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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported) July 16, 1999
USA TALKS.COM, INC.
(Exact name of registrant as specified in charter)
Nevada 33-2474-LA 93-0915593
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4180 La Jolla Village Drive,
Suite 570, La Jolla, CA 92037
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (619) 546-0550
Not applicable
(Former name or former address, if changed since last report)
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ITEM 2. Acquisition Or Disposition Of Assets
On July 16, 1999, USA Talks.com, Inc., a Nevada corporation ("USAT"), all
of the assets of TrendMark, Inc. ("TMI"), a Delaware corporation, pursuant to
the terms of an Asset Purchase Agreement (the "Agreement"). In exchange for all
the assets of TMI, USAT issued an aggregate of 2,000,000 unregistered shares of
common stock, par value $0.001 per share, of USAT ("USAT Common Stock"), and
agreed to lend an aggregate total of $150,000 to TNI under the terms of a
Promissory Note. As a condition of making such a loan, and in order to secure
TMI's obligation under the Note, TMI's obligations shall be secured by a pledge
of 93,750 Shares having a value equal to $187,500 (based on the mutually agreed
value of $2.00 per share) and pursuant to the terms and conditions set forth in
a Stock Pledge Agreement.
The number of shares of USAT Common Stock issued in exchange for all the
assets of TMI was based on an arm's length negotiation between the parties
after considering the perceived value of TMI's assets and the market value of
shares of USAT Common Stock.
ITEM 7. Financial Statements And Exhibits
(a) Financial statements of business acquired.
To be filed by amendment within 60 days of this report.
(b) Pro forma financial information.
To be filed by amendment within 60 days of this report.
(c) Exhibits.
Exhibit Description
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Exhibit 2 Asset Purchase Agreement made and entered into as of
July 16, 1999 by and between USA TALKS.com, Inc.,
and TrendMark, Inc. Schedules, exhibits and similar
attachments to this Exhibit have not been filed; upon request,
USAT will furnish supplementally to the Commission
a copy of any omitted schedule.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
USA TALKS.com, Inc.
Date: July 30, 1999 By: /s/ Jack C. Alexander
Jack C. Alexander
Chief Financial Officer
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INDEX OF EXHIBITS
Exhibit Description
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Exhibit 2 Asset Purchase Agreement made and entered into as of July 16, 1999
by and between USA TALKS.com, Inc., and TrendMark, Inc.
Schedules, exhibits and similar attachments to this Exhibit have
not been filed; upon request, USAT will furnish supplementally to
the Commission a copy of any omitted schedule.
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of
June 29, 1999 (the "Agreement Date") by and between USA Talks.com, Inc., a
Nevada corporation ("USA Talks"), and Trendmark, Inc., a Delaware corporation
("Trendmark"). USA Talks and Trendmark are referred to collectively herein as
the "Parties."
RECITALS
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A. Trendmark is a company specializing in multi-level marketing
activities (the "Business").
B. In July 1998 Trendmark and USA Talks entered into a Letter of
Intent Agreement relating to various matters concerning the acquisition of
Trendmark by USA Talks.
C. Certain disagreements have arisen between USA Talks and Trendmark
with respect to their relationship and the Letter of Intent and the Parties
desire to resolve any remaining disputes between them and to consummate the
transaction on the terms indicated below.
D. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and subject to the conditions hereinafter set forth,
Trendmark desires to sell and USA Talks desires to purchase certain of the
assets used in the Business.
AGREEMENT
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NOW, THEREFORE, in consideration of the representations, warranties
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing hereunder (as defined in
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Section 2.1), Trendmark shall grant, sell, convey, assign, transfer and deliver
to USA Talks, upon and subject to the terms and conditions of this Agreement,
all right, title and interest of Trendmark in and to those assets of the
Business set forth on Schedule 1.1(a) attached hereto (the "Assets"). All other
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assets of Trendmark shall remain the property of Trendmark.
1.2 Agreement to Purchase. At the Closing hereunder, USA Talks shall
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purchase the Assets from Trendmark, upon and subject to the terms and conditions
of this Agreement and in reliance on the representations, warranties and
covenants of Trendmark contained herein, in exchange for the Purchase Price (as
defined in Section 1.3).
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1.3 The Purchase Price.
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(a) Purchase Price. The purchase price for the Assets (the
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"Purchase Price"), shall be 2,000,000 shares of USA Talks' Common Stock (the"USA
Talks Shares").
(b) Payment of Purchase Price. The USA Talks Shares shall be
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issued in definitive form to Trendmark at the Closing.
(c) Allocation of Purchase Price. The Purchase Price shall be
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allocated among the Assets acquired hereunder as provided for by USA Talks on
Schedule 1.3(c) hereof. USA Talks and Trendmark each hereby covenants and
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agrees that it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with the terms of this
Section 1.3(c), unless mutually agreed upon as provided herein.
1.4 No Assumption of Liabilities. Trendmark shall remain fully
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responsible and liable for all obligations and liabilities of Trendmark. USA
Talks does not in any way or manner assume or agree to become obligated to
satisfy any liability of Trendmark, except to the extent specifically set forth
herein.
ARTICLE II
CLOSING; ACTIONS AT CLOSING
2.1 The Closing. Subject to Section 6 below, the closing of the
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transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Gray Cary Ware & Freidenrich LLP, 4365 Executive Drive, Suite
1600, San Diego, California 92121 upon the signing of this Agreement (the
"Closing Date").
2.2 Actions at the Closing.
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(a) At the Closing, USA Talks shall deliver to Norwest Bank, as
Escrow Agent on behalf of Trendmark (the "Escrow Agent"):
(i) a certificate of the Secretary of USA Talks that the
execution, delivery and performance of USA Talks' obligation under this
Agreement have been duly and validly approved and authorized by the Board of
Directors of USA Talks;
(ii) a certificate representing the USA Talks Shares
registered in the name of Trendmark or the Escrow Agent, as determined by
Trendmark, and bearing the legend set forth in Section 35;
(iii) an copy of the Settlement Agreement and General
Mutual Release (the "Settlement Agreement") in the form of Exhibit A attached
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hereto executed on behalf of USA Talks; and
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(iv) a check payable to Trendmark in the amount of Sixty
Thousand Dollars ($60,000), which amount shall constitute a portion of the loan
contemplated by Section 5.2 hereof.
(b) At the Closing, Trendmark shall deliver to USA Talks:
(i) a certificate of the Secretary of Trendmark that the
execution, delivery and performance of Trendmark's obligations under this
Agreement have been duly and validly approved and authorized by the Board of
Directors of Trendmark;
(ii) a Bill of Sale in the form of Exhibit B attached
hereto;
(iii) an copy of the Settlement Agreement executed on
behalf of Trendmark; and
(iv) a promissory note in the form of Exhibit C hereto in
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the principal amount of Ninety Thousand Dollars ($90,000), a Stock Pledge
Agreement in the form of Exhibit D hereto and a certificate for 93,750 shares
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of common stock of USA Talks and a stock power signed on behalf of Trendmark
[and the Escrow Agent] representing the shares pledged as security for the
$90,000 advanced to Trendmark.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TRENDMARK
Trendmark represents and warrants to USA Talks as follows:
3.1 Organization, Standing and Power. Trendmark is a corporation
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duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, has all requisite power to own, lease and operate
its properties and to carry on its business as currently being conducted and as
currently proposed to be conducted, and is duly qualified to transact business
and is in good standing in each jurisdiction in which the nature of its
operations requires such qualification, except where the failure to so qualify
has not and will not have a material adverse effect on Trendmark.
3.2 Authority; No Conflicts.
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(a) Trendmark has all requisite power and authority to enter into
this Agreement and the Settlement Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Settlement Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Trendmark, its board of directors and its shareholders.
This Agreement and all other documents expressly required to be executed and
delivered by Trendmark hereunder (collectively, the "Transaction Documents")
have been or will be duly executed and delivered by Trendmark and constitute or
will constitute the valid and binding obligations of Trendmark, enforceable
against Trendmark in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
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moratorium or other similar laws affecting or relating to creditors' rights
generally, and general principles of equity.
(b) The execution and delivery by Trendmark of this Agreement and
the other Transaction Documents to which it is or will be a party do not, and
the consummation of the transactions contemplated hereby and thereby will not,
(i) conflict with, or result in any violation or breach of any provision of, the
charter documents of Trendmark, (ii) result in any violation or breach of or
constitute (with or without notice or lapse of time, or both) a default under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit under, any note, mortgage, indenture, lease,
contract or other agreement or obligation to which Trendmark is a party or by
which Trendmark or any of the Assets may be bound, or (iii) conflict with or
violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, Rule or regulation applicable to Trendmark, or any of
the Assets, except in the case of (ii) and (iii) above for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which would
not have a Material Adverse Effect on Trendmark or the Assets.
3.3 Title. Trendmark has good and marketable title to all of the
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Assets, free and clear of all mortgages, liens, pledges, charges or encumbrances
of any kind or character, except for (i) liens for current taxes not yet due and
payable and (ii) statutory liens imposed by law; provided, however, that
Trendmark shall have thirty (30) days to remove any mortgage, lien, pledge,
claim or encumbrance on any Assets.
3.4 Intellectual Property.
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(a) Trendmark owns the Assets, and upon transfer USA Talks will
own the Assets, in each case free and clear of all liens, claims or
encumbrances. No third party has any right to the Assets or any right to
restrict their use; provided, however, that Trendmark shall have thirty (30)
days to remove any lien, claim, encumbrance or restriction on the Assets.
(b) Trendmark has (i) not received notice that it has been sued
in any suit, action or proceeding which involves a claim of infringement of any
patent, trademark, service mark, copyright, trade secret or other proprietary
right of any third party affecting the Assets and (ii) no knowledge of any claim
challenging or questioning the validity or effectiveness of any license or
agreement relating to any Asset. Trendmark has at all times used commercially
reasonable efforts to protect its trade secrets and intellectual property rights
relating to the Assets and has not acted in such a manner as to cause the loss
of such trade secrets or intellectual property rights by their release into the
public domain.
(c) Trendmark has used its best efforts to cause each person
currently or formerly employed by Trendmark (including independent contractors,
if any) that has or had access to confidential information of Trendmark to
execute and deliver to Trendmark a confidentiality and non-disclosure agreement
in one of the standard forms of Trendmark.
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3.5 Investment Representations; Accredited Investor.
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(a) Trendmark has been advised that the issuance of the USA Talks
Shares in connection with this Agreement is expected to be effected pursuant to
an exemption from registration under the Securities Act of 1933, as amended (the
"Act"), and Trendmark and the Escrow Agent accordingly agree not to sell,
pledge, transfer or otherwise dispose of any USA Talks Shares issued pursuant to
this Agreement (including any disposition to the shareholders of Trendmark)
except pursuant to a registration statement filed under the Act for registration
of the USA Talk Shares issued pursuant to this Agreement.
(b) Trendmark and the Escrow Agent have been advised that USA
Talks will issue stop transfer instructions to its transfer agent with respect
to any USA Talks Shares issued pursuant to this Agreement, and that there will
be placed on the certificates representing such USA Talks Shares, or any
substitutions therefor, a legend stating in substance:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend), and USA Talks shall so instruct its transfer
agent, if a registration statement respecting the sale of shares has been
declared effective under the Act and the shares of USA Talks Common Stock have
been sold pursuant to such registration statement.
(c) Trendmark and the Escrow Agent will hold the USA Talks Shares
for investment for such person's own account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of the
Act.
(d) Trendmark and the Escrow Agent understand that the USA Talks
Shares have not been registered under the Act by reason of a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the investment intent as expressed herein.
(e) Trendmark has reviewed the USA Talks SEC Reports (as defined
below). Trendmark has received and has had the opportunity to review any
information about USA Talks reasonably requested.
3.6 Status of Trendmark. Trendmark is not insolvent and will not be
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rendered insolvent by this transaction. Trendmark is able to satisfy its debts
as they become due. Trendmark believes it is receiving fair value for the
Assets.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USA TALKS
USA Talks represents and warrants to Trendmark as follows:
4.1 Organization. USA Talks is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Nevada, has all
requisite corporate power to own, lease and operate its property and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction in which the failure to be so qualified would have a
material adverse effect on USA Talks. USA Talks is not in violation of any of
the provisions of its Certificate of Incorporation, Bylaws or other charter
documents.
4.2 Authority; No Conflict.
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(a) USA Talks has all requisite corporate power and authority to
enter into this Agreement and the other Transaction Documents to which it is or
will be a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the other Transaction
Documents to which USA Talks is or will be a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of USA Talks. This Agreement and the
other Transaction Documents to which USA Talks is a party have been or will be
duly executed and delivered by USA Talks and constitute or will constitute the
valid and binding obligations of USA Talks, enforceable in accordance with their
terms, except as such enforceability may be limited by bankruptcy laws and other
similar laws affecting creditors' rights generally and general principles of
equity. As of the date hereof, USA Talks does not contemplate availing itself of
any bankruptcy laws or similar laws affecting creditors rights generally and
general principles of equity with respect to the Transaction Documents to which
USA Talks is a party.
(b) The execution and delivery by USA Talks of this Agreement,
the other Transaction Documents to which it is or will be a party do not, and
the consummation of the transactions contemplated hereby and thereby will not,
(i) conflict with, or result in any violation or breach of any provision of the
Certificate of Incorporation or Bylaws of USA Talks, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default under, or give rise to a right of termination, cancellation
or acceleration of any material obligation or loss of any material benefit
under, any note, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which USA Talks is a party or by which it or any of
its properties or assets may be bound, or (iii) conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, Rule or regulation applicable to USA Talks or any of its properties
or assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which would
not have a Material Adverse Effect on USA Talks.
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4.3 SEC Filings; Financial Statements.
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(a) USA Talks has timely filed and made available to Trendmark
all publicly available forms, reports and documents required to be filed by USA
Talks with the SEC since December 31, 1998 (collectively, the "USA Talks SEC
Reports").
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the USA Talks SEC Reports, complied
as to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-QSB promulgated by the SEC) and
presented fairly or will present fairly, in all material respects, the
consolidated financial position of USA Talks and its subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Registration Rights. USA Talks hereby agrees that it will file,
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no later than July 31, 1999, with the Securities and Exchange Commission a
Registration Statement covering the sale or transfer of all of the USA Talks
Shares by the Escrow Agent. USA Talks shall also file registration or
qualification materials required under any applicable state securities
qualification statutes to enable the Escrow Agent to dispose of or transfer the
USA Talks Shares and USA Talks will use its best efforts to cause such
registrations or qualifications to become effective as soon as practicable. To
provide the Escrow Agent and any recipients of the USA Talks Shares with the
benefits of Rule 144, USA Talks agrees that it will timely file all documents
that USA Talk is required to file under the Securities Exchange Act of 1934, as
amended.
5.2 Loan to Trendmark. USA Talks agrees to make a loan to Trendmark
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not to exceed a cumulative total of $150,000. The parties acknowledge that an
advance of $30,000 has been previously made by USA Talks to Trendmark, and will
be included in the total principal amount of the Note. In addition, at Closing,
USA Talks shall deliver to Trendmark a check for Sixty Thousand Dollars
($60,000). Thereafter, within ten business days following Trendmark's provision
to USA Talks of a written request, but in no event later than September 30,
1999, USA Talks shall loan to Trendmark such additional amount as specified in
Trendmark's request (but not to exceed the cumulative amount of $150,000), and
which loan shall be repayable pursuant to a Promissory Note in the form set
forth at Exhibit C hereto (the "Note"). Further, as a condition to the making
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of such a loan, and in order to secure Trendmark's obligations under the Note,
Trendmark's obligations shall be secured by a pledge of 93,750 Shares having a
value equal to $187,500 (based on the mutually agreed value of $2.00 per share)
and pursuant to the terms and conditions set forth in the Stock Pledge Agreement
in the form set forth at Exhibit D hereto.
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5.3 Distributor Liability. The Parties agree to work together in
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good faith to eliminate or minimize distribution refund claims which have been
made or may be made in the future. USA Talks has previously provided the
following support to distributors: (i) crediting $160.00 for voice registration
and the first month's phone service, (ii) not charging for an agent ("TAP"
starter) kit, (iii) charging only $50.00 for voice registration for the
distributor/agent's customers (with the $50.00 payment received being rebated to
the distributor/agent). Distributors who accept this offer have been required to
sign a release of USA Talks and Trendmark. USA Talks acknowledges and agrees
that substantial changes to the terms of the TAP Program could be detrimental to
Trendmark and agrees to minimize any such changes until January 1, 2000, at
which time USA Talks may make any changes in its sole discretion. USA Talks may
continue this program or modify some or all of the terms of the support provided
in its discretion. USA Talks advises Trendmark that over 1,500 distributors have
accepted the support outlined above. Except as set forth above, Trendmark agrees
that it shall be solely liable for any and all refunds due to any of its
distributors arising out of the previous marketing efforts undertaken by
Trendmark and any of its distributors.
5.4 USA Talks Network. Trendmark and USA Talks will each use their
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good faith efforts to achieve a mutually satisfactory solution regarding the use
of the USA Talks network by Trendmark customers and distributors.
5.5 Consents. Trendmark shall use its best efforts to obtain all
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necessary lien releases, consents, waivers and approvals under its material
agreements, contracts, licenses or leases as may be necessary or advisable to
consummate the transactions contemplated by this Agreement. To the extent that
Trendmark's rights under any agreement, contract, commitment, or lease or with
respect to any Asset to be assigned to USA Talks hereunder may not be assigned
without the consent of another person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful, and Trendmark shall
obtain any such required consent(s) as promptly as possible. If any such
consent shall not be obtained or if any attempted assignment would be
ineffective or would impair USA Talks' rights under the Asset in question so
that USA Talks would not in effect acquire the benefit of all such rights,
Trendmark, to the maximum extent permitted by law and the Asset, shall act after
the Closing as USA Talks' agent in order to obtain for USA Talks the benefits
thereunder and shall cooperate, to the maximum extent permitted by law and the
Asset, with USA Talks in any other reasonable arrangement designed to provide
such benefits to USA Talks.
5.6 Access to Records. Following the Closing, Trendmark shall
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provide USA Talks or any of the authorized representatives of USA Talks with
reasonable timely access to any of Trendmark's records relating to the Assets to
the extent necessary for USA Talks to perform any reasonable procedure
reasonably related to its business.
5.7 Brokers or Finders. Each of USA Talks and Trendmark represents,
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as to itself, its respective subsidiaries and affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement; and
each of USA Talks and Trendmark agrees to indemnify and hold the other harmless
from and against any and all claims, liabilities or obligations with respect to
any fees,
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commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its affiliate.
5.8 Additional Agreements; Reasonable Efforts. Subject to the terms
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and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party and providing
any information reasonably required by the other party. In case at any time
after the Closing any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the USA Talks with full title to all of
the Assets, Trendmark shall take all such necessary action. USA Talks will use
its best efforts to consummate registration of the USA Talks Shares.
5.9 Expenses. Subject to Section 5.1, the parties shall each pay
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their own legal, accounting and financial advisory fees and other out-of-pocket
expenses related to the negotiation, preparation and carrying out of this
Agreement and the transactions herein contemplated.
ARTICLE VI
INDEMNIFICATION
6.1 Survival of Representations and Warranties. All of the
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representations and warranties shall survive the Closing.
6.2 Indemnification.
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(a) Subject to the terms and conditions contained herein,
Trendmark shall indemnify, defend and hold harmless USA Talks, its officers,
directors and employees and affiliates of USA Talks, and the respective
officers, directors and employees of such entities (all such persons and
entities being collectively referred to as the "USA Talks Group") from, against,
for and in respect of any and all losses, damages, costs and expenses (including
reasonable legal fees and expenses) ("Indemnified Loss") which any member of the
USA Talks Group may sustain or incur which are caused by or arise out of any
Material inaccuracy in or Material breach of any of the representations,
warranties or covenants made by Trendmark in this Agreement. The amount of any
Indemnified Loss of the USA Talks Group may be compensated through, at the
option of Trendmark, the payment of cash equal to such Indemnified Loss, or
through the return of that portion of the USA Talk Shares equal in value as of
the Closing Date to such Indemnified Loss. In no event will the USA Talks Group
be entitled to indemnification in an amount in excess of the Purchase Price. For
purposes of determining the amount of Indemnified Losses, no effect will be
given to the resulting tax benefit to any Indemnitee.
(b) Subject to the terms and conditions contained herein, USA
Talks shall indemnify, defend and hold harmless Trendmark, its officers,
directors and shareholders (the "Trendmark Group") from, against, for and in
respect of any and all Indemnified Losses which Trendmark may sustain or incur
which are caused by or arise out of any Material inaccuracy in or Material
breach of any other representations, warranties or covenants made by
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USA Talks in this Agreement. For purposes of determining the amount of
Indemnified Losses, no effect will be given to the resulting tax benefit to any
Indemnitee.
(c) As used in this Section 6.2, the word "Material" means any
change in value of more than One Hundred Thousand Dollars ($100,000).
6.3 Procedures for Indemnification.
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(a) As used in this Article VI, the term "Indemnitee" means the
member or members of the USA Talks Group or, as the case may be, the Trendmark
Group; and the term "Indemnifying Party" shall mean USA Talks in the case where
a member of the Trendmark Group is the Indemnitee, and Trendmark in the case
where a member of the USA Talks Group is the Indemnitee.
(b) A claim for indemnification hereunder (an "Indemnification
Claim") shall be made in writing by the Indemnitee to the Indemnifying Party.
(c) If the Indemnification Claim involves a Third Party Claim,
the procedures set forth in Section 6.4 hereof shall be observed by Indemnitee
and the Indemnifying Party.
6.4 Defense of Third Party Claims. Should any claim be made or suit
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or proceeding be instituted against an Indemnitee which, if prosecuted
successfully, would be a matter for which such Indemnitee is entitled to
indemnification under this Article VI (a "Third Party Claim"), the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) Indemnitee shall give the Indemnifying Party written notice
of any such Third Party Claim promptly after receipt by Indemnitee of notice
thereof, and the Indemnifying Party may, subject to the prior written consent of
the Indemnitee, cure such Third Party claim or undertake control of the defense
thereof by counsel of his or its own choosing reasonably acceptable to
Indemnitee. If Indemnifying Party has undertaken control of the defense of the
matter, Indemnitee may participate in the defense through his or its own counsel
at his or its own expense. In the event an Indemnifying Party desires to assume
the defense of the matter, the Indemnifying Party shall provide the Indemnitee
with reasonable assurances of the Indemnifying Party's ability to bear the costs
of such defense and any likely outcome. If, however, the Indemnifying Party
fails or refuses to undertake the defense of such Third Party Claim within
fifteen (15) days after written notice of such claim has been delivered to the
Indemnifying Party by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such Third Party Claim in any manner
which the Indemnitee deems is reasonable with counsel of its own choosing;
provided, however, that Trendmark may not settle a claim in a manner that would
materially adversely affect USA Talks' business or obligations pursuant to this
Agreement and USA Talks may not settle or claim in a manner that would
materially adversely affect Trendmark's business or obligations pursuant to this
Agreement. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such Third Party Claim,
make an Indemnification Claim as specified in Section 6.3(b), which shall be
deemed an Indemnification Claim that is not
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<PAGE>
a Third Party Claim for the purposes of the procedures set forth herein. Failure
of Indemnitee to furnish written notice to the Indemnifying Party of a Third
Party Claim shall not release the Indemnifying Party from his or its obligations
hereunder, except to the extent he or it is prejudiced by such failure.
(b) Indemnitee and the Indemnifying Party shall cooperate with
each other in all reasonable respects in connection with the defense of any
Third Party Claim, including making available records relating to such claim and
furnishing employees of USA Talks as may be reasonably necessary for the
preparation of the defense of any such Third Party Claim or for testimony as
witness in any proceeding relating to such claim.
(c) Unless the Indemnifying Party has failed to fulfill his or
its obligations under this Article VI, no settlement by Indemnitee of a Third
Party Claim shall be made without the prior written consent by or on behalf of
the Indemnifying Party, which consent shall not be unreasonably withheld,
conditioned or delayed. If the Indemnifying Party has assumed the defense of a
Third Party Claim as contemplated by this Section 6.4, no settlement of such
Third Party Claim may be made by the Indemnifying Party without the prior
written consent by or on behalf of Indemnitee, which consent shall not be
unreasonably withheld, conditioned or delayed.
ARTICLE VII
GENERAL PROVISIONS
7.1 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or within seventy-two (72) hours after being mailed by
registered or certified mail (return receipt requested) or sent via facsimile
(with confirmation of receipt) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to USA Talks, to:
4180 La Jolla Village Drive, Suite 570
San Diego, CA 92121
Attention: President
Fax: (619) 552-8904
Tel: (619) 546-0550
with a copy to:
Gray Cary Ware & Freidenrich LLP
4365 Executive Drive, Ste. 1600
San Diego, CA 92121
Attention: Douglas J. Rein
Fax: (619) 677-1477
Tel: (619) 677-1443
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<PAGE>
(b) if to Trendmark, to
E. Robert Gates
2220 Hickory Hill
Memphis, TN 38119
Fax: 901-754-9790
Tel: 901-754-9790
with a copy to:
c/o John Flynn, Esq.
Tiffany & Bosco
1850 North Central Avenue, Suite 550
Phoenix, AZ 85004
Fax: 602-255-0103
Tel: 602-255-6020
7.2 Interpretation. When a reference is made in this Agreement to an
--------------
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Each Party and its counsel has reviewed this Agreement and provided
revisions thereto; the Rule of construction to the effect that ambiguities are
construed against the drafter shall not be used in the interpretation of this
Agreement.
7.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original as against any party
whose signature appears on such counterpart and all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the Parties and delivered to the other
Parties, it being understood that all Parties need not sign the same
counterpart. This Agreement may be executed by facsimile signature as long as
the Party so executing commits to deliver an original signature within 20 days.
7.4 Severability. In the event that any provision of this Agreement,
------------
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The Parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
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<PAGE>
7.5 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits hereto and the other documents delivered pursuant hereto) constitutes
the entire agreement among the Parties concerning the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the Parties with respect to the subject matter hereof.
7.6 Governing Law; Venue and Jurisdiction. This Agreement shall be
-------------------------------------
governed and construed in accordance with the laws of the State of Nevada
without regard to any applicable conflicts of law principles. Any legal action
arising under this Agreement shall be resolved in the federal courts located in
the Dallas, Texas.
7.7 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by either of the Parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
7.8 Third Party Beneficiaries. Nothing contained in this Agreement
-------------------------
is intended to confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies or obligations
under, or by reason of this Agreement.
7.9 Attorney's Fees. If any Party shall commence any action or
---------------
proceeding against another party in order to enforce the provision hereof, or to
recover damages as the result of the alleged breach of any of the provisions
hereof, the prevailing party therein shall be entitled to recover all reasonable
costs incurred in connection therewith, including, but not limited to,
reasonable attorneys' fees.
IN WITNESS WHEREOF, USA Talks and Trendmark have caused this Agreement
to be signed by their duly authorized representatives.
USA TALKS.COM, INC.
By:_________________________________
Its:________________________________
TRENDMARK, INC.
By:_________________________________
Its:________________________________
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SCHEDULE 1.1
------------
Assets
1. List of all agents and distributors of Trendmark.
2. All rights to do business with these parties.
3. All data bases containing information related to these parties.
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SCHEDULE 1.3(c)
---------------
Allocation of Purchase Price
<TABLE>
<S> <C>
Agent/distributor list $ 350,000
Related Intellectual Property rights 350,000
Goodwill $2,800,000
----------
TOTAL $3,500,000
</TABLE>
Purchase Price = 2,000,000 shares of USA Talks Common Stock
15
