EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with the Schedules and Exhibits
hereto, the "Agreement") dated as of December 9, 2004 is entered into by and
among Vacation Acquisition, LLC, a Delaware limited liability company
("Purchaser"), and FS Tours, Inc., a Delaware corporation (the "Company"), a
wholly-owned direct subsidiary of Flightserv, Inc., a Delaware corporation
("Flightserv") and a wholly-owned indirect subsidiary of RCG Companies
Incorporated, a Delaware corporation ("RCG").
RECITALS:
1. Pursuant to an Asset Purchase Agreement dated as of October 31, 2003
(the "2003 Asset Purchase Agreement"), by and among the Company, VE Holdings,
Inc. ("VE Holdings"), Suntrips, Inc. and FS SunTours, Inc. ("FS SunTours"), the
Company purchased from VE Holdings, substantially all of the assets of VE
Holdings used exclusively or principally by or relating to the business of
serving as public charter airline operator under the name of `Vacation Express'
(the "Business"), subject to certain liabilities in connection with the
Business;
2. Pursuant to the 2003 Asset Purchase Agreement, FS Tours was
indemnified by VE Holdings with respect to certain representations, warranties,
covenants and agreements made by VE Holdings therein;
3. Purchaser desires to purchase, and the Company desires to sell,
substantially all of the assets of the Company used in and comprising the
Business, on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of premises and the respective
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Article I
DEFINITIONS
The definitions of the following terms are set forth in the Sections
specified below and, unless otherwise specified, will apply throughout this
Agreement:
DEFINITION SECTION
---------- -------
Action Section 4.12
Affiliate Section 2.2(b)
Agreement Preamble
Allocation Schedule Exhibit A
Ancillary Documents Section 4.2
Assets Section 2.2(a)
DEFINITION SECTION
---------- -------
Assumed Contracts Section 2.3
Assumed Liabilities Section 2.3
Assumption Agreement Section 9.3
Benefit Plans Section 4.13
▇▇▇▇ of Sale Section 9.2
Business Recital 1
Business Day Section 3.2
Business Intellectual Property Section 4.20
Claims Section 4.5
Closing Section 9.1
Closing Date Section 9.1
Code Section 4.8(a)
Company Preamble
Consents Section 4.11
Control Section 2.2(b)
Employee Section 4.18
Environmental Claims Section 4.16
Environmental Laws Section 4.16
ERISA Section 4.13
Excluded Assets Section 2.2(b)
Excluded Contracts Section 2.2(b)(iv)
Excluded Liabilities Section 2.4
Financial Information Section 4.9(a)
Flightserv Preamble
FS SunTours Recital 1
FS SunTours Payment Section 7.6
Governmental Authority Section 4.11
2
DEFINITION SECTION
---------- -------
Hazardous Materials Section 4.16
Hazardous Substances Section 4.16
Hired Employee Section 6.3(a)
Indemnified Party Section 10.5
Indemnifying Party Section 10.5
Intellectual Property Section 4.20
Intellectual Property Assignments Section 9.2
Knowledge of the Company Section 4.5
Lease Assignments Section 9.2
Lease Realty Section 4.17(b)
Leases Section 4.17(b)
Lien Section 4.3(d)
Loss Section 10.1
Material Adverse Effect Section 4.9(b)
Material Contracts Section 4.14(a)
MyTravel Section 9.2(i)
Permits Section 4.12
Permitted Liens Section 4.6
Person Section 2.2(b)
Purchase Price Section 3.1
Purchaser Preamble
RCG Preamble
Recipients Section 6.4
Registered Intellectual Property Section 4.20
Release Section 4.16
RSI Contract Section 2.2(b)(x)
Seller Preamble
3
DEFINITION SECTION
---------- -------
Tax Returns Section 4.8(b)
Taxes Section 4.8(a)
Third Party Claim Section 10.5
Threshold Section 10.3
Transitory Arrangements Section 2.2(b)(ix)
Transmeridian Section 7.5
VE ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇ Purchase Agreement Recital 1
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Transfer of the Assets. On the terms and subject to the conditions of
this Agreement, the Company agrees to sell, convey, assign, transfer and deliver
to Purchaser, and Purchaser agrees to purchase and accept from the Company, at
the Closing, all of the Company's right, title and interest in and to the Assets
owned or controlled by the Company or used in the Business as currently operated
by the Company.
2.2 Assets.
(a) As used in this Agreement, the term "Assets" shall mean the Business,
properties, assets and rights of the Company (other than the Excluded
Assets), including, in each case as relating exclusively to the Business:
(i) all of the Company's right, title and interest in, to and under
the Leased Realty;
(ii) except to the extent any of the following are Excluded Assets,
all inventory, computer equipment and hardware (including "thin client
computers"), equipment, supplies and other goods, all office furniture and
fixtures, leasehold improvements, machinery, owned vehicles, and other
tangible personal property and the Leases related thereto set forth on
Schedule 2.2(a)(ii);
(iii) all right, title and interest of the Company in, to and under
all Contracts to which they are a party listed on Schedule 2.2(a)(iii),
but excluding any Excluded Contracts;
(iv) 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 the Company in relation to the Business and
all claims, contract rights and judgments relating thereto, including all
of the Company's 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 the Company to the payment or
performance of a monetary obligation;
4
(v) any securities, whether certificated or uncertificated, held by
the Company;
(vi) all right, title and interest of the Company in, to and under
all Permits, to the extent such Permits are transferable;
(vii) all prepaid assets, including all prepaid rentals and all
prepaid expenses, bonds (including the surety bonds), escrow accounts and
deposits of the Company except to the extent any such prepaid assets are
Excluded Assets;
(viii) the originals and all copies of all books of account, sales
and promotional materials, general, financial, accounting and personnel
records solely with respect to any Hired Employee, files, manuals,
invoices, customers and suppliers lists and other data owned or used by
the Company, but excluding the corporate minute books, stock records and
organizational documents of the Company;
(ix) all right, title and interest of the Company in, to and under
all Business Intellectual Property (including the trademark, tradename and
name `Vacation Express'), except to the extent any Business Intellectual
Property is an Excluded Asset;
(x) all of the Company's right, title and interest in, to and under
telephone numbers, answering service numbers, e-mail addresses, web pages,
and other communication codes, numbers or devices (including the software
components for all internet websites for or used by the Company, other
than the `SunTrips' website);
(xi) all of the Company's right, title and interest in, to and under
all passenger escrow accounts maintained with a bank or other financial
institution or received from any customer for deposit therein;
(xii) all causes of action, other than those related to or otherwise
arising in connection with, the Excluded Assets or Excluded Liabilities;
(xiii) all goodwill relating exclusively or principally to the
Business;
(xiv) all right, title and interest of the Company in, to and under
any indemnity rights of the Company arising under or with respect to the
2003 Asset Purchase Agreement, solely to the extent it relates to the
Business or Vacation Express; and
5
(xv) any other assets used exclusively or principally in the
Business on the Closing Date that are not specifically listed above.
(b) The term "Excluded Assets" shall mean:
(i) the minute books, corporate seal, stock records and
organizational documents of the Company;
(ii) copies of such books of account, general, financial, accounting
and personnel records, files, manuals, invoices, customer and suppliers
lists and other data as the Company may be required by applicable Laws to
retain or as may be necessary to assist the Company in preparation of the
Company's Tax Returns;
(iii) all right, title and interest in, to and under any Benefit
Plans listed (or required to be listed) in Section 4.13;
(iv) those Contracts that are listed on Schedule 2.2(b)(iv) (the
"Excluded Contracts");
(v) all of the Company's right, title and interest in, to and under
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;
(vi) all of the Company's right, title and interest in, to and under
this Agreement;
(vii) all notes, drafts, accounts or other obligations for the
payment of money, made or owed to the Company by any current or former
employees or Affiliates;
(viii) all of the Company's right, title and interest in, to and
under the computer hardware and other equipment on which the SunTrips
website is hosted and/or maintained;
(ix) except in the event of the assignment by the Company and
assumption by Purchaser as set forth in Section 7.9, all of the Company's
right, title and interest in, to and under those bonds, letters of credit
or other similar arrangements listed on Schedule 2.2(b)(ix) (the
"Transitory Arrangements");
(x) all of the Company's right, title and interest in, to and under
the Agreement for Licenses of Computer Software by and among Reservation
Systems, Inc., Flightserv, FS SunTours and the Company ("RSI Contract");
and
(xi) all of the Company's right, title and interest in, to and under
all cash or accounts (excluding any amounts in passenger escrow accounts
held by any bank or financial institution), or received from any customer
for deposit therein.
6
As used in this Agreement, "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. "Person" means an individual, a
corporation, a partnership, an association, a trust or other entity or
organization. "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, of the Company.
2.3 Assumed Liabilities. On the terms and subject to the conditions of
this Agreement, at Closing Purchaser will assume and agree to pay, perform and
discharge when due the Company's obligations under and with respect to only
those trade payables of the Company set forth on Schedule 2.3, in the amount of
Eight Million U.S. Dollars (U.S.$8,000,000); provided, however, that Purchaser
shall have the right to settle any such trade payable and any resulting
reduction shall inure to the benefit of Purchaser; and liabilities or
obligations arising under the contracts and other matters, if any, listed on
Schedule 2.3 hereto (the "Assumed Contracts") assumed by Purchaser at Closing
(collectively, the "Assumed Liabilities").
2.4 Excluded Liabilities. Except as expressly assumed in Section 2.3, in
no event shall Purchaser assume and be responsible for any other liability,
obligation, debt commitment of the Business, the Company, Vacation Express or
any Affiliate of RCG, as principal or successor of any kind or nature whatsoever
(and Purchaser shall not be deemed a successor owner or operator of the
Business), whether absolute or contingent, accrued or unaccrued, known or
unknown, liquidated or unliquidated, due or to become due, or otherwise
(collectively, the "Excluded Liabilities"), including, but not limited to, (a)
any liability of the Company or any Affiliate of RCG to any employee, former
employee or their beneficiaries or dependents, arising out of or accruing in
connection with, any employment relationship between the Company or any
Affiliate of RCG and such persons or the Company or any Affiliate of RCG and any
labor union purporting to represent any such person, or arising out of any
employee Benefit Plan, program or policy of the Company or any Affiliate of RCG
including, but not limited to, any liability for severance or termination
payments arising out of, or alleged to have arisen out of, the transactions
contemplated by this Agreement or any prior action or relationship between the
Company or any Affiliate of RCG and such employees, including, but not limited
to, any and all liabilities and obligations arising under any written or oral
agreements with the Company or any Affiliate of RCG or under the Worker
Adjustment and Retraining Notification Act and the Consolidated Omnibus Budget
Reconciliation Act, if any, and the regulations promulgated thereunder and any
applicable similar state or local statute and regulation or at common law; (b)
any liabilities or obligations arising under the Assumed Contracts prior to the
Closing Date to the extent such liabilities are not Assumed Liabilities, (c) any
other liabilities or obligations which otherwise arise or are asserted by reason
of the condition of the Assets, events, acts (or failures to act) or
transactions occurring, or the operation of the Business, prior to the Closing
including, but not limited to, environmental liabilities (including, but not
limited to, any Claims relating to or arising from any off-site storage,
treatment, recycling or disposal facilities owned, leased or used at any time by
the Company); (d) the Claims; (e) any liability or obligation of the Company or
any Affiliate of RCG, whenever arising or accruing, arising out of any Excluded
Asset; (f) any Taxes of the Company, the Business or any Affiliate of RCG,
except as such Taxes are apportioned to Purchaser based on its ownership of the
Assets post-Closing Date, in accordance with Section 9.4; (g) any obligation of
the Company, the Business or Vacation Express arising under the 2003 Asset
Purchase Agreement; (h) any liability or obligation of the Company, the Business
or Vacation Express or any Affiliate of the Company arising under that certain
Letter of Credit Agreement dated as of March 1, 2004, as amended as of November
9, 2004, by and among RCG, Flightserv, the Company and FS SunTours, K. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, Jr., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ and the
FiveOaks Capital Partners, LLC, and any ancillary documents referred therein; or
(i) any obligation incurred by the Company or any Affiliate of RCG (including,
without limitation, Flightserv) and not expressly assumed by Purchaser
hereunder. The parties hereto further agree that all of the Excluded Liabilities
shall remain the sole, exclusive obligation and responsibility of the Company.
7
ARTICLE III
PURCHASE PRICE AND ADJUSTMENT
3.1 Purchase Price. The aggregate purchase price (the "Purchase Price")
for the Assets will be Purchaser's assumption of the Assumed Liabilities.
3.2 [Intentionally Omitted]
3.3 [Intentionally Omitted]
3.4 [Intentionally Omitted]
3.5 [Intentionally Omitted]
3.6 Effectiveness. In the event that the Closing shall occur, Purchaser
and the Company agree that the results of operations of the Business acquired by
Purchaser hereunder from 12:01 am on the Closing Date shall be for the account
of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as follows:
4.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware. The
Company has all requisite power and authority to own its properties, and to
conduct its business as presently conducted.
4.2 Authority; Enforceability. The Company has all requisite corporate
power and authority to execute, deliver and perform its obligations arising
under this Agreement, the Ancillary Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, the Ancillary Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby have been, or will be on or prior to the Closing Date, duly and validly
authorized by all necessary action on the part of the Company. This Agreement
has been, and at the Closing the Ancillary Documents to which it is a party will
have been, duly executed and delivered by the Company and constitute a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except that 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, injunction and other forms of equitable relief and may be
subject to equitable defenses and to the discretion of the court before which
any proceeding may be brought. As used in this Agreement, "Ancillary Documents"
means the ▇▇▇▇ of Sale, the Assumption Agreement, the Lease Assignments, the
Intellectual Property Assignments, and each instrument, agreement or other
document contemplated by this Agreement as being executed and delivered by the
applicable party hereto and any side letters delivered by the parties or their
Affiliates in connection herewith.
8
4.3 No Conflict or Breach. Except as set forth in Schedule 4.3, the
execution, delivery and performance of this Agreement and the Ancillary
Documents to which it is a party does not and will not:
(a) conflict with or constitute a violation of the Certificate of
Incorporation or other constitutive documents of the Company;
(b) conflict with or constitute a violation of any law, statute, judgment,
order, decree or regulation of any legislative body, court, administrative
agency, governmental authority or arbitrator applicable to or relating to
the Company or the Assets or any portion of any thereof;
(c) conflict with, constitute a default under, result in a breach or
acceleration of or require notice to or the consent of any third party
under any contract, agreement, commitment, mortgage, note, license or
other instrument or obligation to which the Company is party or by which
it is bound or by which the Assets or any portion of any thereof is
affected; or
(d) result in the creation or imposition of any Lien. As used in this
Agreement, "Lien" means any lien, security interest, mortgage, pledge,
charge or similar encumbrance, of any nature whatsoever on the Assets or
any portion of any thereof;
except in the case of items (b) and (c) where such conflicts, violations,
defaults, breaches or consents, individually or in the aggregate, would not have
a Material Adverse Effect on the Business or the Assets.
4.4 Governmental Consents and Approvals. The execution, delivery and
performance by the Company of this Agreement and the Ancillary Documents to
which it is a party do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to any
governmental authority, except as described in Schedule 4.4 attached hereto.
4.5 Litigation. Except as set forth on Schedule 4.5, there are no pending
or, to the Knowledge of the Company, threatened claims, actions, suits,
arbitration proceedings, inquiries, hearings, injunctions or investigations
("Claims") against the Company which if adversely determined would result in a
Lien on the Assets or that may seek to enjoin the transactions contemplated
hereby. As used in this Agreement, "Knowledge of the Company" or phrases of
similar import mean the actual knowledge, after reasonable inquiry, of ▇▇▇▇▇
▇▇▇▇▇▇▇, and the president of the Company and director of finance of the
Company.
9
4.6 Valid Title; No Liens. Except as set forth on Schedule 4.6, (i) the
Company is the sole and exclusive owner of, and has good and valid title, and in
the case of the leased (a valid leasehold interest) to, all of the Assets
wherever located, free and clear of all Liens other than Permitted Liens and the
Assumed Liabilities, and (ii) no other person or legal entity has or will have
at Closing any interest whatsoever in any of the Assets. At Closing, the Company
will transfer and convey to Purchaser, and Purchaser will acquire, good and
valid title to the Assets, free and clear of all Liens of any kind or nature
whatsoever, other than Permitted Liens and the Assumed Liabilities. As used in
this Agreement, "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) 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 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, and (iv) Liens arising from travel agency regulations relating to
customer funds.
4.7 Brokers. No finder, broker, agent or other intermediary has acted for
or on behalf of the Company or any Affiliate of the Company in connection with
the negotiation or consummation of this Agreement, and there are no claims for
any brokerage commission, finder's fee or similar payment due from the Company
or its Affiliates.
4.8 Tax Matters.
(a) For the purposes of this Agreement, "Taxes" are any federal, state,
local, or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Internal Revenue Code of 1986 (the
"Code") section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
(b) The Company has filed all returns, declarations, reports or
information returns or statements relating to Taxes, including any
schedules or attachments thereto, and including any amendments thereof
("Tax Returns") that it was required to file prior to the date hereof. All
such Tax Returns were correct and complete in all material respects. All
Taxes owed by the Company shown on any such Tax Return have been paid. The
Company is not currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where the Company does not file Tax Returns that it is
or may be subject to taxation by that jurisdiction. There are no security
interests on any of the Assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax.
10
(c) To the Knowledge of the Company no authority will assess any
additional Taxes for any period for which Tax Returns have been filed.
There is no dispute or claim concerning any Tax liability of the Company
either (A) claimed or raised by any authority in writing to the Company,
or (B) as to which any of the direct or indirect shareholders of the
Company has Knowledge. Except as provided by Schedule 4.8, no Tax Return
filed with respect to the Company has been or currently is the subject of
audit.
(d) The Company has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency. The Company has disclosed on its federal income Tax Returns
all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code section
6662. The Company is not a party to any Tax allocation or sharing
agreement. The Company has no liability for the Taxes of any other person.
4.9 Financial Statements; Undisclosed Liabilities.
(a) The Company delivered to Purchasers the unaudited balance sheets for
the Company dated September 30, 2004 and the unaudited operating income
statements for the Company for the twelve (12) month periods ended
September 30, 2004 (collectively, the "Financial Information"). Except as
set forth on Schedule 4.9(a), the Financial Information has been prepared
in conformity with GAAP applied on a basis consistent with the Company's
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 Company in the manner
required by GAAP, for the applicable time periods covered thereby.
(b) Except as set forth in Schedule 4.9(b), there has been no change in
the business of the Business or the occurrence of any event, in each case,
since September 30, 2004 that has resulted, or could be reasonably
expected to result, in a Material Adverse Effect. As used in the
Agreement, "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, individually or taken as a whole,
except for such changes or effects resulting from (a) the transactions
contemplated by this Agreement, (b) industry-wide regulatory changes, or
(c) an event or circumstances affecting (i) the industry in which the
Business operates in an country in which the Business operates or (ii)
United States economy generally or the economy generally in any other
country in which the Business operates.
(c) 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, disclosed or reserved against in the
Financial Information, or (ii) were incurred after September 30, 2004 in
the ordinary course of business by the Company, 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
11
(d) The Financial Information is based upon information contained in the
books and records of the Company, which such books and records have been
kept in accordance with GAAP, consistent with past practice.
4.10 Receivables. Except as set forth in Schedule 4.10, all accounts
receivable and notes receivable of the Business (i) to the Company's Knowledge,
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 the Company's Knowledge, collectible in the ordinary course of
business and have been adequately reserved for in the Financial Information.
4.11 Consents and Approvals. The execution and delivery of this Agreement
and each Ancillary Document to which the Company is a party does not, and the
performance by the Company of this Agreement and each Ancillary Document to
which the Company is party and the consummation of the transactions contemplated
hereby and thereby will not, require the Company 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 4.11.
4.12 Permits/Compliance with Laws. The Company 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 the Company, threatened, regarding suspension or
cancellation of any such Permits. Except as set forth in Schedule 4.12, the
Company is 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 Assets are bound or subject. Except as set forth in Schedule 4.12, none of
the Permits will lapse, terminate or expire as a result of the performance of
this Agreement by the Company or the consummation of the transactions
contemplated hereby. As used in this Agreement, "Action" means any claim,
action, suit or proceeding, arbitral action, governmental inquiry, criminal
prosecution or other investigation.
4.13 Employee Benefit Plans; ERISA. Schedule 4.13 lists each Benefit Plan.
Except as set forth on Schedule 4.13, 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 the
Company nor to the Knowledge of the Company, 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 the Company, threatened with respect to any Benefit Plan
(other than routine claims for benefits payable in the ordinary course and
appeals of denied claims). As used in this Agreement, "Benefit Plans" means any
"employee benefit plan" with the meaning of Section 3(3) of ERISA that is
maintained or contributed to by the Company (or any of its Affiliates) for the
benefit of Employees. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
12
4.14 Contracts.
(a) Set forth on Schedule 4.14(a) is a complete list of all of the
following contracts (the "Material Contracts"): (i) noncompetition or
other agreements restricting the ability of the Company to engage in any
line of business in any location, (ii) each contract involving payments
made by the Company that are expected to exceed Fifty Thousand Dollars
($50,000), and (iii) each contract involving payments made to the Company
that are expected to exceed Fifty Thousand Dollars ($50,000).
(b) Each Material Contract is a valid and binding obligation of the
Company party thereto and is enforceable by the Company in accordance with
its terms against each other party thereto and except as set forth on
Schedule 4.14(b), the Company is not (with or without the lapse of time or
the giving of notice, or both) in breach or default thereunder. To the
Knowledge of the Company, 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. To the Knowledge of the Company, no defenses,
offsets or counterclaims to any Material Contract have been asserted by
any party thereto other than the Company, and the Company has not waived
any rights under any Material Contract.
(c) Except as set forth specifically on Schedule 4.14(c), the Company is
not party to, and none of the Assets is subject to, any agreement,
understanding or other arrangement with respect to any:
(i) contracts under which the Company is a lessor or sublessor of,
or makes available for use by any third party, (a) any real property owned
or leased by the Company exclusively or principally in connection with the
Business, or any portion of premises otherwise occupied by the Company, or
(b) any material personal property owned or leased by the Company
exclusively or principally in connection with the Business;
(ii) contracts under which the Company has 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;
13
(iii) contracts under which any other person has directly or
indirectly guaranteed any indebtedness, liability or obligation of the
Company, or letter of credit issued to guarantee any obligation of the
Company, or any vendor or customer of the Company; or
(iv) 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 the Company in
excess of Fifty Thousand Dollars ($50,000).
4.15 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment included in the 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) as set
forth on Schedule 4.15, the Assets are sufficient for the continued conduct of
the Business after the Closing in substantially the same manner as conducted
prior to the Closing.
4.16 Environmental Matters. Except as set forth in Schedule 4.16, there is
no Environmental Claim pending or, to the Knowledge of the Company, threatened
against the Company. To the Knowledge of the Company, there have been no
Releases of Hazardous Materials on, beneath or adjacent to any property
currently or formerly owned, operated, or leased by the Company in quantities
sufficient to form the basis for an Environmental Claim. As used in this
Agreement, "Environmental Claim" means any Action or notice by any person or
entity alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response cost,
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 the
Company, or (b) circumstances forming the basis of any violation of any
Environmental Law. As used in this Agreement, "Environmental Laws" means all
laws and regulations relating to pollution or protection of human health or the
environment, including laws relating to Release or threatened Release of
Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport of handling of
Hazardous Materials and all Laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials. As used in
this Agreement, "Hazardous Material" means all materials regulated by law as
capable of causing harm or injury to human health or the environment, including
(a) Hazardous Substances, (b) friable asbestos containing materials, (c)
polychlorinated biphenyls, (d) highly toxic materials as defined by OSHA in 29
C.F.R. ss. 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. ss. 300.5, or
defined as such by, or regulated as such under, any Environmental Law. As used
in this Agreement, "Hazardous Substances" means any hazardous substances within
the meaning of Section 101(14) of CERCLA, 42 U.S.C ss. 9601(14), or any
pollutant or constituent that is regulated under any Environmental Law. As used
in this Agreement, "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.
14
4.17 Real Property.
(a) There is no real property to which the Company has legal or equitable
title.
(b) Schedule 4.17(b) sets forth a true and complete list of all real
property in which the Company has a valid and subsisting leasehold or
other interest (the "Leased Realty"). To the Knowledge of the Company, the
Company as 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 4.17(b)
(the "Leases"). Each Lease is in full force and effect and the Company
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.
4.18 Labor Matters.
(a) Schedule 4.18(a) sets forth a complete list of all employees of the
Company engaged in the Business ("Employee").
(b) Except as set forth in Schedule 4.18(b), the Company is 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.
(c) Except as set forth in Schedule 4.18(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.
(d) Except as set forth in Schedule 4.18(d), since November 1, 2003, there
has not been, nor is there pending, or, to the Company's Knowledge,
threatened, (i) any labor dispute between the Company and any labor
organization, or any strike, slowdown, jurisdictional dispute, work
stoppage or other similar organized labor activity involving any Employee
of the Company or affecting the Company or (ii) any union organizing, or
election activity involving, any employee of the Company.
(e) There exists no pending or to the Knowledge of the Company, threatened
lawsuit, administrative proceeding or investigation between the Company
and any current or former director, officer or employee of the Company,
including any claim for wrongful termination, breach of express or implied
contract of employment or for violation of equal employment opportunity
laws.
(f) Except as set forth in Schedule 4.18(f), there exists no pending or,
to the Knowledge of the Company, threatened lawsuit, administrative
proceeding or investigation of the Company or any employee thereof
regarding allegations of hostile work environment, sexual discrimination
or racial discrimination.
15
(g) All bonuses due and payable to any Employee as of the Closing Date
have been paid. 4.19 Insurance. Set forth in Schedule 4.19 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, including the coverage
amounts and expiration dates thereof. All policies set forth in Schedule
4.19 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 the Company with respect
to any such policy.
4.20 Intellectual Property.
(a) Schedule 4.20(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. As used in this
Agreement, "Business Intellectual Property means any Intellectual Property
that is owned by or licensed to the Company exclusively or primarily for
the benefit of the Business, other than any Intellectual Property that is
an Excluded Asset. As used in this Agreement, "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; (vi) computer software, including all
source code therefor and (vii) domain names and all rights therein
throughout the world.
(b) Schedule 4.20(b) sets forth any proceedings or actions before any
court, tribunal challenging the validity or the Company's ownership of any
of the Registered Intellectual Property.
(c) Except as set forth on Schedule 4.20(c), the Company has not granted
to any Person any rights in the Business Intellectual Property.
(d) To the Knowledge of the Company, 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. The Company has not received any notice from any Person that the
provision of their respective services, infringes or misappropriates the
Intellectual Property of any Person. Except as set forth on Schedule
4.20(d), to the Knowledge of the Company, no Person is infringing or
misappropriating any of the Business Intellectual Property.
16
4.21 Customer Relationships. To the Knowledge of the Company, other than
past due payables, all of which are listed on Schedule 4.21, there exists no
condition, state of facts or circumstances involving any customers, suppliers,
distributors or vendors of the Company (including airlines), that has resulted
in, or could be reasonably expected to result in, a Material Adverse Effect.
4.22 Customer Deposits and Pre-Paid Expenses. The customer deposits and
prepaid expenses of the Company are reasonable in amount, were obtained in the
Company's ordinary course of business and, to the Knowledge of the Company, 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.
4.23 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 the Company (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 Purchasers and are
true, correct and complete copies thereof, including all minutes, exhibits,
schedules, appendices, supplements or modifications thereto and all written
waivers thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as follows:
5.1 Organization and Good Standing; Governing Documents. Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. Purchaser has all requisite power and
authority to own its properties and to conduct its business as presently
conducted.
5.2 Authority; Enforceability. Purchaser has all requisite power and
authority to execute and deliver this Agreement, the Ancillary Documents to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, the Ancillary Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby have been, or will be on or prior to the Closing Date, duly and validly
authorized by all necessary action on the part of Purchaser. This Agreement has
been, and the Ancillary Documents to which Purchaser is a party will be on and
as of the Closing Date, duly executed and delivered by Purchaser and constitute
valid and binding obligations of Purchaser enforceable against Purchaser in
accordance with their respective terms.
17
5.3 No Conflict or Breach. The execution, delivery and performance of this
Agreement and the Ancillary Documents to which Purchaser is a party will not:
(a) conflict with or constitute a violation of the Certificate of
Formation, the Limited Liability Company Agreement or other constitutive
documents of Purchaser;
(b) conflict with or constitute a violation of any law, statute, judgment,
order, decree or regulation of any legislative body, court, administrative
agency, governmental authority or arbitrator applicable to or relating to
Purchaser; or
(c) conflict with, constitute a default under, result in a breach or
acceleration of or require notice to or the consent of any third party
under any contract, agreement, commitment, mortgage, note, license or
other instrument or obligation to which Purchaser is party or by which it
is bound, other than notices which have been given and consents which have
been obtained;
except in the case of (b) and (c) where such conflicts, violations,
defaults, breaches or consents, individually or in the aggregate, would not have
a Material Adverse Effect on Purchaser.
5.4 Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement or the Ancillary Documents to which it is a party,
do not and will not require any consent, approval, authorization or other order
of, action by, filing with or notification to any governmental authority, except
as described in Schedule 5.4 attached hereto.
5.5 Litigation. There are no Claims pending or, to the knowledge of
Purchaser, threatened, against Purchaser which if adversely determined would
result in a Lien on its assets or that may affect or seek to enjoin the
transactions contemplated hereby.
5.6 Brokers. No finder, broker, agent or other intermediary has acted for
or on behalf of Purchaser or its Affiliates in connection with the negotiation
or consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from Purchaser or its
Affiliates.
ARTICLE VI
COVENANTS
6.1 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, the Company 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 the Company
shall use commercially reasonable efforts (subject to availability of capital to
run its operations) to preserve intact its present business organization, keep
available the services of its present officers, employees and independent
contractors, maintain the Assets in good condition and preserve its current
working conditions and relationships with customers, suppliers, creditors and
business partners.
18
6.2 Bulk Transfer Laws. Purchaser hereby waives compliance by the Company
with the provisions of any "bulk transfer law" of any jurisdiction in connection
with the sale of the Assets to Purchaser; provided that such Purchaser shall be
entitled to indemnification in connection therewith pursuant to Section 10.1.
6.3 Employees.
(a) Purchaser shall have the option, at its sole discretion, to offer
employment, effective as of the Closing Date, to any Employee; provided,
however, that Purchaser shall have no obligation to offer employment to
any Employee. Each Employee who accepts an offer of employment from a
Purchaser, if any, is hereinafter referred to as a "Hired Employee".
(b) It is hereby acknowledged and agreed that the Company shall have no
liability of any type or nature in relation to any Hired Employee 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 the
Company from any payments with respect to claims for severance, bonus,
accrued vacation, or other employee benefit obligations imposed upon,
incurred or suffered by the Company arising out of or relating to any of
Purchaser's actions with regard to any Hired Employee (including
termination of employment thereof). Schedule 6.3 hereto sets forth a list
of those employees to whom Purchaser intends to make offers of employment.
(c) The Company will pay to all Hired Employees all accrued employee
benefits arising under any employee Benefit Plan up to and including the
Closing Date within the time required by applicable law, but in no event
later than thirty (30) days from the Closing Date. In addition, the
Company agrees to deliver to all Hired Employees and any benefit provider
any and all notices with respect to their employment by the Company and
their Benefit Plan in connection therewith, as may be required by
applicable law as a result of the transactions contemplated hereby.
(d) Effective upon the Closing Date, all Hired Employees shall cease to
participate in the eRCG 401(k) Plan (the "eRCG Plan"). The Company will
permit each Hired Employee who is a participant in the eRCG Plan to elect
a distribution of his or her account balance in the eRCG Plan, pursuant to
the provisions thereof and in accordance with ERISA.
6.4 Confidentiality; Tax Disclosure.
(a) From and after the Closing, the Company 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 the Company or any of the Recipients, or (iii) is or
becomes available to the Company or any of the Recipients on a
non-confidential basis from a source that to the Company's or such
Recipient's knowledge is not prohibited from disclosing such information
to the Company or such Recipient by a legal, contractual or fiduciary
19
obligation to any other Person; provided, that nothing contained in this
Section 6.4(b) shall prohibit the Company from disclosing any information
in connection with any Action by or against the Company or any of its
Affiliates or any disclosure required by law by any Affiliate of the
Company. Should the Company 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 the
Company is informed of it and, if possible, before any information is
disclosed, so that a protective order or other appropriate remedy may be
obtained by the Purchaser. If the Company 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. Nothing in this
Agreement shall be deemed to restrict Company's Affiliate from filing an
8-K and issuing a press release with respect to the transactions
contemplated hereby; provided, however, that Purchaser and Company's
Affiliate shall agree on all language describing this transaction to be
contained therein, such agreement not to be unreasonably withheld.
(b) 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.
6.5 Notification of Certain Matters. The Company shall give prompt notice
to Purchaser, and Purchaser shall give prompt notice to the Company, of the
occurrence, or non-occurrence, of any event the occurrence or non-occurrence of
which would be reasonably likely to cause the Company or any 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 6.5 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
6.6 Access to Books and Records Following the Closing. Following the
Closing, Purchaser shall permit the Company 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.
20
6.7 Non-Competition; Non-Solicitation.
(a) For the period of three (3) years commencing on the Closing Date
neither the Company nor any of its Affiliates shall directly or indirectly
(i) engage in public charter airline business in competition with
Purchaser using the same gateways as those used by the Company 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 the Company as of the Closing Date (the "Restricted
Activity"); provided, however, that nothing contained in this Section 6.7
shall prohibit the Company or any of its 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. For purposes of
clarification, "using the same gateways" shall mean flying a route which
has the same departure and destination cities as those of a route flown by
Vacation Express. For example, the Company or its Affiliates cannot fly a
route which has a Vacation Express departure city to a Vacation Express
destination city. But, the Company or its Affiliates may fly a route from
a Vacation Express departure city to a non-Vacation Express destination
city, or from a non-Vacation Express departure city to a Vacation Express
destination city, and not be in violation of this Section 6.7 In addition,
the parties agree that upon the consummation of the acquisition of an
online travel consolidator by the Company or any of its Affiliates, the
Company and its Affiliates may sell scheduled airline service on Vacation
Express' gateways, as long as Vacation Express flights receive
preferential display on the Worldspan booking/distribution system or on a
different global distribution system. In no event shall the Company or any
of its Affiliates be permitted to work with any other charter company with
respect to the provision of airline services/vacation packages using the
same gateways as those used by Vacation Express without violation of this
Section 6.7. 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) the
Company hereby acknowledges and agrees to the foregoing.
(b) For the period of three (3) years commencing on the Closing Date
neither the Company nor any of its Affiliates shall directly or indirectly
induce or attempt to induce any Hired Employee or other employee of a
Purchaser to leave the employ of such Purchaser, or in any way interfere
with the relationship between such Purchaser and any Hired Employee or
other employee thereof.
(c) The Company agrees that Purchaser would suffer irreparable harm from a
breach by the Company or any of its Affiliates of any of the covenants or
agreements contained in this Section 6.7. In the event of an alleged or
threatened breach by the Company or any of its Affiliates of any of the
provisions of this Section 6.7, Purchaser or its Affiliates or assigns
may, in addition to all other rights and remedies existing in its favor,
apply to any court of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof. To the extent of any breach of this
Section 6.7 by the Company or any of its Affiliates, the noncompete period
for the Company or any of its Affiliates shall automatically be extended
by the length of such breach.
21
6.8 Credit Card Processing. During the period between the date hereof and
the Closing Date, the Company shall be responsible for conducting, and/or
ensuring the conduct of, all credit card processing relating to the Business.
6.9 Remaining Transitional Arrangement. The Company's letter of credit
with respect to the Leased Realty will be returned to the Company by the
landlord within thirty (30) days of Purchaser's delivery to the landlord of
immediately available funds equal to the amount of US$ 105,175.
6.10 [Intentionally Omitted]
6.11 Operating Account Balances. The Company will maintain sufficient
available dollar account balances in the operating account at Fidelity Bank,
Account #018 000 7558 at all times to pay all checks drawn on such account by
the Company or Vacation Express prior to the Closing.
6.12 FS SunTours Credit. Purchaser's Affiliate shall give FS SunTours a
one year, non-assignable, 25% credit per invoice (inclusive of all marketing and
advertising deductions), up to a maximum amount of Six Hundred Thousand Dollars
(US$ 600,000.00). Purchaser's Affiliate shall charge FS SunTours rates no less
favorable than those charged to other third parties.
6.13 FS SunTours Amounts Forgiven. Purchaser's Affiliates shall forgive
and release FS SunTours from any and all amounts due to Purchaser's Affiliates
from FS SunTours relating to arrivals up to and including November 21, 2004. The
amount forgiven hereunder is $381,907.
6.14 FS SunTours Prepayments. After the Closing Date FS SunTours will
prepay all arrangements and business with Purchaser, d/b/a Vacation Express and
its Affiliates.
Article VII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate or cause the consummation of
the transactions contemplated by this Agreement are subject to the satisfaction
of the following conditions on or before the Closing Date, unless specifically
waived in writing by Purchaser prior to the Closing Date:
7.1 Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall have been true and correct in all
material respects on the date of this Agreement and shall be true and correct in
all material respects on the Closing Date as though made on and as of the
Closing Date, except in the case of those that speak of a specific date, which
shall be true and correct in all material respects on and as of such date.
7.2 Compliance with Covenants. The Company shall have duly performed and
complied or caused the performance or compliance with in all material respects
all covenants, agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing.
22
7.3 Absence of Litigation. No action or proceeding shall be pending by or
before any court or other governmental body or agency seeking to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
would adversely affect the right of the Purchaser to own, operate or control the
Assets or any portion thereof after the Closing Date.
7.4 Due Diligence. The results of Purchaser's due diligence shall be
satisfactory to it in its sole and absolute discretion.
7.5 FS SunTours Payable. FS SunTours shall have paid in full to
Purchaser's Affiliates, any and all sums due and owing to them for all arrivals
from and including November 22, 2004 up to and including the Closing Date (the
"FS Suntours Payment") on or before the Closing.
7.6 Termination of DBA Certificates. The Company shall deliver to
Purchaser executed documents sufficient under applicable law or regulations to
terminate any and all DBA Certificates, and change the name on any business or
other authorization, currently under or using the name `Vacation Express.' 7.7
Permits. Purchaser shall have obtained any and all Permits in its name necessary
to run the Business to the extent the Company's Permits are not assignable.
7.8 Company's Affiliate Guarantee. The Company shall have delivered to
Purchaser a letter, on terms reasonably acceptable to Purchaser, from Company's
Affiliate guaranteeing all of the Company's or any of its Affiliates payment and
performance obligations arising hereunder, all as set forth therein.
7.9 Transitional Arrangements. The Company shall deliver (a) the written
consent by National City Bank of the Midwest to the assignment of all of the
Company's right, title and interest in, to and under the deposit/letter of
credit and Security Agreement number 272 to Purchaser; (b) Fidelity Bank's
written acceptance of, and consent to, the assignment of all of the applicant's
right, title and interest in, to and under the deposit/letter of credit with
Airline Reporting Corporation ("ARC"); (c) Fidelity Bank's written consent to
the assignment of all of the Company's right, title and interest (as applicant)
in, to and under the letter of credit issued for the benefit of Delta Airlines,
to the Purchaser.
7.10 Ancillary Documents. The parties thereto (other than persons under
the control of Purchaser) shall have executed and delivered all of the Ancillary
Documents, including those contemplated to be delivered pursuant to Section 9.2.
23
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligations of the Company to consummate or cause the consummation of
the transactions contemplated by this Agreement are subject to the satisfaction
of each of the following conditions on or before the Closing Date, unless
specifically waived in writing by the Company prior to the Closing:
8.1 Representations and Warranties. The representations and warranties of
Purchaser contained in this Agreement shall have been true and correct in all
material respects on the date of this Agreement, and shall be true and correct
in all material respects on the Closing Date as though made on and as of the
Closing Date, except in the case of those that speak of a specific date, which
shall be true and correct in all material respects on and as of such date.
8.2 Compliance with Covenants. Purchaser shall have duly performed and
complied or caused the performance and compliance in all material respects with
all covenants, agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing.
8.3 Absence of Litigation. No action or proceeding shall be pending by or
before any court or other governmental body or agency seeking to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
8.4 Purchaser Affiliate Guarantee. Purchaser shall deliver to the Company
and RCG a letter, on terms reasonably acceptable to the Company, from
Purchaser's Affiliate guaranteeing all of Purchaser's payment and performance
obligations arising hereunder.
8.5 Ancillary Agreements. The parties thereto (other than persons under
the control of the Company) shall have executed and delivered the Ancillary
Documents, including those contemplated to be delivered pursuant to Section 9.3.
Article IX
CLOSING
9.1 Closing. The closing of the sale of the Assets (the "Closing") shall
take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇▇▇, Colt & Mosle LLP, 101 Park
Avenue, New York, New York, or such other place as may be mutually agreed upon
by the parties hereto. The date of the Closing is referred to as the "Closing
Date."
9.2 Deliveries by Seller. At the Closing, the Company shall deliver or
cause to be delivered to Purchaser the following:
(a) A certificate of an authorized officer of the Company confirming the
satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof.
(b) A copy of all corporate resolutions authorizing the execution,
delivery and performance by the Company and RCG of this Agreement and such
other agreements as may be executed and delivered by the Company pursuant
to this Agreement, and the consummation of the transactions contemplated
herein and therein, accompanied by the certification of an authorized
representative of each of the Company and RCG to the effect that such
resolutions are in full force and effect and have not been amended,
modified or rescinded.
24
(c) Good standing certificates from the Secretary of State of Delaware for
the Company and RCG. (d) ▇▇▇▇ of sale and assignment of the Assets
executed by the Company in favor of Purchaser (the "▇▇▇▇ of Sale"), in the
form annexed here to as Exhibit B.
(e) Assignment and assumption of the Lease and such other documents and
instruments (including, without limitation, an estoppel certificate and a
consent of the Landlord, each executed by the landlord of the Leased
Realty) as may reasonably be requested by Purchaser for the assignment by
the Company to Purchaser of the Leased Realty, mutually agreed between
Purchaser and the Company (the "Lease Assignments").
(f) Assignments for the assignment by the Company to Purchaser of the
Business Intellectual Property (the "Intellectual Property Assignments"),
in the form annexed hereto as Exhibit D.
(g) An opinion of legal counsel of the Company and RCG satisfactory to
Purchaser, in the form annexed hereto as Exhibit E.
(h) RCG will obtain and deliver to Purchaser releases from MyTravel USA
Holdings, Inc. ("My Travel"), Pace Airlines, Inc., and K. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇., ▇▇▇▇ ▇▇▇▇▇▇, and FiveOaks Capital Partners, LLC, in favor of
Purchaser and its Affiliates, substantially in the form of Exhibit H (i),
(ii) and (iii) hereto.
(i) A copy of the consent of MyTravel to the assignment of all right,
title and interest in, to and under any indemnification rights of the
Company arising under and with respect to the 2003 Asset Purchase
Agreement.
(j) Proof of the FS SunTours Payment.
(k) Purchaser, Flightserv and FS SunTours shall have entered into mutually
acceptable letter agreements with respect to the division of the Solarcom
LLC Equipment Leases with Flightserv and the MCI Services Agreement dated
August 27, 2004 between MCI WORLDCOM Communications, Inc. and Flightserv.
(l) Such other documents, instruments or agreements as may be reasonably
requested by Purchaser, including, without limitation, copies of all third
party consents to the transfer and assignment of the Assets, the Permits
and the Assumed Contracts.
9.3 Deliveries by Purchaser. At the Closing, Purchaser will deliver or
cause to be delivered to the Company (except as otherwise noted in (j) below)
the following:
(a) A certificate of an authorized officer of Purchaser confirming the
satisfaction of the conditions set forth in Sections 8.1 and 8.2 hereof.
25
(b) A copy of all corporate resolutions authorizing the execution,
delivery and performance by Purchaser of this Agreement and the Ancillary
Documents to which it is a party and the consummation of the transactions
contemplated herein and therein, accompanied by the certification of an
authorized officer of Purchaser to the effect that such resolutions are in
full force and effect and have not been amended, modified or rescinded.
(c) US$ 200,000, by wire transfer of immediately available funds,
representing the amount of the Company's deposit/letter of credit with
National City Bank of the Midwest under the DOT Security Agreement Number
272 for Charter Operator in the name of FS Tours, Inc. d/b/a Vacation
Express.
(d) US$ 73,500, by wire transfer of immediately available funds,
representing an amount equal to the Company's deposit/letter of credit
with ARC.
(e) US$ 10,000, by wire transfer of immediately available funds,
representing the amount of the letter of credit to Delta Airlines.
(f) An assignment and assumption agreement (the "Assumption Agreement") for
the Assumed Liabilities, in the form annexed hereto as Exhibit F.
(g) The ▇▇▇▇ of Sale, Lease Assignments, Intellectual Property Assignments,
executed by Purchaser. (h) An opinion of legal counsel to Purchaser, in
the form annexed hereto as Exhibit G. (i) A good standing certificate
from the Secretary of State of Delaware for Purchaser. (j) Purchaser
shall deliver to the landlord of the Leased Realty immediately
available funds in the amount
of US$ 105,175.
(k) Purchaser, Flightserv and FS SunTours shall have entered into mutually
acceptable letter agreements with respect to the division of the
Solarcom LLC Equipment Leases with Flightserv and the MCI Services
Agreement dated August 27, 2004 between MCI WORLDCOM Communications,
Inc. and Flightserv.
(l) Such other documents, instruments or agreements as may be reasonably
requested by the Company.
9.4 Transfer Costs. The Company and Purchaser shall share equally (a) any
fees and disbursements in connection with the transfer of the Assets as provided
in Section 2.1, and (b) all property transfer taxes, including, without
limitation, conveyance, sales, use and stamp taxes and any recording,
registration, and other fees, which become payable in connection with the
Closing of the transactions contemplated by this Agreement.
9.5 Further Assurances. The parties hereto will, at any time on or after
the Closing Date, take any and all steps reasonably requested by the other party
to confirm title to Purchaser of the Assets (or any portion thereof), and will
do, execute, acknowledge and deliver all such further acts, deeds, conveyances,
powers of attorney and assurances as may be required for the more effective
transfer to Purchaser, or its successors or assigns, of any of the Assets and to
consummate the transactions contemplated hereby.
26
(a) A copy of all corporate resolutions authorizing the execution, delivery
and performance by Purchaser of this Agreement and the Ancillary
Documents to which it is a party and the consummation of the
transactions contemplated herein and therein, accompanied by the
certification of an authorized officer of Purchaser to the effect that
such resolutions are in full force and effect and have not been
amended, modified or rescinded.
(b) US$ 200,000, by wire transfer of immediately available funds,
representing the amount of the Company's deposit/letter of credit with
National City Bank of the Midwest under the DOT Security Agreement
Number 272 for Charter Operator in the name of FS Tours, Inc. d/b/a
Vacation Express..
(c) US$ 73,500, by wire transfer of immediately available funds,
representing an amount equal to the Company's deposit/letter of credit
with ARC.
(d) US$ 10,000, by wire transfer of immediately available funds,
representing the amount of the letter of credit to Delta Airlines.
(e) An assignment and assumption agreement (the "Assumption Agreement") for
the Assumed Liabilities, in the form annexed hereto as Exhibit F.
(f) The ▇▇▇▇ of Sale, Lease Assignments, Intellectual Property Assignments,
executed by Purchaser.
(g) An opinion of legal counsel to Purchaser, in the form annexed hereto as
Exhibit G.
(h) A good standing certificate from the Secretary of State of Delaware for
Purchaser.
(i) Purchaser shall deliver to the landlord of the Leased Realty
immediately available funds in the amount of US$ 105,175.
(j) Purchaser, Flightserv and FS SunTours shall have entered into mutually
acceptable letter agreements with respect to the division of the
Solarcom LLC Equipment Leases with Flightserv and the MCI Services
Agreement dated August 27, 2004 between MCI WORLDCOM Communications,
Inc. and Flightserv.
(k) Such other documents, instruments or agreements as may be reasonably
requested by the Company.
9.4 Transfer Costs. The Company and Purchaser shall share equally (a) any
fees and disbursements in connection with the transfer of the Assets as provided
in Section 2.1, and (b) all property transfer taxes, including, without
limitation, conveyance, sales, use and stamp taxes and any recording,
registration, and other fees, which become payable in connection with the
Closing of the transactions contemplated by this Agreement.
9.5 Further Assurances. The parties hereto will, at any time on or after
the Closing Date, take any and all steps reasonably requested by the other party
to confirm title to Purchaser of the Assets (or any portion thereof), and will
do, execute, acknowledge and deliver all such further acts, deeds, conveyances,
powers of attorney and assurances as may be required for the more effective
transfer to Purchaser, or its successors or assigns, of any of the Assets and to
consummate the transactions contemplated hereby.
Article II
INDEMNIFICATION
10.1 Indemnification by the Company. From and after the Closing Date, the
Company will indemnify, defend and hold harmless Purchaser and its officers,
directors and Affiliates from, against, and with respect to any and all action
or cause of action, loss, damage, claim, obligation, liability, penalty, fine,
cost and expense (including, without limitation, reasonable attorneys' and
consultants' fees and costs and expenses incurred in investigating, preparing,
defending against or prosecuting any litigation, claim, proceeding, demand or
request for action by any governmental or administrative entity), of any kind or
character (a "Loss") arising out of or in connection with any of the following:
(a) any breach of any of the representations or warranties, covenants or
agreements of the Company contained in or made pursuant to this Agreement
or any Ancillary Document;
(b) any Excluded Liability; and
(c) any claim made against Purchaser by any creditor of, or claimant
against the Company as a result of the waiver granted pursuant to Section
6.2.
10.2 Indemnification by Purchaser. From and after the Closing Date,
Purchaser will indemnify, defend and hold harmless the Company and each of their
officers, directors and Affiliates from, against and with respect to any Loss
arising out of or in connection with any of the following:
(a) any breach of any of the representations and warranties, covenant or
agreement of Purchaser contained in or made pursuant to this Agreement or
any Ancillary Document; and
(b) the Assumed Liabilities.
10.3 Indemnification Threshold. Neither party will be entitled to
indemnification under Section 10.1(a) or Section 10.2(a) hereof until such party
has sustained aggregate Losses under such Sections in excess of Fifty Thousand
Dollars (US$50,000.00) (the "Threshold"). If either party suffers indemnifiable
Losses in excess of the Threshold, such party will be entitled to
indemnification hereunder with respect to the aggregate amount of all such
indemnifiable Losses in excess of the Threshold. Furthermore, payments by the
Indemnifying Party shall be reduced by the amount of any insurance proceeds paid
to the Indemnified Party with respect to such Losses.
10.4 Time Limits on Indemnification. Neither party will have liability to
the other party for indemnification under Section 10.1(a) (other than in
connection with Losses with respect to breaches of the representations and
warranties contained in Section 4.6 hereto (unless notice of loss is given by
the Indemnified Party within three (3) years of Closing)) or Section 10.2(a),
unless notice of the Loss is given by the Indemnified Party to the Indemnifying
Party within eighteen (18) months of the Closing Date.
27
10.5 Notice of Third Party Claim. A party that may be entitled to be
indemnified pursuant to Section 10.1 or 10.2 (the "Indemnified Party") shall
promptly notify the other party (the "Indemnifying Party") in writing within
fifteen (15) days of notice of any pending or threatened claim or demand
asserted by a third party which the Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement ("Third
Party Claims") against the Indemnified Party, describing in reasonable detail
the facts and circumstances with respect to the subject matter of such claim or
demand; provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under this Article X
except to the extent the Indemnifying Party is materially prejudiced by such
failure. Subject to the Indemnifying Party's right to defend in good faith Third
Party Claims as hereinafter provided, the Indemnifying Party shall satisfy or
contest its obligations under this Article X within fifteen (15) days after the
receipt of written notice thereof from the Indemnified Party. If the
Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Losses that may result from a Third
Party Claim, then the Indemnifying Party shall be entitled to assume and control
the defense of such Third Party Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Party
within fifteen (15) days of the receipt of such notice from the Indemnified
Party; provided, however, that the Indemnified Party may participate in such
defense and retain separate counsel at its own cost and expense, without
prejudice to the rights of the parties to control the defense of their
respective interests. In the event the Indemnifying Party exercises the right to
undertake any such defense against any such Third Party Claim as provided above,
the Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party, at the Indemnifying
Party's expense, all witnesses, pertinent records, materials and information in
the Indemnified Party's possession or under the Indemnified Party's control
relating thereto as is reasonably required by the Indemnifying Party. Similarly,
in the event the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the Indemnifying Party shall
cooperate with the Indemnified Party in such defense and make available to the
Indemnified Party, at the Indemnifying Party's expense, all such witnesses,
records, materials and information in the Indemnifying Party's possession or
under the Indemnifying Party's control relating thereto as is reasonably
required by the Indemnified Party. No such Third Party Claim may be settled by
the Indemnifying Party without the written consent of the Indemnified Party
(which consent shall not be unreasonably withheld); provided, however that any
such settlement shall in all cases release the Indemnified Party from all
liability with respect thereto.
10.6 Claims between Purchaser and the Company. Purchaser and the Company
shall attempt to resolve between themselves any claims for indemnification
hereunder not a result of a Third Party Claim. The notification provisions of
Section 10.5 shall also apply to claims between Purchaser and the Company. Any
disputes not resolved within ninety (90) days of notice shall be settled by
arbitration as provided in Section 12.6.
10.7 Dollar Limit on Indemnification by Purchaser and the Company.
Notwithstanding anything to the contrary contained in this Agreement, the
maximum aggregate amount of indemnifiable Losses which may be recovered (a) from
the Company or its Affiliates by Purchaser and its Affiliates arising out of or
resulting from the causes enumerated in Section 10.1(a) (with the exception of
28
any Losses relating to or arising from the breach of any representation or
warranty contained in Section 4.1, 4.2, 4.3 and 4.6, or with respect to an
indemnity pursuant to Sections 10.1(b) or (c)), or (b) from Purchaser or its
Affiliates by the Company and its Affiliates arising out of or resulting from
the causes enumerated in Section 10.2(a) (with the exception of any Losses
relating to or arising from the breach of any representation or warranty
contained in Section 5.1, 5.2 and 5.3 or with respect to an indemnity pursuant
to Section 10.1(b)), shall in either case be an amount equal to One Million
Dollars (US$1,000,000).
10.8 Exclusive Remedy. Except as otherwise expressly provided herein, or
in the case of any intentional default, the provisions of this Article X shall
be the exclusive remedy of the parties hereto with respect to any Loss covered
hereby.
10.9 Limitation on Damages. The Losses covered by this Article X shall be
limited to the direct and indirect out-of-pocket costs of the Indemnified Party.
Article III
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) By the mutual written consent of Purchaser and the Company;
(b) By the Company (if the Company is not then in breach of any term of
this Agreement), if Purchaser (i) fails to perform in any material respect
its agreements contained herein required to be performed on or prior to
the Closing Date, or (ii) materially breaches any of its representations
or warranties contained herein, which failure or breach is not cured
within ten (10) days after the Company has notified Purchaser of its
intent to terminate this Agreement pursuant to this subparagraph; or (iii)
the conditions precedent to the Company's obligations have not been met;
(c) By Purchaser (if Purchaser is not then in breach of any term of this
Agreement), if the Company (i) fails to perform in any material respect
its agreements contained herein required to be performed on or prior to
the Closing Date, or (ii) materially breaches any of its representations
or warranties contained herein , which failure or breach is not cured
within ten (10) days after Purchaser has notified the Company of its
intent to terminate this Agreement pursuant to this subparagraph; or (iii)
the conditions precedent to Purchaser's obligations have not been met;
(d) By either the Company or Purchaser, if there is any order, writ,
injunction or decree of any court or governmental or regulatory agency
binding on Seller or Century which prohibits or restrains Purchaser or the
Company from consummating the transactions contemplated hereby;
(e) By either party if the Closing has not occurred by the later of (i)
thirty (30) days after the date hereof, or (ii) December 15, 2004; or
29
(f) By Purchaser pursuant to Section 12.15.
11.2 Effect on Obligations. Termination of this Agreement pursuant to this
Article shall terminate all obligations of the parties hereunder, except for the
obligations under Sections 12.1 (with respect to expenses) and 12.2 (with
respect to publicity); provided, however, that termination pursuant to Sections
11.1(b) or (c) will not relieve the defaulting or breaching party from any
liability to any other party hereto, in the case of fraud or an intentional
default of the defaulting party.
Article IV
MISCELLANEOUS
11.1 Expenses. Each party shall bear its own fees, costs and expenses
incurred in connection with the transactions contemplated hereby.
11.2 Publicity. Except as may be required by law or stock exchange rules,
no party to this Agreement shall make, or cause to be made, any press release or
public announcement in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without the
prior written consent of the other party, and the parties shall cooperate as to
the timing and contents of any such press release or public announcement.
Notwithstanding the foregoing, where an announcement is required by law or stock
exchange rules, the party required to make such an announcement shall notify the
other party of such requirement (and provide a copy of such announcement to the
other party) as soon as practicable in advance of such announcement and, to the
extent practical, take the views of the other party in respect of such
announcement into account prior to making such announcement.
11.3 Best Efforts. Each party hereto agrees to use its best efforts to
satisfy the conditions to the Closing set forth in this Agreement and otherwise
to consummate the transactions contemplated by this Agreement.
11.4 Notices. All notices, demands and other communications made hereunder
will be in writing and shall be given either by personal delivery, by nationally
recognized overnight courier (with charges prepaid) or by telecopy (with
telephone confirmation), and will be deemed to have been given or made when
personally delivered, the day following the date deposited with such overnight
courier service or when transmitted to telecopy machine and confirmed by
telephone, addressed to the respective parties at the following addresses (or
such other address for a party as shall be specified by like notice):
If to the Company:
FS Tours, Inc.
c/o RCG Companies Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
If to Purchaser:
Vacation Acquisition, LLC
▇/▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇▇▇, Colt & Mosle LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
30
12.5 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the ------------- State of Delaware, applicable to
contracts executed in and to be performed entirely within that state.
12.6 Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or any breach thereof, shall be settled by
arbitration administered by the American Arbitration Association ("AAA") in New
York City under the AAA Commercial Arbitration Rules. The panel of arbitrators
shall consist of three arbitrators. Each party shall select one arbitrator and
the two selected arbitrators shall select a third to complete the panel.
Judgment on the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The determination of the arbitrators shall be final
and binding on the parties.
12.7 Counterparts. This Agreement may be executed in one or more original
or facsimile counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
12.8 Assignment. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interest or obligations
hereunder may be assigned by any of the parties hereto without the prior written
consent of all other parties hereto, and any purported assignment without such
consent shall be void.
12.9 Third Party Beneficiaries. None of the provisions of this Agreement
or any document contemplated hereby is intended to grant any right or benefit to
any person or entity which is not a party to this Agreement.
12.10 Headings. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement.
12.11 Amendments. Any waiver, amendment, modification or supplement of or
to any term or condition of this Agreement will be effective only if in writing
and signed by all parties hereto and the parties hereto waive the right to amend
the provisions of this Section orally.
12.12 Specific Performance. The Company acknowledges that each of the
Assets is unique and that if the Company fails to consummate the transactions
contemplated by this Agreement such failure will cause irreparable harm to
Purchaser for which there will be no adequate remedy at law. Purchaser shall be
entitled, in addition to its other remedies pursuant to Article X hereof, to
specific performance of this Agreement if the Company will, without cause,
refuse to consummate the transactions contemplated by this Agreement.
31
12.13 Severability. In the event that any provision in this Agreement
shall be determined to be invalid, illegal or unenforceable in any respect, the
remaining provisions of this Agreement will not be in any way impaired, and the
illegal, invalid or unenforceable provision shall be fully severed from this
Agreement and there will be automatically added in lieu thereof a provision as
similar in terms and intent to such severed provision as may be legal, valid and
enforceable.
12.14 Entire Agreement. This Agreement, the Ancillary Documents and the
Schedules and Exhibits hereto constitute the entire contract between the parties
hereto pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings between the parties with respect
to such subject matter.
12.15 Representations and Warranties Exclusive. The representations,
warranties, covenants and agreements set forth in this Agreement and the
Ancillary Documents (including all of the Schedules and Exhibits hereto and
thereto) 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, except to
the extent set forth herein or in the Ancillary Documents (including all of the
Schedules and Exhibits hereto and thereto), it is not relying on (a) any
information set forth in any information distributed in connection with the
proposed sale of the Acquired Assets or the Business or the assumption 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 Exhibits and Schedules hereto or any
Ancillary Document, or (c) any financial projection, forecast or business plan
relating to the Business. To the extent an event or occurrence makes the
Schedules not true and accurate at any time prior to Closing, the Company shall
update such Schedules and deliver them to Purchaser prior to Closing.
12.16 Disclosure Schedules. Disclosure of any matter in any of the
Schedules hereto 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 the Company that any such matter is material.
[SIGNATURE PAGE FOLLOWS]
32
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its duly authorized officer or representative as of
the date first above written.
FS Tours, Inc.
By:
---------------------------------------
Name:
Title:
Vacation Acquisition, LLC
By:
---------------------------------------
Name:
Title:
EXHIBIT A
[Intentionally Omitted]
EXHIBIT B
▇▇▇▇ of Sale
EXHIBIT C
Lease Assignments
EXHIBIT D
Intellectual Property Assignments
EXHIBIT E
Opinion of Counsel to the Company
EXHIBIT F
Assumption Agreement
EXHIBIT G
Opinion of Counsel to Purchaser
EXHIBIT H
Releases
ASSET PURCHASE AGREEMENT
BY AND AMONG
FS TOURS, INC.
AND
VACATION ACQUISITION, LLC
DATED AS OF
December 9, 2004
TABLE OF CONTENTS
Page #
Article I DEFINITIONS.............................................................................................1
Article II SALE AND PURCHASE OF ASSETS............................................................................4
2.1 Transfer of the Assets................................................................................4
2.2 Assets................................................................................................4
2.3 Assumed Liabilities...................................................................................7
2.4 Excluded Liabilities..................................................................................7
Article III PURCHASE PRICE AND ADJUSTMENT.........................................................................8
3.1 Purchase Price........................................................................................8
3.2 [Intentionally Omitted]................................................................................
3.3 [Intentionally Omitted]...............................................................................8
3.4 [Intentionally Omitted]...............................................................................8
3.5 [Intentionally Omitted]................................................................................
3.6 Effectiveness.........................................................................................8
Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................8
4.1 Organization and Good Standing. ......................................................................8
4.2 Authority; Enforceability.............................................................................8
4.3 No Conflict or Breach.................................................................................9
4.4 Governmental Consents and Approvals...................................................................9
4.5 Litigation............................................................................................9
4.6 Valid Title; No Liens................................................................................10
4.7 Brokers..............................................................................................10
4.8 Tax Matters..........................................................................................10
4.9 Financial Statements; Undisclosed Liabilities........................................................11
4.10 Receivables..........................................................................................12
4.11 Consents and Approvals...............................................................................12
4.12 Permits/Compliance with Laws.........................................................................12
4.13 Employee Benefit Plans; ERISA........................................................................12
4.14 Contracts............................................................................................13
4.15 Condition and Sufficiency of Assets..................................................................14
4.16 Environmental Matters................................................................................14
4.17 Real Property........................................................................................15
4.18 Labor Matters........................................................................................15
4.19 Insurance............................................................................................16
4.20 Intellectual Property................................................................................16
4.21 Customer Relationships...............................................................................17
4.22 Customer Deposits and Pre-Paid Expenses..............................................................17
4.23 Full Disclosure......................................................................................17
Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................17
5.1 Organization and Good Standing; Governing Documents..................................................17
5.2 Authority; Enforceability............................................................................17
5.3 No Conflict or Breach................................................................................18
5.4 Governmental Consents and Approvals..................................................................18
5.5 Litigation...........................................................................................18
5.6 Brokers..............................................................................................18
Article VI COVENANTS.............................................................................................18
6.1 Conduct of Business..................................................................................18
6.2 Bulk Transfer Laws...................................................................................19
6.3 Employees............................................................................................19
6.4 Confidentiality; Tax Disclosure......................................................................19
6.5 Notification of Certain Matters......................................................................20
6.6 Access to Books and Records Following the Closing....................................................20
6.7 Non-Competition; Non-Solicitation....................................................................21
6.8 Credit Card Processing...............................................................................22
6.9 Remaining Transitional Arrangement...................................................................22
6.10 [Intentionally Omitted]................................................................................
6.11 Operating Account Balances...........................................................................22
6.12 FS SunTours Credit...................................................................................22
6.13 FS SunTours Amounts Forgiven.........................................................................23
6.14 FS SunTours Prepayments..............................................................................23
Article VII CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS......................................................23
7.1 Representations and Warranties.......................................................................23
7.2 Compliance with Covenants............................................................................23
7.3 Absence of Litigation................................................................................23
7.4 Due Diligence........................................................................................23
7.5 FS SunTours Payable..................................................................................23
7.6 Termination of DBA Certificates......................................................................23
7.7 Permits..............................................................................................23
7.8 Company's Affiliate Guarantee........................................................................24
7.9 Transitional Arrangements............................................................................24
7.10 Ancillary Documents..................................................................................24
Article VIII CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS...................................................24
8.1 Representations and Warranties.......................................................................24
8.2 Compliance with Covenants............................................................................24
8.3 Absence of Litigation................................................................................24
8.4 Purchaser Affiliate Guarantee........................................................................24
8.5 Ancillary Agreements.................................................................................24
Article IX CLOSING...............................................................................................24
9.1 Closing..............................................................................................24
9.2 Deliveries by Seller.................................................................................25
9.3 Deliveries by Purchaser..............................................................................26
9.4 Transfer Costs.......................................................................................26
9.5 Further Assurances...................................................................................26
Article X INDEMNIFICATION........................................................................................27
10.1 Indemnification by the Company.......................................................................27
10.2 Indemnification by Purchaser.........................................................................27
10.3 Indemnification Threshold............................................................................27
10.4 Time Limits on Indemnification.......................................................................27
10.5 Notice of Third Party Claim..........................................................................28
10.6 Claims between Purchaser and the Company.............................................................28
10.7 Dollar Limit on Indemnification by Purchaser and the Company.........................................28
10.8 Exclusive Remedy. ..................................................................................29
10.9 Limitation on Damages................................................................................29
Article XI TERMINATION...........................................................................................29
11.1 Termination..........................................................................................29
11.2 Effect on Obligations................................................................................30
Article XII MISCELLANEOUS........................................................................................30
12.1 Expenses.............................................................................................30
12.2 Publicity............................................................................................30
12.3 Best Efforts.........................................................................................30
12.4 Notices..............................................................................................30
12.5 Governing Law........................................................................................31
12.6 Dispute Resolution...................................................................................31
12.7 Counterparts.........................................................................................31
12.8 Assignment...........................................................................................31
12.9 Third Party Beneficiaries............................................................................31
12.10 Headings..........................................................................................31
12.11 Amendments........................................................................................31
12.12 Specific Performance..............................................................................31
12.13 Severability......................................................................................32
12.14 Entire Agreement..................................................................................32
12.15 Representations and Warranties Exclusive..........................................................32
12.16 Disclosure Schedules..............................................................................32
EXHIBITS
Exhibit A: [Intentionally Omitted]
Exhibit B: ▇▇▇▇ of Sale
Exhibit C: Lease Assignments
Exhibit D: Intellectual Property Assignments
Exhibit E: Opinion of Counsel to the Company
Exhibit F: Assumption Agreement
Exhibit G: Opinion of Counsel to Purchaser
Exhibit H: Releases
Exhibit I: Transitional Services Agreement
SCHEDULES
Schedule 2.2(a)(ii) Tangible Personal Property and Leases Related Thereto
Schedule 2.2(a)(iii) Contracts Other Than Excluded Contracts
Schedule 2.2(b)(iv) Excluded Contracts
Schedule 2.2(b)(ix) Transitory Arrangements
Schedule 2.3(i) Assumed Liabilities (Assumed Payables and Assumed Contracts)
Schedule 4.4 Company Governmental Consents and Approvals
Schedule 4.5 Litigation
Schedule 4.6 Liens
Schedule 4.8 Tax Matters
Schedule 4.9(a) Financial Information-GAAP Exceptions
Schedule 4.9(b) Material Adverse Effect
Schedule 4.10 Receivables
Schedule 4.11 Consents
Schedule 4.12 Permits/Compliance With Laws
Schedule 4.13 Employee Benefit Plans/ERISA
Schedule 4.14(a) Material Contracts
Schedule 4.14(b) Defaults Under Material Contracts
Schedule 4.14(c) Specific Contract Disclosures
Schedule 4.15 Sufficiency of Assets
Schedule 4.16 Environmental Matters
Schedule 4.17(b) Leased Realty
Schedule 4.18(a) Employees
Schedule 4.18(b) Collective Bargaining and Other Employment Contracts
Schedule 4.18(c) Grievances and Proceedings
Schedule 4.18(d) Labor Actions
Schedule 4.18(f) Hostile Work Environment, Sexual Discrimination and Racial
Discrimination
Schedule 4.19 Insurance
Schedule 4.20(a) Registered Intellectual Property
Schedule 4.20(b) Intellectual Property Actions or Proceedings
Schedule 4.20(c) Rights in Business Intellectual Property
Schedule 4.20(d) Misappropriation of Intellectual Property
Schedule 4.21 Customer Relationships
Schedule 5.4 Purchaser Governmental Consents and Approvals
Schedule 6.3 Employees to Whom Purchaser will Make Offers of Employment