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AGREEMENT AND PLAN OF ORGANIZATION
dated as of May 9, 1997
by and among
TRAVEL SERVICES INTERNATIONAL, INC.
CRUISES ONLY, INC.
and
the STOCKHOLDERS named herein
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TABLE OF CONTENTS
Page
1. PURCHASE AND SALE............................................... 3
2. [INTENTIONALLY DELETED]......................................... 3
3. DELIVERY OF CONSIDERATION....................................... 3
4. CLOSING......................................................... 5
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND
STOCKHOLDERS.................................................... 7
5.1 DUE ORGANIZATION....................................... 8
5.2 AUTHORIZATION.......................................... 9
5.3 CAPITAL STOCK OF THE COMPANY........................... 9
5.4 TRANSACTIONS IN CAPITAL STOCK.......................... 10
5.5 NO BONUS SHARES........................................ 10
5.6 SUBSIDIARIES........................................... 10
5.7 PREDECESSOR STATUS; ETC................................ 11
5.8 SPIN-OFF BY THE COMPANY................................ 11
5.9 FINANCIAL STATEMENTS................................... 12
5.10 LIABILITIES AND OBLIGATIONS............................ 12
5.11 ACCOUNTS AND NOTES RECEIVABLE.......................... 14
5.12 PERMITS AND INTANGIBLES................................ 15
5.13 ENVIRONMENTAL MATTERS.................................. 16
5.14 PERSONAL PROPERTY...................................... 17
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND
COMMITMENTS............................................ 18
5.16 REAL PROPERTY.......................................... 19
5.17 INSURANCE.............................................. 21
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED
LABOR MATTERS.......................................... 21
5.19 EMPLOYEE PLANS......................................... 22
5.20 COMPLIANCE WITH ERISA.................................. 24
5.21 CONFORMITY WITH LAW; LITIGATION........................ 26
5.22 TAXES.................................................. 27
5.23 NO VIOLATIONS.......................................... 28
5.24 GOVERNMENT CONTRACTS................................... 29
5.25 ABSENCE OF CHANGES..................................... 29
5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY................... 32
5.27 VALIDITY OF OBLIGATIONS................................ 32
5.28 RELATIONS WITH GOVERNMENTS............................. 33
5.29 DISCLOSURE............................................. 33
5.30 PROHIBITED ACTIVITIES.................................. 34
5.31 AUTHORITY; OWNERSHIP................................... 35
5.32 PREEMPTIVE RIGHTS...................................... 35
6. REPRESENTATIONS OF TSII......................................... 35
6.1 DUE ORGANIZATION....................................... 36
6.2 AUTHORIZATION.......................................... 36
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6.3 CAPITAL STOCK OF THE TSII.............................. 37
6.4 TRANSACTIONS IN CAPITAL STOCK.......................... 37
6.5 SUBSIDIARIES........................................... 38
6.6 FINANCIAL STATEMENTS................................... 38
6.7 LIABILITIES AND OBLIGATIONS............................ 39
6.8 CONFORMITY WITH LAW; LITIGATION........................ 39
6.9 NO VIOLATIONS.......................................... 40
6.10 VALIDITY OF OBLIGATIONS................................ 41
6.11 TSII STOCK............................................. 41
6.12 NO SIDE AGREEMENTS..................................... 42
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS........... 42
6.14 TAXES.................................................. 42
6.15 NO INTENTION TO DISPOSE OF LLC INTEREST................ 43
6.16 COMPLETION OF DUE DILIGENCE............................ 43
7. COVENANTS PRIOR TO CLOSING...................................... 44
7.1 ACCESS AND COOPERATION; DUE DILIGENCE.................. 44
7.2 CONDUCT OF BUSINESS PENDING PRE-CLOSING................ 45
7.3 PROHIBITED ACTIVITIES.................................. 47
7.4 NO SHOP................................................ 49
7.5 NOTICE TO BARGAINING AGENTS............................ 50
7.6 AGREEMENTS............................................. 50
7.7 NOTIFICATION OF CERTAIN MATTERS........................ 50
7.8 AMENDMENT OF SCHEDULES................................. 51
7.9 COOPERATION IN PREPARATION OF REGISTRATION
STATEMENT.............................................. 53
7.10 FINAL FINANCIAL STATEMENTS............................. 55
7.11 FURTHER ASSURANCES..................................... 56
7.12 AUTHORIZED CAPITAL..................................... 56
7.13 FORMATION OF LLC AND TRANSFER OF ASSETS................ 56
7.14 BEST EFFORTS TO CONSUMMATE TRANSACTION................. 57
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND
COMPANY......................................................... 57
8.1 REPRESENTATIONS AND WARRANTIES......................... 58
8.2 PERFORMANCE OF OBLIGATIONS............................. 58
8.3 NO LITIGATION.......................................... 58
8.4 OPINION OF COUNSEL..................................... 59
8.5 REGISTRATION STATEMENT................................. 59
8.6 CONSENTS AND APPROVALS................................. 59
8.7 GOOD STANDING CERTIFICATES............................. 59
8.8 NO MATERIAL ADVERSE CHANGE............................. 60
8.9 CLOSING OF IPO......................................... 60
8.10 SECRETARY'S CERTIFICATE................................ 60
8.11 EMPLOYMENT AGREEMENTS.................................. 61
8.12 DIRECTORS AND OFFICERS INSURANCE....................... 61
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF TSII..................... 61
9.1 REPRESENTATIONS AND WARRANTIES......................... 61
9.2 PERFORMANCE OF OBLIGATIONS............................. 62
9.3 NO LITIGATION.......................................... 62
9.4 SECRETARY'S CERTIFICATE................................ 62
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9.5 NO MATERIAL ADVERSE EFFECT.............................. 63
9.6 STOCKHOLDERS' RELEASE................................... 63
9.7 TERMINATION OF RELATED PARTY AGREEMENTS................. 63
9.8 OPINION OF COUNSEL...................................... 64
9.9 CONSENTS AND APPROVALS.................................. 64
9.10 GOOD STANDING CERTIFICATES.............................. 64
9.11 REGISTRATION STATEMENT.................................. 64
9.12 EMPLOYMENT AGREEMENTS................................... 64
9.13 CLOSING OF IPO.......................................... 65
9.14 FIRPTA CERTIFICATE...................................... 65
10. COVENANTS OF TSII AND THE STOCKHOLDERS AFTER CLOSING............. 65
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN
OBLIGATIONS............................................. 65
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT............ 66
10.3 PREPARATION AND FILING OF TAX RETURNS................... 66
10.4 DIRECTORS AND OFFICERS.................................. 68
10.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS.................. 68
10.6 MAINTENANCE OF BOOKS.................................... 68
11. INDEMNIFICATION.................................................. 69
11.1 GENERAL INDEMNIFICATION BY COMPANY AND
STOCKHOLDERS............................................ 69
11.2 INDEMNIFICATION BY TSII................................. 70
11.3 THIRD PERSON CLAIMS..................................... 71
11.4 EXCLUSIVE REMEDY........................................ 74
11.5 LIMITATIONS ON INDEMNIFICATION.......................... 74
12. TERMINATION OF AGREEMENT......................................... 77
12.1 TERMINATION............................................. 77
12.2 LIABILITIES IN EVENT OF TERMINATION..................... 77
13. NONCOMPETITION................................................... 78
13.1 PROHIBITED ACTIVITIES................................... 78
13.2 DAMAGES................................................. 80
13.3 REASONABLE RESTRAINT.................................... 80
13.4 SEVERABILITY; REFORMATION............................... 81
13.5 EFFECTIVENESS........................................... 81
13.6 MATERIALITY............................................. 81
13.7 LIMITATIONS............................................. 81
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION........................ 82
14.1 STOCKHOLDERS............................................ 82
14.2 TSII.................................................... 83
14.3 DAMAGES................................................. 85
14.4 SURVIVAL................................................ 85
15. TRANSFER RESTRICTIONS............................................ 85
15.1 TRANSFER RESTRICTIONS................................... 85
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15.2 CERTAIN TRANSFERS....................................... 86
16. FEDERAL SECURITIES ACT REPRESENTATIONS........................... 87
16.1 COMPLIANCE WITH LAW..................................... 88
16.2 ECONOMIC RISK; SOPHISTICATION........................... 88
17. REGISTRATION RIGHTS.............................................. 89
17.1 PIGGYBACK REGISTRATION RIGHTS........................... 89
17.2 DEMAND REGISTRATION RIGHTS.............................. 90
17.3 REGISTRATION PROCEDURES................................. 92
17.4 UNDERWRITING AGREEMENT.................................. 92
17.5 AVAILABILITY OF RULE 144................................ 93
18. GENERAL.......................................................... 93
18.1 COOPERATION............................................. 93
18.2 SUCCESSORS AND ASSIGNS.................................. 93
18.3 ENTIRE AGREEMENT........................................ 94
18.4 COUNTERPARTS............................................ 94
18.5 BROKERS AND AGENTS...................................... 94
18.6 EXPENSES................................................ 95
18.7 NOTICES................................................. 96
18.8 GOVERNING LAW........................................... 98
18.9 EXERCISE OF RIGHTS AND REMEDIES......................... 98
18.10 TIME...................................................... 98
18.11 REFORMATION AND SEVERABILITY.............................. 98
18.12 REMEDIES CUMULATIVE....................................... 98
18.13 CAPTIONS.................................................. 99
18.14 AMENDMENTS AND WAIVERS.................................... 99
18.15 DEFINED TERMS............................................. 99
ANNEX I
INTENTIONALLY DELETED....................................................105
ANNEX II
CERTIFICATE OF INCORPORATION AND BY-LAWS OF TSII.........................106
ANNEX III
CONSIDERATION TO BE PAID TO COMPANY......................................107
ANNEX IV
STOCKHOLDERS AND STOCK OWNERSHIP OF THE COMPANY..........................108
ANNEX V
STOCKHOLDERS AND STOCK OWNERSHIP OF TSII.................................109
ANNEX VI
FORM OF OPINION OF COUNSEL TO TSII.......................................110
ANNEX VII
FORM OF OPINION OF COUNSEL TO COMPANY AND STOCKHOLDERS...................114
ANNEX VIII
FORM OF EMPLOYMENT AGREEMENT.............................................118
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AGREEMENT AND PLAN OF ORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the "Agreement") is made as of
May 9, 1997, by and among TRAVEL SERVICES INTERNATIONAL, INC., a Delaware
corporation ("TSII"), CRUISES ONLY, INC., a Florida corporation (the "COMPANY"),
XXXXX XXXXXX, an individual residing in the City of Orlando, Florida, and XXXX
XXXXXX, an individual residing in the City of Orlando, Florida. Xxxxx Xxxxxx and
Xxxx Xxxxxx are referred to collectively herein as the "STOCKHOLDERS".
WHEREAS, the respective Boards of Directors of TSII and the
COMPANY deem it advisable and in the best interests of TSII and the
COMPANY and their respective stockholders that the COMPANY contribute
the ownership of all of its assets and liabilities not specifically
excluded from transfer in this Agreement to TSII, by transferring such
assets to the LLC and transferring the LLC interest to TSII, in
exchange for stock of TSII and cash pursuant to this Agreement and in
accordance with the applicable provisions of the laws of the State of
Delaware and the State in which the COMPANY is incorporated;
WHEREAS, TSII is entering into an Agreement and Plan of
Organization (collectively, the "Other Agreements") with Auto- Europe,
Inc. (Maine), a Maine corporation, Cruises, Inc., a New York
corporation, the COMPANY, D-FW Tours, Inc., a Texas corporation, D-FW
Travel Arrangements, Inc., a Texas corporation, and 800-Ideas, Inc., a
Nevada corporation, and their respective stockholders in order to
acquire additional businesses (the COMPANY, together with each of the
entities
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with which TSII has entered into the Other Agreements, are
collectively referred to herein as the "Founding Companies");
WHEREAS, this Agreement, the Other Agreements and the IPO of
TSII Stock constitute the "TSII Plan of Organization;"
WHEREAS, the STOCKHOLDERS and the Boards of Directors and the
stockholders of TSII and each of the Other Founding Companies that are
parties to the Other Agreements have approved and adopted the TSII Plan
of Organization as an integrated plan pursuant to which (1)
Auto-Europe, Inc. (Maine), the COMPANY, and 800-Ideas, Inc. will
contribute the ownership of substantially all of their respective
assets to TSII, (2) the stockholders of Cruises, Inc., D-FW Tours, Inc.
and D-FW Travel Arrangements, Inc. will transfer the capital stock of
such companies to TSII and (3) Auto-Europe, Inc. (Maine), the COMPANY,
800-Ideas, Inc., the public, and the Stockholders of Cruises, Inc.,
D-FW Tours, Inc. and D-FW Travel Arrangements, Inc. will acquire the
stock of TSII as a tax-free transfer of property under Section 351 of
the Internal Revenue Code of 1986, as amended; and
WHEREAS, in consideration of the agreements of the Other
Founding Companies pursuant to the Other Agreements (after being
provided and having the opportunity to review such Other Agreements),
the Board of Directors of the COMPANY has approved this Agreement as
part of the TSII Plan of Organization in order to transfer the
ownership of substantially all of the assets of the COMPANY to TSII.
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NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE
On the Funding and Consummation Date, (a) the COMPANY shall transfer,
convey, assign and deliver to TSII, and TSII shall acquire and accept from the
COMPANY, as a contribution to TSII under Section 351 of the Code, the LLC
Interest, free and clear of all liens, security interests, pledges, charges,
voting trusts, restrictions, encumbrances and claims of every kind.
2. [INTENTIONALLY DELETED]
3. DELIVERY OF CONSIDERATION
3.1 On the Funding and Consummation Date the COMPANY, which is on that
date the holder of all outstanding certificates representing limited liability
company interests of the LLC, shall, upon surrender of such certificates,
receive the number of shares of TSII Stock and the amount of cash set forth on
Annex III hereto, said cash to be payable by wire transfer.
3.2 The COMPANY shall deliver to TSII at the Pre-Closing the
certificates representing the LLC Interest, duly endorsed in blank by the
COMPANY, or accompanied by blank stock powers, and with all necessary transfer
tax and other revenue stamps, acquired at the COMPANY'S expense, affixed and
cancelled. The COMPANY agrees
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promptly to cure any deficiencies with respect to the endorsement of the
interest certificates or other documents of conveyance with respect to such LLC
Interest or with respect to the stock powers accompanying the LLC Interest. TSII
shall pay all transfer and revenue stamps involved in the formation of the LLC
and the transfers to it contemplated by Section 7.13 hereof.
3.3 All TSII Stock received by the COMPANY pursuant to this Agreement
shall, except for restrictions on resale or transfer described in Sections 15
and 16 hereof, have the same rights as all of the other shares of outstanding
TSII Stock by reason of the provisions of the Certificate of Incorporation of
TSII or as otherwise provided by the Delaware GCL. All voting rights of such
TSII Stock received by the COMPANY shall be fully exercisable by the COMPANY and
the COMPANY shall not be deprived nor restricted in exercising those rights. On
the Funding and Consummation Date, TSII shall have no class of capital stock
issued and outstanding other than the TSII Stock and the Restricted Common
Stock.
3.4 Subject to the consummation of the transactions contemplated by
this Agreement, the COMPANY and the STOCKHOLDERS shall have the right to
designate Xxxxx Xxxxxx as a Director of TSII effective as of the Funding and
Consummation Date, which right shall be implemented by appropriate action of the
Board of Directors of TSII in accordance with its Certificate of Incorporation
and By-Laws.
3.5 TSII agrees to pay and reimburse to the COMPANY and the
STOCKHOLDERS, within 15 days after the Funding and Consummation
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Date, all documented, out-of-pocket costs, including accounting and legal
expenses, or additional taxes of any kind (including without limitation any
additional tax imposed on the COMPANY or imposed on the STOCKHOLDERS resulting
from the change in character of income derived by the STOCKHOLDERS) as the
result of consummating the transactions contemplated by this Agreement in the
form set forth herein rather than as a merger, regardless of where such costs or
taxes may be incurred.
4. CLOSING
At or prior to the Pricing, the parties shall take all actions
necessary to prepare to (i) effect the transfer and delivery of the LLC Interest
as contemplated by Section 1 hereof and (ii) effect the delivery of the
consideration referred to in Section 3 hereof; provided, however, that such
actions shall not include the actual completion of the transfer and delivery of
the LLC Interest or the delivery of the consideration by wire transfer(s)
referred to in Section 3 hereof, each of which actions shall only be taken upon
the Funding and Consummation Date as herein provided. In the event that there is
no Funding and Consummation Date and this Agreement terminates, TSII hereby
covenants and agrees to do all things required by Delaware law and all things
which counsel for the COMPANY advise TSII are required by applicable laws of the
State in which the COMPANY is incorporated in order to rescind the effects, if
any, of the transfer of the Assets to the LLC as described Section 7.13 and to
pay all related costs of the COMPANY directly
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associated with such rescission. The taking of the actions described in clauses
(i) and (ii) above (the "Pre-Closing") shall take place on the closing date (the
"Pre-Closing Date") at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.,
0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000. On the Funding and
Consummation Date (x) all transactions contemplated by this Agreement, including
the delivery of the LLC Interest and the delivery of shares and wire transfer(s)
in an amount equal to the cash portion of the consideration which the COMPANY
shall be entitled to receive pursuant to Section 3 hereof shall occur and (y)
the closing with respect to the IPO shall be completed. The date on which the
actions described in the preceding clauses (x) and (y) occur shall be referred
to as the "Funding and Consummation Date." Except as provided in Sections 8 and
9 hereof with respect to actions to be taken on the Funding and Consummation
Date, during the period from the Pre-Closing Date to the Funding and
Consummation Date this Agreement may only be terminated by a party if the
underwriting agreement in respect of the IPO is terminated pursuant to the terms
of such agreement. This Agreement shall in any event terminate if the Funding
and Consummation Date has not occurred within 15 business days of the
Pre-Closing Date. Time is of the essence.
From the Pre-Closing Date to the Funding and Consummation Date the law
firm of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. (the "Escrow Agent") shall
hold the certificates, instruments and other documents evidencing the LLC
Interest and the transfer to TSII
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thereof (collectively, the "Escrowed Documents") in escrow at the Escrow Agent's
office at 0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. In the event the
Funding and Consummation Date does not occur within 15 days of the Pre-Closing
Date or in the event the stock and cash to be delivered to the Company have not
been actually delivered to the Company within such 15-day period, then the
Escrow Agent shall promptly deliver the Escrowed Documents to the Company. In
the event the Funding and Consummation Date occurs within the 15-day period and
the cash and stock owed to the Company under this Agreement are actually
delivered to the Company within the 15-day period, then the Escrowed Documents
shall be delivered to TSII. The Escrow Agent shall maintain possession of the
Escrowed Documents in a safe and secure manner. The Escrow Agent shall only
deliver the Escrowed Documents to TSII when all shares to be received by the
Company and the cash portion of the funds owed to the Company under this
Agreement have been actually delivered to the Company. "Actually delivered" for
this purpose means: (a) in the case of shares of stock, the actual receipt by
the Company at the Company's offices of duly executed and complete certificates
of all stock; (b) in the case of the cash amount, the crediting, by the
Company's designated bank which received the wire transfer, of the cash amount
available for immediate withdrawal by the Company. The Company shall designate
the Company's bank and bank account for the wire transfer by written notice to
the Escrow Agent prior to the Funding and Consummation Date. The cash amount
7
of the consideration owed to the Company shall only be paid by wire transfer to
that account designated in writing by the Company.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDERS
(A) REPRESENTATIONS AND WARRANTIES OF COMPANY AND
STOCKHOLDERS.
Each of the COMPANY and the STOCKHOLDERS jointly and severally
represents and warrants that all of the following representations and warranties
in this Section 5(A) are true at the date of this Agreement and, subject to
Section 7.8 hereof, shall be true at the time of Pre-Closing and the Funding and
Consummation Date; provided, however, that representations and warranties
relating to the LLC shall be true only at the time of Pre-Closing and the
Funding and Consummation Date. Each of the COMPANY and the STOCKHOLDERS agrees
that such representations and warranties shall survive the Funding and
Consummation Date for a period of two years (the last day of such period being
the "Expiration Date"), except that (i) the warranties and representations set
forth in Section 5.22 hereof shall survive until such time as the limitations
period has run for all Tax periods ended on or prior to the Funding and
Consummation Date, which shall be deemed to be the Expiration Date for Section
5.22 and (ii) solely for purposes of determining whether a claim for
indemnification under Section 11.1(iii) hereof has been made on a timely basis,
and solely to the extent that in connection with the IPO, TSII actually incurs
liability under the 1933 Act, the 1934 Act, or any other federal or state
securities
8
laws as a result of a breach of a representation or warranty by the COMPANY or a
STOCKHOLDER, the representations and warranties set forth herein shall survive
until the expiration of any applicable limitations period, which shall be deemed
to be the Expiration Date for such purposes. For purposes of this Section 5, the
term "COMPANY" shall mean and refer to the COMPANY and all of its Subsidiaries,
including the LLC.
5.1 DUE ORGANIZATION. The COMPANY is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and the COMPANY is duly authorized and qualified to do business
under all applicable laws, regulations, ordinances and orders of public
authorities to carry on its business in Florida, except (i) as set forth on
Schedule 5.1 or (ii) where the failure to be so authorized or qualified would
not have a material adverse effect on the business, operations, affairs,
prospects, properties, assets or condition (financial or otherwise), of the
COMPANY taken as a whole (as used herein with respect to the COMPANY, or with
respect to any other person, a "Material Adverse Effect"). Schedule 5.1 sets
forth the jurisdiction in which the COMPANY is incorporated and contains a list
of all such jurisdictions in which the COMPANY is authorized or qualified to do
business. True, complete and correct copies of the Certificate of Incorporation
and By-laws, each as amended, of the COMPANY (the "Charter Documents") are all
attached hereto as Schedule 5.1. The stock records of the COMPANY, as heretofore
made available to TSII, are correct and complete in all material
9
respects. There are no minutes in the possession of the COMPANY or the
STOCKHOLDERS which have not been made available to TSII, and all of such minutes
are correct and complete in all respects. Except as set forth on Schedule 5.1,
the most recent minutes of the COMPANY, which are dated no earlier than ten
business days prior to the date hereof, affirm and ratify all prior acts of the
COMPANY, and of its officers and directors on behalf of the COMPANY.
5.2 AUTHORIZATION. (i) The representatives of the COMPANY executing
this Agreement have the authority to enter into and bind the COMPANY to the
terms of this Agreement and (ii) the COMPANY has the full legal right, power and
authority to enter into and perform this Agreement, and all required approvals
of the shareholders and the Board of Directors of the COMPANY have been
obtained.
5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
COMPANY is as set forth on Schedule 5.3. All of the issued and outstanding
shares of the capital stock of the COMPANY are owned by the STOCKHOLDERS in the
amounts set forth in Annex IV and further, except as set forth on Schedule 5.3,
are owned free and clear of all liens, security interests, pledges, charges,
voting trusts, restrictions, encumbrances and claims of every kind. All of the
issued and outstanding shares of the capital stock of the COMPANY have been duly
authorized and validly issued, are fully paid and nonassessable, are owned of
record and beneficially by the STOCKHOLDERS and further, such shares were
offered, issued, sold and delivered by the COMPANY in compliance with all
applicable state and federal laws concerning the issuance of securities.
10
Further, none of such shares were issued in violation of the preemptive rights
of any past or present stockholder.
5.4 TRANSACTIONS IN CAPITAL STOCK. Except as set forth on Schedule 5.4,
the COMPANY has not acquired any COMPANY Stock since January l, 1994. Except as
set forth on Schedule 5.4, (i) no option, warrant, call, conversion right or
commitment of any kind exists which obligates the COMPANY to issue any of its
authorized but unissued capital stock; (ii) the COMPANY has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof; and (iii) neither the voting stock structure of
the COMPANY nor the relative ownership of shares among any of its respective
stockholders has been altered or changed in contemplation of the transactions
contemplated hereby and/or the TSII Plan of Organization. Schedule 5.4 also
includes complete and accurate copies of all stock option or stock purchase
plans, including a list of all outstanding options, warrants or other rights to
acquire shares of the COMPANY's stock and the material terms of such outstanding
options, warrants or other rights.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of COMPANY Stock was issued pursuant to awards, grants or bonuses.
5.6 SUBSIDIARIES. Schedule 5.6 attached hereto lists the name of each
of the COMPANY's subsidiaries, including the LLC (each, a "Subsidiary"), and
sets forth the number and class of the
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authorized capital stock of each Subsidiary and the number of shares or
interests of each Subsidiary which are issued and outstanding, all of which
shares or interests (except as set forth on Schedule 5.6) are owned by the
COMPANY, free and clear of all liens, security interests, pledges, voting
trusts, equities, restrictions, encumbrances and claims of every kind. Except as
set forth on Schedule 5.6, the COMPANY does not presently own, of record or
beneficially, or control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any corporation,
association or business entity nor is the COMPANY, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity. The
COMPANY is the sole owner of all of the issued and outstanding limited liability
company interests of the LLC, free and clear of all liens, security interests,
pledges, voting trusts, equities, restrictions, encumbrances and claims of every
kind.
5.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 5.7 is a listing of
all names of all predecessor companies of the COMPANY, including the names of
any entities acquired by the COMPANY (by stock purchase, merger or otherwise) or
owned by the COMPANY or from whom the COMPANY previously acquired material
assets. Except as disclosed on Schedule 5.7, the COMPANY has not been a
subsidiary or division of another corporation or a part of an acquisition which
was later rescinded.
5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of
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material assets of either the COMPANY or any other person or entity that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the COMPANY ("Affiliates") since
January 1, 1994.
5.9 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 are copies of
the following financial statements (the "COMPANY Financial Statements") of the
COMPANY: the COMPANY's audited Consolidated Balance Sheets, if any, as of
December 31, 1996, 1995 and 1994 and Statements of Income, Cash Flows and
Retained Earnings, if any, for each of the years in the three-year period ended
December 31, 1996 (December 31, 1996 being hereinafter referred to as the
"Balance Sheet Date"). Except as set forth on Schedule 5.9, such Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as noted thereon or on Schedule 5.9). Except as set forth on Schedule
5.9, such Consolidated Balance Sheets as of December 31, 1996, 1995 and 1994
present fairly the financial position of the COMPANY as of the dates indicated
thereon, and such Consolidated Statements of Income, Cash Flows and Retained
Earnings present fairly the results of operations for the periods indicated
thereon.
5.10 LIABILITIES AND OBLIGATIONS. The COMPANY has delivered to TSII an
accurate list (which is set forth on Schedule 5.10) as of the Balance Sheet Date
of (i) all liabilities of the COMPANY which are not reflected on the balance
sheet of the COMPANY at the Balance Sheet Date or otherwise reflected in the
COMPANY Financial
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Statements at the Balance Sheet Date, (ii) any material liabilities of the
COMPANY (including all liabilities in excess of $10,000) and (iii) all loan
agreements, indemnity or guaranty agreements, bonds, mortgages, liens, pledges
or other security agreements. Except as set forth on Schedule 5.10, since the
Balance Sheet Date the COMPANY has not incurred any material liabilities of any
kind, character and description, whether accrued, absolute, secured or
unsecured, contingent or otherwise, other than liabilities incurred in the
ordinary course of business. The COMPANY has also delivered to TSII on Schedule
5.10, in the case of those contingent liabilities related to pending or
threatened litigation, or other liabilities which are not fixed or are being
contested, the following information:
(i) a summary description of the liability together with the
following:
(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought;
and
(c) name of claimant and all other parties to the claim,
suit or proceeding;
(ii) the name of each court or agency before which such claim,
suit or proceeding is pending; and
(iii) the date such claim, suit or proceeding was instituted; and
14
(iv) a good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable with respect to each
such liability. If no estimate is provided, the estimate shall for
purposes of this Agreement be deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. The COMPANY has delivered to TSII
an accurate list (which is set forth on Schedule 5.11) of (i) all reservations
that have been booked on cruises with a scheduled sailing date after the
Pre-Closing Date and (ii) the accounts and notes receivable of the COMPANY, as
of the Balance Sheet Date, including any such amounts which are not reflected in
the balance sheet as of the Balance Sheet Date, and including receivables from
and advances to employees and the STOCKHOLDERS. Prior to the Pre-Closing Date
the COMPANY shall also provide to TSII (x) an accurate list of all receivables
obtained subsequent to the Balance Sheet Date up to the Pre-Closing Date and (y)
an aging of all accounts and notes receivable showing amounts due in 30 day
aging categories (the "A/R Aging Reports"). Except to the extent reflected on
Schedule 5.11 or as disclosed by the COMPANY to TSII in a writing accompanying
the A/R Aging Reports, the accounts, notes and other receivables shown on
Schedule 5.11 and on the A/R Aging Reports are and shall be collectible in the
amounts shown, net of reserves reflected in the balance sheet as of the Balance
Sheet Date with respect to accounts receivable as of the Balance Sheet Date, and
net of reserves reflected in the books and records of the COMPANY (consistent
with the methods used for the balance
15
sheet) with respect to accounts receivable of the COMPANY after the Balance
Sheet Date.
5.12 PERMITS AND INTANGIBLES. The COMPANY holds all licenses,
franchises, permits and other governmental authorizations the absence of any of
which could have a Material Adverse Effect on its business, and the COMPANY has
delivered to TSII an accurate list and summary description (which is set forth
on Schedule 5.12) of all such licenses, franchises, permits and other
governmental authorizations, including permits, titles, licenses, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the COMPANY (including interests in software or
other technology systems, programs and intellectual property) (it being
understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on Schedule 5.13). To the knowledge of the
COMPANY, the licenses, franchises, permits and other governmental authorizations
listed on Schedules 5.12 and 5.13 are valid, and the COMPANY has not received
any notice that any governmental authority intends to cancel, terminate or not
renew any such license, franchise, permit or other governmental authorization.
The COMPANY has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the licenses,
franchises, permits and other governmental authorizations listed on Schedules
5.12 and 5.13 and is not in violation of any of the foregoing except where such
noncompliance or violation would not have a Material Adverse Effect on the
COMPANY. Except as
16
specifically provided on Schedule 5.12, the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the COMPANY by, any such
licenses, franchises, permits or government authorizations.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, (i)
the COMPANY has complied with and is in compliance with all federal, state,
local and foreign statutes (civil and criminal), laws, ordinances, regulations,
rules, notices, permits, judgments, orders and decrees applicable to it or any
of its properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes and
Hazardous Substances including petroleum and petroleum products (as such terms
are defined in any applicable Environmental Law); (ii) the COMPANY has obtained
and adhered to all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes and Hazardous
Substances, a list of all of which permits and approvals is set forth on
Schedule 5.13, and has reported to the appropriate authorities, to the extent
required by all Environmental Laws, all past and present sites owned and
operated by the COMPANY where Hazardous Wastes or Hazardous Substances have been
treated, stored, disposed of or otherwise handled; (iii) there have been no
releases or threats of
17
releases (as defined in Environmental Laws) at, from, in or on any property
owned or operated by the COMPANY except as permitted by Environmental Laws; (iv)
the COMPANY knows of no on-site or off-site location to which the COMPANY has
transported or disposed of Hazardous Wastes and Hazardous Substances or arranged
for the transportation of Hazardous Wastes and Hazardous Substances, which site
is the subject of any federal, state, local or foreign enforcement action or any
other investigation which could lead to any claim against the COMPANY or TSII
for any clean-up cost, remedial work, damage to natural resources, property
damage or personal injury, including, but not limited to, any claim under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended; and (v) the COMPANY has no contingent liability in connection with any
release of any Hazardous Waste or Hazardous Substance into the environment.
5.14 PERSONAL PROPERTY. The COMPANY has delivered to TSII an accurate
list (which is set forth on Schedule 5.14) of (x) all personal property included
in "depreciable plant, property and equipment" on the balance sheet of the
COMPANY as of the Balance Sheet Date or that will be included on any balance
sheet of the COMPANY prepared after the Balance Sheet Date, (y) all other
personal property owned by the COMPANY with a value in excess of $10,000 (i) as
of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date and (z)
all leases and agreements in respect of personal property, including, true,
complete and correct copies of all such leases and agreements. The COMPANY shall
indicate on
18
Schedule 5.14 those assets currently owned, or that were formerly owned, by
STOCKHOLDERS, relatives of STOCKHOLDERS, or Affiliates of the COMPANY. Except as
set forth on Schedule 5.14, (i) all personal property used by the COMPANY in its
business is either owned by the COMPANY or leased by the COMPANY pursuant to a
lease included on Schedule 5.14, (ii) all of the personal property listed on
Schedule 5.14 is in good working order and condition, ordinary wear and tear
excepted and (iii) all leases and agreements included on Schedule 5.14 are in
full force and effect and constitute valid and binding agreements of the parties
(and their successors) thereto in accordance with their respective terms.
Except for the Excluded Assets listed on Schedule 7.13, the Assets
constitute all of the property and assets used in, and/or necessary to operate,
the business of the COMPANY as it is now being conducted and as contemplated to
be conducted by the LLC on the Funding and Consummation Date.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. The
COMPANY has delivered to TSII an accurate list (which is set forth on Schedule
5.15) of (i) all significant customers, it being understood and agreed that a
"significant customer," for purposes of this Section 5.15, means a customer (or
person or entity) representing 5% or more of the COMPANY's annual revenues as of
the Balance Sheet Date. Except to the extent set forth on Schedule 5.15, none of
the COMPANY's significant customers (or persons or entities that are sources of
a significant number of customers) have cancelled or substantially reduced or,
to the
19
knowledge of the COMPANY, are currently attempting or threatening to cancel a
contract or substantially reduce utilization of the services provided by the
COMPANY.
The COMPANY has listed on Schedule 5.15 all material contracts,
commitments and similar agreements to which the COMPANY is a party or by which
it or any of its properties are bound (including, but not limited to, contracts
with significant customers, joint venture or partnership agreements, contracts
with any labor organizations, strategic alliances and options to purchase land),
other than contracts, commitments and agreements otherwise listed on Schedules
5.10, 5.14 or 5.16, (a) in existence as of the Balance Sheet Date and (b)
entered into since the Balance Sheet Date, and in each case has delivered true,
complete and correct copies of such agreements to TSII. The COMPANY has complied
with all material commitments and obligations pertaining to it, and is not in
default under any contracts or agreements listed on Schedule 5.15 and no notice
of default under any such contract or agreement has been received. The COMPANY
has also indicated on Schedule 5.15 a summary description of all plans or
projects involving the opening of new operations, expansion of existing
operations, the acquisition of any personal property, business or assets
requiring, in any event, the payment of more than $25,000 by the COMPANY.
5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real property
owned or leased by the COMPANY (i) as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date, and all other
20
property, if any, used by the COMPANY in the conduct of its business. The
COMPANY has good and insurable title to the real property owned by it, including
those reflected on Schedule 5.14, subject to no mortgage, pledge, lien,
conditional sales agreement, encumbrance or charge, except for:
(i) liens reflected on Schedules 5.10 or 5.16 as securing
specified liabilities (with respect to which no default exists);
(ii) liens for current Taxes not yet payable and assessments not
in default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions
to title shown of record in the office of the County Clerks in which
the properties, assets and leasehold estates are located which do not
adversely affect the current use of the property.
Schedule 5.16 contains, without limitation, true, complete and correct copies of
all title reports and title insurance policies currently in possession of the
COMPANY with respect to real property owned by the COMPANY.
The COMPANY has also delivered to TSII an accurate list of real
property leased by the COMPANY (which list is set forth on Schedule 5.16),
together with true, complete and correct copies of all leases and agreements in
respect of such real property leased by the COMPANY (which copies are attached
to Schedule 5.16), and an
21
indication as to which such properties, if any, are currently owned, or were
formerly owned, by STOCKHOLDERS or business or personal affiliates of the
COMPANY or STOCKHOLDERS. Except as set forth on Schedule 5.16, all of such
leases included on Schedule 5.16 are in full force and effect and constitute
valid and binding agreements of the parties (and their successors) thereto in
accordance with their respective terms.
5.17 INSURANCE. The COMPANY has delivered to TSII, as set forth on and
attached to Schedule 5.17, (i) an accurate list as of the Balance Sheet Date of
all insurance policies carried by the COMPANY, (ii) an accurate list of all
insurance loss runs and workers compensation claims received for the past three
(3) policy years and (iii) true, complete and correct copies of all insurance
policies currently in effect. Such insurance policies evidence all of the
insurance that the COMPANY is required to carry pursuant to all of its contracts
and other agreements and pursuant to all applicable laws. All of such insurance
policies are currently in full force and effect and shall remain in full force
and effect through the Funding and Consummation Date. No insurance carried by
the COMPANY has ever been cancelled by the insurer and the COMPANY has never
been unable to obtain insurance coverage for its assets and operations.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS. The
COMPANY has delivered to TSII an accurate list (which is set forth on Schedule
5.18) showing all officers, directors and key employees of the COMPANY, listing
all employment agreements
22
with such officers, directors and key employees and the rate of compensation
(and the portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons (i) as of the Balance Sheet Date and (ii)
as of the date hereof. The COMPANY has provided to TSII true, complete and
correct copies of any employment agreements for persons listed on Schedule 5.18.
Since the Balance Sheet Date, there have been no increases in the compensation
payable or any special bonuses to any officer, director, key employee or other
employee, except ordinary salary increases implemented on a basis consistent
with past practices, except as set forth on Schedule 5.18.
Except as set forth on Schedule 5.18, (i) the COMPANY is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any arrangement with any labor union, (ii) no employees of the COMPANY are
represented by any labor union or covered by any collective bargaining
agreement, (iii) no campaign to establish such representation is in progress and
(iv) there is no pending or, to the best of the COMPANY's knowledge, threatened
labor dispute involving the COMPANY and any group of its employees nor has the
COMPANY experienced any labor interruptions over the past three years. The
COMPANY believes its relationship with employees to be good.
5.19 EMPLOYEE PLANS. The COMPANY has delivered to TSII an accurate
schedule (Schedule 5.19) showing all employee benefit plans (including 401(k)
plans) currently sponsored or maintained or contributed to by, or which cover
the current or former employees
23
or directors of the COMPANY, all employment agreements and other agreements or
arrangements containing "golden parachute" or other similar provisions, and all
deferred compensation agreements, together with true, complete and correct
copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on Schedule 5.19, the
COMPANY does not sponsor, maintain or contribute to any plan program, fund or
arrangement that constitutes an "employee pension benefit plan," nor has the
COMPANY any obligation to contribute to or accrue or pay any benefits under any
deferred compensation or retirement funding arrangement on behalf of any
employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or any non-qualified deferred compensation arrangement).
For the purposes of this Agreement, the term "employee pension benefit plan"
shall have the same meaning as is given that term in Section 3(2) of ERISA. The
COMPANY has not sponsored, maintained or contributed to any employee pension
benefit plan other than the plans, agreements, arrangement and trusts set forth
on Schedule 5.19, nor is the COMPANY required to contribute to any retirement
plan pursuant to the provisions of any collective bargaining agreement
establishing the terms and conditions or employment of any of the COMPANY's
employees.
24
The COMPANY is not now, and cannot as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation or to any
multiemployer employee pension benefit plan under the provisions of Title IV of
ERISA.
All employee benefit plans, agreements, arrangements and trusts listed
on Schedule 5.19 and the administration thereof are in substantial compliance
with their terms and all applicable provisions of ERISA and the regulations
issued thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations.
All accrued contribution obligations of the COMPANY with respect to any
plan listed on Schedule 5.19 have either been fulfilled in their entirety or are
fully reflected on the balance sheet of the COMPANY as of the Balance Sheet
Date. At the option of the STOCKHOLDERS, their account in the COMPANY's 401(k)
plan may be distributed in the manner if and as directed by each STOCKHOLDER
prior to or subsequent to the Funding and Consummation Date, including COBRA or
conversion rights under any group insurance or other ERISA plan.
5.20 COMPLIANCE WITH ERISA. All such plans, agreements, arrangements
and trusts of the COMPANY that are currently maintained or contributed to by the
COMPANY or cover employees or former employees of the COMPANY listed on Schedule
5.19 that are intended to qualify under Section 401(a) of the Code (the
"Qualified Plans") are, and have been so qualified and have been determined by
the Internal Revenue Service to be so qualified, and
25
copies of such determination letters are included as part of Schedule 5.19
hereof. Except as disclosed on Schedule 5.19, all reports and other documents
required to be filed with any governmental agency or distributed to plan
participants or beneficiaries (including, but not limited to, actuarial reports,
audit reports or Tax Returns) have been timely filed or distributed, and copies
thereof for the three most recent plan years are included as part of Schedule
5.19 hereof. Neither STOCKHOLDERS, any such plan listed on Schedule 5.19, nor
the COMPANY has engaged in any transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA. No such plan listed on
Schedule 5.19 has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(1) of ERISA; and the COMPANY has not
incurred any liability for excise tax or penalty due to the Internal Revenue
Service nor any liability to the Pension Benefit Guaranty Corporation. The
STOCKHOLDERS further represent that:
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service;
(ii) no such plan listed on Schedule 5.19 subject to the
provisions of Title IV of ERISA has been terminated;
26
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan listed
on Schedule 5.19;
(iv) the COMPANY has not incurred liability under Section 4062 of
ERISA; and
(v) no circumstances exist pursuant to which the COMPANY could
have any direct or indirect liability whatsoever (including, but not
limited to, any liability to any multiemployer plan or the Pension
Benefit Guaranty Corporation under Title IV of ERISA or to the
Internal Revenue Service for any excise tax or penalty, or being
subject to any Statutory Lien to secure payment of any such liability)
with respect to any plan now or heretofore maintained or contributed
to by any entity other than the COMPANY that is, or at any time was, a
member of a "controlled group" (as defined in Section 412(n)(6)(B) of
the Code) that includes the COMPANY.
5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedules 5.21 or 5.13, the COMPANY is not in violation of any law or regulation
which would have a Material Adverse Effect, or of any order of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over the COMPANY; and
except to the extent set forth on Schedules 5.10 or 5.13, there are no claims,
actions, suits or proceedings, commenced or, to the knowledge of the COMPANY,
threatened, against or affecting the COMPANY, at law or in equity, or before or
by any
00
xxxxxxx, xxxxx, xxxxxxxxx or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over the COMPANY and no
notice of any claim, action, suit or proceeding, whether pending or threatened,
has been received. The COMPANY has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations, including all such permits,
licenses, orders and other governmental approvals set forth on Schedules 5.12
and 5.13, and is not in violation of any of the foregoing.
5.22 TAXES. The COMPANY has timely filed all requisite federal, state
and other Tax returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as set forth on Schedule 5.22, there
are no examinations in progress or claims against the COMPANY for federal, state
and other Taxes (including penalties and interest) for any period or periods
prior to and including the Balance Sheet Date and no notice of any claim for
Taxes, whether pending or threatened, has been received. All Tax, including
interest and penalties (whether or not shown on any Tax Return) owed by the
COMPANY, any member of an affiliated or consolidated group which includes or
included the COMPANY, or with respect to any payment made or deemed made by the
COMPANY, required to be paid by the date hereof has been paid. The amounts shown
as accruals for Taxes on the COMPANY Financial Statements are
28
sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
Copies of (i) the federal and local income tax returns and franchise tax returns
of the COMPANY for its last three (3) fiscal years, or such shorter period of
time as the COMPANY shall have existed, (ii) any Tax examinations commenced or
closed or outstanding during their three (3) most recent fiscal years, and (iii)
currently outstanding extensions of statutory limitations, are attached hereto
as Schedule 5.22. The COMPANY has a taxable year ended on the date set forth as
such on Schedule 5.22. Except as disclosed on Schedule 5.22, the COMPANY's
methods of accounting have not changed in the past five years. The COMPANY is
not an investment company as defined in Section 351(e)(1) of the Code.
5.23 NO VIOLATIONS. The COMPANY is not in violation of any Charter
Document. Neither the COMPANY nor, to the knowledge of the COMPANY, any other
party thereto, is in default under any lease, instrument, agreement, license or
permit set forth on Schedules 5.12, 5.13, 5.14, 5.15 or 5.16, or any other
material agreement to which it is a party or by which its properties are bound
(the "Material Documents"); and, except as set forth on Schedule 5.23, (a) the
rights and benefits of the COMPANY under the Material Documents will not be
adversely affected by the transactions contemplated hereby and (b) the execution
of this Agreement and the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby will not
29
result in any violation or breach or constitute a default under, any of the
terms or provisions of the Material Documents or the Charter Documents. Except
as set forth on Schedule 5.23, none of the Material Documents requires notice
to, or the consent or approval of, any governmental agency or other third party
with respect to any of the transactions contemplated hereby in order to remain
in full force and effect, and consummation of the transactions contemplated
hereby will not give rise to any right to termination, cancellation or
acceleration or loss of any right or benefit. Except as set forth on Schedule
5.23, none of the Material Documents prohibits the use or publication by the
COMPANY or TSII of the name of any other party to such Material Document, and
none of the Material Documents prohibits or restricts the COMPANY from freely
providing services to any other customer or potential customer of the COMPANY,
TSII or any Other Founding Company.
5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24, the
COMPANY is not now a party to any governmental contract subject to price
redetermination or renegotiation.
5.25 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set
forth on Schedule 5.25, there has not been:
(i) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of
the COMPANY;
30
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business
of the COMPANY;
(iii) any change in the authorized capital of the COMPANY or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or
commitments;
(iv) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
COMPANY, except as set forth elsewhere in this Agreement;
(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the COMPANY to any of
its officers, directors, STOCKHOLDERS, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases
for employees in accordance with past practice, except as set forth
elsewhere in this Agreement;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely
affecting the business of the COMPANY;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the COMPANY to any person,
including, without limitation, the STOCKHOLDERS and their affiliates;
31
(viii) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the COMPANY, including without limitation
any indebtedness or obligation of any STOCKHOLDER or any affiliate
thereof;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the COMPANY or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the COMPANY's business;
(xi) any waiver of any material rights or claims of the COMPANY;
(xii) any material breach, amendment or termination of any
contract, agreement, license, permit or other right to which the
COMPANY is a party;
(xiii) any transaction by the COMPANY outside the ordinary course
of its business;
(xiv) any cancellation or termination of a material contract with
a customer or client prior to the scheduled termination date; or
(xv) any other distribution of property or assets by the COMPANY.
32
5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The COMPANY has delivered to
TSII an accurate schedule (which is set forth on Schedule 5.26) as of the date
of the Agreement of:
(i) the name of each financial institution in which the COMPANY
has accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or have
access thereto.
Schedule 5.26 also sets forth a complete list of the names of each person,
corporation, firm or other entity holding a general or special power of attorney
from the COMPANY and a description of the terms of such power.
5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by the COMPANY and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of the
COMPANY and this Agreement has been duly and validly authorized by all necessary
corporate action and is a legal, valid and binding obligation of the COMPANY,
enforceable against the COMPANY in accordance with its terms except as limited
by bankruptcy, insolvency or other similar laws of general application relating
to or affecting the enforcement of creditors' rights generally, and the
individual(s) signing this Agreement on behalf of the COMPANY have the legal
power, authority and capacity to bind the COMPANY.
33
5.28 RELATIONS WITH GOVERNMENTS. The COMPANY has not made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office nor has it otherwise taken any action which
would cause the COMPANY to be in violation of the Foreign Corrupt Practices Act
of 1977, as amended, or any law of similar effect.
5.29 DISCLOSURE. (a) This Agreement, including the schedules hereto,
together with the completed Directors and Officers Questionnaires and
Registration Statement Questionnaires attached hereto as Schedule 5.29 and all
other documents and information made available to TSII and its representatives
in writing pursuant hereto or thereto, present fairly the business and
operations of the COMPANY for the time periods with respect to which such
information was requested. The COMPANY'S rights under the documents delivered
pursuant hereto would not be materially adversely affected by, and no statement
made herein would be rendered untrue in any material respect by, any other
document to which the COMPANY is a party, or to which its properties are
subject, or by any other fact or circumstance regarding the COMPANY (which fact
or circumstance was, or should reasonably, after due inquiry, have been known to
the COMPANY) that is not disclosed pursuant hereto or thereto.
(b) The COMPANY and the STOCKHOLDERS acknowledge and agree (i)
that there exists no firm commitment, binding agreement, or promise or other
assurance of any kind, whether express or implied, oral or written, that a
Registration Statement will become
34
effective or that the IPO pursuant thereto will occur at a particular price or
within a particular range of prices or occur at all; and (ii) that neither TSII
or any of its officers, directors, agents or representatives nor any Underwriter
shall have any liability to the COMPANY, the STOCKHOLDERS or any other person
affiliated or associated with the COMPANY for any failure of the Registration
Statement to become effective, the IPO to occur at a particular price or within
a particular range of prices or to occur at all.
(c) The COMPANY does not have any present plan, intention,
commitment, binding agreement or arrangement to dispose of any shares of TSII
stock received as described in Section 3.1, provided that the COMPANY may
distribute such shares of TSII Stock to the STOCKHOLDERS if the STOCKHOLDERS
represent and warrant to the COMPANY and TSII that the STOCKHOLDERS do not have
any present plan, intention, commitment, binding agreement or arrangement to
dispose of any such shares of TSII Stock. This representation shall be true for
such time periods as required by law and is not perpetual.
5.30 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.30 or as
contemplated by Section 7.13 hereof, the COMPANY has not, between the Balance
Sheet Date and the date hereof, taken any of the actions set forth in Section
7.3 (Prohibited Activities).
(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each STOCKHOLDER severally represents and warrants that the
representations and warranties set forth below are true as of
35
the date of this Agreement and, subject to Section 7.8 hereof, shall be true at
the time of Pre-Closing and on the Funding and Consummation Date, and that the
representations and warranties set forth in Sections 5.31 and 5.32 shall survive
until the second anniversary of the Funding and Consummation Date, which shall
be the Expiration Date for purposes of those Sections.
5.31 AUTHORITY; OWNERSHIP. Such STOCKHOLDER has the full legal right,
power and authority to enter into this Agreement. Such STOCKHOLDER owns
beneficially and of record all of the shares of the COMPANY Stock identified on
Annex IV as being owned by such STOCKHOLDER, and, except as set forth on
Schedule 5.31, such COMPANY Stock is owned free and clear of all liens,
encumbrances and claims of every kind.
5.32 PREEMPTIVE RIGHTS. Such STOCKHOLDER does not have, or hereby
waives, any preemptive or other right to acquire shares of COMPANY Stock that
such STOCKHOLDER has or may have had on the date hereof other than rights of any
STOCKHOLDER to acquire TSII stock pursuant to any option granted by TSII.
6. REPRESENTATIONS OF TSII
TSII represents and warrants that all of the following representations
and warranties in this Section 6 are true at the date of this Agreement and,
subject to Section 7.8 hereof, shall be true at the time of Pre-Closing and the
Funding and Consummation Date, and that such representations and warranties
shall survive the Funding and Consummation Date for a period of two years (the
36
last day of such period being the "Expiration Date"), except that (i) the
warranties and representations set forth in Section 6.14 hereof shall survive
until such time as the limitations period has run for all Tax periods ended on
or prior to the Funding and Consummation Date, which shall be deemed to be the
Expiration Date for Section 6.14 and (ii) solely for purposes of determining
whether a claim for indemnification under Section 11.2(iv) hereof has been made
on a timely basis, and solely to the extent that in connection with the IPO,
TSII actually incurs liability under the 1933 Act, the 1934 Act, or any other
federal or state securities laws, the representations and warranties set forth
herein shall survive until the expiration of any applicable limitations period,
which shall be deemed to be the Expiration Date for such purposes.
6.1 DUE ORGANIZATION. TSII is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware, and is
duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted except where the
failure to be so authorized or qualified would not have a Material Adverse
Effect. True, complete and correct copies of the Certificate of Incorporation
and By-laws, each as amended, of TSII (the "TSII Charter Documents") are all
attached hereto as Annex III.
6.2 AUTHORIZATION. (i) The representative of TSII executing this
Agreement has the authority to enter into and bind TSII to the
37
terms of this Agreement and (ii) TSII has the full legal right, power and
authority to enter into and perform this Agreement.
6.3 CAPITAL STOCK OF THE TSII. Immediately prior to the Funding and
Consummation Date, the authorized capital stock of TSII will consist of
50,000,000 shares of TSII Stock, of which the number of issued and outstanding
shares will be as set forth in the Registration Statement, and 1,000,000 shares
of preferred stock, $.01 par value, of which no shares will be issued and
outstanding. All of the issued and outstanding shares of the capital stock of
TSII are owned by the persons set forth on Annex V hereof, in each case, free
and clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. Upon consummation of the
IPO, the number of outstanding shares of TSII will be as set forth in the
Registration Statement. All of the issued and outstanding shares of the capital
stock of TSII have been duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by the persons set forth on
Annex V, and further, such shares were offered, issued, sold and delivered by
TSII in compliance with all applicable state and federal laws concerning the
issuance of securities. Further, none of such shares was issued in violation of
the preemptive rights of any past or present stockholder of TSII.
6.4 TRANSACTIONS IN CAPITAL STOCK. Except for the Other Agreements and
except as set forth on Schedule 6.4, (i) no option, warrant, call, conversion
right or commitment of any kind exists
38
which obligates TSII to issue any of its authorized but unissued capital stock;
and (ii) TSII has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. Schedule 6.4 also
includes complete and accurate copies of all stock option or stock purchase
plans, including a list, accurate as of the date hereof, of all outstanding
options, warrants or other rights to acquire shares of the stock of TSII.
6.5 SUBSIDIARIES. TSII has no subsidiaries except for the companies to
become subsidiaries of TSII pursuant to this Agreement and each of the Other
Agreements as of the Funding and Consummation Date. Except as set forth in the
preceding sentence, TSII does not presently own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
business entity, and TSII is not, directly or indirectly, a participant in any
joint venture, partnership or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. Attached hereto as Schedule 6.6 are copies of
the following financial statements (the "TSII Financial Statements") of TSII,
which reflect the results of its operations from inception: TSII's audited
Balance Sheet as of December 31, 1996 and Statements of Income, Cash Flows and
Retained Earnings for the period from inception through December 31, 1996. Such
TSII Financial Statements have been prepared in accordance
39
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as noted thereon or on Schedule 6.6).
Except as set forth on Schedule 6.6, such Balance Sheets as of December 31, 1996
present fairly the financial position of TSII as of such date, and such
statements of Income, Cash Flows and Retained Earnings present fairly the
results of operations for the period indicated.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule 6.7,
TSII has no material liabilities, contingent or otherwise, except as set forth
in or contemplated by this Agreement and the Other Agreements and except for
fees and expenses incurred in connection with the transactions contemplated
hereby and thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 6.8, TSII is not in violation of any law or regulation which would have
a Material Adverse Effect, or of any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over TSII; and except to the extent set
forth on Schedule 6.8, there are no material claims, actions, suits or
proceedings, pending or, to the knowledge of TSII, threatened, against or
affecting TSII, at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over TSII and no notice of any claim,
action, suit or proceeding, whether pending or threatened, has been
40
received. TSII has conducted and is conducting its business in compliance with
the requirements, standards, criteria and conditions set forth in applicable
federal, state and local statutes, ordinances, permits, licenses, orders,
approvals, variances, rules and regulations and is not in violation of any of
the foregoing. TSII and its stockholders (as set forth on Annex V) have not been
involved in any proceeding with the Securities and Exchange Commission or any
other state or federal governmental agency pertaining to any fraud,
misrepresentation or failure to comply with the laws relating to securities,
taxes or other regulatory laws and regulations. This Agreement does not violate
any federal or state securities laws, rules or regulations, except for any
violations arising out of or based upon any untrue statement or alleged untrue
statement of a material fact relating to the COMPANY or the STOCKHOLDERS, and
provided to TSII or its counsel by the COMPANY or the STOCKHOLDERS contained in
the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to the
COMPANY or the STOCKHOLDERS required to be stated therein or necessary to make
the statements therein not misleading.
6.9 NO VIOLATIONS. TSII is not violation of any TSII Charter Document.
Neither TSII or, to the knowledge of TSII, any other party thereto, is in
default under any lease, instrument, agreement, license or permit to which TSII
is a party, or by which
41
TSII or any of its properties are bound (collectively, the "TSII Documents");
and (a) the rights and benefits of TSII under the TSII Documents will not be
adversely affected by the transactions contemplated hereby and (b) the execution
of this Agreement and the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby will not result in any
violation or breach or constitute a default under, any of the terms or
provisions of the TSII Documents or the TSII Charter Documents. Except as set
forth on Schedule 6.9, none of the TSII Documents requires notice to, or the
consent or approval of, any governmental agency or other third party with
respect to any of the transactions contemplated hereby in order to remain in
full force and effect and consummation of the transactions contemplated hereby
will not give rise to any right to termination, cancellation or acceleration or
loss of any right or benefit.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by TSII and the performance of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors of TSII and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of TSII, enforceable against TSII
in accordance with its terms except as limited by bankruptcy, insolvency or
other similar laws of general application relating to or affecting the
enforcement of creditors' rights generally, and the individual signing this
Agreement on behalf of TSII has the legal power, authority and capacity to bind
TSII.
42
6.11 TSII STOCK. At the time of issuance thereof, the TSII Stock to be
delivered to the COMPANY pursuant to this Agreement will constitute valid and
legally issued shares of TSII, fully paid and nonassessable, and with the
exception of restrictions upon resale set forth in Sections 15 and 16 hereof,
will be identical in all material and substantive respects to the TSII Stock
issued and outstanding as of the date hereof and the TSII Stock to be issued
pursuant to the Other Agreements by reason of the provisions of the Delaware
GCL. The shares of TSII Stock to be issued to the COMPANY pursuant to this
Agreement will not be registered under the 1933 Act, except as provided in
Section 17 hereof.
6.12 NO SIDE AGREEMENTS. TSII has not entered and will not enter into
any agreement with any of the Founding Companies or any of the stockholders of
the Founding Companies or TSII other than the Other Agreements and the
agreements contemplated by each of the Other Agreements, including the
employment agreements referred to therein, and none of TSII, its equity owners
or its affiliates have received any cash compensation or payments in connection
with this transaction except for reimbursement of out-of-pocket expenses which
are necessary or appropriate to this transaction.
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. TSII has not
conducted any operations or business since inception other than activities
related to the TSII Plan of Organization. TSII does not own and has not at any
time owned any real property or any material personal property and is not a
party to any other agreement, except as listed on Schedule 6.13 and except that
TSII is a party to the
43
Other Agreements and the agreements contemplated thereby and to such agreements
as will be filed as Exhibits to the Registration Statement.
6.14 TAXES. TSII has timely filed all requisite federal, state and
other Tax returns or extension requests for all fiscal periods ended on or
before the date hereof; and except as set forth on Schedule 6.14, there are no
examinations in progress or claims against TSII for federal, state and other
Taxes (including penalties and interest) for any period or periods prior to and
including the date hereof, and no notice of any claim for Taxes, whether pending
or threatened, has been received. All Tax, including interest and penalties
(whether or not shown on any Tax return) owed by TSII, any member of an
affiliated or consolidated group which includes or included TSII, or with
respect to any payment made or deemed made by TSII herein has been paid. The
amounts shown as accruals for Taxes on the TSII Financial Statements are
sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
Copies of (i) any Tax examinations, (ii) extensions of statutory limitations and
(iii) the federal and local income tax returns and franchise tax returns of TSII
for its last three (3) fiscal years, or such shorter period of time as TSII
shall have existed, are attached hereto as Schedule 5.22. TSII is not an
investment company as defined in Section 351(e)(1) of the Code.
44
6.15 NO INTENTION TO DISPOSE OF LLC INTEREST. TSII is acquiring the LLC
Interest pursuant hereto for its own account for investment purposes and does
not have any present plan, intention, commitment, binding agreement or
arrangement to dispose of the LLC Interest.
6.16 COMPLETION OF DUE DILIGENCE. TSII has completed its due diligence
as of the date hereof, except for any additional investigation that may be
needed as a result of a notice pursuant to Section 7.7 or an amendment pursuant
to Section 7.8 of this Agreement.
6.17 TAX OPINION MATTERS. TSII will cause to be delivered to the
COMPANY a tax opinion letter from Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. in
substantially the form attached hereto as Annex IX prior to the Pre-Closing
Date. TSII represents and warrants that all representations by TSII as to
factual matters relied upon by Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. in the
opinion letter regarding tax results (other than matters represented by the
COMPANY in writing) are true and correct; provided, however, the foregoing
representation and warranty is limited, with respect to factual matters relating
to the Other Founding Companies, to the actual knowledge of TSII.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Funding and Consummation Date, the COMPANY will afford to the
officers and authorized representatives
45
of TSII and the Other Founding Companies access to all of the COMPANY's sites,
properties, books and records and will furnish TSII with such additional
financial and operating data and other information as to the business and
properties of the COMPANY as TSII or the Other Founding Companies may from time
to time reasonably request. The COMPANY will cooperate with TSII and the Other
Founding Companies and their respective representatives, including TSII's
auditors and counsel, in the preparation of any documents or other material
(including the Registration Statement) which may be required in connection with
any documents or materials required by this Agreement. TSII, the STOCKHOLDERS
and the COMPANY shall treat all information obtained in connection with the
negotiation and performance of this Agreement or the due diligence
investigations conducted with respect to the Other Founding Companies as
confidential in accordance with the provisions of Section 14 hereof. In
addition, TSII will cause each of the Other Founding Companies to enter into a
provision similar to this Section 7.1 requiring each such Other Founding
Company, its stockholders, directors, officers, representatives, employees and
agents to keep confidential any information obtained by such Other Founding
Company.
(b) Between the date of this Agreement and the Funding and Consummation
Date, TSII will afford to the officers and authorized representatives of the
COMPANY access to all of TSII's sites, properties, books and records and all due
diligence, agreements, documents and information of or concerning the Founding
Companies
46
and will furnish the COMPANY with such additional financial and operating data
and other information as to the business and properties of TSII as the COMPANY
may from time to time reasonably request. TSII will cooperate with the COMPANY,
its representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents or
materials required by this Agreement. TSII will provide complete access to its
operations and key officers and employees to the COMPANY, its representatives
and advisors on a continuing basis through the Funding and Consummation Date.
The COMPANY will cause all information obtained in connection with the
negotiation and performance of this Agreement to be treated as confidential in
accordance with the provisions of Section 14 hereof. Any and all audits, reports
(financial or otherwise) pertaining to the due diligence examination by TSII
relating to the COMPANY shall be delivered to the COMPANY as promptly as
practicable with the receipt thereof by TSII.
7.2 CONDUCT OF BUSINESS PENDING PRE-CLOSING. Between the date of this
Agreement and the Funding and Consummation Date, the COMPANY shall, except (w)
as contemplated by Section 7.13, (x) as set forth on Schedule 7.2, (y) as
requested by TSII or (z) as consented to by TSII (which consent shall not be
unreasonably withheld):
(i) carry on its business in substantially the same manner as it
has heretofore and not introduce any new method of management,
operation or accounting;
47
(ii) maintain its properties, facilities and equipment and other
assets as shall be required by the management of the COMPANY to carry
on its business in the same manner as heretofore and in at least as
good working order and condition as at present, ordinary wear and tear
excepted;
(iii) perform in all material respects its obligations under
agreements relating to or affecting its assets, properties or rights;
(iv) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(v) maintain and preserve its business organization intact, use
its best efforts to retain its present key employees and relationships
with suppliers, customers and others having business relations with
the COMPANY;
(vi) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable
courts, regulatory agencies and similar governmental authorities;
(vii) to the extent possible maintain present debt and lease
instruments and not enter into new or amended debt or lease
instruments, other than in the ordinary course of business and in
accordance with previous operating procedures; notwithstanding these
limitations and any other provision herein to the contrary, however,
any existing indebtedness, capital contributions as herein provided,
and indebtedness guaranteed by the STOCKHOLDERS shall continue to be
paid by
48
the COMPANY, in such amounts and in such a manner as may be determined
by the officers of the COMPANY, but in no event shall such payments be
less than normally required in the particular case; and
(viii) maintain or reduce present salaries and commission levels
for all officers, directors, employees and agents except for ordinary
and customary bonus and salary increases for employees in accordance
with past practices.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3 or as
contemplated by Section 7.13, between the date hereof and the Funding and
Consummation Date, the COMPANY shall not, without prior written consent of TSII:
(i) make any change in its Articles of Incorporation or By-laws;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other
than in connection with the exercise of options or warrants listed on
Schedule 5.4;
(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares
of its stock;
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital
49
expenditures, except if it is in the normal course of business
(consistent with past practice) or involves an amount not in excess of
$25,000;
(v) create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now
owned or hereafter acquired, except: (1) with respect to purchase
money liens incurred in connection with the acquisition of equipment
with an aggregate cost not in excess of $25,000 necessary or desirable
for the conduct of the businesses of the COMPANY; (2)(A) liens for
Taxes either not yet due or being contested in good faith and by
appropriate proceedings (and for which contested Taxes adequate
reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other
like liens arising in the ordinary course of business (the liens set
forth in clause (2) being referred to herein as "Statutory Liens"), or
(3) liens set forth on Schedules 5.10 and/or 5.16 hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(vii) negotiate for the acquisition of any business or the
start-up of any new business;
(viii) merge or consolidate or agree to merge or consolidate with
or into any other corporation;
50
(ix) waive any material rights or claims of the COMPANY, provided
that the COMPANY may negotiate and adjust bills in the course of good
faith disputes with customers in a manner consistent with past
practice, provided, further, that such adjustments shall not be deemed
to be included on Schedule 5.11 unless specifically listed thereon;
(x) commit a material breach or amend or terminate any material
agreement, permit, license or other right of the COMPANY; or
(xi) enter into any other transaction outside the ordinary course
of its business or prohibited hereunder.
7.4 NO SHOP. None of the STOCKHOLDERS, the COMPANY, or any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Funding and Consummation Date or the termination of this
Agreement in accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers
from any person or entity for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person or entity other than
TSII or its authorized agents relating to any acquisition or purchase
of all or a material amount of the assets of, or any equity interest
in, the COMPANY or a merger, consolidation or business combination of
the COMPANY.
51
7.5 NOTICE TO BARGAINING AGENTS. Prior to the Pre-Closing Date, the
COMPANY shall satisfy any requirement for notice of the transactions
contemplated by this Agreement under applicable collective bargaining
agreements, and shall provide TSII on Schedule 7.5 with proof that any required
notice has been sent.
7.6 AGREEMENTS. The STOCKHOLDERS and the COMPANY shall terminate (i)
any stockholders agreements, voting agreements, voting trusts, options, warrants
and employment agreements between the COMPANY and any employee listed on
Schedule 8.11 hereto and (ii) any existing agreement between the COMPANY and any
STOCKHOLDER, on or prior to the Funding and Consummation Date. Copies of such
termination agreements are listed on Schedule 7.6 and copies thereof are
attached hereto.
7.7 NOTIFICATION OF CERTAIN MATTERS. The STOCKHOLDERS and the COMPANY
shall give prompt notice to TSII of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of the COMPANY or the STOCKHOLDERS contained herein
to be untrue or inaccurate in any material respect at or prior to the
Pre-Closing and (ii) any material failure of any STOCKHOLDER or the COMPANY to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by such person hereunder. TSII shall give prompt notice to the
COMPANY of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
of TSII contained herein to be untrue or inaccurate in any material respect
52
at or prior to the Pre-Closing and (ii) any material failure of TSII to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder. The delivery of any notice pursuant to this Section
7.7 that is not accompanied by a proposed amendment or supplement to a schedule
pursuant to Section 7.8 shall not be deemed to (i) modify the representations or
warranties hereunder of the party delivering such notice, which modification may
only be made pursuant to Section 7.8, (ii) modify the conditions set forth in
Sections 8 and 9, or (iii) limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
7.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the anticipated
effectiveness of the Registration Statement to supplement or amend promptly the
Schedules hereto with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Schedules, provided, however, that
supplements and amendments to Schedules 5.10, 5.11, 5.14, 5.15 and 5.18 shall
only have to be delivered at the Pre- Closing Date, unless such Schedule is to
be amended to reflect an event occurring other than in the ordinary course of
business. Notwithstanding the foregoing sentence, no amendment or supplement to
a Schedule prepared by the COMPANY that constitutes or reflects an event or
occurrence that would have a Material Adverse Effect
53
may be made unless TSII and a majority of the Founding Companies other than the
COMPANY consent to such amendment or supplement; and provided further, that no
amendment or supplement to a Schedule prepared by TSII that constitutes or
reflects an event or occurrence that would have a Material Adverse Effect may be
made unless a majority of the Founding Companies consent to such amendment or
supplement. For all purposes of this Agreement, including without limitation for
purposes of determining whether the conditions set forth in Sections 8.1 and 9.1
have been fulfilled, the Schedules hereto shall be deemed to be the schedules as
amended or supplemented pursuant to this Section 7.8. In the event that one of
the Other Founding Companies seeks to amend or supplement a schedule pursuant to
Section 7.8 of one of the Other Agreements, and such amendment or supplement
constitutes or reflects an event or occurrence that would have a Material
Adverse Effect on such Other Founding Company, TSII shall give the COMPANY
notice promptly after it has knowledge thereof. If TSII and a majority of the
Founding Companies consent to such amendment or supplement, which consent shall
have been deemed given by TSII or any Founding Company if no response is
received within 24 hours following receipt of notice of such amendment or
supplement (or sooner if required by the circumstances under which such consent
is requested), but the COMPANY does not give its consent, the COMPANY may
terminate this Agreement pursuant to Section 12.l(iv) hereof. In the event that
the COMPANY seeks to amend or supplement a Schedule pursuant to this Section
7.8, and TSII and a majority of
54
the Other Founding Companies do not consent to such amendment or supplement,
this Agreement shall be deemed terminated by mutual consent as set forth in
Section 12.1(i) hereof. In the event that TSII seeks to amend or supplement a
Schedule pursuant to this Section 7.8 and a majority of the Founding Companies
do not consent to such amendment or supplement, this Agreement shall be deemed
terminated by mutual consent as set forth in Section 12.1(i) hereof. No party to
this Agreement shall be liable to any other party if this Agreement shall be
terminated pursuant to the provisions of this Section 7.8. The provisions of
this Section 7.8 shall be contained in the Other Agreements executed in
connection with TSII Plan of Organization.
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The COMPANY
and STOCKHOLDERS shall furnish or cause to be furnished to TSII and the
Underwriters all of the information concerning the COMPANY and the STOCKHOLDERS
required for inclusion in, and will cooperate with TSII and the Underwriters in
the preparation of, the Registration Statement and the prospectus included
therein (including audited and unaudited financial statements, prepared in
accordance with generally accepted accounting principles, in form suitable for
inclusion in the Registration Statement). The COMPANY and the STOCKHOLDERS agree
promptly to advise TSII if at any time during the period in which a prospectus
relating to the offering is required to be delivered under the 1933 Act, any
information contained in the prospectus concerning the COMPANY or the
STOCKHOLDERS becomes incorrect or incomplete in any material
55
respect, and to provide the information needed to correct such inaccuracy. TSII
will give the COMPANY and the STOCKHOLDERS an opportunity to review and comment
on the Registration Statement and all amendments thereto prior to filing.
Insofar as the information relates solely to the COMPANY or the STOCKHOLDERS,
the COMPANY represents and warrants as to such information with respect to
itself, and each STOCKHOLDER represents and warrants, as to such information
with respect to the COMPANY and himself or herself, that the Registration
Statement will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading and that each STOCKHOLDER and the COMPANY has had the opportunity to
review and approve such information. If, prior to the 25th day after the date of
the final prospectus of TSII utilized in connection with the IPO, the COMPANY or
the STOCKHOLDERS become aware of any fact or circumstance which would change
(or, if after the Funding and Consummation Date, would have changed) a
representation or warranty of the COMPANY or the STOCKHOLDERS in this Agreement
or would affect any document delivered pursuant hereto in any material respect,
the COMPANY and the STOCKHOLDERS shall immediately give notice of such fact or
circumstance to TSII. However, subject to the provisions of Section 7.8, such
notification shall not relieve either the COMPANY or the STOCKHOLDERS of their
respective obligations under this Agreement, and, subject to the provisions of
Section 7.8, at the
56
sole option of TSII, the truth and accuracy of any and all warranties and
representations of the COMPANY, or on behalf of the COMPANY and of STOCKHOLDERS
at the date of this Agreement and on the Pre-Closing Date and on the Funding and
Consummation Date, shall be a precondition to the consummation of this
transaction.
7.10 FINAL FINANCIAL STATEMENTS. The COMPANY shall provide prior to the
Funding and Consummation Date, and TSII shall have had sufficient time to
review, the unaudited balance sheets of the COMPANY as of the end of all fiscal
quarters following the Balance Sheet Date that would be required to be disclosed
in the Registration Statement, and the unaudited consolidated statement of
income, cash flows and retained earnings of the COMPANY and its consolidated
subsidiaries for all fiscal quarters ended after the Balance Sheet Date,
disclosing no material adverse change in the financial condition of the COMPANY
or the results of its operations from the financial statements as of the Balance
Sheet Date. Except as set forth on Schedule 7.10, such financial statements
shall have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as noted therein) and are accompanied by a report of independent public
accountants. Except as noted in such financial statements, all of such financial
statements will present fairly the results of operations of the COMPANY for the
periods indicated thereon and shall be for such dates and time periods as
required by Regulation S-X under the 1933 Act and the 1934 Act.
57
7.11 FURTHER ASSURANCES. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or convenient
to carry out the transactions contemplated hereby.
7.12 AUTHORIZED CAPITAL. TSII shall maintain its authorized capital
stock as set forth in the Registration Statement filed with the SEC except for
such changes in authorized capital stock as are made to respond to comments made
by the SEC or requirements of any exchange or automated trading system for which
application is made to register the TSII Stock.
7.13 FORMATION OF LLC AND TRANSFER OF ASSETS.
(i) Prior to the Pre-Closing Date, the COMPANY shall have
caused the due formation of a Delaware limited liability company that
is a wholly owned subsidiary of the COMPANY (the "LLC"), and the
COMPANY shall have delivered to TSII true and correct copies of all
formation and organization documents of the LLC. To the extent
requested by the COMPANY, TSII will assist with the formation and
organization of the LLC and will bear all reasonable costs associated
therewith.
(ii) Prior to the Pre-Closing Date, the COMPANY shall have
transferred, conveyed, assigned and delivered to the LLC, and the LLC
shall have acquired and accepted from the COMPANY: (a) all of the
assets held by the COMPANY and used by or useful to the COMPANY in
connection with the business of the COMPANY except for the Excluded
Assets, all of which assets
58
are set forth on Schedule 7.13 under the heading "Assets" (the
"Assets"); and (b) all of the obligations of the COMPANY in connection
with the business of the COMPANY, all of which obligations are set
forth on Schedule 7.13 under the heading "Obligations." All of the
Excluded Assets are set forth on Schedule 7.13 under the heading
"Excluded Assets."
(iii) Prior to the Closing Date, the COMPANY shall have
amended its legal name and fictitious names in all applicable
jurisdictions and shall have provided for the LLC to operate and
conduct business in such jurisdictions under the names currently used
in such jurisdictions by the COMPANY, and all reasonable costs therefor
shall be borne by TSII.
7.14 BEST EFFORTS TO CONSUMMATE TRANSACTION. TSII agrees to use its
commercially reasonable best efforts to effectuate the acquisition of the
businesses of the Founding Companies pursuant to the Other Agreements, and an
initial public offering pursuant to the Registration Statement of shares of
common stock of TSII.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND
COMPANY
The obligations of STOCKHOLDERS and the COMPANY with respect to actions
to be taken on the Pre-Closing Date are subject to the satisfaction or waiver on
or prior to the Pre-Closing Date of all of the following conditions. The
obligations of the STOCKHOLDERS and the COMPANY with respect to actions to be
taken on the Funding and Consummation Date are subject to the satisfaction or
waiver on
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or prior to the Funding and Consummation Date of the conditions set forth in
Sections 8.2, 8.3, 8.8 and 8.9. From and after the Pre- Closing Date or, with
respect to the conditions set forth in Sections 8.2, 8.3, 8.8 and 8.9, from and
after the Funding and Consummation Date, all conditions not satisfied shall be
deemed to have been waived, except that no such waiver shall be deemed to affect
the survival of the representations and warranties of TSII contained in Section
6 hereof.
8.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of TSII contained in Section 6 shall be true and correct in all material
respects as of the Pre-Closing Date as though such representations and
warranties had been made as of that time; and a certificate to the foregoing
effect dated the Pre-Closing Date and signed by the President or any Vice
President of TSII shall have been delivered to the STOCKHOLDERS.
8.2 PERFORMANCE OF OBLIGATIONS. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by TSII on or
before the Pre-Closing Date and the Funding and Consummation Date shall have
been duly complied with and performed in all material respects; and certificates
to the foregoing effect dated the Pre-Closing Date and the Funding and
Consummation Date and signed by the President or any Vice President of TSII
shall have been delivered to the STOCKHOLDERS.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated
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hereby or the IPO and no governmental agency or body shall have taken any other
action or made any request of the COMPANY as a result of which the management of
the COMPANY deems it inadvisable to proceed with the transactions hereunder.
8.4 OPINION OF COUNSEL. The COMPANY and the Underwriters shall have
received an opinion from counsel for TSII, dated the Pre-Closing Date, in the
forms annexed hereto as Annex VI and IX.
8.5 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC and the underwriters named therein shall have
agreed to acquire on a firm commitment basis, subject to the conditions set
forth in the underwriting agreement, on terms such that the aggregate value of
the cash and the number of shares of TSII stock to be received by the
STOCKHOLDERS is not less than the Minimum Value set forth on Annex III.
8.6 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transaction contemplated herein shall have been obtained and made.
8.7 GOOD STANDING CERTIFICATES. TSII shall have delivered to the
COMPANY a certificate, dated as of a date no later than ten days prior to the
Pre-Closing Date, duly issued by the Delaware Secretary of State and in each
state in which TSII is authorized to do business, showing that TSII is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for TSII for all periods prior to the Pre-Closing
have been filed and paid.
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8.8 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to TSII which would constitute a Material Adverse Effect,
and TSII shall not have suffered any material loss or damages to any of its
properties or assets, whether or not covered by insurance, which change, loss or
damage materially affects or impairs the ability of TSII to conduct its
business.
8.9 CLOSING OF IPO. The closing of the sale of the TSII Stock to the
Underwriters in the IPO and the acquisitions of the Other Founding Companies
pursuant to the Other Agreements shall have occurred simultaneously with the
Funding and Consummation Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The COMPANY shall have received a
certificate or certificates, dated the Pre-Closing Date and signed by the
secretary of TSII, certifying the truth and correctness of attached copies of
TSII's Certificate of Incorporation (including amendments thereto), By-Laws
(including amendments thereto), and resolutions of the board of directors and,
if required, the stockholders of TSII approving TSII's entering into this
Agreement and the consummation of the transactions contemplated hereby. Such
certificate or certificates also shall be addressed to the Underwriters and
copies thereof shall be delivered to the Underwriters.
8.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 8.11
shall have been afforded the opportunity to enter
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into an employment agreement substantially in the form of Annex VIII hereto.
8.12 DIRECTORS AND OFFICERS INSURANCE. TSII shall have obtained
Directors and Officers Liability Insurance in amounts that are customary and
commercially reasonable.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF TSII
The obligations of TSII with respect to actions to be taken on the
Pre-Closing Date are subject to the satisfaction or waiver on or prior to the
Pre-Closing Date of all of the following conditions. The obligations of TSII
with respect to actions to be taken on the Funding and Consummation Date are
subject to the satisfaction or waiver on or prior to the Funding and
Consummation Date of the conditions set forth in Sections 9.2, 9.3, 9.5 and
9.13. From and after the Pre-Closing Date or, with respect to the conditions set
forth in Sections 9.2, 9.3, 9.5 and 9.13, from and after the Funding and
Consummation Date, all conditions not satisfied shall be deemed to have been
waived, except that no such waiver shall be deemed to affect the survival of the
representations and warranties of the COMPANY contained in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of the STOCKHOLDERS and the COMPANY contained in this Agreement shall be true
and correct in all material respects as of the Pre-Closing Date and the Funding
and Consummation Date with the same effect as though such representations and
warranties had been
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made on and as of such date; and the STOCKHOLDERS shall have delivered to TSII
certificates dated the Pre-Closing Date and signed by them to such effect.
9.2 PERFORMANCE OF OBLIGATIONS. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by the
STOCKHOLDERS and the COMPANY on or before the Pre-Closing Date or the Funding
and Consummation Date, as the case may be, shall have been duly performed or
complied with in all material respects; and the STOCKHOLDERS and the COMPANY
shall have delivered to TSII certificates dated the Pre-Closing Date and the
Funding and Consummation Date, respectively, and signed by them to such effect.
9.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions contemplated hereby or the IPO and no governmental
agency or body shall have taken any other action or made any request of TSII as
a result of which the management of TSII deems it inadvisable to proceed with
the transactions hereunder.
9.4 SECRETARY'S CERTIFICATE. TSII shall have received a certificate,
dated the Pre-Closing Date and signed by the secretary of the COMPANY,
certifying the truth and correctness of attached copies of the COMPANY's
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors and the
STOCKHOLDERS approving the COMPANY's entering into this Agreement and the
consummation of the transactions contemplated hereby. Such
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certificate also shall be addressed to the Underwriters and a copy thereof shall
be delivered to the Underwriters.
9.5 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the COMPANY which would constitute a Material Adverse
Effect, and the COMPANY shall not have suffered any material loss or damages to
any of its properties or assets, whether or not covered by insurance, which
change, loss or damage materially affects or impairs the ability of the COMPANY
to conduct its business.
9.6 STOCKHOLDERS' RELEASE. The STOCKHOLDERS shall have delivered to
TSII an instrument dated the Pre-Closing Date releasing the COMPANY and the LLC
from (i) any and all claims of the STOCKHOLDERS against the COMPANY and the LLC
and (ii) obligations of the COMPANY or the LLC to the STOCKHOLDERS, except for
(x) items specifically identified on Schedules 5.10, 5.11 and 5.16 as being
claims of or obligations to the STOCKHOLDERS, (y) continuing obligations to
STOCKHOLDERS relating to their employment by the COMPANY or the LLC and (z)
obligations arising under this Agreement or the transactions contemplated
hereby.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 9.7, all existing agreements between the COMPANY and the STOCKHOLDERS
shall have been cancelled effective prior to or as of the Funding and
Consummation Date.
9.8 OPINION OF COUNSEL. TSII shall have received an opinion from
Counsel to the COMPANY and the STOCKHOLDERS, dated the Pre- Closing Date,
substantially in the form annexed hereto as Annex
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VII, and the Underwriters shall have received a copy of the same opinion
addressed to the Underwriters.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made and all
consents and approvals of third parties listed on Schedule 5.23 shall have been
obtained.
9.10 GOOD STANDING CERTIFICATES. The COMPANY shall have delivered to
TSII a certificate, dated as of a date no earlier than ten days prior to the
Pre-Closing Date, duly issued by the appropriate governmental authority in the
COMPANY's state of incorporation and, unless waived by TSII, in each state in
which the COMPANY is authorized to do business, showing the COMPANY is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the COMPANY for all periods prior to the
Pre-Closing have been filed and paid.
9.11 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
9.12 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 8.11
shall have entered into an employment agreement substantially in the form of
Annex VIII hereto.
9.13 CLOSING OF IPO. The closing of the sale of the TSII Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
9.14 FIRPTA CERTIFICATE. Each STOCKHOLDER shall have delivered to TSII
a certificate to the effect that he or she is not
66
a foreign person pursuant to Section 1.1445-2(b) of the Treasury regulations.
9.15 INSURANCE. TSII shall have been named as an additional insured on
all insurance policies of the LLC and certificates of insurance to that effect
shall have been delivered to TSII. TSII shall reimburse the LLC for the
incremental cost of having TSII so named as an additional insured.
9.16 LOCKUP AGREEMENT. The COMPANY shall have signed an agreement with
the Underwriters, in form and substance identical to agreements signed by the
Founding Stockholders in connection with the Other Agreements, by which the
COMPANY covenants to hold all of the TSII Stock acquired hereunder for a period
of at least 180 days after the Funding and Consummation Date, which 180-day
period shall run concurrently with the one-year period described in Section
15.1.
10. COVENANTS OF TSII AND THE STOCKHOLDERS AFTER CLOSING
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. TSII
shall, contemporaneously with the Funding and Consummation Date, use its best
efforts to have the STOCKHOLDERS released from any and all guarantees on any
indebtedness and trade credits that they personally guaranteed and from any and
all pledges of assets that they pledged to secure such indebtedness for the
benefit of the COMPANY, with all such guarantees on indebtedness being assumed
by TSII. In the event that TSII cannot obtain such releases from the lenders of
any such guaranteed
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indebtedness on the Funding and Consummation Date, TSII shall pay off or
otherwise refinance or retire such indebtedness on the Funding and Consummation
Date. TSII shall indemnify and hold harmless STOCKHOLDERS from the payment of
any guaranties on any indebtedness or contractual obligations that STOCKHOLDERS
had incurred prior to the Pre-Closing Date provided that such indebtedness or
obligations are related to the business of the COMPANY as being conducted at the
Pre-Closing Date whether or not previously disclosed.
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as
contemplated by this Agreement or the Registration Statement, after the Funding
and Consummation Date, TSII shall not and shall not permit any of its
subsidiaries to undertake any act that would jeopardize the tax-free status of
the transaction, including:
(a) the retirement or reacquisition, directly or indirectly, of
all or part of the TSII stock issued in connection with the
transactions contemplated hereby; or
(b) the entering into of financial arrangements for the benefit
of the STOCKHOLDERS.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The COMPANY shall, if possible, file or cause to be filed all
separate Returns of any Acquired Party for all taxable periods that
end on or before the Funding and Consummation Date. The COMPANY shall
pay or cause to be paid all Tax liabilities (in excess of all amounts
already paid with respect thereto or properly accrued or reserved with
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respect thereto on the COMPANY Financial Statements and books and
records) shown by such Returns to be due, provided, however, that the
STOCKHOLDERS shall pay or cause to be paid all taxes due on Subchapter
S distributions to the STOCKHOLDERS.
(ii) TSII shall file or cause to be filed all separate Returns
of, or that include, any Acquired Party for all taxable periods ending
after the Funding and Consummation Date.
(iii) Each party hereto shall, and shall cause its subsidiaries
and affiliates to, provide to each of the other parties hereto such
cooperation and information as any of them reasonably may request in
filing any Return, amended Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any
audit or other proceeding in respect of Taxes. Such cooperation and
information shall include providing copies of all relevant portions of
relevant Returns, together with relevant accompanying schedules and
relevant work papers, relevant documents relating to rulings or other
determinations by taxing authorities and relevant records concerning
the ownership and Tax basis of property, which such party may possess.
Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents
or information so provided. Subject to the preceding sentence, each
party
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required to file Returns pursuant to this Agreement shall bear all
costs of filing such Returns.
(iv) Each of the COMPANY, TSII and each STOCKHOLDER shall comply
with the tax reporting requirements of Section 1.351-3 of the Treasury
Regulations promulgated under the Code, and treat the transaction as a
transfer to a controlled corporation under Section 351(a) of the Code.
10.4 DIRECTORS AND OFFICERS. The persons named in the Registration
Statement shall be appointed as directors and elected as officers of TSII, as
and to the extent set forth in the Registration Statement, promptly following
the Funding and Consummation Date. TSII shall make arrangements to compensate
each Director for attending meetings of the Board of Directors and to reimburse
them for related expenses. The STOCKHOLDER not appointed as a Director shall be
entitled to attend all meetings of the Board of Directors.
10.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS. Following the Funding and
Consummation Date, TSII shall not terminate any health insurance, life insurance
or 401(k) plan in effect at the COMPANY until such time as TSII is able to
replace such plan with a plan that is applicable to TSII and all of its then
existing subsidiaries. TSII shall have no obligation to provide replacement
plans that have the same terms and provisions as the existing plans, except as
required by ERISA; provided, however, that any new health insurance plan shall
provide for coverage for preexisting conditions.
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10.6 MAINTENANCE OF BOOKS. TSII will cause the COMPANY (a) to maintain
the books and records of the COMPANY existing prior to the Pre-Closing Date for
a period of six years after the Pre-Closing Date and (b) to make such books and
records available to the STOCKHOLDERS for any reasonable purpose.
11. INDEMNIFICATION
The COMPANY, STOCKHOLDERS and TSII each make the following covenants
that are applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY COMPANY AND STOCKHOLDERS. The COMPANY
and the STOCKHOLDERS covenant and agree that they, jointly and severally, will
indemnify, defend, protect and hold harmless TSII and the LLC at all times, from
and after the date of this Agreement until the Expiration Date, from and against
all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by TSII or
the LLC as a result of or arising from (i) any breach of the representations and
warranties of the STOCKHOLDERS or the COMPANY set forth herein or on the
schedules or certificates delivered in connection herewith, (ii) any breach of
any agreement on the part of the STOCKHOLDERS or the COMPANY under this
Agreement, (iii) any liability under the 1933 Act, the 1934 Act or other federal
or state law or regulation, at common law or otherwise, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
relating
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to the COMPANY or the STOCKHOLDERS, and provided to TSII or its counsel by the
COMPANY or the STOCKHOLDERS contained in the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact relating to the COMPANY or the STOCKHOLDERS
required to be stated therein or necessary to make the statements therein not
misleading, or (iv) the matters described on Schedule 11.1(iv) (relating to
specifically identified matters such as ongoing claims and/or litigation), which
schedule shall be prepared by TSII; provided, however, (A) that in the case of
any indemnity arising pursuant to clause (iii) such indemnity shall not inure to
the benefit of TSII or the LLC to the extent that such untrue statement (or
alleged untrue statement) was made in, or omission (or alleged omission)
occurred in, any preliminary prospectus and the STOCKHOLDERS provided, in
writing, corrected information to TSII counsel and to TSII for inclusion in the
final prospectus, and such information was not so included or properly
delivered, and (B) that no STOCKHOLDER shall be liable for any indemnification
obligation pursuant to this Section 11.1 to the extent attributable to a breach
of any representation, warranty or agreement made herein individually by any
other STOCKHOLDER.
11.2 INDEMNIFICATION BY TSII. TSII covenants and agrees that it will
indemnify, defend, protect and hold harmless the COMPANY and the STOCKHOLDERS at
all times from and after the date of this Agreement until the Expiration Date,
from and against all claims,
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damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by the COMPANY or the
STOCKHOLDERS as a result of or arising from (i) any breach by TSII of its
representations and warranties set forth herein or on the schedules or
certificates attached hereto, (ii) any nonfulfillment of any agreement on the
part of TSII under this Agreement, (iii) any liabilities which the COMPANY or
the STOCKHOLDERS may incur due to TSII's failure to be responsible for the
liabilities and obligations of the LLC as provided in Section 1 hereof; (iv) any
liability under the 1933 Act, the 1934 Act or other federal or state law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating to TSII or any
of the Other Founding Companies contained in any preliminary prospectus, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to TSII
or any of the Other Founding Companies required to be stated therein or
necessary to make the statements therein not misleading, (v) the matters
described on Schedule 11.2(v) (relating to specifically identified matters),
which schedule shall be prepared by the STOCKHOLDERS or (vi) being named as a
party to litigation which relates to actions of TSII or the Other Founding
Companies.
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11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter
the "Indemnified Party") has received notice of or has knowledge of any claim by
a person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle (such settlement to be subject to the consent of the
Indemnified Party, as hereinafter provided), at its own expense and by its own
counsel, any such matter so long as the Indemnifying Party pursues the same in
good faith and diligently, provided that the Indemnifying Party shall not settle
any criminal proceeding without the written consent of the Indemnified Party. If
the Indemnifying Party undertakes to defend or settle, it shall promptly notify
the Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified
74
Parties shall use the same counsel, which shall be the counsel selected by the
Indemnifying Party, provided that if counsel to the Indemnifying Party shall
have a conflict of interest that prevents counsel for the Indemnifying Party
from representing the Indemnified Party, the Indemnified Party shall have the
right to participate in such matter through counsel of its own choosing and the
Indemnifying Party will reimburse the Indemnified Party for the reasonable
expenses of its counsel. Further, absent a conflict, the Indemnified Party may
select counsel and have such counsel participate in such matter at the sole cost
of the Indemnified Party. After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any defense
or settlement of such asserted liability, except (i) as set forth in the
preceding sentence and (ii) to the extent such participation is requested by the
Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses and
out-of-pocket expenses. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person. If the
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Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnifying Party shall reimburse the Indemnified Party for the amount paid
in such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith, provided, however, that under no
circumstances shall the Indemnified Party settle any Third Person claim without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for insurance proceeds in determining the amount of any
indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section
11 shall (except as prohibited by ERISA) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party, provided, however, that nothing herein
shall be construed to limit the right of a party, in a proper case, to seek
injunctive relief for a breach of this Agreement. The obligations set forth
herein are contingent upon similar obligations being incorporated in connection
with all of the Other Agreements.
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11.5 LIMITATIONS ON INDEMNIFICATION. TSII, the LLC and the other
persons or entities indemnified pursuant to Section 11.1 shall not assert any
claim for indemnification hereunder against the COMPANY or the STOCKHOLDERS
until such time as, and solely to the extent that, the aggregate of all claims
which such persons may have against the COMPANY and such STOCKHOLDERS shall
exceed 2.0% of the sum of (i) the cash paid to the COMPANY and (ii) the value of
the TSII Stock delivered to the COMPANY (the "Indemnification Threshold"),
provided, however, that TSII, the LLC and the other persons or entities
indemnified pursuant to Section 11.1 may assert and shall be indemnified for any
claim under Section 11.l(iv) at any time, regardless of whether the aggregate of
all claims which such persons may have against the COMPANY or any STOCKHOLDER or
all STOCKHOLDERS exceeds the Indemnification Threshold, it being understood that
the amount of any such claim under Section 11.1(iv) shall not be counted towards
the Indemnification Threshold. The COMPANY and the STOCKHOLDERS shall not assert
any claim for indemnification hereunder against TSII until such time as, and
solely to the extent that, the aggregate of all claims which the COMPANY or the
STOCKHOLDERS may have against TSII shall exceed $50,000, provided, however, that
the COMPANY, the STOCKHOLDERS and the other persons or entities indemnified
pursuant to Section 11.2 may assert and shall be indemnified for any claim under
Section 11.2(v) at any time, regardless of whether the aggregate of all claims
which such persons may have against any of TSII or the LLC exceeds $50,000, it
being understood that the amount of any such
77
claim under Section 11.2(v) shall not be counted towards such $50,000 amount. No
person shall be entitled to indemnification under this Section 11 if and to the
extent that such person's claim for indemnification is directly or indirectly
related to a breach by such person of any representation, warranty, covenant or
other agreement set forth in this Agreement.
Notwithstanding any other term of this Agreement (except the proviso to
this sentence), none of the COMPANY or the STOCKHOLDERS shall be liable under
this Section 11 for an amount which exceeds the amount of proceeds received by
the COMPANY in connection with the transactions contemplated hereby, provided
that the COMPANY's and each STOCKHOLDER's indemnification obligations pursuant
to Section 11.1(iv) shall not be limited. Indemnity obligations hereunder may be
satisfied through the payment of cash or the delivery of TSII Stock, or a
combination thereof, at the COMPANY's or the STOCKHOLDER's election. For
purposes of calculating the value of the TSII Stock received or delivered by the
COMPANY or the STOCKHOLDERS (for purposes of determining the Indemnification
Threshold, the limitation on indemnity set forth in the second preceding
sentence and the amount of any indemnity paid), TSII Stock shall be valued at
its initial public offering price as set forth in the Registration Statement.
Any indemnification payment made by the COMPANY or the STOCKHOLDERS pursuant to
this Section 11 shall be deemed to be a reduction in the consideration received
by the COMPANY pursuant to Section 3.
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12. TERMINATION OF AGREEMENT
12.1 TERMINATION. This Agreement may be terminated by written notice
from the party asserting termination to the other parties at any time prior to
the Funding and Consummation Date solely:
(i) by mutual consent of the boards of directors of TSII and the
COMPANY;
(ii) by the STOCKHOLDERS or the COMPANY (acting through its board of
directors), on the one hand, or by TSII (acting through its board of directors),
on the other hand, if the transactions contemplated by this Agreement to take
place at the Pre-Closing shall not have been consummated by September 30, 1997,
unless the failure of such transactions to be consummated is due to the willful
failure of the party seeking to terminate this Agreement to perform any of its
obligations under this Agreement to the extent required to be performed by it
prior to or on the Funding and Consummation Date;
(iii) by the STOCKHOLDERS or COMPANY, on the one hand, or by TSII, on
the other hand, if a material breach or default shall be made by the other party
in the observance or in the due and timely performance of any of the covenants,
agreements or conditions contained herein, and the curing of such default shall
not have been made on or before the Funding and Consummation Date;
(iv) pursuant to Section 7.8 hereof; or
(v) pursuant to Section 4 hereof.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section
7.8 hereof, the termination of this Agreement will in no
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way limit any obligation or liability of any party based on or arising from a
breach or default by such party with respect to any of its representations,
warranties, covenants or agreements contained in this Agreement including, but
not limited to, legal and audit costs and out of pocket expenses relating to the
transactions contemplated hereby specifically relating to the COMPANY. No party
hereto shall be liable to any other party if the Agreement is terminated under
Sections 12.1(i), (ii) (except as set forth therein), (iv) or (v).
12.3 RETURN OF DATA SUBMITTED. Upon termination of this Agreement for
any reason, TSII will cause the return to the COMPANY of all data, and all
copies thereof, submitted to it or its agents pursuant to this Agreement.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. Provided that TSII shall have complied with
and performed all of its obligations hereunder and that the COMPANY shall have
received payment in full of the consideration described in Section 3, the
STOCKHOLDERS and the COMPANY shall not, for a period of three (3) years
following the Funding and Consummation Date, for any reason whatsoever, directly
or indirectly, for themselves or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether
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as an employee, independent contractor, consultant or advisor, or as a
sales representative, in the same or similar business of the COMPANY on
the Pre-Closing Date in direct competition with TSII or any of the
subsidiaries thereof, in the United States of America (the
"Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of TSII (including the subsidiaries thereof) in
a sales representative or managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the employ of
TSII (including the subsidiaries thereof), provided that each
STOCKHOLDER shall be permitted to call upon and hire any member of his
or her immediate family;
(iii) call upon any person or entity which is at that time, or
which has been, within one (l) year prior to the Funding and
Consummation Date, a customer of TSII (including the subsidiaries
thereof), of the COMPANY or of any of the Other Founding Companies
within the Territory for the purpose of soliciting or selling products
or services in direct competition with TSII within the Territory;
(iv) call upon any prospective acquisition candidate, on the
COMPANY's or any STOCKHOLDER's own behalf or on behalf of any
competitor in the travel services business, which candidate, to the
actual knowledge of the COMPANY or such STOCKHOLDER after due inquiry,
was called upon by TSII (including the subsidiaries thereof) or for
which, to the actual knowledge of the COMPANY or such STOCKHOLDER after
due
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inquiry, TSII (or any subsidiary thereof) made an acquisition
analysis, for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of the
COMPANY or the LLC to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever except to the extent
that the COMPANY has in the past disclosed such information to the
types of persons to whom disclosure is then presently contemplated for
valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit any STOCKHOLDER from acquiring as an investment not more than two
percent (2%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over-the-counter.
13.2 DAMAGES. Because of the difficulty of measuring economic losses to
TSII as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to TSII for which it would
have no other adequate remedy, the COMPANY and each STOCKHOLDER agrees that the
foregoing covenant may be enforced by TSII in the event of breach by the COMPANY
or such STOCKHOLDER, by injunctions and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
COMPANY and the STOCKHOLDERS in light of the activities and business of TSII
(including the subsidiaries
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thereof) on the date of the execution of this Agreement and the current plans of
TSII.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 EFFECTIVENESS. It is specifically agreed that the period of three
(3) years stated at the beginning of this Section 13, during which the
agreements and covenants of the COMPANY and each STOCKHOLDER made in this
Section 13 shall be effective, shall be computed by excluding from such
computation any time during which the COMPANY or such STOCKHOLDER is in
violation of any provision of this Section 13. The covenants contained in
Section 13 shall have no effect if the transactions contemplated by this
Agreement are not consummated nor may such covenants be enforced by any party to
this Agreement that is in breach of its obligations hereunder.
13.6 MATERIALITY. The COMPANY and the STOCKHOLDERS hereby agree that
the covenants in this Section 13 are a material and substantial part of this
transaction.
13.7 LIMITATIONS. In the event that any STOCKHOLDER who is employed by
TSII pursuant to an employment agreement is terminated
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without cause (as defined in such employment agreement), the provisions of this
Section 13 shall no longer be valid or enforceable by TSII. If such employment
agreement contains provisions relating to the same subject matter as this
Section 13 that are less restrictive than set forth in this Section 13, the
provisions of such employment agreement shall control as long as such employment
is in effect.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS. The COMPANY and the STOCKHOLDERS recognize and
acknowledge that they had in the past, currently have, and in the future may
possibly have, access to certain confidential information of the COMPANY, the
LLC, the Other Founding Companies, and/or TSII, such as operational policies,
and pricing and cost policies that are valuable, special and unique assets of
the COMPANY's, the LLC's, the Other Founding Companies' and/or TSII's respective
businesses. The COMPANY and the STOCKHOLDERS agree that they shall not disclose
such confidential information to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except (a) to authorized
representatives of TSII, (b) following the Funding and Consummation Date, such
information may be disclosed by the STOCKHOLDERS as is required in the course of
performing their duties for TSII or the LLC and (c) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 14.1, unless (i) such information is
or
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becomes known to the public generally or to businesses operating in the same
industry through no fault of the COMPANY and the STOCKHOLDERS, (ii) disclosure
is required by law or the order of any governmental authority under color of
law, provided, however, that prior to disclosing any information pursuant to
this clause (ii), the COMPANY and the STOCKHOLDERS shall, if possible, give two
days' prior written notice thereof to TSII and provide TSII with the opportunity
within such two-day period to contest such disclosure, or (iii) the disclosing
party reasonably believes that such disclosure is required in connection with
the defense of a lawsuit against the disclosing party. In the event of a breach
or threatened breach by the COMPANY or any of the STOCKHOLDERS of the provisions
of this Section, TSII shall be entitled to an injunction restraining the COMPANY
and such STOCKHOLDERS from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting TSII from pursuing
any other available remedy for such breach or threatened breach, including the
recovery of damages. In the event the transactions contemplated by this
Agreement are not consummated, the COMPANY and the STOCKHOLDERS shall have none
of the above-mentioned restrictions on their ability to disseminate confidential
information with respect to the COMPANY or the LLC.
14.2 TSII. TSII recognizes and acknowledges that TSII had in the past
and currently has access to certain confidential information of the COMPANY,
such as operational policies, and pricing and cost policies that are valuable,
special and unique
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assets of the COMPANY's business. TSII agrees that, prior to the Funding and
Consummation Date, or if the transactions contemplated by this Agreement are not
consummated, it will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of the COMPANY, (b) to
counsel and other advisers, provided, however, that such advisors (other than
counsel) agree to the confidentiality provisions of this Section 14.2 and (c) to
the Other Founding Companies and their representatives pursuant to Section
7.1(a), unless (i) such information becomes known to the public generally
through no fault of TSII, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, however, that prior to
disclosing any information pursuant to this clause (ii), TSII shall, unless
otherwise required by law or such order, give two days' prior written notice
thereof to the COMPANY and the STOCKHOLDERS and provide the COMPANY and the
STOCKHOLDERS with the opportunity within such two-day period to contest such
disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. TSII will disclose confidential information relating to the
COMPANY to the Other Founding Companies only if such companies have agreed, in
advance, to treat such information as confidential. In the event of a breach or
threatened breach by TSII of the provisions of this Section, the COMPANY and the
STOCKHOLDERS shall be entitled to an injunction
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restraining TSII from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting the COMPANY and
the STOCKHOLDERS from pursuing any other available remedy for as such breach or
threatened breach, including the recovery of damages. All confidential data
shall be returned to the COMPANY and the STOCKHOLDERS as set forth in Section
12.3.
14.3 DAMAGES. Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14
shall survive the termination of this Agreement for a period of three years from
(a) the Funding and Consummation Date if the transactions contemplated hereby
are consummated or (b) the date hereof if the transactions contemplated hereby
are not consummated.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS. Except for transfers to Affiliates of the
COMPANY who agree to be bound by the restrictions set forth in this Section
15.1, for a period of one year from the
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Funding and Consummation Date, except pursuant to Section 17 hereof, the COMPANY
shall not sell, assign, exchange, transfer, distribute or otherwise dispose of
any shares of TSII Stock received by the COMPANY as described in Section 3.1.
The certificates evidencing the TSII Stock delivered to the COMPANY pursuant to
Section 3 of this Agreement shall bear a legend substantially in the form set
forth below and containing such other information as TSII may deem necessary or
appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION PRIOR TO [first anniversary of
Closing Date]. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE
ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH
THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE (AS IT MAY BE REDUCED AS
PROVIDED HEREIN).
15.2 CERTAIN TRANSFERS. Except for transfers to Affiliates of the
COMPANY who agree to be bound by the restrictions set forth in Section 15.1 and
except pursuant to Section 17 hereof, regardless of whether transfers of such
shares are restricted pursuant to the terms of this Agreement, during the
two-year period commencing on the Funding and Consummation Date, the COMPANY
shall not sell, assign, exchange, transfer, distribute or otherwise dispose of,
in any transaction or series of transactions involving more than 5,000 shares (a
"Future Sale"), any shares of TSII Stock as described in Section 3.1 received by
the COMPANY in the transaction contemplated hereby except in accordance with
this Section 15.2. If the COMPANY desires to make a Future Sale, the COMPANY
shall first provide
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written notice thereof to TSII. As soon as practicable after receipt of such
notice by TSII, TSII shall designate in writing to the COMPANY the names and
other pertinent information of two investment banks or market makers through
whom the Future Sale may be made. The COMPANY may not make the Future Sale
except through one of the designated investment banks or market makers for TSII
Stock; provided, however, that the terms of such Future Sale (including
commissions) shall be at least as favorable to the COMPANY as the COMPANY would
have received in the absence of this Section 15.2. Upon the sale of any
unregistered letter stock of TSII subject to resale volume limitations contained
in federal securities laws, the COMPANY and the STOCKHOLDERS, together with the
other Founding Stockholders, shall have the first priority in the sale of
unregistered letter stock on a prorata basis based on the shares issued and
outstanding to the COMPANY, the STOCKHOLDERS and such Founding Stockholders.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
The COMPANY acknowledges that the shares of TSII Stock to be delivered
to the COMPANY pursuant to this Agreement have not been and will not be
registered under the 1933 Act and therefore may not be resold without compliance
with the 1933 Act. The TSII Stock to be acquired by the COMPANY pursuant to this
Agreement is being acquired solely for its own account, for investment purposes
only, and with no present intention of distributing, selling or otherwise
disposing of it in connection with a distribution.
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16.1 COMPLIANCE WITH LAW. Each of the COMPANY and the STOCKHOLDERS
covenants, warrants and represents that none of the shares of TSII Stock issued
to the COMPANY will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the 1933 Act and the rules and regulations of the
SEC. All of the TSII Stock shall bear the following legend in addition to the
legend required under Section 15 of this Agreement: THE SHARES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE
ACT AND APPLICABLE SECURITIES LAW.
16.2 ECONOMIC RISK; SOPHISTICATION. The COMPANY is able to bear the
economic risk of an investment in the TSII Stock acquired pursuant to this
Agreement and can afford to sustain a total loss of such investment and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment in the TSII Stock.
The COMPANY and the STOCKHOLDERS have had an adequate opportunity to ask
questions and receive answers from the officers of TSII concerning any and all
matters relating to the transactions described herein including, without
limitation, the background and experience of the current and proposed officers
and directors of TSII, the plans for the operations of the business of TSII, the
business, operations and financial condition of the Founding Companies other
than the COMPANY, and any plans for additional
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acquisitions and the like. The COMPANY and the STOCKHOLDERS have asked any and
all questions in the nature described in the preceding sentence and all
questions have been answered to their satisfaction.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. Notwithstanding any provisions of
this Agreement to the contrary other than the provisions of Section 17.5, at any
time following the Funding and Consummation Date, whenever TSII proposes to
register any TSII Stock for its own or others account under the 1933 Act for a
public offering, other than (i) any shelf registration of shares to be used as
consideration for acquisitions of additional businesses by TSII and (ii)
registrations relating to employee benefit plans, TSII shall give the COMPANY
prompt written notice of its intent to do so. Upon the written request of the
COMPANY given within 30 days after receipt of such notice, TSII shall cause to
be included in such registration all of the TSII Stock issued to the COMPANY
pursuant to this Agreement which the COMPANY requests, provided that TSII shall
have the right to reduce the number of shares included in such registration to
the extent that inclusion of such shares could, in the written opinion of tax
counsel to TSII or its independent auditors, jeopardize the status of the
transactions contemplated hereby and by the Registration Statement as a tax-free
organization. In addition, if TSII is advised in writing in good faith by any
managing underwriter of an underwritten offering of
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the securities being offered pursuant to any registration statement under this
Section 17.1 that the number of shares to be sold by persons other than TSII is
greater than the number of such shares which can be offered without adversely
affecting the offering, TSII may reduce pro rata the number of shares offered
for the accounts of such persons (based upon the number of shares desired to be
sold by such person) to a number deemed satisfactory by such managing
underwriter, provided, that, notwithstanding Section 15.1 hereof, for each such
offering made by TSII after the IPO, such reduction shall be made first by
reducing the number of shares to be sold by persons other than TSII, the COMPANY
and the Other Founding Companies or the stockholders thereof who receive shares
of TSII Stock pursuant to the Other Agreements (collectively, the COMPANY and
the Other Founding Companies or the stockholders thereof who receive shares of
TSII Stock pursuant to the Other Agreements being referred to herein as the
"Founding Stockholders"), and thereafter, if a further reduction is required, by
reducing the number of shares to be sold by the Founding Stockholders.
17.2 DEMAND REGISTRATION RIGHTS. At any time after the date two years
after the Pre-Closing, the holders of a majority of the shares of TSII Stock
issued to the Founding Stockholders pursuant to this Agreement and the Other
Agreements which have not been previously registered or sold and which are not
entitled to be sold under Rule 144(k) (or any similar or successor provision)
promulgated under the 1933 Act may request in writing that TSII file a
registration statement under the 1933 Act covering the
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registration of the shares of TSII Stock issued to the COMPANY pursuant to this
Agreement and the Other Agreements then held by such Founding Stockholders (a
"Demand Registration"). Within ten (10) days of the receipt of such request,
TSII shall give written notice of such request to all other Founding
Stockholders and shall, as soon as practicable but in no event later than 45
days after notice from the COMPANY, file and use its best efforts to cause to
become effective a registration statement covering all such shares. TSII shall
be obligated to effect only one Demand Registration for all Founding
Stockholders.
Notwithstanding the foregoing paragraph, following such a demand a
majority of TSII's disinterested directors (i.e., directors who have not
demanded or elected to sell shares in any such public offering) may defer the
filing of the registration statement for a 60 day period.
If at the time of any request by the Founding Stockholders for a Demand
Registration TSII has fixed plans to file within 60 days after such request a
registration statement covering the sale of any of its securities in a public
offering under the 1933 Act, no registration of the Founding Stockholders' TSII
Stock shall be initiated under this Section 17.2 until 90 days after the
effective date of such registration unless TSII is no longer proceeding
diligently to effect such registration; provided that TSII shall provide the
Founding Stockholders the right to participate in such public offering pursuant
to, and subject to, Section 17.1 hereof.
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17.3 REGISTRATION PROCEDURES. All expenses incurred in connection with
the registrations under this Article 17 (including all registration, filing,
qualification, legal, printer and accounting fees, but excluding underwriting
commissions and discounts), shall be borne by TSII. In connection with
registrations under Sections 17.1 and 17.2, TSII shall (i) use its best efforts
to prepare and file with the SEC as soon as reasonably practicable, a
registration statement with respect to the TSII Stock and use its best efforts
to cause such registration to promptly become and remain effective for a period
of at least 45 days (or such shorter period during which the Founding
Stockholders shall have sold all TSII Stock which they requested to be
registered); (ii) use its best efforts to register and qualify the TSII Stock
covered by such registration statement under applicable state securities laws as
the holders shall reasonably request for the distribution for the TSII Stock;
and (iii) take such other actions as are reasonable and necessary to comply with
the requirements of the 1933 Act and the regulations thereunder to enable the
Founding Stockholders to sell their shares pursuant thereto.
17.4 UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Sections 17.1 and 17.2 covering an underwritten registration public
offering, TSII and each participating holder agree to enter into a written
agreement with the managing underwriters in such form and containing such
provisions (including indemnification provisions) as are customary
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in the securities business for such an arrangement between such managing
underwriters and companies of TSII's size and investment stature.
17.5 AVAILABILITY OF RULE 144. TSII shall not be obligated to register
shares of TSII Stock held by the COMPANY at any time and only at such time when
the resale provisions of Rule 144(k) (or any similar or successor provision)
promulgated under the 1933 Act are available to the COMPANY.
18. GENERAL
18.1 COOPERATION. The COMPANY, STOCKHOLDERS and TSII shall each deliver
or cause to be delivered to the other on the Funding and Consummation Date, and
at such other times and places as shall be reasonably agreed to, such additional
instruments as the other may reasonably request for the purpose of carrying out
this Agreement. The COMPANY shall cooperate and use its reasonable efforts to
have the present officers, directors and the employees of the COMPANY cooperate
with TSII on and after the Funding and Consummation Date in furnishing
information, evidence, testimony and other assistance in connection with any tax
return filing obligations, actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Funding
and Consummation Date.
18.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of
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the parties hereto, the successors of TSII, and the heirs and legal
representatives of the STOCKHOLDERS.
18.3 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the STOCKHOLDERS,
the COMPANY and TSII and supersede any prior agreement and understanding
relating to the subject matter of this Agreement, including but not limited to
any letter of intent entered into by any of the parties hereto. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by the STOCKHOLDERS, the COMPANY and TSII, acting
through their respective officers or trustees, duly authorized by their
respective Boards of Directors.
18.4 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5, each
party represents and warrants that it employed no broker or agent in connection
with this transaction and agrees to indemnify the other parties hereto against
all loss, cost, damages or expense arising out of claims for fees or commission
of brokers employed or alleged to have been employed by such indemnifying party.
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18.6 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, TSII will pay the fees, expenses and disbursements of TSII
and its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by TSII under this Agreement, including the fees and
expenses of Xxxxxx Xxxxxxxx, LLP, Xxxx, Gump, Strauss, Xxxxx & Xxxx, L.L.P., and
any other person or entity retained by TSII, and the costs of preparing the
Registration Statement and the COMPANY and the STOCKHOLDERS shall have no
responsibility for the payment of any such monies associated with such services,
except as set forth herein. The COMPANY shall pay the fees, expenses and
disbursements of the STOCKHOLDERS, the COMPANY and their respective agents,
representatives, accountants and counsel incurred in connection with the subject
matter of this Agreement and any amendments thereto, including all costs and
expenses incurred in the performance and compliance with all conditions to be
performed by the COMPANY and the STOCKHOLDERS under this Agreement, including
the fees and expenses of accountants and legal counsel to the COMPANY and the
STOCKHOLDERS, except as provided herein. Notwithstanding the foregoing, if the
transactions contemplated by this Agreement are consummated, TSII shall
reimburse the STOCKHOLDERS for such reasonable attorneys' fees and accounting
fees upon the closing of the IPO up to $25,000 plus such additional fees,
expenses and disbursements as are
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required by Section 3.5 and as currently set forth on Schedule 18.6 and such
other costs and expenses as will be set forth on Schedule 18.6 prior to the
Pre-Closing Date as costs or expenses incurred as a result of not structuring
the transactions contemplated hereby as a merger. Subject to the foregoing, each
STOCKHOLDER shall pay all sales, use, transfer, gains, stock transfer and other
similar taxes and fees ("Transfer Taxes") imposed in connection with the
transactions contemplated hereby, other than Transfer Taxes, if any, imposed by
the State of Delaware. In addition, if the transactions described in this
Agreement do not close other than by reason of the COMPANY's or any
STOCKHOLDER's breach of this Agreement, then TSII shall reimburse the COMPANY
for all documented expenses and costs of dissolving the LLC and transferring the
Assets back to the COMPANY, including without limitation Florida documentary
stamp of deeds, and for present and future costs described on Schedule 18.6.
Each STOCKHOLDER shall file all necessary documentation and Returns with respect
to such Transfer Taxes. In addition, each STOCKHOLDER acknowledges that he or
she, and not the COMPANY or TSII, shall pay all taxes due upon receipt of the
consideration payable pursuant to Section 3 hereof, and shall assume all tax
risks and liabilities of such STOCKHOLDER in connection with the transactions
contemplated hereby, provided, however, the foregoing shall not in any way
prejudice the ability of the STOCKHOLDERS and the COMPANY to rely upon the
opinions contained in the opinion letter referenced in Annex IX. In the event
that the COMPANY or the STOCKHOLDERS terminate this Agreement otherwise than
pursuant to Section 12.1(i), (ii), (iv) or (v), the
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COMPANY shall reimburse TSII for all documented fees and expenses incurred by
TSII that are directly associated with the acquisition of the LLC Interest as
contemplated by this Agreement.
18.7 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party.
(a) If to TSII, addressed to it at:
Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, XX 00
Xxxxxxxx, Xxxxxxxx 00000
Attention: Elan X. Xxxxxxxxx
with copies to:
Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxxxx
(b) If to the STOCKHOLDERS, addressed to them at their addresses set
forth on Annex IV, with copies to such counsel as is set forth with
respect to each STOCKHOLDER on such Annex IV;
(c) If to the COMPANY, addressed to it at:
Cruises Only, Inc.
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx
and marked "Personal and Confidential"
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with copies to:
Xx. Xxx Xxxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
and
Xxxxxx X. Xxxxx, Esq.
Xxxxx & Shams, P.A.
111 North Orange Avenue-Suite 1200
Xxxxxxx, Xxxxxxx 00000
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
18.8 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Florida, and any all proceedings pertaining to
this Agreement shall be filed in the Circuit Court in and for Orange County,
Florida.
18.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
18.10 TIME. Time is of the essence with respect to this Agreement.
18.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it
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shall, to the extent possible, be modified in such manner as to be valid, legal
and enforceable but so as to most nearly retain the intent of the parties, and
if such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
18.12 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
18.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
18.14 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of TSII, the COMPANY and the STOCKHOLDERS. Any amendment or
waiver effected in accordance with this Section 18.14 shall be binding upon each
of the parties hereto, any other person receiving TSII Stock in connection with
the transactions contemplated hereby and each future holder of such TSII Stock.
18.15 DEFINED TERMS. Unless the context otherwise requires, capitalized
terms used in this Agreement or in any schedule attached hereto and not
otherwise defined shall have the following meanings for all purposes of this
Agreement:
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"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means the COMPANY, any Subsidiary and any member of a
Relevant Group.
"Affiliates" has the meaning set forth in Section 5.8.
"Agreement" has the meaning set forth in the first paragraph hereof.
"A/R Aging Reports" has the meaning set forth in Section 5.11.
"Assets" has the meaning set forth in Section 7.13.
"Balance Sheet Date" has the meaning set forth in Section 5.9.
"Charter Documents" has the meaning set forth in Section 5.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.
"COMPANY Stock" means the capital stock of the COMPANY.
"Delaware GCL" has the meaning set forth in Section 1.5.
"Demand Registration" has the meaning set forth in Section 17.2.
"Environmental Laws" has the meaning set forth in Section 5.13.
"ERISA" has the meaning set forth in Section 5.19.
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Companies" has the meaning set forth in the third recital of
this Agreement.
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"Founding Stockholders" has the meaning set forth in Section 17.1.
"Funding and Consummation Date" has the meaning set forth in Section 4.
"Future Sale" has the meaning set forth in Section 15.2.
"Indemnification Threshold" has the meaning set forth in Section 11.5.
"Indemnified Party" has the meaning set forth in Section 11.3.
"Indemnifying Party" has the meaning set forth in Section 11.3.
"IPO" means the initial public offering of TSII Stock pursuant to the
Registration Statement.
"LLC" has the meaning set forth in Section 7.13.
"LLC Interest" means all of the limited liability company interests in
the LLC owned by the COMPANY.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.23.
"Other Agreements" has the meaning set forth in the third recital of
this Agreement.
"Other Founding Companies" means all of the Founding Companies other
than the Company.
"Plans" has the meaning set forth in Section 5.19.
"Pre-Closing" has the meaning set forth in Section 4.
"Pre-Closing Date" has the meaning set forth in Section 4.
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"Pricing" means the date of determination by TSII and the Underwriters
of the public offering price of the shares of TSII Stock in the IPO; the parties
hereto contemplate that the Pricing shall take place on the Pre-Closing Date.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on
Form S-1 covering the shares of TSII Stock to be issued in the IPO.
"Relevant Group" means the COMPANY and any affiliated, combined,
consolidated, unitary or similar group of which the COMPANY is or was a member.
"Restricted Common Stock" means the common stock of TSII, par value
$0.01 per share, having the restricted voting rights and such other rights,
preferences, restrictions and limitations as are set forth in the Certificate of
Incorporation, as amended, of TSII on the Funding and Consummation Date.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"Statutory Liens" has the meaning set forth in Section 7.3.
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"STOCKHOLDERS" has the meaning set forth in the first paragraph of this
Agreement.
"Subsidiary" has the meaning set forth in Section 5.6.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any nature
whatever, whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"Territory" has the meaning set forth in Section 13.1.
"Third Person" has the meaning set forth in Section 11.3.
"Transfer Taxes" has the meaning set forth in Section 18.6.
"TSII" has the meaning set forth in the first paragraph of this
Agreement.
"TSII Charter Documents" has the meaning set forth in Section 6.1.
"TSII Financial Statements" has the meaning set forth in Section 6.6.
"TSII Plan of Organization" has the meaning set forth in the fourth
recital of this Agreement.
"TSII Stock" means the common stock, par value $.01 per share, of TSII.
"Underwriters" means the prospective underwriters in the IPO, as
identified in the Registration Statement.
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[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TRAVEL SERVICES INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name:__________________________
Title:_________________________
CRUISES ONLY, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx
President
STOCKHOLDERS:
/s/ Xxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx, Individually
/s/ Xxxx Xxxxxx
----------------------------------
Xxxx Xxxxxx, Individually
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