Re: Conference call from Mort's people

tell them that ron burkle is interested in buying and
they should concentrate on that...

--- DKIESQ@aol.com wrote:

Cyna Alderman, Tom Peck and a lawyer from Greenberg
Traurig called me this
evening regarding Radar's need to pay severance pay
and whether or not you are
going to fund the $500,000 capital call.

The highlights of this telephone conference are:

Vacation pay has already been paid.

Severance is to be paid this week.

If there was no agreement prior to the shutdown of
the magazine, the current
view is that Radar created one with its employees
in exchange for receipt
of release agreements, which specify that severance
will be paid this week.

Rich has been provided with a schedule of severance
payable which I will
obtain in the morning.

Various reasons were offered by Cyna and Larry as
justifying a decision for
the defunct magazine to pay severance in the first
place, including:

--The right thing to do when you are firing people
with little notice right
before Christmas

--Limit reputational damage to Mort and you.

--Limit likelihood of lawsuits to which termination
will expose you and
Mort, even frivilous ones, by aggrieved employees,
by giving severance in
exchange for employee releases.

When I raised the issue of there being assets which
could yield enough funds
to pay the severance, Tom Peck claimed that
severance is due now and it
would not have been possible to liquidate in time to
pay it. So, why not pay the
capital call now and get the money back when the
assets are liquidated.

I explained that with contingent liabilities, such
as those asserted by
Carver Cross and the paper vender of the original
Radar Media in the background,
it did not make sense to place additional money at
risk when the assets alone
could satisfy the outstanding obligations.

I also suggested that to me (not to you) there is a
question of whether the
reasons to pay severance when the magazine was bust
should have been reviewed
with JEE and JEE should have had an opportunity to
participate in that
decision under the circumstances. I said I did not
know where you stood on that
issue, but that it was certainly something that
struck me as an issue which
should have been addressed with you prior to making
the decision to pay
severance. I did not receive any response to this
point.

Moreover, I said that even assuming there existed
liability to pay
Severance, and even assuming there was an agreement
to pay it now, would it create any
additional liability by holding off on payment until
the assets were
liquidated?

Tom Peck said he would send me a schedule of
potential liabilities and asset
values, which show that liabilities could
potentially exceed liquidation
value of assets in any event. I told Tom that if
his schedule included
liabilities to Maer, then there is plenty of
justification to support the argument
that Maer violated his agreement and is not entitled
to what he is claiming.

In addition, Cyna said that as recently as this
morning Mort told her, Tom
and the Greenburg Traurig lawyer to stop with plans
on liquidating the assets
because there is still a potential buyer and the
assets need to be kept
together to create something worth buying.
Consequently, the assets cannot be
liquidated at this time, even if it were prudent to
make the former employees
wait for severance.

Moreover, the lawyer from Greenberg Traurig pointed
out that making
employees wait will now create the same adverse
publicity/reputational issues Mort
sought to avoid when he recommended making severance
payments. So, now we will
still have bad publicity and have an obligation to
pay severance.

As to the issue of why can't Mort cover the
outstanding liabilities now and
get it back when the assets are liquidated. The
answer, which was no answer
at all, was that Mort wanted his team to find out
whether you intended to
make payment on your capital call. Beyond that I
could get no other answers.

In summary, Mort's team is of the view that accrued
vacation had to be paid,
so it was paid. Apart from the legal issues,
adverse publicity concerns and
desire to preserve the Radar name for future sale
made a strong argument for
paying severance. If severance had to be paid, why
not secure releases in
exchange to limit liability by entering into
severance agreements Now that
severance agreements were signed, it makes no sense
not to pay severance or to
wait until liquidation to pay severance. Waiting
will create the very
adverse publicity that Mort's team sought to avoid
and if there is a potential
buyer you can't sell off the company in pieces and
expect the buyer to remain
interested.

I said that you and I had not sat down yet to go
over everything because
Rich only finished his discussions with Radar
personnel today. Tom Peck asked
that I speak to you as soon as possible and get an
answer to the questions of
whether you will make payment on your capital call
and, if so, how much.

Jeffrey, it appears to me that Mort made a
completely self-interested
decision to preserve his reputation in the media
industry as a result of which
Radar incurred severance and other obligations which
probably would not have been
due in the first place. In all of this deal, a
portion of Mort's existing
leasing costs was covered by Radar under a sublease
and is now considered a
liability of Radar. Mort hired no new personnel for
US News to cover the
increased time demands created by Radar, yet he was
able to offset some of the
employment costs by allocating a substantial portion
of those costs to Radar.
Mort brought Maer to the table and all the trouble
that Maer caused including,
at least one, but maybe two, litigations. Mort is
the expert in media and
publishing, yet the projections he gave you and upon
which you based your
investment decision were entirely unrealistic.

Adam Bly sent us a broad overview of the costs
associated with a sample
issue of Seed magazine. The overview created more
questions than it answered. I
e-mailed Adam and asked him to put me and Rich in
touch with someone to
explain the overview. I will follow up and make
sure that Rich and flesh out the
overview as necessary.

If you are not going to pay the capital call this
week, then you may want to
discuss it with Mort. I expressed as much
reluctance as I could muster and
made it fairly clear that I personally was against
you making additional
contributions, but was nevertheless asked to get in
touch with you to ask you to
contact Mort make a joint decision and get back to
us.

Darren

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get a list of severance.... time employed... take
nothing for granted

--- DKIESQ@aol.com wrote:

Tom Peck is specifically asking for $ to make
severance payments that he
claims are due at the end of this week. Peck told
me that there is no $ with
which to make the severance payments. I will tell
Peck about Burkle, as you
request, but Peck has already asked and is going to
ask me again whether or not
you intend to make any payment in response to the
capital call. Even if the
sale to Burkle takes place, it will not take place
this week, so Peck needs
to know from whom he should obtain payment to meet
the company's severance
requirements.

What do you want me to tell Peck about payment?

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