EXHIBIT 10.14
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AVENG TRADING PARTNERS, INC.
AND
AVIATION SALES COMPANY
INDEX
ARTICLE I CERTAIN DEFINITIONS.................................................................................. 1
ARTICLE II SALE OF ASSETS: CLOSING; ADJUSTMENT................................................................. 7
Section 2.1. Assets to Be Acquired................................................................ 7
Section 2.2. Assumption of Liabilities............................................................ 8
Section 2.3. Retained Liabilities................................................................. 9
Section 2.4. Consideration; Closing Deliveries; Possession........................................ 9
Section 2.5. Time and Place of Closing............................................................ 11
Section 2.6. Closing Procedures................................................................... 11
Section 2.7. Post-Closing Procedures.............................................................. 12
Section 2.8. Final Purchase Price Adjustments..................................................... 13
Section 2.9. Records.............................................................................. 14
Section 2.10. Liquidation of Seller................................................................ 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER........................................................... 16
Section 3.1. Incorporation; Authorization; Ownership of Stock, etc................................ 16
Section 3.2. Financial Information................................................................ 17
Section 3.3. Properties........................................................................... 17
Section 3.4. Absence of Certain Changes; Solvency................................................. 18
Section 3.5. Litigation; Orders................................................................... 18
Section 3.6. Intellectual Property................................................................ 19
Section 3.7. Licenses, Approvals, Other Authorizations, Consents, Reports,
etc.................................................................................. 19
Section 3.8. Labor Matters........................................................................ 20
Section 3.9. Compliance with Laws................................................................. 20
Section 3.10. Insurance............................................................................ 20
Section 3.11. Contracts............................................................................ 21
Section 3.12. Environmental Matters................................................................ 21
Section 3.13. No Agreements to Sell Assets......................................................... 23
Section 3.14. Brokers, Finders, etc................................................................ 23
Section 3.15. Maintenance of the Assets............................................................ 23
Section 3.16. Preservation of Business............................................................. 23
Section 3.17. Maintenance of the Records........................................................... 24
Section 3.18. Bank Accounts and Directors and Officers............................................. 24
Section 3.19 Regarding Various Transactions....................................................... 24
Section 3.20. Accuracy of Representations and Warranties; Schedules and
Exhibits............................................................................. 24
Section 3.21 No Implied Representation............................................................ 25
Section 3.22. Construction of Certain Provisions................................................... 25
Section 3.23. Estoppel............................................................................. 26
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER............................................................. 27
Section 4.1. Organization; Authorization; etc..................................................... 27
Section 4.2. Brokers, Finders, etc................................................................ 27
Section 4.3. Licenses, Approvals, Other Authorizations, Consents, Reports,
etc.................................................................................. 27
Section 4.4. Litigation; Orders................................................................... 28
Section 4.5. AVS Stock............................................................................ 28
Section 4.6. Disclosure........................................................................... 28
Section 4.7. The AVS Shares....................................................................... 28
Section 4.8. Accuracy of Representations and Warranties; Schedules and
Exhibits............................................................................. 29
ARTICLE V COVENANTS OF SELLER AND BUYER........................................................................ 30
Section 5.1. Efforts; Obtaining Consents.......................................................... 30
Section 5.2. Further Assurances................................................................... 30
Section 5.3. Public Announcements................................................................. 31
Section 5.4. Accounts and Notes Payable Notices................................................... 31
Section 5.5. Post-Closing Confidentiality......................................................... 31
Section 5.6. Registration of AVS Shares........................................................... 32
ARTICLE VI EMPLOYEE BENEFITS................................................................................... 33
Section 6.1. Employee Benefit Plans............................................................... 33
Section 6.2. Termination of Participation......................................................... 33
Section 6.3. Profit Sharing Plan.................................................................. 33
Section 6.4. Employees............................................................................ 34
ARTICLE VII TAX MATTERS........................................................................................ 36
Section 7.1. Tax Returns.......................................................................... 36
Section 7.2. Sales, Transfer and Similar Taxes.................................................... 36
Section 7.3. Cooperation and Exchange of Information.............................................. 36
ARTICLE VIII CONDITIONS OF BUYER'S OBLIGATION TO CLOSE......................................................... 39
Section 8.1. Representations, Warranties and Covenants of Seller.................................. 39
Section 8.2. Filings; Consents.................................................................... 39
Section 8.3. No Injunction........................................................................ 39
Section 8.4. Delivery of Records.................................................................. 39
Section 8.5. Releases of Liens.................................................................... 39
Section 8.6. Performance of Seller's Obligations.................................................. 39
Section 8.7. No Material Adverse Change........................................................... 40
Section 8.8. Due Diligence........................................................................ 40
ARTICLE IX CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.......................................................... 41
Section 9.1. Representations, Warranties and Covenants of Buyer................................... 41
Section 9.2. No Injunction........................................................................ 41
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Section 9.3. Delivery of Initial Purchase Price and Closing Documents............................. 41
Section 9.4. Performance of Buyer's Obligations................................................... 41
ARTICLE X SURVIVAL; INDEMNIFICATION............................................................................ 42
Section 10.1. Survival............................................................................. 42
Section 10.2. General Indemnification by Buyer or Seller........................................... 43
Section 10.3. Third Party Claims................................................................... 43
Section 10.4. Bulk Sales Waiver; Indemnification................................................... 44
ARTICLE XI MISCELLANEOUS....................................................................................... 45
Section 11.1. Non-Assignable Undertakings and Rights............................................. 45
Section 11.2. Counterparts....................................................................... 45
Section 11.3. Governing Law...................................................................... 45
Section 11.4. Entire Agreement................................................................... 45
Section 11.5. Expenses........................................................................... 46
Section 11.6. Notices............................................................................ 46
Section 11.7. [intentionally left blank]......................................................... 47
Section 11.8. Successors and Assigns............................................................. 47
Section 11.9. Headings; Definitions.............................................................. 47
Section 11.10. Amendments and Waivers............................................................. 47
Section 11.11. Interpretation; Absence of Presumption............................................. 47
Section 11.12. Severability....................................................................... 48
Section 11.13. Settlement of Disputes............................................................. 48
Section 11.14. Survival........................................................................... 51
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SCHEDULES
Schedule 1.1(c) Seller's September 30, 1996 Balance Sheet
Schedule 2.1(a)(i) Furniture, Fixture and Equipment
Schedule 2.1(a)(ii) Motor Vehicles
Schedule 2.1(b) Inventory
Schedule 2.1(c) Contracts and Deposits
Schedule 2.1(f) Computer Hardware, Software and Data Files
Schedule 2.1(k) Accounts Receivable and Notes Receivable
Schedule 2.1(l) Licenses and Permits
Schedule 2.10 Distribution of AVS Shares to Seller's Stockholders
Schedule 3.1(a) Seller's Jurisdictions of Qualification
Schedule 3.1(g) Seller's Stock Ownership, etc.
Schedule 3.2 Summary of Seller's Financial Statements
Schedule 3.5 Litigation; Orders
Schedule 3.7(a) Seller's Licenses, Approvals, Other Authorizations,
Consents, Reports, etc.--Operation of the Business
Schedule 3.7(b) Seller's Licenses, Approvals, Other Authorizations,
Consents, Reports, etc.--Performance of Agreement
Schedule 3.10 Insurance
Schedule 3.11 Contracts
Schedule 3.13 Agreements to Sell Assets
Schedule 3.18 Bank Accounts, Directors and Officers
Schedule 6.1(a) Employee Benefit Plans
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Schedule 6.1(c) Employee Benefit Plans
Schedule 6.4(a) Active Employees
Schedule 7.1 Taxing Authorities
Schedule 7.3(c) Tax Returns
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EXHIBITS
Exhibit 2.4(b)(i) Form of Assignment and Assumption Agreement
Exhibit 2.4(b)(ii) Form of Employment Agreements
Exhibit 2.4(b)(iii) Form of Stockholders Agreement
Exhibit 2.4(c)(i) Form of ▇▇▇▇ of Sale
Exhibit 2.4(c)(ii) Form of Materials Certification
Exhibit 5.3 Form of Press Release
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (and, collectively with all of the
Schedules and Exhibits referenced herein and attached hereto, the "AGREEMENT"),
dated as of November 30, 1996 (the "EFFECTIVE DATE"), is by and between AVENG
TRADING PARTNERS, INC. a corporation organized under the laws of the State of
Delaware ("SELLER"), and AVIATION SALES COMPANY, a corporation organized under
the laws of the State of Delaware ("BUYER").
WHEREAS, Seller wishes to sell to Buyer all of the assets and
businesses of Seller, and Buyer wishes to purchase such assets and to assume
certain of the liabilities relating to the Business and such assets, but only to
the extent specified herein and excluding, in all events, the Retained
Liabilities (as defined herein), all upon the terms and subject to the
conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"ACTION" shall mean any actual or threatened action, suit, arbitration,
inquiry, proceeding or investigation by or before any Government Authority or
arbitral tribunal.
"ACTIVE EMPLOYEES" shall have the meaning set forth in Section 6.4(a).
"AFFILIATE" (and, with a correlative meaning, "AFFILIATED") shall mean,
with respect to any Person (i) any corporation or organization of which such
Person is an officer, director or partner or is directly or indirectly the
beneficial owner or at least ten percent (10%) of the outstanding shares of any
class of equity securities or financial interest therein; or (ii) any other
Person that directly, or through one or more intermediaries, controls or is
controlled by or is under common control with such first Person and, if such a
Person is an individual, any member of the immediate family (including parents,
spouse and children) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or
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policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
"AGREEMENT" shall have the meaning set forth in the preamble of this
Agreement.
"ARBITRATOR" shall have the meaning set forth in Section 2.7(b).
"ASOC" shall mean Aviation Sales Operating Company, a wholly-owned
subsidiary of Buyer, d/b/a Aviation Sales Company.
"ASSET PURCHASE" shall mean the consummation of the transactions
described in Sections 2.1 to 2.4.
"ASSETS" shall have the meaning set forth in Section 2.1.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 2.2.
"AVS SHARES" shall have the meaning set forth in Section 2.4(b).
"BANK DEBT" shall mean any indebtedness of Seller to any third-party
financial institution.
"BANK LIENS" shall mean any liens or other encumbrances granted by
Seller to lenders affecting the Business or any of the Assets.
"BUSINESS" shall mean the business of Seller as it is being conducted
by Seller on the Effective Date, consisting of the distribution by sale, lease,
exchange and brokerage of aircraft engine spare parts, which is performed by
Seller from the Seller's Facilities.
"BUSINESS CONDITION" shall have the meaning set forth in Section
3.1(a).
"BUYER" shall have the meaning set forth in the preamble of this
Agreement.
"BUYER INDEMNIFIED PARTIES" shall have the meaning set forth in Section
10.2(b).
"BUYER'S ACCOUNTANT" shall mean the Miami, Florida office of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, L.L.P.
"BUYER'S 401(K) PLAN" shall have the meaning set forth in Section 6.3.
"CERCLA" shall have the meaning set forth in Section 3.12(a)(i).
"CLAIMS" shall mean all rights, demands, claims, actions and causes of
action (whether for personal injuries or property, consequential or other
damages of any kind).
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"CLOSING" shall mean the consummation of the transactions made the
subject of this Agreement.
"CLOSING AUDIT PAYMENT DATE" shall have the meaning set forth in
Section 2.8(c).
"CLOSING DATE" shall mean 11:59 p.m. Miami, Florida time, on the date
of the Closing.
"CLOSING BALANCE SHEET" shall have the meaning set forth in Section
2.7(a).
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"CONSIGNMENT INVENTORY" shall mean all of the inventory of aircraft
engine spare parts held by Seller as consignee under consignment agreement.
"CONTRACTS" shall have the meaning set forth in Section 2.1(c).
"COVERED LIABILITIES" shall mean any and all debts, losses,
liabilities, claims, damages, obligations (including those arising out of any
Action, such as any settlement or compromise thereof or judgment or award
therein), and any reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees, experts' fees, consultants' fees and expenses
incurred in defending any Action).
"EFFECTIVE DATE" shall have the meaning set forth in the preamble of
this Agreement.
"EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in Section
6.1(a).
"EMPLOYEES" shall have the meaning set forth in Section 6.1(a).
"EMPLOYMENT LAWS" shall have the meaning set forth in Section 6.4(d).
"ENCUMBRANCES" shall mean mortgages, liens, encumbrances, security
interests, covenants, conditions, restrictions, rights-of-way, easements and
encroachments, whether recorded or unrecorded.
"EPA" shall have the meaning set forth in Section 10.3(b)(ii)(A).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"FAA" shall mean the United States Federal Aviation Administration.
"FEDERAL AVIATION ACT" shall have the meaning set forth in Section
3.3(b).
"FINAL PURCHASE PRICE ADJUSTMENT" shall have the meaning set forth in
Section 2.8(b).
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"GAAP" shall mean at any particular time, generally accepted accounting
principles as in effect in the United States at such time; provided, however,
that if it was permissible to use more than one principle at such time in
respect of a particular accounting matter, GAAP shall refer to the principle
which was then employed by Seller.
"GOVERNMENT AUTHORITY" shall mean any government or state (or any
subunit thereof), whether domestic, foreign or multinational (including European
Community), or any agency, authority, bureau, commission, department or similar
body or instrumentality thereof, or any governmental court or tribunal.
"HARDWARE, SOFTWARE AND DATA FILES" shall have the meaning set forth in
Section 2.1(f).
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 3.12(
a)(ii).
"HAZARDOUS MATERIALS CONTAMINATION" shall have the meaning set forth in
Section 3.12(a)(iii).
"HAZARDOUS SUBSTANCES LAWS" shall have the meaning set forth in Section
3.12(a)(i).
"HIRED EMPLOYEES" shall have the meaning set forth in Section 6.4(a).
"INITIAL PURCHASE PRICE" shall mean the aggregate sum of $8,000,000.
"INTELLECTUAL PROPERTY RIGHTS" shall have the meaning set forth in
Section 3.6(a).
"INVENTORY" shall mean all of the inventory (whether existing or on
order) of aircraft engine spare parts owned by Seller, as such inventory shall
exist or be on order as of the Closing Date, which Inventory, as of November 30,
1996, is in the quantity and condition described on SCHEDULE 2.1(B) attached
hereto, calculated at Seller's net book value.
"JAMS" shall have the meaning set forth in Section 11.13(b)(ii).
"LICENSES" shall have the meaning set forth in Section 3.7(a).
"MISSING INVENTORY" shall have the meaning set forth in Section 2.6(
c)(i).
"NET WORKING CAPITAL" shall have the meaning set forth in Section
2.6(b).
"PERMITTED LIENS" shall mean (i) statutory liens for Taxes not yet due
and payable, (ii) those Encumbrances disclosed in the Schedules and mechanics
and materialmans liens related to inventory repairs which are in the aggregate
not material to the Business.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, trust, unincorporated organization, other form of business or legal
entity or Government Authority.
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"PHYSICAL INVENTORY" shall have the meaning set forth in Section 2.6
(c)(i).
"PROFIT SHARING PLAN" shall have the meaning set forth in Section 6.3.
"PURCHASE PRICE" shall mean the aggregate sum of $8,000,000, as
adjusted following the Closing in the manner described in Section 2.8, subject
to any additional adjustments specifically provided for in this Agreement.
"RCRA" shall have the meaning set forth in Section 3.12(a)(i).
"RECEIVABLES" shall have the meaning set forth in Section 2.1(k).
"RECORDS" shall have the meaning set forth in Section 2.9.
"RETAINED LIABILITIES" shall have the meaning set forth in Section 2.3.
"REVIEW" shall have the meaning set forth in Section 2.7(b).
"SELLER" shall have the meaning set forth in the preamble of this
Agreement.
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 10.2(a).
"SELLER'S ACCOUNTANT" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇, C.P.A.
"SELLER'S DEPOSITS" shall have the meaning set forth in Section 2.1(c).
"SELLER'S FACILITIES" shall mean the real property, together with
the improvements and fixtures located thereon or attached thereto, leased by
Seller and located at ▇▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, and ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"SELLER'S MANAGEMENT TEAM" shall have the meaning set forth in Section
2.4(b)(ii).
"SELLER'S SEPTEMBER 30, 1996 BALANCE SHEET" shall mean the compiled
balance sheet of Seller as of September 30, 1996, a copy of which is attached
hereto as SCHEDULE 1.1(C).
"SELLER'S STOCKHOLDERS" shall have the meaning set forth in Section
2.10.
"TAX AUDIT" shall have the meaning set forth in Section 7.3(d).
"TAXES" shall mean (i) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, sales, excise, use, occupation, value added,
ad valorem, transfer, franchise, withholding, payroll, employment, excise, real
property or other property taxes, together with any interest or penalties
imposed with
5
respect thereto, and (ii) any obligations under any agreements or arrangements
with respect to any Taxes described in clause (i) above.
"TRADE SECRETS" shall have the meaning set forth in Section 3.6(b).
6
ARTICLE II
SALE OF ASSETS: CLOSING; ADJUSTMENTS
SECTION 2.1. ASSETS TO BE ACQUIRED. Subject to the satisfaction or
waiver of the conditions set forth herein and to the other terms, conditions and
provisions of this Agreement, at the Closing, Seller shall sell, convey, assign,
transfer and deliver to Buyer, and Buyer shall purchase, acquire, accept and pay
for, all of Seller's right, title and interest in all of the properties, assets
and other rights owned or leased by, or licensed to, Seller on the Closing Date,
including without limitation, the following (collectively, the "ASSETS"):
(a) (i) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office equipment, tools,
packing and packaging materials and other tangible personal property used in
connection with the Business, of the type of personal property described on
SCHEDULE 2.1(A)(I) attached hereto, which schedule reflects the personal
property as of the date set forth in such schedule to the extent such personal
property has an individual purchase price greater than or equal to $500, and
(ii) all motor vehicles of the type described on SCHEDULE 2.1(A)(II) attached
hereto, which schedule reflects the motor vehicles as of the date set forth in
such schedule;
(b) all of the Inventory, together with all Records relating thereto,
which Inventory consists of the aircraft engine spare parts inventory in the
quantity and condition described on SCHEDULE 2.1(B) attached hereto;
(c) to the extent assignable and alienable (i) all contracts, agreements,
leases of personal property, franchises, authorizations granted by original
licensed equipment manufacturers and other contracts, agreements or commitments
to which Seller is a party which are in effect on the Closing Date (including
all assignable warranties and indemnities of manufacturers related to the
Inventory) (collectively, the "CONTRACTS"), which Contracts, as of the date set
forth on such schedule, consist of the contracts and agreements described on
SCHEDULE 2.1(C) attached hereto, together with (ii) all deposits or advance
payments made by Seller with third parties in connection with any Contract or
made by third parties with Seller in connection with any Contract (collectively,
the "SELLER'S DEPOSITS"), which Seller's Deposits, as of the date set forth on
such schedule, consist of the deposits described on SCHEDULE 2.1(C) attached
hereto;
(d) all written technical information, data, specifications, research and
development information, engineering drawings and operating and maintenance
manuals;
(e) all proprietary information and licenses from third persons granting
the right to perform services provided by the Business.
(f) to the extent assignable and alienable, all computer hardware and
operating applications and programs, source codes, object codes, and computer
data files, including systems documentation and instructions, including without
limitation, the computer hardware and operating
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applications and programs, source codes, access codes, and computer data files
described on SCHEDULE 2.1(F) attached hereto (the "HARDWARE, SOFTWARE AND DATA
FILES");
(g) all accounting books and records, cost information, sales and pricing
data, customer lists, quality records and reports and other books, records,
studies, surveys, reports, plans and documents;
(h) all lists of Seller's agents, representatives, suppliers and
subcontractors, together with all contracts and agreements with the foregoing to
which Seller is a party which are in effect on the Closing Date;
(i) any prepaid expenses for periods after the Closing Date;
(j) to the extent assignable and alienable, all intangible and other
assets;
(k) all accounts receivable and notes receivable, as such accounts
receivable and notes receivable shall exist on the Closing Date (the
"RECEIVABLES"), which Receivables, as of November 30, 1996, consist of the
accounts receivable and the notes receivable described on SCHEDULE 2.1(K)
attached hereto;
(l) to the extent assignable all licenses, permits, approvals and
authorizations which have been issued by any Government Authority, including,
without limitation, the licenses and permits described on SCHEDULE 2.1(L)
attached hereto;
(m) all Claims which Seller may have against any Person; and
(n) all logos, trade marks, service marks, and trade names and all
applications for registration and registrations therefor (together with the
goodwill associated therewith), and, all literature, sales materials or products
incorporating same.
SECTION 2.2. ASSUMPTION OF LIABILITIES. Except as set forth in this
Section 2.3, at the Closing Buyer shall assume, succeed to, be obligated for or
be liable for and shall indemnify and hold Seller and the Seller Indemnified
Parties harmless as provided in Section 10.2 against all of the liabilities and
obligations which relate to or arise out of the Assets, the Business or any of
its operations arising prior to the Closing Date, or arising from actions taken
or omitted to be taken prior to the Closing Date, including, without limitation,
the following, but excluding the Retained Liabilities (collectively, hereinafter
referred to as the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations relating to employee matters to be
assumed by Buyer pursuant to Article VI (including without limitation, all
liabilities and obligations relating to accrued vacation time of Hired Employees
in accordance with Section 6.4(a));
(b) all other liabilities and obligations with respect to which Buyer
is obligated to indemnify Seller or the Seller Indemnified Parties under this
Agreement as set forth in Article X;
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(c) any Claims asserted in respect of products manufactured,
supplied or sold by Seller or in respect of services provided by Seller;
(d) any contracts, agreements, leases, arrangements, unfilled orders,
commitments, or other instruments or obligations of Seller to the extent
included within the Assets; and
(e) all of Seller's accounts payable as of the Closing Date, as
reflected on the Closing Date Balance Sheet.
SECTION 2.3. RETAINED LIABILITIES. Seller shall retain, and shall
continue to be responsible after the Closing Date for, and shall hold Buyer and
the Buyer Indemnified Parties harmless against, the "RETAINED LIABILITIES",
which term shall mean, and be strictly limited to, the liabilities and
obligations which at any time arise out of the following, and which shall
specifically exclude any and all of the Assumed Liabilities set forth in Section
2.2:
(a) the London Matter; and
(b) any liability or obligation of Seller arising or incurred in
connection with the negotiation, preparation or execution of this Agreement and
the transactions contemplated hereby, except attorneys fees which will be paid
by Buyer in accordance with Section 11.5.
SECTION 2.4. CONSIDERATION; CLOSING DELIVERIES; POSSESSION
(a) At the Closing, Buyer shall purchase the Assets from Seller, upon
and subject to the terms and conditions of this Agreement and in reliance on the
representations, warranties and covenants of Seller contained herein, in
exchange for the Purchase Price.
(b) Subject to the terms and conditions of this Agreement, at the
Closing:
(i) Buyer shall (A) pay the Initial Purchase Price by
delivering to Seller certificates representing 400,000 shares of
Buyer's common stock (the "AVS SHARES") to Seller, which AVS Shares
shall be subject to the registration and restrictive provisions of the
Stockholders Agreement; and (B) Buyer shall assume the Assumed
Liabilities pursuant to an Assignment and Assumption Agreement in the
form of EXHIBIT 2.4(B)(I);
(ii) Buyer, ASOC and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Al
Short (collectively, "SELLER'S MANAGEMENT TEAM") shall enter into
Employment Agreements in substantially the form of EXHIBIT 2.4(B)(II);
and
(iii) Buyer, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Seller's Management Team
shall enter into the Stockholders Agreement in the substantially form
of EXHIBIT 2.4(B)(III).
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(c) In addition to the other things required to be done hereunder, at
the Closing, Seller shall deliver, or cause to be delivered, at Seller's sole
cost and expense except when otherwise expressly provided, to Buyer or ASOC, as
directed by Buyer, the following:
(i) a duly executed ▇▇▇▇ of Sale in substantially the form of
EXHIBIT 2.4(C)(I);
(ii) a Materials Certification executed by Seller regarding
the Inventory in substantially the form of EXHIBIT 2.4(C)(II), which
executed Materials Certification shall be set forth on each page of a
schedule similar in format to SCHEDULE 2.1(B) and listing the items of
the Inventory in existence as of the Closing Date (it being understood
that Seller will provide to Buyer an updated SCHEDULE 2.1(B) with
respect to the Inventory on the Closing Date containing the Materials
Certification);
(iii) to the extent not previously delivered to Buyer, the
materials and information described in Section 2.9 in the form of
originals (or if originals are not available, then true and legible
copies); Seller shall include an inventory record of all such
documentation within the possession or control of Seller or a third
party for the sole benefit of Seller and relating to the Assets
conveyed (PROVIDED, that Seller shall have no liability or obligation
to Buyer if such third party does not deliver such documentation to
Buyer) showing title and reference numbers and other appropriate
identifying information and Seller shall further provide legible,
reproducible current hard copy of all revisions and supplements to such
documentation (PROVIDED, that if such hard copy is not available,
Seller shall deliver microfilm copies); all manuals shall be delivered
to Buyer, shall reflect the configurations of the Purchased Inventory
at the Closing, and shall reflect all data, illustrations and text in
U.S. weights and measures;
(iv) a legal opinion from Much, Shelist, Freed, Denenberg,
Ament, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C. in form and substance reasonably
satisfactory to Buyer and Buyer's counsel;
(v) a certificate dated the Closing Date and duly executed on
behalf of Seller to the effect that the condition set forth in Section
8.1 has been satisfied and otherwise reaffirming the representations
and warranties of Seller set forth in this Agreement;
(vi) a copy of the resolutions of the board of directors of
Seller, or similar enabling document, authorizing the execution,
delivery and performance of this Agreement by Seller, and a certificate
of its secretary or assistant secretary, dated as of the Closing Date,
that such resolutions were duly adopted and are in full force and
effect;
(vii) evidence or copies of any consents, approvals, orders,
qualifications, waivers or releases of liens required pursuant to
Section 8.2 or Section 8.5; and
(viii) an Assignment of Leases, in form and substance
satisfactory to Buyer, whereby Seller will assign its interest in the
leases with respect to the Seller's Facilities.
10
(d) In addition to the payment of the Initial Purchase Price and
assumption of the Assumed Liabilities and the other things required to be done
hereunder, at the Closing, Buyer shall deliver, or cause to be delivered, to
Seller the following:
(i) a legal opinion from ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel
to Buyer, in form and substance reasonably satisfactory to Seller and
Seller's counsel;
(ii) a certificate dated the Closing Date and validly executed
on behalf of Buyer to the effect that the condition set forth in
Section 9.1 shall have been satisfied and otherwise reaffirming the
representations and warranties of Buyer set forth in this Agreement;
(iii) a copy of the resolutions of the board of directors of
Buyer, or similar enabling document, authorizing the execution,
delivery and performance of this Agreement by Buyer, and a certificate
of the secretary or assistant secretary of Buyer, dated as of the
Closing Date, that such resolutions were duly adopted and are in full
force and effect; and
(iv) if not previously delivered to Seller, all other
certificates, documents, instruments and writings required pursuant
hereto to be delivered by or on behalf of Buyer at or before the
Closing.
(e) At the Closing, Seller shall deliver all tangible items included
within the Assets. Seller shall deliver possession of the Assets to Buyer at the
Seller's Facilities on the Closing Date.
SECTION 2.5. TIME AND PLACE OF CLOSING. The Closing shall take place on
the Closing Date beginning at 10:00 A.M., Miami, Florida time, at the offices of
Buyer (or such other time and place as may be agreed to by the parties).
SECTION 2.6. CLOSING PROCEDURES.
(a) [Intentionally omitted]
(b) NET WORKING CAPITAL. For purposes of this Agreement, "NET WORKING
CAPITAL" shall mean (A) the sum of all Receivables, inventories (including the
Inventory), prepaids and other current assets, less (B) the sum of all accounts
payable, accrued wages and other current liabilities excluding those related to
debt, capitalized leases and interest, in each case recorded in accordance with
GAAP. Notwithstanding anything contained in this Section 2.6(b) to the contrary,
deferred tax balances and liabilities for Taxes (whether property, sales or
income), including an estimate of such liabilities through the Closing Date, as
recorded on Seller's September 30, 1996 Balance Sheet and the Closing Balance
Sheet, as the case may be, in accordance with GAAP, shall be excluded from the
calculations of Net Working Capital for purposes of calculating the Final
Purchase Price Adjustment.
(c) PHYSICAL INVENTORY.
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(i) Seller shall have the right to conduct a complete a
physical inventory (the "PHYSICAL INVENTORY") of all of the Inventory
and the Consignment Inventory. The Physical Inventory shall be
undertaken jointly by Buyer and Seller. Each of Seller and Buyer shall
bear their own costs and expenses associated with the Physical
Inventory. The Physical Inventory shall verify the physical existence
of the Inventory reflected on Seller's September 30, 1996 Balance Sheet
and of the Consignment Inventory. If the Physical Inventory reflects
that an item of Inventory is missing (i.e., not located at the Seller's
Facilities or not within the possession or control of Seller)
(collectively, the "MISSING INVENTORY"), such Missing Inventory will
not be included within the Inventory for purposes of calculating the
Final Purchase Price Adjustment.
(ii) Seller acknowledges and agrees that if, after the
Closing, Seller has in its possession or control any of the Missing
Inventory, then if the Missing Inventory is located at the Seller's
Facilities, Seller shall deliver such Missing Inventory to Buyer to be
included as part of the Inventory for purposes of making the Final
Purchase Price Adjustment under Section 2.8 and calculating the
Purchase Price.
(d) VERIFICATION OF THE INVENTORY. Without limiting the provisions of
Section 2.6(c), until the Closing Date, Buyer or Buyer's representative shall
also have the right to verify the stated condition of, and the Records for, the
Inventory. Upon twenty-four (24) hours notice, Seller shall provide Buyer and
Buyer's representative reasonable access to any and all records and storage
facilities necessary for Buyer and Buyer's representative to verify the stated
condition of, and the Records for, each item of the Inventory; PROVIDED,
HOWEVER, that such verification is conducted during normal business hours and
does not unreasonably disrupt Seller's normal business operations, and PROVIDED
FURTHER, HOWEVER, that Seller shall have the right to observe such verification
process by Buyer when and to the extent conducted at the Seller's Facilities.
SECTION 2.7. POST-CLOSING PROCEDURES
(a) FINAL ADJUSTMENT. As soon as practicable following the Closing
Date, but in no event later than forty-five (45) days thereafter, Seller shall,
at Seller's cost and expense, prepare and deliver to Buyer a final balance sheet
as of the Closing Date, which shall be referred to as the "CLOSING BALANCE
SHEET". The Closing Balance Sheet shall be prepared by Seller in conformity with
GAAP. The Closing Balance Sheet shall in Buyer's discretion be audited by
Seller's Accountant in accordance with generally accepted auditing standards
approved and adopted by the American Institute of Certified Public Accountants.
Seller's Accountant, upon completion of the audit of the Closing Balance Sheet
shall issue a report to Seller and Buyer. Buyer shall provide to Seller and
Seller's Accountant access to such of its books and records as may reasonably be
required for the preparation and audit of the Closing Balance Sheet.
(b) RESOLUTION OF AUDIT DISPUTES. Buyer and Buyer's Accountant shall
have sixty (60) days to review the proposed Closing Balance Sheet and the
related report prepared by Seller's Accountant and to notify Seller of any
disputes Buyer may have relating to the proposed Closing Balance Sheet. Buyer's
notice to Seller of any dispute shall specify in reasonable detail all points
12
of disagreement and demand that a review of such dispute (a "REVIEW") be
conducted. Buyer and Seller shall promptly cause Buyer's Accountant and Seller's
Accountant to consult with respect to such points of disagreement in an effort
to resolve all disputes. If Buyer's Accountant and Seller's Accountant are
unable to resolve such disputes within forty-five (45) days of Seller's receipt
of notice of a Review, Buyer's Accountant and Seller's Accountant shall jointly
select the Miami office of a firm of "Big Six" independent public accountants
which has not performed any service since January 1, 1996, for Buyer or Seller
or any of their respective Affiliates to act as arbitrator (the "ARBITRATOR").
The Arbitrator, within thirty (30) days after having been selected hereunder,
shall decide all remaining points of disagreement with respect to any such
proposed Closing Balance Sheet and deliver a written notice of its determination
of the disputed items to Buyer and Seller. In making its determinations, the
Arbitrator may not assign a value to any item in dispute higher than the highest
value for such item claimed by either party or less than the lowest value
claimed for such item by either party. All decisions of the Arbitrator shall be
final, conclusive and legally binding on all parties hereto with respect to the
Closing Balance Sheet. The party whose calculations were furthest from the final
determinations of the Arbitrator shall pay the fees and expenses of the
Arbitrator and the entire expenses of the legal counsel and accountants for both
parties.
SECTION 2.8. FINAL PURCHASE PRICE ADJUSTMENTS.
(a) DECREASE IN NET WORKING CAPITAL. If Seller's Net Working Capital as
shown on the Closing Balance Sheet (the "FINAL NET WORKING CAPITAL") shall be
less than the Net Working Capital reflected in Seller's September 30, 1996
Balance Sheet, then the Purchase Price shall be decreased by the amount of such
decrease in Net Working Capital.
(b) PAYMENT OF FINAL PURCHASE PRICE ADJUSTMENT. On the Closing Audit
Payment Date, the final adjustment to the Purchase Price shall be determined in
accordance with Section 2.8(a) (the "FINAL PURCHASE PRICE ADJUSTMENT"). If the
Final Purchase Price Adjustment reflects that Seller is obligated to pay a net
sum to Buyer, then Seller shall pay to Buyer the amount of the Final Purchase
Price Adjustment. The Final Purchase Price Adjustment shall be paid on the
Closing Audit Payment Date by a delivery by Seller to Buyer of a number of AVS
Shares calculated by taking the amount of the adjustment and dividing such
amount by $20.00. In the event any action or proceeding is brought to enforce
the payment of the Final Purchase Price Adjustment, the prevailing party in such
action shall be entitled to recover all attorney's fees and other costs incurred
in connection with such action.
(c) For purposes of the payment required to be made pursuant to Section
2.8(b), "CLOSING AUDIT PAYMENT DATE" shall mean the date which is ten (10)
business days after the earliest to occur of (i) the date that Buyer and Seller
agree on a resolution of all disputes concerning the proposed Closing Balance
Sheet (ii) sixty (60) days after Buyer receives the proposed Closing Balance
Sheet together with Seller's Accountant's report thereon, if Seller shall not
have received notice from Buyer on or prior to such date demanding a Review of
such proposed Closing Balance Sheet, (iii) the date on which Buyer's Accountant
and Seller's Accountant shall resolve all disputes with respect to the Closing
Balance Sheet, or (iv) the date
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on which the Arbitrator shall resolve all points of disagreement with respect to
the Closing Date Balance Sheet, as the case may be.
SECTION 2.9. RECORDS. Seller will, at Seller's sole cost and expense,
deliver to Buyer at the Seller's Facilities, on the Closing Date, the following
records relating to the Inventory but only in the form such records are already
in existence and in the possession or control of Seller or a third party for the
sole benefit of Seller as of the Closing Date (PROVIDED, that Seller shall have
no liability or obligation to Buyer if such third party does not deliver such
documentation to Buyer); PROVIDED, HOWEVER, that nothing contained in this
Section 2.9 shall be construed to require Seller to create any new or additional
records or modify in any way any existing records (the "RECORDS"):
(a) All computer data, in any and all media in which maintained by Seller,
including, without limitation, Stock Action Reports (SAR), Procurement Action
Reports (PAR), Usage Material Management Systems (MMS) data, inventory details,
historic sales and quote activity, purchasing records, warranty records,
computer data, and hard copies of Inventory Receiving Reports (including
Seller's part number and purchase order history, P.O. number, P.O. date and
vendor code) and price lists and Inventory Activity Reports in whatever medium
currently stored:
(b) All Illustrated Parts Catalogs of aircraft and engine types covered by
the Purchased Inventory, to the extent in Seller's possession or control;
(c) All historical, engineering, technical, operational and maintenance
files and data related to the Purchased Inventory, including, without
limitation, vendor overhaul tags, teardown/shop findings and reports, packing
slips, material certifications, disc sheets, disc records, vendor tags or other
tags indicating the condition of the Inventory and historical records for all
life limited parts, so as to disc and part traceability to the original
manufacturer thereof, including without limitation, the following records:
(i) All shop visit findings for all rotable components; and
(ii) Completed shop overhaul reports and material
certifications for material utilized in any repair, all signed by
persons authorized by the FAA to effect any repair in question;
(d) Seller shall provide:
(i) All airworthiness directive records ("A.D.'S") for all
materials including rotables, engine modules, and engine parts with
A.D.'s performed and/or pending;
(ii) All engineering orders applied to any item of equipment
with signed copy of the engineering order compliance record for such
item of equipment;
(iii) Modification summary for each item of equipment; and
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(iv) Hard copy traceability of life limited parts to original
manufacturer showing ultimate life limits and calculated remaining life
(hours, cycles, and years) (if applicable). Available computer data will
also be provided;
(e) Seller shall provide:
(i) Seller approved vendors by Seller's part number;
(ii) Vendor code to vendor cross reference;
(iii) Seller's part number to manufacturer part number
interchangeability;
(iv) Shelf life limits and current remaining shelf life of
all parts with such limits;
(v) Life limited parts by aircraft type in descending
order of time and cycles remaining; and
(vi) Updated tape of inventory delivered with cover letter
from Seller providing confirmation.
SECTION 2.10. LIQUIDATION OF SELLER. Seller and Buyer hereby
acknowledge that immediately after the consummation of the Asset Purchase,
Seller will be liquidated and all of Seller's assets, which assets of Seller
will then consist of the AVS Shares, shall be distributed by Seller to its
stockholders as listed on SCHEDULE 2.10 attached hereto (the "SELLER'S
Stockholders"). Seller's Stockholders have executed this Agreement for the
express purpose of acknowledging that upon such liquidation of Seller such
Seller's Stockholders will be bound by the terms of Sections 2.7 and 2.8 of this
Agreement on a pro rata basis based upon the number of AVS Shares received by
each of such Seller's Stockholders in connection with the liquidation of Seller.
15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
SECTION 3.1. INCORPORATION; AUTHORIZATION; OWNERSHIP OF STOCK, ETC.
(a) Seller is duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Seller (i) has all
requisite corporate power to own, lease and otherwise operate its properties and
assets and to carry on its business as and where it is now being conducted, and
(ii) is in good standing and is duly qualified to transact business in each
domestic jurisdiction in which the nature of property owned or leased by it or
the conduct of its business requires it to be so qualified, except where the
failure to be in good standing or to be duly qualified to transact business,
would not, individually or in the aggregate, have a material adverse effect on
the Assets or financial condition of Seller (the "BUSINESS CONDITION"). Seller
has delivered to Buyer true, correct and complete copies of all charter, bylaws
and other organizational documents of Seller. SCHEDULE 3.1(A) sets forth a list
of each of the jurisdictions in which Seller is qualified to do business.
(b) Seller has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
(c) The execution and delivery of this Agreement, the performance of
Seller's obligations hereunder and the consummation of the transactions
contemplated hereby by Seller have been duly and validly authorized by all
necessary corporate proceedings on the part of Seller and no other corporate
proceedings or actions on the part of Seller, its board of directors or
stockholders are necessary therefor.
(d) The execution, delivery and performance by Seller of this Agreement
will not (i) violate any provision of Seller's certificate of incorporation or
by-laws, (ii) violate any provision of, or be an event that is (or with the
passage of time will result in) a violation of, or result in the acceleration of
or entitle any party to accelerate (whether after the giving of notice or lapse
of time or both) any obligation under, or result in the imposition of any lien
upon or the creation of a security interest in any of the Assets pursuant to,
any mortgage, lien, lease, agreement, instrument, order, arbitration award,
judgment, injunction, decree, contractual obligation, license, commitment or
other arrangement to which Seller is a party or by which Seller, the Assets or
the Business are bound, or (iii) except as disclosed on SCHEDULE 3.7(A) OR
SCHEDULE 3.7(B) attached hereto, violate or conflict with any statute, rule or
regulation applicable to Seller, the Assets or the Business or any of its
properties or assets or any other restriction of any kind or character to which
Seller, the Assets or the Business is subject.
(e) This Agreement has been duly executed and delivered by Seller, and,
assuming the due execution and delivery of this Agreement by Buyer, this
Agreement constitutes the legal, valid and
16
binding obligation of Seller, enforceable against Seller in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether in equity
or at law).
(f) Upon consummation of the Asset Purchase at the Closing, Seller will
deliver to Buyer good, indefeasible and marketable title to the Assets free and
clear of any liens, claims, charges, security interests, options, claims of
offset or other legal or equitable encumbrances (including without limitation
the Bank Liens), except for Permitted Liens.
(g) SCHEDULE 3.1(G) attached hereto sets forth (i) the number of shares
of capital stock of Seller issued and outstanding as of the Closing Date, (ii)
each of the Persons who owns such stock and the amount of stock of Seller owned
by each such Person, and (iii) the terms and conditions upon which such stock
was acquired, from whom and the date of each such acquisition.
SECTION 3.2. FINANCIAL INFORMATION. Attached as SCHEDULE 3.2 is a
summary of the unaudited balance sheets of Seller and the related statements of
operations of Seller for the operation of Seller since its inception. To
Seller's knowledge, the data contained in such summary is true and accurate in
all material respects and was prepared utilizing the books of account and
records of Seller, which books of account and records, taken as a whole, have
been maintained in all material respects in accordance with GAAP.
SECTION 3.3. PROPERTIES
(a) Except for properties disposed of since September 30, 1996, in the
ordinary course of business, and subject to any Bank Liens (which Bank Liens
with respect to the Assets will be released at the Closing), (i) Seller has
good, indefeasible and marketable title to, or holds by valid and existing lease
or license, free and clear of all mortgages, pledges, liens, encumbrances,
security interests or claims of offset, all of the Assets, (ii) Seller has not
conveyed to any Person any rights or interests in any of the Assets, (iii) no
amount is owing under any lease agreement included in or related to the Assets
or the Business with respect to the period through the Closing Date, (iv) all
mortgages, pledges, liens, encumbrances, security interests upon or affecting
Seller, the Assets or the Business shall have been released prior to the
Closing, except for the Permitted Liens and except in any of the foregoing cases
for such imperfections of title, mortgages, pledges, liens, encumbrances or
security interests as (x) are reflected or reserved against in the Closing
Balance Sheet, or (y) arise out of Taxes or general or special assessments not
in default and payable without penalty or interest.
(b) To Seller's knowledge, SCHEDULE 2.1(B) contains a true, accurate and
complete listing of the quantity, location and condition of the Inventory and
the Consignment Inventory as of November 30, 1996. To Seller's knowledge, the
Inventory and the Consignment Inventory have been maintained, in compliance in
all material respects with Federal Aviation Regulation (FAR) Part 121 under the
United States Federal Aviation Act of 1958, as amended, and all regulations,
rulings, interpretations and guidelines published thereunder and from time to
time in
17
effect (collectively, the "FEDERAL AVIATION ACT"). Except with respect to the
warranties and representations specifically set forth in this Agreement, Seller
makes no warranty, express or implied, whether as to merchantability,
suitability, fitness for a particular purpose, or quality of the Assets or as to
the condition or workmanship thereof, or to the absence of defects thereon,
either latent or patent, it being understood that except as set forth in this
Agreement, the Assets are being conveyed hereunder "as is" on the date hereof
and in their present condition.
(c) All of the Assets are located at the Seller's Facilities.
(d) SCHEDULE 2.1(K) sets forth a true, correct and complete list of all
Receivables as of November 30, 1996, included within the Assets, including the
aging of each account receivable and note receivable. Seller has good and
marketable title to each of the Receivables listed on SCHEDULE 2.1(K), free and
clear of any liens, claims, charges, security interests, options, claims of
offset or other legal or equitable encumbrances.
(e) Except as set forth in this Agreement, any Schedule hereto, or any
certificate delivered by Seller in connection with this Agreement, the
facilities, structures and equipment owned or leased by Seller and comprising a
portion of the Assets or utilized by Seller in the conduct of the Business are
in good operating condition and repair, ordinary wear and tear excepted, and are
adequate for the uses to which they are intended to be or are being put.
SECTION 3.4. ABSENCE OF CERTAIN CHANGES; SOLVENCY
(a) Except as specifically contemplated by the terms and provisions of this
Agreement, since September 30, 1996, (i) there has been no material adverse
change in the consolidated net worth of the Business, (ii) to Seller's knowledge
and except as to reasonable use, wear and tear since September 30, 1996, there
has been no physical damage, destruction or loss that would, after taking into
account any insurance recoveries payable in respect thereof, have an adverse
effect on the Business Condition, and (iii) no event has occurred and no
condition exists which, individually or in the aggregate, would have a material
adverse effect on this Agreement, the Assets, the Business, or the transactions
contemplated by this Agreement.
(b) Seller is solvent and, immediately after giving effect to the
consummation of the transactions contemplated by this Agreement, will be
solvent.
SECTION 3.5. LITIGATION; ORDERS. Except as disclosed on SCHEDULE 3.5
attached hereto, as of the Effective Date, to Seller's knowledge, there are no
lawsuits, actions, administrative or arbitration or other proceedings or
governmental investigations pending or, to Seller's knowledge, threatened by or
against Seller (to the extent reasonably expected to affect the Assets taken as
a whole or impact or affect the ability of Seller to consummate the Asset
Purchase), the Assets taken as a whole, or the Business. Except as disclosed on
SCHEDULE 3.5, as of the Effective Date, to Seller's knowledge, there are no
judgments or outstanding orders, injunctions, decrees, stipulations or awards
(whether rendered by a court or administrative agency, or by arbitration)
against Seller (to the extent reasonably expected to affect the Assets taken as
a
18
whole or impact or affect the ability of Seller to consummate the Asset
Purchase), the Assets taken as a whole, or the Business.
SECTION 3.6. INTELLECTUAL PROPERTY
(a) SCHEDULE 3.6 attached hereto lists all of the patents and patent
applications; all trademarks, service marks, trade names and applications for
registration and registrations therefor; and all copyrights and applications and
registrations therefor used or developed by Seller, or in which Seller has an
interest (collectively, the "INTELLECTUAL PROPERTY RIGHTS"), and their
respective actual and potential use or application. No other patent, trademark,
service ▇▇▇▇, trade name or copyright, or license under any thereof, is
necessary to permit Seller to conduct the Business as now conducted or as
heretofore or proposed to be conducted. Seller owns exclusively or has the
exclusive right to use, free and clear of all Encumbrances, all Intellectual
Property Rights, renewals therefor and claims for infringement thereof, without
infringing upon or otherwise acting adversely to the right or claimed right of
any third party under or with respect to any intellectual property rights.
Seller is not obligated or under any liability whatsoever to make payments by
way of royalties, fees or otherwise to any owner or licensee of, or any claimant
to, any patent, trademark, service ▇▇▇▇, trade name, copyright or other
intangible asset, with respect to the use of the Intellectual Property Rights.
(b) Seller owns exclusively and has the exclusive and unrestricted
right to use all Trade Secrets required for or incident to its operation and
then sale of all products and services sold or proposed to be sold by Seller
free and clear of any Encumbrances, including, without limitation, of any former
employer of its employees. For purposes of this Agreement, "TRADE SECRETS" shall
mean all trade secrets, know-how, inventions, designs, customer lists,
processes, computer programs (including source codes) and technical data and
information.
(c) Seller has no knowledge and has received no communications alleging
that Seller has violated or, by conducting its business as now conducted or as
proposed to be conducted after the Closing Date, would violate any patents,
licenses, trademarks, service marks, trade names, copyrights, trade secrets or
other proprietary rights of any Person.
SECTION 3.7. LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC.
(a) The Assets include all of the agreements, materials, and real and
personal property interests and rights reasonably necessary for vehicular and
pedestrian access, ingress and egress to and from the Seller's Facilities, to
operate and maintain the Seller's Facilities, all in accordance with the
applicable law, except to the extent that would not have a material adverse
effect on the Business Condition or that would not affect the ability of Seller
to enter into this Agreement or consummate the transactions contemplated hereby
and except for land use permits and related items which must be applied for by
Buyer and issued to Buyer. SCHEDULE 3.7(A) attached hereto includes a list of
all licenses, permits, franchises and other authorizations of any Government
Authority that are necessary for the operation and maintenance of the Business
prior to the Closing
19
(the "Licenses"), true, correct and complete copies of which have been delivered
by Seller to Buyer or otherwise been made available by Seller for Buyer. Except
as disclosed on SCHEDULE 3.7(A), all such Licenses are in full force and effect.
As of the Effective Date, except as disclosed on SCHEDULE 3.7(A), to Seller's
knowledge, no proceeding is pending or threatened seeking the revocation or
limitation of any such license, permit, franchise or other authorization.
(b) SCHEDULE 3.7(B) attached hereto lists all registrations, filings,
applications, notices, consents, approvals, orders, qualifications and waivers
required to be made, filed, given or obtained by Seller or any of its Affiliates
with, to or from any Person in connection with the execution, delivery,
performance and consummation of the Asset Purchase, except for those that become
applicable solely as a result of the specific regulatory status of Buyer or its
Affiliates.
SECTION 3.8. LABOR MATTERS. As of the Effective Date, there are no
collective bargaining agreements with labor unions or associations representing
employees of the Business. As of the Effective Date, to Seller's knowledge,
Seller is not involved in any labor dispute, arbitration, lawsuit or
administrative proceeding relating to labor matters involving the employees of
Seller.
SECTION 3.9. COMPLIANCE WITH LAWS
(a) To Seller's knowledge, the conduct of the Business substantially
complies in all material respects with all statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto, and Seller
has obtained all approvals, authorizations, consents, licenses, franchises and
other permits the absence of which would have a material adverse effect upon the
Business Condition or Seller's ability to enter into this Agreement or
consummate the transactions contemplated hereby. The parties agree that the
representation contained in the preceding sentence does not relate to or cover
environmental matters, and that the Seller makes no representation or warranty
with respect to environmental matters, except as specifically set forth in
Section 3.12.
(b) To Seller's knowledge, neither Seller, nor any shareholder,
director, officer, partner, employee or agent of Seller, nor any other Person
acting on their behalf, has, directly or indirectly, given or agreed to give any
payment (in kind or in cash), gift or similar benefit to any customer, supplier,
governmental employee, lobbyist, labor union, political action committee,
candidate for public office or other Person who is or may be in a position to
help or hinder the business of Seller (or assist any of them in connection with
any actual or proposed transaction) which (i) might subject Buyer to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had an adverse effect on Seller, the
Assets, the Business or the operations of Seller, (iii) if not continued in the
future, might adversely affect the Assets, the Business or Buyer, (iv) might
subject the Buyer to suit or penalty in any private or governmental litigation
or proceeding, or (v) violated the Foreign Corrupt Practices Act.
20
SECTION 3.10. INSURANCE. SCHEDULE 3.10 attached hereto lists all
insurance policies owned or held by Seller on the Effective Date. As of the
Effective Date, all such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the Effective Date
have been paid to the extent due, and no notice of cancellation or termination
has been received with respect to any such policy.
SECTION 3.11. CONTRACTS. Except as otherwise disclosed on SCHEDULE 3.11
attached hereto or SCHEDULE 6.1(A) attached hereto, as of the Effective Date,
Seller is not a party to any (i) employment or consulting agreement, (ii)
distributor or manufacturer's representative contract, (iii) lease of real or
personal property, whether as lessor or lessee, (iv) consignment of inventory,
whether as consignor or consignee, (v) joint venture or partnership agreement
relating, (vi) technology license agreement, (vii) agreement or commitment for
capital expenditure, (viii) agreement continuing over a period of more than one
(1) year from its date requiring future payment or payments in excess of $10,000
per year, or (ix) other contract, agreement or arrangement requiring future
payment or payments in excess of $10,000 per year. With respect to all contracts
listed on SCHEDULE 3.11, except as disclosed on said Schedule, to Seller's
knowledge, such contracts are legal, valid and binding and in full force and
effect in accordance with their terms, except as may be limited by judicial
decisions or general principles of equity, and Seller is not, as of the
Effective Date, in material breach thereof or material default thereunder and
there does not exist under any provision thereof, as of the Effective Date, any
event that, with the giving of notice or the lapse of time or both, would
constitute such a breach or default, except for such failures and such breaches,
defaults and events as to which requisite waivers or consents have been or are
obtained or which would not, individually or in the aggregate, have a material
adverse effect on Seller or the Business Condition. To Seller's knowledge, no
dispute exists with respect to any of the contracts listed on SCHEDULE 3.11,
except as described on SCHEDULE 3.11. SCHEDULE 3.11 lists, as of the Effective
Date, all indebtedness owed by Seller, including without limitation, all notes,
mortgages, indentures and other obligations and agreements and other instruments
and other liabilities and obligations, whether accrued, absolute, contingent or
otherwise, for or relating to any lending or borrowing (including assumed debt)
effected by Seller or to which any of the Assets or the properties of the
Business are subject.
SECTION 3.12. ENVIRONMENTAL MATTERS
(a) DEFINITIONS. For the purposes of this Agreement, unless the context
otherwise specifies or requires, the following terms shall have the meaning
herein specified:
(i) "HAZARDOUS SUBSTANCES LAWS" shall mean all present laws,
ordinances, rules, regulations and standards of any Government
Authority relating to the use, analysis, production, storage,
treatment, sale, disposal or transportation of any Hazardous Materials,
including, without limitation, the Resource Conservation and Recovery
Act of 1976 (42 U.S.C. Section 6901 et seq.) ("RCRA"), the
Comprehensive Environmental Response Compensation and Liability Act of
1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251), the Federal
Insecticide,
21
Fungicide and Rodenticide Act (7 U.S.C. Section 136), and the Clean Air
Act, all as may be amended from time to time.
(ii) "HAZARDOUS MATERIALS" shall mean (A) any "hazardous
waste" as defined by RCRA, and regulations promulgated thereunder; (B)
any "hazardous substance" as defined by CERCLA, and regulations
promulgated thereunder; (C) asbestos; (D) polychlorinated biphenyls;
(E) any substance the presence of which on the Seller's Facilities is
prohibited by any Hazardous Substances Laws; and (F) any other
substance which by any Hazardous Substances Laws requires special
handling or notification of any federal, state or local governmental
entity in its collection, storage, treatment or disposal.
(iii) "HAZARDOUS MATERIALS CONTAMINATION" shall mean any
presently existing contamination of any real or personal property,
soil, groundwater, air or other elements or any contamination of the
buildings, facilities, soil, groundwater, air or other elements on, at,
below or of any other property as a result of Hazardous Materials.
(b) HAZARDOUS MATERIALS WARRANTIES. Seller hereby represents and
warrants that:
(i) To Seller's knowledge, there are no conditions existing on
the Seller's Facilities that can reasonably be expected to give rise to
clean up obligations under any Hazardous Substances Laws in effect as
of the Closing Date;
(ii) No investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous Materials
or Hazardous Materials Contamination is in existence or, to Seller's
knowledge, proposed or threatened with respect to the Seller's
Facilities. No portion of the Seller's Facilities is currently on and,
to Seller's knowledge, has ever been on or been proposed to be on the
National Priorities List under CERCLA or on the CERCLIS or any similar
federal or state "Superfund" or "Superlien" list;
(iii) To Seller's knowledge, Seller has disposed of all
wastes, including those containing any Hazardous Materials, in
compliance with all applicable Hazardous Substances Laws, and Seller
has not received any notice or claim of liability for any off-site
contamination;
(iv) To Seller's knowledge, there are no environmental permits
required for the operation of the Business conducted at the Seller's
Facilities, and there are no pending or renewal applications for
issuance of any additional environmental permits for the operations
conducted at the Seller's Facilities;
(v) To Seller's knowledge, Seller has not transported or
arranged for the transportation of any Hazardous Materials to any
location that is listed, to Seller's knowledge, or proposed for listing
on the National Priorities List under CERCLA or on the CERCLIS or any
similar federal or state "Superfund" or "Superlien" list;
22
(vi) To Seller's knowledge, all underground storage tanks
currently located on the Seller's Facilities are disclosed on
SCHEDULE 3.12(B);
(vii) To Seller's knowledge, Seller is in material compliance
with all applicable Hazardous Substances Laws and has not received any
notice or claim of liability under any Hazardous Substances Laws; and
(viii) To Seller's knowledge, Seller does not use any
Hazardous Materials in connection with the Business or any of its
processes.
The parties agree that no representation or warranty contained in this
Agreement, other than those contained in this Section 3.12, relates to or shall
be deemed to relate to any environmental matters.
SECTION 3.13. NO AGREEMENTS TO SELL ASSETS. Except as set forth on
Schedule 3.13 attached hereto and except for the transactions contemplated by
this Agreement, and, except for sales of the Inventory in the ordinary course of
business prior to the Closing Date, Seller has no legal obligation, absolute or
contingent, to any Person to sell the Assets or sell the Business, or to effect
any merger, consolidation or other reorganization of Seller or to enter into any
agreement with respect thereto.
SECTION 3.14. BROKERS, FINDERS, ETC. Seller has not employed, and is
not subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who would
have a valid claim for a fee or commission from Buyer in connection with such
transactions.
SECTION 3.15. MAINTENANCE OF THE ASSETS. From September 30, 1996,
through the Closing Date, Seller has maintained the Assets in a diligent manner
and, in particular, Seller has used its reasonable best efforts:
(a) Not to cancel or permit any insurance relating to the Assets or the
Business to lapse or terminate (unless renewed or replaced by like coverage);
(b) Not to knowingly violate or fail to comply in any material respect
with any laws applicable to Seller, the Assets or the Business;
(c) To keep and maintain the Assets in a good condition, reasonable wear
and tear excepted, and to continue to store the Assets in accordance with
prudent industry practices;
(d) Not to take, or omit to take, any action that would have the effect of
violating any of the representations, warranties, covenants and agreements of
Seller contained in this Agreement; and
23
(e) Not to engage in transactions other than in the ordinary course of
business consistent with past practices.
SECTION 3.16. PRESERVATION OF BUSINESS. Subject to the terms and
conditions of this Agreement, from September 30, 1996, through the Closing Date,
Seller has used reasonable best efforts to preserve the business of the Business
intact, to keep available to the Business the services of the Active Employees
and to preserve the goodwill of customers, suppliers, and others having business
relations with the Business.
SECTION 3.17. MAINTENANCE OF THE RECORDS. Except as may have been
necessary to effect sales of the Inventory by Seller in the ordinary course of
business, Seller (i) has maintained the Records where presently located in the
Seller's Facilities, (ii) has not removed any of the Records, (iii) has
continued to input data into the Seller's computer related to the Assets, (iv)
has not sold, transferred or otherwise assigned any right, title or interest in
or to the Records to any third party, and (v) has taken all reasonable steps to
protect Buyer's interest in the Records.
SECTION 3.18. BANK ACCOUNTS AND DIRECTORS AND OFFICERS. SCHEDULE 3.18
attached hereto contains a true, accurate and complete list of the name and
location of each bank in which Seller has an account, each safety deposit box or
custody agreement and the names of the Persons authorized to draw thereon or to
withdraw therefrom. SCHEDULE 3.18 further sets forth the names of all of the
officers and directors of Seller as of the date noted thereon.
SECTION 3.19 REGARDING VARIOUS TRANSACTIONS
(a) Except as set forth in SCHEDULE 3.19 attached hereto, Seller has not
engaged in any transactions with any Affiliate since the inception of Seller,
except in the ordinary course of Seller's business.
(b) Except as set forth in SCHEDULE 3.19, neither Seller nor any of its
Affiliates has acquired any stock in Buyer.
(c) Except for distributions of cash in the ordinary course of business,
during the two years immediately preceding the Closing Date Seller has not made
any distributions to any of its equity holders, nor has it engaged in any
transactions with its equity holders involving the issuance, exchange or
redemption of its stock.
(d) Seller is not a successor to any entity (by merger or acquisition of
assets), and Seller has not been a subsidiary or division during the two years
immediately preceding the Closing Date.
24
SECTION 3.20. ACCURACY OF REPRESENTATIONS AND WARRANTIES; SCHEDULES AND
EXHIBITS.
(a) No representation, warranty or other statement made by or on behalf
of Seller in this Agreement or any other document executed or to be executed in
connection therewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
taken as a whole not misleading in light of the circumstances under which they
were made.
(b) Disclosure of any fact or item by Seller in any Schedule or Exhibit
hereto referenced by a particular paragraph or section in this Agreement or in
any certificate delivered on or prior to the Closing Date shall, should the
existence of the fact or item or its contents be relevant to any other paragraph
or section, be deemed to be disclosed with respect to that other paragraph or
section whether or not an explicit cross-reference appears.
SECTION 3.21. NO IMPLIED REPRESENTATION. NOTWITHSTANDING ANYTHING
CONTAINED IN THIS ARTICLE OR ANY OTHER PROVISION OF THIS AGREEMENT, IT IS THE
EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLER IS NOT MAKING ANY
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE
EXPRESSLY GIVEN IN THIS AGREEMENT, THE SCHEDULES AND THE DOCUMENTS, INSTRUMENTS
AND CERTIFICATES TO BE DELIVERED TO BUYER AT THE CLOSING, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO ANY OF
THE ASSETS AND IT IS UNDERSTOOD THAT BUYER TAKES ALL OF SUCH PROPERTIES AND
ASSETS ON AN "AS IS" AND "WHERE IS" BASIS. It is understood that any cost
estimates, projections or other predictions contained or referred to in the
Schedules hereto and any cost estimates, projections or predictions that have
been or shall hereafter be provided to Buyer or any of its Affiliates, agents or
representatives are not and shall not be deemed to be representations or
warranties of Seller. NOTWITHSTANDING ANY PROVISION OF THIS SECTION 3.21 TO THE
CONTRARY, BUT SUBJECT IN ALL EVENTS TO THE TERMS OF THIS AGREEMENT WITH RESPECT
TO SURVIVAL OF THE REPRESENTATIONS, WARRANTIES AND AGREEMENTS THAT ARE CONTAINED
HEREIN, SELLER ACKNOWLEDGES THAT (A) BUYER IS RELYING ON THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS ARTICLE III AND IN ARTICLE VI IN DECIDING TO ENTER
INTO THIS AGREEMENT, AND (B) BUYER'S DECISION TO CONSUMMATE THE TRANSACTIONS
MADE THE SUBJECT OF THIS AGREEMENT SHALL NOT BE CONSTRUED AS, OR BE DEEMED TO
BE, A WAIVER OF BUYER'S RELIANCE ON THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS ARTICLE III AND IN ARTICLE VI IN ELECTING TO CONSUMMATE THE TRANSACTIONS
MADE THE SUBJECT OF THIS AGREEMENT. BUYER REPRESENTS AND WARRANTS THAT THE
ASSETS DO NOT CONSTITUTE "CONSUMER PRODUCTS" WITHIN THE MEANING OF THE
▇▇▇▇▇▇▇▇-▇▇▇▇ WARRANTY ACT AND THAT IF ANY WARRANTY IS NEVERTHELESS IMPOSED
UNDER THAT ACT BUYER HEREBY WAIVES ANY
25
ACTIONS OR REMEDIES AVAILABLE THEREUNDER. BUYER HEREBY WAIVES ANY ACTIONS OR
REMEDIES TO THE EXTENT AVAILABLE TO IT UNDER (i) THE DELAWARE UNIFORM DECEPTIVE
TRADE PRACTICES ACT, DELAWARE CODE SECTION 6-2531, ET SEQ., AND (ii) THE FLORIDA
CONSUMER PROTECTION LAWS, FLA. LAWS CH. 501.
SECTION 3.22. CONSTRUCTION OF CERTAIN PROVISIONS. It is understood and
agreed that neither the specification of any dollar amount in the
representations and warranties contained in this Agreement nor the inclusion of
any specific item in the Schedules or Exhibits is intended to imply that such
amounts or higher or lower amounts, or the items so included or other items, are
or are not material, and neither party shall use the fact of the setting of such
amounts or the fact of the inclusion of any such item in the Schedules or
Exhibits in any dispute or controversy between the parties as to whether any
obligation, item or matter is or is not material for purposes of this Agreement.
SECTION 3.23. ESTOPPEL. Seller's representations and warranties under
this Agreement shall be limited by, and Seller shall have no liability arising
out of, any facts or circumstances which become known to Buyer prior to the
Closing. For purposes of this Section 3.23, any facts or circumstances shall be
deemed to be known by Buyer upon the actual knowledge by ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
SECTION 4.1. ORGANIZATION; AUTHORIZATION; ECT. Buyer is a corporation
duly organized and validly existing under the laws of its jurisdiction of
organization. Buyer has full power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance of Buyer's obligations hereunder and the consummation of the
transactions contemplated hereby by Buyer have been duly and validly authorized
by all necessary corporate proceedings on the part of Buyer and no other
proceedings or actions on the part of Buyer, its board of directors or
stockholders are necessary therefor. The execution, delivery and performance by
Buyer of this Agreement will not (i) violate any provision of the certificate of
incorporation or bylaws or similar organizational instrument of Buyer, (ii)
violate any provision of, or be an event that is (or with the passage of time
will result in) a violation of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, or, except in accordance with the terms of that
certain Amended and Restated Credit Agreement dated June 26, 1996, by and among
Buyer and the Lenders and Issuing Banks thereunder and Citicorp USA, Inc., as
agent for the Lenders and the Issuing Banks, result in the imposition of any
lien upon or the creation of a security interest in any of Buyer's assets or
properties pursuant to, any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment, injunction or decree to which Buyer is a party or
by which Buyer is bound, or (iii) violate or conflict with any statute, rule or
regulation applicable to Buyer or any of its properties or assets or any other
restriction of any kind or character to which Buyer is subject. This Agreement
has been duly executed and delivered by Buyer, and, assuming the due execution
and delivery of this Agreement by Seller, this Agreement constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the rights and remedies of
creditors generally and to general principles of equity (regardless of whether
in equity or at law).
SECTION 4.2. BROKERS, FINDERS, ETC. Buyer has not employed, and is not
subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who would
have a valid claim for a fee or commission from Seller in connection with such
transactions.
SECTION 4.3. LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. There are no registrations, filings, applications, notices,
consents, approvals, orders, qualifications or waivers required to be made,
filed, given or obtained by Buyer with, to or from any Person in connection with
the execution, delivery, performance and consummation of the Asset Purchase,
except for those that become applicable solely as a result of the specific
regulatory status of Seller or its Affiliates.
27
SECTION 4.4. LITIGATION; ORDERS. As of the Effective Date, there are no
lawsuits, actions, administrative or arbitration or other proceedings or
governmental investigations pending or, to Buyer's knowledge, threatened by or
against Buyer (to the extent reasonably expected to impact or affect the ability
of Buyer to consummate the Asset Purchase). As of the Effective Date, to Buyer's
knowledge, there are no judgments or outstanding orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency, or
by arbitration) against Buyer (to the extent reasonably expected to affect the
Assets taken as a whole or impact or affect the ability of Buyer to consummate
the Asset Purchase).
SECTION 4.5. AVS STOCK. AVS is authorized to issue 51,000,000 shares of
capital stock of which (i) 50,000,000 shares are Common Stock, par value $0.001
per share, and (ii) 1,000,000 shares are Preferred Stock, par value $0.01 per
share. As of the date hereof and not including the AVS Shares (a) 8,062,500
shares of AVS's Common Stock have been issued and are outstanding, and (b) none
of AVS's Preferred Stock has been issued.
SECTION 4.6. DISCLOSURE. Buyer has heretofore delivered to the Seller
each of the following:
(a) Buyer's Prospectus dated June 26, 1996 as well as a copy of Buyer's
Quarterly Reports on Form 10Q for quarters ending June 30, 1996 and September
30, 1996; and
(b) All other reports of Buyer filed with the SEC, to the extent that such
reports have been filed with the SEC after the filing of the reports referred to
in Section 4.6(a) above and prior to the execution hereof.
Each of such documents, at the time it was prepared, and all of such
documents taken together, did not and do not contain an untrue statement of
material fact or omit to state any material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. All the financial statements contained in the foregoing
documents were prepared from the books and records of Buyer. The audited
financial statements were prepared in accordance with GAAP, and fairly and
accurately reflect the financial position and condition of Buyer as of the dates
and for the periods indicated. The unaudited financial statements were prepared
in a manner not inconsistent with the basis of presentation used in the audited
financial statements, and fairly present the financial condition of Buyer as at
and for the periods indicated, subject to normal adjustments, none of which will
be material.
SECTION 4.7. THE AVS SHARES. The AVS Shares are validly issued, fully
paid and nonassessable, and upon delivery thereof to Seller, Seller will have
good title to the AVS Shares, free and clear of all liens, claims, encumbrances,
and other equities by nature, except as provided in this Agreement, the
Stockholders Agreement and the Escrow Agreement.
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SECTION 4.8. ACCURACY OF REPRESENTATIONS AND WARRANTIES; SCHEDULES AND
EXHIBITS
(a) No representation, warranty or other statement made by or on behalf
of Buyer in this Agreement or any other document executed or to be executed in
connection therewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
taken as a whole not misleading in light of the circumstances under which they
were made.
(b) Disclosure of any fact or item by Buyer in any Schedule or Exhibit
hereto referenced by a particular paragraph or section in this Agreement or in
any certificate delivered on or prior to the Closing Date shall, should the
existence of the fact or item or its contents be relevant to any other paragraph
or section, be deemed to be disclosed with respect to that other paragraph or
section whether or not an explicit cross-reference appears.
29
ARTICLE V
COVENANTS OF SELLER AND BUYER
SECTION 5.1. EFFORTS; OBTAINING CONSENTS
(a) Subject to the terms and conditions herein provided, Seller and Buyer
each agree to use reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated hereby, and to cooperate with the other in connection with the
foregoing, including using all reasonable efforts (i) to obtain the waivers,
consents, approvals and authorizations described on SCHEDULE 3.7(B), (ii) to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties hereto to consummate the transactions
contemplated hereby, (iii) to effect all necessary registrations and filings and
submissions of information requested by any Government Authority, and (iv) to
fulfill all conditions to this Agreement.
(b) Seller and Buyer further covenant and agree, with respect to any
threatened or pending preliminary or permanent injunction or other order, decree
or ruling or statute, rule, regulation or executive order that would adversely
affect the ability of the parties hereto to consummate the transactions
contemplated hereby, to respectively use all reasonable efforts to prevent the
entry, enactment or promulgation thereof, as the case may be. In furtherance and
not in limitation of the foregoing, Buyer and Seller shall use all reasonable
efforts to resolve such objections, if any, as may be asserted with respect to
the transactions contemplated hereby.
(c) Each party hereto shall promptly inform the other of any material
communication from any Government Authority regarding any of the transactions
contemplated hereby. If either party or any Affiliate thereof receives a request
for additional information or documentary material from any such Government
Authority with respect to the transactions contemplated hereby, then such party
will endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party where such consultation
is necessary or appropriate, an appropriate response in compliance with such
request.
SECTION 5.2. FURTHER ASSURANCES. Seller and Buyer agree that, from time
to time, whether before, at or after the Closing Date, each of them will, and
will cause their respective Affiliates to, execute and deliver such further
instruments of conveyance and transfer and take such other action as may be
reasonably necessary to carry out the purposes and intents of this Agreement.
Without limiting the generality of the preceding sentence, after the Closing,
and for no further consideration, Seller shall (a) use its reasonable efforts to
enable Buyer to accomplish the transfer or issuance of all authorizations of any
Government Authority and all other registrations, permits, approvals and the
like as contemplated by this Agreement and as shall be required from time to
time for Buyer to operate the Business, and (b) execute, acknowledge and deliver
such assignments, transfers, consents and other documents and instruments as
Buyer or its counsel may reasonably request, in each case, to vest in Buyer, and
protect Buyer's right,
30
title and interest in, and enjoyment of, the Assets and the Business
intended to be conveyed, assigned, transferred and granted to Buyer pursuant to
this Agreement. If requested by Buyer, Seller further agrees to use its
reasonable best efforts to prosecute or otherwise enforce in its own name for
the benefit of Buyer any claims, rights or benefits that are transferred to
Buyer by this Agreement and that require prosecution or enforcement in any of
Seller's name. Any prosecution or enforcement of claims, rights or benefits
under this Section 5.2 shall be at Buyer's sole expense, unless the prosecution
or enforcement is made necessary by a breach of this Agreement by Seller.
Following the Closing, Seller shall refer to Buyer, as promptly as practicable,
any telephone calls, letters, orders, notices, requests, inquiries and other
communications relating to the Assets and the Business transferred or granted at
such Closing. Notwithstanding the generality of the foregoing, Seller
acknowledges and agrees that, if, after the Closing, Seller receives any
payments or other consideration attributable to the accounts receivable or notes
receivable included within the Assets, then Seller shall hold any and all such
payments or consideration in trust for the benefit of Buyer and Seller shall
immediately segregate and turn over to Buyer any and all such payments and
consideration. Seller further acknowledges and agrees that the agreements of
Seller contained in the preceding sentence shall be absolute and unconditional
obligations of Seller and shall not be subject to the thresholds, deductibles
and limitations set forth in Article X of this Agreement.
SECTION 5.3. PUBLIC ANNOUNCEMENTS. Seller and Buyer will consult with
each other before issuing, or permitting any agent or Affiliate to issue, any
press releases or otherwise making or permitting any agent or Affiliate to make,
any public statements with respect to this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, Seller and Buyer shall be
permitted to file any required disclosures relating to the Asset Purchase as may
be required by the federal securities laws or by any securities exchange on
which securities of Seller, Buyer or any of their respective Affiliates are
listed, and Seller and Buyer shall, upon the Closing of the Asset Purchase, be
permitted to issue the press release attached hereto as EXHIBIT 5.3.
SECTION 5.4. ACCOUNTS AND NOTES PAYABLE NOTICES. Seller shall assist
Buyer and Buyer's agents and representatives in delivering notices from Seller,
in form and substance reasonably satisfactory to Seller and Buyer, and at
Buyer's sole cost and expense, to each Person to whom Seller anticipates it will
owe an account payable or note payable as of the Closing Date notifying such
Person that Buyer has assumed liability for the payment of such account payable
or note payable pursuant to the terms hereof. Seller hereby covenants and agrees
that it will provide Buyer with a list of the Persons to whom such notice should
be addressed.
SECTION 5.5. POST-CLOSING CONFIDENTIALITY. After the Closing, Seller
shall not use or disclose to any Person any trade or business secrets relating
to the Business, and Seller shall not intentionally disclose, directly or
indirectly, any such information, and shall cause such information to be kept
confidential and not used in any way detrimental to Buyer; PROVIDED, that (i)
Seller may use or disclose any such information which has been publicly
disclosed (other than directly or indirectly by Seller after the Effective
Date), (ii) to the extent that Seller may become legally compelled to disclose
any of such information, Seller may disclose such information if Seller has used
its best efforts, and shall have afforded Buyer the opportunity, to obtain any
31
appropriate protective order, or other satisfactory assurance of confidential
treatment, for the information to be so disclosed, (iii) Seller may disclose any
such information to Seller's agents and experts who agree to be bound by this
confidentiality provision, and (iv) Seller may disclose such confidential
information as may be necessary for Seller to prosecute or defend any Claims
related to or arising out of this Agreement.
SECTION 5.6. REGISTRATION OF AVS SHARES. Buyer hereby covenants and
agrees that Buyer will use its best efforts to see that the AVS Shares are
registered in a selling shareholder shelf registration as soon as Buyer is
legally able to effect such registration in accordance with the Securities Act
of 1933 (as amended, or any similar federal statute, and the rules and
regulations promulgated thereunder, all as the same shall be in effect at the
time), and to utilize Form S-3 for this purpose (which registration is legally
precluded until the one year anniversary of the effectiveness of Buyer's initial
S-1 registration statement filed with the Securities and Exchange Commission).
Buyer's obligations under this Section 5.6 will survive the Closing.
32
ARTICLE VI
EMPLOYEE BENEFITS
SECTION 6.1. EMPLOYEE BENEFIT PLANS. Seller hereby represents and
warrants to Buyer as follows:
(a) SCHEDULE 6.1(A) lists all compensation and benefit plans, contracts
and arrangements (other than routine administrative procedures or
government-required programs) in effect as of the Effective Date sponsored or
maintained by Seller or its Affiliates including all pension, profit sharing,
savings and thrift, bonus, incentive or deferred compensation, severance pay and
medical and life insurance plans in which any current or former employees of
Seller or their respective dependents (collectively, "EMPLOYEES") participate
(collectively, "EMPLOYEE BENEFIT PLANS").
(b) All Employee Benefit Plans which are "employee benefit plans," as
defined in Section 3(3) of ERISA, are in compliance with and have been
administered in compliance with all applicable requirements of law, including
but not limited to the Code and ERISA, and all contributions or premiums
required to be made to each such plan under the terms of such Plan, ERISA or the
Code for all periods of time prior to the Effective Date and the Closing Date
have been or will be, as the case may be, made or accrued.
(c) Except as otherwise set forth on SCHEDULE 6.1(C), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
(including severance, unemployment compensation, golden parachute or otherwise)
becoming due under any Employee Benefit Plan, (ii) materially increase any
benefits otherwise payable under any Employee Benefit Plan, or (iii) result in
the acceleration of the time of payment or vesting of any such benefits to any
material extent.
SECTION 6.2. TERMINATION OF PARTICIPATION. Except as otherwise provided
in this Article VI, the active participation of all Employees in each Employee
Benefit Plan shall cease as of the Closing Date and no additional benefits shall
be accrued thereunder for such employees.
SECTION 6.3. PROFIT SHARING PLAN. Effective as of the Closing Date,
Seller shall take, or shall cause to be taken, all action necessary to fully
vest all Active Employees in their accrued benefits, if any, under the Seller's
Profit Sharing Plan (the "PROFIT SHARING PLAN") and to provide for allocation of
contributions accrued prior to the Closing Date with respect to the Active
Employees who are participants in the Profit Sharing Plan as of the Closing
Date. As of the Closing Date, Seller shall make all contributions on behalf of
all Active Employees to the Profit Sharing Plan attributable to service and
compensation for such Active Employees through the Closing Date, whether or not
such contributions are due under the terms of the Profit Sharing Plan and
terminate Seller's Profit Sharing Plan. Seller shall, to the extent legally
permissible, cause a spin-off and transfer, in compliance with Section 414(l) of
the Code, from the trust for the Profit Sharing Plan to a trust established by
and for a defined contribution savings plan qualified under
33
Sections 401(a) and 401(k) of the Code maintained or established by
Buyer ("BUYER'S 401(K) PLAN") of an amount in cash equal to the aggregate
account balances, as of the date of such transfer, of the Hired Employees (as
defined in Section 6.4) who are participants under the Profit Sharing Plan as of
such transfer date. Any such transfer shall occur as soon as practicable after
all of the following have occurred: (a) the Closing, (b) the designation (or
amendment, if necessary) of Buyer's 401(k) Plan, (c) the receipt by Seller of a
favorable determination letter issued by the Internal Revenue Service for
Buyer's 401(k) Plan or an opinion of counsel of Buyer reasonably satisfactory to
Seller opining that the Buyer's 401(k) Plan is a qualified plan under Sections
401(a) and 401(k) of the Code, and, if applicable, (d) the expiration of thirty
(30) days after both Buyer and Seller have filed Form 5310-A, if necessary, with
the Internal Revenue Service. From and after the date of such transfer, the
Hired Employees who are participants under the Profit Sharing Plan as of such
transfer date shall be participants under Buyer's 401(k) Plan. If such a
transfer to Buyer's 401(k) Plan is not legally permissible, then Seller shall
cause the amounts in Seller's Profit Sharing Plan to be distributed to the
participants therein upon termination.
SECTION 6.4. EMPLOYEES
(a) At Closing, Buyer agrees to offer employment to all Persons listed on
SCHEDULE 6.4(A) and any Persons which are hired by Seller to replace such
employees prior to the Closing Date (collectively, "ACTIVE EMPLOYEES") on such
terms and conditions as may be determined by Buyer in its sole discretion;
provided, however, that the base salary of such hired persons shall not be less
than their base salaries as of the Closing Date (the Persons actually hired by
Buyer are referred to herein as the "HIRED EMPLOYEES"). Buyer agrees to assume
all accrued but unpaid vacation time of the Hired Employees as of the Closing
Date.
(b) Buyer shall indemnify and shall hold Seller and the Seller Indemnified
Parties harmless from and against all Covered Liabilities with respect to all
Hired Employees for all actions of Buyer occurring after the Closing Date,
including any Covered Liabilities with respect to Hired Employees arising out of
the transactions contemplated by this Agreement. Without limiting the foregoing,
Buyer shall indemnify and shall hold Seller and the Seller Indemnified Parties
harmless from and against any claims asserted by any Hired Employee for any
severance package from Seller.
(c) Seller agrees that, without the prior written consent of Buyer, which
consent may be withheld in Buyer's sole discretion, neither Seller nor any
Affiliate will hire or offer to hire any of the Active Employees identified on
SCHEDULE 6.4(A) attached hereto, for a period of five (5) years after the
Closing Date. The agreements contained in this Section 6.4(c) shall be enforced
in accordance with the provisions of Section 11.13(c).
(d) Notwithstanding anything in this Agreement to the contrary, Seller and
Buyer covenant and agree to cooperate and to consult with each other to ensure
that neither Seller nor Buyer, nor both of them, violate any federal or state
equal opportunity anti-discrimination, wage and hour or any other employment
law, rule or regulation that is or may be applicable to the
34
provisions hereof (collectively, "EMPLOYMENT LAWS"). Each of Seller and
Buyer covenant and agree that neither will take any separate actions or
omissions, or joint actions or omissions, which would cause either Seller or
Buyer, or both, to violate any of the Employment Laws. Seller and Buyer further
covenant and agree that in the event any of the Employment Laws are violated,
Seller shall be solely responsible and liable for any and all Claims relating to
any violation by Seller of the Employment Laws (except to the extent Seller is
indemnified by Buyer for violations of Employment Laws by Buyer with respect to
the Hired Employees pursuant to the terms of this Agreement), and Buyer shall be
solely responsible and liable for any and all Claims relating to any violation
by Buyer of the Employment Laws.
35
ARTICLE VII
TAX MATTERS
SECTION 7.1. TAX RETURNS. Seller represents and warrants that all Tax
returns required to be filed for taxable periods ending on or prior to the
Closing Date by, or with respect to any activities of, the Business have been or
will be filed in accordance with all applicable laws. All Taxes with respect to
Seller (whether or not requiring the filing of a return and including any
interest, penalties and additions thereto) due and payable have been, and as of
the Closing Date will have been, timely paid in full. To Seller's knowledge,
neither Seller nor any Affiliate of Seller is a party to any threatened action
or proceeding for assessment or collection of Taxes and no claim for assessment
or collection of Taxes has been asserted against Seller, any Affiliate of Seller
or any member of such affiliated or combined group. Seller represents and
warrants that SCHEDULE 7.1 attached hereto sets forth the name, address and
account number of all taxing authorities for which Seller has paid Taxes related
to the Business since Seller's inception. Seller is not a foreign person within
the meaning of Section 1445 of the Code.
SECTION 7.2. SALES, TRANSFER AND SIMILAR TAXES. Buyer shall be liable
for, and shall hold harmless Seller and the Seller Indemnified Parties, from and
against any and all Taxes and fees levied in connection with the transfer of the
Assets to Buyer, including but not limited to sales, transfer, use, and filing
fees and Taxes. Buyer and Seller shall each be liable for, and shall hold
harmless the other party and the Seller Indemnified Parties and the Buyer
Indemnified Parties, as the case may be, from and against any income Taxes
levied against such party in connection with the transactions contemplated by
this Agreement.
SECTION 7.3. COOPERATION AND EXCHANGE OF INFORMATION
(a) As soon as practicable, but in any event within thirty (30) days after
Seller's request, from and after the Closing Date, Buyer shall provide Seller
with such cooperation and shall deliver to Seller such information and data
concerning the pre-Closing operations of the Business and make available such
knowledgeable Hired Employees as Seller may reasonably request, including
providing the information and data required by Seller's customary Tax and
accounting questionnaires, in order to enable Seller to complete and file all
Tax returns which it or its Affiliates may be required to file with respect to
the operations and business of Seller through the Closing Date or to respond to
audits by any taxing authorities with respect to such operations and to
otherwise enable Seller to satisfy its internal accounting and Tax requirements.
Such cooperation and information shall include promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any taxing authority which relate to the operations and business of Seller
through the Closing Date, and providing copies of all relevant Tax returns,
together with accompanying schedules and related workpapers, documents relating
to rulings or other determinations by any taxing authority and records
concerning the ownership and Tax basis of property, which Buyer may possess and
which relate to the operation and business of Seller through the Closing Date.
Buyer shall make its employees and facilities
36
available on a mutually convenient basis to provide explanation of any
documents or information provided hereunder.
(b) For a period of seven (7) years after the Closing Date or such
longer period as may be required by law, Buyer shall retain in accordance with
I.R.S. Rev. Proc. 86-19 and 91-59, and neither destroy nor dispose of, all Tax
returns, books and records (including computer files) of, or with respect to the
activities of, the Business for all taxable periods ending on or prior to the
Closing Date. Thereafter, Buyer shall not destroy or dispose of any such Tax
returns, books or records unless it first uses its best efforts to offer such
Tax returns, books and records to Seller in writing at least sixty (60) days
prior to such proposed destruction or disposition; PROVIDED, HOWEVER, that sixty
(60) days after Buyer offers such Tax returns, books or records to Seller in
writing, if Seller does not accept such offer, Buyer shall be free to dispose of
or destroy such records and if Seller accepts such offer, Buyer shall no longer
have any obligation hereunder with respect to records delivered to Seller.
(c) Buyer and Seller and their respective Affiliates shall cooperate in
the preparation of all Tax returns relating in whole or in part to taxable
periods ending on or before or including the Closing Date that are required to
be filed after such date, a list of which is set forth on SCHEDULE 7.3(C)
attached hereto. Such cooperation shall include, but not be limited to,
furnishing prior years' Tax returns or return preparation packages illustrating
previous reporting practices or containing historical information relevant to
the preparation of such Tax returns, and furnishing such other information
within such party's possession requested by the party filing such Tax returns as
is relevant to their preparation. In the case of any state, local or foreign
joint, consolidated, combined, unitary or group relief system Tax returns, such
cooperation shall also relate to any other taxable periods in which one party
could reasonably require the assistance of the other party in obtaining any
necessary information.
(d) Seller shall have the right, at its own expense, to control any
audit or examination by any taxing authority ("TAX AUDIT"), initiate any claim
for refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes for any taxable period ending on or before the Closing Date with respect
to the Business. In this regard, Seller agrees, notwithstanding any other
provision of this Agreement, to indemnify, defend, and hold harmless Buyer and
the Buyer Indemnified Parties from and against any and all claims, liabilities,
damages, losses, actions, causes of action, costs fees and expenses, including
without limitation, court costs and attorney's fees and expenses, in any way
arising out of any such Tax Audit. The indemnities of Seller contained in this
Section 7.3(d) shall be absolute and unconditional obligations of Seller and
shall not be subject to the thresholds, deductibles and limitations set forth in
Article X.
(e) If either party fails to provide any information reasonably
requested by the other party that such other party is obligated to provide to
the requesting party pursuant to the terms of this Agreement in the time
specified herein, or if no time is specified pursuant to this Section 7.3,
within a reasonable period, or otherwise fails to do any act required of it
under this Section 7.3, then the other party shall be obligated, notwithstanding
any other provision of this Agreement,
37
to indemnify the requesting party and the Seller Indemnified Parties or
the Buyer Indemnified Parties, as the case may be, and the other party shall so
indemnify and hold harmless the requesting party and the Seller Indemnified
Parties or the Buyer Indemnified Parties, as the case may be, from and against
any and all costs, claims or damages, including all Taxes or deficiencies
thereof, payable as a result of such failure.
38
ARTICLE VIII
CONDITIONS OF BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to consummate the Asset Purchase shall be subject to
the satisfaction on or prior to the Closing Date, or waiver by Buyer, of all of
the following conditions:
SECTION 8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. The
representations and warranties of Seller contained in this Agreement shall have
been true on the Effective Date without regard to any schedule updates and 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, except for representations and warranties that speak as of
a specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time), and the covenants and
agreements of Seller to be performed on or before the Closing Date in accordance
with this Agreement shall have been duly performed or complied with in all
material respects.
SECTION 8.2. FILINGS; CONSENTS. All registrations, filings,
applications, notices, consents, assignments, approvals, estoppel certificates,
orders, qualifications and waivers either (a) listed on SCHEDULE 3.7(B) and
indicated thereon as being a condition to the Closing for Buyer or (b) described
in Section 5.1(a)(iv) shall have been filed, made or obtained.
SECTION 8.3. NO INJUNCTION OR PENDING LITIGATION. At the Closing Date,
there shall be no legislation, injunction, restraining order or decree of any
nature of any court or Government Authority of competent jurisdiction that is in
effect that restrains or prohibits the consummation of the Asset Purchase, and
there shall be no action, suit or proceeding, in law or in equity, instituted or
threatened before any federal, state, county or local court, department,
commission, agency or other instrumentality or arbitrator or similar entity
pertaining to the transactions contemplated by this Agreement or to their
consummation, excluding any action, suit or proceeding instituted or threatened
by Buyer.
SECTION 8.4. DELIVERY OF RECORDS. Seller shall have delivered all
Records in its possession to Buyer in accordance with the provisions of Section
2.9.
SECTION 8.5. RELEASES OF LIENS. Buyer shall have received releases of
all liens with respect to the Assets in recordable form executed by all holders
of liens that are of record in any jurisdiction; all of which shall operate to
release any and all liens and encumbrances affecting the Assets, except for
Permitted Liens.
SECTION 8.6. PERFORMANCE OF SELLER'S OBLIGATIONS. Seller shall have
furnished or caused to be furnished to Buyer, all items required to be furnished
to Buyer pursuant to other Sections of this Agreement, including without
limitation, the documents described in Sections 2.4(b) and 2.4(c), and otherwise
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with prior to the Closing.
39
SECTION 8.7. NO MATERIAL ADVERSE CHANGE. Buyer shall have determined to
its satisfaction that there has been no material adverse change in the condition
of the Business or of Seller which would reasonably be expected to affect the
Business, except as may be contemplated by or result from any operations of the
Business to the extent such operations are consistent with the terms and
provisions of this Agreement.
SECTION 8.8. DUE DILIGENCE. Buyer shall be satisfied in its sole
discretion as to the results of its due diligence investigation of Seller,
including, without limitation, of the Business, the Assets, the Assumed
Liabilities, and its review of the Financial Information described on SCHEDULE
3.2.
40
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to consummate the Asset Purchase is subject to the
satisfaction on or prior to the Closing Date, or waiver by Seller, of all of the
following conditions:
SECTION 9.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. The
representations and warranties of Buyer 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 except for representations and warranties that speak as of a
specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time) and the covenants and
agreements of Buyer to be performed on or before the Closing Date in accordance
with this Agreement shall have been duly performed in all material respects.
SECTION 9.2. NO INJUNCTION OR LITIGATION. At the Closing Date, there
shall be no legislation, injunction, restraining order or decree of any nature
of any court or Government Authority of competent jurisdiction that is in effect
that restrains or prohibits the consummation of the Asset Purchase, excluding
any injunction, restraining order or decree resulting from action initiated by
Seller, and there shall be no action, suit or proceeding, in law or in equity,
instituted or threatened before any federal, state, county or local court,
department, commission, agency or other instrumentality or arbitrator or similar
entity pertaining to the transactions contemplated by this Agreement or to their
consummation, or challenging the legality or validity of this Agreement,
excluding any action, suit or proceeding instituted or threatened by Seller.
SECTION 9.3. DELIVERY OF INITIAL PURCHASE PRICE AND CLOSING DOCUMENTS.
Buyer shall have delivered to Seller the Initial Purchase Price and have
executed and delivered to Seller the documents described in Sections 2.4(b) and
2.4(d).
SECTION 9.4. PERFORMANCE OF BUYER'S OBLIGATIONS. Buyer shall have
furnished or caused to be furnished to Seller, all items required to be
furnished to Buyer pursuant to other Sections of this Agreement and otherwise
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with prior to the Closing.
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ARTICLE X
SURVIVAL; INDEMNIFICATION
SECTION 10.1. SURVIVAL
(a) Except as otherwise provided in Section 5.6 and Section 7.3(d), all
representations, warranties and (except as provided in Section 10.1(e))
covenants and agreements of the parties contained in this Agreement, or any
certificate, document or other instrument delivered in connection herewith (to
the extent not fully performed prior to the Closing Date), shall survive the
Closing only until the EARLIER OF (i) the twelfth (12th) month anniversary of
the Closing, and (ii) with regard to those items and matters that would be
discovered in the course of an audit conducted by Buyer's independent auditors,
the date on which Buyer releases its audited financial statements showing the
results of the combined operations of Buyer and the Business, except for the
liabilities or obligations of Seller relating to the payment of Taxes which
shall survive until the applicable statute of limitations shall have expired.
Notwithstanding the terms of this Section 10.1(a), Seller and Buyer hereby
acknowledge and agree that Seller's obligations with respect to the London
Matter (x) are NOT subject to the limitations on survival described in this
Section 10.1(a), and (y) shall continue as absolute obligations of Seller
following the Closing.
(b) No action or proceeding may be brought with respect to any of the
representations, warranties, covenants or agreements set forth in this
Agreement, unless written notice thereof, setting forth in reasonable detail the
claimed misrepresentation or breach of warranty, covenant or agreement, shall
have been delivered to the party alleged to have breached such representation,
warranty, covenant or agreement prior to the expiration of the survival time set
forth for such representation, warranty, covenant or agreement in Section
10.1(a) and Section 10.1(e).
(c) In calculating any amount of loss payable to Seller pursuant to
Section 10.2(a) or payable to Buyer pursuant to Section 10.2(b), amounts shall
not be included for special damages, consequential damages, incidental damages,
lost profits, damages for lost business opportunity, punitive damages or
exemplary damages.
(d) Notwithstanding any provision to the contrary contained in this
Agreement, neither Buyer nor Seller shall make any claim against the other party
for any breach of representation, warranty, covenant or agreement under this
Agreement until the dollar amount of all loss to such other party for such
breaches suffered after the Closing, shall exceed in the aggregate the amount of
$50,000, and, if such amount is exceeded, Buyer or Seller, as the case may be,
shall be required to pay the entire amount of such aggregate loss to the other
party for all such breaches; PROVIDED, HOWEVER, that, except as set forth below
with regard to the Retained Liabilities, Seller's obligations and liabilities
with respect to representations, warranties, covenants and agreements set forth
in this Agreement shall not exceed $1,000,000, and PROVIDED FURTHER, HOWEVER,
that the indemnities of Seller with respect to any Claims against any of the
Buyer Indemnified Parties relating to Seller's failure to satisfy the Retained
Labilities and of Buyer with respect to any Claims against any of the Seller
Indemnified Parties relating to Buyer's failure to satisfy the
42
Assumed Liabilities, respectively, shall be absolute and unconditional
obligations of Seller and Buyer, respectively, and shall not be subject to the
thresholds and limitations set forth in this Article X.
(e) Those covenants or agreements that contemplate or may involve actions
to be taken or obligations in effect after the Closing shall survive in
accordance with their terms.
SECTION 10.2. GENERAL INDEMNIFICATION BY BUYER OR SELLER
(a) From and after the Closing Date, Buyer shall indemnify and hold
harmless Seller, Seller's Affiliates, and each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "SELLER INDEMNIFIED PARTIES")
(i) subject to the applicable notification and timing requirements and the other
limitations provided in Section 10.1, from and against any and all Covered
Liabilities arising out of any breach of any representation or warranty or of
any covenant or agreement which survives the Closing made by Buyer under this
Agreement, (ii) from and against any and all Covered Liabilities arising out of
the failure of Buyer to pay, discharge or perform any of the Assumed
Liabilities, and (iii) the operation of the Business by Buyer after the Closing
Date.
(b) From and after the Closing Date, Seller shall indemnify and hold
harmless Buyer, Buyer's Affiliates, each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "BUYER INDEMNIFIED PARTIES")
from and against (i) subject to the applicable notification and timing
requirements and other limitations and obligations provided in Sections 10.1 and
10.3, any and all Covered Liabilities arising out of any breach of any
representation or warranty or of any covenant or agreement which survives the
Closing made by or on behalf of Seller under this Agreement, and (ii) any and
all Covered Liabilities arising out of the failure of Seller to pay, discharge
or perform any of the Retained Liabilities, including, without limitation, the
London Matter.
(c) Except as may otherwise be provided herein, indemnification
pursuant to this Article X shall be the exclusive remedy for any breach by
either party of any representation or warranty contained in this Agreement.
SECTION 10.3. THIRD PARTY CLAIMS. If a claim by a third party is made
against an indemnified party (i.e., a Seller Indemnified Party or a Buyer
Indemnified Party), and if such indemnified party intends to seek indemnity with
respect thereto under this Article X, such indemnified party shall promptly
notify the indemnifying party in writing of such claims setting forth such
claims in reasonable detail. The indemnifying party shall have thirty (30) days
(or such shorter period as may be necessary to prevent the loss of any rights or
claims) after receipt of such notice to undertake, through counsel of its own
choosing (subject to the reasonable approval of the indemnified party) and at
its own expense, the settlement or defense thereof, and the indemnified party
shall cooperate with it in connection therewith; PROVIDED, HOWEVER, that the
indemnified party may participate in such settlement or defense through counsel
chosen by such
43
indemnified party, PROVIDED that the fees and expenses of such counsel
shall be borne by such indemnified party. The indemnified party shall have the
right to pay or settle any such claim, PROVIDED that in such event it shall
waive any right to indemnity therefor by the indemnifying party unless the
indemnifying party has consented in writing to such payment or settlement. If
the indemnifying party does not notify the indemnified party within thirty (30)
days (or such shorter period as may be necessary to prevent the loss of any
rights or claims) after the receipt of the indemnified party's notice of a claim
of indemnity hereunder that it elects to undertake the defense thereof, the
indemnified party shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.
SECTION 10.4. BULK SALES WAIVER; INDEMNIFICATION. Buyer hereby waives
compliance by Seller with the provisions of any applicable "bulk sales" or
similar laws, subject to the indemnity of Seller contained in this Section 10.4.
Seller hereby agrees to indemnify, defend, and hold harmless Buyer and the Buyer
Indemnified Parties from and against any and all claims, liabilities, damages,
losses, actions, causes of action, costs, fees and expenses, including, without
limitation, court costs and attorney's fees, in any way arising out of any "bulk
sales" or similar laws applicable to the Asset Purchase, unless the claim
relates to an Assumed Liability. Seller acknowledges and agrees that the
agreements of Seller contained in this Section 10.4 shall be absolute and
unconditional obligations of Seller and shall not be subject to the thresholds,
deductibles and limitations set forth in Article X of this Agreement.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. NON-ASSIGNABLE UNDERTAKINGS AND RIGHTS. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any claim, contract, license, permit, lease, commitment,
sales order or purchase order which would otherwise be assigned hereunder if any
attempted assignment thereof without the consent of the other party thereto or
the grantor thereof would constitute a breach thereof or would in any way affect
the rights of Seller thereunder. If such consent is not obtained, Seller shall
act as the agent for Buyer in order to obtain for Buyer the benefits thereunder.
To the extent that consents or waivers are not obtained by Seller prior to
Closing but Buyer elects to consummate the Asset Purchase, Seller and Buyer
shall continue to seek such consents or waivers and to cooperate with each other
to establish, to the extent practicable, arrangements that are reasonable and
lawful as to both Seller and Buyer, and which result in the benefits and
obligations under such assumed contracts, leases and permits being apportioned
in a manner that is in accordance with the purpose and intention of this
Agreement.
SECTION 11.2. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section 11.2, PROVIDED receipt of copies of such counterparts is confirmed.
SECTION 11.3. GOVERNING LAWS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without reference
to the choice of law principles thereof.
SECTION 11.4. ENTIRE AGREEMENT. This Agreement (including agreements
incorporated herein), and the Schedules and Exhibits hereto and the London
Matter Memorandum supersede any and all previous agreements and understandings
between the parties and contain the entire agreement between the parties with
respect to the subject matter of this Agreement and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein. Except for Sections 2.2, 10.2, and 10.3,
which are intended to benefit, and to be enforceable by, any of the Seller
Indemnified Parties and the Buyer Indemnified Parties, as the case may be, and
Sections 2.4, 2.8, 5.2, 10.2 and 11.1, which are intended to benefit and be
enforceable by Seller and any Affiliate of Seller, as the case may be, this
Agreement is not intended to confer upon any Person not a party hereto (other
that the successors and assigns of the parties hereto as permitted by Section
11.8) any rights or remedies hereunder and no other Person, including any
present or future employees of Buyer or Seller, shall be treated as a
third-party beneficiary of any of the provisions of this Agreement.
45
SECTION 11.5. EXPENSES. Whether or not the Asset Purchase is
consummated, all legal and other costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses. Notwithstanding the foregoing, Buyer
agrees to pay reasonable attorneys fees incurred by Seller in connection with
this Agreement and the Asset Purchase.
SECTION 11.6. NOTICES. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to
Seller shall be addressed to:
AvEng Trading Partners, Inc.
▇▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Much, Schelist, Freed, Denenberg, Ament, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other Person as Seller may
designate by written notice to Buyer. Notices to Buyer shall be addressed to:
Aviation Sales Company
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
46
or at such other address and to the attention of such other Person as Buyer may
designate by written notice to Seller.
SECTION 11.7. [INTENTIONALLY LEFT BLANK]
SECTION 11.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, including, without limitation, Seller's shareholders in
the event of a liquidation of Seller as described in Section 2.10; PROVIDED,
HOWEVER, that no party hereto will assign its rights or delegate its obligations
under this Agreement without the express prior written consent of each other
party hereto. Notwithstanding the provisions of the first sentence of this
Section 11.8, (a) on or after the Closing Date, Seller shall be entitled to
assign all of its rights and obligations to any successor entity that may
acquire all or substantially all its assets or business, by merger or otherwise,
without the prior written consent of Buyer, and (b) this Agreement, and all
agreements, documents and instruments contemplated hereby, may be assigned by
Buyer to (i) financial institutions (for the purposes of granting security
interests herein) and/or (ii) a wholly-owned subsidiary of Buyer (for the
purposes of assigning the Buyer's interest herein and therein) without the prior
written consent of the Seller; PROVIDED, HOWEVER, that any assignee of any
assignment shall be subject to all claims of offset and all defenses that may be
asserted by the other party to this Agreement against the assignor to such
assignment; and PROVIDED FURTHER, that no such assignment shall relieve Buyer of
its obligations hereunder.
SECTION 11.9. HEADINGS; DEFINITIONS. The Section, Article and other
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.
SECTION 11.10. AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
all parties hereto. Any party hereto may, only by an instrument in writing,
waive compliance by the other party hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
SECTION 11.11. INTERPRETATION; ABSENCE OF PRESUMPTION
(a) For the purposes of this Agreement, (i) "to Seller's knowledge"
shall mean the actual knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ after due inquiry, which
may be satisfied by consultation with Seller's Management Team, and, where
appropriate, outside legal counsel, (ii) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires, (iii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any
47
particular provision of this Agreement, and Article, Section, paragraph, Exhibit
and Schedule references are to the Articles, Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise specified, (iv) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified, (v) the word "or"
shall not be exclusive, and (vi) provisions shall apply, when appropriate, to
successive events and transactions.
(b) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
SECTION 11.12. SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining provisions of
this Agreement.
SECTION 11.13. SETTLEMENT OF DISPUTES
(a) Except as provided in Section 2.7(b) and Section 11.13(c), any
dispute or controversy between the parties hereto arising from or relating to
this Agreement or the construction, validity, interpretation, meaning,
performance, non-performance, enforcement, operation or breach of this Agreement
shall be submitted to mediation, and if such mediation is unsuccessful then to
mandatory, final and binding arbitration. If there arises any dispute or
controversy arising from or relating to this Agreement in connection with which
a party seeks to impose personal liability upon a Seller Indemnified Party or a
Buyer Indemnified Party, the Seller Indemnified Party or the Buyer Indemnified
Party against whom such claim is made has the right, but is not required, to
require that such dispute or controversy be submitted to mediation, and if such
mediation is unsuccessful then to mandatory, final and binding arbitration, in
accordance with the provisions of this Section 11.13. Prior written notice of
any dispute or controversy described in the preceding sentence shall be
delivered to the Seller Indemnified Party or to the Buyer Indemnified Party,
who, within ten (10) days after delivery of the notice, shall deliver to the
demanding party a written statement of whether the mediation and arbitration
provisions of this Section 11.13 are elected. If the written response of the
Seller Indemnified Party or the Buyer Indemnified Party is not timely delivered
to the claiming party, the provisions of this Section 11.13 shall not apply to
such dispute or controversy.
(b) Any mediation or arbitration under this Agreement shall take place
pursuant to the following procedures:
(i) If a dispute or controversy arises, either party may, in a
written notice delivered to the other party, demand mediation. The
notice shall briefly state the matter in controversy.
(ii) If the parties do not resolve the dispute within ten (10)
days after delivery of the notice of mediation, either party may
request that Judicial Arbitration and Mediation
48
Service ("JAMS") (or similar mediation service of a similar national
scope if JAMS no longer then exists) appoint an independent mediator,
who shall serve as mediator for all purposes hereof. Each party shall
pay one-half of the cost of the mediator's services, in advance upon
request by the mediator or any party.
(iii) Within ten (10) days after appointment of the mediator,
the mediator shall schedule a meeting among the parties and the
mediator for the purpose of mediating the dispute. If the parties do
not resolve the dispute with thirty (30) days after appointment of the
mediator, the dispute shall be resolved in arbitration and either party
may, in a written notice delivered to the other party, demand
arbitration. The notice shall name and appoint an arbitrator selected
by the party demanding arbitration.
(iv) Within thirty (30) days after receiving a demand for
arbitration, the receiving party shall, in a written notice delivered
to the demanding party, name and appoint its own arbitrator. If the
receiving party fails to name and appoint an arbitrator timely, then an
arbitrator shall be appointed for the receiving party by the Senior
United States District Judge for the Southern District of Florida. The
two arbitrators so appointed shall appoint a third arbitrator within
thirty (30) days, and the appointment may be made either by agreement
of the two arbitrators or by the Senior United States District Judge
for the Southern District of Florida at the request of the two
arbitrators.
(v) Each party shall bear its own arbitration fees, costs and
expenses; PROVIDED, HOWEVER, that fees, costs and expenses associated
with judicial proceedings may be awarded by a court under Section
11.13(b)(vii). The arbitration hearing shall be held in Miami, Florida
at a location designated by a majority of the arbitrators. The
Commercial Arbitration Rules of the American Arbitration Association,
as supplemented hereby, shall apply to the arbitration. The substantive
laws of the State of Delaware (excluding conflict of laws provisions)
shall also apply to the arbitration.
(vi) The arbitration hearing shall be concluded within ten
(10) days unless otherwise ordered by a majority of the arbitrators,
and the award thereon shall be made within fifteen (15) days after the
close of submission of evidence. An award rendered by a majority of the
arbitrators shall be final and binding on all parties to the
proceeding, except for any appeal rights available under applicable
law, and judgment on the award may be entered by either party in a
court of competent jurisdiction.
(vii) The parties stipulate that the provisions of this
Section 11.13 shall be a complete defense to any suit, action or
proceeding instituted in any federal, state or local court or before
any administrative tribunal with respect to any controversy or dispute
arising out of this Agreement between the parties. The arbitration
provisions of this Agreement shall, with respect to such controversy or
dispute, survive the termination or expiration of this Agreement.
Should any party institute judicial proceedings seeking to avoid the
mediation or arbitration provisions of this Agreement, or should any
party in judicial proceedings unsuccessfully contest an arbitration
award rendered under this Section
49
11.13, the other party shall be entitled to recover reasonable
attorney's fees, costs and expenses associated with the judicial
proceedings, with the amount of attorney's fees, costs and expenses to
be determined by the court. If a party fails to comply with the terms
of an arbitration award made under this Agreement, the other party
shall be entitled to recover reasonable attorney's fees, costs and
expenses incurred in seeking judicial confirmation of the award, with
the amount of attorney's fees, costs and expenses to be determined by
the court. Failure to comply with the terms of an arbitration award
shall include without limitation the failure to pay the full amount due
under an arbitration award within the time specified in the arbitration
award.
Neither any party hereto nor the arbitrators may disclose the existence or
results of any arbitration hereunder without the prior written consent of the
other party; nor may any party hereto disclose to any third party any
confidential information disclosed by any other party hereto in the course of an
arbitration hereunder without the prior written consent of such other party.
(c) EMERGENCY RELIEF. Notwithstanding anything in this Section 11.13 to
the contrary, either party may seek from a court any provisional remedy that may
be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of the
controversy.
(i) JURISDICTION. In connection only with the provisions of
Section 11.13, each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the
Southern District of Florida and, if such court does not have
jurisdiction, of the courts of the State of Florida in Dade County, for
the purposes of any Action arising out of this Agreement or the subject
matter of this Agreement brought by any other party under Section 11.13
of this Agreement.
(ii) WAIVER OF DEFENSES. In connection only with the
provisions of this Section 11.13, to the extent permitted by applicable
law, each party hereby waives and agrees not to assert, by way of
motion, as a defense or otherwise, in any such Action under this
Section 11.13, any claim (A) that it is not personally subject to the
jurisdiction of the above-named courts, (B) that the Action is brought
in an inconvenient forum, (C) that it is immune from any legal process
with respect to itself or its property, (D) that the venue of the suit,
action or proceeding is improper, or (E) that this Agreement or the
subject matter of this Agreement may not be enforced in or by such
courts.
(iii) SERVICE OF PROCESS. In connection only with the
provisions of this Section 11.13, Buyer and Seller agree that, even if
at any time during the term of this Agreement Buyer is not qualified to
do business as a foreign corporation in the State of Florida, or Seller
is not qualified to do business as a foreign corporation in the State
of Florida, Buyer and Seller each shall and do hereby irrevocably
designate and appoint the Secretary of State of the State of Florida as
its agent for service of process in any Action with respect to any
matter as to which it submits to jurisdiction as set forth above; it
being agreed that any method of service upon such agent, with a copy
sent to Buyer or Seller,
50
as the case may be, in the manner set forth in Section 11.7, shall
constitute valid service upon Buyer or Seller, as the case may be.
(iv) JUDICIAL RELIEF FOR BREACH OF NON-SOLICITATION
PROVISIONS. Notwithstanding anything in this Section 11.13 to the
contrary, a dispute or controversy relating to a violation or
threatened violation of Section 6.4(c) of this Agreement shall not be
subject to the mediation and arbitration provisions of this Section
11.13, and either party may seek from a court of law any available
judicial remedy, whether legal or equitable (including but not limited
to injunctive relief and damages), based on a breach or threatened
breach of Section 6.4(c) of this Agreement.
(d) DISCLOSURE OF ARBITRATOR'S FINDINGS. Notwithstanding any provision
to the contrary contained in this Agreement, the parties shall have the right to
make disclosure of the findings of the Arbitrator in any Mediation or
Arbitration conducted in accordance with this Section 11.13 to the extent
required or reasonably necessary in connection with any other Mediation or
Arbitration or as may be required by a court of law or equity.
SECTION 11.14. SURVIVAL. The disclaimers, waivers, releases,
renunciations and other rights and obligations of the parties under Sections
3.21 and 11.13 of this Agreement shall survive forever and shall specifically
survive any transfer of title or possession of any Purchased Inventory, any
termination or expiration of this Agreement or any impossibility of performance
of this Agreement or frustration of purpose of this Agreement.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
51
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the Effective Date.
AVENG TRADING PARTNERS, INC.
By:______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
AVIATION SALES COMPANY
By:______________________________
▇▇▇▇ ▇. ▇▇▇▇▇, President
The undersigned
Seller's Stockholders
hereby execute this
Agreement for the sole
purpose of evidencing
their agreement to the
provisions of Section
2.10
_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________________
AL SHORT
Signature Page to
Asset Purchase Agreement
By and Between
AvEng Trading Partners, Inc. and
Aviation Sales Company
52
SCHEDULE 2.10
LIST OF SELLER'S STOCKHOLDERS AND
SHARES DISTRIBUTED IN CONNECTION WITH SELLER'S LIQUIDATION
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 23,320 Shares
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 256,680 Shares
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 80,000 Shares
Al Short 40,000 Shares
53
EXHIBIT 2.4(C)(II)
FORM OF MATERIALS CERTIFICATION
The undersigned hereby certifies that, to the undersigned's knowledge
without independent investigation, the material supplied to Aviation Sales
Operating Company d/b/a Aviation Sales Company ("AVS") and filed under P. O.
#____________, T/C _________________, (i) were originally manufactured by the
original equipment manufacturer, any of their designated licensees, or parts
manufacturing authorization; (ii) were manufactured in accordance with the
aircraft, engine, or appliance manufacturer's specification; or (iii) were not
obtained from any U.S. government or military source.
The representations contained in this Materials Certification are
hereby made expressly subject to the terms and conditions of that certain Asset
Purchase Agreement dated as of November 30, 1996, by and between AvEng Trading
Partners, Inc., as seller, and Aviation Sales Company, as buyer.
AVENG TRADING PARTNERS, INC.
Date: December ___, 1996 By:____________________________________
Name:__________________________________
Title:_________________________________
54