1
EX 10.40
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ASSET PURCHASE AGREEMENT
BY AND AMONG
GVG/TMS ACQUISITION SUB, INC.
("BUYER"),
XXXXX XXXXXX SOLUTIONS, INC.
(THE "COMPANY")
AND
XXXXX X. XXXXXX
("XXXXXX")
DATED JUNE 1, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 7
1.1 DEFINITIONS 7
ARTICLE II AGREEMENT OF PURCHASE AND SALE; CLOSING 12
2.1 PURCHASED ASSETS 12
(a) Cash and Cash Equivalents 12
(b) Deposits and Accounts Receivable 12
(c) Real Property 12
(d) Business, Equipment and Supplies 12
(e) Contracts and Other Agreements Relating to the Business 13
(f) Books, Records, Lists and Other Data 13
(g) Employment Agreements and Employee Relationships 13
(h) Licenses, Permits 13
(i) Prepayments 13
(j) Intellectual Property 13
(k) General Intangibles 13
(l) Other Assets 13
2.2 ASSUMED LIABILITIES 13
2.3 EXCLUDED LIABILITIES 14
(a) Liabilities Under This Agreement 14
(b) Taxes 14
(c) Breach of Contract 14
(d) Fees 14
(e) Employee Plans 14
(f) Insurable Loss 14
(g) COBRA 14
(h) Funded Indebtedness 14
(i) Discontinued Operations 14
(j) Litigation 15
2.4 TITLE TO THE PURCHASED ASSETS: DOCUMENTS OF CONVEYANCE 15
2.5 [RESERVED] 15
2.6 PURCHASE PRICE 15
(a) Purchase Price Credits 15
(b) Initial Payment 15
(c) Escrow Holdback 15
2.7 CLOSING 15
2.8 ESCROW ARRANGEMENTS 15
2.9 POST-CLOSING AA REVIEW 16
2.10 POST-CLOSING NET WORTH ADJUSTMENT TO REMAINING PURCHASE PRICE 16
(a) 3/31/98 Balance Sheet Adjustments 16
(b) Closing Date Balance Sheet Adjustments 16
(c) Payment of Adjustments 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND XXXXXX 17
3.1 DUE ORGANIZATION 17
3.2 SUBSIDIARIES 17
3.3 DUE AUTHORIZATION 17
3
3.4 FINANCIAL STATEMENTS; FUNDED INDEBTEDNESS; LETTERS OF CREDIT; UNDISCLOSED LIABILITIES 17
(a) Financial Statements 17
(b) Funded Indebtedness 18
(d) Letters of Credit 18
(e) Undisclosed Liabilities 18
3.5 CERTAIN ACTIONS 18
3.6 PROPERTIES 19
3.7 LICENSES AND PERMITS 19
3.8 INTELLECTUAL PROPERTY 20
(a) Ownership 20
(b) System and Software Performance 20
(c) System and Software Capacity 20
(d) Documentation 21
(e) Prior Transfers 21
3.9 COMPLIANCE WITH LAWS 21
3.10 INSURANCE 21
3.11 EMPLOYEE BENEFIT PLANS 21
(a) Employee Welfare Benefit Plans 21
(b) Employee Pension Benefit Plans 22
(c) Employment and Non-Tax Qualified Deferred Compensation Arrangements 22
3.12 CONTRACTS AND AGREEMENTS 22
3.13 CLAIMS AND PROCEEDINGS 23
3.14 TAXES 23
3.15 PERSONNEL 23
3.16 BUSINESS RELATIONS 24
3.17 ACCOUNTS RECEIVABLE 24
3.18 BANK ACCOUNTS 24
3.19 BROKERS 24
3.20 AFFILIATED TRANSACTIONS 24
3.21 YEAR 2000 24
3.22 INFORMATION FURNISHED 25
3.23 ARC COMPLIANCE 25
ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES 25
4.1 BUYER'S REPRESENTATIONS AND WARRANTIES 25
(a) Due Organization 25
(b) Due Authorization 25
(c) No Broker 25
4.2 GVG'S REPRESENTATIONS AND WARRANTIES 25
(a) Due Organization 25
(b) Due Authorization 25
(c) No Broker 26
ARTICLE V COVENANTS 26
5.1 CONSENTS OF OTHERS 26
5.2 THE COMPANY'S EFFORTS 26
5.3 POWERS OF ATTORNEY 26
5.4 CONDUCT OF BUSINESS PENDING CLOSING 26
5.5 ACCESS TO RECORDS BEFORE CLOSING. 27
ARTICLE VI POST-CLOSING COVENANTS 27
6.1 GENERAL. 27
6.2 TRANSITION. 27
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6.3 CONFIDENTIALITY. 27
6.4 COVENANT NOT TO COMPETE 27
6.5 LITIGATION SUPPORT. 28
6.6 ASSIGNMENT OF CONTRACTS 28
(a) General 28
(b) Xxxxx Xxxxxx Teleservices, Inc. 28
6.7 CHANGE OF NAME 29
6.8 AUDITS. 29
6.9 RELATED TRANSACTIONS 29
6.10 ARC CONSENT 29
6.11 TAX SHARING ARRANGEMENT 29
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING 30
7.1 CONDITIONS TO BUYER'S OBLIGATIONS 30
(a) Covenants, Representations and Warranties 30
(b) Consents 30
(c) Discharge of Indebtedness and Liens 30
(d) Transfer Taxes 30
(e) [Reserved] 30
(f) Documents to be Delivered by Xxxxxx and the Company 30
(i) Conveyance Documents 30
(ii) Opinion of Counsel to the Company and Xxxxxx 30
(iii) Certificates 31
(iv) Escrow Agreement 31
(v) Termination of Employment Agreements 31
(vi) Compliance and Non Disclosure Agreements 31
(vii) UCC Matters 31
(viii) Release 31
(ix) Transition Services Agreement 31
(x) Change of the Company's Name 31
(xi) Wire Instructions 31
(g) Source Code 31
7.2 CONDITIONS TO XXXXXX'X AND THE COMPANY'S OBLIGATIONS 31
(a) Covenants, Representations and Warranties 31
(b) Consents 32
(c) Escrow Agent 32
(d) Assignment and Assumption Agreement 32
(e) Resolutions and Consents 32
(f) Payments to the Company 32
(g) Transition Services Agreement 32
7.3 WAIVER 32
ARTICLE VIII INDEMNIFICATION 32
8.1 INDEMNIFICATION OF BUYER 32
8.2 DEFENSE OF THIRD PARTY CLAIMS 32
8.3 PROCEDURE FOR CLAIMS 33
(a) Escrow Claims 33
(b) Other Claims 33
8.4 TAX AUDITS, ETC. 33
8.5 INDEMNIFICATION OF THE COMPANY AND XXXXXX 34
(a) Buyer's Indemnification 34
(b) GVG's Indemnification 34
8.6 LIMITS ON INDEMNIFICATION 34
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ARTICLE IX TERMINATION 34
9.1 TERMINATION 35
9.2 EFFECT OF TERMINATION 35
ARTICLE X MISCELLANEOUS 35
10.1 MODIFICATIONS; WAIVERS 35
10.2 NOTICES 35
10.3 COUNTERPARTS; FACSIMILE TRANSMISSION 36
10.4 EXPENSES 36
10.5 BINDING EFFECT; ASSIGNMENT 36
10.6 ENTIRE AND SOLE AGREEMENT 37
10.7 GOVERNING LAW 37
10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS 37
10.9 DISPUTE RESOLUTION 37
10.10 INVALID PROVISIONS 37
10.11 PUBLIC ANNOUNCEMENTS 37
10.12 REMEDIES CUMULATIVE 37
10.13 THIRD PARTIES 38
10.14 GVG SUPPORT 38
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LIST OF EXHIBITS
Exhibit A Assignment and Assumption Agreement
Exhibit A-1 Assignment of Trademarks
Exhibit B Form of Escrow Agreement
Exhibit C Form of Opinion of Xxxxx & Minetz
Exhibit D Form of Company's and Stockholder's Officer's Certificate
Exhibit E Form of Compliance Agreement
Exhibit F Form of Non-Disclosure Agreement
Exhibit G Form of Release
Exhibit H Form of Transition Services Agreement
Exhibit I The Company's Accounts and Wire Transfer Instructions
Exhibit J Articles (J-1) and Bylaws J-2)
Exhibit K List Properties
Exhibit L List of Licenses and Permits
Exhibit M List of Intellectual Property
Exhibit N List of Insurance
Exhibit O Employee Plans
Exhibit P List of Contracts
Exhibit Q List of Personnel
Exhibit R List of Bank Accounts
Exhibit S Preliminary 3/31/98 Balance Sheets
Exhibit T-1 Preliminary Closing Date Balance Sheet
Exhibit T-2 Income Statement
LIST OF SCHEDULES
Disclosure Schedules
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of June 1, 1999, by and among GVG/TMS ACQUISITION SUB, INC. ("BUYER"), a
Delaware corporation and a wholly-owned subsidiary of GLOBAL VACATION GROUP,
INC., a New York corporation ("GVG"), XXXXX XXXXXX SOLUTIONS, INC., a Delaware
corporation (the "COMPANY"), and XXXXX X. XXXXXX ("XXXXXX").
Recitals
A. GVG, its wholly-owned subsidiary, MTI Vacations, Inc., a Delaware
corporation formerly known as GVGAC No. 1, Inc. ("NEW MTI"), and JFM, Inc., a
Delaware corporation formerly known as MTI Vacations, Inc. ("OLD MTI"), entered
into and consummated an Asset Purchase Agreement dated April 30, 1998 (the
"PURCHASE AGREEMENT"), pursuant to which New MTI purchased certain assets from
Old MTI (the "MTI ACQUISITION");
B. In connection with the MTI Acquisition, Old MTI retained certain
businesses and assets, including certain intellectual property and other
management information service-related assets which were defined in the Purchase
Agreement as "SELLER'S MIS ASSETS;"
C. Contemporaneously with the consummation of the MTI Acquisition, Old MTI
transferred and/or licensed those same Seller's MIS Assets to the Company, and
the Company and New MTI then entered into a MIS Services Agreement dated April
30, 1998 (the "MIS SERVICES AGREEMENT") pursuant to which the Company (i) agreed
to continue to provide certain management information systems and services to
New MTI and (ii) granted to New MTI an option to acquire all of the issued and
outstanding capital stock of the Company (the "SHARES");;
D. Pursuant to a letter agreement dated August 14, 1998 (the "8/14/98
AGREEMENT"), as amended by that letter agreement dated as of April 30, 1999 (the
"AMENDED 8/14/98 AGREEMENT") the Company, Xxxxxx, New MTI and GVG agreed to (i)
expand the outsourcing under the MIS Services Agreement to cover the potential
migration of all of GVG's wholesale travel sales businesses (the MIS Service
Agreement, as so modified by the Amended 8/14/98 Agreement, shall be hereafter
referred to as the "AMENDED MIS SERVICES AGREEMENT") and (ii) modify New MTI's
option to acquire the Company by providing GVG (or a wholly-owned subsidiary of
GVG such as Buyer) with an extended period in which such option could be
exercised pursuant to terms set forth in the Amended 8/14/98 Agreement;
X. Xxxxxx owns 95.4% of the Shares;
F. The Company owns and leases certain assets, real and personal, tangible
and intangible, which are used in the conduct of the Company's business;
G. Buyer has exercised the option to acquire the Company pursuant to the
8/14/98 Agreement, and Buyer desires to purchase from the Company, and the
Company desires to sell to Buyer substantially all of the assets used in the
operation of the Company's business on the terms and subject to the conditions
hereinafter set forth in this Agreement; and
H. In connection with its purchase of such assets from the Company, Buyer
desires to assume certain of the liabilities and obligations of the Company, and
GVG, as the Buyer's parent, desires to provide the Company comfort that it will
provide Buyer with the financial means necessary to pay the Purchase Price and
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:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In this Agreement, the following terms have the meanings
specified or referred to in
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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.
"AA" means Xxxxxx Xxxxxxxx, LLP, Buyer's independent accountants.
"AA REVIEWED BALANCE SHEETS" has the meaning set forth in SECTION 2.9 below.
"AA REVIEWED 3/31/98 BALANCE SHEET" has the meaning set forth in SECTION 2.9
below.
"AA REVIEWED CLOSING DATE BALANCE SHEET" has the meaning set forth in SECTION
2.9 below.
"AA REVIEWED FINANCIAL STATEMENTS" has the meaning set forth in SECTION 2.9
below.
"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; provided, however, that for purposes of this Agreement, the term
"Affiliate" when used in connection with the Company or Xxxxxx shall include,
without limitation, each of the entities comprising the Xxxxx Xxxxxx Group.
"ACQUISITION PROPOSAL" has the meaning specified in SECTION 5.4(d).
"AMENDED 8/14/98 AGREEMENT" has the meaning specified in RECITAL D.
"AMENDED MIS SERVICES AGREEMENT" has the meaning specified in RECITAL D.
"ARC" means Airlines Reporting Corporation.
"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 A.
"ASSIGNMENT OF TRADEMARKS" means the Assignment of Trademarks to be executed by
the Company on the Closing Date and to be filed in the patent and trademark
office in substantially the form of EXHIBIT A-1.
"ASSUMED LIABILITIES" has the meaning specified in SECTION 2.2.
"BUSINESS" means the Company's and/or Old MTI's ownership, operation,
maintenance and development of management and other information systems
(including, without limitation the System) that manage, support and service
wholesale package tour operator (and other supporting or related data processing
center) services, processes, capabilities, functions and operations, including,
without limitation, the services currently covered by the Amended MIS Services
Agreement or provided to any other Person by the Company, and/or the ownership,
operation maintenance and development of information systems that manage,
support and service the business, operations and assets transferred to New MTI
under the Purchase Agreement. The term "Business" shall also be deemed to
include any services which are incidental to the Business, including, without
limitation, any consulting services (including contract programming) which are
incidental to the Business and the managing and maintenance of (i) service
bureaus pursuant to which such services are provided to third parties, (ii) the
development or provisions of interface protocols internal and external to any
such information systems, including, without limitation, connections or linkages
to any computer reservation system and (iii) Internet web sites providing access
to any such systems, in each case provided by the Company to any Person
(including Affiliates of the Company or Xxxxxx).
"BUYER" has the meaning specified in the first paragraph of this Agreement.
"CLOSING" means the closing of the transfer of the Purchased Assets and the
Assumed Liabilities from the Company to Buyer.
"CLOSING DATE" has the meaning specified in SECTION 2.7.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning specified in the first paragraph of this Agreement.
"CONFIDENTIAL INFORMATION" means (i) terms and provisions of this Agreement or
the transactions to be consummated pursuant hereto, and (ii) confidential
information and trade secrets of the Company, GVG, or Buyer including, without
limitation, any of the same comprising the identity, lists or descriptions of
any
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customers, suppliers, vendors, referral sources or organizations; financial
statements, cost reports or other financial information (and any analyses or
compilations thereof or reports thereon); contract terms or proposals, or
bidding information; business plans and training and operations methods and
manuals; personnel records; fee structure; computer software; and management
systems, policies or procedures, including related forms and manuals.
Confidential Information shall not include any information (i) which is
disclosed pursuant to subpoena or other legal process, (ii) which has been
publicly disclosed by means other than by a breach of a confidentiality
agreement, or (iii) 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.
"CUSTOM PROGRAMS" has the meaning set forth in the definition of Software.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached to this Agreement
pursuant to which exceptions to Xxxxxx'x and the Company's specific
representations and warranties set forth in ARTICLE III and other applicable
provisions (and listed on a Section-by-Section basis) are disclosed to Buyer
pursuant to said ARTICLE III.
"DOCUMENTATION" means, with respect to the System and all Software, copies of
source code, computer programs, all Software documentation, all user and
training manuals, program "help" files and any other materials supplied or
developed by the Company for use with the System or the Software or with any
newly developed versions, "Releases," modifications or amendments thereof.
"EBIT" shall mean the earnings of the Company before interest expenses and
taxes, as calculated in accordance with GAAP and consistent with past practices.
"8/14/98 AGREEMENT" has the meaning specified in RECITAL D.
"ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title, restrictive covenant or other restrictions of any kind.
"ENVIRONMENTAL AND OSHA OBLIGATIONS" has the meaning specified in SECTION 3.12.
"EQUITABLE EXCEPTIONS" shall have the meaning specified in SECTION 3.3.
"EQUIPMENT" has the meaning specified in SECTION 2.1(d).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ESCROW AGENT" means The Bank of New York.
"ESCROW AGREEMENT" means the Escrow Agreement to be executed by and among
Xxxxxx, the Company, Buyer and the Escrow Agent in the form of EXHIBIT B.
"ESCROW PERIOD" has the meaning specified in SECTION 2.8.
"ESCROW SUM" has the meaning specified in SECTION 2.8.
"ESCROW SUM REDUCTION" has the meaning specified in SECTION 2.8.
"EXCLUDED LIABILITIES" has the meaning specified in SECTION 2.3.
"FINANCIAL STATEMENTS" has the meaning specified in SECTION 3.7.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of the Company for borrowed
money or other interest-bearing indebtedness; (ii) capital lease obligations of
the Company; (iii) obligations of the Company 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 the Company or secured
by an Encumbrance on the Company's property; and (v) indebtedness of the Company
under extended credit terms of more than 30 days from vendors provided to the
Company.
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"GAAP" shall mean generally accepted accounting principles, consistently applied
by the Company in the preparation of its financial statements. As permitted by
GAAP, research and development expenditures are expensed as incurred.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or regulatory body, including ARC.
"GOVERNMENTAL PERMITS" has meaning specified in SECTION 3.7.
"GVG" has the meaning specified in the first paragraph of the Recitals.
"HSR ACT" 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.
"INDEPENDENT ACCOUNTS" has the meaning specified in SECTION
2.9.
"INTELLECTUAL PROPERTY" has the meaning specified in
SECTION 2.1(j).
"KNOWLEDGE" (whether or not capitalized) shall mean, in respect of the Company,
actual knowledge (after reasonable inquiry) of Xxxxxx and the following officers
of the Company: Messrs. Xxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxx
Xxxxxxx, Xxx Xxxxxx and Xxxxx Xxxxxx; in respect of Xxxxxx, "Knowledge" shall
mean actual knowledge (after reasonable inquiry).
"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 Company and its subsidiaries, taken as a
whole. In determining whether a "Material Adverse Change" or "Material Adverse
Effect" has occurred in the context of the use of such terms in the Company's
and Xxxxxx'x 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 or may result in a loss
to the Company, taken as a whole, in excess of $50,000 per occurrence or
$150,000 in the aggregate shall be conclusive.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning specified in SECTION 3.4(a).
"NET WORTH" means the Company's assets minus its liabilities, determined in
accordance with GAAP.
"NEW MTI" has the meaning specified in RECITAL A.
"OLD MTI" has the meaning specified in RECITAL A.
"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 3/31/98 ACTUAL BALANCE SHEET" means the Company's unaudited balance
sheet dated as of March 31, 1998, prepared in accordance with GAAP and on a
consistent basis, attached hereto as EXHIBIT S
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(the first column).
"PRELIMINARY 3/31/98 NET WORTH" means, with respect to the Preliminary 3/31/98
Pro Forma Balance Sheet, the difference between the Company's assets and
liabilities, determined in accordance with GAAP.
"PRELIMINARY 3/31/98 PRO FORMA BALANCE SHEET" means the Preliminary 3/31/98
Balance Sheet as adjusted by the Pro Forma Adjustments, such balance sheet
attached hereto as the last column of EXHIBIT S.
"PRELIMINARY CLOSING DATE BALANCE SHEET" has the meaning specified in SECTION
2.9.
"PRELIMINARY CLOSING DATE NET WORTH" has the meaning specified in SECTION
2.10(b).
"PRO FORMA ADJUSTMENTS" means the adjustments to the Preliminary 3/31/98 Actual
Balance Sheet set forth in the second column of EXHIBIT S.
"PURCHASE AGREEMENT" has the meaning specified in RECITAL A.
"PURCHASE PRICE" has the meaning specified in SECTION 2.6.
"PURCHASED ASSETS" has the meaning specified in SECTION 2.1.
"REAL PROPERTY" has the meaning specified in SECTION 2.1(c).
"REMAINING PURCHASE PRICE" has the meaning specified in SECTION 2.6(a).
"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) or common law.
"SHAREHOLDERS" means Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxxxxx X. Xxxx.
"SOFTWARE" means all of the computer software utilized by the Business in the
System, whether by or for Old MTI, the Company or New MTI pursuant to the
Amended MIS Services Agreement, including the Company's proprietary software and
any licensed computer software ("TMS SOFTWARE") and any computer application or
other software programs created or developed for New MTI or the Business by the
Company, including, without limitation, additions or modifications which are
intended to enhance or customize TMS Software specifically for the Company's
exclusive use ("CUSTOM PROGRAMS"). For reference, the term "SOFTWARE" will be
used to refer to both TMS Software and Custom Programs, and references to each
of these terms shall be deemed to include the corresponding Documentation
associated with each.
"SYSTEM" means all of the Company's owned, leased and licensed hardware,
software (including the Software) and communications facilities and resources
owned or utilized by the Business, and all methods of interface between such
items and third party hardware, software and communication facilities, in each
case within the control or under the responsibility of the Company, as well as
all updates, modifications, changes and substitutions made from time to time and
which such hardware, software, communications facilities, resources and methods
of interface allow the Company to, among other things, provide electronic
distribution, on-line reservations processing and booking, ticketing,
connectivity to SABRE, Apollo and Worldspan airline global distribution systems,
cash management, accounting and related services. The "System" does not include
any non-TMS computer reservation system, telecommunications, credit card
software or other non-TMS software or system with which the Software interfaces,
but does include all components developed by the Company to facilitate
communications with third party hardware, software and communication facilities,
including, without limitation, components developed to interface with the
Internet.
"TAX" or "TAXES" means any federal, state, local or foreign income, alternative
or add-on minimum, gross income, gross receipts, windfall profits, severance or
parachute, 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
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(including any attached schedules), including, without limitation, any
information return, claim for refund, amended return and declaration of
estimated Tax.
"TMS SOFTWARE' has the meaning set forth in the definition of Software.
"TRANSITION SERVICES AGREEMENT" means the agreement, in substantially the form
of EXHIBIT H, providing for the Company's ongoing provision until December 31,
1999 of services relating to payroll administration, insurance and employee
benefits in place in respect of the Business or its employees, and such other
matters as reflected therein, prior to the Closing.
"XXXXX XXXXXX GROUP" means the Company, Xxxxx Xxxxxx Technologies, Inc. ("TMT"),
Xxxxx Xxxxxx Teleservices, Inc. ("TMTS"), and JFM, Inc.
"YEAR 2000 COMPLIANT" shall mean any function, process, system or other device
or item, which, regardless of the particular date, year, century or other
chronological variable: (a) can accurately process date information (e.g.,
accept date input, provide date output and perform calculations and comparisons
on dates and portions of dates); (b) which can function without interruption due
to a change in date, ensuring that any results, data or information processed,
generated or transmitted in connection therewith, shall be correct, valid and
not adversely affected and, if applicable, (c) includes date data century
recognition, calculations which accommodate same century and multi-century date
values and formulae, as well as date data interfaces (to application and
operating system software, as applicable) reflecting the correct date, year and
century.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE; CLOSING
2.1 PURCHASED ASSETS. On the terms and subject to the
conditions and exceptions contained herein, the Company agrees to sell to Buyer
and Buyer agrees to purchase from the Company at the Closing and on the Closing
Date, free and clear of all Encumbrances, except for those permitted under
SECTION 2.2 hereof, all of the Company's right, title and interest in and to all
assets of the Business properly included in the Company's April 30, 1999 balance
sheet for the Business, subject to changes in the ordinary course of business
(and consistent with the Company's covenants in SECTION 5.4) from such date
through the Closing Date, together with all other assets owned by the Company
(collectively, the "PURCHASED ASSETS"). The Purchased Assets include, without
limitation, the following as they exist on the Closing Date:
(a) CASH AND CASH EQUIVALENTS. Cash and cash
equivalents;
(b) DEPOSITS AND ACCOUNTS RECEIVABLE. All accounts
receivable and other deposits, advances and suppliers' or vendors' rebates and
all other receivables of the Business and existing on the Closing Date, in the
ordinary course of the operation of the Business; provided, however, that the
Company's accounts receivable and notes receivable from Xxxxxx and JFM
Enterprises, Inc., set forth under the item "Due from related parties" in the
Preliminary Closing Date Balance Sheet are excluded from the Purchased Assets
and the Company's accounts payable and notes payable to Xxxxxx and JFM
Enterprises, Inc., set forth under the item "Due to related parties" in the
Preliminary Closing Date Balance Sheet are Excluded Liabilities;
(c) REAL PROPERTY. All leases of real property and
interests, options or rights with respect to the Business identified as leased
and described on EXHIBIT K attached hereto (collectively, the "REAL PROPERTY");
(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 the Company used in the Business, whether or not located at
or on the Real Property at the Closing Date and whether or not reflected on the
April 30, 1999 balance sheet (collectively, the "EQUIPMENT");
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(e) CONTRACTS AND OTHER AGREEMENTS RELATING TO THE
BUSINESS. All rights of the Company (or of the Company's Affiliates to the
extent that such Affiliate's rights are used in the conduct or operation of the
Business and Purchased Assets) as of the Closing Date under all (written or
oral) contracts, agreements or arrangements used in the Business;
(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 the
Company and used in the Business; provided, however, that with respect to items
leased by the Company, only the Company's leasehold rights are conveyed hereby;
(g) EMPLOYMENT AGREEMENTS AND EMPLOYEE RELATIONSHIPS.
All rights of the Company under all non-compete and non-disclosure agreements.
(h) LICENSES, PERMITS. Except for those which are listed
in EXHIBIT L (under SECTION 3.7) as being not assignable by operation of the
laws of the relevant Governmental Body (e.g., qualifications of the Company 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 Business;
(i) PREPAYMENTS. All security, utility or similar
deposits or prepaid expenses of the Company used in the Business;
(j) INTELLECTUAL PROPERTY. All (i) patents, patent
applications, patent disclosures, inventions, processes, designs, formulae
(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 Xxxxx Xxxxxx Solutions, Inc.
or TMS); (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); (vi) the System; (vii) Software; and (viii) Documentation,
including without limitation the intellectual property listed on EXHIBIT M
(collectively, the "INTELLECTUAL PROPERTY");
(k) GENERAL INTANGIBLES. All general intangibles used by
the Business including, without limitation, all goodwill as a going concern and
any and all causes of action or claims of the Company against any third party;
and
(l) OTHER ASSETS. All other assets of the Company,
whether or not reflected on the books or records of the Company or the Business.
2.2 ASSUMED LIABILITIES. On the terms and subject to the
conditions and exceptions contained herein, at Closing, the Company 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 the Company (insofar
as such liabilities relate to the Business and the Purchased Assets) properly
included in the Company's April 30, 1999 balance sheet for the Business, subject
to changes in the ordinary course of business from such date through the Closing
Date, including, without limitation, all of the Company's obligations under the
contracts included in the Purchased Assets pursuant to SECTION 2.1(e) and all of
the Company's obligations arising after the Closing Date in the ordinary course
of conducting the Business (subject to the Company's and Xxxxxx'x
indemnification obligations set forth in SECTION 8.1, and other than any
Excluded Liabilities) (the "ASSUMED LIABILITIES"), and no others, pursuant to
this Agreement and the Assignment and Assumption Agreement referred to in
SECTION 2.4.
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2.3 EXCLUDED LIABILITIES. Notwithstanding anything to the
contrary contained in this Agreement, Buyer will not assume or be liable for and
the Company will retain and remain responsible for all of the Company'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 Business and the
Purchased Assets or otherwise, and regardless of when asserted (the "EXCLUDED
LIABILITIES"), including, without limitation, the following liabilities or
obligations of the Company (none of which will constitute Assumed Liabilities):
(a) LIABILITIES UNDER THIS AGREEMENT. All of the
Company's liabilities or obligations under this Agreement or under any other
agreement between the Company on the one hand and Buyer on the other hand
entered into on or after the date of this Agreement;
(b) TAXES. All liabilities and obligations of the
Company for Taxes which are imposed on or measured by income, for any period,
and all of the Company's liabilities or obligations with respect to any Taxes
not specifically accrued on the April 30, 1999 balance sheet for the Business,
subject to changes in the ordinary course of business from the date of such
balance sheet through the Closing Date;
(c) BREACH OF CONTRACT. All of the Company'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 April 30, 1999 balance sheet,
subject to changes in the ordinary course of business from the date of such
balance sheet through the Closing Date;
(d) FEES. All of the Company'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 that are the Company's responsibility hereunder;
(e) EMPLOYEE PLANS. The Company's obligations and
liabilities for the period up to and including the Closing Date which relate to
any "employee welfare benefit plan" (as defined in SECTION 3.11(a)) or any
"employee pension benefit plan" as defined in SECTION 3.11(b) (including
unfunded pension plan liabilities and retiree health benefits);
(f) INSURABLE LOSS. All of the Company's liabilities or
obligations that are not otherwise Excluded Liabilities hereunder against which
the Company is insured or otherwise contractually indemnified by a Person other
than Buyer but only to the extent the Company receives the proceeds of such
insurance or indemnification;
(g) COBRA. Any liability or obligation under COBRA to
any person covered by the Company's health plans;
(h) FUNDED INDEBTEDNESS. Any liability or obligation for
Funded Indebtedness (unless included in calculating the Preliminary Closing Date
Net Worth) or any other liability or obligation of the Company that does not
relate to, or arise from, the Business or the Purchased Assets including, but
not limited to, the Company's accounts payable and notes payable to Xxxxxx and
JFM Enterprises, Inc., set forth under the item "Due to related parties" in the
Preliminary Closing Date Balance Sheet;
(i) DISCONTINUED OPERATIONS. Any liability or obligation
pertaining to any discontinued operation owned or operated by the Company and
related to the Business as it was operated by the Company prior to the Closing
Date; and
15
(j) LITIGATION. Any and all claims and liabilities
arising out of the bankruptcy of Service Marine Industries, Inc. or disclosed in
SECTION 3.13 of the Disclosure Schedule.
2.4 TITLE TO THE PURCHASED ASSETS; DOCUMENTS OF CONVEYANCE. At
Closing, the Company shall convey all of its right, title and interest in and to
the Business and the Purchased Assets to Buyer free and clear of all
liabilities, obligations and Encumbrances, excepting only the Assumed
Liabilities. Title to the Purchased Assets shall be conveyed pursuant to the
Assignment and Assumption Agreement, the Assignment of Trademarks and by such
other documents as are reasonably acceptable to counsel for the Company 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 the Buyer (as a Purchased
Asset or an Assumed Liability), the parties will cooperate to transfer the
subject asset or liability to the Buyer.
2.5 [RESERVED].
2.6 PURCHASE PRICE. The total purchase price for the Purchased Assets and the
Assumed Liabilities shall be equal to $30,090,000 (the "PURCHASE PRICE"). The
Purchase Price shall be allocated among the Purchased Assets as determined by
Buyer. The Purchase Price shall be payable by Buyer as follows:
(a) PURCHASE PRICE CREDITS. Prior to the Closing Date,
Buyer has paid the Company the following payments which shall be credited to the
Purchase Price: (i) the $6,750,000 Up Front Option Payment, (ii) the $2,300,000
Option Extension Payment and (iii) the $5,000,000 Option Closing Extension
Payment (as such terms are defined in the Amended 8/14/98 Agreement), in an
aggregate amount of $14,050,000 and the Company and Xxxxxx hereby acknowledge
receipt of the same. The remaining balance of the Purchase Price (the "REMAINING
PURCHASE PRICE") shall be paid pursuant to paragraphs (b) through (c) of this
SECTION 2.6.
(b) INITIAL PAYMENT. $14,540,000, representing the
Remaining Purchase Price less the escrow holdback required by SECTION 2.6(c)
below, will be paid, at the direction of the Company, in cash by wire transfer
of funds at the Closing to the Company's accounts.
(c) ESCROW HOLDBACK. $1,500,000 of the Remaining
Purchase Price will be paid in cash by wire transfer of funds at the Closing to
the Escrow Agent to be held in escrow pursuant to SECTION 2.8 for satisfaction
of the Company's and the Xxxxxx'x indemnification obligations specified in
SECTION 8.1.
2.7 CLOSING. Subject to the terms of Article VII, the Closing of the purchase
and sale of the Purchased Assets and the Assumed Liabilities contemplated by
this Agreement shall take place at (i) 9:00 a.m., Eastern Time, at the offices
of Xxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X. in Washington, D.C. on June 1,
1999, with a preclosing on or before May 28, 1999 or (ii) on such other date and
time as the parties shall agree (the "CLOSING DATE").
2.8 ESCROW ARRANGEMENTS. Pursuant to the Escrow Agreement to be entered into
among Xxxxxx, the Company, Buyer and the Escrow Agent, the portion of the
Remaining Purchase Price specified in SECTION 2.6(c) 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 the Company and/or
Xxxxxx to Buyer pursuant to the indemnification provisions of ARTICLE VIII
below. At the conclusion of the period ending ten days after completion of the
Post Closing AA Review and the resolution of any disputes therein pursuant to
SECTION 2.9 below, the Escrow Sum shall be reduced to an amount equal to the sum
of $1,000,000 in cash, plus the amount, if any, reserved, but not then paid or
resolved, pursuant to claims made against the Escrow Sum by Buyer pursuant to
the Escrow Agreement and this Agreement (such amount of reduction in the Escrow
Sum being referred to as the "ESCROW SUM REDUCTION") and (ii) on April 17, 2000
(such period being
16
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
Escrow Agreement and this Agreement (together with any interest on such
remaining portion of the Escrow Sum) shall be disbursed to the Company or
Xxxxxx. The Company, Xxxxxx 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 all disbursements pursuant to the Escrow
Sum Reduction or at the expiration of the Escrow Period which the furnishing
party is entitled under the provisions of the Escrow Agreement and this
Agreement.
2.9 POST-CLOSING AA REVIEW. Within 90 days following the Closing Date, Buyer
shall cause AA to review the Preliminary 3/31/98 Pro Forma Balance Sheet and a
preliminary balance sheet as of the Closing Date attached hereto as EXHIBIT T-1
(the "PRELIMINARY CLOSING DATE BALANCE SHEET") and AA shall deliver to Buyer and
Xxxxxx within such time period a balance sheet for the Company as of March 31,
1998 reviewed by AA (the "AA REVIEWED 3/31/98 BALANCE SHEET"), a balance sheet
of the Company as of the Closing Date reviewed by AA (the "AA REVIEWED CLOSING
DATE BALANCE SHEET," together with the AA Reviewed 3/31/98 Balance Sheet, the
"AA REVIEWED BALANCE Sheets") and an income statement and a statement of cash
flow reviewed by AA, each for the three months ended March 31, 1998, for the
year ended December 31, 1998 and for the period beginning January 1, 1999 and
ending on the Closing Date (such income statements and statements of cash flow,
together with the AA Reviewed Balance Sheets, the "AA REVIEWED FINANCIAL
STATEMENTS"). The AA Reviewed Financial Statements shall be prepared in
accordance with GAAP. In the event a specific inclusion or exclusion made
pursuant to SECTION 2.1(b) or SECTION 2.3(h) to any of the Company's financial
statements results in the double counting of such item as an adjustment to the
Purchase Price or misstates the Purchase Price because of such double counting,
the parties hereby agree that AA shall perform their review to ensure that any
such inclusion or exclusion is given affect only once. The cost of reviewing the
AA Reviewed Financial Statements shall be paid by the Buyer. In the event that
the Company disputes any items or assumptions or methodologies regarding the AA
Reviewed Financial Statements within fifteen (15) business days after the
Company's receipt thereof, and the parties fail to resolve such dispute within
15 business days thereafter, the parties shall jointly select and retain an
independent "Big Five" accounting firm (the "INDEPENDENT ACCOUNTANTS") to review
the disputed matter(s) on the AA Reviewed Financial Statements. The final
determination of such disputed matter(s) by the Independent Accountants shall be
reflected on the AA Reviewed Financial Statements, which shall be final and
binding on the parties for all purposes. The cost of retaining the Independent
Accountants shall be borne by the Company, except that the Buyer shall reimburse
the Company for one-half the cost of the Independent Accountants in the event
that such review results in at least a $100,000 upward adjustment to the
Remaining Purchase Price pursuant to SECTION 2.10 below.
2.10 POST-CLOSING NET WORTH ADJUSTMENT TO REMAINING PURCHASE PRICE. Following
the Closing, the Remaining Purchase Price may be further adjusted based on
changes to the Net Worth as a result of the March 31, 1998 and Closing Date Net
Worth calculations reflected by the AA Reviewed Balance Sheets, as follows:
(a) 3/31/98 BALANCE SHEET ADJUSTMENTS. In the event that
the Net Worth shown on the AA Reviewed 3/31/98 Balance Sheet is greater than (or
less than) $1,138,647, the Remaining Purchase Price shall be adjusted upward (or
downward) by an amount equal to such difference.
(b) CLOSING DATE BALANCE SHEET ADJUSTMENTS. In the event
that the negative change in the Company's Net Worth from the AA Reviewed 3/31/98
Balance Sheet to the AA Reviewed Closing Date Balance Sheet is less than
$11,066,892 (i.e., the negative change between the Company's Preliminary 3/31/98
Net Worth and its Net Worth calculated from the Preliminary Closing Date Balance
Sheet (the "PRELIMINARY CLOSING DATE NET Worth")), then the Remaining Purchase
Price shall be adjusted downward by an amount equal to the difference between
(i) $11,066,892 and (ii) the change in the Net Worth as determined from the AA
Reviewed Balance Sheets.
(c) PAYMENT OF ADJUSTMENTS. If there is a net positive
adjustment to the
17
Remaining Purchase Price pursuant to CLAUSES (a) and (b) above that exceeds
$25,000, then the Buyer shall pay such amount to the Company or Xxxxxx in
immediately available funds within ten (10) business days of delivery of the AA
Reviewed Financial Statements as finally determined in accordance with SECTION
2.9. Conversely, if there is a net negative adjustment to the Remaining Purchase
Price pursuant to CLAUSES (a) and (b) above that exceeds $25,000, then the
Company and Xxxxxx shall pay such amount to the Buyer in accordance with the
same terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND XXXXXX
Except as set forth on the Disclosure Schedule attached hereto (which
Disclosure Schedule contains a reasonably detailed description of each such
exception and references the applicable representation so qualified), the
Company and Xxxxxx jointly and severally represent and warrant to Buyer that:
3.1 DUE ORGANIZATION. The Company 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 Business as now conducted and as proposed to be conducted
through the Closing. Complete and correct copies of the Certificate of
Incorporation and Bylaws of the Company, and all amendments thereto, have been
delivered to Buyer and are attached hereto as EXHIBITS J-1 and J-2. The Company
is qualified to do business only in the State of Illinois and there is no other
jurisdiction in which the nature of the Business or the ownership of its
properties 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.
3.2 SUBSIDIARIES. The Company does not own, directly or indirectly, any
capital stock or ownership interests in any Person, and the Shareholders do not
own any capital stock or ownership interest in any other Person engaged in the
Business. Other than as disclosed and allowed under SECTION 6.4 in respect of
Xxxxxx, the Shareholders do not own any capital stock or ownership interest in
any other Person engaged in a business that is competitive with the Business.
3.3 DUE AUTHORIZATION. The Company and Xxxxxx have 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 the Company. This Agreement has been duly
and validly executed and delivered by the Company and Xxxxxx and constitutes the
valid and binding obligations of the Company and Xxxxxx, enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency or other 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 the Company and Xxxxxx, do not (a) violate any
Requirements of Laws or any Court Order of any Governmental Body applicable to
the Company or any of the Shareholders, or their respective properties, (b)
violate or conflict with, or permit the cancellation of, or constitute a default
under, any material agreement to which the Company or Xxxxxx is a party, or by
which any of them or any of their respective properties is bound, (c) permit the
acceleration of the maturity of any material indebtedness of, or indebtedness
secured by the property of, the Company or Xxxxxx, (d) violate or conflict with
any provision of the charter or bylaws of the Company, or (e) except for
filings, approvals or expiration of the applicable waiting periods 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; FUNDED INDEBTEDNESS; LETTERS OF CREDIT; UNDISCLOSED
LIABILITIES.
(a) FINANCIAL STATEMENTS. The following financial
statements of the Company (or of its predecessor) have been delivered to Buyer
by the Company: balance sheets of the
18
Company as of December 31, 1996, December 31, 1997 and December 31,1998, and
statements of income of the Company (or of its predecessor) for the fiscal years
ended December 31, 1996, December 31, 1997, and December 31, 1998 (collectively,
the "FINANCIAL STATEMENTS"), which financial statements are included as
supplementary combining items in the audited combined financial statements for
the Xxxxx Xxxxxx Group. The Financial Statements, including the Financial
Statements as of and for the year ended December 31, 1998 (the "MOST RECENT
FINANCIAL STATEMENTS"), have been prepared in accordance with GAAP. The
Financial Statements (including the notes to the financial statement to which
the Financial Statements are a part) have been prepared on a consistent basis
throughout the periods indicated and fairly present the financial position,
results of operations and changes in financial position of the Company as of the
indicated dates and for the indicated periods and are consistent with the books
and records of the Company (which books and records are correct and complete).
Any intercompany allocations made among the members of the Xxxxx Xxxxxx Group
which are reflected in the Financial Statements of the Company are accurate and
sustainable. Since the date of the last of such Financial Statements, the
Company has no material liabilities required by GAAP to be reflected on the
Company's balance sheet or notes thereto that are not so reflected in the
Financial Statements, nor any other obligations (whether absolute, contingent,
or otherwise) that are (individually or in the aggregate) material (in amount or
to the conduct of the Business); and neither the Company nor Xxxxxx has
Knowledge of any basis for the assertion of any such liability or obligation.
Since December 31, 1998, the Company has not suffered a Material Adverse Change.
(b) FUNDED INDEBTEDNESS. The Company does not have any
Funded Indebtedness.
(c) LETTERS OF CREDIT. The Company has no letters of
credit, performance bonds or similar instruments issued on or for its account or
for the benefit of any of its vendors or otherwise.
(d) UNDISCLOSED LIABILITIES. The Company does not have
any material liabilities (whether absolute, accrued, contingent or otherwise),
of a nature required by GAAP to be reflected on a balance sheet or disclosed in
the notes thereto, except such liabilities which are accrued or reserved against
in the Most Recent Financial Statements or disclosed in the notes thereto,
including without limitation, any accounts payable or service liabilities of the
Company.
3.5 CERTAIN ACTIONS. Since December 31, 1998, the Company 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 Shareholder; (b) made or agreed to
make any loans or advances or guaranteed or agreed to guarantee any loans or
advances to any Person whatsoever; (c) suffered or permitted any Encumbrance to
arise or be granted or created against or upon any of its assets, real or
personal, tangible or intangible; (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 $25,000 individually or $100,000 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 assets (except in the ordinary course of the 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; (h) made any material change
in its method of management, operation, ordinary course payments of accounts
payable and other similar liabilities, accounting or reporting income or
deductions for tax purposes; (i) made any material acquisitions, capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Business, or entered into commitments therefor, except
for capital expenditures or commitments therefor which do not, in the aggregate,
exceed $25,000 individually or $100,000 in the aggregate; (j) made any
investment or commitment therefor in any Person; (k) made 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 Business, and (B) wage and salary adjustments made in the
ordinary course of the Business for employees who are not officers, directors,
or stockholders of the Company; (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
19
entered into any vendor, supply, sales, distribution, franchise or agency
agreement which involves annual consideration (or commissions) in excess of
$25,000; (n) made or entered into any agreement granting any Person any
registration or offer rights in respect of the Company's capital stock; (o)
entered into any non-competition agreement; (p) made or entered into any
agreement or other arrangement with any officer, director, stockholder, employee
or Affiliate of the Company; (q) 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 the Company
is a party that would or could reasonably be expected to have a Material Adverse
Effect; or (r) entered into any other material transactions that would or could
reasonably be expected to have a Material Adverse Effect except in the ordinary
course of the Business. The Company shall have operated in the normal course of
business during the period from December 31, 1998 through the Closing Date,
pursuant to the Preliminary Closing Date Balance Sheet (attached as EXHIBIT T-1)
and the accompanying income statement (attached as EXHIBIT T-2). In addition, to
the Knowledge of the Company or Xxxxxx, the Company has operated the Business in
accordance with the 1999 budget, except as otherwise authorized or directed by
GVG, or disclosed to Buyer in SECTION 3.5 of the Disclosure Schedule.
3.6 PROPERTIES. The Company owns no real property. Attached hereto as EXHIBIT
K is a list containing a description of each leasehold interest in real property
and each item of personal property utilized by the Company in the conduct of the
Business having a book or fair market value in excess of $25,000 as of the date
hereof. Except for Permitted Exceptions, such real and personal properties are
free and clear of Encumbrances. Xxxxxx and the Company have delivered to Buyer
true, complete and accurate copies of all real property leases and a lien search
obtained from the counties where the Company conducts business and the Illinois
Secretary of State office of all UCC liens of record against the Company's
personal property in such jurisdictions. All of the properties and assets
necessary for continued operation of the Business as currently conducted
(including, without limitation, all books, records, computers and computer
software and data processing systems) are owned, leased or licensed by the
Company 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 the Company, 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, the Company has full and
unrestricted legal and equitable title to all properties and assets which it
owns. The operation of the properties and Business of the Company 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 of the Company for the purposes for which they are now operated.
All leases of real or personal property by the Company 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. All facilities
leased by the Company have received all approvals of any Governmental Body
(including Governmental Permits) required in connection with the operation
thereof and have been operated and maintained in accordance with all
Requirements of Laws.
3.7 LICENSES AND PERMITS. Attached hereto as EXHIBIT L is a list of all
licenses, certificates, privileges, immunities, approvals, franchises,
authorizations and permits (herein collectively called "GOVERNMENTAL PERMITS")
held or applied for by the Company from any Governmental Body the absence of
which could, individually or in the aggregate, have a Material Adverse Effect.
The Company has complied in all material respects with the terms and conditions
of all such Governmental Permits, and the Company 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 required from any Governmental Body thereof in
connection with the transfer of the Purchased Assets to the Buyer and its
conduct of the Business which Governmental Permit, if not obtained, would have a
Material Adverse Effect. EXHIBIT L also identifies those licenses, certificates,
privileges, immunities, approvals,
20
franchises, authorizations and permits that are not assignable by operation of
the laws of the relevant Governmental Body (e.g., qualifications of the Company
to do business as a foreign corporation in a given jurisdiction).
3.8 INTELLECTUAL PROPERTY.
(a) OWNERSHIP. Attached hereto as EXHIBIT M is a list and brief description
of all Intellectual Property owned or utilized by the Company. The Company has
furnished Buyer with true, complete and accurate copies of (i) all of the
Documentation pertaining to the System as it existed on the Closing Date and
(ii) all material license agreements to which the Company is a party, either as
licensor or licensee, with respect to any Intellectual Property. The Company has
good title to or the right to use, and will convey good and marketable title to
(or the right to use which the Company has), all the Intellectual Property
necessary for the conduct of the Business, as presently conducted without the
payment of any royalty or similar payment, and the Company is not infringing on
any Intellectual Property rights of others, and neither the Company nor Xxxxxx
are aware of any infringement by others of any such rights owned by the Company.
All material licenses set forth on EXHIBIT M are valid and binding obligations
of the Company, and to the Knowledge of the Company or Xxxxxx, the other parties
thereto, and enforceable against the Company, and to the Knowledge of the
Company or Xxxxxx, the other parties thereto in accordance with their respective
terms, except for the Equitable Exceptions. The Company owns and possesses all
right, title and interest in and to, or has the right to use pursuant to a valid
license, all Intellectual Property necessary for the operation of the business
of the Company as presently conducted. Notwithstanding anything to the contrary
in the foregoing sentences of this SECTION 3.8, the Company and Xxxxxx make no
representation as to the existence or extent of the Company's rights to any
Intellectual Property (other than the Software, System and Documentation for the
System) that is not a registered, pending or applied for, trademark, service
xxxx, copyright or patent other than the representation that the Company has
used such Intellectual Property without known conflict with the rights of
others; in addition, the Company's rights to computer software licensed from
third parties are limited by the applicable license agreements.
(b) SYSTEM AND SOFTWARE PERFORMANCE. To the Knowledge of
the Company or Xxxxxx, the System and Software including any System interfaces
which are a part of the System, and the local area networks at the Real
Property, and any wide area networks currently managed and maintained by the
Company, perform, and will continue to perform, and conform in accordance with
the Documentation, free of serious bugs or programming errors, and if operated
by Buyer in accordance with the Company's practices and standards will continue
to provide Buyer with the level of on-line system performance, reliability and
response times as experienced by the Company during the ninety (90) day period
prior to the date hereof. To the Knowledge of the Company or Xxxxxx, unless
disclosed in SECTION 3.8(b) of the Disclosure Schedule, the System, the Software
and such networks do not require any necessary development, modifications or
repair, other than in the ordinary course of business. All programming of the
Software and System was performed in a competent and professional manner by
qualified personnel and in compliance with federal, state and local laws and
regulations. All individual processors and components of the System are
compatible with one another (to the extent such compatibility is intended in the
current design of the System) and are compatible and provide necessary
connectivity to provide the functions intended in the current design of the
System with the Internet and the following third party global distribution
systems: SABRE, Apollo, and Worldspan.
(c) SYSTEM AND SOFTWARE CAPACITY. The System, Software
and all networks on which the System and the Software operate are currently
processing, and are expected to continue to process (if operated consistent with
the Company's practices and standards), an average of 270,000 passengers per
year providing end users an average response time of two (2) seconds or less.
The System architecture, the Software, and all such networks are scaleable, to
the Knowledge of the Company or Xxxxxx (i) after making the necessary increases
in hardware, support personnel and related operating expenses in accordance with
Section 3.8(c) of the Disclosure Schedule based upon increased passenger volume
set forth therein, to process the incremental increase in System passengers per
year as disclosed on such Section 3.8(c) of the Disclosure Schedule and (ii)
without any additions, modifications, enhancements or upgrades, or developments,
to process an average of 320,000 passengers per year, in
21
each case, without any significant degradation in average response time to the
end user.
(d) DOCUMENTATION. The source code included in the
Documentation being transferred from the Company hereunder to the Buyer as part
of the Purchased Assets is true, accurate and complete as of the Closing Date,
and represents all the necessary source code required to conduct the Business as
it is currently being conducted. The other items included in the Documentation
being transferred from the Company hereunder to the Buyer as part of the
Purchased Assets are accurate, and to the Knowledge of the Company and Xxxxxx
complete, in all material respects as of the Closing Date, and represent all the
necessary user and training manuals, computer programs, program "help" files and
the like required to conduct the Business as it is currently being conducted.
The Company has taken such actions as it has considered necessary or
appropriate, in its good faith judgment, to document the System and the Software
and their operations and the source code in order to efficiently conduct its
service bureau business. The Documentation of or relating to the System and the
Software has been written in a reasonably clear and professional manner so that
they may be understood, modified and maintained in an efficient manner by
reasonably competent programmers.
(e) PRIOR TRANSFERS. Old MTI has transferred to the
Company ownership of all of the Intellectual Property (including the System and
the Software) previously owned by Old MTI and not previously transferred to or
owned by the Company.
3.9 COMPLIANCE WITH LAWS. The Company has (i) complied in all material
respects with all Requirements of Laws, Governmental Permits and Court Orders
applicable to the Business or the Company 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 the Company or any of its
employees (because of their activities on behalf of the Company) are subject and
(ii) conducted the 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 Knowledge of the Company and Xxxxxx, no such
claim is anticipated) to the effect that the Business or the Company fails to
comply, in any respect, with any Requirements of Laws, Governmental Permit or
Environmental and OSHA Obligation or Court Order or that a Governmental Permit
is necessary in respect thereto.
3.10 INSURANCE. Attached hereto as EXHIBIT N is a list of all coverages for
fire, liability, or other forms of insurance and all fidelity bonds held by or
applicable to the Company. Copies of the binders for all such insurance policies
have been delivered to Buyer. The insurance maintained by the Company
immediately prior to the Closing Date was in Xxxxxx'x judgment reasonably
adequate for the Company's business and is consistent with levels of insurance
carried by the Company in the past. To the Knowledge of the Company and Xxxxxx,
no event relating to the Company has occurred that 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. The Company will cause, at
Buyer's expense, all of such insurance coverages identified on EXHIBIT N to
remain in full force and effect in favor of the Buyer following the Closing in
accordance with the terms of the Transition Services Agreement.
3.11 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE WELFARE BENEFIT PLANS. Other than as listed
in EXHIBIT O, the Company does not maintain or contribute to any "employee
welfare benefit plan" as such term is defined in Section 3(1) of ERISA. With
respect to any plan listed in EXHIBIT O, (i) the plan is in material compliance
with ERISA and all other applicable Requirements of Laws; (ii) the plan has been
administered in accordance with its governing documents; (iii) neither the plan,
nor any fiduciary with respect to the plan, has engaged in any "prohibited
transaction" as defined in Section 406 of ERISA other
22
than any transaction subject to a statutory or administrative exemption; (iv)
except for the processing of routine claims in the ordinary course of
administration, there is no material litigation, arbitration or disputed claim
outstanding; and (v) all premiums due on any insurance contract through which
the plan is funded have been paid.
(b) EMPLOYEE PENSION BENEFIT PLANS. Other than as listed
in EXHIBIT O, the Company does not maintain or contribute to any arrangement
that is or may be an "employee pension benefit plan" relating to employees, as
such term is defined in Section 3(2) of ERISA. With respect to any plan listed
in EXHIBIT O: (i) the plan is qualified under Section 401(a) of the Code, and
any trust through which the plan is funded meets the requirements to be exempt
from federal income tax under Section 501(a) of the Code; (ii) the plan is in
material compliance with ERISA and all other applicable Requirements of Laws;
(iii) the plan has been administered in accordance with its governing documents
as modified by applicable law; (iv) the plan has not suffered an "accumulated
funding deficiency" as defined in Section 412(a) of the Code; (v) the plan has
not engaged in, nor has any fiduciary with respect to the plan engaged in, any
"prohibited transaction" as defined in Section 406 of ERISA or Section 4975 of
the Code other than a transaction subject to statutory or administrative
exemption; (vi) the plan has not been subject to a "reportable event" (as
defined in Section 4043(b) of ERISA), the reporting of which has not been waived
by regulation of the Pension Benefit Guaranty Corporation; (vii) no termination
or partial termination of the plan has occurred within the meaning of Section
411(d)(3) of the Code; (viii) all contributions required to be made to the plan
or under any applicable collective bargaining agreement have been made to or on
behalf of the plan; (ix) there is no material litigation, arbitration or
disputed claim outstanding; (x) all applicable premiums due to the Pension
Benefit Guaranty Corporation for plan termination insurance have been paid in
full on a timely basis; and (xi) a favorable determination letter from the IRS
has been received by the Company with respect to such plan stating that such
plan is so qualified; and there are no circumstances which would cause such plan
to lose such qualified status.
(c) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED
COMPENSATION ARRANGEMENTS. The Company 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 the Company and any current or
former officer, consultant, director or employee of the Company that is not
intended to be a tax qualified arrangement under Section 401(a) of the Code.
3.12 CONTRACTS AND AGREEMENTS. EXHIBIT P hereto contains a list and brief
description of all written or oral contracts, commitments, leases (whether
realty or personalty), and other agreements (other than the MIS Services
Agreement, but including, without limitation, all promissory notes, loan
agreements, and other evidences of indebtedness, guarantees, hedging agreements,
off-balance sheet financing arrangements, indemnity agreements, vendor
contracts, licenses to use software, marketing agreements, purchase orders, bids
in process, shareholders' agreement, interface or similar agreements pertaining
to various airline or other computer reservation systems or third party owned
software) to which the Company is a party or by which the Company or its
properties or the Business are bound pursuant to which the obligations
thereunder of either party thereto are, or are contemplated as being, for any
one contract $25,000 or greater, or any contract or agreement prohibiting the
Company from freely engaging in any business or competing anywhere in the world
(collectively, the "CONTRACTS"). The Company is not and, to the Knowledge of
Xxxxxx and the Company, 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 the Company) under any of the Contracts, and the Company
has not waived any material right under any of the Contracts. All of the
Contracts to which the Company is a party are legal, valid, binding, enforceable
and are fully assignable to Buyer (unless otherwise disclosed on EXHIBIT P which
EXHIBIT P also identifies those Contracts requiring third party consents in
order to assign) and will remain in full force and effect and will remain legal,
valid, binding, enforceable and in full force and effect on identical terms
immediately after the Closing, except for the Equitable Exceptions. The Company
has not guaranteed any obligations of any other Person. The Company has no
present expectation or intention of not fully performing all of its obligations
under any Contract, the Company has no Knowledge of any breach or anticipated
breach by the other parties to any Contract and the Company has not received
notice of actual or threatened termination or non-renewal of any Contract. The
Company and Xxxxxx
23
have provided Buyer true, complete and accurate copies of the Contracts in
effect as of the Closing Date, and any amendments thereto.
3.13 CLAIMS AND PROCEEDINGS. Except as disclosed in SECTION 3.13 of the
Disclosure Schedule, there are no claims, actions, suits, proceedings, or
investigations pending or, to the Knowledge of Xxxxxx or the Company, threatened
against or affecting the Company, the Intellectual Property or any of its other
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 the
Company or Buyer. The Company has not been and the Company 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 Knowledge
and belief of Xxxxxx or the Company, threatened or asserted against any of the
Shareholders or the Company 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 the Company and Xxxxxx 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 the Company on or before the Closing have been paid and all
Tax Returns that are required to be filed by the Company on or before the date
hereof have been filed within the time and in the manner provided by all
Requirements of Laws, and all such Tax Returns are true and correct and
accurately reflect the Tax liabilities of the Company other than the tax return
for 1998 (for which an extension has been filed). No other Tax Returns of the
Company are presently subject to an extension of the time to file. All Taxes,
assessments, penalties, and interest of the Company that have become due
pursuant to such Tax Returns or any assessments received have been paid or
adequately accrued on the Company's Financial Statements. The provisions for
Taxes reflected on the balance sheets contained in the Financial Statements and
the April 30, 1999 balance sheet are adequate to cover all of the Company's Tax
liabilities for the respective periods then ended and all prior periods. The
Company 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 Xxxxxx or the
Company are aware. For Governmental Bodies with respect to which the Company
does not file Tax Returns, no such Governmental Body has given the Company
written notification that the Company is or may be subject to taxation by that
Governmental Body. The Company 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 the Company.
(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) The Company 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), and 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. Attached hereto as EXHIBIT Q is a list of the names and annual
rates of compensation of the directors and executive officers of the Company,
and of the employees of the Company whose annual rates of compensation during
the calendar year ended December 31, 1999 (including base salary, bonus and
incentive pay) exceed (or by December 31, 1999 are expected to exceed) $50,000.
EXHIBIT Q also summarizes the bonus, profit sharing, percentage compensation,
company automobile, club membership, and other like benefits, if any, paid or
payable to such directors, officers, and employees during the Company's calendar
year ended December 31, 1998 and to the date
24
hereof. EXHIBIT Q also contains a brief description of all material terms of
employment agreements to which the Company is a party and all severance benefits
that any director, officer or employee of the Company is or may be entitled to
receive. The employee relations of the Company are generally good and there is
no pending or, to the Knowledge of Xxxxxx and the Company, threatened labor
dispute or union organization campaign. None of the employees of the Company is
represented by any labor union or organization. The Company 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. Neither the Company or Xxxxxx
has been advised or otherwise has Knowledge that any employee will not agree to
remain employed by the Buyer after the consummation of the transactions
contemplated hereby. There is no unfair labor practice claim against the Company
before the National Labor Relations Board, or any strike, dispute, slowdown, or
stoppage pending or, to the Knowledge of the Company and Xxxxxx, threatened
against or involving the Company, and none has previously occurred.
3.16 BUSINESS RELATIONS. Neither the Company nor Xxxxxx has Knowledge that any
licensor, consultant, customer or supplier engaged in doing business with the
Company will cease to do business with the Buyer after the consummation of the
transactions contemplated hereby in the same manner and at the same levels as
previously conducted with the Company except for any reductions which do not
result in a Material Adverse Change. Neither Xxxxxx nor the Company has received
any notice of cancellation of or adverse modification to any Contract or any
Material business arrangement between any Person and the Company nor is the
Company or Xxxxxx aware of any facts that could lead them to believe that the
Business will be subject to such a cancellation, of or such a modification to,
of any such business arrangement.
3.17 ACCOUNTS RECEIVABLE. All of the accounts, notes, and loans receivable
that have been recorded on the books of the Company 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 as reflected in the Most Recent
Financial Statements) will be collected in full within 180 days following the
Closing Date. With respect to such accounts, notes and loans receivable, (i) all
of such accounts, notes, and loans receivable are free and clear of any
Encumbrances; (ii) no claims of offset have been asserted in writing against any
of such accounts, notes, or loans receivable; and (iii) 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.
3.18 BANK ACCOUNTS. Attached hereto as EXHIBIT R is a list of all banks or
other financial institutions with which the Company has an account or maintains
a safe deposit box, 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.
3.19 BROKERS. Neither the Company nor Xxxxxx has 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.
3.20 AFFILIATED TRANSACTIONS. Except as disclosed on SECTION 3.20 of the
Disclosure Schedule, no officer, director, Shareholder or Affiliate of the
Company or any individual related by blood or marriage to any such Person, or
any entity in which any such Person owns any beneficial interest, is a party to
any agreement, contract, arrangement or commitment with the Company or engaged
in any transaction with the Company or has any interest in any property used by
the Company. No such officer, director, or Shareholder or any Affiliate of any
such officer, director, or Shareholder, has any ownership interest in any
competitor, supplier, or customer of the Company (other than ownership of
securities of a publicly-held corporation of which such Person owns (in the case
of Xxxxxx, pursuant to SECTION 6.4), or has real or contingent rights to own,
less than one percent of any class of outstanding securities) or any property
used in the operation of the Business.
3.21 YEAR 2000. The System, based on the Company's pre-existing programs, is
Year 2000 Compliant as of December 31, 1998 and all of New MTI's data files,
again based on the Company's pre-existing programs, will be Year 2000 Compliant
on the Closing Date. In respect of "off-the-shelf" or
25
"shrinkwrap" (i.e., non-customized software utilized by the Business and/or
included in the Software and the System), to the Knowledge of the Company and
Xxxxxx such software is Year 2000 Compliant.
3.22 INFORMATION FURNISHED. The Company and Xxxxxx have made available to
Buyer true and correct copies of all material corporate records of the Company,
all Contracts and all other material agreements, documents, and other items
listed on the Exhibits and Disclosure Schedule to this Agreement or referred to
in ARTICLE III of this Agreement, and neither this Agreement, the Disclosure
Schedule 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.
3.23 ARC COMPLIANCE. The Company maintains all of its ticketing stock utilized
in the Business in full compliance with the safety standards required by ARC.
None of the Company's ticketing stock utilized for the conduct of the Business
has ever been lost or stolen and no claim has ever been made by any airline,
hotel, tour operator or other travel vendor against the Company with respect to
any lost or stolen ticket stock, except for such prior claims that would not
individually or in the aggregate have a Material Adverse Effect.
ARTICLE IV
BUYER'S AND GVG'S REPRESENTATIONS AND WARRANTIES
4.1 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to the Company and Xxxxxx as follows:
(a) DUE ORGANIZATION. Buyer 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 execute, deliver and perform this
Agreement and to carry out the transactions contemplated hereby.
(b) DUE AUTHORIZATION. 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 Buyer and the Agreement has been
duly and validly executed and delivered by Buyer and constitutes the valid and
binding obligation of Buyer, enforceable in accordance with its terms, except
for 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 Buyer, do not (a) violate any Requirements of
Laws or Court Order of any Governmental Body applicable to Buyer or its
property, (b) violate or conflict with, or permit the cancellation of, or
constitute a default under any agreement to which Buyer is a party or by which
it or its property is bound, (c) permit the acceleration of the maturity of any
indebtedness of, or any indebtedness secured by the property of, Buyer, (d)
violate or conflict with any provision of the charter or bylaws of Buyer, or (e)
except for filings or appraisals 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.
(c) NO BROKERS. Buyer has not engaged, or caused to be incurred any liability
for which the Company or Xxxxxx may be liable 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.
4.2 GVG'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to the Company and Xxxxxx as follows:
(a) DUE ORGANIZATION. GVG is a corporation duly organized, validly existing,
and in good standing under the laws of the State of New York and has full
corporate power and authority to execute, deliver and perform this Agreement and
to carry out its undertaking contemplated hereunder.
(b) DUE AUTHORIZATION. 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 GVG and the Agreement has been
duly and validly executed and delivered by GVG and constitutes the valid and
binding obligation of GVG, enforceable in accordance with its terms, except for
the Equitable
26
Exceptions. The execution, delivery, and performance of this Agreement (as well
as all other instruments, agreements, certificates or other documents
contemplated hereby) by GVG, do not (a) violate any Requirements of Laws or
Court Order of any Governmental Body applicable to GVG or its property, (b)
violate or conflict with, or permit the cancellation of, or constitute a default
under any agreement to which GVG is a party or by which it or its property is
bound, (c) permit the acceleration of the maturity of any indebtedness of, or
any indebtedness secured by the property of, GVG, (d) violate or conflict with
any provision of the charter or bylaws of GVG, or (e) except for filings or
appraisals 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.
(c) NO BROKERS. GVG has not engaged, or caused to be incurred any liability
for which the Company or Xxxxxx may be liable 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.
ARTICLE V
COVENANTS
5.1 CONSENTS OF OTHERS. Prior to the Closing, the Company and Xxxxxx shall
have obtained the written consent of any third party to all the Contracts listed
on EXHIBIT P that require consent prior to the Closing and all other
authorizations, consents and permits required of the Company and Xxxxxx to
permit them to consummate the transactions contemplated by this Agreement. As
promptly as practicable after the date hereof, Buyer, the Company and Xxxxxx
shall make, or shall cause to be 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 THE COMPANY'S EFFORTS. The Company and Xxxxxx shall use all reasonable
efforts to cause all conditions for the Closing set forth in SECTION 7.1 to be
met.
5.3 POWERS OF ATTORNEY. The Company and any of the Shareholders shall cause
the Company, and such Shareholder if applicable, to revoke and terminate at or
prior to Closing all powers of attorney granted by the Company, other than those
relating to service of process, qualification or pursuant to governmental
regulatory or licensing agreements, or representation before the IRS or other
Government Body.
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, the Company and Xxxxxx shall
conduct the Business only in the ordinary course and in accordance with the
terms of the Amended MIS Services Agreement 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) Xxxxxx and the Company shall use their best efforts
to cause the 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) Xxxxxx and the Company shall give prompt notice to
Buyer of any notice of material default received by the Company or the 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
Company or the Business.
(d) Neither the Company nor Xxxxxx, nor any of their
representatives, shall solicit, encourage or discuss any Acquisition Proposal
(as hereinafter defined) or supply any non-public information concerning the
Company or the Business or the Company's 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 Company or the Business, (ii) the acquisition
of the Company or a material equity interest in the Company or a material
27
portion of its assets, or (iii) the dissolution or liquidation of the Company.
5.5 ACCESS TO RECORDS BEFORE CLOSING. Prior to the Closing Date, Xxxxxx and
the Company agree that they will give, or cause to be given, to Buyer and its
representatives, during normal business hours and at Buyer's expense, full and
unrestricted access to the Company's personnel, officers, agents, employees,
assets, properties, titles, contracts, corporate minute and other books,
records, files and documents of the Company with respect to the Business
(including financial, tax basis, budget projections, accountants' work papers
and other information as Buyer may request) and to the Business' personnel,
customers, suppliers and independent accountants, to allow Buyer to obtain such
information as it shall desire, and to make copies of such information, to the
extent reasonably necessary. Additionally, Xxxxxx and the Company will provide
Buyer opportunities to meet with key employees of the Business, to visit
facilities of the Business and to otherwise conduct due diligence in respect of
the Company and the Business. All materials copied by Buyer shall be maintained
in confidence by Buyer and returned to Xxxxxx and/or the Company, as
appropriate, 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 the
Company) 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). The Company
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 any sort relating to the Company, that shall be maintained at the
headquarters of the Company; provided, however, the Company shall be entitled to
reasonable access to and to make copies of such books and records at their sole
cost and expense and Buyer will maintain all of the same for a period of at
least three (3) years after Closing. Thereafter, the Company will offer such
documentation to Xxxxxx before disposal thereof.
6.2 TRANSITION. For a period of three and one-half (3 1/2) years following
Closing, neither the Company nor Xxxxxx will 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, lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relations with the Buyer after the Closing it maintained with the
Company prior to the Closing. For a period of three and one-half (3 1/2) years
following Closing, the Company and Xxxxxx will refer all customer inquiries
relating to the Business to the Buyer.
6.3 CONFIDENTIALITY. The Company 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 the Buyer for a period of three and one-half (3 1/2) 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 that are in their possession or control
except as otherwise permitted herein. In the event that the Company or Xxxxxx
are requested or required (by oral 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, the Company or Xxxxxx, as the case may be, will notify Buyer
promptly of the request or requirement.
6.4 COVENANT NOT TO COMPETE. For and in consideration of the allocation of
$100,000 of the Purchase Price paid to the Company by Buyer, the Company and
Xxxxxx each covenant and agree, for a period of three and one-half (3 1/2) years
from and after the Closing Date, that he, she or it will not, directly or
indirectly, without the prior written consent of Buyer, for or on behalf of any
Person or Affiliate:
(a) engage in the business of developing or providing
any information systems or services (similar to the Business, the Software or
the System) to any travel-related business
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(other than (A) the operation by Xxxxx Xxxxxx Technologies, Inc. of the call
center for American Airlines Vacations or (B) the operation by Xxxxx Xxxxxx
Teleservices, Inc., an Affiliate of the Company ("TMTS"), of call centers so
long as TMTS does not offer services in competition with the business of GVG or
the Company, as such businesses are currently being conducted), provided,
however, that nothing in this SECTION 6.4 shall alter or affect Xxxxxx'x rights
or obligations to own an interest in Preview Travel, Inc., Adventure Media,
Inc., or any affiliate or successor in interest to any of the foregoing,
pursuant to SECTION 6.3(a)(i)of the Purchase Agreement, subject to the provision
of SECTION 6.3(a)(iii) thereof (but such reaffirmation of Xxxxxx'x rights shall
not permit Xxxxxx or his Affiliates to develop or provide information systems or
services similar to the Business, the Software or the System), it being agreed
that SECTION 6.3(a)(ii) of the Purchase Agreement is hereby terminated and
superseded by this SECTION 6.4;
(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, lessor, licensor, customer, supplier, or
other business associate of the Business from maintaining the same business
relations with Buyer after the Closing as it maintained with the Company prior
to the Closing;
provided, however, that Xxxxxx may own less than ten percent (10%) of the
outstanding stock of any publicly-traded corporation and Xxxxxx shall not be
deemed to be in a violation of this SECTION 6.4 solely by reason thereof.
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 the Company, each 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.
(a) GENERAL. 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 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 the Company's name all of the Company's
obligations under any such contract or other agreement for which any such
consent has not been obtained. The Company 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, the Company 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 the Company under any
such Contract or other agreement not otherwise transferred pursuant to the
provisions of this Agreement. The Company hereby authorizes Buyer to perform and
Buyer hereby agrees to perform all of the Company's obligations after the
Closing under all such Contracts or other agreements. The Company agrees to
remit promptly to Buyer all collections or payments received by the Company 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.
(b) XXXXX XXXXXX TELESERVICES, INC. The Company and
Xxxxxx agree to cause Xxxxx Xxxxxx Teleservices, Inc. ("TMTS") to maintain the
same business relations with Buyer for
29
one year after the Closing as it maintained with the Company prior to the
Closing, including, but not limited to, causing TMTS to purchase from Buyer the
same amount of services (measured in dollars) as it had purchased from the
Company during the 12 month period ending on the Closing Date, adjusted,
however, to reflect the fact that certain Company personnel who had previously
been devoted to servicing the TMTS business were recently transferred to the
employ of TMTS, which transfer will cause a concomitant reduction in the amount
of Company services needed or paid for by TMTS going forward. If TMTS desires to
terminate or modify its relationship with Buyer, the Company and Xxxxxx agree to
cause TMTS to provide Buyer 90 days written notice of such termination or
modification, which such notification may be given in advance, so long as the
effective date of such termination or modification is on or after the expiration
of the one year period referenced in the first sentence of this SECTION 6.6(b).
This SECTION 6.6(b) shall be binding on the parties hereto upon execution of
this Agreement, although it is intended that at the request of either Xxxxxx,
the Company or the Buyer, the parties shall prepare and enter into more
definitive and detailed documentation.
6.7 CHANGE OF NAME. The Company agrees to promptly change its
name following the Closing to a name which does not contain the words "Xxxxx
Xxxxxx Solutions, Inc.," "TMS" or any variations thereof.
6.8 AUDITS. Following the Closing, the Company and Xxxxxx shall
cause the Company, at the Buyer's request and expense, to deliver, or cause to
be delivered, to Buyer an unqualified and unmodified review report of AA on the
balance sheets of the Company as of December 31, 1996, December 31, 1997 and
December 31, 1998, and reviewed statements of operations and cash flows of the
Company for the fiscal years then ended, which report shall be without
limitation as to the scope of the review. Xxxxxx, in his respective capacity as
President and director of the Company during such periods (if applicable), shall
assist Buyer by providing all management letters, reports or representations
reasonably requested by AA in connection with such reviews.
6.9 RELATED TRANSACTIONS. It is the intention of the parties
that the Company's and Xxxxxx'x obligations under ARTICLE VIII of this Agreement
(dealing with indemnification) supersede and replace the obligation of (i) Old
MTI and Xxxxxx under ARTICLE VIII of the Purchase Agreement with respect to the
representations and warranties contained in Section 3.24 of the Purchase
Agreement (but only in respect of Seller's MIS Assets, as such term is defined
therein) and (ii) the Company under the Amended MIS Services Agreement.
6.10 ARC CONSENT. The Company, Xxxxxx and Buyer shall each use
their reasonable best efforts to cooperate and to work together to obtain any
and all consents required by ARC in connection with this Agreement and the
transactions contemplated hereby.
6.11 TAX SHARING ARRANGEMENT. The parties hereby agree that, to
the extent any incremental tax benefit is realized from this transaction to
Xxxxxx as a result of the gain on the sale being taxed at capital gain rates and
the reduction in the Net Worth of the Company since March 31, 1998 (after taking
into account ordinary deductions claimed by Xxxxxx from all his other income
generating ventures and after accounting for all other deductions of the Company
not paid for by the Buyer or GVG through the Net Worth adjustments) resulting in
a reduction of taxes at ordinary income rates, any benefit resulting from the
differential in rates shall result in a reduction of the Purchase Price and a
refund to Buyer for one-half of such benefit. In order to determine the amount,
if any, due to Buyer, Xxxxxx shall prepare a schedule upon the completion of his
filing of his 1999 tax return (or, if Xxxxxx desires, a schedule at any time
after February 1999 reflecting his best faith estimate) which reflects the
benefit, if any, he has determined he received on his 1998 and/or 1999 tax
returns as a result of this transaction. Such schedule shall be provided to
Buyer and Buyer's accountants for review. Xxxxxx will provide reasonable support
for the information on his schedule to substantiate his computation. Within 30
days of the receipt of the schedules and any requested supporting information,
Buyer will approve such schedule or submit to Xxxxxx its revised schedule
reflecting the amount due. Any amounts due shall be paid by Xxxxxx to Buyer
within 30 days of receipt of such approval or submission. In the event the
parties fail to
30
agree on the appropriate amount due to Buyer, such claim shall be submitted to
arbitration pursuant to SECTION 10.9 of this Agreement. If Xxxxxx provides a
schedule of his estimated tax benefit, as provided herein, and such estimate is
less than the actual benefit to Xxxxxx by an amount equal to, or greater than,
$50,000, Xxxxxx hereby agrees to share in the excess actual benefit over the
estimated benefit in the same manner as provided by this SECTION 6.11.
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. The
Company and Xxxxxx 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 each of them
prior to or at the Closing Date. The representations and warranties of the
Company and Xxxxxx 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 the Company that no Material Adverse Change or
Material Adverse Effect shall have occurred in the financial condition,
business, operations or prospects of the Company from those presented to Buyer
prior to execution of this Agreement.
(b) CONSENTS. All statutory requirements for the valid
consummation by the Company and any of the Shareholders 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, if applicable, 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. All approvals of the Board of Directors of the Company and the
Shareholders 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 continue in full force and effect following the
Closing.
(c) DISCHARGE OF INDEBTEDNESS AND LIENS. There being no
Funded Indebtedness (other than capital leases) to retire, Xxxxxx and the
Company shall have provided for the payment in full by the Company of all
extended credit from vendors at the Closing (other than customary accounts
payable outstanding on 90 day or less payment terms in accordance with past
practices). Xxxxxx shall have also provided for the termination of all
Encumbrances of record on the properties of the Company, except for Permitted
Exceptions. All liens or UCC filings against the Purchased Assets shall have
been terminated as of the Closing, except for liens securing capital leases.
(d) TRANSFER TAXES. The Company shall have paid all
transfer or gains taxes incurred in connection with
this Agreement.
(e) [RESERVED].
(f) DOCUMENTS TO BE DELIVERED BY XXXXXX AND THE COMPANY.
The following documents shall be delivered at the Closing by Xxxxxx and the
Company:
(i) CONVEYANCE DOCUMENTS. Such instruments of
sale, transfer, assignment, conveyance and delivery
(including all vehicle titles), in form and
substance reasonably satisfactory to counsel for
Buyer (including, without limitation, the Assignment
and Assumption Agreement and the Assignment of
Trademarks, as are required in order to transfer to
Buyer good and marketable title to the Purchased
Assets, free and clear of all Encumbrances except as
provided herein).
(ii) OPINION OF COUNSEL TO THE COMPANY AND XXXXXX. Buyer shall
have received
31
an opinion of Counsel to the Company and Xxxxxx, dated the Closing
Date, in substantially the same form as the form of opinion that
is EXHIBIT C hereto.
(iii) CERTIFICATES. Buyer shall have received (i) an officer's
certificate and (ii) a secretary's certificate of the Company
executed by officers of the Company and Xxxxxx, as appropriate,
and dated the Closing Date, in substantially the same forms as the
forms of certificates that are attached as EXHIBIT D-1 and EXHIBIT
D-2, respectively, hereto.
(iv) ESCROW AGREEMENT. Xxxxxx shall have delivered to Buyer at
the Closing the duly executed Escrow Agreement.
(v) TERMINATION OF EMPLOYMENT AGREEMENTS. The Company shall
have provided evidence satisfactory to Buyer of the complete
termination, without liability to the Company, of all employment
agreements in existence prior to the Closing among the Company, on
the one hand, and Xxxxxx or any other employees of the Company, on
the other (other than any non-compete and non-disclosure
agreements referenced in SECTION 2.1(g)).
(vi) COMPLIANCE AND NON DISCLOSURE AGREEMENTS. Xx. Xxxx
Xxxxxxxxx shall have executed and delivered to the Company a
compliance agreement, including customary noncompete and
nonsolicitation provisions, in substantially the form of EXHIBIT
E. Each of Messrs. Xxxx Xxxxxx, Xxxx Xxxxxxxx and Xxxxx Xxxxxxx
shall have executed and delivered to the Company a nondisclosure
agreement, each in substantially the form of EXHIBIT F.
(vii) UCC MATTERS. UCC termination statements and other
applicable documentation necessary to release or terminate any
Encumbrance or interest of any third party in any of the assets of
the Company, except capital leases.
(viii) RELEASE. The Company and Xxxxxx shall have delivered to
Buyer a release of liabilities related to the Purchased Assets,
the Assumed Liabilities and the Business, except as expressly set
forth in this Agreement, in substantially the form of EXHIBIT G
hereto.
(ix) TRANSITION SERVICES AGREEMENT. The Company and Xxxxxx
shall have executed and delivered a Transition Services Agreement
substantially in the form of EXHIBIT H.
(x) CHANGE OF THE COMPANY'S NAME. Evidence, in the form of an
amended Certificate of Incorporation for the Company that will be
delivered to Buyer in form suitable for filing with the Delaware
Secretary of State, indicating its change of name from Xxxxx
Xxxxxx Solutions, Inc.
(xi) WIRE INSTRUCTIONS. The Company shall have delivered wire
instructions to the Buyer in substantially the form of EXHIBIT I.
(g) SOURCE CODE. Prior to the Closing, the Company shall
have provided Buyer true and complete copies of all source codes for the
Software and the System as in operation as of the date thereof.
7.2 CONDITIONS TO XXXXXX'X AND THE COMPANY'S OBLIGATIONS. The obligation of
Xxxxxx and the Company 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.
32
(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 (if
applicable) 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 Business.
(c) ESCROW AGREEMENT. Buyer shall have delivered to
Xxxxxx and the Company at the Closing the duly executed Escrow Agreement
required pursuant to SECTION 2.8 hereof. Additionally, the Escrow Agent shall
have received $1,500,000 referenced in SECTION 2.6(c).
(d) ASSIGNMENT AND ASSUMPTION AGREEMENT. At the Closing
Buyer shall execute and deliver the Assignment and Assumption Agreement.
(e) RESOLUTIONS AND CONSENTS. At Closing, Buyer shall
deliver the unanimous written consent of its board of directors authorizing the
transactions contemplated hereunder, and GVG shall deliver a shareholder's
consent to the consummation of the transactions contemplated hereunder.
(f) PAYMENTS TO COMPANY. The Company shall have received
at Closing the Remaining Purchase Price referenced in SECTION 2.6(b).
(g) TRANSITION SERVICES AGREEMENT. Buyer shall have
executed and delivered a Transition Services Agreement substantially in the form
of EXHIBIT H.
7.3 WAIVER. Buyer can waive satisfaction of any condition set forth in
SECTION 7.1 and Xxxxxx can waive any condition set forth in SECTION 7.2.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF BUYER. Except as provided in and subject to SECTION
8.6, the Company and Xxxxxx agree on a joint and several basis as between the
Company and Xxxxxx to indemnify and hold harmless Buyer and each officer,
director and Affiliate of Buyer, including without limitation any successor of
the Buyer (collectively, the "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"), that any of the 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 the Company or
Xxxxxx 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 any of the Indemnified Parties by any Person based upon the
facts that form the alleged basis for any claim or litigation to the extent that
it should have been, but was not, reserved for in the Financial Statements and
the April 30, 1999 balance sheet, in accordance with GAAP, (C) the Company's or
Xxxxxx'x tortuous acts or omissions to act prior to Closing for which the
Company did not carry liability insurance for itself or Xxxxxx as the insured
party sufficient to satisfy such claim or liability, whether or not such acts or
omissions to act result in a breach or violation of any representation or
warranty and (D) any Excluded Liabilities paid by Buyer.
8.2 DEFENSE OF THIRD PARTY CLAIMS. If any legal proceeding shall be
instituted, or any claim or demand made, by any third party against any
Indemnified Party in respect of which the Company or Xxxxxx may be liable
hereunder, such Indemnified Party shall give prompt written notice thereof to
the Company or Xxxxxx and, except as otherwise provided in SECTION 8.4 below,
the Company or Xxxxxx shall defend any litigation, action, suit, demand, or
claim for which such Indemnified Party may seek indemnification with counsel
satisfactory to the Company or Xxxxxx; 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 (ii) the
Company or Xxxxxx shall have a conflict of
33
interest in defending such action on Buyer's, the Company's or Xxxxxx'x behalf,
at Buyer's election, Buyer may defend itself, and in either of such instances
the Company or Xxxxxx shall be liable for all expenses reasonably incurred in
connection therewith (including, without limitation, settlement payments and
reasonable attorney's and professional's fees and disbursements). If neither (i)
nor (ii) are applicable but Buyer desires to participate in the defense of an
action the Company or Xxxxxx are defending because in Buyer's reasonable
judgment the outcome of such action could have an ongoing effect on Buyer, Buyer
may participate but at its own expense. In the event the Company or Xxxxxx fails
or refuses to defend any legal proceeding he, she or it is required to defend
under this ARTICLE VIII within a reasonable length of time, the Indemnified
Parties shall be entitled to assume the defense thereof, and the Company and
Xxxxxx shall be liable to repay the Indemnified Parties for all expenses
reasonably incurred in connection with said defense (including, without
limitation, settlement payments and reasonable attorney's fees). If the Company
or Xxxxxx shall not have the right to assume the defense of any litigation,
action, suit, demand, or claim in any legal proceeding he, she or it is required
to defend under this ARTICLE VIII, the Indemnified Parties shall have the
absolute right, at the Company's and Xxxxxx'x expense, to control the defense of
and to settle, in its sole discretion and without the consent of the Company or
Xxxxxx, such litigation, action, suit, demand, or claim, but the Company or
Xxxxxx shall be entitled, at their 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 PROCEDURE FOR CLAIMS.
(a) ESCROW CLAIMS. 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 Indemnified Party shall first apply to the
Escrow Agent for reimbursement of such claim in accordance with the provisions
of the Escrow Agreement; provided, however, that the Escrow Sum is not intended
to be an exclusive remedy in the event Buyer has indemnification claims
hereunder which exceed such amount.
(b) OTHER CLAIMS. If pursuant to this ARTICLE VIII any
claim for indemnification is made by an Indemnified Party after the expiration
of the Escrow Period, other than claims of third parties which are governed by
SECTION 8.2 hereof, the Indemnified Party (the "CLAIMANT"), shall send written
notice to the other Person (by certified mail, return receipt requested or by
personal service as provided in SECTION 10.2 hereof) setting forth in reasonable
detail a description of the facts upon which the claim is based and a reasonable
estimate of the amount of the claim (a "CLAIM", with the notice thereof referred
to as the "CLAIM NOTICE"). The Person against whom the Claim is brought (the
"RESPONDENT") shall have fifteen (15) calendar days from receipt of the Claim
Notice to respond to such Claim. Such response shall be in writing and shall (i)
set forth in reasonable detail the Respondent's objection to the Claim and the
basis for such objection, or (ii) the efforts undertaken or to be undertaken by
the Respondent to cure the Claim. In the event the Respondent fails to respond
to the Claim Notice in the manner set forth above within such 15-day period, the
Respondent shall be deemed to have conceded the Claim in full. In the event the
parties are unable to resolve the Claim within thirty (30) calendar days from
the date of receipt of the Claim Notice, the Claim shall be submitted to
arbitration in accordance with SECTION 10.9 below.
8.4 TAX AUDITS, ETC. In the event of an audit of a Tax Return of the Company
with respect to which an Indemnified Party might be entitled to indemnification
pursuant to this ARTICLE VIII (the parties hereby acknowledging that any
liability for Taxes is specifically excluded from Assumed Liabilities pursuant
to SECTION 2.3(b)), Buyer shall have the right to control any and all such
audits that may result in the assessment of additional Taxes against the Buyer
or the Purchased Assets and any and all subsequent proceedings in connection
therewith, including appeals (subject to the prior written consent of the
Company, which shall not unreasonably be withheld and subject to the right of
the Company to have its accountants and attorneys consult with Buyer on such
audits or procedures at the Company's expense). The Company and Xxxxxx shall
cooperate fully in all matters relating to any such audit or other Tax
34
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 the Company or the Buyer as a result of any such
audit or other proceeding, the Company and Xxxxxx shall be responsible for and
shall promptly pay all Taxes, interest, and penalties for which any of the
Indemnified Parties shall be entitled to indemnification.
8.5 INDEMNIFICATION OF THE COMPANY AND XXXXXX.
(a) BUYER'S INDEMNIFICATION. Buyer agrees to indemnify
and hold harmless Xxxxxx and the Company and each officer, director or Affiliate
of the Company, from and against any Indemnifiable Costs arising out of any
misrepresentation, breach or default by Buyer of or under any of the covenants,
agreements or other provisions of this Agreement or any agreement or document
executed in connection herewith.
(b) GVG'S INDEMNIFICATION. GVG agrees to indemnify and
hold harmless Xxxxxx and the Company and each officer, director or Affiliate of
the Company, from and against any Indemnifiable Costs arising out of any
misrepresentation, breach or default by GVG of or under SECTION 4.2 and SECTION
10.14 of this Agreement.
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 (less the present value of any premium increases occurring
as a result of such claim). Except for (i) any claims for breach of the
representations, warranties and covenants of the Company and Xxxxxx under
SECTIONS 3.11 or 3.14, hereof (for which indemnification claims must be made
prior to the expiration of the applicable statute of limitations and if so made,
such claims shall continue after such date until finally resolved), (ii) any
claims for breach of the representations, warranties and covenants of the
Company and Xxxxxx under SECTION 3.3 (for which indemnification claims must be
made at any time after the Closing) or (iii) any claims for breach of the
representations, warranties or covenants of the Company and Xxxxxx under ARTICLE
VI (for which indemnification claims must be made prior to the expiration of the
time periods contained therein), the right to make claims for indemnification
provided under this ARTICLE VIII shall expire on the third anniversary of the
Closing Date (except for claims made prior to such date which shall continue
after such date until finally resolved). The Company and Xxxxxx shall not be
obligated to pay any amounts for indemnification under this ARTICLE VIII until
the aggregate indemnification obligation sought by Buyer hereunder exceeds
$100,000, whereupon the Company and Xxxxxx shall be liable for all amounts for
which indemnification may be sought. Buyer shall not be obligated to pay any
amounts for indemnification under this ARTICLE VIII until the aggregate
indemnification obligation sought by the Company or Xxxxxx hereunder exceeds
$100,000, whereupon Buyer 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, (i) in no event shall
the aggregate liability of the Company and Xxxxxx to Buyer or Buyer to the
Company and Xxxxxx exceed the Purchase Price and, (ii) in no event shall the
aggregate liability of the Company or Xxxxxx to Buyer for a breach of SECTION
3.21 (Year 2000) exceed $2,500,000 (absent gross negligence or willful
misconduct, in which case only the liability cap in subclause (i) above shall
apply). However nothing in this ARTICLE VIII shall limit Buyer, the Company or
Xxxxxx in exercising or securing any remedies provided by applicable statutory
or common law with respect to the conduct of the Company, Xxxxxx 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 in connection with this Agreement. All
Indemnifiable Costs paid by the Company or Xxxxxx shall be deemed to be a
reduction of the Purchase Price paid by Buyer under this Agreement.
ARTICLE IX
TERMINATION
35
9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of the Company and
Buyer;
(b) in writing by Buyer, if the Company or Xxxxxx 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;
(c) in writing by Xxxxxx and the Company, 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 the Company and Xxxxxx, on the one
hand, or Buyer, on the other hand, in the event the Closing
has not occurred on or before 9:00 a.m. on June 30, 1999,
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 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 the first business day following delivery to a commercial overnight
courier or upon receipt of a confirmation of a facsimile addressed to the
respective parties hereto as follows:
Buyer or GVG:
Global Vacation Group, Inc.
0000 Xxx Xxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxxxxxxxx, General Counsel
36
Tel No.:(000) 000-0000
Fax No.:(000) 000-0000
With copies to:
Xxxxx & Xxxxxxx L.L.P.
Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxx
Xxxxx Xxxx
Fax No.:(000) 000-0000
Tel No.:(000) 000-0000
The Company:
Xxxxx Xxxxxx Solutions, 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
With a copy to:
Xxxxx & Associates
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 parties 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
the Company and each of the Shareholders shall bear all costs and expenses of
(i) any broker involved in this transaction on behalf of any of the Shareholders
or the Company and (ii) all legal and other expenses of the Shareholders or the
Company 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 the Company, Buyer and Xxxxxx, their heirs,
representatives, successors, and permitted assigns, in
37
accordance with the terms hereof. This Agreement shall not be assignable by the
Company or Xxxxxx 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 Xxxxxx or the Company, but any such assignment shall
not relieve Buyer of its obligations hereunder. In addition, Buyer may assign
any or all of its rights and obligations hereunder, without the consent of the
Company or Xxxxxx following the Closing, in connection with any sale of all or
substantially all of the assets, capital stock or business of Buyer or an
Affiliate thereof (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.
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. Regardless of any
investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, 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 three (3) years, provided, however, that (a)
the representations and warranties contained in SECTIONS 3.11 and 3.14 of this
Agreement, and the related indemnities, shall survive the Closing until the
expiration of the applicable statutes of limitations, (b) the representations,
warranties and covenants contained in SECTIONS 3.3 of this Agreement, and the
related indemnities, shall survive the Closing indefinitely and not expire, (c)
all covenants in ARTICLE VI that have an expiration date contained therein shall
expire as of such date, and (d) all other covenants in this Agreement that do
not have an expiration date shall expire upon the expiration of the applicable
statutes of limitations.
10.9 DISPUTE RESOLUTION. ALL DISPUTES AMONG XXXXXX, THE COMPANY AND BUYER WITH
RESPECT TO ANY PROVISION OF THIS AGREEMENT OR THE RIGHTS AND OBLIGATIONS OF
XXXXXX, THE COMPANY AND BUYER HEREUNDER (OTHER THAN DISPUTES INVOLVING
ALLEGATIONS OF INTENTIONAL FRAUD, DISPUTES ARISING UNDER SECTION 6.4 OF THIS
AGREEMENT AND DISPUTES TO BE RESOLVED PURSUANT TO SECTION 2.9), THAT CANNOT BE
RESOLVED BY MUTUAL AGREEMENT, WILL BE RESOLVED IN THE DISTRICT OF COLUMBIA BY
BINDING ARBITRATION IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION IN THE DISTRICT OF COLUMBIA OR BY ANY OTHER MEANS OF ALTERNATIVE
DISPUTE RESOLUTION MUTUALLY AGREED UPON BY THE PARTIES.
10.10 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.
10.11 PUBLIC ANNOUNCEMENTS. Neither the Shareholders nor the Company shall make
any public announcement of the transactions contemplated hereby without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld, conditioned or delayed.
10.12 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.
38
10.13 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.
10.14 GVG SUPPORT. GVG agrees to provide Buyer with sufficient funds to pay for
its obligations under this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
39
IN WITNESS WHEREOF, each of the parties hereto has caused this
Asset Purchase Agreement to be duly executed as of the date and year first above
written.
BUYER:
GVG/TMS ACQUISITION SUB, INC.
By:
-------------------------------
Name:
----------------------
Title:
----------------------
THE COMPANY:
XXXXX XXXXXX SOLUTIONS, INC.
By:
-------------------------------
Name:
----------------------
Title:
----------------------
XXXXX X. XXXXXX
----------------------------------------
XXXXX X. XXXXXX
AGREED AND ACKNOWLEDGED,
only with respect to SECTION 4.2, SECTION 8.5(b) and SECTION 10.14
GLOBAL VACATION GROUP, INC.
By:
-----------------------------------
Name:
------------------------
Title:
------------------------
