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): September 15, 1999
Data Systems Network Corporation
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation)
1-13424 38-2649874
(Commission File Number) (IRS Employer Identification No.)
34705 West Twelve Mile Road, Suite 300, Farmington Hills, Michigan 48331
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 489-8700
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On September 15, Data Systems Network Corporation and Information
Architects Corporation entered into a Confidential Termination Agreement and
Release (the "Termination Agreement"), terminating the proposed merger
between the two companies. The Termination Agreement is attached hereto as
Exhibit 99.1 and the joint press release issued by the companies on
September 15 is attached hereto as Exhibit 99.2. Each Exhibit is
incorporated herein by reference.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 Confidential Termination Agreement and Release, dated
September 15, 1999
Exhibit 99.2 Press Release, dated September 15, 1999
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.
September 30, 1999 DATA SYSTEMS NETWORK CORPORATION
By: /s/Michael W. Grieves
----------------------------------------
Michael W. Grieves
Chairman, President and Chief Executive
Officer
Exhibit 99.1
CONFIDENTIAL TERMINATION AGREEMENT AND RELEASE
This Confidential Termination Agreement and Release ("Termination
Agreement") is effective as of September 15, 1999 (the "Termination
Agreement Effective Date") by and between Information Architects
Corporation, f/k/a Alydaar Software Corporation and Alydaar Acquisition
Corporation (collectively "IA"), both a North Carolina corporation, having
an office at 4064 Colony Road, Charlotte, North Carolina 28211, Data Systems
Network Corporation ("Data Systems"), a Michigan corporation, having an
office at 34705 W. 12 Mile Road, Suite 300, Farmington Hills, MI 48331 and
the Data Systems directors and officers who are named on the signature
pages. Should a conflict exist among the provisions of the Agreements (as
defined below), Exhibits thereto, and this Termination Agreement, the
provisions of this Termination Agreement, shall control. Any terms in
initial capital letters that are not defined in this Termination Agreement
shall have the meaning set forth in the Agreements.
STATEMENT OF PURPOSE AND FACTS
Data Systems and IA entered into an Agreement and Plan of Merger,
dated January 31, 1999 ("Original Agreement"). In addition, Michael W.
Grieves, Diane L. Grieves, Richard R. Burkhart and Gregory D. Cocke, who are
parties to the Termination Agreement, (Michael W. Grieves, Diane L. Grieves,
Richard R. Burkhart and Gregory D. Cocke and Data Systems are referred to
collectively as the "Data Systems Releasors") each individually, and IA
entered into an Affiliate Agreement and a Voting Agreement, each dated
January 31, 1999 ("Ancillary Agreements"). Data Systems and IA also entered
into a letter, dated May 10, 1999 referencing a possible loan between Data
Systems and IA ("Letter of Intent") (the Original Agreement together with
all Ancillary Agreements and the Letter of Intent are referred to
collectively as the "Agreements").
Data Systems Releasors and IA wish to terminate the Agreements
because the possible merger, contemplated by the Agreements, is neither in
the strategic interest of the parties nor in the best interest of the
shareholders of Data Systems or AI.
AGREEMENT
For and in consideration of the undertakings of the parties and the
mutual covenants and agreement set forth in this Termination Agreement, and
for other good and valuable consideration, receipt and sufficiency of which
are hereby acknowledged:
1. Acknowledgment of Compromise. It is expressly understood,
acknowledged and agreed that by reason of entering into this Termination
Agreement, the parties do not admit any fact or liability of any type or
nature with respect to any matter, whether or not referred to herein
regarding the Agreements. This Termination Agreement is entered into by way
of compromise and settlement only to avoid the expense of litigation or
arbitration.
2. Confidentiality, Non-Disclosure. The parties agree that
they shall keep the terms of this Termination Agreement confidential and
shall not disclose any of the terms of this Termination Agreement to any
third party, except to the extent the parties may be required to disclose
the Termination Agreement (a) under Federal securities laws or (b) to its
employees or agents who have a need to know. If a party is required by law
to disclose the terms of this Termination Agreement, such party ("Disclosing
Party") shall promptly notify the other parties in writing, which
notification shall include the nature of the legal requirement and the
extent of the required disclosure. The Disclosing Party shall cooperate
with the other parties to preserve the confidentiality of such information
consistent with applicable law. In the event of a breach of the provisions
of this paragraph, the nonbreaching party shall have the right, in addition
to such other remedies, which may be available to it, to seek injunctive
relief enjoining such acts or attempts, it being acknowledged that monetary
remedies may be inadequate.
3. IA's Release of Data Systems.
(A) Compromise. Upon IA's execution of this Termination
Agreement, IA agrees to pay to Data Systems (a) in accordance with
the terms of the promissory note as attached as Exhibit A to this
Termination Agreement and incorporated by reference as if set forth
in full herein (i) principal in the amount of Two Hundred Fifty
Thousand Dollars ($250,000.00) in ten (10) equal monthly
installments and (ii) interest calculated and paid with each monthly
installment on the outstanding principal balance at a rate of ten
percent (10%) per annum as expense reimbursement in place of the
amounts set forth in the Letter of Intent, commencing October 1,
1999, and (b) Thirteen Thousand Ten and 14/100 Dollars ($13,010.14),
which has previously been invoiced to IA for equipment by Data
Systems by October 1, 1999 ("Outstanding Obligations").
(B) Release. IA hereby releases, forever discharges and acquits
Data Systems' Releasees (as defined below) and all other persons,
partnerships, firms, or corporations charged or chargeable with the
responsibility or liability from the Agreements, including but not
limited to any and all claims which have been asserted or could have
been asserted with respect to the Agreements forever from any and
all past, present and future manner of actions, losses, expenses,
judgements, causes of action, claims, debts, accounts, damages and
demands of every kind and nature, past, present and future, known,
unknown, asserted or unasserted, relating to or which might
hereafter result from the Agreements ("Data Systems' Release"). IA
intends that Data Systems' Release will apply to Data Systems, its
predecessors, successors, assigns, parent entities (direct or
indirect), subsidiaries, affiliates, shareholders, accountants,
legal representatives, financial advisors, officers, directors,
agents and employees, past, present and future and their legal heirs
and representatives (individually and collectively referred to as
"Data Systems' Releasee(s)"). IA also agrees not to institute
administrative proceedings or a lawsuit against the Data Systems'
Releasees in regard to any actions, claims, debts, accounts,
demands, causes of action, damages, losses, expenses or judgments,
and represents and warrants that no other person or entity has
initiated or will initiate such administrative proceedings or
lawsuit on behalf of IA. Nothing in the above waiver and release,
however, is intended to waive IA's rights to enforce this Agreement
or the December 2, 1998 confidentiality letter between IA and Data
Systems ("Confidentiality Agreement").
4. Data Systems Releasors' Release of IA. Except for any
obligations arising under the Outstanding Obligations, Data Systems
Releasors hereby release, forever discharge and acquit IA's Releasees (as
defined below) and all other persons, partnerships, firms, or corporations
charged or chargeable with the responsibility or liability from the
Agreements, including but not limited to any and all claims which have been
asserted or could have been asserted with respect to the Agreements forever
from any and all past, present and future manner of actions, causes of
action, losses, expenses, judgements, claims, debts, accounts, damages and
demands of every kind and nature, past, present and future, known, unknown,
asserted or unasserted, relating to or which might hereafter result from the
Agreements ("IA's Release"). Data Systems Releasors intend that IA's Release
applies to IA, its predecessors, successors, assigns, parent entities
(direct or indirect), subsidiaries, affiliates, shareholders, legal
representatives, financial advisors, officers, accountants, directors,
agents and employees, past, present and future and their legal heirs and
representatives (individually and collectively referred to as "IA's
Releasee(s)"). The Data Systems Releasors also agree not to institute
administrative proceedings or a lawsuit against the IA Releasees in regard
to actions, claims, debts, accounts, demands, causes of action, damages,
losses, expenses or judgments, and represent and warrant that no other
person or entity has initiated or will initiate such administrative
proceedings or lawsuit on behalf of any Data Systems Releasor. Nothing in
the above waiver and release, however, is intended to waive Data System'
Releasors' rights to enforce this Agreement, the Confidentiality Agreement
or the Outstanding Obligations.
5. Agreements' Termination and Press Release. Upon the
Termination Agreement Effective Date, the Agreements are terminated in their
entirety and shall be of no further force or effect, except for the
Confidentiality Agreement. The parties shall simultaneously issue a press
release with mutually agreed to wording as set forth in Exhibit B to this
Agreement following both parties' signatures of this Termination Agreement
and the promissory note.
6. Representations and Warranties.
(a) Data Systems Releasors warrant and represent to IA that:
(i) Data Systems Releasors have read this Termination Agreement in its
entirety, understand its terms and have voluntarily entered into this
Termination Agreement after consultation with legal counsel of its choice;
(ii) no promise or representation of any kind or character has been made to
Data Systems Releasors by any IA representative or by anyone acting for a IA
representative, except as is expressly stated in this Termination Agreement;
(iii) Data Systems Releasors' signatory is duly authorized to execute this
Termination Agreement; (iv) no person other than Data Systems Releasors,
have any interest in the release and settlement herein; (v) Data Systems
Releasors have not assigned, pledged or otherwise sold or transferred, in
any matter whatsoever, any right, title or interest in any claim which it or
they may have or have had against IA Releasees'; and (vi) Data Systems
Releasors know of no claims which may be asserted in the future against IA's
Releasees.
(b) IA warrants and represents to Data Systems that: (i) IA has
read this Termination Agreement in its entirety, understands its terms and
has voluntarily entered into this Termination Agreement after consultation
with legal counsel of its choice; (ii) no promise or representation of any
kind or character has been made to IA by any Data Systems representative or
by anyone acting for a Data Systems representative, except as is expressly
stated in this Agreement; (iii) IA's signatory is duly authorized to execute
this Termination Agreement; (iv) no person other than IA, has any interest
in the release and settlement herein; (v) IA has not assigned, pledged or
otherwise sold or transferred, in any matter whatsoever, any right, title or
interest in any claim which it or they may have or have had against Data
Systems Releasees; and (vi) IA knows of no claims which may be asserted in
the future against Data Systems' Releasees.
7. Termination Agreement Construction. The language of this
Termination Agreement has been approved by both parties. The language of
this Termination Agreement shall be construed as a whole according to its
fair meaning and neither of the parties hereto shall be deemed to be the
draftsman of this Termination Agreement in any action which may hereafter
arise between the parties. If any provision or portion of this Termination
Agreement shall be held for any reason to be unenforceable or illegal, that
provision shall be severed from this Termination Agreement and the remainder
of this Termination Agreement shall be valid and enforceable among the
parties just as if the provision held to be illegal or unenforceable had
never been included in this Termination Agreement.
8. Assignment, Binding Upon Successors. Neither Data Systems
Releasors or IA shall assign or transfer, whether pursuant to a change of
control or otherwise, this Termination Agreement without the prior written
consent of the other party. Notwithstanding the foregoing, this Termination
Agreement and the obligations contained herein shall be binding upon the
agents, servants, employees, officers, directors, shareholders,
subsidiaries, executors, administrators, successors and assigns
("Affiliates") of the parties and the promises and releases herein shall
inure to the benefit of the parties and their Affiliates to the extent
permitted by law.
9. Governing Law. THIS TERMINATION AGREEMENT SHALL BE DEEMED
TO HAVE BEEN MADE, ENTERED INTO AND GOVERNED BY THE LAWS (EXCLUDING CONFLICT
OF LAWS RULES) OF NORTH CAROLINA.
10. Notices. Every communication between the parties which is
required by this Termination Agreement shall be in writing and shall be
effective upon receipt. The notifying party shall address such
communications to the other party's President, with a copy to its General
Counsel, at the address on the first page of the Termination Agreement.
Changes of address shall be communicated to the other party by written
notice.
11. Non-Recruitment Of Employees. Each of Data Systems and IA
agree not to solicit for employment, a present employee of the other party
during the term of this Agreement and for one (1) year thereafter without
the other party's prior written consent. The parties agree that general
advertisements for positions shall not be considered a solicitation under
this paragraph.
12. Execution by Facsimile and Counterparts. The parties are
executing and exchanging facsimile copies of this Termination Agreement.
This Termination Agreement will be deemed to be fully executed and delivered
upon the receipt by the parties of counterpart facsimile copies executed by
the other parties. The parties also intend to execute and deliver manually
executed copies subsequent to the execution of the facsimile copies, however
this Termination Agreement shall be deemed to be fully executed and
delivered upon receipt of the respective facsimile copies, whether or not
the manually executed copies are executed and delivered.
13. Entire Agreement. This Termination Agreement contains the
entire agreement and understanding concerning the subject matter between the
parties and supersedes and replaces all prior negotiations, proposed
agreements, written or oral. The parties acknowledge that neither they nor
any agent or attorney has made any promise, representation, or warranty
whatever, express, implied, or statutory, not contained herein concerning
the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Termination Agreement by a duly authorized representative as of the
Termination Agreement Effective Date.
DATA SYSTEMS NETWORK INFORMATION ARCHITECTS
CORPORATION CORPORATION
BY: /s/ Michael W. Grieves BY: /s/ Robert F. Gruder
---------------------- --------------------
NAME: Michael W. Grieves NAME: Robert F. Gruder
TITLE: Chief Executive Officer TITLE: Chief Executive Officer
/s/ Michael W. Grieves /s/ Gregory D. Cocke
- ---------------------- ---------------------
Name: Michael W. Grieves Name: Gregory D. Cocke
/s/ Diane L. Grieves /s/ Richard R. Burkhart
- -------------------- -----------------------
Name: Diane L. Grieves Name: Richard R. Burkhart
EXHIBIT A
INFORMATION ARCHITECTS CORPORATION
PROMISSORY NOTE
Due July 1, 2000
$250,000.00 Charlotte, North Carolina
September , 1999
FOR VALUE RECEIVED, the undersigned, INFORMATION ARCHITECTS
CORPORATION (f/k/a Alydaar Software Corporation), a North Carolina
corporation (the "Company"), promises to pay to the order of DATA SYSTEMS
NETWORK CORPORATION, a Michigan corporation, (the "Holder"), (a) the
principal sum of Two Hundred Fifty Thousand Dollars ($250,000.00) in ten
(10) consecutive equal monthly installments of principal in the amount of
Twenty Five Thousand ($25,000.00) and (b) interest, in arrears, calculated
on the outstanding principle balance at a rate of ten percent (10%) per
annum, and paid on each of the payment dates (the "Payment Dates")
referenced in Schedule I attached hereto and made a part hereof; provided
that the last such installment shall be in the amount necessary to repay in
full the unpaid principal amount hereof.
Termination Agreement. This promissory note (this "Note") is issued
pursuant to the Confidential Termination Agreement and Release dated as of
the date hereof (as the same may be amended, supplemented or otherwise
modified from time to time, the "Termination Agreement"), between the
Company and the Holder. Capitalized terms used herein without definition
have the meanings assigned thereto in the Termination Agreement.
Interest. The Company promises to pay interest on the principal
amount remaining unpaid hereunder from the date hereof until said principal
amount becomes due and payable on each of the Payment Dates at a rate equal
to 10.00% per annum. Interest on this Note shall accrue from the date of
issuance until repayment of the principal and payment of all accrued
interest in full, shall be computed on the basis of a 360-day year of twelve
30-day months. Notwithstanding the foregoing provisions of this Section 2,
but subject to applicable law, upon the occurrence and during the
continuance of an Event of Default, the principal of and overdue interest on
this Note shall bear interest, from the date of the occurrence of such Event
of Default until such Event of Default is cured or waived, payable on demand
in immediately available funds, at the rate of 18% per annum.
Optional Prepayment.
(a) Upon notice given to the Holder as provided in
Section 3(b), the Company may at any time prepay all or any portion
of this Note by paying an amount equal to the outstanding principal
amount of this Note, or the portion of this Note noticed for
prepayment, together with interest accrued and unpaid thereon to the
date fixed for prepayment and all other amounts due under this Note.
(b) The Company shall give written notice of prepayment
of this Note or any portion thereof pursuant to Section 3(a) not
less than 3 nor more than 60 days prior to the date fixed for such
prepayment. Upon the giving of notice of prepayment by the Company,
the Company covenants and agrees that it will prepay, on the date
therein fixed for prepayment, this Note or the portion hereof so
noticed for prepayment, by paying an amount equal to the outstanding
principal amount hereof or the portion hereof so noticed for
prepayment together with interest accrued and unpaid thereon to the
date fixed for such prepayment and all other amounts due under this
Note.
(c) All such optional prepayments under Section 3 of
this Note shall be applied first to payment of default interest, if
any, then to payment of accrued interest and thereafter to payment
of principal in the inverse order of the scheduled maturities
thereof.
Defaults and Remedies.
(a) Events of Default. An "Event of Default" shall
occur hereunder if:
(i) the Company shall default in the payment of
the principal of this Note, when and as the same shall
become due and payable, whether at maturity or by
acceleration or otherwise; or
(ii) the Company shall default in the payment of
any interest on this Note, when and as the same shall become
due and payable; or
(iii) an involuntary or voluntary proceeding
shall be commenced or an involuntary petition shall be filed
in a court of competent jurisdiction seeking (A) relief in
respect of the Company or of a substantial part of its
property or assets, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or
similar law, (B) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or a similar official
for the Company or for a substantial part of its property or
assets, or (C) the winding up or liquidation of the Company;
and such proceeding or petition shall continue undismissed
for 60 days, or an order or decree approving or ordering any
of the foregoing shall be entered.
(b) Acceleration. If an Event of Default occurs under
Section 4(a)(iii), then the outstanding principal of and interest on
this Note shall automatically become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of
which are expressly waived. If any other Event of Default occurs
and is continuing, the Holder by thirty (30) days prior written
notice to the Company, may declare the principal of and interest on
this Note to be due and payable immediately. Upon any such
declaration of acceleration, such principal and interest shall
become immediately due and payable and the Holder shall be entitled
to exercise all of its rights and remedies hereunder whether at law
or in equity.
Suits for Enforcement. Upon the occurrence and continuation of any
one or more Events of Default, the Holder may proceed to protect and enforce
its rights and remedies hereunder by suit in equity, action at law or by
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Note or in aid of the exercise of
any power granted in this Note, or may proceed to enforce the payment of the
Note, or to enforce any other legal or equitable right of the Holders of the
Note.
Remedies Cumulative. No remedy herein conferred upon the Holder is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. To the extent permitted by applicable law, the Company and the
Holder waive presentment for payment, demand, protest and notice of
dishonor.
Transfer. Neither Holder or Company shall assign or transfer,
whether to a change of control or otherwise, this Note without the prior
written consent of the other party. Notwithstanding the foregoing, this Note
and the obligations contained herein shall be binding upon the permitted
assigns of the parties.
Payments. All payments of principal of and interest on this Note
shall be made in lawful money of the United States of America.
Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of North Carolina regardless of
conflicts of law principles.
Variation in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, this Note has been executed by the Company by
its duly authorized officer as of the day and year first above written.
INFORMATION ARCHITECTS CORPORATION
(f/k/a Alydaar Software Corporation)
By:
Name:
Title:
SCHEDULE I
Payment Dates
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October 1, 1999
November 1, 1999
December 1, 1999
January 1, 2000
February 1, 2000
March 1, 2000
April 1, 2000
May 1, 2000
June 1, 2000
July 1, 2000
Exhibit 99.2
INFORMATION ARCHITECTS CORPORATION AND DATA SYSTEMS NETWORK
CORPORATION ANNOUNCE TERMINATION OF THE PROPOSED MERGER
CHARLOTTE, N.C. and FARMINGTON HILLS, MI., Sept. 15th / PRNewswire/ - Data
Systems Network Corporation (OTC BB; DSYS) and Information Architects
Corporation (Nasdaq: IARC - news) announced a mutual agreement to terminate
the Agreement and Plan of Merger dated January 31, 1999 between the two
companies.
According to Information Architects' CEO Robert F. Gruder and Data Systems'
CEO, Michael Grieves, "During the course of completing the merger, it became
apparent that the business objectives of the two companies have changed, and
that the companies are moving in different strategic directions than
anticipated at the time the Agreement was entered into. Information
Architects is focused on becoming a major player in the Internet marketplace
through its Content Syndication and Aggregation offering, implementing the
patented Metaphoria technology. Data Systems has focused its efforts on
delivering professional services in the area of infrastructure design,
implementation, and management for governmental and corporate accounts.
Both companies believe the termination of the merger to be in the best
interests of their shareholders."
Forward Looking Statements
The foregoing statements made in this press release that are not historical
facts contain "forward-looking information" within the meaning of the
Private Securities Litigation Reform Act of 1995, and Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, both as amended, which can be identified by the use of forward-looking
terminology such as "may," "will," "anticipates," "expects," "projects,"
"estimates," "believes" or "continue," the negative thereof, other
variations of comparable terminology. Important factors, including certain
risks and uncertainties with respect to such forward-looking statements that
could cause actual results to differ materially from those reflected in such
forward-looking statements, include, but are not limited to, the impact of
competitive products and services, our ability to manage growth and
acquisitions of technology or people, diversification of our business, the
effect of economic and business conditions, including risks inherent in
international operations, the ability to attract and retain technical
personnel and other risks detailed from time to time in our SEC reports.
The companies assume no obligation to update the information in this
release.
