EXHIBIT 10.60
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made and entered
into effective as of the 1st day of September, 2000, by and between
xxxxxxxxxx.xxx ltd., an Ontario corporation ("travelbyus"), Global Leisure
Travel, Inc., a Washington corporation ("GLT"), Sunmakers, Inc. ("Sunmakers"),
KWTI Company ("KWTI"), Firstrav International, Inc. ("Firstrav"), Cruise Alaska
Tours, Inc. ("CAT") and AOI, Inc. ("AOI"). GLT, Sunmakers, KWTI, Firstrav, CAT
and AOI are referred to herein collectively as the "GLT Companies".
WHEREAS, GLT is a wholly owned subsidiary of Aviation Group, Inc., a Texas
corporation ("Aviation Group"), and each of Sunmakers, KWTI, Firstrav, CAT and
AOI is a wholly-owned subsidiary of GLT;
WHEREAS, the GLT Companies are primarily engaged in the wholesale and
retail sale of travel packages for North American, Pacific Island and Australian
destinations (the "Business");
WHEREAS, travelbyus is a company which provides consumers and travel agents
with the opportunity to browse travel options world-wide and book travel
reservations through call center operations or Internet connection;
WHEREAS, pursuant to that certain Arrangement Agreement dated May 3, 2000
between travelbyus and Aviation Group (the "Arrangement"), travelbyus and an
Ontario subsidiary of Aviation Group will consummate an arrangement under
Ontario law and cause travelbyus to be an indirect subsidiary of Aviation Group;
WHEREAS, GLT's offices are currently located in Seattle, Washington, and in
anticipation of the completion of the Arrangement and to reduce costs, the GLT
Companies desire to move their operations and business to Reno, Nevada, where
travelbyus' primary business offices are located;
WHEREAS, to facilitate the transactions contemplated by the Arrangement,
the parties hereto deem it desirable for travelbyus to perform for GLT various
management and support services in connection with the Business in accordance
with the terms and upon the conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Appointment. The GLT Companies hereby appoint travelbyus, and
travelbyus hereby accepts the appointment, subject at all times to the terms and
provisions herein set forth, as the sole and exclusive agent acting for and on
behalf of the GLT Companies to perform the Services (as defined below).
2. Management and Support Services. Consistent with the provisions of
this Agreement, subject to any directives or policies established by GLT,
travelbyus shall supervise and manage the
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operation of the Business on behalf of GLT, which obligation of travelbyus shall
include full managerial services for the Business. Without limiting the
generality of the foregoing, travelbyus shall, in consultation with GLT, provide
and perform all management and support services (the "Services") required in
connection with the operation of the Business, including, without limitation,
the following:
(a) provide office space, utilities, furnishings and conference
facilities;
(b) provide all necessary telephone, computers, fax, communications,
and other office equipment and supplies;
(c) provide reception, secretarial and related clerical support;
(d) provide professional staff support and assistance;
(e) provide bookkeeping, accounting and related administrative
support;
(f) shall supervise and direct the billing and collection of all
accounts due GLT for services rendered, subject to collection policies
established from time to time by mutual agreement of the parties;
(g) provide marketing services;
(h) develop, maintain and service the contracts and customers of the
GLT Companies;
(i) maintain separate books, records and accounts for the GLT
Companies reflecting their own revenues and expenses; and
(j) generally provide all overhead and required support for the
Business.
3. Authority. travelbyus is hereby expressly authorized to perform the
Services hereunder in whatever manner it deems reasonably appropriate to meet
the day-to-day requirements of the operations of the Business; provided,
however, it shall comply with any policies or directives established from time
to time by GLT.
4. Compliance with Laws.
(a) travelbyus shall comply with all applicable federal, state and
local laws, regulations and restrictions in the conduct of its obligations under
this Agreement.
(b) travelbyus shall apply for and use commercially reasonable
efforts to obtain and maintain all state, federal, and local licenses and
regulatory permits required in connection with the management or operation of
the Business and any equipment located therein. The GLT Companies shall
cooperate with travelbyus in applying for, obtaining and maintaining such
licenses and permits.
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5. Fees and Expenses of GLT. In consideration for the Services rendered
by travelbyus pursuant to this Agreement, GLT shall pay to travelbyus:
(a) a retainer of Five Thousand Dollars ($5,000) ("Retainer") per
month during the term of this Agreement;
(b) a service fee of Fifty-five Dollars ($55.00) ("Service Fee") per
passenger that is booked for the GLT Companies and for which the GLT Companies
have received full payment. Travelbyus will provide to GLT within 15 days after
the end of each calendar month a detailed accounting of the number of passengers
for which a Service Fee has accrued. Payment of such Service Fee shall be made
by GLT to travelbyus on or before ten (10) days after GLT receives such
accounting;
(c) GLT shall pay, when and as due, or reimburse travelbyus for its
direct and actual out-of-pocket costs for, all marketing and advertising
expenses incurred by or on behalf of GLT specifically for the marketing and
advertising of the GLT Companies or their products or services;
(d) GLT shall pay, when and as due, or reimburse travelbyus for its
direct and actual out-of-pocket costs for (i) delivery and postage charges
directly relating to the business of the GLT Companies and (ii) all long
distance and other telephone charges directly associated with or resulting from
toll-free telephone numbers utilized by the GLT Companies; and
(e) GLT shall pay (or cause the payment of) all rental, common area
maintenance, and other charges due or payable to the lessors under the office
leases for GLT's existing premises located at 000 Xxxx Xxxxxxxx, Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx, Xxxxxxxxxx, and 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx,
until such time as such leases expire or are terminated or as GLT shall assign
said leases to one or more third parties who shall in writing assume all of a
GLT's obligations under the applicable lease.
(f) Notwithstanding the provisions of Sections 5(a) through and
including 5(e), if in any month the gross revenues of the GLT Companies are
insufficient to pay (or reimburse) the fees and expenses set forth in Sections
5(a) through and including 5(e) for such month, then first the Service Fee,
second the Retainer and third the expenses required to be paid or reimbursed by
GLT under Sections 5(c) and 5(d), in such order of priority and to the extent
that the GLT Companies' gross revenues are insufficient to pay or reimburse
travelbyus for the same, shall not be due and payable and shall accrue until
such time (but not later than the termination or expiration of this Agreement)
as the GLT Companies' revenues shall be sufficient to pay such accrued fees and
expenses.
6. travelbyus Expenses. Except as specifically provided in Section 5(c)
and (d), travelbyus shall pay all fees, salaries or other expenses incurred by
or for travelbyus in connection with the provision and performance of the
Services.
7. Third Party Costs. In addition, travelbyus shall pay the compensation
(including fringe benefits) of its officers and employees and shall reimburse
such officers and employees for their reasonable out-of-pocket expenditures in
each case, in connection with the services performed by travelbyus pursuant to
this Agreement. travelbyus will pay for all fees and expenses of third
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parties for services rendered by such third parties to travelbyus in the course
of performance of travelbyus' services provided hereunder.
8. Term; Termination.
(a) The term of this Agreement shall commence on September 1, 2000
and shall continue through and including June 30, 2001; provided, however, this
Agreement shall automatically renew for an additional term of one year expiring
on June 30, 2002 unless any of the parties notifies the other party that it does
not intend to renew the Agreement no later than April 1, 2001.
(b) Upon the termination of this Agreement, except in the event of
the consummation of the transaction contemplated by the Arrangement, travelbyus
shall, at its cost, for a period not to exceed 90 days, cooperate with, and
assist, GLT to regain management of the Business.
9. Bank Accounts; Accounting Records.
(a) travelbyus shall, with and subject to GLT's prior approval, open
and maintain accounts and investments in such banks and other financial
institutions as travelbyus may from time to time select, with such balances
therein (which may be interest bearing or non-interest bearing) as travelbyus
shall from time to time deem appropriate in the names of the GLT Companies, and
shall deposit in such account(s) all receipts and monies specifically related to
the Business and received by travelbyus on behalf of any of the GLT Companies,
and shall make disbursements from the accounts of and on behalf of the GLT
Companies and in such amounts and at such times as the same are required.
Signatories and approvals as to the amounts on all checks shall be in accordance
with mutually agreed requirements.
(b) travelbyus shall manage and collect the accounts receivable of
the GLT Companies, including, but not limited to, extending the time of payment
of any such accounts for cash, credit or otherwise; discharging or releasing the
obligors of any such accounts; suing, assigning or selling at a discount such
accounts to collection agencies; or taking other measures to require the payment
of any such accounts; provided, however, that extraordinary collections
measures, such as discharging or releasing obligors or assigning or selling
accounts at a discount to collection agencies, shall not be undertaken without
approval of GLT. travelbyus shall collect and receive, in the names of the GLT
Companies and on their behalf, all monies paid on xxxxxxxx as set forth above.
Upon receipt of any funds due to the GLT Companies, travelbyus shall immediately
deposit the funds into the proper accounts of the respective GLT Companies,
which shall be and remain at all times in the names of the GLT Companies. Both
parties intend for travelbyus to take possession of, copy and deposit into the
accounts of the GLT Companies any notes, checks, money orders, insurance, and
any other instruments received in payment of accounts receivable for services
rendered by or for any of the GLT Companies.
(c) travelbyus shall supervise, direct and maintain the operation of
a suitable accounting system and shall cause to be delivered to GLT financial
statements as follows:
(1) Within seventy-five (75) days after the close of the fiscal
year, unless delay in delivering the reports is caused by an
independent public accounting firm, unaudited separate and
consolidated balance sheets and related statements of
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operations, shareholders' equity and changes in financial position,
all prepared in accordance with generally accepted accounting
principles consistently applied.
(2) For each quarter of operation of the Business, unaudited
separate and consolidated balance sheets and related statements of
operations, shareholders' equity and changes in financial position,
prepared in accordance with generally accepted accounting principles
(except for the lack of notes and normal year-end adjustments).
(3) For each month of operation of the Business, detailed
statements of all amounts paid to travelbyus by GLT, or billed to GLT
by travelbyus, whether for the Service Fee (as defined hereinafter) or
other items and of all revenues and expenses of the Business.
(4) travelbyus shall keep GLT informed of the condition and
operation of the Business with such other and special reports as GLT
may reasonably request.
(5) The financial and business records of the GLT Companies
shall be kept by travelbyus at the office of travelbyus and shall be
available for inspection by GLT, its auditors or its authorized
representatives at all times during normal business hours (and at any
time in the event of an emergency).
(d) travelbyus shall establish and administer accounting procedures
and controls and systems for the development, preparation and safekeeping of
records and books of accounting relating to the Business. travelbyus shall
maintain the books, records and accounts of the GLT Companies in accordance with
U.S. generally accepted accounting principles or as may be otherwise mutually
agreed to by GLT and travelbyus. travelbyus shall cooperate in all respects
necessary to permit GLT's auditors to audit the financial statements of the GLT
Companies for each fiscal year and to review the financial statements of the GLT
Companies for each fiscal quarter.
10. Insurance. Throughout the term of this Agreement, travelbyus shall,
at its sole expense, obtain and maintain with commercial carriers, appropriate
workers' compensation coverage for travelbyus' employed personnel provided
pursuant to this Agreement, and professional, casualty and comprehensive general
and vicarious liability insurance covering travelbyus, travelbyus' personnel,
and all of travelbyus' equipment in such amounts, on such basis and upon such
terms and conditions as GLT deems reasonably necessary, and such policies shall
name the GLT Companies as additional insureds.
11. Status of travelbyus. Nothing in this Agreement is intended, and
nothing shall be construed, to create an employer/employee, partnership, or
joint venture relationship among the parties hereto. The Services to be
provided hereunder shall be furnished in a manner consistent with the standards
governing such services and the provisions of this Agreement. Each party
understands and agrees that (i) the other will not be treated as an employee for
federal tax purposes, (ii) neither will withhold on behalf of the other any sums
for income tax, unemployment insurance, social security, or any other
withholding pursuant to any law or requirement of any governmental body or make
available any of the benefits afforded to its employees, (iii) all of such
payments, withholdings, and benefits, if any, are the sole responsibility of the
party incurring the liability, and
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(iv) each will indemnify and hold the other harmless from any and all loss or
liability arising with respect to such payments, withholdings, and benefits, if
any.
12. Indemnification.
(a) GLT shall protect, indemnify and hold harmless travelbyus, its
shareholders, officers, directors, and employees and their respective successors
and assigns from and against any and all loss, damage, liability, claims,
demands, causes of action and expense of any kind, arising from injuries, death
or damages to persons or property arising from travelbyus' performance of its
duties under this Agreement, or the condition of the premises unless such
liability resulted solely from (1) the negligence of travelbyus or (2) the
willful misconduct of travelbyus in the performance of its duties under this
Agreement.
(b) If any claim shall be made or proceeding instituted
(collectively, "Action") against any indemnified person ("Indemnitee") for which
indemnity will be sought pursuant to this Agreement, such Indemnitee shall
promptly notify the indemnifying person ("Indemnitor") in writing
("Indemnification Notice"). The Indemnitor, within ten (10) days following
receipt of the Indemnification Notice, shall retain counsel reasonably
satisfactory to the Indemnitee to represent the Indemnitee and any other parties
the Indemnitor may designate. Indemnitee's approval of counsel shall not be
unreasonably denied or delayed. Indemnitor shall pay the reasonable fees and
disbursements of such counsel directly related to the Action. Notwithstanding
the foregoing, any Indemnitee shall have the right to retain its own counsel,
but the fees and disbursements of such counsel shall be at the expense of the
Indemnitee unless: (i) the Indemnitor shall have failed to retain counsel as
required herein, or (ii) counsel retained by the Indemnitor is inappropriate due
to actual or potential conflicting interests between the Indemnitee and any
other party represented by such counsel in the Action. The parties agree that
the Indemnitor shall not be liable for the fees and disbursements of more than
one law firm qualified to act as counsel for the Indemnitee in connection with
an Action.
(c) The Indemnitor shall not be liable for payment of any settlement
of an Action without Indemnitor's prior written consent. The Indemnitee also
shall have the right to consent in writing prior to settlement of an Action, but
such consent shall not be unreasonably withheld or delayed. The Indemnitor shall
not be liable for payment of any pre-Action settlement of a matter which would
give rise to a claim for indemnification hereunder unless the potential
Indemnitee has obtained the prior written consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed.
13. Confidentiality. In the course of the relationship created pursuant
to this Agreement, each of the parties will have access to certain methods,
trade secrets, processes, ideas, procedures, inventions, discoveries, concepts,
software in various stages of development, designs, drawings, specifications,
models, data, documents, diagrams, flow charts, research, economic and financial
analysis, developments, procedures, know-how, marketing and other techniques,
plans, and materials, forms, copyrightable materials and trade information
(collectively, the "Proprietary Information") regarding the operations of the
other party (collectively, the "Protected Party"). The parties shall maintain
all such Proprietary Information in strict secrecy, shall not divulge such
information to any third parties, or use such Proprietary Information for any
purpose, except as may be necessary for the discharge of their obligations under
this Agreement. The parties shall take all necessary and proper precautions
against disclosure of any Proprietary Information to unauthorized
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persons by any of their officers, directors, employees or agents. All officers,
directors, employees and agents of the parties who will have access to all or
any part of the Proprietary Information may be required to execute an agreement,
at the reasonable request of the other party, valid under the law of the
jurisdiction in which such agreement is executed, and in a form acceptable to
such other party and its counsel, committing themselves to maintain the
Proprietary Information in strict confidence and not to disclose it to any
unauthorized person or entity. The parties recognize that a breach of this
Section cannot be adequately compensated in money damages and therefore agree
that injunctive relief shall be available to the Protected Party as their
respective interests may appear. Except in the case of the termination of this
Agreement due to the consummation of the transactions contemplated in the
Arrangement wherein the obligations of the parties under this Section shall
terminate, the obligations of the parties pursuant to this Section shall survive
the termination of this Agreement.
14. Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, approvals or consents provided for or permitted to be
given under this Agreement must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier or by facsimile
transmission; and a notice, request or consent given under this Agreement is
effective on receipt by the person to receive it. All notices, approvals and
consents must be given to the parties at the following addresses:
If to travelbyus: xxxxxxxxxx.xxx ltd.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxx, Xxxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
If to GLT: Global Leisure Travel, Inc.
c/o Aviation Group, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxx
Telecopy: (000) 000-0000
Whenever any notice is required to be given by law or by this Agreement, a
written waiver thereof, signed by the party entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
that notice.
15. Miscellaneous.
(a) Assignment. Subject to provisions herein to the contrary, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns; provided,
however, no party may assign this Agreement without the prior written consent of
the other party, which consent shall not be unreasonably withheld, except that
travelbyus may delegate the provision and performance of the Services to one or
more of its U.S. subsidiaries so long as it remains primarily responsible
therefor.
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(b) Headings. The headings contained herein are nonsubstantive and
are for convenience of reference only and are not intended to define, limit or
describe the scope or intent of any provision of this Agreement.
(c) Choice of Law and Venue. The parties agree that this Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
(e) Waiver of Breach. The waiver by either party of breach or
violation of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or other
provision hereof.
(f) Severability. In the event any provision of this Agreement is
held to be invalid, illegal, or unenforceable for any reason and in any respect,
such invalidity, illegality, or unenforceability shall in no event affect,
prejudice, or disturb the validity of the remainder of this Agreement, which
shall be in full force and effect, enforceable in accordance with its terms.
(g) Amendments. This Agreement may not be amended, modified or
altered except by a written instrument executed by all parties hereto.
(h) Entire Agreement. No party has made any representations,
warranties, covenants or promises relating to the subject matter of this
Agreement except as set forth herein, and any prior agreements or understandings
not specifically set forth herein shall be of no force or effect. This Agreement
constitutes the entire agreement of the parties relative to the subject matter
hereof.
(i) Attorneys' Fees. Should any party be required to bring legal
action (including arbitration) to enforce its rights under this Agreement, the
prevailing party in such action shall be entitled to recover from the losing
party its reasonable attorneys' fees and costs in addition to any other relief
to which it is entitled.
(j) Additional Acts. The parties agree to perform such further acts
and to execute, acknowledge and deliver such documents as may be necessary to
effectuate the provisions of this Agreement.
(k) Interpretation. The language of this Agreement shall not be
construed against any party, it being agreed that all parties have participated
in the negotiation and drafting of this Agreement.
(l) Time of Essence. Time is of the essence in the performance by all
parties of their obligations under this Agreement.
(m) No Third-Party Benefit. This Agreement is for the benefit of the
parties only, and is not intended to and shall not confer any rights or benefits
upon any person who is not a party hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
xxxxxxxxxx.xxx ltd.,
an Ontario corporation
By: /s/ XXXX XXXXX
-------------------------------------
Name: Xxxx Xxxxx
-----------------------------------
Title: CEO
----------------------------------
Global Leisure Travel, Inc.,
a Washington corporation
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------------
Title: Vice President
----------------------------------
Sunmakers, Inc.
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------------
Title: Vice President
----------------------------------
KWTI Company
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------------
Title: Vice President
----------------------------------
Firstrav International, Inc.
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------------
Title: Vice President
----------------------------------
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Cruise Alaska Tours, Inc.
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------------
Title: Vice President
--------------------------------
AOI, Inc.
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------------
Title: Vice President
----------------------------------
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