Purchaser agree that
the Purchase Price shall be allocated among the Assets as set
forth on Schedule 11(b) to this Agreement and the parties
agree to prepare and file their respective tax returns in a
manner wholly consistent with said allocation, including any
reports or returns required under ss. 1060 of the Internal
Revenue Code and the accompanying Regulations thereunder.
QQQ. 8-K Financial Statements. Seller shall promptly provide such
assistance reasonably requested by Symposium to enable it to
prepare financial statements and pro forma financial
statements sufficient to permit Symposium to fully, completely
and timely comply with Symposium's obligations to file
financial statements relating to the Assets, the Assumed
Liabilities and the Business under and pursuant to Item 7 of
Form 8-K under the Exchange Act, and Rule 3-05 of Regulation
S-X of the General Rules and Regulations under the Exchange
Act however, Seller shall have no responsibility for the
preparation or filing of such reports and/or forms.
RRR. Confidentiality.
The Purchaser, Symposium, Seller and each Subsidiary and Prochnow hereby
acknowledge and agree that any and all information which has been disclosed by
one to the other, its directors, partners, members, managers, employees,
consultants, agents and shareholders during the discussions and negotiations
leading to the execution of this Agreement, and all information to be disclosed
by one to the other, its directors, employees, consultants and agents and
shareholders during the period commencing on the date of execution of this
Agreement through the Closing or termination of this Agreement, shall constitute
confidential information and trade secrets of the disclosing party, and as such
are secret, confidential and unique and constitute the exclusive trade
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secrets and property of such party. Such information has been made known and
available to the other party and its respective employees, consultants and
agents strictly in connection with the negotiation and execution of this
Agreement and the consummation of the transactions provided for herein. Each
party hereby acknowledges and agrees that any use or disclosure of any such
confidential information or trade secrets, other than pursuant to this
Agreement, would be wrongful and would cause irreparable injury to the other.
Accordingly, each party hereby expressly agrees, for itself and on behalf of its
shareholders, partners, members and directors, if any, and its principal
officers, managers, employees, agents, consultants and representatives, that it
and they will not at any time prior to the Closing or at any time thereafter,
use or disclose, other than in accordance with the terms and provisions of this
Agreement, any of such confidential information or trade secrets; provided, that
any of the parties hereto may use or disclose such confidential information or
secrets of another party without restriction if such information or secrets (A)
were or are available to such party on a non-confidential basis from a source
other than the other party, or (B) were or become generally available to the
public (other than as a result of an impermissible disclosure by such party or
its Affiliates); and provided, further, that if a party is required (by oral
question, interrogatories, requests for information or documents, subpoena or
similar process) to disclose any of such information or secrets of another
party, such disclosure be made without liability hereunder (although notice of
such requirement shall be given to the other party so that, if practicable, the
other party may seek a protective order against such disclosure).
Notwithstanding the foregoing, no provision of this Section 11(d) shall in any
manner whatsoever prevent or inhibit the Purchaser or Symposium from using or
disclosing any such confidential information relating to the Business or the
Assets in any manner the Purchaser or Symposium shall deem fit from and after
the Closing; provided further, Seller and Prochnow agree, for itself or himself
and its or his Affiliates, officers, managers, partners, members, employees,
agents, consultants and representatives, that it or he will not at any time from
and after the Closing Date use or disclose any such confidential information
which either (x) concerns the Purchaser or Symposium or its respective business
or operations or (y) relates to the Business or is included in the Assets. Each
party acknowledges that, in the event of a violation by the other of the terms
and provisions of this Section 11(d), the remedies at law would not be adequate;
and accordingly, in such event such party may proceed to protect and enforce its
rights under this Section 11(d) by a suit in equity for specific performance and
temporary, preliminary and permanent injunctive relief from violation of any of
the provisions of this Section 11(d) from any court of competent jurisdiction
without the necessity of proving the amount of any actual damages to the party
resulting from the breach.
Seller and Prochnow acknowledge that Symposium has public reporting obligations
under the Exchange Act, and Symposium and the Purchaser must obtain financing to
complete the purchase of the Assets as provided hereunder. Accordingly,
notwithstanding the preceding paragraph:
(a) Symposium may make public disclosures of such
information regarding the Seller and Prochnow as it
deems appropriate under applicable securities Laws;
and
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(b) Symposium may disclose information regarding the
Seller, the DSI Subsidiaries and Prochnow to Persons
from whom Symposium seeks financing to complete the
purchase of the Assets and to underwriters, finders
and broker/dealers who assist in locating such
investors; provided that each such Person is under a
confidentiality obligation with respect to such
information not materially less stringent than the
confidentiality obligations applicable to the
Purchaser and Symposium under this Agreement.
Notwithstanding the foregoing, Symposium agrees not
to issue any press release announcing the closing of the transactions
contemplated by this Agreement without providing a copy of such release to
Prochnow in advance and giving Prochnow a reasonable time to review and comment
on such release.
SSS. Access to Books and Records. Following the Closing, Symposium,
the Purchaser and Seller shall grant to each other access to
the books, records, papers and documents relating to the
Business of Seller (i) in the case of the Purchaser and
Symposium, included in the Assets, and (ii) in the case of
Seller, not included in the Assets which relate to the
operation of the Business of the Seller (the "Records"). Such
access shall be given upon the reasonable request of the
requesting party during normal business hours and upon five
business days prior notice. Each party shall maintain the
Records in its possession for a period of three years from and
after the Closing Date, and each shall first offer to the
other such of the Records as it may hereafter desire to
dispose of or destroy at least 30 days prior to initiating any
disposition or destruction whether prior to or following the
aforementioned three year period.
TTT. Employees. Effective as of the Closing Date, Seller shall
terminate those Employees selected by the Purchaser. Effective
as of the Closing Date, the Purchaser shall offer employment
to the Employees so selected by the Purchaser and terminated
by Seller on such terms and conditions as the Purchaser shall
determine. All Employees to whom the Purchaser offers
employment and who accept such employment are herein referred
to as the "Transferred Employees." Nothing in this Section
11(f) shall limit the Purchaser's authority to terminate the
employment of any Transferred Employee at any time for
whatever reason.
UUU. Amerinet Indebtedness. Purchaser and Symposium covenant that
neither Prochnow nor Seller shall have any liability of any
kind for any indebtedness of Amerinet to Symposium or its
affiliates.
VVV. Prohibited Payments by Purchaser. Purchaser agrees not to make
any Prohibited Payments to Symposium without the prior consent
of Prochnow for two years following the Closing except for
dividends not to exceed the income tax liability which
Purchaser would have paid if it and
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its subsidiaries were not part of the Symposium consolidated
group to tax purposes. "Prohibited Payments" include dividends
and other payments by Purchaser to Symposium other than
payments for actual services rendered by Symposium or pro rata
portion of compensation for officers of Symposium who actually
perform services for Purchaser (but not including salary or
other compensation of Ronald Altbach). In January 2001
Prochnow agrees in good faith to consider terminating this
covenant after one year from the Closing Date based on the
successful operation of Purchaser during 2000.
WWW. MemberWorks Incorporated. Seller presently has a reserve with
MemberWorks Incorporated ("MemberWorks"). Seller and Purchaser
agree to split equally any payments received from MemberWorks
relating to such reserve as it relates to business generated
prior to the Closing.
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Survival of Representations and Warranties; Indemnity.
XXX. Survival of Representations and Warranties. All
representations and warranties made in this Agreement or made
in any document delivered pursuant to this Agreement by or on
behalf of any party shall survive the execution and delivery
of this Agreement and the Closing, regardless of notice of or
any investigation or right of investigation made prior to or
after the date of this Agreement by or on behalf of any party,
and shall terminate and expire two years following the Closing
Date, after which date they shall be of no further force or
effect.
YYY. Not Applicable to Termination. The provisions of this Section
12 with respect to indemnification shall not provide any of
the parties hereto, their officers, directors, employees,
partners of stockholders with any rights for damages, losses
or expenses of any kind relating to the failure, refusal or
inability of the transactions herein contemplated to be closed
on or before the Closing Date, as all such rights, if any,
shall be governed by the provisions of Section 15(d).
ZZZ. Indemnification By Prochnow. Prochnow agrees to indemnify,
save and hold harmless the Purchaser, each DSI Subsidiary,
Symposium and each of their respective officers, directors,
employees, agents and Affiliates, and each of their successors
and assigns (individually, a "Purchaser Indemnified Party" and
collectively, the "Purchaser Indemnified Parties") from and
against any and all costs, losses, claims, liabilities, fines,
penalties, and expenses (including, without limitation,
interest which may be imposed in connection therewith and
court costs and reasonable fees and disbursements of counsel)
("Damages") incurred in connection with, arising out of,
resulting from or incident to:
any breach of the representations or warranties, or any default in any
agreements, made by Seller or Prochnow in this Agreement, any exhibit or
schedule thereto or any certificate, instrument or writing delivered in
connection therewith;
any Excluded Liability;
any Action, compromise, settlement, assessment or judgment arising out of or
incidental to any of the matters indemnified against in this Section 12(c). If,
by reason of any of the matters subject to indemnification under this Section
12(b), a Lien, attachment, garnishment or execution is placed upon any of the
property or assets of any Purchaser Indemnified Party, Prochnow shall also,
promptly upon demand, furnish an indemnity bond satisfactory to the Purchaser
Indemnified Party to obtain the prompt release of such Lien, attachment,
garnishment or execution unless such Lien, attachment, garnishment or execution
is not otherwise released or discharged within 10 days after receipt of written
notice by Prochnow.
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AAAA. Indemnification by the Purchaser and Symposium. The Purchaser
and Symposium shall, jointly and severally, indemnify, save
and hold harmless Prochnow and Seller and each of their
respective officers, directors, partners, members, managers,
employees, agents and Affiliates (other than the DSI
Subsidiaries), and each of their successors and assigns
(individually, a "Seller Indemnified Party" and collectively,
the "Seller Indemnified Parties") from and against any and all
Damages incurred in connection with, arising out of, resulting
from or incident to:
any Assumed Liabilities;
any breach of the representations, warranties, or covenants or any default in
any agreements, made by the Purchaser or Symposium in this Agreement, any
exhibit or schedule thereto or any certificate, instrument or writing delivered
in connection therewith;
any obligation or liability arising out of the operation of the Business after
the Closing Date by Purchaser or Symposium, except in each case, if such
liability or claim results from the breach of any of the warranties,
representations, covenants or agreements made by Seller or Prochnow in any
Transaction Contract, any schedule or exhibit thereto or any certificate or
instrument delivered in connection therewith;
any claim or damages incurred by Seller or Prochnow as a result of the failure
by Symposium to satisfy the obligation to Broker assumed by Symposium under
Section 3(c)(ii) of this Agreement; or
any Action, compromise, settlement, assessment or judgment arising out of or
incidental to any of the matters indemnified against in this Section 12(d). If,
by reason of the claim of any third Person relating to any of the matters
subject to indemnification under this Section 12(d), a Lien, attachment,
garnishment or execution is placed upon any of the property or assets of any
Seller Indemnified Party, Symposium shall also, promptly upon demand, furnish an
indemnity bond satisfactory to the Seller Indemnified Party to obtain the prompt
release of such lien, attachment, garnishment or execution unless such Lien,
attachment, garnishment or execution is not otherwise released or discharged
within 10 days after receipt of written notice by Prochnow.
BBBB. Notice of Claim. If a claim for Damages (a "Claim") is to be
made by a party entitled to indemnification hereunder (an
"Indemnified Party") against the indemnifying party (the
"Indemnifying Party"), the Indemnified Party shall give
written notice (a "Claim Notice") to the Indemnifying Party,
which notice shall specify whether the Claim arises as a
result of a claim by a Person against the Indemnified Party (a
"Third Party Claim") or whether the Claim does not so arise (a
"Direct Claim"), and shall also specify (to the extent that
the information is available) the factual basis for the Claim
and the amount of the Damages, if known. If the Claim is a
Third Party Claim, the Indemnified Party shall provide the
Claim Notice as soon as practicable after such party becomes
aware of any
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fact, condition or event which may give rise to Damages for
which indemnification may be sought hereunder. If any Action
is filed against any Indemnified Party, written notice thereof
shall be given to the Indemnifying Party as promptly as
practicable (and in any event within 15 calendar days after
the service of the citation or summons). The failure of any
Indemnified Party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the
extent that the Indemnifying Party has been damaged by such
failure.
CCCC. Defense of Claims. With respect to a Third Party Claim, if
after receipt of the Claim Notice the Indemnifying Party
acknowledges in writing to the Indemnified Party that the
Indemnifying Party shall be obligated under the terms of its
indemnity hereunder in connection with such Third Party Claim,
the Indemnifying Party shall be entitled, if it so elects at
its own cost, risk and expense, (i) to take control of the
defense and investigation of such Action, (ii) to employ and
engage attorneys of its own choice, but, in any event,
reasonably acceptable to the Indemnified Party, to handle and
defend the same unless the named parties to such action or
proceeding (including, without limitation, any impleaded
parties) include both the Indemnifying Party and the
Indemnified Party and the Indemnified Party has been advised
in writing by counsel that there may be one or more legal
defenses available to such Indemnified Party that are
different from or additional to those available to the
Indemnifying Party, in which event the Indemnified Party shall
be entitled, at the Indemnifying Party's cost, risk and
expense, to separate one firm of counsel (in addition to
appropriate local counsel) of its own choosing, and (iii) to
compromise or settle such Action, which compromise or
settlement shall be made only with the written consent of the
Indemnified Party, such consent not to be unreasonably
withheld or delayed.
If the Indemnifying Party fails to assume the defense of such Claim
within 15 calendar days after receipt of the Claim Notice, the Indemnified Party
against which such Claim has been asserted will (upon delivering notice to such
effect to the Indemnifying Party) have the right to undertake, at the
Indemnifying Party's cost and expense, the defense, compromise or settlement of
such Claim on behalf of and for the account and risk of the Indemnifying Party.
If the Indemnified Party assumes the defense of the Claim, the Indemnified Party
will keep the Indemnifying Party reasonably informed of the progress of any such
defense, compromise or settlement. The Indemnifying Party shall be liable for
any settlement of any action effected pursuant to and in accordance with this
Section 12(f) and for any final judgment (subject to any right of appeal) and
the Indemnifying Party agrees to indemnify and hold harmless the Indemnified
Party from and against any Damages by reason of such settlement or judgment.
DDDD. Limitation on Indemnification Obligations.
Except as provided in Section 12(g)(iv), the Purchaser Indemnitees shall not be
entitled to recover damages under Section 12(c) unless the aggregate amount of
indemnifiable
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Damages incurred by Purchaser Indemnities exceeds $500,000, at which time such
claim for indemnification may be made only for the excess.
Except as provided in Section 12(g)(iv), in no event shall the Purchaser
Indemnities be entitled to recover an amount hereunder in excess of $2,000,000
under this Section 12.
Except as provided in Section 12(g)(iv), no claim for indemnification may be
made after the second annual anniversary of the Closing.
Notwithstanding anything to the contrary herein contained, the limitations
contained in Sections 12(g)(i), (ii) and (iii) shall not apply to (A)
indemnification obligations under Section 12(c)(ii) or Section 12(c)(iii) to the
extent covering an Excluded Liability or (B) indemnification obligations under
Sections 12(c)(i) for: (I) breaches of any of the representations and warranties
relating to Sections 6(b), (c) or (r), (II) breach of any covenants or
agreements of any Indemnifying Party contained in this Agreement or (III) fraud
by an Indemnifying Party in connection with this Agreement and the transactions
contemplated by this Agreement. Any recovery under or in connection with the
circumstances described in the immediately preceding sentence shall not be taken
into account in determining whether the $2,000,000 limitation set forth in
Section 12(g)(ii) has been reached.
EEEE. Satisfaction of Indemnified Claim by Prochnow. In the event
Purchaser or Symposium is entitled to be indemnified and held
harmless by Prochnow pursuant to the terms of this Agreement,
the amount of such indemnification by Prochnow may be
satisfied, at Prochnow's option, by payment in cash or in the
capital stock ("Stock") of Symposium. In the event Prochnow
elects to satisfy such indemnified amount with Stock, the
value of such Stock per share for the purposes of satisfying
such claim shall be the average of the closing sales prices on
the last 10 days on which sales of the Stock are reported
immediately prior to the determination of the indemnified
amount.
Taxes.
FFFF. Payment of Taxes; Filing of Returns. Seller shall remain
liable for the filing of all tax returns and reports and for
the payment of all foreign, federal, state and local taxes of
the Seller and the DSI Subsidiaries relating to the operation
of the business of the Seller, the DSI Subsidiaries or to the
Assets for any period ending on or prior to the Closing Date,
and for the payment of all taxes attributable to or relating
to the consummation of the transactions contemplated herein,
and Seller and Prochnow shall, jointly and severally,
indemnify and hold the Purchaser and Symposium harmless from
and against all liability in connection therewith.
GGGG. Tax Periods Beginning Before and Ending After the Closing
Date. Purchaser shall prepare or cause to be prepared and file
or cause to be filed any tax returns of the DSI Subsidiaries
for tax periods which begin before
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the Closing Date and end after the Closing Date. Seller and
Prochnow shall be jointly and severally liable for payment to
Purchaser, payable within fifteen (15) days after the date on
which taxes are paid with respect to such periods, for an
amount equal to the portion of such taxes which relates to the
portion of such taxable period ending on the Closing Date to
the extent such taxes are not reflected in the reserve for Tax
Liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax
income) shown on the face of the Current Balance Sheet. For
purposes of this Section, in the case of any taxes that are
imposed on a periodic basis and are payable for a taxable
period that includes (but does not end on) the Closing Date,
the portion of such tax which relates to the portion of such
taxable period ending on the Closing Date shall (x) in the
case of any taxes other than taxes based upon or related to
income or receipts, be deemed to be the amount of such tax for
the entire taxable period multiplied by a fraction the
numerator of which is the number of days in the taxable period
ending on the Closing Date and the denominator of which is the
number of days in the entire taxable period, and (y) in the
case of any tax based upon or related to income or receipts be
deemed equal to the amount which would be payable if the
relevant taxable period ended on the Closing Date. Any credits
relating to a taxable period that begins before and ends after
the Closing Date shall be taken into account as though the
relevant taxable period ended on the Closing Date. All
determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior
practice of Seller and the DSI Subsidiaries.
HHHH. Sales Taxes. Seller shall bear all responsibility for sales,
transfer, use, value added or other similar taxes, if any,
arising out of the consummation of the transactions herein
provided for and shall be liable for the filing of all
necessary tax returns and reports with respect to such taxes.
Noncompetition.
IIII. Covenant Not to Compete. For a period of five years from the
Closing Date, Prochnow shall not, directly or indirectly,
whether individually or as a member, officer, director,
investor, stockholder, employee or consultant of any Person,
or in any other capacity, (i) engage anywhere in the United
States in a business which competes with the Business, or (ii)
induce or attempt to induce (A) any employee of Symposium or
any of its Subsidiaries to leave the employ of Symposium or
any of its Subsidiaries or in any way interfere adversely with
the relationship between any such employee and Symposium or
any of its Subsidiaries, (B) any employee of Symposium or any
of its Subsidiaries to work for, render services or provide
advice to or supply confidential business information or trade
secrets of Symposium or any of its Subsidiaries to any third
Person, or (C) any customer, supplier, agent, publisher,
clearing house, licensee, licensor
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or other business relation of Symposium or any of its
Subsidiaries to cease doing business with Symposium or any of
its Subsidiaries or in any way interfere with the relationship
between any such customer, supplier, agent, publisher,
clearing house, licensee, licensor or other business relation
and Symposium or any of its Subsidiaries. The ownership by
Prochnow of four percent or less of the outstanding capital
stock of any corporation engaged in any business which
competes with any line of business engaged in or about to be
engaged in by Symposium or any of its Subsidiaries, where the
capital stock of the corporation is listed on a national
securities exchange or actively quoted on the Nasdaq Stock
Market, shall not be deemed a violation by Prochnow of this
Section 14; provided that Prochnow is not an officer, director
or employee of, or a consultant to, such corporation or
otherwise related in any way to such corporation (other than
as a shareholder thereof).
JJJJ. Remedies. Prochnow acknowledges and agrees that, in the event
of a violation by Prochnow of the terms and provisions of this
Section 14, the remedies at law would not be adequate.
Accordingly, in such event Symposium may proceed to protect
and enforce its rights under this Section 14 by a suit in
equity for specific performance and temporary, preliminary and
permanent injunctive relief from violation of any of the
provisions of this Section 14 from any court of competent
jurisdiction without the necessity of proving the amount of
any actual damages to Symposium or its Subsidiaries resulting
from the breach.
KKKK. Modification. If for any reason there should be a
determination by a court of competent jurisdiction that the
provisions of this Section 14 are too broad or unreasonable
(or otherwise objectionable) and therefore unenforceable, the
provisions of this Section 14 shall be deemed modified, and
fully enforceable as so modified, to the extent that the court
would find them to be fair, reasonable and enforceable under
the circumstances.
Termination.
LLLL. Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing by the mutual
agreement, in writing, of each of the parties to this
Agreement.
MMMM. Termination by Symposium. Symposium may (but shall not be
obligated to) terminate this Agreement on behalf of itself and
the Purchaser prior to the Closing by giving written notice to
Prochnow if:
there has been a material violation or breach by Seller or any Subsidiary or
Prochnow of any agreement, covenant, representation or warranty contained in any
Transaction Contract, which violation or breach shall not have been cured or
corrected within ten days after receipt of notice thereof;
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the Closing does not occur on or prior to January 31, 2000, or such later date
as may be agreed to in writing by the parties; any of the conditions in Section
9 have not been satisfied as of the Closing or if Symposium is made aware and
determines in its reasonable discretion that any condition in Section 9 will not
be satisfied as of the Closing (other than through the failure of the Purchaser
or Symposium to comply with its obligations under this Agreement) and Symposium
has not expressly waived such condition in writing on or before the Closing.
NNNN. Termination by Seller. Seller may (but shall not be obligated
to) terminate this Agreement on behalf of itself and all other
Seller Parties prior to the Closing by giving written notice
to Symposium if:
there has been a material violation or breach by the Purchaser or Symposium of
any agreement, covenant, representation or warranty contained in any Transaction
Contract, which violation or breach shall not have been cured or corrected
within ten days after receipt of notice thereof;
the Closing does not occur on or prior to January 31, 2000, or such later date
as may be agreed to in writing by the parties; or
any of the conditions in Section 10 have not been satisfied as of the Closing or
if Seller is made aware and determines in its reasonable discretion that any
condition in Section 10 will not be satisfied as of the Closing (other than
through the failure of Seller or Prochnow to comply with its or his obligations
under this Agreement) and Seller has not expressly waived such condition in
writing on or before the Closing.
OOOO. Effect of Termination. In the event of such termination, no
party shall have any obligation or liability to any other
party in respect to this Agreement, except that Sections 11(d)
and 16(i) shall remain in full force and effect.
Miscellaneous.
PPPP. Notices. All notices, requests, demands and other
communications (collectively, "Notices") given pursuant to
this Agreement shall be in writing, and shall be delivered by
personal service, courier, facsimile transmission (which must
be confirmed) or by United States first class, registered or
certified mail, postage prepaid, to the following addresses:
(i) if to Symposium, to:
Symposium Corporation
410 Park Avenue
Suite 430
New York, New York 10022
Facsimile No.: (212) 754-9906
Attn: Ronald Altbach
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with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067
Facsimile No.: (310) 728-2211
Attn: Alan B. Spatz, Esq.
(ii) if to Seller or Prochnow, to:
Richard Prochnow
2550 Heritage Court, Suite 106
Atlanta, Georgia 30339
Facsimile No.: (770) 952-0409
with a copy to:
Arnall Golden & Gregory, LLP
1201 West Peachtree Street, Suite 2800
Atlanta, Georgia 33309
Facsimile No.: (404) 873-8501
Attn: S. Jarvin Levison, Esq.
Any Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third day following deposit in the United States mails. Any
party may from time to time change its address for further Notices hereunder by
giving notice to the other parties in the manner prescribed in this Section.
QQQQ. Entire Agreement. This Agreement, the other Transaction
Contracts and the exhibits and schedules thereto contain the
sole and entire agreement and understanding of the parties
with respect to the entire subject matter of this Agreement,
and any and all prior discussions, negotiations, commitments
and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein.
Nothing in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto any
rights or remedies under or by way of this Agreement.
RRRR. Assignment. No party may assign its rights or obligations
under this Agreement, and any attempted or purported
assignment or any delegation of any party's duties or
obligations arising under this Agreement to any Person shall
be deemed to be null and void, and shall constitute a material
breach by such party of its duties and obligations under this
Agreement; provided that Symposium may assign its rights to
any Subsidiary of
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Symposium but such assignment shall not relieve Symposium of
any obligation hereunder. This Agreement shall inure to the
benefit of and be binding upon any successors of each party by
way of merger or consolidation.
SSSS. Waiver and Amendment. No provision of this Agreement may be
waived unless in writing signed by all the parties to this
Agreement, and waiver of any one provision of this Agreement
shall not be deemed to be a waiver of any other provision.
This Agreement may be amended only by a written agreement
executed by all of the parties to this Agreement.
TTTT. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Georgia without giving effect to
the principles of conflicts of law thereof.
UUUU. Severability. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be or become prohibited or invalid
under applicable law, such provision shall be ineffective to
the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
VVVV. Captions. The various captions of this Agreement are for
reference only and shall not be considered or referred to in
resolving questions of interpretation of this Agreement.
WWWW. Costs and Attorneys' Fees. If any Action is instituted to
remedy, prevent or obtain relief from a default in the
performance by any party to this Agreement of its obligations
under this Agreement, the prevailing party shall recover its
reasonable attorneys' fees incurred in each and every such
Action, including, without limitation, any and all appeals or
petitions therefrom.
XXXX. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same
instrument.
YYYY. Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, it is agreed that a
court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of
construction that a document is to be construed more strictly
against the Person who itself or through its agent prepared
the same, it being agreed that all parties have participated
in the preparation of this Agreement.
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IN WITNESS WHEREOF, this Option Agreement has been made and
entered into as of the date and year first above written.
SYMPOSIUM CORPORATION,
a Delaware corporation
By: /s/ Ronald Altbach
------------------------------------
Ronald Altbach
Chief Operating Officer :
DIRECT SALES INTERNATIONAL, INC.
By: /s/ Ronald Altbach
------------------------------------
Ronald Altbach
Chief Executive Officer
DIRECT SALES INTERNATIONAL, L.P.
By: Direct Sales, Inc.
By: /s/Richard Prochnow
------------------------------
Richard L. Prochnow
Chief Executive Officer
RICHARD L. PROCHNOW
/s/ Richard Prochnow
---------------------------------------
Richard L. Prochnow
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SCHEDULES TO
ASSET PURCHASE AGREEMENT
SCHEDULE 2(a)(i) Tangible Personal Property
SCHEDULE 2(a)(vi) Assumed Contracts
SCHEDULE 2(b)(v) Excluded Contracts
SCHEDULE 2(b)(vi) Excluded Assets
SCHEDULE 6(a) Telemarketing Registrations
SCHEDULE 7(g) Contemplated Symposium Financing
SCHEDULE 11(b) Allocation of Purchase Price
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EXHIBIT 99.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered as of January 28, 2000 by and between Symposium Corporation, a Delaware
corporation, (the "Company"), and Richard L. Prochnow ("Purchaser").
1. Definitions
For purposes of this Agreement, the following terms shall have the meanings set
forth below:
"Asset Purchase Closing" shall mean the date of closing of the Asset
Purchase Agreement by and among the Company, Direct Sales International, Inc.,
Direct Sales International, L.P. and Purchaser.
"Common Stock" shall mean the common stock, par value $0.001 per share,
of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Indemnified Party" shall have the meaning set forth in Section 3(g) of
this Agreement.
"Indemnifying Party" shall have the meaning set forth in Section 3(g)
of this Agreement.
"Notices" shall have the meaning set forth in Section 3(a) of this
Agreement.
"Person" shall mean an individual or a partnership, limited
partnership, corporation, trust, association, limited liability company,
governmental authority or other entity.
"Demand Registrable Stock" shall mean 1,000,000 shares of the
Securities, such number of shares subject to adjustment for stock splits,
reverse stock splits and stock dividends.
"Securities" means the 2,500,000 shares of Common Stock purchased by
Purchaser pursuant to that certain Stock Purchase Agreement dated as of June 9,
1999 by and between Company and Purchaser, and all shares of Common Stock issued
by reason of a stock split or stock dividend with respect to such Securities
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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2. Effectiveness of Agreement. This Agreement shall become effective as of
the Asset Purchase Closing, provided, however, that if the Asset Purchase
Closing does not occur on or prior to January 31, 2000, this Agreement shall be
null and void and of no further effect.
3. Registration.
Within 120 days of the Asset Purchase Closing, the Company will file with the
SEC a registration statement including the Demand Registrable Stock, and shall
use its best efforts to cause the registration statement to become effective
within 180 days following the Asset Purchase Closing.
In connection with the registration, the Company will:
Use its best efforts to cause the registration statement to remain effective
until the earliest to occur of: (A) the date Purchaser shall have sold all of
the Demand Registrable Stock included in the Registration Statement; (B) the
date Purchaser can sell the Demand Registrable Stock pursuant to Rule 144(k);
and (C) June 30, 2001;
Furnish to Purchaser a copy of the registration statement and each amendment to
the registration statement and such number of copies of the final prospectus
included under such registration statement as Purchaser may reasonably request
in order to facilitate the distribution of the Demand Registrable Stock owned by
Purchaser;
Notify Purchaser of the issuance of any stop order by the SEC in connection with
the registration statement, and in such event the Company will use its best
efforts to promptly obtain the lifting of any such stop order; and
Pay all costs and expenses of the registration other than (A) any underwriting
discounts or brokerage commissions incurred by Purchaser in connection with the
sale of the Demand Registrable Stock, and (B) any fees and expenses of counsel
or others retained by Purchaser in connection with the registration.
As a condition to the Company's obligation to register the Demand Registrable
Stock, Purchaser must complete and provide to the Company all questionnaires,
powers of attorney, and other documents which may reasonably be required by the
Company in connection with the registration statement.
Following the effectiveness of the registration statement, upon receipt from the
Company of a notice that the registration statement contains an untrue statement
of material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, Purchaser will immediately
discontinue disposition of Demand Registrable Stock pursuant to the registration
statement until the Company notifies Purchaser that it may resume sales of
Demand Registrable Stock and, if necessary, provides to Purchaser copies of the
supplemental or amended prospectus. In such event, Purchaser will deliver
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to the Company all copies, other than permanent file copies then in Purchaser's
possession, of the most recent prospectus covering the Demand Registrable Stock.
Unless the misstatement or omission relates to a proposed merger, acquisition or
other major corporate transaction involving the Company or any of its
subsidiaries, the Company will promptly correct misstatement or omission in the
registration statement so as to permit Purchaser to sell Demand Registrable
Stock pursuant to the registration statement.
The Company agrees to indemnify and hold harmless Purchaser, its officers,
directors and agents, and each person, if any, who controls Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus relating to the Demand Registrable
Stock (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by Purchaser or on Purchaser's behalf
expressly for use therein; provided that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus, or in any prospectus, as the case may be, the indemnity agreement
contained in this paragraph shall not apply to the extent that any such loss,
claim, damage, liability or expense results from the fact that a current copy of
the prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation of
the sale of the Demand Registrable Stock concerned to such person.
Purchaser agrees to indemnify and hold harmless the Company, its officers,
directors and agents and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
Purchaser, but only (i) with respect to information furnished in writing by
Purchaser or on Purchaser's behalf expressly for use in any registration
statement or prospectus relating to the Demand Registrable Stock, or any
amendment or supplement thereto, or any preliminary prospectus or (ii) to the
extent that any loss, claim, damage, liability or expense described in Section
3(e) of this Agreement results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation of
the sale of the Demand Registrable Stock concerned to such person. Purchaser's
obligation to indemnify shall be limited to the net proceeds received from the
sale of Demand Registrable Stock.
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In case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought
pursuant to this Section 3, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses; provided that the
failure of any Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
that the Indemnifying Party is materially prejudiced by such failure to notify.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding.
In the event of an underwritten public offering of capital stock by the Company,
Purchaser agrees not to sell any Securities during such period as may be
reasonably requested by the managing underwriter of the offering (which period
shall not be longer than the period during which the directors of the Company
may not sell capital stock). Unless this restriction is waived, Purchaser shall
be entitled to participate in the offering on a basis comparable to any other
selling stockholder who participates.
4. Put Right.
At any time between January 15, 2001 and March 15, 2001, Purchaser may, by
delivery of written notice to the Company (the "Put Notice"), require on one
occasion the Company to purchase from the Purchaser up to 600,000 shares of
Common Stock for $3.00 per share. The foregoing number of shares and purchase
price per share shall be adjusted appropriately in the event of any stock split,
reverse stock split or stock dividend
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after the date hereof. The closing of such purchase and sale shall take place at
the time designated by the Company within 60 days after the date the Company
receives the Put Notice.
5. Miscellaneous.
(a) Notices. All notices, requests, demands and other communications
(collectively, "Notices") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service, courier, facsimile transmission or
by United States first class, registered or certified mail, postage prepaid,
addressed to the party at the address set forth on the signature page to this
Agreement. Any Notice, other than a Notice sent by registered or certified mail,
shall be effective when received; a Notice sent by registered or certified mail,
postage prepaid return receipt requested, shall be effective on the earlier of
when received or the fifth day following deposit in the United States mails. Any
party may from time to time change its address for further Notices hereunder by
giving notice to the other party in the manner prescribed in this Section 5(a).
(b) Entire Agreement. This Agreement contains the sole and entire agreement and
understanding of the parties with respect to the entire subject matter of this
Agreement, and any and all prior discussions, negotiations, commitments and
understandings, whether oral or otherwise, related to the subject matter of this
Agreement are hereby merged herein.
(c) Successors. This Agreement shall be binding upon and inure to the benefit of
the parties to this Agreement and their respective successors, heirs and
personal representatives.
(d) Waiver and Amendment. No provision of this Agreement may be waived unless in
writing signed by all the parties to this Agreement, and waiver of any one
provision of this Agreement shall not be deemed to be a waiver of any other
provision. This Agreement may be amended only by a written agreement executed by
all of the parties to this Agreement.
(e) Governing Law. This Agreement shall be construed in accordance with the laws
of the State of New York without giving effect to the principles of conflicts of
law thereof.
(f) Captiare for reference only and shall not be considered or referred to in
resolving questions of interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Purchaser have duly executed this Agreement
as of the day and year first above written.
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THE COMPANY:
SYMPOSIUM CORPORATION
By: /s/ Ronald Altbach
-----------------------
Ronald Altbach, Co-Chairman of the Board
Address:
410 Park Avenue, Suite 430
New York, New York 10022
PURCHASER:
RICHARD L. PROCHNOW
/s/ Richard Prochnow_
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Address:
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EXHIBIT 99.2
AMENDED
NON-NEGOTIABLE SECURED PROMISSORY NOTE
$2,500,000 January 28, 2000
FOR VALUE RECEIVED, Richard L. Prochnow (the "Maker"), hereby promises
to pay to the order of Symposium Corporation, a Delaware corporation
("Symposium"), the principal sum of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($2,500,000), as follows: (i) $2,500 shall be due and payable on the date
hereof; and (ii) the remaining balance shall be due and payable on January 14,
2003. In addition, concurrently with any sale of Common Stock of Symposium,
Maker shall pay to Symposium one-third of the net proceeds from such sale to
reduce the amount outstanding on this Note.
If any payment is not made when due, such payment and any outstanding
amount on this Note shall thereafter bear interest at a rate of 10% per annum
until the amount not paid and accrued and unpaid interest is paid in full.
All payments on this Note shall be made in such currency of the United
States as at the time of payment shall be legal tender for the payment of public
and private debts.
This Note evidences indebtedness incurred pursuant to the terms of that
certain Stock Purchase Agreement of June 9, 1999 between Maker and Symposium
(the "Purchase Agreement"). Symposium and the Maker also entered into a Stock
and Partnership Interest Pledge Agreement dated June 9, 1999, as amended on even
date herewith (the "Pledge Agreement") providing, among other things, for the
securing of this Note by a pledge of the Pledged Collateral (as defined in the
Pledge Agreement). To the extent applicable, the provisions of the Purchase
Agreement and/or the Pledge Agreement (including, without limitation, the
provisions of Section 6.1 of the Purchase Agreement) are incorporated herein by
this reference.
If any of the following events (each, an "Event of Default") shall
occur:
ZZZZ. (a) the Maker shall default in the payment of any part of the
principal or interest on this Note when the same shall become
due and payable, whether at maturity, by acceleration or
otherwise;
AAAAA. (b) the Maker shall (i) become insolvent or be unable, or
admit in writing its inability, to pay its debts as they
mature; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated as bankrupt or insolvent or
file a voluntary petition in bankruptcy; (iv) file a petition
or an answer seeking an arrangement with creditors to take
advantage of any insolvency law; or (v) file an answer
admitting to the material obligations or consent to, or
default in answering, or fail to have dismissed within 60 days
after the filing thereof, a petition filed against it in any
bankruptcy or insolvency proceeding; or
BBBBB. (c) any breach of the Maker's obligations under the Pledge
Agreement shall have occurred and be continuing or any
representation or warranty made under Section 4.3 of the
Pledge Agreement shall be false in
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any material respect,
then, the holder of this Note may at any time by written notice to the
Maker, declare the entire unpaid principal of and the interest accrued on this
Note through the date of such Event of Default to be forthwith due and payable,
without other notices or demands of any kind, all of which are hereby waived by
the Maker; provided that if an Event of Default occurs pursuant to paragraph (b)
above, the entire unpaid principal and the interest accrued on this Note shall
become automatically due and payable without any notice, demand or other action
by the holder.
The Maker agrees to pay to the holder hereof all reasonable expenses
incurred by such holder, including reasonable attorneys' fees, in enforcing and
collecting this Note.
The Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, notice of dishonor of this Note and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note.
This Note shall be paid without deduction by reason of any set-off,
defense or counterclaim of the Maker. This Note shall be governed by and
construed in accordance with the laws of the State of Georgia, without giving
effect to conflicts of law principles thereof.
This Note is non-negotiable and shall not be transferred or assigned by
Symposium except by operation of law or as provided in the Purchase Agreement.
Any attempted assignment of this Note by Symposium except by operation of law or
as provided in the Purchase Agreement shall be deemed void. This Note amends and
replaces the non-negotiable promissory note dated June 9, 1999 executed by Maker
in favor of Holder.
/S/ Richard Prochnow
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Richard L. Prochnow
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EXHIBIT 99.3
DIRECT SALES INTERNATIONAL, INC.
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made and entered into
as of January 28, 2000 by and between Direct Sales International, Inc., a
Delaware corporation (the "Company"), Symposium Corporation, and Richard L.
Prochnow ("Consultant").
1. Engagement and Responsibilities
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the Company hereby engages Consultant as a consultant (not as an
agent), and Consultant accepts such engagement.
(b) The Company is engaged in the business of marketing and sale of
magazine subscriptions, directly or through third parties (the "Business"),
which Business the Company acquired on the date hereof from Direct Sales
International, LP, a Georgia limited partnership ("DSI"). Consultant was the
President of the general partner of DSI and as such was effectively the chief
executive officer of DSI. Consultant shall consult with the Chief Executive
Officer of the Company with regard to the duties and responsibilities of the
management of the Company and upon the mutual consent of Consultant and the
Chief Executive Officer of the Company, Consultant shall advise the other senior
officers of the Company with respect to the fulfillment of the policies and
operations of the Business; and in such event the Company's Chief Executive
Officer shall instruct the senior officers of the Company to perform the duties
and responsibilities as outlined by Consultant.
(c) Consultant agrees that he may not perform similar services for any
other Person engaged in the same business as the Company and its subsidiaries so
long as he receives compensation pursuant to this Agreement.
(d) The Company shall make available to Consultant an office at the
Company's principal offices. For so long as the Company's principal office is
located at 2550 Heritage Court, Suite 106, Atlanta, Georgia, the office shall be
the office occupied by Consultant prior to the Company acquiring the business
and assets of Direct Sales International, L.P. The Company acknowledges that
certain furniture and furnishings in such office at the date of this Agreement
are the property of Consultant and may be removed by Consultant at any time. The
Company acknowledges and agrees that the Consultant shall not be required to
perform his services from this office at the Company, and may perform services
in Palm Springs, California and at such other locations as he reasonably deems
appropriate.
(e) The Company acknowledges that Consultant has advised it that he
from time to time takes vacation from his business, and the Company agrees that
during such vacation (up to eight weeks per year) he shall not be required to
perform services for the Company.
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2. Definitions
"Board" shall mean the Board of Directors of the Company.
"Company Group" shall mean the Company and each Person which the
Company directly or indirectly Controls.
"Disability," with respect to Consultant, shall mean that, for physical
or mental reasons, Consultant is unable to perform the essential functions of
Consultant's duties under this Agreement for 90 days during any one six-month
period. Consultant agrees to submit to a reasonable number of examinations by a
medical doctor reasonably acceptable to Consultant advising the Company as to
whether Consultant shall have suffered a disability and be unable to return to
work for 90 days. Consultant hereby authorizes the disclosure and release to the
Company and its agents and representatives of all his supporting medical records
relating to the issue of Consultant's disability. If Consultant is not legally
competent, Consultant's legal guardian or duly authorized attorney-in-fact will
act in Consultant's stead for the purposes of submitting Consultant to the
examinations, and providing the authorization of disclosure of Consultant's
ability or inability to return to work.
"For Cause" shall mean, in the context of a basis for termination of
Consultant's employment with the Company, that:
(a) failure, in the good-faith judgment of the Company, of Consultant
to cure any misconduct or willful or gross negligence by Consultant with respect
to the business and affairs of the Company for which Consultant is assigned
material responsibilities or duties, within a reasonable period of time
following Consultant's receipt of written notice thereof by the Company, which
notice is sufficiently specific so as to permit Consultant reasonable time to
cure such misconduct or such willful or gross negligence;
(b) the conviction of Consultant of a felony (other than a felony
arising out of the use of a motor vehicle), whether or not committed in the
course of his employment;
(c) breach of any fiduciary duty to the Company or any subsidiary
involving personal profit, commission of an act of fraud, embezzlement, or
theft, or commission of an intentional act against the interests of the Company
or any subsidiary that causes the Company or any subsidiary material injury; or
(d) Consultant's willful failure or refusal to carry out his duties
under this Agreement, which failure or refusal has not been, or cannot be, cured
within a reasonable period after his receipt of written notice from the Company.
"Person" shall mean an individual or a partnership, corporation, trust,
association, limited liability company, governmental authority or other entity.
3. Compensation and Benefits
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(a) As fees for his services pursuant this Agreement, the Company will
pay to Consultant in arrears a monthly consulting fee of $50,000 (the fee for
any partial calendar month shall be pro-rated). Symposium guarantees payment of
the monthly consulting fee.
(b) In addition to monthly consulting fees, Consultant may be awarded a
bonus at the sole discretion of the Board.
(c) The Company shall provide to Consultant medical, life and
disability insurance as may from time to time be provided generally to executive
officers of the Company (either pursuant to the group policies of the Company or
separate policies maintained by the Company).
(d) Consultant shall be entitled to all award points or bonuses on
credit cards used by Consultant which have heretofore accumulated as well as
those hereafter awarded in conjunction with Consultant's future reimbursable
expenses.
(e) Expenses. The Company shall reimburse Consultant for any and all
reasonable expenses, including first class air travel, incurred by him in the
course of performing his duties under this Agreement which are consistent with
the Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company's reasonable
requirements with respect to reporting and documentation of expenses.,
4. Term of Engagement
Consultant's engagement pursuant to this Agreement shall commence on
the date hereof and shall terminate on the earliest to occur of the following:
(a) December 31, 2002;
(b) upon the death of Consultant;
(c) upon delivery to Consultant of written notice of termination by the
Company if Consultant shall suffer a Disability;
(d) upon termination by the Company For Cause; or
(e) upon termination by the Company without cause.
In the event of termination of Consultant's engagement without cause
pursuant to subparagraph (e) above prior to December 31 2002, the Company shall
continue to pay to Consultant his monthly consulting fees until December 31,
2002 and Consultant shall be entitled to any bonus which has been approved by
the Board of Directors prior to the termination.
5. Confidentiality
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Consultant agrees not to disclose (whether during or after Consultant's
engagement with the Company) to any Person any trade secrets or other
confidential information relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, financial methods, plans, or the business and affairs of the
Company Group generally, provided that the foregoing shall not apply to
information which is not unique to the Company Group or which is generally known
to the industry or the public other than as a result of Consultant's breach of
this covenant. Consultant agrees that upon termination of his consulting
engagement with the Company for any reason, he will return to the Company
immediately all memoranda, books, papers, plans, information, letters and other
data, and all copies thereof or therefrom, in any way relating to the business
of the Company Group except that he may retain personal notes, notebooks,
diaries, rolodexes and addresses and phone numbers. Consultant further agrees
that he will not retain or use for his account at any time any trade names,
trademark or other proprietary business designation used or owned in connection
with the business of any member of the Company Group.
6. Miscellaneous
(a) Notices. All notices, requests, demands and other communications
(collectively, "Notices") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service, courier, facsimile transmission or
by United States first class, registered or certified mail, addressed to the
following addresses:
If to the Company, to:
Direct Sales International, Inc.
2550 Heritage Court
Suite 106
Atlanta, Georgia 30339
Attn: President
With a copy to:
Symposium Corporation
410 Park Avenue
Suite 430
New York, New York 10022
Attn: President
If to Consultant, to:
The address of Consultant as set forth on the records
of the Company.
With a copy to:
S. Jarvin Levison
Arnall Golden & Gregory, LLP
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2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Any Notice, other than a Notice sent by registered or certified mail,
shall be effective when received; a Notice sent by registered or certified mail,
postage prepaid return receipt requested, shall be effective on the earlier of
when received or the third day following deposit in the United States mails. Any
party may from time to time change its address for further Notices hereunder by
giving notice to the other party in the manner prescribed in this Section.
(b) Entire Agreement. This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein. No representations,
oral or otherwise, express or implied, other than those contained in this
Agreement have been relied upon by any party to this Agreement.
(c) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
(d) Governing Law. This Agreement has been made and entered into in the
State of Georgia and shall be construed in accordance with the laws of the State
of Georgia.
(e) Captions. The various captions of this Agreement are for reference
only and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Attorneys' Fees. If any action or proceeding is brought to enforce
or interpret any provision of this Agreement, the prevailing party shall be
entitled to recover as an element of its costs, and not its damages, its
reasonable attorneys' fees, costs and expenses. The prevailing party is the
party who is entitled to recover its costs in the action or proceeding. A party
not entitled to recover its costs may not recover attorneys' fees. No sum for
attorneys' fees shall be counted in calculating the amount of a judgment for
purposes of determining whether a party is entitled to recover its costs or
attorneys' fees.
(h) Independent Contractor. It is the intention of the parties to this
Agreement that Consultant is, and shall be deemed to be, an independent
contractor with respect to the subject matter hereof, and nothing contained
herein shall be deemed or construed in
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any manner whatsoever as creating any partnership, joint venture or other
similar relationship between Consultant and the Company.
(i) Assignment. This Agreement and the rights hereunder may not be
assigned by either party (except by operation of law) without prior written
consent of the other party.
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(j) Tickets for_Events. For so long as Consultant is a consultant
pursuant to this Agreement, the Company shall acquire (if available) two tickets
to the Sunday round of the Masters Golf Tournament in Augusta, Georgia and four
season tickets to Philips Arena in Atlanta, Georgia. Consultant shall be in
charge of distribution of such tickets for business purposes (such as to
vendors, lead brokers, employees, consultants and advisors).
In Witness Whereof, the parties have executed this Agreement as of the
date first above written.
Direct Sales International, Inc.
By: /s/ Ronald Altbach
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Ronald Altbach, Chief Executive Officer
Symposium Corporation
By: /s/ Ronald Altbach
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Ronald Altbach, Chief Operating Officer
Richard Prochnow
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Richard L. Prochnow
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EXHIBIT 99.4
LOAN AGREEMENT
This Loan Agreement is made and entered into as of January 28, 2000 by
and among Symposium Corporation, a Delaware Corporation (the "Lender"), and
AmeriNet, Inc., an Oregon corporation (the "Borrower").
CCCCC. RECITALS
WHEREAS, Borrower has requested Lender to make a series of loans to
Borrower in the principal amount of $100,000 per month for a period of ten (10)
consecutive months, beginning on March 1, 2000. Such consecutive monthly loans,
which in the aggregate will be in an amount not to exceed $1,000,000, is
hereafter referred to individually and collective as the "Loan";
NOW, THEREFORE, in consideration of ten dollars ($10) and other
valuable consideration, the parties hereto agree as follows:
1. Loan. Lender shall make the Loan in ten (10) equal monthly
installments of $100,000 per installment, the first of such
installments to be made on March 1, 2000, with such subsequent
installments of $100,000 to be made on the 1st day of each
successive month thereafter and the last to be made on
December 1, 2000. Interest on the Loan shall accrue at a rate
of 8% per annum. Prior to and as a condition to the delivery
of each installment, Borrower shall deliver to Lender a
certificate in substantially the same form of Exhibit A,
attached hereto, evidencing Borrower's compliance with certain
relevant representations and warranties contained in that
certain Stock Purchase Agreement dated June 2, 1999 (and
terminated as of January __, 2000) by and among Lender,
Borrower, Richard Prochnow and David Kerlin. Notwithstanding
the termination of that Stock Purchase Agreement, the
certificate shall certify that such representations and
warranties are true and correct as of the date such
certificate is executed and delivered, which shall be not
prior to five nor later than one business day prior to the
date the Lender is obligated to make the installment. Unless
otherwise modified in writing by the Borrower and Lender, the
relevant representations and warranties for purposes of this
Loan Agreement shall be Sections 5.1, 5.2, 5.11, 5.13, 5.17,
5.22 and 5.24. In addition to these listed sections, Borrower
will represent and warrant that Borrower has not filed nor is
Borrower contemplating filing a petition for Bankruptcy, nor
is Borrower subject to an involuntary proceeding in
Bankruptcy. The Loan shall be evidenced by and repaid in
accordance with a Promissory Note executed by Borrower in the
form of Exhibit B attached hereto, dated as of the day of the
first disbursement by Lender to Borrower, and payable to the
order of Lender. Such Note and any and all
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amendments, extensions, modifications, renewals, restatements,
replacements and substitutions thereof and therefor are herein
referred to as the "Note."
2. Use of Proceeds. Borrower agrees that, without the consent of
Lender, Borrower will not use the proceeds of the Loan for any
purpose other than for the day-to-day operations and
management of the company.
3. Termination. This Loan Agreement shall terminate upon the
earlier of (i) one year from the date of the final installment
payment under this Note and (ii) the occurrence of a Financing
Event. A "Financing Event" shall mean: (i) a merger or
consolidation to which Borrower is a party; (ii) the sale of
all or a majority of the assets of Borrower; or (iii) the
receipt by Borrower after the date hereof of gross proceeds of
$2,000,000 or more from loans and the issuance of debt and/or
equity securities (excluding loans from the Lender). The
representations and warranties of Borrower shall survive
termination of this Agreement.
4. Prepayment. Borrower may prepay 100%, and not less than 100%,
of the principal of the Loan, together with the interest
thereon, without penalty or premium.
5. Assignment. Without the written consent of Lender, neither
this Agreement nor any interest herein may be assigned, nor
shall any assignment order be issued on Lender for any advance
or any part thereof, and Lender shall not be obligated to
recognize, accept or fulfill any such assignment or order.
This Agreement shall be binding on the legal representatives,
heirs, successors and assigns of the parties hereto.
6. Notices. Whenever any notice is required or permitted by the
terms of this Agreement, such notice will be deemed given when
deposited in regular United States Mail, postage prepaid, to
the parties, as follows:
To Borrower: AmeriNet, Inc.
Three Centerpointe Drive
Suite 125
Lake Oswego, OR 97035
Attention: David Kerlin
To Lender: Symposium Corporation
410 Park Avenue
Suite 830
New York, New York 10022
Attention: Ronald Altbach
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7. Governing Law. This Agreement and the Note shall be deemed
executed and delivered in the State of Oregon and shall, in
all regards, be governed by the laws (including the conflict
of laws rules) of the State of Oregon.
[The Remainder of This Page is Left Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Loan
Agreement as of the day and year first above written.
BORROWER:
AmeriNet, Inc.
By: /s/ David Kerlin
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David Kerlin, President
LENDER:
Symposium Corporation
By: /s/ Ronald Altbach
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Ronald Altbach, President
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