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EXHIBIT 10.2
AGREEMENT
This Agreement is entered into as of this 2nd day of April, 1998 by
and among (i) Grant & Partners Limited Partnership, a Delaware limited
partnership ("GPLP"), (ii) Cyrk, Inc., a Delaware corporation and sole limited
partner of GPLP ("Cyrk"), (iii) Grant & Partners, Inc., a Massachusetts
corporation and sole general partner of GPLP ("GP, Inc."), and (iv) Xxxx Xxxxx
("Xxxxx"). Xxxxx shall be a party to this Agreement solely for purposes of
Sections 1 and 3 below.
WHEREAS, GPLP was formed under the Delaware Revised Uniform Limited
Partnership Act and is governed currently by that certain First Amended and
Restated Agreement of Limited Partnership, dated March 28, 1995 as amended by
the certain agreement entered into as of September 30, 1997 by and among GPLP,
Cyrk, GP, Inc. and Grant & Partners, LLC (the "Partnership Agreement").
WHEREAS, Cyrk and GP, Inc. desire to restructure GPLP.
In consideration of the mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. ADMISSION OF NEW LIMITED PARTNER. Prior to giving effect to
Section 2 below, Cyrk and GP, Inc. each hereby consent to and approve the
admission of Grant as a Limited Partner to GPLP, effective as of the last
business day prior to the date of this Agreement, in accordance with Section 21
of the Partnership Agreement. By executing this Agreement, Grant hereby assumes
the rights and obligations of a Limited Partner under the Partnership Agreement,
pursuant to such additional terms and conditions as may be mutually agreed upon
between GP, Inc. and Grant after the date hereof.
2. WITHDRAWAL OF CYRK AS A LIMITED PARTNER. Upon execution of this
Agreement by the parties hereto and after giving effect to Section 1 above, Cyrk
hereby withdraws from GPLP in accordance with Section 14(b) of the Partnership
Agreement and relinquishes all of its right, title and interest in GPLP as a
Limited Partner under the Partnership Agreement.
3. TRANSFER TO CYRK OF CERTAIN OF GPLP'S EQUITY INTERESTS IN EXCHANGE
APPLICATIONS, INC. ("EA"). Simultaneously herewith, GP, Inc. has caused GPLP to
distribute to Cyrk all of GPLP's right, title and interest in (i) 1,150,000
shares of Common Stock, $.001 par value per share, of EA (the "Cyrk EA Common
Shares"), and (ii) 377,408 shares of Series A Preferred Stock, $.001 par value
per share, of EA (the "Cyrk EA Preferred Shares").
4. TRANSFER TO ESCROW AGENT OF CERTAIN OF GPLP'S EQUITY INTERESTS IN
EA. Simultaneously herewith, GP, Inc. has caused GPLP to transfer to Xxxxxxx
Xxxxxx, Esq. (the
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"Escrow Agent") 155,250 shares of Common Stock, $.001 par value per share, of
EA (the "Escrow Shares") to be subsequently delivered by the Escrow Agent to
Cyrk or GPLP, as the case may be, in accordance with the terms and conditions
of this Agreement and the escrow agreement of even date herewith that is
attached as EXHIBIT A hereto (the "Escrow Agreement").
5. DISTRIBUTION OF ESCROW SHARES PRIOR TO OCTOBER 1, 1999. If an EA
Valuation Event, defined below, occurs prior to October 1, 1999 where the Cyrk
EA Implied Common Share Value, defined below, exceeds $8,200,000, then the
Escrow Shares shall be returned to GPLP.
6. DISTRIBUTION OF ESCROW SHARES AS OF OCTOBER 1, 1999. If prior to
October 1, 1999, there has not been an EA Valuation Event which results in a
Cyrk EA Implied Common Share Value exceeding $8,200,000, then Cyrk and Grant
shall mutually agree on the value of the Cyrk EA Common Shares as of October 1,
1999 and if the agreed amount exceeds $8,200,000, then the Escrow Shares shall
be returned to GPLP. Otherwise, the Escrow Shares shall be delivered to Cyrk. If
Cyrk and Grant cannot agree on the valuation of the Cyrk EA Common Shares, they
shall submit the matter to binding arbitration in accordance with Section 12 of
this Agreement.
7. CERTAIN DEFINITIONS. "EA Valuation Event" shall mean (i) any sale
of all or a majority of the assets of EA (an "Asset Sale"), (ii) any merger,
consolidation, sale or other transaction which results in a change of ownership
in more than 50% of the voting capital stock of EA (a "Change-of-Ownership
Transaction"), (iii) any issuance of equity securities by EA for consideration
greater than or equal to $5,000,000 (an "Equity Transaction"), (iv) ten
successive trading days on NASDAQ NMS, the New York Stock Exchange or the
American Stock Exchange of EA Common Shares which produces a Cyrk EA Implied
Common Share Value exceeding $8,200,000 based on the average of the closing sale
prices (the "Average Closing Price") for such ten trading days (a "Stock Market
Transaction") or (v) a sale or series of sales by Cyrk of more than 50% of the
Cyrk EA Common Shares (a "Cyrk Sale").
"Cyrk EA Implied Common Share Value" shall mean the going concern
value of EA attributable to the Cyrk EA Common Shares, regardless of whether
Cyrk continues to own the Cyrk EA Common Shares, derived from the consideration
received by EA or EA shareholders in an EA Valuation Event determined in good
faith by the mutual agreement of Grant and Cyrk or absent such agreement by
arbitration. In determining the Cyrk EA Implied Common Share Value, the
following principles shall be applied. In an Asset Sale, the EA Implied Common
Share Value shall be based on the after tax consideration received by EA as well
as the residual fair value of any assets retained by EA in excess of the
retained liabilities of EA. In a Change-of-Ownership Transaction, the common
equivalent per share consideration received by selling shareholders of EA shall
be multiplied by 1,150,000 to determine the Cyrk EA Implied Common Share Value.
In an Equity Transaction, the Cyrk EA Implied Common Share Value shall be the
common equivalent per share consideration received by EA multiplied by
1,150,000. In a Stock Market Transaction, the Cyrk EA Implied Common Share Value
shall be determined by multiplying the Average Closing Price for the ten
successive trading days by 1,150,000. In a Cyrk Sale, the Cyrk EA Implied Common
Share Value shall be determined by multiplying the per share consideration
received by Cyrk by 1,150,000.
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8. RELINQUISHMENT OF RIGHTS. Cyrk hereby relinquishes all of its
rights under that certain Agreement dated as of September 30, 1997 (the "9/30
Agreement") by and among GPLP, Cyrk, GP, Inc, Grant and Grant & Partners, LLC, a
Massachusetts limited liability company, including without limitation, (i) the
distribution preferences provided for in Section 2.1, (ii) the remainder
distributions provided for in Section 2.3, (iii) the license restrictions in
Sections 5.3 and 5.4, (iv) the provisions relating to the election of GP, Inc.
directors provided for in Section 7.1, (v) the provisions relating to the
transfer of GP, Inc. shares provided for in Section 7.2, (vi) the Grant
non-competes provided for in Sections 8.1 through 8.3, and (vii) the various
covenants contained in Sections 9.1 and 9.2. GPLP hereby relinquishes any rights
it may have under the 9/30 Agreement, including without limitation, its interest
under Section 11, in the 2,522,592 shares of Series A Preferred Stock, $.001 par
value per share, of EA, previously issued to Cyrk and the other residual
interests set described therein.
9. NO OTHER OBLIGATIONS; MUTUAL RELEASES. Each of Cyrk and GP, Inc
hereby confirm to each other and on behalf of their respective affiliates that,
except as otherwise provided in this Agreement, there are no other contractual
or equitable undertakings or obligations between Cyrk and its affiliates on the
one hand and GP, Inc. and its affiliates on the other. Each of Cyrk and GP, Inc.
hereby releases and forever discharges the other and each of their respective
officers, directors, employees, affiliates and agents (the "Releasees") from all
debts, demands, actions, contracts, damages, and any and all claims, demands and
liabilities which such party may now have or ever had against the Releasees
except for the obligations created by this Agreement and the Escrow Agreement.
10. FURTHER ASSURANCES. In case at any time after the date hereof any
further action is necessary to carry out the purposes of this Agreement, each of
the parties hereto hereby agrees to take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the requesting
party.
11. INFORMATION. Cyrk and GP, Inc. shall each cooperate with the
other after the date hereof by providing without additional consideration and
promptly upon request, copies of such records and other information regarding
GPLP as may reasonably be requested from time to time by Cyrk or GP, Inc., as
the case may be, and in particular as necessary for the preparation or audit of
federal, state and local income and other tax returns, audits, third party
disputes, refund claims and other valid business purposes.
12. ARBITRATION. Subject to Section 13.2 hereof, all controversies or
claims arising among the parties hereto (or their respective successors or
permitted assigns) that are not resolved within thirty (30) days after a party
notifies the others in writing of the controversy or claim, shall be submitted
for arbitration on demand any of such parties. Such arbitration proceedings will
be conducted in Boston, Massachusetts, and except as otherwise provided in this
Agreement, will be conducted in accordance with the then-current Commercial
Arbitration Rules of the American Arbitration Association. There shall be three
arbitrators. Cyrk and GPLP each shall appoint one arbitrator and the two so
appointed shall appoint a third. If either party shall refuse to appoint an
arbitrator within fourteen (14) days of demand by the other, the arbitration
shall proceed without said arbitrator. The arbitrators will have the right to
award or
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include in the award any relief which they deem proper in the circumstances,
including, but not limited to, money damages, interest on unpaid amounts,
specific performance and other injunctive relief, and reimbursement of
arbitration costs. The award and decision of a majority of the arbitrators will
be conclusive and binding, and judgment on the award may be entered in any court
of competent jurisdiction. Each party hereto, for itself and its respective
successors and permitted assigns, acknowledges that any arbitration award may be
enforced in a court of competent jurisdiction and waives any right to contest
the validity or enforceability of such award.
13. MISCELLANEOUS
13.1. SEVERABILITY. The provisions of this Agreement are severable,
so that the invalidity of unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other term or provision
of this Agreement, which shall remain in full force and effect.
13.2. SPECIFIC PERFORMANCE. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, each party hereto shall be entitled to specific performance of this
agreements and obligations of the other parties hereunder and to such other
injunctive or other equitable relief as may be granted by a court of competent
jurisdiction.
13.3. SUBMISSION TO JURISDICTION. Each of the parties hereto submits
to the jurisdiction of any state or federal court sitting in Boston,
Massachusetts in any action or proceeding arising out of or relating to this
Agreement and/or the Escrow Agreement and agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court. Each
party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement and/or the Escrow Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.
13.4 GOVERNING LAW. This Agreement and the Escrow Agreement shall
be governed by, and construed and enforced in accordance with, the internal laws
of the Commonwealth of Massachusetts, without regard to the conflict of law
principles thereof.
13.5. NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hands, by overnight delivery service or by facsimile.
13.6. AMENDMENTS. No amendment, modification or termination of any
provision of this Agreement shall be valid unless in writing and signed by all
the parties hereto.
13.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective parties hereto and their respective
successors and assigns.
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13.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one agreement binding on all the
parties hereto.
13.9. CAPTIONS. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
GENERAL PARTNER LIMITED PARTNER
GRANT & PARTNERS, INC. CYRK, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxx Xxxxxxx
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Xxxx X. Xxxxx, President duly authorized
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Individually
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ESCROW AGREEMENT
ESCROW AGREEMENT (the "Agreement"), made as of the ____ day of
__________, 1998, by and among Grant & Partners Limited Partnership, a Delaware
limited partnership ("GPLP"), Cyrk, Inc., a Delaware corporation ("Cyrk"), and
Xxxxxxx Xxxxxx, Esq., as Escrow Agent ("Escrow Agent").
RECITALS:
WHEREAS, each of GPLP and Cyrk, among other parties, have executed
and delivered an agreement of even date herewith, which agreement sets forth the
terms and conditions regarding the restructure of GPLP (the "Restructure
Agreement"); and
WHEREAS, the effectiveness of the Restructure Agreement is
conditioned upon, among other things, (i) the deposit of 155,250 shares of
Common Stock, $.001 par value per share, of Exchange Applications, Inc. ("EA")
(including any distributions with respect thereto) (the "Escrowed Shares") with
Escrow Agent, and (ii) the execution and delivery of an escrow agreement among
the parties hereto setting forth the terms and conditions thereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The provisions of the foregoing recitals are hereby incorporated
by reference into this Agreement as if fully stated herein. Unless otherwise
provided herein, all terms not defined herein shall have the respective meanings
attributed to them in the Restructure Agreement.
2. The parties hereto hereby appoint and designate Xxxxxxx Xxxxxx,
Esq. as Escrow Agent for the purpose of holding and disbursing the Escrowed
Shares in accordance with this Agreement. Escrow Agent hereby agrees to act as
escrow agent on behalf of the parties hereto in accordance with this Agreement.
Simultaneously with the execution and delivery hereof, GPLP shall have caused
the Escrowed Shares, as set forth in EXHIBIT A attached hereto and incorporated
herein by reference, to be delivered to Escrow Agent. Escrow Agent hereby
acknowledges receipt of the Escrow Shares. Escrow Agent shall submit a statement
of account with respect to the Escrowed Shares to each of the parties hereto
upon termination of this Agreement.
3. Escrow Agent shall make no distributions of the Escrowed Shares
except in accordance with this paragraph. In the event that (i) an EA Valuation
Event occurs prior to October 1, 1999 that satisfies the conditions set forth in
Section 5 of the Restructure Agreement, or (ii) Cyrk and Grant agree on a
valuation of the Cyrk EA Common Shares in accordance with Section 6 of the
Restructure Agreement, GPLP and Cyrk shall each instruct the Escrow Agent to
deliver to one of them, as the case may be, the Escrowed Shares. Within five (5)
days following Escrow Agent's receipt of any written instructions executed and
sent by either GPLP or Cyrk (the "Notifying Party") notifying Escrow Agent that
the Escrowed Shares shall be delivered to the
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Notifying Party pursuant to this Agreement (the "Disbursement Notice"), Escrow
Agent shall mail a copy of the Disbursement Notice to the other party to this
Agreement (the "Non-Notifying Party"). If, within ten (10) days from the date of
receipt of the Disbursement Notice by the Non-Notifying Party, the Escrow Agent
has not received a notice from the Non-Notifying Party objecting to the delivery
of the Escrowed Shares in accordance with the Disbursement Notice, Escrow Agent
shall promptly deliver the Escrowed Shares to the Notifying Party pursuant to
the terms of this Agreement. If, within said ten (10)-day period, Escrow Agent
shall receive a written notice from the Non-Notifying Party objecting to the
delivery of the Escrowed Shares in accordance with the Disbursement Notice,
Escrow Agent shall not deliver the Escrowed Shares to the Notifying Party
unless: (a) Escrow Agent has received written authorization executed by both the
Notifying Party and the Non-Notifying Party; or (b) such dispute is settled by
arbitration pursuant to the terms set forth in Section 12 of the Restructure
Agreement; or (c) such dispute is resolved by a court of competent jurisdiction
and, in the case of appeal, a court of last resort, whichever first occurs;
provided, however, that the Escrow Agent shall hold the Escrowed Shares
continuously as provided in this Agreement pending resolution of any such
dispute. If such written authorization is not given, or such legal proceedings
for such determination are not commenced and diligently continued, Escrow Agent
may, but shall not be obligated to, bring an appropriate proceeding for leave to
deposit the Escrowed Shares in the registry of a court having jurisdiction in
the Commonwealth of Massachusetts pending such determination.
4. GPLP and Cyrk shall each deliver to the other a copy of every
statement, certificate, notice and other paper delivered by them to Escrow Agent
hereunder. Such delivery shall be made in the same manner and on the same
business day as delivery is made to Escrow Agent hereunder.
5. Escrow Agent shall have no obligation hereunder except to
receive the Escrowed Shares referred to herein and to make distributions of said
shares in accordance with the provisions hereof. Escrow Agent's duties shall be
determined only with reference to this Agreement and applicable laws, and Escrow
Agent is not charged with knowledge of or any duties or responsibilities in
connection with any other document or agreement.
6. Escrow Agent shall be protected in acting upon any written
notice, certificate, waiver, consent or other instrument or document which it
believes to be genuine. Escrow Agent shall not be liable for any error of
judgment or for any act or omission to act taken in good faith except that it
shall be liable for its own gross negligence or willful misconduct. In no event
shall Escrow Agent be required to account for any shares subsequent to the
distribution thereof in accordance with this Agreement.
7. Escrow Agent may consult with and obtain advice from legal
counsel in the event of any dispute or question as to the construction of any of
the provisions herein or its duties hereunder and shall incur no liability and
shall be fully protected in acting in accordance with the opinion of such
counsel.
8. Escrow Agent may execute any of its powers or responsibilities
hereunder and exercise any rights hereunder either directly or through its
agents or attorneys. Nothing in this
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Agreement shall be deemed to impose upon Escrow Agent any duty to qualify to do
business or to act as fiduciary or otherwise in any jurisdiction other than the
Commonwealth of Massachusetts. Escrow Agent shall not be responsible for and
shall not be under a duty to examine or pass upon the validity, binding effect,
execution or sufficiency of this Agreement or of any subsequent amendment or
supplement hereto.
9. If Escrow Agent shall incur any liability, damage or expense
whatsoever arising out of or resulting from any claim brought against Escrow
Agent in connection with this Agreement, GPLP and Cyrk shall indemnify and hold
Escrow Agent harmless from any claim, damage or expense including reasonable
attorney's fees unless such claim, damage or expense results from the Escrow
Agent's gross negligence or willful misconduct.
10. The fees charged by Escrow Agent to provide the services
hereunder shall be nonrefundable and payable in advance, 50% by GPLP and 50% by
Cyrk. Each of GPLP and Cyrk hereby agree to pay on demand Escrow Agent's costs
and expenses, including reasonable fees and expenses of counsel to Escrow Agent,
incurred in connection with its duties hereunder. Such fees and expenses shall
be allocated between GPLP and Cyrk as follows: 50% to GPLP and 50% to Cyrk.
Escrow Agent shall have a lien on all shares held hereunder to pay all of Escrow
Agent's expenses under this Agreement.
11. The parties hereto may, by joint notice to Escrow Agent,
designate a successor Escrow Agent or Escrow Agents which, upon accepting such
designation in writing, and upon payment to any predecessor Escrow Agent of fees
and expenses in connection with its performance as Escrow Agent hereunder, shall
succeed to all of the rights, duties and obligations of Escrow Agent hereunder.
If a successor Escrow Agent is designated by GPLP and Cyrk, Escrow Agent shall,
upon written notice from all parties hereto, promptly deliver the Escrowed
Shares and documents, if any, held by Escrow Agent pursuant to this Agreement to
such successor Escrow Agent. In the event that there is any conflict between the
provisions of the Restructure Agreement and this Agreement, the provisions of
this Agreement shall control.
12. Escrow Agent may resign as Escrow Agent hereunder at any time by
giving ten (10) days' written notice of such intention to GPLP and Cyrk. Upon
the effective date of its resignation, Escrow Agent will deliver the Escrowed
Shares and documents held hereunder to such successor escrow agent as directed
by written instructions of GPLP and Cyrk. In the event that GPLP and Cyrk do not
agree on the appointment of a successor escrow agent within ten (10) days of
notice of Escrow Agent's intention to resign, Escrow Agent may appoint as its
successor any bank or trust company having an office in Boston, Massachusetts.
After the effective date of its resignation, Escrow Agent shall have no duty
with respect to the Escrowed Shares except to hold such property in safekeeping
and to deliver the same to its successor or as directed, in writing, by notice
executed by each of GPLP and Cyrk.
13. All notices, requests, demands, claims and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below or to such address as they may hereunder designate:
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To Escrow Xxxxxxx Xxxxxx, Esq.
Agent: 0 Xxxxxxxxxxxx Xxxx
Xxxxxx, XX 00000
To GPLP: Grant & Partners Limited Partnership
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Xxxx Xxxxx
With a XxXxxxxxx, Will & Xxxxx
copy to: 00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
ATTENTION: Xxxxxx X. Xxxxxxxx, P.C.
To Cyrk: Cyrk, Inc.
0 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
ATTENTION: President
With a Xxxxxx, Xxxx & Xxxxxxx
copy to: Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Xxxxxx X. Xxxxxxxx, III, Esq.
14. This Agreement shall be binding upon and inure to the benefit
of the parties named herein and their respective successors and permitted
assigns. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other party.
15. This Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts without regard to
the conflict of law principles thereof.
16. This Agreement may be executed in two or more counterparts, each
of which shall constitute the original, and all of which collectively shall
constitute one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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WITNESS, the signatures of the undersigned this ___ day of ___________, 1998.
GRANT & PARTNERS LIMITED PARTNERSHIP CYRK, INC.
By: GRANT & PARTNERS, INC.
Its General Partner
By: _________________________ By: _____________________________________
Xxxx Xxxxx, President authorized officer
By: _____________________________________
Xxxxxxx Xxxxxx, Esq., as Escrow Agent
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EXHIBIT A
DESCRIPTION OF SECURITIES
Certificate No. 64 for 155,250 shares of common stock of Exchange
Applications, Inc.
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