SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 14, 2002
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(Date filed with SEC)
December 28, 2001
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(Date of earliest event reported)
NETWORK COMMERCE INC.
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(Exact Name of Registrant as Specified in Charter)
Washington 000-26707 91-1628103
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(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
411 First Avenue South, Suite 200 North, Seattle, WA 98104
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(Address of Principal Executive Offices, including Zip Code)
(206) 223-1996
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
On December 28, 2001, Network Commerce Inc. ("Network Commerce") and
Freemerchant.com, Inc. ("FreeMerchant") sold certain customer assets used in the
operation of the Web site located at www.FreeMerchant.com to Digital River,
Inc., a Delaware corporation, ("Digital River") pursuant to an Asset Purchase
Agreement dated as of December 28, 2001, entered into among Network Commerce,
Freemerchant and Digital River. The assets sold include the technology presently
used to operate the Web site presently located at www.FreeMerchant.com (the
"FreeMerchant Technology"), all software licenses presently required to operate
and maintain the FreeMerchant Technology, all contracts by which Network
Commerce provided services for FreeMerchant subscribers by use of the
FreeMerchant Technology and the servers, computer equipment and other hardware
presently required to operate and maintain the FreeMerchant Technology and the
FreeMerchant.com Web site.
Under the terms of the asset purchase agreement, Digital River acquired
approximately 3,000 subscription-based customers from Network Commerce's
FreeMerchant.com business in exchange for $875,000 in cash. The agreement does
not include the acquisition of any Network Commerce personnel. In addition to
the cash payment, $475,000 of which was paid at closing, the agreement provides
Network Commerce an opportunity for an additional earn out based upon revenue
generated from the acquired customer assets over the next ten months. The asset
purchase agreement is filed as an exhibit to this report and is incorporated
into this report by reference. This summary of the provisions of the asset
purchase agreement is not complete, and you should refer to the exhibits for a
copy of the actual asset purchase agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Information
Not applicable.
(b) Pro Forma Financial Information
Not applicable
(c) Exhibits
10.1* Asset Purchase Agreement, dated as of December 28, 2001,
among Network Commerce Inc., Freemerchant.com, Inc. and
Digital River, Inc.
10.2 Hosting Services Agreement, dated as of December 28, 2001,
among Network Commerce Inc., Freemerchant.com, Inc. and
Digital River, Inc.
* Portions of this Agreement are omitted pursuant to a Confidential Treatment
Request under Rule 24-b2 of the Securities and Exchange Act of 1934.
2
SIGNATURE
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.
NETWORK COMMERCE INC.
Dated: January 14, 2002 By /s/ N. Scott Dickson
N. Scott Dickson
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
10.1 Asset Purchase Agreement, dated as of December 28, 2001,
among Network Commerce Inc., Freemerchant.com, Inc. and
Digital River, Inc.
10.2 Hosting Services Agreement, dated as of December 28, 2001,
among Network Commerce Inc., Freemerchant.com, Inc. and
Digital River, Inc.