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EXHIBIT 10.1
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GENERAL PARTNERSHIP INTEREST PURCHASE AGREEMENT
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Among
UNITED AIR LINES, INC.,
COVIA CORPORATION,
US AIRWAYS, INC.,
USAM CORP.,
AIR CANADA,
RESNET HOLDINGS, INC.,
APOLLO TRAVEL SERVICES PARTNERSHIP
and
GALILEO INTERNATIONAL PARTNERSHIP
Dated as of , 1997
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TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms .................................................. 2
1.02. Other Defined Terms .................................................... 6
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale of the Partnership Interests ......................... 8
2.02. Purchase Price ......................................................... 8
2.03. Closing ................................................................ 8
2.04. Cash Mechanism ......................................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARENT
ENTITIES AND SELLERS
3.01. Organization, Authority and Qualification of the Parent Entities and the
Sellers ............................................................. 12
3.02. Organization, Authority and Qualification of the Partnership and the
Subsidiaries ........................................................ 13
3.03. Partnership Interests .................................................. 14
3.04. No Conflict ............................................................ 15
3.05. Governmental Consents and Approvals .................................... 17
3.06. Financial Information and Books and Records ............................ 17
3.07. No Undisclosed Liabilities ............................................. 18
3.08. Conduct in the Ordinary Course; Absence of Certain Changes, Events and
Conditions .......................................................... 18
3.09. Litigation ............................................................. 20
3.10. Compliance with Laws ................................................... 21
3.11. Environmental and Other Permits and Licenses; Related Matters .......... 21
3.12. Material Contracts ..................................................... 22
3.13. Intellectual Property .................................................. 23
3.14. Real Property and Leases ............................................... 24
3.15. Assets ................................................................. 24
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SECTION PAGE
3.16. Employee Benefit Matters ...................................... 25
3.17. Labor Matters ................................................. 27
3.18. Taxes ......................................................... 28
3.19. Insurance ..................................................... 30
3.20. Brokers ....................................................... 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Organization, Authority and Qualification of the Purchaser .... 31
4.02. No Conflict ................................................... 32
4.03. Governmental Consents and Approvals ........................... 32
4.04. Investment Purpose ............................................ 32
4.05. Brokers ....................................................... 32
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Conduct of Business Prior to the Closing ...................... 33
5.02. Access to Information ......................................... 34
5.03. Confidentiality ............................................... 35
5.04. Regulatory and Other Authorizations; Notices and Consents ..... 36
5.05. Notice of Developments ........................................ 37
5.06. No Solicitation of Employees .................................. 37
5.07. Use of Intellectual Property .................................. 37
5.08. Monthly Financial Statements .................................. 38
5.09. Premier Travel Services, L.L.C ................................ 38
5.10. Pre-Closing Balance Sheet ..................................... 38
5.11. Environmental Audit ........................................... 39
5.12. Employees and Employee Benefits ............................... 39
5.13. Further Action ................................................ 39
ARTICLE VI
TAX MATTERS
6.01. Tax Indemnity ................................................. 40
6.02. Apportionment of Taxes ........................................ 40
6.03. Returns and Payments .......................................... 41
6.04. Contests ...................................................... 43
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SECTION PAGE
6.05. Survival of Obligations ............................................. 44
6.06. Section 754 Elections ............................................... 44
6.07. Conveyance Taxes .................................................... 44
ARTICLE VII
CONDITIONS TO CLOSING
7.01. Conditions to Obligations of the Parent Entities, the Sellers and the
Partnership ...................................................... 46
7.02. Conditions to Obligations of the Purchaser .......................... 47
ARTICLE VIII
INDEMNIFICATION
8.01. Survival of Representations and Warranties .......................... 49
8.02. Indemnification by the Parent Entities and the Sellers .............. 50
8.03. Tax Matters ......................................................... 52
8.04. Indemnification by the Purchaser .................................... 52
8.05. Indemnification Procedures .......................................... 53
ARTICLE IX
TERMINATION AND WAIVER
9.01. Termination ......................................................... 54
9.02. Effect of Termination ............................................... 55
9.03. Waiver .............................................................. 55
ARTICLE X
GENERAL PROVISIONS
10.01. Expenses ........................................................... 56
10.02. Notices ............................................................ 56
10.03. Public Announcements ............................................... 59
10.04. Headings ........................................................... 59
10.05. Severability ....................................................... 59
10.06. Entire Agreement ................................................... 59
10.07. Assignment ......................................................... 60
10.08. No Third Party Beneficiaries ....................................... 60
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SECTION PAGE
10.09. Amendment .................................................... 60
10.10. Arbitration .................................................. 60
10.11. Sellers' Disclosure Schedule ................................. 63
10.12. Governing Law ................................................ 63
10.13. Counterparts ................................................. 63
10.14. Specific Performance ......................................... 63
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GENERAL PARTNERSHIP INTEREST PURCHASE AGREEMENT (this
"Agreement"), dated as of ________, 1997, among UNITED AIR LINES, INC., a
Delaware corporation ("United"), COVIA CORPORATION, a Delaware corporation and a
wholly owned subsidiary of United ("Covia"), US AIRWAYS, INC., a Delaware
corporation ("USAW"), USAM CORP., a Delaware corporation and a wholly owned
subsidiary of USAW ("USAM"), AIR CANADA, a corporation organized under the laws
of Alberta ("Air Canada"), RESNET HOLDINGS, INC., a Delaware corporation and a
wholly owned subsidiary of Air Canada ("Resnet"), APOLLO TRAVEL SERVICES
PARTNERSHIP, a Delaware general partnership (the "Partnership"), and GALILEO
INTERNATIONAL PARTNERSHIP, a Delaware general partnership, and any successor in
interest thereto, including, without limitation, the corporation or limited
liability company formed in connection with the IPO (the "Purchaser"). Covia,
USAM and Resnet (or their respective successors, as the case may be) are each
referred to herein as a "Seller" and as a group they are referred to herein as
the "Sellers". United, USAW and Air Canada are each referred to herein as a
"Parent Entity" and as a group they are referred to herein as the "Parent
Entities".
WHEREAS, the Sellers collectively own one hundred percent (100%)
of the interests in the Partnership;
WHEREAS, Covia wishes, and United wishes to cause Covia, to sell
to the Purchaser, and the Purchaser wishes to purchase from Covia, Covia's 77%
general partnership interest in the Partnership (the "Covia Partnership
Interest"), upon the terms and subject to the conditions set forth herein;
WHEREAS, USAM wishes, and USAW wishes to cause USAM, to sell to
the Purchaser, and the Purchaser wishes to purchase from USAM, USAM's 21.08%
general partnership interest in the Partnership (the "USAM Partnership
Interest"), upon the terms and subject to the conditions set forth herein; and
WHEREAS, Resnet wishes, and Air Canada wishes to cause Resnet, to
sell to the Purchaser, and the Purchaser wishes to purchase from Resnet,
Resnet's 1.92% general partnership interest in the Partnership (the "Resnet
Partnership Interest"), upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Purchaser, the Parent
Entities and the Sellers hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"After-Tax Basis" means, (i) with respect to any Loss that is
required to be indemnified pursuant to Article VI or Article VIII on an
After-Tax Basis, that the indemnification payment will be calculated so as to
take into account both the deductibility or creditability by the indemnitee for
Tax purposes of the Loss being indemnified and the taxability to the indemnitee
of the indemnifying payment (including taxability of any payments made to gross
up for the taxability of the indemnifying payment), and (ii) with respect to any
refund or credit that is required to be paid on an After-Tax Basis pursuant to
Section 6.08, that the refund or credit will be calculated so as to take into
account both the deductibility by the Purchaser for Tax purposes of the payment
of such refund or credit to the Sellers and the taxability to the Purchaser of
the receipt of the refund or credit.
"Agreement" or "this Agreement" means this General Partnership
Interest Purchase Agreement, dated as of _____________, 1997, among the parties
listed in the preamble (including the Exhibits hereto and the Sellers'
Disclosure Schedule) and all amendments hereto made in accordance with the
provisions of Section 10.09.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in The
City of New York.
"Code" means the Internal Revenue Code of 1986, as amended through
the date hereof.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
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ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and Tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Environment" means surface waters, groundwaters, surface water
sediment, soil, subsurface strata and ambient air.
"Environmental Claims" means any and all actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation, notices of
liability or potential liability, investigations, proceedings, consent orders or
consent agreements relating in any way to any Environmental Law, any
Environmental Permit or any Hazardous Material or arising from any alleged
injury or threat of injury to health, safety or the Environment.
"Environmental Law" means any Law, now or hereafter in effect and
as amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
pollution or protection of the Environment, health or safety or to the use,
handling, transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required to operate the respective
businesses of the Partnership or any Subsidiary or the Real Property under any
applicable Environmental Law.
"Governmental Authority" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority, other than any rules and regulations (whether promulgated by order or
otherwise) which apply generally to the computer reservations system industry.
"Hazardous Materials" means (a) petroleum and petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls and (b) any other chemicals, materials
or substances regulated as toxic or hazardous or as a pollutant, contaminant or
waste under any applicable Environmental Law.
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"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Independent Accounting Firm" means any one of the "big six"
accounting firms other than the Purchaser's Accountants and Xxxxxx Xxxxxxxx LLP.
"IRS" means the Internal Revenue Service of the United States.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any Environmental Law),
Action or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Material Adverse Effect" means any change in or effect on the
business of the Partnership that, when taken individually or together with all
other adverse changes and effects, is or is reasonably likely to be materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets or Liabilities of the Partnership and the Subsidiaries, taken
as a whole, or prevents consummation of the transactions contemplated hereby.
"Net Asset Test Reference Balance Sheet" means the audited
consolidated balance sheet (including the related notes and schedules thereto)
of the Partnership, dated as of March 31, 1997, excluding (i) any indebtedness
for borrowed money of the Partnership and the Subsidiaries, (ii) any Cash other
than cash in the amount of any checks outstanding, and (iii) the assets and
liabilities of Premier, a copy of which is set forth in Section 3.06(a) of the
Sellers' Disclosure Schedule.
"Net Assets" means the excess of total consolidated assets over
total consolidated liabilities of the Partnership and the Subsidiaries shown on
the Pre-Closing Balance Sheet or the Seasonally Adjusted Net Asset Test
Reference Balance Sheet, as applicable.
"Ordinary Course Taxes" means Taxes relating to periods (or
portions thereof) prior to the Closing Date and paid by the Partnership or the
Subsidiaries after the Closing Date in the ordinary course of business and not
as a result of an audit or examination by a government or Tax authority or an
administrative or judicial proceeding or a settlement or compromise thereof in
connection with a Tax previously paid or a Return previously filed.
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"Other Tax Audit Reserve" means a non-specific reserve for sales
and use tax audit settlements of $400,000.
"Partnership Intellectual Property" means all trademarks,
trademark rights, trade names, trade name rights, patents, patent rights,
industrial models, inventions, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and other
proprietary rights and information used or held for use in connection with the
business of the Partnership and the Subsidiaries as currently conducted or as
currently contemplated (by existing Partnership management) to be conducted,
together with all applications currently pending for any of the foregoing.
"Permitted Encumbrances" means such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for Taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations;
(c) pledges or deposits to secure obligations under workers' compensation laws
or similar legislation or to secure public or statutory obligations; and (d)
minor survey exceptions, reciprocal easement agreements and other customary
encumbrances on title to real property that (i) were not incurred in connection
with any indebtedness for borrowed money of the Partnership, (ii) do not render
title to the property encumbered thereby unmarketable and (iii) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property for its current and anticipated purposes.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization or
other entity, as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"Purchaser's Accountants" means KPMG Peat Marwick LLP, independent
accountants of the Purchaser.
"Real Property" means the real property leased or owned by the
Partnership or any Subsidiary.
"Regulations" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"Return" means any return, report or form relating to a Tax or
Taxes.
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"Seasonally Adjusted Net Asset Test Reference Balance Sheet" means
the Net Asset Test Reference Balance Sheet adjusted to multiply current assets
reflected thereon by the appropriate seasonal adjustment factors set forth on
Schedule 1.01(a) hereto and current liabilities by the appropriate seasonal
adjustment factors set forth on Schedule 1.01(b) hereto.
"Subsidiaries" means any and all corporations, partnerships,
limited liability companies, joint ventures, associations and other similar
entities controlled by the Partnership directly or indirectly through one or
more intermediaries.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other similar charges (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority (whether federal, state, local,
foreign or otherwise), including, without limitation: taxes or other charges on
or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs duties, tariffs, and similar charges.
"Tax Benefit" means the value, when actually received, of any
deduction, loss, credit or refund to the Purchaser, any Affiliate of the
Purchaser, or the Seller, as the case may be.
"U.S. GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
SECTION 1.02. Other Defined Terms. Each of the following terms is
defined in the Section set forth opposite such term:
Terms Section
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Agreement .................................. Preamble
Air Canada ................................. Preamble
Arbitration Request ........................ 10.10
Assets ..................................... 3.15(a)
Association ................................ 10.10
ATS Names .................................. 5.07(a)
Average Cash Amount ........................ 2.04(b)
Award ...................................... 10.10(a)(v)
Cash ....................................... 2.04(b)
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Cash Payment Amount ........................ 2.04(b)
Closing .................................... 2.03
Closing Cash Amount ........................ 2.04(e)
Closing Date ............................... 2.03
Commencement Date .......................... 10.10(a)(i)
Covia ...................................... Preamble
Covia Partnership Interest ................. Recitals
Dispute Notice ............................. 10.10(a)
Environmental Audit ........................ 5.11
ERISA ...................................... 3.16(a)
Escrow Agent ............................... 2.04(f)(i)
Financial Statements ....................... 3.06(a)
Indemnified Party .......................... 6.01
Independent Firm ........................... 6.03(b)
Interim Financial Statements ............... 3.06(a)
IPO ........................................ 2.03
Loss ....................................... 8.02
Material Contracts ......................... 3.12(a)
Measuring Period ........................... 2.04(b)
Non-Disclosure Agreement ................... 5.03(a)
Parent Entity .............................. Preamble
Parent Entities ............................ Preamble
Partnership ................................ Recitals
Partnership Agreement ...................... 3.02(a)
Partnership Interests ...................... 3.03(a)
Partnership Licenses ....................... 3.13
Petitioner ................................. 10.10(a)
Plans ...................................... 3.16(a)
Pre-Closing Balance Sheet .................. 5.10
Premier .................................... 5.09
Purchase Price ............................. 2.02
Purchase Price Allocation Schedule.......... 6.03(c)
Purchaser .................................. Preamble
Purchaser Indemnified Party ................ 8.02(a)
Resnet ..................................... Preamble
Resnet Partnership Interest ................ Recitals
Respondent ................................. 10.10(a)
Response ................................... 10.10(a)(ii)
Returnable Refund or Credit ................ 6.08(a)
Sales Tax Audit Reserve .................... 6.01(a)
SEC ........................................ 5.03(a)
Seller ..................................... Preamble
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Sellers .................................... Preamble
Sellers' Disclosure Schedule ............... 3.05
Seller Indemnified Party ................... 8.04(a)
Statement .................................. 10.10(a)
Third Party Claim .......................... 8.05
Transaction Agreement ...................... 7.01(g)
United ..................................... Preamble
USAW ....................................... Preamble
USAM ....................................... Preamble
USAM Partnership Interest .................. Recitals
WARN ....................................... 3.16(g)
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Partnership Interests. Upon
the terms and subject to the conditions of this Agreement, at the Closing, (i)
United shall cause Covia to sell, and Covia shall sell to the Purchaser, and the
Purchaser shall purchase from Covia, the Covia Partnership Interest, (ii) USAW
shall cause USAM to sell, and USAM shall sell to the Purchaser, and the
Purchaser shall purchase from USAM, the USAM Partnership Interest, and (iii) Air
Canada shall cause Resnet to sell, and Resnet shall sell to the Purchaser, and
the Purchaser shall purchase from Resnet, the Resnet Partnership Interest.
SECTION 2.02. Purchase Price. The purchase price for the Covia
Partnership Interest, the USAM Partnership Interest and the Resnet Partnership
Interest shall be $700 million in the aggregate (the "Purchase Price") to be
paid in cash pro rata to Covia, USAM and Resnet in accordance with their
respective Partnership Interests in the Partnership.
SECTION 2.03. Closing. Upon the terms and subject to the
conditions of this Agreement, the sale and purchase of the Partnership Interests
contemplated by this Agreement shall take place at a closing (the "Closing") to
be held at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx at 10:00 A.M. New York time on the day of the consummation of the
proposed initial public offering by the Purchaser (the "IPO"), or at such other
place or at such other time or on such other date as the Sellers and the
Purchaser may mutually agree upon in writing (the day on which the Closing takes
place being the "Closing Date").
SECTION 2.04. Cash Mechanism. (a) Subject to the provisions of
this Section 2.04, at or immediately following the Closing, the Partnership will
pay to each of the
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Sellers its pro rata share (determined in accordance with its Partnership
Interest) of the Cash Payment Amount.
(b) For purposes of this Section 2.04, (i) the "Average Cash
Amount" means, subject to adjustment as set forth in Section 2.04(c), the amount
of cash that is equal to the simple average daily balance of cash, time
deposits, certificates of deposit, marketable securities and other short term
investments and cash equivalents ("Cash") of the Partnership and the
Subsidiaries at the close of business on each Business Day during the Measuring
Period, (ii) "Measuring Period" means the period commencing at 12:01 a.m. EDT on
the date of the month immediately preceding the month in which the Closing Date
occurs that is the same date of the month as the Closing Date (or if such date
is not a calendar date, the date that corresponds most closely to the date that
is the Closing Date) and ending at 11:59 p.m. EDT on the day immediately
preceding the Closing Date, and (iii) "Cash Payment Amount" means the Average
Cash Amount less the checks issued by the Partnership and the Subsidiaries that
have not cleared on the Closing Date.
(c) The Average Cash Amount will be adjusted in the event the
Partnership makes any Cash distribution (in respect of their respective
Partnership Interests) to any of the Sellers during the Measuring Period by
subtracting the amount of any such distribution from the daily amount of Cash in
each of the days during the Measuring Period immediately preceding the date of
such distribution.
(d) During the Measuring Period, each of the Purchaser and the
Partnership will make all payments that are to be made to each other under
existing contractual arrangements or agreements in the ordinary course of
business consistent with past practice. In addition, during the Measuring
Period, the Partnership will conduct its business in the ordinary course
consistent with past practice, including, without limitation, not shortening or
lengthening the customary payment time for any of its payables or receivables
and continuing its purchasing and capital purchasing practices in accordance
with past practice. To facilitate the foregoing, (i) Covia shall circulate to
the relevant personnel of the Partnership at least thirty days prior to the
expected commencement of the Measuring Period written instructions to such
effect, (ii) the Partnership will provide representatives of the Purchaser with
access, at reasonable times, to all offices, personnel, books and records of the
Partnership and the Subsidiaries that the Purchaser may reasonably request for
purposes of monitoring the compliance by the Partnership with this Section
2.04(d) and the calculation by the Partnership of the Average Cash Amount, the
Cash Payment Amount and the Closing Cash Amount in accordance with this Section
2.04, and (iii) the parties will agree on mutually agreeable procedures for
implementing the cash transfers described in Section 2.04(e). During the period
from 11:59 p.m. EDT on the day immediately preceding the Closing Date through
the Closing, the Partnership will make no payments of cash except pursuant to
normal banking transactions, including check clearing or deposits, that are not
under the control of the Partnership, or pursuant to contractual obligations
with third parties
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that were previously disclosed to the Purchaser or that were entered into in the
ordinary course of business consistent with past practice.
(e) On the Closing Date, the Partnership will inform each of the
Parent Entities and the Purchaser of the (i) Average Cash Amount, as well as the
calculations resulting therein, (ii) the aggregate amount with respect to which
checks of the Partnership and the Subsidiaries have been issued but not cleared
on the Closing Date, and (iii) the amount of Cash of the Partnership and the
Subsidiaries as of 12:01 a.m. EDT on the Closing Date (the "Closing Cash
Amount"). If the Closing Cash Amount is less than the Cash Payment Amount, then
the Purchaser will make available to the Partnership such difference and,
subject to the provisions of Section 2.04(f), the Cash Payment Amount will be
paid to the Sellers as set forth in Section 2.04(a). If the Closing Cash Amount
is greater than the Cash Payment Amount, then, subject to the provisions of
Section 2.04(f), the Cash Payment Amount will be paid to the Sellers as set
forth in Section 2.04(a), and the difference between the Closing Cash Amount and
the Cash Payment Amount will be retained by the Partnership.
(f) (i) Prior to the Closing, the Purchaser and the Parent
Entities shall enter into an Escrow Agreement, in substantially the form
attached hereto as Exhibit 2.04(f), with a third party selected by the Purchaser
and reasonably acceptable to the Parent Entities (the "Escrow Agent"). In
accordance with the terms of the Escrow Agreement, the Partnership or the
Sellers (pro rata in accordance with their respective Partnership Interests)
will, on the Closing Date, deposit the sum of $3 million with the Escrow Agent,
which will hold such amount in an interest bearing account until the day that is
90 days following the Closing Date, to be managed and paid out in accordance
with the Escrow Agreement and this Section 2.04.
(ii) In the event the Purchaser determines, within 90 days
following the Closing Date, that the agreements of the Partnership contained in
Section 2.04(d) were not complied with and, as a result of such non-compliance,
the Average Cash Amount was either greater or lesser than the average amount of
Cash that the Partnership would have had during the Measuring Period had such
provisions been complied with, the Purchaser will provide written notice to the
Parent Entities to such effect, specifying the amount of the difference and its
reasons for such determination. In the absence of any written notice of dispute
delivered by any of the Parent Entities to the Purchaser and the Escrow Agent
within 10 days after receipt of the Purchaser's written notice as to such
determination and the amount of such difference, (x) in the event the Average
Cash Amount is greater than it would have been, the Purchaser will receive from
the Escrow Agent and the Parent Entities (on a several basis in proportion to
their respective Partnership Interests), if appropriate, a cash payment equal to
the amount of such difference, together with interest thereon, as set forth in
clause (iii) below, and (y) in the event the Average Cash Amount is less than it
would have been, the Sellers will receive (pro rata in proportion to their
respective Partnership Interests) from the Partnership or the Purchaser a cash
payment equal to the amount of such difference,
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together with interest thereon, as set forth in clause (iii) below. In the event
any of the Parent Entities deliver such a written notice disputing such
determination or the amount of such difference, such dispute will be submitted
for resolution to the Independent Accounting Firm, which will resolve such
dispute within 30 days of the date of such submission and whose decision will be
final and binding on the Parent Entities and the Purchaser. The fees and
expenses of the Independent Accounting Firm will be allocated between the
Purchaser, on the one hand, and the Parent Entities (pro rata in accordance with
their respective Partnership Interests), on the other hand, in the same
proportion that the aggregate amount of the difference so submitted to the
Independent Accounting Firm that is unsuccessfully disputed by the Parent
Entities, on the one hand, or the Purchasers, on the other hand, bears to the
total amount of the difference so submitted.
(iii) In the event any payment is to be made to the Purchaser
pursuant to clause (ii) above, the Escrow Agent will pay such amount to the
Purchaser, together with the appropriate amount of interest thereon, and if such
payment is less than the amount of such difference, the Purchaser will recover
such excess amount from the Parent Entities (on a several basis in proportion to
their respective Partnership Interests), together with interest thereon from the
Closing Date to and including the date of payment by the Parent Entities to the
Purchaser at the Interest Rate (as such term is defined in the Escrow
Agreement), pursuant to the provisions of Section 8.02 (except that the
provisions of Section 8.02(b)(i) and (ii) will not apply). In the event any
payment is to be made to the Sellers pursuant to clause (ii) above, the
Partnership or the Purchaser will pay such amount to the Sellers (pro rata in
accordance with their respective Partnership Interests), together with interest
thereon from the Closing Date to and including the date of payment by the
Partnership or Purchaser to the Sellers at the Interest Rate, pursuant to the
provisions of Section 8.04. In the event any amount remains in the Escrow Fund
(as such term is defined in the Escrow Agreement) on the 90th day following the
Closing Date, all amounts held by the Escrow Agent on such day, after giving
effect to any payments to be made to the Purchaser hereunder, will be paid to
the Sellers pro rata in accordance with their Partnership Interests, including
all interest accrued on the remaining principal amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARENT
ENTITIES AND SELLERS
As an inducement to the Purchaser to enter into this Agreement,
the Parent Entities and the Sellers hereby represent and warrant to the
Purchaser as follows: United and Covia jointly and severally represent and
warrant as to the representations and warranties in Sections 3.01(a), 3.03(a),
3.04(a) and 3.05(a); USAW and USAM jointly and severally represent and warrant
as to the representations and warranties in Sections 3.01(b), 3.03(b),
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3.04(b) and 3.05(b); Air Canada and Resnet jointly and severally represent and
warrant as to the representations and warranties in Sections 3.01(c), 3.03(c),
3.04(c) and 3.05(c); and the Parent Entities and the Sellers severally represent
and warrant as to the representations and warranties in Sections 3.02, 3.03(d),
3.06, 3.07, 3.08, 3.09, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18,
3.19 and 3.20.
SECTION 3.01. Organization, Authority and Qualification of the
Parent Entities and the Sellers. (a) Each of United and Covia is a corporation
(and, in the case of Covia, on or prior to the Closing will be either a
corporation or a limited liability company) duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all necessary
power and authority to enter into this Agreement, to carry out its respective
obligations hereunder and to consummate the transactions contemplated hereby.
Each of United and Covia is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased by
each of them or the operation of each of their businesses make such licensing or
qualification necessary, except to the extent that the failure to be so licensed
or qualified would not adversely affect the ability of either United or Covia to
carry out its respective obligations under, and to consummate the transactions
contemplated by, this Agreement. The execution and delivery of this Agreement by
United and Covia, the performance by United and Covia of their respective
obligations hereunder and the consummation by United and Covia of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of United and Covia. This Agreement has been duly executed
and delivered by United and Covia, and (assuming due authorization, execution
and delivery by the other Sellers and Parent Entities and the Purchaser) this
Agreement constitutes a legal, valid and binding obligation of each of United
and Covia enforceable against each of them in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity.
(b) Each of USAW and USAM is a corporation (and, in the case of
USAM, on or prior to the Closing will be either a corporation or a limited
liability company) duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all necessary power and authority to
enter into this Agreement, to carry out its respective obligations hereunder and
to consummate the transactions contemplated hereby. Each of USAW and USAM is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by each of them or the
operation of each of their businesses make such licensing or qualification
necessary, except to the extent that the failure to be so licensed or qualified
would not adversely affect the ability of either USAW or USAM to carry out its
respective obligations under, and to consummate the transactions contemplated
by, this Agreement. The execution and delivery of this Agreement by USAW and
USAM, the performance by USAW and USAM of their respective obligations hereunder
and the consummation by USAW and USAM of the transactions contemplated hereby
have been duly authorized by all requisite action on the part
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of USAW and USAM. This Agreement has been duly executed and delivered by USAW
and USAM, and (assuming due authorization, execution and delivery by the other
Sellers and Parent Entities and the Purchaser) this Agreement constitutes a
legal, valid and binding obligation of each of USAW and USAM enforceable against
each of them in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally or by general principles of equity.
(c) Each of Air Canada and Resnet is a corporation duly organized,
validly existing and in good standing under the laws of Alberta and the State of
Delaware, respectively, and has all necessary power and authority to enter into
this Agreement, to carry out its respective obligations hereunder and to
consummate the transactions contemplated hereby. Each of Air Canada and Resnet
is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by each of them or the
operation of each of their businesses make such licensing or qualification
necessary, except to the extent that the failure to be so licensed or qualified
would not adversely affect the ability of either Air Canada and Resnet to carry
out its respective obligations under, and to consummate the transactions
contemplated by, this Agreement. The execution and delivery of this Agreement by
Air Canada and Resnet, the performance by Air Canada and Resnet of their
respective obligations hereunder and the consummation by Air Canada and Resnet
of the transactions contemplated hereby have been duly authorized by all
requisite action on the part of Air Canada and Resnet. This Agreement has been
duly executed and delivered by Air Canada and Resnet, and (assuming due
authorization, execution and delivery by the other Sellers and Parent Entities
and the Purchaser) this Agreement constitutes a legal, valid and binding
obligation of each of Air Canada and Resnet enforceable against each of them in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights generally
or by general principles of equity.
SECTION 3.02. Organization, Authority and Qualification of the
Partnership and the Subsidiaries. (a) The Partnership is a general partnership
duly organized and validly existing under the laws of the State of Delaware and
is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business or the respective businesses of the Subsidiaries makes such
licensing or qualification necessary (and all such jurisdictions are set forth
in Section 3.02(a) of the Sellers' Disclosure Schedule). The Partnership has all
the necessary power and authority to own, operate or lease the properties and
assets owned, operated, or leased by the Partnership and to carry on its
business and the respective businesses of the Subsidiaries as they have been and
are currently conducted by the Partnership and the Subsidiaries. All material
actions taken by the Partnership have been duly authorized, and the Partnership
has not taken any material action that in any respect conflicts with or results
in a violation of any provision of its partnership agreement (the "Partnership
Agreement"). A true and correct copy of the Partnership Agreement, as in effect
on the date hereof, has
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been delivered by the Sellers to the Purchaser. The execution and delivery of
this Agreement by the Partnership, the performance by the Partnership of its
obligations hereunder and the consummation by the Partnership of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Partnership. This Agreement has been duly executed and
delivered by the Partnership, and (assuming due authorization, execution and
delivery by the Sellers, the Parent Entities and the Purchaser) this Agreement
constitutes a legal, valid and binding obligation of the Partnership enforceable
against the Partnership in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity.
(b) Section 3.02(b) of the Sellers' Disclosure Schedule sets forth
a true and complete list of all Subsidiaries, listing for each Subsidiary its
name, type of entity, the jurisdiction and date of its incorporation or
organization, its authorized capital stock, partnership capital or equivalent,
and the current ownership of such capital stock, partnership interests or
similar ownership interests.
(c) Other than the Subsidiaries, there are no other corporations,
partnerships or limited liability companies in which the Partnership owns, of
record or beneficially, any direct or other interest or any right (contingent or
otherwise) to acquire the same. The Partnership is not, directly or indirectly,
a participant in any joint venture.
(d) Each Subsidiary: (i) is a corporation or partnership duly
organized and validly existing under the laws of its jurisdiction of
organization, (ii) has all necessary power and authority to own, operate or
lease the properties and assets owned, operated or leased by such Subsidiary and
to carry on its business as it has been and is currently conducted by such
Subsidiary and (iii) is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its business makes such licensing or qualification necessary
(and all such jurisdictions are set forth in Section 3.02(d) of the Sellers'
Disclosure Schedule). True and complete copies of the charter and bylaws (or
similar organizational documents), in each case as in effect on the date hereof,
of each Subsidiary have been delivered by the Sellers to the Purchaser.
(e) No Subsidiary is a member of (nor is any part of its business
conducted through) any partnership, other than the Partnership.
SECTION 3.03. Partnership Interests. (a) As of the date hereof,
77% of the outstanding interests in the Partnership ("Partnership Interests")
are owned, beneficially and of record, by Covia, free and clear of all
Encumbrances. There are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments of any character obligating
United, Covia or any Affiliate thereof to issue or sell any Partnership
Interests or any other interest in the Partnership. Neither United, Covia nor
any Affiliate
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thereof is party to any voting trusts, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Partnership Interests. Upon consummation of the transactions contemplated by
Article II, the Purchaser will acquire from Covia 77% of the Partnership
Interests free and clear of all Encumbrances (other than Encumbrances created by
the Purchaser).
(b) As of the date hereof, 21.08% of the outstanding Partnership
Interests are owned, beneficially and of record, by USAM, free and clear of all
Encumbrances. There are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments of any character obligating
USAW, USAM or any Affiliate thereof to issue or sell any Partnership Interests
or any other interest in the Partnership. Neither USAW, USAM nor any Affiliate
thereof is party to any voting trusts, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Partnership Interests. Upon consummation of the transactions contemplated by
Article II, the Purchaser will acquire from USAM 21.08% of the Partnership
Interests free and clear of all Encumbrances (other than Encumbrances created by
the Purchaser).
(c) As of the date hereof, 1.92% of the outstanding Partnership
Interests in are owned, beneficially and of record, by Resnet, free and clear of
all Encumbrances. There are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character
obligating Air Canada, Resnet or any Affiliate thereof to issue or sell any
Partnership Interests or any other interest in the Partnership. Neither Air
Canada, Resnet nor any Affiliate thereof is party to any voting trusts, proxies
or other agreements or understandings in effect with respect to the voting or
transfer of any of the Partnership Interests. Upon consummation of the
transactions contemplated by Article II, the Purchaser will acquire from Resnet
1.92% of the Partnership Interests free and clear of all Encumbrances (other
than Encumbrances created by the Purchaser).
(d) None of the outstanding Partnership Interests was issued in
violation of any preemptive rights. There are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to the Partnership Interests or obligating the Partnership to
issue or sell any Partnership Interests or any other interest in the
Partnership. There are no outstanding contractual obligations of the Partnership
to repurchase, redeem or otherwise acquire any equity interests of or to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other Person. The Partnership Interests constitute all the
issued and outstanding equity interests in the Partnership. The Partnership is
not a party to any voting trusts, proxies or other agreements or understandings
in effect with respect to the voting or transfer of any of the Partnership
Interests.
SECTION 3.04. No Conflict. (a) The execution, delivery and
performance of this Agreement by United, Covia and the Partnership do not and
will not (i) violate,
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conflict with or result in the breach of any provision of the charter, bylaws,
limited liability company agreement or partnership agreement (or similar
organizational documents) of United, Covia, the Partnership or any Subsidiary,
(ii) conflict with or violate (or cause an event which could have a Material
Adverse Effect as a result of) any Law or Governmental Order applicable to
United, Covia, the Partnership or any Subsidiary, or any of their respective
assets, properties or businesses, or (iii) conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Partnership Interests held by Covia or on any of the assets or
properties of United, Covia, the Partnership or any Subsidiary pursuant to, any
note, bond, mortgage or indenture, or material contract, agreement, lease,
sublease, license, sublicense, permit, franchise or other instrument or
arrangement to which United, Covia, the Partnership or any Subsidiary is a party
or by which any of the Partnership Interests held by Covia or any of such assets
or properties is bound or affected.
(b) The execution, delivery and performance of this Agreement by
USAW, USAM and the Partnership do not and will not (i) violate, conflict with or
result in the breach of any provision of the charter, bylaws, limited liability
company agreement or partnership agreement (or similar organizational documents)
of USAW, USAM, the Partnership or any Subsidiary, (ii) conflict with or violate
(or cause an event which could have a Material Adverse Effect as a result of)
any Law or Governmental Order applicable to USAW, USAM, the Partnership or any
Subsidiary, or any of their respective assets, properties or businesses, or
(iii) conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on any of the Partnership Interests
held by USAM or on any of the assets or properties of USAW, USAM, the
Partnership or any Subsidiary pursuant to, any note, bond, mortgage or
indenture, or material contract, agreement, lease, sublease, license,
sublicense, permit, franchise or other instrument or arrangement to which USAW,
USAM, the Partnership or any Subsidiary is a party or by which any of the
Partnership Interests held by USAM or any of such assets or properties is bound
or affected.
(c) The execution, delivery and performance of this Agreement by
Air Canada, Resnet and the Partnership do not and will not (i) violate, conflict
with or result in the breach of any provision of the charter, bylaws, limited
liability company agreement or partnership agreement (or similar organizational
documents) of Air Canada, Resnet, the Partnership or any Subsidiary, (ii)
conflict with or violate (or cause an event which could have a Material Adverse
Effect as a result of) any Law or Governmental Order applicable to Air Canada,
Resnet, the Partnership or any Subsidiary, or any of their respective assets,
properties or businesses, or (iii) conflict with, result in any breach of,
constitute a default (or
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event which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on any of the Partnership Interests
held by Resnet or on any of the assets or properties of Air Canada, Resnet, the
Partnership or any Subsidiary pursuant to, any note, bond, mortgage or
indenture, or material contract, agreement, lease, sublease, license,
sublicense, permit, franchise or other instrument or arrangement to which Air
Canada, Resnet, the Partnership or any Subsidiary is a party or by which any of
the Partnership Interests held by Resnet or any of such assets or properties is
bound or affected.
SECTION 3.05. Governmental Consents and Approvals. (a) The
execution, delivery and performance of this Agreement by United, Covia and the
Partnership do not and will not require any consent, approval, authorization or
other order of, action by, filing with or notification to any Governmental
Authority or any other Person, except for (i) the notification requirements of
the HSR Act and (ii) the consents, approvals and authorizations set forth in
Section 3.05(a) of the disclosure schedule which has been delivered by the
Sellers to the Purchaser prior to the date hereof and which is attached hereto
(the "Sellers' Disclosure Schedule").
(b) The execution, delivery and performance of this Agreement by
USAW, USAM and the Partnership do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to any Governmental Authority or any other Person, except for (i)
the notification requirements of the HSR Act and (ii) the consents, approvals
and authorizations set forth in Section 3.05(b) of the Sellers' Disclosure
Schedule.
(c) The execution, delivery and performance of this Agreement by
Air Canada, Resnet and the Partnership do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to any Governmental Authority or any other Person, except for (i)
the notification requirements of the HSR Act and (ii) the consents, approvals
and authorizations set forth in Section 3.05(c) of the Sellers' Disclosure
Schedule.
SECTION 3.06. Financial Information and Books and Records. (a)
True and complete copies of (i) the audited consolidated balance sheet of the
Partnership and the Subsidiaries for each of the three fiscal years ended as of
December 31, 1994, December 31, 1995 and December 31, 1996, and the related
audited consolidated statements of income, together with all related notes and
schedules thereto, accompanied by the reports thereon of the Sellers'
Accountants (collectively referred to herein as the "Financial Statements") and
(ii) the unaudited consolidated balance sheet of the Partnership and the
Subsidiaries for the quarter ending March 31, 1997, and the related consolidated
statements of income of the Company, together with all related notes and
schedules thereto (collectively referred to
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herein as the "Interim Financial Statements") have been delivered by the Sellers
to the Purchaser. The Financial Statements, the Interim Financial Statements and
the Net Asset Test Reference Balance Sheet (i) were prepared in accordance with
the books of account and other financial records of the Partnership, (ii)
present fairly the consolidated financial condition and results of operations of
the Partnership and the Subsidiaries as of the dates thereof or for the periods
covered thereby, (iii) have been prepared in accordance with U.S. GAAP and (iv)
include all adjustments (consisting only of normal accruals) that are necessary
for a fair presentation of the consolidated financial condition of the
Partnership and the Subsidiaries and the results of the operations of the
Partnership and the Subsidiaries as of the dates thereof or for the periods
covered thereby, except in the case of the Net Asset Test Reference Balance
Sheet (a copy of which is set forth in Section 3.06(a) of the Sellers'
Disclosure Schedule), which excludes (i) any indebtedness for borrowed money of
the Partnership and the Subsidiaries, (ii) any cash or cash equivalents other
than cash in the amount of any checks outstanding, and (iii) the assets and
liabilities of Premier.
(b) The books of account and other financial records of the
Partnership and the Subsidiaries: (i) reflect all items of income and expense
and all assets and Liabilities required to be reflected therein in accordance
with U.S. GAAP and (ii) are in all material respects complete and correct, and
do not contain or reflect any material inaccuracies or discrepancies.
(c) The minute books of the Partnership and the Subsidiaries
contain accurate records of all meetings and accurately reflect all other
actions taken by the Partners or Stockholders thereof. Complete and accurate
copies of all such minute books have been provided to the Purchaser.
SECTION 3.07. No Undisclosed Liabilities. There are no Liabilities
of the Partnership or any Subsidiary, other than Liabilities (i) reflected or
reserved against on the Net Asset Test Reference Balance Sheet, (ii) incurred
since March 31, 1997 in the ordinary course of the business, consistent with the
past practice, or (iii) disclosed in this Agreement or in the Sellers'
Disclosure Schedule, of the Partnership and the Subsidiaries and which do not
and could not have a Material Adverse Effect.
SECTION 3.08. Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions. Except as disclosed in Section 3.08 of the
Sellers' Disclosure Schedule, since March 31, 1997, the business of the
Partnership and the Subsidiaries has been conducted in the ordinary course and
consistent with past practice. As amplification and not limitation of the
foregoing, since March 31, 1997, except as disclosed in Section 3.08 of the
Sellers' Disclosure Schedule, neither the Partnership nor any Subsidiary has:
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(i) permitted or allowed any of the assets or properties
(whether tangible or intangible) of the Partnership or any Subsidiary
to be subjected to any Encumbrance, other than Permitted Encumbrances;
(ii) except in the ordinary course of business consistent with
past practice, discharged or otherwise obtained the release of any
Encumbrance or paid or otherwise discharged any Liability, other than
current liabilities reflected on the Net Asset Test Reference Balance
Sheet and current liabilities incurred in the ordinary course of
business consistent with past practice since March 31, 1997;
(iii) made any loan to, guaranteed any indebtedness of or
otherwise incurred any indebtedness on behalf of any Person;
(iv) redeemed any of the Partnership Interests;
(v) except as specifically requested by the Purchaser or as
required to accommodate changes in the Purchaser's business practices,
made any material changes in the customary methods of operations of the
Partnership or any Subsidiary, including, without limitation, practices
and policies relating to marketing, selling and pricing;
(vi) merged with, entered into a consolidation with or acquired
any interest in any Person or acquired a substantial portion of the
assets or business of any Person or any division or line of business
thereof, or otherwise acquired any material assets;
(vii) made any capital expenditure or commitment for any capital
expenditure in excess of the capital expenditures contemplated by the
planned budget, a true and complete copy of which has been provided to
the Purchaser;
(viii) sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible
assets) with an individual value in excess of $50,000;
(ix) issued or sold any Partnership Interests, or other equity
securities, or any option, warrant or other right to acquire the same,
of, or any other interest in, the Partnership or any Subsidiary, except
as contemplated by this Agreement;
(x) except for agreements, arrangements or transactions with the
Purchaser or having an individual value of less than $5,000, entered
into any agreement, arrangement or transaction with any of its
directors, officers, employees or partners (or with any relative,
beneficiary, spouse or Affiliate of such Person);
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(xi) (A) granted any increase, or announced any increase, in
the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by the Partnership or any Subsidiary to any of
its employees, including, without limitation, any increase or change
pursuant to any Plan, or (B) established or increased or promised to
increase any benefits under any Plan, in either case except for
ordinary increases consistent with the past practices of the
Partnership or such Subsidiary;
(xii) revalued any assets of the Partnership or any Subsidiary
other than in accordance with U.S. GAAP;
(xiii) amended, terminated, cancelled or compromised any material
claims of the Partnership or any Subsidiary or waived any other rights
of material value to the Partnership or any Subsidiary;
(xiv) made any material change in any method of accounting or
accounting practice or policy used by the Partnership or any
Subsidiary;
(xv) amended or restated the Partnership Agreement or the
organizational documents of any Subsidiary;
(xvi) made any express or deemed election or settled or
compromised any liability that is the subject of a dispute with any
government or taxing authority, with respect to (A) Taxes of the
Partnership or any Subsidiary or (B) Taxes, insofar as Partnership
items or any Subsidiary items are involved, of the partners of the
Partnership or of any Subsidiary;
(xvii) suffered any casualty loss or damage with respect to any
of the Assets which individually has a replacement cost of more than
$50,000, which loss or damage shall not have been covered by insurance;
(xviii) suffered any Material Adverse Effect; or
(xix) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 3.08 or granted any options to
purchase, rights of first refusal, rights of first offer or any other
similar rights or commitments with respect to any of the actions
specified in this Section 3.08.
SECTION 3.09. Litigation. Except as set forth in Section 3.09 of
the Sellers' Disclosure Schedule, there are no Actions by or against the
Partnership or any Subsidiary (or by or against the Sellers or any Affiliate
thereof and relating to the Partnership or any Subsidiary or their respective
businesses), or affecting any of the Assets, pending or threatened before any
Governmental Authority. None of the Partnership, the Subsidiaries or
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any of the Assets nor the Sellers is subject to any Governmental Order, nor are
there any such Governmental Orders threatened to be imposed by any Governmental
Authority, which has a Material Adverse Effect.
SECTION 3.10. Compliance with Laws. (a) The Partnership and the
Subsidiaries have conducted and continue to conduct their respective businesses
in accordance with all Laws and Governmental Orders applicable to the
Partnership, any Subsidiary or any of the Assets or such businesses, and neither
the Partnership nor any Subsidiary is in violation of any such Law or
Governmental Order.
(b) Section 3.10(b) of the Sellers' Disclosure Schedule sets forth
a brief description of each Governmental Order applicable to the Partnership or
any Subsidiary or any of the Assets or the Partnership's or the Subsidiaries'
respective businesses, and no such Governmental Order has or could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.11. Environmental and Other Permits and Licenses;
Related Matters. (a) (i) Neither the Partnership nor any Subsidiary has received
notice of any violation of any Environmental Laws; (ii) the Partnership and the
Subsidiaries have obtained all Environmental Permits and are and have been in
material compliance with their requirements; (iii) except as disclosed in
Section 3.11(a)(iii) of the Sellers' Disclosure Schedule, or as permitted by or
as would not result in any material liability under applicable Environmental
Laws, there are no underground or aboveground storage tanks or any surface
impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials
are being or have been treated, stored or disposed on any of the owned or leased
properties or, with respect to the period of the Partnership's or any
Subsidiary's ownership, tenancy or operation of such property, on any real
property formerly owned, leased or occupied by the Partnership or any
Subsidiary; (iv) there is no asbestos or asbestos-containing material on any of
the owned or leased properties, except as permitted by or as would not result in
any material liability under applicable Environmental Laws; (v) neither the
Partnership nor any Subsidiary has released, discharged or disposed of an amount
of Hazardous Materials on any of the owned or leased properties or on any real
property formerly owned, leased or occupied by the Partnership or any Subsidiary
in a manner or quantity which would have a material effect on the Partnership;
(vi) neither the Partnership nor any Subsidiary is undertaking, has completed,
nor is required to conduct, any investigation or assessment or remedial or
response action relating to any release, discharge or disposal of or
contamination with an amount of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any Governmental
Authority or the requirements of any Environmental Law which would have a
material effect on the Partnership; and (vii) there are no past, pending or
threatened in writing Environmental Claims against the Partnership, any
Subsidiary or any of their properties, and there are no facts which can form the
basis of any such Environmental Claim.
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(b) Except as disclosed in Section 3.11(b) of the Sellers'
Disclosure Schedule, there are no environmental audit reports, studies or
analyses in the possession of the Parent Entities, the Sellers or the
Partnership or under their control relating to the owned or leased properties or
the operations of the Partnership and the Subsidiaries.
SECTION 3.12. Material Contracts. (a) Section 3.12(a) of the
Sellers' Disclosure Schedule lists each of the following contracts and
agreements (including, without limitation, oral contracts and agreements) of the
Partnership and each Subsidiary (such contracts and agreements being "Material
Contracts"):
(i) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
the Partnership or any Subsidiary is a party under which the
Partnership can be reasonably expected to pay or be paid at least
$50,000 during the course of the twelve months following the date
hereof;
(ii) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the
Partnership or any Subsidiary is a party, which are not cancelable
without penalty or further payment and without more than 30 days'
notice, and under which the Partnership can be reasonably expected to
pay or be paid at least $50,000 during the course of the twelve months
following the date hereof;
(iii) all contracts and agreements relating to Indebtedness of
the Partnership or any Subsidiary;
(iv) any agreements that are material to the business of the
Partnership and that are currently in effect with subscribers that have
generated annual booking fees of $1.0 million or more per annum over
the course of any of the last three fiscal years;
(v) all contracts and agreements with any Governmental
Authority to which the Partnership or any Subsidiary is a party and
under which the Partnership can be reasonably expected to pay or be
paid at least $50,000 during the course of the twelve months following
the date hereof;
(vi) all contracts and agreements that limit or purport to limit
the ability of the Partnership or any Subsidiary to compete in any line
of business or with any Person or in any geographic area or during any
period of time;
(vii) all contracts and agreements between or among the
Partnership or any Subsidiary and the Sellers or any Affiliate of the
Sellers; and
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(viii) all other contracts and agreements whether or not made in
the ordinary course of business, which are material to the Partnership,
any Subsidiary or the conduct of their respective businesses or the
absence of which would have a Material Adverse Effect.
(b) Each Material Contract: (i) is valid and binding on the
respective parties thereto and is in full force and effect and (ii) upon
consummation of the transactions contemplated by this Agreement, except to the
extent that any consents set forth in Section 3.05 of the Sellers' Disclosure
Schedule are not obtained, shall continue in full force and effect without
penalty or other adverse consequence. Neither the Partnership nor any Subsidiary
is in breach of, or default under, any Material Contract. The Sellers have
furnished the Purchaser with true and complete copies of all Material Contracts.
(c) To the best knowledge of the Parent Entities, the Sellers and
the Partnership, no other party to any Material Contract is in breach thereof or
default thereunder.
(d) There is no contract, agreement or other arrangement granting
any Person any preferential right to purchase, other than in the ordinary course
of business consistent with past practice, any of the properties or assets of
the Partnership or any Subsidiary.
SECTION 3.13. Intellectual Property. The Partnership owns or
possesses adequate licenses or other valid rights to use all of the Partnership
Intellectual Property which is material to the conduct of the business of the
Partnership, and there is no assertion or claim challenging the validity of any
such Partnership Intellectual Property. There are no infringements of any
Partnership Intellectual Property. Notwithstanding anything to the contrary
herein, the representations and warranties contained in the two preceding
sentences shall not be deemed to have been breached with respect to any
Partnership Intellectual Property that has been provided to the Partnership or
any of the Subsidiaries by the Purchaser unless the breach results from any
modification by the Partnership or any of its Subsidiaries to any such
Partnership Intellectual Property. There are no pending or threatened
interferences, reexaminations, oppositions or nullities involving any patents,
patent rights or applications therefor of the Partnership which is material to
the conduct of the business of the Partnership. Section 3.13 of the Sellers'
Disclosure Schedule lists each material license or other agreement pursuant to
which the Partnership has the right to use Partnership Intellectual Property
utilized in connection with any services provided by the Partnership (the
"Partnership Licenses"). There is no breach or violation of any Partnership
License by the Partnership or by any third party or threatened or actual loss of
rights accruing to the Partnership under any Partnership License. Each
Partnership License is a legal, valid and binding agreement of the Partnership
and each Partnership License is a legal, valid and binding agreement of the
other parties thereto. The consummation of the
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transactions contemplated by this Agreement will not result in the termination
of, or any modification to, any Partnership License, except where the foregoing
would not have a material effect on the conduct of the business of the
Partnership. The Partnership has taken reasonable measures to maintain the
confidentiality of the know-how of the Partnership, the value of which to the
Partnership is dependent upon the maintenance of the confidentiality thereof.
The Partnership has not licensed or otherwise permitted the use by any third
party of any proprietary information on terms or in a manner that is reasonably
likely to have a Material Adverse Effect. The conduct of the business of the
Partnership as currently conducted or as currently contemplated (by existing
Partnership management) to be conducted does not and will not infringe upon or
conflict with, in any way, any license, trademark, trademark right, trade name,
trade name right, patent, patent right, industrial model, invention, service
xxxx or copyright of any third party that is reasonably likely to be material to
the Partnership's operations.
SECTION 3.14. Real Property and Leases. (a) Set forth on Section
3.14(a) of the Sellers' Disclosure Schedule is a list of all Real Property.
(b) The Partnership and the Subsidiaries have sufficient title or
leasehold interests to all their Real Property to conduct their respective
businesses as currently conducted or as currently contemplated (by existing
Partnership management) to be conducted.
(c) All leases of real property leased for the use or benefit of
the Partnership or any Subsidiary to which the Partnership or any Subsidiary is
a party which are material, individually or in the aggregate, to the business of
the Partnership and the Subsidiaries taken as a whole, and all amendments and
modifications thereto are in full force and effect and have not been modified or
amended, and there exists no default under any such lease by the Partnership or
any Subsidiary, nor any event which with notice or lapse of time or both would
constitute a default thereunder by the Partnership or any Subsidiary, which
would permit any such lease to be terminated by the other party thereto.
SECTION 3.15. Assets. (a) Either the Partnership or a Subsidiary,
as the case may be, owns, leases or has the legal right to use all material
properties and assets, including, without limitation, the Partnership
Intellectual Property, used or intended to be used in the conduct of its
business or otherwise owned, leased or used by the Partnership or any Subsidiary
and, with respect to contract rights, is a party to and enjoys the right to the
benefits of all material contracts, agreements and other arrangements used or
intended to be used by the Partnership or any Subsidiary or in or relating to
the conduct of their respective businesses (all such properties, assets and
contract rights being the "Assets"). Set forth on Section 3.15(a) of the
Sellers' Disclosure Schedule is a list of all of the Assets as of the date
hereof. Either the Partnership or a Subsidiary, as the case may be, has good and
marketable title to, or, in the case of leased or subleased Assets, valid and
subsisting
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leasehold interests in, all the Assets, free and clear of all Encumbrances,
except for Permitted Encumbrances.
(b) The Assets constitute all the material properties, assets and
rights forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of, the businesses
(as currently conducted by existing Partnership management) of the Partnership
and the Subsidiaries. At all times since December 31, 1996, the Partnership has
caused the Assets to be maintained in accordance with good business practice,
and the Assets are generally in good operating condition and repair and are
suitable for the purposes for which they are used and intended, except for
ordinary wear commensurate with the age and depreciated value of such Assets.
(c) Following the consummation of the transactions contemplated by
this Agreement, either the Partnership or a Subsidiary, as the case may be, will
continue to own, pursuant to good and marketable title, or lease, under valid
and subsisting leases, or otherwise retain its respective interest in the Assets
without incurring any penalty or other adverse consequence, including, without
limitation, any increase in rentals, royalties, or licenses or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement (except, with respect to contractual arrangements
to the extent that any consents set forth in Section 3.05 of the Sellers'
Disclosure Schedule are not obtained). Immediately following the Closing, (i) in
the case of books and records other than Tax-related books and records, either
the Partnership or a Subsidiary, as the case may be, shall own or possess all
documents, books, records, agreements and financial data of any sort used by the
Partnership or such Subsidiary which is material to the conduct of its business,
and (ii) in the case of Tax-related books and records (including all information
(including copies of Returns, original work papers, and source documents (or
copies thereof)) relating to any and all Tax filings of the Partnership or any
Subsidiary), the Partnership shall own or possess all of such books and records
or the Purchaser shall have access to such records pursuant to Section 5.02(c)).
SECTION 3.16. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.16(a) of the Sellers' Disclosure Schedule lists (i) all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, pension,
retiree medical or life insurance, supplemental retirement, severance or other
benefit plans, programs or arrangements, and all employment, termination,
severance or other contracts or agreements, to which the Partnership or any
Subsidiary is a party, with respect to which the Partnership or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the
Partnership or any Subsidiary for the benefit of any current or former employee,
officer or director of the Partnership or any Subsidiary, (ii) each employee
benefit plan for which the Partnership or any Subsidiary could incur liability
under Section 4069 of ERISA in the event such plan has
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been or were to be terminated, (iii) any plan in respect of which the
Partnership or any Subsidiary could incur liability under Section 4212(c) of
ERISA and (iv) any contracts, arrangements or understandings between the Sellers
or any of its Affiliates and any employee of the Partnership or of any
Subsidiary, including, without limitation, any contracts, arrangements or
understandings relating to the sale of the Partnership (collectively, the
"Plans"). Except as disclosed in the Sellers' Disclosure Schedule, each Plan is
in writing and the Parent Entities and the Sellers have furnished the Purchaser
with a complete and accurate copy of each Plan and a complete and accurate copy
of each material document prepared in connection with each such Plan including,
without limitation, (i) a copy of each trust or other funding arrangement, (ii)
each summary plan description and summary of material modifications, (iii) the
most recently filed IRS Form 5500, (iv) the most recently received IRS
determination letter for each such Plan, and (v) the most recently prepared
actuarial report and financial statement in connection with each such Plan.
(b) Absence of Certain Types of Plans. None of the Plans is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
or a single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which the Partnership or any Subsidiary could incur liability under
Section 4063 or 4064 of ERISA. Except as disclosed in the Sellers' Disclosure
Schedule, none of the Plans provides for the payment of separation, severance,
termination or similar-type benefits to any Person or obligates the Partnership
or any Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this Agreement or
as a result of a "change in control", within the meaning of such term under
Section 280G of the Code. Except as disclosed in the Sellers' Disclosure
Schedule, none of the Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of the Partnership or any Subsidiary. Each of the Plans is subject only
to the laws of the United States or a political subdivision thereof.
(c) Compliance with Applicable Law. Each Plan is in compliance
with all material requirements of all applicable Law, including, without
limitation, ERISA and the Code, and all persons who participate in the operation
of such Plans and all Plan "fiduciaries" (within the meaning of Section 3(21) of
ERISA) have always acted in accordance with the provisions of all applicable
Law, including, without limitation, ERISA and the Code. The Partnership and each
Subsidiary has performed all obligations required to be performed by it under,
is not in any respect in default under or in violation of, and has no knowledge
of any default or violation by any party to, any Plan. Except as disclosed in
the Sellers' Disclosure Schedule, no legal action, suit or claim is pending or
threatened with respect to any Plan (other than claims for benefits in the
ordinary course) and no fact or event exists that could reasonably be expected
to give rise to any such action, suit or claim.
(d) Qualification of Certain Plans. Each Plan which is intended to
be qualified under Section 401(a) of the Code or Section 401(k) of the Code has
received a
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favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any Plan which is intended to be exempt
from federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter from the IRS to adversely
affect the qualified status of any such Plan or the exempt status of any such
trust.
(e) Absence of Certain Liabilities and Events. There has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan which could reasonably be expected to
give rise to a material liability of the Partnership or any Subsidiary. Neither
the Partnership nor any Subsidiary has incurred any liability for any penalty or
tax arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA which, in the case of any such penalty, tax
or liability, has not been satisfied in full, and no fact or event exists which
could give rise to any such liability. Neither the Partnership nor any
Subsidiary has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course) which has not been
satisfied in full. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or is expected to occur with respect to any Plan subject to
Title IV of ERISA. No Plan had an accumulated funding deficiency (within the
meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived, as of the most recently ended plan year of such Plan. None of the assets
of the Partnership or any Subsidiary is the subject of any lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code; neither the Partnership
nor any Subsidiary has been required to post any security under Section 307 of
ERISA or Section 401(a)(29) of the Code; and no fact or event exists which could
give rise to any such lien or requirement to post any such security.
(f) Plan Contributions and Funding. All contributions, premiums or
payments required to be made with respect to any Plan have been made on or
before their due dates. All such contributions are deductible for income tax
purposes. Except as disclosed in the Sellers' Disclosure Schedule, as of the
Closing Date, no Plan which is subject to Title IV of ERISA will have an
"unfunded benefit liability" (within the meaning of Section 4001(a)(18) of
ERISA).
(g) WARN Act. The Partnership and the Subsidiaries are in
compliance with the requirements of the Workers Adjustment and Retraining
Notification Act ("WARN") and have no liabilities pursuant to WARN.
SECTION 3.17. Labor Matters. Except as set forth in Section 3.17
of the Sellers' Disclosure Schedule, (a) neither the Partnership nor any
Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Partnership or any
Subsidiary and currently there are no organizational campaigns,
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petitions or other unionization activities seeking recognition of a collective
bargaining unit which could affect the Partnership or any Subsidiary; (b) there
are no material controversies, strikes, slowdowns or work stoppages pending or
threatened between the Partnership or any Subsidiary and any of their respective
employees, and neither the Partnership nor any Subsidiary has experienced any
such material controversy, strike, slowdown or work stoppage within the past
three years; (c) there are no unfair labor practice complaints pending against
the Partnership or any Subsidiary before the National Labor Relations Board or
any other Governmental Authority or any current union representation questions
involving employees of the Partnership or any Subsidiary which could have a
Material Adverse Effect; and (d) the Partnership and each Subsidiary is
currently in material compliance with all applicable Laws relating to the
employment of labor, including those related to wages, hours, collective
bargaining and the payment and withholding of taxes and other sums as required
by the appropriate Governmental Authority and has withheld and paid to the
appropriate Governmental Authority or is holding for payment not yet due to such
Governmental Authority all amounts required to be withheld from employees of the
Partnership or any Subsidiary and is not liable for any material arrears of
wages, taxes, penalties or other sums for failure to comply with any of the
foregoing.
SECTION 3.18. Taxes. Except as set forth in Section 3.18 of the
Sellers' Disclosure Schedule, (a) (i) All returns and reports in respect of
Taxes required to be filed with respect to the Partnership or any Subsidiary
with respect to Taxes of the Partnership or any Subsidiary for all periods
ending on or before the Closing Date (including without limitation Internal
Revenue Service Form 1065 (or successor form) and any comparable state and local
returns) have been timely filed (or will be timely filed by the Partnership);
(ii) all Taxes required to be shown on such returns and reports or otherwise due
have been timely paid; (iii) all returns and reports relating to Taxes on or
with respect to income (including without limitation Internal Revenue Service
Form 1065 (or successor form) and any comparable state and local returns) are
true, correct and complete and all returns and reports of the Partnership or any
Subsidiary relating to Taxes other than Taxes on or with respect to income are
true, correct and complete in all material respects; (iv) no adjustment relating
to such returns has been proposed in writing formally or informally by any Tax
authority and no basis exists for any such adjustment; (v) there are no pending
or, to the best knowledge of the Parent Entities and the Sellers after due
inquiry, threatened actions or proceedings for the assessment or collection of
Taxes against the Partnership or any Subsidiary; (vi) there are no Tax liens on
any assets of the Partnership or any Subsidiary except liens for Taxes not yet
due and payable; (vii) neither the Partnership nor any Subsidiary is a party to
any agreement or arrangement that would result, separately or in the aggregate,
in the payment of any "excess parachute payments" within the meaning of Section
280G of the Code; (viii) other than with respect to any interest in any
Subsidiary, the Partnership has not been at any time a member of any partnership
or joint venture or the holder of a beneficial interest in any trust for any
period for which the statute of limitations for any Tax has not expired; (ix)
the Partnership and each Subsidiary qualify (and have since the date of each
such entity's
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respective date of formation qualified) to be treated as a partnership for
Federal income tax purposes and for state and local tax purposes in all state
and local jurisdictions in which such treatment is relevant and none of the
Partnership, the Sellers, any Subsidiary, or any Tax authority has taken a
position inconsistent with such treatment; (x) the Partnership has in effect a
valid election pursuant to Section 754 of the Code; (xi) there are no
outstanding waivers or agreements extending the statute of limitations for any
period with respect to any Tax to which the Partnership or any Subsidiary may be
subject; (xii) the Partnership (or its partners) does not have any income
reportable for a period ending after the Closing Date but attributable to the
sale of property or the provision of services (e.g., an installment sale)
occurring in or a change in accounting method made for a period ending on or
prior to the Closing Date which resulted in a deferred reporting of income from
which economically accrued in a period ending on or before the Closing Date from
such transaction or from such change in accounting method; (xiii) there are no
requests by any Tax authority for information currently outstanding with respect
to the Taxes of the Partnership (or any Subsidiary) (or of its partners with
respect to Partnership or Subsidiary items); (xiv) there are no proposed
reassessments of any property owned by the Partnership (or any Subsidiary) or
other taxpayer specific proposals that could increase the amount of any Tax to
which the Partnership (or any Subsidiary) would be subject and (xv) no power of
attorney that is currently in force has been granted with respect to any matter
relating to Taxes of the Partnership or a Subsidiary.
(b) For purposes of the Parent Entities' and the Sellers'
indemnification of the Purchaser pursuant to Section 6.01, the representations
in Section 3.18(a) shall be deemed to have been made with no exception for items
disclosed in Section 3.18 of the Disclosure Schedule or otherwise.
(c) (i) Section 3.18 of the Sellers' Disclosure Schedule lists all
Returns (federal, state, local and foreign) filed by each of the Partnership and
the Subsidiaries for taxable periods ended on or after September 16, 1993,
indicates for which jurisdictions Returns have been filed on the basis of a
unitary group, indicates the most recent Return for each relevant jurisdiction
and type of Tax for which an audit has been completed or the statute of
limitations has lapsed and indicates all Returns that currently are the subject
of audit; (ii) the Sellers and the Parent Entities have made available to the
Purchaser correct and
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complete copies of all federal, state, local and foreign Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Partnership or any Subsidiary since September 16, 1993; and (iii) the Sellers
and the Parent Entities have delivered to the Purchaser a true and complete copy
of any tax-sharing or allocation agreement or arrangement to which the
Partnership or any Subsidiary is a party and a true and complete description of
any such unwritten or informal agreement or arrangement.
SECTION 3.19. Insurance. (a) Section 3.19 of the Sellers'
Disclosure Schedule sets forth a complete list of all material policies of
insurance (including, without limitation, errors and omissions insurance) that
the Partnership or any Subsidiary has in effect.
(b) With respect to each such insurance policy: (i) the policy is
legal, valid, binding and enforceable in accordance with its terms and, except
for policies that have expired under their terms in the ordinary course, is in
full force and effect; (ii) neither the Partnership nor any Subsidiary is in
breach or default (including any breach or default with respect to the payment
of premiums or the giving of notice), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default or permit
termination or modification, under the policy; (iii) no party to the policy has
repudiated, or given notice of an intent to repudiate, any provision thereof;
and (iv) to the best knowledge of the Partnership, no insurer on the policy has
been declared insolvent or placed in receivership, conservatorship or
liquidation or currently has a rating of "B+" or below from A.M. Best & Co. or a
claims paying ability rating of "BBB" or below from Standard & Poor's, Inc.
(c) Section 3.19(c) of the Sellers' Disclosure Schedule sets forth
a general description of all risks of a nature generally insured against which
the Partnership or any Subsidiary is self-insured or which are covered under any
risk retention program in which the Partnership or any Subsidiary participates.
(d) All material assets, properties and risks of the Partnership
and each Subsidiary are covered by valid and, except for policies that have
expired under their terms in the ordinary course, currently effective insurance
policies or binders of insurance (including, without limitation, general
liability insurance, property insurance and workers' compensation insurance)
issued in favor of the Partnership or a Subsidiary, as the case may be, in each
case with responsible insurance companies, in such types and amounts and
covering such risks as are consistent with customary practices and standards of
companies engaged in businesses and operations similar to those of the
Partnership or such Subsidiary, as the case may be.
(e) No insurance policy listed in Section 3.19(a) of the Sellers'
Disclosure Schedule will cease to be legal, valid, binding, enforceable in
accordance with its terms and
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in full force and effect on terms identical to those in effect as of the date
hereof as a result of the consummation of the transactions contemplated by this
Agreement.
SECTION 3.20. Brokers. Except for Xxxxxx Brothers, the fees and
expenses of which will be paid by the Partnership prior to Closing, or by the
Sellers or the Parent Entities pro rata in proportion to their respective
Partnership Interests, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Sellers. Any amounts owing for services provided to the
Partnership by Xxxxxx Brothers or any other Person in connection with the
transactions contemplated by this Agreement or any other transaction involving
the Partnership (including, without limitation, any other sale of the
Partnership or public offering of the Partnership) will be settled by the
Partnership prior to the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Parent Entities, the Sellers and the
Partnership to enter into this Agreement, the Purchaser hereby represents and
warrants to the Parent Entities, Sellers and the Partnership as follows:
SECTION 4.01. Organization, Authority and Qualification of the
Purchaser. The Purchaser is a general partnership, and on or prior to the
Closing will be a corporation, duly organized and validly existing under the
laws of the State of Delaware and is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the properties owned or
leased by it or the operation of its business makes such licensing or
qualification necessary, except to the extent that the failure to be so licensed
or qualified would not adversely affect the ability of the Purchaser to carry
out its obligations under, and to consummate the transactions contemplated by,
this Agreement. The Purchaser has all necessary power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by the Purchaser, the performance by the Purchaser of its obligations
hereunder and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized by all requisite action on its part. This
Agreement has been duly executed and delivered by the Purchaser and (assuming
due authorization, execution and delivery by the Parent Entities and the
Sellers) this Agreement constitutes a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity.
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SECTION 4.02. No Conflict. Assuming compliance with the notification
requirements of the HSR Act and the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.03, except as may result from any facts or circumstances relating
solely to the Sellers, the execution, delivery and performance of this Agreement
by the Purchaser do not and will not (a) violate, conflict with or result in the
breach of any provision of, in the case of the Purchaser's Partnership Agreement
(b) conflict with or violate any Law or Governmental Order applicable to the
Purchaser or (c) except for the Credit Agreement, dated as of July 3, 1996,
among the Purchaser, the banks parties thereto, the letter of credit issuing
banks named therein and Xxxxxx Guaranty Trust Company of New York, as agent,
conflict with, or result in any breach of, constitute a default (or event which
with the giving of notice or lapse or time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or result
in the creation of any Encumbrance on any of the assets or properties of the
Purchaser pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Purchaser is a party or by which any of such assets or
properties are bound or affected which would have a material adverse effect on
the ability of the Purchaser to consummate the transactions contemplated by this
Agreement.
SECTION 4.03. Governmental Consents and Approvals. The execution,
delivery and performance of this Agreement by the Purchaser do not and will not
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Authority, except (a) as
described in a writing given to the Sellers by the Purchaser on or prior to the
date of this Agreement and (b) the notification requirements of the HSR Act.
SECTION 4.04. Investment Purpose. The Purchaser is acquiring the
Partnership Interests solely for the purpose of investment and not with a view
to, or for offer or sale in connection with, any distribution thereof.
SECTION 4.05. Brokers. Except for X.X. Xxxxxx, the fees and expenses
of which will be paid for by the Purchaser, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
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SECTION 5.01. Conduct of Business Prior to the Closing. (a) Except
as described in Section 5.01(a) of the Sellers' Disclosure Schedule, between the
date hereof and the time of the Closing, the Partnership shall, and shall cause
each Subsidiary to, conduct its business in the ordinary course and consistent
with the Partnership's and such Subsidiary's prior practice. Without limiting
the generality of the foregoing, except as described in Section 5.01(a) of the
Sellers' Disclosure Schedule, as requested by the Purchaser, or as required to
accommodate changes in the Purchaser's business practices, the Partnership and
each Subsidiary shall (i) continue their advertising and promotional activities,
and pricing and purchasing policies, including capital purchasing, in accordance
with past practice; (ii) not shorten or lengthen the customary payment cycles
for any of their payables or receivables; (iii) use all reasonable efforts to
(A) preserve intact their business organizations, (B) keep available to the
Purchaser the services of the employees of the Partnership and each Subsidiary,
(C) continue in full force and effect without material modification all existing
policies or binders of insurance currently maintained in respect of the
Partnership, each Subsidiary and their respective businesses and (D) preserve
their current relationships with their customers, suppliers and other persons
with which they have significant business relationships; (iv) exercise, but only
after notice to the Purchaser and receipt of the Purchaser's prior written
approval, any rights of renewal pursuant to the terms of any of the material
leases or subleases which by their terms would otherwise expire; and (v) not
engage in any practice, take any action, fail to take any action or enter into
any transaction which could cause any representation or warranty of the Parent
Entities or the Sellers to be untrue or result in a breach of any covenant made
by the Parent Entities, the Sellers or the Partnership in this Agreement.
(b) Without limiting the generality of the foregoing, the
Partnership covenants and agrees that between the date hereof and the Closing
Date, (i) the Partnership will not, without the prior written consent of the
Purchaser, enter into any contract (other than with regard to the Partnership's
July 1997 trade show) with Premier relating to the provision by Premier to the
Partnership, or by the Partnership to Premier, of any services after the Closing
Date, and (ii) at least five Business Days prior to entering into any contract
pursuant to which the Partnership will be a provider or purchaser of services
relating to the Partnership's help desk or network outsourcing businesses, the
Partnership will provide reasonably detailed information concerning such
proposed contract to the Purchaser and will consult with the Purchaser and
discuss in good faith alternatives to entering into any such contract with the
Purchaser to the extent the Purchaser objects to such proposed contract.
(c) Except as described in Section 5.01(c) of the Sellers'
Disclosure Schedule, the Partnership covenants and agrees that, prior to the
Closing, without the prior written consent of the Purchaser, neither the
Partnership nor any Subsidiary will take any of the actions enumerated in the
second sentence of Section 3.08 (including, without limitation, clauses (i)
through (xix) thereof); provided, however, that if the Partnership or any
Subsidiary desires to take any of the actions enumerated in Section 3.08(v) in
response to
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general industry conditions, the Partnership shall provide written notice of the
proposed actions to the Purchaser and the Purchaser shall respond to such
written notice not more than two Business Days after the receipt thereof.
SECTION 5.02. Access to Information. (a) From the date hereof until
the Closing, upon reasonable notice, the Partnership shall, and the Partnership
shall cause each of the Subsidiaries and each of the Partnership's and the
Subsidiaries' officers, directors, employees, agents, representatives,
accountants and counsel to: (i) afford the officers, employees and authorized
agents, accountants, counsel, underwriters, financing sources and
representatives of the Purchaser reasonable access, during normal business
hours, to the offices, properties, plants, other facilities, books and records
of the Partnership and each Subsidiary (including access to the Partnership's
1996 financial audit work papers) and to those officers, directors, employees,
agents, accountants and counsel of the Partnership and of each Subsidiary who
have any knowledge relating to the Partnership, any Subsidiary or their
respective businesses and (ii) furnish to the officers, employees and authorized
agents, accountants, counsel, underwriters, financing sources and
representatives of the Purchaser such additional financial and operating data
and other information regarding the assets, properties and goodwill of the
Partnership (excluding any Returns or other Tax information of the Parent
Entities or the Sellers), the Subsidiaries and their respective businesses (or
legible copies thereof) as the Purchaser may from time to time reasonably
request, including, without limitation, any financial information or other
information that will be required in connection with the IPO.
(b) In order to facilitate the resolution of any claims made against
or incurred by the Sellers prior to the Closing, for a period of seven years
after the Closing, the Purchaser shall (i) retain the books and records of the
Partnership and the Subsidiaries relating to periods prior to the Closing in a
manner reasonably consistent with the prior practice of the Partnership and the
Subsidiaries; provided, however, that any Tax-related books and records shall be
maintained for a period of ten years after the Closing Date, and prior to
disposal thereof the Purchaser shall contact the Parent Entities and offer to
provide them with copies of any such books and records subject to reimbursement
of reasonable expenses; and (ii) upon reasonable notice, afford the officers,
employees and authorized agents and representatives of the Sellers reasonable
access (including the right to make, at the Sellers' expense, photocopies),
during normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser, the Partnership or any Subsidiary after
the Closing or for any other reasonable purpose, for a period of seven years
following the Closing, the Parent Entities and the Sellers shall (i) retain the
books and records of the Sellers which relate to the Partnership and the
Subsidiaries and their operations for periods prior to the Closing and which
shall not otherwise have been delivered to the Purchaser, the Partnership or any
Subsidiary; provided, however, that any Tax-related books and records shall be
maintained
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for a period of ten years after the Closing Date, and prior to disposal thereof
the Parent Entities or the Sellers, as the case may be, shall contact the
Purchaser and offer to provide it with copies of any such books and records
subject to reimbursement of reasonable expenses; and (ii) upon reasonable
notice, afford the officers, employees and authorized agents and representatives
of the Purchaser, the Partnership or any Subsidiary reasonable access (including
the right to make photocopies, at the expense of the Purchaser, the Partnership
or such Subsidiary), during normal business hours, to such books and records.
SECTION 5.03. Confidentiality. (a) Except to the extent of any
disclosure required (after consultation with the Parent Entities and after
seeking appropriate confidential treatment) to be made in the Purchaser's
registration statement on Form S-1 (including in any exhibits thereto) filed
with the Securities and Exchange Commission (the "SEC") in connection with the
IPO or in any future filings made with the SEC or other regulatory authorities,
and except as reasonably required by the underwriters in connection with the
IPO, the parties shall comply with, and shall cause their respective
representatives and agents to comply with all of their respective obligations
under the Non-Disclosure Agreement, dated as of May 1, 1996, between the
Partnership and the Purchaser (the "Non-Disclosure Agreement"), until the
Closing, at which time such Non-Disclosure Agreement and the obligations of the
Purchaser and the Partnership thereunder shall terminate. If this Agreement is,
for any reason, terminated prior to the Closing, the Non-Disclosure Agreement
shall continue in full force and effect.
(b) Each of the Sellers, the Parent Entities and the Partnership
separately agrees for itself to, and shall cause its agents, representatives and
Affiliates to: (i) treat, hold as confidential and (in the case of the Sellers
and the Parent Entities) not exploit for its benefit or the benefit of other
relationships with any of its customers (and not disclose or provide access to
any Person to) all information relating to the Partnership's or the
Subsidiaries' products, customers, assets, plans, business, finances and
technological developments and programs, (ii) in the event that the Sellers, the
Parent Entities or the Partnership or any such agent, representative or
Affiliate becomes legally compelled to disclose any such information, provide
the Purchaser with prompt written notice of such requirement so that the
Purchaser or the Partnership may seek a protective order or other remedy or
waive compliance with this Section 5.03(b), and (iii) in the event that such
protective order or other remedy is not obtained, or the Purchaser waives
compliance with this Section 5.03(b), furnish only that portion of such
confidential information which is legally required to be provided and exercise
their best efforts to obtain assurances that confidential treatment will be
accorded such information; provided, however, that this sentence shall not apply
to any information that, at the time of disclosure, is available publicly and
was not disclosed in breach of this Agreement by the Sellers, the Parent
Entities, the Partnership, their agents, representatives or Affiliates; provided
further that, with respect to Partnership Intellectual Property, specific
information shall not be deemed to
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be within the foregoing exception merely because it is embraced in general
disclosures in the public domain.
SECTION 5.04. Regulatory and Other Authorizations; Notices and
Consents. (a) Each party shall for itself use all reasonable efforts to obtain
(or, in the case of each of the Parent Entities and the Sellers separately,
cause the Partnership and the Subsidiaries to obtain) all authorizations,
consents, orders and approvals of all Governmental Authorities and officials
that may be or become necessary for their execution and delivery of, and the
performance of their obligations pursuant to, this Agreement and will cooperate
fully promptly seeking to obtain all such authorizations, consents, orders and
approvals. Each party hereto agrees for itself to supply as promptly as
practicable to the appropriate Governmental Authorities any additional
information and documentary material that may be requested pursuant to the HSR
Act.1 Without limiting the generality of the foregoing, each party hereto will
(i) use all reasonable efforts to prevent the entry in a judicial or
administrative proceeding brought under any antitrust law of any preliminary
injunction or other order that would make consummation of the transactions
contemplated hereby unlawful or would prevent or delay such consummation; and
(ii) take promptly, in the event that such an injunction or order has been
issued in such a proceeding, all steps necessary to prosecute an appeal of such
an injunction or order, and diligently prosecute such appeal.
(b) The Parent Entities and the Sellers shall or shall cause the
Partnership and the Subsidiaries to give promptly such notices to third parties
and use all reasonable efforts to obtain such third party consents and estoppel
certificates as the Purchaser may deem necessary or desirable in connection with
the transactions contemplated by this Agreement.
(c) The Purchaser shall cooperate and use all reasonable efforts to
assist the Partnership in giving such notices and obtaining such consents and
estoppel certificates; provided, however, that neither the Purchaser nor the
Parent Entities or Sellers shall have any obligation to give any guarantee or
other consideration of any nature in connection with any such notice, consent or
estoppel certificate or to consent to any change in the terms of any agreement
or arrangement which the Purchaser may deem adverse to the interests of the
Purchaser, the Partnership, any Subsidiary or their respective businesses.
(d) None of the Purchaser, the Parent Entities or the Sellers knows
of any reason why all the consents, approvals and authorizations necessary for
the consummation of the transactions contemplated hereby will not be received.
--------
1 Assumes that all necessary filings under the HSR Act will have been made
prior to the execution of this Agreement.
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SECTION 5.05. Notice of Developments. (a) Prior to the Closing, the
Partnership and each Parent Entity and Seller shall promptly notify the
Purchaser in writing of all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could result in any breach of a
representation or warranty or covenant of such Parent Entity or Seller in this
Agreement, or could result in any breach of a covenant of the Partnership in
this Agreement, or which could have the effect of making any representation or
warranty of such Parent Entity or Seller in this Agreement untrue or incorrect
in any material respect.
(b) Prior to the Closing, the Purchaser shall promptly notify the
Parent Entities and the Sellers in writing of all events, circumstances, facts
and occurrences arising subsequent to the date of this Agreement which could
result in any breach of a representation or warranty or covenant of the
Purchaser in this Agreement or which could have the effect of making any
representation or warranty of the Purchaser untrue or incorrect in any material
respect.
SECTION 5.06. No Solicitation of Employees. (a) Each Parent Entity
and Seller severally agrees for itself that it shall not, and each shall cause
each of its Affiliates not to, during the period from the date hereof until
Closing and, if the Closing occurs, for a period of two years from the Closing,
without the prior written consent of the Purchaser, directly or indirectly,
solicit on a specific or targeted basis for employment or employ any person who
is an employee of the Partnership or any Subsidiary, provided that this Section
5.06(a) shall not prohibit any form of employment advertising or prevent the
hiring of any individual who contacts the Parent Entity or Seller or any of
their Affiliates.
(b) The Purchaser agrees that it shall not, during the period from
the date hereof until Closing and, if the Closing occurs, for a period of two
years from the Closing, without the prior written consent of United, directly or
indirectly, solicit on a specific or targeted basis for employment or employ any
person who is an employee of United's information systems division, provided
that this Section 5.06(b) shall not prohibit any form of employment advertising
or prevent the hiring of any individual who contacts the Purchaser.
SECTION 5.07. Use of Intellectual Property. (a) The Sellers
acknowledge that from and after the Closing the name "Apollo Travel Services"
and all similar or related names, marks and logos (all of such names, marks and
logos being the "ATS Names") shall be owned by the Partnership or a Subsidiary,
that (except as provided in Section 5.07(b)) neither the Sellers nor any of
their Affiliates shall have any rights in the ATS Names, and that none of the
Sellers nor any of their Affiliates will contest the ownership or validity of
any rights of the Purchaser, the Partnership or any Subsidiary in or to the ATS
Names.
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(b) Except as expressly agreed in writing by the Purchaser or
pursuant to any agreements and licenses between the Purchaser and the Sellers,
or the Partnership and the Purchaser or any of its Affiliates, from and after
the Closing, neither the Sellers nor any of their Affiliates shall use any of
the Partnership Intellectual Property.
SECTION 5.08. Monthly Financial Statements. Between the date hereof
and the Closing, promptly following the end of each calendar month, but in no
event later than 15 days following the end of each calendar month, the
Partnership will prepare, or cause to be prepared, and will promptly provide to
the Purchaser, a consolidated balance sheet of the Partnership and the
Subsidiaries as of the end of the preceding calendar month and statements of
consolidated income of the Partnership and the Subsidiaries for the preceding
calendar month. Such monthly financial statements shall be prepared in
accordance with past practice.
SECTION 5.09. Premier Travel Services, L.L.C.. Attached as Exhibit
5.09 hereto is a complete and correct list of the assets and liabilities of
Premier Travel Services, L.L.C. or any business of the Partnership related
thereto ("Premier") and of the employees of the Partnership who will be
transferred with Premier on or prior to the Closing Date. On or prior to the
Closing Date, all of the equity interests in Premier shall be transferred by the
Partnership to a Person other than the Partnership or any Subsidiary thereof.
SECTION 5.10. Pre-Closing Balance Sheet. No fewer than five Business
Days prior to the Closing Date, the Partnership shall prepare an unaudited
consolidated balance sheet of the Partnership and the Subsidiaries in accordance
with this Section 5.10 (the "Pre-Closing Balance Sheet"). In the event that the
Closing is scheduled to occur after the fifteenth day of any particular calendar
month, the Pre-Closing Balance Sheet shall be prepared as of the last day of the
immediately preceding calendar month. If the Closing is scheduled to occur on or
prior to the fifteenth day of any particular calendar month, the Pre-Closing
Balance Sheet shall be prepared as of the last day of the second preceding
calendar month. The Pre-Closing Balance Sheet shall be prepared in accordance
with U.S. GAAP applied on a basis consistent with the preparation of the Net
Asset Test Reference Balance Sheet and shall exclude (i) any indebtedness for
borrowed money of the Partnership and the Subsidiaries, (ii) any cash or cash
equivalents, other than cash in the amount of any checks outstanding, and (iii)
the assets and liabilities of Premier. During the preparation of the Pre-Closing
Balance Sheet and during the period of any review by the Purchaser and its
representatives of the Pre-Closing Balance Sheet, the Partnership shall provide,
and the Parent Entities and the Sellers shall cause the Partnership and the
Subsidiaries and their respective officers, employees and agents to provide,
full access to the books, records, facilities and employees of the Partnership
and the Subsidiaries, in each case to the extent required by the Purchaser and
its representatives in order to monitor the preparation of, and review, the
Pre-Closing Balance Sheet.
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SECTION 5.11. Environmental Audit. Prior to the Closing Date, the
Purchaser and the Partnership shall conduct, or cause to be conducted, an
investigation of the underground storage tank located on the Partnership's
premises in Atlanta, Georgia (the "Environmental Audit"). The costs and expenses
of the Environmental Audit shall be borne equally by the Purchaser, on the one
hand, and the Sellers (pro rata in proportion to their respective Partnership
Interests), on the other. During the preparation of the Environmental Audit, the
Partnership shall provide, and the Parent Entities and the Sellers shall cause
the Partnership and the Subsidiaries and their respective officers, employees
and agents to provide, full access to the books, records, facilities and
employees of the Partnership and the Subsidiaries, in each case to the extent
required by the Purchaser and the Persons conducting the Environmental Audit in
order to prepare the Environmental Audit.
SECTION 5.12. Employees and Employee Benefits. From and after the
Closing Date, the Purchaser shall grant all employees of the Partnership and the
Subsidiaries credit for all service (to the same extent as service with the
Purchaser or any subsidiary of the Purchaser is taken into account with respect
to similarly situated employees of the Purchaser and the subsidiaries of the
Purchaser) with the Partnership and any Subsidiary and their respective
predecessors (including, without limitation, United and Covia Partnership) prior
to the Closing Date for all purposes as if such service with the Partnership or
any Subsidiary or predecessor was service with the Purchaser or any subsidiary
of the Purchaser (provided, however, that no such past service credit shall be
granted to the extent it would result in duplicative accrual of benefits for the
same period of service), and, with respect to any medical or dental benefit
plan, the Purchaser shall waive any pre-existing condition exclusions and
actively-at-work requirements (provided, however, that no such waiver shall
apply to a pre-existing condition of any employee of the Partnership or any
Subsidiary who was, as of the Closing Date, excluded from participation in a
Plan by virtue of such pre-existing condition) and provide that any covered
expenses incurred on or before the Closing Date by an employee or an employee's
covered dependent shall be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-pocket provisions after
the Closing Date to the same extent as such expenses are taken into account for
the benefit of similarly situated employees of the Purchaser and subsidiaries of
the Purchaser. The Purchaser shall provide or shall cause the Partnership and
each Subsidiary to provide benefits to any employee of the Partnership and each
Subsidiary which are not less favorable in the aggregate than the benefits
provided to similarly situated employees of the Purchaser and subsidiaries of
the Purchaser, excluding flight benefits; provided, however, that nothing in
this Section 5.12 shall require the Purchaser to provide benefits to any such
employee that are more favorable than the benefits provided or proposed to be
provided to such employee by the Partnership or any Subsidiary immediately prior
to the Closing Date.
SECTION 5.13. Further Action. Each of the parties hereto shall use
all reasonable efforts to take, or cause to be taken, all appropriate action, do
or cause to be done all things necessary, proper or advisable under applicable
Law, and execute and deliver such
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documents and other papers, as may be required to carry out the provisions of
this Agreement and consummate and make effective the transactions contemplated
by this Agreement.
ARTICLE VI
TAX MATTERS
SECTION 6.01. Tax Indemnity. (a) Except to the extent of Ordinary
Course Taxes with respect to sales and use tax audit settlements, the Other Tax
Audit Reserve and, with respect to the open sales tax audits as of April 30,
1997 for which specific reserves of $1.8 million have been established (the
"Sales Tax Audit Reserve"), the Sales Tax Audit Reserve, the Partnership and the
Purchaser and its Affiliates, officers, directors, employees, agents, successors
and assigns (each an "Indemnified Party") shall be indemnified and held harmless
by the Parent Entities and Sellers, on a several basis, for any and all Losses
arising out of or resulting from:
(i) the breach of any representation or warranty made in Section
3.18; or
(ii) Liabilities of the Partnership or any Subsidiary for Taxes with
respect to the period before the Closing Date; provided, however, that
such indemnity shall be reduced by any Tax Benefit to the Purchaser or any
Affiliate of the Purchaser with respect to such Losses or Liabilities or
the items or adjustments resulting in such Losses or Liabilities;
provided, further, that amounts under clause (i) and clause (ii) shall be
without duplication of the amount provided for under the other clause.
To the extent that any of the Parent Entities and the Sellers' undertakings set
forth in this Section 6.01 may be unenforceable, each of the Parent Entities and
the Sellers shall contribute the maximum amount that it is permitted to
contribute under applicable law to the payment and satisfaction of all Losses
incurred by the Indemnified Parties.
(b) The Sellers and the Purchaser agree to treat all payments made
under this Article VI and all indemnification payments made under Article VIII
of this Agreement as adjustments to the Purchase Price for Tax purposes except
to the extent that the laws of a particular jurisdiction provide otherwise.
(c) The obligation of each Parent Entity and its Affiliate Seller
with respect to any indemnification payment under this Section 6.01 shall be
limited to such Affiliate Seller's pro rata share (in accordance with its
Partnership Interest in the Partnership) of the amount of such indemnification
payment under this Section 6.01.
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SECTION 6.02. Apportionment of Taxes. (a) For purposes of Section
6.01, Taxes with respect to the period before the Closing Date shall mean: (i)
Taxes imposed on the Partnership or any Subsidiary with respect to taxable
periods of such person ending on or before the Closing Date; and (ii) with
respect to taxable periods beginning before the Closing Date and ending after
the Closing Date, Taxes imposed on the Partnership or any Subsidiary which are
allocable, pursuant to Section 6.02(b), to the portion of such period ending on
the Closing Date.
(b) In the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date, the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon or related
to income or receipts, or (y) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, which are
governed by Section 6.07), deemed equal to the amount which would be
payable if the taxable year ended with the Closing Date; and
(ii) in the case of Taxes imposed on a periodic basis with respect
to the assets of the Partnership, or otherwise measured by the level of
any item, deemed to be the amount of such Taxes for the entire period (or,
in the case of such Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding period) multiplied by a fraction
the numerator of which is the number of calendar days in the period ending
on the Closing Date and the denominator of which is the number of calendar
days in the entire period.
SECTION 6.03. Returns and Payments. (a) From the date of this
Agreement through and after the Closing Date, the Sellers shall prepare and file
or otherwise furnish in proper form to the appropriate Tax Authority (or cause
to be prepared and filed or so furnished) in a timely manner all Returns
relating to the Partnership and the Subsidiaries that are due on or before the
Closing Date. The Sellers shall pay or cause the Partnership to pay Taxes prior
to the Closing Date in such amounts and at such times as are consistent with
past practices employed with respect to the Partnership and the Subsidiaries. In
the event that the Closing Date does not occur prior to the due date (including
any extension thereof) for the filing of the Federal, state or local Partnership
income tax returns for the Partnership's 1996 taxable year, the Sellers will
provide the Purchaser and its authorized representative a copy of such completed
returns at least 10 Business Days prior to the earlier of the due date
(including any extension thereof) for the filing of such returns or the date of
filing. The Purchaser shall prepare and file or otherwise furnish in proper form
to the appropriate Tax authority (or cause to be prepared and filed or so
furnished) in a timely manner all Returns relating to the Partnership and the
Subsidiaries that are due after the Closing Date. With respect to Returns filed
by the Purchaser for any period ending on or before the Closing
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Date, the Purchaser shall pay the Taxes shown as due and owing on such Returns.
Returns of the Partnership and the Subsidiaries prepared by the Sellers and not
yet filed for any taxable period that ends on or before the Closing Date shall
be prepared in a manner consistent with past practices employed with respect to
the Partnership and the Subsidiaries (except to the extent counsel for the
Sellers renders a legal opinion that there is no reasonable basis in law
therefore or determines that a Return cannot be so prepared and filed without
being subject to penalties).
(b) With respect to Returns filed by the Purchaser for any period
beginning before and ending after the Closing Date, the Purchaser shall pay the
Taxes shown as due and owing on such Returns. The Purchaser will notify the
Sellers of any position it will take on a Return which would be inconsistent
with that taken by the Sellers on prior Returns. If the Purchaser and the
Sellers disagree on the position taken and the position would in any way alter
the balance of Taxes owing or Tax refunds or credits obtainable with respect to
(i) any Tax period of the Partnership or the Subsidiaries ending on or prior to
the Closing Date or (ii) in the case of Tax refunds or credits, any period up to
and including the Closing Date which is part of a Tax period of the Partnership
or the Subsidiaries beginning prior to and ending after the Closing Date, then
the parties shall submit the matter to a mutually selected independent
nationally recognized accounting firm, other than KPMG Peat Marwick and its
affiliates and Xxxxxx Xxxxxxxx and its affiliates (the "Independent Firm"), and
the Independent Firm shall resolve the issue based on a standard of maximal
fairness to both the Purchaser and the Sellers.
(c) With respect to any Return required to be filed by the Purchaser
with respect to the Partnership and the Subsidiaries and as to which an amount
of Tax is allocable to the Sellers under Section 6.02(b), the Purchaser shall
provide the Sellers and their authorized representatives with a copy of such
completed Return and a statement certifying the amount of Tax shown on such
Return that is allocable to the Sellers pursuant to Section 6.02(b), together
with appropriate supporting information and schedules at least 10 Business Days
prior to the due date (including any extension thereof) for the filing of such
Return, in the case of Taxes other than payroll and sales and use Taxes, or five
(5) days prior to the date on which such Return is required to be filed (taking
into account any extensions) in the case of payroll and sales and use Taxes, and
the Sellers and their authorized representatives shall have the right to review
and comment on such Return and statement prior to the filing of such Return.
(d) The sum of the Purchase Price and any Partnership Liabilities
that are part of the Purchaser's Federal income tax basis for its partnership
interest shall be allocated among the assets as of the Closing Date in
accordance with a schedule to be mutually agreed upon by the Purchaser and the
Sellers within 90 days following the Closing Date (the "Purchase Price
Allocation Schedule"). If the Purchaser and the Sellers cannot agree on the
Purchase Price Allocation Schedule, then the parties shall submit the matter to
the
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Independent Firm, and the Independent Firm shall resolve the issue based on a
standard of maximal fairness to both the Purchaser and the Sellers. Any
subsequent adjustments to the sum of the Purchase Price and such Partnership
Liabilities shall be reflected in the allocation in a manner consistent with
Treas. Reg. 1.1060-1T(f). For all Tax purposes (including, without limitation,
the Purchaser's statement filed pursuant to Treas. Reg. 1.743-1(b)(3)), the
Purchaser and the Seller agree to report the transactions contemplated in this
Agreement in a manner consistent with the Purchase Price Allocation Schedule and
agree that none of them will take any position inconsistent therewith in any Tax
return, in any refund claim, in any litigation, or otherwise.
SECTION 6.04. Contests. (a) After the Closing, the Purchaser shall
promptly notify the Sellers in writing of any written notice of a proposed
assessment or claim in an audit or administrative or judicial proceeding of the
Purchaser or of any of the Partnership and the Subsidiaries which, if determined
adversely to the taxpayer, would be grounds for indemnification under this
Article VI or could otherwise result in any Tax cost to any of the Sellers;
provided, however, that a failure to give such notice will not affect the
Purchaser's right to indemnification under this Article VI except to the extent
such failure on the part of the Purchaser or any Affiliate of the Purchaser
prejudices the Sellers by preventing the avoidance of all or a portion of the
Tax liability in question.
(b) In the case of an audit or administrative or judicial proceeding
that relates to periods ending on or before the Closing Date, provided that the
Sellers acknowledge in writing their indemnification obligation liability under
Article VI of this Agreement with respect to the potential liability of the
Purchaser, the Partnership or any Subsidiary as a result of such audit or
administrative or judicial proceeding, the Sellers (or the Parent Entities, as
the case may be) shall have the right, at their expense, to participate in and
control the conduct of such audit or proceeding; the Purchaser may also
participate in any such audit or proceeding but only if such audit or proceeding
relates to non-income Taxes and, if the Sellers do not assume the defense of any
such audit or proceeding, the Purchaser, at its expense, may defend the same in
such manner as it may deem appropriate, including, but not limited to, settling
such audit or proceeding after giving five days' prior written notice to the
Sellers setting forth the terms and conditions of settlement. In the event that
issues relating to a potential adjustment for which the Sellers have
acknowledged their indemnification obligation are required to be dealt with in
the same proceeding as separate issues relating to a potential adjustment for
which the Purchaser would be liable, the Purchaser shall have the right, at its
expense, to control the audit or proceeding with respect to the latter issues,
provided that the Purchaser provides the Sellers with a written acknowledgement
of the Purchaser's liability.
(c) Notwithstanding Section 6.04(b), neither the Purchaser nor the
Sellers shall enter into any compromise or agree to settle any claim pursuant to
any Tax audit or proceeding, including without limitation a Federal, state or
local income Tax audit or
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proceeding to the extent it involves Partnership items, which would adversely
affect the other party for such year or any prior or subsequent year without the
written consent of the other party which consent may not be unreasonably
withheld. If the Purchaser or the Sellers refuse to provide the respective other
party with written consent to settle any such claim, then the parties shall
submit the matter to an Independent Firm and the Independent Firm shall resolve
the issue based on a standard of maximal fairness to both the Purchaser and the
Sellers.
(d) The Purchaser and the Sellers (or the Parent Entities, as the
case may be) shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with (i) the filing of Returns pursuant to
Section 6.03 (including such amended Returns for periods (or portions thereof)
ending on or prior to the Closing Date that the Sellers or the Parent Entities
may reasonably request the Purchaser to file; provided, however, that if in the
Purchaser's reasonable judgment the filing of the amended return would be
disadvantageous to the Purchaser, the Purchaser may deny the Sellers' or the
Parent Entities' request and the parties shall submit the matter to an
Independent Firm and the Independent Firm shall resolve the issue based on a
standard of maximal fairness to both the Purchaser and the Sellers or the Parent
Entities, as the case may be]) and (ii) any audit, litigation or other
proceeding with respect to Taxes.
SECTION 6.05. Survival of Obligations. Notwithstanding any provision
in this Agreement to the contrary, obligations of the Parent Entities and the
Sellers to indemnify and hold harmless the Indemnified Parties pursuant to this
Article VI, and the representations and warranties contained in Section 3.18,
shall terminate at the close of business on the 180th day following the
expiration of the applicable statute of limitations with respect to the Tax
liabilities in question (giving effect to any waiver, mitigation or extension
thereof).
SECTION 6.06. Section 754 Elections. If and only if requested by
Purchaser, the Sellers and the Parent Entities shall cause any Subsidiary (other
than Premier) which is the subject of such request to make the election
described in Section 754 of the Code for such Subsidiary's taxable year which
ends on or includes the Closing Date.
SECTION 6.07. Conveyance Taxes. The Sellers and the Parent Entities
on the one hand and the Purchaser on the other hand shall share equally any
liability for any real property transfer or gains, sales, use, transfer, value
added, stock transfer, and stamp taxes, any transfer, recording, registration,
and other fees, and any similar Taxes (but specifically not including Taxes on
or with respect to income) that become payable in connection with the
transactions contemplated by this Agreement. The Partnership shall prepare in a
timely manner for the review and approval of the parties and file such
applications and documents as shall permit any such Tax to be assessed and paid
on or prior to the Closing Date in accordance with any available presale filing
procedure. The parties
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shall execute and deliver all instruments and certificates necessary to enable
the Partnership to comply with the foregoing.
SECTION 6.08. Tax Refunds, Credits and Other Payments. (a) The
Purchaser shall, within 10 days of receipt of any Tax refund or credit actually
received by or on behalf of the Purchaser or any Affiliate or successor thereto
(other than a refund or credit with respect to Taxes paid by the Purchaser or
any Affiliate or successor thereto on or after the Closing Date and not
previously indemnified by the Parent Entities or the Sellers pursuant to Section
6.01(a)) (A) for or attributable to any Tax period of the Partnership or any
Subsidiary ending at or prior to the Closing Date or (B) for or attributable to
any period up to and including the Closing Date which is part of a Tax period of
the Partnership or any Subsidiaries beginning prior to and ending after the
Closing Date, pay such Tax refund or credit (a "Returnable Refund or Credit") on
an After-Tax Basis and net of amounts payable under Section 6.08(c) hereof to
the Sellers (including any interest or addition actually received thereon). If
the amount of any Returnable Refund or Credit is applied against any other
liability of any of the Purchaser or any Affiliate or successor thereto for
Taxes for any Tax period after the Closing Date, the Purchaser shall, within 10
days of the date of such application, pay to the Sellers an amount equal to the
Returnable Refund or Credit on an After-Tax Basis and net of amounts payable
under Section 6.08(c) hereof (including any interest or addition actually
received thereon). The Purchaser shall deliver with payment to the Sellers a
copy of any written explanation of the facts surrounding the Returnable Refund
or Credit and a copy of any related notice or statement received from any Tax
authority.
(b) To the extent that the Purchaser or any Affiliate or successor
thereto receives a Tax Benefit that is attributable to an adjustment of any
income, gain, loss, deduction, credit, refund or other Tax item made with
respect to any Tax period of the Partnership or any Subsidiary ending on or
prior to the Closing Date or any period beginning before and ending on the
Closing Date which is part of a Tax period of the Partnership or any Subsidiary
beginning before and ending after the Closing Date and in connection therewith
the Sellers or the Parent Entities or any Affiliate or successor thereto suffer
a Loss, the Purchaser will, within 10 days of the receipt of such Tax Benefit by
the Purchaser, or any Affiliate or successor thereto, pay to the Sellers their
respective share, in proportion to their respective Partnership interests, of an
amount equal to the lesser of the amount of the Tax Benefit or the Loss.
(c) Without duplication of any amounts paid to the Purchaser
pursuant to Section 6.01, to the extent that the Seller receives a Tax Benefit
that is attributable to an adjustment of any income, gain, loss, deduction,
credit, refund or other Tax item made with respect to any Tax period of the
Partnership or any Subsidiary ending on or before the Closing Date or any period
ending on or before the Closing Date which is part of a Tax period of the
Partnership or any Subsidiary beginning before and ending after the Closing Date
and in connection therewith the Purchaser or any Affiliate or successor thereto
suffers a
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Loss, the Seller will, within 10 days of the receipt of such Tax Benefit by the
Seller, pay to the Purchaser an amount equal to the lesser of the amount of the
Tax Benefit or the Loss.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Parent Entities, the
Sellers and the Partnership. The obligations of the Parent Entities, the Sellers
and the Partnership to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Purchaser contained in this Agreement shall have been true
and correct in all material respects when made and shall be true and correct in
all material respects as of the Closing, with the same force and effect as if
made as of the Closing Date, other than such representations and warranties as
are made as of another date, which shall be true and correct in all material
respects as of such date (provided, however, if any portion of any
representation or warranty is already qualified by materiality, for purposes of
determining whether this Section 7.01(a) has been satisfied with respect to such
portion of such representation or warranty, such portion of such representation
or warranty as so qualified must be true and correct in all respects), and the
covenants and agreements contained in this Agreement to be complied with by the
Purchaser on or before the Closing shall have been complied with in all material
respects, and the Sellers shall have received a certificate from the Purchaser
to such effect signed by a duly authorized officer thereof;
(b) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Partnership Interests contemplated
hereby shall have expired or shall have been terminated;
(c) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against any of the Parent Entities, the
Sellers, the Partnership or the Purchaser, seeking to restrain or prevent the
consummation of the transactions contemplated by this Agreement; provided,
however, that the provisions of this Section 7.01(c) shall not apply if the
Parent Entities, the Sellers, the Partnership or any Affiliate thereof have
directly or indirectly solicited or encouraged any such Action;
(d) Resolutions. The Sellers shall have received a true and complete
copy, certified by the Secretary of the Purchaser, of the resolutions of the
Purchaser's Supervisory Board evidencing its authorization of the consummation
of the transactions contemplated hereby;
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(e) Incumbency Certificate. The Sellers shall have received a
certificate of the Secretary of the Purchaser certifying the names and
signatures of the officers of the Purchaser authorized to sign this Agreement
and the other documents to be delivered hereunder;
(f) Escrow Agreement. The Purchaser shall have duly executed and
delivered the Escrow Agreement in substantially the form of Exhibit 2.04(f)
hereto;
(g) Consummation of Transactions Contemplated by Transaction
Agreement. The transactions contemplated by the Transaction Agreement, a form of
which is attached as Exhibit 7.01(g) hereto (the "Transaction Agreement"), shall
have been consummated; and
(h) Completion of the IPO. The IPO shall have been consummated.
SECTION 7.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Parent Entities and the Sellers contained in this
Agreement shall have been true and correct in all material respects when made
and shall be true and correct in all material respects as of the Closing with
the same force and effect as if made as of the Closing, other than such
representations and warranties as are made as of another date, which shall be
true and correct in all material respects as of such date (provided, however,
that the representations and warranties contained in Section 3.03 will be true
and correct in all respects and that if any portion of any representation or
warranty is already qualified by materiality, for purposes of determining
whether this Section 7.02(a) has been satisfied with respect to such portion of
such representation or warranty, such portion of such representation or warranty
as so qualified must be true and correct in all respects), and the covenants and
agreements contained in this Agreement to be complied with by the Parent
Entities, the Sellers and the Partnership on or before the Closing shall have
been complied with in all material respects, and the Purchaser shall have
received certificates from each of the Parent Entities and Sellers and from the
Partnership to such effect (relating solely to such Persons) signed by a duly
authorized officer thereof;
(b) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Partnership Interests contemplated
hereby shall have expired or shall have been terminated;
(c) No Proceeding or Litigation. No Action shall have been commenced
or threatened by or before any Governmental Authority against any of the Parent
Entities, the
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Sellers, the Partnership or the Purchaser, seeking to restrain or prevent the
consummation of the transactions contemplated hereby; provided, however, that
the provisions of this Section 7.02(c) shall not apply if the Purchaser has
solicited or encouraged any such Action;
(d) Resolutions of the Sellers, the Parent Entities and the
Partnership. The Purchaser shall have received a true and complete copy,
certified by the Secretary or an Assistant Secretary of each of the Sellers, the
Parent Entities and the Partnership, of the resolutions duly and validly adopted
by the Board of Directors of each of the Sellers and the Parent Entities and the
Supervisory Board of the Partnership evidencing their authorization of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(e) Incumbency Certificate of the Sellers, the Partnership and the
Parent Entities. The Purchaser shall have received certificates of the Secretary
or an Assistant Secretary of each of the Parent Entities, the Sellers and the
Partnership certifying the names and signatures of the officers of each of the
Parent Entities, the Sellers and the Partnership authorized to sign this
Agreement and the other documents to be delivered hereunder;
(f) Consents and Approvals. The Purchaser and the Sellers shall have
received, each in form and substance satisfactory to the Purchaser, all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials and all third party consents and estoppel certificates set forth
on Schedule 7.02(f);
(g) Good Standing; Qualification to Do Business. The Purchaser shall
have received good standing certificates for the Partnership and for each
Subsidiary from the secretary of state of the jurisdiction in which each such
entity is organized dated as of a date not earlier than five Business Days prior
to the Closing Date and accompanied by bring-down telegrams dated the Closing
Date;
(h) Financing. The Purchaser shall have obtained financing on terms
acceptable to it sufficient to enable it to consummate the transactions
contemplated by this Agreement;
(i) Completion of the IPO. The IPO shall have been consummated;
(j) No Material Adverse Effect. No event or events shall have
occurred, or be reasonably likely to occur, which have, or are reasonably likely
to have, a Material Adverse Effect;
(k) No Debt. The Partnership shall have no indebtedness for borrowed
money as of the Closing Date;
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(l) United Network Services Agreement. All necessary actions shall
have been taken by the Partnership to ensure that the Network Services
Agreement, dated as of September 16, 1993, between the Partnership and United
will remain in full force and effect after the Closing;
(m) Net Asset Test. The Net Assets reflected on the Seasonally
Adjusted Net Asset Test Reference Balance Sheet shall not exceed the Net Assets
reflected on the Pre-Closing Balance Sheet by $5 million or more;
(n) Environmental Audit. The results of the Environmental Audit
shall be satisfactory to the Purchaser;
(o) Non-Neutral Travel Provider Issuer. The Purchaser and United
shall have entered into an agreement with respect to the settlement of the
Non-Neutral Travel Provider Issuer as set forth in paragraph (c) of the letter
dated February 21, 1997 from the Purchaser to the Partnership's Supervisory
Board;
(p) Transfer of Premier. Premier shall have been transferred as set
forth in Section 5.09;
(q) Transfer of Interest in Apollo Communications Services L.L.C..
The Sellers shall have transferred their respective equity interests in Apollo
Communications Services L.L.C. to the Partnership or one of the wholly-owned
Subsidiaries; and
(r) Consummation of Transactions Contemplated by the Transaction
Agreement. The transactions contemplated by the Transaction Agreement shall have
been consummated.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties. The
representations and warranties of the parties contained in Sections 3.06, 3.11,
3.14, 3.15, 3.16, 3.17 and 3.19, and Article IV (other than Section 4.05), and
the covenants of the parties set forth in Article V (other than Sections 5.02(b)
and (c), 5.03, 5.06, 5.07, 5.12 and 5.13) shall terminate at Closing. The
representations and warranties of the parties contained in Sections 3.01, 3.02,
3.03, 3.04, 3.05, 3.07, 3.09, 3.10, 3.12, 3.13 and 3.20 and Section 4.05 shall
survive the Closing until the second anniversary of the Closing Date. The
representations and warranties dealing with Tax matters shall survive as
provided in Article VI, and the representations and warranties set forth in
Section 3.08 shall survive the Closing until the first anniversary of the
Closing Date. The covenants of the parties set forth in
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Sections 5.02(b) and (c), 5.03, 5.06, 5.07 and 5.12 shall survive the Closing,
and the other covenants set forth in this Agreement that expressly survive the
Closing shall survive the Closing in accordance with their respective terms.
Notwithstanding the foregoing or anything to the contrary in this Article VIII,
in the event that the Purchaser has actual knowledge prior to the Closing Date
that any of the representations and warranties of the Sellers or the Parent
Entities to survive the Closing in accordance with this Section 8.01 were not
true and correct as of the date hereof or are not true and correct as of the
Closing Date or that the agreements of the Parent Entities and the Sellers
contained in Section 5.03(b) have not been complied with, the sole and exclusive
remedy of the Purchaser with respect to such breaches will be to not consummate
the transactions contemplated by this Agreement if any such breach results in
the nonsatisfaction of the condition contained in Section 7.02(a). For purposes
of the foregoing sentence, the term "actual knowledge" means the actual
knowledge of an officer of the Purchaser, including as a result of the delivery
to the Purchaser by the Parent Entities, the Sellers or the Partnership not
fewer than three Business Days prior to the Closing (other than in a case in
which an event occurs within such three Business Day period which could not have
been anticipated, in which case written notice of such event must be provided to
the Purchaser promptly after the Parent Entities, the Sellers or the Partnership
become aware of it) of a written notice specifically identifying in detail the
nature of the breach and the provisions of this Agreement that have been
breached, without duty of due or specific inquiry other than a written survey of
(i) employees of the Purchaser who are reasonably likely, because of their
substantive and significant contacts with the Partnership, to have knowledge as
to the truth and correctness of the representations and warranties of the Parent
Entities and the Sellers to survive the Closing or whether the Parent Entities
and the Sellers have complied with Section 5.03(b), (ii) the accountants at KPMG
Peat Marwick LLP, (iii) the investment bankers at XX Xxxxxx and (iv) the
attorneys at Shearman & Sterling and Xxxxx Xxxx & Xxxxxxxx, who, in the case of
(ii), (iii) and (iv), actually participated in the Purchaser's due diligence
investigation of the Partnership. Subject to the foregoing, neither the period
of survival nor the liability of the parties hereto with respect to their
representations and warranties and covenants shall be reduced by any
investigation made at any time by or on behalf of any such party. If written
notice of a claim has been given prior to the expiration of the applicable
representations and warranties and covenants by the parties hereto, then the
relevant representations and warranties and covenants shall survive as to such
claim until such claim has been finally resolved.
SECTION 8.02. Indemnification by the Parent Entities and the
Sellers. (a) The Purchaser, its Affiliates, including the Partnership and the
Subsidiaries, and their successors and assigns, and the officers, directors,
employees and agents of the Purchaser, its Affiliates and their successors and
assigns (each a "Purchaser Indemnified Party") shall be indemnified and held
harmless, as and to the extent set forth in this Section 8.02, by the Parent
Entities and the Sellers, severally and not jointly, for any and all
Liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, attorneys' and
consultants' fees and expenses) actually suffered or
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incurred by them (including, without limitation, any Action brought or otherwise
initiated by any of them) on an After-Tax Basis (hereinafter a "Loss"), arising
out of or resulting from:
(i) the breach of any representation or warranty made by the Parent
Entities or the Sellers contained in any of Sections 3.01, 3.02, 3.03,
3.04, 3.05, 3.07, 3.09, 3.10, 3.12, 3.13, 3.18 or 3.20 of this Agreement;
or
(ii) the breach of any covenant or agreement by the Parent Entities
or the Sellers contained in Section 5.03(b) of this Agreement; or
(iii) Liabilities of the Partnership or any Subsidiary, whether
arising before or after the Closing Date, arising from or relating to any
of [specified items listed in the Sellers' Disclosure Schedule]; or
(iv) any shortfall in the Cash of the Partnership that is not
covered by the amount held by the Escrow Agent, together with interest
thereon, as determined by the parties in accordance with Section
2.04(f)(iii); or
(v) Liabilities arising from or related to Premier.
(b) The obligation of a Parent Entity and its Affiliate Seller, as
between themselves, to indemnify a Purchaser Indemnified Party shall be joint
and several and subject to the limitation set forth in the fifth sentence of
Section 8.01 and to the following limitations: (i) no indemnification by any
Parent Entity and Seller (other than an indemnification pursuant to Section
8.02(a)(iv)) shall be made unless the aggregate amount of Losses relating to
breaches or otherwise subject to indemnification hereunder exceeds $5 million,
and then indemnification shall be made solely in the amount of such excess; (ii)
in no event shall the aggregate obligation of all Parent Entities and Sellers to
indemnify the Purchaser Indemnified Parties (other than an indemnification
pursuant to Section 8.02(a)(iv)) exceed $175 million, except for a breach of the
representations and warranties contained in Section 3.03 in which case the
obligation to indemnify the Purchaser Indemnified Parties shall not exceed $700
million; (iii) the aggregate obligation of each Parent Entity and its Affiliate
Seller and the obligation of each Parent Entity and its Affiliate Seller with
respect to any individual indemnifiable Loss, respectively, shall be limited to
such Affiliate Seller's pro rata share (in accordance with its Partnership
Interests in the Partnership) of the aggregate amount set forth in clause (ii)
or such individual indemnifiable Loss, respectively, except to the extent such
Parent Entity or Affiliate Seller is in breach of its representations and
warranties under any of Section 3.01, 3.03, 3.04 or 3.05, or is in breach of the
covenants contained in 5.03, in which event the aggregate obligations of such
Parent Entity or Affiliate Seller and the obligation of such Parent Entity or
Affiliate Seller with respect to any individual indemnifiable Loss,
respectively, shall not be subject to the limitation set forth in this clause
(iii); (iv) any recovery of a Loss due to breach of one representation will
preclude
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recovery of such Loss due to breach of any other representation, and all
indemnification shall be without duplication of any other recovery; (v) a
Purchaser Indemnified Party shall not be entitled to be indemnified for breach
of the representations and warranties set forth in Section 3.08 or Section 3.12
unless it establishes that (A) a reasonably prudent business person would have
concluded, based on the information available to such person at the time of
taking the action that caused such breach or, in the case of Section 3.12, at
the time of entering into the contract that caused such breach, that the Losses
associated with such action or such contract, as the case may be, would exceed
the benefits associated therewith, and (B) in the case of Sections 3.12(a)(vi)
and (a)(viii) only, that such breach has had a materially negative effect on the
Partnership or the Subsidiaries; (vi) a Purchaser Indemnified Party shall not be
entitled to be indemnified for any breach of the representations and warranties
set forth in Section 3.10 if and to the extent such breach also constitutes a
breach of any of the representations and warranties set forth in Sections 3.11,
3.16 or 3.17; and (vii) for purposes of determining whether a Purchaser
Indemnified Party is entitled to be indemnified for any breach of the
representations and warranties contained in Section 3.12, the term "Material
Contracts" shall be deemed to refer solely to (A) any contracts or agreements
under which the Partnership can be reasonably expected to pay or be paid at
least $1,000,000 over any five year period during the life of the contract
following the Closing Date, (B) any contracts or agreements that limit or
purport to limit the ability of the Partnership or any Subsidiary to compete in
any line of business or with any Person or in any geographic area or during any
period of time, or (C) any contracts the presence or absence of which would have
a Material Adverse Effect.
(c) Each Purchaser Indemnified Party shall use its reasonable
efforts to mitigate any Losses for which it seeks indemnification hereunder.
(d) To the extent that the Parent Entities' and the Sellers'
undertakings set forth in this Section 8.02 may be unenforceable, the Parent
Entities and the Sellers shall contribute (in the same proportion as they would
otherwise have indemnified the Purchaser Indemnified Party in accordance with
Section 8.02(b)(iii)) the maximum amount that they are permitted to contribute
under applicable law to the payment and satisfaction of all Losses incurred by
the Purchaser, the Partnership and the Subsidiaries.
SECTION 8.03. Tax Matters. Anything in this Article VIII to the
contrary notwithstanding, the rights and obligations of the parties with respect
to indemnification for any and all Tax matters shall be governed solely by
Article VI.
SECTION 8.04. Indemnification by the Purchaser. (a) The Parent
Entities, its Affiliates and their successors and assigns, and the officers,
directors, employees and agents of the Parent Entities, their Affiliates and
their successors and assigns (each a "Seller Indemnified Party") shall be
indemnified and held harmless, as and to the extent set forth in
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this Section 8.04, by the Purchaser for any and all Losses on an After-Tax Basis
arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Purchaser contained in Section 4.05 of this Agreement;
(ii) Liabilities of the Partnership or any Subsidiary, other than
any Liabilities for which the Purchaser is entitled to be indemnified
pursuant to Section 8.02;
(iii) any Cash that the Purchaser is required to pay to the Parent
Entities, together with interest thereon, as determined by the parties in
accordance with Section 2.04(f)(iii).
(b) Each Seller Indemnified Party shall use its reasonable efforts
to mitigate any Losses for which it seeks indemnification hereunder.
(c) To the extent that the Purchaser's undertakings set forth in
this Section 8.04 may be unenforceable, the Purchaser shall contribute the
maximum amount that it is permitted to contribute under applicable law to the
payment and satisfaction of all Losses incurred by the Parent Entities.
SECTION 8.05. Indemnification Procedures. A Purchaser Indemnified
Party or a Seller Indemnified Party, as the case may be (in each case, the
"Indemnified Party"), shall give the Parent Entities and the Sellers, or the
Purchaser, as the case may be (in each case, the "Indemnifying Party"), notice
of any matter which an Indemnified Party has determined has given or could give
rise to a right of indemnification under this Agreement, within 60 days of such
determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of an Indemnifying Party under this
Article VIII with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article VIII (a "Third
Party Claim") shall be governed by and contingent upon the following additional
terms and conditions: if an Indemnified Party shall receive notice of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party notice of
such Third Party Claim within 30 days of the receipt by the Indemnified Party of
such notice; provided, however, that the failure to provide such notice shall
not release the Indemnifying Party from any of its obligations under this
Article VIII except to the extent the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from any
other obligation or Liability that it may have to any Indemnified Party
otherwise than under this Article VIII. If the Indemnifying Party acknowledges
in writing its obligations to indemnify the Indemnified Party hereunder against
any Losses (subject to the limitations set
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forth in Section 8.02(b)) that may result from such Third Party Claim, then such
Indemnifying Party shall be entitled to assume and control the defense of such
Third Party Claim at its expense and through counsel of its choice if it gives
notice of its intention to do so to the Indemnified Party within five Business
Days of the receipt of such notice from the Indemnified Party; provided,
however, that if there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the reasonable judgment of the
Indemnified Party for the same counsel to represent both the Indemnified Party
and the Indemnifying Party, then the Indemnified Party shall be entitled to
retain its own counsel, in each jurisdiction for which the Indemnified Party
determines counsel is required to participate in such defense, at the expense of
the Indemnifying Party. In the event the Indemnifying Party exercises the right
to undertake any such defense against any such Third Party Claim as provided
above, the Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party, at the Indemnifying
Party's expense, all witnesses, pertinent records, materials and information in
the Indemnified Party's possession or under the Indemnified Party's control
relating thereto as is reasonably required by the Indemnifying Party, subject to
reimbursement of reasonable out-of-pocket expenses. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party
all such witnesses, records, materials and information in the Indemnifying
Party's possession or under the Indemnifying Party's control relating thereto as
is reasonably required by the Indemnified Party, subject to reimbursement of
reasonable out-of-pocket expenses. No such Third Party Claim may be settled by
the Indemnifying Party without the prior written consent of the Indemnified
Party.
ARTICLE IX
TERMINATION AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of the Sellers and the Purchaser;
(b) by either the Sellers or the Purchaser if the Closing shall not
have occurred by December 31, 1997;
(c) by either the Purchaser or the Sellers in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this
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Agreement and such order, decree, ruling or other action shall have become final
and nonappealable; or
(d) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) there shall have been a breach of any material
representation or warranty of the Parent Entities and the Sellers contained in
this Agreement; (ii) a Seller, a Parent Entity or the Partnership shall not have
complied with any material covenant or agreement to be complied with by them and
contained in this Agreement; or (iii) the Parent Entities, the Sellers, the
Partnership or any Subsidiary makes a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against the Parent
Entities, the Sellers, the Partnership or any Subsidiary seeking to adjudicate
any of them a bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition of
its debts under any Law relating to bankruptcy, insolvency or reorganization.
(e) by the Sellers and the Parent Entities if, between the date
hereof and the time scheduled for the Closing: (i) there shall have been a
breach of any material representation or warranty of the Purchaser contained in
this Agreement; (ii) the Purchaser shall not have complied with any material
covenant or agreement to be complied with by them and contained in this
Agreement; or (iii) the Purchaser makes a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against the Purchaser
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up or reorganization, arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy, insolvency or
reorganization.
SECTION 9.02. Effect of Termination. (a) In the event of termination
of this Agreement as provided in Section 9.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
except that the provisions of Sections 5.03(a), 9.02(b), 10.01, 10.02, 10.03,
10.06, 10.08, 10.10, 10.11 and 10.13 shall survive any such termination.
(b) Notwithstanding the foregoing, if the Closing does not occur
because of a breach by a party, such party will reimburse the other parties (as
their sole and exclusive remedy hereunder) for their out-of-pocket costs and
expenses, including, without limitation, fees and disbursements of counsel,
financing sources (other than bank commitment fees paid by the Purchaser prior
to June 15, 1997 or paid by the Purchaser after June 15, 1997 without consulting
the Parent Entities) and accountants, and disbursements (but not fees) of
financial advisors, incurred in connection with the preparation, negotiation and
performance of this Agreement and the transactions contemplated hereby.
SECTION 9.03. Waiver. A party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
parties, (b) waive any
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inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered by the other parties pursuant
hereto or (c) waive compliance with any of the agreements or conditions of the
other parties contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 10.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 10.02):
(a) if to United or Covia:
United Air Lines, Inc.
0000 X. Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. "Jake" Brace, III
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with a copy to:
United Air Lines, Inc.
0000 X. Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq,
and a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(b) if to USAW or USAM:
US Airways, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (703) _______
Attention: Xxxx Xxxxx
with a copy to:
US Airways, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (703) _______
Attention: Xxxxxx Xxxx, Esq.
and a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
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(c) if to Air Canada or Resnet:
Air Canada
C.P. 14,000/P.O. Xxx 00,000
Xxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Telecopy: (000) 000-0000
Attention: Xxx Xxxxxx, Esq.
with a copy to:
Osler, Hoskin, & Harcourt
1 First Canadian Place
West 61st Floor
Toronto, Ontario
Canada M5X 3B8
Telecopy: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxx, Esq.
(d) if to the Sellers: copies to Covia, USAM and Resnet as set
forth above
(e) if to the Parent Entities: copies to United, USAW and Air
Canada as set forth above
(f) if to the Partnership:
Apollo Travel Services Partnership
0000 X. Xxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxx, Esq.
with copies to:
United, Covia, USAW, USAM, Air Canada and Resnet, as set forth
above
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(g) if to the Purchaser:
Galileo International Partnership
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X'Xxxxx, Esq.
SECTION 10.03. Public Announcements. Except as may be required by
Law, no party to this Agreement shall make, or cause to be made, any press
release or public announcement in respect of this Agreement or the transactions
contemplated hereby or the existence of discussion or negotiations between the
parties or otherwise communicate with any news media without the prior consent
of the other parties, and the parties shall cooperate as to the form, timing and
contents of any such press release or public announcement.
SECTION 10.04. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 10.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 10.06. Entire Agreement. This Agreement (including the
Exhibits and the Sellers' Disclosure Schedule which are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein) and
the Non-Disclosure Agreement
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constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between the Parent Entities, the Sellers,
the Partnership and the Purchaser with respect to the subject matter hereof and
thereof.
SECTION 10.07. Assignment. This Agreement may not be assigned by
operation of law or otherwise without the express written consent of the Sellers
and the Purchaser (which consent may be granted or withheld by the Sellers or
the Purchaser); provided, however, that the Purchaser may assign all or any
portion of its rights and obligations under this Agreement to one or more
Affiliates of the Purchaser without the consent of the Sellers; provided further
that in the event of such assignment, Purchaser will remain liable for any
obligations hereunder not performed by such assignee or assignees.
SECTION 10.08. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and its
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 10.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Parent Entities, the Sellers, the Partnership and the Purchaser or (b) by a
waiver in accordance with Section 9.03.
SECTION 10.10. Arbitration. (a) Subject to the final sentence of
this Section 10.10, any dispute arising between or among the parties hereto or
any of them involving the subject matters covered by this Agreement shall be
submitted to arbitration under this Section 10.10. Any party asserting a breach
of this Agreement by any other party or parties shall notify all other parties
of such alleged breach (a "Dispute Notice") and the parties shall attempt to
resolve such dispute amicably and if they shall fail to resolve it within thirty
(30) days of the date of the Dispute Notice, any party may notify any of the
other parties that it wishes to commence an arbitration proceeding under this
Section 10.10 (an "Arbitration Request"). In any arbitration proceeding the
party or parties commencing the arbitration (alone or together, if more than
one, the "Petitioner") shall include in the Arbitration Request (a) a statement
of the facts constituting the alleged breach or dispute, (b) a written statement
of position ("Statement") regarding the dispute and (c) the name of an elector
designated by it. The Statement shall state the facts and arguments in support
of the position taken by the party submitting such Statement and shall detail
that party's proposed solution and relief sought (if any). Copies of any
Arbitration Request shall be furnished at the same time to the other parties
hereto. The party or parties with whom the Petitioner has its dispute (alone or
together, if more than one, the "Respondent") shall within five (5) Business
Days after the date of the Arbitration Request designate a second elector by
notice
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to the Petitioner (copies of which shall be furnished to the other parties), but
if it or they shall fail to do so within such period the Petitioner may
designate an elector on Respondent's behalf. The electors chosen by the
Petitioner and the Respondent shall attempt to agree upon an arbitrator (the
"Arbitrator"), but if they are unable to do so within twenty (20) Business Days
after the designation of the second elector, then either elector thereafter may
apply to the American Arbitration Association (the "Association") for the
selection of the Arbitrator in accordance with the Commercial Arbitration Rules
of such Association. The Arbitrator so selected shall have full power to decide
any dispute referred to in this Section 10.10. The arbitration proceedings shall
be conducted in the English language, and the place of arbitration and the
making of the Award (as defined below) shall be the City of New York. The
UNCITRAL rules of commercial arbitration shall apply to any arbitration
commenced pursuant to this Section 10.10, as modified by the following
procedure:
(i) Within five (5) Business Days of the selection of the Arbitrator
(the "Commencement Date"), the Respondent shall deliver its Statement
regarding the dispute to the Arbitrator and to the Petitioner.
(ii) Within fifteen (15) Business Days from the Commencement Date,
each of the Petitioner and Respondent shall deliver to the Arbitrator and
to the other party, a response ("Response") to the other party's Statement
setting forth opposing facts and arguments and limited in length to ten
(10) typed, single spaced pages (excluding any evidentiary exhibits
included therein).
(iii) Within twenty (20) Business Days from the Commencement Date,
each of the Petitioner and the Respondent may deliver to the Arbitrator
and to the other party, a reply to the Response limited to setting forth
facts and arguments in rebuttal to the Statement and Response of the other
party and limited in length to five (5) typed, single spaced pages
(excluding any evidentiary exhibits included therein).
(iv) Within twenty-five (25) Business Days from the Commencement
Date, each of the Petitioner and Respondent shall present an oral
summation of its position to the Arbitrator in the presence of the other
party in accordance with such rules of procedure including, without
limitation, length of presentation and right of cross-examination, as the
Arbitrator shall determine in writing and deliver to the parties not less
than three (3) Business Days prior to such hearing; provided, however,
that such hearing shall not exceed eight (8) hours in total and may not be
adjourned except for extraordinary circumstances beyond the control of the
parties.
(v) The Arbitrator shall either issue his decision and award
("Award") or request a further meeting of the parties within fifteen (15)
days of the hearing.
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(vi) Any such further meeting of the parties shall take place within
five (5) Business Days of the request therefor and shall be conducted as
determined by the Arbitrator. The Arbitrator shall issue his Award no
later than fifteen (15) days after any such further meeting of the
parties.
(vii) The Award shall be in writing and shall be limited to a
decision either completely in favor of Petitioner's request for relief or
completely in favor of Respondent's request for relief. The Award shall be
final and binding upon the parties hereto and judgment may be entered
thereon in any court of competent jurisdiction and the costs and expenses
of such arbitration (and of enforcing any Award) shall be borne by the
party losing such arbitration.
(b) This Section 10.10 shall in no way affect the right of any party
to seek such interim relief, and only such relief, as may be required to
maintain the status quo in aid of the arbitration in any court of competent
jurisdiction.
(c) In order to facilitate the resolution of any claim for
indemnification brought by a Purchaser Indemnified Party pursuant to Section
8.02 and the enforcement of any Award resulting therefrom, the Parent Entities
and the Sellers agree to be joined as parties to any arbitration relating to a
Purchaser Indemnified Party's claim for indemnification pursuant to Section
8.02. In addition, in order to facilitate the enforcement of any Award resulting
from a claim for indemnification brought by a Purchaser Indemnified Party
pursuant to Section 8.02 or a Seller Indemnified Party pursuant to Section 8.04,
the Parent Entities, the Sellers and the Purchaser (i) submit to the
jurisdiction of any New York State or Federal court sitting in the Borough of
Manhattan, The City of New York with respect to any actions relating to the
enforcement of any Award providing for indemnification of a Purchaser
Indemnified Party pursuant to Section 8.02 or a Seller Indemnified Party's claim
for indemnification pursuant to Section 8.02, as the case may be; (ii) agree
that all claims with respect to such actions shall be heard and determined in
the United States District Court for the Southern District of New York, or if
that court does not have subject matter jurisdiction, in any state court located
in the Borough of Manhattan, The City of New York, and the Parent Entities, the
Sellers and the Purchaser agree to submit to the jurisdiction of and venue in,
such courts; (iii) irrevocably waive, to the fullest extent permitted by law,
any objection that they may have to the laying of venue of any such suit, action
or proceeding brought in such a court and any claim that any such suit, action
or proceeding brought in such a court has been brought in an inconvenient forum;
(iv) consent to the service of process upon them by mailing or delivering such
service to their agent for service of process and represent and warrant that
United has irrevocably appointed Prentice Hall, New York, New York, and each of
the other Parent Entities, each Seller and the Purchaser has irrevocably
appointed CT Corporation, New York, New York, as its agent to accept and
acknowledge on its behalf service of any and all process that may be served in
any such suit, action or proceeding in any court sitting in New York City; and
(v) agree that
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a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
SECTION 10.11. Sellers' Disclosure Schedule. From time to time after
the date hereof and not later than three Business Days (other than in a case in
which an event occurs within such three Business Day period which could not have
been anticipated, in which case written notice of such event must be provided to
the Purchaser promptly after the Parent Entities, the Sellers or the Partnership
become aware of it) prior to the Closing Date, each of the Parent Entities and
the Sellers may amend or supplement the Sellers' Disclosure Schedule in writing
in accordance with Section 10.02 with respect to any matter coming to its
attention or arising which, if known by it or existing prior to the date of this
Agreement would have been required to be set forth or described in the Sellers'
Disclosure Schedule or which is necessary or desirable to complete or correct
any information in the Sellers' Disclosure Schedule or in any representation or
warranty of such Parent Entity or Seller which has been rendered inaccurate
thereby. For purposes of determining the satisfaction of the Purchaser's
condition to close as set forth in Section 7.02(a), the Sellers' Disclosure
Schedule shall be deemed not to have been amended or supplemented from that
attached hereto on the date hereof.
SECTION 10.12. Governing Law. This Agreement shall be governed by
the laws of the State of New York, excluding (to the greatest extent permissible
by law) any rule of law that would cause the application of the laws of any
jurisdiction other than the State of New York.
SECTION 10.13. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 10.14. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
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IN WITNESS WHEREOF, the Parent Entities, the Sellers, the
Partnership and the Purchaser have caused this Agreement to be executed as of
the date first written above by their respective officers thereunto duly
authorized.
UNITED AIR LINES, INC.
By: _____________________________
Name:
Title:
COVIA CORPORATION
By: _____________________________
Name:
Title:
US AIRWAYS, INC.
By: _____________________________
Name:
Title:
USAM CORP.
By: _____________________________
Name:
Title:
AIR CANADA
By: _____________________________
Name:
Title:
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RESNET HOLDINGS, INC.
By: _____________________________
Name:
Title:
APOLLO TRAVEL SERVICES PARTNERSHIP
By: _____________________________
Name:
Title:
GALILEO INTERNATIONAL PARTNERSHIP
By: _____________________________
Name:
Title:
