-------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
among
TOIC ACQUISITION, LLC
("Purchaser"),
THE OFFICIAL INFORMATION COMPANY
("Guarantor"),
INTERNATIONAL TRAVEL SERVICE, INC.
("Seller")
and
XXXXXXX X. XXXXXXXXX XX.,
XXXXXXX X. XXXXXX
and
XXXXXX X. XXXXXX
(collectively, the "Shareholders")
Dated as of March 25, 1999
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TABLE OF CONTENTS
PAGE
||
ARTICLE I DEFINITIONS............................................1
1.1 Definitions............................................1
1.2 Interpretation.........................................8
ARTICLE II SALE AND PURCHASE OF ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS......................9
2.1 Purchased Assets.......................................9
2.2 Assignment of Contracts................................9
2.3 Assumed Obligations...................................10
ARTICLE III PURCHASE PRICE AND PAYMENT............................10
3.1 Payment of Purchase Price.............................10
3.2 Adjustments to Purchase Price.........................10
3.3 Allocation of Consideration...........................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER..............12
4.1 Due Incorporation.....................................12
4.2 Due Authorization.....................................12
4.3 Consents and Approvals; No Conflicts..................13
4.4 Business Information..................................14
4.5 No Material Adverse Effects or Changes................14
4.6 Title to Properties...................................15
4.7 Real Property.........................................15
4.8 Equipment; Personal Property..........................16
4.9 Contracts.............................................16
4.10 Employee Benefit Plans................................17
4.11 Employment and Labor Matters..........................18
4.12 No Material Defaults or Violations....................18
4.13 Litigation............................................18
4.14 Brokers...............................................19
4.15 Taxes.................................................19
4.16 Environmental Matters.................................19
4.17 Intellectual Property.................................19
4.18 Computer Matters......................................20
4.19 Proper Business Practices.............................20
4.20 Relations with Customers..............................20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS........21
5.1 Due Authorization.....................................21
5.2 Consents and Approvals................................21
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
GUARANTOR.............................................22
6.1 Due Incorporation; Ownership..........................22
6.2 Due Authorization.....................................22
6.3 Consents and Approvals; No Conflicts..................23
6.4 Litigation............................................23
6.5 Financing.............................................23
6.6 Due Diligence.........................................24
6.7 Brokers...............................................24
ARTICLE VII COVENANTS OF SELLER...................................24
7.1 Implementing Agreement................................24
7.2 Consents and Approvals................................24
7.3 Preservation of Business..............................25
7.4 Access to Information and Facilities..................27
7.5 Confidentiality.......................................27
7.6 Tax Matters...........................................27
7.7 Information and Records...............................28
ARTICLE VIII COVENANTS OF PURCHASER................................28
8.1 Implementing Agreement................................28
8.2 Consents and Approvals................................28
8.3 Confidentiality.......................................28
8.4 Post-Closing Access...................................29
8.5 Communications........................................30
8.6 Airline Reporting Corporation.........................30
ARTICLE IX CONDITIONS PRECEDENT
TO OBLIGATIONS OF PURCHASER...........................30
9.1 Warranties True as of Both Present Date and
Closing Date..........................................30
9.2 Compliance with Agreements and Covenants..............31
9.3 Certificate...........................................31
9.4 Xxxx-Xxxxx-Xxxxxx.....................................31
9.5 Consents and Approvals................................31
9.6 Legal Actions or Proceedings..........................31
9.7 No Material Adverse Change............................32
9.8 Employment Agreements and Consulting Agreement........32
9.9 Documents. ..........................................32
9.10 Investment by Xxxxxx and Xxxxxx.......................32
ARTICLE X CONDITIONS PRECEDENT TO
OBLIGATIONS OF SELLER AND SHAREHOLDERS................32
10.1 Warranties True as of Both Present Date and
Closing Date..........................................33
10.2 Compliance with Agreements and Covenants..............33
10.3 Certificate...........................................33
10.4 Xxxx-Xxxxx-Xxxxxx.....................................33
10.5 Consents and Approvals................................33
10.6 Legal Actions or Proceedings..........................33
10.7 Employment Agreements and Consulting Agreement........34
10.8 Documents. ..........................................34
10.9 LLC Agreement.........................................34
ARTICLE XI EMPLOYEES AND BENEFIT PLANS...........................34
11.1 Employees.............................................34
11.2 Liabilities Under Benefit Plans.......................35
ARTICLE XII CLOSING...............................................36
12.1 Closing...............................................36
12.2 Deliveries by Seller..................................37
12.3 Deliveries by Purchaser...............................38
ARTICLE XIII TERMINATION...........................................38
13.1 Termination...........................................38
13.2 Effect of Termination.................................39
ARTICLE XIV INDEMNIFICATION.......................................39
14.1 Survival..............................................39
14.2 Indemnification by Seller and Shareholders............39
14.3 Indemnification by Purchaser..........................40
14.4 Limitations on Indemnification........................41
14.5 Claims................................................42
14.6 Notice of Third Party Claims; Assumption of
Defense...............................................42
14.7 Settlement or Compromise..............................42
14.8 Knowledge.............................................43
14.9 Exclusive Remedy......................................43
14.10 Effect on Purchase Price of Indemnity Payments........43
ARTICLE XV NONCOMPETITION AGREEMENT..............................43
15.1 Noncompetition; Seller and Xxxxxxxxx..................43
15.2 Noncompetition; Xxxxxx................................44
15.3 Noncompetition; Xxxxxx................................45
15.4 Enforcement...........................................45
15.5 Specific Performance..................................45
ARTICLE XVI MISCELLANEOUS.........................................46
16.1 Expenses..............................................46
16.2 Amendment.............................................46
16.3 Notices...............................................46
16.4 Payments in Dollars...................................48
16.5 Waivers...............................................48
16.6 Assignment............................................48
16.7 No Third Party Beneficiaries..........................48
16.8 Publicity.............................................48
16.9 Further Assurances....................................49
16.10 Severability..........................................49
16.11 Entire Understanding..................................49
16.12 Applicable Law........................................49
16.13 Choice of Forum.......................................49
16.14 Waiver of Jury Trial..................................50
16.15 Counterparts..........................................50
16.16 Remittances...........................................50
16.17 Bulk Sales............................................50
16.18 Schedules.............................................50
16.19 Disclaimer of Warranties..............................51
ARTICLE XVII GUARANTY..............................................51
17.1 Guaranty..............................................51
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EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form Employment Agreement with Xxxxxxx X. Xxxxxx
Exhibit C Form of Employment Agreement with Xxxxxx X. Xxxxxx
Exhibit D Form of Consulting Agreement with Xxxxxxx X.
Xxxxxxxxx Xx.
Exhibit E Form of Xxxx of Sale
Exhibit F Form of Opinion of Xxxxx, Xxxxx & Xxxxx
Exhibit G Form of Opinion of Xxxxx Xxxxx
Exhibit H Form of LLC Operating Agreement of Gallaxy
Information Services, LLC
SCHEDULES
Schedule 1.1(k) Business Financial Information
Schedule 1.2 Knowledge
Schedule 2.1(a) Equipment
Schedule 2.1(f) Listed Assets
Schedule 2.2 Non-assigned Contracts
Schedule 2.2(a) Real Property Leases
Schedule 2.2(b) Personal Property Leases
Schedule 2.2(c) Customer Contracts
Schedule 2.2(d) Other Contracts
Schedule 3.3 Allocation of Consideration
Schedule 4.3 Seller's Consents
Schedule 4.5 Material Adverse Effects or Changes
Schedule 4.6 Title to Properties
Schedule 4.7 Real Property
Schedule 4.10 Employee Benefit Plans
Schedule 4.11 Employment and Labor Matters
Schedule 4.12 Material Defaults or Violations
Schedule 4.13 Litigation
Schedule 4.17 Intellectual Property
Schedule 4.18 Software
Schedule 4.20 Relations with Customers
Schedule 6.3 Purchaser's Consents
Schedule 6.7 Brokers
Schedule 7.3 Preservation of the Business
Schedule 11.1 Employees
vi
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT is made as of the 25th day of March,
1999, by and between TOIC ACQUISITION, LLC, a Delaware limited liability
company ("Purchaser"), THE OFFICIAL INFORMATION COMPANY, a Delaware corporation
("Guarantor"), INTERNATIONAL TRAVEL SERVICE, INC., an Illinois corporation
("Seller"), and XXXXXXX X. XXXXXXXXX XX. ("Xxxxxxxxx"), XXXXXXX X. XXXXXX
("Xxxxxx") and XXXXXX X. XXXXXX ("Xxxxxx" and, together with Xxxxxxxxx and
Xxxxxx, the "Shareholders"). Certain capitalized terms used herein are defined
in Article I.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Purchaser desires to purchase from Seller and Seller desires
to sell to Purchaser all of the Purchased Assets (as hereinafter defined), and
Purchaser desires to assume from Seller and Seller desires to assign to
Purchaser all of the Assumed Obligations (as hereinafter defined), all upon the
terms and conditions hereinafter set forth;
WHEREAS, the Shareholders will derive benefits from the sale
of the Purchased Assets; and
WHEREAS, the Guarantor will derive benefits from the purchase of the
Purchased Assets by Purchaser.
NOW, THEREFORE, in consideration of the foregoing and the mutual
warranties, representations, covenants and agreements herein contained, the
parties agree as follows:
ARTICLE I
DEFINITIONS
I.1 Definitions.
------------
(a) "Accounting Firm" shall have the meaning provided in Section
3.2(c).
(b) "Accounts Receivable" shall mean all accounts receivable,
trade receivables, notes receivable, future receivables and other receivables,
which are payable as a result of goods sold or services provided (or which will
be sold or provided), or goods or services billed, by Seller prior to the
Closing.
(c) "Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, through one or more
intermediaries, owns or controls, is under
common ownership or control with, or is owned or controlled by, such specified
Person. A Person shall be deemed to "own" another Person if it owns more than
50% of the capital stock or other equity interest of such other Person.
(d) "Agreement" shall mean this Asset Purchase Agreement,
including all exhibits and schedules hereto, as it may be amended from time to
time in accordance with its terms.
(e) "Assets" shall mean the Purchased Assets and the Leased
Assets.
(f) "Assignment and Assumption Agreement" shall mean an assignment
and assumption agreement between Purchaser and Seller to be dated the Closing
Date, in the form attached hereto as Exhibit A.
(g) "Assumed Obligations" shall have the meaning provided in
Section 2.3.
(h) "Benefit Plans" shall have the meaning provided in Section
4.10.
(i) "Business" shall mean the housing reservation and travel
management business conducted by Seller on the date of this Agreement.
(j) "Business Day" shall mean any day of the year other than (i)
any Saturday or Sunday or (ii) any other day on which banks located in Chicago,
Illinois generally are closed for business.
(k) "Business Financial Information" shall mean Seller's (i)
audited balance sheet as of December 31, 1998 and the related statement of
income for the twelve months ended December 31, 1998 and (ii) Seller's
unaudited balance sheet as of February 28, 1999 and the related statement of
income for the two months ended February 28, 1999, which are set forth on
Schedule 1.1(k).
(l) "Cash" shall mean all cash, certificates of deposits, bank
deposits, marketable securities and other cash equivalents, together with all
accrued but unpaid interest thereon.
(m) "Closing" shall mean the consummation of the transactions
contemplated herein in accordance with Article XII.
(n) "Closing Date" shall mean the date on which the Closing
occurs.
2
(o) "Closing Escrow Agent" shall mean the bank or trust company
mutually agreeable to Purchaser and Seller, who shall not have an established
relationship with either Purchaser or Seller, to hold the escrow pursuant to
the Closing Escrow Agreement.
(p) "Closing Escrow Agreement" shall have the meaning provided in
Section 12.1(b).
(q) "Closing Statement" shall have the meaning provided in Section
3.2(b).
(r) "Closing Working Capital" shall have the meaning provided in
Section 3.2(a).
(s) "Code" shall mean the United States Internal Revenue Code of
1986, as amended.
(t) "Consent-Pending Contract" shall have the meaning provided in
Section 7.2.
(u) "Consulting Agreement" shall mean the consulting agreement,
substantially in the form of Exhibit D, to be entered into between Purchaser
and Xxxxxxxxx on or before the Closing Date.
(v) "Contract" shall mean any contract, agreement, lease,
indenture, mortgage, note, bond or other similar binding commitment.
(w) "Customer Contracts" shall have the meaning provided in
Section 2.2(c).
(x) "Customer Deposits" shall mean all deposits of customers of
the Business delivered to and not yet applied by Seller as of the Closing Date
pursuant to any Customer Contracts included in the Purchased Contracts.
(y) "December 31 Working Capital" shall have the meaning provided
in Section 3.2(a).
(z) "Employees" shall have the meaning provided in Section
11.1(a).
(aa) "Equipment" shall have the meaning provided in Section
2.1(a).
(bb) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(cc) "Foreign Governmental Authority" shall mean the government of
any foreign country, or any political subdivision
3
thereof, or any entity, body or authority exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, in each case having jurisdiction over Seller or any of the
Purchased Assets.
(dd) "Foreign Law" shall mean any law (including common law),
statute, rule, regulation or ordinance enacted, promulgated or imposed by any
Foreign Governmental Authority.
(ee) "401(k) Plan" shall have the meaning provided in Section
11.2.
(ff) "GAAP" shall mean U.S. generally accepted accounting
principles, consistently applied with prior periods. Purchaser acknowledges
that Seller's accounting policies, as previously disclosed by Seller to
Purchaser, are in accordance with GAAP.
(gg) "Governmental Authority" shall mean the government of the
United States or any state or political subdivision thereof and any entity,
body or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
(hh) "Guarantor" shall have the meaning provided in the preamble.
(ii) "Xxxxxx Employment Agreement" shall mean the employment
agreement, substantially in the form of Exhibit C, to be entered into between
Purchaser and Xxxxxx on or before the Closing Date.
(jj) "Hired Employee" shall have the meaning provided in Section
11.1(b).
(kk) "Holdback Amount" shall mean the amount of $1.0 million, to
be held by the Indemnity Escrow Agent, in an interest bearing account for a
period of one year from the Closing Date, to be applied against the
indemnification obligations, if any, of the parties pursuant to Article XIV
hereof.
(ll) "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(mm) "Indemnified Person" shall mean the Person or Persons
entitled to, or asserting entitlement to, indemnification or reimbursement
under Article XIV.
(nn) "Indemnifying Person" shall mean the Person or Persons
obligated to, or who is alleged to be obligated to, provide indemnification or
reimbursement under Article XIV.
4
(oo) "Indemnity Escrow" shall mean the escrow under the Indemnity
Escrow Agreement.
(pp) "Indemnity Escrow Agent" shall mean the bank or trust company
mutually agreeable to Purchaser and Seller, who shall not have an established
relationship with either Purchaser or Seller, to hold the Indemnity Escrow and
to enter into the Indemnity Escrow Agreement.
(qq) "Indemnity Escrow Agreement" shall mean the escrow agreement
among Seller, Purchaser and the Indemnity Escrow Agent, to be dated on or
before the Closing Date, in a form reasonably acceptable to Seller, Purchaser
and the Indemnity Escrow Agent.
(rr) "Information and Records" shall have the meaning provided in
Section 2.1(c).
(ss) "Intellectual Property" shall mean all United States and
foreign patents (including continuations, continuations- in-part, reissues and
re-examinations thereof) and patent applications; registered and unregistered
trade names, trademarks, service names and service marks (and applications for
registration of the same) and all goodwill associated therewith; copyrights and
copyright registrations (and applications for the same); trade secrets;
computer data (including formulations and analyses), computer programs and
software (in source code and object code form) and firmware and all related
programming, user and systems documentation; inventions, processes and designs
(whether or not patentable or reduced to practice); know-how and formulae; and
all other intellectual property rights and assets.
(tt) "Inventory" shall have the meaning provided in Section
2.1(b).
(uu) "Law" shall mean any law (including common law), statute,
rule, regulation or ordinance enacted, promulgated or imposed by any
Governmental Authority.
(vv) "Leased Assets" shall mean all assets leased to Seller
pursuant to any of the Real Property Leases or Personal Property Leases.
(ww) "Lien" shall mean any mortgage, deed of trust, lien (except
for any lien for Taxes not yet due and payable), pledge, security interest,
charge, option, right of refusal, easement, encroachment or other encumbrance.
(xx) "LLC Agreement" shall mean the Second Amended and Restated
Limited Liability Company Agreement of Gallaxy Information Services, LLC,
substantially in the form of Exhibit H, to be
5
entered into by TOIC Holdings, LLC, Xxxxxx and Xxxxxx on or before the Closing
Date.
(yy) "Loss" or "Losses" shall mean any and all liabilities,
losses, costs, claims, damages, penalties and expenses (including reasonable
attorneys' fees and expenses but excluding lost profits and consequential
damages).
(zz) "Xxxxxx Employment Agreement" shall mean the employment
agreement, substantially in the form of Exhibit B, to be entered into between
Purchaser and Xxxxxx on or before the Closing Date.
(aaa) "Material Adverse Change" shall mean a change in the
business, operations, liabilities, financial condition or results of operations
of the Business or the Assets that is material and adverse.
(bbb) "Material Adverse Effect" shall mean an effect on the
business, operations, liabilities, financial condition or results of operations
of the Business or the Assets that is material and adverse.
(ccc) "Person" shall mean any individual, corporation,
proprietorship, firm, partnership, limited partnership, limited liability
partnership, limited liability company, trust, association or other entity.
(ddd) "Personal Property Leases" shall have the meaning provided
in Section 2.2(b).
(eee) "Pre-Closing Covenant Breach" shall have the meaning
provided in Section 14.1.
(fff) "Pro-Rata Share" shall have the meaning provided in Section
14.2.
(ggg) "Purchase Price" shall have the meaning provided in Section
3.1.
(hhh) "Purchased Assets" shall have the meaning provided in
Section 2.1.
(iii) "Purchased Contracts" shall have the meaning provided in
Section 2.2.
(jjj) "Purchaser" shall have the meaning provided in the preamble.
(kkk) "Purchaser Benefit Plans" shall have the meaning provided in
Section 11.2.
6
(lll) "Purchaser Consents" shall have the meaning provided in
Section 6.3(a).
(mmm) "Purchaser Indemnified Party" shall have the meaning
provided in Section 14.2.
(nnn) "Real Property" shall have the meaning provided in Section
4.7(a).
(ooo) "Real Property Leases" shall have the meaning provided in
Section 2.2(a).
(ppp) "Related Agreement" shall mean any Contract that is or is to
be entered into at the Closing or otherwise pursuant to this Agreement. The
Related Agreements executed by a specified Person shall be referred to as "such
Person's Related Agreements," "its Related Agreements" or another similar
expression.
(qqq) "Retained Obligations" shall mean all liabilities and
obligations of Seller and the Business arising prior to the Closing, other than
the Assumed Obligations.
(rrr) "Seller" shall have the meaning provided in the preamble.
(sss) "Seller Consents" shall have the meaning provided in Section
4.3(a).
(ttt) "Seller Indemnified Party" shall have the meaning provided
in Section 14.3.
(uuu) "Shareholders" shall have the meaning provided in the
preamble.
(vvv) "Tax Return" shall mean any report, return, declaration or
other information filing required to be supplied to a Governmental Authority or
a Foreign Governmental Authority in connection with any Taxes, including all
exhibits, schedules and amendments thereto.
(www) "Taxes" shall mean all taxes, charges, fees, duties, levies
or other assessments, including, but not limited to, income, alternative or
add-on minimum, gross receipts, net proceeds, ad valorem, real and personal
property (tangible and intangible), sales, use, franchise, excise, value added,
stamp, user, transfer, fuel, excess profits, occupational, interest
equalization, windfall profits, license, payroll, capital stock, disability,
severance, employee's income withholding, other withholding, unemployment and
Social Security taxes, which are imposed by any Governmental Authority or any
Foreign Governmental
7
Authority, and such term shall include any interest, penalties or additions to
tax attributable thereto, whether disputed or not.
1.2 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Schedules attached to
this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender or the singular or plural form of words
herein shall not limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. The use of the term
"or" shall, unless the context explicitly contemplates otherwise, herein mean
"and/or." Reference to any Person includes such Person's successors and assigns
to the extent such successors and assigns are permitted by the terms of any
applicable agreement. Reference to a Person in a particular capacity excludes
such Person in any other capacity or individually. Reference to any agreement
(including this Agreement), document or instrument means such agreement,
document or instrument as amended or modified and in effect from time to time
in accordance with the terms thereof and, if applicable, the terms hereof.
Reference to any Law means such Law as amended, modified, codified, replaced or
re-enacted, in whole or in part, including rules, regulations, enforcement
procedures and any interpretations promulgated thereunder. References to
"Knowledge" of Purchaser or Seller, as the case may be, means the actual
knowledge of any of the individuals set forth on Schedule 1.2 and references to
"knowledge" of any other Person means the actual knowledge of such Person.
Underscored references to Articles, Sections, clauses, Exhibits or Schedules
shall refer to those portions of this Agreement, and any underscored references
to a clause shall, unless otherwise identified, refer to the appropriate clause
within the same Section in which such reference occurs. The use of the terms
"hereunder," "hereof," "hereto" and words of similar import shall refer to this
Agreement as a whole and not to any particular Article, Section or clause of or
Exhibit or Schedule to this Agreement.
8
ARTICLE II
SALE AND PURCHASE OF ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS
II.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, on and as of the Closing Date, Seller shall sell, assign, convey,
transfer and deliver to Purchaser, and Purchaser shall purchase, acquire and
take assignment and delivery of, all of Seller's title, right and interest in
and to all of the Seller's assets, including the following:
(a) Equipment. All equipment, machinery, fixed assets, furniture,
tools, computers, printers, vehicles and other items of personal
property (collectively, the "Equipment"), including the Equipment set
forth on Schedule 2.1(a);
(b) Inventory. All supplies, materials and other inventories
(collectively, the "Inventory");
(c) Information and Records. All books, records, files,
databases, plans, price lists, sales records, customer lists, lists
and files (collectively, the "Information and Records");
(d) Cash and Accounts Receivable. Subject to Section 3.2, all
Cash and Accounts Receivable;
(e) Intellectual Property and Goodwill. All Intellectual Property
and all customer relationships and related goodwill;
(f) Listed Assets. All assets set forth on Schedule 2.1(f); and
(g) Other Assets. All other tangible and intangible assets of
Seller.
All of the foregoing assets described in this Section 2.1, together with the
Purchased Contracts, are referred to herein collectively as the "Purchased
Assets."
II.2 Assignment of Contracts. Subject to the terms and conditions of
this Agreement, on and as of the Closing Date, Seller shall assign and transfer
to Purchaser, and Purchaser shall take assignment of, all of Seller's title,
right and interest in and to all of the Contracts to which Seller is a party
(except those Contracts listed on Schedule 2.2), including the following:
9
(a) Real Property Leases. The leases to or by Seller of real
property set forth on Schedule 2.2(a) (collectively, the "Real
Property Leases");
(b) Personal Property Leases. All leases to or by Seller of
personal property (collectively, the "Personal Property Leases"),
including the Personal Property Leases set forth on Schedule 2.2(b);
(c) Customer Contracts. All customer contracts for the provision
by Seller of goods or services to customers (collectively, the
"Customer Contracts"), including the Customer Contracts set forth on
Schedule 2.2(c); and
(d) Other Contracts. All other Contracts of Seller that are set
forth on Schedule 2.2(d).
All of the foregoing are referred to herein collectively as the
"Purchased Contracts."
II.3 Assumed Obligations. At the Closing, Purchaser shall assume, and
agree to pay, perform, fulfill and discharge all of Seller's obligations (a)
that are reflected in Seller's December 31, 1998 balance sheet, (b) incurred in
the ordinary course of business since December 31, 1998 other than
extraordinary undisclosed liabilities, (c) under the Purchased Contracts and
the Benefit Plans to the extent related to periods after the Closing or as
otherwise included in clause (a) or (b) above, and (d) all liabilities of the
Business arising from the operation of the Business after the Closing (the
"Assumed Obligations"). Buyer shall not and does not assume any liability or
obligation of Seller other than the Assumed Obligations.
ARTICLE III
PURCHASE PRICE AND PAYMENT
III.1 Payment of Purchase Price. On the Closing Date, in consideration
for the sale of the Purchased Assets by Seller, Purchaser shall (a) assume the
Assumed Obligations and (b) pay a purchase price (the "Purchase Price") of
$22,650,000. Purchaser shall pay $21,650,000 of the Purchase Price to Seller in
immediately available funds by electronic transfer to such account or accounts
as Seller shall specify to Purchaser in writing prior to the Closing Date.
Purchaser shall deposit the Holdback Amount into the Indemnity Escrow at or
prior to the Closing. The Purchase Price shall be subject to adjustment as
provided in Section 3.2.
III.2 Adjustments to Purchase Price.
10
(a) If the amount of Closing Working Capital (as defined below)
is greater than (i) the amount of current assets reflected on Seller's
December 31, 1998 audited balance sheet minus (ii) the amount of total
liabilities reflected on Seller's December 31, 1998 audited balance
sheet (i.e., $2,546,538) (such difference, "December 31 Working
Capital") then after the Closing in accordance with Sections 3.2(b)
and 3.2(c), the Purchase Price will be increased by the amount of such
excess and Purchaser shall pay the amount of such excess to Seller
within two (2) Business Days after the Closing Statement becomes final
and binding pursuant to Section 3.2(c). If the Closing Working Capital
is less than the December 31 Working Capital, the Purchase Price will
be decreased by the amount of such deficit and Seller and the
Shareholders shall pay the amount of such shortfall to Purchaser
within two (2) Business Days after the Closing Statement becomes final
and binding pursuant to Section 3.2(c); provided that each Shareholder
shall be required to pay only his Pro-Rata Share of such shortfall.
"Closing Working Capital" means the (i) the amount of current assets
reflected on the Closing Statement minus (ii) (A) the amount of total
liabilities reflected on the Closing Statement plus (B) an accrual for
a profit sharing contribution which as a percentage of Seller's net
income through the Closing Date is equal to the percentage that
Seller's 1998 profit sharing contribution represented of Seller's 1998
net income.
(b) Within sixty (60) days after the Closing Date, Purchaser
shall prepare and deliver to Seller at Purchaser's expense a statement
setting forth in reasonable detail the amount of all current assets
and the amount of Closing Working Capital, as of the Closing Date (the
"Closing Statement"), which shall be prepared by Purchaser in
accordance with GAAP applied on a consistent basis and using the same
accounting policies and procedures used to prepare Seller's audited
balance sheet as of December 31, 1998 and the related statement of
income for the twelve months ended December 31, 1998. Upon Seller's
request, Purchaser shall make available to Seller the work papers and
back-up material used by Purchaser in preparing the Closing Statement
and such other documents as Seller may reasonably request in
connection with its review of the Closing Statement.
(c) Within thirty (30) days after Seller's receipt of the Closing
Statement, Seller shall deliver to Purchaser a written statement
describing its objections, if any, to the Closing Statement. If Seller
does not raise any objections in a written statement within such
thirty-day period, the Closing Statement shall thereupon become final
and binding upon all parties. If Seller does raise objections in a
written statement within such thirty-day period, and the parties
11
cannot resolve such objections within ten (10) days after Purchaser's
receipt of Seller's written statement of objections, any remaining
disputes shall be resolved by a nationally recognized independent
accounting firm mutually agreeable to Purchaser and Seller (the
"Accounting Firm"). If the parties are unable to select a mutually
agreeable accounting firm, Purchaser and Seller shall each select an
independent accounting firm which firms shall select a third
independent accounting firm which shall resolve the dispute. The
Accounting Firm shall be instructed to resolve such disputes within
thirty (30) days after its appointment. The resolution of disputes by
the Accounting Firm shall be set forth in writing and shall be
conclusive and binding upon all parties and the Closing Statement, as
modified by such resolution, shall become final and binding upon the
date of such resolution. The fees and expenses of the Accounting Firm
shall be apportioned by the Accounting Firm based on the degree to
which each party's claims were unsuccessful and shall be paid by the
parties in accordance with such determination. For example, if,
pursuant to this Section 3.2(c), Seller submitted an objection
affecting the Purchase Price in the amount of $100,000 and prevailed
as to $45,000 of the amount, then Seller would bear 55% of the fees
and expenses of the Accounting Firm.
III.3 Allocation of Consideration. The Purchase Price for the Purchased
Assets shall be allocated in accordance with Section 1060 of the Code among the
Purchased Assets as set forth on Schedule 3.3. Following the Closing, Purchaser
and Seller and their respective Affiliates in connection with their respective
U.S. federal, state and local income Tax Returns and other filings (including
Internal Revenue Service Form 8594) shall not take any position inconsistent
with such allocation. Any adjustment to the Purchase Price shall be allocated
as provided by Temp. Treas. Reg.
ss. 1.1060-1T(f).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as of the date hereof as
follows:
IV.1 Due Incorporation. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois, with all
requisite corporate power and authority to own, lease and operate its
properties and to carry on the Business as they are now owned, leased, operated
and carried on.
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IV.2 Due Authorization. Seller has full power and authority to
execute, deliver and perform this Agreement and its Related Agreements and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Seller of this Agreement and its Related Agreements
and the consummation by Seller of the transactions contemplated hereby and
thereby have been duly and validly approved by Seller's board of directors and
by the Shareholders and no other actions or proceedings on the part of Seller
or any of the Shareholders are necessary to authorize the execution, delivery
and performance by Seller of this Agreement or its Related Agreements or the
consummation by Seller of the transactions contemplated hereby and thereby.
Seller has duly and validly executed and delivered this Agreement and has duly
and validly executed and delivered (or prior to or at the Closing will duly and
validly execute and deliver) its Related Agreements. This Agreement constitutes
a legal, valid and binding obligation of Seller, and Seller's Related
Agreements upon execution and delivery by Seller will constitute legal, valid
and binding obligations of Seller, in each case, enforceable in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect that affect
the enforcement of creditors' rights generally, by equitable limitations on the
availability of specific remedies and by principles of equity.
IV.3 Consents and Approvals; No Conflicts.
(a) Except as set forth on Schedule 4.3 (the "Seller Consents"),
no consent, authorization or approval of, or filing or registration
with, any Governmental Authority (or, to the Knowledge of Seller, any
Foreign Governmental Authority) or any other Person is necessary in
connection with the execution, delivery and performance by Seller of
this Agreement and its Related Agreements and the consummation by
Seller of the transactions contemplated hereby or thereby; and
(b) Except as set forth on Schedule 4.3, the execution, delivery
and performance by Seller of this Agreement and its Related Agreements
and the consummation by Seller of the transactions contemplated hereby
and thereby do not and will not (i) violate any Law or any judgment,
order, decree or award applicable to or binding on Seller, the
Purchased Assets or the Business; (ii) violate or conflict with,
result in a breach or termination of, constitute a default or give any
third party any additional right (including a termination or
acceleration right) under, permit cancellation of, result in the
creation of any Lien upon any of the Assets under, or result in or
constitute a circumstance which, with or without notice or lapse of
time or both, would constitute any of the foregoing under, any
Contract to which Seller is a party or by which Seller or any of its
assets are bound; (iii) permit the
13
acceleration of the maturity of any indebtedness of Seller or
indebtedness secured by any of the Purchased Assets; or (iv) violate
or conflict with any provision of the articles of incorporation or
bylaws of Seller.
IV.4 Business Information. Seller has furnished Purchaser with true and
complete copies of the Business Financial Information. The Business Financial
Information has been prepared from the books and records of Seller. Seller's
audited balance sheet as of December 31, 1998 and the related statement of
income for the twelve months ended December 31, 1998 have been prepared in
accordance with GAAP, applied on a basis consistent with preceding years and
present fairly in all material respects the financial condition of Seller at
the date indicated and the results of its operations for the period then ended.
Seller's unaudited balance sheet as of February 28, 1999 and the related
statement of income for the two months ended February 28, 1999 have been
prepared from the books and records of the Seller, have been prepared in
accordance with GAAP (except for the absence of footnote disclosure and subject
to normal year end adjustments consistent with prior years) and present fairly
in all material respects the financial condition of Seller at the date
indicated and the results of its operations for the period then ended.
IV.5 No Material Adverse Effects or Changes. Except as set forth on
Schedule 4.5, since December 31, 1998 until the date hereof, Seller has
conducted the Business and maintained the Assets in all material respects only
in the ordinary course and consistent with past practices. Without limiting the
foregoing, except as set forth on Schedule 4.5, since December 31, 1998 until
the date hereof, Seller has not with respect to the Business or the Assets:
(a) suffered any Material Adverse Change;
(b) suffered any material damage, destruction or loss to any of
the Assets whether or not covered by insurance;
(c) sold, transferred, conveyed, assigned or otherwise disposed
of any of its assets having an aggregate value in excess of $50,000,
other than in the ordinary course of business and consistent with past
practice;
(d) declared, set aside or paid, directly or indirectly, any cash
or noncash dividend or other cash or noncash distribution in respect
of any of the securities of Seller except for (i) tax distributions
and (ii) other distributions; provided that the aggregate amount of
distributions under clauses (i) and (ii) shall not result in the
Closing Working Capital being lower than the December 31 Working
Capital;
(e) written down the value of any assets of Seller or written off
as uncollectible any accounts receivable except in
14
the ordinary course of business, none of which individually or in the
aggregate are material;
(f) increased compensation payable or to become payable to any of
the officers, directors or employees of Seller or any bonus payment or
arrangement made with any such person, or any material change in
personnel policies or benefits except in the ordinary course of
business;
(g) amended or terminated (other than in accordance with its
terms) any Contract to which Seller is a party or licensee, except in
the ordinary course of business;
(h) waived any right of any material value;
(i) committed to any labor organization which represents, or
proposes to represent, Seller's employees;
(j) received notice from any customer as to the customer's
intention not to conduct business with Seller, the result of which
loss or losses of business, individually or in the aggregate, has had
or could reasonably be expected to be material;
(k) changed its accounting principles; or
(l) agreed to do any of the foregoing.
IV.6 Title to Properties. Except as set forth on Schedule 4.6, Seller
has good and valid title to the Purchased Assets, free and clear of any Lien.
Except as set forth on Schedule 4.6 and subject to obtaining all Seller
Consents, Seller has the full right to sell, convey, transfer, assign and
deliver the Purchased Assets to Purchaser. Except as set forth in Schedule 4.6
and subject to obtaining all Seller Consents, at the Closing Seller shall
convey to Purchaser good and valid title to all of the Purchased Assets, free
and clear of any Lien.
IV.7 Real Property.
(a) Schedule 2.2(a) sets forth (i) a true, accurate and complete
list of all leases of real property to which Seller is a party and
which provide for the lease to or by Seller of any real property (all
such real property leased to Seller, collectively, the "Real
Property") and (ii) the street addresses of all of the Real Property.
The Real Property constitutes all of Seller's real property and real
property interests;
(b) All of the Real Property Leases are in full force and effect,
and are valid and enforceable in accordance with
15
their respective terms, except as may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect that affect the enforcement of creditors' rights generally, by
equitable limitations on the availability of specific remedies and by
principles of equity; and
(c) Except as set forth on Schedule 4.7, Seller is not in breach
of any provision of, and is not in default under the terms of, and no
event has occurred which with or without notice or lapse of time or
both would constitute such a default by Seller under the terms of, any
Real Property Lease, and as of the date hereof no other party to any
Real Property Lease is in breach of any provision of, or is in default
under the terms of, and no event has occurred which with or without
notice or lapse of time or both would constitute such a default by
such other party under the terms of, any Real Property Lease.
IV.8 Equipment; Personal Property. Schedule 2.1(a) includes a true,
accurate and complete list as of December 31, 1998 of all of the Equipment
having an original acquisition cost of $5,000 or more. Schedule 2.2(b) sets
forth a true, complete and accurate list as of the date hereof of each Personal
Property Lease that requires a payment by any party in excess of, or a series
of payments which in the aggregate exceed, $10,000.
IV.9 Contracts. Schedules 2.2(a), 2.2(b), 2.2(c) and 2.2(d) set forth a
true, accurate and complete list as of the date hereof of all Contracts of the
following types to which Seller is a party and which relate primarily to the
Business:
(a) any Customer Contract that requires a payment by any party in
excess of, or a series of payments which in the aggregate exceed,
$10,000;
(b) any Contract of any kind with any director, officer or
employee of Seller, including any Contract of any kind with any
Employee involving any post-termination commission, benefit or payment
other than retirement benefits paid pursuant to a union, employee or
employer sponsored benefit plan;
(c) any Contract with a sales representative, sales agency,
advertising agency or other Person engaged in sales, distributing or
promotional activities, or any Contract to act as one of the foregoing
on behalf of any Person;
(d) any Contract involving any restrictions with respect to the
geographical area of operations or scope or type of business of
Seller; and
16
(e) any other Contract that requires a payment by any party in
excess of, or a series of payments which in the aggregate exceed,
$10,000.
Seller has furnished Purchaser with true and complete copies of all written
Contracts and summaries of all oral Contracts.
IV.10 Employee Benefit Plans. (a) Schedule 4.10 sets forth a true,
accurate and complete list as of the date hereof of all "employee welfare
benefit plans" or "employee pension benefit plans" as those terms are
respectively defined in sections 3(1) and 3(2) of ERISA, and all retirement or
deferred compensation plans, incentive compensation plans, stock plans,
vacation pay, severance pay, bonus or benefit arrangements, insurance or
hospitalization programs or any other fringe benefit arrangements which do not
constitute "employee benefit plans" (as defined in section 3(3) of ERISA),
which Seller maintains, is or may become or in the past has been obligated
(including obligations to make contributions or other payments) with respect to
any present or former employees, officers, directors, agents, consultants, or
similar persons providing services to or for Seller (collectively, the "Benefit
Plans") in connection with such services. True, accurate and complete copies or
descriptions of the Benefit Plans (including related trust agreements and the
most recent Form 5500, IRS determination letters and summary plan descriptions
to the extent applicable) have been supplied to Purchaser. None of the Benefit
Plans are subject to Title IV of ERISA;
(b) All Benefit Plans are and at all times have been in all material
respects maintained, funded and administered in compliance with ERISA, the
Code, the Age Discrimination in Employment Act of 1967, as amended, and other
applicable laws and regulations. Neither Seller nor to the Knowledge of Seller
any Benefit Plan fiduciary has engaged in any "prohibited transaction" as
defined in Section 406 of ERISA or in Section 4975 of the Code, with respect to
any Benefit Plan; and
(c) Seller has (i) filed or caused to be filed all returns and reports
on the Benefit Plans that it is required to file and (ii) paid or made adequate
provision for all fees, interest, penalties, assessments or deficiencies that
have become due pursuant to those returns or reports or pursuant to any
assessment or adjustment that has been made relating to those returns or
reports. All other fees, interest, penalties and assessments that are payable
by or for Seller with respect to the Benefit Plans have been timely reported,
fully paid and discharged. There are no unpaid fees, penalties, interest or
assessments due from Seller or from any other person with respect to the
Benefit Plans that are or could reasonably be expected to become a lien or
encumbrance on any Seller asset or otherwise adversely affect any of Seller's
assets. Seller has collected or withheld all amounts that are required to be
collected or withheld by it to discharge its obligations with
17
respect to the Benefit Plans, and all of those amounts have been paid to the
appropriate governmental authority or set aside in appropriate accounts for
future payment when due.
IV.11 Employment and Labor Matters. Except as set forth on Schedule
4.11, since December 31, 1995 until the date hereof there has been no (i)
unfair labor practice proceeding, labor grievance or labor arbitration or (ii)
labor strike, slow-down, work stoppage or other material labor dispute, in any
case actually pending or, to the Knowledge of Seller, threatened involving the
Seller. Except as set forth on Schedule 4.11, on the date hereof none of the
Employees is covered by any collective bargaining agreement.
IV.12 No Material Defaults or Violations. Except as set forth on
Schedule 4.12:
(a) Seller is not in breach of any provision of, nor is it in
default under the terms of, any Purchased Contract, and to the
Knowledge of Seller no other party to any Purchased Contract is in
breach of any provision of, or is in default under the terms of, any
Purchased Contract except for such breaches and defaults which are not
likely to have a Material Adverse Effect; and
(b) Seller and the Assets are in compliance in all material
respects with all Laws (and, to the Knowledge of Seller, all Foreign
Laws) applicable to the Business or the Assets. Seller holds all
licenses from Governmental Authorities (and, to the Knowledge of
Seller, all Foreign Governmental Authorities) necessary in connection
with the Business and such licenses are in full force and effect.
IV.13 Litigation.
(a) Except as set forth on Schedule 4.13, there are no actions,
suits, proceedings or other litigation pending or, to the Knowledge of
Seller, threatened against or affecting Seller or any of its officers,
directors, employees or stockholders in their capacity as such before
any court or other Governmental Authority (or, to the Knowledge of
Seller, any Foreign Governmental Authority) with respect to the
Business. Except as set forth on Schedule 4.13, neither Seller nor any
of the Purchased Assets is subject to any order, judgment, decree,
injunction or consent order of or with any court or other Governmental
Authority (or, to the Knowledge of Seller, any Foreign Governmental
Authority); and
(b) There are no claims, demands, actions, suits, mediations,
arbitrations, proceedings, injunctions or other litigation pending or,
to the Knowledge of Seller, threatened by or against Seller, with
respect to this Agreement or any of
18
the Related Agreements, or in connection with the transactions
contemplated hereby or thereby.
IV.14 Brokers. Seller has not used any broker or finder in connection
with the transactions contemplated hereby except for Xxxxxxx Xxxxx Securities
Inc., the fees and expenses of which will be paid by Seller. Neither Purchaser
nor any Affiliate of Purchaser has or shall have any liability or otherwise
suffer or incur any Loss as a result of or in connection with any brokerage or
finder's fee or other commission of any Person retained by Seller in connection
with any of the transactions contemplated by this Agreement or the Related
Agreements.
IV.15 Taxes.
(a) Seller has duly and timely filed all required Tax returns, reports
and estimates for all periods for which any such returns, reports and estimates
were due, and all amounts shown thereon to be due and payable have been paid in
full except as may be contested in good faith. All of such returns, reports and
estimates are true and complete in all material respects. Seller has withheld
all Taxes required to be withheld under applicable law and regulations, and
such withholdings have either been paid to the proper Governmental Authority or
Foreign Governmental Authority, as the case may be, or set aside in accounts
for such purpose, or accrued, reserved against and entered upon the books of
Seller, as the case may be; and
(b) There are, and after the date of this Agreement will be, no Tax
deficiency (including penalties and interest) of any kind assessed against or
relating to Seller with respect to any taxable periods ending on or before the
Closing Date of a character that would result in a Lien upon any of the
Purchased Assets (other than Liens for current Taxes not yet due and payable)
or that would result in any claim against Purchaser.
IV.16 Environmental Matters.
To the Knowledge of Seller, there are no conditions existing currently
which are reasonably likely to subject Seller to damages, penalties, injunctive
relief or cleanup costs under any federal, state or local environmental laws,
rules or regulations ("Environmental Laws") or which require or are likely to
require cleanup, removal, remedial action or other response by Seller pursuant
to Environmental Laws.
IV.17 Intellectual Property.
(a) Seller has received no claims or demands, and no proceedings are
pending or, to the Knowledge of Seller, threatened by any third party,
pertaining to or challenging Seller's right to
19
use any of the Intellectual Property used by Seller in the Business;
(b) To the Knowledge of Seller, Seller is not infringing upon or
otherwise acting adversely to any trademark, trade name, patent or copyright
owned by a third party;
(c) There are no royalty agreements between Seller and any third party
relating to any of the Intellectual Property used by Seller in the Business;
and
(d) The Intellectual Property listed and described on Schedule 4.17
constitutes all of the intangible and intellectual property used by Seller in
connection with the Business and, to the Knowledge of Seller, constitutes all
such property necessary in connection with owning and operating the Business.
IV.18 Computer Matters.
Schedule 4.18 sets forth a complete and accurate list of all software
owned or licensed by Seller in connection with the Business and all related
computer hardware used by Seller in connection with the Business. All of the
material software programs owned by Seller and to the Knowledge of Seller, all
other material software used by Seller and material software programs used by
Seller's significant vendors, suppliers and banks, are year 2000 compliant such
that attaining the year 2000 will not have a Material Adverse Effect.
IV.19 Proper Business Practices.
Neither Seller nor, to the Knowledge of Seller, its officers,
managers, employees, agents and representatives have, to obtain or retain
business for Seller, directly or indirectly, offered, paid or promised to pay,
or authorized the payment of any money or thing of value, or any commission
payment to (i) any person who is an official, officer, agent, employee or
representative of any governmental body or of any existing or prospective
customer, (ii) any political party or official thereof, (iii) any candidate for
political or political party office, or (iv) any other individual or entity
while knowing or having reason to believe that all or any portion of such money
or thing of value would be offered to any such person or entity referred to in
clause (i), (ii) or (iii) above. Each transaction of the Business is properly
and accurately recorded on the books and records of Seller in all material
aspects.
IV.20 Relations with Customers.
Except as disclosed on Schedule 4.20, to the Knowledge of Seller, (a)
there is no fact, condition or event that would
20
materially and adversely affect its relationship with any customer, and (b) no
supplier, sponsor or exhibitor intends to terminate or materially reduce its
relationship with the Business in the future or as a result of the consummation
of the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder, severally and not jointly, represents and warrants
to Purchaser as of the date hereof as follows:
V.1 Due Authorization. Such Shareholder has full power and authority
to execute, deliver and perform this Agreement and his Related Agreements and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by such Shareholder of this Agreement and his Related
Agreements and the consummation by such Shareholder of the transactions
contemplated hereby and thereby have been duly and validly approved by such
Shareholder and no other actions or proceedings on the part of such Shareholder
are necessary to authorize the execution, delivery and performance by such
Shareholder of this Agreement or his Related Agreements or the consummation by
such Shareholder of the transactions contemplated hereby and thereby. Such
Shareholder has duly and validly executed and delivered this Agreement and has
duly and validly executed and delivered (or prior to or at the Closing will
duly and validly execute and deliver) his Related Agreements. This Agreement
constitutes a legal, valid and binding obligation of such Shareholder, and such
Shareholder's Related Agreements upon execution and delivery by such
Shareholder will constitute legal, valid and binding obligations of such
Shareholder, in each case, enforceable in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect that affect the
enforcement of creditors' rights generally, by equitable limitations on the
availability of specific remedies and by principles of equity.
V.2 Consents and Approvals. No consent, authorization or approval of,
or filing or registration with, any Governmental Authority or any other Person
is necessary in connection with the execution, delivery and performance by such
Shareholder of this Agreement and his Related Agreements and the consummation
by such Shareholder of the transactions contemplated hereby or thereby.
21
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND GUARANTOR
Each of Purchaser and Guarantor represents and warrants to Seller and
the Shareholders as of the date hereof as follows:
VI.1 Due Incorporation; Ownership. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, with all requisite power and authority to own, lease and
operate its properties and to carry on its business as they are now owned,
leased, operated and carried on. As of the date hereof, Purchaser is, and as of
the Closing Date, Purchaser will be, a wholly-owned subsidiary of Gallaxy
Information Services, LLC. Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as they are now owned, leased, operated
and carried on.
VI.2 Due Authorization. Each of Purchaser and Guarantor has full power
and authority to execute, deliver and perform this Agreement and its Related
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by each of Purchaser and Guarantor of
this Agreement and its Related Agreements and the consummation by each of
Purchaser and Guarantor of the transactions contemplated hereby and thereby
have been duly and validly approved by Purchaser's and Guarantor's, as the case
may be, board of directors and no other actions or proceedings on the part of
Purchaser or Guarantor are necessary to authorize the execution, delivery and
performance by Purchaser or Guarantor of this Agreement or its Related
Agreements or the consummation by Purchaser or Guarantor of the transactions
contemplated hereby and thereby. Each of Purchaser and Guarantor has duly and
validly executed and delivered this Agreement and has duly and validly executed
and delivered (or prior to or at the Closing will duly and validly execute and
deliver) its Related Agreements. This Agreement constitutes a legal, valid and
binding obligation of each of Purchaser and Guarantor and Purchaser's and
Guarantor's Related Agreements upon execution and delivery by Purchaser and
Guarantor, as the case may be, will constitute legal, valid and binding
obligations of Purchaser and Guarantor, respectively, in each case, enforceable
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
in effect that affect the enforcement of creditors' rights generally, by
equitable limitations on the availability of specific remedies and by
principles of equity.
VI.3 Consents and Approvals; No Conflicts.
22
(a) Except for the consents set forth on Schedule 6.3 (the
"Purchaser Consents"), no consent, authorization or approval of, or
filing or registration with, any Governmental Authority (or, to the
Knowledge of Purchaser, any Foreign Governmental Authority) or any
other Person is necessary in connection with the execution, delivery
and performance by either Purchaser or Guarantor of this Agreement and
their Related Agreements and the consummation by Purchaser and
Guarantor of the transactions contemplated hereby or thereby; and
(b) Except as set forth on Schedule 6.3, the execution, delivery
and performance by Purchaser and Guarantor of this Agreement and their
Related Agreements and the consummation by Purchaser and Guarantor of
the transactions contemplated hereby and thereby do not and will not
(i) violate any Law (or, to the Knowledge of Purchaser, any Foreign
Law) or any judgment, order, decree or award applicable to or binding
on Purchaser or Guarantor or any of its properties or assets; (ii)
violate or conflict with, result in a breach or termination of,
constitute a default or give any third party any additional right
(including a termination or acceleration right) under, permit
cancellation of, result in the creation of any Lien upon any of the
assets or properties of Purchaser or Guarantor under, or result in or
constitute a circumstance which, with or without notice or lapse of
time or both, would constitute any of the foregoing under, any
Contract to which Purchaser or Guarantor is a party or by which
Purchaser or Guarantor or any of their respective assets are bound;
(iii) permit the acceleration of the maturity of any indebtedness of
Purchaser or Guarantor or indebtedness secured by any of its assets or
properties; or (iv) violate or conflict with any provision of the
articles of incorporation or bylaws or similar organizational
instruments of Purchaser or Guarantor.
VI.4 Litigation. As of the date hereof, there are no claims, demands,
actions, suits, arbitrations, mediations, proceedings, injunctions or other
litigation pending or, to the Knowledge of Purchaser, threatened by or against
Purchaser, with respect to this Agreement or any of the Related Agreements or
in connection with the transactions contemplated hereby or thereby.
VI.5 Financing. Purchaser has internal resources or financing
commitments from responsible financial institutions in connection with the
acquisition of the Purchased Assets in an aggregate amount sufficient to
consummate the transactions contemplated hereby and by the Related Agreements,
and Purchaser has provided evidence of such resources or commitments to Seller.
23
VI.6 Due Diligence. Purchaser is a sophisticated Person that was
advised by knowledgeable counsel and other representatives in connection with
this Agreement, and Purchaser and its representatives have been permitted
access to the management, facilities and books and records of Seller for the
purpose of conducting a due diligence review of the Business and has had the
opportunity to discuss with such management the Business and such other matters
relating thereto and the transactions contemplated hereby as Purchaser has
elected in its sole discretion.
VI.7 Brokers. Except as set forth on Schedule 6.7, neither Purchaser
nor any of its Affiliates has used any broker or finder in connection with the
transactions contemplated hereby, and neither Seller nor any Affiliate of
Seller has or shall have any liability or otherwise suffer or incur any Loss as
a result of or in connection with any brokerage or finder's fee or other
commission of any Person retained by Purchaser or any of its Affiliates in
connection with any of the transactions contemplated by this Agreement or the
Related Agreements.
ARTICLE VII
COVENANTS OF SELLER
Seller agrees to perform each of the following covenants:
VII.1 Implementing Agreement. Subject to the terms and conditions
hereof, Seller shall take all commercially reasonable action required of it to
fulfil its obligations under the terms of this Agreement and shall otherwise
use all commercially reasonable efforts to facilitate the consummation of the
transactions contemplated hereby.
VII.2 Consents and Approvals. Seller shall cooperate with Purchaser in
attempting to obtain such Seller Consents as Purchaser reasonably requests.
Seller shall make, or cause to be made, all filings, notices, applications,
statements and reports consistent with the terms of this Agreement and the
Related Agreements to all Governmental Authorities that are required to be made
prior to the Closing Date by or on behalf of Seller or any of its Affiliates
pursuant to any applicable Law in connection with this Agreement and its
Related Agreements and the transactions contemplated hereby and thereby. Seller
shall cooperate with Purchaser in making all filings, notices, applications,
statements and reports that are required to be made prior to the Closing Date
by or on behalf of Purchaser or any of its Affiliates pursuant to any
applicable Law in connection with this Agreement and its Related Agreements and
the transactions contemplated hereby and thereby.
24
If Seller is unable to obtain a necessary consent from a third
party to the assignment of a Contract to Purchaser by the Closing Date
("Consent-Pending Contract"), Seller shall so advise Purchaser and Purchaser
shall receive the benefits of such Consent- Pending Contract on and after the
Closing Date. Such ConsentPending Contracts will be treated as Purchased
Contracts for purposes hereof, and Purchaser will be responsible for all of the
obligations under such Contracts arising after the Closing Date. No Contract
shall be assigned prior to receipt of the consent. If at any time, Purchaser is
not able to receive substantially all of the material benefits under any
Consent-Pending Contract, such Contract shall thereafter be treated as a
Contract not to be assumed by Purchaser and Seller shall be responsible for the
obligations thereunder. If at anytime after the Closing Date, any necessary
third-party consent shall be received with respect to a Consent-Pending
Contract, such Consent-Pending Contract shall be assigned to and assumed by
Purchaser effective as of the date of such consent; provided, that if any such
consent is received more than nine months after the Closing Date, Purchaser
may, but is not obligated to, assume such Consent-Pending Contract.
VII.3 Preservation of Business. Except as set forth on Schedule 7.3 or
with the prior written consent of Purchaser, which consent shall not be
unreasonably withheld:
(a) until the Closing, Seller shall (i) operate the Business,
including maintaining the Assets, in the usual, regular and ordinary
course and in a manner consistent with past practice and in compliance
in all material respects with all Laws, (ii) use all commercially
reasonable efforts to preserve the goodwill and advantageous
relationships of the Business with customers and suppliers of the
Business and (iii) notify Purchaser of (A) any event of which Seller
has Knowledge and which would cause any of the representations or
warranties of Seller contained herein to be inaccurate in any material
respect or would reasonably be expected to have a Material Adverse
Effect; (B) an event of loss with respect to any of the Purchased
Assets in excess of $50,000; (C) any material violation by Seller or
notice of any alleged violation of any Law; or (D) any notice of
breach or default or termination of any Contract other than pursuant
to its terms; provided that, except for Seller's liability as a result
of an inaccurate representation or warranty under Section 14.2(a),
Seller shall not have any liability or obligation to any Purchaser
Indemnified Party for any breach of or failure by Seller to perform
any covenant or obligation in this clause (iii); and
(b) without limiting the generality of clause (a), until the
Closing, Seller shall not with respect to the Business:
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(i) sell, transfer, convey, assign or otherwise
dispose of any asset having a value in excess $10,000 or
$50,000 in the aggregate, other than in the ordinary course
of business and consistent with past practice,
(ii) authorize or make any capital improvements,
capital purchases or other capital expenditures that in the
aggregate are in excess of $50,000,
(iii) terminate (except at the anticipated
expiration thereof) or make any material amendment to any of
the Purchased Contracts, or reduce or waive any material
payment or right thereunder, or agree to any material
compromise or settlement with respect thereto,
(iv) terminate the employment or increase the
compensation of any Employee, other than in the ordinary
course of business and consistent with past practice,
(v) enter into any Contract which (A) will be a
Purchased Contract and (B) has a term of more than twelve
(12) months, or
(vi) enter into any other Contract, which requires a
payment by any party in excess of, or a series of payments
which in the aggregate exceed, $10,000 and which requires the
performance of any material obligation by Purchaser after the
Closing Date.
(c) Without limiting the generality of clause (a), until the
Closing, Seller shall:
(i) maintain Seller's assets in good working order,
ordinary wear and tear and casualty excepted and replace any
asset that is worn out, broken, stolen or destroyed, which
asset would have been replaced in the ordinary course of
business;
(ii) maintain in full force and effect policies of
liability and casualty insurance of substantially the same
type and coverage as currently carried;
(iii) not adopt or commit to adopt any Benefit Plan
other than those currently maintained;
(iv) not take any action inconsistent with
consummating the transactions contemplated by this Agreement
including negotiating, soliciting or accepting any offer with
any other party to purchase, directly or indirectly, all or a
material portion of the assets or capital stock of Seller;
and
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(v) follow Seller's usual and customary policy with
respect to collecting accounts receivable.
VII.4 Access to Information and Facilities. Prior to the Closing,
Seller shall (a) give Purchaser and Purchaser's representatives access during
normal business hours upon reasonable prior notice (but not less than one
Business Day's notice unless agreed to by Seller) to all of the Purchased
Contracts, the Real Property, the Equipment and the Information and Records,
(b) upon reasonable prior notice (but not less than one Business Day's notice
unless agreed to by Seller) to Seller make the management employees of Seller
available to Purchaser and its representatives as Purchaser and its
representatives shall from time to time reasonably request and (c) furnish to
Purchaser and its representatives any and all information concerning the
Business that Purchaser or its representatives reasonably request.
Notwithstanding the foregoing, Seller shall not be obligated to take any action
that would unreasonably disrupt the normal course of the Business or to violate
any Law or the terms of any Contract to which it is a party or to which any of
the Assets is subject.
VII.5 Confidentiality. After the Closing Date, Seller shall, and shall
cause its Affiliates to, maintain in strict confidence all non-public or
confidential information contained in the Information and Records in accordance
with the procedures it uses to protect its own information of a similar nature
and not disclose to any Person or use any such information; provided, that such
restrictions shall not apply to (i) any information which becomes publicly
available after the Closing Date through no fault of Seller or any of its
Affiliates, (ii) any information which is developed independently by Seller or
any of its Affiliates through Persons who have not had, either directly or
indirectly, access to or knowledge of such information, (iii) any information
which is legitimately received by Seller or any of its Affiliates from a third
party (provided such third party is not known by Seller to be bound by an
obligation of secrecy) or (iv) any disclosure required by Law or any
Governmental Authority, so long as notice of such disclosure is given to
Purchaser prior to making such disclosure and Seller cooperates with Purchaser
as Purchaser may reasonably request to resist such disclosure; and provided
further, that the restrictions in this Section 7.5 shall not apply to the use
by Seller of the Information and Records in connection with matters described
in Section 8.4.
VII.6 Tax Matters. After the Closing, Seller shall make available to
Purchaser such records related to the Business or the Purchased Assets as
Purchaser may reasonably require for the preparation of any Tax Returns or
other similar governmental reports or forms required to be filed by Purchaser
and such records as Purchaser may reasonably require for the defense of any
audit,
27
examination, administrative appeal or litigation of any such Tax Return or
other similar governmental report or form.
7.7 Information and Records. At or after the Closing, Seller shall
promptly transfer the Information and Records to Purchaser at Purchaser's
request in the same form and format in which such Information and Records exist
on the Closing Date. Seller shall have no obligation to provide the Information
and Records to Purchaser in any different form or format.
ARTICLE VIII
COVENANTS OF PURCHASER
Purchaser agrees to perform each of the following covenants:
VIII.1 Implementing Agreement. Subject to the terms and conditions
hereof, Purchaser shall take all commercially reasonable action required of it
to fulfil its obligations under the terms of this Agreement and shall use all
commercially reasonable efforts to facilitate the consummation of the
transactions contemplated hereby.
VIII.2 Consents and Approvals. Purchaser shall use all commercially
reasonable efforts to obtain all Purchaser Consents. Purchaser shall make, or
cause to be made, all filings, notices, applications, statements and reports
consistent with the terms of this Agreement and the Related Agreements to all
Governmental Authorities that are required to be made prior to the Closing Date
by or on behalf of Purchaser or any of its Affiliates pursuant to any
applicable Law in connection with this Agreement and its Related Agreements and
the transactions contemplated hereby and thereby. Purchaser shall cooperate
with Seller in making all filings, notices, applications, statements and
reports that are required to be made prior to the Closing Date by or on behalf
of Seller or any of its Affiliates pursuant to any applicable Law in connection
with this Agreement and its Related Agreements and the transactions
contemplated hereby and thereby.
VIII.3 Confidentiality.
(a) At all times prior to the Closing, Purchaser shall, and shall
cause its Affiliates to, maintain in strict confidence all confidential
information relating to Seller or any of its Affiliates not included in the
Purchased Assets that was obtained by Purchaser or any of its Affiliates in
connection with this Agreement or the Related Agreements or the transactions
contemplated hereby or thereby in accordance with the procedures it uses to
protect its own information of a similar nature and not disclose to any Person
(other than its employees, attorneys,
28
accountants and advisors who need to know) or use any such information;
provided, that such restrictions shall not apply to (i) any information which
becomes publicly available after the date of disclosure by Seller to Purchaser
through no fault of Purchaser or any of its Affiliates, (ii) any information
which prior to disclosure by Seller to Purchaser was properly within the
legitimate possession of Purchaser or any of its Affiliates, (iii) any
information which is developed independently by Purchaser or any of its
Affiliates through Persons who have not had, either directly or indirectly,
access to or knowledge of such information, (iv) any information which is
legitimately received by Purchaser or any of its Affiliates from a third party
(provided such third party is not known by Purchaser to be bound by an
obligation of secrecy) or (v) any disclosure required by Law or any
Governmental Authority, so long as notice of such disclosure is given to Seller
prior to making such disclosure and Purchaser cooperates with Seller as Seller
may reasonably request to resist such disclosure.
(b) At all times prior to the Closing, Purchaser shall, and shall
cause its Affiliates to, maintain in strict confidence all computer data,
software, firmware and other documentation that were obtained by Purchaser or
any of its Affiliates in connection with this Agreement or the Related
Agreements or the transactions contemplated hereby or thereby in accordance
with the procedures it uses to protect its own information of a similar nature
and not disclose to any Person (other than its employees, attorneys,
accountants and advisors who need to know) or use any such computer data,
software, firmware, documentation or materials without the prior written
consent of Seller or its licensors, as the case may be.
(c) If this Agreement is terminated for any reason, upon the request
of Seller, Purchaser shall promptly return any written materials it or any of
its Affiliates has received from Seller or its Affiliates in connection with
this Agreement or the Related Agreements or the transactions contemplated
hereby or thereby, together with any copies of such materials made by them, and
shall promptly return or destroy all analyses, compilations, studies and other
documents of or prepared by Purchaser or any of its Affiliates from such
information (and confirm to Seller in writing that it has done so).
(d) Purchaser shall use all commercially reasonable efforts to cause
its representatives, employees, attorneys, accountants and advisors to whom
information of the type referred to in this Section 8.3 is disclosed pursuant
to this Section 8.3 or otherwise to comply with the provisions of this Section
8.3 and shall be responsible for any failure by any such Person to so comply.
VIII.4 Post-Closing Access. After the Closing, Purchaser shall
make available to Seller such records related to the Business
29
or the Purchased Assets as Seller may reasonably require for the preparation of
any Tax Returns or other similar governmental reports or forms required to be
filed by Seller and such records as Seller may reasonably require for the
defense of any audit, examination, administrative appeal or litigation of any
such Tax Return or other similar governmental report or form or for the
investigation, prosecution or defense of any litigation, arbitration or other
dispute. Purchaser shall retain all such records for a period of at least seven
years. Purchaser shall notify Seller prior to the destruction of any such
records and shall provide Seller with any such records that Seller desires to
keep.
VII.5 Communications. Prior to the Closing, except solely in connection
with Purchaser's operation of its business in the ordinary course (which
communication shall not refer to this Agreement or the transactions
contemplated hereby), Purchaser shall not communicate with any of the customers
of the Business without the prior written approval of Seller, which consent
shall not be unreasonably withheld.
VII.6 Airline Reporting Corporation. Purchaser shall obtain a letter of
credit in favor of the Airline Reporting Corporation and shall cooperate with
Seller in having Seller's letter of credit with the Airline Reporting
Corporation terminated and released as promptly as practicable on or after the
Closing Date. Purchaser agrees to indemnify Seller and the Shareholders for any
draws against Seller's letter of credit with the Airline Reporting Corporation
which either (a) relate to the operation of the Business after the Closing Date
or (b) relate to the operation of the Business on or before the Closing Date
and are in respect of liabilities that are Assumed Obligations.
ARTICLE IX
CONDITIONS PRECEDENT
TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under Articles II and III of this
Agreement are subject to the satisfaction or waiver by Purchaser of the
following conditions precedent on or before the Closing Date:
IX.1 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of Seller contained herein and in its Related
Agreements shall have been true, accurate and correct in all material respects
on and as of the date hereof or of the Related Agreement, respectively, and
shall also be true, accurate and correct in all material respects on and as of
the Closing Date with the same force and effect as though made by Seller on and
as of the Closing Date; provided, that if one or more
30
of such representations or warranties are not true, accurate and correct in all
material respects on and as of any such date, the conditions precedent in this
Section 9.1 shall nevertheless be deemed satisfied unless the falsity,
inaccuracy or incorrectness of such representations or warranties would
reasonably be expected to have a Material Adverse Effect; provided, further,
that, subject to Section 14.8, satisfaction of the conditions set forth in this
Section 9.1 shall not constitute a waiver of Purchaser's rights to
indemnification pursuant to Article XIV resulting from any such breach.
IX.2 Compliance with Agreements and Covenants. Seller shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement and in its Related
Agreements to be performed and complied with by it on or prior to the Closing
Date.
IX.3 Certificate. Seller shall have delivered a certificate to
Purchaser, dated the Closing Date, representing and warranting as to compliance
by Seller with Sections 9.1 and 9.2.
9.4 Xxxx-Xxxxx-Xxxxxx. All waiting periods under the HSR Act shall
have expired or been earlier terminated without action by the Justice
Department or the Federal Trade Commission to prevent or alter in any material
respect the consummation of the transactions contemplated by this Agreement and
the Related Agreements or to impose a materially adverse requirement on
Purchaser in order to obtain approval under the HSR Act.
IX.5 Consents and Approvals. Purchaser shall have received written
evidence satisfactory to it that (a) all regulatory consents and approvals
(other than under the HSR Act) required for the consummation of the
transactions contemplated by this Agreement and the Related Agreements have
been obtained and become final orders and no such consent or approval shall
contain any condition, term or provision that is not acceptable to Purchaser in
its reasonable determination, (b) all other Purchaser Consents have been
obtained and (c) all other Seller Consents identified on Schedule 4.3 have been
obtained; provided that the closing condition described in clause (c) shall be
deemed to have been satisfied if the aggregate amount of estimated 1999 revenue
with respect to Purchased Contracts for which a Seller Consent is not obtained
is less than $500,000; provided further that, notwithstanding anything herein
to the contrary, the closing condition described in clause (c) shall be deemed
to have not been satisfied unless a Seller Consent is obtained related to item
9 on Schedule 2.2(c).
IX.6 Legal Actions or Proceedings. No legal action or proceeding by
any Governmental Authority or other Person shall have been instituted, and no
change in any applicable Law or
31
interpretation thereof by any Governmental Authority shall have occurred, which
enjoins, restrains or prohibits, or has resulted in substantial damages in
respect of, this Agreement or any Related Agreement or the consummation of the
transactions contemplated hereby or thereby, or which imposes any material
adverse obligation upon Purchaser or any of its Affiliates in connection with
the operation of the Business by Purchaser after the Closing or in connection
with the transfer of the Business or the Assets by Seller to Purchaser; and no
legal action or proceeding by any Governmental Authority
shall have been instituted that has a reasonable possibility of giving rise to
any injunction, restraint or prohibition in respect of, or has a reasonable
possibility of resulting in substantial damages in respect of, this Agreement
or any Related Agreement or the consummation of the transactions contemplated
hereby or thereby, or which has a reasonable possibility of imposing any
material adverse obligation upon Purchaser or any of its Affiliates in
connection with the operation of the Business by Purchaser after the Closing or
in connection with the transfer of the Business or the Assets by Seller to
Purchaser or otherwise materially and adversely affects the ability of
Purchaser to operate the Business in a similar manner to the manner in which it
is currently operated.
IX.7 No Material Adverse Change. Since the date of this Agreement, no
Material Adverse Change shall have occurred.
IX.8 Employment Agreements and Consulting Agreement. At or prior to the
Closing, Purchaser shall have received (a) the Xxxxxx Employment Agreement,
duly executed by Xxxxxx, (b) the Xxxxxx Employment Agreement, duly executed by
Xxxxxx and (c) the Consulting Agreement, duly executed by Xxxxxxxxx.
IX.9 Documents. Purchaser shall have received all of the agreements,
documents and items specified in Section 12.2.
IX.10 Investment by Xxxxxx and Xxxxxx. At or prior to the Closing, each
of Xxxxxx and Xxxxxx shall have invested $1,000,000 in an Affiliate of the
Purchaser pursuant to the terms of the LLC Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO
OBLIGATIONS OF SELLER AND SHAREHOLDERS
The obligations of Seller and the Shareholders under Article II of
this Agreement are subject to the satisfaction or waiver by Seller of the
following conditions precedent on or before the Closing Date:
32
X.1 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of Purchaser contained herein and in its Related
Agreements shall have been true, accurate and correct in all material respects
on and as of the date hereof or of the Related Agreement, respectively, and
shall also be true, accurate and correct in all material respects on and as of
the Closing Date with the same force and effect as though made by Purchaser on
and as of the Closing Date.
X.2 Compliance with Agreements and Covenants. Purchaser shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement and in its Related
Agreements to be performed and complied with by it on or prior to the Closing
Date.
X.3 Certificate. Purchaser shall have delivered a certificate to
Seller, dated the Closing Date, representing and warranting as to compliance by
Purchaser with Sections 10.1 and 10.2.
X.4 Xxxx-Xxxxx-Xxxxxx. All waiting periods under the HSR Act shall
have expired or been earlier terminated without action by the Justice
Department or the Federal Trade Commission to prevent or alter in any material
respect the consummation of the transactions contemplated by this Agreement and
the Related Agreements.
X.5 Consents and Approvals. Seller shall have received written
evidence satisfactory to it that (a) all regulatory consents and approvals
(other than under the HSR Act) required for the consummation of the
transactions contemplated by this Agreement and the Related Agreements have
been obtained and become final orders and no such consent or approval shall
contain any condition, term or provision not acceptable to Seller in its
reasonable determination, (b)(i) all other Seller Consents identified on
Schedule 4.3 have been obtained or (ii) as to any such Seller Consent not
obtained, Purchaser has agreed to close without such consent, waive liability
for failure to obtain such consent and indemnify Seller for costs associated
with such failure and (c) all other Purchaser Consents have been obtained.
X.6 Legal Actions or Proceedings. No legal action or proceeding by
any Governmental Authority or other Person shall have been instituted, and no
change in any applicable Law or interpretation thereof by any Governmental
Authority shall have occurred, which enjoins, restrains or prohibits, or has
resulted in substantial damages in respect of, this Agreement or any Related
Agreement or the consummation of the transactions contemplated hereby or
thereby, or which imposes any material adverse obligation upon Seller or any of
its Affiliates in connection with the transfer of the Business or the Assets by
Seller to Purchaser; and no legal action or proceeding by any Governmental
Authority shall have been instituted that has a reasonable possibility of
giving rise to any injunction, restraint or prohibition in respect of, or has a
reasonable possibility of resulting in substantial damages in respect of, this
Agreement or any Related Agreement or the consummation of the transactions
contemplated hereby or thereby, or which has a reasonable
33
possibility of imposing any material adverse obligation upon Seller or any of
its Affiliates in connection with the transfer of the Business or the Assets by
Seller to Purchaser.
X.7 Employment Agreements and Consulting Agreement. At or prior to
the Closing, Seller and the Shareholders shall have received (a) The Xxxxxx
Employment Agreement, (b) the Xxxxxx Employment Agreement and (c) the
Consulting Agreement, each duly executed by Purchaser.
X.8 Documents. Seller and the Shareholders shall have received all of
the agreements, documents and items specified in Section 12.3.
X.9 LLC Agreement. At or prior to the Closing, each of Xxxxxx and
Xxxxxx shall have received the LLC Agreement, duly executed by Purchaser.
ARTICLE XI
EMPLOYEES AND BENEFIT PLANS
XI.1 Employees.
(a) Schedule 11.1 sets forth a true, accurate and complete list
of the names, the titles or job descriptions and the hourly rate
schedule or annual compensation payable for the current fiscal year of
each employee of Seller, including employees on unpaid leave pursuant
to the Family and Medical Leave Act of 1993 and employees on long-term
disability (the "Employees"). From time to time prior to the Closing,
Seller shall promptly disclose in writing to Purchaser any changes to
the information set forth on Schedule 11.1 and upon such notice, any
individual added to such schedule shall be deemed an Employee, any
individual deleted from the schedule shall not be deemed an Employee
and any other information so disclosed shall be deemed added to
Schedule 11.1.
(b) Purchaser shall offer employment as of the Closing Date to
all of the Employees, except for Xxxxxxxxx. The offer of employment,
including, without limitation, wages, salaries and benefits, shall be
upon substantially the same or better terms and conditions as those
under which the Employees were employed by Seller. Purchaser agrees to
continue employment for any Employee hired pursuant to this Section
11.1 for a period of at least three months following the Closing Date;
provided that Purchaser may terminate an Employee's employment for
cause or performance reasons. Each Employee who accepts any offer of
employment from Purchaser and who becomes an employee of Purchaser
shall be referred to herein as a "Hired Employee." The employment by
Seller of each Hired Employee shall be terminated no later than the
Closing Date.
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(c) Prior to the Closing, Purchaser shall not and shall cause its
Affiliates not to (i), except solely in the operation by Purchaser of
its business in the ordinary course (which communication shall not
refer to this Agreement or the transactions contemplated hereby),
communicate with any of the Employees without the prior written
approval of Seller, which consent shall not be unreasonably withheld
or (ii) hire any Employee.
(d) The Closing Statement shall reflect an accrual for all
applicable wages, vacation pay, pay for other compensated absences and
other remuneration earned or accrued by the Employees as of the close
of business on the Closing Date. Seller shall be responsible for
making and remitting all payroll deductions to the appropriate taxing
authorities or trustees (such as any withheld Taxes and any pension or
other employee benefit plan contributions) with respect to such wages,
vacation pay, pay for other compensated absences and other
remuneration.
(e) Seller shall be responsible for the payment of all applicable
severance payments, if any, due to any of the Employees (other than
Hired Employees), arising on or prior to the Closing Date or arising
as a result of the transactions contemplated hereby and for providing
any appropriate Worker Adjustment and Retraining Notification Act
notices as may be required in connection with the transactions
contemplated hereby. Purchaser shall be responsible for the payment of
all applicable severance payments, if any, due to any of the Hired
Employees, including any such payments attributable to periods of
service prior to the Closing Date.
XI.2 Liabilities Under Benefit Plans.
(a) Purchaser agrees to assume, as of the Closing Date,
sponsorship of and liability for, all Benefit Plans to the extent such
liabilities constitute Assumed Obligations, including liability for
continuation coverage under section 4980B(f) of the Code arising with
respect to events occurring before, on or after the Closing Date.
Purchaser agrees to honor and to make required payments in accordance
with all Benefit Plans to the extent such liabilities constitute
Assumed Obligations, and further agrees that, for a period of six
months immediately following the Closing Date, it shall provide that
such employees and former employees may participate in plans of
Purchaser which provide benefits that are substantially comparable to
those provided to them under the Benefit Plans on the date of this
Agreement ("Purchaser Benefit Plans"). Purchaser agrees that for
periods after the Closing Date, it shall provide group health benefits
sufficient to satisfy the obligations of Seller and its Affiliates
under Section 4980B of the Code so that neither the Seller nor its
Affiliates shall incur any tax under Section 4980B or liability under
Part 6 of Title I of ERISA with respect to the Benefit Plans for
continuation coverage after the Closing Date (whether such obligation
arises on account of qualifying events occurring before, on or after
the Closing Date).
35
(b) Purchaser agrees that for all purposes of the Benefit Plans
and any Purchaser Benefit Plans under which a Hired Employee's benefit
depends, in whole or in part, on length of service, Hired Employees
shall be credited as of the Closing Date with service equal to the
service credited to them for such purposes under the comparable plan,
program or arrangement of Seller.
(c) Purchaser agrees that Hired Employees and any qualified
beneficiaries who are receiving or entitled to receive continuation
coverage pursuant to section 4980B(f) of the Code under any Benefit
Plan on the Closing Date shall be given credit for deductibles, co-
payments or out-of pocket expenses already incurred by such
individuals in respect of the plan year in which the Closing Date
occurs to the extent that they participate in any Benefit Plans or
Purchaser Benefit Plans following the Closing Date. Purchaser shall
waive any preexisting condition restriction or waiting period
limitation under any Purchaser Benefit Plans with respect to the Hired
Employees to the extent that such condition or limitation was waived
under the terms of the corresponding Benefit Plan or to the extent
that the Hired Employee or his eligible dependents have satisfied any
similar waiting period limitation under a corresponding Benefit Plan.
ARTICLE XII
CLOSING
XII.1 Closing. (a) The Closing shall take place at the offices of
Xxxxx, Xxxxx & Xxxxx, 000 X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10:00
a.m. on April 30, 1999 or at such other place, time and date as Seller and
Purchaser may mutually agree. All business activity related to the Business and
the Assets immediately before and up to the Closing shall be attributable to
Seller. Seller's ownership of the Purchased Assets shall be deemed to cease
immediately prior to the Closing. All business activity related to the Business
and the Assets immediately after the Closing shall be attributable to
Purchaser.
(b) The transactions contemplated by this Agreement shall not be
consummated unless and until the necessary waiting period with respect to
filings under the HSR Act has expired or shall have been earlier terminated,
and such consummation shall be permitted to occur without violation of the HSR
Act. If such conditions have not been met on the Closing Date, the Parties
shall execute and deliver an escrow agreement in a form mutually acceptable to
Purchaser and Seller (the "Closing Escrow Agreement") and, pursuant to the
Closing Escrow Agreement, (a) Purchaser shall deliver the Purchase Price to the
Closing Escrow Agent, (b) the transactions referred to in Section 3.2 may be
deferred until the termination of the Closing Escrow Agreement, and (c) each
party shall deliver to the Closing Escrow Agent all other closing documents
which otherwise would have been delivered to the other party pursuant to this
Agreement.
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XII.2 Deliveries by Seller. At the Closing, Seller shall deliver to
Purchaser the following:
(a) The Assignment and Assumption Agreement duly executed by
Seller;
(b) A xxxx of sale in the form set forth in Exhibit E duly
executed by Seller;
(c) A certificate of the secretary of Seller certifying
resolutions of the board of directors and of the shareholders of
Seller approving and authorizing the execution, delivery and
performance of this Agreement and its Related Agreements and the
consummation by Seller of the transactions contemplated hereby and
thereby (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of Seller);
(d) An opinion, dated as of the date of the Closing, of Xxxxx,
Xxxxx & Xxxxx, special counsel to Seller, to the effect noted on
Exhibit F;
(e) An assignment of Real Property Leases, duly executed by
Seller; and
(f) Such other documents and instruments as may be required by
any other provision of this Agreement or as may reasonably be required
to consummate the transactions contemplated by this Agreement and the
Related Agreements.
XII.3 Deliveries by Purchaser. At the Closing, Purchaser shall make the
payment described in Section 3.1 and deliver to Seller the following:
(a) The Assignment and Assumption Agreement duly executed by
Purchaser.
(b) A certificate of the secretary of Purchaser certifying
resolutions of the board of directors of Purchaser approving and
authorizing this Agreement and its Related Agreements and the
consummation by Purchaser of the transactions contemplated hereby and
thereby (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of Purchaser);
(c) An opinion, dated as of the date of the Closing, of Xxxxx X.
Xxxxx, general counsel of Guarantor, to the effect noted on Exhibit G;
and
(d) Such other documents and instruments as may be required by
any other provision of this Agreement or as may reasonably be required
to consummate the transactions contemplated by this Agreement and the
Related Agreements.
ARTICLE XXXX
XXXXXXXXXXX
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XIII.1 Termination. This Agreement may be terminated at any time on or
prior to the Closing Date:
(a) With the mutual written consent of Seller and Purchaser;
(b) By Purchaser, if there shall have been a material breach of
any representation or warranty of Seller hereunder or under any of its
Related Agreements and the falsity, inaccuracy or incorrectness of
such representation or warranty would reasonably be expected to have a
Material Adverse Effect or a material breach of any covenant of Seller
hereunder or under any of its Related Agreements, and in any case such
breach shall not have been remedied within thirty (30) days after
receipt by Seller of a notice in writing from Purchaser specifying the
breach and requesting such be remedied;
(c) By Seller, if there shall have been a material breach of any
covenant, representation or warranty of Purchaser hereunder or under
any of its Related Agreements, and such breach shall not have been
remedied within thirty (30) days after receipt by Purchaser of notice
in writing from Seller specifying the breach and requesting such be
remedied; or
(d) By Seller or Purchaser, if the Closing shall not have taken
place on or before April 30, 1999; provided, that the right to
terminate this Agreement under this Section 13.1(d) shall not be
available to any party whose failure to fulfill any of its obligations
under this Agreement has been the cause of or resulted in the failure
of the Closing to occur on or before such date.
In the event of any termination pursuant to this Section 13.1 (other
than pursuant to clause (a)), written notice setting forth the reasons therefor
shall forthwith be given by the terminating party to the other party.
XIII.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 13.1, all obligations and liabilities of the parties hereunder shall
terminate, except for the obligations and liabilities set forth in Sections
4.14, 6.7, 8.3, 16.1, 16.8, and 16.12, which shall survive the termination of
this Agreement. If the Agreement is terminated pursuant to Section 13.1(b),
Purchaser shall be entitled to pursue all legal and equitable remedies against
Seller and the Shareholders including specific performance. If the Agreement is
terminated pursuant to Section 13.1(c), Seller and the Shareholders shall be
entitled to pursue all legal and equitable remedies against Purchaser including
specific performance.
ARTICLE XIV
INDEMNIFICATION
38
XIV.1 Survival. The representations and warranties of the parties
hereto contained herein or in any Related Agreement or in any document
delivered at the Closing shall survive the Closing for a period of one (1) year
except for representations and warranties set forth in Sections 4.10, 4.15 and
4.16, which shall survive for the applicable statute of limitations. The
covenants and obligations of the parties hereto contained herein or in any
Related Agreement or in any document delivered at the Closing shall survive the
Closing, except that no claim regarding a breach of any covenant or obligation
contained herein occurring prior to the Closing (a "Pre-Closing Covenant
Breach") shall be first asserted after one (1) year following the Closing Date.
Neither Purchaser nor Seller shall have any liability with respect to any such
claim first asserted thereafter.
XIV.2 Indemnification by Seller and Shareholders. Subject to the
provisions set forth in Section 14.4, each of the Shareholders, severally and
not jointly, and Seller agrees to indemnify Purchaser and its Affiliates (each
a "Purchaser Indemnified Party") against, and agrees to hold each of them
harmless from, any and all Losses incurred or suffered by them arising out of
or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Seller or Shareholders in this Agreement or any
Related Agreement or any document delivered by Seller or Shareholders
at the Closing; provided, that a notice of the Purchaser Indemnified
Party's claim shall have been given to Seller not later than the close
of business on the first anniversary of the Closing Date; or
(b) any breach of or failure by Seller or Shareholders to perform
any covenant or obligation of Seller or Shareholders set forth in this
Agreement or any Related Agreement or any document delivered by Seller
or Shareholders at the Closing; provided, that in the case of
Pre-Closing Covenant Breaches, a notice of the Purchaser Indemnified
Party's claim shall have been given to Seller not later than the close
of business on the first anniversary of the Closing Date; or
(c) the Retained Obligations; or
(d) noncompliance with Laws applicable to the bulk sale or
transfer of the Purchased Assets.
Notwithstanding anything in this Agreement to the contrary, no Shareholder
shall be liable or responsible for more than his Pro-Rata Share of any Loss.
For purposes of this Agreement, the Shareholders' respective "Pro-Rata Share"
shall be as follows: Xxxxxxxxx, 76%; Xxxxxx, 14%; and Xxxxxx, 10%.
XIV.3 Indemnification by Purchaser. Subject to the provisions set forth
in Section 14.4, Purchaser agrees to indemnify Seller, the Shareholders and
their respective Affiliates (each a "Seller
39
Indemnified Party") against, and agrees to hold each of them harmless from, any
and all Losses incurred or suffered by them arising out of or in connection
with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser in this Agreement or any Related Agreement
or any document delivered by Purchaser at the Closing; provided, that
a notice of the Seller Indemnified Party's claim shall have been given
to Purchaser not later than the close of business on the first
anniversary of the Closing Date.
(b) any breach of or failure by Purchaser to perform any covenant
or obligation of Purchaser set forth in this Agreement or any Related
Agreement or any document delivered by Purchaser at the Closing;
provided, that in the case of Pre-Closing Covenant Breaches, a notice
of the Seller Indemnified Party's claim shall have been given to
Purchaser not later than the close of business on the first
anniversary of the Closing Date; or
(c) the Assumed Obligations or other debts, claims, obligations
or other liabilities relating to or arising out of the ownership or
operation of the Assets or the Business after the Closing Date.
XIV.4 Limitations on Indemnification.
(a) Neither Seller nor any Shareholder shall have any liability
pursuant to Section 14.2(a) unless the aggregate amount of Losses
incurred or suffered by the Purchaser Indemnified Parties from such
breaches or inaccuracies exceeds $100,000, after which Seller and the
Shareholders (severally and only to the extent of their respective
Pro-Rata Shares of any such Loss) shall be liable for all Losses
without regard to such $100,000 limitation. Notwithstanding anything
contained herein to the contrary, for purposes of determining whether
any Losses have been incurred, or the amount of any such Losses, the
representations, warranties and agreements hereunder will be
considered without regard to any materiality qualification set forth
therein and damages of less than $5,000 for an individual occurrence
shall not count towards the $100,000 threshold amount. In addition,
Seller and the Shareholders shall have no liability pursuant to
Section 14.2(a) for Losses in excess of an aggregate amount of $10
million; and no Shareholder shall have any liability in excess of his
Pro-Rata Share of $10 million. The liability of Seller and the
Shareholders pursuant to Section 14.2 shall first (but not
exclusively) be satisfied out of the Holdback Amount.
(b) Purchaser shall not have any liability pursuant to Section
14.3(a) unless the aggregate amount of Losses incurred or suffered by
the Seller Indemnified Parties from such breaches or inaccuracies
exceeds $100,000, after which Purchaser shall be liable for all Losses
without regard to such $100,000 limitation. Notwithstanding anything
contained herein to the contrary, for purposes of determining whether
any Losses have been incurred,
40
or the amount of any such Losses, the representations, warranties and
agreements hereunder will be considered without regard to any
materiality qualification set forth therein and damages of less than
$5,000 for an individual occurrence shall not count towards the
$100,000 threshold amount.
XIV.5 Claims. As soon as is possible after becoming aware of a claim
for indemnification under this Agreement not involving any claim, or the
commencement of any suit, action or proceeding, of the type described in
Section 14.6, but in any event within thirty (30) days after first becoming
aware of such claim, the Indemnified Person shall give written notice to the
Indemnifying Person of such claim (which notice shall specify the facts alleged
to constitute a breach and the representations, warranties, covenants or
obligations alleged to have been breached and shall specify the amount the
Indemnified Person seeks hereunder from the Indemnifying Person); provided,
that the failure of the Indemnified Person to give notice within such
thirty-day period shall not relieve the Indemnifying Person of its obligations
under this Article XIV unless the Indemnifying Person can prove actual
prejudice thereby.
XIV.6 Notice of Third Party Claims; Assumption of Defense. The
Indemnified Person shall as soon as possible (and in any event within ten
(10)days after receiving notice thereof) give written notice to the
Indemnifying Person of the assertion of any claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto in respect of
which indemnity may be sought under this Agreement; provided, that the failure
of the Indemnified Person to give notice within such ten-day period shall not
relieve the Indemnifying Person of its obligations under this Article XIV
unless the Indemnifying Person can prove actual prejudice thereby. The
Indemnifying Person may, at its own expense (a) participate in the defense of
any claim, suit, action or proceeding and (b) upon notice to the Indemnified
Person, assume the defense thereof with counsel of its choice. If the
Indemnifying Person assumes such defense, the Indemnified Person shall have the
right (but not the obligation) to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel employed by the
Indemnifying Person. Whether or not the Indemnifying Person chooses to defend
or prosecute any such claim, suit, action or proceeding, all of the parties
hereto shall cooperate in the defense or prosecution thereof.
XIV.7 Settlement or Compromise. Any settlement or compromise made or
caused to be made by the Indemnified Person or the Indemnifying Person, as the
case may be, of any such claim, suit, action or proceeding of the kind referred
to in Section 14.6 shall also be binding upon the Indemnifying Person or the
Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise; provided, that (i) no money damages,
obligation, restriction or other Loss shall be imposed on the Indemnified
Person as a result of such settlement or compromise without its prior written
consent, which consent shall not be unreasonably withheld, and (ii) the
Indemnified Person will not compromise or settle any claim, suit, action or
proceeding without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, and will give
41
the Indemnifying Person at least thirty (30) Business Days' notice of any
proposed settlement or compromise of any claim, suit, action or proceeding.
XIV.8 Knowledge. Notwithstanding anything contained herein to the
contrary, no party shall have any liability for any breach of or inaccuracy in
any representation or warranty by such party, if the other party had Knowledge
on or before the Closing Date of the facts as a result of which such
representation or warranty was breached or inaccurate unless the party with
such Knowledge informed the other party of such facts and allowed such party a
reasonable opportunity to cure such breach or inaccuracy and such breach or
inaccuracy was not cured within such reasonable period.
XIV.9 Exclusive Remedy. From and after the Closing, the provisions of
this Article XIV shall be the sole and exclusive remedies of the Purchaser
Indemnified Parties and the Seller Indemnified Parties for any breach of or
inaccuracy in any representation or warranty, or any breach of or failure to
perform any covenant or obligation, set forth in this Agreement or any Related
Agreement or any document delivered at the Closing, or for any other matter or
claim arising under or in connection with this Agreement, the Related
Agreements or the transactions contemplated hereby or thereby, except in the
case of fraud or as set forth in Section 15.5.
XIV.10 Effect on Purchase Price of Indemnity Payments. Any amounts
payable under Section 14.2 or Section 14.3 shall be treated by Purchaser and
Seller as an adjustment to the Purchase Price of the Purchased Assets
consistent with Section 3.3.
ARTICLE XV
NONCOMPETITION AGREEMENT
XV.1 Noncompetition; Seller and Xxxxxxxxx. As an inducement to
Purchaser to enter into this Agreement, Seller and Xxxxxxxxx agree that, for a
period of five (5) years after the Closing Date, neither Seller nor Xxxxxxxxx
shall, directly or indirectly,
(a) own, manage, control or be employed by (in any management, sales
or consulting capacity) any Person (except for Purchaser or an Affiliate of
Purchaser) that, directly or indirectly, engages in the Business in North
America and Europe. Nothing herein shall prohibit Seller or Xxxxxxxxx from
owning up to an aggregate of 5% of the outstanding capital stock of any
publicly traded Person engaged in the Business, so long as neither Seller nor
Xxxxxxxxx actively participates in the Business conducted by such Person;
(b) solicit or attempt to divert or remove from Purchaser any person
which is, or during the two (2) years preceding the Closing Date has been, a
customer of Seller or suggest to any such customer that the business it does
with Purchaser be reduced or placed with any other person; or
42
(c) solicit any Hired Employee or other employee of Purchaser or any
of its Affiliates to terminate employment with such entity, or individually or
as owner, agent, employee, consultant or otherwise, employ or offer employment
to any person who is or was employed by Purchaser or an Affiliate thereof
unless such person shall have ceased to be employed by such entity for a period
of at least six (6) months.
XV.2 Noncompetition; Xxxxxx. As an inducement to Purchaser to enter
into this Agreement, Xxxxxx agrees that, for a period of three (3) years after
the Closing Date, he shall not, directly or indirectly,
(a) own, manage, control or be employed by (in any management, sales
or consulting capacity) any Person (except for Purchaser or an Affiliate of
Purchaser) that, directly or indirectly, engages in the Business in North
America and Europe. Nothing herein shall prohibit Xxxxxx xxxx owning up to an
aggregate of 5% of the outstanding capital stock of any publicly traded Person
engaged in the Business, so long as Xxxxxx does not actively participate in the
Business conducted by such Person;
(b) solicit or attempt to divert or remove from Purchaser any person
which is, or during the two (2) years preceding the Closing Date has been, a
customer of Seller or suggest to any such customer that the business it does
with Purchaser be reduced or placed with any other person; or
(c) solicit any Hired Employee or other employee of Purchaser or any
of its Affiliates to terminate employment with such entity, or individually or
as owner, agent, employee, consultant or otherwise, employ or offer employment
to any person who is or was employed by Purchaser or an Affiliate thereof
unless such person shall have ceased to be employed by such entity for a period
of at least six (6) months.
Notwithstanding anything herein to the contrary, if Xxxxxx'x employment with
Purchaser is terminated (other than for Cause) or if Xxxxxx terminates his
employment for Good Cause, Xxxxxx'x obligations pursuant to this Section 15.2
shall cease and be of no further effect as of such termination date. As used in
this Section 15.2, the terms "Cause" and "Good Cause" shall have the meanings
given such term in the Xxxxxx Employment Agreement.
XV.3 Noncompetition; Xxxxxx. As an inducement to Purchaser to enter
into this Agreement, Xxxxxx agrees that, for a period of three (3) years after
the Closing Date, he shall not, directly or indirectly,
(a) own, manage, control or be employed by (in any management, sales
or consulting capacity) any Person (except for Purchaser or an Affiliate of
Purchaser) that, directly or indirectly, engages in the Business in North
America and Europe. Nothing herein shall prohibit Xxxxxx from owning up to an
aggregate of 5% of the outstanding capital stock of any publicly traded Person
43
engaged in the Business, so long as Xxxxxx does not actively participate in the
Business conducted by such Person;
(b) solicit or attempt to divert or remove from Purchaser any person
which is, or during the two (2) years preceding the Closing Date has been, a
customer of Seller or suggest to any such customer that the business it does
with Purchaser be reduced or placed with any other person; or
(c) solicit any Hired Employee or other employee of Purchaser or any
of its Affiliates to terminate employment with such entity, or individually or
as owner, agent, employee, consultant or otherwise, employ or offer employment
to any person who is or was employed by Purchaser or an Affiliate thereof
unless such person shall have ceased to be employed by such entity for a period
of at least six (6) months.
Notwithstanding anything herein to the contrary, if Xxxxxx'x employment with
Purchaser is terminated (other than for Cause) or if Xxxxxx terminates his
employment for Good Cause, Xxxxxx'x obligations pursuant to this Section 15.3
shall cease and be of no further effect as of such termination date. As used in
this Section 15.3, the terms "Cause" and "Good Cause" shall have the meanings
given such term in the Xxxxxx Employment Agreement.
XV.4 Enforcement. If, at the time of any enforcement of this Article
XV, a court shall hold that the duration, scope, area or other restrictions set
forth in this Article XV are unreasonable under circumstances then existing,
the parties agree that the maximum duration, scope, area or other restrictions
reasonable under such circumstances shall be substituted for the stated
duration, scope, area or other restrictions.
XV.5 Specific Performance. Seller acknowledges that in the event of
breach by it of any of the provisions of this Article XV, money damages would
be inadequate and Purchaser would have no adequate remedy at law. Accordingly,
Seller agrees that Purchaser shall have the right, in addition to the rights
and remedies set forth in Article XIV, to enforce its rights and Seller's
obligations under this Article XV by an action or actions for specific
performance, injunction and/or other equitable relief.
ARTICLE XVI
MISCELLANEOUS
XVI.1 Expenses. Except as otherwise provided herein, each party hereto
shall bear its own expenses with respect to the transactions contemplated
hereby. Purchaser shall pay (or, if Seller has paid, reimburse Seller for) (a)
any filing fee required under the HSR Act in connection with the transactions
contemplated hereby, and (b) all sales, use and similar Taxes, if any, imposed
by any Governmental Authority in connection with the transfer and assignment of
the Purchased Assets.
44
XVI.2 Amendment. This Agreement may be amended, modified or
supplemented but only in writing signed by Purchaser, Seller and each of the
Shareholders.
XVI.3 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given (a) when received if given in person or by courier or a courier
service, (b) one (1) Business Day after the date of transmission if sent by
telex, facsimile or other wire transmission (receipt confirmed by telephone) or
(c) five (5) Business Days after being deposited in the mail, certified or
registered, postage prepaid:
If to Seller or Xxxxxxx X. Xxxxxxxxx Xx., addressed as follows:
INTERNATIONAL TRAVEL SERVICE, INC.
000 Xxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx Xx.
Telephone No.: (000)000-0000
Facsimile No.: (000) 000-0000
with copies to:
XXXXX, XXXXX & XXXXX
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Xxxxxxx X. Xxxxxx, addressed as follows:
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
with copies to:
XXXXX, XXXXX & XXXXX
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
45
If to Xxxxxx X. Xxxxxx, addressed as follows:
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Telephone No.: (000) 000-0000
with copies to:
XXXXX, XXXXX & XXXXX
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Purchaser or Guarantor, addressed as follows:
THE OFFICIAL INFORMATION COMPANY 000 Xxxx 00xx Xx., Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxx
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
XVI.4 Payments in Dollars. Except as otherwise provided herein or in a
Related Agreement, all payments pursuant hereto shall be made in U.S. Dollars
in same day or immediately available funds, without any set off, deduction or
counterclaim whatsoever.
46
XVI.5 Waivers. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or
of any breach of any term, covenant, representation or warranty contained in
this Agreement shall be effective unless in writing, and no waiver in any one
or more instances shall be deemed to be a further or continuing waiver of any
such condition or breach in other instances or a waiver of any other condition
or breach of any other term, covenant, representation or warranty.
XVI.6 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, that no assignment of any rights or obligations shall be made by
Seller without the written consent of Purchaser or by Purchaser without the
written consent of Seller, in each case which will not be unreasonably
withheld, except that without such consent (a) each of Seller and Purchaser may
assign its rights and obligations hereunder to any successor entity in a merger
of Seller or Purchaser, respectively, into such successor entity and (b)
Purchaser may assign its rights and obligations to an Affiliate and may
collaterally assign its rights hereunder to its lenders; provided further, that
no assignment pursuant to this Section 16.6 shall relieve either party from any
obligations hereunder.
XVI.7 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, and no provision of this Agreement shall be deemed to
confer upon any other third parties any remedy, claim, liability,
reimbursement, cause of action or other right.
XVI.8 Publicity. At all times prior to the Closing Date, whether or not
the Closing occurs, no press release or other public announcement or publicity
regarding the existence of this Agreement or its contents or the transactions
contemplated hereby shall be made by Purchaser or Seller or any of their
respective Affiliates, officers, directors, employees, representatives or
agents, without the prior approval of Purchaser and Seller, in any case, as to
form, content, timing and manner of distribution and publication; provided,
that nothing in this Section 16.8 shall prohibit any party from (a) making any
public announcement required by Law or the rules of any stock exchange so long
as such party consults the other party as to the form, content, timing and
manner of distribution and publication, (b) enforcing its rights hereunder or
(c) disclosing this Agreement or its contents or the transactions contemplated
hereby to those Persons whose approval, agreement or opinion, as the case may
be, is required for consummation of the transactions contemplated hereby; and
provided, further, that nothing in this Section 16.8 shall prohibit Seller from
disclosing to Employees the existence of this Agreement or its contents
applicable to Employees. Notwithstanding anything herein to the contrary,
neither Purchaser nor Seller (or any of their respective Affiliates, officers,
directors, employees, representatives or agents) shall make any such press
release or other public announcement or publicity (including, without
limitation, in any filing with the Securities and Exchange Commission or any
stock exchange) prior to March 29, 1999. After the Closing Date, Purchaser
shall not make any references to Seller or any of its Affiliates in conjunction
with references to this Agreement, its contents, the transactions contemplated
hereby, Seller's past
47
operation of the Business or Seller's past ownership of the Purchased Assets,
except to identify Seller as the past operator of the Business and the past
owner of the Purchased Assets.
XVI.9 Further Assurances. Upon the reasonable request of Purchaser,
Seller will on and after the Closing Date execute and deliver to Purchaser such
other deeds, assignments and other instruments as may be required to effectuate
completely the transfer and assignment to Purchaser of Seller's title, right
and interest in and to each of the Purchased Assets, and to otherwise carry out
the purposes of this Agreement.
XVI.10 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
XVI.11 Entire Understanding. This Agreement and the Related Agreements
set forth the entire agreement and understanding of the parties hereto with
respect to the transactions contemplated hereby and supersede any and all prior
agreements, arrangements and understandings among the parties relating to the
subject matter hereof, except that the Confidentiality Agreement, dated
December 8, 1998, between Guarantor and Seller, shall remain in full force and
effect.
XVI.12 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Illinois without giving effect to the principles of conflicts of law thereof.
XVI.13 Choice of Forum. Purchaser and Seller agree that any suit or
action or proceeding brought by either party against the other party to this
Agreement in connection with or arising out of this Agreement shall be brought
solely in the Federal Courts of the Northern District of Illinois or, if such
court lacks jurisdiction, in the Circuit Court of Lake County, Illinois.
XVI.14 Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY DISPUTE RELATING TO OR ARISING OUT OF THIS AGREEMENT OR
ANY RELATED AGREEMENT, THE SUBJECT MATTER HEREOF OR THEREOF OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY
OR APPROPRIATE TO EFFECT SUCH WAIVER.
XVI.15 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
XVI.16 Remittances. All remittances, payments, mail and other
communications relating to the Purchased Assets or the Assumed Obligations
received by Seller at any time after the Closing Date shall be promptly turned
over to Purchaser by Seller. All remittances, payments, mail and other
48
communications relating to the Retained Obligations received by Purchaser at
any time after the Closing Date shall be promptly turned over to Seller by
Purchaser.
XVI.17 Bulk Sales. Purchaser hereby waives compliance by Seller with
the provisions of the laws of any jurisdiction relating to the bulk sale or
transfer of assets that may be applicable to the transfer of the Purchased
Assets and Seller shall indemnify Purchaser for any Losses to Purchaser
resulting from such noncompliance in accordance with Section 14.2.
XVI.18 Schedules. The Schedules attached hereto reflect the material
supplied to Purchaser by Seller. Any information disclosed pursuant to any
Schedule hereto shall be deemed to be disclosed to Purchaser for purposes of
another schedule or schedules if it is reasonably apparent that such
information applies to such other schedule or schedules. Seller may, from time
to time prior to the date that is three (3) Business Days before the Closing,
by notice to Purchaser in accordance with the terms of this Agreement,
supplement or amend any Schedule, including one or more supplements or
amendments to correct any matter that would constitute a breach of any
representation, warranty, covenant or obligation contained herein. No such
supplement or amendment to any Schedule shall be deemed to cure any breach for
purposes of Section 9.1. Seller may cure such breach by reducing the Purchase
Price in an amount equal to the Losses to Purchaser caused by such breach or by
making payment to a third party or taking other action to discharge the Losses;
provided, the cure of breaches provided herein shall only be available to the
extent such Losses are less than $250,000. All references to any Schedule
hereto that is supplemented or amended as provided in this Section 16.18 shall
for all purposes (except as provided in the immediately preceding sentence) be
deemed to be a reference to such Schedule as so supplemented or amended.
XVI.19 Disclaimer of Warranties. Purchaser acknowledges that it has had
sufficient opportunity to make whatever investigation it has deemed necessary
and advisable for the purposes of determining whether or not to enter into this
Agreement and acknowledges and agrees that, EXCEPT TO THE EXTENT OF THE EXPRESS
REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS CONTAINED IN THIS
AGREEMENT, PURCHASER IS ACQUIRING THE PURCHASED ASSETS IN RELIANCE UPON ITS OWN
INVESTIGATION AND ON AN "AS IS, WHERE IS" BASIS AND WITHOUT RECOURSE AND
WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE OR ANY OTHER IMPLIED OR EXPRESS WARRANTIES WHATSOEVER.
Purchaser acknowledges and agrees that none of Seller, any Shareholder or any
of their respective Affiliates (or any representatives of any of the foregoing)
has made any representation or warranty, express or implied, as to the accuracy
or completeness of any memoranda, charts, summaries or schedules heretofore
made available by Seller, any Shareholder or any of their respective Affiliates
or representatives to Purchaser, any of its Affiliates or their representatives
(including the Confidential Information Memorandum dated November 1998) or any
information that is not included in this Agreement or the Schedules hereto, and
none of Seller, any Shareholder or any of their respective Affiliates or
representatives will have or be subject to any
49
liability to Purchaser, any of its Affiliates or their representatives
resulting from the distribution of any such information (that is not included
in this Agreement or the Schedules hereto) to, or the use of any such
information (that is not included in this Agreement or the Schedules hereto)
by, Purchaser, any of its Affiliates or any of their representatives.
ARTICLE XVII
GUARANTY
XVII.1 Guaranty. Guarantor hereby unconditionally and irrevocably
guarantees to Seller and the Shareholders the due and punctual payment and
performance of all liabilities and obligations of Purchaser to Seller and the
Shareholders under this Agreement and the Related Agreements. This guaranty of
Guarantor is a guaranty of payment, performance and compliance and not of
collectability, is in no way conditioned or contingent upon an attempt to
collect from or enforce performance or compliance by Purchaser or upon any
other event, contingency or circumstance whatsoever. This guaranty is solely
for the benefit of the Seller and the Shareholders and not for the benefit of
any third party.
* * *
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
INTERNATIONAL TRAVEL SERVICE, INC.
By:___________________________________
Name:
Title:
____________________________________
Xxxxxxx X. Xxxxxxxxx Xx.
____________________________________
Xxxxxxx X. Xxxxxx
____________________________________
Xxxxxx X. Xxxxxx
THE OFFICIAL INFORMATION COMPANY
By:__________________________________
Name:
Title:
TOIC ACQUISITION, LLC
By:__________________________________
Name:
Title:
