1
EXHIBIT 10.8
ASSET PURCHASE AGREEMENT
BY AND AMONG
GLOBAL VACATION GROUP, INC.
("GLOBAL"),
GVGAC NO. 1, INC.
("BUYER"),
MTI VACATIONS, INC.
("SELLER")
AND
XXXXX X. XXXXXX
("SHAREHOLDER")
DATED APRIL 30, 1998
2
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II AGREEMENT OF PURCHASE AND SALE; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Cash and Cash Equivalents and Investments . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Deposits and Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Business, Equipment and Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Contracts and Other Agreements Relating to the Transferred Business . . . . . . . . . . 9
(f) Books, Records, Lists and Other Data . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Employment Agreements and Employee Relationships . . . . . . . . . . . . . . . . . . . 9
(h) Licenses, Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) General Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(l) Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Title to the Purchased Assets: Documents of Conveyance . . . . . . . . . . . . . . . . . . . . 12
2.6 Purchase Price; Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Escrow Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.10 Closing Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Post-Closing Purchase Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) February 28 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Allocation Methodologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) No Double-Counting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Timing of Adjustments and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER . . . . . . . . . . . . . . . . . 15
3.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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3.5 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.6 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.8 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9 Compliance with Laws and other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.12 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.15 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.16 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.17 Accounts Receivable; Customer Deposits Bookings; Financial Condition . . . . . . . . . . . . . 25
(a) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Customer Deposits and Bookings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.18 Financial Results During Stub Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.19 Bank Accounts; Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.20 Customer Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.22 Affiliated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.23 Funded Indebtedness; Letters of Credit; Undisclosed Liabilities . . . . . . . . . . . . . . . 27
(a) Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Liabilities Arising from Discontinued Operations . . . . . . . . . . . . . . . . . . . 27
3.24 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.24 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV BUYER'S AND GLOBAL'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 28
4.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V COVENANTS OF SELLER, SHAREHOLDER AND/OR BUYER . . . . . . . . . . . . . . . . . . . . . . . . 29
5.1 Consents of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 Access to Records Before Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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ARTICLE VI POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Access to Records After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 Litigation Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Assignment of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.7 Change of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.8 Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING . . . . . . . . . . . . . . . . 34
7.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Documents to be Delivered by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(i) Conveyance Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(ii) Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(iii) Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . 35
(iv) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(v) Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(vi) UCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(vii) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(viii) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(ix) Records of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(x) Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(xi) Transition Services Agreements . . . . . . . . . . . . . . . . . . . . . . . 36
(xii) Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(xiii) Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(xiv) Change of Seller's Name . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Conditions to Seller's and Shareholder's Obligations . . . . . . . . . . . . . . . . . . . . . 36
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Documents to be Delivered by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(i) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(ii) Assignment and Assumption Agreement . . . . . . . . . . . . . . . . . . . . . 37
(iii) Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(iv) Transition Services Agreements . . . . . . . . . . . . . . . . . . . . . . . 37
(v) Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(vi) Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) Payments to Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.1 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.2 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Escrow Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Tax Audits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.5 Indemnification of Seller and Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.6 Limits on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.1 Modifications; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.3 Counterparts; Facsimile Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.6 Entire and Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.8 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . 43
10.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.11 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.12 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.13 No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.14 Global Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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LIST OF EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Opinion of Seller's and Shareholder's Counsel
Exhibit C Seller's and Shareholder's Certificates
Exhibit D Form of Assignment and Assumption Agreement
Exhibit E Form of Employment Agreement
Exhibit F Form of Release
Exhibit G MIS Transition Services Agreement
Exhibit H Non-MIS Transition Services Agreement
Exhibit I Lease
Exhibit J Real Property (Leases) (Section 2.1(c))
Exhibit K Seller's Account and Wire Transfer Instructions (Section 2.6)
Exhibit L Articles (I-1), Bylaws (I-2) and Qualified Jurisdictions (I-3) (Section 3.1)
Exhibit M List of Properties (Section 3.6)
Exhibit N List of Licenses and Permits (Section 3.7)
Exhibit O List of Intellectual Property (Section 3.8)
Exhibit P List of Insurance (Section 3.10)
Exhibit Q Employee Plans (Section 3.11)
Exhibit R List of Contracts (Section 3.12)
Exhibit S List of Personnel (Section 3.15)
Exhibit T List of Bookings, Customer Deposits, Prepayments
and Refunds and Customer Claims (Section 3.17(b))
Exhibit U List of Bank Accounts and Investments (Section 3.18)
Exhibit V Letters of Credit (Section 3.22(b))
LIST OF SCHEDULES
DISCLOSURE SCHEDULE
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of April 30, 1998, by and among GLOBAL VACATION GROUP, INC. (formerly
Allied Bus Corp.), a New York corporation ("GLOBAL"), GVGAC NO. 1, INC., a
Delaware corporation and wholly-owned subsidiary of Global ("BUYER"), MTI
VACATIONS, INC., a Delaware corporation ("SELLER") and XXXXX X. XXXXXX
("SHAREHOLDER").
RECITALS
A. Seller is engaged in the wholesale travel sales and
other travel-related businesses in the United States;
B. Shareholder is the owner of a majority of all
outstanding capital stock of Seller;
C. Seller owns and leases certain assets, real and
personal, tangible and intangible, which are used by Seller in the conduct of
the wholesale travel sales business;
D. Buyer, a wholly-owned subsidiary of Global, desires
to purchase from Seller and Seller desires to sell to Buyer substantially all
of Seller's assets used in the operation of the wholesale travel sales business
on the terms and subject to the conditions set forth in this Agreement;
E. Seller intends to exclude certain of its assets from
such purchase and sale transaction with Buyer and will continue to own and
operate such excluded assets following the consummation of such transaction;
and
F. In connection with its purchase of such assets from
Seller, Buyer desires to assume certain of the liabilities and obligations of
Seller relating to the business being transferred to it (and no others), and
Global, as Buyer's parent, desires to provide Seller comfort that it will
provide Buyer with the financial means necessary to support such assumption and
performance of liabilities and obligations, all as more specifically set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
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ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms. Any agreement
referred to below shall mean such agreement as amended, supplemented and
modified from time to time to the extent permitted by the applicable provisions
thereof and by this Agreement.
"AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the General
Assignment, Xxxx of Sale and Assumption Agreement to be executed by the parties
on the Closing Date in substantially the form of Exhibit D.
"ASSUMED LIABILITIES" has the meaning specified in Section
2.3.
"AUDITED CLOSING FINANCIAL STATEMENTS" has the meaning
specified in Section 2.10.
"BOOKINGS" means the aggregate amount (in dollars or number of
passengers, as the context requires) of customer bookings of the Transferred
Business as of any date of determination.
"BUILDING" shall mean the site where the headquarters and
reservation operations of the Business are located at 0000 Xxxxxxxxxxx Xxxx,
Xxxxxxx Xxxxx, Xxxxxxxx 00000.
"BUYER" has the meaning specified in the first paragraph of
this Agreement.
"CASH AND CASH EQUIVALENTS" means cash on hand and balances in
checking accounts and money market accounts (i.e., Bank of America Short Term
Asset Management Account) but excluding Investments.
"CLOSING" means the closing of the transfer of the Purchased
Assets from Seller to Buyer.
"CLOSING DATE" has the meaning specified in Section 2.8.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means all (i) terms and provisions
of this Agreement or the transactions to be consummated pursuant hereto, and
(ii) confidential information and trade secrets of Seller, Buyer or their
Affiliates related to the Transferred
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Business including, without limitation, any of the same comprising the
identity, lists or descriptions of any customers, referral sources or
organizations; financial statements, cost reports or other financial
information; contract proposals or bidding information; business plans and
training and operations methods and manuals; personnel records; fee structure;
and management systems, policies or procedures, including related forms and
manuals. Confidential Information shall not include any information (a) which
is disclosed pursuant to subpoena or other legal process, (b) which has been
publicly disclosed, or (c) which is subsequently disclosed by any third party
not in breach of a confidentiality agreement.
"CONTRACTS" has the meaning specified in Section 3.12.
"COURT ORDER" means any judgment, order, award or decree of
any foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"CUSTOMER DEPOSITS" means all deposits received from customers
in connection with Bookings and reflected on the balance sheet of the
Transferred Business as of the applicable date.
"CUSTOMER DEPOSITORY ACCOUNT" means an account or accounts for
the deposit and holding of Customer Deposits.
"DISCLOSURE SCHEDULE" shall mean the Disclosure Schedule
attached to this Agreement pursuant to which exceptions to the Seller's and
Shareholder's specific representations and warranties set forth in Article III
(and listed on a Section-by-Section basis) are disclosed to Buyer pursuant to
said Article III.
"EBIT" shall mean the earnings of the Transferred Business and
the Purchased Assets before interest expenses, taxes and bonuses, as calculated
in accordance with GAAP.
"EMPLOYEE" has the meaning specified in Section 3.11.
"ENCUMBRANCE" means any lien, claim, charge, security
interest, mortgage or pledge.
"ENVIRONMENTAL AND OSHA OBLIGATIONS" has the meaning specified
in Section 3.9.
"EQUITABLE EXCEPTIONS" shall have the meaning specified in
Section 3.3.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" means The Bank of New York, N.A.
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"ESCROW AGREEMENT" means the Escrow Agreement to be executed
by and among Seller, Buyer and the Escrow Agent in the form of Exhibit A.
"ESCROW PERIOD" has the meaning specified in Section 2.9.
"ESCROW SUM" has the meaning specified in Section 2.9.
"EQUIPMENT" has the meaning specified in Section 2.1(d).
"EXCLUDED ASSETS" means the following specific assets of the
Retained Business which post-Closing will continue to be owned by the Seller,
and which are not part of the Transferred Business and the Purchased Assets
being purchased by Buyer pursuant to this Agreement: (i) cash and Investments
not transferred to Buyer pursuant to Section 2.1(a); (ii) Seller's MIS Assets;
(iii) notes receivable and accounts receivable from Shareholder, Seller's
Affiliates and other third parties not arising out of the conduct of the
Transferred Business; (iv) building improvements and personal property related
to the operation of the Building that are not included in the December 31, 1997
balance sheet for the Transferred Business; (v) aircraft; and (vi) contracts
referenced in the Non-MIS Transition Services Agreement as being retained by
Seller but where Seller will allow the Transferred Business to enjoy the
benefits of subcontracts, as provided therein.
"EXCLUDED LIABILITIES" has the meaning specified in Section
2.4.
"FINANCIAL STATEMENTS" has the meaning specified in Section
3.4.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of Seller for
borrowed money or other interest-bearing indebtedness; (ii) capital lease
obligations of Seller; (iii) obligations of Seller to pay the deferred purchase
or acquisition price for goods or services, other than trade accounts payable
or accrued expenses in the ordinary course of business on no more than 90 day
payment terms; (iv) indebtedness of others guaranteed by Seller or secured by
an Encumbrance on Seller's property or the Purchased Assets; and (v)
indebtedness of Seller under extended credit terms of more than 30 days from
vendors provided to Seller; provided, however, that Funded Indebtedness shall
not include Letters of Credit unless actually drawn upon by the beneficiary
thereof, as of the date the calculation of Funded Indebtedness is made.
"GAAP" shall mean generally accepted accounting principles,
consistently applied by Seller in the preparation of its financial statements.
"GLOBAL" has the meaning specified in the first paragraph of
this Agreement.
"GOVERNMENTAL BODY" means any foreign, federal, state, local
or other governmental authority, judicial body or regulatory body.
"GOVERNMENTAL PERMITS" has meaning specified in Section 3.7.
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"XXX XXX" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended and the rules and regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"INDEMNIFIABLE COSTS" has the meaning specified in Section
8.1.
"INDEMNIFIED PARTIES" has the meaning specified in Section
8.1.
"INTELLECTUAL PROPERTY" has the meaning specified in Section
2.1(j).
"INVESTMENTS" means investments in any funds, accounts,
securities, certificates of deposit or instruments of any Person which are (i)
as investments on a balance sheet in accordance with GAAP, and (ii) marked to
market as of any date of determination.
"KNOWLEDGE" (whether or not capitalized) with respect to
Seller shall mean actual knowledge after reasonable inquiry of Shareholder and
the following employees of Seller and its Affiliates: Xxxxx Xxxxxx, Xxx Xxxxxx,
Xxx Xxxxxxxx, Xxxx Xxxxxxxxx and Xxxxx Xxxxxxxxxxx; with respect to
Shareholder, "KNOWLEDGE" shall mean actual knowledge after reasonable inquiry
of Shareholder.
"LEASE" means the commercial lease to be entered into between
Buyer and Xxxxx X. Xxxxxx covering Buyer's Lease of the Building, in
substantially the form of Exhibit I.
"MATERIAL" (whether or not capitalized) shall, where
appropriate in context of its use in making the representations and warranties
set forth in Article III, be deemed to mean an amount of money greater than
$50,000.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means a
material adverse change or effect on the assets, properties, business,
operations, liabilities, financial condition or prospects of the Transferred
Business. In determining whether a "Material Adverse Change" or "Material
Adverse Effect" has occurred in the context of the use of such terms in the
Seller's and Shareholder's representations and warranties set forth in Article
III, such terms shall refer to the occurrence of any single event, or any
series of related events or set of related circumstances, which results in or
may result in a loss to Seller or Buyer in excess of $50,000 per occurrence or
$150,000 in the aggregate.
"MIS SERVICE PROVIDER AGREEMENT" means the agreement which the
parties to this Agreement contemplate may be entered into between Global and
TMS which will (i) supersede the MIS Transition Services Agreement insofar as
such agreement pertains to the use by Buyer of Seller's MIS Assets, and (ii)
provide for (A) either (1) Global's acquisition of TMS or (2) TMS's provision
of MIS services to Global and its Affiliates' other wholesale travel sales and
related businesses and (B) Global and its Affiliates' right to use Seller's MIS
Assets in the conduct of their various wholesale travel sales and related
businesses.
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"MIS TRANSITION SERVICES AGREEMENT" means the agreement, in
substantially the form of Exhibit G, to be entered into between Buyer, Seller
and TMS providing for Seller's and/or TMS's ongoing provision, to the extent
provided in such agreement, of MIS-related services to the Transferred Business
and Buyer's ongoing right to use Seller's MIS Assets to the extent provided in
such agreement in the post-Closing conduct of the Transferred Business.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning specified
in Section 3.4.
"NET WORTH" means the difference between the total assets and
the total liabilities of the Transferred Business, determined in accordance
with GAAP.
"NON-MIS TRANSITION AGREEMENT" means the agreement, in
substantially the form of Exhibit H, providing for (i) the Seller's ongoing
provision until December 31, 1998 of services relating to payroll
administration, insurance and employee benefits in place in respect of the
Transferred Business or its employees, and such other matters as reflected
therein, prior to the Closing and (ii) Seller's ongoing provision (and Buyer's
and Global's agreement to take all steps necessary to prevent the beneficiaries
thereof from drawing upon such letters of credit and to indemnify and reimburse
Seller in connection therewith) of letters of credit which are outstanding as
of the Closing Date (it being agreed by Buyer and Global that such letters of
credit shall be cash collateralized on a dollar-for-dollar basis by amounts
held under the Escrow Agreement and replaced upon their respective expiration
or rollover dates by letters of credit issued for the account of Buyer or
Global pursuant to Global's senior credit agreement with the Bank of New York
or by another financial institution).
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, and any regulations promulgated
thereunder.
"PERMITTED EXCEPTION" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, or (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value or
the existing use of the property affected by such lien or imperfection.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"PRELIMINARY CLOSING BALANCE SHEET" shall mean the Seller's
best estimate of the balance sheet of the Transferred Business as of the
Closing Date. The Preliminary Closing Balance Sheet shall be delivered to
Buyer not less than three (3) nor more than five (5) days prior to the Closing
Date.
"PROPRIETARY RIGHTS" has the meaning specified in Section
2.1(k).
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"PURCHASE PRICE" has the meaning specified in Section 2.6.
"PURCHASED ASSETS" means the assets of the Transferred
Business specified in Section 2.1 (and which are exclusive of the Excluded
Assets).
"REAL PROPERTY" has the meaning specified in Section 2.1(c).
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without limitation,
those pertaining to electrical, building, zoning, environmental and
occupational safety and health requirements).
"RETAINED BUSINESS" means all of the Seller's business
activities other than the Transferred Business, including without limitation
Seller's continued operation of the Excluded Assets.
"SELLER" has the meaning set forth in the first paragraph of
this Agreement.
"SELLER'S MIS ASSETS" means those certain Excluded Assets
comprised of Seller's computer reservation system and related functions,
including without limitation an AS400 mini-computer and related hardware and
support equipment, together with the TRIPSPRO and related software programs
which Seller intends to transfer or lease on or before the Closing Date to TMS
and which will be the subject of the MIS Transition Services Agreement and,
ultimately, the MIS Service Provider Agreement.
"SHAREHOLDER" has the meaning set forth in the first paragraph
of this Agreement.
"TAX" or "TAXES" means any federal, state, local or foreign
income, alternative or add-on minimum, gross income, gross receipts, windfall
profits, severance, property, production, sales, use, transfer, gains, license,
excise, employment, payroll, withholding or minimum tax, transfer, goods and
services, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amounts imposed thereon by any
Governmental Body.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"TRANSFERRED BUSINESS" means all assets of the Seller other
than the Excluded Assets and including, without limitation, the Seller's
wholesale travel business which is being purchased by Buyer pursuant to the
terms of this Agreement, and which as currently conducted consists of (i) the
assembly and sale of vacation packages to destinations in Hawaii;
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(ii) providing ground services in Hawaii to persons who have purchased such
vacation packages; (iii) providing private label fulfillment services to Amtrak
and Hyatt Vacations; and (iv) the Xxxxx Xxxxxx Rewards program (but not the
name "Xxxxx Xxxxxx Rewards," it being the intent of the Buyer to change the
name of such program following the Closing Date), which provides private label
fulfillment services to other travel wholesalers.
"TRANSITION SERVICES AGREEMENTS" means the MIS Transition
Services Agreement and the Non-MIS Transition Services Agreement.
"TMS" means Seller and Shareholder's Affiliate, Xxxxx Xxxxxx
Solutions, Inc., a Delaware corporation, to whom Seller intends to transfer or
lease the Seller's MIS Assets prior to the Closing; TMS is or will be a party
to the Transition Services Agreement (Exhibit H-1) and, if and when same is
consummated, the MIS Service Provider Agreement.
"WORKING CAPITAL" shall mean the difference between the
current assets (other than prepaid expenses) and current liabilities of the
Transferred Business; provided, however, that for purposes hereof only the
Purchased Assets and Assumed Liabilities (if any) shall be taken into account
when measuring Working Capital of the Transferred Business; and provided,
further, however, that long-term investments included in the Customer
Depository Account of the Transferred Business shall be included when measuring
Working Capital of the Transferred Business.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE; CLOSING
2.1 PURCHASED ASSETS. On the terms and subject to the
conditions and exceptions contained herein, Seller agrees to sell to Buyer and
Buyer agrees to purchase from Seller at the Closing and on the Closing Date
(each as hereinafter defined), free and clear of all liens, claims and
encumbrances except for those permitted under Section 2.3 hereof, all of
Seller's right, title and interest in and to all assets of the Transferred
Business properly included in the Seller's December 31, 1997 balance sheet for
the Transferred Business, subject to changes in the ordinary course of business
(and consistent with the Seller's covenants in Section 5.4) from such date
through the Closing Date, together with all other assets owned by Seller and
used in the Transferred Business, other than the Excluded Assets (collectively,
the "PURCHASED ASSETS"). The Purchased Assets include, without limitation, the
following as they exist on the Closing Date (as hereinafter defined):
(a) CASH AND CASH EQUIVALENTS AND INVESTMENTS.
Cash and Cash Equivalents and Investments not less than Customer Deposits (as
defined in Section 3.17) as of the Closing Date; provided, however, that
Customer Deposits held in the form of long-term investments as of the Closing
Date shall not be transferred to Buyer as a result of this Section 2.1(a) in
accordance with the terms of Section 2.7(b).
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(b) DEPOSITS AND ACCOUNTS RECEIVABLE. All
accounts receivable and other deposits, advances and suppliers' or vendors'
rebates and all other receivables of the Transferred Business and existing on
the Closing Date (as hereinafter defined), in the ordinary course of the
operation of the Transferred Business.
(c) REAL PROPERTY. All leases of real property
and interests, options or rights with respect to the Transferred Business
(other than the Lease, which is being negotiated separately between Buyer and
Shareholder) (collectively, the "REAL PROPERTY"). All Real Property is
identified as leased and described on Exhibit J attached hereto.
(d) BUSINESS, EQUIPMENT AND SUPPLIES. All
tangible personal property, equipment, supplies, furniture, leasehold
improvements, including but not limited to, leases and subleases of personal
property or equipment, all automobiles and other vehicles, computers and
peripherals and all maintenance and other operating supplies and other
miscellaneous tangible personal property of Seller used in the Transferred
Business, whether or not located at or on the Real Property at the Closing Date
and whether or not reflected on the Most Recent Financial Statements
(collectively, the "EQUIPMENT"); provided, however, that the Equipment does not
include Seller's MIS Assets.
(e) CONTRACTS AND OTHER AGREEMENTS RELATING TO
THE TRANSFERRED BUSINESS. All rights of Seller (or of Seller's Affiliates to
the extent that such Affiliate's rights are used in the conduct or operation of
the Transferred Business and Purchased Assets) as of the Closing Date under all
(written or oral) vendor contracts with airlines or other carriers, hotels and
resorts, agreements with rental car companies, marketing agreements, consortia
agreements, travel agency agreements, concession or other agreements relating
to tour or reservation desks maintained on property or in facilities owned by
third parties, interface or similar agreements pertaining to various airline or
other computer reservation systems, licenses, leases, purchase orders and all
other contracts, agreements or arrangements used in the Transferred Business
(other than those contracts referenced in clause (vi) of the definition of
Excluded Assets).
(f) BOOKS, RECORDS, LISTS AND OTHER DATA. All
files, books, records, invoices, accounts, surveys, customer lists and records,
vendor and supplier lists, catalogs, price lists, marketing and advertising
information, purchasing histories, profiles and materials, technical bulletins,
books and records of account and other financial, vendor, customer and credit
data, and all computer programs, software, hardware, firmware, tapes and other
materials used to store, record or produce such data, owned or leased by Seller
and used in the Transferred Business (exclusive of Seller's MIS Assets);
provided, however, that with respect to items leased by Seller, only Seller's
leasehold rights are conveyed hereby.
(g) EMPLOYMENT AGREEMENTS AND EMPLOYEE
RELATIONSHIPS. All rights of Seller as of the Closing Date under all
employment and non-compete agreements plus all relationships of Seller with any
of its Employees.
(h) LICENSES, PERMITS. Except for those which
are listed in the Disclosure Schedule (under Section 3.7) as being not
assignable by operation of the laws of the
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relevant Governmental Body (e.g., qualifications of the Seller to do business
as a foreign corporation in a given jurisdiction), all material federal, state,
local and other governmental licenses, permits, approvals and authorizations
that are used in the operation of the Transferred Business.
(i) PREPAYMENTS. All security, utility or
similar deposits or prepaid expenses of Seller used in the Transferred
Business.
(j) INTELLECTUAL PROPERTY. All (i) patents,
patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing
(including without limitation MTI Vacations); (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; (v) trade secrets, confidential information and know-how
(including but not limited to ideas, business and marketing plans, and customer
vendor and supplier lists and related information); and (vi) computer software
(including but not limited to data, data bases and documentation but excluding
Seller's MIS Assets) used in the Transferred Business, including without
limitation the intellectual property listed on Exhibit O (collectively, the
"INTELLECTUAL PROPERTY").
(k) GENERAL INTANGIBLES. All general intangibles
used by the Transferred Business including, without limitation, all goodwill as
a going concern and any and all causes of action or claims of Seller against
any third party that arose or will arise out of the Transferred Business prior
to the Closing Date.
(l) OTHER ASSETS. All other assets of Seller
used in the conduct of the Transferred Business, whether or not reflected on
the books or records of Seller or the Transferred Business, other than the
Excluded Assets.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the
contrary in this Agreement, the Purchased Assets do not include, and Buyer is
not purchasing or assuming any liability therefore, the Excluded Assets,
ownership of which is retained by Seller.
2.3 ASSUMED LIABILITIES. On the terms and subject to the
conditions and exceptions contained herein, at Closing, Seller shall assign and
delegate to Buyer, and Buyer shall assume and undertake to pay, defend,
discharge and perform in full when due the liabilities of Seller (insofar as
such liabilities relate to the Transferred Business and the Purchased Assets)
properly included in the Seller's December 31, 1997 balance sheet for the
Transferred Business, subject to changes in the ordinary course of business
from such date through the Closing Date, including without limitation the
Customer Deposits, all of Seller's obligations under the contracts included in
the Purchased Assets pursuant to Section 2.1(e) and all of Seller's obligations
arising after the Closing Date in the ordinary course of conducting the
Transferred Business (subject to Seller's and Shareholder's indemnification
obligations set forth in Section 8.1, and other than any Excluded Liabilities
(as defined in Section 2.4) (the "ASSUMED LIABILITIES"), and no others,
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pursuant to this Agreement and the General Assignment, Xxxx of Sale and
Assumption Agreement referred to in Section 2.5.
2.4 EXCLUDED LIABILITIES. Notwithstanding anything to
the contrary contained in this Agreement, Buyer will not assume or be liable
for and Seller will retain and remain responsible for all of Seller's debts,
liabilities and obligations of any nature whatsoever, other than the Assumed
Liabilities, whether accrued, absolute or contingent, whether known or unknown,
whether due or to become due and whether related to the Transferred Business
and the Purchased Assets or otherwise, and regardless of when asserted (the
"EXCLUDED LIABILITIES"), including, without limitation, the following
liabilities or obligations of Seller (none of which will constitute Assumed
Liabilities):
(a) All of Seller's liabilities or obligations
under this Agreement or under any other agreement between Seller on the one
hand and Buyer on the other hand entered into on or after the date of this
Agreement;
(b) All liabilities and obligations of Seller for
Taxes which are imposed on or measured by income, for any period, and all of
Seller's liabilities or obligations with respect to any Taxes not specifically
accrued on the balance sheet for the Transferred Business included in the Most
Recent Financial Statements, subject to changes in the ordinary course of
business from the date of such balance sheet through the Closing Date;
(c) All of Seller's liabilities or obligations
arising out of or in connection with the breach of any contract or agreement
included in the Purchased Assets, other than for such amounts as are adequately
and properly reserved for in the balance sheet included as part of the Most
Recent Financial Statements, subject to changes in the ordinary course of
business from the date of such balance sheet through the Closing Date;
(d) All of Seller's liabilities or obligations
for expenses, Taxes or fees incident to or arising out of the negotiation,
preparation, approval, or authorization of this Agreement or the consummation
(or preparation for the consummation) of the transactions contemplated hereby,
including all attorneys' and accountants' fees, brokerage fees, consultants'
fees and finders' fees, and sales, bulk sales and transfer taxes which are
Seller's responsibility hereunder;
(e) Seller's obligations and liabilities for the
period up to and including the Closing Date which relate to any Employee Plan
(as defined in Section 3.11(a)) (including unfunded pension plan liabilities
and retiree health benefits), other than for amounts as are adequately and
properly reserved for or accrued on the balance sheet for the Transferred
Business included as part of the Most Recent Financial Statements, subject to
changes in the ordinary course of business from the date of such balance sheet
through the Closing Date;
(f) All of Seller's liabilities or obligations
that are not otherwise Excluded Liabilities hereunder against which Seller is
insured or otherwise contractually
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indemnified by a Person other than Buyer but only to the extent Seller receives
the proceeds of such insurance or indemnification.
(g) Any liability or obligation under COBRA (as
defined in Section 3.11(b)) to any person covered by Seller's health plans or
any Employee who ceases to be employed by Seller on or before the Closing Date,
or who is not employed by Buyer on the Closing Date, and any liability or
obligation under COBRA to any family member of such person or Employee.
(h) Any liability or obligation for Funded
Indebtedness or any other liability or obligation of Seller that does not
relate to, or arise from, the Transferred Business and the Purchased Assets.
(i) Any liability or obligation pertaining to any
discontinued operation owned or operated by the Seller and related to the
Transferred Business as it was operated by the Seller prior to the Closing
Date.
(j) Any liability or obligation that arises from,
the Excluded Assets or the Retained Business.
2.5 TITLE TO THE PURCHASED ASSETS: DOCUMENTS OF
CONVEYANCE. At Closing, Seller shall convey all of its right, title and
interest in and to the Transferred Business and the Purchased Assets to Buyer
free and clear of all liabilities, obligations, liens and Encumbrances,
excepting only the Assumed Liabilities (as defined in Section 2.3). Title to
the Purchased Assets shall be conveyed pursuant to the Assignment and
Assumption Agreement, and by such other documents as are reasonably acceptable
to counsel for Seller and counsel for Buyer in accordance with the terms
hereof. Each of the parties hereto agrees to use its reasonable commercial
efforts to take or cause to be taken all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable, whether before or
after Closing, to ensure transfer of title to the Purchased Assets to Buyer
occurs as contemplated hereunder; provided, however, that it is the intention
of the parties that if it is determined post-Closing that a particular asset or
liability should have been, but was not, properly transferred at Closing to
either the Transferred Business (as a Purchased Asset or an Assumed Liability)
or the Retained Business (as an Excluded Asset or an Excluded Liability), the
parties will cooperate to transfer the subject asset or liability to the
Transferred Business or the Retained Business, as appropriate.
2.6 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE. The
total purchase price for the Purchased Assets (the "PURCHASE PRICE") shall be
equal to $26,400,000, subject to any adjustment required to be made pursuant to
Sections 2.7 and 2.11 below. The Purchase Price shall be allocated among the
Purchased Assets as follows: $1,605,000 to furniture and fixtures
(representing the February 28, 1998 net book value of the Transferred Business'
fixed assets) and the remainder to intangibles and other assets as determined
by Buyer.
2.7 PAYMENT OF PURCHASE PRICE. The Purchase Price shall
be payable by Buyer at the Closing (as defined in Section 2.8) as follows:
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(a) That amount of the Purchase Price which
equals $24,900,000 less the marked-to-market value of the long-term Investments
covered by paragraph (b) below will be paid, at the direction of Seller, in
cash by wire transfer of funds to Seller's account as specified in Exhibit K
(including the payment of $100,000 for the agreements not to compete provided
in Section 6.3);
(b) A portion of the Purchase Price, representing
the marked-to-market value (including accrued but unpaid interest, dividends or
other distributions) of the Seller's long-term Investments in the Customer
Depository Account of the Transferred Business as of the Closing Date, will be
deposited Seller's Customer Depository Account thereby creating an overfunding
of Seller's Customer Depository Account in the amount of such cash deposit;
Seller shall transfer from its Customer Depository Account to the Buyer's
Customer Depository Account (which Buyer has established to hold Customer
Deposits of the Transferred Business following the Closing Date) an amount of
Cash and Cash Equivalents equal to Customer Deposits, thereby fully funding the
Buyer's Customer Depository Account and leaving in Seller's Customer Depository
Account long-term Investments equal to the cash deposit received from Buyer,
with the result that the Seller's Customer Depository Account has no
liabilities and is overfunded by the amount of such long-term Investments; and
Seller shall distribute from its Customer Depository Account to itself the
amount of such overfunding, as permitted by the terms of the Seller's Customer
Depository Account; within thirty (30) days from the Closing Date, the parties
agree that they will determine the exact amount of the Customer Deposit
liabilities as of the Closing Date and adjust for any preliminary over- or
under-funding of such liabilities under this paragraph (b); and
(c) $1,500,000 of the Purchase Price will be paid
in cash by wire transfer of funds to the Escrow Agent to be held in escrow
pursuant to Section 2.9 for satisfaction of Seller's indemnification
obligations specified in Section 8.1.
2.8 CLOSING. The Closing of the purchase and sale of the
Purchased Assets contemplated by this Agreement shall take place at 10:00 a.m.,
Eastern Time, at the offices of Xxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X.
in Washington, D.C. on April __30, 1998, or the date selected by Buyer (which
date shall be as soon as practicable following the date on which all of the
conditions to Closing in Sections 7.1 and 7.2 have been satisfied), or on such
other date and time as the parties shall agree but, in any case, with an
effective closing date of April 30, 1998 (the "CLOSING DATE").
2.9 ESCROW ARRANGEMENTS. Pursuant to the Escrow
Agreement to be entered into among Seller, Buyer and the Escrow Agent, the
portion of the Purchase Price specified in Section 2.7(ii) shall be delivered
to the Escrow Agent at Closing in immediately available funds. Such monies
(which, together with all interest accrued thereon, is hereinafter referred to
as the "ESCROW SUM") shall be held pursuant to the terms of the Escrow
Agreement for payment from such Escrow Sum of the amounts, if any, owing by
Seller and Shareholder to Buyer pursuant to the indemnification provisions of
Article VIII below and subject to the cash collateral provisions of the
Transition Services Agreement dealing with (among other matters) Letters of
Credit (Exhibit H-2). At the period ending on the first
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anniversary of the Closing Date (such period being referred to herein as the
"ESCROW PERIOD"), such remaining portion of the Escrow Sum not theretofore
claimed by or paid to Buyer in accordance with the terms of the Escrow
Agreement and this Agreement shall be disbursed to Seller. Seller and Buyer
agree that each will execute and deliver such reasonable instruments and
documents as are furnished by any other party to enable such furnishing party
to receive those portions of the Escrow Sum to which the furnishing party is
entitled under the provisions of the Escrow Agreement and this Agreement.
2.10 CLOSING AUDIT. Within 120 days following the Closing
Date, there shall be delivered to Buyer and to Seller an audit (the "AUDITED
CLOSING FINANCIAL STATEMENTS") of the Transferred Business (as same relates to
the Transferred Business and the Purchased Assets) and the balance sheet for
the Transferred Business at and as of February 28, 1998 (for purposes of the
Net Worth and adjustment to the Purchase Price set forth in Section 2.11) and
at and as of the Closing Date and the statements of income and cash flows for
the Transferred Business for the stub period of January 1, 1998 through and
including the day prior to the Closing Date. The Audited Closing Financial
Statements shall also include (i) a report by Xxxxxx Xxxxxxxx, LLP ("AA"), on
the allocation assumptions and methodologies ("ALLOCATION METHODOLOGIES")
pursuant to which the Transferred Business, the Purchased Assets and the
liabilities assumed by Buyer, on the one hand, and the Retained Business, the
Excluded Assets and the Excluded Liabilities, on the other hand, were
bifurcated and transferred by Seller and/or its Affiliates to Buyer or retained
by Seller (as applicable) and (ii) a statement and quantification by AA,
indicating whether the bifurcation of the Transferred and Retained Businesses
and its Allocation Methodologies were appropriate and consistent with
Allocation Methodologies which AA would have utilized to bifurcate the
Transferred and Retained Businesses in accordance with GAAP. The Audited
Closing Financial Statements shall be prepared by AA in accordance with GAAP.
The cost of preparing the Audited Closing Financial Statements shall be paid by
Buyer. In the event that Seller within ten (10) business days after Seller's
receipt thereof disputes any items or assumptions or methodologies regarding
the Audited Closing Financial Statements to the extent that same relates to the
Net Worth of the Transferred Business as of February 28, 1998 and/or the
Allocation Methodologies, the parties shall jointly select and retain an
independent "Big Six" accounting firm (the "INDEPENDENT ACCOUNTANTS") to review
the disputed matter(s) on the Audited Closing Financial Statements. If the
Independent Accountant determines that competing Allocation Methodologies of
Seller and AA are both permissible under GAAP, then the Independent Accountant
shall determine which of such methodologies is most appropriate under the
circumstances. The final determination of such disputed matter(s) by the
Independent Accountants shall be reflected on the Audited Closing Financial
Statements and shall be final and binding on the parties for all purposes. The
cost of retaining the Independent Accountants shall be borne by Seller, except
that Buyer shall reimburse Seller for one-half the cost of the Independent
Accountants in the event that such review results in at least a $100,000
increase in the Net Worth of the Transferred Business as reflected on the
Audited Closing Financial Statements prepared by Xxxxxx Xxxxxxxx, LLP.
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2.11 POST-CLOSING PURCHASE PRICE ADJUSTMENTS.
(a) FEBRUARY 28 NET WORTH. The Purchase Price
will be adjusted upward or downward (as appropriate), on a dollar-for-dollar
basis, by the amount (if any) that the Net Worth as of February 28, 1998 as
reflected in the Audited Closing Financial Statements is greater or less than
(as appropriate) negative $3,600,000.
(b) ALLOCATION METHODOLOGIES. Subject to the
proviso which follows, the Purchase Price will be further adjusted downward by
the amount (if any) equal to 7.5 times the amount reflected in the report
concerning the Allocation Methodologies issued by AA in connection with its
delivery of the Audited Closing Financial Statements in accordance with the
terms of Section 2.10 as being the aggregate net amount (i.e., taking into
account both positive and negative items) by which the earnings of the
Transferred Business for 1998 are (or are reasonably likely to be) negatively
affected because of errors and omissions in such allocations; provided,
however, that (i) no adjustment shall be made as a result of the foregoing
unless and until the aggregate net amount by which the earnings of the
Transferred Business are (or are reasonably likely to be) negatively affected
exceeds $150,000, whereupon the Purchase Price shall be adjusted (using the
multiple set forth above) for all of such aggregate amount; (ii) in respect of
any Purchase Price adjustment pursuant to this paragraph (b) which is based on
the first $150,000, the multiple used in determining the adjustment shall be
3.75 instead of 7.5 (with the effect that the adjustment in respect of such
$150,000 shall be capped at $562,500); and, (iii) prior to making any Purchase
Price adjustment under this paragraph (b), Seller and Shareholder shall have
ten (10) business days to remedy or cure any such matter to the Buyer's
reasonable satisfaction.
(c) NO DOUBLE-COUNTING. If as a result of the
foregoing a negative adjustment to the Purchase Price could be made under both
paragraphs (a) and (b) as a result of a particular item, only an adjustment
under (b) shall be made with respect to such item.
(d) TIMING OF ADJUSTMENTS AND PAYMENTS. Any
post-closing adjustment to the Purchase Price, if any, shall be paid by Seller
to Buyer (or by Buyer to Seller as a result of the operation of an upward
adjustment under paragraph (a)) in immediately available funds (i) within ten
(10) business days of delivery of the Audited Closing Financial Statements in
the case of any adjustment under paragraph (a), and (ii) promptly upon the
expiration of the cure period provided for in the proviso in paragraph (b) in
the case of any adjustment thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDER
Except as set forth on the Disclosure Schedule attached hereto
(which Disclosure Schedule contains a reasonably detailed description of each
such exception and
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references the applicable representation so qualified), Seller and Shareholder
jointly and severally represent and warrant to Buyer that:
3.1 DUE ORGANIZATION. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has full corporate power and authority to own and lease its
properties and assets and to carry on the Transferred Business as now conducted
and as proposed to be conducted through Closing. Complete and correct copies
of the Articles of Incorporation and Bylaws of Seller, and all amendments
thereto, have been delivered to Buyer and are attached hereto as Exhibits L-1
and L-2. Seller is qualified to do business in the State of Illinois and
Hawaii and in each other jurisdiction in which the nature of the Transferred
Business or the ownership of the properties associated with the Transferred
Business requires such qualification except where the failure to be so
qualified does not and could not reasonably be expected to have a Material
Adverse Effect. The jurisdiction in which Seller is so qualified are listed on
Exhibit L-3 attached hereto.
3.2 SUBSIDIARIES. Seller does not own, directly or
indirectly, any capital stock or ownership interests in any Person. Other than
as disclosed and allowed under Section 6.3, Shareholder does not own any
capital stock or ownership interest in any other Person engaged in a business
that is competitive with the Transferred Business.
3.3 DUE AUTHORIZATION. Seller and Shareholder each has
full power and authority to execute, deliver and perform this Agreement and to
carry out the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action of Seller.
This Agreement has been duly and validly executed and delivered by Seller and
Shareholder and constitutes the valid and binding obligations of Seller and
Shareholder, enforceable in accordance with its terms, except to the extent
that enforceability may be limited by laws affecting creditors' rights and
debtors' obligations generally, and legal limitations relating to remedies of
specific performance and injunctive and other forms of equitable relief (the
"EQUITABLE EXCEPTIONS"). The execution, delivery, and performance of this
Agreement (as well as all other instruments, agreements, certificates, or other
documents contemplated hereby) by Seller, do not (a) violate any Requirements
of Laws or any Court Order of any Governmental Body applicable to Seller, or
its property, (b) violate or conflict with, or permit the cancellation of, or
constitute a default under, any material agreement to which Seller is a party,
or by which it or any of its property is bound, (c) permit the acceleration of
the maturity of any material indebtedness of, or indebtedness secured by the
property of, Seller, (d) violate or conflict with any provision of the charter
or bylaws of Seller, or (e) except for filings or approvals under the HSR Act
and such consents, approvals, or registrations as may be required under
applicable state securities laws, require any consent, approval or
authorization of, or notice to, or declaration, filing or registration with,
any Governmental Body or other third party.
3.4 FINANCIAL STATEMENTS. The following financial
statements of Seller have been delivered to Buyer by Seller: (i) audited
combined balance sheets of Seller as of December 31, 1995, December 31, 1996
and Xxxxxxxx 00, 0000, (xx) audited combined
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statements of income and cash flows of Seller for the fiscal years ended
December 31, 1995, December 31, 1996 and December 31, 1997, (iii) audited
balance sheet of the Transferred Business as of December 31, 1997, and (iv)
unaudited statement of income of the Transferred Business for the fiscal year
ended December 31, 1997 (collectively, the "FINANCIAL STATEMENTS"). The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP on a consistent basis throughout the periods indicated and
fairly present the financial position, results of operations and cash flows of
Seller or the Transferred Business (as appropriate) as of the indicated dates
and for the indicated periods and are consistent with the books and records of
Seller (which books and records are correct and complete). Since the date of
the last of such Financial Statements (the "MOST RECENT FINANCIAL STATEMENTS"),
Seller has no material liabilities relating to the Transferred Business
required by GAAP to be reflected on Seller's or the Transferred Business' (as
appropriate) balance sheet or notes thereto that are not so reflected. Since
December 31, 1997, Seller has not experienced any Material Adverse Change
relating to the Transferred Business.
3.5 CERTAIN ACTIONS. Since December 31, 1997, Seller has
not, except as disclosed on any of the Financial Statements or notes thereto:
(a) paid or declared any dividends or distributions, or purchased, redeemed,
acquired, or retired any stock or indebtedness from any stockholder (other than
distributions to pay estimated income taxes of the shareholders of Seller
associated with the income of Seller); (b) made or agreed to make any loans or
advances or guaranteed or agreed to guarantee any loans or advances to any
party whatsoever; (c) suffered or permitted any Encumbrance to arise or be
granted or created against or upon any of the Purchased Assets; (d) canceled,
waived, or released or agreed to cancel, waive, or release any of its debts,
rights, or claims against third parties in excess of $50,000 individually or
$150,000 in the aggregate; (e) sold, assigned, pledged, mortgaged, or otherwise
transferred, or suffered any material damage, destruction, or loss (whether or
not covered by insurance) to, any of the Purchased Assets (except in the
ordinary course of the Transferred Business); (f) amended its charter or
bylaws; (g) paid or made a commitment to pay any severance or termination
payment to any employee or consultant engaged in the Transferred Business; (h)
made any material change in the method of management, operation, accounting
(including in respect of Working Capital) or reporting income or deductions for
tax purposes in respect of the Seller or the Transferred Business; (i) made,
with respect to the Transferred Business, any material acquisitions, capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Transferred Business, or entered into commitments
therefor, except for capital expenditures or commitments therefor which do not,
in the aggregate, exceed $50,000; (j) made any investment or commitment
therefor in any Person; (k) made, with respect to the Transferred Business, any
payment or contracted for the payment of any bonus or other compensation or
personal expenses, other than (A) wages and salaries and business expenses paid
in the ordinary course of the Transferred Business, and (B) wage and salary
adjustments made in the ordinary course of the Transferred Business for
employees who are not officers, directors, or shareholders of Seller; (l) made,
amended, or entered into any written employment contract or created or made any
material change in any bonus, stock option, pension, retirement, profit sharing
or other employee benefit plan or arrangement; (m) made or entered into any
vendor, supply, sales, distribution, franchise, consortia or travel agency
agreement which involves annual consideration (or commissions) in excess of
$50,000 with respect to the Transferred Business, other than in the ordinary
course of business on normal commercial terms; (n) entered into any
non-competition
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agreement involving the Transferred Business; (o) made or entered into any
agreement or other arrangement with any Affiliate of Seller or any officer,
director, shareholder or employee of Seller or any Affiliate of Seller, other
than as contemplated under this Agreement; (p) materially amended, experienced
a termination or received notice of actual or threatened termination or
non-renewal of any material contract, agreement, lease, franchise or license to
which Seller is a party that would or could reasonably be expected to have a
Material Adverse Effect; or (q) entered into any other material transactions
that would or could reasonably be expected to have a Material Adverse Effect.
3.6 PROPERTIES. Attached hereto as Exhibit M is a list
containing a description of each interest in real property (including, without
limitation, leasehold interests) and each item of tangible personal property
included in the Purchased Assets having a depreciated book or fair market value
in excess of $50,000 as of the date hereof. Except for Permitted Exceptions,
such real and personal properties are free and clear of Encumbrances. Seller
has delivered to Buyer copies of all real property leases and a lien search
obtained from the counties where Seller conducts business and the Illinois
Secretary of State office of all UCC liens of record against Seller's personal
property in the State of Illinois. All of the properties and assets necessary
for continued operation of the Transferred Business and the Purchased Assets as
currently conducted (including, without limitation, all books, records,
computers and computer software and data processing systems) are owned, leased
or licensed by Seller and are suitable for the purposes for which they are
currently being used. The physical properties comprising the Purchased Assets,
including the real properties leased by Seller, are in good operating condition
and repair, normal wear and tear excepted, and are free from any defects of a
material nature. Except for Permitted Exceptions, Seller has full and
unrestricted legal and equitable title to all such properties and assets. The
operation of the Purchased Assets and the Transferred Business in the manner in
which they are now and have been operated does not violate any zoning
ordinances, municipal regulations, or other Requirements of Laws, except for
any such violations which would not, individually or in the aggregate, have a
Material Adverse Effect. Except for Permitted Exceptions, no restrictive
covenants, easements, rights-of-way, or regulations of record impair the uses
of the properties comprising the Purchased Assets for the purposes for which
they are now operated. All leases of real or personal property by Seller are
legal, valid, binding, enforceable and in full force and effect and will remain
legal, valid, binding, enforceable and in full force and effect on identical
terms immediately following the Closing, except for the Equitable Exceptions.
Seller owns no real property.
3.7 LICENSES AND PERMITS. Attached hereto as Exhibit N
is a list of all licenses, authorizations and permits held or applied for by
Seller from any Governmental Body (herein collectively called "GOVERNMENTAL
PERMITS") the absence of which could, individually or in the aggregate, have a
Material Adverse Effect. Seller has complied in all material respects with the
terms and conditions of all such Governmental Permits, and Seller has not
received notification from any Governmental Body of violation of any such
Governmental Permit or the Requirements of Laws governing the issuance or
continued validity thereof. All of such Governmental Permits are valid and in
full force and effect and are transferable to Buyer in accordance with the
terms of this Agreement. No additional Governmental Permit is
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required from any Governmental Body thereof in connection with the transfer of
the Purchased Assets to Buyer and its conduct of the Transferred Business which
Governmental Permit, if not obtained, would have a Material Adverse Effect.
3.8 INTELLECTUAL PROPERTY. Attached hereto as Exhibit O
is a list and brief description of all Intellectual Property owned or licensed
by Seller. Seller has furnished Buyer with copies of all material license
agreements to which Seller is a party, either as licensor or licensee, with
respect to any Intellectual Property. Seller has good title to or the right to
use all the Intellectual Property in the Transferred Business as presently
conducted without the payment of any royalty or similar payment, and Seller is
not infringing on any Intellectual Property right of others, and Seller is not
aware of any infringement by others of any such rights owned by Seller. All
Intellectual Property licenses set forth on Exhibit O are valid and binding
obligations of Seller, and to the Knowledge of Seller the other parties
thereto, and enforceable against Seller, and to the Knowledge of Seller the
other parties thereto in accordance with their respective terms, except for the
Equitable Exceptions. When taken together with the intellectual property
rights and/or licenses granted to Buyer for use by the Transferred Business
following the Closing pursuant to the MIS Transition Services Agreement,
following the Closing Buyer will have all intellectual property and rights or
licenses thereto as necessary to continue to own and operate the Transferred
Business as same was owned and operated by Seller prior to the Closing.
Notwithstanding anything to the contrary in the foregoing sentences of this
Section 3.8, Seller and Shareholder make no representation as to the existence
or extent of its rights to any Intellectual Property that is not a registered
trademark, service xxxx, copyright or patent other than the representation that
Seller has used such Intellectual Property without known conflict with the
rights of others; in addition, Seller's rights to computer software licensed
from third parties are limited by the applicable license agreements.
3.9 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Seller
has (i) complied in all material respects with all Requirements of Laws,
Governmental Permits and Court Orders applicable to the Transferred Business
and has filed with the proper Governmental Bodies all statements and reports
required by all Requirements of Laws, Governmental Permits and Court Orders to
which Seller or any of its employees (because of their activities on behalf of
Seller) are subject and (ii) conducted the Transferred Business and is in
compliance in all material respects with all federal, state and local energy,
public utility, health, safety and environmental Requirements of Laws,
Governmental Permits and Court Orders including the Clean Air Act, the Clean
Water Act, the Solid Waste Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Safe Drinking Water Act, OSHA, the Toxic Substances Control Act and any similar
state, local or foreign laws (collectively "ENVIRONMENTAL AND OSHA
OBLIGATIONS") and all other Governmental Body requirements, except where any
such failure to comply or file would not, in the aggregate, have a Material
Adverse Effect. No claim has been made by any Governmental Body (and, to the
best knowledge of Seller, no such claim is anticipated) to the effect that the
Transferred Business fails to comply, in any respect, with any Requirements of
Laws, Governmental Permit or Environmental and OSHA Obligation or that a
Governmental Permit or Court Order is necessary in respect thereto.
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3.10 INSURANCE. Attached hereto as Exhibit P is a list of
all coverages for fire, liability, or other forms of insurance and all fidelity
bonds held by or applicable to Seller or the Transferred Business. Copies of
the binder or certificate of insurance for all such insurance policies have
been delivered to Buyer. The insurance maintained by Seller immediately prior
to the Closing Date was in Seller's judgment reasonably adequate for the
Transferred Business as conducted by Seller and is consistent with levels of
insurance carried by the Seller in the past. To the best of Seller's
Knowledge, no event relating to Seller or the Transferred Business has occurred
which will result in (i) cancellation of any such insurance coverages; (ii) a
retroactive upward adjustment of premiums under any such insurance coverages;
or (iii) any prospective upward adjustment in such premiums. Seller will use
all reasonable efforts to cause all of such insurance policies to remain in
full force and effect in favor of Buyer following the Closing in accordance
with the terms of the Non-MIS Transition Services Agreement. Seller is not in
default under any such insurance policies.
3.11 EMPLOYEE BENEFIT PLANS.
(a) Exhibit Q hereto lists all Employee Plans
covering employees of the Seller currently employed in the conduct of the
Transferred Business ("EMPLOYEES"). The term "EMPLOYEE PLAN" means any
pension, retirement, savings, disability, medical, dental, health, life
(including, without limitation, any individual life insurance policy under
which any Employee is the named insured and as to which Seller, on behalf of
the Transferred Business, makes premium payments, whether or not Seller is the
owner, beneficiary or both of such policy), death benefit, group insurance,
profit-sharing, deferred compensation, stock option, bonus, incentive, vacation
pay, severance pay, or other written employee benefit plan, trust, arrangement,
agreement, policy or commitment (including, without limitation, any employee
pension benefit plan as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") ("PENSION PLAN"), and any
employee welfare benefit plan as defined in Section 3(1) of ERISA ("WELFARE
PLAN")), whether or not any of the foregoing is funded or insured, which is
maintained by Seller and is intended to provide or does in fact provide
benefits to any group of or all Employees, and (i) to which Seller is party or
by which Seller (or any of the rights, properties or assets of Seller) is
bound, (ii) with respect to which Seller has made any payments, contributions
or commitments, or may otherwise have any liability (whether or not Seller
still maintains such plan, trust, arrangement, contract, agreement, policy or
commitment) or (iii) under which any director, Employee or agent of Seller is a
beneficiary as a result of his or her employment or affiliation with Seller.
(b) With respect to any Employee, Seller has no
obligation to contribute to (or any other liability with respect to) any funded
or unfunded Welfare Plan, whether or not terminated, which provides medical,
health, life insurance or other welfare-type benefits for current or future
retirees or current or future former Employees (including their dependents and
spouses) except for limited continued medical benefit coverage for former
Employees, their spouses and their other dependents as required to be provided
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), and Seller
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is in compliance in all material respects with the continued medical and other
welfare benefit coverage requirements of COBRA and all other applicable laws.
(c) With respect to any Employee, Seller does not
maintain, contribute to or have any material liability under (or with respect
to) any Pension Plan which is a tax qualified "defined benefit plan" (as
defined in Section 3(35) of ERISA) or, except as disclosed in Exhibit Q, a
tax-qualified "defined contribution plan" (as defined in Section 3(34) of
ERISA), whether or not terminated. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each Employee Plan or are reflected as a liability on the books of
Seller and all contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such Employee Plan or accrued
in accordance with past custom and practice of Seller.
(d) Seller has, with respect to the Transferred
Business and all current and former Employee Plans (and all related trusts,
insurance contracts and funds), at all times complied in all material respects
with the applicable requirements of ERISA, the Internal Revenue Code of 1986,
as amended (the "CODE"), and all other applicable statutes, common law,
regulations and regulatory pronouncements, or has determined that such statutes
(including ERISA), common law, regulations and regulatory pronouncements were
and are not applicable to the Transferred Business. Seller has not engaged in,
nor is it bound to enter into, any transaction with respect to any Employee
Plan which would subject Seller to any material liability due to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code. No actions, suits
or claims with respect to the assets of any Employee Plan (and all related
trusts, insurance contracts and funds), other than routine claims for benefits,
are pending or threatened which could result in or subject Seller, the
Transferred Business or the Purchased Assets to any material liability. There
are not now, nor have there been, any tax-qualified retirement plans sponsored
or maintained by Seller for Employees, nor are there any unfunded obligations
with respect thereto. With respect to any Employee, Seller has no obligation
to contribute to (or any other liability with respect to) any "multi-employer
plan," as defined in the Multi-employer Pension Plan Amendments Act of 1980,
and Seller has not incurred nor will incur any current or potential withdrawal
or termination liability as a result of a complete or partial withdrawal from
any multi-employer plan or the sale of the Purchased Assets. Each Employee
Plan intended to qualify under Section 401(a) of the Code has been determined
by the IRS to be qualified under the requirements of Section 401(a) of the
Code, the IRS has issued a determination letter to that effect, and such letter
remains effective and has not been revoked. No unfulfilled obligation to
contribute with respect to an Employee Plan existed as of the date of the Most
Recent Financial Statements, except as shown in the Most Recent Financial
Statements. There is no agreement or promise, written or oral, of Seller to
the effect that any Employee Plan may not be terminated at Seller's discretion
at any time, subject to applicable law. Exhibit Q sets forth a list and a
summary description of all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, employee pension plans or retirement plans, employee
stock options or stock purchase plans and group life, health and accident
insurance and other employee benefit plans or agreements, including, without
limitation, holiday, vacation, Christmas and other bonus practices, to which
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the Transferred Business or the Seller is a party or is bound or which relate
to the operation of the Transferred Business. The Most Recent Financial
Statements reflect all accrued vacation and other benefits for the Transferred
Business' employees as of the date thereof.
(e) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED
COMPENSATION ARRANGEMENTS. Seller does not maintain or contribute to any
retirement or deferred or incentive compensation or stock purchase, stock grant
or stock option arrangement entered into between Seller and any current or
former officer, consultant, director or employee of Seller that is not intended
to be a tax qualified arrangement under Section 401(a) of the Code.
3.12 CONTRACTS AND AGREEMENTS. Exhibit R hereto contains
a list of the following written and oral contracts and agreements, and in the
case of oral contracts and agreements, a brief description of the contract or
agreement (collectively, the "CONTRACTS"):
(i) all real estate leases other
than travel desk agreements with hotels in Hawaii;
(ii) all promissory notes, loan
agreements, other evidences of indebtedness,
guarantees, hedging agreements, off-balance sheet
financing arrangements, indemnity agreements, and
similar agreements, but excluding office equipment
leases;
(iii) all vendor contracts with
airlines;
(iv) all contracts with hotels and
resorts at which the Transferred Business did
$1,000,000 or more of business in 1997;
(v) all agreements with rental car
companies, except agreements for a single state or
Hawaiian island;
(vi) all consortia agreements, with
the four top producers (measured by sales volume) in
1997, representing approximately 30% of the
Transferred Business's 1997 sales volume;
(vii) all interface agreements
pertaining to various airline or other computer
reservation systems;
(viii) all agreements prohibiting
Seller from freely engaging in any business or
competing anywhere in the world;
(ix) all agreements with telephone
companies;
(x) all agreements with credit card
processors;
(xi) all agreements with non-travel
agency customers; and
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(xii) any other agreements which are
material, are not disclosed elsewhere in this
agreement, and are not of a type described in
subsections (i) through (xi) above.
Seller is not and, to the best knowledge of Seller, no other party thereto is
in default (and no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default by Seller) under any of
the Contracts, and Seller has not waived any right under any of the Contracts.
All of the Contracts to which Seller is a party are legal, valid, binding,
enforceable and in full force and effect and will remain legal, valid, binding,
enforceable and are fully assignable to Buyer and will remain in full force and
effect in favor of Buyer on identical terms immediately after the Closing,
except for the Equitable Exceptions. Seller has not guaranteed any obligations
of any other Person. Seller has no present expectation or intention of not
fully performing all of its obligations under any Contract, Seller has no
knowledge of any breach or anticipated breach by the other parties to any
Contract and Seller has not received notice of actual or threatened termination
or non-renewal of any Contract. In respect of the National Tour Operator
Agreement between the National Railroad Passenger Corporation and Seller dated
April 28, 1998 (the "NEW AMTRAK AGREEMENT"), Seller represents that (i) the
only material changes reflected in the New Amtrak Agreement, as compared to the
October 10, 1994 Agreement it superseded and replaced (the "OLD AMTRAK
AGREEMENT"), are as set forth in the April 28, 1998 memo from Xxxxx Xxxxxx (Xxx
Xxxxxx) to Global (Xxx Xxxxx); (ii) projections for the Transferred Business
provided by Seller to Global were based on the economic terms as are reflected
in the New Amtrak Agreement; and (iii) the changes in the New Amtrak Agreement
referenced in clause (i) will be effectively revenue neutral to the Transferred
Business as compared to the Old Amtrak Agreement.
3.13 CLAIMS AND PROCEEDINGS. There are no claims,
actions, suits, proceedings, or investigations pending or, to the best
knowledge and belief of Seller, threatened against or affecting Seller or any
of its properties or assets, at law or in equity, before or by any court,
municipality or other Governmental Body. To the extent any are disclosed on
the Disclosure Schedule, none of such claims, actions, suits, proceedings, or
investigations, if adversely determined, will result in any material liability
or loss to Seller. Seller has not been and Seller is not now, subject to any
Court Order, stipulation, or consent of or with any court or Governmental Body.
No inquiry, action or proceeding has been instituted or, to the best knowledge
and belief of Seller, threatened or asserted against Seller to restrain or
prohibit the carrying out of the transactions contemplated by this Agreement or
to challenge the validity of such transactions or any part thereof or seeking
damages on account thereof. To the knowledge of Seller there is no basis for
any such valid claim or action.
3.14 TAXES.
(a) All Federal, foreign, state, county and local
and other Taxes due from Seller on or before the Closing have been paid and all
Tax Returns which are required to be filed by Seller on or before the date
hereof have been filed within the time (including permitted extensions) and in
the manner provided by all Requirements of Laws, and all such
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Tax Returns are true and correct and accurately reflect the Tax liabilities of
Seller. All Taxes, assessments, penalties, and interest of Seller which have
become due pursuant to such Tax Returns or any assessments received have been
paid or adequately accrued on Seller's Financial Statements. The provisions
for Taxes reflected on the balance sheets contained in the Financial Statements
are adequate to cover all of Seller's Tax liabilities for the respective
periods then ended and all prior periods. Seller has not executed any
presently effective waiver or extension of any statute of limitations against
assessments and collection of Taxes, and there are no pending or threatened
claims, assessments, notices, proposals to assess, deficiencies, or audits with
respect to any such Taxes of which the Seller is aware. For Governmental
Bodies with respect to which Seller does not file Tax Returns, no such
Governmental Body has given Seller written notification that Seller is or may
be subject to taxation by that Governmental Body. Seller has withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, shareholder, creditor, independent contractor or
other party. There are no Tax liens on any of the property or assets of
Seller.
(b) No transaction contemplated by this Agreement
is subject to withholding under Section 1445 of the Code and no transfer taxes,
real estate transfer taxes or similar taxes will be imposed upon the transfer
and sale of the Purchased Assets pursuant to this Agreement.
(c) Seller has made a valid election under
Section 1362 of the Code and any corresponding state or local provisions to be
an S corporation within the meaning of Section 1361 of the Code for all taxable
years (or portions thereof) beginning on or after December 31, 1990, no such S
election has been terminated (whether voluntarily, involuntarily or
inadvertently, including, without limitation, by taking any action defined in
Section 1362(d) of the Code) since such time.
3.15 PERSONNEL. All Employees (as defined in Section
3.11) are employed by the Seller and, as between Seller and Seller's
Affiliates, Seller employs all the individuals and Seller's Affiliates do not
have any employees necessary to conduct the Transferred Business. Attached
hereto as Exhibit S is a list of the names and annual rates of compensation of
Employees whose annual rates of compensation during the calendar year ended
December 31, 1997 (including base salary, bonus and incentive pay) exceed (or
by December 31, 1998 are expected to exceed) $60,000. Exhibit S also
summarizes the bonus, profit sharing, percentage compensation, company
automobile, club membership, and other like benefits, if any, paid or payable
to such Employees during Seller's calendar year ended December 31, 1997 and to
the date hereof. Exhibit S also contains a brief description of all material
terms of employment agreements to which Seller is a party and all severance
benefits which any Employee is or may be entitled to receive. The employee
relations of Seller are generally good and there is no pending or, to the best
knowledge of Seller, threatened labor dispute or union organization campaign.
None of the Employees is represented by any labor union or organization.
Seller is in compliance in all material respects with all Requirements of Laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practices. Seller has not been advised, nor does Seller have
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good reason to believe, that any Employee will not agree to be employed by
Buyer after the consummation of the transactions contemplated hereby. There is
no unfair labor practice claim against Seller before the National Labor
Relations Board, or any strike, dispute, slowdown, or stoppage pending or, to
the best knowledge of Seller, threatened against or involving Seller, and none
has previously occurred.
3.16 BUSINESS RELATIONS. Seller does not know or have
good reason to believe that any customer, supplier, travel agency, resort
operator or lodging or transportation company engaged in doing business with
Seller will cease to do business with Buyer after the consummation of the
transactions contemplated hereby in the same manner and at the same levels as
previously conducted with Seller except for any reductions which do not result
in a Material Adverse Change. Seller has not received any notice of
cancellation or non-renewal of any material business arrangement between any
Person and Seller nor is Seller aware of any facts which could lead it to
believe that the Transferred Business will be subject to cancellation or
non-renewal of any such business arrangement.
3.17 ACCOUNTS RECEIVABLE; CUSTOMER DEPOSITS AND BOOKINGS;
FINANCIAL CONDITION.
(a) ACCOUNTS RECEIVABLE. All of the accounts,
notes, and loans receivable that have been recorded on the books of Seller
pertaining to the Transferred Business are bona fide and represent amounts
validly due for goods sold or services rendered and all such amounts (net of
any allowance for doubtful accounts) will be collected in full within 180 days
following the Closing Date, and (a) all of such accounts, notes, and loans
receivable are free and clear of any Encumbrances; (b) no claims of offset have
been asserted in writing against any of such accounts, notes, or loans
receivable; and (c) none of the obligors of such accounts, notes, or loans
receivable has given written notice that it will or may refuse to pay the full
amount or any portion thereof.
(b) CUSTOMER DEPOSITS AND BOOKINGS. Exhibit T
sets forth, as of the date specified therein, (i) all Bookings, (ii) all
Customer Deposits, (iii) the aggregate amount of all prepayments to vendors and
suppliers and refunds to customers made by Seller in connection with such
Bookings as of such date, and (iv) the aggregate amount of all claims by
customers of the Transferred Business for refunds received by Seller for which
refunds have not been made as of such date ("CUSTOMER CLAIMS"). The Customer
Deposits are recognized and included on Seller's balance sheet only to the
extent of cash received from the customers in respect thereof, and each
Customer Deposit so recognized and included is matched by a deferred liability
on such balance sheet. All cancellations by customers of Bookings are
recognized on Seller's financial statements within one (1) business day of
Seller's receipt of notice of such cancellation from the customer. For the
period since December 31, 1997 through the Closing Date, the Bookings of the
Transferred Business (and its projected revenues for the future periods in
which such Bookings will be converted into revenues) are consistent with those
levels of Bookings and revenues needed for the Transferred Business to achieve
a projected EBIT level for the twelve months ending December 31, 1998 of
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approximately $4,022,000. The level of Customer Claims for the period since
December 31, 1997 through the Closing Date is consistent with the past
practices of Seller.
3.18 FINANCIAL RESULTS DURING STUB PERIOD. On the Closing
Date, Bookings shall exceed 36,044 passengers and Working Capital for the
Transferred Business shall be not less than that amount which is equal to
Working Capital reflected on the Preliminary Closing Balance Sheet minus
$300,000. Such levels of Bookings and Working Capital for the Transferred
Business are not materially less than the levels of Bookings and Working
Capital for the Transferred Business as of the same date in 1997, computed on a
basis consistent with past practice.
3.19 BANK ACCOUNTS; INVESTMENTS. Attached hereto as
Exhibit U is a list of all banks or other financial institutions with which
Seller has an account for the Transferred Business or maintains a safe deposit
box for the Transferred Business, showing the type and account number of each
such account and safe deposit box and the names of the persons authorized as
signatories thereon or to act or deal in connection therewith. Exhibit U also
contains a list of all material Investments by Seller which are included in the
Purchased Assets. None of such Investments involve any type of derivative,
option, hedging or other speculative instrument. All Investments of the
Transferred Business shall be marked to market as of any date of determination.
3.20 CUSTOMER CLAIMS. No written or oral claim for breach
of contract or otherwise by any customer has been made against Seller since
January 1, 1998 which could, individually or in the aggregate, result in any
Material Adverse Effect. To the best knowledge of Seller, no state of facts
exists, and no event has occurred, which could reasonably be expected to form
the basis of any present claim against Seller for liability to any third party
in connection with vacation packages sold or services rendered by Seller, other
than Customer Claims arising in the ordinary course of the Transferred
Business.
3.21 BROKERS. Other than Mesirow Financial (for which
Seller alone has responsibility for any fees), Seller has not (and Seller's
stockholders have not) engaged, or caused to be incurred any liability to any
finder, broker, or sales agent in connection with the origin, negotiation,
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby.
3.22 AFFILIATED TRANSACTIONS. No officer, director,
stockholder (including Shareholder) or Affiliate of Seller or, to the Knowledge
of the Seller or Shareholder, any individual related by blood or marriage to
any such Person, or any entity in which any such Person owns any beneficial
interest of 10% or more, is a party to any agreement, contract, arrangement or
commitment with Seller or engaged in any transaction with Seller or has any
interest in any property used by Seller and included in the Transferred
Business or the Purchased Assets. Neither Shareholder nor, to the knowledge of
Seller or Shareholder, any officer, director, or shareholder of Seller or any
Affiliate of any such officer, director, or shareholder, has any ownership
interest in any competitor, supplier, or customer of Seller or the Transferred
Business (other than ownership of securities of a publicly-held corporation of
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which such Person owns, or has real or contingent rights to own, less than ten
percent (10%) of any class of outstanding securities) or any property used in
the operation of the Transferred Business.
3.23 FUNDED INDEBTEDNESS; LETTERS OF CREDIT; UNDISCLOSED
LIABILITIES.
(a) FUNDED INDEBTEDNESS. The Transferred
Business does not have nor is subject to any Funded Indebtedness that is not an
Excluded Liability.
(b) LETTERS OF CREDIT. Other than those listed
on Exhibit V, Seller has no letters of credit, performance bonds or similar
instruments issued on or for its account and pertaining to the Transferred
Business or the Purchased Assets for the benefit of vendors or otherwise.
(c) UNDISCLOSED LIABILITIES. Seller does not
have any liabilities in connection with the Transferred Business in excess of
$50,000 in the aggregate (whether absolute, accrued, contingent or otherwise),
of a nature required by GAAP to be reflected on a corporate balance sheet or
disclosed in the notes thereto, except such liabilities which are accrued or
reserved against in the Financial Statements or disclosed in the notes thereto,
including without limitation any accounts payable or service liabilities of
Seller for the Transferred Business incurred prior to the Closing Date.
(d) LIABILITIES ARISING FROM DISCONTINUED
OPERATIONS. Seller does not have any liabilities in connection with any
discontinued operations that will in any way affect or impact the Transferred
Business following the Closing.
3.24 YEAR 2000. All of the material computer software,
firmware and hardware (whether general or specific in purpose) and other
similar or related items of automated, computerized and/or software system(s)
that are used or relied on by the Transferred Business whether part of the
Transferred Business or Seller's MIS Assets or subject to the MIS Transition
Services Agreement and/or the MIS Service Provider Agreement, will not
malfunction, will not cease to function, will not generate incorrect data, and
will not produce incorrect results when processing, providing and/or receiving
(i) date-related data into and between the twentieth and twenty-first centuries
and (ii) date-related data in connection with any valid date in the twentieth
and twenty-first centuries; provided, however, that in respect of
"off-the-shelf" or "shrinkwrap" (i.e., non-customized) software, the foregoing
representation is made only to the best of Seller's and Shareholder's
knowledge; and, provided, further, however, that in the event that Global
acquires TMS and the Seller's MIS Assets, this Section 3.24 and the related
indemnities under Section 8.1 shall no longer apply to the assets acquired
under such acquisition agreement after the effective date of such agreement
(the "MIS ACQUISITION DATE"). In support of the foregoing representations,
Seller and Shareholder agree that Seller's net worth (as per GAAP) shall be no
less than $6,000,000 through the MIS Acquisition Date. Seller and
Shareholder's combined liability under this Section 3.24 shall be limited to
$6,000,000.
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3.25 INFORMATION FURNISHED. Seller has made available to
Buyer true and correct copies of all material corporate records of Seller
relevant to the Transferred Business and all material agreements, documents,
and other items listed on the Schedules to this Agreement or referred to in
Article III of this Agreement, and neither this Agreement, the Schedules
hereto, nor any written information, instrument, or document delivered to Buyer
pursuant to this Agreement contains any untrue statement of a material fact or
omits any material fact necessary to make the statements herein or therein, as
the case may be, not misleading.
ARTICLE IV
BUYER'S AND GLOBAL'S
REPRESENTATIONS AND WARRANTIES
Buyer and Global jointly and severally represent and warrant
to Seller and Shareholder as follows:
4.1 DUE ORGANIZATION. Each of Buyer and Global is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware (Buyer) and New York (Global) and has full
corporate power and authority to execute, deliver and perform this Agreement
and to carry out the transactions contemplated hereby.
4.2 DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement (together with all other instruments, agreements
or other documents contemplated hereby, including without limitation the
Transition Services Agreement, the Escrow Agreement, the Lease, and the
Assignment and Assumption Agreement) have been duly authorized by all necessary
corporate action of Buyer and Global and the Agreement (and such other
instruments, agreements and documents) been duly and validly executed and
delivered by Buyer and Global and constitutes the valid and binding obligation
of each of them, enforceable in accordance with its terms, except for the
Equitable Exceptions. The execution, delivery, and performance of this
Agreement (and such other instruments, agreements and documents) by Buyer and
Global, do not (a) violate any Requirements of Laws or Court Order of any
Governmental Body applicable to Buyer or Global or their property, (b) violate
or conflict with, or permit the cancellation of, or constitute a default under
any agreement to which Buyer or Global is a party or by which either of them or
their property is bound, (c) permit the acceleration of the maturity of any
indebtedness of, or any indebtedness secured by the property of, Buyer or
Global, (d) violate or conflict with any provision of the charter or bylaws of
Buyer or Global, or (e) except for filings or approvals under the HSR Act and
such consents, approvals or registrations as may be required under applicable
state securities laws, require any consent, approval or authorization of, or
notice to, or declaration, filing or registration with, any Governmental Body
or other third party.
4.3 NO BROKERS. Neither Buyer nor Global has engaged, or
caused to be incurred any liability for which Seller may be liable to any
finder, broker or sales agent in
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connection with the origin, negotiation, execution, delivery, or performance of
this Agreement or the transactions contemplated hereby.
ARTICLE V
COVENANTS OF SELLER, SHAREHOLDER AND/OR BUYER
5.1 CONSENTS OF OTHERS. Prior to the Closing, Seller and
Shareholder shall use their reasonable commercial efforts to obtain all
authorizations, consents and permits required of Seller to permit it to
consummate the transactions contemplated by this Agreement, and Buyer shall
cooperate to the extent necessary to secure such consents or otherwise smooth
the transition with Seller's vendors and other Contract parties to Buyer's
ownership of the Transferred Business; provided, however, that Seller and
Shareholder are not required hereunder to obtain the consent of any third party
to the transfer hereunder of any agreement which is not a Contract (as defined
under Section 3.12). Buyer and Seller have previously made such filings as may
be required pursuant to the HSR Act with respect to the consummation of the
transactions contemplated by this Agreement.
5.2 EFFORTS. Seller and Shareholder shall use all
reasonable efforts to cause all conditions for the Closing to be met.
5.3 POWERS OF ATTORNEY. Seller shall terminate at or
prior to Closing all powers of attorney granted by Seller pertaining to the
Transferred Business or the Purchased Assets, other than those relating to
service of process, qualification or pursuant to governmental regulatory or
licensing agreements, or representation before the IRS or other Governmental
Bodies.
5.4 CONDUCT OF BUSINESS PENDING CLOSING. From the date
of this Agreement to the Closing Date:
(a) Except as otherwise contemplated by this
Agreement, or as Buyer may otherwise consent to in writing, Seller shall
conduct both its Retained Business and the Transferred Business and operate the
Excluded Assets and Purchased Assets only in the ordinary course and shall not
engage in any material activity or enter into any material transaction which
would cause a breach of the representations and warranties contained in Article
III.
(b) Seller shall use its reasonable commercial
efforts to cause the Transferred Business to preserve substantially intact its
current business organization and present relationships with its customers,
vendors, suppliers and employees and to maintain all of its insurance currently
in effect.
(c) Seller shall give prompt notice to Buyer of
any notice of material default received by Seller or the Transferred Business
subsequent to the date of this Agreement under any Contract or any Material
Adverse Change occurring prior to the Closing Date in the operation of the
Transferred Business and the Purchased Assets.
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(d) Neither Seller or Shareholder, nor any of
their representatives, shall solicit, encourage or discuss any Acquisition
Proposal (as hereinafter defined) or supply any non-public information
concerning the Transferred Business or the Purchased Assets to any party other
than Buyer or its representatives. As used herein, "ACQUISITION PROPOSAL"
means any proposal other than the transactions herein contemplated, for (i) any
merger or other business combination involving the Transferred Business, (ii)
the acquisition of Seller or a material equity interest in Seller or a material
portion of its assets pertaining to the Transferred Business, or (iii) the
dissolution or liquidation of Seller.
5.5 ACCESS TO RECORDS BEFORE CLOSING. Prior to the
Closing Date, Seller agrees that it will give, or cause to be given, to Buyer
and their representatives, during normal business hours and at Buyer's expense,
full and unrestricted access to Seller's personnel, officers, agents,
employees, assets, properties, titles, contracts, corporate minute and other
books, records, files and documents of Seller with respect to the Transferred
Business (including financial, tax basis, budget projections, auditors' work
papers and other information as Buyer may request) and to the Transferred
Business' personnel customers, suppliers and independent auditors, to allow
Buyer to obtain such information as it shall desire, and to make copies of such
information to the extent reasonably necessary. Additionally, Seller will
provide Buyer opportunities to meet with key employees of the Transferred
Business, to visit facilities of the Transferred Business and to otherwise
conduct due diligence in respect of the Transferred Business and the Purchased
Assets. All materials copied by Buyer shall be maintained in confidence by
Buyer and returned to Seller if the Closing of the transactions contemplated
hereunder fails to occur.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 GENERAL. In case at any time after the Closing any
further action is legally necessary or reasonably desirable (as determined by
Buyer and Seller) to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article VIII
below). Seller and Shareholder each acknowledges and agrees that from and
after the Closing, Buyer will be entitled to possession of all documents,
books, records, agreements, and financial data of the Transferred Business.
6.2 CONFIDENTIALITY. Seller and Shareholder will treat
and hold in confidence and not disclose all Confidential Information and
refrain from using any of the Confidential Information except in connection
with this Agreement or otherwise for the benefit of Buyer for a period of four
(4) years from the date of this Agreement, and deliver promptly to Buyer or
destroy, at the written request and option of Buyer, all tangible embodiments
(and all copies) of the Confidential Information which are in their possession
except as otherwise permitted herein. In the event that Seller or Shareholder
is requested or required (by oral
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question or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
legal proceeding) to disclose any Confidential Information, Seller or
Shareholder, as the case may be, will notify Buyer promptly of the request or
requirement.
6.3 COVENANT NOT TO COMPETE. For and in consideration of
the allocation of $100,000 of the Purchase Price paid to Seller by Buyer,
Seller and Shareholder each covenant and agree, for a period of four (4) years
from and after the Closing Date, that it (and he) will not, directly or
indirectly without the prior written consent of Buyer, for or on behalf of any
entity or Affiliate:
(a) engage in the business of wholesale travel
sales or assembling or selling vacation packages that are marketed or sold to
the public under a brand or identity owned or controlled by Shareholder or
Seller; provided, however:
(i) subject to the terms of subparagraph
(iii) below, it shall not be a violation of this Section 6.3
for Seller or Shareholder to own interests (including
controlling interests) in, provide financial and other
assistance to, and to otherwise deal with Preview Travel,
Inc., Adventure Media, Inc., or to any Affiliate or successor
in interest to any of the foregoing, or for any of such
entities to engage in any business activities whether or not
in competition with Buyer and its Affiliates;
(ii) it shall not be a violation of this
Section 6.3 for Shareholder to continue to own controlling
interests in, provide financial and other assistance to, and
to otherwise deal with Seller, TMS, Xxxxx Xxxxxx Technologies,
Inc. ("TMT"), Xxxxx Xxxxxx Teleservices, Inc. ("TMTS") or for
TMS, TMT and TMTS to provide services to entities engaged in
the business of wholesale travel sales or assembling or
selling vacation packages that are marketed or sold to the
public under a brand or identity NOT owned or controlled by
Shareholder, Seller, TMS, TMT, or TMTS. Buyer acknowledges
that TMS, TMT and TMTS provide services to direct competitors
of Buyer and its Affiliates;
(iii) if at any time after the Closing
Date, Seller or Shareholder (individually or together or
through any Affiliate) owns or acquires a direct or indirect
controlling interest in any of the entities referenced in
subparagraph (i) above, then the following provisions shall
apply: (A) if any such entity at the time of such acquisition
or ownership of a controlling interest is in the business of
wholesale travel sales or assembling or selling vacation
packages, Seller or Shareholder (as appropriate), shall,
unless Seller or Shareholder (as appropriate) receives a legal
opinion to the effect that to consummate such a transaction
would constitute a breach of such person's fiduciary
obligations to the other shareholders of any such controlled
entity) in good faith offer to Buyer the right to be such
entity's exclusive vacation
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package provider on market terms and/or (at Buyer's option) to
purchase on market terms that portion of such entity's
business as is competitive with Global, Buyer or their
Affiliates; and (B) if any such entity at the time of such
acquisition or ownership of a controlling interest is not then
in the business of wholesale travel sales or assembling or
selling vacation packages, paragraph (a) shall operate to
preclude such entity from entering the wholesale travel sales
business or assembling or selling vacation packages
notwithstanding the terms of subparagraph (i) above.
(b) hire, retain, or solicit the employment or
services of employees, consultants or representatives of Buyer or any of its
Affiliates for the purpose of causing them to leave the employment of Buyer or
such Affiliates; or
(c) take any action (or cause any such action to
be taken by another Person) that primarily is designed or intended to have the
effect of discouraging any vendor (including without limitation any airline or
other carrier, hotel, resort or rental car company), lessor, licensor,
customer, travel agency, consortia member, supplier, or other business
associate of the Transferred Business from maintaining the same business
relations with Buyer after the Closing as it maintained with Seller prior to
the Closing;
provided, however, that either Seller or Shareholder may own less than ten
percent (10%) of the outstanding stock of any publicly-traded corporation and
same shall not be deemed to be in a violation of this Section 6.3 solely by
reason thereof.
6.4 ACCESS TO RECORDS AFTER CLOSING. After the Closing
Date, Buyer on the one hand and Seller on the other agree that they will give,
or cause to be given, to the other party, its successors and its
representatives, during normal business hours and at the requesting party's
expense, such reasonable access to the properties, titles, contracts, books,
records, files and documents (but excluding attorney work product or other
privileged communications) of Buyer (to the extent Buyer's records are the
records, materials and data transferred to Buyer from Seller pursuant to this
Agreement) or Seller, as the case may be, as is reasonably necessary to allow
the requesting party to obtain information in the other party's possession with
respect to any claims, demands, audits, suits or matters of a similar nature
made by or against the requesting party as the previous or new owner and
operator of the Transferred Business, as the case may be, and to make copies of
such information to the extent reasonably necessary. Buyer agrees that it will
not dispose of or destroy any of such records for seven (7) years after the
Closing Date without first offering to turn over possession thereof to Seller
and Shareholder by written notice to Seller and Shareholder at least 30 days
prior to the proposed date of any such disposition or destruction.
6.5 LITIGATION SUPPORT. In the event and for so long as
any party is actively contesting or defending against any claim, suit, action
or charge, complaint, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, circumstance, status,
condition, activity, practice, occurrence, event, action, failure to act, or
transaction on or prior to the Closing Date involving Seller or the Transferred
Business, each
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of the other parties will cooperate and make available themselves or their
personnel, as applicable, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense.
6.6 ASSIGNMENT OF CONTRACTS. Anything in this Agreement
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to assign or otherwise transfer any Contract or any other agreement
used in the Transferred Business or any rights thereunder, if an attempted
assignment or transfer thereof would constitute a breach thereof, would be
ineffective or would violate any applicable law without the consent of a third
party to such assignment or transfer. Until such consent or waiver has been
obtained, Buyer shall make all reasonable efforts to perform in Seller's name
all of Seller's obligations under any such Contract or other agreement for
which any such consent has not been obtained. Seller shall cooperate with
Buyer in any reasonable arrangement designed to provide for Buyer all of the
benefits, and to have Buyer assume the burdens, liabilities, obligations and
expenses under all such Contracts or other agreements. At Buyer's request,
Seller shall, at Buyer's sole cost and expense, take all reasonable efforts
requested by Buyer to enforce, for the benefit of Buyer, any and all rights of
Seller under any such Contract or other agreement not otherwise transferred
pursuant to the provisions of this Agreement. Seller hereby authorizes Buyer
to perform and Buyer hereby agrees to perform all of Seller's obligations after
the Closing under all such contracts. Seller agrees to remit promptly to Buyer
all collections or payments received by Seller in respect of all such Contracts
or other agreements, and shall hold all such collections or payments for the
benefit of, and promptly pay the same over to, Buyer; provided, however, that
nothing herein shall create or provide any rights or benefits in or to third
parties.
6.7 CHANGE OF NAME. Seller agrees to promptly change its
name following the Closing to a name which does not contain the words "MTI
Vacations" or any variations thereof.
6.8 AUDITS. Following the Closing, the Seller shall
cooperate with the Buyer's efforts to cause the Company, at the Company's
expense, to deliver, or cause to be delivered, to Buyer an unqualified and
unmodified audit report of an independent accountant selected by Buyer on the
balance sheets of the Company as of December 31, 1995, December 31, 1996,
December 31, 1997, and as of the Closing Date and audited statements of
operations and cash flows of the Company for the fiscal years or periods then
ended, which report shall be without limitation as to the scope of the audit.
The Shareholder, in his capacity as an officer and director of the Company
during such periods, shall assist Buyer by providing all management letters,
reports or representations reasonably requested by such auditors in connection
with such audits.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PARTIES
TO CONSUMMATE CLOSING
7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of
Buyer under this Agreement to consummate the Closing is subject to the
conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
Seller and Shareholder shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by it
prior to or at the Closing Date. The representations and warranties of Seller
and Shareholder set forth in this Agreement shall be accurate in all material
respects at and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. In addition, Buyer shall have determined
from its due diligence review of Seller that no Material Adverse Change or
Material Adverse Effect shall have occurred in the financial condition,
business, operations or prospects of Seller or the Transferred Business from
those presented to Buyer prior to execution of this Agreement.
(b) CONSENTS. All statutory requirements for the
valid consummation by Seller and Shareholder of the transactions contemplated
by this Agreement shall have been fulfilled and all authorizations, consents
and approvals, including expiration or early termination of all waiting periods
under the HSR Act and those of all federal, state, local and foreign
governmental agencies and regulatory authorities required to be obtained in
order to permit the consummation of the transactions contemplated hereby shall
have been obtained in form and substance reasonably satisfactory to Buyer
unless such failure could not reasonably be expected to have a Material Adverse
Effect. All approvals of the Board of Directors and shareholders of Seller
necessary for the consummation of this Agreement and the transactions
contemplated hereby shall have been obtained. All consents or waivers of any
third party to the Contracts shall have been obtained as necessary to
consummate the transactions contemplated by this Agreement or to ensure that
the Contracts shall remain in place following the Closing.
(c) FINANCIAL CONDITION. Buyer shall be
satisfied in its sole discretion with the financial condition of the
Transferred Business as reflected in the Preliminary Closing Date Financial
Statements. Working Capital as of the Closing Date shall be more than that
amount that is equal to the amount of Working Capital shown on the Preliminary
Closing Balance Sheet minus $300,000, and the Transferred Business shall have
Cash and Cash Equivalents and Investments on hand at the Closing in an amount
not less than the Customer Deposits.
(d) DOCUMENTS TO BE DELIVERED BY SELLER. The
following documents shall be delivered at the Closing by Seller:
(i) CONVEYANCE DOCUMENTS. Such
instruments of sale, transfer, assignment, conveyance and
delivery (including all vehicle titles), in
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form and substance reasonably satisfactory to counsel for
Buyer (including, without limitation, the Assignment and
Assumption Agreement, as are required in order to transfer to
Buyer good and marketable title to the Purchased Assets, free
and clear of all liens, charges, security interests and other
encumbrances except as provided herein.
(ii) LEASED REAL PROPERTY. Assignments
of all leases, if any, with appropriate lessor consents, if
necessary, or Buyer shall have entered into lease agreements
with such lessors for the respective facilities in form
satisfactory to Buyer.
(iii) OPINION OF SELLER'S COUNSEL. Buyer
shall have received an opinion of counsel to Seller and
Shareholder, dated the Closing Date, in substantially the same
form as the form of opinion that is Exhibit B hereto.
(iv) CERTIFICATES. Buyer shall have
received an officer's certificate and a secretary's
certificate of Seller and Shareholder executed by officers of
Seller and by Shareholder, dated the Closing Date, in
substantially the same forms as the forms of certificates that
are Exhibit C hereto.
(v) RESOLUTIONS. A certified copy of
resolutions of Seller's Board of Directors authorizing the
execution, delivery and consummation of this Agreement and the
transactions contemplated hereby.
(vi) UCC MATTERS. UCC termination
statements and other applicable documentation necessary to
release any interest of any third party in the Purchased
Assets.
(vii) ESCROW AGREEMENT. Seller and
Shareholder shall have delivered to Buyer at the Closing the
duly executed Escrow Agreement.
(viii) EMPLOYMENT AGREEMENTS. Xxx Xxxxxx
shall have duly executed and delivered an Employment
Agreements in substantially the same form attached as Exhibit
E hereto, pursuant to which such Persons will be employed by
Buyer or its Affiliates following the Closing, and Seller
shall have provided evidence satisfactory to Buyer of the
complete termination, without liability to Seller or Buyer, of
all employment agreements among Seller and such Persons.
[GLOBAL TO REPORT ON STATUS--SELLER STILL WANTS THIS REMOVED
AS A CLOSING CONDITION.]
(ix) RECORDS OF SELLER. All contracts,
files, documents, data, records and information of Seller
included in the Purchased Assets, shall have been delivered to
Buyer, all of which may be delivered to Buyer at the offices
of the Transferred Business.
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(x) LEASE. Buyer and Shareholder shall
have entered into the Lease on terms satisfactory to Buyer.
(xi) TRANSITION SERVICES AGREEMENTS.
Buyer, Global and Seller or TMS (as appropriate) shall have
entered into the Transition Services Agreements on terms
satisfactory to Buyer and Global.
(xii) EQUITY ARRANGEMENTS. Seller or
Shareholder shall have delivered to Buyer duly executed
documents and the funds pertaining to its or his $2,400,000
equity investment in Global, including without limitation the
following agreements: (A) Equity Subscription Agreement; and
(B) Shareholders Agreement (collectively, the "EQUITY
ARRANGEMENTS").
(xiii) RELEASE. Seller and Shareholder
shall have delivered to Buyer a release of liabilities related
to the Purchased Assets and the Transferred Business, except
as expressly set forth in this Agreement in substantially the
form of Exhibit F hereto.
(xiv) CHANGE OF SELLER'S NAME. Evidence,
in the form of an amended Certificate of Incorporation for
Seller which will be delivered to Buyer in form suitable for
filing with the Delaware Secretary of State, indicating its
change of name from MTI Vacations, Inc.
7.2 CONDITIONS TO SELLER'S AND SHAREHOLDER'S OBLIGATIONS.
The obligation of Seller and Shareholder under this Agreement to consummate the
Closing is subject to the conditions that:
(a) COVENANTS, REPRESENTATIONS AND
WARRANTIES. Buyer shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by
Buyer prior to or at the Closing and the representations and warranties of
Buyer set forth in Article IV hereof shall be accurate in all material
respects, at and as of the Closing Date, with the same force and effect as
though made on and as of the Closing Date.
(b) CONSENTS. All statutory
requirements for the valid consummation by Buyer of the transactions
contemplated by this Agreement shall have been fulfilled and all
authorizations, consents and approvals, including expiration or early
termination of all waiting periods under the HSR Act and those of all federal,
state, local and foreign governmental agencies and regulatory authorities
required to be obtained in order to permit the consummation by Buyer of the
transactions contemplated hereby shall have been obtained unless such failure
shall not have a Material Adverse Effect on the Transferred Business.
(c) DOCUMENTS TO BE DELIVERED BY BUYER.
The following documents shall be delivered at the Closing by Buyer:
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(i) ESCROW AGREEMENT. Buyer shall have
delivered to Seller at the Closing the duly executed Escrow
Agreement.
(ii) ASSIGNMENT AND ASSUMPTION AGREEMENT.
Buyer shall have executed and delivered the Assignment and
Assumption Agreement in substantially the form attached
hereto as Exhibit D, dated as of the Closing Date.
(iii) EQUITY ARRANGEMENTS. Seller or
Shareholder shall be satisfied that all other parties thereto
have duly executed and delivered (and, if applicable to a
party, funded pursuant to) the Equity Arrangements on terms
satisfactory to the Seller or Shareholder (as appropriate),
and that any representations and warranties made by Global or
any other party in connection with the agreements underlying
such Equity Arrangements are complete and accurate.
(iv) TRANSITION SERVICES AGREEMENTS.
Buyer, Global and Seller or TMS (as appropriate) shall have
entered into the Transition Services Agreement, on terms
satisfactory to Seller and the Shareholder.
(v) LEASE. Buyer and the Shareholder
shall have entered into the Lease on terms satisfactory to the
Shareholder.
(vi) RESOLUTIONS. A certified copy of
resolution's of Global and Buyer's Board of Directors
authorizing the execution, delivery and consummation of this
Agreement and the transactions contemplated hereby.
(d) PAYMENTS TO SELLER. Seller shall have received the
portion of the Purchase Price payable at the Closing to Seller.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF BUYER. Except as provided in
Section 8.6, Seller and Shareholder jointly and severally agree to indemnify
and hold harmless Buyer and each officer, director, and Affiliate of Buyer,
including without limitation any successor of Buyer (collectively, the "BUYER
INDEMNIFIED PARTIES") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively,
the "INDEMNIFIABLE COSTS"), which any of the Buyer Indemnified Parties may
sustain, or to which any of the Indemnified Parties may be subjected, arising
out of (A) any misrepresentation, breach or default by Seller or Shareholder of
or under any of the representations, warranties, covenants, agreements or other
provisions of this Agreement or any agreement or document executed in
connection herewith; (B) the assertion and final determination of any claim or
liability against the Purchased Assets or any
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of the Buyer Indemnified Parties by any Person based upon the facts which form
the alleged basis for any litigation to the extent it should have been, but was
not, reserved for in the Financial Statements in accordance with GAAP; and (C)
any Excluded Liabilities paid by Buyer.
8.2 DEFENSE OF CLAIMS. If any legal proceeding shall be
instituted, or any claim or demand made, against any Buyer Indemnified Party in
respect of which Seller or Shareholder may be liable hereunder, such
Indemnified Party shall give prompt written notice thereof to Seller and,
except as otherwise provided in Section 8.4 below, Seller shall have the right
to defend, or cause Buyer or its successors to defend, any litigation, action,
suit, demand, or claim for which it may seek indemnification with counsel
reasonably satisfactory to Seller; provided, however, if in the reasonable
judgment of Buyer, (i) such litigation, action, suit, demand, or claim, or the
resolution thereof, would have a Material Adverse Effect on Buyer or its
successors or the Transferred Business or (ii) Seller shall have a conflict of
interest in defending such action on the Buyer's behalf, then at Buyer's
election, Buyer may defend itself, and in either of such instances it shall be
at the Seller's expense. If neither (i) nor (ii) are applicable but Buyer
desires to participate in the defense of an action Seller is defending because
in Buyer's reasonable judgment the outcome of such action could have an ongoing
effect on Buyer, its successors or assignees or the Transferred Business, the
Buyer may participate but at its own expense. In the event Seller fails or
refuses to defend any legal proceeding it is required to defend under this
Article VIII within a reasonable length of time, the Buyer Indemnified Parties
shall be entitled to assume the defense thereof, and Seller and Shareholder
shall be liable to repay the Buyer Indemnified Parties for all expenses
reasonably incurred in connection with said defense (including reasonable
attorneys' fees and settlement payments). If Seller shall not have the right
to assume the defense of any litigation, action, suit, demand, or claim in any
legal proceeding Seller should defend under this Article VIII, the Buyer
Indemnified Parties shall have the absolute right to control the defense of and
to settle, in their sole discretion and without the consent of Seller, such
litigation, action, suit, demand, or claim, but Seller shall be entitled, at
its own expense, to participate in such litigation, action, suit, demand, or
claim. The party controlling any defense pursuant to this Section 8.2 shall
deliver, or cause to be delivered to the other party, copies of all
correspondence, pleadings, motions, briefs, appeals or other written statements
relating to or submitted in connection with the defense of any such litigation,
action, suit, demand or claim, and timely notices of any hearing or other court
proceeding relating to such litigation, action, suit, demand or claim.
8.3 ESCROW CLAIM. If any claim for indemnification is
made by an Indemnified Party pursuant to this Article VIII prior to the
expiration of the Escrow Period, such Buyer Indemnified Party shall apply to
the Escrow Agent provided in Section 2.8 of this Agreement for reimbursement of
such claim in accordance with the provisions of the Escrow Agreement; provided,
however, the Escrow Sum is not intended to be an exclusive remedy in the event
Buyer has indemnification claims hereunder which exceed such amount.
8.4 TAX AUDITS, ETC. In the event of an audit of a Tax
Return of Seller with respect to which a Buyer Indemnified Party might be
entitled to indemnification pursuant to
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this Article VIII, Buyer shall have the right to control any and all such
audits which may result in the assessment of additional Taxes against Buyer or
the Purchased Assets and any and all subsequent proceedings in connection
therewith, including appeals (subject to the prior written consent of Seller,
which shall not unreasonably be withheld and subject to the right of Seller to
have its accountants and attorneys consult with Buyer on such audits or
procedures at Seller's expense). Seller shall cooperate fully in all matters
relating to any such audit or other Tax proceeding (including according access
to all records pertaining thereto), and will execute and file any and all
consents, powers of attorney, and other documents as shall be reasonably
necessary in connection therewith. If additional Taxes are payable by Seller
or Buyer as a result of any such audit or other proceeding, Seller shall be
responsible for and shall promptly pay all Taxes, interest, and penalties for
which any of the Buyer Indemnified Parties shall be entitled to
indemnification.
8.5 INDEMNIFICATION OF SELLER AND SHAREHOLDER. Buyer and
Global, on a joint and several basis, agree to indemnify and hold harmless
Seller and Shareholder and each officer, director, stockholder or Affiliate of
Seller and Affiliate of Shareholder ("SELLER/SHAREHOLDER INDEMNIFIED PARTIES"),
from and against any Indemnifiable Costs which any of the Seller/Shareholder
Indemnified Parties may be subjected, arising out of (A) any misrepresentation,
breach or default by Buyer or Global of or under any of the representations,
warranties, covenants, agreements or other provisions of this Agreement or any
agreement or document executed in connection herewith and (B) any Assumed
Liability paid by Seller or Shareholder.
8.6 LIMITS ON INDEMNIFICATION. All Indemnifiable Costs
sought by any party hereunder shall be net of any insurance proceeds received
by such Person with respect to such claim. Except for any claims for breach of
the representations and warranties of Seller and Shareholder under Sections 3.3
or 3.14 hereof (the indemnification for which shall expire on the expiration of
the applicable statute of limitations except for claims made prior to such date
which claims shall continue after such date until finally resolved), the right
to make claims for indemnification provided under this Article VIII shall
expire on the second anniversary of the Closing Date (except for claims made
prior to such date which shall continue after such date until finally
resolved). Seller and Shareholder shall not be obligated to pay any amounts
for indemnification under this Article VIII until the aggregate indemnification
obligation to which Buyer is entitled hereunder exceeds $150,000, whereupon
Seller shall be liable for all amounts for which indemnification may be sought.
For purposes of Sections 8.1 or 8.5, any requirement in any representation or
warranty that an event or fact be material or have a Material Adverse Effect,
as appropriate, in order for such event or fact to constitute a
misrepresentation or breach of such representation or warranty shall be
ignored. Notwithstanding the foregoing, in no event shall the aggregate
liability of Seller and Shareholder to Buyer exceed the Purchase Price.
However nothing in this Article VIII shall limit Buyer or Seller and
Shareholder in exercising or securing any remedies provided by applicable
common law with respect to the conduct of Seller and Shareholder or Buyer in
connection with this Agreement or in the amount of damages that it can recover
from the other in the event that Buyer successfully proves intentional fraud or
intentional fraudulent conduct
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in connection with this Agreement. All Indemnified Costs paid by Seller and
Shareholder shall be deemed to be a reduction of the Purchase Price paid by
Buyer hereunder.
ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of Seller,
Shareholder and Buyer;
(b) in writing by Buyer, if Seller or Shareholder
has breached in any material respect any representation, warranty or covenant
contained in this Agreement, and in each case such breach has not been remedied
within ten (10) business days after receipt of notice specifying such breach
and demanding such breach to be remedied; or
(c) in writing by Seller and Shareholder, if
Buyer has breached in any material respect any representation, warranty or
covenant contained in this Agreement, and in each case such breach has not been
remedied within ten (10) business days after receipt of notice specifying such
breach and demanding such breach to be remedied; or
(d) in writing by either Seller and Shareholder,
on the one hand, or Buyer, on the other hand, in the event the Closing has not
occurred on or before April 30, 1998, unless the failure of such consummation
or the failure to satisfy such condition, as applicable, shall be due to a
breach of any representation or warranty made by the party or parties seeking
to terminate this Agreement or the failure of such party or parties to comply
in all material respects with the agreements and covenants contained herein to
be performed by such party or parties.
9.2 EFFECT OF TERMINATION. If the transactions
contemplated by this Agreement are terminated pursuant to Section 9.1 by notice
in writing to the non-terminating party or parties, this Agreement shall become
void and of no further force and effect, except that such termination shall not
relieve (i) any party from its covenants in respect of confidentiality
contained in Section 6.3 and (ii) any party then in breach of any
representation, warranty, covenant or agreement contained in this Agreement
from liability in respect of such breach
ARTICLE X
MISCELLANEOUS
10.1 MODIFICATIONS; WAIVERS. Any amendment, change or
modification of this Agreement shall be void unless in writing and signed by
all parties hereto. No failure or delay by any party hereto in exercising any
right, power or privilege hereunder (and no course
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of dealing between or among any of the parties) shall operate as a waiver of
any such right, power or privilege. No waiver of any default on any one
occasion shall constitute a waiver of any subsequent or other default. No
single or partial exercise of any such right, power or privilege shall preclude
the further or full exercise thereof.
10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered, or 48 hours after deposited in the United States mail,
first-class, postage prepaid, or by facsimile addressed to the respective
parties hereto as follows:
Buyer and/or Global:
Global Vacation Group, Inc.
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxx, President
Xxxxxx Xxxxxx
Fax No.: (000) 000-0000
Tel No.: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx Xxxxx
Xxxxx Xxxx
Fax No.: (000) 000-0000
Tel No.: (000) 000-0000
Seller and Shareholder:
MTI Vacations, Inc.
c/o JFM Enterprises
0000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
Tel No.: (000) 000-0000
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With a copy to:
Xxxxx & Minetz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax No.: (000) 000-0000
Tel No.: (000) 000-0000
or to such other address as to any party hereto as such party shall designate
by like notice to the other parties hereto.
10.3 COUNTERPARTS; FACSIMILE TRANSMISSION. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original but all of which counterparts collectively shall constitute one
instrument, and in making proof of this Agreement, it shall never be necessary
to produce or account for more than one such counterpart. Signatures of a
party to this Agreement or other documents executed in connection herewith
which are sent to the other parties by facsimile transmission shall be binding
as evidence of acceptance of the terms hereof or thereof by such signatory
party, with originals to be circulated to the other party in due course.
10.4 EXPENSES. Each of the parties hereto will bear all
costs, charges and expenses incurred by such party in connection with this
Agreement and the consummation of the transactions contemplated herein,
provided, however, that Seller shall bear all costs and expenses of (i) any
broker involved in this transaction on behalf of Seller and (ii) all legal and
other expenses of the Transferred Business with respect to this Agreement and
the transactions contemplated hereby.
10.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of Buyer and Seller, their heirs,
representatives, successors, and permitted assigns, in accordance with the
terms hereof. This Agreement shall not be assignable by Seller without the
prior written consent of Buyer. This Agreement shall be assignable by Buyer to
either (a) any lender providing financing to Buyer or its Affiliates or (b) an
Affiliate of Buyer, in each case without the prior written consent of Seller or
Shareholder. In addition, Buyer may assign any or all of its rights hereunder,
without the consent of Seller or Shareholder, in connection with any sale of
all or substantially all of the assets, capital stock or business of Buyer or
the Purchased Assets (whether effected by sale, exchange, merger, consolidation
or other transaction).
10.6 ENTIRE AND SOLE AGREEMENT. This Agreement and the
other schedules and agreements referred to herein, constitute the entire
agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements
and understandings, whether oral or written, express or implied, with respect
to the subject matter hereof.
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10.7 GOVERNING LAW. This Agreement and its validity,
construction, enforcement, and interpretation shall be governed by the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.
10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. All covenants, agreements, representations, and warranties and the
related indemnities made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of two
(2) years, provided, however, that (a) the representations and warranties
contained in Section 3.14 of this Agreement, and the related indemnities, shall
survive the Closing until the expiration of the applicable statutes of
limitations for determining or contesting Tax liabilities including any
extensions of such periods, plus sixty (60) days; (b) the representations and
warranties contained in Section 3.3 of this Agreement, and the related
indemnities, shall survive the Closing indefinitely and not expire; and (c) all
covenants in Article VI which have an expiration date contained therein shall
expire as of such date.
10.9 INVALID PROVISIONS. If any provision of this
Agreement is deemed or held to be illegal, invalid or unenforceable, this
Agreement shall be considered divisible and inoperative as to such provision to
the extent it is deemed to be illegal, invalid or unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal, invalid or unenforceable
provision and be legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be
binding upon all parties hereto.
10.10 PUBLIC ANNOUNCEMENTS. Seller and Shareholder shall
not make any public announcement of the transactions contemplated hereby
without the prior written consent of Buyer, which consent shall not be
unreasonably withheld.
10.11 REMEDIES CUMULATIVE. The remedies of the parties
under this Agreement are cumulative and shall not exclude any other remedies to
which any party may be lawfully entitled.
10.12 THIRD PARTIES. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any Person, other than the parties hereto
and their permitted successors or assigns, any rights or remedies under or by
reason of this Agreement.
10.13 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Agreement.
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10.14 GLOBAL SUPPORT. Global agrees, in respect of Buyer's
assumption of the Assumed Liabilities pursuant to the terms of Section 2.3, to
provide such financial assistance to Buyer as is necessary to ensure that Buyer
has the financial means required to honor such liabilities and obligations as
are included in the Assumed Liabilities. It is the intention of this Section
10.14, in conjunction with Global's joint and several (with Buyer)
indemnification obligations under Section 8.5, to provide Seller and
Shareholder with comfort that on a post-Closing basis (i) Buyer will honor, and
(ii) Seller and Shareholder will incur no liability as a result of Buyer's
failure to honor, any liability or obligation properly included in the Assumed
Liabilities.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first above written.
BUYER:
-----
GVGAC NO. 1, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Vice President and Secretary
GLOBAL:
------
GLOBAL VACATION GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Vice President and Secretary
SELLER:
------
MTI VACATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
President
SHAREHOLDER:
-----------
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
XXXXX X. XXXXXX
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The Exhibits and Schedules to this Asset Purchase Agreement are not included
with this Registration Statement on Form S-1. Global will provide these
exhibits and schedules upon the request of the Securities and Exchange
Commission.
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