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: July 27, 1999
Commission file number 0-22432
DIPLOMAT DIRECT MARKETING CORPORATION
(Exact name of registrant as specified in its charter)
(Formerly Diplomat Corporation)
Delaware 13-3727399
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
414 Alfred Avenue
Teaneck, New Jersey 07666
(Address of principal executive offices) (Zip Code)
(201) 833-4450 (Registrant's telephone number, including area code)
Item 5. OTHER EVENTS
The information below in this Current Report on Form 8-K is a summary
of the transactions discussed herein and is qualified in its entirety by the
exhibits hereto.
STRATEGIC ALLIANCE WITH TADEO HOLDINGS, INC.
Diplomat Direct Marketing Corporation consummated a joint internet
and marketing strategic alliance with Tadeo Holdings, Inc. dated as of June
30, 1999. Under this strategic alliance:
o Diplomat and Tadeo entered into a Web Site Design and Consulting
Agreement and Online Hosting Agreement,
o Diplomat will provide direct marketing consulting services to Tadeo,
o Tadeo purchased $1,000,000 of Diplomat's Series G Preferred Stock, and
o Diplomat and Tadeo exchanged $1,000,000 of common stock.
Diplomat entered into a Web Site and Development Agreement with Tadeo
E-Commerce Corp., a wholly owned subsidiary of Tadeo Holdings, Inc. Tadeo
Holdings, through its operating subsidiaries, is engaged in the software and
e-commerce development business. Under the terms of the agreements, Tadeo is
providing all necessary consulting and development services to design,
maintain and enhance Diplomat's electronic commerce internet sites and other
related electronic commerce marketing vehicles, as well as to host those sites
on behalf of Diplomat. In addition to fees as provided in schedules to the
agreements, Tadeo will receive a royalty of 5% of net revenues derived from
Diplomat's e-commerce business up to $500,000 and 20% of net profits
thereafter.
In connection with assistance provided to Tadeo's electronic commerce
development activities, Tadeo paid Diplomat $500,000 for Diplomat's provision
of content and marketing consulting services.
To enhance the strategic alliance between the parties, Tadeo made a
$1,000,000 cash investment in Diplomat's Series G Preferred Stock. The Series
G Preferred Stock is convertible into common stock based on the average of the
closing bid prices for the lowest five of the twenty trading days immediately
preceding the date of conversion. Assuming a conversion price of $0.75, the
closing bid price of Diplomat's common stock on July 27, 1999, Tadeo would
receive on conversion 1,333,333 shares of common stock. The Series G Preferred
Stock is redeemable at Diplomat's option, but must be redeemed out of the
proceeds of any public offering in excess of $9 million. Diplomat also granted
Tadeo a right of first refusal on any future securities offerings while the
Series G Preferred Stock is outstanding. The Rubin Family Irrevocable Stock
Trust pledged 300,000 shares of Tadeo Holdings common stock to secure the
repayment of the Series G Preferred Stock to Tadeo.
Finally, Diplomat exchanged $1,000,000 worth of Diplomat's common
stock (1,066,098 shares) for $1,000,000 worth of Tadeo's common stock
(285,715 shares), based on the companies' stock prices as of June 7, 1999. The
Tadeo common stock acquired by Diplomat was pledged as additional collateral to
secure the asset based loan facility provided by First Source Financial LLP.
The Rubin Family Irrevocable Stock Trust, which owns a majority of
Diplomat's outstanding voting securities, owns approximately 9% of Tadeo's
outstanding common stock.
INCREASE AVAILABLE FUNDS UNDER FIRST SOURCE LOAN FACILITY
On July 26, 1999, Diplomat and First Source Financial LLP, Diplomat's
asset based lender amended the Secured Credit Agreement dated May 12, 1999 to
allow for an additional $1.1 million in additional funds available under the
loan facility. This additional availability was secured by a pledge by the
Rubin Family Irrevocable Stock Trust of 400,000 shares of Tadeo Holdings, Inc.
common stock.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
2
(a), (b) Financial Statements - None
(c) Exhibits
3.1 Certificate of Designation of Series G Preferred Stock
10.1 Securities Purchase Agreement between Diplomat Direct Marketing
Corporation, Tadeo Holdings, Inc. and Tadeo E-Commerce Corp. dated
June 30, 1999 (schedules omitted)
10.2 Registration Rights Agreement between Diplomat Direct Marketing
Corporation and Tadeo E-Commerce Corp. dated June 30, 1999
10.3 Web Site Design and Consulting Agreement between Diplomat Direct
Marketing Corporation and Tadeo Holdings, Inc., dated June 1, 1999
(exhibits omitted)
10.4 Online Hosting Agreement between Diplomat Direct Marketing
Corporation and Tadeo E-Commerce Corp. dated June 30, 1999 (exhibits
omitted)
10.5 Pledge Security Agreement between Diplomat Direct Marketing
Corporation, the Rubin Family Irrevocable Stock Trust, and Tadeo
E-Commerce Corp. dated June 30, 1999
10.6 First Amendment to Secured Credit Agreement and Related Documents,
Waiver and Consent dated July 13, 1999 (schedules omitted)
10.7 Second Amendment to Secured Credit Agreement and Waiver dated July
26, 1999 (schedules omitted)
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DIPLOMAT DIRECT MARKETING CORPORATION
Dated: August 4, 1999 By: /s/ WARREN H. GOLDEN
---------------------
Warren H. Golden
President and Chief Executive Officer
EXHIBIT INDEX
3.1 Certificate of Designation of Series G Preferred Stock
10.1 Securities Purchase Agreement between Diplomat Direct Marketing
Corporation, Tadeo Holdings, Inc. and Tadeo E-Commerce Corp. dated
June 30, 1999 (schedules omitted)
10.2 Registration Rights Agreement between Diplomat Direct Marketing
Corporation and Tadeo E-Commerce Corp. dated June 30, 1999
10.3 Web Site Design and Consulting Agreement between Diplomat Direct
Marketing Corporation and Tadeo Holdings, Inc., dated June 1, 1999
(exhibits omitted)
10.4 Online Hosting Agreement between Diplomat Direct Marketing
Corporation and Tadeo E-Commerce Corp. dated June 30, 1999 (exhibits
omitted)
10.5 Pledge Security Agreement between Diplomat Direct Marketing
Corporation, the Rubin Family Irrevocable Stock Trust, and Tadeo
E-Commerce Corp. dated June 30, 1999
10.6 First Amendment to Secured Credit Agreement and Related Documents,
Waiver and Consent dated July 13, 1999 (schedules omitted)
10.7 Second Amendment to Secured Credit Agreement and Waiver dated July
26, 1999 (schedules omitted)