Exhibit 10.57
▇▇▇▇▇▇▇▇▇▇.▇▇▇ LTD.
- and -
▇▇▇▇▇▇▇▇.▇▇▇ AG
________________________________________________________________________________
SHARE EXCHANGE AGREEMENT
________________________________________________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
Scotia Plaza, Suite 2100
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
THIS SHARE EXCHANGE AGREEMENT is made as of the 16th day of June, 2000.
BETWEEN:
▇▇▇▇▇▇▇▇▇▇.▇▇▇ LTD. a corporation incorporated pursuant to the laws of
the Province of Ontario
("Travelbyus")
- and -
▇▇▇▇▇▇▇▇.▇▇▇ AG, a corporation incorporated pursuant to the laws of
.
("T24")
RECITALS:
A. Travelbyus and T24 executed a letter of intent dated as of the 23/rd/ day
of May, 2000 (the "LOI") pursuant to which:
(i) Travelbyus has agreed to issue 13,800,000 common shares in its capital
(the "Travelbyus Shares") to T24 in exchange for 1,282,594 common
shares in the capital of T24 (the "T24 Shares"); and
(ii) Travelbyus and T24 have agreed to use their best efforts to effect a
full merger (▇▇▇ "▇▇▇ ▇▇▇▇▇▇") subject to requisite board of director,
shareholder and regulatory approvals including without limitation, the
approval of The Toronto Stock Exchange (the "TSE") and the German
Neuer Market (the "GNM").
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained and for other good and valuable consideration
(the receipt and adequacy whereof is hereby acknowledged) the parties hereto
agree as follows:
Article 1
Definitions And Principles Of Interpretation
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1.1 Definitions - Whenever used in this Agreement, unless there is something
inconsistent in the subject matter or context, the following words and terms
shall have the meanings set out below:
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"Acquisition Proposal" shall mean any reorganization, recapitalization,
reclassification, combination, merger, consolidation, amalgamation,
plan of arrangement, take-over bid, sale of material assets (or any
lease, long-term supply agreement or other arrangement having the same
economic effect as a sale), any material sale of shares or rights or
their respective interests therein or thereto or similar transactions
involving Travelbyus or T24, as the case may be, or any of their
respective Subsidiaries or a proposal to do so, excluding the T24
Merger, the Aviation Merger and the Transaction.
"Agreement" means this Share Exchange Agreement, including all
schedules and all instruments supplementing, amending or confirming
this Agreement and references to "Article" or "Section" mean and refer
to the specified Article or section of this Agreement.
"Affiliate" shall mean any Person which, directly or indirectly,
Controls, is Controlled by, or is under common Control with, such
Person.
"Applicable Laws" shall mean, with respect to any Person all Laws by
which such Person, any of its Subsidiaries or any of their respective
securities, material assets or properties is bound or which is
applicable to it, any of its Subsidiaries or any of their respective
securities, material assets or properties.
"Aviation" shall means Aviation Group, Inc. a corporation incorporated
pursuant to the laws of Dallas, Texas.
"Aviation Merger" shall mean the merger pursuant to and as contemplated
by the Aviation Arrangement Agreement.
"Aviation Arrangement Agreement" shall mean the arrangement agreement
dated as May 3 2000 among Aviation, Aviation Group Canada Ltd and
Travelbyus.
"Bankruptcy Laws" shall mean; (i) all bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other Laws of
general application affecting the rights and remedies of creditors; and
(ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
"Benefit Plans" shall mean all employee benefit plans, and any related
or separate contracts, plans, trusts, programs, policies, arrangements,
practices, customs and understandings, in each case whether formal or
informal, written or oral and whether maintained by or binding upon
Travelbyus or T24, as the case may be, or any of their respective
Subsidiaries that provide rights or benefits of economic value to their
respective current or former employees or any current or former
beneficiary, dependent or assignee of any such employees or former
employees.
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"Business Day" shall mean any day on which commercial banks are open
for business in Toronto, Ontario and any day other than a Saturday,
Sunday or a day observed as a holiday in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"Claims" means any claim, demand, action, suit, litigation,
arbitration, investigation, proceeding, cause of action, damage, loss,
cost, liability or expense, including without limitation, reasonable
professional fees and all costs incurred in investigating or pursuing
any of the foregoing or any proceeding relating to any of the
foregoing.
"Closing" means the completion of the sale to and purchase by
Travelbyus of the Purchased Shares under this Agreement.
"Closing Date" means the 30/th/ day of September, 2000 or such other
date as the Parties may agree in writing as the date upon which Closing
shall take place.
"Closing Time" means 10:00 a.m. Toronto time on the Closing Date or
such other time on such date as the Parties may agree in writing as the
time at which Closing shall take place.
"Commercial Software" shall mean packaged commercial software programs
generally available to the public through retail computer software
dealers or available directly from the manufacturer which have been
licensed to Travelbyus or T24, as the case may be, or any of their
respective Subsidiaries pursuant to End-User Licenses and which are
used in the business of Travelbyus or T24, as the case may be, or any
of their respective Subsidiaries but are in no way a component of or
incorporated in or specifically required to develop or support any of
the products and related trademarks, technology and know-how of
Travelbyus or T24, as the case may be, or any of their respective
Subsidiaries.
"Commissions" shall mean the Alberta, British Columbia, Manitoba,
Ontario and Saskatchewan Securities Commissions.
"Consent" shall have the meaning ascribed thereto in section 3.4
"Contract" shall mean any written or oral agreement, contract,
instrument, indenture, bond, debenture, note, credit agreement,
mortgage, lease, permit, concession, grant, franchise, license,
guarantee or commitment to which a Person or any of its Subsidiaries is
a party or by which it, any of their respective Subsidiaries or any of
its material assets or properties is bound or which is applicable to
it, any of their respective Subsidiaries or any of their respective
material assets or properties.
"Control" (including with correlative meaning, controlled by and under
common control with) shall mean, with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and
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policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Dollar" or "$" shall mean US dollars.
"Encumbrance" shall mean any mortgage, pledge, lien, claim, charge,
security interest, lease, conditional sale or other title retention
agreement, easement, servitude, refusal, claim of infringement,
condition or other restriction or encumbrance of any kind, including
any restriction on use, voting (in the case of any security), transfer,
receipt of income or exercise of any other attribute of ownership on
assets.
"End-User Licenses" shall mean End-User Licenses, under which
Travelbyus or T24, as the case may be, or any of their respective
Subsidiaries is the licensor and which provide for payments to
Travelbyus or T24, as the case may be, or any of their respective
Subsidiaries of less than $250,000.
"Environmental Claim" shall mean any notice alleging potential
liability (including potential liability for investigatory costs,
cleanup costs, response or remediation costs, natural resource damages,
property damages, personal injuries, fines or penalties) arising out
of, based on or resulting from: (a) the presence or release of any
Material of Environmental Concern, whether or not the Material of
Environmental Concern is present on or has been released from property
owned by that party or any of its Affiliates; or (b) circumstances
forming the basis for any violation or alleged violation of any
Environmental Law.
"Environmental Laws" shall mean any and all Laws relating to the
protection of public health, safety or the environment.
"GNM" has the meaning ascribed thereto in the preambles to this
Agreement (Neuer Markt, trading segment of the Deutsche Borse AG).
"Governmental Entity" shall mean; (a) any German, United States,
Canadian, multinational, foreign, federal, provincial, state, regional,
territorial, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency; (b) any subdivision, agent,
commission, board, authority or instrumentality of any of the
foregoing; or (c) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account
of any of the foregoing. The term "Governmental Entity" shall include
the OSC, GNM, the TSE, the Winnipeg Stock Exchange, The Canadian
Venture Exchange and the Frankfurt Stock Exchange.
"HSR Act" shall mean the US ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
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"Indebtedness" shall mean; (a) all items (except items of capital,
shareholders' equity, surplus or retained earnings and general
contingency reserves) that, in accordance with generally accepted
accounting principles, would be included in determining total
liabilities of Travelbyus or T24, as the case may be, and their
respective Subsidiaries as of the date at which Indebtedness is to be
determined; (b) indebtedness secured by any Encumbrance to which any
property or asset owned or held by Travelbyus or T24, as the case may
be, and their respective Subsidiaries is subject, whether or not the
indebtedness secured thereby shall have been assumed; and (c)
indebtedness of others which Travelbyus or T24, as the case may be, and
their respective Subsidiaries have directly or indirectly guaranteed,
endorsed (other than for collection or deposit in the ordinary course
of business), sold or discounted with recourse (contingently or
otherwise) or to purchase or repurchase or otherwise acquire or in
respect of which Travelbyus or T24, as the case may be, and their
respective Subsidiaries have agreed to supply or advance funds (whether
by way of loan, share purchase, capital contribution or otherwise) or
otherwise become directly or indirectly liable.
"Laws" shall mean all laws, statutes, ordinances, regulations, rules,
published policies and guidelines of any Governmental Entity and the
terms and conditions of any Permit, judgment, order or decree of any
Governmental Entity.
"Leases" shall mean each lease, sublease, license or other agreement
under which Travelbyus or T24, as the case may be, or any of their
respective Subsidiaries uses, occupies or has the right to occupy any
real property or interest therein that; (a) provides for future minimum
payments of $10,000 or more per month (ignoring any right of
cancellation or termination); or (b) the cancellation or termination of
which would have a Material Adverse Effect.
"Liabilities" shall have the meaning ascribed thereto in section 3.7.2.
"LOI" has the meaning ascribed thereto in the preambles to this
Agreement.
"Material Adverse Effect" shall mean, among other things, any event,
change or effect that is or is reasonably expected to be materially
adverse to; (a) the financial condition, business, operations, assets,
properties, personnel or results of operations of Travelbyus or T24, as
the case may be, and their respective Subsidiaries taken as a whole; or
(b) the ability of Travelbyus or T24, as the case may be, and their
respective Subsidiaries to perform their respective obligations under
this Agreement, or to consummate the Transaction, or any of the other
transactions contemplated hereby. "Material Adverse Effect" shall not
include any adverse effect resulting from changes in general economic
conditions or conditions generally affecting the industry in which
Travelbyus or T24, as the case may be, operates.
"Materials of Environmental Concern" shall mean petroleum and its by-
products, all hazardous substances and all substances or constituents
that are regulated by or form the basis for liability under any
Environmental Laws.
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"OBCA" shall mean the Business Corporations Act (Ontario).
"OSC" shall mean the Ontario Securities Commission.
"Parties" means Travelbyus and T24 and "Party" means any one of them.
"Permit" shall mean any permit, concession, approval, permission,
authorization, certificate or license from any Governmental Entity.
"Permitted Encumbrances" shall mean; (a) liens for current taxes and
other statutory liens and trusts not yet due and payable or that are
being contested in good faith; (b) liens that were incurred in the
ordinary course of business, such as carriers', warehousemen's,
landlords' and mechanics' liens and other similar liens arising in the
ordinary course of business; (c) liens on personal property leased
under operating leases; (d) liens, pledges or deposits incurred or made
in connection with workers' compensation, unemployment insurance and
other social insurance and social security benefits or securing the
performance of bids, tenders, leases, contracts (other than for the
repayment of borrowed money), statutory obligations, progress payments,
surety and appeal bonds and other obligations of like nature, in each
case incurred in the ordinary course of business; (e) pledges of or
liens on manufactured products as security for any drafts or bills of
exchange drawn in connection with the importation of such manufactured
products in the ordinary course of business; (f) liens under Article 2
of the applicable commercial code in effect under applicable personal
property security Laws that are special property interests in goods
identified as goods to which a contract refers; and (g) liens under
applicable personal property that are purchase money security
interests, none of which are material in the aggregate or individually.
"Person" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, governmental authority and a
natural person in such person's capacity as trustee, executor,
administrator or other legal representative.
"Subsidiary" shall mean any corporation, association or other business
entity a majority of the shares or other voting interests (by number of
votes to the election of directors or persons holding positions with
similar responsibilities) of which is owned by Travelbyus or T24, as
the case may be, or any of their respective Subsidiaries.
"T24 " means ▇▇▇▇▇▇▇▇.▇▇▇ AG
"T24 Advances" has the meaning ascribed thereto in section 9.1.
"T24 Balance Sheet" shall have the meaning ascribed thereto in section
4.7.1.
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"T24 Benefit Plans" shall mean all benefit plans sponsored or
maintained by T24 or any of its Subsidiaries or under which T24 or any
of its Subsidiaries is obligated.
"T24 Common Shares" shall mean, the common shares in the capital of
T24.
"T24 Disclosure Schedule" shall have the meaning ascribed thereto in
Article 4.
"T24 Insurance Contracts" shall have the meaning ascribed thereto in
section 4.19.
"T24 Loan Amount" has the meaning ascribed thereto in section 9.1.
"T24 Loan Commitment" has the meaning ascribed thereto in the preambles
to this Agreement.
"T24 Merger" has the meaning ascribed thereto in the preambles to this
Agreement.
"T24 Plans" shall mean, collectively, all T24 Benefit Plans and all
plans, programs and agreements described in subsection 4.12.
"T24 Proprietary Rights" shall have the meaning ascribed thereto in
section 4.17.1.
"T24 Securities Reports" shall have the meaning ascribed thereto in
section 4.6.
"T24 Shares" has the meaning ascribed thereto in the preambles to this
Agreement.
"T24 Superior Proposal" shall have the meaning ascribed thereto in
section 7.13.2.
"Tax" shall mean any European, Canadian, United States, multinational,
foreign, federal, provincial, state, regional, territorial, municipal
and local capital, capital stock, disability, customs duties,
employment, environmental, estimated, excise, franchise, capital gains,
employer health, income, license, alternative or add-on minimum,
occupation, payroll, premium, profits, windfall profits, personal
property, real property, gross receipts, registration, gross revenue,
sales, goods and services, severance, social security (or similar),
stamp, transfer, turnover, unemployment, use, value added, withholding,
net worth or other tax of any kind whatsoever including employment
insurance and Canada Pension Plan premiums as well as any interest or
penalty in respect thereof and any addition thereto, whether disputed
or not.
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"Tax Return" shall mean any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including
any schedule or attachment thereto and any amendment thereof.
"Transaction" means the issuance of Travelbyus Shares in exchange for
the T24 Shares and $5 million.
"Travelbyus" means ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Ltd.
"Travelbyus Balance Sheet" shall have the meaning ascribed thereto in
section 3.7.1.
"Travelbyus Benefit Plans" shall mean all benefit plans sponsored or
maintained by Travelbyus or any of its Subsidiaries or under which
Travelbyus or any of its Subsidiaries is obligated.
"Travelbyus Common Shares" shall mean the common shares in the capital
of Travelbyus.
"Travelbyus Disclosure Schedule" shall have the meaning ascribed
thereto in Article 3.
"Travelbyus Insurance Contracts" shall have the meaning ascribed
thereto in section 3.19.
"Travelbyus Plans" shall mean, collectively, all Travelbyus Benefit
Plans and all plans, programs or arrangements described in subsection
3.12.
"Travelbyus Proprietary Rights" shall have the meaning ascribed thereto
in section 3.17.1.
"Travelbyus Securities Reports" shall have the meaning ascribed thereto
in section 3.6.
"Travelbyus Shares" has the meaning ascribed thereto in the preambles
to this Agreement
"TSE" has the meaning ascribed thereto in the preambles to this
Agreement.
"United States" means the United States of America, including any state
thereof and its territories and assigns.
"Violation" shall mean, with respect to any provision, with or without
the giving of notice or the lapse of time, or both; (a) any conflict
with, violation or breach of, or default under, such provision; (b) the
arising of any right of termination, amendment, cancellation or
acceleration of any obligation contained in or the loss of any material
benefit under, such provision; or (c) the arising of any
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Encumbrance upon any of the properties or assets of the Person or any
of its Subsidiaries subject to the provision.
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1.2 Certain Rules of Interpretation - In this Agreement and the Schedules:
(a) Time - time is of the essence in the performance of the Parties'
respective obligations.
(b) Currency - unless otherwise specified, all references to money amounts
are to United States currency.
(c) Headings - the descriptive headings of Articles and sections are
inserted solely for convenience of reference and are not intended as
complete or accurate descriptions of the content of such Articles or
sections.
(d) Singular, etc. - the use of words in the singular or plural or with a
particular gender shall not limit the scope or exclude the application
of any provision of this Agreement to such person or persons or
circumstances as the context otherwise permits.
(e) Consent - whenever a provision of this Agreement requires an approval
or consent by a Party and notification of such approval or consent is
not delivered within the applicable time limit, unless otherwise
specified, the Party whose consent or approval is required shall be
conclusively deemed to have withheld its approval or consent.
(f) Calculation of Time - unless otherwise specified, time periods within
or following which any payment is to be made or act is to be done
shall be calculated by excluding the day on which the period commences
and by including the day on which the period ends and by extending the
period to the next Business Day following if the last day of the
period is not a Business Day.
(g) Business Day - whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a day
other than a Business Day, such payment shall be made or action shall
be taken on the next Business Day following such day.
1.3 Knowledge - In this Agreement, any reference to the knowledge of a Party
shall mean to the best of the knowledge, information and belief of the Party
after reviewing all relevant records and making due inquiries.
1.4 Entire Agreement - This Agreement together with the other agreements and
documents to be delivered pursuant to this Agreement constitute the entire
agreement among the Parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties (including without limitation, the LOI)
and there are no warranties, representations or other agreements among the
Parties in connection with the Transaction except as specifically set forth in
this Agreement and any document delivered pursuant to this Agreement. No
supplement, modification, waiver or
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termination of this Agreement shall be binding unless executed in writing by the
Parties to be bound thereby.
1.5 Applicable Law and Attornment - This Agreement shall be construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein and shall be treated in all respects as an Ontario
contract.
1.6 Accounting Principles - In this Agreement all references to generally
accepted accounting principles means to principles recommended, from time to
time, with respect to Travelbyus, by the Canadian Institute of Chartered
Accountants and with respect to T24, by . and all accounting terms not otherwise
defined in this Agreement have the meanings assigned thereto in accordance with
Canadian generally accepted accounting principles with respect to Travelbyus and
in accordance with German generally accepted accounting principles with respect
to T24.
1.7 Tender - Any tender of documents or money under this Agreement may be made
upon the Parties or their respective counsel and money may be tendered by
official bank draft drawn upon a bank or by negotiable cheque payable in United
States funds and certified by a bank or trust Travelbyus or with the consent of
the Party entitled to payment by wire transfer of immediately available funds to
the account specified by that Party.
1.8 Disclosure - The Parties acknowledge that any information, matter,
circumstance, agreement, document or other thing disclosed in any Schedule to
this Agreement shall be deemed to be disclosed in every other Schedule for
purposes of the representations and warranties of the Parties.
Article 2
Exchange Transaction
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2.1 Exchange Transaction- Subject to the terms and conditions herein, the
Parties shall effect the following transactions:
(a) At the Closing Time, Travelbyus shall issue to T24 the Travelbyus
Shares and shall deliver a certificate therefor to T24 registered in
the name of T24 which certificate shall include a legend restricting
the transfer of the Travelbyus Shares for a period of one year; and
(b) T24 shall issue to Travelbyus the T24 Shares and shall deliver a
global share certificate to Clearstream Banking AG and such global
share certificate shall not be transferable for a period of one year;
2.2 Place of Closing - The Closing shall take place at the Closing Time at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, Barristers and Solicitors, ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ or at such other place as may
be agreed upon by T24 and Travelbyus.
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Article 3
Representations And Warranties Of Travelbyus
Travelbyus represents and warrants to T24 that the statements in this Article 3
are true and correct, except as set forth in the disclosure schedule delivered
by Travelbyus to T24 on the date hereof (the "Travelbyus Disclosure Schedule").
The Travelbyus Disclosure Schedule shall be arranged in sections and paragraphs
corresponding to the numbered and lettered sections and paragraphs in this
Article 3. The disclosure in any section or paragraph of the Travelbyus
Disclosure Schedule shall qualify other sections and paragraphs in this Article
3 only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other sections or
paragraphs.
3.1 Corporate Status of Travelbyus and its Subsidiaries - Each of Travelbyus
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the Laws of its jurisdiction of incorporation, with the
requisite corporate or organizational power and authority to carry on its
business as currently being conducted and to own, lease and operate the
properties currently owned, leased and operated by it. Each of Travelbyus and
its Subsidiaries is duly qualified or licensed to do business and is in good
standing as an extra-provincial or foreign corporation or organization
authorized to do business in all jurisdictions in which the character of the
properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification or licensing necessary, except in
jurisdictions in which the failure to be so qualified or licensed would not
result in a Material Adverse Effect. Section 3.1 of the Travelbyus Disclosure
Schedule sets forth a complete list of Travelbyus' Subsidiaries, their
jurisdictions of incorporation and a complete list of each jurisdiction in which
each of Travelbyus and its Subsidiaries is duly qualified and in good standing
to do business.
3.2 Articles of Incorporation, By-Laws, Directors and Officers - Travelbyus
has delivered to T24 true and complete copies of the Articles of Incorporation
and By-laws of Travelbyus, including all amendments thereto, as in effect on the
date hereof. Each of the minute books of Travelbyus and its Subsidiaries made
available to T24 and/or its agents contains accurate records of all meetings and
consents in lieu of meetings of the Board of Directors of Travelbyus or its
Subsidiaries, as the case may be (and any committees thereof) and of its
securityholders (or other equity holders having rights to vote or consent) since
the date of incorporation and such records accurately reflect all transactions
referred to in such minutes and consents. Section 3.2 of the Travelbyus
Disclosure Schedule sets forth a list of the directors and officers of
Travelbyus and its Subsidiaries and the respective offices held by them.
3.3 Authority for Agreement; Noncontravention
3.3.1. Authority - Travelbyus has all requisite corporate power and authority to
enter into this Agreement and to issue the Travelbyus Shares. The execution and
delivery by
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Travelbyus of this Agreement and the consummation by Travelbyus of the
Transaction have been duly and validly authorized by the Board of Directors of
Travelbyus. No other corporate proceedings on the part of Travelbyus are
necessary to authorize the execution and delivery by Travelbyus of this
Agreement and the consummation by Travelbyus of the Transaction. This Agreement
has been duly executed and delivered by Travelbyus and constitutes a valid and
binding obligation of Travelbyus, enforceable against Travelbyus in accordance
with its terms, subject to the qualifications that enforcement of the rights and
remedies created hereby are subject to Bankruptcy Laws.
3.3.2. No Conflict - None of the execution and delivery by Travelbyus of this
Agreement, the performance by Travelbyus of its obligations hereunder and the
consummation by Travelbyus of the Transaction will cause a Violation of any
term, condition or provision of the Articles of Incorporation or By-Laws of
Travelbyus or any of its Subsidiaries or any contract, judgment, decree or order
to which Travelbyus or any of its Subsidiaries is a party or by which it, any of
its Subsidiaries or any of their respective material assets or properties is
bound or to the knowledge of Travelbyus, any Applicable Laws, other than such
Violations which individually or in the aggregate would not result in a Material
Adverse Effect.
3.4. Governmental Consents - No consent, approval, order or authorization of
or registration or filing with or declaration or notice to any Governmental
Entity (the "Consents"), is required to be obtained by Travelbyus or any of its
Subsidiaries in connection with the execution and delivery by Travelbyus of this
Agreement or the performance by Travelbyus of its obligations hereunder or
thereby except any approvals required in accordance with the rules of the TSE
and the Winnipeg Stock Exchange and such filings and notices as may be necessary
under the Investment Canada Act.
3.5. Capitalization
3.5.1. Authorized Share Capital of Travelbyus -. The authorized and issued share
capital of Travelbyus is as set forth in section 3.5.1 of the Travelbyus
Disclosure Schedule. All of the issued Travelbyus Common Shares have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
issued Travelbyus Common Shares was issued in violation of the terms of any
agreement or other understanding binding upon Travelbyus. All of the issued
Travelbyus Common Shares were issued in compliance with all applicable charter
documents of Travelbyus and all Applicable Laws. There are and have been no
preemptive rights with respect to the issuance of Travelbyus Common Shares.
3.5.2. Options and Convertible Securities of Travelbyus - Section 3.5.2 of the
Travelbyus Disclosure Schedule sets forth a complete list of; (a) each stock
option plan, stock purchase plan and each other plan, arrangement or agreement
under which Travelbyus or any of its Subsidiaries has reserved shares or any
securities or obligations convertible into or exercisable or exchangeable for
any shares, to any employee, director, consultant, service provider or other
Person (collectively, the "Travelbyus Plans"); and (b) the number of shares,
securities or obligations reserved for issuance under such plan, arrangement or
agreement. Save and except as provided
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in section 3.5.2 of Travelbyus' Disclosure Schedule all such plans, arrangements
and agreements are in compliance with all Applicable Laws and have been approved
by the TSE. Except as set forth in section 3.5.2 of the Travelbyus Disclosure
Schedule, there are no outstanding subscriptions, options, warrants or
conversion rights or other rights, securities, agreements, calls or commitments
(contingent or otherwise) that obligate Travelbyus to issue, sell, deliver or
otherwise dispose of shares or any securities or obligations convertible into or
exercisable or exchangeable for any shares. None of the execution and delivery
by Travelbyus of this Agreement, the performance by Travelbyus of its
obligations hereunder and the consummation by Travelbyus of the Transaction and
any other event that occurred on or prior to the date hereof will accelerate the
vesting under any item set forth in section 3.5.2 of the Travelbyus Disclosure
Schedule. Save and except as provided in section 3.5.2 of Travelbyus' Disclosure
Schedule, there are no voting trusts or other agreements or understandings to
which Travelbyus or to the knowledge of Travelbyus, any securityholder of
Travelbyus is a party with respect to the voting of Travelbyus Common Shares.
Except as set forth in section 3.5.2 of the Travelbyus Disclosure Schedule,
Travelbyus is not a party to or bound by any outstanding restrictions, puts,
options or other obligations, agreements or commitments to repurchase, redeem or
otherwise acquire any outstanding Travelbyus Common Shares or other equity
securities of Travelbyus.
3.5.3. Subsidiaries - Section 3.5.3 of the Travelbyus Disclosure Schedule sets
forth the authorized and issued shares of each of Travelbyus' Subsidiaries. All
of the issued shares of each of Travelbyus' Subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
issued securities of any of Travelbyus' Subsidiaries was issued in violation of
the terms of any agreement or other understanding binding upon the issuing
Subsidiary and all of such issued securities were issued in compliance with all
applicable charter documents of the issuing Subsidiary and all Applicable Laws.
There are no outstanding subscriptions, options, warrants or conversion rights
or other rights, securities, agreements, calls or commitments (contingent or
otherwise) that obligate any of Travelbyus' Subsidiaries to issue, sell, deliver
or otherwise dispose of shares or any securities or obligations convertible into
or exercisable or exchangeable for any shares. There are and have been no
preemptive rights with respect to the issuance of securities of any of
Travelbyus' Subsidiaries. Travelbyus owns beneficially and of record all of the
outstanding securities of each of its Subsidiaries, free and clear of all
Encumbrances save and except as set forth in section 3.5.3 of the Travelbyus
Disclosure Schedule. Other than Travelbyus' Subsidiaries, Travelbyus does not
own, directly or indirectly, any shares or other equity interest or securities
in any Person.
3.6. Securities Reports; Financial Statements - Travelbyus has timely filed
all forms, reports and documents (including prospectuses, offering memoranda and
TSE filing statements) with the Commissions and the TSE required to be filed by
it pursuant to Applicable Laws (collectively, the "Travelbyus Securities
Reports"). As of their respective dates, Travelbyus Securities Reports complied
in all material respects with Applicable Laws and did not contain any 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 under which they were made, not misleading. The
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financial statements (including any related notes) of Travelbyus included in
Travelbyus Securities Reports complied in all material respects with applicable
accounting requirements and with Applicable Laws, were prepared in conformity
with Canadian generally accepted accounting principles applied on a consistent
basis (except as otherwise stated in the financial statements) and present
fairly the consolidated financial position, results of operations, shareholders'
equity, liabilities (contingent or otherwise) and cash flows, as the case may
be, of Travelbyus and its consolidated Subsidiaries as of the dates and for the
periods indicated, subject, in the case of unaudited interim financial
statements to; (i) the absence of certain notes thereto; and (ii) normal year-
end audit adjustments.
3.7. Absence of Material Adverse Changes and Undisclosed Liabilities
3.7.1. Changes - Since the date of the most recent consolidated balance sheet
filed by Travelbyus with the Commissions (the "Travelbyus Balance Sheet"),
Travelbyus has not experienced a Material Adverse Effect. Without limiting the
generality of the foregoing, except as set forth in section 3.7.1 of the
Travelbyus Disclosure Schedule, since the date of the Travelbyus Balance Sheet
neither Travelbyus nor any of its Subsidiaries has:
(a) sold, leased, transferred or assigned any of its assets, tangible
or intangible, other than in the ordinary course of business;
(b) accelerated, terminated, modified or canceled any contract, lease,
sublease, license or sublicense (or series of related contracts,
leases, subleases, licenses and sublicenses) involving more than
$100,000;
(c) cancelled, compromised, waived or released any right or claim (or
series of related rights and claims) either involving more than
$100,000 or outside the ordinary course of business;
(d) experienced material damage, destruction or loss (whether or not
covered by insurance) to its material property (other than ordinary
wear and tear not caused by neglect);
(e) created or suffered to exist any Encumbrance (other than Permitted
Encumbrances) upon any of the assets, tangible or intangible, of
Travelbyus or any Subsidiary;
(f) issued, sold, delivered or otherwise disposed of any shares or any
securities or obligations convertible into or exercisable or
exchangeable for any shares of Travelbyus or any of its
Subsidiaries or undergone any reorganization, recapitalization,
reclassification, stock split or reverse stock split;
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(g) accelerated, amended, repriced or changed the period of
exercisability of any outstanding security or authorized cash
payments in exchange for any options granted under any of
Travelbyus Plans;
(h) declared, set aside or paid any dividend or distribution with
respect to its shares (whether in cash or in kind) or directly or
indirectly redeemed, purchased or otherwise acquired any of its
shares;
(i) entered into financial arrangements for the benefit of any
director, officer or securityholder of Travelbyus other than in
connection with such Person's employment by Travelbyus in the
ordinary course of its business and consistent with past practice;
(j) made or committed to make any capital expenditures or entered into
any other material transaction outside the ordinary course of
business or involving an expenditure in excess of $100,000;
(k) amended or modified in any respect any employment contract or
arrangement or any profit sharing, bonus, incentive compensation,
severance, employee benefit or multi-employer plans;
(l) entered into any employment agreement or collective bargaining
agreement or increased the compensation of any of its employees
other than in the ordinary course of its business and consistent
with past practice; or
(m) committed (orally or in writing) to do any of the foregoing.
3.7.2. Liabilities - Except for liabilities and obligations; (i) set forth in
Travelbyus Securities Reports; or (ii) set forth in section 3.7.2 of the
Travelbyus Disclosure Schedule; neither Travelbyus nor any of its Subsidiaries
has any Liabilities required by generally accepted accounting principles to be
set forth on a consolidated balance sheet of Travelbyus or in the notes thereto
and which, individually or in the aggregate, could be reasonably expected to
have a Material Adverse Effect.
3.8. Litigation and Audits - Except as set forth in section 3.8 of the
Travelbyus Disclosure Schedule, there is no investigation or inquiry by any
Governmental Entity with respect to Travelbyus or any of its Subsidiaries
pending or to the knowledge of Travelbyus threatened, nor has any Governmental
Entity indicated to Travelbyus or any of its Subsidiaries an intention to
conduct the same. Except as set forth in section 3.8 of the Travelbyus
Disclosure Schedule, there is no claim, action, suit, arbitration or proceeding
pending or to the knowledge of Travelbyus threatened against or involving
Travelbyus, any of its Subsidiaries or any of their respective assets or
properties, at law or in equity or before any arbitrator or Governmental Entity,
which if determined adversely to Travelbyus or any Subsidiary could result in a
Material Adverse Effect. There are no judgments, decrees, injunctions, orders or
rulings of any Governmental
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Entity or arbitrator outstanding against Travelbyus or any of its Subsidiaries,
which if existed, would result in a Material Adverse Effect.
3.9. Compliance with Applicable Law, Articles of Incorporation and By-Laws -
Each of Travelbyus and its Subsidiaries has all requisite Permits necessary to
carry on its respective business as currently being conducted and to own, lease
and operate the respective properties currently owned, leased and operated by it
in the manner currently owned, leased and operated, except where the failure to
have such Permits would not result in a Material Adverse Effect. There are no
proceedings pending or to the knowledge of Travelbyus threatened, which might
result in the revocation, cancellation, suspension or adverse modification of
any such Permit. The business of Travelbyus and its Subsidiaries has not been
conducted in Violation of Applicable Laws, except for Violations which
individually or in the aggregate would not result in a Material Adverse Effect.
Neither Travelbyus nor any of its Subsidiaries is in Violation of nor has any
event occurred that has resulted or will result in a Violation of any term,
condition or provision of the Articles of Incorporation or By-Laws of Travelbyus
and its Subsidiaries.
3.10. Books and Records; Accounting Matters - The books, records and accounts
of Travelbyus and its Subsidiaries: (a) have been maintained in accordance with
good business practices; (b) are stated in reasonable detail and accurately and
fairly reflect in all material respects the transactions and dispositions of the
respective assets of Travelbyus and its Subsidiaries; and (c) accurately and
fairly reflect in all material respects the basis for the Travelbyus Balance
Sheet. Travelbyus has devised and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that; (i) transactions are
executed in accordance with management's general or specific authorizations; and
(ii) transactions are recorded as necessary; (a) to permit preparation of
accurate financial statements in conformity with Canadian generally accepted
accounting principles or any other criteria applicable to such statements; and
(b) to maintain accountability for assets. There has been no change in
Travelbyus' accounting policies or the methods of making accounting estimates or
changes in estimates that are material to Travelbyus' financial statements
except as described in the notes thereto.
3.11. Tax Matters
3.11.1. Filing of Returns - Each of Travelbyus and its Subsidiaries has prepared
and timely filed with all appropriate Governmental Entities all Tax Returns that
it was required to file. All such Tax Returns were correct and complete in all
material respects. Neither Travelbyus nor any of its Subsidiaries currently is
the beneficiary of any extension of time within which to file any Tax Return
other than extensions for which Travelbyus or any of its Subsidiaries has filed
a request which request has resulted in the automatic granting of such
extension. No Governmental Entity in any jurisdiction in which any of Travelbyus
and any of its Subsidiaries does not file Tax Returns has ever claimed that
Travelbyus or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction.
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3.11.2. Payment of Taxes - All Taxes payable or owed by Travelbyus and its
Subsidiaries (whether or not shown on any Tax Return) have been paid when due.
In the case of Taxes accruing on or before the date hereof that are not due on
or before the date hereof, Travelbyus has made adequate provision in its books
and records and financial statements for such payment. There are no security
interests on any assets of Travelbyus or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
3.11.3. Withholding - Each of Travelbyus and its Subsidiaries has withheld from
every payment made to each of its current or former employees, officers,
directors, shareholders, independent contractors, creditors, non-residents and
other Persons all amounts required by Applicable Law to be withheld and, where
required, has remitted such amounts within the applicable periods to the
appropriate Governmental Entity.
3.11.4. Assessments - Neither Travelbyus nor any of its Subsidiaries expects
any authority to assess any additional Taxes in excess of tax reserves provided
for in Travelbyus' financial statements against Travelbyus or any of its
Subsidiaries for any period for which Tax Returns have been filed. No Tax Return
of Travelbyus or any of its Subsidiaries has been audited or currently is the
subject of audit. No Governmental Authority has raised any dispute or claim
concerning any Tax liability of Travelbyus or any of its Subsidiaries. Neither
Travelbyus nor any of its Subsidiaries has waived any statute of limitations
with respect to Taxes or has agreed to any extension of time with respect to a
Tax assessment or deficiency.
3.11.5. Access to Returns - Travelbyus has provided T24 with a copy of or
access to all Canadian and other federal, provincial, state and local income and
capital Tax returns filed by Travelbyus and its Subsidiaries after September 30,
1999. Travelbyus has provided T24 with a copy of or access to all assessments,
extensions and waivers resulting from any examinations or audits of Travelbyus
or any of its Subsidiaries by a Governmental Entity in respect of Taxes and all
such assessments and related penalties and interest have been paid in full
unless being contested in good faith by Travelbyus or any of its Subsidiaries
and described in section 3.11 of the Travelbyus Disclosure Schedule.
3.12. Employee Benefit Plans
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3.12.1. List of Plans - Section 3.12 of the Travelbyus Disclosure Schedule sets
forth a complete list of all Travelbyus Benefit Plans. Travelbyus has delivered
to T24; (a) accurate and complete copies of all Travelbyus Benefit Plan
documents and all other material documents relating thereto, including (if
applicable) all summary plan descriptions, summary annual reports and insurance
contracts; (b) accurate and complete detailed summaries of all unwritten
Travelbyus Benefit Plans; (c) accurate and complete copies of the most recent
financial statements and actuarial reports with respect to all Travelbyus
Benefit Plans for which financial statements or actuarial reports are required
or have been prepared; (d) accurate and complete copies of all information
returns and annual reports for all Travelbyus Benefit Plans (for which
information returns or annual reports are required or have been prepared)
prepared within the last three years; (e) all material professional opinions
relating to Travelbyus Benefit Plans; and (f) accurate and complete copies of
material correspondence with all regulatory authorities.
3.12.2. Claims - There are no pending or to the knowledge of Travelbyus
threatened claims by or on behalf of any Travelbyus Benefit Plans or by or on
behalf of any individual participants or beneficiaries of any Travelbyus Benefit
Plans alleging any breach of fiduciary duty on the part of Travelbyus or any of
its Subsidiaries or any of their respective officers, directors, employees or
agents under any Applicable Laws or claiming benefit payments (other than those
made in the ordinary operation of such Travelbyus Benefit Plans) nor to the
knowledge of Travelbyus is there any basis therefor that if existed would cause
a Material Adverse Effect.
3.12.3. Contributions - Travelbyus and each of its Subsidiaries has timely made
all required contributions under Travelbyus Benefit Plans.
3.12.4. Travelbyus Benefit Plans - All of Travelbyus Benefit Plans in which
employees of Travelbyus and each of its Subsidiaries participate or are eligible
to participate are and have been established, registered, qualified, invested
and administered in all respects in accordance with all laws, regulations,
orders or other legislative, administrative or judicial promulgations applicable
to Travelbyus Benefit Plans. With respect to Travelbyus Benefit Plans having
special Tax status, no fact or circumstance exists that could adversely affect
the intended Tax status of such Travelbyus Benefit Plan. All obligations
regarding Travelbyus Benefit Plans have been satisfied and there are no actions,
outstanding defaults or violations by any party to any Travelbyus Benefit Plan
that could subject Travelbyus or any of its Subsidiaries to any material penalty
or Tax and no Tax, penalty or fee is owing or eligible under or in respect of
any Travelbyus Benefit Plan. Neither Travelbyus nor its applicable Subsidiary,
subject to the limitations or conditions set forth in other provisions hereof,
may unilaterally amend, modify, vary, revoke or terminate, in whole or in part,
any Travelbyus Benefit Plan maintained by it or may take contribution holidays
under or withdraw surplus from such Travelbyus Benefit Plans, subject only to
approvals required by Applicable Laws. Subject to Applicable Laws and all
limitations and conditions in other provisions hereof, Travelbyus or its
applicable Subsidiaries may amend, revise or merge any Travelbyus Benefit Plan
or transfer or merge the assets or liabilities of any Travelbyus Benefit Plan
with any other
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arrangement, plan or fund. No Travelbyus Benefit Plan nor any related trust or
other funding medium thereunder is subject to any pending investigation,
examination or other proceeding, action or claim initiated by any Governmental
Entity or by any other party (other than routine claims for benefits) and there
exists no state of facts which after notice or lapse of time or both could
reasonably be expected to give rise to any such investigation, examination or
other proceeding, action or claim or to affect the registration of any
Travelbyus Benefit Plan required to be registered. All contributions or premiums
required to be made by Travelbyus or any of its Subsidiaries under the terms of
a Travelbyus Benefit Plan or by Applicable Laws have been made in a timely
fashion in accordance with Applicable Laws and the terms of a Travelbyus Benefit
Plan, and neither Travelbyus nor any of its Subsidiaries has and, as of the
Effective Time, will have any Liability (other than Liabilities accruing after
the Effective Time) with respect to any of Travelbyus Benefit Plans.
Contributions or premiums will be paid by Travelbyus and its Subsidiaries on an
accrual basis for the period up to the Effective Time even though not otherwise
required to be made until a later date. No amendments have been made to any
Travelbyus Benefit Plan and no improvements to any Travelbyus Benefit Plan have
been promised. No statement, either written or oral, has been made by or on
behalf of Travelbyus or its Subsidiaries that was not in accordance with the
terms of Travelbyus Benefit Plans which would have a Material Adverse Effect.
There have been no withdrawals, applications or transfers of assets from any
Travelbyus Benefit Plan or the trusts or other funding media relating thereto in
violation of Applicable Laws or the terms of Travelbyus Benefit Plans and
neither Travelbyus nor any of its Subsidiaries or any agent thereof has been
negligent, or in breach of any fiduciary obligation, with respect to the
administration of Travelbyus Benefit Plans. Each Travelbyus Benefit Plan is
fully funded or fully insured on both an ongoing and solvency basis. All
employee data necessary to administer each Travelbyus Benefit Plan has been
provided to T24 and is true and correct. No insurance policy or other contract
or agreement affecting Travelbyus Benefit Plans requires or permits a
retroactive increase in premiums or payments due thereunder. The level of
insurance reserves under each insured Travelbyus Benefit Plan is reasonable and
sufficient to provide for all incurred claims. No Travelbyus Benefit Plan
provides benefits to retired employees or to the beneficiaries or dependants of
retired employees. No Travelbyus Benefit Plan is a plan or arrangement to which
more than one employer that is not Travelbyus nor any of its Subsidiaries is
required or permitted to contribute and no Travelbyus Benefit Plan is a multi-
employer plan.
3.13. Employment-Related Matters - Neither Travelbyus nor any of its
Subsidiaries is a party to any collective bargaining agreement or other contract
or agreement with any labor organization or other representative of any of the
employees of Travelbyus or any of its Subsidiaries nor are any of such contracts
or agreements pending or contemplated. There is no labor strike, dispute,
slowdown, work stoppage or lockout that is pending or to the knowledge of
Travelbyus, threatened against or otherwise affecting Travelbyus or any of its
Subsidiaries and neither Travelbyus nor any of its Subsidiaries has experienced
the same. Except as set forth in section 3.13 of the Travelbyus Disclosure
Schedule neither Travelbyus nor any of its Subsidiaries has closed any plant or
facility, effectuated any layoffs of employees or implemented any early
retirement or separation program at any time from or after December 31, 1999 nor
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has Travelbyus or any of its Subsidiaries planned or announced any such action
or program for the future with respect to which Travelbyus or any of its
Subsidiaries may have any liability. All salaries, wages, vacation pay, bonuses,
commissions and other compensation payable by Travelbyus or any of its
Subsidiaries to their respective employees before the date hereof have been paid
or accrued in all material respects as of the date hereof. No Person has
asserted any claim or to the knowledge of Travelbyus, has any reasonable basis
to assert any valid claim against Travelbyus or any of its Subsidiaries that
either the continued employment by or association with Travelbyus or any of its
Subsidiaries of any of the current officers or employees of or consultants to
Travelbyus or any of its Subsidiaries contravenes any agreements or Applicable
Laws relating to unfair competition, trade secrets or proprietary information.
Closing will not result in the payment, vesting or acceleration of any benefit,
payment or amount under any of Travelbyus Benefit Plans.
3.14. Environmental
3.14.1. Environmental Laws - Travelbyus and its Subsidiaries are in compliance
in all material respects with all applicable Environmental Laws. Neither
Travelbyus nor any of its Subsidiaries has received any communication that
alleges that Travelbyus or any of its Subsidiaries was or is not in compliance
in all respects with or has any liability under any applicable Environmental
Law. To the knowledge of Travelbyus there are no circumstances that may prevent
or interfere with compliance in the future with all applicable Environmental
Laws.
3.14.2. Environmental Claims - There is no Environmental Claim pending or to
the knowledge of Travelbyus, threatened against or involving Travelbyus or any
of its Subsidiaries or against any Person whose liability for any Environmental
Claim Travelbyus or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law that if existed, would cause a
Material Adverse Effect.
3.15. Assets Other Than Real Property
3.15.1. Title - Travelbyus and its Subsidiaries have good and marketable title
to all of the tangible assets shown on the Travelbyus Balance Sheet, in each
case, free and clear of any Encumbrances except; (a) assets disposed of since
the date of the Travelbyus Balance Sheet in the ordinary course of business and
in a manner consistent with past practice and not material in amount; (b)
Encumbrances reflected in the Travelbyus Balance Sheet or otherwise in the most
recent consolidated financial statements filed by Travelbyus with the
Commissions; (c) Permitted Encumbrances; and (d) Encumbrances set forth in
section 3.15 of the Travelbyus Disclosure Schedule. None of such Encumbrances in
sections (a) through (d) individually or in the aggregate, would result in a
Material Adverse Effect.
3.15.2. Condition - Except as set forth in section 3.15.2 of the Travelbyus
Disclosure Schedule, all receivables shown on the Travelbyus Balance Sheet and
all receivables accrued by Travelbyus and its Subsidiaries since the date of the
Travelbyus Balance
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Sheet have been collected or are collectible in the aggregate amount shown. All
material plant, equipment and personal property owned by Travelbyus and its
Subsidiaries and regularly used in their respective business are in good
operating condition and repair, ordinary wear and tear excepted.
3.16. Real Property
3.16.1. Travelbyus Real Property - Neither Travelbyus nor its Subsidiaries own
any real property.
3.16.2. Travelbyus Leases - Section 3.16.2 of the Travelbyus Disclosure Schedule
lists all of the Leases of Travelbyus and its Subsidiaries. Travelbyus has
delivered to T24 complete copies of the Leases and all material amendments
thereto (which are identified in section 3.16.2 of the Travelbyus Disclosure
Schedule). Travelbyus Leases grant to Travelbyus or its Subsidiaries leasehold
estates free and clear of all Encumbrances except Permitted Encumbrances.
Travelbyus Leases are in full force and effect and are binding and enforceable
against each of the parties thereto in accordance with their respective terms.
Neither Travelbyus nor any of its Subsidiaries nor to the knowledge of
Travelbyus, any other party to a Travelbyus Lease is in material Violation of
any Travelbyus Lease nor are there any facts or circumstances that would
reasonably indicate that Travelbyus or any of its Subsidiaries is likely to be
in material Violation of any Travelbyus Lease. Section 3.16.2 of the Travelbyus
Disclosure Schedule correctly identifies each Travelbyus Lease that requires the
consent of any Person in connection with the transactions contemplated hereby.
No material construction, alteration or other leasehold improvement work with
respect to the real property covered by any of Travelbyus Leases remains to be
paid for or to be performed by Travelbyus or any of its Subsidiaries.
3.16.3. Condition - All buildings, structures and fixtures or parts thereof used
by Travelbyus or any of its Subsidiaries in the conduct of their respective
business are in good operating condition and repair, ordinary wear and tear
excepted and are insured with all coverages that are usual and customary for
similar properties and similar businesses and that pursuant to the terms of
Travelbyus Leases, are required to be insured by third parties.
3.17. Intellectual Property
3.17.1. Right to Intellectual Property - Except as set forth in section 3.17.1
of the Travelbyus Disclosure Schedule, Travelbyus and its Subsidiaries own or
have perpetual, fully paid, worldwide rights to use all patents, industrial
designs, trademarks, trade names, service marks, copyrights and any applications
therefor, maskworks, net lists, schematics, technology, websites, domain names,
inventions, know-how, trade secrets, algorithms, computer software programs or
applications (in both source code and object code form) and tangible or
intangible proprietary information or material that are used in the business of
Travelbyus and its Subsidiaries (the "Travelbyus Proprietary Rights"), free and
clear of any and all Encumbrances. To the knowledge of Travelbyus, there is no
reason why Travelbyus and its Subsidiaries will not be able to
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continue to own or have perpetual, fully paid, worldwide rights to use all
Travelbyus Proprietary Rights necessary for the lawful conduct of their
respective business as currently conducted and as currently proposed to be
conducted without any infringement or conflict with the rights of others. Except
as set forth in section 3.17.1 of the Travelbyus Disclosure Schedule all of the
rights of Travelbyus and its Subsidiaries in and to Travelbyus Proprietary
Rights are freely assignable in the name of Travelbyus or one of its
Subsidiaries including the right to create derivatives and Travelbyus and its
Subsidiaries are under no obligation to obtain any approval or consent for use
of any of Travelbyus Proprietary Rights.
3.17.2. List of Travelbyus Proprietary Rights - Section 3.17.2 of the Travelbyus
Disclosure Schedule sets forth a complete list of Travelbyus Proprietary Rights
specifying, where applicable, the jurisdictions in which each of Travelbyus
Proprietary Rights has been issued or registered or in which an application for
such issuance or registration has been filed including the respective
registration or application numbers and the names of all registered owners and
inventors, as applicable. Except as set forth in section 3.17.2 of the
Travelbyus Disclosure Schedule, none of the products of Travelbyus and its
Subsidiaries as currently marketed or supported have been registered for patent
protection or for copyright protection in any jurisdiction nor has Travelbyus or
any of its Subsidiaries been requested to make any such registration.
3.17.3. Royalties - Except as set forth in section 3.17.3 of the Travelbyus
Disclosure Schedule neither Travelbyus nor any of its Subsidiaries is obligated
to pay any royalties or other compensation to any Person in respect of its
ownership, use or license of any of their respective Travelbyus Proprietary
Rights.
3.17.4. Licenses - Section 3.17.4 of the Travelbyus Disclosure Schedule sets
forth a complete list of all material licenses, sublicenses and other agreements
to which Travelbyus or any of its Subsidiaries is a party and pursuant to which
Travelbyus or any of its Subsidiaries is authorized to use any Travelbyus
Proprietary Right (excluding End-User Licenses). Travelbyus Proprietary Rights
include all trademarks, trade names, service marks, trade secrets, websites and
domain names and software and all patent rights and industrial design rights
that are necessary for Travelbyus and its Subsidiaries to satisfy and perform
such licenses, sublicenses and agreements. None of Travelbyus, any of its
Subsidiaries and the other contracting parties thereto is in violation of any
license, sublicense or agreement included in such list except for violations
that do not materially impair the rights of Travelbyus or its Subsidiaries under
such license, sublicense or agreement, except as would not have a Material
Adverse Effect. Such licenses, sublicenses and agreements are in full force and
effect and are binding and enforceable against each of the parties thereto in
accordance with their respective terms. The execution and delivery by Travelbyus
of this Agreement, the performance by Travelbyus of its obligations hereunder
and the consummation by Travelbyus of the Transaction will not cause Travelbyus
or any of its Subsidiaries to be in violation or in default under any material
license, sublicense or agreement nor will entitle any other party to any such
license, sublicense or agreement to terminate or modify such license, sublicense
or agreement.
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3.17.5. Status of Registrations - All of Travelbyus Proprietary Rights set forth
in section 3.17.2 of the Travelbyus Disclosure Schedule as having been issued
by, registered with or filed with any patent or trademark office have been duly
so issued, registered or filed, as the case may be and have been properly
maintained and renewed in accordance with all Applicable Laws. Travelbyus and
each of its Subsidiaries have diligently protected their respective Travelbyus
Proprietary Rights and have diligently maintained the confidentiality of their
trade secrets, know-how and other confidential Travelbyus Proprietary Rights. To
the knowledge of Travelbyus there have been no acts or omissions by Travelbyus
or any of its Subsidiaries the result of which has been or would be to
compromise the rights of Travelbyus or any of its Subsidiaries to apply for or
enforce appropriate legal protection of Travelbyus Proprietary Rights.
3.17.6. No Conflict - Except as set forth in section 3.17.6 of the Travelbyus
Disclosure Schedule, no claims with respect to Travelbyus Proprietary Rights are
pending, have been asserted or to the knowledge of Travelbyus are threatened by
any Person nor to the knowledge of Travelbyus are there any valid grounds for
any bona fide claims; (a) to the effect that the development, sale, licensing or
use of any of the products of Travelbyus and its Subsidiaries as now developed,
sold, licensed or used or as proposed for development, sale, licensing or use by
Travelbyus and its Subsidiaries infringes on any patent, industrial design,
trademark, trade name, service ▇▇▇▇, copyright, trade secret, website or domain
name or other proprietary right of any Person; (b) against the use by Travelbyus
or any of its Subsidiaries of any patents, industrial designs, trademarks, trade
names, service marks, copyrights, website or domain name and any applications
therefor, maskworks, net lists, schematics, technology, know-how, trade secrets,
algorithms, computer software programs or applications and tangible or
intangible proprietary information or material used in the business of
Travelbyus and its Subsidiaries as currently conducted or as proposed to be
conducted; or (c) challenging the ownership by Travelbyus or any of its
subsidiaries of the validity of any registration for any application relating to
or the effectiveness of any of Travelbyus Proprietary Rights. To the knowledge
of Travelbyus there is no unauthorized use, infringement or misappropriation of
any of Travelbyus Proprietary Rights by any third Person including without
limitation, any current or former employee of Travelbyus or any of its
Subsidiaries. No Travelbyus Proprietary Right or product of Travelbyus or any of
its Subsidiaries is subject to any outstanding decree, order, judgment or
stipulation restricting in any manner the use or licensing thereof by Travelbyus
or any of its Subsidiaries.
3.17.7. Employee Agreements - To the knowledge of Travelbyus, no employee,
officer or consultant of Travelbyus or any of its Subsidiaries is in violation
of any term of any employment or consulting contract, proprietary information
and inventions agreement, non-competition agreement or any other contract or
agreement relating to the relationship of any such employee, officer or
consultant with Travelbyus or any of its Subsidiaries.
3.18. Agreements, Contracts and Commitments
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3.18.1. Travelbyus Agreements - Except as set forth in section 3.18 of the
Travelbyus Disclosure Schedule neither Travelbyus nor any of its Subsidiaries is
a party to or has:
(a) any pension, profit sharing, retirement, deferred compensation,
welfare, legal services, medical, dental or other employee benefit
or health insurance plans, life insurance or other death benefit
plans, disability, stock option, stock purchase, stock
compensation, bonus, vacation pay, severance pay or other similar
plans, programs or agreements or material personnel policy which is
not set forth in section 3.12 of the Travelbyus Disclosure Schedule
(other than normal policies regarding holidays, vacations and
salary continuation during short absences for illnesses or other
reasons);
(b) any employment agreement which provides for a payment which, if
paid pro rata on a monthly basis, would exceed $5,000 per month, or
any employment agreement which is binding on Travelbyus for a
period in excess of one year, with any present employee, officer,
director or consultant (or former employees, officers, directors or
consultants to the extent there remain at the date hereof
obligations to be performed by Travelbyus or any of its
Subsidiaries);
(c) any agreement for personal services or employment that upon
termination requires any payments greater than those that would
otherwise be imposed by Applicable Law;
(d) any agreement of guarantee or indemnification;
(e) any agreement or commitment containing a covenant limiting or
purporting to limit the freedom of Travelbyus or any of its
Subsidiaries; (i) to compete with any Person in any geographic
area; (ii) to engage in any line of business; or (iii) to hire or
solicit any individual for employment or consulting services;
(f) any lease, other than the Leases, under which Travelbyus or any of
its Subsidiaries is a lessee or lessor that involves payments of
$100,000 or more per annum or is material to the conduct of the
business of Travelbyus or any of its Subsidiaries;
(g) any joint venture or profit-sharing agreement;
(h) except for trade indebtedness incurred in the ordinary course of
business and reflected on the Travelbyus Balance Sheet, any loan or
credit agreements providing for the extension of credit to
Travelbyus or any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other
entities or indebtedness for borrowed money by way of direct loan,
sale of debt securities, purchase
-26-
money obligation, conditional sale, lease, guarantee or otherwise
that individually is in the amount of $100,000 or more;
(i) any agreement or arrangement with any third Person to develop any
intellectual property or other asset expected to be used or
currently used or useful in the business of Travelbyus or any of
its Subsidiaries;
(j) any agreement or arrangement for Travelbyus or any of its
Subsidiaries to develop any intellectual property or other asset
for any third Person;
(k) any agreement or arrangement providing for the payment of any
commission based on sales other than in the ordinary course of
business and consistent with past practice;
(l) any agreement for the sale or license by or to Travelbyus or any of
its Subsidiaries of materials, products, services or supplies that
involves future payments to Travelbyus or any of its Subsidiaries
of more than $100,000;
(m) any agreement for the purchase by Travelbyus or any of its
Subsidiaries of any materials, equipment, services or supplies that
either; (i) involves a binding commitment by Travelbyus or such
Subsidiary to make future payments in excess of $100,000 and cannot
be terminated by Travelbyus or such Subsidiary without penalty upon
less than three months' notice; or (ii) was not entered into in the
ordinary course of business;
(n) any agreement or commitment for the acquisition, construction or
sale of fixed assets owned or to be owned by Travelbyus or any of
its Subsidiaries that involves future payments by it of more than
$100,000;
(o) any agreement or commitment to which present or former directors or
officers (or members of their immediate families) or Affiliates (or
directors or officers of an Affiliate) are also parties;
(p) any agreement not described above (ignoring solely for this purpose
any dollar amount thresholds in those descriptions) involving the
payment or receipt by Travelbyus or any of its Subsidiaries of more
than $100,000, other than the Leases; or
(q) any agreement not described above that was not made in the ordinary
course of business and that is material to the financial condition,
business, operations, assets, results of operations or prospects of
Travelbyus and its Subsidiaries taken as a whole.
3.18.2. Validity, Violation and Consent - The contracts, including those listed
in section 3.18 of the Travelbyus Disclosure Schedule are valid and in full
force and effect.
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Neither Travelbyus nor any of its Subsidiaries is in Violation of any term,
condition or provision of any Contract to which Travelbyus or any of its
Subsidiaries is a party or by which it, any of its Subsidiaries or any of their
respective material assets or properties is bound or which is applicable to it,
any of its Subsidiaries or any of their respective material assets or properties
except for such Violations which, individually or in the aggregate, would not
result in a Material Adverse Effect. Section 3.18.2 of the Travelbyus Disclosure
Schedule identifies each Contract that requires the consent of a third Person in
connection with the Transaction.
3.19. Insurance Contracts - Section 3.19 of the Travelbyus Disclosure Schedule
lists all material contracts of insurance and indemnity (other than those
identified as such in other sections of the Travelbyus Disclosure Schedule) in
force at the date hereof with respect to Travelbyus and its Subsidiaries. Such
contracts of insurance and indemnity and those identified as such in other
sections of the Travelbyus Disclosure Schedule (collectively, the "Travelbyus
Insurance Contracts") insure against such risks and are in such amounts as are
reasonable and appropriate considering Travelbyus and its Subsidiaries and their
respective property, business and operations. Except as set forth in section
3.19 of the Travelbyus Disclosure Schedule, all of Travelbyus Insurance
Contracts are in full force and effect with no default thereunder by Travelbyus
or any of its Subsidiaries which could permit the insurer to deny payment of
claims thereunder. The execution and delivery by Travelbyus of this Agreement
and the other agreements contemplated hereby, the performance by Travelbyus of
its obligations hereunder and thereunder and the consummation by Travelbyus of
the other transactions contemplated hereby and thereby will not cause Travelbyus
or any of its Subsidiaries to be in Violation of any Travelbyus Insurance
Contracts nor entitle any other party thereto to terminate or modify a
Travelbyus Insurance Contract. Neither Travelbyus nor any of its Subsidiaries
has received notice from any of their respective insurance carriers that any
insurance premiums will be materially increased in the future or that any
insurance coverage provided under Travelbyus Insurance Contracts will not be
available in the future on substantially the same terms as now in effect.
Neither Travelbyus nor any of its Subsidiaries has received nor has given a
notice of cancellation with respect to any of Travelbyus Insurance Contracts.
3.20 Banking Relationships - Section 3.20 of the Travelbyus Disclosure
Schedule sets forth the names and locations of all banks and trust companies in
which Travelbyus or any of its Subsidiaries has accounts, lines of credit or
safety deposit boxes.
3.21 Suppliers, Distributors and Customers - The relationships of Travelbyus
and its Subsidiaries with their respective suppliers, distributors and customers
are satisfactory commercial working relationships. Except as set forth in
section 3.21 of the Travelbyus Disclosure Schedule since the date of the
Travelbyus Balance Sheet no material supplier, distributor or customer of
Travelbyus or any of its Subsidiaries has cancelled or otherwise adversely
modified its relationship with Travelbyus or any of its Subsidiaries and to the
knowledge of Travelbyus no supplier, distributor or customer of Travelbyus or
any of its Subsidiaries has any intention to do so and to the knowledge of
Travelbyus none of the execution and delivery by Travelbyus of this Agreement,
the
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performance by Travelbyus of its obligations hereunder and the consummation by
Travelbyus of the Transaction will materially adversely affect any such
relationship.
3.22. Products - Each product sold, leased, licensed or delivered by Travelbyus
or any of its Subsidiaries has been in material conformity with all applicable
contractual commitments.
3.23. No Broker's or Finder's Fees - Except for Wellington West Capital Inc.,
none of Travelbyus, any of its Subsidiaries and their respective directors,
officers, employees and agents has employed any broker, finder, financial
advisor or intermediary or has paid or incurred any liability for any fee or
commission to any broker, finder, financial advisor or intermediary in
connection with this Agreement, the Arrangement or any other transaction
contemplated hereby. Travelbyus has made available to T24 a complete and correct
copy of any engagement letter or other agreement or arrangement between
Wellington West Capital Inc. on the one hand and Travelbyus on the other hand.
3.24. Full Disclosure - This Agreement does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements contained herein and therein not false or misleading. To the
knowledge of Travelbyus there is no fact existing on the date hereof that
Travelbyus has not disclosed to T24 in writing that could result in a Material
Adverse Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF T24
T24 represents and warrants to Travelbyus that the statements in this Article 4
are true and correct except as set forth in the disclosure schedule delivered by
T24 to Travelbyus on the date hereof (the "T24 Disclosure Schedule"). The T24
Disclosure Schedule shall be arranged in sections and paragraphs corresponding
to the numbered and lettered sections and paragraphs in this Article 4. The
disclosure in any section or paragraph of T24 Disclosure Schedule shall qualify
other sections and paragraphs in this Article 4 only to the extent that it is
reasonably apparent from a reading of such disclosure that it also qualifies or
applies to such other sections or paragraphs.
4.1. Corporate Status of T24 and its Subsidiaries - Each of T24 and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the Laws of its jurisdiction of incorporation with the requisite
corporate power and authority to carry on its business as currently being
conducted and to own, lease and operate the properties currently owned, leased
and operated by it. Each of T24 and its Subsidiaries is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of the
properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification or licensing necessary, except in
jurisdictions in which the failure to be so qualified or licensed would not
result in a Material Adverse Effect.
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Section 4.1 of the T24 Disclosure Schedule sets forth a complete list of T24's
Subsidiaries, their jurisdictions of incorporation and a complete list of each
jurisdiction in which each of T24 and its Subsidiaries is duly qualified and in
good standing to do business.
4.2. Articles of Association, Directors and Officers - T24 has delivered to
Travelbyus true and complete copies of the Articles of Association of T24 as in
effect on the date hereof. Each of the minute books of T24 and its Subsidiaries
made available to Travelbyus contains accurate records of all meetings and
written consents of the Board of Directors and Supervisory Board of T24 or its
Subsidiaries, as the case may be (and any committees thereof) and of its
securityholders (or other equity holders having rights to vote or consent) since
the date of incorporation and such records accurately reflect all transactions
referred to in such minutes and consents. Section 4.2 of the T24 Disclosure
Schedule sets forth a list of the managing directors and supervisory board
members of T24 and its Subsidiaries.
4.3. Authority for Agreement; Noncontravention
4.3.1. Authority\ - T24 has all requisite corporate power and authority to
enter into this Agreement and to consummate the Transaction including without
limitation the making of the T24 Loan Commitment. The execution and delivery by
T24 of this Agreement and the consummation by T24 of the Transaction including
without limitation the making of the T24 Loan Commitment have been duly and
validly authorized by the Board of Directors and Supervisory Board of T24. No
other corporate approvals on the part of T24 are necessary to authorize the
execution and delivery by T24 of this Agreement and the consummation by T24 of
the Transaction including without limitation the making of the T24 Loan
Commitment. This Agreement has been duly executed and delivered by T24 and
constitutes a valid and binding obligation of T24, enforceable against T24 in
accordance with its terms, subject to the qualifications that enforcement of the
rights and remedies created hereby are subject to Bankruptcy Laws.
4.3.2. No Conflict - None of the execution and delivery by T24 of this
Agreement, the performance by T24 of its obligations hereunder and the
consummation by T24 of the Transaction including without limitation the making
of the T24 Loan Commitment will cause a Violation of any term, condition or
provision of the Articles of Association of T24 or any of its Subsidiaries or
any contract, judgement, decree or order to which T24 or any of its Subsidiaries
is a party or by which it, any of its Subsidiaries or any of their respective
material assets or properties is bound or to the knowledge of T24, any
Applicable Laws, other than such Violations which individually or in the
aggregate would not result in a Material Adverse Effect.
4.4. Governmental Consents - No Consent is required to be obtained by T24 or
any of its Subsidiaries in connection with the execution and delivery by T24 of
this Agreement, the performance by T24 of its obligations hereunder and the
consummation of the Transaction including without limitation the making of the
T24 Loan Commitment except any approvals required under applicable federal or
state securities Laws and the
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rules of the GNM except for the consents of the GNM and Commerz bank which are
necessary for the issuance of the shares.
4.5. Capitalization
4.5.1. Authorized Share Capital of T24 - The authorized and issued share
capital of T24 is as set forth in section 4.5.1 of the T24 Disclosure Schedule.
All of the issued T24 Common Shares have been duly authorized and validly issued
and are fully paid and nonassessable except with respect to 3,150,000 shares
which are expected to be fully paid on or about June 30, 2000. None of the
issued T24 Common Shares was issued in violation of the terms of any agreement
or other understanding binding upon T24. All of the issued T24 Common Shares
were issued in compliance with all applicable charter documents of T24 and all
Applicable Laws. There are and have been no preemptive rights with respect to
the issuance of T24 Common Shares.
4.5.2. Options and Convertible Securities of T24 - Section 4.5.2 of the T24
Disclosure Schedule sets forth a complete list of: (a) each stock option plan,
stock purchase plan and each other plan, arrangement or agreement under which
T24 or any of its Subsidiaries has reserved shares or any securities or
obligations convertible into or exercisable or exchangeable for any shares, to
any employee, director, consultant, service provider or other Person
(collectively, the "T24 Plans"); and (b) the number of shares, securities or
obligations reserved for issuance under such plan, arrangement or agreement. All
such plans, arrangements and agreements are in compliance with all Applicable
Laws. Except as set forth in section 4.5.2 of the T24 Disclosure Schedule, there
are no outstanding subscriptions, options, warrants or conversion rights or
other rights, securities, agreements, calls or commitments (contingent or
otherwise) that obligate T24 to issue, sell, deliver or otherwise dispose of
shares or any securities or obligations convertible into or exercisable or
exchangeable for any shares. None of the execution and delivery by T24 of this
Agreement, the performance by T24 of its obligations hereunder and thereunder
and the consummation by T24 of the Transaction including without limitation the
making of the T24 Loan Commitment and any other event that occurred on or prior
to the date hereof will accelerate the vesting under any item set forth in
section 4.5.2 of the T24 Disclosure Schedule. There are no voting trusts or
other agreements or understandings to which T24 or to the knowledge of T24, any
securityholder of T24 is a party with respect to the voting of the T24 Common
Shares except as set forth in section 4.5.2 of the T24 Disclosure Schedule.
Except as set forth in section 4.5.2 of the T24 Disclosure Schedule, T24 is not
a party to or bound by any outstanding restrictions, puts, options or other
obligations, agreements or commitments to repurchase, redeem or otherwise
acquire any outstanding T24 Common Stock or other equity securities of T24.
4.5.3. Subsidiaries - Section 4.5.3 of the T24 Disclosure Schedule sets forth
the authorized and issued shares of each of T24's Subsidiaries. All of the
issued shares of each of T24's Subsidiaries have been duly authorized and
validly issued and are fully paid and nonassessable. None of the issued
securities of any of T24's Subsidiaries was issued in violation of the terms of
any agreement or other understanding binding upon the issuing Subsidiary and all
of such issued securities were issued in compliance
-31-
with all applicable charter documents of the issuing Subsidiary and all
Applicable Laws. There are no outstanding subscriptions, options, warrants or
conversion rights or other rights, securities, agreements, calls or commitments
(contingent or otherwise) that obligate any of T24's Subsidiaries to issue,
sell, deliver or otherwise dispose of shares or any securities or obligations
convertible into or exercisable or exchangeable for any shares. There are and
have been no preemptive rights with respect to the issuance of securities of any
of T24's Subsidiaries. T24 owns beneficially and of record all of the
outstanding securities of each of its Subsidiaries, free and clear of all
Encumbrances save and except as set forth in section 4.5.3 of the T24 Disclosure
Schedule. Other than T24's Subsidiaries, T24 does not own, directly or
indirectly, any shares or other equity interests or securities in any Person.
4.6. Securities Reports; Financial Statements - T24 has filed all forms,
reports and documents with the Deutsche Borse AG and the GNM (including
prospectuses, offering memoranda and filing statements) required to be filed by
it pursuant to Applicable Laws (collectively, the "T24 Securities Reports"). T24
has delivered or made available to Travelbyus true and complete copies of; (a)
its . for the fiscal years ended .; (b) all proxy statements relating to T24's
meetings of shareholders (whether annual or special) held since .; (c) all
reporting of T24 filed by T24 with the Deutsche Borse AG since January 1, 1998;
and (d) all amendments and supplements to all such forms, reports and documents
filed by T24 with Deutsche Borse AG. As of their respective dates, the T24
Securities Reports complied in all material respects with Applicable Laws and
did not contain any 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 under which they were made, not
misleading. The financial statements (including any related notes) of T24
included in the T24 Securities Reports complied in all material respects with
applicable accounting requirements and with Applicable Laws, were prepared in
conformity with Germany generally accepted accounting principles applied on a
consistent basis (except as otherwise stated in the financial statements) and
present fairly the consolidated financial position, results of operations,
shareholders' equity, liabilities (contingent or otherwise) and cash flows, as
the case may be, of T24 and its consolidated Subsidiaries as of the dates and
for the periods indicated, subject, in the case of unaudited interim financial
statements to; (i) the absence of certain notes thereto; and (ii) normal year-
end audit adjustments.
4.7. Absence of Material Adverse Changes and Undisclosed Liabilities
4.7.1. Changes - Since the date of the most recent consolidated balance sheet
drawn up by T24 as of December 31, 1999 (the "T24 Balance Sheet"), T24 has not
experienced a Material Adverse Effect. Without limiting the generality of the
foregoing, except as set forth in section 4.7.1 of the T24 Disclosure Schedule,
since the date of the T24 Balance Sheet neither T24 nor any of its Subsidiaries
has:
(a) sold, leased, transferred or assigned any of its assets, tangible
or intangible, other than in the ordinary course of business;
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(b) accelerated, terminated, modified or canceled any contract,
lease, sublease, license or sublicense (or series of related
contracts, leases, subleases, licenses and sublicenses)
involving more than $100,000;
(c) cancelled, compromised, waived or released any right or claim
(or series of related rights and claims) either involving more
than $100,000 or outside the ordinary course of business;
(d) experienced material damage, destruction or loss (whether or
not covered by insurance) to its material property (other than
ordinary wear and tear not caused by neglect);
(e) created or suffered to exist any Encumbrance (other than
Permitted Encumbrances) upon any of the assets, tangible or
intangible, of T24 or any Subsidiary;
(f) issued, sold, delivered or otherwise disposed of any shares or
any securities or obligations convertible into or exercisable
or exchangeable for any shares of T24 or any of its
Subsidiaries or undergone any reorganization,
recapitalization, reclassification, stock split or reverse
stock split except for the issuance of shares as set forth in
section 4.7.1(f) of the T24 Disclosure Schedule;
(g) accelerated, amended, repriced or changed the period of
exercisability of any outstanding security or authorized cash
payments in exchange for any options granted under any of the
T24 Plans;
(h) declared, set aside or paid any dividend or distribution with
respect to its shares (whether in cash or in kind) or directly
or indirectly redeemed, purchased or otherwise acquired any of
its shares;
(i) entered into financial arrangements for the benefit of any
director, officer or securityholder of T24 other than in
connection with such Person's employment by T24 in the
ordinary course of its business and consistent with past
practice (however, the annual remuneration of the Managing
Directors has been adjusted by a resolution of the Supervisory
Board);
(j) made or committed to make any capital expenditures or entered
into any other material transaction outside the ordinary
course of business or involving an expenditure in excess of
$100,000 except as set forth in section 4.7.1(j) of the T24
Disclosure Schedule;
(k) amended or modified in any respect any employment contract or
arrangement or any profit sharing, bonus, incentive
compensation, severance, employee benefit or multi-employer
plans except to comply with Applicable Laws (however, annual
remuneration of the Managing Directors has been adjusted by a
resolution of the Supervisory Board);
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(l) entered into any employment agreement or collective bargaining
agreement or increased the compensation of any of its employees
other than in the ordinary course of its business and consistent
with past practice; or
(m) committed (orally or in writing) to do any of the foregoing.
4.7.2. Liabilities - Except for liabilities and obligations set forth in; (i)
the T24 Securities Reports; or (ii) section 4.7.2 of the T24 Disclosure
Schedule, neither T24 nor any of its Subsidiaries has any Liabilities required
by Germany generally accepted accounting principles to be set forth on a
consolidated balance sheet of T24 or in the notes thereto and which,
individually or in the aggregate, could be reasonably expected to have a
Material Adverse Effect.
4.8. Litigation and Audits - Except as set forth in section 4.8 of the T24
Disclosure Schedule, there is no investigation or inquiry by any Governmental
Entity with respect to T24 or any of its Subsidiaries pending or to the
knowledge of T24 threatened, nor has any Governmental Entity indicated to T24 or
any of its Subsidiaries an intention to conduct the same. Except as set forth in
section 4.8 of the T24 Disclosure Schedule, there is no claim, action, suit,
arbitration or proceeding pending or to the knowledge of T24, threatened against
or involving T24, any of its Subsidiaries or any of their respective assets or
properties, at law or in equity or before any arbitrator or Governmental Entity,
which if determined adversely to T24 or any Subsidiary could result in a
Material Adverse Effect. There are no judgments, decrees, injunctions, orders or
rulings of any Governmental Entity or arbitrator outstanding against T24 or any
of its Subsidiaries, which if existed, would result in a Material Adverse
Effect.
4.9. Compliance with Applicable Law and Articles of Association - Each of T24
and its Subsidiaries has all requisite Permits necessary to carry on its
respective business as currently being conducted and to own, lease and operate
the respective properties currently owned, leased and operated by it in the
manner currently owned, leased and operated, except where the failure to have
such Permits would not result in a Material Adverse Effect. There are no
proceedings pending or to the knowledge of T24 threatened, which might result in
the revocation, cancellation, suspension or adverse modification of any such
Permit. The business of T24 and its Subsidiaries has not been conducted in
Violation of Applicable Laws, except for Violations which individually or in the
aggregate would not result in a Material Adverse Effect. Neither T24 nor any of
its Subsidiaries is in Violation of nor has any event occurred that has resulted
or will result in any Violation of any term, condition or provision of the
Articles of Association of T24 and its Subsidiaries.
4.10. Books and Records; Accounting Matters - The books, records and accounts
of T24 and its Subsidiaries: (a) have been maintained in accordance with good
business practices; (b) are stated in reasonable detail and accurately and
fairly reflect in all material respects the transactions and dispositions of the
respective assets of T24 and its Subsidiaries; and (c) accurately and fairly
reflect in all material respects the basis for the
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T24 Balance Sheet. T24 has devised and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary: (a) to permit preparation of
accurate financial statements in conformity with Germany generally accepted
accounting principles or any other criteria applicable to such statements; and
(b) to maintain accountability for assets. For the business year 1999, T24 has
changed its consolidated accounting from German accounting principles to US
generally accepted accounting principles.
4.11. Tax Matters
4.11.1. Filing of Returns - Each of T24 and its Subsidiaries has prepared and
timely filed with all appropriate Governmental Entities all Tax Returns that it
was required to file. All such Tax Returns were correct and complete in all
material respects. Neither T24 nor any of its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return other
than extensions for which T24 or any of its Subsidiaries has filed a request
which request has resulted in the automatic granting of such extension. No
Governmental Entity in any jurisdiction in which T24 and any of its Subsidiaries
does not file Tax Returns has ever claimed that T24 or any of its Subsidiaries
is or may be subject to taxation by that jurisdiction.
4.11.2. Payment of Taxes - All Taxes payable or owed by T24 and its Subsidiaries
(whether or not shown on any Tax Return) have been paid when due, and all Taxes
due. In the case of Taxes accruing on or before the date hereof that are not due
on or before the date hereof, T24 has made adequate provision in its books and
records and financial statements for such payment. There are no security
interests on any assets of T24 or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
4.11.3. Withholding - Each of T24 and its Subsidiaries has withheld from
payments made to each of its current or former employees, officers, directors,
shareholders, independent contractors, creditors, non-residents and other
Persons all amounts required by Applicable Laws to be withheld and, where
required, has remitted such amounts within the applicable periods to the
appropriate Governmental Entity.
4.11.4. Assessments - Neither T24 nor any of its Subsidiaries expects any
authority to assess any additional Taxes in excess of tax reserves provided for
in T24's financial statements against T24 or any of its Subsidiaries for any
period for which Tax Returns have been filed. No Tax Return of T24 or any of its
Subsidiaries has been audited or currently is the subject of audit. No
Governmental Authority has raised any dispute or claim concerning any Tax
liability of T24 or any of its Subsidiaries. Neither T24 nor any of its
Subsidiaries has waived any statute of limitations with respect to Taxes or has
agreed to any extension of time with respect to a Tax assessment or deficiency.
4.11.5. Access to Returns - T24 has provided Travelbyus with a copy of or access
to all German and other state and local income and capital Tax returns filed by
T24 and its Subsidiaries after.. T24 has provided Travelbyus with a copy of or
access to all
-35-
assessments, extensions and waivers resulting from any examinations or audits of
T24 or any of its Subsidiaries by a Governmental Entity in respect of Taxes, and
all such assessments and related penalties and interest have been paid in full
unless being contested in good faith by T24 or any of its Subsidiaries and
described in section 4.11 of the T24 Disclosure Schedule.
4.12. Employee Benefit Plans - Except for the Employee Stock Purchase Plan
described under section 4.5.2., there are no Employee Benefit Plans.
4.13. Employment-Related Matters - Neither T24 nor any of its Subsidiaries is
a party to any collective bargaining agreement or other contract or agreement
with any labor organization or other representative of any of the employees of
T24 or any of its Subsidiaries nor are any of such contracts or agreements
pending or contemplated except as set forth in section 4.13 of the T24
Disclosure Schedule. There is no labor strike, dispute, slowdown, work stoppage
or lockout that is pending or to the knowledge of T24, threatened against or
otherwise affecting T24 and neither T24 nor any of its Subsidiaries has ever
experienced same. Except as set forth in section 4.13 of the T24 Disclosure
Schedule neither T24 nor any of its Subsidiaries has closed any plant or
facility, effectuated any layoffs of employees or implemented any early
retirement or separation program at any time nor has T24 or any of its
Subsidiaries planned or announced any such action or program for the future with
respect to which T24 or any of its Subsidiaries may have any liability. All
salaries, wages, vacation pay, bonuses, commissions and other compensation
payable by T24 or any of its Subsidiaries to their respective employees before
the date hereof have been paid or accrued in all material respects as of the
date hereof. No Person has asserted any claim or to the knowledge of T24 has any
reasonable basis to assert any valid claim against T24 or any of its
Subsidiaries that either the continued employment by or association with T24 or
any of its Subsidiaries of any of the current officers or employees of or
consultants to T24 or any of its Subsidiaries contravenes any agreements or
Applicable Laws relating to unfair competition, trade secrets or proprietary
information. Closing will not result in the payment, vesting, or acceleration of
any benefit, payment or amount under any of the T24 Benefit Plans.
4.14. Environmental
4.14.1. Environmental Laws - T24 and its Subsidiaries are in compliance in all
material respects with all applicable Environmental Laws. Neither T24 nor any of
its Subsidiaries has received any communication that alleges that T24 or any of
its Subsidiaries was or is not in compliance in all respects with or has any
liability under any applicable Environmental Law. To the knowledge of T24, there
are no circumstances that may prevent or interfere with compliance in the future
with all applicable Environmental Laws.
4.14.2. Environmental Claims - There is no Environmental Claim pending or to the
knowledge of T24 threatened against or involving T24 or any of its Subsidiaries
or against any Person whose liability for any Environmental Claim T24 or any of
its
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Subsidiaries has or may have retained or assumed either contractually or by
operation of law that, if existed, would cause a Material Adverse Effect.
4.15. Assets Other Than Real Property
4.15.1. Title - T24 and its Subsidiaries have good and defensible title to all
of the tangible assets shown on the T24 Balance Sheet, in each case, free and
clear of any Encumbrances except; (a) assets disposed of since the date of the
T24 Balance Sheet in the ordinary course of business and in a manner consistent
with past practice and not material in amount; (b) Encumbrances reflected in the
T24 Balance Sheet or otherwise in the most recent consolidated financial
statements as of December 31, 1999; (c) Permitted Encumbrances; (d) Encumbrances
set forth in section 4.15 of the T24 Disclosure Schedule; and (e) Encumbrances
in the ordinary course of business which are customary in the trade.
4.15.2. Condition - Except as set forth in section 4.15.2 of the T24 Disclosure
Schedule, all receivables shown on the T24 Balance Sheet and all receivables
accrued by T24 and its Subsidiaries since the date of the T24 Balance Sheet have
been collected or are collectible in the aggregate amount shown or have been
written off as irrevocable. All material plant, equipment and personal property
owned by T24 and its Subsidiaries and regularly used in their respective
business are in good operating condition and repair, ordinary wear and tear
excepted.
4.16. Real Property
4.16.1. T24 Real Property - Except as set forth on section 4.16.1 of the T24
Disclosure Schedule, neither T24 nor its Subsidiaries own any real property.
4.16.2. T24 Leases - Section 4.16.2 of the T24 Disclosure Schedule lists all of
the Leases of T24 and its Subsidiaries. T24 has delivered or made available to
Travelbyus complete copies of the Leases and all material amendments thereto
(which are identified in section 4.16.2 of the T24 Disclosure Schedule). The T24
Leases grant to T24 or its Subsidiaries leasehold estates free and clear of all
Encumbrances except Permitted Encumbrances. The T24 Leases are in full force and
effect and are binding and enforceable against each of the parties thereto in
accordance with their respective terms. Neither T24 nor any of its Subsidiaries
nor to the knowledge of T24, any other party to a T24 Lease is in material
Violation of any T24 Lease nor are there any facts or circumstances that would
reasonably indicate that T24 or any of its Subsidiaries is likely to be in
material Violation of any T24 Lease. Section 4.16.2 of the T24 Disclosure
Schedule correctly identifies each T24 Lease that requires the consent of any
Person in connection with the transactions contemplated hereby. No material
construction, alteration or other leasehold improvement work with respect to the
real property covered by any of the T24 Leases remains to be paid for or to be
performed by T24 or any of its Subsidiaries.
4.16.3. Condition - All buildings, structures and fixtures or parts thereof used
by T24 or any of its Subsidiaries in the conduct of their respective business
are in good operating
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condition and repair, ordinary wear and tear excepted and are insured with all
coverages that are usual and customary for similar properties and similar
businesses and that, pursuant to the terms of the T24 Leases, are required to be
insured by third parties.
4.17. Intellectual Property
4.17.1. Right to Intellectual Property - Except as set forth in section 4.17.1
of the T24 Disclosure Schedule, T24 and its Subsidiaries own or have, subject to
statutory restrictions, rights to use all patents, industrial designs,
trademarks, trade names, service marks, copyrights and any applications
therefor, maskworks, net lists, schematics, technology, websites, domain names,
inventions, know-how, trade secrets, algorithms, computer software programs or
applications (in both source code and object code form) and tangible or
intangible proprietary information or material that are used in the business of
T24 and its Subsidiaries (the "T24 Proprietary Rights"), free and clear of any
and all Encumbrances. To the knowledge of T24, there is no reason why T24 and
its Subsidiaries will not be able to continue to own or have, subject to
statutory restrictions, unlimited rights to use all T24 Proprietary Rights
necessary for the lawful conduct of their respective business as currently
conducted and as currently proposed to be conducted without any infringement or
conflict with the rights of others. Except as set forth in section 4.17.1 of the
T24 Disclosure Schedule, all of the rights of T24 and its Subsidiaries in and to
the T24 Proprietary Rights are freely assignable in the name of T24 or one of
its Subsidiaries including the right to create derivatives and T24 and its
Subsidiaries are under no obligation to obtain any approval or consent for use
of any of the T24 Proprietary Rights.
4.17.2. List of T24 Proprietary Rights - Section 4.17.2 of the T24 Disclosure
Schedule sets forth a complete list of the T24 Proprietary Rights specifying,
where applicable, the jurisdictions in which each of the T24 Proprietary Rights
has been issued or registered or in which an application for such issuance or
registration has been filed including the respective registration or application
numbers and the names of all registered owners and inventors, as applicable.
None of the products of T24 and its Subsidiaries as currently marketed or
supported have been registered for patent protection or for copyright protection
in any jurisdiction nor has T24 or any of its Subsidiaries been requested to
make any such registration.
4.17.3. Royalties - Except as set forth in section 4.17.3 of the T24 Disclosure
Schedule, neither T24 nor any of its Subsidiaries is obligated to pay any
royalties or other compensation to any Person in respect of its ownership, use
or license of any of their respective T24 Proprietary Rights.
4.17.4. Licenses - Section 4.17.4 of the T24 Disclosure Schedule sets forth a
complete list of all material licenses, sublicenses and other agreements to
which T24 or any of its Subsidiaries is a party and pursuant to which T24 or any
of its Subsidiaries is authorized to use any T24 Proprietary Right (excluding
End-User Licenses). The T24 Proprietary Rights include all trademarks, trade
names, service marks, trade secrets, websites and domain names and software and
all patent rights and industrial design rights that are
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necessary for T24 and its Subsidiaries to satisfy and perform such licenses,
sublicenses and agreements. None of T24, any of its Subsidiaries and the other
contracting parties thereto is in violation of any license, sublicense or
agreement included in such list except for violations that do not materially
impair the rights of T24 or its Subsidiaries under such license, sublicense or
agreement, except as would not have a Material Adverse Effect. Such licenses,
sublicenses and agreements are in full force and effect and are binding and
enforceable against each of the parties thereto in accordance with their
respective terms. The execution and delivery by T24 of this Agreement, the
performance by T24 of its obligations hereunder and the consummation by T24 of
the Transaction including without limitation the making of the T24 Loan
Commitment will not cause T24 or any of its Subsidiaries to be in violation or
in default under any such license, sublicense or agreement nor will entitle any
other party to any material license, sublicense or agreement to terminate or
modify such license, sublicense or agreement.
4.17.5. Status of Registrations - All of the T24 Proprietary Rights set forth in
section 4.17.2 of the T24 Disclosure Schedule as having been issued by,
registered with or filed with any patent or trademark office have been duly so
issued, registered or filed, as the case may be and have been properly
maintained and renewed in accordance with all Applicable Laws. T24 and each of
its Subsidiaries have diligently protected their respective T24 Proprietary
Rights and have diligently maintained the confidentiality of their trade
secrets, know-how and other confidential T24 Proprietary Rights. To the
knowledge of T24 there have been no acts or omissions by T24 or any of its
Subsidiaries the result of which has been or would be to compromise the rights
of T24 or any of its Subsidiaries to apply for or enforce appropriate legal
protection of the T24 Proprietary Rights except as set forth in section 4.17.5
of the T24 Disclosure Schedule.
4.17.6. No Conflict - Except as set forth in section 4.17.6 of the T24
Disclosure Schedule, no claims with respect to the T24 Proprietary Rights are
pending, have been asserted or to the knowledge of T24 are threatened by any
Person nor to the knowledge of T24 are there any valid grounds for any bona fide
claims; (a) to the effect that the development, sale, licensing or use of any of
the products of T24 and its Subsidiaries as now developed, sold, licensed or
used or as proposed for development, sale, licensing or use by T24 and its
Subsidiaries infringes on any patent, industrial design, trademark, trade name,
service ▇▇▇▇, copyright, trade secret, website or domain name or other
proprietary right of any Person; (b) against the use by T24 or any of its
Subsidiaries of any patents, industrial designs, trademarks, trade names,
service marks, copyrights, website or domain name and any applications therefor,
maskworks, net lists, schematics, technology, know-how, trade secrets,
algorithms, computer software programs or applications and tangible or
intangible proprietary information or material used in the business of T24 and
its Subsidiaries as currently conducted or as proposed to be conducted; or (c)
challenging the ownership by T24 or any of its Subsidiaries of the validity of
any registration for any application relating to or the effectiveness of any of
the T24 Proprietary Rights. To the knowledge of T24 there is no unauthorized
use, infringement or misappropriation of any of the T24 Proprietary Rights by
any third Person, including without limitation, any current or former employee
of T24 or any of its Subsidiaries. No T24 Proprietary Right or product of T24 or
any of its Subsidiaries is
-39-
subject to any outstanding decree, order, judgment or stipulation restricting in
any manner the use or licensing thereof by T24 or any of its Subsidiaries.
4.17.7. Employee Agreements - To the knowledge of T24, no employee, officer or
consultant of T24 or any of its Subsidiaries is in violation of any term of any
employment or consulting contract, proprietary information and inventions
agreement, non-competition agreement or any other contract or agreement relating
to the relationship of any such employee, officer or consultant with T24 or any
of its Subsidiaries.
4.18. Agreements, Contracts and Commitments
4.18.1. T24 Agreements - Except as set forth in section 4.18 of the T24
Disclosure Schedule, neither T24 nor any of its Subsidiaries is a party to or
has:
(a) any pension, profit sharing, retirement, deferred compensation,
welfare, legal services, medical, dental or other employee
benefit or health insurance plans, life insurance or other death
benefit plans, disability, stock option, stock purchase, stock
compensation, bonus, vacation pay, severance pay or other similar
plans, programs or agreements or material personnel policy which
is not already set forth in section 4.12 of the T24 Disclosure
Schedule (other than normal policies regarding holidays,
vacations and salary continuation during short absences for
illnesses or other reasons);
(b) any employment agreement which provides for a payment which, if
paid pro rata on a monthly basis, would exceed $5,000 per month,
or any employment agreement which is binding on T24 for a period
in excess of one year, with any present employee, officer,
director or consultant (or former employees, officers, directors
or consultants to the extent there remain at the date hereof
obligations to be performed by T24 or any of its Subsidiaries);
(c) any agreement for personal services or employment that upon
termination requires any payments greater than those that would
otherwise be imposed by Applicable Law;
(d) any agreement of guarantee or indemnification;
(e) any agreement or commitment containing a covenant limiting or
purporting to limit the freedom of T24 or any of its
Subsidiaries; (i) to compete with any Person in any geographic
area; (ii) to engage in any line of business; or (iii) to hire or
solicit any individual for employment or consulting services;
(f) any lease, other than the Leases, under which T24 or any of its
Subsidiaries is a lessee or lessor that involves payments of
$100,000 or
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more per annum or is material to the conduct of the business of
T24 or any of its Subsidiaries;
(g) any joint venture or profit-sharing agreement;
(h) except for trade indebtedness incurred in the ordinary course of
business and reflected on the T24 Balance Sheet, any loan or
credit agreements providing for the extension of credit to T24 or
any instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of
debt securities, purchase money obligation, conditional sale,
lease, guarantee or otherwise that individually is in the amount
of $100,000 or more;
(i) any agreement or arrangement with any third Person to develop any
intellectual property or other asset expected to be used or
currently used or useful in the business of T24 or any of its
Subsidiaries;
(j) any agreement or arrangement for T24 or any of its Subsidiaries
to develop any intellectual property or other asset for any third
Person;
(k) any agreement or arrangement providing for the payment of any
commission based on sales other than in the ordinary course of
business and consistent with past practice;
(l) any agreement for the sale or license by or to T24 or any of its
Subsidiaries of materials, products, services or supplies that
involves future payments to T24 or any of its Subsidiaries of
more than $100,000;
(m) any agreement for the purchase by T24 or any of its Subsidiaries
of any materials, equipment, services or supplies that either:
(i) involves a binding commitment by T24 or such Subsidiary to
make future payments in excess of $100,000 and cannot be
terminated by T24 or such Subsidiary without penalty upon less
than three months' notice; or (ii) was not entered into in the
ordinary course of business;
(n) any agreement or commitment for the acquisition, construction or
sale of fixed assets owned or to be owned by T24 or any of its
Subsidiaries that involves future payments by it of more than
$100,000;
(o) any agreement or commitment to which present or former directors
or officers (or members of their immediate families) or
Affiliates (or directors or officers of an Affiliate) are also
parties;
(p) any agreement not described above (ignoring solely for this
purpose any dollar amount thresholds in those descriptions)
involving the payment or
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receipt by T24 or any of its Subsidiaries of more than $100,000,
other than the Leases; or
(q) any agreement not described above that was not made in the
ordinary course of business and that is material to the financial
condition, business, operations, assets, results of operations or
prospects of T24 and its Subsidiaries taken as a whole.
4.18.2. Validity, Violation and Consent - The Contracts listed in section 4.18
of the T24 Disclosure Schedule are valid and in full force and effect. Neither
T24 nor any of its Subsidiaries is in Violation of any term, condition or
provision of any Contract to which T24 or any of its Subsidiaries is a party or
by which it, any of its Subsidiaries or any of their respective material assets
or properties is bound or which is applicable to it, any of its Subsidiaries or
any of their respective material assets or properties, except for such
Violations which, individually or in the aggregate, would not result in a
Material Adverse Effect. Section 4.18.2 of the T24 Disclosure Schedule
identifies each Contract that requires the consent of a third Person in
connection with the Transaction including without limitation the making of the
T24 Loan Commitment.
4.19. Insurance Contracts - Section 4.19 of the T24 Disclosure Schedule lists
all material contracts of insurance and indemnity in force at the date hereof
with respect to T24 and its Subsidiaries. Such contracts of insurance and
indemnity (collectively, the "T24 Insurance Contracts") insure against such
risks and are in such amounts as are reasonable and appropriate considering T24
and its Subsidiaries and their respective property, business and operations.
Except as set forth in section 4.19 of the T24 Disclosure Schedule, all of the
T24 Insurance Contracts are in full force and effect with no default thereunder
by T24 or any of its Subsidiaries which could permit the insurer to deny payment
of claims thereunder. The execution and delivery by T24 of this Agreement, the
performance by T24 of its obligations hereunder and the consummation by T24 of
the Transactions including without limitation the making of the T24 Loan
Commitment and thereby will not cause T24 or any of its Subsidiaries to be in
Violation of any T24 Insurance Contracts nor entitle any other party thereto to
terminate or modify a T24 Insurance Contract. Neither T24 nor any of its
Subsidiaries has received notice from any of their respective insurance carriers
that any insurance premiums will be materially increased in the future or that
any insurance coverage provided under the T24 Insurance Contracts will not be
available in the future on substantially the same terms as now in effect.
Neither T24 nor any of its Subsidiaries has received or has given a notice of
cancellation with respect to any of the T24 Insurance Contracts.
4.20. Banking Relationships - Section 4.20 of the T24 Disclosure Schedule sets
forth the names and locations of all banks and trust companies in which T24 or
any of its Subsidiaries has accounts, lines of credit or safety deposit boxes.
4.21. Suppliers, Distributors and Customers - The relationships of T24 and its
Subsidiaries with their respective suppliers, distributors and customers are
satisfactory commercial working relationships. Except as set forth in section
4.21 of the T24 Disclosure Schedule, since the date of the T24 Balance Sheet, no
material supplier,
-42-
distributor or customer of T24 or any of its Subsidiaries has cancelled or
otherwise adversely modified its relationship with T24 or any of its
Subsidiaries, and to the knowledge of T24, no supplier, distributor or customer
of T24 or any of its Subsidiaries has any intention to do so. To the knowledge
of T24, none of the execution and delivery by T24 of this Agreement, the
performance by T24 of its obligations hereunder and the consummation by T24 of
the Transaction including without limitation the making of the T24 Loan
Commitment will materially adversely affect any such relationship.
4.22. Products - Each product sold, leased, licensed or delivered by T24 or any
of its Subsidiaries has been in material conformity with all applicable
contractual commitments.
4.23. No Broker's or Finder's Fees - None of T24, any of its Subsidiaries and
their respective directors, officers, employees and agents has employed any
broker, finder, financial advisor or intermediary or has paid or incurred any
liability for any fee or commission to any broker, finder, financial advisor or
intermediary in connection with this Agreement except for contracts with Von
Weichs and Partner GmbH and CMF AG.
4.24. Full Disclosure - This Agreement does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements contained herein not false or misleading. To the knowledge of T24
there is no fact existing on the date hereof that T24 has not disclosed to
Travelbyus in writing that could result in a Material Adverse Effect.
Article 5
Non-Waiver; Survial
-------------------
5.1 Non-Waiver - No investigations made by or on behalf of Travelbyus or T24
at any time shall have the effect of waiving, diminishing the scope of or
otherwise affecting any representation or warranty made by the Travelbyus or
T24, as applicable, in or pursuant to this Agreement. No waiver of any condition
or other provision, in whole or in part, shall constitute a waiver of any other
condition or provision (whether or not similar) nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided. However, the
circumstances set forth in the Travelbyus and the T24 Disclosure Schedules are,
to the extent they have been duly disclosed, deemed known to the respective
other Party; the Agreement is concluded with imputed knowledge of such
circumstances and therefore no claims may be raised in this respect.
5.2 Nature and Survival - All representations, warranties and covenants
contained in this Agreement on the part of each of the Parties shall survive the
Closing, the execution and delivery under this Agreement of any share or
security transfer instruments or other documents of title to any of the
Travelbyus Shares and/or T24 Shares, except that:
(i) any claim for intentional misrepresentation or fraud may be brought
at any time within the applicable statute of limitations;
-43-
(ii) the representations and warranties set out in sections 3.1 to 3.4 and
4.1 to 4.4 shall survive and continue in full force and effect within
the applicable statute of limitations without limitation of time;
(iii) representations and warranties as to environmental matters shall
survive for a period of 10 years from the Closing Date;
(iv) representations and warranties concerning Tax matters shall survive
for a period of 90 days after the relevant authorities shall no
longer be entitled to assess liability for Tax against the
Corporation for any particular taxation year ended on or prior to the
Closing Date; and
(v) all other representations and warranties shall survive for a period
of three years from the Closing Date.
Article 6
Conditions Precedent Of Travelbyus
----------------------------------
The obligation of Travelbyus to complete the issuance of Travelbyus Shares under
this Agreement shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is acknowledged to be inserted for the exclusive benefit of Travelbyus and
may be waived by Travelbyus in whole or in part):
6.1 Truth and Accuracy of Representations and Warranties of T24 at the Closing
Time - All of the representations and warranties of T24 made in or pursuant to
this Agreement shall be true and correct as at the Closing Time.
6.2 Performance of Obligations - T24 shall have performed or complied with, in
all respects, its obligations, covenants and agreements under this Agreement.
6.3 Receipt of Closing Documentation - All documentation relating to the due
authorization and completion of the issuance of the T24 Shares under this
Agreement and all actions and proceedings taken on or prior to Closing in
connection with the performance by T24 of its obligations under this Agreement,
shall be satisfactory to Travelbyus, acting reasonably and Travelbyus shall have
received copies of all such documentation or other evidence as Travelbyus may
reasonably request in order to establish the consummation of the Transaction and
the taking of all corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and otherwise) and substance
satisfactory to Travelbyus, acting reasonably.
6.4 Opinion of Counsel for T24 - Travelbyus shall have received an opinion
dated the Closing Date from counsel to T24 with respect to T24 and this
Agreement on terms and conditions satisfactory to Travelbyus and its counsel.
Travelbyus shall have
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received all schedules, appendices and attachments mentioned in this Agreement
from T24 within 20 days after the date hereof for due diligence review until
Closing.
6.5 Consents, Authorizations and Registrations - All consents, approvals,
orders and authorizations of any Person or Governmental Authority (or
registrations, declarations, filings or recordings with any such Governmental
Authorities) required in connection with the completion of the Transaction, the
execution of this Agreement, Closing or the performance of any of the terms and
conditions of this Agreement shall have been obtained at or before the Closing
Time.
6.6 No Injunction - There shall be no injunction or restraining order issued
preventing and no pending or threatened Claim, judicial or administrative or
investigation against any Party by any Governmental Authority, for the purpose
of enjoining or preventing the consummation of the Transaction or otherwise
claiming that this Agreement or the consummation thereof is improper or would
give rise to proceedings under any statute or rule of law.
6.7 Substantial Damage - No substantial damage by fire or other hazard to the
assets of T24 shall have occurred prior to the Closing Time.
If any of the foregoing conditions in this Article have not been fulfilled by
Closing, Travelbyus may terminate this Agreement by notice in writing to T24, in
which event Travelbyus is released from all obligations under this Agreement and
unless Travelbyus can show that the condition relied upon could reasonably have
been performed by T24, T24 is also released from all obligations under this
Agreement. Travelbyus may waive compliance with any condition in whole or in
part if it sees fit to do so without prejudice to its rights of termination in
the event of non-fulfilment of any other condition, in whole or in part, or to
its rights to recover damages for the breach of any representation, warranty,
covenant or condition contained in this Agreement.
Article 7
Conditions Precedent Of T24
---------------------------
The obligation of T24 to complete the issuance of the T24 Shares under this
Agreement shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is acknowledged to be inserted for the exclusive benefit of T24 and may be
waived by T24 in whole or in part).
7.1 Truth and Accuracy of Representations and Warranties of Travelbyus at
Closing Time - All of the representations and warranties of Travelbyus made in
or pursuant to this Agreement shall be true and correct as at the Closing Time.
7.2 Performance of Obligations - Travelbyus shall have performed or complied
with, in all respects, all its obligations, covenants and agreements under this
Agreement.
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7.3 Receipt of Closing Documentation - All documentation relating to the due
authorization and completion of the issuance of the Travelbyus Shares under this
Agreement and all actions and proceedings taken on or prior to Closing in
connection with the performance by Travelbyus of its obligations under this
Agreement, shall be satisfactory to T24, acting reasonably and T24 shall have
received copies of all such documentation or other evidence as T24 may
reasonably require in order to establish the consummation of the Transaction and
the taking of all corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and otherwise) and substance
satisfactory to T24, acting reasonably.
7.4 Receipt of Schedules - T24 shall have received all schedules, appendices
and attachments mentioned in this Agreement from Travelbyus within 20 days after
the date hereof for due diligence review until Closing.
7.5 Consents, Authorizations and Registrations - All consents, approvals,
orders and authorizations of any Person or Governmental Authority (or
registrations, declarations, filings or recordings with any such Governmental
Authorities) required in connection with the completion of the Transaction, the
execution of this Agreement, Closing or the performance of any of the terms and
conditions of this Agreement shall have been obtained at or before the Closing
Time.
If any of the foregoing conditions in this Article have not been fulfilled by
Closing, T24 may terminate this Agreement by notice in writing to Travelbyus in
which event T24 is released from all obligations under this Agreement and unless
T24 can show that the condition relied upon could reasonably have been performed
by Travelbyus, Travelbyus is also released from all obligations under this
Agreement. T24 may waive compliance with any condition in whole or in part if it
sees fit to do so, without prejudice to its rights of termination in the event
of non-fulfilment of any other condition in whole or in part or to their rights
to recover damages for the breach of any representation, warranty, covenant or
condition contained in this Agreement.
Article 8
Indemnification
---------------
8.1 Indemnification by T24. - T24 agrees to indemnify and save harmless
Travelbyus without duplication on an after-tax basis from and against all Losses
suffered or incurred by Travelbyus as a result of or arising directly or
indirectly out of or in connection with:
(a) any breach by T24 of or any inaccuracy of any of the representations
and warranties of T24 set out in this Agreement (provided that the
indemnity provided for in this section 8.1A(a) shall not apply in the
case of a breach or inaccuracy of any representation or warranty
unless Travelbyus shall have provided notice to T24 in accordance
with this Article 9 on or prior to the expiration of such
representation and warranty as provided in section 6.2);
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(b) any breach or non-performance by T24 of any covenants to be performed
by T24 under this Agreement;
(c) any liability arising by reason of a breach of the provisions of
section 10.2.
8.2 Indemnification by Travelbyus - Travelbyus agrees to indemnify and save
harmless T24 without duplication on an after-tax basis from and against all
Losses suffered or incurred as a result of or arising directly or indirectly out
of or in connection with:
(a) any breach by Travelbyus of or any inaccuracy of any of the
representations and warranties of Travelbyus set out in this Agreement
provided that the indemnity provided for in this section 8.2(a) shall
not apply in the case of a breach or inaccuracy of any representation
or warranty unless T24 shall have provided notice to Travelbyus in
accordance with this Article 9 on or prior to the expiration of such
representation and warranty as provided in section 6.2);
(b) any breach or non performance by Travelbyus of any covenants to be
performed by Travelbyus under this Agreement; and
(c) any liability arising by reason of a breach of the provisions of
section 11.2.
8.3 Notification of and Participation in Claims - No claim for indemnification
will arise until notice thereof is given to T24 or Travelbyus , as the case may
be. Such notice shall be sent within a reasonable time following the
determination by Travelbyus or T24, as applicable, that a claim for indemnity
exists. If any legal proceedings shall be instituted or any claim or demand is
asserted by any third Person in respect of which T24 or Travelbyus , as
applicable, may have an obligation to indemnify Travelbyus , or T24, as the case
may be, Travelbyus or T24, as the case may be, shall give or cause to be given
to T24 or Travelbyus , as the case may be, written notice thereof and such Party
shall have the right, at its option and expense, to be present at the defence of
such proceedings, claim or demand, but not to control the defence, negotiation
or settlement thereof, which control shall at all times rest with Travelbyus or
T24, as the case may be, unless T24 or Travelbyus , as the case may be,
irrevocably acknowledges full and complete responsibility for indemnification of
Travelbyus or T24, as the case may be, in which case T24 or Travelbyus , as the
case may be, may assume such control through counsel of its choice provided
however that no settlement shall be entered into without Travelbyus 's written
consent or the Vendor's written consent, as the case may be, which shall not be
unreasonably withheld. The Parties shall co-operate fully with each other in
connection with the defence, negotiation or settlement of any such third Person
legal proceeding, claim or demand by reason of a breach of the provisions of
section 11.2.
8.4 De Minimis Threshold - Travelbyus and T24 shall be liable for claims for
indemnification only in the event that the aggregate amount of such claims
exceeds US$1,000,000 (United Sates Dollar one million), respectively. In case
the aggregate
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amount of such damages exceeds the aforementioned threshold, Travelbyus and T24,
respectively, shall be liable for the entire amount of the claims.
8.5 Limitation of Remedies - The claims for indemnification and resulting
remedies shall not include the claim to rescind or cancel or in any other way
withdraw from this Agreement. Otherwise, the rights and remedies of Travelbyus
and T24 arising out of a breach of misrepresentations, warranties or covenants
under this Agreement shall not be limited, unless such limitation is
specifically provided for.
Article 9
Post Closing Covenants
----------------------
9.1 Board Appointments - Travelbyus and T24 covenant and agree, that as
provided in the LOI, each party has appointed three observers to each other's
board of directors, namely ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the
case of the nominees of Travelbyus and Marc Maslatun, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
von Plettenberg in the case of T24. All of such observers or their respective
duly appointed successors shall be entitled to receive notice of and attend at
(but not be heard at) all meetings of the board of directors of such other
party, such provision to continue until the earlier of completion of the T24
Merger and December 31, 2000.
9.3 Exchange of Information and Resources - Travelbyus and T24 covenant and
agree to fully exchange information of their respective businesses and financial
plans and to exchange mutual resources including without limitation, technology,
supplier contracts and tourist flows on a most preferred basis. Travelbyus and
T24 will co-ordinate their respective businesses and financial plans and will
establish a pro-forma common business and financial plan as soon as possible on
the assumption of a 'virtually merged entity" as a basis for the T24 Merger.
Each of Travelbyus and T24 agree to notify the other party with respect to
significant transactions.
9.4 T24 Merger - Travelbyus and T24 covenant and agree that from and after
Closing they shall use their respective best efforts to; (i) negotiate and
settle the terms and conditions of the T24 Merger, including without limitation,
the share exchange ratio forming a part thereof (the "T24 Share Exchange Ratio")
; (ii) each retain separate investment banking advisors in order to provide a
fairness opinion with respect to the T24 Share Exchange Ratio; (iii) negotiate,
settle, execute and deliver a form of agreement to provide for the T24 Merger
(the "T24 Merger Agreement") which agreement will contain mutual covenants,
representations and warranties; (iv) procure all requisite court and regulatory
approvals in connection with the T24 Merger and the T24 Merger Agreement,
including without limitation, the approval of the TSE and the GNM; (v) procure
all requisite board approvals in connection with the T24 Merger and the T24
Merger Agreement; and (vi) procure all requisite shareholder approvals in
connection with the T24 Merger and the T24 Merger Agreement and in connection
therewith to co-operate with each other with respect to all information
(business-related and otherwise) to be contained in any and all related proxy-
solicitation materials to be forwarded to shareholders in connection with a
joint meeting or joint meetings to be held
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to consider and approve, among other things, the T24 Merger and the T24 Merger
Agreement and to procure all requisite regulatory approvals in connection
therewith.
Article 10
General
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10.1 Public Notices - All public notices to third Persons and all other
publicity concerning the Transaction shall be jointly planned and co-ordinated
by Travelbyus and T24 and no Party shall act unilaterally in this regard without
the prior approval of the other Party, such approval not to be unreasonably
withheld except where required to do so by law or by the applicable regulations
or policies of any regulatory agency of competent jurisdiction or any stock
exchange in circumstances where prior consultation with the other Party is not
practicable.
10.2 Expenses - Each of the Parties shall pay their respective legal, accounting
and other professional advisory fees, costs and expenses incurred in connection
with the Transaction and the preparation, execution and delivery of this
Agreement and all documents and instruments executed pursuant to this Agreement
and any other costs and expenses incurred by the Party including any fees and
expenses of any broker or investment advisor in connection with the issuance of
Travelbyus Shares and/or the T24 Shares.
10.3 Notices - Any notice or other writing required or permitted to be given
under this Agreement or for the purposes of this Agreement (in this section
referred to as a "Notice") shall be in writing and shall be sufficiently given
if delivered, or if transmitted by facsimile or other form of recorded
communication tested prior to transmission to such Party:
(a) to Travelbyus at: .
.
with a copy to: .
.
Attention: .
Fax No.: .
(b) to T24 at: .
Attention: .
Fax No.: .
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with a copy to: .
Attention: .
Fax No.: .
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
10.4 Assignment - Neither this Agreement nor any benefits or burdens under this
Agreement shall be assignable by any Party without the prior written consent of
each of the other Parties. Subject to the foregoing, this Agreement shall enure
to the benefit of and be binding upon the Parties and their respective
successors (including any successor by reason of amalgamation of any Party) and
permitted assigns.
10.5 Further Assurances - The Parties shall, with reasonable diligence, do all
such things and provide all such reasonable assurances as may be required to
consummate the Transaction and each Party shall provide such further documents
or instruments required by any other Party as may be reasonably necessary or
desirable to effect the purpose of this Agreement and carry out its provisions,
whether before or after the Closing.
10.6 Counterparts and Facsimile - This Agreement may be executed by the Parties
in separate counterparts and by facsimile each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
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IN WITNESS WHEREOF the Parties have duly executed this Agreement.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ LTD.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇▇.▇▇▇ AG
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
This Share Exchange Agreement including Appendices A, B E-C may only be
rescinded in case of gross mis-representation on either side discovered within
the 20 day review period as mentioned in paragraph 6.4
This Agreement is further subject to review by both parties' legal
counsel until 5 p.m., Tuesday, June 20, 2000, Toronto time to ensure it properly
reflects the intention of the LOI dated May ▇▇, ▇▇▇▇-▇▇-▇▇
/▇/ ▇▇, ▇▇, ▇▇
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▇▇▇▇▇▇▇▇▇▇.▇▇▇ LTD.
▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
July 11, 2000
Travel24.comAG
Altheimer ▇▇▇ 2
D-80331 Munchen
Dear Sirs:
RE: Letter of Intent dated as of May 23, 2000
-----------------------------------------
Reference is made to the above noted letter of intent (the "LOI") and the US$3
million convertible, callable, redeemable, secured debenture dated as of June
16, 2000 (the "Debenture") executed pursuant to the LOI.
By our respective execution of this letter, we do hereby agree that, as provided
in the LOI, the rate of interest in the Debenture shall be deemed to be US$LIBOR
plus 1 percent per annum, payable quarterly in arrears and calculated based on
the LIBOR rate in effect on the first day of such quarter.
Additionally, we do hereby agree that the share exchange agreement (the
"Agreement") executed by Travelbyus and T24 and dated as of June 16, 2000, shall
be deemed to include the following information (which was accidentally omitted
from the Agreement):
1. Jurisdiction of Incorporation of T24: Munich.
2. Section 1.6: US-GAAP.
3. Section 4.6: See contractual documentation June 20, 2000.
4. Section 4.11.5: 31.12.1999.
5. Section 10. 3 (a) notice to Travelbyus at the address set forth above with
a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP Scotia Plaza, Suite 2100, ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Facsimile
Number (▇▇▇) ▇▇▇-▇▇▇▇.
6. Section 10.3 (b) notice to T24 and its counsel:
Hearmann, Hemmerlrath & Partner
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇▇ Schueppen
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Yours truly,
▇▇▇▇▇▇▇▇▇▇.▇▇▇ LTD.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------
Agreed to and accepted to this 17/th/ day of July, 2000.
TRAVEL24.COMAG
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ (CEO)
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