Exhibit 2.11
EXECUTION COPY
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
November 3, 2000 by and among Journeycraft, Inc., a New York corporation
("Journeycraft"), Journeycraft's parent corporation, Xceed Inc., a Delaware
corporation ("Xceed"), 488 Performance Group, Inc., a New York corporation ("NEW
PERFORMANCE"), and Werner G. Haase ("HAASE"), an individual and principal
shareholder of New Performance.
RECITALS:
A. Journeycraft owns the assets and liabilities comprising its
"Performance Group" business located at 488 Madison Avenue, New York, New York
10022, which is more particularly described on EXHIBIT A attached hereto (the
"NEW YORK PG BUSINESS");
B. Xceed owns one hundred percent of the issued and outstanding
capital stock of Journeycraft (the "JOURNEYCRAFT STOCK");
C. Xceed owns the assets and liabilities comprising its "Performance
Group" business located at 255 Trinity Avenue, Atlanta Georgia 30303 and more
particularly described on Exhibit A hereto (the "ATLANTA PG BUSINESS");
D. Xceed desires to transfer all of its Journeycraft Stock to New
Performance and to enter into certain other agreements with New Performance for
(i) the "Purchase Price" (as defined below), (ii) the release of certain claims
against Xceed of each of the "PG EMPLOYEES" (as defined below), (iii) the
assumption by New Performance of certain liabilities of Xceed related to the PG
Business; and (iv) certain other agreements of New Performance and Haase, all
upon and subject to the terms and satisfaction of the conditions more
particularly hereinafter set forth; and
E. In contemplation of Xceed's transfer of the Journeycraft Stock to
New Performance, Xceed and Journeycraft desire to effect a transfer and
assignment of assets pursuant to which Xceed will transfer and assign the New
York PG Business and Atlanta PG Business (collectively, the "PG BUSINESS")
assets held by it to Journeycraft and Xceed will retain the non-PG Business
assets held by it.
NOW, THEREFORE, in consideration for the foregoing recitals and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1
Transfer of Assets and Assumption of Liabilities; Transfer of Stock
1.1 CERTAIN DEFINED TERMS. Unless otherwise expressly defined herein,
the following capitalized terms used in this Agreement shall be defined as
follows:
"Atlanta Lease" means that certain Lease Agreement dated June 30, 1997
by and between Brenda Issac (the "LANDLORD") and Xceed Motivation Atlanta, Inc.,
as Tenant, pertaining to the Atlanta PG Business located at 255 Trinity Avenue,
Atlanta, Georgia 30303.
"Contract" means any contract, agreement, arrangement or other
understanding or agreement, whether oral or written, to which Journeycraft or
Xceed is a party (whether or not legally bound thereby), together with all
obligations with respect to the payment and performance thereof and with respect
to any breach thereof.
"Equipment Lease" means any lease of equipment or other tangible
personal property.
"Intellectual Property" means any patent, patent application,
discovery which may be patentable, trademark, service mark, copyright
(registered or unregistered) and any registration or application for
registration thereof (including derivative works or other revisions thereof),
work of authorship, mask work, computer software, data, database, code segment,
algorithm, object, routine, template or documentation, trade secret or other
confidential information, other intellectual property right, license or right to
royalties, damages or payments under and with respect to all of the foregoing,
and the goodwill symbolized by the foregoing and connected therewith.
"Madison Lease" means that certain Lease Agreement dated April 25,
1993 between Journeycraft and 488 Madison Avenue Associates, as amended
pertaining to Journeycraft's office space located at 488 Madison Avenue, New
York, New York 10022.
"Personal Property" means any equipment, furniture, supplies,
marketing collateral, and other tangible personal property (exclusive of any
Intellectual Property).
"Purchase Documents" means this Agreement, the Assignment Agreement,
and the other agreements, documents, or instruments executed or delivered in
connection therewith.
"PG Receivable" means any account receivable, whether or not earned by
the performance of any service or the sale or delivery of any goods, with
respect to customer accounts for the PG Business.
"PG Stock Transfer" means the transfer and sale of the Journeycraft
Stock by Xceed to New Performance.
"Xceed Asset Transfer" means the transfer and sale of certain assets
relating to the PG Business by Xceed to Journeycraft as provided herein.
1.2 TRANSFER OF XCEED HELD PG ASSETS AND RETENTION OF NON-PG ASSETS
BETWEEN XCEED AND JOURNEYCRAFT. In contemplation of Xceed's transfer of the
Journeycraft Stock to New Performance, Xceed and Journeycraft agree as follows
with respect to the "Xceed Held PG Assets" (as defined below):
(a) TRANSFER OF XCEED HELD PG ASSETS. Upon the terms and subject
to the conditions set forth in this Agreement, immediately prior to the Closing,
Xceed, without representation or warranty of any kind, agrees to convey,
transfer, assign and deliver to Journeycraft, and Journeycraft agrees to,
acquire, and take assignment and delivery from Xceed, of all right, title and
interest of Xceed, if any, in and to all assets, properties, and rights of Xceed
(exclusive of the Xceed retained Assets) that are owned or leased and used in
the PG Business, including, without limitation, those assets that are specified
in the following paragraphs (collectively the "XCEED HELD PG ASSETS") (each of
the references to a "PG SCHEDULE" in this Section 1.2 below shall mean and be a
reference to the correspondingly numbered schedule attached to the Assignment
Agreement (as defined herein), each of which is incorporated herein by this
reference thereto):
(i) the Personal Property of the Atlanta PG Business
described on PG SCHEDULE 1(a)(i);
(ii) the PG Receivables related to the Atlanta PG Business
described on PG SCHEDULE 1(a)(ii);
(iii) the Atlanta Lease, a copy of which is attached on PG
SCHEDULE 1(a)(iii);
(iv) the Equipment Leases related to the Atlanta PG
Business described on PG SCHEDULE 1(a)(iv);
(v) the Contracts of the Atlanta PG Business described on
PG Schedule 1(a)(v); and
(vi) the Employment Agreements (the "PG EMPLOYMENT
AGREEMENTS") of the employees of Xceed listed on PG SCHEDULE 1(a)(vi)
(the "PG EMPLOYEES").
(b) ASSUMPTION OF PG LIABILITIES. Upon the terms and subject to
the conditions set forth in this Agreement, immediately prior to the Closing,
Journeycraft and New Performance jointly and severally shall assume and hereby
agrees to pay, perform and discharge, when due, those debts, liabilities,
obligations and commitments of Xceed which are described below (the
"JOURNEYCRAFT ASSUMED LIABILITIES") (each of the references to a "PG SCHEDULE"
in this Section 1.3 below shall mean and be a reference to the correspondingly
numbered schedule attached to the Assignment Agreement, each of which is
incorporated herein by this reference thereto):
(i) all accounts payable, accrued expenses, and other
liabilities described on PG SCHEDULE 1(b)(i);
(ii) all accrued salaries, wages, and vacation pay with
respect to the PG Employees;
(iii) all obligations and liabilities with respect to the PG
Employees and the PG Employment Agreements, the Atlanta Lease, and the
other Contracts comprising part of the Xceed Held PG Assets;
(iv) all post closing liabilities and obligations of
Journeycraft and Xceed under and pursuant to that certain Asset
Purchase Agreement dated July 31, 2000 by and among Journeycraft,
Xceed, Nurit Kahane Haase, and Journey Corp. .Com (the "JOURNEY CORP.
ASSET SALE AGREEMENT") with the exception of the obligations and
rights set forth in Section 1.3.1, 1.3.2 and 1.3.3 thereof, which
shall be retained by Xceed; and
(v) all post closing obligations of Xceed under and
pursuant to that certain Agreement and Plan of Merger dated effective
as of April 29, 1999 by and among X-Ceed Motivation Atlanta, Inc.,
Brenda G. Isaac ("Isaac") and Xceed (the "Atlanta Merger Agreement"),
except that pursuant to Section 1.10 Xceed shall issue and deliver the
appropriate shares of Xceed common stock, if any, due pursuant to that
certain letter dated March 29, 1999 from Haase to Isaac delivered in
connection with the foregoing described merger (the "LETTER
AGREEMENT"); and
(vi) all other debts, liabilities, obligations and
commitments arising under or owing in connection with the Xceed Held
PG Assets transferred to Journeycraft hereunder.
(c) XCEED RETAINED ASSETS. Notwithstanding anything in Section
1.2(a) or the description of the Xceed Held PG Assets to the contrary, the
following assets, properties, rights, and businesses are expressly excluded from
the Xceed Asset Transfer under this Agreement and the Assignment Agreement and
are expressly excluded from the Xceed Held PG Assets (the "XCEED RETAINED
ASSETS"): (i) all rights and claims of Xceed under the Journey Corp. Asset Sale
Agreement (including, without limitation, the rights to receive payments under
Sections 1.3.1 and 1.3.3 thereof)); (ii) all rights and claims of Xceed under
the Atlanta Merger Agreement; (iii) $2,000,000 in cash collected from PG
Receivables; (iv) all of the assets, properties, rights, or business of Xceed
not expressly connected with the PG Business; (v) all assets of Xceed that are
utilized in an overall corporate or administrative manner in connection with the
totality of Xceed's operations; (vi) all rights to the Haase Note (as defined
herein) pending purchase of same pursuant to Section 1.7(e); and (vii) all of
the assets, properties, rights, or business of Xceed (including, without
limitation, all associated Intellectual Property), of every kind and
description, not expressly enumerated on the PG Schedules. In addition to and in
furtherance of the foregoing retention of the Xceed Retained Assets, upon the
terms and subject to the conditions set forth in this Agreement, effective as of
the Closing Date and immediately prior to the effectiveness of the PG Stock
Transfer, Journeycraft, without representation or warranty of any kind, agrees
to convey, transfer, assign and deliver to Xceed, and Xceed agrees to acquire,
and take assignment and delivery from Journeycraft, of all right, title and
interest of Journeycraft
in and to all assets, properties, and rights of Journeycraft with the exception
of the following (Journeycraft Retained Assets"):
(i) the Xceed Held PG Assets;
(ii) the Personal Property of the PG Business described on
PG SCHEDULE 1(c)(ii);
(iii) the PG Receivables described on PG SCHEDULE 1(c)(iii);
(iv) the Madison Lease;
(v) the Equipment Leases of the PG Business described on
PG SCHEDULE 1(c)(v);
(vi) all other assets of the PG Business reflected on the
Closing Balance Sheet, including, without limitation, all cash and
cash equivalents, all "excess program costs over billings" and all
prepaid expenses; and
(vii) All right and title to the "Performance Group" name
and all goodwill associated therewith.
Notwithstanding any provision of this Agreement to the contrary, the parties
agree that it is the intention of the parties hereto that upon consummation of
the transaction contemplated hereby, Journeycraft will own the PG Business and
all assets and liabilities related thereto and that Xceed will own all assets of
Xceed and Journeycraft not comprising a part of the PG Business. The parties
agree to do all reasonable and necessary acts following closing hereunder to
give effect to such intent.
1.3. TRANSFER OF THE JOURNEYCRAFT SHARES TO NEW PERFORMANCE. Upon the
terms and subject to the conditions set forth in this Agreement, at the Closing,
Xceed, without representation or warranty of any kind (other than those provided
in Section 4.1 hereof), agrees to convey, transfer, assign and deliver to New
Performance, and New Performance agrees to purchase, acquire, and take
assignment and delivery from Xceed, of all right, title and interest of Xceed in
and to the Journeycraft Stock. Upon the terms and subject to the conditions set
forth in this Agreement, from and after the Effective Date, New Performance
agrees to cause Journeycraft to pay, perform and discharge, when due,
Journeycraft's debts, liabilities, obligations and commitments.
1.4. PURCHASE PRICE. At the Closing and subject to any adjustment in
accordance with Section 1.5:
(a) Journeycraft and New Performance shall assume the
Journeycraft Assumed Liabilities as provided in Section 1.2(b); and
(b) New Performance shall issue and deliver to Xceed a
non-interest bearing promissory note in the principal amount of THREE MILLION
SIX HUNDRED THOUSAND DOLLARS ($3,600,000), subject to adjustment in accordance
with Section 1.6 (the "Purchase Price"), in the form attached hereto as EXHIBIT
B (the "NOTE") (which shall provide for, among other terms specified therein,
for payment in equal quarterly installments of $300,000 commencing ninety (90)
days after the Closing Date and shall be secured by a first priority pledge in
favor of Xceed of one hundred percent (100%) of the capital stock of New
Performance and Journeycraft pursuant to the Stock Pledge Agreement in the form
attached hereto as EXHIBIT C) (the "PLEDGE AGREEMENT").
1.5. CLOSING DATE BALANCE SHEET.
(a) PREPARATION. Xceed shall prepare and deliver to New
Performance by November 20, 2000 a balance sheet for the PG Business prepared
consistent with Xceed's standard month-end closing procedures and dated as of
the October 31, 2000 (the "CLOSING BALANCE SHEET"). The Closing Balance Sheet
shall be prepared in accordance with generally accepted accounting principles
and shall be prepared in substantially the manner used to prepare the September
30, 2000 balance sheet of the PG Business annexed hereto as Exhibit H (the "9-30
BALANCE SHEET") and the audited balance sheets of Xceed for its fiscal year
ended August 31, 2000, except that the assets and liabilities shall be only the
assets and liabilities of Journeycraft.
(b) DISPUTE RESOLUTION. If New Performance in good faith
disagrees with the Closing Date Balance Sheet, then New Performance shall notify
Xceed in writing (the "NOTICE OF DISAGREEMENT") of such disagreement within
thirty (10) days after delivery of the Closing Date Balance Sheet to New
Performance. The Notice of Disagreement shall set forth in detail the basis for
the disagreement and New Performance's computation of the Closing Date Balance
Sheet. Thereafter, New Performance and Xceed shall attempt in good faith to
resolve and finally determine the Closing Date Balance Sheet. If New Performance
and Xceed are unable to resolve the disagreement within twenty (20) days after
delivery of the Notice of Disagreement, then Xceed and New Performance shall
select a mutually acceptable, independent accounting firm (such accounting firm
being hereinafter referred to as the "INDEPENDENT ACCOUNTANT") to resolve the
disputed items and make a determination of the Closing Date Balance Sheet based
thereon. Such determination will be made, and written notice thereof given to
Xceed and New Performance, within sixty (60) days after such selection. The
Independent Accountant's recalculation of the Closing Date Balance Sheet shall
be final, binding and conclusive upon the parties hereto and no party shall have
any right to contest such resolution. The scope of such firm's engagement (which
shall not be an audit) shall be limited to the resolution of the items contained
in the Notice of Disagreement, and the recalculation, if any, of the Closing
Date Balance Sheet in light of such resolution. The authority of the Independent
Accountant to resolve disputes shall be limited to determining whether or not
the Closing Date Balance Sheet was prepared in accordance with the requirements
of Section 1.6(a). The fees, costs and expenses of Xceed relating to the
preparation of the Closing Date Balance Sheet shall be borne by Xceed. The fees,
costs and expenses of the Independent Accountant, if any, selected in accordance
with this Section 1.5(b) will be shared equally by Xceed and New Performance.
1.6 PURCHASE PRICE ADJUSTMENT. Upon final determination of the
Closing Date Balance Sheet, if net assets as shown on the Closing Date Balance
Sheet are less than $0, then the principal balance of the Note shall be reduced
by an amount equal to such shortfall (the "Purchase Price Reduction") up to a
maximum amount equal to the Note. The Purchase Price Reduction shall be applied
to reduce principal installments on the Note in the order of their maturity. If
net assets as shown on the Closing Date Balance Sheet exceed $0, then such
excess shall be added to the principal balance of the Note and the installment
payments on the Note shall be adjusted in the inverse order of maturity within
ten (10) business days of final determination of the Closing Date Balance Sheet.
1.7 AGREEMENTS OF HAASE. As additional consideration for the PG Stock
Transfer, Haase hereby agrees as follows:
(a) Haase shall execute and deliver to Xceed at Closing the
Haase Severance Agreement in the form attached hereto as EXHIBIT E
(the "HAASE SEVERANCE AGREEMENT").
(b) All of Haase's rights to purchase Common Stock of, or any
other equity interest in, Xceed pursuant to any vested or unvested
option, grant, agreement, or other right, regardless of whether issued
to Haase in his capacity as an employee or a member of the Board of
Director of Xceed or in any other capacity, shall be terminated in all
respects as of Closing with the exception of Haase's right to purchase
43,750 shares of Common Stock pursuant to the option grant attached
hereto as EXHIBIT F (the "SURVIVING OPTION").
(c) Haase shall not, either directly or indirectly, sell or in
any manner dispose (except upon death) of any of the shares of Common
Stock of Xceed directly, indirectly or otherwise beneficially held by
Haase for a period of one hundred and eighty (180) days from and after
the Closing Date.
(d) In recognition of Haase's services as the Chief Executive
Officer of Xceed through August 31, 2000, Haase shall execute, and
provide reasonable assistance in connection with the preparation of,
Xceed's annual report on Form 10-K for the year ending August 31, 2000
and all necessary and related collateral documents provided (i) that
the Scott Mednick, in his capacity as Chairman, also executes same and
(ii) that Xceed has corrected any material misstatements of facts or
omissions identified by Haase.
(e) At Closing, New Performance shall cause a third party to
purchase from Xceed for $100,000 cash (by same day electronic transfer
or in otherwise immediately available funds) that certain promissory
note payable owed by Haase to Journeycraft in the original principal
amount of $1,247,483.15, together with all obligations of Haase
related to such promissory note including all obligations for payment
of accrued interest (the "Haase Note").
1.8. COOPERATION OF JAMES EDWARDS. New Performance agrees that until
the earlier to occur of (i)December 1, 2000 or (ii) completion of Xceed's
audited financial statements for its
fiscal year ending August 31, 2000, New Performance shall not hire Mr. James
Edwards and shall no take any actions intended to cause Mr. Edwards to leave the
employ of Xceed. Notwithstanding the foregoing, Xceed agrees to make Mr. Edwards
services available to New Performance for not more than one business day per
week to assist New Performance with its accounting needs. New Performance shall
pay to Xceed a per diem fee of $750 for the services of Mr. Edwards.
1.9 ISSUANCE OF XCEED COMMON STOCK UNDER LETTER AGREEMENT. In
accordance with the Letter Agreement and the requirements of the Atlanta Merger
Agreement, New Performance and Haase shall cause to be delivered to Xceed, and
each shall represent as accurate, a statement setting forth the proper
calculation of any shares of Xceed common stock due to Brenda Isaac pursuant to
the Letter Agreement. Within thirty (30) days of receipt of same, Xceed shall
have the right to audit the books and records of New Performance and/or
Journeycraft or any successor in interest thereto relative to the calculation of
any such shares due to Isaac. Thereafter, and upon Xceed's reasonable
satisfaction with said calculation, Xceed shall cause to be issued such number
of shares of common stock of Xceed, if any, as is properly due Isaac.
1.10. TAX MATTERS. All sales and transfer taxes, recording charges,
and similar taxes and charges, incurred in connection with the PG Stock Transfer
shall be borne by New Performance.
SECTION 2
Closing
2.1 CLOSING. The consummation of the transactions contemplated by
this Agreement (the "CLOSING") shall take place as soon as practicable after
satisfaction or waiver of all conditions set forth herein, but regardless shall
be deemed effective as of November 1, 2000. The Closing shall occur at the
offices of Xceed Inc., 233 Broadway, New York, New York 10279, or at such other
time and place as the parties shall mutually agree (the date on which such
closing occurs being herein referred to as the "CLOSING DATE").
2.2 DELIVERIES BY JOURNEYCRAFT AND XCEED. At the Closing,
Journeycraft and Xceed shall deliver to each other, duly and properly executed,
the following:
(a) the Assignment and Assumption Agreement in the form attached
hereto as EXHIBIT G evidencing Xceed's assignment of the Xceed Held PG
Assets and Journeycraft's assumption of the Journeycraft Assumed
Liabilities, subject to the terms and conditions set forth herein and
therein (the "ASSIGNMENT AGREEMENT"); and
(b) the Lease Assumption Agreement by and among Xceed, Landlord,
Journeycraft, and New Performance relating to the Atlanta Lease in the
form attached hereto as EXHIBIT H (the "LEASE ASSUMPTION").
2.3 DELIVERIES BY XCEED TO NEW PERFORMANCE. At the Closing, Xceed
shall deliver to New Performance, duly and properly executed, the following:
(a) the certificates representing all of the Journeycraft Shares
which are represented by certificates, endorsed or accompanied by
documents of assignment or other documents sufficient to transfer
legal and beneficial ownership of the Journeycraft Shares represented
by the certificates to New Performance, and evidence that all the
Journeycraft Shares which are not represented by certificates have
been registered in the name of, or otherwise transferred to, New
Performance.
(b) Xceed's acknowledgement of the Lease Assumption;
(c) an Employee Severance Agreement in the form of EXHIBIT I
attached hereto (a "SEVERANCE AGREEMENT") with respect to each
Employee;
(d) the Haase Severance Agreement; and
(e) a certificate of the Chief Executive Officer and Secretary
of Xceed certifying (i) true and correct copies of Xceed's Certificate
of Incorporation and By-laws; (ii) true and correct copies of
resolutions authorizing the Purchase Documents; and (iii) true names
and incumbency of certain officers of Xceed.
2.4 DELIVERIES BY NEW PERFORMANCE AND HAASE. At the Closing, New
Performance and/or Haase, as applicable, shall deliver to Xceed, duly and
properly executed, the following:
(a) the Assignment Agreement;
(b) a Severance Agreement from each of Employees (exclusive of
Haase who shall deliver the Haase Severance Agreement);
(c) the Haase Severance Agreement;
(d) the Lease Assumption;
(e) the Note;
(f) the Pledge Agreement; and
(g) a Certificate of the Chief Executive Officer and Secretary
of New Performance, certifying (i) true and correct copies of the
Certificate of Incorporation and Bylaws of New Performance, (ii) a
true and correct copy of resolutions authorizing the Purchase
Documents, and (iii) the names and incumbency of the officers of New
Performance.
2.5 SURVIVAL OF CERTAIN TERMS. Notwithstanding the satisfaction of the
conditions hereof and the closing of the transactions contemplated by this
Agreement, Section 4, Section 5, Section 7 and Section 8 shall survive such
closing.
SECTION 3
Conditions; Effective Date
3.1 CONDITIONS. The closing of the transactions contemplated hereby
shall be subject to the following conditions:
(a) the execution and delivery by each of the parties hereto of
each of the Purchase Documents to which it is a party;
(b) the execution and delivery by each of the Employees of the
Severance Agreements, with the exception of Brenda Isaac;
(c) the execution and delivery of the Atlanta Lease Assumption
by New Performance, and the Landlord;
(d) consummation of the purchase of the Haase Note as
contemplated in Section 1.7(e); and
(e) completion of all necessary corporate actions by Xceed,
including Board approval, to consummate the transaction contemplated
by this Agreement
3.2 EFFECTIVE DATE. The PG Stock Transfer shall occur at such time as
all of the conditions precedent set forth in Section 3.1 are satisfied, but the
parties agree that the effective date ("Effective Date") of the PG Stock
Transfer and all liabilities and rights associated with the transaction
contemplated hereby shall be November 1, 2000.
SECTION 4
Representations and Warranties
4.1 REPRESENTATIONS OF XCEED. Xceed hereby represents and warrants to
New Performance as of the date hereof, as follows:
(a) Xceed: (i) is a corporation duly organized and validly
existing under the laws of the State of Delaware; (ii) has the power and
authority to own its property and to carry on its business as now conducted or
as presently contemplated; and (iii) has the power and authority to execute,
deliver and perform this Agreement and the Purchase Documents to which it is a
party.
(b) The execution, delivery and performance by Xceed of each of
this Agreement and the other Purchase Documents to which it is a party: (i) have
been duly authorized by all requisite corporate action on the part of Xceed,
including any requisite approval of its board of directors; and (ii) do not
violate any provision of law, the Certificate of Incorporation or Bylaws of
Xceed, or any applicable order of any court or other governmental agency.
(c) Each of this Agreement and the other Purchase Documents to
which Xceed is a party constitutes a legal, valid and binding obligation of
Xceed, enforceable against Xceed in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, reorganization, insolvency and similar
laws affecting creditors' rights generally and to moratorium laws from time to
time in effect and to the extent that such enforcement is subject to the
principles of equity in a proceeding at law or in equity.
(d) As of the date of execution of this Agreement and through
the Closing Date, all cash generated upon receipt of payment of accounts
receivable reflected in the 9-30 Balance Sheet, or of accounts receivable
generated by the PG Business since September 30, 2000, have been applied to pay
obligations of the PG Business, except that Xceed shall retain from such
receipts an amount equal to $2,000,000.
4.2 REPRESENTATIONS OF NEW PERFORMANCE AND HAASE. Each of New
Performance and Haase jointly and severally hereby represent and warrant to
Xceed, as of the date hereof, as follows:
(a) New Performance: (i) is a corporation duly organized and
validly existing under the laws of the State of New York; (ii) has the power and
authority to own its property and to carry on its business as now conducted or
as presently contemplated; and (iii) has the power and authority to execute,
deliver and perform this Agreement and the Purchase Documents to which it is a
party.
(b) The execution, delivery and performance by New Performance
of this Agreement and the other Purchase Documents to which it is a party: (i)
have been duly authorized by all requisite corporate action on its part,
including any requisite approval of its board of directors and stockholder; and
(ii) do not violate any provision of law, the certificate of incorporation or
bylaws of New Performance, or any applicable order of any court or other
governmental agency.
(c) Each of this Agreement and the other Purchase Documents to
which New Performance and/or Haase is a party constitutes a legal, valid and
binding obligation of New Performance and/or Haase, as applicable, enforceable
against New Performance or Haase, as applicable, in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, reorganization, insolvency
and similar laws affecting creditors' rights generally and to moratorium laws
from time to time in effect and to the extent that such enforcement is subject
to the principles of equity in a proceeding at law or in equity.
(d) Haase represents that the Balance Sheet dated as of
September 30, 2000 attached hereto as Exhibit J has been prepared in accordance
with generally accepted accounting principles and is true and accurate in all
material respects.
SECTION 5
Covenants
5.1 INDEMNIFICATION. (a) Subject to Closing, from and after the
Effective Date, each of Journeycraft, New Performance, and Haase shall
indemnify, on a joint and several basis, Xceed, together with its officers,
directors, stockholders, employees, and agents (collectively the "XCEED
PARTIES") from and against any and all causes of action, losses, liabilities,
damages, costs, or expenses (including reasonable attorneys' fees) incurred by
any of the Xceed Parties, including, without limitation, both third-party and
direct claims, arising out of or in connection with: (i) the failure of New
Performance to assume, pay, perform and discharge the Journeycraft Assumed
Liabilities and the failure of Journeycraft to pay, perform and discharge its
liabilities; (ii) the ownership, operation or control of the Journeycraft and
New Performance from and after the Effective Date; (iii) breach of any warranty,
representation or covenant herein by Haase and/or New Performance; (iv) any
liability incurred by Xceed after the Effective Date and relating to the PG
Business. To the extent any claim for indemnity is made pursuant to this Section
5.1 against Haase, Haase's liability shall be limited to One Million One Hundred
Seventy-Three Thousand Dollars ($1,173,000), except in the case of a claim for
indemnity arising out of a breach of the representation included in Section
4.2(d) or any liability arising out of the failure of Journeycraft and/or New
Performance to satisfy and properly discharge the Journeycraft Assumed
Liabilities and the liabilities of Journeycraft reflected on the 9-30 Balance
Sheet and/or the Closing Balance Sheet.
(b) Xceed shall indemnify New Performance together with its
officers, directors, stockholders, employees and agents (collectively, the "New
Performance Parties") from and against any and all causes of action, losses,
liabilities, damages, costs or expenses incurred by the New Performance Parties
arising our of or in connection with the breach by Xceed of any warranty of
Xceed set forth in Section 4.1.
5.2 SURVIVAL OF REPRESENTATIONS; EXCLUSIVE REMEDY; AND LIMITATION OF
LIABILITY.
(a) SURVIVAL OF REPRESENTATIONS. The representations and
warranties contained in this Agreement and the other Purchase Documents shall
survive the Closing.
(b) LIMITATION OF LIABILITY. Each of Journeycraft, Xceed, New
Performance and Haase hereby agrees that, absent actual fraud and exclusive of
claims made by any third party, no party hereto shall be liable for any special,
consequential, indirect or similar damages.
5.3 EXISTING LITIGATION. Notwithstanding any other provision of this
Agreement, neither New Performance, Haase nor Xceed shall have any obligation
solely as a result of having entered into this Agreement to indemnify the other
for any claims arising out of that certain litigation commenced in United States
District Court of the Southern District of New York and captioned "Brenda Isaac,
Plaintiff against Xceed, Inc., McLaughlin & Stern, LLP, Werner G. Haase, and
Richard J. Blumberg, Defendants" or out of the facts and circumstances giving
rise to such litigation.
5.4 INDEMNIFICATION PROCEDURES.
(a) THIRD PARTY CLAIMS. If a claim by a third party arises as to
which any party is entitled to indemnification hereunder, the party entitled to
indemnification (the "INDEMNIFIED
PARTY") shall endeavor to advise the other party (the "INDEMNIFYING PARTY") of
the claim within five (5) business days after receipt of a summons, or within
twenty (20) business days after receipt of other written communication giving
information as to the nature of the claim, by the Indemnified Party, provided
that failure to so notify shall not limit the Indemnified Party's right to
indemnification under Section 5.1 unless such failure materially prejudices the
ability of the Indemnifying Party to defend such third party claim. The
Indemnifying Party shall not be liable or responsible for any expenses which are
incurred by the Indemnified Party before such notice has been given to the
Indemnifying Party, nor bound by any settlements made by the Indemnified Party
before such notice. The Indemnifying Party shall, within the lesser of twenty
(20) days after receipt of notification of the claim from the Indemnified Party
or five (5) days before an answer is required to be filed, advise the
Indemnified Party whether the Indemnifying Party will undertake the defense of
such claim on behalf of the Indemnified Party and, if so, shall specify the name
of the attorney who will handle the matter, which attorney shall be reasonably
satisfactory to the Indemnified Party and shall not have any present or
potential conflict in representing the interests of both parties. If the
Indemnifying Party timely notifies the Indemnified Party that it will undertake
the defense of such claim and agrees that it is legally obligated to indemnify
the Indemnified Party hereunder and shall thereafter diligently provide such
defense, such counsel shall have control of the defense, but the Indemnified
Party may participate in the defense with its own counsel paid for by the
Indemnified Party, and the Indemnified Party shall not settle or compromise such
claim without the prior consent of the Indemnifying Party, which consent shall
not be unreasonably withheld. If the Indemnifying Party fails timely to advise
the Indemnified Party that it will undertake the defense of such claim on behalf
of the Indemnified Party, fails to agree that it is legally obligated to
indemnify the Indemnified Party hereunder or fails diligently to pursue such
defense, then the Indemnified Party may undertake the defense of such claim with
its own counsel and may settle or compromise such claim in its sole discretion,
all at the expense of the Indemnifying Party.
(b) DIRECT CLAIMS. Any indemnifiable claim hereunder by a party
hereto and that is not a claim by a third party shall be asserted by the
Indemnified party by promptly delivering notice thereof to the Indemnifying
party, provided that failure to so notify shall not limit the Indemnified
Party's right to indemnification under Section 5.1 unless such failure
materially prejudices the ability of the Indemnifying Party to remedy such
claim.
ARTICLE 6
Covenants
6.1 ENTITY NAME. It is expressly understood that the assets of
Journeycraft will not include the right to use the "Xceed" name or any
derivations thereof. Accordingly, New Performance shall immediately discontinue
all uses of the "Xceed" name and any and all derivations thereof, including,
without limitation, the name "X-Ceed," in connection with the PG Business or
otherwise.
6.2 PERFORMANCE GROUP NAME. It is expressly understood and agreed
that in acquiring the Journeycraft Shares, New Performance is acquiring all
trademark and/or service mark rights, if any, to use the name "Performance
Group" in connection with the PG Business. Accordingly, Xceed shall immediately
discontinue all trademark and/or service mark uses of the "Performance Group"
name in connection with its business.
6.3 EMPLOYMENT ISSUES.
(a) OFFER OF EMPLOYMENT. Subject to and in accordance with the
provisions of this Section 6.3, New Performance agrees to, effective upon the
Closing, offer full-time employment to all of the Employees on terms and
conditions no less favorable than the terms and conditions of their employment
relationship with Journeycraft and/or Xceed, as applicable. Schedule 6.3(a)
describes as to each such Employee the terms of his or her employment with
Xceed. New Performance agrees to hire all of the Employees who accept such
offer. Each Employee who accepts employment with New Performance upon the
Closing is hereinafter referred to as a "TRANSFERRED EMPLOYEE."
(b) TRANSITION. The employment of the Transferred Employees by
Journeycraft or Xceed, as applicable, shall end effective as of the close of
business on the day before the Closing Date and the employment of the
Transferred Employees by New Performance shall commence at 12:01 a.m. on the
Closing Date.
(c) BENEFITS FOR TRANSFERRED EMPLOYEES. New Performance shall
use reasonable efforts to permit Employees who accept employment from New
Performance, effective as of the Closing Date, to participate in and roll-over
their retirement funds into New Performance's applicable benefit plans, if any.
New Performance shall use reasonable efforts to provide coverage for Transferred
Employees under New Performance's benefit plans and programs, as applicable, as
of 12:01 a.m. on the Closing Date. New Performance shall give each Transferred
Employee credit for such Transferred Employee's years of most recent continuous
service (including time during approved leaves of absences of less than
twenty-six (26) weeks) with Journeycraft or Xceed, as applicable, for purpose of
determining participation and benefit levels under all of the vacation policies
and benefit plans and programs of New Performance, as applicable, unless
otherwise prohibited by law or the terms of any of such benefit plans and
programs, and shall give each Transferred Employee credit for any accrued
vacation time to which each Transferred Employee would be entitled immediately
prior to the Closing under Xceed's current vacation policy.
6.4. COLLECTION OF ACCOUNTS. Xceed agrees to cooperate with New
Performance to allow New Performance to collect all accounts receivable of the
PG Business from and after November 1, 2000. In furtherance of the foregoing,
Xceed agrees that to the extent that it receives any payments on account of
accounts receivable, contracts, contract rights, notes, drafts or other form of
obligation owing to the PG Business from and after November 1, 2000, it shall
receive such payments in trust for the benefit of New Performance and it shall
immediately deliver such payments to New Performance in the same form received,
endorsed or otherwise assigned by Xceed where necessary to permit the collection
of such items. Furthermore, Xceed agrees that, to the extent any such payment is
received from and after November 1, 2000 by New
Performance owing to the PG Business which requires an endorsement or other
action by Xceed to permit New Performance to collect such items, Xceed shall
cooperate fully with New Performance by providing such endorsements or taking
such other necessary action to permit collection within three (3) business days
of New Performance's request. The parties hereto further agree that to the
extent that checks have been received by the PG Business in payment of accounts
receivable owing to the PG Business and such checks have not been deposited for
collection, such checks shall be endorsed to New Performance on the Closing
Date. New Performance likewise agrees that to the extent it receives any
payments on account of accounts receivable, contracts, contract rights, notes,
drafts or other form of obligation owing to Xceed and not the PG Business, it
shall receive such payments in trust for the benefit of Xceed and it shall
immediately deliver such payments to New Performance in the same form received.
Notwithstanding the foregoing, in the event the closing of the transactions
contemplated by this Agreement does not occur, New Performance shall fully
account to Xceed for all such accounts receivable and other payments turned over
to New Performance in accordance with this Section 6.4.
SECTION 7
Tax Matters
7.1. TAX RETURNS. Xceed will be responsible for the preparation and
filing of all tax returns for Xceed for all periods as to which tax returns are
due after the Closing date (including the consolidated returns for Xceed which
include the Atlanta operations of the PG Business and Journeycraft for any
period ending on or before the Closing date). Xceed will make all payments
required with respect to any such tax return.
7.2. TERMINATION OF TAX SHARING AGREEMENTS. Any agreement between
Xceed and Journeycraft regarding allocation or payment of taxes or amounts in
lieu of taxes shall be deemed terminated at and as of the Closing and shall have
no effect with respect to Journey craft for any period thereafter.
7.3. TAX RETURNS POST CLOSING. New Performance will be responsible
for the preparation and filing of all tax returns for the Journeycraft and for
the Atlanta operations of Performance Group for all periods as to which tax
returns are due after the Closing (other than taxes with respect to periods for
which the consolidated returns of Xceed will include the Atlanta operations and
the operations of Journeycraft). New Performance will make all payments required
with respect to any such tax return, provided however, that Xceed will reimburse
New Performance and currently therewith to the extent any payment New
Performance is making relates to the operations of Journeycraft and for the
Atlanta operations of Performance Group for any period ending on or before the
Closing Date.
7.4. 338 ELECTION. At the option of New Performance, the parties
hereto will cooperate in the preparation and filing of an election under Code
Section 338(h)(10) with respect to the sale of the Journeycraft Stock hereunder,
and take all such action as is required in order to give effect to the election
for state, local, and foreign tax purposes to the greatest extent permitted by
law.
7.5. ALLOCATION. The parties agree to allocate the purchase price (and
all other capitalizable costs) among the acquired assets for all purposes in
accordance with the allocation schedule attached hereto as Exhibit K.
SECTION 8
Miscellaneous Provisions
8.1 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
incorporated by reference herein and the other Purchase Documents, shall
constitute the entire agreement between and among the parties relating to the
subject matter hereof and, without limiting the foregoing, supersedes in its
entirety that certain document agreement entitled "Terms of Sale of Performance
Group" among the parties dated October 11, 2000. There are no terms,
obligations, covenants, representations, statements, or conditions other than
those contained herein, in such Exhibits, and in the other Purchase Documents.
No variation or modification of this Agreement or waiver of any of the terms or
provisions hereof shall be deemed valid unless made in a writing signed by all
parties hereto.
8.2 HEADINGS. The headings appearing at the beginning of the numbered
sections hereof have been inserted for convenience only and do not constitute
any part of this Agreement.
8.3 GOVERNING LAW; JURISDICTION; VENUE. This Agreement shall be
considered as having been made in the United States of America and shall be
construed and the respective rights of the parties determined in accordance with
the laws of the State of New York. Each party hereto agrees that any legal
action or proceeding arising hereunder shall be brought either in federal or
state courts located in the State of New York and irrevocably submit themselves
to the jurisdiction of those courts.
8.4 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery, or
first-class mail, certified or registered with return receipt requested, or by
commercial overnight courier and shall be deemed to have been duly given upon
hand delivery, delivery by commercial overnight courier to the address specified
below, or deposit in the U.S. mail as provided above, addressed as follows:
(a) If to Xceed:
Xceed Inc.
640 North LaSalle Street
Suite 590
Chicago, Illinois 60610
Attention: Richard R. Dennerline,
Chief Legal Officer
Telephone: 312.360-6587
Telecopy: 312.360-6575
(b) If to New Performance
488 Madison Avenue
New York, New York 10022
Attention: Werner Haase
Telephone: 212. 758.4572
Telecopy: 212.688. 3434
(c) To such other address as to which notice is provided in
accordance with this Section.
8.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and its successors and assignees permitted
hereunder. No party hereto shall assign this Agreement, except (i) in a sale of
all or substantially all of the assets or equity shares of such party to, or
through a merger or dissolution of such party into, another entity which agrees
in writing to be bound by this Agreement or (ii) to a greater than fifty percent
(50%) owned affiliate of such party which agrees in writing to be bound by this
Agreement
8.6 SEVERABILITY. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of this Agreement shall be deemed valid and
enforceable to the extent possible.
8.7 THIRD-PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit nor confer any rights or remedies on any person
other than the parties hereto and their respective heirs, successors and legal
representatives.
8.8 BROKERS. Xceed represents to New Performance that there are no
brokers or finders entitled to any brokerage or finder's fee or other commission
or fee based upon arrangements made by or on behalf of such party or any other
person in connection with this Agreement or any of the transactions contemplated
hereby. New Performance represents Xceed that no broker or finder is entitled to
any brokerage or finder's fee or other commission or fee based upon arrangements
made by or on behalf of New Performance in connection with this Agreement or any
of the transactions contemplated hereby.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof, but all of
which together shall constitute one and the same instrument.
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT IMMEDIATELY FOLLOWS]
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed as of the day and year first above written.
JOURNEYCRAFT, INC.
By: /s/ Werner G. Haase
---------------------------------
Werner G. Haase, President
XCEED INC.
By: /s/ Howard A. Tullman
---------------------------------
Howard A. Tullman, Chief Executive
Officer
488 PERFORMANCE GROUP, INC.
By: /s/ Werner G. Haase
---------------------------------
Werner G. Haase, Chief Executive
Officer
/s/ Werner G. Haase
---------------------------------
Werner G. Haase, individually
ACKNOWLEDGEMENT AND CONSENT
Journey Corp. .Com, a New York corporation ("Journeycorp.", and its
principal shareholder, Nurit Kahane Haase, join in the execution of this
Agreement for the sole purpose of acknowledging and consenting, to the extent
required by the Journey Corp. Asset Sale Agreement, to the consummation of the
transaction contemplated hereby and hereby releases Xceed from any obligations
which have been assumed by Journeycraft and/or New Performance hereunder,
otherwise owing to Journeycorp under the Journey Corp. Asset Sale Agreement.
JOURNEY CORP. .COM
By:/s/ Nurit Kahane Haase
---------------------------------
Nurit Kahane Haase, President
/s/ Nurit Kahane Haase
---------------------------------
Nurit Kahane Haase, individually and
as principal shareholder of
Journey Corp. .com
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "AMENDMENT") is
made as of November 6, 2000, by and among Journeycraft, Inc., a New York
corporation ("Journeycraft"), Journeycraft's parent corporation, Xceed Inc., a
Delaware corporation ("Xceed"), 488 Performance Group, Inc., a New York
corporation ("NEW PERFORMANCE"), and Werner G. Haase ("HAASE"), an individual
and principal shareholder of New Performance.
RECITALS:
A. The parties hereto entered into that certain Stock Purchase
Agreement as of November 3, 2000, (the "PURCHASE AGREEMENT") pursuant to which
Xceed has agreed to transfer and sell all of the outstanding capital stock of
Journeycraft to New Performance for the consideration stated therein.
B. The parties desire to amend the Purchase Agreement in connection
with the closing of the transaction contemplated thereunder.
C. Capitalized terms used in this Amendment shall have the meaning
set forth in the Purchase Agreement, unless otherwise specifically defined
herein.
NOW, THEREFORE, in consideration for the foregoing recitals and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. AMENDMENT TO NEW PERFORMANCE'S OBLIGATION TO DELIVER EMPLOYEE
SEVERANCE AGREEMENTS.
Paragraph (c) of Section 2.3 of the Purchase Agreement is hereby
deleted.
Paragraph (b) of Section 2.4 of the Purchase Agreement is hereby
amended and restated to read as follows: "(b) an Employee Acknowledgment in the
form attached as EXHIBIT A to the First Amendment from each of the PG Employees
(exclusive of Haase who shall deliver the Haase Severance Agreement and Isaac)."
2. ADDITIONAL DEFINITIONS. Section 1.1 of the Purchase Agreement is
hereby amended to add the following new definitions in alphabetical order
thereunder:
"EMPLOYEES" means the PG Employees.
"FIRST AMENDMENT" means that certain First Amendment to Stock
Purchase Agreement dated November 6, 2000 among the parties hereto.
"PG EMPLOYEES" means all of the employees of the PG Business.
-1-
3. AMENDMENT TO DATE FOR DELIVERY OF CLOSING BALANCE SHEET. The
first sentence of Section 1.5(a) is hereby amended to delete the first sentence
thereof and replace same with the following:
"Xceed shall prepare and deliver to New Performance by November
24, 2000 a balance sheet for the PG Business prepared consistent
with Xceed's standard month-end closing procedures and dated as
of the October 31, 2000 (the "CLOSING BALANCE SHEET")"
4. EXPANDED INDEMNIFICATION RELATING TO CLAIMS BY PG EMPLOYEES. The
first sentence of Section 5.1(a) is hereby amended to add a new subsection (v)
immediately following the existing subsection (iv) as follows:
"; and (v), with the exception of Brenda Isaac (an employee of
the Atlanta PG Business) any liability incurred by Xceed with
respect to any PG Employee that would have been released or
otherwise not actionable had such PG Employee executed the form
of Employee Severance Agreement attached hereto as EXHIBIT I."
5. NO OTHER MODIFICATIONS. Except as expressly set forth in this
Amendment, the Purchase Agreement, as written, shall remain in full force and
effect in accordance with its terms and is hereby ratified and confirmed in all
respects.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the day and year first above written.
JOURNEYCRAFT, INC.
By: /s/ Werner G. Haase
--------------------------------
Werner G. Haase, President
XCEED INC.
By: /s/ Howard A. Tullman
--------------------------------
Howard A. Tullman, Chief Executive
Officer
488 PERFORMANCE GROUP, INC.
By: /s/ Werner G. Haase
----------------------------------
Werner G. Haase, Chief Executive
Officer
/s/ Werner G. Haase
---------------------------------
Werner G. Haase, individually
-2-
ACKNOWLEDGEMENT AND CONSENT:
JOURNEY CORP. .COM
By: /s/ Nurit Kahane Haase
----------------------------------
Nurit Kahane Haase, President
/s/ Nurit Kahane Haase
------------------------------------
Nurit Kahane Haase, individually and
as principal shareholder of Journey
Corp..com
-3-