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) February 17, 2000
Alternate Marketing Networks, Inc.
______________________________________________________________________________
(Exact name of registration as specified in its charter)
Michigan 0-26624 38-2841197
______________________________________________________________________________
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
One Ionia, S.W., Suite 300, Grand Rapids, MI 49503
______________________________________________________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code 616-235-0698
Not applicable
______________________________________________________________________________
(Former name or former address, if changed since last report)
Item 1. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
1. Acquired certain assets of Total Logistics, Inc. on
February 17, 2000.
2. Assets acquired consist of contracts; furniture, fixtures and
equipment, and intellectual property rights. Furniture, fixtures
and equipment will continue to be used for logistics planning,
tracking, and transportation brokering.
3. Amount of consideration was $800,000.00 in cash and 40,816 shares
of the Company's Common Stock. Additionally, there is contingent
consideration of a maximum of $900,000 in cash if certain profit
levels are achieved.
4. The source of funds used for the cash portion of the purchase
price was cash on hand at the Company.
Item 3. Not Applicable.
Item 4. Not Applicable.
Item 5. Not Applicable.
Item 6. Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial Statements of Business Acquired.
1. To be filed by Amendment not later than April 28, 2000.
b. Pro Forma Financial Information.
1. To be filed by Amendment not later than April 28, 2000.
c. Exhibits
1. Asset Purchase Agreement
2. Consulting Agreement
3. Press Release
Item 8. Not Applicable.
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.
ALTERNATE MARKETING NETWORKS, INC.
Date: February 28, 2000 By /s/ Sandra J. Smith
Sandra J. Smith
Chief Financial Officer
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into this 17th day of
February, 2000, by and among Alternate Marketing Networks, Inc., a Michigan
corporation ("ALTM"), Kevin Powers (the "Founder"), and Total Logistics, Inc.,
a California corporation ("TLI").
W I T N E S S E T H :
WHEREAS, TLI is engaged in the business of logistics planning and
transportation brokering and related enterprises and activities (the
"Business"); and
WHEREAS, the Founder owns all of the issued and outstanding stock of TLI
(the "TLI Stock"); and
WHEREAS, ALTM desires to acquire, and TLI is willing to convey
substantially all of the assets of TLI to ALTM, free and clear of all liens,
claims and encumbrances whatsoever (except as specifically set forth herein),
on the terms and conditions set forth herein.
NOW, THEREFORE, in order to consummate the transaction set forth above and
in consideration of the mutual covenants, representations and warranties herein
contained, and subject to the conditions herein contained, the parties hereto
agree as follows:
1. Agreement to Purchase and Sell Assets. On the date of closing (as
defined in paragraph 4), ALTM agrees to acquire the Assets (defined below) from
TLI and TLI agrees to assign, transfer, convey and deliver the Assets to ALTM,
on the terms and subject to the conditions set forth in this Agreement. The
purchase and sale contemplated by this Agreement shall be effective as of
opening of business on February 18, 2000 (the "Effective Date").
(a) ALTM agrees to purchase, accept and acquire from TLI, and TLI
agrees to sell, transfer, assign, convey and deliver to ALTM, at the
Closing and as of the Effective Date, all right, title and interest in and
to all of the rights and assets, real, personal and mixed, tangible or
intangible, used directly or indirectly in or otherwise relating primarily
to the Business, whether now owned or hereafter acquired, as owned or held
by TLI, except as expressly excluded (as set forth in paragraph 1(d),
below). As used herein, the "Determination Date" means the date of this
Agreement, or if another date is specifically identified in a Schedule as
the Determination Date for purposes of the Assets described in such
Schedule, such other specified date. Without in any way limiting the
generality of the foregoing, the Assets shall include all of TLI's right,
title and interest in and to the following, wherever located:
(i) All of TLI's service, license, marketing and other similar
agreements and sales contracts used directly or indirectly in or
otherwise relating primarily to the Business (the "License
Agreements"), including, without limitation, the License Agreements
disclosed in Schedule 1(a)(i);
(ii) All of TLI's assets, goods, equipment and other property
used directly or indirectly in or otherwise relating primarily to the
Business (the "Equipment"), whether owned or leased, including,
without limitation, the Equipment and related leases (if any),
disclosed in Schedule 1(a)(ii);
(iii) All patents, trademarks, service marks, trade names,
domain names, copyrights, marketing data (including without
limitation data concerning actual and prospective customers), and
general intangibles (including registrations, licenses and
applications pertaining thereto); the name "Total Logistics" and all
variations thereof, and associated logos, marks, slogans, and
marketing materials; all technologies, methods, formulations,
databases, trade secrets, know-how, inventions and other intellectual
property now existing or under development; all Internet domain names
and registrations; all software, programs, data bases and other
intellectual property rights, whether owned or leased, pursuant to
which TLI operates the Business; and all computer software (including
technical documentation and user reference manuals and related object
and source codes), in each case as used directly or indirectly in or
otherwise relating primarily to the Business, including, but not
limited to, the software and other intellectual property disclosed in
Schedule 1(a)(iii) (collectively, the "Intellectual Property");
(iv) All office furniture and fixtures used directly or
indirectly in or otherwise relating primarily to the Business (the
"Office Furniture"). As of the Determination Date, the Office
Furniture consists of the items disclosed in Schedule 1(a)(ii);
(v) All contracts, agreements, licenses, commitments,
permissions, correspondence or other written or oral arrangements or
relationships entered into in connection with or otherwise relating
primarily to the Business (the "Contracts"), which items are
disclosed in Schedule 1(a)(v), to the extent not otherwise classified
as License Agreements or Insurance Policies;
(vi) All business and marketing records, including accounting
and operating records, asset ledgers, inventory records, reports,
budgets, personnel records, payroll records, customer lists, copies
of employment and consulting agreements, supplier lists, information
and data respecting leased or owned equipment, files, correspondence
and mailing lists, advertising materials and brochures, and other
business records used directly or indirectly in or otherwise relating
primarily to the Business, in whatever form they exist (the "Business
Records");
(vii) All governmental approvals, authorizations,
certifications, consents, variances, permissions, licenses and
permits to or from, or filings, notices or recordings to or with,
U.S. federal, state and/or local governmental authorities, as well as
states and jurisdictions outside of the U.S. (the "Authorizations"),
as used directly or indirectly in or otherwise relating primarily to
the Business, but subject as to the reassignability to ALTM. As of
the Determination Date, the Authorizations consist of the following
disclosed in Schedule 1(a)(vii);
(viii) All insurance and reinsurance, surety, bonding or
indemnity policies, binders or contracts, and the benefits of any
prior insurance coverage to the extent still available, as
established or obtained with respect to the Business or the Assets
(the "Insurance Policies"). As of the Determination Date, the
Insurance Policies consist of the items disclosed in Schedule
1(a)(viii); and
(ix) All claims TLI may have against any person relating to or
arising from the Assets or the Business, including without limitation
rights to recoveries for damages or defective goods, to refunds,
insurance claims and choses in action ("Claims"), but not including
any Claims under or in connection with the Excluded Assets.
(b) Although the Schedules to this Agreement are intended to be
complete, to the extent any rights or assets of TLI primarily relate to
the Business or are otherwise necessary for the ownership and use of the
Assets and the conduct of the Business, but are not properly itemized or
do not appear in the applicable Schedules where required, then, unless
this Agreement otherwise provides directly for ALTM to provide for or
obtain such rights or assets in a different way, or unless such rights or
assets are specifically included in Excluded Assets, the general language
of paragraph 1(a) shall govern and such rights and assets shall
nonetheless be deemed transferred to ALTM on the Effective Date.
(c) TLI agrees to convey to ALTM fee simple, good, marketable and
unencumbered lien free title to all of the Assets by appropriate documents
of transfer and sale, including such warranty bills of sale, endorsements
and assignments, and other good and sufficient instruments of bargain and
sale, in such form as shall be approved and deemed appropriate by legal
counsel for ALTM.
(d) Notwithstanding the foregoing, the Assets shall not include any
of the following: certificate of incorporation, minute books, stock books,
tax returns, books of account or other records having to do with corporate
organization of TLI; the rights which accrue or will accrue to TLI under
this Agreement; the rights to any of TLI's claims for any federal, state,
local or foreign tax refunds; or the assets, properties or rights
disclosed in Schedule 1(d) (the "Excluded Assets").
2. Purchase Price. The total consideration (the "Purchase Price") for the
Assets shall be four times the average of the actual annual operating profit of
the Business for the first three fiscal years following the Closing Date
(estimated at $450,000 per year before incentive bonus, payable (if any) under
the Consulting Agreement discussed in Section 5), calculated in accordance with
the example shown on Schedule 2.1; provided, however, that the Purchase Price
shall be not more than $1,800,000 and not less than $900,000. The Purchase
Price shall be paid at the Closing in the form of cash in the amount of
$800,000. The Purchase Price includes shares of the common stock of ALTM (the
"ALTM Stock") in an amount described on Schedule 2.2, which shall be delivered
to TLI within ten (10) business days following the Closing Date. The Balance
Due (if any), as described on Schedule 2.2, shall be paid in cash on the date
set forth on Schedule 2.2. Notwithstanding the foregoing, no Balance Due shall
be due or owing if the Consulting Agreement is terminated prior to the date for
payment of the Balance Due, as set forth on Schedule 2.2, (a) by the Consultant
or (b) by the Company in accordance with the terms of the Consultant Agreement,
but only after expiration of the time to cure and/or remedy as provided for in
the Consulting Agreement. Further, in the event that the Audited Statements
(defined below) include any material adjustment or adjustments that indicate
that the profits of the Business relied upon by ALTM in determining the
Purchase Price have been overstated by TLI, ALTM shall have the right to offset
the Balance Due or the amount of the fees paid under the Consulting Agreement
dollar for dollar by the amount of such overstatement; provided, that for
purposes of this paragraph 2, "material" adjustment shall be any adjustment or
adjustments totaling $5,000 or more in the aggregate, but shall not include any
adjustment or adjustments resulting from a conversion from a cash to accrual
basis of accounting. The parties agree that the Purchase Price represents the
fair market value of the Assets. The Purchase Price shall be allocated among
the Assets acquired hereunder as disclosed on IRS Form 8594, which shall be
attached as Schedule 2.3. TLI, Founder and ALTM each hereby covenants and
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
Agreement and Schedule 2.4.
3. Liabilities. ALTM agrees that:
(a) It shall assume and pay in a timely fashion and be responsible
for only the specific obligations and liabilities of TLI (the
"Liabilities") that arise out of the Business or the Assets and that are
specifically identified below (the "Assumed Liabilities") or are
specifically assumed by any other covenant, agreement or indemnity of ALTM
in this Agreement. Subject to the express exclusions disclosed in
paragraph 3(b), the Assumed Liabilities shall include only the following:
(i) Contracts. All payment and performance obligations arising
after the Effective Date and relating to the License Agreements, and
the Contracts, except to the extent attributable to (A) any breach or
default by TLI under any of the same on or before the Determination
Date, or (B) any material liability or obligation outside the
ordinary course of business not disclosed by TLI pursuant to this
Agreement, insofar as disclosure thereof is required hereunder and
ALTM does not receive property or services of substantially
equivalent value in respect of such liability or obligation;
(b) Liabilities Not Assumed. Without limitation, ALTM shall not
assume or be responsible for any of the following liabilities or
obligations (the "Excluded Liabilities"):
(i) any liability or similar claim for injury to person,
business or property, regardless of when made or asserted, which
arises out of or is based upon any express or implied representation,
warranty, agreement or guarantee made by TLI, or alleged to have been
made by TLI, or which is imposed or asserted to be imposed by
operation of law, in connection with any service performed or product
sold or leased by or on behalf of TLI on or prior to the Closing
Date, including without limitation any claim relating to any product
delivered in connection with the performance of such service and any
claim seeking recovery for consequential damages, lost revenue or
income;
(ii) sales or use taxes, recapture taxes, other taxes,
assessments and penalties (A) payable with respect to the Business,
Assets, properties or operations of TLI or any member of any
affiliated group of which TLI is a member for any period prior to the
date hereof, or (B) incident to or arising as a consequence of the
negotiation or consummation by TLI, or any member of any affiliated
group of which TLI is a member, of this Agreement and the
transactions contemplated hereby. All sales taxes, transfer taxes,
documentary stamp taxes and other similar assessments relating to the
sale and transfer of the Assets pursuant to this Agreement shall be
paid by ALTM;
(iii) any liability or obligation under or in connection with
the Excluded Assets;
(iv) any liability or obligation of TLI of any kind, known or
unknown, contingent or otherwise, not either enumerated as an Assumed
Liability in paragraph 3(a) or resulting from any other covenant,
agreement or indemnity of TLI in this Agreement and instruments to be
executed and delivered by TLI;
(v) any liability or obligation resulting from violations of
any applicable laws or regulations by TLI prior to the Determination
Date or from infringement of third-party rights or interests;
(vi) any employee liabilities relating to present and past
employees of the Business with respect to plans, programs, policies,
commitments and other benefit entitlement established or existing on
or prior to the Closing Date (whether or not such liabilities are
accrued or payable at Closing, and whether or not such liabilities
are contingent in nature), including:
(A) any liability or obligation for workers' compensation;
(B) any current or future liabilities to employees or
their dependents arising on, before or after the Closing, and
their dependents;
(C) any current or future liabilities for benefits that
may have been accrued or earned by any employees associated with
the Business on or before Closing under any pension plans
relating to service prior to the Closing Date;
(D) any current or future liabilities for claims incurred
prior to Closing and related expenses with respect to any
employees associated with the Business under any welfare or
disability plans established or existing at or prior to Closing,
regardless of when filed with ALTM, TLI, or the claims
administrator for any such plan;
(E) any retrospective premium on pension, savings, thrift
or profit-sharing plan contribution relating to any employees
associated with the Business incurred or accrued prior to the
Closing Date, regardless of when invoiced or recorded; and
(F) any monetary liability for severance payments that may
arise at any time in favor of any of TLI's employees under any
plan, program, policy, commitment or any other benefit
entitlement, provided such monetary liability relates to periods
of employment prior to the Closing;
(vii) any Litigation (as defined herein) pending or threatened
against TLI or the Assets, if the cause of action or activities
giving rise to such litigation arise or accrue prior to the Closing
Date;
(viii) any liability or obligation that under generally
accepted accounting principles ("GAAP") would be required to be
accrued and reflected in TLI's most recent balance sheet furnished
to ALTM before the Closing Date, but is not included therein,
regardless of the materiality of such items individually or in the
aggregate;
(ix) any liability or obligation of TLI arising or incurred in
connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby and fees and
expenses of counsel, accountants and other experts (except as
provided in paragraph 7(e));
(x) any liability or obligation of TLI arising or incurred in
connection with any securities of TLI, including, but not limited to,
the offer or sale of any securities by TLI, the repurchase by TLI of
any of its securities from its shareholders, and the issuance or
payment of any distributions and/or dividends by TLI to its
shareholders; and
(xi) any liability or obligation of TLI arising or incurred in
connection with any non-disclosure, confidentiality, no-shop,
standstill or similar agreements which TLI or any of its officers,
directors, shareholders, employees, or agents may have entered into
prior to the date hereof.
4. Closing. The consummation of the transaction (the "Closing") shall be
effected by the following actions. On the date of the Closing (the "Closing
Date"), TLI shall deliver to ALTM the instruments of conveyance specified in
paragraph 1(c). In addition, the parties shall deliver the other documents and
instruments provided for by this Agreement on the Closing Date. On the
Effective Date, TLI shall deliver to ALTM the unrestricted and sole possession
of the Assets. The Closing of the transactions set forth herein shall occur at
the offices of Moss & Barnett, A Professional Association, and the Closing Date
shall be February 17, 2000, or at such other time and/or place as the parties
hereto may agree. ALTM may terminate this Agreement at any time prior to
Closing by written notice to TLI if ALTM determines, through its due diligence
review or otherwise, that any representation or warranty of TLI is untrue as of
the date of this Agreement, or as of the date of Closing, or that TLI or the
Founder cannot perform its or his covenants to be performed prior to or after
the date of Closing.
5. Status of Founder following Closing. Following the Closing, TLI shall
become an independent contractor of ALTM. TLI will, among other things, train
the employees of ALTM in the operation of the Business.
6. Consulting Agreement. At Closing, the Founder and TLI will execute
and deliver a Consulting Agreement (the "Consulting Agreement") in the form
attached hereto as Schedule 5. Delivery of the Purchase Price, and the
purchase of the Assets by ALTM, is expressly conditioned upon the concurrent
delivery at Closing of the Consulting Agreement.
7. Representations, Warranties and Covenants of TLI and the Founder.
TLI and the Founder jointly and individually represent and warrant the
following to ALTM:
(a) TLI is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has the requisite
power and authority to carry on its business and enter into this
Agreement. TLI is qualified and in good standing in each jurisdiction in
which it conducts business.
(b) As of the date of this Agreement, at Closing and as of the
Effective Date, the Founder is and will be the sole record and beneficial
owner of all the TLI Stock and TLI is and will be the owner of all of the
Assets, free and clear of all liens, encumbrances, equities or claims
(except for the Assumed Liabilities and Excluded Liabilities set forth in
the Schedules to this Agreement).
(c) All authorizations, approvals and consents necessary for the
execution and delivery by TLI and the Founder of this Agreement and for
the consummation of the transaction contemplated hereby have been given,
and TLI and the Founder have full right, power and authority to execute,
deliver and perform this Agreement and the documents and instruments
required hereby. No consent, approval, or waiver by any third party is
necessary for delivery of good and marketable title to the Assets, free of
all liens and encumbrances, by the Founder and TLI to ALTM at the Closing
and on the Effective Date, except as specifically noted on Schedule 7(c).
(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate any
law, rule or regulation or court or administrative order, or result in a
material breach or violation of, or constitute a material default (or
event which with notice or lapse of time, or both, would constitute a
default) under any material agreement or instrument or any decree,
judgment or order to which TLI or the Founder is a party or by which
either of them or their properties may be bound.
(e) The balance sheets of TLI as of December 31, 1998, and December
31, 1999, and the related statements of income and retained earnings for
the twenty-four (24) month period ended December 31, 1999 (the "Financial
Statements") delivered to ALTM present fairly the financial position of
TLI at such dates and the results of operations of TLI for such periods in
all material respects. All liabilities of TLI, actual or contingent, have
been reported in the Financial Statements. Not later than 60 days
following the Closing Date, TLI shall provide to ALTM financial
statements, audited by PricewaterhouseCoopers LLP at the expense of ALTM
(except as provided below) and unaudited financial statements which meet
the requirements of Regulation S-X of the Securities and Exchange
Commission in respect of "an acquired business" (the "Audited
Statements"). If the Closing does not occur for a reason other than a
default by ALTM under this Agreement, TLI shall reimburse ALTM for all
costs and expenses incurred with respect to the Audited Statements.
(f) All of the Contracts, Insurance Policies and License Agreements
are valid and binding obligations of TLI and the other parties thereto
(the "Contract Parties") in accordance with their respective terms and
conditions. TLI and each of the Contract Parties are current in their
performance and there are no material liabilities or adverse claims
arising from any breach or default of any provisions of any such
Contracts. True and complete copies of all of the Contracts and any
amendments thereto have been made available to ALTM.
(g) As of the Closing Date and the Effective Date, the Equipment,
normal wear-and-tear and obsolescence excepted, is in good condition and
working order and TLI has good and marketable title or good and marketable
leasehold interest, as the case may be, free and clear of all claims,
liens and encumbrances, to all such Equipment, except as set forth on
Schedule 7(g), and except for Equipment which may be sold or disposed of
in the ordinary course of business. True and complete copies of all
leases or other agreements pertaining to the Equipment and any amendments
thereto have been made available to ALTM.
(h) TLI and Founder are in compliance in all material respects with
all federal, state and municipal laws, ordinances, rules and regulations
relating to its properties and the operation or conduct its business. All
required federal, state, provincial and local tax returns, delinquent
taxes, penalties, and interest concerning TLI and Founder have been filed
and paid, or will be paid on or before the date that payment is due, and
are correct and complete. All state and federal tax liens for unpaid
taxes shall be discharged and released within 30 days after the Closing.
There are no material legal actions, suits or administrative or
governmental proceedings existing or pending which affect TLI.
(i) Since inception, (i) TLI has been operated in the normal course
with due care to the preservation of TLI and its prospects, and (ii) TLI
has not incurred any debt or liabilities, paid any obligations or
liabilities, made any payments other than in the usual and ordinary course
of business, and has not entered into any transactions other than in the
usual and ordinary course of business. Since the inception of TLI, the
Founder and the managers of TLI have conducted its business with a view to
establishing a reputation for fair dealing and high ethical standards, and
none of TLI, the Founder, or any manager of TLI has engaged in or promoted
any unethical conduct (whether or not in violation of law), including
without limitation, espionage; sabotage; bribery; false or misleading
accounting, invoicing or revenue recognitions; kickbacks, pay-offs, or
undisclosed compensation for referrals of business; or other business
practices which would tend to damage the reputation and/or credibility of
TLI.
(j) There exists no default in the payment of any principal or
interest on any indebtedness of TLI.
(k) TLI owns all of the Intellectual Property and all other
proprietary information used by TLI in the conduct of the Business and all
such Intellectual Property is included in the Assets. Schedule 1(a)(iii)
sets forth all domestic and foreign patents, trademarks, service marks,
trade names and copyrights, and all applications therefor and
registrations thereof, which relate to and are included in the
Intellectual Property.
(l) No significant customer or account of TLI has indicated that it
intends to terminate or diminish its relationship with TLI or materially
alter the volume of purchases from TLI by reason of the consummation of
the transaction contemplated hereby or otherwise.
(m) Neither TLI nor the Founder is aware of any claim of
infringement or invalidity relating to TLI's proprietary computer
software, source code, object code, or software program documentation and
software designs described on Schedule 7(m) (the "Proprietary Products").
(n) The Proprietary Products are the sole property of TLI and were
developed for its exclusive use, license, or sale.
(o) The Proprietary Products will perform according to the system
specifications as defined in system's printed documentation attached
hereto as Schedule 7(o) and are Y2K Compliant (as that term is defined on
Schedule 7(o)).
(p) The Proprietary Products do not contain any virus or other code
which will in any way damage, alter or destroy ALTM's other software or
adversely affect the operation of ALTM's software systems.
(q) Except as set forth on Schedule 7(q), the Proprietary Products
do not contain any fuses, time bombs, or any other internally or
externally activated disabling devices, routines, or viruses.
(r) The Proprietary Products are owned by TLI free and clear of all
claims, liens, licenses, and/or encumbrances and ALTM will become the
record and beneficial owner of the Proprietary Products upon purchase of
the Assets as contemplated by this Agreement.
(s) None of the Proprietary Products infringes any proprietary
rights of any third party.
(t) The Proprietary Products are compatible among themselves and
with ALTM's currently owned or licensed software and with ALTM's current
user environment.
(u) Except for Power's ownership of a 25% interest in Impact
Transportation, Inc., TLI has no subsidiaries and neither TLI nor the
Founder is a participant in, or a shareholder or member of, any
partnership, joint venture, corporation, unincorporated association,
limited liability company, limited liability partnership, business trust,
or any other entity.
(v) TLI and the Founder have sufficient information about the
business and affairs of ALTM to enable them to independently evaluate this
transaction.
(w) TLI and the Founder understand that the ALTM Stock to be issued
pursuant to this Agreement has not been registered under the Securities
Act of 1933, as amended (the "Act"), and that ALTM is issuing the ALTM
Stock to TLI in reliance upon the exemption from the registration
requirements of the Act contained in paragraph 4(2) of the Act. TLI and
the Founder further acknowledge that the ALTM Stock must be held for
investment and not for resale. TLI and the Founder acknowledge that ALTM
has no obligation to assist in or facilitate the resale of the ALTM Stock
by registration under the Act or otherwise.
(x) TLI and the Founder shall promptly and fully assist and
cooperate with ALTM in obtaining transfer to ALTM, of public record, all
copyrights, trademarks, service marks, patents and pending applications
for the same relating to the Proprietary Products, the other Intellectual
Property, and the Business.
(y) To the best knowledge of the Founder and TLI, neither this
Agreement nor any other instrument, document or representation furnished
to ALTM pursuant to this Agreement contains or will contain any false
statement of a material fact or a misrepresentation or omits or will omit
to state a material fact necessary and in order to make statements
contained herein or therein not misleading.
(z) All of the representations and warranties of TLI and Founder
shall be true and correct as of the Closing Date and the Effective Date.
8. Representations, Warranties and Covenants of ALTM. ALTM represents
and warrants to the Founder that:
(a) ALTM is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan, and has the
requisite power and authority to carry on its business and enter into this
Agreement.
(b) All authorizations, approvals and consents necessary for the
execution and delivery by ALTM of this Agreement and for the consummation
by ALTM of the transaction contemplated hereby, have been given, and each
has full right, power and authority to execute, deliver and perform this
Agreement.
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate any
law, rule or regulations or court or administrative order, or result in a
breach or violation of, or constitute a default (or event which with
notice or lapse of time, or both, would constitute a default) under any
agreement, instrument, decree, judgment or order to which the Founder is a
party or by which it may be bound.
(d) The shares of ALTM Stock to be issued to TLI pursuant to this
Agreement has been or will be duly and validly issued in accordance and
compliance with all applicable laws, rules and regulations and are, or
will be, fully paid and nonassessable.
(e) To the best knowledge of ALTM, neither this Agreement nor any
other instrument, document or representation furnished to the Founder
pursuant to this Agreement contains or will contain any false statement of
a material fact or a misrepresentation or omits or will omit to state
a material fact necessary and in order to make statements contained herein
or therein not misleading.
9. Indemnification.
(a) TLI and the Founder, jointly and severally, shall indemnify and
hold ALTM harmless against any loss, costs, expense, deficiency, liability
or damage incurred by Buyer from:
(i) The failure to disclose a material fact or facts or the
material incorrectness of any representation made by TLI and/or the
Founder in this Agreement, the material breach of any warranty of TLI
and/or the Founder contained in this Agreement, or the nonfulfillment
by TLI or the Founder of any material agreement or covenant made by
them in this Agreement;
(ii) Any material liabilities of TLI for which ALTM becomes
liable, whether accrued, absolute, contingent or otherwise, and
whether due or to become due and not disclosed to ALTM by TLI;
(iii) Any material liabilities, debts or obligations of TLI
arising out of or having to do with the operation of TLI prior to the
Effective Date;
(iv) Any action based on a claim that the Proprietary Products
or any of the other Intellectual Property infringes a copyright in
the United States or Canada, a United States or Canadian patent, or
wrongfully employ any trade secret or proprietary information of any
third party; and
(v) Any and all actions, suits, proceedings, demands,
judgments, costs and legal and other expenses incident to any of the
matters referred to in this paragraph, or any claims with respect
thereto.
(b) ALTM agrees to indemnify and hold TLI and the Founder harmless
against any loss, cost, expense, deficiency, liability or damage incurred
by TLI and the Founder arising from:
(i) The breach of any warranty of ALTM contained in this
Agreement, or the wrongful nonfulfillment by ALTM of any agreement or
covenant made by it in this Agreement; and
(ii) Any and all actions, suits, proceedings, demands,
judgments, costs and legal and other expenses incident to any of the
matters referred to in this paragraph, or any claims with respect
thereto.
(c) With respect to matters involving third party claims:
(i) If any third party shall notify any party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against another party (the
"Indemnifying Party") under this paragraph 9, then the Indemnified
Party shall notify the Indemnifying Party thereof in writing within
thirty (30) days, provided that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) that the Indemnifying Party thereby is
prejudiced.
(ii) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice satisfactory to the Indemnified Party so long as (a) the
Indemnifying Party notifies the Indemnified Party in writing within
ten business days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party in accordance with this paragraph 9 with respect to
the Third Party Claim, and (b) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with paragraph
9(c)(ii) above, (a) the Indemnified Party may retain separate
co-counsel at its sole cost and expense, (b) the Indemnified Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (c) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) If the Indemnifying Party does not conduct the defense of
the Third Party Claim in accordance with paragraph 9(c)(ii) above,
then (a) the Indemnified Party may assume the defense of the Third
Party Claim with counsel which shall be reasonably satisfactory to
the Indemnifying Party, at the expense of the Indemnifying Party, (b)
the Indemnified Party shall act reasonably and in accordance with its
good faith business judgment and shall not effect any settlement
without the consent of the Indemnifying Party, which consent shall
not be withheld or delayed unreasonably, and (c) the Indemnifying
Party shall be entitled to participate in such defense with its own
counsel and at its own expense.
(d) All of the representations, warranties, covenants and agreements
contained in this Agreement and in any certificate, schedule, document or
other writing delivered pursuant to this Agreement have been relied upon
and shall survive for one year following the Closing, and shall thereafter
be of no further force or effect, except as to claims for indemnification
timely made pursuant to this paragraph 9 which shall survive until
resolved or judicially determined.
10. Right of Offset. Notwithstanding anything set forth herein to the
contrary, and without limiting any other remedy which may be available to ALTM
at law or in equity for any breach by TLI or the Founder of this Agreement or
the Consulting Agreement, ALTM may reduce and offset the Balance Due, or any
portion thereof, and any and all amounts due and payable or which may become
due and payable under the Consulting Agreement, by any amounts owed to ALTM
by TLI or the Founder pursuant to paragraph 9. Further, ALTM may deduct from
the Balance Due an amount equal to $100.00 for each day of delinquency in
delivery of the Audited Statements, but only if such delinquency is due solely
to factors within the control of TLI or the Founder.
11. Performance Pending Closing. TLI and the Founder shall give ALTM and
its officers and agents, upon reasonable notice, full access during reasonable
hours to all of the books, records, contracts, commitments and agreements of
TLI and of the Founder (to the extent related to TLI) as any of such officers
or agents shall reasonably request. Any information obtained by ALTM will be
treated as confidential and ALTM will take all necessary steps to ensure that
the information gained by it is restricted to those of its employees that need
to have the information in order to carry out the transactions contemplated by
this Agreement. In the event that the transaction contemplated by this
Agreement is not completed, ALTM will return to TLI and/or the Founder
(as applicable) any original documents acquired by it from TLI and/or the
Founder (as applicable), together with all copies thereof and notes and
memoranda prepared therefrom.
12. Documents to be Delivered by TLI and the Founder at Closing. At the
Closing, TLI and the Founder shall execute, where necessary or appropriate, and
deliver to ALTM each of the following:
(a) A certificate signed by TLI and the Founder, dated as of the
Closing Date, to the effect that all of the representations and warranties
made by TLI and the Founder in this Agreement are true and correct at and
as of the Closing Date and will be true and correct as of the Effective
Date;
(b) A Warranty Bill of Sale conveying the Assets to ALTM;
(c) Evidence of satisfaction of any lien or encumbrance on the
Assets (except for Assumed Liabilities);
(d) All consents, releases, assignments and permissions of any kind
or nature which reasonably may be required to effectively sell, assign and
transfer the Assets to ALTM, consistent with the terms of this Agreement
(including, without limitation, those listed on Schedule 7(c));
(e) The Consulting Agreement, duly executed by TLI and the Founder;
(f) A certified copy of joint resolutions of the Board of Directors
and sole shareholder of TLI authorizing the execution and delivery of this
Agreement and the other documents and instruments executed in connection
herewith; and
(g) Assignments of the Intellectual Property in form suitable for
filing with the U.S. Patent and Trademark Office and/or comparable
domestic and foreign agencies, as applicable.
(h) Letter of undertaking to change the name of TLI within twenty
(20) business days of the Closing Date, and to provide ALTM with any and
all documents, certifications or agreements necessary or appropriate to
allow ALTM to use and do business in the State of California under
the name "Total Logistics, Inc." or "Total Logistics".
13. Documents to be Delivered by ALTM at Closing. At the Closing, ALTM
shall execute and deliver the following:
(a) A certified copy of resolutions adopted by the Boards of
Directors of ALTM authorizing the execution and delivery of this Agreement
and the other documents and instruments executed in connection herewith;
and
(b) $800,000.00 by cashier's check or wire transfer.
14. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement or the relationship between the parties shall be
settled by binding arbitration in accordance with the rules of the American
Arbitration Association ("AAA"). Such arbitration shall be conducted in the
City of Grand Rapids, Michigan or such other location as the parties may
mutually agree. The arbitration shall be conducted by one (1) arbitrator
mutually agreed upon between the parties. If the parties are unable to agree
upon a single arbitrator within thirty (30) days after one party has delivered
written notice to the other party requesting arbitration of a stated dispute,
each party shall select one arbitrator and the selected arbitrators shall
select a third arbitrator in accordance with the AAA Rules. The decision of
the arbitrator(s) shall be final and accorded full faith and credit and
entitled to recognition by the federal and state courts of the United States.
15. Notices. All notices and other communications from any of the
parties to the others shall be in writing and shall be considered to have been
duly given or served if sent by certified mail, return receipt requested to the
others at the address provided below, or to such other address as a party may
hereafter designate by written notice to the other party or parties:
If to TLI or the Founder: Kevin Powers
P.O. Box 1875
Temecula, CA 92593
With a copy to: Joseph L. Di Tomo, Jr., Esq.
1026 Winter Street
Philadelphia, PA 19107-1808
If to ALTM: Phillip D. Miller
Alternate Marketing Networks, Inc.
One Ionia S.W.
Suite 300
Grand Rapids, MI 49503
With a copy to: Janna R. Severance, Esq.
Moss & Barnett, P.A.
4800 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4129
16. Amendment. This Agreement may be altered or amended only by a
writing signed by all of the parties.
17. Governing Law. This Agreement shall be subject to and governed by
the laws of the State of Michigan.
18. Parties in Interest. This Agreement shall be binding upon the
parties and their respective heirs, executors, administrators, successors and
assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated by any of the parties
without the prior written consent of all the other parties.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same instrument.
20. Severability. The invalidity or partial invalidity of any portions
of this Agreement shall not invalidate the remainder hereof, and said remainder
shall remain in full force and effect.
21. Entire Agreement. This Agreement and its Exhibits constitute the
entire agreement between the parties on the subject matter hereof and
supersedes any prior agreement or understanding between the parties on the
subject matter hereof.
22. Captions. Captions at the beginning of the paragraphs of this
Agreement are designated for convenience of reference only and are not to be
resorted to for the purpose of interpreting any provisions of this Agreement.
TOTAL LOGISTICS, INC.
By /s/ Kevin Powers
Its President and Secretary
FOUNDER:
/s/ Kevin Powers
Kevin Powers
ALTERNATE MARKETING NETWORKS, INC.
By /s/ Phillip D. Miller
Its Chairman/CEO
Schedules
Schedule 1(a)(i) License Agreements
Schedule 1(a)(ii) Equipment and Office Furniture
Schedule 1(a)(iii) Intellectual Property
Schedule 1(a)(v) Contracts
Schedule 1(a)(vii) Authorizations
Schedule 1(a)(viii) Insurance Policies
Schedule 1(d) Excluded Assets
Schedule 2.1 Purchase Price
Schedule 2.2 Payment Terms
Schedule 2.3 IRS Form 8594
Schedule 5 Form of Consulting Agreement
Schedule 7(c) Required Consents
Schedule 7(g) Equipment Liens
Schedule 7(m) Proprietary Products
Schedule 7(o) Program Specifications
Schedule 7(q) Proprietary Products-Time Bomb
SCHEDULE 1(a)(i)
License Agreements
Licensor License No.
P.C. Miler (Software License) *
* Founder and TLI will provide the license number with respect to the P.C.
Miler software to ALTM within thirty (30) days of the Closing Date.
SCHEDULE 1(a)(ii)
Equipment and Office Furniture
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date Bought Product Cost Fair Market Value
March 24, 1999 Laptop Computer $3,158.00 1,600.00
April 29, 1999 Desk 204.00 75.00
June 10, 1999 Refrigerator/Software 570.00 200.00
June 17, 1999 Desk 379.92 200.00
June 17, 1999 Chair 123.00 75.00
June 22, 1999 Computer 800.00 600.00
June 22, 1999 Monitor for Computer 350.00 150.00
August 10, 1999 Computer & Monitor 1,239.00 800.00
August 10, 1999 Xerox Copier 755.00 500.00
August 23, 1999 Canon Printer 296.00 150.00
November 22, 1999 File Cabinet 160.00 80.00
November 22, 1999 Book Shelf 130.00 75.00
TOTAL: $8,164.92 4,505.00
</TABLE>
SCHEDULE 1(a)(iii)
Intellectual Property
All of TLI's right, title and interest in any and all trademarks, service marks
or other registrations including use as a corporate name or assumed name with
respect to the name "Total Logistics, Inc." or "Total Logistics"
SCHEDULE 1(a)(v)
Contracts
The Contracts shall include but not be limited to, TLI's relationships with the
following:
Transportation Vendor Contracts:
Suncoast Transportation
Impact Transportation, Inc.
Customer Contracts:
General Motors
Quality Packaging Systems, Inc. ("QPSI")
Johnson & Johnson
Procter & Gamble
SCHEDULE 1(a)(vii)
Authorizations
NOT APPLICABLE
SCHEDULE 1(a)(viii)
Insurance Policies
NONE
SCHEDULE 1(d)
Excluded Assets
The Excluded Assets include all accounts receivable of TLI that relate to
shipments on or before the Effective Date and all cash and prepaid expenses.
SCHEDULE 2.1
I. EXAMPLE OF CALCULATION OF ANNUAL BASE OF BUSINESS
Commission Revenues $ 550,000
Gross Profit 550,000
Freight Revenues 1,000,000
Gross Profit 300,000
Total Revenues 1,550,000
Total Gross Profit 850,000
Total S, G & A Expenses 400,000
Operating Profit $ 450,000
II. INDEPENDENT CONTRACTOR INCENTIVE CALCULATION
The independent contractor will be paid an annual bonus of 35% of operating
profit which exceeds the Annual Base of Business, $450,000. For 2000, the
Annual Base will be prorated to reflect a shorter year. Each annual bonus will
be payable not later than the 90th day after the end of the fiscal year for
which it is calculated.
SCHEDULE 2.2
Cash ALTM Stock
(# shares)
Closing $800,000 (described below) 40,816*
45 days after the 3rd
anniversary of the Closing Date Payment of Balance Due of Purchase Price,
plus interest from the Closing Date through
the date of final payment at a rate equal
to the 7-day average yield for money market
funds as of the Closing Date, as reported
in the Wall St. Journal on the Closing Date.
The Balance Due shall equal the total Purchase
Price (i.e., 4 times the average annual
operating profit calculated in accordance with
Schedule 2.1) minus $900,000.
* The number of shares of common stock is equal in value to $100,000, based on
a value of $2.45 per share (which is the average closing sale price for 5
trading days based on the 5 trading day period beginning February 7, 2000, and
ending February 11, 2000). The shares shall be delivered within ten (10)
business days of the Closing Date.
SCHEDULE 2.3
IRS Form 8594
SCHEDULE 5
Form of Consulting Agreement
SCHEDULE 7(c)
Required Consents
NONE
SCHEDULE 7(g)
Equipment Liens
NONE
SCHEDULE 7(m)
Proprietary Products
NONE
SCHEDULE 7(o)
Program Specifications
For purposes of this Asset Purchase Agreement, "Y2K Compliant" means a
system or product will at all times (i) consistently and accurately handle and
process date and time information and data with values before, during and after
January 1, 2000, including, without limitation, accepting date input, providing
date output, and performing calculations on or utilizing dates or portions of
dates; (ii) function accurately and in accordance with its specifications
without interruption, abnormal endings, degradation, change in operation or
other impact, or disruption of the other parts of ALTM's systems, resulting
from processing data or time data with values before, during and after
January 1, 2000; (iii) respond to and process two-digit date input in a way
that resolves any ambiguity as to century; and (iv) store and provide output of
date information in ways that are unambiguous as to century, except in any
case, as would not result (either individually or in the aggregate) in a
Material Adverse Effect.
"Material Adverse Effect" means any change that, individually or in the
aggregate with all other related changes or effects, is materially adverse to
the business, financial condition, operating results, assets, value, customer
or employee relations, operations or, except to the extent affected by general
economic condition, business prospects of ALTM.
SCHEDULE 7 (q)
Proprietary Products - Time Bomb
NONE
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made and entered into this 17th day of
February, 2000, by and between Alternate Marketing Networks, Inc., a Michigan
corporation (the "Company"), Total Logistics, Inc., a California corporation
(the "Consultant"), and Kevin Powers ("Powers") and shall be effective with the
opening of business on February 18, 2000.
RECITALS:
A. The Consultant, which is wholly-owned by Powers, has heretofore been
engaged in the business of logistics planning and transportation brokering (the
"Business").
B. Simultaneously with the execution hereof, the Company has purchased
from the Consultant and the Consultant has sold to the Company substantially
all of the assets comprising the Business, as more fully described in the Asset
Purchase Agreement dated February 17, 2000 among the Company, the Consultant,
and Powers (the "Purchase Agreement").
C. Powers has been the sole founder, shareholder and sole officer and
director of the Consultant and has developed unique knowledge, information and
expertise concerning the Business.
D. The Company would not have entered into the Purchase Agreement and
purchased said assets of the Consultant and the Business but for the
Consultant's agreement contained herein to provide consulting services to the
Company and to refrain from competition with the Company.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants herein contained and intending to be legally bound
hereby, the parties agree as follows:
1. Services. The Consultant agrees that during the period of forty-eight
(48) months commencing on the date hereof and ending on February 17, 2004, (a)
it will advise and consult, at the Company's offices or at such other place or
places as may from time to time be reasonably requested by the Company, with
the officers, directors, employees and other representatives of the Company
when and to the extent reasonably requested to do so by the Company's officers
and/or directors, and will provide to the Company, through such officers,
directors, employees and other representatives, assistance in maintaining the
current Business, obtaining new business, and improving the profit margins of
the Business (as augmented by the additional new business), and (b) it will
actively promote and develop new sales and Business opportunities. In
addition, the Consultant shall train the Company's employees in these tasks,
upon the request of the Company. The services described above shall comprise
not less than ninety percent (90%) of Consultant's hours of operation, but in
no event less than one hundred forty (140) hours per month. The Consultant
shall submit a monthly activity report providing a summary and analysis
of the significant efforts and accomplishments, within ten (10) days after the
end of each calendar month.
All services to be rendered pursuant to this Agreement by the Consultant
shall be rendered personally by Powers unless specifically agreed otherwise in
any particular instance by the Company. For purposes of all provisions of this
Agreement (including without limitation Sections 4, 5 and 6 of this Agreement),
the term "Consultant" shall include Powers and each and every other employee,
consultant, officer, director, shareholder or other person associated with
Consultant who renders services to the Company (i.e. the duties and
restrictions imposed upon Total Logistics, Inc. shall also apply to each
individual performing services on behalf of the Consultant under this
Agreement).
The Company, upon prior notice, may terminate this Agreement "for cause"
in the event of (i) any material noncompliance by the Consultant with the
Company's directives, (ii) failure by the Consultant to perform adequately in
the Company's judgment, or (iii) any action or omission by Consultant which, in
the judgment of the Company, is adverse to the Company's business, its
reputation, or its prospects. Such notice to Consultant shall specify with
particularity the act, omission, material non-compliance or failure to perform
upon which the Company bases the termination. In addition, any judgment
exercised by the Company in connection therewith must be reasonable, and
Consultant must be provided with a fifteen (15) day period after receipt of the
notice of termination within which to take steps to cure or remedy the default
to the reasonable satisfaction of the Company. Such termination shall not take
effect if, upon the 15th day after receipt, all conditions giving rise to the
termination have been remedied to the satisfaction of the Company.
The Consultant shall perform its duties under this Agreement with regard
to the preservation and enhancement of the Company's reputation for fair-
dealing and integrity, and shall not engage in or promote any course of conduct
which would damage such reputation, whether or not such conduct would be
unlawful.
In addition, and without prejudice to its rights of termination set forth
above, in the event that the Consultant breaches any of its covenants,
agreements or obligations arising under this Agreement, the Company shall have
the right to discontinue making the payments to the Consultant provided for
herein until the Consultant has cured any such existing breaches. Further, the
Fee and any incentive bonus (earned and otherwise) may be reduced or eliminated
pursuant to the offset provisions contained in paragraph 10 of the Purchase
Agreement.
2. Relationship. It is the intent of the parties to this Agreement that
the Consultant is and shall remain at all times an independent contractor in
the performance of this Agreement and nothing herein contained shall be
construed as inconsistent with that status. The Consultant shall not be
considered the employee, agent or servant of the Company at any time, under any
circumstances or for any purpose whatsoever. The payments to the Consultant
pursuant to this Agreement are not to be construed to be salary, wages or
payroll. The Consultant understands, acknowledges and agrees that the Company
will not withhold state or federal income tax from the compensation which it
will pay to the Consultant, will not withhold or make contributions to social
security, and will not provide unemployment compensation, worker's
compensation, or any other kind of taxes, benefits or insurance. The
Consultant shall not be entitled to paid vacations, paid sick leave, or any
other fringe benefits.
The Consultant understands and agrees that it has no authority to and will
not enter into contracts or commitments in the name or on behalf of the
Company, that it shall in no event represent that it is acting as an agent or
representative of the Company, and that it shall not otherwise attempt to bind
the Company in any respect whatsoever without the prior written consent of the
chief executive officer of the Company in each particular instance. The
Consultant shall not make any representations, warranties or commitments
binding upon the Company without its prior written consent.
3. Compensation. For the services rendered by the Consultant pursuant to
this Agreement, the Company shall pay the Consultant the sum of Two Hundred
Seventy-two Thousand Dollars ($272,000.00) per year (the "Fee"), payable in
monthly installments in arrears, which payment shall constitute Consultant's
only compensation during the term of this Agreement, except for the incentive
bonus compensation described below. The Fee shall cover all services rendered
and expenses incurred by the Consultant, including but not limited to rent,
utilities, telephone, and travel and entertainment expenses. The Consultant
shall be entitled to receive, in addition to the Fee, an incentive bonus based
on operating profits in excess of the Annual Base of Business as shown on
Schedule 2.1 to the Purchase Agreement (copy attached), due and payable as set
forth on said Schedule. The parties acknowledge and agree that the amount of
the Fee is subject to ALTM's right to offset the Fee in accordance with
paragraphs 2 and 10 of the Purchase Agreement.
In the event of termination of this Agreement for any reason, the Fee and
any incentive bonus earned by Consultant prior to the date of termination shall
be paid through such date. The Fee shall be paid within ten (10) business days
following termination and the incentive bonus (if any) shall be paid at the
time stated in Schedule 2.1.
In the event of the death or disability of Powers, the Company shall pay
the Fee and any incentive bonus which has been earned by the Consultant up to
the date of Powers' death or disability and this Agreement shall terminate as
of such date.
4. Confidential Information. The Consultant understands and agrees that
the business of the Company is based upon specialized work and that as a
consultant to the Company it will receive, have access to and/or contribute to
Confidential Information (as hereinafter defined). The Consultant agrees that
at all times during the term of this Agreement and thereafter without
limitation, it shall keep secret all such Confidential Information and that he
will not "Use" (as hereinafter defined) or "Disclose" (as hereinafter defined)
the same to any person, firm, or corporation without first obtaining the
written consent of the Company. Upon termination of this Agreement, or at any
time the Company may so request, the Consultant shall turn over to the Company
all books, notes, memoranda, manuals, notebooks, tables, drawings, calculations,
records or other documents made, compiled by or delivered to the Consultant
containing or concerning any Confidential Information, including copies
thereof, in its possession, it being agreed that the same and all information
contained therein are at all times the exclusive property of the Company.
As used in this Agreement, the term "Confidential Information" means any
information or compilation of information not generally known to the public or
the industry, which is proprietary to the Company (including the Business),
relating to the Company's procedures, techniques, methods, concepts, ideas,
affairs, products, processes and services, including, but not limited to,
information relating to marketing, merchandising, selling, research,
development, manufacturing, purchasing, accounting, engineering, financing,
costs, customers, plans, pricing, billing, needs of customers and services used
by customers. Confidential Information for purposes of this Agreement shall
also include all lists of customers, addresses, prospects, sales calls,
suppliers, vendors, products, services, prices and the like as well as any
specifications, formulas, plans, drawings, accounts or sales records, sales
brochures, books, code books, records, manuals, trade secrets, knowledge,
know-how, pricing strategies, operating costs, sales margins, methods of
operations, invoices or statements and the like. All information disclosed to
the Consultant, or to which the Consultant obtains access, during the term of
this Agreement, which Consultant has a reasonable basis to believe to be
Confidential Information or which is treated by the Company as being
Confidential Information, shall be presumed to be Confidential Information.
As used in this Agreement, the term "Disclose" means to reveal, deliver,
divulge, disclose, publish, copy, communicate, show or otherwise make known or
available to any other person, firm or entity, or in any way to copy, any of
the Company's Confidential Information.
As used in this Agreement, the term "Use" means to appropriate any of the
Company's Confidential Information for the benefit of one's self or any person,
firm or entity other than the Company.
5. Covenant Not to Compete. For and in consideration of the Company's
purchase of the assets from the Consultant and of its agreement to appoint the
Consultant as a consultant, the Consultant agrees that it shall not engage
directly or indirectly in activity in competition with the Company or which
would adversely affect the Company's full recognition of the value of the TLI
Business or the services obtained from the Consultant during the term of this
Agreement. Such covenant shall endure from the date hereof and for a period of
one (1) year following the termination of this Agreement, but for five (5)
years from the date hereof at a minimum. Notwithstanding the foregoing, in the
event the Company terminates this Agreement "for cause", the restrictions
contained in this Section 5 shall continue for a period of one (1) year
following the date of such termination. The Consultant agrees that the scope
of the restrictions contained in this Agreement are reasonable and necessary
for the protection of the Company and that, if any court should hold that the
covenants contained in this Agreement are too broad to be enforced, the court
shall not disregard the provisions of this Agreement but shall, instead,
enforce those provisions as to such scope as the court deems equitable.
6. Injunctive Relief, Attorneys' Fees. In recognition of the irreparable
harm that a violation by the Consultant of any of the covenants of paragraphs 4
or 5 would cause the Company, the Consultant agrees that in addition to any
other remedies or relief afforded by law, an injunction against an actual or
threatened violation or violations may be issued against him and every other
person concerned thereby, it being the understanding of the parties that both
damages and an injunction shall be proper modes of relief and are not to be
considered alternative remedies. In the event of any such actual or threatened
violation, the Consultant agrees to pay the costs, expenses and reasonable
attorneys' fees incurred by the Company in pursuing any of its rights with
respect to such actual or threatened violation, in addition to the actual
damages sustained by the Company as a result thereof.
7. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto and supersedes all prior or contemporaneous agreements and
understandings, oral or written, between the parties hereto with respect to
subject matter hereof (including, without limitation, the consulting agreement
dated September 18, 1999, by and between the Company and the Consultant).
8. Amendment. No amendment or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing and signed by all the
parties and then such waiver shall only be effective in the specific instance
and for the specific purpose for which it was given.
9. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefits of the parties hereto and their respective heirs,
personal representatives, successors and permitted assigns, but nothing in this
Agreement is to be construed as an authorization or right of either party to
assign its rights or delegate its duties under this Agreement without the
consent of the other party hereto.
10. Governing Law. This Agreement shall be construed, governed by and
enforced in accordance with the laws of the State of Michigan.
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
12. Headings. The headings of the paragraphs of this Agreement are
intended for the convenience of the parties only and shall in no way be held to
explain, modify, amplify or aid in the interpretation of the provisions hereof.
13. Severability. The provisions of this Agreement shall be deemed
severable and if any portion hereof shall be held invalid, illegal or
unenforceable for any reason, the remainder shall not thereby be invalidated
but shall remain in force and effect.
14. Waiver. The waiver by the Company of the breach of any provision of
this Agreement by the Consultant shall not operate or be construed as a waiver
of any subsequent breach of that provision or any other provision by the
Consultant. None of the terms of this Agreement shall be deemed to have been
waived by either party unless such waiver is in writing and signed by or on
behalf of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day, month and year first above written.
COMPANY:
ALTERNATE MARKETING NETWORKS, INC.
By: /s/ Phillip D. Miller
Its: Chairman/CEO
CONSULTANT:
TOTAL LOGISTICS, INC.
By: /s/ Kevin Powers
Kevin Powers, Its President
/s/ Kevin Powers
KEVIN POWERS
FOR IMMEDIATE RELEASE
Contact: Phil Miller, Chairman and CEO
616.235.0698, ext. 131 [email protected]
or
Jeff Lambert, Mary Ann Sabo ([email protected])
Lambert, Edwards & Associates, Inc. (616) 233-0500
ALTERNATE MARKETING NETWORKS ACQUIRES NATIONAL
LOGISTICS PROVIDER TOTAL LOGISTICS INC.
New Stand-Alone Internet Product, itrackfreight.com, Unveiled
GRAND RAPIDS, Michigan, February 22, 2000 Alternate Marketing Networks
(NASDAQ Small Cap: ALTM) announced today the acquisition of California-based
Total Logistics Inc. The deal, effective on February 18, 2000, allows the
Company to expand its Web presence by introducing a new Internet tracking
system.
The Grand Rapids, Mich.-based national marketing company said the acquisition
of Total Logistics, which provides logistics support and brokering of freight
for clients such as General Motors, Procter & Gamble and Quality Packaging
Specialists, Inc., broadens Alternate Marketing's service offerings and
potential base of clients. Terms of the deal were not disclosed.
The deal also allows the Company to launch a new Internet-based product and
promotion tracking service that will combine the logistics expertise and
relationships of Total Logistics with Alternate Marketing's online monitoring
system.
Alternate Marketing Networks said it plans to launch itrackfreight.com, a new
product featuring its proprietary Internet-based End-to-End tracking system.
The system allows companies to track their products' movement across the nation
to insure high quality and timely service. Clients can also track other unique
variables that may be important to their business, such as temperature in
warehouses where the product is stored. Alternate Marketing currently utilizes
the Internet system for its sample promotions.
"This acquisition is a good fit with our core marketing business and, more
significantly, it provides us the platform to strengthen our comprehensive
Internet tracking system," said Phillip Miller, chairman and chief executive
officer of Alternate Marketing Networks. "We anticipate tapping the
complementary strengths of both companies and becoming a single-source provider
to our combined network of top-tier clients."
Total Logistics founder Kevin Powers added: "Teaming with Alternate Marketing
will give us a critical advantage in the transportation and logistics market.
Our clients are demanding better tools to track freight in real-time and to
enhance quality. Based on the success of our cooperative work in the past, we
already know this relationship can be a success. We are pleased to join
Alternate Marketing and to be on the leading edge of innovation in the sampling
and logistics market."
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Alternate Marketing Networks / page 2 of 2
Powers explained that Total Logistics has been a core supplier to Alternate
Marketing for the past two years on a number of major marketing projects.
Miller said these joint efforts and the resulting positive feedback it received
from clients sparked the acquisition.
"The opportunity for Alternate Marketing to expand the services it offers to
its Direct Division's telephone directory publishers, while adding Total
Logistics' package goods clients for sample distribution underscores our
optimism about this deal," concluded Miller.
The acquisition comes on the heels of a year of record sales and profits for
Alternate Marketing Networks. Sales rose nearly 42 percent to reach $28.6
million for the 12 months ended December 31, 1999. The Company posted earnings
of $1.05 million, or $0.27 per diluted share in 1999.
Alternate Marketing announced its new Internet-based monitoring product,
itrackfreight.com, will be available in a pre-launch site within the next few
weeks. Miller said this site is the first of several new Internet-based
options the Company will unveil in the coming months.
Alternate Marketing Networks (www.altmarknet.com) is a national marketing
services company that focuses on targeted consumer product sampling, suburban
newspaper advertising, and the delivery of telephone directories. The Company
provides these services by utilizing its proprietary Media Optimizer national
database, its verification system, its Internet-based End-to-End tracking
system and its Direct Delivery capabilities.
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