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ASSET PURCHASE AGREEMENT
by and among
EDS INFORMATION SERVICES L.L.C.,
Buyer,
ELECTRONIC DATA SYSTEMS CORPORATION,
Buyer Parent,
SABRE INC.,
Seller,
and
SABRE HOLDINGS CORPORATION,
Seller Parent
Dated as of March 14, 2001
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
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ARTICLE I PURCHASE AND SALE OF ASSETS....................................................................2
1.1 PURCHASE AND SALE OF ASSETS.....................................................................2
1.2 RETAINED ASSETS.................................................................................4
1.3 THE TRANSFERRED BUSINESS........................................................................6
ARTICLE II ASSUMPTION OF LIABILITIES.....................................................................6
2.1 ASSUMPTION OF ASSUMED LIABILITIES...............................................................6
2.2 RETAINED LIABILITIES............................................................................7
ARTICLE III PURCHASE PRICE...............................................................................9
3.1 PURCHASE PRICE AND CONTINGENT NOTE..............................................................9
3.2 DEFERRED PREMIUM PAYMENTS.......................................................................9
3.3 TRANSFER AND OTHER TAXES.......................................................................12
3.4 ALLOCATION OF PURCHASE PRICE...................................................................16
ARTICLE IV CLOSING......................................................................................17
4.1 CLOSING DATE...................................................................................17
4.2 DELIVERIES AT THE CLOSING......................................................................17
4.3 CERTAIN CONSENTS; NO UNLAWFUL TRANSFERS; FURTHER ASSURANCES....................................20
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER PARENT..............................................22
5.1 ORGANIZATION; EXISTENCE AND QUALIFICATION......................................................23
5.2 POWER; AUTHORITY; ENFORCEABLE OBLIGATIONS......................................................23
5.3 NO CONFLICTS...................................................................................24
5.4 FINANCIAL STATEMENTS; NO UNDISCLOSED ASSUMED LIABILITIES.......................................24
5.5 ABSENCE OF CHANGES.............................................................................25
5.6 TITLE TO ASSETS................................................................................26
5.7 LEASES.........................................................................................27
5.8 CONDITION OF TANGIBLE PROPERTY.................................................................27
5.9 TRANSFERRED CONTRACTS..........................................................................28
5.10 INSURANCE...................................................................................30
5.11 PERMITS.....................................................................................30
5.12 LITIGATION..................................................................................31
5.13 ENVIRONMENTAL MATTERS.......................................................................31
5.14 TAXES.......................................................................................33
5.15 LABOR MATTERS...............................................................................33
5.16 EMPLOYEE BENEFITS...........................................................................34
5.17 COMPLIANCE WITH LAWS........................................................................35
5.18 BROKERS AND FINDERS.........................................................................36
5.19 SUFFICIENCY OF TRANSFERRED ASSETS...........................................................36
5.20 COMPLIANCE WITH EXPORT LAWS.................................................................36
5.21 SELLER PARENT...............................................................................37
5.22 CERTAIN COMMUNICATIONS......................................................................37
5.23 NO OTHER REPRESENTATIONS OR WARRANTIES......................................................37
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT.....................................37
6.1 ORGANIZATION; EXISTENCE AND QUALIFICATION......................................................37
6.2 POWER; AUTHORITY; ENFORCEABLE OBLIGATIONS......................................................38
6.3 NO CONFLICTS...................................................................................38
6.4 LITIGATION.....................................................................................39
6.5 BROKERS AND FINDERS............................................................................39
6.6 AVAILABILITY OF FUNDS..........................................................................39
6.7 NO OTHER REPRESENTATIONS OR WARRANTIES.........................................................39
COVENANTS OF THE PARTIES................................................................................40
7.1 CONDUCT OF BUSINESS............................................................................40
7.2 BUYER'S INVESTIGATION; FULL ACCESS.............................................................41
7.3 BOOKS AND RECORDS; FURNISHING INFORMATION......................................................42
7.4 CONSUMMATION OF TRANSACTIONS; CONSENTS.........................................................44
7.5 AGREEMENTS REGARDING CONFIDENTIALITY...........................................................44
7.6 PUBLIC DISCLOSURES.............................................................................47
7.7 NO SOLICITATION................................................................................48
7.8 PAYMENTS RECEIVED; ACCOUNTS RECEIVABLE; VENDOR INVOICES........................................48
7.9 GOVERNMENT CONSENTS............................................................................49
7.10 FURTHER ASSURANCES..........................................................................49
7.11 RELEASE OF LIENS............................................................................49
7.12 NON-SOLICITATION OF EMPLOYEES...............................................................49
7.13 TAX EXEMPTIONS, CREDITS AND INCENTIVES......................................................50
7.14 CLAIMS BY SELLER............................................................................50
7.15 SUBCONTRACTING AGREEMENT....................................................................50
7.16 CERTAIN SCHEDULES TO THE OUTSOURCING AGREEMENT..............................................50
7.17 EFFORTS REGARDING AMERICAN AIRLINES.........................................................51
7.18 IDENTIFICATION OF FINANCED HARDWARE.........................................................51
7.19 DATABASES...................................................................................51
ARTICLE VIII EMPLOYEE MATTERS...........................................................................52
8.1 OFFERS/TRANSFERS OF EMPLOYMENT.................................................................52
8.2 COMPARABLE COMPENSATION AND BENEFITS...........................................................57
8.3 TRAVEL PRIVILEGE AGREEMENTS....................................................................59
8.4 STOCK PLANS....................................................................................59
8.5 PENSION PLANS..................................................................................63
8.6 401(K) PLAN....................................................................................63
8.7 RETIREE MEDICAL PLAN...........................................................................63
8.8 FLEXIBLE BENEFIT PLANS.........................................................................63
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8.9 RETENTION BONUS PLAN...........................................................................63
8.10 VACATION....................................................................................64
8.11 RELOCATION ASSISTANCE.......................................................................64
8.12 SEVERANCE...................................................................................64
8.13 EXPENSES....................................................................................65
8.14 WARN ACT....................................................................................65
ARTICLE IX CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE SELLER PARENT................................66
9.1 REPRESENTATIONS AND WARRANTIES TRUE............................................................66
9.2 PERFORMANCE....................................................................................66
9.3 ABSENCE OF LITIGATION..........................................................................66
9.4 GOVERNMENTAL CONSENTS; HSR ACT WAITING PERIODS.................................................66
9.5 CERTIFICATES...................................................................................66
9.6 DELIVERIES.....................................................................................67
9.7 CONSENT LETTER ACKNOWLEDGEMENT.................................................................67
ARTICLE X CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE BUYER PARENT...................................67
10.1 REPRESENTATIONS AND WARRANTIES TRUE.........................................................67
10.2 PERFORMANCE.................................................................................67
10.3 ABSENCE OF LITIGATION.......................................................................67
10.4 GOVERNMENTAL CONSENTS; HSR ACT WAITING PERIODS..............................................68
10.5 CERTIFICATES................................................................................68
10.6 DELIVERIES..................................................................................68
10.7 CONSENT LETTER ACKNOWLEDGEMENT..............................................................68
ARTICLE XI SURVIVAL; INDEMNIFICATION....................................................................68
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................................................68
11.2 INDEMNIFICATION.............................................................................69
11.3 THIRD PARTY CLAIMS..........................................................................70
11.4 LIMITATION OF LIABILITY.....................................................................71
11.5 SET-OFF RIGHTS..............................................................................72
11.6 SUBROGATION.................................................................................72
11.7 EXCLUSIVE REMEDY............................................................................72
11.8 DISPUTE RESOLUTION..........................................................................72
ARTICLE XII TERMINATION.................................................................................74
12.1 METHODS OF TERMINATION......................................................................74
12.2 PROCEDURE UPON TERMINATION..................................................................75
12.3 EXCLUSIVE REMEDIES PRIOR TO CLOSING.........................................................75
ARTICLE XIII MISCELLANEOUS PROVISIONS...................................................................75
13.1 EXPENSES....................................................................................75
13.2 WAIVER OF COMPLIANCE WITH BULK SALES LAWS...................................................76
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13.3 NOTICES.....................................................................................76
13.4 WAIVERS.....................................................................................77
13.5 AMENDMENT...................................................................................77
13.6 ENTIRE AGREEMENT............................................................................78
13.7 APPLICABLE LAW; JURISDICTION AND VENUE......................................................78
13.8 INTERPRETATION..............................................................................78
13.9 SEVERABILITY................................................................................79
13.10 CERTAIN DEFINITIONS.........................................................................79
13.11 RELATIONSHIP OF THE PARTIES.................................................................82
13.12 ASSIGNMENTS.................................................................................83
13.13 BINDING EFFECT; BENEFITS....................................................................83
13.14 GOOD FAITH DEALING..........................................................................83
13.15 COUNTERPARTS................................................................................83
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of March 14, 2001, by and among EDS INFORMATION SERVICES L.L.C., a
Delaware limited liability company (the "BUYER"), ELECTRONIC DATA SYSTEMS
CORPORATION, a Delaware corporation (the "BUYER PARENT"), SABRE INC., a Delaware
corporation ("SABRE" or the "SELLER"), and SABRE HOLDINGS CORPORATION, a
Delaware corporation (the "SELLER PARENT").
WHEREAS, the Seller is engaged in the business of providing
information technology services;
WHEREAS, the Buyer and the Buying Subsidiaries desire to purchase, and
the Seller and the Selling Subsidiaries desire to sell, the Transferred Assets
(as defined in Section 1.1), subject to the Buyer's assumption of the Assumed
Liabilities (as defined in Section 2.1), all on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, it is a condition to the closing of the transactions
contemplated by this Agreement that the Buyer, the Buyer Parent, the Seller and
the Seller Parent enter into (i) an information technology services agreement
with respect to the operation of Seller's retained businesses, (ii) a commercial
agreement with respect to the marketing of various products and services by the
Buyer and the Seller, (iii) a technology license agreement pursuant to which the
Seller and the Selling Subsidiaries will grant licenses to certain technology
and intellectual property to the Buyer, (iv) a subcontracting agreement pursuant
to which the Seller will provide certain services to the Buyer, (v) a travel
marketing and distribution (TMD) products and services joint marketing agreement
with respect to Buyer's marketing and utilization of Seller's TMD products and
services, and (vi) certain other agreements, instruments and documents
identified herein;
WHEREAS, simultaneously with the execution of this Agreement, the Buyer
and the Seller have entered into (i) a transition assistance agreement
substantially in the form of Exhibit 1 (together with appropriate schedules and
exhibits, the "TRANSITION AGREEMENT"), (ii) a purchase agreement substantially
in the form of Exhibit 2 (together with appropriate schedules and exhibits, the
"CHEROKEE PURCHASE AGREEMENT") and (iii) a letter of intent substantially in the
form of Exhibit 3 (the "AIR SERVICES BUSINESS LETTER OF INTENT") relating to the
potential acquisition by the Seller from the Buyer of the Buyer's air services
portfolio and related customer agreements;
WHEREAS, prior to execution of this Agreement, the Seller and American
Airlines, Inc. ("AMERICAN AIRLINES") executed the Third Amended and Restated
Information Technology Services Agreement, dated February 26, 2001, between
American Airlines and the Seller (including any renewals, extensions or
replacements thereof and any amendments or supplements thereto, the "THIRD
AMENDED ITSA"), the PSS/FPC/Related Services Agreement, dated February 26, 2001,
between American Airlines and the Seller (the "RSA"), and the Letter Re: (1)
Bifurcation of the Second Amended and Restated Information Technology Services
Agreement,
dated as of December 13, 1999 (the "SECOND AMENDED ITSA"), between American
Airlines and the Seller and (2) proposed delegation of performance of certain
services, dated February 26, 2001, from American Airlines to the Seller (the
"CONSENT LETTER");
WHEREAS, it is a condition to the closing of the transactions
contemplated by this Agreement that American Airlines and the Seller have
executed a mutual written acknowledgement that all conditions in Sections I and
II of the Consent Letter have been fulfilled or waived; and
WHEREAS, the Seller is a wholly owned subsidiary of the Seller Parent
and the Buyer is a wholly owned subsidiary of the Buyer Parent.
Certain capitalized terms used in this Agreement are defined in Section
13.10 of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration described herein, the
Buyer, the Buyer Parent, the Seller and the Seller Parent agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS
Upon the terms and subject to the conditions of this Agreement, at the
Closing (as defined in Section 4.1), the Seller shall, and shall cause each of
the Selling Subsidiaries to, sell, transfer, convey, assign and deliver to the
Buyer, and to those Buying Subsidiaries specified by the Buyer prior to the
Closing, free and clear of all Liens (other than Permitted Liens), and the Buyer
shall, and, as directed by the Buyer, the Buyer Parent shall cause the Buying
Subsidiaries to, purchase, acquire and accept (or cause to be purchased,
acquired and accepted), those assets, rights, properties, claims and contracts
of Seller and the Selling Subsidiaries, whether tangible or intangible, whether
real, personal or mixed, whether accrued, contingent or otherwise, described in
paragraphs (a) through (j) below ("TRANSFERRED ASSETS"):
(a) All (i) interests of the Seller and the Selling Subsidiaries
in the real property leased or subleased by the Seller and the Selling
Subsidiaries that is identified in Section 1.1(a)(i) of the Seller Disclosure
Schedule, together with any options to purchase the underlying real property
and leasehold improvements thereon, and in each case all other rights,
subleases, licenses, permits and easements (including reciprocal parking
easements) appurtenant to or related to leases and subleases held by the
Seller and the Selling Subsidiaries relating to such real property (the
"TRANSFERRED LEASED REAL PROPERTY"); and (ii) leasehold interests being
granted to the Buyer by the Seller for those parcels of real property
identified in Section 1.1(a)(ii) of the Seller Disclosure Schedule (the
"LEASEHOLD INTERESTS," and together with the Transferred Leased Real
Property, the "PREMISES");
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(b) All tangible assets, including all land and leasehold
improvements, buildings, fixtures, machinery, equipment (including computer
hardware and firmware, telecommunications equipment and redundancy equipment
(such as generators, uninterrupted power supplies, chillers, batteries and
other associated equipment)), underground and aboveground tanks, tools,
furniture, furnishings, and office equipment, leased or owned by the Seller
and the Selling Subsidiaries, including all warranties and guarantees, if
any, expressed or implied, existing for the benefit of the Seller and the
Selling Subsidiaries in connection therewith (collectively, "TANGIBLE
ASSETS"), which are either (i) located on the Premises, (ii) used primarily
in the Transferred Business (as defined in Section 1.3(a)), (iii) used by the
Seller and the Selling Subsidiaries prior to the Closing primarily to provide
the Outsourced Services (as defined in Section 4.2(a)(ix)), or (iv) used
primarily both in the Transferred Business and by the Seller and the Selling
Subsidiaries prior to the Closing to provide the Outsourced Services, in each
case except for the Tangible Assets identified in Section 1.1(b) of the
Seller Disclosure Schedule (collectively, the "TRANSFERRED TANGIBLE ASSETS");
(c) All Contracts that are identified in Section 1.1(c) of the
Seller Disclosure Schedule and all rights therein or arising thereunder (the
"ASSIGNED CUSTOMER AGREEMENTS"), including any right to receive payments
pursuant to the Assigned Customer Agreements, but not including (i) any right
to receive payment for or in connection with goods shipped or services
rendered before 12:01 a.m. Central Time on the Closing Date (as defined in
Section 4.1) under the Assigned Customer Agreements (including all accounts
receivable, all notes, bonds and other evidence of indebtedness and all other
rights to receive payments arising out of the Assigned Customer Agreements
before 12:01 a.m. Central Time on the Closing Date) (the "CUSTOMER ACCOUNTS
RECEIVABLE") or (ii) any right to assert claims or take other actions in
respect of Defaults under the Assigned Customer Agreements that arise out of
or relate to events occurring before 12:01 a.m. Central Time on the Closing
Date;
(d) All Contracts pursuant to which any of the Seller or the
Selling Subsidiaries has licensed Software (as defined in Section 1.2(c))
from a third party (collectively, "SOFTWARE LICENSES") and which are
identified in Section 1.1(d) of the Seller Disclosure Schedule and all rights
therein or arising thereunder (collectively, the "TRANSFERRED SOFTWARE
LICENSES"), including any right to receive goods or services pursuant to the
Transferred Software Licenses, but not including any right to assert claims
or take other actions in respect of Defaults under the Transferred Software
Licenses that arise out of or relate to events occurring before 12:01 a.m.
Central Time on the Closing Date;
(e) All Contracts (other than Assigned Customer Agreements,
Software Licenses, insurance policies and Contracts relating to interests in
real property) pursuant to which the Seller or any Selling Subsidiary obtains
goods or services from a third party (other than any Person who is party to
any of the Assigned Customer Agreements) which are identified in Section
1.1(e) of the Seller Disclosure Schedule and which primarily relate to or are
primarily used in connection with any of (i) the Transferred Business, (ii)
the Transferred Tangible Assets, (iii) the Premises, (iv) the provision by
the Seller and the Selling Subsidiaries prior to the Closing of the
Outsourced Services, or (v) any combination of clauses (i) through (iv) of
this Section 1.1(e) and all rights therein or arising thereunder
(collectively, the "TRANSFERRED VENDOR
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CONTRACTS," and together with the Assigned Customer Agreements, Transferred
Software Licenses and Transferred Leases (as defined in Section 2.1), the
"TRANSFERRED CONTRACTS"), including any right to receive goods, services or
payments pursuant to the Transferred Vendor Contracts, but not including any
right to assert claims or take other actions in respect of Defaults under the
Transferred Vendor Contracts that arise out of or relate to events occurring
before 12:01 a.m. Central Time on the Closing Date;
(f) All prepaid items (or the applicable portions thereof) which
(i) are identified in Section 1.1(f)(i) of the Seller Disclosure Schedule or
(ii) relate primarily to the Premises, the Transferred Tangible Assets or the
Transferred Contracts, in each case except for those prepaid items identified
in Section 1.1(f)(ii) of the Seller Disclosure Schedule (collectively, the
"PREPAID ITEMS");
(g) Original or electronic or hard copies of all operating data
and records of the Seller and the Selling Subsidiaries, including books,
records, manuals, operating guidelines and practices, sales and promotional
data, advertising materials, customer lists, credit information, historical
cost and pricing information, data regarding operating expenses for the
Premises, supplier lists, business plans, reference catalogs, Transferred
Databases (as defined in Section 7.19) and other similar property (but
excluding all Intellectual Property Rights (as defined in Section 1.2(b)),
Software and Retained Databases (as defined in Section 7.19)), which relate
primarily to any of the other Transferred Assets (collectively, "BOOKS AND
RECORDS"), in each case except for those Books and Records identified in
Section 1.1(g) of the Seller Disclosure Schedule (collectively, the
"TRANSFERRED BOOKS AND RECORDS");
(h) To the extent transferable, the licenses, permits, certificates
of authority, development rights, zoning variances, authorizations,
certifications, registrations, classifications, franchises and other Consents
granted or issued by a governmental or regulatory authority (collectively,
"PERMITS") which either (i) relate primarily to the Transferred Assets, the
Transferred Business or the provision by the Seller and the Selling
Subsidiaries prior to the Closing of the Outsourced Services or (ii) are
identified in Section 1.1(h) of the Seller Disclosure Schedule (the
"TRANSFERRED PERMITS");
(i) The capitalized software development costs associated with the
development of version 4.1 of the operating system for the Seller's Flight
Operations System (FOS) product (but not including any Intellectual Property
Rights (as defined in Section 1.2(b)) or Software (as defined in Section
1.2(c)); and
(j) The tangible personal property owned by the Seller and the
Selling Subsidiaries, and identified in Section 1.1(j) of the Seller
Disclosure Schedule (the "TRANSFERRED PERSONAL PROPERTY").
1.2 RETAINED ASSETS
The Seller and the Selling Subsidiaries shall retain all of the assets
used in the Transferred Business and the Retained Business which are not
included in the Transferred Assets (the "RETAINED ASSETS") including:
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(a) All (i) cash and cash equivalents of the Seller and the Selling
Subsidiaries, including securities, bank accounts and deposits, investments in
money market funds, commercial paper, certificates of deposit, treasury bills
and accrued interest thereon and (ii) accounts receivable and other rights of
Seller and the Selling Subsidiaries to receive payments, including all Customer
Accounts Receivable;
(b) All ownership rights of the Seller and the Selling
Subsidiaries in all U.S. and foreign patents and patent applications,
trademarks and trademark registrations, copyright registrations, trade name
registrations, service marks and service xxxx registrations, logos and any
applications or pending applications related to any of the foregoing, all
confidential information, trade secrets, compilations, know-how, drawings,
techniques, and processes, and all invention disclosures and common law
trademarks, service marks, copyrights and trade names owned or controlled by
the Seller and the Selling Subsidiaries, pursuant to license or otherwise and
whether or not used in the Transferred Business or to provide the Outsourced
Services (collectively, "INTELLECTUAL PROPERTY RIGHTS");
(c) All ownership rights of the Seller and the Selling
Subsidiaries in all computer software and database software and all
representations thereof, including any Intellectual Property Rights related
to any of the foregoing ("SOFTWARE"), whether developed by the Seller, the
Selling Subsidiaries or any other Person, and all rights of the Seller and
the Selling Subsidiaries in Software Licenses that are not Transferred
Software Licenses;
(d) All Contracts of the Seller and the Selling Subsidiaries that
are not Transferred Contracts, including any Contracts of insurance in
respect of the Transferred Business or the Transferred Assets and any
reimbursement for, or other benefit associated with, prepaid insurance,
including any insurance proceeds with respect to events occurring before
12:01 a.m. Central Time on the Closing Date;
(e) All corporate charters, minute books, stock records and
corporate seals of the Seller and the Selling Subsidiaries, and all Books and
Records of the Seller and the Selling Subsidiaries that are not Transferred
Books and Records;
(f) Any refunds, credits or other assets or rights (including
interest thereon or claims therefor) with respect to any Taxes, income taxes
or franchise taxes paid or incurred by the Seller and the Selling
Subsidiaries;
(g) Any rights (including rights of the Seller and the Selling
Subsidiaries to indemnification and any policy of insurance) and claims and
recoveries under litigation of the Seller and the Selling Subsidiaries
against third parties arising out of or relating to events occurring before
12:01 a.m. Central Time on the Closing Date;
(h) Any assets of the Seller or the Selling Subsidiaries that are
transferred or otherwise disposed of by the Seller or a Selling Subsidiary in
the ordinary course of the Transferred Business before 12:01 a.m. Central
Time on the Closing Date;
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(i) All Retained Databases (excluding rights in database software
included in the Transferred Software Licenses);
(j) All assets of the Seller and the Selling Subsidiaries relating
to the Plans (as defined in Section 5.16(a)), except to the extent expressly
provided in Article VIII; and
(k) Those other assets of the Seller and the Selling Subsidiaries
identified in Section 1.2(k) of the Seller Disclosure Schedule.
1.3 THE TRANSFERRED BUSINESS
(a) The "TRANSFERRED BUSINESS" shall mean (i) all services
provided and operations conducted or required to be conducted by the Seller
or the Selling Subsidiaries to the extent required under the Assigned
Customer Agreements listed under the subheading "Outsourcing Business" in
Section 1.1(c) of the Seller Disclosure Schedule (the "OUTSOURCING
BUSINESS"); (ii) all services provided and operations conducted or required
to be conducted by the Seller or the Selling Subsidiaries to the extent
required under the Assigned Customer Agreements listed under the subheading
"Logistics Business" in Section 1.1(c) of the Seller Disclosure Schedule (the
"LOGISTICS BUSINESS"); (iii) all services provided and operations conducted
or required to be conducted by the Seller or the Selling Subsidiaries to the
extent required under the Assigned Customer Agreements listed under the
subheading "Rail Business" in Section 1.1(c) of the Seller Disclosure
Schedule (the "RAIL BUSINESS"); and (iv) all services provided and operations
conducted or required to be conducted by the Seller or the Selling
Subsidiaries to the extent required under the Assigned Customer Agreements
listed under the subheading "Web Hosting Business" in Section 1.1(c) of the
Seller Disclosure Schedule (the "WEB HOSTING BUSINESS").
(b) The "RETAINED BUSINESS" shall mean all businesses of the
Seller and the Selling Subsidiaries that are not part of the Transferred
Business. For the avoidance of doubt, the parties agree that the Retained
Business includes the multi-hosting business, including the passenger
services, flight operations and cargo systems, as defined in Section 1.3(b)
of the Seller Disclosure Schedule, to the extent not included in the
Transferred Business.
ARTICLE II
ASSUMPTION OF LIABILITIES
2.1 ASSUMPTION OF ASSUMED LIABILITIES
Upon the terms and subject to the conditions of this Agreement, at the
Closing, as part of the consideration for the transfer of the Transferred Assets
to the Buyer and the Buying Subsidiaries under this Agreement, the Buyer and, as
directed by the Buyer, the Buying Subsidiaries shall agree to be bound by the
Transferred Contracts, Transferred Permits and all leases and subleases relating
to the Transferred Leased Real Property (the "TRANSFERRED LEASES") and shall
assume and agree to pay, perform and discharge, when due, the following
liabilities and obligations of the Seller and the Selling Subsidiaries (the
"ASSUMED LIABILITIES"):
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(a) All liabilities and obligations of any kind, character or
description relating directly to, or arising under or in respect of,
performance after 12:01 a.m. Central Time on the Closing Date under the
Transferred Contracts, Transferred Permits and Transferred Leases;
(b) All liabilities and obligations of any kind, character or
description arising after 12:01 a.m. Central Time on the Closing Date in
respect of the interests in the Premises transferred to the Buyer and the
Buying Subsidiaries pursuant to this Agreement or any other Transaction
Document (including payment of all Taxes, utilities and other related
payments);
(c) Any and all Transfer Taxes (as defined in Section 3.3(a)) for
which the Buyer Parent, the Buyer or any Buying Subsidiary is responsible
pursuant to Section 3.3(a)(i);
(d) Those liabilities and obligations expressly assumed by the
Buyer and the Buying Subsidiaries pursuant to Article VIII;
(e) All fees payable to Computer Associates International, Inc.
after 12:01 a.m. Central Time on the Closing Date pursuant to Article 3 of
the License Agreement, dated June 30, 1997, between the Seller and Computer
Associates International, Inc., as amended to date, but in no event more than
the minimum annual payments specified therein; and
(f) All liabilities and obligations of any kind, character or
description arising before 12:01 a.m. Central Time on the Closing Date under
any Environmental Law in connection with the ownership or operation of the
Transferred Leased Real Property except (i) for any such liabilities and
obligations arising with respect to any Identified Environmental Condition
(as defined in Section 7.2(b)) and (ii) to the extent that the Buyer is
entitled to receive payments in respect of rights to indemnification under
this Agreement by reason of breach by the Seller or the Seller Parent of any
representation or warranty contained in Section 5.13.
2.2 RETAINED LIABILITIES
The Buyer and the Buying Subsidiaries have not agreed to pay or
discharge any obligation or liability, and shall not be required to assume any
liability or obligation, direct or indirect, absolute or contingent, of the
Seller or the Selling Subsidiaries, the assumption of which by the Buyer and the
Buying Subsidiaries is not expressly provided for in this Agreement (the
"RETAINED LIABILITIES"). Without limiting the foregoing, the Buyer and the
Buying Subsidiaries shall not assume, and the Seller and the Selling
Subsidiaries shall retain, pay and discharge, any and all liabilities and
obligations, direct or indirect, absolute or contingent, relating to:
(a) Any and all Taxes (other than those Transfer Taxes for which
the Buyer Parent, the Buyer or any Buying Subsidiary is responsible pursuant
to Section 3.3(a)(i)) and any and all income and franchise taxes,
attributable to or incurred in connection with the ownership or operation of
the Transferred Business or the Transferred Assets before 12:01 a.m. Central
Time on the Closing Date (including any such Taxes which are not due or
assessed until after the Closing Date), as determined pursuant to Section
3.3(d) below;
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(b) Any and all obligations and liabilities of the Seller and the
Selling Subsidiaries with respect to benefits and other liabilities accrued
prior to, on or after the Closing Date with respect to any of the Plans and
any and all other liabilities and obligations whatsoever payable with respect
to any employee benefit plan or arrangement, including under a Foreign Plan
(as defined in Section 5.16(h)), including severance pay, termination pay,
retention pay, salary continuation and similar obligations, plans or policies
regarding vacation, sick leave or other paid-time-off benefits, welfare
benefit plans or programs, qualified or non-qualified or approved or
non-approved benefit plans or arrangements or any other employee benefit
plans, programs, agreements, policies or arrangements maintained by the
Seller or the Selling Subsidiaries, whether accrued prior to, on or following
the Closing Date, in each case except to the extent expressly assumed by the
Buyer and the Buying Subsidiaries pursuant Article VIII;
(c) All liabilities and obligations of any kind, character or
description arising before 12:01 a.m. Central Time on the Closing Date in
connection with the ownership or operation of the Transferred Business, the
Transferred Assets or the provision by the Seller of the Outsourced Services
(including (i) any claim by a customer or vendor alleging any failure by the
Seller or any Selling Subsidiary to comply with the terms and conditions of
any Transferred Contract before 12:01 a.m. Central Time on the Closing Date
(including any warranty claims made by customers under the Assigned Customer
Agreements arising out of work performed prior to 12:01 a.m. Central Time on
the Closing Date and any product liability claims relating to the Transferred
Business arising out of work performed, or products sold or delivered prior
to 12:01 a.m. Central Time on the Closing Date) and (ii) any matter disclosed
in Section 2.2(c) of the Seller Disclosure Schedule) and not otherwise expressly
assumed by the Buyer or the Buying Subsidiaries pursuant to Section 2.1;
(d) All liabilities and obligations of any kind, character or
description arising before the Closing associated with the Retained Business
or the Retained Assets;
(e) All trade payables of the Seller and the Selling Subsidiaries
that under GAAP should be reflected in a balance sheet of the Seller as of
the Closing Date, and all indebtedness of the Seller and the Selling
Subsidiaries for money borrowed, including liabilities or obligations arising
from or relating to any Liens (as defined in Section 13.10), other than
Permitted Liens (as defined in Section 13.10), on the Transferred Assets;
(f) All liabilities of the Seller and the Selling Subsidiaries
related to Litigation that is pending as of the Closing Date;
(g) Any and all obligations and liabilities of any kind, character
or description relating to the environmental condition of the Leasehold
Interests or arising under applicable Environmental Laws associated with the
Leasehold Interests, except to the extent attributable to Buyer's occupancy
of the Leasehold Interests; and
(h) All deferred revenue liabilities created prior to 12:01 a.m.
Central Time on the Closing Date under the Assigned Customer Agreements in
excess of the amount shown on the Statement of Assets and Liabilities (as
defined in Section 5.4).
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ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE AND CONTINGENT NOTE
(a) The aggregate purchase price for the Transferred Assets shall
be (i) $669,800,000 in cash payable at the Closing (the "CLOSING CASH
PAYMENT"), (ii) subject to the conditions in Section 3.2, deferred premium
payments of up to $25,000,000 in the aggregate, calculated and payable in
accordance with Section 3.2, and (iii) the assumption by the Buyer and the
Buying Subsidiaries of the Assumed Liabilities (collectively, the "PURCHASE
PRICE").
(b) On the Closing Date, the Buyer Parent will deliver or cause to
be delivered on behalf of the Buyer and the Buying Subsidiaries the Closing
Cash Payment to the Seller by wire transfer of immediately available federal
funds to such bank account or accounts as shall be designated by the Seller
to the Buyer Parent prior to the Closing.
(c) On the Closing Date, the Seller will issue and deliver to the
Buyer a contingent note in substantially the form of Exhibit 3.1(c)(i) (the
"CONTINGENT NOTE") and the Seller Parent will execute and deliver to the
Buyer a parent guaranty agreement in substantially the form of Exhibit
3.1(c)(ii) (the "GUARANTY").
3.2 DEFERRED PREMIUM PAYMENTS
(a) Provided that (x) the "FIXED AMOUNT" (as defined in the
Contingent Note) has been paid in full, (y) the Seller has paid in full to
the Buyer the portion of the "Make Whole Payment" (as defined in the
Alignment of Interests Agreement) required to be paid pursuant to the
Alignment of Interests Agreement (including, if applicable, the entire Make
Whole Payment) or (z) the Contingent Note has been canceled in accordance
with Section 2 thereof, on or prior to April 15, 2003 (or, if later, the
fifth business day after the earlier of (i) the resolution pursuant to
Section 3.2(e) of any and all disputes between the Buyer and the Seller with
respect to the First Deferred Premium Payment Amount and (ii) the issuance of
the report by the Independent Auditor on any disputed amounts with respect to
the First Deferred Premium Payment Amount pursuant to Section 3.2(f)), the
Buyer, on behalf of itself and the Buying Subsidiaries, shall deliver or
cause to be delivered to the Seller, on behalf of the Seller and the Selling
Subsidiaries, by wire transfer of immediately available federal funds to such
bank account or accounts as shall be designated by the Seller to the Buyer
prior to such payment date, an amount equal to the First Deferred Premium
Payment Amount; provided, that, notwithstanding anything else to the contrary
in this Agreement, if the Fixed Amount has been paid in full but the Buyer
has not received payment in full of the "CLAWBACK AMOUNT" (as defined in the
Contingent Note) (regardless of whether the Seller or the Seller Parent has
received any amounts pursuant to Section 4.3 of the Option Issuance Agreement
(as defined in Section 5.9(h))), the Buyer shall have no obligation to pay
and shall retain an amount of the First Deferred Premium Payment Amount equal
to the lesser of (i) such amount of the Clawback Amount as then remains
unpaid and (ii) the First Deferred Premium Payment Amount (such retained
amount, the "FIRST DEFERRED PAYMENT RETENTION") in accordance with the
provisions of Section 3.2(j).
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(b) Provided that (x) the Fixed Amount has been paid in full, (y)
the Seller has paid in full to the Buyer the portion of the Make Whole
Payment required to be paid pursuant to the Alignment of Interests Agreement
(including, if applicable, the entire Make Whole Payment) or (z) the
Contingent Note has been canceled in accordance with Section 2 thereof, on or
prior to April 15, 2004 (or, if later, the fifth business day after the
earlier of (i) the resolution pursuant to Section 3.2(e) of any and all
disputes between the Buyer and the Seller with respect to the Second Deferred
Premium Payment Amount and (ii) the issuance of the report by the Independent
Auditor on any disputed amounts with respect to the Second Deferred Premium
Payment Amount pursuant to Section 3.2(f)), the Buyer, on behalf of itself
and the Buying Subsidiaries, shall deliver or cause to be delivered to the
Seller, on behalf of the Seller and the Selling Subsidiaries, by wire
transfer of immediately available federal funds to such bank account or
accounts as shall be designated by the Seller to the Buyer prior to such
payment date, an amount equal to the Second Deferred Premium Payment Amount;
provided, that, notwithstanding anything else to the contrary in this
Agreement, if the Fixed Amount has been paid in full but the Buyer has not
received payment in full of the Clawback Amount (regardless of whether the
Seller or the Seller Parent has received any amounts pursuant to Section 4.3
of the Option Issuance Agreement), the Buyer shall have no obligation to pay
and shall retain an amount of the Second Deferred Premium Payment Amount
equal to the lesser of (i) the amount of the Clawback Amount as then remains
unpaid (less the amount of the First Deferred Payment Retention) and (ii) the
Second Deferred Premium Payment Amount (such retained amount, the "SECOND
DEFERRED PAYMENT RETENTION" and, together with the First Deferred Payment
Retention, the "DEFERRED PAYMENT RETENTION") in accordance with the
provisions of Section 3.2(j).
(c) As used in this Section 3.2:
(i) "FIRST DEFERRED PREMIUM PAYMENT AMOUNT" shall mean the
sum of (i) 33% of the amount, if any, by which the amount of AA
Non-Transition Revenues in calendar year 2002 exceeds $450,000,000
and (ii) 5% of the amount, if any, of AA Incoming Transition
Revenues during the period from the Closing Date through December
31, 2002; provided, however, that, notwithstanding anything else to
the contrary in this Agreement, in no event shall the First Deferred
Premium Payment Amount exceed $25,000,000; provided, further, that,
notwithstanding anything else to the contrary in this Agreement, in
the event the Contingent Note is canceled in accordance with Section
2 thereof the First Deferred Premium Payment Amount shall not exceed
$6,500,000.
(ii) "SECOND DEFERRED PREMIUM PAYMENT AMOUNT" shall mean the
sum of (i) 33% of the amount, if any, by which the amount of AA
Non-Transition Revenues in calendar year 2003 exceeds the greater of
(x) $450,000,000 or (y) the amount of AA Non-Transition Revenues in
calendar year 2002; and (ii) 5% of the amount, if any, of AA
Incoming Transition Revenues during calendar year 2003; provided,
however, that, notwithstanding anything else to the contrary in this
Agreement, in no event shall the sum of the First Deferred Premium
Payment Amount and the Second Deferred Premium Payment Amount exceed
$25,000,000; provided, further, that, notwithstanding anything else
to the contrary in this Agreement, in the event the Contingent Note
is canceled in accordance with Section 2 thereof the sum of the
First Deferred Premium Payment
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Amount and the Second Deferred Premium Payment Amount shall not exceed
$6,500,000.
(iii) "AA NON-TRANSITION REVENUES" shall mean all revenues
(other than AA Incoming Transition Revenues and AA Outgoing
Transition Revenues) recognized by the Buyer in accordance with GAAP
during the applicable period, but only from or with respect to
services performed under the Third Amended ITSA.
(iv) AA INCOMING TRANSITION REVENUES" shall mean all revenues
recognized by the Buyer in accordance with GAAP during the
applicable period from or with respect to transition, conversion or
migration assistance provided with respect to the transition,
conversion or migration from another operating system to the
American Airlines operating system pursuant to the Third Amended
ITSA.
(v) "AA OUTGOING TRANSITION REVENUES" shall mean all
revenues recognized by Payee in accordance with GAAP during the
applicable period from or with respect to transition, conversion or
migration assistance provided with respect to the transition,
conversion or migration from the American Airlines operating system
to another operating system pursuant to the Third Amended ITSA.
(d) On or before February 15, 2003, the Buyer shall calculate and
provide to the Seller written notice of (i) the First Deferred Premium
Payment Amount, (ii) the amount of AA Non-Transition Revenues for 2002,
including the amount of such revenues by operating tower, and (iii) the
amount of AA Incoming Transition Revenues during the period from the Closing
Date through December 31, 2002, in each case together with a summary of such
calculations. On or before February 15, 2004, the Buyer shall calculate and
provide to the Seller written notice of (i) the Second Deferred Premium
Payment Amount, (ii) the amount of AA Non-Transition Revenues for 2003,
including the amount of such revenues by operating tower, and (iii) the
amount of AA Incoming Transition Revenues during calendar year 2003, in each
case together with a summary of such calculations; provided, that the Seller
shall not be obligated to make such calculations or to provide such notice if
(x) the Contingent Note has been canceled in accordance with Section 2
thereof, the Seller and the Seller Parent have no further obligations under
Article II of the Alignment of Interests Agreement, and the Seller has received
from the Buyer payment of a First Deferred Premium Payment Amount that equals
$6,500,000, or (y) the First Deferred Premium Payment Amount was $25,000,000.
(e) If within 45 days after receipt of such calculations the
Seller notifies the Buyer in writing that the Seller disputes any amounts set
forth in the notice provided by the Buyer pursuant to Section 3.2(d), then
the Buyer and the Seller shall meet to discuss such dispute and attempt in
good faith to reconcile any differences. In no event will the Buyer be
required to disclose to the Seller (i) any proprietary or trade secret
information of the Buyer or its customers or (ii) the details of any third
party confidential information (including any of the Buyer's customers).
(f) If the Buyer and the Seller are unable to reach a resolution
of such differences within 30 days after receipt of the Seller's written
notice of dispute to the Buyer, the Buyer and
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the Seller shall jointly designate a nationally recognized independent
accounting firm that is mutually agreeable to the Buyer and the Seller (the
"INDEPENDENT AUDITOR") to undertake a review and audit of the calculations
and amounts of the First Deferred Premium Payment Amount or the Second
Deferred Premium Payment Amount (as applicable), the AA Non-Transition
Revenues and the AA Incoming Transition Revenues. The Independent Auditor
shall be directed to determine and report to the Buyer and the Seller, within
30 days after such submission, upon such remaining disputed amounts, and such
report shall be final, binding and conclusive on the parties hereto with
respect to the amounts disputed.
(g) Under no circumstances whatsoever shall the Buyer or the
Independent Auditor be obligated to disclose to the Seller or any third party
any information other than the Independent Auditor's final conclusion
regarding the calculation of the First Deferred Premium Payment Amount or
Second Deferred Premium Payment Amount (as applicable), the AA Non-Transition
Revenues and the AA Incoming Transition Revenues. Without limiting the
foregoing, the Seller shall have no right to review customer contracts, work
papers or other information, the Seller and the Buyer agreeing, in the event
of a dispute, to rely exclusively on the Independent Auditor's report on the
First Deferred Premium Payment Amount or Second Deferred Premium Payment
Amount (as applicable), AA Non-Transition Revenues and AA Incoming Transition
Revenues.
(h) Each of the Buyer and the Seller shall bear and pay for 50% of
the fees and expenses of the Independent Auditor.
(i) Notwithstanding any other provision of this Agreement, the
Contingent Note or the Alignment of Interests Agreement, to the extent that
the First Deferred Premium Payment Amount and/or the Second Deferred Premium
Payment Amount shall have been determined prior to the date upon which either
(i) the Fixed Amount is due under the Contingent Note or (ii) the Make Whole
Payment is due under the Alignment of Interests Agreement, such determined
amount(s) shall be set off against (x) the Fixed Amount under the Contingent
Note or (y) the Make Whole Payment under the Alignment of Interests
Agreement, as the case may be.
(j) In the event that, pursuant to Sections 3.2(a) and 3.2(b), the
Buyer retains any Deferred Payment Retention, the Buyer shall retain only
such portion of the Deferred Payment Retention as does not exceed the then
unpaid amount of the Clawback Amount (including interest thereon). Upon
receipt of any portion of the Clawback Amount, the Buyer shall apply such
amount to unpaid interest on the Clawback Amount, then to reduce the unpaid
balance of the Clawback Amount, and then, to the extent the then current
amount of the Deferred Payment Amount exceeds the unpaid balance of the
Clawback Amount (including interest thereon), the Buyer shall promptly pay to
the Seller the amount of such excess. The Buyer not pay interest on any
portion of the Deferred Payment Retention.
3.3 TRANSFER AND OTHER TAXES
(a) Responsibility for all sales taxes, use taxes, gross receipts
taxes, value added taxes, goods and services taxes, provincial sales taxes,
excise taxes, real estate transfer taxes, recordation taxes, documentary
taxes, stamp taxes, and other similar taxes, charges, fees, levies,
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or other assessments arising from or in connection with the transfers by the
Seller and the Selling Subsidiaries of the Transferred Assets (including
Deferred Transferred Assets) and the Transferred Business to the Buyer, the
Buying Subsidiaries and their assignees pursuant to this Agreement and the
other Transaction Documents ("TRANSFER TAXES") shall be as follows:
(i) The Buyer shall be responsible for and shall pay:
(A) All Transfer Taxes that are imposed by a foreign taxing
authority;
(B) The first $2,000,000 of any Transfer Taxes not described
in Section 3.3(a)(i)(A);
(C) Fifty percent (50%) of the first $8,000,000 of any Transfer
Taxes not described in Section 3.3(a)(i)(A) or Section
3.3(a)(i)(B); and
(D) Any Transfer Taxes not described in Section 3.3(a)(i)(A),
Section 3.3(a)(i)(B), Section 3.3(a)(i)(C), or Section
3.3(a)(ii).
(ii) The Seller shall be responsible for and shall pay an amount
of Transfer Taxes equal to the amount of Transfer Taxes paid by the
Buyer pursuant to Section 3.3(a)(i)(C).
(iii) If the Buyer Parent, the Buyer, or a Buying Subsidiary
has the primary responsibility under applicable Law (as defined in
Section 5.17) for the collection and remittance of any particular
Transfer Tax, the Buyer Parent or the Buyer shall, or the Buyer
Parent shall cause a Buying Subsidiary to, prepare and timely file
the relevant Tax Return and remit the Transfer Taxes shown on such
Tax Return. If the Seller or a Selling Subsidiary has the primary
responsibility under applicable Law for the collection and remittance
of Transfer Taxes, the Seller shall, or the Seller shall cause a
Selling Subsidiary to, prepare and timely file the relevant tax
return and remit the Transfer Taxes shown on such Tax Return. The
Seller shall deliver to the Buyer no later than five days prior to
the Closing a draft schedule of all Transfer Taxes required under
applicable Law to be collected and remitted by the Seller and the
Selling Subsidiaries and by the Buyer Parent, the Buyer, and the
Buyer Subsidiaries, which schedule shall be finalized by the Seller
on or prior to the Closing. If such amount the Seller and Selling
Subsidiaries are required to collect and remit under applicable Law
exceeds the amount of Transfer Taxes payable by the Seller and the
Seller Subsidiaries pursuant to Section 3.3(a)(ii), on the Closing
Date, the Buyer Parent shall deliver, or cause to be delivered on
behalf of the Buyer and the Buying Subsidiaries, the amount of such
excess (the "EXCESS TAX PAYMENT") specified in such schedule in
immediately available federal funds to such bank account or bank
accounts as shall be designated by the Seller to the Buyer Parent
prior to the Closing. The Buyer and the Seller shall cooperate, and
the Buyer Parent and the Seller shall cause the Buying Subsidiaries
and the Selling Subsidiaries, respectively, to cooperate, to the
extent reasonably necessary to file all relevant Tax Returns
relating to Transfer Taxes.
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(b) The Buyer shall cooperate, and the Buyer Parent shall cause
the Buying Subsidiaries to cooperate, with, and, subject to the other terms
of this Agreement, take any action reasonably requested by, the Seller
provided that such action does not cause the Buyer or a Buying Subsidiary to
incur any material cost or material inconvenience in order to minimize any
such Transfer Taxes, including applying for the Oklahoma statutory exemption
under 68 Okl. St. Xxx. Section 1357(19) and Oklahoma Regulation, Rule
710:65-13-54 and adopting, supporting, and defending any reasonable position
that the transactions contemplated under this Agreement qualify for an
exemption or exemptions from Transfer Taxes. The Seller shall cooperate, and
the Seller shall cause the Selling Subsidiaries to cooperate, with, and
subject to the other terms of this Agreement, take any action reasonably
requested by the Buyer provided that such action does not cause the Seller or
a Selling Subsidiary to incur any material cost or material inconvenience in
order to minimize any such Transfer Taxes, including adopting, supporting,
and defending any reasonable position that the transactions contemplated
under this Agreement qualify for an exemption or exemptions from Transfer
Taxes. In this regard, with respect to any tangible personal property
included in the Transferred Assets that will be held for resale by the Buyer
or any Buying Subsidiary, the Buyer or the appropriate Buying Subsidiary
shall furnish the Seller or the appropriate Selling Subsidiary at Closing
with valid and proper exemption certificates and the Seller or the Selling
Subsidiary shall accept such certificates with respect to any such inventory.
The Buyer and the Buying Subsidiaries shall also furnish the Seller and the
Selling Subsidiaries with any applicable exemption certificates, letter
rulings, notifications or similar documents, including those furnished to the
Buyer or a Buying Subsidiary from the appropriate taxing authority with
respect to Transfer Taxes. The parties further acknowledge and agree that,
where applicable, the transfer of the Transferred Assets by the Seller to be
effectuated pursuant to this Agreement will be treated by both parties as a
sale of the entire operating assets of one or more businesses, or of one or
more separate divisions, branches, or identifiable segments of a business, of
Seller within the meaning of Section 151.304(b)(2) of the Texas Tax Code. The
parties agree that they will adopt positions that are consistent with the
foregoing characterization in any Tax Return, tax audit, tax contest, tax
proceeding, or tax ruling request.
(c) The Buyer and the Seller shall notify each other in writing of
any claim or demand for any Transfer Taxes promptly after the Buyer Parent,
the Buyer, or a Buying Subsidiary or the Seller or a Selling Subsidiary
obtains knowledge thereof. As the Persons generally responsible for Transfer
Taxes under this Agreement, the Buyer Parent, the Buyer, and the Buying
Subsidiaries may direct, at the Buyer's sole cost and expense through counsel
selected by Buyer and reasonably acceptable to the Seller, any such claim or
proceeding for such Transfer Taxes, and shall keep the Seller informed of all
actions taken by the Buyer Parent, the Buyer, and the Buying Subsidiaries;
provided, however, that at Seller's request, Seller may participate (at its
sole cost and expense) in such claim or proceeding. The Seller shall
cooperate, and the Seller shall cause the Selling Subsidiaries to cooperate,
with the Buyer and the Buying Subsidiaries, and the Buyer shall cooperate,
and the Buyer Parent shall cause the Buying Subsidiaries to cooperate, with
the Seller and the Selling Subsidiaries, in good faith in the defense,
prosecution, compromise or settlement of any claim, demand or proceeding
involving Transfer Taxes (a "CONTEST"), except that Seller shall not, and the
Seller shall not permit a Selling Subsidiary to, agree to a settlement or
compromise of a Contest without the prior written consent of the Buyer, and
the Buyer shall not and the Buyer Parent shall not permit a Buying Subsidiary
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to, agree to a settlement or compromise of a Contest without the prior
written consent of the Seller. Notwithstanding the preceding sentence, the
Buyer or a Buying Subsidiary may settle or compromise any such Contest
without the consent of the Seller if the Buyer or a Buying Subsidiary pays
100% of, and the Buyer Parent waives all rights of the Buyer Parent, the
Buyer, and the Buyer Subsidiaries to collect from the Seller and the Selling
Subsidiaries any portion of, the Transfer Taxes subject to such settlement or
compromise, and the Seller or a Selling Subsidiary may settle or compromise
any such Contest without the consent of Buyer if the Seller or a Selling
Subsidiary pays 100% of, and Seller Parent waives all rights of the Seller
and the Selling Subsidiaries to collect from the Buyer Parent, the Buyer, and
the Buying Subsidiaries any portion of, the Transfer Taxes subject to such
settlement or compromise. The parties' obligations under this Section 3.3(c)
shall remain notwithstanding any other provisions of this Agreement.
(d) For purposes of this Section, (i) the term "STRADDLE PERIOD"
shall mean any Tax period that begins before and ends on or after the Closing
Date; (ii) the term "PRE-CLOSING PERIOD" shall mean any Tax period ending
before 12:01 a.m. Central Time on the Closing Date, and, in the case of any
Straddle Period, the portion of such Straddle Period ending before 12:01 a.m.
Central Time on the Closing Date; and (iii) the term "POST-CLOSING PERIOD"
shall mean any Tax period beginning at or after 12:01 a.m. Central Time on
the Closing Date, and, in the case of any Straddle Period, the portion of
such Straddle Period beginning at or after 12:01 a.m. Central Time on the
Closing Date. The Seller shall be liable for any and all Taxes (other than
Transfer Taxes for which the Buyer Parent, the Buyer, and the Buying
Subsidiaries are liable pursuant to Section 3.3(a) above) and income and
franchise taxes which are attributable to or connected with the ownership or
operation of the Transferred Assets or the Transferred Business during any
Pre-Closing Period. The Buyer shall be liable for any and all Taxes (other
than Transfer Taxes for which the Seller and the Seller Subsidiaries are
liable pursuant to Section 3.3(a) above) and income and franchise taxes which
are attributable to or connected with the ownership or operation of the
Transferred Assets or the Transferred Business during any Post-Closing
Period. In the case of Straddle Periods, the portion of Taxes (and, where
applicable, income and franchise taxes) attributable to the Pre-Closing
Period and the Post-Closing Period, respectively, shall be determined on the
basis of an interim closing of the books of the Seller, except that Taxes
(such as real property Taxes) imposed on a periodic basis shall be allocated
to such periods on a daily basis.
(e) The Buyer Parent shall promptly pay, or shall cause the Buyer
and the Buying Subsidiaries to promptly pay, to the Seller the net amount,
after subtracting any applicable reasonably incurred out-of-pocket attorney's
fees or other Contest costs, of any credit or refund received directly or
indirectly by, or credited to, the Buyer or a Buying Subsidiary of Taxes
attributable to any Pre-Closing Period with respect to the Seller's or a
Selling Subsidiary's ownership or operation of the Transferred Business or
Transferred Assets that were paid by or on behalf of the Seller or a Selling
Subsidiary. The Seller shall promptly pay or cause the Selling Subsidiaries
to pay to the Buyer the net amount, after subtracting any applicable
reasonably incurred out-of-pocket attorneys' fees or other Contest costs, of
any credit or refund received directly or indirectly by, or credited to, the
Seller or a Selling Subsidiary of Taxes attributable to any Post-Closing
Period with respect to the Buyer's or a Buying Subsidiary's ownership or
operation of the Transferred Business or Transferred Assets and that are paid
by or on behalf of
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the Buyer, the Buyer Parent or a Buying Subsidiary. The Buyer shall be
entitled to all refunds of Transfer Taxes borne by the Buyer Parent, the
Buyer, or the Buying Subsidiaries, and the Seller shall be entitled to all
refunds of Transfer Taxes borne by the Seller or the Selling Subsidiaries.
For these purposes, any refunds of any Transfer Taxes paid to foreign taxing
authorities shall be paid to the Buyer, and any refunds of any other Transfer
Taxes will be deemed to relate (I) firstly, to Transfer Taxes paid pursuant
to Section 3.3(a)(i)(D) to the extent thereof, (II) secondly, in equal parts
to Transfer Taxes paid pursuant to Section 3.3(a)(i)(C) and Section
3.3(a)(ii), and (III) lastly, to Transfer Taxes paid pursuant to Section
3.3(a)(i)(B). For these purposes, any credit for overpayments of Transfer
Taxes shall be treated as a refund of such Transfer Taxes to the Person that
received the benefit of the credit. In cases where the Buyer Parent, the
Buyer and the Buying Subsidiaries are not permitted to directly claim refunds
or credits of overpayments of Transfer Taxes paid by or on behalf of any of
them, the Seller and the Selling Subsidiaries shall use reasonable efforts to
claim credits on their Tax Returns for such overpayments of Transfer Taxes
paid by or on behalf of the Buyer Parent, the Buyer or any Buying Subsidiary
or, to the extent it is not feasible to claim such credits, then to claim
refunds of such overpayments of Transfer Taxes.
3.4 ALLOCATION OF PURCHASE PRICE
(a) The Purchase Price shall be allocated among the Transferred
Assets in the manner set forth in a schedule that shall be jointly prepared
by the Buyer and the Seller on or prior to the Closing Date (the "AGREED
ALLOCATION"); provided that if the Buyer and the Seller fail to agree on the
allocation in such schedule on or prior to the Closing Date, the Purchase
Price shall be allocated first to real property and tangible personal
property in accordance with the Seller's net book value of such property as
of the last day of the most recent month prior to the Closing Date for which
the Seller Parent has completed the closing of its consolidated balance
sheet, and the balance of the Purchase Price shall be allocated to the
intangible Transferred Assets and goodwill (the "DEFAULT ALLOCATION"). The
allocation of the Purchase Price among the Bills of Sale to the Buyer and the
appropriate Buying Subsidiaries designated by the Buyer shall be in
accordance with the Agreed Allocation or the Default Allocation, as the case
may be, under this Section 3.4(a).
(b) The Seller and the Buyer agree that they will adopt and
utilize the amounts allocated pursuant to Section 3.4(a) to each of the
Transferred Assets and such other assets and benefits for all tax purposes,
including in preparation of all income tax returns (including IRS Form 8594
and any supplements thereto), franchise tax returns, or Tax Returns with
respect to Transfer Taxes filed by them and that they will not voluntarily
take any tax position inconsistent therewith, or on any such income tax
returns, franchise tax returns, or Tax Return with respect to Transfer Taxes
or in any legal or administrative proceeding or otherwise. Each party hereto
agrees to prepare and timely file all applicable Internal Revenue Service and
applicable State tax forms (including IRS Form 8594 and any required
supplements thereto), to cooperate with the other party in the preparation of
such forms, and to furnish the other party with a copy of such forms prepared
in draft, within a reasonable period before the filing due date thereof.
Neither Buyer nor Seller will assert that such allocation was not separately
bargained for at arm's-length
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and in good faith. Buyer and Seller recognize that the Purchase Price does
not include Buyer's acquisition expenses and that Buyer will allocate such
expenses appropriately.
(c) The payment of any First Deferred Premium Payment Amount and
any Second Deferred Premium Payment Amount shall be allocated for all tax
purposes (including for purposes of preparing and filing any supplemental or
amended IRS Form 8594) in the manner set forth in a schedule that shall be
jointly prepared by the Buyer and the Seller within 60 days after the date
such payment of a First Deferred Premium Payment Amount or a Second Deferred
Premium Payment Amount, as the case may be, becomes fixed and determinable.
ARTICLE IV
CLOSING
4.1 CLOSING DATE
(a) Subject to the terms and conditions of this Agreement, the
closing of the purchase and sale of the Transferred Assets and the assumption
of the Assumed Liabilities (the "CLOSING") shall be held at the offices of
Xxxxx Xxxxx LLP, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx, on May 1, 2001; provided,
however, that if the parties are unable to cause the Closing to occur on such
date, the Closing shall occur on June 1, 2001; provided further that if the
parties are unable to cause the Closing to occur on June 1, 2001, the Closing
shall occur on the first business day after all of the conditions to all
parties' obligations hereunder have been satisfied, unless waived by the
appropriate party, but in no event shall the Closing occur later than the
Outside Termination Date (as defined in Section 12.1).
(b) Notwithstanding Section 4.1(a), the Buyer may extend the
Closing to a date no more than 30 days after the date on which the Closing
was otherwise to occur if, as of the date immediately prior to the date on
which the Closing was otherwise to occur, the Buyer has not obtained
assurances from a sufficient number and quality (as determined in Buyer's
sole discretion) of Designated Employees regarding acceptance of employment
of such Persons by the Buyer.
(c) The date on which the Closing occurs shall be referred to as
the "CLOSING DATE".
4.2 DELIVERIES AT THE CLOSING
(a) At the Closing, the Seller Parent (to the extent a party), the
Seller or the appropriate Selling Subsidiary will deliver or cause to be
delivered to the Buyer or appropriate Buying Subsidiary designated by the
Buyer, duly executed (to the extent applicable) by the Seller, the Seller
Parent or the appropriate Selling Subsidiary:
(i) the Contingent Note;
(ii) the Guaranty;
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(iii) instruments of assignment substantially in the forms of
Exhibit 4.2(a)(iii) for the Seller's and Selling Subsidiaries'
interests in the Transferred Leased Real Property subject only to
Permitted Liens (together with appropriate schedules and exhibits,
the "LEASE ASSIGNMENTS");
(iv) the real estate sublease agreement substantially in the
form of Exhibit 4.2(a)(iv) for the Leasehold Interest (together with
appropriate schedules and exhibits, the "TRINITY LEASE AGREEMENT");
(v) a shared facilities agreement substantially in the form
of Exhibit 4.2(a)(v) (together with appropriate schedules and
exhibits, the "SHARED FACILITIES AGREEMENT") with respect to the
real property identified in Section 4.2(a)(v) of the Seller
Disclosure Schedule;
(vi) bills of sale in favor of the Buyer and, at the
direction of the Buyer, the appropriate Buying Subsidiaries
designated by the Buyer in each jurisdiction, in such form as shall
be mutually agreed to by the parties, for the Transferred Tangible
Assets and the Transferred Personal Property (together with
appropriate schedules and exhibits, the "BILLS OF SALE");
(vii) all such other endorsements, assignments and other
instruments as the Buyer may reasonably request and are reasonably
necessary to transfer to the Buyer or the Buyer Subsidiaries, as the
case may be, good and marketable title to the Transferred Assets
(the "OTHER CONVEYANCE DOCUMENTS");
(viii) assignment and assumption agreements in favor of the
Buyer and, at the direction of the Buyer, the appropriate Buying
Subsidiaries designated by the Buyer in each jurisdiction, in such
form as shall be mutually agreed to by the parties, for the Assumed
Liabilities (together with appropriate schedules and exhibits, the
"ASSIGNMENT AND ASSUMPTION AGREEMENTS");
(ix) an information technology services agreement
substantially in the form of Exhibit 4.2(a)(ix) (together with
appropriate schedules and exhibits, the "OUTSOURCING AGREEMENT"),
pursuant to which the Buyer shall provide to the Seller certain
services as set forth therein (the "OUTSOURCED SERVICES");
(x) a technology license agreement substantially in the
form of Exhibit 4.2(a)(x) (together with appropriate schedules and
exhibits, the "TECHNOLOGY LICENSE AGREEMENT");
(xi) a subcontracting agreement, the principal economic and
other material terms of which are set forth in Exhibit 4.2(a)(xi)
(together with appropriate schedules and exhibits, the
"SUBCONTRACTING AGREEMENT");
(xii) a commercial agreement substantially in the form of
Exhibit 4.2(a)(xii) (together with appropriate schedules and
exhibits, the "COMMERCIAL AGREEMENT");
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(xiii) a TMD products and services joint marketing agreement
substantially in the form of Exhibit 4.2(a)(xiii) (together with
appropriate certificates, assignments, schedules and exhibits, the
"TMD MARKETING AGREEMENT");
(xiv) a revenue sharing agreement substantially in the form
of Exhibit 4.2(a)(xiv) (together with appropriate certificates,
assignments, schedules and exhibits, the "REVENUE SHARING
AGREEMENT");
(xv) an alignment of interests agreement substantially in
the form of Exhibit 4.2(a)(xv) (the "ALIGNMENT OF INTERESTS
AGREEMENT");
(xvi) an agreement and related financing statement granting
the Buyer a security interest in all of the Seller Parent's right,
title and interest in and to the Option Issuance Agreement, in such
form as shall be mutually agreed by the parties (the "SECURITY
AGREEMENT");
(xvii) the certificates referred to in Section 10.5;
(xviii) duly executed certificates of the Secretary or
Assistant Secretary (or other appropriate officer) of the Seller and
the Seller Parent, certifying as of the Closing Date as to the
incumbency and signature of the officers of the Seller and the
Seller Parent who have executed this Agreement and the documents
delivered at the Closing on behalf of the Seller and the Seller
Parent;
(xix) a duly executed opinion of Xxxxxx & Bird LLP, counsel
to the Seller and the Seller Parent, as to the matters set forth in
Exhibit 4.2(a)(xix);
(xx) copies of any and all releases, termination statements
and other documents and instruments as are reasonably necessary to
evidence the removal and release of any Liens (other than Permitted
Liens) which may encumber any of the Transferred Assets; and
(xxi) a receipt for the Closing Cash Payment specifying the
amounts paid by the Buyer and each Buying Subsidiary which shall be
consistent with the Bills of Sale.
(b) At the Closing, the Buyer or the appropriate Buying Subsidiary
will deliver or cause to be delivered to the Seller or the appropriate Selling
Subsidiary designated by the Seller, duly executed (where appropriate) by the
Buyer or the appropriate Buying Subsidiary:
(i) the Closing Cash Payment pursuant to the terms of
Section 3.1(b);
(ii) any Excess Tax Payment required to be made by the Buyer
Parent pursuant to the terms of Section 3.3(a)(iii);
(iii) the Assignment and Assumption Agreements;
(iv) the Lease Assignments;
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(v) the Trinity Lease Agreement;
(vi) the Shared Facilities Agreement;
(vii) the Technology License Agreement;
(viii) the Subcontracting Agreement;
(ix) the Commercial Agreement;
(x) the TMD Marketing Agreement;
(xi) the Contingent Note;
(xii) the Revenue Sharing Agreement;
(xiii) the Alignment of Interests Agreement;
(xiv) the Security Agreement;
(xv) certificates required by all relevant taxing authorities
that are necessary to support any exemption from the imposition of any
Transfer Taxes on the transfer of the Transferred Assets, including
valid resale certificates, letter rulings, notifications or similar
documents furnished to Buyer from the appropriate taxing authority;
(xvi) the certificates referred to in Section 9.5;
(xvii) duly executed certificates of the Secretary or
Assistant Secretary (or other appropriate officer) of the Buyer and
the Buyer Parent, certifying as of the Closing Date as to the
incumbency and signature of the officers of the Buyer and the Buyer
Parent who have executed this Agreement and the documents delivered
at the Closing on behalf of the Buyer and the Buyer Parent; and
(xviii) a duly executed opinion of Xxxxx Xxxxx L.L.P., counsel
to the Buyer and the Buyer Parent, as to the matters set forth in
Exhibit 4.2(b)(xviii).
4.3 CERTAIN CONSENTS; NO UNLAWFUL TRANSFERS; FURTHER ASSURANCES
(a) To the extent that the rights of the Seller or the Selling
Subsidiaries under any of the Transferred Assets or obligations under the
Assumed Liabilities intended to be transferred or assigned to the Buyer and
the Buying Subsidiaries hereunder may not be transferred or assigned without
the Consent of another Person which Consent has not been obtained, this
Agreement shall not constitute an agreement to transfer or assign the same if
an attempted transfer or assignment would constitute a breach thereof or be
unlawful. Notwithstanding anything to the contrary contained in this
Agreement, to the extent that the transfer or assignment or attempted
transfer or attempted assignment to the Buyer or the Buying Subsidiaries of
any of the Transferred Assets or Assumed Liabilities is prohibited by any
applicable Law or would require
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any Consent, and any such Consent shall not have been obtained prior to the
Closing Date, this Agreement shall not constitute a sale, assignment,
transfer, conveyance or delivery, or any attempted sale, assignment,
transfer, conveyance or delivery, thereof.
(b) If, on the Closing Date, (i) the Seller or any Selling
Subsidiary has not obtained any Consent necessary to transfer or assign any
of the Seller's or such Selling Subsidiary's right, title or interest in or
to any of the Transferred Assets after having used commercially reasonable
efforts to obtain such Consent or an attempted transfer or assignment of any
of the Transferred Assets would be ineffective or the failure to have such
Consent would adversely affect the ability of the Seller or the Selling
Subsidiaries to convey any such Transferred Asset so that the Buyer or the
Buying Subsidiaries would not receive all right, title and interest of the
Seller or the Selling Subsidiary therein, subject to Permitted Liens, (ii)
the conditions precedent to the Closing set forth in Article IX and Article X
otherwise have been satisfied and (iii) the failure to transfer or assign
such asset, either individually or in the aggregate, is not reasonably likely
to have a Seller Material Adverse Effect, then such Transferred Assets shall
constitute "DEFERRED TRANSFERRED ASSETS" and shall not be transferred to the
Buyer or the Buyer Subsidiaries at the Closing.
(c) The Seller and the Buyer shall use commercially reasonable
efforts to obtain at the earliest practicable date and prior to the Closing
all Consents of third parties related to the consummation of the transactions
contemplated hereby, and will provide to each other copies of each such
Consent promptly after such Consent is obtained.
(d) After the Closing, the Seller and the Buyer will:
(i) continue to use commercially reasonable efforts to
obtain the Consent and/or to remove any other impediments to the
transfer or assignment of each Deferred Transferred Asset, in
accordance with Section 4.3(e), and will transfer or assign each
Deferred Transferred Asset to the Buyer or the appropriate Buying
Subsidiary designated by the Buyer within five business days after
the receipt of such Consent and/or removal of such impediment
(ii) until the transfer or assignment with respect to any
Deferred Transferred Asset is accomplished, cooperate with the Buyer
or the Buying Subsidiaries in any lawful arrangement (including, to
the extent permitted, subcontracting, sublicensing or performance by
the Seller or appropriate Selling Subsidiary as agent) to provide
that the Buyer or the appropriate Buying Subsidiary shall receive
all benefits of such Deferred Transferred Asset (or the economic
equivalent thereof), and to allow the Buyer or the appropriate
Buying Subsidiary to perform their respective obligations under the
Assumed Liabilities, to the same extent as if the Deferred
Transferred Asset were transferred or assigned to the Buyer or the
Buying Subsidiaries at Closing, and each party shall bear its own
incidental administrative expenses incurred in connection with any
such arrangement; and
(iii) until the transfer or assignment with respect to any
Deferred Transferred Asset is accomplished, at the request and for
the account of the Buyer or the appropriate
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Buying Subsidiary, and subject to the Buyer's direction, enforce, at
the Buyer's expense, the Seller's and Selling Subsidiaries' rights
thereto or interests therein against any other parties thereto
(including the right to terminate any such Deferred Transferred
Asset in accordance with its terms, provided that the Buyer and the
Buying Subsidiaries pay any cancellation or other fee due upon such
termination).
(e) If and only to the extent that the Buyer or the appropriate
Buying Subsidiary receives the benefits of a Deferred Transferred Asset, the
Buyer or the Buying Subsidiary shall perform the obligations of the Seller
and the Selling Subsidiaries arising with respect to such Deferred
Transferred Asset to the extent that, by reason of consummation of the
transactions contemplated by this Agreement, the Buyer or the Buying
Subsidiary has control over the resources necessary to perform such
obligations or reimburse the Seller for the reasonable cost of such
performance.
(f) The Seller shall pay 50% of the Seller's Pro Rata Share of the
first $12,000,000 of Shared Consent Costs and 100% of the Seller's Pro Rata
Share of all Shared Consents Costs in excess of $12,000,000. The term "SHARED
CONSENT COSTS" means all out-of-pocket costs of obtaining Consents relating
to Transferred Contracts that are used by the Buyer, in whole or in part, to
provide the Outsourced Services to the Seller. The term "SELLER'S PRO RATA
SHARE" means the amount of products and services obtained under the
Transferred Contract in question and used by the Buyer to provide the
Outsourced Services to the Seller or its Affiliates, expressed as a
percentage of the total amount of products and services obtained by the Buyer
under such Transferred Contract however used by the Buyer or the Buyer's
other customers. The Buyer shall pay (i) all Shared Consent Costs other than
those that the Seller is required to pay pursuant to this Section 4.3(f) and
(ii) all out-of-pocket costs of obtaining Consents that are not Shared
Consent Costs. The parties shall promptly pay or reimburse each other as is
necessary to give effect to the provisions of this Section 4.3(f).
(g) In addition to any other further assurances or covenants of
cooperation contained in this Agreement, the Seller and the Buyer will
execute, acknowledge, file and deliver (or will cause to be executed,
acknowledged, filed and delivered) upon the reasonable request of the other
such documents as may be necessary or appropriate to further document or
evidence the respective obligations of the parties under this Agreement,
including documents to further evidence the transfer or assignment of the
Transferred Assets to the Buyer and the assumption of the Assumed Liabilities
by the Buyer. Each of the parties to this Agreement will cooperate with the
other in good faith to obtain Consents in a cost-effective and efficient
manner and to execute and deliver to the other party such other instruments
and documents and take such other actions as may be reasonably requested from
time to time by the other party as necessary to carry out, evidence and
confirm the intended purpose of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER PARENT
Except as set forth in the Seller Disclosure Schedule, the Seller and
the Seller Parent jointly and severally represent and warrant to the Buyer and
the Buyer Parent as follows:
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5.1 ORGANIZATION; EXISTENCE AND QUALIFICATION
Each of the Seller, the Seller Parent and the Selling Subsidiaries is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction in which it is incorporated. Each of the Seller, the Seller
Parent and the Selling Subsidiaries has full corporate power and authority to
carry on the Transferred Business that it conducts as such business is now being
conducted by it and to own, operate and lease the Transferred Assets that it
owns, operates or leases. Each of the Seller, the Seller Parent and the Selling
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required, except where the failure to be so qualified or
licensed would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect.
5.2 POWER; AUTHORITY; ENFORCEABLE OBLIGATIONS
Each of the Seller and the Seller Parent has full corporate power and
authority to enter into and perform its obligations under this Agreement and the
other Transaction Documents to which it is party and to carry out the
transactions contemplated hereby and thereby. Each Selling Subsidiary has full
corporate power and authority to enter into and perform its obligations under
the Transaction Documents to which it is a party and to carry out the
transactions contemplated thereby. Each of the Seller and the Seller Parent has
taken all action required by Law, its certificate of incorporation and bylaws or
otherwise to authorize the execution and delivery of this Agreement and the
other Transaction Documents to which it is a party, the performance by the
Seller and the Seller Parent of their respective obligations hereunder and
thereunder and the consummation by the Seller and the Seller Parent of the
transactions contemplated hereby and thereby. Each Selling Subsidiary has taken
all action required by Law, its certificate or articles of incorporation and
bylaws or otherwise to authorize the execution and delivery by such Selling
Subsidiary of any Transaction Document to which it is a party, the performance
by such Selling Subsidiary of its obligations thereunder and the consummation by
such Selling Subsidiary of the transactions contemplated thereby. This Agreement
has been duly executed and delivered by the Seller and the Seller Parent. At the
Closing (subject to the conditions to closing set forth in Article IX), each of
the other Transaction Documents will be duly executed and delivered by the
Seller and the Selling Subsidiaries, as the case may be. This Agreement is a
valid and binding agreement of the Seller and the Seller Parent enforceable
against the Seller and the Seller Parent in accordance with its terms, except as
such validity, binding effect or enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
fraudulent transfer, moratorium (whether general or specific) or other Law now
or hereafter in effect affecting the enforceability of creditors' rights
generally, and except that the availability of equitable remedies, such as
specific performance or injunctive relief, are subject to the discretion of the
court before which any proceeding may be brought. Each of the Transaction
Documents other than this Agreement to which the Seller, the Seller Parent or
any Selling Subsidiary is a party, when executed and delivered at the Closing,
will be valid and binding and enforceable against such party in accordance with
its terms, except as such validity, binding effect or enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, fraudulent transfer, moratorium (whether general or specific)
or other Law now
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or hereafter in effect affecting the enforceability of creditors' rights
generally, and except that the availability of equitable remedies, such as
specific performance or injunctive relief, are subject to the discretion of
the court before which any proceeding may be brought.
5.3 NO CONFLICTS
None of the (1) execution or delivery by the Seller or the Seller
Parent of this Agreement or any other Transaction Document to which it is a
party, or the execution or delivery by any Selling Subsidiary of any Transaction
Document to which it is a party, (2) performance by the Seller or the Seller
Parent of its obligations hereunder or under any other Transaction Document to
which it is a party, or the performance by any Selling Subsidiary of its
obligations under any Transaction Document to which it is a party, or (3)
consummation by the Seller, the Seller Parent or any Selling Subsidiary of the
transactions contemplated hereby or thereby will: (i) require the Seller, the
Seller Parent or any Selling Subsidiary to obtain the Consent of, or deliver any
notice, filing or application to, any governmental, administrative or regulatory
authority (whether federal, state, local or foreign) or any other Person with
respect to the Transferred Business or the transfer of the Transferred Assets,
the assumption of the Assumed Liabilities, or the performance of any obligations
under any other Transaction Document, other than (x) filings pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
or any similar Law, (y) the Consents identified in Section 5.3 of the Seller
Disclosure Schedule ("SELLER CONSENTS") and (z) compliance with any state bulk
sales law, any factory closing law or any similar Law; (ii) conflict with or
result in any violation of any provision of the certificate or articles of
incorporation or bylaws (or other charter or governance documents), each as
amended to date, of the Seller, the Seller Parent or any Selling Subsidiary;
(iii) result in any conflict with, or Default under, any Transferred Contract,
any lease relating to the Premises, any lease relating to any material
Transferred Tangible Assets or any other material Contract to which the Seller,
the Seller Parent or any Selling Subsidiary is a party or pursuant to which any
of their respective properties or assets are bound; (iv) violate any term of any
Law applicable to the Seller, Seller Parent or any Selling Subsidiary or any of
their respective properties or assets (but in no event does Seller or Seller
Parent make any representation or warranty under this Agreement regarding
non-infringement of any Intellectual Property Rights or Software); or (v) result
in the creation of, or impose on the Seller, the Seller Parent or any Selling
Subsidiary the obligation to create, any Lien upon the Transferred Assets.
5.4 FINANCIAL STATEMENTS; NO UNDISCLOSED ASSUMED LIABILITIES
(a) An income statement of the Transferred Business for the
twelve-month period ended December 31, 2000 (the "INCOME STATEMENT") and a
statement of the Transferred Assets and Assumed Liabilities, as of December 31,
2000 (the "STATEMENT OF ASSETS AND LIABILITIES" and, together with the Income
Statement, the "FINANCIAL STATEMENTS"), are set forth in Section 5.4 of the
Seller Disclosure Schedule. The Income Statement fairly presents in all material
respects the results of operations of the Transferred Business for the period
set forth therein, and has been prepared in accordance with United States
generally accepted accounting principles consistently applied ("GAAP"), except
for the omission of footnotes. The Statement of Assets and Liabilities fairly
presents in all material respects the assets and liabilities set forth therein
as of the date
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thereof, and has been prepared in accordance with GAAP, except for the
omission of footnotes. The Income Statement is subject to the qualification
that the Transferred Business does not and has not operated as a separate
"stand-alone" entity within the Seller. As a result, the Transferred Business
received certain allocated charges and credits as described in Section 5.4 of
the Seller Disclosure Schedule. Such charges and credits, while believed by
the Seller to be reasonable, do not necessarily reflect the amounts which
would have resulted from arm's-length transactions. In order to present
stand-alone Financial Statements for the Transferred Business, a number of
significant assumptions (including assumptions regarding allocations) have
been made by the Seller, all of which are believed by the Seller to be
reasonable and are described in Section 5.4 of the Seller Disclosure Schedule.
(b) There are no material Assumed Liabilities that are of a
nature required by GAAP to be reflected on, or identified in the notes to, a
balance sheet of the Seller and the Selling Subsidiaries, except for (i)
liabilities and obligations reflected or reserved for in, or identified in the
notes to, the Statement of Assets and Liabilities, (ii) liabilities and
obligations incurred after the date of the Statement of Assets and Liabilities
in the ordinary course of business consistent with past practice and (iii)
liabilities and obligations under this Agreement or the other Transaction
Documents.
(c) Except for operating leases entered into in the ordinary
course of business, none of the Seller or any Selling Subsidiaries has any
material liabilities or obligations in respect of financing arrangements
relating to the Transferred Business or the Transferred Assets or the
provision by the Seller and the Selling Subsidiaries prior to the Closing of
the Outsourced Services for which the liabilities or obligations of Seller or
the Selling Subsidiaries are not required by GAAP to be reflected on, or
identified in the notes to, a balance sheet of Seller.
5.5 ABSENCE OF CHANGES
(a) Since January 1, 2000, there has been no (i) Seller Material
Adverse Effect or (ii) destruction of any material tangible asset of the
Seller or the Selling Subsidiaries that relates primarily to the Transferred
Business (whether or not covered by insurance).
(b) Since September 30, 2000:
(i) the Seller and the Selling Subsidiaries have used
commercially reasonable efforts consistent with past practice to
preserve business relationships with employees and with customers,
vendors and suppliers under the Transferred Contracts;
(ii) the Seller and the Selling Subsidiaries have paid
and performed all obligations under the Transferred Contracts
consistent with past practice;
(iii) neither the Seller, the Seller Parent nor the
Selling Subsidiaries have permitted or allowed any of the Transferred
Assets to be subjected to any Liens, other than Permitted Liens;
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(iv) neither the Seller nor the Selling Subsidiaries
have sold, leased, transferred or otherwise disposed of any asset
that, but for such sale, lease, transfer or disposition, would have
been a Transferred Asset, in each case except in the ordinary course
of business;
(v) neither the Seller nor the Selling Subsidiaries
have granted any increase in the compensation of officers or
employees engaged in the Transferred Business (including any such
increase pursuant to any bonus, pension, profit sharing or other plan
or commitment) or entered into any employment agreements with any
such officers or employees, except in the ordinary course of business
or as required by Law;
(vi) neither the Seller nor the Selling Subsidiaries
have paid, discharged or satisfied any claims, liabilities or
obligations relating to the Transferred Business (absolute, accrued,
contingent or otherwise) other than the payment, discharge or
satisfaction of any claims, liabilities or obligations made in the
ordinary course of business;
(vii) neither the Seller nor the Selling Subsidiaries
have amended, released or canceled any obligations, liabilities,
rights or claims included in the Transferred Assets, except in the
ordinary course of business;
(viii) the Seller and the Selling Subsidiaries have
maintained and serviced the Transferred Assets consistent with past
practice;
(ix) neither the Seller nor the Selling Subsidiaries
have made any single capital expenditure or commitment relating to
the Transferred Business or the Transferred Assets in excess of
$500,000 for additions to property, plant, equipment or intangible
capital assets;
(x) neither the Seller nor the Selling Subsidiaries
have amended or terminated any Assigned Customer Agreement or, except
in the ordinary course of business, any other material Transferred
Contract;
(xi) the Seller and the Selling Subsidiaries have
conducted, or caused to be conducted, the Transferred Business
consistent with the ordinary course of the Transferred Business; and
(xii) neither the Seller nor the Selling Subsidiaries
have agreed, whether in writing or otherwise, to take any action
described in clauses (i) through (xi) of this Section 5.5(b).
5.6 TITLE TO ASSETS
(a) The Seller and the Selling Subsidiaries have valid leasehold
or subleasehold interests in the Transferred Leased Real Property, in each
case free and clear of all Liens, other than Permitted Liens. None of the
Seller or the Selling Subsidiaries has received any written
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notice of assessments for public improvements, assessments for increased
valuation for ad valorem property taxes not yet due and payable or condemnation
against any of the Premises.
(b) The Seller and the Selling Subsidiaries have good and
marketable title to, or hold valid leasehold interests in, all of the material
Transferred Tangible Assets, in each case free and clear of all Liens, other
than Permitted Liens. The Seller and the Selling Subsidiaries have good and
marketable title to all Transferred Assets that constitute "FINANCED HARDWARE"
(as defined in the Outsourcing Agreement) free and clear of all Liens other
than Permitted Liens and leases entered into by the Seller or the Selling
Subsidiaries, as lessor, with "Third Party Participants" (as defined in the
Outsourcing Agreement).
(c) The Lease Assignments, Bills of Sale and Other Conveyance
Documents to be executed and delivered to the Buyer and the Buying
Subsidiaries by the Seller and the Selling Subsidiaries at the Closing will
vest in the Buyer or the appropriate Buying Subsidiary good and marketable
title to the Transferred Assets, subject only to Permitted Liens.
5.7 LEASES
(a) All leases relating to the Premises and any leased material
Transferred Tangible Assets are valid, binding and enforceable in accordance
with their terms, and are, to the Knowledge of the Seller, in full force and
effect, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, fraudulent
transfer, moratorium (whether general or specific) or other Law now or
hereafter in effect affecting the enforceability of creditors rights
generally, and except that the availability of equitable remedies, such as
specific performance or injunctive relief, are subject to the discretion of
the court before which any proceeding may be brought. None of the Seller or
the Selling Subsidiaries is in Default under any such leases and, to the
Knowledge of the Seller, no other party to such leases is in Default under any
such leases.
(b) Section 5.7(b) of the Seller Disclosure Schedule contains a
complete and correct list of all real properties owned, leased or subleased by
the Seller, the Seller Parent or the Selling Subsidiaries in which there are
located (i) the principal mainframe and mid-range computing assets used or
held for use in the Transferred Business or the provision by the Seller or the
Selling Subsidiaries prior to the Closing of the Outsourced Services or (ii)
the Designated Employees who perform application development and maintenance
services for the Transferred Business. The Seller has provided or made
available to the Buyer true and accurate copies of the leases and subleases
with respect to the Transferred Leased Real Property.
5.8 CONDITION OF TANGIBLE PROPERTY
All tangible property to be transferred to the Buyer and the Buying
Subsidiaries by the Seller and the Selling Subsidiaries pursuant to this
Agreement, whether owned or leased, is being transferred "as is," "where is,"
and "with all faults." EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET
FORTH IN SECTION 5.19, NEITHER THE SELLER NOR THE SELLING SUBSIDIARIES MAKE ANY
WARRANTY WITH RESPECT TO THE VALUE, CONDITION OR USE OF ANY OF THE TANGIBLE
PROPERTY
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INCLUDED IN THE TRANSFERRED ASSETS, WHETHER EXPRESSED OR IMPLIED, INCLUDING
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
5.9 TRANSFERRED CONTRACTS
(a) Section 5.9(a) of the Seller Disclosure Schedule contains a
complete and correct list of all Transferred Contracts that fall into one or
more of the categories described below in this Section 5.9(a) (the "SPECIFIED
CONTRACTS"), specifically identifying which Specified Contracts fall into the
categories described in clauses (i), (iv), (v) and (vii) of this Section
5.9(a):
(i) all Contracts containing any provision, covenant or
obligation limiting or restricting in any manner whatsoever (whether
during any particular period of time from and after the Closing Date,
in certain geographic areas or otherwise) the ability of any of the
Seller or the Selling Subsidiaries to engage in any line of business,
to sell any products or services to or to compete with any Person, or
to obtain products or services from a Person;
(ii) all distribution, partnership, joint venture,
profit-sharing or similar Contracts with any Person;
(iii) Contracts containing covenants (other than
covenants granted pursuant to Contracts entered into in the ordinary
course of business with customers of the Transferred Business) that
prohibit or prevent the Seller or any Selling Subsidiary from hiring
or soliciting any Person for employment for a period in excess of six
months after the Closing Date;
(iv) all Contracts that involve the disposition or
acquisition after December 31, 2000 of any assets of the Seller or
any Selling Subsidiary that involve an amount exceeding $1,000,000
and do not relate to transactions entered into in the ordinary course
of business, consistent with past practice;
(v) all Contracts or arrangements (including those
relating to allocations of expenses, personnel, services, equipment
or facilities) between or among the Seller or any Selling Subsidiary,
on the one hand, and any of their respective Affiliates, on the other
hand;
(vi) all Contracts with sales representatives,
distributors, dealers or independent contractors upon which the
Transferred Business or the provision by the Seller and the Selling
Subsidiaries prior to the Closing of the Outsourced Services are
materially dependent;
(vii) all Transferred Customer Contracts that require the
Seller or any Selling Subsidiary to provide their goods or services
to any Person at (or calculated as a percentage of or otherwise
directly based upon) the lowest, best or most favorable price (or
otherwise upon the best or most favorable terms) provided to any
other Person; and
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(viii) any other Contracts not included above which are
otherwise material to the Transferred Business, the Transferred
Assets or the provision by the Seller and the Selling Subsidiaries
prior to the Closing of the Outsourced Services and which were not
entered into in the ordinary course of the Transferred Business or
the provision by the Seller or the Selling Subsidiaries prior to the
Closing of the Outsourced Services.
(b) Section 5.9(b) of the Seller Disclosure Schedule contains a
complete and correct list of:
(i) all outstanding bids involving amounts exceeding
$1,000,000 for new business or projects submitted by the Seller or
any of the Selling Subsidiaries;
(ii) all mortgages, deeds of trust, pledges, security
agreements or other instruments or arrangements granting or
purporting to xxxxx x Xxxx (other than a Permitted Lien) upon any of
the Transferred Assets;
(iii) any notice of default under, or any termination or
written threat of termination of, any Transferred Customer Contract
since January 1, 2000; and
(iv) the ten largest customers of the Transferred
Business (in terms of 2000 annual revenues).
(c) Each Transferred Contract is valid, binding and in full
force and effect and is enforceable in accordance with its terms against the
Seller or Selling Subsidiaries party thereto and, to the Knowledge of the
Seller, each other party thereto, in each case except as such validity,
binding effect or enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, fraudulent
transfer, moratorium (whether general or specific) or other Law now or
hereafter in effect affecting the enforceability of creditors' rights
generally.
(d) No Seller or Selling Subsidiary nor, to the Knowledge of the
Seller, any other party to any Transferred Contract is in Default thereunder
and, to the Knowledge of the Seller, there are no material disputes with
respect thereto, no notice of Default has been received by Seller or any
Selling Subsidiary in connection therewith, and, to the Knowledge of the
Seller, no event has occurred that would constitute a Default.
(e) Neither the Seller nor any Selling Subsidiary has any
present intention of not fully performing any Transferred Contract
substantially in accordance with its terms and consistent with past practices.
(f) There are no oral contracts included in the Transferred
Contracts that are material to the Transferred Business or the Transferred
Assets.
(g) Prior to execution of this Agreement, the Seller and
American Airlines, Inc. have executed and delivered the Third Amended ITSA,
the RSA, and the Consent Letter, true and correct copies of each of which have
been delivered to the Buyer. Neither PA Consulting Group
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nor Xxxxxxx Sachs & Co. have prepared or have had prepared for the Seller or
the Seller Parent any written assessments, analyses, or memoranda relating to
the Third Amended ITSA or the proposed Fourth Amended and Restated Information
Technology Services Agreement with American Airlines (the "I2M STRAWMAN"). The
Seller has provided the Buyer with true and accurate copies of all material
written assessments, analyses and memoranda relating to the Third Amended ITSA
or the I2M Strawman internally prepared or prepared for the Seller or the
Seller Parent by Xxxxxx & Bird LLP (excluding privileged materials) or by
Technology Partners, Inc. ("TPI").
(h) Prior to execution of this Agreement, the Seller and the
Seller Parent have delivered to the Buyer true and accurate copies of the
Information Technology Services Agreement, dated as of December 15, 1997,
between US Airways, Inc. and the Seller (the "US AIRWAYS ITSA"), the Option
Issuance Agreement, dated as of January 1, 1998, between the Seller Parent and
US Airways (the "OPTION ISSUANCE AGREEMENT"), and the Option to Purchase
3,000,000 Shares of Class A Common Stock, Par Value $.01 Per Share, of the
Seller Parent, dated January 2, 1998, issued by the Seller Parent to US
Airways (No. SOUS-2) (the "T2 OPTION") as each is in effect as of the date
hereof. The Option Issuance Agreement is in full force and effect and,
together with the provisions of the US Airways ITSA specifically referenced
therein, sets forth the entire agreement of the parties regarding the
obligation of US Airways to repay certain proceeds received by US Airways upon
exercise of "OPTION ONE" (as defined in the Option Issuance Agreement)
pursuant to Section 4.3 of the Option Issuance Agreement. The Seller Parent
has not sold or assigned the Option Issuance Agreement, or sold, assigned,
terminated or waived any of its rights under Section 4.3 of the Option
Issuance Agreement. The Seller Parent is not in Default under the Option
Issuance Agreement, and, to the Knowledge of the Seller, no grounds exist for
US Airways to avoid its obligations under Section 4.3 of the Option Issuance
Agreement in the event of termination of the US Airways ITSA pursuant to
Sections 23.1(B), 23.3, 23.4, 23.5 or 23.6 thereof.
5.10 INSURANCE
As of the date hereof, the Seller or the Selling Subsidiaries have in
force the policies of insurance related to the Transferred Business or the
Transferred Assets that are identified in Section 5.10 of the Seller Disclosure
Schedule. Neither the Seller nor the Selling Subsidiary has been refused any
insurance with respect to the Transferred Business, by any insurance carrier to
which it has applied for insurance or with which it has carried insurance since
January 1, 1996. There are no outstanding requirements or recommendations by any
current insurer or underwriter with respect to the Transferred Business or the
Transferred Assets which require or recommend changes in the conduct of the
Transferred Business, or require any repairs or other work to be done with
respect to any of the Transferred Assets or operations of the Transferred
Business.
5.11 PERMITS
The Seller and the Selling Subsidiaries own or validly hold all
material Permits that are required in connection with the conduct of the
Transferred Business, the ownership or use of the Transferred Assets or the
provision by the Seller and the Selling Subsidiaries prior to the Closing
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of the Outsourced Services. All Transferred Permits owned or held by the
Seller and the Selling Subsidiaries are valid and in full force and effect. No
proceeding is pending or, to the Knowledge of the Seller, threatened which
would reasonably be expected to result in the revocation or termination of any
such Permits, and to the Knowledge of the Seller, there is no valid basis for
any such proceeding. The consummation of the transactions contemplated by this
Agreement will not affect the continued validity or effectiveness or alter the
terms and conditions of any material Transferred Permits.
5.12 LITIGATION
There is no Litigation pending, or to the Knowledge of the Seller,
threatened against or involving or arising in connection with the Transferred
Assets, the Transferred Business or the provision by the Seller and the Selling
Subsidiaries prior to the Closing of the Outsourced Services, in each case which
(i) would reasonably be expected to have, individually or in the aggregate, a
Seller Material Adverse Effect or (ii) questions or challenges the validity of
this Agreement or the other Transaction Documents or any action taken or to be
taken by the Seller, the Seller Parent or any Selling Subsidiary pursuant hereto
or thereto or the consummation of the transactions contemplated hereby or
thereby. None of the Transferred Business, the Transferred Assets or the
provision by the Seller and the Selling Subsidiaries prior to the Closing of
Outsourced Services is subject to any judgment, order or decree entered into in
any lawsuit or proceeding which, individually or in the aggregate, would
reasonably be expected to have a Seller Material Adverse Effect.
5.13 ENVIRONMENTAL MATTERS
(a) There are no actions, suits, claims, arbitration
proceedings, or complaints related to the Premises which are pending or, to
the Knowledge of the Seller, threatened against the Seller, any Selling
Subsidiary or the Premises relating to environmental protection, to the
environmental condition of the Premises, or to compliance with any applicable
Environmental Law. "ENVIRONMENTAL LAW" shall mean any Law, order, decree,
permit, license, or other governmental requirements and contracts relating to
pollution, the protection of human health or safety (including community or
worker "right-to-know" requirements), natural resources, or the environment or
the use or manufacture of, or discharge, release, or emission into, the
environment or work place of, or exposure to Hazardous Materials, including
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 ("CERCLA"), 42 U.S.C. Section 9601 et seq, and any other federal, state
or local Law that imposes strict liability. "HAZARDOUS MATERIALS" means
hazardous, toxic or radioactive materials (including energy, odors, radio
frequency, and noise), substances, or wastes.
(b) Neither the Seller nor any Selling Subsidiary has any
Knowledge that, or has received any notice that, any of the Premises is in
violation of any Environmental Laws or that Hazardous Materials are present
in, at or under any of the Premises other than in compliance with
Environmental Law, nor have the Seller or the Selling Subsidiaries received
any communication requesting information with respect to an investigation
pursuant to any Environmental Law. To the Knowledge of the Seller, there are
no facts, circumstances, or conditions that would require
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significant capital expenditures by an owner or operator of the Premises in
order for the Premises or the Transferred Business to maintain compliance with
Environmental Laws in the future.
(c) The Seller and the Selling Subsidiaries have obtained and
are in material compliance with all authorizations required under
Environmental Laws in connection with the ownership, use, or lease of the
Premises and the Transferred Tangible Assets, and such authorizations are
identified in Section 5.13(c) of the Seller Disclosure Schedule.
(d) The Seller and the Selling Subsidiaries have submitted all
filings, reports and notices required under Environmental Laws in connection
with the operation of the Transferred Business and the provision by the Seller
and the Selling Subsidiaries prior to Closing of the Outsourced Services.
(e) Neither the Seller nor any Selling Subsidiary has entered
into or received, nor is the Seller or any Selling Subsidiary in default
under, nor are any of the Premises subject to, any consent decree, compliance
order, administrative order, judgment, order, writ, injunction, or decree of
any governmental authority in connection with the violation of or compliance
with any Environmental Laws relating to the Premises or the Transferred
Tangible Assets.
(f) No Lien has arisen or, to the Seller's Knowledge, is
threatened on or against any of the Premises under or as a result of a
violation of under any Environmental Laws or the presence of any Hazardous
Materials in, at, or under the Premises.
(g) There is not now, there has not been at any time during
which the Seller or any of the Selling Subsidiaries has owned, leased or
occupied the Premises in question, nor to the Knowledge of the Seller or the
Selling Subsidiaries, has there ever been, on or in any of the Premises any of
the following: (i) landfills, dumps, or surface impoundments; (ii) any
remedial action involving, or on-site release of, Hazardous Materials; (iii)
any asbestos containing materials or presumed asbestos containing materials
other than in compliance with Environmental Law; (iv) any polychlorinated
biphenyls other than in compliance with Environmental Law; (v) any release of
a Hazardous Material which may have entered or leached into the ground water
and migrated under the Premises, (vi) any site on or nominated for the
National Priority List promulgated pursuant to CERCLA or any state remedial
priority list promulgated or published pursuant to any comparable state law,
or (vii) any underground and/or above-ground storage tanks. All underground or
above-ground storage tanks located on or under the Premises have, if required
by any applicable Environmental Law, been registered, tested and certified in
accordance with such Environmental Law and have been operated and maintained
in accordance with the manufacturer's requirements and applicable
Environmental Laws. To the Knowledge of the Seller, there are no known
asbestos containing materials or polychlorinated biphenyls present in any of
the Premises.
(h) The Seller and the Selling Subsidiaries have provided the
Buyer with true and correct copies of all environmental and health and safety
related assessments, audits, investigations, sampling or similar reports in
the possession of the Seller or the Selling Subsidiaries relating to the
Transferred Business, the Premises or the provision by the Seller and the
Selling Subsidiaries prior to the Closing of the Outsourced Services.
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5.14 TAXES
The Seller and the Selling Subsidiaries have (i) duly filed or caused
to be filed with the appropriate taxing authorities all material Tax Returns
required to be filed with respect to or attributable to the Transferred Business
or the Transferred Assets and all such Tax Returns are true, correct and
complete in all material respects, (ii) timely paid or caused to be paid in full
all Taxes shown to be due on such Tax Returns, and (iii) with respect to the
Transferred Business and the Transferred Assets, complied in all material
respects with all applicable Laws, rules and regulations relating to the
withholding of Taxes and the payment of withheld Taxes. No deficiencies or
assessments for any Taxes with respect to the Transferred Business or the
Transferred Assets have been proposed, asserted or assessed which have not been
resolved and paid in full, or which are not being contested in appropriate
proceedings; and there are no Liens for Taxes upon the Transferred Assets. There
are no pending and, to the Knowledge of the Seller, threatened, examinations,
audits, actions, proceedings, investigations, legal proceedings, disputes, or
claims against the Seller or any of the Selling Subsidiaries with respect to any
Taxes the underpayment or nonpayment of which could result in a claim or Lien
upon the Buyer, any Buying Subsidiary, the Transferred Assets, or the
Transferred Business. No claims have been made by any taxing authority that, as
a result of the operation or ownership of the Transferred Assets or the
Transferred Business, the Seller or any Selling Subsidiary is (or may be)
required to either (i) file Tax Returns in any jurisdiction in which the Seller
or such Selling Subsidiary does not already file Tax Returns or (ii) pay or
remit Taxes imposed by any jurisdiction to which the Seller or such Selling
Subsidiary does not already pay or remit Taxes.
5.15 LABOR MATTERS
(a) Neither the Seller nor any Selling Subsidiary has entered
into any collective bargaining agreements with respect to the Designated
Employees (as defined in Section 8.1(a)); there is no labor strike, dispute,
slowdown or work stoppage or lockout involving the Designated Employees that
is pending or, to the Knowledge of the Seller, threatened against or affecting
the Transferred Business; to the Knowledge of the Seller, no union
organizational campaign is in progress with respect to the Designated
Employees and no question concerning representation exists respecting such
employees; there is no unfair labor practice charge or complaint against the
Transferred Business or the Seller or any Selling Subsidiary with respect to
the Designated Employees in the Transferred Business pending, or, to the
Knowledge of the Seller, threatened before the United States National Labor
Relations Board; and neither the Seller nor any Selling Subsidiary has
received notice of the intent of any federal, state or local agency or any
agency in any Foreign Country responsible for the enforcement of labor or
employment Law to conduct any formal compliance review (other than routine
investigation of individual charges and complaints) with respect to or
relating to the Designated Employees in the Transferred Business and no such
review is in progress.
(b) The Seller and the Selling Subsidiaries have complied in all
material respects with the requirements of the United States Worker Adjustment
and Retraining Notification ("WARN") Act) with respect to the Domestic
Designated Employees (as defined in Section 8.1(a)) and have not engaged in a
mass layoff or plant closing (as those terms are defined by the
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WARN Act) with respect to the Domestic Designated Employees within the 90-day
period prior to the date hereof or the 90-day period prior to the Closing
Date, as the case may be.
(c) To the Knowledge of the Seller: (i) all of the Domestic
Designated Employees who are not U.S. citizens are legally entitled to work in
the United States under the Laws related to the employment of non-U.S.
citizens; and (ii) the Seller and the Selling Subsidiaries maintain all
required documents, copies, books, records, permits and accounts, and have
filed all required notices, filings or other documents with the appropriate
governmental authorities, with respect to the employment or compensation of
the Domestic Designated Employees who are non-U.S. citizens.
5.16 EMPLOYEE BENEFITS
(a) Section 5.16(a) of the Seller Disclosure Schedule (i)
contains a true, correct and complete list of each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance
or termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement
plan, program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Seller or by any trade or business which
(A) together with the Seller would be deemed a "single employer" within the
meaning of Code Sections 414(b), (c) or (m) (each an "ERISA AFFILIATE"), for
the benefit of any employee or former employee of the Seller, whether formal
or informal (the "U.S. PLANS") or (B) which is mandated by a government of a
Foreign Country or maintained pursuant to the laws of a Foreign Country (the
"FOREIGN PLANS" and, collectively with the U.S. Plans, the "PLANS") and (ii)
identifies each of the U.S. Plans that is an "employee welfare benefit plan"
or "employee pension benefit plan" as such terms are defined in Sections 3(1)
and 3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA")
(such U.S. Plans being hereinafter referred to collectively as the "ERISA
PLANS").
(b) There has been no "reportable event" (as defined in Section
4043 of ERISA), or event described in Section 4041, 4042, 4062, 4063, 4064 or
4069 of ERISA with respect to, or termination or partial termination,
withdrawal or partial withdrawal from, any ERISA Plans to which the Seller
maintains or contributes or has maintained or contributed to.
(c) The Seller has incurred no liability under Title IV of ERISA
with respect to any of the ERISA Plans, other than liability for premiums due
the Pension Benefit Guaranty Corporation, which payments have been made or
will be made when due.
(d) All contributions with respect to all ERISA Plans of the
Seller or any ERISA Affiliate that are subject to Code Section 412 or ERISA
Section 302 have been or will be timely made and there has been no lien
imposed on the Seller or any ERISA Affiliate under Code Section 412(n).
(e) Neither the Seller nor any ERISA Affiliate contributes to or
is required to contribute to a "multiemployer plan," as such term is defined
in ERISA Section 3(37).
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(f) To the Knowledge of the Seller, neither the Seller, any
ERISA Affiliate, any of the ERISA Plans, any trust created thereunder nor any
trustee or administrator thereof has engaged in a transaction or has taken or
failed to take any action in connection with which the Seller, any ERISA
Affiliate, any of the ERISA Plans, any such trust, any trustee or
administrator thereof, or any party dealing with the ERISA Plans or any such
trust could be subject to either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976 or
4980B of the Code, except for such instances of noncompliance as would not
reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect.
(g) To the Knowledge of the Seller, each of the U.S. Plans has
been operated and administered in all material respects in accordance with
applicable Law, including ERISA and the Code. There are no qualification
defects in the Sabre Inc. 401(k) Savings Plan (the "SELLER 401(k) PLAN") that
could cause the disqualification of the Buyer's 401(k) plan (the "BUYER 401(k)
PLAN") upon the transfer of account balances from the Seller 401(k) Plan to
the Buyer 401(k) Plan, as contemplated by Section 8.6 of this Agreement.
(h) With respect to each Foreign Plan, subject to exceptions
that are not material:
(i) Each Foreign Plan and the manner in which it has
been administered by the Seller and the Selling Subsidiaries
materially complies with the laws of the applicable Foreign Country;
(ii) Each Foreign Plan which, under the laws of the
applicable Foreign Country, is required to be registered or approved
by the government or any agency or instrumentality of such Foreign
Country, has been so registered or approved.
(iii) All contributions to each Foreign Plan required to
be made through the Closing Date have been or shall be made by the
Seller and the Selling Subsidiaries or, if applicable, shall be
accrued in accordance with country-specific accounting practices; and
(iv) Each Foreign Plan which, under the laws of a
Foreign Country, is required to be funded, is either funded to an
extent sufficient to provide for accrued benefit obligations with
respect to Non-Domestic Transferred Employees (as defined in Section
8.1(a)) of such Foreign Country or is fully insured, in each case
based upon generally accepted local accounting and actuarial practice
and procedure.
5.17 COMPLIANCE WITH LAWS
Except for environmental laws (for which the only representations and
warranties made by the Seller and the Seller Parent are contained in Section
5.13), tax laws (for which the only representations and warranties made by the
Seller and the Seller Parent are contained in Section 5.14), laws relating to
the Plans (for which the only representations and warranties made by the Seller
and the Seller Parent are contained in Section 5.16) and export laws (for which
the only representations and warranties made by the Seller and the Seller Parent
are contained in Section 5.20), the Transferred Business has been and is being
conducted in accordance, in all material
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respects, with all applicable law (including common law), statute, code, rule,
regulation, reporting or licensing requirement, ordinance and other
pronouncement having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision, including those promulgated, interpreted or enforced by any
governmental or regulatory authority (collectively "LAWS").
5.18 BROKERS AND FINDERS
Other than Xxxxxxx Xxxxx & Co., the fees of which are the sole
responsibility of the Seller, neither the Seller nor any of its Affiliates,
directors, officers or employees have employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in connection
with the transactions contemplated by this Agreement or the other Transaction
Documents.
5.19 SUFFICIENCY OF TRANSFERRED ASSETS
The Transferred Assets, in conjunction with the rights, goods and
services granted, transferred or to be performed by the Seller and its
Affiliates to or for the Buyer and the Buying Subsidiaries pursuant to the other
Transaction Documents, comprise substantially all of the assets currently used
or held for use by the Seller and the Selling Subsidiaries to perform, and are
collectively sufficient to provide the Buyer and the Buying Subsidiaries with
the means and capability to perform, the obligations the Buyer and the Buying
Subsidiaries are assuming under the Assigned Customer Agreements and to perform
the Buyer's obligations under the Outsourcing Agreement, in each case as and in
the manner such obligations are being performed by the Seller and the Selling
Subsidiaries on the date of this Agreement. Without limiting the foregoing,
other than the (i) Transferred Software Licenses, (ii) intellectual property to
be licensed to the Buyer pursuant to the Technology License Agreement, (iii)
with respect to obligations that the Buyer is performing under the Outsourcing
Agreement, access, use and/or management rights to be granted to the Buyer under
the Outsourcing Agreement with respect to certain Software Licenses identified
therein and (iv) application development and maintenance services to be
performed by the Seller under, and any access, use and/or management rights to
be granted to the Buyer under, the Subcontracting Agreement, there is no other
intellectual property reasonably necessary for the Buyer and the Buying
Subsidiaries to perform the obligations that the Buyer and the Buying
Subsidiaries are assuming under the Assigned Customer Agreements (except to the
extent that such obligations are to be performed by the Seller pursuant to the
Subcontracting Agreement) or to perform the obligations of the Buyer under the
Outsourcing Agreement, in each case as and in the manner such obligations are
being performed by the Seller and the Selling Subsidiaries on the date of this
Agreement.
5.20 COMPLIANCE WITH EXPORT LAWS
The export licenses listed or described in Section 5.20 of the Seller
Disclosure Schedule are the only export license documents issued or required by
any Law to be issued with respect to the Transferred Business or the Transferred
Assets as of the date hereof, and each of the Seller and the Selling
Subsidiaries currently holds and is in compliance in all material respects with
such export licenses, if any, listed with respect to such Person. Each of the
Seller and the Selling
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Subsidiaries also is in compliance in all material respects with the general
export licenses it relies upon with respect to the Transferred Business.
5.21 SELLER PARENT
Seller Parent is a holding company and is engaged in the Transferred
Business, if at all, only indirectly through the Seller and the Selling
Subsidiaries.
5.22 CERTAIN COMMUNICATIONS
To the Knowledge of the Seller, the Seller has disclosed or made
available to the Buyer all material information in the Seller's possession
regarding whether or to what extent US Airways (or its successor) will continue
to obtain information technology services from the Seller after the consummation
of the pending business combination transaction between US Airways and UAL, Inc.
("UAL"), the character of such services and UAL's expressed intentions with
respect to the US Airways ITSA.
5.23 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Article
V or in the other Transaction Documents, neither the Seller, the Seller Parent
nor any other Person makes any express or implied representation or warranty on
behalf of the Seller, the Seller Parent or the Selling Subsidiaries, and the
Seller and the Seller Parent hereby disclaim any such representation or warranty
whether by the Seller, the Seller Parent or any of their Affiliates, officers,
directors, employees, agents or representatives or any other Person.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT
Except as set forth in the Buyer Disclosure Schedule, the Buyer and the
Buyer Parent jointly and severally represent and warrant to the Seller and the
Seller Parent as follows:
6.1 ORGANIZATION; EXISTENCE AND QUALIFICATION
Each of the Buyer Parent and the Buying Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated or otherwise formed. The Buyer is a limited liability
company duly formed, validly existing and in good standing under the laws of the
state of Delaware. Each of the Buyer, the Buyer Parent and the Buying
Subsidiaries is duly qualified or licensed to do business as a foreign entity
and is in good standing in each jurisdiction in which such qualification is
required, except where failure to be so qualified or licensed would not
reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect.
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6.2 POWER; AUTHORITY; ENFORCEABLE OBLIGATIONS
The Buyer Parent has full corporate power and authority to enter into
and perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and to carry out the transactions contemplated
hereby and thereby. The Buyer has full limited liability company power and
authority to enter into and perform its obligations under this Agreement and the
other Transaction Documents to which it is a party and to carry out the
transactions contemplated hereby and thereby. Each Buying Subsidiary has full
corporate or limited liability company power and authority to enter into and
perform its obligations under the Transaction Documents to which it is a party
and to carry out the transactions contemplated thereby. Each of the Buyer and
the Buyer Parent has taken all action required by Law, its certificate of
incorporation and bylaws (or other formation and governance documents) or
otherwise to authorize the execution and delivery of this Agreement and the
other Transaction Documents to which it is a party, the performance by the Buyer
and the Buyer Parent of their respective obligations hereunder and thereunder
and the consummation by the Buyer and the Buyer Parent of the transactions
contemplated hereby and thereby. Each Buying Subsidiary has taken all action
required by Law, its certificate or articles of incorporation and bylaws (or
other formation and governance documents) or otherwise to authorize the
execution and delivery by such Buying Subsidiary of any Transaction Document to
which it is a party, the performance by such Buying Subsidiary of its
obligations thereunder and the consummation by such Buying Subsidiary of the
transactions contemplated thereby. This Agreement has been duly executed and
delivered by the Buyer and the Buyer Parent. At the Closing (subject to the
conditions to closing set forth in Article X), each of the other Transaction
Documents will be duly executed and delivered by the Buyer, the Buyer Parent and
the Buying Subsidiaries, as the case may be. This Agreement is a valid and
binding agreement of the Buyer and the Buyer Parent enforceable against the
Buyer and the Buyer Parent in accordance with its terms, except as such
validity, binding effect or enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
fraudulent transfer, moratorium (whether general or specific) or other Law now
or hereafter in effect affecting the enforceability of creditors rights
generally, and except that the availability of equitable remedies, such as
specific performance or injunctive relief, are subject to the discretion of the
court before which any proceeding may be brought. Each of the Transaction
Documents other than this Agreement to which the Buyer, the Buyer Parent or a
Buying Subsidiary is a party, when executed and delivered at the Closing, will
be valid and binding and enforceable against such party in accordance with its
terms, except as such validity, binding effect or enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, fraudulent transfer, moratorium (whether general or specific)
or other Law now or hereafter in effect affecting the enforceability of
creditors' rights generally, and except that the availability of equitable
remedies, such as specific performance or injunctive relief, are subject to the
discretion of the court before which any proceeding may be brought.
6.3 NO CONFLICTS
None of the (1) execution or delivery by the Buyer or the Buyer Parent
of this Agreement or any other Transaction Document to which it is a party, or
the execution or delivery by any
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Buying Subsidiary of any Transaction Document to which it is a party, (2)
performance by the Buyer or the Buyer Parent of its obligations hereunder or
under any other Transaction Document to which it is a party, or the
performance by any Buying Subsidiary of its obligations under any Transaction
Document to which it is a party, or (3) consummation by the Buyer, the Buyer
Parent or any Buying Subsidiary of the transactions contemplated hereby or
thereby will: (i) require the Buyer, the Buyer Parent or any Buying Subsidiary
to obtain the Consent of, or deliver any notice, filing or application to, any
governmental, administrative or regulatory authority (whether federal, state,
local or foreign) or any other Person with respect to the transfer of the
Transferred Assets, the assumption of the Assumed Liabilities, or the
performance of any obligations under any other Transaction Document, other
than (x) filings pursuant to the HSR Act or any similar Law, (y) the Consents
identified in Section 6.3 of the Buyer Disclosure Schedule ("BUYER CONSENTS")
and (z) compliance with any state bulk sales law, any factory closing law or
any similar Law; (ii) conflict with or result in any violation of any
provision of the certificate or articles of incorporation or bylaws (or other
formation or governance documents), each as amended to date, of the Buyer, the
Buyer Parent or any Buying Subsidiary, or (iii) violate any term of any Law
applicable to the Buyer, the Buyer Parent or any Buying Subsidiary or any of
their respective properties or assets.
6.4 LITIGATION
There is no Litigation pending or, to the Knowledge of the Buyer,
threatened against or involving the Buyer, in each case which, individually or
in the aggregate, would reasonably be expected to have a Buyer Material Adverse
Effect. Neither the Buyer nor the Buyer Parent is subject to any judgment, order
or decree entered into in any lawsuit or proceeding which, individually or in
the aggregate, would reasonably be expected to have a Buyer Material Adverse
Effect.
6.5 BROKERS AND FINDERS
Other than Xxxxxx Xxxxxxx Xxxx Xxxxxx, the fees of which are the sole
responsibility of the Buyer Parent, neither the Buyer Parent nor any of its
Affiliates, officers, directors or employees have employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders fees in
connection with the transactions contemplated by this Agreement or the other
Transaction Documents.
6.6 AVAILABILITY OF FUNDS
At the Closing, the Buyer Parent, on behalf of the Buyer and the Buying
Subsidiaries, will have sufficient funds to enable the Buyer and the Buying
Subsidiaries to consummate the transactions contemplated by this Agreement and
the other Transaction Documents.
6.7 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Article
VI or in the other Transaction Documents, neither the Buyer, the Buyer Parent
nor any other Person makes any express or implied representation or warranty on
behalf of the Buyer or the Buyer Parent, and the
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Buyer and the Buyer Parent hereby disclaim any such representation or warranty
whether by the Buyer, the Buyer Parent or any of their Affiliates, directors,
officers, employees, agents or representatives or any other Person.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 CONDUCT OF BUSINESS
The Seller agrees that from the date of this Agreement until the
Closing Date, the Seller and the Selling Subsidiaries will cause the Transferred
Business to be conducted consistent with the ordinary and normal course of the
Transferred Business existing prior to the date of this Agreement, except as set
forth in Section 7.1 of the Seller Disclosure Schedule and except as otherwise
consented to in writing by the Buyer. Without limiting the generality of this
Section 7.1, except as set forth in Section 7.1 of the Seller Disclosure
Schedule and except as otherwise consented to in writing by the Buyer, the
Seller will and will cause each Selling Subsidiary to:
(a) use commercially reasonable efforts consistent with past
practice to preserve business relationships with employees and with customers,
vendors and suppliers under the Transferred Contracts;
(b) maintain and service the Transferred Assets consistent with
past practice;
(c) use its commercially reasonable efforts to comply with and
perform its obligations and duties imposed by all Laws applicable to the
Designated Employees, the Transferred Assets, the Transferred Business and the
provision by the Seller and the Selling Subsidiaries prior to the Closing of
the Outsourced Services;
(d) pay and perform all obligations under the Transferred
Contracts consistent with past practice;
(e) not amend or make other changes to its certificate of
incorporation or bylaws (or other charter or governance documents) in any
manner whatsoever that would inhibit or hinder its ability to consummate the
transactions contemplated hereby;
(f) not merge with, consolidate with or purchase, or enter into
any agreement to merge with, consolidate with or purchase any other Person if
such merger, consolidation or purchase would inhibit or hinder its ability to
consummate the transactions contemplated hereby or would result in a breach of
this Agreement;
(g) not sell, lease, transfer or otherwise dispose of any asset
that, but for such sale, lease, transfer or disposition, would be a
Transferred Asset, in each case except in the ordinary course of business;
(h) not permit or allow any of the Transferred Assets to become
subject to any Lien, other than Permitted Liens;
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(i) not modify, release or cancel any obligations, liabilities,
rights or claims included in the Transferred Assets, except in the ordinary
course of business;
(j) not grant any increase in the compensation of Designated
Employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or enter into any employment agreement
with any Transferred Employees, other than (i) as required by Law or (ii) with
respect to Domestic Designated Employees, in the ordinary course of business;
(k) not make capital commitments relating to the Transferred
Business or the Transferred Assets for additions to property, plant,
equipment, or intangible capital assets that exceed the amounts set forth in
the Section 7.1(k) of the Seller Disclosure Schedule by $500,000 with respect
to any single commitment or $20,000,000 in the aggregate;
(l) not amend or terminate any Assigned Customer Agreement or,
except in the ordinary course of business, any other Transferred Contract;
(m) not enter into any Contract relating to the Premises
(including any facilities management agreement) that is material to any of the
Premises and that would be a Transferred Contract;
(n) not sell, assign or terminate the Option Issuance Agreement,
or sell, assign, terminate or waive any of the Seller Parent's rights under
Section 4.3 of the Option Issuance Agreement (the Seller Parent agrees that
the Buyer may withhold consent to a waiver of this clause (n) in its sole
discretion);
(o) not enter into a new customer Contract that would be a
Transferred Customer Contract; and
(p) not agree, whether in writing or otherwise, to do any of the
acts prohibited by clauses (a)-(o) above without the prior written consent of
the Buyer.
The Seller Parent agrees to take all such action as may be necessary or
appropriate to cause the Seller and the Selling Subsidiaries to comply with the
provisions of this Section 7.1.
7.2 BUYER'S INVESTIGATION; FULL ACCESS
(a) From and after the date hereof until the Closing Date and to
the extent permitted by Law, the Seller shall, within reason, afford to the
Buyer and its counsel, accountants, consultants and other agents and
representatives access during normal business hours to the Premises,
management, properties, and Books and Records which are directly related to
the Transferred Business, the Transferred Assets or the Assumed Liabilities,
provided that such investigation shall be conducted on an efficient basis and
shall not interfere unreasonably with the normal operations of the Transferred
Business or the Retained Business, and the Seller will cause its employees,
accountants and agents to furnish, within reason, such additional financial
and operating data and other information and to enter into such discussions
with the Buyer as the
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Buyer shall from time to time request in order to enable the Buyer to
investigate adequately the Transferred Business, the Transferred Assets and the
Assumed Liabilities, provided, that the Buyer shall not have access to
Intellectual Property Rights, Software, Retained Databases or any projections
or valuation information the Seller, the Seller Parent or the Selling
Subsidiaries may have concerning the Retained Business, the Retained Assets or
the Retained Liabilities or any financial appraisals or enterprise valuation
information the Seller, the Seller Parent or the Selling Subsidiaries may have
concerning the Transferred Business. Notwithstanding any other provision to the
contrary in this Section 7.2, the Seller is under no obligation to provide the
Buyer with any information which is restricted, as of the date of this
Agreement, by any confidentiality agreement with a third party; provided that,
to the extent reasonably requested by the Buyer, the Seller will request any
Consents necessary to provide the Buyer with such information. In such event,
the Buyer agrees to keep such information confidential.
(b) For a period ending on the 90th day after the date of this
Agreement (the "ENVIRONMENTAL DILIGENCE PERIOD"), the Buyer shall have the
right to conduct, at its sole expense, such environmental inspections and
investigations of the Premises and the Transferred Tangible Assets as the
Buyer deems necessary or desirable, including the right to conduct sampling of
surface water, ground water, soil, indoor and outdoor air quality, building
and construction materials, and transformer and tank fluids. The Buyer shall
coordinate the scheduling of any sampling activities occurring before the
Closing Date with the Seller, it being understood that such activities may be
scheduled outside of normal business hours. The Buyer's environmental
investigations shall not unreasonably interfere with the normal operations of
the Transferred Business. Interference with the normal operations of the
Transferred Business that is unavoidable in order for the Buyer to conduct
environmental sampling shall not be deemed unreasonable; provided the Buyer
shall make commercially reasonable efforts to avoid or minimize the duration
of any such interference. Any condition or circumstance existing on or before
12:01 a.m. on the Closing Date at, on or under any of the Premises or with
respect to the Transferred Tangible Assets that would reasonably be expected
to give rise to liability, compliance costs or third party claims under
Environmental Laws and that the Buyer identifies and notifies the Seller of in
writing during the Environmental Diligence Period shall be deemed to be an
"IDENTIFIED ENVIRONMENTAL CONDITION." The Buyer shall defend, indemnify and
hold harmless Seller and its Affiliates from and against any and all damages,
penalties, liabilities or claims arising from the acts or omissions of the
Buyer or its consultants or contractors in conducting such environmental
inspections and investigations except to the extent attributable to liability
for conditions existing on the Premises or with respect to the Transferred
Tangible Assets that are not the result of an act or omission of the Buyer or
its consultants or contractors. The Buyer shall be responsible at its expense
for the disposal of all samples, cuttings, purge water or other wastes or
materials generated as a result of such environmental investigations.
7.3 BOOKS AND RECORDS; FURNISHING INFORMATION
(a) After the Closing Date, to the extent permitted by Law, the
Seller agrees, within reason, to make available to the Buyer for inspection
and copying at the Buyer's expense, at reasonable times after request
therefor, any Books and Records directly relating to the Transferred Assets,
the Assumed Liabilities and the Transferred Business retained by the Seller,
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the Seller Parent or the Selling Subsidiaries which, at the time of such
request, are in the possession or control of the Seller, the Seller Parent or
the Selling Subsidiaries; provided, however, notwithstanding any other
provision of this Agreement to the contrary, the Seller shall be under no
obligation under this Agreement to provide the Buyer access to Intellectual
Property Rights, Software, Retained Databases or any projections or valuation
information the Seller, the Seller Parent or the Selling Subsidiaries may have
concerning the Retained Business, the Retained Assets or the Retained
Liabilities or any financial appraisals or enterprise valuation information
the Seller, the Seller Parent or the Selling Subsidiaries may have concerning
the Transferred Business. In addition, the Seller agrees, within reason, to
make available to the Buyer all financial data and other information retained
by the Seller, the Seller Parent or the Selling Subsidiaries relating to the
Transferred Business, the Transferred Assets or the Assumed Liabilities, and
will make available its relevant employees, as the Buyer shall from time to
time reasonably request, in each case as reasonably required to permit the
Buyer to prepare any Tax Returns and in connection with any governmental
examination of Tax Returns relating to the Transferred Business, the
Transferred Assets or the Assumed Liabilities for periods from and after the
Closing Date. The reasonable expenses (including copying costs) incurred by
the Seller in connection with its obligations under the preceding sentence
shall be reimbursed by the Buyer. For a period of six years after the Closing
Date, the Seller shall not destroy or otherwise render unavailable any of the
aforesaid records, documents, data and information. Notwithstanding any other
provision to the contrary in this Section 7.3(a), the Seller is under no
obligation to provide the Buyer with any information which is restricted, as
of the Closing, by any confidentiality agreement with a third party; provided
that, to the extent reasonably requested by Buyer, the Seller will request and
use commercially reasonable efforts to obtain any Consents necessary to
provide Buyer with such information.
(b) After the Closing Date to the extent permitted by Law, the
Buyer agrees, within reason, to make available to the Seller for inspection
and copying at the Seller's expense, at reasonable times after request
therefor, any Transferred Books and Records relating to periods prior to the
Closing Date which, at the time of such request, are in the possession or
control of the Buyer, the Buyer Parent or the Buyer Subsidiaries. In addition,
the Buyer agrees, within reason, to make available to the Seller all financial
data and other information relating to periods prior to the Closing Date
retained by the Buyer, the Buyer Parent or the Buyer Subsidiaries relating to
the Transferred Business, the Transferred Assets or the Assumed Liabilities,
and will make available its relevant employees, as the Seller shall from time
to time reasonably request, in each case as reasonably required to permit the
Seller to prepare any Tax Returns and in connection with any governmental
examination of Tax Returns relating to the Transferred Business, the
Transferred Assets or the Assumed Liabilities for periods prior to and through
the Closing Date. The reasonable expenses (including copying costs) incurred
by the Buyer in connection with its obligations under the preceding sentence
shall be reimbursed by the Seller. For a period of six years after the Closing
Date, the Buyer shall not destroy or otherwise render unavailable any of the
aforesaid records, documents, data and information. Notwithstanding any other
provision to the contrary in this Section 7.3(b), the Buyer is under no
obligation to provide the Seller with any information which is restricted, as
of the Closing, by any confidentiality agreement with a third party; provided
that, to the extent reasonably requested by the Seller, the
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Buyer will request and use commercially reasonable efforts to obtain any
Consents necessary to provide the Seller with such information.
7.4 CONSUMMATION OF TRANSACTIONS; CONSENTS
(a) Subject to the terms and conditions hereof, the Seller and
the Buyer agree to use all commercially reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including all of the following: (i) obtain
prior to the Closing all licenses, certificates, permits, approvals,
authorizations, qualifications and orders of governmental authorities as are
necessary for the consummation of the transactions contemplated hereby,
including such Consents as may be required under the HSR Act and any similar
Law and (ii) effect all necessary registrations and filings. The Seller and
the Buyer shall cooperate fully with each other to the extent reasonable in
connection with the foregoing.
(b) The Buyer and the Seller shall timely and promptly make all
filings which may be required by each of them in connection with the
consummation of the transactions contemplated hereby under the HSR Act and any
similar Law. Each party shall furnish to each other such necessary information
and assistance as the other party may reasonably request in connection with
the preparation of any necessary filings or submissions by it to any U.S. or
foreign governmental agency, including any filings necessary under the
provisions of the HSR Act or any similar Law. The parties agree to share
equally the filing fee required under the HSR Act.
(c) Each party shall notify and keep the other advised as to (i)
any litigation or administrative proceeding pending and known to such party,
or to its Knowledge threatened, which challenges the transactions contemplated
hereby or by the other Transaction Documents and (ii) any event or
circumstance which would constitute a breach of such party's representations,
warranties, covenants or other agreements in this Agreement; provided,
however, that the failure of a party to comply with clause (ii) shall not
subject such party to any liability hereunder except as and to the extent such
party otherwise is responsible for a breach of such representations,
warranties, covenants or agreements pursuant to Article XI. Subject to the
provisions of Article XII, neither party shall take any action inconsistent
with its obligations under this Agreement or which would materially hinder or
delay the consummation of the transactions contemplated by this Agreement.
7.5 AGREEMENTS REGARDING CONFIDENTIALITY
(a) Each of the Seller Parent and the Seller covenants that,
from and after the date of this Agreement (including after the Closing), it
will not for a period of five years, without the prior written consent of the
Buyer, disclose to any Person confidential information relating to or
concerning:
(i) The Buyer, the Buyer Parent or the Buying
Subsidiaries, or their respective business, customers, financial
condition, performance or operations, obtained by or in the
possession of the Seller Parent or the Seller prior to the Closing
(the "BUYER CONFIDENTIAL INFORMATION"), except to the officers,
directors, employees and
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representatives of the Seller Parent or the Seller who need to know
such information for purposes of the transactions contemplated by
this Agreement and the other Transaction Documents, unless, upon the
advice of counsel to the Seller, disclosure is required to be made
under the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, other Law or the rules of the New York Stock
Exchange or any other relevant securities exchange. If the Seller and
the Buyer enter into a definitive agreement regarding the acquisition
by the Seller of the Buyer's air services portfolio and related
customer agreements, the confidentiality provisions of such agreement
shall govern any Buyer Confidential Information relating to such
business in lieu of this Section 7.5(a)(i).
(ii) The Transferred Assets, Assumed Liabilities,
Transferred Business or the provision by the Seller and the Selling
Subsidiaries prior to the Closing of the Outsourced Services in each
case obtained by or in the possession of the Seller Parent or the
Seller prior to the Closing (the "TRANSFERRED BUSINESS CONFIDENTIAL
INFORMATION"), except to their respective officers, directors,
employees and representatives to the extent such Persons need to know
such information for purposes of the transactions contemplated by
this Agreement and the other Transaction Documents, Taxes,
accounting, litigation and other matters necessary in respect of the
ownership by Seller and the Selling Subsidiaries prior to the Closing
of the Transferred Assets or the Transferred Business or the
provision by the Seller and the Selling Subsidiaries prior to the
Closing of the Outsourced Services, unless, upon the advice of
counsel to the Seller, disclosure is required to be made under the
Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, other Law or the rules of the New York Stock
Exchange or any other relevant securities exchange.
(b) Notwithstanding the foregoing, the Seller Parent and the
Seller may use and disclose Transferred Business Confidential Information to
the extent (i) reasonably required to bring any claim against, or resolve any
dispute with, any Person who is party to any Transferred Contract arising
under such Transferred Contract and relating to events prior to 12:01 a.m.
Central Time on the Closing Date, (ii) reasonably required to defend any
Litigation, claim or other dispute relating to any matter that is or relates
to, or is asserted to be or relate to, a Retained Asset or a Retained
Liability or any other matter that is or is asserted to be covered by the
Seller's or the Seller Parent's indemnification obligations under Article XI
or (iii) such Transferred Business Confidential Information was available on a
non-confidential basis prior to its coming into the possession of the Seller
Parent or the Seller and directly relates to the Retained Assets, the Retained
Liabilities or the Retained Business. Prior to any use or disclosure of such
Transferred Business Confidential Information, the Seller will notify the
Buyer that the Seller intends to disclose Transferred Business Confidential
Information and will consult with the Buyer in good faith regarding the scope
of the use and disclosure.
(c) In the event that the Seller Parent or the Seller is
requested or required by documents subpoena, civil investigative demand,
interrogatories, requests for information, or other similar process to
disclose any Buyer Confidential Information or Transferred Business
Confidential Information which otherwise may not be disclosed except as set
forth in Section 7.5(a) or (b), the Seller Parent or the Seller will provide
the Buyer with prompt notice of such
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request or demand or other similar process so that the Buyer may seek an
appropriate protective order or, if such request, demand or other similar
process is mandatory, waive compliance with the provisions of this Section
7.5, as appropriate. The term "Buyer Confidential Information" does not
include information which (i) becomes generally available to the public other
than as a result of wrongful disclosure by the Seller Parent or Seller, (ii)
was available on a non-confidential basis prior to its coming into the
possession of the Seller Parent or the Seller to the extent such Buyer
Confidential Information relates to the Retained Assets, the Retained
Liabilities or the Retained Business or (iii) becomes available after the
Closing to the Seller Parent or the Seller on a non-confidential basis from a
source other than the Buyer Parent or the Buyer to the extent such Buyer
Confidential Information relates to the Retained Assets, the Retained
Liabilities or the Retained Business, provided that, to the knowledge of the
Seller, such source is not bound by a confidentiality agreement with the Buyer
Parent or the Buyer or their respective representatives. The term "Transferred
Business Confidential Information" does not include information which becomes
generally available to the public other than as a result of wrongful
disclosure by the Seller Parent or the Seller.
(d) Each of the Buyer Parent and the Buyer covenants that, from
and after the date of this Agreement (including after the Closing), it will
not for a period of five years, without the prior written consent of the
Seller, disclose to any Person confidential information relating to or
concerning the Retained Assets, the Retained Liabilities, the Retained
Business or the Seller Parent, the Seller or the Selling Subsidiaries, or
their respective businesses, customers, financial condition, performance or
operations, obtained by the Buyer Parent or the Buyer prior to the Closing
Date (the "SELLER CONFIDENTIAL INFORMATION"), except to their respective
officers, directors, employees and representatives to the extent such Persons
need to know such information for purposes of the transactions contemplated by
this Agreement and the other Transaction Documents, Taxes, accounting,
litigation and other matters necessary in respect of the ownership by the
Buyer and the Buying Subsidiaries, subsequent to the Closing, of the
Transferred Assets or the Transferred Business, and their assumption of the
Assumed Liabilities, unless, upon the advice of counsel to the Buyer,
disclosure is required to be made under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, other applicable Law
or the rules of the New York Stock Exchange or any other relevant securities
exchange.
(e) Notwithstanding the foregoing, the Buyer Parent and the
Buyer may use and disclose Seller Confidential Information to the extent (i)
reasonably required to bring any claim against, or resolve any dispute with,
any Person who is party to any Transferred Contract arising under such
Transferred Contract and relating to events on or after 12:01 a.m. Central
Time on the Closing Date, (ii) reasonably required to defend any Litigation,
claim or other dispute relating to any matter that is or relates to, or is
asserted to be or relate to, a Transferred Asset or an Assumed Liability or
any other matter that is or is asserted to be covered by the Buyer's or the
Buyer Parent's indemnification obligations under Article XI or (iii) such
Seller Confidential Information was available on a non-confidential basis
prior to its coming into the possession of the Buyer Parent or the Buyer and
directly relates to the Transferred Assets, the Assumed Liabilities or the
Transferred Business. Prior to any use or disclosure of such Seller
Confidential Information, the Buyer will notify the Seller that the Buyer
intends to disclose Seller
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Confidential Information and will consult with the Seller in good faith
regarding the scope of the use and disclosure.
(f) In the event that the Buyer Parent or the Buyer is requested
or required by documents subpoena, civil investigative demand,
interrogatories, requests for information, or other similar process to
disclose any Seller Confidential Information which otherwise may not be
disclosed except as set forth in Section 7.5(d) or (e), the Buyer Parent or
the Buyer will provide the Seller with prompt notice of such request or demand
or other similar process so that the Seller may seek an appropriate protective
order or, if such request, demand or other similar process is mandatory, waive
compliance with the provisions of this Section 7.5, as appropriate. The term
"Seller Confidential Information" does not include information which (i)
becomes generally available to the public other than as a result of disclosure
by the Buyer Parent or the Buyer, (ii) was available on a non-confidential
basis prior to its coming into the possession of the Buyer Parent or the Buyer
or (iii) becomes available after the Closing Date to the Buyer Parent or the
Buyer on a non-confidential basis from a source other than the Seller Parent
or the Seller, provided that, to the knowledge of the Buyer, such source is
not bound by a confidentiality agreement with the Seller Parent or the Seller
or their respective representatives.
(g) For purposes of this Section 7.5, (i) the Seller Parent and
the Seller shall include the Selling Subsidiaries, their respective
subsidiaries and Affiliates, and any of their respective directors, officers,
employees and representatives and the Seller Parent and the Seller shall cause
all such other Persons to comply with the terms of this Section 7.5, and (ii)
the Buyer Parent and the Buyer shall include the Buying Subsidiaries, their
respective subsidiaries and Affiliates, and any of their respective directors,
officers, employees and representatives and the Buyer Parent and the Buyer
shall cause all such other Persons to comply with the terms of this Section
7.5.
(h) No failure or delay by either party hereto in exercising any
right, power or privilege under this Section 7.5 shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
(i) Notwithstanding any other provision under Sections 7.5 or
7.6, no party shall be prohibited from publicly disclosing information related
to the effect of the transactions contemplated hereunder and under the other
Transaction Documents on such party's financial conditions and results of
operations in connection with customary investor relations activities
consistent with past practice.
(j) The parties agree that the confidentiality provisions of
that certain Mutual Nondisclosure Agreement dated as of July 28, 2000 among
the Seller, the Seller Parent and the Buyer Parent shall be superseded by this
Section 7.5.
7.6 PUBLIC DISCLOSURES
In connection with the execution of this Agreement and in connection
with the Closing, the Seller and the Buyer jointly will plan, coordinate and
release any related press release and other public announcements, statements or
communications. Prior to the Closing Date, no party
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to this Agreement will issue any press release or make any other public
disclosures, announcements, statements or communications concerning this
transaction or the contents of this Agreement without the prior written
consent of the other party. Notwithstanding the above, nothing in this Section
will preclude any party from making any disclosures required by Law or
necessary and proper in conjunction with the filing of any Tax Return or other
document required to be filed with any governmental body, authority or agency;
provided, however, that the party required to make the release or statement
shall to the extent practicable allow the other party reasonable time to
comment on such release or statement in advance of such issuance.
7.7 NO SOLICITATION
The Seller will not, and will ensure that its directors, officers,
employees or other Affiliates or representatives do not, directly or indirectly
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any Person (other than the Buyer or its
directors, officers, employees or other Affiliates or representatives) with
respect to any sale, disposition, lease or other transfer of any of the
Transferred Assets (except for sales of Transferred Assets in the ordinary
course of business) or the Transferred Business (an "ACQUISITION TRANSACTION").
The Seller shall notify the Buyer upon receipt of any bona fide proposal
concerning an Acquisition Transaction and the terms thereof.
7.8 PAYMENTS RECEIVED; ACCOUNTS RECEIVABLE; VENDOR INVOICES
(a) From and after the Closing, the Seller and the Buyer each
agree that it will hold and promptly transfer and deliver to the other, from
time to time, as and when received by such party any payments or property
which properly belongs to the other party, and will account for the other
party all such receipts. When a party receives a payment to which it is
partially entitled, such party may deduct its portion from such payment and
deliver the balance of the payment to the other party.
(b) From and after the Closing, the Buyer will reasonably
cooperate with the Seller's efforts to collect all accounts receivable and
other rights of Seller to receive payments that relate to the Transferred
Business or Transferred Assets and are included in the Retained Assets,
including the Customer Accounts Receivable.
(c) From and after the Closing Date, all valid and undisputed
invoices from third-party vendors relating to the Transferred Contracts up to
and including the Closing Date that are received by the Buyer will be paid by
the Buyer to the extent included as Assumed Liabilities, and will otherwise be
forwarded to the Seller for payment. Where an invoice must be prorated, the
Buyer will pay the full amount of the invoice, and Seller will promptly
reimburse the Buyer for the amount of the payment which is its pro rata
obligation. Where the Seller has already paid any such invoice before the
Closing Date, and the invoice must be prorated, the Buyer will promptly
reimburse the Seller for the amount of the payment which is the pro rata
obligation of the Buyer.
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7.9 GOVERNMENT CONSENTS
As promptly as practicable after the execution of this Agreement, the
Seller or the Seller Parent and the Buyer or the Buyer Parent, as appropriate,
shall (i) file all reports, notifications, applications and other documents that
may be required to be filed with any and all governmental, administrative or
regulatory authorities having proper jurisdiction over the Seller and the Buyer
in connection with this Agreement, the purchase by the Buyer of the Transferred
Assets and any other transactions contemplated hereby or by any other
Transaction Document; (ii) cooperate with each other in connection with such
filings or responses to requests for additional information; and (iii) use
commercially reasonable efforts to resolve any objections raised by any of such
authorities. To the extent permitted by Law, the parties will furnish to each
other such necessary information and reasonable assistance as each may request
in connection with their preparation of necessary filings with such authorities.
7.10 FURTHER ASSURANCES
From time to time after the Closing Date, each of the Seller and the
Buyer shall, at its sole expense, at the reasonable request of the other,
execute and deliver such other and further instruments of sale, assignment,
assumption, transfer and conveyance and take such other and further action as
may be reasonably requested by the other party in order to vest in the Buyer and
the Buying Subsidiaries put the Buyer and the Buying Subsidiaries in possession
of the Transferred Assets, and to give effect to the Buyer's and the Buyer
Subsidiaries' assumption of the Assumed Liabilities.
7.11 RELEASE OF LIENS
Prior to or at the Closing, the Seller will deliver to the Buyer, and
cause to be filed or recorded, such releases, termination statements and other
documents and instruments as are sufficient to eliminate and extinguish all
Liens (other than Permitted Liens) on any of the Transferred Assets so that, at
the Closing, the Buyer or the appropriate Buying Subsidiary designated by Buyer
will receive title to such Transferred Assets free and clear of such Liens
(other than Permitted Liens and, in the case of Financed Hardware, leases
entered into by the Seller or the Selling Subsidiaries, as lessor, with "Third
Party Participants" (as defined in the Outsourcing Agreement)).
7.12 NON-SOLICITATION OF EMPLOYEES
From the date of this Agreement until the second anniversary of the
date of this Agreement, neither the Seller or its Affiliates on the one hand,
nor the Buyer or its Affiliates on the other hand will (or will assist, advise
or encourage others to), directly or indirectly, solicit for employment (i) any
elected officer of the other party or (ii) any other managerial employee of the
other party (or any subsidiary or division thereof) with whom the other party or
any of its Affiliates first had contact or for whom the other party or any of
its Affiliates first received a resume or other similar background information
during the period of its consideration of the transactions contemplated by this
Agreement, except that the Buyer may take any action contemplated in Article
VIII with respect to the Designated Employees prior to the Closing.
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Notwithstanding the foregoing, the Buyer and the Seller acknowledge and agree
that this Agreement will not prohibit (i) any executive search or similar
business controlled by the Buyer or by any of the Buyer's Affiliates from
engaging in its business in the ordinary course on behalf of clients other than
the Buyer or any Affiliate of the Buyer, (ii) solicitations through general
public advertisements or other publications of general public circulation not
targeted directly or indirectly at the other party's employees, or (iii) the
solicitation for employment or employment by one party of a former employee of
the other party who, at the date of such solicitation, was not an employee or
subcontractor of such party at any time during the previous 12 months.
7.13 TAX EXEMPTIONS, CREDITS AND INCENTIVES
The Seller shall reasonably cooperate with the Buyer in the Buyer's
effort to cause all Tax (including income tax) exemptions, abatements, credits,
and incentives granted to the Seller related to the Transferred Business or
Transferred Assets to remain in effect after the Closing Date or in the Buyer's
effort to apply for the same. Such cooperation shall include participating in
reasonable negotiations, filing necessary documentation, and providing necessary
historical information.
7.14 CLAIMS BY SELLER
If the Seller, the Seller Parent or any Selling Subsidiary asserts a
claim or takes any other action in respect of a Default under any Transferred
Contract that arises out of or relates to events occurring before 12:01 a.m.
Central Time on the Closing Date and if such claim or other action involves
Litigation against, or formal dispute resolution before any third-party mediator
or arbitrator with, a party who at the Closing was a customer or vendor of the
Transferred Business and remains a customer or vendor of the Transferred
Business at the time of such Litigation or such formal dispute resolution, then,
prior to commencing Litigation or formal dispute resolution, the Seller shall
first discuss the matter with the Buyer and shall consider in good faith the
Buyer's views on the matter.
7.15 SUBCONTRACTING AGREEMENT
The Seller and the Buyer agree to negotiate in good faith the
definitive terms of the Subcontracting Agreement, the principal economic and
other material terms of which are set forth in Exhibit 4.2(a)(xi), prior to the
Closing and to enter into the Subcontracting Agreement at the Closing.
7.16 CERTAIN SCHEDULES TO THE OUTSOURCING AGREEMENT
The Seller and the Buyer agree to negotiate in good faith the
definitive terms of the Approved Subcontractors Schedule, the Hardware Schedule,
the Software Schedule, the Third Party Agreements Schedule, Attachment B
(Financial Responsibilities Matrix) to the Charges Schedule and Attachment E
(Labor Skill Sets) to the Charges Schedule to the Outsourcing Agreement prior to
the Closing and to include such schedules as part of the Outsourcing Agreement
at the Closing.
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7.17 EFFORTS REGARDING AMERICAN AIRLINES
The Seller will use commercially reasonable efforts to satisfy the
conditions in Sections I and II of the Consent Letter, taking into consideration
the Seller's commercial interests relating to Exhibit P to the RSA. In addition,
the Seller will work at the reasonable direction of the Buyer in connection with
completing the Other Schedules (as defined in the Consent Letter) to the Third
Amended ITSA. The Seller and the Buyer shall use commercially reasonable efforts
so that TPI shall remain a "neutral party" with respect to the negotiation of
the I2M Strawman.
7.18 IDENTIFICATION OF FINANCED HARDWARE
Prior to the Closing, the Seller will deliver to the Buyer a good faith
estimate of the number of units of Financed Hardware, by asset category, that
the Seller is transferring to the Buyer and the Buying Subsidiaries pursuant to
this Agreement.
7.19 DATABASES
Between the date of this Agreement and the Closing, the parties will
work together to identify those electronic databases owned by the Seller that
are used in the Transferred Business or the provision by the Seller and the
Selling Subsidiaries prior to the Closing of the Outsourced Services or which
contain data regarding the Transferred Assets and the Assumed Liabilities
("DATABASES"). The parties agree to work together in good faith to designate
which such Databases should be designated as "Transferred Databases" and which
such Databases should be designated as "Retained Databases." The parties
generally agree that "TRANSFERRED DATABASES" should include those Databases that
are used primarily in the Transferred Business or that primarily contain data
regarding the Transferred Assets and Assumed Liabilities (including such matters
as purchase, installation, maintenance and similar records relating to the
Transferred Tangible Assets, operating data relating to the Premises, historical
service performance, invoicing and other operational and financial data
regarding the Transferred Contracts, and, to the extent permitted under
applicable Law, copies of historical personnel, payroll and medical records of
each of the Transferred Employees in the possession of the Seller) and that the
"RETAINED DATABASES" should include those Databases that are used by the Seller
primarily in the Retained Business or that primarily contain data regarding the
Retained Assets and Retained Liabilities (including such matters as historical
service performance, invoicing and other operational and financial data
regarding Contracts that are not Transferred Contracts, passenger name records,
fare and pricing information, and other data primarily relating to the provision
by the Seller of "TMD Products and Services" (as defined in the TMD Marketing
Agreement), and Databases that are part of integrated systems (such as the
Seller's SAP enterprise resource planning systems) that are necessary to the
operation of the Retained Business). For Databases that contain data relating to
both the Transferred Assets and Assumed Liabilities and the Retained Assets and
Retained Liabilities, the parties agree to work together in good faith to
institute procedures pursuant to which the party owning such Database after the
Closing will provide reasonably necessary data feeds to the other party and
permit the other party to otherwise access such data pursuant to Section 7.5.
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ARTICLE VIII
EMPLOYEE MATTERS
8.1 OFFERS/TRANSFERS OF EMPLOYMENT
(a) As used in this Article VIII, the following terms have the
respective meanings set forth below:
(i) "BUYER ENTITY" shall mean the Buyer or the applicable
Buying Subsidiary.
(ii) "DESIGNATED EMPLOYEES" shall mean, collectively, the
Domestic Designated Employees and the Non-Domestic Designated Employees.
(iii) "DOMESTIC DESIGNATED EMPLOYEES" shall mean the
employees of the Seller or the Selling Subsidiaries whose names are set
forth in Section 8.1(a)(iii) of the Seller Disclosure Schedule (whose
employment services are currently primarily performed in the United
States).
(iv) "DOMESTIC TRANSFERRED EMPLOYEES" shall mean the
Domestic Designated Employees who accept offers of employment from the
Buyer Entity pursuant to this Agreement.
(v) "DOMESTIC EMPLOYEE TRANSITION DATE" shall mean the
effective date of an offer of employment received by a Domestic
Designated Employee from the Buyer Entity pursuant to this Agreement,
which shall be a date no earlier than the Closing Date and no later
than 90 days after the Closing Date. The Domestic Employee Transition
Date shall not be deemed to refer to the date that the Seconded
Employees who are Domestic Designated Employees transition employment
to the Buyer Entity.
(vi) "EMPLOYEE COSTS" shall mean the direct cash costs of
paying or providing compensation, benefits, privileges and
perquisites, including reasonable attorneys' fees and the fees of
consultants, third party administrators and other advisors relating to
the provision of such compensation, benefits privileges and
perquisites.
(vii) "EMPLOYEE TRANSITION DATE" shall mean the Domestic
Employee Transition Date with respect to Domestic Designated
Employees, and the Non-Domestic Employee Transition Date with respect
to Non-Domestic Designated Employees, as applicable, for the
provisions of this Article VIII applicable to both categories of
Designated Employees.
(viii) "EXCESS NON-DOMESTIC EMPLOYEE BENEFITS" shall mean
benefits, privileges and perquisites provided to Expatriate Employees
(whether such Expatriate Employee is a Domestic Transferred Employee
or a Non-Domestic Transferred Employee) and Non-Domestic Transferred
Employees, as applicable, that are in excess of or different from the
benefits, privileges or perquisites provided to similarly situated
employees of the Buyer Entity.
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(ix) "FOREIGN COUNTRY" shall mean a country listed in
Section 8.1(a)(ix) of the Seller Disclosure Schedule.
(x) "FOREIGN EMPLOYMENT AGREEMENT" shall mean an
employment agreement with respect to a Non-Domestic Designated
Employee that is valid and enforceable under the Laws of (A) the
Foreign Country in which such Non-Domestic Designated Employee
primarily provides employment services for Seller or the Selling
Subsidiaries, or (B) the Laws of any other country applicable to such
agreement.
(xi) "NON-DOMESTIC DESIGNATED EMPLOYEES" shall mean the
employees of the Seller or the Selling Subsidiaries whose names are
set forth in Section 8.1(a)(xi) of the Seller Disclosure Schedule
(whose employment services are currently primarily performed in a
Foreign Country).
(xii) "NON-DOMESTIC EMPLOYEE TRANSITION DATE" shall mean, as
applicable, (A) the effective date of an offer of employment received
from the Buyer Entity by Non-Domestic Designated Employees in a
specific Foreign Country pursuant to this Agreement, or (B) the
effective date of a transfer of employment of Non-Domestic Employees
in a specific Foreign Country to the Buyer Entity pursuant to this
Agreement. The Non-Domestic Employee Transition Date shall not be
deemed to refer to the date that the Seconded Employees who are
Non-Domestic Designated Employees transition employment to the Buyer
Entity.
(xiii) "NON-DOMESTIC SEVERANCE COSTS" shall mean any and all
legal claims, including any costs, expenses, damages or reasonable
attorneys' fees, attributable to and arising from the assertion by a
Non-Domestic Designated Employee that such Non-Domestic Designated
Employee is entitled to receive compensation, other remuneration,
termination gratuities, leaving indemnities, severance or termination
benefits, an ex gratia payment or any similar compensation or benefits
from any member of the Seller Group or from any member of the Buyer
Group.
(xiv) "NON-DOMESTIC TRANSFERRED EMPLOYEE" shall mean a
Non-Domestic Designated Employee who accepts an offer of employment
from the Buyer Entity pursuant to this Agreement or whose employment
is transferred to the Buyer Entity in connection with the transactions
contemplated by this Agreement, as applicable.
(xv) "TRANSFERRED EMPLOYEES" shall mean, collectively, the
Domestic Transferred Employees and the Non-Domestic Transferred
Employees.
(b) Not later than 14 days after the date of this Agreement, the
Buyer Entity shall make offers of regular employment, to be effective as of the
Domestic Employee Transition Date, to the Domestic Designated Employees other
than those Domestic Designated Employees who, as of the date of this Agreement,
are not actively at work. Such offers shall be (i) for either full-time or
part-time employment, consistent with, and the same as, such Domestic
Designated Employee's employment with the Seller or a Selling Subsidiary as of
the date of this Agreement
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and (ii) with similar duties and responsibilities as provided by the Seller or
a Selling Subsidiary as of the date of this Agreement.
(c) Not later than 14 days after the date of this Agreement, the
Buyer Entity shall make offers of regular employment to each Domestic
Designated Employee who is not actively at work as of the date of this
Agreement, to be effective as of the later of the Domestic Employee Transition
Date and the date such Domestic Designated Employee is ready to return to work
in his or her former position. Such offers shall be (i) for either full-time or
part-time employment, consistent with, and the same as, such Domestic
Designated Employee's employment with the Seller or a Selling Subsidiary at the
most recent time that such Domestic Designated Employee was actively at work
and (ii) with similar duties and responsibilities as provided by the Seller or
a Selling Subsidiary at the most recent time that such Domestic Designated
Employee was actively at work. Notwithstanding the foregoing, the Buyer Entity
shall have no obligation to extend employment to any Domestic Designated
Employee who is not actively at work as of the date of this Agreement unless
such Domestic Designated Employee is able to return to work within 180 days
after the Domestic Employee Transition Date and, in the case of medical leave,
such return to work is approved by a licensed physician.
(d) Not later than seven days after the date of hire (the "HIRE
DATE") by the Seller or a Selling Subsidiary of a person to fill a position
which would have otherwise caused such person to be classified as a Domestic
Designated Employee by the Seller (a "NEW HIRE"), the Seller shall provide
notice to the Buyer of the hiring of such person. Not later than 14 days after
receipt by the Buyer of such notice, the Buyer Entity shall make an offer of
regular employment, to be effective as of the Domestic Employee Transition Date
or as soon as commercially practicable thereafter, to such New Hire. Such offer
shall be (i) for either full-time or part-time employment, consistent with, and
the same as, such New Hire's employment with the Seller or a Selling Subsidiary
as of such New Hire's Hire Date and (ii) with similar duties and
responsibilities as provided by the Seller or a Selling Subsidiary as of such
New Hire's Hire Date. Notwithstanding the foregoing, the Buyer Entity shall
have no obligation to extend employment to a New Hire unless the terms of such
New Hire's employment are consistent with the terms of employment that would be
offered to similarly situated Domestic Designated Employees in the ordinary
course of business. For all other purposes under this Agreement, New Hires
shall be considered Domestic Designated Employees.
(e) The Buyer Entity shall give each Domestic Designated Employee
at least 14 days, but no more than the number of days mutually agreed upon by
the Buyer and the Seller, in which to accept or reject the Buyer Entity's
employment offer, unless a relocation is required, in which case the Buyer
Entity shall give the Domestic Designated Employee no less than 21 days, but no
more than the number of days mutually agreed upon by the Buyer and the Seller,
in which to accept or reject the Buyer Entity's employment offer. The Buyer
shall use commercially reasonable efforts to (i) forward to the Seller on a
weekly basis a list of those Domestic Designated Employees who have
communicated an acceptance or rejection of the Buyer Entity's offer of
employment within seven days of the Buyer Entity's receipt of such acceptances
or rejections and (ii) prepare and deliver to the Seller a notice listing all
of the Domestic Designated Employees who shall become Domestic Transferred
Employees on the earlier of (x) the date that
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is 14 days after the date the Domestic Designated Employees are required to
accept or reject the Buyer Entity's employment offer, or (y) the date that is
14 days prior to Domestic Employee Transition Date. Unless otherwise mutually
agreed by the Buyer and the Seller, the Seller shall cause all of the Domestic
Designated Employees, other than (i) the Seconded Employees (as defined in
Section 8.1(m) and (ii) the Domestic Designated Employees who (A) have received
offers of employment from American Airlines, Inc. as provided by that certain
letter agreement between the Seller and American Airlines, Inc., dated February
26, 2001, and (B) have not rejected such offers, to be terminated from
employment with the Seller or the Selling Subsidiaries effective as of the
Domestic Employee Transition Date.
(f) The Seller, the Selling Subsidiaries, and the Buyer hereby
agree that the Non-Domestic Employee Transition Date with respect to
Non-Domestic Designated Employees shall be the Domestic Employee Transition
Date wherever possible, and thereafter shall be the earliest date upon which
employment of the Non-Domestic Designated Employees by the Buyer Entity in a
specific Foreign Country can commence in accordance with applicable Laws in
such Foreign Country, the terms of any applicable collective bargaining
agreement and any applicable works' council notice and consultation
requirements.
(g) The term "EXPATRIATE EMPLOYEE" shall mean a Designated
Employee who receives compensation, other remuneration or benefits pursuant to
programs or arrangements of the Seller or a Selling Subsidiary (the "SELLER
HOME COUNTRY PLANS") which are maintained under the Laws of a country (the
"HOME COUNTRY") other than the country in which such Designated Employee
primarily performs services for the Seller or the Selling Subsidiaries.
Notwithstanding any provision of this Article VIII to the contrary, (i) subject
to clause (ii), to the extent that Buyer Entity is obligated under this Article
VIII to pay or provide compensation, other remuneration or benefits to an
Expatriate Employee (whether such Expatriate Employee is a Domestic Designated
Employee or a Non-Domestic Designated Employee), the Buyer Entity shall, if the
Expatriate Employee is covered under Seller Home Country Plans, pay or provide
such compensation, other remuneration or benefits under programs or
arrangements of the Buyer Entity which are maintained under the Laws of the
applicable Home Country (the "BUYER HOME COUNTRY PLANS"), in an amount and at a
benefit level, as the case may be, equivalent to the amount or level provided
under the Buyer Home Country Plans to similarly situated employees of the Buyer
Entity; (ii) if such Expatriate Employee is subject to an agreement with the
Seller or a Selling Subsidiary (an "EXPATRIATE AGREEMENT") which provides that
the Expatriate Employee will receive compensation, other remuneration or
benefits in an amount or at a level greater than the amount or level generally
provided under the Buyer Home Country Plans to similarly situated employees of
the Buyer Entity, then the Buyer Entity shall, pursuant to the Buyer Home
Country Plans, pay or provide such greater amount or level of compensation,
other remuneration or benefits to such Expatriate Employee; provided that the
Buyer and the Seller shall share equally the Employee Costs of providing the
Excess Non-Domestic Employee Benefits to such Expatriate Employees for a period
of two years following the Employee Transition Date.
(h) If under the Laws of any Foreign Country, the Seller or the
Selling Subsidiaries would be permitted in connection with the transactions
contemplated hereby to transfer a Non-Domestic Designated Employee's employment
to the Buyer Entity, then the Seller, the Selling
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Subsidiaries, and the Buyer Entity shall cooperate and use commercially
reasonable efforts to effectuate the transfer of employment of the Non-Domestic
Designated Employees on the Non-Domestic Employee Transition Date in accordance
with the Laws of such Foreign Country so that no severance benefits,
termination indemnities or other termination benefits shall be payable to such
Non-Domestic Designated Employees in connection with the transactions
contemplated by this Agreement.
(i) If the employment of a Non-Domestic Designated Employee is not
transferred in accordance with Section 8.1(h), then the Buyer Entity shall
offer employment to such Non-Domestic Designated Employee effective on the
applicable Non-Domestic Employee Transition Date and, other than with respect
to Seconded Employees, the employment of such Non-Domestic Designated Employee
shall be terminated by the Seller or the Selling Subsidiary, as applicable, on
the Non-Domestic Employee Transition Date. Such offers shall be made in a time
and manner, to the extent commercially practicable, consistent with the time
and manner in which offers of employment are made with respect to Domestic
Designated Employees under Sections 8.1(b), (c), (d) and (e); provided that,
the Seller, the Selling Subsidiaries and the Buyer Entity shall cooperate and
use commercially reasonable efforts to effectuate the termination of employment
by the Seller and the offer of employment by the Buyer Entity so that no
severance benefits, termination indemnities or other termination benefits shall
be payable to such Non-Domestic Designated Employees in connection with the
transactions contemplated by this Agreement.
(j) Prior to the Employee Transition Date or as soon as
commercially practicable thereafter, the Buyer Entity, with the cooperation of
the Seller, shall satisfy or cause to be satisfied any and all Laws relating to
immigration and visa requirements necessary to permit the employment of
Designated Employees by the Buyer Entity on the Employee Transition Date as
contemplated by this Article VIII.
(k) Section 8.1(a)(iii) of the Seller Disclosure Schedule, with
respect to Domestic Designated Employees, and Section 8.1(a)(xi), of the Seller
Disclosure Schedule, with respect to Non-Domestic Designated Employees, set
forth the current base salary or wages, target bonus participation rate, duties
and responsibilities, length of service and certain other benefit information
for each Designated Employee.
(l) Notwithstanding anything to the contrary in this Section 8.1,
except as otherwise required under the Laws of a Foreign Country governing the
employment of a Non-Domestic Transferred Employee, the Buyer Entity shall not
be obligated to offer employment to any Designated Employee, if such person
ceases to be an employee of the Seller or any Selling Subsidiary at any time
after the date of this Agreement and before the Employee Transition Date.
(m) Notwithstanding anything to the contrary in Section 8.1(h) and
8.1(i), at any time prior to the Employee Transition Date, the Seller shall
have the right, in its sole discretion, to allow certain Designated Employees
who: (i) will, within two years of the Employee Transition Date, be eligible to
receive retiree flight privileges from American Airlines, Inc. pursuant to the
Travel Privileges Agreement with American Airlines, Inc., dated as of July 1,
1996, as amended
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as of March 15, 2000, which is more fully described in Section 5.16 of the
Seller Disclosure Schedule, (ii) are in the process of obtaining green card and
possess H-1B visas which will expire within two years of the Employee
Transition Date, or (iii) are Non-Domestic Designated Employees who, as a
result of restrictions provided by the Laws of a Foreign Country, are unable to
transfer or accept employment with the Buyer Entity on the Non-Domestic
Employee Transition Date (collectively, "SECONDED EMPLOYEES") to remain
employed by the Seller or a Selling Subsidiary after the Closing Date until
such time as determined by the Seller in its sole discretion (the "SECONDMENT
PERIOD"). At the termination of the Secondment Period, the Seconded Employees
shall transfer employment to the Buyer Entity under terms substantially similar
to those provided by this Article VIII, unless such Seconded Employees fail to
accept the Buyer Entity's offer of employment or as otherwise mutually agreed
by the Seller and the Buyer. The Seller shall not second more than 600
Designated Employees in the aggregate.
8.2 COMPARABLE COMPENSATION AND BENEFITS
(a) The Buyer Entity shall offer each Domestic Transferred
Employee (i) for at least one year following the Domestic Employee Transition
Date, total cash compensation which is the same as or better than the total
cash compensation (including base pay and bonus) such Domestic Transferred
Employee received from the Seller or Selling Subsidiary immediately prior to
the Domestic Employee Transition Date; provided that, if the Seller or any
Selling Subsidiary creates, amends, or otherwise modifies any bonus or other
cash compensation plan or commitment after the date of this Agreement, the
Buyer Entity shall only be obligated to offer each Domestic Transferred
Employee total cash compensation which is the same as or better than the total
cash compensation (including base pay and bonus) such Domestic Transferred
Employee would have received immediately prior to the Domestic Employee
Transition Date if such bonus or other cash compensation plan or commitment had
not been so amended and (ii) a package of benefits, privileges and perquisites
that is no less favorable than those offered to similarly situated employees of
the Buyer Entity.
(b) The Buyer Entity shall offer to each Non-Domestic Transferred
Employee (i) for at least one year following the Non-Domestic Employee
Transition Date, total cash compensation which is the same as or better than
the total cash compensation (including base pay and bonus) such Non-Domestic
Transferred Employee received from the Seller or the Selling Subsidiary
immediately prior to the applicable Non-Domestic Employee Transition Date, and
(ii) a package of benefits, privileges and perquisites that is no less
favorable than those offered to similarly situated employees of the Buyer
Entity in the specific Foreign Country; provided, however, that to the extent
that the Laws of any Foreign Country in which any Non-Domestic Designated
Employees are located require the provision of Excess Non-Domestic Employee
Benefits, as a result of the transactions contemplated by this Agreement, the
Buyer Entity, for a period of two years following the applicable Non-Domestic
Employee Transition Date, shall also, subject to the approval of the Seller
(which approval shall not be unreasonably withheld), provide the Non-Domestic
Transferred Employees employed in such Foreign Country with the Excess
Non-Domestic Employee Benefits at the amount and level so required by the Laws
of such Foreign Country or, if permitted by the Laws of such Foreign Country,
with benefits, privileges, perquisites or other compensation having an
equivalent value of such Excess Non-
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Domestic Employee Benefits. The Buyer and the Seller shall, for a period of two
years following the applicable Non-Domestic Employee Transition Date, share
equally the Employee Costs associated with: (i) the provision of the Excess
Non-Domestic Employee Benefits to the extent the Employee Costs associated with
the Excess Non-Domestic Employee Benefits exceed the Employee Costs which the
Buyer Entity would have otherwise borne had Buyer Entity provided such
Non-Domestic Transferred Employees with benefits, privileges and perquisites
equal to that which Buyer Entity provides to similarly situated employees of
the Buyer Entity during such two-year period, and (ii) the Non-Domestic
Severance Costs; provided that the Seller and the Selling Subsidiaries shall
not be responsible for any of the costs or expenses, including the Non-Domestic
Severance Costs, arising out of the Buyer Entity's failure to fulfill the Buyer
Entity's obligations under this Agreement and as required by Law with respect
to such Excess Non-Domestic Employee Benefits unless otherwise mutually agreed
upon by the Seller and the Buyer. Notwithstanding any provision of this Section
8.2(b) to the contrary: (i) the Buyer Entity shall provide benefits, privileges
and perquisites to the Non-Domestic Designated Employees covered by the
collective bargaining agreements set forth in Section 8.2(b) of the Seller
Disclosure Schedule (the "COLLECTIVE BARGAINING AGREEMENTS") at the amount and
level of the benefits, privileges and perquisites required to be provided by
the Collective Bargaining Agreements, other than any profit-sharing plan,
pension plan, or equity compensation plan or program provided by such
Collective Bargaining Agreements; provided, however, that nothing set forth in
this Section 8.2(a) shall prohibit the Non-Domestic Designated Employees
subject to such collective bargaining agreements from receiving the Buyer
Options and other compensation provided by Section 8.4 of this Agreement and
(ii) the Buyer Entity shall not amend, terminate or take any other similar
action with respect to the pension plans maintained by the Buyer Entity under
the Laws of Canada for the two-year period following the Non-Domestic Employee
Transition Date that would independently result in a partial wind-up of the
pension plans maintained by the Seller or the Selling Subsidiaries under the
Laws of Canada.
(c) With respect to each Transferred Employee who received
commission payments from the Seller or a Selling Subsidiary prior to the date
of this Agreement, the Buyer Entity shall continue to make such commission
payments to such Transferred Employees on a substantially similar basis;
provided that, the Buyer Entity receives the revenue on which such commission
payments were previously based. The Seller and the Selling Subsidiaries agree
to notify, consult and cooperate with the Buyer prior to effectuating any
increase in the total cash compensation of any Designated Employee after the
date of this Agreement and prior to the Employee Transition Date. Except as set
forth in Section 8.2(c) of the Buyer Disclosure Schedule, the Buyer Entity
shall also provide all Transferred Employees with a 5% increase in base pay
within six months of the Employee Transition Date. The Buyer Entity shall offer
the Transferred Employees benefits, privileges and perquisites without any
waiting periods or limitations or exclusions relating to pre-existing
conditions. For purposes of eligibility and vesting (but not for the purpose of
benefit accrual unless expressly stated in this Article VIII) under any such
benefits, privileges and perquisites offered by the Buyer Entity, the
Transferred Employees shall be credited with service for the period of their
employment with the Seller, the Selling Subsidiaries, the Buyer Entity or with
any other employer, employment with whom the Seller and the Selling
Subsidiaries have credited service for the purposes of eligibility and vesting
in the benefits, privileges and perquisites provided by the Seller and the
Selling Subsidiaries (collectively, "PAST SERVICE"). The
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Seller shall determine, in its sole discretion, the amount of the bonus that
each Transferred Employee shall receive for the period from January 1, 2001
through the applicable Employee Transition Date under the Seller's Variable
Compensation Plan (the "PRO RATA VCP BONUS"). In January 2002, the Buyer Entity
shall pay the Pro Rata VCP Bonus to those Transferred Employees who are
employed by the Buyer on the date that such Pro Rata VCP Bonus is paid, and the
Seller shall reimburse the Buyer Entity for the gross amount of such Pro Rata
VCP Bonus.
(d) The Buyer agrees to review and discuss with the Seller, prior
to the Employee Transition Date, the total compensation (including base pay,
bonus, and equity compensation) provided to the Transferred Employees
designated as senior management and classified as Level 7 or above by the
Seller or any Selling Subsidiary as of the Employee Transition Date and to
provide total compensation to such Transferred Employees no less favorable than
the total compensation provided to similarly situated employees of the Buyer
Entity.
8.3 TRAVEL PRIVILEGE AGREEMENTS
(a) The Buyer Entity shall use commercially reasonable efforts to
enter into agreements (each a "TRAVEL PRIVILEGES CONTINUATION AGREEMENT") as
soon as reasonably practicable after the date of this Agreement, but not later
than 90 calendar days after the Employee Transition Date, with each of American
Airlines, Inc., US Airways, Inc., and Gulf Air Company G.S.C. (the "TRAVEL
PRIVILEGE PROVIDERS") pursuant to which the Travel Privilege Providers shall
provide travel privileges to the Transferred Employees. Notwithstanding the
foregoing, under no circumstances shall the Buyer Entity have any obligation to
offer travel privileges to the Domestic Transferred Employees prior to the
Domestic Employee Transition Date.
(b) The Seller shall reimburse the Buyer Entity for one-third of
the Buyer Entity's costs, other than administrative, labor and programming
costs, of providing travel privileges to the Transferred Employees from
American Airlines, Inc. following the Employee Transition Date through 2004;
provided that, the reimbursement amount shall be calculated utilizing a rate
structure and an employee subsidy percentage which are no higher than the rate
structure and employee subsidy percentage then in effect for the provision of
similar travel privileges from American Airlines, Inc. to the employees of the
Seller. The Seller shall not be responsible for any costs incurred by the Buyer
Entity as a result of any administrative, labor or programming delays in
implementing any Travel Privileges Continuation Agreements.
8.4 STOCK PLANS
(a) For the purposes of this Section 8.4, "IN-THE-MONEY SELLER
OPTIONS" shall mean options to purchase the Seller Parent's Class A common
stock ("SELLER OPTIONS") which have an exercise price less than the price
mutually agreed by the Buyer and the Seller (the "AGREED PRICE"), which shall
not exceed $46.78.
(b) Six months after the Employee Transition Date, the Buyer
Entity shall pay to each Transferred Employee employed by the Buyer Entity on
such date who, as of the Employee
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Transition Date, held unvested In-the-Money Seller Options granted to such
Transferred Employee pursuant to the Seller's Amended and Restated 1996
Long-Term Incentive Plan (the "1996 LTIP") a bonus in an amount determined by
the Seller approximately equal to the excess of the Agreed Price over the
exercise price for such In-the-Money Seller Options which would have vested had
such Transferred Employee remained employed by the Seller on April 1, 2002 (the
"2002 LTIP OPTIONS"); provided, however, that the Buyer Entity shall have no
obligation to pay such bonuses to the Transferred Employees if such
In-the-Money Seller Options become vested for any reason prior to the date
which is six months after the Employee Transition Date. The gross amount of the
bonuses that the Buyer and the Buying Subsidiaries shall pay to all Transferred
Employees pursuant to this Section 8.4(b) shall not exceed $3,300,000,
including all related payroll taxes. The Seller shall reimburse the Buyer
Entity for the gross amount of the bonuses actually paid by the Buyer Entity,
including all related payroll taxes, pursuant to this Section 8.4(b).
(c) One year after the Employee Transition Date, the Buyer Entity
shall pay to each Transferred Employee employed by the Buyer Entity on such
date who, as of the Employee Transition Date, held unvested In-the-Money Seller
Options granted to such Transferred Employee pursuant to the 1996 LTIP a bonus
in an amount determined by the Seller approximately equal to the excess of the
Agreed Price over the exercise price for such In-the-Money Seller Options which
would have vested had such Transferred Employee remained employed by the Seller
on April 1, 2003, other than the 2002 LTIP Options (the "2003 LTIP OPTIONS");
provided, however, that the Buyer Entity shall have no obligation to pay such
bonuses to the Transferred Employees if such In-the-Money Seller Options become
vested for any reason prior to the date which is one year after the Employee
Transition Date. The gross amount that the Buyer and the Buying Subsidiaries
shall pay the Transferred Employees pursuant to this Section 8.4(c) shall not
exceed $2,000,000, excluding any related payroll taxes.
(d) On the Employee Transition Date, or as soon as
administratively practicable thereafter, the Buyer Parent shall grant to the
Transferred Employees who held Seller Options granted pursuant to the 1996 LTIP
which are unvested as of the Employee Transition Date, other than the 2002 LTIP
Options and the 2003 LTIP Options, options to purchase the Buyer Parent's
common stock ("BUYER OPTIONS") pursuant to the 1996 Incentive Plan of the Buyer
Parent (the "BUYER INCENTIVE PLAN"); provided, however, that the Buyer Parent
shall have no obligation to grant such Buyer Options if such unvested Seller
Options become vested as a result of the transactions contemplated by this
Agreement. The number of Buyer Options granted by the Buyer Parent pursuant to
this Section 8.4(d) shall have an aggregate value approximately equal to the
quotient obtained by dividing (i) the product of (x) the number of unvested
Seller Options, other than the 2002 LTIP Options and the 2003 LTIP Options,
which were held by the Transferred Employees as of the Employee Transition Date
and (y) the value of such unvested Seller Options, utilizing the Black-Scholes
valuation methodology set forth in Section 8.4(d) of the Seller Disclosure
Schedule, by (ii) the value of the Buyer Options on the Employee Transition
date, utilizing the Black-Scholes methodology set forth in Section 8.4(d) of
the Seller Disclosure Schedule. The Buyer Options granted pursuant to this
Section 8.4(d) shall (i) have an exercise price equal to the fair market value
of the Buyer Parent's common stock on the date such Buyer Options are granted
(the "GRANT DATE") and (ii) have a vesting schedule and term as
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provided by the Buyer Incentive Plan. Notwithstanding the foregoing, the
aggregate number of Buyer Options that the Buyer Parent shall grant to the
Transferred Employees pursuant to this Section 8.4(d) shall be no less than
250,000 or more than 409,000 (in each case, as adjusted for stock splits, stock
combinations and other similar transactions), as determined by the Seller in
its sole discretion.
(e) Effective as of the Employee Transition Date, outstanding
awards under the Seller's 1999-2001 Performance Share Program and the Seller's
2000-2002 Performance Share Program ("SELLER PERFORMANCE SHARES") granted to
the Transferred Employees under the 1996 LTIP which have not been paid out as
of the Employee Transition Date shall be treated as if such Transferred
Employees had been involuntarily terminated by the Seller, not for cause, and
shall be paid out at the end of the applicable measurement period in accordance
with the 1996 LTIP. On the Employee Transition Date, or as soon as
administratively practicable thereafter, the Buyer Parent shall grant to the
Transferred Employees who held unvested Seller Performance Shares as of the
Employee Transition Date Buyer Options pursuant to the Buyer Incentive Plan;
provided, however, that the Buyer Parent shall have no obligation to grant such
Buyer Options if such unvested Seller Performance Shares become vested as a
result of the transactions contemplated by this Agreement. The number of Buyer
Options granted by the Buyer Parent pursuant to this Section 8.4(e) shall have
an aggregate value approximately equal to the quotient obtained by dividing (i)
the product of (x) the number of unvested Seller Performance Shares held by the
Transferred Employees as of the Employee Transition Date, (y) the performance
ratio with respect to such Seller Performance Shares as provided by the 1996
LTIP, and (z) the Agreed Price by (ii) the value of the Buyer Options on the
Employee Transition date, utilizing the Black-Scholes methodology set forth in
Section 8.4(e) of the Seller Disclosure Schedule. The Buyer Options granted
pursuant to this Section 8.4(e) shall (i) have an exercise price equal to the
fair market value of the Buyer Parent's common stock on the Employee Transition
Date and (ii) have vesting schedule and term as provided in the Buyer Incentive
Plan. Notwithstanding the foregoing, the aggregate number of Buyer Options that
the Buyer Parent shall grant to the Transferred Employees pursuant to this
Section 8.4(e) shall not exceed 42,000 (as adjusted for stock splits, stock
combinations and other similar transactions).
(f) Six months after the Employee Transition Date, the Buyer
Entity shall pay to each Transferred Employee employed by the Buyer Entity on
such date who, as of the Employee Transition Date, held unvested In-the-Money
Seller Options granted to such Transferred Employee pursuant to the Seller's
2000 Stock Option Plan (the "2000 SOP") a bonus in an amount determined by the
Seller approximately equal to the excess of the Agreed Price over the exercise
price for such In-the-Money Seller Options which would have vested had such
Transferred Employee remained employed by the Seller on April 1, 2002 (the
"2002 SOP OPTIONS"); provided, however, that the Buyer Entity shall have no
obligation to pay such bonuses to the Transferred Employees if such
In-the-Money Seller Options become vested for any reason prior to the date
which is six months after the Employee Transition Date. The gross amount of the
bonuses that the Buyer and the Buying Subsidiaries shall pay to all Transferred
Employees pursuant to this Section 8.4(f) shall not exceed $2,700,000,
including all related payroll taxes. The Seller shall reimburse the Buyer
Entity for the gross amount of the bonuses actually paid by the Buyer Entity,
including all related payroll taxes pursuant to this Section 8.4(f).
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(g) One year after the Employee Transition Date, the Buyer
Entity shall pay to each Transferred Employee employed by the Buyer Entity on
such date who, as of the Employee Transition Date, held unvested In-the-Money
Seller Options granted to such Transferred Employee pursuant to the 2000 SOP a
bonus in an amount determined by the Seller approximately equal to the excess
of the Agreed Price over the exercise price for such In-the-Money Seller
Options which would have vested had such Transferred Employee remained
employed by the Seller on April 1, 2003, other than the 2002 SOP Options (the
"2003 SOP OPTIONS"); provided, however, that the Buyer Entity shall have no
obligation to pay such bonuses to the Transferred Employees if such
In-the-Money Seller Options become vested for any reason prior to the date
which is one year after the Employee Transition Date. The gross amount that
the Buyer and the Buying Subsidiaries shall pay the Transferred Employees
pursuant to this Section 8.4(g) shall not exceed $2,000,000 in the aggregate,
excluding any related payroll taxes. Upon receipt of instructions from the
Seller, the Buyer Entity shall reallocate the aggregate amount of the bonus
provided by this Section 8.4(g) among the Transferred Employees in accordance
with such instructions.
(h) On the Employee Transition Date, or as soon as
administratively practicable thereafter, the Buyer Parent shall grant to each
Transferred Employee who held Seller Options granted to each Transferred
Employee under the 2000 SOP which were unvested as of the Employee Transition
Date, other than the 2002 SOP Options and the 2003 SOP Options, Buyer Options
pursuant to the 2000 Nonqualified Stock Option Plan of the Buyer Parent (the
"BUYER GLOBAL SHARE PLAN"); provided, however, that the Buyer Parent shall
have no obligation to grant such Buyer Options if such unvested Seller Options
become vested as a result of the transactions contemplated by this Agreement.
The number of Buyer Options granted pursuant to this Section 8.4(h) shall
equal the number of unvested Seller Options as of the Employee Transition Date
less the number of 2002 SOP Options and 2003 SOP Options. The Buyer Options
granted pursuant to this Section 8.4(h) shall (i) have an exercise price equal
to the fair market value of the Buyer Parent's common stock on the Grant Date
and (ii) have a vesting schedule and term as provided in the Buyer Global
Share Plan. The total number of Buyer Options that the Buyer Parent shall
grant to the Transferred Employees pursuant to this Section 8.4(h) shall equal
503,000 (as adjusted for stock splits, stock combinations and other similar
transactions); provided that, upon receipt of instructions from the Seller,
the Buyer Parent shall reallocate the aggregate number of Buyer Options to be
granted pursuant to this Section 8.4(h) among the Transferred Employees in
accordance with such instructions.
(i) Notwithstanding anything to the contrary provided in this
Section 8.4, the Transferred Employees designated as senior management and
classified as Level 7 or above by the Seller or any Selling Subsidiary as of
the Employee Transition Date shall be eligible to participate in the Buyer
Parent's option grant in the first quarter of 2002.
(j) After the Employee Transition Date, the Buyer Entity shall
provide to the Transferred Employees equity-based compensation equivalent to
that which the Buyer Entity provides similarly situated employees of the Buyer
Entity.
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8.5 PENSION PLANS
After the Domestic Employee Transition Date, the Domestic Transferred
Employees shall be eligible to participate in the Buyer's Retirement Plan (the
"BUYER RETIREMENT PLAN"). The Buyer Entity shall take into account each Domestic
Transferred Employee's Past Service for purposes of eligibility, vesting and
future benefit accrual in the Buyer Retirement Plan. The Buyer Entity shall use
each Domestic Transferred Employee's age as of the first date for which such
Domestic Transferred Employee is credited with Past Service for the purpose of
determining the Mid-Career Adjustment provided by the Buyer Retirement Plan with
respect to such Domestic Transferred Employees.
8.6 401(k) PLAN
As soon as practicable after the Employee Transition Date, the Seller
shall cause to be transferred all account balances and all outstanding loan
balances of the Domestic Transferred Employees from the Seller 401(k) Plan to
the Buyer 401(k) Plan. The Buyer 401(k) Plan shall provide that (i) such
Domestic Transferred Employees shall be eligible to participate in the Buyer
401(k) Plan as of the Employee Transition Date and (ii) the Buyer Entity shall
take into account each Domestic Transferred Employee's Past Service for purposes
of eligibility and vesting in the Buyer 401(k) Plan. Domestic Transferred
Employees shall be required to sign new salary deferral agreements with respect
to the Buyer 401(k) Plan.
8.7 RETIREE MEDICAL PLAN
The Buyer agrees that, upon and following the Domestic Employee
Transition Date, the Buyer Entity shall sponsor a retiree medical plan (the
"BUYER RETIREE MEDICAL PLAN") with respect to the Domestic Transferred Employees
who participate in the Sabre Inc. Retiree Medical Plan (the "SELLER RETIREE
MEDICAL PLAN") prior to the Domestic Employee Transition Date with benefits and
privileges which are equivalent to those provided to similarly situated
employees of the Buyer Entity. The Buyer Entity shall take into account each
Domestic Transferred Employee's Past Service for purposes of eligibility in the
Buyer Retiree Medical Plan. The Buyer Retiree Medical Plan may include such
other terms and provisions as shall be determined by the Buyer in its discretion
to the extent not inconsistent with applicable Law and this Section 8.7.
8.8 FLEXIBLE BENEFIT PLANS
Following the Domestic Employee Transition Date, the Buyer Entity shall
provide the Domestic Transferred Employees with the opportunity to participate
in the Buyer Entity flexible benefit plans pursuant to the terms of such plans
as of the Domestic Employee Transition Date.
8.9 RETENTION BONUS PLAN
The Buyer shall adopt, as of the Closing Date, a retention bonus plan
mutually satisfactory to the Buyer and the Seller which is intended to encourage
the continued employment with the Buyer of those Transferred Employees
designated as "SIGNIFICANT
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PERSONNEL" (by virtue of their job skills or position) by providing such
Transferred Employees with a bonus equal to an amount which will vary from
approximately 15% to 30% of such Transferred Employee's base pay, depending
upon the criticality of such Transferred Employee's position. Such Transferred
Employees must be employed by the Buyer Entity on the first anniversary of the
Employee Transition Date to be entitled to receive the retention bonus
provided by this Section 8.9. In connection with the adoption of such
retention bonus plan, the Seller agrees to (i) assist the Buyer in identifying
those Transferred Employees who the Seller believes to be "Significant
Personnel," and (ii) reimburse the Buyer Entity for all retention bonus
payments paid to the Transferred Employees, including all related payroll
taxes, pursuant to such retention bonus plan, the gross amount of which shall
not exceed $6,500,000. Notwithstanding the foregoing, under no circumstances
shall more than 15% of the Transferred Employees be classified as "Significant
Personnel."
8.10 VACATION
After the Domestic Employee Transition Date, the Buyer Entity shall
provide the Domestic Transferred Employees with vacation benefits pursuant to
the vacation policy of the Buyer; provided, however, that the Domestic
Transferred Employees shall be given credit for their Past Service for the
purpose of determining vacation benefits under such policy; provided further
that: (i) all vacation benefits for the calendar year 2001 accrued by the
Domestic Transferred Employees (regardless of their respective dates of hire)
that are unused prior to the Domestic Employee Transition Date shall be assumed
by the Buyer Entity; and (ii) all vacation benefits for the calendar year 2002
accrued by the Domestic Transferred Employees hired prior to January 1, 1998
shall be retained by the Seller. The Buyer Entity shall also honor all vacation
benefits granted to the Domestic Transferred Employees pursuant to special
arrangements with the Seller or a Selling Subsidiary. The Seller will transfer a
record of the number of unused vacation days accrued by or granted to each
Domestic Transferred Employee through the Domestic Employee Transition Date for
the calendar year 2001. Vacation days purchased by the Domestic Transferred
Employees that are not used prior to the Domestic Employee Transition Date shall
not be assumed by the Buyer Entity.
8.11 RELOCATION ASSISTANCE
The Buyer Entity shall offer relocation assistance to each Transferred
Employee who, as a result of the Buyer Entity's offer of employment, is required
to relocate a distance of more than 50 miles from such Transferred Employee's
current work location. Such relocation assistance shall be equal to the
relocation assistance provided to employees pursuant to the Buyer Entity's
relocation assistance program.
8.12 SEVERANCE
(a) During the 12-month period following the Domestic Employee
Transition Date, the Buyer Entity shall provide the Domestic Transferred
Employees with severance benefits and outplacement services equal to the
greater of (i) the severance benefits and outplacement services provided to
similarly situated employees of the Buyer Entity pursuant to the Buyer
Entity's programs and (ii) the severance benefits and outplacement services
provided to similarly situated
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employee of the Seller pursuant to the Seller's severance policy and
outplacement programs, each as in effect as of the date of this Agreement;
provided that the terms of the Buyer Entity's programs shall determine the
eligibility of the Domestic Transferred Employees for such benefits. For
purposes of eligibility, vesting and benefit accrual under such severance
policies and programs, the Domestic Transferred Employees shall be given
additional credit for their Past Service.
(b) After the 12-month period following the Domestic Employee
Transition Date, the Buyer Entity shall provide the Domestic Transferred
Employees with severance benefits and outplacement services equal to those
provided to similarly situated employees of the Buyer Entity pursuant to the
Buyer Entity's programs; provided that for purposes of eligibility, vesting
and benefit accrual under such severance programs, the Domestic Transferred
Employees shall continue to be given additional credit for their Past Service.
8.13 EXPENSES
Other than as provided in this Article VIII, the Buyer shall be solely
responsible for any costs or expenses incurred by the Buyer and the Buying
Subsidiaries in connection with the offer to employ and employment of the
Designated Employees. Notwithstanding the foregoing, the Seller shall be
responsible for any travel costs or expenses incurred prior to the Employee
Transition Date by the Designated Employees or other employees of the Seller in
connection with Buyer Entity's offer to employ the Designated Employees. The
Buyer shall reimburse the Seller as soon as commercially practicable the amount
of any salary or wages and benefit costs incurred by the Seller, if any, with
respect to the Transferred Employees during the period commencing immediately
following the Closing Date and ending on the Employee Transition Date. The Buyer
shall reimburse the Seller, as provided in the Subcontracting Agreement, the
amount of any salary or wages and benefit costs incurred by the Seller with
respect to the Seconded Employees during the Secondment Period.
8.14 WARN ACT
The Buyer covenants that there will be no employment losses as a
consequence of the transactions contemplated by this Agreement that might
trigger obligations under the WARN Act, or under any similar provisions of Law
("WARN OBLIGATIONS"). To the extent that any WARN Obligations arise as a
consequence of a transaction contemplated by this Agreement, it is agreed that
the Seller shall be responsible for any WARN Obligations arising as a result of
any employment losses from the Seller occurring prior to the Closing Date,
except to the extent that such WARN Obligations are a result of the offers of
employment made by the Buyer Entity to the Transferred Employees which WARN
Obligations shall be the sole responsibility of the Buyer, and the Buyer shall
be responsible for any WARN Obligations arising as a result of any employment
losses occurring upon or following the Closing Date. Further, for the first 90
days following the Closing Date, the Buyer shall not engage in any mass layoff,
plant closing or other action that might trigger WARN Obligations.
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ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE SELLER PARENT
The obligation of the Seller and the Seller Parent to consummate the
sale of the Transferred Assets pursuant to this Agreement shall be subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions, unless waived in writing by the Seller:
9.1 REPRESENTATIONS AND WARRANTIES TRUE
The representations and warranties contained in Article VI shall be
true and correct at and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall be true and correct only as
of such specified date), except where the failure of such representations and
warranties to be so true and correct does not have and is not reasonably likely
to have a Buyer Material Adverse Effect, and except for changes expressly
contemplated by the terms of this Agreement.
9.2 PERFORMANCE
The Buyer and the Buyer Parent shall have performed and complied in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by it at or prior to the
Closing.
9.3 ABSENCE OF LITIGATION
On the Closing Date, there shall be (i) no injunction, writ,
preliminary restraining order, or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein or in
any other Transaction Document not be consummated as so provided and (ii) no
pending, or written threat of, Litigation brought by the United States Federal
Trade Commission or the United States Department of Justice which seeks to
prohibit, delay or challenge the validity of any of the transactions provided
for herein or in any other Transaction Document.
9.4 GOVERNMENTAL CONSENTS; HSR ACT WAITING PERIODS
All governmental Consents identified in Section 9.4 of the Seller
Disclosure Schedule (the "REQUIRED GOVERNMENTAL CONSENTS") shall have been
obtained and remain in full force and effect, and all applicable waiting periods
in respect of the transactions contemplated by this Agreement under the HSR Act
shall have expired or been terminated.
9.5 CERTIFICATES
The Buyer and the Buyer Parent shall have furnished the Seller with
such certificates of their officers and others to evidence compliance with the
conditions set forth in this Article IX and the authority of the Buyer and the
Buyer Parent to enter into this Agreement and the other Transaction Documents as
may be reasonably requested by the Seller.
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9.6 DELIVERIES
The Seller shall have received from or on behalf of the Buyer and the
Buyer Subsidiaries delivery of all the items listed in Section 4.2(b).
9.7 CONSENT LETTER ACKNOWLEDGEMENT
All conditions in Sections I and II of the Consent Letter shall have
been fulfilled or waived, and American Airlines and the Seller shall have
executed and delivered to one another a mutual written acknowledgement to that
effect.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE BUYER PARENT
The obligation of the Buyer and the Buyer Parent to consummate the
purchase of the Transferred Assets and to assume the Assumed Liabilities
pursuant to this Agreement shall be subject to the satisfaction, at or prior to
the Closing, of each of the following conditions, unless waived in writing by
the Buyer:
10.1 REPRESENTATIONS AND WARRANTIES TRUE
The representations and warranties contained in Article V shall be true
and correct at and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall be true and correct only as
of such specified date), except where the failure of such representations and
warranties to be so true and correct does not have and is not reasonably likely
to have a Seller Material Adverse Effect, and except for changes expressly
contemplated by the terms of this Agreement.
10.2 PERFORMANCE
The Seller and the Seller Parent shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be performed or complied with by it at or prior to the
Closing.
10.3 ABSENCE OF LITIGATION
On the Closing Date, there shall be (i) no injunction, writ,
preliminary restraining order, or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein or in
any other Transaction Document not be consummated as so provided and (ii) no
pending, or written threat of, Litigation brought by the United States Federal
Trade Commission or the United States Department of Justice which seeks to
prohibit, delay or challenge the validity of any of the transactions provided
for herein or in any other Transaction Document.
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10.4 GOVERNMENTAL CONSENTS; HSR ACT WAITING PERIODS
All Required Governmental Consents shall have been obtained and remain
in full force and effect, and all applicable waiting periods in respect of the
transactions contemplated by this Agreement under the HSR Act shall have expired
or been terminated.
10.5 CERTIFICATES
The Seller and the Seller Parent shall have furnished the Buyer with
such certificates of their officers and others to evidence compliance with the
conditions set forth in this Article X and the authority of the Seller and the
Seller Parent to enter into this Agreement and the other Transaction Documents
as may be reasonably requested by the Buyer.
10.6 DELIVERIES
The Buyer and the Buying Subsidiaries shall have received from or on
behalf of the Seller and the Selling Subsidiaries delivery of all the items
listed in Section 4.2(a).
10.7 CONSENT LETTER ACKNOWLEDGEMENT
All conditions in Sections I and II of the Consent Letter have been
fulfilled or waived, and the Seller shall have delivered to the Buyer true and
correct copies of a mutual written acknowledgement by and between American
Airlines and the Seller to that effect. In addition, the Other Schedules (as
defined in the Consent Letter) to the Third Amended ITSA shall have been
completed to the reasonable satisfaction of the Buyer.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the parties hereto contained
herein shall survive the Closing and shall remain in full force and effect until
the second anniversary of the Closing Date; provided, however, that each
representation or warranty set forth in Sections 5.6, 5.13, 5.14 and 5.16 shall
remain in full force and effect until the statute of limitations applicable to
the subject matter of such representation or warranty (including any waivers)
has expired. Any right of indemnification pursuant to this Article XI with
respect to a claimed breach of (i) a representation or warranty shall expire at
the date of termination of the representation or warranty claimed to be
breached, (ii) Section 7.1 shall expire one year after the Closing Date and
(iii) any other covenant or agreement (other than with respect to any Retained
Liability or Assumed Liability) shall expire four years after the date on which
performance of such covenant or agreement was required (in each case, the
"TERMINATION DATE"), unless in each case on or prior to the Termination Date a
Claim (as defined below) has been made to the party from whom indemnification is
sought. Provided that a Claim is timely made, it may continue to be asserted
beyond the Termination Date of the representation, warranty, covenant or
agreement to which such Claim relates. A "CLAIM" means a written notice
asserting a breach of a representation,
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xxxxxxxx, xxxxxxxx, agreement or obligation specified in this Agreement, which
shall reasonably set forth, in light of the information then known to the
party giving such notice, a reasonably detailed description of and estimate
(but only if then reasonable to make) of the amount involved in such breach.
11.2 INDEMNIFICATION
(a) After the Closing Date, the Seller and the Seller Parent
jointly and severally hereby agree to defend, indemnify and hold harmless the
Buyer, the Buyer Parent, their Affiliates and their respective successors and
assigns (collectively, the "BUYER GROUP"), as the case may be, from and
against all past, present and future demands, claims, suits, actions or causes
of action, assessments, losses, damages, liabilities, fines, judgments, costs
and expenses, including interest, penalties and reasonable attorneys' and
consultants' fees, disbursements and expenses (collectively, "DAMAGES")
asserted against, imposed upon or incurred by any member of the Buyer Group by
reason of or resulting from: (i) a breach of any representation or warranty of
the Seller or the Seller Parent contained in this Agreement or any certificate
delivered pursuant to Section 4.2(a); (ii) a breach of any covenant or
agreement of the Seller or the Seller Parent contained in Section 7.1; (iii) a
breach of any covenant or agreement of the Seller or the Seller Parent
contained in this Agreement other than those contained in Section 7.1; (iv)
the Retained Liabilities; (v) any noncompliance with any bulk sales Laws in
connection with the transactions contemplated by this Agreement; (vi)
Identified Environmental Conditions; and (vii) the Buyer Group's obligations
under (1) Section 19.12 of the Third Amended ITSA, (2) the last sentence of
Section 10.4 of the Third Amended ITSA, (3) the last sentence of Section 14.1
of the Third Amended ITSA, and (4) the last proviso of Section 24.1(C) of the
Third Amended ITSA (or any provisions contained in any amendment to, or
replacement for, the Third Amended ITSA to the same effect as the provisions
set forth in clauses (1) through (4)) (collectively, the "TRANSITION
PROVISIONS"); provided that the Seller and the Seller Parent shall not be
required to defend, indemnify or hold harmless the Buyer Group under this
clause (vii) with respect to any breach by the Buyer Group (or any member
thereof or successor thereto) of any provision of the Third Amended ITSA other
than the Transition Provisions. Any and all "SPECIFIED CLAIMS" (as defined in
the Alignment of Interests Agreement) shall be made solely under the Alignment
of Interests Agreement and may not be made under this Article XI.
(b) After the Closing Date, the Buyer and the Buyer Parent
jointly and severally hereby agree to defend, indemnify and hold harmless the
Seller, the Seller Parent, their Affiliates and their respective successors
and assigns (collectively, the "SELLER GROUP") from and against all Damages
asserted against, imposed upon or incurred by any member of the Seller Group
by reason of or resulting from: (i) a breach of any representation or warranty
of the Buyer or the Buyer Parent contained in this Agreement or any
certificate delivered pursuant to Section 4.2(b); (ii) a breach of any
covenant or agreement of the Buyer or the Buyer Parent contained in this
Agreement; and (iii) the Assumed Liabilities.
(c) The parties agree (i) that there are other Articles in this
Agreement which set forth certain covenants, agreements and obligations
expressly requiring the payment of money or certain reimbursements, and (ii)
that in the event of a Claim arising from an alleged failure to
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make such payments and/or reimbursements, the exclusive remedy for such Claim
is provided by this Article XI; provided, however, that there shall not be any
duplication of reimbursement or indemnification with respect to any such
matter.
11.3 THIRD PARTY CLAIMS
The obligations of the parties provided for under Section 11.2 in
respect of any claims made or asserted by a third party ("THIRD PARTY CLAIMS")
shall be performed in accordance with the following procedures:
(a) Each Person seeking indemnification under Section 11.2 (each
an "INDEMNIFIED PARTY") shall give the party from whom it is seeking
indemnification hereunder (each an "INDEMNIFYING PARTY") written notice as
promptly as reasonably practicable after the written assertion of any Third
Party Claim or commencement of any action, suit or proceeding in respect
thereof describing in reasonable detail the nature of the Third Party Claim to
the extent then known to the Indemnified Party; provided, however, that if an
Indemnified Party fails to give the Indemnifying Party such written notice (a
"THIRD PARTY CLAIM NOTICE"), the Indemnifying Party shall not be relieved of
its obligations under this Article XI in respect of such Third Party Claim
except to the extent that the Indemnifying Party is prejudiced thereby
(whether as a result of the forfeiture of substantive defenses or otherwise).
(b) Upon receipt of any Third Party Claim Notice, the
Indemnifying Party may undertake the defense, compromise and settlement
thereof by representatives of its own choosing reasonably acceptable to the
Indemnified Party. The assumption of the defense, compromise and settlement of
any such Third Party Claim by the Indemnifying Party will not be an
acknowledgment of the obligation of the Indemnifying Party to indemnify the
Indemnified Party with respect to such claim. If the Indemnified Party desires
to participate in, but not control, any such defense, compromise and
settlement, it may do so at its sole cost and expense. If, however, the
Indemnifying Party fails or refuses to undertake the defense of such Third
Party Claim within ten business days after notice of such Third Party Claim
has been given to the Indemnifying Party, the Indemnified Party will have the
right to undertake the defense, compromise and settlement of such claim with
counsel of its own choosing. In the circumstances described in the immediately
preceding sentence, the Indemnified Party shall, upon undertaking the defense
of such claim, provide notice thereof to the Indemnifying Party, which shall
be deemed a claim for indemnification that is not a Third Party Claim for the
purposes of the procedures set forth herein. If the Indemnifying Party
undertakes the defense of a Third Party Claim and if in the reasonable opinion
of counsel to the Indemnified Party there may exist defenses available to the
Indemnified Party that are different from or in addition to those available to
the Indemnifying Party or if the Indemnified Party otherwise believes that its
interests would be adversely affected by the Indemnifying Party assuming sole
control of the defense of such Third Party Claim, the Indemnified Party shall
be entitled to retain separate counsel to participate in (and the Indemnifying
Party shall cooperate with the Indemnified Party so as to allow it to
participate in and jointly control) the defense of such Third Party Claim; and
the Indemnifying Party shall reimburse the Indemnified Party for the
reasonable fees and expenses of such separate counsel if
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and only if it is finally determined that the Indemnified Party is entitled to
indemnification for such Third Party Claim pursuant to this Article XI.
(c) No settlement of a Third Party Claim involving the asserted
liability of the Indemnifying Party under this Article XI shall be made
without the prior written consent by or on behalf of the Indemnifying Party,
which consent shall not unreasonably be withheld, conditioned or delayed. If
the Indemnifying Party assumes the defense of a Third Party Claim, (i) no
compromise or settlement thereof may be effected by the Indemnifying Party
without the Indemnified Party's prior written consent (which consent shall not
unreasonably be withheld, conditioned or delayed) unless (A) there is no
finding or admission of any violation of law by or on behalf of the
Indemnified Party, (B) the sole relief provided is monetary damages that are
paid in full by the Indemnifying Party and (C) the compromise or settlement
includes, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release, in form and substance
reasonably satisfactory to the Indemnified Party, from all liability in
respect of such Third Party Claim, and (ii) the Indemnified Party shall have
no liability with respect to any compromise or settlement thereof affected
without its consent.
(d) The Indemnifying Party will provide the Indemnified Party
with access to all records, documents and personnel of the Indemnifying Party
to the extent reasonably related to any Third Party Claim. The Indemnified
Party will provide the Indemnifying Party with access to all records,
documents and personnel of the Indemnified Party to the extent reasonably
related to any Third Party Claim. All of such records, documents and personnel
shall be subject to the confidentiality provisions of the Outsourcing
Agreement.
11.4 LIMITATION OF LIABILITY
(a) No indemnification shall be required to be made by the
Seller or the Seller Parent under Section 11.2(a)(i) or Article II of the
Alignment of Interests Agreement (other than the Make Whole Payment (as
defined in such Agreement) or any payment under Section 2.1(e)(iii) thereof)
unless the aggregate amount of Damages indemnified against under such Section
and Article II of such Agreement (excluding the Make Whole Payment or any
payment under Section 2.1(e)(iii) thereof) exceeds $4,000,000 in the aggregate
and indemnification shall be made by the Seller and/or the Seller Parent only
to the extent of such excess over $4,000,000. In no event will the aggregate
liability of the Seller and the Seller Parent for indemnification under
Sections 11.2(a)(i), 11.2(a)(ii) and 11.2(a)(vi) and Article II of the
Alignment of Interests Agreement (excluding the Make Whole Payment or any
payment under Section 2.1(e)(iii) thereof) exceed $200,000,000.
(b) No indemnification shall be required to be made by the Buyer
or the Buyer Parent under Section 11.2(b)(i) unless the aggregate amount of
Damages indemnified against under such Sections exceeds $4,000,000 in the
aggregate and indemnification shall be made by the Buyer and/or the Buyer
Parent only to the extent of such excess over $4,000,000. In no event will the
aggregate liability of the Buyer and the Buyer Parent for indemnification
under Section 11.2(b)(i) exceed $200,000,000.
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11.5 SET-OFF RIGHTS
Notwithstanding anything to the contrary in this Agreement, in no event
shall any party who is asserting rights to indemnification under this Article XI
have the right to set off amounts asserted to be owed to such party under this
Article XI against any payment obligation that such party may have to the party
from whom indemnification is sought unless and until (and then only to the
extent that) there is a final and non-appealable determination in favor of the
party asserting such indemnification rights, and any and all set off rights to
the contrary that may exist under common law, by statute or otherwise are hereby
unconditionally waived.
11.6 SUBROGATION
Upon payment in full of any Claim for indemnification pursuant to this
Article XI or the payment of any judgment or settlement with respect to a Third
Party Claim, the Indemnifying Party shall be subrogated to the extent of such
payment to the rights of the Indemnified Party against any Person with respect
to the subject matter of such Claim or Third Party Claim.
11.7 EXCLUSIVE REMEDY
If the Closing occurs, except for Claims relating to actual fraud and
except for equitable remedies, the remedies provided in this Article XI
constitute the sole and exclusive remedies between the parties for Damages or
any other Claims arising under this Agreement or under any other Transaction
Document (other than the Trinity Lease Agreement, the Shared Facilities
Agreement, the Technology License Agreement, the Outsourcing Agreement, the
Transition Agreement, the Subcontracting Agreement, the Commercial Agreement,
the Revenue Sharing Agreement, the TMD Marketing Agreement and the Alignment of
Interests Agreement), including Claims based upon the inaccuracy, untruth,
incompleteness or breach of any representation or warranty contained in this
Agreement or in such other Transaction Documents or based upon the failure to
perform any covenant, agreement or undertaking contained in this Agreement or in
such other Transaction Documents.
11.8 DISPUTE RESOLUTION
In the event of any dispute, controversy or claim among the parties
hereto arising hereunder or relating hereto (including disputes as to whether
any dispute is subject to arbitration) (each a "DISPUTE"), such Dispute shall be
submitted to arbitration in accordance with the provisions of this Section 11.8.
Other than those matters involving specific performance, injunctive or other
extraordinary relief or any action necessary to enforce the award of the
arbitrators, the parties agree that the provisions of this Section 11.8 are the
exclusive remedy for the parties in respect of a Dispute and are a complete
defense to any suit, action or other proceeding instituted in any court or
before any administrative tribunal with respect to any Dispute:
(a) The Buyer Parent and Buyer on the one hand or the Seller
Parent and Seller on the other hand may demand arbitration by giving the
other party written notice to such effect, which notice shall describe, in
reasonable detail, the facts and legal grounds forming the basis for the
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filing party's request for relief and shall include a statement of the total
amount of damages claimed, if any, and any other remedy sought by that party.
The arbitration shall be held before a panel of three arbitrators in Dallas,
Texas.
(b) Within 30 days after the other party's receipt by a party of
such demand, each party shall select one arbitrator and those two arbitrators
shall select a third arbitrator. If the two arbitrators selected by the
parties are unable to agree on the third arbitrator within ten days, the
third arbitrator shall be selected by the American Arbitration Association
(the "AAA"). In any event, each arbitrator shall have a background in, and
knowledge of, the information technology services industry and shall be an
appropriate person based on the nature of the Dispute. If persons with such
industry experience are not available, the remaining arbitrators shall be
chosen from the large and complex case panel or, if appropriate persons are
not available from such panel, the retired federal judges pool.
(c) The arbitration shall be governed by the Commercial
Arbitration Rules of the AAA, except as expressly provided in this Section
11.8. However, the arbitration shall be administered by any organization
mutually agreed to in writing by the parties. If the parties are unable to
agree on the organization to administer the arbitration, it shall be
administered by the AAA under its procedures for large and complex cases.
(d) Discovery shall be limited to the request for and production
of documents, depositions and interrogatories. Interrogatories shall be
allowed only as follows: a party may request the other party to identify by
name, last known address and telephone number (i) all persons having
knowledge of facts relevant to the Dispute and a brief description of that
person's knowledge, (ii) any experts who may be called as an expert witness,
the subject matter about which the expert is expected to testify, the mental
impressions and opinions held by the expert and the facts known by the expert
(regardless of when the factual information was acquired) which relate to or
form the basis for the mental impressions and opinions held by the expert and
(iii) any experts who have been used for consultation, but who are not
expected to be called as an expert witness, if such consulting expert's
opinions or impressions have been reviewed by an expert witness. All
discovery shall be guided by the Federal Rules of Civil Procedure. All issues
concerning discovery upon which the parties cannot agree shall be submitted
to the arbitrators for determination.
(e) In rendering an award, the arbitrators shall determine the
rights and obligations of the parties according to the substantive and
procedural laws of the State of Texas.
(f) Each of the Buyer and the Seller agree that it shall use
commercially reasonable efforts to join (and will allow the other party to
join) any third party that the parties have agreed is indispensable to the
arbitration. If any such third party does not agree to be joined, the
arbitration shall proceed nonetheless.
(g) The decision of, and award rendered by, the arbitrators shall
be final and binding on the parties and shall not be subject to appeal. In no
event shall an award rendered by the arbitrators be inconsistent with the
terms of this Agreement, including Article XI. Judgment on the award may be
entered in and enforced by any court of competent jurisdiction. Each party
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shall bear its own costs and expenses (including filing fees) with respect to
the arbitration, including one-half of the fees and expenses of the
arbitrators.
ARTICLE XII
TERMINATION
12.1 METHODS OF TERMINATION
This Agreement may be terminated and the transactions contemplated
herein may be abandoned at any time prior to the Closing as follows:
(a) by mutual agreement of the Seller and the Buyer;
(b) by either the Seller or the Buyer in the event the Closing
shall not have occurred on or before August 31, 2001 or such later date to
which the Closing may be extended pursuant to Section 4.1(b) (the "OUTSIDE
TERMINATION DATE"), if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any material
breach of any covenant or other agreement in this Agreement by the party (or
any Affiliate thereof) electing to terminate pursuant to this Section 12.1;
(c) by either the Seller or the Buyer, if any court or other
governmental entity of competent jurisdiction shall have issued or entered an
order, writ, injunction or decree which shall have the effect of prohibiting
or making illegal the transactions contemplated by this Agreement and such
order, writ, injunction or decree shall have become final and non-appealable;
(d) by either the Seller or the Buyer, if there shall have
occurred a breach of any representation, warranty, covenant or agreement
contained in this Agreement that would give rise to the failure of the
conditions to the obligations of such party or parties set forth in Article
IX or Article X, as the case may be, and such breach is (i) not capable of
being cured prior to the Closing or (ii) is capable of being cured prior to
the Closing but the breaching party has failed to take any action to cure
such breach for a period of 30 consecutive days after receiving notice of
such breach from the non-breaching party or parties; provided, however, that
the Buyer or the Seller shall only be entitled to terminate this Agreement
pursuant to this Section 12.1(d) if such party (or any Affiliate thereof) is
not in breach in any material respect in the performance of its obligations
under this Agreement; or
(e) by either party if one or more Identified Environmental
Conditions individually or in the aggregate would reasonably be expected to
exceed $100,000,000 in costs, liabilities and expenses to the owner or
operator of the Premises attributable to compliance, remediation, claims or
enforcement under Environmental Laws or as a result of third-party claims
relating thereto.
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12.2 PROCEDURE UPON TERMINATION
The party desiring to terminate this Agreement pursuant to Section 12.1
shall give written notice to the other party of such desire. If the transactions
contemplated by this Agreement are terminated and/or abandoned as provided
herein:
(a) if and to the extent requested, each party will destroy or
redeliver to the party furnishing the same all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof;
(b) this Agreement shall forthwith become void and there shall be
no liability or obligation on the part of any party hereto except (i) with
respect to this Section 12.2, Sections 7.5 and 7.12, and Article VIII, (ii)
with respect to the provisions of the Transition Agreement and the parties'
rights and obligations thereunder which are expressly stated therein to
survive the termination of this Agreement and (iii) to the extent that such
termination results from the willful breach by such party of any of its
covenants or agreements contained in this Agreement; and
(c) no party hereto and none of their respective directors,
officers, stockholders, Affiliates or controlling persons shall have any
liability or further obligation to any other party to this Agreement except
as stated in subparagraphs (a) and (b) of this Section 12.2.
12.3 EXCLUSIVE REMEDIES PRIOR TO CLOSING
Prior to the Closing, each party agrees that its sole remedies against
the other parties for breach of any representation, warranty, covenant or
agreement contained in this Agreement (other than a covenant or agreement
contained in Sections 7.5 or 7.12 or the Transition Agreement and other than any
willful breach of any covenant or agreement contained herein) shall be to elect
to (i) terminate this Agreement in accordance with Section 12.1 or (ii) xxx for
specific performance or other appropriate equitable remedies. In no event shall
either party be entitled to monetary damages prior to the Closing for the breach
by the other of any representation, warranty, covenant or agreement contained in
this Agreement (other than a covenant or agreement contained in Section 7.5 or
7.12 or the Transition Agreement and other than any willful breach of any
covenant or agreement contained in this Agreement).
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 EXPENSES
Except as otherwise provided in this Agreement or the Transition
Agreement, whether or not the transactions contemplated hereby are consummated,
all expenses in connection with such transactions will be paid by the party
incurring said expenses.
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13.2 WAIVER OF COMPLIANCE WITH BULK SALES LAWS
The Buyer Parent and the Buyer hereby waive compliance with the "bulk
sales" provisions of Article 6 of the Uniform Commercial Code as it is in effect
in the states where the Seller and the Selling Subsidiaries own assets to be
conveyed to the Buyer and the Buying Subsidiaries hereunder. Nothing in this
paragraph will estop or prevent the Buyer or the Seller from asserting as a bar
or defense to any action or proceeding brought under applicable bulk sales law
that it does not apply to the transfer of the Transferred Assets contemplated
under this Agreement.
13.3 NOTICES
All notices, requests, demands and other communications which are
required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed given when delivered by hand, by facsimile
transmission (with a confirmatory copy sent within one business day by courier
or overnight carrier), or by courier or overnight carrier, as follows:
If to the Buyer
or the Buyer Parent: Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx
Mail Drop X0-00-00
Xxxxx, Xxxxx 00000
Attention: President of Travel and Transportation
Global Industry Group
Fax: (000) 000-0000
With a copy to: Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx
Mail Drop X0-0X-00
Xxxxx, Xxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
AND
Xxxxx Xxxxx LLP
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
If to the Seller
or the Seller Parent: Sabre Inc.
0000 Xxxx Xxxxxx Xxxxxxxxx
Mail Drop 0000
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Xxxx Xxxxx, Xxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
With a copy to: Xxxxxx & Bird LLP
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxx, Xx.
Fax: (000) 000-0000
or to such other address as any party shall have designated by notice in writing
to the other parties.
13.4 WAIVERS
(a) Prior to or at the Closing, the Buyer shall have the right to
waive any Default in the performance of any term of this Agreement by the
Seller or the Seller Parent, to waive or extend the time for the compliance
or fulfillment by the Seller and the Seller Parent of any and all of their
respective obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of the Buyer and the Buyer Parent
under this Agreement. No such waiver shall be effective unless in writing
signed by a duly authorized officer of the Buyer.
(b) Prior to or at the Closing, the Seller shall have the right to
waive any Default in the performance of any term of this Agreement by the
Buyer or the Buyer Parent, to waive or extend the time for the compliance or
fulfillment by the Buyer and the Buyer Parent of any and all of their
respective obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of the Seller and the Seller Parent
under this Agreement. No such waiver shall be effective unless in writing
signed by a duly authorized officer of the Seller.
(c) The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained
in this Agreement in one or more instances shall be deemed to be or construed
as a further or continuing waiver of such condition or breach or a waiver of
any other condition or of the breach of any other term of this Agreement.
13.5 AMENDMENT
This Agreement may be modified, supplemented or amended only by a
written instrument executed by all of the parties hereto.
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13.6 ENTIRE AGREEMENT
This Agreement (including the Exhibits, the Seller Disclosure Schedule
and the Buyer Disclosure Schedule) and the other Transaction Documents
constitute the complete and exhaustive statement of the agreement of the parties
with respect to the subject matter hereof and thereof, and supersede all prior
statements, representations, warranties, agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof and
thereof.
13.7 APPLICABLE LAW; JURISDICTION AND VENUE
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to any
of the conflict of law rules thereof.
(b) In the event that a dispute is subject to legal or equitable
action and either the dispute or the relief sought is not subject to the
dispute resolution process specified in Section 11.8, that action shall be
brought in a state court of appropriate jurisdiction sitting in Dallas
County, Texas (or if not possible in Dallas County, then in a federal court
in the Northern District of Texas sitting in Dallas County). Each of the
Buyer and the Seller (i) hereby irrevocably submits itself to the
jurisdiction of a court of appropriate jurisdiction in these locations, and
(ii) to the extent permitted by applicable Law, hereby waives, and agrees not
to assert, by way of motion, as a defense or otherwise, in any such suit,
action or proceeding, the defense that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Agreement or other Transaction
Documents, or the subject matter thereof, may not be enforced in or by such
courts. Without limiting the foregoing, each of the parties consent to
process being served on it in any such suit, action or proceeding at the
address of such party set forth in Section 13.3.
(c) To the maximum extent permitted by law, the parties waive all
provisions of the Texas Deceptive Trade Practices Act - Consumer Protection
Act, Subchapter E of Chapter 18 (Sections 17.41 ET SEQ.), Texas Business and
Commerce Code (other than Section 17.555 thereof), insofar as the provisions
of such Act may be applicable to this Agreement or the transactions
contemplated hereby. To evidence its ability to grant such waiver, each party
hereby represents and warrants to the other party that it: (i) is represented
by legal counsel of its own selection in and is seeking or acquiring or
disposing of or divesting, as applicable, by sale, purchase, or lease, as
applicable, goods or services for commercial or business use for a price that
exceeds $500,000; (ii) has, as of the Closing Date, assets of $25,000,000 or
more according to its most recent financial statements prepared in accordance
with GAAP; (iii) has knowledge and experience in financial and business
matters that enable it to evaluate the merits and risks of the transactions
contemplated hereby; and (iv) is not in a significantly disparate bargaining
position.
13.8 INTERPRETATION
As used in this Agreement, the term "Agreement" is intended to refer to
this Agreement and the Buyer Disclosure Schedule and the Seller Disclosure
Schedule but not the Exhibits to this Agreement. The headings in this Agreement
are for convenience of reference only and do
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not define, limit or describe the scope of this Agreement or the intent of
its provisions. Each party to this Agreement has been represented by counsel
and this Agreement is to be interpreted as if it were drafted by all and not
any one or more of the parties. As used in this Agreement, words are intended
to have their ordinary meaning unless capitalized, in which case they are
intended to have the meanings specifically given to them in this Agreement or
any related agreements. The words "include" and "including" mean "including
without limitation." Examples are given without any intention of limitation
to the specifics of the example. References to the singular include the
plural. References to he, she or it refer to all genders and objects. Each
time that this Agreement provides that one party must obtain the consent of
the other, such consent may not be unreasonably withheld, delayed or
conditioned, unless otherwise specified. Each time that a party is obligated
to take an action under this Agreement within a certain number of days such
reference shall mean calendar days, unless otherwise indicated. As used in
this Agreement and the other Transaction Documents, accounting terms not
otherwise defined, or only partially defined, shall have the meanings given
to them under GAAP. To the extent that the definitions of accounting terms in
the Transaction Documents are inconsistent with the meanings of such terms
under GAAP, the definitions contained in the Transaction Documents shall
control.
13.9 SEVERABILITY
Any provision of this Agreement which is invalid or unenforceable in
any jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13.10 CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms will have the
meanings ascribed to them in this Section 13.10:
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"BUYER DISCLOSURE SCHEDULE" shall mean the written information entitled
"Buyer Disclosure Schedule to Asset Purchase Agreement" delivered prior to or on
the date of this Agreement to the Seller describing the matters contained
therein. Neither the Seller Parent nor the Seller will be entitled to claim that
any fact or combination of facts constitutes a breach of any of the
representations or warranties contained in this Agreement if and to the extent
that such fact or combination of facts has been fairly disclosed in the Buyer
Disclosure Schedule (in each case in sufficient detail to put a reasonable
person on notice of the relevance of the facts or circumstances so disclosed).
The inclusion, in and of itself, of any matter in the Buyer Disclosure Schedule
shall not be deemed an admission or an acknowledgement or otherwise to
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imply that any such matter is material or outside the ordinary course of
business for purposes of this Agreement.
"BUYER MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, financial condition, or results of operations of the Buyer, or on
the ability of the Buyer to consummate the transactions contemplated by this
Agreement or the other Transaction Documents; provided, however, that Buyer
Material Adverse Effect shall not be deemed to include the impact of (i) the
public announcement of the transactions contemplated by this Agreement, (ii)
changes affecting as a whole any industry in which the Buyer operates, (iii) any
decline in the market price per share of Seller Parent common stock or Buyer
Parent common stock, (iv) the implementation of changes in GAAP, (v) changes in
laws of general applicability or interpretations thereof by courts or
governmental authorities, (vi) actions or omissions of the Buyer or any of its
Affiliates taken or permitted with the prior written consent of the Seller, and
(vii) the direct effects of compliance with the terms of this Agreement,
including expenses incurred by the Buyer and its Affiliates in consummating the
transactions contemplated by this Agreement.
"BUYING SUBSIDIARIES" shall mean the wholly owned (directly or
indirectly) subsidiaries of the Buyer Parent that the Buyer Parent will
designate prior to the Closing to purchase certain portions of the Transferred
Assets at the Closing pursuant hereto.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, permit or similar affirmation, document or instrument.
"CONTRACT" shall mean any contract, agreement, lease, sublease,
license, sublicense, promissory note, indenture, mortgage, insurance policy,
annuity or other binding commitment, whether written or oral, including any
amendment to or extension of any of the foregoing.
"DEFAULT" shall mean (i) any breach or violation of, or default under,
any Contract, Law or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of, or default under, any Contract, Law or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any liability
under, or decrease or defer any rights under, any Contract, Law or Permit.
"KNOWLEDGE OF THE BUYER," "KNOWN TO THE BUYER," "KNOWLEDGE OF THE BUYER
PARENT," "KNOWN TO THE BUYER PARENT," "KNOWLEDGE OF THE BUYING SUBSIDIARIES,"
"KNOWN TO THE BUYING SUBSIDIARIES" or any other use of the capitalized term
"KNOWLEDGE" with respect to the Buyer, the Buyer Parent and/or any Buying
Subsidiary shall mean the actual, personal knowledge of those Persons listed in
Section 13.10(a) of the Buyer Disclosure Schedule.
"KNOWLEDGE OF THE SELLER," "KNOWN TO THE SELLER," "KNOWLEDGE OF THE
SELLER PARENT," "KNOWN TO THE SELLER PARENT," "KNOWLEDGE OF THE SELLING
SUBSIDIARIES," "KNOWN TO THE SELLING SUBSIDIARIES" or any other use of the
capitalized term "KNOWLEDGE" with respect to the Seller, the
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Seller Parent and/or any Selling Subsidiary shall mean the actual, personal
knowledge of those Persons listed in Section 13.10(b) of the Seller
Disclosure Schedule.
"LIEN" shall mean any lien, encumbrance, mortgage, pledge,
hypothecation, security interest, conditional sale agreement, reservation,
restriction or title retention or other security arrangement.
"LITIGATION" shall mean any claim, complaint, grievance, arbitration,
action, suit, inquiry, proceeding or investigation by or before any United
States or foreign court or governmental or other regulatory or administrative
agency or commission or arbitration tribunal.
"PERMITTED LIENS" shall mean (i) Liens for current taxes or assessments
that are not yet due and payable and that were incurred in the ordinary course
of business, (ii) builder, mechanic, warehousemen, materialmen, contractor,
workmen, repairmen, carrier Liens or other similar Liens arising in the ordinary
course of business, in each case for obligations which are not yet due and
payable, (iii) other similar Liens which do not materially affect the value of
the Transferred Assets subject to such Liens or the usefulness or marketability
of such Transferred Assets, and (iv) the Liens identified in Section 13.10(c) of
the Seller Disclosure Schedule.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, including a corporation, general partnership, joint
venture, limited partnership, limited liability company, trust, business
association, group acting in concert, or any person acting in a representative
capacity.
"SELLER DISCLOSURE SCHEDULE" shall mean the written information
entitled "Seller Disclosure Schedule to Asset Purchase Agreement" delivered
prior to or on the date of this Agreement to the Buyer describing the matters
contained therein. The Buyer Parent and the Buyer will not be entitled to claim
that any fact or combination of facts constitutes a breach of any of the
representations or warranties contained in this Agreement if and to the extent
that such fact or combination of facts has been fairly disclosed in the Seller
Disclosure Schedule (in each case in sufficient detail to put a reasonable
person on notice of the relevance of the facts or circumstances so disclosed).
The inclusion, in and of itself, of any matter in the Seller Disclosure Schedule
shall not be deemed an admission or an acknowledgement or otherwise to imply
that any such matter is material or outside the ordinary course of business for
purposes of this Agreement.
"SELLER MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on the business, financial condition, or results of operations of the
Transferred Business, or on the ability of the Seller to consummate the
transactions contemplated by this Agreement or the other Transaction Documents;
provided, however, that Seller Material Adverse Effect shall not be deemed to
include the impact of (i) the public announcement of the transactions
contemplated by this Agreement, (ii) changes affecting as a whole any industry
in which the Transferred Business or the Seller or any Selling Subsidiary
operates, (iii) the pending business combination between UAL Corporation and US
Airways Group, Inc. or the consummation thereof, (iv) the effectiveness of the
Third Amended ITSA, the RSA and the Consent Letter with American Airlines, Inc.,
including the effectiveness of the requirement to further re-negotiate the Third
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Amended ITSA pursuant to the terms thereof, (v) the failure to obtain any
Consent required or asserted to be required under the US Airways ITSA, including
any actual or potential litigation, arbitration or other proceeding relating
thereto, (vi) any decline in the market price per share of Seller Parent common
stock, (vii) the implementation of changes in GAAP, (viii) changes in laws of
general applicability or interpretations thereof by courts or governmental
authorities, (ix) actions or omissions of the Seller or any of its Affiliates
taken or permitted with the prior written consent of the Buyer, and (x) the
direct effects of compliance with the terms of this Agreement, including
expenses incurred by the Seller and its Affiliates in consummating the
transactions contemplated by this Agreement.
"SELLING SUBSIDIARIES" shall mean the entities listed in Section
13.10(d) of the Seller Disclosure Schedule.
"TAX" or "TAXES" shall mean all taxes, charges, fees, levies or other
assessments, including all gross receipts, sales, use, value added, ad valorem,
real estate transfer, documentary stamp, gains, bulk sales, profits, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, property or other similar taxes, duties, fees, assessments or charges
of any kind whatsoever, including any interest, penalties or additional amounts
attributable thereto imposed by any United States federal, state, local or
foreign governmental authority, but specifically excluding any taxes, duties,
fees or charges imposed on or measured by net or gross income, capital stock or
net worth or in the nature of an income, capital, franchise, or net worth tax.
"TAX RETURN" shall mean any return, report, information return,
statement, declaration or other document (including any related or supporting
information) filed or required to be filed with any United States federal,
state, local or foreign governmental authority in connection with any
determination, assessment or collection of any Tax or other administration of
any Laws, regulations or administrative requirements.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the
Transition Agreement, the Lease Assignments, the Trinity Lease Agreement, the
Shared Facilities Agreement, the Technology License Agreement, the Outsourcing
Agreement, the Subcontracting Agreement, the Commercial Agreement, the TMD
Marketing Agreement, the Revenue Sharing Agreement, the Alignment of Interests
Agreement, the Other Conveyance Documents, the Assignment and Assumption
Agreements, the Bills of Sale, the Contingent Note, the Guaranty and all other
agreements (other than the Cherokee Purchase Agreement and the Air Services
Business Letter of Intent) contemplated by this Agreement or otherwise executed
in connection with this Agreement or the Closing, including all exhibits and
schedules hereto and thereto, and all certificates delivered in connection
herewith and therewith.
13.11 RELATIONSHIP OF THE PARTIES
The relationship between the Seller Parent and the Seller on the one
hand, and the Buyer Parent and the Buyer on the other hand established by this
Agreement is solely that of vendor and vendee and nothing contained herein shall
be deemed to create a joint venture among the
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Buyer Parent and the Buyer, and the Seller Parent and the Seller. No party,
its agents or employees shall be deemed the agent or servant of another party
and no party shall have the right or authority to enter into any contract or
commitment, in the name of or on behalf of the other party, or purport to
bind the other party in any manner whatsoever.
13.12 ASSIGNMENTS
Except as otherwise expressly provided in this Agreement, this
Agreement may not be assigned (whether by operation of law or otherwise) by any
party hereto without the prior written consent of the other party; provided,
however, that the Seller and the Buyer each shall have the right, without the
consent of any other party hereto, to assign or delegate to any of its direct or
indirect subsidiaries any or all rights or obligations under this Agreement;
provided further, that Buyer has the right, without the consent of any other
party hereto, to assign or delegate to any Person that directly or indirectly
provides financing to Buyer for purposes of consummating the acquisition of the
Transferred Assets or any of the other transactions contemplated by this
Agreement any or all rights or obligations under this Agreement; provided
further, that any such assignment or delegation shall not relieve the assigning
party from responsibility for performance of its obligations under this
Agreement.
13.13 BINDING EFFECT; BENEFITS
This Agreement shall inure to the benefit of, and be binding upon, the
parties to it and their respective successors and permitted assigns. Nothing
contained in this Agreement, express or implied, is intended to confer upon any
Person (including any Designated Employee or Transferred Employee) other than
the parties to it and their respective successors, permitted assigns and other
transferees, any rights or remedies under or by reason of this Agreement. The
Seller agrees to cause its respective successors and permitted assigns to agree
in writing to perform all of its covenants and agreements contained in this
Agreement upon a sale of all or substantially all of the assets of the Seller.
13.14 GOOD FAITH DEALING
As concerns every provision of this Agreement, each party agrees to act
reasonably and in good faith unless a provision expressly states that such party
may act in its sole discretion.
13.15 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties as of the date first above written.
EDS INFORMATION SERVICES L.L.C.
By:
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
ELECTRONIC DATA SYSTEMS CORPORATION
By:
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and CEO
SABRE INC.
By:
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman, President and Chief
Executive Officer
SABRE HOLDINGS CORPORATION
By:
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman, President and Chief
Executive Officer
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INDEX OF DEFINED TERMS
Term Page
---- ----
1996 LTIP..........................................58
2000 SOP...........................................59
2002 LTIP Options..................................58
2002 SOP Options...................................59
2003 LTIP Options..................................58
2003 SOP Options...................................60
AA Incoming Transition Revenues....................10
AA Non-Transition Revenues.........................10
AA Outgoing Transition Revenues....................10
AAA................................................70
Acquisition Transaction............................46
Affiliate..........................................77
Agreed Allocation..................................15
Agreed Price.......................................58
Agreement...........................................1
Air Services Business Letter of Intent..............1
Alignment of Interests Agreement...................18
American Airlines...................................1
Assigned Customer Agreements........................3
Assignment and Assumption Agreements...............17
Assumed Liabilities.................................6
Bills of Sale......................................17
Books and Records...................................4
Buyer...............................................1
Buyer 401(k) Plan..................................34
Buyer Confidential Information.....................43
Buyer Consents.....................................38
Buyer Disclosure Schedule..........................77
Buyer Entity.......................................50
Buyer Global Share Plan............................60
Buyer Group........................................67
Buyer Home Country Plans...........................53
Buyer Incentive Plan...............................58
Buyer Material Adverse Effect......................77
Buyer Options......................................58
Buyer Parent........................................1
Buyer Retiree Medical Plan.........................61
Buyer Retirement Plan..............................61
CERCLA.............................................30
Cherokee Purchase Agreement.........................1
Claim..............................................66
Clawback Amount.....................................9
Closing............................................16
Closing Cash Payment................................8
Closing Date.......................................17
Collective Bargaining Agreements...................56
Commercial Agreement...............................18
Consent............................................78
Consent Letter......................................2
Contest............................................14
Contingent Note.....................................9
Contract...........................................78
Customer Accounts Receivable........................3
Damages............................................67
Databases..........................................49
Default............................................78
Default Allocation.................................16
Deferred Payment Retention.........................10
Deferred Transferred Assets........................20
Designated Employees...............................50
Dispute............................................70
Domestic Designated Employees......................50
Domestic Employee Transition Date..................50
Domestic Transferred Employees.....................50
Employee Costs.....................................51
Employee Transition Date...........................51
Environmental Diligence Period.....................41
Environmental Law..................................30
ERISA..............................................33
ERISA Affiliate....................................33
ERISA Plans........................................33
Excess Non-Domestic Employee Benefits..............51
Excess Tax Payment.................................13
Expatriate Agreement...............................54
Expatriate Employees...............................53
Financed Hardware..................................26
Financial Statements...............................24
First Deferred Payment Retention....................9
First Deferred Premium Payment Amount..............10
Fixed Amount........................................9
Foreign Country....................................51
Foreign Employment Agreement.......................51
Foreign Plan.......................................33
GAAP...............................................24
Grant Date.........................................59
Guaranty............................................9
Hazardous Materials................................30
Hire Date..........................................52
Home Country.......................................53
HSR Act............................................23
I2M Strawman.......................................29
Identified Environmental Condition.................41
Income Statements..................................24
Indemnified Party..................................68
Indemnifying Party.................................68
Independent Auditor................................11
Intellectual Property Rights........................5
In-the-Money Options...............................58
Knowledge of the Buyer.............................78
Knowledge of the Seller............................78
Laws...............................................35
Lease Assignments..................................17
Leasehold Interests.................................2
Lien...............................................78
Litigation.........................................78
Logistics Business..................................6
Make Whole Payment..................................9
New Hire...........................................52
Non-Domestic Designated Employees..................51
Non-Domestic Employee Transition Date..............51
Non-Domestic Severance Costs.......................51
Non-Domestic Transferred Employee..................52
Option Issuance Agreement..........................29
Option One.........................................29
Other Conveyance Documents.........................17
Outside Termination Date...........................72
Outsourced Services................................18
Outsourcing Agreement..............................18
Outsourcing Business................................6
Past Service.......................................57
Permits.............................................4
Permitted Liens....................................78
Person.............................................79
Plans..............................................33
Post-Closing Period................................14
Pre-Closing Period.................................14
Premises............................................2
Prepaid Items.......................................4
Pro Rata VCP Bonus.................................57
Purchase Price......................................8
Rail Business.......................................6
Required Governmental Consents.....................64
Retained Assets.....................................4
Retained Business...................................6
Retained Databases.................................50
Retained Liabilities................................7
Revenue Sharing Agreement..........................18
RSA.................................................1
Sabre...............................................1
Second Amended ITSA.................................1
Second Deferred Payment Retention..................10
Second Deferred Premium Payment Amount.............10
Seconded Employees.................................55
Secondment Period..................................55
Security Agreement.................................18
Seller..............................................1
Seller 401(k) Plan.................................34
Seller Confidential Information....................45
Seller Consents....................................23
Seller Disclosure Schedule.........................79
Seller Group.......................................67
Seller Home Country Plans..........................53
Seller Material Adverse Effect.....................79
Seller Options.....................................58
Seller Parent.......................................1
Seller Performance Shares..........................59
Seller Pro Rata Share..............................21
Seller Retiree Medical Plan........................61
Selling Subsidiaries...............................79
Shared Consent Costs...............................21
Shared Facilities Agreement........................17
Significant Personnel..............................62
Software............................................5
Software Licenses...................................3
Specified Claims...................................67
Specified Contracts................................27
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Statement of Assets and Liabilities................24
Straddle Period....................................14
Subcontracting Agreement...........................18
T2 Option..........................................29
Tangible Assets.....................................3
Tax................................................79
Tax Return.........................................80
Taxes..............................................79
Technology License Agreement.......................18
Termination Date...................................66
Third Amended ITSA..................................1
Third Party Claim Notice...........................68
Third Party Claims.................................68
TMD Marketing Agreement............................18
TPI................................................29
Transaction Documents..............................80
Transfer Taxes.....................................12
Transferred Assets..................................2
Transferred Books and Records.......................4
Transferred Business................................6
Transferred Business Confidential Information......44
Transferred Contracts...............................3
Transferred Databases..............................49
Transferred Employee...............................52
Transferred Leased Real Property....................2
Transferred Leases..................................6
Transferred Permits.................................4
Transferred Personal Property.......................4
Transferred Software Licenses.......................3
Transferred Tangible Assets.........................3
Transferred Vendor Contracts........................3
Transition Agreement................................1
Transition Provisions..............................67
Travel Privileges Continuation Agreement...........57
Travel Privileges Providers........................57
Trinity Lease Agreement............................17
U.S. Plans.........................................33
UAL................................................36
US Airways ITSA....................................29
WARN...............................................32
WARN Obligations...................................63
Web Hosting Business................................6
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EXHIBIT INDEX
Exhibit Description
------- -----------
1..................................Transition Agreement
2..................................Cherokee Purchase Agreement
3..................................Air Services Business Letter of Intent
3.1(c)(i)..........................Contingent Note
3.1(c)(ii).........................Guaranty
4.2(a)(iii)........................Form Lease Assignments
4.2(a)(iv).........................Trinity Lease Agreement
4.2(a)(v)..........................Shared Facilities Agreement
4.2(a)(ix).........................Outsourcing Agreement
4.2(a)(x)..........................Technology License Agreement
4.2(a)(xi).........................Statement of Principal Terms of Subcontracting Agreement
4.2(a)(xii)........................Commercial Agreement
4.2(a)(xiii).......................TMD Marketing Agreement
4.2(a)(xiv)........................Revenue Sharing Agreement
4.2(a)(xv).........................Alignment of Interests Agreement
4.2(a)(xix)........................Matters to be Covered by Legal Opinion of Counsel to the
Seller and the Seller Parent
4.2(b)(xviii)......................Matters to be covered by Legal Opinion of Counsel to the
Buyer and the Buyer Parent
