<PAGE> 1
As filed with the Securities and Exchange Commission on May 21, 1998
Registration No. 333-52673
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GLOBAL VACATION GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW YORK 4725 13-1894567
(State of Incorporation) (Primary S.I.C. Code Number) (IRS Employer Identification No.)
</TABLE>
1455 PENNSYLVANIA AVENUE, N.W., SUITE 350
WASHINGTON, DC 20004
(202) 371-0150
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ROGER H. BALLOU
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GLOBAL VACATION GROUP, INC.
1455 PENNSYLVANIA AVENUE, N.W., SUITE 350
WASHINGTON, DC 20004
(202) 371-0150
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
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DAVID B.H. MARTIN, ESQ. BRENT B. SILER, ESQ.
HOGAN & HARTSON L.L.P. HALE AND DORR LLP
555 13TH STREET, N.W. 1455 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, DC 20004 WASHINGTON, DC 20004
(202) 637-5600 (202) 942-8400
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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EXPLANATORY NOTE TO AMENDMENT NO. 1
This Amendment No. 1 to the Global Vacation Group, Inc. Registration
Statement on Form S-1 has been filed solely for the purpose of filing certain
exhibits to the Registration Statement.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all fees and expenses, other than the
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of the Common Stock being registered. All amounts shown are
estimates except for the registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT
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<S> <C>
Securities and Exchange Commission registration fee......... $18,659
NASD filing fee............................................. 6,825
NYSE listing fee............................................ *
Blue sky qualification fees and expenses.................... *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Printing and engraving expenses............................. *
Transfer agent and registrar fees........................... *
Miscellaneous expenses...................................... *
-------
Total............................................. $ *
=======
</TABLE>
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* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Sections 721 through 725 of the Business Corporation Law of the State
of New York (the "NYBCL"), the Registrant has broad powers to indemnify its
directors, officers and other employees. These sections (i) provide that the
statutory indemnification and advancement of expenses provisions of the NYBCL
are not exclusive, provided that no indemnification may be made to or on behalf
of any director or officer if a judgment or other final adjudication adverse to
the director or officer establishes that his or her acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action so adjudicated, or that he or she personally gained in
fact a financial profit or other advantage to which he or she was not legally
entitled, (ii) establish procedures for indemnification and advancement of
expenses that may be contained in the certificate of incorporation or bylaws,
or, when authorized by either of the foregoing, set forth in a resolution of the
shareholders or directors or an agreement providing for indemnification and
advancement of expenses, (iii) apply a single standard for statutory
indemnification for third-party and derivative suits by providing that
indemnification is available if the director or officer acted in good faith, for
a purpose which he or she reasonably believed to be in the best interests of the
corporation, and in criminal actions, had no reasonable cause to believe that
his or her conduct was unlawful and (iv) permit the advancement of litigation
expenses upon receipt of an undertaking to repay such advance if the director or
officer is ultimately determined not to be entitled to indemnification or to the
extent the expenses advanced exceed the indemnification to which the director or
officer is entitled. Section 726 of the NYBCL permits the purchase of insurance
to indemnify a corporation or its officers and directors to the extent
permitted.
As permitted by Section 721 of the NYBCL, the Registrant's Restated
Certificate of Incorporation (the "Amended Certificate") provides that the
Registrant shall indemnify its officers and directors, as such, to the fullest
extent permitted by applicable law, and that expenses reasonably incurred by any
such officer or director in connection with a threatened or actual action or
proceeding shall be advanced or promptly reimbursed by the Registrant in advance
of the final disposition of such action or proceeding under the circumstances
permitted by the NYBCL.
The Amended Certificate further provides that no director of the Registrant
shall be held personally liable to the Registrant or its shareholders for
damages for any breach of duty in his or her capacity as a director unless a
judgment or other final adjudication adverse to such director establishes that
(i) such
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<PAGE> 4
director's acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law, or (ii) such director personally
gained in fact a financial profit or other advantage to which such director was
not legally entitled, or (iii) such director's acts violated Section 719 of the
NYBCL.
The Registrant intends to purchase directors' and officers' liability
insurance on behalf of its directors and others.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) On March 18, 1998, pursuant to a Recapitalization Agreement dated as of
such date among Thayer Equity Investors III, L.P. ("Thayer"), the Registrant,
Allied Tours Holding Corp. ("Allied Holding") and the shareholders of Allied
Holding (the "Recapitalization Agreement"), the Registrant was recapitalized
(the "Recapitalization") and issued (i) 247,215 shares of common stock, par
value $.01 per share ("Common Stock"), and 22,249 shares of Class A Convertible
Preferred Stock, par value $1,000 per share ("Convertible Preferred Stock"), to
Thayer in respect of its interest in the Registrant as of the time of the
Recapitalization and (ii) 39,034 shares of Common Stock and 3,513 shares of
Convertible Preferred Stock to Allied Holding in respect of its interest in the
Registrant as of the time of the Recapitalization. These shares were issued
without registration under the Securities Act of 1993, as amended (the
"Securities Act"), in reliance upon an exemption from registration contained in
Section 3(a)(9) thereof ("Section 3(a)(9)").
(b) On March 30, 1998, in connection with an Equity Purchase Agreement (the
"Thayer Purchase Agreement") dated as of March 30, 1998 among the Registrant,
Thayer TC Co-Investors, LLC, an affiliate of Thayer, and 16 other individuals or
entities (collectively, the "Investors"), the Registrant issued (i) a total of
266,425.4 shares of Common Stock to the Investors at a purchase price of $10 per
share for an aggregate consideration of $2,664,254 and (ii) a total of 1,227.64
shares of Convertible Preferred Stock to the Investors at a purchase price of
$1,000 per share for an aggregate consideration of $1,227,640. These shares were
issued without registration under the Securities Act in reliance upon an
exemption from registration contained in Section 4(2) thereof ("Section 4(2)").
(c) On March 30, 1998, in connection with Senior Management Agreements
entered into with each of Roger H. Ballou, the Registrant's Chief Executive
Officer and Chairman, J. Raymond Lewis, Jr., the Registrant's President and
Chief Operating Officer, and Walter S. Berman, the Registrant's Executive Vice
President and Chief Financial Officer, the Registrant issued to Messrs. Ballou,
Lewis and Berman (i) a total of 57,500 shares of Common Stock at a purchase
price of $10 per share for an aggregate consideration of $575,000 and (ii) a
total of 425 shares of Convertible Preferred Stock at a purchase price of $1,000
per share for an aggregate consideration of $425,000. These shares were issued
without registration under the Securities Act in reliance upon an exemption from
registration contained in Section 4(2).
(d) Between April 3, 1998 and May 5, 1998, pursuant to the Thayer Purchase
Agreement, the Registrant issued 22,751 shares of Convertible Preferred Stock to
Thayer at a purchase price of $1,000 per share for an aggregate consideration of
$22,751,000. These shares were issued without registration under the Securities
Act in reliance upon an exemption from registration contained in Section 4(2).
(e) On March 30, 1998, in connection with an Equity Subscription Agreement
dated as of such date by and among the Registrant and two former shareholders of
Haddon Holidays, Inc. ("Haddon"), the Registrant issued to such persons (i) a
total of 5,000 shares of Common Stock at a purchase price of $10 per share for
an aggregate consideration of $50,000 and (ii) a total of 450 shares of
Convertible Preferred Stock at a purchase price of $1,000 per share for an
aggregate consideration of $450,000. These shares were issued without
registration under the Securities Act in reliance upon an exemption from
registration contained in Section 4(2).
(f) On April 30, 1998, in connection with an Equity Subscription Agreement
dated as of such date by and among the Registrant and a former shareholder of
MTI Vacations, Inc. ("MTI"), the Registrant issued to such person an 24,000
shares of Common Stock at a purchase price of $10 per share for an aggregate
consideration of $240,000 and 2,160 shares of Convertible Preferred Stock at a
purchase price of $1,000 per
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<PAGE> 5
share for an aggregate consideration of $2,160,000. These shares were issued
without registration under the Securities Act in reliance upon an exemption from
registration contained in Section 4(2).
Each of the foregoing transactions was effected without an underwriter.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
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1.1* Form of Underwriting Agreement
3.1* Restated Certificate of Incorporation of the Registrant
3.2* Amended and Restated Bylaws of the Registrant
5.1* Opinion of Hogan & Hartson L.L.P.
10.1 Recapitalization Agreement dated as of March 18, 1998 among
the Registrant Thayer, Allied Holding and the shareholders
of Allied Holding
10.2 Equity Purchase Agreement dated as of March 30, 1998 between
the Registrant and Thayer and certain other purchasers
10.3 Equity Subscription Agreement dated as of March 30, 1998 by
and among the Registrant, Ralph M. Caliri and William W.
Webber
10.4 Equity Subscription Agreement dated as of April 30, 1998
between the Registrant and James F. Miller
10.5* Registration Rights Agreement dated as of May , 1998 by and
among the Registrant, Thayer and certain shareholders of the
Registrant
10.6 Stock Purchase Agreement dated as of March 30, 1998 by and
among the Registrant, Haddon and the shareholders of Haddon
10.7* Stock Purchase Agreement dated as of April 20, 1998 by and
among the Registrant, Classic Custom Vacations, Inc.
("Classic") and the stockholders of Classic
10.8 Asset Purchase Agreement dated as of April 30, 1998 by and
among the Registrant, MTI and James F. Miller
10.9 Stock Purchase Agreement dated as of May 4, 1998 by and
among the Registrant, Globetrotters, Inc. and Robert A.
Grinberg.
10.10* Professional Services Agreement dated as of March 30, 1998
between the Registrant and TC Management Partners, LLC
10.11 Credit Agreement dated as of March 27, 1998 by and among the
Registrant, the lenders party thereto and The Bank of New
York, as administrative agent
10.12 Amendment No. 1 and Consent dated as of April 8, 1998 to
Credit Agreement dated as of March 27, 1998 by and among the
Registrant, the lenders party thereto and The Bank of New
York as administrative agent
10.13 Amendment No. 2 dated as of May 5, 1998 to Credit Agreement
dated as of March 27, 1998 by and among the Registrant, the
lenders party thereto and The Bank of New York as
administrative agent
10.14* Registrant's 1998 Stock Option Plan
10.15 Senior Management Agreement dated as of March 30, 1998
between the Registrant and Roger H. Ballou
10.16 Senior Management Agreement dated as of March 30, 1998
between the Registrant and J. Raymond Lewis, Jr.
10.17 Senior Management Agreement dated as of March 30, 1998
between the Registrant and Walter S. Berman
10.18 Consulting Agreement dated as of March 27, 1998 by and
between the Registrant and Stanley Fisher
10.19 Employment Agreement dated as of March 18, 1998 by and
between the Registrant and Michael Fisher
10.20 Employment Agreement dated as of March 18, 1998 by and
between the Registrant and Gregory Fisher
</TABLE>
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<TABLE>
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11.1* Statement Regarding Computation of Per Share Earnings
21.1* Subsidiaries of the Registrant
23.1+ Consent of Arthur Andersen LLP (Financial Statements of the
Registrant)
23.2+ Consent of Arthur Andersen LLP (Financial Statements of
Classic)
23.3+ Consent of Arthur Andersen LLP (Financial Statements of
Haddon)
23.4+ Consent of Deloitte & Touche LLP (Financial Statements of
Classic)
23.5+ Consent of Coopers & Lybrand LLP (Financial Statements of
MTI)
23.6* Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
24.1+ Power of Attorney
27.1+ Financial Data Schedule
</TABLE>
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+ Previously filed.
* To be filed by amendment.
(b) Financial Statement Schedule
The following schedule to the Financial Statements of the Registrant was
previously filed as a part of this Registration Statement:
Schedule II -- Allowance for Doubtful Accounts
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as may be required by the
underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
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<PAGE> 7
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WASHINGTON, DISTRICT OF
COLUMBIA, ON THE 19TH DAY OF MAY, 1998.
GLOBAL VACATION GROUP, INC.
By: /s/ ROGER H. BALLOU
------------------------------------
ROGER H. BALLOU
CHIEF EXECUTIVE OFFICER AND CHAIRMAN
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
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<S> <C> <C>
/s/ ROGER H. BALLOU Chief Executive Officer May 19, 1998
- ----------------------------------------------------- and Chairman
ROGER H. BALLOU (Principal Executive Officer)
/s/ WALTER S. BERMAN Executive Vice President May 19, 1998
- ----------------------------------------------------- and Chief Financial Officer
WALTER S. BERMAN (Principal Financial and
Accounting Officer)
* Director
- -----------------------------------------------------
FREDERIC V. MALEK
* Director
- -----------------------------------------------------
CARL J. RICKERTSEN
*By: /s/ ROGER H. BALLOU Attorney-in-fact May 19, 1998
---------------------------------------------------
ROGER H. BALLOU
</TABLE>
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EXHIBIT INDEX
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PAGE
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1.1* Form of Underwriting Agreement
3.1* Restated Certificate of Incorporation of the Registrant
3.2* Amended and Restated Bylaws of the Registrant
5.1* Opinion of Hogan & Hartson L.L.P.
10.1 Recapitalization Agreement dated as of March 18, 1998 among
the Registrant Thayer, Allied Holding and the shareholders
of Allied Holding
10.2 Equity Purchase Agreement dated as of March 30, 1998 between
the Registrant and Thayer and certain other purchasers
10.3 Equity Subscription Agreement dated as of March 30, 1998 by
and among the Registrant, Ralph M. Caliri and William W.
Webber
10.4 Equity Subscription Agreement dated as of April 30, 1998
between the Registrant and James F. Miller
10.5* Registration Rights Agreement dated as of May , 1998 by
and among the Registrant, Thayer and certain shareholders of
the Registrant
10.6 Stock Purchase Agreement dated as of March 30, 1998 by and
among the Registrant, Haddon and the shareholders of Haddon
10.7* Stock Purchase Agreement dated as of April 20, 1998 by and
among the Registrant, Classic Custom Vacations, Inc.
("Classic") and the shareholders of Classic
10.8 Asset Purchase Agreement dated as of April 30, 1998 by and
among the Registrant, MTI and James F. Miller
10.9 Stock Purchase Agreement dated as of May 4, 1998 by and
among the Registrant, Globetrotters, Inc. and Robert A.
Grinberg.
10.10* Professional Services Agreement dated as of March 30, 1998
between the Registrant and TC Management Partners, LLC
10.11 Credit Agreement dated as of March 27, 1998 by and among the
Registrant, the lenders party thereto and The Bank of New
York, as administrative agent
10.12 Amendment No. 1 and Consent dated as of April 8, 1998 to
Credit Agreement dated as of March 27, 1998 by and among the
Registrant, the lenders party thereto and The Bank of New
York as administrative agent
10.13 Amendment No. 2 dated as of May 5, 1998 to Credit Agreement
dated as of March 27, 1998 by and among the Registrant, the
lenders party thereto and The Bank of New York as
administrative agent
10.14* Registrant's 1998 Stock Option Plan
10.15 Senior Management Agreement dated as of March 30, 1998
between the Registrant and Roger H. Ballou
10.16 Senior Management Agreement dated as of March 30, 1998
between the Registrant and J. Raymond Lewis, Jr.
10.17 Senior Management Agreement dated as of March 30, 1998
between the Registrant and Walter S. Berman
10.18 Consulting Agreement dated as of March 27, 1998 by and
between the Registrant and Stanley Fisher
10.19 Employment Agreement dated as of March 18, 1998 by and
between the Registrant and Michael Fisher
10.20 Employment Agreement dated as of March 18, 1998 by and
between the Registrant and Gregory Fisher
11.1* Statement Regarding Computation of Per Share Earnings
21.1* Subsidiaries of the Registrant
23.1+ Consent of Arthur Andersen LLP (Financial Statements of the
Registrant)
23.2+ Consent of Arthur Andersen LLP (Financial Statements of
Classic)
23.3+ Consent of Arthur Andersen LLP (Financial Statements of
Haddon)
</TABLE>
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<TABLE>
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PAGE
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23.4+ Consent of Deloitte & Touche LLP (Financial Statements of
Classic)
23.5+ Consent of Coopers & Lybrand LLP (Financial Statements of
MTI)
23.6* Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
24.1+ Power of Attorney
27.1+ Financial Data Schedule
</TABLE>
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+ Previously filed.
* To be filed by amendment.
<PAGE> 1
Exhibit 10.1
RECAPITALIZATION AGREEMENT
BY AND AMONG
THAYER EQUITY INVESTORS, III, L.P.
AND CERTAIN OTHER INVESTORS
TO BE LISTED ON THE INVESTOR SCHEDULE
(THE "INVESTORS")
ALLIED BUS CORP.
(THE "COMPANY")
ALLIED TOURS HOLDING CORP.
("ALLIED PARENT")
AND
THE SHAREHOLDERS OF THE COMPANY
(THE "SHAREHOLDERS")
DATED MARCH 18, 1998
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II RECAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Stock Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 The Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Escrow Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Intentionally Left Blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Closing Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.10 Post-Closing Net Worth Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY, ALLIED PARENT AND SHAREHOLDERS . . . . . 10
3.1 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 No Liens on Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Other Rights to Acquire Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Employee Welfare Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Employee Pension Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(c) Employment and Non-Tax Qualified Deferred Compensation Arrangements . . . . . . . . 16
3.15 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.16 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.18 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.19 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 3
<TABLE>
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3.20 Accounts Receivable; Accounts Payables; Customer Deposits and Bookings . . . . . . . . . . 19
(a) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Customer Deposits; Bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.21 Bank Accounts; Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.22 Customer Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.23 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.24 Affiliated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.25 Funded Indebtedness; Letters of Credit; Undisclosed Liabilities . . . . . . . . . . . . . 20
(a) Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.26 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.27 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV THE INVESTORS' REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 21
4.1 Due Organization of Thayer III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V PRE-CLOSING COVENANTS OF THE COMPANY, ALLIED PARENT, THAYER III AND SHAREHOLDERS . . . . 22
5.1 Consents of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Shareholders' Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Access Before Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Investor Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Transition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Additional Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Litigation Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.7 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.8 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING . . . . . . . . . . . . . . 28
7.1 Conditions to the Investors' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
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<TABLE>
<S> <C>
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Discharge of Indebtedness and Lien; Shareholder Loans . . . . . . . . . . . . . . . 29
(e) Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(f) Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(g) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) Documents to be Delivered by Shareholders; Allied Parent and the Company . . . . . 29
(i) Opinion of Shareholder's Counsel . . . . . . . . . . . . . . . . . . . . . 29
(ii) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(iii) Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(iv) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(v) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(vi) Delivery of Purchased Shares . . . . . . . . . . . . . . . . . . . . . . 30
(vii) Redemption of Existing Common Stock . . . . . . . . . . . . . . . . . . 30
(viii) Resignation of Directors . . . . . . . . . . . . . . . . . . . . . . . 30
(ix) Termination of Shareholder Agreements . . . . . . . . . . . . . . . . . . 30
(x) Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(i) Company Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(j) Restated Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . 30
(k) Liquidation of Sister Business . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Conditions to Shareholders', Allied Parent's and the Company's Obligations . . . . . . . . 31
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 31
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Documents to be Delivered by Investors . . . . . . . . . . . . . . . . . . . . . . 31
(ii) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(iii) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 31
(iv) Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Company Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(e) Payments to Allied Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1 Indemnification by Allied Parent and Shareholders . . . . . . . . . . . . . . . . . . . . . 32
8.2 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Escrow Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 Tax Audits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 Indemnification of Shareholders, Allied Parent and the Company . . . . . . . . . . . . . . 33
8.6 Limits on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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<TABLE>
<S> <C>
10.1 Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.3 Counterparts; Facsimile Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Entire and Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.8 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . 38
10.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.11 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.12 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.13 No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.14 Joinder by Additional Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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<PAGE> 6
LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Restated Certificate of Incorporation
Exhibit B Form of Escrow Agreement
Exhibit C Opinion of the Company's and Shareholders' Counsel
Exhibit D [Intentionally Left Blank]
Exhibit E Form of Release
Exhibit F Form of Michael Fisher Employment Agreement
Exhibit F-1 Form of Gregory Fisher Employment
Exhibit F-2 Form of Gilbert Fishman Employment
Exhibit G Shareholders Accounts and Wire Transfer Instructions(Section 2.4)
Exhibit H Ownership of Shares (Section 3.1)
Exhibit I-1 Articles (Section 3.5)
Exhibit I-2 Bylaws (Section 3.5)
Exhibit I-3 Qualified Jurisdictions (Section 3.6)
Exhibit J List of Properties (Section 3.9)
Exhibit K List of Licenses and Permits (Section 3.10)
Exhibit L List of Intellectual Property (Section 3.11)
Exhibit M List of Insurance (Section 3.13)
Exhibit N List of Contracts (Section 3.15)
Exhibit O List of Personnel (Section 3.18)
Exhibit P List of Bookings (Section 3.20)
Exhibit Q [Intentionally Left Blank]
Exhibit R List of Bank Accounts and Investments (Section 3.21)
Exhibit S List of Letters of Credit (Section 3.25(b))
Exhibit T List of Indebtedness (Section 7.1(d))
Exhibit U Stan Fisher Consulting Agreement
</TABLE>
LIST OF SCHEDULES
INVESTOR SCHEDULE
ESCROW SCHEDULE
DISCLOSURE SCHEDULE
RECAPITALIZATION SCHEDULE
TAX PAYMENTS SCHEDULE
FINANCIAL STATEMENTS
GAAP EXCEPTIONS MEMO
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<PAGE> 7
RECAPITALIZATION AGREEMENT
THIS RECAPITALIZATION AGREEMENT (this "AGREEMENT") is entered
into as of March 18, 1998, by and among THAYER EQUITY INVESTORS III, L.P., a
Delaware limited partnership ("THAYER III"), on behalf of itself and certain
other investors who may execute a joinder hereto and shall be listed on the
Investor Schedule to this Agreement (Thayer III and the other signatory
investors shall be referred to herein individually as an "INVESTOR" and
collectively as the "INVESTORS"), ALLIED BUS CORP., a New York corporation (the
"COMPANY") and ALLIED TOURS HOLDING CORP., a New York corporation ("ALLIED
PARENT"), and Stanley Fisher, Michael Fisher, Gregory Fisher, and Francine
Fishman (collectively, the "SHAREHOLDERS").
RECITALS
Pursuant to this Agreement, the Company, which is engaged in
the wholesale travel sales business in the United States (the "BUSINESS"), will
be recapitalized in a series of transactions (the "TRANSACTIONS"). The
Transactions will occur in the following steps:
A. THE CURRENT CAPITALIZATION OF THE COMPANY
On the date of this Agreement, the Company's capitalization
consists of 200 shares of common stock, no par value per share (the "CAPITAL
STOCK"). Allied Parent is the owner of 100 shares of Capital Stock, which
stock represents all of the issued and outstanding stock of the Company (the
"EXISTING SHARES"). The Shareholders own 100 shares of the capital stock of
Allied Parent, which stock represents all of the issued and outstanding shares
of capital stock of Allied Parent.
B. THE STOCK PURCHASE
The Investors desire to purchase from Allied Parent and Allied
Parent desires to sell to the Investors an aggregate of 57 shares of Capital
Stock (the "STOCK PURCHASE") for a purchase price of $433,710 per share (an
aggregate purchase price of $24,721,470), subject to adjustment as provided
herein.
C. THE FINANCING
It is anticipated that the Company will enter into a credit
agreement or agreements with a financial institution or institutions (the
"FINANCING") to be arranged by Thayer III, which Financing shall provide for a
loan or loans to the Company on commercially reasonable terms in connection
with the Transactions in the principal amount of up to approximately
$15,000,000 (the "LOAN PROCEEDS"). The closing of the Financing is not a
condition precedent to the closing of the Transactions, and if for any reason
the Financing is not fully consummated, such that some or all of the Loan
Proceeds are not received by the Company, but all of the remaining closing
conditions to this Agreement are satisfied, then Thayer III will be responsible
for funding on commercially
<PAGE> 8
reasonable terms the sums necessary to consummate the Transactions (any such
other funds, together with any Loan Proceeds as necessary to consummate the
Transactions, shall be referred to herein as the "FINANCING PROCEEDS").
D. THE REDEMPTION
At Closing, 34 shares (the "REDEMPTION SHARES") of the
Existing Shares held by Allied Parent will be redeemed by the Company for a
purchase price of $433,710 per share (an aggregate redemption price of
$14,746,140), subject to adjustment and escrow holdbacks as provided herein
(the "REDEMPTION").
E. THE RECAPITALIZATION
Following the Redemption, the Company will recapitalize itself
(the "RECAPITALIZATION") by amending and restating its Certificate of
Incorporation to authorize two classes of capital stock, (i) the Common Stock,
$.01 par value (the "COMMON STOCK") and (ii) the Preferred Stock, par value
$1,000 per share (the "PREFERRED STOCK"). Pursuant to the Recapitalization,
each issued and outstanding share of Capital Stock will be exchanged for (i)
4,337.1 shares of Common Stock and (ii) 390.339 shares of Preferred Stock. A
chart showing the details of the Recapitalization is attached as the
Recapitalization Schedule hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms. Any agreement
referred to below shall mean such agreement as amended, supplemented and
modified from time to time to the extent permitted by the applicable provisions
thereof and by this Agreement.
"AA" has the meaning set forth in Section 2.9 below.
"ACCOUNTS RECEIVABLE ADJUSTMENT" has the meaning set forth in
Section 8.1 below.
"AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
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<PAGE> 9
"ADJUSTED CLOSING FINANCIAL STATEMENTS" has the meaning
specified in Section 2.9.
"BUSINESS" has the meaning specified in the first recital of
the Agreement.
"CAPITAL STOCK" has the meaning specified in Recital A of the
Agreement.
"CLOSING" means the closing of the Stock Purchase followed by
the Redemption and subsequently the Recapitalization.
"CLOSING DATE" has the meaning specified in Section 2.6.
"CLOSING REDEMPTION PRICE" shall have the meaning assigned to
such term in Section 2.4(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" has the meaning specified in Recital E of this
Agreement.
"COMPANY" has the meaning specified in the first paragraph of
this Agreement.
"CONFIDENTIAL INFORMATION" means (i) the terms and provisions
of this Agreement and the Transactions and (ii) all confidential information
and trade secrets of the Company or its Affiliates including, without
limitation, any of the same comprising the identity, lists or descriptions of
any customers, referral sources or organizations; financial statements, cost
reports or other financial information; contract proposals, or bidding
information; business plans and training and operations methods and manuals;
personnel records; fee structure; and management systems, policies or
procedures, including related forms and manuals. Confidential Information
shall not include any information (a) which is disclosed pursuant to subpoena
or other legal process, (b) which has been publicly disclosed, or (c) which is
subsequently disclosed to any third party not in breach of a confidentiality
agreement.
"CONTRACTS" has the meaning specified in Section 3.15.
"COURT ORDER" means any judgment, order, award or decree of
any foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
to this Agreement pursuant to which exceptions to Allied Parent's, the
Shareholders' and the Company's specific representations and warranties set
forth in Article III (and listed on a Section-by-Section basis) are disclosed
to Investors pursuant to said Article III.
"ENCUMBRANCE" means any lien, claim, charge, security
interest, mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, restrictive covenant or other restrictions of any
kind.
-3-
<PAGE> 10
"ENVIRONMENTAL AND OSHA OBLIGATIONS" has the meaning specified
in Section 3.12.
"EQUITABLE EXCEPTIONS" shall have the meaning specified in
Section 3.6.
"EQUITY AGREEMENTS" means those certain equity agreements
between Investors, the Company, Allied Parent, the Shareholders and certain
executives to be entered into as of the Closing Date, including without
limitation, the Shareholders Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" means The Bank of New York.
"ESCROW AGREEMENT" means the Escrow Agreement to be executed
by and among the Company, Allied Parent, the Shareholders, Thayer III and the
Escrow Agent in the form of Exhibit B.
"ESCROW NOTE" has the meaning specified in Section 2.4.
"ESCROW PERIOD" has the meaning specified in Section 2.7.
"ESCROW SUM" has the meaning specified in Section 2.7.
"EXISTING SHARES" has the meaning specified in Recital A of
the Agreement.
"FINANCIAL STATEMENTS" has the meaning specified in Section
3.7.
"FINANCING" has the meaning specified in Recital C of the
Agreement.
"FINANCING PROCEEDS" has the meaning specified in Recital C of
the Agreement.
"FORCE MAJEURE" shall mean any failure or delay caused by acts
of god, flood, fire, war or terrorism or any failure or delay caused by a
governmental blockage of all currency transactions between a foreign
Governmental Body and the United States of America.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of the
Company for borrowed money or other interest-bearing indebtedness; (ii) capital
lease obligations of the Company; (iii) obligations of the Company to pay the
deferred purchase or acquisition price for goods or services, other than trade
accounts payable in the ordinary course of business; (iv) indebtedness of
others guaranteed by the Company or secured by an Encumbrance on the Company's
property; and (v) indebtedness of the Company under extended credit terms of
more than 30 days from vendors provided to the Company.
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<PAGE> 11
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GAAP EXCEPTIONS MEMO" shall have the meaning specified in
Section 3.7.
"GOVERNMENTAL BODY" means any foreign, federal, state, local
or other governmental authority or regulatory body having jurisdiction over the
Company, Allied Parent and/or the Shareholders.
"GOVERNMENTAL PERMITS" has the meaning specified in Section
3.10.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and the rules and regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"INDEMNIFIABLE COSTS" has the meaning specified in Section
8.1.
"INDEMNIFIED PARTIES" has the meaning specified in Section
8.1.
"INDEPENDENT ACCOUNTANTS" has the meaning specified in Section
2.9.
"INTELLECTUAL PROPERTY" shall mean all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information); and (vi) computer
software (including but not limited to data, data bases and documentation).
"INVESTORS" has the meaning specified in the first paragraph
of this Agreement.
"KNOWLEDGE OF THE COMPANY" (whether or not capitalized) shall
mean actual knowledge, after reasonable inquiry, of the Shareholders and the
employees of the Company with responsibility for the applicable subject matter.
"KNOWLEDGE OF THE SHAREHOLDERS" (whether or not capitalized) shall mean actual
knowledge of the Shareholders after reasonable inquiry
"LEASES" shall mean the leases for the Company's offices
located at (i) 165 West 46th Street, 10th Floor, New York, New York 10036;
(ii) Suite Nos. 710 and 714 in 6151 West Century Boulevard, Los Angeles,
California 90045; (iii) 407 Lincoln Road, Suite PH.N.W., Miami Beach, Florida
33139; and (iv) 2222 Kalakaua Avenue, Part of 9th Floor, Honolulu, Hawaii.
-5-
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"LOAN PROCEEDS" has the meaning specified in Recital C of the
Agreement.
"MATERIAL" (whether or not capitalized) shall, where
appropriate in context of its use in making the representations and warranties
set forth in Article III, be deemed to mean an amount of money greater than
$100,000.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means a
material adverse change or effect on the assets, properties, Business,
operations, liabilities, financial condition or prospects of the Company and
its subsidiaries, taken as a whole. In determining whether a "Material Adverse
Change" or "Material Adverse Effect" has occurred in the context of the use of
such terms in the Company's, Allied Parent's and Shareholders' representations
and warranties set forth in Article III, such terms shall refer to the
occurrence of any single event, or any series of related events, or set of
related circumstances, which results or may result in a loss to the Company, in
excess of $100,000 per occurrence or $250,000 in the aggregate.
"NET WORTH" shall equal the Company's total assets minus its
total liabilities.
"NET WORTH ADJUSTMENT" has the meaning specified in Section
2.10.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, and any regulations promulgated
thereunder.
"PERMITTED DISTRIBUTIONS" has the meaning specified in Section
3.8.
"PERMITTED EXCEPTION" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, or (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value or
the existing use of the property affected by such lien or imperfection.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"PREFERRED STOCK" has the meaning specified in Recital E of
the Agreement.
"PROJECTED NET WORTH" means a minus ($400,000).
"PURCHASE PRICE" has the meaning specified in Section 2.1.
"PURCHASED SHARES" has the meaning specified in Section 2.1..
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"RECAPITALIZATION" has the meaning specified in Recital E of
the Agreement.
"REDEMPTION" has the meaning specified in Recital D of the
Agreement.
"REDEMPTION PRICE" has the meaning specified in Section 2.4.
"REDEMPTION SHARES" has the meaning specified in Recital D of
the Agreement.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without limitation,
those pertaining to electrical, building, zoning, environmental and
occupational safety and health requirements).
"SHAREHOLDERS" has the meaning set forth in the first
paragraph of this Agreement.
"STOCK PURCHASE" has the meaning specified in Recital B of the
Agreement.
"TAX" or "TAXES" means any federal, state, local or foreign
income, alternative or add-on minimum, gross income, gross receipts, windfall
profits, severance, property, production, sales, use, transfer, gains, license,
excise, employment, payroll, withholding or minimum tax, transfer, goods and
services, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amounts imposed thereon by any
Governmental Body.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"THAYER III" has the meaning specified in the first paragraph
of this Agreement.
"TRANSACTIONS" has the meaning specified in the beginning of
the recitals of this Agreement.
ARTICLE II
RECAPITALIZATION
2.1. STOCK PURCHASE. On the Closing Date and subject to
the terms and conditions set forth in this Agreement, Allied Parent shall sell
and deliver to the Investors an aggregate of 57 shares of the Capital Stock
(the "PURCHASED SHARES"), free and clear of all Encumbrances, other than the
restrictions imposed by federal and state securities laws. The total
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purchase price for the Purchased Shares (the "PURCHASE PRICE") shall be equal
to $24,721,470, subject to any adjustment required to be made pursuant to
Section 2.10 below.
2.2. PAYMENT OF PURCHASE PRICE. The Purchase Price shall
be payable by the Investors or Thayer III as follows: (a) $21,350,470 of the
Purchase Price will be payable at the Closing (as defined in Section 2.6) in
cash by wire transfer of funds to Allied Parent's account as specified in
Exhibit G attached hereto and (b) the balance of the Purchase Price
($3,371,000) will be paid in accordance with the Tax Payments Schedule attached
hereto by wire transfer of funds to Allied Parent's or the Shareholders'
accounts as specified in Exhibit G attached hereto as updated from time to time
following the Closing Date.
2.3. THE FINANCING. On the Closing Date, the Company
shall consummate the Financing and shall borrow an amount equal to the
Financing Proceeds in order to consummate the Redemption.
2.4. REDEMPTION. On the Closing Date and subject to the
terms and conditions set forth in this Agreement, the Company shall redeem the
Redemption Shares from Allied Parent. Subject to the terms of Section 2.7,
which provision requires certain holdbacks prior to the distribution of such
price to Allied Parent, the Redemption Shares shall be redeemed at a price of
$433,710 per share, for an aggregate gross redemption price of $14,746,140 (the
"REDEMPTION PRICE"). The Redemption Price shall be payable as follows:
(a) an aggregate of $10,746,140 shall be paid at
Closing by wire transfer of funds to Allied Parent's account as specified in
Exhibit G hereto (the "CLOSING REDEMPTION PRICE"); and
(b) $4,000,000 shall be paid to the Escrow Agent
at Closing pursuant to Section 2.7 below to serve as the Escrow Sum (as defined
below) in the form of a 120 day promissory note which bears interest at the
rate of 8% per annum in a form mutually agreed upon by Thayer III and Allied
Parent (the "ESCROW NOTE").
2.5. RECAPITALIZATION. Following the Stock Purchase and
the Redemption and on the Closing Date, the Company shall amend and restate its
Certificate of Incorporation to authorize the issuance of the two classes of
the capital stock (the Common Stock and the Preferred Stock) each having the
rights and preferences set forth in the Company's Restated Certificate of
Incorporation in substantially the form of Exhibit A attached hereto and as
necessary to effect the Transactions. Pursuant to such amendment, each share
of Capital Stock issued and outstanding after the Stock Purchase and the
Redemption shall be exchanged for (i) 4,337.1 shares of Common Stock and (ii)
390.34 shares of Preferred Stock.
2.6. CLOSING. The Closing of the Transactions shall take
place at 10:00 a.m., Eastern Time, at the offices of Hogan & Hartson L.L.P.,
555 13th Street, N.W. in Washington, D.C. on March 25, 1998, or on the date
selected by Thayer III (which date shall be as soon as practicable following
the date on which all of the conditions to Closing set forth in Sections 7.1
and 7.2 have been satisfied) (the "CLOSING DATE").
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2.7. ESCROW ARRANGEMENTS. Pursuant to the Escrow
Agreement to be entered into among Shareholders, Allied Parent, the Company,
Thayer III and the Escrow Agent, $4,000,000 of the Redemption Price shall be
delivered to the Escrow Agent at Closing pursuant to the Escrow Note. Upon
payment of the Escrow Note by the Company in immediately available funds on or
prior to 120 days after the Closing Date, such monies paid (which, together
with all interest accrued thereon, is hereinafter referred to as the "ESCROW
SUM") shall be held pursuant to the terms of the Escrow Agreement for payment
from such Escrow Sum of the amounts, if any, owing by Allied Parent to the
Investors or the Company pursuant to the provisions of the Net Worth Adjustment
or the Escrow Schedule attached hereto and the indemnification provisions of
Article VIII below. At the conclusion of the period ending ten days after
completion of the final Adjusted Closing Financial Statements and the
resolution of any disputes therein pursuant to Section 2.9 below, the Escrow
Sum shall be reduced to an amount equal to the sum of $2,000,000 in cash, plus
the amount, if any, reserved, but not then paid or resolved, pursuant to claims
made against the Escrow Sum by the Investors or the Company pursuant to the
provisions of the Net Worth Adjustment and the Escrow Schedule (such amount of
reduction in the Escrow Sum being referred to as the "ESCROW SUM REDUCTION")
and (ii) on the first anniversary of the Closing Date (such one-year period
being referred to herein as the "ESCROW PERIOD"), such remaining portion of the
Escrow Sum not theretofore claimed by or paid to the Investors or the Company
in accordance with the terms of the Escrow Agreement, the Escrow Schedule and
this Agreement (together with any interest on such remaining portion of the
Escrow Sum) shall be disbursed to Allied Parent. All disbursements pursuant to
the Escrow Sum Reduction or at the expiration of the Escrow Period shall be
paid in cash to Allied Parent at its account set forth in Exhibit G as updated
from time to time. Shareholders, Allied Parent, the Company and Thayer III
agree that each will execute and deliver such reasonable instruments and
documents as are furnished by any other party to enable such furnishing party
to receive those portions of the Escrow Sum to which the furnishing party is
entitled under the provisions of the Escrow Agreement and this Agreement.
2.8. [INTENTIONALLY LEFT BLANK].
2.9. CLOSING AUDIT. Within 120 days following the Closing
Date, there shall be delivered to Investors and to Shareholders an audit of the
Company's balance sheet and statements of income and cash flows as of and for
the two months ended February 28, 1998 (the "ADJUSTED CLOSING FINANCIAL
STATEMENTS"). The Adjusted Closing Financial Statements shall be audited by
Arthur Andersen, LLP ("AA") in accordance with GAAP and then adjusted to be in
accordance with the Company's prior accounting practices. The cost of
preparing the Adjusted Closing Financial Statements shall be paid by the
Company. In the event that Allied Parent disputes any items or assumptions or
methodologies regarding the Adjusted Closing Financial Statements within thirty
(30) days after Allied Parent's receipt thereof, Allied Parent and Thayer III
shall jointly select and retain an independent "Big Six" accounting firm (the
"INDEPENDENT ACCOUNTANTS") to review the disputed matter(s) on the Adjusted
Closing Financial Statements. In conducting such review, the Company and AA
shall provide the Independent Accountants and, during the thirty (30) day
period, Allied Parent, with customary access to the work papers of AA utilized
in preparing the Adjusted Closing Financial Statements. The final
determination of such disputed matter(s) by the Independent Accountants shall
be
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utilized to determine all adjustments described in Section 2.10 below and shall
be final and binding on the parties for such purposes. The cost of retaining
the Independent Accountants shall be borne by Shareholders, except that the
Company shall reimburse Shareholders for one-half the cost of the Independent
Accountants in the event that such review results in at least a $150,000
increase in the Company's Net Worth as reflected on the Adjusted Closing
Financial Statements prepared by AA.
2.10. POST-CLOSING NET WORTH ADJUSTMENT. The Redemption
Price will be adjusted upward or downward, on a dollar-for-dollar basis, to
reflect the increase or decrease, as the case may be, in Net Worth as reflected
on the Adjusted Closing Financial Statements from the Projected Net Worth (the
"NET WORTH ADJUSTMENT"). The Net Worth Adjustment shall be determined by AA.
In the event that the Net Worth Adjustment results in a decrease in the
Redemption Price, then the Escrow Agent or Allied Parent and the Shareholders
shall pay such amount to the Company in immediately available funds within ten
(10) business days of delivery of the Adjusted Closing Financial Statements as
finally determined in accordance with Section 2.9 above. Conversely, in the
event that the Net Worth Adjustment results in an increase in the Redemption
Price, then the Company shall pay such amount to Allied Parent to the account
set forth in Exhibit G hereto in immediately available funds within ten (10)
business days of delivery of the Adjusted Closing Financial Statements as
finally determined in accordance with Section 2.9 above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY, ALLIED PARENT AND SHAREHOLDERS
Except as set forth on the Disclosure Schedule attached hereto
(which Disclosure Schedule contains a reasonably detailed description of each
such exception and references the applicable representation so qualified), the
Company, Allied Parent and Shareholders jointly and severally represent and
warrant to the Investors that:
3.1. CAPITALIZATION. The authorized capital stock of the
Company immediately prior to Closing consists of 200 shares of Capital Stock,
100 of which being the Existing Shares are issued and outstanding. All of the
Existing Shares are duly authorized, validly issued, fully paid, and
nonassessable. All of the Existing Shares are owned of record and beneficially
by Allied Parent. All of the outstanding shares of Allied Parent are owned of
record and beneficially by the Shareholders in the amounts set forth on Exhibit
H hereto. None of the Existing Shares was issued or will be redeemed under
this Agreement in violation of any preemptive or preferential rights of any
Person.
3.2. NO LIENS ON SHARES. Allied Parent owns the Existing
Shares and Shareholders own all of the Allied Parent shares, free and clear of
any Encumbrances other than the rights and obligations arising under this
Agreement, and none of the Existing Shares or the Allied Parent shares is
subject to any outstanding option, warrant, call, or similar right of any other
Person to acquire the same, and none of the Existing Shares or the Allied
Parent shares is
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subject to any restriction on transfer thereof except for restrictions imposed
by applicable federal and state securities laws. At Closing pursuant to the
Redemption and the Stock Purchase, Allied Parent will have full corporate power
and authority to convey good and marketable title to the Redemption Shares and
the Purchased Shares, free and clear of any Encumbrances other than the
restrictions imposed by federal and state securities laws.
3.3. SUBSIDIARIES. The Company does not own, directly or
indirectly, any capital stock or ownership interests in any Person. The
Shareholders do not own any capital stock or ownership interests in any other
Person engaged in the Business other than Allied Parent. Allied Parent does
not own any capital stock or ownership interests in any other Person other than
the Company.
3.4. OTHER RIGHTS TO ACQUIRE CAPITAL STOCK. Except as set
forth in this Agreement in respect of Investors' rights to acquire the
Purchased Shares, there are no authorized or outstanding warrants, options, or
rights of any kind to acquire from the Company any equity or debt securities of
the Company, or securities convertible into or exchangeable for equity or debt
securities of the Company, and there are no shares of capital stock of the
Company reserved for issuance for any purpose nor any contracts, commitments,
understandings or arrangements which require the Company to issue, sell or
deliver any additional shares of its capital stock.
3.5. DUE ORGANIZATION. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of New York and has full corporate power and authority to own and lease its
properties and assets and to carry on the Business as now conducted and as
proposed to be conducted through Closing. Allied Parent is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of New York and has full corporate power and authority to own and lease its
properties and assets and to carry on the Business as now conducted and as
proposed to be conducted through Closing. Complete and correct copies of the
Certificate of Incorporation and Bylaws of the Company and Allied Parent, and
all amendments thereto, have been delivered to Investors and are attached
hereto as Exhibits I-1 and I-2. The Company is qualified to do business in the
State of New York and in each jurisdiction in which the nature of the Business
or the ownership of its properties requires such qualification except where the
failure to be so qualified does not and could not reasonably be expected to
have a Material Adverse Effect. The jurisdictions in which the Company is so
qualified are listed on Exhibit I-3 attached hereto.
3.6. DUE AUTHORIZATION. The Company, Allied Parent and
the Shareholders each have full power and authority to execute, deliver and
perform this Agreement and to carry out the Transactions. The execution,
delivery, and performance of this Agreement and the Transactions have been duly
and validly authorized by all necessary corporate action of the Company and
Allied Parent. This Agreement has been duly and validly executed and delivered
by the Company, Allied Parent and Shareholders and constitutes the valid and
binding obligations of the Company, Allied Parent and Shareholders, enforceable
in accordance with its terms, except to the extent that enforceability may be
limited by laws affecting creditors' rights and debtors' obligations generally,
and legal limitations relating to remedies of specific performance and
injunctive and other forms of equitable relief (the "EQUITABLE EXCEPTIONS").
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The execution, delivery, and performance of this Agreement and the Transactions
(as well as all other instruments, agreements, certificates, or other documents
contemplated hereby) by the Company, Allied Parent and Shareholders, do not (a)
violate any Requirements of Laws or any Court Order of any Governmental Body
applicable to the Company, Allied Parent or Shareholders, or their respective
property, (b) violate or conflict with, or permit the cancellation of, or
constitute a default under, any material agreement to which the Company, Allied
Parent or Shareholders are a party, or by which any of them or any of their
respective property is bound, (c) permit the acceleration of the maturity of
any material indebtedness of, or indebtedness secured by the property of, the
Company, Allied Parent or Shareholders, (d) violate or conflict with any
provision of the charter or bylaws of the Company or Allied Parent, or (e)
except for filings or approvals under the HSR Act and such consents, approvals,
or registrations as may be required under applicable state securities laws,
require any consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any Governmental Body or other third
party.
3.7. FINANCIAL STATEMENTS. The following financial
statements of the Company have been delivered to Investors by the Company:
reviewed balance sheets of the Company as of December 31, 1995, December 31,
1996 and unaudited balance sheet as of December 31, 1997, and reviewed
statements of income and cash flows of the Company for the fiscal years ended
December 31, 1995 and December 31, 1996 and unaudited statements of income and
cash flow for the year ending December 31, 1997 (collectively, the "FINANCIAL
STATEMENTS"). Copies of the Financial Statements are included in the
Disclosure Schedule hereto. The Financial Statements, including the Financial
Statements as of and for the year ending December 31, 1997 (the "MOST RECENT
FINANCIAL STATEMENTS"), have been prepared in accordance with GAAP, except as
specifically set forth in the Rosen Seymour Shapss Martin & Company LLP
memorandum included in the Disclosure Schedule hereto (the "GAAP EXCEPTIONS
MEMO"). The Financial Statements (including the notes thereto) have been
prepared on a consistent basis throughout the periods indicated and fairly
present the financial position, results of operations and changes in financial
position of the Company as of the indicated dates and for the indicated periods
and are consistent with the books and records of the Company (which books and
records are correct and complete). Since the date of the last of such
Financial Statements, the Company has no Material liabilities required by GAAP
to be reflected on the Company's balance sheet or notes thereto that are not so
reflected in the Financial Statements except as set forth in the GAAP
Exceptions Memo, nor any other obligations (whether absolute, contingent, or
otherwise) which are (individually or in the aggregate) Material (in amount or
to the conduct of the Business); and neither the Company nor Shareholders have
Knowledge of any basis for the assertion of any such Material liability or
obligation. Since December 31, 1997, the Company has not experienced any
Material Adverse Change.
3.8. CERTAIN ACTIONS. Since December 31, 1997, the
Company has not, except as disclosed on any of the Financial Statements or
notes thereto: (a) paid or declared any dividends or distributions, or
purchased, redeemed, acquired, or retired any stock or indebtedness from Allied
Parent or any Shareholder (other than distributions to pay estimated income
taxes of the Shareholders associated with the income of the Company
distributions of the Company's net income for the fiscal year ended December
31, 1997; up to $900,000 of retained, pre-S
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corporation earnings, less the aggregate amount of all debt owed by the
Shareholders to the Company; and additional distributions by the Company, all
of which shall be deemed to be made on or prior to February 28, 1998
(collectively the "PERMITTED DISTRIBUTIONS"); provided that in the event that
payment of any portion of the Permitted Distributions would result in any
violation of the condition to the Closing contained in Section 7.1(g) hereof,
then the Company shall pay such Permitted Distributions at Closing in an amount
not to exceed $2,000,000 out of the Financing Proceeds); (b) made or agreed to
make any loans or advances or guaranteed or agreed to guarantee any loans or
advances to any party whatsoever; (c) suffered or permitted any Encumbrance to
arise or be granted or created against or upon any of its assets, real or
personal, tangible or intangible; (d) canceled, waived, or released or agreed
to cancel, waive, or release any of its debts, rights, or claims against third
parties in excess of $25,000 individually or $50,000 in the aggregate; (e)
sold, assigned, pledged, mortgaged, or otherwise transferred, or suffered any
material damage, destruction, or loss (whether or not covered by insurance) to,
any assets (except in the ordinary course of the Business); (f) amended its
charter or bylaws; (g) paid or made a commitment to pay any severance or
termination payment to any employee or consultant; (h) made any material change
in its method of management operation, accounting or reporting of income or
deductions for tax purposes or any change outside the ordinary course of the
Business in the Company's working capital other than Permitted Distributions;
(i) made any material acquisitions, made any capital expenditures, including,
without limitation, replacements of equipment in the ordinary course of the
Business, or entered into commitments therefor, except for capital expenditures
or commitments therefor which do not, in the aggregate, exceed $100,000; (j)
made any investment or commitment therefor in any Person; (k) made any payment
or contracted for the payment of any bonus or other compensation or personal
expenses, other than (A) wages and salaries and business expenses paid in the
ordinary course of the Business, and (B) wage and salary adjustments made in
the ordinary course of the Business for employees who are not officers,
directors, or shareholders of the Company; (l) made, amended, or entered into
any written employment contract or created or made any material change in any
bonus, stock option, pension, retirement, profit sharing or other employee
benefit plan or arrangement; (m) made or entered into any vendor, supply,
sales, distribution, franchise, consortia or travel agency agreement which
involves annual consideration (or commissions) in excess of $100,000; (n) made
or entered into any agreement granting any Person any registration or offer
rights in respect of the Company's capital stock; (o) entered into any
non-competition agreement; (p) made or entered into any agreement or other
arrangement with any officer, director, shareholder, employee or Affiliate of
the Company or any of the foregoing Persons; (q) materially amended,
experienced a termination or received notice of actual or threatened
termination or non-renewal of any material contract, agreement, lease,
franchise or license to which the Company is a party that would or could
reasonably be expected to have a Material Adverse Effect; or (r) entered into
any other material transactions that would or could reasonably be expected to
have a Material Adverse Effect.
3.9. PROPERTIES. Attached hereto as Exhibit J is a list
containing a description of each interest in real property (including, without
limitation, leasehold interests) and each item of personal property utilized by
the Company in the conduct of the Business having a book or fair market value
in excess of $20,000 as of the date hereof. Except for Permitted Exceptions,
such real and personal properties are free and clear of Encumbrances.
Shareholders and the
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Company have delivered to Investors copies of all real property leases and a
lien search obtained from the counties where the Company conducts business and
the New York Secretary of State office of all UCC liens of record against the
Company's personal property in the State of New York. All of the properties
and assets necessary for continued operation of the Business as currently
conducted (including, without limitation, all books, records, computers and
computer software and data processing systems) are owned, leased or licensed by
the Company and are suitable for the purposes for which they are currently
being used. With the exception of used equipment and inventory valued at no
more than $20,000 in the aggregate on the Company's Financial Statements, the
physical properties of the Company, including the real properties leased by the
Company, are in operating condition and repair, normal wear and tear excepted,
and are free from any defects of a material nature. Except for Permitted
Exceptions, the Company has full and unrestricted legal and equitable title to
all such properties and assets. The operation of the properties and Business
of the Company in the manner in which they are now and have been operated does
not violate any zoning ordinances, municipal regulations, or other Requirements
of Laws, except for any such violations which would not, individually or in the
aggregate, have a Material Adverse Effect. To the Knowledge of the
Shareholders, except for Permitted Exceptions, no restrictive covenants,
easements, rights-of-way, or regulations of record impair the uses of the
properties of the Company for the purposes for which they are now operated.
All leases of real or personal property by the Company are legal, valid,
binding, enforceable and in full force and effect and will remain legal, valid,
binding, enforceable and in full force and effect on identical terms
immediately following the Closing, except for the Equitable Exceptions. All
facilities leased by the Company have received all approvals of any
Governmental Body (including Governmental Permits) required to be obtained by
the Company in connection with the operation of the Business and have been
operated and maintained in accordance with all Requirements of Laws applicable
to the Company as a lessee thereof. The Company owns no real property.
3.10. LICENSES AND PERMITS. Attached hereto as Exhibit K
is a list of all licenses, certificates, privileges, immunities, approvals,
franchises, authorizations and permits held or applied for by the Company from
any Governmental Body (herein collectively called "GOVERNMENTAL PERMITS") the
absence of which could, individually or in the aggregate, have a Material
Adverse Effect. The Company has complied in all material respects with the
terms and conditions of all such Governmental Permits, and the Company has not
received notification from any Governmental Body of violation of any such
Governmental Permit or the Requirements of Laws governing the issuance or
continued validity thereof. All of such Governmental Permits are valid and in
full force and effect. No additional Governmental Permit is required from any
Governmental Body thereof in connection with the conduct of the Business which
Governmental Permit, if not obtained, would have a Material Adverse Effect.
3.11. INTELLECTUAL PROPERTY. Attached hereto as Exhibit L
is a list and brief description of all Intellectual Property owned or utilized
by the Company. The Company has furnished Investors with copies of all license
agreements to which the Company is a party, either as licensor or licensee,
with respect to any Intellectual Property. The Company has good title to or
the right to use all the Intellectual Property and all inventions, processes,
designs, formulae, trade secrets and know-how necessary for the conduct of the
Business, in the Business as
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<PAGE> 21
presently conducted without the payment of any royalty or similar payment, and
the Company is not infringing on any Intellectual Property right of others, and
neither the Company nor Shareholders are aware of any infringement by others of
any such rights owned by the Company. All licenses set forth on Exhibit L are
valid and binding obligations of the Company, and to the Knowledge of the
Company the other parties thereto, and enforceable against the Company, and to
the Knowledge of the Company the other parties thereto in accordance with their
respective terms, except for the Equitable Exceptions. The Company owns and
possesses all right, title and interest in and to, or has the right to use
pursuant to a valid license, all Intellectual Property necessary for the
operation of the business of the Company as presently conducted.
3.12. COMPLIANCE WITH LAWS. The Company has (i) complied
in all material respects with all Requirements of Laws, Governmental Permits
and Court Orders applicable to the Business and has filed with the proper
Governmental Bodies all statements and reports required by all Requirements of
Laws, Governmental Permits and Court Orders to which the Company or any of its
employees (because of their activities on behalf of the Company) are subject
and (ii) to the Knowledge of the Company, conducted the Business and is in
compliance in all material respects with all federal, state and local energy,
public utility, health, safety and environmental Requirements of Laws,
Governmental Permits and Court Orders including the Clean Air Act, the Clean
Water Act, the Solid Waste Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Safe Drinking Water Act, OSHA, the Toxic Substances Control Act and any similar
state, local or foreign laws (collectively "ENVIRONMENTAL AND OSHA
OBLIGATIONS") and all other Governmental Body requirements, except where any
such failure to comply or file would not, in the aggregate, have a Material
Adverse Effect. No claim has been made by any Governmental Body (and, to the
Knowledge of the Company and Shareholders, no such claim is anticipated) to the
effect that the Business fails to comply, in any respect, with any Requirements
of Laws, Governmental Permit or Environmental and OSHA Obligation or that a
Governmental Permit or Court Order is necessary in respect thereto.
3.13. INSURANCE. Attached hereto as Exhibit M is a list of
all coverages for fire, liability, or other forms of insurance and all fidelity
bonds held by or applicable to the Company. Copies of the binder for all such
insurance policies have been delivered to Investors. The insurance maintained
by the Company is adequate and customary for companies engaged in the Business.
To the best of the Company's and Shareholders' Knowledge, no event relating to
the Company has occurred which will result in (i) cancellation of any such
insurance coverages; (ii) a retroactive upward adjustment of premiums under any
such insurance coverages; or (iii) any prospective upward adjustment in such
premiums. All of such insurance coverages will remain in full force and effect
following the Closing. The Company is not in default under any such insurance
policies.
3.14. EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE WELFARE BENEFIT PLANS. The Company
does not maintain or contribute to any "employee welfare benefit plan" as such
term is defined in Section 3(1) of ERISA. With respect to each such plan
listed in the Disclosure Schedule, (i) the plan is
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in material compliance with ERISA and all other applicable Requirements of
Laws; (ii) the plan has been administered in accordance with its governing
documents; (iii) neither the plan, nor any fiduciary with respect to the plan,
has engaged in any "prohibited transaction" as defined in Section 406 of ERISA
other than any transaction subject to a statutory or administrative exemption;
(iv) except for the processing of routine claims in the ordinary course of
administration, there is no material litigation, arbitration or disputed claim
outstanding; and (v) all premiums due on any insurance contract through which
the plan is funded have been paid.
(b) EMPLOYEE PENSION BENEFIT PLANS. The Company
does not maintain or contribute to any arrangement that is or may be an
"employee pension benefit plan" relating to employees, as such term is defined
in Section 3(2) of ERISA.
(c) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED
COMPENSATION ARRANGEMENTS. The Company does not maintain or contribute to any
retirement or deferred or incentive compensation or stock purchase, stock grant
or stock option arrangement entered into between the Company and any current or
former officer, consultant, director or employee of the Company that is not
intended to be a tax qualified arrangement under Section 401(a) of the Code.
3.15. CONTRACTS AND AGREEMENTS. Exhibit N hereto contains
a list and brief description of all written or oral contracts, commitments,
leases (including without limitation the Leases), and other agreements
(including, without limitation, promissory notes, loan agreements, and other
evidences of indebtedness, guarantees, hedging agreements, off-balance sheet
financing arrangements, indemnity agreements, vendor contracts with airlines
and other carriers, hotels and resorts, agreements with rental car companies,
marketing agreements, consortia agreements, travel agency agreements, interface
or similar agreements pertaining to various airline or other computer
reservation systems) to which the Company is a party or by which the Company or
its properties are bound pursuant to which the obligations thereunder of either
party thereto are, or are contemplated as being, for any one contract, $150,000
or greater or any contract or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world (collectively, the
"CONTRACTS"). The Company is not and, to the best knowledge of Shareholders
and the Company, no other party thereto is in default (and no event has
occurred which, with the passage of time or the giving of notice, or both,
would constitute a default by the Company) under any of the Contracts, and the
Company has not waived any right under any of the Contracts. All of the
Contracts to which the Company is a party are legal, valid, binding,
enforceable and in full force and effect and will remain legal, valid, binding,
enforceable and in full force and effect on identical terms immediately after
the Closing, except for the Equitable Exceptions. The Company has not
guaranteed any obligations of any other Person. The Company has no present
expectation or intention of not fully performing all of its obligations under
any Contract, the Company has no Knowledge of any breach or anticipated breach
by the other parties to any Contract and the Company has not received notice of
actual or threatened termination or non renewal of any Contract.
3.16. CLAIMS AND PROCEEDINGS. There are no claims,
actions, suits, proceedings, or investigations pending or, to the Knowledge of
the Shareholders or the Company, threatened against or affecting the Company or
any of its properties or assets, at law
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or in equity, before or by any court, municipality or other Governmental Body.
To the extent any are disclosed on the Disclosure Schedule, none of such
claims, actions, suits, proceedings, or investigations, if adversely
determined, will individually or in the aggregate result in any Material
Adverse Effect to the Company. The Company has not been and the Company is not
now, subject to any Court Order, stipulation, or consent of or with any court
or Governmental Body. No inquiry, action or proceeding has been instituted or,
to the best knowledge and belief of the Shareholders or the Company, threatened
or asserted against the Shareholders, Allied Parent or the Company to restrain
or prohibit the carrying out of the Transactions or to challenge the validity
of the Transactions or any part thereof or seeking damages on account thereof.
To the Knowledge of the Company and Shareholders there is no basis for any such
valid claim or action.
3.17. TAXES.
(a) All Federal, foreign, state, county and local
and other Taxes due from the Company on or before the Closing have been paid
and all Tax Returns which are required to be filed by the Company on or before
the date hereof have been filed within the time and in the manner provided by
all Requirements of Laws or extensions were timely filed, and all such Tax
Returns are true and correct and accurately reflect the Tax liabilities of the
Company. No Tax Returns of the Company, Allied Parent or any of the
Shareholders are presently subject to an extension of the time to file. All
Taxes, assessments, penalties, and interest of the Company which have become
due pursuant to such Tax Returns or any assessments received have been paid or
adequately accrued on the Company's Financial Statements. The provisions for
Taxes reflected on the balance sheets contained in the Financial Statements are
adequate to cover all of the Company's Tax liabilities for the respective
periods then ended and all prior periods. The Company has not executed any
presently effective waiver or extension of any statute of limitations against
assessments and collection of Taxes, and there are no pending or threatened
claims, assessments, notices, proposals to assess, deficiencies, or audits with
respect to any such Taxes of which any of the Shareholders or the Company are
aware. For Governmental Bodies with respect to which the Company does not file
Tax Returns, no such Governmental Body has given the Company written
notification that the Company is or may be subject to taxation by that
Governmental Body. The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, shareholder, creditor, independent contractor or other party. There
are no Tax liens on any of the property or assets of the Company.
(b) Neither the Company nor any other corporation
has filed an election under Section 341(f) of the Code that is applicable to
the Company or any assets held by the Company. The Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Sec. 280G. The Company has not
been a United States real property holding corporation within the meaning of
Code Sec. 897(c)(2) during the applicable period specified in Code Sec.
897(c)(1)(A)(ii). The Company is not a party to any Tax allocation or sharing
agreement. During the past seven years, the Company has not and has never been
(nor does the Company have any liability for unpaid Taxes
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because it once was) a member of an affiliated group during any part of which
return year any corporation other than the Company also was a member of the
affiliated group.
(c) No transaction contemplated by this Agreement
is subject to withholding under Section 1445 of the Code and no stock transfer
taxes, real estate transfer taxes or similar taxes will be imposed upon the
sale of the Purchased Shares or the redemption of the Redemption Shares
pursuant to this Agreement.
(d) The Company and Allied Parent have each made
a valid election under Section 1362 of the Code and any corresponding state or
local provisions to be an S corporation within the meaning of Section 1361 of
the Code for all taxable years (or portions thereof) beginning on or after
December 31, 1982 with respect to the Company and since inception with respect
to Allied Parent, no such S election has been terminated (whether voluntarily,
involuntarily or inadvertently, including, without limitation, by taking any
action defined in Section 1362(d) of the Code) since such time. Allied Parent
has made a valid election for the Company to be qualified as a "Qualified
Subchapter S subsidiary" under Section 1361 of the Code and applicable state
laws effective as of the date that the Shareholders contributed the stock of
the Company to Allied Parent.
(e) The Company will not be required to include
any amount in taxable income or exclude any item of deduction or loss from
taxable income for any taxable period (or portion thereof) ending after the
Closing Date (i) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing Date, (ii) as a result of any "closing
agreement," as described in Code Section 7121 (or any corresponding provision
of state, local or foreign income Tax law) entered into on or prior to the
Closing Date, (iii) as a result of any sale reported on the installment method
where such sale occurred on or prior to the Closing Date, and (iv) as a result
of any prepaid amount received on or prior to the Closing Date.
3.18. PERSONNEL. Attached hereto as Exhibit O is a list of
the names and annual rates of compensation of the directors and executive
officers of the Company, and of the employees of the Company whose annual rates
of compensation during the calendar year ended December 31, 1997 (including
base salary, bonus and incentive pay) exceed (or by December 31, 1998 are
expected to exceed) $60,000. Exhibit O also summarizes the bonus, profit
sharing, percentage compensation, company automobile, club membership, and
other like benefits, if any, paid or payable to such directors, officers, and
employees during the Company's calendar year ended December 31, 1997 and to the
date hereof. Exhibit O also contains a brief description of all material terms
of employment agreements to which the Company is a party and all severance
benefits which any director, officer or employee of the Company is or may be
entitled to receive. The employee relations of the Company are generally good
and there is no pending or, to the best knowledge of Shareholders or the
Company, threatened labor dispute or union organization campaign. None of the
employees of the Company is represented by any labor union or organization.
The Company is in compliance in all material respects with all Requirements of
Laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practices. Neither the Company or Shareholders has been advised, or has good
reason to believe, that any employee will not agree to
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<PAGE> 25
remain employed by the Company after the consummation of the Transactions.
There is no unfair labor practice claim against the Company before the National
Labor Relations Board, or any strike, dispute, slowdown, or stoppage pending
or, to the Knowledge of the Company and Shareholders, threatened against or
involving the Company, and none has previously occurred.
3.19. BUSINESS RELATIONS. Neither the Company nor
Shareholders know or has good reason to believe that any customer, supplier,
travel agency, resort operator or lodging or transportation company engaged in
doing business with the Company will cease to do business with the Company
after the consummation of the Transactions in the same manner and at the same
levels as previously conducted with the Company except for any reductions which
do not result in a Material Adverse Change. Neither Shareholders nor the
Company has received any notice of cancellation of any Material business
arrangement between any Person and the Company nor is the Company or
Shareholders aware of any facts which could lead them to believe that the
Business will be subject to cancellation of any such business arrangement.
3.20. ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLES; CUSTOMER
DEPOSITS AND BOOKINGS.
(a) ACCOUNTS RECEIVABLE. All of the accounts,
notes, and loans receivable that have been recorded on the books of the Company
are bona fide and represent amounts validly due for goods sold or services
rendered and, subject to a $660,000 write-off already reflected in the Most
Recent Financial Statements and the possibility of an occurrence of a Force
Majeure event, all such amounts will be collected in full prior to December 31,
1998. With respect to such accounts, notes, and loans receivable: (i) all are
free and clear of any Encumbrances; (ii) no claims of offset have been asserted
in writing against any of such accounts, notes, or loans receivable; and (iii)
none of the obligors thereto has given written notice that it will or may
refuse to pay the full amount or any portion thereof. Lists of the Company's
accounts receivable (A) as of December 31, 1997 (including any reconciliation
to the accounts receivable entry on the balance sheet included in the Most
Recent Financial Statements), (B) as of February 28, 1998, and (C) as of the
day prior to the Closing (or as of the most recent date available), will all be
delivered at the Closing and added to the Disclosure Schedule.
(b) ACCOUNTS PAYABLE. The aggregate amount of
accounts payable reflected on the Most Recent Financial Statements are true and
correct in all material respects in accordance with GAAP except as adjusted for
in the Net Worth Adjustment and, after giving effect to such adjustment,
accurately reflect the accounts payables of the Company as of December 31,
1997. Lists of the Company's accounts payable (A) as of December 31, 1997
(including any reconciliation to the accounts payable entry on the balance
sheet included in the Most Recent Financial Statements), (B) as of February 28,
1998, and (C) as of the day prior to the Closing (or as of the most recent date
available), will all be delivered at the Closing and added to the Disclosure
Schedule.
(c) BOOKINGS. Exhibit P sets forth, as of the
date specified therein all customer bookings as of such date on an aggregate
basis ("BOOKINGS"). For the period since December 31, 1997 through February
28, 1998, to the Knowledge of the Company and the
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Shareholders, the Company's actual Bookings are not less than the Company's
Bookings for the period December 31, 1996 through February 28, 1997.
3.21. BANK ACCOUNTS; INVESTMENTS. Attached hereto as
Exhibit R is a list of all banks or other financial institutions with which the
Company has an account or maintains a safe deposit box, showing the type and
account number of each such account and safe deposit box and the names of the
persons authorized as signatories thereon or to act or deal in connection
therewith. Exhibit R also contains a list of all material investments by the
Company in any funds, accounts, securities, certificates of deposit or
instruments of any Person. All of such investments are customary in form and
amount for reasonably prudent treasury investments of comparable businesses,
none of which involve any type of derivative, option, hedging or other
speculative instrument.
3.22. CUSTOMER CLAIMS. No written or oral claim for breach
of contract or otherwise by any customer (a "CUSTOMER CLAIM") has been made
against the Company since January 1, 1998 which could, individually or in the
aggregate, result in any Material Adverse Effect. The level of Customer Claims
for the period since December 31, 1997 through the date hereof is consistent
(plus or minus 5%) with past practices of the Company for the comparable period
in 1997. To the Knowledge of Shareholders and the Company, no state of facts
exists, and no event has occurred, which could reasonably be expected to form
the basis of any present claim against the Company for liability to any third
party in connection with vacation packages sold or services rendered by the
Company, other than Customer Claims arising in the ordinary course of the
Business.
3.23. BROKERS. Neither the Company, Allied Parent nor
Shareholders have engaged, or caused to be incurred any liability to any
finder, broker, or sales agent in connection with the origin, negotiation,
execution, delivery, or performance of this Agreement or the Transactions.
3.24. AFFILIATED TRANSACTIONS. No officer, director,
shareholder (including the Shareholders and Allied Parent) or Affiliate of the
Company or any individual related by blood or marriage to any such Person, or
any entity in which any such Person owns any beneficial interest, is a party to
any agreement, contract, arrangement or commitment with the Company or engaged
in any transaction with the Company or has any interest in any property used by
the Company. No officer, director, or shareholder of the Company, Allied
Parent or any Affiliate of any such officer, director, or shareholder, has any
ownership interest in any competitor, supplier, or customer of the Company
(other than ownership of securities of a publicly-held corporation of which
such Person owns, or has real or contingent rights to own, less than five
percent of any class of outstanding securities) or any property used in the
operation of the Business.
3.25. FUNDED INDEBTEDNESS; LETTERS OF CREDIT; UNDISCLOSED
LIABILITIES.
(a) FUNDED INDEBTEDNESS. Other than any Funded
Indebtedness which is to be repaid and discharged by Shareholders prior to
Closing in accordance with Section 7.1(d), the Company does not have any Funded
Indebtedness.
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(b) LETTERS OF CREDIT. Other than those listed
on Exhibit S, the Company has no letters of credit, performance bonds or
similar instruments issued on or for its account for the benefit of any of its
vendors or otherwise.
(c) UNDISCLOSED LIABILITIES. The Company does
not have any liabilities in excess of $50,000 in the aggregate (whether
absolute, accrued, contingent or otherwise) of a nature required by GAAP to be
reflected on a corporate balance sheet or in the notes thereto, except as set
forth in the GAAP Exceptions Memo and except such liabilities which are accrued
or reserved against in the Financial Statements or disclosed in the notes
thereto, including without limitation any accounts payable or service
liabilities of the Company incurred prior to the Closing Date.
3.26. YEAR 2000. To the Knowledge of the Company, all of
the Material computer software, computer firmware, computer hardware (whether
general or special purpose), and other similar or related items of automated,
computerized, and/or software system(s) that are used or relied on by the
Company in the conduct of its business will not malfunction, will not cease to
function, will not generate incorrect data, and will not produce incorrect
results when processing, providing, and/or receiving (i) date-related data into
and between the twentieth and twenty-first centuries and (ii) date-related data
in connection with any valid date in the twentieth and twenty-first centuries,
except for any malfunctions or generations of incorrect data or results that
would not individually or in the aggregate have a Material Adverse Effect.
3.27. INFORMATION FURNISHED. The Company and Shareholders
have made available to Investors true and correct copies of all material
corporate records of the Company and all material agreements, documents, and
other items listed on the Schedules to this Agreement or referred to in Article
III of this Agreement, and neither this Agreement, the Schedules hereto, nor
any written information, instrument, or document delivered to Investors
pursuant to this Agreement contains any untrue statement of a Material fact or
omits any Material fact necessary to make the statements herein or therein, as
the case may be, not misleading.
ARTICLE IV
THE INVESTORS' REPRESENTATIONS AND WARRANTIES
The Investors jointly and severally represent and warrant to
Shareholders, Allied Parent and the Company as follows:
4.1. DUE ORGANIZATION OF THAYER III. Thayer III is a
limited partnership duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has full partnership power and
authority to execute, deliver and perform this Agreement and to carry out the
Transactions.
4.2. DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
individual, partnership or corporate action on the part of each Person
comprising the Investors, as appropriate, and the Agreement has been duly
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and validly executed and delivered by each of the Investors and constitutes the
valid and binding obligation of each of the Investors, enforceable in
accordance with its terms, except for the Equitable Exceptions. The execution,
delivery, and performance of this Agreement and the Escrow Agreement (as well
as all other instruments, agreements, certificates or other documents
contemplated hereby) by the Investors shall not (a) violate any Requirements of
Laws or Court Order of any Governmental Body applicable to any Investor or its
or his respective property, (b) violate or conflict with, or permit the
cancellation of, or constitute a default under any agreement to which any
Investor is a party or by which any Investor or its or his respective property
is bound, (c) permit the acceleration of the maturity of any indebtedness of,
or any indebtedness secured by the property of, any Investor, (d) violate or
conflict with any provision of the Certificate of Limited Partnership of Thayer
III or the charter or bylaws of any other Investor which is a corporation or a
partnership (as applicable), or (e) except for filings or approvals under the
HSR Act and such consents, approvals, or registrations as may be required under
applicable state securities laws, require any consent, approval or
authorization of, or notice to, or declaration, filing or registration with,
any Governmental Body or other third party.
4.3. NO BROKERS. The Investors have not engaged, or
caused to be incurred any liability for which Shareholders or Allied Parent may
be liable to any finder, broker or sales agent in connection with the origin,
negotiation, execution, delivery, or performance of this Agreement or the
Transactions.
4.4. INVESTMENT. The Investors will each acquire the
Purchased Shares for investment and for its own account and not with a view to
the distribution thereof.
ARTICLE V
PRE-CLOSING COVENANTS OF THE COMPANY, ALLIED PARENT, THAYER III AND
SHAREHOLDERS
5.1. CONSENTS OF OTHERS. Prior to the Closing, the
Company, Allied Parent and Shareholders shall use their best efforts to obtain
and to cause the Company to obtain all authorizations, consents and permits
required of the Company, Allied Parent and Shareholders to permit them to
consummate the Transactions. To the extent required to consummate the
Transactions or to ensure that the Contracts shall remain in full force and
effect following the Closing, Shareholders shall have obtained the written
consent or waiver of any "change of control" type termination rights of any
third party to any Contract. As promptly as practicable after the date hereof,
Thayer III, the Company and the Shareholders shall make, or shall cause to be
made, such filings as may be required pursuant to the HSR Act with respect to
the consummation of the Transactions.
5.2. SHAREHOLDERS' EFFORTS. The Company and Shareholders
shall use all reasonable efforts to cause all conditions for the Closing to be
met.
5.3. POWERS OF ATTORNEY. The Company and Shareholders
shall cause the Company to terminate at or prior to Closing all powers of
attorney granted by the Company,
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other than those relating to service of process, qualification or pursuant to
governmental regulatory or licensing agreements, or representation before the
IRS or other Governmental Bodies.
5.4. CONDUCT OF BUSINESS PENDING CLOSING. From the date
of this Agreement to the Closing Date:
(a) Except as otherwise contemplated by
this Agreement, or as Thayer III may otherwise consent to in writing, the
Company and Shareholders shall conduct the Business only in the ordinary course
and shall not engage in any material activity or enter into any material
transaction which would cause a breach of the representations and warranties
contained in Article III.
(b) Shareholders and the Company shall
use their best efforts to cause the Business to preserve substantially intact
its current business organization and present relationships with its customers,
vendors, suppliers and employees and to maintain all of its insurance currently
in effect.
(c) Shareholders and the Company shall
give prompt notice to Investors of any notice of material default received by
the Company or the Business subsequent to the date of this Agreement under any
Contract or any Material Adverse Change occurring prior to the Closing Date in
the operation of the Company or the Business.
(d) Neither the Company, Allied Parent
nor the Shareholders, nor any of their representatives, shall solicit,
encourage or discuss any Acquisition Proposal (as hereinafter defined) or
supply any non-public information concerning the Company or the Business or the
Company's assets to any party other than Investors or their representatives.
As used herein, "ACQUISITION PROPOSAL" means any proposal other than the
Transactions, for (i) any merger or other business combination involving the
Company or the Business, (ii) the acquisition of the Company or a material
equity interest in the Company or a material portion of its assets, or (iii)
the dissolution or liquidation of the Company.
5.5. ACCESS BEFORE CLOSING. Prior to the Closing Date,
Shareholders and the Company agree that it will give, or cause to be given, to
the Investors and their representatives, during normal business hours and at
the Investors' expense, full and unrestricted access to the Company's
personnel, independent accountants, customers, suppliers, officers, agents,
employees, assets, properties, titles, contracts, corporate minute and other
books, records, files and documents of the Company with respect to the Business
(including financial, tax basis, budget projections, accountants' work papers
and other information as Investors may request).
5.6. INVESTOR CONFIDENTIALITY. Until the Closing Date,
Thayer III agrees to remain bound by the terms of the confidentiality
provisions contained in the December 8, 1997 letter of intent between Thayer
III and the Company.
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ARTICLE VI
POST-CLOSING COVENANTS
6.1. GENERAL. In case at any time after the Closing any
further action is legally necessary or reasonably desirable (as determined by
Thayer III and Shareholders) to carry out the purposes of this Agreement, each
of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
reasonably may request, all at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor
under Article VIII below). The Shareholders acknowledge and agree that from
and after the Closing, the Company will be entitled to possession of all
documents, books, records, agreements, and financial data of any sort relating
to the Company, which shall be maintained at the chief executive office of the
Company; provided, however, that Shareholders shall be entitled to reasonable
access to and to make copies of such books and records at their sole cost and
expense and the Company will maintain all of the same for a period of at least
three (3) years after Closing. Thereafter, the Company will offer such
documentation to Shareholders before disposal thereof.
6.2. TRANSITION. For a period of four (4) years following
Closing, the Shareholders will not take any action (or cause any such action to
be taken by another Person) that primarily is designed or intended to have the
effect of discouraging any vendor (including without limitation any airline or
other carrier, hotel, resort or rental car company), lessor, licensor,
customer, travel agency, consortia member, supplier, or other business
associate of the Company from maintaining the same business relations with the
Company after the Closing as it maintained with the Company prior to the
Closing. For a period of four (4) years following Closing, the Shareholders
will refer all customer inquiries relating to the Business to the Company.
6.3. CONFIDENTIALITY. The Shareholders will treat and
hold in confidence and not disclose all Confidential Information and refrain
from using any of the Confidential Information except in connection with this
Agreement or otherwise for the benefit of the Company or Investors for a period
of four (4) years from the date of this Agreement, and deliver promptly to
Investors or destroy, at the written request and option of Thayer III, all
tangible embodiments (and all copies) of the Confidential Information which are
in their possession except as otherwise permitted herein. In the event that
any Shareholder is requested or required (by oral question or written request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar legal proceeding) to disclose any
Confidential Information, such Shareholder will notify the Company and Thayer
III promptly of the request or requirement.
6.4. COVENANT NOT TO COMPETE. For and in consideration of
the allocation of $50,000 of the Redemption Price paid to the Shareholders by
the Company, each Shareholder covenants and agrees, for a period of four (4)
years from and after the Closing Date, that he will not, directly or indirectly
without the prior written consent of the Company, for or on behalf of any
entity:
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(a) become interested or engaged, directly or
indirectly, as a shareholder, bondholder, creditor, officer, director, partner,
agent, contractor with, employer or representative of, or in any manner
associated with, or give financial, technical or other assistance to, any
Person, firm or corporation for the purpose of engaging in the Business in
competition with the Company or any of its Affiliates, within the United
States;
(b) enter into any agreement with, service,
assist or solicit the business of any customers of the Company or any of its
Affiliates for the purpose of providing wholesale travel services to such
customers in competition with the Company or any of its Affiliates in the
United States or to cause them to reduce or end their business with the Company
or any of its Affiliates; or
(c) hire, retain, or solicit the employment or
services of employees, consultants or representatives of the Company or any of
its Affiliates for the purpose of causing them to leave the employment of the
Company or any of its Affiliates;
provided, however, that no owner of less than five percent (5%) of the
outstanding stock of any publicly-traded corporation shall be deemed to be in a
violation of this Section 6.4 solely by reason thereof.
6.5. ADDITIONAL MATTERS.
(a) The Shareholders shall cause the Company and
Allied Parent to file with the appropriate governmental authorities all Tax
Returns required to be filed by it for any taxable period ending prior to the
Closing Date and the Company and Allied Parent shall remit any Taxes (other
than Taxes on income) due in respect of such Tax Returns. In addition, Allied
Parent and Shareholders shall cause Rosen, Seymour, Shapss, Martin & Co. to
prepare a short period tax return for the Company covering the period January
1, 1998 through the Closing Date. The cost of preparation of such short period
tax return shall be paid for by Shareholders.
(b) Investors and Shareholders recognize that
each of them will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information held by Investors and/or the
Company to the extent such records and information pertain to events occurring
on or prior to the Closing Date; therefore, Investors agree to cause the
Company to (A) use its best efforts to properly retain and maintain such
records for a period of six (6) years from the date the Tax Returns for the
year in which the Closing occurs are filed or until the expiration of the
statute of limitations with respect to such year, whichever is later, and (B)
allow each Shareholder and his agents and representatives at times and dates
mutually acceptable to the parties, to inspect, review and make copies of such
records as such other party may deem necessary or appropriate from time to
time, such activities to be conducted during normal business hours and at the
other party's expense.
(c) The Shareholders and Allied Parent shall be
liable for, and shall indemnify and hold Investors and the Company harmless
against, any Taxes or other costs attributable solely to (i) a failure on the
part of any Shareholder to take all actions required of him under Section
6.5(a); (ii) a failure on the part of the Company or Allied Parent to qualify,
at
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or prior to the Closing, as an "S corporation" for federal and/or state income
Tax purposes; or (iii) a change in accounting method of the Company reasonably
required by applicable Tax law (as determined by the Company's independent
accountants) as a result of any action or omission taken by Shareholders,
Allied Parent or the Company on or prior to the Closing Date in the event of
any final determination by the IRS or any state or local Tax authority that the
parties' characterization that the transactions contemplated by this Agreement
would be treated as an "asset sale" for tax purposes is invalid. Payment for
such indemnification provided in the preceding sentence shall be due and
payable within 30 days after a final determination of such matter has been
made; provided, however, that payment for indemnification under clause (iii) of
the preceding sentence (other than interest and penalties of the Company which
shall be immediately due and payable upon incurrence thereof by the Company)
shall not be due and payable until 10 days after Allied Parent's and/or
Shareholders' receipt of a tax refund or tax credit resulting from such change
in accounting method as described in the last sentence of this Section 6.5(c).
The Shareholders' and Allied Parent's indemnification of the Company under
clause (iii) above shall be an amount equal to the sum of (A) Allied Parent's
and the Shareholders' actual federal, state and local income tax refunds and/or
credits solely as a result of the decreased income resulting from the change in
accounting method and (B) all interest and penalties due to such change in
accounting method. In the event of any required change in accounting method,
Allied Parent and the Shareholders shall use their best efforts to obtain all
Tax refunds or credits from the appropriate Tax authorities as a result of the
change in accounting method by filing their then current Tax Returns with a
provision for a credit against that current year's or other year's Taxes (if
permitted by applicable Tax law) or by filing amended Tax Returns within 30
days of Allied Parent's receipt of written notice from the Company of such
accounting method change. Thayer III shall have the right to review and approve
any amended Tax Returns or any provisions for credits against then current
Taxes reflected on Tax Returns made by the Shareholders or Allied Parent in
connection therewith. In the event any Tax authority disputes such refund or
credit, Allied Parent shall have the right to control (with the participation
of Thayer III and the Company) all matters or proceedings relating to such
dispute. Allied Parent and Shareholders shall pay to the Investors all refunds
or credits obtained by Allied Parent or Shareholders within ten days after (A)
their receipt of a tax refund from the IRS or any state or local Tax authority
(with respect to refunds for amended Tax Returns) with respect to any decreased
income as a result of the accounting method change or (B) the filing of any Tax
Return claiming a credit or similar benefit against then current Taxes in any
Tax Return as a result of the accounting method change.
(d) Subject to the limitations described below,
the Shareholders and Allied Parent shall be liable for and shall repay to the
Investors the aggregate amount of all payments made by the Investors to the
Shareholders pursuant to the Tax Payments Schedule (the "GROSS-UP TAXES") in
the event of any final determination by the IRS or any state or local Tax
authority that the parties' characterization that the transactions contemplated
by this Agreement would be treated as an "asset sale" for tax purposes is
invalid. In the event of such final determination, Allied Parent and the
Shareholders shall use their best efforts to either (i) obtain a refund from
the appropriate Tax authorities of all Gross-Up Taxes paid to any Tax authority
through an amended Tax Return (such refund to be filed for within 30 days of
Shareholders' receipt of written notice from the Company or Investors of a
final determination) or (ii) file its
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then current Tax Returns with a provision for a credit against that current
year's or other year's Taxes for the overpayments for Gross-Up Taxes. Thayer
III shall have the right to review and approve any amended Tax Returns or any
provisions for credits against then current Taxes reflected on Tax Returns made
by the Shareholders or Allied Parent in connection therewith. In the event any
Tax authority disputes such refund or credit, Allied Parent shall have the
right to control (with the participation of Thayer III and the Company) all
matters or proceedings relating to such dispute. Allied Parent and
Shareholders shall pay to the Investors all refunds or credits obtained by
Allied Parent or Shareholders within five (5) business days after (A) their
receipt of a tax refund from the IRS or any state or local Tax authority (with
respect to refunds for amended Tax Returns) with respect to any Gross-Up Taxes
or (B) the filing of any Tax Return claiming a credit or similar benefit
against then current Taxes in any Tax Return with respect to the overpayments
of Gross-Up Taxes. The aggregate liability of Allied Parent and the
Shareholders to the Investors for Gross-Up Taxes shall be limited to the actual
amount of all refunds and/or credits received by Allied Parent and/or the
Shareholders from Tax authorities. Notwithstanding the foregoing, in the event
that Allied Parent or the Shareholders determine that any of such Gross-Up
Taxes are not for any reason required to be made to any Tax authority and the
parties characterization of the transactions contemplated by this Agreement as
an "asset sale" for Tax purposes remains valid, then the Shareholders shall
promptly reimburse the Investors for ninety percent (90%) of all of such
Gross-Up Taxes not paid by the Shareholders. Any such reimbursement required
by the preceding sentence shall be refunded to the Shareholders in the event
that such Gross-Up Taxes are later determined to be required to be paid by
Shareholders. Allied Parent and the Shareholders shall cause Rosen Seymour
Shapss Martin & Company LLP to certify to the Company the final amount of all
Gross-Up Taxes actually paid by the Shareholders.
(e) The Shareholders shall maintain Allied Parent
in existence following the Closing Date for a period of at least four years;
provided, however, that at the Company's request, Allied Parent shall change
its name so that the words "Allied Tours" are removed therefrom.
6.6. LITIGATION SUPPORT. In the event and for so long as
any party is actively contesting or defending against any claim, suit, action
or charge, complaint, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, circumstance, status,
condition, activity, practice, occurrence, event, action, failure to act, or
transaction on or prior to the Closing Date involving the Company, each of the
other parties will cooperate and make available themselves or their personnel,
as applicable, and provide such testimony and access to their books and records
as shall be necessary in connection with the contest or defense.
6.7. AUDITS. Following the Closing, the Shareholders
shall use their best efforts to cause the Company, at the Company's expense, to
deliver, or cause to be delivered, to Investors an unqualified and unmodified
audit report of Arthur Andersen, LLP on the balance sheets of the Company as of
December 31, 1995, December 31, 1996, December 31, 1997 and the Closing Date,
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and audited statements of operations and cash flows of the Company for the
fiscal years then ended and with respect to the period January 1, 1998 through
the Closing Date, which report shall be without limitation as to the scope of
the audit. Shareholders, in their capacities as officers and directors of the
Company during such periods, shall provide all management letters, reports or
representations reasonably requested by such auditors in connection with such
audits.
6.8. REGISTRATION RIGHTS. Following the Closing, Thayer
III and the Company anticipate that they may enter into a registration rights
agreement with respect to shares of the Company's Common Stock. Upon execution
thereof, Thayer III and the Company each hereby agree to offer Allied Parent
and the Shareholders the right to become a party to such registration rights
agreement, in which event Allied Parent and the Shareholders shall receive
customary piggyback registration rights with respect to their shares of the
Company's Common Stock (including any shares of Common Stock issuable upon
conversion of the Preferred Stock). All customary registration expenses (other
than underwriting discounts and fees) in connection with any piggyback
registration will be at the Company's expense.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING
7.1. CONDITIONS TO THE INVESTORS' OBLIGATIONS. The
obligation of the Investors under this Agreement to consummate the Closing is
subject to the conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
The Company, Allied Parent and Shareholders shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants contained in this Agreement to be performed and
complied with by each of them prior to or at the Closing Date. The
representations and warranties of the Company, Allied Parent and Shareholders
set forth in this Agreement shall be accurate in all material respects at and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date.
(b) CONSENTS. All statutory requirements for the
valid consummation by the Company, Allied Parent and Shareholders of the
Transactions shall have been fulfilled and all authorizations, consents and
approvals, including expiration or early termination of all waiting periods
under the HSR Act and those of all federal, state, local and foreign
governmental agencies and regulatory authorities required to be obtained in
order to permit the consummation of the Transactions shall have been obtained
in form and substance reasonably satisfactory to Thayer III unless such failure
could not reasonably be expected to have a Material Adverse Effect. All
approvals of the Boards of Directors and shareholders of the Company and Allied
Parent necessary for the consummation of this Agreement and the Transactions
shall have been obtained.
(c) LEASES. Each of the Leases shall provide
that the Company is the lessee and that such Lease survives the Closing for the
term of such Lease, and copies of such Leases (and any assignments pursuant to
which any of such Leases have been assigned to the Company prior to the Closing
Date) shall have been provided to the Investors.
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(d) DISCHARGE OF INDEBTEDNESS AND LIENS;
SHAREHOLDER LOANS. Shareholders and the Company shall have provided for the
payment in full by the Company of all Funded Indebtedness of the Company at the
Closing. Such Funded Indebtedness, if any, as of December 31, 1997, is listed
on Exhibit T hereto. Shareholders shall have also provided for the termination
of all Encumbrances of record on the properties of the Company, except for
Permitted Exceptions. All liens or UCC filings against the Company or
Affiliates of the Company which are engaged in the Business, shall have been
terminated as of the Closing. All outstanding loans or other amounts owed by
any Shareholder or Allied Parent to the Company shall have been repaid in full
on or prior to the Closing.
(e) FEE. In consideration of investment banking
services provided by Thayer III's Affiliate, TC Management Partners LLC, in
connection with the Transactions, the Company shall pay to TC Management
Partners LLC immediately following the Closing a fee in the amount of $425,000.
(f) TRANSFER TAXES. Shareholders shall be
responsible for all stock transfer or gains taxes imposed on Shareholders or
Allied Parent incurred in connection with this Agreement.
(g) FINANCIAL CONDITION. The Company's Net Worth
as projected at the Closing shall be not less than ($400,000) and the Company
shall continue to have cash or cash equivalents on hand at the Closing in an
amount not less than $0.
(h) DOCUMENTS TO BE DELIVERED BY SHAREHOLDERS,
ALLIED PARENT AND THE COMPANY. The following documents shall be delivered at
the Closing by Shareholders, Allied Parent and the Company:
(i) OPINION OF SHAREHOLDERS' COUNSEL.
Investors shall have received an opinion of counsel to the
Company, Allied Parent and Shareholders, dated the Closing
Date, in substantially the same form as the form of opinion
that is Exhibit C hereto.
(ii) CERTIFICATES. Investors shall have
received an officer's certificate and a secretary's
certificate of the Company executed by officers of the
Company, dated the Closing Date, in a form mutually agreed
upon by Thayer III and Allied Parent, which certificates shall
include a certification as to the aggregate amount of
Permitted Distributions.
(iii) RELEASE. Shareholders and Allied
Parent shall have furnished the Company with a general release
of liabilities, excluding compensation and employee benefits
as well as obligations pursuant to this Agreement, in the form
attached as Exhibit E hereto.
(iv) ESCROW AGREEMENT. Shareholders,
Allied Parent and the Company shall have delivered to
Investors at the Closing the duly executed Escrow Agreement in
substantially the form attached hereto as Exhibit G.
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(v) EMPLOYMENT AGREEMENTS. Michael
Fisher, Gregory Fisher and Gilbert Fishman shall each have
duly executed and delivered Employment Agreements in
substantially the same form attached as Exhibits F-1, F-2 and
F-3 hereto, pursuant to which he will be employed by the
Company following the Closing, and the Company shall have
amended its incentive compensation arrangements with Marilyn
Reis and Jane Rossmango to a reasonably equivalent incentive
arrangement.
(vi) DELIVERY OF PURCHASED SHARES. At the
Closing, Allied Parent shall deliver to Investors the
Purchased Shares.
(vii) REDEMPTION OF EXISTING COMMON STOCK.
Allied Parent shall have delivered the stock certificate(s)
representing the Redemption Shares duly endorsed for transfer
to the Company and free and clear of all encumbrances, other
than the restrictions imposed by federal and state securities
laws.
(viii) RESIGNATION OF DIRECTORS. The
Company shall deliver the written resignations of all
directors of the Company effective as of the Closing.
(ix) TERMINATION OF SHAREHOLDER
AGREEMENTS. The Company shall have provided evidence
satisfactory to Thayer III of the complete termination of all
shareholder agreements among the Shareholders, Allied Parent
and/or the Company with respect to the Company or the Existing
Shares.
(x) CONSULTING AGREEMENT. Stanley
Fisher shall have executed and delivered a Consulting
Agreement with the Company in substantially the form attached
as Exhibit U hereto, pursuant to which he will be engaged as a
consultant to the Company following the Closing.
(i) COMPANY EQUITY ARRANGEMENTS. The Equity
Agreements shall have been executed and delivered by the
respective parties thereto.
(j) RESTATED CERTIFICATE OF INCORPORATION. At
the Closing immediately following the Stock Purchase and the Redemption, the
Company's Certificate of Incorporation shall have been duly amended and
restated to include substantially all of the provisions set forth in Exhibit A
attached hereto and shall not have been further amended or modified.
(k) LIQUIDATION OF SISTER BUSINESSES. The
Shareholders shall have assigned and conveyed to the Company all of the assets
of Allied Tours, Inc. and Allied Tours International, Inc. (including all
trademarks and tradenames) and such corporations shall either have been
dissolved or their certificates of incorporation shall have been amended to
remove "Allied" from their corporate names.
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7.2. CONDITIONS TO SHAREHOLDERS', ALLIED PARENT'S AND THE
COMPANY'S OBLIGATIONS. The obligation of Shareholders, Allied Parent and the
Company under this Agreement to consummate the Closing is subject to the
conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
Investors shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants contained
in this Agreement to be performed and complied with by Investors prior to or at
the Closing and the representations and warranties of Investors set forth in
Article IV hereof shall be accurate in all material respects, at and as of the
Closing Date, with the same force and effect as though made on and as of the
Closing Date.
(b) CONSENTS. All statutory requirements for the
valid consummation by Investors of the Transactions shall have been fulfilled
and all authorizations, consents and approvals, including expiration or early
termination of all waiting periods under the HSR Act and those of all federal,
state, local and foreign governmental agencies and regulatory authorities
required to be obtained in order to permit the consummation by Investors of the
Transactions shall have been obtained unless such failure shall not have a
Material Adverse Effect on the Business.
(c) DOCUMENTS TO BE DELIVERED BY INVESTORS. The
following documents shall be delivered at the Closing by Investors:
(i) ESCROW AGREEMENT. Investors shall
have delivered to Shareholders and Allied Parent at the
Closing the duly executed Escrow Agreement.
(ii) EMPLOYMENT AGREEMENTS. Investors
shall have caused the Company to duly execute and deliver
Employment Agreements with each of Michael Fisher, Gregory
Fisher and Gilbert Fishman in the same form attached as
Exhibits F-1, F-2 and F-3 hereto, pursuant to which such
Persons will be employed by the Company following the Closing.
The Employment Agreements with each of Michael Fisher and
Gregory Fisher shall provide that each will receive an option
grant upon consummation of an initial public offering of the
Company (so long as he is employed by the Company at such
date) for the exercise of up to an aggregate of $1,000,000 of
the Company's Common Stock at an exercise price per share
equal to the initial public offering price.
(iii) CONSULTING AGREEMENT. The Investors
shall have caused the Company to execute and deliver a
Consulting Agreement with Stanley Fisher in substantially the
form attached as Exhibit U hereto, pursuant to which he will
be engaged as a consultant to the Company following the
Closing.
(d) COMPANY EQUITY ARRANGEMENTS. The Equity
Agreements shall have been executed and delivered by the respective parties
thereto.
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(e) PAYMENTS TO ALLIED PARENT. Allied Parent
shall have received (i) the Closing Redemption Price for the Redemption Shares
and (ii) the portion of the Purchase Price payable to Allied Parent at Closing
for the Purchased Shares.
ARTICLE VIII
INDEMNIFICATION
8.1. INDEMNIFICATION BY ALLIED PARENT AND SHAREHOLDERS.
Except as provided in Section 8.6, Shareholders and Allied Parent agree to
jointly and severally indemnify and hold harmless the Investors and the Company
and each officer, director, and Affiliate of the Investors and the Company,
including without limitation any successor of the Company (collectively, the
"INDEMNIFIED PARTIES") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively,
the "INDEMNIFIABLE COSTS"), which any of the Indemnified Parties may sustain,
or to which any of the Indemnified Parties may be subjected, arising out of (A)
any misrepresentation, breach or default by Shareholders, Allied Parent or the
Company of or under any of the representations, covenants, agreements or other
provisions of this Agreement or any agreement or document executed in
connection herewith; (B) the Company's tortious acts or omissions to act prior
to Closing for which the Company did not carry liability insurance for
themselves as the insured party, whether or not such acts or omissions to act
result in a breach or violation of any representation or warranty; (C) any
accounts receivable of the Company in existence on the Closing Date (net of the
$660,000 write-off for bad debts already reflected in the Most Recent Financial
Statements) which are not collected prior to December 31, 1998 in accordance
with the standards set forth in the Escrow Schedule attached hereto (the
"ACCOUNTS RECEIVABLE ADJUSTMENT"); (D) any downward Net Worth Adjustment not
paid to the Company pursuant to a reduction of the Escrow Sum; and (E) any
litigation matter disclosed on Schedule 3.16 hereof. Determination of whether
the Company, on the one hand, or the Investors, on the other hand, is entitled
to indemnification hereunder shall be made by such parties in light of the
economic impact or loss caused by the matter which is the subject of the claim
of indemnification. By way of example, a claim of indemnification for breaches
of the representation made in Section 3.17 (Taxes) would impact the Company so
that the Company would be entitled to indemnification. A claim of
indemnification based on a breach of Section 3.1 (Capitalization) would affect
the Investors' investment in the Company directly (as opposed to derivatively),
so that the Investors would be entitled to indemnification.
8.2. DEFENSE OF CLAIMS. If any legal proceeding shall be
instituted, or any claim or demand made by a third Person, against any
Indemnified Party in respect of which Shareholders or Allied Parent may be
liable hereunder, such Indemnified Party shall give prompt written notice
thereof to Shareholders and, except as otherwise provided in Section 8.4 below,
Shareholders shall have the right to defend, or cause the Company or its
successors to defend, any litigation, action, suit, demand, or claim for which
it may seek indemnification unless, in the reasonable judgment of Thayer III,
such litigation, action, suit, demand, or claim, or the resolution thereof, is
seeking injunctive or other equity relief or damages which would have a
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Material Adverse Effect on Investors, the Company or its successors, and such
Indemnified Party shall extend reasonable cooperation in connection with such
defense, which shall be at Shareholders' expense. In the event Shareholders
fail or refuse to defend the same within a reasonable length of time, the
Indemnified Parties shall be entitled to assume the defense thereof, and
Shareholders and Allied Parent shall be jointly and severally liable to repay
the Indemnified Parties for all expenses reasonably incurred in connection with
said defense (including reasonable attorneys' fees and settlement payments).
If Shareholders shall not have the right to assume the defense of any
litigation, action, suit, demand, or claim in accordance with either of the two
preceding sentences, the Indemnified Parties shall, at Shareholders' expense,
have the absolute right to control the defense of and to settle, in their sole
discretion and without the consent of Shareholders, such litigation, action,
suit, demand, or claim, but Shareholders shall be entitled, at their own
expense, to participate in such litigation, action, suit, demand, or claim.
The party controlling any defense pursuant to this Section 8.2 shall deliver,
or cause to be delivered to the other party, copies of all correspondence,
pleadings, motions, briefs, appeals or other written statements relating to or
submitted in connection with the defense of any such litigation, action, suit,
demand or claim, and timely notice of any hearing or other court proceeding
relating to such litigation, action, suit, demand or claim. Notwithstanding
the forgoing, in no event will the Shareholders or Allied Parent settle any
litigation matter disclosed on Schedule 3.16 if such settlement results in any
monetary liability to the Company without the Company's express written
consent.
8.3. ESCROW CLAIM. If any claim for indemnification is
made by an Indemnified Party pursuant to this Article VIII prior to the
expiration of the Escrow Period, such Indemnified Party may first apply to the
Escrow Agent provided in Section 2.7 of this Agreement for reimbursement of
such claim in accordance with the provisions of the Escrow Agreement provided,
however, the Escrow Sum is not intended to be an exclusive remedy in the event
Investors have indemnification claims hereunder which exceed such amount.
8.4. TAX AUDITS, ETC. In the event of an audit of a Tax
Return of the Company with respect to which an Indemnified Party might be
entitled to indemnification pursuant to this Article VIII, the Shareholders and
the Company shall jointly control any and all such audits which may result in
the assessment of additional Taxes against the Company and any and all
subsequent proceedings in connection therewith, including appeals.
Shareholders and Investors shall cooperate fully in all matters relating to any
such audit or other Tax proceeding (including according access to all records
pertaining thereto), and will execute and file any and all consents, powers of
attorney, and other documents as shall be reasonably necessary in connection
therewith. If additional Taxes are payable by the Company as a result of any
such audit or other proceeding, Shareholders shall be responsible for and shall
promptly pay all Taxes, interest, and penalties for which any of the
Indemnified Parties shall be entitled to indemnification (subject to the
limitations contained in Section 6.5(c) in the event of any audit or proceeding
relating to the indemnification provided in Section 6.5(c)(iii) hereof).
8.5. INDEMNIFICATION OF SHAREHOLDERS, ALLIED PARENT AND
THE COMPANY. Investors agree to jointly and severally indemnify and hold
harmless Shareholders, Allied Parent and the Company and each officer,
director, Shareholder or Affiliate of the Company, from and
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against any Indemnifiable Costs arising out of any material misrepresentation,
breach or default by Investors of or under any of the covenants, agreements or
other provisions of this Agreement or any agreement or document executed in
connection herewith.
8.6. LIMITS ON INDEMNIFICATION. All Indemnifiable Costs
sought by any party hereunder shall be net of any insurance proceeds received
by such Person with respect to such claim (less the present value of any
premium increases occurring as a result of such claim). Except for any claims
for breach of the representations, warranties and covenants of Allied Parent
and the Shareholders under Sections 3.1, 3.2, 3.3, 3.4, 3.6, 3.17 or 6.5(c)
hereof (the indemnification for which shall expire on the expiration of the
applicable statute of limitations and if so made, such claims, and all
Indemnifiable Costs incurred thereafter, shall continue after such date until
finally resolved), the right to make claims for indemnification provided under
this Article VIII shall expire two (2) years following the Closing Date (except
for any claims for Indemnifiable Costs made prior to such date which claims
shall continue after such date until finally resolved). The Shareholders and
Allied Parent shall not be obligated to pay any amounts for indemnification
under this Article VIII until the aggregate indemnification obligation sought
by Investors hereunder exceeds $250,000, whereupon Shareholders and Allied
Parent shall be liable for all amounts in excess of $250,000 for which
indemnification may be sought; provided, however, that Shareholders and Allied
Parent shall not be obligated to pay any amounts for indemnification under
Section 8.1(E) until the aggregate indemnification obligation sought by
Investors thereunder exceeds $100,000, whereupon Shareholders and Allied Parent
shall be liable for all amounts in excess of $100,000 for which indemnification
may be sought. For purposes of making claims for indemnification under Section
8.1(A), any requirement in any representation or warranty that an event or fact
be Material or have a Material Adverse Effect, as appropriate, in order for
such event or fact to constitute a misrepresentation or breach of such
representation or warranty shall be ignored. Notwithstanding the foregoing, in
no event shall the aggregate liability of Shareholders and Allied Parent to
Investors for breach of representations and warranties exceed the sum of
$6,500,000; provided, however, that such $6,500,000 limitation shall not
include and shall not limit any claims for (i) the Accounts Receivable
Adjustment and the Net Worth Adjustment and (ii) breach of the representations
and warranties of the Shareholders and Allied Parent under Sections 3.1, 3.2,
3.3, 3.4, 3.6, and 3.17 hereof; provided, further, that in no event shall the
aggregate liability of Shareholders and Allied Parent to Investors or the
Company with respect to any claims described in clauses (i) and (ii) above
exceed the sum of the Purchase Price and the Redemption Price. However nothing
in this Article VIII shall limit Investors or Shareholders in exercising or
securing any remedies provided by applicable statutory or common law with
respect to the conduct of Shareholders, Allied Parent or Investors in
connection with this Agreement or in the amount of damages that it can recover
from the other in the event that Investors successfully prove intentional fraud
or intentional fraudulent conduct in connection with this Agreement. All
Indemnified Costs paid by Shareholders shall be deemed to be a reduction of the
Purchase Price paid to Allied Parent by Investors hereunder.
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ARTICLE IX
TERMINATION
9.1. TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of all parties
hereto;
(b) in writing by Thayer III on behalf of all
Investors, if the Company, Allied Parent or any of the Shareholders has
breached in any material respect any representation, warranty or covenant
contained in this Agreement, and in each case such breach has not been remedied
within ten (10) business days after receipt of notice specifying such breach
and demanding such breach to be remedied; or
(c) in writing by the Shareholders and the
Company, if Investors have breached in any material respect any representation,
warranty or covenant contained in this Agreement, and in each case such breach
has not been remedied within ten (10) business days after receipt of notice
specifying such breach and demanding such breach to be remedied; or
(d) in writing by either the Company and the
Shareholders, on the one hand, or Thayer III on behalf of all Investors, on the
other hand, in the event the Closing has not occurred on or before April 15,
1998, unless the failure of such consummation or the failure to satisfy such
condition, as applicable, shall be due to a breach of any representation or
warranty made by the party or parties seeking to terminate this Agreement or
the failure of such party or parties to comply in all material respects with
the agreements and covenants contained herein to be performed by such party or
parties.
9.2. EFFECT OF TERMINATION. If the Transactions are
terminated pursuant to Section 9.1 by notice in writing to the non-terminating
party or parties, this Agreement shall become void and of no further force and
effect, except that (a) such termination shall not relieve (i) any party from
its covenants in respect of confidentiality contained in Section 6.3 and (ii)
any party then in breach of any representation, warranty, covenant or agreement
contained in this Agreement from liability in respect of such breach and (b)
Sections 10.4 and 10.7 shall survive termination of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. MODIFICATIONS. Any amendment, change or modification
of this Agreement shall be void unless in writing and signed by all parties
hereto. No failure or delay by any party hereto in exercising any right, power
or privilege hereunder (and no course of dealing between or among any of the
parties) shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege
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shall preclude the further or full exercise thereof. Notwithstanding the
foregoing, Thayer III shall have the right to act on behalf of all Investors on
any amendment, change or modification to this Agreement or any right, power or
privilege of Investors hereunder without the consent of such Investors unless
such action would materially adversely effect the obligations of such Investors
under this Agreement.
10.2. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered, or 48 hours after deposited in the United States mail,
first-class, postage prepaid, or by facsimile addressed to the respective
parties hereto as follows:
Investors:
c/o Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, NW
Suite 350
Washington, D.C. 20004
Attention: Roger Ballou
Daniel Raskas
Christopher Temple
Fax No.: (202) 371-0391
Tel No.: (202) 371-0150
With a copy to:
Hogan & Hartson L.L.P.
Columbia Square
Thirteenth Street, NW
Washington, DC 20004-1109
Attention: Christopher J. Hagan or
Hovey Kemp
Fax No.: (202) 637-5910
Tel No.: (202) 637-5600
The Company, Allied Parent or Shareholders:
Allied Bus Corp.
165 W. 46th Street
10th Floor
New York, New York 10036
Attention: Stanley Fisher
Fax No.: (212) 869-5100
Tel No.: (212) 302-6129
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With a copy to:
Rosen & Reade, LLP
757 Third Avenue
New York, New York 10017-2049
Attention: Kevin P. Groarke
Fax No.: (212) 755-5600
Tel No.: (212) 303-9047
or to such other address as to any party hereto as such party shall designate
by like notice to the other parties hereto.
10.3. COUNTERPARTS; FACSIMILE TRANSMISSION. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original but all of which counterparts collectively shall constitute one
instrument, and in making proof of this Agreement, it shall never be necessary
to produce or account for more than one such counterpart. Signatures of a
party to this Agreement or other documents executed in connection herewith
which are sent to the other parties by facsimile transmission shall be binding
as evidence of acceptance of the terms hereof or thereof by such signatory
party, with originals to be circulated to the other parties in due course.
10.4. EXPENSES. Each of the parties hereto will bear all
costs, charges and expenses incurred by such party in connection with this
Agreement and the consummation of the Transactions, provided, however, that
Shareholders shall bear all costs and expenses of (i) any broker involved in
this transaction on behalf of Shareholders, Allied Parent or the Company and
(ii) all legal and other expenses of Shareholders, Allied Parent or the Company
with respect to this Agreement and the Transactions.
10.5. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Company, Allied Parent, Investors
and Shareholders, their heirs, representatives, successors, and permitted
assigns, in accordance with the terms hereof. This Agreement shall not be
assignable by the Company, Allied Parent or Shareholders without the prior
written consent of Thayer III on behalf of all Investors. This Agreement shall
be assignable by Thayer III on behalf of the Investors to either (a) any lender
providing financing to Investors or the Company (but only with respect to
Investors' rights under Article II and Article VIII hereof) or (b) any
Affiliate of Thayer III, provided the Investors remain liable, in each case
without the prior written consent of Shareholders. In addition, following the
Closing, Thayer III may assign any or all of its rights hereunder, without the
consent of the Shareholders, in connection with any sale of all or
substantially all of the assets, capital stock, partnership interests or
business of the Company or Thayer III (whether effected by sale, exchange,
merger, consolidation or other transaction) and provided the acquiring party
shall assume all of Thayer III's obligations hereunder.
10.6. ENTIRE AND SOLE AGREEMENT. This Agreement and the
other schedules and agreements referred to herein, constitute the entire
agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information,
-37-
<PAGE> 44
arrangements and understandings, whether oral or written, express or implied,
with respect to the subject matter hereof.
10.7. GOVERNING LAW. This Agreement and its validity,
construction, enforcement, and interpretation shall be governed by the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.
10.8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Regardless of any investigation at any time made by or on behalf of
any party hereto or of any information any party may have in respect thereof,
all covenants, agreements, representations, and warranties and the related
indemnities made hereunder or pursuant hereto or in connection with the
Transactions shall survive the Closing for a period of two (2) years, provided
(a) the representations and warranties contained in Section 3.17 of this
Agreement, and the related indemnities, shall survive the Closing until the
expiration of the applicable statutes of limitations for determining or
contesting Tax liabilities including any extension of such periods plus sixty
(60) days, (b) the representations, warranties and covenants contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.6 and 6.5(c) of this Agreement, and the related
indemnities, shall survive the Closing indefinitely and not expire, (c) all
covenants in this Agreement which have an expiration date contained therein
shall expire as of such date and (d) all other covenants in this Agreement
which do not have an expiration date shall expire upon the expiration of the
applicable statutes of limitations.
10.9. INVALID PROVISIONS. If any provision of this
Agreement is deemed or held to be illegal, invalid or unenforceable, this
Agreement shall be considered divisible and inoperative as to such provision to
the extent it is deemed to be illegal, invalid or unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal, invalid or unenforceable
provision and be legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be
binding upon all parties hereto.
10.10. PUBLIC ANNOUNCEMENTS. Neither Shareholders, Allied
Parent nor the Company (pre-Closing) shall make any public announcement of the
Transactions without the prior written consent of Thayer III, which consent
shall not be unreasonably withheld. Shareholders shall have the right to
approve any public announcement of the Transactions by Thayer III prior to the
Closing Date.
10.11. REMEDIES CUMULATIVE. The remedies of the parties
under this Agreement are cumulative and shall not exclude any other remedies to
which any party may be lawfully entitled.
10.12. THIRD PARTIES. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any Person, other than the parties hereto
and their permitted successors or assigns, any rights or remedies under or by
reason of this Agreement.
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<PAGE> 45
10.13. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Agreement.
10.14. JOINDER BY ADDITIONAL INVESTORS. During the term of
this Agreement, to the extent the Investor Schedule is updated to the effect
that additional Investors will join Thayer III as Investors hereunder, Thayer
III shall cause all such Persons to become parties hereto, without the consent
of the Company, Allied Parent or the Shareholders, by execution and delivery of
a counterpart of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 46
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first above written.
THE COMPANY:
-----------
ALLIED BUS CORP.
By: /s/ Stanley Fisher
----------------------------
Stanley Fisher
President
ALLIED PARENT:
-------------
ALLIED TOURS HOLDING CORP.
By: /s/ Stanley Fisher
----------------------------
Stanley Fisher
President
SHAREHOLDERS:
------------
/s/ Stanley Fisher
------------------------------------
Stanley Fisher
/s/ Michael Fisher
------------------------------------
Michael Fisher
/s/ Gregory Fisher
------------------------------------
Gregory Fisher
/s/ Francine Fishman
------------------------------------
Francine Fishman
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<PAGE> 47
INVESTORS:
---------
THAYER EQUITY INVESTORS III, L.P.
By: TC Equity Partners, L.L.C.
Its: General Partner
By: /s/ Chris Temple
-------------------
Name:
The Exhibits and Schedules to this Recapitalization Agreement are not included
with this Registration Statement on Form S-1. Global will provide these
exhibits and schedules upon the request of the Securities and Exchange
Commission.
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<PAGE> 1
EXHIBIT 10.2
EQUITY PURCHASE AGREEMENT
BETWEEN
GLOBAL VACATION GROUP, INC.
(FORMERLY, ALLIED BUS CORP.)
AND
THAYER EQUITY INVESTORS III, L.P.
AND
CERTAIN OTHER PURCHASERS
DATED MARCH 30, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I AUTHORIZATION AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Authorization of the Stock . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase and Sale of the Stock at Initial Closing . . . . . . . . . . . 2
(a) Initial Purchase . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Use of Proceeds of Initial Purchase . . . . . . . . . . . . . . 2
(c) Initial Closing . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Subsequent Take-Downs of Class A Preferred . . . . . . . . . . . . . . . 2
(a) Request for Takedowns . . . . . . . . . . . . . . . . . . . . . 2
(b) Subsequent Closings . . . . . . . . . . . . . . . . . . . . . . 3
(c) Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING . . . . . . . . . . . 3
2.1 Initial Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Representations and Warranties, Covenants . . . . . . . . . . . 3
(b) Management Agreements . . . . . . . . . . . . . . . . . . . . . 3
(c) Shareholders Agreement . . . . . . . . . . . . . . . . . . . . . 4
(d) Professional Services Agreement . . . . . . . . . . . . . . . . 4
(e) Compliance with Applicable Laws . . . . . . . . . . . . . . . . 4
(f) Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Subsequent Closing Conditions . . . . . . . . . . . . . . . . . . . . . 4
(a) Representations and Warranties, Covenants . . . . . . . . . . . 4
(b) Compliance with Applicable Laws . . . . . . . . . . . . . . . . 4
(c) Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Financial Statements and Other Information . . . . . . . . . . . . . . . 5
3.2 Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Unrelated Business Taxable Income . . . . . . . . . . . . . . . . . . . 7
3.5 Hart-Scott-Rodino Compliance . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV TRANSFER OF RESTRICTED SECURITIES . . . . . . . . . . . . . . . . . . . . 8
4.1 Transfer of Restricted Securities . . . . . . . . . . . . . . . . . . . 8
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . 9
5.1 Organization and Corporate Power . . . . . . . . . . . . . . . . . . . . 9
5.2 Capital Stock and Related Matters . . . . . . . . . . . . . . . . . . . 9
5.3 Subsidiaries; Investments . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Authorization; No Breach . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 Violation of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.6 Governmental Consent, etc. . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI PURCHASER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 11
6.1 Purchaser's Investment Representations . . . . . . . . . . . . . . . . . 11
6.2 Authorization; No Breach . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Governmental Consent, etc. . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.3 Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Survival of Representation and Warranties . . . . . . . . . . . . . . . 15
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.8 Descriptive Headings; Interpretation . . . . . . . . . . . . . . . . . . 16
8.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
LIST OF EXHIBITS
Exhibit A Form of Senior Management Agreement
Exhibit B Shareholders Agreement
Exhibit C Professional Services Agreement
-ii-
<PAGE> 4
PURCHASE AGREEMENT
THIS AGREEMENT is made as of March 30, 1998, between GLOBAL
VACATION GROUP, INC., a New York corporation (formerly, Allied Bus Corp.) (the
"COMPANY"), THAYER EQUITY INVESTORS III, L.P., a Delaware limited partnership
("THAYER III"), and each of the other persons or entities set forth in the
Schedule of Purchasers attached hereto (collectively with Thayer III, the
"PURCHASERS" and individually a "PURCHASER"). Except as otherwise indicated
herein, capitalized terms used herein are defined in Section 7 hereof.
RECITALS:
A. The Company was formed in 1959 for the purpose of
engaging in the vacation package and tour business.
B. Pursuant to a Recapitalization Agreement dated March
18, 1998 (the "RECAPITALIZATION AGREEMENT") by and among the Company, Thayer
III, Allied Tours Holding Corp. ("ALLIED PARENT"), and the shareholders of
Allied Parent (the "EXISTING SHAREHOLDERS"), Thayer III has acquired an
aggregate of (i) 22,249 shares of the Company's Class A Preferred Stock, par
value $1,000 per share (the "CLASS A PREFERRED"), and (ii) 247,215 shares of
the Company's Common Stock, $.01 par value per share (the "COMMON").
C. At the Initial Closing, the Purchasers desire to
purchase from the Company, and the Company desires to sell to the Purchasers
(i) an aggregate of 1,227.64 shares of Class A Preferred and (ii) an aggregate
of 266,425.4 shares of the Common, in the amount set forth opposite each
Purchaser's name on the Schedule of Purchasers attached hereto.
D. At the Subsequent Closings, if any, Thayer III will
purchase from the Company, and the Company will sell to Thayer III, up to an
aggregate of 22,751 additional shares of the Class A Preferred.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
AUTHORIZATION AND CLOSING
1.1 AUTHORIZATION OF THE STOCK. The Company shall
authorize the issuance and sale to the Purchasers of up to an aggregate of
23,978.64 shares of Class A Preferred and an aggregate of 266,425.4 shares of
Common, each having the rights and preferences set forth in
<PAGE> 5
Exhibit A attached hereto. The Class A Preferred and the Common are
collectively referred to herein as the "STOCK."
1.2 PURCHASE AND SALE OF THE STOCK AT INITIAL CLOSING.
(a) INITIAL PURCHASE. Subject to the terms and
conditions set forth in this Section 1.2 and in Section 2.1, at the Initial
Closing, the Company shall sell to each Purchaser and, each Purchaser shall
purchase from the Company:
(i) that number of shares of the Class A
Preferred set forth opposite such Purchaser's name in the
Schedule of Purchasers attached hereto, at a purchase price of
$1,000 per share; and
(ii) that number of shares of the Common
set forth opposite such Purchaser's name set forth in the
Schedule of Purchasers attached hereto, at a purchase price of
$10 per share.
(b) USE OF PROCEEDS OF INITIAL PURCHASE. The
funds obtained by the Company from the Purchasers at the Initial Closing shall,
together with debt financing provided by The Bank of New York ("LENDER")
pursuant to the Credit Agreement (the "CREDIT AGREEMENT") dated March 27, 1998,
as amended, between Lender, the Company and its Subsidiaries, be used to (i)
finance the Company's costs of consummating the acquisition of Haddon Holidays,
Inc. ("HADDON") and (ii) provide funds for the Company's working capital
requirements.
(c) INITIAL CLOSING. The closing of the purchase
and sale of the Stock to be purchased pursuant to Sections 1.2(a) (the "INITIAL
CLOSING") shall take place at the offices of Hogan & Hartson, LLP, 555
Thirteenth Street, NW, Washington, D.C., 20004 at 10:00 a.m. on March 30, 1998
or at such other place or on such other date as may be mutually agreeable to
the Company and the Purchasers. At the Initial Closing, the Company shall
deliver to each Purchaser stock certificates evidencing the Stock to be
purchased by such Purchaser, registered in such Purchaser's name, upon payment
of the purchase price thereof by, at the Company's option, either a cashier's
or certified check, or by wire transfer of immediately available funds to such
account as designated by the Company.
1.3 SUBSEQUENT TAKE-DOWNS OF CLASS A PREFERRED.
(a) REQUEST FOR TAKEDOWNS. The Company may from
time to time request that Thayer III purchase from the Company up to 22,751
additional shares of Class A Preferred at a purchase price of $1,000 per share
(an aggregate purchase price of $22,751,000) (such purchases are referred to as
"TAKE-DOWNS"). Such requests shall be made in conjunction with and for the
purpose of funding future acquisitions of vacation package tour businesses by
the Company and shall be presented to Thayer III in writing. Thayer III shall
accept or reject such Take-Down within 10 business days of receiving such
request. The Company and Thayer III shall agree upon a date (the "SUBSEQUENT
CLOSING DATE") for the closing (the "SUBSEQUENT
-2-
<PAGE> 6
CLOSING") of the additional shares of Class A Preferred to be purchased in
connection with such Take-Down.
(b) SUBSEQUENT CLOSINGS. Subsequent Closings
shall take place on the Subsequent Closing Date at the offices of Hogan &
Hartson LLP, 555 Thirteenth Street, NW, Washington, D.C. 20004, or at such
other place as shall be agreed to by Thayer III and the Company. At a
Subsequent Closing, upon the satisfaction of the provisions of this Section 1.3
and of Section 2.2, the Company shall deliver to Thayer III stock certificates
evidencing the shares of Class A Preferred to be purchased by Thayer III
registered in its name, upon payment of the purchase price thereof by, at the
Company's option, either a cashier's or certified check, or by wire transfer of
immediately available funds to such account as designated by the Company.
(c) TERMINATION. The provisions of this Section
1.3 shall terminate on the earlier to occur of the following events: (i) the
written consent of the holders of greater than 50% of the outstanding shares of
Class A Preferred and the Company; (ii) a Drag-Along Sale (as defined in the
Shareholders Agreement); (iii) a merger or other business combination involving
the Company in which the holders of the Company's capital stock immediately
prior to the effective time of such merger or business combination own less
than 50% of the capital stock of the surviving corporation (determined on a
fully-diluted basis) immediately after the effective time of such merger or
business combination; or (iv) the closing of an IPO Event (as defined in the
Shareholders Agreement).
ARTICLE II
CONDITIONS OF THE PURCHASERS' OBLIGATIONS
AT CLOSINGS
2.1 INITIAL CLOSING CONDITIONS. The obligation of the
Purchasers to purchase and pay for the Stock at the Initial Closing is subject
to the satisfaction as of the Initial Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES, COVENANTS.
The representations and warranties contained in Section 5 hereof shall be true
and correct at and as of the Initial Closing as though then made, except to the
extent of changes caused by the transactions expressly contemplated herein; and
the Company shall have performed in all material respects all of the covenants
required to be performed by it hereunder prior to the Initial Closing.
(b) MANAGEMENT AGREEMENTS. The Company shall
have entered into a senior management agreement, in form and substance
substantially similar to Exhibit A attached hereto (the "MANAGEMENT
AGREEMENTS"), with each of Roger Ballou, Raymond Lewis and Walter Berman (the
"EXECUTIVES"), the Management Agreements shall not have been amended or
modified and shall be in full force and effect as of the Initial Closing, and
each Executive shall have purchased the Stock, if any, proposed to be purchased
by him thereunder.
-3-
<PAGE> 7
(c) SHAREHOLDERS AGREEMENT. The Purchasers and
the Executives shall have executed a joinder agreement to the Shareholders
Agreement (the "SHAREHOLDERS AGREEMENT") in form and substance substantially
similar to Exhibit B attached hereto, and the Shareholders Agreement shall be
in full force and effect as of the Initial Closing.
(d) PROFESSIONAL SERVICES AGREEMENT. The Company
and TC Management Partners, L.L.C., a Delaware limited liability company, shall
have entered into a Professional Services Agreement in form and substance
substantially similar to Exhibit C attached hereto (the "PROFESSIONAL SERVICES
AGREEMENT"), and the Professional Services Agreement shall be in full force and
effect as of the Initial Closing.
(e) COMPLIANCE WITH APPLICABLE LAWS. The purchase
of Stock by the Purchasers hereunder shall not be prohibited by any applicable
law or governmental regulation, shall not subject the Purchasers to any
penalty, liability or, in the Purchasers' sole judgment, other onerous
conditions under or pursuant to any applicable law or governmental regulation,
and shall be permitted by laws and regulations of the jurisdictions to which
the Purchasers are subject.
(f) WAIVER. Any condition specified in this
Section 2.1 may be waived only if such waiver is set forth in a writing
executed by the Purchasers.
2.2 SUBSEQUENT CLOSING CONDITIONS. The obligation of
Thayer III to purchase and pay for shares of Class A Preferred at a Subsequent
Closing in connection with a Take-Down is subject to the satisfaction as of the
Subsequent Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES, COVENANTS.
The representations and warranties contained in Section 5 hereof shall be true
and correct in all material respects at and as of the Subsequent Closing as
though then made, except:
(i) to the extent expressly made as of
an earlier date;
(ii) to the extent of changes caused by
the transactions expressly contemplated herein (including the
acquisition of Haddon) or by the transactions for which such
Take-Down is being made (or for which prior Take-Downs have
been made) and the Company shall have performed in all
material respects all of the covenants required to be
performed by it hereunder prior to the Subsequent Closing; and
(iii) to reflect the fact that additional
shares of Class A Preferred have been issued to Thayer III
pursuant to Section 1.3.
(b) COMPLIANCE WITH APPLICABLE LAWS. The
purchase of Stock by Thayer III pursuant to such Subsequent Closing shall not
be prohibited by any applicable law or governmental regulation, shall not
subject Thayer III to any penalty, liability or, in Thayer III's sole judgment,
other onerous conditions under or pursuant to any applicable law or
governmental
-4-
<PAGE> 8
regulation, and shall be permitted by laws and regulations of the
jurisdictions to which Thayer III is subject.
(c) WAIVER. Any condition specified in this
Section 2.2 may be waived only if such waiver is set forth in a writing
executed by Thayer III.
ARTICLE III
COVENANTS
3.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Company shall deliver to Thayer III so long as it holds any Investor Stock:
(a) as soon as available but in any event within
45 days after the end of each quarterly accounting period in each fiscal year,
unaudited consolidating and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such quarterly period and for the period
from the beginning of the fiscal year to the end of such quarter, and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarterly period, all prepared in accordance
with generally accepted accounting principles, consistently applied, subject to
the absence of footnote disclosures and to normal year-end adjustments;
(b) within 120 days after the end of each fiscal
year, consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the end
of such fiscal year, setting forth in each case comparisons to the annual
budget and to the preceding fiscal year, all prepared in accordance with
generally accepted accounting principles, consistently applied, and accompanied
by (i) with respect to the consolidated portions of such statements (except
with respect to budget data), an opinion containing no exceptions or
qualifications (except for qualifications regarding specified contingent
liabilities) of Arthur Andersen, LLP or an independent accounting firm of
recognized national standing acceptable to Thayer III, and (ii) a copy of such
firm's annual management letter to the Board;
(c) promptly upon receipt thereof, any additional
reports, management letters or other detailed information concerning
significant aspects of the Company's operations or financial affairs given to
the Company by its independent accountants (and not otherwise contained in
other materials provided hereunder); and
(d) with reasonable promptness, such other
information and financial data concerning the Company and its Subsidiaries as
Thayer III may reasonably request.
Each of the financial statements referred to in Sections 3.1
(a) and (b) shall be true and correct in all material respects as of the dates
and for the periods stated therein, subject in the case of the unaudited
financial statements to changes resulting from normal year-end audit
-5-
<PAGE> 9
adjustments (none of which would, alone or in the aggregate, be materially
adverse to the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries taken as a whole).
3.2 INSPECTION OF PROPERTY. The Company shall permit any
representatives designated by Thayer III (so long as Thayer III holds any
Investor Stock), upon reasonable notice and during normal business hours and
such other times as any such holder may reasonably request, to (i) visit and
inspect any of the properties of the Company and its Subsidiaries, (ii) examine
the corporate and financial records of the Company and its Subsidiaries and
make copies thereof or extracts therefrom and (iii) discuss the affairs,
finances and accounts of any such corporations with the directors, officers,
key employees and independent accountants of the Company and its Subsidiaries.
3.3 RESTRICTIONS. Except as expressly contemplated by
the purchase agreements relating to the acquisition of Haddon, this Agreement,
the Recapitalization Agreement or an agreement to be entered into in connection
with a transaction for which a Take-Down is being made, the Company shall not
without the prior written consent of either (x) a majority of the members of
the Company's Board of Directors (the "BOARD") appointed by Thayer III pursuant
to any resolution of the Board or (y) the holders of a majority of the
outstanding Investor Preferred or, in the event no Investor Preferred is
outstanding, without the prior written consent of the holders of a majority of
the Investor Common:
(a) directly or indirectly declare or pay any
dividends or make any distributions upon any of its equity securities, other
than payments of dividends on, or redemption payments in respect of, the Class
A Preferred pursuant to the Certificate of Incorporation;
(b) except pursuant to the Management Agreements
and the Shareholders Agreement, directly or indirectly redeem, purchase or
otherwise acquire, or permit any Subsidiary to redeem, purchase or otherwise
acquire, any of the Company's equity securities (including, without limitation,
warrants, options and other rights to acquire equity securities),
(c) except as expressly contemplated by the
Management Agreements authorize, issue, sell or enter into any agreement
providing for the issuance (contingent or otherwise), or permit any Subsidiary
to authorize, issue, sell or enter into any agreement providing for the
issuance (contingent or otherwise) of, (i) any notes or debt securities
containing equity features or (ii) any equity securities (or any securities
convertible into or exchangeable for any equity securities) or rights to
acquire any equity securities, other than the issuance of equity securities by
a Subsidiary to the Company or another Subsidiary;
(d) merge or consolidate with any Person or
permit any Subsidiary to merge or consolidate with any Person (other than a
wholly owned Subsidiary);
(e) sell, lease or otherwise dispose of, or
permit any Subsidiary to sell, lease or otherwise dispose of, more than 5% of
the consolidated assets of the Company and its Subsidiaries (computed on the
basis of book value, determined in accordance with generally
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<PAGE> 10
accepted accounting principles consistently applied, or fair market value,
determined by the Board in its reasonable good faith judgment) in any
transaction or series of related transactions (other than sales of inventory in
the ordinary course of business);
(f) liquidate, dissolve or effect a
recapitalization or reorganization in any form of transaction (including,
without limitation, any reorganization into partnership form);
(g) acquire, or permit any Subsidiary to acquire,
any material interest in any business (whether by a purchase of assets,
purchase of stock, merger or otherwise), or enter into any material joint
venture;
(h) enter into, or permit any Subsidiary to enter
into, the ownership, active management or operation of any business other than
the operation of leisure and travel service businesses;
(i) enter into, or permit any Subsidiary to enter
into, any transaction with any of its or any Subsidiary's officers, directors,
employees or Affiliates or any individual related by blood, marriage or
adoption to any such Person or any entity in which any such Person or
individual owns a beneficial interest, except for normal employment
arrangements and benefit programs on reasonable terms and except as otherwise
expressly contemplated by this Agreement, the Management Agreements and the
Professional Services Agreement; or
(j) create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, Indebtedness
exceeding the amounts approved therefor by the Board in the annual budget.
3.4 UNRELATED BUSINESS TAXABLE INCOME. The Company shall
not engage in any transaction which is reasonably likely to cause Thayer III or
any of its limited partners which are exempt from income taxation under Section
501(a) of the IRC and, if applicable, any pension plan that any such trust may
be a part of, to recognize unrelated business taxable income as defined in
Section 512 and Section 514 of the IRC.
3.5 HART-SCOTT-RODINO COMPLIANCE. In connection with any
transaction in which the Company is involved which is required to be reported
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from
time to time (the "HSR ACT"), the Company shall prepare and file all documents
with the Federal Trade Commission and the United States Department of Justice
which may be required to comply with the HSR Act, and shall promptly furnish
all materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings, in connection with the transactions
contemplated thereby. The Company shall take all reasonable actions and shall
file and use reasonable best efforts to have declared effective or approved all
documents and notifications with any governmental or regulatory bodies as may
be necessary or may reasonably be requested under federal antitrust laws for
the consummation of the subject transaction; provided that this Section 3.5
shall not be interpreted as requiring the Company to divest of any lines of
business or other assets.
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<PAGE> 11
3.6 CONFIDENTIALITY. Except as otherwise required by law
or judicial order or decree or by any governmental agency or authority, Thayer
III shall use its best efforts to maintain the confidentiality of all nonpublic
information obtained by Thayer III pursuant to Section 3.1 or 3.2, which the
Company has reasonably designated as proprietary or confidential in nature;
provided that Thayer III may disclose such information to other Purchasers (who
shall be bound by this provision) or in connection with the sale or transfer,
or proposed sale or transfer, of any shares of Investor Stock, if the
transferee or proposed transferee agrees in writing to be bound by the
provisions hereof.
3.7 TERMINATION. Upon (i) a Drag-Along Sale (as defined
in the Shareholders Agreement), (ii) an IPO Event (as defined in the
Shareholders Agreement) or (iii) such time as the Investor Common constitutes
less than 10% of the fully-diluted Common Stock, Section 3.1, 3.2 and 3.3 shall
terminate without further action and shall be of no further force and effect.
ARTICLE IV
TRANSFER OF RESTRICTED SECURITIES
4.1 TRANSFER OF RESTRICTED SECURITIES.
(a) Restricted Securities are transferable only
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 or Rule 144A of the Securities Act (or any similar rule or rules then in
force) if such rule or rules are available and (iii) subject to the conditions
specified in Section 4.1(b) below, any other legally available means of
transfer.
(b) In connection with the transfer of any
Restricted Securities (other than a transfer described in Section 4.1(a)(i) or
(ii) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together
with an opinion of Hogan & Hartson LLP, or other counsel which (to the
Company's reasonable satisfaction) is knowledgeable in securities law matters
to the effect that such transfer of Restricted Securities may be effected
without registration of such Restricted Securities under the Securities Act.
In addition, if the holder of the Restricted Securities delivers to the Company
an opinion of Hogan & Hartson LLP, or such other counsel that no subsequent
transfer of such Restricted Securities shall require registration under the
Securities Act, the Company shall promptly upon such contemplated transfer
deliver new certificates for such Restricted Securities which do not bear a
customary Securities Act legend. If the Company is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof shall not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this Section 4.1 and Section 6.1.
(c) Upon the request of the Purchaser, the
Company shall promptly supply to the Purchasers or their respective prospective
transferees all information regarding the Company required to be delivered in
connection with a transfer pursuant to Rule 144A of the Securities Act.
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<PAGE> 12
(d) Each Purchaser agrees to execute and deliver
to the Company and Thayer III a joinder to the Shareholders Agreement and to
cause any of its prospective transferees to execute and deliver to the Company
and Thayer III a joinder to the Shareholders Agreement prior to making any
transfer of Stock.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchasers to enter into this Agreement
and purchase the Stock, the Company hereby represents and warrants to the
Purchasers that:
5.1 ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the state of New York and is qualified to do business in every
jurisdiction in which the failure to so qualify might reasonably be expected to
have a material adverse effect on the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole. The Company has all requisite corporate power and authority
and all material licenses, permits and authorizations necessary to own and
operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement.
5.2 CAPITAL STOCK AND RELATED MATTERS.
(a) As of the Closing and immediately thereafter,
the authorized capital stock of the Company shall consist of 6,100,000 shares
of stock, of which (i) 100,000 shares shall be designated as Class A Preferred
(27,439.64 shares of which shall be issued and outstanding, 22,751 shares of
which shall be reserved for issuance to Thayer III pursuant to Section 1.3
hereof, and 425 shares of which shall be reserved for issuance to Executives);
(ii) 6,000,000 shares shall be designated as Common Stock (of which 615,174.37
shares shall be issued and outstanding, 5,000 shares shall be reserved for
issuance in connection with the acquisition of Haddon, and 2,777.75 shares
shall be reserved for issuance to future managers). As of the Closing, the
Company shall not be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock or
any warrants, options or other rights to acquire its capital stock, except
pursuant to this Agreement and the Management Agreements. As of the Closing,
all of the outstanding shares of the Company's capital stock shall be validly
issued, fully paid and nonassessable.
(b) Based in part on the investment
representations of (i) the Purchasers in Section 6.1 hereof, (ii) the
Executives in paragraph l(d) of the Management Agreements, and (iii) the
purchasers in the Haddon Subscription Agreement, the Company has not violated
any applicable federal or state securities laws in connection with the offer,
sale or issuance of any of its capital stock, and the offer, sale and issuance
of the Stock hereunder and
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<PAGE> 13
pursuant to Section 1.3 hereof do not and will not require registration under
the Securities Act or any applicable state securities laws.
5.3 SUBSIDIARIES; INVESTMENTS. Prior to the Haddon
acquisition, the Company did not own or hold any shares of stock or any other
security or interest in any other Person.
5.4 AUTHORIZATION; NO BREACH. The execution, delivery
and performance of this Agreement, the Management Agreements, the Shareholders
Agreement, the Professional Services Agreement, the Recapitalization Agreement
and all other agreements contemplated hereby to which the Company is a party
have been duly authorized by the Company. This Agreement, the Management
Agreements, the Shareholders Agreement, the Professional Services Agreement,
the Recapitalization Agreement and all other agreements contemplated hereby
each constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms. The execution and delivery by the Company of this
Agreement, the Management Agreements, the Shareholders Agreement, the
Professional Services Agreement, the Recapitalization Agreement and all other
agreements contemplated hereby to which the Company is a party, the offering,
sale and issuance of the Stock hereunder and pursuant to Section 1.2(a), the
Amended and Restated Certificate of Incorporation and the fulfillment of and
compliance with the respective terms hereof and thereof by the Company do not
and will not (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) result in the creation
of any lien, security interest, charge or encumbrance upon the Company's
capital stock or assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or other
action by or notice to any court or administrative or governmental body
pursuant to, the Certificate of Incorporation or bylaws of the Company, or any
law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree to which the Company is a
party or by which it is bound.
5.5 VIOLATIONS OF LAWS. Except as set forth in the
Disclosure Schedule to the Recapitalization Agreement, the Company has not (i)
violated any laws or governmental rules or regulations, which violation would
reasonably be expected to have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects of the
Company; (ii) received notice of any such material violation; or (iii) become
subject to any material clean up liability, and the Company has no reason to
believe it may become subject to any material clean up liability, under any
federal, state or local environmental law, rule or regulation.
5.6 GOVERNMENTAL CONSENT, ETC. Except for approvals
under the HSR Act, no material permit, consent, approval or authorization of,
or declaration to or filing with, any governmental authority is required in
connection with the execution, delivery and performance by the Company of this
Agreement or the other agreements contemplated hereby, or the consummation by
the Company of any other transactions contemplated hereby or thereby.
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<PAGE> 14
5.7 DISCLOSURE. Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to the Purchasers by or on behalf of the Company
with respect to the transactions contemplated hereby contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein not misleading. There is no fact which
the Company has not disclosed to the Purchasers in writing and of which any of
its officers, directors or executive employees is aware and which has had or
might reasonably be anticipated to have a material adverse effect upon the
existing or expected financial condition, operating results, assets, customer
or supplier relations, employee relations or business prospects of the Company.
ARTICLE VI
PURCHASERS REPRESENTATIONS AND WARRANTIES
As a material inducement to the Company to enter into this Agreement, each
Purchaser hereby represents and warrants to the Company, with respect to itself
and not jointly, as follows:
6.1 PURCHASER'S INVESTMENT REPRESENTATIONS. Such
Purchaser (i) is acquiring the Restricted Securities purchased hereunder or
acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, (ii) has no intention of
selling such securities in a public distribution in violation of the federal
securities laws or any applicable state securities laws and (iii) is an
"accredited investor" as defined in the Securities Act; provided that nothing
contained herein shall prevent such Purchaser and subsequent holders of
Restricted Securities from transferring such securities in compliance with the
provisions of Article IV hereof. Each certificate for Restricted Securities
shall be imprinted with a customary securities legend in a form provided by the
Company's counsel.
6.2 AUTHORIZATION; NO BREACH. The execution, delivery
and performance of this Agreement, the Shareholders Agreement and all other
agreements contemplated hereby to which such Purchaser is a party have been
duly authorized by such Purchaser. This Agreement, the Shareholders Agreement
and all other agreements contemplated hereby to which a Purchaser is a party
each constitutes a valid and binding obligation of such Purchaser, enforceable
in accordance with its terms. The execution and delivery by such Purchaser of
this Agreement, the Shareholders Agreement and all other agreements
contemplated hereby to which such Purchaser is a party, and compliance with the
respective terms hereof and thereof by such Purchaser do not and will not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the creation of any lien,
security interest, charge or encumbrance upon such Purchaser's capital stock or
assets pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authorization, consent, approval, exemption or other action by or notice to
any court or administrative or governmental body pursuant to, the charter or
organizational documents of such Purchaser, if applicable, or any law, statute,
rule or regulation to which such
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<PAGE> 15
Purchaser is subject, or any agreement, instrument, order, judgment or decree
to which such Purchaser is a party or by which it is bound.
6.3 BROKERAGE. Other than the Professional Services
Agreement, there are no claims for brokerage commissions, finders, fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon such Purchaser.
Such Purchaser shall pay, and hold the Company harmless against, any liability,
loss or expense (including, without limitation, attorneys, fees and
out-of-pocket expenses) arising in connection with any such claim.
6.4 GOVERNMENTAL CONSENT, ETC. No permit, consent,
approval or authorization of, or declaration to or filing with, any
governmental authority is required in connection with the execution, delivery
and performance by such Purchaser of this Agreement or the other agreements
contemplated hereby, or the consummation by such Purchaser of any other
transactions contemplated hereby or thereby.
ARTICLE VII
DEFINITIONS
For the purposes of this Agreement, the following terms have
the meanings set forth below:
"AFFILIATE" of any particular person or entity means any other
person or entity controlling, controlled by or under common control with such
particular person or entity.
"CERTIFICATE OF INCORPORATION" means the Company's amended and
restated certificate of incorporation filed with the Secretary of State of the
State of New York on March 30, 1998.
"CLASS A PREFERRED" has the meaning set forth in Recital B of
this Agreement.
"COMMON" has the meaning set forth in Recital B of this
Agreement.
"COMMON STOCK" means collectively, the Common and any other
class of the Company's common stock, $.01 par value per share.
"CREDIT AGREEMENT" has the meaning set forth in Section
1.2(b).
"EXISTING SHAREHOLDERS" has the meaning set forth in Recital B
of this Agreement.
"HSR ACT" has the meaning set forth in Section 3.5.
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<PAGE> 16
"INDEBTEDNESS" means all indebtedness for borrowed money
(including purchase money obligations) maturing one year or more from the date
of creation or incurrence thereof or renewable or extendible at the option of
the debtor to a date one year or more from the date of creation or incurrence
thereof, all indebtedness under revolving credit arrangements extending over a
year or more, all capitalized lease obligations and all guarantees of any of
the foregoing.
"INITIAL CLOSING" has the meaning set forth in Section 1.2(c).
"INVESTOR COMMON" means (i) the Common Stock issued hereunder
and (ii) any Common Stock issued or issuable with respect to the Common Stock
referred to in clause (i) above by way of stock dividends or stock splits or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular shares of Investor
Common, such shares shall cease to be Investor Common when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering, them or (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar rule then in force).
"INVESTOR PREFERRED" means (i) the Class A Preferred issued
hereunder and (ii) any Class A Preferred issued or issuable with respect to the
Class A Preferred referred to in clause (i) above by way of stock dividends or
stock splits or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular shares of
Investor Preferred, such shares shall cease to be Investor Preferred when they
have been (a) effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering them, (b) distributed to
the public through a broker, dealer or market maker pursuant to Rule 144 under
the Securities Act (or any similar rule then in force) or (c) redeemed by the
Company.
"INVESTOR STOCK" means the Investor Preferred and the Investor
Common.
"IRC" means the Internal Revenue Code of 1986, as amended, and
any reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"MANAGEMENT AGREEMENTS" has the meaning set forth in Section
2.1(b).
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
"PROFESSIONAL SERVICES AGREEMENT" has the meaning set forth in
Section 2.1(d).
"RECAPITALIZATION AGREEMENT" has the meaning set forth in
Recital D.
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<PAGE> 17
"RESTRICTED SECURITIES" means (i) the Stock issued hereunder
and (ii) any securities issued with respect to the securities referred to in
clause (i) above by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (A) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (B) become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act
or (C) been otherwise transferred and new certificates for them not bearing a
customary Securities Act legend have been delivered by the Company in
accordance with Section 4.1(b). Whenever any particular securities cease to be
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing a customary
Securities Act legend.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental
body or agency succeeding to the functions thereof.
"SHAREHOLDERS AGREEMENT" has the meaning set forth in Section
2.1(c).
"STOCK" has the meaning set forth in Section 1.1 of this
Agreement.
"SUBSEQUENT CLOSING DATE" has the meaning set forth in Section
1.3(a).
"SUBSEQUENT CLOSING" has the meaning set forth in Section
1.3(a).
"SUBSIDIARY" means any corporation of which the securities
having a majority of the ordinary voting power in electing the board of
directors or otherwise are, at the time as of which any determination is being
made, owned by the Company either directly or through one or more Subsidiaries.
"TAKE DOWNS" has the meaning set forth in Section 1.3(a).
" THAYER III" means Thayer Equity Investors III, L.P.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES. The Company agrees to pay, and hold Thayer
III harmless against liability for the payment of, (i) the fees and expenses of
its counsel arising in connection with the negotiation and execution of this
Agreement and the consummation of the transactions
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<PAGE> 18
contemplated by this Agreement (including but not limited to fees and expenses
arising with respect to any subsequent purchase of Stock pursuant to Section
1.3 hereof), (ii) the fees and expenses incurred with respect to any amendments
or waivers (whether or not the same become effective) under or in respect of
this Agreement, the Management Agreements, the Shareholders Agreement, the
Professional Services Agreement, the other agreements contemplated hereby and
the Certificate of Incorporation, (iii) stamp and other taxes which may be
payable in respect of the execution and delivery of this Agreement or the
issuance, delivery or acquisition of any shares of Stock purchased hereunder or
in accordance with Section 1.3 hereof, and (iv) the fees and expenses incurred
with respect to the interpretation or enforcement of the rights of Thayer III
granted under this Agreement, the Management Agreements, the Shareholders
Agreement, the Professional Services Agreement, the other agreements
contemplated hereby and the Certificate of Incorporation and the Company's
bylaws.
8.2 REMEDIES. Each holder of Investor Stock shall have
all rights and remedies set forth in this Agreement and the Certificate of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
8.3 CONSENT TO AMENDMENTS. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the holders of a majority of the outstanding shares of
Investor Common. No other course of dealing between the Company and the holder
of any Stock or any delay in exercising any rights hereunder or under the
Certificate of Incorporation shall operate as a waiver of any rights of any
such holders. For purposes of this Agreement, shares of Stock held by the
Company or any Subsidiaries shall not be deemed to be outstanding.
8.4 SURVIVAL OF REPRESENTATION AND WARRANTIES. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
regardless of any investigation made by any Purchasers or on their behalf
8.5 SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto whether so expressed or not. In addition, and whether or not any
express assignment has been made, the provisions of this Agreement which are
for the Purchaser's benefit as a purchaser or holder of Stock are also for the
benefit of, and enforceable by, any permitted subsequent holder of such Stock.
The rights and obligations of the Thayer III under this Agreement and the
agreements contemplated hereby may be assigned by the Thayer III at any time,
in whole or in part, to any investment fund managed by TC Management Partners,
L.L.C. or any other Affiliate of Thayer III, or any successor thereto.
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<PAGE> 19
8.6 SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating, the remainder of this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.
8.8 DESCRIPTIVE HEADINGS; INTERPRETATION. The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a Section of this Agreement. The use of the word "including" in
this Agreement shall be by way of example rather than by limitation.
8.9 GOVERNING LAW. This Agreement and the exhibits and
schedules hereto shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
8.10 NOTICES. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally to the recipient by reputable express service (charges
prepaid), 24 hours after being sent by overnight courier service (charges
prepaid), 48 hours after being deposited to the recipient by United States
mail, first class, postage prepaid, or sent by facsimile. Such notices,
demands and other communications shall be sent to the Purchasers and to the
Company at the address indicated below:
If to the Company:
Global Vacation Group, Inc.
c/o Thayer Capital Partners
1455 Pennsylvania Avenue NW, Suite 350
Washington, D.C. 20004
Attention: Chris Temple
Daniel Raskas
Tel No.: (202) 371-0150
Fax No.: (202) 371-0391
If to the Purchasers:
To each Purchaser at the address set forth in the
Schedule of Purchasers attached hereto
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<PAGE> 20
with a copy to:
Hogan & Hartson, LLP
Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Christopher J. Hagan
Tel No.: (202) 637-5600
Fax No.: (202) 637-5910
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8.11 ENTIRE AGREEMENT. Except as otherwise expressly set
forth herein, this document embodies the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
[THIS SPACE INTENTIONALLY LEFT BLANK]]
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
GLOBAL VACATION GROUP, INC.
By: /s/ J. RAYMOND LEWIS
------------------------------------------
Name:
-------------------------------------
Title: President & Chief Operating Officer
------------------------------------
THAYER EQUITY INVESTORS III, L.P.
By: TC Equity Partners, LLC.
Its: General Partner
By: /s/ CHRISTOPHER TEMPLE
---------------------------------------
Name:
----------------------------------
Title: Member
---------------------------------
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<PAGE> 22
[OTHER PURCHASERS]
TC CO-INVESTORS, LLC
By: /s/ Christopher Temple
-----------------------------
Christopher Temple
Member
ALTOBELLO FAMILY LIMITED PARTNERSHIP
By: Daniel J. Altobello
Its: General Partner
/s/ Daniel J. Altobello
----------------------------------
Daniel J. Altobello
/s/ Vernon E. Jordan, Jr.
----------------------------------
Vernon E. Jordan, Jr.
/s/ Jack F. Kemp
----------------------------------
Jack F. Kemp
/s/ Drew Lewis
----------------------------------
Drew Lewis
/s/ James D. Robinson, III
----------------------------------
James D. Robinson, III
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<PAGE> 23
UEBERROTH FAMILY TRUST,
dated June 27, 1986
By: /s/ Peter Ueberroth
---------------------
Peter Ueberroth
Trustee
JOSEPH J. UEBERROTH REVOCABLE TRUST
By: /s/ Joseph Ueberroth
---------------------
Joseph Ueberroth
Trustee
/s/ Frank Zarb and Patricia Zarb
----------------------------------
Frank Zarb and Patricia Zarb
/s/ Eric A. Croson and Mari Jan Pitcher
----------------------------------
Eric A. Croson and Mari Jan Pitcher
/s/ Daniel F. Gillis
----------------------------------
Daniel F. Gillis
/s/ Steve McNeely
----------------------------------
Steve McNeely
/s/ Harry K. McCreery
----------------------------------
Harry K. McCreery
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<PAGE> 24
PHILIP S. DAUBER AND ELAYNE A. DAUBER,
TRUSTEES
PSERD TRUST, dated March 11, 1986
By: /s/ Philip S. Dauber
------------------------
Philip S. Dauber
Trustee
/s/ Edward Mathias
----------------------------------
Edward Mathias
/s/ Harry N. Walters
----------------------------------
Harry N. Walters
/s/ Herman Porten
----------------------------------
Herman Porten
The Exhibits and Schedules to this Equity Purchase Agreement are not included
with this Registration Statement on Form S-1. Global will provide these
exhibits and schedules upon the request of the Securities and Exchange
Commission.
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<PAGE> 1
EXHIBIT 10.3
EQUITY SUBSCRIPTION AGREEMENT
THIS AGREEMENT is made as of March 30, 1998 by and among GLOBAL
VACATION GROUP, IN(c) (formerly Allied Bus Corp.), a New York corporation (the
"COMPANY"), and RALPH M. CALIRI ("CALIRI") and WILLIAM W. WEBBER ("WEBBER")
(collectively, the "PURCHASERS" and each individually a "PURCHASER"). Except
as otherwise indicated, capitalized terms used herein are defined in Section
7 hereof.
The parties hereto agree as follows:
1 AUTHORIZATION OF STOCK. The Company has authorized the
issuance and sale to the Purchasers of an aggregate of (i) 450 shares of its
Preferred Stock, $1,000 par value per share (the "PREFERRED"), and (ii) 5,000
shares of its Common Stock, $.01 par value per share (the "COMMON"). The
Preferred and the Common are collectively referred to herein as the "STOCK."
2 PURCHASE AND SALE OF THE STOCK. The parties will execute
and deliver counterparts of this Agreement and the Joinder to the
Shareholders Agreement (as defined in Sections 3(d) and 3(e) below) on March
30, 1998. The subscription by the Purchasers will occur at a closing
("CLOSING") to be held on that same date. At the Closing, the Company will
sell to the Purchasers and, subject to the terms and conditions set forth
herein, the Purchasers will purchase from the Company, an aggregate of (i)
450 shares of Preferred at a price of $1,000 per share and (ii) 5,000 shares
of Common at a price of $10 per share (in the aggregate, a total price of
$500,000). The allocation of the purchase of the Stock among each of the
Purchasers is set forth in Exhibit A hereto. The Closing of the purchase and
sale of the Stock will be effected by exchange of documents, certificates and
agreements, by air courier, telefax or other means satisfactory to the
parties. At the Closing, the Company will issue and deliver to the
Purchasers certificates evidencing the Stock to be purchased by the
Purchasers, registered in each Purchaser's name, against payment of the
purchase price therefor by check or wire transfer of funds in the amount set
forth for each Purchaser in Exhibit A hereto.
3 CONDITIONS OF THE PURCHASERS' OBLIGATION AT THE CLOSING.
The obligation of the Purchasers to purchase and pay for the Stock at the
Closing is subject to the satisfaction as of the Closing of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Section 6 hereof will be true and correct at and
as of the Closing as though then made, except to the extent of changes caused
by the transactions expressly contemplated herein.
<PAGE> 2
(b) CERTIFICATE OF INCORPORATION. The Company's
Certificate of Incorporation (the "CHARTER") in the form of Exhibit B as
filed with the State of New York will be in full force and effect at the
Closing and will not have been further amended or modified.
(c) EQUITY PURCHASE AGREEMENT. The Equity Purchase
Agreement dated March 30, 1998 (the "EQUITY PURCHASE AGREEMENT") among the
Company, Thayer Equity Investors, III, L.P. ("THAYER III") and each of the
other Persons set forth in the Schedule of Purchasers attached thereto, will
be in full force and effect and will not have been amended or modified as of
the Closing.
(d) SHAREHOLDERS AGREEMENT. The Company, Thayer III, and
the other shareholders of the Company are parties to that certain
Shareholders Agreement dated March 30, 1998, in form and substance
substantially similar to Exhibit C attached hereto (the "SHAREHOLDERS
AGREEMENT"), and the Shareholders Agreement as so amended will be in full
force and effect as of the Closing.
(e) PROCEEDINGS. All corporate and other proceedings
taken or required to be taken in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto will be satisfactory in form and substance to the
Purchasers.
4 TRANSFER OF RESTRICTED SECURITIES.
(a) Restricted Securities are transferable pursuant to
(i) public offerings registered under the Securities Act, (ii) Rule 144 of
the Securities and Exchange Commission (or any similar rule then in force) if
such rule is available and (iii) subject to the conditions specified in
Section 4(b) below, any other legally available means of transfer.
(b) In connection with the transfer of any Restricted
Securities (other than a transfer described in Section 4(a)(i) or (ii)
above), the holder thereof will deliver written notice to the Company
describing the transfer or proposed transfer, together with an opinion of
Hogan & Hartson, LLC or other counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that
such transfer of Restricted Securities may be effected without registration
of such Restricted Securities under the Securities Act. In addition, if the
holder of the Restricted Securities delivers to the Company an opinion of
Hogan & Hartson, LLC or such other counsel that no subsequent transfer of
such Restricted Securities will require registration under the Securities
Act, the Company will promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities
Act legend set forth in Section 8(a). If the Company is not required to
deliver such new certificates for such Restricted Securities, the holder
thereof will not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the
conditions contained in this Section 4(b) and Section 8(a).
5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of
the Purchasers represents and warrants to the Company that he or she is
purchasing and will
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<PAGE> 3
purchase the Stock for his or her own account, with no present intention of
distributing or reselling the Stock or any part thereof, and that he or she is
prepared to bear the economic risk of retaining the Stock for an indefinite
period, all without prejudice, however, to his or her right at any time, in
accordance with this Agreement, lawfully to sell or otherwise dispose of all or
any part of the Stock held by him or her. Each of the Purchasers also represents
and warrants that he or she is an accredited investor, as such term is defined
in Rule 501 of Regulation D promulgated under the Securities Act, and that he or
she has had the opportunity to ask questions of the Company's management with
respect to his or her investment. Each of the Purchasers agrees that if, and to
the extent, he or she elects to sell the Stock, he or she will do so in
compliance with the provisions and requirements of the Securities Act and
applicable state securities laws. Each of the Purchasers further represents that
he or she has full authority to enter into the transactions contemplated by this
Agreement and to perform his or her obligations hereunder.
6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Purchasers to enter into this Agreement and
purchase the Stock, the Company hereby represents and warrants that:
(a) ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York and is qualified to do business in every
jurisdiction in which the failure so to qualify might reasonably be expected
to have a material adverse effect on the financial condition, operating
results or business prospects of the Company. The Company has all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement. The copies of the
Company's Charter and bylaws that have been furnished to the Purchasers'
counsel reflect all amendments made thereto at any time prior to the date of
this Agreement and are correct and complete.
(b) CAPITAL STOCK AND RELATED MATTERS.
(i) As of the Closing and immediately thereafter,
the authorized capital stock of the Company will consist of (A)
100,000 shares of Preferred, of which 27,439.64 shares will be
issued and outstanding, and (B) 6,000,000 shares of Common, of
which 615,174.37 shares will be issued and outstanding. As of
the Closing, the Company will not have outstanding any stock or
securities convertible or exchangeable for any shares of its
capital stock, nor will it have outstanding any rights or options
to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital
stock, except as described in the Equity Purchase Agreement. As
of the Closing, the Company will not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock, except pursuant to its
Charter and the Management Agreements with each of Roger Ballou
("BALLOU"), Raymond Lewis ("LEWIS") and Walter Berman
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<PAGE> 4
("BERMAN"). As of the Closing, all of the outstanding shares of
the Company's capital stock will be validly issued, fully paid
and nonassessable.
(ii) Except as provided in the Equity Purchase
Agreement, there are no statutory or contractual shareholders
preemptive rights with respect to the issuance of the Stock
hereunder. Based in part on the investment representations of
the Purchasers in Section 5 above, the Company has not violated
any applicable federal or state securities laws in connection
with the offer, sale or issuance of any of the Stock, and the
offer, sale and issuance of the Stock hereunder do not require
registration under the Securities Act or any applicable state
securities laws. To the best of the Company's knowledge, there
are no agreements among the Company's stockholders with respect
to the voting or transfer of the Company's capital stock or with
respect to any other aspect of the Company's affairs other than
the Equity Purchase Agreement, the Shareholders Agreement, the
Registration Agreement or the Management Agreements with Ballou,
Lewis and Berman.
(c) SUBSIDIARIES. The Company does not own or hold any
rights to acquire any shares of stock or any other security or interest in
any other Person, other than Haddon Holidays, In(c) following the consummation
on March 30, 1998 of the Company's acquisition thereof.
(d) AUTHORIZATION; NO BREACH. The execution, delivery
and performance of this Agreement, the Registration Agreement, the
Shareholders Agreement, and all other agreements contemplated hereby to which
the Company is a party have been duly authorized by the Company. This
Agreement and each of the Registration Agreement, the Shareholders Agreement,
the Charter and the other agreements contemplated hereby constitutes a valid
and binding obligation of the Company, enforceable in accordance with its
terms. The execution and delivery by the Company of this Agreement, the
Registration Agreement, the Shareholders Agreement and all other agreements
contemplated hereby to which the Company is a party, the offering, sale and
issuance of the Stock hereunder, and fulfillment of and compliance with the
respective terms hereof and thereof by the Company, do not and will not (i)
conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in the creation of any
lien, security interest, charge or encumbrance upon the Company's capital
stock or assets pursuant to, (iv) give any third party the right to
accelerate any obligation under, (v) result in a violation of, or (vi)
require any authorization, consent, approval, exemption or other action by or
notice to any court or administrative or governmental body pursuant to, the
Charter or bylaws of the Company, or any law, statute, rule or regulation to
which the Company is subject, or any agreement, instrument, order, judgment
or decree to which the Company is a party or by which it is bound.
(e) BROKERAGE. There are no claims against the Company
for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement binding upon the Company.
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<PAGE> 5
(f) GOVERNMENTAL CONSENT, ETC. No permit, consent,
approval or authorization of, or declaration to or filing with, any
governmental authority is required in connection with the execution, delivery
and performance by the Company of this Agreement or the other agreements
contemplated hereby, or the consummation by the Company of any other
transaction contemplated hereby or thereby.
(g) COMPLIANCE WITH LAWS. The Company is not in
violation of any law or any regulation or requirement which violation might
reasonably be expected to have a material adverse effect upon the financial
condition, operating results or business prospects of the Company and the
Company has not received notice of any such violation.
(h) DISCLOSURE. Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to the Purchasers by or on behalf of the Company
with respect to the transactions contemplated hereby contains any untrue
statement of a material fact or omits a material fact necessary to make each
statement contained herein or therein not misleading. There is no fact which
the Company has not disclosed to the Purchasers in writing and of which any
of its officers, directors or executive employees is aware and which could
reasonably be anticipated to have a material adverse effect upon the existing
or expected financial condition, operating results, assets, customer
relations, employee relations or business prospects of the Company.
(i) CLOSING DATE. The representations and warranties of
the Company contained in this Section 6 and elsewhere in this Agreement and
all information contained in any exhibit, schedule or attachment hereto or in
any writing delivered by, or on behalf of, the Company to any Purchasers will
be true and correct in all material respects on the date of the Closing as
though then made, except as affected by the transactions expressly
contemplated by this Agreement.
7 DEFINITIONS. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.
"RESTRICTED SECURITIES" means the Stock issued hereunder, and
any securities issued with respect thereto by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities will cease to be Restricted Securities when they
have (a) been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) become eligible
for sale and have actually been sold to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act or (c) been otherwise
transferred and new certificates for them not bearing the Securities Act legend
set forth in Section 8(a) have been delivered by the Company in accordance with
Section 4(b). Whenever any particular securities cease to be Restricted
Securities, the
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<PAGE> 6
holder thereof will be entitled to receive from the Company, without expense,
new securities of like tenor not bearing a Securities Act legend of the
character set forth in Section 8(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"SUBSIDIARY" means any corporation of which the securities
having a majority of the ordinary voting power in electing the board of
directors are, at the time as of which any determination is being made, owned by
the Company either directly or through one or more Subsidiaries.
8 MISCELLANEOUS.
(a) RESTRICTIVE LEGEND. Each certificate for Restricted
Securities will be imprinted with a legend in substantially the following
form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
transfer of the securities represented by this certificate is
subject to the conditions specified in the Equity Subscription
Agreement, dated as of March 30, 1998, by and between the
issuer (the "COMPANY") and a certain investor, and the Company
reserves the right to refuse the transfer of such securities
until such conditions have been fulfilled with respect to such
transfer. A copy of such conditions will be furnished by the
Company to the holder hereof upon written request and without
charge.
(b) SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein or in any instruments of transfer or assignment,
all covenants and agreements contained in this Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed
or not. In addition, and whether or not any express assignment has been
made, the provisions of this Agreement which are for the Purchasers' benefit
as a purchaser or holder of Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Stock.
(c) COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, both of which need not contain the signatures
of more than one party, but both such counterparts taken together will
constitute one and the same Agreement.
(d) DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
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<PAGE> 7
E. GOVERNING LAW. This Agreement will be governed by
the internal law, and not the law of conflicts, of the State of New York.
F. NOTICES. All notices, demands or other
communications to be given or delivered under or by reason of the provisions
of this Agreement will be in writing and will be deemed to have been given
when delivered personally, or sent by telex or facsimile transmission, or
sent by receipted air courier, or mailed by certified or registered mail,
return receipt requested and postage prepaid, to the recipient. Such
notices, demands and other communications will be sent to the Company and the
Purchasers at the address indicated below:
Notice to the Company
Global Vacation Group, In(c)
c/o Thayer Capital Partners
1455 Pennsylvania Avenue, N.W., Suite 350
Washington, D.C. 20004
Attention: Chris Temple
Daniel Raskas
Telephone No.: (202) 371-0150
Facsimile No.: (202) 371-0391
Notice to the Purchasers
To each Purchaser at the address of each
Purchaser set forth on the signature page hereto.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GLOBAL VACATION GROUP, INC.
By: /s/ Raymond Lewis
-------------------------------------
Raymond Lewis
President and Chief Operating Officer
PURCHASERS:
/s/ Ralph M. Caliri
-------------------------------------
Ralph M. Caliri
ADDRESS:
-------------------------
-------------------------
-------------------------
-------------------------
/s/ William W. Webber
-------------------------------------
William W. Webber
ADDRESS:
-------------------------
-------------------------
-------------------------
-------------------------
The Exhibits to this Equity Subscription Agreement are not included with this
Registration Statement on Form S-1. Global will provide these exhibits and
schedules upon the request of the Securities and Exchange Commission.
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<PAGE> 1
Exhibit 10.4
EQUITY SUBSCRIPTION AGREEMENT
THIS AGREEMENT is made as of May 4, 1998 by and among GLOBAL
VACATION GROUP, INC. (formerly Allied Bus Corp.), a New York corporation (the
"COMPANY"), and James F. Miller (the "PURCHASER"). Except as otherwise
indicated, capitalized terms used herein are defined in Section 7 hereof.
The parties hereto agree as follows:
1. AUTHORIZATION OF STOCK. The Company has authorized
the issuance and sale to the Purchaser of (i) 2,160 shares of its Preferred
Stock, $1,000 par value per share (the "PREFERRED"), and (ii) 24,000 shares of
its Common Stock, $.01 par value per share (the "COMMON"). The Preferred and
the Common are collectively referred to herein as the "STOCK."
2. PURCHASE AND SALE OF THE STOCK. The parties will
execute and deliver counterparts of this Agreement and the Joinder to the
Shareholders Agreement (as defined in Section 3(d) below) on April __, 1998.
The subscription by the Purchaser will occur at a closing ("CLOSING") to be
held on that same date. At the Closing, the Company will sell to the Purchaser
and, subject to the terms and conditions set forth herein, the Purchaser will
purchase from the Company, (i) 2,160 shares of the Preferred at a price of
$1,000 per share and (ii) 24,000 shares of the Common at a price of $10 per
share (in the aggregate, a total price of $2,400,000). The Closing of the
purchase and sale of the Stock will be effected by exchange of documents,
certificates and agreements, by air courier, telefax or other means
satisfactory to the parties. At the Closing, the Company will issue and
deliver to the Purchaser certificates evidencing the Stock to be purchased by
the Purchaser, registered in the Purchaser's name, against payment of the
purchase price therefor by check or wire transfer of funds in the amount set
forth opposite the Purchaser's name on Exhibit A hereto.
3. CONDITIONS OF THE PURCHASER'S OBLIGATION AT THE
CLOSING. The obligation of the Purchaser to purchase and pay for the Stock at
the Closing is subject to the satisfaction as of the Closing of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in Section 6 hereof will be true and
correct at and as of the Closing as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein.
(b) CERTIFICATE OF INCORPORATION. The Company's
Certificate of Incorporation (the "CHARTER") in the form of Exhibit B hereto as
filed with the State of New York will be in full force and effect at the
Closing and will not have been further amended or modified.
<PAGE> 2
(c) EQUITY PURCHASE AGREEMENT. The Equity
Purchase Agreement dated March 27, 1998 (the "EQUITY PURCHASE AGREEMENT") among
the Company, Thayer Equity Investors, III, L.P. ("THAYER III") and each of the
other Persons set forth in the Schedule of Purchasers attached thereto, will be
in full force and effect.
(d) SHAREHOLDERS AGREEMENT. The Company, Thayer
III, and the other shareholders of the Company are parties to that certain
Shareholders Agreement dated March 27, 1998, in form and substance
substantially similar to Exhibit C attached hereto (the "SHAREHOLDERS
AGREEMENT"), and the Shareholders Agreement as so amended will be in full force
and effect as of the Closing.
(e) PROCEEDINGS. All corporate and other
proceedings taken or required to be taken in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto will be satisfactory in form and substance to the
Purchasers.
4. TRANSFER OF RESTRICTED SECURITIES.
(a) Restricted Securities are transferable
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 of the Securities and Exchange Commission (or any similar rule then in
force) if such rule is available and (iii) subject to the conditions specified
in Section 4(b) below, any other legally available means of transfer.
(b) In connection with the transfer of any
Restricted Securities (other than a transfer described in Section 4(a)(i) or
(ii) above), the holder thereof will deliver written notice to the Company
describing the transfer or proposed transfer, together with an opinion of Hogan
& Hartson, LLP or other counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that
such transfer of Restricted Securities may be effected without registration of
such Restricted Securities under the Securities Act. In addition, if the
holder of the Restricted Securities delivers to the Company an opinion of Hogan
& Hartson, LLP or such other counsel that no subsequent transfer of such
Restricted Securities will require registration under the Securities Act, the
Company will promptly upon such contemplated transfer deliver new certificates
for such Restricted Securities which do not bear the Securities Act legend set
forth in Section 8(a). If the Company is not required to deliver such new
certificates for such Restricted Securities, the holder thereof will not
transfer the same until the prospective transferee has confirmed to the Company
in writing its agreement to be bound by the conditions contained in this
Section 4(b) and Section 8(a).
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Company that he is purchasing and will
purchase the Stock for his own account, with no present intention of
distributing or reselling the Stock or any part thereof, and that he is
prepared to bear the economic risk of retaining the Stock for an indefinite
period, all without prejudice, however, to his right at any time, in accordance
with this Agreement, lawfully to sell or otherwise dispose of all or any part
of the Stock held by him. The Purchaser also represents and warrants that he
is an accredited investor, as such term is defined in Rule 501
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<PAGE> 3
of Regulation D promulgated under the Securities Act, and that he has had the
opportunity to ask questions of the Company's management with respect to his
investment. The Purchaser agrees that if, and to the extent, he elects to sell
the Stock, he will do so in compliance with the provisions and requirements of
the Securities Act and applicable state securities laws. The Purchaser further
represents that he has full authority to enter into the transactions
contemplated by this Agreement and to perform his obligations hereunder.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Purchaser to enter into this Agreement and purchase
the Stock, the Company hereby represents and warrants that:
(a) ORGANIZATION AND CORPORATE POWER. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York and is qualified to do business in
every jurisdiction in which the failure so to qualify might reasonably be
expected to have a material adverse effect on the financial condition,
operating results or business prospects of the Company. The Company has all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement. The copies of the
Company's Charter and bylaws that have been furnished to the Purchaser's
counsel reflect all amendments made thereto at any time prior to the date of
this Agreement and are correct and complete.
(b) CAPITAL STOCK AND RELATED MATTERS.
(i) As of the Closing and immediately
thereafter, the authorized capital stock of the Company will
consist of (A) 100,000 shares of the Preferred, of which
36,724.64 shares will be issued and outstanding, and (B)
6,000,000 shares of the Common, of which 639,174.4 shares will
be issued and outstanding. As of the Closing, the Company
will not have outstanding any stock or securities convertible
or exchangeable for any shares of its capital stock, nor will
it have outstanding any rights or options to subscribe for or
to purchase its capital stock or any stock or securities
convertible into or exchangeable for its capital stock, except
as described in the Equity Purchase Agreement. As of the
Closing, the Company will not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock, except pursuant to
its Charter and the Management Agreements with each of Roger
Ballou ("BALLOU"), Raymond Lewis ("LEWIS") and Walter Berman
("BERMAN"). As of the Closing, all of the outstanding shares
of the Company's capital stock will be validly issued, fully
paid and nonassessable.
(ii) Except as provided in the Equity
Purchase Agreement, there are no statutory or contractual
shareholders preemptive rights with respect to the issuance of
the Stock hereunder. Based in part on the investment
representations of the Purchaser in Section 5 above, the
Company has not violated
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<PAGE> 4
any applicable federal or state securities laws in connection
with the offer, sale or issuance of any of the Stock, and the
offer, sale and issuance of the Stock hereunder do not require
registration under the Securities Act or any applicable state
securities laws. To the best of the Company's knowledge,
there are no agreements among the Company's shareholders with
respect to the voting or transfer of the Company's capital
stock or with respect to any other aspect of the Company's
affairs other than the Equity Purchase Agreement, the
Shareholders Agreement, [THE REGISTRATION AGREEMENT] or the
Management Agreements with Ballou, Lewis and Berman.
(c) SUBSIDIARIES. The Company does not own or
hold any rights to acquire any shares of stock or any other security or
interest in any other Person, other than (i) Haddon Holidays, Inc. following
the consummation on March 30, 1998 of the Company's acquisition thereof and
Globetrotters, Inc. following the consummation on May 4, 1998 of the Company's
acquisition thereof, and (ii) the Company entered into a Stock Purchase
Agreement with Globetrotters, Inc. and Robert Grinberg on May 4, 1998 for the
acquisition of all the outstanding capital stock of Globetrotters, Inc..
(d) AUTHORIZATION; NO BREACH. The execution,
delivery and performance of this Agreement, the Shareholders Agreement, and all
other agreements contemplated hereby to which the Company is a party have been
duly authorized by the Company. This Agreement and each of the Shareholders
Agreement, the Charter and the other agreements contemplated hereby constitutes
a valid and binding obligation of the Company, enforceable in accordance with
its terms. The execution and delivery by the Company of this Agreement, the
Shareholders Agreement and all other agreements contemplated hereby to which
the Company is a party, the offering, sale and issuance of the Stock hereunder,
and fulfillment of and compliance with the respective terms hereof and thereof
by the Company, do not and will not (i) conflict with or result in a breach of
the terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the Company's capital stock or assets pursuant to, (iv) give any third
party the right to accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or other
action by or notice to any court or administrative or governmental body
pursuant to, the Charter or bylaws of the Company, or any law, statute, rule or
regulation to which the Company is subject, or any agreement, instrument,
order, judgment or decree to which the Company is a party or by which it is
bound.
(e) BROKERAGE. There are no claims against the
Company for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement binding upon the Company.
(f) GOVERNMENTAL CONSENT, ETC. No permit,
consent, approval or authorization of, or declaration to or filing with, any
governmental authority is required in connection with the execution, delivery
and performance by the Company of this Agreement or
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<PAGE> 5
the other agreements contemplated hereby, or the consummation by the Company of
any other transaction contemplated hereby or thereby.
(g) COMPLIANCE WITH LAWS. The Company is not in
violation of any law or any regulation or requirement which violation might
reasonably be expected to have a material adverse effect upon the financial
condition, operating results or business prospects of the Company and the
Company has not received notice of any such violation.
(h) DISCLOSURE. Neither this Agreement nor any
of the schedules, attachments, written statements, documents, certificates or
other items prepared or supplied to the Purchaser by or on behalf of the
Company with respect to the transactions contemplated hereby contains any
untrue statement of a material fact or omits a material fact necessary to make
each statement contained herein or therein not misleading. There is no fact
which the Company has not disclosed to the Purchaser in writing and of which
any of its officers, directors or executive employees is aware and which could
reasonably be anticipated to have a material adverse effect upon the existing
or expected financial condition, operating results, assets, customer relations,
employee relations or business prospects of the Company.
(i) CLOSING DATE. The representations and
warranties of the Company contained in this Section 6 and elsewhere in this
Agreement and all information contained in any exhibit, schedule or attachment
hereto or in any writing delivered by, or on behalf of, the Company to the
Purchaser will be true and correct in all material respects on the date of the
Closing as though then made, except as affected by the transactions expressly
contemplated by this Agreement.
7. DEFINITIONS. For the purposes of this Agreement,
the following terms have the meanings set forth below:
"PERSON" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization or a governmental entity or any department,
agency or political subdivision thereof.
"RESTRICTED SECURITIES" means the Stock issued
hereunder, and any securities issued with respect thereto by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities will cease to be Restricted
Securities when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering
them, (b) become eligible for sale and have actually been sold to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) been otherwise transferred and new certificates for them
not bearing the Securities Act legend set forth in Section 8(a) have been
delivered by the Company in accordance with Section 4(b). Whenever any
particular securities cease to be Restricted Securities, the holder thereof
will be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act legend of the character set forth in
Section 8(a).
- 5 -
<PAGE> 6
"SECURITIES ACT" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities
Exchange Act of 1934, as amended, or any similar federal law then in force.
"SUBSIDIARY" means any corporation of which the
securities having a majority of the ordinary voting power in electing the board
of directors are, at the time as of which any determination is being made,
owned by the Company either directly or through one or more Subsidiaries.
8. MISCELLANEOUS.
(a) RESTRICTIVE LEGEND. Each certificate for
Restricted Securities will be imprinted with a legend in substantially the
following form:
The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended. The transfer of the securities
represented by this certificate is subject to the
conditions specified in the Equity Subscription
Agreement, dated as of March 30, 1998, by and between
the issuer (the "COMPANY") and a certain investor,
and the Company reserves the right to refuse the
transfer of such securities until such conditions
have been fulfilled with respect to such transfer. A
copy of such conditions will be furnished by the
Company to the holder hereof upon written request and
without charge.
(b) SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein or in any instruments of transfer or assignment, all
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as a
purchaser or holder of Stock are also for the benefit of, and enforceable by,
any subsequent holder of such Stock.
(c) COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, both of which need not contain the signatures
of more than one party, but both such counterparts taken together will
constitute one and the same Agreement.
(d) DESCRIPTIVE HEADINGS. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(e) GOVERNING LAW. This Agreement will be
governed by the internal law, and not the law of conflicts, of the State of New
York.
- 6 -
<PAGE> 7
(f) NOTICES. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement will be in writing and will be deemed to have been given when
delivered personally, or sent by telex or facsimile transmission, or sent by
receipted air courier, or mailed by certified or registered mail, return
receipt requested and postage prepaid, to the recipient. Such notices, demands
and other communications will be sent to the Company and the Purchaser at the
address indicated below:
Notice to the Company
Global Vacation Group, Inc.
c/o Thayer Capital Partners
1455 Pennsylvania Avenue, N.W., Suite 350
Washington, D.C. 20004
Attention: Chris Temple
Daniel Raskas
Telephone No.: (202) 371-0150
Facsimile No.: (202) 371-0391
Notice to the Purchaser
JFM Enterprises
1301 West 22nd Street
Suite 1001
Oak Brook, Illinois 60521
Attention: James F. Miller
Telephone No.: (630) 990-6850
Facsimile No.: (630) 990-4555
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
[THIS SPACE INTENTIONALLY LEFT BLANK]
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
GLOBAL VACATION GROUP, INC.
By: /s/ Daniel A. Raskas
--------------------------------
Daniel A. Raskas
Vice President and Secretary
PURCHASER:
/s/ James F. Miller
-----------------------------------------
James F. Miller
The Exhibits to this Equity Subscription Agreement are not included with this
Registration Statement on Form S-1. AnswerThink will provide these exhibits
and schedules upon the request of the Securities and Exchange Commission.
- 8 -
<PAGE> 1
EXHIBIT 10.6
STOCK PURCHASE AGREEMENT
BY AND AMONG
GLOBAL VACATION GROUP, INC.,
("BUYER")
HADDON HOLIDAYS, INC.
(THE "COMPANY")
AND
THE SHAREHOLDERS OF THE COMPANY
(THE "SELLERS")
DATED MARCH 30, 1998
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II AGREEMENT OF PURCHASE AND SALE; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Purchase Price and Assumption of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Escrow Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Closing Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Post-Closing Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS . . . . . . . . . . . . . . . . 7
3.1 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 No Liens on Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Other Rights to Acquire Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Employee Welfare Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Employee Pension Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Employment and Non-Tax Qualified Deferred Compensation Arrangements . . . . . . . . . 13
3.15 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.20 Accounts Receivable; Customer Deposits and Bookings . . . . . . . . . . . . . . . . . . . . 16
(a) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
(b) Customer Deposits; Bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.21 Bank Accounts; Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.22 Customer Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.23 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.24 Affiliated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.25 Funded Indebtedness; Letters of Credit; Undisclosed Liabilities . . . . . . . . . . . . . . 17
(a) Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.26 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.27 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Consents of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Reasonable Commercial Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Access to Records Before Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 CCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Additional Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Litigation Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING . . . . . . . . . . . . . . . 23
7.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 23
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) Discharge of Indebtedness and Liens . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(e) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
(f) Documents to be Delivered by Seller and the Company . . . . . . . . . . . . . . . . . . . . 24
(i) Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . 24
(ii) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(iii) Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(iv) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(v) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Termination of Existing Agreements . . . . . . . . . . . . . . . . . 25
New Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(vi) Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(vii) Resignation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 25
(viii) Termination of Shareholder Agreements . . . . . . . . . . . . . . . . . . 25
(ix) Termination of Certain Benefits . . . . . . . . . . . . . . . . . . . . . . 25
(x) Caliri Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Conditions to Seller's and the Company's Obligations . . . . . . . . . . . . . . . . . . . . 25
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 26
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Documents to be Delivered by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 26
(i) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(ii) Caliri Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . 26
(iii) Caliri Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . 26
(iv) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) Payments to Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Escrow Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Tax Audits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Indemnification of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Limits on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Modifications; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Counterparts; Facsimile Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.6 Entire and Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
10.8 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . 33
10.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.11 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.12 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.13 No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
LIST OF EXHIBITS
<S> <C>
Exhibit A Form of Escrow Agreement
Exhibit B Opinion of the Company's and Sellers' Counsel
Exhibit C Sellers' Certificates
Exhibit D Form of Release
Exhibit E Caliri Consulting Agreement
Exhibit F Forms of Employment Agreement For Zetusky, Langley
and Parillo (F-1) and Van Horn (F-2)
Exhibit G Sellers' Accounts; Allocation of Interests; Wire Transfer
Instructions (Section 2.3)
Exhibit H Ownership of Shares (Section 3.1)
Exhibit I Articles (I-1) and Bylaws (I-2) and Qualified
Jurisdictions (I-3) (Section 3.4)
Exhibit J List of Properties (Section 3.9)
Exhibit K List of Licenses and Permits (Section 3.10)
Exhibit L List of Intellectual Property (Section 3.11)
Exhibit M List of Insurance (Section 3.13)
Exhibit N List of Contracts (Section 3.15)
Exhibit O List of Personnel (Section 3.18)
Exhibit P List of Bookings, Customer Deposits, Prepayments
and Refunds and Customer Claims (Section 3.20)
Exhibit Q List of Bank Accounts and Investments (Section 3.21)
Exhibit R List of Letters of Credit (Section 3.25(b))
Exhibit S List of Funded Indebtedness (Section 7.1(d))
LIST OF SCHEDULES
Disclosure Schedule
</TABLE>
-v-
<PAGE> 7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of March 30, 1998, by and among GLOBAL VACATION GROUP, INC., a New York
corporation ("BUYER"), HADDON HOLIDAYS, INC., a New Jersey corporation (the
"COMPANY") and Ralph M. Caliri and William W. Webber (collectively, the
"SELLERS").
RECITALS
A. The Company is engaged in the wholesale travel sales
business in the United States (the "BUSINESS"); and
B. Sellers own all of the issued and outstanding shares
of capital stock of the Company (the "SHARES"); and
C. Buyer desires to purchase from Sellers and Sellers
desire to sell to Buyer all of the Shares owned by Sellers on the terms and
subject to the conditions hereinafter set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In this Agreement, the following terms
have the respective meanings specified or referred to in this Section 1.1 and
shall be equally applicable to both the singular and plural forms. Any
agreement referred to below shall mean such agreement as amended, supplemented
and modified from time to time to the extent permitted by the applicable
provisions thereof and by this Agreement.
"AFFILIATE" means, with respect to any Person, any
other Person which directly or indirectly controls, is controlled by or is
under common control with such Person.
"AUDITED CLOSING FINANCIAL STATEMENTS" has the meaning
specified in Section 2.6.
"BONUSES" has the meaning specified in Section 2.2.
"BUSINESS" has the meaning specified in the first
recital of the Agreement.
<PAGE> 8
"BUYER" has the meaning specified in the first paragraph of
this Agreement.
"CALIRI CONSULTING AGREEMENT" means the consulting agreement to
be entered into effective as of the Closing Date between Buyer and Ralph M.
Caliri in the form of Exhibit E attached hereto.
"CASH AND CASH EQUIVALENTS" means cash, demand and time
deposits, marketable securities, including those pledged to secure letters of
credit, and credit card receivables.
"CCI" means CCI Communications, Inc. (also known as Community
Camera, Inc.), a Pennsylvania corporation.
"CLOSING" means the closing of the transfer of the Shares from
the Sellers to Buyer.
"CLOSING DATE" has the meaning specified in Section 2.4.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning specified in the first paragraph of
this Agreement.
"CONFIDENTIAL INFORMATION" means (i) terms and provisions of
this Agreement or the transactions to be consummated pursuant hereto, and (ii)
confidential information and trade secrets of the Company or Buyer including,
without limitation, any of the same comprising the identity, lists or
descriptions of any customers, referral sources or organizations; financial
statements, cost reports or other financial information (and any analyses or
compilations thereof or reports thereon); contract proposals, or bidding
information; business plans and training and operations methods and manuals;
personnel records; fee structure; computer software; and management systems,
policies or procedures, including related forms and manuals. Confidential
Information shall not include any information (i) which is disclosed pursuant
to subpoena or other legal process, (ii) which has been publicly disclosed, or
(iii) which is subsequently disclosed by any third party not in breach of a
confidentiality agreement.
"CONTRACTS" has the meaning specified in Section 3.15.
"COURT ORDER" means any judgment, order, award or decree of
any foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
to this Agreement pursuant to which exceptions to the Sellers' and the
Company's specific representations and warranties set forth in Article III (and
listed on a Section-by-Section basis) are disclosed to Buyer pursuant to said
Article III.
"EBIT" shall mean the earnings of the Company before interest
expenses and taxes, as calculated in accordance with GAAP and consistent with
past practices.
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"ENCUMBRANCE" means any lien, claim, charge, security
interest, mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, restrictive covenant or other restrictions of any
kind.
"ENVIRONMENTAL AND OSHA OBLIGATIONS" has the meaning specified
in Section 3.12.
"EQUITABLE EXCEPTIONS" shall have the meaning specified in
Section 3.6.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" means Wilmington Trust of Pennsylvania, a
Pennsylvania banking corporation.
"ESCROW AGREEMENT" means the Escrow Agreement to be executed by
and among the Sellers, Buyer and the Escrow Agent in the form of Exhibit A.
"ESCROW PERIOD" has the meaning specified in Section 2.5.
"ESCROW SUM" has the meaning specified in Section 2.5.
"FINANCIAL STATEMENTS" has the meaning specified in Section
3.7.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of the
Company for borrowed money or other interest-bearing indebtedness; (ii) capital
lease obligations of the Company; (iii) obligations of the Company to pay the
deferred purchase or acquisition price for goods or services, other than trade
accounts payable or accrued expenses in the ordinary course of business on no
more than 90 day payment terms; (iv) indebtedness of others guaranteed by the
Company or secured by an Encumbrance on the Company's property; and (v)
indebtedness of the Company under extended credit terms of more than 30 days
from vendors provided to the Company; provided, however, that Funded
Indebtedness shall not include any Letter of Credit that has not been actually
drawn upon by the beneficiary thereof.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL BODY" means any foreign, federal, state, local
or other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has meaning specified in Section 3.10.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and the rules and regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"INDEMNIFIABLE COSTS" has the meaning specified in Section
8.1.
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"INDEMNIFIED PARTIES" has the meaning specified in Section
8.1.
"INTELLECTUAL PROPERTY" shall mean all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information); and (vi) computer
software (including but not limited to data, data bases and documentation).
"KNOWLEDGE" (whether or not capitalized), in respect of the
Company, shall mean actual knowledge after reasonable inquiry of the Sellers
and the following employees of the Company: Cheryl L. Van Horn, Edward J.
Zetusky, Barbara Parillo and Steve Langley; in respect of a Seller, "KNOWLEDGE"
shall mean actual knowledge after reasonable inquiry of such Seller.
"LEASE" shall mean the Company's lease of its offices located
at 1120 Executive Plaza, Mt. Laurel, New Jersey 08054.
"MATERIAL" (whether or not capitalized) shall, where
appropriate in context of its use in making the representations and warranties
set forth in Article III, be deemed to mean an amount of money greater than
$50,000.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means a
material adverse change or effect on the assets, properties, Business,
operations, liabilities, financial condition or prospects of the Company and its
subsidiaries, taken as a whole. In determining whether a "Material Adverse
Change" or "Material Adverse Effect" has occurred in the context of the use of
such terms in the Company's and the Sellers' representations and warranties set
forth in Article III, such terms shall refer to the occurrence of any single
event, or any series of related events, or set of related circumstances, which
results or could reasonably be expected to result in a loss to the Company,
taken as a whole, in excess of $50,000 per occurrence or $160,000 in the
aggregate.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, and any regulations promulgated
thereunder.
"PERMITTED EXCEPTION" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, (c) other liens or imperfections on property which
are not material in amount or do not materially detract from the value or the
existing use of the property affected by such lien or imperfection, and (d)
capital lease obligations for equipment used in the ordinary course of the
Company's business (as such capital leases are set forth on Exhibit J).
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
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"PURCHASE PRICE" has the meaning specified in Section 2.2.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without limitation,
those pertaining to electrical, building, zoning, environmental and
occupational safety and health requirements) or common law.
"SELLERS" has the meaning set forth in the first paragraph of
this Agreement.
"SHARES" means all of the issued and outstanding shares of the
capital stock of the Company.
"TAX" or "TAXES" means any federal, state, local or foreign
income, alternative or add-on minimum, gross income, gross receipts, windfall
profits, severance or parachute, property, production, sales, use, transfer,
gains, license, excise, employment, payroll, withholding or minimum tax,
transfer, goods and services, or any other tax, custom, duty, governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amounts imposed thereon
by any Governmental Body.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"2/28/98 WORKING CAPITAL" means a deficit of $400,000.
"WORKING CAPITAL" shall mean the difference between the
Company's current assets and its current liabilities, determined in accordance
with GAAP.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE; CLOSING
2.1 AGREEMENT TO SELL AND PURCHASE. Upon the basis of
the representations and warranties, for the consideration, and subject to the
terms and conditions set forth in this Agreement, Sellers agree to sell the
Shares to Buyer and Buyer agrees to purchase the Shares from Sellers.
2.2 PURCHASE PRICE AND ASSUMPTION OF INDEBTEDNESS. The
total purchase price for the Shares (the "PURCHASE PRICE") shall be equal to
$7,450,000, which equals $8,050,000 less the 1998 employee bonuses to be paid
pre-Closing in the aggregate amount of $600,000 (the "BONUSES"), subject to any
adjustment required to be made pursuant to Section 2.7 below.
2.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall
be payable by Buyer at the Closing (as defined in Section 2.4) as follows:
(a) $7,100,000 representing the Purchase Price
less the escrow holdback required by paragraph (b) below, will be paid, at the
direction of the Sellers, in cash by wire transfer of immediately available
funds to the Sellers' accounts and allocated in the proportions as specified in
Exhibit G (including the payment of $50,000 to Ralph M. Caliri for his covenant
not to compete
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provided in Section 6.4 and the payment of $50,000 to William W. Webber to
compensate him for the approximate amount of his grossed up tax liability
arising from the payment of the Bonuses in 1998 as opposed to 1997), which
allocations reflect that Caliri is receiving a "control premium" in connection
with his sale of the Shares to the Buyer; and
(b) $350,000.00 of the Purchase Price will be
paid in cash by wire transfer of funds to the Escrow Agent to be held in escrow
pursuant to Section 2.5 for satisfaction of Sellers' indemnification
obligations specified in Section 8.1.
2.4 CLOSING. The Closing of the purchase and sale of the
Shares contemplated by this Agreement shall take place at 10:00 a.m., Eastern
Time, at the offices of Hogan & Hartson, Columbia Square, 555 Thirteenth
Street, N.W., Washington, D.C. on March 30, 1998, or if all the conditions set
forth in Article VIII have not been satisfied or waived by such date, on the
date selected by Buyer (which date shall be as soon as practicable following
the date on which all of the conditions to Closing set forth in Sections 7.1
and 7.2 have been satisfied), or on such other date and time as the parties
shall agree (the "CLOSING DATE").
2.5 ESCROW ARRANGEMENTS. Pursuant to the Escrow
Agreement to be entered into among Sellers, Buyer and the Escrow Agent, the
portion of the Purchase Price specified in Section 2.3(b) shall be delivered to
the Escrow Agent at Closing in immediately available funds. Such monies
(which, together with all interest accrued thereon and amounts paid thereon, is
hereinafter referred to as the "ESCROW SUM") shall be held pursuant to the
terms of the Escrow Agreement for payment from such Escrow Sum of the amounts,
if any, owing by Sellers to Buyer pursuant to the indemnification provisions of
Article VIII below. Promptly following, but in any event within ten (10)
business days of the final delivery of the Audited Closing Financial Statements
(as defined in Section 2.6), the difference between Two Hundred Thousand
Dollars ($200,000) and the aggregate amount (if any) claimed by or paid to the
Buyer on or before such date in accordance with the terms of the Escrow
Agreement and this Agreement shall be disbursed to Sellers in accordance with
the allocations set forth on Exhibit G. At the conclusion of the period ending
on the first anniversary of the Closing Date (such period being referred to
herein as the "ESCROW PERIOD"), such remaining portion of the Escrow Sum not
theretofore claimed by or paid to Buyer in accordance with the terms of the
Escrow Agreement and this Agreement shall be disbursed to Sellers in accordance
with the allocations set forth on Exhibit G. Sellers and Buyer agree that each
will execute and deliver such reasonable instruments and documents as are
furnished by any other party to enable such furnishing party to receive those
portions of the Escrow Sum to which the furnishing party is entitled under the
provisions of the Escrow Agreement and this Agreement.
2.6 CLOSING AUDIT. Within 120 days following the Closing
Date, Buyer will cause there to be delivered to Buyer and to Sellers an audit
of the Company's balance sheet as of the Closing Date and statement of income
and cash flows for the stub period of January 1, 1998 through and including the
day prior to the Closing Date, and including a determination of the Company's
Working Capital as of February 28, 1998 (the "AUDITED CLOSING FINANCIAL
STATEMENTS"). The Company's balance sheet at such date and income statement
and statement of cash flows for such period shall be audited by Arthur
Andersen, LLP in accordance with GAAP. The cost of preparing the Audited
Closing Financial Statements shall be paid by the Company. In the event that
the Sellers unanimously dispute any items or assumptions or methodologies
regarding the Audited Closing Financial Statements within ten (10) business
days after Sellers' receipt thereof, the parties shall
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jointly select and retain an independent "Big Six" accounting firm (the
"INDEPENDENT ACCOUNTANTS") to review the disputed matter(s) on the Audited
Closing Financial Statements. The final determination of such disputed matter(s)
by the Independent Accountants shall be reflected on the Audited Closing
Financial Statements, which shall be final and binding on the parties for all
purposes. The cost of retaining the Independent Accountants shall be borne by
Sellers, except that the Company shall reimburse Sellers for one-half the cost
of the Independent Accountants in the event that such review results in at least
a $50,000 increase in the Company's Working Capital as reflected on the Audited
Closing Financial Statements prepared by Arthur Andersen, LLP.
2.7 POST-CLOSING PURCHASE PRICE ADJUSTMENT. The Purchase
Price will be adjusted downward by the amount (if any) by which Working Capital
as of February 28, 1998 as reflected or based on the Audited Closing Financial
Statements is less than the 2/28/98 Working Capital. The post-closing
adjustment to the Purchase Price, if any, shall be paid by Sellers to Buyer in
immediately available funds within ten (10) business days of delivery of the
Audited Closing Financial Statements as finally determined in accordance with
Section 2.6 above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SELLERS
Except as set forth on the Disclosure Schedule attached hereto (which
Disclosure Schedule contains a reasonably detailed description of each such
exception and references the applicable representation so qualified) or
elsewhere in this Agreement and the Exhibits hereto, the Company and Sellers
represent and warrant to Buyer, on the basis described in the ultimate proviso
of this Article III, that:
3.1 CAPITALIZATION. The authorized capital stock of the
Company consists of 1,000 shares of Common Stock, par value $1.00 per share,
100 of which are issued and outstanding. All of the Shares are duly
authorized, validly issued, fully paid, and nonassessable. All of the Shares
are owned of record and beneficially by Sellers in the amounts set forth on
Exhibit H hereto. None of the Shares was issued or will be transferred under
this Agreement in violation of any preemptive or preferential rights of any
Person. The Sellers own all of the issued and outstanding capital stock of the
Company.
3.2 NO LIENS ON SHARES. Sellers own the Shares, free and
clear of any Encumbrances other than the rights and obligations arising under
this Agreement, and none of the Shares is subject to any outstanding option,
warrant, call, or similar right of any other Person to acquire the same, and
none of the Shares is subject to any restriction on transfer thereof except for
restrictions imposed by applicable federal and state securities laws. At
Closing, Sellers will have full power and authority to convey good and
marketable title to the Shares, free and clear of any Encumbrances other than
the restrictions imposed by federal and state securities laws.
3.3 OTHER RIGHTS TO ACQUIRE CAPITAL STOCK. Except as set
forth in this Agreement in respect of Buyer's rights to acquire the Shares,
there are no authorized or outstanding warrants, options, or rights of any kind
to acquire from the Company any equity or debt securities of the Company, or
securities convertible into or exchangeable for equity or debt securities of
the
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Company, and there are no shares of capital stock of the Company reserved for
issuance for any purpose nor any contracts, commitments, understandings or
arrangements which require the Company to issue, sell or deliver any additional
shares of its capital stock.
3.4 DUE ORGANIZATION. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of New Jersey and has full corporate power and authority to own and lease its
properties and assets and to carry on the Business as now conducted and as
proposed to be conducted through Closing. Complete and correct copies of the
Certificate of Incorporation and Bylaws of the Company, and all amendments
thereto, are attached hereto as Exhibits I-1 and I-2. The Company is qualified
to do business in the State of New Jersey and in each jurisdiction in which the
nature of the Business or the ownership of its properties requires such
qualification except where the failure to be so qualified does not and could
not reasonably be expected to have a Material Adverse Effect. The
jurisdictions in which the Company is so qualified are listed on Exhibit I-3
attached hereto.
3.5 SUBSIDIARIES. The Company does not own, directly or
indirectly, any capital stock or ownership interests in any Person other than
approximately 26% of the capital stock of CCI, which interest the Company
intends to and shall convey or distribute to the Sellers or other nominees
prior to the Closing Date. The Sellers do not own any capital stock or
ownership interest in any other Person engaged in the Business.
3.6 DUE AUTHORIZATION. The Company and the Sellers each
have full power and authority to execute, deliver and perform this Agreement
and to carry out the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
of the Company. This Agreement has been duly and validly executed and
delivered by the Company and Sellers and constitutes the valid and binding
obligations of the Company and Sellers, enforceable in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights and debtors' obligations
generally, and legal limitations relating to remedies of specific performance
and injunctive and other forms of equitable relief (the "EQUITABLE
EXCEPTIONS"). The execution, delivery, and performance of this Agreement (as
well as all other instruments, agreements, certificates, or other documents
contemplated hereby) by the Company and Sellers, do not (a) violate any
Requirements of Laws or any Court Order of any Governmental Body applicable to
the Company or Sellers, or their respective property, (b) violate or conflict
with, or permit the cancellation of, or constitute a default under, any
material agreement to which the Company or Sellers are a party, or by which any
of them or any of their respective property is bound, (c) permit the
acceleration of the maturity of any material indebtedness of, or indebtedness
secured by the property of, the Company, (d) violate or conflict with any
provision of the charter or bylaws of the Company, or (e) except for filings or
approvals under the HSR Act and such consents, approvals or registrations as may
be required under applicable state securities laws, require any consent,
approval or authorization of, or notice to, or declaration, filing or
registration with, any Governmental Body or other third party.
3.7 FINANCIAL STATEMENTS. The following financial
statements of the Company have been delivered to Buyer by the Company: balance
sheets of the Company as of December 31, 1995 and December 31, 1996 (which
balance sheets were reviewed and unaudited and include a statement by the
reviewing independent accounting firm that such firm is not aware of any
material
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modifications that should be made to such financial statements in order for them
to be in conformity with GAAP) and as of December 31, 1997 (which balance sheet
was unaudited and not compiled), and consolidated statements of income and cash
flows of the Company for the fiscal years ended December 31, 1995 and December
31, 1996 (which statements were reviewed and unaudited and include a statement
by the reviewing independent accounting firm that such firm is not aware of any
material modifications that should be made to such financial statements in order
for them to be in conformity with GAAP) and December 31, 1997 (which statements
were unaudited and not compiled) (collectively, the "FINANCIAL STATEMENTS"). The
Financial Statements (including the notes thereto) have been prepared on a
consistent basis throughout the periods indicated and fairly present the
financial position, results of operations and changes in financial position of
the Company as of the indicated dates and for the indicated periods and are
consistent with the books and records of the Company (which books and records
are correct and complete) in all material respects. Since the date of the last
of such Financial Statements, the Company has no material liabilities required
by GAAP to be reflected on the Company's balance sheet or notes thereto
contained in the Financial Statements that are not so reflected in the Financial
Statements, nor any other obligations (whether absolute, contingent, or
otherwise) which are (individually or in the aggregate) material (in amount or
to the conduct of the Business); and neither the Company nor Sellers have
knowledge of any basis for the assertion of any such liability or obligation.
Since December 31, 1997, the Company has not suffered a Material Adverse Change.
The EBIT for the Company for the period from January 1, 1998 to and including
February 28, 1998 was not less than $19,500 and such amount is not less than the
EBIT of the Company for the comparable 1997 period, computed on a basis
consistent with past practice.
3.8 CERTAIN ACTIONS. Since December 31, 1997, the
Company has not, except as disclosed (i) on any of the Financial Statements or
notes thereto or (ii) pursuant to this Article III: (a) paid or declared any
dividends or distributions, or purchased, redeemed, acquired, or retired any
stock or indebtedness from any stockholder (other than distributions to pay
estimated income taxes of the Sellers associated with the income of the
Company); (b) made or agreed to make any loans or advances or guaranteed or
agreed to guarantee any loans or advances to any party whatsoever; (c) suffered
or permitted any Encumbrance (other than Permitted Exceptions) to arise or be
granted or created against or upon any of its assets, real or personal,
tangible or intangible; (d) canceled, waived, or released or agreed to cancel,
waive, or release any of its debts, rights, or claims against third parties in
excess of $50,000 individually or $160,000 in the aggregate; (e) sold,
assigned, pledged, mortgaged, or otherwise transferred, or suffered any
material damage, destruction, or loss (whether or not covered by insurance) to,
any assets (except in the ordinary course of the Business); (f) amended its
charter or bylaws; (g) paid or made a commitment to pay any severance or
termination payment to any employee or consultant other than the Bonuses to be
made by the Company prior to the Closing in an aggregate amount not to exceed
$600,000; (h) made any material change in its method of management, operation,
accounting or reporting income or deductions for tax purposes; (i) made any
material acquisitions, capital expenditures, including, without limitation,
replacements of equipment in the ordinary course of the Business, or entered
into commitments therefor, except for capital expenditures or commitments
therefor which do not, in the aggregate, exceed $50,000 individually or
$160,000 in the aggregate; (j) made any investment or commitment therefor in
any Person; (k) made any payment or contracted for the payment of any bonus or
other compensation or personal expenses, other than (A) wages and salaries and
business expenses paid in the ordinary course of the Business, and (B) wage and
salary adjustments made in the ordinary course of the Business for employees
who are not officers, directors, or shareholders of the
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Company; (l) made, amended, or entered into any written employment contract or
created or made any material change in any bonus, stock option, pension,
retirement, profit sharing or other employee benefit plan or arrangement; (m)
made or entered into any vendor, supply, sales, distribution, franchise,
consortia or travel agency agreement which involves annual consideration (or
commissions) in excess of $50,000; (n) made or entered into any agreement
granting any Person any registration or offer rights in respect of the Company's
capital stock; (o) entered into any non-competition agreement; (p) made or
entered into any agreement or other arrangement with any officer, director,
shareholder, employee or Affiliate of the Company or any of the foregoing
Persons except pursuant to the terms or requirements hereof or as contemplated
hereby; (q) materially amended, experienced a termination or received notice of
actual or threatened termination or non-renewal of any material contract,
agreement, lease, franchise or license to which the Company is a party that
would or could reasonably be expected to have a Material Adverse Effect, except
in the ordinary course of the Business; or (r) entered into any other material
transactions that would or could reasonably be expected to have a Material
Adverse Effect except in the ordinary course of the Business.
3.9 PROPERTIES. Attached hereto as Exhibit J is a list
containing a description of each interest in real property (including, without
limitation, leasehold interests) and each item of personal property utilized by
the Company in the conduct of the Business having a book or fair market value
in excess of $50,000 as of the date hereof. Except for Permitted Exceptions,
such real and personal properties are free and clear of Encumbrances. Sellers
and the Company have delivered to Buyer copies of all real property leases and
a lien search obtained from the counties where the Company conducts business
and the New Jersey Secretary of State office of all UCC liens of record against
the Company's personal property in the State of New Jersey. All of the
properties and assets necessary for continued operation of the Business as
currently conducted (including, without limitation, all books, records,
computers and computer software and data processing systems) are owned, leased
or licensed by the Company and are believed by the Company and the Sellers to
be suitable for the purposes for which they are currently being used. With the
exception of used equipment and inventory valued at no more than $50,000 in the
aggregate on the Company's Financial Statements, the physical properties of the
Company, including the real properties leased by the Company, are, to the
Knowledge of the Company or the Sellers, in good operating condition and
repair, normal wear and tear excepted, and are free from any defects of a
material nature. Except for Permitted Exceptions, the Company has full and
unrestricted legal and equitable title to all such properties and assets. The
operation of the properties and Business of the Company in the manner in which
they are now and have been operated does not violate any zoning ordinances,
municipal regulations, or other Requirements of Laws, except for any such
violations which would not, individually or in the aggregate, have a Material
Adverse Effect. Except for Permitted Exceptions, no restrictive covenants,
easements, rights-of-way, or regulations of record impair the uses of the
properties of the Company for the purposes for which they are now operated.
All leases of real or personal property by the Company are legal, valid,
binding, enforceable and in full force and effect and will remain legal, valid,
binding, enforceable and in full force and effect on identical terms
immediately following the Closing, except for the Equitable Exceptions. All
facilities leased by the Company have received all approvals of any
Governmental Body (including Governmental Permits) required in connection with
the operation thereof and have been operated and maintained in accordance with
all Requirements of Laws. The Company owns no real property.
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3.10 LICENSES AND PERMITS. Attached hereto as Exhibit K
is a list of all licenses, certificates, privileges, immunities, approvals,
franchises, authorizations and permits held or applied for by the Company from
any Governmental Body (herein collectively called "GOVERNMENTAL PERMITS") the
absence of which could, individually or in the aggregate, have a Material
Adverse Effect. To the Knowledge of the Company or the Sellers, the Company
has complied in all material respects with the terms and conditions of all such
Governmental Permits, and the Company has not received notification from any
Governmental Body of violation of any such Governmental Permit or the
Requirements of Laws governing the issuance or continued validity thereof. All
of such Governmental Permits are valid and in full force and effect. No
additional Governmental Permit is required from any Governmental Body thereof
in connection with the conduct of the Business which Governmental Permit, if
not obtained, would have a Material Adverse Effect.
3.11 INTELLECTUAL PROPERTY. Attached hereto as Exhibit L
is a list and brief description of all Intellectual Property owned or utilized
by the Company. The Company has furnished Buyer with copies of all license
agreements to which the Company is a party, either as licensor or licensee, with
respect to any Intellectual Property. The Company has good title to or the right
to use all the Intellectual Property and all inventions, processes, designs,
formulae, trade secrets and know-how necessary for the conduct of the Business,
in the Business as presently conducted without the payment of any royalty or
similar payment, and, to the Knowledge of the Company or the Sellers, the
Company is not infringing on any Intellectual Property right of others, and
neither the Company nor Sellers are aware of any infringement by others of any
such rights owned by the Company. All material licenses set forth on Exhibit L
are valid and binding obligations of the Company, and to the Knowledge of the
Company and the Sellers, of the other parties thereto, and enforceable against
the Company, and to the Knowledge of the Company and the Sellers, the other
parties thereto in accordance with their respective terms, except for the
Equitable Exceptions. The Company owns and possesses all right, title and
interest in and to, or has the right to use pursuant to a valid license, all
Intellectual Property necessary for the operation of the business of the Company
as presently conducted.
3.12 COMPLIANCE WITH LAWS. The Company has (i) complied
in all material respects with all Requirements of Laws, Governmental Permits
and Court Orders applicable to the Business and has filed with the proper
Governmental Bodies all statements and reports required by all Requirements of
Laws, Governmental Permits and Court Orders to which the Company or any of its
employees (because of their activities on behalf of the Company) are subject
and (ii) conducted the Business and is in compliance in all material respects
with all federal, state and local energy, public utility, health, safety and
environmental Requirements of Laws, Governmental Permits and Court Orders
including the Clean Air Act, the Clean Water Act, the Solid Waste Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Safe Drinking Water Act, OSHA, the
Toxic Substances Control Act and any similar state, local or foreign laws
(collectively "ENVIRONMENTAL AND OSHA OBLIGATIONS") and all other Governmental
Body requirements, except where any such failure to comply or file would not,
in the aggregate, have a Material Adverse Effect. No claim has been delivered
by any Governmental Body to the Company (and, to the best knowledge of the
Company and Sellers, no such claim is anticipated) to the effect that the
Business fails to comply, in any respect, with any Requirements of Laws,
Governmental Permit or Environmental and OSHA Obligation or that a Governmental
Permit or Court Order is necessary in respect thereto other than
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<PAGE> 18
such non-compliance as does not and would not reasonably be expected to have a
Material Adverse Effect on the Company.
3.13 INSURANCE. Attached hereto as Exhibit M is a list of
all coverages for fire, liability, or other forms of insurance and all fidelity
bonds held by or applicable to the Company. Copies of the binder for all such
insurance policies have been delivered to Buyer. The insurance maintained by
the Company is believed by the Company and the Sellers to be adequate for the
Business. To the best of the Company's and Sellers' knowledge, no event
relating to the Company has occurred which will result in (i) cancellation of
any such insurance coverages; (ii) a retroactive upward adjustment of premiums
under any such insurance coverages (other than as a result of routine year-end
insurance audits); or (iii) any prospective upward adjustment in such premiums.
All of such insurance coverages will remain in full force and effect following
the Closing. The Company is not in default under any such insurance policies.
3.14 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE WELFARE BENEFIT PLANS. The Company
does not maintain or contribute to any "employee welfare benefit plan" as such
term is defined in Section 3(1) of ERISA. With respect to each such plan, (i)
the plan is in material compliance with ERISA and all other applicable
Requirements of Laws; (ii) the plan has been administered in material accordance
with its governing documents; (iii) to the Knowledge of the Company and the
Sellers, neither the plan, nor any fiduciary with respect to the plan, has
engaged in any "prohibited transaction" as defined in Section 406 of ERISA other
than any transaction subject to a statutory or administrative exemption under
ERISA; (iv) except for the processing of routine claims in the ordinary course
of administration, there is no material litigation, arbitration or disputed
claim outstanding; and (v) all premiums due on any insurance contract through
which the plan is funded have been paid or accrued by the Company in a timely
manner in the ordinary course of business.
(b) EMPLOYEE PENSION BENEFIT PLANS. The Company
does not maintain or contribute to any arrangement that is or may be an
"employee pension benefit plan," as such term is defined in Section 3(2) of
ERISA. With respect to each such plan: (i) to the Knowledge of the Company
and the Sellers, each plan intended to be qualified under Section 401(a) of the
Code is qualified under Section 401(a) of the Code, and any trust through which
the plan is funded meets the requirements to be exempt from federal income tax
under Section 501(a) of the Code; (ii) the plan is in material compliance with
ERISA and all other applicable Requirements of Laws; (iii) the plan has been
administered in accordance with its governing documents as modified by
applicable law; (iv) the plan has not suffered an "accumulated funding
deficiency" as defined in Section 412(a) of the Code; (v) to the Knowledge of
the Company and the Sellers, the plan has not engaged in, nor has any fiduciary
with respect to the plan engaged in, any "prohibited transaction" as defined in
Section 406 of ERISA or Section 4975 of the Code other than a transaction
subject to statutory or administrative exemption; (vi) the plan has not been
subject to a "reportable event" (as defined in Section 4043(b) of ERISA), the
reporting of which has not been waived by regulation of the Pension Benefit
Guaranty Corporation; (vii) no termination or partial termination of the plan
has occurred within the meaning of Section 411(d)(3) of the Code; (viii) all
contributions required to be made to the plan or under any applicable
collective bargaining agreement have been made to or on behalf of the plan;
(ix) there is no material litigation, arbitration or disputed claim
outstanding; (x) all applicable premiums due to the Pension Benefit Guaranty
Corporation for plan termination
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<PAGE> 19
insurance have been paid in full on a timely basis; and (xi) a favorable
determination letter from the IRS has been received by the Company with respect
to such plan stating that such plan is so qualified; and to the Company's
knowledge there are no circumstances which would cause such plan to lose such
qualified status.
(c) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED
COMPENSATION ARRANGEMENTS. The Company does not maintain or contribute to any
retirement or deferred or incentive compensation or stock purchase, stock grant
or stock option arrangement entered into between the Company and any current or
former officer, consultant, director or employee of the Company that is not
intended to be a tax qualified arrangement under Section 401(a) of the Code.
3.15 CONTRACTS AND AGREEMENTS. Exhibit N hereto contains
a list of all written or oral contracts, commitments, leases, and other
agreements (including, without limitation, promissory notes, loan agreements,
and other evidences of indebtedness, guarantees, hedging agreements,
off-balance sheet financing arrangements, indemnity agreements, vendor
contracts with airlines and other carriers, hotels and resorts, agreements with
rental car companies, marketing agreements, consortia agreements, travel agency
agreements, interface or similar agreements pertaining to various airline or
other computer reservation systems) to which the Company is a party or by which
the Company or its properties are bound pursuant to which the obligations
thereunder of either party thereto are, or are contemplated as being, for any
one contract $50,000 or greater or any contract or agreement prohibiting it
from freely engaging in any business or competing anywhere in the world
(collectively, the "CONTRACTS"). The Company is not and, to the best knowledge
of Sellers and the Company, no other party thereto is in default (and no event
has occurred which, with the passage of time or the giving of notice, or both,
would constitute a default by the Company) under any of the Contracts, and the
Company has not waived any material right under any of the Contracts. All of the
Contracts to which the Company is a party are legal, valid, binding, enforceable
and in full force and effect and will remain legal, valid, binding, enforceable
and in full force and effect on identical terms immediately after the Closing,
except for the Equitable Exceptions. The Company has not guaranteed any
obligations of any other Person. The Company has no present expectation or
intention of not fully performing all of its obligations under any Contract, the
Company has no knowledge of any material breach or anticipated breach by the
other parties to any Contract and the Company has not received notice of actual
or threatened termination or non-renewal of any Contract. The Company is not a
party to any irrevocable powers of attorney.
3.16 CLAIMS AND PROCEEDINGS. There are no claims,
actions, suits, proceedings, or investigations pending or, to the best
knowledge of the Sellers or the Company, threatened against or affecting the
Company or any of its properties or assets, at law or in equity, before or by
any court, municipality or other Governmental Body. To the extent any are
disclosed on the Disclosure Schedule, none of such claims, actions, suits,
proceedings, or investigations, if adversely determined, will result in any
material liability or loss to the Company. The Company has not been and the
Company is not now, subject to any Court Order, stipulation, or consent of or
with any court or Governmental Body. No inquiry, action or proceeding has been
instituted or, to the best knowledge and belief of the Sellers or the Company,
threatened or asserted against the Sellers or the Company to restrain or
prohibit the carrying out of the transactions contemplated by this Agreement or
to challenge the validity of such transactions or any part thereof or seeking
damages on account thereof. To the best knowledge of the Company and Sellers
there is no basis for any such valid claim or action.
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<PAGE> 20
3.17 TAXES.
(a) All Federal, foreign, state, county and local
and other Taxes due from the Company on or before the Closing have been paid
and all Tax Returns which are required to be filed by the Company on or before
the date hereof have been filed within the time and in the manner provided by
all Requirements of Laws, and all such Tax Returns are true and correct and
accurately reflect the Tax liabilities of the Company. No Tax Returns of the
Company or any of the Sellers are currently subject to an extension of the time
to file. All Taxes, assessments, penalties, and interest of the Company which
have become due pursuant to such Tax Returns or any assessments received have
been paid or adequately accrued on the Company's Financial Statements. The
provisions for Taxes reflected on the balance sheets contained in the Financial
Statements are adequate to cover all of the Company's Tax liabilities for the
respective periods then ended and all prior periods. The Company has not
executed any presently effective waiver or extension of any statute of
limitations against assessments and collection of Taxes, and there are no
pending or threatened claims, assessments, notices, proposals to assess,
deficiencies, or audits with respect to any such Taxes of which any of the
Sellers or the Company are aware. For Governmental Bodies with respect to
which the Company does not file Tax Returns, no such Governmental Body has
given the Company written notification that the Company is or may be subject to
taxation by that Governmental Body. The Company has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, shareholder, creditor, independent contractor or
other party. There are no Tax liens on any of the property or assets of the
Company.
(b) Neither the Company nor any other corporation
has filed an election under Section 341(f) of the Code that is applicable to
the Company or any assets held by the Company. The Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Sec. 280G. The Company has not
been a United States real property holding corporation within the meaning of
Code Sec. 897(c)(2) during the applicable period specified in Code Sec.
897(c)(1)(A)(ii). The Company is not a party to any Tax allocation or sharing
agreement. The Company has not and has never been (nor does the Company have
any liability for unpaid Taxes because it once was) a member of an affiliated
group during any part of which return year any corporation other than the
Company also was a member of the affiliated group.
(c) No transaction contemplated by this Agreement
is subject to withholding under Section 1445 of the Code (other than as may be
required in connection with bonus payments made to employees prior to or
contemporaneously with the Closing), and no stock transfer taxes, real estate
transfer taxes or similar taxes will be imposed upon the transfer and sale of
the Shares pursuant to this Agreement.
(d) The Company has made a valid election under
Section 1362 of the Code and any corresponding state or local provisions to be
an S corporation within the meaning of Section 1361 of the Code for all taxable
years (or portions thereof) beginning on or after December 31, 1990 (as to the
federal tax election), no such S election has been terminated (whether
voluntarily, involuntarily or inadvertently, including, without limitation, by
taking any action defined in Section 1362(d) of the Code) since such time.
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<PAGE> 21
(e) The Company will not be required to include
any amount in taxable income or exclude any item of deduction or loss from
taxable income for any taxable period (or portion thereof) ending after the
Closing Date (i) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing Date, (ii) as a result of any "closing
agreement," as described in Code Section 7121 (or any corresponding provision
of state, local or foreign income Tax law) entered into on or prior to the
Closing Date, (iii) as a result of any sale reported on the installment method
where such sale occurred on or prior to the Closing Date, and (iv) as a result
of any prepaid amount received on or prior to the Closing Date.
3.18 PERSONNEL. Attached hereto as Exhibit O is a list of
the names and annual rates of compensation of the directors and executive
officers of the Company, and of the employees of the Company whose annual rates
of compensation during the calendar year ended December 31, 1997 (including
base salary, bonus and incentive pay) exceed (or by December 31, 1998 are
expected to exceed) $60,000. Exhibit O also summarizes the bonus, profit
sharing, percentage compensation, company automobile, club membership, and
other like benefits, if any, paid or payable to such directors, officers, and
employees during the Company's calendar year ended December 31, 1997 and to the
date hereof. Ralph M. Caliri and William W. Webber are the only Persons who
are parties to employment agreements with the Company and, other than (i)
bonuses to be paid to certain employees prior to the Closing and (ii) severance
arrangements reflected on Caliri's and Webber's employment agreements which
will be terminated as of Closing pursuant to Section 7.1(f)(v), there are no
severance benefits which any director, officer or employee of the Company is or
may be entitled to receive. The employee relations of the Company are
generally good and there is no pending or, to the best knowledge of Sellers or
the Company, threatened labor dispute or union organization campaign. None of
the employees of the Company is represented by any labor union or organization.
The Company is in compliance in all material respects with all Requirements of
Laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practices. Neither the Company nor Sellers have Knowledge, that any employee
(other than Sellers) will not agree to remain employed by the Company after the
consummation of the transactions contemplated hereby. There is no unfair labor
practice claim against the Company before the National Labor Relations Board,
or any strike, dispute, slowdown, or stoppage pending or, to the best knowledge
of the Company and Sellers, threatened against or involving the Company, and
none has previously occurred.
3.19 BUSINESS RELATIONS. Neither the Company nor Sellers
have Knowledge that any customer, supplier, travel agency, resort operator or
lodging or transportation company engaged in doing business with the Company
will cease to do business with the Company after the consummation of the
transactions contemplated hereby in the same manner and at the same levels as
previously conducted with the Company except for any reductions which do not
result in a Material Adverse Change. Neither Sellers nor the Company has
received any notice of cancellation of any Material business arrangement
between any Person and the Company nor is the Company or Sellers aware of any
facts which could lead them to believe that the Business will be subject to
cancellation of any such business arrangement.
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<PAGE> 22
3.20 ACCOUNTS RECEIVABLE; CUSTOMER DEPOSITS AND BOOKINGS.
(a) ACCOUNTS RECEIVABLE. All of the accounts,
notes, and loans receivable that have been recorded on the books of the Company
are bona fide and represent amounts validly due for goods sold or services
rendered and all such amounts (net of any allowance for doubtful accounts) will
be collected in full within 180 days following the Closing Date. All of such
accounts, notes, and loans receivable are free and clear of any Encumbrances;
no claims of offset have been asserted in writing against any of such accounts,
notes, or loans receivable; and none of the obligors of such accounts, notes,
or loans receivable has given written notice that it will or may refuse to pay
the full amount or any portion thereof.
(b) CUSTOMER DEPOSITS; BOOKINGS. Exhibit P sets
forth, as of the date specified therein, (i) all customer bookings as of such
date on an aggregate basis ("BOOKINGS"), (ii) all deposits received from
customers in connection with such Bookings as of such date on an aggregate
basis ("CUSTOMER DEPOSITS"), (iii) the aggregate amount of all prepayments to
vendors and suppliers and refunds to customers made by the Company in
connection with such Bookings as of such date, and (iv) the aggregate amount of
all claims by customers for refunds received by the Company for which refunds
have not been made as of such date ("CUSTOMER CLAIMS"). The Customer Deposits
are recognized and included on the Company's balance sheet only to the extent
of cash received from the customers in respect thereof, and each Customer
Deposit so recognized and included is matched by a deferred liability on such
balance sheet. All cancellations by customers of Bookings are recognized on
the Company's financial statements promptly within one (1) business day upon
the Company's receipt of notice of such cancellation from the customer. On
February 28, 1998, the Company's Bookings exceeded $17,500,000. The level of
Customer Claims for the period since December 31, 1997 through the Closing Date
is consistent (plus or minus 5%) with past practices of the Company.
3.21 BANK ACCOUNTS; INVESTMENTS. Attached hereto as
Exhibit Q is a list of all banks or other financial institutions with which the
Company has an account or maintains a safe deposit box, showing the type and
account number of each such account and safe deposit box and the names of the
persons authorized as signatories thereon or to act or deal in connection
therewith. Exhibit Q also contains a list of all material investments by the
Company in any funds, accounts, securities, certificates of deposit or
instruments of any Person. All of such investments are believed by the Company
and the Seller to be reasonably prudent treasury investments, none of which
involve any type of derivative, option, hedging or other speculative
instrument.
3.22 CUSTOMER CLAIMS. No written or oral claim for breach
of contract or otherwise by any customer has been made against the Company
since January 1, 1998 which could, individually or in the aggregate, result in
any Material Adverse Effect. To the best knowledge of Sellers and the Company,
no state of facts exists, and no event has occurred, which could reasonably be
expected to form the basis of any present claim against the Company for
liability to any third party in connection with vacation packages sold or
services rendered by the Company, other than Customer Claims arising in the
ordinary course of the Business.
3.23 BROKERS. Neither the Company nor Sellers have
engaged, or caused to be incurred any liability to any finder, broker, or sales
agent in connection with the origin, negotiation, execution, delivery, or
performance of this Agreement or the transactions contemplated hereby.
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<PAGE> 23
3.24 AFFILIATED TRANSACTIONS. No officer, director,
stockholder (including the Sellers) or Affiliate of the Company or any
individual related by blood or marriage to any such Person, or any entity in
which any such Person owns any beneficial interest, is a party to any
agreement, contract, arrangement or commitment with the Company or engaged in
any transaction with the Company or has any interest in any property used by
the Company. No officer, director, or shareholder of the Company or any
Affiliate of any such officer, director, or shareholder, has any ownership
interest in any competitor, supplier, or customer of the Company (other than
ownership of securities of a publicly-held corporation of which such Person
owns, or has real or contingent rights to own, less than five percent (5%)of any
class of outstanding securities) or any property used in the operation of the
Business.
3.25 FUNDED INDEBTEDNESS; LETTERS OF CREDIT; UNDISCLOSED
LIABILITIES.
(a) FUNDED INDEBTEDNESS. Other than such Funded
Indebtedness which is to be repaid and discharged prior to Closing in
accordance with Section 7.1(d), the Company does not have any Funded
Indebtedness.
(b) LETTERS OF CREDIT. Other than those listed
on Exhibit S, the Company has no letters of credit, performance bonds or
similar instruments issued on or for its account for the benefit of any of its
vendors or otherwise.
(c) UNDISCLOSED LIABILITIES. The Company does
not have any material liabilities (whether absolute, accrued, contingent or
otherwise), of a nature required by GAAP to be reflected on a corporate balance
sheet or disclosed in the notes thereto, except such liabilities which are
accrued or reserved against in the Financial Statements or disclosed in the
notes thereto, including without limitation any accounts payable or service
liabilities of the Company.
3.26 YEAR 2000. To the Knowledge of the Company and the
Seller based on commercially reasonable investigations made by the Company (the
results of which, whether performed by the Company or outside consultants, have
been delivered to Buyer), all of the material computer software, computer
firmware, computer hardware (whether general or special purpose), and other
similar or related items of automated, computerized, and/or software system(s)
that are used or relied on by the Company in the conduct of its business will
not malfunction, will not cease to function, will not generate incorrect data,
and will not produce incorrect results when processing, providing, and/or
receiving (i) date-related data into and between the twentieth and twenty-first
centuries and (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
3.27 INFORMATION FURNISHED. The Company and Sellers have
made available to Buyer true and correct copies of all material corporate
records of the Company and all material agreements, documents, and other items
listed on the Exhibits and Schedules to this Agreement or referred to in
Article III of this Agreement, all of which is true, correct and complete in
all material respects.
Provided, however, that (i) those of the foregoing representations and
warranties which pertain to the Company and the Business are made by the
Company and each of the Sellers, on a joint and several basis, and (ii) those
of the foregoing representations and warranties which pertain to a Seller
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<PAGE> 24
individually or such Seller's Shares or such Seller's Knowledge are made by
each Seller only as to such Seller and his Shares on a several, and not joint,
basis.
ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Sellers as follows:
4.1 DUE ORGANIZATION. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of New York and has full corporate power and authority to execute, deliver and
perform this Agreement and to carry out the transactions contemplated hereby.
4.2 DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of Buyer and the Agreement has been duly and validly executed
and delivered by Buyer and constitutes the valid and binding obligation of
Buyer, enforceable in accordance with its terms, except for the Equitable
Exceptions. The execution, delivery, and performance of this Agreement (as well
as all other instruments, agreements, certificates or other documents
contemplated hereby) by Buyer, do not (a) violate any Requirements of Laws or
Court Order of any Governmental Body applicable to Buyer or its property, (b)
violate or conflict with, or permit the cancellation of, or constitute a default
under any agreement to which Buyer is a party or by which it or its property is
bound, (c) permit the acceleration of the maturity of any indebtedness of, or
any indebtedness secured by the property of, Buyer, (d) violate or conflict with
any provision of the charter or bylaws of Buyer, or (e) except for filings or
approvals under the HSR Act and such consents, approvals or registrations as may
be required under applicable state securities laws, require any consent,
approval or authorization of, or notice to, or declaration, filing or
registration with, any Governmental Body or other third party.
4.3 NO BROKERS. Buyer has not engaged, or caused to be
incurred any liability for which Sellers or the Company may be liable to any
finder, broker or sales agent in connection with the origin, negotiation,
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby; provided, however, that it is acknowledged that following
the Closing the Company will pay a fee to TC Management Partners LLC, an
Affiliate of Buyer.
4.4 ACCESS TO INFORMATION. Buyer understands and
acknowledges that neither the Company nor anyone acting on its behalf has made
any representations or warranties other than those contained herein respecting
the Company, and Buyer has not relied upon any representations or warranties
other than those contained herein in the belief that they were made on behalf
of the Company.
4.5 INVESTMENT. Buyer represents, warrants, acknowledges
and confirms that it is acquiring the Shares without a view to any distribution
or resale thereof, other than a distribution or resale which, in the opinion of
counsel, which opinion is satisfactory to the Company and the Sellers, may be
made without violating the registration provisions of the Securities Act of
1933, as amended (the "1933 ACT") or any applicable blue sky or securities
laws. Buyer acknowledges that
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<PAGE> 25
the Shares are "restricted securities" within the meaning of Rule 144
promulgated under the 1933 Act and have not been registered under the 1933 Act
or any such blue sky or securities law and must be held indefinitely unless they
are subsequently registered under the 1933 Act and any such other applicable
securities laws or an exemption from registration is available.
ARTICLE V
PRE-CLOSING COVENANTS
5.1 CONSENTS OF OTHERS. Prior to the Closing, the
Company and Sellers shall use reasonable commercial to obtain and to cause the
Company to obtain all authorizations, consents and permits required of the
Company and Sellers to permit them to consummate the transactions contemplated
by this Agreement. To the extent required to consummate such transactions or
to ensure that the Contracts shall remain in place following the Closing,
Sellers shall have obtained the written consent (or waiver of any "change of
control"-type termination rights) of any third party to any material Contract.
As promptly as practicable after the date hereof, Buyer, the Company and the
Sellers shall make, or shall cause to be made, such filings as may be required
pursuant to the HSR Act with respect to the consummation of the transactions
contemplated by this Agreement.
5.2 REASONABLE COMMERCIAL EFFORTS. The Company, Sellers
and Buyer shall use reasonable commercial efforts to cause all conditions for
the Closing set forth in Section 7.1 (as to the Company and Sellers) and
Section 7.2 (as to Buyer) to have been satisfied at or before the Closing.
5.3 POWERS OF ATTORNEY. The Company and Sellers shall
cause the Company to revoke at or prior to Closing all revocable powers of
attorney granted by the Company, other than those relating to service of
process, qualification or pursuant to governmental regulatory or licensing
agreements, or representation before the IRS or other Government Bodies.
5.4 CONDUCT OF BUSINESS PENDING CLOSING. From the date
of this Agreement to the Closing Date:
(a) Except as otherwise contemplated by this
Agreement, or as Buyer may otherwise consent to in writing, the Company and
Sellers shall conduct the Business only in the ordinary course and shall not
engage in any material activity or enter into any material transaction which
would cause a breach of the representations and warranties contained in Article
III.
(b) Sellers and the Company shall use their
reasonable commercial efforts to cause the Business to preserve substantially
intact its current business organization and present relationships with its
customers, vendors, suppliers and employees and to maintain all of its
insurance currently in effect.
(c) Sellers and the Company shall give prompt
notice to Buyer of any notice of material default received by the Company or
the Business subsequent to the date of this
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<PAGE> 26
Agreement under any Contract or any Material Adverse Change occurring prior to
the Closing Date in the operation of the Company or the Business.
(d) Neither the Company nor the Sellers, nor any
of their representatives, shall solicit, encourage or discuss any Acquisition
Proposal (as hereinafter defined) or supply any non-public information
concerning the Company or the Business or the Company's assets to any party
other than Buyer or its representatives. As used herein, "ACQUISITION
PROPOSAL" means any proposal other than the transactions herein contemplated,
for (i) any merger or other business combination involving the Company or the
Business, (ii) the acquisition of the Company or a material equity interest in
the Company or a material portion of its assets, or (iii) the dissolution or
liquidation of the Company.
5.5 ACCESS TO RECORDS BEFORE CLOSING. Prior to the
Closing Date, Sellers and the Company agree that it will give, or cause to be
given, to Buyer and their representatives, during normal business hours and at
Buyer's expense, full and unrestricted access to the Company's personnel,
officers, agents, employees, assets, properties, titles, contracts, corporate
minute and other books, records, files and documents of Sellers with respect to
the Business (including financial, tax basis, budget projections, accountants'
work papers and other information as Buyer may request) and to the Business'
personnel, customers, suppliers and independent accountants, to allow Buyer to
obtain such information as it shall reasonably request, and to make copies of
such information to the extent reasonably necessary. Additionally, Sellers and
the Company will provide Buyer opportunities to meet with key employees of the
Business, to visit facilities of the Business and to otherwise conduct due
diligence in respect of the Company and the Business. All materials copied by
Buyer shall be maintained in confidence and not used by Buyer and returned to
Sellers and/or the Company, as appropriate, if the Closing of the transactions
contemplated hereunder fails to occur.
5.6 CCI. Prior to the Closing, the Company shall convey
or distribute its approximately 26% interest in CCI to Sellers or their
nominees.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 GENERAL. In case at any time after the Closing any
further action is legally necessary or reasonably desirable (as determined by
Buyer and Sellers) to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article VIII
below). The Sellers acknowledge and agree that from and after the Closing,
Buyer will be entitled to possession of all documents, books, records,
agreements, and financial data of any sort relating to the Company, which shall
be maintained at the chief executive office of the Company; provided, however,
that Sellers shall be entitled to reasonable access to and to make copies of
such books and records at their sole cost and expense and Buyer will maintain
all of the same for a period of at least three (3) years after Closing.
Thereafter, the Company will offer such documentation to Sellers before
disposal thereof.
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<PAGE> 27
6.2 TRANSITION. For a period of four (4) years following
Closing, the Sellers will not take any action (or cause any such action to be
taken by another Person) that primarily is designed or intended to have the
effect of discouraging any vendor (including without limitation any airline or
other carrier, hotel, resort or rental car company), lessor, licensor,
customer, travel agency, consortia member, supplier, or other business
associate of the Company from maintaining the same business relations with the
Company after the Closing as it maintained with the Company prior to the
Closing. For a period of four (4) years following Closing, the Sellers will
refer all customer inquiries relating to the Business to the Company.
6.3 CONFIDENTIALITY. The Sellers will treat and hold in
confidence and not disclose all Confidential Information and refrain from using
any of the Confidential Information except in connection with this Agreement or
otherwise for the benefit of the Company or Buyer for a period of four (4)
years from the date of this Agreement, and deliver promptly to Buyer or
destroy, at the written request and option of Buyer, all tangible embodiments
(and all copies) of the Confidential Information which are in their possession
except as otherwise permitted herein. In the event that any Seller is
requested or required (by oral question or written request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar legal proceeding) to disclose any Confidential Information,
such Seller will notify Buyer promptly of the request or requirement.
6.4 COVENANT NOT TO COMPETE. For and in consideration of
the allocation of $50,000 of the Purchase Price paid to Ralph M. Caliri by
Buyer, Ralph M. Caliri, by signing this Agreement as a Seller, covenants and
agrees, for a period of four (4) years from and after the Closing Date, that he
will not, directly or indirectly without the prior written consent of Buyer,
for or on behalf of any entity:
(a) become interested or engaged, directly or
indirectly, as a shareholder, bondholder, creditor, officer, director, partner,
agent, contractor with, employer or representative of, or in any manner
associated with, or give financial, technical or other assistance to, any
Person, firm or corporation for the purpose of engaging in the Business in
competition with the Company or any of its Affiliates, within the United
States;
(b) enter into any agreement with, service,
assist or solicit the business of any customers of the Company or any of its
Affiliates for the purpose of providing wholesale travel services to such
customers in competition with the Company or any of its Affiliates in the United
States or to cause them to reduce or end their business with the Company or any
of its Affiliates; or
(c) hire, retain, or solicit the employment or
services of employees, consultants or representatives of the Company or any of
its Affiliates for the purpose of causing them to leave the employment of the
Company or any of its Affiliates;
provided, however, if he owns less than five percent (5%) of the outstanding
stock of any publicly-traded corporation, he shall not be deemed to be in
violation of this Section 6.4 solely by reason thereof.
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6.5 ADDITIONAL MATTERS.
(a) The Sellers shall cause the Company to file
with the appropriate governmental authorities all Tax Returns required to be
filed by it for any taxable period ending prior to the Closing Date and the
Company shall remit any Taxes due in respect of such Tax Returns. In addition,
Sellers shall cause its independent accountants to prepare a short period tax
return for the Company covering the period January 1, 1998 through the Closing
Date (the "SHORT PERIOD RETURN"). The cost of preparation of such short period
tax return shall be paid for by Sellers. Consistent with paragraph (b) below,
Sellers agree to provide Buyer and the Company with copies of the Company's Tax
Returns and the Short Period Return.
(b) Buyer, the Company and Sellers recognize that
each of them may need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information held by the parties to the
extent such records and information pertain to events occurring on or prior to
the Closing Date; therefore, (a) Buyer agrees to cause the Company to use its
best efforts to properly retain and maintain such records for a period of six
(6) years from the date the Tax Returns for the year in which the Closing
occurs are filed or until the expiration of the statute of limitations with
respect to such year, whichever is later, and (b) each party agrees to allow
each other party and his agents and representatives at times and dates mutually
acceptable to the parties, to inspect, review and make copies of such records
as such other party may deem necessary or appropriate from time to time, such
activities to be conducted during normal business hours and at the requesting
party's expense.
(c) SECTION 338(h)(10) ELECTION. If in Buyer's
sole discretion such an election is deemed to be desireable, Sellers and Buyer
shall join in making a timely election (but in no event later than the 15th day
of the ninth full calendar month after the month in which the Closing Date
occurs) under Section 338(h)(10) of the Code (including the prerequisite
election under Section 338 of the Code) and any similar state law provisions in
all applicable states which permit corporations to make such elections, with
respect to the sale and purchase of the Shares pursuant to this Agreement, and
each party shall provide the others all necessary information to permit such
elections to be made. Buyer and the Sellers shall, as promptly as practicable
following the Closing Date, take all actions necessary and appropriate
(including filing such forms, returns, schedules and other documents as may be
required) to effect and preserve timely elections; provided, however, that
Buyer shall be the party responsible for preparing and filing the forms,
returns, schedules and other documents necessary for making an effective and
timely election. All Taxes attributable to the elections made pursuant to this
Section 6.5(c) shall be the liability of the Sellers; provided, however, that
to the extent that such election triggers a tax to the Company on "built-in" or
captured gains as a result of Sellers' Subchapter S election in respect of the
Company, Sellers agree that their liability and obligation under this sentence
as a result thereof shall only be to reimburse the Company for the amount (if
any) by which the sum of (i) 50% of the first $125,000 of any such Tax
liability plus (ii) 100% of any such Tax liability in excess of $125,000
exceeds $35,000. Such reimbursement obligation shall be fulfilled within
thirty (30) days of Sellers' receipt of notice (with appropriate backup or
detail) from the Company that such Tax liability has been incurred. In
connection with such elections, following the Closing Date, Buyer and the
Sellers shall act together in good faith to determine and agree upon the "deemed
sales price" to be allocated to each asset of the Company in accordance with
Treasury Regulation Section 1.338(h)(10)-1(f) and the other regulations under
Section 338 of the Code. Notwithstanding the generality of the immediately
preceding sentence,
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Buyer and the Sellers agree that the "deemed sales price" shall be allocated to
the monetary assets of the Company at their fair market value as of the Closing
Date as determined as part of the determination of the Working Capital of the
Company in accordance with Section 2.7 hereof, $50,000 shall be allocated to the
covenant not to compete contained in Section 6.4 hereof, and the balance of the
"deemed sales price" shall be allocated to the fixed assets, goodwill and other
intangible assets of the Company. Both Buyer and Sellers shall report the tax
consequences of the transactions contemplated by this Agreement consistently
with such allocations and shall not take any position inconsistent with such
allocations in any Tax Return or otherwise. In the event that Buyer and the
Sellers are unable to agree as to such allocations, Buyer's reasonable positions
with respect to such allocations shall control.
(d) INDEMNITY. Each Seller shall be liable for,
and shall indemnify and hold Buyer and the Company harmless against, any Taxes
or other costs attributable solely to (i) a failure on the part of such Seller
to take all actions required of him under Section 6.5(c); or (ii) a failure on
the part of the Company to qualify, at or prior to the Closing, as an "S
corporation" for federal and/or state income Tax purposes.
6.6 LITIGATION SUPPORT. In the event and for so long as
any party is actively contesting or defending against any claim, suit, action
or charge, complaint, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, circumstance, status,
condition, activity, practice, occurrence, event, action, failure to act, or
transaction on or prior to the Closing Date involving the Company, each of the
other parties will cooperate and make available themselves or their personnel,
as applicable, and provide such testimony and access to their books and records
as shall be necessary in connection with the contest or defense.
6.7 EQUITY ARRANGEMENTS. On or immediately following the
Closing Date, Ralph M. Caliri and William W. Webber shall each execute
documents and deliver to Buyer the funds pertaining to their aggregate $500,000
equity investment in Buyer (allocated between them as set forth in Exhibit G),
including without limitation the following agreements: (a) Equity Subscription
Agreement; (b) Shareholders Agreement; and (c) either a Registration Agreement
or a commitment in (a) or (b) that Buyer provide customary piggyback
registration rights to Seller at a later date (collectively, the "EQUITY
ARRANGEMENTS").
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING
7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of
Buyer under this Agreement to consummate the Closing is subject to the
conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
The Company and Sellers shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by each
of them prior to or at the Closing Date. The representations and warranties of
the Company and Sellers set forth in this Agreement shall be accurate in all
material respects at and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date,
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except for changes occurring between the date of this Agreement and the Closing
Date in the ordinary course of business, provided that such changes are not
materially adverse to the business or financial condition of the Company and do
not arise from any occurrence or circumstance which would constitute a breach of
Section 5.4. In addition, no Material Adverse Change or Material Adverse Effect
shall have occurred with respect to the Company after the date of this
Agreement.
(b) CONSENTS. All statutory requirements for the
valid consummation by the Company and Sellers of the transactions contemplated
by this Agreement shall have been fulfilled and all authorizations, consents and
approvals, including expiration or early termination of all waiting periods
under the HSR Act (if applicable) and those of all federal, state, local and
foreign governmental agencies and regulatory authorities required to be obtained
in order to permit the consummation of the transactions contemplated hereby
shall have been obtained in form and substance reasonably satisfactory to Buyer
unless such failure could not reasonably be expected to have a Material Adverse
Effect. All approvals of the Board of Directors and shareholders of the Company
necessary for the consummation of this Agreement and the transactions
contemplated hereby shall have been obtained.
(c) DISCHARGE OF INDEBTEDNESS AND LIENS. The
Company shall have provided for the payment in full by the Company of all
Funded Indebtedness (other than capital lease obligations set forth in Exhibit
J) of the Company and all extended credit from vendors at the Closing (other
than customary accounts payable outstanding on 90 day or less payment terms in
accordance with past practices). Such Funded Indebtedness, if any, as of
December 31, 1997, is listed on the Financial Statements. Sellers shall have
also provided for the termination of all Encumbrances of record on the
properties of the Company, except for Permitted Exceptions. All liens or UCC
filings against the Company or Affiliates of the Company which are engaged in
the Business, shall have been terminated as of the Closing.
(d) TRANSFER TAXES. Sellers shall be responsible
for all stock transfer or gains taxes imposed on Sellers incurred in connection
with this Agreement.
(e) FINANCIAL CONDITION. The Company shall
continue to have Cash and Cash Equivalents on the Closing Date in an amount not
less than $4,000,000 (before payment of the Bonuses).
(f) DOCUMENTS TO BE DELIVERED BY SELLERS AND THE
COMPANY. The following documents shall be delivered at the Closing by Sellers
and the Company:
(i) OPINION OF SELLERS' COUNSEL. Buyer
shall have received an opinion of counsel to the Company and
Sellers, dated the Closing Date, in substantially the same
form as the form of opinion that is Exhibit B hereto.
(ii) CERTIFICATES. Buyer shall have
received a shareholders and officer's certificate of the
Company executed by the Sellers and officers of the Company,
together with an incumbency certificate for the Company, dated
the Closing Date, in substantially the same forms as the forms
of certificates that are Exhibit C hereto.
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(iii) RELEASE. Sellers shall have
furnished the Company with a duly executed general release of
liabilities, excluding compensation and employee benefits as
well as obligations pursuant to this Agreement, in the form
attached as Exhibit D hereto.
(iv) ESCROW AGREEMENT. Sellers shall
have delivered to Buyer at the Closing the duly executed
Escrow Agreement.
(v) EMPLOYMENT AGREEMENTS.
(A) Termination of Existing
Agreements. The Company shall have provided
evidence satisfactory to Buyer of the
complete termination, without liability to
the Company, of all employment agreements in
existence prior to the Closing among the
Company, on the one hand, and the Sellers or
any other employees of the Company.
(B) New Agreements. Buyer shall
have entered into employment agreements, on
terms satisfactory to Buyer, with Cheryl Van
Horn, Edward J. Zetusky, Steve Langley and
Barbara Parillo, each in substantially the
forms attached as Exhibit F-1 (Zetusky,
Langley and Parillo) and F-2 (Van Horn).
(vi) STOCK CERTIFICATES. Sellers shall
have delivered the Shares accompanied by duly executed stock
powers, together with any stock transfer stamps or receipts
for any transfer taxes required to be paid thereon.
(vii) RESIGNATION OF DIRECTORS. The
Company shall deliver the written resignations of all
directors of the Company effective as of the Closing.
(viii) TERMINATION OF SHAREHOLDER
AGREEMENTS. The Company shall have provided evidence
satisfactory to Buyer of the complete termination of all
shareholder agreements among the Sellers and/or the Company
with respect to the Company or the Shares.
(ix) TERMINATION OF CERTAIN BENEFITS.
The Company shall have provided evidence satisfactory to Buyer
of the assignment to Sellers or their nominees or the
termination of all life insurance policies covering the lives
of, and leases for automobiles used by, the Sellers or any
other employee of the Company.
(x) CALIRI CONSULTING AGREEMENT. Ralph
M. Caliri shall have duly executed and delivered to Buyer the
Caliri Consulting Agreement.
7.2 CONDITIONS TO SELLERS' AND THE COMPANY'S OBLIGATIONS.
The obligation of Sellers and the Company under this Agreement to consummate
the Closing is subject to the conditions that:
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(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
Buyer shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants contained
in this Agreement to be performed and complied with by Buyer prior to or at the
Closing and the representations and warranties of Buyer set forth in Article IV
hereof shall be accurate in all material respects, at and as of the Closing
Date, with the same force and effect as though made on and as of the Closing
Date.
(b) CONSENTS. All statutory requirements for
the valid consummation by Buyer of the transactions contemplated by this
Agreement shall have been fulfilled and all authorizations, consents and
approvals, including expiration or early termination of all waiting periods
under the HSR Act (if applicable) and those of all federal, state, local and
foreign governmental agencies and regulatory authorities required to be
obtained in order to permit the consummation by Buyer of the transactions
contemplated hereby shall have been obtained unless such failure shall not have
a Material Adverse Effect on the Business.
(c) DOCUMENTS TO BE DELIVERED BY BUYER.
The following documents shall be delivered at the Closing by Buyer:
(i) ESCROW AGREEMENT. Buyer shall have
delivered to Sellers at the Closing the duly executed Escrow
Agreement required pursuant to Section 2.5 hereof.
(ii) CALIRI CONSULTING AGREEMENT. Buyer
shall have duly executed and delivered the Caliri Consulting
Agreement.
(iii) CALIRI AND WEBBER EQUITY
ARRANGEMENTS. Sellers shall be satisfied that all other parties
thereto have duly executed and delivered (and, if applicable to
a party, funded pursuant to) the Equity Arrangements, and that
any representations or warranties made by the Buyer or any
other party in connection with the agreements underlying such
Equity Arrangements are complete and accurate.
(iv) EMPLOYMENT AGREEMENTS. Buyer shall
have entered into employment agreements with Cheryl L. Van
Horn, Edward J. Zetusky, Steve Langley and Barbara Parilo,
each in substantially the forms attached as Exhibits F-1
(Zetusky, Langley and Parilo) and F-2 (Van Horn).
(d) PAYMENTS TO SELLERS. Sellers shall have
received the portion of the Purchase Price payable at Closing to Sellers.
7.3 WAIVERS. Buyer can waive satisfaction of any
condition set forth in Section 7.1 and Sellers can waive satisfaction of any
condition set forth on Section 7.2.
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ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF BUYER.
(a) Except as provided in and subject to Section
8.6, Sellers agree to jointly and severally indemnify and hold harmless Buyer
and each officer, director, and Affiliate of Buyer, including without
limitation the Company or any successor of the Company (collectively, the
"INDEMNIFIED PARTIES") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively,
the "INDEMNIFIABLE COSTS"), which any of the Indemnified Parties may sustain,
or to which any of the Indemnified Parties may be subjected, arising out of (a)
any misrepresentation, breach or default by Sellers or the Company of or under
any of the representations, warranties, covenants, agreements or other
provisions of this Agreement or any agreement or document executed in
connection herewith; (b) the assertion and final determination of any claim or
liability against the Company or any of the Indemnified Parties by any Person
which arose prior to January 1, 1998 not reserved for or referred to in the
Financial Statements or in this Agreement (including the Exhibits and
Disclosure Schedule); and (c) the Company's tortious acts or omissions to act
prior to Closing for which the Company did not carry liability insurance for
themselves as the insured party sufficient to satisfy such claim or liability,
whether or not such acts or omissions to act result in a breach or violation of
any representation or warranty.
(b) Notwithstanding the terms of this Section
8.1, Thayer shall not be entitled to indemnity pursuant to this Article VIII
unless Thayer (i) delivers the notice required under Section 8.1(c), (ii)
complies with the requirements set forth in Section 8.2 regarding the
settlement and compromise of claims for which Thayer is entitled to
indemnification hereunder and (iii) permits Sellers to exercise their
respective rights under Section 8.2 with respect to the defense of claims or
legal proceedings; provided, however, that the failure to comply with any of
the foregoing requirements shall not constitute a defense to the indemnity
obligations of Sellers hereunder unless and only to the extent that Sellers
suffer actual prejudice as the result of such failure to comply.
(c) Whenever any claim shall arise for
indemnification under this Article VIII, Thayer shall promptly after obtaining
knowledge thereof, and in no event later than one week preceding the deadline
(or any extension thereof) for filing a responsive pleading to a complaint in
the case of litigation, notify Sellers of the claim and, when known, the facts
constituting the basis for such claim. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, such notice shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom.
8.2 DEFENSE OF CLAIMS. If any legal proceeding shall be
instituted, or any claim or demand made, against any Indemnified Party in
respect of which Sellers may be liable hereunder, such Indemnified Party shall
give prompt written notice thereof to Sellers and, except as otherwise provided
in Section 8.4 below, Sellers shall have the right to defend, or cause the
Company or its successors to defend, any litigation, action, suit, demand, or
claim for which it may seek indemnification with counsel satisfactory to
Sellers; provided, however, if in the reasonable judgment of Buyer, (i) such
litigation, action, suit, demand, or claim, or the resolution thereof, would
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have a Material Adverse Effect on Buyer or (ii) Sellers have a conflict of
interest in defending such action on Buyer's or the Company's behalf, at
Buyer's election, Buyer may defend itself. If either (i) or (ii) is applicable
and Buyer participates in the defense of such claim, it shall be at Buyer's
expense in the case of (i) if Seller is defending such claim and, it shall be
at Seller's expense, in the case of (i) if Seller is not defending such claim
or in the case of (ii). If neither (i) nor (ii) are applicable but Buyer
desires to participate in the defense of an action Seller is defending because
in Buyer's reasonable judgment the outcome of such action could have an ongoing
effect on Buyer, the Company or its successors, Buyer may so participate but at
its own expense. In the event Sellers fail or refuse to defend any legal
proceeding they are required to defend under this Article VIII within a
reasonable length of time, the Indemnified Parties shall be entitled to assume
the defense thereof, and Sellers shall be severally liable in proportion to
their receipt of the Purchase Price to repay the Indemnified Parties for all
expenses reasonably incurred in connection with said defense (including
reasonable attorneys' fees and settlement payments) if it is determined that
such request for indemnification was proper. If Sellers do not or refuse to
assume the defense of any litigation, action, suit, demand, or claim in any
legal proceeding they should defend under this Article VIII, the Indemnified
Parties shall have the absolute right to control the defense of and to settle,
in their sole discretion and with notice to but without the consent of Sellers,
such litigation, action, suit, demand, or claim, but Sellers shall be entitled,
at their own expense, to participate in such litigation, action, suit, demand,
or claim. The party controlling any defense pursuant to this Section 8.2 shall
deliver, or cause to be delivered to the other party, copies of all
correspondence (other than privileged materials), pleadings, motions, briefs or
other written statements (other than privileged materials) relating to or
submitted in connection with the defense of any such litigation, action, suit,
demand, or claim, and timely notices of any hearing or other court proceeding
relating to such litigation, action, suit, demand, or claim.
8.3 ESCROW CLAIM. If any claim for indemnification is
made by an Indemnified Party pursuant to this Article VIII prior to the
expiration of the Escrow Period, such Indemnified Party shall first apply to
the Escrow Agent provided in Section 2.5 of this Agreement for reimbursement of
such claim in accordance with the provisions of the Escrow Agreement; provided,
however, the Escrow Sum is not intended to be an exclusive remedy in the event
Buyer has indemnification claims hereunder which exceed such amount.
8.4 TAX AUDITS, ETC. In the event of an audit of a Tax
Return of the Company with respect to which an Indemnified Party might be
entitled to indemnification pursuant to this Article VIII, Buyer shall have the
right to control any and all such audits which may result in the assessment of
additional Taxes against the Company and any and all subsequent proceedings in
connection therewith, including appeals (subject to the prior written consent
of Sellers, which shall not unreasonably be withheld and subject to the right
of Sellers to have their accountants and attorneys consult with Buyer on such
audits or procedures at Sellers' expense). Buyer shall provide Seller with
prompt notice of any such audit, and the parties shall cooperate fully with each
other in all matters relating to any such audit or other Tax proceeding
(including according access to all records pertaining thereto). Sellers shall
have the right to participate in any such audit or Tax proceeding at their
expense and the parties will execute and file any and all consents, powers of
attorney, and other documents as shall be reasonably necessary in connection
therewith. If additional Taxes are payable by the Company as a result of any
such audit or other proceeding, Sellers shall be responsible for and shall
promptly pay all Taxes, interest, and penalties for which any of the Indemnified
Parties shall be entitled to indemnification.
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8.5 INDEMNIFICATION OF SELLERS. Subject to Section
8.6(c), Buyer agrees to indemnify and hold harmless Sellers and the Company and
each officer, director, stockholder or affiliate of the Company, from and
against any Indemnifiable Costs arising out of (i) any material
misrepresentation, breach or default by Buyer of or under any of the
representations, warranties, covenants, agreements or other provisions of this
Agreement or any agreement or document executed in connection herewith, and
(ii) any act or omission or alleged act or omission of Buyer or the Company
arising out of the operation of the Business and occurring on or after the
Closing Date.
8.6 LIMITS ON INDEMNIFICATION.
(a) All Indemnifiable Costs sought by any party
hereunder shall be net of any insurance proceeds received by such Person with
respect to such claim. Except for any claims for breach of the
representations, warranties and covenants of the Sellers under Sections 3.1,
3.2, 3.3, 3.6, 3.17 or 6.5(d) hereof (for which indemnification claims must be
made prior to the expiration of the applicable statute of limitations or any
extension thereof consented to by the Indemnifying Party and if so made, such
claims shall continue after such date until finally resolved), the right to
make claims for indemnification provided under this Article VIII shall expire
on the second anniversary of the Closing Date (except for claims made prior to
such date which shall continue after such date until finally resolved). The
Sellers shall not be obligated to pay any amounts for indemnification until the
aggregate indemnification obligation sought by Buyer hereunder exceeds
$160,000, whereupon Sellers shall be liable for all amounts for which
indemnification may be sought in excess of such amount. Notwithstanding the
foregoing, in no event shall the aggregate liability of either Seller for
indemnification exceed the respective portion of the Purchase Price received by
such Seller. However nothing in this Article VIII shall limit Buyer or Sellers
in exercising or securing any remedies provided by applicable statutory or
common law with respect to the conduct of Sellers or Buyer in connection with
this Agreement or in the amount of damages that it can recover from the other
in the event that Buyer successfully proves intentional fraud or intentional
fraudulent conduct in connection with this Agreement.
(b) Notwithstanding the foregoing or any
provision contained in this Agreement to the contrary, each Seller shall have
sole liability in respect of breaches of his respective representations,
warranties or covenants in respect of such Sellers and his Shares, which
liability shall in all respects be several and not joint, and the other Seller
shall not have any liability for the breaches of any representation, warranty
or covenant in respect of the other Seller or such other Seller's Shares.
(c) For purposes of Sections 8.1 or 8.5, any
requirement in any representation or warranty that an event or fact be material
or have a Material Adverse Effect, as appropriate, in order for such event or
fact to constitute a misrepresentation or breach of such representation or
warranty shall be ignored.
(d) All Indemnifiable Costs paid by the Sellers
shall be deemed to be a reduction of the Purchase Price paid by Buyer under
this Agreement.
(e) Notwithstanding anything to the contrary
contained in this Article VIII, any party may undertake the defense of any third
party claim pursuant to alleged indemnification obligations hereunder with full
reservation of rights, and if it shall ultimately be determined that the party
seeking indemnification is not entitled thereto with respect to such claim,
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then the party seeking indemnification shall reimburse to the party or parties
undertaking such defense, all indemnification payments in respect of such claim
made as well as the reasonable fees and costs of such defense, including
reasonable attorneys fees. No indemnification of, or reimbursement for, the fees
or costs of litigation shall be payable under this Article VIII by any party in
connection with a bona fide dispute between such party and any other party
regarding any matter arising under this Agreement, the costs and expenses of
which shall be borne by the parties hereto in accordance with the terms of
Section 10.4.
ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of the Company
and Buyer;
(b) in writing by Buyer, if the Company or any of
the Sellers has breached in any material respect any representation, warranty
or covenant contained in this Agreement, and in each case such breach has not
been remedied within ten (10) business days after receipt of notice specifying
such breach and demanding such breach to be remedied; or
(c) in writing by the Sellers and the Company, if
Buyer has breached in any material respect any representation, warranty or
covenant contained in this Agreement, and in each case such breach has not been
remedied within ten (10) business days after receipt of notice specifying such
breach and demanding such breach to be remedied; or
(d) in writing by either the Company and the
Sellers, on the one hand, or Buyer, on the other hand, in the event the Closing
has not occurred on or before April 30, 1998, unless the failure of such
consummation or the failure to satisfy such condition, as applicable, shall be
due to a breach of any representation or warranty made by the party or parties
seeking to terminate this Agreement or the failure of such party or parties to
comply in all material respects with the agreements and covenants contained
herein to be performed by such party or parties.
9.2 EFFECT OF TERMINATION. If the transactions
contemplated by this Agreement are terminated pursuant to Section 9.1 by notice
in writing to the non-terminating party or parties, this Agreement shall become
void and of no further force and effect, except that such termination shall not
relieve (i) any party from its covenants in respect of confidentiality
contained in Section 6.3 and (ii) any party then in breach of any
representation, warranty, covenant or agreement contained in this Agreement
from liability in respect of such breach.
ARTICLE X
MISCELLANEOUS
10.1 MODIFICATIONS; WAIVERS. Any amendment, change or
modification of this Agreement shall be void unless in writing and signed by
all parties hereto. No failure or delay by
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any party hereto in exercising any right, power or privilege hereunder (and no
course of dealing between or among any of the parties) shall operate as a waiver
of any such right, power or privilege. No waiver of any default on any one
occasion shall constitute a waiver of any subsequent or other default. No single
or partial exercise of any such right, power or privilege shall preclude the
further or full exercise thereof.
10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered, or 48 hours after deposited in the United States mail,
first-class, postage prepaid, or by facsimile addressed to the respective
parties hereto as follows:
Thayer:
Global Vacation Group, Inc.
c/o Thayer Capital Partners
1455 Pennsylvania Avenue, NW
Suite 350
Washington, D.C. 20004
Attention: Roger H. Ballou, President
Daniel Raskas
Fax No.: (202) 371-0391
Tel No.: (202) 371-0150
With a copy to:
Hogan & Hartson L.L.P.
Columbia Square
Thirteenth Street, NW
Washington, DC 20004-1109
Attention: Chris Hagan
Hovey Kemp
Fax No.: (202) 637-5910
Tel No.: (202) 637-5600
The Company or Sellers:
Haddon Holidays, Inc.
Route 73
Executive Plaza, Suite 400
Mt. Laurel, NJ 08054
Attention: Ralph M. Caliri
Fax No.: (609) 273-8997
Tel No.: (609) 273-8778
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With copies to:
Fell & Spalding
Suite 2230
Land Title Building
100 South Broad Street
Philadelphia, PA 19110
Attention: David J. Moloznik
Fax No.: (215) 563-8330
Tel No.: (215) 563-6161
and
Mesirow Gelman Jaffe Cramer & Jamieson
1735 Market Street
Philadelphia, PA 19103-7598
Attention: Steven B. King
Fax No.: (215) 994-1111
Tel No. (215) 994-1037
or to such other address as to any party hereto as such party shall designate
by like notice to the other parties hereto.
10.3 COUNTERPARTS; FACSIMILE TRANSMISSION. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original but all of which counterparts collectively shall constitute one
instrument, and in making proof of this Agreement, it shall never be necessary
to produce or account for more than one such counterpart. Signatures of a
party to this Agreement or other documents executed in connection herewith
which are sent to the other parties by facsimile transmission shall be binding
as evidence of acceptance of the terms hereof or thereof by such signatory
party, with originals to be circulated to the other parties in due course.
10.4 EXPENSES. Each of the parties hereto will bear all
costs, charges and expenses incurred by such party in connection with this
Agreement and the consummation of the transactions contemplated herein,
provided, however, that Sellers shall bear all costs and expenses of (i) any
broker involved in this transaction on behalf of Sellers or the Company and
(ii) all legal and other expenses of Sellers or the Company with respect to
this Agreement and the transactions contemplated hereby.
10.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Company, Buyer and Sellers, their
heirs, representatives, successors, and permitted assigns, in accordance with
the terms hereof. This Agreement shall not be assignable by the Company or
Sellers without the prior written consent of Buyer. This Agreement shall be
assignable by Buyer to either (a) any lender providing financing to Buyer or
its Affiliates or (b) an Affiliate of Buyer, in each case without the prior
written consent of Sellers, but any such assignment shall not relieve Buyer of
its obligations hereunder. In addition, Buyer may assign any or all of its
rights hereunder, without the consent of the Sellers following the Closing, in
connection with any
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sale of all or substantially all of the assets, capital stock or business of
Buyer or the Company (whether effected by sale, exchange, merger, consolidation
or other transaction).
10.6 ENTIRE AND SOLE AGREEMENT. This Agreement and the
other schedules and agreements referred to herein, constitute the entire
agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements
and understandings, whether oral or written, express or implied, with respect
to the subject matter hereof.
10.7 GOVERNING LAW. This Agreement and its validity,
construction, enforcement, and interpretation shall be governed by the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.
10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Regardless of any investigation at any time made by or on behalf of
any party hereto or of any information any party may have in respect thereof,
all covenants, agreements, representations, and warranties and the related
indemnities made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of two
(2) years, provided (a) the representations and warranties contained in Section
3.17 of this Agreement, and the related indemnities, shall survive the Closing
until the expiration of the applicable statutes of limitations for determining
or contesting Tax liabilities, (b) the representations, warranties and covenants
contained in Sections 3.1, 3.2, 3.3, 3.6 and 6.5(d) of this Agreement, and the
related indemnities, shall survive the Closing and not expire for the period of
limitation of actions on contracts set forth in the statutes of limitations
applicable to such contractual matters and (c) all other covenants in Article VI
which have an expiration date contained therein shall expire as of such date.
10.9 INVALID PROVISIONS. If any provision of this
Agreement is deemed or held to be illegal, invalid or unenforceable, this
Agreement shall be considered divisible and inoperative as to such provision to
the extent it is deemed to be illegal, invalid or unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal, invalid or unenforceable
provision and be legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be
binding upon all parties hereto.
10.10 PUBLIC ANNOUNCEMENTS. Neither Sellers (whether pre-
or post-Closing) nor the Company (pre-Closing) shall make any public
announcement of the transactions contemplated hereby without the prior written
consent of Buyer, which consent shall not be unreasonably withheld. To the
extent that it makes any such public announcement prior to the Closing, Buyer
agrees to give Ralph M. Caliri an opportunity to review and approve the text
thereof.
10.11 REMEDIES CUMULATIVE. The remedies of the parties
under this Agreement are cumulative and shall not exclude any other remedies to
which any party may be lawfully entitled.
10.12 THIRD PARTIES. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any Person,
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other than the parties hereto and their permitted successors or assigns, any
rights or remedies under or by reason of this Agreement.
10.13 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first above written.
BUYER:
GLOBAL VACATION GROUP, INC.
By: /s/ Raymond Lewis
-------------------------------------
Raymond Lewis
President and Chief Operating Officer
THE COMPANY:
HADDON HOLIDAYS, INC.
By: /s/ Ralph M. Caliri
-------------------------------------
Ralph M. Caliri
President
SELLERS:
/s/ Ralph M. Caliri
---------------------------------------------
Ralph M. Caliri
/s/ William W. Webber
---------------------------------------------
William W. Webber
The Exhibits and Schedules to this Stock Purchase Agreement are not included
with this Registration Statement on Form S-1. Global will provide these
exhibits and schedules upon the request of the Securities and Exchange
Commission.
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EXHIBIT 10.8
ASSET PURCHASE AGREEMENT
BY AND AMONG
GLOBAL VACATION GROUP, INC.
("GLOBAL"),
GVGAC NO. 1, INC.
("BUYER"),
MTI VACATIONS, INC.
("SELLER")
AND
JAMES F. MILLER
("SHAREHOLDER")
DATED APRIL 30, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II AGREEMENT OF PURCHASE AND SALE; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Cash and Cash Equivalents and Investments . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Deposits and Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Business, Equipment and Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Contracts and Other Agreements Relating to the Transferred Business . . . . . . . . . . 9
(f) Books, Records, Lists and Other Data . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Employment Agreements and Employee Relationships . . . . . . . . . . . . . . . . . . . 9
(h) Licenses, Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) General Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(l) Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Title to the Purchased Assets: Documents of Conveyance . . . . . . . . . . . . . . . . . . . . 12
2.6 Purchase Price; Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Escrow Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.10 Closing Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Post-Closing Purchase Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) February 28 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Allocation Methodologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) No Double-Counting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Timing of Adjustments and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER . . . . . . . . . . . . . . . . . 15
3.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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3.5 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.6 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.8 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9 Compliance with Laws and other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.12 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.15 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.16 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.17 Accounts Receivable; Customer Deposits Bookings; Financial Condition . . . . . . . . . . . . . 25
(a) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Customer Deposits and Bookings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.18 Financial Results During Stub Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.19 Bank Accounts; Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.20 Customer Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.22 Affiliated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.23 Funded Indebtedness; Letters of Credit; Undisclosed Liabilities . . . . . . . . . . . . . . . 27
(a) Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Liabilities Arising from Discontinued Operations . . . . . . . . . . . . . . . . . . . 27
3.24 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.24 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV BUYER'S AND GLOBAL'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 28
4.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V COVENANTS OF SELLER, SHAREHOLDER AND/OR BUYER . . . . . . . . . . . . . . . . . . . . . . . . 29
5.1 Consents of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 Access to Records Before Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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ARTICLE VI POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Access to Records After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 Litigation Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Assignment of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.7 Change of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.8 Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING . . . . . . . . . . . . . . . . 34
7.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Documents to be Delivered by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(i) Conveyance Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(ii) Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(iii) Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . 35
(iv) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(v) Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(vi) UCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(vii) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(viii) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(ix) Records of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(x) Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(xi) Transition Services Agreements . . . . . . . . . . . . . . . . . . . . . . . 36
(xii) Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(xiii) Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(xiv) Change of Seller's Name . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Conditions to Seller's and Shareholder's Obligations . . . . . . . . . . . . . . . . . . . . . 36
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Documents to be Delivered by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(i) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(ii) Assignment and Assumption Agreement . . . . . . . . . . . . . . . . . . . . . 37
(iii) Equity Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(iv) Transition Services Agreements . . . . . . . . . . . . . . . . . . . . . . . 37
(v) Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(vi) Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) Payments to Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.1 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.2 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Escrow Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Tax Audits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.5 Indemnification of Seller and Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.6 Limits on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.1 Modifications; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.3 Counterparts; Facsimile Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.6 Entire and Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.8 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . 43
10.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.11 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.12 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.13 No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.14 Global Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
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<PAGE> 6
LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Escrow Agreement
Exhibit B Opinion of Seller's and Shareholder's Counsel
Exhibit C Seller's and Shareholder's Certificates
Exhibit D Form of Assignment and Assumption Agreement
Exhibit E Form of Employment Agreement
Exhibit F Form of Release
Exhibit G MIS Transition Services Agreement
Exhibit H Non-MIS Transition Services Agreement
Exhibit I Lease
Exhibit J Real Property (Leases) (Section 2.1(c))
Exhibit K Seller's Account and Wire Transfer Instructions (Section 2.6)
Exhibit L Articles (I-1), Bylaws (I-2) and Qualified Jurisdictions (I-3) (Section 3.1)
Exhibit M List of Properties (Section 3.6)
Exhibit N List of Licenses and Permits (Section 3.7)
Exhibit O List of Intellectual Property (Section 3.8)
Exhibit P List of Insurance (Section 3.10)
Exhibit Q Employee Plans (Section 3.11)
Exhibit R List of Contracts (Section 3.12)
Exhibit S List of Personnel (Section 3.15)
Exhibit T List of Bookings, Customer Deposits, Prepayments
and Refunds and Customer Claims (Section 3.17(b))
Exhibit U List of Bank Accounts and Investments (Section 3.18)
Exhibit V Letters of Credit (Section 3.22(b))
</TABLE>
LIST OF SCHEDULES
DISCLOSURE SCHEDULE
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<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of April 30, 1998, by and among GLOBAL VACATION GROUP, INC. (formerly
Allied Bus Corp.), a New York corporation ("GLOBAL"), GVGAC NO. 1, INC., a
Delaware corporation and wholly-owned subsidiary of Global ("BUYER"), MTI
VACATIONS, INC., a Delaware corporation ("SELLER") and JAMES F. MILLER
("SHAREHOLDER").
RECITALS
A. Seller is engaged in the wholesale travel sales and
other travel-related businesses in the United States;
B. Shareholder is the owner of a majority of all
outstanding capital stock of Seller;
C. Seller owns and leases certain assets, real and
personal, tangible and intangible, which are used by Seller in the conduct of
the wholesale travel sales business;
D. Buyer, a wholly-owned subsidiary of Global, desires
to purchase from Seller and Seller desires to sell to Buyer substantially all
of Seller's assets used in the operation of the wholesale travel sales business
on the terms and subject to the conditions set forth in this Agreement;
E. Seller intends to exclude certain of its assets from
such purchase and sale transaction with Buyer and will continue to own and
operate such excluded assets following the consummation of such transaction;
and
F. In connection with its purchase of such assets from
Seller, Buyer desires to assume certain of the liabilities and obligations of
Seller relating to the business being transferred to it (and no others), and
Global, as Buyer's parent, desires to provide Seller comfort that it will
provide Buyer with the financial means necessary to support such assumption and
performance of liabilities and obligations, all as more specifically set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
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<PAGE> 8
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms. Any agreement
referred to below shall mean such agreement as amended, supplemented and
modified from time to time to the extent permitted by the applicable provisions
thereof and by this Agreement.
"AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the General
Assignment, Bill of Sale and Assumption Agreement to be executed by the parties
on the Closing Date in substantially the form of Exhibit D.
"ASSUMED LIABILITIES" has the meaning specified in Section
2.3.
"AUDITED CLOSING FINANCIAL STATEMENTS" has the meaning
specified in Section 2.10.
"BOOKINGS" means the aggregate amount (in dollars or number of
passengers, as the context requires) of customer bookings of the Transferred
Business as of any date of determination.
"BUILDING" shall mean the site where the headquarters and
reservation operations of the Business are located at 2211 Butterfield Road,
Downers Grove, Illinois 60615.
"BUYER" has the meaning specified in the first paragraph of
this Agreement.
"CASH AND CASH EQUIVALENTS" means cash on hand and balances in
checking accounts and money market accounts (i.e., Bank of America Short Term
Asset Management Account) but excluding Investments.
"CLOSING" means the closing of the transfer of the Purchased
Assets from Seller to Buyer.
"CLOSING DATE" has the meaning specified in Section 2.8.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means all (i) terms and provisions
of this Agreement or the transactions to be consummated pursuant hereto, and
(ii) confidential information and trade secrets of Seller, Buyer or their
Affiliates related to the Transferred
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<PAGE> 9
Business including, without limitation, any of the same comprising the
identity, lists or descriptions of any customers, referral sources or
organizations; financial statements, cost reports or other financial
information; contract proposals or bidding information; business plans and
training and operations methods and manuals; personnel records; fee structure;
and management systems, policies or procedures, including related forms and
manuals. Confidential Information shall not include any information (a) which
is disclosed pursuant to subpoena or other legal process, (b) which has been
publicly disclosed, or (c) which is subsequently disclosed by any third party
not in breach of a confidentiality agreement.
"CONTRACTS" has the meaning specified in Section 3.12.
"COURT ORDER" means any judgment, order, award or decree of
any foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"CUSTOMER DEPOSITS" means all deposits received from customers
in connection with Bookings and reflected on the balance sheet of the
Transferred Business as of the applicable date.
"CUSTOMER DEPOSITORY ACCOUNT" means an account or accounts for
the deposit and holding of Customer Deposits.
"DISCLOSURE SCHEDULE" shall mean the Disclosure Schedule
attached to this Agreement pursuant to which exceptions to the Seller's and
Shareholder's specific representations and warranties set forth in Article III
(and listed on a Section-by-Section basis) are disclosed to Buyer pursuant to
said Article III.
"EBIT" shall mean the earnings of the Transferred Business and
the Purchased Assets before interest expenses, taxes and bonuses, as calculated
in accordance with GAAP.
"EMPLOYEE" has the meaning specified in Section 3.11.
"ENCUMBRANCE" means any lien, claim, charge, security
interest, mortgage or pledge.
"ENVIRONMENTAL AND OSHA OBLIGATIONS" has the meaning specified
in Section 3.9.
"EQUITABLE EXCEPTIONS" shall have the meaning specified in
Section 3.3.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" means The Bank of New York, N.A.
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<PAGE> 10
"ESCROW AGREEMENT" means the Escrow Agreement to be executed
by and among Seller, Buyer and the Escrow Agent in the form of Exhibit A.
"ESCROW PERIOD" has the meaning specified in Section 2.9.
"ESCROW SUM" has the meaning specified in Section 2.9.
"EQUIPMENT" has the meaning specified in Section 2.1(d).
"EXCLUDED ASSETS" means the following specific assets of the
Retained Business which post-Closing will continue to be owned by the Seller,
and which are not part of the Transferred Business and the Purchased Assets
being purchased by Buyer pursuant to this Agreement: (i) cash and Investments
not transferred to Buyer pursuant to Section 2.1(a); (ii) Seller's MIS Assets;
(iii) notes receivable and accounts receivable from Shareholder, Seller's
Affiliates and other third parties not arising out of the conduct of the
Transferred Business; (iv) building improvements and personal property related
to the operation of the Building that are not included in the December 31, 1997
balance sheet for the Transferred Business; (v) aircraft; and (vi) contracts
referenced in the Non-MIS Transition Services Agreement as being retained by
Seller but where Seller will allow the Transferred Business to enjoy the
benefits of subcontracts, as provided therein.
"EXCLUDED LIABILITIES" has the meaning specified in Section
2.4.
"FINANCIAL STATEMENTS" has the meaning specified in Section
3.4.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of Seller for
borrowed money or other interest-bearing indebtedness; (ii) capital lease
obligations of Seller; (iii) obligations of Seller to pay the deferred purchase
or acquisition price for goods or services, other than trade accounts payable
or accrued expenses in the ordinary course of business on no more than 90 day
payment terms; (iv) indebtedness of others guaranteed by Seller or secured by
an Encumbrance on Seller's property or the Purchased Assets; and (v)
indebtedness of Seller under extended credit terms of more than 30 days from
vendors provided to Seller; provided, however, that Funded Indebtedness shall
not include Letters of Credit unless actually drawn upon by the beneficiary
thereof, as of the date the calculation of Funded Indebtedness is made.
"GAAP" shall mean generally accepted accounting principles,
consistently applied by Seller in the preparation of its financial statements.
"GLOBAL" has the meaning specified in the first paragraph of
this Agreement.
"GOVERNMENTAL BODY" means any foreign, federal, state, local
or other governmental authority, judicial body or regulatory body.
"GOVERNMENTAL PERMITS" has meaning specified in Section 3.7.
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<PAGE> 11
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and the rules and regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"INDEMNIFIABLE COSTS" has the meaning specified in Section
8.1.
"INDEMNIFIED PARTIES" has the meaning specified in Section
8.1.
"INTELLECTUAL PROPERTY" has the meaning specified in Section
2.1(j).
"INVESTMENTS" means investments in any funds, accounts,
securities, certificates of deposit or instruments of any Person which are (i)
as investments on a balance sheet in accordance with GAAP, and (ii) marked to
market as of any date of determination.
"KNOWLEDGE" (whether or not capitalized) with respect to
Seller shall mean actual knowledge after reasonable inquiry of Shareholder and
the following employees of Seller and its Affiliates: Frank Silzer, Tom Mikrut,
Bob Pancoast, Mark Rittmanic and Randy Christensen; with respect to
Shareholder, "KNOWLEDGE" shall mean actual knowledge after reasonable inquiry
of Shareholder.
"LEASE" means the commercial lease to be entered into between
Buyer and James F. Miller covering Buyer's Lease of the Building, in
substantially the form of Exhibit I.
"MATERIAL" (whether or not capitalized) shall, where
appropriate in context of its use in making the representations and warranties
set forth in Article III, be deemed to mean an amount of money greater than
$50,000.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means a
material adverse change or effect on the assets, properties, business,
operations, liabilities, financial condition or prospects of the Transferred
Business. In determining whether a "Material Adverse Change" or "Material
Adverse Effect" has occurred in the context of the use of such terms in the
Seller's and Shareholder's representations and warranties set forth in Article
III, such terms shall refer to the occurrence of any single event, or any
series of related events or set of related circumstances, which results in or
may result in a loss to Seller or Buyer in excess of $50,000 per occurrence or
$150,000 in the aggregate.
"MIS SERVICE PROVIDER AGREEMENT" means the agreement which the
parties to this Agreement contemplate may be entered into between Global and
TMS which will (i) supersede the MIS Transition Services Agreement insofar as
such agreement pertains to the use by Buyer of Seller's MIS Assets, and (ii)
provide for (A) either (1) Global's acquisition of TMS or (2) TMS's provision
of MIS services to Global and its Affiliates' other wholesale travel sales and
related businesses and (B) Global and its Affiliates' right to use Seller's MIS
Assets in the conduct of their various wholesale travel sales and related
businesses.
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<PAGE> 12
"MIS TRANSITION SERVICES AGREEMENT" means the agreement, in
substantially the form of Exhibit G, to be entered into between Buyer, Seller
and TMS providing for Seller's and/or TMS's ongoing provision, to the extent
provided in such agreement, of MIS-related services to the Transferred Business
and Buyer's ongoing right to use Seller's MIS Assets to the extent provided in
such agreement in the post-Closing conduct of the Transferred Business.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning specified
in Section 3.4.
"NET WORTH" means the difference between the total assets and
the total liabilities of the Transferred Business, determined in accordance
with GAAP.
"NON-MIS TRANSITION AGREEMENT" means the agreement, in
substantially the form of Exhibit H, providing for (i) the Seller's ongoing
provision until December 31, 1998 of services relating to payroll
administration, insurance and employee benefits in place in respect of the
Transferred Business or its employees, and such other matters as reflected
therein, prior to the Closing and (ii) Seller's ongoing provision (and Buyer's
and Global's agreement to take all steps necessary to prevent the beneficiaries
thereof from drawing upon such letters of credit and to indemnify and reimburse
Seller in connection therewith) of letters of credit which are outstanding as
of the Closing Date (it being agreed by Buyer and Global that such letters of
credit shall be cash collateralized on a dollar-for-dollar basis by amounts
held under the Escrow Agreement and replaced upon their respective expiration
or rollover dates by letters of credit issued for the account of Buyer or
Global pursuant to Global's senior credit agreement with the Bank of New York
or by another financial institution).
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, and any regulations promulgated
thereunder.
"PERMITTED EXCEPTION" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, or (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value or
the existing use of the property affected by such lien or imperfection.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"PRELIMINARY CLOSING BALANCE SHEET" shall mean the Seller's
best estimate of the balance sheet of the Transferred Business as of the
Closing Date. The Preliminary Closing Balance Sheet shall be delivered to
Buyer not less than three (3) nor more than five (5) days prior to the Closing
Date.
"PROPRIETARY RIGHTS" has the meaning specified in Section
2.1(k).
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<PAGE> 13
"PURCHASE PRICE" has the meaning specified in Section 2.6.
"PURCHASED ASSETS" means the assets of the Transferred
Business specified in Section 2.1 (and which are exclusive of the Excluded
Assets).
"REAL PROPERTY" has the meaning specified in Section 2.1(c).
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without limitation,
those pertaining to electrical, building, zoning, environmental and
occupational safety and health requirements).
"RETAINED BUSINESS" means all of the Seller's business
activities other than the Transferred Business, including without limitation
Seller's continued operation of the Excluded Assets.
"SELLER" has the meaning set forth in the first paragraph of
this Agreement.
"SELLER'S MIS ASSETS" means those certain Excluded Assets
comprised of Seller's computer reservation system and related functions,
including without limitation an AS400 mini-computer and related hardware and
support equipment, together with the TRIPSPRO and related software programs
which Seller intends to transfer or lease on or before the Closing Date to TMS
and which will be the subject of the MIS Transition Services Agreement and,
ultimately, the MIS Service Provider Agreement.
"SHAREHOLDER" has the meaning set forth in the first paragraph
of this Agreement.
"TAX" or "TAXES" means any federal, state, local or foreign
income, alternative or add-on minimum, gross income, gross receipts, windfall
profits, severance, property, production, sales, use, transfer, gains, license,
excise, employment, payroll, withholding or minimum tax, transfer, goods and
services, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amounts imposed thereon by any
Governmental Body.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"TRANSFERRED BUSINESS" means all assets of the Seller other
than the Excluded Assets and including, without limitation, the Seller's
wholesale travel business which is being purchased by Buyer pursuant to the
terms of this Agreement, and which as currently conducted consists of (i) the
assembly and sale of vacation packages to destinations in Hawaii;
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<PAGE> 14
(ii) providing ground services in Hawaii to persons who have purchased such
vacation packages; (iii) providing private label fulfillment services to Amtrak
and Hyatt Vacations; and (iv) the Trase Miller Rewards program (but not the
name "Trase Miller Rewards," it being the intent of the Buyer to change the
name of such program following the Closing Date), which provides private label
fulfillment services to other travel wholesalers.
"TRANSITION SERVICES AGREEMENTS" means the MIS Transition
Services Agreement and the Non-MIS Transition Services Agreement.
"TMS" means Seller and Shareholder's Affiliate, Trase Miller
Solutions, Inc., a Delaware corporation, to whom Seller intends to transfer or
lease the Seller's MIS Assets prior to the Closing; TMS is or will be a party
to the Transition Services Agreement (Exhibit H-1) and, if and when same is
consummated, the MIS Service Provider Agreement.
"WORKING CAPITAL" shall mean the difference between the
current assets (other than prepaid expenses) and current liabilities of the
Transferred Business; provided, however, that for purposes hereof only the
Purchased Assets and Assumed Liabilities (if any) shall be taken into account
when measuring Working Capital of the Transferred Business; and provided,
further, however, that long-term investments included in the Customer
Depository Account of the Transferred Business shall be included when measuring
Working Capital of the Transferred Business.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE; CLOSING
2.1 PURCHASED ASSETS. On the terms and subject to the
conditions and exceptions contained herein, Seller agrees to sell to Buyer and
Buyer agrees to purchase from Seller at the Closing and on the Closing Date
(each as hereinafter defined), free and clear of all liens, claims and
encumbrances except for those permitted under Section 2.3 hereof, all of
Seller's right, title and interest in and to all assets of the Transferred
Business properly included in the Seller's December 31, 1997 balance sheet for
the Transferred Business, subject to changes in the ordinary course of business
(and consistent with the Seller's covenants in Section 5.4) from such date
through the Closing Date, together with all other assets owned by Seller and
used in the Transferred Business, other than the Excluded Assets (collectively,
the "PURCHASED ASSETS"). The Purchased Assets include, without limitation, the
following as they exist on the Closing Date (as hereinafter defined):
(a) CASH AND CASH EQUIVALENTS AND INVESTMENTS.
Cash and Cash Equivalents and Investments not less than Customer Deposits (as
defined in Section 3.17) as of the Closing Date; provided, however, that
Customer Deposits held in the form of long-term investments as of the Closing
Date shall not be transferred to Buyer as a result of this Section 2.1(a) in
accordance with the terms of Section 2.7(b).
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<PAGE> 15
(b) DEPOSITS AND ACCOUNTS RECEIVABLE. All
accounts receivable and other deposits, advances and suppliers' or vendors'
rebates and all other receivables of the Transferred Business and existing on
the Closing Date (as hereinafter defined), in the ordinary course of the
operation of the Transferred Business.
(c) REAL PROPERTY. All leases of real property
and interests, options or rights with respect to the Transferred Business
(other than the Lease, which is being negotiated separately between Buyer and
Shareholder) (collectively, the "REAL PROPERTY"). All Real Property is
identified as leased and described on Exhibit J attached hereto.
(d) BUSINESS, EQUIPMENT AND SUPPLIES. All
tangible personal property, equipment, supplies, furniture, leasehold
improvements, including but not limited to, leases and subleases of personal
property or equipment, all automobiles and other vehicles, computers and
peripherals and all maintenance and other operating supplies and other
miscellaneous tangible personal property of Seller used in the Transferred
Business, whether or not located at or on the Real Property at the Closing Date
and whether or not reflected on the Most Recent Financial Statements
(collectively, the "EQUIPMENT"); provided, however, that the Equipment does not
include Seller's MIS Assets.
(e) CONTRACTS AND OTHER AGREEMENTS RELATING TO
THE TRANSFERRED BUSINESS. All rights of Seller (or of Seller's Affiliates to
the extent that such Affiliate's rights are used in the conduct or operation of
the Transferred Business and Purchased Assets) as of the Closing Date under all
(written or oral) vendor contracts with airlines or other carriers, hotels and
resorts, agreements with rental car companies, marketing agreements, consortia
agreements, travel agency agreements, concession or other agreements relating
to tour or reservation desks maintained on property or in facilities owned by
third parties, interface or similar agreements pertaining to various airline or
other computer reservation systems, licenses, leases, purchase orders and all
other contracts, agreements or arrangements used in the Transferred Business
(other than those contracts referenced in clause (vi) of the definition of
Excluded Assets).
(f) BOOKS, RECORDS, LISTS AND OTHER DATA. All
files, books, records, invoices, accounts, surveys, customer lists and records,
vendor and supplier lists, catalogs, price lists, marketing and advertising
information, purchasing histories, profiles and materials, technical bulletins,
books and records of account and other financial, vendor, customer and credit
data, and all computer programs, software, hardware, firmware, tapes and other
materials used to store, record or produce such data, owned or leased by Seller
and used in the Transferred Business (exclusive of Seller's MIS Assets);
provided, however, that with respect to items leased by Seller, only Seller's
leasehold rights are conveyed hereby.
(g) EMPLOYMENT AGREEMENTS AND EMPLOYEE
RELATIONSHIPS. All rights of Seller as of the Closing Date under all
employment and non-compete agreements plus all relationships of Seller with any
of its Employees.
(h) LICENSES, PERMITS. Except for those which
are listed in the Disclosure Schedule (under Section 3.7) as being not
assignable by operation of the laws of the
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<PAGE> 16
relevant Governmental Body (e.g., qualifications of the Seller to do business
as a foreign corporation in a given jurisdiction), all material federal, state,
local and other governmental licenses, permits, approvals and authorizations
that are used in the operation of the Transferred Business.
(i) PREPAYMENTS. All security, utility or
similar deposits or prepaid expenses of Seller used in the Transferred
Business.
(j) INTELLECTUAL PROPERTY. All (i) patents,
patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing
(including without limitation MTI Vacations); (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; (v) trade secrets, confidential information and know-how
(including but not limited to ideas, business and marketing plans, and customer
vendor and supplier lists and related information); and (vi) computer software
(including but not limited to data, data bases and documentation but excluding
Seller's MIS Assets) used in the Transferred Business, including without
limitation the intellectual property listed on Exhibit O (collectively, the
"INTELLECTUAL PROPERTY").
(k) GENERAL INTANGIBLES. All general intangibles
used by the Transferred Business including, without limitation, all goodwill as
a going concern and any and all causes of action or claims of Seller against
any third party that arose or will arise out of the Transferred Business prior
to the Closing Date.
(l) OTHER ASSETS. All other assets of Seller
used in the conduct of the Transferred Business, whether or not reflected on
the books or records of Seller or the Transferred Business, other than the
Excluded Assets.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the
contrary in this Agreement, the Purchased Assets do not include, and Buyer is
not purchasing or assuming any liability therefore, the Excluded Assets,
ownership of which is retained by Seller.
2.3 ASSUMED LIABILITIES. On the terms and subject to the
conditions and exceptions contained herein, at Closing, Seller shall assign and
delegate to Buyer, and Buyer shall assume and undertake to pay, defend,
discharge and perform in full when due the liabilities of Seller (insofar as
such liabilities relate to the Transferred Business and the Purchased Assets)
properly included in the Seller's December 31, 1997 balance sheet for the
Transferred Business, subject to changes in the ordinary course of business
from such date through the Closing Date, including without limitation the
Customer Deposits, all of Seller's obligations under the contracts included in
the Purchased Assets pursuant to Section 2.1(e) and all of Seller's obligations
arising after the Closing Date in the ordinary course of conducting the
Transferred Business (subject to Seller's and Shareholder's indemnification
obligations set forth in Section 8.1, and other than any Excluded Liabilities
(as defined in Section 2.4) (the "ASSUMED LIABILITIES"), and no others,
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<PAGE> 17
pursuant to this Agreement and the General Assignment, Bill of Sale and
Assumption Agreement referred to in Section 2.5.
2.4 EXCLUDED LIABILITIES. Notwithstanding anything to
the contrary contained in this Agreement, Buyer will not assume or be liable
for and Seller will retain and remain responsible for all of Seller's debts,
liabilities and obligations of any nature whatsoever, other than the Assumed
Liabilities, whether accrued, absolute or contingent, whether known or unknown,
whether due or to become due and whether related to the Transferred Business
and the Purchased Assets or otherwise, and regardless of when asserted (the
"EXCLUDED LIABILITIES"), including, without limitation, the following
liabilities or obligations of Seller (none of which will constitute Assumed
Liabilities):
(a) All of Seller's liabilities or obligations
under this Agreement or under any other agreement between Seller on the one
hand and Buyer on the other hand entered into on or after the date of this
Agreement;
(b) All liabilities and obligations of Seller for
Taxes which are imposed on or measured by income, for any period, and all of
Seller's liabilities or obligations with respect to any Taxes not specifically
accrued on the balance sheet for the Transferred Business included in the Most
Recent Financial Statements, subject to changes in the ordinary course of
business from the date of such balance sheet through the Closing Date;
(c) All of Seller's liabilities or obligations
arising out of or in connection with the breach of any contract or agreement
included in the Purchased Assets, other than for such amounts as are adequately
and properly reserved for in the balance sheet included as part of the Most
Recent Financial Statements, subject to changes in the ordinary course of
business from the date of such balance sheet through the Closing Date;
(d) All of Seller's liabilities or obligations
for expenses, Taxes or fees incident to or arising out of the negotiation,
preparation, approval, or authorization of this Agreement or the consummation
(or preparation for the consummation) of the transactions contemplated hereby,
including all attorneys' and accountants' fees, brokerage fees, consultants'
fees and finders' fees, and sales, bulk sales and transfer taxes which are
Seller's responsibility hereunder;
(e) Seller's obligations and liabilities for the
period up to and including the Closing Date which relate to any Employee Plan
(as defined in Section 3.11(a)) (including unfunded pension plan liabilities
and retiree health benefits), other than for amounts as are adequately and
properly reserved for or accrued on the balance sheet for the Transferred
Business included as part of the Most Recent Financial Statements, subject to
changes in the ordinary course of business from the date of such balance sheet
through the Closing Date;
(f) All of Seller's liabilities or obligations
that are not otherwise Excluded Liabilities hereunder against which Seller is
insured or otherwise contractually
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indemnified by a Person other than Buyer but only to the extent Seller receives
the proceeds of such insurance or indemnification.
(g) Any liability or obligation under COBRA (as
defined in Section 3.11(b)) to any person covered by Seller's health plans or
any Employee who ceases to be employed by Seller on or before the Closing Date,
or who is not employed by Buyer on the Closing Date, and any liability or
obligation under COBRA to any family member of such person or Employee.
(h) Any liability or obligation for Funded
Indebtedness or any other liability or obligation of Seller that does not
relate to, or arise from, the Transferred Business and the Purchased Assets.
(i) Any liability or obligation pertaining to any
discontinued operation owned or operated by the Seller and related to the
Transferred Business as it was operated by the Seller prior to the Closing
Date.
(j) Any liability or obligation that arises from,
the Excluded Assets or the Retained Business.
2.5 TITLE TO THE PURCHASED ASSETS: DOCUMENTS OF
CONVEYANCE. At Closing, Seller shall convey all of its right, title and
interest in and to the Transferred Business and the Purchased Assets to Buyer
free and clear of all liabilities, obligations, liens and Encumbrances,
excepting only the Assumed Liabilities (as defined in Section 2.3). Title to
the Purchased Assets shall be conveyed pursuant to the Assignment and
Assumption Agreement, and by such other documents as are reasonably acceptable
to counsel for Seller and counsel for Buyer in accordance with the terms
hereof. Each of the parties hereto agrees to use its reasonable commercial
efforts to take or cause to be taken all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable, whether before or
after Closing, to ensure transfer of title to the Purchased Assets to Buyer
occurs as contemplated hereunder; provided, however, that it is the intention
of the parties that if it is determined post-Closing that a particular asset or
liability should have been, but was not, properly transferred at Closing to
either the Transferred Business (as a Purchased Asset or an Assumed Liability)
or the Retained Business (as an Excluded Asset or an Excluded Liability), the
parties will cooperate to transfer the subject asset or liability to the
Transferred Business or the Retained Business, as appropriate.
2.6 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE. The
total purchase price for the Purchased Assets (the "PURCHASE PRICE") shall be
equal to $26,400,000, subject to any adjustment required to be made pursuant to
Sections 2.7 and 2.11 below. The Purchase Price shall be allocated among the
Purchased Assets as follows: $1,605,000 to furniture and fixtures
(representing the February 28, 1998 net book value of the Transferred Business'
fixed assets) and the remainder to intangibles and other assets as determined
by Buyer.
2.7 PAYMENT OF PURCHASE PRICE. The Purchase Price shall
be payable by Buyer at the Closing (as defined in Section 2.8) as follows:
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(a) That amount of the Purchase Price which
equals $24,900,000 less the marked-to-market value of the long-term Investments
covered by paragraph (b) below will be paid, at the direction of Seller, in
cash by wire transfer of funds to Seller's account as specified in Exhibit K
(including the payment of $100,000 for the agreements not to compete provided
in Section 6.3);
(b) A portion of the Purchase Price, representing
the marked-to-market value (including accrued but unpaid interest, dividends or
other distributions) of the Seller's long-term Investments in the Customer
Depository Account of the Transferred Business as of the Closing Date, will be
deposited Seller's Customer Depository Account thereby creating an overfunding
of Seller's Customer Depository Account in the amount of such cash deposit;
Seller shall transfer from its Customer Depository Account to the Buyer's
Customer Depository Account (which Buyer has established to hold Customer
Deposits of the Transferred Business following the Closing Date) an amount of
Cash and Cash Equivalents equal to Customer Deposits, thereby fully funding the
Buyer's Customer Depository Account and leaving in Seller's Customer Depository
Account long-term Investments equal to the cash deposit received from Buyer,
with the result that the Seller's Customer Depository Account has no
liabilities and is overfunded by the amount of such long-term Investments; and
Seller shall distribute from its Customer Depository Account to itself the
amount of such overfunding, as permitted by the terms of the Seller's Customer
Depository Account; within thirty (30) days from the Closing Date, the parties
agree that they will determine the exact amount of the Customer Deposit
liabilities as of the Closing Date and adjust for any preliminary over- or
under-funding of such liabilities under this paragraph (b); and
(c) $1,500,000 of the Purchase Price will be paid
in cash by wire transfer of funds to the Escrow Agent to be held in escrow
pursuant to Section 2.9 for satisfaction of Seller's indemnification
obligations specified in Section 8.1.
2.8 CLOSING. The Closing of the purchase and sale of the
Purchased Assets contemplated by this Agreement shall take place at 10:00 a.m.,
Eastern Time, at the offices of Hogan & Hartson L.L.P., 555 13th Street, N.W.
in Washington, D.C. on April __30, 1998, or the date selected by Buyer (which
date shall be as soon as practicable following the date on which all of the
conditions to Closing in Sections 7.1 and 7.2 have been satisfied), or on such
other date and time as the parties shall agree but, in any case, with an
effective closing date of April 30, 1998 (the "CLOSING DATE").
2.9 ESCROW ARRANGEMENTS. Pursuant to the Escrow
Agreement to be entered into among Seller, Buyer and the Escrow Agent, the
portion of the Purchase Price specified in Section 2.7(ii) shall be delivered
to the Escrow Agent at Closing in immediately available funds. Such monies
(which, together with all interest accrued thereon, is hereinafter referred to
as the "ESCROW SUM") shall be held pursuant to the terms of the Escrow
Agreement for payment from such Escrow Sum of the amounts, if any, owing by
Seller and Shareholder to Buyer pursuant to the indemnification provisions of
Article VIII below and subject to the cash collateral provisions of the
Transition Services Agreement dealing with (among other matters) Letters of
Credit (Exhibit H-2). At the period ending on the first
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anniversary of the Closing Date (such period being referred to herein as the
"ESCROW PERIOD"), such remaining portion of the Escrow Sum not theretofore
claimed by or paid to Buyer in accordance with the terms of the Escrow
Agreement and this Agreement shall be disbursed to Seller. Seller and Buyer
agree that each will execute and deliver such reasonable instruments and
documents as are furnished by any other party to enable such furnishing party
to receive those portions of the Escrow Sum to which the furnishing party is
entitled under the provisions of the Escrow Agreement and this Agreement.
2.10 CLOSING AUDIT. Within 120 days following the Closing
Date, there shall be delivered to Buyer and to Seller an audit (the "AUDITED
CLOSING FINANCIAL STATEMENTS") of the Transferred Business (as same relates to
the Transferred Business and the Purchased Assets) and the balance sheet for
the Transferred Business at and as of February 28, 1998 (for purposes of the
Net Worth and adjustment to the Purchase Price set forth in Section 2.11) and
at and as of the Closing Date and the statements of income and cash flows for
the Transferred Business for the stub period of January 1, 1998 through and
including the day prior to the Closing Date. The Audited Closing Financial
Statements shall also include (i) a report by Arthur Andersen, LLP ("AA"), on
the allocation assumptions and methodologies ("ALLOCATION METHODOLOGIES")
pursuant to which the Transferred Business, the Purchased Assets and the
liabilities assumed by Buyer, on the one hand, and the Retained Business, the
Excluded Assets and the Excluded Liabilities, on the other hand, were
bifurcated and transferred by Seller and/or its Affiliates to Buyer or retained
by Seller (as applicable) and (ii) a statement and quantification by AA,
indicating whether the bifurcation of the Transferred and Retained Businesses
and its Allocation Methodologies were appropriate and consistent with
Allocation Methodologies which AA would have utilized to bifurcate the
Transferred and Retained Businesses in accordance with GAAP. The Audited
Closing Financial Statements shall be prepared by AA in accordance with GAAP.
The cost of preparing the Audited Closing Financial Statements shall be paid by
Buyer. In the event that Seller within ten (10) business days after Seller's
receipt thereof disputes any items or assumptions or methodologies regarding
the Audited Closing Financial Statements to the extent that same relates to the
Net Worth of the Transferred Business as of February 28, 1998 and/or the
Allocation Methodologies, the parties shall jointly select and retain an
independent "Big Six" accounting firm (the "INDEPENDENT ACCOUNTANTS") to review
the disputed matter(s) on the Audited Closing Financial Statements. If the
Independent Accountant determines that competing Allocation Methodologies of
Seller and AA are both permissible under GAAP, then the Independent Accountant
shall determine which of such methodologies is most appropriate under the
circumstances. The final determination of such disputed matter(s) by the
Independent Accountants shall be reflected on the Audited Closing Financial
Statements and shall be final and binding on the parties for all purposes. The
cost of retaining the Independent Accountants shall be borne by Seller, except
that Buyer shall reimburse Seller for one-half the cost of the Independent
Accountants in the event that such review results in at least a $100,000
increase in the Net Worth of the Transferred Business as reflected on the
Audited Closing Financial Statements prepared by Arthur Andersen, LLP.
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2.11 POST-CLOSING PURCHASE PRICE ADJUSTMENTS.
(a) FEBRUARY 28 NET WORTH. The Purchase Price
will be adjusted upward or downward (as appropriate), on a dollar-for-dollar
basis, by the amount (if any) that the Net Worth as of February 28, 1998 as
reflected in the Audited Closing Financial Statements is greater or less than
(as appropriate) negative $3,600,000.
(b) ALLOCATION METHODOLOGIES. Subject to the
proviso which follows, the Purchase Price will be further adjusted downward by
the amount (if any) equal to 7.5 times the amount reflected in the report
concerning the Allocation Methodologies issued by AA in connection with its
delivery of the Audited Closing Financial Statements in accordance with the
terms of Section 2.10 as being the aggregate net amount (i.e., taking into
account both positive and negative items) by which the earnings of the
Transferred Business for 1998 are (or are reasonably likely to be) negatively
affected because of errors and omissions in such allocations; provided,
however, that (i) no adjustment shall be made as a result of the foregoing
unless and until the aggregate net amount by which the earnings of the
Transferred Business are (or are reasonably likely to be) negatively affected
exceeds $150,000, whereupon the Purchase Price shall be adjusted (using the
multiple set forth above) for all of such aggregate amount; (ii) in respect of
any Purchase Price adjustment pursuant to this paragraph (b) which is based on
the first $150,000, the multiple used in determining the adjustment shall be
3.75 instead of 7.5 (with the effect that the adjustment in respect of such
$150,000 shall be capped at $562,500); and, (iii) prior to making any Purchase
Price adjustment under this paragraph (b), Seller and Shareholder shall have
ten (10) business days to remedy or cure any such matter to the Buyer's
reasonable satisfaction.
(c) NO DOUBLE-COUNTING. If as a result of the
foregoing a negative adjustment to the Purchase Price could be made under both
paragraphs (a) and (b) as a result of a particular item, only an adjustment
under (b) shall be made with respect to such item.
(d) TIMING OF ADJUSTMENTS AND PAYMENTS. Any
post-closing adjustment to the Purchase Price, if any, shall be paid by Seller
to Buyer (or by Buyer to Seller as a result of the operation of an upward
adjustment under paragraph (a)) in immediately available funds (i) within ten
(10) business days of delivery of the Audited Closing Financial Statements in
the case of any adjustment under paragraph (a), and (ii) promptly upon the
expiration of the cure period provided for in the proviso in paragraph (b) in
the case of any adjustment thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDER
Except as set forth on the Disclosure Schedule attached hereto
(which Disclosure Schedule contains a reasonably detailed description of each
such exception and
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references the applicable representation so qualified), Seller and Shareholder
jointly and severally represent and warrant to Buyer that:
3.1 DUE ORGANIZATION. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has full corporate power and authority to own and lease its
properties and assets and to carry on the Transferred Business as now conducted
and as proposed to be conducted through Closing. Complete and correct copies
of the Articles of Incorporation and Bylaws of Seller, and all amendments
thereto, have been delivered to Buyer and are attached hereto as Exhibits L-1
and L-2. Seller is qualified to do business in the State of Illinois and
Hawaii and in each other jurisdiction in which the nature of the Transferred
Business or the ownership of the properties associated with the Transferred
Business requires such qualification except where the failure to be so
qualified does not and could not reasonably be expected to have a Material
Adverse Effect. The jurisdiction in which Seller is so qualified are listed on
Exhibit L-3 attached hereto.
3.2 SUBSIDIARIES. Seller does not own, directly or
indirectly, any capital stock or ownership interests in any Person. Other than
as disclosed and allowed under Section 6.3, Shareholder does not own any
capital stock or ownership interest in any other Person engaged in a business
that is competitive with the Transferred Business.
3.3 DUE AUTHORIZATION. Seller and Shareholder each has
full power and authority to execute, deliver and perform this Agreement and to
carry out the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action of Seller.
This Agreement has been duly and validly executed and delivered by Seller and
Shareholder and constitutes the valid and binding obligations of Seller and
Shareholder, enforceable in accordance with its terms, except to the extent
that enforceability may be limited by laws affecting creditors' rights and
debtors' obligations generally, and legal limitations relating to remedies of
specific performance and injunctive and other forms of equitable relief (the
"EQUITABLE EXCEPTIONS"). The execution, delivery, and performance of this
Agreement (as well as all other instruments, agreements, certificates, or other
documents contemplated hereby) by Seller, do not (a) violate any Requirements
of Laws or any Court Order of any Governmental Body applicable to Seller, or
its property, (b) violate or conflict with, or permit the cancellation of, or
constitute a default under, any material agreement to which Seller is a party,
or by which it or any of its property is bound, (c) permit the acceleration of
the maturity of any material indebtedness of, or indebtedness secured by the
property of, Seller, (d) violate or conflict with any provision of the charter
or bylaws of Seller, or (e) except for filings or approvals under the HSR Act
and such consents, approvals, or registrations as may be required under
applicable state securities laws, require any consent, approval or
authorization of, or notice to, or declaration, filing or registration with,
any Governmental Body or other third party.
3.4 FINANCIAL STATEMENTS. The following financial
statements of Seller have been delivered to Buyer by Seller: (i) audited
combined balance sheets of Seller as of December 31, 1995, December 31, 1996
and December 31, 1997, (ii) audited combined
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statements of income and cash flows of Seller for the fiscal years ended
December 31, 1995, December 31, 1996 and December 31, 1997, (iii) audited
balance sheet of the Transferred Business as of December 31, 1997, and (iv)
unaudited statement of income of the Transferred Business for the fiscal year
ended December 31, 1997 (collectively, the "FINANCIAL STATEMENTS"). The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP on a consistent basis throughout the periods indicated and
fairly present the financial position, results of operations and cash flows of
Seller or the Transferred Business (as appropriate) as of the indicated dates
and for the indicated periods and are consistent with the books and records of
Seller (which books and records are correct and complete). Since the date of
the last of such Financial Statements (the "MOST RECENT FINANCIAL STATEMENTS"),
Seller has no material liabilities relating to the Transferred Business
required by GAAP to be reflected on Seller's or the Transferred Business' (as
appropriate) balance sheet or notes thereto that are not so reflected. Since
December 31, 1997, Seller has not experienced any Material Adverse Change
relating to the Transferred Business.
3.5 CERTAIN ACTIONS. Since December 31, 1997, Seller has
not, except as disclosed on any of the Financial Statements or notes thereto:
(a) paid or declared any dividends or distributions, or purchased, redeemed,
acquired, or retired any stock or indebtedness from any stockholder (other than
distributions to pay estimated income taxes of the shareholders of Seller
associated with the income of Seller); (b) made or agreed to make any loans or
advances or guaranteed or agreed to guarantee any loans or advances to any
party whatsoever; (c) suffered or permitted any Encumbrance to arise or be
granted or created against or upon any of the Purchased Assets; (d) canceled,
waived, or released or agreed to cancel, waive, or release any of its debts,
rights, or claims against third parties in excess of $50,000 individually or
$150,000 in the aggregate; (e) sold, assigned, pledged, mortgaged, or otherwise
transferred, or suffered any material damage, destruction, or loss (whether or
not covered by insurance) to, any of the Purchased Assets (except in the
ordinary course of the Transferred Business); (f) amended its charter or
bylaws; (g) paid or made a commitment to pay any severance or termination
payment to any employee or consultant engaged in the Transferred Business; (h)
made any material change in the method of management, operation, accounting
(including in respect of Working Capital) or reporting income or deductions for
tax purposes in respect of the Seller or the Transferred Business; (i) made,
with respect to the Transferred Business, any material acquisitions, capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Transferred Business, or entered into commitments
therefor, except for capital expenditures or commitments therefor which do not,
in the aggregate, exceed $50,000; (j) made any investment or commitment
therefor in any Person; (k) made, with respect to the Transferred Business, any
payment or contracted for the payment of any bonus or other compensation or
personal expenses, other than (A) wages and salaries and business expenses paid
in the ordinary course of the Transferred Business, and (B) wage and salary
adjustments made in the ordinary course of the Transferred Business for
employees who are not officers, directors, or shareholders of Seller; (l) made,
amended, or entered into any written employment contract or created or made any
material change in any bonus, stock option, pension, retirement, profit sharing
or other employee benefit plan or arrangement; (m) made or entered into any
vendor, supply, sales, distribution, franchise, consortia or travel agency
agreement which involves annual consideration (or commissions) in excess of
$50,000 with respect to the Transferred Business, other than in the ordinary
course of business on normal commercial terms; (n) entered into any
non-competition
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agreement involving the Transferred Business; (o) made or entered into any
agreement or other arrangement with any Affiliate of Seller or any officer,
director, shareholder or employee of Seller or any Affiliate of Seller, other
than as contemplated under this Agreement; (p) materially amended, experienced
a termination or received notice of actual or threatened termination or
non-renewal of any material contract, agreement, lease, franchise or license to
which Seller is a party that would or could reasonably be expected to have a
Material Adverse Effect; or (q) entered into any other material transactions
that would or could reasonably be expected to have a Material Adverse Effect.
3.6 PROPERTIES. Attached hereto as Exhibit M is a list
containing a description of each interest in real property (including, without
limitation, leasehold interests) and each item of tangible personal property
included in the Purchased Assets having a depreciated book or fair market value
in excess of $50,000 as of the date hereof. Except for Permitted Exceptions,
such real and personal properties are free and clear of Encumbrances. Seller
has delivered to Buyer copies of all real property leases and a lien search
obtained from the counties where Seller conducts business and the Illinois
Secretary of State office of all UCC liens of record against Seller's personal
property in the State of Illinois. All of the properties and assets necessary
for continued operation of the Transferred Business and the Purchased Assets as
currently conducted (including, without limitation, all books, records,
computers and computer software and data processing systems) are owned, leased
or licensed by Seller and are suitable for the purposes for which they are
currently being used. The physical properties comprising the Purchased Assets,
including the real properties leased by Seller, are in good operating condition
and repair, normal wear and tear excepted, and are free from any defects of a
material nature. Except for Permitted Exceptions, Seller has full and
unrestricted legal and equitable title to all such properties and assets. The
operation of the Purchased Assets and the Transferred Business in the manner in
which they are now and have been operated does not violate any zoning
ordinances, municipal regulations, or other Requirements of Laws, except for
any such violations which would not, individually or in the aggregate, have a
Material Adverse Effect. Except for Permitted Exceptions, no restrictive
covenants, easements, rights-of-way, or regulations of record impair the uses
of the properties comprising the Purchased Assets for the purposes for which
they are now operated. All leases of real or personal property by Seller are
legal, valid, binding, enforceable and in full force and effect and will remain
legal, valid, binding, enforceable and in full force and effect on identical
terms immediately following the Closing, except for the Equitable Exceptions.
Seller owns no real property.
3.7 LICENSES AND PERMITS. Attached hereto as Exhibit N
is a list of all licenses, authorizations and permits held or applied for by
Seller from any Governmental Body (herein collectively called "GOVERNMENTAL
PERMITS") the absence of which could, individually or in the aggregate, have a
Material Adverse Effect. Seller has complied in all material respects with the
terms and conditions of all such Governmental Permits, and Seller has not
received notification from any Governmental Body of violation of any such
Governmental Permit or the Requirements of Laws governing the issuance or
continued validity thereof. All of such Governmental Permits are valid and in
full force and effect and are transferable to Buyer in accordance with the
terms of this Agreement. No additional Governmental Permit is
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<PAGE> 25
required from any Governmental Body thereof in connection with the transfer of
the Purchased Assets to Buyer and its conduct of the Transferred Business which
Governmental Permit, if not obtained, would have a Material Adverse Effect.
3.8 INTELLECTUAL PROPERTY. Attached hereto as Exhibit O
is a list and brief description of all Intellectual Property owned or licensed
by Seller. Seller has furnished Buyer with copies of all material license
agreements to which Seller is a party, either as licensor or licensee, with
respect to any Intellectual Property. Seller has good title to or the right to
use all the Intellectual Property in the Transferred Business as presently
conducted without the payment of any royalty or similar payment, and Seller is
not infringing on any Intellectual Property right of others, and Seller is not
aware of any infringement by others of any such rights owned by Seller. All
Intellectual Property licenses set forth on Exhibit O are valid and binding
obligations of Seller, and to the Knowledge of Seller the other parties
thereto, and enforceable against Seller, and to the Knowledge of Seller the
other parties thereto in accordance with their respective terms, except for the
Equitable Exceptions. When taken together with the intellectual property
rights and/or licenses granted to Buyer for use by the Transferred Business
following the Closing pursuant to the MIS Transition Services Agreement,
following the Closing Buyer will have all intellectual property and rights or
licenses thereto as necessary to continue to own and operate the Transferred
Business as same was owned and operated by Seller prior to the Closing.
Notwithstanding anything to the contrary in the foregoing sentences of this
Section 3.8, Seller and Shareholder make no representation as to the existence
or extent of its rights to any Intellectual Property that is not a registered
trademark, service mark, copyright or patent other than the representation that
Seller has used such Intellectual Property without known conflict with the
rights of others; in addition, Seller's rights to computer software licensed
from third parties are limited by the applicable license agreements.
3.9 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Seller
has (i) complied in all material respects with all Requirements of Laws,
Governmental Permits and Court Orders applicable to the Transferred Business
and has filed with the proper Governmental Bodies all statements and reports
required by all Requirements of Laws, Governmental Permits and Court Orders to
which Seller or any of its employees (because of their activities on behalf of
Seller) are subject and (ii) conducted the Transferred Business and is in
compliance in all material respects with all federal, state and local energy,
public utility, health, safety and environmental Requirements of Laws,
Governmental Permits and Court Orders including the Clean Air Act, the Clean
Water Act, the Solid Waste Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Safe Drinking Water Act, OSHA, the Toxic Substances Control Act and any similar
state, local or foreign laws (collectively "ENVIRONMENTAL AND OSHA
OBLIGATIONS") and all other Governmental Body requirements, except where any
such failure to comply or file would not, in the aggregate, have a Material
Adverse Effect. No claim has been made by any Governmental Body (and, to the
best knowledge of Seller, no such claim is anticipated) to the effect that the
Transferred Business fails to comply, in any respect, with any Requirements of
Laws, Governmental Permit or Environmental and OSHA Obligation or that a
Governmental Permit or Court Order is necessary in respect thereto.
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3.10 INSURANCE. Attached hereto as Exhibit P is a list of
all coverages for fire, liability, or other forms of insurance and all fidelity
bonds held by or applicable to Seller or the Transferred Business. Copies of
the binder or certificate of insurance for all such insurance policies have
been delivered to Buyer. The insurance maintained by Seller immediately prior
to the Closing Date was in Seller's judgment reasonably adequate for the
Transferred Business as conducted by Seller and is consistent with levels of
insurance carried by the Seller in the past. To the best of Seller's
Knowledge, no event relating to Seller or the Transferred Business has occurred
which will result in (i) cancellation of any such insurance coverages; (ii) a
retroactive upward adjustment of premiums under any such insurance coverages;
or (iii) any prospective upward adjustment in such premiums. Seller will use
all reasonable efforts to cause all of such insurance policies to remain in
full force and effect in favor of Buyer following the Closing in accordance
with the terms of the Non-MIS Transition Services Agreement. Seller is not in
default under any such insurance policies.
3.11 EMPLOYEE BENEFIT PLANS.
(a) Exhibit Q hereto lists all Employee Plans
covering employees of the Seller currently employed in the conduct of the
Transferred Business ("EMPLOYEES"). The term "EMPLOYEE PLAN" means any
pension, retirement, savings, disability, medical, dental, health, life
(including, without limitation, any individual life insurance policy under
which any Employee is the named insured and as to which Seller, on behalf of
the Transferred Business, makes premium payments, whether or not Seller is the
owner, beneficiary or both of such policy), death benefit, group insurance,
profit-sharing, deferred compensation, stock option, bonus, incentive, vacation
pay, severance pay, or other written employee benefit plan, trust, arrangement,
agreement, policy or commitment (including, without limitation, any employee
pension benefit plan as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") ("PENSION PLAN"), and any
employee welfare benefit plan as defined in Section 3(1) of ERISA ("WELFARE
PLAN")), whether or not any of the foregoing is funded or insured, which is
maintained by Seller and is intended to provide or does in fact provide
benefits to any group of or all Employees, and (i) to which Seller is party or
by which Seller (or any of the rights, properties or assets of Seller) is
bound, (ii) with respect to which Seller has made any payments, contributions
or commitments, or may otherwise have any liability (whether or not Seller
still maintains such plan, trust, arrangement, contract, agreement, policy or
commitment) or (iii) under which any director, Employee or agent of Seller is a
beneficiary as a result of his or her employment or affiliation with Seller.
(b) With respect to any Employee, Seller has no
obligation to contribute to (or any other liability with respect to) any funded
or unfunded Welfare Plan, whether or not terminated, which provides medical,
health, life insurance or other welfare-type benefits for current or future
retirees or current or future former Employees (including their dependents and
spouses) except for limited continued medical benefit coverage for former
Employees, their spouses and their other dependents as required to be provided
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), and Seller
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is in compliance in all material respects with the continued medical and other
welfare benefit coverage requirements of COBRA and all other applicable laws.
(c) With respect to any Employee, Seller does not
maintain, contribute to or have any material liability under (or with respect
to) any Pension Plan which is a tax qualified "defined benefit plan" (as
defined in Section 3(35) of ERISA) or, except as disclosed in Exhibit Q, a
tax-qualified "defined contribution plan" (as defined in Section 3(34) of
ERISA), whether or not terminated. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each Employee Plan or are reflected as a liability on the books of
Seller and all contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such Employee Plan or accrued
in accordance with past custom and practice of Seller.
(d) Seller has, with respect to the Transferred
Business and all current and former Employee Plans (and all related trusts,
insurance contracts and funds), at all times complied in all material respects
with the applicable requirements of ERISA, the Internal Revenue Code of 1986,
as amended (the "CODE"), and all other applicable statutes, common law,
regulations and regulatory pronouncements, or has determined that such statutes
(including ERISA), common law, regulations and regulatory pronouncements were
and are not applicable to the Transferred Business. Seller has not engaged in,
nor is it bound to enter into, any transaction with respect to any Employee
Plan which would subject Seller to any material liability due to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code. No actions, suits
or claims with respect to the assets of any Employee Plan (and all related
trusts, insurance contracts and funds), other than routine claims for benefits,
are pending or threatened which could result in or subject Seller, the
Transferred Business or the Purchased Assets to any material liability. There
are not now, nor have there been, any tax-qualified retirement plans sponsored
or maintained by Seller for Employees, nor are there any unfunded obligations
with respect thereto. With respect to any Employee, Seller has no obligation
to contribute to (or any other liability with respect to) any "multi-employer
plan," as defined in the Multi-employer Pension Plan Amendments Act of 1980,
and Seller has not incurred nor will incur any current or potential withdrawal
or termination liability as a result of a complete or partial withdrawal from
any multi-employer plan or the sale of the Purchased Assets. Each Employee
Plan intended to qualify under Section 401(a) of the Code has been determined
by the IRS to be qualified under the requirements of Section 401(a) of the
Code, the IRS has issued a determination letter to that effect, and such letter
remains effective and has not been revoked. No unfulfilled obligation to
contribute with respect to an Employee Plan existed as of the date of the Most
Recent Financial Statements, except as shown in the Most Recent Financial
Statements. There is no agreement or promise, written or oral, of Seller to
the effect that any Employee Plan may not be terminated at Seller's discretion
at any time, subject to applicable law. Exhibit Q sets forth a list and a
summary description of all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, employee pension plans or retirement plans, employee
stock options or stock purchase plans and group life, health and accident
insurance and other employee benefit plans or agreements, including, without
limitation, holiday, vacation, Christmas and other bonus practices, to which
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the Transferred Business or the Seller is a party or is bound or which relate
to the operation of the Transferred Business. The Most Recent Financial
Statements reflect all accrued vacation and other benefits for the Transferred
Business' employees as of the date thereof.
(e) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED
COMPENSATION ARRANGEMENTS. Seller does not maintain or contribute to any
retirement or deferred or incentive compensation or stock purchase, stock grant
or stock option arrangement entered into between Seller and any current or
former officer, consultant, director or employee of Seller that is not intended
to be a tax qualified arrangement under Section 401(a) of the Code.
3.12 CONTRACTS AND AGREEMENTS. Exhibit R hereto contains
a list of the following written and oral contracts and agreements, and in the
case of oral contracts and agreements, a brief description of the contract or
agreement (collectively, the "CONTRACTS"):
(i) all real estate leases other
than travel desk agreements with hotels in Hawaii;
(ii) all promissory notes, loan
agreements, other evidences of indebtedness,
guarantees, hedging agreements, off-balance sheet
financing arrangements, indemnity agreements, and
similar agreements, but excluding office equipment
leases;
(iii) all vendor contracts with
airlines;
(iv) all contracts with hotels and
resorts at which the Transferred Business did
$1,000,000 or more of business in 1997;
(v) all agreements with rental car
companies, except agreements for a single state or
Hawaiian island;
(vi) all consortia agreements, with
the four top producers (measured by sales volume) in
1997, representing approximately 30% of the
Transferred Business's 1997 sales volume;
(vii) all interface agreements
pertaining to various airline or other computer
reservation systems;
(viii) all agreements prohibiting
Seller from freely engaging in any business or
competing anywhere in the world;
(ix) all agreements with telephone
companies;
(x) all agreements with credit card
processors;
(xi) all agreements with non-travel
agency customers; and
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(xii) any other agreements which are
material, are not disclosed elsewhere in this
agreement, and are not of a type described in
subsections (i) through (xi) above.
Seller is not and, to the best knowledge of Seller, no other party thereto is
in default (and no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default by Seller) under any of
the Contracts, and Seller has not waived any right under any of the Contracts.
All of the Contracts to which Seller is a party are legal, valid, binding,
enforceable and in full force and effect and will remain legal, valid, binding,
enforceable and are fully assignable to Buyer and will remain in full force and
effect in favor of Buyer on identical terms immediately after the Closing,
except for the Equitable Exceptions. Seller has not guaranteed any obligations
of any other Person. Seller has no present expectation or intention of not
fully performing all of its obligations under any Contract, Seller has no
knowledge of any breach or anticipated breach by the other parties to any
Contract and Seller has not received notice of actual or threatened termination
or non-renewal of any Contract. In respect of the National Tour Operator
Agreement between the National Railroad Passenger Corporation and Seller dated
April 28, 1998 (the "NEW AMTRAK AGREEMENT"), Seller represents that (i) the
only material changes reflected in the New Amtrak Agreement, as compared to the
October 10, 1994 Agreement it superseded and replaced (the "OLD AMTRAK
AGREEMENT"), are as set forth in the April 28, 1998 memo from Trase Miller (Ted
Jansen) to Global (Ray Lewis); (ii) projections for the Transferred Business
provided by Seller to Global were based on the economic terms as are reflected
in the New Amtrak Agreement; and (iii) the changes in the New Amtrak Agreement
referenced in clause (i) will be effectively revenue neutral to the Transferred
Business as compared to the Old Amtrak Agreement.
3.13 CLAIMS AND PROCEEDINGS. There are no claims,
actions, suits, proceedings, or investigations pending or, to the best
knowledge and belief of Seller, threatened against or affecting Seller or any
of its properties or assets, at law or in equity, before or by any court,
municipality or other Governmental Body. To the extent any are disclosed on
the Disclosure Schedule, none of such claims, actions, suits, proceedings, or
investigations, if adversely determined, will result in any material liability
or loss to Seller. Seller has not been and Seller is not now, subject to any
Court Order, stipulation, or consent of or with any court or Governmental Body.
No inquiry, action or proceeding has been instituted or, to the best knowledge
and belief of Seller, threatened or asserted against Seller to restrain or
prohibit the carrying out of the transactions contemplated by this Agreement or
to challenge the validity of such transactions or any part thereof or seeking
damages on account thereof. To the knowledge of Seller there is no basis for
any such valid claim or action.
3.14 TAXES.
(a) All Federal, foreign, state, county and local
and other Taxes due from Seller on or before the Closing have been paid and all
Tax Returns which are required to be filed by Seller on or before the date
hereof have been filed within the time (including permitted extensions) and in
the manner provided by all Requirements of Laws, and all such
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Tax Returns are true and correct and accurately reflect the Tax liabilities of
Seller. All Taxes, assessments, penalties, and interest of Seller which have
become due pursuant to such Tax Returns or any assessments received have been
paid or adequately accrued on Seller's Financial Statements. The provisions
for Taxes reflected on the balance sheets contained in the Financial Statements
are adequate to cover all of Seller's Tax liabilities for the respective
periods then ended and all prior periods. Seller has not executed any
presently effective waiver or extension of any statute of limitations against
assessments and collection of Taxes, and there are no pending or threatened
claims, assessments, notices, proposals to assess, deficiencies, or audits with
respect to any such Taxes of which the Seller is aware. For Governmental
Bodies with respect to which Seller does not file Tax Returns, no such
Governmental Body has given Seller written notification that Seller is or may
be subject to taxation by that Governmental Body. Seller has withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, shareholder, creditor, independent contractor or
other party. There are no Tax liens on any of the property or assets of
Seller.
(b) No transaction contemplated by this Agreement
is subject to withholding under Section 1445 of the Code and no transfer taxes,
real estate transfer taxes or similar taxes will be imposed upon the transfer
and sale of the Purchased Assets pursuant to this Agreement.
(c) Seller has made a valid election under
Section 1362 of the Code and any corresponding state or local provisions to be
an S corporation within the meaning of Section 1361 of the Code for all taxable
years (or portions thereof) beginning on or after December 31, 1990, no such S
election has been terminated (whether voluntarily, involuntarily or
inadvertently, including, without limitation, by taking any action defined in
Section 1362(d) of the Code) since such time.
3.15 PERSONNEL. All Employees (as defined in Section
3.11) are employed by the Seller and, as between Seller and Seller's
Affiliates, Seller employs all the individuals and Seller's Affiliates do not
have any employees necessary to conduct the Transferred Business. Attached
hereto as Exhibit S is a list of the names and annual rates of compensation of
Employees whose annual rates of compensation during the calendar year ended
December 31, 1997 (including base salary, bonus and incentive pay) exceed (or
by December 31, 1998 are expected to exceed) $60,000. Exhibit S also
summarizes the bonus, profit sharing, percentage compensation, company
automobile, club membership, and other like benefits, if any, paid or payable
to such Employees during Seller's calendar year ended December 31, 1997 and to
the date hereof. Exhibit S also contains a brief description of all material
terms of employment agreements to which Seller is a party and all severance
benefits which any Employee is or may be entitled to receive. The employee
relations of Seller are generally good and there is no pending or, to the best
knowledge of Seller, threatened labor dispute or union organization campaign.
None of the Employees is represented by any labor union or organization.
Seller is in compliance in all material respects with all Requirements of Laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practices. Seller has not been advised, nor does Seller have
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good reason to believe, that any Employee will not agree to be employed by
Buyer after the consummation of the transactions contemplated hereby. There is
no unfair labor practice claim against Seller before the National Labor
Relations Board, or any strike, dispute, slowdown, or stoppage pending or, to
the best knowledge of Seller, threatened against or involving Seller, and none
has previously occurred.
3.16 BUSINESS RELATIONS. Seller does not know or have
good reason to believe that any customer, supplier, travel agency, resort
operator or lodging or transportation company engaged in doing business with
Seller will cease to do business with Buyer after the consummation of the
transactions contemplated hereby in the same manner and at the same levels as
previously conducted with Seller except for any reductions which do not result
in a Material Adverse Change. Seller has not received any notice of
cancellation or non-renewal of any material business arrangement between any
Person and Seller nor is Seller aware of any facts which could lead it to
believe that the Transferred Business will be subject to cancellation or
non-renewal of any such business arrangement.
3.17 ACCOUNTS RECEIVABLE; CUSTOMER DEPOSITS AND BOOKINGS;
FINANCIAL CONDITION.
(a) ACCOUNTS RECEIVABLE. All of the accounts,
notes, and loans receivable that have been recorded on the books of Seller
pertaining to the Transferred Business are bona fide and represent amounts
validly due for goods sold or services rendered and all such amounts (net of
any allowance for doubtful accounts) will be collected in full within 180 days
following the Closing Date, and (a) all of such accounts, notes, and loans
receivable are free and clear of any Encumbrances; (b) no claims of offset have
been asserted in writing against any of such accounts, notes, or loans
receivable; and (c) none of the obligors of such accounts, notes, or loans
receivable has given written notice that it will or may refuse to pay the full
amount or any portion thereof.
(b) CUSTOMER DEPOSITS AND BOOKINGS. Exhibit T
sets forth, as of the date specified therein, (i) all Bookings, (ii) all
Customer Deposits, (iii) the aggregate amount of all prepayments to vendors and
suppliers and refunds to customers made by Seller in connection with such
Bookings as of such date, and (iv) the aggregate amount of all claims by
customers of the Transferred Business for refunds received by Seller for which
refunds have not been made as of such date ("CUSTOMER CLAIMS"). The Customer
Deposits are recognized and included on Seller's balance sheet only to the
extent of cash received from the customers in respect thereof, and each
Customer Deposit so recognized and included is matched by a deferred liability
on such balance sheet. All cancellations by customers of Bookings are
recognized on Seller's financial statements within one (1) business day of
Seller's receipt of notice of such cancellation from the customer. For the
period since December 31, 1997 through the Closing Date, the Bookings of the
Transferred Business (and its projected revenues for the future periods in
which such Bookings will be converted into revenues) are consistent with those
levels of Bookings and revenues needed for the Transferred Business to achieve
a projected EBIT level for the twelve months ending December 31, 1998 of
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approximately $4,022,000. The level of Customer Claims for the period since
December 31, 1997 through the Closing Date is consistent with the past
practices of Seller.
3.18 FINANCIAL RESULTS DURING STUB PERIOD. On the Closing
Date, Bookings shall exceed 36,044 passengers and Working Capital for the
Transferred Business shall be not less than that amount which is equal to
Working Capital reflected on the Preliminary Closing Balance Sheet minus
$300,000. Such levels of Bookings and Working Capital for the Transferred
Business are not materially less than the levels of Bookings and Working
Capital for the Transferred Business as of the same date in 1997, computed on a
basis consistent with past practice.
3.19 BANK ACCOUNTS; INVESTMENTS. Attached hereto as
Exhibit U is a list of all banks or other financial institutions with which
Seller has an account for the Transferred Business or maintains a safe deposit
box for the Transferred Business, showing the type and account number of each
such account and safe deposit box and the names of the persons authorized as
signatories thereon or to act or deal in connection therewith. Exhibit U also
contains a list of all material Investments by Seller which are included in the
Purchased Assets. None of such Investments involve any type of derivative,
option, hedging or other speculative instrument. All Investments of the
Transferred Business shall be marked to market as of any date of determination.
3.20 CUSTOMER CLAIMS. No written or oral claim for breach
of contract or otherwise by any customer has been made against Seller since
January 1, 1998 which could, individually or in the aggregate, result in any
Material Adverse Effect. To the best knowledge of Seller, no state of facts
exists, and no event has occurred, which could reasonably be expected to form
the basis of any present claim against Seller for liability to any third party
in connection with vacation packages sold or services rendered by Seller, other
than Customer Claims arising in the ordinary course of the Transferred
Business.
3.21 BROKERS. Other than Mesirow Financial (for which
Seller alone has responsibility for any fees), Seller has not (and Seller's
stockholders have not) engaged, or caused to be incurred any liability to any
finder, broker, or sales agent in connection with the origin, negotiation,
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby.
3.22 AFFILIATED TRANSACTIONS. No officer, director,
stockholder (including Shareholder) or Affiliate of Seller or, to the Knowledge
of the Seller or Shareholder, any individual related by blood or marriage to
any such Person, or any entity in which any such Person owns any beneficial
interest of 10% or more, is a party to any agreement, contract, arrangement or
commitment with Seller or engaged in any transaction with Seller or has any
interest in any property used by Seller and included in the Transferred
Business or the Purchased Assets. Neither Shareholder nor, to the knowledge of
Seller or Shareholder, any officer, director, or shareholder of Seller or any
Affiliate of any such officer, director, or shareholder, has any ownership
interest in any competitor, supplier, or customer of Seller or the Transferred
Business (other than ownership of securities of a publicly-held corporation of
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which such Person owns, or has real or contingent rights to own, less than ten
percent (10%) of any class of outstanding securities) or any property used in
the operation of the Transferred Business.
3.23 FUNDED INDEBTEDNESS; LETTERS OF CREDIT; UNDISCLOSED
LIABILITIES.
(a) FUNDED INDEBTEDNESS. The Transferred
Business does not have nor is subject to any Funded Indebtedness that is not an
Excluded Liability.
(b) LETTERS OF CREDIT. Other than those listed
on Exhibit V, Seller has no letters of credit, performance bonds or similar
instruments issued on or for its account and pertaining to the Transferred
Business or the Purchased Assets for the benefit of vendors or otherwise.
(c) UNDISCLOSED LIABILITIES. Seller does not
have any liabilities in connection with the Transferred Business in excess of
$50,000 in the aggregate (whether absolute, accrued, contingent or otherwise),
of a nature required by GAAP to be reflected on a corporate balance sheet or
disclosed in the notes thereto, except such liabilities which are accrued or
reserved against in the Financial Statements or disclosed in the notes thereto,
including without limitation any accounts payable or service liabilities of
Seller for the Transferred Business incurred prior to the Closing Date.
(d) LIABILITIES ARISING FROM DISCONTINUED
OPERATIONS. Seller does not have any liabilities in connection with any
discontinued operations that will in any way affect or impact the Transferred
Business following the Closing.
3.24 YEAR 2000. All of the material computer software,
firmware and hardware (whether general or specific in purpose) and other
similar or related items of automated, computerized and/or software system(s)
that are used or relied on by the Transferred Business whether part of the
Transferred Business or Seller's MIS Assets or subject to the MIS Transition
Services Agreement and/or the MIS Service Provider Agreement, will not
malfunction, will not cease to function, will not generate incorrect data, and
will not produce incorrect results when processing, providing and/or receiving
(i) date-related data into and between the twentieth and twenty-first centuries
and (ii) date-related data in connection with any valid date in the twentieth
and twenty-first centuries; provided, however, that in respect of
"off-the-shelf" or "shrinkwrap" (i.e., non-customized) software, the foregoing
representation is made only to the best of Seller's and Shareholder's
knowledge; and, provided, further, however, that in the event that Global
acquires TMS and the Seller's MIS Assets, this Section 3.24 and the related
indemnities under Section 8.1 shall no longer apply to the assets acquired
under such acquisition agreement after the effective date of such agreement
(the "MIS ACQUISITION DATE"). In support of the foregoing representations,
Seller and Shareholder agree that Seller's net worth (as per GAAP) shall be no
less than $6,000,000 through the MIS Acquisition Date. Seller and
Shareholder's combined liability under this Section 3.24 shall be limited to
$6,000,000.
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3.25 INFORMATION FURNISHED. Seller has made available to
Buyer true and correct copies of all material corporate records of Seller
relevant to the Transferred Business and all material agreements, documents,
and other items listed on the Schedules to this Agreement or referred to in
Article III of this Agreement, and neither this Agreement, the Schedules
hereto, nor any written information, instrument, or document delivered to Buyer
pursuant to this Agreement contains any untrue statement of a material fact or
omits any material fact necessary to make the statements herein or therein, as
the case may be, not misleading.
ARTICLE IV
BUYER'S AND GLOBAL'S
REPRESENTATIONS AND WARRANTIES
Buyer and Global jointly and severally represent and warrant
to Seller and Shareholder as follows:
4.1 DUE ORGANIZATION. Each of Buyer and Global is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware (Buyer) and New York (Global) and has full
corporate power and authority to execute, deliver and perform this Agreement
and to carry out the transactions contemplated hereby.
4.2 DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement (together with all other instruments, agreements
or other documents contemplated hereby, including without limitation the
Transition Services Agreement, the Escrow Agreement, the Lease, and the
Assignment and Assumption Agreement) have been duly authorized by all necessary
corporate action of Buyer and Global and the Agreement (and such other
instruments, agreements and documents) been duly and validly executed and
delivered by Buyer and Global and constitutes the valid and binding obligation
of each of them, enforceable in accordance with its terms, except for the
Equitable Exceptions. The execution, delivery, and performance of this
Agreement (and such other instruments, agreements and documents) by Buyer and
Global, do not (a) violate any Requirements of Laws or Court Order of any
Governmental Body applicable to Buyer or Global or their property, (b) violate
or conflict with, or permit the cancellation of, or constitute a default under
any agreement to which Buyer or Global is a party or by which either of them or
their property is bound, (c) permit the acceleration of the maturity of any
indebtedness of, or any indebtedness secured by the property of, Buyer or
Global, (d) violate or conflict with any provision of the charter or bylaws of
Buyer or Global, or (e) except for filings or approvals under the HSR Act and
such consents, approvals or registrations as may be required under applicable
state securities laws, require any consent, approval or authorization of, or
notice to, or declaration, filing or registration with, any Governmental Body
or other third party.
4.3 NO BROKERS. Neither Buyer nor Global has engaged, or
caused to be incurred any liability for which Seller may be liable to any
finder, broker or sales agent in
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connection with the origin, negotiation, execution, delivery, or performance of
this Agreement or the transactions contemplated hereby.
ARTICLE V
COVENANTS OF SELLER, SHAREHOLDER AND/OR BUYER
5.1 CONSENTS OF OTHERS. Prior to the Closing, Seller and
Shareholder shall use their reasonable commercial efforts to obtain all
authorizations, consents and permits required of Seller to permit it to
consummate the transactions contemplated by this Agreement, and Buyer shall
cooperate to the extent necessary to secure such consents or otherwise smooth
the transition with Seller's vendors and other Contract parties to Buyer's
ownership of the Transferred Business; provided, however, that Seller and
Shareholder are not required hereunder to obtain the consent of any third party
to the transfer hereunder of any agreement which is not a Contract (as defined
under Section 3.12). Buyer and Seller have previously made such filings as may
be required pursuant to the HSR Act with respect to the consummation of the
transactions contemplated by this Agreement.
5.2 EFFORTS. Seller and Shareholder shall use all
reasonable efforts to cause all conditions for the Closing to be met.
5.3 POWERS OF ATTORNEY. Seller shall terminate at or
prior to Closing all powers of attorney granted by Seller pertaining to the
Transferred Business or the Purchased Assets, other than those relating to
service of process, qualification or pursuant to governmental regulatory or
licensing agreements, or representation before the IRS or other Governmental
Bodies.
5.4 CONDUCT OF BUSINESS PENDING CLOSING. From the date
of this Agreement to the Closing Date:
(a) Except as otherwise contemplated by this
Agreement, or as Buyer may otherwise consent to in writing, Seller shall
conduct both its Retained Business and the Transferred Business and operate the
Excluded Assets and Purchased Assets only in the ordinary course and shall not
engage in any material activity or enter into any material transaction which
would cause a breach of the representations and warranties contained in Article
III.
(b) Seller shall use its reasonable commercial
efforts to cause the Transferred Business to preserve substantially intact its
current business organization and present relationships with its customers,
vendors, suppliers and employees and to maintain all of its insurance currently
in effect.
(c) Seller shall give prompt notice to Buyer of
any notice of material default received by Seller or the Transferred Business
subsequent to the date of this Agreement under any Contract or any Material
Adverse Change occurring prior to the Closing Date in the operation of the
Transferred Business and the Purchased Assets.
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(d) Neither Seller or Shareholder, nor any of
their representatives, shall solicit, encourage or discuss any Acquisition
Proposal (as hereinafter defined) or supply any non-public information
concerning the Transferred Business or the Purchased Assets to any party other
than Buyer or its representatives. As used herein, "ACQUISITION PROPOSAL"
means any proposal other than the transactions herein contemplated, for (i) any
merger or other business combination involving the Transferred Business, (ii)
the acquisition of Seller or a material equity interest in Seller or a material
portion of its assets pertaining to the Transferred Business, or (iii) the
dissolution or liquidation of Seller.
5.5 ACCESS TO RECORDS BEFORE CLOSING. Prior to the
Closing Date, Seller agrees that it will give, or cause to be given, to Buyer
and their representatives, during normal business hours and at Buyer's expense,
full and unrestricted access to Seller's personnel, officers, agents,
employees, assets, properties, titles, contracts, corporate minute and other
books, records, files and documents of Seller with respect to the Transferred
Business (including financial, tax basis, budget projections, auditors' work
papers and other information as Buyer may request) and to the Transferred
Business' personnel customers, suppliers and independent auditors, to allow
Buyer to obtain such information as it shall desire, and to make copies of such
information to the extent reasonably necessary. Additionally, Seller will
provide Buyer opportunities to meet with key employees of the Transferred
Business, to visit facilities of the Transferred Business and to otherwise
conduct due diligence in respect of the Transferred Business and the Purchased
Assets. All materials copied by Buyer shall be maintained in confidence by
Buyer and returned to Seller if the Closing of the transactions contemplated
hereunder fails to occur.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 GENERAL. In case at any time after the Closing any
further action is legally necessary or reasonably desirable (as determined by
Buyer and Seller) to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article VIII
below). Seller and Shareholder each acknowledges and agrees that from and
after the Closing, Buyer will be entitled to possession of all documents,
books, records, agreements, and financial data of the Transferred Business.
6.2 CONFIDENTIALITY. Seller and Shareholder will treat
and hold in confidence and not disclose all Confidential Information and
refrain from using any of the Confidential Information except in connection
with this Agreement or otherwise for the benefit of Buyer for a period of four
(4) years from the date of this Agreement, and deliver promptly to Buyer or
destroy, at the written request and option of Buyer, all tangible embodiments
(and all copies) of the Confidential Information which are in their possession
except as otherwise permitted herein. In the event that Seller or Shareholder
is requested or required (by oral
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question or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
legal proceeding) to disclose any Confidential Information, Seller or
Shareholder, as the case may be, will notify Buyer promptly of the request or
requirement.
6.3 COVENANT NOT TO COMPETE. For and in consideration of
the allocation of $100,000 of the Purchase Price paid to Seller by Buyer,
Seller and Shareholder each covenant and agree, for a period of four (4) years
from and after the Closing Date, that it (and he) will not, directly or
indirectly without the prior written consent of Buyer, for or on behalf of any
entity or Affiliate:
(a) engage in the business of wholesale travel
sales or assembling or selling vacation packages that are marketed or sold to
the public under a brand or identity owned or controlled by Shareholder or
Seller; provided, however:
(i) subject to the terms of subparagraph
(iii) below, it shall not be a violation of this Section 6.3
for Seller or Shareholder to own interests (including
controlling interests) in, provide financial and other
assistance to, and to otherwise deal with Preview Travel,
Inc., Adventure Media, Inc., or to any Affiliate or successor
in interest to any of the foregoing, or for any of such
entities to engage in any business activities whether or not
in competition with Buyer and its Affiliates;
(ii) it shall not be a violation of this
Section 6.3 for Shareholder to continue to own controlling
interests in, provide financial and other assistance to, and
to otherwise deal with Seller, TMS, Trase Miller Technologies,
Inc. ("TMT"), Trase Miller Teleservices, Inc. ("TMTS") or for
TMS, TMT and TMTS to provide services to entities engaged in
the business of wholesale travel sales or assembling or
selling vacation packages that are marketed or sold to the
public under a brand or identity NOT owned or controlled by
Shareholder, Seller, TMS, TMT, or TMTS. Buyer acknowledges
that TMS, TMT and TMTS provide services to direct competitors
of Buyer and its Affiliates;
(iii) if at any time after the Closing
Date, Seller or Shareholder (individually or together or
through any Affiliate) owns or acquires a direct or indirect
controlling interest in any of the entities referenced in
subparagraph (i) above, then the following provisions shall
apply: (A) if any such entity at the time of such acquisition
or ownership of a controlling interest is in the business of
wholesale travel sales or assembling or selling vacation
packages, Seller or Shareholder (as appropriate), shall,
unless Seller or Shareholder (as appropriate) receives a legal
opinion to the effect that to consummate such a transaction
would constitute a breach of such person's fiduciary
obligations to the other shareholders of any such controlled
entity) in good faith offer to Buyer the right to be such
entity's exclusive vacation
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package provider on market terms and/or (at Buyer's option) to
purchase on market terms that portion of such entity's
business as is competitive with Global, Buyer or their
Affiliates; and (B) if any such entity at the time of such
acquisition or ownership of a controlling interest is not then
in the business of wholesale travel sales or assembling or
selling vacation packages, paragraph (a) shall operate to
preclude such entity from entering the wholesale travel sales
business or assembling or selling vacation packages
notwithstanding the terms of subparagraph (i) above.
(b) hire, retain, or solicit the employment or
services of employees, consultants or representatives of Buyer or any of its
Affiliates for the purpose of causing them to leave the employment of Buyer or
such Affiliates; or
(c) take any action (or cause any such action to
be taken by another Person) that primarily is designed or intended to have the
effect of discouraging any vendor (including without limitation any airline or
other carrier, hotel, resort or rental car company), lessor, licensor,
customer, travel agency, consortia member, supplier, or other business
associate of the Transferred Business from maintaining the same business
relations with Buyer after the Closing as it maintained with Seller prior to
the Closing;
provided, however, that either Seller or Shareholder may own less than ten
percent (10%) of the outstanding stock of any publicly-traded corporation and
same shall not be deemed to be in a violation of this Section 6.3 solely by
reason thereof.
6.4 ACCESS TO RECORDS AFTER CLOSING. After the Closing
Date, Buyer on the one hand and Seller on the other agree that they will give,
or cause to be given, to the other party, its successors and its
representatives, during normal business hours and at the requesting party's
expense, such reasonable access to the properties, titles, contracts, books,
records, files and documents (but excluding attorney work product or other
privileged communications) of Buyer (to the extent Buyer's records are the
records, materials and data transferred to Buyer from Seller pursuant to this
Agreement) or Seller, as the case may be, as is reasonably necessary to allow
the requesting party to obtain information in the other party's possession with
respect to any claims, demands, audits, suits or matters of a similar nature
made by or against the requesting party as the previous or new owner and
operator of the Transferred Business, as the case may be, and to make copies of
such information to the extent reasonably necessary. Buyer agrees that it will
not dispose of or destroy any of such records for seven (7) years after the
Closing Date without first offering to turn over possession thereof to Seller
and Shareholder by written notice to Seller and Shareholder at least 30 days
prior to the proposed date of any such disposition or destruction.
6.5 LITIGATION SUPPORT. In the event and for so long as
any party is actively contesting or defending against any claim, suit, action
or charge, complaint, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, circumstance, status,
condition, activity, practice, occurrence, event, action, failure to act, or
transaction on or prior to the Closing Date involving Seller or the Transferred
Business, each
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of the other parties will cooperate and make available themselves or their
personnel, as applicable, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense.
6.6 ASSIGNMENT OF CONTRACTS. Anything in this Agreement
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to assign or otherwise transfer any Contract or any other agreement
used in the Transferred Business or any rights thereunder, if an attempted
assignment or transfer thereof would constitute a breach thereof, would be
ineffective or would violate any applicable law without the consent of a third
party to such assignment or transfer. Until such consent or waiver has been
obtained, Buyer shall make all reasonable efforts to perform in Seller's name
all of Seller's obligations under any such Contract or other agreement for
which any such consent has not been obtained. Seller shall cooperate with
Buyer in any reasonable arrangement designed to provide for Buyer all of the
benefits, and to have Buyer assume the burdens, liabilities, obligations and
expenses under all such Contracts or other agreements. At Buyer's request,
Seller shall, at Buyer's sole cost and expense, take all reasonable efforts
requested by Buyer to enforce, for the benefit of Buyer, any and all rights of
Seller under any such Contract or other agreement not otherwise transferred
pursuant to the provisions of this Agreement. Seller hereby authorizes Buyer
to perform and Buyer hereby agrees to perform all of Seller's obligations after
the Closing under all such contracts. Seller agrees to remit promptly to Buyer
all collections or payments received by Seller in respect of all such Contracts
or other agreements, and shall hold all such collections or payments for the
benefit of, and promptly pay the same over to, Buyer; provided, however, that
nothing herein shall create or provide any rights or benefits in or to third
parties.
6.7 CHANGE OF NAME. Seller agrees to promptly change its
name following the Closing to a name which does not contain the words "MTI
Vacations" or any variations thereof.
6.8 AUDITS. Following the Closing, the Seller shall
cooperate with the Buyer's efforts to cause the Company, at the Company's
expense, to deliver, or cause to be delivered, to Buyer an unqualified and
unmodified audit report of an independent accountant selected by Buyer on the
balance sheets of the Company as of December 31, 1995, December 31, 1996,
December 31, 1997, and as of the Closing Date and audited statements of
operations and cash flows of the Company for the fiscal years or periods then
ended, which report shall be without limitation as to the scope of the audit.
The Shareholder, in his capacity as an officer and director of the Company
during such periods, shall assist Buyer by providing all management letters,
reports or representations reasonably requested by such auditors in connection
with such audits.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PARTIES
TO CONSUMMATE CLOSING
7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of
Buyer under this Agreement to consummate the Closing is subject to the
conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
Seller and Shareholder shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by it
prior to or at the Closing Date. The representations and warranties of Seller
and Shareholder set forth in this Agreement shall be accurate in all material
respects at and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. In addition, Buyer shall have determined
from its due diligence review of Seller that no Material Adverse Change or
Material Adverse Effect shall have occurred in the financial condition,
business, operations or prospects of Seller or the Transferred Business from
those presented to Buyer prior to execution of this Agreement.
(b) CONSENTS. All statutory requirements for the
valid consummation by Seller and Shareholder of the transactions contemplated
by this Agreement shall have been fulfilled and all authorizations, consents
and approvals, including expiration or early termination of all waiting periods
under the HSR Act and those of all federal, state, local and foreign
governmental agencies and regulatory authorities required to be obtained in
order to permit the consummation of the transactions contemplated hereby shall
have been obtained in form and substance reasonably satisfactory to Buyer
unless such failure could not reasonably be expected to have a Material Adverse
Effect. All approvals of the Board of Directors and shareholders of Seller
necessary for the consummation of this Agreement and the transactions
contemplated hereby shall have been obtained. All consents or waivers of any
third party to the Contracts shall have been obtained as necessary to
consummate the transactions contemplated by this Agreement or to ensure that
the Contracts shall remain in place following the Closing.
(c) FINANCIAL CONDITION. Buyer shall be
satisfied in its sole discretion with the financial condition of the
Transferred Business as reflected in the Preliminary Closing Date Financial
Statements. Working Capital as of the Closing Date shall be more than that
amount that is equal to the amount of Working Capital shown on the Preliminary
Closing Balance Sheet minus $300,000, and the Transferred Business shall have
Cash and Cash Equivalents and Investments on hand at the Closing in an amount
not less than the Customer Deposits.
(d) DOCUMENTS TO BE DELIVERED BY SELLER. The
following documents shall be delivered at the Closing by Seller:
(i) CONVEYANCE DOCUMENTS. Such
instruments of sale, transfer, assignment, conveyance and
delivery (including all vehicle titles), in
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form and substance reasonably satisfactory to counsel for
Buyer (including, without limitation, the Assignment and
Assumption Agreement, as are required in order to transfer to
Buyer good and marketable title to the Purchased Assets, free
and clear of all liens, charges, security interests and other
encumbrances except as provided herein.
(ii) LEASED REAL PROPERTY. Assignments
of all leases, if any, with appropriate lessor consents, if
necessary, or Buyer shall have entered into lease agreements
with such lessors for the respective facilities in form
satisfactory to Buyer.
(iii) OPINION OF SELLER'S COUNSEL. Buyer
shall have received an opinion of counsel to Seller and
Shareholder, dated the Closing Date, in substantially the same
form as the form of opinion that is Exhibit B hereto.
(iv) CERTIFICATES. Buyer shall have
received an officer's certificate and a secretary's
certificate of Seller and Shareholder executed by officers of
Seller and by Shareholder, dated the Closing Date, in
substantially the same forms as the forms of certificates that
are Exhibit C hereto.
(v) RESOLUTIONS. A certified copy of
resolutions of Seller's Board of Directors authorizing the
execution, delivery and consummation of this Agreement and the
transactions contemplated hereby.
(vi) UCC MATTERS. UCC termination
statements and other applicable documentation necessary to
release any interest of any third party in the Purchased
Assets.
(vii) ESCROW AGREEMENT. Seller and
Shareholder shall have delivered to Buyer at the Closing the
duly executed Escrow Agreement.
(viii) EMPLOYMENT AGREEMENTS. Ted Jansen
shall have duly executed and delivered an Employment
Agreements in substantially the same form attached as Exhibit
E hereto, pursuant to which such Persons will be employed by
Buyer or its Affiliates following the Closing, and Seller
shall have provided evidence satisfactory to Buyer of the
complete termination, without liability to Seller or Buyer, of
all employment agreements among Seller and such Persons.
[GLOBAL TO REPORT ON STATUS--SELLER STILL WANTS THIS REMOVED
AS A CLOSING CONDITION.]
(ix) RECORDS OF SELLER. All contracts,
files, documents, data, records and information of Seller
included in the Purchased Assets, shall have been delivered to
Buyer, all of which may be delivered to Buyer at the offices
of the Transferred Business.
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(x) LEASE. Buyer and Shareholder shall
have entered into the Lease on terms satisfactory to Buyer.
(xi) TRANSITION SERVICES AGREEMENTS.
Buyer, Global and Seller or TMS (as appropriate) shall have
entered into the Transition Services Agreements on terms
satisfactory to Buyer and Global.
(xii) EQUITY ARRANGEMENTS. Seller or
Shareholder shall have delivered to Buyer duly executed
documents and the funds pertaining to its or his $2,400,000
equity investment in Global, including without limitation the
following agreements: (A) Equity Subscription Agreement; and
(B) Shareholders Agreement (collectively, the "EQUITY
ARRANGEMENTS").
(xiii) RELEASE. Seller and Shareholder
shall have delivered to Buyer a release of liabilities related
to the Purchased Assets and the Transferred Business, except
as expressly set forth in this Agreement in substantially the
form of Exhibit F hereto.
(xiv) CHANGE OF SELLER'S NAME. Evidence,
in the form of an amended Certificate of Incorporation for
Seller which will be delivered to Buyer in form suitable for
filing with the Delaware Secretary of State, indicating its
change of name from MTI Vacations, Inc.
7.2 CONDITIONS TO SELLER'S AND SHAREHOLDER'S OBLIGATIONS.
The obligation of Seller and Shareholder under this Agreement to consummate the
Closing is subject to the conditions that:
(a) COVENANTS, REPRESENTATIONS AND
WARRANTIES. Buyer shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by
Buyer prior to or at the Closing and the representations and warranties of
Buyer set forth in Article IV hereof shall be accurate in all material
respects, at and as of the Closing Date, with the same force and effect as
though made on and as of the Closing Date.
(b) CONSENTS. All statutory
requirements for the valid consummation by Buyer of the transactions
contemplated by this Agreement shall have been fulfilled and all
authorizations, consents and approvals, including expiration or early
termination of all waiting periods under the HSR Act and those of all federal,
state, local and foreign governmental agencies and regulatory authorities
required to be obtained in order to permit the consummation by Buyer of the
transactions contemplated hereby shall have been obtained unless such failure
shall not have a Material Adverse Effect on the Transferred Business.
(c) DOCUMENTS TO BE DELIVERED BY BUYER.
The following documents shall be delivered at the Closing by Buyer:
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(i) ESCROW AGREEMENT. Buyer shall have
delivered to Seller at the Closing the duly executed Escrow
Agreement.
(ii) ASSIGNMENT AND ASSUMPTION AGREEMENT.
Buyer shall have executed and delivered the Assignment and
Assumption Agreement in substantially the form attached
hereto as Exhibit D, dated as of the Closing Date.
(iii) EQUITY ARRANGEMENTS. Seller or
Shareholder shall be satisfied that all other parties thereto
have duly executed and delivered (and, if applicable to a
party, funded pursuant to) the Equity Arrangements on terms
satisfactory to the Seller or Shareholder (as appropriate),
and that any representations and warranties made by Global or
any other party in connection with the agreements underlying
such Equity Arrangements are complete and accurate.
(iv) TRANSITION SERVICES AGREEMENTS.
Buyer, Global and Seller or TMS (as appropriate) shall have
entered into the Transition Services Agreement, on terms
satisfactory to Seller and the Shareholder.
(v) LEASE. Buyer and the Shareholder
shall have entered into the Lease on terms satisfactory to the
Shareholder.
(vi) RESOLUTIONS. A certified copy of
resolution's of Global and Buyer's Board of Directors
authorizing the execution, delivery and consummation of this
Agreement and the transactions contemplated hereby.
(d) PAYMENTS TO SELLER. Seller shall have received the
portion of the Purchase Price payable at the Closing to Seller.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF BUYER. Except as provided in
Section 8.6, Seller and Shareholder jointly and severally agree to indemnify
and hold harmless Buyer and each officer, director, and Affiliate of Buyer,
including without limitation any successor of Buyer (collectively, the "BUYER
INDEMNIFIED PARTIES") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively,
the "INDEMNIFIABLE COSTS"), which any of the Buyer Indemnified Parties may
sustain, or to which any of the Indemnified Parties may be subjected, arising
out of (A) any misrepresentation, breach or default by Seller or Shareholder of
or under any of the representations, warranties, covenants, agreements or other
provisions of this Agreement or any agreement or document executed in
connection herewith; (B) the assertion and final determination of any claim or
liability against the Purchased Assets or any
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of the Buyer Indemnified Parties by any Person based upon the facts which form
the alleged basis for any litigation to the extent it should have been, but was
not, reserved for in the Financial Statements in accordance with GAAP; and (C)
any Excluded Liabilities paid by Buyer.
8.2 DEFENSE OF CLAIMS. If any legal proceeding shall be
instituted, or any claim or demand made, against any Buyer Indemnified Party in
respect of which Seller or Shareholder may be liable hereunder, such
Indemnified Party shall give prompt written notice thereof to Seller and,
except as otherwise provided in Section 8.4 below, Seller shall have the right
to defend, or cause Buyer or its successors to defend, any litigation, action,
suit, demand, or claim for which it may seek indemnification with counsel
reasonably satisfactory to Seller; provided, however, if in the reasonable
judgment of Buyer, (i) such litigation, action, suit, demand, or claim, or the
resolution thereof, would have a Material Adverse Effect on Buyer or its
successors or the Transferred Business or (ii) Seller shall have a conflict of
interest in defending such action on the Buyer's behalf, then at Buyer's
election, Buyer may defend itself, and in either of such instances it shall be
at the Seller's expense. If neither (i) nor (ii) are applicable but Buyer
desires to participate in the defense of an action Seller is defending because
in Buyer's reasonable judgment the outcome of such action could have an ongoing
effect on Buyer, its successors or assignees or the Transferred Business, the
Buyer may participate but at its own expense. In the event Seller fails or
refuses to defend any legal proceeding it is required to defend under this
Article VIII within a reasonable length of time, the Buyer Indemnified Parties
shall be entitled to assume the defense thereof, and Seller and Shareholder
shall be liable to repay the Buyer Indemnified Parties for all expenses
reasonably incurred in connection with said defense (including reasonable
attorneys' fees and settlement payments). If Seller shall not have the right
to assume the defense of any litigation, action, suit, demand, or claim in any
legal proceeding Seller should defend under this Article VIII, the Buyer
Indemnified Parties shall have the absolute right to control the defense of and
to settle, in their sole discretion and without the consent of Seller, such
litigation, action, suit, demand, or claim, but Seller shall be entitled, at
its own expense, to participate in such litigation, action, suit, demand, or
claim. The party controlling any defense pursuant to this Section 8.2 shall
deliver, or cause to be delivered to the other party, copies of all
correspondence, pleadings, motions, briefs, appeals or other written statements
relating to or submitted in connection with the defense of any such litigation,
action, suit, demand or claim, and timely notices of any hearing or other court
proceeding relating to such litigation, action, suit, demand or claim.
8.3 ESCROW CLAIM. If any claim for indemnification is
made by an Indemnified Party pursuant to this Article VIII prior to the
expiration of the Escrow Period, such Buyer Indemnified Party shall apply to
the Escrow Agent provided in Section 2.8 of this Agreement for reimbursement of
such claim in accordance with the provisions of the Escrow Agreement; provided,
however, the Escrow Sum is not intended to be an exclusive remedy in the event
Buyer has indemnification claims hereunder which exceed such amount.
8.4 TAX AUDITS, ETC. In the event of an audit of a Tax
Return of Seller with respect to which a Buyer Indemnified Party might be
entitled to indemnification pursuant to
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this Article VIII, Buyer shall have the right to control any and all such
audits which may result in the assessment of additional Taxes against Buyer or
the Purchased Assets and any and all subsequent proceedings in connection
therewith, including appeals (subject to the prior written consent of Seller,
which shall not unreasonably be withheld and subject to the right of Seller to
have its accountants and attorneys consult with Buyer on such audits or
procedures at Seller's expense). Seller shall cooperate fully in all matters
relating to any such audit or other Tax proceeding (including according access
to all records pertaining thereto), and will execute and file any and all
consents, powers of attorney, and other documents as shall be reasonably
necessary in connection therewith. If additional Taxes are payable by Seller
or Buyer as a result of any such audit or other proceeding, Seller shall be
responsible for and shall promptly pay all Taxes, interest, and penalties for
which any of the Buyer Indemnified Parties shall be entitled to
indemnification.
8.5 INDEMNIFICATION OF SELLER AND SHAREHOLDER. Buyer and
Global, on a joint and several basis, agree to indemnify and hold harmless
Seller and Shareholder and each officer, director, stockholder or Affiliate of
Seller and Affiliate of Shareholder ("SELLER/SHAREHOLDER INDEMNIFIED PARTIES"),
from and against any Indemnifiable Costs which any of the Seller/Shareholder
Indemnified Parties may be subjected, arising out of (A) any misrepresentation,
breach or default by Buyer or Global of or under any of the representations,
warranties, covenants, agreements or other provisions of this Agreement or any
agreement or document executed in connection herewith and (B) any Assumed
Liability paid by Seller or Shareholder.
8.6 LIMITS ON INDEMNIFICATION. All Indemnifiable Costs
sought by any party hereunder shall be net of any insurance proceeds received
by such Person with respect to such claim. Except for any claims for breach of
the representations and warranties of Seller and Shareholder under Sections 3.3
or 3.14 hereof (the indemnification for which shall expire on the expiration of
the applicable statute of limitations except for claims made prior to such date
which claims shall continue after such date until finally resolved), the right
to make claims for indemnification provided under this Article VIII shall
expire on the second anniversary of the Closing Date (except for claims made
prior to such date which shall continue after such date until finally
resolved). Seller and Shareholder shall not be obligated to pay any amounts
for indemnification under this Article VIII until the aggregate indemnification
obligation to which Buyer is entitled hereunder exceeds $150,000, whereupon
Seller shall be liable for all amounts for which indemnification may be sought.
For purposes of Sections 8.1 or 8.5, any requirement in any representation or
warranty that an event or fact be material or have a Material Adverse Effect,
as appropriate, in order for such event or fact to constitute a
misrepresentation or breach of such representation or warranty shall be
ignored. Notwithstanding the foregoing, in no event shall the aggregate
liability of Seller and Shareholder to Buyer exceed the Purchase Price.
However nothing in this Article VIII shall limit Buyer or Seller and
Shareholder in exercising or securing any remedies provided by applicable
common law with respect to the conduct of Seller and Shareholder or Buyer in
connection with this Agreement or in the amount of damages that it can recover
from the other in the event that Buyer successfully proves intentional fraud or
intentional fraudulent conduct
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in connection with this Agreement. All Indemnified Costs paid by Seller and
Shareholder shall be deemed to be a reduction of the Purchase Price paid by
Buyer hereunder.
ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of Seller,
Shareholder and Buyer;
(b) in writing by Buyer, if Seller or Shareholder
has breached in any material respect any representation, warranty or covenant
contained in this Agreement, and in each case such breach has not been remedied
within ten (10) business days after receipt of notice specifying such breach
and demanding such breach to be remedied; or
(c) in writing by Seller and Shareholder, if
Buyer has breached in any material respect any representation, warranty or
covenant contained in this Agreement, and in each case such breach has not been
remedied within ten (10) business days after receipt of notice specifying such
breach and demanding such breach to be remedied; or
(d) in writing by either Seller and Shareholder,
on the one hand, or Buyer, on the other hand, in the event the Closing has not
occurred on or before April 30, 1998, unless the failure of such consummation
or the failure to satisfy such condition, as applicable, shall be due to a
breach of any representation or warranty made by the party or parties seeking
to terminate this Agreement or the failure of such party or parties to comply
in all material respects with the agreements and covenants contained herein to
be performed by such party or parties.
9.2 EFFECT OF TERMINATION. If the transactions
contemplated by this Agreement are terminated pursuant to Section 9.1 by notice
in writing to the non-terminating party or parties, this Agreement shall become
void and of no further force and effect, except that such termination shall not
relieve (i) any party from its covenants in respect of confidentiality
contained in Section 6.3 and (ii) any party then in breach of any
representation, warranty, covenant or agreement contained in this Agreement
from liability in respect of such breach
ARTICLE X
MISCELLANEOUS
10.1 MODIFICATIONS; WAIVERS. Any amendment, change or
modification of this Agreement shall be void unless in writing and signed by
all parties hereto. No failure or delay by any party hereto in exercising any
right, power or privilege hereunder (and no course
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of dealing between or among any of the parties) shall operate as a waiver of
any such right, power or privilege. No waiver of any default on any one
occasion shall constitute a waiver of any subsequent or other default. No
single or partial exercise of any such right, power or privilege shall preclude
the further or full exercise thereof.
10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered, or 48 hours after deposited in the United States mail,
first-class, postage prepaid, or by facsimile addressed to the respective
parties hereto as follows:
Buyer and/or Global:
Global Vacation Group, Inc.
c/o Thayer Capital Partners
1455 Pennsylvania Avenue, NW
Suite 350
Washington, D.C. 20004
Attention: Roger H. Ballou, President
Daniel Raskas
Fax No.: (202) 371-0391
Tel No.: (202) 371-0150
With a copy to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, NW
Washington, D.C. 20004-1109
Attention: Chris Hagan
Hovey Kemp
Fax No.: (202) 637-5910
Tel No.: (202) 637-5600
Seller and Shareholder:
MTI Vacations, Inc.
c/o JFM Enterprises
1301 West 22nd Street
Suite 1001
Oak Brook, Illinois 60521
Attention: James F. Miller
Fax No.: (630) 990-6850
Tel No.: (630) 990-4555
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With a copy to:
Cowan & Minetz
180 North LaSalle Street
Suite 2901
Chicago, Illinois 60601
Attention: William H. Cowan
Fax No.: (312) 236-6252
Tel No.: (312) 853-4472
or to such other address as to any party hereto as such party shall designate
by like notice to the other parties hereto.
10.3 COUNTERPARTS; FACSIMILE TRANSMISSION. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original but all of which counterparts collectively shall constitute one
instrument, and in making proof of this Agreement, it shall never be necessary
to produce or account for more than one such counterpart. Signatures of a
party to this Agreement or other documents executed in connection herewith
which are sent to the other parties by facsimile transmission shall be binding
as evidence of acceptance of the terms hereof or thereof by such signatory
party, with originals to be circulated to the other party in due course.
10.4 EXPENSES. Each of the parties hereto will bear all
costs, charges and expenses incurred by such party in connection with this
Agreement and the consummation of the transactions contemplated herein,
provided, however, that Seller shall bear all costs and expenses of (i) any
broker involved in this transaction on behalf of Seller and (ii) all legal and
other expenses of the Transferred Business with respect to this Agreement and
the transactions contemplated hereby.
10.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of Buyer and Seller, their heirs,
representatives, successors, and permitted assigns, in accordance with the
terms hereof. This Agreement shall not be assignable by Seller without the
prior written consent of Buyer. This Agreement shall be assignable by Buyer to
either (a) any lender providing financing to Buyer or its Affiliates or (b) an
Affiliate of Buyer, in each case without the prior written consent of Seller or
Shareholder. In addition, Buyer may assign any or all of its rights hereunder,
without the consent of Seller or Shareholder, in connection with any sale of
all or substantially all of the assets, capital stock or business of Buyer or
the Purchased Assets (whether effected by sale, exchange, merger, consolidation
or other transaction).
10.6 ENTIRE AND SOLE AGREEMENT. This Agreement and the
other schedules and agreements referred to herein, constitute the entire
agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements
and understandings, whether oral or written, express or implied, with respect
to the subject matter hereof.
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<PAGE> 49
10.7 GOVERNING LAW. This Agreement and its validity,
construction, enforcement, and interpretation shall be governed by the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.
10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. All covenants, agreements, representations, and warranties and the
related indemnities made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of two
(2) years, provided, however, that (a) the representations and warranties
contained in Section 3.14 of this Agreement, and the related indemnities, shall
survive the Closing until the expiration of the applicable statutes of
limitations for determining or contesting Tax liabilities including any
extensions of such periods, plus sixty (60) days; (b) the representations and
warranties contained in Section 3.3 of this Agreement, and the related
indemnities, shall survive the Closing indefinitely and not expire; and (c) all
covenants in Article VI which have an expiration date contained therein shall
expire as of such date.
10.9 INVALID PROVISIONS. If any provision of this
Agreement is deemed or held to be illegal, invalid or unenforceable, this
Agreement shall be considered divisible and inoperative as to such provision to
the extent it is deemed to be illegal, invalid or unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal, invalid or unenforceable
provision and be legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be
binding upon all parties hereto.
10.10 PUBLIC ANNOUNCEMENTS. Seller and Shareholder shall
not make any public announcement of the transactions contemplated hereby
without the prior written consent of Buyer, which consent shall not be
unreasonably withheld.
10.11 REMEDIES CUMULATIVE. The remedies of the parties
under this Agreement are cumulative and shall not exclude any other remedies to
which any party may be lawfully entitled.
10.12 THIRD PARTIES. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any Person, other than the parties hereto
and their permitted successors or assigns, any rights or remedies under or by
reason of this Agreement.
10.13 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Agreement.
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<PAGE> 50
10.14 GLOBAL SUPPORT. Global agrees, in respect of Buyer's
assumption of the Assumed Liabilities pursuant to the terms of Section 2.3, to
provide such financial assistance to Buyer as is necessary to ensure that Buyer
has the financial means required to honor such liabilities and obligations as
are included in the Assumed Liabilities. It is the intention of this Section
10.14, in conjunction with Global's joint and several (with Buyer)
indemnification obligations under Section 8.5, to provide Seller and
Shareholder with comfort that on a post-Closing basis (i) Buyer will honor, and
(ii) Seller and Shareholder will incur no liability as a result of Buyer's
failure to honor, any liability or obligation properly included in the Assumed
Liabilities.
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<PAGE> 51
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first above written.
BUYER:
-----
GVGAC NO. 1, INC.
By: /s/ Daniel A. Raskas
-----------------------------------
Daniel A. Raskas
Vice President and Secretary
GLOBAL:
------
GLOBAL VACATION GROUP, INC.
By: /s/ Daniel A. Raskas
-----------------------------------
Daniel A. Raskas
Vice President and Secretary
SELLER:
------
MTI VACATIONS, INC.
By: /s/ James F. Miller
-----------------------------------
James F. Miller
President
SHAREHOLDER:
-----------
/s/ James F. Miller
--------------------------------------------
JAMES F. MILLER
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<PAGE> 52
The Exhibits and Schedules to this Asset Purchase Agreement are not included
with this Registration Statement on Form S-1. Global will provide these
exhibits and schedules upon the request of the Securities and Exchange
Commission.
-46-
<PAGE> 1
EXHIBIT 10.9
STOCK PURCHASE AGREEMENT
BY AND AMONG
GLOBAL VACATION GROUP, INC.,
("BUYER")
GLOBETROTTERS, INC.
(THE "COMPANY")
AND
ROBERT A. GRINBERG
(THE "SELLER")
DATED MAY 4, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II AGREEMENT OF PURCHASE AND SALE; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Purchase Price and Assumption of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Escrow Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Closing Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Post-Closing Net Worth Adjustment to Purchase Price . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER . . . . . . . . . . . . . . 8
3.1 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 No Liens on Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Other Rights to Acquire Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Employee Welfare Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Employee Pension Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Employment and Non-Tax Qualified Deferred Compensation Arrangements . . . . . . . . . 14
3.15 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.18 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.19 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.20 Accounts Receivable; Customer Deposits and Bookings; Financial Results
During Current Stub Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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TABLE OF CONTENTS (CON'T)
<TABLE>
<CAPTION>
Page
<S> <C>
(b) Customer Deposits; Bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Financial Results During Current Stub Period . . . . . . . . . . . . . . . . . . . . 18
3.21 Bank Accounts; Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.22 Customer Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.23 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.24 Affiliated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.25 Funded Indebtedness; Letters of Credit; Undisclosed Liabilities . . . . . . . . . . . . . . 19
(a) Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.26 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.27 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.28 Sunshine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Consents of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Seller's Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.5 Access to Records Before Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.6 Payments to the Company by the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.7 Relationship with Aquarius Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.8 Buyer's Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Transition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 Additional Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Litigation Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Post-Closing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING . . . . . . . . . . . . . . . 27
7.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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TABLE OF CONTENTS (CON'T)
<TABLE>
<CAPTION>
Page
<S> <C>
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 27
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Discharge of Indebtedness and Liens . . . . . . . . . . . . . . . . . . . . . . . . . 28
(e) Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(g) Preliminary Closing Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . 28
(h) Transition Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(i) Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(j) Documents to be Delivered by the Seller and the Company . . . . . . . . . . . . . . . 28
(i) Opinion of Gargill, Sassoon & Rudolph . . . . . . . . . . . . . . . . . . . 28
(ii) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(iii) Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(iv) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(v) Termination of Employment Agreements . . . . . . . . . . . . . . . . . . . . 29
(vi) Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(vii) Resignation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.2 Conditions to the Seller's and the Company's Obligations . . . . . . . . . . . . . . . . . . 29
(a) Covenants, Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 29
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Payments to the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Sublease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Procedure for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Escrow Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.4 Tax Audits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.6 Limits on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.7 Indemnification for Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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TABLE OF CONTENTS (CON'T)
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.1 Modifications; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.3 Counterparts; Facsimile Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Entire and Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.8 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . 37
10.9 DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.11 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.12 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.13 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
LIST OF EXHIBITS
<S> <C>
Exhibit A Form of Escrow Agreement
Exhibit B Form of Opinion of Gargill, Sassoon & Rudolph, LLP
Exhibit C-1 Form of Seller's Officer's and Stockholder's Certificate
Exhibit C-2 Form of Seller's Clerk's Certificate
Exhibit D Form of Release
Exhibit E Seller's Account and Wire Transfer Instructions (Section 2.3)
Exhibit F Articles (F-1) and Bylaws (F-2) and Qualified
Jurisdictions (F-3) (Section 3.4)
Exhibit G List of Properties (Section 3.9)
Exhibit H List of Licenses and Permits (Section 3.10)
Exhibit I List of Intellectual Property (Section 3.11)
Exhibit J List of Insurance (Section 3.13)
Exhibit K List of Contracts (Section 3.15)
Exhibit L List of Personnel (Section 3.18)
Exhibit M List of Bookings, Customer Deposits, Prepayments
and Refunds and Customer Claims (Section 3.20)
Exhibit N List of Bank Accounts and Investments (Section 3.21)
Exhibit O List of Letters of Credit (Section 3.25(b))
Exhibit P List of Funded Indebtedness (Section 7.1(d))
LIST OF SCHEDULES
Disclosure Schedule
</TABLE>
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<PAGE> 7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of May 4, 1998, by and among GLOBAL VACATION GROUP, INC., a New York
corporation ("BUYER"), GLOBETROTTERS, INC., a Massachusetts corporation (the
"COMPANY") and ROBERT A. GRINBERG (the "SELLER").
RECITALS
A. The Company is engaged in the business of providing
wholesale travel sales and vacation packaging services (the "TOUR BUSINESS") to
travel agents and other customers located in the United States of America (the
"BUSINESS"); and
B. The Seller owns all of the issued and outstanding
shares of capital stock of the Company (the "COMPANY SHARES") and all of the
issued and outstanding shares of capital stock of Sunshine Vacations, Inc. (the
"SUNSHINE SHARES" and, together with the Company Shares, the "SHARES")
(Sunshine Vacations, Inc. shall be referred to in this Agreement as
"SUNSHINE"); and
C. Buyer desires to purchase from the Seller, and the
Seller desires to sell to Buyer, all of the Shares owned by the Seller on the
terms and subject to the conditions hereinafter set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms. Any agreement
referred to below shall mean such agreement as amended, supplemented and
modified from time to time to the extent permitted by the applicable
provisions thereof and by this Agreement.
"AA" means Arthur Andersen LLP
"AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
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"ACQUISITION PROPOSAL" has the meaning specified in Section
5.4(d).
"AUDITED CLOSING BALANCE SHEET" has the meaning specified in
Section 2.6.
"BOOKINGS" has the meaning specified in Section 3.20(b).
"BUSINESS" has the meaning specified in the first recital of
the Agreement.
"BUYER" has the meaning specified in the first paragraph of
this Agreement.
"CASH AND CASH EQUIVALENTS" means cash and short term
investments, which have maturities of ninety (90) days or less, in each case as
reflected on the Preliminary Closing Balance Sheet.
"CLOSING" means the closing of the transfer of the Shares from
the Seller to Buyer.
"CLOSING DATE" has the meaning specified in Section 2.4.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning specified in the first paragraph of
this Agreement.
"COMPANY SHARES" means all the issued and outstanding shares
of capital stock of the Company.
"CONFIDENTIAL INFORMATION" means (i) terms and provisions of
this Agreement or the transactions to be consummated pursuant hereto, and (ii)
confidential information and trade secrets of the Company or Buyer including,
without limitation, any of the same comprising the identity, lists or
descriptions of any customers, referral sources or organizations; financial
statements, cost reports or other financial information (and any analyses or
compilations thereof or reports thereon); contract proposals, or bidding
information; business plans and training and operations methods and manuals;
personnel records; fee structure; computer software; and management systems,
policies or procedures, including related forms and manuals. Confidential
Information shall not include any information (i) which is disclosed pursuant
to subpoena or other legal process, (ii) which has been publicly disclosed by
means other than by a breach of a confidentiality agreement, or (iii) which is
subsequently disclosed by any third party not in breach of a confidentiality
agreement.
"CONTRACTS" has the meaning specified in Section 3.15.
"COURT ORDER" means any judgment, order, award or decree of
any foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"CUSTOMER CLAIMS" has the meaning specified in Section
3.20(b).
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"CUSTOMER DEPOSITS" has the meaning specified in Section
3.20(b).
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
to this Agreement pursuant to which exceptions to the Seller's and the
Company's specific representations and warranties set forth in Article III and
other applicable provisions (and listed on a Section-by-Section basis) are
disclosed to Buyer pursuant to said Article III.
"EBIT" shall mean the earnings of the Company before interest
expenses and taxes, as calculated in accordance with Modified GAAP and
consistent with past practices.
"EFFECTIVE DATE" has the meaning set forth in Section 2.4.
"ENCUMBRANCE" means any lien, claim, charge, security
interest, mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, restrictive covenant or other restrictions of any
kind.
"ENVIRONMENTAL AND OSHA OBLIGATIONS" has the meaning specified
in Section 3.12.
"EQUITABLE EXCEPTIONS" shall have the meaning specified in
Section 3.6.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" means The Bank of New York.
"ESCROW AGREEMENT" means the Escrow Agreement to be executed
by and among the Seller, Buyer and the Escrow Agent in the form of Exhibit A.
"ESCROW PERIOD" has the meaning specified in Section 2.5.
"ESCROW SUM" has the meaning specified in Section 2.5.
"FINANCIAL STATEMENTS" has the meaning specified in Section
3.7.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of the
Company for borrowed money or other interest-bearing indebtedness; (ii) capital
lease obligations of the Company; (iii) obligations of the Company to pay the
deferred purchase or acquisition price for goods or services, other than trade
accounts payable or accrued expenses in the ordinary course of business on no
more than 90 day payment terms; (iv) indebtedness of others guaranteed by the
Company or secured by an Encumbrance on the Company's property; and (v)
indebtedness of the Company under extended credit terms of more than 30 days
from vendors provided to the Company; provided, however, that Funded
Indebtedness shall not include any Letter of Credit unless actually drawn upon
by the beneficiary thereof.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
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"GOVERNMENTAL BODY" means any foreign, federal, state, local
or other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has meaning specified in Section 3.10.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and the rules and regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"INDEMNIFIABLE COSTS" has the meaning specified in Section
8.1.
"INDEMNIFIED PARTIES" has the meaning specified in Section
8.1.
"INTELLECTUAL PROPERTY" shall mean all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information); and (vi) computer
software (including but not limited to data, data bases and documentation).
"KNOWLEDGE" (whether or not capitalized) shall mean, in
respect of the Company, actual knowledge of Robert Grinberg, Susan Weitzenkorn,
Stacy Evos, Edward Bechirlan and Robert Ludwick after reasonable inquiry; in
respect of the Seller, "Knowledge" shall mean actual knowledge of the Seller
after reasonable inquiry.
"MATERIAL" (whether or not capitalized) shall, where
appropriate in context of its use in making the representations and warranties
set forth in Article III, be deemed to mean an amount of money greater than
$25,000.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means a
material adverse change or effect on the assets, properties, Business,
operations, liabilities, financial condition or prospects of the Company and
its subsidiaries, taken as a whole. In determining whether a "Material Adverse
Change" or "Material Adverse Effect" has occurred in the context of the use of
such terms in the Company's and the Seller's representations and warranties set
forth in Article III, such terms shall refer to the occurrence of any single
event, or any series of related events, or set of related circumstances, which
results or may result in a loss to the Company, taken as a whole, in excess of
$25,000 per occurrence or $100,000 in the aggregate shall be conclusive.
"MODIFIED GAAP" means the accounting practices and methods of
the Company, which are in accordance with GAAP, except with respect to the
variations and qualifications set forth in Section 3.7 of the Disclosure
Schedule.
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"MOST RECENT FINANCIAL STATEMENTS" has the meaning specified
in Section 3.7.
"NET WORTH" means the difference between the Company's total
assets and its total liabilities, determined in accordance with Modified GAAP.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, and any regulations promulgated
thereunder.
"PERMITTED EXCEPTION" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, or (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value or
the existing use of the property affected by such lien or imperfection.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"PRELIMINARY CLOSING BALANCE SHEET" shall mean the Company's
best estimate of the Company's balance sheet and income statement as of the
Effective Date. The Preliminary Closing Balance Sheet shall be delivered to
Buyer by the Company not less than three (3) nor more than five (5) days prior
to the Closing Date.
"PROJECTED CLOSING DATE NET WORTH" means negative $499,000.
"PURCHASE PRICE" has the meaning specified in Section 2.2.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without limitation,
those pertaining to electrical, building, zoning, environmental and
occupational safety and health requirements) or common law.
"SELLER" has the meaning set forth in the first paragraph of
this Agreement.
"SHARES" means all of the issued and outstanding shares of the
capital stock of the Company and Sunshine.
"SUNSHINE" means Sunshine Vacations, Inc., a Massachusetts
corporation.
"SUNSHINE SHARES" means all the issued and outstanding shares
of capital stock of Sunshine.
"TAX" or "TAXES" means any federal, state, local or foreign
income, alternative or add-on minimum, gross income, gross receipts, windfall
profits, severance or parachute, property, production, sales, use, transfer,
gains, license, excise, employment, payroll,
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withholding or minimum tax, transfer, goods and services, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amounts imposed thereon by any Governmental Body.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE; CLOSING
2.1 AGREEMENT TO SELL AND PURCHASE. Upon the basis of
the representations and warranties, for the consideration, and subject to the
terms and conditions set forth in this Agreement, the Seller agrees to sell the
Shares to Buyer and Buyer agrees to purchase the Shares from Seller.
2.2 PURCHASE PRICE. The total purchase price for the
Shares (the "PURCHASE PRICE") shall be equal to $5,350,000.00, subject to any
adjustment required to be made pursuant to Section 2.7 below. The parties
acknowledge and agree that $1.00 of the Purchase Price shall be allocated to
the purchase of the Sunshine Shares and the remainder shall be allocated to the
purchase of the Company Shares.
2.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall
be payable by Buyer at the Closing (as defined in Section 2.4) as follows:
(a) $4,850,000.00, representing the Purchase
Price less the escrow holdback required by paragraph (b) below, will be paid,
at the direction of the Seller, in cash by wire transfer of funds to the
Seller's account as specified in Exhibit E (including the payment of $50,000
for the Seller's covenant not to compete provided in Section 6.4); and
(b) $500,000.00 of the Purchase Price will be
paid in cash by wire transfer of funds to the Escrow Agent to be held in escrow
pursuant to Section 2.5 for satisfaction of Seller's indemnification
obligations specified in Section 8.1.
2.4 CLOSING. The Closing of the purchase and sale of the
Shares contemplated by this Agreement shall take place at 10:00 a.m., Eastern
Time, at the offices of Hogan & Hartson L.L.P., 555 13th Street, N.W. in
Washington, D.C. on May 5, 1998, or on the date selected by Buyer (which date
shall be as soon as practicable following the date on which all of the
conditions to Closing set forth in Sections 7.1 and 7.2 have been satisfied,
but not later than the tenth (10th) business day after such date), or on such
other date and time as the parties shall agree (the "CLOSING DATE"), effective
as of April 30, 1998 (the EFFECTIVE DATE").
2.5 ESCROW ARRANGEMENTS. Pursuant to the Escrow
Agreement to be entered into among the Seller, Buyer and the Escrow Agent, the
portion of the Purchase Price specified
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in Section 2.3(b) shall be delivered to the Escrow Agent at Closing in
immediately available funds. Such monies (which, together with all interest
accrued thereon, is hereinafter referred to as the "ESCROW SUM") shall be held
pursuant to the terms of the Escrow Agreement for payment from such Escrow Sum
of the amounts, if any, owing by the Seller to Buyer pursuant to the
indemnification provisions of Article VIII below. At the conclusion of the
period ending on the first anniversary of the Closing Date (such period being
referred to herein as the "ESCROW PERIOD"), such remaining portion of the
Escrow Sum not theretofore claimed by or paid to Buyer in accordance with the
terms of the Escrow Agreement and this Agreement shall be disbursed to the
Seller. The Seller and Buyer agree that each will execute and deliver such
reasonable instruments and documents as are furnished by any other party to
enable such furnishing party to receive those portions of the Escrow Sum to
which the furnishing party is entitled under the provisions of the Escrow
Agreement and this Agreement.
2.6 CLOSING AUDIT. Within 120 days following the Closing
Date, there shall be delivered to Buyer and to the Seller an audit of the
Preliminary Closing Balance Sheet (the "AUDITED CLOSING BALANCE SHEET"). The
Preliminary Closing Balance Sheet shall be audited by AA in accordance with
Modified GAAP. The cost of preparing the Audited Closing Balance Sheet shall
be paid by the Company. In the event that the Seller disputes any items or
assumptions or methodologies regarding the Audited Closing Balance Sheet within
fifteen (15) business days after the Seller's receipt thereof, the parties
shall jointly select and retain an independent "Big Six" accounting firm (the
"INDEPENDENT ACCOUNTANTS") to review the disputed matter(s) on the Audited
Closing Balance Sheet. The final determination of such disputed matter(s) by
the Independent Accountants shall be reflected on the Audited Closing Balance
Sheet, which shall be final and binding on the parties for all purposes. The
cost of retaining the Independent Accountants shall be borne by the Seller,
except that the Company shall reimburse the Seller for one-half the cost of the
Independent Accountants in the event that such review results in at least a
$75,000 increase in the Company's Net Worth as reflected on the Audited Closing
Balance Sheet prepared by AA.
2.7 POST-CLOSING NET WORTH ADJUSTMENT TO PURCHASE PRICE.
In the event the Projected Closing Date Net Worth exceeds the amount of Net
Worth reflected on the Audited Closing Balance Sheet by more than $25,000, the
Purchase Price shall be adjusted downward by an amount equal to the difference
of (a) the Projected Closing Date Net Worth, minus (b) the amount of Net Worth
reflected on the Audited Closing Balance Sheet plus $25,000; provided, however,
that when calculating the amount of Net Worth on the Audited Closing Balance
Sheet for purposes of determining whether an adjustment is required under this
Section 2.7, AA and, if applicable, the Independent Accountants, shall accept
the Most Recent Financial Statements as accurate. The post-closing adjustment
to the Purchase Price, if any, shall be paid by the Seller to Buyer in
immediately available funds within ten (10) business days of delivery of the
Audited Closing Balance Sheet as finally determined in accordance with Section
2.6 above.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SELLER
Except as set forth on the Disclosure Schedule attached hereto
(which Disclosure Schedule contains a reasonably detailed description of each
such exception and references the applicable representation so qualified), the
Company and the Seller jointly and severally represent and warrant to Buyer
that:
3.1 CAPITALIZATION. The authorized capital stock of the
Company consists of 10,000 shares of Common Stock, no par value per share,
1,000 of which are issued and outstanding and such shares constitute the
Company Shares hereunder. The authorized capital stock of Sunshine consists of
20,000 shares of Common Stock, no par value per share, 100 of which are issued
and outstanding and such shares constitute the Sunshine Shares hereunder. All
of the Shares are duly authorized, validly issued, fully paid, and
nonassessable. All of the Shares are owned of record and beneficially by the
Seller. None of the Shares was issued or will be transferred under this
Agreement in violation of any preemptive or preferential rights of any Person.
3.2 NO LIENS ON SHARES. The Seller own the Shares, free
and clear of any Encumbrances other than the rights and obligations arising
under this Agreement, and none of the Shares is subject to any outstanding
option, warrant, call, or similar right of any other Person to acquire the
same, and none of the Shares is subject to any restriction on transfer thereof
except for restrictions imposed by applicable federal and state securities
laws. At Closing, the Seller will have full power and authority to convey good
and marketable title to the Shares, free and clear of any Encumbrances other
than the restrictions imposed by federal and state securities laws.
3.3 OTHER RIGHTS TO ACQUIRE CAPITAL STOCK. Except as set
forth in this Agreement in respect of Buyer's rights to acquire the Shares,
there are no authorized or outstanding warrants, options, or rights of any kind
to acquire from the Company or Sunshine any equity or debt securities of the
Company or Sunshine, or securities convertible into or exchangeable for equity
or debt securities of the Company or Sunshine, and there are no shares of
capital stock of the Company or Sunshine reserved for issuance for any purpose
nor any contracts, commitments, understandings or arrangements which require
the Company or Sunshine to issue, sell or deliver any additional shares of its
capital stock.
3.4 DUE ORGANIZATION. Each of the Company and Sunshine
is a corporation duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts and has full corporate power and
authority to own and lease its properties and assets and to carry on the
Business as now conducted and as proposed to be conducted through Closing.
Complete and correct copies of the Articles of Organization and Bylaws of the
Company and Sunshine, and all amendments thereto, have been delivered to Buyer
and are attached hereto as Exhibits F-1 and F-2. The Company is qualified to
do business in the State of
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California and in each other jurisdiction in which the nature of the Business
or the ownership of its properties requires such qualification, except where
the failure to be so qualified does not and could not reasonably be expected to
have a Material Adverse Effect. The jurisdictions in which the Company is so
qualified are listed on Exhibit F-3 attached hereto.
3.5 SUBSIDIARIES. The Company does not own, directly or
indirectly, any capital stock or ownership interests in any Person and, other
than the Seller's ownership in Sunshine, Seller's indirect 45% ownership
interest in Aquarius/Presidential General Partnership (d/b/a Aquarius Travel)
("AQUARIUS TRAVEL") and Seller's direct 30% ownership interest in General
Tours, Inc. (successor to Globetrotters Eastern Europe Travel, Inc.) ("GENERAL
TOURS"), the Seller does not own any capital stock or ownership interest in any
other Person engaged in the Tour Business. Other than serving as one of the
five directors of General Tours, the Seller owns a passive interest in, and
does not direct or exercise any control over the activities and operations of,
General Tours.
3.6 DUE AUTHORIZATION. The Company and the Seller each
have full power and authority to execute, deliver and perform this Agreement
and to carry out the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
of the Company. This Agreement has been duly and validly executed and
delivered by the Company and the Seller and constitutes the valid and binding
obligations of the Company and the Seller, enforceable in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights and debtors' obligations
generally, and legal limitations relating to remedies of specific performance
and injunctive and other forms of equitable relief (the "EQUITABLE
EXCEPTIONS"). The execution, delivery, and performance of this Agreement (as
well as all other instruments, agreements, certificates, or other documents
contemplated hereby) by the Company and the Seller, do not (a) violate any
Requirements of Laws or any Court Order of any Governmental Body applicable to
the Company or the Seller, or their respective property, (b) violate or
conflict with, or permit the cancellation of, or constitute a default under,
any Contract, (c) permit the acceleration of the maturity of any material
indebtedness of, or indebtedness secured by the property of, the Company or the
Seller, (d) violate or conflict with any provision of the charter or bylaws of
the Company or Sunshine, or (e) except for filings or approvals under the HSR
Act and such consents, approvals, or registrations as may be required under
applicable state securities laws, require any consent, approval or
authorization of, or notice to, or declaration, filing or registration with,
any Governmental Body or other third party.
3.7 FINANCIAL STATEMENTS. The following financial
statements of the Company have been delivered to Buyer by the Company: reviewed
but unaudited balance sheets of the Company as of December 31, 1995, December
31, 1996 and December 31, 1997, and reviewed but unaudited consolidated
statements of income and cash flows of the Company for the fiscal years ended
December 31, 1995 and December 31, 1996 and December 31, 1997 (collectively,
the "Financial Statements"). The Financial Statements, including the Financial
Statements as of and for the year ending December 31, 1997 (the "MOST RECENT
FINANCIAL STATEMENTS"), have been prepared in accordance with Modified GAAP.
The Financial
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Statements (including the notes thereto) have been prepared on a consistent
basis throughout the periods indicated and fairly present the financial
position, results of operations and changes in financial position of the
Company as of the indicated dates and for the indicated periods and are
consistent with the books and records of the Company (which books and records
are correct and complete in all material respects). Since the date of the last
of such Financial Statements, the Company has no material liabilities required
by Modified GAAP to be reflected on the Company's balance sheet or notes
thereto that are not so reflected in the Financial Statements, nor any other
obligations (whether absolute, contingent, or otherwise) which are
(individually or in the aggregate) material (in amount or to the conduct of the
Business); and neither the Company nor the Seller has Knowledge of any basis
for the assertion of any such liability or obligation. Since December 31,
1997, the Company has not suffered a Material Adverse Change, other than a loss
of earnings equal to $218,000 from January 1, 1998 until the Effective Date.
The Most Recent Financial Statements reflect a Net Worth as of December 31,
1997 of not less than negative $282,000.
3.8 CERTAIN ACTIONS. Since December 31, 1997, the
Company has not, except as disclosed on any of the Financial Statements or
notes thereto: (a) paid or declared any dividends or distributions, or
purchased, redeemed, acquired, or retired any stock or indebtedness from any
stockholder (other than distributions to pay estimated income taxes of the
Seller associated with the income of the Company); (b) made or agreed to make
any loans or advances or guaranteed or agreed to guarantee any loans or
advances to any party whatsoever; (c) suffered or permitted any Encumbrance to
arise or be granted or created against or upon any of its assets, real or
personal, tangible or intangible; (d) canceled, waived, or released or agreed
to cancel, waive, or release any of its debts, rights, or claims against third
parties in excess of $25,000 individually or $100,000 in the aggregate; (e)
sold, assigned, pledged, mortgaged, or otherwise transferred, or suffered any
material damage, destruction, or loss (whether or not covered by insurance) to,
any assets (except in the ordinary course of the Business); (f) amended its
charter or bylaws; (g) paid or made a commitment to pay any severance or
termination payment to any employee or consultant; (h) made any material change
in its method of management, operation, accounting or reporting income or
deductions for tax purposes; (i) made any material acquisitions, capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Business, or entered into commitments therefor, except
for capital expenditures or commitments therefor which do not, in the
aggregate, exceed $25,000 individually or $100,000 in the aggregate; (j) made
any investment or commitment therefor in any Person; (k) made any payment or
contracted for the payment of any bonus or other compensation or personal
expenses, other than (A) wages and salaries and business expenses paid in the
ordinary course of the Business, and (B) wage and salary adjustments made in
the ordinary course of the Business for employees who are not officers,
directors, or stockholders of the Company; (l) made, amended, or entered into
any written employment contract or created or made any material change in any
bonus, stock option, pension, retirement, profit sharing or other employee
benefit plan or arrangement; (m) made or entered into any vendor, supply,
sales, distribution, franchise, consortia or travel agency agreement which
involves annual consideration (or commissions) in excess of $50,000; (n) made
or entered into any agreement granting any Person any registration or offer
rights in respect of the Company's capital stock; (o) entered into any
non-competition agreement; (p) made or entered into any agreement or other
arrangement
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with any officer, director, stockholder, or Affiliate of the Company or, other
than in the ordinary course of business, any employee of the Company; (q)
materially amended, experienced a termination or received notice of actual or
threatened termination or non-renewal of any material contract, agreement,
lease, franchise or license to which the Company is a party that would or could
reasonably be expected to have a Material Adverse Effect; or (r) entered into
any other material transactions that would or could reasonably be expected to
have a Material Adverse Effect except in the ordinary course of the Business.
3.9 PROPERTIES. Attached hereto as Exhibit G is a list
containing a description of each interest in real property (including, without
limitation, leasehold interests pertaining to the Company's headquarters and
call center in Cambridge, MA and its call centers in Irvine, CA, Lake Success,
NY and Allentown, PA) and each item of personal property utilized by the
Company in the conduct of the Business having a book or fair market value in
excess of $30,000 as of the date hereof. Except for Permitted Exceptions, such
real and personal properties are free and clear of Encumbrances. The Seller
and the Company have delivered to Buyer copies of all real property leases and
a lien search obtained from the counties where the Company conducts business
and the California, Massachusetts, New York and Pennsylvania Secretary of State
office of all UCC liens of record against the Company's personal property in
such jurisdictions. All of the properties and assets necessary for continued
operation of the Business as currently conducted (including, without
limitation, all books, records, computers and computer software and data
processing systems) are owned, leased or licensed by the Company and are
suitable for the purposes for which they are currently being used. The
physical properties of the Company, including the real properties leased by the
Company, are in good operating condition and repair, normal wear and tear
excepted, and are free from any defects of a material nature. Except for
Permitted Exceptions, the Company has full and unrestricted legal and equitable
title to all such properties and assets. The operation of the properties and
Business of the Company in the manner in which they are now and have been
operated does not violate any zoning ordinances, municipal regulations, or
other Requirements of Laws, except for any such violations which would not,
individually or in the aggregate, have a Material Adverse Effect. Except for
Permitted Exceptions, no restrictive covenants, easements, rights-of-way, or
regulations of record impair the uses of the properties of the Company for the
purposes for which they are now operated. All leases of real or personal
property by the Company are legal, valid, binding, enforceable and in full
force and effect and will remain legal, valid, binding, enforceable and in full
force and effect on identical terms immediately following the Closing, except
for the Equitable Exceptions. All facilities leased by the Company have
received all approvals of any Governmental Body (including Governmental
Permits) required in connection with the operation thereof and have been
operated and maintained in accordance with all Requirements of Laws. The
Company owns no real property.
3.10 LICENSES AND PERMITS. Attached hereto as Exhibit H
is a list of all licenses, certificates, privileges, immunities, approvals,
franchises, authorizations and permits held or applied for by the Company from
any Governmental Body (herein collectively called "Governmental Permits") the
absence of which could, individually or in the aggregate, have a Material
Adverse Effect. The Company has complied in all material respects with the
terms and conditions of all such Governmental Permits, and the Company has not
received notification
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from any Governmental Body of violation of any such Governmental Permit or the
Requirements of Laws governing the issuance or continued validity thereof. To
the Knowledge of the Company and Seller, all of such Governmental Permits are
valid and in full force and effect. No additional Governmental Permit is
required from any Governmental Body thereof in connection with the conduct of
the Business which Governmental Permit, if not obtained, would have a Material
Adverse Effect.
3.11 INTELLECTUAL PROPERTY. Attached hereto as Exhibit I
is a list and brief description of all Intellectual Property owned or utilized
by the Company. The Company has furnished Buyer with copies of all license
agreements to which the Company is a party, either as licensor or licensee,
with respect to any Intellectual Property. The Company has good title to or
the right to use all the Intellectual Property and all inventions, processes,
designs, formulae, trade secrets and know-how necessary for the conduct of the
Business, in the Business as presently conducted without the payment of any
royalty or similar payment, and the Company is not infringing on any
Intellectual Property right of others, and neither the Company nor the Seller
are aware of any infringement by others of any such rights owned by the
Company. All material licenses set forth on Exhibit I are valid and binding
obligations of the Company, and to the Knowledge of the Company the other
parties thereto, and enforceable against the Company, and to the Knowledge of
the Company the other parties thereto in accordance with their respective
terms, except for the Equitable Exceptions. The Company owns and possesses all
right, title and interest in and to, or has the right to use pursuant to a
valid license, all Intellectual Property necessary for the operation of the
business of the Company as presently conducted.
3.12 COMPLIANCE WITH LAWS. The Company has (i) complied
in all material respects with all Requirements of Laws, Governmental Permits
and Court Orders applicable to the Business and has filed with the proper
Governmental Bodies all statements and reports required by all Requirements of
Laws, Governmental Permits and Court Orders to which the Company or any of its
employees (because of their activities on behalf of the Company) are subject
and (ii) conducted the Business and is in compliance in all material respects
with all federal, state and local energy, public utility, health, safety and
environmental Requirements of Laws, Governmental Permits and Court Orders
including the Clean Air Act, the Clean Water Act, the Solid Waste Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Safe Drinking Water Act, OSHA, the
Toxic Substances Control Act and any similar state, local or foreign laws
(collectively "Environmental and OSHA Obligations") and all other Governmental
Body requirements, except where any such failure to comply or file would not,
in the aggregate, have a Material Adverse Effect. No claim has been made by
any Governmental Body (and, to the Knowledge of the Company and the Seller, no
such claim is anticipated) to the effect that the Business fails to comply, in
any respect, with any Requirements of Laws, Governmental Permit or
Environmental and OSHA Obligation or that a Governmental Permit or Court Order
is necessary in respect thereto.
3.13 INSURANCE. Attached hereto as Exhibit J is a list of
all coverages for fire, liability, or other forms of insurance and all fidelity
bonds held by or applicable to the Company. Copies of the binders for all such
insurance policies have been delivered to Buyer. To the
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Company's and the Seller's Knowledge, the insurance maintained by the Company
is adequate for its business. To the Knowledge of the Company and the Seller,
no event relating to the Company has occurred which will result in (i)
cancellation of any such insurance coverages; (ii) a retroactive upward
adjustment of premiums under any such insurance coverages; or (iii) any
prospective upward adjustment in such premiums. All of such insurance
coverages will remain in full force and effect following the Closing. The
Company is not in default under any such insurance policies.
3.14 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE WELFARE BENEFIT PLANS. Other than
as listed in Section 3.14(a) of the Disclosure Schedule, the Company does not
maintain or contribute to any "employee welfare benefit plan" as such term is
defined in Section 3(1) of ERISA. With respect to any plan listed in Section
3.14(a) of the Disclosure Schedule, (i) the plan is in material compliance with
ERISA and all other applicable Requirements of Laws; (ii) the plan has been
administered in accordance with its governing documents; (iii) neither the
plan, nor any fiduciary with respect to the plan, has engaged in any
"prohibited transaction" as defined in Section 406 of ERISA other than any
transaction subject to a statutory or administrative exemption; (iv) except for
the processing of routine claims in the ordinary course of administration,
there is no material litigation, arbitration or disputed claim outstanding; and
(v) all premiums due on any insurance contract through which the plan is funded
have been paid.
(b) EMPLOYEE PENSION BENEFIT PLANS. Other than
as listed in Section 3.14(b) of the Disclosure Schedule, the Company does not
maintain or contribute to any arrangement that is or may be an "employee
pension benefit plan" relating to employees, as such term is defined in Section
3(2) of ERISA. With respect to any plan listed in Section 3.14(b) of the
Disclosure Schedule: (i) the plan is qualified under Section 401(a) of the
Code, and any trust through which the plan is funded meets the requirements to
be exempt from federal income tax under Section 501(a) of the Code; (ii) the
plan is in material compliance with ERISA and all other applicable Requirements
of Laws; (iii) the plan has been administered in accordance with its governing
documents as modified by applicable law; (iv) the plan has not suffered an
"accumulated funding deficiency" as defined in Section 412(a) of the Code; (v)
the plan has not engaged in, nor has any fiduciary with respect to the plan
engaged in, any "prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Code other than a transaction subject to statutory or
administrative exemption; (vi) the plan has not been subject to a "reportable
event" (as defined in Section 4043(b) of ERISA), the reporting of which has not
been waived by regulation of the Pension Benefit Guaranty Corporation; (vii) no
termination or partial termination of the plan has occurred within the meaning
of Section 411(d)(3) of the Code; (viii) all contributions required to be made
to the plan or under any applicable collective bargaining agreement have been
made to or on behalf of the plan; (ix) there is no material litigation,
arbitration or disputed claim outstanding; (x) all applicable premiums due to
the Pension Benefit Guaranty Corporation for plan termination insurance have
been paid in full on a timely basis; and (xi) a favorable determination letter
from the IRS has been received by the Company with respect to such plan stating
that such plan is so qualified; and there are no
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circumstances which would cause such plan to lose such qualified status and
would have a Material Adverse Effect on the Company.
(c) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED
COMPENSATION ARRANGEMENTS. The Company does not maintain or contribute to any
retirement or deferred or incentive compensation or stock purchase, stock grant
or stock option arrangement entered into between the Company and any current or
former officer, consultant, director or employee of the Company that is not
intended to be a tax qualified arrangement under Section 401(a) of the Code.
3.15 CONTRACTS AND AGREEMENTS. Exhibit K hereto contains
a list and brief description of (i) all promissory notes, loan agreements, and
other evidences of indebtedness for borrowed money (other than equipment
leases), guarantees, hedging agreements, off-balance sheet financing
arrangements, indemnity agreements, vendor contracts with airlines and other
carriers, agreements with rental car companies, consortia agreements, interface
or similar agreements pertaining to various airline or other computer
reservation systems to which the Company is a party or by which the Company or
its properties are bound, (ii) all written or oral contracts, commitments,
leases, and other agreements that are material to the business of the Company
(including, without limitation, marketing agreements, coop agreements and
travel agency agreements) to which the Company is a party or by which the
Company or its properties are bound pursuant to which (a) the obligations
thereunder of the Company are, or are contemplated as being as of the
commencement date thereof, for any one contract $50,000 or greater irrespective
of the level of usage, or (b) the obligations thereunder of the other party to
such Contract are, or are anticipated as representing, for any one contract
$50,000 or greater of the Company's gross margin for fiscal year 1998 (as
determined in accordance with past practices and procedures on the Company's
monthly profit and loss statements), and (iii) any non-competition agreement or
other similar agreement prohibiting the Company from freely engaging in any
business or competing anywhere in the world (collectively, the "CONTRACTS").
The Company is not and, to the Knowledge of the Seller and the Company, no
other party thereto is in default (and no event has occurred which, with the
passage of time or the giving of notice, or both, would constitute a default by
the Company) under any of the Contracts, and the Company has not waived any
material right under any of the Contracts. All of the Contracts to which the
Company is a party are legal, valid, binding, enforceable and in full force and
effect and will remain legal, valid, binding, enforceable and in full force and
effect on identical terms immediately after the Closing, except for the
Equitable Exceptions. The Company has not guaranteed any obligations of any
other Person. The Company has no present expectation or intention of not fully
performing all of its obligations under any Contract, the Company has no
Knowledge of any breach or anticipated breach by the other parties to any
Contract and the Company has not received notice of actual or threatened
termination or non-renewal of any Contract. The Company has received
cooperative marketing support from various suppliers in the form of cash and/or
payment-in-kind services. The Company has utilized or is utilizing such cash
and services (i) for their intended purpose, (ii) in accordance with the terms
under which they were received, and (iii) consistent with past practices.
3.16 CLAIMS AND PROCEEDINGS. There are no claims,
actions, suits, proceedings, or investigations pending or, to the Knowledge of
the Seller or the Company,
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threatened against or affecting the Company or any of its properties or assets,
at law or in equity, before or by any court, municipality or other Governmental
Body. To the extent any are disclosed on the Disclosure Schedule, none of such
claims, actions, suits, proceedings, or investigations, if adversely
determined, will result in any material liability or loss to the Company. The
Company has not been and the Company is not now, subject to any Court Order,
stipulation, or consent of or with any court or Governmental Body. No inquiry,
action or proceeding has been instituted or, to the Knowledge and belief of the
Seller or the Company, threatened or asserted against the Seller or the Company
to restrain or prohibit the carrying out of the transactions contemplated by
this Agreement or to challenge the validity of such transactions or any part
thereof or seeking damages on account thereof. To the Knowledge of the Company
and the Seller there is no basis for any such valid claim or action.
3.17 TAXES.
(a) All Federal, foreign, state, county and local
and other Taxes due from the Company on or before the Closing have been paid
and all Tax Returns which are required to be filed by the Company on or before
the date hereof have been filed within the time and in the manner provided by
all Requirements of Laws, and all such Tax Returns are true and correct and
accurately reflect the Tax liabilities of the Company. No Tax Returns of the
Company or the Seller are presently subject to an extension of the time to
file. All Taxes, assessments, penalties, and interest of the Company which
have become due pursuant to such Tax Returns or any assessments received have
been paid or adequately accrued on the Company's Financial Statements. The
provisions for Taxes reflected on the balance sheets contained in the Financial
Statements are adequate to cover all of the Company's Tax liabilities for the
respective periods then ended and all prior periods. The Company has not
executed any presently effective waiver or extension of any statute of
limitations against assessments and collection of Taxes, and there are no
pending or threatened claims, assessments, notices, proposals to assess,
deficiencies, or audits with respect to any such Taxes of which the Seller or
the Company are aware. For Governmental Bodies with respect to which the
Company does not file Tax Returns, no such Governmental Body has given the
Company written notification that the Company is or may be subject to taxation
by that Governmental Body. To the Knowledge of the Seller and the Company, the
Company has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, stockholder,
creditor, independent contractor or other party. There are no Tax liens on any
of the property or assets of the Company.
(b) Neither the Company nor any other corporation
has filed an election under Section 341(f) of the Code that is applicable to
the Company or any assets held by the Company. The Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code. The
Company has not been a United States real property holding corporation within
the meaning of Code Sec. 897(c)(2) during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. The Company is not a party to any Tax
allocation or sharing agreement. The Company has not and has never been (nor
does the Company have any liability for unpaid Taxes because it
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<PAGE> 22
once was) a member of an affiliated group during any part of which return year
any corporation other than the Company also was a member of the affiliated
group.
(c) No transaction contemplated by this Agreement
is subject to withholding under Section 1445 of the Code and no stock transfer
taxes, real estate transfer taxes or similar taxes will be imposed upon the
transfer and sale of the Shares pursuant to this Agreement.
(d) The Company has made a valid election under
Section 1362 of the Code and any corresponding state or local provisions to be
an S corporation within the meaning of Section 1361 of the Code for all taxable
years (or portions thereof) beginning on or after September 1, 1989, no such S
election has been terminated (whether voluntarily, involuntarily or
inadvertently, including, without limitation, by taking any action defined in
Section 1362(d) of the Code) since such time.
(e) The Company will not be required to include
any amount in taxable income or exclude any item of deduction or loss from
taxable income for any taxable period (or portion thereof) ending after the
Closing Date (i) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing Date, (ii) as a result of any "closing
agreement," as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign income Tax law) entered into on or prior
to the Closing Date, (iii) as a result of any sale reported on the installment
method where such sale occurred on or prior to the Closing Date, and (iv) as a
result of any prepaid amount received on or prior to the Closing Date.
3.18 PERSONNEL. Attached hereto as Exhibit L is a list of
the names and annual rates of compensation of the directors and executive
officers of the Company, and of the employees of the Company whose annual rates
of compensation during the calendar year ended December 31, 1997 (including
base salary, bonus and incentive pay) exceed (or by December 31, 1998 are
expected to exceed) $50,000. Exhibit L also summarizes the bonus, profit
sharing, percentage compensation, company automobile, club membership, and
other like benefits, if any, paid or payable to such directors, officers, and
employees during the Company's calendar year ended December 31, 1997 and to the
date hereof. Exhibit L also contains a brief description of all material terms
of employment agreements to which the Company is a party and all severance
benefits which any director, officer or employee of the Company is or may be
entitled to receive. To the Knowledge of the Seller and the Company, the
employee relations of the Company are generally good and there is no pending or
threatened labor dispute or union organization campaign. None of the employees
of the Company is represented by any labor union or organization. The Company
is in compliance in all material respects with all Requirements of Laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and are not engaged in any unfair labor
practices. Neither the Company or the Seller has been advised or otherwise has
Knowledge that any employee will not agree to remain employed by the Company
after the consummation of the transactions contemplated hereby. There is no
unfair labor practice claim against the Company before the National Labor
Relations Board, or any strike, dispute, slowdown, or stoppage pending or, to
the Knowledge of
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the Company and the Seller, threatened against or involving the Company, and
none has previously occurred.
3.19 BUSINESS RELATIONS. Neither the Company nor the
Seller has Knowledge or has received notice that any customer, supplier, travel
agency, resort operator or lodging or transportation company engaged in doing
business with the Company will cease to do business with the Company after the
consummation of the transactions contemplated hereby in the same manner and at
the same levels as previously conducted with the Company except for any
reductions which do not result in a Material Adverse Change. Neither the
Seller nor the Company has received any notice of cancellation of or Material
adverse modification to any Material business arrangement between any Person
and the Company nor is the Company or the Seller aware of any facts which could
lead them to believe that the Business will be subject to cancellation or such
a modification of any such business arrangement.
3.20 ACCOUNTS RECEIVABLE; CUSTOMER DEPOSITS AND BOOKINGS;
FINANCIAL RESULTS DURING CURRENT STUB PERIOD.
(a) ACCOUNTS RECEIVABLE. All of the accounts,
notes, and loans receivable that have been recorded on the books of the Company
are bona fide and represent amounts validly due for goods sold or services
rendered and all such amounts (net of any allowance for doubtful accounts) will
be collected in full within 180 days following the Closing Date, except for an
aggregate amount not to exceed $300,000 collection of which may extend to the
eleven (11) month anniversary of the Closing Date. With respect to such
accounts, notes and loans receivable, (i) all of such accounts, notes, and
loans receivable are free and clear of any Encumbrances; (ii) no claims of
offset have been asserted in writing against any of such accounts, notes, or
loans receivable; and (iii) none of the obligors of such accounts, notes, or
loans receivable has given written notice that it will or may refuse to pay the
full amount or any portion thereof.
(b) CUSTOMER DEPOSITS; BOOKINGS. Exhibit M sets
forth, as of the date specified therein, (i) all customer bookings as of such
date on an aggregate basis ("BOOKINGS"), (ii) all deposits received from
customers in connection with such Bookings as of such date on an aggregate
basis ("CUSTOMER DEPOSITS"), and (iii) the aggregate amount of all prepayments
to vendors and suppliers and refunds to customers made by the Company in
connection with such Bookings as of such date. As of the Closing Date, the
Company's aggregate exposure (net of third party reimbursements) for all claims
by customers for refunds as of such date ("CUSTOMER CLAIMS") does not exceed
$5,000. The Customer Deposits are recognized and included on the Company's
balance sheet only to the extent of cash received from the customers in respect
thereof, and each Customer Deposit so recognized and included is matched by a
deferred liability on such balance sheet. All cancellations by customers of
Bookings are recognized on the Company's financial statements promptly within
three (3) business days upon the Company's receipt of notice of such
cancellation from the customer. The number of Customer Claims, and the
projected cost to the Company in respect of such Customer Claims, for the
period since December 31, 1997 through the Closing Date are consistent with
past practices of the Company.
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<PAGE> 24
(c) FINANCIAL RESULTS DURING CURRENT STUB PERIOD.
On the Effective Date, Bookings shall exceed $15.8 million. The Company's
working capital (determined in accordance with Modified GAAP) shall not be less
than negative $1.6 million on the Effective Date. The EBIT for the Company for
the period from January 1, 1998 to and including the Effective Date shall
exceed negative $218,000. Such levels of Bookings for the Company are not
materially less than the levels of Bookings for the comparable 1997 period,
computed on a basis consistent with past practice; provided that Bookings for
fiscal year 1997 shall be determined without regard to any Bookings made in
connection with the Company's past relationship with Continental Vacations.
3.21 BANK ACCOUNTS; INVESTMENTS. Attached hereto as
Exhibit N is a list of all banks or other financial institutions with which the
Company has an account or maintains a safe deposit box, showing the type and
account number of each such account and safe deposit box and the names of the
persons authorized as signatories thereon or to act or deal in connection
therewith. Exhibit N also contains a list of all material investments by the
Company in any funds, accounts, securities, certificates of deposit or
instruments of any Person. To the Knowledge of the Seller and the Company, all
of such investments are customary in form and amount for reasonably prudent
treasury investments of comparable businesses. None of such investments
involve any type of derivative, option, hedging or other speculative
instrument.
3.22 CUSTOMER CLAIMS. No written or oral claim for breach
of contract or otherwise by any customer has been made against the Company
since January 1, 1998 which could, individually or in the aggregate, result in
any Material Adverse Effect. To the Knowledge of the Seller and the Company,
no state of facts exists, and no event has occurred, which could reasonably be
expected to form the basis of any present claim against the Company for
liability to any third party in connection with vacation packages sold or
services rendered by the Company, other than Customer Claims arising in the
ordinary course of the Business.
3.23 BROKERS. Neither the Company nor the Seller have
engaged, or caused to be incurred any liability to any finder, broker, or sales
agent in connection with the origin, negotiation, execution, delivery, or
performance of this Agreement or the transactions contemplated hereby.
3.24 AFFILIATED TRANSACTIONS. No officer, director,
stockholder (including the Seller) or Affiliate of the Company or any
individual related by blood or marriage to any such Person, or any entity in
which any such Person owns any beneficial interest, is a party to any
agreement, contract, arrangement or commitment with the Company or engaged in
any transaction with the Company or has any interest in any property used by
the Company. No officer, director, or stockholder of the Company or any
Affiliate of any such officer, director, or stockholder, has any ownership
interest in any competitor, supplier, or customer of the Company (other than
ownership of securities of a publicly-held corporation of which such Person
owns, or has real or contingent rights to own, less than one percent of any
class of outstanding securities) or any property used in the operation of the
Business.
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<PAGE> 25
3.25 FUNDED INDEBTEDNESS; LETTERS OF CREDIT; UNDISCLOSED
LIABILITIES.
(a) FUNDED INDEBTEDNESS. Other than such Funded
Indebtedness which is to be repaid and discharged prior to Closing in
accordance with Section 7.1(d) and outstanding equipment leases set forth in
Section 3.25(a) of the Disclosure Schedule, the Company does not have any
Funded Indebtedness.
(b) LETTERS OF CREDIT. Other than those listed
on Exhibit O, the Company has no letters of credit, performance bonds or
similar instruments issued on or for its account for the benefit of any of its
vendors or otherwise.
(c) UNDISCLOSED LIABILITIES. The Company does
not have any Material liabilities (whether absolute, accrued, contingent or
otherwise), of a nature required by Modified GAAP to be reflected on a
corporate balance sheet or disclosed in the notes thereto, except such
liabilities which are accrued or reserved against in the Most Recent Financial
Statements or disclosed in the notes thereto, including without limitation any
accounts payable or service liabilities of the Company.
3.26 YEAR 2000. All of the material computer software,
computer firmware, computer hardware (whether general or special purpose), and
other similar or related items of automated, computerized, and/or software
system(s) that are used or relied on by the Company in the conduct of its
business will not malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results when processing,
providing, and/or receiving (i) date-related data into and between the
twentieth and twenty-first centuries and (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries.
3.27 INFORMATION FURNISHED. To the Knowledge of the
Company and Seller, the Company and the Seller have made available to Buyer
true and correct copies of all material corporate records of the Company and
all material agreements, documents, and other items listed on the Exhibits and
Disclosure Schedule to this Agreement or referred to in Article III of this
Agreement, and neither this Agreement, the Schedules hereto, nor any written
information, instrument, or document delivered to Buyer pursuant to this
Agreement contains any untrue statement of a material fact.
3.28 SUNSHINE. With respect to the Sunshine Shares, the
Seller (and not the Company) represents and warrants to Buyer that except for
its account with the Airlines Reporting Corporation (ARC #22618002), Sunshine
has no other assets or liabilities of any kind, and Sunshine is not currently
engaged nor has it ever been engaged in the Tour Business or in any other
business since its inception.
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<PAGE> 26
ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to the Seller as follows:
4.1 DUE ORGANIZATION. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of New York and has full corporate power and authority to execute, deliver and
perform this Agreement and to carry out the transactions contemplated hereby.
4.2 DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action of Buyer and
the Agreement has been duly and validly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable in
accordance with its terms, except for the Equitable Exceptions. The execution,
delivery, and performance of this Agreement (as well as all other instruments,
agreements, certificates or other documents contemplated hereby) by Buyer, do
not (a) violate any Requirements of Laws or Court Order of any Governmental
Body applicable to Buyer or its property, (b) violate or conflict with, or
permit the cancellation of, or constitute a default under any agreement to
which Buyer is a party or by which it or its property is bound, (c) permit the
acceleration of the maturity of any indebtedness of, or any indebtedness
secured by the property of, Buyer, (d) violate or conflict with any provision
of the charter or bylaws of Buyer, or (e) except for filings or appraisals
under the HSR Act and such consents, approvals or registrations as may be
required under applicable state securities laws, require any consent, approval
or authorization of, or notice to, or declaration, filing or registration with,
any Governmental Body or other third party.
4.3 NO BROKERS. Buyer has not engaged, or caused to be
incurred any liability for which the Company or the Seller may be liable to any
finder, broker or sales agent in connection with the origin, negotiation,
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby.
4.4 INVESTMENT. Buyer will acquire the Shares for
investment and for its own account and not with a view to the distribution
thereof. Buyer has had an opportunity to review the financial books and
records of the Company.
4.5 CLAIMS AND PROCEEDINGS. No inquiry, action or
proceeding has been instituted or, to the knowledge and belief of Buyer,
threatened or asserted against Buyer to restrain or prohibit the carrying out
of the transactions contemplated by this Agreement or to challenge the validity
of such transactions or any part thereof or seeking damages on account thereof.
To the best knowledge of Buyer there is no basis for any such valid claim or
action.
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ARTICLE V
COVENANTS
5.1 CONSENTS OF OTHERS. Prior to the Closing, the
Company and the Seller shall use their best efforts to obtain and to cause the
Company to obtain all authorizations, consents and permits required of the
Company and the Seller under the Contracts (other than the Contract with Walt
Disney Attractions, Inc.) and real property leases to permit them to consummate
the transactions contemplated by this Agreement. To the extent required to
consummate such transactions or to ensure that the Contracts shall remain in
place following the Closing, the Seller shall have obtained the written consent
(or waiver of any "change of control"-type termination rights) of any third
party to any Contract (other than the Contract with Walt Disney Attractions,
Inc.). As promptly as practicable after the date hereof, Buyer, the Company
and the Seller shall make, or shall cause to be made, such filings as may be
required pursuant to the HSR Act with respect to the consummation of the
transactions contemplated by this Agreement.
5.2 SELLER'S EFFORTS. The Company and the Seller shall
use all reasonable efforts to cause all conditions for the Closing set forth in
Section 7.1 to be met.
5.3 POWERS OF ATTORNEY. The Company and the Seller shall
cause the Company to revoke and terminate at or prior to Closing all powers of
attorney granted by the Company, other than those relating to service of
process, qualification or pursuant to governmental regulatory or licensing
agreements, or representation before the IRS or other Government Bodies.
5.4 CONDUCT OF BUSINESS PENDING CLOSING. From the date
of this Agreement to the Closing Date:
(a) Except as otherwise contemplated by this
Agreement, or as Buyer may otherwise consent to in writing, the Company and the
Seller shall conduct the Business only in the ordinary course and shall not
engage in any material activity or enter into any material transaction which
would cause a breach of the representations and warranties contained in Article
III.
(b) The Seller and the Company shall use all
reasonable efforts to cause the Business to preserve substantially intact its
current business organization and present relationships with its customers,
vendors, suppliers and employees and to maintain all of its insurance currently
in effect.
(c) The Seller and the Company shall give prompt
notice to Buyer of any notice of material default received by the Company or
the Business subsequent to the date of this Agreement under any Contract or any
Material Adverse Change occurring prior to the Closing Date in the operation of
the Company or the Business.
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(d) Neither the Company nor the Seller, nor any
of their representatives, shall solicit, encourage or discuss any Acquisition
Proposal (as hereinafter defined) or supply any non-public information
concerning the Company or the Business or the Company's assets to any party
other than Buyer or its representatives. As used herein, "ACQUISITION
PROPOSAL" means any proposal other than the transactions herein contemplated,
for (i) any merger or other business combination involving the Company or the
Business, (ii) the acquisition of the Company or a material equity interest in
the Company or a material portion of its assets, or (iii) the dissolution or
liquidation of the Company.
5.5 ACCESS TO RECORDS BEFORE CLOSING. Prior to the
Closing Date, the Seller and the Company agree that they will give, or cause to
be given, to Buyer and their representatives, during normal business hours and
at Buyer's expense, access to the Company's personnel, officers, agents,
employees, assets, properties, titles, contracts, corporate minute and other
books, records, files and documents of the Seller with respect to the Business
(including financial, tax basis, budget projections, accountants' work papers
and other information as Buyer may request) and to the Business' personnel,
customers, suppliers and independent accountants, to allow Buyer to obtain such
information as they shall desire, and to make copies of such information, to
the extent reasonably necessary. Additionally, the Seller and the Company will
provide Buyer opportunities to meet with key employees of the Business, to
visit facilities of the Business and to otherwise conduct due diligence in
respect of the Company and the Business. All materials copied by Buyer and all
Confidential Information shall be maintained in confidence by Buyer and
returned to the Seller and/or the Company, as appropriate, if the Closing of
the transactions contemplated hereunder fails to occur. The exercise of
Buyer's rights hereunder shall be conducted at such times and in such a manner
as shall not unreasonably interfere with the Company's conduct of the Business.
5.6 PAYMENTS TO THE COMPANY BY THE SELLER.
(a) The Seller agrees to reimburse the Company
prior to the Closing Date for any and all legal, accounting and other expenses,
which (i) were paid or accrued by the Company and (ii) incurred by the Seller
or the Company in connection with the preparation and negotiation of this
Agreement and the consummation of the transactions contemplated hereby. All
such expenses are disclosed in Section 5.6(a) of the Disclosure Schedule.
(b) The Seller agrees to repay or caused to be
repaid to the Company as of the Closing any and all indebtedness owed by the
Seller or any Affiliate of the Seller, including without limitation any
indebtedness owed to the Company by Presidential, Aquarius Travel and Champagne
Realty. All such indebtedness is disclosed in Section 5.6(b) of the Disclosure
Schedule.
5.7 RELATIONSHIP WITH AQUARIUS TRAVEL. The Seller
shall use his reasonable efforts to cause Aquarius Travel to maintain the
Company as a preferred supplier of products consistent with past practices and
on at least as good of terms as set forth in the 1998 Commission Agreement
dated January 10, 1998 between the Company and Aquarius Travel.
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5.8 BUYER'S EFFORTS. Buyer shall use all reasonable
efforts to cause all conditions for the Closing set forth in Section 7.2 to be
met.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 GENERAL. In case at any time after the Closing any
further action is legally necessary or reasonably desirable (as determined by
Buyer and the Seller) to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article VIII
below). The Seller acknowledges and agrees that from and after the Closing,
Buyer will be entitled to possession of all documents, books, records,
agreements, and financial data of any sort relating to the Company, which shall
be maintained at the headquarters of the Company; provided, however, that the
Seller shall be entitled to reasonable access to and to make copies of such
books and records at their sole cost and expense and Buyer will maintain all of
the same for a period of at least three (3) years after Closing. Thereafter,
the Company will offer such documentation to the Seller before disposal
thereof.
6.2 TRANSITION. For a period of four (4) years following
Closing, the Seller will not take any action (or cause any such action to be
taken by another Person) that primarily is designed or intended to have the
effect of discouraging any vendor (including without limitation any airline or
other carrier, hotel, resort or rental car company), lessor, licensor,
customer, travel agency, consortia member, supplier, or other business
associate of the Company from maintaining the same business relations with the
Company after the Closing as it maintained with the Company prior to the
Closing. For a period of four (4) years following Closing, the Seller will
refer all customer inquiries relating to the Tour Business to the Company.
6.3 CONFIDENTIALITY. The Seller will treat and hold in
confidence and not disclose all Confidential Information and refrain from using
any of the Confidential Information except in connection with this Agreement or
otherwise for the benefit of the Company or Buyer for a period of four (4)
years from the date of this Agreement, and deliver promptly to Buyer or
destroy, at the written request and option of Buyer, all tangible embodiments
(and all copies) of the Confidential Information which are in their possession
except as otherwise permitted herein. In the event that the Seller is
requested or required (by oral question or written request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar legal proceeding) to disclose any Confidential Information,
the Seller will notify Buyer promptly of the request or requirement.
6.4 COVENANT NOT TO COMPETE. For and in consideration of
the allocation of $50,000 of the Purchase Price paid to the Seller by Buyer,
the Seller, by signing this Agreement, covenants and agrees, for a period of
four (4) years from and after the Closing Date, that he will
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not, directly or indirectly without the prior written consent of Buyer, for or
on behalf of any entity:
(a) become interested or engaged, directly or
indirectly, as a shareholder, bondholder, creditor, officer, director, partner,
agent, contractor with, employer or representative of, or in any manner
associated with, or give financial, technical or other assistance to, any
Person, firm or corporation for the purpose of (i) engaging in the Tour
Business in competition with the Company or any of its Affiliates or (ii)
providing wholesale travel sales or vacation package services directly to
consumers (or indirectly to consumers through other travel agents or
wholesalers) for travel to North America; provided, however, that the Seller's
ownership of an interest in and association with Aquarius Travel and General
Tours shall not constitute a violation of the foregoing covenant not to compete
so long as neither Aquarius Travel nor General Tours develop its own vacation
packages to be sold directly to consumers (or indirectly to consumers through
other travel agents or wholesalers) for travel to destinations serviced by the
Company or the Company's Affiliates; and provided, further, that so long as the
Seller maintains a passive interest in General Tours and is not able to direct
or exercise control over any of the activities or operations of General Tours
(other than serving as one of five directors of General Tours), Seller shall
not be required to cause General Tours to abide by the restrictions contained
in this Section 6.4, but at such time, if any, that the Seller is no longer a
passive investor in, or is able to direct or exercise control over any of the
activities or operations of, General Tours, the parties agree that the Seller
shall cause General Tours to abide by the restrictions contained in this
Section 6.4.
(b) enter into any agreement with, service,
assist or solicit the business of any customers of the Company or any of its
Affiliates for the purpose of providing wholesale travel or vacation package
services to such customers in competition with the Company or any of its
Affiliates or to cause them to reduce or end their business with the Company or
any of its Affiliates; or
(c) hire, retain, or solicit the employment or
services of employees, consultants or representatives of the Company or any of
its Affiliates for the purpose of causing them to leave the employment of the
Company or any of its Affiliates; provided, however, that in respect of
employees, consultants or representatives of any Affiliate of the Company, the
nonsolicitation covenant contained in this paragraph (c) shall only apply in
those situations where the affected person is being hired or solicited by
Seller to work for a business or entity that is competitive with the Company or
any Affiliate;
provided, however, that the Seller's ownership of less than five percent (5%)
of the outstanding stock of any publicly-traded corporation that engages in
competition with the Company or any of its Affiliates shall not be deemed to be
a violation of this Section 6.4 solely by reason thereof; and provided,
further, that the Seller's direct or indirect ownership of any Person that
engages in the Tour Business shall not be deemed a violation of this Section
6.4 if less than Five Million Dollars ($5,000,000) of the annual total sales of
such Persons, in the aggregate, is derived from the Tour Business.
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6.5 ADDITIONAL MATTERS.
(a) The Seller shall cause the Company to file
with the appropriate governmental authorities all Tax Returns required to be
filed by it for any taxable period ending prior to the Effective Date and the
Company shall remit any Taxes due in respect of such Tax Returns. In addition,
the Seller shall cause Carlin, Charron and Rosen, LLP to prepare a short period
tax return for the Company covering the period January 1, 1998 through the
Effective Date (the "SHORT PERIOD RETURN"). The cost of preparation of such
short period tax return shall be paid for by the Seller. The Seller agrees to
provide the Company and the Buyer with copies of the Company's Tax Returns and
the Short Period Return.
(b) Buyer and the Seller recognize that each of
them will need access, from time to time, after the Closing Date, to certain
accounting and Tax records and information held by Buyer and/or the Company to
the extent such records and information pertain to events occurring on or prior
to the Closing Date; therefore, Buyer agrees to cause the Company to (A) use
its best efforts to properly retain and maintain such records for a period of
six (6) years from the date the Tax Returns for the year in which the Closing
occurs are filed or until the expiration of the statute of limitations with
respect to such year, whichever is later, and (B) each party agrees to allow
the other party and his or its agents and representatives at times and dates
mutually acceptable to the parties, to inspect, review and make copies of such
records as such other party may deem necessary or appropriate from time to
time, such activities to be conducted during normal business hours and at the
requesting party's expense.
(C) SECTION 338(h)(10) ELECTION. If in Buyer's
sole discretion such an election is deemed to be desirable, the Seller and
Buyer shall join in making a timely election (but in no event later than the
15th day of the ninth full calendar month after the month in which the Closing
Date occurs) under Section 338(h)(10) of the Code (including the prerequisite
election under Section 338 of the Code) and any similar state law provisions in
all applicable states which permit corporations to make such elections, with
respect to the sale and purchase of the Shares pursuant to this Agreement, and
each party shall provide the others all necessary information to permit such
elections to be made. Buyer and the Seller shall, as promptly as practicable
following the Closing Date, take all actions necessary and appropriate
(including filing such forms, returns, schedules and other documents as may be
required) to effect and preserve timely elections; provided, however, that
Buyer shall be the party responsible for preparing and filing the forms,
returns, schedules and other documents necessary for making an effective and
timely election. All Taxes attributable to the elections made pursuant to this
Section 6.5(c) shall be the liability of the Seller. In connection with such
elections, following the Closing Date, Buyer and the Seller shall act together
in good faith to determine and agree upon the "deemed sales price" to be
allocated to each asset of the Company in accordance with Treasury Regulation
Section 1.338(h)(10)-1(f) and the other regulations under Section 338 of the
Code. Notwithstanding the generality of the immediately preceding sentence,
Buyer and the Seller agree that the "deemed sales price" shall be allocated to
the monetary assets of the Company at their fair market value as of the
Effective Date as determined as part of the determination of the Net Worth of
the Company in accordance with Section 2.7 hereof, $50,000 shall be allocated
to the covenant not to compete contained in Section 6.4 hereof, and the balance
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of the "deemed sales price" shall be allocated to the fixed assets, goodwill
and other intangible assets of the Company. Both Buyer and the Seller shall
report the tax consequences of the transactions contemplated by this Agreement
consistently with such allocations and shall not take any position inconsistent
with such allocations in any Tax Return or otherwise. In the event that Buyer
and the Seller are unable to agree as to such allocations, Buyer's reasonable
positions with respect to such allocations shall control.
(d) INDEMNITY. The Seller shall be liable for,
and shall indemnify and hold Buyer and the Company harmless against, any Taxes
or other costs attributable solely to (i) a failure on the part of the Seller
to take all actions required of him under Section 6.5(c); or (ii) a failure on
the part of the Company to qualify, at or prior to the Closing, as an "S
corporation" for federal and/or state income Tax purposes. The indemnity set
forth in this Section 6.5(d) shall not be subject to the conditions and
limitations set forth in Section 8.6 of this Agreement.
6.6 LITIGATION SUPPORT. In the event and for so long as
any party is actively contesting or defending against any claim, suit, action
or charge, complaint, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, circumstance, status,
condition, activity, practice, occurrence, event, action, failure to act, or
transaction on or prior to the Closing Date involving the Company, each of the
other parties will cooperate and make available themselves or their personnel,
as applicable, and provide such testimony and access to their books and records
as shall be necessary in connection with the contest or defense.
6.7 AUDITS. Following the Closing, the Seller shall
cooperate with Buyer's efforts to cause the Company, at the Company's expense,
to deliver, or cause to be delivered, to Buyer an unqualified and unmodified
audit report of AA on the balance sheets of the Company as of December 31,
1995, December 31, 1996 and December 31, 1997, and audited statements of
operations and cash flows of the Company for the fiscal years then ended, which
report shall be without limitation as to the scope of the audit. The Seller,
in his capacity as an officer and directors of the Company during such periods,
shall assist Buyer, at no cost or expense to Seller, by providing all
management letters, reports or representations reasonably requested by such
auditors in connection with such audits.
6.8 POST-CLOSING OPERATIONS. Buyer shall cause the
Company to use its reasonable efforts, consistent with past practices, to
collect and, if necessary, settle all accounts receivable recorded on the books
of the Company as of the Closing Date (the "RECEIVABLES"). Buyer shall cause
the Company to use its reasonable efforts, consistent with past practices, to
research, confirm, and approve the accuracy of all invoices, billings, debit
memos, credit adjustments, and other charges to the Company with respect to
operations prior to the Closing Date. Buyer shall cause the Company to pay any
such accounts payable in accordance with past practices. Upon two (2) business
days prior notice, Buyer shall allow representatives of the Seller reasonable
access to the Company's facilities, personnel, books, and records so as to
permit the Seller an opportunity to monitor the Company's efforts with respects
to this Section 6.8.
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6.9 UNCOLLECTED RECEIVABLES. In the event the Seller
indemnifies the Company, or any other Indemnified Party, for any accounts
receivables of the Company outstanding as of the Closing Date which remained
uncollected after the Closing Date, and such accounts receivables are
subsequently collected by the Company, the Company shall promptly reimburse the
Seller for all such collected amounts, less any amounts relating to uncollected
accounts receivables that an Indemnified Party was not able to receive from the
Seller in view of the limitations set forth in Section 8.6.
6.10 TRANSACTION EXPENSES. In the event the legal,
accounting and other related expenses of the Company and the Seller actually
incurred in connection with the preparation and negotiation of this Agreement
and the transactions contemplated hereby are less than the amount of expenses
set forth in Section 5.6(a) of the Disclosure Schedule and paid to Company by
the Seller pursuant to Section 5.6(a) hereof, Buyer agrees to cause the Company
promptly to pay to the Seller the amount of such excess, on a dollar-for-dollar
basis.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING
7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of
Buyer under this Agreement to consummate the Closing is subject to the
conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
The Company and the Seller shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by each
of them prior to or at the Closing Date. The representations and warranties of
the Company and the Seller set forth in this Agreement shall be accurate in all
material respects at and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date. In addition, Buyer shall have
determined from its due diligence review of the Company that no Material
Adverse Change or Material Adverse Effect shall have occurred in the financial
condition, business, operations or prospects of the Company from those
presented to Buyer prior to execution of this Agreement.
(b) CONSENTS. All statutory requirements for the
valid consummation by the Company and the Seller of the transactions
contemplated by this Agreement shall have been fulfilled and all
authorizations, consents and approvals, including expiration or early
termination of all waiting periods under the HSR Act, if applicable, and those
of all federal, state, local and foreign governmental agencies and regulatory
authorities required to be obtained in order to permit the consummation of the
transactions contemplated hereby shall have been obtained in form and substance
reasonably satisfactory to Buyer. All approvals of the Board of Directors and
stockholders of the Company necessary for the consummation of this Agreement
and the transactions contemplated hereby shall have been obtained.
(c) SUBLEASE. A sublease for the Company's
headquarters and call center in Cambridge, MA shall have been executed in form
and substance satisfactory to Buyer.
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(d) DISCHARGE OF INDEBTEDNESS AND LIENS. The
Seller and the Company shall have provided for the payment in full by the
Company of all Funded Indebtedness of the Company and all extended credit from
vendors at the Closing (other than customary accounts payable outstanding on 90
day or less payment terms in accordance with past practices). Such Funded
Indebtedness, if any, as of December 31, 1997, is listed on Exhibit P hereto.
The Seller shall have also provided for the termination of all Encumbrances of
record on the properties of the Company, except for Permitted Exceptions.
Except for those items set forth in Section 7.1(d) of the Disclosure Schedule,
all liens or UCC filings against the Company shall have been terminated as of
the Closing.
(e) TRANSFER TAXES. The Seller shall have paid
all stock transfer or gains taxes imposed on the Seller incurred in connection
with this Agreement.
(f) FINANCIAL CONDITION. The Company shall
continue to have Cash and Cash Equivalents on the Closing Date in an amount not
less than $1.9 million.
(g) PRELIMINARY CLOSING BALANCE SHEET.
The Company and the Seller shall have delivered to Buyer the Preliminary
Closing Balance Sheet and Buyer shall be reasonably satisfied in all respects
with the content of the Preliminary Closing Balance Sheet.
(h) TRANSITION SERVICES AGREEMENT. The Company
and Aquarius Travel shall have entered into a Transition Services Agreement in
form and substance satisfactory to Buyer.
(i) ASSIGNMENT. The Company shall have
registered with the U.S. Patent and Trademark Office, the assignment from
Carlson Travel Group, Inc. to the Company on August 31, 1993 of the federally
registered mark "SuperCities" (Registration No. 1,339,558).
(j) DOCUMENTS TO BE DELIVERED BY THE SELLER AND
THE COMPANY. The following documents shall be delivered at the Closing by the
Seller and the Company:
(i) OPINION OF GARGILL, SASSOON &
RUDOLPH. Buyer shall have received an opinion of Gargill,
Sassoon & Rudolph LLP, dated the Closing Date, in
substantially the same form as the form of opinion that is
Exhibit B hereto.
(ii) CERTIFICATES. Buyer shall have
received (i) an officer's and stockholder's certificate and
(ii) a clerk's certificate of the Company executed by officers
of the Company and the Seller, as appropriate and dated the
Closing Date, in substantially the same forms as the forms of
certificates that are attached as Exhibit C-1 and Exhibit C-2,
respectively, hereto.
(iii) RELEASE. The Seller shall have
furnished the Company with a duly executed general release of
liabilities in the form attached as Exhibit D hereto.
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(vi) ESCROW AGREEMENT. The Seller shall
have delivered to Buyer at the Closing the duly executed
Escrow Agreement.
(v) TERMINATION OF EMPLOYMENT
AGREEMENTS. The Company shall have provided evidence
satisfactory to Buyer of the complete termination, without
liability to the Company, of all employment agreements in
existence prior to the Closing among the Company, on the one
hand, and the Seller or any other employees of the Company;
provided, however, that the parties to this Agreement
acknowledge and agree that for purposes of this Agreement an
employee-at-will shall not be considered to be bound and
subject to an employment agreement.
(vi) STOCK CERTIFICATES. The Seller
shall have delivered the Shares accompanied by duly executed
stock powers, together with any stock transfer stamps or
receipts for any transfer taxes required to be paid thereon.
(vii) RESIGNATION OF DIRECTORS. The
Company and Sunshine shall deliver the written resignations of
all directors of the Company and Sunshine effective as of the
Closing; provided that Buyer shall cause replacement
director(s) to be duly elected and appointed upon such
resignations.
7.2 CONDITIONS TO THE SELLER'S AND THE COMPANY'S
OBLIGATIONS. The obligation of the Seller and the Company under this Agreement
to consummate the Closing is subject to the conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES.
Buyer shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants contained
in this Agreement to be performed and complied with by Buyer prior to or at the
Closing and the representations and warranties of Buyer set forth in Article IV
hereof shall be accurate in all material respects, at and as of the Closing
Date, with the same force and effect as though made on and as of the Closing
Date.
(b) CONSENTS. All statutory requirements for the
valid consummation by Buyer of the transactions contemplated by this Agreement
shall have been fulfilled and all authorizations, consents and approvals,
including expiration or early termination of all waiting periods under the HSR
Act (if applicable) and those of all federal, state, local and foreign
governmental agencies and regulatory authorities required to be obtained in
order to permit the consummation by Buyer of the transactions contemplated
hereby shall have been obtained unless such failure shall not have a Material
Adverse Effect on the Business.
(c) ESCROW AGREEMENT. Buyer shall have delivered
to the Seller at the Closing the duly executed Escrow Agreement required
pursuant to Section 2.5 hereof.
(d) PAYMENTS TO THE SELLER. The Seller shall
have received the portion of the Purchase Price payable at Closing to the
Seller.
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(e) CONSULTING AGREEMENT. The Company and the
Seller shall have entered into a Consulting Agreement on terms mutually
satisfactory to the parties.
(f) SUBLEASE. A sublease for the Company's
headquarters and call center in Cambridge, MA shall have been executed in form
and substance satisfactory to the Seller.
7.3 WAIVER. Buyer can waive satisfaction of any
condition set forth in Section 7.1 and the Seller can waive any condition set
forth in Section 7.2
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF BUYER. Except as provided in and
subject to Section 8.6, the Seller agrees to indemnify and hold harmless Buyer,
the Company, each officer and director of the Company and Buyer and any
successor of the Company or Buyer (collectively, the "INDEMNIFIED PARTIES")
from and against any and all actual damages (but not including punitive
damages; provided, however, that the Seller shall be required to indemnify and
hold the Indemnified Parties harmless from any punitive damages that an
Indemnified Party may be required to pay to a third party), losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively,
the "INDEMNIFIABLE COSTS"), which any of the Indemnified Parties may sustain,
or to which any of the Indemnified Parties may be subjected, arising out of (A)
any misrepresentation, breach or default by the Seller or the Company of or
under any of the representations, warranties, covenants, agreements or other
provisions of this Agreement or any agreement or document executed in
connection herewith and (B) the Company's tortious acts or omissions to act
prior to Closing for which the Company did not carry liability insurance for
itself as the insured party sufficient to satisfy such claim or liability,
whether or not such acts or omissions to act result in a breach or violation of
any representation or warranty.
8.2 DEFENSE OF THIRD PARTY CLAIMS. If any legal
proceeding shall be instituted, or any claim or demand made, by any third party
against any Indemnified Party in respect of which the Seller may be liable
hereunder (and such determination shall be made without regard to the
limitations set forth in Section 8.6), such Indemnified Party shall give prompt
written notice thereof to the Seller and, except as otherwise provided in
Section 8.4 below, the Seller shall have the right to defend, or cause the
Company or its successors to defend, any litigation, action, suit, demand, or
claim for which such Indemnified Party may seek indemnification with counsel
satisfactory to the Seller; provided, however, that the Seller may not settle
any such litigation, action, suit, demand, or claim without the prior written
consent of Buyer, which shall not be unreasonably withheld. Notwithstanding
the foregoing, if in the reasonable judgment of Buyer, (i) such litigation,
action, suit, demand or claim, or the resolution thereof, would have a Material
Adverse Effect on Buyer or the Company in excess of $100,000 or (ii) Seller has
a conflict of interest in defending such action on Buyer's or the Company's
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behalf, at Buyer's election, Buyer may defend itself (although in the case of
(i) above, Buyer's defense of any such action shall be through counsel
reasonably acceptable to Seller, such approval to not be unreasonably
withheld), and in either of such instances Seller shall be liable for all
expenses reasonably incurred in connection therewith (including, without
limitation, settlement payments and reasonable attorney's fees); provided,
however, that Buyer may not settle any such litigation, action, suit, demand,
or claim without the prior written consent of the Seller, which shall not be
unreasonably withheld. If neither (i) nor (ii) are applicable but Buyer
desires to participate in the defense of an action Seller is defending because
in Buyer's reasonable judgment the outcome of such action could have an ongoing
effect on Buyer, the Company or its successors, the Buyer may participate but
at its own expense. In the event the Seller fails or refuses to defend any
legal proceeding he is required to defend under this Article VIII within a
reasonable length of time, the Indemnified Parties shall be entitled to assume
the defense thereof, and the Seller shall be liable to repay the Indemnified
Parties for all expenses reasonably incurred in connection with said defense
(including, without limitation, settlement payments and reasonable attorney's
fees). If the Seller does not or refuses to assume the defense of any
litigation, action, suit, demand, or claim in any legal proceeding he is
required to defend under this Article VIII, the Indemnified Parties shall have
the absolute right, at Seller's expense, to control the defense of and to
settle, in their sole discretion and without the consent of Seller, such
litigation, action, suit, demand, or claim, but Seller shall be entitled, at
his own expense, to participate in such litigation, action, suit, demand, or
claim, and if the Seller elects to participate in such litigation the
Indemnified Parties shall consult with the Seller prior to settling such
litigation. The party controlling any defense pursuant to this Section 8.2
shall deliver, or cause to be delivered to the other party, copies of all
correspondence, pleadings, motions, briefs appeals or other written statements
relating to or submitted in connection with the defense of any such litigation,
action, suit, demand, or claim, and timely notices of any hearing or other
court proceeding relating to such litigation, action, suit, demand, or claim.
8.3 PROCEDURE FOR CLAIMS.
(a) ESCROW CLAIMS. If any claim for
indemnification is made by an Indemnified Party pursuant to this Article VIII
prior to the expiration of the Escrow Period, such Indemnified Party shall first
apply to the Escrow Agent provided in Section 2.5 of this Agreement for
reimbursement of such claim in accordance with the provisions of the Escrow
Agreement; provided, however, the Escrow Sum is not intended to be an exclusive
remedy in the event Buyer has indemnification claims hereunder which exceed such
amount.
(b) OTHER CLAIMS. If pursuant to this
Article VIII any claim for indemnification is made by (i) an Indemnified Party
after the expiration of the Escrow Period, other than claims of third parties
which are governed by Section 8.2 hereof, or (ii) the Seller, the Indemnified
Party or the Seller, as the case may be (in either instance, the "CLAIMANT"),
shall send written notice to the other Person (by certified mail, return receipt
requested or by personal service as provided in Section 10.2 hereof) setting
forth in reasonable detail a description of the facts upon which the claim is
based and a reasonable estimate of the amount of the claim (a "CLAIM", with the
notice thereof referred to as the "CLAIM NOTICE"). The Person against whom the
Claim is brought (the RESPONDENT") shall have fifteen (15) calendar days from
receipt of the Claim
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Notice to respond to such Claim. Such response shall be in writing and shall
(i) set forth in reasonable detail the Respondent's objection to the Claim and
the basis for such objection, or (ii) the efforts undertaken or to be
undertaken by the Respondent to cure the Claim. In the event the Respondent
fails to respond to the Claim Notice in the manner set forth above within such
15-day period, the Respondent shall be deemed to have conceded the Claim in
full. In the event the parties are unable to resolve the Claim within thirty
(30) calendar days from the date of receipt of the Claim Notice, the Claim
shall be submitted to arbitration in accordance with Section 10.9 below.
8.4 TAX AUDITS, ETC. In the event of an audit of a Tax
Return of the Company with respect to which an Indemnified Party might be
entitled to indemnification pursuant to this Article VIII, Buyer shall have the
right to control any and all such audits which may result in the assessment of
additional Taxes against the Company and any and all subsequent proceedings in
connection therewith, including appeals (subject to the prior written consent
of the Seller, which shall not unreasonably be withheld and subject to the
right of the Seller to have his accountants and attorneys consult with Buyer on
such audits or procedures at the Seller's expense); provided, however, that the
Seller and the Buyer shall jointly control, and shall cooperate with each other
in connection with, any and all such audits which may result in the assessment
of additional Taxes against both the Seller and the Company. The Seller shall
cooperate fully in all matters relating to any such audit or other Tax
proceeding (including according access to all records pertaining thereto), and
will execute and file any and all consents, powers of attorney, and other
documents as shall be reasonably necessary in connection therewith. If
additional Taxes are payable by the Company as a result of any such audit or
other proceeding, the Seller shall be responsible for and shall promptly pay
all Taxes, interest, and penalties for which any of the Indemnified Parties
shall be entitled to indemnification.
8.5 INDEMNIFICATION OF SELLER. Buyer agrees to indemnify
and hold harmless the Seller and the Company and each officer, director,
stockholder or affiliate of the Company, from and against any Indemnifiable
Costs arising out of any misrepresentation, breach or default by Buyer of or
under any of the covenants, agreements or other provisions of this Agreement or
any agreement or document executed in connection herewith.
8.6 LIMITS ON INDEMNIFICATION. All Indemnifiable Costs
sought by any party hereunder shall be net of any insurance proceeds received
by such Person with respect to such claim (less the present value of any
premium increases occurring as a result of such claim). Except for any claims
for breach of the representations, warranties and covenants of the Seller under
Sections 3.1, 3.2, 3.3, 3.6, 3.14, 3.17 or 6.5(d) hereof (for which
indemnification claims must be made prior to the expiration of the applicable
statute of limitations and if so made, such claims shall continue after such
date until finally resolved), the right to make claims for indemnification
provided under this Article VIII shall expire on the second anniversary of the
Closing Date (except for claims made prior to such date which shall continue
after such date until finally resolved). The Seller shall not be obligated to
pay any amounts for indemnification under this Article VIII until the aggregate
indemnification obligation sought by Buyer hereunder exceeds $100,000 (less any
amount that Buyer is unable to receive pursuant to Section 2.7 as a result of
the requirement that the Projected Closing Date Net Worth exceeds the Net Worth
reflected on the Audited Closing Balance Sheet by more than $25,000) (the
"BASKET"),
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whereupon the Seller shall be liable for all amounts for which indemnification
may be sought in excess of $50,000; provided, however, that any Indemnifiable
Costs resulting from (i) a breach by the Seller of any of his obligations under
Section 5.6 or Section 6.5 hereof, (ii) the Seller's failure to obtain, in
connection with the transactions contemplated by this Agreement, the consent of
the landlord under the lease agreement relating to the 2171 Campus Drive
property in Irvine, California, or (iii) the Company's failure to be qualified
to transact business in the State of New York or the Commonwealth of
Pennsylvania as of the Closing Date, shall not be subject to the limitations
set forth in this sentence, but shall be reimbursable by the Seller to the
Indemnified Parties on a dollar-for-dollar basis. Buyer shall not be obligated
to pay any amounts for indemnification under this Article VIII until the
aggregate indemnification obligation sought by the Seller hereunder exceeds
$100,000, whereupon Buyer shall be liable for all amounts for which
indemnification may be sought in excess of $50,000. For purposes of Section
8.1 or 8.5, any requirement in any representation or warranty that an event or
fact be material or have a Material Adverse Effect, as appropriate, in order
for such event or fact to constitute a misrepresentation or breach of such
representation or warranty shall be ignored. Notwithstanding the foregoing, in
no event shall the aggregate liability of the Seller to Buyer or Buyer to the
Seller exceed the Purchase Price. However nothing in this Article VIII shall
limit Buyer or the Seller in exercising or securing any remedies provided by
applicable statutory or common law with respect to the conduct of the Seller or
Buyer in connection with this Agreement or in the amount of damages that it can
recover from the other in the event that Buyer successfully proves intentional
fraud or intentional fraudulent conduct in connection with this Agreement. All
Indemnifiable Costs paid by the Seller shall be deemed to be a reduction of the
Purchase Price paid by Buyer under this Agreement. The parties agree that any
Indemnifiable Cost otherwise recoverable under Section 8.1 hereof that has
already been collected by an Indemnified Party under Section 2.7 hereof shall
not be collected a second time or be charged to the Basket by an Indemnified
Party pursuant to this Article VIII.
8.7 INDEMNIFICATION FOR LETTERS OF CREDIT AND EQUIPMENT
LEASES.
(a) Exhibit O hereto lists the outstanding
letters of credit that the Seller has caused the Company, prior to the Closing
Date, to arrange and maintain in support of its business (the "LETTERS OF
CREDIT"). The Seller hereby agrees that it shall maintain and not take any
steps to cancel or terminate the Letters of Credit except as provided in this
Section 8.7.
(b) Buyer and the Company jointly and severally
agree that on or before the next expiration date of each separate Letter of
Credit (assuming non-renewal under any evergreen provisions contained in any
such Letter of Credit), Buyer and/or the Company shall arrange for the Bank of
New York ("BNY") or another acceptable financial institution to provide and
issue replacement letters of credit for each of the Letters of Credit, which
the Company and Buyer deem necessary to continue to operate the business of the
Company. Buyer shall not permit the Company to draw on the line of credit
relating to the Letter of Credits.
(c) In connection with the replacement of the
Letters of Credit in accordance with the foregoing provisions of Section
8.7(b), the Seller shall take, and Buyer and the Company agree that they too
shall cooperate with the Seller to take, all such steps as are
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<PAGE> 40
necessary and required under the terms of each Letter of Credit to provide any
required notice of termination and/or non-renewal to the issuing banks and
beneficiaries of such Letters of Credit.
(d) Buyer and the Company agree that after the
Closing Date they shall be jointly and severally liable for the payment to or
reimbursement of the Seller for (i) any costs, fees and expenses associated
with the Letters of Credit and incurred by the Seller because of the acts or
omissions of the Company or Buyer after the Closing Date and (ii) any costs,
fees and expenses associated with the continuation of the Letter of Credit
facility with USTrust as contemplated under this Section 8.7.
(e) Buyer and the Company do hereby indemnify and
agree to hold the Seller harmless from any liability, claim or obligation
incurred by the Seller and relating to or arising out of any Letter of Credit
after the Closing Date or the related credit facility with USTrust, and all
amounts which the Seller pays or becomes obligated to pay under the Letters of
Credit or the related credit facility with USTrust after the Closing Date shall
be paid on written demand by Buyer and the Company. To the extent any such
amount is not so paid within three (3) business days from receipt of such
demand, it shall bear interest at BNY's Prime Rate until paid.
(f) Buyer and the Company do hereby indemnify and
agree to hold the Seller harmless from any liability, claim or obligation
incurred by the Seller because of the acts or omissions of the Company or Buyer
after the Closing Date that arises out of the Seller's guarantee of the two
equipment leases set forth as items 1 and 2 on Section 3.25(a) of the
Disclosure Schedule, and all amounts which the Seller pays or becomes obligated
to pay under such guarantees after the Closing Date shall be paid on written
demand by Buyer and the Company. To the extent any such amount is not so paid
within three (3) business days from receipt of such demand, it shall bear
interest at BNY's Prime Rate until paid.
(g) Buyer and the Company agree that the
reimbursement and indemnification obligations of Buyer and the Company under
this Section 8.7 shall not be subject to the limitations and conditions set
forth in Section 8.6 above.
ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of the Company
and Buyer;
(b) in writing by Buyer, if the Company or any of
the Seller has breached in any material respect any representation, warranty or
covenant contained in this Agreement, and in each case such breach has not been
remedied within ten (10) business days (plus such additional time not to exceed
ten (10) business days as may be reasonably required to
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<PAGE> 41
remedy any nonmonetary defaults) after receipt of notice specifying such breach
and demanding such breach to be remedied; or
(c) in writing by the Seller and the Company, if
Buyer has breached in any material respect any representation, warranty or
covenant contained in this Agreement, and in each case such breach has not been
remedied within ten (10) business days (plus such additional time not to exceed
ten (10) business days as may be reasonably required to remedy any nonmonetary
defaults) after receipt of notice specifying such breach and demanding such
breach to be remedied; or
(d) in writing by either the Company and the
Seller, on the one hand, or Buyer, on the other hand, in the event the Closing
has not occurred on or before May 31, 1998, unless the failure of such
consummation or the failure to satisfy such condition, as applicable, shall be
due to a breach of any representation or warranty made by the party or parties
seeking to terminate this Agreement or the failure of such party or parties to
comply in all material respects with the agreements and covenants contained
herein to be performed by such party or parties.
9.2 EFFECT OF TERMINATION. If the transactions
contemplated by this Agreement are terminated pursuant to Section 9.1 by notice
in writing to the non-terminating party or parties, this Agreement shall become
void and of no further force and effect, except that such termination shall not
relieve (i) any party from its covenants in respect of confidentiality
contained in Section 6.3 and the second to last sentence of Section 5.5 and
(ii) any party then in breach of any representation, warranty, covenant or
agreement contained in this Agreement from liability in respect of such breach.
ARTICLE X
MISCELLANEOUS
10.1 MODIFICATIONS; WAIVERS. Any amendment, change or
modification of this Agreement shall be void unless in writing and signed by
all parties hereto. No failure or delay by any party hereto in exercising any
right, power or privilege hereunder (and no course of dealing between or among
any of the parties) shall operate as a waiver of any such right, power or
privilege. No waiver of any default on any one occasion shall constitute a
waiver of any subsequent or other default. No single or partial exercise of
any such right, power or privilege shall preclude the further or full exercise
thereof.
10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered, or 48 hours after deposited in the United States mail,
first-class, postage prepaid, or by facsimile addressed to the respective
parties hereto as follows:
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<PAGE> 42
Buyer:
Global Vacation Group, Inc.
c/o Thayer Capital Partners
1455 Pennsylvania Avenue, NW
Suite 350
Washington, D.C. 20004
Attention: Roger Ballou, President
Daniel Raskas
Fax No.: (202) 371-0391
Tel No.: (202) 371-0150
With a copy to:
Hogan & Hartson L.L.P.
Columbia Square
Thirteenth Street, NW
Washington, DC 20004-1109
Attention: Chris Hagan
Hovey Kemp
Fax No.: (202) 637-5910
Tel No.: (202) 637-5600
The Company or the Seller:
Globetrotters, Inc.
139 Main Street
Cambridge, MA 02142
Attention: Robert A. Grinberg
Tel No.: (617) 621-9911 ext. 500
With a copy to:
Gargill, Sassoon & Rudolph LLP
92 State Street
Boston, MA 02109
Attention: Lewis A. Sassoon
Fax No.: (617) 227-0313
Tel No.: (617) 523-7700
or to such other address as to any party hereto as such party shall designate
by like notice to the other parties hereto.
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<PAGE> 43
10.3 COUNTERPARTS; FACSIMILE TRANSMISSION. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original but all of which counterparts collectively shall constitute one
instrument, and in making proof of this Agreement, it shall never be necessary
to produce or account for more than one such counterpart. Signatures of a
party to this Agreement or other documents executed in connection herewith
which are sent to the other parties by facsimile transmission shall be binding
as evidence of acceptance of the terms hereof or thereof by such signatory
party, with originals to be circulated to the other parties in due course.
10.4 EXPENSES. Each of the parties hereto will bear all
costs, charges and expenses incurred by such party in connection with this
Agreement and the consummation of the transactions contemplated herein,
provided, however, that the Seller shall bear all costs and expenses of (i) any
broker involved in this transaction on behalf of the Seller or the Company and
(ii) all legal and other expenses of the Seller or the Company with respect to
this Agreement and the transactions contemplated hereby.
10.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Company, Buyer and the Seller,
their heirs, representatives, successors, and permitted assigns, in accordance
with the terms hereof. This Agreement shall not be assignable by the Company
or the Seller without the prior written consent of Buyer. This Agreement shall
be assignable by Buyer to either (a) any lender providing financing to Buyer or
its Affiliates or (b) an Affiliate of Buyer, in each case without the prior
written consent of Sellers, but any such assignment shall not relieve Buyer of
its obligations hereunder. In addition, Buyer may assign any or all of its
rights and obligations hereunder, without the consent of the Seller following
the Closing, in connection with any sale of all or substantially all of the
assets, capital stock or business of Buyer or the Company (whether effected by
sale, exchange, merger, consolidation or other transaction). Any assignment by
Buyer shall include an assumption agreement by the assignee.
10.6 ENTIRE AND SOLE AGREEMENT. This Agreement and the
other schedules and agreements referred to herein, constitute the entire
agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements
and understandings, whether oral or written, express or implied, with respect
to the subject matter hereof.
10.7 GOVERNING LAW. This Agreement and its validity,
construction, enforcement, and interpretation shall be governed by the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.
10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Regardless of any investigation at any time made by or on behalf of
any party hereto or of any information any party may have in respect thereof,
all covenants, agreements, representations, and warranties and the related
indemnities made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of two
(2) years, provided (a) the representations and warranties contained in
Sections 3.14 and 3.17 of this
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<PAGE> 44
Agreement, and the related indemnities, shall survive the Closing until the
expiration of the applicable statutes of limitations for determining or
contesting Tax liabilities, (b) the representations, warranties and covenants
contained in Sections 3.1, 3.2, 3.3, 3.6 and 6.5(d) of this Agreement, and the
related indemnities, shall survive the Closing indefinitely and not expire, (c)
all covenants in Article VI which have an expiration date contained therein
shall expire as of such date, and (d) all other covenants in this Agreement
that do not have an expiration date shall expire upon the expiration of the
applicable statutes of limitations.
10.9 DISPUTE RESOLUTION. ALL DISPUTES BETWEEN THE SELLER
AND BUYER WITH RESPECT TO ANY PROVISION OF THIS AGREEMENT OR THE RIGHTS AND
OBLIGATIONS OF THE SELLER AND BUYER HEREUNDER (OTHER THAN DISPUTES INVOLVING
ALLEGATIONS OF INTENTIONAL FRAUD AND DISPUTES ARISING UNDER SECTION 6.4 OF THIS
AGREEMENT), WHICH CANNOT BE RESOLVED BY MUTUAL AGREEMENT, WILL BE RESOLVED IN
THE DISTRICT OF COLUMBIA BY BINDING ARBITRATION IN ACCORDANCE WITH THE RULES OF
THE AMERICAN ARBITRATION ASSOCIATION IN THE DISTRICT OF COLUMBIA OR BY ANY
OTHER MEANS OF ALTERNATIVE DISPUTE RESOLUTION MUTUALLY AGREED UPON BY THE
PARTIES.
10.10 INVALID PROVISIONS. If any provision of this
Agreement is deemed or held to be illegal, invalid or unenforceable, this
Agreement shall be considered divisible and inoperative as to such provision to
the extent it is deemed to be illegal, invalid or unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal, invalid or unenforceable
provision and be legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be
binding upon all parties hereto.
10.11 PUBLIC ANNOUNCEMENTS. Neither the Seller nor the
Company shall make any public announcement of the transactions contemplated
hereby without the prior written consent of Buyer, which consent shall not be
unreasonably withheld.
10.12 REMEDIES CUMULATIVE. Except as otherwise provided
herein, the remedies of the parties under this Agreement are cumulative and
shall not exclude any other remedies to which any party may be lawfully
entitled.
10.13 THIRD PARTIES. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any Person, other than the parties hereto
and their permitted successors or assigns, any rights or remedies under or by
reason of this Agreement.
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<PAGE> 45
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first above written.
BUYER:
-----
GLOBAL VACATION GROUP, INC.
By: /s/ Roger H. Ballou
---------------------------------------
Roger H. Ballou
President and Chief Executive Officer
THE COMPANY:
-----------
GLOBETROTTERS, INC.
By: /s/ Robert A. Grinberg
---------------------------------------
Robert A. Grinberg
President
SELLER:
------
/s/ Robert A. Grinberg
-----------------------------------------------
Robert A. Grinberg
The Exhibits and Schedules to this Stock Purchase Agreement are not included
with this Registration Statement on Form S-1. Global will provide these
exhibits and schedules upon the request of the Securities and Exchange
Commission.
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<PAGE> 1
EXHIBIT 10.11
CREDIT AGREEMENT,
DATED AS OF MARCH 27, 1998,
BY AND AMONG
ALLIED BUS CORP.
(TO BE KNOWN AS GLOBAL VACATION GROUP, INC.
ON AND AFTER THE NAME CHANGE REFERRED TO HEREIN)
THE LENDERS PARTY HERETO,
AND
THE BANK OF NEW YORK, AS ADMINISTRATIVE AGENT
BNY CAPITAL MARKETS, INC.,
AS ARRANGER
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION ..................... 1
1.1. Definitions .................................................. 1
1.2. Accounting Terms ............................................ 22
1.3. Rules of Interpretation ..................................... 22
ARTICLE 2. AMOUNT AND TERMS OF EXTENSIONS OF CREDIT ................... 23
2.1. Loans ....................................................... 23
2.2. Procedure for Borrowing ..................................... 23
2.3. Termination or Reduction of Commitments ..................... 24
2.4. Scheduled Repayments of Term Loans; Prepayments
of Loans; Commitment Reductions ............................. 25
2.5. Letters of Credit ........................................... 28
2.6. Payments; Pro Rata Treatment and Sharing of
Set-offs .................................................... 31
2.7. Cash Collateral Account ..................................... 32
ARTICLE 3. INTEREST, FEES, YIELD PROTECTIONS, ETC. .................... 33
3.1. Interest Rate and Payment Dates ............................. 33
3.2. Fees ........................................................ 34
3.3. Conversions ................................................. 35
3.4. Concerning Interest Periods ................................. 36
3.5. Funding Loss ................................................ 36
3.6. Increased Costs; Illegality, etc. ........................... 37
3.7. Taxes ....................................................... 38
3.8. Register .................................................... 39
ARTICLE 4. REPRESENTATIONS AND WARRANTIES ............................. 40
4.1. Organization and Power ...................................... 40
4.2. Authorization; Enforceability ............................... 40
4.3. Approvals; No Conflicts ..................................... 40
4.4. Financial Condition; No Material Adverse Change ............. 41
4.5. Properties, etc. ............................................ 41
4.6. Litigation .................................................. 42
4.7. Environmental Matters ....................................... 42
4.8. Compliance with Laws and Agreements; No Default ............. 43
4.9. Investment Companies and other Regulated
Entities .................................................... 43
4.10. Federal Reserve Regulations ................................ 43
4.11. ERISA ...................................................... 43
4.12. Taxes ...................................................... 44
4.13. Subsidiaries ............................................... 44
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<PAGE> 3
4.14. Absence of Certain Restrictions ............................ 44
4.15. Labor Relations ............................................ 45
4.16. Insurance .................................................. 45
4.17. No Misrepresentation ....................................... 45
4.18. Transaction Documents ...................................... 45
4.19. Financial Condition ........................................ 45
4.20. Year 2000 .................................................. 45
4.21. Material Agreements ........................................ 46
ARTICLE 5. CONDITIONS TO FIRST EXTENSION OF CREDIT .................... 46
5.1. Evidence of Action .......................................... 46
5.2. This Agreement .............................................. 46
5.3. Notes ....................................................... 46
5.4. Opinion of Counsel to the Loan Parties ...................... 47
5.5. Security Documents, Search Reports, etc. .................... 47
5.6. Allied Recapitalization; Officer's Certificate .............. 47
5.7. Allied Recapitalization Documents ........................... 48
5.8. Legal and Capital Structure ................................. 48
5.9. Absence of Material Adverse Change .......................... 48
5.10. Compliance Certificate ..................................... 48
5.11. Leverage Ratio ............................................. 48
5.12. Solvency Certificate ....................................... 48
5.13. Property, Public Liability and Other
Insurance .................................................. 49
5.14. Fees ....................................................... 49
5.15. Other Documents ............................................ 49
ARTICLE 6. CONDITIONS TO EACH TERM LOAN AND EACH OTHER
EXTENSION OF CREDIT ........................................ 49
6.1. Term Loans after Effective Date ............................. 49
6.2. All Extension of Credit ..................................... 49
ARTICLE 7. AFFIRMATIVE COVENANTS ...................................... 50
7.1. Financial Statements and Information ........................ 50
7.2. Notice of Material Events ................................... 52
7.3. Existence: Conduct of Business .............................. 53
7.4. Payment of Obligations ...................................... 53
7.5. Maintenance of Properties ................................... 53
7.6. Insurance ................................................... 53
7.7. Books and Records: Inspection Rights ........................ 54
7.8. Compliance with Laws ........................................ 54
7.9. Additional Subsidiaries ..................................... 54
7.10. Additional Collateral ...................................... 55
7.11. Hedging Agreements ......................................... 55
7.12. Classic Mortgages .......................................... 55
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<PAGE> 4
7.13. Existing Letters of Credit ................................. 56
ARTICLE 8. NEGATIVE COVENANTS ......................................... 56
8.1. Indebtedness ................................................ 56
8.2. Negative Pledge ............................................. 57
8.3. Fundamental Changes ......................................... 58
8.4. Investments, Loans, Advances and Guarantees ................. 59
8.5. Acquisitions ................................................ 60
8.6. Dispositions ................................................ 62
8.7. Restricted Payments ......................................... 63
8.8. Hedging Agreements .......................................... 63
8.9. Sale and Lease-Back Transactions ............................ 64
8.10. Lines of Business .......................................... 64
8.11. Transactions with Affiliates ............................... 64
8.12. Use of Proceeds ............................................ 64
8.13. Restrictive Agreements ..................................... 64
8.14. Financial Covenants ........................................ 65
ARTICLE 9. DEFAULTS ................................................... 67
9.1. Events of Default ........................................... 67
9.2. Contract Remedies ........................................... 69
ARTICLE 10. THE ADMINISTRATIVE AGENT .................................. 70
10.1. Appointment ................................................ 70
10.2. Individual Capacity ........................................ 71
10.3. Exculpatory Provisions ..................................... 71
10.4. Reliance by Administrative Agent ........................... 71
10.5. Reliance by Administrative Agent ........................... 72
10.6. Resignation; Successor Administrative Agent ................ 72
10.7. Non-Reliance on Other Credit Parties ....................... 72
ARTICLE 11. OTHER PROVISIONS .......................................... 73
11.1. Amendments and Waivers ..................................... 73
11.2. Notices .................................................... 74
11.3. Survival ................................................... 75
11.4. Expenses; Indemnity ........................................ 75
11.5. Successors and Assigns ..................................... 76
11.6. Counterparts; Integration .................................. 77
11.7. Severability ............................................... 77
11.8. GOVERNING LAW .............................................. 78
11.9. Jurisdiction; Service of Process ........................... 78
11.10. WAIVER OF TRIAL BY JURY ................................... 78
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<PAGE> 5
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Credit Request
Exhibit C Form of Notice of Conversion
Exhibit D Form of Compliance Certificate
Exhibit E Form of Opinion of Counsel to the Loan Parties
Exhibit F Form of Assignment and Acceptance Agreement
Exhibit G Form of Security Agreement
Exhibit H Form of Subsidiary Guarantee
Exhibit I Form of Intercompany Subordination Agreement
SCHEDULES
Schedule 2.5 List of Existing Letters of Credit Issued by The Bank of
New York
Schedule 4.3 Exceptions to Section 4.3 (Consents and Approvals)
Schedule 4.4(a) Exceptions to Section 4.4(a) (Historical Allied
Financial Statements)
Schedule 4.6 List of Litigation
Schedule 4.7 List Environmental Matters
Schedule 4.13 List of Subsidiaries; Capitalization
Schedule 4.17 List of Insurance
Schedule 8.1 List of Existing Indebtedness
Schedule 8.2 List of Existing Liens
Schedule 8.4 List of Existing Investments
- iv -
<PAGE> 6
CREDIT AGREEMENT, dated as of March 27, 1998, by and among ALLIED BUS
CORP., a New York corporation, to be known as Global Vacation Group, Inc. on and
after the Name Change (the "BORROWER"), the several banks and other parties from
time to time parties hereto (the "LENDERS") and THE BANK OF NEW YORK ("BNY"), as
administrative agent for each of the other Credit Parties hereto (in such
capacity, the "ADMINISTRATIVE AGENT").
ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION
1.1. DEFINITIONS
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:
"ABR ADVANCES" means the Loans (or any portions thereof), at such
time as they (or such portions) are made and/or being maintained at a rate of
interest based upon the Alternate Base Rate.
"ACCOUNTANTS" means Arthur Andersen, LLP (or any successor thereto),
or such other firm of certified public accountants of recognized national
standing selected by the Borrower and reasonably satisfactory to the
Administrative Agent.
"ACQUISITION" has the meaning set forth in Section 8.5.
"ACQUISITION CONSIDERATION" has the meaning set forth in Section
8.5(c).
"ADDITIONAL PLEDGE AGREEMENT" has the meaning set forth in Section
7.9.
"ADJUSTED NET CASH PROCEEDS" means, with respect to any Disposition
as of any date of determination, the amount equal to the difference between (i)
the Net Cash Proceeds from such Disposition, and (ii) the Reinvested Proceeds in
connection with such Disposition.
"ADVANCE" means an ABR Advance or a Eurodollar Advance.
"AFFILIATE" means as to any Person (i) any other Person at the time
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Person, (ii) any other Person of which such Person at
the time owns, or has the right to acquire, directly or indirectly, ten percent
(10%) or more on a consolidated basis of the equity or beneficial interest of
such Person, (iii) any other Person which at the time owns, or has the right to
acquire, directly or indirectly, ten percent (10%) or more of any class of the
capital stock or beneficial interest of such Person, (iv) any executive officer,
director or trustee of such Person, and (v) when used with respect to an
individual, a spouse,
<PAGE> 7
any ancestor or descendant, or any other relative (by blood, adoption or
marriage), within the third degree of such individual, provided, however, that
for purposes of this Agreement, Persons in which Thayer holds an interest which
are not engaged in the Line of Business shall not be considered Affiliates.
"AGGREGATE REVOLVING COMMITMENT" means, at any time, the sum at such
time of the Revolving Commitments of all Lenders.
"AGGREGATE REVOLVING EXPOSURE" means, at any time, the aggregate sum
at such time of the Revolving Exposures of all Lenders.
"AGGREGATE TERM EXPOSURE" means, at any time, the aggregate sum at
such time of the Term Exposures of all Lenders.
"AGREEMENT" means this Credit Agreement.
"ALLIED EQUITY DOCUMENTS" means, collectively, (i) the Allied
Shareholders Agreement, and (ii) all other equity agreements among the Allied
Recapitalization Parties and certain executives of the Borrower.
"ALLIED PARENT" means Allied Tour Holdings Corp., a New York
corporation.
"ALLIED PARENT SHAREHOLDERS" means, collectively, Stanley Fisher,
Michael Fisher, Gregory Fisher and Francine Fishman.
"ALLIED RECAPITALIZATION" means, collectively and in the following
order, (i) the purchase by Thayer and, if applicable, certain other investors of
57 shares of Existing Allied Stock from Allied Parent, (ii) the redemption by
the Borrower of an additional 34 shares of Existing Allied Stock of Allied
Parent in exchange for the Allied Redemption Payment, and (iii) the exchange of
each share of Existing Allied Stock for 4,337.1 shares of New Common Stock and
390.339 shares of New Preferred Stock, in each case (x) pursuant to the Allied
Recapitalization Documents as in effect on the date hereof, and (y) in a manner
in all respects satisfactory to the Administrative Agent.
"ALLIED RECAPITALIZATION DOCUMENTS" means, collectively, (i) the
Recapitalization Agreement, dated as of March 27, 1998, among the Allied
Recapitalization Parties, (ii) the Allied Equity Documents, (iii) the Escrow
Agreement to be entered at the closing of the Allied Recapitalization among the
Allied Recapitalization Parties, and (iv) all other documents executed in
connection therewith.
"ALLIED RECAPITALIZATION PARTIES" means, collectively, the Borrower,
Allied Parent, the Allied Parent Shareholders, Thayer and any other any
investors which are or become party to an Allied Recapitalization Document.
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<PAGE> 8
"ALLIED REDEMPTION PAYMENT" means the payment to be made to the
Allied Parent by the Borrower in exchange for 34 shares of Existing Allied Stock
in an amount not in excess of $14,746,140.
"ALLIED SHAREHOLDERS AGREEMENT" means the Shareholders Agreement,
dated as of March 27, 1998, by and among the Allied Recapitalization Parties.
"ALTERNATE BASE RATE" means on any date, a rate of interest per
annum equal to the higher of (i) the Federal Funds Effective Rate in effect on
such date plus 1/2 of 1% or (ii) the Prime Rate in effect on such date.
"APPLICABLE MARGIN" means:
(a) Subject to clause (c) below, for the period from the
Effective Date through the date on which the Allied Recapitalization and at
least two of the Pending Acquisitions shall have been consummated, (i) with
respect to Loans consisting of ABR Advances, 0.75%, (ii) with respect to Loans
consisting of Eurodollar Advances and Letter of Credit Fees, 1.75%, and (iii)
with respect to the Commitment Fee, 0.375%, provided, however, that if the
Allied Recapitalization and at least two of the Pending Acquisitions shall not
have been consummated on or before May 1, 1998, the Applicable Margins for ABR
Advances, Eurodollar Advances and Letter of Credit Fees set forth in clauses
(a)(i) and (a)(ii) above shall be increased to 1.25% and 2.25%, respectively.
(b) Subject to clause (c) below, on and after the date on
which the Allied Recapitalization and at least two of the Pending Acquisitions
shall have been consummated, at all times during which the applicable period set
forth below is in effect, (i) with respect to Loans consisting of ABR Advances,
the percentage set forth below under the heading "ABR Margin" and adjacent to
such applicable period, (ii) with respect to Loans consisting of Eurodollar
Advances and Letter of Credit Fees, the percentage set forth below under the
heading "Eurodollar and LC Margin" and adjacent to such applicable period, and
(iii) with respect to the Commitment Fee, the percentage set forth below under
the heading "Commitment Fee" and adjacent to such Pricing Level:
Eurodollar
Pricing ABR and LC Commitment
Level Margin Margin Fee
----- ------ ------ ---
I 0.250% 1.250% 0.375%
II 0.500% 1.500% 0.375%
III 0.750% 1.750% 0.375%
IV 1.000% 2.000% 0.500%,
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<PAGE> 9
provided that the Pricing Level on the date on which the last of the Allied
Recapitalization and such two Pending Acquisitions shall have been consummated
shall be based on the Compliance Certificate delivered pursuant to Section
8.5(g), and any changes to the Applicable Margin thereafter resulting from a
change in the Leverage Ratio shall be based upon the Compliance Certificate most
recently delivered pursuant to Section 7.1(c) or 8.5(g) and shall become
effective on the date such Compliance Certificate is delivered to the
Administrative Agent and the Lenders.
(c) Notwithstanding anything to the contrary contained in this
definition, if the Borrower shall fail to deliver to the Administrative Agent a
Compliance Certificate on or prior to any date required hereby, for purposes of
calculating the Applicable Margin, Pricing Level IV shall be in effect from and
including such date to the date of delivery to the Administrative Agent of such
Compliance Certificate.
"APPLICABLE PROCEEDS" means any and all proceeds of casualty
insurance or condemnation held by the Administrative Agent pursuant to the Loan
Documents in connection with a casualty or condemnation event for which the
conditions for use thereof by the Borrower or any Subsidiary, as set forth in
the Loan Documents, shall not have been satisfied.
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" means an assignment and
acceptance agreement substantially in the form of Exhibit F.
"AVAILABLE DEBT AMOUNT" means, at any time, an amount equal to (a)
$2,500,000, minus (b) the sum, without duplication, of the following: (1) the
unpaid principal balance of all Indebtedness incurred pursuant to Section 8.1(e)
and 8.1(f), and (2) the fair market value of all property securing any Lien
under Section 8.2(c).
"AVAILABLE INTERCOMPANY INVESTMENT AMOUNT" means, at any time, an
amount equal to (a) $2,500,000, minus, (b) the sum of, without duplication, the
following: (1) the outstanding principal balance of all Indebtedness of each
Subsidiary which is not a Subsidiary Guarantor to the Borrower or any Subsidiary
Guarantor, (2) the outstanding principal balance of all Indebtedness of
Subsidiaries that are not Subsidiary Guarantors, to the extent that such
Indebtedness is Guaranteed by the Borrower or any Subsidiary Guarantor, (3) the
fair market value of all consideration paid by the Borrower or any Subsidiary
Guarantor on or after the Effective Date to any Subsidiary other than a
Subsidiary Guarantor in connection with any one or more of the following: (i)
any merger between a Subsidiary that is not a Subsidiary Guarantor and a
Subsidiary Guarantor, (ii) each investment by the Borrower or any Subsidiary
Guarantor in the Capital Stock of or debt issued by any Subsidiary that is not a
Subsidiary Guarantor, (iii) any purchase or acquisition between a Loan Party, as
purchaser, and a Subsidiary that is not a Subsidiary Guarantor, as seller, to
the extent that such purchase or acquisition is for more than fair market value,
(iv) sales, assignments, leases, transfers or other dispositions of any property
or assets by any Loan Party to any Subsidiary that is not a Subsidiary
Guarantor, to
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<PAGE> 10
the extent that such sale, assignment, lease, transfer or other disposition is
for less than fair market value, and (v) any Restricted Payment made by a Loan
Party to a Subsidiary which is not a Subsidiary Guarantor.
"AVAILABLE OTHER INVESTMENT AMOUNT" means, at any time an amount
equal to (a) prior to the consummation of the Initial Public Offering,
$50,000,000, and on and after the consummation of the Initial Public Offering,
$75,000,000, in each case minus, (b) the sum of, without duplication, the
following: (1) the fair market value of all consideration paid by the Borrower
or any Subsidiary on or after the Effective Date in connection with any one or
more of the following: (i) any merger referred to in Section 8.3(d)(iii)(A), and
(ii) any Acquisition referred to in Section 8.5.
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States.
"BORROWER OBLIGATIONS" means, collectively, (i) all of the
obligations and liabilities of the Borrower under the Loan Documents, and (ii)
all of the obligations and liabilities of the Borrower under each Secured
Hedging Agreement, in each case whether fixed, contingent, now existing or
hereafter arising, created, assumed, incurred or acquired, and whether before or
after the occurrence of any Event of Default under Section 9.1(h) or (i) and
including any obligation or liability in respect of any breach of any
representation or warranty and all post-petition interest and funding losses,
whether or not allowed as a claim in any proceeding arising in connection with
such an event.
"BORROWING DATE" means any Business Day on which (i) the Lenders
make Revolving Loans or (ii) the Issuer issues a Letter of Credit.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks located in New York City are authorized or
required by law or other governmental action to be closed, provided that when
used in connection with a Eurodollar Advance, the term shall also exclude any
day on which banks are not open for dealings in dollar deposits in the London
interbank market.
"CAPITAL EXPENDITURES" means, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability) by the Borrower and the Subsidiaries on a consolidated
basis in accordance with GAAP during such period for fixed or capital assets
(excluding any capitalized interest and any such asset acquired in connection
with normal replacement and maintenance programs properly charged to current
operations and excluding any replacement assets acquired with the proceeds of
insurance).
"CAPITAL LEASE OBLIGATIONS" means, with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination
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<PAGE> 11
thereof, (a) which obligations are required to be classified and accounted for
as capital leases on a balance sheet of such Person under GAAP, and the amount
of such obligations shall be the capitalized amount thereof determined in
accordance with GAAP, or (b) which lease does not qualify as a Tax Operating
Lease. For purposes of this definition, "TAX OPERATING LEASE" means any
"synthetic lease", and any other lease (i) that is treated as a lease for
purposes of the Code, and (ii) the lessor under which is treated as the owner of
the assets subject to the lease for purposes of the Code.
"CAPITAL STOCK" means, as to any Person, all shares, interests,
partnership interests, limited liability company interests, participations,
rights in or other equivalents (however designated) of such Person's equity
(however designated) and any rights, warrants or options exchangeable for or
convertible into such shares, interests, participations, rights or other equity.
"CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 2.7.
"CASH EQUIVALENTS" means Dollar denominated investments in (i)
securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in full support thereof) having
maturities of not more than one year from the date of acquisition, (ii) time
deposits, certificates of deposit and bankers acceptances of maturing within 180
days from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any domestic
office of any commercial bank having a combined capital surplus and undivided
profits of not less than $100,000,000 and whose (or whose parent company's)
unsecured non-credit supported short-term debt rating at the time of such
acquisition is the highest credit rating obtainable from S&P and Moody's or, if
rated by only one such rating agency, the highest credit rating obtainable from
such rating agency, (iii) commercial paper maturing within 90 days from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's, (iv) marketable direct
obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either S&P or
Moody's, (v) normal business banking accounts, and (vi) investments in money
market funds substantially all the assets of which are comprised of securities
of the types described in clauses (i) through (iv) above.
"CHANGE IN CONTROL" means the occurrence of one or more of the
following events:
(b) the acquisition directly or indirectly by any Person, or two or
more persons acting in concert, other than Thayer, of beneficial ownership of a
percentage of the outstanding voting stock of the Borrower that exceeds in the
aggregate the percentage
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<PAGE> 12
of such voting stock then beneficially owned or controlled, directly or
indirectly, by Thayer;
(c) prior to the Initial Public Offering, the failure of (i) Thayer
to own or control (either directly or indirectly) at least 51% of the voting
stock of the Borrower in the aggregate (on a fully diluted basis and free and
clear of all Liens), and (ii) the Borrower to own and control 100% of the
outstanding shares of voting and non-voting stock of each Subsidiary on a fully
diluted basis and free and clear of all Liens (except, in all cases, Liens in
favor of the Administrative Agent); and
(d) subsequent to the Initial Public Offering, the failure of (i)
Thayer to own or control (either directly or indirectly) at least 40% of the
voting stock of the Borrower in the aggregate (on a fully diluted basis and free
and clear of all Liens), and (ii) the Borrower to own and control 100% of the
outstanding shares of voting and non-voting stock of each Subsidiary on a fully
diluted basis and free and clear of all Liens (except, in all cases, Liens in
favor of the Administrative Agent).
For purposes of this definition, (i) the terms "person" and "group"
shall have the respective meanings ascribed thereto in Sections 13(d) and
14(d)(2) of the Exchange Act, (ii) the term "beneficial owner" shall have the
meaning ascribed thereto in Rule 13d-3 under the Exchange Act, and (iii) the
term "voting stock" shall mean all outstanding shares of any class or classes
(however designated) of Capital Stock of the Borrower entitled to vote generally
in the election of members of the Managing Person thereof.
"CHANGE IN LAW" means (i) the adoption of any law, rule or
regulation after the Effective Date, (ii) the issuance or promulgation after the
Effective Date of any directive, guideline or request from any Governmental
Authority (whether or not having the force of law), or (iii) any change after
the Effective Date in the interpretation of any existing law, rule, regulation,
directive, guideline or request by any Governmental Authority charged with the
administration thereof.
"CLASSIC" means Classic Custom Vacations, a California corporation.
"CLASSIC ACQUISITION" means the acquisition by the Borrower of all
of the issued and outstanding Capital Stock of Classic (i) pursuant to the
Classic Acquisition Documents, and (ii) in a manner in all respects satisfactory
to the Administrative Agent.
"CLASSIC ACQUISITION DOCUMENTS" means, collectively, (i) the Stock
Purchase Agreement to be entered into among Classic, the Classic Stockholders
and Thayer, (ii) the instrument of assignment pursuant to which Thayer assigns
its rights and obligations under such Stock Purchase Agreement to the Borrower,
(iii) the Classic Mortgage Purchase Documents, (iv) the Letterman Employment
Agreement to be entered into between Classic and Ronald D. Letterman, (v) the
Escrow Agreement to be entered at the
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<PAGE> 13
closing of the Classic Acquisition among the Classic Stockholders and the
Borrower, and (vi) all other documents executed in connection therewith.
"CLASSIC MORTGAGE PURCHASE DOCUMENTS" collectively, (i) the Purchase
and Sale Agreement, Security Agreements and Notes to be to be entered at the
closing of the Classic Acquisition among Stanley S. Heller, Sandra Heller,
Ronald D. Letterman, Lynn Letterman and the Borrower, pursuant to which such
individuals purchase the Classic Mortgages from Classic, and (ii) all other
documents executed in connection therewith.
"CLASSIC MORTGAGES" means, collectively (i) the portfolio of
approximately 1200 first and second mortgages held by Classic with respect to
residential real property located in Denmark, (ii) the portfolio of
approximately thirty first, second and third mortgages held by Classic with
respect to commercial and residential real property located in California, (iii)
all related notes or other evidence of Indebtedness, and (iv) all interest rate
and currency hedging arrangements maintained by Classic with respect thereto.
"CLASSIC STOCKHOLDERS" means, collectively, Stanley S. Heller,
Sandra Heller, Ronald D. Letterman, Lynn Letterman, James E. Levitt, Patti
Levitt, John F. Levitt, Sherry Levin, Alan M. Robin and Dee Robin.
"CODE" means the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"COLLATERAL" means any and all "Collateral", as defined in any
Security Document.
"COMMITMENTS" means, collectively, the Revolving Commitments, the
Term Loan Commitments and the Letter of Credit Commitment, each a "COMMITMENT".
"COMMITMENT FEE" has the meaning set forth in Section 3.2(a).
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section
7.1(c).
"CONVERSION DATE" means the date on which: (i) a Eurodollar Advance
is converted to an ABR Advance, (ii) an ABR Advance is converted to a Eurodollar
Advance or (iii) a Eurodollar Advance is converted to, or continued as, a new
Eurodollar Advance.
"CREDIT PARTY" means the Administrative Agent, the Issuer or a
Lender, as the case may be.
"CREDIT REQUEST" means a request for Loans or a Letter of Credit
substantially in the form of Exhibit B.
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<PAGE> 14
"CUSTOMARY LIEN" means any of the following: (i) any Lien imposed by
law for Taxes that are not yet due or are being contested in compliance with
Section 7.4, provided that enforcement of such Lien is stayed pending such
contest; (ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 7.4, provided that enforcement of each such
Lien is stayed pending such contest; (iii) pledges and deposits made in the
ordinary course of business in compliance with workers' compensation,
unemployment insurance and other social security laws or regulations; (iv)
deposits and pledges to secure the performance of bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
ordinary course of business; (v) judgment liens in respect of judgments that
would not cause an Event of Default under Section 9.1(j); (vi) zoning
ordinances, easements, rights of way, minor defects, irregularities, and other
similar encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere with the
ordinary conduct of business of the Borrower or any Subsidiary; and (vii) Liens
created under the Loan Documents.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which, with the giving of notice, the lapse of time, or any other
condition, would, unless cured or waived, become an Event of Default.
"DISPOSITION" has the meaning set forth in Section 8.6.
"DISQUALIFIED STOCK" means any Capital Stock of any Person that, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part prior to four years after the Maturity Date,
provided, however, that any Capital Stock that would constitute Disqualified
Stock solely because the holders thereof have the right to require such Person
to repurchase such Capital Stock upon the occurrence of certain events shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Borrower may not repurchase or redeem any such Capital Stock pursuant to
such provisions unless such repurchase or redemption complies with Section 8.7
of this Agreement.
"DOLLARS" and "$" mean lawful currency of the United States of
America.
"DOMESTIC SUBSIDIARY" means any Subsidiary that is not a Foreign
Subsidiary.
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<PAGE> 15
"EBITDA" means, for any period, an amount equal to (i) net income of
the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP for such period, plus (ii) the sum of, without duplication,
each of the following with respect to the Borrower and its Subsidiaries to the
extent utilized in determining such net income for such period, (a) cash
interest expense, (b) cash income taxes paid, (c) depreciation, amortization and
other non-cash charges, and (d) extraordinary losses from sales, exchanges and
other dispositions of Property not in the ordinary course of business, minus
(iii) the sum of, without duplication, each of the following with respect to the
Borrower and its Subsidiaries, to the extent utilized in determining such net
income for such period: extraordinary gains from sales, exchanges and other
dispositions of property not in the ordinary course of business; provided,
however, that, notwithstanding anything to the contrary contained herein, such
amount shall be subject to such adjustments (including adjustments with respect
to specific items referred to in clauses (i), (ii) and (iii) of this definition)
as the Borrower may request and the Administrative Agent shall approve in its
discretion exercised reasonably.
"EFFECTIVE DATE" means the date on which the conditions set forth in
Article 5 have been satisfied (or waived in accordance with Section 11.1).
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 4.7.
"EQUITY CONTRIBUTIONS" means, the equity investments made in cash to
the Borrower on or after the Effective Date (other than equity investments made
with the proceeds of any payment or distribution by the Borrower or any
Subsidiary, including the Allied Redemption Payment) minus all Thayer Fees.
"EQUITY ISSUANCE" means the issuance of any equity securities or the
receipt of any capital contribution, in each case by the Borrower, other than
(i) any issuance of equity securities to, or receipt of any such capital
contribution from, the Borrower, (ii) the issuance of stock as consideration to
the seller in connection with a Permitted Acquisition, (iii) the issuance of any
equity securities to, or the receipt of a capital contribution from, Thayer or
any of its Affiliates, the proceeds of which are expended by the Borrower in
connection with such Permitted Acquisition, or (iv) the issuance of common stock
pursuant to a stock option plan, or for executive compensation, in either case
in the ordinary course of business.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations issued thereunder,
as from time to time in effect.
"ERISA AFFILIATE" means any Person which is a member of any group of
organizations within the meaning of Sections 414(b) or (c) of the Code (or,
solely for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the
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<PAGE> 16
Code, Sections 414(m) or (o) of the Code) of which the Borrower or any
Subsidiary is a member.
"ERISA EVENT" means (i) a "reportable event", as defined in Section
4043 of ERISA with respect to a Pension Plan (other than an event for which the
30-day notice period is waived), (ii) the existence with respect to any Pension
Plan of an "accumulated funding deficiency" (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived; (ii) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Pension Plan; (iv)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Pension Plan;
(vi) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Pension
Plan or Pension Plans or to appoint a trustee to administer any Pension Plan;
(vii) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Pension
Plan or Multiemployer Plan; or (viii) the receipt by the Borrower or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"EURODOLLAR ADVANCES" means, collectively, the Loans (or any
portions thereof), at such time as they (or such portions) are made and/or being
maintained at a rate of interest based upon the Eurodollar Rate.
"EURODOLLAR RATE" means, with respect each Eurodollar Advance, a
rate of interest per annum, as determined by the Administrative Agent, obtained
by dividing (and then rounding to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, then to the next higher 1/16 of 1%).
(a) the rate of interest per annum as determined by the
Administrative Agent, equal to the rate, as reported by BNY to the
Administrative Agent, quoted by BNY to leading banks in the London interbank
eurodollar market as the rate at which BNY is offering dollar deposits in an
amount approximately equal to its Specified Percentage of such Eurodollar
Advance and having a period to maturity approximately equal to the Interest
Period applicable to such Eurodollar Advance at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, by
(b) a number equal to 1.00 minus the aggregate of the then
stated maximum rates during such Interest Period of all reserve requirements
(including marginal, emergency, supplemental and special reserves), expressed as
a decimal, established by the Board and any other banking authority to which BNY
and other major money center banks chartered under the laws of the United States
or any State thereof are subject, in respect of eurocurrency funding (currently
referred to as "eurocurrency li-
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<PAGE> 17
abilities" in Regulation D) without benefit of credit for proration, exceptions
or offsets which may be available from time to time to BNY.
"EVENT OF DEFAULT" has the meaning set forth in Section 9.1.
"EXCESS CASH FLOW" means, in respect of any period, (i) an amount
equal to the sum of EBITDA for such period plus Working Capital Decreases if
any, during such period less (ii) the sum of each of the following with respect
to the Borrower and the Subsidiaries on a consolidated basis in accordance with
GAAP for such period: (a) Fixed Charges, (b) Capital Expenditures made during
such period, (c) Working Capital Increases, if any, during such period minus and
(c) all prepayments of the Term Loans made during such period pursuant to
Section 2.4(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"EXCLUDED TAX" means as to any Person, a Tax imposed by one of the
following jurisdictions or by any political subdivision or taxing authority
thereof: (i) the United States, (ii) the jurisdiction in which such Person is
organized, (iii) the jurisdiction in which such Person's principal office is
located, (iv) in the case of each Credit Party, any jurisdiction in which such
Credit Party is deemed to be doing business, (v) in the case of any Foreign
Credit Party, any withholding tax that is imposed on amounts payable to such
Foreign Credit Party at the time such Foreign Credit Party becomes a party to
this Agreement (or designates a new lending office) or is attributable to such
Foreign Credit Party's failure to comply with Section 3.7(c), except to the
extent that such Foreign Credit Party (or its assignor, if any) was entitled, at
the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 3.7; which Tax (a) is any income tax or franchise tax
imposed on all or part of the net income or net profits of such Person or (b)
represents interest, fees or penalties for payment of any such income tax or
franchise tax.
"EXISTING ALLIED STOCK" means the common stock of the Borrower, no
par value, of which 100 shares are issued and outstanding immediately prior to
the Allied Recapitalization.
"EXISTING LETTERS OF CREDIT" shall have the meaning set forth in
Section 8.5(f)(i).
"EXISTING LETTER OF CREDIT EXPOSURE" means at any time, an amount
equal to the sum (without duplication) at such time of (i) the aggregate undrawn
face amount of the outstanding Existing Letters of Credit, (ii) the aggregate
amount of unpaid drafts drawn on all Existing Letters of Credit, and (iii) the
aggregate unpaid reimbursement obligations in respect thereof, provided,
however, that Existing Letters of Credit issued
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<PAGE> 18
for the account of a Pending Acquisition Target shall not be taken into account
for purposes of this definition until the consummation of the applicable Pending
Acquisition.
"EXTENSIONS OF CREDIT" means, collectively, the Loans, the Letters
of Credit and any participations therein pursuant to Section 2.5(c).
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, a rate per annum
(expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100
of 1%) equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (i) if the day for
which such rate is to be determined is not a Business Day, the Federal Funds
Effective Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Effective
Rate for such day shall be the average of the quotations for such day on such
transactions received by BNY as determined by BNY and reported to the
Administrative Agent.
"FEES" has the meaning set forth in Section 2.6(a).
"FINANCIAL OFFICER" means, as to any Person, the chief financial
officer or the treasurer of such Person or such other officer as shall be
satisfactory to the Administrative Agent.
"FIXED CHARGES" means, for the most recently completed twelve month
period, the sum, without duplication, of each of the following with respect to
the Borrower and the Subsidiaries for such period on a consolidated basis in
accordance with GAAP: (i) all cash interest expense, (ii) principal amounts that
became payable (whether or not paid and whether at the stated maturity, by
acceleration or by reason of optional prepayment or redemption or otherwise) by
the Borrower or any Subsidiary in respect of Indebtedness of the Borrower or the
Subsidiaries during such period, and (iii) cash income taxes paid.
"FIXED CHARGE COVERAGE RATIO" means, at any date of determination,
the ratio of (a) EBITDA for Four Quarter Trailing Period, to (b) Fixed Charges
for such period.
"FOREIGN CREDIT PARTY" means any Credit Party that is organized
under the laws of a country (or political subdivision thereof) other than the
United States.
"FOREIGN SUBSIDIARY" means any Subsidiary that is a "controlled
foreign corporation" within the meaning of Section 957 of the Code.
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<PAGE> 19
"FOUR QUARTER TRAILING PERIOD" means, at any date of determination,
the four fiscal quarters ending on such date, or, if such date is not the last
day of a fiscal quarter, the period of the most immediately completed four
fiscal quarters.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States.
"GOVERNMENTAL AUTHORITY" means any foreign, federal, state,
municipal or other government, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof, or any court or arbitrator.
"GUARANTEE" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or in effect
guaranteeing any return on any investment made by another Person, or any
Indebtedness, lease, dividend or other obligation (a "primary obligation") of
any other Person (a "primary obligor") in any manner, whether directly or
indirectly, including any obligation of the guarantor, direct or indirect (i) to
purchase any primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (A) for the purchase or
payment of any primary obligation or (B) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of a primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the beneficiary of any primary
obligation of the ability of a primary obligor to make payment of a primary
obligation, (iv) otherwise to assure or hold harmless the beneficiary of a
primary obligation against loss in respect thereof, and (v) in respect of the
liabilities of any partnership in which a secondary obligor is a general
partner, except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate property, provided,
however, that the term "Guarantee" shall not include the endorsement of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee shall be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guarantor in good faith.
"GRANT OF SECURITY INTEREST" means a grant of a security interest in
copyrights and trademarks in the forms of Annex B-1 and B-2, respectively, to
the Security Agreement or any other form approved by the Administrative Agent.
"HADDON" means Haddon Holidays, Inc., a New Jersey corporation.
"HADDON ACQUISITION" means the acquisition by the Borrower of Haddon
(i) pursuant to the Haddon Acquisition Documents, and (ii) in a manner in all
respects satisfactory to the Administrative Agent.
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<PAGE> 20
"HADDON ACQUISITION DOCUMENTS" means, collectively, (i) the Stock
Purchase Agreement to be entered into among Haddon, the Borrower, Ralph M.
Caliri and William W. Webber, (ii) the Escrow Agreement to be entered at the
closing of the Haddon Acquisition among Haddon Ralph M. Caliri, William W.
Webber and the Borrower and (iii) all other documents executed in connection
therewith.
"HEDGING AGREEMENT" means any interest rate swap, cap or collar
arrangement or any other derivative product customarily offered by banks or
other financial institutions to their customers in order to manage the exposure
of such customers to interest rate fluctuations.
"HISTORICAL ALLIED FINANCIAL STATEMENTS" has the meaning set forth
in Section 4.4(a).
"INDEBTEDNESS" means, as to any Person, at a particular time, all
items which constitute, without duplication, (i) indebtedness for borrowed
money, (ii) indebtedness in respect of the deferred purchase price of property
(other than trade payables incurred in the ordinary course of business), (iii)
indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv)
obligations with respect to any conditional sale or title retention agreement,
(v) indebtedness arising under acceptance facilities and the amount available to
be drawn under all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder to the extent such Person shall
not have reimbursed the issuer in respect of the issuer's payment thereof, (vi)
liabilities secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned by such Person (other than carriers', warehousemen's, mechanics',
repairmen's or other like non-consensual statutory Liens arising in the ordinary
course of business), even though such Person has not assumed or otherwise become
liable for the payment thereof, (vii) Capital Lease Obligations, (viii) all
obligations of such Person in respect of Disqualified Stock, and (ix) all
Guarantees by such Person of Indebtedness of others. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. Notwithstanding
the foregoing, Indebtedness shall not include any liability of any Person with
respect to customer deposits.
"INDEMNIFIED TAX" means as to any Person, any Tax, except (i) an
Excluded Tax imposed on such Person and (ii) any interest, fees or penalties for
late payment thereof imposed on such Person.
"INITIAL PUBLIC OFFERING" means the first offering by the Borrower
of its Capital Stock to the public pursuant to an effective registration
statement under the Securi-
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<PAGE> 21
ties Act of 1933, as then in effect, or any comparable statement under similar
federal statute then in force with net proceeds to the Borrower of at least
$15,000,000.
"INITIAL TRANSACTIONS" means, collectively, (i) the Allied
Recapitalization, (ii) the execution and delivery of the Loan Documents and
(iii) the Extensions of Credit on the Effective Date.
"INSOLVENT" means, with respect to any Person, (a) the sum of the
assets measured on a "going concern" basis (including goodwill as accounted for
in accordance with GAAP) at a fair valuation, of such Person does not exceed its
debts, (b) such Person has incurred debts beyond its ability to pay such debts
as such debts mature, (c) such Person believes that, in the ordinary course of
its business during the reasonably foreseeable future, it will incur debts
beyond its ability to pay such debts as such debts mature, and (d) such Person
has insufficient capital with which to conduct its business. For purposes of
this definition only, "DEBT" means any liability on a claim, and "CLAIM" means
any (i) right to payment, whether such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, unmatured, disputed, undisputed, secured, unsecured,
liquidated or unliquidated.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, trade secrets, confidential or proprietary technical and business
information and other similar property and all licenses related thereto.
"INTERCOMPANY SUBORDINATION AGREEMENT" means a subordination
agreement substantially in the form of Exhibit I.
"INTEREST COVERAGE RATIO" means, as of the last day of any fiscal
quarter, the ratio of EBITDA to cash interest expense, in each case for the Four
Quarter Trailing Period.
"INTEREST PERIOD" means, as to each Eurodollar Advance, the period
commencing on, as the case may be, the Borrowing Date or Conversion Date with
respect thereto and ending one, two, three or six months thereafter, in the case
of an Interest Period commencing on or after the date on which the Syndication
Period expires, in each case, as selected by the Borrower in its Credit Request
or Notice of Conversion, provided, however, (i) until the earlier of the end of
the Syndication Period or the last day of the fourth week after the consummation
of each of the Pending Acquisitions, all Interests Periods shall end one week
after the Borrowing Date or Conversion Date applicable thereto and (ii) if the
Syndication Period has not expired on or before the last day of the fourth week
after the consummation of each of the Pending Acquisitions, until the end of
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<PAGE> 22
the Syndication Period, all Interests Periods shall end one month after the
Borrowing Date or Conversion Date applicable thereto.
"INVESTMENT GRADE SECURITY" means (i) in respect of a short term
security, any such security rated at least A1/P1 or A2/P2 by S&P or Moody's (or
an equivalent rating issued by a nationally recognized rating service) and (ii)
in respect of a long term security, any such security rated at least BBB- or
Baa3 by S&P or Moody's (or an equivalent rating issued by a nationally
recognized rating service), provided, however, that any derivative, option,
hedging or other speculative instrument shall not be considered to be an
Investment Grade Security.
"ISSUER" means BNY.
"LETTERS OF CREDIT" has the meaning set forth in Section 2.6.
"LETTER OF CREDIT FEES" has the meaning set forth in Section 3.2(c).
"LETTER OF CREDIT COMMITMENT" means the commitment of the Issuer to
issue Letters of Credit (including the letters of credit listed on Schedule 2.5
in which the Lenders assume a participation pursuant to Section 2.5(a)) having
an aggregate outstanding face amount up to $5,000,000.
"LETTER OF CREDIT EXPOSURE" means in respect of any Lender at any
time, an amount equal to (i) the sum (without duplication) at such time of (x)
the aggregate undrawn face amount of the outstanding Letters of Credit, (y) the
aggregate amount of unpaid drafts drawn on all Letters of Credit, and (z) the
aggregate unpaid Reimbursement Obligations, multiplied by (ii) such Lender's
Revolving Percentage at such time.
"LEVERAGE RATIO" means, as of any date, the ratio of (i) Total Debt
as of such date less to (ii) EBITDA for the Four Quarter Trailing Period,
provided, however, that, notwithstanding anything to the contrary contained
herein, for purposes of this definition, Total Debt shall not include any
Indebtedness in respect of standby letters of credit.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other), or other security agreement or security
interest of any kind or nature whatsoever, including any conditional sale or
other title retention agreement and any capital or financing lease having
substantially the same economic effect as any of the foregoing.
"LINE OF BUSINESS" means, the wholesale tour operators business
serving the leisure travel industry and any business reasonably similar,
complimentary, ancillary or related thereto, including the Pending Acquisitions.
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<PAGE> 23
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Security Documents, each Secured Hedging Agreement, each subordination agreement
entered into pursuant to Section 8.1(d) and (f) and all other agreements,
instruments and documents executed or delivered in connection herewith.
"LOAN PARTIES" means, collectively, the Borrower and each Subsidiary
Guarantor.
"LOANS" means Revolving Loans and Term Loans.
"MANAGING PERSON" means, with respect to any Person that is (i) a
corporation, its board of directors, (ii) a limited liability company, its board
of control, managing member or members, (iii) a limited partnership, its general
partner, (iv) a general partnership or a limited liability partnership, its
managing partner or executive committee or (v) any other Person, the managing
body thereof or other Person analogous to the foregoing.
"MARGIN STOCK" has the meaning set forth in Regulation U.
"MATERIAL ADVERSE" means, with respect to any change or effect, a
material adverse change in, or effect on, as the case may be, (i) the business,
assets, operations, prospects or condition, financial or otherwise, of the
Borrower and the Subsidiaries taken as a whole, (ii) the ability of any Loan
Party to perform its obligations under the Loan Documents to which it is a
party, (iii) the rights of, or benefits available to, the Credit Parties under
the Loan Documents, or (iv) the legality or enforceability of any Loan Document.
"MATERIAL LIABILITIES" means, on any date, with respect to the
Borrower, any Subsidiary or any combination thereof: (i) all Indebtedness (other
than Indebtedness under the Loan Documents), (ii) the net termination
obligations in respect of one or more Hedging Agreements (calculated as if such
Hedging Agreements were terminated as of such date), and (iii) other
liabilities, in each case whether as principal, guarantor, surety or other
obligor, in an aggregate principal amount exceeding (A) $100,000 until the
consummation of any two of the Pending Acquisitions and (B) $250,000 thereafter.
"MATURITY DATE" means September 30, 2004, or such earlier date on
which the Notes shall become due and payable, whether by acceleration or
otherwise.
"MINIMUM AMOUNT" means in respect of (i) ABR Advances, $500,000 or
such amount plus a whole multiple of $100,000 in excess thereof, and (ii)
Eurodollar Advances, $1,000,000 or such amount plus a whole multiple of $500,000
in excess thereof.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
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<PAGE> 24
"MTI" means MTI Vacations, Inc., an Illinois corporation.
"MTI ACQUISITION" means the acquisition by the Borrower of
substantially all of the assets of MTI (i) pursuant to the MTI Acquisition
Documents and (ii) in a manner in all respects satisfactory to the
Administrative Agent.
"MTI ACQUISITION DOCUMENTS" means, collectively, (i) the Asset
Purchase Agreement to be entered into among MTI, James F. Miller and the
Borrower, (ii) the Escrow Agreement to be entered at the closing of the MTI
Acquisition among MTI, James F. Miller and the Borrower and (iii) all other
documents executed in connection therewith.
"MULTIEMPLOYER PLAN" means a Pension Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"NAME CHANGE" means the change of the name of Allied Bus Corp. to
Global Vacation Group, Inc. after the Allied Recapitalization.
"NET CASH PROCEEDS" means, cash proceeds received from a
Disposition, an Equity Issuance, the incurrence of Refinancing Debt, a casualty
loss or a condemnation after deduction of taxes payable in cash in connection
therewith and net of reasonable transaction expenses.
"NET WORTH" means, at any date of determination, (i) the sum of,
without duplication, (a) all amounts which would be included under
"shareholders' equity" or any analogous entry on a consolidated balance sheet of
the Borrower determined in accordance with GAAP as of such date plus (b) the
proceeds of an Equity Issuance to the extent not applied to the prepayment of
the Loans minus (ii) any preferred stock or other class of equity securities
(other than the New Preferred Stock) that, by its stated terms (or by the terms
of any class of equity securities issuable upon conversion thereof or in
exchange therefor), or upon the occurrence of any event, matures or is
mandatorily redeemable, or is redeemable at the option of the holders thereof,
in whole or in part prior to the date which is nine months after the Maturity
Date.
"NEW COMMON STOCK" means common stock of the Borrower, no par value,
issued as part of the Allied Recapitalization in exchange for Existing Allied
Stock.
"NEW PREFERRED STOCK" means Class A Preferred Stock of the Borrower,
$1.00 par value, issued as part of the Allied Recapitalization in exchange for
Existing Allied Stock.
"NOTES" means with respect to each Lender in respect of such
Lender's Loans, a promissory note, substantially in the form of Exhibit A,
payable to the order of
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<PAGE> 25
such Lender, each such promissory note having been made by the Borrower and
dated the Effective Date, including all replacements thereof and substitutions
therefor.
"NOTICE OF CONVERSION" has the meaning set forth in Section 3.3(a).
"OTHER TAXES" means any and all current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery, registration or enforcement of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents.
"ORGANIZATIONAL DOCUMENTS" means as to any Person which is (i) a
corporation, the certificate or articles of incorporation and by-laws of such
Person, (ii) a limited liability company, the limited liability company
agreement or similar agreement of such Person, (iii) a partnership, the
partnership agreement or similar agreement of such Person, or (iv) any other
form of entity or organization, the organizational documents analogous to the
foregoing.
"PAYMENT OFFICE" the office of the Administrative Agent set forth in
Section 11.2(b).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority
succeeding to the functions thereof.
"PENDING ACQUISITIONS" means, collectively, the Classic
Acquisitions, the MTI Acquisition and the Haddon Acquisition.
"PENDING ACQUISITION DOCUMENTS" means, collectively, the Classic
Acquisition Documents, the MTI Acquisition Documents and the Haddon Acquisition
Documents.
"PENDING ACQUISITION TARGETS" means, collectively, Classic, MTI and
Haddon.
"PENSION PLAN" means, at any date of determination, any employee
pension benefit plan (other than a Multiemployer Plan), the funding requirements
of which (under Section 302 of ERISA or Section 412 of the Code) are, or at any
time within the six years immediately preceding such date, were in whole or in
part, the responsibility of the Borrower or any ERISA Affiliate.
"PERFECTION CERTIFICATE" means a certificate in the form of Annex A
to the Security Agreement or any other form approved by the Administrative
Agent.
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<PAGE> 26
"PERMITTED ACQUISITION" means an Acquisition (including the Allied
Recapitalization and the Pending Acquisitions) permitted by Section 8.5.
"PERMITTED LIENS" has the meaning set forth in Section 8.2.
"PERSON" means a natural person, firm, partnership, limited
liability company, joint venture, corporation, association, business enterprise,
joint stock company, unincorporated association, trust, Governmental Authority
or any other entity, whether acting in an individual, fiduciary, or other
capacity, and for the purpose of the definition of "ERISA Affiliate", a trade or
business.
"PRICING LEVEL" means Pricing Level I, Pricing Level II, Pricing
Level III or Pricing Level IV, as applicable.
"PRICING LEVEL I" means the applicable Pricing Level at any time
when the Leverage Ratio is less than 2.25:1.00.
"PRICING LEVEL II" means the applicable Pricing Level at any time
when the Leverage Ratio is greater than or equal to 2.25:1.00 but less than
2.75:1.00.
"PRICING LEVEL III" means the applicable Pricing Level at any time
when the Leverage Ratio is greater than or equal to 2.75:1.00 but less than
3.25:1.00.
"PRICING LEVEL IV" means the applicable Pricing Level at any time
when the Leverage Ratio is greater than or equal to 3.25:1.00.
"PRIME RATE" means the rate of interest per annum publicly announced
in New York City by BNY from time to time as its prime commercial lending rate,
such rate to be adjusted automatically (without notice) on the effective date of
any change in such publicly announced rate.
"REGULATION D, G, T, U AND X" mean Regulations D, G, T, U and X,
respectively, of the Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"REFINANCING DEBT" has the meaning set forth in Section 8.1(g).
"REFINANCING DEBT DOCUMENTS" has the meaning set forth in Section
8.1(g).
"REIMBURSEMENT OBLIGATION" means, collectively, the obligation of
the Borrower to the Issuer with respect to each Letter of Credit and all
documents, instruments and other agreements related thereto, including the
obligation of the Borrower to reimburse the Issuer for amounts drawn under such
Letter of Credit.
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<PAGE> 27
"REINVESTED PROCEEDS" means, with respect to any Disposition as of
any date of determination, the amount of Net Cash Proceeds from such Disposition
that is used by the Borrower or any Subsidiary to acquire, during the
Reinvestment Period with respect to such Disposition, property that is to be
used in the Line of Business.
"REINVESTMENT PERIOD" means the period beginning on the date that
proceeds from a Disposition are received by the Borrower or any Subsidiary, as
the case may be, and ending 365 days after the receipt of such proceeds.
"RELATED PARTIES" means, with respect to any Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, one or more Lenders having
the sum of unused Revolving Commitments, unused Term Loan Commitments, Revolving
Exposures and Term Exposures greater than or equal to 51% of the sum of the
unused Aggregate Revolving Commitments, unused Aggregate Term Loan Commitments,
Aggregate Revolving Exposures and Aggregate Term Exposures.
"RESTRICTED PAYMENT" has the meaning set forth in Section 8.7.
"REVOLVING COMMITMENT" means, in respect of any Lender, the maximum
amount of such Lender's Revolving Exposure as set forth on the signature page of
such Lender under the heading "REVOLVING COMMITMENT" or in an Assignment and
Acceptance Agreement or other document pursuant to which it became a Lender, as
such amount may be adjusted from time to time in accordance herewith.
"REVOLVING COMMITMENT TERMINATION DATE" means September 30, 2004, or
such earlier date upon which either the Revolving Commitments shall terminate or
the Aggregate Revolving Commitment shall otherwise equal zero.
"REVOLVING EXPOSURE" means, with respect to any Lender as of any
date, the sum as of such date of (i) the outstanding principal balance of such
Lender's Revolving Loans, plus (ii) such Lender's Letter of Credit Exposure.
"REVOLVING LOAN" and "REVOLVING LOANS" have the meaning set forth in
Section 2.1(a).
"REVOLVING PERCENTAGE" means, as of any date and with respect to
each Lender, the percentage equal to a fraction (i) the numerator of which is
the Revolving Commitment of such Lender on such date (or, if there are no
Revolving Commitments on such date, on the last date upon which one or more
Revolving Commitments were in effect), and (ii) the denominator of which is sum
of the Revolving Commitments of all
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<PAGE> 28
Lenders on such date (or, if there are no Revolving Commitments on such date, on
the last date upon which one or more Revolving Commitments were in effect).
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission or any
Governmental Authority succeeding to the functions thereof.
"SECURED HEDGING AGREEMENT" means any Hedging Agreement entered into
by the Borrower with a counterparty that was a Lender (or an Affiliate thereof)
at the time such Hedging Agreement was entered into.
"SECURED PARTIES" has the meaning set forth in the Security
Agreement.
"SECURITY AGREEMENT" means the Security Agreement, by and among the
Loan Parties party thereto and the Administrative Agent, substantially in the
form of Exhibit G.
"SECURITY DOCUMENTS" means, collectively, (i) upon the execution and
delivery thereof, the Security Agreement, the Subsidiary Guarantee, the Grants
of Security Interest, the Intercompany Subordination Agreement and (ii) all
other instruments and documents delivered pursuant to Section 7.9 or 7.10 to
secure any of the Borrower Obligations or Guarantor Obligations (as defined in
the Subsidiary Guarantee).
"SPECIAL COUNSEL" means Emmet, Marvin & Martin, LLP, as, or such
other counsel selected by the Administrative Agent as, special counsel to the
Administrative Agent hereunder.
"SPECIFIED PERCENTAGE" means, with respect to any Lender (i) in
connection with Revolving Loans and Eurodollar Advances to the extent consisting
of Revolving Loans, the percentage equal to such Lender's Revolving Commitment
at such time divided by the Aggregate Revolving Commitment at such time, and
(ii) in connection with Term Loans and Eurodollar Advances to the extent
consisting of Term Loans, the percentage equal to the unpaid principal amount of
such Lender's Term Exposure at such time divided by the Aggregate Term Exposure
at such time.
"SUBSIDIARY" means, with respect to any Person (the "parent") at any
date, any other Person (i) the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, (ii)
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests or more than 50%
of the profits or losses of which are, as of such date, owned,
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<PAGE> 29
controlled or held by the parent or one or more subsidiaries of the parent.
Unless otherwise qualified, all references to "Subsidiary" or to "Subsidiaries"
in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTOR" means each Subsidiary party to the Subsidiary
Guarantee.
"SUBSIDIARY GUARANTEE" means the Subsidiary Guarantee, by and among
the Subsidiary Guarantors, the Borrower and the Administrative Agent,
substantially in the form of Exhibit H.
"SYNDICATION PERIOD" means the period commencing on the Effective
Date and ending on the day on which the Administrative Agent notifies the
Borrower in writing that the syndication of this Agreement has been completed.
"TAX" means any present or future tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature and whatever called, by a
Governmental Authority, on whomsoever and wherever imposed, levied, collected,
withheld or assessed.
"TERM EXPOSURE" means, with respect to any Lender as of any date,
the sum as of such date of the outstanding principal balance of such Lender's
Term Loans.
"TERM LOAN" and "TERM LOANS" have the meaning set forth in Section
2.1(b).
"TERM LOAN COMMITMENT" means, in respect of any Lender, the amount
set forth on the signature page of such Lender under the heading "TERM LOAN
COMMITMENT" or in an Assignment and Acceptance Agreement or other document
pursuant to which it became a Lender, as such amount may be adjusted from time
to time in accordance herewith.
"TERM LOAN COMMITMENT TERMINATION DATE" means the earliest of (i)
the date on which the full amount of the Aggregate Term Loan Commitment has been
borrowed, (ii) March 26, 1999, and (iii) any date upon which the Term
Commitments shall terminate.
"TERM PERCENTAGE" means, as of any date and with respect to each
Lender, the percentage equal to a fraction (i) the numerator of which is the
Term Loan Commitment of such Lender on such date (or, if there are no Term Loan
Commitments on such date, such Lender's Term Exposure on such date), and (ii)
the denominator of which is the Aggregate Term Loan Commitments on such date
(or, if there are no Term Loan Commitments on such date, the Aggregate Term
Exposure on such date).
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<PAGE> 30
"THAYER" means Thayer Equity Investors III, L.P., a Delaware limited
partnership.
"THAYER FEES" means any amounts payable at or in connection with the
consummation of the Allied Recapitalization or a Pending Acquisition to TC
Management Partners LLC or any of its Affiliates in consideration of investment
banking services, provided that the Thayer Fees shall not exceed an amount equal
to one percent (1%) of the gross consideration payable for the stock and/or the
assets to be acquired in each such transaction.
"TOTAL DEBT" means, as of any date, the Indebtedness of the Borrower
and the Subsidiaries, to the extent that as at such date such Indebtedness would
appear on a consolidated balance sheet of the Borrower prepared in accordance
with GAAP.
"TOTAL PERCENTAGE" means, as of any date and with respect to each
Lender, the percentage equal to a fraction (i) the numerator of which is the sum
of the Revolving Commitment of such Lender on such date (or, if there are no
Revolving Commitments on such date, on the last date upon which one or more
Revolving Commitments were in effect) plus the unpaid principal balance of such
Lender's Term Loan on such date, and (ii) the denominator of which is sum of the
aggregate Revolving Commitments on such date (or, if there are no Revolving
Commitments on such date, on the last date upon which one or more Revolving
Commitments were in effect) plus the aggregate unpaid principal balance of all
Term Loans on such date.
"TRANSACTION DOCUMENTS" means, collectively, the Loan Documents, the
Allied Recapitalization Documents, the Classic Acquisition Documents, the Haddon
Acquisition Documents, the MTI Acquisition Documents, and all documents,
instruments and other agreements executed or delivered in connection with all
other Acquisitions by the Borrower or any Subsidiary.
"TRANSACTIONS" means, collectively, the Initial Transactions, the
Pending Acquisitions, and all other Acquisitions by the Borrower and the
Subsidiaries.
"UNCONSOLIDATED INVESTMENT" means, as of any date, any investment
made by the Borrower or any Subsidiary in any other Person that, pursuant to
GAAP as in effect on such date, would not be consolidated with the Borrower for
financial reporting purposes immediately after giving effect to such investment.
"UNITED STATES" means the United States of America.
"WORKING CAPITAL" means, at any date of determination, the
difference between (i) current assets of the Borrower and the Subsidiaries
determined on a consolidated basis in accordance with GAAP minus (ii) current
liabilities of the Borrower and
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<PAGE> 31
the Subsidiaries determined on a consolidated in accordance with GAAP less the
current portion of long term debt.
"WORKING CAPITAL DECREASE" means, for any period, the result, if
positive, obtained by subtracting Working Capital at the close of business on
the last day of such period from Working Capital at the opening of business on
the first day of such period.
"WORKING CAPITAL INCREASE" means, for any period, the result, if
positive, obtained by subtracting Working Capital at the opening of business on
the first day of such period from Working Capital at the close of business on
the last day of such period.
"WHOLLY OWNED" means, with respect to any Subsidiary of any Person,
100% of the outstanding Capital Stock of such Subsidiary is owned, directly or
indirectly, by such Person.
"WITHDRAWAL LIABILITY" means, with respect to any Person, liability
of such Person to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
1.2. ACCOUNTING TERMS
As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant thereto, accounting terms not defined
in Section 1.1, and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
If any change in GAAP would affect the computation of any financial ratio or
requirement set forth in this Agreement, the Credit Parties and the Borrower
shall negotiate in good faith to amend such ratio or requirement to reflect such
change in GAAP (subject to the approval of the Required Lenders), provided that,
until so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change and (ii) the Borrower shall provide to
the Credit Parties financial statements and other documents required under this
Agreement (or such other items as the Administrative Agent may reasonably
request) setting forth a reconciliation between calculations of such ratio or
requirement before and after giving effect to such change.
1.3. RULES OF INTERPRETATION
(a) Unless expressly provided in a Loan Document to the contrary,
(i) the words "hereof", "herein", "hereto" and "hereunder" and similar words
when used in each Loan Document shall refer to such Loan Document as a whole and
not to any particular provision thereof, (ii) section, subsection, schedule and
exhibit references contained therein shall refer to section, subsection,
schedule and exhibit thereof or thereto, (iii) the words "include" and
"including", shall mean that the same shall be "included,
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<PAGE> 32
without limitation", (iv) any definition of, or reference to, any agreement,
instrument, certificate or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified, (v) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (vi) the words
"asset" and "property" shall be construed to have the same meaning and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights, (vii) words in the singular number
include the plural, and words used therein in the plural include the singular,
(viii) any reference to a time shall refer to such time in New York, (ix) in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding", and (x) references therein to a fiscal period shall
refer to that fiscal period of the Borrower.
(b) Article and Section headings have been inserted in the Loan
Documents for convenience only and shall not be construed to be a part thereof.
ARTICLE 2. AMOUNT AND TERMS OF EXTENSIONS OF CREDIT
2.1. LOANS
(a) REVOLVING LOANS. Subject to the terms and conditions hereof,
each Lender severally agrees to make revolving credit loans in Dollars (each a
"REVOLVING LOAN" and, as the context may require, collectively with all other
Revolving Loans of such Lender and with the Revolving Loans of all other
Lenders, the "REVOLVING LOANS") to the Borrower from time to time on any
Business Day during the period from the Effective Date to the Revolving
Commitment Termination Date, provided that after giving effect thereto (i) such
Lender's Revolving Exposure would not exceed such Lender's Revolving Commitment,
and (ii) the sum of (A) the Aggregate Revolving Exposure plus (B) the Existing
Letter of Credit Exposure would not exceed the Aggregate Revolving Commitment.
During such period, the Borrower may borrow, prepay in whole or in part and
reborrow under the Revolving Commitments, all in accordance with the terms and
conditions of this Agreement. The outstanding principal balance of each
Revolving Loan shall be due and payable on the Maturity Date.
(b) TERM LOANS. Subject to the terms and conditions hereof, each
Lender severally agrees to make term loans in Dollars (each a "TERM LOAN" and,
as the context may require, collectively with all other Term Loans of such
Lender and with the Term Loans of all other Lenders, the "TERM LOANS") to the
Borrower from time to time on any Business Day during the period from the
Effective Date to the Term Loan Commitment Termination Date, provided that after
giving effect thereto (i) such Lender's Term Exposure would not exceed such
Lender's Term Loan Commitment, (ii) the Aggregate Term Exposure would not exceed
the Aggregate Term Loan Commitment, and
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<PAGE> 33
(iii) the sum of the aggregate amount of such Term Loans plus the aggregate
amount of all Term Loans borrowed prior to such date shall not exceed either (x)
the aggregate amount of all Equity Contributions made on or before such date or
(y) 50% of the sum of the aggregate Acquisition Consideration (including
transaction costs other than fees payable to Thayer or any of its Affiliates)
paid in cash on or before such date in connection with Permitted Acquisitions
(net of any post-closing adjustments made in connection therewith which resulted
in a reduction to, or refund of any portion of, such Acquisition Consideration),
provided, however, that on and after the date on which the aggregate amount of
Equity Contributions shall equal or exceed $44,200,000, this clause (iii) shall
cease to apply. Term Loans once repaid may not be reborrowed. The outstanding
principal balance of each Term Loan shall be due and payable on the Maturity
Date.
2.2. PROCEDURE FOR BORROWING
(a) CREDIT REQUEST. To request a Loan, the Borrower shall notify the
Administrative Agent by the delivery of a Credit Request, which shall be sent by
facsimile and shall be irrevocable (confirmed promptly, and in any event within
five Business Days, by the delivery to the Administrative Agent of a Credit
Request manually signed by the Borrower), no later than 11:00 a.m., three
Business Days prior to the requested Borrowing Date in the case of Eurodollar
Advances and 10:00 a.m., on the requested Borrowing Date in the case of ABR
Advances, specifying (A) whether such borrowing is a Revolving Loan, a Term Loan
or a combination thereof, (B) the aggregate principal amount to be borrowed, (C)
the requested Borrowing Date, (D) whether such borrowing is to consist of one or
more Eurodollar Advances, ABR Advances, or a combination thereof and (E) if the
Loan is to consist of one or more Eurodollar Advances, the amount and length of
the Interest Period for each Eurodollar Advance. The amount of each (i)
Eurodollar Advance to be made on a Borrowing Date, when aggregated with all
amounts to be converted to, or continued as, a Eurodollar Advance on such date
and having the same Interest Period as such first Eurodollar Advance, shall
equal the Minimum Amount and (ii) each ABR Advance made on each Borrowing Date
shall equal the Minimum Amount or, if less, the unused portion of the Aggregate
Revolving Commitment.
(b) FUNDING BY LENDERS. Upon receipt of each Credit Request, the
Administrative Agent shall promptly notify each Lender thereof. Subject to its
receipt of the notice referred to in the preceding sentence, each Lender will
make the amount of its Specified Percentage of the requested Loans available to
the Administrative Agent for the account of the Borrower at the Payment Office
not later than 1:00 p.m. on the relevant Borrowing Date requested by the
Borrower, in funds immediately available to the Administrative Agent at such
office. The amounts so made available to the Administrative Agent on such
Borrowing Date will then, subject to the satisfaction of the terms and
conditions of this Agreement, be made available on such date to the Borrower by
the Administrative Agent at the Payment Office by crediting the account of the
Borrower on the books of the Administrative Agent at such office with the
aggregate of said amounts (in like funds) received by the Administrative Agent.
The failure of any Lender to provide such Lender's
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<PAGE> 34
share of the requested Loans shall not relieve any other Lender of its
obligations hereunder to provide its share of the requested Loans.
(c) FAILURE TO FUND. Unless the Administrative Agent shall have
received notice prior to a proposed Borrowing Date (or, in the case of a
borrowing of ABR Advances, prior to 12:00 noon on such Borrowing Date) from a
Lender (by telephone or otherwise, such notice to be promptly confirmed by
facsimile or other writing) that such Lender will not make available to the
Administrative Agent such Lender's share of the requested Loans, the
Administrative Agent may assume that such Lender has made such share available
to the Administrative Agent on the Borrowing Date in accordance with this
Section and, in reliance upon such assumption, make available to the Borrower on
such Borrowing Date a corresponding amount. If and to the extent such Lender
shall not have so made such share available to the Administrative Agent, such
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount (to the extent not previously paid
by the other), together with interest thereon for each day from the date such
amount is made available to the Borrower to the date such amount is paid to the
Administrative Agent, at a rate per annum equal to, in the case of the Borrower,
the interest rate otherwise applicable to such Loan, and, in the case of such
Lender, at a rate of interest per annum equal to the greater of the Federal
Funds Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rates on interbank compensation. If such Lender
shall pay to the Administrative Agent such corresponding amount, such amount so
paid shall constitute such Lender's Loan as part of the relevant borrowing for
purposes of this Agreement.
2.3. TERMINATION OR REDUCTION OF COMMITMENTS
(a) VOLUNTARY TERMINATION OR REDUCTIONS. The Borrower may, upon at
least three Business Days' prior written notice to the Administrative Agent, (i)
at any time when the Aggregate Revolving Exposure and the Aggregate Term
Exposure shall be zero, terminate all of the Revolving Commitments, (ii) at any
time when the Aggregate Term Exposure shall be zero, terminate all of the Term
Loan Commitments, and (iii) at any time and from time to time when (A) the
Aggregate Revolving Commitment shall exceed the Aggregate Revolving Exposure
(after giving effect to any contemporaneous payment or prepayment of Revolving
Loans or Reimbursement Obligations) or (B) the Aggregate Term Loan Commitment
shall exceed the Aggregate Term Exposure (after giving effect to any
contemporaneous payment or prepayment of the Term Loans), permanently reduce the
Aggregate Revolving Commitment or the Aggregate Term Loan Commitment, as the
case may be, by a sum not greater than the amount of such excess, provided,
however, that each such partial reduction shall be in the amount of $1,000,000
or such amount plus a whole multiple of $500,000 in excess thereof.
(b) OTHER MANDATORY REDUCTIONS. The Aggregate Revolving Commitment
shall be permanently reduced at the times and in the amounts required by Section
2.4(c).
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<PAGE> 35
(c) REDUCTIONS OF LETTER OF CREDIT COMMITMENT. The Letter of Credit
Commitment shall not be reduced until such time as the Aggregate Revolving
Commitment shall equal such Letter of Credit Commitment, and thereafter shall in
each case be reduced, automatically, by a sum equal to the amount of each such
reduction in the Aggregate Revolving Commitment.
(d) REDUCTIONS IN GENERAL. Each reduction of the Aggregate Revolving
Commitment or the Aggregate Term Loan Commitment, as the case may be, shall be
made by reducing each Lender's Revolving Commitment or Term Loan Commitment, as
the case may be, by an amount equal to such Lender's Specified Percentage of
such reduction. Simultaneously with each reduction of the Aggregate Revolving
Commitment or the Aggregate Term Loan Commitment, as the case may be, the
Borrower shall pay the Commitment Fee accrued on the amount by which the
Aggregate Revolving Commitment or the Aggregate Term Loan Commitment has been
reduced.
2.4. SCHEDULED REPAYMENTS OF TERM LOANS; PREPAYMENTS OF LOANS;
COMMITMENT REDUCTIONS
(a) SCHEDULED REPAYMENT OF TERM LOANS.
(i) Subject to clause (ii) below, the aggregate outstanding
principal balance of the Term Loans shall be due and payable in 26
consecutive quarterly installments on the last Business Day of each March,
June, September and December, commencing on June 30, 1998, provided,
however, that the last such installment shall be due and payable on the
Maturity Date. Each such installment of principal payable during the
periods set forth below to each Lender shall be in an amount equal to the
product of (i) such Lender's Term Percentage and (ii) the amount of the
installment set forth below opposite such period:
<TABLE>
<CAPTION>
Amount of
Period Installment
------ -----------
<S> <C>
June 30, 1998 through
March 31, 1999 $ 500,000
June 30, 1999 through
March 31, 2000 $ 750,000
June 30, 2000 through
March 31, 2001 $1,250,000
June 30, 2001 through
March 31, 2002 $1,750,000
</TABLE>
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<PAGE> 36
<TABLE>
<S> <C>
June 30, 2002 through
March 31, 2002 $2,000,000
June 30, 2003 through
March 31, 2004 $2,300,000
June 30, 2004 $5,000,000
Maturity Date the remaining unpaid
principal amount of the Term
Loans.
</TABLE>
(ii) If the aggregate amount of the Term Loans borrowed by the
Borrower exceeds $44,200,000, upon the earlier of (A) the Term Loan
Commitment Termination Date and (B) the date on which the full amount of
the Aggregate Term Loan Commitment has been borrowed, each of the
remaining scheduled payments of the Term Loans set forth above will be
increased by an amount equal to the excess of the aggregate amount of the
Term Loans borrowed over $44,200,000 multiplied by a fraction, the
numerator of which is the amount of such scheduled payment of the Term
Loans and the denominator of which is the aggregate amount of all
remaining scheduled payments of the Term Loans.
(b) VOLUNTARY PREPAYMENTS. The Borrower shall have the right at any
time and from time to time to prepay all or any portion of the Loans without
premium or penalty (but subject to Section 3.5), by delivering to the
Administrative Agent an irrevocable written notice thereof at least one Business
Day prior to the proposed prepayment date, in the case of Loans consisting of
ABR Advances, and at least three Business Days prior to the proposed prepayment
date, in the case of Loans consisting of Eurodollar Advances, specifying whether
the Loans to be prepaid are Revolving Loans or Term Loans, whether the Loans to
be prepaid consist of ABR Advances, Eurodollar Advances, or a combination
thereof, the amount to be prepaid and the date of prepayment, whereupon the
amount specified in such notice shall be due and payable on the date specified.
Upon receipt of each such notice, the Administrative Agent shall promptly notify
each Lender thereof. Each partial prepayment of the Loans pursuant to this
subsection shall be in an amount equal to the Minimum Amount, or, if less, the
outstanding principal balance of the Loans. After giving effect to any partial
prepayment with respect to Eurodollar Advances which were made (whether as the
result of a borrowing, a conversion or a continuation) on the same date and
which had the same Interest Period, the outstanding principal balance of such
Eurodollar Advances shall exceed (subject to Section 3.3) the Minimum Amount.
(c) MANDATORY PREPAYMENTS; COMMITMENT REDUCTIONS. On or before each
date set forth below, the Borrower shall prepay the aggregate unpaid principal
amount of the Term Loans by the amount set forth below and applicable to such
date
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<PAGE> 37
provided, however, that if after applying all or any portion of a prepayment
required by this Section 2.4(c) to the prepayment of the Term Loans, the Term
Loans shall have been paid in full or, if at the time of such prepayment no Term
Loans are outstanding, such portion of such prepayment (or all thereof) not
applied to the prepayment of the Term Loans shall be applied to the permanent
reduction of the Aggregate Revolving Commitments and to the prepayment of the
Revolving Loans pursuant to and to the extent required by Section 2.4(d):
(i) on the last day of the Reinvestment Period for each
Disposition described in Section 8.6(d), by an amount equal to 100% of the
Adjusted Net Cash Proceeds with respect to such Disposition;
(ii) on the earlier of the date the annual financial
statements in respect of each fiscal year, commencing with the fiscal year
ending December 31, 1998, are delivered to the Administrative Agent
pursuant to Section 7.1(a), or the 90th day following the end of each such
fiscal year, by an amount equal to the following: (A) if the Leverage
Ratio at the end of such fiscal year is greater than 2.50:1.00, 75% of
Excess Cash Flow, and (B) if the Leverage Ratio at the end of such fiscal
year is less than or equal to 2.50:1.00, 50% of Excess Cash Flow;
(iii) upon receipt by the Borrower or any Subsidiary Guarantor
of Net Cash Proceeds attributable to any Equity Issuance, by an amount
equal to the lesser of (A) $20,000,000 or (B) the amount of such Net Cash
Proceeds;
(iv) upon receipt by the Borrower or any Subsidiary of Net
Cash Proceeds of Refinancing Debt, by an amount equal to 100% of such Net
Cash Proceeds;
(v) in an amount equal to all Applicable Proceeds (i) in
excess of amounts used to replace or repair any properties or (ii) which
are not used or designated to replace or repair properties within one year
after receipt thereof, provided that the Borrower or the applicable
Subsidiary Guarantor shall have commenced the restoration or replacement
process (including the making of appropriate filings and requests for
approval) within 45 days after such casualty or after the receipt of any
such condemnation proceeds, as the case may be, and diligently pursues the
same through completion; and
(vi) with respect to any Acquisition, upon receipt by the
Borrower or any Subsidiary of proceeds from any reduction, or refund of
any portion of, the Acquisition Consideration paid in respect thereof
resulting from any post-closing adjustment made in connection therewith,
by an amount equal to 100% of such proceeds;
provided, however, that if on the date of such a reduction of the Aggregate
Revolving Commitment, the Aggregate Revolving Exposure exceeds the Aggregate
Revolving Com-
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<PAGE> 38
mitment after giving effect to such reduction and, if the Revolving Loans have
been paid in full and the Letter of Credit Exposure of all Lenders is greater
than zero, the Borrower shall deposit into the Cash Collateral Account an amount
in cash that would cause the balance on deposit in the Cash Collateral Account
to equal or exceed the Letter of Credit Exposure of all Lenders.
(d) OTHER MANDATORY PREPAYMENTS; CASH COLLATERAL. Simultaneously
with each reduction or termination of:
(i) the Aggregate Revolving Commitment, (1) in the event that
the Letter of Credit Commitment shall exceed the Aggregate Revolving
Commitment as so reduced or terminated, the Letter of Credit Commitment
shall be automatically reduced by an amount equal to such excess, and (2)
the Borrower shall prepay the Revolving Loans by an amount equal to the
lesser of (A) the aggregate outstanding principal balance of the Revolving
Loans, or (B) the excess of the aggregate outstanding principal balance of
the Revolving Loans over the Aggregate Revolving Commitment as so reduced
or terminated; and
(ii) the Letter of Credit Commitment (including pursuant to
clause (i) above), in the event the aggregate Letter of Credit Exposure of
all Lenders exceeds the Letter of Credit Commitment as so reduced or
terminated, the Borrower shall immediately deposit into the Cash
Collateral Account such amount, in cash, as would cause the balance on
deposit in the Cash Collateral Account to equal or exceed the aggregate
Letter of Credit Exposure of all Lenders.
(e) IN GENERAL. Each prepayment of the Term Loans shall be applied
among the remaining installments of principal set forth in Section 2.4(a) on a
pro rata basis. Simultaneously with each prepayment of a Loan, the Borrower
shall prepay all accrued interest on the amount prepaid through the date of
prepayment.
2.5. LETTERS OF CREDIT
(a) AVAILABILITY; PROCEDURE. Prior to the Effective Date, BNY issued
the letters of credit for the account of the Borrower and each Pending
Acquisition Target listed on Schedule 2.5. As of the Effective Date with respect
to such letters of credit issued for the account of the Borrower and as of the
date of the consummation of a Pending Acquisition with respect to such letters
of credit issued for the account of a Pending Acquisition Target, each Bank
(other than BNY) assumes a portion of the risk associated with such letters of
credit in accordance with its Revolving Commitment Percentage. In addition, the
Borrower may request the Issuer to issue additional standby letters of credit
(together with the letters of credit listed on Schedule 2.5, the "LETTERS OF
CREDIT"; each, individually, a "LETTER OF CREDIT") during the period from the
Effective Date to the tenth Business Day prior to the Maturity Date, provided
that (i) immediately after the issuance of each Letter of Credit, the Letter of
Credit Exposure of all Lenders would not exceed
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<PAGE> 39
the Letter of Credit Commitment, and (ii) the Aggregate Revolving Exposure would
not exceed the Aggregate Revolving Commitment. To request the issuance of a
Letter of Credit, the Borrower shall notify the Administrative Agent and the
Issuer by the delivery of a Credit Request, which shall be sent by facsimile and
shall be irrevocable (confirmed promptly, and in any event within five Business
Days, by the delivery to the Administrative Agent of a Credit Request manually
signed by the Borrower), at least three Business Days prior to the requested
date of issuance, specifying (A) the beneficiary of such Letter of Credit, (B)
the Borrower's proposal as to the conditions under which a drawing may be made
under such Letter of Credit and the documentation to be required in respect
thereof, (C) the maximum amount to be available under such Letter of Credit, and
(D) the requested dates of issuance and expiration. Such Credit Request shall be
accompanied by a duly completed application for such Letter of Credit on such
forms as may be made available from time to time by the Issuer and such other
certificates, documents (including a reimbursement agreement) and other
information as may be required by the Issuer in accordance with its customary
procedures (collectively, the "LETTER OF CREDIT DOCUMENTATION"). Upon receipt of
such Credit Request from the Borrower, the Administrative Agent shall promptly
notify the each Lender thereof. Subject to the satisfaction of the terms and
conditions of this Agreement, the Issuer shall issue each requested Letter of
Credit. In the event of any conflict between the provisions of this Agreement
and any Letter of Credit Documentation, the provisions of this Agreement shall
control.
(b) TERMS OF LETTERS OF CREDIT. Each Letter of Credit shall (i) be
denominated in Dollars, (ii) be issued for the account of the Borrower and in
support of obligations, contingent or otherwise, of the Borrower or any
Subsidiary arising in the ordinary course of business, and (iii) have an
expiration date which shall be not later than the earlier of (A) twelve months
after the date of issuance thereof or (B) five Business Days before the Maturity
Date, provided that the expiration date of such Letter of Credit may be extended
or such Letter of Credit may be renewed, provided, further, that any renewal, or
any extension of any expiry date, of a Letter of Credit shall constitute the
issuance of such Letter of Credit for all purposes of this Agreement.
(c) LETTER OF CREDIT PARTICIPATIONS. Immediately upon the issuance
of a Letter of Credit, the Issuer shall be deemed to have sold and transferred
to each Lender, and each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuer, without recourse or
warranty, an undivided interest and participation, to the extent of such
Lender's Revolving Percentage thereof, in such Letter of Credit and the
obligations of Borrower with respect thereto and any security therefor and any
guaranty pertaining thereto at any time existing.
(d) DRAWINGS ON LETTERS OF CREDIT. The Issuer shall promptly notify
(i) each Lender of the Issuer's receipt of a drawing request under any Letter of
Credit, stating the amount of such Lender's Revolving Percentage of such drawing
request and the date on which such request will be honored and (ii) Borrower of
the amount of such drawing request and the date on which such request will be
honored. Any failure of the
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<PAGE> 40
Issuer to give or any delay in the Issuer's giving any such notice shall not
release or diminish the obligations of Borrower or any Lender hereunder. In
determining whether to pay under any Letter of Credit, the Issuer shall have no
obligation to any Lender or the Borrower other than to confirm that any
documents required to be delivered under such Letter of Credit have been
delivered and that they appear to comply on their face with the requirements of
such Letter of Credit. In the absence of gross negligence or willful misconduct
on the part of the Issuer, the Issuer shall have no liability to any Lender or
the Borrower for any action taken or omitted to be taken by it under or in
connection with any Letter of Credit, including any such action negligently
taken or negligently omitted to be taken by it.
(e) REIMBURSEMENT. The Borrower shall pay to the Administrative
Agent for the account of the Issuer on demand therefor, in Dollars in
immediately available funds, the amount of all Reimbursement Obligations owing
to the Issuer under any Letter of Credit, together with interest thereon as
provided in Section 3.1, irrespective of any claim, setoff, defense or other
right which the Borrower may have at any time against the Issuer or any other
Person. In the event that the Issuer makes any payment under any Letter of
Credit and Borrower shall not have repaid such amount to the Issuer when due,
the Issuer shall promptly notify each Lender of such failure, and each Lender
shall promptly and unconditionally pay to the Administrative Agent, for the
account of the Issuer, the amount of such Lender's Revolving Percentage of such
payment in Dollars in immediately available funds on the Business Day the Issuer
so notifies such Lender if such notice is given prior to 12:00 Noon or, if such
notice is given after 12:00 Noon, such Lender shall make its Revolving
Percentage of such payment available to the Issuer prior to 12:00 Noon on the
next succeeding Business Day.
(f) LENDERS' OBLIGATIONS. If and to the extent any Lender shall not
make such Lender's Revolving Percentage of any Reimbursement Obligations
available to the Issuer when due in accordance with Section 2.5(e), such Lender
agrees to pay interest to the Issuer on such unpaid amount for each day from the
date such payment is due until the date such amount is paid in full to the
Issuer at the Federal Funds Effective Rate until (and including) the third
Business Day after the date due and thereafter at the Alternate Base Rate. The
obligations of the Lenders under this Section 2.5(f) are several and not joint
or joint and several, and the failure of any Lender to make available to the
Issuer its Revolving Percentage of any Reimbursement Obligations when due in
accordance with Section 2.5(e) shall not relieve any other Lender of its
obligation hereunder to make its Revolving Percentage of such Reimbursement
Obligations so available when so due, but no Lender shall be responsible for the
failure of any other Lender to make such other Lender's Revolving Percentage of
such Reimbursement Obligations so available when so due.
(g) RESCISSION. Whenever the Issuer receives a payment of a
Reimbursement Obligation from or on behalf of Borrower as to which the Issuer
has received any payment from a Lender pursuant to Section 2.5(e), the Issuer
shall promptly pay to
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<PAGE> 41
such Lender an amount equal to such Lender's Revolving Percentage of such
payment from or on behalf of Borrower. If any payment by or on behalf of
Borrower and received by the Issuer with respect to any Letter of Credit is
rescinded or must otherwise be returned by the Issuer for any reason and the
Issuer has paid to any Lender any portion thereof, each such Lender shall
forthwith pay over to the Issuer an amount equal to such Lender's Revolving
Percentage of the amount which must be so returned by the Issuer.
(h) EXPENSES. Each Lender, upon the demand of the Issuer, shall
reimburse the Issuer, to the extent the Issuer has not been reimbursed by
Borrower after demand therefor, for the reasonable costs and expenses (including
reasonable attorneys' fees) incurred by the Issuer in connection with the
collection of amounts due under, and the preservation and enforcement of any
rights conferred by, any Letter of Credit or the performance of the Issuer's
obligations as issuer of the Letters of Credit under this Agreement in respect
thereof, to the extent of such Lender's Revolving Percentage of the amount of
such costs and expenses provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent the same result solely from the gross negligence or willful misconduct of
the Issuer. The Issuer shall refund any costs and expenses reimbursed by such
Lender that are subsequently recovered from Borrower in an amount equal to such
Lender's Revolving Percentage thereof.
(i) OBLIGATIONS ABSOLUTE. The obligation of the Borrower to
reimburse the Issuer pursuant to this Section 2.5, and the obligation of each
Lender to make available to the Issuer the amounts set forth in this Section 2.5
shall be absolute, unconditional and irrevocable under any and all
circumstances, shall be made without reduction for any set-off, counterclaim or
other deduction of any nature whatsoever, may not be terminated, suspended or
delayed for any reason whatsoever, shall not be subject to any qualification or
exception and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including without limitation, any of the
following circumstances: (1) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents, (2) the existence of any claim,
setoff, defense or other right which Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Issuer, any
Lender or any other Person, whether in connection with this Agreement, any other
Loan Document, any Letter of Credit, the transactions contemplated in the Loan
Documents or any unrelated transactions (including any underlying transaction
between Borrower and the beneficiary named in any such Letter of Credit), (3)
any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect, (4) the
surrender or impairment of any Collateral for the performance or observance of
any of the terms of any of the Loan Documents, or (5) the occurrence of any
Default or Event of Default. Nothing contained in this Section 2.5(i), however,
shall require the Borrower or any Lender to reimburse the Issuer for any amounts
that become due by reason of the Issuer's gross negligence or wilful misconduct.
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2.6. PAYMENTS; PRO RATA TREATMENT AND SHARING OF SET-OFFS
(a) PAYMENTS GENERALLY. (i) Except as provided below, all payments,
including prepayments, of principal and interest on the Loans, of the Commitment
Fee, the Letter of Credit Fees and of all other amounts to be paid by the
Borrower under the Loan Documents (the Commitment Fee and the Letter of Credit
Fees, together with all of such other fees, being sometimes hereinafter
collectively referred to as the "FEES") shall be made to the Administrative
Agent, prior to 1:00 p.m. on the date such payment is due, for the account of
the applicable Credit Parties at the Payment Office, in Dollars and in
immediately available funds, without set-off, offset, recoupment or
counterclaim. The failure of the Borrower to make any such payment by such time
shall not constitute a Default, provided that such payment is made on such due
date, but any such payment made after 1:00 p.m. on such due date shall be deemed
to have been made on the next Business Day for the purpose of calculating
interest on amounts outstanding on the Loans. As between the Borrower and each
Credit Party, any payment by the Borrower to the Administrative Agent for the
account of such Credit Party shall be deemed to be payment by the Borrower to
such Credit Party. Notwithstanding the foregoing, all payments pursuant to
Sections 3.5, 3.6, 3.7, and 11.4 shall be paid directly to the Credit Party
entitled thereto. If any payment under the Loan Documents shall be due and
payable on a day which is not a Business Day, the due date thereof (except as
otherwise provided with respect to Interest Periods) shall be extended to the
next Business Day and (except with respect to payments in respect of the Fees)
interest shall be payable at the applicable rate specified herein during such
extension, provided, however, that if such next Business Day would be after the
Maturity Date, such payment shall instead be due on the immediately preceding
Business Day.
(ii) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (A) first,
towards payment of interest and fees then due under the Loan Documents, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (B) second, towards payment of principal
then due under the Loan Documents, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.
(b) SET-OFF. In addition to any rights and remedies of the Credit
Parties provided by law, upon and after the acceleration of all the obligations
of the Borrower under the Loan Documents to which it is a party, or at any time
upon the occurrence and during the continuance of an Event of Default under
Sections 9.1(a) or (b), each Credit Party shall have the right, without prior
notice to any Loan Party, any such notice being expressly waived by each Loan
Party to the extent not prohibited by applicable law, to set-off and apply
against any indebtedness, whether matured or unmatured, of such Loan Party to
such Credit Party any amount owing from such Credit Party to such Loan Party,
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at, or at any time after, the happening of any of the above-mentioned events. To
the extent not prohibited by applicable law, the aforesaid right of set-off may
be exercised by any Credit Party against such Loan Party or against any trustee
in bankruptcy, custodian, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of such Loan
Party, or against anyone else claiming through or against such Loan Party, or
such trustee in bankruptcy, custodian, debtor in possession, assignee for the
benefit of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Credit Party prior to the making, filing or issuance, or
service upon such Credit Party of, or of notice of, any such petition,
assignment for the benefit of creditors, appointment or application for the
appointment of a receiver, or issuance of execution, subpoena, order or warrant.
Each Credit Party agrees promptly to notify the Borrower and the Administrative
Agent after any such set-off and application made by such Credit Party, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
(c) ADJUSTMENTS. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in respect of the principal of or interest on its Revolving Loans or
its Term Loan, resulting in such Lender receiving payment of a greater
proportion of the aggregate principal amount of, or accrued interest on, such
type of Loan than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall promptly purchase, at face value for
cash, participations in the Loans of that type to the extent necessary so that
the benefit of such payment shall be shared by the Lenders ratably in accordance
with the aggregate amount of principal of and accrued interest on their
respective Loans of such type, provided, however, that (d) if all or any portion
of such payment is thereafter recovered, such participations shall be rescinded
and the purchase price returned, in each case to the extent of such recovery,
and (e) the provisions of this Section 2.6(c) shall not be construed to apply to
any payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to the Borrower or any Subsidiary or Affiliate
thereof (as to which the provisions of this Section 2.6(c) shall apply). The
Borrower agrees that any Lender that purchased a participation pursuant to this
subsection may exercise such rights to payment (including the right of set-off)
with respect to such participation as fully as such Lender were the direct
creditor of the Borrower in the amount of such participation.
2.7. CASH COLLATERAL ACCOUNT
At, or at any time before, the time the Borrower shall be required
to make a deposit into the Cash Collateral Account, the Administrative Agent
shall establish and maintain at its offices at One Wall Street, New York, New
York in the name of the Borrower but under the sole dominion and control of the
Administrative Agent, a cash collateral account designated as Allied Bus
Corp./Cash Collateral Account" to be renamed
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"GLOBAL VACATION GROUP, INC./CASH COLLATERAL ACCOUNT" upon the occurrence of the
Name Change (the "CASH COLLATERAL ACCOUNT"). The Borrower may from time to time
make one or more deposits into the Cash Collateral Account. The Borrower hereby
pledges to the Administrative Agent for the benefit of the Credit Parties, a
Lien on and security interest in the Cash Collateral Account and all sums at any
time and from time to time on deposit therein (the Cash Collateral Account,
together with all sums on deposit therein, being sometimes hereinafter
collectively referred to as the "CASH COLLATERAL"), as collateral security for
the prompt payment in full when due, whether at stated maturity, by acceleration
or otherwise, of the Borrower Obligations. The Borrower agrees that at any time
and from time to time at its expense, it will promptly execute and deliver to
the Administrative Agent any further instruments and documents, and take any
further actions, that may be necessary or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Cash Collateral. The Borrower agrees that it will not (i) sell or otherwise
dispose of any of the Cash Collateral, or (ii) create or permit to exist any
Lien upon any of the Cash Collateral, except for Permitted Liens. The Borrower
hereby authorizes the Administrative Agent, promptly after each drawing under
any Letter of Credit shall become due and payable, to apply any and all cash on
deposit in the Cash Collateral Account towards the reimbursement of the Issuer
for all sums paid in respect of such drawing, and all other Borrower Obligations
which shall then be due and owing.
ARTICLE 3. INTEREST, FEES, YIELD PROTECTIONS, ETC.
3.1. INTEREST RATE AND PAYMENT DATES
(a) ADVANCES. Each (i) ABR Advance shall bear interest at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin and (ii)
Eurodollar Advance shall bear interest at a rate per annum equal to the
Eurodollar Rate for the applicable Interest Period plus the Applicable Margin.
(b) EVENT OF DEFAULT; LATE CHARGES. Notwithstanding the foregoing,
after the occurrence and during the continuance of an Event of Default, the
outstanding principal balance of the Loans shall bear interest at a rate per
annum equal to 2% plus the rate otherwise applicable to such Loans as provided
in subsection (a) above. If any interest, Reimbursement Obligation, Fee or other
amount payable under the Loan Documents is not paid when due (whether at the
stated maturity thereof, by acceleration or otherwise), such overdue amount
shall bear interest at a rate per annum equal to the Alternate Base Rate plus
2%, from the date of such nonpayment until paid in full (whether before or after
the entry of a judgment thereon). All such interest shall be payable on demand.
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<PAGE> 45
(c) PAYMENT OF INTEREST. Except as otherwise provided in subsection
(b) above, interest shall be payable in arrears on the following dates and upon
each payment (including prepayment) of the Loans:
(i) in the case of an ABR Advance, on the last Business Day of
each March, June, September and December commencing on the first of such
days to occur after such ABR Advance is made or any Eurodollar Advance is
converted to an ABR Advance;
(ii) in the case of a Eurodollar Advance, on the last day of
the Interest Period applicable thereto and, if such Interest Period is
longer than three months, the last Business Day of each three month
interval occurring during such Interest Period; and
(iii) in the case of all Loans, the Maturity Date.
(d) COMPUTATIONS. Interest on (i) ABR Advances to the extent based
on the Prime Rate shall be calculated on the basis of a 365 or 366- day year (as
the case may be), and (ii) ABR Advances to the extent based on the Federal Funds
Effective Rate and on Eurodollar Advances shall be calculated on the basis of a
360-day year, in each case, for the actual number of days elapsed. The
Administrative Agent shall, as soon as practicable, notify the Borrower and the
Lenders of the effective date and the amount of each such change in the Prime
Rate, but any failure to so notify shall not in any manner affect the obligation
of the Borrower to pay interest on the Loans in the amounts and on the dates
required. Each determination of a rate of interest by the Administrative Agent
pursuant to the Loan Documents shall be conclusive and binding on all parties
hereto absent manifest error. The Borrower acknowledges that to the extent
interest payable on ABR Advances is based on the Prime Rate, such rate is only
one of the bases for computing interest on loans made by the Lenders, and by
basing interest payable on ABR Advances on the Prime Rate, the Lenders have not
committed to charge, and the Borrower has not in any way bargained for, interest
based on a lower or the lowest rate at which the Lenders may now or in the
future make loans to other borrowers.
3.2. FEES
(a) COMMITMENT FEE. The Borrower agrees to pay to the Administrative
Agent, for the account of the Lenders in accordance with such Lender's Specified
Percentage, fees (collectively, the "COMMITMENT FEE") as follows: (i) with
respect to the Aggregate Revolving Commitment, during the period from the
Effective Date through the Revolving Commitment Termination Date, at a rate per
annum equal to the Applicable Margin on the average daily unused Aggregate
Revolving Commitment and (ii) with respect to the Aggregate Term Loan
Commitment, during the period from the Effective Date through the Term Loan
Commitment Termination Date, at a rate per annum equal to the Applicable Margin
on the average daily unused Aggregate Term Loan Commitment.
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<PAGE> 46
The Commitment Fee shall be payable (A) quarterly in arrears on the last
Business Day of each March, June, September and December during such period,
commencing on the last Business Day of June, 1998, (B) on the date of any
reduction in the Aggregate Revolving Commitment or the Aggregate Term Loan
Commitment (to the extent of such reduction) and (C) on the Maturity Date. The
Commitment Fee shall be calculated on the basis of a 360-day year for the actual
number of days elapsed.
(b) LETTER OF CREDIT FEES. The Borrower agrees to pay to the
Administrative Agent, for the account of the Lenders in accordance with each
Lender's Revolving Percentage, commissions (the "LETTER OF CREDIT FEES") with
respect to the Letters of Credit for the period from and including the date of
issuance of each thereof through the expiration date thereof, at a rate per
annum equal to the Applicable Margin on the average daily maximum amount
available under any contingency to be drawn under such Letter of Credit. The
Letter of Credit Fees shall be (i) calculated on the basis of a 360-day year for
the actual number of days elapsed and (ii) payable quarterly in arrears on the
last Business Day of each March, June, September and December of each year,
commencing on the first such day following the Effective Date, and on the date
that the Revolving Commitments shall expire. In addition to the Letter of Credit
Fees, the Borrower agrees to pay to the Issuer, for its own account, its
standard fees and charges customarily charged to customers similar to the
Borrower with respect to any Letter of Credit.
(c) ADMINISTRATIVE AGENT'S AND ISSUER'S FEES. The Borrower agrees to
pay to the Administrative Agent and the Issuer, for their own respective
accounts, such other fees as have been agreed to in writing by the Borrower, the
Administrative Agent and the Issuer.
3.3. CONVERSIONS
(a) The Borrower may elect from time to time to convert one or more
Eurodollar Advances to ABR Advances by giving the Administrative Agent at least
one Business Day's prior irrevocable notice of such election, specifying the
amount to be converted, provided, that any such conversion of Eurodollar
Advances shall only be made on the last day of the Interest Period applicable
thereto. In addition, the Borrower may elect from time to time to (i) convert
ABR Advances comprising all or a portion of Loans to Eurodollar Advances and
(ii) continue Eurodollar Advances as new Eurodollar Advances by selecting a new
Interest Period therefor, in each case by giving the Administrative Agent at
least three Business Days' prior irrevocable notice of such election, in the
case of a conversion to, or continuation of, Eurodollar Advances, specifying the
amount to be so converted or continued and the initial Interest Period relating
thereto, provided that any such conversion of ABR Advances to Eurodollar
Advances shall only be made on a Business Day and any such continuation of
Eurodollar Advances as new Eurodollar Advances shall only be made on the last
day of the Interest Period applicable to the Eurodollar Advances which are to be
continued as such new Eurodollar Advances. Each such notice (a "NOTICE OF
CONVERSION") shall be substantially in the form of Exhibit C, shall be
ir-
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<PAGE> 47
revocable and shall be given by facsimile (confirmed promptly, and in any
event within five Business Days, by the delivery to the Administrative Agent of
a Notice of Conversion manually signed by the Borrower). The Administrative
Agent shall promptly provide the Lenders with notice of each such election.
Advances may be converted or continued pursuant to this Section in whole or in
part, provided that the amount to be converted to, or continued as, each
Eurodollar Advance, when aggregated with any Eurodollar Advance to be made on
such date in accordance with Section 2.2 and having the same Interest Period as
such first Eurodollar Advance, shall equal the Minimum Amount.
(b) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence and during the continuance of an Event of Default, the Borrower
shall have no right to elect to convert any existing ABR Advance to a new
Eurodollar Advance or to continue any existing Eurodollar Advance as a new
Eurodollar Advance. In such event, all ABR Advances shall be automatically
continued as ABR Advances and all Eurodollar Advances shall be automatically
converted to ABR Advances on the last day of the Interest Period applicable to
such Eurodollar Advance.
(c) Each conversion or continuation shall be effected by each Lender
by applying the proceeds of its new ABR Advance or Eurodollar Advance, as the
case may be, to its Advances (or portion thereof) being converted (it being
understood that any such conversion or continuation shall not constitute a
borrowing for purposes of Articles 4, 5 or 6).
3.4. CONCERNING INTEREST PERIODS
(a) No Interest Period in respect of a Eurodollar Advance under a
Revolving Loan shall end after the Revolving Commitment Termination Date, and no
Interest Period in respect of a Eurodollar Advance under a Term Loan shall end
after the Maturity Date.
(b) With respect to Eurodollar Advances, any Interest Period which
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month.
(c) If an Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless, in the case of a Interest Period, the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding Business
Day.
(d) If the Borrower shall have failed to timely elect a Eurodollar
Advance under Section 2.2 or 3.3, as the case may be, in connection with any
borrowing of, conversion to, or continuation of, a Eurodollar Advance, such
borrowing or such Advance
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<PAGE> 48
requested to be converted to, or continued as, a Eurodollar Advance shall
thereafter be an ABR Advance until such time, if any, as the Borrower shall
elect a new Eurodollar Advance pursuant to Section 3.3.
(e) The Borrower shall not be permitted to have more than eight
Eurodollar Advances outstanding at any one time, it being agreed that each
borrowing of a Eurodollar Advance pursuant to a single Credit Request shall
constitute the making of one Eurodollar Advance for the purpose of calculating
such limitation.
(f) Notwithstanding anything herein to the contrary, (i) until the
earlier of the end of the Syndication Period or the last day of the fourth week
after the consummation of each of the Pending Acquisitions, the Borrower may
only select Interest Periods of one week as set forth in the proviso to the
definition of Interest Period, all of which shall commence on the same date and
end on the same date, and (ii) if the Syndication Period has not expired on or
before the fourth week after the consummation of each of the Pending
Acquisitions, until the end of the Syndication Period, the Borrower may only
select Interest Periods of one month as set forth in the proviso to the
definition of Interest Period, all of which shall commence on the same date and
end on the same date.
3.5. FUNDING LOSS
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow, convert or continue a Eurodollar Advance on a
Borrowing Date or Conversion Date after it shall have given notice to do so in
which it shall have requested a Eurodollar Advance, or if a Eurodollar Advance
shall be terminated for any reason prior to the last day of the Interest Period
applicable thereto, or if, while a Eurodollar Advance is outstanding, any
repayment or prepayment of such Eurodollar Advance is made for any reason
(including as a result of acceleration or illegality) on a date which is prior
to the last day of the Interest Period applicable thereto, the Borrower agrees
to indemnify each Lender against, and to pay on demand directly to such Lender
the amount (calculated by such Lender using any reasonable method chosen by such
Lender which is customarily used by such Lender for such purpose) equal to any
loss or out-of-pocket expense suffered by such Lender as a result of such
failure to borrow convert, or continue, or such termination, repayment or
prepayment, including any loss, cost or expense suffered by such Lender in
liquidating or employing deposits acquired to fund or maintain the funding of
such Eurodollar Advance or redeploying funds prepaid or repaid, in amounts which
correspond to such Eurodollar Advance and any reasonable internal processing
charge customarily charged by such Lender in connection therewith.
3.6. INCREASED COSTS; ILLEGALITY, ETC.
(a) INCREASED COSTS. If any Change in Law shall impose, modify or
make applicable any reserve, special deposit, compulsory loan, assessment,
increased cost or similar requirement against assets held by, or deposits of, or
advances or loans by, or
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other credit extended by, or any other acquisition of funds by, any office of
any Credit Party in respect of its Eurodollar Advances which is not otherwise
included in the determination of a Eurodollar Rate or against any Letters of
Credit issued hereunder and the result thereof is to increase the cost to any
Credit Party of making, renewing, converting or maintaining its Eurodollar
Advances or its commitment to make such Eurodollar Advances, or to reduce any
amount receivable under the Loan Documents in respect of its Eurodollar
Advances, or to increase the cost to any Credit Party of issuing or maintaining
the Letters of Credit or participating therein, as the case may be, or the cost
to any Credit Party of performing its respective functions hereunder with
respect to the Letters of Credit, then, in any such case, the Borrower shall pay
such Credit Party such additional amounts as is sufficient to compensate such
Credit Party for such additional cost or reduction in such amount receivable
which such Credit Party deems to be material as determined by such Credit Party;
provided, however, that the Borrower shall not be responsible for costs under
this Section 3.6(a) arising more than 90 days prior to receipt by the Borrower
of the certificate from the affected Credit Party pursuant to Section 3.6(e)
with respect to such costs.
(b) CAPITAL ADEQUACY. If any Credit Party determines that any Change
in Law relating to capital requirements has or would have the effect of reducing
the rate of return on such Credit Party's capital or on the capital of such
Credit Party's holding company, if any, on the Extensions of Credit to a level
below that which such Credit Party (or its holding company) would have achieved
or would thereafter be able to achieve but for such Change in Law (after taking
into account such Credit Party's (or such holding company's) policies regarding
capital adequacy), the Borrower shall pay to such Credit Party (or such holding
company) such additional amount or amounts as will compensate such Credit Party
(or such holding company) for such reduction.
(c) ILLEGALITY. Notwithstanding any other provision hereof, if any
Lender shall reasonably determine that any law, regulation, treaty or directive,
or any change therein or in the interpretation or application thereof, shall
make it unlawful for such Lender to make or maintain any Eurodollar Advance as
contemplated by this Agreement, such Lender shall promptly notify the Borrower
and the Administrative Agent thereof, and (i) the commitment of such Lender to
make such Eurodollar Advances or convert ABR Advances to Eurodollar Advances
shall forthwith be suspended, (ii) such Lender shall fund its portion of each
requested Eurodollar Advance as an ABR Advance and (iii) such Lender's Revolving
Loans then outstanding as such Eurodollar Advances, if any, shall be converted
automatically to ABR Advances on the last day of the then current Interest
Period applicable thereto or at such earlier time as may be required by law. The
commitment of any such Lender with respect to Eurodollar Advances shall be
suspended until such Lender shall notify the Administrative Agent and the
Borrower that the circumstances causing such suspension no longer exist. Upon
receipt of such notice by each of the Administrative Agent and the Borrower,
such Lender's commitment to make or maintain Eurodollar Advances shall be
reinstated.
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(d) SUBSTITUTED INTEREST RATE. In the event that (i) the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that by reason of circumstances
affecting the interbank eurodollar market either adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section
3.1 or (ii) the Required Lenders shall have notified the Administrative Agent
that they have determined (which determination shall be conclusive and binding
on the Borrower) that the applicable Eurodollar Rate will not adequately and
fairly reflect the cost to such Lenders of maintaining or funding loans bearing
interest based on such Eurodollar Rate, with respect to any portion of the
Revolving Loans that the Borrower has requested be made as Eurodollar Advances
or Eurodollar Advances that will result from the requested conversion or
continuation of any portion of the Advances into or of Eurodollar Advances
(each, an "AFFECTED ADVANCE"), the Administrative Agent shall promptly notify
the Borrower and the Lenders (by telephone or otherwise, to be promptly
confirmed in writing) of such determination, on or, to the extent practicable,
prior to the requested Borrowing Date or Conversion Date for such Affected
Advances. If the Administrative Agent shall give such notice, (a) any Affected
Advances shall be made as ABR Advances, (b) the Advances (or any portion
thereof) that were to have been converted to Affected Advances shall be
converted to ABR Advances and (c) any outstanding Affected Advances shall be
converted, on the last day of the then current Interest Period with respect
thereto, to ABR Advances. Until any notice under clauses (i) or (ii), as the
case may be, of this Section has been withdrawn by the Administrative Agent (by
notice to the Borrower promptly upon either (x) the Administrative Agent having
determined that such circumstances affecting the interbank eurodollar market no
longer exist and that adequate and reasonable means do exist for determining the
Eurodollar Rate pursuant to Section 3.1 or (y) the Administrative Agent having
been notified by such Required Lenders that circumstances no longer render the
Advances (or any portion thereof) Affected Advances), no further Eurodollar
Advances shall be required to be made by the Lenders, nor shall the Borrower
have the right to convert all or any portion of the Revolving Loans to or as
Eurodollar Advances.
(e) PAYMENT; CERTIFICATES. Each payment pursuant to subsections (a)
or (b) above shall be made within 10 days after demand therefor, which demand
shall be accompanied by a certificate of the Credit Party demanding such payment
setting forth the calculations of the additional amounts payable pursuant
thereto. Each such certificate shall be conclusive absent manifest error.
Subject to the provisions of Section 3.6(a), no failure by any Credit Party to
demand, and no delay in demanding, compensation for any increased cost shall
constitute a waiver of its right to demand such compensation at any time.
3.7. TAXES
(a) PAYMENTS FREE OF TAXES. All payments by or on account of the
Borrower under any Loan Document to or for the account of a Credit Party shall
be made free and clear of, and without any deduction or withholding for or on
account of, any and
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all present or future Indemnified Taxes or Other Taxes, provided that if the
Borrower or any other Person is required by any law, rule, regulation, order,
directive, treaty or guideline to make any deduction or withholding in respect
of such Indemnified Tax or Other Tax from any amount required to be paid by the
Borrower to or on behalf of any Credit Party under any Loan Document (each a
"Required Payment"), then (i) the Borrower shall notify the Administrative Agent
and such Credit Party of any such requirement or any change in any such
requirement as soon as the Borrower becomes aware thereof, (ii) the Borrower
shall pay such Indemnified Tax or Other Tax prior to the date on which penalties
attach thereto, such payment to be made (to the extent that the liability to pay
is imposed on the Borrower) for its own account or (to the extent that the
liability to pay is imposed on such Credit Party) on behalf and in the name of
such Credit Party, (iii) the Borrower shall pay to such Credit Party an
additional amount such that such Credit Party shall receive on the due date
therefor an amount equal to the Required Payment had no such deduction or
withholding been made or required, and (iv) the Borrower shall, within 30 days
after paying such Indemnified Tax or Other Tax, deliver to the Administrative
Agent and such Credit Party satisfactory evidence of such payment to the
relevant Governmental Authority.
(b) REIMBURSEMENT FOR TAXES AND OTHER TAXES PAID BY CREDIT
PARTY. The Borrower shall reimburse each Credit Party, within ten days after
written demand therefor, for the full amount of all Indemnified Taxes or Other
Taxes paid by such Credit Party on or with respect to any payment by or on
account of any obligation of the Borrower under the Loan Documents (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto (other than any such
penalties, interest or expenses that are incurred by such Credit Party's
unreasonably taking or omitting to take action with respect to such Indemnified
Taxes or Other Taxes), whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Credit Party shall be conclusive absent manifest error. In the
event that any Credit Party determines in good faith that it has received a
refund or credit for Indemnified Taxes or Other Taxes paid by the Borrower under
this Section 3.7, such Credit Party shall promptly notify the Borrower of such
fact and shall remit to the Borrower the amount of such refund or credit.
(c) FOREIGN CREDIT PARTIES. Any Foreign Credit Party that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under the Loan Documents shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law (including Internal Revenue Form 4224
or Form 1001) or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate.
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3.8. REGISTER
The Administrative Agent will maintain a register for the
recordation of the names and addresses of the Lenders and the Revolving
Commitments of, and principal amount of the Loans owing to, each Lender, and the
Letters of Credit outstanding, from time to time (the "REGISTER"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and each Loan Party and each Credit Party may treat each party
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Credit Parties to enter into this Agreement and
extend or participate in the Extensions of Credit provided herein, the Borrower
makes the following representations and warranties to the Credit Parties:
4.1. ORGANIZATION AND POWER
Each of the Borrower and its Subsidiaries (i) is duly
organized or formed, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority to
own its property and to carry on its business as now conducted, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted therein or the property owned by it
therein makes such qualification necessary, except where such failure to qualify
or be in good standing, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse effect.
4.2. AUTHORIZATION; ENFORCEABILITY
Each Initial Transaction and each other transaction
contemplated by the Loan Documents (other than the Pending Acquisitions) is
within the corporate power of the Borrower and has been duly authorized by its
Managing Person and, if required, by any other Person, including holders of its
Capital Stock. On and after the date a Pending Acquisition is consummated, such
Pending Acquisition and each transaction contemplated by the Loan Documents and
the Pending Acquisition Documents related to such Pending Acquisition will be
within the corporate, partnership or other analogous powers of each of the
Borrower and each Subsidiary party thereto and will have been duly authorized by
its Managing Person and, if required, by any other Person including holders of
its Capital Stock. Each Loan Document has been validly executed and delivered by
each Loan Party party thereto and constitutes a legal, valid and binding
obligation of each such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject
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to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
4.3. APPROVALS; NO CONFLICTS
(a) Except as provided on Schedule 4.3, none of the Initial
Transactions or any other transaction contemplated by the Loan Documents (other
than the Pending Acquisitions) (i) requires any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority
or any other Person, except such as have been obtained or made and are in full
force and effect, (ii) will violate any applicable law, rule or regulation or
the Organizational Documents of the Borrower or any Subsidiary or any order of
any Governmental Authority, (iii) will violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any
Subsidiary or their assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any Subsidiary, and (iv) will result in
the creation or imposition of any Lien on any asset of the Borrower or any
Subsidiary other than the Permitted Liens.
(b) On and after the date of the consummation of a Pending
Acquisition, except as provided in the Pending Acquisition Documents related
thereto, no transaction contemplated by such Pending Acquisition Documents (i)
will require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority or any other Person, except such as
have been obtained or made and are in full force and effect, (ii) will violate
any applicable law, rule or regulation or the Organizational Documents of the
Borrower or any Subsidiary or any order of any Governmental Authority, (iii)
will violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or any Subsidiary or their assets, or give
rise to a right thereunder to require any payment to be made by the Borrower or
any Subsidiary, and (iv) will result in the creation or imposition of any Lien
on any asset of the Borrower or any Subsidiary other than the Permitted Liens.
4.4. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE
(a) The Borrower has heretofore furnished or caused to be
furnished to each Credit Party the reviewed consolidated balance sheet of the
Borrower as of December 31, 1995 and December 31, 1996, and the unaudited
consolidated balance sheet of the Borrower as of December 31, 1997, and the
reviewed consolidated statements of income and cash flows of the Borrower for
the fiscal years ended December 31, 1995 and December 31, 1996, and the
unaudited consolidated statements of income and cash flows of the Borrower for
the fiscal year ended December 31, 1997 (collectively, the "HISTORICAL ALLIED
FINANCIAL STATEMENTS"). Except as provided on Schedule 4.4(a), the Historical
Allied Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP on a consistent basis throughout the periods indicated and
present fairly, in all material respects, the financial position, results of
operations and changes in financial position of the Borrower as of the indicated
dates and for the indicated periods and are
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consistent with the books and records of the Borrower (which books and records
are correct and complete. Except as fully reflected in such financial
statements, there are no material liabilities required by GAAP to be reflected
on the Borrower's balance sheet or notes thereto that are not so reflected in
such balance sheet or note thereto that are not so reflected in the Historical
Allied Financial Statements, nor any other obligations (whether absolute,
contingent or otherwise) which are (individually or in the aggregate) material
(in amount or to the conduct of the Business of the Borrower or any Subsidiary).
(b) Since December 31, 1997, except for the Transactions, each
of the Borrower and each Subsidiary which was a Subsidiary as of such date has
conducted its business only in the ordinary course and there has been no
Material Adverse change.
(c) Since the date of its acquisition (or if not acquired, its
creation), each Subsidiary has conducted its business only in the ordinary
course and there has been no Material Adverse change.
4.5. PROPERTIES, ETC.
(a) Each of the Borrower and each Subsidiary has (and after
giving effect to the Allied Recapitalization and each Pending Acquisition, will
have) good and marketable title to, or valid leasehold interests in, all of its
property, real and personal, material to its business, subject to no Liens,
except Permitted Liens and except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.
(b) Each of the Borrower and each Subsidiary owns or is
licensed to use (and after giving effect to the Allied Recapitalization and each
Pending Acquisition, will have) all Intellectual Property material to its
business, and the use thereof by the Borrower or any Subsidiary does not (and
after giving effect to the Allied Recapitalization and each Pending Acquisition,
will not) conflict with or infringe upon the valid rights of others, except for
any such conflicts or infringements that individually are in the aggregate,
could not reasonably be expected to result in a Material Adverse effect.
(c) No contract, lease or other agreement to which the
Borrower, any Pending Acquisition Target or any of their respective Subsidiaries
is a party will lapse, be cancelled or otherwise terminate, which lapse,
cancellation or termination, could reasonably be expected to result in a
Material Adverse effect.
4.6. LITIGATION
Except as set forth on Schedule 4.6, there are no actions,
suits or proceedings at law or in equity or by or before any Governmental
Authority (whether purportedly on behalf of the Borrower or any Subsidiary)
pending or, to the knowledge of the Borrower, threatened against the Borrower or
any Subsidiary, or maintained by the Borrower
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or any Subsidiary or which may affect the property of any the Borrower or any
Subsidiary, (i) that, in the good faith opinion of the Borrower, would reason
ably be expected to have an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse effect or (ii) that involve any of the
Transactions. Since the Effective Date, there has been no change in the status
of any matter disclosed on Schedule 4.6 that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
effect.
4.7. ENVIRONMENTAL MATTERS
Except as set forth on Schedule 4.7 and except with respect to
any other matters that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse effect, neither the Borrower nor any
Subsidiary has (i) received written notice or otherwise learned of any claim,
demand, action, event, condition, report or investigation indicating or
concerning any potential or actual liability which individually or in the
aggregate could reasonably be expected to result in a Material Adverse effect,
arising in connection with any non- compliance with or violation of the
requirements of any applicable laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Substance (as defined
below) or to health and safety matters (collectively, "ENVIRONMENTAL LAWS"),
(ii) to the best knowledge of the Borrower, any threatened or actual liability
in connection with the release or threatened release of any Hazardous Substance
into the environment which individually or in the aggregate could reasonably be
expected to result in a Material Adverse effect, (iii) received notice of any
federal or state investigation evaluating whether any remedial action is needed
to respond to a release or threatened release of any Hazardous Substance into
the environment for which the Borrower or any Subsidiary is or would be liable,
which liability could reasonably be expected to result in a Material Adverse
effect, or (iv) has received notice that any the Borrower or any Subsidiary is
or may be liable to any Person under any Environmental Law, which liability
could reasonably be expected to result in a Material Adverse effect. Each of the
Borrower and each any Subsidiary is in compliance with the financial
responsibility requirements of Environmental Laws to the extent applicable,
except in those cases in which the failure so to comply would not reasonably be
expected to result in a Material Adverse effect. For purposes hereof, "HAZARDOUS
SUBSTANCE" shall mean any hazardous or toxic substance, material, waste or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes, radioactive materials or any other substance or waste regulated
pursuant to any Environmental Law. Since the Effective Date, there has been no
change in the status of any matter disclosed on Schedule 4.7 that, individually
or in the aggregate, has resulted in, or materially increased the likelihood of,
a Material Adverse effect.
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4.8. COMPLIANCE WITH LAWS AND AGREEMENTS; NO DEFAULT
Each of the Borrower and each Subsidiary is in compliance with
all laws, regulations and orders of any Governmental Authority applicable to it
or its property and all indentures, agreements and other instruments binding
upon it or its property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
effect. No Default has occurred and is continuing.
4.9. INVESTMENT COMPANIES AND OTHER REGULATED ENTITIES
None of the Borrower, any Subsidiary nor any Person controlled
by, controlling, or under common control with, the Borrower or any Subsidiary,
is (i) an "investment company" as defined in, or subject to regulation under,
the Investment Company Act of 1940, as amended, (ii) a "holding company" as
defined in, or subject to regulation under, the Public Utility Holding Company
Act of 1935 or the Federal Power Act, as amended, or (iii) subject to any
statute or regulation which prohibits or restricts the incurrence of
Indebtedness for borrowed money, including statutes or regulations relative to
common or contract carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
4.10. FEDERAL RESERVE REGULATIONS
(a) Neither the Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. After giving
effect to each Transaction and the making of each Extension of Credit, Margin
Stock will constitute less than 25% of the assets (as determined by any
reasonable method) of the Borrower and its Subsidiaries.
(b) No part of the proceeds of any Extension of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of Regulation G, U or X.
4.11. ERISA
Each Pension Plan is in compliance with ERISA and the Code,
where applicable, in all material respects and no ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse effect. The present value of all
accumulated benefit obligations under each Pension Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed by more than $100,000 the fair market value of the assets
of such Pension Plan, and the present value of all accumulated benefit
obligations of all
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underfunded Pension Plans (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed by more
than $100,000 the fair market value of the assets of all such underfunded
Pension Plans.
4.12. TAXES
Each of the Borrower and each Subsidiary has timely filed or
caused to be filed all tax returns and reports required to have been filed and
has paid, or caused to be paid, all Taxes required to have been paid by it
except (i) Taxes being contested in good faith by appropriate proceedings and
for which the Borrower or such Subsidiary, as applicable, has set aside on its
books adequate reserves, or (ii) to the extent that the failure to do so could
not reasonably be expected to result in a Material Adverse effect.
4.13. SUBSIDIARIES
(a) As of the Effective Date, (i) the Borrower has only the
Subsidiaries set forth on, and the authorized, issued and outstanding Capital
Stock of the Borrower and its Subsidiaries is as set forth on, Schedule 4.13 and
(ii) the ownership interests in each Subsidiary are duly authorized, validly
issued, fully paid and nonassessable and are owned beneficially and of record by
the Persons set forth on such Schedule 4.13, free and clear of all Liens (other
than Permitted Liens).
(b) As of the date of the consummation of a Pending
Acquisition in which the Pending Acquisition Target becomes a Subsidiary of the
Borrower (and after giving effect to the recapitalization or cancellation of any
shares of such Pending Acquisition Target contemporaneously with or immediately
following the consummation of such Pending Acquisition, (i) the authorized,
issued and outstanding Capital Stock of each such Subsidiary will be as set
forth on, Schedule 4.13 as amended by the Borrower in accordance with Section
8.5(f)(vi), and (ii) the ownership interests in each Subsidiary will be duly
authorized, validly issued, fully paid and nonassessable and are owned
beneficially and of record by the Persons set forth on such Schedule 4.13, free
and clear of all Liens (other than Permitted Liens).
(c) Except as set forth on Schedule 4.13, neither the Borrower
nor any Subsidiary has issued any securities convertible into, or options or
warrants for, any common or preferred equity securities thereof and there are no
agreements, voting trusts or understandings binding upon the Borrower or any
Subsidiary with respect to the voting securities of any Subsidiary or affecting
in any manner the sale, pledge, assignment or other disposition thereof,
including any right of first refusal, option, redemption, call or other right
with respect thereto, whether similar or dissimilar to any of the foregoing.
4.14. ABSENCE OF CERTAIN RESTRICTIONS
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No indenture, certificate of designation for preferred stock,
agreement or instrument to which the Borrower or any Subsidiary is a party
(other than this Agreement), prohibits or limits in any way, directly or
indirectly the ability of any Subsidiary to make Restricted Payments or loans
to, to make any advance on behalf of, or to repay any Indebtedness to, the
Borrower or to another Subsidiary.
4.15. LABOR RELATIONS
As of the Effective Date, there are no material controversies
pending that involve the Borrower or any Subsidiary which might result in a
Material Adverse effect.
4.16. INSURANCE
Schedule 4.17 sets forth a description of all insurance
maintained by or on behalf of the Borrower and the Subsidiaries as of the
Effective Date. As of the Effective Date, all premiums in respect of such
insurance that are due and payable have been paid.
4.17. NO MISREPRESENTATION
The Borrower has disclosed to each Credit Party all
agreements, instruments and corporate or other restrictions to which it or any
Subsidiary is subject, and all other matters known to it, that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
effect. No certificate or report from time to time furnished by any of the Loan
Parties in connection with the Transactions contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements therein contained not
misleading in the light of the circumstances under which made, provided that any
projections or pro-forma financial information contained therein are based upon
good faith estimates and assumptions believed by the Borrower to be reasonable
at the time made, it being recognized by the Credit Parties that such
projections as to future events are not to be viewed as facts, and that actual
results during the period or periods covered thereby may differ from the
projected results.
4.18. TRANSACTION DOCUMENTS
On and after the consummation of each Transaction, the
Transaction Documents applicable thereto are in full force and effect, and
neither the Borrower nor any Subsidiary has entered into, or agreed to, any
amendment, supplement, modification or waiver of any term or condition of any
Transaction Document in any way which would adversely effect any Credit Party.
4.19. FINANCIAL CONDITION
On and after each Borrowing Date and each date upon which a
Transaction shall be consummated, neither the Borrower nor any Subsidiary
Guarantor is Insolvent.
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4.20. YEAR 2000
All of the material computer software, computer firmware,
computer hardware (whether general or special purpose) and other similar or
related items of automated, computerized and/or software system(s) that are used
or relied on by the Borrower or any Subsidiary in the conduct of its business
will not malfunction, will not cease to function, will not generate incorrect
data, and will not produce incorrect results when processing, providing and/or
receiving, (i) data-related data into and between the twentieth and twenty-first
centuries and (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
4.21. MATERIAL AGREEMENTS
The Borrower has not received notice from any party to any
agreements, the cancellation or termination of which individually or in the
aggregate could reasonably be expected to result in a Material Adverse effect,
that such agreement or agreements would be cancelled, not renewed or otherwise
terminated as a result of the consummation of any of the Transactions.
ARTICLE 5. CONDITIONS TO FIRST EXTENSION OF CREDIT
In addition to the conditions precedent set forth in Article 6, the
obligation of the Credit Parties to make the initial Extension of Credit shall
not become effective until each of the following conditions precedent have been
satisfied (or waived in accordance with Section 11.1):
5.1. EVIDENCE OF ACTION
The Administrative Agent shall have received a certificate,
dated the Effective Date, of the Secretary or Assistant Secretary or other
analogous counterpart of each Loan Party:
(a) attaching a true and complete copy of the resolutions of
its Managing Person and of all other documents evidencing all necessary
corporate, partnership or other action (in form and substance satisfactory to
the Administrative Agent) taken to authorize the Loan Documents to which it is a
party and the transactions contemplated thereby;
(b) attaching a true and complete copy of its Organizational
Documents;
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(c) setting forth the incumbency of its officer or officers
(or other analogous counterpart) who may sign the Loan Documents, including
therein a signature specimen of such officer or officers (or other analogous
counterpart); and
(d) attaching a certificate of good standing of the Secretary
of State of the jurisdiction of its formation and of each other jurisdiction in
which it is qualified to do business, except, in the case of such other
jurisdiction, when the failure to be in good standing in such jurisdiction would
not result in a Material Adverse effect.
5.2. THIS AGREEMENT
The Administrative Agent (or Special Counsel) shall have
received, in respect of each Person listed on the signature pages of this
Agreement, either (i) a counterpart signature page hereof signed on behalf of
such Person, or (ii) written evidence satisfactory to the Administrative Agent
(which may include a facsimile transmission of a signed signature page of this
Agreement) that a counterpart signature page hereof has been signed on behalf of
such Person.
5.3. NOTES
The Administrative Agent shall have received a Note for each
Lender, dated the Effective Date, duly executed by a duly authorized officer of
the Borrower.
5.4. OPINION OF COUNSEL TO THE LOAN PARTIES
The Administrative Agent shall have received a favorable
opinion of Hogan & Hartson, L.L.P, counsel to the Loan Parties, addressed to the
Credit Parties (and permitting Special Counsel to rely thereon), dated the
Effective Date, substantially in the form of Exhibit E, together with such
opinions of local counsel as the Administrative Agent may reasonably require.
5.5. SECURITY DOCUMENTS, SEARCH REPORTS, ETC.
The Administrative Agent (or Special Counsel) shall have
received a counterpart of the Security Agreement, dated as the Effective Date,
signed by the Borrower (or a facsimile of a signature page thereof signed by the
Borrower) together with the following:
(a) a completed Perfection Certificate, dated the Effective
Date and signed by a Financial Officer of the Borrower, together with all
attachments contemplated thereby, including the results of a search of the
Uniform Commercial Code (or equivalent) filings and the results of trademark,
tax and judgment lien searches made with respect to the Borrower and each
Subsidiary Guarantor in the jurisdictions contemplated by the Perfection
Certificate and such other jurisdictions as the Administrative Agent may
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reasonably request, and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 8.2 or have been released;
(b) Instruments (as defined in the Security Agreement)
constituting Collateral, duly indorsed in blank by the Borrower, as the case may
be;
(c) such Uniform Commercial Code Financing Statements,
executed by the Borrower, as shall be reasonably requested by the Administrative
Agent; and
(d) such other documents as the Administrative Agent may
reasonably require in connection with the creation and perfection of the
security interests intended to be granted under the Security Documents.
5.6. ALLIED RECAPITALIZATION; OFFICER'S CERTIFICATE
(a) The Allied Recapitalization shall have been (or
simultaneously with the making of the first Extension of Credit is being)
consummated in accordance with the terms of the Allied Recapitalization
Documents, with no waiver of any term or condition thereof without the written
consent of the Administrative Agent.
(b) All outstanding Indebtedness of Allied and its
Subsidiaries shall have been (or simultaneously with the making of the first
Extension of Credit is being) paid in full and all agreements with respect
thereto have been cancelled or terminated, and all Liens, if any, securing the
same shall have been terminated (and attaching evidence satisfactory to the
Administrative Agent of such Lien terminations).
(c) All approvals and consents of all Persons required to be
obtained in connection with the consummation of the Initial Transactions have
been obtained, all required notices have been given and all required waiting
periods have expired.
(d) The transaction costs incurred by the Borrower in
connection with the Initial Transactions shall not be greater than $3,000,000.
(e) The Administrative Agent shall have received a certificate
of an officer of the Borrower, dated the Effective Date, as to the matters set
forth in subsections (a) through (d) above.
5.7. ALLIED RECAPITALIZATION DOCUMENTS
The Administrative Agent shall have received a certificate of
an officer of the Borrower, in all respects satisfactory to the Agent and dated
the Effective Date, (i) attaching a true and complete copy of each of the fully
executed Allied Recapitalization
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Documents which shall be in all respects satisfactory to the Administrative
Agent and (ii) certifying that each thereof is in full force and effect.
5.8. LEGAL AND CAPITAL STRUCTURE
The legal and capital structure of each of Credit Party shall
in all respects be satisfactory to the Administrative Agent.
5.9. ABSENCE OF MATERIAL ADVERSE CHANGE
Since December 31, 1997, there shall have occurred no Material
Adverse change and the Administrative Agent shall have received a certificate of
a Financial Officer of the Borrower to the foregoing effect.
5.10. COMPLIANCE CERTIFICATE
The Administrative Agent shall have received a Compliance
Certificate signed by a Financial Officer of the Borrower, in all respects
reasonably satisfactory to the Administrative Agent, dated the Effective Date
and (i) stating that the Borrower is in compliance with all covenants on a
pro-forma basis after giving effect to each Initial Transaction, and (ii)
attaching a copy of a pro-forma consolidated balance sheet of the Borrower
utilized for purposes of preparing such Compliance Certificate, which pro-forma
consolidated balance sheet presents the Borrower's good faith estimate of its
pro-forma consolidated financial condition at the date thereof, after giving
effect to the Initial Transactions.
5.11. LEVERAGE RATIO
The Leverage Ratio (after giving effect to the Initial
Transactions) shall not exceed 3.30:1.00, and the Administrative Agent shall
have received a Certificate signed by a Financial Officer of the Borrower, in
all respects reasonably satisfactory to the Administrative Agent, dated the
Effective Date setting forth a calculation thereof.
5.12. SOLVENCY CERTIFICATE
The Administrative Agent shall have received a certificate of
a Financial Officer of the Borrower, in all respects reasonably satisfactory to
the Administrative Agent certifying that, to the best knowledge of such
Financial Officer, after giving effect to the Initial Transactions neither the
Borrower nor any Subsidiary Guarantor is Insolvent.
5.13. PROPERTY, PUBLIC LIABILITY AND OTHER INSURANCE
The Administrative Agent shall have received a certificate of
all insurance maintained by the Borrower and its Subsidiaries in form and
substance reasonably satisfactory
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to the Administrative Agent, together with the endorsements required by Section
5.4 of the Security Agreement.
5.14. FEES
The Administrative Agent shall have received all fees and
other amounts due and payable to the Administrative Agent under the Loan
Documents on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of the fees and disbursements of Special Counsel and
all other out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder.
5.15. OTHER DOCUMENTS
The Administrative Agent shall have received such other
documents, each in form and substance reasonably satisfactory to it, as it shall
reasonably request.
ARTICLE 6. CONDITIONS TO EACH TERM LOAN AND EACH OTHER EXTENSION OF CREDIT
6.1. TERM LOANS AFTER EFFECTIVE DATE
The obligation of each Credit Party to make any Term Loan after the
Effective Date shall be subject to the satisfaction of the following conditions
precedent as of the date thereof:
(a) such Term Loan is being made in connection with the
consummation of an Acquisition with respect to which all conditions set forth in
Section 8.5 shall have been satisfied; and
(b) the amount of such Term Loan together with the aggregate
amount of all Term Loans previously borrowed shall not exceed either (i) the
aggregate amount of all Equity Contributions made on or before such date or (ii)
50% of the sum of the aggregate Acquisition Consideration (including transaction
costs other than fees payable to Thayer or any of its Affiliates) paid in cash
on or before such date in connection with Permitted Acquisitions (net of any
post-closing adjustments made in connection therewith which resulted in a
reduction to, or refund of any portion of, such Acquisition Consideration),
provided, however, that on and after the date on which the aggregate amount of
Equity Contributions shall equal or exceed $44,200,000, this subsection (b)
shall cease to apply.
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6.2. ALL EXTENSION OF CREDIT
The obligation of each Credit Party to make any Extension of Credit
(other than a participation in a Letter of Credit) under this Agreement shall be
subject to the satisfaction of the following conditions precedent as of the date
thereof:
(a) COMPLIANCE. On each Borrowing Date and after giving effect
to the Extensions of Credit thereon (i) no Default shall have occurred or be
continuing; and (ii) the representations and warranties contained in the Loan
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on such
Borrowing Date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true and correct on and as of such earlier date. Each
Extension of Credit and each Credit Request therefor shall constitute a
certification by the Borrower as of such Borrowing Date that each of the
foregoing matters is true and correct in all respects.
(b) CREDIT REQUEST. With respect to each Extension of Credit,
the Administrative Agent shall have received a Credit Request, executed by a
duly authorized officer of the Borrower.
(c) LAW. Such Extension of Credit shall not be prohibited by
any applicable law, rule or regulation.
ARTICLE 7. AFFIRMATIVE COVENANTS
The Borrower agrees that, so long as any Commitment is in effect and
until the principal of, and interest on, each Loan, all Reimbursement
Obligations, all Fees and all other amounts payable under the Loan Documents
shall have been paid in full:
7.1. FINANCIAL STATEMENTS AND INFORMATION
The Borrower shall furnish or cause to be furnished to the
Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal
year:
(i) a copy of the audited consolidated
balance sheet and related statements of income, stockholders' equity
and cash flows as of the end of and for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
all reported on by the Accountants (without (x) a "going concern" or
like qualification or exception, (y) any qualification or exception as
to the scope of such audit or (z) any qualification or exception which
relates to the
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treatment or classification of any item and which, as a condition to
the removal of such qualification, would require an adjustment to such
item, the effect of which would be to cause the Borrower to be in
default of any of its obligations under Section 8.14 (each, an
"IMPERMISSIBLE QUALIFICATION")) to the effect that such consolidated
financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiarie on a consolidated basis in accordance with
GAAP consistently applied;
(ii) a copy of its unaudited consolidating
balance sheet and related statements of income, stockholders' equity
and cash flows as of the end of and for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
certified by a Financial Officer of the Borrower, as being complete and
correct in all material respects and as presenting fairly the
consolidating financial condition and the consolidating results of
operations of the Borrower and the Subsidiaries.
(b) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year:
(i) a copy of its consolidated balance sheet
and the related consolidated statements of income and cash flows as of
the end of and for such fiscal quarter and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes;
(ii) a copy of its consolidating balance
sheet and related statements of income, and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of such fiscal
year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, certified by one of
its Financial Officers as presenting fairly in all material respects
the financial condition and results of operations of the Borrower and
its consolidated Subsidiaries on a consolidating basis in accordance
with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, together with a schedule of
other unaudited financial information consisting of consolidating or
combining details in columnar form with such consolidating Subsidiaries
separately identified, in accordance with GAAP consistently applied;
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(c) concurrently with any delivery of financial statements
under subsections (a) or (b) above, a certificate (a "COMPLIANCE CERTIFICATE")
of a Financial Officer of the Borrower, substantially in the form of Exhibit D,
(i) certifying as to whether a Default has occurred and, if so, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 8.14 and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the audited financial
statements referred to in Section 4.4 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such Compliance Certificate;
(d) concurrently with any delivery of financial statements
under subsection (a) above, a certificate executed by a Financial Officer of the
Borrower (i) setting forth the information required pursuant to Section 2 of the
Perfection Certificate or confirming that there has been no change in such
information since the date of such certificate or the date of the most recent
certificate delivered pursuant to this subsection (e), (ii) certifying that all
Uniform Commercial Code financing statements or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
re-registrations, containing a description of the Collateral, have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interest of the Administrative Agent for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period) and (iii) identifying in the format of Schedules 7, 8 and 10, as
applicable, Equity Interests (as defined in the Security Agreement), Instruments
(as defined in the Security Agreement) and Intellectual Property of the Borrower
and each Subsidiary Guarantor in existence on the date thereof and not then
listed on such Schedules or previously so identified to the Administrative
Agent;
(e) concurrently with any delivery of financial statements
under subsections (a) and (b) above, a certificate executed by a Financial
Officer certifying as to (i) the then outstanding Existing Letters of Credit and
the collateral pledged to the issuers of such Existing Letters of Credit, and
(ii) all investments (including such information as shall be sufficient to
enable the Administrative Agent to make a determination as to whether, in its
good faith determination, such investments and the earnings therefrom
sufficiently reduce the exposure of the Borrower and the Subsidiaries to
interest rate fluctuations);
(f) promptly after the same become publicly available, copies
of all material periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the SEC or with any national
securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be;
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(g) promptly after the same become available (but in no event
more than 60 days after the Effective Date with respect to the Allied
Recapitalization, and 60 days after the consummation of a Pending Acquisition)
copies of the audited 1997 year end financial statements for each of the
Borrower and the applicable Pending Acquisition Target; and
(h) promptly following any request therefor, such other
information regarding the Borrower or any Subsidiary, or compliance with the
terms of this Agreement, as any Credit Party may reasonably request.
7.2. NOTICE OF MATERIAL EVENTS
The Borrower shall furnish to the Administrative Agent and
each Lender, prompt written notice of the following together with a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and, if applicable,
any action taken or proposed to be taken with respect thereto:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could in the
good faith opinion of the Borrower reasonably be expected to result in a
Material Adverse effect;
(c) any lapse, refusal to renew or extend or other
termination of any material license, permit, franchise or other authorization
issued to the Borrower or any Subsidiary by any Person or Governmental
Authority, which lapse, refusal or termination, could reasonably be expected to
result in a Material Adverse effect;
(d) the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred, could reasonably be
expected to result in a Material Adverse effect;
(e) the occurrence of any Equity Issuance resulting
in Net Cash Proceeds;
(f) the occurrence of any insured damage to any
portion of any Collateral or the commencement of any action or proceeding for
the taking of any Collateral or any part thereof or interest therein under power
of eminent domain or by condemnation or similar proceeding the value of which
would reasonably be expected to exceed (i) $100,000 until the consummation of
any two of the Pending Acquisitions and (ii) $250,000 thereafter; or
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(g) the occurrence of any other development that has
or could reasonably be expected to result in, a Material Adverse effect.
7.3. EXISTENCE: CONDUCT OF BUSINESS
The Borrower shall, and shall cause each Subsidiary to, do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect (i) its legal existence (provided that the foregoing shall not
prohibit any merger or consolidation not prohibited by Section 8.3), and (ii)
all rights, licenses, permits, privileges and franchises the absence of which
would reasonably be expected to have a Material Adverse effect.
7.4. PAYMENT OF OBLIGATIONS
The Borrower shall, and shall cause each Subsidiary to, pay
and discharge when due, its obligations, including obligations with respect to
Taxes, which, if unpaid, could reasonably be expected to result in a Material
Adverse effect, except where (i) the validity or amount thereof is being
contested in good faith by appropriate proceedings diligently conducted, (ii)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (iii) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse effect.
7.5. MAINTENANCE OF PROPERTIES
The Borrower shall, and shall cause each Subsidiary to,
maintain, protect and keep in good repair, working order and condition (ordinary
wear and tear excepted) at all times, all of its property other than property,
the loss of which would not reasonably be expected to have a Material Adverse
effect.
7.6. INSURANCE
The Borrower shall, and shall cause each Subsidiary to,
maintain with financially sound and reputable insurance companies (i) insurance
in at least such amounts and against at least such risks (but including in any
event public liability and, within 90 days after the Effective Date, business
interruption coverage) as are usually insured against in the same general area
by companies engaged in the same or a similar business and (ii) such other
insurance as is required pursuant to the terms of any Security Document, and
furnish to the Administrative Agent, upon written request, full information as
to the insurance carried.
7.7. BOOKS AND RECORDS: INSPECTION RIGHTS
The Borrower shall, and shall cause each Subsidiary to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and
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transactions in relation to its business and activities and, at all reasonable
times upon reasonable prior notice, permit representatives of the Credit Parties
to (i) visit the offices of the Borrower and each Subsidiary, (ii) examine such
books and records and Accountants' reports relating thereto, (iii) make copies
or extracts therefrom, (iv) discuss the affairs of the Borrower and each such
Subsidiary with the respective officers thereof, (v) to examine and inspect the
property of the Borrower and each such Subsidiary and (vi) meet and discuss the
affairs of the Borrower and each such Subsidiary with the Accountants.
7.8. COMPLIANCE WITH LAWS
The Borrower shall, and shall cause each Subsidiary to, comply
with all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse effect.
7.9. ADDITIONAL SUBSIDIARIES
(a) DOMESTIC SUBSIDIARIES. Subject to Section 7.14, in the
event that on or after the Effective Date, any Person shall become a Domestic
Subsidiary, or any Subsidiary (other than a Subsidiary Guarantor) shall at any
time be a Domestic Subsidiary, the Borrower shall (i) notify the Administrative
Agent in writing thereof within three Business Days thereof, (ii) cause such
Person to execute and deliver to the Administrative Agent the Subsidiary
Guarantee or, if the Subsidiary Guarantee is then in effect, a Guarantee
Supplement (as defined therein), a Security Agreement Supplement (as defined in
the Security Agreement) and to become a party to each other applicable Security
Document in the manner provided therein within five Business Days thereafter and
to promptly take such actions to create and perfect Liens on such Person's
assets to secure such Person's obligations under the Loan Documents as the
Administrative Agent or the Required Lenders shall reasonably request, (iii)
cause any shares of Capital Stock of, or promissory notes evidencing
Indebtedness of, such new Domestic Subsidiary owned by or on behalf of any Loan
Party to be pledged pursuant to the Security Agreement within five Business Days
thereafter, (iv) cause each such new Domestic Subsidiary to deliver to the
Administrative Agent any shares of Capital Stock or promissory notes evidencing
Indebtedness of any Subsidiary that are owned by or on behalf of such new
Domestic Subsidiary within five Business Days after such Subsidiary is formed or
acquired (except that, if any such Subsidiary is a Foreign Subsidiary, shares of
Capital Stock of such Person to be so pledged may be limited as provided in
subsection (b) below and, if requested by the Administrative Agent with respect
to the pledge of Capital Stock of a Foreign Subsidiary, the Administrative Agent
shall receive the documents referred to in subsection (b)(iii) below), and (v)
deliver to the Administrative Agent a Perfection Certificate with respect to
such Subsidiary and such additional Financing Statements, Grants of Security
Interest and Powers of Attorney (as each such term is defined in the Security
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Agreement) certificates, instruments, opinions and other documents as the
Administrative Agent may request.
(b) FOREIGN SUBSIDIARIES. In the event that on or after the
Effective Date, any Person shall become a Foreign Subsidiary, the Borrower shall
(i) notify the Administrative Agent in writing thereof within three Business
Days thereof, (ii) cause such Person to execute and deliver to the
Administrative Agent an Intercompany Subordination Agreement (iii) cause the
lesser of (x) 65% of the outstanding shares of Capital Stock of such Foreign
Subsidiary or (y) all of such shares owned by the Loan Parties, together with
all promissory notes evidencing Indebtedness of, such Foreign Subsidiary are to
any Loan Party to be pledged pursuant to the Security Agreement within five
Business Days thereafter, provided, that if requested by the Administrative
Agent with respect to the pledge of Capital Stock of a Foreign Subsidiary,
deliver to the Administrative Agent an additional pledge agreement, in form and
substance reasonably satisfactory to the Administrative Agent (each an
"ADDITIONAL PLEDGE AGREEMENT") and an opinion of counsel (including counsel
practicing under the laws of the jurisdiction under which such Foreign
Subsidiary was formed) with respect to the enforceability of such Pledge
Agreement or Additional Pledge Agreement and the validity and perfection of the
Lien granted therein and (iv) deliver to the Administrative Agent such
certificates, instruments and opinions as the Administrative Agent may request.
7.10. ADDITIONAL COLLATERAL
Subject to Section 7.14, if after the Effective Date, the
Borrower or any other Loan Party acquires any property which would constitute
Collateral, the Borrower shall, and shall cause each such Loan Party to, execute
any and all documents, financing statements, agreements and instruments, Grants
of Security Interests and take all such further actions (including the filing
and recording of financing statements, fixture filings, mortgages, deeds of
trust, control agreements and other documents), that may be required under any
applicable law, or which the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the Transactions or to grant, preserve,
protect or perfect the Liens created or intended to be created by the Security
Documents or the validity or priority of any such Lien, all at the expense of
the Loan Parties.
7.11. HEDGING AGREEMENTS
Within 30 days after the Administrative Agent notifies the
Borrower that in the good faith determination of the Administrative Agent (which
determination shall be binding on the Borrower), the investments of the Borrower
and the Subsidiaries and the earnings therefrom do not sufficiently reduce the
exposure of the Borrower and the Subsidiaries to interest rate fluctuations, the
Borrower shall enter into and maintain Hedging Agreements, in form and substance
reasonably satisfactory to the Administrative Agent, with respect to an amount
equal to not less than 50% of the Term Loan Exposure at any time.
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7.12. CLASSIC MORTGAGES
Not later than two Business Days after the consummation of the
Classic Acquisition, the transactions contemplated by the Classic Mortgage
Purchase Documents shall have been consummated in accordance with their terms
with no waiver of any term or condition thereof without the consent of the
Administrative Agent, and the Administrative Agent shall have received a
certificate of an officer of the Borrower to the foregoing effect.
7.13. EXISTING LETTERS OF CREDIT
The Borrower shall use its best efforts to cause Letters of
Credit issued pursuant to this Agreement to be substituted for all Existing
Letters of Credit issued for the account of a Pending Acquisition Target at the
closing of the Pending Acquisition thereof except to the extent that such
substitution cannot be effected at a reasonable cost or is not practicable as a
result of the lack of time to obtain the necessary consents thereto and effect
such substitution prior to such closing. To the extent that such substitution is
not made with respect to all such Existing Letters of Credit prior to the
closing of the related Pending Acquisition, the Borrower shall use its best
efforts to cause such substitution to be made as soon as practicable thereafter,
provided that Letters of Credit issued pursuant to this Agreement shall
substituted for all Existing Letters of Credit no later than December 31, 1998.
7.14. SUMMIT BANK CONTROL AGREEMENT
Notwithstanding anything to the contrary contained in any Loan
Document, not later than 30 days after the Effective Date, the Borrower shall
deliver to the Agent a control agreement in all respects reasonably satisfactory
to the Agent, signed by Haddon and Summit Bank with respect to the securities
account established by Summit Bank for Haddon designated as account number
1911278002.
ARTICLE 8. NEGATIVE COVENANTS
The Borrower agrees that, so long as any Commitment is in effect and
until the principal of, and interest on, each Loan, all Reimbursement
Obligations, all Fees and all other amounts payable under the Loan Documents
shall have been paid in full:
8.1. INDEBTEDNESS
The Borrower shall not, and shall not permit any Subsidiary
to, create, incur, assume or suffer to exist any liability for Indebtedness,
except:
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(a) Indebtedness due under the Loan Documents;
(b) Indebtedness of the Borrower or any Subsidiary existing on
the Effective Date as set forth on Schedule 8.1 and in respect of any Existing
Letter of Credit, but not, in the case of any Existing Letter of Credit, any
extensions, renewals and replacements thereof;
(c) Indebtedness of the Borrower to any Subsidiary or of
Subsidiaries to the Borrower or other Subsidiaries, provided that (A)
Indebtedness of the Borrower or any Subsidiary Guarantor to a Subsidiary that is
not a Subsidiary Guarantor shall be subordinated pursuant to the Intercompany
Subordination Agreement, and (B) immediately after giving effect to any
Indebtedness of any Subsidiary that is not a Subsidiary Guarantor to the
Borrower or any Subsidiary Guarantor, the Available Intercompany Investment
Amount shall not be less than $1.00;
(d) Guarantees by the Borrower of Indebtedness of any
Subsidiary or Guarantees by any Subsidiary of Indebtedness of the Borrower or of
any other Subsidiary, provided that with respect to Guarantees by the Borrower
or any Subsidiary Guarantor of Indebtedness of a Subsidiary that is not a
Subsidiary Guarantor, immediately after giving effect thereto, the Available
Intercompany Investment Amount shall not be less than $1.00;
(e) (i) Indebtedness of the Borrower or any Subsidiary (A)
incurred to finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations, (B) assumed in connection
with the acquisition of any such assets or (C) secured by a Lien on any such
assets, (ii) Indebtedness of any Person that becomes a Subsidiary of the
Borrower after the Effective Date, or (iii) extensions, renewals and
replacements of any Indebtedness under this subsection 8.1(e) that do not
increase the outstanding principal amount thereof, provided that (x)
Indebtedness under this subsection 8.1(e) shall not (1) exceed $5,000,000 in
aggregate principal amount at any one time outstanding, and (2) except with
respect to Indebtedness under clause (i)(A) of this Section 8.1(e), be created,
assumed or incurred in contemplation of or in connection with any such
acquisition or such Person becoming a Subsidiary, and (3) immediately after
giving effect thereto, the Available Debt Amount shall not be less than $1.00;
(f) other unsecured Indebtedness of the Borrower or any
Subsidiary, excluding Indebtedness (A) of Subsidiaries to the Borrower or other
Subsidiaries or the Borrower to Subsidiaries, (B) under the Loan Documents, and
(C) Indebtedness subordinated to the Indebtedness under the Loan Documents
pursuant to a subordination agreement in form and substance satisfactory to the
Administrative Agent, provided that immediately after giving effect to such
other non-excluded Indebtedness, the Available Debt Amount shall not be less
than $1.00; and
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(g) other unsecured Indebtedness of the Borrower (the
"REFINANCING DEBT"), provided that: (i) no Default shall exist immediately
before and after giving effect thereto and all of the representations and
warranties contained in Article 4 shall be true and correct as if then made,
(ii) the terms and conditions of the note or other agreements pursuant to which
the Refinancing Debt is issued (collectively, the "REFINANCING DEBT DOCUMENTS")
are no less favorable taken as a whole to the Borrower than the terms and
conditions of this Agreement, (iii) the Refinancing Debt shall be either pari
passu with, or subordinated to, the Indebtedness under the Loan Documents, (iv)
the maturity of such Indebtedness is not earlier than one year after the
Maturity Date, (v) interest thereon is payable in cash and the rate thereon is
not in excess of the rate available for similar borrowings by similar borrowers
at the time of the incurrence of the Refinancing Debt, (vi) the Net Cash
Proceeds thereof are applied to the prepayment of the Loans and the permanent
reduction of the Aggregate Revolving Commitment pursuant to Sections 2.3 and
2.4, and (vii) the Administrative Agent receives a copy of the agreement,
indenture or other documents governing such Refinancing Debt, which shall be in
form and substance reasonably satisfactory to the Administrative Agent.
8.2. NEGATIVE PLEDGE
The Borrower shall not, and shall not permit any Subsidiary
to, create, incur, assume or suffer to exist any Lien upon any of its property,
whether now owned or hereafter acquired, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except for the following (collectively, "PERMITTED LIENS"):
(a) any Customary Lien;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the Effective Date and set forth on Schedule 8.2,
provided that (i) such Lien shall not apply to any other property or asset of
the Borrower or any Subsidiary, (ii) such Lien shall secure only those
obligations which it secures on the Effective Date and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof and (iii) such Lien shall not secure any obligations in respect of any
letter of credit;
(c) any Lien on any fixed or capital asset of the Borrower or
any Subsidiary, provided that such Lien shall exist at the time of the
acquisition of such asset, shall have been created contemporaneously with such
acquisition to secure the payment of the purchase price thereof or shall have
been incurred prior to the acquisition of such asset by the Borrower or such
Subsidiary, or prior to the time such Person became a Subsidiary of the
Borrower, but in any event such Lien shall not have been created in
contemplation of or in connection with the acquisition of such asset, or the
creation or acquisition of any Person that, after giving effect thereto, is a
Subsidiary of the Borrower, provided that (i) such Lien shall not apply to any
other property or assets of the Borrower or any Subsidiary
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(other than fixed assets which constitute fixtures thereon or accessions
thereto), (ii) at the time of acquisition of any such fixed asset, the aggregate
amount remaining unpaid on all liabilities secured by Liens on such fixed asset,
whether or not assumed by the Borrower or a Subsidiary, shall not exceed the
fair market value at the time of acquisition of such fixed asset (as determined
in good faith by the Board of Directors of the Borrower), (iii) at the time of
the incurrence of such liabilities and after giving effect thereto and to the
application of the proceeds thereof, no Default would exist; and (vi)
immediately after giving effect thereto, the Available Debt Amount shall not be
less than $1.00.
(d) Liens on Margin Stock, if and to the extent that the value
of the Margin Stock of the Borrower and its Subsidiaries exceeds 25% of the
assets (as determined by any reasonable method) of the Borrower and its
Subsidiaries.
8.3. FUNDAMENTAL CHANGES
The Borrower shall not, and shall not permit Subsidiaries to,
consolidate or merge into or with any other Person, or permit any other Person
to merge into or consolidate with it or any Subsidiary, or sell, transfer, lease
or otherwise dispose of (in one transaction or in a series of transactions) all
or substantially all of its assets, or all or substantially all of any class of
the Capital Stock of any Subsidiary (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, or permit any Subsidiaries to do
any of the foregoing, except that so long as immediately before and after giving
effect thereto, no Default shall exist:
(a) the Borrower may merge with any Subsidiary Guarantor and
any Subsidiary Guarantor may merge with the Borrower or any other Subsidiary
Guarantor, provided that in connection with any merger involving the Borrower,
the Borrower shall be the survivor thereof;
(b) any Subsidiary which is not a Subsidiary Guarantor may
merge with any other Subsidiary which is not a Subsidiary Guarantor;
(c) any Subsidiary which is not a Subsidiary Guarantor may
merge with any Subsidiary Guarantor, and any Subsidiary Guarantor may merge with
any Subsidiary which is not a Subsidiary Guarantor, provided that (i)
immediately after giving effect to any such merger in which such Subsidiary
Guarantor is the survivor, the Available Intercompany Investment Amount shall
not be less than $1.00, (ii) with respect to any merger in which such Subsidiary
Guarantor is not the survivor, such merger shall be treated as a Disposition for
all purposes of Sections 2.4(c)(i) and 8.6(d);
(d) the Borrower or any Subsidiary may merge with any Person
that is not a Subsidiary, provided that (i) in connection with any such merger
involving the Borrower, the Borrower shall be the survivor thereof, (ii) with
respect to any such merger involving a Subsidiary in which, immediately after
giving effect thereto, the surviving
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Person is not a Subsidiary, such merger shall be treated as a Disposition for
all purposes of Sections 2.4(c)(i) and 8.6(d), (iii) with respect to any such
merger involving a Loan Party in which, immediately after giving effect thereto,
the surviving Person is a Subsidiary, provided that (A) if such Subsidiary is a
Domestic Subsidiary, (1) immediately after giving effect to any such merger, the
Available Other Investment Amount shall not be less than $1.00, and (2) such
merger shall be treated as an Acquisition for all purposes of Section 8.5 and
(B) if such Subsidiary is a Foreign Subsidiary, immediately after giving effect
to any such merger, the Available Intercompany Investment Amount shall not be
less than $1.00;
(e) any Subsidiary may make any Disposition permitted by
Sections 8.6(c) or (d);
(f) any Subsidiary other than a Subsidiary Guarantor may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; and
(g) after the consummation of the Initial Public Offering, the
Borrower may merge into a newly formed corporation incorporated under Delaware
law, with such Delaware corporation as the survivor, provided, however, (i) no
Default would exist immediately before or after giving effect thereto, (ii) such
surviving corporation shall have executed and delivered to the Administrative
Agent an assumption agreement in form and substance satisfactory to it pursuant
to which such surviving corporation assumes the obligations of the Borrower
under the Loan Documents, (iii) the surviving corporation executes and delivers
to the Administrative Agent such UCC-1 financing statements and other documents
as the Administrative Agent shall reasonably request in connection with the
perfection of the security interests granted under the Collateral Documents.
8.4. INVESTMENTS, LOANS, ADVANCES AND GUARANTEES
The Borrower shall not, and shall not permit any Subsidiary
to, purchase or otherwise acquire, hold or invest in any derivative product, or
any Capital Stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of any Person,
or make or permit to exist any investment or any other interest in, any other
Person, except:
(a) investments in Cash Equivalents and Investment Grade
Securities;
(b) subject to Section 7.12, investments existing on the
Effective Date as set forth on Schedule 8.4;
(c) investments by the Borrower or any Subsidiary in the
Capital Stock of or debt issued by the Borrower and investments by any
Subsidiary in the Capital Stock
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<PAGE> 76
of or debt issued by any other Subsidiary, provided that (i) the proceeds of
such investment in a Borrower or a Subsidiary Guarantor shall be received by the
Borrower or such Subsidiary Guarantor, and (ii) immediately after giving effect
to each investment by the Borrower or any Subsidiary Guarantor in the Capital
Stock of or debt issued by any Subsidiary that is not a Subsidiary Guarantor,
the Available Intercompany Investment Amount shall not be less than $1.00;
(d) Acquisitions permitted by Section 8.5;
(e) purchases or other acquisitions (including through a
dividend or otherwise and whether in a single transaction or in a series of
related transactions) (i) by the Borrower or any Subsidiary of any property or
assets from any other Subsidiary or (ii) by any Subsidiary of any property or
assets from the Borrower or any other Subsidiary, provided that immediately
after giving effect to any such purchase or acquisition between a Loan Party, as
purchaser, and a Subsidiary which is not a Subsidiary Guarantor, as seller, the
Available Intercompany Investment Amount shall not be less than $1.00; and
(f) Guarantees permitted by Section 8.1(d) and Hedging
Agreements permitted by Section 8.8.
Notwithstanding anything in this Agreement to the contrary, all
customer deposits shall be invested in cash, Cash Equivalents and Investment
Grade Securities.
8.5. ACQUISITIONS
The Borrower shall not, and shall not permit any Subsidiary
to, at any time, make any purchase or other acquisition (including by way of a
dividend received or otherwise and whether in a single transaction or in a
series of related transactions and including each of the Pending Acquisitions)
of (i) any assets of any other Person that, taken together, constitute a
business unit, (ii) any Capital Stock of any other Person if, immediately
thereafter, such other Person would be a Subsidiary of the Borrower (iii) any
assets of any other Person otherwise not in the ordinary course of business, or
(iv) enter into any binding agreement to perform any transaction described in
clauses (i), (ii) or (iii) above which is not contingent on obtaining the
consent of the Required Lenders (each transaction described in clauses (i),
(ii), (iii) and (iv) above being referred to as an "ACQUISITION"), except that
the Borrower or any Subsidiary may make Acquisitions, provided that:
(g) no Acquisition other than a Pending Acquisition shall be
permitted unless the Allied Recapitalization and at least two Pending
Acquisitions shall have been consummated;
(h) no Default shall or would exist immediately before or
after giving effect to each such Acquisition, all of the representations and
warranties contained in
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<PAGE> 77
Article 4 shall be true and correct as if then made, and the pro-forma Leverage
Ratio shall not exceed 3.10:1.00 (on a pro forma basis giving effect to such
Acquisition, any Indebtedness incurred in connection therewith, and taking into
account the earnings before interest, taxes, depreciation and amortization
(calculated in the manner of the calculation of EBITDA) of the Person or
business acquired and each other Person or business acquired during the
immediately preceding four fiscal quarters), and the Borrower shall have
delivered to the Administrative Agent and each Lender a certificate of a
Financial Officer as to the foregoing matters (containing calculations of the
Leverage Ratio in reasonable detail),
(i) with respect to each Acquisition other than a Pending
Acquisition, immediately after giving effect thereto, the Available Other
Investment Amount shall not be less than $1.00,
(j) with respect to each Acquisition other than a Pending
Acquisition made in any fiscal year, the sum (the "Acquisition Consideration")
of (i) the cash consideration paid or agreed to be paid in connection with such
Acquisition plus (ii) the fair market value of all non-cash consideration paid
or agreed to be paid in connection with such Acquisition plus (iii) an amount
equal to the principal or stated amount of all liabilities assumed or incurred
by such Person or any Loan Party in connection therewith plus (iv) the
Acquisition Consideration paid in respect of each other such Acquisition made
during such fiscal year shall not exceed $25,000,000,
(k) with respect to each Acquisition other than a Pending
Acquisition, pursuant to which the Acquisition Consideration exceeds $5,000,000,
the Borrower shall have delivered to the Administrative Agent and each Lender
written notice thereof not less than five Business Days prior to the
consummation of such Acquisition,
(l) with respect to each Pending Acquisition:
(i) all outstanding Indebtedness of the applicable
Pending Acquisition Target and its Subsidiaries shall have been (or
simultaneously is being) paid in full and all agreements with respect
thereto have been cancelled or terminated, and all Liens, if any,
securing the same and all lockbox or similar arrangements with respect
thereto, if any, shall have been terminated (and attaching evidence
satisfactory to the Administrative Agent of such Lien terminations),
provided, however, that the Borrower shall not be required to cancel or
terminate unsecured letters of credit issued for the account of a
Pending Acquisition Target (the "EXISTING LETTERS OF CREDIT") provided
that (A) the Administrative Agent shall receive a certificate of a
Financial Officer setting forth with respect to each such letter of
credit (1) the names of the issuing bank, beneficiary and account
party, (2) the issuance and expiry dates and (3) the face and undrawn
amounts, (B) no such letter of credit shall be extended, and (C) the
availability of Revolving Loans shall be reduced by the Letter of
Credit Exposure with respect thereto,
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<PAGE> 78
(ii) the Administrative Agent shall have received a
certificate of an officer of the Borrower, in all respects satisfactory
to the Agent and dated the date of the consummation of such Pending
Acquisition (A) attaching a true and complete copy of each of the
applicable Pending Acquisition Documents, which shall be in form and
substance satisfactory to the Administrative Agent and (B) certifying
that each thereof is in full force and effect,
(iii) there shall have occurred no Material Adverse change or
any material adverse change in the business, assets, operations,
prospects or condition, financial or otherwise, of the applicable
Pending Acquisition Target, in each case since December 31, 1997,
(iv) all approvals and consents of all Persons required to be
obtained in connection with the consummation of such Pending
Acquisition have been obtained, all required notices have been given
and all required waiting periods have expired,
(v) as a condition to the consummation of a Pending
Acquisition, the Borrower shall furnish or caused to be furnished to
each Credit Party the consolidated balance sheets and statements of
operations and cash flows of the applicable Pending Acquisition Target
for the most recently completed fiscal year, which shall have been
prepared in accordance with GAAP on a consistent basis throughout the
periods indicated and present fairly, in all material respects, the
financial position, results of operations and changes in financial
position of such Pending Acquisition Target as of the indicated dates
and for the indicated periods and shall be consistent with the books
and records of such Pending Acquisition Target (which books and records
shall be correct and complete),
(vi) the Administrative Agent shall have received such updated
schedules to this Agreement as the Borrower deems necessary, such
schedules to be satisfactory in form and substance to the
Administrative Agent and Required Lenders, and
(vii) the Administrative Agent shall have received a
certificate of an officer of the Borrower, dated the Effective Date, as
to the matters set forth in subsection (f)(i) through and including
(f)(iv) above,
(m) the Borrower shall have delivered to the Administrative
Agent and each Lender, a Compliance Certificate signed by a Financial Officer of
the Borrower, in all respects reasonably satisfactory to the Administrative
Agent, dated the date of the consummation of such Acquisition and (i) stating
that the Borrower is in compliance with all covenants on a pro-forma basis after
giving effect to such Acquisition, and (ii) attaching a copy of a pro-forma
consolidated balance sheet of the Borrower utilized for
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<PAGE> 79
purposes of preparing such Compliance Certificate, which pro-forma consolidated
balance sheet presents the Borrower's good faith estimate of its pro-forma
consolidated financial condition at the date thereof, after giving effect to
such Acquisition,
(n) the Borrower shall have complied with the provisions of
Sections 7.9 and 7.10 (including the delivery of additional Security Documents,
legal opinions, certificates, etc.), and
(o) the Borrower shall have delivered to the Administrative
Agent such other information, documents and other items as the Administrative
Agent shall have reasonably requested.
8.6. DISPOSITIONS
The Borrower shall not, and shall not permit any Subsidiary
to, sell, assign, lease, transfer or otherwise dispose of any property or
assets, except:
(a) (i) sales of inventory and Unconsolidated Investments in
the ordinary course of business, (ii) sales, assignments, transfers or other
dispositions of any property or assets that, in the reasonable opinion of the
Borrower or such Subsidiary, as the case may be, are obsolete or no longer
useful in the conduct of its business, (iii) investments in Cash Equivalents,
and Investment Grade Securities and (iv) the Classic Mortgages;
(b) sales of Margin Stock, if and to the extent that the value
of the Margin Stock of the Borrower and the Subsidiaries exceeds 25% of the
value of the assets (as determined by any reasonable method) of the Borrower and
the Subsidiaries;
(c) sales, assignments, leases, transfers or other
dispositions of any property or assets by the Borrower to any Subsidiary and by
any Subsidiary to the Borrower or any other such Subsidiary, provided that
immediately after giving effect to any such transaction between a Loan Party and
a Subsidiary which is not a Subsidiary Guarantor, the Available Intercompany
Investment Amount shall not be less than $1.00;
(d) sales, assignments, leases, transfers or other
dispositions not otherwise described in this Section 8.6 (each a "DISPOSITION"),
provided that (i) immediately before and after giving effect to each such
Disposition, no Default shall or would exist, (ii) 75% of the total
consideration received or to be received therefor by the Borrower or the
Subsidiaries shall be payable in cash or Cash Equivalents on or before the
closing thereof and shall not be less than the fair market value thereof as
reasonably determined by the Managing Person of the Borrower or such Subsidiary,
(iii) the Administrative Agent and the Lenders shall have received (A) written
notice thereof not less than ten Business Days prior to each such Disposition,
and (B) a certificate in respect thereof signed by a duly authorized officer of
the Borrower identifying the property or other asset
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<PAGE> 80
subject to such Disposition, and certifying that the consideration received or
to be received by the Borrower or such Subsidiary for such property has been
determined by the Managing Person thereof to be not less than the fair market
value of such property and (z) the total consideration to be paid in respect of
such Disposition, together with estimates of items to be deducted therefrom in
arriving at the Net Cash Proceeds thereof.
8.7. RESTRICTED PAYMENTS
The Borrower shall not, and shall not permit any Subsidiaries
to declare, pay or make any dividend or other distribution, direct or indirect,
on account of any Capital Stock issued by such Person now or hereafter
outstanding (other than a dividend payable solely in shares or other units of
such Capital Stock to the holders of such shares or other units) or any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition, direct or indirect, of any shares of any class of its Capital Stock
now or hereafter outstanding (collectively, "RESTRICTED PAYMENTS"), except:
(a) Restricted Payments made by the Borrower to any Subsidiary
or made by any Subsidiary to the Borrower or to any other Subsidiary, provided
that (i) immediately before and after giving effect thereto, no Default shall or
would exist, and (ii) in the case of a Restricted Payment made by a Loan Party
to a Subsidiary which is not a Subsidiary Guarantor, immediately after giving
effect thereto, the Available Intercompany Investment Amount shall not be less
than $1.00; and
(b) the Allied Redemption Payment; and
(c) provided that no Default would exist immediately before
and after giving effect thereto, the Borrower may make a Restricted Payment
during the fiscal quarter in which it receives Net Cash Proceeds of an Equity
Issuance in excess of $20,000,000 in an amount equal to the lesser of (x) the
amount of such Net Cash Proceeds in excess of $20,000,000 and (y) $30,000,000.
8.8. HEDGING AGREEMENTS
The Borrower shall not, and shall not permit any Subsidiary
to, enter into any Hedging Agreements, other than Hedging Agreements entered
into in the ordinary course of business to hedge or mitigate risks to which the
Borrower or any Subsidiary is exposed in the conduct of its business or the
management of its liabilities.
8.9. SALE AND LEASE-BACK TRANSACTIONS
The Borrower shall not, and shall not permit any Subsidiary
to, enter into an arrangement with any Person or group of Persons providing for
the renting or leasing by the Borrower or any Subsidiary of any property or
asset which has been or is to be sold or transferred by the Borrower or any
Subsidiary to any such Person.
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<PAGE> 81
8.10. LINES OF BUSINESS
The Borrower shall not, and shall not permit any Subsidiary
to, engage in any business other than the Line of Business.
8.11. TRANSACTIONS WITH AFFILIATES
The Borrower shall not, and shall not permit any Subsidiary
to, become a party to any transaction with an Affiliate, or permit any
Subsidiary so to do, unless the Borrower's or such Subsidiary's Managing Person
shall have determined that the terms and conditions relating thereto are as
favorable to the Borrower or such Subsidiary as those which would be obtainable
at the time in a comparable arms-length transaction with a Person other than an
Affiliate, provided, however, that the payment of the Thayer Fees and the costs
and expenses of Thayer with respect to the Transactions shall not be deemed to
be a violation of this Section 8.11.
8.12. USE OF PROCEEDS
The Borrower shall not use the proceeds of (i) Revolving Loans
for any purpose other than for the Borrower's general corporate purposes not
inconsistent with the provisions hereof, including the payment of Fees
hereunder, and for the issuance of Letters of Credit and (ii) Term Loans (A) to
finance the Acquisitions and (B) to pay up to $4,000,000 (less the Thayer Fees)
for transaction fees and expenses.
8.13. RESTRICTIVE AGREEMENTS
The Borrower shall not, and shall not permit any Subsidiary
to, directly or indirectly, enter into, incur or permit to exist any agreement
or other arrangement that prohibits, restricts or imposes any condition upon the
ability of any such Subsidiary to pay dividends or other distributions with
respect to any shares of its Capital Stock or to make or repay loans or advances
to the Borrower or any other Subsidiary of the Borrower or to Guarantee
Indebtedness of the Borrower or any other Subsidiary of the Borrower, provided
that the foregoing shall not apply to restrictions and conditions imposed by
applicable law or by this Agreement.
8.14. FINANCIAL COVENANTS
(a) LEVERAGE RATIO. The Borrower shall not permit the Leverage
Ratio to at any time exceed the ratio set forth below with respect to the
applicable period set forth below:
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<PAGE> 82
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date through
December 31, 1998 3.50:1.00
January 1, 1999 through
December 31, 1999 3.25:1.00
January 1, 2000 through
December 31, 2000 3.00:1.00
January 1, 2001 through
December 31, 2001 2.75:1.00
January 1, 2002 and
thereafter 2.50:1.00
</TABLE>
(b) INTEREST COVERAGE RATIO. The Borrower shall not permit the
Interest Coverage Ratio as of the last day of any fiscal quarter to be less than
the ratio set forth below with respect to the applicable period set forth below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date through
December 31, 1998 3.00:1.00
January 1, 1999 through
December 31, 1999 3.50:1.00
January 1, 2000 through
December 31, 2000 4.00:1.00
January 1, 2001 and
thereafter 5.00:1.00
</TABLE>
(c) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit
the Fixed Charge Coverage Ratio as of the last day of any fiscal quarter to be
less than the ratio set forth below with respect to the applicable period set
forth below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date through
December 31, 1998 1.25:1.00
January 1, 1999 through
December 31, 1999 1.30:1.00
</TABLE>
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<PAGE> 83
<TABLE>
<S> <C>
January 1, 2000 through
December 31, 2000 1.40:1.00
January 1, 2001 and
thereafter 1.50:1.00
</TABLE>
(d) MINIMUM NET WORTH. The Borrower shall not permit Net Worth
to be less than:
(i) as of each of December 31, 1998, March 31, 1999,
June 30, 1999 and September 30, 1999, an amount equal to
$11,500,000,
(ii) as of each of December 31, 1999, March 31, 2000,
June 30, 2000 and September 30, 2000, an amount equal to
$11,500,000 plus the sum for the fiscal year ended December
31, 1999, of 75% of the net profit (but not net loss) of the
Borrower and the Subsidiaries on a consolidated basis for such
fiscal year,
(iii) as of each of December 31, 2000, March 31,
2001, June 30, 2001 and September 30, 2001, an amount equal to
the amount calculated under clause (ii) above plus the sum for
the fiscal year ended December 31, 2000, of 75% of the net
profit (but not net loss) of the Borrower and the Subsidiaries
on a consolidated basis for such fiscal year,
(iv) as of each of December 31, 2001, March 31, 2002,
June 30, 2002 and September 30, 2002, an amount equal to the
amount calculated under clause (iii) above plus the sum for
the fiscal year ended December 31, 2001, of 75% of the net
profit (but not net loss) of the Borrower and the Subsidiaries
on a consolidated basis for such fiscal year,
(v) as of each of December 31, 2002, March 31, 2003,
June 30, 2003 and September 30, 2003, an amount equal to the
amount calculated under clause (iv) above plus the sum for the
fiscal year ended December 31, 2003, of 75% of the net profit
(but not net loss) of the Borrower and the Subsidiaries on a
consolidated basis for such fiscal year,
(vi) as of each of December 31, 2003, March 31, 2004,
June 30, 2004 and September 30, 2004, an amount equal to the
amount calculated under clause (v) above.
(e) CAPITAL EXPENDITURES. The Borrower shall not make any
Capital Expenditures (or incur any obligation to make any Capital Expenditure)
or permit any Subsidiary to do so, in any fiscal year in an aggregate amount in
excess of the amounts set
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<PAGE> 84
forth below for such fiscal year (to be calculated on a noncumulative basis so
that amounts not expended in a fiscal year may not be carried over and expended
in any subsequent fiscal year):
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
1998 $4,300,000
1999 $4,500,000
2000 $4,700,000
2001 $4,900,000
2002 $5,100,000
2003 and thereafter $5,300,000.
</TABLE>
ARTICLE 9. DEFAULTS
9.1. EVENTS OF DEFAULT
The following shall each constitute an "EVENT OF DEFAULT"
hereunder:
(a) the failure of the Borrower to make (i) any payment of
principal on any Loan, or in respect of any Reimbursement Obligation,
when due and payable, or (ii) any deposit into the Cash Collateral
Account when required hereby; or
(b) the failure of the Borrower to make any payment of
interest, Fees, expenses or other amounts payable under any Loan
Document or otherwise to the Administrative Agent with respect to the
loan facilities established hereunder within three Business Days of the
date when due and payable; or
(c) the failure of the Borrower to observe or perform any
covenant or agreement contained in Section 7.9, 7.10, 7.11, 7.12 or
7.14 or Article 8; or
(d) the failure of any Loan Party to observe or perform any
other term, covenant, or agreement contained in any Loan Document to
which it is a party and such failure shall have continued unremedied
for a period of 30 days after such Loan Party shall have obtained
knowledge thereof; or
(e) any representation or warranty made by any Loan Party (or
by an officer thereof on its behalf) in any Loan Document or in any
certificate, report, opinion (other than an opinion of counsel) or
other document delivered or to be delivered pursuant thereto, shall
prove to have been incorrect or misleading
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<PAGE> 85
(whether because of misstatement or omission) in any material respect
when made; or
(f) the failure of any Loan Party to make any payment (whether
of principal or interest and regardless of amount) in respect of
Material Liabilities when due or within any grace period for the
payment thereof; or
(g) any event or condition occurs that results in any Material
Liability becoming or being declared to be due and payable prior to the
scheduled maturity thereof, or that enables or permits (with or without
the giving of notice, the lapse of time or both) the holder or holders
of any Material Liability or any trustee or agent on its or their
behalf to cause any Material Liability to be due and payable, or to
require the prepayment, repurchase, redemption or defeasance thereof,
in each case prior to the scheduled maturity thereof (in each case
after giving effect to any applicable grace period); or
(h) any Loan Party shall (i) suspend or discontinue its
business (except to the extent permitted by Section 7.3), (ii) make an
assignment for the benefit of creditors, (iii) generally not be paying
its debts as such debts become due, (iv) admit in writing its inability
to pay its debts as they become due, (v) file a voluntary petition in
bankruptcy, (vi) become Insolvent, (vii) file any petition or answer
seeking for itself any reorganization, arrangement, composition, read
justment of debt, liquidation or dissolution or similar relief under
any present or future statute, law or regulation of any jurisdiction,
(viii) petition or apply to any tribunal for any receiver, custodian or
any trustee for any substantial part of its property, (ix) be the
subject of any such proceeding filed against it which remains
undismissed for a period of 60 days, (x) file any answer admitting or
not contesting the material allegations of any such petition filed
against it or any order, judgment or decree approving such petition in
any such proceeding, (xi) seek, approve, consent to, or acquiesce in
any such proceeding, or in the appointment of any trustee, receiver,
sequestrator, custodian, liquidator, or fiscal agent for it, or any
substantial part of its property, or an order is entered appointing any
such trustee, receiver, custodian, liquidator or fiscal agent and such
order remains in effect for 60 days, or (xii) take any formal action
for the purpose of effecting any of the foregoing or looking to the
liquidation or dissolution of the Borrower, such Subsidiary or such
other Loan Party; or
(i) an (i) order or decree is entered by a court having
jurisdiction (A) adjudging any Loan Party bankrupt or insolvent, (B)
approving as properly filed a petition seeking reorganization,
liquidation, arrangement, adjustment or composition of or in respect of
any Loan Party under the bankruptcy or insolvency laws of any
jurisdiction, (C) appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of any Loan Party
or of any substantial part of the property of any thereof, or (D)
ordering the winding up or
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<PAGE> 86
liquidation of the affairs of any Loan Party, and any such decree or
order continues unstayed and in effect for a period of 60 days or (ii)
order for relief is entered under the bankruptcy or insolvency laws of
any jurisdiction or any other; or
(j) judgments or decrees against any Loan Party aggregating in
excess of $100,000 until the consummation of any two of the Pending
Acquisitions and $250,000 thereafter (unless adequately insured by a
solvent unaffiliated insurance company which has acknowledged
coverage), shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of 60 consecutive days; or
(k) any of this Agreement, any Note, or any Security Document
shall cease, for any reason, to be in full force and effect, or any
Loan Party shall so assert in writing or shall disavow any of its
obligations under any of this Agreement, any Note, or any Security
Document; or
(l) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not
to be, a valid and perfected Lien on, and security interest in, any
Collateral, with the priority required by the applicable Security
Document, except as a result of a Disposition thereof to the extent
permitted under the Loan Documents; or
(m) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding
(i) in any year, $100,000 until the consummation of any two of the
Pending Acquisitions and $250,000 thereafter, or (ii) for all periods,
$100,000 until the consummation of any two of the Pending Acquisitions
and $250,000 thereafter; or
(n) the occurrence of a Change of Control; or
(o) any court of competent jurisdiction shall determine that
the Borrower or any Subsidiary thereof was rendered Insolvent as a
result of or in connection with any of the Initial Transactions, the
Pending Acquisitions or any other transaction related thereto or
occurring substantially contemporaneous therewith.
9.2. CONTRACT REMEDIES
(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof,
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<PAGE> 87
(i) in the case of an Event of Default specified in Section
9.1(h) or 9.1(i), without declaration or notice to the Borrower, all of
the Commitments shall immediately and automatically terminate, and the
Loans, all accrued and unpaid interest thereon and all other amounts
owing under the Loan Documents shall immediately become due and
payable, and
(ii) in all other cases, upon the direction of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower,
declare all of the Commitments to be terminated forthwith, whereupon
such Commitments shall immediately terminate, and/or declare the Loans,
all accrued and unpaid interest thereon and all other amounts owing
under the Loan Documents to be due and payable forthwith, whereupon the
same shall immediately become due and payable.
In the event that the Loans, all accrued and unpaid interest thereon and all
other amounts owing under the Loan Documents shall have been declared due and
payable pursuant to the provisions of this Section, the Administrative Agent (i)
upon the direction of the Required Lenders, shall proceed to enforce the rights
of the holders of the Notes and the Reimbursement Obligations by suit in equity,
action at law and/or other appropriate proceedings, whether for payment or the
specific performance of any covenant or agreement contained in the Loan
Documents and (ii) may exercise any and all rights and remedies provided to the
Administrative Agent by the Loan Documents. To the extent permitted by law,
except as otherwise expressly provided in the Loan Documents, the Borrower
expressly waives presentment, demand, protest and all other notices of any kind
in connection with the Loan Documents are hereby expressly waived. To the extent
permitted by law, the Borrower hereby further expressly waives and covenants
not to assert any appraisement, valuation, stay, extension, redemption or
similar laws, now or at any time hereafter in force which might delay, prevent
or otherwise impede the performance or enforcement of any Loan Document.
(b) In the event that the Commitments shall have terminated or
the Loans, all accrued and unpaid interest thereon and all other amounts owing
under the Loan Documents shall have become due and payable pursuant to the
provisions of this Article 9, any funds received by any Credit Party from or on
behalf of the Borrower (except funds received by any Lender as a result of a
purchase from any other Lender pursuant to Section 2.6(c)) shall be remitted to,
and applied by, the Administrative Agent in the following manner and order:
(i) first, to the payment of interest on, and then
the principal portion of, any Loans which the Administrative
Agent may have advanced on behalf of any Lender for which the
Administrative Agent has not then been reimbursed by such
Lender or any Loan Party,
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(ii) second, to reimburse the Administrative Agent,
the Issuer and the Lenders, in that order, for any expenses
due from the Borrower pursuant to the provisions of Section
11.4,
(iii) third, to the payment of interest on, and then
the principal portion of, the Reimbursement Obligations,
(iv) fourth, to the payment of the Fees, pro rata
according to the Fees due and owing to the Credit Parties,
(v) fifth, to the payment of any other fees, expenses
or other amounts (other than the principal of and interest on
the Loans) payable by the Loan Parties to the Credit Parties
under the Loan Documents,
(vi) sixth, to the payment, pro rata according to the
Total Percentage of each Lender, of interest due on the Loans,
(vii) seventh, to the payment to the Lenders of, and
on a pro rata basis in accordance with, the unpaid principal
amount of the Loans and each amount then due and payable under
each Secured Hedging Agreement, and
(viii) eighth, any remaining funds shall be paid to
the Borrower or as a court of competent jurisdiction shall
direct.
ARTICLE 10. THE ADMINISTRATIVE AGENT
10.1. APPOINTMENT
Each of the Lenders hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
10.2. INDIVIDUAL CAPACITY
The Person serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such Person and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower, any Subsidiary, or
any Affiliate of the Borrower as if it were not the Administrative Agent
hereunder.
10.3. EXCULPATORY PROVISIONS
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The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (1) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (2) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 11.1), and (3) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any Subsidiary that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 11.1) or in the absence of its own gross negligence or
willful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or another Credit Party and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreements, instrument or document,
or (v) the satisfaction of any condition set forth in Articles 5 or 6 or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
10.4. RELIANCE BY ADMINISTRATIVE AGENT
The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel to the Borrower), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
10.5. RELIANCE BY ADMINISTRATIVE AGENT
The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the
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Administrative Agent, provided that no such delegation shall serve as a release
of the Administrative Agent or waiver by the Borrower of any rights hereunder.
The Administrative Agent and any such sub-agent may perform any and all its
duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions of this Article 10 shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
10.6. RESIGNATION; SUCCESSOR ADMINISTRATIVE AGENT
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this Section 10.6, the Administrative Agent
may resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New York, and having combined capital and surplus of at least $250,000,000 or an
Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 11.4 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or permitted to be
taken by any of them while it was acting as Administrative Agent.
10.7. NON-RELIANCE ON OTHER CREDIT PARTIES
Each Credit Party acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Credit Party and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Credit Party
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Credit Party and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
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ARTICLE 11. OTHER PROVISIONS
11.1. AMENDMENTS AND WAIVERS
(a) No failure to exercise and no delay in exercising, on the
part of any Credit Party, any right, remedy, power or privilege under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
under the Loan Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law. No waiver of any provision of
any Loan Document or consent to any departure by any Loan Party therefrom shall
in any event be effective unless the same shall be permitted by this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether any Credit Party may have had notice or knowledge
of such Default at the time.
(b) Notwithstanding anything to the contrary contained in any
Loan Document, with the written consent of the Required Lenders, the
Administrative Agent and the appropriate parties to the Loan Documents (other
than the other Credit Parties) may, from time to time, enter into written
amendments, supplements or modifications thereof and, with the consent of the
Required Lenders, the Administrative Agent on behalf of the other Credit
Parties, may execute and deliver to any such parties a written instrument
waiving or consenting to the departure from, on such terms and conditions as the
Administrative Agent may specify in such instrument, any of the requirements of
the Loan Documents or any Default and its consequences; provided, however, that
no such amendment, supplement, modification, waiver or consent shall:
(i) increase the Revolving Commitment of any Lender,
without such Lender's consent;
(ii) unless agreed to by each Credit Party affected
thereby, (A) reduce the principal amount of any Extension of
Credit, or reduce the rate of interest thereon, or reduce any
fees or other obligations payable under the Loan Documents,
(B) extend any date (including the Maturity Date) fixed for
the payment of any principal of or interest on any Extension
of Credit, any fees, or any other obligation payable under the
Loan Documents or (C) extend the expiration date of any Letter
of Credit beyond the Maturity Date;
(iii) unless agreed to by all of the Lenders, (A)
increase the Aggregate Revolving Commitment or Aggregate Term
Loan Commitment, (B) change the definition of "Required
Lenders" or any other provision hereof specifying the number
or percentage of Lenders required to waive, amend or modify
any rights
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hereunder or make any determination or grant any consent
hereunder, (C) change Section 2.6 in a manner that would alter
the pro rata sharing of payments required thereby, (D) consent
to any assignment or delegation by any Loan Party of any of
its rights or obligations under any Loan Document, (E) release
any Subsidiary Guarantor from its obligations under the
Subsidiary Guarantee (except as expressly provided therein or
as a result of the termination of the existence of such
Subsidiary Guarantor in a transaction permitted by Sections
8.3, 8.4 or 8.6), or (F) release any of the Collateral from
the Liens of the Security Documents, except as may be
expressly permitted thereunder or in connection with a
transaction permitted by Sections 8.3, 8.4 or 8.6), and
(iv) unless agreed to by the Administrative Agent or
the Issuer, amend, modify or otherwise affect the rights or
duties of the Administrative Agent or the Issuer,
respectively, under the Loan Documents.
Any such amendment, supplement, modification, waiver or
consent shall apply equally to each Credit Party and shall be binding upon each
Credit Party and each Loan Party to the applicable Loan Document, and upon all
future holders of the Notes and the Reimbursement Obligations. In the case of
any waiver, the Credit Parties and each Loan Party to the applicable Loan
Document shall be restored to their former position and rights hereunder and
under the outstanding Notes and other Loan Documents to the extent provided for
in such waiver, and any Default waived shall not extend to any subsequent or
other Default, or impair any right consequent thereon.
11.2. NOTICES
All notices, requests and demands to or upon the respective
parties to the Loan Documents to be effective shall be in writing and, unless
otherwise expressly provided therein, shall be deemed to have been duly given or
made when delivered by hand, one Business Day after having been sent by
overnight courier service, or when deposited in the mail, first-class postage
prepaid, or, in the case of notice by facsimile, when sent to the last address
(including telephone and facsimile numbers) for such party specified by such
party in a written notice delivered to the Administrative Agent and the Borrower
or, if no such written notice was so delivered, as follows:
(a) in the case of any Loan Party, to such Loan Party
c/o Allied Bus Corp., 165 West 46th Street, New York, NY
10036; Attention: Michael Fisher, Telephone: (212) 869-5100;
Facsimile (212) 302-6129; with copies to: (i) Thayer Equity
Investors III, L.P., 1455 Pennsylvania Avenue, Washington,
D.C. 20004, Attention Roger Ballou, Daniel Raskas, Christopher
Temple, Telephone: (202) 371-0391, Facsimile: (202) 371-0150,
and (ii) Hogan & Hartson, L.L.P., Columbia Square, 555
Thirteenth Street, N.W., Washington, D.C. 20004; Attention:
Christopher J. Hagan or J. Hovey Kemp, Esq.; Telephone: (202)
637-5600, Facsimile: (202) 637-5910;
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(b) in the case of the Administrative Agent, to The
Bank of New York, One Wall Street, Agency Function
Administration, 18th Floor, New York, New York 10286;
Attention: Pina Impeduglia, Telephone: (212) 635-4696,
Facsimile (212) 635-6365 or 6366 or 6367; with a copy to: The
Bank of New York, One Wall Street, New York, New York 10286,
Attention: Ronald R. Reedy, Vice President, Telephone: (212)
635-6724, Facsimile: (212) 635-6434; and
(c) in the case of a Lender, at its address for
notices set forth on Schedule 11.2;
provided, however, that any notice, request or demand by the Borrower pursuant
to Sections 2.2, 2.3, 2.6 or 3.3 shall not be effective until received. Any
party to a Loan Document may rely on signatures of the parties thereto which are
transmitted by facsimile or other electronic means as fully as if originally
signed.
11.3. SURVIVAL
All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Extensions of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder.
11.4. EXPENSES; INDEMNITY
(a) The Borrower agrees, on demand therefor and whether any
Extension of Credit is made (i) to pay or reimburse the Administrative Agent and
its Related Parties for all reasonable out-of-pocket expenses incurred thereby,
including the reasonable fees, charges and disbursements of counsel, in
connection with the development, preparation, execution, syndication and
administration of, the Loan Documents (including any amendment, supplement or
other modification thereto (whether or not executed or effective)), any
documents prepared in connection therewith and the consummation of the
transactions contemplated thereby and (ii) to pay or reimburse each Credit Party
for all of its costs and expenses, including reasonable fees and disbursements
of counsel, incurred in connection with (A) the protection or enforcement of its
rights under the Loan Documents, including any related collection proceedings
and any negotiation, restructuring or "work-out", and (B) the enforcement of
this Section.
(b) The Borrower shall, on demand therefor, indemnify each
Credit Party and each of their respective Related Parties (each, an "INDEMNIFIED
PERSON")
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against, and hold each Indemnified Person harmless from, any and all losses,
claims, damages, penalties, liabilities and related expenses, including the
fees, charges and disbursements of any counsel, incurred by or asserted against
any Indemnified Person in connection with or in any way arising out of any Loan
Document, any other Transaction Document or any Transaction, including as a
result of (i) any breach by the Borrower of the terms of any Loan Document, the
use of proceeds of any Extension of Credit or any action or failure to act on
the part of the Borrower, (ii) the consummation or proposed consummation of the
Transactions or any other transactions contemplated hereby, (iii) any Extension
of Credit or the use of the proceeds therefrom, (iv) any actual or alleged
presence or release of Hazardous Substance on or from any property owned or
operated by the Borrower or any Subsidiary, or any liability in respect of any
Environmental Law related in any way to the Borrower or any Subsidiary, (v) any
action or failure to act on the part of the Borrower or (vi) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnified Person is a party thereto (collectively,
the "INDEMNIFIED LIABILITIES") provided that such indemnity shall not, as to any
Indemnified Person, be available to the extent that such losses, claims,
damages, liabilities or related expenses resulted from the gross negligence or
wilful misconduct of such Indemnified Person.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or any of its Affiliates
under subsections (a) or (b) of this Section, each Lender severally agrees, on
demand therefor, to pay to the Administrative Agent such Lender's Total
Percentage of such amount (determined as of the time that the applicable
unreimbursed expense or Indemnified Liability is sought).
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnified Person
for any special, indirect, consequential or punitive damages (whether accrued
and whether known or suspected to exist in its favor) arising out of, in
connection with, or as a result of, the Loan Documents, the transactions
contemplated thereby or any Extension of Credit or the use of the proceeds
thereof.
11.5. SUCCESSORS AND ASSIGNS
(a) The Loan Documents shall be binding upon and inure to the
benefit of each of the parties thereto, and their respective successors and
assigns, except that no Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each Credit
Party (and any such attempted assignment or transfer without such consent shall
be null and void).
(b) Each Lender may assign all or a portion of its rights and
obligations under the Loan Documents to (i) any Subsidiary or Affiliate of such
Lender, (ii) any other Lender, or (iii) with the consent of the Borrower, the
Administrative Agent, the Issuer
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(which consents shall not be unreasonably withheld or delayed and, in the case
of the Borrower's consent, shall not be required during the continuance of an
Event of Default), any other institution, provided that:
(A) each such assignment shall be of a constant, and not a
varying, percentage of the assignor Lender's rights and obligations
under the Loan Documents;
(B) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount
of the assigning Lender's Revolving Commitment, the amount of the
Revolving Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance
Agreement with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000; and
(C) the assignor and such assignee shall deliver to the
Administrative Agent three copies of an Assignment and Acceptance
Agreement executed by each of them, along with an assignment fee in the
sum of $3,500 for the account of the Administrative Agent and, if the
assignee is not then a Lender, such assignee shall designate its
address for notices and shall deliver to the Administrative Agent and,
if such assignee is a Foreign Credit Party, the documents required by
Section 3.7(c).
Upon receipt of such number of executed copies of each such Assignment and
Acceptance Agreement together with the assignment fee therefor and the consents
required to such assignment, if required, the Administrative Agent shall record
the same and execute not less than two copies of such Assignment and Acceptance
Agreement in the appropriate place, deliver one such copy to the assignor and
one such copy to the assignee, and deliver one photocopy thereof, as executed,
to the Borrower. From and after the Assignment Effective Date specified in, and
as defined in, such Assignment and Acceptance Agreement, the assignee thereunder
shall, unless already a Lender, become a party hereto and shall, for all
purposes of the Loan Documents, be deemed a "Lender" and, to the extent provided
in such Assignment and Acceptance Agreement, the assignor Lender thereunder
shall be released from its obligations under this Agreement and the other Loan
Documents. The Borrower agrees that, if requested, in connection with each such
assignment, it shall at its own cost and expense execute and deliver to the
Administrative Agent or such assignee a Note, each payable to the order of such
assignee and dated the Effective Date. The Administrative Agent shall be
entitled to rely upon the representations and warranties made by the assignee
under each Assignment and Acceptance Agreement.
(c) Each Lender may grant participations in all or any part of
its rights and obligations under the Loan Documents to (i) any Subsidiary or
Affiliate of such Lender, (ii) any other Lender, or (iii) any other institution
reasonably acceptable to the
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Administration Agent, provided that (A) such Lender's obligations under this
Agreement and the other Loan Documents shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties to this Agreement and the
other Loan Documents for the performance of such obligations, (C) the Borrower
and the Credit Parties shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the Loan
Documents, (D) the granting of such participation does not require that any
additional loss, cost or expense be borne by the Borrower at any time, and (E)
the voting rights of any holder of any participation shall be limited to
decisions that in accordance with Section 11.1 require the consent of all of the
Lenders.
(d) Subject to subsection (e) below, any Lender may at any
time assign all or any portion of its rights under any Loan Document to any
Federal Reserve Bank.
(e) Except to the extent of any assignment pursuant to
subsection (b) above, no Lender shall be relieved of any of its obligations
under the Loan Documents as a result of any assignment of or granting of
participations in, all or any part of its rights and obligations under the Loan
Documents.
11.6. COUNTERPARTS; INTEGRATION
Each Loan Document (other than the Notes) may be executed by
one or more of the parties thereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same document. It shall not be necessary in making proof of any Loan
Document to produce or account for more than one counterpart signed by the party
to be charged. Delivery of an executed counterpart of a signature page of any
Loan Document by facsimile shall be effective as delivery of a manually executed
counterpart of such Loan Document. The Loan Documents and any separate letter
agreements between the Borrower and a Credit Party with respect to fees embody
the entire agreement and understanding among the Loan Parties and the Credit
Parties with respect to the subject matter thereof and supersede all prior
agreements and understandings among the Loan Parties and the Credit Parties with
respect to the subject matter thereof.
11.7. SEVERABILITY
Every provision of the Loan Documents is intended to be
severable, and if any term or provision thereof shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
11.8. GOVERNING LAW
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THE LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.9. JURISDICTION; SERVICE OF PROCESS
Each party to a Loan Document hereby irrevocably submits to
the nonexclusive jurisdiction of any New York State or Federal court sitting in
the City of New York over any suit, action or proceeding arising out of or
relating to the Loan Documents. Each party to a Loan Document hereby irrevocably
waives, to the fullest extent permitted or not prohibited by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such suit,
action or proceeding brought in such a court has been brought in an inconvenient
forum. Each Loan Party hereby agrees that a final judgment in any such suit,
action or proceeding brought in such a court, after all appropriate appeals,
shall be conclusive and binding upon it and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that a Credit Party may
otherwise have to bring any action or proceeding relating to Loan Documents
against the Borrower or its properties in the courts of any jurisdiction. Each
party to a Loan Document hereby irrevocably consents to service of process in
the manner provided for notices in Section 11.2. Nothing in this Agreement will
affect the right of any party to a Loan Document to serve process in any other
manner permitted by law.
11.10. WAIVER OF TRIAL BY JURY
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
ALLIED BUS CORP.
By: /s/ J. Raymond Lewis
---------------------------------------
J. Raymond Lewis
President and Chief Operating Officer
Revolving Commitment THE BANK OF NEW YORK,
Individually, as Issuer
$10,000,000 and as Administrative Agent
Term Loan Amount
$55,000,000 By: /s/ Ronald R. Reedy
---------------------------------------
Ronald R. Reedy
Vice President
Address for Notices
The Bank of New York
Agency Function Administration
One Wall Street
18th Floor
New York, NY 10286
Attention: Pina Impeduglia
Telephone: (212) 635-4696
Facsimile: (212) 635-6365 or 6366 or 6367
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with a copy to:
The Bank of New York
One Wall Street
New York, New York 10286
Attention: Ronald R. Reedy
Vice President
Telephone: (212) 635-6724
Facsimile: (212) 635-6434
The Exhibits and Schedules to this Credit Agreement are not included with this
Registration Statement on Form S-1. Global will provide these exhibits and
schedules upon the request of the Securities and Exchange Commission.
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<PAGE> 1
Exhibit 10.12
AMENDMENT NO. 1 AND CONSENT
AMENDMENT NO. 1 and CONSENT (this "Amendment"), dated as of April 8, 1998,
to the Credit Agreement, dated as of March 27, 1998, by and among Allied Bus
Corp. (now known or to be known as Global Vacation Group, Inc.), the Lenders
party thereto, and The Bank of New York, as Administrative Agent (as amended,
the "Agreement").
RECITALS
I. Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Agreement.
II. The Borrower has requested that the Administrative Agent agree to
amend the Agreement and grant its consent thereunder, in each case upon the
terms and conditions contained herein, and the Administrative Agent is willing
so to agree.
Accordingly, in consideration of the Recitals and the terms and conditions
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Borrower and the
Administrative Agent hereby agree as follows:
1. The definition of "EXISTING LETTERS OF CREDIT" contained in Section 1.1
of the Agreement is amended and restated in its entirety as follows:
"EXISTING LETTERS OF CREDIT" shall mean the letters of credit
set forth on Schedule 8.1 issued for the account of a Pending Acquisition
Target.
2. Section 4.13(b)(i) of the Agreement is amended by deleting the
reference to Section 8.5(f)(vi) contained therein and inserting a reference to
Section 8.5(f)(iii) in its place.
3. Section 8.5(f) of the Agreement is amended and restated in its entirety
as follows:
(f) with respect to each Pending Acquisition:
(i) the Administrative Agent shall have received a certificate
of an officer of the Borrower, in all respects satisfactory to the Agent
and dated the date of the consummation of such Pending Acquisition, (A)
attaching a true and complete copy of each of the applicable Pending
Acquisition Documents, which
<PAGE> 2
shall be in form and substance satisfactory to the Administrative Agent,
and (B) certifying that each thereof is in full force and effect,
(ii) as a condition to the consummation of such Pending
Acquisition, the Borrower shall furnish or caused to be furnished to each
Credit Party the consolidated balance sheets and statements of operations
and cash flows of the applicable Pending Acquisition Target for the most
recently completed fiscal year, which shall have been prepared in
accordance with GAAP on a consistent basis throughout the periods
indicated (except as provided in Schedule 4.4(a)) and present fairly, in
all material respects, the financial position, results of operations and
changes in financial position of such Pending Acquisition Target as of the
indicated dates and for the indicated periods and shall be consistent with
the books and records of such Pending Acquisition Target (which books and
records shall be correct and complete), and
(iii) the Administrative Agent shall have received such
updated schedules to this Agreement as the Borrower deems necessary, such
schedules to be satisfactory in form and substance to the Administrative
Agent and Required Lenders,
4. Notwithstanding anything to the contrary contained in any Loan
Document, but subject to Section 7.12 of the Agreement, the Administrative Agent
hereby consents to the Disposition by Classic of the Classic Mortgages and the
capital Stock of Virgil Travel, Inc. and Homer Travel, Inc., in each case free
and clear of the Liens created under the Loan Documents, (other than Liens on
property evidencing, or otherwise pledged to secure, obligations owing to
Classic under the Classic Mortgage Purchase Documents).
5. Paragraphs 1 - 4 of this Amendment and Consent shall not be effective
until such time as the Required Lenders shall have consented in writing to this
Amendment and Consent.
6. The Borrower hereby (a) reaffirms and admits the validity and
enforceability of each Loan Document and all of the obligations of each Loan
Party thereunder, (b) agrees and admits that no Loan Party has any defenses to
or offsets against any such obligation, and (c) certifies that, immediately
after giving effect to paragraphs 1 - 4 of this Amendment and Consent, (i) no
Default or Event of Default shall exist, and (ii) the representations and
warranties contained in the Loan Documents are true and correct in all material
respects with the same effect as though such representations and warranties had
been made at such time, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true and correct on and as of such earlier date.
7. In all other respects, the Loan Documents shall remain in full force
and effect, and no amendment or consent in respect of any term or condition of
any Loan
- 2 -
<PAGE> 3
Document shall be deemed to be an amendment or consent in respect of any other
term or condition contained in any Loan Document.
8. This Amendment and Consent may be executed in any number of
counterparts all of which, taken together, shall constitute one agreement. In
making proof of this Amendment and Consent, it shall only be necessary to
produce the counterpart executed and delivered by the party to be charged.
9. THIS AMENDMENT AND CONSENT IS BEING EXECUTED AND DELIVERED IN, AND IS
INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND
ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
- 3 -
<PAGE> 4
AS EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Amendment and
Consent to be executed on its behalf.
ALLIED BUS CORP. (now known or to be
known as Global Vacation Group, Inc.)
By: /s/ Christopher Temple
----------------------------------------------
Name: Christopher Temple
Title: Assistant Treasurer and Assistant Secretary
THE BANK OF NEW YORK, in its
capacity as the Lender, as the Issuer
and as the Administrative Agent
By: /s/ Ronald R. Reedy
----------------------------------------------
Name: Ronald R. Reedy
Title: Vice President
Consented to and agreed:
HADDON HOLIDAYS, INC.
By: /s/ Christopher Temple
- --------------------------------------------------
Name: Christopher Temple
Title: Assistant Treasurer and Assistant Secretary
- 4 -
<PAGE> 1
Exhibit 10.13
AMENDMENT NO. 2
AMENDMENT NO. 2 (this "Amendment"), dated as of May 5, 1998, to the Credit
Agreement, dated as of March 27, 1998, by and among Global Vacation Group, Inc.
(formerly known as Allied Bus Corp.), the Lenders party thereto, and The Bank of
New York, as Administrative Agent (as amended, the "Agreement").
RECITALS
I. Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Agreement.
II. The Borrower has requested that the Administrative Agent agree to
amend the Agreement upon the terms and conditions contained herein, and the
Administrative Agent is willing so to agree.
Accordingly, in consideration of the Recitals and the terms and conditions
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Borrower and the
Administrative Agent hereby agree as follows:
1. The definition of "EXISTING LETTERS OF CREDIT" contained in Section 1.1
of the Agreement is amended and restated in its entirety as follows:
"EXISTING LETTERS OF CREDIT" shall mean the letters of credit
set forth on Schedule 8.1 issued for the account of a Pending Acquisition
Target or Globetrotters, Inc., as the case may be.
2. The definition of "EXISTING LETTER OF CREDIT EXPOSURE" contained in
Section 1.1 of the Agreement is amended by amending and restating the proviso
contained in such definition in its entirety as follows:
provided, however, that Existing Letters of Credit issued for the account
of a Pending Acquisition Target or Globetrotters, Inc., as the case may
be, shall not be taken into account for purposes of this definition until
the consummation of the applicable Pending Acquisition or the Acquisition
of Globetrotters pursuant to Section 8.5, as the case may be
3. Section 7.13 of the Agreement is amended and restated in its entirety
as follows:
<PAGE> 2
7.13 EXISTING LETTERS OF CREDIT
The Borrower shall use its best efforts to cause Letters of
Credit issued pursuant to this Agreement to be substituted for all
Existing Letters of Credit issued for the account of a Pending Acquisition
Target or Globetrotters, Inc., as the case may be, at the closing of the
applicable Pending Acquisition or the Acquisition of Globetrotters
pursuant to Section 8.5, as the case may be, except to the extent that
such substitution cannot be effected at a reasonable cost or is not
practicable as a result of the lack of time to obtain the necessary
consents thereto and effect such substitution prior to such closing. To
the extent that such substitution is not made with respect to all such
Existing Letters of Credit prior to the closing of the related Pending
Acquisition or the Acquisition of Globetrotters pursuant to Section 8.5,
as the case may be, the Borrower shall use its best efforts to cause such
substitution to be made as soon as practicable thereafter, provided that
Letters of Credit issued pursuant to this Agreement shall be substituted
for all Existing Letters of Credit no later than (i) in the case of an
Existing Letter of Credit issued for the account of a Pending Acquisition
Target, December 31, 1998, and (ii) in the case of an Existing Letters of
Credit issued for the account of Globetrotters, Inc., the date which is
one year after the consummation of the Acquisition of Globetrotters, Inc.
pursuant to Section 8.5.
4. Section 8.1(b) of the Agreement is amended and restated
in its entirety as follows:
(b) Indebtedness of the Borrower or any Subsidiary in respect
of any Existing Letter of Credit as set forth on Schedule 8.1, but not any
extensions, renewals and replacements of such Indebtedness, and other
Indebtedness of the Borrower or any Subsidiary existing on the Effective
Date as set forth on Schedule 8.1, and any extensions, renewals and
replacements of such other Indebtedness;
5. Section 8.2(b) of the Agreement is amended and restated in
its entirety as follows:
(b) any Lien on any property or asset of the Borrower or any
Subsidiary securing obligations in respect of the Existing Letters of
Credit as set forth on Schedule 8.2, and any other Lien on any property or
asset of the Borrower or any Subsidiary existing on the Effective Date as
set forth on Schedule 8.2, provided that, in each case, (i) such Lien
shall not apply to any other property or asset of the Borrower or any
Subsidiary, and (ii) such Lien shall secure only those obligations which
it secures as set forth on Schedule 8.2, and any extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof.
- 2 -
<PAGE> 3
6. Schedule 4.3 to the Agreement is amended and restated in its entirety
in the form attached hereto as Annex A.
7. Schedule 8.1 to the Agreement is amended and restated in its entirety
in the form attached hereto as Annex B.
8. Schedule 8.2 to the Agreement is amended and restated in its entirety
in the form attached hereto as Annex C.
9. Paragraphs 1 - 8 of this Amendment shall not be effective until such
time as the Required Lenders shall have consented in writing to this Amendment.
10. The Borrower hereby (a) reaffirms and admits the validity and
enforceability of each Loan Document and all of the obligations of each Loan
Party thereunder, (b) agrees and admits that no Loan Party has any defenses to
or offsets against any such obligation, and (c) certifies that, immediately
after giving effect to paragraphs 1 - 8 of this Amendment, (i) no Default or
Event of Default shall exist, and (ii) the representations and warranties
contained in the Loan Documents are true and correct in all material respects
with the same effect as though such representations and warranties had been made
at such time, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true and correct on and as of such earlier date.
11. In all other respects, the Loan Documents shall remain in full force
and effect, and no amendment or consent in respect of any term or condition of
any Loan Document shall be deemed to be an amendment or consent in respect of
any other term or condition contained in any Loan Document.
12. This Amendment may be executed in any number of counterparts all of
which, taken together, shall constitute one agreement. In making proof of this
Amendment, it shall only be necessary to produce the counterpart executed and
delivered by the party to be charged.
13. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED TO
BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCEABLE IN
ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
- 3 -
<PAGE> 4
AS EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Amendment to be
executed on its behalf.
GLOBAL VACATION GROUP, INC. (formerly
known as Allied Bus Corp.)
By: /s/ Christopher Temple
----------------------------------------------
Name: Christopher Temple
Title: Assistant Treasurer and Assistant Secretary
THE BANK OF NEW YORK, in its
capacity as the Lender, as the Issuer
and as the Administrative Agent
By: /s/ Ronald R. Reedy
----------------------------------------------
Name: Ronald R. Reedy
Title: Vice President
Consented to and agreed:
HADDON HOLIDAYS, INC.
By: /s/ Christopher Temple
----------------------------------------------
Name: Christopher Temple
Title: Assistant Treasurer and Assistant Secretary
CLASSIC CUSTOM VACATIONS
By: /s/ Christopher Temple
----------------------------------------------
Name: Christopher Temple
Title: Assistant Treasurer and Assistant Secretary
- 4 -
<PAGE> 5
GVGAC NO. 1, INC. (to be known as
MTI Vacations, Inc.)
By: /s/ Daniel A. Raskas
----------------------------------------------
Name: Daniel A. Raskas
Title: Vice President and Secretary
- 5 -
<PAGE> 1
Exhibit 10.15
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of March 30, 1998, between GLOBAL VACATION
GROUP, INC. (formerly Allied Bus Corp.), a New York corporation (the "COMPANY"),
and ROGER H. BALLOU ("EXECUTIVE").
RECITALS
A. The Company and Executive desire to enter into an agreement
pursuant to which Executive will purchase, and the Company will sell, 34,000
shares of the Company's Common Stock, par value $.01 per share (the "COMMON
STOCK") and 60 shares of the Company's Class A Preferred Stock, par value $.01
per share (the "PREFERRED STOCK"). All of such shares of Preferred Stock and
Common Stock and all shares of Preferred Stock and Common Stock hereafter
acquired by Executive are referred to herein as "EXECUTIVE STOCK." (as further
defined in Section 10).
B. The execution and delivery of this Agreement by the Company and
Executive is a condition to the purchase of shares of Common Stock and Preferred
Stock by Thayer Equity Investors III, L.P. (the "INVESTOR") pursuant to a
purchase agreement between the Company and the Investor and certain other
investors (collectively, the "PURCHASERS") dated as of the date hereof (the
"PURCHASE AGREEMENT"). Certain provisions of this Agreement are intended for the
benefit of, and will be enforceable by, the Investor.
C. Certain definitions are set forth in Section 10 of this
Agreement.
AGREEMENT
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. PURCHASE AND SALE OF EXECUTIVE STOCK.
(a) Pursuant to the terms of this Agreement, Executive will
purchase, and the Company will sell, an aggregate of 33,333 shares of Common
Stock at a price of $10.00 per share (sometimes referred to herein as the
"VESTING STOCK") upon the closing of the Recapitalization. At the time of such
purchase, the Company will deliver to Executive the certificates representing
such Executive Stock, and Executive will deliver to the Company a cashier's or
certified check or wire transfer of funds in the aggregate amount of $333,333.
<PAGE> 2
(b) Upon the purchase from time to time by the Purchasers of
additional shares of Common Stock and Preferred Stock pursuant to Article I of
the Purchase Agreement, Executive will purchase and the Company will sell to
Executive up to an aggregate of (i) 667 shares of Common Stock at a price of
$10.00 per share (the "NON-VESTING COMMON STOCK") and (ii) 60 shares of
Preferred Stock at a price of $1,000.00 per share (the "NON-VESTING PREFERRED
STOCK") (each of (i) and (ii) as adjusted from time to time as a result of stock
splits, stock dividends, recapitalizations and similar events). The number of
shares of Non-Vesting Common Stock and Non-Vesting Preferred Stock to be sold by
the Company and purchased by the Executive shall be as determined by the Company
and the Investor, provided, however, that in no event will such purchase occur
later than (i) with respect to the Non-Vesting Common Stock, at the time that
the Purchasers purchase their remaining commitment of Common Stock pursuant to
the Purchase Agreement and (ii) with respect to the Non-Vesting Preferred Stock,
at the time that the Purchasers have purchased all of their remaining commitment
of Preferred Stock pursuant to the Purchase Agreement. The Company will deliver
to Executive the certificates representing such shares of Executive Stock
purchased by Executive, and Executive will deliver to the Company a cashiers or
certified check or a wire transfer of funds in an aggregate amount equal to the
product of (x) the price per share of such Executive Stock and (y) the number of
shares so purchased by the Executive.
(c) Within 30 days after Executive purchases any Executive Stock
from the Company, Executive will make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder in the form of Annex A attached hereto.
(d) In connection with the purchase and sale of the Executive
Stock hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own
account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act, or any applicable state
securities laws, and the Executive Stock will not be disposed of in
contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of the Company,
is sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time
because the Executive Stock has not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available.
(iv) Executive has had an opportunity to ask questions
and receive answers concerning the terms and conditions of the
offering of Executive
- 2 -
<PAGE> 3
Stock and has had full access to such other information concerning
the Company as he has requested.
(v) This Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement
by Executive does not and will not conflict with, violate or cause a
breach of any agreement, contract or instrument to which Executive
is a party or any judgment, order or decree to which Executive is
subject.
(vi) Executive is a resident of the District of Columbia.
(e) As an inducement to the Company to issue the Executive Stock
to Executive, as a condition thereto, Executive acknowledges and agrees that
neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
2. VESTING OF CERTAIN EXECUTIVE STOCK.
(a) Except as otherwise provided in Section 2(d) below, 22,222
shares or 67% of the Vesting Stock issued pursuant to Section 1(a) above (the
"TIME VESTING SHARES") shall become vested in accordance with the following
schedule, if as of each such date Executive is still employed by the Investor or
the Company or any of its Affiliates:
Cumulative Percentage of
Date Common Stock to be Vested
---- -------------------------
Closing of the Recapitalization 20%
1st Anniversary of Closing
of the Recapitalization 40%
2nd Anniversary of Closing
of the Recapitalization 60%
3rd Anniversary of Closing
of the Recapitalization 80%
4th Anniversary of Closing
of the Recapitalization 100%
If Executive ceases to be employed by the Investor or the Company or its
Affiliates on any date prior to the fourth anniversary of the Closing (other
than any anniversary date prior thereto), the cumulative percentage of Time
Vesting Shares to become vested will be determined on a pro rata basis according
to the number of days elapsed since the prior anniversary date. Notwithstanding
the foregoing sentence, (i) all Time Vesting Shares shall become vested in the
event that Executive (A) has been terminated without Cause or Performance Cause
at any time after the effective date of an Initial Public Offering; (B)
terminated his employment with the Company for Good Reason at any time after the
effective date of an Initial Public Offering; or (C) dies or is "disabled" (as
such term is defined in Section 7(c) hereof) and (ii) 50% of all Time Vesting
Shares which are Unvested Shares (as hereinafter defined) shall be become vested
in the event
- 3 -
<PAGE> 4
that Executive has been terminated without Cause or Performance Cause or if
Executive terminated his employment with the Company for Good Reason within
three months prior to the effective date of an Initial Public Offering.
(b) Except as otherwise provided in Section 2(d) below, 11,111
shares or 33% of the Vesting Stock issued pursuant to Section 1(a) above (the
"PERFORMANCE VESTING SHARES") shall become vested in accordance with the
following schedule if the Investor shall have earned or deemed to have earned
the Return set forth below as of the date of determination:
Cumulative Percentage
of Performance
Return Vesting Shares "Vested"
------ -----------------------
30% 50%
31% 55%
32% 60%
33% 65%
34% 70%
35% 75%
36% 80%
37% 85%
38% 90%
39% 95%
40% or more 100%
In addition to the other times set forth in this Agreement in which the Return
will be calculated, the Return will also be calculated for purposes of
determining vesting under this Section 2(b) upon the following circumstances:
(i) if the Investor has sold or transferred more than 50% of its highest total
ownership interest in the Company to any non-Affiliate of the Investor; (ii) if
Executive has been terminated without Cause or Performance Cause; (iii) if
Executive terminates his employment for Good Reason; or (iv) if Executive has
been terminated because of disability or death. Notwithstanding anything in this
Agreement to the contrary, all Performance Vesting Shares then outstanding will
become Vested Shares on April 1, 2005.
(c) All other shares of Executive Stock (i.e., shares of
Non-Vesting Common Stock and Non-Vesting Preferred Stock (if any)) to be
purchased by Executive hereunder will vest immediately upon such purchase.
(d) Upon the occurrence of a Sale of the Company, all shares of
Executive Stock which have not yet become vested shall become vested at the time
of such event. Shares of Executive Stock which have become vested (whether
pursuant to Section 2(a) or 2(b) above) or upon purchase thereof (i.e., the
shares referred to in Section 2(c) above) are referred to herein as "VESTED
SHARES," and all other shares of Common Stock are referred to herein as
"UNVESTED SHARES").
- 4 -
<PAGE> 5
3. REPURCHASE OPTION.
(a) In the event that Executive ceases to be employed by the
Company and its Affiliates for any reason (the "TERMINATION"), then all of the
Executive Stock (whether held by Executive or one or more of Executive's
Permitted Transferees) will be subject to repurchase by the Company and the
Investor pursuant to the terms and conditions set forth in this Section 3 (the
"REPURCHASE OPTION").
(b) In the event of Termination, (i) the purchase price for
each Unvested Share of Common Stock will be Executive's Original Cost for such
share, (ii) the purchase price for each Vested Share of Common Stock will be the
Fair Market Value for such share; provided, however, that if Executive's
employment is terminated with Cause, the purchase price for each Vested Share of
Vesting Common Stock will be Executive's Original Cost for such share and (iii)
the purchase price for each share of Preferred Stock will be the Liquidation
Value of such share (as defined in the Company's Certificate of Incorporation)
plus all accrued and unpaid dividends thereon.
(c) The Board may elect to purchase all or any portion of the
Unvested Shares and the Vested Shares subject to repurchase by delivering
written notice (the "REPURCHASE NOTICE") to the holder or holders of the
Executive Stock within 120 days after the Termination Event. The Repurchase
Notice will set forth the number of Unvested Shares and Vested Shares of each
class to be acquired from each holder, the aggregate consideration to be paid
for such shares and the time and place for the closing of the transaction. The
number of shares to be repurchased by the Company shall first be satisfied to
the extent possible from the shares of Executive Stock held by Executive at the
time of delivery of the Repurchase Notice. If the number of shares of any class
of Executive Stock then held by Executive is less than the total number of
shares of such class of Executive Stock which the Company has elected to
purchase, then the Company shall purchase the remaining shares of such class
elected to be purchased from the other holder(s) of Executive Stock issued under
this Agreement (i.e., Permitted Transferees), pro rata according to the number
of shares of such class of Executive Stock held by such other holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest share).
(d) If for any reason the Company does not elect to purchase
all of the Executive Stock pursuant to the Repurchase Option, the Investor shall
be entitled to exercise the Repurchase Option for the shares of any class of
Executive Stock the Company has not elected to purchase (the "AVAILABLE
SHARES"). As soon as practicable after the Company has determined that there
will be Available Shares, but in any event within ninety (90) days after the
Termination Event, the Company shall give written notice (the "OPTION NOTICE")
to the Investor setting forth the number of Available Shares and the purchase
price for the Available Shares. The Investor may elect to purchase any or all of
the Available Shares by giving written notice to the Company within twenty (20)
days after the Option Notice has been given by the Company. As soon as
practicable, and in any event within ten (10) days, after the expiration of the
twenty (20) day period set forth above, the Company shall notify each holder of
Executive Stock as to the number of shares of each class being purchased from
such holder by the Investor (the
- 5 -
<PAGE> 6
"SUPPLEMENTAL REPURCHASE NOTICE"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Executive Stock, the Company
shall also deliver written notice to the Investor setting forth the number of
shares of each class the Investor will purchase, the aggregate purchase price
and the time and place of the closing of the transaction.
(e) The closing of the purchase of the Executive Stock
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice or Supplemental Repurchase Notice, which date
shall not be more than 150 days after the delivery of the Repurchase Notice. The
Company will pay for the Executive Stock to be purchased by it pursuant to the
Repurchase Option by first offsetting amounts outstanding under any bona fide
debts owed by Executive to the Company. The Investor will pay for the Executive
Stock to be purchased by it pursuant to the Repurchase Option by delivery of a
check or wire transfer of funds in the aggregate amount of the purchase price
for such shares. The Company and the Investor will be entitled to receive
customary representations and warranties from the sellers regarding such sale.
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
any customary restrictions contained in applicable corporate and securities laws
and in the Company's and its Subsidiaries' debt and equity financing agreements.
If any such restrictions prohibit the repurchase of Executive Stock hereunder
which the Company is otherwise entitled or required to make, the Company may
make such repurchases as soon as it is permitted to do so under such
restrictions.
4. RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK. The Executive
Stock is subject to certain restrictions on transfer and certain tag-along and
drag-along rights which are provided for in the Shareholders Agreement of even
date herewith between the Company, Executive and certain other shareholders of
the Company (the "SHAREHOLDERS AGREEMENT"), and nothing in this Agreement shall
be deemed to amend, modify or limit in any way the restrictions on the issuance
of shares of Preferred Stock or Common Stock set forth in the Purchase
Agreement, in the Shareholders Agreement or in any other Agreement to which the
Company is bound.
5. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(a) LEGEND. The certificates representing the Executive Stock
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS
- 6 -
<PAGE> 7
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN A (1) SENIOR MANAGEMENT AGREEMENT
BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED
MARCH 30, 1998 AND (2) SHAREHOLDERS AGREEMENT AMONG THE
COMPANY AND CERTAIN OF ITS SHAREHOLDERS, DATED AS OF MARCH
27, 1998, AS AMENDED FROM TIME TO TIME. COPIES OF SUCH
AGREEMENTS MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel (reasonably acceptable in form and substance to
the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer.
6. SHAREHOLDER AGREEMENTS. Nothing contained in this Agreement shall
be deemed to limit in any way the restrictions on the shares of Preferred Stock
or Common Stock set forth in the Purchase Agreement, in the Shareholders
Agreement or in any other agreement to which the Company is bound. By execution
of this Agreement, Executive hereby agrees to execute a joinder to and to be
bound by the terms and conditions of the Shareholders Agreement.
PROVISIONS RELATING TO EMPLOYMENT
7. EMPLOYMENT. The Company hereby engages Executive to serve as
Chairman and Chief Executive Officer of the Company, and Executive agrees to
serve the Company, during the Service Term (as defined in Section 7(d) hereof)
in the capacities, and subject to the terms and conditions, set forth in this
Agreement. In addition, the Company and the Investor will use their reasonable
best efforts to cause Executive to be elected as a member of the Board and the
board of directors of any Subsidiary of the Company during the Service Term.
(a) SERVICES. During the Service Term, Executive, as Chairman and
Chief Executive Officer of the Company, shall have all the duties and
responsibilities customarily rendered by Chief Executive Officers of companies
of similar size and nature and as may be delegated from time to time by the
Board in its sole discretion; provided, however, the following actions of the
Company must be approved in advance by the Board:
(i) Acquisitions or dispositions of the assets or stock of a
business with a value in excess of $100,000;
- 7 -
<PAGE> 8
(ii) Employment agreements (other than standard
confidentiality and noncompetition agreements with employees) and
stock or option issuances;
(iii) Annual corporate objectives;
(iv) Annual operating budgets (including capital
expenditures budgets);
(v) Contracts with an operating cost to the Company in
excess of $100,000;
(vi) Dividends, distributions or redemptions of the
Company's capital stock; and
(vii) Statutory and other corporate matters required by law
to be approved by the Board or the Company's shareholders, including
sales of stock and amendments to the Company's charter or bylaws.
Executive will devote his best efforts and substantially all of his business
time and attention (except for vacation periods and periods of illness or other
incapacity) to the business of the Company and its Affiliates. Notwithstanding
the foregoing, and provided that such activities do not interfere with the
fulfillment of Executive's obligations hereunder, Executive may (A) serve as a
director or trustee of any charitable or non-profit entity; (B) acquire
investment interests in one or more entities which are not, directly or
indirectly, in competition with the Company or its Subsidiaries and which do not
have a material business relationship with the Company, except with the written
consent of the Investor, other than the following current investments:
Executive's pre-existing investment in Certified Tours, Inc.; or (C) own up to
3% of the outstanding voting securities of any publicly-held company. Unless the
Company and Executive agree to the contrary, Executive's place of employment
shall be at the Company's principal executive offices in Washington, D.C.;
provided, however, that Executive will travel to such other locations of the
Company and its Affiliates as may be reasonably necessary and/or as required by
the Board in its sole discretion in order to discharge his duties hereunder.
(b) SALARY, BONUS AND BENEFITS.
(i) SALARY AND BONUS. During the Service Term, the
Company will pay Executive a base salary (the "ANNUAL BASE SALARY")
as the Board may designate from time to time, at the rate of not
less than $200,000 per annum; provided, however, that the Annual
Base Salary shall be subject to review annually by the Board for
upward increases thereon. The Executive will be eligible to receive
an annual bonus in an amount not to exceed 100% of Executive's
Annual Base Salary for such year, as determined by the Board based
upon the Company's achievement of budgetary and other objectives set
by the Board, which objectives shall be reasonable in light of the
Company's past year's performance and shall be communicated to
Executive by the Board prior to the
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<PAGE> 9
start of the Company's fiscal year. Executive's Annual Base Salary
and bonus for any partial year will be prorated based upon the
number of days elapsed in such year, except that Executive's bonus
payment for the first year of employment shall not be prorated.
(ii) BENEFITS. During the Service Term, Executive will
be entitled to such other benefits approved by the Board and made
available to the Company's top three senior executives.
(iii) OPTION. In addition, the Company agrees that
effective upon the closing of an Initial Public Offering, the
Company shall grant to Executive, so long as he remains employed by
the Company or any of its Subsidiaries as of such date, an option
(the "OPTION") to purchase 2.5% of the Company's Common Stock
outstanding at the time of an Initial Public Offering at an exercise
price per share equal to the initial offering price per share of the
Initial Public Offering. The Option shall vest in four equal
installments on the first, second, third and fourth anniversaries of
the date of grant. All other terms of the Option shall be as set
forth in the Company's stock option plan to be adopted prior to the
Initial Public Offering and an option agreement to be entered into
as of the date of grant.
(c) TERMINATION.
(i) EVENTS OF TERMINATION. Executive's employment
with the Company shall cease upon:
(A) Executive's death.
(B) Executive's voluntary retirement.
(C) Executive's disability, which means his
incapacity due to physical or mental illness such that he is
unable to perform the essential functions of his previously
assigned duties for a period of six months in any twelve month
period and such incapacity has been determined to exist by
either (x) the Company's disability insurance carrier or (y)
by the Board in good faith based on competent medical advice
in the event that the Company does not maintain disability
insurance on the Executive.
(D) Termination by the Company by the delivery to
Executive of a written notice from the Board that Executive
has been terminated ("NOTICE OF TERMINATION") with or without
Cause or with Performance Cause. "CAUSE" shall mean:
(1) Executive's (aa) conviction of a felony or
Executive's commission of any other act or omission
involving
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<PAGE> 10
dishonesty or fraud with respect to the Company or any
of its Affiliates or any of their customers, vendors or
suppliers or involving harassment or discrimination with
respect to the employees of the Company or its
Subsidiaries, (bb) misappropriation of funds or assets
of the Company for personal use or (cc) engaging in any
conduct relating to the Company's business or involving
moral turpitude that actually brought the Company or any
of its Affiliates into public disgrace or disrepute;
(2) Executive's continued substantial and
repeated neglect of his duties, after written notice
thereof from the Board, and such neglect has not been
cured within 30 days after Executive receives notice
thereof from the Board;
(3) Executive's gross negligence or willful
misconduct in the performance of his duties hereunder
that results, or is reasonably expected to result, in
material damage to the Company; or
(4) Executive's engaging in conduct
constituting a breach of Sections 8 or 9 hereof or
Executive's failure to purchase any Non-Vesting
Preferred Stock required to be purchased by him pursuant
to Section 1(b) above within 15 days of any notice of
default thereof from the Company or Investor.
"PERFORMANCE CAUSE" shall mean Executive's termination within
90 days after the Company's failure to achieve at least 75% of
its budgeted net income as determined in accordance with
generally accepted accounting principles for any four
consecutive fiscal quarters for which financial statements are
available and such failure is reasonably expected to continue
for at least two additional fiscal quarters thereafter;
provided, however, that the Board shall determine in good
faith if any adjustments thereto are necessary or appropriate
to account for extraordinary or nonrecurring events (including
but not limited to Acts of God, substantive travel industry
events (e.g., materially adverse tax or regulatory changes),
travel industry strikes, wars, terrorism) or other
circumstances that should be included or disregarded in order
to fairly determine whether the Company has failed to achieve
such budgeted net income; and provided, however, that in no
fiscal year will budgeted income growth be greater than 30%.
In order for the termination to be effective: Executive must
be notified in writing (which writing shall specify the cause
in reasonable detail) of any termination of his employment for
Cause or Performance Cause. Executive will then have the
right, within ten days of receipt of such notice, to file a
written request for review by the Company. In such case,
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<PAGE> 11
Executive will be given the opportunity to be heard,
personally or by counsel, by the Board and a majority of the
Directors must thereafter confirm that such termination is
either for Cause or Performance Cause. If the Directors do not
provide such confirmation, the termination shall be treated as
other than for Cause or Performance Cause. Notwithstanding
anything to the contrary contained in this paragraph,
Executive shall have the right after termination has occurred
to appeal any determination by the Board to arbitration in
accordance with the provisions of Section 9(h) hereof.
The delivery by the Company of notice to Executive
that it does not intend to renew this Agreement as provided in
Section 7(d) shall constitute a termination by the Company
without Cause unless such notice fulfills the requirements of
Section 7(c)(i)(D)(1), (2), (3) or (4) above.
(E) Executive's voluntary resignation by the
delivery to the Board of a written notice from Executive that
Executive has resigned with or without Good Reason. "GOOD
REASON" shall mean Executive's resignation from employment
with the Company within 45 days after the occurrence of any
one of the following:
(1) the failure of the Company to pay an
amount owing to Executive hereunder after Executive has
provided the Company with written notice of such failure
and such payment has not thereafter been made within 15
days of the delivery of such written notice;
(2) the required relocation of Executive from
the Washington, D.C. area without his consent; or
(3) any material reduction or diminution in
Executive's duties and responsibilities as set forth in
Section 7(a) and as developed during the course of
employment.
The delivery by the Executive of notice to the
Company that he does not intend to renew this Agreement as
provided in Section 7(d) shall constitute a resignation by the
Execution without Good Reason unless such notice fulfills the
requirements of Section 7(c)(i)(E)(1) or (2) above.
(ii) RIGHTS ON TERMINATION.
(A) In the event that termination is by Executive
with Good Reason or by the Company without Cause (including by
operation of the last paragraph of Section 7(c)(i)(D)) or
Performance Cause, the Company will continue to pay Executive
a monthly portion of the Annual
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<PAGE> 12
Base Salary plus a monthly portion of the Executive's bonus
for the prior year for a period equal to twelve-months
commencing on the date of termination on regular salary
payment dates. In the event that termination is by the Company
for Performance Cause, the Company will continue to pay
Executive a monthly portion of the Annual Base Salary for a
period equal to three-months commencing on the date of
termination on regular salary payment dates. The payments to
Executive pursuant to the foregoing two sentences are referred
to as the "SEVERANCE PAYMENTS."
(B) If the Company terminates Executive's
employment for Cause, if Executive retires or if Executive
resigns without Good Reason (including by operation of the
last paragraph of Section 7(c)(i)(E)), the Company's
obligations to pay any compensation or benefits under this
Agreement will cease effective as of the date of termination.
Executive's right to receive any other health or other
benefits will be determined under the provisions of applicable
plans, programs or other coverages.
(C) If Executive's employment terminates because
of Executive's death or disability, the Company will pay
Executive or his estate an amount, if any, equal to his bonus
for the current year prorated to reflect the number of days
Executive has worked during the year in which he dies or
becomes disabled (such amount to be paid after the end of such
year when bonuses are normally paid to other senior executives
of the Company).
Notwithstanding the foregoing, the Company's obligation to
Executive for severance pay or other rights under either subparagraphs (A) or
(B) above (the "SEVERANCE PAY") shall cease if Executive is in violation of the
provisions of Sections 8 or 9 hereof. Until such time as Executive has received
all of his Severance Payments, he will be entitled to continue to receive any
health, life, accident and disability insurance benefits provided by the Company
to Executive under this Agreement. If Executive dies or is permanently disabled,
then Executive or his estate shall be entitled to any disability income or life
insurance payments from any insurance policies paid for by the Company or its
Affiliates as specified in such policies.
(d) TERM OF EMPLOYMENT. Unless Executive's employment under
this Agreement is sooner terminated as a result of Executive's termination in
accordance with the provisions of Section 7(c) above, Executive's employment
under this Agreement shall commence on April 1, 1998 and shall terminate on the
third anniversary of the date hereof (the "SERVICE TERM"); provided, however,
that Executive's employment under this Agreement, and the Service Term, shall be
automatically renewed for one-year periods commencing on the third anniversary
of the date hereof and, thereafter, on each successive anniversary of such date
unless either the Company or Executive notifies the other party in writing
within sixty (60) days prior to any such anniversary that it or he desires to
terminate Executive's employment under this Agreement. All
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<PAGE> 13
references herein to "SERVICE TERM" shall include any renewals thereof after the
third anniversary of the date hereof.
8. CONFIDENTIAL INFORMATION AND GOODWILL; INVENTIONS. Executive
acknowledges and agrees that:
(a) As a necessary function of Executive's employment
hereunder, Executive will have access to and utilize Confidential Information
which constitutes a valuable and essential asset of the Company's business.
(b) The Confidential Information, observations and data
obtained by him during the course of his performance under this Agreement
concerning the business and affairs of the Company are the property of the
Company, including information concerning the acquisition opportunities in or
reasonably related to the Business of which Executive becomes aware during the
Service Term. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for his own account any of the Confidential
Information without the Board's written consent. Executive agrees to deliver to
the Company at the termination of his employment, or at any other time the
Company may request, all memoranda, notes, plans, records, reports and other
documents (including copies thereof) relating to the Company, the Business or
any other Confidential Information.
(c) All inventions, innovations, developments, improvements,
methods, designs, analyses, drawings, software, reports and all similar or
related information (whether or not patented or patentable) developed by
Executive during the Service Term which (i) directly or indirectly relate to the
Company or its Affiliates or the Business, or (ii) result from any work
performed by Executive while employed by the Company or its Affiliates shall
belong to the Company and its Affiliates. Executive shall promptly disclose all
such inventions to the Board and perform all actions reasonably requested by the
Board (whether during or after the Service Term) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
9. NONCOMPETITION AND NONSOLICITATION.
(a) NONCOMPETITION. Executive acknowledges that in the course of
his employment with the Company he will become familiar with the Company's and
its Affiliates' trade secrets and with other confidential information concerning
the Company and that his services will be of special, unique and extraordinary
value to the Company and its Affiliates. Therefore, Executive agrees that,
during the Service Term and for a period of one (1) year after termination
thereof (collectively, the "NONCOMPETE PERIOD"), he shall not directly or
indirectly own, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the business of the
Company and its Subsidiaries or any businesses with which the Company or its
Subsidiaries have firm plans to engage in at the time of the termination of the
Executive's employment with the Company.
(b) NONSOLICITATION. During the Noncompete Period and for a
period of one (1) year thereafter, Executive shall not directly or indirectly
through another entity (i)
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<PAGE> 14
induce or attempt to induce any senior management employee of the Company or any
Subsidiary or, to the actual knowledge of the Executive, any other employee of
the Company or any Subsidiary, to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof or (ii) induce or attempt to induce any
customer, supplier, vendor, licensee or other business relation of the Company
or any Subsidiary to cease doing business with the Company or such Subsidiary,
or to modify its business relationship with the Company in a manner adverse to
the Company or any Subsidiary, or in any way disparage the Company or its
Subsidiaries to any such customer, supplier, vendor, licensee or business
relation of the Company or any Subsidiary.
(c) ENFORCEMENT. The Executive understands and agrees that the
sale of the Executive Stock to Executive pursuant to Section 1 of this Agreement
and the terms and conditions of Executive's employment hereunder are in
consideration for Executive's covenants contained in Section 8 and 9 of this
Agreement. If, at the time of enforcement of Section 8 or 9 of this Agreement, a
court holds that the restrictions stated herein are unreasonable under
circumstances then existing the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because Executive's services are
unique and because Executive has access to confidential information, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security).
GENERAL PROVISIONS
10. DEFINITIONS.
"AFFILIATE" of any Person means any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"BOARD" means the Company's board of directors or the board of
directors or similar management body of any successor of the Company.
"BUSINESS" means any business of the Company or its
Subsidiaries now or hereafter engaged in, including without limitation the
business of providing travel products.
"COMPETITIVE ACTIVITY" means any business or activity of
Executive or any third party that is the same as the Business or competitive
with the Business.
"CONFIDENTIAL INFORMATION" means all confidential information
and trade secrets of the Company and its Affiliates including, without
limitation, the following: the
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<PAGE> 15
identity, written lists, or descriptions of any customers, referral sources or
Organizations; financial statements, cost reports, or other financial
information; contract proposals or bidding information; business plans; training
and operations methods and manuals; personnel records; fee structures; and
management systems, policies or procedures, including related forms and manuals.
"Confidential Information" shall not include any information or knowledge which:
(a) is in the public domain other than by Executive's breach of this Agreement
or (b) is disclosed to Executive lawfully by a third party who is not under any
obligation of confidentiality.
"EXECUTIVE STOCK" will mean all shares of Vesting Stock and
Non-Vesting Stock. Such shares will continue to be Executive Stock in the hands
of any holder other than Executive (except for the Company, any transferee
permitted by the Shareholders Agreement (other than to a Permitted Transferee)
and except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or other
recapitalization. Notwithstanding the foregoing, all Unvested Shares shall
remain Unvested Shares after any Transfer thereof.
"FUND$" shall mean the aggregate amount invested by Investor
to purchase shares of the Company's Common Stock and Preferred Stock pursuant to
the Purchase Agreement and in the Recapitalization Agreement.
"FAIR MARKET VALUE" of each share of Executive Stock means the
average of the closing prices of the sales of Common Stock on all securities
exchanges on which such Common Stock may at the time be listed, or, if there
have been no sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such Common Stock is not so listed, the average of the representative
bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time,
or, if on any day such Common Stock is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time such Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value will
be the fair value of such Common Stock determined in good faith by the Board.
"INITIAL PUBLIC OFFERING" shall mean the completion of the
first Public Offering of the Company's Common Stock with net proceeds to the
Company or the sellers of such Common Stock of not less than $15 million.
"MARKET LIQUIDITY" shall be deemed to exist after the earlier
of (i) two years following the effective date of an Initial Public Offering, if,
and so long as, a Public
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<PAGE> 16
Market exists for the Common Stock or (ii) the day prior to the date that
Executive has been terminated by the Company without Cause or Performance Cause.
"ORGANIZATION" means any organization that has contracted with
the Company for the performance of services in connection with the Business.
"ORIGINAL COST" means with respect to each share of Common
Stock purchased hereunder, $10.00 (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).
"PERMITTED TRANSFEREE" shall have the meaning assigned to such
term in the Shareholders Agreement.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock.
"PUBLIC MARKET" for the Common Stock of the Company shall mean
such Common Stock is traded on a national exchange, the NASDAQ National Market
System or any registered interdealer quotation system involving at least three
registered market makers.
"PUBLIC MARKET PRICE" shall mean the average of the closing
trading prices of the Common Stock in the Public Market averaged over the
four-calendar week period immediately preceding the date upon which the
determination of whether a "PUBLIC MARKET" exists is made.
"PUBLIC SALE" means any sale pursuant to a registered public
offering under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"RECAPITALIZATION" means the recapitalization transactions
involving the Company pursuant to that certain Recapitalization Agreement dated
March 18, 1998 among the Company, the Investor and certain other shareholders of
the Company.
"RETURN" shall mean the annual rate of return which, when used
to calculate the net present value of the Cash Inflows and the Cash Outflows as
of the date of determination, causes such net amount to equal zero. As used in
this definition, "CASH INFLOWS" shall include, without duplication, (i) all cash
payments received by the Investor on or prior to the date of determination with
respect to Common Stock and Preferred Stock acquired with the Fund$ on or prior
to the date of determination (whether such payments are received from the
Company or any third party and whether such payments are received as interests,
dividends, proceeds with respect to sale or redemption of such securities, upon
a liquidation of the
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<PAGE> 17
Company or otherwise), (ii) the fair market value of all non-cash consideration
received by the Investor in connection with the sale of any Common Stock or
Preferred Stock acquired by the Investor with Fund$ and (iii) if Market
Liquidity exists on the date of determination, the Public Market Price on the
date of determination of any shares of Common Stock (including Common Stock
issuable upon conversion of Preferred Stock) acquired with Fund$ held by the
Investor on the date of determination. As used in this definition, "CASH
OUTFLOWS" shall include the sum of all cash payments and investments made by the
Investor to and in the Company to purchase Common Stock and/or Preferred Stock
acquired with Fund$.
"SALE OF THE COMPANY" means any transaction or series of
transactions pursuant to which any Person(s) other than the Investor and its
Affiliates in the aggregate acquire(s) (i) capital stock of the Company
possessing the voting power (other than voting rights acquiring only in the
event of a default, breach or event of noncompliance) to elect a majority of the
Board (whether by merger, consolidation, reorganization, combination, sale or
transfer of the Company's capital stock, shareholder or voting agreement, proxy,
power of attorney or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement
dated as of the date hereof among the Company, the Executive, the Investor and
other shareholders of the Company that may become a party thereto, as amended or
restated from time to time.
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"TRANSFER" means to sell, transfer, assign, pledge or
otherwise dispose of all or any portion of any interest (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law,
including upon death).
11. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class United
States mail (postage prepaid, return receipt requested) or sent by reputable
overnight courier service (charges prepaid) or by facsimile to the recipient at
the address below indicated:
If to the Executive:
Roger H. Ballou
c/o Global Vacation Group, Inc.
1455 Pennsylvania Avenue, N.W., Suite 350
Washington, D.C. 20004
Tel No.: (202) 371-0150
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<PAGE> 18
With a copy to:
Vladeck, Waldman, Elias & Engelhard, P.C.
1501 Broadway, Suite 800
New York, New York 10036
Attention: James D. Esseks
Tel No.: (212) 403-7300
Fax No.: (212) 221-3172
If to the Investor or the Company:
c/o Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, NW
Suite 350
Washington, D.C. 20004
Attention: Daniel Raskas
Christopher Temple
Tel No.: (202) 371-0150
Fax No.: (202) 371-0391
with a copy to:
Hogan & Hartson, LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Christopher J. Hagan
Tel No.: (202) 637-5771
Fax No.: (202) 637-5910
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
12. GENERAL PROVISIONS.
(a) EXPENSES. The Company agrees to pay Executive's reasonable
legal, accounting and other expenses incurred in connection with the negotiation
and execution of this Agreement and the consummation of the transactions
contemplated by this Agreement; provided, however, that the Company will in no
event be responsible for any such expenses incurred in excess of $10,000 for all
Executives.
(b) TRANSFERS IN VIOLATION OF AGREEMENTS. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of this
Agreement or the Shareholders Agreement shall be void, and the Company shall not
record such Transfer on its
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<PAGE> 19
books or treat any purported transferee of such Executive Stock as the owner of
such stock for any purpose.
(c) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(e) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company, the Investor and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Stock hereunder.
(g) CHOICE OF LAW. The corporate law of the Company's state of
incorporation will govern all questions concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits hereto will be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.
(h) REMEDIES AND ARBITRATION. Each of the parties to this
Agreement (including the Investor) will be entitled to enforce its rights under
this Agreement to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. Except for the remedies of the Company
provided in Section 9(c) hereof, the parties hereto agree to submit any disputes
arising out of or relating to this Agreement to binding arbitration in
Washington, D.C. administered by the American Arbitration Association under its
Commercial Arbitration Rules, before a panel of three arbitrators, and judgment
on the award rendered by the arbitrators may be
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<PAGE> 20
entered into any court having jurisdiction thereof. The prevailing party in any
arbitration shall be entitled to recover its reasonable attorneys' fees and
costs from the other party or parties.
(i) AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company,
Executive and the Investor.
(j) BUSINESS DAYS. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company's chief executive office is located, the time
period shall be automatically extended to the business day immediately following
such Saturday, Sunday or holiday.
(k) TERMINATION. This Agreement (except for the provisions of
Section 7) shall survive the termination of Executive's employment with the
Company and shall remain in full force and effect after such termination.
(l) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES; ADJUSTMENTS OF
NUMBERS. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with
generally accepted accounting principles, consistently applied, except that if
because of a change in generally accepted accounting principles the Company
would have to alter a previously utilized accounting method or policy in order
to remain in compliance with generally accepted accounting principles, such
determination or calculation shall continue to be made in accordance with the
Company's previous accounting methods and policies. All numbers set forth herein
which refer to share prices or amounts will be appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and other
recapitalizations affecting the subject class of stock.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
GLOBAL VACATION GROUP, INC.
By: /s/ J. Raymond Lewis
-------------------------------------
J. Raymond Lewis
President and Chief Operating Officer
/s/ Roger H. Ballou
-------------------------------------------
ROGER H. BALLOU
Agreed and Accepted:
THAYER EQUITY INVESTORS III, L.P.
By: TC Equity Partners, L.L.C.
Its: General Partner
By: /s/ Christopher Temple
---------------------------
Christopher Temple
Member
The Exhibits to this Senior Management Agreement are not included with this
Registration Statement on Form S-1. Global will provide these exhibits and
schedules upon the request of the Securities and Exchange Commission.
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<PAGE> 1
Exhibit 10.16
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of March 30, 1998, between GLOBAL VACATION
GROUP, INC. (formerly Allied Bus Corp.), a New York corporation (the "COMPANY"),
and RAYMOND LEWIS ("EXECUTIVE").
RECITALS
A. The Company and Executive desire to enter into an agreement
pursuant to which Executive will purchase, and the Company will sell, 9,500
shares of the Company's Common Stock, par value $.01 per share (the "COMMON
STOCK") and 105 shares of the Company's Class A Preferred Stock, par value $.01
per share (the "PREFERRED STOCK"). All of such shares of Preferred Stock and
Common Stock and all shares of Preferred Stock and Common Stock hereafter
acquired by Executive are referred to herein as "EXECUTIVE STOCK." (as further
defined in Section 10).
B. The execution and delivery of this Agreement by the Company and
Executive is a condition to the purchase of shares of Common Stock and Preferred
Stock by Thayer Equity Investors III, L.P. (the "INVESTOR") pursuant to a
purchase agreement between the Company and the Investor and certain other
investors (collectively, the "PURCHASERS") dated as of the date hereof (the
"PURCHASE AGREEMENT"). Certain provisions of this Agreement are intended for the
benefit of, and will be enforceable by, the Investor.
C. Certain definitions are set forth in Section 10 of this
Agreement.
AGREEMENT
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. PURCHASE AND SALE OF EXECUTIVE STOCK.
(a) Pursuant to the terms of this Agreement, Executive will
purchase, and the Company will sell, an aggregate of 8,333 shares of Common
Stock at a price of $10.00 per share (sometimes referred to herein as the
"VESTING STOCK") upon the closing of the Recapitalization. At the time of such
purchase, the Company will deliver to Executive the certificates representing
such Executive Stock, and Executive will deliver to the Company a cashier's or
certified check or wire transfer of funds in the aggregate amount of $83,333.
<PAGE> 2
(b) Upon the purchase from time to time by the Purchasers of
additional shares of Common Stock and Preferred Stock pursuant to Article I of
the Purchase Agreement, Executive will purchase and the Company will sell to
Executive up to an aggregate of (i) 1,167 shares of Common Stock at a price of
$10.00 per share (the "NON-VESTING COMMON STOCK") and (ii) 105 shares of
Preferred Stock at a price of $1,000.00 per share (the "NON-VESTING PREFERRED
STOCK") (each of (i) and (ii) as adjusted from time to time as a result of stock
splits, stock dividends, recapitalizations and similar events). The number of
shares of Non-Vesting Common Stock and Non-Vesting Preferred Stock to be sold by
the Company and purchased by the Executive shall be as determined by the Company
and the Investor, provided, however, that in no event will such purchase occur
later than (i) with respect to the Non-Vesting Common Stock, at the time that
the Purchasers purchase their remaining commitment of Common Stock pursuant to
the Purchase Agreement and (ii) with respect to the Non-Vesting Preferred Stock,
at the time that the Purchasers have purchased all of their remaining commitment
of Preferred Stock pursuant to the Purchase Agreement. The Company will deliver
to Executive the certificates representing such shares of Executive Stock
purchased by Executive, and Executive will deliver to the Company a cashiers or
certified check or a wire transfer of funds in an aggregate amount equal to the
product of (x) the price per share of such Executive Stock and (y) the number of
shares so purchased by the Executive.
(c) Within 30 days after Executive purchases any Executive
Stock from the Company, Executive will make an effective election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code and
the regulations promulgated thereunder in the form of Annex A attached hereto.
(d) In connection with the purchase and sale of the Executive
Stock hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own
account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act, or any applicable state
securities laws, and the Executive Stock will not be disposed of in
contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of the Company,
is sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time
because the Executive Stock has not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available.
(iv) Executive has had an opportunity to ask questions
and receive answers concerning the terms and conditions of the
offering of Executive
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<PAGE> 3
Stock and has had full access to such other information concerning
the Company as he has requested.
(v) This Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement
by Executive does not and will not conflict with, violate or cause a
breach of any agreement, contract or instrument to which Executive
is a party or any judgment, order or decree to which Executive is
subject.
(vi) Executive is a resident of the District of
Columbia.
(e) As an inducement to the Company to issue the Executive
Stock to Executive, as a condition thereto, Executive acknowledges and agrees
that neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
2. VESTING OF CERTAIN EXECUTIVE STOCK.
(a) Except as otherwise provided in Section 2(d) below, 5,555
shares or 67% of the Vesting Stock issued pursuant to Section 1(a) above (the
"TIME VESTING SHARES") shall become vested in accordance with the following
schedule, if as of each such date Executive is still employed by the Investor or
the Company or any of its Affiliates:
Cumulative Percentage of
Date Common Stock to be Vested
------------------------------- -------------------------
Closing of the Recapitalization 20%
1st Anniversary of Closing
of the Recapitalization 40%
2nd Anniversary of Closing
of the Recapitalization 60%
3rd Anniversary of Closing
of the Recapitalization 80%
4th Anniversary of Closing
of the Recapitalization 100%
If Executive ceases to be employed by the Investor or the Company or its
Affiliates on any date prior to the fourth anniversary of the Closing (other
than any anniversary date prior thereto), the cumulative percentage of Time
Vesting Shares to become vested will be determined on a pro rata basis according
to the number of days elapsed since the prior anniversary date. Notwithstanding
the foregoing sentence, (i) all Time Vesting Shares shall become vested in the
event that Executive (A) has been terminated without Cause or Performance Cause
at any time after the effective date of an Initial Public Offering; (B)
terminated his employment with the Company for Good Reason at any time after the
effective date of an Initial Public Offering; or (C) dies or is "disabled" (as
such term is defined in Section 7(c) hereof) and (ii) 50% of all Time Vesting
Shares which are Unvested Shares (as hereinafter defined) shall be become vested
in the event
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<PAGE> 4
that Executive has been terminated without Cause or Performance Cause or if
Executive terminated his employment with the Company for Good Reason within
three months prior to the effective date of an Initial Public Offering.
(b) Except as otherwise provided in Section 2(d) below, 2,778
shares or 33% of the Vesting Stock issued pursuant to Section 1(a) above (the
"PERFORMANCE VESTING SHARES") shall become vested in accordance with the
following schedule if the Investor shall have earned or deemed to have earned
the Return set forth below as of the date of determination:
Cumulative Percentage
of Performance
Return Vesting Shares "Vested"
------ -----------------------
30% 50%
31% 55%
32% 60%
33% 65%
34% 70%
35% 75%
36% 80%
37% 85%
38% 90%
39% 95%
40% or more 100%
In addition to the other times set forth in this Agreement in which the Return
will be calculated, the Return will also be calculated for purposes of
determining vesting under this Section 2(b) upon the following circumstances:
(i) if the Investor has sold or transferred more than 50% of its highest total
ownership interest in the Company to any non-Affiliate of the Investor; (ii) if
Executive has been terminated without Cause or Performance Cause; (iii) if
Executive terminates his employment for Good Reason; or (iv) if Executive has
been terminated because of disability or death. Notwithstanding anything in this
Agreement to the contrary, all Performance Vesting Shares then outstanding will
become Vested Shares on April 1, 2005.
(c) All other shares of Executive Stock (i.e., shares of
Non-Vesting Common Stock and Non-Vesting Preferred Stock (if any)) to be
purchased by Executive hereunder will vest immediately upon such purchase.
(d) Upon the occurrence of a Sale of the Company, all shares
of Executive Stock which have not yet become vested shall become vested at the
time of such event. Shares of Executive Stock which have become vested (whether
pursuant to Section 2(a) or 2(b) above) or upon purchase thereof (i.e., the
shares referred to in Section 2(c) above) are referred to herein as "VESTED
SHARES," and all other shares of Common Stock are referred to herein as
"UNVESTED SHARES").
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<PAGE> 5
3. REPURCHASE OPTION.
(a) In the event that Executive ceases to be employed by the
Company and its Affiliates for any reason (the "TERMINATION"), then all of the
Executive Stock (whether held by Executive or one or more of Executive's
Permitted Transferees) will be subject to repurchase by the Company and the
Investor pursuant to the terms and conditions set forth in this Section 3 (the
"REPURCHASE OPTION").
(b) In the event of Termination, (i) the purchase price for
each Unvested Share of Common Stock will be Executive's Original Cost for such
share, (ii) the purchase price for each Vested Share of Common Stock will be the
Fair Market Value for such share; provided, however, that if Executive's
employment is terminated with Cause, the purchase price for each Vested Share of
Vesting Common Stock will be Executive's Original Cost for such share and (iii)
the purchase price for each share of Preferred Stock will be the Liquidation
Value of such share (as defined in the Company's Certificate of Incorporation)
plus all accrued and unpaid dividends thereon.
(c) The Board may elect to purchase all or any portion of the
Unvested Shares and the Vested Shares subject to repurchase by delivering
written notice (the "REPURCHASE NOTICE") to the holder or holders of the
Executive Stock within 120 days after the Termination Event. The Repurchase
Notice will set forth the number of Unvested Shares and Vested Shares of each
class to be acquired from each holder, the aggregate consideration to be paid
for such shares and the time and place for the closing of the transaction. The
number of shares to be repurchased by the Company shall first be satisfied to
the extent possible from the shares of Executive Stock held by Executive at the
time of delivery of the Repurchase Notice. If the number of shares of any class
of Executive Stock then held by Executive is less than the total number of
shares of such class of Executive Stock which the Company has elected to
purchase, then the Company shall purchase the remaining shares of such class
elected to be purchased from the other holder(s) of Executive Stock issued under
this Agreement (i.e., Permitted Transferees), pro rata according to the number
of shares of such class of Executive Stock held by such other holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest share).
(d) If for any reason the Company does not elect to purchase
all of the Executive Stock pursuant to the Repurchase Option, the Investor shall
be entitled to exercise the Repurchase Option for the shares of any class of
Executive Stock the Company has not elected to purchase (the "AVAILABLE
SHARES"). As soon as practicable after the Company has determined that there
will be Available Shares, but in any event within ninety (90) days after the
Termination Event, the Company shall give written notice (the "OPTION NOTICE")
to the Investor setting forth the number of Available Shares and the purchase
price for the Available Shares. The Investor may elect to purchase any or all of
the Available Shares by giving written notice to the Company within twenty (20)
days after the Option Notice has been given by the Company. As soon as
practicable, and in any event within ten (10) days, after the expiration of the
twenty (20) day period set forth above, the Company shall notify each holder of
Executive Stock as to the number of shares of each class being purchased from
such holder by the Investor (the
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<PAGE> 6
"SUPPLEMENTAL REPURCHASE NOTICE"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Executive Stock, the Company
shall also deliver written notice to the Investor setting forth the number of
shares of each class the Investor will purchase, the aggregate purchase price
and the time and place of the closing of the transaction.
(e) The closing of the purchase of the Executive Stock pursuant
to the Repurchase Option shall take place on the date designated by the Company
in the Repurchase Notice or Supplemental Repurchase Notice, which date shall not
be more than 150 days after the delivery of the Repurchase Notice. The Company
will pay for the Executive Stock to be purchased by it pursuant to the
Repurchase Option by first offsetting amounts outstanding under any bona fide
debts owed by Executive to the Company. The Investor will pay for the Executive
Stock to be purchased by it pursuant to the Repurchase Option by delivery of a
check or wire transfer of funds in the aggregate amount of the purchase price
for such shares. The Company and the Investor will be entitled to receive
customary representations and warranties from the sellers regarding such sale.
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
any customary restrictions contained in applicable corporate and securities laws
and in the Company's and its Subsidiaries' debt and equity financing agreements.
If any such restrictions prohibit the repurchase of Executive Stock hereunder
which the Company is otherwise entitled or required to make, the Company may
make such repurchases as soon as it is permitted to do so under such
restrictions.
4. RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK. The Executive Stock
is subject to certain restrictions on transfer and certain tag-along and
drag-along rights which are provided for in the Shareholders Agreement of even
date herewith between the Company, Executive and certain other shareholders of
the Company (the "SHAREHOLDERS AGREEMENT"), and nothing in this Agreement shall
be deemed to amend, modify or limit in any way the restrictions on the issuance
of shares of Preferred Stock or Common Stock set forth in the Purchase
Agreement, in the Shareholders Agreement or in any other Agreement to which the
Company is bound.
5. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(a) LEGEND. The certificates representing the Executive Stock
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS
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<PAGE> 7
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN A (1) SENIOR MANAGEMENT AGREEMENT
BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED
MARCH 30, 1998 AND (2) SHAREHOLDERS AGREEMENT AMONG THE
COMPANY AND CERTAIN OF ITS SHAREHOLDERS, DATED AS OF MARCH
27, 1998, AS AMENDED FROM TIME TO TIME. COPIES OF SUCH
AGREEMENTS MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel (reasonably acceptable in form and substance to
the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer.
6. SHAREHOLDER AGREEMENTS. Nothing contained in this Agreement shall
be deemed to limit in any way the restrictions on the shares of Preferred Stock
or Common Stock set forth in the Purchase Agreement, in the Shareholders
Agreement or in any other agreement to which the Company is bound. By execution
of this Agreement, Executive hereby agrees to execute a joinder to and to be
bound by the terms and conditions of the Shareholders Agreement.
PROVISIONS RELATING TO EMPLOYMENT
7. EMPLOYMENT. The Company hereby engages Executive to serve as
President and Chief Operating Officer of the Company, and Executive agrees to
serve the Company, during the Service Term (as defined in Section 7(d) hereof)
in the capacities, and subject to the terms and conditions, set forth in this
Agreement.
(a) SERVICES. During the Service Term, Executive, as President
and Chief Operating Officer of the Company, shall have all the duties and
responsibilities customarily rendered by Chief Operating Officers of companies
of similar size and nature and as may be delegated from time to time by the
Board in its sole discretion. Executive will devote his best efforts and
substantially all of his business time and attention (except for vacation
periods and periods of illness or other incapacity) to the business of the
Company and its Affiliates. Notwithstanding the foregoing, and provided that
such activities do not interfere with the fulfillment of Executive's obligations
hereunder, Executive may (A) serve as a director or trustee of any charitable or
non-profit entity; (B) acquire investment interests in one or more entities
which are not, directly or indirectly, in competition with the Company or its
Subsidiaries and
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<PAGE> 8
which do not have a material business relationship with the Company, except with
the written consent of the Investor; or (C) own up to 3% of the outstanding
voting securities of any publicly-held company. Unless the Company and Executive
agree to the contrary, Executive's place of employment shall be at the Company's
principal executive offices in Washington, D.C.; provided, however, that
Executive will travel to such other locations of the Company and its Affiliates
as may be reasonably necessary and/or as required by the Board in its sole
discretion in order to discharge his duties hereunder.
(b) SALARY, BONUS AND BENEFITS.
(i) SALARY AND BONUS. During the Service Term, the Company will
pay Executive a base salary (the "ANNUAL BASE Salary") as the Board may
designate from time to time, at the rate of not less than $200,000 per
annum; provided, however, that the Annual Base Salary shall be subject
to review annually by the Board for upward increases thereon. The
Executive will be eligible to receive an annual bonus in an amount not
to exceed 100% of Executive's Annual Base Salary for such year, as
determined by the Board based upon the Company's achievement of
budgetary and other objectives set by the Board, which objectives shall
be reasonable in light of the Company's past year's performance and
shall be communicated to Executive by the Board prior to the start of
the Company's fiscal year. Executive's Annual Base Salary and bonus for
any partial year will be prorated based upon the number of days elapsed
in such year, except that Executive's bonus payment for the first year
of employment shall not be prorated.
(ii) BENEFITS. During the Service Term, Executive will be
entitled to such other benefits approved by the Board and made available
to the Company's top three senior executives.
(iii) OPTION. In addition, the Company agrees that effective
upon the closing of an Initial Public Offering, the Company shall grant
to Executive, so long as he remains employed by the Company or any of
its Subsidiaries as of such date, an option (the "OPTION") to purchase
2.5% of the Company's Common Stock outstanding at the time of an Initial
Public Offering at an exercise price per share equal to the initial
offering price per share of the Initial Public Offering. The Option
shall vest in four equal installments on the first, second, third and
fourth anniversaries of the date of grant. All other terms of the Option
shall be as set forth in the Company's stock option plan to be adopted
prior to the Initial Public Offering and an option agreement to be
entered into as of the date of grant.
(c) TERMINATION.
(i) EVENTS OF TERMINATION. Executive's employment with the
Company shall cease upon:
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<PAGE> 9
(A) Executive's death.
(B) Executive's voluntary retirement.
(C) Executive's disability, which means his
incapacity due to physical or mental illness such that he is
unable to perform the essential functions of his previously
assigned duties for a period of six months in any twelve month
period and such incapacity has been determined to exist by
either (x) the Company's disability insurance carrier or (y)
by the Board in good faith based on competent medical advice
in the event that the Company does not maintain disability
insurance on the Executive.
(D) Termination by the Company by the delivery to
Executive of a written notice from the Board that Executive
has been terminated ("NOTICE OF Termination") with or without
Cause or with Performance Cause. "CAUSE" shall mean:
(1) Executive's (aa) conviction of a felony
or Executive's commission of any other act or omission
involving dishonesty or fraud with respect to the
Company or any of its Affiliates or any of their
customers, vendors or suppliers or involving harassment
or discrimination with respect to the employees of the
Company or its Subsidiaries, (bb) misappropriation of
funds or assets of the Company for personal use or (cc)
engaging in any conduct relating to the Company's
business or involving moral turpitude that actually
brought the Company or any of its Affiliates into public
disgrace or disrepute;
(2) Executive's continued substantial and
repeated neglect of his duties, after written notice
thereof from the Board, and such neglect has not been
cured within 30 days after Executive receives notice
thereof from the Board;
(3) Executive's gross negligence or willful
misconduct in the performance of his duties hereunder
that results, or is reasonably expected to result, in
material damage to the Company; or
(4) Executive's engaging in conduct
constituting a breach of Sections 8 or 9 hereof or
Executive's failure to purchase any Non-Vesting
Preferred Stock required to be purchased by him pursuant
to Section 1(b) above within 15 days of any notice of
default thereof from the Company or Investor.
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<PAGE> 10
"PERFORMANCE CAUSE" shall mean Executive's termination within
90 days after the Company's failure to achieve at least 75% of
its budgeted net income as determined in accordance with
generally accepted accounting principles for any four
consecutive fiscal quarters for which financial statements are
available and such failure is reasonably expected to continue
for at least two additional fiscal quarters thereafter;
provided, however, that the Board shall determine in good
faith if any adjustments thereto are necessary or appropriate
to account for extraordinary or nonrecurring events (including
but not limited to Acts of God, substantive travel industry
events (e.g., materially adverse tax or regulatory changes),
travel industry strikes, wars, terrorism) or other
circumstances that should be included or disregarded in order
to fairly determine whether the Company has failed to achieve
such budgeted net income; and provided, however, that in no
fiscal year will budgeted income growth be greater than 30%.
In order for the termination to be effective: Executive must
be notified in writing (which writing shall specify the cause
in reasonable detail) of any termination of his employment for
Cause or Performance Cause. Executive will then have the
right, within ten days of receipt of such notice, to file a
written request for review by the Company. In such case,
Executive will be given the opportunity to be heard,
personally or by counsel, by the Board and a majority of the
Directors must thereafter confirm that such termination is
either for Cause or Performance Cause. If the Directors do not
provide such confirmation, the termination shall be treated as
other than for Cause or Performance Cause. Notwithstanding
anything to the contrary contained in this paragraph,
Executive shall have the right after termination has occurred
to appeal any determination by the Board to arbitration in
accordance with the provisions of Section 9(h) hereof.
The delivery by the Company of notice to Executive
that it does not intend to renew this Agreement as provided in
Section 7(d) shall constitute a termination by the Company
without Cause unless such notice fulfills the requirements of
Section 7(c)(i)(D)(1), (2), (3) or (4) above.
(E) Executive's voluntary resignation by the
delivery to the Board of a written notice from Executive that
Executive has resigned with or without Good Reason. "GOOD
REASON" shall mean Executive's resignation from employment
with the Company within 45 days after the occurrence of any
one of the following:
(1) the failure of the Company to pay an
amount owing to Executive hereunder after Executive has
provided the Company with written notice of such failure
and such payment has
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<PAGE> 11
not thereafter been made within 15 days of the delivery
of such written notice;
(2) the required relocation of Executive
from the Washington, D.C. area without his consent; or
(3) any material reduction or diminution in
Executive's duties and responsibilities as set forth in
Section 7(a) and as developed during the course of
employment.
The delivery by the Executive of notice to the
Company that he does not intend to renew this Agreement as
provided in Section 7(d) shall constitute a resignation by the
Execution without Good Reason unless such notice fulfills the
requirements of Section 7(c)(i)(E)(1) or (2) above.
(ii) RIGHTS ON TERMINATION.
(A) In the event that termination is by Executive
with Good Reason or by the Company without Cause (including by
operation of the last paragraph of Section 7(c)(i)(D)) or
Performance Cause, the Company will continue to pay Executive
a monthly portion of the Annual Base Salary plus a monthly
portion of the Executive's bonus for the prior year for a
period equal to twelve-months commencing on the date of
termination on regular salary payment dates. In the event that
termination is by the Company for Performance Cause, the
Company will continue to pay Executive a monthly portion of
the Annual Base Salary for a period equal to three-months
commencing on the date of termination on regular salary
payment dates. The payments to Executive pursuant to the
foregoing two sentences are referred to as the "SEVERANCE
PAYMENTS."
(B) If the Company terminates Executive's
employment for Cause, if Executive retires or if Executive
resigns without Good Reason (including by operation of the
last paragraph of Section 7(c)(i)(E)), the Company's
obligations to pay any compensation or benefits under this
Agreement will cease effective as of the date of termination.
Executive's right to receive any other health or other
benefits will be determined under the provisions of applicable
plans, programs or other coverages.
(C) If Executive's employment terminates because
of Executive's death or disability, the Company will pay
Executive or his estate an amount, if any, equal to his bonus
for the current year prorated to reflect the number of days
Executive has worked during the year in which he dies or
becomes disabled (such amount to be paid after the end of such
year when bonuses are normally paid to other senior executives
of the Company).
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<PAGE> 12
Notwithstanding the foregoing, the Company's obligation to
Executive for severance pay or other rights under either subparagraphs (A) or
(B) above (the "SEVERANCE PAY") shall cease if Executive is in violation of the
provisions of Sections 8 or 9 hereof. Until such time as Executive has received
all of his Severance Payments, he will be entitled to continue to receive any
health, life, accident and disability insurance benefits provided by the Company
to Executive under this Agreement. If Executive dies or is permanently disabled,
then Executive or his estate shall be entitled to any disability income or life
insurance payments from any insurance policies paid for by the Company or its
Affiliates as specified in such policies.
(d) TERM OF EMPLOYMENT. Unless Executive's employment under
this Agreement is sooner terminated as a result of Executive's termination in
accordance with the provisions of Section 7(c) above, Executive's employment
under this Agreement shall commence on April 1, 1998 and shall terminate on the
third anniversary of the date hereof (the "SERVICE TERM"); provided, however,
that Executive's employment under this Agreement, and the Service Term, shall be
automatically renewed for one-year periods commencing on the third anniversary
of the date hereof and, thereafter, on each successive anniversary of such date
unless either the Company or Executive notifies the other party in writing
within sixty (60) days prior to any such anniversary that it or he desires to
terminate Executive's employment under this Agreement. All references herein to
"SERVICE TERM" shall include any renewals thereof after the third anniversary of
the date hereof.
8. CONFIDENTIAL INFORMATION AND GOODWILL; INVENTIONS.
Executive acknowledges and agrees that:
(a) As a necessary function of Executive's employment
hereunder, Executive will have access to and utilize Confidential Information
which constitutes a valuable and essential asset of the Company's business.
(b) The Confidential Information, observations and data
obtained by him during the course of his performance under this Agreement
concerning the business and affairs of the Company are the property of the
Company, including information concerning the acquisition opportunities in or
reasonably related to the Business of which Executive becomes aware during the
Service Term. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for his own account any of the Confidential
Information without the Board's written consent. Executive agrees to deliver to
the Company at the termination of his employment, or at any other time the
Company may request, all memoranda, notes, plans, records, reports and other
documents (including copies thereof) relating to the Company, the Business or
any other Confidential Information.
(c) All inventions, innovations, developments, improvements,
methods, designs, analyses, drawings, software, reports and all similar or
related information (whether or not patented or patentable) developed by
Executive during the Service Term which (i) directly or indirectly relate to the
Company or its Affiliates or the Business, or (ii) result from any work
performed by Executive while employed by the Company or its Affiliates shall
belong to the Company and its Affiliates. Executive shall promptly disclose all
such inventions to the
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<PAGE> 13
Board and perform all actions reasonably requested by the Board (whether during
or after the Service Term) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
9. NONCOMPETITION AND NONSOLICITATION.
(a) NONCOMPETITION. Executive acknowledges that in the course
of his employment with the Company he will become familiar with the Company's
and its Affiliates' trade secrets and with other confidential information
concerning the Company and that his services will be of special, unique and
extraordinary value to the Company and its Affiliates. Therefore, Executive
agrees that, during the Service Term and for a period of one (1) year after
termination thereof (collectively, the "NONCOMPETE PERIOD"), he shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in any business competing with the
business of the Company and its Subsidiaries or any businesses with which the
Company or its Subsidiaries have firm plans to engage in at the time of the
termination of the Executive's employment with the Company.
(b) NONSOLICITATION. During the Noncompete Period and for a
period of one (1) year thereafter, Executive shall not directly or indirectly
through another entity (i) induce or attempt to induce any senior management
employee of the Company or any Subsidiary or, to the actual knowledge of the
Executive, any other employee of the Company or any Subsidiary, to leave the
employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any Subsidiary and any employee thereof or
(ii) induce or attempt to induce any customer, supplier, vendor, licensee or
other business relation of the Company or any Subsidiary to cease doing business
with the Company or such Subsidiary, or to modify its business relationship with
the Company in a manner adverse to the Company or any Subsidiary, or in any way
disparage the Company or its Subsidiaries to any such customer, supplier,
vendor, licensee or business relation of the Company or any Subsidiary.
(c) ENFORCEMENT. The Executive understands and agrees that the
sale of the Executive Stock to Executive pursuant to Section 1 of this Agreement
and the terms and conditions of Executive's employment hereunder are in
consideration for Executive's covenants contained in Section 8 and 9 of this
Agreement. If, at the time of enforcement of Section 8 or 9 of this Agreement, a
court holds that the restrictions stated herein are unreasonable under
circumstances then existing the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because Executive's services are
unique and because Executive has access to confidential information, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to
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<PAGE> 14
enforce, or prevent any violations of, the provisions hereof (without posting a
bond or other security).
GENERAL PROVISIONS
10. DEFINITIONS.
"AFFILIATE" of any Person means any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"BOARD" means the Company's board of directors or the board of
directors or similar management body of any successor of the Company.
"BUSINESS" means any business of the Company or its
Subsidiaries now or hereafter engaged in, including without limitation the
business of providing travel products.
"COMPETITIVE ACTIVITY" means any business or activity of
Executive or any third party that is the same as the Business or competitive
with the Business.
"CONFIDENTIAL INFORMATION" means all confidential information
and trade secrets of the Company and its Affiliates including, without
limitation, the following: the identity, written lists, or descriptions of any
customers, referral sources or Organizations; financial statements, cost
reports, or other financial information; contract proposals or bidding
information; business plans; training and operations methods and manuals;
personnel records; fee structures; and management systems, policies or
procedures, including related forms and manuals. "Confidential Information"
shall not include any information or knowledge which: (a) is in the public
domain other than by Executive's breach of this Agreement or (b) is disclosed to
Executive lawfully by a third party who is not under any obligation of
confidentiality.
"EXECUTIVE STOCK" will mean all shares of Vesting Stock and
Non-Vesting Stock. Such shares will continue to be Executive Stock in the hands
of any holder other than Executive (except for the Company, any transferee
permitted by the Shareholders Agreement (other than to a Permitted Transferee)
and except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or other
recapitalization. Notwithstanding the foregoing, all Unvested Shares shall
remain Unvested Shares after any Transfer thereof.
"FUND$" shall mean the aggregate amount invested by Investor
to purchase shares of the Company's Common Stock and Preferred Stock pursuant to
the Purchase Agreement and in the Recapitalization Agreement.
"FAIR MARKET VALUE" of each share of Executive Stock means the
average of the closing prices of the sales of Common Stock on all securities
exchanges on which
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<PAGE> 15
such Common Stock may at the time be listed, or, if there have been no sales on
any such exchange on any day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day such
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any
day such Common Stock is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such Common
Stock is not listed on any securities exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value will be the fair value of
such Common Stock determined in good faith by the Board.
"INITIAL PUBLIC OFFERING" shall mean the completion of the
first Public Offering of the Company's Common Stock with net proceeds to the
Company or the sellers of such Common Stock of not less than $15 million.
"MARKET LIQUIDITY" shall be deemed to exist after the earlier
of (i) two years following the effective date of an Initial Public Offering, if,
and so long as, a Public Market exists for the Common Stock or (ii) the day
prior to the date that Executive has been terminated by the Company without
Cause or Performance Cause.
"ORGANIZATION" means any organization that has contracted with
the Company for the performance of services in connection with the Business.
"ORIGINAL COST" means with respect to each share of Common
Stock purchased hereunder, $10.00 (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).
"PERMITTED TRANSFEREE" shall have the meaning assigned to such
term in the Shareholders Agreement.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock.
"PUBLIC MARKET" for the Common Stock of the Company shall mean
such Common Stock is traded on a national exchange, the NASDAQ National Market
System or any registered interdealer quotation system involving at least three
registered market makers.
"PUBLIC MARKET PRICE" shall mean the average of the closing
trading prices of the Common Stock in the Public Market averaged over the
four-calendar week period
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<PAGE> 16
immediately preceding the date upon which the determination of whether a "PUBLIC
MARKET" exists is made.
"PUBLIC SALE" means any sale pursuant to a registered public
offering under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"RECAPITALIZATION" means the recapitalization transactions
involving the Company pursuant to that certain Recapitalization Agreement dated
March 18, 1998 among the Company, the Investor and certain other shareholders of
the Company.
"RETURN" shall mean the annual rate of return which, when used
to calculate the net present value of the Cash Inflows and the Cash Outflows as
of the date of determination, causes such net amount to equal zero. As used in
this definition, "CASH INFLOWS" shall include, without duplication, (i) all cash
payments received by the Investor on or prior to the date of determination with
respect to Common Stock and Preferred Stock acquired with the Fund$ on or prior
to the date of determination (whether such payments are received from the
Company or any third party and whether such payments are received as interests,
dividends, proceeds with respect to sale or redemption of such securities, upon
a liquidation of the Company or otherwise), (ii) the fair market value of all
non-cash consideration received by the Investor in connection with the sale of
any Common Stock or Preferred Stock acquired by the Investor with Fund$ and
(iii) if Market Liquidity exists on the date of determination, the Public Market
Price on the date of determination of any shares of Common Stock (including
Common Stock issuable upon conversion of Preferred Stock) acquired with Fund$
held by the Investor on the date of determination. As used in this definition,
"CASH OUTFLOWS" shall include the sum of all cash payments and investments made
by the Investor to and in the Company to purchase Common Stock and/or Preferred
Stock acquired with Fund$.
"SALE OF THE COMPANY" means any transaction or series of
transactions pursuant to which any Person(s) other than the Investor and its
Affiliates in the aggregate acquire(s) (i) capital stock of the Company
possessing the voting power (other than voting rights acquiring only in the
event of a default, breach or event of noncompliance) to elect a majority of the
Board (whether by merger, consolidation, reorganization, combination, sale or
transfer of the Company's capital stock, shareholder or voting agreement, proxy,
power of attorney or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement
dated as of the date hereof among the Company, the Executive, the Investor and
other shareholders of the Company that may become a party thereto, as amended or
restated from time to time.
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<PAGE> 17
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"TRANSFER" means to sell, transfer, assign, pledge or
otherwise dispose of all or any portion of any interest (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law,
including upon death).
11. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class United
States mail (postage prepaid, return receipt requested) or sent by reputable
overnight courier service (charges prepaid) or by facsimile to the recipient at
the address below indicated:
If to the Executive:
Raymond Lewis
c/o Global Vacation Group, Inc.
1455 Pennsylvania Avenue, N.W., Suite 350
Washington, D.C. 20004
Tel No.: (202) 371-0150
With a copy to:
Vladeck, Waldman, Elias & Engelhard, P.C.
1501 Broadway, Suite 800
New York, New York 10036
Attention: James D. Esseks
Tel No.: (212) 403-7300
Fax No.: (212) 221-3172
If to the Investor or the Company:
c/o Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, NW
Suite 350
Washington, D.C. 20004
Attention: Daniel Raskas
Christopher Temple
Tel No.: (202) 371-0150
Fax No.: (202) 371-0391
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<PAGE> 18
with a copy to:
Hogan & Hartson, LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Christopher J. Hagan
Tel No.: (202) 637-5771
Fax No.: (202) 637-5910
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
12. GENERAL PROVISIONS.
(a) EXPENSES. The Company agrees to pay Executive's reasonable
legal, accounting and other expenses incurred in connection with the negotiation
and execution of this Agreement and the consummation of the transactions
contemplated by this Agreement; provided, however, that the Company will in no
event be responsible for any such expenses incurred in excess of $10,000 for all
Executives.
(b) TRANSFERS IN VIOLATION OF AGREEMENTS. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of this
Agreement or the Shareholders Agreement shall be void, and the Company shall not
record such Transfer on its books or treat any purported transferee of such
Executive Stock as the owner of such stock for any purpose.
(c) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(e) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the
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<PAGE> 19
Company, the Investor and their respective successors and assigns (including
subsequent holders of Executive Stock); provided that the rights and obligations
of Executive under this Agreement shall not be assignable except in connection
with a permitted transfer of Executive Stock hereunder.
(g) CHOICE OF LAW. The corporate law of the Company's state of
incorporation will govern all questions concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits hereto will be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.
(h) REMEDIES AND ARBITRATION. Each of the parties to this
Agreement (including the Investor) will be entitled to enforce its rights under
this Agreement to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. Except for the remedies of the Company
provided in Section 9(c) hereof, the parties hereto agree to submit any disputes
arising out of or relating to this Agreement to binding arbitration in
Washington, D.C. administered by the American Arbitration Association under its
Commercial Arbitration Rules, before a panel of three arbitrators, and judgment
on the award rendered by the arbitrators may be entered into any court having
jurisdiction thereof. The prevailing party in any arbitration shall be entitled
to recover its reasonable attorneys' fees and costs from the other party or
parties.
(i) AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company,
Executive and the Investor.
(j) BUSINESS DAYS. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company's chief executive office is located, the time
period shall be automatically extended to the business day immediately following
such Saturday, Sunday or holiday.
(k) TERMINATION. This Agreement (except for the
provisions of Section 7) shall survive the termination of Executive's
employment with the Company and shall remain in full force and effect after
such termination.
(l) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES; ADJUSTMENTS OF
NUMBERS. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with
generally accepted accounting principles, consistently applied, except that if
because of a change in generally accepted accounting principles the Company
would have to alter a previously utilized accounting method or policy in order
to remain in compliance with generally accepted accounting principles, such
determination or calculation shall continue to be made in accordance with the
Company's previous accounting methods and
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<PAGE> 20
policies. All numbers set forth herein which refer to share prices or amounts
will be appropriately adjusted to reflect stock splits, stock dividends,
combinations of shares and other recapitalizations affecting the subject class
of stock.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
GLOBAL VACATION GROUP, INC.
By: /s/ Roger H. Ballou
-----------------
Roger H. Ballou
Member
/s/ Raymond Lewis
-----------------
RAYMOND LEWIS
Agreed and Accepted:
THAYER EQUITY INVESTORS III, L.P.
By: TC Equity Partners, L.L.C.
Its: General Partner
By: /s/ Christopher Temple
----------------------
Christopher Temple
Member
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<PAGE> 1
Exhibit 10.17
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of March 30, 1998, between GLOBAL VACATION
GROUP, INC. (formerly Allied Bus Corp.), a New York corporation (the "COMPANY"),
and WALTER S. BERMAN ("EXECUTIVE").
RECITALS
A. The Company and Executive desire to enter into an agreement
pursuant to which Executive will purchase, and the Company will sell, 14,000
shares of the Company's Common Stock, par value $.01 per share (the "COMMON
STOCK") and 260 shares of the Company's Class A Preferred Stock, par value $.01
per share (the "PREFERRED STOCK"). All of such shares of Preferred Stock and
Common Stock and all shares of Preferred Stock and Common Stock hereafter
acquired by Executive are referred to herein as "EXECUTIVE STOCK." (as further
defined in Section 10).
B. The execution and delivery of this Agreement by the Company and
Executive is a condition to the purchase of shares of Common Stock and Preferred
Stock by Thayer Equity Investors III, L.P. (the "INVESTOR") pursuant to a
purchase agreement between the Company and the Investor and certain other
investors (collectively, the "PURCHASERS") dated as of the date hereof (the
"PURCHASE AGREEMENT"). Certain provisions of this Agreement are intended for the
benefit of, and will be enforceable by, the Investor.
C. Certain definitions are set forth in Section 10 of this
Agreement.
AGREEMENT
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. PURCHASE AND SALE OF EXECUTIVE STOCK.
(a) Pursuant to the terms of this Agreement, Executive will
purchase, and the Company will sell, an aggregate of 11,111 shares of Common
Stock at a price of $10.00 per share (sometimes referred to herein as the
"VESTING STOCK") upon the closing of the Recapitalization. At the time of such
purchase, the Company will deliver to Executive the certificates representing
such Executive Stock, and Executive will deliver to the Company a cashier's or
certified check or wire transfer of funds in the aggregate amount of $111,111.
<PAGE> 2
(b) Upon the purchase from time to time by the Purchasers of
additional shares of Common Stock and Preferred Stock pursuant to Article I of
the Purchase Agreement, Executive will purchase and the Company will sell to
Executive up to an aggregate of (i) 2,889 shares of Common Stock at a price of
$10.00 per share (the "NON-VESTING COMMON STOCK") and (ii) 260 shares of
Preferred Stock at a price of $1,000.00 per share (the "NON-VESTING PREFERRED
STOCK") (each of (i) and (ii) as adjusted from time to time as a result of stock
splits, stock dividends, recapitalizations and similar events). The number of
shares of Non-Vesting Common Stock and Non-Vesting Preferred Stock to be sold by
the Company and purchased by the Executive shall be as determined by the Company
and the Investor, provided, however, that in no event will such purchase occur
later than (i) with respect to the Non-Vesting Common Stock, at the time that
the Purchasers purchase their remaining commitment of Common Stock pursuant to
the Purchase Agreement and (ii) with respect to the Non-Vesting Preferred Stock,
at the time that the Purchasers have purchased all of their remaining commitment
of Preferred Stock pursuant to the Purchase Agreement. The Company will deliver
to Executive the certificates representing such shares of Executive Stock
purchased by Executive, and Executive will deliver to the Company a cashiers or
certified check or a wire transfer of funds in an aggregate amount equal to the
product of (x) the price per share of such Executive Stock and (y) the number of
shares so purchased by the Executive.
(c) Within 30 days after Executive purchases any Executive
Stock from the Company, Executive will make an effective election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code and
the regulations promulgated thereunder in the form of Annex A attached hereto.
(d) In connection with the purchase and sale of the Executive
Stock hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own
account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act, or any applicable state
securities laws, and the Executive Stock will not be disposed of in
contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of the Company,
is sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time
because the Executive Stock has not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available.
(iv) Executive has had an opportunity to ask questions
and receive answers concerning the terms and conditions of the
offering of Executive
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<PAGE> 3
Stock and has had full access to such other information concerning
the Company as he has requested.
(v) This Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement
by Executive does not and will not conflict with, violate or cause a
breach of any agreement, contract or instrument to which Executive
is a party or any judgment, order or decree to which Executive is
subject.
(vi) Executive is a resident of the State of New
York.
(e) As an inducement to the Company to issue the Executive
Stock to Executive, as a condition thereto, Executive acknowledges and agrees
that neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
2. VESTING OF CERTAIN EXECUTIVE STOCK.
(a) Except as otherwise provided in Section 2(d) below, 7,407
shares or 67% of the Vesting Stock issued pursuant to Section 1(a) above (the
"TIME VESTING SHARES") shall become vested in accordance with the following
schedule, if as of each such date Executive is still employed by the Investor or
the Company or any of its Affiliates:
Cumulative Percentage of
Date Common Stock to be Vested
------------------------------- -------------------------
Closing of the Recapitalization 20%
1st Anniversary of Closing
of the Recapitalization 40%
2nd Anniversary of Closing
of the Recapitalization 60%
3rd Anniversary of Closing
of the Recapitalization 80%
4th Anniversary of Closing
of the Recapitalization 100%
If Executive ceases to be employed by the Investor or the Company or its
Affiliates on any date prior to the fourth anniversary of the Closing (other
than any anniversary date prior thereto), the cumulative percentage of Time
Vesting Shares to become vested will be determined on a pro rata basis according
to the number of days elapsed since the prior anniversary date. Notwithstanding
the foregoing sentence, (i) all Time Vesting Shares shall become vested in the
event that Executive (A) has been terminated without Cause or Performance Cause
at any time after the effective date of an Initial Public Offering; (B)
terminated his employment with the Company for Good Reason at any time after the
effective date of an Initial Public Offering; or (C) dies or is "disabled" (as
such term is defined in Section 7(c) hereof) and (ii) 50% of all Time Vesting
Shares which are Unvested Shares (as hereinafter defined) shall be become vested
in the event
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<PAGE> 4
that Executive has been terminated without Cause or Performance Cause or if
Executive terminated his employment with the Company for Good Reason within
three months prior to the effective date of an Initial Public Offering.
(b) Except as otherwise provided in Section 2(d) below, 3,704
shares or 33% of the Vesting Stock issued pursuant to Section 1(a) above (the
"PERFORMANCE VESTING SHARES") shall become vested in accordance with the
following schedule if the Investor shall have earned or deemed to have earned
the Return set forth below as of the date of determination:
Cumulative Percentage
of Performance
Return Vesting Shares "Vested"
------ -----------------------
30% 50%
31% 55%
32% 60%
33% 65%
34% 70%
35% 75%
36% 80%
37% 85%
38% 90%
39% 95%
40% or more 100%
In addition to the other times set forth in this Agreement in which the Return
will be calculated, the Return will also be calculated for purposes of
determining vesting under this Section 2(b) upon the following circumstances:
(i) if the Investor has sold or transferred more than 50% of its highest total
ownership interest in the Company to any non-Affiliate of the Investor; (ii) if
Executive has been terminated without Cause or Performance Cause; (iii) if
Executive terminates his employment for Good Reason; or (iv) if Executive has
been terminated because of disability or death. Notwithstanding anything in this
Agreement to the contrary, all Performance Vesting Shares then outstanding will
become Vested Shares on April 1, 2005.
(c) All other shares of Executive Stock (i.e., shares of
Non-Vesting Common Stock and Non-Vesting Preferred Stock (if any)) to be
purchased by Executive hereunder will vest immediately upon such purchase.
(d) Upon the occurrence of a Sale of the Company, all shares
of Executive Stock which have not yet become vested shall become vested at the
time of such event. Shares of Executive Stock which have become vested (whether
pursuant to Section 2(a) or 2(b) above) or upon purchase thereof (i.e., the
shares referred to in Section 2(c) above) are referred to herein as "VESTED
SHARES," and all other shares of Common Stock are referred to herein as
"UNVESTED SHARES").
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<PAGE> 5
3. REPURCHASE OPTION.
(a) In the event that Executive ceases to be employed by the
Company and its Affiliates for any reason (the "TERMINATION"), then all of the
Executive Stock (whether held by Executive or one or more of Executive's
Permitted Transferees) will be subject to repurchase by the Company and the
Investor pursuant to the terms and conditions set forth in this Section 3 (the
"REPURCHASE OPTION").
(b) In the event of Termination, (i) the purchase price for
each Unvested Share of Common Stock will be Executive's Original Cost for such
share, (ii) the purchase price for each Vested Share of Common Stock will be the
Fair Market Value for such share; provided, however, that if Executive's
employment is terminated with Cause, the purchase price for each Vested Share of
Vesting Common Stock will be Executive's Original Cost for such share and (iii)
the purchase price for each share of Preferred Stock will be the Liquidation
Value of such share (as defined in the Company's Certificate of Incorporation)
plus all accrued and unpaid dividends thereon.
(c) The Board may elect to purchase all or any portion of the
Unvested Shares and the Vested Shares subject to repurchase by delivering
written notice (the "REPURCHASE NOTICE") to the holder or holders of the
Executive Stock within 120 days after the Termination Event. The Repurchase
Notice will set forth the number of Unvested Shares and Vested Shares of each
class to be acquired from each holder, the aggregate consideration to be paid
for such shares and the time and place for the closing of the transaction. The
number of shares to be repurchased by the Company shall first be satisfied to
the extent possible from the shares of Executive Stock held by Executive at the
time of delivery of the Repurchase Notice. If the number of shares of any class
of Executive Stock then held by Executive is less than the total number of
shares of such class of Executive Stock which the Company has elected to
purchase, then the Company shall purchase the remaining shares of such class
elected to be purchased from the other holder(s) of Executive Stock issued under
this Agreement (i.e., Permitted Transferees), pro rata according to the number
of shares of such class of Executive Stock held by such other holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest share).
(d) If for any reason the Company does not elect to purchase
all of the Executive Stock pursuant to the Repurchase Option, the Investor shall
be entitled to exercise the Repurchase Option for the shares of any class of
Executive Stock the Company has not elected to purchase (the "AVAILABLE
SHARES"). As soon as practicable after the Company has determined that there
will be Available Shares, but in any event within ninety (90) days after the
Termination Event, the Company shall give written notice (the "OPTION NOTICE")
to the Investor setting forth the number of Available Shares and the purchase
price for the Available Shares. The Investor may elect to purchase any or all of
the Available Shares by giving written notice to the Company within twenty (20)
days after the Option Notice has been given by the Company. As soon as
practicable, and in any event within ten (10) days, after the expiration of the
twenty (20) day period set forth above, the Company shall notify each holder of
Executive Stock as to the number of shares of each class being purchased from
such holder by the Investor (the
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<PAGE> 6
"SUPPLEMENTAL REPURCHASE NOTICE"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Executive Stock, the Company
shall also deliver written notice to the Investor setting forth the number of
shares of each class the Investor will purchase, the aggregate purchase price
and the time and place of the closing of the transaction.
(e) The closing of the purchase of the Executive Stock pursuant
to the Repurchase Option shall take place on the date designated by the Company
in the Repurchase Notice or Supplemental Repurchase Notice, which date shall not
be more than 150 days after the delivery of the Repurchase Notice. The Company
will pay for the Executive Stock to be purchased by it pursuant to the
Repurchase Option by first offsetting amounts outstanding under any bona fide
debts owed by Executive to the Company. The Investor will pay for the Executive
Stock to be purchased by it pursuant to the Repurchase Option by delivery of a
check or wire transfer of funds in the aggregate amount of the purchase price
for such shares. The Company and the Investor will be entitled to receive
customary representations and warranties from the sellers regarding such sale.
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
any customary restrictions contained in applicable corporate and securities laws
and in the Company's and its Subsidiaries' debt and equity financing agreements.
If any such restrictions prohibit the repurchase of Executive Stock hereunder
which the Company is otherwise entitled or required to make, the Company may
make such repurchases as soon as it is permitted to do so under such
restrictions.
4. RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK. The Executive Stock
is subject to certain restrictions on transfer and certain tag-along and
drag-along rights which are provided for in the Shareholders Agreement of even
date herewith between the Company, Executive and certain other shareholders of
the Company (the "SHAREHOLDERS AGREEMENT"), and nothing in this Agreement shall
be deemed to amend, modify or limit in any way the restrictions on the issuance
of shares of Preferred Stock or Common Stock set forth in the Purchase
Agreement, in the Shareholders Agreement or in any other Agreement to which the
Company is bound.
5. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(a) LEGEND. The certificates representing the Executive Stock
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS
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<PAGE> 7
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN A (1) SENIOR MANAGEMENT AGREEMENT
BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED
MARCH 30, 1998 AND (2) SHAREHOLDERS AGREEMENT AMONG THE
COMPANY AND CERTAIN OF ITS SHAREHOLDERS, DATED AS OF MARCH
27, 1998, AS AMENDED FROM TIME TO TIME. COPIES OF SUCH
AGREEMENTS MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel (reasonably acceptable in form and substance to
the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer.
6. SHAREHOLDER AGREEMENTS. Nothing contained in this Agreement shall
be deemed to limit in any way the restrictions on the shares of Preferred Stock
or Common Stock set forth in the Purchase Agreement, in the Shareholders
Agreement or in any other agreement to which the Company is bound. By execution
of this Agreement, Executive hereby agrees to execute a joinder to and to be
bound by the terms and conditions of the Shareholders Agreement.
PROVISIONS RELATING TO EMPLOYMENT
7. EMPLOYMENT. The Company hereby engages Executive to serve as
Executive Vice President and Chief Financial Officer of the Company, and
Executive agrees to serve the Company, during the Service Term (as defined in
Section 7(d) hereof) in the capacities, and subject to the terms and conditions,
set forth in this Agreement.
(a) SERVICES. During the Service Term, Executive, as Executive
Vice President and Chief Financial Officer of the Company, shall have all the
duties and responsibilities customarily rendered by Executive Vice Presidents
and Chief Financial Officers of companies of similar size and nature and as may
be delegated from time to time by the Board in its sole discretion or the
Company's Chief Executive Officer. Executive will devote his best efforts and
substantially all of his business time and attention (except for vacation
periods and periods of illness or other incapacity) to the business of the
Company and its Affiliates. Notwithstanding the foregoing, and provided that
such activities do not interfere with the fulfillment of Executive's obligations
hereunder, Executive may (A) serve as a director or trustee of any charitable or
non-profit entity; (B) acquire investment interests in one or more entities
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<PAGE> 8
which are not, directly or indirectly, in competition with the Company or its
Subsidiaries and which do not have a material business relationship with the
Company, except with the written consent of the Investor; or (C) own up to 3% of
the outstanding voting securities of any publicly-held company. Unless the
Company and Executive agree to the contrary, Executive's place of employment
shall be at the Company's principal executive offices in New York, New York;
provided, however, that Executive will travel to such other locations of the
Company and its Affiliates as may be reasonably necessary and/or as required by
the Board in its sole discretion in order to discharge his duties hereunder.
(b) SALARY, BONUS AND BENEFITS.
(i) SALARY AND BONUS. During the Service Term, the Company
will pay Executive a base salary (the "ANNUAL BASE Salary") as the
Board may designate from time to time, at the rate of not less than
$200,000 per annum; provided, however, that the Annual Base Salary
shall be subject to review annually by the Board for upward increases
thereon. The Executive will be eligible to receive an annual bonus in
an amount not to exceed 100% of Executive's Annual Base Salary for such
year, as determined by the Board based upon the Company's achievement
of budgetary and other objectives set by the Board, which objectives
shall be reasonable in light of the Company's past year's performance
and shall be communicated to Executive by the Board prior to the start
of the Company's fiscal year. Executive's Annual Base Salary and bonus
for any partial year will be prorated based upon the number of days
elapsed in such year, except that Executive's bonus payment for the
first year of employment shall not be prorated.
(ii) BENEFITS. During the Service Term, Executive will be
entitled to such other benefits approved by the Board and made
available to the Company's top three senior executives.
(iii) OPTION. In addition, the Company agrees that effective
upon the closing of an Initial Public Offering, the Company shall grant
to Executive, so long as he remains employed by the Company or any of
its Subsidiaries as of such date, an option (the "OPTION") to purchase
2.5% of the Company's Common Stock outstanding at the time of an
Initial Public Offering at an exercise price per share equal to the
initial offering price per share of the Initial Public Offering. The
Option shall vest in four equal installments on the first, second,
third and fourth anniversaries of the date of grant. All other terms of
the Option shall be as set forth in the Company's stock option plan to
be adopted prior to the Initial Public Offering and an option agreement
to be entered into as of the date of grant.
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<PAGE> 9
(c) TERMINATION.
(i) EVENTS OF TERMINATION. Executive's employment with the
Company shall cease upon:
(A) Executive's death.
(B) Executive's voluntary retirement.
(C) Executive's disability, which means his incapacity
due to physical or mental illness such that he is unable to
perform the essential functions of his previously assigned duties
for a period of six months in any twelve month period and such
incapacity has been determined to exist by either (x) the
Company's disability insurance carrier or (y) by the Board in
good faith based on competent medical advice in the event that
the Company does not maintain disability insurance on the
Executive.
(D) Termination by the Company by the delivery to
Executive of a written notice from the Board that Executive has
been terminated ("NOTICE OF TERMINATION") with or without Cause
or with Performance Cause. "CAUSE" shall mean:
(1) Executive's (aa) conviction of a felony or
Executive's commission of any other act or omission involving
dishonesty or fraud with respect to the Company or any of its
Affiliates or any of their customers, vendors or suppliers or
involving harassment or discrimination with respect to the
employees of the Company or its Subsidiaries, (bb)
misappropriation of funds or assets of the Company for
personal use or (cc) engaging in any conduct relating to the
Company's business or involving moral turpitude that actually
brought the Company or any of its Affiliates into public
disgrace or disrepute;
(2) Executive's continued substantial and repeated
neglect of his duties, after written notice thereof from the
Board, and such neglect has not been cured within 30 days
after Executive receives notice thereof from the Board;
(3) Executive's gross negligence or willful
misconduct in the performance of his duties hereunder that
results, or is reasonably expected to result, in material
damage to the Company; or
(4) Executive's engaging in conduct constituting a
breach of Sections 8 or 9 hereof or Executive's failure to
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<PAGE> 10
purchase any Non-Vesting Preferred Stock required to be
purchased by him pursuant to Section 1(b) above within 15
days of any notice of default thereof from the Company or
Investor.
"PERFORMANCE CAUSE" shall mean Executive's termination within 90
days after the Company's failure to achieve at least 75% of its
budgeted net income as determined in accordance with generally
accepted accounting principles for any four consecutive fiscal
quarters for which financial statements are available and such
failure is reasonably expected to continue for at least two
additional fiscal quarters thereafter; provided, however, that
the Board shall determine in good faith if any adjustments
thereto are necessary or appropriate to account for extraordinary
or nonrecurring events (including but not limited to Acts of God,
substantive travel industry events (e.g., materially adverse tax
or regulatory changes), travel industry strikes, wars, terrorism)
or other circumstances that should be included or disregarded in
order to fairly determine whether the Company has failed to
achieve such budgeted net income; and provided, however, that in
no fiscal year will budgeted income growth be greater than 30%.
In order for the termination to be effective: Executive must be
notified in writing (which writing shall specify the cause in
reasonable detail) of any termination of his employment for Cause
or Performance Cause. Executive will then have the right, within
ten days of receipt of such notice, to file a written request for
review by the Company. In such case, Executive will be given the
opportunity to be heard, personally or by counsel, by the Board
and a majority of the Directors must thereafter confirm that such
termination is either for Cause or Performance Cause. If the
Directors do not provide such confirmation, the termination shall
be treated as other than for Cause or Performance Cause.
Notwithstanding anything to the contrary contained in this
paragraph, Executive shall have the right after termination has
occurred to appeal any determination by the Board to arbitration
in accordance with the provisions of Section 9(h) hereof.
The delivery by the Company of notice to Executive
that it does not intend to renew this Agreement as provided in
Section 7(d) shall constitute a termination by the Company
without Cause unless such notice fulfills the requirements of
Section 7(c)(i)(D)(1), (2), (3) or (4) above.
(E) Executive's voluntary resignation by the
delivery to the Board of a written notice from Executive that
Executive has resigned with or without Good Reason. "GOOD REASON"
shall mean Executive's resignation from employment with the
Company within 45 days after the occurrence of any one of the
following:
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<PAGE> 11
(1) the failure of the Company to pay an
amount owing to Executive hereunder after Executive has
provided the Company with written notice of such failure
and such payment has not thereafter been made within 15
days of the delivery of such written notice;
(2) the relocation of Executive from
either the Washington, D.C. or New York city areas
without his consent; or
(3) any material reduction or diminution in
Executive's duties and responsibilities as set forth in
Section 7(a) and as developed during the course of
employment.
The delivery by the Executive of notice to the
Company that he does not intend to renew this Agreement as
provided in Section 7(d) shall constitute a resignation by the
Execution without Good Reason unless such notice fulfills the
requirements of Section 7(c)(i)(E)(1) or (2) above.
(ii) RIGHTS ON TERMINATION.
(A) In the event that termination is by Executive
with Good Reason or by the Company without Cause (including by
operation of the last paragraph of Section 7(c)(i)(D)) or
Performance Cause, the Company will continue to pay Executive
a monthly portion of the Annual Base Salary plus a monthly
portion of the Executive's bonus for the prior year for a
period equal to twelve-months commencing on the date of
termination on regular salary payment dates. In the event that
termination is by the Company for Performance Cause, the
Company will continue to pay Executive a monthly portion of
the Annual Base Salary for a period equal to three-months
commencing on the date of termination on regular salary
payment dates. The payments to Executive pursuant to the
foregoing two sentences are referred to as the "SEVERANCE
PAYMENTS."
(B) If the Company terminates Executive's
employment for Cause, if Executive retires or if Executive
resigns without Good Reason (including by operation of the
last paragraph of Section 7(c)(i)(E)), the Company's
obligations to pay any compensation or benefits under this
Agreement will cease effective as of the date of termination.
Executive's right to receive any other health or other
benefits will be determined under the provisions of applicable
plans, programs or other coverages.
(C) If Executive's employment terminates because
of Executive's death or disability, the Company will pay
Executive or his estate an amount, if any, equal to his bonus
for the current year prorated to reflect the number of days
Executive has worked during the year in
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<PAGE> 12
which he dies or becomes disabled (such amount to be paid
after the end of such year when bonuses are normally paid to
other senior executives of the Company).
Notwithstanding the foregoing, the Company's obligation to
Executive for severance pay or other rights under either subparagraphs (A) or
(B) above (the "SEVERANCE PAY") shall cease if Executive is in violation of the
provisions of Sections 8 or 9 hereof. Until such time as Executive has received
all of his Severance Payments, he will be entitled to continue to receive any
health, life, accident and disability insurance benefits provided by the Company
to Executive under this Agreement. If Executive dies or is permanently disabled,
then Executive or his estate shall be entitled to any disability income or life
insurance payments from any insurance policies paid for by the Company or its
Affiliates as specified in such policies.
(d) TERM OF EMPLOYMENT. Unless Executive's employment under
this Agreement is sooner terminated as a result of Executive's termination in
accordance with the provisions of Section 7(c) above, Executive's employment
under this Agreement shall commence on April 1, 1998 and shall terminate on the
third anniversary of the date hereof (the "SERVICE TERM"); provided, however,
that Executive's employment under this Agreement, and the Service Term, shall be
automatically renewed for one-year periods commencing on the third anniversary
of the date hereof and, thereafter, on each successive anniversary of such date
unless either the Company or Executive notifies the other party in writing
within sixty (60) days prior to any such anniversary that it or he desires to
terminate Executive's employment under this Agreement. All references herein to
"SERVICE TERM" shall include any renewals thereof after the third anniversary of
the date hereof.
8. CONFIDENTIAL INFORMATION AND GOODWILL; INVENTIONS.
Executive acknowledges and agrees that:
(a) As a necessary function of Executive's employment
hereunder, Executive will have access to and utilize Confidential Information
which constitutes a valuable and essential asset of the Company's business.
(b) The Confidential Information, observations and data
obtained by him during the course of his performance under this Agreement
concerning the business and affairs of the Company are the property of the
Company, including information concerning the acquisition opportunities in or
reasonably related to the Business of which Executive becomes aware during the
Service Term. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for his own account any of the Confidential
Information without the Board's written consent. Executive agrees to deliver to
the Company at the termination of his employment, or at any other time the
Company may request, all memoranda, notes, plans, records, reports and other
documents (including copies thereof) relating to the Company, the Business or
any other Confidential Information.
(c) All inventions, innovations, developments, improvements,
methods, designs, analyses, drawings, software, reports and all similar or
related information
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<PAGE> 13
(whether or not patented or patentable) developed by Executive during the
Service Term which (i) directly or indirectly relate to the Company or its
Affiliates or the Business, or (ii) result from any work performed by Executive
while employed by the Company or its Affiliates shall belong to the Company and
its Affiliates. Executive shall promptly disclose all such inventions to the
Board and perform all actions reasonably requested by the Board (whether during
or after the Service Term) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
9. NONCOMPETITION AND NONSOLICITATION.
(a) NONCOMPETITION. Executive acknowledges that in the course
of his employment with the Company he will become familiar with the Company's
and its Affiliates' trade secrets and with other confidential information
concerning the Company and that his services will be of special, unique and
extraordinary value to the Company and its Affiliates. Therefore, Executive
agrees that, during the Service Term and for a period of one (1) year after
termination thereof (collectively, the "NONCOMPETE PERIOD"), he shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in any business competing with the
business of the Company and its Subsidiaries or any businesses with which the
Company or its Subsidiaries have firm plans to engage in at the time of the
termination of the Executive's employment with the Company.
(b) NONSOLICITATION. During the Noncompete Period and for a
period of one (1) year thereafter, Executive shall not directly or indirectly
through another entity (i) induce or attempt to induce any senior management
employee of the Company or any Subsidiary or, to the actual knowledge of the
Executive, any other employee of the Company or any Subsidiary, to leave the
employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any Subsidiary and any employee thereof or
(ii) induce or attempt to induce any customer, supplier, vendor, licensee or
other business relation of the Company or any Subsidiary to cease doing business
with the Company or such Subsidiary, or to modify its business relationship with
the Company in a manner adverse to the Company or any Subsidiary, or in any way
disparage the Company or its Subsidiaries to any such customer, supplier,
vendor, licensee or business relation of the Company or any Subsidiary.
(c) ENFORCEMENT. The Executive understands and agrees that the
sale of the Executive Stock to Executive pursuant to Section 1 of this Agreement
and the terms and conditions of Executive's employment hereunder are in
consideration for Executive's covenants contained in Section 8 and 9 of this
Agreement. If, at the time of enforcement of Section 8 or 9 of this Agreement, a
court holds that the restrictions stated herein are unreasonable under
circumstances then existing the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because Executive's services are
unique and because Executive has access to confidential information, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or
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<PAGE> 14
assigns may, in addition to other rights and remedies existing in their favor,
apply to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security).
GENERAL PROVISIONS
10. DEFINITIONS.
"AFFILIATE" of any Person means any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"BOARD" means the Company's board of directors or the board of
directors or similar management body of any successor of the Company.
"BUSINESS" means any business of the Company or its
Subsidiaries now or hereafter engaged in, including without limitation the
business of providing travel products.
"COMPETITIVE ACTIVITY" means any business or activity of
Executive or any third party that is the same as the Business or competitive
with the Business.
"CONFIDENTIAL INFORMATION" means all confidential information
and trade secrets of the Company and its Affiliates including, without
limitation, the following: the identity, written lists, or descriptions of any
customers, referral sources or Organizations; financial statements, cost
reports, or other financial information; contract proposals or bidding
information; business plans; training and operations methods and manuals;
personnel records; fee structures; and management systems, policies or
procedures, including related forms and manuals. "Confidential Information"
shall not include any information or knowledge which: (a) is in the public
domain other than by Executive's breach of this Agreement or (b) is disclosed to
Executive lawfully by a third party who is not under any obligation of
confidentiality.
"EXECUTIVE STOCK" will mean all shares of Vesting Stock and
Non-Vesting Stock. Such shares will continue to be Executive Stock in the hands
of any holder other than Executive (except for the Company, any transferee
permitted by the Shareholders Agreement (other than to a Permitted Transferee)
and except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or other
recapitalization. Notwithstanding the foregoing, all Unvested Shares shall
remain Unvested Shares after any Transfer thereof.
"FUND$" shall mean the aggregate amount invested by Investor
to purchase shares of the Company's Common Stock and Preferred Stock pursuant to
the Purchase Agreement and in the Recapitalization Agreement.
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<PAGE> 15
"FAIR MARKET VALUE" of each share of Executive Stock means the
average of the closing prices of the sales of Common Stock on all securities
exchanges on which such Common Stock may at the time be listed, or, if there
have been no sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such Common Stock is not so listed, the average of the representative
bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time,
or, if on any day such Common Stock is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time such Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value will
be the fair value of such Common Stock determined in good faith by the Board.
"INITIAL PUBLIC OFFERING" shall mean the completion of the
first Public Offering of the Company's Common Stock with net proceeds to the
Company or the sellers of such Common Stock of not less than $15 million.
"MARKET LIQUIDITY" shall be deemed to exist after the earlier
of (i) two years following the effective date of an Initial Public Offering, if,
and so long as, a Public Market exists for the Common Stock or (ii) the day
prior to the date that Executive has been terminated by the Company without
Cause or Performance Cause.
"ORGANIZATION" means any organization that has contracted with
the Company for the performance of services in connection with the Business.
"ORIGINAL COST" means with respect to each share of Common
Stock purchased hereunder, $10.00 (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).
"PERMITTED TRANSFEREE" shall have the meaning assigned to such
term in the Shareholders Agreement.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock.
"PUBLIC MARKET" for the Common Stock of the Company shall mean
such Common Stock is traded on a national exchange, the NASDAQ National Market
System or any registered interdealer quotation system involving at least three
registered market makers.
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<PAGE> 16
"PUBLIC MARKET PRICE" shall mean the average of the closing
trading prices of the Common Stock in the Public Market averaged over the
four-calendar week period immediately preceding the date upon which the
determination of whether a "PUBLIC MARKET" exists is made.
"PUBLIC SALE" means any sale pursuant to a registered public
offering under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"RECAPITALIZATION" means the recapitalization transactions
involving the Company pursuant to that certain Recapitalization Agreement dated
March 18, 1998 among the Company, the Investor and certain other shareholders of
the Company.
"RETURN" shall mean the annual rate of return which, when used
to calculate the net present value of the Cash Inflows and the Cash Outflows as
of the date of determination, causes such net amount to equal zero. As used in
this definition, "CASH INFLOWS" shall include, without duplication, (i) all cash
payments received by the Investor on or prior to the date of determination with
respect to Common Stock and Preferred Stock acquired with the Fund$ on or prior
to the date of determination (whether such payments are received from the
Company or any third party and whether such payments are received as interests,
dividends, proceeds with respect to sale or redemption of such securities, upon
a liquidation of the Company or otherwise), (ii) the fair market value of all
non-cash consideration received by the Investor in connection with the sale of
any Common Stock or Preferred Stock acquired by the Investor with Fund$ and
(iii) if Market Liquidity exists on the date of determination, the Public Market
Price on the date of determination of any shares of Common Stock (including
Common Stock issuable upon conversion of Preferred Stock) acquired with Fund$
held by the Investor on the date of determination. As used in this definition,
"CASH OUTFLOWS" shall include the sum of all cash payments and investments made
by the Investor to and in the Company to purchase Common Stock and/or Preferred
Stock acquired with Fund$.
"SALE OF THE COMPANY" means any transaction or series of
transactions pursuant to which any Person(s) other than the Investor and its
Affiliates in the aggregate acquire(s) (i) capital stock of the Company
possessing the voting power (other than voting rights acquiring only in the
event of a default, breach or event of noncompliance) to elect a majority of the
Board (whether by merger, consolidation, reorganization, combination, sale or
transfer of the Company's capital stock, shareholder or voting agreement, proxy,
power of attorney or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement
dated as of the date hereof among the Company, the Executive, the Investor and
other shareholders of the Company that may become a party thereto, as amended or
restated from time to time.
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<PAGE> 17
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"TRANSFER" means to sell, transfer, assign, pledge or
otherwise dispose of all or any portion of any interest (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law,
including upon death).
11. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class United
States mail (postage prepaid, return receipt requested) or sent by reputable
overnight courier service (charges prepaid) or by facsimile to the recipient at
the address below indicated:
If to the Executive:
Walter S. Berman
c/o Allied Tours
165 W. 46th Street, 10th Floor
New York, New York 10036
Tel No.: (212) 869-5100
Fax No.: (212) 302-6129
With a copy to:
Vladeck, Waldman, Elias & Engelhard, P.C.
1501 Broadway, Suite 800
New York, New York 10036
Attention: James D. Esseks
Tel No.: (212) 403-7300
Fax No.: (212) 221-3172
If to the Investor or the Company:
c/o Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, NW
Suite 350
Washington, D.C. 20004
Attention: Daniel Raskas
Christopher Temple
Tel No.: (202) 371-0150
Fax No.: (202) 371-0391
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<PAGE> 18
with a copy to:
Hogan & Hartson, LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Christopher J. Hagan
Tel No.: (202) 637-5771
Fax No.: (202) 637-5910
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
12. GENERAL PROVISIONS.
(a) EXPENSES. The Company agrees to pay Executive's reasonable
legal, accounting and other expenses incurred in connection with the negotiation
and execution of this Agreement and the consummation of the transactions
contemplated by this Agreement; provided, however, that the Company will in no
event be responsible for any such expenses incurred in excess of $10,000 for all
Executives.
(b) TRANSFERS IN VIOLATION OF AGREEMENTS. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of this
Agreement or the Shareholders Agreement shall be void, and the Company shall not
record such Transfer on its books or treat any purported transferee of such
Executive Stock as the owner of such stock for any purpose.
(c) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(e) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the
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<PAGE> 19
Company, the Investor and their respective successors and assigns (including
subsequent holders of Executive Stock); provided that the rights and obligations
of Executive under this Agreement shall not be assignable except in connection
with a permitted transfer of Executive Stock hereunder.
(g) CHOICE OF LAW. The corporate law of the Company's state of
incorporation will govern all questions concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits hereto will be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.
(h) REMEDIES AND ARBITRATION. Each of the parties to this
Agreement (including the Investor) will be entitled to enforce its rights under
this Agreement to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. Except for the remedies of the Company
provided in Section 9(c) hereof, the parties hereto agree to submit any disputes
arising out of or relating to this Agreement to binding arbitration in
Washington, D.C. administered by the American Arbitration Association under its
Commercial Arbitration Rules, before a panel of three arbitrators, and judgment
on the award rendered by the arbitrators may be entered into any court having
jurisdiction thereof. The prevailing party in any arbitration shall be entitled
to recover its reasonable attorneys' fees and costs from the other party or
parties.
(i) AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company,
Executive and the Investor.
(j) BUSINESS DAYS. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company's chief executive office is located, the time
period shall be automatically extended to the business day immediately following
such Saturday, Sunday or holiday.
(k) TERMINATION. This Agreement (except for the
provisions of Section 7) shall survive the termination of Executive's
employment with the Company and shall remain in full force and effect after
such termination.
(l) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES; ADJUSTMENTS OF
NUMBERS. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with
generally accepted accounting principles, consistently applied, except that if
because of a change in generally accepted accounting principles the Company
would have to alter a previously utilized accounting method or policy in order
to remain in compliance with generally accepted accounting principles, such
determination or calculation shall continue to be made in accordance with the
Company's previous accounting methods and
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<PAGE> 20
policies. All numbers set forth herein which refer to share prices or amounts
will be appropriately adjusted to reflect stock splits, stock dividends,
combinations of shares and other recapitalizations affecting the subject class
of stock.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
GLOBAL VACATION GROUP, INC.
By: /s/ J. Raymond Lewis
-------------------------------------
J. Raymond Lewis
President and Chief Operating Officer
/s/ Walter S. Berman
-------------------------------------------
WALTER S. BERMAN
Agreed and Accepted:
THAYER EQUITY INVESTORS III, L.P.
By: TC Equity Partners, L.L.C.
Its: General Partner
By: /s/ Christopher Temple
---------------------------
Christopher Temple
Member
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<PAGE> 1
EXHIBIT 10.18
STANLEY FISHER CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "AGREEMENT") is dated as of March
27, 1998 by and between GLOBAL VACATION GROUP, INC. (formerly Allied Bus Corp.),
a New York corporation (the "COMPANY") and STANLEY FISHER (the "CONSULTANT").
RECITALS
A. THAYER EQUITY INVESTORS III, L.P. ("THAYER"), the Company, the
Consultant (in his capacity as a shareholder of the Company) and MICHAEL FISHER,
GREGORY FISHER AND FRANCINE FISHMAN (the other current shareholders of the
Company) ("SHAREHOLDERS"), are parties to that certain Recapitalization
Agreement dated March 18, 1998 herewith (the "RECAPITALIZATION AGREEMENT"),
pursuant to which Thayer and certain other investors have agreed to purchase a
portion of the outstanding stock of the Company from the Consultant and the
other Shareholders; and
B. Pursuant to the Recapitalization Agreement, the Company and the
Consultant agreed to enter into a consulting arrangement upon the closing of the
transactions contemplated by the Recapitalization Agreement, whereby the Company
would engage the Consultant as a consultant to the Company; and
C. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Recapitalization Agreement.
AGREEMENT
In consideration for the payments to be made to the Consultant
pursuant to this Agreement and for the mutual covenants and agreements contained
herein, the parties have agreed that the Consultant shall resign from his
employment with the Company effective as of the closing date of the
Recapitalization Agreement and shall thereafter be engaged as a consultant to
the Company pursuant to the terms and provisions hereof.
1. CONSULTING. The Company hereby engages the Consultant to serve as
an advisor and consultant to the Company and the Consultant hereby accepts such
engagement, on the terms and conditions of this Agreement.
2. TERM OF ENGAGEMENT. The term of Consultant's engagement hereunder
shall commence effective as of the Closing Date under the Recapitalization
Agreement in accordance with the provisions of Section 13 hereof, and shall
continue thereafter until the earlier of (i) December 31, 1999 or (ii) the death
or disability of Consultant. This Agreement shall automatically extend for
additional one month periods, on the same terms and conditions as are
<PAGE> 2
set forth herein, unless at least one month prior written notice is sent from
either Consultant or the Company to the other declining to extend this Agreement
as aforesaid. In addition to any other remedies the Company may have, the
Company may terminate this Agreement in the event of the breach of any of the
provisions of this Agreement by Consultant.
3. DUTIES. The Consultant shall during the term of this Agreement,
be available to the Company for up to fifty (50) days per annum primarily at the
Company's offices in New York, New York or by telephone to provide services to
and be a member of the advisory board which the Company intends to establish to
guide it in its consolidation of the wholesale travel sales industry, and to
provide such other information and consultation to the Company as the Company
may request from time to time. Such services shall be aimed at assisting the
Company with the development and marketing of the Company's business. The
Consultant shall discharge such consulting functions to the best of his ability.
Consultant shall provide information as set forth above to the Chairman and
President (or Chief Executive Officer) of the Company or such other person as
the Company may designate. Information provided to the Company pursuant to the
terms of this Agreement will not be used by Consultant, or any company or entity
which he owns or controls, directly or indirectly, or provided to any company or
other person or organization without, in each case, the prior written consent of
the Company. The restriction in the foregoing sentence shall not apply to
information which is or subsequently becomes part of the public domain (unless
such information became public as a result of Consultant's breach of the
foregoing sentence).
4. COMPENSATION. For providing consulting services hereunder and the
Consultant's undertakings pursuant to Section 6 hereof, the Company shall pay
the Consultant $100,000 per year. Such annual compensation shall be paid to the
Consultant in accordance with the Company's normal payroll schedule.
5. EXPENSES. The Company will reimburse the Consultant for all
reasonable expenses incurred by Consultant in rendering services hereunder upon
submission to the Company of an accounting and substantiation for such expenses;
provided, however, that any expenses or series of related expenses in excess of
$5,000 shall be approved in advance by the Company.
6. COVENANT NOT TO COMPETE.
(a) For and in consideration of the payments made to the
Consultant under this Agreement, Consultant, by signing this Agreement,
covenants and agrees, for a period of four (4) years from and after the date of
this Agreement or one (1) year beyond the term of his engagement as a consultant
by the Company, whichever is shorter, Consultant agrees that he will not,
directly or indirectly without the prior written consent of the Company, for or
on behalf of any entity:
(i) become interested or engaged, directly or
indirectly, as a shareholder, bondholder, creditor, officer,
director, partner, agent, contractor
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<PAGE> 3
with, employer or representative of, or in any manner associated
with, or give financial, technical or other assistance to, any
Person, firm or corporation for the purpose of engaging in the
wholesale travel sales business in competition with the Company or
its Affiliates, within the United States;
(ii) enter into any agreement with, service, assist or
solicit the business of any customers of the Company or its
Affiliates for the purpose of providing wholesale travel services to
such customers in competition with the Company or its Affiliates in
the United States or to cause them to reduce or end their business
with the Company or such Affiliates; or
(iii) hire, retain, or solicit the employment or
services of employees, consultants or representatives of the Company
or its Affiliates for the purpose of causing them to leave the
employment of the Company or its Affiliates;
provided, however, that no owner of less than five percent (5%) of the
outstanding stock of any publicly-traded corporation shall be deemed to be in a
violation of this Section 6.(a) solely by reason thereof.
(b) Consultant represents to the Company that the enforcement
of the restrictions contained in this Agreement would and will not be unduly
burdensome to Consultant. The parties to this Agreement hereby agree that the
covenants contained in this Agreement are reasonable and necessary restrictions
for the purpose of protecting the goodwill and other business interests of the
Company, which includes the Company's expectation of expanding its business
without competition from Consultant for such period. In the event that a court
should determine that any of such restrictions are unenforceable, the parties
agree that this Agreement shall nevertheless be enforceable for the maximum term
and maximum geographical area allowed by law.
(c) Consultant acknowledges and agrees that the covenant not
to compete contained in this Section 6 is in addition to, is separate from and
is based on independent consideration as compared to, that certain
non-competition covenant to which Consultant is bound as a shareholder under
Section 6.4 of the Recapitalization Agreement.
7. CONSULTANT'S REPRESENTATIONS. Consultant hereby represents and
warrants to the Company that (i) the execution, delivery and performance by
Consultant of this Agreement and all other agreements contemplated hereby to
which Consultant is a party do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which Consultant is a party or by which he is bound, (ii) Consultant
is not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity that remains in full
force and effect, and (iii) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of
Consultant, enforceable in accordance with its terms.
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<PAGE> 4
8. NON-ASSIGNABILITY. The Consultant shall have no right to assign
or transfer any rights hereunder.
9. BINDING NATURE; AMENDMENT AND WAIVER; ENTIRE AGREEMENT;
COUNTERPARTS AND FACSIMILE CLOSING. This Agreement shall be binding upon the
Company, its successors and assigns, and upon the Consultant and his respective
heirs, legatees, executors and administrators. This Agreement may not be
modified or amended except by an instrument in writing signed by both the
parties. This Agreement is the entire agreement between the parties hereto with
regard to the subject matter hereof and supersedes all prior discussions,
arrangements or agreements between the parties relating thereto. This Agreement
may be executed in counterparts and executed signature pages sent by facsimile
shall be binding as evidence of acceptance of the terms hereof by the signatory
party.
10. INDEPENDENT CONTRACTOR. The relationship of Consultant to the
Company is that of an independent contractor. Consultant shall not be considered
an employee or agent of the Company or any of its Affiliates, and shall have
absolutely no authority to bind, commit or otherwise obligate the Company or any
of its Affiliates in any way whatsoever. Consultant is not eligible to
participate in any employee benefit or other plan of the Company or any of its
Affiliates.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.
12. CONDITIONAL AGREEMENT. This Agreement and all rights, duties and
obligations of Consultant and the Company contained herein are expressly
conditioned upon the closing of the Recapitalization Agreement. In the event the
Recapitalization Agreement closes, the closing date thereof shall be the
effective date of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date and year first above written.
GLOBAL VACATION GROUP, INC.
By: /s/ J. Raymond Lewis
--------------------------------
J. Raymond Lewis
President and Chief Operating Officer
/s/ Stanley Fisher
-----------------------------------
Stanley Fisher
5
<PAGE> 1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into
as of March 27, 1998 by and between Michael Fisher ("EXECUTIVE") and GLOBAL
VACATION GROUP, INC., d/b/a Allied Tours, a New York corporation (formerly
Allied Bus Corp.) ("EMPLOYER"), with reference to the following facts:
A. Employer, Thayer Equity Investors III, L.P. ("THAYER"), Allied
Tours Holdings Corp. ("ALLIED PARENT") and the existing shareholders of Allied
Parent (collectively, the "SELLERS"), have entered into a Recapitalization
Agreement dated as of March 18, 1998 (the "ACQUISITION AGREEMENT") pursuant to
which Thayer will acquire from Allied Parent a majority of the capital stock of
Employer (the "ACQUISITION").
B. Prior to and following the consummation of the Acquisition,
Executive is a shareholder of Employer.
C. Thayer recognizes that Executive's management services have
contributed to the goodwill inherent in Employer's business, which goodwill
constitutes a substantial asset of Employer.
D. Thayer has required Executive to enter into this Employment
Agreement as a condition precedent to Thayer's consummation of the Acquisition.
E. Executive and Employer desire to enter into an agreement to set
forth the terms and conditions of Executive's employment with Employer.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. DEFINITIONS.. For purposes of this Agreement, the following
terms, including both the singular and the plural and whether or not
capitalized, shall have the meanings assigned to them below, as follows:
(a) "AFFILIATE" means with respect to any Person, any other
Person which directly or indirectly controls, is controlled or is under common
control with such Person.
(b) "BUSINESS" means the business of Employer including,
without limitation, the business of engaging in the wholesale travel services
business.
<PAGE> 2
(c) "CLOSING DATE". has the meaning ascribed to such term in
the Acquisition Agreement.
(d) "COMPETITIVE ACTIVITY" means any business or activity of
Executive or any third party. that is the same as the Business or competitive
with the Business.
(e) "CONFIDENTIAL INFORMATION" means all confidential
information and trade secrets of Employer and its Affiliates including, without
limitation, the following: the identity, written lists, or descriptions of any
customers, referral sources or Organizations; financial statements, cost
reports, or other financial information; contract proposals or bidding
information; business plans; training and operations methods and manuals;
personnel records; fee structures; and management systems, policies or
procedures, including related forms and manuals. "Confidential Information"
shall not include any information or knowledge which: (a) is in the public
domain other than by Executive's breach of this Agreement; (b) is disclosed to
Executive lawfully by a third party who is not under any obligation of
confidentiality; or (c) is now or hereafter becomes generally known in the
industry of Employer.
(f) "NONCOMPETE PERIOD" means the period beginning on the
Closing Date and ending on the later of (i) the first anniversary of the date of
the termination of Executive's employment under any provision of Section 7 or
(ii) the fourth anniversary of the Closing Date of the Acquisition Agreement.
(g) "ORGANIZATION" means any organization that has contracted
with Employer for the performance of services in connection with the Business.
(h) "PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government body..
(i) "PURCHASER" means any individual or entity that purchases
all or substantially all the shares of capital stock or assets of Employer, or
any entity with which Employer merges.
(j) "TRADE AREA" means the United States of America.
2. EMPLOYMENT. Employer hereby employs Executive and Executive
hereby accepts such employment by Employer on the terms and conditions set forth
in this Agreement.
3. TERM. The term of this Agreement (the "TERM") shall commence on
the Closing Date of the Acquisition Agreement and shall continue until the
fourth anniversary of the date hereof, unless sooner terminated as provided for
herein; provided, however, that this Agreement shall automatically renew for
additional one year periods (each a "RENEWAL TERM") on the fourth anniversary of
the date hereof and on each additional anniversary thereafter unless either
Employer or Executive provides the other with written notice of termination at
least sixty
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<PAGE> 3
(60) days prior to the expiration of the Term or any Renewal Term. Either
Executive or Employer may terminate this Agreement with or without Cause as
provided in Section 7 below. Upon termination of Executive's employment with
Employer pursuant to the terms contained in this Agreement, Employer shall have
no further liability to Executive with respect to this Agreement except for
compensation, fringe benefits and perquisites accrued and unpaid on the date of
such termination and except as otherwise specifically set forth herein. Upon
termination of this Agreement by Executive pursuant to the terms contained in
this Agreement, Executive shall have no further liability to Employer with
respect to this Agreement except for the covenants of the Executive contained in
Sections 8 and 9 herein which survive the term of this Agreement and except as
specifically set forth herein.
4. POSITION, DUTIES AND PLACE OF PERFORMANCE.. Executive agrees to
serve as a Senior Vice President of Employer and as Co-President and Co-Chief
Operating Officer at the Allied Tours division of Employer or in such other
capacities on behalf of Employer or its Affiliates of reasonably similar levels
and duties as designated by Employer's Board of Directors ("BOARD") or
Employer's Chief Executive Officer or Chief Operating Officer. Subject to
periodic travel, Executive's principal location for business shall be New York
City, New York. Executive shall perform those duties, if so requested, which are
consistent with such positions.
5. TIME AND EFFORTS DEVOTED.. Executive shall devote all of his
business time, energy, best efforts and attention to the business and affairs of
Employer and shall not engage, directly or indirectly, in any other business or
businesses without the consent of Employer. Notwithstanding the foregoing,
Executive shall have the right to engage in passive investment activities
subject to the limitations of Section 9 hereof.
6. COMPENSATION; BENEFITS AND PERQUISITES..
(a) COMPENSATION. For all services rendered by Executive
during the Term, Employer shall pay Executive a base salary of $250,000 per
annum ($20,833.33 per month), payable in equal installments and regular
intervals at least monthly; provided, however, that such base salary shall be
increased as may be mutually agreed by Employer and Executive in writing from
time to time during the Term (the "BASE SALARY").
(b) BENEFITS AND PERQUISITES. Executive shall be entitled to
the following benefits and perquisites and such other benefits as may be
mutually agreed by Employer and Executive in writing from time to time during
the Term: (i) payment of Executive's reasonable travel and other business
expenses in accordance with Employer's policies applicable to all senior
executives of Employer, provided that Executive properly accounts therefor in
accordance with such policies and provided that any expenses or series of
related expenses in excess of $5,000 shall be approved in advance by the
Employer; (ii) paid 4-weeks vacation, holidays and sick leave in accordance with
Employer's policies applicable to all senior executives of Employer; and (iii)
all other applicable employee benefits, including without limitation, group
medical, dental and long-term disability insurance applicable to all senior
executives of Employer and, at the sole discretion of Employer, participation in
pension, profit
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sharing and other benefits plans of Employer or its Affiliates, in accordance
with Employer's policies applicable to all senior executives of Employer. At the
Employer's expense, Executive shall also be entitled to a monthly allowance for
the lease of an automobile and related expenses (e.g., parking, insurance,
etc.); provided, however, that the amount of the monthly allowance for the lease
of an automobile shall not exceed Executive's current monthly lease payments.
(c) ANNUAL BONUS.
(i) For the fiscal year ending December 31, 1998 (the
"98 FISCAL YEAR"), Executive shall be eligible for an annual bonus (the "1998
BONUS") equal to the sum of (a) $50,000 in the event that the earnings before
interest and taxes of the Allied Tours division of the Employer (the "ALLIED
EARNINGS") for the 98 Fiscal Year exceed the Allied Earnings for December 31,
1997 fiscal year (the "97 FISCAL YEAR") by at least five percent (5%); (b) in
the event that clause (a) above is attained, an additional $25,000 in the event
that the revenues of the Allied Tours division of the Employer (the "ALLIED
REVENUES") for the 98 Fiscal Year exceed the 97 Fiscal Year's Allied Revenues by
at least five percent (5%); (c) in the event that clauses (a) and (b) above are
attained, an additional $25,000 in the event that the Allied Earnings for the 98
Fiscal Year exceed the 97 Fiscal Year's Allied Earnings by at least ten percent
(10%); and (d) in the event that clauses (a), (b) and (c) above have all been
attained, an additional $50,000 (or a maximum total of $150,000) in the event
that the Allied Earnings for the 98 Fiscal Year exceed the 97 Fiscal Year's
Allied Earnings by at least thirteen percent (13%). Notwithstanding the
foregoing, Executive shall be entitled to a pro rata portion of any unattained
1998 Bonus target based on the percentage of such target that has been achieved
(such pro rata amount to be paid only to the extent that (i) with respect to a
pro rata portion of clauses (a) and (b) above, both Allied Earnings and Allied
Revenues for the 98 Fiscal Year exceed those attained in the 97 Fiscal Year and
(ii) with respect to a pro rata portion of clauses (c) or (d) above, the targets
in both (a) and (b) above have been attained). For example, if the Allied
Earnings for the 98 Fiscal Year exceed those for the 97 Fiscal Year by eight
percent (8%) (and assuming clauses (a) and (b) above have both been attained),
then Executive will be entitled to a 1998 Bonus of $90,000 ($75,000 plus $15,000
(60% (i.e., the percentage 8% is between 5% and 10%) multiplied by $25,000). The
1998 Bonus, if any, shall be determined based on generally accepted accounting
principles for any fiscal year; provided, however, that the Board shall in good
faith make adjustments that are necessary or appropriate to account for Force
Majeure (as defined in the Acquisition Agreement) or other extraordinary or
nonrecurring events or other circumstances that should be included or
disregarded in order to fairly determine whether the applicable levels of Allied
Earnings and Allied Revenues have been met, including the exclusion of all
restructuring costs or any costs associated with an IPO. The 1998 Bonus shall be
payable to Executive promptly after its determination.
(ii) The Executive shall also be eligible for an annual
bonus of up to $150,000 commencing with the fiscal year ending December 31, 1999
in the event that the Executive achieves certain performance criteria determined
by the Board for such fiscal year (the "ANNUAL BONUS"). The methodology utilized
for determining whether the performance criteria for the Annual Bonus has been
achieved shall be substantially similar to that utilized in
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determining the 1998 Bonus, including the need to make adjustments for an event
of Force Majeure or other extraordinary or nonrecurring events.
(d) COMPENSATION. In addition, the Employer agrees that
effective upon the closing of any initial public offering of the Employer's
equity securities ("IPO"), the Employer shall grant to Executive an option (the
"OPTION") to purchase up to $1,000,000 worth of the Employer's common stock at
an exercise price per share equal to the initial offering price per share of
such IPO. The Option shall vest in four equal annual installments on the first,
second, third and fourth anniversaries of the date of grant, subject to all
other terms of the Option as set forth in the Employer's stock option plan
applicable to all senior executives of the Employer to be adopted prior to the
IPO and an option agreement to be entered into as of the date of grant. In the
event that Executive's employment is terminated pursuant to either Sections
7(a)(ii), (iv) or (v) hereof or upon the occurrence of any change of control (as
customarily defined in the Employer's stock option plan), then the Option will
be deemed to be fully vested as of such date. Notwithstanding the foregoing, in
the event that Executive resigns prior to the expiration of the Term, then the
Option will immediately terminate and the Option will provide that Executive
shall forfeit to the Employer all profits deemed to have been made by Executive
upon the exercise of the Option during the Term (i.e., the difference, if any,
between the option exercise price and the fair market value of the Employer's
common stock at the time of exercise).
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION EVENTS. Executive's employment under this
Agreement, and the Term, shall terminate and neither party shall have any
further rights or obligations under this Agreement (except for the rights and
obligations under those sections of this Agreement which are continuing and
shall survive such termination), on the earliest to occur of the following
events:
(i) The sixtieth (60th) day following Employer's receipt
of written notice of resignation from Executive.
(ii) The thirtieth (30th) day following Employer's
notice of termination without Cause to Executive.
(iii) On the expiration date of the Term or any Renewal
Term provided that sixty (60) days' prior written notice of
termination has been given by either Employer or Executive.
(iv) The death of Executive.
(v) Upon written notice to Executive by Employer,
effective as of the date of such notice, if Executive shall have
become permanently disabled. For purposes of this Agreement, the
term "PERMANENTLY DISABLED" shall mean a
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condition as determined by the Board in good faith rendering
Executive unable to perform his responsibilities under this
Agreement for a period of at least six (6) consecutive months.
(vi) The termination of Executive by Employer for
"Cause" (as hereinafter defined). For purposes of this Agreement,
"CAUSE" shall mean, subject to the limitations described below, any
wrongful act or omission which constitutes: (A) Executive's
material neglect, refusal or failure to diligently discharge his
duties and abide by the Employer's written policies or other
material obligations under this Agreement, as determined in good
faith by the Board; (B) Executive's conviction of any crime
involving moral turpitude or any felony; (C) Executive's commission
of an act of theft or fraud in connection with his duties hereunder
or Executive engaging in any discrimination or sexual harassment
with respect to employees, customers or vendors of the Employer; (D)
Executive's gross negligence or willful misconduct in connection
with the performance of his duties hereunder; or (E) any material
violation of Sections 8 or 9 hereof by Executive. Notwithstanding
the foregoing, unless Executive has been given written notice of any
act or omission covered by Section 7(a)(vi)(A) or (D) and fails to
cure the same within fifteen (15) days from such notice, such act or
omission shall not constitute Cause.
(b) PAYMENTS AFTER TERMINATION. In the event Employer
terminates Executive's employment during the Term without Cause pursuant to
Section 7(a)(ii) above, Executive shall have no further rights or claims against
the Employer or its Affiliates except for the right to (i) continue to receive
the monthly portion of the Base Salary during a severance period (the "SEVERANCE
PERIOD") ending on the earlier of (x) the expiration date of the Term or any
Renewal Term and (y) the later of (1) December 31, 2000 or (2) 24 months from
the Termination Date (such monthly portion of the Base Salary to be paid out
ratably over the Severance Period in accordance with the Employer's normal
payroll practices); (ii) receive a monthly payment during the Severance Period
equal to the quotient obtained by dividing (A) the prior year's annual bonus
(for any termination during 1998 such annual bonus shall be deemed to be
$150,000) by (B) twelve (12) (such amount to be payable in accordance with the
Employer's normal payroll practices); (iii) reimbursement of all business
expenses properly incurred by the Executive prior to the date of termination;
and (iv) continue to receive during the Severance Period all medical, dental or
other health and welfare benefits provided to Executive prior to his
termination; provided, however, that such benefits shall cease to the extent
Executive receives similar benefits from any business with which he obtains
employment during the Severance Period. In the event of Executive's death or his
permanent disability as determined pursuant to Section 7(a)(v) above, Executive
shall have no further rights or claims against the Employer or its Affiliates
except for (i) the right to receive a monthly portion of his base salary under
Section 6(a) above for a period of six (6) months following the date of
Executive's termination (the "DEATH/DISABILITY PERIOD") payable ratably over the
Death/Disability Period in accordance with the Employer's normal payroll
practices; (ii) reimbursement of all business expenses properly incurred by the
Executive prior to the date of termination; and (iii) in the event of
termination
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due to permanent disability pursuant to Section 7(a)(v) above, the right to
continue to receive during the Death/Disability Period all medical, dental or
other health and welfare benefits provided to Executive prior to his
termination. In the event of termination of the Executive's employment for any
reason other than by Employer without Cause pursuant to Section 7(a)(ii) above,
Executive's death or by Executive's permanent disability pursuant to Section
7(a)(v) above, neither Executive nor his beneficiary or estate will have any
further rights or claims against the Employer or its Affiliates except for (i)
the unpaid portion of his base salary through the date of termination and (ii)
reimbursement of all business expenses incurred by the Executive prior to such
date.
(c) RETURN OF EMPLOYER'S PROPERTY. Executive agrees that,
upon the termination of this Agreement, Executive will immediately surrender to
the Employer all of the Employer's property, including, without limitation,
equipment, funds, lists, manuals, books, records or other Confidential
Information (including all copies of the foregoing) in the possession of, or
provided to, Executive.
8. CONFIDENTIAL INFORMATION AND GOODWILL; INVENTIONS. Executive
acknowledges and agrees as follows:
(a) As a necessary function of Executive's employment
hereunder, Executive will have access to and utilize Confidential Information
which constitutes a valuable and essential asset of Employer's business;
(b) Employer's relationship with its employees and the
recognition of Employer as a provider of efficient and effective services in the
Business are valuable and essential elements of the goodwill of Employer; and
(c) All inventions, innovations, developments, improvements,
methods, designs, analyses, drawings, software, reports and all similar or
related information (whether or not patented or patentable) developed by
Executive which (i) directly or indirectly relate to the Employer or its
Affiliates or the Business, or (ii) result from any work performed by Executive
while employed by Employer or its Affiliates shall belong to the Employer and
its Affiliates. Executive shall promptly disclose all such inventions to the
Board and perform all actions reasonably requested by the Board (whether during
or after the Term or any Renewal Term) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
9. NONCOMPETITION, NONSOLICITATION AND PROTECTION OF CONFIDENTIAL
INFORMATION. Executive covenants and agrees as follows:
(a) NONCOMPETITION. At any time during the Noncompete Period,
he will not, as an officer, director, employee, shareholder, owner, consultant,
principal, agent, trustee or through the agency of any corporation, partnership,
association or agent or agency, except in his capacity as an employee of
Employer, participate or engage in the Business or any
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Competitive Activity in the Trade Area, and shall not, directly or indirectly,
be the owner of more than five percent (5%) of the outstanding capital stock of
any corporation, partnership or other business engaged in any Competitive
Activity in the Trade Area.
(b) NONSOLICITATION. At any time during the period Executive
is employed by Employer or its Affiliates and for a period of two years
thereafter (the "NONSOLICIT PERIOD"), Executive will not, except in his capacity
as an employee of Employer, (i) directly or indirectly induce any customer of
Employer or its Affiliates to patronize any other individual or entity engaged
in any Competitive Activity; (ii) service, canvass, solicit or accept any
business from any customer of Employer or its Affiliates for the purpose of
competing with Employer or its Affiliates; (iii) directly or indirectly request
or advise any customer of Employer or its Affiliates to withdraw, curtail or
cancel such customer's business with Employer or its Affiliates; or (iv)
directly or indirectly disclose to any other Person the name or address of any
customer of Employer or its Affiliates for the purpose of competing with
Employer or its Affiliates. At any time during the Nonsolicit Period, Executive
further agrees that he will not, either directly or indirectly, through any
Person with which he is now or may hereafter become associated, solicit for
employment or employ any person who is or was employed by Employer or its
Affiliates at any time within the one (1) year period immediately preceding such
solicitation or employment.
(c) DISCLOSURE. During the Noncompete Period and the
Nonsolicit Period, Executive will use good faith reasonable efforts to preserve
as confidential and not to, either directly or indirectly, publish, release,
disseminate, disclose or otherwise make available to any third party or use or
otherwise exploit for Executive's own benefit or for the benefit of anyone other
than Employer, any Confidential Information, except as (i) may be expressly
authorized by Employer in its sole discretion, (ii) required during and in the
course of Executive's employment, or (iii) required by a judicial order or
decree of governmental law or regulation.
(d) The restrictive covenants and agreements contained in this
Section 9 are reasonable with respect to subject matter, length of time and
geographic area, for the protection of the legitimate business interests of
Employer, including, without limitation, Employer's Confidential Information,
goodwill and expectation of conducting its business without competition from
Executive in the Trade Area during the Noncompete Period.. Executive further
acknowledges and agrees that the restrictive covenants contained in this Section
9 constitute a material inducement to Employer to enter into this Agreement.
10. ARBITRATION WITH RESPECT TO CERTAIN MATTERS. EXCEPT WITH RESPECT
TO SECTION 9 ABOVE, WHICH IS EXPRESSLY EXCLUDED HEREFROM, THE PARTIES AGREE TO
SUBMIT TO ARBITRATION, IN ACCORDANCE WITH THESE PROVISIONS, ANY CLAIM OR
CONTROVERSY ARISING FROM OR RELATED TO THE ALLEGED BREACH OF THIS AGREEMENT. THE
PARTIES FURTHER AGREE THAT THE ARBITRATION PROCESS AGREED UPON HEREIN SHALL BE
THE EXCLUSIVE MEANS FOR RESOLVING ALL DISPUTES MADE SUBJECT TO ARBITRATION
HEREIN, BUT THAT NO ARBITRATOR SHALL HAVE AUTHORITY TO EXPAND THE SCOPE OF THESE
ARBITRATION PROVISIONS. ANY ARBITRATION HEREUNDER SHALL BE CONDUCTED UNDER THE
MODEL EMPLOYMENT PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION (AAA).
EITHER PARTY MAY INVOKE ARBITRATION PROCEDURES
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HEREIN BY WRITTEN NOTICE FOR ARBITRATION CONTAINING A STATEMENT OF THE MATTER TO
BE ARBITRATED. THE PARTIES SHALL THEN HAVE FOURTEEN (14) DAYS IN WHICH THEY MAY
IDENTIFY A MUTUALLY AGREEABLE, NEUTRAL ARBITRATOR. AFTER THE FOURTEEN (14) DAY
PERIOD HAS EXPIRED, THE PARTIES SHALL PREPARE AND SUBMIT TO THE AAA A JOINT
SUBMISSION, WITH EACH PARTY TO CONTRIBUTE HALF OF THE APPROPRIATE ADMINISTRATIVE
FEE. IN THE EVENT THE PARTIES CANNOT AGREE UPON A NEUTRAL ARBITRATOR WITHIN
FOURTEEN (14) DAYS AFTER WRITTEN NOTICE FOR ARBITRATION IS RECEIVED, THEIR JOINT
SUBMISSION TO THE AAA SHALL REQUEST A PANEL OF THREE ARBITRATORS WHO ARE
PRACTICING ATTORNEYS WITH PROFESSIONAL EXPERIENCE IN THE FIELD OF LABOR AND/OR
EMPLOYMENT LAW, AND THE PARTIES SHALL ATTEMPT TO SELECT AN ARBITRATOR FROM THE
PANEL ACCORDING TO AAA PROCEDURES. UNLESS OTHERWISE AGREED BY THE PARTIES, THE
ARBITRATION HEARING SHALL TAKE PLACE IN NEW YORK, NEW YORK, AT A PLACE
DESIGNATED BY THE AAA. ALL ARBITRATION PROCEDURES HEREUNDER SHALL BE
CONFIDENTIAL. EACH PARTY SHALL BE RESPONSIBLE FOR ITS COSTS INCURRED IN ANY
ARBITRATION, AND THE ARBITRATOR SHALL NOT HAVE AUTHORITY TO INCLUDE ALL OR ANY
PORTION OF SAID COSTS IN AN AWARD, REGARDLESS OF WHICH PARTY PREVAILS. ANY
ARBITRATION AWARDED SHALL BE ACCOMPANIED BY A WRITTEN STATEMENT CONTAINING A
SUMMARY OF THE ISSUES IN CONTROVERSY, A DESCRIPTION OF THE AWARD, AND AN
EXPLANATION OF THE REASONS FOR THE AWARD. IT IS UNDERSTOOD AND AGREED BY THE
PARTIES THAT THEIR AGREEMENTS HEREIN CONCERNING ARBITRATION DO NOT OTHERWISE
ALTER THE TERMS AND CONDITIONS OF EXECUTIVE'S EMPLOYMENT AS PROVIDED BY THIS
AGREEMENT.
11. REMEDIES-COURT ACTION. With respect to each breach or threatened
breach of Section 9 of this Agreement and without waiver of any right or remedy
which the Employer may elect to pursue with respect thereto, all remedies
available at law or in equity, including specific performance and injunctive
relief, may be pursued by the Employer at any time. The agreements and covenants
contained in Section 9 shall not be held invalid or unenforceable because of the
scope of the geographic area or actions subject thereto or restrictions imposed
thereby, or the period of time within which such agreement or covenant is
operative, but any judgment of a court of competent jurisdiction may reform or
define the maximum geographic area and actions subject to and restricted by
Section 9 and the period of time during which such agreement or covenant is
enforceable.
12. CAPTIONS AND NUMBER. The captions of the sections of this
Agreement have been inserted for convenience of reference only and shall not
affect the interpretation of this Agreement. Whenever it appears appropriate
from the context, each term stated in either the singular or plural shall
include both the singular and the plural.
13. ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder may be assigned, transferred or delegated by either party without the
prior written consent of the other party in his or its sole discretion, and any
attempt to do so shall be void; provided, however, that Employer shall have the
right to assign this Agreement or any of its rights or obligations hereunder to
any Affiliate of Employer or to any Purchaser without the consent of Executive.
14. SEPARATE AGREEMENTS. This Agreement shall be deemed to consist
of a series of separate covenants. Should a determination be made by a court of
competent
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jurisdiction that the character, duration, or geographical scope of any
provision of this Agreement is unreasonable in light of the circumstances as
they then exist, then it is the intention and the agreement of the Employer and
Executive that this Agreement shall be construed by the court in such a manner
as to impose only those restrictions on the conduct of Executive which are
reasonable in light of the circumstances as they then exist and as are necessary
to assure the Employer of the intended benefit of this Agreement. If, in any
judicial proceeding, a court shall refuse to enforce all of the separate
covenants deemed included herein because, taken together, they are more
extensive than necessary to assure the Employer of the intended benefit of this
Agreement, then it is expressly understood and agreed by the Employer and
Executive that those covenants which, if eliminated, would permit the remaining
separate covenants to be enforced in such proceeding, shall, for the purpose of
such proceeding, be deemed eliminated from the provisions hereof.
15. POLICIES, REGULATIONS AND GUIDELINES FOR EMPLOYEES. The Employer
might issue policies, rules, regulations, guidelines, procedures, or other
informational material, whether in the form of handbooks, memoranda, or
otherwise, relating to Employer's employees. The parties acknowledge and agree
that such materials are general guidelines for Executive's information and shall
not be construed to alter, modify or amend this Agreement for any purpose
whatsoever.
16. AMENDMENT. No amendment of this Agreement shall be valid unless
made in writing and signed by Employer and Executive.
17. ENTIRE AGREEMENT; AGREEMENT CONFIDENTIAL. This Agreement
contains the entire agreement and understanding between Employer and Executive
with respect to Executive's employment and supersedes all prior agreements,
whether written or oral, relating to Executive's employment with Employer. No
representations, inducements, or agreements have been made to induce either
Executive or Employer to enter into this Agreement which are not expressly set
forth herein. This Agreement is the sole source of rights and duties as between
Employer and employee relating to Executive's employment by Employer. Except as
required by law, Executive and Employer agree to use their respective best
efforts to maintain as confidential the terms of this Agreement.
18. CONDITIONAL AGREEMENT. This Agreement and all of the rights,
duties and obligations of Employer and Executive contained herein are expressly
conditioned upon the consummation of the Acquisition (the "Closing"). In the
event of Closing, the Closing Date shall be the effective date of this
Agreement.
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19. NOTICE. All notices, consents, requests, approvals or other
communications in connection with this Agreement shall be in writing and shall
be delivered personally or sent by certified, registered or express mail,
postage prepaid, or by facsimile transmission (with confirmation of
transmission), and shall be deemed delivered on the date received. Unless
changed by written notice pursuant hereto, the address of each party for the
purposes hereof is as follows:
If to Executive:
c/o Allied Bus Corp.
165 West 46th Street
10th Floor
New York, New York 10036
Telephone: (212) 869-5100
Facsimile: (212) 302-6129
with a copy to:
Rosen & Reade, LLP
757 Third Avenue
New York, New York 10017
Telephone: (212) 303-9047
Facsimile: (212) 755-5600
Attention: Kevin P. Groarke, Esq.
If to Employer:
c/o Global Vacation Group, Inc.
1455 Pennsylvania Avenue, N.W., Suite 350
Washington, D.C. 20004
Telephone: (202) 371-0150
Facsimile: (202) 371-0391
Attention: Daniel Raskas
Roger Ballou
With a copy to:
Hogan & Hartson, LLP
555 13th Street, NW
Washington, D.C. 20004-1109
Telephone: 202/637-5600
Facsimile: 202/637-5910
Attention: Christopher J. Hagan, Esq.
J. Hovey Kemp, Esq.
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Notice given by mail as set out above shall be deemed delivered only when
actually received.
20. LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THAT STATE'S CHOICE OF LAW RULES.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but together they shall
constitute one and the same instrument.
22. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES. Executive represents
and warrants that he has full right and authority to enter into this Agreement
and fully perform his obligations hereunder, that he is not subject to any
non-competition agreement other than with Employer, and that his past, present
and anticipated future activities have not and will not infringe on the
proprietary rights of others. Executive further represents and warrants that he
is not obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, which would conflict with
his obligation to use his best efforts to promote the interests of Employer or
which would conflict with Employer's business as conducted or proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of Employer's business as an officer, director or employee by
Executive will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which Executive is now obligated.
IMPORTANT: THIS AGREEMENT CONTAINS VERY IMPORTANT TERMS GOVERNING
YOUR EMPLOYMENT WITH EMPLOYER. SECTION 9 CONTAINS PROVISIONS WHICH AFFECT YOUR
ABILITY TO TAKE CERTAIN ACTIONS FOLLOWING THE TERMINATION OF THIS AGREEMENT. YOU
SHOULD FEEL FREE TO SEEK ADVICE FROM YOUR ATTORNEY REGARDING ANY MATTER RELATING
TO THIS AGREEMENT. BY EXECUTING THIS AGREEMENT, YOU ARE AFFIRMING THAT YOU HAVE
HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND TO CONSULT WITH YOUR ATTORNEY
IF YOU SO DESIRED, THAT YOU UNDERSTAND THE MEANING AND SIGNIFICANCE OF ALL OF
ITS PROVISIONS, THAT NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE TO YOU
REGARDING YOUR EMPLOYMENT WHICH ARE NOT SET FORTH IN THIS AGREEMENT, AND THAT
YOU ARE FREELY SIGNING THIS AGREEMENT TO OBTAIN EMPLOYMENT WITH EMPLOYER.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
"EXECUTIVE"
/s/ Michael Fisher
--------------------------------------
Michael Fisher
"EMPLOYER"
GLOBAL VACATION GROUP, INC.
By: /s/ J. Raymond Lewis
----------------------------------
J. Raymond Lewis
President and Chief Operating Officer
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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into
as of March 27, 1998 by and between Gregory Fisher ("EXECUTIVE") and GLOBAL
VACATION GROUP, INC., d/b/a Allied Tours, a New York corporation (formerly
Allied Bus Corp.) ("EMPLOYER"), with reference to the following facts:
A. Employer, Thayer Equity Investors III, L.P. ("THAYER"), Allied
Tours Holdings Corp. ("ALLIED PARENT") and the existing shareholders of Allied
Parent (collectively, the "SELLERS"), have entered into a Recapitalization
Agreement dated as of March 18, 1998 (the "ACQUISITION AGREEMENT") pursuant to
which Thayer will acquire from Allied Parent a majority of the capital stock of
Employer (the "ACQUISITION").
B. Prior to and following the consummation of the Acquisition,
Executive is a shareholder of Employer.
C. Thayer recognizes that Executive's management services have
contributed to the goodwill inherent in Employer's business, which goodwill
constitutes a substantial asset of Employer.
D. Thayer has required Executive to enter into this Employment
Agreement as a condition precedent to Thayer's consummation of the Acquisition.
E. Executive and Employer desire to enter into an agreement to set
forth the terms and conditions of Executive's employment with Employer.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms, including both the singular and the plural and whether or not
capitalized, shall have the meanings assigned to them below, as follows:
(a) "AFFILIATE" means with respect to any Person, any other
Person which directly or indirectly controls, is controlled or is under common
control with such Person.
(b) "BUSINESS" means the business of Employer including,
without limitation, the business of engaging in the wholesale travel services
business.
<PAGE> 2
(c) "CLOSING DATE". has the meaning ascribed to such term in
the Acquisition Agreement.
(d) "COMPETITIVE ACTIVITY" means any business or activity of
Executive or any third party that is the same as the Business or competitive
with the Business.
(e) "CONFIDENTIAL INFORMATION" means all confidential
information and trade secrets of Employer and its Affiliates including, without
limitation, the following: the identity, written lists, or descriptions of any
customers, referral sources or Organizations; financial statements, cost
reports, or other financial information; contract proposals or bidding
information; business plans; training and operations methods and manuals;
personnel records; fee structures; and management systems, policies or
procedures, including related forms and manuals. "Confidential Information"
shall not include any information or knowledge which: (a) is in the public
domain other than by Executive's breach of this Agreement; (b) is disclosed to
Executive lawfully by a third party who is not under any obligation of
confidentiality; or (c) is now or hereafter becomes generally known in the
industry of Employer.
(f) "NONCOMPETE PERIOD" means the period beginning on the
Closing Date and ending on the later of (i) the first anniversary of the date of
the termination of Executive's employment under any provision of Section 7 or
(ii) the fourth anniversary of the Closing Date of the Acquisition Agreement.
(g) "ORGANIZATION" means any organization that has contracted
with Employer for the performance of services in connection with the Business.
(h) "PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government body.
(i) "PURCHASER" means any individual or entity that purchases
all or substantially all the shares of capital stock or assets of Employer, or
any entity with which Employer merges.
(j) "TRADE AREA" means the United States of America.
2. EMPLOYMENT. Employer hereby employs Executive and Executive
hereby accepts such employment by Employer on the terms and conditions set forth
in this Agreement.
3. TERM. The term of this Agreement (the "TERM") shall commence on
the Closing Date of the Acquisition Agreement and shall continue until the
fourth anniversary of the date hereof, unless sooner terminated as provided for
herein; provided, however, that this Agreement shall automatically renew for
additional one year periods (each a "RENEWAL TERM") on the fourth anniversary of
the date hereof and on each additional anniversary thereafter unless either
Employer or Executive provides the other with written notice of termination at
least sixty
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(60) days prior to the expiration of the Term or any Renewal Term. Either
Executive or Employer may terminate this Agreement with or without Cause as
provided in Section 7 below. Upon termination of Executive's employment with
Employer pursuant to the terms contained in this Agreement, Employer shall have
no further liability to Executive with respect to this Agreement except for
compensation, fringe benefits and perquisites accrued and unpaid on the date of
such termination and except as otherwise specifically set forth herein. Upon
termination of this Agreement by Executive pursuant to the terms contained in
this Agreement, Executive shall have no further liability to Employer with
respect to this Agreement except for the covenants of the Executive contained in
Sections 8 and 9 herein which survive the term of this Agreement and except as
specifically set forth herein.
4. POSITION, DUTIES AND PLACE OF PERFORMANCE. Executive agrees to
serve as a Senior Vice President of Employer and as Co-President and Co-Chief
Operating Officer at the Allied Tours division of Employer or in such other
capacities on behalf of Employer or its Affiliates of reasonably similar levels
and duties as designated by Employer's Board of Directors ("BOARD") or
Employer's Chief Executive Officer or Chief Operating Officer. Subject to
periodic travel, Executive's principal location for business shall be Los
Angeles, California. Executive shall perform those duties, if so requested,
which are consistent with such positions.
5. TIME AND EFFORTS DEVOTED. Executive shall devote all of his
business time, energy, best efforts and attention to the business and affairs of
Employer and shall not engage, directly or indirectly, in any other business or
businesses without the consent of Employer. Notwithstanding the foregoing,
Executive shall have the right to engage in passive investment activities
subject to the limitations of Section 9 hereof.
6. COMPENSATION; BENEFITS AND PERQUISITES.
(a) COMPENSATION. For all services rendered by Executive
during the Term, Employer shall pay Executive a base salary of $250,000 per
annum ($20,833.33 per month), payable in equal installments and regular
intervals at least monthly; provided, however, that such base salary shall be
increased as may be mutually agreed by Employer and Executive in writing from
time to time during the Term (the "BASE SALARY").
(b) BENEFITS AND PERQUISITES. Executive shall be entitled to
the following benefits and perquisites and such other benefits as may be
mutually agreed by Employer and Executive in writing from time to time during
the Term: (i) payment of Executive's reasonable travel and other business
expenses in accordance with Employer's policies applicable to all senior
executives of Employer, provided that Executive properly accounts therefor in
accordance with such policies and provided that any expenses or series of
related expenses in excess of $5,000 shall be approved in advance by the
Employer; (ii) paid 4-weeks vacation, holidays and sick leave in accordance with
Employer's policies applicable to all senior executives of Employer; and (iii)
all other applicable employee benefits, including without limitation, group
medical, dental and long-term disability insurance applicable to all senior
executives of Employer and, at the sole discretion of Employer, participation in
pension, profit
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sharing and other benefits plans of Employer or its Affiliates, in accordance
with Employer's policies applicable to all senior executives of Employer. At the
Employer's expense, Executive shall also be entitled to a monthly allowance for
the lease of an automobile and related expenses (e.g., parking, insurance,
etc.); provided, however, that the amount of the monthly allowance for the lease
of an automobile shall not exceed Executive's current monthly lease payments.
(c) ANNUAL BONUS.
(i) For the fiscal year ending December 31, 1998 (the
"98 FISCAL YEAR"), Executive shall be eligible for an annual bonus (the "1998
BONUS") equal to the sum of (a) $50,000 in the event that the earnings before
interest and taxes of the Allied Tours division of the Employer (the "ALLIED
EARNINGS") for the 98 Fiscal Year exceed the Allied Earnings for December 31,
1997 fiscal year (the "97 FISCAL YEAR") by at least five percent (5%); (b) in
the event that clause (a) above is attained, an additional $25,000 in the event
that the revenues of the Allied Tours division of the Employer (the "ALLIED
REVENUES") for the 98 Fiscal Year exceed the 97 Fiscal Year's Allied Revenues by
at least five percent (5%); (c) in the event that clauses (a) and (b) above are
attained, an additional $25,000 in the event that the Allied Earnings for the 98
Fiscal Year exceed the 97 Fiscal Year's Allied Earnings by at least ten percent
(10%); and (d) in the event that clauses (a), (b) and (c) above have all been
attained, an additional $50,000 (or a maximum total of $150,000) in the event
that the Allied Earnings for the 98 Fiscal Year exceed the 97 Fiscal Year's
Allied Earnings by at least thirteen percent (13%). Notwithstanding the
foregoing, Executive shall be entitled to a pro rata portion of any unattained
1998 Bonus target based on the percentage of such target that has been achieved
(such pro rata amount to be paid only to the extent that (i) with respect to a
pro rata portion of clauses (a) and (b) above, both Allied Earnings and Allied
Revenues for the 98 Fiscal Year exceed those attained in the 97 Fiscal Year and
(ii) with respect to a pro rata portion of clauses (c) or (d) above, the targets
in both (a) and (b) above have been attained). For example, if the Allied
Earnings for the 98 Fiscal Year exceed those for the 97 Fiscal Year by eight
percent (8%) (and assuming clauses (a) and (b) above have both been attained),
then Executive will be entitled to a 1998 Bonus of $90,000 ($75,000 plus $15,000
(60% (i.e., the percentage 8% is between 5% and 10%) multiplied by $25,000). The
1998 Bonus, if any, shall be determined based on generally accepted accounting
principles for any fiscal year; provided, however, that the Board shall in good
faith make adjustments that are necessary or appropriate to account for Force
Majeure (as defined in the Acquisition Agreement) or other extraordinary or
nonrecurring events or other circumstances that should be included or
disregarded in order to fairly determine whether the applicable levels of Allied
Earnings and Allied Revenues have been met, including the exclusion of all
restructuring costs or any costs associated with an IPO. The 1998 Bonus shall be
payable to Executive promptly after its determination.
(ii) The Executive shall also be eligible for an annual
bonus of up to $150,000 commencing with the fiscal year ending December 31, 1999
in the event that the Executive achieves certain performance criteria determined
by the Board for such fiscal year (the "ANNUAL BONUS"). The methodology utilized
for determining whether the performance criteria for the Annual Bonus has been
achieved shall be substantially similar to that utilized in
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determining the 1998 Bonus, including the need to make adjustments for an event
of Force Majeure or other extraordinary or nonrecurring events.
(d) COMPENSATION. In addition, the Employer agrees that
effective upon the closing of any initial public offering of the Employer's
equity securities ("IPO"), the Employer shall grant to Executive an option (the
"OPTION") to purchase up to $1,000,000 worth of the Employer's common stock at
an exercise price per share equal to the initial offering price per share of
such IPO. The Option shall vest in four equal annual installments on the first,
second, third and fourth anniversaries of the date of grant, subject to all
other terms of the Option as set forth in the Employer's stock option plan
applicable to all senior executives of the Employer to be adopted prior to the
IPO and an option agreement to be entered into as of the date of grant. In the
event that Executive's employment is terminated pursuant to either Sections
7(a)(ii), (iv) or (v) hereof or upon the occurrence of any change of control (as
customarily defined in the Employer's stock option plan), then the Option will
be deemed to be fully vested as of such date. Notwithstanding the foregoing, in
the event that Executive resigns prior to the expiration of the Term, then the
Option will immediately terminate and the Option will provide that Executive
shall forfeit to the Employer all profits deemed to have been made by Executive
upon the exercise of the Option during the Term (i.e., the difference, if any,
between the option exercise price and the fair market value of the Employer's
common stock at the time of exercise).
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION EVENTS. Executive's employment under this
Agreement, and the Term, shall terminate and neither party shall have any
further rights or obligations under this Agreement (except for the rights and
obligations under those sections of this Agreement which are continuing and
shall survive such termination), on the earliest to occur of the following
events:
(i) The sixtieth (60th) day following Employer's receipt
of written notice of resignation from Executive.
(ii) The thirtieth (30th) day following Employer's
notice of termination without Cause to Executive.
(iii) On the expiration date of the Term or any Renewal
Term provided that sixty (60) days' prior written notice of
termination has been given by either Employer or Executive.
(iv) The death of Executive.
(v) Upon written notice to Executive by Employer,
effective as of the date of such notice, if Executive shall have
become permanently disabled. For purposes of this Agreement, the
term "PERMANENTLY DISABLED" shall mean a
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condition as determined by the Board in good faith rendering
Executive unable to perform his responsibilities under this
Agreement for a period of at least six (6) consecutive months.
(vi) The termination of Executive by Employer for
"Cause" (as hereinafter defined). For purposes of this Agreement,
"CAUSE" shall mean, subject to the limitations described below, any
wrongful act or omission which constitutes: (A) Executive's
material neglect, refusal or failure to diligently discharge his
duties and abide by the Employer's written policies or other
material obligations under this Agreement, as determined in good
faith by the Board; (B) Executive's conviction of any crime
involving moral turpitude or any felony; (C) Executive's commission
of an act of theft or fraud in connection with his duties hereunder
or Executive engaging in any discrimination or sexual harassment
with respect to employees, customers or vendors of the Employer; (D)
Executive's gross negligence or willful misconduct in connection
with the performance of his duties hereunder; or (E) any material
violation of Sections 8 or 9 hereof by Executive. Notwithstanding
the foregoing, unless Executive has been given written notice of any
act or omission covered by Section 7(a)(vi)(A) or (D) and fails to
cure the same within fifteen (15) days from such notice, such act or
omission shall not constitute Cause.
(b) PAYMENTS AFTER TERMINATION. In the event Employer
terminates Executive's employment during the Term without Cause pursuant to
Section 7(a)(ii) above, Executive shall have no further rights or claims against
the Employer or its Affiliates except for the right to (i) continue to receive
the monthly portion of the Base Salary during a severance period (the "SEVERANCE
PERIOD") ending on the earlier of (x) the expiration date of the Term or any
Renewal Term and (y) the later of (1) December 31, 2000 or (2) 24 months from
the Termination Date (such monthly portion of the Base Salary to be paid out
ratably over the Severance Period in accordance with the Employer's normal
payroll practices); (ii) receive a monthly payment during the Severance Period
equal to the quotient obtained by dividing (A) the prior year's annual bonus
(for any termination during 1998 such annual bonus shall be deemed to be
$150,000) by (B) twelve (12) (such amount to be payable in accordance with the
Employer's normal payroll practices); (iii) reimbursement of all business
expenses properly incurred by the Executive prior to the date of termination;
and (iv) continue to receive during the Severance Period all medical, dental or
other health and welfare benefits provided to Executive prior to his
termination; provided, however, that such benefits shall cease to the extent
Executive receives similar benefits from any business with which he obtains
employment during the Severance Period. In the event of Executive's death or his
permanent disability as determined pursuant to Section 7(a)(v) above, Executive
shall have no further rights or claims against the Employer or its Affiliates
except for (i) the right to receive a monthly portion of his base salary under
Section 6(a) above for a period of six (6) months following the date of
Executive's termination (the "DEATH/DISABILITY PERIOD") payable ratably over the
Death/Disability Period in accordance with the Employer's normal payroll
practices; (ii) reimbursement of all business expenses properly incurred by the
Executive prior to the date of termination; and (iii) in the event of
termination
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due to permanent disability pursuant to Section 7(a)(v) above, the right to
continue to receive during the Death/Disability Period all medical, dental or
other health and welfare benefits provided to Executive prior to his
termination. In the event of termination of the Executive's employment for any
reason other than by Employer without Cause pursuant to Section 7(a)(ii) above,
Executive's death or by Executive's permanent disability pursuant to Section
7(a)(v) above, neither Executive nor his beneficiary or estate will have any
further rights or claims against the Employer or its Affiliates except for (i)
the unpaid portion of his base salary through the date of termination and (ii)
reimbursement of all business expenses incurred by the Executive prior to such
date.
(c) RETURN OF EMPLOYER'S PROPERTY. Executive agrees that,
upon the termination of this Agreement, Executive will immediately surrender to
the Employer all of the Employer's property, including, without limitation,
equipment, funds, lists, manuals, books, records or other Confidential
Information (including all copies of the foregoing) in the possession of, or
provided to, Executive.
8. CONFIDENTIAL INFORMATION AND GOODWILL; INVENTIONS. Executive
acknowledges and agrees as follows:
(a) As a necessary function of Executive's employment
hereunder, Executive will have access to and utilize Confidential Information
which constitutes a valuable and essential asset of Employer's business;
(b) Employer's relationship with its employees and the
recognition of Employer as a provider of efficient and effective services in the
Business are valuable and essential elements of the goodwill of Employer; and
(c) All inventions, innovations, developments, improvements,
methods, designs, analyses, drawings, software, reports and all similar or
related information (whether or not patented or patentable) developed by
Executive which (i) directly or indirectly relate to the Employer or its
Affiliates or the Business, or (ii) result from any work performed by Executive
while employed by Employer or its Affiliates shall belong to the Employer and
its Affiliates. Executive shall promptly disclose all such inventions to the
Board and perform all actions reasonably requested by the Board (whether during
or after the Term or any Renewal Term) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
9. NONCOMPETITION, NONSOLICITATION AND PROTECTION OF CONFIDENTIAL
INFORMATION. Executive covenants and agrees as follows:
(a) NONCOMPETITION. At any time during the Noncompete Period,
he will not, as an officer, director, employee, shareholder, owner, consultant,
principal, agent, trustee or through the agency of any corporation, partnership,
association or agent or agency, except in his capacity as an employee of
Employer, participate or engage in the Business or any
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Competitive Activity in the Trade Area, and shall not, directly or indirectly,
be the owner of more than five percent (5%) of the outstanding capital stock of
any corporation, partnership or other business engaged in any Competitive
Activity in the Trade Area.
(b) NONSOLICITATION. At any time during the period Executive
is employed by Employer or its Affiliates and for a period of two years
thereafter (the "NONSOLICIT PERIOD"), Executive will not, except in his capacity
as an employee of Employer, (i) directly or indirectly induce any customer of
Employer or its Affiliates to patronize any other individual or entity engaged
in any Competitive Activity; (ii) service, canvass, solicit or accept any
business from any customer of Employer or its Affiliates for the purpose of
competing with Employer or its Affiliates; (iii) directly or indirectly request
or advise any customer of Employer or its Affiliates to withdraw, curtail or
cancel such customer's business with Employer or its Affiliates; or (iv)
directly or indirectly disclose to any other Person the name or address of any
customer of Employer or its Affiliates for the purpose of competing with
Employer or its Affiliates. At any time during the Nonsolicit Period, Executive
further agrees that he will not, either directly or indirectly, through any
Person with which he is now or may hereafter become associated, solicit for
employment or employ any person who is or was employed by Employer or its
Affiliates at any time within the one (1) year period immediately preceding such
solicitation or employment.
(c) DISCLOSURE. During the Noncompete Period and the
Nonsolicit Period, Executive will use good faith reasonable efforts to preserve
as confidential and not to, either directly or indirectly, publish, release,
disseminate, disclose or otherwise make available to any third party or use or
otherwise exploit for Executive's own benefit or for the benefit of anyone other
than Employer, any Confidential Information, except as (i) may be expressly
authorized by Employer in its sole discretion, (ii) required during and in the
course of Executive's employment, or (iii) required by a judicial order or
decree of governmental law or regulation.
(d) The restrictive covenants and agreements contained in this
Section 9 are reasonable with respect to subject matter, length of time and
geographic area, for the protection of the legitimate business interests of
Employer, including, without limitation, Employer's Confidential Information,
goodwill and expectation of conducting its business without competition from
Executive in the Trade Area during the Noncompete Period. Executive further
acknowledges and agrees that the restrictive covenants contained in this Section
9 constitute a material inducement to Employer to enter into this Agreement.
10. ARBITRATION WITH RESPECT TO CERTAIN MATTERS. EXCEPT WITH RESPECT
TO SECTION 9 ABOVE, WHICH IS EXPRESSLY EXCLUDED HEREFROM, THE PARTIES AGREE TO
SUBMIT TO ARBITRATION, IN ACCORDANCE WITH THESE PROVISIONS, ANY CLAIM OR
CONTROVERSY ARISING FROM OR RELATED TO THE ALLEGED BREACH OF THIS AGREEMENT. THE
PARTIES FURTHER AGREE THAT THE ARBITRATION PROCESS AGREED UPON HEREIN SHALL BE
THE EXCLUSIVE MEANS FOR RESOLVING ALL DISPUTES MADE SUBJECT TO ARBITRATION
HEREIN, BUT THAT NO ARBITRATOR SHALL HAVE AUTHORITY TO EXPAND THE SCOPE OF THESE
ARBITRATION PROVISIONS. ANY ARBITRATION HEREUNDER SHALL BE CONDUCTED UNDER THE
MODEL EMPLOYMENT PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION (AAA).
EITHER PARTY MAY INVOKE ARBITRATION PROCEDURES
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HEREIN BY WRITTEN NOTICE FOR ARBITRATION CONTAINING A STATEMENT OF THE MATTER TO
BE ARBITRATED. THE PARTIES SHALL THEN HAVE FOURTEEN (14) DAYS IN WHICH THEY MAY
IDENTIFY A MUTUALLY AGREEABLE, NEUTRAL ARBITRATOR. AFTER THE FOURTEEN (14) DAY
PERIOD HAS EXPIRED, THE PARTIES SHALL PREPARE AND SUBMIT TO THE AAA A JOINT
SUBMISSION, WITH EACH PARTY TO CONTRIBUTE HALF OF THE APPROPRIATE ADMINISTRATIVE
FEE. IN THE EVENT THE PARTIES CANNOT AGREE UPON A NEUTRAL ARBITRATOR WITHIN
FOURTEEN (14) DAYS AFTER WRITTEN NOTICE FOR ARBITRATION IS RECEIVED, THEIR JOINT
SUBMISSION TO THE AAA SHALL REQUEST A PANEL OF THREE ARBITRATORS WHO ARE
PRACTICING ATTORNEYS WITH PROFESSIONAL EXPERIENCE IN THE FIELD OF LABOR AND/OR
EMPLOYMENT LAW, AND THE PARTIES SHALL ATTEMPT TO SELECT AN ARBITRATOR FROM THE
PANEL ACCORDING TO AAA PROCEDURES. UNLESS OTHERWISE AGREED BY THE PARTIES, THE
ARBITRATION HEARING SHALL TAKE PLACE IN NEW YORK, NEW YORK, AT A PLACE
DESIGNATED BY THE AAA. ALL ARBITRATION PROCEDURES HEREUNDER SHALL BE
CONFIDENTIAL. EACH PARTY SHALL BE RESPONSIBLE FOR ITS COSTS INCURRED IN ANY
ARBITRATION, AND THE ARBITRATOR SHALL NOT HAVE AUTHORITY TO INCLUDE ALL OR ANY
PORTION OF SAID COSTS IN AN AWARD, REGARDLESS OF WHICH PARTY PREVAILS. ANY
ARBITRATION AWARDED SHALL BE ACCOMPANIED BY A WRITTEN STATEMENT CONTAINING A
SUMMARY OF THE ISSUES IN CONTROVERSY, A DESCRIPTION OF THE AWARD, AND AN
EXPLANATION OF THE REASONS FOR THE AWARD. IT IS UNDERSTOOD AND AGREED BY THE
PARTIES THAT THEIR AGREEMENTS HEREIN CONCERNING ARBITRATION DO NOT OTHERWISE
ALTER THE TERMS AND CONDITIONS OF EXECUTIVE'S EMPLOYMENT AS PROVIDED BY THIS
AGREEMENT.
11. REMEDIES-COURT ACTION. With respect to each breach or threatened
breach of Section 9 of this Agreement and without waiver of any right or remedy
which the Employer may elect to pursue with respect thereto, all remedies
available at law or in equity, including specific performance and injunctive
relief, may be pursued by the Employer at any time. The agreements and covenants
contained in Section 9 shall not be held invalid or unenforceable because of the
scope of the geographic area or actions subject thereto or restrictions imposed
thereby, or the period of time within which such agreement or covenant is
operative, but any judgment of a court of competent jurisdiction may reform or
define the maximum geographic area and actions subject to and restricted by
Section 9 and the period of time during which such agreement or covenant is
enforceable.
12. CAPTIONS AND NUMBER. The captions of the sections of this
Agreement have been inserted for convenience of reference only and shall not
affect the interpretation of this Agreement. Whenever it appears appropriate
from the context, each term stated in either the singular or plural shall
include both the singular and the plural.
13. ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder may be assigned, transferred or delegated by either party without the
prior written consent of the other party in his or its sole discretion, and any
attempt to do so shall be void; provided, however, that Employer shall have the
right to assign this Agreement or any of its rights or obligations hereunder to
any Affiliate of Employer or to any Purchaser without the consent of Executive.
14. SEPARATE AGREEMENTS. This Agreement shall be deemed to consist
of a series of separate covenants. Should a determination be made by a court of
competent
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jurisdiction that the character, duration, or geographical scope of any
provision of this Agreement is unreasonable in light of the circumstances as
they then exist, then it is the intention and the agreement of the Employer and
Executive that this Agreement shall be construed by the court in such a manner
as to impose only those restrictions on the conduct of Executive which are
reasonable in light of the circumstances as they then exist and as are necessary
to assure the Employer of the intended benefit of this Agreement. If, in any
judicial proceeding, a court shall refuse to enforce all of the separate
covenants deemed included herein because, taken together, they are more
extensive than necessary to assure the Employer of the intended benefit of this
Agreement, then it is expressly understood and agreed by the Employer and
Executive that those covenants which, if eliminated, would permit the remaining
separate covenants to be enforced in such proceeding, shall, for the purpose of
such proceeding, be deemed eliminated from the provisions hereof.
15. POLICIES, REGULATIONS AND GUIDELINES FOR EMPLOYEES. The Employer
might issue policies, rules, regulations, guidelines, procedures, or other
informational material, whether in the form of handbooks, memoranda, or
otherwise, relating to Employer's employees. The parties acknowledge and agree
that such materials are general guidelines for Executive's information and shall
not be construed to alter, modify or amend this Agreement for any purpose
whatsoever.
16. AMENDMENT. No amendment of this Agreement shall be valid unless
made in writing and signed by Employer and Executive.
17. ENTIRE AGREEMENT; AGREEMENT CONFIDENTIAL. This Agreement
contains the entire agreement and understanding between Employer and Executive
with respect to Executive's employment and supersedes all prior agreements,
whether written or oral, relating to Executive's employment with Employer. No
representations, inducements, or agreements have been made to induce either
Executive or Employer to enter into this Agreement which are not expressly set
forth herein. This Agreement is the sole source of rights and duties as between
Employer and employee relating to Executive's employment by Employer. Except as
required by law, Executive and Employer agree to use their respective best
efforts to maintain as confidential the terms of this Agreement.
18. CONDITIONAL AGREEMENT. This Agreement and all of the rights,
duties and obligations of Employer and Executive contained herein are expressly
conditioned upon the consummation of the Acquisition (the "CLOSING"). In the
event of Closing, the Closing Date shall be the effective date of this
Agreement.
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19. NOTICE. All notices, consents, requests, approvals or other
communications in connection with this Agreement shall be in writing and shall
be delivered personally or sent by certified, registered or express mail,
postage prepaid, or by facsimile transmission (with confirmation of
transmission), and shall be deemed delivered on the date received. Unless
changed by written notice pursuant hereto, the address of each party for the
purposes hereof is as follows:
If to Executive:
c/o Allied Bus Corp.
165 West 46th Street
10th Floor
New York, New York 10036
Telephone: (212) 869-5100
Facsimile: (212) 302-6129
with a copy to:
Rosen & Reade, LLP
757 Third Avenue
New York, New York 10017
Telephone: (212) 303-9047
Facsimile: (212) 755-5600
Attention: Kevin P. Groarke, Esq.
If to Employer:
c/o Global Vacation Group, Inc.
1455 Pennsylvania Avenue, N.W., Suite 350
Washington, D.C. 20004
Telephone: (202) 371-0150
Facsimile: (202) 371-0391
Attention: Daniel Raskas
Roger Ballou
With a copy to:
Hogan & Hartson, LLP
555 13th Street, NW
Washington, D.C. 20004-1109
Telephone: 202/637-5600
Facsimile: 202/637-5910
Attention: Christopher J. Hagan, Esq.
J. Hovey Kemp, Esq.
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Notice given by mail as set out above shall be deemed delivered only when
actually received.
20. LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THAT STATE'S CHOICE OF LAW RULES.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but together they shall
constitute one and the same instrument.
22. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES. Executive represents
and warrants that he has full right and authority to enter into this Agreement
and fully perform his obligations hereunder, that he is not subject to any
non-competition agreement other than with Employer, and that his past, present
and anticipated future activities have not and will not infringe on the
proprietary rights of others. Executive further represents and warrants that he
is not obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, which would conflict with
his obligation to use his best efforts to promote the interests of Employer or
which would conflict with Employer's business as conducted or proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of Employer's business as an officer, director or employee by
Executive will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which Executive is now obligated.
IMPORTANT: THIS AGREEMENT CONTAINS VERY IMPORTANT TERMS GOVERNING
YOUR EMPLOYMENT WITH EMPLOYER. SECTION 9 CONTAINS PROVISIONS WHICH AFFECT YOUR
ABILITY TO TAKE CERTAIN ACTIONS FOLLOWING THE TERMINATION OF THIS AGREEMENT. YOU
SHOULD FEEL FREE TO SEEK ADVICE FROM YOUR ATTORNEY REGARDING ANY MATTER RELATING
TO THIS AGREEMENT. BY EXECUTING THIS AGREEMENT, YOU ARE AFFIRMING THAT YOU HAVE
HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND TO CONSULT WITH YOUR ATTORNEY
IF YOU SO DESIRED, THAT YOU UNDERSTAND THE MEANING AND SIGNIFICANCE OF ALL OF
ITS PROVISIONS, THAT NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE TO YOU
REGARDING YOUR EMPLOYMENT WHICH ARE NOT SET FORTH IN THIS AGREEMENT, AND THAT
YOU ARE FREELY SIGNING THIS AGREEMENT TO OBTAIN EMPLOYMENT WITH EMPLOYER.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
"EXECUTIVE"
/s/ Gregory Fisher
------------------------------------------
Gregory Fisher
"EMPLOYER"
GLOBAL VACATION GROUP, INC.
By: /s/ J. Raymond Lewis
---------------------------------------
J. Raymond Lewis
President and Chief Operating Officer
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