<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): June 1, 1999
GLOBAL VACATION GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 0-14353 13-1894567
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
1420 New York Avenue, N.W., Suite 550, Washington, DC 20005
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (202) 347-1800
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF ASSETS OF TRASE MILLER SOLUTIONS, INC.
On June 1, 1999, Global Vacation Group, Inc. ("GVG"), through a
wholly owned subsidiary, acquired substantially all of the assets of Trase
Miller Solutions, Inc. ("TMS"). TMS operated and developed management
information systems that support wholesale packaged tour services. In the
acquisition, GVG acquired TMS's technology platform, an integrated travel
reservation and information processing system. It also purchased TMS's current
assets, furniture, computer and office equipment. Prior to this acquisition, GVG
had a services agreement with TMS which included an option to purchase TMS's
assets. GVG will use the assets acquired to service its operations.
The total purchase price paid for TMS's assets and the assumed
liabilities was $30,090,000, of which (i) $14,050,000 had been prepaid under
GVG's services agreement with TMS, (ii) $14,540,000 was paid at the closing on
June 1, 1999 and (iii) $1,500,000 was placed in escrow to fund future claims, if
any, of GVG. GVG funded the acquisition through its secured credit facility with
The Bank of New York.
The purchase price was determined as a result of arms-length
negotiations between GVG and TMS. During such negotiations, the parties
considered, among other things, the capabilities of TMS's software and systems
and the need of GVG for such technology. The foregoing description of the asset
purchase is only a summary and is qualified in its entirety by reference to the
Asset Purchase Agreement, filed as Exhibit 2.1 hereto and incorporated herein by
reference. A copy of the press release, dated June 2, 1999, issued by GVG
regarding the above-described transaction is attached as Exhibit 99.1 hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired;
It is impractical to provide the required financial statements at the
time of the filing of this report. The required financial statements for the
acquired business will be filed as an amendment to this Form 8-K within 60 days
of the date of this filing, which will be 75 days from the date of the
acquisition.
(b) Pro Forma Financial Information;
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It is impractical to provide the required pro forma information at
the time of the filing of this report. The required pro forma information will
be filed as an amendment to this Form 8-K within 60 days of the date of this
filing.
(c) Exhibits;
2.1 Asset Purchase Agreement dated as of June 1, 1999 by and among
GVG/TMS Acquisition Sub, Inc., Trase Miller Solutions, Inc.,
James F. Miller and for certain limited purposes, Global
Vacation Group, Inc. (Filed as Exhibit 2.1).
99.1 Press Release, dated June 2, 1999, relating to the acquisition
of TMS.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 16, 1999 GLOBAL VACATION GROUP, INC.
By: /s/ Roger H. Ballou
-------------------------------------
Roger H. Ballou
Chairman and Chief Executive Officer
By: /s/ Jay G. Stuart
-------------------------------------
Jay G. Stuart
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT
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2.1 Asset Purchase Agreement dated as of
June 1, 1999 by and among GVG/TMS
Acquisition Sub, Inc., Trase Miller
Solutions, Inc., James F. Miller and
for certain limited purposes, Global
Vacation Group, Inc. (Filed as
Exhibit 2.1).
99.1 Press Release, dated June 2, 1999,
relating to the acquisition of TMS.
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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
GVG/TMS ACQUISITION SUB, INC.
("BUYER"),
TRASE MILLER SOLUTIONS, INC.
(THE "COMPANY")
AND
JAMES F. MILLER
("MILLER")
DATED JUNE 1, 1999
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ARTICLE I DEFINITIONS..............................................................................................2
1.1 Definitions...................................................................................................2
ARTICLE II AGREEMENT OF PURCHASE AND SALE; CLOSING..................................................................9
2.1 Purchased Assets..............................................................................................9
(a) Cash and Cash Equivalents.............................................................................9
(b) Deposits and Accounts Receivable......................................................................9
(c) Real Property.........................................................................................9
(d) Business, Equipment and Supplies......................................................................9
(e) Contracts and Other Agreements Relating to the Business...............................................10
(f) Books, Records, Lists and Other Data..................................................................10
(g) Employment Agreements and Employee Relationships......................................................10
(h) Licenses, Permits.....................................................................................10
(i) Prepayments...........................................................................................10
(j) Intellectual Property.................................................................................10
(k) General Intangibles...................................................................................11
(l) Other Assets..........................................................................................11
2.2 Assumed Liabilities...........................................................................................11
2.3 Excluded Liabilities..........................................................................................11
(a) Liabilities Under This Agreement......................................................................11
(b) Taxes.................................................................................................11
(c) Breach of Contract....................................................................................12
(d) Fees..................................................................................................12
(e) Employee Plans........................................................................................12
(f) Insurable Loss........................................................................................12
(g) COBRA.................................................................................................12
(h) Funded Indebtedness...................................................................................12
(i) Discontinued Operations...............................................................................12
(j) Litigation............................................................................................12
2.4 Title to the Purchased Assets: Documents of Conveyance.......................................................13
2.5 [Reserved]....................................................................................................13
2.6 Purchase Price................................................................................................13
(a) Purchase Price Credits................................................................................13
(b) Initial Payment.......................................................................................13
(c) Escrow Holdback.......................................................................................13
2.7 Closing.......................................................................................................14
2.8 Escrow Arrangements...........................................................................................14
2.9 Post-Closing AA Review........................................................................................14
2.10 Post-Closing Net Worth Adjustment to Remaining Purchase Price................................................15
(a) 3/31/98 Balance Sheet Adjustments.....................................................................15
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(b) Closing Date Balance Sheet Adjustments.................................................................15
(c) Payment of Adjustments.................................................................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND MILLER................................................................................................16
3.1 Due Organization..............................................................................................16
3.2 Subsidiaries..................................................................................................16
3.3 Due Authorization.............................................................................................16
3.4 Financial Statements; Funded Indebtedness; Letters of Credit;
Undisclosed Liabilities....................................................................................17
(a) Financial Statements...................................................................................17
(b) Funded Indebtedness....................................................................................17
(d) Letters of Credit......................................................................................17
(e) Undisclosed Liabilities................................................................................18
3.5 Certain Actions...............................................................................................18
3.6 Properties....................................................................................................19
3.7 Licenses and Permits..........................................................................................19
3.8 Intellectual Property.........................................................................................20
(a) Ownership..............................................................................................20
(b) System and Software Performance........................................................................20
(c) System and Software Capacity...........................................................................21
(d) Documentation..........................................................................................21
(e) Prior Transfers........................................................................................21
3.9 Compliance with Laws..........................................................................................22
3.10 Insurance....................................................................................................22
3.11 Employee Benefit Plans.......................................................................................22
(a) Employee Welfare Benefit Plans.........................................................................22
(b) Employee Pension Benefit Plans.........................................................................23
(c) Employment and Non-Tax Qualified Deferred Compensation
Arrangements........................................................................................23
3.12 Contracts and Agreements.....................................................................................23
3.13 Claims and Proceedings.......................................................................................24
3.14 Taxes........................................................................................................24
3.15 Personne1....................................................................................................25
3.16 Business Relations...........................................................................................26
3.17 Accounts Receivable..........................................................................................26
3.18 Bank Accounts................................................................................................26
3.19 Brokers......................................................................................................26
3.20 Affiliated Transactions......................................................................................26
3.21 Year 2000....................................................................................................27
3.22 Information Furnished........................................................................................27
3.23 ARC Compliance...............................................................................................27
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ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES..................................................................27
4.1 Buyer's Representations and Warranties........................................................................27
(a) Due Organization.......................................................................................27
(b) Due Authorization......................................................................................28
(c) No Broker..............................................................................................28
4.2 GVG's Representations and Warranties..........................................................................28
(a) Due Organization.......................................................................................28
(b) Due Authorization......................................................................................28
(c) No Broker..............................................................................................29
ARTICLE V COVENANTS..................................................................................................29
5.1 Consents of Others............................................................................................29
5.2 The Company's Efforts.........................................................................................29
5.3 Powers of Attorney............................................................................................29
5.4 Conduct of Business Pending Closing...........................................................................29
5.5 Access to Records Before Closing..............................................................................30
ARTICLE VI POST-CLOSING COVENANTS....................................................................................30
6.1 General.......................................................................................................30
6.2 Transition....................................................................................................31
6.3 Confidentiality...............................................................................................31
6.4 Covenant Not to Compete.......................................................................................31
6.5 Litigation Support............................................................................................32
6.6 Assignment of Contracts.......................................................................................32
(a) General................................................................................................32
(b) Trase Miller Teleservices, Inc.........................................................................33
6.7 Change of Name................................................................................................33
6.8 Audits........................................................................................................33
6.9 Related Transactions..........................................................................................33
6.10 ARC Consent..................................................................................................33
6.11 Tax Sharing Arrangement......................................................................................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...............................................................................................35
(c) Discharge of Indebtedness and Liens....................................................................35
(d) Transfer Taxes.........................................................................................35
(e) [Reserved].............................................................................................35
(f) Documents to be Delivered by Miller and the Company....................................................35
(i) Conveyance Documents............................................................................35
(ii) Opinion of Counsel to the Company and Miller...................................................35
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(iii) Certificates..................................................................................36
(iv) Escrow Agreement...............................................................................36
(v) Termination of Employment Agreements............................................................36
(vi) Compliance and Non Disclosure Agreements.......................................................36
(vii) UCC Matters...................................................................................36
(viii) Release......................................................................................36
(ix) Transition Services Agreement..................................................................36
(x) Change of the Company's Name....................................................................37
(xi) Wire Instructions..............................................................................37
(g) Source Code............................................................................................37
7.2 Conditions to Miller's and the Company's Obligations..........................................................37
(a) Covenants, Representations and Warranties..............................................................37
(b) Consents...............................................................................................37
(c) Escrow Agent...........................................................................................37
(d) Assignment and Assumption Agreement....................................................................37
(e) Resolutions and Consents...............................................................................38
(f) Payments to the Company................................................................................38
(g) Transition Services Agreement..........................................................................38
7.3 Waiver........................................................................................................38
ARTICLE VIII INDEMNIFICATION.........................................................................................38
8.1 Indemnification of Buyer......................................................................................38
8.2 Defense of Third Party Claims.................................................................................38
8.3 Procedure for Claims..........................................................................................39
(a) Escrow Claims..........................................................................................39
(b) Other Claims...........................................................................................39
8.4 Tax Audits, Etc...............................................................................................40
8.5 Indemnification of the Company and Miller.....................................................................40
(a) Buyer's Indemnification................................................................................40
(b) GVG's Indemnification..................................................................................40
8.6 Limits on Indemnification.....................................................................................41
ARTICLE IX TERMINATION...............................................................................................41
9.1 Termination...................................................................................................41
9.2 Effect of Termination.........................................................................................42
ARTICLE X MISCELLANEOUS..............................................................................................42
10.1 Modifications; Waivers.......................................................................................42
10.2 Notices......................................................................................................42
10.3 Counterparts; Facsimile Transmission.........................................................................44
10.4 Expenses.....................................................................................................44
10.5 Binding Effect; Assignment...................................................................................44
10.6 Entire and Sole Agreement....................................................................................44
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10.7 Governing Law................................................................................................44
10.8 Survival of Representations, Warranties and Covenants........................................................44
10.9 DISPUTE RESOLUTION...........................................................................................45
10.10 Invalid Provisions..........................................................................................45
10.11 Public Announcements........................................................................................45
10.12 Remedies Cumulative.........................................................................................45
10.13 Third Parties...............................................................................................46
10.14 GVG Support.................................................................................................46
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LIST OF EXHIBITS
Exhibit A Assignment and Assumption Agreement
Exhibit A-1 Assignment of Trademarks
Exhibit B Form of Escrow Agreement
Exhibit C Form of Opinion of Cowan & Minetz
Exhibit D Form of Company's and Stockholder's Officer's Certificate
Exhibit E Form of Compliance Agreement
Exhibit F Form of Non-Disclosure Agreement
Exhibit G Form of Release
Exhibit H Form of Transition Services Agreement
Exhibit I The Company's Accounts and Wire Transfer Instructions
Exhibit J Articles (J-1) and Bylaws J-2)
Exhibit K List Properties
Exhibit L List of Licenses and Permits
Exhibit M List of Intellectual Property
Exhibit N List of Insurance
Exhibit O Employee Plans
Exhibit P List of Contracts
Exhibit Q List of Personnel
Exhibit R List of Bank Accounts
Exhibit S Preliminary 3/31/98 Balance Sheets
Exhibit T-1 Preliminary Closing Date Balance Sheet
Exhibit T-2 Income Statement
LIST OF SCHEDULES
Disclosure Schedules
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
June 1, 1999, by and among GVG/TMS ACQUISITION SUB, INC. ("BUYER"), a Delaware
corporation and a wholly-owned subsidiary of GLOBAL VACATION GROUP, INC., a New
York corporation ("GVG"), TRASE MILLER SOLUTIONS, INC., a Delaware corporation
(the "COMPANY"), and JAMES F. MILLER ("MILLER").
RECITALS
A. GVG, its wholly-owned subsidiary, MTI Vacations, Inc., a Delaware
corporation formerly known as GVGAC No. 1, Inc. ("NEW MTI"), and JFM, Inc., a
Delaware corporation formerly known as MTI Vacations, Inc. ("OLD MTI"), entered
into and consummated an Asset Purchase Agreement dated April 30, 1998 (the
"PURCHASE AGREEMENT"), pursuant to which New MTI purchased certain assets from
Old MTI (the "MTI ACQUISITION");
B. In connection with the MTI Acquisition, Old MTI retained certain
businesses and assets, including certain intellectual property and other
management information service-related assets which were defined in the Purchase
Agreement as "SELLER'S MIS ASSETS;"
C. Contemporaneously with the consummation of the MTI Acquisition, Old
MTI transferred and/or licensed those same Seller's MIS Assets to the Company,
and the Company and New MTI then entered into a MIS Services Agreement dated
April 30, 1998 (the "MIS SERVICES AGREEMENT") pursuant to which the Company (i)
agreed to continue to provide certain management information systems and
services to New MTI and (ii) granted to New MTI an option to acquire all of the
issued and outstanding capital stock of the Company (the "SHARES");;
D. Pursuant to a letter agreement dated August 14, 1998 (the "8/14/98
AGREEMENT"), as amended by that letter agreement dated as of April 30, 1999 (the
"AMENDED 8/14/98 AGREEMENT") the Company, Miller, New MTI and GVG agreed to (i)
expand the outsourcing under the MIS Services Agreement to cover the potential
migration of all of GVG's wholesale travel sales businesses (the MIS Service
Agreement, as so modified by the Amended 8/14/98 Agreement, shall be hereafter
referred to as the "AMENDED MIS SERVICES AGREEMENT") and (ii) modify New MTI's
option to acquire the Company by providing GVG (or a wholly-owned subsidiary of
GVG such as Buyer) with an extended period in which such option could be
exercised pursuant to terms set forth in the Amended 8/14/98 Agreement;
E. Miller owns 95.4% of the Shares;
F. The Company owns and leases certain assets, real and personal,
tangible and intangible, which are used in the conduct of the Company's
business;
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G. Buyer has exercised the option to acquire the Company pursuant to the
8/14/98 Agreement, and Buyer desires to purchase from the Company, and the
Company desires to sell to Buyer substantially all of the assets used in the
operation of the Company's business on the terms and subject to the conditions
hereinafter set forth in this Agreement; and
H. In connection with its purchase of such assets from the Company, Buyer
desires to assume certain of the liabilities and obligations of the Company, and
GVG, as the Buyer's parent, desires to provide the Company comfort that it will
provide Buyer with the financial means necessary to pay the Purchase Price and
to support such assumption and performance of liabilities and obligations, all
as more specifically set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto covenant and agree
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In this Agreement, the following terms have the meanings
specified or referred to in 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, Buyer's independent accountants.
"AA REVIEWED BALANCE SHEETS" has the meaning set forth in SECTION 2.9
below.
"AA REVIEWED 3/31/98 BALANCE SHEET" has the meaning set forth in
SECTION 2.9 below.
"AA REVIEWED CLOSING DATE BALANCE SHEET" has the meaning set forth in
SECTION 2.9 below.
"AA REVIEWED FINANCIAL STATEMENTS" has the meaning set forth in
SECTION 2.9 below.
"AFFILIATE" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person; provided, however, that for purposes of this Agreement, the
term "Affiliate" when used in connection with the Company or Miller shall
include, without limitation, each of the entities comprising the Trase Miller
Group.
"ACQUISITION PROPOSAL" has the meaning specified in SECTION 5.4(d).
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"AMENDED 8/14/98 AGREEMENT" has the meaning specified in RECITAL D.
"AMENDED MIS SERVICES AGREEMENT" has the meaning specified in RECITAL
D.
"ARC" means Airlines Reporting Corporation.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the General Assignment,
Bill of Sale and Assumption Agreement to be executed by the parties on the
Closing Date in substantially the form of EXHIBIT A.
"ASSIGNMENT OF TRADEMARKS" means the Assignment of Trademarks to be
executed by the Company on the Closing Date and to be filed in the patent and
trademark office in substantially the form of EXHIBIT A-1.
"ASSUMED LIABILITIES" has the meaning specified in SECTION 2.2.
"BUSINESS" means the Company's and/or Old MTI's ownership, operation,
maintenance and development of management and other information systems
(including, without limitation the System) that manage, support and service
wholesale package tour operator (and other supporting or related data processing
center) services, processes, capabilities, functions and operations, including,
without limitation, the services currently covered by the Amended MIS Services
Agreement or provided to any other Person by the Company, and/or the ownership,
operation maintenance and development of information systems that manage,
support and service the business, operations and assets transferred to New MTI
under the Purchase Agreement. The term "Business" shall also be deemed to
include any services which are incidental to the Business, including, without
limitation, any consulting services (including contract programming) which are
incidental to the Business and the managing and maintenance of (i) service
bureaus pursuant to which such services are provided to third parties, (ii) the
development or provisions of interface protocols internal and external to any
such information systems, including, without limitation, connections or linkages
to any computer reservation system and (iii) Internet web sites providing access
to any such systems, in each case provided by the Company to any Person
(including Affiliates of the Company or Miller).
"BUYER" has the meaning specified in the first paragraph of this
Agreement.
"CLOSING" means the closing of the transfer of the Purchased Assets
and the Assumed Liabilities from the Company to Buyer.
"CLOSING DATE" has the meaning specified in SECTION 2.7.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning specified in the first paragraph of this
Agreement.
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"CONFIDENTIAL INFORMATION" means (i) terms and provisions of this
Agreement or the transactions to be consummated pursuant hereto, and (ii)
confidential information and trade secrets of the Company, GVG, or Buyer
including, without limitation, any of the same comprising the identity, lists or
descriptions of any customers, suppliers, vendors, referral sources or
organizations; financial statements, cost reports or other financial information
(and any analyses or compilations thereof or reports thereon); contract terms or
proposals, or bidding information; business plans and training and operations
methods and manuals; personnel records; fee structure; computer software; and
management systems, policies or procedures, including related forms and manuals.
Confidential Information shall not include any information (i) which is
disclosed pursuant to subpoena or other legal process, (ii) which has been
publicly disclosed by means other than by a breach of a confidentiality
agreement, or (iii) which is subsequently disclosed by any third party not in
breach of a confidentiality agreement.
"CONTRACTS" has the meaning specified in SECTION 3.12.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"CUSTOM PROGRAMS" has the meaning set forth in the definition of
Software.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached to this
Agreement pursuant to which exceptions to Miller'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.
"DOCUMENTATION" means, with respect to the System and all Software,
copies of source code, computer programs, all Software documentation, all user
and training manuals, program "help" files and any other materials supplied or
developed by the Company for use with the System or the Software or with any
newly developed versions, "Releases," modifications or amendments thereof.
"EBIT" shall mean the earnings of the Company before interest
expenses and taxes, as calculated in accordance with GAAP and consistent with
past practices.
"8/14/98 AGREEMENT" has the meaning specified in RECITAL D.
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, restrictive covenant or other restrictions of any kind.
"ENVIRONMENTAL AND OSHA OBLIGATIONS" has the meaning specified in
SECTION 3.12.
"EQUITABLE EXCEPTIONS" shall have the meaning specified in SECTION
3.3.
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"EQUIPMENT" has the meaning specified in SECTION 2.1(d).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means The Bank of New York.
"ESCROW AGREEMENT" means the Escrow Agreement to be executed by and
among Miller, the Company, Buyer and the Escrow Agent in the form of EXHIBIT B.
"ESCROW PERIOD" has the meaning specified in SECTION 2.8.
"ESCROW SUM" has the meaning specified in SECTION 2.8.
"ESCROW SUM REDUCTION" has the meaning specified in SECTION 2.8.
"EXCLUDED LIABILITIES" has the meaning specified in SECTION 2.3.
"FINANCIAL STATEMENTS" has the meaning specified in SECTION 3.7.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of the Company for
borrowed money or other interest-bearing indebtedness; (ii) capital lease
obligations of the Company; (iii) obligations of the Company to pay the deferred
purchase or acquisition price for goods or services, other than trade accounts
payable or accrued expenses in the ordinary course of business on no more than
90 day payment terms; (iv) indebtedness of others guaranteed by the Company or
secured by an Encumbrance on the Company's property; and (v) indebtedness of the
Company under extended credit terms of more than 30 days from vendors provided
to the Company.
"GAAP" shall mean generally accepted accounting principles,
consistently applied by the Company in the preparation of its financial
statements. As permitted by GAAP, research and development expenditures are
expensed as incurred.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or regulatory body, including ARC.
"GOVERNMENTAL PERMITS" has meaning specified in SECTION 3.7.
"GVG" has the meaning specified in the first paragraph of the
Recitals.
"HSR ACT" means the 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.
"INDEPENDENT ACCOUNTS" has the meaning specified in SECTION 2.9.
"INTELLECTUAL PROPERTY" has the meaning specified in SECTION 2.1(j).
"KNOWLEDGE" (whether or not capitalized) shall mean, in respect of
the Company, actual knowledge (after reasonable inquiry) of Miller and the
following officers of the Company: Messrs. Mark Rittmanic, Mark Wilson, Matt
Hartzman, Steve Johnson, Tom Mikrut and Frank Silzer; in respect of Miller,
"Knowledge" shall mean actual knowledge (after reasonable inquiry).
"MATERIAL" (whether or not capitalized) shall, where appropriate in
context of its use in making the representations and warranties set forth in
ARTICLE III, be deemed to mean an amount of money greater than $50,000.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means a
material adverse change or effect on the assets, properties, Business,
operations, liabilities, financial condition or prospects of the Company and its
subsidiaries, taken as a whole. In determining whether a "Material Adverse
Change" or "Material Adverse Effect" has occurred in the context of the use of
such terms in the Company's and Miller'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
$50,000 per occurrence or $150,000 in the aggregate shall be conclusive.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning specified in
SECTION 3.4(a).
"NET WORTH" means the Company's assets minus its liabilities,
determined in accordance with GAAP.
"NEW MTI" has the meaning specified in RECITAL A.
"OLD MTI" has the meaning specified in RECITAL A.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, and any regulations promulgated
thereunder.
"PERMITTED EXCEPTION" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, or (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value or
the existing use of the property affected by such lien or imperfection.
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"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"PRELIMINARY 3/31/98 ACTUAL BALANCE SHEET" means the Company's
unaudited balance sheet dated as of March 31, 1998, prepared in accordance with
GAAP and on a consistent basis, attached hereto as EXHIBIT S (the first column).
"PRELIMINARY 3/31/98 NET WORTH" means, with respect to the
Preliminary 3/31/98 Pro Forma Balance Sheet, the difference between the
Company's assets and liabilities, determined in accordance with GAAP.
"PRELIMINARY 3/31/98 PRO FORMA BALANCE SHEET" means the Preliminary
3/31/98 Balance Sheet as adjusted by the Pro Forma Adjustments, such balance
sheet attached hereto as the last column of EXHIBIT S.
"PRELIMINARY CLOSING DATE BALANCE SHEET" has the meaning specified in
SECTION 2.9.
"PRELIMINARY CLOSING DATE NET WORTH" has the meaning specified in
SECTION 2.10(b).
"PRO FORMA ADJUSTMENTS" means the adjustments to the Preliminary
3/31/98 Actual Balance Sheet set forth in the second column of EXHIBIT S.
"PURCHASE AGREEMENT" has the meaning specified in RECITAL A.
"PURCHASE PRICE" has the meaning specified in SECTION 2.6.
"PURCHASED ASSETS" has the meaning specified in SECTION 2.1.
"REAL PROPERTY" has the meaning specified in SECTION 2.1(c).
"REMAINING PURCHASE PRICE" has the meaning specified in SECTION
2.6(a).
"REQUIREMENTS OF LAWS" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Governmental Body (including, without limitation, those
pertaining to electrical, building, zoning, environmental and occupational
safety and health requirements) or common law.
"SHAREHOLDERS" means Miller, William Cowan, Sandra Klubeck and
William J. Bowe.
"SOFTWARE" means all of the computer software utilized by the
Business in the System, whether by or for Old MTI, the Company or New MTI
pursuant to the Amended MIS Services Agreement, including the Company's
proprietary software and any licensed
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computer software ("TMS SOFTWARE") and any computer application or other
software programs created or developed for New MTI or the Business by the
Company, including, without limitation, additions or modifications which are
intended to enhance or customize TMS Software specifically for the Company's
exclusive use ("CUSTOM PROGRAMS"). For reference, the term "SOFTWARE" will be
used to refer to both TMS Software and Custom Programs, and references to each
of these terms shall be deemed to include the corresponding Documentation
associated with each.
"SYSTEM" means all of the Company's owned, leased and licensed
hardware, software (including the Software) and communications facilities and
resources owned or utilized by the Business, and all methods of interface
between such items and third party hardware, software and communication
facilities, in each case within the control or under the responsibility of the
Company, as well as all updates, modifications, changes and substitutions made
from time to time and which such hardware, software, communications facilities,
resources and methods of interface allow the Company to, among other things,
provide electronic distribution, on-line reservations processing and booking,
ticketing, connectivity to SABRE, Apollo and Worldspan airline global
distribution systems, cash management, accounting and related services. The
"System" does not include any non-TMS computer reservation system,
telecommunications, credit card software or other non-TMS software or system
with which the Software interfaces, but does include all components developed by
the Company to facilitate communications with third party hardware, software and
communication facilities, including, without limitation, components developed to
interface with the Internet.
"TAX" or "TAXES" means any federal, state, local or foreign income,
alternative or add-on minimum, gross income, gross receipts, windfall profits,
severance or parachute, property, production, sales, use, transfer, gains,
license, excise, employment, payroll, withholding or minimum tax, transfer,
goods and services, or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
any penalty, addition to tax or additional amounts imposed thereon by any
Governmental Body.
"TAX RETURN" means any return, report or similar statement required
to be filed with respect to any Taxes (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return and declaration of estimated Tax.
"TMS SOFTWARE' has the meaning set forth in the definition of
Software.
"TRANSITION SERVICES AGREEMENT" means the agreement, in substantially
the form of EXHIBIT H, providing for the Company's ongoing provision until
December 31, 1999 of services relating to payroll administration, insurance and
employee benefits in place in respect of the Business or its employees, and such
other matters as reflected therein, prior to the Closing.
"TRASE MILLER GROUP" means the Company, Trase Miller Technologies,
Inc. ("TMT"), Trase Miller Teleservices, Inc. ("TMTS"), and JFM, Inc.
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"YEAR 2000 COMPLIANT" shall mean any function, process, system or
other device or item, which, regardless of the particular date, year, century or
other chronological variable: (a) can accurately process date information (e.g.,
accept date input, provide date output and perform calculations and comparisons
on dates and portions of dates); (b) which can function without interruption due
to a change in date, ensuring that any results, data or information processed,
generated or transmitted in connection therewith, shall be correct, valid and
not adversely affected and, if applicable, (c) includes date data century
recognition, calculations which accommodate same century and multi-century date
values and formulae, as well as date data interfaces (to application and
operating system software, as applicable) reflecting the correct date, year and
century.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE; CLOSING
2.1 PURCHASED ASSETS. On the terms and subject to the conditions and
exceptions contained herein, the Company agrees to sell to Buyer and Buyer
agrees to purchase from the Company at the Closing and on the Closing Date, free
and clear of all Encumbrances, except for those permitted under SECTION 2.2
hereof, all of the Company's right, title and interest in and to all assets of
the Business properly included in the Company's April 30, 1999 balance sheet for
the Business, subject to changes in the ordinary course of business (and
consistent with the Company's covenants in SECTION 5.4) from such date through
the Closing Date, together with all other assets owned by the Company
(collectively, the "PURCHASED ASSETS"). The Purchased Assets include, without
limitation, the following as they exist on the Closing Date:
(a) CASH AND CASH EQUIVALENTS. Cash and cash equivalents;
(b) DEPOSITS AND ACCOUNTS RECEIVABLE. All accounts receivable and
other deposits, advances and suppliers' or vendors' rebates and all other
receivables of the Business and existing on the Closing Date, in the ordinary
course of the operation of the Business; provided, however, that the Company's
accounts receivable and notes receivable from Miller and JFM Enterprises, Inc.,
set forth under the item "Due from related parties" in the Preliminary Closing
Date Balance Sheet are excluded from the Purchased Assets and the Company's
accounts payable and notes payable to Miller and JFM Enterprises, Inc., set
forth under the item "Due to related parties" in the Preliminary Closing Date
Balance Sheet are Excluded Liabilities;
(c) REAL PROPERTY. All leases of real property and interests,
options or rights with respect to the Business identified as leased and
described on EXHIBIT K attached hereto (collectively, the "REAL PROPERTY");
(d) BUSINESS, EQUIPMENT AND SUPPLIES. All tangible personal
property, equipment, supplies, furniture, leasehold improvements, including but
not limited to, leases and subleases of personal property or equipment, all
automobiles and other vehicles, computers and peripherals and all maintenance
and other operating supplies and other miscellaneous tangible personal property
of the Company used in the Business, whether or not
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located at or on the Real Property at the Closing Date and whether or not
reflected on the April 30, 1999 balance sheet (collectively, the "EQUIPMENT");
(e) CONTRACTS AND OTHER AGREEMENTS RELATING TO THE BUSINESS. All
rights of the Company (or of the Company's Affiliates to the extent that such
Affiliate's rights are used in the conduct or operation of the Business and
Purchased Assets) as of the Closing Date under all (written or oral) contracts,
agreements or arrangements used in the Business;
(f) BOOKS, RECORDS, LISTS AND OTHER DATA. All files, books,
records, invoices, accounts, surveys, customer lists and records, vendor and
supplier lists, catalogs, price lists, marketing and advertising information,
purchasing histories, profiles and materials, technical bulletins, books and
records of account and other financial, vendor, customer and credit data, and
all computer programs, software, hardware, firmware, tapes and other materials
used to store, record or produce such data, owned or leased by the Company and
used in the Business; provided, however, that with respect to items leased by
the Company, only the Company's leasehold rights are conveyed hereby;
(g) EMPLOYMENT AGREEMENTS AND EMPLOYEE RELATIONSHIPS. All rights
of the Company under all non-compete and non-disclosure agreements.
(h) LICENSES, PERMITS. Except for those which are listed in
EXHIBIT L (under SECTION 3.7) as being not assignable by operation of the laws
of the relevant Governmental Body (e.g., qualifications of the Company to do
business as a foreign corporation in a given jurisdiction), all material
federal, state, local and other governmental licenses, permits, approvals and
authorizations that are used in the operation of the Business;
(i) PREPAYMENTS. All security, utility or similar deposits or
prepaid expenses of the Company used in the Business;
(j) INTELLECTUAL PROPERTY. All (i) patents, patent applications,
patent disclosures, inventions, processes, designs, formulae (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing
(including without limitation Trase Miller Solutions, Inc. or TMS); (iii)
copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including, but not limited to ideas, business and marketing plans,
and customer vendor and supplier lists and related information); (vi) the
System; (vii) Software; and (viii) Documentation, including without limitation
the intellectual property listed on EXHIBIT M (collectively, the "INTELLECTUAL
PROPERTY");
(k) GENERAL INTANGIBLES. All general intangibles used by the
Business including, without limitation, all goodwill as a going concern and any
and all causes of action or claims of the Company against any third party; and
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(l) OTHER ASSETS. All other assets of the Company, whether or not
reflected on the books or records of the Company or the Business.
2.2 ASSUMED LIABILITIES. On the terms and subject to the conditions
and exceptions contained herein, at Closing, the Company shall assign and
delegate to Buyer, and Buyer shall assume and undertake to pay, defend,
discharge and perform in full when due the liabilities of the Company (insofar
as such liabilities relate to the Business and the Purchased Assets) properly
included in the Company's April 30, 1999 balance sheet for the Business, subject
to changes in the ordinary course of business from such date through the Closing
Date, including, without limitation, all of the Company's obligations under the
contracts included in the Purchased Assets pursuant to SECTION 2.1(e) and all of
the Company's obligations arising after the Closing Date in the ordinary course
of conducting the Business (subject to the Company's and Miller's
indemnification obligations set forth in SECTION 8.1, and other than any
Excluded Liabilities) (the "ASSUMED LIABILITIES"), and no others, pursuant to
this Agreement and the Assignment and Assumption Agreement referred to in
SECTION 2.4.
2.3 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
contained in this Agreement, Buyer will not assume or be liable for and the
Company will retain and remain responsible for all of the Company's debts,
liabilities and obligations of any nature whatsoever, other than the Assumed
Liabilities, whether accrued, absolute or contingent, whether known or unknown,
whether due or to become due and whether related to the Business and the
Purchased Assets or otherwise, and regardless of when asserted (the "EXCLUDED
LIABILITIES"), including, without limitation, the following liabilities or
obligations of the Company (none of which will constitute Assumed Liabilities):
(a) LIABILITIES UNDER THIS AGREEMENT. All of the Company's
liabilities or obligations under this Agreement or under any other agreement
between the Company on the one hand and Buyer on the other hand entered into on
or after the date of this Agreement;
(b) TAXES. All liabilities and obligations of the Company for
Taxes which are imposed on or measured by income, for any period, and all of the
Company's liabilities or obligations with respect to any Taxes not specifically
accrued on the April 30, 1999 balance sheet for the Business, subject to changes
in the ordinary course of business from the date of such balance sheet through
the Closing Date;
(c) BREACH OF CONTRACT. All of the Company's liabilities or
obligations arising out of or in connection with the breach of any contract or
agreement included in the Purchased Assets, other than for such amounts as are
adequately and properly reserved for in the April 30, 1999 balance sheet,
subject to changes in the ordinary course of business from the date of such
balance sheet through the Closing Date;
(d) FEES. All of the Company's liabilities or obligations for
expenses, Taxes or fees incident to or arising out of the negotiation,
preparation, approval, or authorization of this Agreement or the consummation
(or preparation for the consummation) of the transactions contemplated hereby,
including all attorneys' and accountants' fees, brokerage fees, consultants'
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fees and finders' fees, and sales, bulk sales and transfer taxes that are the
Company's responsibility hereunder;
(e) EMPLOYEE PLANS. The Company's obligations and liabilities for
the period up to and including the Closing Date which relate to any "employee
welfare benefit plan" (as defined in SECTION 3.11(a)) or any "employee pension
benefit plan" as defined in SECTION 3.11(b) (including unfunded pension plan
liabilities and retiree health benefits);
(f) INSURABLE LOSS. All of the Company's liabilities or
obligations that are not otherwise Excluded Liabilities hereunder against which
the Company is insured or otherwise contractually indemnified by a Person other
than Buyer but only to the extent the Company receives the proceeds of such
insurance or indemnification;
(g) COBRA. Any liability or obligation under COBRA to any person
covered by the Company's health plans;
(h) FUNDED INDEBTEDNESS. Any liability or obligation for Funded
Indebtedness (unless included in calculating the Preliminary Closing Date Net
Worth) or any other liability or obligation of the Company that does not relate
to, or arise from, the Business or the Purchased Assets including, but not
limited to, the Company's accounts payable and notes payable to Miller and JFM
Enterprises, Inc., set forth under the item "Due to related parties" in the
Preliminary Closing Date Balance Sheet;
(i) DISCONTINUED OPERATIONS. Any liability or obligation
pertaining to any discontinued operation owned or operated by the Company and
related to the Business as it was operated by the Company prior to the Closing
Date; and
(j) LITIGATION. Any and all claims and liabilities arising out of
the bankruptcy of Service Marine Industries, Inc. or disclosed in SECTION 3.13
of the Disclosure Schedule.
2.4 TITLE TO THE PURCHASED ASSETS; DOCUMENTS OF CONVEYANCE . At
Closing, the Company shall convey all of its right, title and interest in and to
the Business and the Purchased Assets to Buyer free and clear of all
liabilities, obligations and Encumbrances, excepting only the Assumed
Liabilities. Title to the Purchased Assets shall be conveyed pursuant to the
Assignment and Assumption Agreement, the Assignment of Trademarks and by such
other documents as are reasonably acceptable to counsel for the Company and
counsel for Buyer in accordance with the terms hereof. Each of the parties
hereto agrees to use its reasonable commercial efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things reasonably
necessary, proper or advisable, whether before or after Closing, to ensure
transfer of title to the Purchased Assets to Buyer occurs as contemplated
hereunder; provided, however, that it is the intention of the parties that if it
is determined post-Closing that a particular asset or liability should have
been, but was not, properly transferred at Closing to the Buyer (as a Purchased
Asset or an Assumed Liability), the parties will cooperate to transfer the
subject asset or liability to the Buyer.
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2.5 [RESERVED].
2.6 PURCHASE PRICE. The total purchase price for the Purchased Assets
and the Assumed Liabilities shall be equal to $30,090,000 (the "PURCHASE
PRICE"). The Purchase Price shall be allocated among the Purchased Assets as
determined by Buyer. The Purchase Price shall be payable by Buyer as follows:
(a) PURCHASE PRICE CREDITS. Prior to the Closing Date, Buyer has
paid the Company the following payments which shall be credited to the Purchase
Price: (i) the $6,750,000 Up Front Option Payment, (ii) the $2,300,000 Option
Extension Payment and (iii) the $5,000,000 Option Closing Extension Payment (as
such terms are defined in the Amended 8/14/98 Agreement), in an aggregate amount
of $14,050,000 and the Company and Miller hereby acknowledge receipt of the
same. The remaining balance of the Purchase Price (the "REMAINING PURCHASE
PRICE") shall be paid pursuant to paragraphs (b) through (c) of this SECTION
2.6.
(b) INITIAL PAYMENT. $14,540,000, representing the Remaining
Purchase Price less the escrow holdback required by SECTION 2.6(c) below, will
be paid, at the direction of the Company, in cash by wire transfer of funds at
the Closing to the Company's accounts.
(c) ESCROW HOLDBACK. $1,500,000 of the Remaining Purchase Price
will be paid in cash by wire transfer of funds at the Closing to the Escrow
Agent to be held in escrow pursuant to SECTION 2.8 for satisfaction of the
Company's and the Miller's indemnification obligations specified in SECTION 8.1.
2.7 CLOSING. Subject to the terms of Article VII, the Closing of the
purchase and sale of the Purchased Assets and the Assumed Liabilities
contemplated by this Agreement shall take place at (i) 9:00 a.m., Eastern Time,
at the offices of Hogan & Hartson L.L.P., 555 13th Street, N.W. in Washington,
D.C. on June 1, 1999, with a preclosing on or before May 28, 1999 or (ii) on
such other date and time as the parties shall agree (the "CLOSING DATE").
2.8 ESCROW ARRANGEMENTS. Pursuant to the Escrow Agreement to be
entered into among Miller, the Company, Buyer and the Escrow Agent, the portion
of the Remaining Purchase Price specified in SECTION 2.6(c) shall be delivered
to the Escrow Agent at Closing in immediately available funds. Such monies
(which, together with all interest accrued thereon, is hereinafter referred to
as the "ESCROW SUM") shall be held pursuant to the terms of the Escrow Agreement
for payment from such Escrow Sum of the amounts, if any, owing by the Company
and/or Miller to Buyer pursuant to the indemnification provisions of ARTICLE
VIII below. At the conclusion of the period ending ten days after completion of
the Post Closing AA Review and the resolution of any disputes therein pursuant
to SECTION 2.9 below, the Escrow Sum shall be reduced to an amount equal to the
sum of $1,000,000 in cash, plus the amount, if any, reserved, but not then paid
or resolved, pursuant to claims made against the Escrow Sum by Buyer pursuant to
the Escrow Agreement and this Agreement (such amount of reduction in the Escrow
Sum being referred to as the "ESCROW SUM REDUCTION") and (ii) on April 17, 2000
(such period being referred to herein as the "ESCROW PERIOD"), such remaining
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portion of the Escrow Sum not theretofore claimed by or paid to Buyer in
accordance with the terms of Escrow Agreement and this Agreement (together with
any interest on such remaining portion of the Escrow Sum) shall be disbursed to
the Company or Miller. The Company, Miller and Buyer agree that each will
execute and deliver such reasonable instruments and documents as are furnished
by any other party to enable such furnishing party to receive all disbursements
pursuant to the Escrow Sum Reduction or at the expiration of the Escrow Period
which the furnishing party is entitled under the provisions of the Escrow
Agreement and this Agreement.
2.9 POST-CLOSING AA REVEIW. Within 90 days following the Closing
Date, Buyer shall cause AA to review the Preliminary 3/31/98 Pro Forma Balance
Sheet and a preliminary balance sheet as of the Closing Date attached hereto as
EXHIBIT T-1 (the "PRELIMINARY CLOSING DATE BALANCE SHEET") and AA shall deliver
to Buyer and Miller within such time period a balance sheet for the Company as
of March 31, 1998 reviewed by AA (the "AA REVIEWED 3/31/98 BALANCE SHEET"), a
balance sheet of the Company as of the Closing Date reviewed by AA (the "AA
REVIEWED CLOSING DATE BALANCE SHEET," together with the AA Reviewed 3/31/98
Balance Sheet, the "AA REVIEWED BALANCE SHEETS") and an income statement and a
statement of cash flow reviewed by AA, each for the three months ended March 31,
1998, for the year ended December 31, 1998 and for the period beginning January
1, 1999 and ending on the Closing Date (such income statements and statements of
cash flow, together with the AA Reviewed Balance Sheets, the "AA REVIEWED
FINANCIAL STATEMENTS"). The AA Reviewed Financial Statements shall be prepared
in accordance with GAAP. In the event a specific inclusion or exclusion made
pursuant to SECTION 2.1(b) or SECTION 2.3(h) to any of the Company's financial
statements results in the double counting of such item as an adjustment to the
Purchase Price or misstates the Purchase Price because of such double counting,
the parties hereby agree that AA shall perform their review to ensure that any
such inclusion or exclusion is given affect only once. The cost of reviewing the
AA Reviewed Financial Statements shall be paid by the Buyer. In the event that
the Company disputes any items or assumptions or methodologies regarding the AA
Reviewed Financial Statements within fifteen (15) business days after the
Company's receipt thereof, and the parties fail to resolve such dispute within
15 business days thereafter, the parties shall jointly select and retain an
independent "Big Five" accounting firm (the "INDEPENDENT ACCOUNTANTS") to review
the disputed matter(s) on the AA Reviewed Financial Statements. The final
determination of such disputed matter(s) by the Independent Accountants shall be
reflected on the AA Reviewed Financial Statements, which shall be final and
binding on the parties for all purposes. The cost of retaining the Independent
Accountants shall be borne by the Company, except that the Buyer shall reimburse
the Company for one-half the cost of the Independent Accountants in the event
that such review results in at least a $100,000 upward adjustment to the
Remaining Purchase Price pursuant to SECTION 2.10 below.
2.10 POST-CLOSING NET WORTH ADJUSTMENT TO REMAINING PURCHASE PRICE.
Following the Closing, the Remaining Purchase Price may be further adjusted
based on changes to the Net Worth as a result of the March 31, 1998 and Closing
Date Net Worth calculations reflected by the AA Reviewed Balance Sheets, as
follows:
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(a) 3/31/98 BALANCE SHEET ADJUSTMENTS. In the event that the Net
Worth shown on the AA Reviewed 3/31/98 Balance Sheet is greater than (or less
than) $1,138,647, the Remaining Purchase Price shall be adjusted upward (or
downward) by an amount equal to such difference.
(b) CLOSING DATE BALANCE SHEET ADJUSTMENTS. In the event that the
negative change in the Company's Net Worth from the AA Reviewed 3/31/98 Balance
Sheet to the AA Reviewed Closing Date Balance Sheet is less than $11,066,892
(i.e., the negative change between the Company's Preliminary 3/31/98 Net Worth
and its Net Worth calculated from the Preliminary Closing Date Balance Sheet
(the "PRELIMINARY CLOSING DATE NET WORTH")), then the Remaining Purchase Price
shall be adjusted downward by an amount equal to the difference between (i)
$11,066,892 and (ii) the change in the Net Worth as determined from the AA
Reviewed Balance Sheets.
(c) PAYMENT OF ADJUSTMENTS. If there is a net positive adjustment
to the Remaining Purchase Price pursuant to CLAUSES (a) and (b) above that
exceeds $25,000, then the Buyer shall pay such amount to the Company or Miller
in immediately available funds within ten (10) business days of delivery of the
AA Reviewed Financial Statements as finally determined in accordance with
SECTION 2.9. Conversely, if there is a net negative adjustment to the Remaining
Purchase Price pursuant to CLAUSES (a) and (b) above that exceeds $25,000, then
the Company and Miller shall pay such amount to the Buyer in accordance with the
same terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND MILLER
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 Miller jointly and severally represent and warrant to Buyer that:
3.1 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has full corporate power and authority to own and lease its properties and
assets and to carry on the Business as now conducted and as proposed to be
conducted through the Closing. Complete and correct copies of the Certificate of
Incorporation and Bylaws of the Company, and all amendments thereto, have been
delivered to Buyer and are attached hereto as EXHIBITS J-1 and J-2. The Company
is qualified to do business only in the State of Illinois and there is no other
jurisdiction in which the nature of the Business or the ownership of its
properties requires such qualification, except where the failure to be so
qualified does not and could not reasonably be expected to have a Material
Adverse Effect.
3.2 SUBSIDIARIES. The Company does not own, directly or indirectly,
any capital stock or ownership interests in any Person, and the Shareholders do
not own any capital stock or ownership interest in any other Person engaged in
the Business. Other than as
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disclosed and allowed under SECTION 6.4 in respect of Miller, the Shareholders
do not own any capital stock or ownership interest in any other Person engaged
in a business that is competitive with the Business.
3.3 DUE AUTHORIZATION. The Company and Miller 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
Miller and constitutes the valid and binding obligations of the Company and
Miller, 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 Miller,
do not (a) violate any Requirements of Laws or any Court Order of any
Governmental Body applicable to the Company or any of the Shareholders, or their
respective properties, (b) violate or conflict with, or permit the cancellation
of, or constitute a default under, any material agreement to which the Company
or Miller is a party, or by which any of them or any of their respective
properties is bound, (c) permit the acceleration of the maturity of any material
indebtedness of, or indebtedness secured by the property of, the Company or
Miller, (d) violate or conflict with any provision of the charter or bylaws of
the Company, or (e) except for filings, approvals or expiration of the
applicable waiting periods under the HSR Act and such consents, approvals, or
registrations as may be required under applicable state securities laws, require
any consent, approval or authorization of, or notice to, or declaration, filing
or registration with, any Governmental Body or other third party.
3.4 FINANCIAL STATEMENTS; FUNDED INDEBTEDNESS; LETTERS OF CREDIT;
UNDISCLOSED LIABILITIES.
(a) FINANCIAL STATEMENTS. The following financial statements of
the Company (or of its predecessor) have been delivered to Buyer by the Company:
balance sheets of the Company as of December 31, 1996, December 31, 1997 and
December 31,1998, and statements of income of the Company (or of its
predecessor) for the fiscal years ended December 31, 1996, December 31, 1997,
and December 31, 1998 (collectively, the "FINANCIAL STATEMENTS"), which
financial statements are included as supplementary combining items in the
audited combined financial statements for the Trase Miller Group. The Financial
Statements, including the Financial Statements as of and for the year ended
December 31, 1998 (the "MOST RECENT FINANCIAL STATEMENTS"), have been prepared
in accordance with GAAP. The Financial Statements (including the notes to the
financial statement to which the Financial Statements are a part) have been
prepared on a consistent basis throughout the periods indicated and fairly
present the financial position, results of operations and changes in financial
position of the Company as of the indicated dates and for the indicated periods
and are consistent with the books and records of the Company (which books and
records are correct
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and complete). Any intercompany allocations made among the members of the Trase
Miller Group which are reflected in the Financial Statements of the Company are
accurate and sustainable. Since the date of the last of such Financial
Statements, the Company has no material liabilities required by GAAP to be
reflected on the Company's balance sheet or notes thereto that are not so
reflected in the Financial Statements, nor any other obligations (whether
absolute, contingent, or otherwise) that are (individually or in the aggregate)
material (in amount or to the conduct of the Business); and neither the Company
nor Miller has Knowledge of any basis for the assertion of any such liability or
obligation. Since December 31, 1998, the Company has not suffered a Material
Adverse Change.
(b) FUNDED INDEBTEDNESS. The Company does not have any Funded
Indebtedness.
(c) LETTERS OF CREDIT. The Company has no letters of credit,
performance bonds or similar instruments issued on or for its account or for the
benefit of any of its vendors or otherwise.
(d) UNDISCLOSED LIABILITIES. The Company does not have any
material liabilities (whether absolute, accrued, contingent or otherwise), of a
nature required by GAAP to be reflected on a balance sheet or disclosed in the
notes thereto, except such liabilities which are accrued or reserved against in
the Most Recent Financial Statements or disclosed in the notes thereto,
including without limitation, any accounts payable or service liabilities of the
Company.
3.5 CERTAIN ACTIONS. Since December 31, 1998, the Company has not,
except as disclosed on any of the Financial Statements or notes thereto: (a)
paid or declared any dividends or distributions, or purchased, redeemed,
acquired, or retired any stock or indebtedness from any Shareholder; (b) made or
agreed to make any loans or advances or guaranteed or agreed to guarantee any
loans or advances to any Person whatsoever; (c) suffered or permitted any
Encumbrance to arise or be granted or created against or upon any of its assets,
real or personal, tangible or intangible; (d) canceled, waived, or released or
agreed to cancel, waive, or release any of its debts, rights, or claims against
third parties in excess of $25,000 individually or $100,000 in the aggregate;
(e) sold, assigned, pledged, mortgaged, or otherwise transferred, or suffered
any material damage, destruction, or loss (whether or not covered by insurance)
to, any assets (except in the ordinary course of the Business); (f) amended its
charter or bylaws; (g) paid or made a commitment to pay any severance or
termination payment to any employee or consultant; (h) made any material change
in its method of management, operation, ordinary course payments of accounts
payable and other similar liabilities, accounting or reporting income or
deductions for tax purposes; (i) made any material acquisitions, capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Business, or entered into commitments therefor, except
for capital expenditures or commitments therefor which do not, in the aggregate,
exceed $25,000 individually or $100,000 in the aggregate; (j) made any
investment or commitment therefor in any Person; (k) made any payment or
contracted for the payment of any bonus or other compensation or personal
expenses, other than (A) wages and salaries and business
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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 or agency agreement which involves annual
consideration (or commissions) in excess of $25,000; (n) made or entered into
any agreement granting any Person any registration or offer rights in respect of
the Company's capital stock; (o) entered into any non-competition agreement; (p)
made or entered into any agreement or other arrangement with any officer,
director, stockholder, employee or Affiliate of the Company; (q) materially
amended, experienced a termination or received notice of actual or threatened
termination or non-renewal of any material contract, agreement, lease, franchise
or license to which the Company is a party that would or could reasonably be
expected to have a Material Adverse Effect; or (r) entered into any other
material transactions that would or could reasonably be expected to have a
Material Adverse Effect except in the ordinary course of the Business. The
Company shall have operated in the normal course of business during the period
from December 31, 1998 through the Closing Date, pursuant to the Preliminary
Closing Date Balance Sheet (attached as EXHIBIT T-1) and the accompanying income
statement (attached as EXHIBIT T-2). In addition, to the Knowledge of the
Company or Miller, the Company has operated the Business in accordance with the
1999 budget, except as otherwise authorized or directed by GVG, or disclosed to
Buyer in SECTION 3.5 of the Disclosure Schedule.
3.6 PROPERTIES. The Company owns no real property. Attached hereto as
EXHIBIT K is a list containing a description of each leasehold interest in real
property and each item of personal property utilized by the Company in the
conduct of the Business having a book or fair market value in excess of $25,000
as of the date hereof. Except for Permitted Exceptions, such real and personal
properties are free and clear of Encumbrances. Miller and the Company have
delivered to Buyer true, complete and accurate copies of all real property
leases and a lien search obtained from the counties where the Company conducts
business and the Illinois Secretary of State office of all UCC liens of record
against the Company's personal property in such jurisdictions. All of the
properties and assets necessary for continued operation of the Business as
currently conducted (including, without limitation, all books, records,
computers and computer software and data processing systems) are owned, leased
or licensed by the Company and are suitable for the purposes for which they are
currently being used. The physical properties comprising the Purchased Assets,
including the real properties leased by the Company, are in good operating
condition and repair, normal wear and tear excepted, and are free from any
defects of a material nature. Except for Permitted Exceptions, the Company has
full and unrestricted legal and equitable title to all properties and assets
which it owns. The operation of the properties and Business of the Company in
the manner in which they are now and have been operated does not violate any
zoning ordinances, municipal regulations, or other Requirements of Laws, except
for any such violations which would not, individually or in the aggregate, have
a Material Adverse Effect. Except for Permitted Exceptions, no restrictive
covenants, easements, rights-of-way, or regulations of record impair the uses of
the properties of the Company for the purposes for which they are now operated.
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All leases of real or personal property by the Company are legal, valid,
binding, enforceable and in full force and effect and will remain legal, valid,
binding, enforceable and in full force and effect on identical terms immediately
following the Closing, except for the Equitable Exceptions. All facilities
leased by the Company have received all approvals of any Governmental Body
(including Governmental Permits) required in connection with the operation
thereof and have been operated and maintained in accordance with all
Requirements of Laws.
3.7 LICENSES AND PERMITS. Attached hereto as EXHIBIT L is a list of
all licenses, certificates, privileges, immunities, approvals, franchises,
authorizations and permits (herein collectively called "GOVERNMENTAL
PERMITS") held or applied for by the Company from any Governmental Body the
absence of which could, individually or in the aggregate, have a Material
Adverse Effect. The Company has complied in all material respects with the terms
and conditions of all such Governmental Permits, and the Company has not
received notification from any Governmental Body of violation of any such
Governmental Permit or the Requirements of Laws governing the issuance or
continued validity thereof. All of such Governmental Permits are valid and in
full force and effect and are transferable to Buyer in accordance with the terms
of this Agreement. No additional Governmental Permit is required from any
Governmental Body thereof in connection with the transfer of the Purchased
Assets to the Buyer and its conduct of the Business which Governmental Permit,
if not obtained, would have a Material Adverse Effect. EXHIBIT L also identifies
those licenses, certificates, privileges, immunities, approvals, franchises,
authorizations and permits that are not assignable by operation of the laws of
the relevant Governmental Body (e.g., qualifications of the Company to do
business as a foreign corporation in a given jurisdiction).
3.8 INTELLECTUAL PROPERTY.
(a) OWNERSHIP. Attached hereto as EXHIBIT M is a list and brief
description of all Intellectual Property owned or utilized by the Company. The
Company has furnished Buyer with true, complete and accurate copies of (i) all
of the Documentation pertaining to the System as it existed on the Closing Date
and (ii) all material license agreements to which the Company is a party,
either as licensor or licensee, with respect to any Intellectual Property. The
Company has good title to or the right to use, and will convey good and
marketable title to (or the right to use which the Company has), all the
Intellectual Property necessary for the conduct of the Business, as presently
conducted without the payment of any royalty or similar payment, and the
Company is not infringing on any Intellectual Property rights of others, and
neither the Company nor Miller are aware of any infringement by others of any
such rights owned by the Company. All material licenses set forth on EXHIBIT M
are valid and binding obligations of the Company, and to the Knowledge of the
Company or Miller, the other parties thereto, and enforceable against the
Company, and to the Knowledge of the Company or Miller, the other parties
thereto in accordance with their respective terms, except for the Equitable
Exceptions. The Company owns and possesses all right, title and interest in and
to, or has the right to use pursuant to a valid license, all Intellectual
Property necessary for the operation of the business of the Company as
presently conducted. Notwithstanding anything to the contrary in the foregoing
sentences of this SECTION 3.8, the Company and Miller make no
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representation as to the existence or extent of the Company's rights to any
Intellectual Property (other than the Software, System and Documentation for the
System) that is not a registered, pending or applied for, trademark, service
mark, copyright or patent other than the representation that the Company has
used such Intellectual Property without known conflict with the rights of
others; in addition, the Company's rights to computer software licensed from
third parties are limited by the applicable license agreements.
(b) SYSTEM AND SOFTWARE PERFORMANCE. To the Knowledge of the Company
or Miller, the System and Software including any System interfaces which are a
part of the System, and the local area networks at the Real Property, and any
wide area networks currently managed and maintained by the Company, perform, and
will continue to perform, and conform in accordance with the Documentation, free
of serious bugs or programming errors, and if operated by Buyer in accordance
with the Company's practices and standards will continue to provide Buyer with
the level of on-line system performance, reliability and response times as
experienced by the Company during the ninety (90) day period prior to the date
hereof. To the Knowledge of the Company or Miller, unless disclosed in SECTION
3.8(b) of the Disclosure Schedule, the System, the Software and such networks do
not require any necessary development, modifications or repair, other than in
the ordinary course of business. All programming of the Software and System was
performed in a competent and professional manner by qualified personnel and in
compliance with federal, state and local laws and regulations. All individual
processors and components of the System are compatible with one another (to the
extent such compatibility is intended in the current design of the System) and
are compatible and provide necessary connectivity to provide the functions
intended in the current design of the System with the Internet and the following
third party global distribution systems: SABRE, Apollo, and Worldspan.
(c) SYSTEM AND SOFTWARE CAPACITY. The System, Software and all
networks on which the System and the Software operate are currently processing,
and are expected to continue to process (if operated consistent with the
Company's practices and standards), an average of 270,000 passengers per year
providing end users an average response time of two (2) seconds or less. The
System architecture, the Software, and all such networks are scaleable, to the
Knowledge of the Company or Miller (i) after making the necessary increases in
hardware, support personnel and related operating expenses in accordance with
Section 3.8(c) of the Disclosure Schedule based upon increased passenger volume
set forth therein, to process the incremental increase in System passengers per
year as disclosed on such Section 3.8(c) of the Disclosure Schedule and (ii)
without any additions, modifications, enhancements or upgrades, or developments,
to process an average of 320,000 passengers per year, in each case, without any
significant degradation in average response time to the end user.
(d) DOCUMENTATION. The source code included in the Documentation
being transferred from the Company hereunder to the Buyer as part of the
Purchased Assets is true, accurate and complete as of the Closing Date, and
represents all the necessary source code required to conduct the Business as it
is currently being conducted. The other items included in the Documentation
being transferred from the Company hereunder to the Buyer as
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part of the Purchased Assets are accurate, and to the Knowledge of the Company
and Miller complete, in all material respects as of the Closing Date, and
represent all the necessary user and training manuals, computer programs,
program "help" files and the like required to conduct the Business as it is
currently being conducted. The Company has taken such actions as it has
considered necessary or appropriate, in its good faith judgment, to document the
System and the Software and their operations and the source code in order to
efficiently conduct its service bureau business. The Documentation of or
relating to the System and the Software has been written in a reasonably clear
and professional manner so that they may be understood, modified and maintained
in an efficient manner by reasonably competent programmers.
(e) PRIOR TRANSFERS. Old MTI has transferred to the Company
ownership of all of the Intellectual Property (including the System and the
Software) previously owned by Old MTI and not previously transferred to or owned
by the Company.
3.9 COMPLIANCE WITH LAWS. The Company has (i) complied in all
material respects with all Requirements of Laws, Governmental Permits and Court
Orders applicable to the Business or the Company and has filed with the proper
Governmental Bodies all statements and reports required by all Requirements of
Laws, Governmental Permits and Court Orders to which the Company or any of its
employees (because of their activities on behalf of the Company) are subject and
(ii) conducted the Business and is in compliance in all material respects with
all federal, state and local energy, public utility, health, safety and
environmental Requirements of Laws, Governmental Permits and Court Orders
including the Clean Air Act, the Clean Water Act, the Solid Waste Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Safe Drinking Water Act, OSHA, the
Toxic Substances Control Act and any similar state, local or foreign laws
(collectively "ENVIRONMENTAL AND OSHA OBLIGATIONS") and all other Governmental
Body requirements, except where any such failure to comply or file would not, in
the aggregate, have a Material Adverse Effect. No claim has been made by any
Governmental Body (and, to the Knowledge of the Company and Miller, no such
claim is anticipated) to the effect that the Business or the Company fails to
comply, in any respect, with any Requirements of Laws, Governmental Permit or
Environmental and OSHA Obligation or Court Order or that a Governmental Permit
is necessary in respect thereto.
3.10 INSURANCE. Attached hereto as EXHIBIT N is a list of all
coverages for fire, liability, or other forms of insurance and all fidelity
bonds held by or applicable to the Company. Copies of the binders for all such
insurance policies have been delivered to Buyer. The insurance maintained by the
Company immediately prior to the Closing Date was in Miller's judgment
reasonably adequate for the Company's business and is consistent with levels of
insurance carried by the Company in the past. To the Knowledge of the Company
and Miller, no event relating to the Company has occurred that will result in
(i) cancellation of any such insurance coverages; (ii) a retroactive upward
adjustment of premiums under any such insurance coverages; or (iii) any
prospective upward adjustment in such premiums. The Company will cause, at
Buyer's expense, all of such insurance coverages identified on EXHIBIT
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N to remain in full force and effect in favor of the Buyer following the Closing
in accordance with the terms of the Transition Services Agreement.
3.11 EMPLOYEE BENEFIT PLANS
(a) EMPLOYEE WELFARE BENEFIT PLANS. Other than as listed in
EXHIBIT O, the Company does not maintain or contribute to any "employee welfare
benefit plan" as such term is defined in Section 3(1) of ERISA. With respect to
any plan listed in EXHIBIT O, (i) the plan is in material compliance with ERISA
and all other applicable Requirements of Laws; (ii) the plan has been
administered in accordance with its governing documents; (iii) neither the plan,
nor any fiduciary with respect to the plan, has engaged in any "prohibited
transaction" as defined in Section 406 of ERISA other than any transaction
subject to a statutory or administrative exemption; (iv) except for the
processing of routine claims in the ordinary course of administration, there is
no material litigation, arbitration or disputed claim outstanding; and (v) all
premiums due on any insurance contract through which the plan is funded have
been paid.
(b) EMPLOYEE PENSION BENEFIT PLANS. Other than as listed in
EXHIBIT O, the Company does not maintain or contribute to any arrangement that
is or may be an "employee pension benefit plan" relating to employees, as such
term is defined in Section 3(2) of ERISA. With respect to any plan listed in
EXHIBIT O: (i) the plan is qualified under Section 401(a) of the Code, and any
trust through which the plan is funded meets the requirements to be exempt from
federal income tax under Section 501(a) of the Code; (ii) the plan is in
material compliance with ERISA and all other applicable Requirements of Laws;
(iii) the plan has been administered in accordance with its governing documents
as modified by applicable law; (iv) the plan has not suffered an "accumulated
funding deficiency" as defined in Section 412(a) of the Code; (v) the plan has
not engaged in, nor has any fiduciary with respect to the plan engaged in, any
"prohibited transaction" as defined in Section 406 of ERISA or Section 4975 of
the Code other than a transaction subject to statutory or administrative
exemption; (vi) the plan has not been subject to a "reportable event" (as
defined in Section 4043(b) of ERISA), the reporting of which has not been waived
by regulation of the Pension Benefit Guaranty Corporation; (vii) no termination
or partial termination of the plan has occurred within the meaning of Section
411(d)(3) of the Code; (viii) all contributions required to be made to the plan
or under any applicable collective bargaining agreement have been made to or on
behalf of the plan; (ix) there is no material litigation, arbitration or
disputed claim outstanding; (x) all applicable premiums due to the Pension
Benefit Guaranty Corporation for plan termination insurance have been paid in
full on a timely basis; and (xi) a favorable determination letter from the IRS
has been received by the Company with respect to such plan stating that such
plan is so qualified; and there are no circumstances which would cause such plan
to lose such qualified status.
(c) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED COMPENSATION
ARRANGEMENTS. The Company does not maintain or contribute to any retirement or
deferred or incentive compensation or stock purchase, stock grant or stock
option arrangement entered into between the Company and any current or former
officer, consultant, director or employee
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of the Company that is not intended to be a tax qualified arrangement under
Section 401(a) of the Code.
3.12 CONTRACTS AND AGREEMENTS. EXHIBIT P hereto contains a list and
brief description of all written or oral contracts, commitments, leases (whether
realty or personalty), and other agreements (other than the MIS Services
Agreement, but including, without limitation, all promissory notes, loan
agreements, and other evidences of indebtedness, guarantees, hedging agreements,
off-balance sheet financing arrangements, indemnity agreements, vendor
contracts, licenses to use software, marketing agreements, purchase orders, bids
in process, shareholders' agreement, interface or similar agreements pertaining
to various airline or other computer reservation systems or third party owned
software) to which the Company is a party or by which the Company or its
properties or the Business are bound pursuant to which the obligations
thereunder of either party thereto are, or are contemplated as being, for any
one contract $25,000 or greater, or any contract or agreement prohibiting the
Company from freely engaging in any business or competing anywhere in the world
(collectively, the "CONTRACTS"). The Company is not and, to the Knowledge of
Miller and the Company, no other party thereto is in default (and no event has
occurred which, with the passage of time or the giving of notice, or both, would
constitute a default by the Company) under any of the Contracts, and the Company
has not waived any material right under any of the Contracts. All of the
Contracts to which the Company is a party are legal, valid, binding, enforceable
and are fully assignable to Buyer (unless otherwise disclosed on EXHIBIT P which
EXHIBIT P also identifies those Contracts requiring third party consents in
order to assign) and will remain in full force and effect and will remain legal,
valid, binding, enforceable and in full force and effect on identical terms
immediately after the Closing, except for the Equitable Exceptions. The Company
has not guaranteed any obligations of any other Person. The Company has no
present expectation or intention of not fully performing all of its obligations
under any Contract, the Company has no Knowledge of any breach or anticipated
breach by the other parties to any Contract and the Company has not received
notice of actual or threatened termination or non-renewal of any Contract. The
Company and Miller have provided Buyer true, complete and accurate copies of the
Contracts in effect as of the Closing Date, and any amendments thereto.
3.13 CLAIMS AND PROCEEDINGS. Except as disclosed in SECTION 3.13 of
the Disclosure Schedule, there are no claims, actions, suits, proceedings, or
investigations pending or, to the Knowledge of Miller or the Company, threatened
against or affecting the Company, the Intellectual Property or any of its other
properties or assets, at law or in equity, before or by any court, municipality
or other Governmental Body. To the extent any are disclosed on the Disclosure
Schedule, none of such claims, actions, suits, proceedings, or investigations,
if adversely determined, will result in any material liability or loss to the
Company or Buyer. The Company has not been and the Company is not now, subject
to any Court Order, stipulation, or consent of or with any court or Governmental
Body. No inquiry, action or proceeding has been instituted or, to the Knowledge
and belief of Miller or the Company, threatened or asserted against any of the
Shareholders or the Company to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement or to challenge the validity
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of such transactions or any part thereof or seeking damages on account thereof.
To the Knowledge of the Company and Miller there is no basis for any such valid
claim or action.
3.14 TAXES
(a) All Federal, foreign, state, county and local and other
Taxes due from the Company on or before the Closing have been paid and all Tax
Returns that are required to be filed by the Company on or before the date
hereof have been filed within the time and in the manner provided by all
Requirements of Laws, and all such Tax Returns are true and correct and
accurately reflect the Tax liabilities of the Company other than the tax return
for 1998 (for which an extension has been filed). No other Tax Returns of the
Company are presently subject to an extension of the time to file. All Taxes,
assessments, penalties, and interest of the Company that have become due
pursuant to such Tax Returns or any assessments received have been paid or
adequately accrued on the Company's Financial Statements. The provisions for
Taxes reflected on the balance sheets contained in the Financial Statements and
the April 30, 1999 balance sheet are adequate to cover all of the Company's Tax
liabilities for the respective periods then ended and all prior periods. The
Company has not executed any presently effective waiver or extension of any
statute of limitations against assessments and collection of Taxes, and there
are no pending or threatened claims, assessments, notices, proposals to assess,
deficiencies, or audits with respect to any such Taxes of which Miller or the
Company are aware. For Governmental Bodies with respect to which the Company
does not file Tax Returns, no such Governmental Body has given the Company
written notification that the Company is or may be subject to taxation by that
Governmental Body. The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
Shareholder, creditor, independent contractor or other party. There are no Tax
liens on any of the property or assets of the Company.
(b) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code and no transfer taxes, real estate
transfer taxes or similar taxes will be imposed upon the transfer and sale of
the Purchased Assets pursuant to this Agreement.
(c) The Company has made a valid election under Section 1362 of
the Code and any corresponding state or local provisions to be an S corporation
within the meaning of Section 1361 of the Code for all taxable years (or
portions thereof), and no such S election has been terminated (whether
voluntarily, involuntarily or inadvertently, including, without limitation, by
taking any action defined in Section 1362(d) of the Code) since such time.
3.15 PERSONNEL. Attached hereto as EXHIBIT Q is a list of the names
and annual rates of compensation of the directors and executive officers of the
Company, and of the employees of the Company whose annual rates of compensation
during the calendar year ended December 31, 1999 (including base salary, bonus
and incentive pay) exceed (or by December 31, 1999 are expected to exceed)
$50,000. EXHIBIT Q also summarizes the bonus,
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profit sharing, percentage compensation, company automobile, club membership,
and other like benefits, if any, paid or payable to such directors, officers,
and employees during the Company's calendar year ended December 31, 1998 and to
the date hereof. EXHIBIT Q also contains a brief description of all material
terms of employment agreements to which the Company is a party and all severance
benefits that any director, officer or employee of the Company is or may be
entitled to receive. The employee relations of the Company are generally good
and there is no pending or, to the Knowledge of Miller and the Company,
threatened labor dispute or union organization campaign. None of the employees
of the Company is represented by any labor union or organization. The Company is
in compliance in all material respects with all Requirements of Laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and is not engaged in any unfair labor practices. Neither the
Company or Miller has been advised or otherwise has Knowledge that any employee
will not agree to remain employed by the Buyer after the consummation of the
transactions contemplated hereby. There is no unfair labor practice claim
against the Company before the National Labor Relations Board, or any strike,
dispute, slowdown, or stoppage pending or, to the Knowledge of the Company and
Miller, threatened against or involving the Company, and none has previously
occurred.
3.16 BUSINESS RELATIONS. Neither the Company nor Miller has Knowledge
that any licensor, consultant, customer or supplier engaged in doing business
with the Company will cease to do business with the Buyer after the consummation
of the transactions contemplated hereby in the same manner and at the same
levels as previously conducted with the Company except for any reductions which
do not result in a Material Adverse Change. Neither Miller nor the Company has
received any notice of cancellation of or adverse modification to any Contract
or any Material business arrangement between any Person and the Company nor is
the Company or Miller aware of any facts that could lead them to believe that
the Business will be subject to such a cancellation, of or such a modification
to, of any such business arrangement.
3.17 ACCOUNTS RECEIVABLE. All of the accounts, notes, and loans
receivable that have been recorded on the books of the Company are bona fide and
represent amounts validly due for goods sold or services rendered and all such
amounts (net of any allowance for doubtful accounts as reflected in the Most
Recent Financial Statements) will be collected in full within 180 days following
the Closing Date. With respect to such accounts, notes and loans receivable, (i)
all of such accounts, notes, and loans receivable are free and clear of any
Encumbrances; (ii) no claims of offset have been asserted in writing against any
of such accounts, notes, or loans receivable; and (iii) none of the obligors of
such accounts, notes, or loans receivable has given written notice that it will
or may refuse to pay the full amount or any portion thereof.
3.18 BANK ACCOUNTS. Attached hereto as EXHIBIT R is a list of all
banks or other financial institutions with which the Company has an account or
maintains a safe deposit box, showing the type and account number of each such
account and safe deposit box and the names of the persons authorized as
signatories thereon or to act or deal in connection therewith.
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3.19 BROKERS. Neither the Company nor Miller has engaged, or caused
to be incurred any liability to any finder, broker, or sales agent in connection
with the origin, negotiation, execution, delivery, or performance of this
Agreement or the transactions contemplated hereby.
3.20 AFFILIATED TRANSACTIONS. Except as disclosed on SECTION 3.20 of
the Disclosure Schedule, no officer, director, Shareholder or Affiliate of the
Company or any individual related by blood or marriage to any such Person, or
any entity in which any such Person owns any beneficial interest, is a party to
any agreement, contract, arrangement or commitment with the Company or engaged
in any transaction with the Company or has any interest in any property used by
the Company. No such officer, director, or Shareholder or any Affiliate of any
such officer, director, or Shareholder, has any ownership interest in any
competitor, supplier, or customer of the Company (other than ownership of
securities of a publicly-held corporation of which such Person owns (in the case
of Miller, pursuant to SECTION 6.4), or has real or contingent rights to own,
less than one percent of any class of outstanding securities) or any property
used in the operation of the Business.
3.21 YEAR 2000. The System, based on the Company's pre-existing
programs, is Year 2000 Compliant as of December 31, 1998 and all of New MTI's
data files, again based on the Company's pre-existing programs, will be Year
2000 Compliant on the Closing Date. In respect of "off-the-shelf" or
"shrinkwrap" (i.e., non-customized software utilized by the Business and/or
included in the Software and the System), to the Knowledge of the Company and
Miller such software is Year 2000 Compliant.
3.22 INFORMATION FURNISHED. The Company and Miller have made
available to Buyer true and correct copies of all material corporate records of
the Company, all Contracts and all other material agreements, documents, and
other items listed on the Exhibits and Disclosure Schedule to this Agreement or
referred to in ARTICLE III of this Agreement, and neither this Agreement, the
Disclosure Schedule hereto, nor any written information, instrument, or document
delivered to Buyer pursuant to this Agreement contains any untrue statement of a
material fact or omits any material fact necessary to make the statements herein
or therein, as the case may be, not misleading.
3.23 ARC COMPLIANCE. The Company maintains all of its ticketing stock
utilized in the Business in full compliance with the safety standards required
by ARC. None of the Company's ticketing stock utilized for the conduct of the
Business has ever been lost or stolen and no claim has ever been made by any
airline, hotel, tour operator or other travel vendor against the Company with
respect to any lost or stolen ticket stock, except for such prior claims that
would not individually or in the aggregate have a Material Adverse Effect.
ARTICLE IV
BUYER'S AND GVG'S REPRESENTATIONS AND WARRANTIES
4.1 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to the Company and Miller as follows:
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(a) DUE ORGANIZATION. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has
full corporate power and authority to execute, deliver and perform this
Agreement and to carry out the transactions contemplated hereby.
(b) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action of Buyer and the
Agreement has been duly and validly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable in accordance
with its terms, except for the Equitable Exceptions. The execution, delivery,
and performance of this Agreement (as well as all other instruments, agreements,
certificates or other documents contemplated hereby) by Buyer, do not (a)
violate any Requirements of Laws or Court Order of any Governmental Body
applicable to Buyer or its property, (b) violate or conflict with, or permit the
cancellation of, or constitute a default under any agreement to which Buyer is a
party or by which it or its property is bound, (c) permit the acceleration of
the maturity of any indebtedness of, or any indebtedness secured by the property
of, Buyer, (d) violate or conflict with any provision of the charter or bylaws
of Buyer, or (e) except for filings or appraisals under the HSR Act and such
consents, approvals or registrations as may be required under applicable state
securities laws, require any consent, approval or authorization of, or notice
to, or declaration, filing or registration with, any Governmental Body or other
third party.
(c) NO BROKERS. Buyer has not engaged, or caused to be incurred any
liability for which the Company or Miller may be liable to any finder, broker or
sales agent in connection with the origin, negotiation, execution, delivery, or
performance of this Agreement or the transactions contemplated hereby.
4.2 GVG'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to the Company and Miller as follows:
(a) DUE ORGANIZATION. GVG is a corporation duly organized, validly
existing, and in good standing under the laws of the State of New York and has
full corporate power and authority to execute, deliver and perform this
Agreement and to carry out its undertaking contemplated hereunder.
(b) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action of GVG and the Agreement
has been duly and validly executed and delivered by GVG and constitutes the
valid and binding obligation of GVG, enforceable in accordance with its terms,
except for the Equitable Exceptions. The execution, delivery, and performance of
this Agreement (as well as all other instruments, agreements, certificates or
other documents contemplated hereby) by GVG, do not (a) violate any Requirements
of Laws or Court Order of any Governmental Body applicable to GVG or its
property, (b) violate or conflict with, or permit the cancellation of, or
constitute a default under any agreement to which GVG is a party or by which it
or its property is bound, (c) permit the acceleration of the
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maturity of any indebtedness of, or any indebtedness secured by the property of,
GVG, (d) violate or conflict with any provision of the charter or bylaws of GVG,
or (e) except for filings or appraisals under the HSR Act and such consents,
approvals or registrations as may be required under applicable state securities
laws, require any consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any Governmental Body or other third
party.
(c) NO BROKERS. GVG has not engaged, or caused to be incurred any
liability for which the Company or Miller may be liable to any finder, broker or
sales agent in connection with the origin, negotiation, execution, delivery, or
performance of this Agreement or the transactions contemplated hereby.
ARTICLE V
COVENANTS
5.1 CONSENTS OF OTHERS. Prior to the Closing, the Company and Miller
shall have obtained the written consent of any third party to all the Contracts
listed on EXHIBIT P that require consent prior to the Closing and all other
authorizations, consents and permits required of the Company and Miller to
permit them to consummate the transactions contemplated by this Agreement. As
promptly as practicable after the date hereof, Buyer, the Company and Miller
shall make, or shall cause to be made, such filings as may be required pursuant
to the HSR Act with respect to the consummation of the transactions contemplated
by this Agreement.
5.2 THE COMPANY'S EFFORTS. The Company and Miller shall use all
reasonable efforts to cause all conditions for the Closing set forth in SECTION
7.1 to be met.
5.3 POWERS OF ATTORNEY. The Company and any of the Shareholders shall
cause the Company, and such Shareholder if applicable, to revoke and terminate
at or prior to Closing all powers of attorney granted by the Company, other than
those relating to service of process, qualification or pursuant to governmental
regulatory or licensing agreements, or representation before the IRS or other
Government Body.
5.4 CONDUCT OF BUSINESS PENDING CLOSING. From the date of this
Agreement to the Closing Date:
(a) Except as otherwise contemplated by this Agreement, or as
Buyer may otherwise consent to in writing, the Company and Miller shall conduct
the Business only in the ordinary course and in accordance with the terms of the
Amended MIS Services Agreement and shall not engage in any material activity or
enter into any material transaction which would cause a breach of the
representations and warranties contained in ARTICLE III.
(b) Miller 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.
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(c) Miller and the Company shall give prompt notice to Buyer of
any notice of material default received by the Company or the Business
subsequent to the date of this Agreement under any Contract or any Material
Adverse Change occurring prior to the Closing Date in the operation of the
Company or the Business.
(d) Neither the Company nor Miller, 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,
Miller and the Company agree that they will give, or cause to be given, to Buyer
and its representatives, during normal business hours and at Buyer's expense,
full and unrestricted access to the Company's personnel, officers, agents,
employees, assets, properties, titles, contracts, corporate minute and other
books, records, files and documents of the Company with respect to the Business
(including financial, tax basis, budget projections, accountants' work papers
and other information as Buyer may request) and to the Business' personnel,
customers, suppliers and independent accountants, to allow Buyer to obtain such
information as it shall desire, and to make copies of such information, to the
extent reasonably necessary. Additionally, Miller and the Company will provide
Buyer opportunities to meet with key employees of the Business, to visit
facilities of the Business and to otherwise conduct due diligence in respect of
the Company and the Business. All materials copied by Buyer shall be maintained
in confidence by Buyer and returned to Miller and/or the Company, as
appropriate, if the Closing of the transactions contemplated hereunder fails to
occur.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 GENERAL. In case at any time after the Closing any further action
is legally necessary or reasonably desirable (as determined by Buyer and the
Company) to carry out the purposes of this Agreement, each of the parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other party reasonably may request, all at the
sole cost and expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under ARTICLE VIII below). The Company
acknowledges and agrees that from and after the Closing, Buyer will be entitled
to possession of all documents, books, records, agreements, and financial data
of any sort relating to the Company, that shall be maintained at the
headquarters of the Company; provided, however, the Company shall be entitled to
reasonable access to and to make copies of such books and records at their sole
cost and expense and Buyer will maintain all of the same for a period of at
least three (3) years after Closing. Thereafter, the Company will offer such
documentation to Miller before disposal thereof.
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6.2 TRANSITION. For a period of three and one-half (3 1/2) years
following Closing, neither the Company nor Miller will take any action (or cause
any such action to be taken by another Person) that primarily is designed or
intended to have the effect of discouraging any vendor, lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relations with the Buyer after the Closing it maintained with
the Company prior to the Closing. For a period of three and one-half (3 1/2)
years following Closing, the Company and Miller will refer all customer
inquiries relating to the Business to the Buyer.
6.3 CONFIDENTIALITY. The Company will treat and hold in confidence
and not disclose all Confidential Information and refrain from using any of the
Confidential Information except in connection with this Agreement or otherwise
for the benefit of the Buyer for a period of three and one-half (3 1/2) years
from the date of this Agreement, and deliver promptly to Buyer or destroy, at
the written request and option of Buyer, all tangible embodiments (and all
copies) of the Confidential Information that are in their possession or control
except as otherwise permitted herein. In the event that the Company or Miller
are requested or required (by oral question or written request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar legal proceeding) to disclose any Confidential
Information, the Company or Miller, as the case may be, will notify Buyer
promptly of the request or requirement.
6.4 COVENANT NOT TO COMPETE. For and in consideration of the
allocation of $100,000 of the Purchase Price paid to the Company by Buyer, the
Company and Miller each covenant and agree, for a period of three and one-half
(3 1/2) years from and after the Closing Date, that he, she or it will not,
directly or indirectly, without the prior written consent of Buyer, for or on
behalf of any Person or Affiliate:
(a) engage in the business of developing or providing any
information systems or services (similar to the Business, the Software or the
System) to any travel-related business (other than (A) the operation by Trase
Miller Technologies, Inc. of the call center for American Airlines Vacations or
(B) the operation by Trase Miller Teleservices, Inc., an Affiliate of the
Company ("TMTS"), of call centers so long as TMTS does not offer services in
competition with the business of GVG or the Company, as such businesses are
currently being conducted), provided, however, that nothing in this SECTION 6.4
shall alter or affect Miller's rights or obligations to own an interest in
Preview Travel, Inc., Adventure Media, Inc., or any affiliate or successor in
interest to any of the foregoing, pursuant to SECTION 6.3(a)(i)of the Purchase
Agreement, subject to the provision of SECTION 6.3(a)(iii) thereof (but such
reaffirmation of Miller's rights shall not permit Miller or his Affiliates to
develop or provide information systems or services similar to the Business, the
Software or the System), it being agreed that SECTION 6.3(a)(ii) of the Purchase
Agreement is hereby terminated and superseded by this SECTION 6.4;
(b) hire, retain, or solicit the employment or services of
employees, consultants or representatives of Buyer or any of its Affiliates for
the purpose of causing them to leave the employment of Buyer or such Affiliates;
or
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(c) take any action (or cause any such action to be taken by
another Person) that primarily is designed or intended to have the effect of
discouraging any vendor, lessor, licensor, customer, supplier, or other business
associate of the Business from maintaining the same business relations with
Buyer after the Closing as it maintained with the Company prior to the Closing;
provided, however, that Miller may own less than ten percent (10%) of the
outstanding stock of any publicly-traded corporation and Miller shall not be
deemed to be in a violation of this SECTION 6.4 solely by reason thereof.
6.5 LITIGATION SUPPORT. In the event and for so long as any party is
actively contesting or defending against any claim, suit, action or charge,
complaint, or demand in connection with (i) any transaction contemplated under
this Agreement or (ii) any fact, circumstance, status, condition, activity,
practice, occurrence, event, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other parties will
cooperate and make available themselves or their personnel, as applicable, and
provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense.
6.6 ASSIGNMENT OF CONTRACTS.
(a) GENERAL. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign or
otherwise transfer any Contract or any other agreement used in the Business or
any rights thereunder, if an attempted assignment or transfer thereof would
constitute a breach thereof, would be ineffective or would violate any
applicable law without the consent of a third party to such assignment or
transfer. Until such consent or waiver has been obtained, Buyer shall make all
reasonable efforts to perform in the Company's name all of the Company's
obligations under any such contract or other agreement for which any such
consent has not been obtained. The Company shall cooperate with Buyer in any
reasonable arrangement designed to provide for Buyer all of the benefits, and to
have Buyer assume the burdens, liabilities, obligations and expenses under all
such Contracts or other agreements. At Buyer's request, the Company shall, at
Buyer's sole cost and expense, take all reasonable efforts requested by Buyer to
enforce, for the benefit of Buyer, any and all rights of the Company under any
such Contract or other agreement not otherwise transferred pursuant to the
provisions of this Agreement. The Company hereby authorizes Buyer to perform and
Buyer hereby agrees to perform all of the Company's obligations after the
Closing under all such Contracts or other agreements. The Company agrees to
remit promptly to Buyer all collections or payments received by the Company in
respect of all such Contracts or other agreements, and shall hold all such
collections or payments for the benefit of, and promptly pay the same over to,
Buyer; provided, however, that nothing herein shall create or provide any rights
or benefits in or to third parties.
(b) TRASE MILLER TELESERVICES, INC. The Company and Miller agree
to cause Trase Miller Teleservices, Inc. ("TMTS") to maintain the same business
relations
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with Buyer for one year after the Closing as it maintained with the Company
prior to the Closing, including, but not limited to, causing TMTS to purchase
from Buyer the same amount of services (measured in dollars) as it had purchased
from the Company during the 12 month period ending on the Closing Date,
adjusted, however, to reflect the fact that certain Company personnel who had
previously been devoted to servicing the TMTS business were recently transferred
to the employ of TMTS, which transfer will cause a concomitant reduction in the
amount of Company services needed or paid for by TMTS going forward. If TMTS
desires to terminate or modify its relationship with Buyer, the Company and
Miller agree to cause TMTS to provide Buyer 90 days written notice of such
termination or modification, which such notification may be given in advance, so
long as the effective date of such termination or modification is on or after
the expiration of the one year period referenced in the first sentence of this
SECTION 6.6(b). This SECTION 6.6(b) shall be binding on the parties hereto upon
execution of this Agreement, although it is intended that at the request of
either Miller, the Company or the Buyer, the parties shall prepare and enter
into more definitive and detailed documentation.
6.7 CHANGE OF NAME. The Company agrees to promptly change its name
following the Closing to a name which does not contain the words "Trase Miller
Solutions, Inc.," "TMS" or any variations thereof.
6.8 AUDITS. Following the Closing, the Company and Miller shall cause
the Company, at the Buyer's request and expense, to deliver, or cause to be
delivered, to Buyer an unqualified and unmodified review report of AA on the
balance sheets of the Company as of December 31, 1996, December 31, 1997 and
December 31, 1998, and reviewed statements of operations and cash flows of the
Company for the fiscal years then ended, which report shall be without
limitation as to the scope of the review. Miller, in his respective capacity as
President and director of the Company during such periods (if applicable), shall
assist Buyer by providing all management letters, reports or representations
reasonably requested by AA in connection with such reviews.
6.9 RELATED TRANSACTIONS. It is the intention of the parties that the
Company's and Miller's obligations under ARTICLE VIII of this Agreement (dealing
with indemnification) supersede and replace the obligation of (i) Old MTI and
Miller under ARTICLE VIII of the Purchase Agreement with respect to the
representations and warranties contained in Section 3.24 of the Purchase
Agreement (but only in respect of Seller's MIS Assets, as such term is defined
therein) and (ii) the Company under the Amended MIS Services Agreement.
6.10 ARC CONSENT. The Company, Miller and Buyer shall each use their
reasonable best efforts to cooperate and to work together to obtain any and all
consents required by ARC in connection with this Agreement and the transactions
contemplated hereby.
6.11 TAX SHARING ARRANGEMENT. The parties hereby agree that, to the
extent any incremental tax benefit is realized from this transaction to Miller
as a result of the gain on the sale being taxed at capital gain rates and the
reduction in the Net Worth of the Company since March 31, 1998 (after taking
into account ordinary deductions claimed by Miller from all
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his other income generating ventures and after accounting for all other
deductions of the Company not paid for by the Buyer or GVG through the Net Worth
adjustments) resulting in a reduction of taxes at ordinary income rates, any
benefit resulting from the differential in rates shall result in a reduction of
the Purchase Price and a refund to Buyer for one-half of such benefit. In order
to determine the amount, if any, due to Buyer, Miller shall prepare a schedule
upon the completion of his filing of his 1999 tax return (or, if Miller desires,
a schedule at any time after February 1999 reflecting his best faith estimate)
which reflects the benefit, if any, he has determined he received on his 1998
and/or 1999 tax returns as a result of this transaction. Such schedule shall be
provided to Buyer and Buyer's accountants for review. Miller will provide
reasonable support for the information on his schedule to substantiate his
computation. Within 30 days of the receipt of the schedules and any requested
supporting information, Buyer will approve such schedule or submit to Miller its
revised schedule reflecting the amount due. Any amounts due shall be paid by
Miller to Buyer within 30 days of receipt of such approval or submission. In the
event the parties fail to agree on the appropriate amount due to Buyer, such
claim shall be submitted to arbitration pursuant to SECTION 10.9 of this
Agreement. If Miller provides a schedule of his estimated tax benefit, as
provided herein, and such estimate is less than the actual benefit to Miller by
an amount equal to, or greater than, $50,000, Miller hereby agrees to share in
the excess actual benefit over the estimated benefit in the same manner as
provided by this SECTION 6.11.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PARTIES TO CONSUMMATE CLOSING
7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer under
this Agreement to consummate the Closing is subject to the conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES. The Company and
Miller 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 Miller
set forth in this Agreement shall be accurate in all material respects at and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date. In addition, Buyer shall have determined from its due
diligence review of the Company that no Material Adverse Change or Material
Adverse Effect shall have occurred in the financial condition, business,
operations or prospects of the Company from those presented to Buyer prior to
execution of this Agreement.
(b) CONSENTS. All statutory requirements for the valid
consummation by the Company and any of the Shareholders of the transactions
contemplated by this Agreement shall have been fulfilled and all authorizations,
consents and approvals, including expiration or early termination of all waiting
periods under the HSR Act, if applicable, and those of all federal, state, local
and foreign governmental agencies and regulatory authorities required to be
obtained in order to permit the consummation of the transactions contemplated
hereby shall have been obtained in form and substance reasonably satisfactory to
Buyer. All approvals of the Board of Directors of the Company and the
Shareholders necessary for the
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consummation of this Agreement and the transactions contemplated hereby shall
have been obtained. All consents or waivers of any third party to the Contracts
shall have been obtained as necessary to consummate the transactions
contemplated by this Agreement or to ensure that the Contracts continue in full
force and effect following the Closing.
(c) DISCHARGE OF INDEBTEDNESS AND LIENS. There being no Funded
Indebtedness (other than capital leases) to retire, Miller and the Company shall
have provided for the payment in full by the Company of all extended credit from
vendors at the Closing (other than customary accounts payable outstanding on 90
day or less payment terms in accordance with past practices). Miller shall have
also provided for the termination of all Encumbrances of record on the
properties of the Company, except for Permitted Exceptions. All liens or UCC
filings against the Purchased Assets shall have been terminated as of the
Closing, except for liens securing capital leases.
(d) TRANSFER TAXES. The Company shall have paid all transfer or
gains taxes incurred in connection with this Agreement.
(e) [RESERVED].
(f) DOCUMENTS TO BE DELIVERED BY MILLER AND THE COMPANY. The
following documents shall be delivered at the Closing by Miller and the Company:
(i) CONVEYANCE DOCUMENTS. Such instruments of
sale, transfer, assignment, conveyance and delivery (including
all vehicle titles), in form and substance reasonably
satisfactory to counsel for Buyer (including, without limitation,
the Assignment and Assumption Agreement and the Assignment of
Trademarks, as are required in order to transfer to Buyer good
and marketable title to the Purchased Assets, free and clear of
all Encumbrances except as provided herein).
(ii) OPINION OF COUNSEL TO THE COMPANY AND MILLER.
Buyer shall have received an opinion of Counsel to the Company
and Miller, dated the Closing Date, in substantially the same
form as the form of opinion that is EXHIBIT C hereto.
(iii) CERTIFICATES. Buyer shall have received (i)
an officer's certificate and (ii) a secretary's certificate of
the Company executed by officers of the Company and Miller, as
appropriate, and dated the Closing Date, in substantially the
same forms as the forms of certificates that are attached as
EXHIBIT D-1 and EXHIBIT D-2, respectively, hereto.
(iv) ESCROW AGREEMENT. Miller 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
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termination, without liability to the Company, of all employment
agreements in existence prior to the Closing among the Company,
on the one hand, and Miller or any other employees of the
Company, on the other (other than any non-compete and
non-disclosure agreements referenced in SECTION 2.1(g)).
(vi) COMPLIANCE AND NON DISCLOSURE AGREEMENTS. Mr.
Mark Rittmanic shall have executed and delivered to the Company a
compliance agreement, including customary noncompete and
nonsolicitation provisions, in substantially the form of EXHIBIT
E. Each of Messrs. Mark Wilson, Matt Hartzman and Steve Johnson
shall have executed and delivered to the Company a nondisclosure
agreement, each in substantially the form of EXHIBIT F.
(vii) UCC MATTERS. UCC termination statements and
other applicable documentation necessary to release or terminate
any Encumbrance or interest of any third party in any of the
assets of the Company, except capital leases.
(viii) RELEASE. The Company and Miller shall have
delivered to Buyer a release of liabilities related to the
Purchased Assets, the Assumed Liabilities and the Business,
except as expressly set forth in this Agreement, in substantially
the form of EXHIBIT G hereto.
(ix) TRANSITION SERVICES AGREEMENT. The Company
and Miller shall have executed and delivered a Transition
Services Agreement substantially in the form of EXHIBIT H.
(x) CHANGE OF THE COMPANY'S NAME. Evidence, in the
form of an amended Certificate of Incorporation for the Company
that will be delivered to Buyer in form suitable for filing with
the Delaware Secretary of State, indicating its change of name
from Trase Miller Solutions, Inc.
(xi) WIRE INSTRUCTIONS. The Company shall have
delivered wire instructions to the Buyer in substantially the
form of EXHIBIT I.
(g) SOURCE CODE. Prior to the Closing, the Company shall have
provided Buyer true and complete copies of all source codes for the Software and
the System as in operation as of the date thereof.
7.2 CONDITIONS TO MILLER'S AND THE COMPANY'S OBLIGATIONS. The
obligation of Miller 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
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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 Miller and
the Company at the Closing the duly executed Escrow Agreement required pursuant
to SECTION 2.8 hereof. Additionally, the Escrow Agent shall have received
$1,500,000 referenced in SECTION 2.6(c).
(d) ASSIGNMENT AND ASSUMPTION AGREEMENT. At the Closing Buyer
shall execute and deliver the Assignment and Assumption Agreement.
(e) RESOLUTIONS AND CONSENTS. At Closing, Buyer shall deliver the
unanimous written consent of its board of directors authorizing the transactions
contemplated hereunder, and GVG shall deliver a shareholder's consent to the
consummation of the transactions contemplated hereunder.
(f) PAYMENTS TO COMPANY . The Company shall have received at
Closing the Remaining Purchase Price referenced in SECTION 2.6(b).
(g) TRANSITION SERVICES AGREEMENT. Buyer shall have executed and
delivered a Transition Services Agreement substantially in the form of EXHIBIT
H.
7.3 WAIVER. Buyer can waive satisfaction of any condition set forth
in SECTION 7.1 and Miller can waive any condition set forth in SECTION 7.2.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF BUYER. Except as provided in and subject to
SECTION 8.6, the Company and Miller agree on a joint and several basis as
between the Company and Miller to indemnify and hold harmless Buyer and each
officer, director and Affiliate of Buyer, including without limitation any
successor of the Buyer (collectively, the "INDEMNIFIED PARTIES") from and
against any and all damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs and expenses (including court costs and reasonable
attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) (collectively, the "INDEMNIFIABLE COSTS"), that any of
the Indemnified Parties may sustain, or to which any of the Indemnified Parties
may be subjected, arising out of (A) any misrepresentation, breach or default by
the Company or Miller of or under any of the representations, warranties,
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covenants, agreements or other provisions of this Agreement or any agreement or
document executed in connection herewith, (B) the assertion and final
determination of any claim or liability against any of the Indemnified Parties
by any Person based upon the facts that form the alleged basis for any claim or
litigation to the extent that it should have been, but was not, reserved for in
the Financial Statements and the April 30, 1999 balance sheet, in accordance
with GAAP, (C) the Company's or Miller's tortuous acts or omissions to act prior
to Closing for which the Company did not carry liability insurance for itself or
Miller as the insured party sufficient to satisfy such claim or liability,
whether or not such acts or omissions to act result in a breach or violation of
any representation or warranty and (D) any Excluded Liabilities paid by Buyer.
8.2 DEFENSE OF THIRD PARTY CLAIMS. If any legal proceeding shall be
instituted, or any claim or demand made, by any third party against any
Indemnified Party in respect of which the Company or Miller may be liable
hereunder, such Indemnified Party shall give prompt written notice thereof to
the Company or Miller and, except as otherwise provided in SECTION 8.4 below,
the Company or Miller shall defend any litigation, action, suit, demand, or
claim for which such Indemnified Party may seek indemnification with counsel
satisfactory to the Company or Miller; provided, however, if in the reasonable
judgment of Buyer, (i) such litigation, action, suit, demand or claim, or the
resolution thereof, would have a Material Adverse Effect on Buyer or (ii) the
Company or Miller shall have a conflict of interest in defending such action on
Buyer's, the Company's or Miller's behalf, at Buyer's election, Buyer may defend
itself, and in either of such instances the Company or Miller shall be liable
for all expenses reasonably incurred in connection therewith (including, without
limitation, settlement payments and reasonable attorney's and professional's
fees and disbursements). If neither (i) nor (ii) are applicable but Buyer
desires to participate in the defense of an action the Company or Miller are
defending because in Buyer's reasonable judgment the outcome of such action
could have an ongoing effect on Buyer, Buyer may participate but at its own
expense. In the event the Company or Miller fails or refuses to defend any legal
proceeding he, she or it is required to defend under this ARTICLE VIII within a
reasonable length of time, the Indemnified Parties shall be entitled to assume
the defense thereof, and the Company and Miller shall be liable to repay the
Indemnified Parties for all expenses reasonably incurred in connection with said
defense (including, without limitation, settlement payments and reasonable
attorney's fees). If the Company or Miller shall not have the right to assume
the defense of any litigation, action, suit, demand, or claim in any legal
proceeding he, she or it is required to defend under this ARTICLE VIII, the
Indemnified Parties shall have the absolute right, at the Company's and Miller's
expense, to control the defense of and to settle, in its sole discretion and
without the consent of the Company or Miller, such litigation, action, suit,
demand, or claim, but the Company or Miller shall be entitled, at their own
expense, to participate in such litigation, action, suit, demand, or claim. The
party controlling any defense pursuant to this SECTION 8.2 shall deliver, or
cause to be delivered to the other party, copies of all correspondence,
pleadings, motions, briefs, appeals or other written statements relating to or
submitted in connection with the defense of any such litigation, action, suit,
demand, or claim, and timely notices of any hearing or other court proceeding
relating to such litigation, action, suit, demand, or claim.
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8.3 PROCEDURE FOR CLAIMS.
(a) ESCROW CLAIMS. If any claim for indemnification is made by an
Indemnified Party pursuant to this ARTICLE VIII prior to the expiration of the
Escrow Period, such Indemnified Party shall first apply to the Escrow Agent for
reimbursement of such claim in accordance with the provisions of the Escrow
Agreement; provided, however, that the Escrow Sum is not intended to be an
exclusive remedy in the event Buyer has indemnification claims hereunder which
exceed such amount.
(b) OTHER CLAIMS. If pursuant to this ARTICLE VIII any claim for
indemnification is made by an Indemnified Party after the expiration of the
Escrow Period, other than claims of third parties which are governed by SECTION
8.2 hereof, the Indemnified Party (the "CLAIMANT"), shall send written notice to
the other Person (by certified mail, return receipt requested or by personal
service as provided in SECTION 10.2 hereof) setting forth in reasonable detail a
description of the facts upon which the claim is based and a reasonable estimate
of the amount of the claim (a "CLAIM", with the notice thereof referred to as
the "CLAIM NOTICE"). The Person against whom the Claim is brought (the
"RESPONDENT") shall have fifteen (15) calendar days from receipt of the Claim
Notice to respond to such Claim. Such response shall be in writing and shall (i)
set forth in reasonable detail the Respondent's objection to the Claim and the
basis for such objection, or (ii) the efforts undertaken or to be undertaken by
the Respondent to cure the Claim. In the event the Respondent fails to respond
to the Claim Notice in the manner set forth above within such 15-day period, the
Respondent shall be deemed to have conceded the Claim in full. In the event the
parties are unable to resolve the Claim within thirty (30) calendar days from
the date of receipt of the Claim Notice, the Claim shall be submitted to
arbitration in accordance with SECTION 10.9 below.
8.4 TAX AUDITS, ETC. In the event of an audit of a Tax Return of
the Company with respect to which an Indemnified Party might be entitled to
indemnification pursuant to this ARTICLE VIII (the parties hereby acknowledging
that any liability for Taxes is specifically excluded from Assumed Liabilities
pursuant to SECTION 2.3(b)), Buyer shall have the right to control any and all
such audits that may result in the assessment of additional Taxes against the
Buyer or the Purchased Assets and any and all subsequent proceedings in
connection therewith, including appeals (subject to the prior written consent of
the Company, which shall not unreasonably be withheld and subject to the right
of the Company to have its accountants and attorneys consult with Buyer on such
audits or procedures at the Company's expense). The Company and Miller 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 or the Buyer as a result of any such
audit or other proceeding, the Company and Miller shall be responsible for and
shall promptly pay all Taxes, interest, and penalties for which any of the
Indemnified Parties shall be entitled to indemnification.
8.5 INDEMNIFICATION OF THE COMPANY AND MILLER.
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(a) BUYER'S INDEMNIFICATION. Buyer agrees to indemnify and hold
harmless Miller and the Company and each officer, director or Affiliate of the
Company, from and against any Indemnifiable Costs arising out of any
misrepresentation, breach or default by Buyer of or under any of the covenants,
agreements or other provisions of this Agreement or any agreement or document
executed in connection herewith.
(b) GVG'S INDEMNIFICATION. GVG agrees to indemnify and hold
harmless Miller and the Company and each officer, director or Affiliate of the
Company, from and against any Indemnifiable Costs arising out of any
misrepresentation, breach or default by GVG of or under SECTION 4.2 and SECTION
10.14 of this Agreement.
8.6 LIMITS ON INDEMNIFICATION. All Indemnifiable Costs sought by any
party hereunder shall be net of any insurance proceeds received by such Person
with respect to such claim (less the present value of any premium increases
occurring as a result of such claim). Except for (i) any claims for breach of
the representations, warranties and covenants of the Company and Miller under
SECTIONS 3.11 or 3.14, hereof (for which indemnification claims must be made
prior to the expiration of the applicable statute of limitations and if so made,
such claims shall continue after such date until finally resolved), (ii) any
claims for breach of the representations, warranties and covenants of the
Company and Miller under SECTION 3.3 (for which indemnification claims must be
made at any time after the Closing) or (iii) any claims for breach of the
representations, warranties or covenants of the Company and Miller under ARTICLE
VI (for which indemnification claims must be made prior to the expiration of the
time periods contained therein), the right to make claims for indemnification
provided under this ARTICLE VIII shall expire on the third anniversary of the
Closing Date (except for claims made prior to such date which shall continue
after such date until finally resolved). The Company and Miller shall not be
obligated to pay any amounts for indemnification under this ARTICLE VIII until
the aggregate indemnification obligation sought by Buyer hereunder exceeds
$100,000, whereupon the Company and Miller shall be liable for all amounts for
which indemnification may be sought. Buyer shall not be obligated to pay any
amounts for indemnification under this ARTICLE VIII until the aggregate
indemnification obligation sought by the Company or Miller hereunder exceeds
$100,000, whereupon Buyer shall be liable for all amounts for which
indemnification may be sought. For purposes of SECTIONS 8.1 or 8.5, any
requirement in any representation or warranty that an event or fact be material
or have a Material Adverse Effect, as appropriate, in order for such event or
fact to constitute a misrepresentation or breach of such representation or
warranty shall be ignored. Notwithstanding the foregoing, (i) in no event shall
the aggregate liability of the Company and Miller to Buyer or Buyer to the
Company and Miller exceed the Purchase Price and, (ii) in no event shall the
aggregate liability of the Company or Miller to Buyer for a breach of SECTION
3.21 (Year 2000) exceed $2,500,000 (absent gross negligence or willful
misconduct, in which case only the liability cap in subclause (i) above shall
apply). However nothing in this ARTICLE VIII shall limit Buyer, the Company or
Miller in exercising or securing any remedies provided by applicable statutory
or common law with respect to the conduct of the Company, Miller 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
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<PAGE> 47
paid by the Company or Miller shall be deemed to be a reduction of the Purchase
Price paid by Buyer under this Agreement.
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 Miller has breached in
any material respect any representation, warranty or covenant contained in this
Agreement, and in each case such breach has not been remedied within ten (10)
business days after receipt of notice specifying such breach and demanding such
breach to be remedied;
(c) in writing by Miller 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 Miller, on the one hand,
or Buyer, on the other hand, in the event the Closing has not occurred on or
before 9:00 a.m. on June 30, 1999, unless the failure of such consummation or
the failure to satisfy such condition, as applicable, shall be due to a breach
of any representation or warranty made by the party or parties seeking to
terminate this Agreement or the failure of such party or parties to comply in
all material respects with the agreements and covenants contained herein to be
performed by such party or parties.
9.2 EFFECT OF TERMINATION. If the transactions contemplated by this
Agreement are terminated pursuant to SECTION 9.1 by notice in writing to the
non-terminating party or parties, this Agreement shall become void and of no
further force and effect, except that such termination shall not relieve (i) any
party from its covenants in respect of confidentiality contained in SECTION 6.3
and (ii) any party then in breach of any representation, warranty, covenant or
agreement contained in this Agreement from liability in respect of such breach.
ARTICLE X
MISCELLANEOUS
10.1 MODIFICATIONS; WAIVERS. Any amendment, change or modification of
this Agreement shall be void unless in writing and signed by all parties hereto.
No failure or delay by any party hereto in exercising any right, power or
privilege hereunder (and no course of dealing between or among any of the
parties) shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of
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<PAGE> 48
any subsequent or other default. No single or partial exercise of any such
right, power or privilege shall preclude the further or full exercise thereof.
10.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, or 48 hours after deposited in the United States mail, first-class,
postage prepaid, or the first business day following delivery to a commercial
overnight courier or upon receipt of a confirmation of a facsimile addressed to
the respective parties hereto as follows:
Buyer or GVG:
Global Vacation Group, Inc.
1420 New York Avenue, NW
Suite 550
Washington, D.C. 20005
Attention: Larry Gilbertson, General Counsel
Tel No.: (202) 347-1800
Fax No.: (202) 347-0710
With copies 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:
Trase Miller Solutions, Inc.
c/o JFM Enterprises
1301 West 22nd Street
Suite 1001
Oak Brook, Illinois 60523
Attention: James F. Miller
Fax No.: (630) 990-6850
Tel No.: (630) 990-4555
With a copy to:
Cowan & Associates
180 North LaSalle Street
Suite 1922
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<PAGE> 49
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 parties in due course.
10.4 EXPENSES. Each of the parties hereto will bear all costs,
charges and expenses incurred by such party in connection with this Agreement
and the consummation of the transactions contemplated herein, provided, however,
that the Company and each of the Shareholders shall bear all costs and expenses
of (i) any broker involved in this transaction on behalf of any of the
Shareholders or the Company and (ii) all legal and other expenses of the
Shareholders or the Company with respect to this Agreement and the transactions
contemplated hereby.
10.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Company, Buyer and Miller, their heirs,
representatives, successors, and permitted assigns, in accordance with the terms
hereof. This Agreement shall not be assignable by the Company or Miller 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 Miller
or the Company, but any such assignment shall not relieve Buyer of its
obligations hereunder. In addition, Buyer may assign any or all of its rights
and obligations hereunder, without the consent of the Company or Miller
following the Closing, in connection with any sale of all or substantially all
of the assets, capital stock or business of Buyer or an Affiliate thereof
(whether effected by sale, exchange, merger, consolidation or other
transaction).
10.6 ENTIRE AND SOLE AGREEMENT. This Agreement and the other
schedules and agreements referred to herein, constitute the entire agreement
between the parties hereto and supersede all prior agreements, representations,
warranties, statements, promises, information, arrangements and understandings,
whether oral or written, express or implied, with respect to the subject matter
hereof.
10.7 GOVERNING LAW. This Agreement and its validity, construction,
enforcement, and interpretation shall be governed by the substantive laws of the
State of New York, without giving effect to the principles of conflicts of laws
thereof.
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10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, all
covenants, agreements, representations, and warranties and the related
indemnities made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of three
(3) years, provided, however, that (a) the representations and warranties
contained in SECTIONS 3.11 and 3.14 of this Agreement, and the related
indemnities, shall survive the Closing until the expiration of the applicable
statutes of limitations, (b) the representations, warranties and covenants
contained in SECTIONS 3.3 of this Agreement, and the related indemnities, shall
survive the Closing indefinitely and not expire, (c) all covenants in ARTICLE VI
that have an expiration date contained therein shall expire as of such date, and
(d) all other covenants in this Agreement that do not have an expiration date
shall expire upon the expiration of the applicable statutes of limitations.
10.9 DISPUTE RESOLUTION. ALL DISPUTES AMONG MILLER, THE COMPANY AND
BUYER WITH RESPECT TO ANY PROVISION OF THIS AGREEMENT OR THE RIGHTS AND
OBLIGATIONS OF MILLER, THE COMPANY AND BUYER HEREUNDER (OTHER THAN DISPUTES
INVOLVING ALLEGATIONS OF INTENTIONAL FRAUD, DISPUTES ARISING UNDER SECTION 6.4
OF THIS AGREEMENT AND DISPUTES TO BE RESOLVED PURSUANT TO SECTION 2.9), THAT
CANNOT BE RESOLVED BY MUTUAL AGREEMENT, WILL BE RESOLVED IN THE DISTRICT OF
COLUMBIA BY BINDING ARBITRATION IN ACCORDANCE WITH THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION IN THE DISTRICT OF COLUMBIA OR BY ANY OTHER MEANS OF
ALTERNATIVE DISPUTE RESOLUTION MUTUALLY AGREED UPON BY THE PARTIES.
10.10 INVALID PROVISIONS. If any provision of this Agreement is
deemed or held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it is
deemed to be illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however, that if any
provision of this Agreement is deemed or held to be illegal, invalid or
unenforceable there shall be added hereto automatically a provision as similar
as possible to such illegal, invalid or unenforceable provision and be legal,
valid and enforceable. Further, should any provision contained in this Agreement
ever be reformed or rewritten by any judicial body of competent jurisdiction,
such provision as so reformed or rewritten shall be binding upon all parties
hereto.
10.11 PUBLIC ANNOUNCEMENTS. Neither the Shareholders nor the Company
shall make any public announcement of the transactions contemplated hereby
without the prior written consent of Buyer, which consent shall not be
unreasonably withheld, conditioned or delayed.
10.12 REMEDIES CUMULATIVE. The remedies of the parties under this
Agreement are cumulative and shall not exclude any other remedies to which any
party may be lawfully entitled.
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<PAGE> 51
10.13 THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any Person, other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement.
10.14 GVG SUPPORT. GVG agrees to provide Buyer with sufficient funds
to pay for its obligations under this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 52
IN WITNESS WHEREOF, each of the parties hereto has caused this Asset
Purchase Agreement to be duly executed as of the date and year first above
written.
BUYER:
GVG/TMS ACQUISITION SUB, INC.
By: /s/ Roger H. Ballou
--------------------------------------
Name: Roger H. Ballou
Title: Chief Executive Officer
THE COMPANY:
TRASE MILLER SOLUTIONS, INC.
By: /s/ James F. Miller
--------------------------------------
Name: James F. Miller
Title: Chairman
JAMES F. MILLER
/s/ James F. Miller
------------------------------------------
JAMES F. MILLER
AGREED AND ACKNOWLEDGED,
only with respect to SECTION 4.2, SECTION 8.5(b) and SECTION 10.14
GLOBAL VACATION GROUP, INC.
By: /s/ Roger H. Ballou
---------------------------
Name: Roger H. Ballou
Title: Chairman and Chief Executive Office
<PAGE> 1
EXHIBIT 99.1
For immediate release
Contact: Jay Stuart Jerry Daly, Carol McCune (Media)
Chief Financial Officer Daly Gray Public Relations
Global Vacation Group, Inc. (609) 383-1414
(202) 347-1800
GLOBAL VACATION GROUP ACQUIRES TRASE MILLER SOLUTIONS
WASHINGTON, D.C., June 2, 1999--Global Vacation Group, Inc. (NYSE:
GVG), one of the largest U.S. providers of value-added vacation products and
services targeted to higher-income travelers, today announced that it has
acquired Chicago-based Trase Miller Solutions, Inc. The company designed and
maintains the information systems which are the designated technology platform
for Global Vacation Group's reservation systems, back-office and marketing
support services, including website and on-line booking maintenance. Under terms
of the agreement, Global Vacation Group will acquire all of the technology and
rights of Trase Miller.
"We previously had a long-term contract with Trase Miller, with an
option to buy the company and its technology," said Roger Ballou. "This is an
important strategic acquisition that ensures our continued access to
well-designed technology that allows us to control our own destiny as we move
rapidly into the Information Age."
"From a financial viewpoint, the acquisition helps us better manage
our costs and provides us with additional economies of scale," said Ballou.
"From a strategic viewpoint, it gives us the depth and expertise to be on the
leading edge in our industry. We believe this will give us a competitive
advantage as technology becomes an increasingly important component of the
leisure travel business.
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Global Acquires Trase Miller
Page 2
"This acquisition not only benefits us, but our travel agents and
suppliers, as well," he noted. "We will use the system to better target and
market to our customers, cross-sell, gain
<PAGE> 2
greater understanding of market trends and preferences, as well as obtain more
accurate, up-to-the-minute data. This system will play an important role in the
future success of our branded products."
Ballou said that the company has completed Y2K testing and believes
the Trase Miller system is fully Y2K compliant. Global Vacation Group currently
has migrated MTI and Globetrotters over to the Trase Miller system and is
beginning to migrate its most recent acquisitions--Friendly Holidays and Island
Resort Tours--to the platform. Classic Custom Vacations is expected to migrate
to the system in 2000, as well as other future acquisitions.
Global Vacation Group, headquartered in Washington, D.C., is a
value-added provider of vacation products and services. Global Vacation Group's
family of brands includes Classic Custom Vacations, which creates customized
vacation packages for upscale U.S. travelers, Globetrotters, which is targeted
to the popularly priced-vacation buyer, and Allied Tours, which creates and
coordinates packages and tours for international vacation travelers. Global
Vacation Group recently announced the formation of a business arrangement with
Meredith Publishing to launch Better Homes and Gardens Vacations, an affinity
product targeted to consumers who relate to that publication's attributes,
including value, service and trust.
The matters in this press release include "forward looking
statements" within the meaning of the safe harbor provisions of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 and are qualified by cautionary statements contained herein and in Global
Vacation Group's filings with the Securities and Exchange Commission.
