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 19, 2001
e-Synergies, inc.
California
(State or other jurisdiction of incorporation)
Commission File Number
3 Corporate Plaza
Suite 250
Newport Beach, CA 92660
(Address of principal executive office)
91-2021595
------------------------
I.R.S. Employer I.D. No.
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
TRANSACTION - OVERVIEW
On July 19, 2001, the United States Bankruptcy Court for the Northern District
of Illinois (the "Court") approved the purchase by e-Synergies, inc.
("e-Synergies") of substantially all the operating assets (the "Acquired
Assets") and the assumption of certain liabilities (the "Assumed Liabilities")
of Worldwide Xceed Group, Inc. ("Worldwide Xceed"), a debtor-in-possession in
case number 01-15553 filed under Chapter 11 of Title 11 of the United States
Code. The parties effected the purchase pursuant to that certain Asset Purchase
Agreement (the "Purchase Agreement" a copy of which is attached as Exhibit 1),
dated July 3, 2001.
Immediately upon the Court's approval of the purchase and pursuant to that
certain Assignment and Assumption Agreement between e-Synergies and eSynergies
Xceed, Inc. ("New Xceed"), a wholly-owned subsidiary of e-Synergies, dated July
19, 2001, e-Synergies assigned all of its right title and interest in the
Acquired Assets to New Xceed and New Xceed assumed and agreed to pay the
Assumed Liabilities of e-Synergies.
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TRANSACTION - DETAILS
The common stock of Worldwide Xceed previously traded on the Nasdaq under the
"XCED" symbol, was halted on or about May 1, 2001 and de-listed from The Nasdaq
National Market on or about May 4, 2001. Worldwide Xceed previously operated as
a management and computer software consulting provider, helping companies to
develop e-commerce and e-business solutions, and improve business performance
through more effective and efficient communication tools, techniques and
technologies.
The Acquired Assets include: (1) certain intellectual property, including but
not limited to domain names, trademarks (both pending and allowed) and
copyrights; (2) certain personal property, including but not limited to client,
customer and advertiser lists, office equipment, furnishings and computer
equipment; (3) certain outstanding accounts receivable with an aggregate stated
value of approximately $2,866,000; (4) certain rights to receive payment for
services rendered to customers but not yet billed with an aggregate stated
value of approximately $1,047,000; (4) certain assigned contracts, including
contracts for the continuation of services for ten customers; (5) certain
employee covenants, including but not limited to non-disclosure,
confidentiality and non-solicitation agreements; and (6) all books and records
pertaining to the assets acquired by e-Synergies.
Several customers whose contracts were assigned, as described in (4) above, are
CBS Entertainment, a division of CBS Broadcasting, Inc., Hilton Hotels
Corporation, Herman Miller RED, and Castrol North America, Inc. A complete list
of the assigned contracts is included as an exhibit to the Purchase Agreement.
The Assumed Liabilities include: (1) certain specifically identified trade
accounts payable, accrued expenses and other liabilities, which collectively
equal approximately $123,000; (2) certain accrued salaries and wages relating
to employee services for a portion of the July 15 payroll period and in an
amount equal to $97,925; (3) certain accrued vacation benefits of employees
transferred to e-Synergies in an amount approximately equal to $322,000; (4)
certain obligations, including cure amounts, related to above mentioned
assigned contracts, including most prominently the leases for office space in
Chicago, Dallas and Los Angeles; and (5) a restructured financing facility with
Spherion Corporation with a face amount equal to $4,000,000. The accrued
salaries and wages assumed by e-Synergies was increased to an aggregate of
approximately $310,000 as a result of e-Synergies agreeing to fund forty
percent (40%) of Worldwide Xceed's July 15 payroll, since the closing of the
acquisition did not occur until July 19.
The consideration paid by e-Synergies to Worldwide Xceed at the closing of the
acquisition (the "Closing"), in addition to the assumption of the
above-described Assumed Liabilities, was equal to $1,750,000 in cash, and
$559,620.24 in the form of a promissory note issued by e-Synergies in favor of
Worldwide Xceed. The promissory note is due on or before August 15, 2001, bears
interest at the rate of eighteen percent (18%) per annum, and is secured by a
security interest in all of the Acquired Assets. The amount of consideration
paid by e-Synergies resulted from arms length negotiations between executive
management of e-Synergies and executive management of Worldwide Xceed, as well
as approval by the secured creditors of Worldwide Xceed and the Court.
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To obtain Spherion Corporation's approval of the purchase, e-Synergies also
agreed to make an advance payment at Closing of $1,000,000 in cash to Spherion
Corporation, causing the face amount of the restructured financing facility
with Spherion Corporation to be reduced to $3,000,000 immediately following
such payment. The portion of the financing facility that remains outstanding is
secured by the accounts receivable related to services already rendered to
customers, whether billed or unbilled, and acquired by e-Synergies pursuant to
this transaction. Any receivables relating to services rendered after the
acquisition are not subject to the terms of the financing facility.
USE OF ACQUIRED ASSETS
e-Synergies, through New Xceed, intends to maintain and operate the acquired
assets, with the transferred employees and the assigned client contracts, as a
separate sustainable business that compliments the services and products
offered by e-Synergies' other subsidiaries. The costs associated with the
Acquired Assets, Assumed Liabilities and transferred employees will be closely
examined with a purpose toward eliminating duplicative roles and expenses and
reducing non-duplicative expenses, while maintaining the company's client
service and revenue generation capabilities.
Other subsidiaries of e-Synergies include:
Salesmation, Inc., a wholly-owned subsidiary of e-Synergies based in Newport
Beach, California, is a marketing and communications services company that
employs proprietary technologies to provide affordable, easy to use
Internet-based marketing tools, turn-key interactive marketing services, and
data and email list services.
CommerceSWITCH (Pty.) Ltd., a fifty-one percent (51%) owned subsidiary of
e-Synergies based in South Africa, is a technology based company that employs
proprietary technology to provide product management and cataloging services
for businesses engaging in electronic commerce on the Internet. The scope of
services provided to customers include, but is not limited to, catalog and
content management, corporate purchasing automation, and Internet based
financial and information services.
SOURCES OF FUNDS
e-Synergies borrowed $3,000,000 from five persons to effect the transaction.
Market Strategems, Inc. loaned $150,000 (the "Strategms Loan"), Suprafin, Inc.
loaned $1,100,000 (the "Suprafin Loan"), Hitechcafe.com loaned $1,000,000 (the
"Hitech Loan"), Steven and Linda Eichberg loaned $300,000 (the "Eichberg
Loan"), and First International Bank loaned $450,000 (the "Bank Loan"). The
Strategems Loan bears interest at the rate of ten and three-quarters percent
(10.75%), is due in six months, and is secured by certain stock held by
e-Synergies and e-Synergies shareholders. The Suprafin Loan bears interest at
the rate of ten and three-quarters percent (10.75%), is due in one year, and is
secured by certain stock held by e-Synergies and e-Synergies shareholders. The
Hitech Loan bears interest at the rate of ten and three-quarters percent
(10.75%), is due in sixty days, and is secured by a blanket lien on all the
assets of e-Synergies. The Eichberg Loan bears interest at the rate of ten and
three-quarters percent (10.75%), is due in sixty days, and is secured by
certain of the assets held by e-Synergies and e-Synergies shareholders. The
Bank Loan bears interest at the rate of ten and three-quarters percent
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(10.75%), is due in one year, and is secured by certain stock held by
e-Synergies and e-Synergies shareholders. Collectively these five loans are
referred to herein as the "Loans."
e-Synergies is in the process of securing a longer term financing facility,
with more favorable terms, that will be used to repay the Loans. e-Synergies is
also in the process of raising additional equity investment, which is intended
to provide additional working capital for e-Synergies and its subsidiaries. If
the alternative financing facility is not secured, the company will use the
proceeds from the equity investment to repay the Loans. If e-Synergies is
unable to secure both the financing facility and the equity investment, the
company will be forced to reduce our expenses and possibly restrict or
eliminate planned product development and marketing. There is no assurance that
additional financing will be available to us. This could hamper potential
business opportunities or the Company's response to competitive pressures.
Should these situations occur, they could have a material adverse affect on our
operations and financial condition.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events and Regulation FD Disclosure.
Not applicable.
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements and Exhibits.
a. Financial Statements of Business Acquired.
It is impractical to provide the required financial statements for Esynergies
Xceed, Inc. at this time. The registrant intends to file such financial
statements as soon as is practical, but not later than 60 days after this
report on Form 8-K is filed with the Commission.
b. PRO FORMA FINANCIAL INFORMATION.
It is impractical to provide the required pro forma financial statements at
this time. The registrant intends to file such pro forma consolidated financial
statements for itself and its wholly-owned subsidiaries as soon as is
practical, but not later than 60 days after this report on Form 8-K is filed
with the Commission.
c. EXHIBITS.
Exhibit 1. Asset Purchase Agreement
Item 8. Change in Fiscal Year.
Not applicable.
Item 9. Regulation FD Disclosure.
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated: August 1, 2001
e-Synergies, inc.
Thomas Ronk
- ----------------------
Thomas Ronk, President
Exhibit 1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
July 3, 2001 by and among Worldwide Xceed Group, Inc., a Delaware corporation
("Xceed"), and e-Synergies, Inc., a California corporation ("Buyer").
RECITALS:
WHEREAS, Xceed is a debtor and a debtor in possession in a case (the
"Case") filed in the United States Bankruptcy Court for the Northern District
of Illinois (the "Bankruptcy Court") under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code") on April 30, 2001 (the "Petition Date?), as
case number 01-15553;
WHEREAS, the Buyer desires to purchase from Xceed, and Xceed desires to
sell, convey, assign, and transfer to the Buyer, all of the operating assets
and other assets relating to Xceed's business, and the Buyer desires to assume
certain obligations and liabilities relating thereto, all in the manner and
subject to the terms and conditions set forth herein and in accordance with
sections 105, 363, and 365 of the Bankruptcy Code (the "Proposed Transaction");
and
WHEREAS, the parties desire to consummate the Proposed Transaction as
promptly as practicable after the Bankruptcy Court enters an order approving
the Proposed Transaction (the "Sale Order").
NOW, THEREFORE, in consideration of the foregoing recitals and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
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SECTION 1
Sale of Assets and Assumption of Liabilities
1.1 Certain Defined Terms. Unless otherwise expressly defined herein, the
following capitalized terms used in this Agreement shall be defined as follows:
"Buyer Receivables" means all Receivables included in Purchased Assets
and all proceeds thereof, including all proceeds in the form of cash and cash
equivalents.
"Collection" means, with respect to any Buyer Receivable, all cash
collections and other cash proceeds in respect of such Buyer Receivable,
including, without limitation, all interest, finance charges, or other related
amounts accruing in respect thereof and all cash proceeds of collateral,
guaranties, and/or insurance with respect to such Buyer Receivable.
"Collection Account" means any lockbox, lockbox account, collection
account, concentration account, or deposit account to which any Collection is
mailed or into which any Collection is deposited.
"Contingent Liability" means any claim or right to payment of any third
party against Xceed relating to any Xceed Retained Assets that is not, as of
the Closing Date, reduced to judgment, liquidated, fixed, matured or
undisputed, or is otherwise contingent upon any event or circumstance occurring
after the Closing Date.
"Contract" means any agreements, contracts, leases, powers of attorney,
notes, loans, evidence of indebtedness, purchase orders, letters of credit,
settlement agreements, franchise agreements, undertakings, covenants not to
compete, employment agreements, licenses, benefit plans, instruments,
obligations, commitments, understandings, policies, purchase and sales orders,
quotations, and other executory commitments to which any person is a party or
to which any of the assets of Xceed is subject, whether oral or written,
express or implied, together with all obligations with respect to the payment
and performance thereof.
"Employee Covenants" means all rights and claims of Xceed of every kind
and description under all non-disclosure, confidentiality, non-competition,
non-solicitation, assignment of inventions, and other agreements of a
comparable nature with (i) all present and former employees other than
"Transferred Employees" (as defined in Section 5.2) to the extent such
agreements relate to the Purchased Assets and (ii) all Transferred Employees
whether or not such agreements relate to the Purchased Assets.
"Original Spherion Facility" means that certain Revolving Credit
Agreement dated as of November 15, 2000 between Xceed and Spherion.
"Personal Property" means any equipment, inventory, fixtures, furniture,
general intangibles and other personal property (exclusive of any intellectual
property and any Contracts) of Xceed.
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"Purchase Documents" means this Agreement, the bill of sale in the form
attached hereto as Exhibit A (the "Bill of Sale"), the assignment and
assumption agreement in the form attached hereto as Exhibit B (the "Assignment
and Assumption"), and the other agreements, documents, or instruments executed
or delivered at the Closing (as hereinafter defined) in connection therewith.
"Receivables" mean any accounts receivable, whether or not earned by the
performance of any service or the sale or delivery of any goods, with respect
to customer accounts of Xceed.
"Restructured Spherion Facility" means a term loan facility between Buyer
and Spherion pursuant to which the Original Spherion Facility, together with
the liens evidenced thereby, shall be terminated in exchange for a term note of
not more than $4.0 million (or such lesser amount equal to the balance of the
Original Spherion Facility immediately prior to the Effective Time, which shall
not be less than $3.5 million) made by Buyer in favor of Spherion and secured
by a lien in and having recourse solely to the Receivables described on
Schedule 1.2(c), in accordance with the terms set forth on that certain
Proposal Term Sheet dated June 6, 2001 among Spherion, Xceed, and Buyer and as
otherwise mutually agreed to among them consistent with the Sale Order.
"Solvent" means, when used with respect to any person or entity, that at
the time of determination: (i) it is then both able to, and fully expects to,
pay its debts as they mature; and (ii) it has capital sufficient to carry on
its business as conducted and as proposed to be conducted.
"Spherion" means Spherion Corporation, a Delaware corporation.
1.2 Sale of the Purchased Assets. Upon the terms and subject to the
conditions set forth in this Agreement, upon the occurrence of the Closing, but
effective as of the Effective Time (as hereinafter defined), Xceed shall, by
quit-claim on an "As Is" and "Where Is" basis, and without representation or
warranty of any kind (other than as set forth in Section 4 of this Agreement)
sell, convey, transfer, assign and deliver to Buyer, and Buyer shall purchase,
acquire, and take assignment and delivery from Xceed of, all right, title and
interest of Xceed in and to only those assets, properties, and rights of Xceed
that are specified in the following paragraphs (collectively the "Purchased
Assets") (each of the references to a "Schedule" in this Section 1.2 below
shall mean and be a reference to the correspondingly numbered schedule attached
to this Agreement, each of which is incorporated herein by this reference
thereto):
(a) the intellectual property described on Schedule 1.2(a);
(b) the Personal Property described on Schedule 1.2(b);
(c) the Receivables described on Schedule 1.2(c);
(d) the Contracts described on Schedule 1.2(d) (the "Assigned
Contracts");
(e) the Employee Covenants, except as described on Schedule 1.2(e); and
(f) all books and records pertaining to the foregoing.
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1.3 Assumption of Liabilities. Upon the terms and subject to the
conditions set forth in this Agreement, upon the occurrence of the Closing, but
effective as of the Effective Time, Buyer shall assume and pay, perform and
discharge, when due, those debts, liabilities, obligations and commitments of
Xceed which are described below (the "Assumed Liabilities"):
(a) the accounts payable, accrued expenses, and other liabilities of
Xceed described on Schedule 1.3(a);
(b) the accrued salaries, wages, and benefits as set forth on Schedule
1.3(b) with respect to the Transferred Employees of Xceed listed on
Schedule 1.3(b); and
(c) all obligations and liabilities with respect to the Assigned
Contracts that, by the terms of such Assigned Contracts, arise after Closing,
relate to periods following the Closing and are to be observed, paid,
discharged, or performed, as the case may be, in each case at any time after
the Effective Time; provided, that cure amounts payable in order to effectuate,
pursuant to the Bankruptcy Code, the assumption by and assignment to Buyer of
the Assigned Contracts under the Sale Order shall be paid by Xceed pursuant to
the Sale Order and in accordance with Section 1.6(b) hereof.
1.4 Xceed Retained Assets. Notwithstanding anything in Section 1.2 or
the description of the Purchased Assets to the contrary, all of the assets,
properties, and rights of Xceed of every kind and description not expressly
enumerated on the Schedules referred to in Section 1.2 of this Agreement are
excluded from the sale of the Purchased Assets pursuant to this Agreement,
including, without limitation, (a) the Receivables described on Schedule 1.4
hereto and (b) all Contracts other than (i) the Assigned Contracts and (ii) the
Employee Covenants (such excluded assets described in this Section being
referred to as the "Xceed Retained Assets").
1.5 Xceed Retained Liabilities. Notwithstanding anything in Section 1.3
or the description of the Assumed Liabilities to the contrary, all of the
claims, debts, liabilities, obligations and commitments of Xceed of every kind
and description not expressly enumerated on the Schedules to this Agreement are
expressly excluded from the assumption of the Assumed Liabilities pursuant to
this Agreement (such excluded assets being referred to as the "Xceed Retained
Liabilities"). Without limiting the foregoing and notwithstanding anything to
the contrary in this Agreement, none of the following shall be Assumed
Liabilities for the purposes of this Agreement and shall be deemed Xceed
Retained Liabilities:
(a) any accounts payable and accrued expenses of Xceed, except as listed
on Schedule 1.3(a);
(b) any liability or obligation related to employees of Xceed, except as
listed on Schedule 1.3(b);
(c) any liability or obligation under any Contract, other than the
Assigned Contracts;
8
(d) any liability or obligation of Xceed arising out of any Assigned
Contract relating to any period prior to the Closing, including, without
limitation, all cure costs relating to defaults under Assigned Contracts;
(e) any liability or obligation relating to any Xceed Retained Asset;
(f) any liability or obligation arising out of any litigation brought
against Xceed or any of its current or former officers or directors in their
capacities as officers or directors; and
(g) any Contingent Liability.
1.6. Purchase Price. As consideration for the sale by Xceed to Buyer of
the Purchased Assets hereunder, upon the occurrence of the Closing, but
effective as of the Effective Time, Buyer shall:
(a) pay to Xceed in cash (by same day electronic wire transfer or in
otherwise immediately available funds in accordance with Xceed"s written
instructions) the sum of $1,000,000;
(b) pay to Xceed (or certain creditors of Xceed as directed by Xceed in
accordance with the Sale Order) in cash (by same day electronic wire transfer
or in otherwise immediately available funds in accordance with Xceed"s written
instructions) the sum of $1,000,000, to satisfy cure amounts payable in order
to effectuate, pursuant to the Bankruptcy Code, the assumption by and
assignment to Buyer of the Assigned Contracts under the Sale Order, in such
amounts as set forth on Schedule 1.2(d);
(c) pay to Spherion for the benefit of Xceed in cash (by same day
electronic wire transfer or in otherwise immediately available funds in
accordance with Spherion"s written instructions) the sum of $1,000,000, to
repay a portion of the outstanding balance of the Original Spherion Facility in
accordance with the terms of the Restructured Spherion Facility;
(d) execute and deliver the Restructured Spherion Facility with Spherion;
and
(e) assume the Assumed Liabilities as provided in Section 1.3.
1.7 Tax Matters. All sales and transfer taxes, recording charges, and
similar taxes and charges, incurred in connection with the transactions
contemplated by this Agreement shall be borne by Buyer.
SECTION 2
Condition to Closing
The Closing shall be subject to (a) the entry of a Sale Order by the
Bankruptcy Court of Xceed, directing and authorizing Xceed to enter into and
perform its obligations under this Agreement and approving all terms,
provisions and transactions contemplated herein and (b) confirmation of the
consummation of the Restructured Spherion Facility.
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SECTION 3
CLOSING; EFFECTIVE TIME
3.1 Closing. The closing of the Proposed Transaction (the "Closing")
shall occur on the date on which the Sale Order is entered by the Bankruptcy
Court of Xceed, or such other date as is mutually agreed upon by the parties,
which date shall not be later than July 9, 2001. Notwithstanding the
foregoing, the consummation of the transactions contemplated by this Agreement
shall be deemed for all purposes to have occurred as of the date the Sale Order
has been entered by the Bankruptcy Court (the "Effective Time"). The Closing
shall occur by facsimile and delivery of executed documentation by overnight
courier to the respective parties, or by such other means as the parties shall
mutually agree.
3.2 Deliveries by Xceed. At the Closing, Xceed shall deliver or cause to
be delivered to or at the direction of Buyer, duly and properly executed, the
following:
(a) the Bill of Sale, in the form attached hereto as Exhibit A,
evidencing the sale of the Purchased Assets by Xceed to Buyer;
(b) the Assignment and Assumption, in the form attached hereto as Exhibit
B, evidencing the assignment of the Assigned Contracts by Xceed to Buyer and
the assumption of the Assumed Liabilities by Buyer;
(c) executed documents (which shall be approved by the Sale Order in lieu
of the approval of the stockholders of Xceed) to be filed with the Secretary of
State of the State of Delaware sufficient to change the legal name of Xceed to
a name substantially dissimilar to "Worldwide Xceed Group"; and
(d) such other documents and instruments as may be reasonably requested
by Buyer in order to effect or carry out the intent of this Agreement or the
Sale Order.
3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to
be delivered to or at the direction of Xceed, duly and properly executed (as
applicable), the following:
(a) the cash purchase price in accordance with and as described in
paragraphs (a), (b), and (c) of Section 1.6;
(b) the Bill of Sale, in the form attached hereto as Exhibit A,
evidencing the sale of the Purchased Assets by Xceed to Buyer;
(c) the Assignment and Assumption, in the form attached hereto as Exhibit
B, evidencing the assignment of the Assigned Contracts by Xceed to Buyer and
the assumption of the Assumed Liabilities by Buyer; and
(d) such other documents and instruments as may be reasonably requested
by Xceed in order to effect or carry out the intent of this Agreement or the
Sale Order.
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SECTION 4
Representations and Warranties
4.1 Representations of Xceed. Xceed hereby represents and warrants to
Buyer 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,
subject to the approval of the Bankruptcy Court, perform its obligations under
each of the Purchase Documents to which it is a party.
(b) The execution, delivery and performance by Xceed of all of its
obligations under each of the Purchase Documents to which it is a party have
been duly authorized by all requisite corporate action on the part of Xceed,
including any requisite approval of its board of directors.
(c) Each of the 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) 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
Xceed in connection with this Agreement or any of the transactions contemplated
hereby.
(e) At the Closing, Xceed will have good and marketable title
to all of the Purchased Assets (i) to be transferred pursuant to the Assumed
Contracts and/or (ii) reflected on the books and records of Xceed as being
owned by Xceed, free and clear of all liens, charges and encumbrances.
4.2 Representations of Buyer. Buyer hereby represents and warrants to
Xceed as follows:
(a) Buyer is a corporation duly organized and validly existing under the
laws of the State of California; Buyer has the power and authority to own its
property and to carry on its business as now conducted or as presently
contemplated; and Buyer has the power and authority to execute, deliver and
perform its respective obligations under each of the Purchase Documents to
which it is a party.
(b) The execution, delivery and performance by Buyer of its obligations
under each of the Purchase Documents to which it is a party have been duly
authorized by all requisite corporate action on its part, including any
requisite approval of its board of directors and stockholders.
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(c) Each of the Purchase Documents to which Buyer is a party constitutes
a legal, valid and binding obligation of such party enforceable against such
party 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) After giving effect to the Proposed Transaction, Buyer will be
Solvent.
(e) 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
Buyer in connection with this Agreement or any of the transactions contemplated
hereby.
SECTION 5
Covenants
5.1 Survival of Representations and Covenants; Limitation of Liability.
(a) Survival of Representations. The representations and warranties
contained in this Agreement shall survive for a period of one (1) year from the
Closing and the covenants contained in this Agreement shall survive the Closing
indefinitely.
(b) Limitation of Liability. Xceed and Buyer hereby agree 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
caused by the other party hereunder.
5.2 Employment Issues.
(a) Offer of Employment. Effective as of the Effective Time, the
employees of Xceed listed on Schedule 1.3(b) shall cease to be employees of
Xceed. Effective as of the Effective Time and subject to and in accordance
with the provisions of this Section 5.2, Buyer shall offer full time employment
to all of the employees listed on Schedule 1.3(b) on such terms and conditions
as Buyer, in its sole discretion, shall determine. Employees who accept such
offer of employment shall be referred to as the "Transferred Employees" and
Buyer shall, effective as of the Effective Time, assume responsibility for such
Transferred Employees' accrued salaries, wages and benefits, solely as set
forth on Schedule 1.3(b). Xceed shall be solely responsible for any
notification or any liability relating to any termination of any of Xceed's
employees occurring before, on or after the date of this Agreement.
(b) Benefits for Transferred Employees. Effective as of the Effective
Time, Buyer shall permit the Transferred Employees to participate in Buyer's
applicable benefit plans, if any. Buyer shall give each of the Transferred
Employees credit for such Transferred Employees' years of most recent
continuous service (including time during approved leaves of absences of less
than twenty six (26) weeks) with Xceed, as applicable, for purposes of
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determining participation and vesting under all of the applicable benefit plans
and programs of Buyer, if any, unless otherwise prohibited by law or the terms
of any of such benefit plans and programs.
5.3 Post-Closing Cooperation. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
If at any time after the Closing any further action is necessary or desirable
to carry out the purposes of this Agreement (including transferring any
Purchased Assets which were not previously transferred hereunder, or
transferring back any Xceed Retained Assets which were transferred hereunder,
or transferring any mail or payments on accounts receivable which should have
been delivered to the other party hereunder), the parties hereto shall take or
cause to be taken all such necessary action, including, without limitation, the
execution and delivery of such further instruments and documents as may be
reasonably requested by the other party for such purposes or otherwise to
consummate and make effective the transactions contemplated hereby.
5.4 Post-Closing Collections of Receivables.
(a) From and after the Closing, if Xceed receives any proceeds of Buyer
Receivables ("Acquired Proceeds"), it shall receive such payments as Buyer's
trustee, and shall, as soon as possible and in any event within two (2)
business days after receipt of any Collection, transfer such Collection to
Buyer, together with all necessary endorsements. All Collections received in
any Collection Account or otherwise shall be subject to Buyer's ownership
thereof, and withdrawals with respect to the Acquired Proceeds by Xceed from
any Collection Account shall not be permitted except in effecting a transfer of
such proceeds to Buyer. Xceed, at Buyer's request, shall execute and deliver to
Buyer such documents as Buyer shall require to grant Buyer access to any
records concerning Collections reasonably requested by Buyer. Xceed covenants
to cause daily listings of receipts (indicating amount of receipt, payor, and
other available pertinent information) to its Collection Accounts to be
provided promptly but no later than 3:00 p.m. Central time daily to Buyer's
designated representative(s) until the earlier of the date Xceed is notified by
Buyer that provision of such listings is no longer required and the tenth
(10th) business day after date the last Buyer Receivable becomes Acquired
Proceeds. Xceed covenants that, until the earlier of the one hundred eightieth
(180th) day after the date hereof or the tenth (10th) business day after the
date the last Buyer Receivable becomes Acquired Proceeds, it shall maintain the
Collection Account at Texas Capital Bank in existence on the date hereof and
shall not direct payments of any Buyer Receivable to any other account or
location, except as directed by Buyer or to Buyer as required herein. At the
Closing, Xceed shall irrevocably direct the persons at any institution at which
any Collection Account exists to administer, maintain, and otherwise manage any
such Collection Account as set forth in this Agreement.
(b) At the Closing, Xceed shall deliver for the Buyer's countersignature
a joint instruction for each Buyer Receivable debtor in a form acceptable to
the Buyer signed by Xceed (i) notifying such debtor that such debtor's account
receivable has been sold to the Buyer and (ii) instructing such debtor that
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such debtor shall make payment of all amounts due or payable or to become due
directly to the Buyer or its designee or designated account.
(c) It is the intention of the parties hereto that the conveyance of the
Purchased Assets hereunder shall constitute a sale, which sale is absolute and
irrevocable and provides Buyer with the full benefits of ownership of the
Purchased Assets. Upon the request of Buyer, Xceed will execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate to perfect and maintain the perfection of Buyer's ownership
interest in the Buyer Receivable originated by Xceed and included in the
Purchased Assets.
(d) If, notwithstanding the intention of the parties expressed in clause
(a) above, the conveyance of any of the Purchased Assets hereunder shall be
characterized as a secured loan and not a sale or such sale shall for any
reason be ineffective or unenforceable, then this Agreement shall be deemed to
constitute a security agreement under the UCC and other applicable law. For
this purpose and without being in derogation of the parties' intention that the
sale of the Buyer Receivables by Xceed hereunder shall constitute a true sale
thereof, Xceed hereby grants to Buyer a duly perfected security interest in all
of Xceed's right, title and interest in, to and under the Purchased Assets
which are now existing or hereafter arising, and all proceeds thereof to secure
the prompt and complete payment of a loan deemed to have been made in an amount
equal to the aggregate purchase price set forth in Section 1.6 together with
all other obligations of Xceed hereunder. Buyer and its assigns shall have, in
addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor under the UCC and
other applicable law, which rights and remedies shall be cumulative.
(e) Upon the Closing, Xceed shall have hereby irrevocably appointed the
Buyer as Xceed's attorney with power thereafter: (i)to endorse Xceed's name on
any checks, notes, acceptances, money orders, or other forms of payment or
security constituting Acquired Proceeds that come into the Buyer's possession;
(ii) to sign Xceed's name on any instrument, bill of lading, warehouse receipt,
or other negotiable or non-negotiable document of title constituting Acquired
Proceeds, on assignments of Buyer Receivable, on notices of assignment,
financing statements, and other public records and to file any such financing
statements by electronic means with or without a signature as authorized or
required by applicable law or filing procedure, but in each case reflecting
only the rights of the Buyer to such Buyer Receivable acquired hereunder; and
(iii) to send requests for redirection of payments on Buyer Receivables to
obligors thereon. Xceed hereby ratifies and approves all acts of such attorney.
Neither the Buyer nor its attorneys will be liable for any acts or omissions or
for any error of judgment or mistake of fact or law except for their willful
misconduct or gross negligence. This power, being coupled with an interest, is
irrevocable.
5.5 Discontinuance of Service Mark and Corporate Name. As of and after
the Closing, Xceed shall cease all use of the "Xceed" service mark and any
other similar mark or derivative thereof. In addition, Xceed will, as soon as
practicable after the Closing, change its corporate name from "Worldwide Xceed
Group, Inc." to another substantially different corporate name.
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5.6 Location of Xceed Retained Assets. For a reasonable period of time
following the Closing, Xceed shall be permitted to keep all of the Xceed
Retained Assets at their current locations, provided, however, that Xceed
shall: (i) retain the risk of loss with respect to such Xceed Retained Assets
during such period and (ii) release and indemnify Buyer from all claims,
actions, suits and proceedings with respect to the loss of or damage to such
Xceed Retained Assets during such period. During such time period, Xceed shall
be entitled reasonable access during normal business hours to such Xceed
Retained Assets (and to books and records relating to such Xceed Retained
Assets), and Buyer shall neither relocate nor in any way disturb such Xceed
Retained Assets.
5.7 Assistance of Transferred Employees in Liquidation of Xceed. Subsequent
to the Closing, Xceed shall be permitted to utilize the reasonable assistance
of Transferred Employees in connection with its liquidation.
SECTION 6
Miscellaneous Provisions
6.1 Entire Agreement. This Agreement, together with the Schedules
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. There are no terms, obligations, covenants,
representations, statements, or conditions other than those contained herein,
in such Schedules, 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.
6.2 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.
6.3 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 Illinois. 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 Illinois, County of Cook and irrevocably
submit themselves to the jurisdiction of those courts.
6.4 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:
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(a) If to Xceed:
Worldwide Xceed Group
c/o Techspace
41 East 11th Street
New York, New York 10003
Attention: Barbara Rupert
With a copy to:
Katten Muchin Zavis
525 West Monroe Street
Chicago, Illinois 60661
Attention: Michael S. Terrien, Esq.
Facsimile: 312/902-1061
(b) If to Buyer:
e-Synergies, Inc.
3 Corporate Plaza
# 250
Newport Beach, CA 92660
Attention: Theodore Marr
Facsimile: 949-219-0173
With a copy to:
Jeffrey L. Davidson
11755 Wilshire Blvd.
Suite 1200
Los Angles, CA 90025
Facsimile: 310-473-0148
6.5 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 may assign this Agreement, except (i) in
a sale of all or substantially all of the assets or equity securities of such
party to, or through a merger or dissolution of such party into, another entity
that agrees in writing to be bound by all of the terms of this Agreement or
(ii) to a greater than fifty percent (50%) owned affiliate of such party that
agrees in writing to be bound by all of the terms of this Agreement.
6.6 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 fullest extent possible.
6.7 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 successors, assigns and
legal representatives.
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6.8 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.
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed as of the day and year first above written.
WORLDWIDE XCEED GROUP, INC.
By: Howard A. Tullman
-------------------
Howard A. Tullman,
Chief Executive Officer
E-SYNERGIES, INC.
By: ___________________________________
Name: _____________________________
Title: _____________________________
SCHEDULES AND EXHIBITS
Schedule 1.2(a) Intellectual Property
Schedule 1.2(b) Personal Property
Schedule 1.2(c) Receivables
Schedule 1.2(d) Assigned Contracts and Cure Amounts
Schedule 1.2(e) Exceptions to Employee Covenants
Schedule 1.3(a) Accounts Payable, Accrued Expenses and Other
Liabilities
Schedule 1.3(b) Transferred Employees, Accrued Salaries, Wages and
Benefits
Schedule 1.4 Retained Receivables
EXHIBITS
Exhibit A Bill of Sale
Exhibit B Assignment and Assumption Agreement
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SCHEDULE 1.2(a)
TO SET PURCHASE AGREEMENT
INTELLECTUAL PROPERTY
All of the following, whether owned, used, or licensed (as licensee or
licensor) by Xceed, and all rights corresponding thereto throughout the world,
in any form and on any medium now known or hereafter developed and all
embodiments thereof, whether tangible, intangible, printed, recorded,
digitized, fixed, stored, electronic, or otherwise:
(A) Xceed's corporate name, domain names, uniform resource locators,
fictitious business names, trade names, brand names, trade dress, logos,
trademarks, service marks (including, without limitation, the mark XCEED),
trademark registrations, service mark registrations, applications for
registration and the goodwill symbolized by the foregoing and connected
therewith;
(B) all copyrights, whether or not published, protected or registered
under the Copyright Act of 1909 or the Copyright Act of 1976 (as either shall
be amended from time to time, and any predecessor or successor statute
thereto), applications for registration of copyrights, all works of authorship,
and all secondary and subsidiary rights therein;
(C) all art, audiovisual works, animations, compilations, collective
works, computer software and programs, data, databases, designs, emblems,
films, film clips, graphics, images, illustrations, likenesses, literary works,
logos, motion pictures, musical compositions, music videos, performances,
photographs, pictorial works, song lyrics, sound clips, sound recordings,
scripts, screenplays, video recordings, and all other copyrightable subject
matter;
(D) all renewals, derivative works, enhancements, improvements,
modifications, updates, new releases or other revisions thereof;
(E) all publication rights, display rights, attribution rights, integrity
rights, performance rights (including digital performance rights), mechanical
rights, synchronization rights, publishing rights, approval rights,
reproduction rights, rights to create derivative works, distribution rights, or
moral rights;
(F) all publicity rights or privacy rights (or waivers or quitclaims
thereof) of any person related thereto;
(G) all patents, patent applications and extensions, continuations and
renewals thereof and inventions and discoveries that may be patentable;
(H) all know-how, trade secrets, confidential information, customer
lists, software (including but not limited to the Evolve and Great Plains
software), technical information, data, process technology, plans, drawings,
and blue prints; and
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(I) all of the following listed on the attachments to this Schedule
1.2(a) are incorporated and made a part hereof.
SCHEDULE 1.2(b)
TO ASSET PURCHASE AGREEMENT
PERSONAL PROPERTY
Include, without limitation, the following:
(a) all right, title and interest in and to all client, client
contact, customer and advertiser lists;
(b) all marketing files, identifying contacts, dates of most recent
client contact and other information customarily contained therein;
(c) all recruiting files, identifying all active or potential
recruiting prospects, applications, letters, technical reviews, references,
resumes and other information customarily contained therein;
(d) all personnel files pertaining to any person now providing or
who has provided services as a billable consultant or employee, together with
any and all information customarily contained therein, including, but not
limited to, W 2's, W 4's, I 9's, 1099's, employment agreements, personnel
reviews, commission and/or bonus arrangements and salary history; and
(e) all of the following listed on the attachments to this Schedule
1.2(b), to the extent owned and to the extent of Xceed's right, title and
interest therein, are incorporated and made a part hereof.
SCHEDULE 1.2(c)
TO ASSET PURCHASE AGREEMENT
RECEIVABLES
[Please see attached.]
SCHEDULE 1.2(d)
TO ASSET PURCHASE AGREEMENT
ASSIGNED CONTRACTS AND CURE COSTS
SCHEDULE 1.2(e)
ASSET PURCHASE AGREEMENT
EXCLUDED EMPLOYEE COVENANTS
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SCHEDULE 1.3(a)
TO ASSET PURCHASE AGREEMENT
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES
SCHEDULE 1.3(b)
TO ASSET PURCHASE AGREEMENT
TRANSFERRED EMPLOYEES, ACCRUED SALARIES, WAGES AND BENEFITS
SCHEDULE 1.4
TO ASSET PURCHASE AGREEMENT
RETAINED RECEIVABLES
EXHIBIT A
to
ASSET PURCHASE AGREEMENT
BILL OF SALE
Worldwide Xceed Group, Inc., a Delaware corporation ("Xceed"), for and in
consideration of and other good and valuable consideration paid by e-Synergies,
Inc., a California corporation ("Buyer"), does hereby grant, bargain, sell,
transfer, set over, deliver and assign unto Buyer all of the "Purchased Assets"
described in that certain Asset Purchase Agreement dated July __, 2001 by and
between Xceed and Buyer (the "Purchase Agreement").
Xceed hereby transfers the Purchased Assets in "as is, where is"
condition and Xceed makes no warranty or representation as to or regarding the
condition of the Purchased Assets (other than as set forth in Section 4 of the
Purchase Agreement) to Buyer or any successor, assigns, agent, or subsequent
purchaser of the Purchased Assets.
Xceed makes no warranty or representation, either express or implied,
relating to fitness for a particular purpose, merchantability, quality, design,
condition, capacity, suitability or performance of the Purchased Assets, or of
the material and workmanship thereof, it being agreed that all such risks as
between Buyer and Xceed are to be borne by Buyer alone and at its expense.
This Bill of Sale shall be interpreted, construed and enforced in
accordance with the laws of the State of Illinois applied without giving effect
to any conflicts-of-laws principles. This Bill of Sale shall be binding on,
and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Bill of Sale.
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IN WITNESS WHEREOF, the parties have executed this Bill of Sale by and through
their duly authorized officers this ______ day of July, 2001.
WORLDWIDE XCEED GROUP, INC.
By: Howard A. Tullman
-----------------------
Howard A. Tullman
Chief Executive Officer
E-SYNERGIES, INC.
By: ___________________________________
Name:
Title:
EXHIBIT B
TO ASSET PURCHASE AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is entered
into as of July __, 2001 by and between Worldwide Xceed Group, Inc., a
Delaware corporation ("Assignor"), and e-Synergies, Inc., a California
corporation ("Assignee"). All undefined terms herein shall have the meanings
ascribed thereto in the Purchase Agreement (as defined below).
RECITALS:
A. Pursuant to the terms of that certain Asset Purchase Agreement dated
as of July 3, 2001 (the "Purchase Agreement"), between Assignor and Assignee,
Assignor has concurrently with the delivery hereof, sold, conveyed,
transferred, assigned and delivered to Assignee the Purchased Assets, which
Purchased Assets are specifically identified in the Purchase Agreement.
B. In partial consideration of the sale of the Purchased Assets, the
Purchase Agreement provides that Assignee shall assume the Assumed Liabilities,
which Assumed Liabilities are specifically identified in the Purchase
Agreement.
NOW, THEREFORE, Assignor and Assignee hereby agree as follows:
1. Assignment; Assumption. Assignor hereby assigns, transfers and
delivers to Assignee, and Assignee does hereby accept, all of Assignor's
rights, titles and interests, legal and equitable, in, to and under the
Assigned Contracts, which Assigned Contracts are specifically identified in the
Purchase Agreement, and as to all obligations occurring on and after the
21
Effective Time, Assignee agrees to assume and pay when due, those liabilities
accruing from and after the Effective Time under the Assigned Contracts and to
observe, perform, and comply with the covenants, restrictions, limitations, and
conditions imposed upon Assignor under the Assigned Contracts and Assignee
hereby assumes and agrees to pay, perform and discharge, when due, the Assumed
Liabilities.
2. Effectiveness. This Agreement shall become effective at and upon the
occurrence of the Effective Time. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their subsidiaries,
affiliates, legal representatives, successors and assigns.
3. Conflicts. To the extent there is a conflict between the terms and
provisions of this Agreement and the Purchase Agreement, the Purchase Agreement
shall prevail.
4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
collectively shall constitute one and the same instrument representing this
Agreement between the parties and it shall not be necessary for the proof of
this Agreement that any party produce or account for more than one such
counterpart. This Agreement may be executed using facsimiles of signatures,
and a facsimile of a signature shall be deemed to be the same, and equally
enforceable, as an original of such signature.
5. Severability. If any provision of this Agreement is, in the final
judgment of a court of competent jurisdiction, held to be invalid or
unenforceable, such provision shall thereupon be deemed modified only to the
extent necessary to render it valid, or not applicable to given circumstances,
or excised from this Agreement, as the situation may require.
6. Governing Law. This Agreement is governed by and is to be construed
and interpreted in accordance with the laws of the State of Illinois, without
giving effect to the conflict of law principles thereof.
7. Modifications, Amendments or Waivers. Except as otherwise provided
herein, provisions of this Agreement may be modified, amended or waived only by
a written document specifically identifying this Agreement and signed by a duly
authorized executive officer of each of the parties.
8. Entire Agreement. This Agreement, together with the Schedules
incorporated by reference herein, the Purchase Agreement and the other Purchase
Documents, shall constitute the entire agreement between and among the parties
relating to the subject matter hereof. There are no terms, obligations,
covenants, representations, statements, or conditions other than those
contained herein, in such Schedules and Exhibits, the Purchase Agreement 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.
22
9. Limitation on Damages. Each of Assignor and Assignee hereby agree
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 caused by the other party.
IN WITNESS WHEREOF, each of Xceed and Buyer has caused this Assignment
and Assumption Agreement to be executed and delivered as of the date written
above.
WORLDWIDE XCEED GROUP, INC.
By: Howard A. Tullman
-----------------
Howard A. Tullman,
Chief Executive Officer
E-SYNERGIES, INC.
By: ___________________________________
Name: _____________________________
Title: _____________________________
23