EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
VE HOLDINGS, INC.,
SUNTRIPS, INC.
and
FS TOURS, INC.
Dated as of
October 17, 2003
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ARTICLE I DEFINITIONS AND TERMS......................................................................1
Section 1.1 Certain Definitions...................................................................1
Section 1.2 Other Definitional Provisions.........................................................7
ARTICLE II PURCHASE AND SALE OF ACQUIRED ASSETS.......................................................8
Section 2.1 Purchase and Sale.....................................................................8
Section 2.2 Acquired Assets and Excluded Assets...................................................8
Section 2.3 Assumption of Liabilities.............................................................9
Section 2.4 Purchase Price........................................................................9
Section 2.5 Purchase Price Adjustment.............................................................9
Section 2.6 Allocation of the Purchase Price.....................................................11
Section 2.7 Transfer Taxes.......................................................................11
ARTICLE III CLOSING...................................................................................11
Section 3.1 Closing..............................................................................11
Section 3.2 Deliveries by Sellers................................................................11
Section 3.3 Deliveries by Purchaser..............................................................12
Section 3.4 Risk of Loss.........................................................................12
Section 3.5 Simultaneous Transactions............................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS.................................................12
Section 4.1 Authority, Binding Effect............................................................12
Section 4.2 Title to Property....................................................................13
Section 4.3 No Violation.........................................................................13
Section 4.4 Litigation; Proceedings.............................................................14
Section 4.5 Organization and Qualification.......................................................14
Section 4.6 Financial Statements; Undisclosed Liabilities.......................................14
Section 4.7 Receivables..........................................................................14
Section 4.8 Consents and Approvals...............................................................15
Section 4.9 Permits/Compliance with Laws.........................................................15
Section 4.10 Employee Benefit Plans; ERISA.......................................................15
Section 4.11 Contracts............................................................................15
Section 4.12 Condition and Sufficiency of Acquired Assets.........................................16
Section 4.13 Environmental Matters................................................................16
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Section 4.14 Real Property........................................................................16
Section 4.15 Labor Matters........................................................................17
Section 4.16 Insurance............................................................................17
Section 4.17 Intellectual Property................................................................17
Section 4.18 Taxes................................................................................18
Section 4.19 Customer Relationships...............................................................18
Section 4.20 Customer Deposits and Pre-Paid Expenses..............................................18
Section 4.21 Full Disclosure......................................................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................................18
Section 5.1 Organization.........................................................................18
Section 5.2 Authority, Binding Effect............................................................18
Section 5.3 No Violation; Consents and Approvals................................................19
Section 5.4 Financial Sufficiency................................................................20
ARTICLE VI COVENANTS.................................................................................20
Section 6.1 Conduct of Business..................................................................20
Section 6.2 Bulk Transfer Laws...................................................................20
Section 6.3 Employees............................................................................20
Section 6.4 Further Assurances...................................................................21
Section 6.5 Confidentiality; Tax Disclosure......................................................21
Section 6.6 Notification of Certain Matters......................................................22
Section 6.7 Access to Books and Records Following the Closing....................................22
Section 6.8 Change of Name.......................................................................22
Section 6.9 MyTravel Names.......................................................................22
Section 6.10 Non-Competition; Non-Solicitation....................................................23
Section 6.11 Stub Period Financial Statements.....................................................23
Section 6.12 Credit Card Processing...............................................................23
Section 6.13 Multiple Purchasers..................................................................23
ARTICLE VII INDEMNIFICATION OBLIGATIONS; SURVIVAL....................................................23
Section 7.1 Agreements to Indemnify..............................................................23
Section 7.2 Third Party Claims Procedures........................................................24
Section 7.3 Limitation of Liability..............................................................25
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Section 7.4 Method of Payment; Treatment of Indemnity Benefits...................................25
Section 7.5 Exclusive Remedy.....................................................................25
Section 7.6 Survival.............................................................................26
ARTICLE VIII CONDITIONS TO CLOSING; TERMINATION........................................................26
Section 8.1 Mutual Conditions to the Obligations of the Parties..................................26
Section 8.2 Conditions to the Obligations of Purchaser...........................................26
Section 8.3 Conditions to the Obligations of Sellers.............................................27
Section 8.4 Termination..........................................................................27
Section 8.5 Effect of Termination................................................................27
Section 8.6 Closing Failure Fee..................................................................27
Section 8.7 Third Party Real Estate Consents.....................................................28
Section 8.8 No Multiple Materiality Qualifiers...................................................28
ARTICLE IX GENERAL...................................................................................28
Section 9.1 Notices..............................................................................28
Section 9.2 Amendment, Waiver....................................................................29
Section 9.3 Assignment...........................................................................29
Section 9.4 Entire Agreement.....................................................................29
Section 9.5 Fulfillment of Obligations...........................................................29
Section 9.6 Parties in Interest..................................................................29
Section 9.7 Expenses.............................................................................29
Section 9.8 Brokers..............................................................................30
Section 9.9 Governing Law........................................................................30
Section 9.10 Counterparts.........................................................................30
Section 9.11 Headings.............................................................................30
Section 9.12 Disclosure Schedules.................................................................30
Section 9.13 Specific Performance.................................................................30
Section 9.14 Publicity............................................................................30
Section 9.15 Severability.........................................................................30
Section 9.16 Rules of Construction................................................................30
Section 9.17 Representations and Warranties Exclusive.............................................31
Section 9.18 WAIVER OF JURY TRIAL.................................................................31
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EXHIBITS
Exhibit A - Pledge Agreement
Exhibit B - Purchase Agreement Supplement
Exhibit C - Purchase Price Note
Exhibit D - ▇▇▇▇ of Sale Exhibit E- Assumption Agreement
Exhibit F - Lease Assignments
Exhibit G - Transition Services Agreement
Exhibit H - Intellectual Property Assignments
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ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT, dated as of October [16], 2003, by and
among VE Holdings, Inc., a
Delaware corporation ("VE Holdings") and a
wholly-owned subsidiary of MyTravel USA Holdings, Inc., a Florida corporation
("MyTravel"), SunTrips, Inc., a California corporation ("SunTrips") and a
wholly-owned subsidiary of MyTravel, and FS Tours, Inc., a
Delaware corporation
("Purchaser"), a wholly-owned direct subsidiary of Flightserv, Inc., a
Delaware
corporation ("Flightserv") and a wholly-owned indirect subsidiary of eResource
Capital Group, Inc., a
Delaware corporation. VE Holdings and SunTrips are each
referred to herein individually as "Seller" and collectively as "Sellers".
RECITALS:
WHEREAS, Sellers are engaged in the business of serving as public
charter airline operators (collectively the "Business"); and
WHEREAS, Sellers wish to sell to Purchaser, and Purchaser wishes to
purchase from Sellers, substantially all of the assets of Sellers used
exclusively or principally by or relating to the Business, subject to certain
liabilities in connection with the Business, upon the terms and subject to the
conditions of this Agreement (the "Asset Purchase"); and
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
DEFINITIONS AND TERMS
Certain Definitions. As used in this Agreement (including the Schedules and
hereto), the following terms have the meanings set forth or as referenced below:
"Acquired Assets" has the meaning set forth in Section 2.2(a).
"Action" means any claim, action, suit or proceeding, arbitral action,
governmental inquiry, criminal prosecution or other investigation.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. The term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or other ownership interest, as trustee or
executor, by contract, credit arrangement or otherwise.
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"Agreement" means this Agreement, as it may be amended or supplemented
from time to time in accordance with the terms hereof.
"Ancillary Documents" means the ▇▇▇▇ of Sale, the Assumption Agreement,
the Lease Assignment, the Transition Services Agreement, the Intellectual
Property Assignments, each Other Conveyance Document, the Replacement Letters of
Credit, the Purchase Agreement Supplement, the Pledge Agreement, and each
instrument, agreement or other document contemplated by this Agreement as being
executed and delivered by the applicable party hereto.
"Asset Purchase" has the meaning set forth in the recitals.
"Assumed Liabilities" has the meaning set forth in Section 2.3(a).
"Assumption Agreement" has the meaning set forth in Section 3.2(b).
"Benefit Plans" means any Plan that is maintained or contributed to by
Sellers (or any of their Affiliates) for the benefit of Employees.
"▇▇▇▇ of Sale" has the meaning set forth in Section 3.2(a).
"Business" has the meaning set forth in the recitals.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in New York City or Atlanta, Georgia are authorized or obligated
by law or executive order to close.
"Business Intellectual Property" shall mean any Intellectual Property
that is owned by or licensed to Sellers exclusively or principally for the
benefit of the Business, other than any such Intellectual Property that is an
Excluded Asset.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Statement" has the meaning set forth in Section 2.5(a).
"Closing Working Capital Amount" means the difference between the
Current Assets and the Current Liabilities.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competition Laws" means all Laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization, lessening of competition or restraint of trade.
"Consents" has the meaning set forth in Section 4.8
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"Contract" means any written contract, agreement, indenture, note,
bond, instrument, lease, conditional sales contract, mortgage, license,
franchise agreement, concession agreement, insurance policy, security interest,
guaranty, binding commitment or other agreement or arrangement, in each case to
which a Seller is a party and relating to the Business.
"Current Assets" means the Current Assets (as defined by GAAP) of
Sellers as recorded in their books and records as of the Closing Date (including
the Surety Bonds), but excluding all Excluded Assets.
"Current Letters of Credit" means the Letters of Credit set forth on
Schedule 1.1(a).
"Current Liabilities" means the Current Liabilities (as defined by
GAAP) of Sellers as recorded in their books and records as of the Closing Date,
but excluding all Excluded Liabilities.
"Damages" has the meaning set forth in Section 7.1(a).
"Employee" means each employee of Sellers engaged in the Business as of
the Closing Date.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence or Release of any Hazardous Materials at any location,
whether or not owned or operated by any Seller, or (b) circumstances forming the
basis of any violation of any Environmental Law.
"Environmental Laws" means all Laws and regulations relating to
pollution or protection of human health or the environment, including Laws
relating to Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials and all Laws with regard
to recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning set forth in Section 2.2(b).
"Excluded Contracts" has the meaning set forth in Section 2.2(b)(v).
"Excluded Liabilities" has the meaning set forth in Section 2.3(b).
"Financial Information" has the meaning set forth in Section 4.6(a).
"Flightserv" has the meaning set forth in the preamble.
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"GAAP" means United States generally accepted accounting principles and
practices in effect from time to time as consistently applied.
"Governmental Authority" has the meaning set forth in Section 4.8.
"Governmental Order" means any statute, rule, regulation, order,
judgment, injunction, decree, stipulation or determination issued, promulgated
or entered by or with any Governmental Authority of competent jurisdiction.
"Hazardous Materials" means all materials regulated by law as capable
of causing harm or injury to human health or the environment, including (a)
Hazardous Substances (as hereinafter defined), (b) friable asbestos containing
material, (c) polychlorinated biphenyls, (d) highly toxic materials as defined
by OSHA in 29 C.F.R. Section 1910.1200, (d) radioactive materials and (f) all
substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in
the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
Section 300.5, or defined as such by, or regulated as such under, any
Environmental Law.
"Hazardous Substances" means any hazardous substances within the
meaning of Section 101(14) of CERCLA, 42 U.S.C. Section 9601(14), or any
pollutant or constituent that is regulated under any Environmental Law.
"Indemnified Party" has the meaning set forth in Section 7.2.
"Indemnifying Party" has the meaning set forth in Section 7.2.
"Independent Accounting Firm" means (a) a certified public accounting
firm in the United States of international recognition mutually acceptable to
Sellers and Purchaser, which does not have a material existing relationship with
either of Sellers or Purchaser, or (b) if Sellers and Purchaser are unable to
agree upon such a firm, then Sellers shall select one such firm and Purchaser
shall select one such firm and those two firms shall select a third firm, in
which event "Independent Accounting Firm" shall mean such third firm.
"Intellectual Property" means any or all of the following: (i) all
patents and applications therefor and reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof; (ii) inventions
(whether patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology, technical data and customer
lists; (iii) copyrights, copyright registrations and applications therefor; (iv)
trade names, trade dress, logos, trademarks and service marks, and registrations
and applications therefor and the goodwill associated therewith; (v) databases;
(viii) computer software, including all source code therefor and (ix) domain
names and all rights therein throughout the world.
"Intellectual Property Assignments" has the meaning set forth in
Section 3.2(e).
"Knowledge of Sellers", "Sellers' Knowledge" and phrases of similar
import mean the actual knowledge after reasonable inquiry of any current officer
of either Seller.
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"Laws" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree, administrative order or
decree, administrative or judicial decision, and any other executive or
legislative proclamation.
"Lease Assignments" has the meaning set forth in Section 3.2(a).
"Leased Realty" has the meaning set forth in Section 4.14(b).
"Leases" has the meaning set forth in Section 4.14(b).
"Liens" means any lien, security interest, mortgage, pledge, charge or
similar encumbrance.
"Litigation" has the meaning set forth in Section 4.4.
"Material Adverse Effect" means any change or effect that is materially
adverse to the financial condition, assets, liabilities or results of operations
of the Business, with regard to either Seller individually or taken as a whole,
except for any such changes or effects resulting directly or indirectly from (a)
the transactions contemplated by this Agreement, (b) the announcement or other
disclosure of the transactions contemplated by this Agreement, (c) industry-wide
regulatory changes, or (d) an event or circumstance or series of events or
circumstances affecting (i) the industry in which the Business operates in any
country in which the Business operates or (ii) the United States economy
generally or the economy generally of any other country in which the Business
operates.
"Material Contracts" has the meaning set forth in Section 4.11(a).
"MyTravel" means MyTravel USA Holdings, Inc., a Florida corporation.
"MyTravel Canada" means MyTravel Canada Holidays Inc., a Canadian
corporation.
"MyTravel Names" means the trademark "MyTravel" and all other
trademarks containing the word "MyTravel" or any derivatives thereof.
"Notice of Disagreement" has the meaning set forth in Section 2.5(b).
"Other Conveyance Documents" has the meaning set forth in Section
3.2(f).
"Permits" has the meaning set forth in Section 4.9.
"Permitted Liens" means (i) mechanics', carriers', workmen's or
repairmens' Liens arising or incurred in the ordinary course of business with
respect to liabilities that are not yet due or delinquent, (ii) Liens arising by
operation of law for Taxes, assessments and other governmental charges which are
not due and payable or which may hereafter be paid without penalty or which are
being contested in good faith by appropriate proceedings, (iii) Liens set forth
on Schedule 1.1(b), and (iv) other imperfections of title or encumbrances, if
any, which imperfections of title or other encumbrances, individually or in the
aggregate, would not reasonably be expected to materially detract from the value
of the property or asset to which it
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relates or materially impair the ability to use the property or asset to which
it relates in substantially the same manner as it was used prior to the Closing
Date.
"Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Plans" means any "employee benefit plan" within the meaning of Section
3(3) of ERISA.
"Pledge Agreement" means the Stock Pledge Agreement, dated as of the
closing date, between eResource Capital Group, Inc. and Sellers, in the form
attached hereto as Exhibit A.
"Post-Closing Letters of Credit" means those Letters of Credit set
forth on Schedule 1.1(c).
"Purchase Agreement Supplement" means the Purchase Agreement
Supplement, dated as of the Closing Date, between MyTravel Canada and Purchaser,
in the form attached hereto as Exhibit B.
"Purchase Price" has the meaning set forth in Section 2.4.
"Purchase Price Note" means the Secured Promissory Note of Purchaser
and Flightserv, due December 1, 2010, issued to the Sellers, jointly and
severally, in the aggregate principal amount of Ten Million Dollars
($10,000,000) (as may be adjusted from time to time pursuant to Sections 2.5(d)
and 7.4(a)), in the form attached hereto as Exhibit C.
"Purchaser" has the meaning set forth in the preamble.
"Purchaser Group" has the meaning set forth in Section 7.1(a).
"Recipients" has the meaning set forth in Section 6.5(b).
"Registered Intellectual Property" has the meaning set forth in Section
4.17(a).
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including ambient air, surface water,
groundwater and surface or subsurface strata), or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
"Replacement Letters of Credit" means the Letters of Credit obtained by
Purchaser in replacement of the Current Letters of Credit other than the
Post-Closing Letters of Credit, issued to the same entities, in the same amounts
and securing the same obligations as such Current Letters of Credit, each in
form and substance, and from a bank or other financial institution, reasonably
satisfactory to Sellers and the Purchaser; provided, however that the Letter of
Credit obtained by Purchaser in replacement of the $3,000,000 Letter of Credit
issued for the benefit of ▇▇▇▇ International Airlines Inc. by Barclays Bank
shall be in the amount of One Million Five Hundred Thousand Dollars
($1,500,000).
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"Schedule" means any disclosure schedule being delivered by Sellers
concurrently with the execution of this Agreement.
"Seller" has the meaning set forth in the preamble.
"Seller Group" has the meaning set forth in Section 7.1(b).
"SunTrips" has the meaning set forth in the preamble.
"Surety Bonds" means (i) the $200,000 Cash Surety issued by National
City Bank in favor of the Department of Transportation for the benefit of VE
Holdings and (ii) the $200,000 Cash Surety issued by National City Bank in favor
of the Department of Transportation for the benefit of SunTrips.
"Tax Return" means any return, report, information return or other
document (including any related or supporting information) with respect to
Taxes, including any schedule or attachment thereto.
"Taxes" means all taxes, charges, fees, duties, levies, penalties or
other assessments imposed by any federal, state, local or foreign Governmental
Authority, including, but not limited to, income, gross receipts, excise,
property, sales, gain, use, license, capital stock, transfer, franchise,
payroll, withholding, social security, value added or other taxes, including any
interest, penalties or additions attributable thereto.
"Third Party Claim" has the meaning set forth in Section 7.2.
"Transfer Taxes" means sales, use, transfer, real property transfer,
recording, documentary, stamp, registration, stock transfer, and other similar
taxes and fees (including any penalties and interest).
"Transferred Employee" has the meaning set forth in Section 6.3(a).
"Transition Services Agreement" has the meaning set forth in Section
3.2(d).
"VE Holdings" has the meaning set forth in the preamble.
Other Definitional Provisions.
When a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference shall be to an Article, Section, Exhibit or Schedule of
this Agreement unless otherwise indicated.
The words "hereof," "herein," "hereto," "hereunder" and "hereinafter"
and words of similar import, when used in this Agreement refer to this Agreement
as a whole and not to any particular provision of this Agreement.
The terms defined in the singular have a comparable meaning when used
in the plural, and vice versa.
The term "dollars" and character "$" mean United States dollars.
The word "including" means including, without limitation, and the words
"include" and "includes" have corresponding meanings.
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PURCHASE AND SALE OF ACQUIRED ASSETS
Purchase and Sale. Upon the terms and subject to the conditions of this
Agreement, Sellers agree to sell, assign, transfer, convey and deliver, or cause
to be sold, assigned, transferred, conveyed and delivered, to Purchaser and
Purchaser agrees to purchase all of the Acquired Assets on the Closing Date.
Acquired Assets and Excluded Assets.
The term "Acquired Assets" shall mean all the business, properties, assets and
rights of Sellers relating exclusively or principally to the Business of
whatever kind and nature, tangible or intangible, other than the Excluded
Assets, including, in each case as relating exclusively or principally to the
Business:
all right, title and interest in, to and under any Leased Realty;
except to the extent any of the following are Excluded Assets, all inventory,
computer equipment and hardware, equipment, supplies and other goods, all office
furniture and fixtures, leasehold improvements, machinery, owned vehicles, and
other tangible personal property;
all right, title and interest of Sellers in, to and under all Contracts to which
they are a party, including those listed on Schedule 4.11(a), but excluding any
Excluded Contracts;
except to the extent any of the following are Excluded Assets, all accounts
receivable of the Business (net of any reserves for bad debt), and notes payable
to Sellers in relation to the Business and all claims, contract rights and
judgments relating thereto, including all of Sellers' rights to any proofs of
claim filed against account debtors and any negotiable instruments, letters of
credit or any other writing that evidences a right of Sellers to the payment or
performance of a monetary obligation;
any securities, whether certificated or uncertificated, held by Sellers;
all right, title and interest of Sellers to and under all Permits, to the extent
such Permits are transferable;
all prepaid assets, including all prepaid rentals and all prepaid expenses,
bonds (including the Surety Bonds), escrow accounts and deposits of Sellers;
the originals and all copies of all books of account, sales and promotional
materials, general, financial, accounting and personnel records, files, manuals,
invoices, customers and suppliers lists and other data owned or used by Sellers,
but excluding the corporate minute books, stock records and organizational
documents of Sellers;
all right, title and interest of Sellers in, to and under all Business
Intellectual Property (including the trademarks, tradenames and names "SunTrips"
and "Vacation Express"), except to the extent any Business Intellectual Property
is an Excluded Asset;
all of Sellers' right, title and interest in and to telephone numbers, answering
service numbers, e-mail addresses, and other communication codes, numbers or
devices (including the software components for all internet websites other than
the "MyTravel" website);
all of Sellers' right, title and interest in and to all passenger escrow
accounts maintained with a bank or other financial institution;
all causes of action, other than those related to or otherwise arising in
connection with, the Excluded Assets or Excluded Liabilities;
all goodwill relating exclusively or principally to the Business; and
any other assets used exclusively or principally in the Business on the Closing
Date that are not specifically listed above.
The term "Excluded Assets" shall mean:
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the minute books, corporate seal, stock records and organizational documents of
Sellers;
copies of such books of account, general, financial, accounting and personnel
records, files, manuals, invoices, customer and suppliers lists and other data
as Sellers may be required by applicable Laws to retain or as may be necessary
to assist Sellers in preparation of Sellers' Tax Returns;
all of Sellers' cash on hand, cash equivalents or cash held in any financial
institution, other than any escrowed cash or security deposits;
any demand, money market, time, savings, passbook, or similar account maintained
with a bank or other financial institution;
all right, title and interest in, to and under any Benefit Plans listed (or
required to be listed) in Section 4.10;
those Contracts that are listed on Schedule 2.2(b) (the "Excluded Contracts");
all of Sellers' right, title and interest in and to Tax
credits and other Tax benefits, Tax refunds, prepaid Taxes, insurance
premium refunds, and insurance and other claims or rights to recoveries
and similar benefits of and relating to the Business prior to the
Closing Date;
all of Sellers' right, title and interest in and to this
Agreement;
any notes, drafts, accounts or other obligations for the payment of money, made
or owed to any Seller by any current or former employees or Affiliates of any
Seller;
all accounts receivable of the Business or Sellers due and owing from any
Affiliate of Sellers (other than as owed from one Seller to another);
all of Sellers' right, title and interest in and to the trademark, tradename or
name "MyTravel" anywhere in the world;
all of Sellers' right, title and interest in and to the reservation system
commonly referred to as "Logibro"; and
all of Sellers' right, title and interest to the computer hardware and other
equipment on which the SunTrips website is hosted and/or maintained.
Assumption of Liabilities.
Upon the terms and subject to the conditions of this Agreement, at the Closing,
Purchaser shall assume and agree to pay, perform and discharge solely those
obligations and liabilities of Sellers set forth on Schedule 2.3(a). The
foregoing obligations, liabilities and commitments, and no others, shall be
hereinafter referred to as the "Assumed Liabilities."
Purchaser shall not assume or become liable to pay, perform or discharge any
other obligations or liabilities of Sellers (collectively, the "Excluded
Liabilities").
Purchaser shall acquire the Acquired Assets free and clear of all Liens, except
for the Assumed Liabilities and Permitted Liens.
Purchase Price. Subject to the terms and conditions of this Agreement, in
consideration of the sale, assignment, transfer and delivery of the Acquired
Assets to the Purchaser, the Purchaser agrees to pay to Sellers the aggregate
amount equal to Ten Million Dollars ($10,000,000) (as adjusted pursuant to
Section 2.5, the "Purchase Price"), which shall be represented by the Purchase
Price Note.
Purchase Price Adjustment.
Closing Statement. As promptly as practicable, but no later than twenty
(20) Business Days after the Closing Date, Purchaser shall prepare and deliver
to Sellers a statement (the "Closing Statement") setting forth the Closing
Working Capital Amount, together with detail
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regarding the method of calculation thereof. The calculations set forth on the
Closing Statement will be prepared on the basis and using the same accounting
policies, principles, methodologies and estimates used in preparing the
Financial Information. At all reasonable times during the ten (10) Business Days
immediately following Sellers' receipt of the Closing Statement, Sellers and
their representatives will be permitted to review at Purchaser's offices
Purchaser's working papers (including work papers of accountants and other
advisors) relating to the Closing Statement, as well as all of the books and
records relating to the operations and finances of Sellers with respect to the
period up to and including the Closing Date, and Purchaser shall make reasonably
available at its offices the individuals responsible for the preparation of the
Closing Statement in order to respond to the reasonable inquiries of Sellers
related thereto.
Notice of Disagreement. Sellers shall notify Purchaser in writing (the "Notice
of Disagreement") within ten (10) Business Days after receiving the Closing
Statement if Sellers disagree with any aspect of the Closing Statement or any of
Purchaser's calculations with regard to the Closing Working Capital Amount,
which Notice of Disagreement shall set forth in reasonable detail the basis for
such dispute and Sellers' good faith calculations of the Closing Working Capital
Amount. If Sellers do not deliver a Notice of Disagreement to Purchaser within
such ten (10) Business Day period, then the Closing Statement shall be deemed to
have been accepted by Sellers, shall become final and binding upon the parties
and shall be the final Closing Statement.
Dispute Resolution. During the ten (10) Business Days immediately following the
delivery of a Notice of Disagreement, Sellers and Purchaser shall seek in good
faith to resolve any differences that they may have with respect to any matter
specified in the Notice of Disagreement. If at the end of such ten (10) Business
Day period Sellers and Purchaser have been unable to agree upon a final Closing
Statement, then Sellers and Purchaser shall submit to the Independent Accounting
Firm for review and resolution any and all matters that remain in dispute with
respect to the Notice of Disagreement. Purchaser and Sellers shall cause the
Independent Accounting Firm to use commercially practicable efforts to make a
final determination (which determination shall be binding on the parties hereto)
on the disputes so submitted as well as such modifications, if any, to the
Closing Balance Sheet and the Closing Working Capital Amount within ten (10)
Business Days from such submission, and such final determination shall be the
final Closing Statement. The cost of the Independent Accounting Firm's review
and determination shall be paid by the party whose determination of the
aggregate amount of the Closing Working Capital Amount differed by the greater
amount from the aggregate amount of the final Closing Working Capital Amount.
During the ten (10) Business Day review by the Independent Accounting Firm,
Purchaser and Sellers will each make available to the Independent Accounting
Firm interviews with such individuals and such information, books and records as
may be reasonably required by the Independent Accounting Firm to make its final
determination.
Adjustment. If the final Closing Working Capital Amount is negative, Sellers and
MyTravel Canada shall be obligated, jointly and severally, within five (5)
Business Days following the determination of the final Closing Working Capital
Amount, to pay to Purchaser an amount in cash equal to the amount by which the
difference between the absolute value of such final Closing Working Capital
Amount and zero (0) exceeds Two Million Dollars ($2,000,000). If the final
Closing Working Capital Amount is positive, Purchaser may elect that either (i)
Purchaser shall within such five (5) Business Days pay to Sellers an amount in
cash equal to equal to the difference between such final Working Capital Amount
and zero (0) or (ii) the amount
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outstanding at such time under the Purchase Price Note shall be increased by an
amount equal to the difference between such final Closing Working Capital Amount
and zero (0).
Allocation of the Purchase Price. The Purchase Price and the amount of
the Assumed Liabilities shall be allocated among the Acquired Assets in a manner
consistent with values as set forth on Schedule 2.6. Each party hereto agrees
that: (i) any such allocation shall be consistent with the requirements of
section 1060 of the Code; (ii) it shall file Form 8594 with its Federal income
Tax Return consistent with such allocation for the tax year in which the Closing
occurs; and (iii) except as otherwise required by applicable Law, it will not
take a position on any income, transfer or gains or other Tax Return, before any
Governmental Authority charged with the collection of any such Tax or in any
judicial proceeding, that is in any manner inconsistent with the terms of any
such allocation without the consent of the other party hereto.
Transfer Taxes. Each party shall pay fifty percent (50%) of all
applicable Transfer Taxes imposed in connection with this Agreement and the
transactions contemplated by this Agreement. The appropriate party shall file
all necessary documentation and Tax Returns with respect to such Transfer Taxes;
provided, however, that Purchaser and Sellers shall cooperate to prepare and
file with the appropriate Governmental Authority, as and to the extent
necessary, all appropriate Tax exemption certificates or similar instruments as
may be necessary to avoid the imposition of any Transfer Taxes.
CLOSING
Closing. Subject to the satisfaction or waiver of the conditions set forth in
Article VIII, the closing of the Asset Purchase (the "Closing") shall take place
on October 31, 2003, at 10:00 a.m. (New York time), or such other date and time
as the parties hereto may agree, either in person at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at such other location
as the parties hereto may agree, or by overnight delivery and facsimile. The
date on which the Closing occurs is called the "Closing Date".
Deliveries by Sellers. At the Closing, Sellers shall deliver or cause to be
delivered to Purchaser (unless delivered previously) the following:
a ▇▇▇▇ of sale (the "▇▇▇▇ of Sale") for the Acquired Assets, in the form
attached hereto as Exhibit D, executed by Sellers;
an assumption agreement (the "Assumption Agreement") for the Assumed
Liabilities, in the form attached hereto as Exhibit E, executed by Sellers;
assignments and assumptions of lease (the "Lease Assignments") with respect to
the Leased Realty, each in the respective form attached hereto as Exhibit F,
executed by the appropriate Sellers; provided, however, that in the event that
any landlord under any of the Leases objects to giving the Certification (as
defined in the Lease Assignments), Purchaser hereby waives the requirement to
obtain such Certification and Sellers are hereby authorized to unilaterally
modify the Lease Assignments to remove solely those provisions relating to the
Certification, and the Lease Assignments, as so modified, shall be deemed
satisfactory in form and substance for all purposes of this Agreement;
a transition services agreement (the "Transition Services Agreement"), in the
form attached hereto as Exhibit G, with respect to transitional services to be
provided to the Purchaser by MyTravel Canada, executed by MyTravel Canada;
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such trademark assignments and domain name assignments to the extent necessary
(collectively, the "Intellectual Property Assignments"), in each case in the
forms attached hereto as Exhibit H, executed by the applicable Sellers;
the Purchase Agreement Supplement, executed by MyTravel Canada, and the Pledge
Agreement, executed by Sellers; and
all such other agreements, assignments, endorsements and instruments of transfer
(collectively, the "Other Conveyance Documents") as are reasonably necessary or
appropriate to carry out the intent of this Agreement, each executed by Sellers.
Deliveries by Purchaser. At the Closing, Purchaser shall deliver or cause to be
delivered to Sellers (unless delivered previously) the following:
the Purchase Price Note, duly executed by Purchaser;
the ▇▇▇▇ of Sale, Assumption Agreement, Lease Assignments,
Transition Services Agreement, Intellectual Property Assignments,
Purchase Agreement Supplement and Pledge Agreement, each executed by
Purchaser, Flightserv and/or eResource Capital Group, Inc., to the
extent each of the foregoing is party thereto;
the Replacement Letters of Credit, executed by all of the parties thereto; and
all such Other Conveyance Documents as are reasonably
necessary or appropriate to carry out the intent of this Agreement,
each executed by the Purchaser.
Risk of Loss. On or prior to the Closing Date, any loss of or damage to the
Acquired Assets from fire, casualty or other occurrences shall be entirely the
responsibility of Sellers. Risk of loss to the Acquired Assets following the
Closing Date shall be entirely the responsibility of Purchaser.
Simultaneous Transactions. All of the transactions contemplated by this
Agreement shall be deemed to occur simultaneously, and no such transaction shall
be deemed to have been consummated until all such transactions have been
consummated.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant, jointly and severally, and,
solely for purposes of Section 4.1(c) each of MyTravel and MyTravel Canada
represents and warrants, to Purchaser as follows:
Authority, Binding Effect.
Each Seller has all requisite corporate power, capacity and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of each Seller, and no other corporate action on the part of any
Seller or their stockholders is required to authorize the execution, delivery
and performance hereof, and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each Seller and
constitutes the valid and binding obligation of such Seller enforceable against
such Seller in accordance with its terms, except that such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or limiting creditors' rights generally
and the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to
12
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
Each Seller has all requisite corporate power, capacity and authority to execute
and deliver each Ancillary Document to which it is a party, to perform its
obligations thereunder and to consummate the transactions contemplated thereby.
The execution, delivery and performance of the Ancillary Documents and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of each Seller, and no other
corporate action on the part of any Seller or their respective stockholders or
partners is required to authorize the execution, delivery and performance of any
Ancillary Document applicable to such Seller, and the consummation of the
transactions contemplated thereby. At Closing, each Ancillary Document will have
been duly executed and delivered by each Seller party thereto and will
constitute the valid and binding obligation of such Seller enforceable against
such Seller in accordance with its terms, except that such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or limiting creditors' rights generally
and the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought.
Each of MyTravel and MyTravel Canada has all requisite corporate power, capacity
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, in each case
solely with regard to the provisions set forth under such entity's name on the
signature page hereto. The execution, delivery and performance of the provisions
set forth under MyTravel's or MyTravel Canada's name, as the case may be, on the
signature page hereto this Agreement and the consummation of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of each of MyTravel and MyTravel Canada, and no other corporate
action on the part of MyTravel or MyTravel Canada or their stockholders is
required to authorize the execution, delivery and performance thereof, and the
consummation of the transactions contemplated thereby. This Agreement has been
duly executed and delivered by each of MyTravel and MyTravel Canada and
constitutes the valid and binding obligation of each of such entity enforceable
against it in accordance with its terms, except that such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or limiting creditors' rights generally
and the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought.
Title to Property. Each Seller has good title to, or a valid leasehold interest
in, the Acquired Assets owned or leased by it, free and clear of all Liens
(other than the Assumed Liabilities, Permitted Liens or Liens created by the
acts of Purchaser).
No Violation. The execution and delivery of this Agreement by each Seller and
each Ancillary Document by each Seller party thereto and the consummation by
such Seller of the transactions contemplated hereby and thereby will not, except
as set forth on Schedule 4.3, (i) conflict with or violate the certificate of
incorporation or bylaws of such Seller in each case as currently in effect, (ii)
conflict with or violate any Laws applicable to such Seller or by which any of
the Acquired Assets are bound or are subject, or (iii) result in any breach of,
or constitute a default (or an event that with notice or lapse of time, or both,
would constitute a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or require payments under, or result
in the creation of a Lien on any of the Acquired Assets under, any note, bond,
mortgage,
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indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Seller is a party or by which any of the
Acquired Assets are bound or subject.
Litigation; Proceedings. Except as set forth in Schedule 4.4, there is no Action
pending or, to the Knowledge of Sellers, threatened, against, by or affecting
any Seller, the Business or the Acquired Assets ("Litigation") nor is there any
Governmental Order outstanding which (i) adversely affects or could adversely
affect the Acquired Assets or the Business or (ii) seeks to enjoin or prohibit
any of the transactions contemplated by this Agreement.
Organization and Qualification. Each Seller is a corporation validly existing
and in good standing under the laws of the state of its incorporation and has
all requisite power and authority to own, lease and operate all of its
properties and assets and to conduct its business as it is now being conducted.
Except as set forth in Schedule 4.5(a), each Seller is duly qualified or
licensed and in good standing to do business as a foreign corporation in each
jurisdiction in which the nature of its business, or the ownership, leasing or
operation of its properties or assets, makes such qualification necessary,
except where such failure to be so qualified or licensed could not result in a
Material Adverse Effect.
Financial Statements; Undisclosed Liabilities.
Sellers have delivered to the Purchaser unaudited balance sheet for the Business
dated September 30, 2002 and September 30, 2003 and unaudited operating income
statement for the Business for the twelve (12) month periods ended September 30,
2002 and September 30, 2003 a (collectively, the "Financial Information").
Except as set forth on Schedule 4.6(a), the Financial Information has been
prepared in conformity with GAAP applied on a basis consistent with Sellers'
past practice (except for changes, if any, required by GAAP and disclosed
therein, and except for the absence of notes and normal recurring adjustments).
The Financial Information presents fairly and accurately in all material
respects the financial position of the Sellers in the manner required by GAAP,
for the applicable time periods covered thereby.
Except as set forth in Schedule 4.6(b), there has been no
change in the business of the Business since September 30, 2003 that
has resulted, or could be reasonably expected to result, in a Material
Adverse Effect. As of the date hereof, none of the Sellers has any
actual knowledge of the occurrence of any event or circumstance that a
reasonable person would believe would adversely affect the financial
projections, dated August 2003, provided by Sellers to Purchaser, a
copy of which has been attached to Schedule 4.6(b).
The Business does not have any liabilities of the type required to be reflected
as liabilities on a balance sheet prepared in accordance with GAAP, whether
accrued, absolute, contingent or otherwise, except such liabilities that (i) are
reflected or disclosed in the Financial Information, or (ii) were incurred after
September 30, 2003 in the ordinary course of business by the Sellers consistent
with past practice. Except as otherwise disclosed herein (including on the
Schedules hereto), the Business will not have at Closing any other liabilities
that are material to the Business; provided, that this representation and
warranty shall not apply, and there shall be no breach of this representation
and warranty, to the extent that any such liability is (i) unknown and upon
reasonable investigation could not have been known or (ii) disclosed.
The Financial Information is based upon information contained in the books and
records of the Sellers, which such books and records have been kept in
accordance with GAAP.
Receivables. Except as set forth in Schedule 4.7, all accounts receivable and
notes receivable of the Business (i) are valid obligations of the obligors, (ii)
have arisen from bona fide transactions in the ordinary course of business
consistent with past practice, (iii) are, to Sellers' Knowledge,
14
collectible in the ordinary course of business and have been adequately reserved
for in the Financial Information.
Consents and Approvals. The execution and delivery of this Agreement and each
Ancillary Document by each Seller party thereto does not, and the performance by
such Seller of this Agreement and each Ancillary Document to which such Seller
is party and the consummation of the transactions contemplated hereby and
thereby will not, require such Seller to obtain (i) any consent, approval,
waiver, authorization or permit of, or to make any filing or registration with
or notification to ("Consents"), any court, agency or commission, or other
governmental entity, authority or instrumentality, whether domestic or foreign
(each, a "Governmental Authority"), or (ii) any Consent of any third party under
any Contract, except where the failure to obtain such Consent would not have a
Material Adverse Effect and except for the Consents set forth in Schedule 4.8.
Permits/Compliance with Laws. Sellers possess all material franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate their
properties and assets and to carry on the Business as it is now being conducted
(collectively, the "Permits"), and there is no Action pending or, to the
Knowledge of Sellers, threatened regarding suspension or cancellation of any
such Permits. Except as set forth in Schedule 4.9, Sellers are in compliance in
all material respects with such Permits and in compliance with all material Laws
applicable to them or by or to which any of the Acquired Assets are bound or
subject. Except as set forth in Schedule 4.9, none of the Permits will lapse,
terminate or expire as a result of the performance of this Agreement by Sellers
or the consummation of the transactions contemplated hereby.
Employee Benefit Plans; ERISA. Schedule 4.10 lists each Benefit Plan. Except as
set forth on Schedule 4.10, or to the extent that any breach of the
representations set forth in this sentence would not have a Material Adverse
Effect: (i) each Benefit Plan has been administered and operated in all respects
in accordance with its terms and in accordance with the applicable provisions of
the Code and ERISA; (ii) no Benefit Plan is subject to Title IV of ERISA or
subject to section 412 of the Code or section 302 of ERISA; (iii) neither any
Seller nor to the Knowledge of Sellers, any other "disqualified person" or
"party in interest" (as defined in section 4975(e)(2) of the Code and section
3(14) of ERISA, respectively) has engaged in any transaction in connection with
any Benefit Plan that could reasonably be expected to result in the imposition
of a penalty pursuant to section 502 of ERISA or an excise tax pursuant to
section 4975 of the Code; (iv) no Benefit Plan provides for post-employment or
retiree welfare benefits, except to the extent required by Part 6 of Title I of
ERISA or section 4980B of the Code; and (v) no Action has been made, commenced
or, to the Knowledge of Sellers, threatened with respect to any Benefit Plan
(other than routine claims for benefits payable in the ordinary course and
appeals of denied claims).
Contracts.
Set forth on Schedule 4.11(a) is a complete list of all of the following
Contracts (the "Material Contracts"): (i) noncompetition or other agreements
restricting the ability of Sellers to engage in any line of business in any
location, (ii) each Contract involving payments made by a Seller that are
expected to exceed Fifty Thousand Dollars ($50,000) and (iii) each Contract
involving payments made to a Seller that are expected to exceed Fifty Thousand
Dollars ($50,000).
Each Material Contract is a valid and binding obligation of Seller party thereto
and is enforceable by such Seller in accordance with its terms against each
other party thereto. Such Seller is not (with or without the lapse of time or
the giving of notice, or both) in breach or
15
default thereunder. To the Knowledge of Sellers, none of the other parties to
any Material Contract is (with or without the lapse of time or the giving of
notice, or both) in breach or default thereunder or has given notification of
cancellation thereunder. No defenses, offsets or counterclaims to any Material
Contract have been asserted by any party thereto other than Sellers, and Sellers
have not waived any rights under any Material Contract.
Except as set forth specifically on Schedule 4.11(c), Sellers are not party to,
and none of the Acquired Assets is subject to, any agreement, understanding or
other arrangement with respect to any:
Contracts under which Sellers are a lessor or sublessor of, or makes available
for use by any third party, (a) any real property owned or leased by Sellers
exclusively or principally in connection with the Business, or any portion of
premises otherwise occupied by Sellers, or (b) any material personal property
owned or leased by Sellers exclusively or principally in connection with the
Business;
Contracts under which Sellers have borrowed or loaned any money or issued any
note, bond, indenture or other evidence of indebtedness or directly or
indirectly guaranteed any indebtedness, liability or obligation of any third
party (other than any loan made to any employee for relocation, travel or other
employment-related purposes, in each case, in the ordinary course of business
consistent with past practice), or any other note, bond, indenture or other
evidence of indebtedness;
Contracts under which any other person has directly or indirectly guaranteed any
indebtedness, liability or obligation of Sellers, or letter of credit issued to
guarantee any obligation of Sellers, or any vendor or customer of Sellers; or
Contracts with any Governmental Authority except those entered into in the
ordinary course of business consistent with past practice which do not involve
aggregate payments thereunder by Sellers in excess of Fifty Thousand Dollars
($50,000).
Condition and Sufficiency of Acquired Assets. The buildings, plants, structures,
and equipment included in the Acquired Assets are in good operating condition
and repair (ordinary wear and tear excepted) and are adequate for the uses to
which they are being employed. Except (i) for the Excluded Assets, (ii) matters
to be covered by the Transition Services Agreement and (iii) as set forth on
Schedule 4.12, the Acquired Assets are sufficient for the continued conduct of
the Business after the Closing in substantially the same manner as conducted
prior to the Closing.
Environmental Matters. Except as set forth in Schedule 4.13(a), there is no
Environmental Claim pending or, to the Knowledge of Sellers, threatened against
Sellers. To the Knowledge of Sellers, there have been no Releases of Hazardous
Materials on, beneath or adjacent to any property currently or formerly owned,
operated, or leased by Sellers in quantities sufficient to form the basis for an
Environmental Claim.
Real Property.
There is no real property to which any Seller has legal or equitable title.
Schedule 4.14(b) sets forth a true and complete list of all real property in
which Sellers have a valid and subsisting leasehold or other interest (the
"Leased Realty"). Seller which is the lessee of each particular piece of Leased
Realty possesses a valid and subsisting leasehold or other interest in such
Leased Realty pursuant to the leases or other instruments set forth in Schedule
4.14(b) (the "Leases"). Each Lease is in full force and effect and Sellers have
not received any outstanding notice of default from the landlord under any such
Lease. There has not occurred any event of default under any Lease or any event
which, with or without lapse of time, shall constitute an event of default
thereunder.
16
Labor Matters.
Schedule 4.15(a) sets forth a complete list of all Employees.
Except as set forth in Schedule 4.15(b), Sellers are not a party to (i) any
collective bargaining agreement or similar agreement with any labor organization
or employee association, or (ii) any other written employment contract.
Except as set forth in Schedule 4.15(c), no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is pending, and no
such grievance or proceeding is threatened.
Except as set forth in Schedule 4.15(d), since January 1, 2001, there has not
been, nor is there pending or threatened, (i) any labor dispute between Sellers
and any labor organization, or any strike, slowdown, jurisdictional dispute,
work stoppage or other similar organized labor activity involving any employee
of Sellers or affecting Sellers or (ii) any union organizing, or election
activity involving, any employee of Sellers.
There exists no pending or to the Knowledge of Sellers, threatened lawsuit,
administrative proceeding or investigation between Sellers and any current or
former director, officer or employee of Sellers, including any claim for
wrongful termination, breach of express or implied contract of employment or for
violation of equal employment opportunity laws.
Except as set forth in Schedule 4.15(f), there exists no pending or, to the
Knowledge of Sellers, threatened lawsuit, administrative proceeding or
investigation of Sellers or any employee thereof regarding allegations of
hostile work environment, sexual discrimination or racial discrimination.
All bonuses due and payable to any Employee as of the Closing Date have been
paid.
Insurance. Set forth in Schedule 4.16 is a complete and accurate list of all
primary, excess and umbrella policies, bonds and other forms of insurance
currently owned or held by or on behalf of or providing insurance coverage to
the Business. All policies set forth in Schedule 4.16 are in full force and
effect and shall remain in full force and effect through the Closing Date and no
pending notice of default, cancellation or termination has been received by
Sellers with respect to any such policy.
Intellectual Property.
Schedule 4.17(a) sets forth all of the following United States and foreign
Business Intellectual Property: (i) patents and patent applications (including
provisional applications); (ii) trademark registrations and trademark
applications; (iii) registered copyrights and applications for copyright
registration; and (iv) domain names (the items set forth in the forgoing clauses
(i) through (iv), collectively, the "Registered Intellectual Property"). All
necessary registration, maintenance and renewal fees in connection with such
Registered Intellectual Property that have come due have been paid and all
necessary maintenance and renewal documents in connection with such Registered
Intellectual Property that have come due have been filed with the relevant
patent, copyright, trademark or domain name authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
Schedule 4.17(b) sets forth any proceedings or actions before any court,
tribunal challenging the validity or Sellers' ownership of any of the Registered
Intellectual Property.
Except as set forth on Schedule 4.17(c), Sellers have not granted to any Person
any rights in the Business Intellectual Property.
To the Knowledge of Sellers, the operation of the Business, taken individually
or as a whole, as such Business currently is conducted, does not infringe or
misappropriate the Intellectual Property of any other Person. Sellers have not
received any notice from any Person that the
17
provision of their respective services, infringes or misappropriates the
Intellectual Property of any Person. Except as set forth on Schedule 4.17(d), to
the Knowledge of Sellers, no Person is infringing or misappropriating any of the
Business Intellectual Property.
Taxes. All Tax Returns required to have been filed by Sellers with respect to
the Business have been filed, and each such Tax Return reflects the liability
for Taxes in all material respects. All Taxes shown on such Tax Returns as owing
have been (or will be) paid. There are no Liens on any of the Acquired Assets
that arose in connection with any failure (or alleged failure) to pay any Tax,
other than Permitted Liens. Sellers have withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
third party in connection with the operation of the Business.
Customer Relationships. To the Knowledge of Sellers, there exists no condition,
state of facts or circumstances involving any customers, suppliers, distributors
or vendors of the Sellers (including airlines), that has resulted in, or could
be reasonably expected to result in, a Material Adverse Effect.
Customer Deposits and Pre-Paid Expenses. The customer deposits and prepaid
expenses of Sellers are reasonable in amount, were obtained in the Sellers'
ordinary course of business and, to the Knowledge of Sellers, can be used by
Purchaser in the conduct of the Business after the Closing Date in substantially
the same manner as conducted prior to the Closing Date.
Full Disclosure. None of the information contained in this Agreement (including
the Schedules and Exhibits hereto) or in any Ancillary Document to be furnished
by any Seller (i) contains an untrue statement of a material fact as of the date
when made or (ii) omits to state any material fact necessary to be stated in
order to make any other statements herein or therein not misleading in light of
the circumstances under which they were made. Copies of all documents referred
to in any Schedule hereto have been delivered to Purchaser and are true, correct
and complete copies thereof, including all minutes, exhibits, schedules,
appendices, supplements or modifications thereto and all written waivers
thereunder.
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to each Seller as follows:
Organization. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate all of its
properties and assets and to conduct its business as it is now being conducted.
Authority, Binding Effect.
Purchaser has all requisite corporate power, capacity and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Purchaser, and no other corporate action on the part of Purchaser
or its stockholders is required to authorize the execution, delivery and
performance hereof, and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Purchaser and
constitutes the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, except that such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium or other
18
laws now or hereafter in effect relating to or limiting creditors' rights
generally and the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceedings therefor may be brought.
Purchaser has all requisite corporate, power, capacity and authority to execute
and deliver each Ancillary Document to which it is party, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of such Ancillary Documents and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser, and no other
corporate action on the part of Purchaser or its stockholders is required to
authorize the execution, delivery and performance hereof, and the consummation
of the transactions contemplated hereby. At Closing, such Ancillary Documents
will have been duly executed and delivered by Purchaser and constitute the valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except that such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium or other laws now or hereafter in effect
relating to or limiting creditors' rights generally and the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
No Violation; Consents and Approvals.
The execution and delivery of this Agreement by Purchaser do not, and the
performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
certificate of incorporation or bylaws, in each case as currently in effect, of
Purchaser, (ii) conflict with or violate in any material respect any Laws
applicable to Purchaser or by or to which any of its properties or assets is
bound or subject, or (iii) result in any material breach of, or constitute a
material default (or an event that with notice or lapse of time or both would
constitute a material default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a Lien on any of the properties or assets of
Purchaser under, any material note, bond, mortgage, indenture, contract,
agreement, arrangement, commitment, lease, license, permit, franchise or other
instrument or obligation to which Purchaser is a party or by or to which
Purchaser or any of its properties or assets is bound or subject.
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The execution and delivery of each Ancillary Document to which
it is party by Purchaser do not, and the performance of such Ancillary
Documents by Purchaser and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the
certificate of incorporation or bylaws, in each case as currently in
effect, of Purchaser, (ii) conflict with or violate in any material
respect any Laws applicable to Purchaser or by or to which any of its
properties or assets is bound or subject, or (iii) result in any
material breach of, or constitute a material default (or an event that
with notice or lapse of time or both would constitute a material
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or require payment under, or result in
the creation of a Lien on any of the properties or assets of Purchaser
under, any material note, bond, mortgage, indenture, contract,
agreement, arrangement, commitment, lease, license, permit, franchise
or other instrument or obligation to which Purchaser is a party or by
or to which Purchaser or any of its properties or assets is bound or
subject.
The execution and delivery of this Agreement or any Ancillary Document by
Purchaser do not, and the performance by Purchaser of this Agreement or any
Ancillary Document and the consummation of the transactions contemplated hereby
and thereby will not, require Purchaser to obtain any Consents from any
Governmental Authority, or any third party.
Financial Sufficiency. On and after the Closing Date, Purchaser shall have such
working capital as it deems reasonably necessary in its sole business judgement
to operate the Business as a going concern and in accordance with generally
acknowledged sound business practices. Nothing in this Section 5.4 shall
prohibit Purchaser from terminating any contractual relationship, not renewing
any Contract or other agreement, or negotiating modifications or otherwise
satisfying any Assumed Liability for an amount less than the entire amount of
such Assumed Liability.
COVENANTS
Conduct of Business. Except as expressly permitted by this Agreement or with the
prior written consent of Purchaser, during the period from the date hereof until
the Closing Date, Sellers shall conduct the Business only in the ordinary course
consistent with past practice (including maintaining current advertising
practices, maintaining salary levels as in effect on the date hereof and
refraining from hiring additional executive-level personnel) and Sellers shall
use commercially reasonable efforts to preserve intact its present business
organization, keep available the services of its present officers, employees and
independent contractors, maintain the Acquired Assets in good condition and
preserve its current working conditions and relationships with customers,
suppliers, creditors and business partners.
Bulk Transfer Laws. Purchaser hereby waives compliance by Sellers with the
provisions of any "bulk transfer law" of any jurisdiction in connection with the
sale of the Acquired Assets to Purchaser; provided that Purchaser shall be
entitled to indemnification in connection therewith pursuant to Section 7.1(a).
Employees.
Purchaser shall offer employment, effective as of the Closing Date, to each
Employee other than those listed on Schedule 6.3(a) (whether salaried or hourly,
and whether full-time or part-time),
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whether or not actively employed on the date hereof (e.g., including Employees
on vacation and leave of absence, including maternity, family, sick or
short-term disability leave). Each Employee who accepts Purchaser's offer of
employment is hereinafter referred to as a "Transferred Employee".
It is hereby acknowledged and agreed that the Sellers shall have no
liability of any type or nature in relation to any Transferred Employee or any
Employee who does not accept Purchaser's offer of employment made pursuant to
Section 6.3(a), other than any such liabilities arising prior to the Closing
Date and which are not subject to indemnification by Purchaser as set forth in
the following sentence. Purchaser hereby agrees to indemnify and hold harmless
Sellers from any payments with respect to claims for severance, bonus, accrued
vacation, or other employee benefit obligations imposed upon, incurred or
suffered by Sellers arising out of or relating to (i) any Employee who does not
does not accept Purchaser's offer of employment made pursuant to Section 6.3(a)
(including any claims thereby for severance payments, bonus payments, accrued
vacation payments or benefits payments) and (ii) any of Purchaser's actions with
regard to any Transferred Employee (including termination of employment
thereof).
Purchaser hereby acknowledges and understands that Sellers have issued notice
under the applicable California Worker Adjustment and Retraining Notification
requirements (Assembly ▇▇▇▇ 2957, Chapter 4, Part 4, Sections 1400-1408,
California Labor Code) on October 1, 2003 applicable to a sixty (60) day period
from such date. Purchaser hereby acknowledges and agrees that the issuance of
the notice referred to in the foregoing sentence and the legal requirements
resulting therefrom do not constitute a Material Adverse Effect.
Further Assurances. From and after the Closing Date, each party hereto shall
take all actions (including Sellers (i) granting Purchaser access to such books
and records of Sellers for the period prior to the Closing Date as are necessary
to allow Purchaser to comply with applicable securities laws and accounting
issues and (ii) providing assistance to, and cooperation with, Purchaser in
order to effect the full and legal transfer to Purchaser of all of the Sellers'
notes payable and the Surety Bonds) and execute all documents and instruments as
may be reasonably necessary or appropriate in order to carry out the purposes of
this Agreement.
Confidentiality; Tax Disclosure.
The Confidentiality Agreement, dated as of September 2, 2003, between Travel
Services International, Inc. and eResource Capital Group, Inc. is hereby
terminated and replaced by the provisions of Section 6.5(b).
From and after the Closing, Sellers shall, and shall use reasonable efforts to
cause its Affiliates and their respective officers, directors, employees and
advisors (collectively, the "Recipients") to, keep confidential any information
relating to the Business, except for any such information that (i) is available
to the public on the Closing Date, (ii) thereafter becomes available to the
public other than as a result of a disclosure by Sellers or any of their
Recipients, or (iii) is or becomes available to Sellers or any of their
Recipients on a non-confidential basis from a source that to Sellers' or such
Recipient's knowledge is not prohibited from disclosing such information to
Sellers or such Recipient by a legal, contractual or fiduciary obligation to any
other Person; provided, that nothing contained in this Section 6.5(b) shall
prohibit Sellers from disclosing any information in connection with any Action
by or against Sellers or any of their Affiliates. Should a Seller or any such
Recipient be required to disclose any such information in response to a
Governmental Order or as otherwise required by Law or administrative process, it
shall inform the Purchaser in writing of such request or obligation as soon as
possible after Sellers are informed of it and, if possible, before any
information is disclosed, so that a protective order or
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other appropriate remedy may be obtained by the Purchaser. If a Seller or such
Recipient is obligated to make such disclosure, it shall only make such
disclosure to the extent to which it is so obligated, but not further or
otherwise.
Anything herein to the contrary notwithstanding, each party hereto (and each
employee, representative, or other agent of any party hereto) may disclose to
any and all persons, without limitation of any kind, the Federal income tax
treatment and Federal income tax structure of any and all transaction(s)
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are or have been provided to any party (or to any employee,
representative, or other agent of any party) relating to such tax treatment or
tax structure, provided, however, that this authorization of disclosure shall
not apply to restrictions reasonably necessary to comply with securities laws.
This authorization of disclosure is retroactively effective immediately upon
commencement of the first discussions regarding the transactions contemplated
herein, and the parties aver and affirm that this tax disclosure authorization
has been given on a date which is no later than thirty (30) days from the first
day that any party hereto (or any employee, representative, or other agent of
any party hereto) first made or provided a statement as to the potential tax
consequences that may result from the transactions contemplated hereby.
Notification of Certain Matters. Each Seller shall give prompt notice to
Purchaser, and Purchaser shall give prompt notice to each Seller, of the
occurrence, or non-occurrence, of any event the occurrence or non-occurrence of
which would be reasonably likely to cause any Seller or Purchaser, as the case
may be, to fail to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.6 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
Access to Books and Records Following the Closing. Following the Closing,
Purchaser shall permit Sellers and their authorized representatives, during
normal business hours and upon reasonable notice, to have reasonable access to,
and examine and make copies of, all books and records which relate to
transactions or events occurring prior to the Closing or transactions or events
occurring subsequent to the Closing which are related to or arise out of
transactions or events occurring prior to the Closing.
Change of Name. Within thirty (30) days following the Closing Date, each Seller
shall (i) file an amendment to its articles of incorporation in order to change
its name as may be requested by Purchaser to a name dissimilar to "Vacation
Express", "SunTrips" or any other similar name (ii) assign or otherwise transfer
to Purchaser to the extent legally possible and commercially practicable the
filings relating to VE Holdings' conduct of business under the name "Vacation
Express". Each Seller shall do or cause to be done all other acts, including
without limitation the payment of any fees required in connection with such
change of name, to cause such amendments to become effective in its state of
incorporation or formation and all other states in which such Seller is
qualified to transact business. After the Closing Date, neither Seller nor any
of its Affiliates shall transact business as, or use in the conduct of its
businesses or otherwise, the names "Vacation Express" or "SunTrips" or any other
similar name.
MyTravel Names. After the Closing, Purchaser will not, directly or indirectly
use or do business under, or allow any of its respective Affiliates or
subsidiaries to use or do business under, any trademark, service ▇▇▇▇, brand
name or trade, corporate or business name consisting of, derived from, including
or incorporating any of the MyTravel Names or any other trademark, service ▇▇▇▇,
brand name or trade, corporate or business name confusingly similar to any of
the
22
MyTravel Names. No later than forty-five (45) days after the Closing, Purchaser
shall have removed or obliterated all trademarks, service marks, brand names or
trade, corporate or business names consisting of, derived from, including or
incorporating any of the MyTravel Names that are contained in or on any of the
Acquired Assets, other than printed brochures existing as of the Closing Date.
Non-Competition; Non-Solicitation.
For the longer of (A) a period of three (3) years commencing on the Closing Date
and (B) the term of the Purchase Agreement Supplement, none of Sellers,
MyTravel, MyTravel Canada or any of their subsidiaries or Affiliates shall
directly or indirectly (i) engage in competition with Purchaser using the same
gateways used by Sellers as of the Closing Date or (ii) have an ownership
interest in, any person, firm, corporation, association or other enterprise that
is directly or indirectly engaged in conducting public charter operations using
the same gateways used by Sellers as of the Closing Date (the "Restricted
Activity"); provided, however, that nothing contained in this Section 6.10 shall
prohibit Sellers, MyTravel or any of their subsidiaries or Affiliates from
owning, in the aggregate, (x) three percent (3%) or less of any class of capital
stock or other equity interest of any company engaged in any Restricted Activity
that has securities listed on a national or regional securities exchange or
traded in the over-the-counter market or (y) one percent (1%) or less of any
class of capital stock or other equity interest of any other business enterprise
engaged in any Restricted Activity. In connection with the foregoing, (i)
Purchaser hereby represents that the limitations set forth herein are reasonable
and are properly required for the adequate protection of the Business and (ii)
each of Sellers and MyTravel hereby acknowledges and agrees to the foregoing.
For the longer of (A) a period of three (3) years commencing on the Closing Date
and (B) the term of the Purchase Agreement Supplement, none of Sellers,
MyTravel, MyTravel Canada or any of their subsidiaries or Affiliates shall
directly or indirectly induce or attempt to induce any Transferred Employee or
other employee of Purchaser to leave the employ of Purchaser, or in any way
interfere with the relationship between Purchaser and any Transferred Employee
or other employee thereof.
Stub Period Financial Statements. After the Closing, Sellers shall deliver to
Purchaser financial statements of Sellers for the period commencing on October
1, 2003 and ending October 31, 2003, as prepared by Sellers in accordance with
GAAP and delivered at such time, containing such information, and presented in
such format as is in accordance with Sellers ordinary course business practice
prior to the Closing Date with regard to delivery of monthly financial
statements.
Credit Card Processing. During the period between the date hereof and the
Closing Date, Sellers shall be responsible for conducting, and/or ensuring the
conduct of, all credit card processing relating to the Business.
Multiple Purchasers. During the period between the date hereof and the Closing
Date, Sellers hereby agree to amend this Agreement and any applicable Ancillary
Agreement to reflect the purchase of the Acquired Assets by (i) an additional
purchaser formed by Flightserv for the purpose of acquiring the Acquired Assets
hereunder or (ii) another Affiliate of Purchaser.
INDEMNIFICATION OBLIGATIONS; SURVIVAL
Agreements to Indemnify.
Subject to the terms and conditions of this Article VII, from and after the
Closing, each of Sellers and MyTravel Canada, jointly and severally, shall
indemnify, defend and hold harmless
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Purchaser, its Affiliates, and each of their respective successors and permitted
assigns, directors, officers, employees, representatives, agents, Affiliates and
associates (collectively, the "Purchaser Group") from and against any and all
losses, liabilities of any kind or nature, expenses (including reasonable
attorneys' fees), claims and damages (collectively, "Damages") imposed upon or
incurred or suffered by the Purchaser Group, or any one of them, arising out of,
relating to or in connection with (i) any breach of any representation,
warranty, covenant or agreement of either Seller contained in or made pursuant
to this Agreement or any Ancillary Document, (ii) any Excluded Liability, (iii)
the Litigation set forth on Schedule 4.4, (iv) any claim made against Purchaser
by any creditor of, or claimant against, Sellers as a result of the waiver
granted by Purchaser in Section 6.2, and (v) all costs pertaining to the DC-10
aircraft referred to in the Charter Agreement, dated as of December 12, 1997,
between ▇▇▇▇ International Airlines and Sunquest Holdings, U.S.A., Inc., in the
case of each of clauses (i) through (v) above, whether asserted by one party
hereto against another or by a third party.
Subject to the terms and conditions of this Article VII, from and after the
Closing, the Purchaser shall indemnify, defend and hold harmless Sellers, their
Affiliates, and each of their respective successors and permitted assigns, and
each of their respective directors, officers, employees, representatives,
agents, Affiliates and associates (collectively, the "Seller Group") from and
against any and all Damages imposed upon or incurred or suffered by Seller
Group, or any one of them, arising out of, relating to or in connection with (i)
any breach of any representation, warranty, covenant or agreement of Purchaser
contained in or made pursuant to this Agreement or any Ancillary Document, (ii)
any Assumed Liability and (iii) the employee benefit obligations described in
Section 6.3(b), in the case of each of clauses (i) through (iii) above, whether
asserted by one party hereto against another or by a third party.
Third Party Claims Procedures. If any Person other than a party hereto shall
assert a claim (each, a "Third Party Claim") against or with respect to a party
entitled to indemnification pursuant to this Agreement (the "Indemnified
Party"), then such Indemnified Party shall notify the party from whom
indemnification is sought (the "Indemnifying Party") in writing of the Third
Party Claim within a reasonable time after receipt by such Indemnified Party of
written notice of such Third Party Claim; provided, however, that the failure to
give such notice shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent that the Indemnifying Party is prejudiced by such
failure to give notice. The notice (i) shall state (with reasonable specificity)
the basis on which indemnification is being asserted, (ii) shall set forth the
amount of Damages for which indemnification is being asserted and (iii) in the
case of third party claims, shall be accompanied by copies of all relevant
pleadings, demands and other papers served on the Indemnified Party. Each
Indemnifying Party shall, at its own expense, have the right to defend, contest
or otherwise protect against any Third Party Claim, and each Indemnifying Party
shall receive from the Indemnified Party all necessary and reasonable
cooperation in said defense including, but not limited to, the services of
employees of the Indemnified Party who are familiar with the transactions out of
which any such Third Party Claim may have arisen. The Indemnifying Party shall
have the right to control the defense of any such Third Party Claim unless it is
relieved of its liability hereunder by the Indemnified Party. The Indemnifying
Party shall have the right, at its option, and, unless so relieved, to
compromise or defend, at its own expense by its own counsel, any such Third
Party Claim involving monetary damages but may not compromise or settle any
matter involving equitable or injunctive recourse against the Indemnified Party
without such party's written consent. In the event that the Indemnifying Party
shall undertake to compromise or defend any such Third Party Claim, it shall
promptly notify the
24
Indemnified Party of its intention to do so, and in any event shall not settle
or compromise any such Third Party Claim unless in so settling or compromising
the Indemnified Party is unconditionally released from liability therefor. In
the event that an Indemnifying Party, after written notice from an Indemnified
Party, fails to take timely action to defend a Third Party Claim, the
Indemnified Party shall have the right to defend the same by counsel of its own
choosing, but at the cost and expense of the Indemnifying Party. In the event
that the Indemnified Party defends a Third Party Claim, it shall not compromise
any such Third Party Claim without the written consent of the Indemnifying
Party, such consent not to be unreasonably withheld or delayed.
Limitation of Liability.
Anything in this Agreement to the contrary notwithstanding, in no event will the
aggregate amount of the Indemnifying Party's obligations pursuant to Section 7.1
hereof exceed an amount equal to Ten Million Dollars ($10,000,000).
The obligations set forth in Section 7.1 will be effective as to any
Indemnifying Party only after the aggregate amount for which such Indemnifying
Party is liable under such Section exceeds One Hundred Thousand Dollars
($100,000) and then only in the amount of such excess.
Sections 7.3(a) and 7.3(b) shall not be applicable to (i) the obligations to
indemnify under Section 7.1(a)(ii), 7.1(a)(iii), 7.1(a)(iv), 7.1(a)(v),
7.1(b)(ii), and Section 7.1(b)(iii) and (ii) any obligation to indemnify for
breaches of Sections 4.2, 4.4, 4.10, 4.13, 4.18 and Section 6.10.
Notwithstanding anything herein to the contrary, payments by the Indemnifying
Party pursuant to Section 7.1 shall be limited to the amount of Damages, if any,
that remains after deducting therefrom any insurance proceeds and any indemnity,
contribution or other similar payment actually recovered by the Indemnified
Parties from any third party with respect thereto; provided, however, that
nothing in this Section 7.3(d) shall require that an Indemnified Party seek
recovery under any insurance policy.
Anything in this Section 7.3 to the contrary notwithstanding, in no event shall
Sellers, MyTravel Canada or Purchaser be liable for punitive, consequential,
special, indirect, incidental or exemplary damages, whether for lost profits,
lost revenues, injury to property, injury to reputation, loss of data, loss of
use or otherwise.
Method of Payment; Treatment of Indemnity Benefits.
Each payment made by Sellers and/or MyTravel Canada to or for the benefit of
Purchaser pursuant to any indemnification obligations under this Agreement shall
be made, at Sellers' election, either (i) in cash or (ii) by decreasing the
amount outstanding at such time under the Purchase Price Note by the amount of
such payment; provided, however, that notwithstanding the foregoing, all such
payments with respect to indemnification pursuant to Sections 7.1(a)(iii),
7.1(a)(iv) and 7.1(a)(v) and indemnification for breaches of Sections 4.2, 4.4,
4.10, 4.13 and 4.18 shall be made in cash.
Each payment made by Purchaser to or for the benefit of Sellers pursuant to any
indemnification obligations under this Agreement shall be made by increasing the
amount outstanding at such time under the Purchase Price Note by the amount of
such payment.
All payments made by Sellers, MyTravel Canada or Purchaser, as the case may be,
to or for the benefit of the other pursuant to any indemnification obligations
under this Agreement shall be treated as adjustments to the Purchase Price for
Tax purposes, unless otherwise required by applicable Law.
Exclusive Remedy. The parties hereto acknowledge and agree that, except (i) with
regard to fraud or intentional misrepresentation and (ii) the remedies of
specific performance or injunctive
25
or other equitable relief, the sole and exclusive remedy of the Indemnified
Parties, from and after the Closing with respect to Damages and any and all
claims for any breach or liability under this Agreement, the Ancillary Documents
or any other agreement, instrument or certificate executed or entered into in
connection herewith or otherwise relating to the subject matter of this
Agreement, the Ancillary Documents or the transactions contemplated hereby or
thereby shall be solely in accordance with, and limited by, the indemnification
provisions set forth in this Article VII. In furtherance of the foregoing, the
parties hereto hereby waive on their own behalf and on behalf of each other
applicable Indemnified Party, to the fullest extent permitted under applicable
Law, any and all rights, claims and causes of action it or they may have against
the other parties hereto, arising under or based upon any Law.
Survival. The representations, warranties, covenants and agreements made by any
party and contained in or made pursuant to this Agreement or any Ancillary
Document shall survive the Closing and expire on the date which is eighteen (18)
months after the Closing Date; provided, however, that notwithstanding the
foregoing, (i) Section 6.10 shall survive in accordance with the terms thereof,
(ii) the representations and warranties contained in Section 4.13 shall survive
the Closing and expire on the date which is eight (8) years after the Closing
Date, (iii) the representations and warranties contained in Section 4.4 shall
survive the Closing and expire on the date which is three (3) years after the
Closing Date and (iii) the representations and warranties contained in Section
4.18 shall survive to the end of the statutes of limitations applicable thereto;
provided, further, that any representation or warranty which is fraudulently
given shall not be subject to any limitation contained in this Section 7.6.
Notwithstanding the foregoing, if written notice is properly given pursuant to
this Article VII with respect to any alleged breach of a representation,
warranty, covenant or agreement to which such party is entitled to be
indemnified hereunder prior to the expiration of such representation, warranty,
covenant or agreement shall survive, with respect to the subject matter of such
written notice only, until the applicable claim is finally resolved in
accordance with the provisions of this Article VII.
CONDITIONS TO CLOSING; TERMINATION
Mutual Conditions to the Obligations of the Parties. The respective obligations
of each party hereto to consummate the transactions contemplated by this
Agreement are subject to the satisfaction or waiver at or prior to the Closing
of the condition that no temporary restraining order, preliminary or permanent
injunction or other judgment, order or decree issued by a court of competent
jurisdiction which prevents the consummation of the transactions contemplated
hereby shall have been issued and remain in effect, and no statute, rule or
regulation shall have been enacted, promulgated or enforced by any Governmental
Authority which makes the consummation of the transactions contemplated hereby
illegal; provided, that the parties hereto shall use their reasonable best
efforts to have any temporary or preliminary order or injunction lifted.
Conditions to the Obligations of Purchaser. The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction at or prior to the Closing of the following conditions (unless
waived, to the extent permitted by applicable Law, by Purchaser):
Representations and Warranties. The representations and warranties of
Sellers contained in Article IV shall be true and correct in all material
respects as of the Closing Date.
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Performance. Sellers shall have performed and complied in all material respects
with all agreements, conditions, covenants and obligations required by this
Agreement to be performed or complied with by Sellers on or prior to the Closing
Date.
No Change of Circumstances. There shall not have occurred, during the period
between the date hereof and the Closing Date, any circumstance or event
constituting a Material Adverse Effect.
Consents. All Consents to assignment required under the Contracts set forth on
Schedule 8.2(d) shall have been obtained; provided that no change shall be
required to any of such Contracts as a consequence of obtaining such Consents
unless such change has been approved in advance by Purchaser or any other
condition which would have a Material Adverse Effect on Purchaser or the
Business as proposed to be conducted by Purchaser as of the Closing Date.
Officer's Certificate. Sellers shall have delivered to Purchaser a certificate,
dated as of the Closing Date, executed by a duly authorized officer of each
Seller certifying as to the satisfaction of the conditions set forth in Sections
8.2(a), 8.2(b) and 8.2(c).
Conditions to the Obligations of Sellers. The obligation of Sellers to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction at or prior to the Closing of the following conditions (unless
waived, to the extent permitted by applicable Law, by Sellers):
Representations and Warranties. The representations and warranties of
Purchaser contained in Article V shall be true and correct in all material
respects as of the Closing Date.
Performance. Purchaser shall have performed and complied in all material
respects with all agreements, conditions, covenants and obligations required by
this Agreement to be performed or complied with by Purchaser on or prior to the
Closing Date.
Officer's Certificate. Purchaser shall have delivered to Sellers a certificate,
dated as of the Closing Date, executed by a duly authorized officer of Purchaser
certifying as to the satisfaction of the conditions set forth in Sections 8.3(a)
and 8.3(b).
Termination. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
by mutual written agreement of Purchaser and Sellers; or
at any time after November 5, 2003 by Purchaser or jointly by Sellers,
by giving written notice of such termination to the other party, if the Closing
shall not have occurred on or prior to such date (unless the failure to
consummate the Closing by such date shall be due to or have resulted from any
breach of the representations or warranties made by, or the failure to perform
or comply with any of the agreements or covenants hereof to be performed or
complied with prior to the Closing by, the party seeking to terminate this
Agreement).
Effect of Termination. In the event of the termination of this Agreement in
accordance with Section 8.4 hereof, this Agreement shall thereafter become void
and have no effect and the transactions contemplated hereby shall be abandoned,
and no party hereto will have any liability to the other party hereto or their
respective Affiliates, directors, officers or employees, except for the
obligations of the parties hereto contained in this Section 8.5 and in Section
6.5, Section 8.6 and Sections 9.1, 9.7, 9.8. 9.9, 9.13, 9.14 and 9.18, and
except that nothing herein will relieve any party from liability for an
intentional breach of any provision of this Agreement or limit or restrict the
rights or remedies of any party hereto against the other party for any breach of
this Agreement, subject only to the limitation set forth in Section 8.6.
Closing Failure Fee. In the event that the Closing does not occur on or prior to
October 31, 2003 for any reason (other than the failure of Sellers to satisfy,
or obtain a waiver of, any of the conditions to the Closing set forth in Section
8.2), Purchaser shall, within ten (10) Business
27
Days, pay to Sellers a fee consisting of the transfer from Purchaser to MyTravel
Canada of Two Hundred Fifty Thousand (250,000) restricted shares of common stock
of Lifestyle Innovations, Inc. (otcbb: LFSI.OB). The fee described in this
Section 8.6 shall not restrict or preclude Sellers from asserting monetary
breach of contract claims pursuant to this Agreement; provided, however, that
any damages asserted against Purchaser in connection with such claims shall be
limited to damages, if any, that remain after deducting therefrom any insurance
proceeds with respect thereto. Sellers and MyTravel shall have a duty to take
all commercially reasonable actions to mitigate any and all such damages.
Third Party Real Estate Consents. To the extent that any Lease is not assignable
without the consent, waiver or approval of another Person and such consent,
waiver or approval has not been obtained before or at the Closing, this
Agreement shall not constitute an assignment or an attempted assignment of such
Lease by the applicable Seller or an assumption or an attempted assumption of
such Lease by Purchaser. Sellers shall use their commercially reasonable efforts
to obtain such consents, waivers and approvals with regard to each Lease as soon
as practicable following the date hereof and Purchaser shall cooperate with and
assist Sellers to this end to the extent commercially reasonable. If any such
consent, waiver or approval shall not be obtained with regard to such Lease
before or at the Closing, then until such consent, waiver or approval is
obtained, Sellers shall cooperate with Purchaser in any reasonable arrangement
(including indemnification) designed to provide Purchaser with the benefits
intended to be assigned to Purchaser with respect to the underlying Lease,
including enforcement for the account of Purchaser of any and all rights of the
Seller against any other party to such Lease arising out of the breach,
nonfulfillment or cancellation thereof by such other party or otherwise.
No Multiple Materiality Qualifiers. To the extent any representation, warranty
or covenant in this Agreement is qualified by reference to materiality
(including any qualification related to a Material Adverse Effect or to a
particular level or extent of permissible deviation from a standard (including
deviation from the absolute)), no corresponding reference to materiality or
permissible deviation from a standard in these conditions precedent or in
Article VII shall be of any effect.
GENERAL
Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by Federal Express (or other
internationally recognized courier), to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
To any Seller
MyTravel, or
MyTravel Canada: ▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Group Company Secretary
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
28
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
To Purchaser: FS Tours, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice that is delivered personally or by courier in the manner
provided herein shall be deemed to have been duly given to the party to whom it
is directed upon receipt by such party in the case of personal delivery, or upon
receipt of delivery thereof in the case of delivery by courier.
Amendment, Waiver. Any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by Purchaser, each Seller and each other party against which such
amendment is to be effective and enforced, or in the case of a waiver, by the
party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder will operate as a
waiver thereof nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
Assignment. No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
parties hereto; provided that each of Purchaser and Sellers may assign their
rights or obligations under this Agreement to an Affiliate thereof. Any
assignment in contravention of this provision is void.
Entire Agreement. This Agreement (including all Schedules and Exhibits hereto)
contains the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to thereto.
Fulfillment of Obligations. Any obligation of any party to any other party under
this Agreement, which obligation is performed, satisfied or fulfilled by an
Affiliate of such party, will be deemed to have been performed, satisfied or
fulfilled by such party.
Parties in Interest. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
Person other than Purchaser and each Seller or their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement, other than
any Person entitled to indemnification under Article VII.
Expenses. Except as otherwise expressly provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including
29
all fees and disbursements of financial advisors, counsel and accountants) shall
be borne by the party incurring such expenses.
Brokers. The fees of any broker, finder or investment banker hired by any party
hereto or any of such party's Affiliates shall be borne by such party.
Governing Law. This Agreement is to be governed by and construed in accordance
with the laws of the State of
Delaware without giving effect to the choice of
law provisions thereof.
Counterparts. This Agreement may be executed by facsimile and in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
Headings. The heading references herein and in the table of contents hereto are
for convenience purposes only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
Disclosure Schedules. Disclosure of any matter in any of such Schedules shall
not constitute an expression of a view that such matter is material or is
required to be disclosed pursuant to this Agreement. To the extent that any
representation or warranty in Article IV of this Agreement is qualified by
materiality or "Material Adverse Effect", the inclusion of any matter in any
Schedule in Article IV of this Agreement does not constitute a determination by
any Seller that any such matter is material.
Specific Performance. Each party hereto acknowledges that money damages would be
both incalculable and an insufficient remedy for any breach of this Agreement by
such party and that any such breach would cause the other party hereto
irreparable harm. Accordingly, each party hereto also agrees that, in the event
of any breach or threatened breach of the provisions of this Agreement by such
party, the other party hereto shall be entitled to equitable relief without the
requirement of posting a bond or other security, including in the form of
injunctions and orders for specific performance.
Publicity. Each party hereto shall not, and shall cause each of their Affiliates
not to issue or make, or allow to be issued or made, any press release or public
announcement concerning the transactions contemplated by this Agreement without
the prior written consent of the other party hereto, except as otherwise
required by applicable Law or the rules of any applicable stock exchange, but in
any event only after giving the other party hereto a reasonable opportunity to
comment on such release or announcement in advance, consistent with such
applicable legal requirements.
Severability. If any term or provision of this Agreement or the application
thereof to any situation or circumstance shall be held to be invalid or
unenforceable, the remainder of this Agreement or the application of such term
or provision to situations or circumstances other than those as to which it
shall have been held to be invalid or unenforceable, shall not be affected and
such remaining terms of this Agreement shall be valid to the fullest extent
permitted by applicable law. In addition, the parties hereto shall in good faith
endeavor to reach agreement on a provision to replace the invalid provision
which, as nearly as possible, will reflect the intent of the original provision.
Rules of Construction. The parties hereto agree that they have been represented
by counsel during the negotiation, preparation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
30
Representations and Warranties Exclusive. The representations, warranties,
covenants and agreements set forth in this Agreement, the Ancillary Documents
and the Financial Information constitute all of the representations, warranties,
covenants and agreements of the parties hereto and their respective
shareholders, directors, officers, employees, affiliates, advisors (including
financial, legal and accounting advisors), agents and representatives and upon
which the parties have relied. The parties expressly disclaim any implied
warranties. In particular, and without limiting the generality of the foregoing,
the Purchaser acknowledges and agrees that except as expressly contemplated
hereby, in making its decision to purchase the Acquired Assets and assume the
Assumed Liabilities, it is not relying on (a) any information set forth in any
information or offering memorandum distributed in connection with the proposed
sale of the Acquired Assets or the Business or the assumption of Assumed
Liabilities, (b) any information or materials, oral or written, distributed or
made available to the Purchaser prior to the date hereof other than matters set
forth in this Agreement, including the Schedules hereto or any Ancillary
Document, or (c) except as set forth in Section 4.6, any financial projection,
forecast or business plan relating to the Business. With respect to any
projection, forecast or business plan delivered by or on behalf of Sellers or
any of their Affiliates to the Purchaser, the Purchaser acknowledges that (w)
there are uncertainties inherent in attempting to make such projections,
forecasts and plans, (x) it is familiar with such uncertainties, (y) except as
expressly represented by Sellers herein, it is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all such projections,
forecasts and plans so furnished to it and (z) it shall have no claim of any
kind whatsoever against any Person with respect thereto, other than claims
pursuant to Article VII and claims for fraud or intentional misrepresentation.
WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
Signature Page Follows
31
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
by its duly authorized representative as of the day and year first above
written.
SIGNATURE PAGE TO
ASSET PURCHASE AGREEMENT
SELLERS
VE HOLDINGS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
SUNTRIPS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
ACCEPTED AND AGREED
solely for purposes of Sections 4.1(c),
6.10 and Article IX hereof:
MYTRAVEL USA HOLDINGS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
ACCEPTED AND AGREED
solely for purposes of Sections 2.5
4.1(c), 6.10 and Articles VII and IX hereof:
MYTRAVEL CANADA HOLIDAYS INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
SIGNATURE PAGE TO
ASSET PURCHASE AGREEMENT
PURCHASER
FS TOURS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
SIGNATURE PAGE TO
ASSET PURCHASE AGREEMENT