Exhibit 10.62
XXXXXXXXXX.XXX LTD.
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XXXX XXXXX, J. XXXXXXX XXXXXX, XXXXX X. XXXXX,
XXXXX XXXXXXXXX, XXX XXXXXXX,
XXXXXXX XXXX AND XXXXXXX SEENE
ACQUISITION AGREEMENT
September 14, 2000
Xxxxxxx Xxxxx & Xxxxxxxxx LLP
Scotia Plaza, Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
THIS ACQUISITION AGREEMENT is made as of the 14th day of September, 2000,
A M O N G :
XXXXXXXXXX.XXX LTD., a corporation incorporated pursuant to the laws
of the Province of Ontario ("Travelbyus")
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XXXX XXXXX being an individual normally resident and domiciled in the
State of California ("Xxxxx")
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J. XXXXXXX XXXXXX being an individual normally resident and domiciled
in the State of California ("Xxxxxx")
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XXXXX X. XXXXX, being an individual normally resident and domiciled in
the State of California ("Vasil")
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XXXXX XXXXXXXXX, being an individual normally resident and domiciled
in the State of California ("Xxxxxxxxx")
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XXX XXXXXXX, being an individual normally resident and domiciled in
the State of California ("Lindsay")
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XXXXXXX XXXX, being an individual normally resident and domiciled in
the State of California ("Xxxx")
-and-
XXXXXXX SEENE, being an individual normally resident and domiciled in
the State of California ("Seene")
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RECITALS:
A. Travelbyus and ProSoft (as hereinafter defined) executed the LOI (as
hereinafter defined) pursuant to which, among other things, Travelbyus agreed to
purchase 100% of the issued and outstanding shares in the capital of ProSoft;
B. The parties hereto are desirous of entering into this Agreement to
consummate the transactions contemplated in the LOI; and
C. The parties intend that this transaction constitute a tax-free
reorganization to the Sellers under all applicable tax laws, including but not
limited to Internal Revenue Code section 368(a)(i)(B).
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 do
hereby agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
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 Business Corporations Act, Ontario 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 Target
and recorded as receivable in the Books and Records of the Target and any
other amount due to the Target including any refunds and rebates and the
benefit of all security (including cash deposits), guarantees and other
collateral held by the Target.
"Accrued Liabilities" means any and all accrued liabilities of the Target
incurred in the ordinary course of business, including accruals for
vacation pay, customer rebates and allowances for product returns.
"Additional Shares" has the meaning ascribed thereto in section 3.2.
"Affiliate" has the meaning ascribed thereto in the Act.
"Agreement" means this Acquisition 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.
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"arm's length" means arm's length as defined in the Tax Act.
"Associate" has the meaning ascribed thereto in the Act.
"Average Daily Closing Price" has the meaning ascribed thereto in section
3.2.
"Aviation" means Aviation Group, Inc.
"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 Target is a party
to or bound by or under which the Target has any liability or contingent
liability, relating to:
(a) retirement savings or pension plans, 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
Target, 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 Target is required to comply.
"Blue Sky Laws" has the meaning ascribed therein in section 4.11.
"Books and Records" means all books and records of the Target, including
without limitation, all data and information stored on computer-related
media.
"Business" means the business currently and heretofore carried on by the
Target, being custom software in the travel business.
"Business Day" means a day, other than a Saturday or Sunday, on which the
principal commercial banks located in the City of Toronto 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 Transaction under this Agreement.
"Closing Date" means the day of September, 2000, or such other date as the
Parties may agree in writing as the date upon which Closing shall take
place.
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"Closing Time" means 10:00 a.m. Toronto 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 Target
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 Target or which set out the understanding of the
parties with respect to the meaning of any provisions of such collective
agreements.
"Competitive Business" has the meaning ascribed thereto in section 11.2.
"Contracts" means all contracts, indentures, mortgages, obligations,
instruments, licences, leases, agreements, commitments, entitlements and
engagements of the Target 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.
"Employees" means all persons employed by the Target.
"Employment Agreements" mean the three employment agreements to be executed
by Xxxxx and the Target, Xxxxxx and the Target, Vasil and the Target and
Lindsay and the Target contemporaneous herewith.
"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 Target or its
assets and includes without limitation, any sewer surcharge agreement.
"Environmental Laws" means all Laws relating in whole 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, labeling,
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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 Target.
"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 Target, including without limitation, those in
storage or in transit and other tangible property and facilities used by
the Target whether located in or on the premises of the Target or
elsewhere, including the assets listed and described in Schedule 5.14.
"Governmental Authority" means any federal, state, foreign or local
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 Target 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, know-
how, domain names, domain registrations and all other intellectual property
owned by, licensed to or used by the Target, 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 Target including without limitation, all
inventories of raw materials, work-in progress, finished goods, operating
supplies, packaging materials, travel credits and media 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.
"Lindsay" means Xxx Xxxxxxx.
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"LOI" means that certain letter of intent dated as of July 17, 2000 as
amended July 21, 2000 between Target and Travelbyus.
"Management Sellers" means Xxxxx, Xxxxxx and Xxxxx.
"Material Contract" means; (a) the Equipment Contracts, Real Property
Leases and Benefit Plans; (b) any other Contract involving aggregate annual
payments to or by the Target in excess of $25,000; (c) any commitment to or
by the Target 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 Target.
"Xxxx" means Xxxxxxx Xxxx.
"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 12.3.
"Other Amounts" has the meaning ascribed thereto in section 10.1.
"Parties" means Travelbyus and the Sellers and "Party" means any one of
them.
"Person" means any individual, sole proprietorship, partnership,
unincorporated association, corporation, limited liability company,
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.
"ProSoft" means ProSoft Corporation.
"ProSoft Balance Sheet" means the audited balance sheet of ProSoft as at
June 30, 2000, forming part of the ProSoft Financial Statements for the
last completed fiscal year of ProSoft.
"ProSoft Financial Statements" means the audited balance sheet of ProSoft
as at June 30, 2000 and the accompanying statement of earnings, retained
earnings and statement of cash flow for the period then ended, copies of
which are attached as Schedule 5.7.
"Purchased Shares" means 1,140,000 common shares in the capital of the
Target, held by the Sellers as set forth in Schedule "A" attached hereto.
"Real Property" means collectively, those premises described on Schedule
5.21.
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"Real Property Leases" means those leases, subleases, agreements to lease,
tenancy agreements, rights of occupation, licenses and other agreements
relating to the Real Property.
"Reference Date" has the meaning ascribed thereto in section 3.2.
"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 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 Xxxxxxx X. Xxxxxx.
"Xxxxx" means Xxxx Xxxxx.
"Xxxxxxxxx" means Xxxxx Xxxxxxxxx.
"SEC" means the Securities and Exchange Commission.
"Seene" means Xxxxxxx Seene.
"Sellers" means Saner, Rucker, Vasil, Schneider, Lindsay, Xxxx and Seene.
"SiteRabbit" means XxxxXxxxxx.xxx Inc.
"SiteRabbit Shareholders' Agreement" means that certain agreement dated as
of September 1, 1999 among J. Xxxxxxx Xxxxxx, Xxxxxx London, Xxxxx
Management Services, LLC and ProSoft.
"SiteRabbit Shares" means 49,808 common shares in the capital of
SiteRabbit, representing 11.05% of the issued and outstanding shares
thereof.
"Target" means ProSoft.
"Tax Act" means the Internal Revenue Code, 1986, as amended.
"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 the Target.
"Taxes" means and includes without limitation, all taxes, duties, fees,
premiums, assessments, imposts, levies and other charges of any kind
whatsoever imposed
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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
federal and other government pension plan premiums.
"Transaction" means the transaction of purchase and sale contemplated by
this Agreement.
"Travelbyus" means Xxxxxxxxxx.xxx Ltd.
"Travelbyus Shares" means 1,680,000 common shares in the capital of
Travelbyus.
"TSE" means The Toronto Stock Exchange.
"UCC" means Uniform Commercial Code.
"U.S. Securities Act" means the United States Securities Act of 1933, as
amended.
"Vasil" means Xxxxx X. Xxxxx.
"WSE" means the Winnipeg Stock Exchange.
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.
(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
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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 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 the Party
after reviewing 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 between the Parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties (including without limitation, the LOI)
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 California without regard to its
conflicts of laws provisions and shall be treated in all respects as a
California contract.
1.6 Accounting Principles - Except as provided herein, in this Agreement all
references to generally accepted accounting principles means to principles
recommended, from time to time, by the American Institute of Certified Public
Accountants and all accounting terms not otherwise defined in this Agreement
have the meanings assigned thereto in accordance with United States generally
accepted accounting principles.
1.7 Tender - Any tender of documents or money under this Agreement to be made
upon the Parties or their respective counsel shall be tendered by wire transfer
of immediately available funds to the account specified by that Party.
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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 the
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 "A" Purchased Shares
Schedule 3.1 Allocation of Travelbyus Shares
Schedule 5.1 Registrations of the Target
Schedule 5.3 SiteRabbit Shareholders' Agreement
Schedule 5.4 Capitalization of the Target
Schedule 5.5 Location of Material Assets of the Target
Schedule 5.7 ProSoft Financial Statements
Schedule 5.12 Guarantees of the Target
Schedule 5.13 Material Suppliers and Customers of the Target
Schedule 5.14 Fixed Assets of the Target
Schedule 5.17 Governmental Authorizations of the Target
Schedule 5.19 Intellectual Property of the Target
Schedule 5.20 Equipment Contracts of the Target
Schedule 5.21 Real Property of the Target
Schedule 5.22 Real Property Leases of the Target
Schedule 5.24 Employees of the Target
Schedule 5.26 Benefit Plans of the Target
Schedule 5.27 Insurance of the Target
Schedule 5.28 Material Contracts of the Target
Schedule 5.35 Bank Accounts of the Target
Schedule 5.37 Non-Arm's Length Transactions
Schedule 8.7 Liabilities or Obligations of the Target
ARTICLE 2
CLOSING
2.1 Closing - Subject to the terms and conditions hereof at the Closing Time
the Parties shall complete the Transaction. Closing on the Closing Date shall
occur at the offices of Xxxxxxx Xxxxx & Xxxxxxxxx LLP or such other place as the
Parties may agree.
2.2 Purchase and Sale of the Purchased Shares - Subject to the terms and
conditions herein:
(a) at Closing, the Sellers shall sell, transfer and assign to Travelbyus
and Travelbyus shall purchase and accept the assignment of the
Purchased Shares, free and clear of any and all Encumbrances;
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(b) at Closing, the Sellers shall transfer and deliver to Travelbyus share
certificates representing the Purchased Shares duly endorsed in blank
for transfer or accompanied by irrevocable security transfer powers of
attorney duly executed in blank; and
(c) the Sellers and Travelbyus shall adopt this Agreement as a plan of
reorganization under Internal Revenue Code Section 368(a)(i)(B).
ARTICLE 3
PURCHASE PRICE AND PAYMENT ADJUSTMENT
3.1 The aggregate purchase price for the Purchased Shares shall be satisfied
and paid by Travelbyus as follows: (a) on Closing by way of the issuance of 75%
of the Travelbyus Shares (aggregating 1,260,000 common shares subject to section
3.2) to the Sellers in the numbers set forth on Schedule 3.1 attached hereto and
forming a part hereof; and (b) at the expiry of two years following the
commencement of the term of the Employment Agreements for each of Xxxxx, Xxxxxx
and Xxxxx, by way of the issuance of their remaining 25% of the Travelbyus
Shares (aggregating 420,000 common shares subject to section 3.2) provided that
if any of such Employment Agreements shall have been terminated for cause or by
resignation (as more particularly set forth therein) (other than for an employee
becoming disabled) prior to two years following the commencement of the term
thereof, the entitlement of the applicable affected Seller to his pro rata
portion of such remaining shares shall terminate and such applicable affected
Seller shall not be entitled to receive his pro rata portion of such Travelbyus
Shares, in whole or in part.
3.2 Purchase Price Adjustments - Travelbyus agrees that, subject to requisite
regulatory and stock exchange approvals, the number of the Travelbyus Shares
(from up to a maximum of 1,680,000 common shares) shall be adjusted (the
"Adjustment") on the earlier of (the "Reference Date"); (i) December 15, 2000;
and (ii) the first NASDAQ trading date that is ninety days after the SEC
declares effective the Form S4 registration statement of Aviation (SEC filing
number 333-40352). The Travelbyus Shares shall be adjusted if (and only if) the
average of the daily per share closing price of the common shares of Travelbyus
quoted on NASDAQ for the five trading days prior to and the five trading days
after the Reference Date (the "Average Daily Closing Price") is less than
US$2.50 per share. Travelbyus will use its best efforts to effect the
adjustment within fifteen trading days after the Reference Date and will use its
best efforts to ensure that additional common shares in the capital of
Travelbyus (the "Additional Shares") are issued to the Sellers pro rata (in
accordance with the percentages set forth in Schedule 3.1) so that the aggregate
value of the Travelbyus Shares and the Additional Shares, equals US$4.2 million
as at the Reference Date (notwithstanding the provisions of section 3.1(b)). If
the common shares of Travelbyus are not quoted on NASDAQ but are listed on any
other U.S. stock exchange, then the price per share will be calculated by
reference to the closing price on that exchange.
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For greater certainty and without limitation, if as of the Reference Date, the
common shares of Travelbyus are not listed and quoted on NASDAQ but are listed
and quoted on another foreign stock exchange, then the Average Daily Closing
Price shall be calculated by reference to the closing price on such exchange and
shall be adjusted for currency exchange rates. Notwithstanding the foregoing, in
no event shall Travelbyus be obligated to issue to the Sellers greater than
1,680,000 Additional Shares as part of the Adjustment. If at any time prior to
the issuance of the Additional Shares to the Sellers:
(a) the outstanding Travelbyus Shares are subdivided or are consolidated
into a greater or lesser number of Travelbyus Shares, respectively;
(b) the Travelbyus Shares are reclassified, exchanged for or converted
into other shares, securities or property;
(c) a stock dividend has been declared and paid on the Travelbyus Shares;
(d) there has been an amalgamation, merger, consolidation or other
reorganization affecting Travelbyus; or
(e) there has been a transfer of all or substantially all of the
undertaking or assets of Travelbyus to another corporation or entity,
(any of such events being referred to in this paragraph 3.2 as a "Change"), then
the Sellers, after the effective date of the Change, shall be entitled to
receive and shall accept and Travelbyus shall deliver in accordance with this
Agreement, in lieu of the number of Additional Shares deliverable prior to the
effective date of the Change, the aggregate number and kind of Additional Shares
or other securities or amount of property which the Sellers would have been
entitled to as a result of the Change if, on the effective date thereof, the
Sellers had been the registered holder of the number of Additional Shares they
would have received had they received the Additional Shares immediately before
the effective date of the Change.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS
Each of the Sellers severally represents and warrants as follows and
acknowledges that Travelbyus is relying on such representations and warranties
in entering into this Agreement:
4.1 Options - Such Seller has not granted an option to any third Person to
acquire any of its Purchased Shares.
4.2 Title to Assets - Such Seller is the sole registered owner of their
Purchased Shares with good and valid title thereto, which will be free and clear
of all Encumbrances at the Closing Time.
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4.3 Regulatory Approvals - To such Seller's knowledge, no Governmental
Authorization is required on the part of such Seller 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 by such Seller.
4.4 Right to Sell - Such Seller has the exclusive right to deal with their
Purchased Shares as provided in this Agreement. None of the Purchased Shares
are subject to any shareholders' agreement, voting trust or voting agreement.
4.5 Enforceability of Obligations - This Agreement has been duly executed
and delivered by such Seller and constitutes a valid and binding obligation
enforceable against such Seller 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 save and except that equitable remedies such as specific performance
and injunction are available only in the discretion of a court of competent
jurisdiction.
4.6 Absence of Conflicting Agreements - At the Closing Time, such Seller
will not be a party to, bound or affected by or subject to any Contract or, to
such Seller's knowledge, Law, which would be violated, contravened, breached by
or under which default would occur or an Encumbrance in respect of the Purchased
Shares would be created as a result of the execution, delivery and performance
of this Agreement by such Seller or any other agreement to be entered by such
Seller under the terms of this Agreement.
4.7 Residence of the Sellers - Such Seller's State of residence is as set
forth on page one or two of this Agreement.
4.8 No Litigation - To such Seller's knowledge, there are no outstanding
Claims at law or in equity or before any Governmental Authority pending,
proposed or threatened which would prevent such Seller from completing the
Transaction.
4.9 Bankruptcy - Such Seller has not committed an act of bankruptcy, is
not insolvent, has not proposed a compromise or arrangement to their creditors
generally, has not had any petition for a receiving order in bankruptcy filed
against them, has not made a voluntary assignment in bankruptcy, has not taken
any proceeding with respect to a compromise or arrangement, has not taken any
proceeding to have themselves declared bankrupt or wound up, has not taken any
proceeding to have a receiver appointed of any of their assets, has not had any
encumbrancer take possession of any of their property and has not had any
execution or distress become enforceable or become levied upon any of their
property. The Transaction contemplated herein will not result in such Seller
becoming insolvent.
4.10 Non-Arm's Length Transactions - Neither such Seller nor any Person not
dealing at arm's length with such Seller:
(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
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supplier of the Target;
(b) owns, directly or indirectly, any interest in any property or asset of
the Target;
(c) is a party to any Contract with the Target, save and except as
contemplated by the Employment Agreements; or
(d) has any indebtedness, liability or obligation to the Target,
4.11 United States Offers and Sales of Consideration Shares - Such Seller
understands that the Travelbyus Shares (including for greater certainty and
without limitation, the Additional Shares) have not been and will not be
registered under the U.S. Securities Act or any state securities laws (the "Blue
Sky Laws") and that the sale contemplated hereby is being made in reliance on an
exemption from the registration requirements of the U.S. Securities Act and any
applicable Blue Sky Laws. Such Seller further understands that the Travelbyus
Shares (including for greater certainty and without limitation, the Additional
Shares) may not be offered, sold, transferred, pledged or hypothecated in the
United States in the absence of an effective registration statement under the
U.S. Securities Act or an opinion of counsel reasonably suitable to Travelbyus
that registration is not required. Such Seller acknowledges that they have had
access to such information concerning Travelbyus as they have considered
necessary in connection with their decision to invest in the Travelbyus Shares
(including for greater certainty and without limitation, the Additional Shares)
including the information and statements regarding Travelbyus referenced in
section 6.8. Such Seller acknowledges that they and/or their advisors have had
the opportunity to ask questions and to receive answers from Travelbyus, or a
Person or Persons acting on their behalf, regarding Travelbyus and the
Travelbyus Shares (including for greater certainty and without limitation, the
Additional Shares) and to obtain any additional information so requested that
Travelbyus possesses or can acquire without unreasonable expense or effort, that
is necessary to verify the accuracy of any other information, and all questions
have been answered and all such information has been provided to the full
satisfaction of such Seller. Such Seller acknowledges that they have, either
alone or with their advisors, such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of their
investment in the Travelbyus Shares (including for greater certainty and without
limitation, the Additional Shares) and that they are able to bear the economic
risks of such investment. None of such Sellers is purchasing the Travelbyus
Shares (including for greater certainty and without limitation, the Additional
Shares) as a result of any general solicitation or general advertising (as those
terms are used in Regulation D under the U.S. Securities Act), including
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or television or
any seminar or meeting whose attendees have been invited by general solicitation
or general advertising. Such Seller understands that they may not offer, sell or
otherwise transfer any of the Travelbyus Shares (including for greater certainty
and without limitation, the Additional Shares) directly or indirectly, unless:
(i) the sale is to Travelbyus; or (ii) the transaction does not require
registration under the U.S. Securities Act or any applicable Blue Sky Laws or
United States state laws and regulations governing the offer and sale
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of securities and, if reasonably required, such Seller has furnished to
Travelbyus an opinion of counsel of recognized standing to that effect
reasonably satisfactory to Travelbyus. Such Seller understands that Travelbyus
is under no obligation to register the Travelbyus Shares for sale in the United
States or California (including for greater certainty and without limitation,
the Additional Shares) on their behalf or to assist such Seller in complying
with any exemption from registration. Such Seller understands and acknowledges
that upon the original issuance of the Travelbyus Shares (including for greater
certainty and without limitation, the Additional Shares) and until such time as
is no longer required under applicable requirements of the U.S. Securities Act
or applicable Blue Sky Laws, all certificates representing the Travelbyus Shares
(including for greater certainty and without limitation, the Additional Shares)
and all certificates issued in exchange therefor or in substitution thereof,
shall bear, on the face of such certificates, the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR ANY
STATE SECURITIES LAWS (THE "BLUE SKY LAWS"). THESE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE UNITED
STATES IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH
SECURITIES UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO TRAVELBYUS THAT REGISTRATION IS NOT REQUIRED.
4.12 Brokers - Such Seller has not entered into any Contract that would
entitle any Person, on or after the Closing Time to a Claim against Travelbyus
or the Target 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.
4.13 Full Disclosure - None of the representations and warranties of such
Seller knowingly contains any untrue statement of a material fact or knowingly
omits to state any material fact necessary to make any such representation or
warranty not misleading to a prospective purchaser of the Purchased Shares
seeking full information thereto and to the Business.
4.14 Canadian Legend - Each of the Sellers understands and acknowledges
that upon the original issuance of the Travelbyus Shares (including for greater
certainty and without limitation, the Additional Shares) and until such time as
is no longer required under applicable requirements of Canadian securities laws,
all certificates representing Travelbyus Shares (including for greater certainty
and without limitation, the Additional Shares) and all certificates issued in
exchange therefor or in substitution thereof, shall bear, on the face of such
certificates, the following legend, provided that the legend shall be removed
from such certificate at the request and expense of the holder thereof at any
time after December 12, 2000 without the requirement of obtaining an opinion of
counsel:
THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNTIL DECEMBER 12, 2000,
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EXCEPT IN ACCORDANCE WITH APPLICABLE CANADIAN SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE; HOWEVER, THE SAID SECURITIES CAN NOT BE TRADED THROUGH THE FACILITIES
OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRADEABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON THE TORONTO STOCK EXCHANGE. THIS LEGEND MAY ONLY BE REMOVED
UPON THE CORPORATION'S RECEIPT OF A LEGAL OPINION CONFIRMING COMPLIANCE WITH
APPLICABLE SECURITIES LEGISLATION.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET
The Management Sellers jointly and severally represent and warrant to Travelbyus
as follows and acknowledge that Travelbyus is relying on their representations
and warranties in entering into this Agreement:
5.1 Incorporation and Registration - The Target 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 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 Target requires it to be registered, licensed or
otherwise qualified as a foreign corporation in any jurisdiction save and except
as provided in Schedule 5.1.
5.2 Absence of Conflicting Agreements - The Target is not a party to, bound or
affected by or subject to any Contract or, to the knowledge of such Seller, Law,
which would be violated, contravened, breached by or under which default would
occur (which breach or default would, alone or in the aggregate, have an adverse
impact on the business of Target) or an Encumbrance would be created as a result
of the execution, delivery and performance of this Agreement by the Sellers.
5.3 Subsidiaries - The Target does not own or have any interest in any
securities of any other Person save and except for SiteRabbit. The Target owns
the SiteRabbit Shares, free and clear of any and all Encumbrances. The
SiteRabbit Shares are not subject to any shareholders' agreement, voting trust
or voting agreement other than the SiteRabbit Shareholders' Agreement, which is
in full force and effect unamended as of the date hereof, a copy whereof is set
forth in Schedule 5.3.
5.4 Capitalization - The authorized capital and the issued capital of the
Target is as set forth in Schedule 5.4. All of the outstanding shares in the
capital of the Target have been duly and validly issued and are outstanding as
fully paid and non-assessable shares of the Target and are all registered as
provided in Schedule 5.4. No options, warrants or other rights to purchase
shares or other securities of the Target and no
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securities or obligations convertible into or exchangeable for shares or other
securities of the Target have been authorized or agreed to be issued or are
outstanding and all of such options, warrants or other rights shall be
terminated on or before Closing.
5.5 Title to Assets - The Target 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 Target are situated in
the locations set forth in Schedule 5.5.
5.6 Regulatory Approvals - To the knowledge of the Management Sellers, no
Governmental Authorization is required on the part of the Target in connection
with the execution, delivery and performance of this Agreement by the Sellers.
5.7 ProSoft Financial Statements - The ProSoft Financial Statements attached as
Schedule 5.7 present fairly:
(i) the assets, liabilities and financial position of the Target as
at the date indicated; and
(ii) the sales, earnings, results of operation and statement of cash
flows of the Target for all of the periods indicated.
and to the knowledge of the Management Sellers, have been prepared in accordance
with GAAP.
5.8 Absence of Undisclosed Liabilities - Since the date of the ProSoft Balance
Sheet, the Target 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. The Target does not have any liability,
obligation to or agreement with any Person not dealing at arm's length with the
Target.
5.9 Absence of Changes or Unusual Transactions - Since the date of the ProSoft
Balance Sheet, and except as caused by services performed for Travelbyus which
have not been invoiced or paid for, the Target has carried on the Business and
has conducted 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 Target, 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 Target;
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(c) any transfer, assignment, sale or other disposition of any of the
assets shown or reflected in the ProSoft Balance Sheet or cancellation
of any debts or entitlements except in each case in the ordinary
course of business;
(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 ProSoft Balance Sheet and liabilities incurred since
the date of the ProSoft 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 Target;
(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 any 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 Target 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 shares of the Target or directly or indirectly
the purchase or other acquisition of any of the shares of the Target;
or
(k) the authorization, agreement or other commitment to do any of the
foregoing.
5.10 Reserves and Accruals - There are no reserves or Accrued Liabilities of
the Target not disclosed on or reflected in the ProSoft Financial Statements and
the Books and Records of the Target.
5.11 No Joint Venture Interests, etc. - The Target 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 Target has no other significant investment
interests in any business owned or controlled by any third Person.
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5.12 Absence of Guarantees - Save and except as provided in Schedule 5.12, the
Target has not given or agreed to give and is not 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 Target is, or is contingently,
responsible for such indebtedness or other obligations.
5.13 Major Suppliers and Customers - Schedule 5.13 sets forth a comprehensive
listing of each material supplier of goods and services to and each material
customer of the Target. To the knowledge of the Management Sellers, no material
supplier or customer has any intention of changing its relationship or the terms
upon which it conducts business with the Target as a result of the Transaction.
5.14 Condition of Assets - To the knowledge of the Management Sellers, 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 5.14 are all of the Fixed Assets used to earn income on the ProSoft
Financial Statements.
5.15 Inventories - All Inventories are valued on the books of the Target at the
lower of out of pocket cost or net recoverable value.
5.16 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. The Accounts Receivable are not subject to any defence,
counterclaim or set off.
5.17 Business in Compliance with Law - To the knowledge of the Management
Sellers, the operations of the Target have been and are now being conducted in
compliance with all applicable Laws of each jurisdiction in which the Target
carries on or has carried on business and the Target has not received notice of
any alleged breach of any such Laws. To the knowledge of the Management Sellers,
the Governmental Authorizations set forth in Schedule 5.17 are all
authorizations required by the Target to carry on the Business in compliance
with applicable Laws. To the knowledge of the Management Sellers, such
Governmental Authorizations are in full force and effect in accordance with
their terms and there have been no violations thereof and no proceedings are
pending or to the knowledge of the Management Sellers, threatened, which could
result in their revocation or limitation.
5.18 Restrictive Covenants - The Target is not a party to and is not bound or
affected by any commitment, agreement or document containing any covenant
expressly limiting the freedom of the Target 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 Target or the continued operation of the Business after Closing on
substantially the same basis as the Business is currently carried on.
5.19 Intellectual Property - Schedule 5.19 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
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beneficial owner of such registrations and applications. The Target (as
indicated in Schedule 5.19) has the exclusive right to use and is the exclusive
owner 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). The Intellectual Property which is not owned by the Target is
being used by the Target 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 5.19. 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 Management Sellers 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 Target relating to the Intellectual Property. The
Management Sellers have no knowledge that the Target, any activity in which the
Target is engaged or any product which the Target uses or sells or any process,
method, packaging, advertising or material that the Target 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
Target to carry on the Business. Schedule 5.19 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
Management Sellers 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 Target.
5.20 Equipment Contracts - Schedule 5.20 sets forth a complete list of all
Equipment Contracts together with a description of the equipment and vehicles to
which the Equipment Contracts relate.
5.21 Real Property - Schedule 5.21 contains a description of all Real Property
owned, leased or occupied by the Target. Save and except as set forth in
Schedule 5.21 there are no contracts or other documents registered or
unregistered affecting or relating to title of the Real Property.
5.22 Real Property Leases - Schedule 5.22 sets forth a complete list of the
Real Property Leases. Each of the Real Property Leases is in full force and
effect and is enforceable against the landlord thereunder. All interests held
by the Target as lessee under the Real Property Leases are free and clear of all
Encumbrances of any nature and kind whatsoever. There are no consents necessary
as a result of the completion of the Transaction save and except as set forth in
Schedule 5.22. All payments required to be made by the Target pursuant to the
Real Property Leases have been duly paid and the Target is not otherwise in
default in meeting its obligations under any of the Real Property Leases. The
Management Sellers have no knowledge that any of the landlords under each of the
Real Property Leases are in default in meeting any of the material obligations
under their respective Real Property Leases. Except as detailed on
-21-
Schedule 5.22, the Target does not have any option, right of first refusal or
other contractual right relating to the Real Property. To the knowledge of the
Management Sellers, no event exists which, but for the lapse of time or the
giving of notice, or both, would constitute default under any such option, right
of first refusal or other contractual right and to the knowledge of the
Management Sellers, no Person is claiming any such material default or taking
any action purportedly based upon any default. To the knowledge of the
Management Sellers, no event exists which, but for the passing of time or the
giving of notice or both, would constitute a default by any party to any of the
Real Property Leases and no party to any Real Property Lease is claiming any
such default or taking any action purportedly based upon any such default. The
Target has not waived or omitted to take any action in respect of any
substantial rights under any of the Real Property Leases.
5.23 Environmental Matters - All operations of the Target conducted on the Real
Property or any other property now or formerly under its charge, management,
operation or control have been and are now, in compliance with all Environmental
Laws. All Environmental Approvals required to be held by the Target 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 Management Sellers, threatened to revoke or amend any
Environmental Approvals. Neither the Target nor any of its operations has been
or is now the subject of any Remedial Order nor do the Management Sellers 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 Management Sellers have knowledge of any circumstances
which could result in the issuance of any such Remedial Order. The Target has
never been prosecuted for or convicted of any offence under Environmental Laws
nor has the Target 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 Management Sellers, there is no basis for any such
proceeding.
5.24 Employment Matters - Schedule 5.24 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 December 31, 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 Target. Except as disclosed in Schedule 5.24 no Employee is on
long-term disability leave, extended absence or is receiving workers'
compensation. Save and except as contemplated by the Employment Agreements and
as previously provided to Travelbyus, 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 5.24, 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
Target. To the knowledge of the Management Sellers, the Target has been
-22-
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
Target. There are no complaints nor to the knowledge of the Management Sellers,
are there any threatened complaints, against the Target before any employment
standards branch or tribunal or human rights tribunal. To the knowledge of the
Management Sellers, nothing has occurred which might lead to a complaint against
the Target 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 Target to do or refrain from doing any act. The Target 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, have been paid or accrued
for on the Books and Records of the Target.
5.25 No Collective Agreements - The Target 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 Target. 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 Target 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 contractors
of the Target. There is no strike or lock-out occurring or threatened which
affects or would affect the Target. The Target has no unresolved grievances or
pending arbitration cases outstanding. The Target has no serious labour
problems that might materially affect the value of the Target or that might lead
to an interruption of the Business.
5.26 Benefit Plans - Schedule 5.26 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 Travelbyus 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
Target has not received, in the last three years, notice from any Person
questioning or challenging such compliance and the Management Sellers have no
knowledge of any such notice from any Person questioning or challenging such
compliance beyond the last three years. All obligations
-23-
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 Target nor do the Management Sellers 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 Travelbyus. 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 respecting any Benefit Plan which would entitle any Person (without the
consent of the Target) 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 Target 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.
5.27 Insurance - The Target maintains such policies of insurance, issued by
responsible insurers, as are appropriate to its 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 Target is not in
default as to the payment of premiums or otherwise under the terms of any such
policy. Schedule 5.27 sets forth a complete list of all policies of insurance
which the Target 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.
5.28 Contracts - Except for the Material Contracts listed in Schedule 5.28, the
Target is not a party to or bound by any Material Contract. The Material
Contracts listed in Schedule 5.28 are all in full force and effect, unamended
and no default exists under
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such Material Contracts on the part of any of the parties to such Contracts,
except as noted on Schedule 5.28. Except as noted on Schedule 5.28 none of the
Material Contracts include provisions requiring consent to a change of control
of the Target. Current and complete copies of the Material Contracts have been
delivered to Travelbyus. Except as noted on Schedule 5.28, there are no current
or pending negotiations with respect to the renewal, repudiation or amendment of
any such agreement, plan or policy.
5.29 Litigation - There is no Claim, including appeals and applications for
review, in progress, or, to the knowledge of the Management Sellers, pending or
threatened against or relating to the Target before any court, Governmental
Authority, commission, board, bureau, agency or arbitration panel.
5.30 Tax Matters - The Target has filed on a timely basis (within the time and
manner required by law including any extensions of time to file) 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 Closing, the Target
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 its income, business, assets or property) and all
interest and penalties thereon, for all previous years and all required
quarterly installments based on quarterly installment requirements for prior
fiscal years, 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 Target
will have provided adequate reserves, if any, for all Taxes for the period ended
December 31, 2000. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the payment of any Tax,
governmental charge or deficiency by the Target nor are there any examination,
actions, suits, proceedings, investigations or claims now threatened or pending
against the Target in respect of, or discussions under way with any governmental
authority relating to, any such Tax or governmental charge or deficiency.
The Target has not:
(i) acquired or had the use of any property from a Person with whom the
Target was not dealing at arm's length other than at fair market value;
(ii) disposed of any property to a Person with whom the Target was not dealing
at arm's length for proceeds less than the fair market value thereof; or
(iii) discontinued carrying on any business in respect of which non-capital
losses were incurred and any non-capital losses which the Target has are
not losses from property or business investment losses.
There are no contingent tax liabilities for the period ended December 31, 2000
and prior fiscal periods nor any grounds which would prompt a reassessment
except and excluding any contingent tax liabilities that relate to or result
from this transaction. The schedules attached to the corporate income tax
returns by the Target for its taxation years ended December 31, 1999, reflect
and disclose all transactions to which the
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Target was a party that are required to be disclosed by applicable revenue laws
and all such transactions are reflected or disclosed in such financial
statements and schedules and such corporate income tax returns and schedules
have been duly and accurately completed as required by such Acts. This section
5.30 is qualified in its entirety by the 1999 corporate tax liability (including
any penalties and interest thereon) disclosed or reflected in the ProSoft
Financial Statements. Travelbyus acknowledges and agrees that Target is an S
corporation for the purposes of the U.S. Tax Code and that such S status shall
terminate by law upon Closing and that Travelbyus shall be liable for any and
all tax consequences to the Target of the termination of S status.
5.31 Books and Records - All Books and Records of the Target have been
delivered or made available to Travelbyus. The Books and Records of the Target
fairly and correctly set out and disclose in all material respects the financial
position of the Target and all financial transactions of the Target have been
accurately recorded in the Books and Records of the Target.
5.32 Corporate Records and Minute Book - The corporate records and minute books
of the Target have been delivered or made available to Travelbyus. The articles
and by-laws of the Target are in full force and effect and no amendments have
been made to the same. The minute books, including the articles and by-laws of
the Target include complete and accurate minutes of all meetings of the
directors or shareholders of the Target, as applicable, held to date or
resolutions passed by the directors or shareholders on consent, since the date
of incorporation of the Target. The share certificate book, register of
shareholders, register of transfers and register of directors of the Target, are
complete and accurate.
5.33 Trade Allowances - No customers of the Target 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.
5.34 [Intentionally deleted]
5.35 Bank Accounts, etc - Schedule 5.35 sets forth a complete list of every
financial institution in which the Target 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.
5.36 Judgments and Executions and Insolvency Proceedings - There are no
judgments or executions against the Target which are outstanding and
unsatisfied. The Target has not made any assignment for the benefit of
creditors nor has any receiving order been made against the Target under the
provisions of any applicable bankruptcy or insolvency legislation nor has any
petition for such an order been served upon the Target.
5.37 Non-Arm's Length Transactions - Since June 30, 2000, the Target has not
made any payment or loan to or borrowed any money from and is not otherwise
indebted to, any officer, director, Employee, shareholder or any other Person
not
-26-
dealing at arm's length with the Target except as disclosed in the ProSoft
Financial Statements and Schedule 5.37 and except for usual Employee
reimbursements and compensation paid in the ordinary and normal course of the
Business. The Target 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
Target. No officer, director or shareholder of the Target 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 representing less than one
percent of the outstanding shares 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 Target or
a lessor, lessee, supplier, distributor, sales agent or customer of the Business
or the Target; (ii) owns, directly or indirectly, in whole or in part, any
property that the Target uses in the operation of the Business; or (iii) has any
Claim whatsoever against or owes any amount to the Target in connection with the
Business, except for any liabilities reflected in the ProSoft Financial
Statements and claims in the ordinary and normal course of business such as for
accrued vacation pay and accrued benefits for Employees.
5.38 [Intentionally Deleted]
5.39 UCC Searches - For the purposes of permitting Travelbyus to perform
searches of the UCC records; (i) the Target has not conducted business under any
name other than ProSoft Corporation and Atlantis Laboratory Systems within the
last five years; (ii) the chief executive office or principal place of business
of the Target is and has at all times within the last five years been located in
San Diego, California; and (iii) the Target does not own any personal property,
as such term is defined in the applicable UCC that is located in any
jurisdiction other than the jurisdictions described in (ii) hereof.
5.40 Ownership of Property - The Target does not own any titled motor vehicles,
vessels, aircraft, trademarks, copyrights, patents, railcars or other similar
types or items of property that have a recordation system for liens against such
property other than the recordation system set forth in the applicable UCC. The
Target is not a party to any contracts with the United States Government or any
division thereof.
5.41 Full Disclosure - The Management Sellers have made available to Travelbyus
all information including the financial, marketing, sales and operational
information on a historic basis relating to the Target which would be material
to a purchaser of the Purchased Shares. To the knowledge of the Management
Sellers, all information, which has been provided to Travelbyus is true and
correct in all material respects and does not contain any untrue statement of a
material fact and no material fact or facts have been omitted therefrom which
would make such information misleading. The Management Sellers do not have
knowledge of any facts nor are there are any facts that should be reasonably
known to the Management Sellers relating to the Purchased Shares or the Business
not disclosed in this Agreement which might be reasonably expected to diminish
the appreciation of the worth or profitability of the Business which if known
by Travelbyus, might be reasonably expected to deter Travelbyus from completing
the Transaction.
-27-
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF TRAVELBYUS
Travelbyus represents and warrants to the Sellers as follows and acknowledges
that the Sellers are relying on the representations and warranties of Travelbyus
in entering into this Agreement:
6.1 Incorporation and Registration - Travelbyus 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.
6.2 Enforceability of Obligations - This Agreement has been duly executed and
delivered by Travelbyus and constitutes a valid and binding obligation of
Travelbyus enforceable against Travelbyus 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 save and except that equitable remedies, such as specific
performance and injunction are available only in the discretion of a court of
competent jurisdiction.
6.3 Absence of Conflicting Agreements - Travelbyus 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.
6.4 No Litigation - There are no outstanding Claims at law or in equity or
before any Governmental Authority pending or to the knowledge of Travelbyus,
proposed or threatened, which would prevent Travelbyus from completing the
Transaction.
6.5 Purchased Shares - The Travelbyus Shares (and if applicable, the
Additional Shares) form part of a class of shares that are listed and posted for
trading on the TSE and the WSE and upon issuance will be duly and validly issued
and outstanding as fully paid and non-assessable common shares without nominal
or par value.
6.6 Regulatory Approvals - Save and except for the approval of the TSE and the
WSE, no Governmental Authorization is required on the part of Travelbyus 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.
6.7 Reporting Issuer Status - Travelbyus is a "reporting issuer" within the
meaning of the Securities Act (Alberta), (British Columbia), (Saskatchewan),
(Manitoba), (Ontario) and (Quebec) and is not in default of any requirement of
applicable Laws and no material change relating to Travelbyus 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
-28-
has issued any order preventing or suspending trading in any securities of
Travelbyus or prohibiting the issue and sale of the common shares in the capital
of Travelbyus and to the knowledge of Travelbyus no such proceedings for such
purposes are pending or threatened.
6.8 Fully Disclosed Information - The information and statements with respect
to Travelbyus set forth in all information filed with the securities
commissions of the provinces of Alberta, British Columbia, Saskatchewan,
Manitoba, Ontario and Quebec and the TSE and the WSE is in compliance or
intended compliance with applicable Laws, were true, correct and complete and
did not contain any misrepresentations as of the date of such information or
statement.
6.9 Business in Compliance with Law - To the knowledge of Travelbyus the
operations of Travelbyus have been and are now being conducted in compliance
with all applicable Laws of each jurisdiction in which Travelbyus carries on or
has carried on business and Travelbyus has not received notice of any alleged
breach of any such Laws.
6.10 Judgments and Executions and Insolvency Proceedings - There are no
judgments or executions against Travelbyus which are outstanding and
unsatisfied. Travelbyus has not made any assignment for the benefit of
creditors nor has any receiving order been made against Travelbyus under the
provisions of any applicable bankruptcy or insolvency legislation nor has any
petition for such an order been served upon Travelbyus.
ARTICLE 7
NON-WAIVER; SURVIVAL
7.1 Non-Waiver - No investigations made by or on behalf of Travelbyus or the
Sellers at any time shall have the effect of waiving, diminishing the scope of
or otherwise affecting any representation or warranty made by the Sellers or
Travelbyus 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.
7.2 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 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, 4.2, 4.3,
4.5 and 4.6 shall survive and continue in full force and effect
without limitation of time;
-29-
(iii) 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 Target
for any particular taxation year ended on or prior to the Closing
Date; and
(iv) all other representations and warranties shall survive for a period
of two years from the Closing Date.
7.3 Timing of Survival - For the purposes of section 7.3 relating to the
survival of representations, warrants and covenants contained in this Agreement,
a claim for breach of a representation, warranty or covenant shall be deemed to
have been properly brought if notice of the asserted claim shall have been
delivered to the Sellers or Travelbyus, as the case may be, prior to the last
day for survival for such representation, warranty or covenant.
ARTICLE 8
TRAVELBYUS CONDITIONS PRECEDENT
The obligation of Travelbyus to complete the Transaction 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 Travelbyus and may be waived by Travelbyus in whole or
in part):
8.1 Truth and Accuracy of the Sellers' Representations and Warranties at the
Closing Time - All of the Sellers' representations and warranties made in or
pursuant to this Agreement shall be true and correct as at the Closing Time.
8.2 Performance of Obligations - The Sellers shall have performed or complied
with, in all respects, their obligations, covenants and agreements under this
Agreement.
8.3 Receipt of Closing Documentation - All documentation relating to the due
authorization and completion of the Transaction under this Agreement and all
actions and proceedings taken on or prior to Closing in connection with the
performance by the Sellers of their obligations under this Agreement, shall be
satisfactory to Travelbyus, acting reasonably and Travelbyus shall have received
copies of all such documentation or other evidence as Travelbyus may reasonably
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 Travelbyus, acting reasonably.
8.4 Opinion of Counsel for the Target - Travelbyus shall have received an
opinion dated the Closing Date from counsel to the Target, on terms and
conditions reasonably satisfactory to Travelbyus and its counsel.
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8.5 Releases - All resigning directors and officers of the Target shall have
executed full and final releases, in form and content reasonably satisfactory to
Travelbyus.
8.6 Employment Agreements - The Employment Agreements shall have been executed
by all parties thereto, on terms and conditions satisfactory to Travelbyus.
8.7 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 Closing,
including for greater certainty and without limitation, a waiver of any and all
rights of the other shareholders of SiteRabbit as set forth in the SiteRabbit
Shareholders' Agreement.
8.8 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.
8.9 Purchase of SiteRabbit Shares - Travelbyus shall contemporaneously purchase
all of the issued and outstanding shares of SiteRabbit.
If any of the foregoing conditions in this Article have not been fulfilled by
Closing, Travelbyus may terminate this Agreement by notice in writing to the
Sellers, in which event Travelbyus is released from all obligations under this
Agreement and unless Travelbyus can show that the condition relied upon could
reasonably have been performed by the Sellers, the Sellers are also released
from all obligations under this Agreement. Travelbyus 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-fulfillment 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 9
SELLERS' CONDITIONS PRECEDENT
The obligation of the Sellers to complete the Transaction under this Agreement
shall be subject to the satisfaction of or compliance with, at or before
Closing, each of the following conditions precedent (each of which is
acknowledged to be inserted for the exclusive benefit of the Sellers and may be
waived by the Sellers in whole or in part).
-31-
9.1 Truth and Accuracy of Travelbyus' Representations and Warranties at Closing
Time - All of the representations and warranties of Travelbyus made in or
pursuant to this Agreement shall be true and correct as at Closing.
9.2 Performance of Obligations - Travelbyus shall have performed or complied
with, in all respects, all of its obligations, covenants and agreements under
this Agreement.
9.3 Receipt of Closing Documentation - All documentation relating to the due
authorization and completion of the Transaction and the issuance of the
Travelbyus Shares (and if applicable, the Additional Shares) and all actions and
proceedings taken on or prior to Closing in connection with the performance by
Travelbyus of the obligations of Travelbyus under this Agreement, shall be
satisfactory to the Sellers, acting reasonably and the Sellers shall have
received copies of all such documentation or other evidence as the Sellers 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 Sellers, acting reasonably.
9.4 Opinion of Counsel for Travelbyus - The Sellers shall have received an
opinion dated the Closing Date from counsel to Travelbyus with respect to
Travelbyus, on terms and conditions satisfactory to the Sellers and their
respective counsel.
9.5 Employment Agreements - The Employment Agreements shall have been executed
by all parties thereto, on terms and conditions satisfactory to the parties
thereto.
9.6 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
Authority) 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 Closing.
9.7 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.
9.8 Options - Travelbyus shall issue options to those people and in those
amounts set forth in Schedule 9.8 hereto, provided that in no event shall such
options be exercisable prior to the date Travelbyus receives all necessary
regulatory approvals to such grant, including, without limitation, approval of
The Toronto Stock Exchange.
If any of the foregoing conditions in this Article have not been fulfilled by
Closing, the Sellers may terminate this Agreement by notice in writing to
Travelbyus in which event
-32-
the Sellers are released from all obligations under this Agreement and unless
the Sellers can show that the condition relied upon could reasonably have been
performed by Travelbyus, Travelbyus is also released from all obligations under
this Agreement. The Sellers 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 10
INDEMNIFICATION
10.1 Indemnification by the Management Sellers - Subject to section 7.2, the
Management Sellers agree to indemnify and save harmless Travelbyus without
duplication on an after-tax basis from and against all losses suffered or
incurred by Travelbyus from and after Closing as a result of or arising directly
or indirectly out of or in connection with:
(a) any breach by the Management Sellers of or any inaccuracy of any of the
representations and warranties of the Management Sellers set out in
Article 4 of this Agreement, on a several basis as set out in Article 4
of this Agreement;
(b) any breach by the Management Sellers of or any inaccuracy of any of the
representations and warranties of the Management Sellers set out in
Article 5 of this Agreement, on a joint and several basis as set out in
Article 5 of this Agreement;
(c) any breach or non-performance by the Management Sellers of any
covenants to be performed by the Management Sellers under this
Agreement; and
(d) except to the extent Taxes are reserved or are disclosed for on the
ProSoft Financial Statements, (i) for any and all Taxes with respect to
all taxation years of the Target ending on or prior to December 31,
1999, except and excluding any and all Taxes that may arise from or
result from the Transaction; (ii) all Taxes allocated to the Management
Sellers pursuant hereto; and (iii) any losses or expenses with respect
to all taxation years of the Target ending on or prior to December 31,
1999, 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
except and excluding any and all Taxes that may arise from or result
from the Transaction (collectively, the "Other Amounts"). For greater
certainty and without limitation, each of Travelbyus and the Management
Sellers shall prepare or cause to be prepared in a manner consistent
with past practice and shall file or cause to be filed, all Tax Returns
of the Target with respect to periods ending on or before the
-33-
Closing Date. Tax Returns shall be subject to review and approval by
Travelbyus. Tax Returns shall be delivered to Travelbyus 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 Target or
otherwise asserts a claim, makes an assessment or disputes the amounts
of Taxes for a tax year ending on or prior to December 31, 1999 (which
the Management Sellers are or may be liable for under this Agreement),
Travelbyus shall promptly inform the Management Sellers and the
Management Sellers 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
Management Sellers are liable under this Agreement. For greater
certainty and without limitation, each of Travelbyus and the Management
Sellers 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. It is
understood and agreed that Travelbyus will bear the expense of
preparing the corporate return and the shareholder corresponding
filings for the abbreviated Year 2000 (January 1, 2000 through
Closing).
10.2 Indemnification by Sellers - Subject to section 7.2, the Sellers agree to
indemnify and save harmless Travelbyus without duplication on an after-tax basis
from and against all losses suffered or incurred by Travelbyus from and after
Closing as a result of or arising directly or indirectly out of or in connection
with:
(a) any breach by the Sellers of or any inaccuracy of any of the
representations and warranties of the Sellers set out in Article 4 of
this Agreement, on a several basis as set out in Article 4 of this
Agreement; and
(b) any breach or non-performance by the Sellers of any covenants to be
performed by the Sellers under this Agreement.
10.3 Indemnification Limitations - Subject to section 7.2, the Sellers will
have liability (for indemnification or otherwise) for any losses suffered or
incurred by Travelbyus from and after Closing with respect to the matters
described in this Section 10 only for an amount up to the closing price of the
Travelbyus Shares on the Closing Date. Each of the Sellers will have liability
only for his, her or its pro-rata amount of Travelbyus Shares received on the
Closing Date.
10.4 Indemnification by Travelbyus - Travelbyus agrees to indemnify and save
harmless the Sellers on an after-tax basis from and against all losses suffered
or
-34-
incurred by the Sellers from and after Closing as a result of or arising
directly or indirectly out of or in connection with:
(a) any breach by Travelbyus of or any inaccuracy of any of the
representations and warranties of Travelbyus set out in Article 6 of
this Agreement; and
(b) any breach or non-performance by Travelbyus of any covenants to be
performed by Travelbyus under this Agreement.
10.5 Notification of and Participation in Claims - No claim for
indemnification shall arise until notice thereof is given to the Sellers or
Travelbyus, as the case may be. Such notice shall be sent within a reasonable
time following the determination by Travelbyus or the Sellers, as applicable,
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
Sellers or Travelbyus, as applicable, may have an obligation to indemnify
Travelbyus or the Sellers, as the case may be, Travelbyus or the Sellers, as the
case may be, shall give or cause to be given to the Sellers or Travelbyus, as
the case may be, 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 Travelbyus or the Sellers, as the
case may be, unless the Sellers or Travelbyus, as the case may be, irrevocably
acknowledges full and complete responsibility for indemnification of Travelbyus
or the Sellers, as the case may be, in which case the Sellers or Travelbyus, as
the case may be, may assume such control through counsel of their respective
choice provided however that no settlement shall be entered into without
Travelbyus' written consent or the Sellers' written consent, as the case may be,
which 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 11
NON-COMPETITION AND NON-SOLICITATION COVENANTS
11.1 Non-Solicitation Covenant. - In addition to and notwithstanding the
-------------------------
provisions of the applicable Employment Agreements, the Sellers do hereby
severally covenant and agree with Travelbyus and the Target that they shall not,
during the term of their respective applicable Employment Agreement, as the case
may be, and for a period ending one year following the termination thereof (with
respect to Xxxxx, Xxxxxx and Xxxxx) and, with respect to each of the other
Sellers, they shall not for a period ending one year from the date hereof:
(a) directly or indirectly solicit, interfere with or endeavour to direct
or entice away from the Target, any person, firm or company who is or
has within the preceding year been a customer, client or otherwise in
the habit of dealing with the Target; or
(b) interfere with, entice away or otherwise attempt to induce the
termination
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of employment of any employee of the Target.
11.2 Non-Competition Covenant. The Sellers do hereby severally covenant and
------------------------
agree with Travelbyus and the Target that they will not (without the prior
written consent of Travelbyus and/or the Target) directly or indirectly, in any
manner whatsoever, including without limitation, either individually or in
partnership or jointly or in conjunction with any other person or persons, firm,
association, syndicate, company or corporation, as principal, agent,
shareholder, consultant or in any other manner whatsoever during the term of the
applicable Employment Agreement and for a period ending one year after the
termination of their respective applicable Employment Agreement (with respect to
Saner, Rucker, Vasil and Lindsay) and for a period ending one year with respect
to each of the other Sellers, carry on or be engaged in any business within
North America and Europe which is competitive with the Business of Target (a
"Competitive Business") or be concerned with or interested in or lend money to,
guarantee the debts or obligations of or permit their name or any part thereof
to be used by any person, persons, firm, association, syndicate, company or
corporation engaged or concerned with or interested in a Competitive Business.
Notwithstanding the foregoing provisions, the Sellers may invest in stocks,
bonds or other securities in any Competitive Business (but without participating
in such Competitive Business) if:
(a) the stocks, bonds or other securities of the Competitive Business are
listed on any national or regional securities exchange or are publicly
traded over the counter;
(b) their investment in the Competitive Business does not exceed, in the
case of any class of capital stock, five percent of the issued and
outstanding shares or in the case of bonds or other securities, five
percent of the aggregate principal amount thereof issued and
outstanding; and
(c) such investment would not prevent, directly or indirectly, the
transaction of business by the Target with any federal, state or
provincial government of Canada or the United States of America or any
governmental subdivision, agency or instrumentality thereof by virtue
of any statute, law, regulation or administrative practice.
11.3 Injunctive Relief. The Sellers acknowledge and agree that the agreements
-----------------
and covenants in this Article 11 are essential to the transactions contemplated
in this Agreement and further to protect the business and goodwill of the Target
and that a breach by the Sellers of the covenants in this Article 11 could
result in irreparable loss to the Target which could not be adequately
compensated for in damages and that Travelbyus may have no adequate remedy at
law if the Sellers breach such provisions. Consequently, if the Sellers breach
any of such provisions, in addition to and not in lieu of, any other rights and
remedies available to Travelbyus under any law or in equity, Travelbyus shall
have the right to obtain injunctive relief to restrain any breach or threatened
breach thereof and to have such provisions specifically enforced by any court of
competent jurisdiction.
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ARTICLE 12
GENERAL
12.1 Public Notices - All public notices to third Persons and all other
publicity concerning the Transaction shall be jointly planned and coordinated by
the Sellers and Travelbyus 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 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.
12.2 Expenses - Each of the Parties shall pay their respective legal,
accounting and other professional advisory fees, costs and expenses incurred in
connection with the Transaction 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
Transaction, except that Target shall pay all of the legal, accounting and other
advisory fees of the Sellers, to a maximum of US$25,000, exclusive of audit fees
which shall be paid by the Target following Closing.
12.3 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 Sellers at: 0000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, XX
00000-0000
Attention: .
Fax No.: (000) 000-0000
with a copy to: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx
Xxx Xxxxx, XX
00000
Attention: .
Fax No.: (000) 000-0000
(b) to Travelbyus at: 204 - 0000 Xxxx Xxxxxx Xxx.
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
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Attention: Xxxx Xxxxx
Fax No.: (000) 000-0000
with a copy to: Xxxxxxx Xxxxx & Xxxxxxxxx LLP
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.
12.4 Assignment - Neither this Agreement nor any benefits or burdens under this
Agreement shall be assignable by any Party without the prior written consent of
the other Parties. Subject to the foregoing, this Agreement shall enure to the
benefit of and shall be binding upon the Parties and their respective successors
(including any successor by reason of amalgamation of any Party) and permitted
assigns.
12.5 Further Assurances - The Parties shall, with reasonable diligence, do all
such acts and things and shall 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 Closing.
12.6 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.
-38-
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
XXXXXXXXXX.XXX LTD.
Per: /s/ XXXX XXXXX
---------------------------------
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
)
)
Witness )
)
/s/ Xxxxxxx Xxxxxx ) /s/ Xxxx Xxxxx
----------------------------- ) ---------------------------
Witness ) XXXX XXXXX
)
/s/ Xxxxx Xxxxx ) /s/ J. Xxxxxxx Xxxxxx
----------------------------- ) ---------------------------
Witness ) J. XXXXXXX XXXXXX
)
/s/ Xxxxxxx Xxxxxx ) /s/ Xxxxx X. Xxxxx
----------------------------- ) ---------------------------
Witness ) XXXXX X. XXXXX
)
/s/ Xxxxx Xxxxx ) /s/ Xxxxx Xxxxxxxxx
----------------------------- ) ---------------------------
Witness ) XXXXX XXXXXXXXX
)
/s/ Xxxxxxxx (illegible) ) /s/ Xxx Xxxxxxx
----------------------------- ) ---------------------------
Witness ) XXX XXXXXXX
)
/s/ Xxxxxxxx (illegible) ) /s/ Xxxxxxx Xxxx
----------------------------- ) ---------------------------
Witness ) XXXXXXX XXXX
)
/s/ Xxxxxxx Xxxxxx ) /s/ Xxxxxxx Seene
----------------------------- ) ---------------------------
Witness ) XXXXXXX SEENE
