EXHIBIT 2.3
TRANSITIONAL SERVICES AGREEMENT
BETWEEN
AMBASSADORS INTERNATIONAL, INC.
AND
AMBASSADORS GROUP, INC.
EFFECTIVE AS OF
_________________, 2001
TRANSITIONAL SERVICES AGREEMENT
This Transitional Services Agreement (this "Agreement") is entered into
as of __________, 2001, between Ambassadors International, Inc., a Delaware
corporation ("Ambassadors"), and Ambassadors Group, Inc., a Delaware corporation
("Education"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in Article 1 below. Ambassadors
and Education are sometimes referred to herein individually as a "party" or
collectively as the "parties."
RECITALS
WHEREAS, Ambassadors currently owns all of the issued and outstanding
capital stock of Education; and,
WHEREAS, the Board of Directors of Ambassadors has determined that it is
appropriate and desirable to separate the business of the parties (the
"Separation") and to distribute all of the shares of Education common stock pro
rata to the holders of Ambassadors common stock (the "Distribution"), all on the
terms and conditions contemplated by a Master Separation and Distribution
Agreement dated _____________, 2001 (the "Separation Agreement");
WHEREAS, in connection with the Separation and Distribution, the parties
wish to make certain agreements regarding services during the transitional
period.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
1. DEFINITIONS. For the purpose of this Agreement, the following capitalized
terms shall have the following meanings:
1.1. "AMBASSADORS GROUP" has the meaning set forth in Section 6.1 of the
Separation Agreement.
1.2. "ANCILLARY AGREEMENTS" shall have the meaning set forth in Section
6.3 of the Separation Agreement.
1.3. "CONFIDENTIAL DISCLOSURE AGREEMENT" shall mean that certain
Confidential Disclosure Agreement dated ____________________, 2001
between Ambassadors and Education.
1.4. "DISPUTES" shall have the meaning set forth in Section 6.7 of the
Separation Agreement.
1.5. "DISTRIBUTION DATE"shall have the meaning set forth in Section 6.10
of the Separation Agreement.
1.6. "EDUCATION GROUP" has the meaning set forth in Section 6.13 of the
Separation Agreement.
1.7. "FORCE MAJEURE" shall have the meaning set forth in Article 10
hereof.
1.8. "IMPRACTICABLE" shall have the meaning set forth in Section 2.2.
1.9. "RENDERING PARTY" shall have the meaning set forth in Section 2.
1.10. "RECEIVING PARTY" shall have the meaning set forth in Section 2.
1.11. "SEPARATION AGREEMENT" means the Master Separation and Distribution
Agreement dated as of _____________, 2001, to which this Agreement is an
Exhibit.
1.12. "SEPARATION DATE" has the meaning set forth in Section 1.1 of the
Separation Agreement.
1.13. "SUBCONTRACTOR" shall have the meaning set forth in Article 8
hereof.
1.14. "SUBSIDIARY" has the meaning set forth in Section 6.26 of the
Separation Agreement.
2. SERVICES.
2.1. SERVICES GENERALLY. Except as otherwise provided herein, for the
term determined pursuant to Article 3 hereof, the parties agree to use
their best efforts to provide transitional services including financial,
payroll, information services, human resources and other similar services
("Services") as reasonably requested by the other party. The party
providing transitional services is referred to as the "Rendering Party"
and the other party the "Receiving Party."
2.2. IMPRACTICABILITY. The Rendering Party shall not be required to
provide any Service to the extent the performance of such Service becomes
"Impracticable" as a result of a cause or causes outside the reasonable
control of the Rendering Party despite the Rendering Party's good faith
effort to provide the relevant Service, or to the extent the performance
of such Services (i) would require the Rendering Party (in the opinion of
its counsel) to violate any applicable laws, rules or regulations or (ii)
would result in the breach of any applicable contract.
3. TERM. The term of this Agreement shall commence on the Separation Date and
shall remain in effect until twelve (12) months after the Separation Date (the
"Expiration Date"), unless earlier terminated under Article 6. This Agreement
may be extended by the parties in writing, either as a whole or with respect to
one or more of the Services; provided, however, that such extension shall only
apply to the Services for which the Agreement was extended. The parties may also
agree on an earlier expiration date for a specific Service.
4. COMPENSATION.
4.1. CHARGES FOR SERVICES. Each Receiving Party shall pay to the
Rendering Party the hourly rate of the employee(s) or agent of the
Rendering Party specified in Schedule A attached hereto. In addition, the
Receiving Party shall pay to the Rendering Party all out-of-pocket costs
and expenses of the Rendering Party in performing such Services. The
parties also intend for charges to be easy to administer and justify and,
therefore, they hereby acknowledge it may be counterproductive to try to
recover every cost, charge or expense, particularly those that are
insignificant. The parties shall use good faith efforts to discuss any
situation in which the actual charge for a Service is reasonably expected
to exceed the estimated charge, if any.
4.2. PAYMENT TERMS. The Rendering Party shall ▇▇▇▇ the Receiving Party
monthly for all charges pursuant to this Agreement. Such bills shall be
accompanied by reasonable documentation or other reasonable explanation
supporting such charges. Payments hereunder shall be made within 45 days
after receipt of an invoice therefor. Late payments shall bear interest
at the lesser of 12% per annum or the maximum rate allowed by law. If
both parties have rendered services to each other, they may offset the
lesser charge against the greater charge.
4.3. PERFORMANCE UNDER ANCILLARY AGREEMENTS. Notwithstanding anything to
the contrary contained herein, neither party shall be charged under this
Agreement for any obligations that are specifically required to be
performed under the Separation Agreement or any other Ancillary Agreement
and any such other obligations shall be performed and any charge
therefore levied in accordance with the terms of the Separation Agreement
or such other Ancillary Agreement.
4.4. ERROR CORRECTION; TRUE-UPS; ACCOUNTING. The parties shall reasonably
agree in writing on a process and procedure for conducting internal
audits and making adjustments to charges as a result of the movement of
employees and functions between parties, the discovery of errors or
omissions in charges, as well as a true-up of amounts owed. In no event
shall such processes and procedures extend beyond two (2) years after
completion of a Service.
4.5. PRICING ADJUSTMENTS. In the event of a tax audit adjustment relating
to the pricing of any or all Services
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provided pursuant to this Agreement in which it is determined by a taxing
authority that any of the charges, individually or in combination, did
not result in an arm's-length payment, as determined under
internationally accepted arm's-length standards, then the parties,
including any subcontractor providing Services hereunder, may agree to
make corresponding adjustments to the charges in question for such period
to the extent necessary to achieve arm's-length pricing. Any adjustment
made pursuant to this Section 4.5 at any time during the term of this
Agreement or after termination of this Agreement and shall be reflected
in the parties' legal books and records, and the resulting underpayment
or overpayment shall create, respectively, an obligation to be paid in
the manner specified in Section 4.2, or shall create a credit against
amounts owed under this Agreement.
5. GENERAL OBLIGATIONS; STANDARD OF CARE.
5.1. PERFORMANCE METRICS. Each of the parties shall maintain sufficient
resources to perform its obligations hereunder. Specific performance
metrics for a specific Service may be set forth in writing between the
parties. Where none is set forth, the Rendering Party shall use
reasonable efforts to provide Services and shall exercise the same care
and skill as it exercises in performing similar services for itself.
5.2. TRANSITIONAL NATURE OF SERVICES; CHANGES. The parties acknowledge
the transitional nature of the Services and that the Rendering Party may
make changes from time to time in the manner of performing the Services
if the Rendering Party is making similar changes in performing similar
services for itself and if the Rendering Party furnishes to the Receiving
Party 60 days prior written notice regarding such changes.
5.3. RESPONSIBILITY FOR ERRORS; DELAYS. The Rendering Party's sole
responsibility to the Receiving Party:
5.3.1. for errors or omissions in Services, other than errors or
omissions attributable to the Rendering Party's gross negligence
or willful misconduct, shall be to furnish correct information,
payment and/or adjustment in the Services, at no additional cost
or expense to the Receiving Party; provided, the Receiving Party
must promptly advise the Rendering Party of any such error or
omission of which it becomes aware.
5.3.2. for failure to deliver any Service because of
Impracticability, shall be to use reasonable efforts to make any
portion of the Services which are not Impracticable available
and/or to resume performing the Services which are or have become
impracticable as promptly as reasonably practicable.
5.4. GOOD FAITH COOPERATION; CONSENTS. The parties will use good faith
efforts to cooperate with each other in all matters relating to the
provision and receipt of Services. Such cooperation shall include
exchanging information, performing true-ups and adjustments, and
obtaining all third party consents or approvals necessary to permit each
party to perform its obligations hereunder. The reasonable and documented
costs of obtaining such third party consents or approvals shall be borne
by the Receiving Party. The parties will maintain in accordance with
their respective standard document retention procedures, documentation
supporting the information relevant to cost calculations, if any, and
cooperate with each other in making such information available as needed
in the event of a tax audit.
5.5. ALTERNATIVES. If the Rendering Party reasonably believes it is
unable to provide any Service because of a failure to obtain necessary
consents, licenses, sublicenses or approvals pursuant to Section 5.4 or
because of Impracticability, the parties shall mutually and reasonably
determine the best alternative approach. Until such alternative approach
is found or the problem otherwise resolved to the satisfaction of the
parties, the Rendering Party shall use reasonable efforts to continue
providing the Service. To the extent a mutually agreed upon alternative
approach requires payment above and beyond that which is included in the
Rendering Party's charge for the Service in question, the parties shall
share equally in making any such payment unless they otherwise agree in
writing.
6. TERMINATION.
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6.1. TERMINATION. Either party may terminate this Agreement with respect
to any one or all of the Services provided to it hereunder, for any
reason or for no reason, at any time upon 30 days prior written notice to
the other party. In addition, subject to the provisions of Article 12
below, either party may terminate this Agreement with respect to a
specific Service if the other party materially breaches a material
provision with regard to that particular Service and does not cure such
breach (or does not take reasonable steps required under the
circumstances to cure such breach) within 30 days after being given
written notice of the breach.
6.2. SURVIVAL. In the event of any termination with respect to one or
more, but less than all Services, this Agreement shall continue in full
force and effect with respect to any Services not terminated in
accordance with the terms of this Agreement.
7. RELATIONSHIP BETWEEN THE PARTIES. It is expressly acknowledged that the
parties are "independent contractors," and nothing in this Agreement is intended
and nothing shall be construed to allow either party to exercise control or
direction over the manner or method by which the other party performs the
Services that are the subject matter of this Agreement; provided, that the
Services to be provided hereunder shall be furnished in a manner consistent with
the standards governing such Services and the provisions of this Agreement. Each
party understands and agrees that (i) neither party will withhold on behalf of
the other party any sums for income tax, unemployment insurance, social security
or any other withholding pursuant to any law or requirement of any governmental
body or make available any of the benefits afforded to its employees, (ii) all
of such payments, withholdings and benefits, if any, are the sole responsibility
of the party incurring the liability, and (iii) each party will indemnify and
hold the other harmless from any and all loss or liability arising with respect
to such payments, withholdings and benefits, if any.
8. SUBCONTRACTORS. The Rendering Party may engage a "Subcontractor" to perform
all or any portion of its duties under this Agreement, provided that any such
Subcontractor agrees in writing to be bound by confidentiality obligations at
least as protective as the terms of Article 9 regarding confidentiality below,
and provided further that the Rendering Party remains responsible for the
performance of such Subcontractor. As used in this Agreement, "Subcontractor"
will mean any individual, partnership, corporation, firm, association,
unincorporated organization, joint venture, trust or other entity engaged to
perform hereunder.
9. CONFIDENTIALITY. The terms of the Confidential Disclosure Agreement between
the parties shall apply to any Confidential Information (as defined therein)
which is the subject matter of this Agreement.
10. FORCE MAJEURE. Each party will be excused for any failure or delay in
performing any of its obligations under this Agreement, other than the
obligations to make certain payments pursuant to Article 4 hereof for services
rendered, if such failure or delay is caused by Force Majeure. "Force Majeure"
means any act of God or the public enemy, any accident, explosion, fire, storm,
earthquake, flood, or any other circumstance or event beyond the reasonable
control of the party relying upon such circumstance or event.
11. DISPUTE RESOLUTION. Resolution of any and all Disputes arising from or in
connection with this Agreement shall be exclusively governed by and settled in
accordance with the provisions of Section 4.6 of the Separation Agreement.
12. MISCELLANEOUS.
12.1. AUTHORITY. Each of the parties hereto represents to the other that
(i) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (ii) the execution, delivery
and performance of this Agreement by it have been duly authorized by all
necessary corporate or other actions, (iii) it has duly and validly
executed and delivered this Agreement, and (iv) this Agreement is a
legal, valid and binding obligation, enforceable against it in accordance
with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equity principles.
12.2. AMENDMENT AND EXECUTION. The Boards of Directors of Education and
Ambassadors may mutually agree
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to amend the provisions of this Agreement at any time or times, for any
reason, either prospectively or retroactively, to such extent and in such
manner as the Boards mutually deem advisable. Each Board may delegate its
amendment power, in whole or in part, to one or more Persons or
committees as it deems advisable. No change or amendment will be made to
this Agreement, except by an instrument in writing signed by authorized
individuals. This Agreement and amendments hereto shall be in writing and
executed on behalf of Ambassadors and Education by their respective duly
authorized officers and representatives.
12.3. COUNTERPARTS. This Agreement, including any attachments hereto and
the other documents referred to herein, may be executed via facsimile or
otherwise in counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement.
12.4. EFFECTIVENESS. All covenants and agreements of the parties
contained in this Agreement shall be subject to and conditioned upon the
Distribution becoming effective.
12.5. EFFECT IF SEPARATION AND/OR DISTRIBUTION DOES NOT OCCUR. If the
Separation and/or Distribution does not occur, then all actions and
events that are, under this Agreement, to be taken or occur effective as
of the Separation Date and/or Distribution Date, or otherwise in
connection with the Separation and/or Distribution, shall not be taken or
occur except to the extent specifically agreed by Education and
Ambassadors.
12.6. TERMINATION. This Agreement may be terminated and the Distribution
abandoned at any time prior to the Time of Distribution by and in the
sole discretion of the Ambassadors Board of Directors without the
approval of Education or of Ambassadors's shareholders. In the event of
such termination, no party will have any liability of any kind to any
other party on account of such termination.
12.7. BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
legal representatives and successors, and nothing in this Agreement,
express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. Except as herein specifically provided to the contrary,
neither party may assign this Agreement or any rights or obligations
hereunder, without the prior written consent of the other party, and any
such assignment shall be void; provided, however, either party (or its
permitted successive assignees or transferees hereunder) may assign or
transfer this Agreement as a whole without consent to an entity that
succeeds to all or substantially all of the business or assets of such
party to which this Agreement relates.
12.8. PERFORMANCE. Each party hereto will cause to be performed, and
hereby guarantees the performance of all actions, agreements and
obligations set forth herein to be performed by any subsidiary or any
member of such party's Group.
12.9. ADDITIONAL ASSURANCES. Except as may be specifically provided
herein to the contrary, the provisions of this Agreement shall be
self-operative and shall not require further agreement by the parties;
provided, however, at the request of either party, the other party shall
execute such additional instruments and take such additional acts as are
reasonable, and as the requesting party may reasonably deem necessary, to
effectuate this Agreement.
12.10. ENTIRE AGREEMENT. This Agreement, the Separation Agreement, all
other Transaction Agreements, including any annexes, schedules and
exhibits hereto or thereto, and other agreements and documents referred
to herein and therein, will together constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof
and shall supersede all prior negotiations, agreements and understandings
of the parties of any nature, whether oral or written, with respect to
such subject matter.
12.11. ATTACHMENTS. All attachments hereto are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Capitalized
terms used in the attachments hereto but not otherwise defined therein
will have the respective meanings assigned to such terms in this
Agreement.
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12.12. DESCRIPTIVE HEADINGS. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table of contents to this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. When a reference is made
in this Agreement to an Article or a Section, Exhibit or Schedule, such
reference shall be to an Article or Section of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated.
12.13. GENDER AND NUMBER. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine,
feminine and neuter, and the number of all words herein shall include the
singular and plural.
12.14. SEVERABILITY. The parties hereto have negotiated and prepared the
terms of this Agreement in good faith with the intent that each and every
one of the terms, covenants and conditions herein be binding upon and
inure to the benefit of the respective parties. Accordingly, if any one
or more of the terms, provisions, promises, covenants or conditions of
this Agreement or the application thereof to any person or circumstance
shall be adjudged to any extent invalid, unenforceable, void or voidable
for any reason whatsoever by a court of competent jurisdiction, such
provision shall be as narrowly construed as possible, and each and all of
the remaining terms, provisions, promises, covenants and conditions of
this Agreement or their application to other persons or circumstances
shall not be affected thereby and shall be valid and enforceable to the
fullest extent permitted by law. To the extent this Agreement is in
violation of applicable law, then the parties agree to negotiate in good
faith to amend the Agreement, to the extent possible consistent with its
purposes, to conform to law and effect the original intent of the
parties.
12.15. SURVIVAL OF AGREEMENTS. Except as otherwise contemplated by this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall remain in full force and effect and shall survive the
time of Distribution.
12.16. GOVERNING LAW. This Agreement shall be construed in accordance
with and all Disputes hereunder shall be governed by the laws of the
State of California, excluding its conflict of law rules and the United
Nations Convention on Contracts for the International Sale of Goods. The
Superior Court of [LOS ANGELES] County and/or the United States District
Court for the Southern District of California shall have jurisdiction and
venue over all Disputes between the parties that are permitted to be
brought in a court of law pursuant to Section 11 above.
12.17. NOTICES. Any notice, demand, offer, request or other communication
required or permitted to be given by either party pursuant to the terms
of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally,
(iii) one Business Day after being delivered by facsimile (with receipt
of appropriate confirmation), (iv) one Business Day after being deposited
with a nationally recognized overnight courier service or (v) four days
after being deposited in the U.S. mail, First Class with postage prepaid,
and addressed to:
If to Ambassadors: With a copy to:
Ambassadors International, Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Richman, Mann, Chizever, Philips & ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇ ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇
If to Education: With a copy to:
Ambassadors Group, Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Building Richman, Mann, Chizever, Philips & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇ Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇
Ambassadors and Education may substitute a different address or facsimile
number, from time to time, if such substitute is provided to the intended
notice recipient in writing by notice given in the manner provided in
this section.
12.18. WAIVERS; REMEDIES. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder will operate as a
waiver thereof, nor will any waiver on the part of any party hereto of
any right, power or privilege hereunder operate as a waiver of any other
right, power or privilege hereunder, nor will any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege hereunder. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies which the
parties may otherwise have at law or equity.
12.19. LIMITATION OF LIABILITY. In no event shall any member of the
Ambassadors Group or Education Group be liable to any other member of the
Ambassadors Group or Education Group for any special, consequential,
indirect, incidental or punitive damages or lost profits, however caused
and on any theory of liability (including negligence) arising in any way
out of this Agreement, whether or not such party has been advised of the
possibility of such damages; provided, however, that the foregoing
limitations shall not limit each party's indemnification obligations for
liabilities to third parties as set forth in the Indemnification and
Insurance Matters Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties as of the date first written
above.
Ambassadors International, Inc., Ambassadors Group, Inc.,
a Delaware corporation a Delaware corporation
By: By:
-------------------------------- ------------------------------------
Title: Title:
----------------------------- ----------------------------------
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Schedule A
Rates for Transitional Services
Service to be provided Charge per hour
---------------------- ---------------
Accounts payable, distributions $21.00
Financial analysis $25.00
Information services, financial systems administrator $33.00
Payroll $33.00
Information services, database and
network administrator $38.00
Human resources $39.00
Information services, Director $67.00
Director of Finance, Vice President Finance $81.00
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