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EXHIBIT 2.4
EXHIBIT C TO MERGER AGREEMENT
INDEMNITY AND RELEASE AGREEMENT
THIS INDEMNITY AND RELEASE AGREEMENT ("this Agreement") is made and
entered into this _____ day of __________, 1996 among each of the persons and
entities identified on the signatures page(s) hereto (collectively, the
"Owners"); THE XXXXXX XXXXXXX GROUP, INC. (the "Company") a California
corporation; and TRAVEL SYSTEMS, INC. ("Travel Systems"), a Delaware
corporation.
Background Statement
A. The Owners own all of the outstanding membership interests of
The Xxxxxx Xxxxxxx Group, LLC. ("JSG"), a California limited liability company
formed on November 6, 1996.
B. JSG owns all of the issued and outstanding capital stock of
the Company.
C. The Company, with the prior approval and consent of JSG and
Owners, has or is prepared to enter into an agreement with Travel Systems (the
"Merger Agreement," by this reference made a part hereof), pursuant to which
the Company will be merged with and into Travel Systems in exchange for certain
shares of Travel Systems' stock and other consideration (the "Merger").
D. Prior to the closing of the Merger, Travel Systems will
operate the Company's business under the terms of an Interim Operating
Agreement (the "Interim Agreement," by this reference made a part hereof) among
the parties hereto and JSG.
E. The Merger will benefit each of the Owners.
F. To induce Travel Systems to enter into the Merger Agreement
and to consummate the Merger, the Owners are willing to indemnify and release
Travel Systems, all as hereinafter set forth.
Agreement
NOW, THEREFORE, in consideration of the premises, and the
covenants and agreements set forth in this, the Merger Agreement and the other
agreements contemplated thereby, the Owners hereby agree as follows:
INDEMNIFICATION
A. Indemnification by Owners. Subject to the procedures and
limitations set forth in this Agreement, Owners jointly and
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severally agree to indemnify and save harmless Travel Systems and its agents
and representatives from and against any and all Net Economic Loss (herein
defined) incurred by Travel Systems or any of the other indemnified persons or
entities arising after the closing of the Merger Agreement (the "Closing") out
of (i) the breach of any representation or warranty made by JSG in the Merger
Agreement or in any instrument or documents required to be delivered by JSG to
Travel Systems pursuant to the Merger Agreement, (ii) JSG's failure to duly
perform any covenant or agreement to be performed by JSG under the Merger
Agreement or under any instrument or document required to be delivered by JSG
to Travel Systems pursuant to the Merger Agreement, and (iii) any liabilities
or obligations, contingent or otherwise, of the Company which exist at the
Closing and which are based upon any act, state of facts or condition which
occurred or existed before the Closing, known or unknown, due or payable,
except to the extent such liabilities and/or obligations are specifically
assumed by Travel Systems under the Merger Agreement.
B. Net Economic Loss Defined. As used in this Agreement, the
term "Net Economic Loss" means the amount of any loss, liability, damage, cost
or expense (including reasonably attorneys' fees) incurred by Travel Systems or
any of the other indemnified persons or entities arising out of the matters or
circumstances referred to in Section 1 hereof, less the amount of the economic
benefit (if any) received by Travel Systems in connection with such loss,
liability, damage, cost or expense (including without limitation benefits
obtained under federal, state and local tax laws, amounts recovered under
insurance policies net of deductibles and incidental expenses and premium
increases resulting therefrom, recovery or potential recovery by setoffs or
counterclaims, and other economic benefits). The amount of any such economic
benefit received by Travel Systems after the calculation of Net Economic Loss
shall be subtracted from any amount payable by Owners under this Agreement or
shall be payable to Owners in reimbursement for amounts already paid by Owners
under this Agreement. In determining the amount of such economic benefit, due
consideration shall be given to, among other things, appropriate discount for
timing factors. The indemnity provided for in this Agreement shall be in
addition to, and not in lieu of, the indemnity provided by JSG under the Merger
Agreement. Travel Systems may pursue its rights hereunder regardless of
whether it has taken action to enforce the indemnity provided under the Merger
Agreement.
C. Indemnity Claims by Travel Systems or Others.
(a) Notice of Claim. If any matter shall arise which, in
the opinion of Travel Systems or any of the other indemnified persons or
entities, constitutes or may give rise to a Net Economic Loss subject to
indemnification by Owners as provided herein (an "Indemnity Claim"), Travel
Systems shall give written
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notice (the "Notice of Claim") of such Indemnity Claim to Owners, setting forth
the relevant facts and circumstances of each Indemnity Claim in reasonable
detail and the amount of indemnity sought from Owners with respect thereto, and
shall give continuing notice promptly thereafter as to developments coming to
Travel Systems' attention materially affecting any matter relating to such
Indemnity Claim.
(b) Mitigation of Loss. Travel Systems shall use
reasonable efforts to mitigate its Net Economic Loss in connection with any
Indemnity Claim, to the same extent as would a reasonable and prudent person to
whom no indemnity were available. This Section 6.3(b) shall not apply with
respect to a Third Party Claim (hereinafter defined) for which Owners did not
elect to assume the defense as provided in the following subsection (c).
(c) Third Party Claims. If any Indemnity Claim is based
upon any claim, demand, suit or action of any third party against Travel
Systems or any of the other indemnified persons or entities or the Assets (a
"Third Party Claim"), then Travel Systems, at the time it gives Owners the
Notice of Claim with respect to such Third Party Claim shall offer to Owners
the option to have Owners assume the defense of the Third Party Claim, which
option may be exercised by Owners by written notice to Travel Systems within
fifteen (15) days after Travel Systems gives written notice to Owners thereof.
If Owners so exercises the option, then Owners shall at its own expense assume
the defense of the Third Party Claim, shall upon the final determination
thereof fully discharge at their own expense all liability of Travel Systems
and the other indemnified persons and entities with respect to the Third Party
Claim, and shall be entitled, in their sole discretion and at their sole
expense but without any liability of Travel Systems or any of the other
indemnified persons or entities therefor, to compromise or settle the Third
Party Claim upon terms acceptable to Owners. From the time Owners so assumes
such defense and while such defense is pursued diligently and in good faith,
Owners shall have no further liability for attorneys' fees or other costs of
defense thereafter incurred by Travel Systems and the other indemnified persons
and entities in connection with such Third Party Claim. If Owners does not
exercise the option to defend such Third Party Claim, then Travel Systems or
any of the other indemnified persons or entities shall undertake to defend such
Third Party Claim itself. Travel Systems and/or the other persons and entities
indemnified hereunder shall conduct such defense as would a reasonable and
prudent person to whom no indemnity were available, shall permit Owners (at
Owners's expense) to participate in (but not control) such defense, and shall
not settle or compromise such Third Party Claim without Owners's consent (but
such consent shall not of itself establish Owners's indemnity liability
therefor).
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MUTUAL RELEASES
D. Release by Owners. Each of Owners, individually and on behalf
of their respective heirs, personal representatives, agents, successors and
assigns, hereby release the Company, its successors and assigns, of and from
any and all rights, claims, demands, damages, actions, and causes of action, of
any nature whatsoever, whether arising at law or in equity, which Owners or any
of them may have had, may now have, or may hereafter have, against the Company
by reason of any matter, cause, document, agreement, instrument, stock option,
act, omission, happening or thing, from the beginning of time to and including
the Effective Date (as defined in the Interim Agreement), and, upon the advice
of legal counsel, the parties expressly waive all rights under California Civil
Code Section 1542, which provides:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release which, if known by him, must have
materially affected his settlement with the debtor.
It is intended by Owners by this Agreement to forever remise,
acquit, waive, release and forever discharge the Company and its successors and
assigns of and from any and all claims, demands for losses, injuries and
damages, rights known or unknown, direct or indirect, from the above-described
matters, and from any other matter occurring prior to the Effective Date, it
being understood that all rights which any Owner or any person who claims by,
through or under any Owner may have against the Company as of the Effective
Date, shall be forever released, remised and acquitted, and Owners and all such
persons shall be forever barred from bringing or asserting the same in their
own name or names, jointly with or through any person, natural or corporate,
for or upon or by reason of any matter, cause, document, agreement, instrument,
stock option, act, omission, happening or thing whatsoever, from the beginning
of time through and including the Effective Date (as defined in the Interim
Agreement).
E. Release by the Company. The Company, individually and on
behalf of their successors and assigns, hereby releases the Owners, their
agents and representatives, of and from any and all rights, claims, demands,
damages, actions, and causes of action, of any nature whatsoever, whether
arising at law or in equity, which the Company may have had, may now have, or
may hereafter have, against the Owners, or any of them, by reason of any
matter, cause, document, agreement, instrument, stock option, act, omission,
happening or thing, from the beginning of time to and including the Effective
Date (as defined in the Interim Agreement), and, upon the advice of legal
counsel, the parties
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expressly waive all rights under California Civil Code Section 1542, which
provides:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release which, if known by him, must have
materially affected his settlement with the debtor.
It is intended by the Company to forever remise, acquit,
waive, release and forever discharge the Owners of and from any and all claims,
demands for losses, injuries and damages, rights known or unknown, direct or
indirect, from the above-described matters, and from any other matter occurring
on or prior to the Effective Date (as defined in the Interim Agreement), it
being understood that all rights which the Company or any person who claims by,
through or under the Company may have against the Owners as of the the
Effective Date (as defined in the Interim Agreement), shall be forever
released, remised and acquitted, and the Company and all such persons shall be
forever barred from bringing or asserting the same in their own name or names,
jointly with or through any person, natural or corporate, for or upon or by
reason of any matter, cause, document, agreement, instrument, stock option,
act, omission, happening or thing whatsoever, from the beginning of time
through and including the Effective Date (as defined in the Interim Agreement).
MISCELLANEOUS
F. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California,
represents the entire agreement among the parties hereto with respect to the
subject matter hereof; may not be modified or amended except pursuant to the
written agreement of the parties hereto; may be executed in multiple
counterparts; and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Any notice given hereunder
shall be given in the manner specified for notices in the Merger Agreement. If
a party commences or is made a party to an action or proceeding to enforce or
interpret the terms of this Agreement, or to obtain a declaration of rights
under this Agreement, the prevailing party in such action or proceeding shall
be entitled to recover from the other party all attorneys' fees, costs and
expenses incurred in connection with such action or proceeding or any appeal or
enforcement of such action or proceeding.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement, this
_____ day of __________, 1996.
"Owners"
Xxxxx Xxxxxxxx
Address: X.X. Xxx 000
Xx Xxxxx, XX 00000
SONOVA BEACH, INC., a Nevada
corporation
By:
--------------------------------
Its:
Address: X.X. Xxx 000
Xx Xxxxx, XX 00000
Xxx Xxxxxxxx
Address: X.X. Xxx 0000
Xxx Xxxxx, XX 00000
MOHS, INC., a California
corporation
By:
--------------------------------
Its:
Address: X.X. Xxx 0000
Xxx Xxxxx, XX 00000
[SIGNATURES CONTINUED ON NEXT PAGE]
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WH/JSG LLC, a California
limited liability company
By:
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Western Horizons, Inc.,
a British Virgin Islands
corporation, Member
By:
--------------------------------
Xxx Xxxxxxxx
Its:
Address: X.X. Xxx 0000
Xxx Xxxxx, XX 00000
TRAVEL SYSTEMS, INC.
By:
--------------------------------
Its:
Address: 0000 Xxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
THE XXXXXX XXXXXXX GROUP, INC.
By:
--------------------------------
Its:
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000 11270
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