Travelzoo 2010 Annual Report Download - page 87

other current assets in the accompanying Consolidated Balance Sheets. See Note 11 for a further discussion on the
sale of the Company’s Asia Pacific operating segment.
(11) Discontinued Operations
On September 30, 2009, the Company and its principal Asia Pacific subsidiaries entered into two definitive
Asset Purchase Agreements (“Asset Purchase Agreements”) with Azzurro Capital Inc. and it’s newly formed
wholly-owned subsidiaries, Travelzoo (Asia) Limited and Travelzoo Japan K.K. to acquire substantially all of the
assets, and with the exception of intercompany loans, assume substantially all of the liabilities of Travelzoo’s
principal Asia Pacific subsidiaries, which constitute Travelzoo’s Asia Pacific operating segment. The aggregate
purchase price under the Asset Purchase Agreements was $3,600,000, subject to a working capital adjustment, as
defined in the Asset Purchase Agreements, based on unaudited balance sheets as of October 31, 2009.
As part of the transaction, the Company and Azzurro Capital Inc., Travelzoo (Asia) Limited and Travelzoo
Japan K.K. entered into the following additional agreements:
• A License Agreement providing for a limited, nontransferable (except as provided therein), perpetual,
exclusive (except as provided therein) fully paid-up license to perform the Licensed Services and Licensed
Business Processes (as defined in the License Agreement), and to use the Licensed Marks, the Licensed
Software, the Licensed Trade Secrets, and the Licensed Works (as defined in the License Agreements) in
connection with the Licensed Services and Licensed Business Processes within the Territory, which is
defined as all countries located in those time zones that are more than five hours ahead of Greenwich Mean
Time, based on Standard time, including India and Pakistan, but excluding Russia.
• A Hosting Agreement under which Travelzoo agrees to host, transact, process, store, implement, operate,
manage, maintain and provide access to licensed software and to data files and content provided by
Travelzoo (Asia) Limited and Travelzoo Japan K.K. for use in connection with the Licensed Services and the
Licensed Business Processes referred to in the Hosting Agreement.
• A Referral Agreement pursuant to which each party will, on a non-exclusive basis, make customer referrals
to each other, in consideration for receiving a specified percentage of the revenues derived from such
referrals.
• A Transition Services Agreement under which Travelzoo agrees to provide, at the option of the Travelzoo
(Asia) Limited and Travelzoo Japan K.K., certain services on a temporary basis, at the prices and on other
terms to be determined as provided in the Transition Services Agreement.
The Company and Azzurro Capital Inc. also entered into an Option Agreement (the “Option Agreement”) on
September 30, 2009, under which the Company will have an option (the “Option”) to acquire the assets or shares of
the Travelzoo (Asia) Limited and Travelzoo Japan K.K., exercisable during the month of June in any year from 2011
to 2020. The Option is also exercisable upon receipt by Travelzoo of a notice delivered under the Option Agreement
of (a) the intent for either of both of the Travelzoo (Asia) Limited and Travelzoo Japan K.K. to cease operations or
(b) an intention to effect an initial public offering of the shares of either of Travelzoo (Asia) Limited or Travelzoo
Japan K.K. The purchase price under the Option will be the fair market value of the assets and business being
acquired, determined by third party appraisal under the procedures set forth in the Option Agreement.
A voting agreement was also reached between the Company and Ralph Bartel with the intent to avoid any
future conflicts of interest relating to the dealings between the Company and Azzurro Capital Inc. and their
affiliates. Under the voting agreement, Mr. Bartel agrees to vote (or cause to be voted) any shares of the Company
over which he has voting control, with respect to any proposal relating the Asia Pacific business, Azzurro Capital
Inc., Travelzoo (Asia) Limited, or Travelzoo Japan K.K., in the same manner and in the same proportion that all
other securities of the same class are voted at any meeting of the stockholders of the Company, and included
provisions relating to the exercise of his voting rights as a shareholder or director of the Company in respect of
60
TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)