EXHIBIT 10.10
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
this 28th day of January, 2000 between TRAVELMAX INTERNATIONAL, INC, a
California corporation (the "Seller") and PROTRAVEL SOLUTIONS, INC., a Florida
corporation ("Purchaser").
WITNESSETH:
WHEREAS, Seller, leases and operates a facility located at 0000 Xxxx
Xxxxxxx Xxxx Xxxx., Xx. Xxxxxxxxxx, XX (the "Facility"), where it conducts a
business of retail travel reservations and fulfillment, and travel
representative multi-level marketing (the "Business");
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Purchaser seeks to purchase certain of Seller's assets and assume
certain liabilities;
WHEREAS, Seller seeks to sell, assign, or transfer certain of its
assets and liabilities to Purchaser; and
WHEREAS, the parties intend and believe that it is in their best
interests to enter into this Agreement and the other agreements contemplated
herein;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other valuable consideration, the receipt, accuracy, and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. TRANSACTION
1.1 Purchase and Sale
On the terms and subject to the conditions set forth herein, Seller agrees to
sell, assign, transfer, convey and deliver to Purchaser, and Purchaser agrees to
purchase and acquire from Seller at the Closing (as defined herein):
(a) All right, title and interest of Seller in and to the assets
only as described in Schedule 1.1(a), attached hereto and
incorporated by reference to this Agreement (the "Assets");
(b) The contracts in force and effect (including deposits related
thereto), leases, agreements and purchase and sale orders of
Seller related to the Business only as identified in Schedule
1.1(b), attached hereto and incorporated by reference to this
Agreement, prorated as applicable; and
(c) All Permits (as defined in Section 5.9 hereof) listed on
Schedule 5.9 hereof, particularly Airlines Reporting
Corporation ("ARC") appointment number 10532395, subject to
ARC consent and at such time as ARC provides such consent, and
toll-free telephone numbers 000.000.0000 and 000.000.0000,
subject to any required third-party approvals.
1.2 Additional Liabilities Assumed
(a) Purchaser shall assume liability for travel commissions
payable as of the Closing Date (the "Commissions") that are
associated with the operations of the Business, up to an
amount of $150,000.00. Purchaser represents and warrants that
funds to pay such commission (the "Commissions Funds") shall
be deposited into an account and segregated for the specific
purpose of paying such Commissions in accordance herewith, and
further agrees to indemnify Seller from and against all claims
in connection with such Commissions. The banking coordinates
for the funds are described on Schedule 1.2 attached hereto
and incorporated by reference to this Agreement The Commission
Funds shall be immediately released to those known to be
eligible for payment as of the Closing Date. The nature and
extent of such commissions known to the Seller as of the
Closing Date are more fully set out in Schedule 1.2(a),
attached hereto and incorporated by reference to this
Agreement. The names, nature and extent of commissions owed to
additional third-parties prior to the Closing Date but not
known to the Seller as of the Closing Date may be disclosed to
the Purchaser following the Closing, and will be paid in full
on or before the expiration of the six (6) week period
following execution of this Agreement.
(b) Purchaser shall assume all liabilities and obligations under
the contracts and permits assumed by Purchaser pursuant to
Sections 1.1(b) and (c), and Seller's employment obligations
to the employees listed on Schedule 1.2(b), attached hereto
and incorporated by reference to this Agreement, all as of the
Closing Date.
1.3 Software and Database
(a) Seller shall cause KamTel International, Inc. ("Kamtel") and
Network Holdings International, Inc., ("NHI") to enter into a
non-exclusive software license agreement (the "Software
Licensing Agreement") with the Purchaser for the use of the
software known as the KAM2000 software (the "Software").
Purchaser shall not sub-license the software to third parties
without the prior written consent of each of KamTel, NETW, and
the Seller. Purchaser acknowledges that default in the payment
of the Purchase Price (as defined herein) shall constitute
default in the Software Licensing Agreement and shall entitle
KamTel and NHI to terminate the Software Licensing Agreement.
(b) Seller shall provide Purchaser with non-exclusive use of
Seller's database consisting of information pertaining to
independent travel agents and independent representatives (the
"Database"), which Database is maintained in the Software. It
is agreed and understood that (i) Seller shall retain the
ownership of the Database and all rights appurtenant thereto;
(ii) during such time as the Software Licensing Agreement is
in effect, Seller will not use the Database to solicit new
home-based travel business (but may continue to service its
existing business); (iii) Purchaser will not make the Database
available to third-parties and will hold the information
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confidential at all times; and (iv) upon the termination of
the Software Licensing Agreement for any reason, Purchaser
shall immediately cease any and all use of the Database and
will return all representations (whether digital or analog) of
the Database.
1.4 Continuing Operations
Notwithstanding any provision of this Agreement, Purchaser acknowledges and
agrees that it shall not receive or assume any part of Seller's corporate travel
operation and further acknowledges and agrees that Seller may continue to
operate travel services to the extent not specifically prohibited herein.
2. PURCHASE PRICE
2.1 Cash Purchase Price
The cash purchase price shall be $ 230,000.00 (the "Purchase Price"), payable as
follows
(a) At Closing, Purchaser shall pay to Seller, by wire transfer,
attorney's trust account check or money order, one hundred
fifty thousand dollars ($150,000.00), which shall include
fifty thousand dollars ($50,000.00) previously deposited in
the escrow account of Xxxxxx Xxxxxxx, Esq. (the "Escrow
Agent").
(b) At Closing, Purchaser shall deposit into the escrow account of
the Escrow Agent eighty-thousand dollars ($80,000.00) to be
later distributed to Seller subject to the following terms:
(i) sixty five thousand dollars ($65,000.00) shall be
paid to Seller in cleared funds no later than ninety
(90) calendar days following the Closing Date;
(ii) fifteen thousand dollars ($15,000.00) shall be paid
to Seller in cleared funds no later than six (6)
calendar months from the Closing Date; and
(iii) until such time as this payment has been made to
Seller, these funds shall be held in escrow by the
Escrow Agent, to be released as agreed upon elsewhere
herein, pursuant to an escrow agreement (the "Escrow
Agreement") to be delivered at Closing.
2.2 Stock of Purchaser or Successor-in-Interest
(a) At such time as Purchaser or Purchaser's successor-in-interest
(the "Entity") undertakes to file a registration statement
under the Securities Act of 1933, as amended (the "Act"), the
Securities Exchange Act of 1934, as amended, or otherwise
establishes a public market for the securities of the Entity,
Purchaser shall cause to be issued to Seller or its designee
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50,000 shares of unrestricted common stock of the Entity (or
such other security of the Entity for which a public market is
being established (the "Security").
(b) In the event that a public market for the Security has not
been established by March 31, 2001, then the Purchaser shall
ensure that the Entity, at Seller's option, either issues to
the Seller or designee 50,000 shares of the Entity's capital
stock or pays to the Seller or designee $50,000 in cash.
3. CLOSING
Subject to the terms and conditions set forth herein, the closing of the
purchase and sale of the Assets and the Business (the "Closing") shall take
place within seven (7) calendar days of the execution of this Agreement and of
Seller's delivery to Purchaser of all schedules and closing documents referred
to in this Agreement. Such Closing shall take place at a mutually agreeable time
at the Seller's place of business or at a location to be determined by the
parties hereto as soon as practicable after the conditions set forth herein have
been satisfied or waived, or at such other time and place as the parties hereto
may agree. (The time of the Closing being hereinafter called the "Closing
Date").
3.1 Items to be Delivered at Closing
(a) Prior to or at the Closing, and subject to the terms and
conditions herein contained, the Seller will deliver to the
Purchaser the following:
(1) Such full xxxx of sale, assignments, consents and
other good and sufficient instruments and documents
of conveyance and transfer in a form reasonably
satisfactory to the Purchaser and its counsel, as
shall be necessary and effective to convey, transfer
and assign to, and vest in, the Purchaser all of the
Seller's right, title and interest in and to the
Assets, including, without limitation good and valid
leasehold interests in all of the Assets leased by
the Seller and all the Seller's rights under all
agreements, contracts, commitments, leases, plans,
quotations, proposals, licenses, permits,
authorizations, software, know-how, instruments, and
accounts receivable documents that are included in
the Assets;
(2) A copy of all of the resolutions adopted by the
Seller's board of directors relating to the
transactions contemplated by this Agreement,
certified on the Closing Date to be complete and
correct by the Secretary or an Assistant Secretary of
the Seller; and
(3) All of the agreements, contracts, commitments,
leases, plans, bids, quotations, proposals, licenses,
permits, authorizations, instruments, computer
programs and software, manuals and guidebooks, price
books and price lists, customer lists, supplier
lists, sales records, files, correspondence, and
other documents, books, records, papers, files and
data belonging to the Seller which are part of the
Assets as enumerated in the schedules attached
hereto; provided, however, that Seller may retain
copies of such materials to the extent necessary for
Seller to fulfill its obligations under this
Agreement or under other agreements, laws,
regulations or understandings by which it is bound;
and
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(4) UCC-3 forms reflecting the release of the UCC-1
filings on Assets conveyed hereunder.
(b) The Purchaser will deliver to the Seller the following:
(1) A certified or bank cashier's check, or an attorney's
escrow account check, payable to the order of the
Seller or a wire transfer in the cash amount of
$150,000.00;
(2) Copies of the resolutions adopted by the Purchaser's
board of directors relating to the transactions
contemplated by this Agreement, certified on the
Closing Date to be complete and correct by the
Secretary or an Assistant Secretary of the Purchaser;
(3) The Escrow Agreement referenced in Section
2.1(b)(ii);
(4) Assignment and assumption of lease of the facility;
and
(5) The Software Licensing Agreement.
3.2 As an express pre-condition to Closing, all third party consents required
hereunder this transaction shall be obtained or waived.
4. POST CLOSING COVENANTS
4.1 Operations
Following the Closing, the parties agree to cooperate to take all reasonable
steps as are appropriate to put the Purchaser in actual possession and operating
control of the acquired portion of the Business and the Assets.
4.2 Third Party Consents
To the extent that the Seller's rights under any agreement, contract,
commitment, lease, license, permit, authorization or other asset to be assigned
to the Purchaser hereunder may not be assigned without the consent of another
person which is not obtained by the Closing Date, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful. The Seller covenants and agrees to
use its best efforts to obtain all such required consents as promptly as
possible prior to or after the Closing. If any such consent shall not be
obtained or if any attempted assignment would be ineffective or would impair the
Purchaser's rights under the Asset in question so that the Purchaser would not
in effect acquire the benefit of all such rights, the Seller, to the maximum
extent permitted by law and any agreements pertaining to the Asset, shall act as
the Purchaser's agent in order to obtain for it the benefits thereunder and
shall cooperate, to the maximum extent permitted by law and any agreements
pertaining to the Asset, with the Purchaser in any other reasonable arrangement
designed to provide such benefits to the Purchaser.
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4.3 Return of Operations to Seller
Seller is hereby granted the right of first refusal to reacquire the Business
and the Assets for an amount not to exceed one-half of the consideration
actually received by the Seller under this Agreement, in the event of either of
the following:
(a) Should Purchaser fail to operate the Business either because
of a decision to cease operations, insolvency of the Business
or the Purchaser, or filing for protection from creditors
under bankruptcy law; or
(b) The Entity fails to issue the Payment Shares to the Seller or
its designee and a public market for such Payment Shares has
not been established on or before March 31, 2001.
4.6 ARC
Prior to ARC granting approval for the transfer of the ARC Agent Reporting
Agreement from Seller to Purchaser, Purchaser shall continue to book applicable
travel through Seller under the ARC appointment number 10532395. Seller agrees
that all revenue associated with such bookings, and all expenses related to such
revenue, shall be for the benefit, and shall be the obligations of, Purchaser.
4.7 Third Party Consents
Purchaser agrees to use good faith and reasonable effort in obtaining third
party consents to the assumptions and assignments as contained herein. This
shall include immediately applying to third parties for approval and consents of
any such assignment including, without limitation, applications for SABRE lease
assignment and ARC number assignment.
4.8 Escrow Payments
Payments from the monies deposited in the escrow account shall be subject to the
terms and conditions of the Escrow Agreement to be delivered at Closing. It
shall also include payments from the monies in escrow pursuant to Section 2.1(b)
and 7.3(c) paid only toward debit memos, claims, charges, or the like for which
Seller is responsible and which arose prior to the Closing. Such obligations
shall be paid only pursuant to the terms and conditions of the Escrow Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as of the date of
this Agreement as follows:
5.1. Corporate Existence
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of California, and has all requisite power and
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authority and all necessary licenses and permits to carry on its business as it
has been and is now being conducted and to own, lease and operate the properties
used in connection therewith.
5.2 Corporate Power and Authorization
The Seller has the corporate power to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by the
Seller has been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller enforceable against it in
accordance with its terms.
5.3 Existing Condition
To Seller's knowledge, and except as disclosed to the Purchaser, prior to the
Closing Date Seller, in relation to the Business, Seller has not:
(a) sold, assigned or transferred any of the Assets or other
interests in the Business except in the ordinary course of
business consistent with past practice;
(b) mortgaged, pledged or subjected to any lien, pledge, mortgage,
security interest, conditional sales contract or other
encumbrance of any nature whatsoever any of Assets, other than
the liens, if any, of current taxes not yet due and payable or
liens which will be discharged or satisfied by the Closing
Date;
(c) suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
Assets; or
(d) suffered any material adverse change to the condition of the
Assets.
5.4 Title to Properties; Leasehold Interests
Except as otherwise disclosed to Purchaser, Seller has good, valid and
marketable title to all of the Assets, real, personal and mixed, including all
of the properties and assets used by the Business and those acquired (except in
each case for Assets sold or otherwise disposed of in the ordinary course of
business consistent with past practice), free and clear of all mortgages, liens,
pledges, security interests, charges, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever, except liens for
current taxes not yet due and payable and except for liens that will be removed
prior to the Closing Date. To Seller's knowledge, all leases, licenses, permits
and authorizations in any manner related to the Assets or the Business and all
other instruments, documents and agreements pursuant to which Seller has
obtained the right to use any real or personal property in connection with the
Business are in good standing, valid and effective in accordance with their
respective terms, and there is not under any of such instruments, documents or
agreements any existing default or event which with notice or lapse of time, or
both, would constitute a default and in respect of which Seller has not taken
adequate steps to prevent a default from occurring, except has otherwise
disclosed to Purchaser.
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5.5 Condition of Tangible Assets
All facilities, machinery, equipment and other material items of personal
property owned, leased, or used by Seller in the Business are in good operating
condition and repair, subject to normal wear and maintenance, are usable in the
regular and ordinary course of the Business and conform to all applicable laws,
ordinances, codes, rules and regulations relating to their construction, use and
operation.
5.6 Tax and Other Returns and Reports
Except as disclosed in Schedule 5.6, all federal, state and local tax returns,
reports and statements (including all income tax, unemployment compensation,
social security, payroll, sales and use, excise, privilege, property, ad
valorem, franchise, license, school and any other tax under laws of the United
States or any state or municipal or political subdivision thereof) required to
be filed by Seller in connection with the Business (the "Tax Returns") have been
filed with the appropriate governmental agencies in all jurisdictions in which
such returns, reports and statements are required to be filed, and all such
returns, reports and statements properly reflect the tax liabilities of Seller
in relation to the Business for the periods, properties or events covered
thereby; (b) all federal, state and local taxes, assessments, interest,
penalties, deficiencies, fees and other governmental charges or impositions,
including those enumerated above in respect of the Tax Returns, which are called
for by the Tax Returns, or claimed to be due by any taxing authority from
Seller, or upon or measured by Seller's properties, assets or income (the
"Taxes"), have been properly accrued or paid; (c) Seller has not received any
notice of assessment or proposed assessment by the Internal Revenue Service or
any other taxing authority in connection with any Tax Returns and there are no
pending tax examinations of or tax claims asserted against Seller or any of its
assets or properties; (d) there are no tax liens (other than any lien for
current taxes not yet due and payable) on any of the Assets; (f) Seller has no
knowledge of any basis for any additional assessment of any Taxes in relation to
the Business; and (e) Seller has made all deposits required by law to be made
with respect to employees' withholding taxes. Seller has not been notified of
any tax delinquency, discrepancy, filing failure, or liability that has not been
disclosed herein.
5.7 Litigation
Except as disclosed on Schedule 5.7, no litigation, arbitration, investigation
or other proceeding of or before any court, arbitrator or governmental or
regulatory official, body or authority is pending or, to Seller's knowledge and
belief, threatened against Seller (in connection with the Business), the Assets,
the Business, or the transactions contemplated by this Agreement, and to
Seller's knowledge and belief, there is not any basis for any such litigation,
arbitration, investigation or proceeding. Except as disclosed, to Seller's
knowledge and belief, Seller is not a party to or subject to the provisions of
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority.
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5.8 Compliance with Law
Seller, in connection with the Business, has complied with each, and is not in
violation of any law, ordinance, or governmental rule or regulation to which it,
the Business, or the Assets is subject. To Seller's knowledge, neither Seller
nor any officer, employee or agent of, nor any consultant to, Seller in
connection with the Business has unlawfully offered, paid, or agreed to pay,
directly or indirectly, any money or anything of value to, or for the benefit
of, any individual who is or was a candidate for public office, or an official
or employee of any governmental or regulatory body or authority or an officer or
employee of any client, customer or supplier of Seller. To Seller's knowledge,
Seller has not engaged in any transaction, maintained any bank account or used
any corporate funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records of Seller.
5.9 Permits, Notices
Attached hereto as Schedule 5.9 is a complete list of all governmental permits,
licenses and authorizations (collectively, the "Permits") that Seller has
obtained to operate the Facility and the Business, including AGA approval. To
Seller's knowledge, no other governmental permits, licenses or authorizations
were necessary to operate and continue the Facility and the Business. To
Seller's knowledge, Seller was not in breach of the terms of any of the Permits
and had paid all necessary fees associated therewith and there were no other
permits necessary for the operation of the Business as of the Closing Date.
Seller had not received and there did not exist, any notice, notification or
inquiry from any governmental or quasi-governmental agency to the effect that
the Business or any of the Assets was in violation of any law, ordinance, rule,
regulation, license, permit or authorization.
5.10 Validity of Contemplated Transactions, etc.
The execution and delivery of this Agreement by the Seller do not, and the
performance of this Agreement by Seller will not, violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent of any other party to, (a) any existing law, ordinance, or governmental
rule or regulation to which Seller, the Business or the Assets is subject, (b)
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority which is applicable to
Seller, the Business or the Assets, (c) the Articles of Incorporation or By-Laws
of Seller or any securities issued by Seller or (d) except as disclosed, any
mortgage, indenture, agreement, contract, commitment, lease, plan, license,
permit, authorization or other instrument, document or understanding, oral or
written, to which Seller is a party, by which Seller may have rights or by which
any of the assets or properties of Seller may be bound or affected, or give any
party with rights thereunder the right to terminate, modify, accelerate or
otherwise change the existing rights or obligations of Seller thereunder.
5.11 Restrictions
Seller is not a party to any indenture, agreement, contract, commitment, lease,
plan, license, permit, authorization or other instrument, document or
understanding, oral or written, or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree or award which
materially adversely affects or materially restricts or, so far as Seller can
now reasonably foresee, may in the future materially adversely affect or
materially restrict, the prospects or condition (financial or otherwise) of the
Business or the Assets.
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5.12 Conditions Affecting the Business
There are no conditions existing with respect to the Business, its markets,
products, services, clients, customers, facilities, personnel or suppliers which
are known to Seller or which should be known to the prudent businessman in
charge of operations of the Business which would adversely affect the Business,
considered as a whole, other than such conditions as may affect as a whole the
industry in which the Business engages.
5.13 Contracts and Commitments
Except as otherwise disclosed, Seller, in relation to the Business, is not a
party to any written or oral:
(a) Agreement, contract or commitment with any present or former
shareholder, director, officer, employee or consultant or for
the employment of any person, including any consultant;
(b) Agreement, contract, commitment or arrangement with any labor
union or other representative of employees;
(c) Representative or sales agency agreement, contract or
commitment;
(d) Lease under which Seller is either the lessor or lessee;
(e) Agreement, contract or commitment for any charitable or
political contribution;
(f) Agreement, contract or commitment limiting or restraining it
from engaging or competing in any lines of business with any
person, nor was any officer or employee of the Business
subject to any such agreement, contract or commitment as of
the Closing Date nor is any officer or employee of the
Business subject to any such agreement, contract or
commitment;
(g) License, franchise, distributorship or other agreement,
including those which relate in whole or in part to any
patent, trademark, or copyright or to any ideas, technical
assistance or other know-how of or used by the Business; or
(h) Material agreement or contract not made in the ordinary course
of Business.
Except as may be disclosed, each of the agreements, contracts, commitments,
leases and other instruments, documents and undertakings listed is valid and
enforceable in accordance with is terms, the parties thereto are in compliance
with the provisions thereof, no party is in default in the performance,
observance or fulfillment of any material obligation, covenant or condition
contained therein and no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder,
furthermore, except as may be disclosed no such agreement, contract, commitment,
lease or other instrument, document or undertaking, in the reasonable opinion of
the Seller, contains any contractual requirement with which there is a
reasonable likelihood Seller or any other thereto will be unable to comply.
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5.14 No Third Party Options
There are no existing agreements, options, commitments or rights with, to or in
any person to acquire the Business, any of the Assets or any interest therein,
except for this Agreement and those contracts entered into in the normal course
of business consistent with past practice for the sale of Seller's products and
services.
5.15 Full Disclosure
No representation or warranty by Seller in this Agreement or in any document
delivered or to be delivered by Seller pursuant hereto, and no statement, list,
certificate or instrument furnished or to be furnished to the Purchaser pursuant
hereto or in connection with the negotiation, execution or performance of this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any fact necessary to make any statement herein or
therein not misleading.
5.16 Broker
All negotiations relating to this Agreement and the transactions contemplated
hereby have been carried on by the Seller directly with the Purchaser and its
counsel without the intervention of any person acting on behalf of the Seller in
such a manner as to give rise to any valid claim against the Purchaser for a
brokerage commission, finder's fee or other like payment.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as of the date of
this Agreement as follows:
6.1. Corporate Existence
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, and has all requisite power and
authority and all necessary licenses and permits to carry on its business as it
has been and is now being conducted and to own, lease and operate the properties
used in connection therewith. Purchaser further warrants that it has obtained
the necessary authorization to enter into this Agreement.
6.2 Corporate Power and Authorization
The Purchaser has the corporate power to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by the
Purchaser has been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by the Purchaser and constitutes
the legal, valid and binding obligation of the Purchaser enforceable against it
in accordance with its terms.
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6.3 Broker
Except for its counsel which advised the Purchaser in the transactions
contemplated hereby and whose fees shall be payable by the Purchaser, all
negotiations relating to this Agreement and the transactions contemplated hereby
have been carried on by the Purchaser directly with the Seller without the
intervention of any person acting on behalf of the Purchaser in such a manner as
to give rise to any valid claim against the Seller for a brokerage commission,
finder's fee or other like payment.
6.4 Full Disclosure
To Purchaser's knowledge, no representation or warranty by Purchaser in this
Agreement or in any document delivered or to be delivered by Purchaser pursuant
hereto, and no statement, list, certificate or instrument furnished or to be
furnished to the Seller pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not misleading.
7. INDEMNIFICATIONS
7.1 Seller Indemnification
To the extent not otherwise provided herein, Seller agrees to defend, indemnify
and hold harmless Purchaser from and against:
(a) All debts, liabilities and obligations arising out of or in
any way relating to the operation of the Business accruing
prior to the Closing Date or from events occurring prior to
the Closing with respect to the ownership, management,
operation and maintenance of the Business, other than those
assumed by the Purchaser as of the Closing Date;
(b) Any actual loss, liability or damage suffered or incurred by
Purchaser because any representation or warranty contained in
this Agreement, or in any document furnished to Purchaser by
Seller in connection with the Closing hereunder, shall be
false or misleading in any material respect; and all
reasonable costs and expenses (including reasonable attorneys'
fees) incurred by Purchaser in connection with any action,
suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this provision;
provided, however, that Seller's liability to Purchaser under this provision
shall not exceed $80,000, which amount is subject to the Escrow Agreement
referenced elsewhere herein.
7.2 Purchaser Indemnity
To the extent not otherwise provided herein or not inconsistent with any other
provision hereof, Purchaser agrees to defend, indemnify and hold Seller harmless
from and against:
(a) Claims arising concerning payment of Commissions as addressed
in this Agreement;
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(b) All debts, liabilities and obligations arising out of or in
any way relating to the operation of the Business accruing
subsequent to the Closing or from events occurring subsequent
to the Closing with respect to the ownership, management,
operation, maintenance and repair of the Business;
(c) Any actual loss, liability, or damage suffered or incurred by
Seller because of any representation or warranty contained in
this Agreement, or in any document furnished to Seller by
Purchaser in connection with the Closing hereunder, shall be
false or misleading in any material respect; and
(d) All reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Seller in connection with any
suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this provision.
7.3 Indemnification Procedure
Except to the extent expressly provided elsewhere in this Agreement, the
following procedures shall be followed with respect to all claims for
indemnification under this Agreement and all obligations of indemnification
hereunder shall be subject to compliance by the party to be indemnified with
such procedures:
(a) The indemnitee shall give prompt written notice to the
indemnitor of any claim that might give rise to a claim by the
indemnitee against the indemnitor pursuant to this Agreement,
stating the nature and basis of such claims and the estimated
amounts thereof.
(b) If any action, suit or proceeding is brought against an
indemnitee with respect to which an indemnitor may have
liability pursuant to this Agreement, the action, suit or
proceeding shall be defended (including all proceedings on
appeal or for review that counsel for the indemnitor shall
deem appropriate) by, and may be settled or compromised by,
the indemnitor, upon (X) the written acknowledgment by the
indemnitor that it has the obligation to indemnify the
indemnitee under the indemnity agreements contained herein and
(Y) the making of reasonably adequate provisions by the
indemnitor to ensure the indemnitee of the ability of the
indemnitor to satisfy its obligation hereunder. Prior to
receipt by the indemnitee of the indemnitee of the
indemnitor's written acknowledgment and provision as required
by clauses (X) and (Y) of the preceding sentence, the
indemnitee shall have the right to contest or defend (and, if
the indemnitee has not received such written acknowledgment
and provision within 30 business days after the indemnitee has
provided written notice as required by Section 8.2 above, to
settle or compromise) such action, suit or proceeding at the
expense of the indemnitor. In addition to the foregoing, the
indemnitee may, by written notice to the indemnitor, require
the indemnitor to assume the defense of any action, suit or
proceeding with respect to which the indemnitor may have
liability pursuant to this Agreement. The indemnitee shall
have the right to employ its own counsel in connection with
any action, suit or proceeding being defended by the
indemnitor pursuant hereto, but the fees and expenses of such
Page 13 of 18
counsel shall be at the indemnitee's own expense unless (i)
the employment of such counsel and the payment of such fees
and expenses shall have been specifically authorized by the
indemnitor in connection with the defense of such action, suit
or proceeding or (ii) the indemnitee shall have reasonably
concluded and notified the indemnitor that there may be
specific defenses available to it that are different from or
in addition to those available to the indemnitor or that such
action, suit or proceeding involves or could have an effect
upon matters beyond the scope of the indemnity agreements
contained herein, in either of which events (A) the
indemnitor, to the extent made necessary by such defenses,
shall not have the right to direct the defense of such action,
suit or proceeding on behalf of the indemnitee and (B) only
that portion of such fees and expenses reasonably related to
matters covered by the indemnity agreements contained herein
shall be borne by the indemnitor. The indemnitor shall keep
the indemnitee fully informed of such action, suit or
proceeding at all stages thereof whether or not the indemnitee
is so represented. The indemnitor shall make available to the
indemnitee and its attorneys and accountants all books and
records of the indemnitor relating to such proceedings or
litigation, and the parties hereto agree to render to each
other such assistance as they may reasonably require to ensure
the proper and adequate investigation, and the defense or
settlement, of any such action, suit or proceeding.
(c) The indemnitee shall be entitled to compromise or settle all
actions, suits or proceedings as to which the indemnitor does
not have or does not exercise the right to assume the defense,
without consent of the indemnitor, PROVIDED, that it acts
reasonably and in good faith in doing so. The indemnitee shall
keep the indemnitor fully informed of such action, suit or
proceeding at all stages thereof.
(d) Purchaser shall have the right to set off against amounts held
in escrow pursuant to the Escrow Agreement any amounts paid
pursuant to a compromise or settlement of any action, suit, or
connection with such action, suit, or proceeding, including
reasonable attorneys' fees and costs through the appellate
level; provided, however, that no set off shall be permitted
unless and until the Seller has had an opportunity to
negotiate a compromise or settlement related to said claim.
8. MISCELLANEOUS PROVISIONS
8.1 Entire Agreement; Amendment; Assignment
This Agreement and the exhibits and schedules and all other agreements and
documents specifically referenced herein and appended hereto embody and
constitute the entire understanding between the parties with respect to the
transactions contemplated herein, and all prior agreements, understandings,
representations and statements, oral or written, are merged into this Agreement.
Neither this Agreement nor any provision hereof may be waived, modified,
amended, discharged, assigned or terminated except by an instrument signed by
the party against whom the enforcement of such waiver, modification, amendment,
discharge, assignment or termination is sought, and then only to the extent set
forth in such instrument. Notwithstanding any provision in this Agreement to the
contrary, Purchaser may not assign the rights and obligations under this
Agreement to any third party without prior written notice to, and consent of,
Seller.
Page 14 of 18
8.2 Notices
All notices, demands, requests, or other communications which may be or are
required to be given, served or sent by either party to the other party pursuant
to this Agreement, shall be in writing and shall be hand delivered, sent by
guaranteed overnight parcel express service or mailed by registered or certified
mail, return receipt requested, postage prepaid, or transmitted by or telecopy
(with a confirming copy sent by another permitted means), addressed as follows:
If to Seller:
NETWORK HOLDINGS INTERNATIONAL, INC.
0000 X. Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xx Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Executive Vice-President
Facsimile: 954.453.3354
with a copy (which shall not constitute notice) to its counsel:
Xxxxx X. Shemrock, Esq.
0000 X. Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xx Xxxxxxxxxx, XX 00000
Facsimile: 954.453.3193
If to Purchaser:
PROTRAVEL SOLUTIONS, INC.
0000 00xx Xxxxxx
Xxxxxx, XX 00000
Attention Ben O'Dell, President
with a copy (which shall not constitute notice) to its counsel:
Xxxxxx Xxxxxxx, Esq.
English, XxXxxxxxx & X'Xxxxx, PA
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
Facsimile: 954.963.2439
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be mailed or
telefaxed in the manner described above, or which shall be delivered to a
telegraph company, shall be deemed sufficiently given, served, sent or received
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt or, with respect to a telefax, the answer
back being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
Page 15 of 18
8.3 Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Florida, without giving effect to the conflicts of laws
provisions thereof. Proper venue for any action arising out of this Agreement
shall be Broward County, Florida.
8.4 Captions
The captions in this Agreement are inserted for convenience of reference only
and in no way define, describe or limit the scope or intent of this Agreement or
any of the provisions hereof.
8.5 Benefit
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
8.6 Construction
As used in this Agreement, the masculine shall include the feminine and neuter,
the singular shall include the plural and the plural shall include the singular,
as the context may require.
8.7 Waiver
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights, or privileges hereunder.
8.8 Non-Business Days
If any obligation of a party hereto falls due on a Saturday, Sunday or legal
holiday recognized by the United States Government or the State of Florida, then
such obligation shall automatically be postponed until the next day which is not
a Saturday, Sunday or legal holiday.
8.9 Cost and Expenses
Except for costs and expenses specifically assumed by a party under this
Agreement, each party hereto shall pay its own expenses incident to this
Agreement and the transactions contemplated hereunder.
8.10 Survival of Representations
Each of the representations and warranties made herein shall survive the Closing
for a period of two (2) years.
Page 16 of 18
8.11 Counterparts
To facilitate execution, this Agreement may be executed in as many counterparts
as may be required; and it shall not be necessary that the signature of, or on
behalf of, each party, or that the signatures of all persons required to bind
any party, appear on each counterpart; but it shall be sufficient that the
signature of, or on behalf of, each party, or that the signatures of the persons
required to bind any party, appear on one or more such counterparts. All
counterparts shall collectively constitute a single agreement.
8.12 Exhibits and Schedules
Each Exhibit, Schedule, and document attached hereto or referenced herein is
incorporated by reference and made a part of this Agreement.
8.13 Benefit of Counsel; Construction of Contract
The parties to this Agreement were represented by counsel and participated in
the drafting of this Agreement. This Agreement shall not be construed against
the drafting party.
Page 17 of 18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
SELLER:
TRAVELMAX INTERNATIONAL, INC.
By: /S/ XXXXX X. XXXXX
--------------------------------
Xxxxx X. Xxxxx
Vice-President
PURCHASER:
PROTRAVEL SOLUTIONS, INC.
By: /S/ XXX X. O'DELL
--------------------------------
Xxx X. O'Dell
President
Page 18 of 18
SCHEDULE 1.1(a) ASSETS
Pursuant to this Agreement, Seller conveys, assigns, transfers and conveys to
Purchaser all its right, title, and interest in the following assets:
FURNISHINGS
1) 7 cubicles with returns
2) 4 desks
3) 4 returns
4) 1 credenza
5) 11 chairs
6) 2 lateral file cabinets
7) 4 four drawer file cabinets
8) 1 cement/steel safe
9) 14 cubicle filing cabinets
10) 11 cubicle dividers (sm. xxxx)
11) 47 ITA/IR filing cabinets with ITA/IR files
COMPUTER HARDWARE AND OTHER ELECTRONICS
1) Computers with corresponding monitors, keyboards and mice
COMPUTERS
---------
IBM Clone #002114
IBM Clone #001180
IBM Clone #002110
IBM Clone #002112
IBM Clone #001048
IBM Clone #1040000656
Excel #9BTWRAFQNE8
Excel #42639ATV322
MONITORS
--------
Daytek #DV9707M106772
Daytek #DC9707M106874
AOC Spectrum #DK74301374
Shamrock #67TTBO435906
MGC #71400-1990
AOC Spectrum #DDDK74305983
Shamrock #63TTCO147568
Impress 5 #59552484
2) 2 HP LaserJet 4 Plus document printers
HP 5m #JPKH027648
HP 5 #USHBO61447
3) 1 Cheetah Persona Card Printer #60350116
4) 1 Hewlett Packard ScanJet 4 color scanner #SG6832104C
5) 1 Minoltafax 1800 fax machine #JPKH027648
6) 1 HP Office Jet 300 #SG69CE318N
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SCHEDULE 1.1(a) ASSETS
OTHER ASSETS
2 H1 NIN VIDEO "NETWORK XXXX. IN ACTION" 248
2 H1 1122 BOOK "WAVE THREE" 138
2 I1 1122 BOOK "WAVE THREE" 864
5 A2 1210 AUDIO TAPE "OPPORTUNITY" 930
1 C1 1111 VIDEO "ITS ABOUT TIME" 1576
1 E2 1278 VIDEO "GETTING ON LINE" 488
1K1 Nin BOOK "MULTI LEVEL MAGIC" 6
1 K2 NIN DREAM VACATIONS INTO TAX DED. 17
1 K2 NIN VIDEO "TAX ADVAN. FOR VAC. OWN. 73
1 K3 NIN VIDEO "TAX ADV.FOR HOME BUS." 189
1 K3 NIN ITA EXAM 2400
1 K4 NIN D.V.INTO T.D. OWNERSHIP BETTER 16
1 K4 1072 D.V.INTO T.D. TAX ADV. R.V. RESORT 28
1 K5 1103 AUDIO TAPE "DO YOU LIKE TO TRAV." 48
1067 TAXMAX 400
NIN= NO ITEM NUMBER
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SCHEDULE 1.1(b) LEASES AND CONTRACTS
LEASES
(1) LEASE OF OFFICE SPACE
Network Holdings International, Inc. and The Century Group, Inc.
(2) SABRE RESERVATIONS SYSTEM LEASE ON 8 SABRE PENTIUM COMPUTERS AND
CORRESPONDING MONITORS, KEYBOARDS, AND MICE AND ON 2 TRAVEL INVOICE PRINTERS AND
1 TRAVEL TICKET PRINTER (SUBJECT TO THIRD PARTY APPROVAL AND CONSENT)
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SCHEDULE 1.2 COMMISSION FUND BANKING COORDINATES
Account #00000000, Bank of Shorewood, 000 X. Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000.
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SCHEDULE 1.2(a) COMMISSIONS
Commissions payable
March $ 17,598.20
April - June 22,258.95
July - December 83,634.12
-------------
TOTAL $ 123,491.27
=============
Support information for the above figures is voluminous and shall be maintained
by Seller for inspection upon request, and shall be relinquished to Purchaser to
enable payment thereon.
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SCHEDULE 1.2(b) EMPLOYEES
EMPLOYEE ANNUAL SALARY
Xxxxx Xxxxxxxx - $ 22,880.00 MLM Cust Svc/ITA ID Cards,
etc
Xxxx Xxxxxxx(1) - $ 33,790.12 QC for tktg/ARC report/
fulfillment
Xxxxxxx Xxxxxxxxx $ 24,000.00 travel agent
---------------
(1) Salary reflects a seven percent (7%) temporary salary cut that is in place
through February 13, 2000.
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SCHEDULE 5.6 FEDERAL, STATE, AND LOCAL TAX LIABILITY/FILING STATUS
A) Federal tax returns (form 1120) for the fiscal periods ended 6/30/98 and
6/30/99 have not been filed pending the completion of our audit. It is
anticipated that there will be no tax liability associated with the
filings.
B) Federal employer tax form 941 for the quarter ended 9/30/99 has been filed
with a balance due for the tax deposits. Employer taxes for that quarter
and the quarter ended 12/31/99 not remitted as of this date are
approximately $44,018.
C) State sales tax forms REV.63 for the State of California have not been
filed with the State Board of Equalization for the quarters ended 6/30/99,
9/30/99 and 12/31/99 and are expected to be filed shortly. The aggregate
tax liability associated with those filings is expected to be less that
$1,000. Sales tax forms for the same periods for the State of Washington
also have not been filed and are not expected to generate a tax liability.
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SCHEDULE 5.7 LITIGATION
RPS, Inc. On July 20, 1998, RPS, Inc., filed a complaint in the Los Angeles
County Superior Court, Central District, in Los Angeles, California (Case # BC
188107), against TravelMax International, Inc., a subsidiary of the Company.
XXXXX X. XXXXXX. On June 3, 1999, Xxxxx X. Xxxxxx, a former TravelMax
Independent Travel Agent, filed a complaint in the Third Judicial Distract Court
in and for Salt Lake County, State of Utah (Civil No: 990906014) against
TravelMax International, Inc. There is a Stipulated Judgment against TravelMax
for $1,500.00.
IKON OFFICE SOLUTIONS. On November 1, 1999, IKON Office Solutions, Inc., was
awarded a stipulated judgment in the amount of $ 735,341.37, against TravelMax
International, Inc.
CUSTOM GRAPHICS PRODUCTS. On November 24, 1999, Custom Graphics Products filed a
complaint against TravelMax International, Inc. seeking approximately
$111,000.00.
XXXX-XXXXXX. A judgment was entered on December 8, 1997 in favor of Xxxx-Xxxxxx
Security Corporation against TravelMax International, Inc., in the amount of $
524,060.
NOVUS SERVICES. On August 6, 1998, NOVUS Services filed a complaint in the
Superior Court of California for the County of Orange (Case # 797873) against
TravelMax International, Inc.
ATTORNEY GENERAL OF CALIFORNIA. On September 8, 1998, Xxxxxx X. Xxxxxxx, as
Attorney General of the State of California, filed a Stipulation for Entry of
Judgment, in the Superior Court of the State of California, for the County of
Los Angeles (Case # BC197029). This Judgment was filed as a settlement of
threatened legal action against TravelMax International, Inc., and TravelMax
International Foundation. The settlement was for $ 245,695.55, the outstanding
balance of which is approximately $170,000.
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SCHEDULE 5.9 PERMITS, LICENSES, AND AUTHORIZATIONS
1) Airlines Reporting Corporation appointment number 10532395, subject to
ARC consent
2) Toll-free telephone numbers 000.000.0000 and 000.000.0000, subject to
any required third-party approvals.
3) Authorization to operate and book using the SABRE reservations system,
subject to any required third-party approvals.
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