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EXHIBIT 10.7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of May 5, 1999,
by and among XXXXXXXX.XXX, INC., a Washington corporation ("Purchaser"), Travel
Companions International, Inc., a Minnesota corporation ("Seller"), and Xxxx
Xxxx and Xxxxx Xxxx, significant shareholders of Seller (together, "Xxxx").
WHEREAS, Seller owns and operates web-based, electronic commerce
businesses known as Worldwide Brochures and Travel Companions (the
"Businesses");
WHEREAS, Seller desires to sell and assign to Purchaser, and Purchaser
desires to purchase and assume from Seller, all of Seller's right, title and
interest in substantially all the assets of the Businesses upon the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, in order to induce Purchaser to enter into the purchase
transaction, Xxxx is willing to join in the representations and warranties of
Seller hereunder and to make certain other convenants;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. (a) In addition to the terms defined above, the
following capitalized terms, as used herein, have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Closing Date" means the date of the Closing.
"Encumbrance" means any charge, claim, community property interest,
condition, equitable or beneficial interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including without
limitation restrictions on transfer, receipt of income or exercise of any other
attribute of ownership.
"Marks" means each registered or unregistered trademark, service xxxx
and tradename used by Seller as described in Schedule A.
"Employment and Noncompetition Agreement" means the Employment and
Noncompetition Agreement attached as Exhibit A.
"Section" means a section or subsection of this Agreement.
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(b) Each of the following terms is defined in the Section below set
forth opposite such term:
Term Section
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Apportioned Obligations 8.1
Assumed Liabilities 2.4
Closing 2.8
Consideration 2.6
Distributor Contracts 2.2
Excluded Assets 2.3
Excluded Liabilities 2.5
Financial Statements 3.5
Holdback Amount 2.7
Indemnified Party 10.3
Indemnifying Party 10.3
Losses 10.2
Purchased Assets 2.2
Securities Act 3.4
1.2 References. Unless stated otherwise in this Agreement, references in
this Agreement to Sections, Schedules and Exhibits are references to Sections of
and Schedules and Exhibits attached to this Agreement. Each Schedule to this
Agreement is by this reference incorporated into this Agreement.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, the parties agree to consummate the following transactions at
the Closing: (a) Seller will sell, transfer and assign to Purchaser, and
Purchaser will purchase from Seller, all of the Purchased Assets; and (b) Seller
will assign to Purchaser, and Purchaser will assume, and become directly
responsible for the performance of all obligations with respect to, the Assumed
Liabilities; and (c) Purchaser will pay to Seller the Consideration as provided
herein. Notwithstanding the foregoing, Seller will remain obligated to discharge
the Excluded Liabilities without any responsibility therefor on the part of
Purchaser.
2.2 Purchased Assets. For purposes hereof, the term "Purchased Assets"
means, to the extent not specifically included in the Excluded Assets, all
assets, powers and rights held by Seller as of the Closing Date, or in which
Seller has a right, title or interest as of the Closing Date, and which are
used, were acquired for use or are held for use by Seller primarily in
connection with the Businesses, of whatever kind, tangible and intangible, and
wherever located, including, without limitation:
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(a) the servers, software, content and data to run the
Businesses;
(b) all intellectual property related to the Businesses,
including without limitation all Marks.
(c) the database of registered consumer subscribers, including
the software system holding the data and third-party licenses for such software;
(d) all contracts between the Businesses and their respective
clients (collectively the "Merchant Contracts");
(e) all distribution contracts with portals or other world wide
web sites (the "Distribution Contracts");
(f) all equipment, property and assets of the fulfillment
facility;
(g) all other user lists and other books, records, lists, files
and papers, whether in hard copy or electronic format; and
(h) all goodwill associated with the Businesses or the Purchased
Assets.
2.3 Excluded Assets. For purposes hereof, the term "Excluded Assets"
means the following rights, properties and assets of Seller which are used, were
acquired for use or are held for use by Seller primarily in connection with the
Businesses, which shall not be included as part of the Purchased Assets and
shall not be conveyed to Purchaser at the Closing:
(a) all cash; and
(b) all accounts, notes and other receivables;
2.4 Assumed Liabilities. Upon the terms and subject to the conditions of
this Agreement, Purchaser agrees, effective at the time of Closing, to assume
only the following liabilities of Seller ("Assumed Liabilities") arising out of
the conduct of the Businesses:
(a) the obligations of the Businesses under the Merchant
Contracts.
2.5 Excluded Liabilities. For purposes hereof, the term "Excluded
Liabilities" means all liabilities of Seller, whether known or unknown, whether
relating to the operation of the Businesses or otherwise, now existing or
arising and created by Seller hereafter, except the Assumed Liabilities.
2.6 Consideration. The consideration (the "Consideration") for the
Purchased Assets shall be cash in the amount of one million four hundred
thousand Dollars ($1,400,000.00). The Consideration, net of the Holdback Amount,
shall be delivered to Seller at Closing.
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2.7 Holdback. Purchaser shall retain the sum of $150,000 (the "Holdback
Amount") for a period of 180 days after Closing, at the expiration of which
period Purchaser shall promptly pay the Holdback Amount, subject to any offsets
in accordance with Section 10.2(c) below, to Seller. During Holdback period,
without limitation, Seller shall transfer the Purchased Assets, excluding
fulfillment business, to Purchaser's Seattle offices and provide education and
training to Purchaser in the operation of such Purchased Assets prior to
Closing.
2.8 Closing. Provided that all conditions have been satisfied, and
unless the parties agree in writing to an extension, closing (the "Closing")
shall occur at a time, date and place mutually agreeable to the parties, but not
later than June 15, 1999. Purchaser shall be entitled to sole possession of the
Purchased Assets on and after the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and Xxxx hereby jointly and severally represent and warrant to
Purchaser that:
3.1 Status of Seller. Seller is a corporation, validly existing and in
good standing under the laws of the State of Minnesota, and has all corporate
powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. Seller is not required to
qualify to do business in any other state or jurisdiction.
3.2 Authorization. The execution, delivery and performance by Seller of
this Agreement and all other documents and instruments to be delivered by Seller
hereunder, and the consummation by Seller of the transactions contemplated
hereby, are within the corporate powers of Seller and have been duly authorized
by all necessary action on the part of Seller. This Agreement has been duly
executed and delivered by a duly authorized officer of Seller and constitutes a
valid and binding agreement of Seller. All other documents and instruments to be
delivered by Seller under this Agreement, when executed and delivered, will
constitute valid and binding obligations of Seller.
3.3 Approvals. Neither the execution of this Agreement, the consummation
of the sale of the Purchased Assets nor the assumption of the Assumed
Liabilities hereunder requires the approval or consent of any governmental body,
agency, official or authority having jurisdiction over the Businesses.
3.4 Financial Statements. Seller has provided Purchaser with true,
correct, and complete copies of Seller's income statement and balance sheet for
the period ending December 31, 1998, and the interim income statement for the
three months ended March 31, 1999 (collectively, "Financial Statements"). To the
best of Seller's knowledge, the Financial Statements are correct and complete
and fairly present the results of operations and financial condition of Seller
for the period or as at the date specified, and were prepared on an income tax
basis, applied on a consistent basis throughout the periods involved, subject to
any comments
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noted therein. The books of account from which the Financial Statements were
prepared accurately reflect all of the items of income and expense, all assets
and liabilities, and all accruals of Seller.
3.5 Liabilities. There are no liabilities or obligations of any nature
or of any amount whatsoever, whether accrued or unaccrued, absolute or
contingent, liquidated or unliquidated, unmatured, unasserted, potential or
otherwise, related to the Purchased Assets or the Businesses except:
(a) to the extent reflected in the Financial Statements and not
already paid or discharged; and
(b) those that have been or will be incurred in or as a result
of the normal and ordinary course of business after March 31, 1999.
3.6 Litigation. There are no actions, suits, claims, proceedings or
investigations pending or, to the best of Seller's knowledge, threatened against
or affecting the Purchased Assets or the Businesses at law or in equity or
before or by any federal, state, municipal or other governmental court,
department, commission, board, bureau, agency or instrumentality. To the best of
Seller's knowledge, no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such action, suit, claim
proceeding or investigation. Seller has fully complied with all laws and
regulations applicable to the Purchased Assets and the Businesses. There are no
awards, decisions, injunctions, judgment, orders, rulings, subpoenas or verdicts
entered, issued, made or rendered by any court, administrative agency,
governmental body, or arbitrator to which the Purchased Assets or the Businesses
are subject.
3.7 Employee Claims. No employee of Seller involved in the operations of
the Businesses has any claim against Seller, and Seller is not obligated or
liable to any such person in any way or for any amounts except compensation due
to employees in the ordinary course of business.
3.8 Taxes.
(a) Seller has filed with the appropriate governmental
authorities all tax and related returns required to be filed by it, and such
returns accurately reflect the taxes payable;
(b) all federal, state, local, county, franchise, sales, use,
excise, property, and other taxes which are due and payable have been duly paid;
(c) no reserves for unpaid taxes have been set up or are
required on the basis of the facts and in accordance with generally accepted
accounting principles, except as reflected in the Financial Statements;
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(d) there are no unpaid assessments or proposed assessments of
federal, state or local taxes pending against Seller; and
(e) there are no federal, state, or local tax audits pending or,
to the best of Seller's knowledge, threatened, concerning Seller.
3.9 Title to Personal Property. Seller owns good and marketable title to
all personal property and assets of every type and description purported to be
owned or used by it as part of the Businesses, including those properties and
assets reflected on its Financial Statements, free and clear of any and all
Encumbrances of every kind, nature, and description; and all of Seller's
operating assets are in good operating condition and repair, not in need of
non-routine maintenance and are adequate and sufficient for the uses to which
they are being put and for the continued conduct of the Businesses by Purchaser.
3.11 Intellectual Properties.
(a) Seller has no patents or patent rights, and requires no such
rights in connection with the conduct of its business as presently conducted.
Seller is not infringing or otherwise acting adversely to the right of any
person under or in respect to any patent or patent rights.
(b) Schedule A contains a complete and accurate list of all
Marks owned or claimed by Seller and material to its business as presently
conducted. Seller is the owner of all right, title, and interest in and to each
of these Marks, free and clear of all Encumbrances or other adverse claims. None
of the Marks infringe or violate any trademark, service xxxx, tradename or other
proprietary right of any other person. Seller does not license any of the Marks
from any third party. The Marks constitute all those necessary for the operation
of Seller's business as currently conducted.
3.12 Employees and Benefits. Seller is not a party to any pension or
other employee benefit plan and has no outstanding withdrawal liability (or
other obligation) with respect to any such plan; is not a party to any
collective bargaining or union agreement; and has no written or oral employment
agreements with any of its employees. Seller has timely paid all withholding,
FICA, and other taxes required to be paid on behalf of its employees
3.13 Employment Practices. Seller has been and is in compliance with all
federal or state law respecting employment or employment practices, including
without limitation terms and conditions of employment, wages and hours, equal
employment opportunity, non-discrimination, immigration, collective bargaining
and occupation safety and health. There is no labor or employment problem or
dispute pending or threatened against or affecting Seller with respect to the
Businesses or the Purchased Assets. Notwithstanding the foregoing, it is not
intended that this Agreement shall in any way require Purchaser to assume any
obligations or liabilities of Seller with respect to labor or employment
matters.
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3.14 Brokers. Seller has not employed any broker, finder, or agent, or
otherwise become in any way obligated for any broker's, finder's or agent's (or
similar) fee with respect to the transaction contemplated by this Agreement.
3.15 Insurance. Seller is adequately insured with respect to all risks
normally insured against by companies similarly situated. Seller has paid all
premiums and otherwise performed all its obligations under all its insurance
policies and will keep all such insurance policies in full force and effect
through the Closing Date.
3.16 Absence of Certain Events, Circumstances, Etc. Since March 31,
1999, Seller has conducted the Businesses only in the ordinary course and there
has not been any material adverse change in the Businesses or in the assets,
properties, prospects or condition of the Businesses, and no event has occurred
or circumstances exists that may result in such a material adverse change, and
Seller has not:
(a) incurred any obligation or liability related to the
Businesses, whether absolute or contingent, except obligations and liabilities
incurred in the ordinary course of Seller's business;
(b) discharged or satisfied any Encumbrance or paid any
obligation or liability related to the Businesses, whether absolute or
contingent, other than current liabilities having become due and payable since
that date in the ordinary course;
(c) sold or transferred any of its tangible or intangible assets
or properties or cancelled any debts or claims related to the Businesses,
except, in each case, in the ordinary course;
(d) sold, assigned, or transferred any Xxxx;
(e) suffered any losses that would have a materially adverse
effect on the business or financial condition of the Businesses or waived any
rights of substantial value;
(f) suffered any loss, damage, or destruction to any of its
properties due to fire or other casualty whether or not insured, which loss,
damage, or destruction materially and adversely affects its business, properties
or operations;
(g) mortgaged, pledged, or subjected to any Encumbrance any of
its tangible or intangible assets related to the Businesses, except the lien of
current personal property taxes not yet due and payable; or
(h) conducted the Businesses otherwise than in its ordinary,
normal and usual manner.
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3.17 Disclosure.
(a) No representation or warranty of Seller and/or Xxxx in this
Agreement omits to state a material fact necessary to make the statements
herein, in light of the circumstances in which they were made, not misleading;
and
(b) No notice given pursuant to Section 5.3 will contain any
untrue statement or omit to state a material fact necessary to make the
statement therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
4.1 Organization and Existence. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Washington and has all corporate powers required to carry on its business as
now conducted.
4.2 Corporate Authorization. The execution, delivery and performance by
Purchaser of this Agreement and all other documents and instruments to be
delivered by Purchaser hereunder, and the consummation by Purchaser of the
transactions contemplated hereby, are within the corporate powers of Purchaser
and have been duly authorized by all necessary corporate action on the part of
Purchaser. This Agreement has been duly executed and delivered by a duly
authorized officer of Purchaser and constitutes a valid and binding agreement of
Purchaser. All other documents and instruments to be delivered by Purchaser
under this Agreement, when executed and delivered, will constitute valid and
binding obligations of Purchaser.
4.3 Governmental Authorization. The execution, delivery and performance
by Purchaser of this Agreement require no action by or in respect of, or filing
with, any governmental body, agency, official or authority.
4.4 Non-Contravention. The execution, delivery and performance by
Purchaser of this Agreement do not and will not (a) contravene or conflict with
the articles of incorporation or bylaws of Purchaser or (b) to the knowledge of
Purchaser contravene or conflict with any provision of any law, regulation,
judgment, injunction, order or decree binding upon Purchaser.
4.5 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Purchaser, threatened against or
affecting, Purchaser before any court or arbitrator or any governmental body,
agency or official which in any matter challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated hereby.
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ARTICLE 5
COVENANTS OF SELLER
Seller agrees that:
5.1 Conduct of the Businesses. Except as Purchaser otherwise expressly
agrees in writing, Seller covenants that, prior to the Closing Date, Seller
will:
(a) conduct the Businesses only in the ordinary and usual
course, without material change in the nature of its operations, and not
otherwise sell, mortgage, lease or dispose of any portion of its assets or
acquire any property or assets;
(b) not incur any debts, liabilities or contract obligations
related to the Businesses, except in the ordinary course or with the prior
approval of Purchaser, which involve total consideration in excess of $5,000 and
cannot be canceled by Seller on 30 days' notice;
(c) not do or cause to be done anything that would cause any
representation or warranty to be untrue or inaccurate if made at the time,
except as otherwise permitted by this Agreement;
(d) maintain the Purchased Assets, and the insurance with
respect thereto, in accordance with good business practice;
(e) make no change with respect to management or supervisory
personnel or its auditors or other major consultants;
(f) use its best efforts to preserve its business organization
intact, keep available the services of its present management, and preserve the
goodwill of its suppliers, customers, and others having business relationships
with it; and
(g) permit no increase in the compensation payable or to become
payable by it to any of its employees or consultants, or other employees except
as required under Seller's established policies and consistent with past
practice.
5.2 Access to Information. During the period from the date hereof to the
Closing Date, Purchaser and its duly authorized representatives shall have full
and free access to the offices, records, files, and books of account of Seller
related to the Businesses; provided, however, that such access shall not
unreasonably interfere with Seller's normal operations and employee
relationships. Purchaser and its representatives shall treat all information
obtained from such access and not otherwise in the public domain as
confidential, and if this transaction does not close, Purchaser shall return all
books, records and documents made available to it.
5.3 Notices of Certain Events. Between the date of this Agreement and
the Closing Date, Seller will promptly notify Purchaser in writing if Seller
becomes aware of any fact or condition that causes or constitutes a breach of
any of Seller's representations and warranties as
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of the date of this Agreement, or if Seller becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a breach of any
representation or warranty had such representation or warranty been made as of
the time of occurrence or delivery of such fact or condition.
5.4 Employee Matters. Seller shall terminate all employees of the
Businesses as of the Closing Date. Seller will be responsible for accrued wages,
vacation, pension, termination pay and all benefits (including all matters
related to COBRA rights) arising from Seller's employment or termination of all
personnel involved with the Businesses.
ARTICLE 6
COVENANTS OF PURCHASER
Purchaser agrees that:
6.1 Confidentiality. Prior to the Closing Date and after any termination
of this Agreement, Purchaser will hold all confidential documents and
information concerning Seller furnished to Purchaser in connection with the
transactions contemplated by this Agreement in confidence, except to the extent
that such information can be shown to have been (i) previously known on a
nonconfidential basis by Purchaser, (ii) in the public domain through no fault
of Purchaser or (iii) later lawfully acquired by Purchaser from sources other
than Seller; provided that Purchaser may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so
long as such persons are informed by Purchaser of the confidential nature of
such information and are directed by Purchaser to treat such information
confidentially. The obligation of Purchaser to hold any such information in
confidence shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the confidentiality of their own
similar information. If this Agreement is terminated, Purchaser will cause its
officers, directors, employees, accountants, counsel, consultants, advisors,
auditors and agents to, destroy or deliver to Seller, upon written request, all
documents and other materials, and all copies thereof, obtained by Purchaser or
on its behalf from Seller in connection with this Agreement that are subject to
such confidence.
6.2 Hiring of Employees. Purchaser will offer the three current
employees of Businesses employment with Purchaser. These employees will be
offered compensation at a level not less than that which they are currently
receiving.
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ARTICLE 7
COVENANTS OF BOTH PARTIES
The parties hereto agree that:
7.1 Reasonable Efforts; Further Assurances. Subject to the terms and
conditions of this Agreement, each party will use its best efforts (exclusive of
litigation) to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Seller and Purchaser
each agree to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable to consummate or implement expeditiously the transactions contemplated
by this Agreement and to vest in Purchaser good and marketable title to the
Purchased Assets. Prior to Closing, Seller will cause the American Express and
Norvista contracts to be transferred to Purchase and shall provide Purchaser
with evidence of such transfers reasonably satisfactory to Purchaser.
7.2 Certain Filings. Seller and Purchaser shall cooperate with one
another (a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
7.3 Confidentiality of Agreement. Seller and Purchaser will hold, and
will use their best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold the
terms of this Agreement in confidence, unless compelled to disclose such terms
by judicial or administrative process or by other requirements of law.
ARTICLE 8
TAX MATTERS
8.1 Tax Cooperation; Allocation of Taxes.
(a) Purchaser and Seller agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Purchased Assets and the Businesses
as is reasonably necessary for the filing of all Tax returns, and making of any
election related to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any claim, suit or proceeding
relating to any Tax return. Seller and Purchaser shall cooperate with each other
in the conduct of any audit or other proceeding related to Taxes involving the
Businesses and each shall execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this Section 8.1(a).
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(b) All personal property taxes due and payable in 1999 with
respect to the Purchased Assets shall be apportioned between Seller and
Purchaser as of the Closing Date based on the number of days of such taxable
period included in the Pre-Closing Tax Period and the number of days of such
taxable period included in the Post-Closing Tax Period. Seller shall be liable
for the proportionate amount of such taxes that is attributable to the
Pre-Closing Tax Period, and Purchaser shall be liable for the proportionate
amount of such taxes that is attributable to the Post-Closing Tax Period. Within
90 days after the Closing, Seller and Purchaser shall present a statement to the
other setting forth the amount of reimbursement to which each is entitled under
this Section 8.1(b) together with such supporting evidence as is reasonably
necessary to calculate the proration amount. The proration amount shall be paid
by the party owing it to the other within 10 days after delivery of such
statement. Thereafter, Seller shall notify Purchaser upon receipt of any xxxx
for personal property taxes relating to the Purchased Assets, part or all of
which are attributable to the Post-Closing Tax Period, and shall promptly
deliver such xxxx to Purchaser who shall pay the same to the appropriate taxing
authority, provided that if such xxxx covers the Pre-Closing Tax Period, Seller
shall also remit prior to the due date of assessment to Purchaser payment for
the proportionate amount of such xxxx that is attributable to the Pre-Closing
Tax Period. In the event that either Seller or Purchaser shall thereafter make a
payment for which it is entitled to reimbursement under this Section 8.1(b), the
other party shall make such reimbursement promptly but in no event later than 30
days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of
reimbursement. Any payment required under this Section and not made within 10
days of delivery of the statement shall bear interest at the rate of 12% per
annum for each day until paid.
(c) All transfer, documentary, sales, use and other Taxes
assessed upon or with respect to the transfer of the Purchased Assets to
Purchaser (exclusive of Taxes imposed upon or measured by Seller's net income or
gross receipts) shall be the responsibility of Purchaser.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 Conditions to the Obligations of Each Party. The obligations of
Purchaser and Seller to consummate the Closing are subject to the satisfaction
of the following conditions:
(a) no action or proceeding shall have been instituted in which
an order has been entered restraining or prohibiting or invalidating the
transactions contemplated by this Agreement, or affecting the right of Purchaser
to own the Purchased Assets after the Closing Date; and
(b) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Closing shall have been
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obtained.
9.2 Conditions to Obligation of Purchaser. The obligation of Purchaser
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) Purchaser shall have completed its due diligence review of
Seller, the Businesses and the Purchased Assets, and the results of such review
shall be to Purchaser's satisfaction in its sole discretion;
(b) Seller shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Closing Date;
(c) The Purchased Assets, including but not limited to all
servers and databases, shall have been transferred to Purchaser's Seattle
offices and otherwise delivered to the satisfaction of Purchaser in its sole
discretion;
(d) The representations and warranties of Seller contained in
this Agreement and in any certificate or other writing delivered by Seller
pursuant hereto shall be true in all material respects at and as of the Closing
Date, as if made at and as of such time;
(e) The Employment and Noncompetition Agreement shall have been
duly executed by Xxxx Xxxx;
(f) Purchaser shall have received:
(i) a xxxx of sale for the Purchased Assets, duly
executed by the Seller, in form reasonably satisfactory to Purchaser and its
legal counsel; and
(ii) assignment and assumption agreements for the
Merchant Contracts and the Distributor Contracts, duly executed by Seller, in
form reasonably satisfactory to Purchaser and its legal counsel, and all
necessary consents from the other parties to such contracts;
(iii) such other approvals or documents as Purchaser may
reasonably request including without limitation written consents to transfer of
the American Express and Norvista contracts.
9.3 Conditions to Obligation of Seller. The obligation of Seller to
consummate the Closing is subject to the satisfaction of the following
conditions:
(a) Purchaser shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Closing Date;
(b) The representations and warranties of Purchaser contained in
this Agreement and in any certificate or other writing delivered by Purchaser
pursuant hereto shall be
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true in all material respects at and as of the Closing Date, as if made at and
as of such time;
(c) Seller shall have received:
(i) payment of the Consideration, as provided in Section
2.6;
(ii) assignment and assumption agreements for the
Merchant Contracts and the Distributor Contracts, duly executed by Purchaser, in
form reasonably satisfactory to Seller and its legal counsel, and all necessary
consents from the other parties to such contracts; and
(iii) such other approvals or documents as Seller may
reasonably request.
ARTICLE 10
SURVIVAL; INDEMNIFICATION
10.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing for a period
of one year. The right to indemnification, payment of damages or other remedy
based on such representation and warranties or other covenants and obligations
will not be affected by any investigation conducted with respect to any
knowledge acquired (or capable of being acquired) at any time, whether before or
after the execution and delivery of this Agreement or the Closing Date, with
respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty, covenant or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages or other remedy based on such
representation, warranties, covenants and obligations.
10.2 Indemnification. (a) Seller and Xxxx each hereby agrees to
indemnify Purchaser against and agrees to hold it harmless from any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) (collectively, "Losses")
incurred or suffered by Purchaser in any way related to or arising out of (i)
any misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Seller pursuant to this Agreement, or (ii) Seller's ownership of
the Purchased Assets or operation of the Businesses prior to the Closing Date.
(b) Purchaser hereby indemnifies Seller and Xxxx against and
agrees to hold each of them harmless from any and all Losses incurred or
suffered by Seller or Xxxx in any way related to or arising out of (i) any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Purchaser pursuant to this Agreement or (ii) Purchaser's ownership
of the Purchased Assets or operation of the Businesses on or after the Closing
Date.
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(c) In addition to any other legal or equitable remedies
available to Purchaser for Seller's and/or Xxxx'x breach of any representation,
warranty, covenant or agreement contained in this Agreement, and in addition to
pursuing indemnification rights for Losses covered under Section 10.2(a) above,
Purchaser may, as a nonexclusive remedy, offset against the Holdback Amount the
amount of any loss that it shall have suffered as a result of such breach or the
amount of any Losses for which Purchaser is to be indemnified pursuant to
Section 10.2(a) above.
10.3 Procedures. The party seeking indemnification under Section 10.2
(the "Indemnified Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion of any claim, or
the commencement of any suit, action or proceeding in respect of which indemnity
may be sought under such Section. The Indemnifying Party may, at its own
expense, participate in and control the defense of any such suit, action or
proceeding; provided, the Indemnifying Party's counsel is reasonably
satisfactory to the Indemnified Party and the Indemnifying Party thereafter
consults with the Indemnified Party upon the Indemnified Party's reasonable
request from time to time with respect to such suit, action or proceeding. The
parties shall in any event cooperate in the defense or prosecution of any such
suit, action or proceeding. The Indemnifying Party shall not be liable under
Section 10.2 for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder.
ARTICLE 11
TERMINATION
11.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by Purchaser if the results of Purchaser's due diligence
review of Seller, the Businesses and the Purchased Assets are not satisfactory
to Purchaser in its sole discretion;
(b) by mutual written agreement of Seller and Purchaser;
(c) by either Seller or Purchaser if the Closing shall not have
been consummated on or before June 15, 1999;
(d) by either Seller or Purchaser if there shall be any law or
regulation that makes the consummation of the transaction contemplated hereby
illegal or otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent jurisdiction; or
(e) by either Seller or Purchaser, in the event of any material
breach by the other party to this Agreement.
The party desiring to terminate this Agreement shall give prompt notice
of such
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termination to the other party.
11.2 Effect of Termination. If this Agreement is terminated as permitted
by Section 11.1, such termination shall be without liability of either party (or
any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful failure of either party
to fulfill a condition to the performance of the obligations of the other party
or to perform a covenant of this Agreement or from a willful breach by either
party to this Agreement, such party shall be fully liable for any and all Losses
incurred or suffered by the other party as a result of such failure or breach.
The provisions of Section 12.3 shall survive any termination hereof pursuant to
Section 11.1.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. All notices, requests and other communications to either
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given,
if to Purchaser, to:
XxxxXxxx.xxx, Inc.
00 Xxxxx Xxxxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxx, President and CEO
if to Seller, to:
Travel Companions International, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000 0000
Attn: Xxxx Xxxx
or to such other address as such party shall have designated by notice so given
to each other party.
12.2 Amendments; No Waivers. Any provision of this Agreement may be
amended or waived prior to the Closing Date if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Purchaser and
Seller, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not
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exclusive of any rights or remedies provided by law.
12.3 Expenses. Except as otherwise specified herein, Purchaser and
Seller will each be solely responsible for and bear all of its own respective
expenses, including, without limitation, expenses of legal counsel, accountants,
and other advisors, incurred at any time in connection with pursuing or
consummating this Agreement and the transactions contemplated hereby.
12.4 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
12.5 Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of Washington, without regard to the
conflicts of law rules of such state.
12.6 Consent to Jurisdiction; Attorneys' Fees. For purposes of any
litigation arising out of or in connection with this Agreement, the parties
hereby consent to the jurisdiction of State and Federal Courts sitting in King
County, Washington. In the event of any such litigation, the prevailing party
shall be entitled to recover from the other party all of its attorneys' fees and
other expenses incurred in connection with such litigation.
12.7 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
12.8 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto. Neither
this Agreement nor any provision hereof is intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
12.9 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
12.10 Severability. Unless otherwise provided herein, if any provision
of this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining portions shall not in any way be
affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
XXXXXXXX.XXX, INC.
By________________________________
Name: Xxx Xxxxxx
Title: CEO
TRAVEL COMPANIONS INTERNATIONAL,
INC.
By: _______________________________
Name: Xxxxx Xxxx
Title: Chief Executive Officer
By_______________________________
Name: Xxxx Xxxx
Title: Chief Operating Officer
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SCHEDULE A
MARKS
- WORLDWIDE BROCHURES
- THE OFFICIAL TRAVEL BROCHURE DIRECTORY
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EXHIBIT A
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Employment and Noncompetition Agreement
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