1
EXHIBIT 10.25
---------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 3, 1995
BY AND AMONG
FIRST AVIATION SERVICES INC.
FE ACQUISITION SUBSIDIARY,
TRITON GROUP LTD.
AND
NATIONAL AIRMOTIVE CORPORATION
-------------------------------------------------
2
TABLE OF CONTENTS
RECITALS.....................................................................
ARTICLE I - THE MERGER.............................................. 1
1.1 The Merger........................................ 1
1.2 Effective Time of the Merger...................... 1
1.3 Effect of the Merger.............................. 2
1.4 Certificate of Incorporation...................... 2
1.5 By-Laws........................................... 2
1.6 Directors......................................... 2
1.7 Officers.......................................... 3
ARTICLE II - MERGER CONSIDERATION................................... 3
2.1 Conversion of Shares.............................. 3
2.2 Merger Consideration.............................. 3
ARTICLE III - REPRESENTATIONS OF SELLER............................. 3
3.1 Organization and Authority; Execution and
Delivery................................................... 4
3.2 Existence and Good Standing....................... 4
3.3 Capital Stock..................................... 4
3.4 Financial Statements.............................. 5
3.5 Personal Property................................. 5
3.7 Material Contracts................................ 6
3.8 No Violations..................................... 7
3.9 Litigation........................................ 8
3.10 Taxes............................................. 8
3.11 [Omitted]......................................... 8
3.12 Intellectual Properties........................... 8
3.13 Compliance with Laws.............................. 9
3.14 Employee Benefit Plans............................ 9
3.15 Insurance......................................... 10
3.16 Broker's or Finder's Fees......................... 10
3.17 Books and Records................................. 11
3.18 Accounts Receivable............................... 11
3.19 Inventory......................................... 11
3.20 No Material Change................................ 11
3.21 Absence of Change or Event........................ 11
3.22 Products.......................................... 13
3.23 Environmental Matters............................. 13
3.24 Governmental Matters.............................. 14
3.25 Labor Matters..................................... 15
3.26 Disclosure........................................ 15
3.27 Notice of Developments............................ 15
ARTICLE IV - REPRESENTATIONS OF PURCHASER........................... 16
4.1 Existence and Good Standing of Purchaser.......... 16
4.2 No Restrictions................................... 16
4.3 Purchase for Investment........................... 16
4.4 Broker's or Finder's Fees......................... 16
4.5 Litigation........................................ 17
i
3
ARTICLE V - CLOSING/ESCROW......................................... 17
5.1 Closing.......................................... 17
5.2 Interest......................................... 17
5.3 Escrow........................................... 17
ARTICLE VI - CONDUCT OF BUSINESS; EXCLUSIVE DEALING; REVIEW........ 18
6.1 Conduct of Business of the Company............... 18
6.2 Exclusive Dealing................................ 19
6.3 Review of the Company............................ 19
6.4 Confidentiality.................................. 19
6.5 Best Efforts..................................... 20
6.6 Notification of Certain Matters.................. 20
6.7 Permits and Approvals............................ 20
6.8 Preservation of Confidentiality.................. 21
ARTICLE VII - CONDITIONS TO PURCHASER'S OBLIGATIONS................ 21
7.1 Opinion of Seller's Counsel...................... 21
7.2 No Material Adverse Change....................... 22
7.3 Truth of Representations and Warranties.......... 22
7.4 Performance of Agreements........................ 22
7.5 No Orders; Legal Proceedings..................... 22
7.6 Consents and Approvals........................... 23
7.7 Third Party Consents and Approvals............... 23
7.8 Due Diligence.................................... 23
7.9 Financing........................................ 23
7.10 Resignation of Directors......................... 23
ARTICLE VIII - CONDITIONS TO SELLER'S OBLIGATIONS.................. 23
8.1 Opinions of Purchaser's Counsel.................. 23
8.2 Truth of Representations and Warranties.......... 23
8.3 Performance of Agreements........................ 24
8.4 No Orders; Legal Proceedings..................... 24
8.5 Consents and Approvals........................... 24
ARTICLE IX - NO SURVIVAL OF REPRESENTATIONS; EVENTS OF
TERMINATION........................................................ 24
9.1 No Survival of Representations................... 24
9.2 Events of Termination............................ 24
9.3 Effect of Termination............................ 25
9.4 Failure to Close................................. 25
ARTICLE X - MISCELLANEOUS.......................................... 26
10.1 Expenses......................................... 26
10.2 Transfer Taxes................................... 27
10.3 Governing Law.................................... 27
10.4 "Person" Defined................................. 27
10.5 Captions......................................... 27
10.6 Publicity........................................ 27
10.7 Continuation of Indemnification, Insurance....... 27
10.8 Memorandum; Disclaimer of Projections............ 28
10.9 Notices.......................................... 28
10.10 Parties in Interest.............................. 29
10.11 Counterparts..................................... 29
ii
4
10.12 Entire Agreement.................................. 29
10.13 Amendments........................................ 29
10.14 Severability...................................... 29
10.15 Third Party Beneficiaries......................... 29
iii
5
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of this 3rd day of March 1995, by and among First Aviation
Services Inc., a Delaware corporation ("Purchaser"), FE Acquisition Subsidiary,
a California corporation and wholly owned direct or indirect subsidiary of
Purchaser ("Acquisition Sub"), Triton Group Ltd., a Delaware corporation
("Seller"), and National Airmotive Corporation, a California corporation and
wholly owned subsidiary of Seller (the "Company").
BACKGROUND
A. Seller owns all of the outstanding shares of capital stock
of the Company (the "Stock").
B. It is the intention of the parties hereto that Acquisition
Sub merge with and into the Company upon the terms and subject to the conditions
contained herein (the "Merger").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and conditions set forth in
this Agreement and in accordance with the California General Corporation Law
("CGCL"), on the Closing Date (as defined in Section 5.1 hereof), Acquisition
Sub shall be merged with and into the Company, and the separate existence of
Acquisition Sub shall thereupon cease, and the Company, as the surviving
corporation in the Merger, shall continue its corporate existence under the laws
of the State of California.
1.2 EFFECTIVE TIME OF THE MERGER. As soon as practicable
following the waiver or satisfaction of the conditions to the Closing (as
defined in Section 5.1) specified herein, an officer's certificate of each of
Acquisition Sub and the Company shall be executed in accordance with Section
1103 of the CGCL, and a duly executed agreement of merger, in substantially the
form attached hereto as Exhibit A (the "Merger Agreement"), with such officers'
certificates attached and, if applicable, a certificate of satisfaction by the
California Franchise Tax Board with respect to the Company shall be filed with
the Secretary of State of the State of California, as provided in the CGCL. The
Merger shall thereupon become
1
6
effective in accordance with the CGCL, and such time is hereinafter referred to
as the "Effective Time" and the date on which the Effective Time occurs is
hereinafter referred to as the "Closing Date."
1.3 EFFECT OF THE MERGER. At the Effective Time, the separate
existence of Acquisition Sub shall cease and the Company shall thereupon and
thereafter possess all of the rights, privileges, immunities, powers, franchises
and authority, and be subject to all of the restrictions, disabilities and
duties, of each of the Acquisition Sub and the Company (collectively the
"Constituent Corporations"); and the rights, privileges, immunities, powers,
franchises and authority of each of the Constituent Corporations, and all assets
and property of every description, real, personal and mixed, and every interest
therein, wherever located, and all debts or other obligations belonging or due
to each of the Constituent Corporations on whatever account, as well as all
other things in action or belonging to each of the Constituent Corporations,
shall be vested in the Company; and all property, rights, privileges,
immunities, powers, franchises and authority of any of the Constituent
Corporations, and each and every other interest of each them, shall be
thereafter the property of the Company as they were of the Constituent
Corporations, and the title to any real estate or interest therein vested by
deed or otherwise in any Constituent Corporation shall not revert or be in any
way impaired by reason of the Merger; but all rights of creditors and all liens
upon any property of each of the Constituent Corporations shall be preserved
unimpaired, and the Company shall be liable for the debts, liabilities, duties
and obligations of each of the Constituent Corporations and any claim existing,
or action or proceeding pending, by or against each of the Constituent
Corporations may be prosecuted to judgment with right of appeal, as if the
Merger had not taken place.
1.4 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall remain as the Certificate of Incorporation of the Company upon
completion of the Merger until thereafter amended in accordance with applicable
law.
1.5 BY-LAWS. The By-Laws of the Acquisition Sub, as in effect
immediately prior to the Effective Time, shall become the By-Laws of the Company
upon completion of the Merger and remain the Bylaws until thereafter amended in
accordance with applicable law, the Articles of Incorporation of the Company and
such By-Laws.
1.6 DIRECTORS. At the Effective Time, the directors of the
Company immediately prior to the Effective Time shall be deemed to have
resigned. The directors of Acquisition Sub immediately before the Effective Time
shall be the directors of the Company after the Effective Time and shall hold
office until
2
7
their respective successors shall be elected and qualified or as otherwise
provided in the By-Laws of the Company.
1.7 OFFICERS. The executive officers of the Company as of the
Effective Time shall remain the executive officers of the Company and shall
continue to hold office until their respective successors shall be appointed and
qualified or as otherwise provided in the By-Laws of the Company.
ARTICLE II
MERGER CONSIDERATION
2.1 CONVERSION OF SHARES. At the Effective Time:
(a) Each share of Stock, by virtue of the Merger and
without any action on the part of the holder thereof, shall be canceled and
cease to be outstanding and shall be converted into the right to receive $2.7368
per share, assuming there are 4,750,000 shares of Stock outstanding and no
interest is payable pursuant to Section 5.2 hereof.
(b) Each issued and outstanding share of capital
stock of Acquisition Sub at and as of the Effective Time shall be converted into
one share of Common Stock, $.01 par value, of the Company, one certificate for
which shall be issued to Purchaser.
2.2 MERGER CONSIDERATION.
(a) AMOUNT. Subject to the terms and conditions
hereof, the aggregate consideration payable for all shares of Stock surrendered
and canceled pursuant to the Merger is equal to Thirteen Million Dollars
($13,000,000) plus any interest payable to Seller pursuant to Section 5.2 hereof
(the "Merger Consideration").
(b) PAYMENT OF MERGER CONSIDERATION. Promptly after
the Effective Time, upon surrender of the certificates representing the Stock,
the Merger Consideration in the form of a cashier's check or wire transfer (less
any amount to be distributed to Seller in accordance with Section 7 of the
Escrow Agreement (as defined in Section 5.3 hereof)) shall be delivered to
Seller.
ARTICLE III
REPRESENTATIONS OF SELLER
Except as set forth in the disclosure schedule hereto
delivered by Seller to Purchaser on the date hereof, as may be amended in
accordance with Section 3.27 hereof (the "Disclosure Schedule"), Seller
represents and warrants as follows:
3
8
3.1 ORGANIZATION AND AUTHORITY; EXECUTION AND DELIVERY. Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby by Seller. The
execution, delivery and performance of this Agreement by Seller and the Company
and the consummation by Seller and the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Seller and the Company. This Agreement has been duly executed and
delivered by Seller and the Company and the agreements of Seller and the Company
contained herein constitute the valid and binding obligations of Seller and
Company, respectively, which are enforceable against Seller and the Company in
accordance with their terms except to the extent that enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights in general and except
that the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought.
3.2 EXISTENCE AND GOOD STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The Company is duly qualified or licensed as a foreign corporation to
do business, and is in good standing in under the laws of each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
requires such qualification or licensing except where the failure to be so
qualified or licensed would not have a Material Adverse Effect on the Company.
As used in this Agreement, the term "Material Adverse Effect" and "Material
Adverse Change" mean, with respect to any Party, a material adverse effect or
change, as the case may be, on the financial condition, assets, liabilities
(contingent or otherwise), results of operations, business or business prospects
of the party, considered as a whole. The Company is not in material default
under or in violation of any provision of its Articles of Incorporation or
By-Laws.
3.3 CAPITAL STOCK. The Seller is the sole shareholder of the
Company. All of the outstanding shares of the Stock have been duly authorized
and validly issued and are fully paid and nonassessable. There are 4,750,000
shares of Stock issued and outstanding. Except as set forth in Schedule 3.3
attached hereto, there are no outstanding subscriptions, options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements providing for the purchase, issuance or sale of any shares of
the capital stock of the Company, other than as contemplated by this Agreement.
4
9
3.4 FINANCIAL STATEMENTS. Seller has or shall furnish
Purchaser with audited consolidated balance sheets of the Company (the "Balance
Sheet") as at March 31, 1994, 1993, and 1992, respectively, and the related
statements of income and cash flows for the periods then ended, accompanied by
the report of Price Waterhouse, along with an unaudited balance sheet of the
Company (the "Reference Balance Sheet"), and the related statements of income
and cash flows for the period then ended as of December 31, 1994 (the "Reference
Balance Sheet Date") and an unaudited balance sheet of the Company and the
related statements of income and cash flows for the period then ended as of
January 31, 1995. Such financial statements, including the footnotes thereto
(the "Financial Statements"), except as indicated therein and except for normal
year-end adjustments with respect to the unaudited financial statements , have
been prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP") and fairly present in all material respects the
financial condition and results of the operations of the Company and the changes
in its financial position at such dates and for such periods, except that the
unaudited financial statements do not contain all footnotes required by GAAP.
The Company has no outstanding claims, liabilities or indebtedness or any
nature, whether accrued, absolute, contingent or otherwise, and whether due, or
to become due, probable of assertion or not, which could have a Material Adverse
Effect on the Company and which are required to be reported on a balance sheet
(or in footnotes thereto) prepared in accordance with GAAP, except liabilities
(i) set forth in the Reference Balance Sheet or (ii) incurred subsequent to the
Reference Balance Sheet Date in the ordinary course of business not involving
borrowings of the Company.
3.5 PERSONAL PROPERTY.
(a) Schedule 3.5(a) sets forth: (i) the tangible
physical assets of the Company (including machinery, equipment, tools, dies,
furniture, furnishings, leasehold improvements, vehicles, buildings and
fixtures) that do not constitute real property as of a recent date and that have
a value in excess of $5,000 per item or per category of items and the location
of such items; (ii) individual refundable deposits, prepaid expenses, deferred
charges and "other assets" of the Company in excess of $10,000 in the aggregate,
as of the Reference Balance Sheet Date; and (iii) all loans or advances made by
the Company to, or any investments in, any Person in excess of $5,000, as of the
Reference Balance Sheet Date.
(b) Except as disclosed in Schedule 3.5(b), the
Company has good and valid title to all of its properties, assets and other
rights that do not constitute real property, free and clear of all encumbrances,
liens, charges or other restrictions of any kind or character, except for (a)
liens included in the balances reflected in the Balance Sheet or on Schedule
3.5, (b) liens consisting of zoning or planning restrictions, easements,
5
10
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the value
of, or impair the use of, such property by the Company in the operation of its
business, (c) liens arising by operation of law, (d) liens for current taxes,
assessments or governmental charges or levies on property not yet due and
delinquent and (e) liens which do not materially affect the operation of the
business of the Company (the "Encumbrances"). Except as disclosed in Schedule
3.5(b), the Company owns, has valid leasehold interests (pursuant to leases
disclosed in Schedule 3.6) in or valid contractual rights (pursuant to contracts
disclosed in Schedule 3.7 or not required to be disclosed therein) to use, all
of the assets used in the business of the Company.
(c) The machinery, tools, equipment and other
tangible physical assets used in the business of the Company (other than items
of inventory) (i) are, with respect to the material machinery, tools, equipment
and other physical assets, in good working order, normal wear and tear excepted,
(ii) are being used or are useful in the business of the Company at its present
level of activity and (iii) are in an operating condition sufficient to conduct
the business of the Company as now being conducted.
3.6 REAL PROPERTY. Schedule 3.6 attached hereto contains a
list of all material real property leases to which the Company is a party.
Except as set forth on Schedules 3.6 and 3.8, each lease set forth in Schedule
3.6 is in full force and effect; all rents and additional rents due to date on
each such lease have been paid; in each case, the Company has received no notice
that it is in default thereunder; and there exists no event, occurrence,
condition or act (including the purchase of the Stock hereunder) which, with the
giving of notice, the lapse of time or the happening of any further event or
condition, would become a default by the Company under such lease. True and
complete copies of the leases listed on Schedule 3.6 have been delivered to
Purchaser. Except as set forth in Schedule 3.6 or 3.8, the legality, validity,
enforceability and effectiveness of each such lease will not be affected by this
Agreement or the consummation of the transactions contemplated hereby. To
Seller's and the Company's knowledge, there has been no repudiation of any
provision of any such lease by any party thereto, and there are no proceedings,
actions, claims or other matters materially and adversely affecting the
Company's use or occupancy of the leased premises.
3.7 MATERIAL CONTRACTS. Except as set forth in Schedule 3.7
the Company does not have and is not bound by any agreement, contract or
commitment limiting the freedom of the Company to engage in any line of business
or to compete with any other Person, and the Company has not violated any term
or condition of any such contract or agreement set forth in
6
11
Schedule 3.7 in any material respect. Schedule 3.7 sets forth, as of a recent
date, a true and complete list of each material contract, license, lease,
indenture, franchise, permit or other agreement of the Company, if known to the
Company, which (i) involves an outstanding purchase order or sales order of the
Company of $50,000 or more in any calendar year, (ii) with respect to
indebtedness for money borrowed (other than trade payables in the ordinary and
usual course of business) or (iii) which constitutes any other liability
(including, without limitation, any guarantee, surety contract or similar
instrument), obligation or transaction and, in the case of any item referred to
in this clause (iii), is material to the Company (the items referred to in
clauses (i), (ii) and (iii) of this sentence being referred to herein as
"Material Contracts"). A true and complete copy of each Material Contract is
available to Purchaser or its representative for inspection. Except as set forth
in Schedule 3.7, each Material Contract is a valid and legally binding
obligation of the Company, is in full force and effect, all material obligations
required to be performed thereunder as of the date hereof by the Company have
been performed to date, and, to the knowledge of Seller and the Company, no
other party to any such Material Contract is in default in any material respect
under the terms thereof except for such failures to perform or defaults which
individually and in the aggregate are not material to the Company. Schedule 3.7
indicates (i) which of the customer contracts identified thereon are terminable
on notice of 60 days or less and (ii) the names of and describes all contracts
with and the appropriate percentage of business attributable to the ten largest
customers as of the Reference Balance Sheet based upon revenues for the
preceding nine-month period and ten most significant suppliers of the business
of the Company as of a recent date, and any original equipment manufacturer
suppliers of significant goods or services (other than electricity, gas,
telephone or water) to the Company with respect to which alternative sources of
supply are not readily available on comparable terms and conditions.
3.8 NO VIOLATIONS. Except as set forth in Schedule 3.8
attached hereto and assuming all filings required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), are duly made
and the waiting period thereunder has been terminated or has expired, neither
the execution and delivery of this Agreement by Seller and the Company, nor the
consummation of the transactions contemplated hereby (a) will violate any
provision of the Articles of Incorporation or By-Laws of Seller or the Company,
(b) will violate any statute, rule, regulation, order or decree of any public
body or authority by which Seller or the Company is bound or binding upon any of
its properties or assets and (c) will conflict with, result in a violation or
breach of, or constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or cancel, or require
any notice under any Material Contract.
7
12
3.9 LITIGATION. Except as set forth in Schedule 3.9 attached
hereto, and except with regard to worker's compensation claims, there is no
action, suit or proceeding at law or in equity by any Person or any arbitration
or any administrative or other proceeding by or before any governmental or other
instrumentality or agency, pending or, to Seller's and the Company's knowledge,
threatened against the Company which would have a material adverse effect on the
business, financial condition or results of operations of the Company.
3.10 TAXES. The Company has filed or caused to be filed, or
will file or cause to be filed on or prior to the Closing Date (as defined in
Section 5.1), all federal, state, local and foreign income, gross receipts,
sales, use, property, production, payroll, franchise, withholding, employment,
social security, license, excise, transfer, gains and other tax returns or
reports required to be filed by it, and has paid or withheld, or caused to be
paid or withheld, all material taxes of any nature whatsoever, including any
related penalties, interest and liabilities (any of the foregoing being referred
to herein as a "Tax"), required to be paid as described therein, other than
where the failure to file such returns or to pay or withhold such taxes would
not have a material adverse effect on the financial condition, properties,
business or results of operations of the Company or where such Taxes are being
contested in good faith and for which adequate reserves have been established.
The Company has not made an election to be treated as a "consenting corporation"
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company has no material deferred intercompany gain within the
meaning of the Treasury Regulations promulgated under Section 1502 of the Code.
Except as set forth in Schedule 3.10, there are no outstanding requests by the
Company for any extension of time within which to file any return or within
which to pay any Taxes shown to be due on any return. As a result of the
transactions contemplated hereby, the Company will not be obligated to make a
payment to an individual that would be a "parachute payment" to a "disqualified
Individual" as those terms are defined in Section 280G of the Code. Except as
disclosed on Schedule 3.10, (a) there are no waivers in effect of the applicable
statutory period of limitation for any Taxes of the Company for any taxable
period and (b) no deficiency assessment or proposed adjustment with respect to
any Tax liability of the Company for any taxable period is pending or, to
Seller's and the Company's knowledge, threatened. There are no tax sharing
agreements between the Company and any other party other than with Seller and a
copy of such agreement will be provided to Purchaser.
3.11 [OMITTED].
3.12 INTELLECTUAL PROPERTIES. Except as set forth in Schedule
3.12 attached hereto, the Company does not have any right, title or interest in
or to (including rights as a
8
13
licensee) any domestic and foreign patents, patent applications, patent
licenses, software licenses, tradenames, trademarks, service marks, trademark
registrations and applications, or copyright registrations and applications
(collectively "Intellectual Property"), and there are no pending proceeding or
litigation or other adverse claims involving the Company with respect to
Intellectual Property.
3.13 COMPLIANCE WITH LAWS. To the actual knowledge of each of
the Company's President, Senior Vice President, and Chief Financial Officer,
except as set forth in Schedule 3.13 attached hereto, the Company has received
no written notification alleging any existing material violation of any
applicable statutes, rules, regulations (including laws, rules and regulations
respecting employment and employment practices, terms and conditions of
employment and wage and hours), ordinances, codes, orders, licenses, permits or
authorizations, including, without limitation, any applicable business,
building, zoning, antipollution, occupational safety, health or other law,
ordinance or regulation which would have a Material Adverse Effect or the
Company. To the actual knowledge of each of the Company's President, Senior Vice
President, and Chief Financial Officer, the conduct of the Company's business is
in conformity with all foreign, federal, state, local and other governmental and
regulatory requirements, except where such non-conformities, individually or in
the aggregate, do not have a Material Adverse Effect on the Company.
3.14 EMPLOYEE BENEFIT PLANS.
(a) All employee benefit plans of the Company (the
"Benefit Plans"), as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, ("ERISA"), are listed in
Schedule 3.14 hereto. Seller has provided Purchaser with true and complete
copies of:
(i) each of the Benefit Plans, including all
amendments thereto, any related trust agreements, group annuity contracts,
insurance policies or other funding agreements or arrangements; and
(ii) the most recent determination letter as
to qualification under Section 401(a) or 403(a) of the Code, if any, received
from the Internal Revenue Service ("IRS") with respect to each of the Benefit
Plans.
(b) Except as disclosed in Schedule 3.14 hereto:
(i) all contributions which were due and
payable on or before the Closing Date to the Benefit Plans have been made;
9
14
(ii) there is no "accumulated funding
deficiency," as defined in Section 412(a) of the Code, whether or not waived,
with respect to any of the Benefit Plans;
(iii) each of the Benefit Plans for which
the Company has claimed a deduction under Section 404 of the Code, if such plan
was qualified under Section 401(a) or 403(a) of the Code, has received a
favorable determination letter from the IRS as to qualification under such
section, and such favorable determination has not been modified or revoked;
(iv) Each of the Benefit Plans complies with
the material requirements of ERISA and has been administered in material
compliance with its own terms;
(v) there has been no non-exempt "prohibited
transaction", as defined in Section 4975 of the Code, with respect to any
Benefit Plan;
(vi) no Benefit Plan is a "multiemployer
plan," as defined in Section 3(37) of ERISA;
(vii) no Benefit Plan provides welfare
benefits following termination of employment, except as required by Section 601
of ERISA and under consulting agreements entered into between the Company and
five of its employees; and
(viii) neither the execution of this
Agreement nor its performance will create any obligation to make or increase the
amount of any payment to an employee of Seller, accelerate the time by which any
payment to an employee of Seller must be made, or cause any employee of Seller
to become vested in any payment or benefit, in any of theses cases whether under
a Benefit Plan or under any other plan, program or agreement.
3.15 INSURANCE. Schedule 3.15 attached hereto contains a list
of each policy and contract for property, casualty liability and workers'
compensation insurance and bond and surety arrangements maintained by the
Company. All such policies contracts and arrangements are in full force and
effect, and neither the Company nor Seller has received any notice of
termination or material increase in premiums with respect to any of such
policies. The Seller shall cause the Company to use its reasonable efforts to
keep or cause to be kept such policies contracts and arrangements (or
substantial equivalents) in such amounts duly in force until the Closing Date
and shall give Purchaser notice of any material change in such policies
contracts and arrangements. True and complete copies of such policies, contracts
and arrangements have been delivered to Purchaser.
3.16 BROKER'S OR FINDER'S FEES. No agent, broker, person or
firm acting on behalf of Seller or the Company is, or
10
15
will be, entitled to any commission or broker's or finder's fees from any of the
parties hereto, or from any Person controlling, controlled by or under common
control with any of the parties hereto, in connection with any of the
transactions contemplated herein, except for Patricof & Co. Capital Corp.
("Patricof") and ▇▇▇▇▇▇▇▇▇▇ & Associates ("▇▇▇▇▇▇▇▇▇▇"), whose fees and expenses
will be paid by Seller.
3.17 BOOKS AND RECORDS. The Company has made and will make
available for inspection by Purchaser upon reasonable request all the books of
account, relating to the business of the Company. Such books of account of the
Company have been maintained in the ordinary course of business.
3.18 ACCOUNTS RECEIVABLE. The accounts receivable appearing on
the Reference Balance Sheet and all accounts receivable created since that date
through the Closing Date represent and will represent valid obligations (subject
to the effects of bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors generally) owing to the Company and are bona
fide, subject to the reserve for doubtful accounts appearing on the Reference
Balance Sheet which reserve was prepared in accordance with generally accepted
accounting principles and thus is expected based upon past experience to
adequately provide for all uncollectible receivables.
3.19 INVENTORY. Except as disclosed in Schedule 3.19, the
inventories of parts, raw materials, in-process and finished products of the
Company are in good condition, conform in all material respects with the
Company's applicable specifications and warranties, are useable or saleable in
the ordinary course of business; all in-process and finished products in such
inventories have been produced in compliance with the Company's applicable
quality control procedures. The values at which such inventories are carried are
in accordance with GAAP. The amount and mix of items in the inventories of
parts, in-process and finished products is, and will be at the Closing Date,
consistent in all material respects with the Company's past business practices.
3.20 NO MATERIAL CHANGE. Since the Reference Balance
Sheet Date, there has been no Material Adverse Change in the Company.
3.21 ABSENCE OF CHANGE OR EVENT. Except as disclosed in
Schedule 3.21 or as set forth in the Financial Statements or in the ordinary
course, since the Reference Balance Sheet Date, the Company has conducted its
business only in the ordinary course and has not:
(i) when considered as a whole, incurred any
obligation or liability, absolute, accrued, contingent or
11
16
otherwise, whether due or to become due, required by GAAP to be disclosed on a
financial statement in excess of $50,000 in the aggregate, except liabilities or
obligations incurred in the ordinary course of business and consistent with
prior practice;
(ii) subjected to Encumbrance, any of the property,
businesses or assets, tangible or intangible, of the Company;
(iii) sold, transferred, leased to others or
otherwise disposed of any of its assets (or committed to do any of the
foregoing), including the payment of any loans owed to any affiliate, except for
inventory sold to customers or returned to vendors and payments to any
non-affiliates on account of accounts payable or scheduled payments in respect
of indebtedness for money borrowed disclosed on the Reference Balance Sheet or
in the Schedules, in each case in the ordinary course of business and consistent
with prior practice, or canceled, waived, released or otherwise compromised any
debt or claim, waived, released or otherwise compromised any debt or claim, or
any right of significant value, except in the ordinary course of business and
consistent with prior practice;
(iv) suffered any damage, destruction or loss
(whether or not covered by insurance) which has had or could have a Material
Adverse Effect on the Company;
(v) when considered as a whole, made or committed to
make any capital expenditures or capital additions or betterments in excess of
an aggregate of $50,000;
(vi) encountered any labor union organizing activity
or had any actual or threatened employee strikes, work stoppages, slow-downs or
lock-outs;
(vii) instituted any litigation, action or proceeding
before any court, governmental body or arbitration tribunal relating to it or
its property, except for litigation, actions or proceedings instituted in the
ordinary course of business and consistent with prior practice;
(viii) declared or paid any dividend or made any
other payment or distribution in respect of its capital stock, or directly or
indirectly redeemed, purchased or otherwise acquired any of its capital stock;
(ix) increased the compensation of any officer,
employee earning more than $50,000 per year or agent of the Company, directly or
indirectly, including by means of any bonus, pension plan, profit sharing,
deferred compensation, savings, insurance, retirement, or any other employee
benefit plan, except in the ordinary course of business consistent with prior
practice;
12
17
(x) taken any action which, if taken subsequent to
the execution of this Agreement and on or prior to the Closing Date, would
constitute a breach of Seller's agreement set forth in Section 6.1(a) or (b) and
Section 6.1(i), (ii), (vi) and (vii), unless described herein.
3.22 PRODUCTS. Schedule 3.22 sets forth (i) all claims
exceeding $10,000 asserted or, to Seller's and the Company's best knowledge,
threatened at any time during the past three years against the Company in
respect of personal injury, wrongful death or property damage alleged to have
resulted from products or services provided by the Company, together with a
description of each such claim or action initiated with respect thereto and the
disposition thereof and (ii) the Company's standard warranty and disclaimers of
warranty used by the Company in connection with the products or services
provided by the Company. The Company has not experienced product recall or
warranty claims in excess of 5% of aggregate gross sales for any of the past
five years.
3.23 ENVIRONMENTAL MATTERS. To the actual knowledge of the
Company's environmental compliance officer (▇▇▇▇▇ ▇▇▇▇▇▇▇) after consultation
with the Company's President:
(a) Except as set forth in Schedule 3.23 to this
Agreement, (A) the Company has not (i) generated, used, transported, treated,
stored, released or disposed of, or (ii) allowed or authorized anyone else to
generate, use, transport, treat, store, release or dispose of any Hazardous
Material (as defined in Section 3.23(b)) in violation of any Environmental
Requirement (as defined in Section 3.23(c)); (B) there has not been any
generation, use, transportation, treatment, storage, release or disposal of any
Hazardous Material in connection with the conduct of the business of the Company
or the use of any property or facility of the Company (the "Company Properties")
or any nearby or adjacent properties or facilities which has created or might
reasonably be expected to create any liability for violation of, or which would
require reporting to or notification of any governmental entity for violation
of, any Environmental Requirement; (C) the Company is in compliance with all
Environmental Requirements (i) regarding Hazardous Materials on or under any of
the Company Properties or (ii) which are applicable to the conduct of its
business, except where the failure to so comply would not materially impair the
conduct of the Company's business and would not have a material adverse effect
on the business, operations, properties, results of operations or financial
condition of the Company; and (D) no notice has been received by the Company
alleging that the Company is in violation in any material respect of any
Environmental Requirement.
(b) For the purposes of this Agreement, a "Hazardous
Material" is any material, chemical or substance that is defined or listed in,
or otherwise classified pursuant to, any
13
18
applicable Environmental Requirement as a hazardous substance, hazardous
material, toxic substance or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, radioactivity, carcinogenicity, reproductive toxicity
or "EP toxicity," including, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, and petroleum and drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal energy.
(c) For the purposes of this Agreement, an
"Environmental Requirement" is any law, statute, code, act, ordinance, order,
judgment, decree, injunction, rule, regulation, permit, license, authorization,
direction or requirement of any government, department, commission, board,
court, authority, agency, official or officer, foreseen or unforeseen, ordinary
or extraordinary relating to (i) the generation, use, storage, transportation or
disposal of any Hazardous Material or (ii) the protection of the environment,
land use or the safety, health and welfare of human, animal or plant life,
including, without limitation, the Clean Air Act, the Clean Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Hazardous Materials Transportation
Act and the Toxic Substances Control Act, each as amended or supplemented and
any analogous future or present local, state or federal statute and any
regulations promulgated pursuant thereto.
3.24 GOVERNMENTAL MATTERS. To the actual knowledge of each of
the Company's President, Senior Vice President and Chief Financial Officer, in
connection with the business and operations of the Company, neither the Company
nor any director, officer, agent, employee or other person acting on behalf of
the Company has used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds. To the actual knowledge of each of
the Company's President, Senior Vice President and Chief Financial Officer, with
respect to the business and operations of the Company, neither the Company nor
any director, officer, agent, employee or other person acting on behalf of the
Company, has accepted or received any unlawful contributions, payments, gifts or
expenditures. Schedule 3.24 lists all governmental reviews, audits,
investigations or inspections, known to Seller or the Company whether pending,
completed or threatened since January 1, 1992, which if resolved adversely to
the Company could have a material adverse effect on the business, business
prospects or financial condition of the Company or its properties or assets. The
Company is in compliance with all security and related requirements on its
contracts which are classified as confidential, secret or top secret. Schedule
3.24 describes the
14
19
status and findings of all security compliance inspections completed since
January 1, 1992 and all on-going security investigations or inquiries relating
to the Company, any of its directors, officers or employees which are known to
Seller or the Company. To the knowledge of Seller and the Company, there have
not been any material security problems, incidents or occurrences occurring
since January 1, 1992 which involve disclosure by the Company's directors,
officers or employees of information which is classified as confidential, secret
or top secret.
3.25 LABOR MATTERS. To the Seller's and the Company's
knowledge, (a) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against the Company; (b) none of the Company's employees
are covered by a collective bargaining agreement or are members of a union and
no representation question exists respecting the employees of the Company and no
effort is currently threatened or under way to establish a union; or (c) there
exists no basis for the assessment of unpaid wages with respect to employees of
the Company. Schedule 3.25 sets forth a true and complete list of (i) the name
and wage rate or salary, as applicable, of all employees of the Company as of
February 15, 1995, and (ii) the name and employment status of each employee
currently on long-term or short-term disability, workers' compensation, sick
leave, personal leave, military leave or any similar leave arrangement.
3.26 DISCLOSURE. No representations or warranties by the
Company in this Agreement, including the Schedules, and no statement contained
in any document (including, without limitation, the financial statements,
certificates, or other writing furnished or to be furnished by the Company to
Purchaser or any of its representatives pursuant to the provisions hereof or in
connection with the transactions contemplated hereby) contains or will contain
any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading. Each of the
Schedules is complete and correct.
3.27 NOTICE OF DEVELOPMENTS. Seller or the Company may elect
at any time to notify Purchaser of any development causing a breach of any of
the representations and warranties in Article III of this Agreement. Unless
Purchaser objects to such development by written notice to Seller and the
Company within five business days following such notice of developments, the
written notice pursuant to this Section 3.27 shall be deemed to have amended the
applicable Schedule, to have qualified the representations and warranties
contained in Article III and to have cured any misrepresentation or breach or
warranty that otherwise might have existed hereunder by reason of such
development.
15
20
ARTICLE IV
REPRESENTATIONS OF PURCHASER
Purchaser and Acquisition Sub represent and warrant as
follows:
4.1 EXISTENCE AND GOOD STANDING OF PURCHASER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Purchaser and Acquisition Sub each has the corporate power and authority to
make, execute, deliver and perform this Agreement and the transactions
contemplated hereby, and this Agreement has been duly authorized and approved by
all required corporate action of Purchaser and Acquisition Sub. This Agreement
is a valid and binding obligation of each of Purchaser and Acquisition Sub
enforceable against Purchaser and Acquisition Sub in accordance with its terms
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights in general and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought.
4.2 NO RESTRICTIONS. Assuming all filings required by the HSR
Act are duly made and the waiting period thereunder has been terminated or
expired, the execution and delivery of this Agreement by Purchaser and
Acquisition Sub and the consummation of the transactions contemplated hereby (a)
will not violate any provision of the Articles of Incorporation or By-Laws of
Purchaser or Acquisition Sub, (b) will not violate any statute, rule,
regulation, order or decree of any public body or authority by which Purchaser
or Acquisition Sub or any of their respective properties or assets is bound and
(c) will not result in a violation or breach of, or constitute a default under,
any license, franchise, permit, indenture, agreement or other instrument to
which Purchaser or Acquisition Sub is a party, or by which Purchaser or
Acquisition Sub or any of their respective properties or assets is bound.
4.3 PURCHASE FOR INVESTMENT. Purchaser will acquire the Stock
for its own account for investment and not with a view toward any resale or
distribution thereof.
4.4 BROKER'S OR FINDER'S FEES. No agent, broker, person or
firm acting on behalf of Purchaser or Acquisition Sub is, or will be, entitled
to any commission or broker's or finder's fees from any of the parties hereto,
or from any person controlling, controlled by or under common control with any
of the parties hereto, in connection with any of the transactions
16
21
contemplated herein except for affiliates of Purchaser, whose fees and expenses
will be paid by Purchaser.
4.5 LITIGATION. There is no action, suit or proceeding at law
or in equity by any Person or any arbitration or any administrative or other
proceeding by or before any governmental or other instrumentality, or agency,
pending or, to Purchaser's and Acquisition Sub's knowledge, threatened, seeking
to restrain, prevent or change the transactions contemplated hereby or
questioning the legality or validity of any such transactions or seeking damages
in connection with such transactions or which, individually or in the aggregate,
if adversely determined, would have an adverse effect on the ability of
Purchaser or Acquisition Sub to consummate the transactions contemplated by this
Agreement.
ARTICLE V
CLOSING/ESCROW
5.1 CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Articles VII and VIII, the closing of the Merger (the
"Closing") will be held within two (2) business days after the same at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇ Seidenwurm & ▇▇▇▇▇, ▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the parties hereto shall by written
instrument designate, for the purposes of delivering the documents required
pursuant to the Agreement, authorizing the filing of the instruments and
certificates required under the California General Corporation Law and taking
all such other and further actions as may be required by law to make the Merger
effective. Such time and date are herein referred to as the "Closing Date."
5.2 INTEREST. If the Closing does not occur on or before March
31, 1995, Seller shall be entitled to interest on the Merger Consideration from
such date until the Closing Date at the rate of 10% per annum. Any such interest
paid to Seller shall be deemed to be an increase in the amount of the Merger
Consideration.
5.3 ESCROW. Upon the date hereof, Buyer shall deposit into an
Escrow Account with Chemical Trust Company of California (the "Escrow Agent"),
Two Hundred Fifty Thousand Dollars ($250,000) (the "Escrow Fund") to be held and
released in accordance with the terms of an Escrow Agreement in substantially
the form attached hereto as Exhibit B (the "Escrow Agreement"). The Escrow
Agreement shall be entered into within two business days hereof, by Purchaser,
Seller and the Escrow Agent.
17
22
ARTICLE VI
CONDUCT OF BUSINESS; EXCLUSIVE DEALING; REVIEW
6.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from
the date of this Agreement to the Closing Date, Seller shall cause the Company
to conduct its operations in the ordinary course of business. Notwithstanding
the immediately preceding sentence, pending the Closing Date and except as may
be first approved by Purchaser (such approval not to be unreasonably withheld)
or as is otherwise permitted or required by this Agreement, Seller shall cause
(a) the Company's Articles of Incorporation and By-Laws to be maintained in
their respective forms on the date of this Agreement, (b) the compensation
payable or to become payable by the Company to any director, officer or employee
being paid $50,000 per year or more to be maintained at the amount existing on
the date of this Agreement, (c) the Company to refrain from making any bonus,
pension, retirement or insurance payment or arrangement to or with any such
persons except those that have been accrued or accrue in the ordinary course of
business, (d) the Company to refrain from entering into any contract or
commitment except contracts and commitments in the ordinary course of business,
(e) the Company to refrain from increasing its indebtedness for borrowed money,
except current borrowings in the ordinary course of business, (f) the Company to
refrain from canceling or waiving any claims or rights of substantial value
which individually is or in the aggregate are material to the Company, (g) the
Company to refrain from declaring or paying any dividends, (h) the Company from
lending money to or borrowing money from Seller or entering into any agreement
with Seller and (i) the Company not to agree, whether or not in writing, to do
any of the foregoing. In addition to the foregoing, from the date hereof to the
Closing Date, the Company will not, unless first approved by Purchaser (said
approval not to be unreasonably withheld): (i) terminate or fail to renew any
existing insurance coverage; (ii) terminate or fail to renew or preserve any
permits, or take any action that would jeopardize the continuance of its
material supplier or customer relationship; (iii) make any loan, guarantee or
other extension of credit, or enter into any commitment to make any loan,
guarantee or other extension of credit, to or for the benefit of any director,
officer, employee, stockholder of Seller or the Company or any of their
respective associates or affiliates; (iv) sell, transfer, mortgage, encumber or
otherwise dispose of any assets or any liabilities, except in the ordinary
course of business; (v) issue, sell, redeem or acquire for value, or agree to do
so, any debt obligations or equity securities of the Company; (vi) make any
capital expenditures or commitments with respect thereto aggregating more than
$50,000; (vii) make any material investment, by purchase contributions to
capital, property transfers, or otherwise, in any other person; or (viii) agree
to or make any commitment to take any action prohibited by this sentence or take
or omit to take any other
18
23
action which is reasonably likely to have a material impact on the financial
condition or operations of the Company.
6.2 EXCLUSIVE DEALING. During the period from the date of this
Agreement through May 2, 1995, Seller and the Company shall not directly or
indirectly, through any officer, director, employee, agent or otherwise, (i)
participate in any negotiations or solicit, initiate or encourage submission of
inquiries, proposals or offers from any potential buyer relating to the assets
or stock of the Company or any material part thereof or (ii) enter into any
agreement pertaining thereto. The May 2, 1995 date referred to above may, at the
election of Purchaser, be extended to May 31, 1995 upon the payment of an
additional $250,000 to the Escrow Account on or before May 2, 1995 and notice
thereof to Seller.
6.3 REVIEW OF THE COMPANY. Purchaser may, prior to the Closing
Date, through its representatives (which terms shall be deemed to include its
independent accountants, lenders, and counsel), review the properties, books and
records of the Company to familiarize itself with such properties and the
business of the Company. Seller shall cause the Company to permit Purchaser and
its representatives to have reasonable access to the premises and to the books
and records (including all information to determine the "amount of unfunded
liabilities" as defined in Section 4001(a)(18) of ERISA for each Company Benefit
Plan) of the Company during normal working hours and to furnish Purchaser with
such financial and operating data and other information with respect to the
business and properties of the Company as Purchaser shall from time to time
reasonably request. From the date hereof to the Closing Date, the Company shall
furnish to Purchaser (i) as soon as available copies of all reports, renewals,
filings, certificates, statements and other documents filed with any
governmental entity; (ii) monthly and quarterly unaudited balance sheets,
statements of operations and cash flow and changes in stockholders' equity for
the Company; and (iii) such other reports prepared by the Company in the
ordinary course of its business as Purchaser may reasonably request. The Company
shall, upon request, furnish Purchaser with complete copies of all agreements,
instruments and documents set forth in the Disclosure Schedule or underlying the
Disclosure Schedule.
6.4 CONFIDENTIALITY. The parties hereto acknowledge that
Purchaser (or an affiliate of Purchaser) and the Company have entered into a
Confidentiality Agreement in the form attached hereto as Exhibit C, the
"Confidentiality Agreement") and Purchaser confirms that it and its affiliates
and advisors will comply with their respective obligations thereunder.
Notwithstanding the foregoing, and the provisions of Section 10.6, after
consultation with each other, Purchaser and/or Seller (a) may issue or make a
press release, announcement or other disclosure regarding this Agreement and the
transactions contemplated hereby which it determines necessary or desirable
19
24
under applicable law, and (b) may, at any time after the date of this Agreement,
file with the Securities and Exchange Commission a Report on Form 8-K pursuant
to the Securities Exchange Act of 1934, as amended, with respect to the
transactions contemplated by this Agreement.
6.5 BEST EFFORTS. Each of the parties agrees to use its best
efforts to take, or cause to be taken, all action to do, or cause to be done,
and to assist and cooperate with the other parties hereto in doing, all things
necessary, proper or advisable to consummate and make effective, in an
expeditious manner, the transactions contemplated by this Agreement, including,
but not limited to, (a) compliance with the HSR Act in all respects (including
the filing of a notification and report form to the extent necessary), (b) the
obtaining of all necessary waivers, consents and approvals from governmental or
regulatory agencies or authorities and the making of all necessary registrations
and filings (including, but not limited to, filings with governmental or
regulatory agencies or authorities, if any) and the taking of all reasonable
steps as may be necessary to obtain any approval or waiver from, or to avoid any
action or proceeding by, any governmental agency or authority, (c) the obtaining
of all necessary consents, approvals or waivers from third parties and (d) the
defending of any lawsuits or any other legal proceedings whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby.
6.6 NOTIFICATION OF CERTAIN MATTERS. Seller and the Company
each shall give prompt notice to Purchaser, and Purchaser shall give prompt
notice to Seller, of (i) the occurrence, or failure to occur, of any event that
would be likely to cause any representation or warranty contained in this
Agreement and made by the Seller or the Company or Purchaser or Acquisition Sub
to be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Closing Date and (ii) any failure of Purchaser or
Acquisition Sub, or Seller or the Company as the case may be, to comply with or
satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by and under this Agreement. From the date hereof to
the Closing Date, the Company and the Seller shall promptly notify Purchaser of
any event of which the Company or Seller obtains knowledge which has had or may
reasonably be expected to have a material adverse effect on the business of the
Company or which as of the date hereof would have been required to be disclosed
to Purchaser.
6.7 PERMITS AND APPROVALS.
(a) Purchaser, the Company and Seller each agree to
cooperate and use their good faith efforts to obtain approvals and permits that
may be necessary or which may be reasonably
20
25
requested by Purchaser to consummate the transactions
contemplated by this Agreement.
(b) To the extent that the approval of a third party
with respect to any contract is required in connection with the transactions
contemplated by this Agreement, the Company and Seller shall use their best
efforts to obtain such approval prior to the Closing Date and in the event that
any such approval is not obtained, the Company and the Seller each shall
reasonably cooperate with Purchaser to attempt to achieve for that Purchaser the
benefits of each such contract.
6.8 PRESERVATION OF CONFIDENTIALITY. For a period of ten (10)
years from the date of this Agreement, Seller agrees to treat all Confidential
Information (as defined below) of the Company, as confidential, to preserve the
confidentiality thereof and not to use or disclose any Confidential Information,
except disclosures to its representatives who need to know such Confidential
Information in connection with the transactions contemplated herein at any time
before or after Closing. The Company agrees that through the Closing Date it
will not use or disclose any Confidential Information, except disclosures made
to customers and vendors in the ordinary course of business and disclosures to
its representatives who need to know such Confidential Information in connection
with the transactions contemplated herein at any time before or after the
Closing. As used in this Agreement, "CONFIDENTIAL INFORMATION" means any and all
technical, manufacturing or marketing information, ideas, methods, developments,
inventions, improvements, business plans, trade secrets, scientific or
statistical data, diagrams, drawings, specifications or other proprietary
information relating thereto normally treated as confidential and proprietary by
the Company in the ordinary course of its business consistent with past
practice, together with all analyses, compilations, studies or other documents,
records or data prepared by Seller, the Company or Purchaser or their respective
representatives, as the case may be, which contain or otherwise reflect or are
generated from such information at any time before or after the Closing.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser and Acquisition Sub to effect the
Closing shall be subject to the following conditions except to the extent waived
in writing by Purchaser and Acquisition Sub. The condition set forth in Section
7.8 shall, unless relied upon to terminate this Agreement on or before March 17,
1995, be considered waived by Purchaser.
7.1 OPINION OF SELLER'S COUNSEL. Purchaser shall have
received an opinion, dated the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇
21
26
Seidenwurm & ▇▇▇▇▇, counsel to Seller, to the effect and substantially in the
form set forth in Exhibit D attached hereto.
7.2 NO MATERIAL ADVERSE CHANGE. From the date of this
Agreement to the Closing Date, there shall not have been a Material Adverse
Change in the Company. The (i) failure to obtain the consent of ▇▇▇▇▇▇▇ to the
change in control of the Company contemplated by the Agreement under the terms
of each of the Authorized Maintenance Center Agreement (▇▇▇▇▇▇▇ Model 501) dated
November 14, 1994, Authorized Maintenance Center Agreement (▇▇▇▇▇▇▇ Model 250)
dated December 21, 1994 and the Direct Service Dealer Agreement (▇▇▇▇▇▇▇ Model
570k) dated September 1, 1983 and any other material agreements with ▇▇▇▇▇▇▇ or
(ii) failure to obtain the consent of the Port of Oakland to the change in
control of the Company contemplated by this Agreement under the Lease with the
Port of Oakland dated January 23, 1991 and the consent of the City of Oakland
under the Test Cells Lease with the City of Oakland dated January 23, 1991,
shall be considered to constitute a Material Adverse Change in the Company.
7.3 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement or in any
Schedule delivered pursuant hereto shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and Seller
shall have delivered to Purchaser a certificate, dated the Closing Date, to such
effect.
7.4 PERFORMANCE OF AGREEMENTS. Each and all of the agreements
of Seller to be performed at or prior to the Closing pursuant to the terms
hereof shall have been duly performed in all material respects, and Seller shall
have delivered to Purchaser a certificate, dated the Closing Date, to such
effect.
7.5 NO ORDERS; LEGAL PROCEEDINGS. No law or order shall have
been enacted, entered, issued, promulgated or enforced by any governmental
entity, nor shall any action have been instituted and remain pending or, to the
best knowledge of the Company, have been threatened and remain so by any
governmental entity at what would otherwise be the Closing Date, which prohibits
or restricts or would (if successful) prohibit or restrict the transactions
contemplated by this Agreement or which would not permit the business of the
Company as presently conducted to continue unimpaired following the Closing
Date. No governmental entity shall have notified any party to this Agreement
that consummation of the transactions contemplated by this Agreement would
constitute a violation of any laws of any jurisdiction or that it intends to
commence proceedings to restrain or prohibit such transactions or force
divesture or recision, unless such governmental entity shall have withdrawn
22
27
such notice and abandoned any such proceedings prior to the time which otherwise
would have been the Closing Date.
7.6 CONSENTS AND APPROVALS. All governmental consents and
approvals materially necessary to permit or required because of the consummation
of the transactions contemplated by this Agreement shall have been received. All
time periods under the HSR Act shall have expired.
7.7 THIRD PARTY CONSENTS AND APPROVALS. All material third
party, non-governmental consents or approvals (including any consent or approval
required under a Material Contract) required under contracts and agreements
necessary to permit or required because of the consummation of the transactions
contemplated by this Agreement shall have been received.
7.8 DUE DILIGENCE. Purchaser shall have completed its due
diligence review of the Company and, in the course of such review, shall not
have discovered information which Purchaser reasonably believes has or may have
an adverse effect on the business of the Company.
7.9 FINANCING. Purchaser shall have obtained financing from a
lender or lenders in amounts sufficient to finance the transactions contemplated
hereby, and such financing shall be on terms that are reasonably acceptable to
Purchaser.
7.10 RESIGNATION OF DIRECTORS. The directors of the Company
shall have submitted their resignations in writing to the Company. Such
resignations of directors shall be effective as of the date of the Merger.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller and the Company to effect the
Closing shall be subject to the following conditions, except to the extent
waived in writing by the Seller and the Company.
8.1 OPINIONS OF PURCHASER'S COUNSEL. Purchaser shall have
furnished Seller with an opinion, dated the Closing Date, of O'Melveny & ▇▇▇▇▇,
to the effect and substantially in the form set forth in Exhibit E attached
hereto.
8.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date, and Purchaser shall have delivered to Seller a certificate,
dated the Closing Date, to such effect.
23
28
8.3 PERFORMANCE OF AGREEMENTS. Each and all of the agreements
of Purchaser to be performed at or prior to the Closing pursuant to the terms
hereof shall have been duly performed in all material respects, and Purchaser
shall have delivered to Seller a certificate, dated the Closing Date, to such
effect.
8.4 NO ORDERS; LEGAL PROCEEDINGS. No law or order shall have
been enacted, entered, issued, promulgated or enforced by any governmental
entity, nor shall any action have been instituted and remain pending or, to the
best knowledge of the Company, have been threatened and remain so by any
governmental entity at what would otherwise be the Closing Date, which prohibits
or restricts or would (if successful) prohibit or restrict the transactions
contemplated by this Agreement or which would not permit the business of the
Company as presently conducted to continue unimpaired following the Closing
Date. No governmental entity shall have notified any party to this Agreement
that consummation of the transactions contemplated by this Agreement would
constitute a violation of any laws of any jurisdiction or that it intends to
commence proceedings to restrain or prohibit such transactions or force
divesture or recision, unless such governmental entity shall have withdrawn such
notice and abandoned any such proceedings prior to the time which otherwise
would have been the Closing Date.
8.5 CONSENTS AND APPROVALS. All material governmental consents
and approvals, if any, necessary to permit or required because of the
consummation of the transactions contemplated by this Agreement shall have been
received. All time periods under the HSR Act shall have expired.
ARTICLE IX
NO SURVIVAL OF REPRESENTATIONS; EVENTS OF TERMINATION
9.1 NO SURVIVAL OF REPRESENTATIONS. Except for the
representations and warranties set forth in Sections 3.1, 3.3, 3.16 and 4.4
which shall survive until the applicable statute of limitations has expired, the
representations and warranties of Seller and Purchaser contained in this
Agreement shall not survive the Closing of the Merger. Effective upon the
Closing, each of the parties hereto expressly waives any and all rights, whether
known or unknown, to assert any claim(s) or bring any action(s) for breach by
any party hereto of any of its representations, warranties, covenants or
obligations hereunder other than the representations and warranties set forth in
Sections 3.1, 3.3, 3.16 and 4.4 hereof and the agreements set forth in Sections
10.1, 10.7 and 10.10 hereof.
9.2 EVENTS OF TERMINATION. This Agreement may be terminated:
24
29
(a) by mutual written agreement of the parties hereto;
(b) by Purchaser by written notice to Seller that (i) it has
not obtained the financing (on terms that are reasonably acceptable to
Purchaser) required to complete the Merger, or (ii) the results of its
due diligence are not satisfactory to Purchaser provided that, with
respect to this clause (ii), notice thereof is given on or before March
17, 1995,
(c) by Purchaser by written notice to Seller, if the
conditions set forth in Article VII hereof shall not have been complied
with or performed on or prior to the Closing Date in any material
respect and, in either case, such noncompliance or nonperformance shall
not have been cured or eliminated (or by its nature cannot be cured or
eliminated) on or before May 2, 1995 (May 31, 1995 if Purchaser makes a
payment of an additional $250,000 to the Escrow Account on or before
May 2, 1995);
(d) by Purchaser if Seller or the Company shall have delivered
a notice to Purchaser under Section 3.27 hereof and Purchaser elects
within five business days thereof to terminate this Agreement;
(e) by Seller by written notice to Purchaser, if the
conditions set forth in Article VIII hereof shall not have been
complied with or performed on or prior to the Closing Date in any
material respect and, in either case, such noncompliance or
nonperformance shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) on or before May 2, 1995 (May 31,
1995 if Purchaser makes a payment of an additional $250,000 to the
Escrow Account on or before May 2, 1995).
9.3 EFFECT OF TERMINATION. If this Agreement shall be
terminated pursuant to Section 9.2, all further obligations of the parties
hereto under this Agreement (other than pursuant to Sections 9.4 and 10.1 and as
provided in the Confidentiality Agreement) shall terminate without further
liability or obligation of either party to the other party hereunder, except as
provided in Section 9.4 hereof.
9.4 FAILURE TO CLOSE.
(a) If (i) Purchaser fails to consummate the
transactions contemplated on its part to occur on the Closing Date, and all
conditions of the Closing set forth in Article VII (other than the conditions
specified in Sections 7.3, 7.4, 7.7, 7.8, 7.9 or 7.10) have been satisfied in
all material respects or waived, (ii) Seller elects to terminate this Agreement
pursuant to Section 9.2(e) hereof (other than as a result of a failure of the
condition specified in Section 8.4 or 8.5 hereof), (iii)
25
30
Purchaser elects to terminate this Agreement pursuant to Section 9.2(c) hereof
and such termination is solely the result of a failure of a condition specified
in Sections 7.3, 7.4, 7.7, 7.8, 7.9 or 7.10 hereof and such failure does not
constitute a Material Adverse Effect with respect to the Company and there has
not been, independently thereof, a Material Adverse Change with respect to the
Company, or (iv) this Agreement is terminated by Purchaser pursuant to Section
9.2(d) hereof and the notice or notices given to Purchaser under Section 3.27
hereof independently and together do not constitute a Material Adverse Change
with respect to the Company, then Seller shall be entitled to have disbursed to
Seller the Escrow Fund, in accordance with the terms of the Escrow Agreement, as
liquidated damages, and Seller and the Company hereby agree that neither they
nor any of their affiliates shall have any further recourse of any kind against
Purchaser or Acquisition Sub.
(b) If (i) Seller fails to consummate the
transactions contemplated on its part to occur on the Closing Date, and all
conditions of the Closing set forth in Article VIII (other than the conditions
specified in Sections 8.4 or 8.5 hereof) have been satisfied in all material
respects or waived, (ii) this Agreement is terminated by Purchaser pursuant to
Section 9.2(c) hereof (unless such termination is solely the result of a failure
of a condition specified in Sections 7.3, 7.4, 7.7, 7.8, 7.9 or 7.10 hereof and
such failure does not constitute a Material Adverse Effect with respect to
Company and there has not been, independently thereof, a Material Adverse Change
with respect to the Company) (iii) this Agreement is terminated by Purchaser
pursuant to Section 9.2(d) and the notice or notices given to Purchaser under
Section 3.27 hereof independently or together constitute a Material Adverse
Change with respect to the Company, or (iv) this Agreement is terminated by
Purchaser pursuant to Section 9.2(b)(i) hereof on or before March 17, 1995, then
Purchaser shall receive the return of the Escrow Fund in accordance with the
terms of the Escrow Agreement and Purchaser's sole remedy (in addition to a
return of the Escrow Fund), which remedy only applies in the event of (i) above,
shall be to require Seller and the Company to consummate and specifically
perform the Merger in accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES. The parties hereto shall pay all of their own
expenses relating to the transactions contemplated including, without
limitation, the fees and expenses of their respective counsel and financial
advisors; provided, however, that Purchaser and Seller each agree to pay
one-half of the HSR Act filing fee.
26
31
10.2 TRANSFER TAXES. All stamp, transfer, documentary, sales,
use, registration and other such taxes and fees (including any penalties and
interest incurred in connection with this Agreement and the transactions
contemplated hereby (collectively, the "Transfer Taxes") shall be paid by
Purchaser, and Purchaser shall, at its own expense, procure any stock transfer
stamps required by, and properly file on a timely basis all necessary tax
returns and other documentation with respect to, any Transfer Tax and provide to
Seller evidence of payment of all Transfer Taxes.
10.3 GOVERNING LAW. The interpretation and construction of
this Agreement, and all matters relating hereto, shall be governed by the laws
of the State of California applicable to contracts made by California residents
and to be performed entirely within the State of California.
10.4 "PERSON" DEFINED. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
10.5 CAPTIONS. The Article, Section and Schedule captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
10.6 PUBLICITY. Except as otherwise required by law or
regulation, neither of the parties hereto shall issue any press release or make
any other public statement, in each case relating to or connected with or
arising out of this Agreement or the matters contained herein, without obtaining
the prior approval of the other party to the contents and the manner of
presentation and publication thereof. The requirements of this Section 10.6
shall be in addition to those included in the Confidentiality Agreement.
10.7 CONTINUATION OF INDEMNIFICATION, INSURANCE.
(a) Purchaser agrees that subsequent to the Closing
the Company shall continue to indemnify and hold harmless each of its present
and former directors, officers, and employees in their capacities as such (the
"Indemnified Persons"), from and against all damages actually incurred or
suffered in connection with any threatened or pending action, suit or proceeding
at law or in equity by any Person or any arbitration or any administrative or
other proceeding relating to the business of the Company to the fullest extent
permitted under the charter documents of the Company. In addition, subsequent to
the Closing Purchaser shall not, and shall not permit the Company to, amend or
modify its charter documents, except as required by law, if the effect of such
amendment or modification would be to lessen or otherwise adversely affect the
indemnification rights of the
27
32
Indemnified Persons as provided therein, and Purchaser shall permit the Company
to advance expenses to each such Indemnified Person to the fullest extent so
permitted upon receipt of any undertaking required by law. If the Company
transfers all or substantially all of its properties and assets to any Person,
then and in each such case, proper provisions shall be made so that the
transferee shall assume the obligations of the Company under this Section
10.7(a).
(b) Purchaser shall cause to be maintained for a
period of three years after the Closing directors and officers liability
insurance provided that the annual cost of such insurance does not exceed
$25,000. The obligation to maintain insurance includes the obligation to
purchase all available extended reporting periods with respect to preexisting
insurance should the procurement of insurance meeting the above-described
conditions not be achieved.
(c) This Section 10.7 is intended to benefit each of
the Indemnified Persons, each of whom shall be entitled to enforce the
provisions hereof.
10.8 MEMORANDUM; DISCLAIMER OF PROJECTIONS. Seller makes no
representation or warranty to Purchaser except as specifically made in this
Agreement. In particular, the Seller makes no representation or warranty to
Purchaser with respect to (a) the information set forth in the Confidential
Memorandum distributed by Patricof in connection with the offering of the
Company or (b) any financial projection or forecast relating to the Company.
With respect to any such projection or forecast delivered by or on behalf of
Seller to Purchaser, Purchaser acknowledges that (i) there are uncertainties
inherent in attempting to make such projections and forecasts, (ii) it is
familiar with such uncertainties, (iii) it is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all such projections
and forecasts so furnished to it and (iv) it shall have no claim against Seller
with respect thereto.
10.9 NOTICES. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mall, postage prepaid, addressed as
follows: if to Purchaser or Acquisition Sub, to c/o First Equity Development,
Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, and to c/o First Equity Development,
Inc., ▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX (203)
▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to its counsel, O'Melveny &
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
FAX (▇▇▇) ▇▇▇-▇▇▇▇, Attention: J. ▇▇▇ ▇▇▇▇▇▇, Esq.; and if to Seller or the
Company, to Triton Group Ltd., ▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX (619)
28
33
231-9170, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, with a copy to its counsel, ▇▇▇▇▇▇▇ ▇▇▇▇
Seidenwurm & ▇▇▇▇▇, ▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.; or such other address or number
as shall be furnished in writing by any such party, and such notice or
communication shall be deemed to have been given as of the date so delivered,
sent by telecopy or mailed.
10.10 PARTIES IN INTEREST. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto, other than
(i) by operation of law. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns and (ii) Purchaser and
Acquisition Sub each may assign their rights and obligations hereunder to any
entity that is wholly-owned, directly or indirectly, by Purchaser or that,
directly or indirectly, owns all of the outstanding capital stock of Purchaser
or is under common control with Purchaser.
10.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
10.12 ENTIRE AGREEMENT. This Agreement, including the
Exhibits, Schedules and other documents referred to herein which form a part
hereof, including the Escrow Agreement and the Confidentiality Agreement,
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter other than the Escrow Agreement and the Confidentiality Agreement.
10.13 AMENDMENTS. This Agreement may not be changed orally,
but only by an agreement in writing signed by the parties hereto. Any provision
of this Agreement can be waived, amended, supplemented or modified by written
agreement of the parties hereto.
10.14 SEVERABILITY. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
10.15 THIRD PARTY BENEFICIARIES. Except as otherwise set forth
in Sections 10.7 and 10.10, each party hereto intends that this Agreement shall
not benefit or create any right or cause of action in or on behalf of any Person
other than the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
29
34
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
SELLER
TRITON GROUP LTD., a Delaware
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
NATIONAL AIRMOTIVE CORPORATION,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
PURCHASER
FIRST AVIATION SERVICES INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
FE ACQUISITION SUBSIDIARY,
a California corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
30