1
EXHIBIT 10.2
EXECUTION COPY
================================================================================
STOCK SUBSCRIPTION AND EXCHANGE AGREEMENT
AMONG
CRUISE LINE HOLDINGS CO.
XXXXXX XXXXXX
XXXXX XXXXXXX
THE XXXXXX XXXXXX REVOCABLE TRUST 8/3/94
THE XXXXX XXXXXX REVOCABLE TRUST 8/3/94
AND
THE XXXXX XXXXXX REVOCABLE TRUST 8/3/94
Dated as of August 27, 1998
================================================================================
2
TABLE OF CONTENTS
Page
1. DEFINITIONS.................................................................................... 2
2. CONTRIBUTION AND EXCHANGE...................................................................... 2
2.1. Contribution of the Shares................................................... 2
3. THE CLOSING.................................................................................... 2
3.1. Time and Place of Closing.................................................... 2
3.2. Deliveries................................................................... 2
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS.............................................. 3
4.1. Corporate Matters............................................................ 3
4.1.1. Organization, Power and Standing............................ 3
4.1.2. Capitalization.............................................. 3
4.1.3. Subsidiaries................................................ 4
4.1.4. Charter and By-laws......................................... 4
4.2. Financial Statements, etc.................................................... 4
4.2.1. Financial Information....................................... 4
4.2.2. Character of Financial Information.......................... 4
4.2.3. Inventory and Receivables................................... 5
4.2.4. Change in Condition......................................... 5
4.3. Liabilities.................................................................. 6
4.3.1. Debt........................................................ 6
4.3.2. Other Liabilities........................................... 7
4.4. Assets....................................................................... 7
4.4.1. Title to Assets............................................. 7
4.4.2. Real Property and Equipment................................. 7
4.4.3. Intellectual Property Rights................................ 8
4.5. Contracts, etc............................................................... 9
4.5.1. Certain Contractual Obligations............................. 9
4.5.2. Nature of Contracts, etc.................................... 11
4.5.3. Insurance................................................... 11
4.5.4. Transactions with Affiliates................................ 11
4.5.5. Non-Contravention, etc...................................... 12
4.6. Compliance with Laws, etc.................................................... 12
4.6.1. Compliance Generally........................................ 12
4.6.2. Tax Matters................................................. 13
4.6.3. No Illegal Payments, etc.................................... 15
4.6.4. Employee Benefit Plans...................................... 15
4.7. Environmental and Safety Matters, etc........................................ 18
4.8. Labor Relations.............................................................. 18
-i-
3
4.9. Customers, Suppliers and Distributors........................................ 18
4.10. Litigation, etc.............................................................. 19
4.11. Disclosure................................................................... 19
4.12. Banking Facilities, Powers of Attorney, etc.................................. 19
4.13. Books and Records............................................................ 19
4.14. Brokers or Finders Fees...................................................... 20
4.15. Shareholder Agreements....................................................... 20
4.16. Amendments to Disclosure Schedules........................................... 20
5. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS.................................. 20
5.1. Enforceability............................................................... 20
5.2. Authorization................................................................ 21
5.3. Non-Contravention, etc....................................................... 21
5.4. Title, etc................................................................... 21
5.5. Amendments to Disclosure Schedules........................................... 21
5.6. Organization................................................................. 22
5.7. Investment................................................................... 22
6. REPRESENTATIONS AND WARRANTIES OF HOLDCO ONE................................................... 22
6.1. Corporate Matters............................................................ 22
6.2. Authorization and Enforceability............................................. 23
6.3. Non-Contravention, etc....................................................... 23
6.4. Brokers' Fees................................................................ 23
6.5. Investment................................................................... 23
6.6. Capitalization of Holdco One................................................. 23
6.7. Greyhound Acquisition........................................................ 24
6.8. Commitment Letters........................................................... 24
6.9. Investment Company........................................................... 24
6.10. Liabilities. ............................................................... 24
6.11. Amendments to Disclosure Schedules........................................... 24
6.12. Disclosure................................................................... 25
7. CERTAIN AGREEMENTS OF THE PARTIES.............................................................. 25
7.1. Certain Pre-Closing Matters.................................................. 25
7.1.1. Exclusivity................................................. 25
7.1.2. Access to Premises and Information.......................... 25
7.1.3. Confidentiality Covenant of Holdco One...................... 25
7.1.4. Operation of Business in the Ordinary Course................ 26
7.1.5. Certain Notices............................................. 27
7.1.6. Preparation for Closing..................................... 27
7.1.7. Amendment of Articles of By-Laws............................ 27
7.2. Certain Closing Matters...................................................... 27
-ii-
4
7.2.1. Expenses of Transaction..................................... 27
7.2.2. Publicity, etc.............................................. 28
7.3. Confidentiality Covenants of Subscribers..................................... 28
7.4. Tax Matters.................................................................. 28
7.4.1. Payment of Transfer Taxes and Other Charges.................. 28
7.4.2. Withholding................................................. 29
7.4.3. Certificates................................................ 29
7.4.4. Tax Sharing Agreements...................................... 30
7.4.5. Section 351 Issues.......................................... 30
7.4.6. Applicable Period........................................... 31
7.5. Noncompetition............................................................... 31
7.6. Continuation of Benefits..................................................... 31
7.7. Guarantee.................................................................... 32
7.8. Management Options........................................................... 32
7.9. Assignment and Amendment. .................................................. 32
8. CONDITIONS TO THE HOLDCO ONE'S OBLIGATION TO CLOSE............................................. 32
8.1. Representations, Warranties and Covenants.................................... 33
8.1.1. Continued Accuracy of Representations and Warranties........ 33
8.1.2. Performance of Agreements................................... 33
8.1.3. Closing Certificate......................................... 33
8.2. Indebtedness. .............................................................. 33
8.3. Greyhound Acquisition........................................................ 33
8.4. Consents, etc................................................................ 33
8.5. Closing Agreements........................................................... 33
8.6. Legality; Governmental Authorization; General Litigation..................... 34
8.7. Opinion of Counsel........................................................... 34
8.8. Financing.................................................................... 34
8.9. No Material Adverse Change................................................... 34
8.10. Guarantee.................................................................... 35
8.11. Changes to Schedules......................................................... 35
8.12. Dutch Holding Company........................................................ 35
8.13. Termination of Obligations................................................... 35
8.14. Dutch Law.................................................................... 35
8.15. Side Letter. ............................................................... 35
8.16. Assignment and Amendment..................................................... 35
8.17. General...................................................................... 35
9. CONDITIONS TO THE SUBSCRIBERS' OBLIGATION TO CLOSE............................................. 35
9.1. Representations, Warranties and Covenants.................................... 36
9.1.1. Continued Accuracy of Representations and Warranties........ 36
-iii-
5
9.1.2. Performance of Agreements................................... 36
9.1.3. Officer's Certificate....................................... 36
9.2. Consents, etc................................................................ 36
9.3. Closing Agreements........................................................... 36
9.4. Government Authorization; Litigation......................................... 36
9.5. Opinion of Counsel........................................................... 37
9.6. Options...................................................................... 37
9.7. Greyhound Acquisition........................................................ 37
9.8. Initial Investment........................................................... 37
9.9. Indemnity Agreements......................................................... 37
9.10. Changes to Schedules......................................................... 37
9.11. Commitment Letters........................................................... 37
9.12. Dutch Holding Company. ...................................................... 37
9.13. Dutch Law.................................................................... 37
9.14. Side Letter.................................................................. 38
9.15. Assignment and Amendment..................................................... 38
10. INDEMNIFICATION................................................................................ 38
10.1. Survival of Representations and Warranties................................... 38
10.2. Indemnity by Subscribers..................................................... 38
10.3. Indemnity by Holdco One...................................................... 39
10.4. Matters Involving Third Parties.............................................. 39
10.5. Other Indemnification Provisions............................................. 40
10.6. Limitations on Indemnification............................................... 41
11. DEFINITIONS.................................................................................... 41
11.1. Certain Matters of Construction.............................................. 41
11.2. Cross Reference Table........................................................ 42
11.3. Certain Definitions.......................................................... 43
11.3.1. Action..................................................... 43
11.3.2. Affiliate.................................................. 43
11.3.3. Berkshire Investors LLC.................................... 44
11.3.4. Business................................................... 44
11.3.5. Business Day............................................... 44
11.3.6. By-laws.................................................... 44
11.3.7. Charter.................................................... 44
11.3.8. Code....................................................... 44
11.3.9. Compensation............................................... 44
11.3.10. Contractual Obligation.................................... 45
11.3.11. Debt...................................................... 45
11.3.12. Distribution.............................................. 45
11.3.13. Enforceable............................................... 45
11.3.14. ERISA..................................................... 45
-iv-
6
11.3.15. Gain Recognition Agreement................................ 45
11.3.16. Generally Accepted Accounting Principles.................. 46
11.3.17. Guarantee................................................. 46
11.3.18. Governmental Authority.................................... 46
11.3.19. Governmental Order........................................ 46
11.3.20. Intangibles............................................... 46
11.3.21. Known or Knowledge........................................ 46
11.3.22. Legal Requirement......................................... 47
11.3.23. Lien...................................................... 47
11.3.24. Majority Subscribers. ................................... 47
11.3.25. Material Adverse Effect................................... 47
11.3.26. Members of the Immediate Family........................... 47
11.3.27. Ordinary Course of Business............................... 48
11.3.28. Person.................................................... 48
11.3.29. Subsidiary................................................ 48
11.3.30. Tax Distribution.......................................... 48
11.3.31. Taxes..................................................... 48
11.3.32. Tax Return................................................ 48
12. GOVERNING LAW.................................................................................. 49
12.1. Governing Law................................................................ 49
12.2. [Reserved]................................................................... 49
12.3. Waiver of Jury Trial......................................................... 49
12.4. Reliance..................................................................... 49
13. TERMINATION.................................................................................... 49
13.1. Termination of Agreement..................................................... 49
13.2. Effect of Termination........................................................ 50
14. MISCELLANEOUS.................................................................................. 50
14.1. Entire Agreement; Waivers.................................................... 50
14.2. Amendment or Modification, etc............................................... 51
14.3. Headings, etc................................................................ 51
14.4. Schedules; Listed Documents, etc............................................. 51
14.5. Severability................................................................. 51
14.6. Counterparts................................................................. 51
14.7. Successors and Assigns....................................................... 52
15. NOTICES........................................................................................ 52
-v-
7
SCHEDULES
Schedule 4.1.1 Foreign Jurisdictions
Schedule 4.1.3 Subsidiaries
Schedule 4.2.4 Changes in Conditions
Schedule 4.3.1 Indebtedness
Schedule 4.4.1 Liens
Schedule 4.4.2 Listed Leases and Real Property
Schedule 4.4.3 Listed Intangibles/Listed Licenses
Schedule 4.5.1 Contractual Obligations
Schedule 4.5.3 Liability Policies/Loss Runs
Schedule 4.5.4 Transactions with Affiliates
Schedule 4.5.5 Non-Contravention, etc. (Companies)
Schedule 4.6.1 Compliance Generally
Schedule 4.6.2 Tax Matters (Subscribers)
Schedule 4.6.4 Employee Plans
Schedule 4.7 Environmental Claims
Schedule 4.9 Customers, Suppliers and Distributors
Schedule 4.10 Litigation
Schedule 4.12 Banking Facilities
Schedule 5.3 Non-Contravention, etc. (Individual Subscribers)
Schedule 6.6 Holdco One Capital Structure
Schedule 6.8 Commitment Letters
Schedule 7.1.4 Operation of Business
Schedule 7.6 Continued Insurance
EXHIBITS
Exhibit 2.2 Allocation of Purchase Price
Exhibit 8.5(a) Form of Employment Agreement
Exhibit 8.5(b) Form of Shareholders Agreement
Exhibit 8.7 Opinion of White & Case
Exhibit 9.5 Buyer's Opinion
Exhibit 9.9 Form of Indemnity Agreement
-vi-
8
STOCK SUBSCRIPTION AND EXCHANGE AGREEMENT
This STOCK SUBSCRIPTION AND EXCHANGE AGREEMENT (the "Agreement") is
made as of the 27th day of August, 1998 among Cruise Line Holdings Co., a
Delaware corporation ("Holdco One"), Xxxxxx Xxxxxx, Xxxxx Xxxxxxx, the Xxxxxx
Xxxxxx Revocable Trust 8/3/94, the Xxxxx Xxxxxx Revocable Trust 8/3/94 and the
Xxxxx Xxxxxx Revocable Trust 8/3/94, the holders of all the issued and
outstanding capital stock of the Companies (Xxxxx, Xxxxxxx and each Trust, each
a "Subscriber" and collectively the "Subscribers").
Recitals
1. The Subscribers own all of the issued and outstanding shares of
common stock (being all of the issued and outstanding shares of capital stock,
the "Capital Stock") of On-Board Media, Inc., a Florida corporation
("On-Board"), Cruise Management International, Inc., a Florida corporation
("Cruise"), Boxer Media, Inc., a Florida corporation ("Boxer") (On-Board, Cruise
and Boxer each a "Company" and collectively, the "Companies").
2. The Subscribers desire to contribute and transfer to Holdco One all
of the issued and outstanding shares of Capital Stock (collectively, the
"Shares" and such contribution, the "Subscribers' Contribution").
3. Each Subscriber is willing to acquire, and Holdco One is willing to
issue to such Subscriber in exchange for the Subscribers' Contribution, shares
of stock of Holdco One and cash, all upon the terms and subject to the
conditions set forth in this Agreement.
4. Berkshire Investors LLC and the Management Investors (as defined in
the Shareholders Agreement) have agreed to contribute cash to Holdco One in
exchange for the issuance of common stock of Holdco One (the "Berkshire
Contribution"). Together with the Subscribers and the Management Investors,
Berkshire Investors LLC will own all of the outstanding common stock of Holdco
One immediately after such contributions.
5. Holdco One, Berkshire Investors LLC and the Subscribers each intend
that the Berkshire Contribution and the Subscribers' Contribution qualify as a
transaction under Section 351 of the Code.
Agreement
Therefore, in consideration of the foregoing and the mutual agreements
and covenants set forth below, the parties hereto hereby agree as follows:
9
1. DEFINITIONS.
Certain terms are used in this Agreement as specifically defined
herein. These definitions are set forth or referred to in Section 11.
2. CONTRIBUTION AND EXCHANGE.
2.1. Contribution of the Shares. Upon the terms, subject to the
conditions, and in reliance on the representations, warranties and covenants set
forth herein, the Subscribers hereby agree to contribute to Holdco One at the
Closing all of the Shares in exchange for the consideration described below:
(a) an aggregate amount equal to $30,000,000 in cash
payable by wire transfer to the Subscribers in the amounts set
forth opposite each Subscriber's name on Exhibit 2.2 and in
accordance with written instructions of each such Subscriber
delivered at least two business days prior to the Closing; and
(b) the number of shares of common stock of Holdco
One (the "Holdco One Stock" and, together with the cash
described in the preceding paragraph, the "Consideration")
which, at Closing, will represent 27 1/2% of the fully diluted
and outstanding common stock of Holdco One, allocated among
the Subscribers in the percentages set forth on Exhibit
2.2(a).
3. THE CLOSING.
3.1. Time and Place of Closing. Subject to Section 13, the closing of
the contribution and exchange of the Shares and the other transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Ropes & Xxxx, One International Place, Boston, Massachusetts, or such other
location as the parties may agree, at 9:00 a.m. (New York time) on September 15,
1998 or such other time and date as the Majority Subscribers and Holdco One
shall mutually agree (such date being referred to herein as the "Closing Date").
3.2. Deliveries. On the Closing Date:
(a) each Subscriber will contribute, transfer and
deliver to Holdco One a certificate or certificates for all of
the Shares to be contributed by such Subscriber duly endorsed
or accompanied by separate stock powers duly endorsed, with
signature(s) guaranteed, in each case free and clear of any
Liens and in form proper for contribution and transfer and
satisfactory to Holdco One, in exchange for the Consideration
as set forth in Section 2.1; and
-2-
10
(b) (i) Holdco One will make or cause to be made the
Tax Distributions in the amounts set forth in Schedule 7.1.4
and (ii) Holdco One will pay off the Debt incurred in respect
of the Carnival Commissions as set forth in Section 4.3.1.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS.
In order to induce Holdco One to enter into and perform this Agreement
and to consummate the transactions contemplated hereby, each of the Subscribers
severally and not jointly represents and warrants to Holdco One that the
statements contained in this Article 4 are correct and complete as of the date
of this Agreement and, unless a date is specified in such representation and
warranty, will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement through this Section 4), provided, however, that the Subscribers may
amend such disclosure schedules as set forth in Section 4.16.
4.1. Corporate Matters.
4.1.1. Organization, Power and Standing. Each Company is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to execute, deliver and perform each of
the Closing Agreements to which it is a party, to carry on the Business
as currently conducted, and to consummate the transactions contemplated
hereby. Except as set forth on Schedule 4.6.1, each Company is duly
qualified or licensed to do business as a foreign corporation, and is
in good standing as such, in each jurisdiction in which the failure to
be so qualified or licensed and in good standing could reasonably be
expected to have a Material Adverse Effect upon the Business as
currently conducted, and each such jurisdiction is listed in Schedule
4.1.1.
4.1.2. Capitalization. The only issued and outstanding shares
of capital stock of the Companies are the Shares, consisting of 750
shares of common stock, $1.00 par value of On-Board, 750 shares of
common stock, $1.00 par value of Cruise and 100 shares of common stock
$1.00 par value of Boxer, of which no shares are held as treasury
stock, all of which have been duly authorized and validly issued and
are fully paid and non-assessable, and all of which are beneficially
owned and held of record by the Subscribers. There is no Contractual
Obligation or Charter or By-law provision which obligates any Company
to issue, purchase or redeem, or make any payment in respect of, any
shares of capital stock or other securities convertible into or
exchangeable for shares of capital stock or which provides for any
stock appreciation or similar right or grants any right to share in the
equity, income, revenues (except for sales commission or distribution
agreements entered into in the Ordinary Course of Business) or cash
flow of any Company and no authorization therefor has been given.
-3-
11
4.1.3. Subsidiaries. No Company has, or ever has had, any
Subsidiary. Except as set forth on Schedule 4.1.3, no Company has,
directly or indirectly, any ownership or other interest in, or control
any corporation, partnership, joint venture, business association or
other entity.
4.1.4. Charter and By-laws. The Subscribers have heretofore
delivered to Holdco One a true and complete copy of each Company's
Charter and By-laws.
4.2. Financial Statements, etc.
4.2.1. Financial Information. Holdco One has been furnished
with true and complete copies of each of the following:
(a) The audited balance sheets of On-Board as of
December 31, 1997, 1996 and 1995, the audited balance sheets
of Cruise as of December 31, 1997 and 1996, and the related
statements of income and retained earnings and cash flows for
the fiscal years then ended, accompanied by the notes thereto
and the report thereon (the "Audited Financials", and together
with the Boxer Financials and the Quarterly Financials, the
"Financial Statements").
(b) The unaudited balance sheet of Boxer as of
December 31, 1997 and related unaudited statements of earnings
and stockholders equity and cash flows for the fiscal year
then ended (the "Boxer Financials").
(c) The unaudited balance sheets of the Companies as
of June 30, 1998 and related statements of earnings and
stockholders equity and cash flows for the fiscal quarter and
six months then ended (the "Quarterly Financials").
(d) Balance Sheet. As used herein, the term "Balance
Sheet Date" shall mean December 31, 1997 and the term "Balance
Sheets" shall mean the balance sheets of the Companies as of
December 31, 1997 contained in the Audited Financials and
Boxer Financials, respectively.
4.2.2. Character of Financial Information. The Financial
Statements relating to On-Board and Cruise (including with respect only
to the Audited Financials the notes thereto) were prepared in
accordance with generally accepted accounting principles consistently
(except as described therein) applied throughout the periods specified
therein, and present fairly the financial position and results of
operations of each Company for the periods specified therein, subject
in the case of the Quarterly Financials to an absence of footnotes and
normal year-end audit adjustments. The Financial Statements relating to
Boxer were prepared on a cash basis methodology, applied consistently
throughout the periods specified therein, and present fairly the
financial position and results of operations of Boxer for the periods
specified therein,
-4-
12
subject in the case of the Quarterly Financials to an absence of
footnotes and normal year-end adjustments.
4.2.3. Inventory and Receivables.
4.2.3.1. Inventories.
(a) The values at which all inventories are carried
on the balance sheets delivered with the Financial Statements,
including without limitation the reserves with respect thereto
reflected in the Balance Sheets, have been calculated in
accordance with generally accepted accounting principles.
(b) Taking into account the reserves for inventory
set forth in the Balance Sheets, the inventories reflected on
the Balance Sheets are (i) in all material respects in good
and merchantable condition, (ii) salable in the Ordinary
Course of Business of the Companies, and (iii) verifiable in
all material respects by reference to records which are
maintained by the Companies. The inventories reflected on the
Balance Sheets included any and all material amounts of
inventory held on consignment by third parties.
4.2.3.2. Accounts Receivable. Taking into account the
reserves for uncollectible accounts set forth in the Balance
Sheets, all of the accounts reflected on the Balance Sheet
were accounts receivable that (i) arose from sales made and
orders received in the Ordinary Course of Business, and (ii)
to the Subscribers' Knowledge, are not subject to any set-off
or counterclaim, except with respect to the dispute with
Xxxxxx X. Xxxxxx d/b/a Brazilian Gems set forth on Schedule
4.10.
4.2.4. Change in Condition. Except for the matters set forth
on Schedule 4.2.4, which matters, in the aggregate, have not had and
could not reasonably be expected to have a Material Adverse Effect,
since the Balance Sheet Date:
(a) The Business has been conducted only in the
Ordinary Course of Business;
(b) No Company has incurred or otherwise become
liable in respect of any Debt except for borrowings in the
Ordinary Course of Business, or become liable in respect of
any Guarantee (other than Guarantees by the Companies of
obligations of the Companies) except such Debt as is permitted
pursuant to subsection 7.1.4(d) hereof;
(c) No Company has declared or made any Distribution
or entered into or performed any other transaction which has
resulted or will result in any
-5-
13
payment or other transfer of assets to or for the benefit of
any Subscriber or any Affiliate of any Subscriber (other than
transactions among the Companies or Tax Distributions
permitted pursuant to subsection 7.1.4(c) hereof);
(d) No Company has (i) sold, leased to others or
otherwise disposed of any material portion of its assets
(except for sales of inventory and equipment in the Ordinary
Course of Business), (ii) entered into any Contractual
Obligation relating to (A) the purchase of any Debt or equity
interest in any Person, (B) the purchase of assets
constituting a business or (C) any merger, consolidation or
other business combination (other than among the Companies),
(iii) canceled or compromised any material Debt or claim
(other than accounts receivable and other Debts or claims in
the Ordinary Course of Business), (iv) Knowingly waived or
released any right of material value (other than in the
Ordinary Course of Business), or (v) instituted, settled or
agreed to settle any material Action, inquiry or investigation
(other than in the Ordinary Course of Business);
(e) No Company has (i) made any changes in the rate
of Compensation in effect for any of the Subscribers or (ii)
paid or agreed or orally promised to pay, conditionally or
otherwise, any extra Compensation to any Subscriber, or (iii)
made any changes in the rate of Compensation of any other
officer, employee, consultant or agent of any Company (other
than in the case of clause (iii) of this subsection (e) in the
Ordinary Course of Business);
(f) No Company has made any material change in its
customary methods of accounting or accounting practices
(including without limitation with respect to reserves),
pricing policies or payment or credit practices or failed to
pay any creditor any amount owed to such creditor when due or
granted any extensions of credit other than in the Ordinary
Course of Business;
(g) No Subscriber or Company has entered into any
Contractual Obligation to do any of the things referred to in
clauses (a) through (f) above; and
(h) No Material Adverse Effect has occurred, nor, to
the Subscribers' Knowledge, have any event or events occurred
which could reasonably be expected to have, a Material Adverse
Effect.
4.3. Liabilities.
4.3.1. Debt. Immediately prior to the Closing hereunder,
except as set forth on Schedule 4.3.1 hereto, no Company will have any
liabilities in respect of Debt, other than in respect of Debt
outstanding immediately prior to the Closing of up to
-6-
14
$1,000,000 for the payment of commissions under the contract dated July
31, 1998 among Cruise and Carnival Corporation (the "Carnival
Commissions").
4.3.2. Other Liabilities. Immediately prior to the Closing
hereunder and the consummation of the transactions contemplated hereby,
to Subscribers' Knowledge no Company will have any material liabilities
or other material obligations, whether absolute, accrued, contingent,
due, to become due, or otherwise, other than, to the extent the
existence thereof is consistent with all other representations and
warranties of the Subscribers made in or pursuant to this Agreement,
the following (the "Assumed Liabilities"):
(a) Obligations and liabilities of the Companies
existing on the Balance Sheet Date.
(b) Obligations and liabilities of the Companies
incurred since the Balance Sheet Date in the Ordinary Course
of Business.
(c) Obligations and liabilities of the Companies
described in Schedule 4.2.4 in response to clause (a) thereof.
4.4. Assets.
4.4.1. Title to Assets. The Companies have good and marketable
title to, or in the case of property held under lease or other
Contractual Obligation, a valid and enforceable right to use, all of
their properties, rights and assets, whether real or personal and
whether tangible or intangible (collectively, the "Assets"), including
without limitation all properties, rights and assets reflected in the
Balance Sheets, except (i) as sold or otherwise disposed of since the
Balance Sheet Date in the Ordinary Course of Business and (ii) such as
have not had, and could not reasonably be expected to have, a Material
Adverse Effect. The Assets are not subject to any Lien securing any
Debt or other material obligation of any Company or Subscriber except
as described in Schedule 4.4.1. The Assets (including without
limitation the Equipment, the Intangibles and the Contracts) constitute
all properties, rights and assets held for or used in the conduct of
the Business of the Companies as currently conducted.
4.4.2. Real Property and Equipment.
4.4.2.1. General. No Company owns, or ever has owned,
any real property, except for the fixtures and other
improvements included in the Assets and set forth on Schedule
4.4.2, which reflects the Company's assets as of December 31,
1997 (the "Real Property"). All of the Real Property and all
of the tangible personal property other than inventory
included in the Assets (the "Equipment") are, taken together,
suitable for the purpose for which they are
-7-
15
presently used in the Business and in a condition sufficient
to conduct the Business as presently conducted. Schedule 4.4.2
sets forth a list of each lease or other Contractual
Obligation (including all amendments) under which any Real
Property or Equipment having a cost, annual aggregate lease
payment or capital lease obligation in excess of $50,000 is
held or used by any Company (the "Listed Leases"; the Listed
Leases, together with all such leases and Contractual
Obligations other than the Listed Leases which have been
entered into in the Ordinary Course of Business, are referred
to herein collectively as the "Leases"). There is no lease or
other Contractual Obligation under which any Company is liable
as lessor with respect to any Real Property or Equipment.
Schedule 4.4.2 also sets forth a list of all of the realty
included in the Real Property and of the addresses of each
other location, if any, at which is located any Equipment or
inventory.
4.4.2.2. Certificates. All certificates, licenses,
approvals and permits necessary in connection with the
construction and present use and operation of the Real
Property and the lawful occupancy thereof (the "Permits") have
been issued by the appropriate governmental authorities,
except for such as has not had, and could not reasonably be
expected to have, a Material Adverse Effect. The Real Property
may be used as currently used under and in material accordance
with the certificates of occupancy with respect thereto. All
such Permits shall continue in full force and effect
immediately after giving effect to the transactions
contemplated hereby.
4.4.2.3. Absence of Certain Notices. No Company, nor
any Subscriber, has received any written, or to Subscriber's
Knowledge, oral notice of (i) any violation of any Legal
Requirement, including, without limitation, zoning
restrictions and ordinances, building, life, safety, health
and fire codes and ordinances affecting any of the Real
Property, (ii) any violation of any material Permit or (iii)
any eminent domain, condemnation or similar proceeding pending
or, to the Subscribers' Knowledge, threatened, or any decree
or order relating thereto, which in each case could reasonably
be expected to have a Material Adverse Effect.
4.4.3. Intellectual Property Rights. Schedule 4.4.3 lists all
trade and product names, foreign letters patent of invention, patents
and patent applications, trademarks and trademark applications, service
marks and copyrights, in each case which are material to the conduct of
the Business in the Ordinary Course of Business or the absence of which
could reasonably be expected to have a Material Adverse Effect (the
"Listed Intangibles"). Schedule 4.4.3 sets forth a list of each license
or other Contractual Obligation (including all amendments) under which
any Intangible material to the conduct of the Business in the Ordinary
Course of Business or the absence of which could reasonably be expected
to have a Material Adverse Effect is held or used
-8-
16
by any Company (the "Listed Licenses"). Except as described in Schedule
4.4.3, there is no license or other Contractual Obligation under which
any Company is liable as licensor with respect to any Intangible.
Except as set forth on Schedule 4.4.3, registrable or patentable
Intangibles owned by any Company have been duly registered and patented
in accordance with applicable Legal Requirements in all jurisdictions
in which the Business is currently conducted by any Company under such
Intangible except for such failures to be so registered or patented as
have not had and could not reasonably be expected to have a Material
Adverse Effect. No Subscriber or Company has received any notice that
the use by any Company of the Intangibles in the Business and in the
areas where the Business is currently conducted infringes or has
infringed any rights of any third party; to the Subscribers' Knowledge,
such use does not actually infringe and has not actually infringed any
such rights; and to the Subscribers' Knowledge, no activity of any
third party infringes upon the rights of any Company with respect to
any of the Intangibles.
4.5. Contracts, etc.
4.5.1. Certain Contractual Obligations. Set forth on Schedule
4.5.1 is a true and complete list of all of the following Contractual
Obligations of the Companies:
(a) All collective bargaining agreements and other
labor agreements; all employment or consulting agreements; and
all other plans, agreements or arrangements (other than any
Employee Plan listed on Schedule 4.6.4) which constitute
Compensation or benefits to any of the senior executive
officers or employees or consultants of any Company.
(b) All Contractual Obligations under which any
Company has incurred or may incur any severance pay or special
Compensation obligations which would become payable by reason
of this Agreement or the consummation of the transactions
contemplated hereby.
(c) All Contractual Obligations (other than
licensing, sales and distribution agreements disclosed
pursuant to clause (h) below) under which any Company is or
will after the Closing be restricted from carrying on any
business or other activities in any country, state, town,
territory, province, county, city or other political
subdivision of any country.
(d) All Contractual Obligations (including without
limitation options) to sell or otherwise dispose of a material
portion of any Assets except in the Ordinary Course of
Business.
(e) All Contractual Obligations under which any
Company has or will after the Closing have any material
liability or obligation to or for the
-9-
17
benefit of any Subscriber or any Affiliate of any Subscriber
(other than such Contractual Obligations disclosed on Schedule
4.5.4 or pursuant to any Closing Agreement).
(f) All Contractual Obligations under which any
Company has any material liability or obligation for Debt or
constituting or giving rise to a Guarantee of any material
liability or obligation of any Person, or under which any
Person has any material liability or obligation constituting
or giving rise to a Guarantee of any material liability or
obligation of any Company (including without limitation
partnership and joint venture agreements).
(g) Other than pursuant to the Charter or Bylaws of
the Companies, all Contractual Obligations under which any
Company is or may become obligated to pay any material amount
in respect of indemnification obligations, purchase price
adjustment or otherwise in connection with any (i) acquisition
or disposition of assets or securities, (ii) merger,
consolidation or other business combination, or (iii) series
or group of related transactions or events of a type specified
in subclauses (i) and (ii).
(h) All distributorship agreements and all other
Contractual Obligations (other than purchase orders and sales
orders entered into in the Ordinary Course of Business), with
distributors, suppliers, vendors, or other suppliers of goods
or services.
(i) All advertising contracts which individually
involve material liabilities of any Company.
(j) All material purchase or sales orders not entered
into in the Ordinary Course of Business.
(k) Contractual Obligations (other than purchase
orders or sales orders) not required to be listed on Schedule
4.5.1 pursuant to clauses (a) through (j) above which
individually involve liabilities or payments of any Company in
excess of $50,000 in any given year.
The Subscribers have heretofore made available to Holdco One a true and
complete copy of each of the Contractual Obligations listed on Schedule
4.5.1, each as in effect on the date hereof including without
limitation all amendments thereto (the "Listed Contracts") and true and
complete copies of each of the Listed Leases, Listed Licenses and
Insurance Policies (the Listed Contracts, Listed Leases, Listed
Licenses and Insurance Policies are referred to herein collectively as
the "Contracts").
-10-
18
4.5.2. Nature of Contracts, etc. No breach or default by any
Company under any of the Contracts has occurred and is continuing, and
to Subscribers' Knowledge no event has occurred which with notice or
lapse of time would constitute such a breach or default or permit
termination, modification or acceleration by any other Person under any
of the Contracts, other than such breaches, defaults and events as have
not had and could not reasonably be expected to have a Material Adverse
Effect. To the Subscribers' Knowledge, no breach or default by any
Person other than the Companies under any of the Contracts has occurred
and is continuing, and no event has occurred which with notice or lapse
of time would constitute such a breach or default or permit
termination, modification or acceleration by any Company under any of
such Contracts.
4.5.3. Insurance. Set forth on Schedule 4.5.3 is a copy of the
declarations page from each liability (including without limitation,
public liability, products liability and automobile liability) policy
by which any Company has been insured since January 1, 1996
(collectively, the "Liability Policies"). Except for the matters set
forth on the loss runs attached hereto ("Loss Runs") and the matters
set forth on Schedule 4.5.3, Subscribers have no Knowledge of any
liability Actions against any Company. Statutory workers' compensation
has been maintained, to the extent required by law, on all employees of
the Companies and all such policies were written by insurers in
existence as of the date hereof. The premiums for all Liability
Policies and workers' compensation policies have been fully paid in
accordance with their terms. Set forth on Schedule 4.5.3 is a copy of
the declarations page from all insurance policies of the Companies
currently in effect other than the Liability Policies and the workers'
compensation policies (together with the Liability Policies and the
workers' compensation policies, the "Insurance Policies"). Immediately
prior to the Closing and the consummation of the transactions
contemplated hereby, and except as set forth on Schedule 4.5.3, each
Insurance Policy will be in full force and effect and be payable to the
respective Company.
4.5.4. Transactions with Affiliates. Except for the matters
set forth on Schedule 4.5.1 pursuant to clause (e) of Section 4.5.1
(the "Affiliate Relationships"), no Subscriber or any Affiliate of any
Subscriber (other than the Companies) is a consultant, competitor,
customer, distributor, supplier or vendor of, or is party to any
Contractual Obligation (except in the course of such Subscriber's
employment) with, any Company involving amounts in excess of $25,000.
Except as set forth on Schedule 4.5.4, there are no trademarks, trade
names (or any component thereof), service marks, service names,
copyrights, patents, patent rights, franchises, or confidential
knowledge that any Subscriber or such Affiliate owns or is licensed or
otherwise has the right to use which are currently used in or are
necessary to the conduct of the Business of the Companies. Since
January 1, 1996 (i) there have been no changes in the terms of the
Affiliate Relationships which have had or could reasonably be expected
to have a Material Adverse Effect, and (ii) except as set forth on
Schedule 4.5.1 pursuant to clause (e) thereof, there have been no
relationships, Contractual Obligations or other
-11-
19
transactions between any Company on the one hand, and any Subscriber or
such Affiliate on the other hand, other than (x) the Affiliate
Relationships and (y) other relationships, Contractual Obligations and
transactions the termination or non-continuation of which has not had
and could not reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 4.5.4, all transactions between any
Company on the one hand, and any Subscriber or any such Affiliate
(other than the Companies) on the other hand, which occurred during the
periods covered by the Financial Statements and are required by
generally accepted accounting principles to be reflected therein, are
reflected in the Financial Statements at amounts which do not overstate
the net worth or net income of the Companies as compared with fair
market values and prices which would have been charged and paid between
parties at arms' length at the time of the entering into of the
transactions in question.
4.5.5. Non-Contravention, etc. Except as set forth on Schedule
4.5.5, neither the execution and delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby does or
will constitute, result in or give rise to (i) a breach of or a default
or violation under any Charter or By-Laws provision of any Company,
(ii) the acceleration of the time for performance of any obligation
under any Contractual Obligation, (iii) the imposition of any Lien upon
or the forfeiture of any Asset (including without limitation any Asset
held under a Lease or License), (iv) a breach of or a default or
violation under any Contractual Obligation of any Company, or the
requirement that any consent under or waiver of any such Contractual
Obligation, Charter or By-Laws be obtained, or (v) any severance
payments, right of termination, modification of terms, or any other
right or cause of action under any such Contractual Obligation, Charter
or By-laws provision, except as set forth in Schedule 4.5.5.
4.6. Compliance with Laws, etc.
4.6.1. Compliance Generally. Except as set forth on Schedule
4.6.1, the operations of the Business as heretofore or currently
conducted have at no time been and are not in violation of, nor is any
Company in default or violation under, any Legal Requirement, except
for such violations or defaults as have not had and could not
reasonably be expected to have a Material Adverse Effect. The Companies
have been duly granted all licenses, permits, franchises and other
authorizations under any Legal Requirement necessary for the conduct of
the Business as currently conducted, except licenses, permits,
franchises and other authorizations the failure of which to have been
obtained has not had and could not reasonably be expected to have a
Material Adverse Effect. Except for any required filings under the
Xxxx-Xxxxx-Xxxxxx Act and the expiration of the applicable waiting
period thereunder, (i) neither the execution and delivery of this
Agreement nor the consummation of any of the transactions contemplated
hereby does or will constitute, result in or give rise to a breach or
violation or default under any Legal Requirement applicable to any
Company and (ii)
-12-
20
no approval, consent, waiver, authorization or other order of, and no
declaration, filing, registration, qualification or recording with, any
Governmental Authority is required to be obtained or made by or on
behalf of the any Company in connection with the execution, delivery or
performance of this Agreement or the consummation of any of the
transactions contemplated hereby.
4.6.2. Tax Matters. Except as set forth on Schedule 4.6.2:
(i) all Tax Returns that are required to be
filed by or with respect to each Company
have been duly and timely filed (including
within any applicable extension period) in
accordance with all applicable Legal
Requirements, all such Tax Returns were
correct and complete in all material
respects, no Company currently is the
beneficiary of any extension of time within
which to file any Tax Return, no claim has
ever been made by any taxing authority in a
jurisdiction where any Company does not file
Tax Returns that it is or may be subject to
taxation by that jurisdiction,
(ii) all Taxes that are due, whether or not shown
on any Tax Return, have been paid in full,
(iii) all other written tax assessments that are
due have been paid in full,
(iv) no Tax Return has been the subject of
examination or audit by the Internal Revenue
Service ("IRS") or the appropriate state,
local or foreign taxing authority,
(v) no deficiencies have been asserted or
assessments made as a result of any
examinations of the Tax Returns referred to
in clause (i) by the IRS or the appropriate
state, local or foreign taxing authority,
(vi) there is no action, suit, proceeding, audit,
claim, deficiency or assessment pending with
respect to any Taxes of the Company, and
there are no Liens or other security
interests on any of the assets of any
Company that arose in connection with any
failure (or alleged failure) to pay any Tax
other than for current Taxes not yet due and
payable,
(vii) no waivers of statutes of limitations have
been given or requested by or with respect
to any Taxes of any Company and no
-13-
21
Company has agreed to any extension of time
with respect to any Taxes,
(viii) no written powers of attorney (for example,
IRS Form 2848 or other similar authority)
with respect to Taxes of the Companies are
currently in force,
(ix) there is no Contractual Obligation
(including without limitation any of the
Closing Agreements) covering any employee or
former employee of any Company that will
give rise to the payment of any amount that
will be not deductible by reason of Section
280G of the Code or subject to the excise
tax under Section 4999 of the Code,
(x) no Company will have as of the Closing Date
any liability for Taxes, except for Taxes
which have been specifically accrued for in
full on the books and records of the
Companies in the Ordinary Course of Business
(other than any such reserves for deferred
Taxes established to reflect timing
differences between book and Tax income),
(xi) each Company has withheld and paid over to
the proper government authorities all Taxes
required to have been withheld and paid
over, and complied with all information and
backup withholding requirements, including
maintenance of required records with respect
thereto, in connection with amounts paid or
owing to any employee, creditor, independent
contractor or other third party, and the
Companies will continue to do so with
respect to all such amounts paid by it
through the Closing Date,
(xii) no consent to the application of Section
341(f) of the Code has been made by or on
behalf of any Company with regard to any
assets or property held, acquired or to be
acquired by any Company,
(xiii) No Company is a party to any Tax allocation
or sharing agreement,
(xiv) Each Company has, with all requisite consent
of its shareholders, validly elected to be
treated as an S corporation under Section
1362 of the Code since May 14, 1990 for
On-Board, March 27, 1995 for Cruise and
November 21, 1996 for Boxer (the date of
each Company's inception, respectively) and,
where permitted, under the corresponding
provisions of applicable state and local
law.
-14-
22
None of the Subscribers have taken any
action or omitted to take any action which
action or omission could result in the loss
of subchapter S corporation status for any
Company for such period prior to the
Closing, other than actions or omissions
relating to the loss of S corporation status
which would occur as a result of the
acquisition of the Companies by Holdco One
pursuant to this Agreement.
4.6.3. No Illegal Payments, etc. To the Subscribers'
Knowledge, no Subscriber, Company or any of their respective officers,
employees or agents, has (a) directly or indirectly given or agreed to
give any gift, contribution, payment or similar benefit to any
supplier, customer, governmental employee or other Person who was in a
position to help or hinder any Company (or assist in connection with
any actual or proposed transaction) or made or agreed to make any
contribution, or reimbursed any political gift or contribution made by
any other Person, to any candidate for federal, state, local or foreign
public office (i) which at the time of such action would have subjected
(whether then or in the future) any Company or Holdco One to any damage
or penalty in any civil, criminal or governmental litigation or
proceeding, or (ii) the non-continuation of which has had or could
reasonably be expected to have a Material Adverse Effect, or (b)
established or maintained any unrecorded fund or asset or made any
false entries on any books or records for any purpose.
4.6.4. Employee Benefit Plans.
4.6.4.1. Disclosure. Schedule 4.6.4 sets forth all
Employee Plans to which any Company contributes or is
obligated to contribute, or under which any Company has or may
have any liability for premiums or benefits (an "Existing
Plan"), as well as all plans, agreements, policies and
arrangements that would be Existing Plans if the term
"employee" were construed to include outside directors,
consultants or other independent contractors who provide
services to or for the benefit of any Company. For purposes of
this Agreement, the term "Employee Plan" means any plan,
program, agreement, policy or arrangement (a "plan"), whether
or not reduced to writing, that is: (i) a welfare benefit plan
within the meaning of Section 3(1) of ERISA (a "Welfare
Plan"); (ii) a pension benefit plan within the meaning of
Section 3(2) of ERISA (a "Pension Plan"); (iii) a stock bonus,
stock purchase, stock option, restricted stock, stock
appreciation right or similar equity-based plan; or (iv) any
other deferred-compensation, retirement, welfare-benefit,
bonus, incentive fringe benefit, pension, profit-sharing,
severance, group insurance, death benefit or other employee
benefit plan, arrangement or policy, whether formal or
informal, which benefits or is for the benefit of any of its
employees or former employees or the beneficiaries of any such
employee or former employee. With
-15-
23
respect to each Existing Plan, the Subscribers have provided
or made available to Holdco One accurate, current and complete
copies of each of the following: (1) where the Existing Plan
has been reduced to writing, the plan document together with
all amendments; (2) where the Existing Plan has not been
reduced to writing, a written summary of all material plan
terms; (3) where applicable, copies of any trust agreements,
custodial agreements, insurance policies, administration
agreements and similar agreements, and investment management
or investment advisory agreements; (4) copies of any summary
plan descriptions, employee handbooks or any other employee
communications that (i) summarize any Existing Plan or the
benefits or coverage thereunder or (ii) describe in detail any
obligations under any Existing Plan; (5) in the case of any
Existing Plan that is intended to be qualified under Section
401(a) of the Code, a copy of the most recent determination
letter from the IRS, if any, and any related correspondence
with the IRS, including a copy of the request for such
determination; (6) in the case of any funding arrangement
intended to qualify as a VEBA under Section 501(c)(9) of the
Code, a copy of any IRS letter determining that it so
qualifies; (7) in the case of any Existing Plan for which
Forms 5500 are required to be filed, a copy of the three most
recently filed Forms 5500, with schedules attached; and (8)
copies of any notices, letters or other correspondence from
the IRS or the Department of Labor relating to the Existing
Plan. Except where the failure would not have a Material
Adverse Effect, all Employee Plans listed on Schedule 4.6.4
have been duly registered where required by, and are in good
standing under, all applicable legislation, and the Company
has fulfilled its funding obligations under all such plans.
4.6.4.2. No Defined Benefit Pension Plans. No
Company, nor any corporation, trust, partnership or other
entity that would be considered as a single employer with any
Company under Section 4001(b)(1) of ERISA or Sections 414(b),
(c), (m) or (o) of the Code has ever maintained or been
required to contribute to any Employee Plan subject to Title
IV of ERISA.
4.6.4.3. Plan Qualification; Plan Administration;
Certain Taxes and Penalties. Each Existing Plan that is
intended to be qualified under Section 401(a) of the Code has
been determined to be so qualified by the IRS and nothing has
occurred or failed to occur which would adversely affect or
result in the revocation of such favorable determination.
Except where the failure or occurrence would not have a
Material Adverse Effect, each Existing Plan, including any
associated trust or fund, has been administered in accordance
with its terms and with all applicable Legal Requirements, and
nothing has occurred with respect to any Existing Plan that
has subjected or could subject any Company to a liability
under Section 502 of ERISA or Chapter 43 of Subtitle D or
section 6652 of the Code, or that has subjected or could
subject any participant in or beneficiary of an Existing Plan
to a tax under Section 4973 of
-16-
24
the Code. Except where the failure would not have a Material
Adverse Effect, there have been no non-exempt prohibited
transactions within the meaning of Section 4975 of the Code or
406 of ERISA with respect to any Employee Plan.
4.6.4.4. All Contributions and Premiums Paid Funding.
Except where such matters, in the aggregate, would not have a
Material Adverse Effect, all required contributions,
assessments and premium payments on account of each Existing
Plan have been made. With respect to each Employee Plan,
except where such matters, in the aggregate, would not have a
Material Adverse Effect, as of the Quarterly Financials, there
will be no liability of the Company that has not either been
paid or accrued in accordance with GAAP applied consistently
with the past practice of the Company. There are no
liabilities with respect to any employee benefit plan other
than the Existing Plans.
4.6.4.5. Claims. There are no existing (or, to the
Subscribers' Knowledge, threatened) lawsuits, claims or other
controversies relating to an Existing Plan, other than claims
for information or benefits in the normal course, except where
such matters, in the aggregate, would not have a Material
Adverse Effect.
4.6.4.6. Retiree Benefits; Certain Welfare Plans.
Other than as required under Section 601 et seq. of ERISA, no
Existing Plan that is a Welfare Plan provides benefits or
coverage for any period following retirement or other
termination of employment. There is no and never has been any
welfare benefit trust or fund that constitutes or is
associated with an Existing Plan that is intended to be exempt
from federal income tax under Section 501(c)(9) of the Code.
No event has occurred that could result in a loss of any
deduction to any Company under Section 162(n) of the Code.
4.6.4.7. No Restrictions On Termination. Except as
required to maintain the tax-qualified status of any Existing
Plan intended to qualify under Section 401(a) of the Code, no
provision of any Existing Plan would limit the ability of any
Subscriber, the Company, or Holdco One to amend or terminate
any Existing Plan.
4.6.4.8. Employer Securities. No Existing Plan would
require the distribution of "employer securities" within the
meaning of Code Section 409(l) in satisfaction of benefit
obligations thereunder.
4.6.4.9. Effect of Transactions. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby will not involve any
prohibited transaction within the meaning of ERISA.
-17-
25
4.7. Environmental and Safety Matters, etc. Each Company is and has at
all times been in compliance in all respects with all applicable Legal
Requirements relating to environmental, natural resource, health or safety
matters, except such non-compliance as has not had and could not reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule 4.7,
there is no suit, claim, action or proceeding, pending (or, to the Subscribers'
Knowledge, threatened) against any Company in respect of (i) noncompliance with
any such Legal Requirement, (ii) except as disclosed pursuant to Section 4.10,
personal injury, wrongful death, other tortious conduct, or the existence of any
nuisance relating to materials, commodities or products held, used, sold,
transferred, manufactured or disposed of by or on behalf of any Company or any
predecessor entity made of, containing or incorporating any hazardous, noxious
or toxic materials, commodities or substances, or (iii) the presence or release
or threatened release into the environment of any pollutant, contaminant or
toxic, hazardous or noxious material, substance or waste, whether solid, liquid
or gas and whether generated by any Company or any predecessor entity or located
at or about a site included in the Real Property or heretofore owned by any
Company or any predecessor entity or currently leased or otherwise used by any
Company. No event has occurred or condition exists or operating practice is
being employed that will give rise to any Liability or Losses on the part of any
Company (or, after the Closing, Holdco One) either at the present or at any
future time (including, without limitation, any obligation to conduct any
remedial or monitoring work) under any Environmental Laws or otherwise resulting
from or relating to the handling, storage, use, transportation or disposal of
any Hazardous Substance by or on behalf of any Company or any of their
respective predecessors or otherwise in or near their respective properties.
4.8. Labor Relations. No employee of any Company is represented by a
labor union, and to the Subscribers' Knowledge, no petition has been filed or
proceedings instituted by any employee or group of employees with any labor
relations board seeking recognition of a bargaining representative. To the
Subscribers' Knowledge, there is no organizational effort currently being made
or threatened by or on behalf of any labor union to organize any employees of
any Company. There are no labor or employment disputes pending between any
Company on the one hand and any of their respective employees on the other hand,
except for such disputes with individual employees arising in the Ordinary
Course of Business which have not had and could not reasonably be expected to
have a Material Adverse Effect.
4.9. Customers, Suppliers and Distributors. Except as set forth in
Schedule 4.9, since the Balance Sheet Date (i) no customer (or group of
customers) or any distributor of the Business has given any Company written, or
to Subscriber's Knowledge, oral notice that such customer (or group of
customers) or distributor will cease to purchase products or services or
materially reduce the amount of products and services purchased from any
Company, and (ii) no supplier or vendor (or group of suppliers or vendors) of
the Business has given any Company written, or Subscriber's Knowledge, oral
notice that such supplier or vendor (or group of suppliers or vendors) will
cease to supply or restrict the amount supplied or change
-18-
26
its price or terms to any Company of any products or services, in each case in a
manner or to a degree which could reasonably be expected to have a Material
Adverse Effect.
4.10. Litigation, etc. There is no litigation, at law or in equity, or
any proceeding before or investigation by any Governmental Authority pending or,
to the Subscribers' Knowledge, threatened against any Company, except for (i)
such of the foregoing as are described in Schedule 4.10, and (ii) matters which
have not had and could not reasonably be expected to have a Material Adverse
Effect. There is no litigation at law or in equity, or any proceeding before or
investigation by any Governmental Authority pending or to Subscribers' Knowledge
threatened against any Company which seeks rescission of, seeks to enjoin the
consummation of, or otherwise relates to, this Agreement or any of the
transactions contemplated hereby. No judgment, decree or order of any
Governmental Authority (i) has been issued against any Company, or (ii) to
Subscribers' Knowledge has been issued against any Person other than the
Companies, in each case which granted equitable relief binding any Company or
which has otherwise had or could reasonably be expected to have a Material
Adverse Effect.
4.11. Disclosure. This Agreement (including without limitation the
Schedules hereto) does not contain and will not contain any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
4.12. Banking Facilities, Powers of Attorney, etc. Schedule 4.12 hereto
sets forth a true, correct and complete list of each bank, savings and loan or
similar financial institution in which any Company has an account or safety
deposit box or other arrangement, and any numbers of the accounts or safety
deposit boxes maintained by any Company thereat, the names of all persons
authorized to draw on each such account or to have access to any such safety
deposit box facility, and any outstanding powers of attorney executed on behalf
of any Company in respect of such Company. No Company has any general or special
powers of attorney outstanding (whether as grantor or grantee thereof) or has
any obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity, except as endorser or
maker of checks or letters of credit, respectively, endorsed or made in the
ordinary course of business.
4.13. Books and Records. The minute books, stock record books and other
records of the Companies, all of which have been made available to Holdco One,
are true, complete and correct and have been maintained in accordance with sound
business practices in all material respects. The minute books of the Companies
contain true, accurate and complete records in all material respects of all
meetings held of, and corporate action taken by, the stockholders, the boards of
directors and committees of the boards of directors of the Companies, and no
meeting of any such stockholders, board of directors or committee has been held
for which
-19-
27
minutes have not been prepared and are not contained in such minute books. At
the Closing, all of those books and records will be in the possession of the
Companies.
4.14. Brokers or Finders Fees. No Company, Subscriber, nor any agent of
any of them has incurred any liability, contingent or otherwise, for brokerage
or finder's fees or agent's commissions or other similar payments in connection
with this Agreement or the transactions contemplated hereby.
4.15. Shareholder Agreements. The Subscribers represent and warrant
that execution of this agreement constitutes required consent to the
transactions contemplated hereby and waiver of all rights under the Restated
Shareholder Agreement, dated as of October 19, 1996 of On-Board Media, Inc., as
amended by the First Amendment to the Restated Shareholder Agreement and the
Shareholder Agreement, dated as of October 19, 1996, of Cruise Management
International, Inc.
4.16. Amendments to Disclosure Schedules. From the date hereof through
the day which is three business days prior to the Closing Date, the Subscribers
may amend or supplement the disclosure schedules provided by them pursuant to
this Agreement by providing Holdco One with a copy of the amendments by
facsimile, hand delivery or overnight courier; provided, however, (a) if such
amendments relate to any fact or circumstance that occurred prior to the date
hereof, the Subscribers shall remain liable pursuant to Section 10 hereof to
Holdco One for any Losses that result from such facts and circumstances, and (b)
if such amendments relate to any fact or circumstance that occurs after the date
hereof, Holdco One shall have the option of (i) accepting and assuming such
disclosures and the same shall become a part of this Agreement or (ii)
terminating this Agreement.
5. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS.
In order to induce Holdco One to enter into and perform this Agreement
and to consummate the transactions contemplated hereby, each Subscriber
severally and not jointly represents and warrants to Holdco One that the
statements contained in this Article 5 are correct and complete as of the date
of this Agreement and, unless a date is specified in such representation and
warranty, will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article 5); provided, however, that the Subscribers
may amend such disclosures as set forth in Section 5.5 hereof.
5.1. Enforceability. This Agreement has been duly authorized, executed
and delivered by such Subscriber and is Enforceable against such Subscriber and,
on or prior to the Closing Date, each Closing Agreement to which such Subscriber
is a party will be duly executed and delivered by such Subscriber, and will be
Enforceable against such Subscriber.
-20-
28
5.2. Authorization. The Trustee of each Trust has all power and
authority to enter into and perform this Agreement and the other documents and
instruments to be delivered pursuant to this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by each Trust of
this Agreement have been duly and validly authorized by all necessary action on
the part of each Trust. This Agreement constitutes the legal, valid and binding
obligation of each Trust. Xxxxxx Xxxxxx is the qualified and acting Trustee of
each Trust and, as such, has all requisite power and authority to execute,
deliver and perform this Agreement and the other documents and instruments to be
delivered pursuant to this Agreement on behalf of the Trusts and to consummate
the transactions contemplated hereby and thereby.
5.3. Non-Contravention, etc. Except for any required filings under the
Xxxx-Xxxxx-Xxxxxx Act and the expiration of the applicable waiting period
thereunder, (i) neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby does or will constitute,
result in or give rise to any breach or violation of, or any default or right or
cause of action under, any Contractual Obligation of such Subscriber or any
Legal Requirement applicable to such Subscriber and (ii) no approval, consent,
waiver, authorization or other order of, and no declaration, filing,
registration, qualification or recording with, any Governmental Authority or any
other Person, including without limitation any party to any Contractual
Obligation of such Subscriber, is required to be made by or on behalf of such
Subscriber in connection with the execution, delivery or performance of this
Agreement and the transactions contemplated hereby by such Subscriber, except as
set forth in Schedule 5.3. The items set forth in Schedule 5.3 shall have been
obtained or made and be in full force and effect at the Closing. The execution
and delivery of this Agreement and the Closing Documents to which the Trusts are
a party do not, and the performance of the Trusts of the terms thereof
applicable to them will not, violate the terms of or conflict with the governing
documents of any Trust.
5.4. Title, etc. Such Subscriber has good and valid title to the Shares
owned by such Subscriber, free and clear of any Liens (subject to such
restrictions as may be imposed under applicable federal and state securities
laws). Except for this Agreement, there is no Contractual Obligation pursuant to
which such Subscriber has, directly or indirectly, granted any option, warrant
or other right to any Person to acquire any Shares of or direct or indirect
interests in any Company. Upon delivery of certificates representing such
Shares, and payment therefor as contemplated herein, Holdco One will receive
good and valid title to such Shares free and clear of any Liens and subject to
no rescission or similar rights or equities of any kind (subject to such
restrictions as may be imposed under applicable federal and state securities
laws).
5.5. Amendments to Disclosure Schedules. From the date hereof through
the day which is three business days prior to the Closing Date, the Subscribers
may amend or supplement the disclosure schedules provided by them pursuant to
this Agreement by providing Holdco One with a copy of the amendments by
facsimile, hand delivery or overnight courier;
-21-
29
provided, however, (a) if such amendments relate to any fact or circumstance
that occurred prior to the date hereof, the Subscribers shall remain liable
pursuant to Section 10 hereof to Holdco One for any Losses that result from such
facts and circumstances, and (b) if such amendments relate to any fact or
circumstance that occurs after the date hereof, Holdco One shall have the option
of (i) accepting and assuming such disclosures and the same shall become a part
of this Agreement or (ii) terminating this Agreement.
5.6. Organization. Each Trust has been duly created and is validly
existing under the laws of the State of Florida.
5.7. Investment. Each of the Subscribers (a) understands that the
Holdco One Stock has not been, and will not be, registered under the Securities
Act of 1933, and is being offered and sold in reliance upon U.S. federal and
state exemptions for transactions not involving any public offering, (b) is
acquiring the Holdco One Stock solely for its own account for investment
purposes, and not with a view to the distribution thereof, (c) is a
sophisticated investor with knowledge and experience in business and financial
matters, (d) has received certain information concerning Holdco One and has had
the opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding the Holdco One Stock, and (e) is
able to bear the economic risk and lack of liquidity inherent in holding the
Holdco One Stock.
6. REPRESENTATIONS AND WARRANTIES OF HOLDCO ONE.
In order to induce the Subscribers to enter into and perform this
Agreement and to consummate the transactions contemplated hereby, Holdco One
represents and warrants to each Subscriber that the statements contained in this
Article 6 are correct and complete as of the date of this Agreement and, unless
a date is specified in such representation and warranty, will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article 6);
provided, however, that Holdco One may amend such disclosure schedules as set
forth in Section 6.11 hereof.
6.1. Corporate Matters. Cruise Line Holdings Co. is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. As of the
Closing Date, Dutch Holding Company will be duly organized, validly existing and
in good standing as a Dutch private company with limited liability and will have
all requisite power and authority to consummate the transactions contemplated
hereby. As of the Closing Date, Dutch Holding Company will be duly qualified or
licensed to do business as a foreign corporation, and will be in good standing
as such, in each jurisdiction in which the failure to be so qualified or
licensed and in good standing could reasonably be expected to have a Material
Adverse Effect. Holdco One has heretofore
-22-
30
delivered to the Subscribers a true and complete copy of Holdco One's Charter
and By-laws, substantially in the form which such Charter and By-laws will exist
on the Closing Date.
6.2. Authorization and Enforceability. This Agreement has been duly
authorized, executed and delivered by Holdco One and is Enforceable against
Holdco One and, on or prior to the Closing Date, each Closing Agreement to which
it is a party will be duly authorized, executed and delivered by Holdco One, and
will be Enforceable against Holdco One.
6.3. Non-Contravention, etc. Except for any required filings under the
Xxxx-Xxxxx-Xxxxxx Act and the expiration of the applicable waiting period
thereunder, (i) neither the execution, delivery nor performance of this
Agreement nor the consummation of the transactions contemplated hereby does or
will constitute, result in or give rise to any breach or violation of, or any
default or right or cause of action under, any Contractual Obligation of or the
Charter or By-Laws of Holdco One or any Legal Requirement applicable to Holdco
One and (ii) no approval, consent, waiver, authorization or other order of, and
no declaration, filing, registration, qualification or recording with, any
Governmental Authority or any other Person, including without limitation any
party to any Contractual Obligation of Holdco One, is required to be obtained or
made by or on behalf of Holdco One in connection with the execution, delivery or
performance of this Agreement and the transactions contemplated hereby by Holdco
One, except for items which shall have been obtained or made and shall be in
full force and effect at the Closing.
6.4. Brokers' Fees. Holdco One has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Subscribers could
become liable or obligated.
6.5. Investment. Holdco One (a) understands that the Shares have not
been, and will not be, registered under the Securities Act of 1933, and are
being offered and sold in reliance upon U.S. federal and state exemptions for
transactions not involving any public offering, (b) is acquiring the Shares
solely for its own account for investment purposes, and not with a view to the
distribution thereof, (c) is a sophisticated investor with knowledge and
experience in business and financial matters, (d) has received certain
information concerning the Companies and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding the Shares, and (e) is able to bear the economic risk and
lack of liquidity inherent in holding the Shares.
6.6. Capitalization of Holdco One. Immediately after the Closing, all
of the issued and outstanding stock of Holdco One will have been duly
authorized, validly issued, fully paid, and nonassessable, and will held of
record as set forth in Schedule 6.6 hereto. Except as disclosed in Schedule 6.6
hereto, immediately after the Closing, (i) there will be no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Holdco One to issue, sell, or otherwise cause to become outstanding any of its
capital stock (ii) there will be
-23-
31
no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Holdco One, and (iii) there
will be no voting trusts, proxies or other agreements or understandings with
respect to the voting of the capital stock of Holdco One.
To be delivered within a reasonable time after the signing hereof and
prior to the Closing as an addition to Schedule 6.6 is a pro forma balance sheet
for Holdco One, dated as of the date of this Agreement, which gives effect on a
pro forma basis to (i) the consummation of the Greyhound Acquisition, (ii) the
acquisition contemplated by this Agreement, and (iii) the contemplated financing
for both such acquisitions.
6.7. Greyhound Acquisition. The Share Purchase Agreement between Viad
Corp. and Cruise Line Holdings Co. dated as of July 31, 1998 for the acquisition
by Cruise Line Holdings Co. of Greyhound Leisure Services, Inc. (the "Greyhound
Acquisition") has been executed by all parties thereto and to Holdco One's
Knowledge there has been no default thereunder. A true and complete copy of the
such purchase and sale agreement has been provided to the Subscribers. As of the
Closing Date, (i) such agreement shall not, without the written consent of the
Majority Subscribers, have been subject to any amendment or waiver which could
be reasonably expected to have a Material Adverse Effect on the Subscribers; and
(ii) Subscribers shall have been provided notice of all amendments to such
contract.
6.8. Commitment Letters. Holdco One has furnished to Subscribers true
and complete copies of the debt and equity commitment letters attached as
Schedule 6.8 hereto (the "Commitment Letters") by which the funding for the cash
portion of the Consideration will be available for consummation of the
transactions contemplated hereby. As of the date hereof, Holdco One is not aware
of any facts or circumstances causing Holdco One to believe that Holdco One will
not be able to obtain financing in accordance with the terms of the Commitment
Letters.
6.9. Investment Company. Holdco One is not an "Investment Company" as
such term is defined under the Investment Company Act of 1940, as amended, and
the regulations promulgated thereunder.
6.10. Liabilities. Holdco One has not engaged in any business or
entered into or performed any Contractual Obligations or incurred any expenses
or liabilities since the date of its incorporation except for actions, expenses
and liabilities incident to its organization or carrying out the transactions
contemplated by this Agreement, the Closing Agreements and the Greyhound
Acquisition agreements.
6.11. Amendments to Disclosure Schedules. From the date hereof through
the day which is three business days prior to the Closing Date, Holdco One may
amend or supplement the disclosure schedules provided by them pursuant to this
Agreement by providing the Subscribers with a copy of the amendments by
facsimile, hand delivery or overnight courier; provided, however, (a) if such
amendments relate to any fact or circumstance that occurred
-24-
32
prior to the date hereof, Holdco One shall remain liable pursuant to Section 10
hereof to the Subscribers for any Losses that result from such facts and
circumstances, and (b) if such amendments relate to any fact or circumstance
that occurs after the date hereof, the Majority Subscribers shall have the
option of (i) accepting and assuming such disclosures and the same shall become
a part of this Agreement or (ii) terminating this Agreement.
6.12. Disclosure. This Agreement (including without limitation the
Schedules hereto) does not contain and will not contain any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
7. CERTAIN AGREEMENTS OF THE PARTIES.
7.1. Certain Pre-Closing Matters.
7.1.1. Exclusivity. Prior to the Closing, no Subscriber will,
and the Subscribers, as a group, will cause the Companies and all
affiliates, directors, officers, employees, representatives and agents
of any Company, or any Subscriber not to, directly or indirectly,
solicit or initiate or enter into discussions or transactions or
Contractual Obligations with or encourage or provide any information to
any Person (other than Holdco One and its designees) concerning any
sale of stock by (or by the stockholders of), or any merger or share
exchange or sale or other disposition of securities or substantial
assets or recapitalization or any similar transaction involving, any
Company. Each Subscriber will notify Holdco One immediately upon
becoming aware that any Person has made any proposal, offer, inquiry,
or contact with respect to any such transaction.
7.1.2. Access to Premises and Information. Prior to the
Closing, the Subscribers will cause the Companies to permit Holdco One,
its prospective investors and lenders, and their respective authorized
representatives, to have reasonable access, upon giving reasonable
notice, to their premises and documents, books and records and to make
copies at Holdco One's reasonable expense during normal business hours
of such financial and operating data and other information with respect
to the Companies as Holdco One, such investors or lenders, or any of
their representatives shall reasonably request. The Subscribers will
make available to Holdco One at Holdco One's reasonable expense such
additional information and copies of documents, books and records
relating to the Companies as may be reasonably requested by Holdco One,
such investors or lenders, or any of their representatives.
7.1.3. Confidentiality Covenant of Holdco One. Holdco One will
not, and will not permit any of its prospective investors or lenders or
its or their respective representatives to, directly or indirectly,
without the prior written consent of the Subscribers, disclose any
information relating to the Companies furnished to Holdco
-25-
33
One or such investors or lenders by or on behalf of any Company or use
any such information for any purpose other than in evaluating the
Companies in connection with the transactions contemplated hereby;
provided, however, that (i) such information may be disclosed to any of
the representatives of Holdco One or to its prospective investors or
lenders and their respective representatives who have a need to know
such information in connection with the transactions contemplated
hereby provided that such Person agrees to keep such information
confidential to the same extent provided for in this Section 7.1.3 with
respect to Holdco One, and (ii) the information subject to the
foregoing provisions of this sentence shall be deemed not to include
any information generally available or known by the public (other than
as a result of disclosure in violation hereof) or any information
received by Holdco One, such investor or lender or any of their
representatives from a third party not bound by a duty of
confidentiality to the Companies or independently developed by Holdco
One, such investor or lender or any of their representatives without
violating any of its obligations under this Section 7.1.3. In addition,
confidential information may be disclosed if required by legal process
or by operation of applicable law, so long as reasonable prior notice
is given of such disclosure and a reasonable opportunity is afforded to
contest the same. In the event of the termination of this Agreement,
upon request of the Subscribers, Holdco One, such investors and
lenders, and their respective representatives will return all copies of
any written materials in their possession furnished by or on behalf of
the Subscribers. The foregoing provisions of this Section 7.1.3 (i)
shall supersede all prior confidentiality obligations of Berkshire
Partners LLC ("Berkshire") or Holdco One, (ii) shall terminate upon the
consummation of the Closing insofar as they relate to the Companies,
and (iii) shall not prohibit any retention of records or disclosure
required by law or made in connection with the enforcement of any right
or remedy relating to this Agreement or the transactions contemplated
hereby.
7.1.4. Operation of Business in the Ordinary Course. Prior to
the Closing, the Subscribers will cause the Companies to conduct their
Business only in the Ordinary Course of Business and maintain the
relationships of the Companies with customers, distributors, suppliers,
vendors, employees, agents and others. Without limiting the generality
of the foregoing, on and prior to the Closing Date the Subscribers will
cause the Companies not to, without the prior written consent of Holdco
One:
(a) Enter into any transactions otherwise than on an
arms'-length basis or any transaction with any Subscriber or
any Affiliate of any Subscriber (other than transactions
between a Company on the one hand and another Company on the
other);
(b) Pay any Compensation other than in the Ordinary
Course of Business at the rates in effect throughout the
period covered by the Monthly Financials or increase any
Compensation of any of the Subscribers;
-26-
34
(c) Except as contemplated by the Closing Agreements,
make or declare any Distribution;
(d) Incur any Debt or become liable in respect of any
Guarantee except in the Ordinary Course of Business (other
than Guarantees by one Company of obligations of another
Company) except for the incurrence of Debt, up to an aggregate
total of $1,000,000, for the prepayment of the Carnival
Commissions; or
(e) Except as contemplated by the Closing Agreements,
sell, lease to others or otherwise dispose of any portion of
its assets having a net book value equal to or greater than
$50,000 (except for sales of inventory in the Ordinary Course
of Business).
7.1.5. Certain Notices. Prior to the Closing, (i) each
Subscriber will promptly, upon becoming aware thereof, give Holdco One
written notice of any material development affecting or which could
reasonably be expected to affect the Business or the financial
condition of the Companies; and (ii) each party will give the other
prompt written notice upon becoming aware of any breach of any
representation or warranty of such notifying party. The notification
called for by this Section 7.1.5 shall, to the extent it affects an
existing schedule or creates the need for a new schedule, be provided
as a disclosure schedule amendment in accordance with Section 4.16, 5.5
or 6.11, as applicable.
7.1.6. Preparation for Closing. Each party will use its
reasonable best efforts to bring about the fulfillment of each of the
conditions precedent to the obligations of the other parties hereto set
forth in this Agreement, and will render all reasonable assistance (not
requiring the expenditure of funds) to such other parties requested by
such other parties in connection with such other parties' best efforts.
7.1.7. Amendment of Articles of By-Laws. Prior to the Closing,
the Subscribers will not amend nor permit to be amended any Company's
Charter and Bylaws, or make any change in the authorized or issued
capital stock of any Company without the written consent of Holdco One.
7.2. Certain Closing Matters.
7.2.1. Expenses of Transaction. Without in any way limiting
the provisions of Section 10, whether or not the transactions
contemplated hereby are consummated, each party and each Company will
pay the respective expenses incurred by it or for its benefit in
connection with the preparation and execution of this Agreement, the
compliance herewith and the transactions contemplated hereby; provided,
however, that the Companies may pay up to $150,000 in the aggregate of
the expenses incurred by
-27-
35
the Subscribers. The fees and expenses of Holdco One shall include
without limitation the reasonable fees and expenses of Berkshire,
Holdco One's lenders and their respective attorneys, accountants and
other advisers.
7.2.2. Publicity, etc. No announcement shall be made by any
party to the public, any Company's customers or employees, or to any
other Person with respect to the consummation of the transactions
contemplated hereby or the terms thereof, other than the parties'
respective partners, employees, advisers, agents, Affiliates and
representatives who have a need to know in connection with such
transactions without the prior consent of Holdco One and (prior to the
Closing) the Majority Subscribers; provided, however, that this Section
7.2.2 shall not prohibit (i) any private disclosure by any Person
providing or proposing to provide financing to Holdco One or its
Affiliates in the ordinary course to any of such Person's investors,
(ii) any disclosure required by law, including without limitation
disclosures required under the Xxxx-Xxxxx Xxxxxx Act (in which case
prior written notice of such announcement shall be given to the other
parties), or (iii) any disclosure made in connection with the
enforcement of any right or remedy relating to this Agreement or the
transactions contemplated hereby.
7.3. Confidentiality Covenants of Subscribers. Each of the Subscribers
acknowledges that the success of the Companies after the Closing depends upon
the continued preservation of the confidentiality of certain information
possessed by such Subscriber, that the preservation of the confidentiality of
such information by such Subscriber is an essential premise of the bargain
between the Subscribers and Holdco One, and that Holdco One would be unwilling
to enter into this Agreement in the absence of this Section 7.3. Accordingly,
each Subscriber hereby agrees with Holdco One that such Subscriber will not, and
will cause its Affiliates not to, at any time on or after the Closing Date,
directly or indirectly, without the prior written consent of Holdco One,
disclose or use, in any way harmful to Holdco One or any Company, or otherwise
contrary to the interests of Holdco One or any Company, any confidential or
proprietary information involving or relating to Holdco One or any Company;
provided, however, that the information subject to the foregoing provisions of
this sentence shall be deemed not to include any information known generally in
the industry (other than as a result of disclosure in violation hereof by any
Subscriber or any such Affiliate thereof); and provided, further, that the
provisions of this Section 7.3 shall not prohibit any retention of records or
disclosure required by law, so long as reasonable prior notice is given of such
disclosure and a reasonable opportunity is afforded to contest the same or made
in connection with the enforcement of any right or remedy relating to this
Agreement or the transactions contemplated hereby.
7.4. Tax Matters.
7.4.1. Payment of Transfer Taxes and Other Charges. The
Subscribers shall pay all stock transfer Taxes, real property transfer
Taxes, sales Taxes, documentary stamp Taxes, recording charges and
other similar Taxes arising under any Legal Requirement
-28-
36
in connection with the transfer of the Shares. Each of the parties
hereto shall prepare and file, and shall fully cooperate with each
other party with respect to the preparation and filing of, any Tax
Returns and other filings relating to any such Taxes or charges as may
be required. The Subscribers shall be responsible for, shall indemnify
and hold Holdco One harmless against and from all Taxes of the
Companies and any person for which any of the Companies has any
liability under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferee or successor,
by contract or otherwise for all taxable periods (or portions thereof)
ending on or before the Closing Date. Holdco One and the Companies
shall be responsible for and shall indemnify and hold Subscribers
harmless against all Taxes relating to ownership and operations of any
of the Companies for all taxable periods (or portions thereof)
beginning on the date immediately following the Closing Date or
thereafter. In order to apportion appropriately any income Taxes
relating to any taxable year or period that begins before or on and
ends after the Closing Date, the parties hereto shall, to the extent
permitted or not prohibited by applicable law, elect with the relevant
taxing authority if required or necessary, to terminate the taxable
year as of the Closing Date. In any case where applicable law does not
permit any of the Companies to treat such date as the end of a taxable
year of such Company, then whenever it is necessary to determine the
liability for income Taxes of such Company, for a portion of a taxable
year, such determination shall (unless otherwise agreed to in writing
by Holdco One and Subscribers) be determined by a closing of such
Company's books, except that exemptions, allowances or deductions that
are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a time basis. In order to
apportion appropriately any Taxes, other than income Taxes, relating to
any taxable year or period that begins before or on and ends after the
Closing Date, (a) ad valorem Taxes (including, without limitation, real
and personal property Taxes) shall be accrued on a daily basis over the
period for which the Taxes are levied, or if it cannot be determined
over what period the Taxes are being levied, over the fiscal period of
the relevant taxing authority, in each case irrespective of the lien or
assessment date of such Taxes, and (b) franchise and other privilege
Taxes not measured by income shall be accrued on a daily basis over the
period to which the privilege relates.
7.4.2. Withholding. There shall be withheld from any amount
payable under this Agreement such amounts, if any, as may be required
to be withheld under applicable Legal Requirements.
7.4.3. Certificates. Holdco One and Subscribers further agree,
upon request, to use their best efforts to obtain any certificate or
other document from any Governmental Authority or any other person as
may be necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby). Subscribers agree to deliver to
Holdco One a FIRPTA certificate as provided in Treasury Regulation
Section 1.1445-2(b)(2).
-29-
37
7.4.4. Tax Sharing Agreements. All Tax sharing agreements,
policies, arrangements and practices with respect to or involving any
Company will terminate as of the Closing Date and will have no further
effect for any taxable year (whether the current year, a future year,
or a past year). Any powers of attorney with respect to Taxes any
Company currently in force will be terminated effective as of the
Closing Date.
7.4.5. Section 351 Issues.
(a) Each of Holdco One and the Subscribers intend the
Berkshire Contribution and the Subscribers' Contribution to
qualify for nonrecognition treatment under Section 351 of the
Code, except with respect to any gain recognized pursuant to
Section 351(b) of the Code.
(b) As of the Closing Date, each Subscriber
represents that it has no present intent, plan or commitment
to sell or exchange the Holdco One stock acquired in exchange
for such Subscriber's Share of the Subscribers' Contribution.
(c) As of the Closing Date, Berkshire Investors LLC
represents that it has no present intent, plan, or commitment
to sell or exchange the Holdco One Stock acquired in exchange
for the Berkshire Contribution.
(d) As of the Closing Date, Holdco One has no present
intent, plan or commitment to issue an amount of additional
shares of its stock or options to acquire shares of its stock,
except for options to be granted to employees of Holdco One or
its subsidiaries and warrants issued to lenders to Holdco One
or its subsidiaries. As of the Closing Date, Holdco One has no
plan or intention to dispose of the Shares other than in the
normal course of business operations, except to transfer such
Shares to its subsidiary that is wholly-owned, which in turn
will transfer such Shares to other subsidiaries that are
wholly-owned through a chain of ownership.
(e) Until such time as the Gain Recognition
Agreements expire, Holdco One agrees not to take any action
which will trigger any gain recognition under any Gain
Recognition Agreement without obtaining the prior written
consent of all of the Subscribers who entered into such Gain
Recognition Agreements.
(f) Each of Holdco One and the Subscribers covenant
and agree not to take any action which would cause either of
the Berkshire Contribution or the Subscribers' Contribution to
fail to qualify for such nonrecognition treatment
-30-
38
under Section 351 of the Code, except with respect to any gain
recognized pursuant to Section 351(b) of the Code.
(g) Holdco One will indemnify each Subscriber for any
additional Taxes it incurs as a result of any inaccuracy of
the representations in Sections 7.4.5(c) and (d) and any
nonfulfillment of any agreement or covenant of Holdco One in
Section 7.4.5(e) or (f). This shall be each Subscriber's sole
remedy in respect of these matters.
(h) If Holdco One fails to pay to the applicable
Subscribers the amount of any indemnification obligation
arising from Section 7.4.5(g) within 45 days of receiving
notice of, and the amount of, such obligation, beginning on
the 46th day following such notice, the amount of such
obligation shall accrue interest daily at the lesser of (i) an
annual rate equal to the prime rate (defined as the rate of
interest per annum publicly announced from time to time by
Credit Suisse First Boston as its prime rate in effect at its
principal office in New York City) plus 11 percent or (ii) the
highest applicable interest rate permitted by law.
7.4.6. Applicable Period. The obligations of the parties set
forth in this Section 7.4 relating to Taxes will, except as otherwise
agreed in writing, be unconditional and absolute and will remain in
effect without limitation as to time or amount of recovery by any party
hereto until thirty (30) days after the expiration of the applicable
statute of limitations governing the Tax to which such obligations
relate (after giving effect to any agreement extending or tolling such
statute of limitations).
7.5. Noncompetition. Each Subscriber agrees that, in consideration of
the benefits which each of them will realize upon consummation of the
transactions contemplated by this Agreement (including the payment of
substantial cash payments in respect of their equity ownership of the
Companies), it shall not, on or prior to the date which is two (2) years after
the Closing Date, directly or indirectly, run, own, manage, operate, control, be
employed by, provide consulting services to, be an officer or director of,
participate in, lend his, her or its name to, invest in or be connected in any
manner with the management, ownership, operation or control of any business,
venture or activity involved in the business of providing (i) cruise ship art
auction services, (ii) port lecturing, (iii) custom publishing for the cruise
industry, (iv) custom publishing for the hotel or resort industries (v) custom
publishing for the airline industry, or (vi) cruise ship gift shop sales,
provided, however, no Subscriber shall be considered to be in default of this
Section 7.5 solely by virtue of holding for portfolio purposes as a passive
investor not more than five percent (5%) of the issued and outstanding equity
securities of a corporation, the equity securities of which are listed or quoted
on a stock exchange or an over-the-counter market within the United States.
-31-
39
7.6. Continuation of Benefits. Holdco One agrees, (a) for a period of
at least 2 years from the Closing Date, to continue to provide or enable,
materially the same types at materially the same levels, of benefits disclosed
on Schedule 4.6.4 and (b) for a period of at least 1 year from the Closing Date,
to continue those corporate insurance policies listed on Schedule 7.6 at
materially the same level noted on Schedule 7.6.
7.7. Guarantee. Holdco One will use its reasonable best efforts to
assist in the termination of Xxxxxx Xxxxxx'x guarantee of Cruise's obligations
under the agreement dated April 18, 1996 among Park West at Sea, Inc., Xxxxxx,
Cruise and the other parties thereto (the "Park West Contract"). From the date
hereof until such guarantee is eliminated, fees collected from the cruise lines
which are subject to the Park West Contract will be deposited directly into a
separate bank account within 2 business days of receipt of any funds in such
account, in which no other funds may be commingled and for which Xx. Xxxxxx
shall be sole signatory. 92% of such collected proceeds will be paid to Park
West at Sea, Inc. and 8% will be paid to Cruise. In the event such guarantee is
not terminated within a reasonable period of time after the Closing, Xx. Xxxxxx
shall have the right in his sole discretion to offer to amend, and Holdco One
shall assent to the amendment, of the Park West Contract so that fees collected
from the cruise lines may be collected directly by Park West at Sea, Inc.
7.8. Management Options. Holdco One will grant to mutually agreed upon
management employees of the Companies shortly after the closing options which
will represent 1% of the fully diluted and outstanding common stock of Holdco
One calculated as of the Closing.
7.9. Assignment and Amendment. Holdco One, Berkshire Investors LLC and
the Subscribers agree that on or prior to the Closing, this Agreement shall be
assigned from Cruise Line Holdings Co. to Dutch Holding Company through the
execution of an Assignment and Amendment Agreement pursuant to which (i) Dutch
Holding Company shall assume the rights and obligations of Cruise Line Holdings
Co., and thereafter all references to "Holdco One" within this Agreement shall
be deemed to refer to Dutch Holding Company including, without limitation, such
references within Sections 2, 3 and 6, and (ii) such changes shall be made to
this Agreement as are necessary to comply with Dutch law.
8. CONDITIONS TO THE HOLDCO ONE'S OBLIGATION TO CLOSE.
The obligations of Holdco One at the Closing to consummate the
transactions contemplated by this Agreement and to execute and deliver the
Closing Agreements are subject to the satisfaction, at or prior to the Closing,
of all of the following conditions, compliance with which, or the occurrence of
which, may be waived prior to the Closing in writing by Holdco One in its sole
discretion:
-32-
40
8.1. Representations, Warranties and Covenants.
8.1.1. Continued Accuracy of Representations and Warranties.
All representations and warranties of any Subscriber contained in this
Agreement shall be true and correct as of the Closing with the same
force and effect as if made at and as of the Closing (except that
representations and warranties made as of a specific date shall
continue to be true and correct as at such date).
8.1.2. Performance of Agreements. Each Subscriber shall have
performed and satisfied all covenants and agreements required by this
Agreement to be performed or satisfied by such Subscriber at or prior
to the Closing.
8.1.3. Closing Certificate. At the Closing, each Subscriber
shall have furnished to Holdco One an unqualified certificate, signed
by such Subscriber, dated the Closing Date, to the effect that the
conditions specified in Sections 8.1.1 and 8.1.2 applicable to such
Subscriber have been satisfied.
8.2. Indebtedness. The Companies shall have no Debt outstanding
immediately prior to the Closing except for (i) up to an aggregate total of
$1,000,000 of Debt for the prepayment of the Carnival Commissions, and (ii) such
Debt as the Companies were required to incur for the payment of Tax
Distributions.
8.3. Greyhound Acquisition. The Greyhound Acquisition shall have been
consummated.
8.4. Consents, etc. The Subscribers shall have secured written consents
or waivers under all Contractual Obligations of the Subscribers and the
Companies set forth on Schedules 4.5.5 and 5.3 in a manner reasonably
satisfactory in form and substance to Holdco One, necessary to permit the
consummation of the transactions contemplated hereby or otherwise reasonably
requested by Holdco One, without affecting any rights of any Company under any
such Contractual Obligations.
8.5. Closing Agreements. The following parties to each of the following
agreements (the "Closing Agreements"), other than Holdco One and Berkshire
Investors LLC, shall have executed and delivered the following agreements:
(a) Each of Xxxxxx and Xxxxxxx shall have executed
employment agreements (the "Employment Agreements") in
substantially the form of Exhibit 8.5(a) hereto.
(b) Each Subscriber shall have executed a
Shareholders Agreement (the "Shareholders Agreement") among
Dutch Holding Company, Berkshire Investors LLC, the
Subscribers and other holders of Dutch Holding Company
-33-
41
stock in substance and form substantially the same as attached
as Exhibit 8.5(b) hereto, except for such changes as may be
required to comply with Dutch law and as are reasonably
satisfactory to Holdco One.
(c) A lease for the property at 000 Xxxxx Xxxx, Xxxxx
Xxxxx, XX (the "Xxxxx Road Lease") in a form acceptable to
Holdco One.
8.6. Legality; Governmental Authorization; General Litigation. Holdco
One's acceptance of the contribution of the Shares, the issuance of the Holdco
One Stock and the consummation of the other transactions contemplated hereby,
shall not be prohibited by any Legal Requirement, and shall not subject any
Company or Holdco One to any penalty or Tax or other liability other than
liabilities created by Holdco One, if any. The Subscribers shall have caused to
have been obtained or made and be in full force and effect all approvals,
consents, approvals, waivers, authorizations and other orders of, and
declarations, filings, registrations, qualifications and recordings with, any
Governmental Authority necessary to be obtained or made by the Subscriber or any
Company, in order to permit the consummation of the transactions contemplated
hereby or otherwise reasonably requested by Holdco One in connection with Holdco
One's financing of the transactions contemplated by this Agreement except where
such failure could not have a Material Adverse Effect, and, without limiting the
generality of the foregoing, all necessary filings, if any, pursuant to the
Xxxx-Xxxxx-Xxxxxx Act, shall have been made and all applicable waiting periods
thereunder shall have expired or been terminated, except where such failure
could not have a Material Adverse Effect. No action or proceeding shall have
been instituted at or prior to the Closing before any court, arbitrator or other
governmental body by any Person other than Holdco One or any of its Affiliates,
or instituted or threatened in writing by any Governmental Authority, relating
to this Agreement or any of the transactions contemplated hereby or against any
Company, any of the Subscribers or Holdco One, the result of which could prevent
or make illegal the consummation of any such transaction or could otherwise have
a material adverse effect on Holdco One or have a Material Adverse Effect.
8.7. Opinion of Counsel. The Subscribers shall have furnished Holdco
One and Credit Suisse First Boston with a favorable opinion of White & Case LLP
dated the Closing Date in substantially the form of Exhibit 8.7 and covering
such other matters with respect to the transactions contemplated hereby as
Holdco One or its counsel may reasonably request; provided, however, that any
opinion relating to the Trusts shall be provided by Gunster, Yoakley,
Xxxxxx-Xxxxx & Xxxxxxx, P.A.
8.8. Financing. Holdco One shall have received the debt funding from
Credit Suisse First Boston on terms and conditions substantially in accordance
with the terms of the Credit Suisse First Boston Commitment Letter.
8.9. No Material Adverse Change. Without limiting the generality of
Section 8.1, since the Balance Sheet Date, no Material Adverse Effect shall have
occurred, nor shall any
-34-
42
event or events have occurred which could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
8.10. Guarantee. Xxxxxx Xxxxxx shall have executed the Guarantee on the
signature page hereto.
8.11. Changes to Schedules. Holdco One shall be satisfied, in its sole
discretion, with any changes made to the disclosure schedules pursuant to
Section 4.16(b) or 5.5(b).
8.12. Dutch Holding Company. A Dutch private company with limited
liability (the "Dutch Holding Company") shall have been formed and the Articles
of Association and other charter documents of Dutch Holding Company shall be
mutually agreeable to the parties hereto.
8.13. Termination of Obligations. On-Board's guarantee of Media
Holdings, Ltd.'s mortgage with Colonial Bank shall have been terminated.
8.14. Dutch Law. Holdco One shall not have been notified by its Dutch
counsel that the transactions contemplated by this Agreement or the Shareholders
Agreement will result in or give rise to a breach or violation or default under
Dutch law.
8.15. Side Letter. Holdco, Berkshire Investors LLC and the Subscribers
shall have entered into a mutually acceptable side letter regarding the
non-transferability of Berkshire Investor LLC's limited liability company
interests.
8.16. Assignment and Amendment. The parties hereto shall have entered
into an Assignment and Amendment Agreement as contemplated by Section 7.9.
8.17. General. All actions to be taken by the Companies in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to Holdco One.
9. CONDITIONS TO THE SUBSCRIBERS' OBLIGATION TO CLOSE.
The obligations of each Subscriber at the Closing to consummate the
transactions contemplated by this Agreement and to execute and deliver the
Closing Agreements are subject to the satisfaction, at or prior to the Closing,
of all of the following conditions, compliance with which, or the occurrence of
which, may be waived prior to the Closing in writing by the Majority Subscribers
in their sole discretion:
-35-
43
9.1. Representations, Warranties and Covenants.
9.1.1. Continued Accuracy of Representations and Warranties.
All representations and warranties of Holdco One contained in this
Agreement shall be true and correct as of the Closing with the same
force and effect as if made at and as of the Closing (except that
representations and warranties made as of a specific date shall
continue to be true and correct as at such date).
9.1.2. Performance of Agreements. Holdco One shall have
performed and satisfied all covenants and agreements required by this
Agreement to be performed or satisfied by Holdco One at or prior to the
Closing.
9.1.3. Officer's Certificate. At the Closing, Holdco One shall
have furnished to the Subscribers an unqualified certificate signed by
the President or any Vice President of Holdco One, dated the Closing
Date, to the effect that the conditions specified in Sections 9.1.1 and
9.1.2 have been satisfied.
9.2. Consents, etc. Holdco One shall have secured written consents or
waivers under all Contractual Obligations of Holdco One, in a manner reasonably
satisfactory in form and substance to the Subscribers, necessary to permit the
consummation of the transactions contemplated hereby or otherwise reasonably
requested by the Subscribers.
9.3. Closing Agreements. Holdco One and Berkshire Investors LLC, where
applicable, shall have executed and delivered each of the following agreements
to which it is a party:
(a) The Employment Agreements, in substantially the
form of Exhibit 8.5(a) hereto.
(b) The Shareholders Agreement, in substance and form
substantially the same as attached as Exhibit 8.5(b) hereto,
except for such changes as may be required to comply with
Dutch law and as are reasonably satisfactory to the
Subscribers.
(c) The Xxxxx Road Lease, in a form acceptable to the
Subscribers.
9.4. Government Authorization; Litigation. Holdco One shall have caused
to be obtained or made and be in full force and effect all approvals, consents,
waivers, authorizations and other orders of, and declarations, filings,
registrations, qualifications and recordings with, any Governmental Authority
necessary to be obtained or made by Holdco One in order to permit the
consummation of the transactions contemplated hereby or otherwise reasonably
required by the Subscribers, and, without limiting the generality of the
foregoing, all necessary filings, if any, pursuant to the Xxxx-Xxxxx-Xxxxxx Act,
shall have been made and
-36-
44
all applicable waiting periods thereunder shall have expired or been terminated.
No action or proceeding shall have been instituted at or prior to the Closing
before any court, arbitrator or other governmental body by any Person other than
any Subscriber, any Affiliate thereof, any Company, or instituted or threatened
by any Governmental Authority, relating to this Agreement or any of the
transactions contemplated hereby or against Holdco One, the result of which
could prevent or make illegal the consummation any such transaction or could
otherwise have a material adverse effect on such Subscriber.
9.5. Opinion of Counsel. Holdco One shall have furnished each
Subscriber with a favorable opinion of Holdco One's counsel dated the Closing
Date covering the matters set forth in Exhibit 9.5 and covering such other
matters with respect to the transactions contemplated hereby as the Subscribers
or their counsel may reasonably request.
9.6. Options. Xxxxx Xxxxxxx shall have received options priced at the
share price equal to the price made available to Berkshire Investors LLC on the
Closing Date for shares of common stock which, at Closing, will represent 1% of
the fully diluted and outstanding common stock of Holdco One.
9.7. Greyhound Acquisition. The Greyhound Acquisition shall have been
consummated.
9.8. Initial Investment. There shall have been made an aggregate cash
equity investment of $30,000,000 in Holdco One, of which $28,800,000 shall have
been made by Berkshire Investors LLC.
9.9. Indemnity Agreements. Holdco One shall have executed and delivered
to each Subscriber who will be an officer or director of Holdco One an indemnity
agreement substantially in the form of Exhibit 9.9 hereto.
9.10. Changes to Schedules. The Subscribers shall be satisfied, in its
sole discretion, with any changes made to the Schedules pursuant to Section
6.11(b).
9.11. Commitment Letters. The Commitment Letters shall not have been
terminated, amended, modified or superseded in a manner that is, or is
reasonably likely to be, materially adverse to Subscribers.
9.12. Dutch Holding Company. The Dutch Holding Company shall have been
formed and the Articles of Association and other charter documents of Dutch
Holding Company shall be in a form mutually agreeable to the parties.
9.13. Dutch Law. The Subscribers shall not have been notified by their
Dutch counsel that the transactions contemplated by this Agreement or the
Shareholders Agreement will result
-37-
45
in or give rise to a breach or violation or default under Dutch law, or that
this Agreement or the Shareholders Agreement are not Enforceable under Dutch
law.
9.14. Side Letter. Holdco, Berkshire Investors LLC and the Subscribers
shall have entered into a mutually acceptable side letter regarding the
non-transferability of Berkshire Investors LLC's limited liability company
interests.
9.15. Assignment and Amendment. The parties hereto shall have entered
into an Assignment and Amendment Agreement as contemplated by Section 7.9.
10. INDEMNIFICATION.
10.1. Survival of Representations and Warranties. All of the
representations and warranties of the Subscribers (except for those contained in
Sections 4.4.1, 4.6.2, 5.2 and 5.4) contained herein or in any document,
certificate or other instrument required to be delivered hereunder shall survive
the Closing and continue in full force and effect only until the first
anniversary of the Closing Date. The representations and warranties of
Subscribers contained in Sections 4.4.1, 4.6.2 and 5.4 shall survive the Closing
and shall continue in full force and effect without limit as to time (subject to
any applicable statutes of limitations and any extensions or waivers thereof for
Taxes). The termination of any such representation and warranty, however, shall
not affect any claim for breaches of representations or warranties if written
notice thereof is given to the breaching party or parties prior to such
termination date. All of the representations and warranties of Holdco One
contained in Article 6 shall survive the Closing and shall continue in full
force and effect until the first anniversary of the Closing Date except for
those contained in Sections 6.2 and 6.6 which shall survive the Closing and
shall continue in full force and effect without limit as to time (subject to any
applicable statutes of limitations). All covenants and indemnities of the
Subscribers and Holdco One in this Agreement or in any document or certificate
delivered hereunder shall, unless otherwise specifically provided therein,
remain in full force and effect forever.
10.2. Indemnity by Subscribers. The Subscribers hereby agree to
severally and not jointly indemnify, defend and hold harmless Holdco One and
each Company, and each of their directors, officers and Affiliates against and
in respect of all liabilities, obligations, judgments, Liens, injunctions,
charges, orders, decrees, rulings, damages, dues, assessments, Taxes, losses,
fines, penalties, expenses, fees, costs, amounts paid in settlement (including
reasonable attorneys' and expert witness fees and disbursements in connection
with investigating, defending or settling any action or threatened action),
which arise out of any claim, damages, complaint, demand, cause of action,
audit, investigation, hearing, action, suit or other proceeding asserted or
initiated or otherwise existing in respect of any matter and are actually paid
by the Indemnified Party (collectively, the "Losses") that results from the
inaccuracy of any representation or warranty made by Subscribers herein, or
resulting from any misrepresentation, breach of warranty as each such
representation or warranty would read if all qualifications as to materiality
(including without limitation the definition of Material Adverse Effect) or
knowledge (including without
-38-
46
limitation the definition of Knowledge) were deleted therefrom or nonfulfillment
of any agreement or covenant of Subscribers or the Company contained herein or
in any agreement or instrument required to be entered into in connection
herewith or from any misrepresentation in or omission from any schedule,
document, certificate or other instrument required to be furnished by
Subscribers hereunder. Holdco One shall provide Subscribers written notice for
any claim made in respect of the indemnification provided in this Article 10,
whether or not arising out of a claim by a third party.
10.3. Indemnity by Holdco One. Holdco One hereby agrees to indemnify,
defend and hold harmless Subscribers and their respective Affiliates against and
in respect of all liabilities, obligations, judgments, liens, injunctions,
charges, orders, decrees, rulings, damages, dues, assessments, Taxes, losses,
fines, penalties, damages, expenses, fees, costs, amounts paid in settlement
(including reasonable attorneys' and expert witness fees and disbursements in
connection with investigating, defending or settling any action or threatened
action) arising out of any claim, complaint, demand, cause of action, audit,
investigation, hearing, action, suit or other proceeding asserted or initiated
in respect of any matter that results from the inaccuracy of any representation
or warranty made by Holdco One herein, or resulting from any misrepresentation,
breach of warranty as each such representation or warranty would read if all
qualifications as to materiality (including without limitation the definition of
Material Adverse Effect) or knowledge (including without limitation the
definition of Knowledge) were deleted therefrom or nonfulfillment of any
agreement or covenant of Holdco One contained herein or in any agreement or
instrument required to be entered into in connection herewith or from any
misrepresentation in or omission from any schedule, document, certificate or
other instrument required to be furnished by Holdco One hereunder. This Section
10.3 shall not apply to any representations, warranties, covenants or agreements
provided in Section 7.4.
10.4. Matters Involving Third Parties.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying
Party") under this Article 10, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(b) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim
with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after
the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any
-39-
47
Losses the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (ii) the Indemnifying Party provides
the Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii)
the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (iv) settlement
of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with
Section 10.4(b) above, (i) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be
withheld), and (iii) the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim unless written agreement is
obtained releasing the Indemnified Party from all liability
thereunder.
(d) In the event any of the conditions in Section
10.4(b) above is or becomes unsatisfied, however, (i) the
Indemnified Party may defend against, and consent to the entry
of any judgment or enter into any settlement with respect to,
the Third Party Claim in any manner it may deem appropriate
(and the Indemnified Party need not consult with, or obtain
any consent from, any Indemnifying Party in connection
therewith), (ii) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including attorneys'
fees and expenses), and (iii) the Indemnifying Parties will
remain responsible for any Losses the Indemnified Party may
suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest
extent provided in this Article 10.
10.5. Other Indemnification Provisions. Each of the Subscribers hereby
agrees that he or it will not make any claim for indemnification against Holdco
One or the Company solely by reason of the fact that he or it was a director,
officer, employee, or agent of the Company or was serving at the request of any
such entity as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit,
-40-
48
proceeding, complaint, claim, or demand brought by Holdco One or Company against
such Subscribers (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
10.6. Limitations on Indemnification.
(a) The maximum aggregate indemnification liability
of each Subscriber for any Losses pursuant to this Article 10
shall be its pro rata portion of $6,000,000.
(b) No indemnifying party under this Article 10 shall
have any obligation to indemnify any indemnified party
pursuant to this Article 10 for damages relating to breaches
of representations and warranties set forth herein or in any
certificate or document delivered in connection herewith until
the aggregate amount of Losses incurred by such indemnitee
(taken together with Losses incurred by its subsidiaries and
Affiliates) exceeds $500,000, and then only to the extent such
Losses exceed $500,000.
(c) The limitations of Sections 10.6(a) and (b) will
not apply with respect to any Losses incurred with respect to
a breach of a representation or warranty contained in Section
4.6.2.
11. DEFINITIONS.
For purposes of this Agreement:
11.1. Certain Matters of Construction. In addition to the definitions
referred to as set forth below in this Section 11:
(a) The words "hereof", "herein", "hereunder" and
words of similar import shall refer to this Agreement as a
whole and not to any particular Section or provision of this
Agreement, reference to Sections, Exhibits or Schedules are,
unless the context otherwise requires, references to Sections
of, and Exhibits and Schedules to, this Agreement, and
references to a particular Section of this Agreement shall
include all subsections thereof.
(b) The words "party" and "parties" shall refer to
each of the Subscribers and Holdco One.
(c) Definitions shall be equally applicable to both
the singular and plural forms of the terms defined, and
references to the masculine, feminine or neuter gender shall
include each other gender.
-41-
49
(d) Accounting terms used herein and not otherwise
defined herein are used herein as defined by generally
accepted accounting principles in effect as of the date
hereof.
11.2. Cross Reference Table. The following terms defined elsewhere in
this Agreement in the Sections set forth below shall have the respective
meanings therein defined:
Term Definition
"Affiliate Relationships" Section 4.5.4
"Agreement" Preamble
"Xxxxx Road Lease" Section 8.5(c)
"Assets" Section 4.4.1
"Assumed Liabilities" Section 4.3.2
"Audited Financials" Section 4.2.1(a)
"Berkshire" Section 7.1.3
"Berkshire Contribution" Recitals
"Balance Sheet" Section 4.2.1(d)
"Balance Sheet Date" Section 4.2.1(d)
"Boxer" Preamble
"Boxer Financials" Section 4.2.1(c)
"Holdco One" Preamble
"Capital Stock" Recitals
"Carnival Commissions" Section 4.3.1
"Closing" Section 3.1
"Closing Agreements" Section 8.5
"Closing Date" Section 3.1
"Commitment Letters" Section 6.8
"Company" Recitals
"Company Plan" Section 4.6.4
"Consideration" Section 2.1
"Contracts" Section 4.5.1
"Cruise" Preamble
"Dutch Holding Company" Section 8.13
"Employee Plan" Section 4.6.4
"Employment Agreements: Section 8.5(a)
"Equipment" Section 4.4.2.1
"Escrow Agreement" Section 2.2(b)
"Existing Plans" Section 4.6.4
"Final Termination Date" Section 13.1
"Financial Statements" Section 4.2.1.1
"Greyhound Acquisition" Section 6.7
"Indemnified Party" Section 10.4(a)
-42-
50
"Indemnifying Party" Section 10.4(a)
"Insurance Policies" Section 4.5.3
"IRS" Section 4.6.2
"Leases" Section 4.4.2.1
"Listed Contracts" Section 4.5.1
"Liability Policies" Section 4.5.3
"Listed Intangibles" Section 4.4.3
"Listed Leases" Section 4.4.2.1
"Listed Licenses" Section 4.4.3
"Loss Runs" Section 4.5.3
"Losses" Section 10.2
"NCL Commissions" Section 4.3.1
"Holdco One Stock" Section 2.1(b)
"On Board" Preamble
"Park West Contract" Section 7.7
"Pension Plan" Section 4.6.4
"Permit" Section 4.4.2.2
"Plan" Section 4.6.4
"Purchase" Recitals
"Quarterly Financials" Section 4.2.1(b)
"Real Property" Section 4.4.2.1
"Shares" Recitals
"Shareholders Agreement" Section 8.5(b)
"Stock Purchase Agreement" Recitals
"Subscribers" Preamble
"Subscribers' Contribution" Recitals
"Third Party Claim" Section 10.4(a)
"Welfare Plan" Section 4.6.4
11.3. Certain Definitions. The following terms shall have the following
meanings:
11.3.1. Action. The term "Action" shall mean any claim,
action, cause of action or suit (in contract or tort or otherwise),
arbitration or proceeding by or before any Governmental Authority.
11.3.2. Affiliate. The term "Affiliate" shall mean, as to any
specified Person at any time, (i) each Person directly or indirectly
controlling, controlled by or under direct or indirect common control
with such specified Person at such time, (ii) each Person who is or has
been within two years prior to the time in question an officer,
director or direct or indirect beneficial holder of at least 5% of any
class of the outstanding capital stock of such specified Person and the
Members of the Immediate Family of each such officer, director or
holder (and, if such specified Person is a natural person, of such
specified Person), and (iii) each Person of which such specified
-43-
51
Person or an Affiliate (as defined in clauses (i) or (ii) above)
thereof shall, directly or indirectly, beneficially own at least 5% of
any class of outstanding capital stock or other evidence of beneficial
interest at such time, provided, however, that in the case the time in
question is after the Closing, the Subscribers and each of their
Affiliates (as determined by the provisions of this Section 11.3.2
other than this proviso) (other than Holdco One and the Companies)
shall be deemed not to be Affiliates of Holdco One or the Companies,
and Holdco One and the Companies shall be deemed not to be Affiliates
of the Subscribers and such Persons, for any purposes of this
Agreement.
11.3.3. Berkshire Investors LLC. The term "Berkshire Investors
LLC" shall mean the limited liability company to be organized under the
laws of Delaware on or prior to the Closing, a majority of the
membership interests of which will be owned by Affiliates of Berkshire.
11.3.4. Business. The term "Business" shall mean the business
of the Companies including without limitation as such business is
reflected in the Financial Statements.
11.3.5. Business Day. The term "Business Day" shall mean any
day on which banking institutions in New York, New York are customarily
open for the purpose of transacting business.
11.3.6. By-laws. The term "By-laws" shall mean all by-laws
relating to such Person, as from time to time in effect.
11.3.7. Charter. The term "Charter" shall mean the certificate
or articles of incorporation or organization, statute, constitution,
joint venture or partnership agreement or articles or other charter
documents of any Person (other than an individual), each as from time
to time in effect.
11.3.8. Code. The term "Code" shall mean the federal Internal
Revenue Code of 1986 or any successor statute, and the rules and
regulations thereunder, and in the case of any referenced section of
any such statute, rule or regulation, any successor section thereto,
collectively and as from time to time amended and in effect.
11.3.9. Compensation. The term "Compensation", as applied to
any Person, shall mean all salaries, compensation, remuneration or
bonuses of any character, and medical, surgical, dental, hospital,
disability, unemployment, retirement, pension, vacation, insurance or
fringe benefits of any kind, or other payments of any kind in the
nature of compensation whatsoever made directly or indirectly by any
Company to such Person or Members of the Immediate Family of such
Person; provided, however, that compensation shall exclude
reimbursements and advances for business expenses.
-44-
52
11.3.10. Contractual Obligation. The term "Contractual
Obligation" shall mean, with respect to any Person, any contract,
agreement, deed, mortgage, lease, license, commitment, undertaking,
arrangement or understanding, written or oral, or other document or
instrument including without limitation any document or instrument
evidencing or otherwise relating to any indebtedness but excluding the
Charter and Bylaws of such Person, to which or by which such Person is
a party or otherwise subject or bound or to which or by which any
property or right of such Person is subject or bound.
11.3.11. Debt. "Debt" of any Person means all obligations of
such Person (i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) for the deferred purchase
price of goods or services (other than trade payables or accruals
incurred in the Ordinary Course of Business), (iv) under capital leases
and (v) in the nature of Guarantees of the obligations described in
clauses (i) through (iv) above of any other Person.
11.3.12. Distribution. The term "Distribution" shall mean,
with respect to the capital stock of or other evidence of beneficial
interest in any Person, (i) the declaration or payment of any dividend
on or in respect of any shares of any class of such capital stock or
beneficial interest; (ii) the purchase, redemption or other retirement
of any shares of any class of such capital stock or beneficial
interest, directly, or indirectly through a Subsidiary or otherwise;
(iii) any other distribution on or in respect of any shares of any
class of such capital stock or beneficial interest, or on or in respect
of any stock appreciation or similar right, and (iv) any payment or
other transfer of all or any part of any interest in any asset to any
Affiliate.
11.3.13. Enforceable. The term "Enforceable" shall mean, with
respect to any Contractual Obligation stated to be Enforceable by or
against any Person, that such Contractual Obligation is a legal, valid
and binding obligation enforceable by or against such Person in
accordance with its terms, except to the extent that enforcement of the
rights and remedies created thereby is subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of
general application affecting the rights and remedies of creditors and
to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).
11.3.14. ERISA. The term "ERISA" shall mean the federal
Employee Retirement Income Security Act of 1974 or any successor
statute, and the rules and regulations thereunder, and in the case of
any referenced section of any such statute, rule or regulation, any
successor section thereto, collectively and as from time to time
amended and in effect.
11.3.15. Gain Recognition Agreement. The term "Gain
Recognition Agreement" shall mean an agreement to recognize gain as
described in Section
-45-
53
1.367(a)-8 of the Income Tax Regulations entered into by those
Subscribers who immediately following the Berkshire Contribution and
the Subscribers' Contribution will hold at least 5 percent of either
the total voting power or the total value of the common stock of Holdco
One.
11.3.16. Generally Accepted Accounting Principles. The term
"generally accepted accounting principles" shall mean generally
accepted accounting principles, as defined by the Financial Accounting
Standards Board as of the Balance Sheet Date.
11.3.17. Guarantee. The term "Guarantee" shall mean (i) any
guarantee of the payment or performance of, or any contingent
obligation in respect of, any indebtedness or other obligation of any
other Person, (ii) any other arrangement whereby credit is extended to
one obligor on the basis of any promise or undertaking of another
Person (A) to pay the indebtedness of such obligor, (B) to purchase any
obligation owed by such obligor, (C) to purchase or lease assets (other
than inventory in the ordinary course of business) under circumstances
that would enable such obligor to discharge one or more of its
obligations, or (D) to maintain the capital, working capital, solvency
or general financial condition of such obligor, and (iii) any liability
as a general partner of a partnership or as a venturer in a joint
venture in respect of indebtedness or other obligations of such
partnership or venture.
11.3.18. Governmental Authority. The term "Governmental
Authority" shall mean any U.S. Federal, state or local or any foreign
government, governmental authority, regulatory or administrative
agency, governmental commission, court or tribunal (or any department,
bureau or division thereof) or any arbitral body or any similar
government, authority or body in any other country.
11.3.19. Governmental Order. The term "Governmental Order"
shall mean any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental Authority.
11.3.20. Intangibles. The term "Intangibles" shall mean trade
and product names; foreign letters patent of invention, patents, patent
applications, and unpatented proprietary development records;
trademarks, service marks, logos and copyrights (including
registrations and applications); trade secrets, know-how and other
proprietary or confidential information; computer software; and other
intangible property and rights that are directly or indirectly owned,
licensed or otherwise used by any Company.
11.3.21. Known or Knowledge. The term "Known" or "Knowledge"
means actual knowledge of any one of the parties to this Agreement of
information with respect to a subject, or information with respect to a
subject which any one of the parties obtains or would have obtained
upon reasonable inquiry from directors, officers,
-46-
54
general managers, or supervisors of or to it who are in possession of
or have access to such information in the performance of his or her
duties within the scope of his or her employment.
11.3.22. Legal Requirement. The term "Legal Requirement" shall
mean any federal, state, local or foreign law (including provincial and
local foreign laws), statute, standard, ordinance, code, order, rule,
regulation, resolution or promulgation, or any order, judgment or
decree of any Governmental Authority, or any license, franchise, permit
or similar right granted under any of the foregoing, or any similar
provision having the force and effect of law.
11.3.23. Lien. The term "Lien" shall mean any mortgage,
pledge, lien, security interest, charge, adverse or prior claim,
encumbrance, restriction on transfer, conditional sale or other title
retention device or arrangement (including without limitation a capital
lease), transfer for the purpose of subjection to the payment of any
indebtedness, or restriction on the creation of any of the foregoing,
whether relating to any property or right or the income or profits
therefrom; provided, however, that the term "Lien" shall not include
(i) statutory liens for Taxes to the extent that the payment thereof is
not in arrears or otherwise due, (ii) encumbrances in the nature of
zoning restrictions, easements, rights or restrictions of record on the
use of real property if the same do not detract from the value of such
property or impair its use in the Business as currently conducted,
(iii) statutory or common law liens to secure landlords, lessors or
renters under leases or rental agreements confined to the premises
rented to the extent that no payment or performance under any such
lease or rental agreement is in arrears or is otherwise due, (iv)
deposits or pledges made in connection with, or to secure payment of,
worker's compensation, unemployment insurance, old age pension programs
mandated under applicable Legal Requirements or other social security,
(v) statutory or common law liens in favor of carriers, warehousemen,
mechanics and materialmen, statutory or common law liens to secure
claims for labor, materials or supplies and other like liens, which
secure obligations to the extent that payment thereof is not in arrears
or otherwise due and (vi) liens reflected in the Financial Statements
or notes thereto
11.3.24. Majority Subscribers. The term "Majority Subscribers"
shall mean Subscribers holding at Closing a majority or more (in
number) of the Shares.
11.3.25. Material Adverse Effect. The term "Material Adverse
Effect" shall mean any change in or effect on the business, operations,
assets or financial condition of any Company which is materially
adverse to the Companies considered as one enterprise.
11.3.26. Members of the Immediate Family. The term "Members of
the Immediate Family", with respect to any individual, shall mean each
spouse, parent,
-47-
55
brother, sister or child of such individual, each spouse of any such
Person, each child of any of the aforementioned Persons, each trust
created in whole or in part for the benefit of one or more of the
aforementioned Persons and each custodian or guardian of any property
of one or more of the aforementioned Persons.
11.3.27. Ordinary Course of Business. The term "Ordinary
Course of Business" shall mean the ordinary course of business
consistent with past custom and practice in light of all circumstances.
11.3.28. Person. The term "Person" shall mean any individual,
partnership, corporation, association, trust, joint venture,
unincorporated organization or other entity, and any government,
governmental department or agency or political subdivision thereof.
11.3.29. Subsidiary. The term "Subsidiary" shall mean any
Person of which any Company (or other specified Person) shall own
directly or indirectly through a Subsidiary, a nominee arrangement or
otherwise at least a majority of the outstanding capital stock (or
other shares of beneficial interest) presently entitled to vote
generally or at least a majority of the partnership, joint venture or
similar interests, or in which any Company (or other specified Person)
is a general partner or joint venturer without limited liability. All
Subsidiaries are listed on Schedule 4.1.3.
11.3.30. Tax Distribution. The term "Tax Distribution" shall
mean cash distributions from the Companies or Holdco One to the
Subscribers in an amount equal to Subscribers' tax liability for the
earnings of the Companies from January 1, 1998 through the Closing Date
as set forth on Schedule 7.1.4.
11.3.31. Taxes. The term "Taxes" shall mean any federal,
state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, profits,
windfall profits, environmental (including taxes under Code Section
59A), customs duties, import or export duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real or personal property, sales, use, goods
and services, customs, duties, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not.
11.3.32. Tax Return. The term "Tax Return" shall mean all
federal, state, local and foreign Tax returns, Tax reports, claims for
refund of Tax and declarations of estimated Tax, and reports of or
relating to any federal, provincial, municipal, state, foreign or local
tax, assessment or charge of any nature whatsoever or other statement
relating to Taxes and any schedule or attachments to any of the
foregoing.
-48-
56
11.3.33. Trusts. The term "Trusts" shall mean the Xxxxxx
Xxxxxx Revocable Trust 8/3/94, the Xxxxx Xxxxxx Revocable Trust 8/3/94
and the Xxxxx Xxxxxx Revocable Trust 8/3/94.
12. GOVERNING LAW.
12.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of the State of Florida,
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the domestic substantive laws of any other
jurisdiction.
12.2. [Reserved]
12.3. Waiver of Jury Trial. To the extent not prohibited by applicable
law which cannot be waived, each of the parties hereto hereby waives, and
covenants that he or it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any issue,
claim, demand, cause of action, action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof, in each case whether now
existing or hereafter arising and whether in contract or tort or otherwise. Any
of the parties hereto may file an original counterpart or a copy of this Section
12.3 with any court as written evidence of the consent of each of the parties
hereto to the waiver of his or its right to trial by jury.
12.4. Reliance. Each of the parties hereto acknowledges that he or it
has been informed by each other party that the provisions of Section 12
constitute a material inducement upon which such party is relying and will rely
in entering into this Agreement and the transactions contemplated hereby.
13. TERMINATION.
13.1. Termination of Agreement. This Agreement may be terminated by the
parties only as provided below:
(a) Holdco One and the Majority Subscribers may
terminate this Agreement by mutual written consent at any time
prior to the Closing.
(b) Holdco One may terminate this Agreement by giving
written notice to the Majority Subscribers at any time prior
to the Closing in the event there has been a material breach
of any representation or warranty made by any Subscriber in
this Agreement (including without limitation the Schedules
hereto) or a material breach or material violation by any
Subscriber of any covenant or agreement made in or any duty
with respect to this Agreement (including without limitation
the Schedules hereto) which breach cannot be or has not been
-49-
57
cured within 10 days (but not later than September 30, 1998)
after written notice to the breaching party.
(c) The Majority Subscribers may terminate this
Agreement by giving written notice to Holdco One at any time
prior to the Closing in the event there has been a material
breach of any representation or warranty made by Holdco One in
this Agreement (including without limitation the Schedules
hereto) or a material breach or material violation by Holdco
One of any covenant or agreement made in or any duty with
respect to this Agreement (including without limitation the
Schedules hereto) which breach cannot be or has not been cured
within 10 days (but not later than September 30, 1998) after
written notice to the breaching party.
(d) Holdco One may terminate this Agreement by giving
written notice to the Majority Subscribers at any time after
September 30, 1998 (the "Final Termination Date") if the
Closing shall not have occurred on or before the Final
Termination Date by reason of the failure of any condition set
forth in Section 8 to be satisfied (unless the failure results
primarily from one or more breaches or violations of this
Agreement by Holdco One or inaccuracies in representations of
Holdco One hereunder).
(e) The Majority Subscribers may terminate this
Agreement by giving written notice to Holdco One at any time
after the Final Termination Date if the Closing shall not have
occurred on or before the Final Termination Date by reason of
the failure of any condition set forth in Section 9 to be
satisfied (unless the failure results primarily from one or
more breaches or violations of this Agreement by any
Subscriber or inaccuracies in representations of any
Subscriber hereunder).
13.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 13.1, all obligations of the parties hereunder
shall terminate without any liability of any party to any other party; provided,
however, that no termination of this Agreement shall relieve any party of
liabilities in respect of any breaches or violations of this Agreement or any
duty with respect hereto by such party or any inaccuracies in any
representations by such party hereunder prior to termination.
14. MISCELLANEOUS.
14.1. Entire Agreement; Waivers. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to such subject matter. No waiver of any provision of this Agreement
shall be deemed to or shall constitute a waiver of any other provision hereof
-50-
58
(whether or not similar), shall constitute a continuing waiver unless otherwise
expressly provided nor shall be effective unless in writing and executed (i) in
the case of a waiver by Holdco One, by Holdco One, and (ii) in the case of a
waiver by any Subscriber, by such Subscriber.
14.2. Amendment or Modification, etc. The parties hereto may not amend
or modify this Agreement except in such manner as may be agreed upon by a
written instrument executed by Holdco One and the Majority Subscribers. Any
written amendment, modification or waiver executed by Holdco One and the
Majority Subscribers shall be binding upon Holdco One and each Subscriber.
14.3. Headings, etc. Section and subsection headings are not to be
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof. This Agreement shall be deemed to express
the mutual intent of the parties, and no rule of strict construction shall be
applied against any party.
14.4. Schedules; Listed Documents, etc. Neither the listing nor
description of any item, matter or document in any Schedule hereto nor the
furnishing or availability for review of any document shall be construed to
modify, qualify or disclose an exception to any representation or warranty of
any party made herein or in connection herewith, except to the extent that such
representation or warranty specifically refers to such Schedule and such
modification, qualification or exception is clearly described in such Schedule.
The parties hereto intend that each representation, warranty, covenant and
agreement contained herein shall have independent significance. If any party has
breached any representation, warranty, covenant or agreement contained herein in
any respect, the fact that there exists other representation, warranty, covenant
or agreement relating to the same subject matter (regardless of the relative
levels of specificity) which the party has not breached shall not detract from
or mitigate the fact that such party is in breach of the first representation,
warranty, covenant or agreement.
14.5. Severability. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, such provision shall
(to the extent permitted by applicable law) be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law. The provisions hereof are severable,
and in the event any provision hereof should be held invalid or unenforceable in
any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision hereof.
14.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
-51-
59
14.7. Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and assigns (each of which
such transferees, successors and assigns shall be deemed to be a party hereto
for all purposes hereof); provided, however, that (i) no party may transfer any
of its rights or obligations hereunder without the consent of Holdco One and the
Majority Subscribers, except that Holdco One may assign this Agreement to Dutch
Holding Company pursuant to an Assignment and Amendment Agreement as provided in
Section 7.9, and (ii) no transfer or assignment by any party shall relieve such
party of any of its obligations hereunder. Except as expressly provided herein,
this Agreement shall not confer any right or remedy upon any Person other than
the parties and their respective transferees, successors and assigns.
15. NOTICES.
Any notices or other communications required or permitted hereunder
shall be effective if in writing and delivered personally or sent by telecopier,
Federal Express, or registered or certified mail, postage prepaid, addressed as
follows:
If to any Subscriber, ON BOARD MEDIA, INC.
or him or it: 000 Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: White & Case LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
If to Holdco One to Cruise Line Holdings Co.
it at: c/o Berkshire Partners
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
With a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
-52-
60
Unless otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date delivered, if delivered personally, (b) two
business days after being sent by Federal Express, if sent by Federal Express,
(c) one business day after being delivered, if delivered by telecopier with
confirmation of good transmission, and (d) three business days after being sent,
if sent by registered or certified mail. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each of
the other parties hereto.
[SPACE INTENTIONALLY LEFT BLANK]
-53-
61
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have hereunto set their hands under seal, as of the date first above
written.
HOLDCO ONE: CRUISE LINE HOLDINGS CO.
/s/ Xxxxx X. Xxxxxx
---------------------------------
By: Xxxxx X. Xxxxxx
Title:
SUBSCRIBERS: ON-BOARD MEDIA, INC.
/s/ Xxxxxx Xxxxxx
--------------------------------------
By: Xxxxxx Xxxxxx
Title: President
CRUISE MANAGEMENT INTERNATIONAL,
INC.
/s/ Xxxxxx Xxxxxx
--------------------------------------
By: Xxxxxx Xxxxxx
Title: President
BOXER MEDIA, INC.
/s/ Xxxxxx Xxxxxx
--------------------------------------
By: Xxxxxx Xxxxxx
Title: President
/s/ Xxxxxx Xxxxxx
--------------------------------------
Xxxxxx Xxxxxx, Individually
/s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx, Individually
THE XXXXXX XXXXXX REVOCABLE
TRUST 8/3/94
/s/ Xxxxxx Xxxxxx
--------------------------------------
Xxxxxx Xxxxxx, Trustee
62
THE XXXXX XXXXXX REVOCABLE
TRUST 8/3/94
/s/ Xxxxxx Xxxxxx
--------------------------------------
Xxxxxx Xxxxxx, Trustee
THE XXXXX XXXXXX REVOCABLE
TRUST 8/3/94
/s/ Xxxxxx Xxxxxx
--------------------------------------
Xxxxxx Xxxxxx, Trustee
GUARANTY
The undersigned, Xxxxxx Xxxxxx ("Guarantor"), hereby joins in this
Agreement for the sole purpose of acting as a primary obligor for the several
(and not joint) indemnification liabilities, if any, of the Xxxxxx Xxxxxx
Revocable Trust 8/3/94, the Xxxxx Xxxxxx Revocable Trust 8/3/94 and the Xxxxx
Xxxxxx Revocable Trust 8/3/94 (collectively, the "Trusts") arising pursuant to
Article 10 of this Agreement, provided that the Guarantor shall have the benefit
of, and the right to assert, all of the defenses available to the Trusts as
though any such claims for indemnification against Guarantor were asserted
against the Trusts.
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx, Individually
