EXHIBIT 2.3
Cyrk, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
March 12, 2002
Mr. Xxxxx Xxxxx
Xxxxx Worldwide, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Xxxxx:
As you know, a number of issues have arisen between Cyrk, Inc. f/k/a
Rockridge Partners, Inc. ("Cyrk") and Simon Worldwide, Inc. f/k/a Cyrk, Inc.
("Simon") since the Purchase Agreement dated as of January 20, 2001, as amended
by Amendment No. 1 to Purchase Agreement dated as of February 15, 2001 (the
"Purchase Agreement") was executed by Cyrk and Simon. We propose that all of
these issues be resolved as follows:
1. Cyrk and Simon execute a Mutual Release Agreement in the form attached
hereto as Exhibit A in which each party releases the other from any and all
liabilities arising from the Purchase Agreement or otherwise, excepting only the
matters set forth in such release agreement.
2. The Winthrop Resources ERP Lease (the "Winthrop Lease") will be
finalized, and each party agrees to timely perform and discharge its respective
obligations to Winthrop Resources. We believe that all the necessary documents
have been executed to (a) provide for Simon's assignment to Cyrk of $86,046 of
Simon's current security deposit with Winthrop, (b) put into effect a new letter
of credit in the amount of $4,200,000 in favor of Winthrop for the benefit of
Cyrk, and (c) divide the existing liability with respect to the Winthrop Lease
as outlined in the Purchase Agreement and subsequent correspondence between the
parties. To the extent that additional documentation is reasonably required to
further the intent of the parties, each party agrees to provide such
documentation.
3. Cyrk agrees to pay all rent and other charges due with respect to the
000 Xxxxx Xxxxxx facility (the "Danvers Facility") through June 15, 2002 and to
vacate the premises by such date. In addition, Cyrk agrees to pay immediately
all amounts currently due to the landlord in respect of the Danvers Facility.
Subject to the compliance by Cyrk with the first two sentences of this Paragraph
3, Simon releases Cyrk from all obligations with respect to the Danvers Facility
for periods occurring on or after June 16, 2002 and agrees to become responsible
for all costs, if any, with respect to the Danvers Facility for periods
occurring on or after June 16, 2002. In addition, Simon shall be responsible for
the removal of any of Simon's inventory remaining in the Danvers Facility. Simon
and Cyrk shall execute a letter agreement dated of even date herewith by and
among Simon, Cyrk and the landlord for the Danvers Facility in the form attached
hereto as Exhibit B (the "Danvers Agreement") to effectuate, among other things,
the provisions of this Paragraph 3.
4. With respect to the Xxxx Xxxxxxx lawsuit, subject to the satisfaction
of the terms and conditions set forth in this agreement, the parties agree as
follows: (a) Simon and Cyrk shall cause their counsel, Xxxxxxxxxxx and Diamond,
P.L.L.C., to engage in active settlement negotiations with Xx. Xxxxxxx at the
direction of Cyrk commencing as of the mediation on March 13, 2002, and (b) in
connection with any settlement of all of Xx. Xxxxxx'x claims against Simon and
Cyrk, (i) Simon agrees to be responsible for up to $400,000 of any cash payments
payable to Xx. Xxxxxxx in immediately available funds, (ii) the parties agree to
equally split any cash payment to Xx. Xxxxxxx or his counsel for Xx. Xxxxxx'x
legal fees and related expenses with respect to the lawsuit; provided that
Simon's portion of such payment shall not exceed $100,000, (iii) Simon agrees to
be responsible for the costs of defense of the lawsuit as provided by
Xxxxxxxxxxx and Diamond, P.L.L.C. to the extent covered by Simon's insurance and
one-half of such costs in excess of its insurance coverage and (iv) Cyrk agrees
to be responsible for all costs and other obligations related to the Xxxxxxx
matter or the settlement thereof not included in clauses (i) through (iii)
above, including without limitation one-half of the cost of defense of the
lawsuit in excess of Simon's insurance coverage. Simon's obligations under this
paragraph are subject to, and shall be expressly conditioned upon, (x) Simon and
its subsidiaries, and their respective directors, officers, employees, agents,
consultants and affiliates (collectively, the "Simon Parties"), receiving a
general release of all claims Xx. Xxxxxxx has or may have against the Simon
Parties, whether known or unknown, liquidated or unliquidated, or at law or at
equity, (y) Xx. Xxxxxxx and Cyrk
agreeing that Simon's sole obligation under the settlement will be to pay in
cash its portion of the amounts expressly described in clauses (b)(i)-(iii)
above, and (z) Cyrk agreeing in writing to indemnify, defend and hold the Simon
Parties harmless from any Losses (as defined in the Purchase Agreement) arising
out of Cyrk or one of its subsidiaries failing to perform or otherwise breaching
any of its obligations under any settlement or other agreement with Xx. Xxxxxxx.
Xxxxx'x conditions set forth in the prior sentence are sometimes referred to
herein as "Simon's Conditions." Cyrk shall actively pursue settlement
negotiations with Xxxxxxx in good faith in accordance with Simon's Conditions,
shall in good faith try to minimize the aggregate settlement obligations payable
to Xx. Xxxxxxx, and shall provide, or cause Xxxxxxxxxxx and Diamond, P.L.L.C. to
provide, daily updates to a representative designated by Simon on the status of
such negotiations.
5. Cyrk hereby assigns to Simon its entire right, title and interest to
any malpractice or similar or related claim against any law firm that advised
Simon and Cyrk's former subsidiary, Tonkin, Inc. with respect to the Xxxxxxx
matter. In exchange for the foregoing assignment, Simon agrees to split equally
with Cyrk any recovery in excess of Simon's out-of-pocket payments to Xxxx
Xxxxxxx and/or his counsel and any legal fees and expenses incurred by Simon in
connection with any such malpractice or similar claim.
6. Cyrk agrees to provide to City National Bank a letter of credit for the
benefit of Simon which will be a back-to-back letter of credit as security for
Simon's letter of credit to Winthrop Resources and shall have similar terms to
such letter of credit and be in an amount equal to Simon's out-of-pocket costs
in settling the Xxxxxxx case (including without limitation, payments made by
Simon in accordance with Paragraph 4(b)(ii) above relating to the legal fees of
Xx. Xxxxxxx), not to exceed $500,000.
7. The Subordinated Promissory Note dated February 15, 2001 in the
original principal amount of $2,300,000 (the "Note") will be cancelled and shall
be returned to Cyrk as follows: (a) Upon the execution by all of the parties of
the Danvers Agreement, the principal amount of the Note shall be reduced to
$1,800,000 without any further action of the parties; provided, however, that in
the event Cyrk shall breach or fail to timely perform any of the Assumed
Liabilities (as defined in the Purchase Agreement) in any material respect
(other than any Assumed Liabilities under the Winthrop Lease to the extent such
Assumed Liabilities were due and payable prior to the date hereof), and such
breach or failure to perform is not cured within 15 days after receipt of
written notice of such breach or failure to perform, Cyrk agrees that $500,000
of the principal amount of the Note shall be reinstated without further action
of the parties; and (b) upon the execution by Cyrk, Simon and Xxxx Xxxxxxx of a
settlement agreement in accordance with the terms and conditions set forth in
this agreement, including without limitation Simon's Conditions, the remaining
$1,800,000 of the principal amount of the Note shall be cancelled; provided,
however, that in the event Cyrk breaches any of its obligations under this
agreement in any material respect, and such breach is not cured within 15 days
after receipt of written notice of such breach, Cyrk agrees that $1,800,000 of
the principal amount of the Note shall be reinstated without further action of
the parties; provided further, that if Cyrk breaches or fails to timely perform
in any material respect any Assumed Liabilities not included within the prior
proviso, then Cyrk agrees that two (2) times the Losses incurred by Simon as a
result of such breach or failure shall be reinstated to the principal amount of
the Note without any further action of the parties. The parties acknowledge that
the rights and remedies of Simon set forth herein are not the exclusive rights
and remedies of Simon, and Simon hereby expressly reserves all of its rights and
remedies with respect to any breach or failure by Cyrk to perform its
obligations hereunder or with respect to the Assumed Liabilities, including
without limitation any rights of Simon under the Purchase Agreement. Simon
hereby represents to Cyrk that, to the knowledge of Simon, Cyrk is not currently
in breach of its obligation to perform and discharge any Assumed Liabilities,
other than Assumed Liabilities for the Winthrop Lease and the Danvers Facility.
8. Paragraphs 1, 2, 4(b), 5, 6 and 7(b) shall be conditioned upon, and
shall not be effective or legally binding until, the settlement of the pending
litigation with Xxxx Xxxxxxx in accordance with Simon's Conditions, and the
execution of all documentation reasonably required to evidence such settlement
in form and substance reasonably satisfactory to Simon and its attorneys, in
each case on or prior to March 22, 2002. Paragraphs 3, 4(a) and 7(a) are
effective and legally binding as of the date hereof. The proviso in paragraph
7(a) shall be of no further force and effect if, and only if, the litigation
with Xxxx Xxxxxxx is settled in accordance with the terms and conditions of this
agreement, including without limitation Simon's Conditions, and Cyrk has
performed all of its obligations under paragraph 3 and the Danvers Agreement. If
a settlement of the Xxxxxx'x matter does not occur in accordance with the terms
and conditions of this agreement, including without limitation Simon's
Conditions, on or prior to March 22, 2002, then the provisions of this agreement
shall terminate and be of no further force and effect, except that paragraphs 3
and 7(a) shall survive such termination in accordance with their terms.
9. This letter agreement and the Mutual Release Agreement contain the
full, final and exclusive statement of the agreement of the parties hereto with
respect to the matters contained herein or therein, and supercede any other
agreements, arrangements or understandings.
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
If you agree that the foregoing represents the agreement of the parties,
please signify by executing this letter agreement in the space provided and
returning an executed copy to me at your earliest convenience.
Very truly yours
CYRK, INC.
By:
--------------------------------------------
Xxxxxx Xxxxxxxxx, Chief Executive Officer
AGREED AS AFORESAID:
SIMON WORLDWIDE, INC.
By:
------------------------------------------
Xxxxx Xxxxx, Chief Executive Officer
Cyrk, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
March 22, 2002
Simon Worldwide, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Sir or Madam:
Reference is made to the letter agreement dated as of March 12, 2002 (the
"Letter Agreement") by and between Cyrk, Inc., a Massachusetts corporation
("Cyrk"), and Simon Worldwide, Inc., a Delaware corporation ("Simon"), and to
the proposed Settlement Agreement by and among Simon, Cyrk and Xxxx Xxxxxxx (the
"Xxxxxxx Settlement Agreement") drafted by Xxxxxxxxxxx and Diamond, P.L.L.C.
Under the proposed Xxxxxxx Settlement Agreement, a total of $775,000 (the
"Settlement Amount") is payable to Xxxx Xxxxxxx (inclusive of Xx. Xxxxxxx'
attorneys' fees and costs). Pursuant to the terms of the Letter Agreement, Simon
is obligated to pay $500,000 of such amount, and Cyrk is obligated to pay
$275,000 of such amount.
If, on or before March 25, 2002 (or such other date as is agreed to in
writing by Cyrk and Simon), (i) Xxxx Xxxxxxx, Xxxxx and Cyrk have executed and
delivered the Xxxxxxx Settlement Agreement, (ii) Cyrk and Simon have wired
immediately available funds to Xxxxxxxxxxx and Diamond, P.L.L.C. in the amount
of their respective portions of the $775,000 Settlement Amount and the
Settlement Amount has been paid to Xxxx Xxxxxxx in accordance with the terms of
the Xxxxxxx Settlement Agreement and (iii) Cyrk and Simon have executed and
delivered the Mutual Release Agreement (in the revised form attached hereto),
then all of the terms of the Letter Agreement shall be in full force and effect
and legally binding.
Except as expressly modified by this letter, the terms of the Letter
Agreement shall remain in effect.
