EXHIBIT 10.1
EXECUTION VERSION
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
BY AND AMONG
VE HOLDINGS, INC.,
SUNTRIPS, INC.,
FS TOURS, INC.
and
FS SUNTOURS, INC.
Dated as of
October 31, 2003
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ARTICLE I DEFINITIONS AND TERMS......................................................................1
Section 1.1 Certain Definitions...................................................................1
Section 1.2 Other Definitional Provisions.........................................................8
ARTICLE II PURCHASE AND SALE OF ACQUIRED ASSETS.......................................................8
Section 2.1 Purchase and Sale.....................................................................8
Section 2.2 Acquired Assets and Excluded Assets...................................................8
Section 2.3 Assumption of Liabilities............................................................11
Section 2.4 Purchase Price.......................................................................11
Section 2.5 Purchase Price Adjustment............................................................11
Section 2.6 Allocation of the Purchase Price.....................................................12
Section 2.7 Transfer Taxes.......................................................................13
ARTICLE III CLOSING...................................................................................13
Section 3.1 Closing..............................................................................13
Section 3.2 Deliveries by Sellers................................................................13
Section 3.3 Deliveries by Purchasers.............................................................14
Section 3.4 Risk of Loss.........................................................................14
Section 3.5 Simultaneous Transactions............................................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS.................................................14
Section 4.1 Authority, Binding Effect............................................................14
Section 4.2 Title to Property....................................................................16
Section 4.3 No Violation.........................................................................16
Section 4.4 Litigation; Proceedings.............................................................16
Section 4.5 Organization and Qualification.......................................................16
Section 4.6 Financial Statements; Undisclosed Liabilities.......................................16
Section 4.7 Receivables..........................................................................17
Section 4.8 Consents and Approvals...............................................................17
Section 4.9 Permits/Compliance with Laws.........................................................17
Section 4.10 Employee Benefit Plans; ERISA.......................................................18
Section 4.11 Contracts............................................................................18
Section 4.12 Condition and Sufficiency of Acquired Assets.........................................19
Section 4.13 Environmental Matters................................................................19
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Section 4.14 Real Property........................................................................19
Section 4.15 Labor Matters........................................................................20
Section 4.16 Insurance............................................................................20
Section 4.17 Intellectual Property................................................................20
Section 4.18 Taxes................................................................................21
Section 4.19 Customer Relationships...............................................................21
Section 4.20 Customer Deposits and Pre-Paid Expenses..............................................21
Section 4.21 Full Disclosure......................................................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASERS..............................................22
Section 5.1 Organization.........................................................................22
Section 5.2 Authority, Binding Effect............................................................22
Section 5.3 No Violation; Consents and Approvals................................................23
Section 5.4 Financial Sufficiency................................................................24
ARTICLE VI COVENANTS.................................................................................24
Section 6.1 Conduct of Business..................................................................24
Section 6.2 Bulk Transfer Laws...................................................................24
Section 6.3 Employees............................................................................24
Section 6.4 Further Assurances...................................................................25
Section 6.5 Confidentiality; Tax Disclosure......................................................25
Section 6.6 Notification of Certain Matters......................................................26
Section 6.7 Access to Books and Records Following the Closing....................................26
Section 6.8 Change of Name.......................................................................26
Section 6.9 MyTravel Names.......................................................................26
Section 6.10 Non-Competition; Non-Solicitation....................................................27
Section 6.11 Stub Period Financial Statements.....................................................27
Section 6.12 Credit Card Processing...............................................................27
ARTICLE VII INDEMNIFICATION OBLIGATIONS; SURVIVAL....................................................28
Section 7.1 Agreements to Indemnify..............................................................28
Section 7.2 Third Party Claims Procedures........................................................28
Section 7.3 Limitation of Liability..............................................................29
Section 7.4 Method of Payment; Treatment of Indemnity Benefits...................................30
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Section 7.5 Exclusive Remedy.....................................................................30
Section 7.6 Survival.............................................................................30
ARTICLE VIII CONDITIONS TO CLOSING; TERMINATION........................................................31
Section 8.1 Mutual Conditions to the Obligations of the Parties..................................31
Section 8.2 Conditions to the Obligations of Purchasers..........................................31
Section 8.3 Conditions to the Obligations of Sellers.............................................32
Section 8.4 Termination..........................................................................32
Section 8.5 Effect of Termination................................................................32
Section 8.6 Closing Failure Fee..................................................................32
Section 8.7 Third Party Real Estate Consents.....................................................33
Section 8.8 No Multiple Materiality Qualifiers...................................................33
ARTICLE IX GENERAL...................................................................................33
Section 9.1 Notices..............................................................................33
Section 9.2 Amendment, Waiver....................................................................34
Section 9.3 Assignment...........................................................................34
Section 9.4 Entire Agreement.....................................................................34
Section 9.5 Fulfillment of Obligations...........................................................34
Section 9.6 Parties in Interest..................................................................35
Section 9.7 Expenses.............................................................................35
Section 9.8 Brokers..............................................................................35
Section 9.9 Governing Law........................................................................35
Section 9.10 Counterparts.........................................................................35
Section 9.11 Headings.............................................................................35
Section 9.12 Disclosure Schedules.................................................................35
Section 9.13 Specific Performance.................................................................35
Section 9.14 Publicity............................................................................35
Section 9.15 Severability.........................................................................36
Section 9.16 Rules of Construction................................................................36
Section 9.17 Representations and Warranties Exclusive.............................................36
Section 9.18 WAIVER OF JURY TRIAL.................................................................36
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EXHIBITS
Exhibit A - Pledge Agreement
Exhibit B - Purchase Agreement Supplement
Exhibit C - Purchase Price Note
Exhibit D - Xxxx of Sale
Exhibit E - Assumption Agreement
Exhibit F - Lease Assignments
Exhibit G - Transition Services Agreement
Exhibit H - Intellectual Property Assignments
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of October
31, 2003, by and among VE Holdings, Inc., a Delaware corporation ("VE Holdings")
and a wholly-owned subsidiary of MyTravel USA Holdings, Inc., a Florida
corporation ("MyTravel"), SunTrips, Inc., a California corporation ("SunTrips")
and a wholly-owned subsidiary of MyTravel, FS Tours, Inc., a Delaware
corporation ("FS Tours"), a wholly-owned direct subsidiary of Flightserv, Inc.,
a Delaware corporation ("Flightserv") and a wholly-owned indirect subsidiary of
eResource Capital Group, Inc., a Delaware corporation ("ECG"), and FS SunTours,
Inc., a Delaware corporation ("FS SunTours"), a wholly-owned direct subsidiary
of Flightserv and a wholly-owned indirect subsidiary of ECG. VE Holdings and
SunTrips are each referred to herein individually as "Seller" and collectively
as "Sellers". FS Tours and FS SunTours are each referred to herein individually
as a "Purchaser" and collectively as "Purchasers".
RECITALS:
WHEREAS, Sellers and FS Tours entered into that certain Asset Purchase
Agreement, dated as of October 17, 2003 (the "Original Agreement") and Sellers
and FS Tours desire to amend and restate the Original Agreement in its entirety
in order to provide for the purchase by FS SunTours of substantially all of the
assets of SunTrips;
WHEREAS, Sellers are engaged in the business of serving as public
charter airline operators (collectively the "Business"); and
WHEREAS, (i) SunTrips wishes to sell to FS SunTours, and FS SunTours
wishes to purchase from SunTrips, substantially all of the assets of SunTrips
used exclusively or principally by or relating to the Business, subject to
certain liabilities in connection with the Business, upon the terms and subject
to the conditions of this Agreement and (ii) VE Holdings wishes to sell to FS
Tours, and FS Tours wishes to purchase from VE Holdings, substantially all of
the assets of VE Holdings used exclusively or principally by or relating to the
Business, subject to certain liabilities in connection with the Business, upon
the terms and subject to the conditions of this Agreement (collectively, the
"Asset Purchase").
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the Original Agreement is hereby amended, and the parties
hereto agree, as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Certain Definitions. As used in this Agreement (including
the Schedules and hereto), the following terms have the meanings set forth or as
referenced below:
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"Acquired Assets" has the meaning set forth in Section 2.2(a).
"Action" means any claim, action, suit or proceeding, arbitral action,
governmental inquiry, criminal prosecution or other investigation.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. The term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or other ownership interest, as trustee or
executor, by contract, credit arrangement or otherwise.
"Agreement" means this Agreement, as it may be amended or supplemented
from time to time in accordance with the terms hereof.
"Ancillary Documents" means the Xxxx of Sale, the Assumption Agreement,
the Purchase Price Note, the Lease Assignment, the Transition Services
Agreement, the Intellectual Property Assignments, each Other Conveyance
Document, the Replacement Letters of Credit, the Purchase Agreement Supplement,
the Pledge Agreement, and each instrument, agreement or other document
contemplated by this Agreement as being executed and delivered by the applicable
party hereto.
"Asset Purchase" has the meaning set forth in the recitals.
"Assumed Liabilities" has the meaning set forth in Section 2.3(a).
"Assumption Agreement" has the meaning set forth in Section 3.2(b).
"Benefit Plans" means any Plan that is maintained or contributed to by
Sellers (or any of their Affiliates) for the benefit of Employees.
"Xxxx of Sale" has the meaning set forth in Section 3.2(a).
"Business" has the meaning set forth in the recitals.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in New York City or Atlanta, Georgia are authorized or obligated
by law or executive order to close.
"Business Intellectual Property" shall mean any Intellectual Property
that is owned by or licensed to Sellers exclusively or principally for the
benefit of the Business, other than any such Intellectual Property that is an
Excluded Asset or provided pursuant to the Transition Services Agreement.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
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"Closing Statement" has the meaning set forth in Section 2.5(a).
"Closing Working Capital Amount" means the difference between the
Current Assets and the Current Liabilities.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competition Laws" means all Laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization, lessening of competition or restraint of trade.
"Consents" has the meaning set forth in Section 4.8
"Contract" means any written contract, agreement, indenture, note,
bond, instrument, lease, conditional sales contract, mortgage, license,
franchise agreement, concession agreement, insurance policy, security interest,
guaranty, binding commitment or other agreement or arrangement, in each case to
which a Seller is a party and relating to the Business.
"Current Assets" means the Current Assets (as defined by GAAP) of
Sellers as recorded in their books and records as of the Closing Date (including
the Surety Bonds), but excluding all Excluded Assets.
"Current Letters of Credit" means the Letters of Credit set forth on
Schedule 1.1(a).
"Current Liabilities" means the Current Liabilities (as defined by
GAAP) of Sellers as recorded in their books and records as of the Closing Date,
but excluding all Excluded Liabilities.
"Damages" has the meaning set forth in Section 7.1(a).
"ECG" has the meaning set forth in the preamble.
"Employee" means each employee of Sellers engaged in the Business as of
the Closing Date.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence or Release of any Hazardous Materials at any location,
whether or not owned or operated by any Seller, or (b) circumstances forming the
basis of any violation of any Environmental Law.
"Environmental Laws" means all Laws and regulations relating to
pollution or protection of human health or the environment, including Laws
relating to Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials and all Laws with regard
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to recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning set forth in Section 2.2(b).
"Excluded Contracts" has the meaning set forth in Section 2.2(b)(v).
"Excluded Liabilities" has the meaning set forth in Section 2.3(b).
"Financial Information" has the meaning set forth in Section 4.6(a).
"Flightserv" has the meaning set forth in the preamble.
"GAAP" means United States generally accepted accounting principles and
practices in effect from time to time as consistently applied.
"Governmental Authority" has the meaning set forth in Section 4.8.
"Governmental Order" means any statute, rule, regulation, order,
judgment, injunction, decree, stipulation or determination issued, promulgated
or entered by or with any Governmental Authority of competent jurisdiction.
"Hazardous Materials" means all materials regulated by law as capable
of causing harm or injury to human health or the environment, including (a)
Hazardous Substances (as hereinafter defined), (b) friable asbestos containing
material, (c) polychlorinated biphenyls, (d) highly toxic materials as defined
by OSHA in 29 C.F.R. ss. 1910.1200, (d) radioactive materials and (f) all
substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in
the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
ss. 300.5, or defined as such by, or regulated as such under, any Environmental
Law.
"Hazardous Substances" means any hazardous substances within the
meaning of Section 101(14) of CERCLA, 42 U.S.C. ss. 9601(14), or any pollutant
or constituent that is regulated under any Environmental Law.
"Indemnified Party" has the meaning set forth in Section 7.2.
"Indemnifying Party" has the meaning set forth in Section 7.2.
"Independent Accounting Firm" means (a) a certified public accounting
firm in the United States of international recognition mutually acceptable to
Sellers and Purchasers, which does not have a material existing relationship
with either of Sellers or Purchasers, or (b) if Sellers and Purchasers are
unable to agree upon such a firm, then Sellers shall select one such firm and
Purchasers shall select one such firm and those two firms shall select a third
firm, in which event "Independent Accounting Firm" shall mean such third firm.
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"Intellectual Property" means any or all of the following: (i) all
patents and applications therefor and reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof; (ii) inventions
(whether patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology, technical data and customer
lists; (iii) copyrights, copyright registrations and applications therefor; (iv)
trade names, trade dress, logos, trademarks and service marks, and registrations
and applications therefor and the goodwill associated therewith; (v) databases;
(viii) computer software, including all source code therefor and (ix) domain
names and all rights therein throughout the world.
"Intellectual Property Assignments" has the meaning set forth in
Section 3.2(e).
"Knowledge of Sellers", "Sellers' Knowledge" and phrases of similar
import mean the actual knowledge after reasonable inquiry of any current officer
of either Seller.
"Laws" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree, administrative order or
decree, administrative or judicial decision, and any other executive or
legislative proclamation.
"Lease Assignments" has the meaning set forth in Section 3.2(a).
"Leased Realty" has the meaning set forth in Section 4.14(b).
"Leases" has the meaning set forth in Section 4.14(b).
"Liens" means any lien, security interest, mortgage, pledge, charge or
similar encumbrance.
"Litigation" has the meaning set forth in Section 4.4.
"Material Adverse Effect" means any change or effect that is materially
adverse to the financial condition, assets, liabilities or results of operations
of the Business, with regard to either Seller individually or taken as a whole,
except for any such changes or effects resulting directly or indirectly from (a)
the transactions contemplated by this Agreement, (b) the announcement or other
disclosure of the transactions contemplated by this Agreement, (c) industry-wide
regulatory changes, or (d) an event or circumstance or series of events or
circumstances affecting (i) the industry in which the Business operates in any
country in which the Business operates or (ii) the United States economy
generally or the economy generally of any other country in which the Business
operates.
"Material Contracts" has the meaning set forth in Section 4.11(a).
"MyTravel" means MyTravel USA Holdings, Inc., a Florida corporation.
"MyTravel Canada" means MyTravel Canada Holidays Inc., a Canadian
corporation.
"MyTravel Names" means the trademark "MyTravel" and all other
trademarks containing the word "MyTravel" or any derivatives thereof.
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"Notice of Disagreement" has the meaning set forth in Section 2.5(b).
"Other Conveyance Documents" has the meaning set forth in Section
3.2(f).
"Permits" has the meaning set forth in Section 4.9.
"Permitted Liens" means (i) mechanics', carriers', workmen's or
repairmens' Liens arising or incurred in the ordinary course of business with
respect to liabilities that are not yet due or delinquent, (ii) Liens arising by
operation of law for Taxes, assessments and other governmental charges which are
not due and payable or which may hereafter be paid without penalty or which are
being contested in good faith by appropriate proceedings, (iii) Liens set forth
on Schedule 1.1(b), and (iv) other imperfections of title or encumbrances, if
any, which imperfections of title or other encumbrances, individually or in the
aggregate, would not reasonably be expected to materially detract from the value
of the property or asset to which it relates or materially impair the ability to
use the property or asset to which it relates in substantially the same manner
as it was used prior to the Closing Date.
"Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Plans" means any "employee benefit plan" within the meaning of Section
3(3) of ERISA.
"Pledge Agreement" means the Stock Pledge Agreement, dated as of the
Closing Date, between ECG and Sellers, in the form attached hereto as Exhibit A.
"Post-Closing Letters of Credit" means those Letters of Credit set
forth on Schedule 1.1(c).
"Purchase Agreement Supplement" means the Purchase Agreement
Supplement, dated as of the Closing Date, between MyTravel Canada, Flightserv
and Purchasers, in the form attached hereto as Exhibit B.
"Purchase Price" has the meaning set forth in Section 2.4.
"Purchase Price Note" means the Secured Promissory Note of Purchasers
and Flightserv, due December 1, 2010, issued to the Sellers, jointly and
severally, in the aggregate principal amount of Ten Million Dollars
($10,000,000) (as may be adjusted from time to time pursuant to Sections 2.5(d)
and 7.4(a)), in the form attached hereto as Exhibit C.
"Purchaser" has the meaning set forth in the preamble.
"Purchaser Group" has the meaning set forth in Section 7.1(a).
"Recipients" has the meaning set forth in Section 6.5(b).
"Registered Intellectual Property" has the meaning set forth in Section
4.17(a).
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"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including ambient air, surface water,
groundwater and surface or subsurface strata), or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
"Replacement Letters of Credit" means the Letters of Credit obtained by
Purchasers in replacement of the Current Letters of Credit other than the
Post-Closing Letters of Credit, issued to the same entities, in the same amounts
and securing the same obligations as such Current Letters of Credit, each in
form and substance, and from a bank or other financial institution, reasonably
satisfactory to Sellers and the Purchasers; provided, however that the Letter of
Credit obtained by Purchasers in replacement of the $3,000,000 Letter of Credit
issued for the benefit of Xxxx International Airlines Inc. by Barclays Bank
shall be in the amount of One Million Five Hundred Thousand Dollars
($1,500,000).
"Schedule" means any disclosure schedule being delivered by Sellers
concurrently with the execution of this Agreement.
"Seller" has the meaning set forth in the preamble.
"Seller Group" has the meaning set forth in Section 7.1(b).
"SunTrips" has the meaning set forth in the preamble.
"Surety Bonds" means (i) the $200,000 Cash Surety issued by National
City Bank in favor of the Department of Transportation for the benefit of VE
Holdings and (ii) the $200,000 Cash Surety issued by National City Bank in favor
of the Department of Transportation for the benefit of SunTrips.
"Tax Return" means any return, report, information return or other
document (including any related or supporting information) with respect to
Taxes, including any schedule or attachment thereto.
"Taxes" means all taxes, charges, fees, duties, levies, penalties or
other assessments imposed by any federal, state, local or foreign Governmental
Authority, including, but not limited to, income, gross receipts, excise,
property, sales, gain, use, license, capital stock, transfer, franchise,
payroll, withholding, social security, value added or other taxes, including any
interest, penalties or additions attributable thereto.
"Third Party Claim" has the meaning set forth in Section 7.2.
"Transfer Taxes" means sales, use, transfer, real property transfer,
recording, documentary, stamp, registration, stock transfer, and other similar
taxes and fees (including any penalties and interest).
"Transferred Employee" has the meaning set forth in Section 6.3(a).
"Transition Services Agreement" has the meaning set forth in Section
3.2(d).
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"VE Holdings" has the meaning set forth in the preamble.
Section 1.2 Other Definitional Provisions.
(a) When a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference shall be to an Article,
Section, Exhibit or Schedule of this Agreement unless otherwise
indicated.
(b) The words "hereof," "herein," "hereto," "hereunder" and
"hereinafter" and words of similar import, when used in this Agreement
refer to this Agreement as a whole and not to any particular provision
of this Agreement.
(c) The terms defined in the singular have a comparable
meaning when used in the plural, and vice versa.
(d) The term "dollars" and character "$" mean United States
dollars.
(e) The word "including" means including, without limitation,
and the words "include" and "includes" have corresponding meanings.
ARTICLE II
PURCHASE AND SALE OF ACQUIRED ASSETS
Section 2.1 Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, (i) SunTrips agrees to sell, assign, transfer,
convey and deliver, or cause to be sold, assigned, transferred, conveyed and
delivered, to FS SunTours and FS SunTours agrees to purchase, on the Closing
Date, all of the Acquired Assets owned or controlled by SunTrips and (ii) VE
Holdings agrees to sell, assign, transfer, convey and deliver, or cause to be
sold, assigned, transferred, conveyed and delivered, to FS Tours and FS Tours
agrees to purchase, on the Closing Date, all of the Acquired Assets owned or
controlled by VE Holdings; provided that, in any event, Purchasers shall
collectively purchase hereunder all of the Acquired Assets, notwithstanding any
specific division thereof set forth in this Section 2.1.
Section 2.2 Acquired Assets and Excluded Assets.
(a) The term "Acquired Assets" shall mean all the business,
properties, assets and rights of Sellers relating exclusively or
principally to the Business of whatever kind and nature, tangible or
intangible, other than the Excluded Assets, including, in each case as
relating exclusively or principally to the Business:
(i) all right, title and interest in, to and under
any Leased Realty;
(ii) except to the extent any of the following are
Excluded Assets, all inventory, computer equipment and
hardware, equipment, supplies and other goods, all office
furniture and fixtures, leasehold improvements, machinery,
owned vehicles, and other tangible personal property;
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(iii) all right, title and interest of Sellers in, to
and under all Contracts to which they are a party, including
those listed on Schedule 4.11(a), but excluding any Excluded
Contracts;
(iv) except to the extent any of the following are
Excluded Assets, all accounts receivable of the Business (net
of any reserves for bad debt), and notes payable to Sellers in
relation to the Business and all claims, contract rights and
judgments relating thereto, including all of Sellers' rights
to any proofs of claim filed against account debtors and any
negotiable instruments, letters of credit or any other writing
that evidences a right of Sellers to the payment or
performance of a monetary obligation;
(v) any securities, whether certificated or
uncertificated, held by Sellers;
(vi) all right, title and interest of Sellers to and
under all Permits, to the extent such Permits are
transferable;
(vii) all prepaid assets, including all prepaid
rentals and all prepaid expenses, bonds (including the Surety
Bonds), escrow accounts and deposits of Sellers;
(viii) the originals and all copies of all books of
account, sales and promotional materials, general, financial,
accounting and personnel records, files, manuals, invoices,
customers and suppliers lists and other data owned or used by
Sellers, but excluding the corporate minute books, stock
records and organizational documents of Sellers;
(ix) all right, title and interest of Sellers in, to
and under all Business Intellectual Property (including the
trademarks, tradenames and names "SunTrips" and "Vacation
Express"), except to the extent any Business Intellectual
Property is an Excluded Asset;
(x) all of Sellers' right, title and interest in and
to telephone numbers, answering service numbers, e-mail
addresses, and other communication codes, numbers or devices
(including the software components for all internet websites
other than the "MyTravel" website);
(xi) all of Sellers' right, title and interest in and
to all passenger escrow accounts maintained with a bank or
other financial institution;
(xii) all causes of action, other than those related
to or otherwise arising in connection with, the Excluded
Assets or Excluded Liabilities;
(xiii) all goodwill relating exclusively or
principally to the Business; and
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(xiv) any other assets used exclusively or
principally in the Business on the Closing Date that are not
specifically listed above.
(b) The term "Excluded Assets" shall mean:
(i) the minute books, corporate seal, stock records and
organizational documents of Sellers;
(ii) copies of such books of account, general, financial,
accounting and personnel records, files, manuals, invoices, customer
and suppliers lists and other data as Sellers may be required by
applicable Laws to retain or as may be necessary to assist Sellers in
preparation of Sellers' Tax Returns;
(iii) all of Sellers' cash on hand, cash equivalents or cash
held in any financial institution, other than any escrowed cash or
security deposits;
(iv) any demand, money market, time, savings, passbook, or
similar account maintained with a bank or other financial institution;
(v) all right, title and interest in, to and under any Benefit
Plans listed (or required to be listed) in Section 4.10;
(vi) those Contracts that are listed on Schedule 2.2(b) (the
"Excluded Contracts");
(vii) all of Sellers' right, title and interest in and to Tax
credits and other Tax benefits, Tax refunds, prepaid Taxes, insurance
premium refunds, and insurance and other claims or rights to recoveries
and similar benefits of and relating to the Business prior to the
Closing Date;
(viii) all of Sellers' right, title and interest in and to
this Agreement;
(ix) any notes, drafts, accounts or other obligations for the
payment of money, made or owed to any Seller by any current or former
employees or Affiliates of any Seller;
(x) all accounts receivable of the Business or Sellers due and
owing from any Affiliate of Sellers (other than as owed from one Seller
to another);
(xi) all of Sellers' right, title and interest in and to the
trademark, tradename or name "MyTravel" anywhere in the world;
(xii) all of Sellers' right, title and interest in and to the
reservation system commonly referred to as "Logibro" and all other
software applications licensed from third parties and used in the
operation of the Sellers' websites; and
(xiii) all of Sellers' right, title and interest to the
computer hardware and other equipment on which the SunTrips website is
hosted and/or maintained.
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Section 2.3 Assumption of Liabilities.
(a) Upon the terms and subject to the conditions of this
Agreement, at the Closing, (i) FS SunTours shall assume and agree to
pay, perform and discharge solely those obligations and liabilities of
Sellers set forth on Schedule 2.3(a) relating to the SunTrips and (ii)
FS Tours shall assume and agree to pay, perform and discharge solely
those obligations and liabilities of Sellers set forth on Schedule
2.3(a) relating to VE Holdings; provided that, in any event, Purchasers
shall, collectively, assume and agree to pay, perform and discharge all
of the obligations and liabilities of Sellers set forth on Schedule
2.3(a), notwithstanding any specific division thereof set forth in this
Section 2.3. The foregoing obligations, liabilities and commitments,
and no others, shall be hereinafter referred to as the "Assumed
Liabilities."
(b) Purchasers shall not assume or become liable to pay,
perform or discharge any other obligations or liabilities of Sellers
(collectively, the "Excluded Liabilities").
(c) Purchasers shall acquire the Acquired Assets free and
clear of all Liens, except for the Assumed Liabilities and Permitted
Liens.
Section 2.4 Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration of the sale, assignment, transfer and delivery of
the Acquired Assets to the Purchasers, Purchasers agree, jointly and severally,
to pay to Sellers, jointly and severally, an aggregate amount equal to Ten
Million Dollars ($10,000,000) (as adjusted pursuant to Section 2.5, the
"Purchase Price"), which shall be represented by the Purchase Price Note.
Section 2.5 Purchase Price Adjustment.
(a) Closing Statement. As promptly as practicable, but no
later than twenty (20) Business Days after the Closing Date, Purchasers
shall prepare and deliver to Sellers a statement (the "Closing
Statement") setting forth the Closing Working Capital Amount, together
with detail regarding the method of calculation thereof. The
calculations set forth on the Closing Statement will be prepared on the
basis and using the same accounting policies, principles, methodologies
and estimates used in preparing the Financial Information. At all
reasonable times during the ten (10) Business Days immediately
following Sellers' receipt of the Closing Statement, Sellers and their
representatives will be permitted to review at Purchasers' offices
Purchasers' working papers (including work papers of accountants and
other advisors) relating to the Closing Statement, as well as all of
the books and records relating to the operations and finances of
Sellers with respect to the period up to and including the Closing
Date, and Purchasers shall make reasonably available at their offices
the individuals responsible for the preparation of the Closing
Statement in order to respond to the reasonable inquiries of Sellers
related thereto.
(b) Notice of Disagreement. Sellers shall notify Purchasers in
writing (the "Notice of Disagreement") within ten (10) Business Days
after receiving the Closing Statement if Sellers disagree with any
aspect of the Closing Statement or any of Purchasers' calculations with
regard to the Closing Working Capital Amount, which Notice of
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Disagreement shall set forth in reasonable detail the basis for such
dispute and Sellers' good faith calculations of the Closing Working
Capital Amount. If Sellers do not deliver a Notice of Disagreement to
Purchasers within such ten (10) Business Day period, then the Closing
Statement shall be deemed to have been accepted by Sellers, shall
become final and binding upon the parties and shall be the final
Closing Statement.
(c) Dispute Resolution. During the ten (10) Business Days
immediately following the delivery of a Notice of Disagreement, Sellers
and Purchasers shall seek in good faith to resolve any differences that
they may have with respect to any matter specified in the Notice of
Disagreement. If at the end of such ten (10) Business Day period
Sellers and Purchasers have been unable to agree upon a final Closing
Statement, then Sellers and Purchasers shall submit to the Independent
Accounting Firm for review and resolution any and all matters that
remain in dispute with respect to the Notice of Disagreement.
Purchasers and Sellers shall cause the Independent Accounting Firm to
use commercially practicable efforts to make a final determination
(which determination shall be binding on the parties hereto) on the
disputes so submitted as well as such modifications, if any, to the
Closing Balance Sheet and the Closing Working Capital Amount within ten
(10) Business Days from such submission, and such final determination
shall be the final Closing Statement. The cost of the Independent
Accounting Firm's review and determination shall be paid by the party
whose determination of the aggregate amount of the Closing Working
Capital Amount differed by the greater amount from the aggregate amount
of the final Closing Working Capital Amount. During the ten (10)
Business Day review by the Independent Accounting Firm, Purchasers and
Sellers will each make available to the Independent Accounting Firm
interviews with such individuals and such information, books and
records as may be reasonably required by the Independent Accounting
Firm to make its final determination.
(d) Adjustment. If the final Closing Working Capital Amount is
negative, Sellers and MyTravel Canada shall be obligated, jointly and
severally, within five (5) Business Days following the determination of
the final Closing Working Capital Amount, to pay to Purchasers an
aggregate amount in cash equal to the amount by which the difference
between the absolute value of such final Closing Working Capital Amount
and zero (0) exceeds Two Million Dollars ($2,000,000). If the final
Closing Working Capital Amount is positive, Purchasers may elect that
either (i) Purchasers shall be obligated, jointly and severally, to pay
to Sellers within such five (5) Business Days an amount in cash equal
to equal to the difference between such final Working Capital Amount
and zero (0) or (ii) the amount outstanding at such time under the
Purchase Price Note shall be increased by an amount equal to the
difference between such final Closing Working Capital Amount and zero
(0).
Section 2.6 Allocation of the Purchase Price. The Purchase Price and
the amount of the Assumed Liabilities shall be allocated among the Acquired
Assets in a manner consistent with values as set forth on Schedule 2.6. Each
party hereto agrees that: (i) any such allocation shall be consistent with the
requirements of section 1060 of the Code; (ii) it shall file Form 8594 with its
Federal income Tax Return consistent with such allocation for the tax year in
which the Closing occurs; and (iii) except as otherwise required by applicable
Law, it will not take a position on any income, transfer or gains or other Tax
12
Return, before any Governmental Authority charged with the collection of any
such Tax or in any judicial proceeding, that is in any manner inconsistent with
the terms of any such allocation without the consent of the other party hereto.
Section 2.7 Transfer Taxes. Each of Sellers, on the one hand, and
Purchasers, on the other hand, shall pay fifty percent (50%) of all applicable
Transfer Taxes imposed in connection with this Agreement and the transactions
contemplated by this Agreement. The appropriate party shall file all necessary
documentation and Tax Returns with respect to such Transfer Taxes; provided,
however, that Purchasers and Sellers shall cooperate to prepare and file with
the appropriate Governmental Authority, as and to the extent necessary, all
appropriate Tax exemption certificates or similar instruments as may be
necessary to avoid the imposition of any Transfer Taxes.
ARTICLE III
CLOSING
Section 3.1 Closing. Subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the closing of the Asset Purchase (the
"Closing") shall take place on October 31, 2003, at 10:00 a.m. (New York time),
or such other date and time as the parties hereto may agree, either in person at
the offices of Xxxxxx Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at such other location as the parties hereto may agree, or by overnight
delivery and facsimile. The date on which the Closing occurs is called the
"Closing Date".
Section 3.2 Deliveries by Sellers. At the Closing, Sellers shall
deliver or cause to be delivered to Purchasers (unless delivered previously) the
following:
(a) a xxxx of sale (the "Xxxx of Sale") for the Acquired
Assets, in the form attached hereto as Exhibit D, executed by Sellers;
(b) an assumption agreement (the "Assumption Agreement") for
the Assumed Liabilities, in the form attached hereto as Exhibit E,
executed by Sellers;
(c) assignments and assumptions of lease (the "Lease
Assignments") with respect to the Leased Realty, each in the respective
form attached hereto as Exhibit F, executed by the appropriate Sellers;
provided, however, that in the event that any landlord under any of the
Leases objects to giving the Certification (as defined in the Lease
Assignments), each Purchaser hereby waives the requirement to obtain
such Certification and Sellers are hereby authorized to unilaterally
modify the Lease Assignments to remove solely those provisions relating
to the Certification, and the Lease Assignments, as so modified, shall
be deemed satisfactory in form and substance for all purposes of this
Agreement;
(d) a transition services agreement (the "Transition Services
Agreement"), in the form attached hereto as Exhibit G, with respect to
transitional services to be provided to Purchasers by MyTravel Canada,
executed by MyTravel Canada;
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(e) certain trademark assignments and domain name assignments
(collectively, the "Intellectual Property Assignments"), in each case
in the forms attached hereto as Exhibit H, executed by the applicable
Sellers;
(f) the Purchase Agreement Supplement, executed by MyTravel
Canada, and the Pledge Agreement, executed by Sellers; and
(g) all such other agreements, assignments, endorsements and
instruments of transfer (collectively, the "Other Conveyance
Documents") as are reasonably necessary or appropriate to carry out the
intent of this Agreement, each executed by Sellers.
Section 3.3 Deliveries by Purchasers. At the Closing, Purchasers shall
deliver or cause to be delivered to Sellers (unless delivered previously) the
following:
(a) the Purchase Price Note, duly executed by Purchasers and
Flightserv;
(b) the Xxxx of Sale, Assumption Agreement, Lease Assignments,
Transition Services Agreement, Intellectual Property Assignments,
Purchase Agreement Supplement and Pledge Agreement, each executed by
Purchasers, Flightserv and/or ECG, to the extent each of the foregoing
is party thereto;
(c) the Replacement Letters of Credit, executed by all of the
parties thereto (other than the Replacement Letter of Credit to be
issued to Pace Airlines, Inc., which shall be delivered no later than
November 14, 2003); and
(d) all such Other Conveyance Documents as are reasonably
necessary or appropriate to carry out the intent of this Agreement,
each executed by the Purchasers.
Section 3.4 Risk of Loss. On or prior to the Closing Date, any loss of
or damage to the Acquired Assets from fire, casualty or other occurrences shall
be entirely the responsibility of Sellers. Risk of loss to the Acquired Assets
following the Closing Date shall be entirely the responsibility of Purchasers.
Section 3.5 Simultaneous Transactions. All of the transactions
contemplated by this Agreement shall be deemed to occur simultaneously, and no
such transaction shall be deemed to have been consummated until all such
transactions have been consummated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant, jointly and severally, and,
solely for purposes of Section 4.1(c) each of MyTravel and MyTravel Canada
represents and warrants, to Purchasers, as of the date hereof, as follows:
Section 4.1 Authority, Binding Effect.
(a) Each Seller has all requisite corporate power, capacity
and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
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hereby. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each
Seller, and no other corporate action on the part of such Seller or its
stockholders is required to authorize the execution, delivery and
performance hereof, and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by each Seller and constitutes the valid and binding
obligation of such Seller enforceable against such Seller in accordance
with its terms, except that such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or limiting creditors' rights generally
and the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be
brought.
(b) Each Seller has all requisite corporate power, capacity
and authority to execute and deliver each Ancillary Document to which
it is a party, to perform its obligations thereunder and to consummate
the transactions contemplated thereby. The execution, delivery and
performance of the Ancillary Documents and the consummation of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of each Seller, and no other
corporate action on the part of such Seller or its respective
stockholders or partners is required to authorize the execution,
delivery and performance of any Ancillary Document applicable to such
Seller, and the consummation of the transactions contemplated thereby.
At Closing, each Ancillary Document will have been duly executed and
delivered by each Seller party thereto and will constitute the valid
and binding obligation of such Seller enforceable against such Seller
in accordance with its terms, except that such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium or
other laws now or hereafter in effect relating to or limiting
creditors' rights generally and the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
(c) Each of MyTravel and MyTravel Canada has all requisite
corporate power, capacity and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby, in each case solely with regard to
the provisions set forth under such entity's name on the signature page
hereto. The execution, delivery and performance of the provisions set
forth under MyTravel's or MyTravel Canada's name, as the case may be,
on the signature page hereto this Agreement and the consummation of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of each of MyTravel and MyTravel
Canada, and no other corporate action on the part of MyTravel or
MyTravel Canada or their stockholders is required to authorize the
execution, delivery and performance thereof, and the consummation of
the transactions contemplated thereby. This Agreement has been duly
executed and delivered by each of MyTravel and MyTravel Canada and
constitutes the valid and binding obligation of each of such entity
enforceable against it in accordance with its terms, except that such
enforcement may be subject to any bankruptcy, insolvency,
15
reorganization, moratorium or other laws now or hereafter in effect
relating to or limiting creditors' rights generally and the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
Section 4.2 Title to Property. Each Seller has good title to, or a
valid leasehold interest in, the Acquired Assets owned or leased by it, free and
clear of all Liens (other than the Assumed Liabilities, Permitted Liens or Liens
created by the acts of Purchasers).
Section 4.3 No Violation. The execution and delivery of this Agreement
by each Seller and each Ancillary Document by each Seller party thereto and the
consummation by such Seller of the transactions contemplated hereby and thereby
will not, except as set forth on Schedule 4.3, (i) conflict with or violate the
certificate of incorporation or bylaws of such Seller in each case as currently
in effect, (ii) conflict with or violate any Laws applicable to such Seller or
by which any of the Acquired Assets are bound or are subject, or (iii) result in
any breach of, or constitute a default (or an event that with notice or lapse of
time, or both, would constitute a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or require payments
under, or result in the creation of a Lien on any of the Acquired Assets under,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such Seller is a
party or by which any of the Acquired Assets are bound or subject.
Section 4.4 Litigation; Proceedings. Except as set forth in Schedule
4.4, there is no Action pending or, to the Knowledge of Sellers, threatened,
against, by or affecting any Seller, the Business or the Acquired Assets
("Litigation") nor is there any Governmental Order outstanding which (i)
adversely affects or could adversely affect the Acquired Assets or the Business
or (ii) seeks to enjoin or prohibit any of the transactions contemplated by this
Agreement.
Section 4.5 Organization and Qualification. Each Seller is a
corporation validly existing and in good standing under the laws of the state of
its incorporation and has all requisite power and authority to own, lease and
operate all of its properties and assets and to conduct its business as it is
now being conducted. Except as set forth in Schedule 4.5(a), each Seller is duly
qualified or licensed and in good standing to do business as a foreign
corporation in each jurisdiction in which the nature of its business, or the
ownership, leasing or operation of its properties or assets, makes such
qualification necessary, except where such failure to be so qualified or
licensed could not result in a Material Adverse Effect.
Section 4.6 Financial Statements; Undisclosed Liabilities.
(a) Sellers have delivered to the Purchasers the unaudited
balance sheets for the Business dated September 30, 2002 and September
30, 2003 and the unaudited operating income statements for the Business
for the twelve (12) month periods ended September 30, 2002 and
September 30, 2003 (collectively, the "Financial Information"). Except
as set forth on Schedule 4.6(a), the Financial Information has been
prepared in conformity with GAAP applied on a basis consistent with
Sellers' past practice (except for changes, if any, required by GAAP
and disclosed therein, and except for the absence of notes and normal
recurring adjustments). The Financial Information presents fairly and
16
accurately in all material respects the financial position of the
Sellers in the manner required by GAAP, for the applicable time periods
covered thereby.
(b) Except as set forth in Schedule 4.6(b), there has been no
change in the business of the Business since September 30, 2003 that
has resulted, or could be reasonably expected to result, in a Material
Adverse Effect. As of the date hereof, none of the Sellers has any
actual knowledge of the occurrence of any event or circumstance that a
reasonable person would believe would adversely affect the financial
projections, dated August 2003, provided by Sellers to Purchasers, a
copy of which has been attached to Schedule 4.6(b).
(c) The Business does not have any liabilities of the type
required to be reflected as liabilities on a balance sheet prepared in
accordance with GAAP, whether accrued, absolute, contingent or
otherwise, except such liabilities that (i) are reflected or disclosed
in the Financial Information, or (ii) were incurred after September 30,
2003 in the ordinary course of business by the Sellers consistent with
past practice. Except as otherwise disclosed herein (including on the
Schedules hereto), the Business will not have at Closing any other
liabilities that are material to the Business; provided, that this
representation and warranty shall not apply, and there shall be no
breach of this representation and warranty, to the extent that any such
liability is (i) unknown and upon reasonable investigation could not
have been known or (ii) disclosed.
(d) The Financial Information is based upon information
contained in the books and records of the Sellers, which such books and
records have been kept in accordance with GAAP.
Section 4.7 Receivables. Except as set forth in Schedule 4.7, all
accounts receivable and notes receivable of the Business (i) are valid
obligations of the obligors, (ii) have arisen from bona fide transactions in the
ordinary course of business consistent with past practice, (iii) are, to
Sellers' Knowledge, collectible in the ordinary course of business and have been
adequately reserved for in the Financial Information.
Section 4.8 Consents and Approvals. The execution and delivery of this
Agreement and each Ancillary Document by each Seller party thereto does not, and
the performance by such Seller of this Agreement and each Ancillary Document to
which such Seller is party and the consummation of the transactions contemplated
hereby and thereby will not, require such Seller to obtain (i) any consent,
approval, waiver, authorization or permit of, or to make any filing or
registration with or notification to ("Consents"), any court, agency or
commission, or other governmental entity, authority or instrumentality, whether
domestic or foreign (each, a "Governmental Authority"), or (ii) any Consent of
any third party under any Contract, except where the failure to obtain such
Consent would not have a Material Adverse Effect and except for the Consents set
forth in Schedule 4.8.
Section 4.9 Permits/Compliance with Laws. Sellers possess all material
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate their properties and assets and to carry on the Business as it is
now being conducted (collectively, the "Permits"), and there is no Action
17
pending or, to the Knowledge of Sellers, threatened regarding suspension or
cancellation of any such Permits. Except as set forth in Schedule 4.9, Sellers
are in compliance in all material respects with such Permits and in compliance
with all material Laws applicable to them or by or to which any of the Acquired
Assets are bound or subject. Except as set forth in Schedule 4.9, none of the
Permits will lapse, terminate or expire as a result of the performance of this
Agreement by Sellers or the consummation of the transactions contemplated
hereby.
Section 4.10 Employee Benefit Plans; ERISA. Schedule 4.10 lists each
Benefit Plan. Except as set forth on Schedule 4.10, or to the extent that any
breach of the representations set forth in this sentence would not have a
Material Adverse Effect: (i) each Benefit Plan has been administered and
operated in all respects in accordance with its terms and in accordance with the
applicable provisions of the Code and ERISA; (ii) no Benefit Plan is subject to
Title IV of ERISA or subject to section 412 of the Code or section 302 of ERISA;
(iii) neither any Seller nor to the Knowledge of Sellers, any other
"disqualified person" or "party in interest" (as defined in section 4975(e)(2)
of the Code and section 3(14) of ERISA, respectively) has engaged in any
transaction in connection with any Benefit Plan that could reasonably be
expected to result in the imposition of a penalty pursuant to section 502 of
ERISA or an excise tax pursuant to section 4975 of the Code; (iv) no Benefit
Plan provides for post-employment or retiree welfare benefits, except to the
extent required by Part 6 of Title I of ERISA or section 4980B of the Code; and
(v) no Action has been made, commenced or, to the Knowledge of Sellers,
threatened with respect to any Benefit Plan (other than routine claims for
benefits payable in the ordinary course and appeals of denied claims).
Section 4.11 Contracts.
(a) Set forth on Schedule 4.11(a) is a complete list of all of
the following Contracts (the "Material Contracts"): (i) noncompetition
or other agreements restricting the ability of Sellers to engage in any
line of business in any location, (ii) each Contract involving payments
made by a Seller that are expected to exceed Fifty Thousand Dollars
($50,000) and (iii) each Contract involving payments made to a Seller
that are expected to exceed Fifty Thousand Dollars ($50,000).
(b) Each Material Contract is a valid and binding obligation
of Seller party thereto and is enforceable by such Seller in accordance
with its terms against each other party thereto. Such Seller is not
(with or without the lapse of time or the giving of notice, or both) in
breach or default thereunder. To the Knowledge of Sellers, none of the
other parties to any Material Contract is (with or without the lapse of
time or the giving of notice, or both) in breach or default thereunder
or has given notification of cancellation thereunder. No defenses,
offsets or counterclaims to any Material Contract have been asserted by
any party thereto other than Sellers, and Sellers have not waived any
rights under any Material Contract.
(c) Except as set forth specifically on Schedule 4.11(c),
Sellers are not party to, and none of the Acquired Assets is subject
to, any agreement, understanding or other arrangement with respect to
any:
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(i) Contracts under which Sellers are a lessor or
sublessor of, or makes available for use by any third party,
(a) any real property owned or leased by Sellers exclusively
or principally in connection with the Business, or any portion
of premises otherwise occupied by Sellers, or (b) any material
personal property owned or leased by Sellers exclusively or
principally in connection with the Business;
(ii) Contracts under which Sellers have borrowed or
loaned any money or issued any note, bond, indenture or other
evidence of indebtedness or directly or indirectly guaranteed
any indebtedness, liability or obligation of any third party
(other than any loan made to any employee for relocation,
travel or other employment-related purposes, in each case, in
the ordinary course of business consistent with past
practice), or any other note, bond, indenture or other
evidence of indebtedness;
(iii) Contracts under which any other person has
directly or indirectly guaranteed any indebtedness, liability
or obligation of Sellers, or letter of credit issued to
guarantee any obligation of Sellers, or any vendor or customer
of Sellers; or
(iv) Contracts with any Governmental Authority except
those entered into in the ordinary course of business
consistent with past practice which do not involve aggregate
payments thereunder by Sellers in excess of Fifty Thousand
Dollars ($50,000).
Section 4.12 Condition and Sufficiency of Acquired Assets. The
buildings, plants, structures, and equipment included in the Acquired Assets are
in good operating condition and repair (ordinary wear and tear excepted) and are
adequate for the uses to which they are being employed. Except (i) for the
Excluded Assets, (ii) matters to be covered by the Transition Services Agreement
and (iii) as set forth on Schedule 4.12, the Acquired Assets are sufficient for
the continued conduct of the Business after the Closing in substantially the
same manner as conducted prior to the Closing.
Section 4.13 Environmental Matters. Except as set forth in Schedule
4.13(a), there is no Environmental Claim pending or, to the Knowledge of
Sellers, threatened against Sellers. To the Knowledge of Sellers, there have
been no Releases of Hazardous Materials on, beneath or adjacent to any property
currently or formerly owned, operated, or leased by Sellers in quantities
sufficient to form the basis for an Environmental Claim.
Section 4.14 Real Property.
(a) There is no real property to which any Seller has
legal or equitable title.
(b) Schedule 4.14(b) sets forth a true and complete
list of all real property in which Sellers have a valid and
subsisting leasehold or other interest (the "Leased Realty").
Seller which is the lessee of each particular piece of Leased
Realty possesses a valid and subsisting leasehold or other
interest in such Leased Realty pursuant to the leases or other
instruments set forth in Schedule 4.14(b) (the "Leases"). Each
Lease is in full force and effect and Sellers have not
19
received any outstanding notice of default from the landlord
under any such Lease. There has not occurred any event of
default under any Lease or any event which, with or without
lapse of time, shall constitute an event of default
thereunder.
Section 4.15 Labor Matters.
(a) Schedule 4.15(a) sets forth a complete list of
all Employees.
(b) Except as set forth in Schedule 4.15(b), Sellers
are not a party to (i) any collective bargaining agreement or
similar agreement with any labor organization or employee
association, or (ii) any other written employment contract.
(c) Except as set forth in Schedule 4.15(c), no
grievance or arbitration proceeding arising out of or under
any collective bargaining agreement is pending, and no such
grievance or proceeding is threatened.
(d) Except as set forth in Schedule 4.15(d), since
January 1, 2001, there has not been, nor is there pending or
threatened, (i) any labor dispute between Sellers and any
labor organization, or any strike, slowdown, jurisdictional
dispute, work stoppage or other similar organized labor
activity involving any employee of Sellers or affecting
Sellers or (ii) any union organizing, or election activity
involving, any employee of Sellers.
(e) There exists no pending or to the Knowledge of
Sellers, threatened lawsuit, administrative proceeding or
investigation between Sellers and any current or former
director, officer or employee of Sellers, including any claim
for wrongful termination, breach of express or implied
contract of employment or for violation of equal employment
opportunity laws.
(f) Except as set forth in Schedule 4.15(f), there
exists no pending or, to the Knowledge of Sellers, threatened
lawsuit, administrative proceeding or investigation of Sellers
or any employee thereof regarding allegations of hostile work
environment, sexual discrimination or racial discrimination.
(g) All bonuses due and payable to any Employee as of
the Closing Date have been paid.
Section 4.16 Insurance. Set forth in Schedule 4.16 is a complete and
accurate list of all primary, excess and umbrella policies, bonds and other
forms of insurance currently owned or held by or on behalf of or providing
insurance coverage to the Business. All policies set forth in Schedule 4.16 are
in full force and effect and shall remain in full force and effect through the
Closing Date and no pending notice of default, cancellation or termination has
been received by Sellers with respect to any such policy.
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Section 4.17 Intellectual Property.
(a) Schedule 4.17(a) sets forth all of the following United
States and foreign Business Intellectual Property: (i) patents and
patent applications (including provisional applications); (ii)
trademark registrations and trademark applications; (iii) registered
copyrights and applications for copyright registration; and (iv) domain
names (the items set forth in the forgoing clauses (i) through (iv),
collectively, the "Registered Intellectual Property"). All necessary
registration, maintenance and renewal fees in connection with such
Registered Intellectual Property that have come due have been paid and
all necessary maintenance and renewal documents in connection with such
Registered Intellectual Property that have come due have been filed
with the relevant patent, copyright, trademark or domain name
authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of maintaining such Registered Intellectual
Property.
(b) Schedule 4.17(b) sets forth any proceedings or actions
before any court, tribunal challenging the validity or Sellers'
ownership of any of the Registered Intellectual Property.
(c) Except as set forth on Schedule 4.17(c), Sellers have not
granted to any Person any rights in the Business Intellectual Property.
(d) To the Knowledge of Sellers, the operation of the
Business, taken individually or as a whole, as such Business currently
is conducted, does not infringe or misappropriate the Intellectual
Property of any other Person. Sellers have not received any notice from
any Person that the provision of their respective services, infringes
or misappropriates the Intellectual Property of any Person. Except as
set forth on Schedule 4.17(d), to the Knowledge of Sellers, no Person
is infringing or misappropriating any of the Business Intellectual
Property.
Section 4.18 Taxes. All Tax Returns required to have been filed by
Sellers with respect to the Business have been filed, and each such Tax Return
reflects the liability for Taxes in all material respects. All Taxes shown on
such Tax Returns as owing have been (or will be) paid. There are no Liens on any
of the Acquired Assets that arose in connection with any failure (or alleged
failure) to pay any Tax, other than Permitted Liens. Sellers have withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any third party in connection with the operation of the
Business.
Section 4.19 Customer Relationships. To the Knowledge of Sellers, there
exists no condition, state of facts or circumstances involving any customers,
suppliers, distributors or vendors of the Sellers (including airlines), that has
resulted in, or could be reasonably expected to result in, a Material Adverse
Effect.
Section 4.20 Customer Deposits and Pre-Paid Expenses. The customer
deposits and prepaid expenses of Sellers are reasonable in amount, were obtained
in the Sellers' ordinary course of business and, to the Knowledge of Sellers,
can be used by Purchasers in the conduct of the Business after the Closing Date
in substantially the same manner as conducted prior to the Closing Date.
21
Section 4.21 Full Disclosure. None of the information contained in this
Agreement (including the Schedules and Exhibits hereto) or in any Ancillary
Document to be furnished by any Seller (i) contains an untrue statement of a
material fact as of the date when made or (ii) omits to state any material fact
necessary to be stated in order to make any other statements herein or therein
not misleading in light of the circumstances under which they were made. Copies
of all documents referred to in any Schedule hereto have been delivered to
Purchasers and are true, correct and complete copies thereof, including all
minutes, exhibits, schedules, appendices, supplements or modifications thereto
and all written waivers thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PURCHASERS
Purchasers hereby represent and warrant, jointly and severally, as of
the date hereof, to each Seller as follows:
Section 5.1 Organization. Each Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate all of its properties and assets and to
conduct its business as it is now being conducted.
Section 5.2 Authority, Binding Effect.
(a) Each Purchaser has all requisite corporate power, capacity
and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each
Purchaser, and no other corporate action on the part of such Purchaser
or its stockholders is required to authorize the execution, delivery
and performance hereof, and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by each Purchaser and constitutes the valid and binding
obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except that such enforcement may be subject
to any bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or limiting creditors' rights
generally and the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceedings
therefor may be brought.
(b) Each Purchaser has all requisite corporate, power,
capacity and authority to execute and deliver each Ancillary Document
to which it is party, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution,
delivery and performance of such Ancillary Documents and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each
Purchaser, and no other corporate action on the part of such Purchaser
or its stockholders is required to authorize the execution, delivery
and performance hereof, and the consummation of the transactions
contemplated hereby. At Closing, such Ancillary Documents will have
22
been duly executed and delivered by each Purchaser and will constitute
the valid and binding obligation of such Purchaser, enforceable against
such Purchaser in accordance with its terms, except that such
enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect
relating to or limiting creditors' rights generally and the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
Section 5.3 No Violation; Consents and Approvals.
(a) The execution and delivery of this Agreement by each
Purchaser do not, and the performance of this Agreement by such
Purchaser and the consummation of the transactions contemplated hereby
will not, (i) conflict with or violate the certificate of incorporation
or bylaws, in each case as currently in effect, of such Purchaser, (ii)
conflict with or violate in any material respect any Laws applicable to
such Purchaser or by or to which any of its properties or assets is
bound or subject, or (iii) result in any material breach of, or
constitute a material default (or an event that with notice or lapse of
time or both would constitute a material default) under, or give to
others any right of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of
a Lien on any of the properties or assets of such Purchaser under, any
material note, bond, mortgage, indenture, contract, agreement,
arrangement, commitment, lease, license, permit, franchise or other
instrument or obligation to which such Purchaser is a party or by or to
which such Purchaser or any of its properties or assets is bound or
subject.
(b) The execution and delivery of each Ancillary Document to
which it is party by each Purchaser do not, and the performance of such
Ancillary Documents by such Purchaser and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate
the certificate of incorporation or bylaws, in each case as currently
in effect, of such Purchaser, (ii) conflict with or violate in any
material respect any Laws applicable to such Purchaser or by or to
which any of its properties or assets is bound or subject, or (iii)
result in any material breach of, or constitute a material default (or
an event that with notice or lapse of time or both would constitute a
material default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or require payment under,
or result in the creation of a Lien on any of the properties or assets
of such Purchaser under, any material note, bond, mortgage, indenture,
contract, agreement, arrangement, commitment, lease, license, permit,
franchise or other instrument or obligation to which such Purchaser is
a party or by or to which such Purchaser or any of its properties or
assets is bound or subject.
(c) The execution and delivery of this Agreement or any
Ancillary Document by Purchasers do not, and the performance by
Purchasers of this Agreement or any Ancillary Document and the
consummation of the transactions contemplated hereby and thereby will
not, require any Purchaser to obtain any Consents from any Governmental
Authority, or any third party.
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Section 5.4 Financial Sufficiency. On and after the Closing Date, each
Purchaser shall have such working capital as it deems reasonably necessary in
its sole business judgement to operate the Business as a going concern and in
accordance with generally acknowledged sound business practices. Nothing in this
Section 5.4 shall prohibit any Purchaser from terminating any contractual
relationship, not renewing any Contract or other agreement, or negotiating
modifications or otherwise satisfying any Assumed Liability for an amount less
than the entire amount of such Assumed Liability.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business. Except as expressly permitted by this
Agreement or with the prior written consent of Purchasers, during the period
from the date hereof until the Closing Date, Sellers shall conduct the Business
only in the ordinary course consistent with past practice (including maintaining
current advertising practices, maintaining salary levels as in effect on the
date hereof and refraining from hiring additional executive-level personnel) and
Sellers shall use commercially reasonable efforts to preserve intact its present
business organization, keep available the services of its present officers,
employees and independent contractors, maintain the Acquired Assets in good
condition and preserve its current working conditions and relationships with
customers, suppliers, creditors and business partners.
Section 6.2 Bulk Transfer Laws. Each Purchaser hereby waives compliance
by Sellers with the provisions of any "bulk transfer law" of any jurisdiction in
connection with the sale of the Acquired Assets to Purchasers; provided that
such Purchaser shall be entitled to indemnification in connection therewith
pursuant to Section 7.1(a).
Section 6.3 Employees.
(a) Purchasers shall, in the aggregate, offer employment,
effective as of the Closing Date, to each Employee other than those
listed on Schedule 6.3(a) (whether salaried or hourly, and whether
full-time or part-time), whether or not actively employed on the date
hereof (e.g., including Employees on vacation and leave of absence,
including maternity, family, sick or short-term disability leave). Each
Employee who accepts an offer of employment from a Purchaser is
hereinafter referred to as a "Transferred Employee".
(b) It is hereby acknowledged and agreed that the Sellers
shall have no liability of any type or nature in relation to any
Transferred Employee or any Employee who does not accept an offer of
employment from a Purchaser made pursuant to Section 6.3(a), other than
any such liabilities arising prior to the Closing Date and which are
not subject to indemnification by Purchasers as set forth in the
following sentence. Purchasers hereby agree, jointly and severally, to
indemnify and hold harmless Sellers from any payments with respect to
claims for severance, bonus, accrued vacation, or other employee
benefit obligations imposed upon, incurred or suffered by Sellers
arising out of or relating to (i) any Employee who does not does not
accept an offer of employment from a Purchaser made pursuant to Section
6.3(a) (including any claims thereby for severance payments, bonus
24
payments, accrued vacation payments or benefits payments) and (ii) any
of Purchasers' actions with regard to any Transferred Employee
(including termination of employment thereof).
(c) Each Purchaser hereby acknowledges and understands that
Sellers have issued notice under the applicable California Worker
Adjustment and Retraining Notification requirements (Assembly Xxxx
2957, Chapter 4, Part 4, Sections 1400-1408, California Labor Code) on
October 1, 2003 applicable to a sixty (60) day period from such date.
Each Purchaser hereby acknowledges and agrees that the issuance of the
notice referred to in the foregoing sentence and the legal requirements
resulting therefrom do not constitute a Material Adverse Effect.
Section 6.4 Further Assurances. From and after the Closing Date, each
party hereto shall take all actions (including Sellers (i) granting Purchasers
access to such books and records of Sellers for the period prior to the Closing
Date as are necessary to allow Purchasers to comply with applicable securities
laws and accounting issues and (ii) providing assistance to, and cooperation
with, Purchasers in order to effect the full and legal transfer to Purchasers of
all of the Sellers' notes payable and the Surety Bonds) and execute all
documents and instruments as may be reasonably necessary or appropriate in order
to carry out the purposes of this Agreement.
Section 6.5 Confidentiality; Tax Disclosure.
(a) The Confidentiality Agreement, dated as of September 2,
2003, between Travel Services International, Inc. and ECG is hereby
terminated and replaced by the provisions of Section 6.5(b).
(b) From and after the Closing, Sellers shall, and shall use
reasonable efforts to cause its Affiliates and their respective
officers, directors, employees and advisors (collectively, the
"Recipients") to, keep confidential any information relating to the
Business, except for any such information that (i) is available to the
public on the Closing Date, (ii) thereafter becomes available to the
public other than as a result of a disclosure by Sellers or any of
their Recipients, or (iii) is or becomes available to Sellers or any of
their Recipients on a non-confidential basis from a source that to
Sellers' or such Recipient's knowledge is not prohibited from
disclosing such information to Sellers or such Recipient by a legal,
contractual or fiduciary obligation to any other Person; provided, that
nothing contained in this Section 6.5(b) shall prohibit Sellers from
disclosing any information in connection with any Action by or against
Sellers or any of their Affiliates. Should a Seller or any such
Recipient be required to disclose any such information in response to a
Governmental Order or as otherwise required by Law or administrative
process, it shall inform the Purchasers in writing of such request or
obligation as soon as possible after Sellers are informed of it and, if
possible, before any information is disclosed, so that a protective
order or other appropriate remedy may be obtained by the Purchasers. If
a Seller or such Recipient is obligated to make such disclosure, it
shall only make such disclosure to the extent to which it is so
obligated, but not further or otherwise.
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(c) Anything herein to the contrary notwithstanding, each
party hereto (and each employee, representative, or other agent of any
party hereto) may disclose to any and all persons, without limitation
of any kind, the Federal income tax treatment and Federal income tax
structure of any and all transaction(s) contemplated herein and all
materials of any kind (including opinions or other tax analyses) that
are or have been provided to any party (or to any employee,
representative, or other agent of any party) relating to such tax
treatment or tax structure, provided, however, that this authorization
of disclosure shall not apply to restrictions reasonably necessary to
comply with securities laws. This authorization of disclosure is
retroactively effective immediately upon commencement of the first
discussions regarding the transactions contemplated herein, and the
parties aver and affirm that this tax disclosure authorization has been
given on a date which is no later than thirty (30) days from the first
day that any party hereto (or any employee, representative, or other
agent of any party hereto) first made or provided a statement as to the
potential tax consequences that may result from the transactions
contemplated hereby.
Section 6.6 Notification of Certain Matters. Sellers shall give prompt
notice to Purchasers, and Purchasers shall give prompt notice to Sellers, of the
occurrence, or non-occurrence, of any event the occurrence or non-occurrence of
which would be reasonably likely to cause any Seller or any Purchaser, as the
case may be, to fail to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.6 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 6.7 Access to Books and Records Following the Closing.
Following the Closing, Purchasers shall permit Sellers and their authorized
representatives, during normal business hours and upon reasonable notice, to
have reasonable access to, and examine and make copies of, all books and records
which relate to transactions or events occurring prior to the Closing or
transactions or events occurring subsequent to the Closing which are related to
or arise out of transactions or events occurring prior to the Closing.
Section 6.8 Change of Name. Within thirty (30) days following the
Closing Date, each Seller shall (i) file an amendment to its articles of
incorporation in order to change its name as may be requested by Purchasers to a
name dissimilar to "Vacation Express", "SunTrips" or any other similar name (ii)
assign or otherwise transfer to FS Tours to the extent legally possible and
commercially practicable the filings relating to VE Holdings' conduct of
business under the name "Vacation Express". Each Seller shall do or cause to be
done all other acts, including without limitation the payment of any fees
required in connection with such change of name, to cause such amendments to
become effective in its state of incorporation or formation and all other states
in which such Seller is qualified to transact business. After the Closing Date,
neither Seller nor any of its Affiliates shall transact business as, or use in
the conduct of its businesses or otherwise, the names "Vacation Express" or
"SunTrips" or any other similar name.
Section 6.9 MyTravel Names. After the Closing, Purchasers will not,
directly or indirectly use or do business under, or allow any of its respective
Affiliates or subsidiaries to use or do business under, any trademark, service
xxxx, brand name or trade, corporate or business name consisting of, derived
from, including or incorporating any of the MyTravel Names or any other
26
trademark, service xxxx, brand name or trade, corporate or business name
confusingly similar to any of the MyTravel Names. No later than forty-five (45)
days after the Closing, Purchasers shall have removed or obliterated all
trademarks, service marks, brand names or trade, corporate or business names
consisting of, derived from, including or incorporating any of the MyTravel
Names that are contained in or on any of the Acquired Assets, other than printed
brochures existing as of the Closing Date.
Section 6.10 Non-Competition; Non-Solicitation.
(a) For the longer of (A) a period of three (3) years
commencing on the Closing Date and (B) the term of the Purchase
Agreement Supplement, none of Sellers, MyTravel, MyTravel Canada or any
of their subsidiaries or Affiliates shall directly or indirectly (i)
engage in competition with Purchasers using the same gateways used by
Sellers as of the Closing Date or (ii) have an ownership interest in,
any person, firm, corporation, association or other enterprise that is
directly or indirectly engaged in conducting public charter operations
using the same gateways used by Sellers as of the Closing Date (the
"Restricted Activity"); provided, however, that nothing contained in
this Section 6.10 shall prohibit Sellers, MyTravel, MyTravel Canada or
any of their subsidiaries or Affiliates from owning, in the aggregate,
(x) three percent (3%) or less of any class of capital stock or other
equity interest of any company engaged in any Restricted Activity that
has securities listed on a national or regional securities exchange or
traded in the over-the-counter market or (y) one percent (1%) or less
of any class of capital stock or other equity interest of any other
business enterprise engaged in any Restricted Activity. In connection
with the foregoing, (i) each Purchaser hereby represents that the
limitations set forth herein are reasonable and are properly required
for the adequate protection of the Business and (ii) each of Sellers,
MyTravel and MyTravel Canada hereby acknowledges and agrees to the
foregoing.
(b) For the longer of (A) a period of three (3) years
commencing on the Closing Date and (B) the term of the Purchase
Agreement Supplement, none of Sellers, MyTravel, MyTravel Canada or any
of their subsidiaries or Affiliates shall directly or indirectly induce
or attempt to induce any Transferred Employee or other employee of a
Purchaser to leave the employ of such Purchaser, or in any way
interfere with the relationship between such Purchaser and any
Transferred Employee or other employee thereof.
Section 6.11 Stub Period Financial Statements. After the Closing,
Sellers shall deliver to Purchasers financial statements of Sellers for the
period commencing on October 1, 2003 and ending October 31, 2003, as prepared by
Sellers in accordance with GAAP and delivered at such time, containing such
information, and presented in such format as is in accordance with Sellers
ordinary course business practice prior to the Closing Date with regard to
delivery of monthly financial statements.
Section 6.12 Credit Card Processing. During the period between the date
hereof and the Closing Date, Sellers shall be responsible for conducting, and/or
ensuring the conduct of, all credit card processing relating to the Business.
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ARTICLE VII
INDEMNIFICATION OBLIGATIONS; SURVIVAL
Section 7.1 Agreements to Indemnify.
(a) Subject to the terms and conditions of this Article VII,
from and after the Closing, each of Sellers and MyTravel Canada,
jointly and severally, shall indemnify, defend and hold harmless each
Purchaser, its Affiliates, and each of their respective successors and
permitted assigns, directors, officers, employees, representatives,
agents, Affiliates and associates (collectively, the "Purchaser Group")
from and against any and all losses, liabilities of any kind or nature,
expenses (including reasonable attorneys' fees), claims and damages
(collectively, "Damages") imposed upon or incurred or suffered by the
Purchaser Group, or any one of them, arising out of, relating to or in
connection with (i) any breach of any representation, warranty,
covenant or agreement of either Seller contained in or made pursuant to
this Agreement or any Ancillary Document, (ii) any Excluded Liability,
(iii) the Litigation set forth on Schedule 4.4, (iv) any claim made
against a Purchaser by any creditor of, or claimant against, Sellers as
a result of the waiver granted by such Purchaser in Section 6.2, and
(v) all costs pertaining to the DC-10 aircraft referred to in the
Charter Agreement, dated as of December 12, 1997, between Xxxx
International Airlines and Sunquest Holdings, U.S.A., Inc., in the case
of each of clauses (i) through (v) above, whether asserted by one party
hereto against another or by a third party.
(b) Subject to the terms and conditions of this Article VII,
from and after the Closing, Purchasers, jointly and severally, shall
indemnify, defend and hold harmless Sellers, their Affiliates, and each
of their respective successors and permitted assigns, and each of their
respective directors, officers, employees, representatives, agents,
Affiliates and associates (collectively, the "Seller Group") from and
against any and all Damages imposed upon or incurred or suffered by
Seller Group, or any one of them, arising out of, relating to or in
connection with (i) any breach of any representation, warranty,
covenant or agreement of any Purchaser contained in or made pursuant to
this Agreement or any Ancillary Document, (ii) any Assumed Liability
and (iii) the employee benefit obligations described in Section 6.3(b),
in the case of each of clauses (i) through (iii) above, whether
asserted by one party hereto against another or by a third party.
Section 7.2 Third Party Claims Procedures. If any Person other than a
party hereto shall assert a claim (each, a "Third Party Claim") against or with
respect to a party entitled to indemnification pursuant to this Agreement (the
"Indemnified Party"), then such Indemnified Party shall notify the party from
whom indemnification is sought (the "Indemnifying Party") in writing of the
Third Party Claim within a reasonable time after receipt by such Indemnified
Party of written notice of such Third Party Claim; provided, however, that the
failure to give such notice shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent that the Indemnifying Party is
prejudiced by such failure to give notice. The notice (i) shall state (with
reasonable specificity) the basis on which indemnification is being asserted,
(ii) shall set forth the amount of Damages for which indemnification is being
asserted and (iii) in the case of third party claims, shall be accompanied by
copies of all relevant pleadings, demands and other papers served on the
Indemnified Party. Each Indemnifying Party shall, at its own expense, have the
28
right to defend, contest or otherwise protect against any Third Party Claim, and
each Indemnifying Party shall receive from the Indemnified Party all necessary
and reasonable cooperation in said defense including, but not limited to, the
services of employees of the Indemnified Party who are familiar with the
transactions out of which any such Third Party Claim may have arisen. The
Indemnifying Party shall have the right to control the defense of any such Third
Party Claim unless it is relieved of its liability hereunder by the Indemnified
Party. The Indemnifying Party shall have the right, at its option, and, unless
so relieved, to compromise or defend, at its own expense by its own counsel, any
such Third Party Claim involving monetary damages but may not compromise or
settle any matter involving equitable or injunctive recourse against the
Indemnified Party without such party's written consent. In the event that the
Indemnifying Party shall undertake to compromise or defend any such Third Party
Claim, it shall promptly notify the Indemnified Party of its intention to do so,
and in any event shall not settle or compromise any such Third Party Claim
unless in so settling or compromising the Indemnified Party is unconditionally
released from liability therefor. In the event that an Indemnifying Party, after
written notice from an Indemnified Party, fails to take timely action to defend
a Third Party Claim, the Indemnified Party shall have the right to defend the
same by counsel of its own choosing, but at the cost and expense of the
Indemnifying Party. In the event that the Indemnified Party defends a Third
Party Claim, it shall not compromise any such Third Party Claim without the
written consent of the Indemnifying Party, such consent not to be unreasonably
withheld or delayed.
Section 7.3 Limitation of Liability.
(a) Anything in this Agreement to the contrary
notwithstanding, in no event will the aggregate amount of the
Indemnifying Party's obligations pursuant to Section 7.1 hereof exceed
an amount equal to Ten Million Dollars ($10,000,000).
(b) The obligations set forth in Section 7.1 will be effective
as to any Indemnifying Party only after the aggregate amount for which
such Indemnifying Party is liable under such Section exceeds One
Hundred Thousand Dollars ($100,000) and then only in the amount of such
excess.
(c) Sections 7.3(a) and 7.3(b) shall not be applicable to (i)
the obligations to indemnify under Section 7.1(a)(ii), 7.1(a)(iii),
7.1(a)(iv), 7.1(a)(v), 7.1(b)(ii), and Section 7.1(b)(iii) and (ii) any
obligation to indemnify for breaches of Sections 4.2, 4.4, 4.10, 4.13,
4.18 and Section 6.10.
(d) Notwithstanding anything herein to the contrary, payments
by the Indemnifying Party pursuant to Section 7.1 shall be limited to
the amount of Damages, if any, that remains after deducting therefrom
any insurance proceeds and any indemnity, contribution or other similar
payment actually recovered by the Indemnified Parties from any third
party with respect thereto; provided, however, that nothing in this
Section 7.3(d) shall require that an Indemnified Party seek recovery
under any insurance policy.
(e) Anything in this Section 7.3 to the contrary
notwithstanding, in no event shall Sellers, MyTravel Canada or
Purchasers be liable for punitive, consequential, special, indirect,
29
incidental or exemplary damages, whether for lost profits, lost
revenues, injury to property, injury to reputation, loss of data, loss
of use or otherwise.
Section 7.4 Method of Payment; Treatment of Indemnity
Benefits.
(a) Each payment made by Sellers and/or MyTravel Canada to or
for the benefit of a Purchaser pursuant to any indemnification
obligations under this Agreement shall be made, at Sellers' election,
either (i) in cash or (ii) by decreasing the amount outstanding at such
time under the Purchase Price Note by the amount of such payment;
provided, however, that notwithstanding the foregoing, all such
payments with respect to indemnification pursuant to Sections
7.1(a)(iii), 7.1(a)(iv) and 7.1(a)(v) and indemnification for breaches
of Sections 4.2, 4.4, 4.10, 4.13 and 4.18 shall be made in cash.
(b) Each payment made by a Purchaser to or for the benefit of
Sellers pursuant to any indemnification obligations under this
Agreement shall be made by increasing the amount outstanding at such
time under the Purchase Price Note by the amount of such payment.
(c) All payments made by Sellers or MyTravel Canada to or for
the benefit of a Purchaser or by Purchasers to or for the benefit of a
Seller pursuant to any indemnification obligations under this Agreement
shall be treated as adjustments to the Purchase Price for Tax purposes,
unless otherwise required by applicable Law.
Section 7.5 Exclusive Remedy. The parties hereto acknowledge and agree
that, except (i) with regard to fraud or intentional misrepresentation and (ii)
the remedies of specific performance or injunctive or other equitable relief,
the sole and exclusive remedy of the Indemnified Parties, from and after the
Closing with respect to Damages and any and all claims for any breach or
liability under this Agreement, the Ancillary Documents or any other agreement,
instrument or certificate executed or entered into in connection herewith or
otherwise relating to the subject matter of this Agreement, the Ancillary
Documents or the transactions contemplated hereby or thereby shall be solely in
accordance with, and limited by, the indemnification provisions set forth in
this Article VII. In furtherance of the foregoing, the parties hereto hereby
waive on their own behalf and on behalf of each other applicable Indemnified
Party, to the fullest extent permitted under applicable Law, any and all rights,
claims and causes of action it or they may have against the other parties
hereto, arising under or based upon any Law.
Section 7.6 Survival. The representations, warranties, covenants and
agreements made by any party and contained in or made pursuant to this Agreement
or any Ancillary Document shall survive the Closing; provided, however that such
representations and warranties shall expire on the date which is eighteen (18)
months after the Closing Date; provided, further, that notwithstanding the
foregoing, (i) Section 6.10 shall survive in accordance with the terms thereof,
(ii) the representations and warranties contained in Section 4.13 shall survive
the Closing and expire on the date which is eight (8) years after the Closing
Date, (iii) the representations and warranties contained in Section 4.4 shall
survive the Closing and expire on the date which is three (3) years after the
Closing Date and (iii) the representations and warranties contained in Section
30
4.18 shall survive to the end of the statutes of limitations applicable thereto;
provided, further, that any representation or warranty which is fraudulently
given shall not be subject to any limitation contained in this Section 7.6.
Notwithstanding the foregoing, if written notice is properly given pursuant to
this Article VII with respect to any alleged breach of a representation,
warranty, covenant or agreement to which such party is entitled to be
indemnified hereunder prior to the expiration of such representation, warranty,
covenant or agreement shall survive, with respect to the subject matter of such
written notice only, until the applicable claim is finally resolved in
accordance with the provisions of this Article VII.
ARTICLE VIII
CONDITIONS TO CLOSING; TERMINATION
Section 8.1 Mutual Conditions to the Obligations of the Parties. The
respective obligations of each party hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or waiver at or
prior to the Closing of the condition that no temporary restraining order,
preliminary or permanent injunction or other judgment, order or decree issued by
a court of competent jurisdiction which prevents the consummation of the
transactions contemplated hereby shall have been issued and remain in effect,
and no statute, rule or regulation shall have been enacted, promulgated or
enforced by any Governmental Authority which makes the consummation of the
transactions contemplated hereby illegal; provided, that the parties hereto
shall use their reasonable best efforts to have any temporary or preliminary
order or injunction lifted.
Section 8.2 Conditions to the Obligations of Purchasers. The obligation
of Purchasers to consummate the transactions contemplated by this Agreement is
subject to the satisfaction at or prior to the Closing of the following
conditions (unless waived, to the extent permitted by applicable Law, by
Purchasers):
(a) Representations and Warranties. The representations and
warranties of Sellers contained in Article IV shall be true and correct
in all material respects as of the Closing Date.
(b) Performance. Sellers shall have performed and complied in
all material respects with all agreements, conditions, covenants and
obligations required by this Agreement to be performed or complied with
by Sellers on or prior to the Closing Date.
(c) No Change of Circumstances. There shall not have occurred,
during the period between the date hereof and the Closing Date, any
circumstance or event constituting a Material Adverse Effect.
(d) Consents. All Consents to assignment required under the
Contracts set forth on Schedule 8.2(d) shall have been obtained (other
than with regard to any Leases subject to Section 8.7); provided that
no change shall be required to any of such Contracts as a consequence
of obtaining such Consents unless such change has been approved in
advance by Purchasers or any other condition which would have a
Material Adverse Effect on Purchasers or the Business as proposed to be
conducted by Purchasers as of the Closing Date.
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Section 8.3 Conditions to the Obligations of Sellers. The obligation of
Sellers to consummate the transactions contemplated by this Agreement is subject
to the satisfaction at or prior to the Closing of the following conditions
(unless waived, to the extent permitted by applicable Law, by Sellers):
(a) Representations and Warranties. The representations and
warranties of Purchasers contained in Article V shall be true and
correct in all material respects as of the Closing Date.
(b) Performance. Purchasers shall have performed and complied
in all material respects with all agreements, conditions, covenants and
obligations required by this Agreement to be performed or complied with
by Purchasers on or prior to the Closing Date.
Section 8.4 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written agreement of Purchasers and Sellers; or
(b) at any time after November 5, 2003 by Purchasers or by
Sellers, by giving written notice of such termination to the other
parties, if the Closing shall not have occurred on or prior to such
date (unless the failure to consummate the Closing by such date shall
be due to or have resulted from any breach of the representations or
warranties made by, or the failure to perform or comply with any of the
agreements or covenants hereof to be performed or complied with prior
to the Closing by, the party seeking to terminate this Agreement).
Section 8.5 Effect of Termination. In the event of the termination of
this Agreement in accordance with Section 8.4 hereof, this Agreement shall
thereafter become void and have no effect and the transactions contemplated
hereby shall be abandoned, and no party hereto will have any liability to the
other party hereto or their respective Affiliates, directors, officers or
employees, except for the obligations of the parties hereto contained in this
Section 8.5 and in Section 6.5, Section 8.6 and Sections 9.1, 9.7, 9.8. 9.9,
9.13, 9.14 and 9.18, and except that nothing herein will relieve any party from
liability for an intentional breach of any provision of this Agreement or limit
or restrict the rights or remedies of any party hereto against the other party
for any breach of this Agreement, subject only to the limitation set forth in
Section 8.6.
Section 8.6 Closing Failure Fee. In the event that the Closing does not
occur on or prior to October 31, 2003 for any reason (other than the failure of
Sellers to satisfy, or obtain a waiver of, any of the conditions to the Closing
set forth in Section 8.2), Purchasers shall, within ten (10) Business Days, have
the joint and several obligation to pay to Sellers a fee consisting of the
transfer from Purchasers or an Affiliate thereof to MyTravel Canada of Two
Hundred Fifty Thousand (250,000) restricted shares of common stock of Lifestyle
Innovations, Inc. (otcbb: LFSI.OB). The fee described in this Section 8.6 shall
not restrict or preclude Sellers from asserting monetary breach of contract
claims pursuant to this Agreement; provided, however, that any damages asserted
against Purchasers in connection with such claims shall be limited to damages,
32
if any, that remain after deducting therefrom any insurance proceeds with
respect thereto. Sellers and MyTravel shall have a duty to take all commercially
reasonable actions to mitigate any and all such damages.
Section 8.7 Third Party Real Estate Consents. To the extent that any
Lease is not assignable without the consent, waiver or approval of another
Person and such consent, waiver or approval has not been obtained before or at
the Closing, this Agreement shall not constitute an assignment or an attempted
assignment of such Lease by the applicable Seller or an assumption or an
attempted assumption of such Lease by any Purchaser. Sellers shall use their
commercially reasonable efforts to obtain such consents, waivers and approvals
with regard to each Lease as soon as practicable following the date hereof and
Purchasers shall cooperate with and assist Sellers to this end to the extent
commercially reasonable. If any such consent, waiver or approval shall not be
obtained with regard to such Lease before or at the Closing, then until such
consent, waiver or approval is obtained, Sellers shall cooperate with Purchasers
in any reasonable arrangement (including indemnification) designed to provide
the applicable Purchaser with the benefits intended to be assigned to such
Purchaser with respect to the underlying Lease, including enforcement for the
account of such Purchaser of any and all rights of the Seller against any other
party to such Lease arising out of the breach, nonfulfillment or cancellation
thereof by such other party or otherwise.
Section 8.8 No Multiple Materiality Qualifiers. To the extent any
representation, warranty or covenant in this Agreement is qualified by reference
to materiality (including any qualification related to a Material Adverse Effect
or to a particular level or extent of permissible deviation from a standard
(including deviation from the absolute)), no corresponding reference to
materiality or permissible deviation from a standard in these conditions
precedent or in Article VII shall be of any effect.
ARTICLE IX
GENERAL
Section 9.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
Federal Express (or other internationally recognized courier), to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
To either Seller
MyTravel, or
MyTravel Canada: x/x XxXxxxxx Xxxxx xxx
Xxxxxxx Xxx
Xxxxxxx Xxxxxxxx Xxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, X00 0XX
Xxxxxx Xxxxxxx
Attn: Xxxx XxXxxxx, Group Company Secretary
Fax: 00-000-000-0000
33
with a copy to: Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxx
Fax: 000-000-0000
To either
Purchaser: FS Tours, Inc. or
FS SunTours, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxx & Xxxx, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Any notice that is delivered personally or by courier in the manner
provided herein shall be deemed to have been duly given to the party to whom it
is directed upon receipt by such party in the case of personal delivery, or upon
receipt of delivery thereof in the case of delivery by courier.
Section 9.2 Amendment, Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchasers, each Seller and each other
party against which such amendment is to be effective and enforced, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder will operate as a waiver thereof nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
Section 9.3 Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other parties hereto; provided that each of Purchasers and Sellers may
assign their rights or obligations under this Agreement to an Affiliate thereof.
Any assignment in contravention of this provision is void.
Section 9.4 Entire Agreement. This Agreement amends and restates the
Original Agreement in its entirety and supercedes the Original Agreement in all
respects. This Agreement (including all Schedules and Exhibits hereto) contains
the entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
with respect to thereto.
Section 9.5 Fulfillment of Obligations. Any obligation of any party to
any other party under this Agreement, which obligation is performed, satisfied
or fulfilled by an Affiliate of such party, will be deemed to have been
performed, satisfied or fulfilled by such party.
34
Section 9.6 Parties in Interest. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than the parties hereto or their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement, other than any Person entitled to indemnification under Article
VII.
Section 9.7 Expenses. Except as otherwise expressly provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby (including all fees and disbursements of
financial advisors, counsel and accountants) shall be borne by the party
incurring such expenses.
Section 9.8 Brokers. The fees of any broker, finder or investment
banker hired by any party hereto or any of such party's Affiliates shall be
borne by such party.
Section 9.9 Governing Law. This Agreement is to be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the choice of law provisions thereof.
Section 9.10 Counterparts. This Agreement may be executed by facsimile
and in one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute but one and the same instrument.
Section 9.11 Headings. The heading references herein and in the table
of contents hereto are for convenience purposes only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
Section 9.12 Disclosure Schedules. Disclosure of any matter in any of
such Schedules shall not constitute an expression of a view that such matter is
material or is required to be disclosed pursuant to this Agreement. To the
extent that any representation or warranty in Article IV of this Agreement is
qualified by materiality or "Material Adverse Effect", the inclusion of any
matter in any Schedule in Article IV of this Agreement does not constitute a
determination by any Seller that any such matter is material.
Section 9.13 Specific Performance. Each party hereto acknowledges that
money damages would be both incalculable and an insufficient remedy for any
breach of this Agreement by such party and that any such breach would cause the
other party hereto irreparable harm. Accordingly, each party hereto also agrees
that, in the event of any breach or threatened breach of the provisions of this
Agreement by such party, the other party hereto shall be entitled to equitable
relief without the requirement of posting a bond or other security, including in
the form of injunctions and orders for specific performance.
Section 9.14 Publicity. Each party hereto shall not, and shall cause
each of their Affiliates not to issue or make, or allow to be issued or made,
any press release or public announcement concerning the transactions
contemplated by this Agreement without the prior written consent of the other
party hereto, except as otherwise required by applicable Law or the rules of any
applicable stock exchange, but in any event only after giving the other party
hereto a reasonable opportunity to comment on such release or announcement in
advance, consistent with such applicable legal requirements.
35
Section 9.15 Severability. If any term or provision of this Agreement
or the application thereof to any situation or circumstance shall be held to be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to situations or circumstances other than those as to
which it shall have been held to be invalid or unenforceable, shall not be
affected and such remaining terms of this Agreement shall be valid to the
fullest extent permitted by applicable law. In addition, the parties hereto
shall in good faith endeavor to reach agreement on a provision to replace the
invalid provision which, as nearly as possible, will reflect the intent of the
original provision.
Section 9.16 Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
Section 9.17 Representations and Warranties Exclusive. The
representations, warranties, covenants and agreements set forth in this
Agreement, the Ancillary Documents and the Financial Information constitute all
of the representations, warranties, covenants and agreements of the parties
hereto and their respective shareholders, directors, officers, employees,
affiliates, advisors (including financial, legal and accounting advisors),
agents and representatives and upon which the parties have relied. The parties
expressly disclaim any implied warranties. In particular, and without limiting
the generality of the foregoing, each Purchaser acknowledges and agrees that
except as expressly contemplated hereby, in making its decision to purchase the
Acquired Assets and assume the Assumed Liabilities, it is not relying on (a) any
information set forth in any information or offering memorandum distributed in
connection with the proposed sale of the Acquired Assets or the Business or the
assumption of Assumed Liabilities, (b) any information or materials, oral or
written, distributed or made available to such Purchaser prior to the date
hereof other than matters set forth in this Agreement, including the Schedules
hereto or any Ancillary Document, or (c) except as set forth in Section 4.6, any
financial projection, forecast or business plan relating to the Business. With
respect to any projection, forecast or business plan delivered by or on behalf
of Sellers or any of their Affiliates to any Purchaser, each Purchaser
acknowledges that (w) there are uncertainties inherent in attempting to make
such projections, forecasts and plans, (x) it is familiar with such
uncertainties, (y) except as expressly represented by Sellers herein, it is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all such projections, forecasts and plans so furnished to it and (z)
it shall have no claim of any kind whatsoever against any Person with respect
thereto, other than claims pursuant to Article VII and claims for fraud or
intentional misrepresentation.
Section 9.18 WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Signature Page Follows
36
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
by its duly authorized representative as of the day and year first above
written.
SELLERS
-------
VE HOLDINGS, INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SUNTRIPS, INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
ACCEPTED AND AGREED solely for purposes of Sections 4.1(c), 6.10 and Article IX
hereof:
MYTRAVEL USA HOLDINGS, INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
ACCEPTED AND AGREED
solely for purposes of Sections 2.5
4.1(c), 6.10 and Articles VII and IX hereof:
MYTRAVEL CANADA HOLIDAYS INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
PURCHASERS
----------
FS TOURS, INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
FS SUNTOURS, INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SIGNATURE PAGE TO AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
