Exhibit 10.3
AGREEMENT AND PLAN OF MERGER
among:
AVIATION GROUP INC.,
a Texas corporation;
AVGP SUB, INC.
a Washington corporation;
GLOBAL LEISURE TRAVEL, INC.
a Washington corporation;
THE EQUITY HOLDERS OF GLOBAL LEISURE TRAVEL, INC.;
Identified on Schedule I hereto;
and
THE DEBT HOLDERS OF GLOBAL LEISURE TRAVEL, INC.
Identified on Schedule II hereto,
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Dated as of March 17, 2000
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TABLE OF CONTENTS
SECTION 1 DESCRIPTION OF TRANSACTION.......................................2
1.1 Merger of Merger Sub into the Company............................2
1.2 Effect of the Merger.............................................2
1.3 Closing; Effective Date..........................................2
1.4 Articles of Incorporation and Bylaws.............................2
1.5 Conversion of Shares; Treatment of Options;
Issuance of Warrants.............................................3
1.6 Conversion of Company Warrants...................................3
1.7 Treatment of Company Indebtedness................................4
1.8 Closing of the Company's Transfer Books..........................4
1.9 Closing Deliveries...............................................4
1.10 Further Action...................................................6
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................6
2.1 Due Organization; Etc............................................6
2.2 Articles of Incorporation and Bylaws; Records....................6
2.3 Capitalization...................................................7
2.4 Subsidiaries.....................................................8
2.5 Financial Statements.............................................8
2.6 Title to Assets..................................................8
2.7 Compliance with Legal Requirements...............................9
2.8 Governmental Authorizations......................................9
2.9 Tax Matters......................................................9
2.10 Contracts.......................................................10
2.11 Intellectual Property...........................................10
2.12 Registration Rights.............................................11
2.13 No Conflict of Interest.........................................12
2.14 Voting Rights...................................................12
2.15 Employee Benefits...............................................12
2.16 Labor Agreements and Actions....................................13
2.17 Changes.........................................................13
2.18 Legal Proceedings; Orders.......................................13
2.19 Authority; Binding Nature of Agreement..........................14
2.20 Non-Contravention; Consents and Notices.........................14
2.21 Full Disclosure.................................................15
2.22 Finder's Fee....................................................15
2.23 Real Property...................................................15
SECTION 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........16
3.1 Due Organization; Etc...........................................16
3.2 Legal Proceedings; Orders.......................................16
3.3 Authority; Binding Nature of Agreement..........................16
3.4 Non-Contravention; Consents and Notices.........................17
3.5 Certificates of Incorporation and Bylaws; Records...............17
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3.6 Capitalization..................................................18
SECTION 4 CERTAIN COVENANTS OF THE COMPANY................................18
4.1 Access and Investigation........................................18
4.2 Operation of the Company's Business.............................18
4.3 Notification; Updates to Company Disclosure Schedule............18
SECTION 5 CONDITIONS......................................................19
5.1 Conditions to Each Party's Obligations to Effect the Merger.....19
5.2 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger...............................................20
5.3 Conditions to Obligation of the Company to Effect the Merger....21
SECTION 6 TERMINATION.....................................................22
6.1 Termination.....................................................22
6.2 Effect of Termination...........................................22
6.3 Fees and Expenses; Termination..................................22
SECTION 7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.....23
7.1 Survival of Company Representations and Warranties..............23
7.2 Survival of Parent and Merger Sub Representations and
Warranties......................................................23
7.3 Indemnification by Company Stockholders.........................23
7.4 Notice; Defense of Claim........................................24
7.5 Further Limitations on Indemnification..........................25
SECTION 8 MISCELLANEOUS PROVISIONS........................................26
8.1 Further Assurances..............................................26
8.2 Attorney's Fees.................................................26
8.3 Notices.........................................................26
8.4 Time of the Essence.............................................28
8.5 Governing Law; Venue............................................28
8.6 Successors and Assigns..........................................28
8.7 Remedies Cumulative; Specific Performance.......................29
8.8 Waiver..........................................................29
8.9 Amendments......................................................29
8.10 Severability....................................................29
8.11 Disclosure Schedule.............................................29
8.12 Entire Agreement................................................30
8.13 Construction....................................................30
8.14 Headings........................................................30
8.15 Counterparts....................................................30
SECTION 9 ADDITIONAL REPRESENTATIONS AND WARRANTIES.......................30
9.1 Authorization...................................................30
9.2 Organization andStanding........................................31
9.3 Indebtedness....................................................31
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EXHIBITS
Exhibit A - Certain Definitions
Exhibit B - Form of Amended and Restated Articles of Incorporation of Surviving
Corporation
Exhibit C - Directors and Officers of Surviving Corporation
Exhibit D - Form of Debt Warrant
Exhibit E - Terms of Parent Series A Convertible Preferred Stock
Exhibit F - Form of GDI Warrant
Exhibit G - Form of GLI Warrant
Exhibit H - Terms of Debt Exchange
Exhibit I - Form of Preferred Stock Purchase Agreement
Exhibit J - Terms of Bridge Financing
Exhibit K - Legal Opinion of Nida & ▇▇▇▇▇▇▇, LLP
Exhibit L Certificate of Chief Executive Officer of Company
SCHEDULES
Schedule I - Company Stockholders
Schedule II - Company Debtholders
Schedule III - Company Warrantholders
Schedule IV - Institutional Indebtedness
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AGREEMENT
AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of March 17, 2000, by and among AVIATION GROUP INC., a Texas corporation
("Parent"), AVGP SUB, INC., a Washington corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), GLOBAL LEISURE TRAVEL, INC., a Washington
corporation (the "Company"); the Stockholders of the Company listed on Schedule
I hereto (the "Company Stockholders"), and the holders of outstanding
indebtedness of the Company listed on Schedule II hereto (the "Company
Debtholders"). Certain capitalized terms used in this Agreement are defined in
Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company have each determined that it is
advisable and in the best interests of their respective stockholders to
consummate the business combination transaction provided for herein.
B. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company (the "Merger") in accordance with this Agreement and the
Washington Business Corporation Act (the "WBCA"). Upon consummation of the
Merger, Merger Sub will cease to exist, and the Company will become a wholly
owned subsidiary of Parent.
C. In connection with and as a condition to the Merger, the holders
identified on Schedule III hereto (the "Company Warrantholders") of all of the
outstanding options, warrants or other rights to purchase equity of the Company
identified on Schedule IV (collectively "Company Warrants"), shall exchange
their Company Warrants for warrants ("Debt Warrants") to purchase shares of the
common stock, par value $0.01 per share, of Parent (the "Parent Common Stock")
upon the terms and conditions hereinafter set forth.
D. In connection with and as a condition to the Merger, the Company
Stockholders and Company Debtholders, who together hold all of the issued and
outstanding stock of the Company, as set forth on Schedule I and who hold
indebtedness of the Company as set forth on Schedule II, shall surrender such
stock to Parent and shall assign such indebtedness to Parent in exchange for
shares of Series A Preferred Stock of Parent (the "Parent Series A Preferred
Stock") with an initial aggregate liquidation preference equal to the principal
amount of Company's indebtedness to the Company Debtholders plus warrants to
purchase 750,000 shares of Parent Common Stock in exchange for the assignment of
such indebtedness to Parent. No additional consideration shall be given for the
common stock of the Company.
E. The Company, Parent, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. El-Batrawi have
previously entered into the that certain Preferred Stock Purchase Agreement
dated as of March 1, 2000, as amended by the First Amendment to Preferred Stock
Purchase Agreement dated as of March 1, 2000 (collectively, the "Purchase
Agreement") among the same parties, Global Leisure, Inc. a Washington
corporation ("GLI") and Genesis Diversified Investments, Inc., a Florida
corporation ("GDI"), pursuant to which the Company has purchased 450,000 shares
of Series B Preferred Stock, $0.01 par value (the "Company Preferred Stock"), at
a price of $10.00 per share and may purchase additional shares of Company
Preferred Stock upon the receipt by Parent of additional funds (the "Bridge
Financing") through the sale of Parent Common Stock and the Parent's Series B
Preferred Stock, $0.01 par value (the "Parent Series B Preferred Stock").
Pursuant to the Purchase Agreement, ▇▇. ▇▇▇▇▇▇▇, Mr. El-Batrawi, GDI and GLI
have agreed to the substance of the terms of this Agreement and of the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1
DESCRIPTION OF TRANSACTION; OTHER AGREEMENTS
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time, Merger Sub
shall be merged with and into the Company, and the separate existence of Merger
Sub shall cease. The Company will continue as the surviving corporation in the
Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the WBCA. Without limiting
the generality of the foregoing, and subject thereto and any other applicable
laws, at the Effective Time, all the properties, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, restrictions, disabilities and duties
of the Company and Merger Sub shall become the debts, restrictions, disabilities
and duties of the Surviving Corporation.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Jenkens & ▇▇▇▇▇▇▇▇▇, a Professional Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ on March 24, 2000, or at such other place, time and
date as the parties may designate, but in any event shall be no later than the
second business day after the date that all of the conditions set forth in
Section 5 have been satisfied or waived (the "Closing Date"). Contemporaneously
with the Closing, a properly executed certificate of merger conforming to the
requirements of the WBCA (the "Certificate of Merger") shall be filed with the
Washington Department of Consumer and Industry Services. The Merger shall take
effect at the time the Certificate of Merger is filed with and accepted by the
Department of Consumer and Industry Services of the State of Washington (the
"Effective Time").
1.4 Articles of Incorporation and Bylaws; Directors and Officers. Unless
otherwise agreed to in writing by the Company and Parent prior to the Effective
Time:
(a) the Articles of Incorporation of the Surviving Corporation shall be
amended and restated as of the Effective Time to conform to Exhibit B; and
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(b) the directors and officers of the Surviving Corporation immediately
after the Effective Time shall be the individuals identified on Exhibit C.
1.5 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any further action on the part of Parent, stockholders of the
Parent, Merger Sub, the Company, Company Stockholders or Company Warrantholders:
(a) Conversion of Merger Sub Common Stock. Each issued and outstanding
share of the common stock, par value $.001 per share, of Merger Sub ("Merger Sub
Common Stock") shall be converted into and become one (1) fully paid and
nonassessable share of common stock, no par value per share, of the Surviving
Corporation ("Surviving Corporation Common Stock"). Each certificate
representing outstanding shares of Merger Sub Common Stock shall at the
Effective Time represent an equal number of shares of Surviving Corporation
Common Stock.
(b) Conversion of the Company Common Stock. Each share of the Company's
Common Stock, no par value (the "Company Common Stock"), issued and outstanding
immediately prior to the Effective Time shall automatically be canceled and
retired and shall cease to exist, and no Parent Common Stock or other
consideration shall be delivered in exchange therefor.
(c) Cancellation of Treasury Stock and Parent-Owned Stock. Notwithstanding
any other provision of this Section 1.4, each share of Company Common Stock or
Company Preferred Stock that is owned by the Company and each share of Company
Common Stock or Company Preferred Stock that is owned by Parent or Merger Sub
shall automatically be canceled and retired and shall cease to exist, and no
Parent Common Stock or other consideration shall be delivered in exchange
therefor.
1.6 Conversion of Company Warrants.
(a) Conversion of Warrants. At or prior to the Closing Date, the Company
Warrantholders shall surrender any and all certificates representing their
Company Warrants. At the Effective Time, all of the Company Warrants shall be
deemed canceled and extinguished and automatically converted into the right to
receive that number of warrants to purchase shares of the Parent Common Stock,
substantially in the form of Exhibit E, ("Debt Warrants") equal to (i) 3,500,000
divided by (ii) the total number of shares of Company Common Stock represented
by the Company Warrants (rounded to the nearest five decimal places) (the
"Exchange Ratio").. Prior to the Effective Time, the parties shall take all such
other lawful action as may be reasonably necessary to give effect to the
transactions contemplated by this Section 1.5. The Company Warrants shall
terminate as of the Effective Time, and no Company Warrant shall be deemed to be
outstanding or to have rights after the Effective Time other than the right to
the consideration for such Company Warrant as set forth in this Section 1.5.
(b) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to
reflect fully the appropriate effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution to Parent security
holders of securities convertible into or exercisable for Parent
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Common Stock or Company Common Stock), extraordinary dividend, reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring (or with a record date) on or
after the date hereof and prior to the Effective Time.
1.7 Treatment of Company Indebtedness.
(a) At or prior to the Closing Date, the Company Debtholders, which
collectively are holders of the Company's outstanding corporate indebtedness in
the approximate amount of $16.2 million as of the date of this Agreement but not
to exceed $16.5 million in any event for purpose of issuance of Series A
Preferred Stock, shall assign such indebtedness to Parent in exchange for shares
of Parent's Series A Convertible Preferred Stock ("Parent Series A Preferred
Stock") with an initial aggregate liquidation preference equal to the principal
amount of such indebtedness (the "Principal Amount") In addition, Parent shall
issue to GLI, or its nominee, warrants to purchase 250,000 shares of Parent
Common Stock (the "GLI Warrants") as part of the consideration for the
assignment by GLI to Parent of indebtedness owed by the Company to GLI, and
Parent shall issue to GDI, or its nominee, warrants to purchase 500,000 shares
of Parent Common Stock (the "GDI Warrants") as part of the consideration for the
assignment by GDI to Parent of the indebtedness owed to GDI by the Company. The
terms of the Series A Preferred Stock are set forth with more particularity on
Exhibit E. The form of the GDI Warrant shall be substantially as set forth in
Exhibit F. The form of GLI Warrant shall be substantially as set forth in
Exhibit G. The transactions described in this Section 1.6(a) shall be referred
to as the "Debt Exchange". The terms of the Debt Exchange shall be substantially
as set forth in Exhibit H.
(b) At or prior to the Closing Date, the Company shall apply the proceeds
of the Bridge Financing, described with more particularity in Section 5.1(c), to
pay its institutional indebtedness, by delivering in immediately available funds
in the amounts and to the institutional debtholders set forth on Schedule IV.
1.8 Closing of the Company's Transfer Books. At the Effective Time, (a)
all certificates representing shares of Company Stock outstanding immediately
prior to the Effective Time shall automatically be cancelled and retired and
shall cease to exist, and all holders of certificates representing shares of
Company Stock that were outstanding immediately prior to the Effective Time
shall cease to have any rights as stockholders of the Company, (b) all Company
Warrants outstanding immediately prior to the Effective Time shall automatically
be cancelled and retired and shall cease to exist and all holders of Company
Warrants that were outstanding immediately prior to the Effective Time Shall
cease to have any rights to purchase or acquire Company Common Stock, and (c)
the stock transfer books of the Company shall be closed with respect to all
shares of such Company Stock outstanding immediately prior to the Effective
Time. No further transfer of any such shares of Company Stock shall be made on
such stock transfer books after the Effective Time.
1.9 Closing Deliveries.
(a) At the Closing, the Company Stockholders as the holders of all of the
issued and outstanding shares of Company Common Stock and the holders of all
certificates representing such
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shares, shall deliver such certificates or suitable affidavits (including
indemnity) representing lost certificates, duly endorsed in blank by the Company
Stockholders, or accompanied by blank irrevocable stock powers to Parent.
(b) At the Closing, the Company Warrantholders, as the holders of all of
the issued and outstanding Company Warrants and as the holders of all
outstanding certificates, instruments or documents representing such Company
Warrants, shall surrender such instruments or documents to Parent duly marked
"cancelled" or duly endorsed in blank by the Company Warrantholders, or
accompanied by blank irrevocable assignments, upon the receipt of which by
Parent such Warrants shall be cancelled, and Parent shall deliver to the Company
Warrantholders Debt Warrants representing the number of shares of Parent Common
Stock calculated pursuant to Section 1.5 duly executed by authorized officers of
Parent and shall take such steps as shall be necessary to enter the Company
Warrantholders or their nominee(s) upon the books of Parent as the holders of
each party's respective number of Debt Warrants.
(c) At the Closing, the Company Debtholders, as the holders of all of the
indebtedness of the Company set forth on Schedule III, shall negotiate and
transfer to Parent all promissory notes, loan agreements, security agreements
and related instruments and other documents evidencing or representing such
indebtedness, including, without limitation, appropriate Uniform Commercial Code
("UCC") assignments of any security interests (the "Loan Agreements") to Parent
and Parent shall deliver to (i) the Company Debtholders certificates
representing the number of shares of Series A Preferred Stock, calculated
pursuant to Section 1.6(a), (ii) GDI, or its nominee, the GDI Warrant, and (iii)
GLI, or its nominee, the GLI Warrant, all duly executed by authorized officers
of Parent, and shall take such steps as shall be necessary to enter the Company
Debtholders or their nominee(s) upon the books of Parent as the holders of each
party's respective number of Series A Preferred Stock, GDI Warrants and GLI
Warrants.
(d) The Company Debtholders, Company Stockholders, Company Warrantholders,
and Parent agree promptly to cure any deficiencies with respect to the
endorsement or cancellation of the certificates, instruments or other documents
of conveyance or cancellation with respect to such indebtedness, Company Common
Stock and Company Warrants or with respect to the stock powers or assignments
accompanying any Company Common Stock or Company Warrants, or with respect to
the issuance of the Debt Warrants, GDI Warrants, GLI Warrants, or Series A
Preferred Stock.
(e) Neither the Surviving Corporation, Parent nor any other Person shall
be liable to any former Company Stockholder or Company Warrantholder in respect
of any amount or property delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any certificates for
the Company Common Stock or the Company Warrants have not been surrendered prior
to the end of the applicable period after the Effective Time under escheat laws
(remotely prior to such earlier date on which any amount or property would
otherwise escheat to or become the property of any governmental entity), any
such amount or property shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of any claims or
interest of any person previously entitled thereto.
(f) If the issuance of any Debt Warrant is to be made to a person other
than the person
5
in whose name a surrendered certificate or instrument is registered, it shall be
a condition to such issuance that the certificate or instrument so surrendered
shall be properly endorsed and shall be otherwise in proper form for transfer
and that the person requesting such issuance shall have paid any transfer and
other taxes required by reason of such issuance in a name other than that of the
registered holder of the certificate or instruments surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not payable.
1.10 Further Action. If, at any time after the Effective Time, any further
action is necessary to carry out the purposes of this Agreement or to vest the
Surviving Corporation with full right, title and possession of and to all rights
and property of Merger Sub and the Company, the officers and directors of the
Surviving Corporation shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND COMPANY STOCKHOLDERS
The Company, and each of the Company Stockholders (separately and not
jointly), represent and warrant to Parent and Merger Sub that, except as set
forth in the disclosure schedule prepared by the Company in accordance with the
requirements of Section 8.11 and delivered by the Company to Parent on the date
of this Agreement (the "Company Disclosure Schedule"):
2.1 Due Organization; Etc.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington with full corporate
power and authority to (i) conduct its business in the manner in which it is now
being conducted, (ii) own and use its assets in the manner in which its assets
are now being owned and used and (iii) perform its obligations under all
Material Company Contracts by which it is bound. Each of the Company's
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to (i) conduct its business in the manner in which
it is now being conducted, (ii) own and use its assets in the manner in which
its assets are now being owned and used and (iii) perform its obligations under
all Material Company Contracts by which it is bound.
(b) The Company and its Subsidiaries are qualified to do business as
foreign corporations, and are in good standing, under the laws of the
jurisdictions set forth in Schedule 2.1(b) of the Company Disclosure Schedule,
which are all the jurisdictions where the nature of that business requires such
qualification and where the failure to be so qualified would have a Material
Adverse Effect on the Company or its Subsidiaries.
2.2 Articles of Incorporation and Bylaws; Records. The Company has
delivered or otherwise made available to Parent accurate and complete copies of:
(1) the articles of incorporation and bylaws of the Company and each of its
Subsidiaries as currently in effect, including all amendments thereto; (2) the
stock records of the Company and each Subsidiary; and (3) the minutes and other
records of the meetings and other proceedings (including any actions taken by
written consent or otherwise without a meeting) of the shareholders, the Board
of Directors and all
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committees of the Board of Directors of the Company and each Subsidiary. The
Company and each Subsidiary are not in violation of any of the provisions of
their articles of incorporation or bylaws. The books of account, stock records,
minute books and other records of the Company and each Subsidiary are accurate
and complete in all material respects, and have been maintained in accordance
with prudent business practices.
2.3 Capitalization. The authorized capital stock of the Company consists
of: (i) 20,000,000 shares of Company Common Stock, no par value, of which
4,000,000 shares have been issued and are outstanding as of the date hereof and
(ii) 5,000,000 shares of Series B Preferred Stock, $0.01 par value, of which
450,000 shares of Series B Preferred Stock have been issued and are outstanding
as of the date hereof. Warrants to purchase 3,952,952 shares of Company Common
Stock are issued and outstanding as of the date hereof. Section 2.3(a) of the
Company Disclosure Schedule sets forth the names of shareholders of the Company
and the number of shares and certificate numbers of Company Stock owned of
record by each of such shareholders. Section 2.3(b) of the Company Disclosure
Schedule sets forth, with respect to each Company Warrant that is outstanding on
the date of this Agreement: (i) the name of the holder of such Company Warrant;
(ii) the total amount of Company Common Stock subject to such Company Warrant;
(iii) the date on which such Company Warrant was granted; (iv) the vesting
schedule for such Company Warrant; and (v) the exercise price of such Company
Warrant. All of the outstanding shares of Company Stock have been duly
authorized and validly issued, and are fully paid and nonassessable, and, except
as set forth on Schedule 2.3 of the Company Disclosure Schedule, none of such
shares is subject to any repurchase option or restriction on transfer other than
restrictions imposed by federal or state securities laws. Except as set forth on
Schedule 2.3 of the Company Disclosure Schedule, there are no outstanding
subscriptions, options, calls, warrants, voting trusts, rights of conversion or
exchange, proxies, shareholder agreements, preemptive rights, phantom stock,
stock appreciation rights or other rights (whether or not currently exercisable)
to acquire any shares of the capital stock or other securities of the Company.
All outstanding shares of Company Stock have been issued in compliance with all
applicable securities laws and other applicable Legal Requirements and all
requirements set forth in applicable Company Contracts. Except as set forth on
Section 2.3 of the Company Disclosure Schedule, the Company has never
repurchased, redeemed or otherwise reacquired any shares of capital stock or
other securities.
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2.4 Subsidiaries
(a) Schedule 2.4 of the Company Disclosure Schedule identifies each
Subsidiary of the Company and sets forth, for each such Subsidiary, its capital
structure, state of organization and the other jurisdictions in which it is
qualified to do business. All of the issued and outstanding shares of capital
stock or other equity interests of each Subsidiary of the Company are (i)
validly issued, fully paid, and, in the case of each Subsidiary that is a
corporation, nonassessable, and (ii) owned directly or indirectly by the Company
free and clear of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever. There are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such Subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of its
capital stock or other equity interests or obligating it to grant, extend or
enter into any such agreement or commitment.
(b) Except as described in Schedule 2.4 of the Company Disclosure
Schedule, the Company does not (i) own, beneficially or of record, any shares of
any other corporation or entity or any interests in any partnership or limited
liability companies or (ii) participate in any manner in any joint ventures,
corporate alliance agreements or corporate partnering agreements.
2.5 Financial Statements. The Company has provided to the Investor its
audited financial statements for the year ended December 31, 1997, its unaudited
financial statements for the year ended December 31, 1998 and its unaudited
consolidated financial statements (including balance sheet and income statement)
for the period from January 1, 1999 to October 31, 1999 (the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated. The Financial Statements fairly present the
financial condition and operating results of the Company and its Subsidiaries as
of the dates, and for the periods indicated therein, subject to, with respect to
unaudited statements normal year-end audit adjustments and the absence of any
footnotes required under generally accepted accounting principles. Except as set
forth in the Financial Statements, the Company and its Subsidiaries have no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to October 31, 1999 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in the Financial Statements, which, in both cases, individually or
in the aggregate are not material to the financial condition or operating
results of the Company and its Subsidiaries and do not exceed $50,000 in value.
Except as disclosed in the Financial Statements, neither the Company nor any
Subsidiary is a guarantor or indemnitor of any indebtedness of any other person,
firm or corporation. The Company and its Subsidiaries maintain and will continue
to maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.6 Title to Assets. The Company and its Subsidiaries own, and have good
and valid title to, all assets purported to be owned by them, including all of
the assets reflected in the Company Financial Statements and all other assets
reflected in the Company's books and records as being owned by the Company or
its Subsidiaries. All of said assets are owned by the Company or its
8
Subsidiaries free and clear of any liens or other Encumbrances, except for (i)
any lien for current taxes not yet due and payable, (ii) minor liens that have
arisen in the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of the Company or its Subsidiaries, and (iii)
liens related to capital leases.
2.7 Compliance with Legal Requirements. The Company and its Subsidiaries
are, and have at all times since December 31, 1997 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and will not have a Material Adverse Effect on
the Company and its Subsidiaries. Since December 31, 1997, neither the Company
nor its Subsidiaries have received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any Legal Requirement.
2.8 Governmental Authorizations. The Company and its Subsidiaries have all
Governmental Authorizations necessary to enable them to conduct their business
in the manner in which their business is currently being conducted. The Company
and its Subsidiaries are, and at all times since December 31, 1997 have been, in
compliance with the material terms and requirements of such Governmental
Authorizations. Since December 31, 1997, neither the Company nor its
Subsidiaries have received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply with any term or requirement of any Governmental Authorization, or (b)
any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization.
2.9 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of the Company
and its Subsidiaries with any Governmental Body on or before the Closing Date
(the "Company Returns") (i) have been or will be filed when due, and (ii) have
been, or will be when filed, accurately prepared in all material respects. The
Company and its Subsidiaries have, within the time (including any extensions of
applicable due dates) and in the manner prescribed by law, paid all Taxes that
are due and payable, except Taxes that, individually and in the aggregate, are
not material. The Financial Statements fully accrue all actual and identified
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles.
(b) No claim or Legal Proceeding is pending or has been threatened against
or with respect to the Company or its Subsidiaries in respect of any Tax. There
are no unsatisfied liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by the Company or its
Subsidiaries. There are no liens for Taxes upon any of the assets of the Company
or its Subsidiaries, except liens for current Taxes not yet due and payable.
(c) The Company and its Subsidiaries have withheld and paid in all
material respects all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
shareholder, auditor or other third party.
9
(d) Neither the Company nor any Subsidiary have waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency, which will be outstanding as of the Effective
Time.
(e) There has never been a Tax sharing or allocation agreement in place
between the Company or any Subsidiary or any other Person other than those, if
any, with respect to which the applicable statute of limitations has run.
(f) Neither the Company nor any Subsidiary (A) has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which is the Company) or (B) has any liability for
the Taxes of any person (other than any of the Company and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract or otherwise.
(g) Except as set forth on Schedule 2.9 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary is a party to any agreement,
contract, arrangement, or plan that has resulted or would result, separately or
in the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G(a) of the of the Internal Revenue Code of 1986 (or any
similar provision of state, local or foreign law).
2.10 Contracts.
(a) True, correct and complete copies of each contract, agreement or
instrument with an obligation to or from the Company and its Subsidiaries in
excess of $50,000 has been made available to the Parent (the "Material Company
Contracts"), and are listed on Schedule 2.10 of the Company Disclosure Schedule.
(b) Except as set forth on Schedule 2.10 of the Company Disclosure
Schedule, the Company and its Subsidiaries have not (i) incurred any
indebtedness for money borrowed, (ii) incurred any liabilities (other than
indebtedness for money borrowed) individually in excess of $50,000 or, in the
case of liabilities individually less than $50,000, in excess of $250,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business. For the purposes of this subsection (b), all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company and its Subsidiaries have reason to believe are
Affiliates therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar mounts of such subsections.
2.11 Intellectual Property.
(a) Ownership. The Company and its Subsidiaries own all patents,
trademarks, service marks, and copyrights, if any, necessary to conduct their
business, or possesses adequate licenses or other rights, if any, therefor,
where the failure to have such would have a material adverse effect on
10
the Company and its Subsidiaries. Set forth in Schedule 2.11 of the Company
Disclosure Schedule is a true and correct description of all Proprietary Rights.
"Proprietary Rights" shall mean (i) all trademarks, tradenames, service marks
and other trade designations, including common law rights, registrations and
applications therefor, and all patents, copyrights and applications therefor
currently owned, in whole or in part, by the Company and its Subsidiaries with
respect to the business of the Company and its Subsidiaries, and all licenses,
royalties, assignments and other similar agreements relating to the foregoing to
which the Company and its Subsidiaries are a party; and (ii) all agreements
relating to technology, know-how or processes that the Company and its
Subsidiaries are licensed or are authorized to use by others, or which it
licenses or authorizes others to use.
(b) Conflicting Rights of Third Parties. The Company and its Subsidiaries
have the right to use the Proprietary Rights (including, to the Company's and
its Subsidiaries' knowledge, all patent rights) without infringing or violating
the rights of any third parties and the use of the Proprietary Rights
(including, to the Company's and its Subsidiaries' knowledge, all patent rights)
does not require the consent of any other person that has not been obtained (all
of such consents being set forth in Schedule 2.11 of the Company Disclosure
Schedule) and the Proprietary Rights held by the Company and its Subsidiaries
are freely transferable, other than those set forth in Schedule 2.11 of the
Company Disclosure Schedule. No claim has been asserted by any person to the
ownership of or right to use any Proprietary Right or challenging or questioning
the validity or effectiveness of any license or agreement constituting a part of
any Proprietary Right, and the Company and its Subsidiaries know of no valid
basis for any such claim. Each of the material Proprietary Rights is valid and
subsisting, has not been cancelled, abandoned or otherwise terminated and, if
applicable, has been duly issued or filed.
(c) Claims of Other Persons. The Company and its Subsidiaries have no
knowledge of any claim that, or inquiry as to whether, any product, activity or
operation of the Company and its Subsidiaries infringes upon or involves, or has
resulted in the infringement of, any proprietary right of any other person,
corporation or other entity, and no proceedings have been instituted, are
pending or, to the best knowledge of the Company and its Subsidiaries, are
threatened that challenge the rights of the Company and its Subsidiaries with
respect thereto. Any agreement of indemnification by the Company and its
Subsidiaries for any Proprietary Right as to any license granted by it or any
property manufactured, used or sold by it is set forth in Schedule 2.11 of the
Company Disclosure Schedule.
(d) Trade Secrets and Customer Lists. The Company and its Subsidiaries
have the right to use, free and clear of any claims or rights of others except
claims or rights specifically set forth in Schedule 2.11 of the Company
Disclosure Schedule, all trade secrets, customer lists and proprietary
information required for the marketing of all merchandise and services formerly
or presently sold or marketed by the Company and its Subsidiaries. The Company
and its Subsidiaries are not using or in any way making use of any confidential
information or trade secrets of any third party, including, without limitation,
any past or present employee of the Company or its Subsidiaries, except under
valid and existing license agreements (all such license agreements being set
forth in Schedule 2.11 of the Company Disclosure Schedule).
2.12 Registration Rights. The Company and its Subsidiaries have not
granted or agreed to grant any registration rights to any person or entity with
respect to any of its securities.
11
2.13 No Conflict of Interest. Except as set forth on Schedule 2.13 of the
Company Disclosure Schedule, the Company and its Subsidiaries are not indebted,
directly or indirectly, to any of its officers, directors, the Company
Stockholders or the Company Warrantholders or to their respective spouses or
children, in any amount whatsoever other than in connection with accrued and
unpaid salaries, expenses or advances of expenses incurred in the ordinary
course of business or relocation expenses of employees. None of the Company and
its Subsidiaries' officers, directors, the Company Stockholders or the Company
Warrantholders, or any members of their immediate families are, directly or
indirectly, indebted to the Company or its Subsidiaries (other than in
connection with purchases of the Company stock) or to the Company's knowledge
have any direct or indirect ownership interest in any firm or corporation with
which the Company and its Subsidiaries are affiliated or with which the Company
and its Subsidiaries have a business relationship, or any firm or corporation
that competes with the Company and its Subsidiaries, except that officers,
directors and/or stockholders of the Company and its Subsidiaries may own stock
in (but not exceeding two percent of the outstanding capital stock of) any
publicly traded Company and its Subsidiaries that may compete with the Company
and its Subsidiaries. Except as set forth on Schedule 2.10 of the Company
Disclosure Schedule, none of the Company's and its Subsidiaries' officers,
directors, Company Stockholders or Company Warrantholders or any member of their
immediate families are, directly or indirectly, interested in any material
contract with the Company and its Subsidiaries. The Company and its Subsidiaries
are not a guarantors or indemnitors of any indebtedness of any other person,
firm or corporation.
2.14 Voting Rights. Except as contemplated in the Purchase Agreement, one
of the Company Stockholders have entered into any agreements with respect to the
voting of capital shares of the Company.
2.15 Employee Benefits.
(a) The Company and its Subsidiaries currently maintain those employee
benefit plans identified on Schedule 2.15 of the Company Disclosure Schedule
(the "Company Benefit Plans") and such plans are in compliance with applicable
federal and state laws in all material respects.
(b) None of the Company Benefit Plans is a Multiemployer Plan or a
Multiple Employer Plan (as defined in ERISA). Neither the Company nor any of its
Subsidiaries has present liability due to a complete or partial withdrawal from
a Multiemployer Plan or Multiple Employer Plan or due to the termination or
reorganization of a Multiemployer Plan, and no events have occurred and no
circumstances exist that could reasonably be expected to result in any such
liability to the Company or any of its Subsidiaries.
(c) Each Company Benefit Plan that is intended to qualify under Section
401(a) of the Code, and the trust maintained pursuant thereto, has been
determined to be so qualified and exempt from taxation under Sections 401(a) and
501(a) of the Code, and nothing has occurred with respect to the operation of
any such Company Benefit Plan that could reasonably be expected to adversely
affect such qualification or tax-exempt status.
12
(d) All contributions (including all employer contributions and employee
contributions) required to have been made by the Company or a Subsidiary under
the Company Benefit Plans or by law to any funds or trusts established
thereunder or in connection therewith have been made by the due date thereof
(including any valid extension), and all contributions for any period ending on
or before the Closing Date which become due (including any valid extension) will
have been paid by the Closing Date.
2.16 Labor Agreements and Actions. The Company and its Subsidiaries are
not bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company and its Subsidiaries, has sought to represent any of
the employees, representatives or agents of the Company and its Subsidiaries.
There is no strike or other labor dispute involving the Company or its
Subsidiaries pending, or to the knowledge of the Company and its Subsidiaries
threatened, which could have a material adverse effect on the assets,
properties, financial condition, operating results, or business of the Company
or its Subsidiaries (as such business is presently conducted and as it is
proposed to be conducted), nor are the Company and its Subsidiaries aware of any
labor organization activity involving its employees. The Company and its
Subsidiaries have not entered into any employment agreements other than with the
persons listed on Schedule 2.16 of the Company Disclosure Schedule. Copies of
the employment agreements with such persons have been provided to counsel to the
Parent. Except as set forth on Schedule 2.16 of the Company Disclosure Schedule,
the employment of each officer and employee of the Company or its Subsidiaries
are terminable at the will of the Company and its Subsidiaries. The Company and
its Subsidiaries have complied in all material respects with all applicable
state and federal equal employment opportunity laws and with other laws related
to employment.
2.17 Changes. The parties acknowledge that since October 31, 1999, there
has been a significant decline of sales due to a delay of payments of
commissions to travel agents due to the Company's working capital needs. Except
as set forth on Schedule 2.17 of the Company Disclosure Schedule, since October
31, 1999 there has not been, to the best of the Company and its Subsidiaries'
knowledge, any event or condition of any character that might materially and
adversely affect the business, properties, prospects or financial condition of
the Company and its Subsidiaries (as such business is presently conducted and as
it is proposed to be conducted).
2.18 Legal Proceedings; Orders. There is no pending Legal Proceeding, and,
to the best knowledge of the Company and its Subsidiaries, no Person has
threatened to commence any Legal Proceeding that: (i) may have a Material
Adverse Effect on the Company and its Subsidiaries or their respective
businesses; or (ii) challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Merger or any of the
other transactions contemplated by this Agreement. To the best knowledge of the
Company and its Subsidiaries, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that will, or that could reasonably be
expected to, give rise to or serve as a basis for the commencement of any such
Legal Proceeding. There is no order, writ, injunction, judgment or decree to
which the Company or any of its Subsidiaries, or any of the assets owned or used
by the Company or any of its Subsidiaries, is subject. To the best knowledge of
the Company and its Subsidiaries, no officer or other employee of the Company or
its Subsidiaries is subject to any order, writ, injunction, judgment or decree
that prohibits
13
such officer or other employee from engaging in or continuing any conduct,
activity or practice relating to the Company's and its Subsidiaries' respective
businesses. There is no action, suit, proceeding or investigation by the Company
or any of its Subsidiaries currently pending or which the Company or any of its
Subsidiaries intends to initiate.
2.19 Authority; Binding Nature of Agreement. The Company has full
corporate power and authority to enter into and to perform its obligations under
this Agreement and the execution, delivery and performance by the Company of
this Agreement and the other agreements and transactions contemplated hereby
have been duly authorized by all necessary action on the part of the Company,
its Board of Directors and its shareholders. The members of the Board of
Directors have unanimously approved this Agreement and the other agreements and
transactions contemplated hereby. The Company Stockholders and the Parent, in
its capacity as holder of Company Series B Preferred Stock have unanimously
approved and adopted this Agreement and the other agreements and transactions
contemplated hereby including the Merger, the amended and restated Articles of
Incorporation, each as required by the WBCA and the Company's Articles of
Incorporation and bylaws. This Agreement constitutes the legal, valid and
binding obligation of the Company and its Subsidiaries, enforceable against the
Company and its Subsidiaries in accordance with its terms, except as enforcement
thereof may be limited by (i) laws of general application relating to
bankruptcy, insolvency, moratorium, reorganization or other similar laws, both
state and federal, affecting the enforcement of creditors' rights or remedies in
general, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
2.20 Non-Contravention; Consents and Notices. Neither (1) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, nor (2) the consummation of the Merger or any of
the other transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the
provisions of the Company's or its Subsidiaries' articles of incorporation or
bylaws;
(b) with respect to the Company and its Subsidiaries, contravene, conflict
with or result in a violation of, or give any Governmental Body or other Person
the right to challenge any of the transactions contemplated by this Agreement or
to exercise any remedy or obtain any relief under, any Legal Requirement or any
order, writ, injunction, judgment or decree to which the Company or its
Subsidiaries, or any of the assets owned or used by the Company or its
Subsidiaries, is subject;
(c) with respect to the Company and its Subsidiaries, contravene, conflict
with or result in a violation of any of the terms or requirements of, or give
any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate
or modify, any Governmental Authorization that is held by the Company or its
Subsidiaries or that otherwise relates to the Company's or its Subsidiaries'
business or to any of the assets owned or used by the Company or its
Subsidiaries;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Material Company Contract, or
give any Person the right to (i) declare a default or exercise any remedy under
any Material Company Contract, (ii) accelerate the maturity
14
or performance of any Material Company Contract, or (iii) cancel, terminate or
modify any Material Company Contract; or
(e) result in the imposition or creation of any lien or other Encumbrance
upon or with respect to any asset owned or used by the Company or its
Subsidiaries (except for minor liens that will not, in any case or in the
aggregate, materially detract from the value of the assets subject thereto or
materially impair the operations of the Company and its Subsidiaries).
Except as may be required by the WBCA and state securities or blue sky
laws or as listed on Schedule 2.20 of the Company Disclosure Schedule, the
Company and its Subsidiaries are not and will not be required to make any filing
with or give any notice to, or to obtain any Consent from, any Person in
connection with (x) the execution, delivery or performance of this Agreement or
any of the other agreements referred to in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
2.21 Full Disclosure. This Agreement (including the Company Disclosure
Schedule) does not (i) contain any representation, warranty or information that
is false or misleading with respect to any material fact, or (ii) omit to state
any material fact necessary in order to make the representations, warranties and
information contained and to be contained herein and therein not false or
misleading.
2.22 Finder's Fee. Except as set forth on Schedule 2.22 of the Company
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
any of the other transactions contemplated thereby based upon arrangements made
by or on behalf of the Company or its Subsidiaries. No such fee or commission
shall be payable by the Company or Parent.
2.23 Real Property
(a) None of the Company or its Subsidiaries own any real property.
(b) Schedule 2.23 of the Company Disclosure Schedule contains a complete
and accurate list of all real property leases, subleases or leases to which the
Company or any of its Subsidiaries is a party (collectively, the "Leases"),
including the address of each property (collectively, the "Leased Real
Property"). Except as set forth in Schedule 2.23 of the Company Disclosure
Schedule, the Company's or Subsidiary's interests in and to all Leases are free
and clear of all mortgages, liens, pledges, security interests or other
encumbrances. Except as otherwise provided on Schedule 2.23, of the Company
Disclosure Schedule: (i) the Lease is legal, valid, binding, enforceable and in
full force and effect; (ii) assuming any required landlord consent to the Merger
and other transactions contemplated by this Agreement is obtained, the Lease
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing; (iii) neither the Company nor
such Subsidiary nor any other party to the Lease is in breach or default, and to
the knowledge of the Company, no event has occurred which, with notice or lapse
of time, would constitute such a breach or default or permit termination,
modification or acceleration under the Lease; (iv) no party to the Lease has
repudiated any provision thereof; (v) there are no disputes or forbearance
programs in effect as to the Lease; (vi) the Lease has not been modified in any
respect,
15
except to the extent that such modifications are disclosed by the documents
delivered to Parent; and (vii) the Company (or such Subsidiary) has not
conveyed, mortgaged, deeded in trust or encumbered any interest in the Lease.
Except as set forth in Schedule 2.23 of the Company Disclosure Schedule, no
consents to the transactions contemplated by this Agreement are required in
connection with such Leases.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that:
3.1 Due Organization, Etc.
(a) Parent and Merger Sub are corporations duly incorporated, validly
existing and in good standing under the laws of the State of Texas and
Washington, respectively, each with full corporate power and authority to (i)
conduct its business in the manner in which it is now being conducted, (ii) own
and use its assets in the manner in which its assets are now being owned and
used and (iii) perform its obligations under all Material Parent Contracts by
which it is bound.
(b) Parent and Merger Sub are qualified to do business as foreign
corporations, and are in good standing, under the laws of the jurisdictions
where the nature of their business requires such qualification and where the
failure to be so qualified would have a Material Adverse Effect on Parent or
Merger Sub.
3.2 Legal Proceedings; Orders. There is no pending Legal Proceeding, and,
to the best knowledge of Parent, no Person has threatened to commence any Legal
Proceeding that: (i) may have a Material Adverse Effect on Parent or its
business; or (ii) challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Merger or any of the
other transactions contemplated by this Agreement. To the best knowledge of
Parent, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that will, or that could reasonably be expected to, give
rise to or serve as a basis for the commencement of any such Legal Proceeding.
There is no order, writ, injunction, judgment or decree to which Parent, or any
of the assets owned or used by Parent, is subject. To the best knowledge of
Parent, no officer or other employee of Parent is subject to any order, writ,
injunction, judgment or decree that prohibits such officer or other employee
from engaging in or continuing any conduct, activity or practice relating to
Parent's business.
3.3 Authority; Binding Nature of Agreement. Parent and Merger Sub have the
full corporate power and authority to perform their obligations under this
Agreement; the execution, delivery and performance by Parent and Merger Sub of
this Agreement and the other agreements and transactions contemplated hereby
have been duly authorized by all necessary action on the part of Parent and
Merger Sub and their respective Boards of Directors, and the execution, delivery
and performance of this Agreement by Merger Sub have been duly authorized by all
necessary action on the part of Parent, as the sole shareholder of Merger Sub.
This Agreement constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against them in accordance with its
16
terms, except as enforcement thereof may be limited by (i) laws of general
application relating to bankruptcy, insolvency, moratorium, reorganization or
other similar laws, both state and federal, affecting the enforcement of
creditors' rights or remedies in general, and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies.
3.4 Non-Contravention; Consents and Notices. Neither (1) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, nor (2) the consummation of the Merger or any of
the other transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the
provisions of Parent's or Merger Sub's certificate of incorporation or bylaws;
(b) with respect to Parent, contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the transactions contemplated by this Agreement or to exercise
any remedy or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which Parent, or any of the assets owned or
used by Parent, is subject;
(c) with respect to Parent, contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Parent or that otherwise relates to
Parent's business or to any of the assets owned or used by Parent;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any material contract, or give any
Person the right to (i) declare a default or exercise any remedy under any
material contract, (ii) accelerate the maturity or performance of any material
contract, or (iii) cancel, terminate or modify any material contract; or
(e) result in the imposition or creation of any lien or other Encumbrance
upon or with respect to any asset owned or used by Parent (except for minor
liens that will not, in any case or in the aggregate, materially detract from
the value of the assets subject thereto or materially impair the operations of
Parent).
Except as may be required by the Securities Act, the Exchange Act, state
securities or blue sky" laws, the Delaware General Corporation Law and the WBCA,
Parent is not, and will not be, required to make any filing with or give any
notice to, or to obtain any Consent from, any Person in connection with the
execution and delivery of this Agreement or the consummation of the Merger.
3.5 Certificates of Incorporation and Bylaws; Records. Parent has
delivered or otherwise made available to Company accurate and complete copies
of: (1) Parent's and Merger Sub's Articles of Incorporation and bylaws as
currently in effect, including all amendments thereto. Parent and Merger Sub are
not in violation of any of the provisions of their Articles of Incorporation or
bylaws. The books of account, stock records, minute books and other records of
Parent and
17
Merger Sub are accurate and complete in all material respects, and have been
maintained in accordance with prudent business practices.
3.6 Capitalization. The authorized capital stock of Parent consists of:
(i) 10,000,000 shares of common stock, par value $.01 per share, of which
3,849,937 shares shall have been issued and outstanding, and (ii) 5,000,000
shares of preferred stock, par value $.01 per share, of which 1,500 have been
designated as Series B Preferred Stock, 2,000 have been designated as Series A
Preferred Stock and 2,000 have been designated as Series C Preferred Stock and
of which 450 shares of Series B Preferred Stock and no shares of Series A
Preferred Stock or Series C Preferred Stock are issued and are outstanding. All
of the outstanding shares of Parent Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable, and none of such shares is
subject to any repurchase option or restriction on transfer other than
restrictions imposed by federal or state securities laws. Except with respect to
the purchase agreements and other agreements set forth on Schedule 3.6 hereof,
there are no outstanding subscriptions, options, calls, warrants or other rights
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of Parent.
SECTION 4
CERTAIN COVENANTS OF THE COMPANY
4.1 Access and Investigation. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide TBU, TBU's
Representatives, Parent and Parent's Representatives with reasonable access to
the Company's Representatives, personnel and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to the Company and (b) provide Parent and Parent's Representatives with such
copies of the existing books, records, Tax Returns, work papers and other
documents and information relating to the Company, and with such additional
financial, operating and other data and information regarding the Company, as
Parent or its Representatives may reasonably request.
4.2 Operation of the Company's Business. During the Pre-Closing Period,
except as contemplated by this Agreement or consented to by Parent in writing,
the Company and its Subsidiaries shall conduct their business and operations in
the ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement.
4.3 Notification; Updates to Company Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of:
(i) the discovery by the Company of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes an inaccuracy in or breach of any representation
or warranty made by the Company in this Agreement;
18
(ii) any event, condition, fact or circumstance that occurs, arises
or exists after the date of this Agreement and that would cause or constitute an
inaccuracy in or breach of any representation or warranty made by the Company in
this Agreement if (A) such representation or warranty had been made as of the
time of the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of the Company; and
(iv) any event, condition, fact or circumstance that would make the
timely satisfaction of any of the conditions set forth in Section 5 impossible
or unlikely.
(b) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.3(a) requires any change in the Company
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Company Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Company shall promptly deliver to Parent an
update to the Company Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Company Disclosure Schedule for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by the Company in this Agreement, or (ii) determining whether
any of the conditions set forth in Section 5 has been satisfied.
SECTION 5
CONDITIONS
5.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by the
requisite vote of the stockholders of the Company under the WBCA and the
Company's Articles of Incorporation.
(b) No Injunctions or Restraints. No court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any Legal Requirement (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Merger or the other transactions contemplated by this Agreement.
(c) Bridge Financing.
(i) ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Ltd. ("Travelbyus") shall have purchased for
cash from Parent shares of Parent Series B Preferred Stock with an initial
aggregate liquidation preference of not less than $4,000,000 (plus Company
indebtedness incurred since February 10, 2000) and up to
19
$10,500,000, and Parent shall have contemporaneously used all of the proceeds of
the sale of Parent Series B Preferred Stock (less $500,000 that Parent may
retain for transaction costs and other related expenses) to purchase shares of
Company Preferred Stock, pursuant to the Preferred Stock Purchase Agreement
dated as of March 1, 2000, as amended, between Parent and Travelbyus.
(ii) ▇▇▇▇▇▇ Capital shall have sold up to $20,000,000 of Parent
Series B Preferred Stock and $2,000,000 of Parent Common Stock to further
finance, among other things, the Merger, the Company's operations and Parent's
operations substantially on the terms set forth in Exhibit J (the "Bridge
Financing"). Upon the consummation of at least $7,500,000 in new cash proceeds
from the Bridge Financing, Parent shall have used such proceeds to purchase
shares of Company Preferred Stock. The Company shall have used the proceeds of
such sale to repay the Company's institutional indebtedness, as more
particularly described in Section 1.6(b). In the event at least $7,500,000 is
not raised in the Bridge Financing, the remaining institutional indebtedness
shall have been assigned to Parent in exchange for issuance by Parent of
additional Parent Series B Preferred Stock with an initial liquidation
preference equal to the remaining indebtedness, plus warrants to purchase Parent
Common Stock on the terms of the Bridge Financing as set forth in Exhibit J, in
which case all guarantees of the Company's institutional indebtedness shall have
been released.
(iii) Appropriate documents and agreements shall have been received
from the Company Warrantholders by which they agree to the terms of this
Agreement, including Section 1 and shall have surrendered all of the
certificates for the Company Warrants to Parent.
5.2 Conditions to Obligation of Parent and Merger Sub to Effect the
Merger. The obligation of Parent and Merger Sub to effect the Merger and the
transactions herein is further subject to the fulfillment, at or prior to the
Closing, of each of the following additional conditions (all or any of which may
be waived in whole or in part by Parent and Merger Sub in their sole
discretion):
(a) Debt Exchange. The Debt Exchange as described in Section 1.6(a) and as
substantially set forth in Exhibit H shall be consummated at or prior to the
Closing in a manner satisfying the Parent in its sole discretion.
(b) Representations and Warranties. Each of the representations and
warranties made by the Company in this Agreement shall be true and correct as of
the Closing Date as though made on and as of the Closing Date or, in the case of
representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date.
(c) Performance Obligations. The Company shall have performed and complied
with, in all material respects, each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by the Company at or prior
to the Closing.
(d) No Material Adverse Effect. Since the date of this Agreement, there
shall have been no Material Adverse Effect on the Company and there shall not
have occurred any change or development, or any combination of changes or
developments, that would reasonably be expected to have a Material Adverse
Effect on the Company.
20
(e) Compliance Certificate. The Company shall have delivered to Parent a
certificate of the Chief Executive Officer of the Company evidencing compliance
with the conditions set forth herein.
(f) Consents. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement (including the
Consents identified in Section 2.20 of the Company Disclosure Schedule) shall
have been obtained and shall be in full force and effect.
(f) Legal Opinion. Parent shall have received a legal opinion of Nida &
▇▇▇▇▇▇▇, LLP, in the form of Exhibit K, dated as of the Closing Date;
(g) Completion of Exhibits, Schedules and Due Diligence. The Exhibits and
Company Disclosure Schedule shall have been completed. TBU, TBU's
Representative, Parent and Parent's Representative shall have satisfactorily
completed their due diligence review of the Company and shall be satisfied, in
their sole discretion, with the results of the due diligence and the Company
Disclosure Schedules and Exhibits provided subsequent to the signing of this
Agreement.
(h) Releases. Company Stockholders, Company Debtholders and Company
Warrantholders shall have delivered full releases of the Company, its
Subsidiaries, and their respective officers, directors, agents, and
stockholders, in a form satisfactory to the Parent.
(i) Employment Agreements. The Parent shall have final approval and shall
be satisfied, in its sole discretion, with all employment arrangements of
employees of the Company an d its Subsidiaries that will remain in effect after
the Effective Time.
(j) GenesisIntermedia. The Parent shall have received an executed
agreement from GenesisIntermedia related to the Centerlinq Network satisfactory
to the Parent, in the Parent's sole discretion.
(k) Amendment to Purchase Agreement. An amendment to the Purchase
Agreement has been fully executed in form satisfactory to the Parent.
5.3 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a) Representations and Warranties. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall be true and
correct as of the Closing Date as though made on and as of the Closing Date or,
in the case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date.
21
(b) Performance Obligations. Parent and Merger Sub shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by
Parent and Merger Sub at or prior to the Closing.
(c) Compliance Certificate. Parent shall have delivered to the Company a
certificate of the Chief Executive Officer of Parent in substantially the same
form as set forth in Exhibit L, evidencing compliance with the conditions set
forth herein.
SECTION 6
TERMINATION
6.1 Termination. This Agreement may be terminated prior to the Closing
Date:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by March 31, 2000 (unless the failure to consummate the Merger is
attributable to a failure on the part of the party seeking to terminate this
Agreement to perform any material obligation required to be performed by such
party at or prior to the Closing Date);
(c) by either Parent or the Company if a court of competent jurisdiction
or other Governmental Body shall have issued a final and nonappealable order,
decree or ruling, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
(d) by either Parent or Company if any of the other party's
representations and warranties contained in this Agreement shall be or shall
have become materially inaccurate, or if any of the other party's covenants
contained in this Agreement shall have been breached in any material respect;
provided, however, that if an inaccuracy in a party's representations and
warranties or a breach of a covenant by a party is curable by such party and
such party is continuing to exercise all reasonable efforts to cure such
inaccuracy or breach, then the breaching party shall have thirty (30) days from
time of receipt of written notice from the nonbreaching party of such breach or
inaccuracy to cure such breach and if it is not cured within such thirty (30)
day period, the nonbreaching party may terminate this Agreement on account of
such inaccuracy or breach.
6.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 6.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 6.2, Section 6.3, and
Section 8 shall survive the termination of this Agreement and shall remain in
full force and effect, and (ii) the termination of this Agreement shall not
relieve any party from any liability for any breach of this Agreement.
6.3 Fees and Expenses; Termination Each party to this Agreement shall bear
and pay all fees, costs and expenses (including legal fees and accounting fees)
that have been incurred or that are incurred in the future by such party in
connection with the transactions contemplated by this Agreement, including all
fees, costs and expenses incurred by such party in connection with or by
22
virtue of (a) the investigation and review conducted by such party (or its
Representatives) with respect to the other party's business (and the furnishing
of information to the other party and its Representatives in connection with
such investigation and review), (b) the negotiation, preparation and review of
this Agreement and all agreements, certificates, opinions and other instruments
and documents delivered or to be delivered in connection with the transactions
contemplated by this Agreement, (c) the preparation and submission of any filing
or notice required to be made or given in connection with any of the
transactions contemplated by this Agreement, and the obtaining of all Consents
and Governmental Authorizations required to be obtained in connection with any
of such transactions, and (d) the consummation of the Merger.
SECTION 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.1 Survival of Company Representations and Warranties. The
representations and warranties made by the Company herein (including the
representations and warranties set forth in Section 2 or contained in any
certificate delivered by an officer of the Company) shall survive the Closing
and shall expire on the first anniversary of the Closing Date (the "Expiration
Date"); provided, however, that the representations and warranties contained in
Section 2.9 shall expire on the date the applicable statute of limitations runs
and representations and warranties contained in Section 2.3 shall survive
indefinitely; and provided further that if, at any date prior to the Expiration
Date, Parent (acting in good faith) delivers to the Company a written notice
alleging the existence of an inaccuracy in or a breach of any of the
representations or warranties made by the Company (and setting forth in
reasonable detail the basis for Parent's belief that such an inaccuracy or
breach may exist) and asserting a claim for recovery under Section 7.3 based on
such alleged inaccuracy or breach, then the claim asserted in such notice shall
survive the Expiration Date until such date as such claim is fully and finally
resolved. The representations, warranties, covenants and obligations of the
Company and the rights and remedies that may be exercised by Parent shall not be
limited or otherwise affected by or as a result of any information furnished to,
or any investigation made by or knowledge of, the Parent; provided, however,
that there shall be no liability for any matter disclosed to Parent pursuant to
Section 4.3 and which Parent expressly waives in writing as a condition to
closing. For purposes of this Agreement, each statement or other item of
information set forth in the Company Disclosure Schedule or any update to the
Company Disclosure Schedule shall be deemed to be a representation and warranty
made by the Company in this Agreement.
7.2 Survival of Parent and Merger Sub Representations and Warranties. The
representations and warranties made by Parent and Merger Sub herein (including
the representations and warranties set forth in Section 3 or contained in any
certificate delivered by an officer of Parent) shall survive the Closing and
shall expire on the Expiration Date. The representations, warranties, covenants
and obligations of the Parent and Merger Sub and the rights and remedies that
may be exercised by the Company shall not be limited or otherwise affected by or
as a result of any information furnished to, or any investigation made by or
knowledge of, the Company.
7.3 Indemnification by Company Stockholders. Subject to the limitations
contained in Section 7.1, this Section 7.3 and Section 7.5, from and after the
Effective Time, the Company Stockholders shall severally, and not jointly, hold
harmless and indemnify Parent, Company, or their
23
representive officers, directors, agents or controlling stockholders (other than
the Company Stockholders) from and against, and shall compensate and reimburse
Parent for, any Damages which are directly or indirectly suffered or incurred by
Parent or the Company or to which Parent or the Company may otherwise become
subject (regardless of whether or not such Damages relate to any third-party
claim) and which arise from or as a result of, or are directly or indirectly
connected with, any inaccuracy in or breach of any representation or warranty or
breach of any warrant or agreement made or undertaken by the Company or the
Company Stockholders contained in this Agreement (including Section 2) or
contained in any document or instrument delivered to Parent by the Company;
provided, that, for the purposes of indemnification under this Section 7, an
inaccuracy in or breach of any representation or warranty contained herein, or
in any other document or instrument delivered to Parent by the Company, shall be
deemed to exist if either such representation or warranty is actually inaccurate
or breached or if such representation or warranty would have been inaccurate or
breached if such representation or warranty had not contained any limitation or
qualification as to knowledge, Material Adverse Effect or other materiality
limitation or qualification.
7.4 Notice; Defense of Claim.
(a) If any party entitled to indemnification under Section 7.3 (the
"Indemnified Party") shall receive notice or otherwise learn of the assertion by
any other Person of any claim or of the commencement by any such Person of any
action (a "Third Party Claim") with respect to which a party may be obligated to
provide indemnification pursuant to Section 7.3 (the "Indemnifying Party"), such
Indemnified Party shall give written notice thereof to the Indemnifying Party
within ten (10) business days after becoming aware of such Third Party Claim
(the "Indemnification Notice") Such notice shall describe the Third Party Claim
in reasonable detail, and shall indicate the amount (estimated if necessary) of
the Damages that has been or may be sustained by such Indemnified Party.
Thereafter, such Indemnified Party shall deliver to the Indemnifying Party
within five (5) business days after the Indemnified Party's receipt thereof,
copies of all notices and documents received by the Indemnified Party relating
to the Third Party Claim (including court papers).
(b) If, promptly after receipt by the Indemnifying Party of notice of any
Third Party Claim as provided in Section 7.4(a), the Indemnifying Party shall
give written notice to the Indemnified Party stating that it intends to assume
the defense thereof, at its own cost, then the defense of such Third Party
Claim, including selection of counsel reasonably satisfactory to the Indemnified
Party, shall be by the Indemnifying Party and the Indemnified Party shall make
no payment on such Third Party Claim as long as the Indemnifying Party is
conducting a good faith and diligent defense. The Indemnified Party shall make
available all information and assistance that the Indemnifying Party may
reasonably request and shall cooperate with the Indemnifying Party in such
defense. Notwithstanding the foregoing, the Indemnified Party shall at all times
have the right to fully participate in such defense at its own expense directly
or through counsel. If no such notice to assume the defense against a Third
Party Claim is received by the Indemnified Party from the Indemnifying Party,
the Indemnified Party shall, at the expense of the Indemnifying Party, undertake
the defense of such Third Party Claim, with counsel selected by the Indemnified
Party, and shall have the right to compromise or settle the same exercising
reasonable judgment.
(c) No Third Party Claim made against any Indemnified Party shall be
settled without the
24
prior written consent of the Indemnifying Party.
7.5 Further Limitations on Indemnification. Notwithstanding the foregoing
provisions of this Section 7, the right to indemnification under this Section 7
shall be subject to the following:
(a) No Indemnifying Party shall have liability under Section 7.3 except to
the extent that Damages exceed $100,000 in the aggregate, in which event the
Indemnifying Party shall be liable for all Damages.
(b) No Indemnifying Party shall have liability under Section 7.3 in excess
of the liquidation preference of the Parent Series A Preferred Stock originally
issued to such Indemnifying Party pursuant to Section 1.6(a).
(c) No indemnification shall be payable pursuant to Section 7.3 after the
Expiration Date, except (i) for claims for Damages made prior to the Expiration
Date but not then resolved, or (ii) for claims for Damages made with respect to
an inaccuracy or breach of any representation or warranty contained in Section
2.9, which representation and warranty shall survive until the expiration of the
applicable statute of limitations, or Sections 2.3, which representations and
warranties shall survive indefinitely in all cases, without giving effect to any
limitation or qualification as to knowledge, Material Adverse Effect or other
materiality limitation or qualification.
(d) The limitations of Sections 7.1, 7.2 and 7.5(a) and (b) shall not
apply to any claim for Damages that are determined by a court of competent
jurisdiction, in a proceeding from which no further appeal is permitted to be
taken, to have been primarily caused by fraud or intentional misrepresentation
or intentional breach of such Indemnifying Party.
(e) In determining the amount of any indemnity under Section 7.3, the
Damages shall be reduced (including, without limitation, retroactively) by any
insurance proceeds, tax benefit or other similar recovery or offset realized,
directly or indirectly, by the Indemnified Party actually recovered by or on
behalf of such Indemnified Party in reduction of the loss giving rise to the
claim for Damages.
(f) In the event an Indemnifying Party fails to satisfy an indemnification
payable pursuant to Section 7.3 within 30 days after the final amount of Damages
have been determined and after all other provisions of this Section 7 have been
satisfied, then the Indemnifying Party shall surrender to Parent for
cancellation that number of shares of Parent Preferred Stock with a redemption
value equal to the amount of the indemnification obligation.
25
SECTION 8
MISCELLANEOUS PROVISIONS
8.1 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
8.2 Attorneys' Fees. Subject to Section 6.3, if any action at law or suit
in equity to enforce this Agreement or the rights of any of the parties
hereunder is brought against any party hereto, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
8.3 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing to the address
or facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
if to Parent or Merger Sub:
Aviation Group Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
Jenkens & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company:
Global Leisure Travel, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. El-Batrawi
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
26
with a copy to (which shall not constitute notice):
Nida & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company Stockholders:
Genesis Diversified Investments, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. El-Batrawi
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
Nida & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Global Leisure, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇.▇.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company Debtholders:
Genesis Diversified Investments, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇-▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇ No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
Nida & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Global Leisure, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇.▇.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.4 Time of the Essence. Time is of the essence of this Agreement.
8.5 Governing Law; Venue.
(a) This Agreement shall be construed in accordance with, and governed in
all respects by, the internal laws of the State of Washington (without giving
effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this Agreement
or the enforcement of any provision of this Agreement shall be brought or
otherwise commenced in any state or federal court located in Dallas, Texas.
(c) Nothing contained in Section 8.5(b) shall be deemed to limit or
otherwise affect the right of any Person entitled to indemnification hereunder
to commence any legal proceeding or otherwise proceed against the Indemnifying
Party in any other forum or jurisdiction.
8.6 Successors and Assigns. This Agreement shall be binding upon and shall
be enforceable by and inure solely to the benefit of, the parties hereto and
their successors and assigns; provided, however, that this Agreement may not be
assigned by any party without the written consent of the other parties, and any
attempted assignment without such consent shall be void and of no effect. In
addition, the provisions of Section 7 shall be binding upon the successive
holders of Series
28
A Preferred Stock. None of the provisions of this Agreement are intended to
provide any rights or remedies to any Person other than the parties hereto and
their respective successors and assigns (if any).
8.7 Remedies Cumulative; Specific Performance. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
8.8 Waiver.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No Person shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
8.9 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
8.10 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
8.11 Disclosure Schedule. The Company Disclosure Schedule shall be
arranged in separate parts corresponding to the numbered and lettered sections
contained in Section 2, and the information disclosed in any numbered or
lettered part shall be deemed to relate to and to qualify only the particular
representation and warranty set forth in the corresponding numbered or lettered
section in Section 2 and shall not be deemed to relate to or to qualify any
other representation or warranty.
29
8.12 Entire Agreement. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties hereto relating to the
subject matter hereof and, supersede all prior and contemporaneous agreements
and understandings among or between any of the parties relating to the subject
matter hereof.
8.13 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
8.14 Headings. The bold-faced section headings contained in this Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
8.15 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one and the same instrument.
SECTION 9
Additional Representations and Warranties
9.1 Authorization. Each Company Stockholder and each Company Debtholder
has all requisite legal and corporate power and authority to enter into this
Agreement and all other agreements, documents or instruments contemplated by
this Agreement to which it is a party. All corporate action on the part of each
Company Stockholder and each Company Debtholder and their respective directors,
officers and stockholders necessary for the authorizations, execution, delivery
and performance of all obligations of such Company Stockholder and Company
Debtholder under this Agreement has been taken as of the Closing Date. This
Agreement constitutes an obligation of each Company Stockholder and each Company
Debtholder, enforceable in accordance with its terms, except as may be limited
by (a) applicable bankruptcy, insolvency, reorganization or other laws of
30
general application relating to or affecting the enforcement of creditors'
rights generally and (b) the effect of rules of law governing the availability
of equitable remedies.
9.2 Organization and Standing. Each Company Stockholder and each Company
Debtholder is a corporation duly organized and existing under, and by virtue of,
the laws of the jurisdiction of its organization and is in good standing under
such laws. True and accurate copies of such Company Stockholder's and such
Company Debtholder's Articles of Incorporation and Bylaws, as presently in
effect, have been delivered to the Parent.
9.3 Indebtedness. The indebtedness set forth on Schedule II of this
Agreement that is being assigned to the Parent in exchange for the Parent Series
A Preferred Stock and all related promissory notes, agreements, understandings,
security agreements, instruments and contracts constitute valid and enforceable
indebtedness, liabilities and obligations of the Company and the assignment,
negotiation and transfer of same to Parent will be valid, binding and
enforceable.
[Signature page to follow.]
31
The parties hereto have caused this Agreement to be executed and delivered
as of 17, March 2000.
AVIATION GROUP INC.
a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman
AVGP SUB, INC.
a Washington corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
GLOBAL LEISURE TRAVEL, INC.,
a Washington corporation
By: /s/ ▇▇▇▇ ▇. El-Batrawi
----------------------------------
Name: ▇▇▇▇ ▇. El-Batrawi
Title: President and CEO
COMPANY STOCKHOLDERS:
GENESIS DIVERSIFIED INVESTMENTS,
INC., a Florida corporation
By /s/ ▇▇▇▇ ▇. El-Batrawi
----------------------------------
Name: ▇▇▇▇ ▇. El-Batrawi
Title: Chairman
GLOBAL LEISURE, INC.,
a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
32
COMPANY DEBTHOLDERS:
GENESIS DIVERSIFIED INVESTMENTS,
INC., a Florida corporation
By: /s/ ▇▇▇▇ ▇. El-Batrawi
----------------------------------
Name: ▇▇▇▇ ▇. El-Batrawi
Title: Chairman
GLOBAL LEISURE, INC.,
a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
33
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Affiliates. "Affiliates" shall mean any Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with, a specified Person.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger to
which this Exhibit A is attached (including the Company Disclosure Schedule), as
it may be amended from time to time.
Certificate of Merger. "Certificate of Merger" shall have the meaning set
forth in Section 1.5.
Closing. "Closing" shall have the meaning set forth in Section 1.5.
Closing Date. "Closing Date" shall have the meaning set forth in Section
1.5.
Company. "Company" shall mean GLOBAL LEISURE TRAVEL, INC., a Washington
corporation.
Company Common Stock. "Company Common Stock" shall have the meaning set
forth in Section 1.4(b).
Company Contract. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; (b) by which the Company or any of its assets is or may
become bound or under which the Company has, or may become subject to, any
obligation; or (c) under which the Company has or may acquire any right or
interest.
Company Disclosure Schedule. "Company Disclosure Schedule" shall have the
meaning set forth in the Preamble to Section 2.
Company Warrant. "Company Warrant" shall mean any rights or options under
the Company Plan and any other option, warrant or other security to purchase
capital stock of the Company held by any Person including any director, officer
or employee of, or consultant to, the Company.
Proprietary Rights. "Proprietary Rights" shall have the meaning set forth
in Section 2.9.
Company Returns. "Company Returns" shall have the meaning set forth in
Section 2.8.
Company Stock. "Company Stock" shall mean all classes of Company capital
stock.
34
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or undertaking of
any nature.
Damages. "Damages" shall include any loss, damage, injury, liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable attorneys' fees), charge, cost (including costs of investigation) or
expense of any nature. Damages shall not include lost profits, lost savings, or
other indirect, special, incidental or consequential damages whether such
damages are based on tort, contract, or any other legal theory, and even if the
Indemnified Party or Indemnifying Party has been advised or is aware of the
possibility of such damages.
Effective Time. "Effective Time" shall have the meaning set forth in
Section 1.5.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company, limited liability company,
joint stock company, firm or other enterprise, association, organization or
entity.
Expiration Date. "Expiration Date" shall have the meaning set forth in
Section 7.1.
Financial Statements. "Financial Statements" shall mean those financial
statements of the Company (including the footnotes thereto) described in clauses
(i) and (ii) of Section 2.4(a).
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency,
35
commission, instrumentality, official, organization, unit, body or Entity and
any court or other tribunal).
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, order, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body.
WBCA. "WBCA" shall mean the Washington Business Corporation Act.
Material Adverse Effect. A violation of a representation or warranty or
any other matter will be deemed to have a "Material Adverse Effect" on the
Company or Parent, as the case may be, if such violation or other matter
(considered together with all other matters that would constitute exceptions to
such representations and warranties set forth in the Agreement but for the
presence of "Material Adverse Effect" or other materiality qualifications, or
any similar qualifications, in such representations and warranties) would have a
material adverse effect on the Company's or, taken as a whole, Parent's and
Parent's Subsidiaries, as the case may be, business, condition, assets,
liabilities, operations, financial performance or prospects.
Material Company Contract. "Material Company Contract" shall have the
meaning set forth in Section 2.9(a).
Merger Sub. "Merger Sub" shall mean AVIATION GROUP INC., a Delaware
corporation.
Merger Sub Common Stock. "Merger Sub Common Stock" shall have the meaning
set forth in Section 1.7.
Parent. "Parent" shall mean AVIATION GROUP INC., a Delaware corporation.
Parent Common Stock. "Parent Common Stock" shall mean Parent's Common
Stock, $.01 par value per share.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Pre-Closing Period. "Pre-Closing Period" shall have the meaning set forth
in Section 4.1.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
36
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Subsidiaries. "Subsidiaries" shall mean, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which more than fifty percent (50%) of either the equity interests in, or the
voting control of, such corporation or other organization is, directly or
indirectly through Subsidiaries or otherwise, beneficially owned by such party.
Surviving Corporation. "Surviving Corporation" shall have the meaning set
forth in Section 1.3.
Surviving Corporation Common Stock. "Surviving Corporation Common Stock"
shall have the meaning set forth in Section 1.7.
Taxes. "Taxes" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax,
ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
37
EXHIBIT B
FORM OF AMENDED AND RESTATED ARTICLES
OF INCORPORATION OF SURVIVING CORPORATION
ARTICLE I
The name of the corporation is Global Leisure Travel, Inc.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The corporation is organized for the purpose of engaging in any
lawful act, activity and/or business for which corporations may be organized
under Revised Code of Washington (the "Code").
ARTICLE IV
1. The aggregate number of shares that the corporation shall have
authority to issue is twenty-five million (25,000,000), consisting of twenty
million (20,000,000) shares of common stock, having no par value (the "Common
Stock"), and five million (5,000,000) shares of preferred stock, par value one
cent ($0.01) per share (the "Preferred Stock").
2. The Board of Directors is hereby expressly authorized, by
resolution or resolutions from time to time adopted, to provide, out of the
unissued shares of Preferred Stock, for the issuance of serial Preferred Stock.
Before any shares of any such series are issued, the Board of Directors shall
fix and state, and hereby is expressly empowered to fix, by resolution or
resolutions, the designations, preferences, and relative, participating,
optional or other special rights of the shares of each such series, and the
qualifications, limitations or restrictions thereon, including, but not limited
to, determination of any of the following:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof if different from the par
value thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights, which may be full or limited;
38
(c) the dividends, if any, payable on such series and at what rates,
whether any such dividends shall be cumulative, and, if so, from what dates, the
conditions and dates upon which such dividends shall be payable, the preference
or relation which such dividends shall bear to the dividends payable on any
shares of stock of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to redemption
by the corporation, and, if so, the prices and other terms and conditions of
such redemption;
(e) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up of, or upon any distribution of the
assets of, the corporation;
(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or other corporate
purposes and other terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of this
class or any other class or classes of securities and, if so, the price or
prices or the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or the
taking of other distributions on, and upon the purchase, redemption or other
acquisition by the corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the corporation or upon the issue of any additional stock,
including additional shares of such series or any other series of this class or
of any other class; and
(j) any other powers, preferences and relative, participating,
optional and other special rights and any qualifications, limitations and
restrictions thereof.
The powers, preferences and relative, participating, optional and
other special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the date from which dividends thereof shall be cumulative. The
Board of Directors may increase the number of shares of the Preferred Stock
designated for any existing series by a resolution adding to such series
authorized and unissued shares
39
of the Preferred Stock not designated for any other series. The Board of
Directors may decrease the number of shares of Preferred Stock designated for
any existing series by a resolution, subtracting from such series unissued
shares of the Preferred Stock designated for such series, and the shares so
subtracted shall become authorized, unissued and undesignated shares of the
Preferred Stock.
ARTICLE V
The address of the registered office of the corporation is ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, and the name of
the initial registered agent at such address is ▇▇▇ ▇▇▇▇▇▇▇.
ARTICLE VI
1. The number of directors of this corporation shall be not less
than one (1) nor more than eleven (11), the exact number to be fixed from time
to time in the manner provided in the Bylaws of the corporation.
2. The Board of Directors shall have the power to alter, amend or
repeal the Bylaws of the corporation or to adopt new Bylaws.
3. The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of the corporation are granted subject to this right.
ARTICLE VII
The Board of Directors of the corporation, in its sole discretion,
shall have the power, on behalf of the corporation, to indemnify persons for
whom indemnification is permitted by Section 23B.08.510 of the Code, as amended,
to the fullest extent permissible under Section 23B.08.510 of the Code, as
amended, and may purchase such liability, indemnification and/or other similar
insurance as the Board of Directors from time to time shall deem necessary or
appropriate, in its sole discretion.
The corporation may purchase and maintain liability, indemnification
and/or other similar insurance on behalf of itself, and/or for any person who is
or was a director, officer, employee
40
or agent of the corporation or who is or was serving at the request of the
corporation as a director, officer, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other enterprise,
against any liability asserted against and/or incurred by the corporation or
person serving in such a capacity or arising out of his/her/its status as such a
person or entity, whether or not the corporation would otherwise have the power
to indemnify such person against that liability.
The power to indemnify and/or obtain insurance provided in this
Article VII shall be cumulative of any other power of the Board of Directors
and/or any rights to which such a person or entity may be entitled by law, the
Articles of Incorporation and/or Bylaws of the corporation, contract, other
agreement, vote or otherwise.
ARTICLE VIII
The right to cumulate votes in the election of directors and/or
cumulative voting by any shareholder is hereby expressly denied.
ARTICLE IX
No shareholder of this corporation shall, by reason of their holding
shares of any class of stock of this corporation, have any preemptive or
preferential right to purchase or subscribe for any shares of any class of stock
of this corporation, now or hereafter to be authorized, or any notes,
debentures, bonds or other securities convertible into or carrying options,
warrants or rights to purchase shares of any class, now or hereafter to be
authorized, whether or not the issuance of any such shares or such notes,
debentures, bonds or other securities would adversely affect the dividend or
voting rights of any such shareholder, other than such rights, if any, as the
Board of Directors, at its discretion, from time to time may grant, and at such
price as the Board of Directors at its discretion may fix; and the Board of
Directors may issue shares of any class of stock of this corporation or any
notes, debentures, bonds or other securities convertible into or carrying
options,
41
warrants or rights to purchase shares of any class without offering any such
shares of any class or such notes, debentures, bonds or other securities either
in whole or in part to the existing shareholders of any class.
ARTICLE X
No contract or other transaction between this corporation and any
person, firm, association or corporation and no act of this corporation, shall,
in the absence of fraud, be invalidated or in any way affected by the fact that
any of the directors of this corporation is pecuniarily or otherwise interested,
directly or indirectly, in such contract, transaction or act, or is related to
or interested in such person, firm, association or corporation as a director,
shareholder, officer, employee, member or otherwise. Any director so interested
or related who is present at any meeting of the Board of Directors or committee
of directors at which action on any such contract, transaction or act is taken
may be counted in determining the presence of a quorum at such meeting and the
vote at such meeting of any such director may be counted in determining the
approval of any such contract, transaction or act. No director so interested or
related shall, because of such interest or relationship, be disqualified from
holding his office or be liable to the corporation or to any shareholder or
creditor thereof for any loss incurred by this corporation under or by reason of
such contract, transaction or act, or be accountable for any gains or profits he
may have realized therein.
42
ARTICLE XI
No member of the Board of Directors of the corporation shall be
liable, personally or otherwise, in any way to the corporation or its
shareholders for monetary damages caused in any way by an act or omission
occurring in the director's capacity as a director of the corporation, except as
otherwise expressly provided by Section 23B.08.300 of the Code, as amended.
ARTICLE XII
Any action required by the Code to be taken at any annual or special
meeting of the shareholders of the corporation, and/or any action that may be
taken at any annual or special meeting of the shareholders of the corporation,
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of shares having not less than the minimum
number of votes that would be necessary to take such action at a meeting at
which the holders of all shares entitled to vote on the action were present and
voted. Such action shall be taken in accordance with the provisions of Section
23B.07.040 of the Code, as amended.
ARTICLE XIII
Notwithstanding any provision of the Code now or hereafter in force
requiring for the approval of any action the affirmative vote of two-thirds, or
any other percentage greater than a majority, of the outstanding shares entitled
by law to vote thereon or of the outstanding shares of a class or series
entitled by law to vote separately as a class or series thereon, such action may
be authorized and taken by the affirmative vote of the holders of a majority of
such outstanding shares, or such outstanding shares of a class or series, as
applicable. Except as provided in the preceding sentence, in all other
circumstances requiring the approval of the outstanding shares of a class or
series, the vote of the holders of a majority of the shares entitled to vote and
represented in person or by proxy at any shareholders' meeting at which a quorum
is present shall be the act of the
43
shareholders. This provision shall not impair any other express provision of
these Articles of Incorporation or contractual rights granted by the Board of
Directors that expressly require greater than a majority or class vote on
certain corporate actions.
44
EXHIBIT C
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
DIRECTORS
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
OFFICERS
Name Position(s)
---- ----------------------------
▇▇▇▇ ▇▇▇▇▇ Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇ President
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Vice President and Secretary
▇▇▇▇ Feynes Chief Operating Officer
45
Exhibit D
FORM OF DEBT WARRANT
46
EXHIBIT E
TERMS OF PARENT SERIES A CONVERTIBLE PREFERRED STOCK
47
EXHIBIT F
FORM OF GDI WARRANT
48
EXHIBIT G
FORM OF GLI WARRANT
49
EXHIBIT H
Terms of Debt Exchange
In connection with and as a condition to the Merger, Parent will issue to
certain holders of the Company's outstanding corporate indebtedness
(approximately US$16.2 million plus new indebtedness from February 10, 2000, up
to a maximim of US$16.5 million) and the holders of all of the Company's common
stock in exchange for transfer of such indebtedness to Parent and the
cancellation of such common stock (a) shares of Parent's Series A Convertible
Preferred Stock ("Series A Preferred Stock") with an initial aggregate
liquidation preference equal to the principal amount of such indebtedness (the
"Principal Amount") and (b) warrants (the "Exchange Warrants") to purchase
750,000 shares of Parent's common stock. The Exchange Warrants shall be issued
as follows: warrants to purchase 500,000 shares of Parent's common stock shall
be issued to Genesis Diversified Investments, Inc. or its nominee, and warrants
to purchase 250,000 shares of Parent's common stock shall be issued to Global
Leisure, Inc. or its nominee. The the Company Debt and Equity Holders will
receive no additional consideration for the cancellation of their the Company
common stock.
The Exchange Warrants issued to Global Leisure, Inc. or its nominee, shall
be non-transferable and nonexercisable until both of the following conditions
are satisfied within two calendar years of the date of issuance: (i) the
revenues of the Company meet or exceed US$80 million for any one year period (as
defined below), and (ii) the Company generates net income during any one year
period (as defined below). For this purpose, a one year period shall consist of
any four consecutive fiscal quarters. In addition, until both conditions are
satisfied, the Exchange Warrants may be canceled at the option of the Board of
Directors of Parent, ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ("TBU"), or the surviving corporation
of the contemplated merger by and between Parent and TBU ("Newco"), as the case
may be, in the event the Board determines in good faith that both of the above
conditions will not be met in the required time period.
GenesisIntermedia shall enter into an agreement with Parent, TBU, and/or
Newco, as the case may be, whereby GenesisIntermedia agrees to provide exclusive
access (other than access provided to American Express and its affiliates) to
its Centerlinq Network for three years, and provide such access without charge
for the first year. Such agreement shall be subject to the approval of an
independent committee of the board of directors of GenesisIntermedia which shall
occur prior to completion of the the Company Merger. In consideration for
entering into such agreement, (1) the Exchange Warrants issued to Genesis
Diversified Investments, Inc., or its nominee, shall not be cancelable, and
shall be transferable and exercisable upon issuance, subject to applicable
securities law and approval by Parent's stockholders, and (2) Parent, TBU and/or
Newco, as the case may be, shall redeem the Series A Preferred Stock issued to
Genesis Diversified Investments, Inc., or its nominees, (the "Genesis Series A
Preferred Stock") unless previously converted to common stock, by paying to
Genesis Diversified Investments, Inc., or its nominees, the Series A Liquidation
Preference from the proceeds of any one or more public financings subsequent to
the completion of the proposed business combinations and financings contemplated
herein (the "Genesis Series A Redemption") but only to the extent the proceeds
from such financings exceed the amount necessary to complete the redemption of
Parent's Series B Preferred Stock issued in connection with the series
50
of transactions contemplated by Parent, TBU and the Company, of which this
merger is a part, and exceed, in the aggregate, U.S. $25 million.
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EXHIBIT J
Terms of Bridge Financing
Subject to the execution of definitive subscription documents reasonably
acceptable to Parent, ▇▇▇▇▇▇ Capital, together with other broker-dealers
selected by ▇▇▇▇▇▇ Capital with the concurrence of Travelbyus and Parent and in
compliance with applicable securities laws, shall use its commercially best
efforts to sell up to US$20 million of Parent's Series B Preferred Stock
("Series B Preferred Stock"), US$2 million of common stock of Parent and US$3
million of Common Stock of Travelbyus to finance the combinations (the "Bridge
Financing"). To the extent the amount of new cash proceeds from the Bridge
Financing exceeds the aggregate liquidation preference of any Series B Preferred
Stock held by Travelbyus, such excess shall be used to purchase outstanding
Series B Preferred Stock from Travelbyus in lieu of issuing new shares of Series
B Preferred Stock. Except as set forth in the immediately preceding sentence,
the Bridge Financing may also be effected by the transfer of existing Company
indebtedness to Parent, in which case any guarantees of such indebtedness shall
be released.
The purchasers of Series B Preferred Stock shall be issued warrants (the
"Bridge Warrants") to purchase 7,500 shares of common stock of Parent for each
$100,000 in liquidation preference of the Series B Preferred Stock. The Bridge
Warrants shall be transferable only with the Series B Preferred Stock prior to
closing of the Travelbyus Merger.
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EXHIBIT K
LEGAL OPINION OF NIDA & ▇▇▇▇▇▇▇, LLP
53
EXHIBIT L
CERTIFICATE OF CHIEF EXECUTIVE OFFICER OF COMPANY
54
AMENDMENT
TO
AGREEMENT
AND PLAN OF MERGER
This AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of March 31, 2000, by and among AVIATION GROUP, INC., a
Texas corporation ("Parent"), AVGP SUB, INC., a Washington corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), GLOBAL LEISURE TRAVEL, INC., a
Washington corporation (the "Company"), the Stockholders of the Company (the
"Company Stockholders") listed on Schedule I to the Merger Agreement (as
hereinafter defined), and the holders of outstanding indebtedness of the Company
listed on Schedule II to the Merger Agreement (the "Company Debtholders").
Certain capitalized terms used in this Agreement are used as defined in the
Merger Agreement.
RECITALS
A. The parties hereto are parties to that certain Agreement and Plan of
Merger dated as of March 17, 2000 among Parent, Merger Sub, the Company, the
Company Stockholders and the Company Debtholders (the "Merger Agreement"),
whereby (i) Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company, such that upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent, and (ii) the parties have made the covenants set forth therein.
B. The parties hereto have agreed to certain amendments to the Merger
Agreement, upon the terms and conditions hereinafter set forth.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. Closing Date. The date "March 24, 2000" in Section 1.3 of the Merger
Agreement is hereby amended to read "May 5, 2000," and the date "March 31, 2000"
in Section 6.1(b) of the Merger Agreement is hereby amended to read "May 5,
2000."
2. Company Debtholders. The following creditors of the Company have been, or
hereby are, added to Schedule II to the Merger Agreement as Company Debtholders,
and are hereby added as parties to the Merger Agreement by execution hereof:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. El-Batrawi
3. Conversion of Company Warrants. The second sentence of Section 1.6(a) of the
Merger Agreement is hereby amended to read in its entirety as follows:
55
At the Effective Time, each of the Company Warrants shall be deemed
canceled and extinguished and automatically converted into the right
to receive warrants, substantially in the form of Exhibit E ("Debt
Warrants"), to purchase that number of shares of the Parent Common
Stock equal to (A) the number of shares of Company Common Stock
represented by such Company Warrant, multiplied by (B) the Exchange
Ratio. The Exchange Ratio shall mean and refer to the quotient of
(i) 3,500,000 divided by (ii) the total number of shares of Company
Common Stock represented by all of the Company Warrants (rounded to
the nearest five decimal places).
4. Releases from Company Creditors. The text of Section 5.2(h) of the Merger
Agreement is hereby amended to read in its entirety as follows:
Company Stockholders, Company Warrantholders, Company Debtholders,
and all other holders of indebtedness of the Company and its
Subsidiaries (for borrowed money to be repaid in full in connection
with the consummation of the Merger), including without limitation
indebtedness owed to ▇▇▇▇▇▇ Capital Management and its affiliates
and clients, shall have delivered full releases of the Company, its
Subsidiaries, and their respective officers, directors, agents, and
stockholders, in a form satisfactory to the Parent.
5. ▇▇▇▇ ▇▇▇ Claims Indemnity. Section 7.3 of the Merger Agreement is hereby
amended by adding to the end thereof the following new sentence:
In addition, the Parent, the Company and their respective Affiliates
and representatives of the type listed hereinabove also shall be
indemnified by the Company Stockholders under the foregoing sentence
from and against any and all Damages which directly or indirectly
arise from or as a result of claims made by ▇▇▇▇ ▇▇▇, former CEO of
the Company, as if such claims constituted a breach of this
Agreement by the Company.
6. Technical Corrections.
(a) The reference in Section 1.5 to "Section 1.4" is hereby amended to
read "Section 1.5," and all references in Section 1.6 to "Section
1.5" are hereby amended to read "Section 1.6."
(b) All references in the Merger Agreement to "Section 1.6(a)" and
"Section 1.6(b)" are hereby amended to read "Section 1.7(a)" and
Section 1.7(b)," respectively.
(c) All references in the Merger Agreement to the "Investor" are hereby
amended to read "Parent," and all references to "TBU" are hereby
amended to read "Travelbyus."
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(d) The text of Section 2.14 is hereby amended to read in its entirety
as follows: "Except as contemplated in the Purchase Agreement, none
of the Company Stockholders have entered into any agreements with
respect to the voting of capital shares of the Company."
7. Continuation of Merger Agreement. Except as expressly amended hereby, the
Merger Agreement shall continue in full force and effect among the parties
hereto.
8. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. A telecopy or facsimile transmission of
a signed counterpart of this Agreement shall be sufficient to bind the party or
parties whose signature(s) appear(s) hereon.
The parties hereto have caused this Agreement to be executed and delivered
as of April 30, 2000.
AVIATION GROUP, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
AVGP SUB, INC.,
a Washington corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
GLOBAL LEISURE TRAVEL, INC.,
a Washington corporation
By: /s/ ▇▇▇▇ ▇. El-Batrawi
----------------------------------
Name: ▇▇▇▇ ▇. El-Batrawi
Title: President and CEO
57
COMPANY STOCKHOLDERS:
GENESIS DIVERSIFIED INVESTMENTS, INC.,
a Florida corporation
By: /s/ ▇▇▇▇ ▇. El-Batrawi
----------------------------------
Name: ▇▇▇▇ ▇. El-Batrawi
Title: Chairman
GLOBAL LEISURE, INC.,
a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
COMPANY DEBTHOLDERS:
GENESIS DIVERSIFIED
INVESTMENTS, INC.,
a Florida corporation
By: /s/ ▇▇▇▇ ▇. El-Batrawi
----------------------------------
Name: ▇▇▇▇ ▇. El-Batrawi
Title: Chairman
GLOBAL LEISURE, INC.,
a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
58
/s/ ▇▇▇▇ ▇. El-Batrawi
--------------------------------------
▇▇▇▇ ▇. ▇▇-▇▇▇▇▇▇▇
▇▇