Exhibit 10.49
XXXXXXXXXX.XXX LTD.
- AND -
XXXX XXXXXX, XXX XXXXXX,
THE XXX AND XXXXX XXXXXX CHARITABLE
REMAINDER UNITRUST, THE XXXX AND
XXXX XXXXXX CHARITABLE REMAINDER UNITRUST
AND ELDORADO RESORTS, LLC
________________________________________________________________________________
PURCHASE AGREEMENT
November 1, 1999
________________________________________________________________________________
Xxxxxxx Xxxxx & Xxxxxxxxx
Scotia Plaza, Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
THIS PURCHASE AGREEMENT is made as of the 1st day of November, 1999.
AMONG:
XXXX XXXXXX, of the City of Sparks, in the State of Nevada, THE XXXX
AND XXXX XXXXXX CHARITABLE REMAINDER UNITRUST, of the City of Sparks,
in the State of Nevada, XXX XXXXXX, of the City of Reno, in the State
of Nevada, THE XXX AND XXXXX XXXXXX CHARITABLE REMAINDER UNITRUST, of
the City of Reno, in the State of Nevada, and ELDORADO RESORTS, LLC,
of the City of Reno, in the State of Nevada,
(collectively, the "Vendors")
- and -
XXXXXXXXXX.XXX LTD. a corporation incorporated pursuant to the laws of
the Province of Ontario
(the "Purchaser")
RECITALS:
A. Express Vacations, LLC (the "Company") is a limited liability company under
Chapter 86 of the Nevada Revised Statutes owned by persons designated under
its articles of organization as "Members".
B. The ownership interest of each Member in the capital and profits of the
Company is, pursuant to the operating agreement of the Company, in the form
of units of membership interests ("Units") evidenced by certificates issued
in the name of each Member denominating the number of Units held by each
such Member.
C. Xxxx Xxxxxx and Xxx Xxxxxx are the managers of the Company, and the other
Members are not actively involved in the management of the Company.
D. The parties hereto are desirous of entering into this Agreement to effect
the transfer of Units from the Vendors to the Purchaser for good and
valuable consideration.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained and for other good and valuable consideration
(the receipt and adequacy whereof is hereby acknowledged) the parties hereto
agree as follows:
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ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
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1.1 Definitions - Whenever used in this Agreement, unless there is something
inconsistent in the subject matter or context, the following words and terms
shall have the meanings set out below:
"Act" means the Nevada Revised Statutes, Chapters 78 and 86 as in effect on
the date hereof.
"Accounts Receivable" means any and all accounts receivable, bills
receivable, trade accounts, book debts and insurance claims of the Company
and recorded as receivable in the Books and Records of the Company and any
other amount due to the Company including any refunds and rebates and the
benefit of all security (including cash deposits), guarantees and other
collateral held by the Company.
"Accrued Liabilities" means any and all accrued liabilities of the Company
incurred in the ordinary course of business, including accruals for
vacation pay, customer rebates and allowances for product returns.
"Affiliate" has the meaning ascribed thereto in the Act.
"Agreement" means this Purchase Agreement, including all schedules and all
instruments supplementing, amending or confirming this Agreement and
references to "Article" or "Section" mean and refer to the specified
article or section of this Agreement.
"arm's length" means arm's length as defined in the Tax Act.
"Associate" has the meaning ascribed thereto in the Act.
"Audited Financial Statements" means the audited balance sheet of the
Company as at September 30, 1999 and the accompanying audited income
statement for the period August 13, 1998 to September 30, 1999.
"Balance Sheet" means the balance sheet of the Company as at September 30,
1999 forming part of the Financial Statements.
"Benefit Plans" means all plans, arrangements, agreements, programs,
policies or practices, whether oral or written, formal or informal,
registered or unregistered, funded or unfunded, which the Company is a
party to or bound by or under which the Company has any liability or
contingent liability, relating to:
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(a) retirement savings or pensions, including without limitation, any
defined benefit pension plan, defined contribution pension plan, group
registered retirement savings plan or supplemental pension or
retirement plan; or
(b) any bonus, profit sharing, deferred compensation, incentive
compensation, hospitalization, health, dental, disability,
unemployment insurance, vacation pay, severance pay or other benefit
plan with respect to any of the Employees or former Employees of the
Company, individuals working on contract with them or other
individuals providing services to them of a kind normally provided by
employees and all statutory plans with which the Company is required
to comply.
"Books and Records" means all books and records of the Company, including
without limitation, all data and information stored on computer-related
media.
"Business" means the business currently and heretofore carried on by the
Company consisting of the production, marketing and sale of travel and
related products and the operation of a call centre.
"Business Day" means a day, other than a Saturday or Sunday, on which the
principal commercial banks located in the Cities of Toronto, Ontario and
Reno, Nevada are open for business during normal banking hours.
"Claims" means any claim, demand, action, suit, litigation, arbitration,
investigation, proceeding, cause of action, damage, loss, cost, liability
or expense, including without limitation, reasonable professional fees and
all costs incurred in investigating or pursuing any of the foregoing or any
proceeding relating to any of the foregoing.
"Closing" means the completion of the sale to and purchase by the Purchaser
of the Purchased Units under this Agreement.
"Closing Date" means the 1/st/ day of November, 1999 or such other date as
the Parties may agree in writing as the date upon which Closing shall take
place.
"Closing Time" means 11:00 a.m. Pacific standard time on the Closing Date
or such other time on such date as the Parties may agree in writing as the
time at which Closing shall take place.
"Collective Agreements" means the collective agreements by which the
Company is bound and all related documents including all benefit
agreements, letters of understanding, letters of intent and other written
communications with bargaining agents for the Employees which impose any
obligations upon the Company or which set out the understanding of the
parties with respect to the meaning of any provisions of such collective
agreements.
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"Company" means Express Vacations, LLC, of the city of Reno, in the State
of Nevada.
"Contracts" means all contracts, indentures, mortgages, obligations,
instruments, licences, leases, agreements, commitments, entitlements and
engagements of the Company whether written or oral and includes all
quotations, orders or tenders for contracts which remain open for
acceptance and any manufacturers' or suppliers' warranty, guarantee or
commitment (express or implied).
"control" has the meaning ascribed thereto in the Act.
"Eldorado" means Eldorado Resorts, LLC.
"Employees" means all persons employed by the Company.
"Employment Agreements" means collectively the employment agreements to be
signed on Closing by the Company and Xxxxxx and by the Company and Xxxxxx.
"Encumbrance" means any and all mortgages, pledges, liens, charges,
security interests, adverse claims, demands, voting trusts, proxies and
encumbrances of whatsoever nature and howsoever incurred.
"Environment" means the environment or natural environment as defined in
any Environmental Law and includes without limitation, air, surface, water,
ground water, land surface, soil, subsurface strata, a sewer system and the
environment in the workplace.
"Environmental Approvals" means all permits, certificates, licences,
authorizations, consents, instructions, registrations, directions or
approvals issued or required by Governmental Authorities pursuant to
Environmental Laws with respect to the operation of the Company or its
assets.
"Environmental Laws" means all Laws relating in full or in part, to the
protection of the Environment, product liability and employee and public
health and safety and includes without limitation, Environmental Laws
relating to the storage, generation, use, handling, manufacture,
processing, labelling, advertising, sale, display, transportation,
treatment, Release and disposal of Hazardous Substances.
"Equipment Contracts" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other similar
agreements relating to equipment used by the Company.
"Xxxxxx" means Xxxx Xxxxxx, of the City of Sparks, in the State of Nevada.
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"Xxxxxx Trust" means The Xxxx and Xxxx Xxxxxx Charitable Remainder
Unitrust.
"Financial Statements" means the balance sheet of the Company as at
September 30, 1999 and the accompanying income statement for the period
August 13, 1998 to September 30, 1999, copies of which are attached as
Schedule 4.14.
"Fixed Assets" means the fixed assets, machinery, equipment, fixtures,
furniture, furnishings, vehicles, material handling equipment, implements,
parts, tools, jigs, discs, moulds, patterns and tooling, spare parts owned
or used or held by the Company, including without limitation, those in
storage or in transit and other tangible property and facilities used by
the Company whether located in or on the premises of the Company or
elsewhere, including the assets listed and described in Schedule 4.21.
"Governmental Authority" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal, crown
corporation or court or other law, rule or regulation-making entity having
or purporting to have jurisdiction on behalf of any nation or province or
state or other subdivision thereof or any municipality, district or other
subdivision thereof.
"Governmental Authorization" means all authorizations, approvals, orders,
consents or filings, including Environmental Approvals, licences or permits
issued to the Company by any Governmental Authorities.
"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance, dangerous
substance or dangerous good as defined, judicially interpreted or
identified in any Environmental Law.
"Intellectual Property" means all patents, copyrights, trade-marks, trade-
names, industrial designs, proprietary information, trade secrets and all
other intellectual property owned by, licensed to or used by the Company,
including applications and registrations for any of the foregoing and
renewals, divisions, extensions and reissues, where applicable, pertaining
thereto.
"Inventories" means all inventories of every kind and nature and
wheresoever situate owned by the Company including without limitation, all
inventories of raw materials, work-in progress, finished goods, operating
supplies, packaging materials and travel credits.
"Laws" means all applicable laws, by-laws, rules, regulations, orders,
ordinances, protocols, codes, guidelines, policies, notices, directions and
judgments or other requirements of any Governmental Authority.
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"Leased Premises" means the premises located at 0000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxx, Xxxxxx.
"Material Contract" means; (a) the Equipment Contracts and Benefit Plans;
(b) any other Contract involving aggregate annual payments to or by the
Company in excess of US$25,000 or which provides for the lease of real
property; (c) any commitment to or by the Company that may reasonably
extend beyond one year which does not terminate or cannot be terminated
without penalty on less than three months' notice; and (d) any Contract
which is outside the ordinary course of business of the Company.
"Member" has the meaning ascribed thereto in Recital B.
"Net Income" means gross sales and commissions less expenses (including
interest expense) but before deduction of income tax.
"Net Working Capital" means current assets less current liabilities all
calculated in accordance with generally accepted accounting principles.
"Non-Arm's Length Person" means a Person who is not at arm's length to the
Party in question.
"Notice" has the meaning ascribed thereto in section 10.3.
"Other Amounts" has the meaning ascribed thereto in section 9.1(a).
"Parties" means the Vendors and the Purchaser and "Party" means any one of
them.
"Person" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, Governmental Authority and a natural
person in such person's capacity as trustee, executor, administrator or
other legal representative.
"Purchased Units" has the meaning ascribed thereto in section 2.1(a).
"Purchaser" means Xxxxxxxxxx.xxx Ltd.
"Release" has the meaning prescribed in any Environmental Law and includes
without limitation, any release, spill, leak, pumping, pouring, emission,
emptying, discharge, injection, escape, leaching, disposal, dumping,
deposit, spraying, burial, abandonment, incineration, seepage or placement.
"Remedial Order" means any administrative complaint, direction, order or
sanction issued, filed or imposed by any Governmental Authority pursuant to
any
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Environmental Laws and includes without limitation, any order requiring
any remediation or clean-up of any Hazardous Substance or requiring that
any Release or any other activity be reduced, modified or eliminated.
"Xxxxxx" means Xxx Xxxxxx, of the City of Reno, in the State of Nevada.
"Xxxxxx Trust" means The Xxx and Xxxxx Xxxxxx Charitable Remainder
Unitrust.
"Tax Act" means the Internal Revenue Code.
"Tax Returns" means and includes without limitation, all returns, reports,
declarations, elections, notices, filings, information returns and
statements filed in respect of Taxes payable by any Party.
"Taxes" means and includes without limitation, all taxes, duties, fees,
premiums, assessments, imposts, levies and other charges of any kind
whatsoever imposed by any Governmental Authority, together with all
interest, penalties, fines, additions to tax or other additional amounts
imposed in respect thereof, including without limitation, those levied on
or measured by or referred to as income, gross receipts, profits, capital,
transfer, land transfer, sales, goods and services, use, value-added,
excise, stamp, withholding, business, franchising, property, payroll,
employment, health, social services, education and social security taxes,
all surtaxes, all customs duties and import and export taxes, all license,
franchise and registration fees and all employment insurance, health
insurance and United States and other government pension plan premiums.
"Transaction" means the transaction of purchase and sale contemplated by
this Agreement.
"Travelbyus Shares" has the meaning ascribed thereto in section 2.1.
"TSE" means The Toronto Stock Exchange.
"Unit" has the meaning ascribed thereto in Recital B.
"Vendors" means, collectively, Eldorado, Xxxxxx, the Xxxxxx Trust, Xxxxxx
and the Xxxxxx Trust.
1.2 Certain Rules of Interpretation - In this Agreement and the Schedules:
(a) Time - time is of the essence in the performance of the Parties'
respective obligations.
(b) Currency - unless otherwise specified, all references to money amounts
are to United States currency.
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(c) Headings - the descriptive headings of Articles and sections are
inserted solely for convenience of reference and are not intended as
complete or accurate descriptions of the content of such Articles or
sections.
(d) Singular, etc. - the use of words in the singular or plural or with a
particular gender shall not limit the scope or exclude the application
of any provision of this Agreement to such person or persons or
circumstances as the context otherwise permits.
(e) Consent - whenever a provision of this Agreement requires an approval
or consent by a Party and notification of such approval or consent is
not delivered within the applicable time limit, unless otherwise
specified, the Party whose consent or approval is required shall be
conclusively deemed to have withheld its approval or consent.
(f) Calculation of Time - unless otherwise specified, time periods within
or following which any payment is to be made or act is to be done
shall be calculated by excluding the day on which the period commences
and by including the day on which the period ends and by extending the
period to the next Business Day following if the last day of the
period is not a Business Day.
(g) Business Day - whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a day
other than a Business Day, such payment shall be made or action shall
be taken on the next Business Day following such day.
1.3 Knowledge - In this Agreement, any reference to the knowledge of a Party
shall mean to the best of the knowledge, information and belief of Xxxxxx and
Xxxxxx after, in the case of Xxxxxx, the Xxxxxx Trust, Xxxxxx and the Xxxxxx
Trust, having reviewed all relevant records.
1.4 Entire Agreement - This Agreement together with the other agreements and
documents to be delivered pursuant to this Agreement constitute the entire
agreement among the Parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties and there are no warranties,
representations or other agreements among the Parties in connection with the
Transaction except as specifically set forth in this Agreement and any document
delivered pursuant to this Agreement. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
Parties to be bound thereby.
1.5 Applicable Law and Attornment - This Agreement shall be construed in
accordance with the laws of the State of Nevada and the laws of the United
States applicable therein and shall be treated in all respects as a Nevada
contract.
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1.6 Accounting Principles - Any reference in this Agreement to generally
accepted accounting principles refers to generally accepted accounting
principles that have been established in the United States of America, including
those approved from time to time by the Financial Accounting Standards Board or
any successor body thereto and all accounting terms not otherwise defined in
this Agreement have the meanings assigned thereto in accordance with such
generally accepted accounting principles.
1.7 Tender - Any tender of documents or money under this Agreement may be
made upon the Parties or their respective counsel and money may be tendered by
official bank draft drawn upon a bank or by negotiable cheque payable in United
States funds and certified by a bank or trust company or with the consent of the
Party entitled to payment by wire transfer of immediately available funds to the
account specified by that Party.
1.8 Disclosure - The Parties acknowledge that any information, matter,
circumstance, agreement, document or other thing disclosed in any Schedule to
this Agreement shall be deemed to be disclosed in every other Schedule for
purposes of the representations and warranties of the Parties.
1.9 Schedules - The Schedules to this Agreement as listed below are an integral
part of this Agreement:
Schedule Description
-------- -----------
Schedule 3.2 Form of Promissory Note
Schedule 4.8 Registrations of the Company
Schedule 4.10 Capitalization of the Company
Schedule 4.11 Intangible Assets of the Company
Schedule 4.13 Licences
Schedule 4.14 Financial Statements
Schedule 4.15 Letters of Credit
Schedule 4.16 Changes or Unusual Transactions
Schedule 4.20 Material Suppliers and Customers of the Company
Schedule 4.21 Fixed Assets of the Company
Schedule 4.24 Governmental Authorizations of the Company
Schedule 4.26 Intellectual Property of the Company
Schedule 4.27 Equipment Contracts of the Company
Schedule 4.30 Employees of the Company
Schedule 4.32 Benefit Plans of the Company
Schedule 4.33 Insurance of the Company
Schedule 4.34 Material Contracts of the Company
Schedule 4.41 Bank Accounts of the Company
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ARTICLE 2
ACQUISITION TRANSACTION
-----------------------
2.1 Purchase and Sale of the Purchased Units - Subject to the terms and
conditions herein, at the Closing Time, the Parties shall effect the following
transactions:
(a) the Vendors shall sell, transfer and assign to the Purchaser and the
Purchaser shall purchase and accept the assignment of 100% of the
issued and outstanding Units of the Company, free and clear of any and
all Encumbrances (the "Purchased Units"), in exchange for the sum of
US$2,000,000 (the "Cash Component") and 3,462,000 common shares of the
Purchaser. The common shares of the Purchaser to be issued are
hereinafter referred to as the "Travelbyus Shares".
(b) the Vendors shall transfer and deliver to the Purchaser certificates
representing the Purchased Units duly endorsed in blank for transfer
or accompanied by irrevocable security transfer powers of attorney
duly executed in blank together with a new certificate representing
the Purchased Units registered in the name of the Purchaser; and
(c) the Purchaser shall deliver to the Vendors share certificates
representing the Travelbyus Shares registered as set out in section
3.2(c).
2.2 Place of Closing - The Closing shall take place at the Closing Time at the
offices of Xxxxxxx Xxxxx & Xxxxxxxxx, Barristers and Solicitors, 00 Xxxx Xxxxxx
Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx X0X 0X0 or at such other place as may be
agreed upon by the Vendors and the Purchaser.
ARTICLE 3
PURCHASE PRICE AND PAYMENT
--------------------------
3.1 Purchase Price - The aggregate purchase price for the Purchased Units (the
"Purchase Price") shall be US$6,000,000, to be satisfied as set out in Section
3.2.
3.2 Satisfaction of Purchase Price - At the Time of Closing, the Purchaser
shall satisfy and pay the Purchase Price to the Vendors as follows:
(a) The Purchaser shall deliver certified cheques or bank drafts to the
Vendors in the following amounts:
(i) Xxxxxx - US$333,334
(ii) Xxxxxx - US$333,333
(iii) Eldorado - US$333,333
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(b) The Purchaser shall deliver promissory notes to each of the Vendors in
the principal amounts set out below representing in aggregate
US$1,000,000 of the Cash Component in each case bearing interest at a
rate of 5% per annum and payable in equal quarterly instalments on
January 29, 2000, April 29, 2000, July 29, 2000 and October 29, 2000,
each such note to be in the form attached hereto as Schedule 3.2:
(i) Xxxxxx - US$333,334
(ii) Xxxxxx - US$333,333
(iii) Eldorado - US$333,333
(c) The Purchaser shall deliver to the Vendors share certificates
representing the Travelbyus Shares as follows:
(i) 577,000 of such shares issued in the name of Xxxxxx;
(ii) 577,000 of such shares issued in the name of the Xxxxxx Trust;
(iii) 577,000 of such shares issued in the name of Xxxxxx;
(iv) 577,000 of such shares issued in the name of the Xxxxxx Trust;
and
(v) 1,154,000 of such shares issued in the name of Eldorado.
3.3 Reduction in Purchase Price - (a) The parties agree that the Purchase Price
is based on the Net Income of the Company for the period ended September 30,
1999 as shown on the Audited financial statements being at least US$1,000,000.
In the event that the Net Income of the Company for the period ended September
30, 1999 as shown on the Audited financial statements is less than US$1,000,000,
the parties agree to reduce the Purchase Price to six times the Net Income and
the parties agree that the Purchaser may set off the difference between the
Purchase Price and six times such Net Income against amounts owing under the
promissory notes referred to in Section 3.2(b).
(b) The parties agree that if Net Working Capital of the Company as at the
Closing Date is less than US$250,000, the Purchaser may set off the difference
between US$250,000 and the Net Working Capital against amounts owing under the
promissory notes referred to in section 3.2(b).
(c) All amounts payable by the Vendors to the Purchaser hereunder that exceed
the amount set-off by the Purchaser pursuant to this section 3.3 shall be paid
by the Vendors to the Purchaser forthwith after demand therefor.
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ARTICLE 4
A. REPRESENTATIONS AND WARRANTIES CONCERNING THE VENDORS
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The Vendors, on a joint and several basis, represent and warrant to the
Purchaser as follows and acknowledge that the Purchaser is relying on their
representations and warranties in entering into this Agreement:
4.1 Right to Sell - They are the sole registered and beneficial owners of their
respective Purchased Units with good and marketable title thereto free and clear
of all Encumbrances. They have the exclusive right to sell, transfer and assign
their respective Purchased Units to the Purchaser as provided in this Agreement.
Their respective Purchased Units are not subject to the terms of any
shareholders' agreement, voting trust or voting agreement.
4.2 Enforceability of Obligations - This Agreement has been executed and
delivered by them and constitutes a valid and binding obligation enforceable
against them in accordance with its terms, save and except that the enforcement
thereof may be limited by applicable bankruptcy, insolvency and other laws of
general application affecting the enforcement of creditors' rights and except
that equitable remedies such as specific performance and injunction are
available only in the discretion of a court of competent jurisdiction.
4.3 Absence of Conflicting Agreements - They are not a party to, bound or
affected by or subject to any Contract or Law which would be violated,
contravened, breached by or under which default would occur or an Encumbrance
would be created as a result of the execution, delivery and performance of this
Agreement or any other agreement to be entered into under the terms of this
Agreement.
4.4 Non-Arm's Length Transactions - Neither they nor any Person not dealing at
arm's length with them:
(a) owns, directly or indirectly, any interest in or is an employee,
consultant to or agent of, an entity which is a competitor, lessor,
lessee, customer or supplier of the Company;
(b) owns, directly or indirectly, any interest in any property or asset of
the Company;
(c) is a party to any Contract with the Company, save and except as
contemplated by the Employment Agreements; or
(d) has any indebtedness, liability or obligation to the Company.
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The Company is not indebted or otherwise obligated to them or any Person not
dealing at arm's length with them.
4.5 Residence of the Vendors - They are residents of the United States of
America.
4.6 No Litigation - There are no outstanding Claims at law or in equity or
before any Governmental Authority pending or to their knowledge, proposed or
threatened, which would prevent them from completing the Transaction.
4.7 Brokers - They have not entered into any Contract that would entitle any
Person to a Claim against the Purchaser or the Company for any broker's
commission, finder's fee, agent's fee, fee for financial intermediary services
or any like payment in respect of the Transaction.
B. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
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The Vendors jointly and severally represent and warrant to the Purchaser as
follows and acknowledge that the Purchaser is relying on the Vendors'
representations and warranties in entering into this Agreement:
4.8 Incorporation and Registration - The Company is a limited liability company
duly organized and validly existing under the laws of its jurisdiction of
organization and has all necessary power, authority and capacity to own its
property and assets and to carry on its business as currently conducted. Neither
the nature of its business nor the location or character of the property owned
or leased by the Company requires it to be registered, licensed or otherwise
qualified as a foreign corporation in any jurisdiction save and except as
provided in Schedule 4.8.
4.9 Subsidiaries - The Company does not own or have any interest in any
securities of any other corporation.
4.10 Capitalization - The authorized capital and the issued capital of the
Company is as set forth in Schedule 4.10. All of the outstanding Units in the
capital of the Company have been duly and validly issued and are outstanding as
fully paid and non-assessable Units of the Company. No options, warrants or
other rights to purchase Units or other securities of the Company and no
securities or obligations convertible into or exchangeable for Units or other
securities of the Company have been authorized or agreed to be issued or are
outstanding.
4.11 Title to Assets - The Company is the sole beneficial and (where its
interests are registrable) the sole registered owner of its assets and interests
in assets, real and personal, with good and valid title thereto, free and clear
of all Encumbrances. All of the material assets of the Company are situated in
the City of Reno, in the State of Nevada. For greater certainty, these material
assets include the telephone number 0-000-000-0000, the internet site operated
by the Business and the business names and other intangible assets listed on
Schedule 4.11.
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4.12 Absence of Conflicting Agreements - The Company is not a party to, bound or
affected by or subject to any Contract or Law which would be violated,
contravened, breached by or under which default would occur or an Encumbrance
would be created as a result of the execution, delivery and performance of this
Agreement or any other agreement to be entered into under the terms of this
Agreement.
4.13 Regulatory Approvals - No Governmental Authorization is required on the
part of the Vendors or the Company in connection with the execution, delivery
and performance of this Agreement or any other agreements to be entered into
under the terms of this Agreement except as set out on Schedule 4.13.
4.14 Financial Statements - The Financial Statements have been prepared in
accordance with generally accepted accounting principles and present fairly:
(i) all of the assets, liabilities and financial position of the
Company as at the dates indicated; and
(ii) the sales, earnings, results of operation and changes in cash
flows of the Company for all of the dates indicated.
4.15 Absence of Undisclosed Liabilities - Since the date of the Balance Sheet,
the Company has not incurred any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) which continue to be outstanding other than
those which have been incurred in the ordinary course of business, none of which
is materially adverse. A list of all outstanding letters of credit of the
Company is attached hereto as Schedule 4.15. The Company does not have any
liability, obligation to or agreement with any Person not dealing at arm's
length with the Company.
4.16 Absence of Changes or Unusual Transactions - Since the date of the Balance
Sheet, the Company has carried on Business and conducted its operations and
affairs only in the ordinary and normal course consistent with past practice and
there has not been:
(a) any material change in the financial condition, operations or
prospects of the Company, other than changes in the ordinary course of
business, none of which has been materially adverse;
(b) any damage, destruction, loss, labour trouble or other event,
development or condition of any character (whether or not covered by
insurance) materially and adversely affecting the business, assets,
properties or future prospects of the Company;
(c) any transfer, assignment, sale or other disposition of any of the
assets shown or reflected in the Balance Sheet or cancellation of any
debts or entitlements except in each case in the ordinary course of
business;
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(d) any assumption of any obligation or liability (fixed or contingent),
except unsecured current obligations and liabilities incurred in the
ordinary course of business;
(e) any discharge or satisfaction of any Encumbrance or payment of any
obligation or liability (fixed or contingent) other than liabilities
included in the Balance Sheet and liabilities incurred since the date
of the Balance Sheet in the ordinary course of business;
(f) any operating loss or any extraordinary loss, waiver or omission to
take any action in respect of any rights of substantial value or
entering into any commitment or transaction not in the ordinary course
of business where such loss, rights, commitment or transaction is or
would be material in relation to the Company;
(g) any grant of any bonuses, whether monetary or otherwise or the making
or announcement of any general wage or salary increase in respect of
Employees or change in the terms of employment of any Employee except
in the ordinary course of business, consistent with past practice;
(h) the hiring or dismissal of any Employee;
(i) any Encumbrance on any of the assets or property of the Company
whether tangible or intangible;
(j) directly or indirectly, any declaration or payment of any dividend or
declaration or making of any other payments or distributions on or in
respect of any of the Units of the Company or directly or indirectly
the purchase or other acquisition of any of the Units of the Company;
or
(k) the authorization, agreement or other commitment to do any of the
foregoing.
4.17 Reserves and Accruals - The reserves and Accrued Liabilities of the Company
disclosed on or reflected in the Financial Statements and the Books and Records
of the Company are sufficient in all respects to provide for the liabilities in
respect of which they have been established and have been established in
accordance with generally accepted accounting principles.
4.18 No Joint Venture Interests, etc. - The Company is not a partner,
beneficiary, trustee, co-tenant, joint venturer or otherwise a participant in
any partnership, trust, joint venture, co-tenancy or other similar jointly owned
business undertaking and the Company does not have any other significant
investment interests in any business owned or controlled by any third Person.
-16-
4.19 Absence of Guarantees - The Company has not given or agreed to give or is a
party to or bound by any guarantee or indemnity in respect of indebtedness or
other obligations of any Person or any other commitment by which the Company is,
or is contingently, responsible for such indebtedness or other obligations.
4.20 Major Suppliers and Customers - Schedule 4.20 sets forth a comprehensive
listing of each material supplier of goods and services to, and each material
customer of, the Company. To the knowledge of the Vendors, no material supplier
or customer has any intention of changing its relationship or the terms upon
which it conducts business with the Company as a result of the Transactions.
4.21 Condition of Assets - The Fixed Assets are in good condition, repair and
proper working order, having regard to their use and age and such assets have
been properly and regularly maintained, reasonable wear and tear excepted. The
Fixed Assets listed in Schedule 4.21 are all of the Fixed Assets used to earn
income on the Financial Statements.
4.22 Inventories - All Inventories are valued on the books of the Company at the
lower of out of pocket cost or net recoverable value.
4.23 Collectibility of Accounts Receivable - The Accounts Receivable are bona
fide, good and collectible at the aggregate recorded amounts within 120 days of
the Closing Date, except to the extent of any reserves provided for such
accounts in the Books and Records of the Company, which reserves have been
established in accordance with generally accepted accounting principles and are
adequate. The Accounts Receivable are not subject to any defence, counterclaim
or set off.
4.24 Business in Compliance with Law - The operations of the Company have been
and are now being conducted in compliance with all applicable Laws of each
jurisdiction in which the Company carries on or has carried on business and the
Company has not received notice of any alleged breach of any such Laws. The
Governmental Authorizations set forth in Schedule 4.24 are all authorizations
required by the Company to carry on Business in compliance with applicable Laws.
Such Governmental Authorizations are in full force and effect in accordance with
their terms, there have been no violations thereof and no proceedings are
pending or to the knowledge of the Vendors, threatened, which could result in
their revocation or limitation.
4.25 Restrictive Covenants - The Company is not a party to or bound or affected
by any commitment, agreement or document containing any covenant expressly
limiting the freedom of the Company to compete in any line of business anywhere
in the world, transfer or move any of its assets or operations or which
materially or adversely affects the business practices, operations or conditions
of the Company or the continued operation of Business after Closing on
substantially the same basis as the Business is presently carried on.
-17-
4.26 Intellectual Property - Schedule 4.26 sets forth a complete list and brief
description of all Intellectual Property which has been registered or for which
applications for registration have been filed, including the name of the
registered and beneficial owner of such registrations and applications. The
Company has the exclusive right to use and is the exclusive owners of all right,
title and interest in and to the Intellectual Property (with no breaks in the
chain of title and free and clear of any Encumbrance of any kind whatsoever save
and except for the Permitted Encumbrances). The Intellectual Property which is
not owned by the Company is being used by the Company only with the consent of
or license from the rightful owner thereof and all such licenses are in full
force and effect. All such licenses are listed in Schedule 4.26. The
Intellectual Property is in full force and effect and has not been used or
enforced or failed to be used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of any of the Intellectual
Property. The Vendors have no knowledge of any claim of adverse ownership,
invalidity or other opposition to or conflict with any of the Intellectual
Property nor of any pending or threatened Claim of any nature or kind against
the Company relating to the Intellectual Property. The Vendors have no knowledge
that the Company, any activity in which the Company is engaged or any product
which the Company uses or sells or any process, method, packaging, advertising
or material that the Company employs in the marketing or sale of any such
product or the use of any of the Intellectual Property breaches, violates,
infringes or interferes with any intellectual property rights of any third
Person or requires payment for the use of any patent, trade-name, trade secret,
trade-xxxx, copyright or other intellectual property right or technology of
another. The Intellectual Property is complete to the extent and under the
conditions stated in this Agreement to enable the Company to carry on Business.
Schedule 4.26 sets forth a complete and correct list and brief description of
all Claims, conflicts, breaches, violations, infringements and interferences of
the Intellectual Property of which the Vendors are aware as well as a complete
and correct list and brief description of all judgments, covenants not to xxx,
permits, grants, licenses and other agreements and arrangements relating to any
of the Intellectual Property which bind, obligate or otherwise restrict the
Company.
4.27 Equipment Contracts - Schedule 4.27 sets forth a complete list of all
Equipment Contracts together with a description of the equipment and vehicles to
which the Equipment Contracts relate. All of the Equipment Contracts are in full
force and effect and no default exists on the part of the Company or to the
knowledge of the Vendors, on the part of any of the other parties thereto. The
entire interest of the Company under each of the Equipment Contracts is held by
it free and clear of any Encumbrances, other than Permitted Encumbrances and all
payments due under the Equipment Contracts have been duly and punctually paid.
4.28 Real Property - The Company does not own any real property. The only
premises leased or otherwise contracted for by the Company are the Leased
Premises.
4.29 Environmental Matters - All operations of the Company or any property now
or formerly under its charge, management or control have been and are now, in
-18-
compliance with all Environmental Laws. All Environmental Approvals required
to be held by the Company have been obtained, are valid and in full force and
effect, have been and are being complied with and there have been and are no
proceedings commenced or to the knowledge of the Vendors threatened to revoke or
amend any Environmental Approvals. Neither the Company nor any of its
operations has been or is now the subject of any Remedial Order nor do the
Vendors have any knowledge of any investigation or evaluation commenced as to
whether any such Remedial Order is necessary nor has any threat of any such
Remedial Order been made nor do the Vendors have knowledge of any circumstances
which could result in the issuance of any such Remedial Order. The Company has
never been prosecuted for or convicted of any offence under Environmental Laws
nor has the Company been found liable in any proceeding to pay any fine or
judgment to any Person as a result of any Release or threatened Release of any
Hazardous Substance into the Environment or the breach of any Environmental Law
and to the knowledge of the Vendors, there is no basis for any such proceeding.
4.30 Employment Matters - Schedule 4.30 sets forth a complete list of all
Employees together with the titles and material terms of employment, including
current wages, salaries or hourly rate of pay of and bonus (whether monetary or
otherwise) paid (including the date of payment if paid since September 30, 1999)
or payable to each Employee, the date upon which such wage, salary, rate or
bonus became effective and the date upon which each such Employee was first
hired by the Company. Except as disclosed in Schedule 4.30 no Employee is on
long-term disability leave, extended absence or is receiving workers'
compensation. Save and except as contemplated by the Employment Agreements there
are no written contracts of employment entered into with any Employees or any
oral contracts of employment which are not terminable on the giving of
reasonable notice in accordance with applicable law. Except as set out in
Schedule 4.30, there are no employment policies or plans including policies or
plans regarding incentive compensation, stock options, severance pay or other
terms or conditions of employment or terms or conditions upon which Employees
may be terminated which are binding upon the Company. The Company has been and
is being operated in full compliance with all Laws relating to employees,
including employment standards, occupational health and safety, pay equity and
employment equity. There have been no complaints under such Laws against the
Company. There are no complaints nor to the knowledge of the Vendors, are there
any threatened complaints, against the Company before any employment standards
branch or tribunal or human rights tribunal. To the knowledge of the Vendors
nothing has occurred which might lead to a complaint against the Company, under
any human rights legislation or employment standards legislation. There are no
outstanding decisions or settlements or pending settlements under employment
standards legislation which place any obligation upon the Company, to do or
refrain from doing any act. The Company has not been subject to any experience
rating surcharge over the past five years. All amounts owing in respect of
salary, wages, bonus or benefits including any vacation pay, have been paid or
accrued for on the Books and Records of the Company. No Employee has a claim for
overtime or time off in lieu of overtime which has not been accrued on the Books
and Records of the Company.
-19-
4.31 No Collective Agreements - The Company is not a party, either directly or
by operation of law, to any collective agreement, letters of understanding,
letters of intent or other written communication with any trade union or
association which may qualify as a trade union, which would cover any of its
Employees or any independent contractors of the Company. There are no
outstanding labour tribunal proceedings of any kind, including any proceedings
which could result in certification of a trade union as bargaining agent for
Employees or independent contractors of the Company and there have not been any
such proceedings within the last two years. There are no threatened or apparent
union organizing activities involving the Employees or independent contractor of
the Company. There is no strike or lock-out occurring or threatened which
affects or would affect the Company. The Company does not have unresolved
grievances or pending arbitration cases outstanding. The Company does not have
any serious labour problems that might materially affect the value of the
Company taken as a whole or that might lead to an interruption of their
Business.
4.32 Benefit Plans - Schedule 4.32 sets forth a complete list of all Benefit
Plans. Current and complete copies of all written Benefit Plans or where oral,
written summaries of the material terms thereof, have been provided or made
available to the Purchaser together with current and complete copies of all
documents relating to the Benefit Plans, including without limitation, as
applicable; (i) all documents establishing, creating or amending any Benefit
Plan; (ii) all trust agreements, funding agreements, insurance contracts and
investment management agreements; (iii) all financial statements and accounting
statements and reports, and investment reports for each of the last three years
and where actuarial reports are prepared in relation to a Benefit Plan, the two
most recent actuarial reports in relation to each such Benefit Plan; (iv) all
reports, returns, filings and material correspondence with any applicable
regulatory authority in the last three years; and (v) all booklets, summaries or
manuals prepared for or circulated to, and written communications of a general
nature to Employees concerning any Benefit Plan. Each Benefit Plan is, and has
been, established, registered, qualified and administered and invested in
compliance with; (i) the terms thereof; and (ii) all applicable Laws. The
Company has not received, in the last three years, notice from any Person
questioning or challenging such compliance and the Vendors have no knowledge of
any such notice from any Person questioning or challenging such compliance
beyond the last three years. All obligations under the Benefit Plans (whether
pursuant to the terms thereof or applicable Laws) have been satisfied and there
are no outstanding defaults or violations thereunder by the Company nor do the
Vendors have any knowledge of any default or violation by any other party to any
Benefit Plan. There have been no amendments, modifications or restatements of
any Benefit Plan made or any improvements in benefits promised under the Benefit
Plans that have not been disclosed to the Purchaser. All contributions or
premiums required to be paid to or in respect of each Benefit Plan have been
paid in a timely fashion in accordance with the terms thereof and all applicable
Laws. No Taxes, penalties or fees are owing or exigible under any Benefit Plan.
There is no Claim pending or threatened involving any Benefit Plan or its assets
and no facts exist which could reasonably be expected to give rise to any such
Claim. No event has occurred
-20-
respecting any Benefit Plan which would entitle any Person (without the consent
of the Company) to wind-up or terminate any Benefit Plan, in whole or in part,
or which could reasonably be expected to adversely affect the tax status thereof
or require any penalty taxes to be paid under any applicable laws. There are no
going concern unfunded actuarial liabilities, past service unfunded liabilities
or solvency deficiencies respecting any of the Benefit Plans. No material
changes have occurred in respect of any Benefit Plan since the date of the most
recent financial or accounting report issued in connection with any Benefit Plan
which could reasonably be expected to adversely affect the report (including
rendering it misleading in any material respect). All employer contribution or
premium holidays that have been taken under any Benefit Plan have been permitted
by the terms of the relevant Benefit Plan and have been in accordance with
applicable Laws. There have been no improper withdrawals or transfers of assets
from any Benefit Plan. All employee data necessary to administer each Benefit
Plan is in the possession of the Company and is complete, correct and in a form
which is sufficient for the proper administration of the Benefit Plans and none
of the Benefit Plans provide benefits to retired Employees or to the
beneficiaries or dependants of retired Employees. None of the Benefit Plans
require or permit a retroactive increase in premiums or payments and the level
of insurance reserves, if any, under any insured Benefit Plan is reasonable and
sufficient to provide for all incurred but unreported claims. The consummation
of the Transaction shall not constitute an event under any Benefit Plan that
shall or may result; (i) in any acceleration of, or vesting of, or increase in
benefits with respect to any Employee or former Employee; or (ii) in any
acceleration of or increase in the funding requirements of any Benefit Plan.
4.33 Insurance - The Company maintains such policies of insurance, issued by
responsible insurers, as are appropriate to their respective operations,
property and assets, in such amounts and against such risks as are customarily
carried and insured against by owners of comparable businesses, properties and
assets. All such policies of insurance are in full force and effect and the
Company is not in default as to the payment of premiums or otherwise under the
terms of any such policy. Schedule 4.33 sets forth a complete list of all
policies of insurance which the Company maintains and the particulars of such
policies including the name of the insurer, the risk insured against, the amount
of coverage and the amount of any deductible.
4.34 Contracts - Except for the Material Contracts listed in Schedule 4.34, the
Company is not a party to or bound by any Material Contract. The Material
Contracts listed in Schedule 4.34 are all in full force and effect, unamended
and no default exists under such Material Contracts on the part of any of the
parties to such Contracts. Except as noted on Schedule 4.34 none of the Material
Contracts include provisions requiring consent to a change of control of the
Company. Current and complete copies of the Material Contracts have been
delivered to the Purchaser. There are no current or pending negotiations with
respect to the renewal, repudiation or amendment of any such Material Contract.
4.35 Litigation - There is no Claim, including appeals and applications for
review, in progress, or, to the knowledge of the Vendors, pending or threatened
against or relating
-21-
to the Company before any court, Governmental Authority, commission, board,
bureau, agency or arbitration panel.
4.36 Tax Matters - The Company has filed on a timely basis (within the time and
manner required by law) all federal and state income tax returns and election
forms and the tax returns of any other jurisdiction required to be filed and all
such returns and forms have been completed accurately and correctly in all
respects. As of the Closing Date, the Company will have paid all Taxes,
(including for greater certainty and without limitation, all federal, state and
local taxes, assessments and reassessments or other imposts in respect of their
respective income, business, assets or property) and all interest and penalties
thereon with respect to the Company, for all previous years and all required
quarterly instalments due for the current fiscal year have been paid for which
tax returns are not yet required to be filed. As of the Closing Date, the
Company will have provided adequate reserves for all Taxes for the periods
covered by, and such reserves are reflected in the Financial Statements. There
are no agreements, waivers or other arrangements providing for an extension of
time with respect to the filing of any Tax return by, or payment of any Tax,
governmental charge or deficiency by the Company nor are there any actions,
suits, proceedings, investigations or claims now threatened or pending against
the Company in respect of, or discussions under way with any governmental
authority relating to, any such Tax or governmental charge or deficiency.
The Company has not:
(i) acquired or had the use of any property from a Person with whom they were
not dealing at arm's length other than at fair market value;
(ii) disposed of any property to a Person with whom they were not dealing at
arm's length for proceeds less than the fair market value thereof; and
(iii) discontinued carrying on any business in respect of which non-capital
losses were incurred, and any non-capital losses which the Company has are
not losses from property or business investment losses;
There are no contingent tax liabilities nor any grounds which would prompt a
reassessment. The schedules attached to the income tax returns by the Company
for each of its respective taxation years reflect and disclose all transactions
to which the Company was a party as required by applicable revenue laws and all
of the transactions to which the Company was a party are reflected or disclosed
in such financial statements and schedules and the income tax returns and
schedules have been duly and accurately completed as required by such Acts.
4.37 Books and Records - All Books and Records of the Company have been
delivered or made available to the Purchaser. The Books and Records of the
Company fairly and correctly set out and disclose in all material respects the
financial position of
-22-
Company taken as a whole and all financial transactions of the Company have been
accurately recorded in the Books and Records of the Company.
4.38 Company Records and Minute Books - The company records and minute books of
the Company have been delivered or made available to the Purchaser. The articles
and operating agreement of the Company are in full force and effect and no
amendments have been made to the same. The minute books, including the articles
and operating agreement of the Company include complete and accurate minutes of
all meetings of the members and managers of the Company, as applicable, held to
date or resolutions passed by the managers or members on consent, since the date
of incorporation of the Company. The share certificate book, register of
members, register of transfers and register of managers of the Company, are
complete and accurate.
4.39 Trade Allowances - No customers of the Company are entitled to or
customarily receive discounts, allowances, volume rebates or similar reductions
in price or other trade terms arising from any agreements or understandings
(whether written or oral) with or concessions granted to any customer.
4.40 Location of the Assets - All of the assets of the Company are located on
the Leased Premises.
4.41 Bank Accounts, etc. - Schedule 4.41 sets forth a complete list of every
financial institution in which the Company maintains any depository account,
trust account or safety deposit box and the names of all Persons authorized to
draw on or who have access to such accounts or safety deposit box.
4.42 Judgments and Executions and Insolvency Proceedings - There are no
judgments or executions against the Company which are outstanding and
unsatisfied. The Company has not made any assignment for the benefit of
creditors nor has any receiving order been made against the Company under the
provisions of any applicable bankruptcy or insolvency legislation nor has any
petition for such an order been served upon the Company.
4.43 Non-Arm's Length Transactions - Since September 30, 1999 the Company has
not made any payment or loan to or borrowed any money from or is otherwise
indebted to, any member, manager, Employee or any other Person not dealing at
arm's length with the Company except as disclosed in the Financial Statements
and except for usual Employee reimbursements and compensation paid in the
ordinary and normal course of the Business. The Company is not a party to any
Contract with any officer, director, Employee, shareholder or any other Person
not dealing at arm's length with the Company. No member or manager of the
Company and no entity which is an Affiliate or Associate of one or more of such
individuals; (i) owns, directly or indirectly, any interest in (except for
shares or other securities representing less than one percent of the outstanding
shares or other securities of any class or series of any publicly traded
company) or is an officer, director, employee or consultant of, any Person which
is, or is engaged in business as, a competitor of the Business or the Company or
a lessor,
-23-
lessee, supplier, distributor, sales agent or customer of the Business or the
Company; (ii) owns, directly or indirectly, in whole or in part, any property
that the Company uses in the operation of the Business; or (iii) has any Claim
whatsoever against or owes any amount to the Company in connection with the
Business, except for any liabilities reflected in the Financial Statements and
claims in the ordinary and normal course of business such as for accrued
vacation pay and accrued benefits for Employees.
4.44 Year 2000 Readiness - The software currently utilized by the Company in
its operation and the software developed by or on behalf of the Company and
supplied to clients of the Company: (i) will function without error or
interruption related to Date Data, specifically including errors or
interruptions from functions which may involve Date Data from more than one
century; (ii) the software currently utilized for the operation by the Business
requires that all Date Data (whether received from user, systems applications or
other sources) include an indication of century in each instance. All date
output and results, in any form, shall include an indication of century in each
instance; and (iii) will recognize the year 2000 as a leap year. When used in
this paragraph, the term "Date Data" shall mean any data or input which includes
an indication of or reference to date. The software currently utilized by the
Company in its operation and developed by or on behalf of the Company and or
otherwise supplied to clients of the Company does not contain any routines or
devices introduced by the Company or to the knowledge of the Vendors introduced
by any other person or in any other manner that could interfere with their use
(including without limitation, time locks, keys or bombs) or interfere with,
delete or corrupt data (commonly known as "viruses").
4.45 Full Disclosure - The Vendors have made available to the Purchaser all
information including the financial, marketing, sales and operational
information on a historic basis relating to the Company which would be material
to a purchaser of the Purchased Units. All information, which has been provided
to the Purchaser is true and correct in all material respects and no material
fact or facts have been omitted therefrom which would make such information
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Vendors as follows and acknowledges
that the Vendors are relying on the representations and warranties by the
Purchaser in entering into this Agreement:
5.1 Incorporation and Registration - The Purchaser is a corporation duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has all necessary corporate power, authority and capacity to
own its property and assets, to carry on its business as presently conducted and
to execute, deliver and perform its obligations under this Agreement.
-24-
5.2 Enforceability of Obligations - This Agreement has been executed and
delivered by the Purchaser and constitutes a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, save
and except that the enforcement hereof may be limited by applicable bankruptcy,
insolvency and other laws of general application affecting the enforcement of
creditors' rights and except that equitable remedies, such as specific
performance and injunction, are available only in the discretion of a court of
competent jurisdiction.
5.3 Absence of Conflicting Agreements - The Purchaser is not a party to, bound
or affected by or subject to any Contract or Law which would be violated,
contravened, breached by or under which default would occur or an Encumbrance
would be created as a result of the execution, delivery and performance of this
Agreement or any other agreement to be entered into under the terms of this
Agreement.
5.4 No Litigation - There are no outstanding Claims at law or in equity or
before any Governmental Authority pending or to the knowledge of the Purchaser,
proposed or threatened, which would prevent the Purchaser from completing the
Transaction.
5.5 Travelbyus Shares - The Travelbyus Shares form part of a class of shares
that are listed and posted for trading on the TSE and upon issuance will be duly
and validly issued and outstanding as fully paid and non-assessable common
shares without nominal or par value.
5.6 Regulatory Approvals - Save and except for the approval of the TSE, no
Governmental Authorization is required on the part of the Purchaser in
connection with the execution, delivery and performance of this Agreement or any
other agreements to be entered into under the terms of this Agreement.
5.7 Reporting Issuer Status - The Purchaser is a "reporting issuer" within the
meaning of the Securities Act (Alberta), (British Columbia), (Manitoba),
(Ontario) and (Quebec) and is not in default of any requirement of applicable
Laws and no material change relating to the Purchaser has occurred with respect
to which the requisite material change report has not been filed and no such
disclosure has been made on a confidential basis. No securities commission or
similar regulatory authority has issued any order preventing or suspending
trading in any securities of the Purchaser or prohibiting the issue and sale of
the common shares in the capital of the Purchaser and to the knowledge of the
Purchaser no such proceedings for such purposes are pending or threatened.
5.8 Litigation - There is no Claim, including appeals and applications for
review, in progress or to the knowledge of the Purchaser, pending or threatened
against or relating to the Purchaser before any court, Governmental Authority,
commission, board, bureau, agency or arbitration panel.
5.9 Finder's Fee ' - The obligation of the Purchaser to pay a finder's fee in
respect of the acquisition of the Company by the Purchaser has been satisfied in
full.
-25-
5.10 Hold Period - The Purchaser does hereby covenant and agree that it is the
understanding of the Purchaser that the general accepted practice in the
Province of Ontario, consistent with requisite securities laws, rules and
policies published by the Ontario Securities Commission and various telephone
conversations between counsel to the Purchaser and the Ontario Securities
Commission, that securities issued outside of the Province of Ontario (i.e. to
non-residents of Ontario) will have a 90 day restriction on their tradeability,
subject always to requisite and applicable rules relative to the holding and
sale of stock by insiders of public companies such as the Purchaser.
ARTICLE 6
NON-WAIVER; SURVIVAL
--------------------
6.1 Non-Waiver - No investigations made by or on behalf of the Purchaser or the
Vendors at any time shall have the effect of waiving, diminishing the scope of
or otherwise affecting any representation or warranty made by the Vendors or the
Purchaser, as applicable, in or pursuant to this Agreement. No waiver of any
condition or other provision, in whole or in part, shall constitute a waiver of
any other condition or provision (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
6.2 Nature and Survival - All representations, warranties and covenants
contained in this Agreement on the part of each of the Parties shall survive the
Closing, the execution and delivery under this Agreement of any share or
security transfer instruments or other documents of title to any of the
Purchased Units and/or the Travelbyus Shares, except that:
(i) any claim for intentional misrepresentation or fraud may be brought
at any time;
(ii) the representations and warranties set out in sections 4.1 and 4.11
shall survive and continue in full force and effect without
limitation of time;
(iii) representations and warranties as to environmental matters shall
survive for a period of 10 years from the Closing Date;
(iv) representations and warranties concerning Tax matters shall survive
for a period of 90 days after the relevant authorities shall no
longer be entitled to assess liability for Tax against the Company
for any particular taxation year ended on or prior to the Closing
Date; and
(v) all other representations and warranties shall survive for a period
of three years from the Closing Date.
-26-
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
---------------------------------
The obligation of the Purchaser to complete the purchase of the Purchased Units
under this Agreement shall be subject to the satisfaction of or compliance with,
at or before the Closing Time, each of the following conditions precedent (each
of which is acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by the Purchaser in whole or in part):
7.1 Truth and Accuracy of Vendors' Representations and Warranties at the
Closing Time - All of the Vendors' representations and warranties made in or
pursuant to this Agreement shall be true and correct as at the Closing Time.
7.2 Performance of Obligations - The Vendors shall have performed or complied
with, in all respects, their respective obligations, covenants and agreements
under this Agreement.
7.3 Receipt of Closing Documentation - All documentation relating to the due
authorization and completion of the sale and purchase of the Purchased Units
under this Agreement and all actions and proceedings taken on or prior to
Closing in connection with the performance by the Vendors of their obligations
under this Agreement, shall be satisfactory to the Purchaser and the Purchaser
shall have received copies of all such documentation or other evidence as the
Purchaser may request in order to establish the consummation of the Transaction
and the taking of all corporate proceedings in connection therewith in
compliance with these conditions, in form (as to certification and otherwise)
and substance satisfactory to the Purchaser.
7.4 Opinion of Counsel for the Vendors - The Purchaser shall have received an
opinion dated the Closing Date from counsel to the Vendors with respect to the
Company on terms and conditions satisfactory to the Purchaser and its counsel.
7.5 Consents, Authorizations and Registrations - All consents, approvals,
orders and authorizations of any Person or Governmental Authority (or
registrations, declarations, filings or recordings with any such Governmental
Authorities) required in connection with the completion of the Transaction, the
execution of this Agreement, Closing or the performance of any of the terms and
conditions of this Agreement shall have been obtained at or before the Closing
Time.
7.6 No Injunction - There shall be no injunction or restraining order issued
preventing and no pending or threatened Claim, judicial or administrative or
investigation against any Party by any Governmental Authority, for the purpose
of enjoining or preventing the consummation of the Transaction or otherwise
claiming that this Agreement or the consummation thereof is improper or would
give rise to proceedings under any statute or rule of law.
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7.7 Employment Agreements - The Employment Agreements shall have been executed
and delivered on mutually acceptable terms and conditions.
7.8 Substantial Damage - No substantial damage by fire or other hazard to the
assets of the Company shall have occurred prior to the Closing Time.
7.9 Non-Permitted Encumbrances - Encumbrances on any of the assets or shares
of the Company shall have been discharged.
7.10 Elections - All elections under S.754 of the Tax Act which are considered
necessary or desirable by the Purchaser shall have been completed by the
Vendors.
If any of the foregoing conditions in this Article have not been fulfilled by
Closing, the Purchaser may terminate this Agreement by notice in writing to the
Vendors, in which event the Purchaser is released from all obligations under
this Agreement and unless the Purchaser can show that the condition relied upon
could reasonably have been performed by the Vendors, the Vendors are also
released from all obligations under this Agreement. The Purchaser may waive
compliance with any condition in whole or in part if it sees fit to do so
without prejudice to its rights of termination in the event of non-fulfilment of
any other condition, in whole or in part, or to its rights to recover damages
for the breach of any representation, warranty, covenant or condition contained
in this Agreement.
ARTICLE 8
VENDORS' CONDITIONS PRECEDENT
------------------------------
The obligation of the Vendors to complete the sale of the Purchased Units under
this Agreement shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is acknowledged to be inserted for the exclusive benefit of the Vendors
and may be waived by the Vendors in whole or in part).
8.1 Truth and Accuracy of Purchaser's Representations and Warranties at Closing
Time - All of the representations and warranties of the Purchaser made in or
pursuant to this Agreement shall be true and correct as at the Closing Time.
8.2 Performance of Obligations - The Purchaser shall have performed or
complied with, in all respects, all its obligations, covenants and agreements
under this Agreement.
8.3 Receipt of Closing Documentation - All documentation relating to the due
authorization and completion of the sale of the Purchased Units and the issuance
of the Travelbyus Shares under this Agreement and all actions and proceedings
taken on or prior to Closing in connection with the performance by the Purchaser
of its obligations under this Agreement, shall be satisfactory to the Vendors,
acting reasonably and the
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Vendors shall have received copies of all such documentation or other evidence
as the Vendors may reasonably require in order to establish the consummation of
the Transaction and the taking of all corporate proceedings in connection
therewith in compliance with these conditions, in form (as to certification and
otherwise) and substance satisfactory to the Vendors, acting reasonably.
8.4 Consents, Authorizations and Registrations - All consents, approvals,
orders and authorizations of any Person or Governmental Authority (or
registrations, declarations, filings or recordings with any such Governmental
Authorities) required in connection with the completion of the Transaction, the
execution of this Agreement, Closing or the performance of any of the terms and
conditions of this Agreement shall have been obtained at or before the Closing
Time.
8.5 Employment Agreements - The Employment Agreements shall have been executed
and delivered on mutually acceptable terms and conditions.
8.6 Appointment to Board of Purchaser - The Purchaser shall have caused either
Xxxxxx or Xxxxxx to be appointed to the board of directors of the Purchaser.
If any of the foregoing conditions in this Article have not been fulfilled by
Closing, the Vendors may terminate this Agreement by notice in writing to the
Purchaser in which event the Vendors are released from all obligations under
this Agreement and unless the Vendors can show that the condition relied upon
could reasonably have been performed by the Purchaser, the Purchaser is also
released from all obligations under this Agreement. The Vendors may waive
compliance with any condition in whole or in part if they see fit to do so,
without prejudice to their rights of termination in the event of non-fulfilment
of any other condition in whole or in part or to their rights to recover damages
for the breach of any representation, warranty, covenant or condition contained
in this Agreement.
ARTICLE 9
INDEMNIFICATION
---------------
9.1 Indemnification by the Vendors - The Vendors agree to jointly and severally
indemnify and save harmless the Purchaser without duplication on an after-tax
basis from and against all Losses suffered or incurred by the Purchaser as a
result of or arising directly or indirectly out of or in connection with:
(a) any breach by the Vendors of or any inaccuracy of any of the
representations and warranties of the Vendors set out in this Agreement
(provided that the indemnity provided for in this section 9.1(a) shall not
apply in the case of a breach or inaccuracy of any representation or
warranty unless the Purchaser shall have provided notice to the Vendors in
accordance with this Article 9 on or prior to the expiration of such
representation and warranty as provided in section 6.2);
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(b) any breach or non-performance by the Vendors of any covenants to be
performed by the Vendors under this Agreement;
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(c) except to the extent Taxes are reserved for on the Financial Statements,
(i) for any and all Taxes of the Company with respect to all taxation
years of the Company ending on or prior to the Closing Date; (ii) all
Taxes allocated to the Vendors pursuant hereto; and (iii) any Losses
expenses, with respect to all taxation years of the Company on or prior to
the Closing Date, arising out of or incidental to the imposition,
assessment or assertion of any such Taxes, including those incurred in
connection with the assertion or defense of any claim or assessment for
such Taxes (collectively, the "Other Amounts"). If, with respect to any
Taxes, the taxation year of the Company does not terminate on the Closing
Date, the notional Taxes (whether based on income, capital, sale, transfer
of ownership or provision of property or services or otherwise)
attributable to the taxation year of the Company that includes the Closing
Date shall be allocated to; (i) the Vendors for the period up to and
including the Closing Date; and (ii) the Purchaser for the period
subsequent to the Closing Date. For the purposes of the section, Taxes for
the period up to and including the Closing Date shall be determined on the
basis of a closing of the books of the Company as of the Closing Date. Any
additional Taxes due up to and including the Closing Date will be paid by
the Vendors through an adjustment of the Purchase Price. The notional tax
calculations will be prepared based on the provisions of the Tax Act and
state income tax legislation in effect at the Closing Date as if the
Company had a year end on the Closing Date. For greater certainty and
without limitation, each of the Purchaser and the Vendors shall prepare or
cause to be prepared in a manner consistent with past practice, and file
or cause to be filed, all Tax Returns of the Company with respect to
periods ending on or before the Closing Date. Tax Returns shall be subject
to the review and approval by the Purchaser. Tax Returns shall be
delivered to the Purchaser at least 30 days prior to the due date for
approval. Whenever any taxing authority sends a notice of an audit,
initiates an examination of the Company, or otherwise asserts a claim,
makes an assessment, or disputes the amounts of Taxes for which the
Vendors are or may be liable under this Agreement, the Purchaser shall
promptly inform the Vendors and the Vendors shall have the right to
control, at their own cost and expense any resulting proceedings and to
determine whether and when to settle any such claim, assessment or dispute
to the extent such proceedings or determinations affect the amount of
Taxes for which the Vendors are liable under this Agreement. For greater
certainty and without limitation, each of the Purchaser and the Vendors
shall provide the other Party with such assistance as may reasonably be
requested by either of them in connection with the preparation of any Tax
Return, any audit or other examination with the preparation of any Tax
Return, any audit or other examination by any taxing authority or any
judicial or administrative proceedings relating to liability for Taxes,
and each will retain and provide the other Party with any records or
information which may be relevant to such Tax Return, audit or
examination, proceedings or determination; and
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(d) any liability arising by reason of a breach of the provisions of section
10.2.
9.2 Indemnification by the Purchaser - The Purchaser agrees to indemnify and
save harmless the Vendors without duplication on an after-tax basis from and
against all Losses suffered or incurred as a result of or arising directly or
indirectly out of or in connection with:
(a) any breach by the Purchaser of or any inaccuracy of any of the
representations and warranties of the Purchaser set out in this
Agreement provided that the indemnity provided for in this section
9.2(a) shall not apply in the case of a breach or inaccuracy of any
representation or warranty unless the Vendors shall have provided
notice to the Purchaser in accordance with this Article 9 on or prior
to the expiration of such representation and warranty as provided in
section 6.2); and
(b) any breach or non performance by the Purchaser of any covenants to be
performed by the Purchaser under this Agreement.
9.3 Notification of and Participation in Claims - No claim for indemnification
will arise until notice thereof is given by the party seeking indemnification
(the "Indemnified Party") to the Vendors or the Purchaser, as the case may be
(the "Indemnifying Party"). Such notice shall be sent within a reasonable time
following the determination by the Indemnified Party that a claim for indemnity
exists. If any legal proceedings shall be instituted or any claim or demand is
asserted by any third Person in respect of which the Indemnifying Party may have
an obligation to indemnify, the Indemnified Party shall give or cause to be
given to the Indemnifying Party written notice thereof and such Party shall have
the right, at its option and expense, to be present at the defence of such
proceedings, claim or demand, but not to control the defence, negotiation or
settlement thereof, which control shall at all times rest with the Indemnified
Party, unless the Indemnifying Party irrevocably acknowledges full and complete
responsibility for indemnification of the Indemnified Party, in which case the
Indemnifying Party may assume such control through counsel of its choice
provided however that no settlement shall be entered into without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld. The Parties shall co-operate fully with each other in connection with
the defence, negotiation or settlement of any such third Person legal
proceeding, claim or demand.
ARTICLE 10
GENERAL
-------
10.1 Public Notices - All public notices to third Persons and all other
publicity concerning the Transaction shall be jointly planned and co-ordinated
by the Vendors and the Purchaser and no Party shall act unilaterally in this
regard without the prior approval of the other Party, such approval not to be
unreasonably withheld, except:
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(a) in the case of the Purchaser for communications made in confidence to
Employees of the Company affected by the Transaction who shall be
informed of the confidential nature of the Transaction and who agree
to keep such information confidential; or
(b) where required to do so by law or by the applicable regulations or
policies of any regulatory agency of competent jurisdiction or any
stock exchange in circumstances where prior consultation with the
other Party is not practicable.
10.2 Expenses - Each of the Parties shall pay their respective legal,
accounting and other professional advisory fees, costs and expenses incurred in
connection with the purchase and sale of the Purchased Units and the issuance of
the Travelbyus Shares and the preparation, execution and delivery of this
Agreement and all documents and instruments executed pursuant to this Agreement
and any other costs and expenses incurred by the Party including any fees and
expenses of any broker or investment advisor in connection with the sale of the
Purchased Units and the issuance of the Travelbyus Shares.
10.3 Notices - Any notice or other writing required or permitted to be given
under this Agreement or for the purposes of this Agreement (in this section
referred to as a "Notice") shall be in writing and shall be sufficiently given
if delivered, or if transmitted by facsimile or other form of recorded
communication tested prior to transmission to such Party:
(a) to the Vendors at: 0000 X. Xxxxxxxx Xx.
Xxxx, Xxxxxx
00000
Attention: Xxx Xxxxxx
Fax No.: (000) 000-0000
with a copy to: XxXxxxxx Carano Xxxxxx XxXxxx
Xxxxxx Xxxxxxxxxx & Xxxxx LLP
0xx Xxxxx
000 Xxxxx Xxxxxx
Xxxx, Xxxxxx
Attention: Xxxx Xxxxxxxxxx
Fax No.: (000) 000-0000
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(b) to the Purchaser at: 204 - 0000 Xxxx Xxxxxx Xxx.
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: President
Fax No.: (000) 000-0000
with a copy to: Xxxxxxx Xxxxx & Xxxxxxxxx
Scotia Plaza
Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx X. Xxxxx
Fax No.: (000) 000-0000
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
10.4 Assignment - Neither this Agreement nor any benefits or burdens under this
Agreement shall be assignable by any Party without the prior written consent of
each of the other Parties. Subject to the foregoing, this Agreement shall enure
to the benefit of and be binding upon the Parties and their respective
successors (including any successor by reason of amalgamation of any Party) and
permitted assigns.
10.5 Further Assurances - The Parties shall, with reasonable diligence, do all
such things and provide all such reasonable assurances as may be required to
consummate the Transaction and each Party shall provide such further documents
or instruments required by any other Party as may be reasonably necessary or
desirable to effect the purpose of this Agreement and carry out its provisions,
whether before or after the Closing.
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10.6 Counterparts and Facsimile - This Agreement may be executed by the Parties
in separate counterparts and by facsimile each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
XXXXXXXXXX.XXX LTD.
Per: /s/ Xxxx Xxxxx
--------------
ELDORADO RESORTS, LLC
Per: /s/ Xxxx Xxxxxx
---------------
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
/s/ Xxxxxx Xxxxxxxxxx ) /s/ Xxxx Xxxxxx
---------------------------- ) ---------------
Witness ) XXXX XXXXXX
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
/s/ Xxxxxx Xxxxxxxxxx ) /s/ Xxx Xxxxxx
---------------------------- ) --------------
Witness ) XXX XXXXXX
THE XXX AND XXXXX XXXXXX CHARITABLE REMAINDER
UNITRUST
/s/ Xxx Xxxxxx /s/ Xxxxx Xxxxxx
--------------------------- ----------------
XXX XXXXXX, trustee XXXXX XXXXXX, trustee
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THE XXXX AND XXXX XXXXXX CHARITABLE REMAINDER
UNITRUST
/s/ Xxxx Xxxxxx /s/ Xxxx Xxxxxx
------------------------- ----------------
XXXX XXXXXX, trustee XXXX XXXXXX, trustee
