EXHIBIT 10.12
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and between
MACQUARIE INVESTMENT HOLDINGS, INC.
EXECUTIVE AIR SUPPORT, INC.
and
THE SHAREHOLDERS
OF
EXECUTIVE AIR SUPPORT, INC.
Dated as of
April 28, 2004
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 PURCHASE AND SALE.................................................................. 1
1.1 Agreement to Sell and Purchase............................................. 1
1.2 Purchase Price............................................................. 1
1.3 Adjustments to Purchase Price.............................................. 2
1.4 Payment of Purchase Price.................................................. 3
1.5 The Closing................................................................ 5
1.6 Conduct of Closing......................................................... 5
1.7 Net Working Capital Determination.......................................... 6
1.8 Cash and Cash Equivalents Determination.................................... 8
1.9 Shareholder Representative................................................. 9
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER................................. 10
2.1 Authority Relative to the Agreement........................................ 10
2.2 Title to Stock............................................................. 10
2.3 Shareholder Authorization; Absence of Breach; Consents..................... 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS................................. 11
3.1 Qualification.............................................................. 11
3.2 Authorization.............................................................. 11
3.3 No Violations.............................................................. 11
3.4 Consents and Approvals..................................................... 12
3.5 Capitalization............................................................. 12
3.6 Subsidiaries............................................................... 12
3.7 Interests in Other Entities................................................ 13
3.8 Compliance with Law........................................................ 13
3.9 Litigation................................................................. 13
3.10 Insurance.................................................................. 14
3.11 Financial Statements....................................................... 14
3.12 Accounts Receivable........................................................ 14
3.13 Inventory.................................................................. 14
3.14 No Undisclosed Liabilities................................................. 14
3.15 Powers of Attorney......................................................... 15
3.16 Contracts.................................................................. 15
3.17 Bank Accounts, Etc......................................................... 16
3.18 Employees; Employee Benefit Plans.......................................... 16
3.19 Labor Matters.............................................................. 19
3.20 Property................................................................... 21
3.21 Taxes...................................................................... 23
3.22 Environmental Matters...................................................... 25
3.23 Permits.................................................................... 27
3.24 Transactions with Affiliates............................................... 27
3.25 Intellectual Property...................................................... 28
3.26 Absence of Certain Changes or Events....................................... 28
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3.27 Brokerage.................................................................. 30
3.28 Fuel Flowage............................................................... 30
ARTICLE 4 REPRESENTATION AND WARRANTIES OF PURCHASER......................................... 30
4.1 Organization............................................................... 30
4.2 Authorization.............................................................. 30
4.3 No Violations.............................................................. 31
4.4 Brokerage.................................................................. 31
ARTICLE 5 OTHER OBLIGATIONS.................................................................. 31
5.1 Conduct of Business Pending Closing........................................ 31
5.2 Access, Information and Documents.......................................... 33
5.3 Acquisition Proposals...................................................... 33
5.4 HSR Filing; Further Assurances............................................. 33
ARTICLE 6 CONDITIONS TO CLOSING; TERMINATION................................................. 34
6.1 Conditions Precedent to Obligations of Purchaser........................... 34
6.2 Conditions Precedent to the Obligations of the Shareholders................ 37
6.3 Termination................................................................ 38
ARTICLE 7 CERTAIN ADDITIONAL COVENANTS....................................................... 39
7.1 Costs, Expenses............................................................ 39
7.2 Public Announcement........................................................ 39
7.3 Mutual Covenants........................................................... 39
7.4 Tax Matters................................................................ 39
7.5 Indemnification of Directors and Officers.................................. 40
7.6 Shareholder Agreement...................................................... 41
7.7 Subsequent Transaction..................................................... 41
7.8 Updating of Disclosure Schedules........................................... 41
7.9 Atlantic Indemnification Claim............................................. 41
7.10 Additional Covenant of Certain Shareholders................................ 42
ARTICLE 8 SURVIVAL/INDEMNIFICATION........................................................... 42
8.1 Nature and Survival of Representations and Agreements...................... 42
8.2 Indemnification by Shareholders............................................ 42
8.3 Indemnification by Purchaser............................................... 45
8.4 Indemnity Procedures....................................................... 45
8.5 Exclusive Remedy........................................................... 47
8.6 Adjustments to Purchase Price.............................................. 47
ARTICLE 9 MISCELLANEOUS...................................................................... 47
9.1 Entire Agreement........................................................... 47
9.2 Notices.................................................................... 47
9.3 Successors and Assigns..................................................... 48
9.4 Arbitration................................................................ 48
9.5 Headings; Interpretation................................................... 49
9.6 Knowledge.................................................................. 49
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9.7 Further Assurances......................................................... 49
9.8 Amendment and Waiver....................................................... 49
9.9 No Other Beneficiaries..................................................... 50
9.10 Governing Law.............................................................. 50
9.11 Schedules.................................................................. 50
9.12 Additional Matters Regarding Canterbury Warrant............................ 50
9.13 Counterparts............................................................... 50
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LIST OF EXHIBITS
Exhibit A List of Shareholders
Exhibit B Escrow Agreement
Exhibit C Form of Cancellation Agreement
Exhibit D Form of Opinion of Shareholders Counsel
Exhibit E Form of Shareholder Release
Exhibit F Form of Opinion of Purchaser Counsel
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LIST OF SCHEDULES
Schedule 1.3 Excluded Funded Indebtedness
Schedule 1.7 Working Capital Determination
Schedule 3.1 Subsidiaries
Schedule 3.3 No Violations/Third Party Consents
Schedule 3.4 Governmental Consents
Schedule 3.5 Shareholders/Options/Warrants
Schedule 3.6 Subsidiaries
Schedule 3.7 Interests in Other Entities
Schedule 3.8 Compliance with Law
Schedule 3.9 Litigation
Schedule 3.10 Insurance
Schedule 3.11(a) Financial Statements
Schedule 3.11(b) Funded Indebtedness
Schedule 3.12 Accounts Receivable
Schedule 3.13 Inventory
Schedule 3.14 Undisclosed Liabilities
Schedule 3.15 Powers of Attorney
Schedule 3.16 Contracts
Schedule 3.16(b)(i) FBO Leases
Schedule 3.16(b)(ii) Terms/Renewal Periods of FBO Leases
Schedule 3.17 Bank Accounts
Schedule 3.18(a) Employees
Schedule 3.18(b) Benefit Plans
Schedule 3.18(c)(i) and (ii) Qualified Plans
Schedule 3.18(c) (vii) Multiemployer Plans
Schedule 3.18(d) Retiree Benefits
Schedule 3.18(e) Bonus Compensation
Schedule 3.19 Labor Matters
Schedule 3.20 Property
Schedule 3.21 Taxes
Schedule 3.22 Environmental Matters
Schedule 3.23 Permits
Schedule 3.24 Transactions with Affiliates
Schedule 3.25 Intellectual Property
Schedule 3.26 Absence of Certain Changes
Schedule 3.28 Fuel Flowage Statements
Schedule 6.1(m) Estoppel Letters
Schedule 8.2(b)(ii) Certain Indemnification Matters
Schedule 9.6 Certain EAS Individuals
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TABLE OF DEFINED TERMS
TERM PAGE
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Accounting Firm ................................................ 7
Affiliate....................................................... 27
Agreement ...................................................... 1
Airports ....................................................... 21
Argosy.......................................................... 50
Association..................................................... 48
Benefit Plans .................................................. 17
Business ....................................................... 11
Cancellation Agreement.......................................... 12
Canterbury...................................................... 1
Canterbury Warrant ............................................. 1
Canterbury Warrant Shares....................................... 1
CERCLA.......................................................... 25
Claims ......................................................... 1
Closing......................................................... 5
Closing Certification........................................... 2
Closing Date.................................................... 5
Closing Statement .............................................. 3
Code ........................................................... 17
Consents ....................................................... 11
Contracts ...................................................... 15
Convertible Notes .............................................. 36
Damages......................................................... 43
Disbursement Agent.............................................. 3
Disbursement Fund .............................................. 3
Effective Time ................................................. 5
Environmental Laws ............................................. 26
Environmental Notices........................................... 26
ERISA .......................................................... 16
ERISA Affiliate ................................................ 17
Escrow Agent.................................................... 3
Escrow Agreement................................................ 3
Escrow Funds.................................................... 3
Executive....................................................... 1
Executive Balance Sheet......................................... 14
FAA............................................................. 13
FBO Leases...................................................... 15
Financial Statements ........................................... 14
Funded Indebtedness............................................. 2
GAAP............................................................ 6
Governmental Entity............................................. 12
Guaranteed Obligations ......................................... 51
Guarantor ...................................................... 51
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Hazardous Substances............................................ 25
HSR Act......................................................... 12
Intellectual Property........................................... 27
Interim Balance Sheet Date ..................................... 14
Interim Financial Statements ................................... 32
IRS ............................................................ 17
Knowledge of the Shareholders .................................. 49
Leases.......................................................... 20
Option Equivalent Stock......................................... 4
Options......................................................... 12
Permit.......................................................... 26
Permits ........................................................ 26
Permitted Liens ................................................ 21
Person.......................................................... 11
Purchase Agreement ............................................. 51
Purchase Price.................................................. 1
Purchaser....................................................... 1
Purchaser Indemnified Parties .................................. 42
Qualified Plans................................................. 17
Shareholder .................................................... 1
Shareholder Representative ..................................... 9
Shareholders.................................................... 1
Shareholders' Knowledge......................................... 49
Shares ......................................................... 1
Subsequent Transaction ......................................... 41
Tax Returns..................................................... 22
Taxes........................................................... 23
Taxing Authority................................................ 22
Warrants ....................................................... 12
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of April 28,
2004, is made by and between Macquarie Investment Holdings, Inc., a Delaware
corporation ("PURCHASER"), Executive Air Support, Inc., a Delaware corporation
("EXECUTIVE"), and all the Shareholders of Executive (individually, a
"SHAREHOLDER" and collectively, the "SHAREHOLDERS"). The Shareholders are listed
on Exhibit A to this Agreement.
Background
The Shareholders collectively own all the outstanding shares of capital
stock of Executive (collectively, the "SHARES");
Canterbury Mezzanine Capital II, L.P., a Shareholder of Executive
("CANTERBURY"), is the record owner of warrants to purchase 1,104,354 shares of
Common Stock of Executive (the "CANTERBURY WARRANT SHARES") pursuant to a
Warrant Agreement, dated December 20, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"); and
Subject to the terms and conditions hereinafter set forth in this
Agreement, the Purchaser desires to purchase from the Shareholders, and the
Shareholders desire to sell to the Purchaser, the Shares and the Canterbury
Warrant.
Terms
In consideration of the premises and the mutual terms and covenants
contained herein, the parties hereto agree as follows:
ARTICLE 1.
PURCHASE AND SALE
1.1 Agreement to Sell and Purchase. Subject to the terms and conditions
of this Agreement, at the Closing, the Shareholders shall sell to Purchaser, and
Purchaser shall purchase from the Shareholders, the Shares and the Canterbury
Warrant, free and clear of any and all liens, claims, options, charges, pledges,
security interests, voting agreements or trusts, proxies, preemptive rights,
rights of first refusal, encumbrances or other restrictions (other than any
restrictions under federal and state securities laws) or interests of any kind
or nature whatsoever (collectively, "CLAIMS").
1.2 Purchase Price. Subject to the terms and conditions of this
Agreement, Purchaser shall pay at the Closing, an aggregate cash purchase price
in the amount of Two Hundred Seventeen Million Dollars ($217,000,000) (the
"PURCHASE PRICE"); provided, however, that the Purchase Price shall be subject
to adjustment on the date of Closing as provided in Section 1.3 of this
Agreement and subject to further adjustment after the Closing as provided in
Section 1.7 and Section 1.8 of this Agreement.
1.3 Adjustments to Purchase Price.
(a) Adjustments on the Closing Date. The Purchase Price shall be
subject to adjustment at the Closing as follows:
(i) Decreases. The Purchase Price shall be decreased as
follows:
(1) by an amount equal to the outstanding principal
of, and accrued interest on, the Funded Indebtedness (as defined below) as
of the Closing Date; and
(2) by an amount equal to the amount by which the Base
Net Working Capital exceeds the Net Working Capital estimated as of the
Closing Date pursuant to Section 1.7(c), if any.
(ii) Increases. The Purchase Price shall be decreased as
follows:
(1) by an amount equal to the amount by which the Net
Working Capital estimated as of the Closing Date pursuant to Section
1.7(c) exceeds Base Net Working Capital, if any;
(2) by an amount equal to the amount of the Cash and
Cash Equivalents of Executive estimated as of the Closing Date pursuant to
Section 1.8(a); and
(3) by an amount equal to all capital expenditures
paid by Executive on or after April 1, 2004, but prior to the Closing, for
the construction of capital improvements at its fixed base operation
located at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ up to a maximum amount of Two
Million One Hundred Fifty Thousand Dollars ($2,150,000).
(b) Definitions. For the purposes of this Agreement, "FUNDED
INDEBTEDNESS" shall mean the aggregate amount (including the current portions
thereof) of (i) all indebtedness for money borrowed from others (whether in the
form of direct loans or capital leases) and purchase money indebtedness of
Executive or its Subsidiaries, other than the indebtedness listed in Schedule
1.3; (ii) indebtedness of the type described in clause (i) above secured by any
lien upon property owned by either Executive or its Subsidiaries, even though
Executive or its Subsidiaries has not in any manner become liable for the
payment of such indebtedness, (iii) interest expense accrued but unpaid, and all
prepayment premiums, on or relating to any of such indebtedness, (iv)
indebtedness of the type described in clause (i) above guaranteed, directly or
indirectly, by either Executive or its Subsidiaries, and (v) any purchase money
indebtedness for premiums for insurance maintained by Executive and its
Subsidiaries to the extent the outstanding balance thereof exceeds the amortized
value of the premiums. Funded Indebtedness shall not include the letters of
credit listed in Schedule 1.3 to the extent outstanding on the Closing Date.
Reference to the "Confidentiality Agreement" shall mean the letter agreement
dated November 5, 2003, between Executive Air Support, Inc, and Macquarie
Securities (USA) Inc.
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(c) Closing Certification. Executive shall deliver to Purchaser at
least two (2) days prior to the Closing its certification, duly executed by the
Chief Executive Officer and Chief Financial Officer of Executive, in form
acceptable to Purchaser ("CLOSING CERTIFICATION"), of (a) the amount of the
Funded Indebtedness as of the Closing, broken down by lender, accompanied by
pay-off statements or the functional equivalent thereof from all of the lenders
of the Funded Indebtedness in form reasonably acceptable to Purchaser, (b) a
list of all shareholders of Executive as of the Closing and the number of shares
of Common Stock and Series A Preferred Stock owned by each, (c) a list of all
holders of stock options and warrants of Executive and number and type of shares
of capital stock subject to each such stock option and warrant held by each
holder and (d) the amount of all capital expenditures paid by Executive on or
after April 1, 2004, but prior to Closing, for the construction of capital
improvements at its fixed base operation located at Midway Airport, Chicago,
Illinois.
1.4 Payment of Purchase Price.
(a) The Purchase Price shall be payable as set forth pursuant to a
closing statement (the "CLOSING STATEMENT") in a form reasonably acceptable to
Purchaser and duly executed by the Chief Executive Officer and Chief Financial
Officer of Executive which shall (i) calculate the Purchase Price as adjusted
pursuant to Section 1.3 hereof, (ii) reflect the amounts payable with respect to
the Funded Indebtedness that were deducted from the Purchase Price pursuant to
Section 1.3(a)(i)(1) hereof, and (iii) reflect the portion of the Purchase Price
payable to each Shareholder and to each holder of stock options and warrants to
satisfy the payment obligations of Executive pursuant to the Cancellation
Agreements as defined in Section 3.5.
(b) Two Million Five Hundred Thousand Dollars ($2,500,000)
(together with any interest thereon, the "ESCROW FUNDS") of the Purchase Price
shall be paid to Wachovia Bank, N.A., as Escrow Agent ("ESCROW AGENT") which
shall hold and disburse the Escrow Funds pursuant to the terms of the Escrow
Agreement in the form of Exhibit B (the "ESCROW AGREEMENT"). As set forth in the
Escrow Agreement, the Escrow Funds shall be used solely for the payment of any
amounts payable to the Purchaser under Section 1.7 or 1.8 of this Agreement and
to satisfy any indemnification obligations of the Shareholders pursuant to
Section 8.2. On the first anniversary of the Closing Date, the balance of the
Escrow Funds that have not been used to pay Purchaser under Section 1.7 or 1.8
of this Agreement or to satisfy indemnification obligations of the Shareholders
pursuant to Section 8.2, less the aggregate amount of any indemnification claims
asserted by one or more Purchaser Indemnified Parties that are pending as of the
first anniversary of the Closing Date, shall be distributed in accordance with
Section 1.4(e)(iii) to the Shareholders and the stock option and warrant
holders. If, upon resolution of all such indemnification claims pending as of
such first anniversary date, there is a positive balance of Escrow Funds, such
positive balance shall be distributed in accordance with Section 1.4(e)(iii) to
the Shareholders and the stock option and warrant holders.
(c) The amount of the Purchase Price payable to the Shareholders
and the consideration payable to the stock option and warrant holders pursuant
to the Cancellation Agreements, as defined in Section 3.5, as shown in the
Closing Statement less the Escrow Funds (such difference being referred to as
the "DISBURSEMENT FUND") shall be paid to ABS Capital Partners III, LLC to act
as the disbursement agent for the Shareholders and the stock option and warrant
holders (the "DISBURSEMENT AGENT") by wire transfer of same day funds on the
Closing
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Date to an account designated by the Disbursement Agent at least two (2)
business days prior to Closing.
(d) The Disbursement Agent shall hold such fund in trust for
the Shareholders and the stock option and warrant holders in a separate account
until its application as provided herein.
(e) The Disbursement Agent shall apply the Disbursement Fund
as follows:
(i) The Disbursement Agent shall retain One Million
Dollars ($1,000,000) to be held for disbursement
upon the instructions of the Shareholder
Representative for the payment of expenses
incurred for or on behalf of Executive, the
Shareholders or the stock option and warrant
holders for which the Shareholders are responsible
pursuant to Section 7.1 of this Agreement or, if
not so used, for distribution to the Shareholders
and the stock option and warrant holders pursuant
to Section 1.4(e)(iii) below.
(ii) Next, the holder of each share of Series A
Preferred Stock outstanding immediately prior to
the Closing shall be paid $1.81 in cash per share;
and
(iii) Next, the holders of each share of Common Stock,
each share of Series A Preferred Stock and each
share of Option Equivalent Stock (as defined in
Section 1.4(f) below) outstanding immediately
prior to the Closing shall be paid an amount per
share determined on a prorata per share basis in
the balance of the Disbursement Fund remaining
after the payments pursuant to Subsections (i) and
(ii) above. Such prorata allocation shall be
reflected in the Closing Certification. For the
purposes of this Section 1.4(e)(iii), subject to
Section 9.12 of this Agreement, Canterbury shall
be deemed to hold, in addition to any other shares
of capital stock of Executive owned by Canterbury,
a number of shares of Common Stock equal to the
number of shares of the Canterbury Warrant Shares
as if such shares were outstanding shares of
Common Stock and the payments made to Canterbury
pursuant to this Section 1.4(e)(iii) shall include
the consideration payable to Canterbury for the
purchase of the Canterbury Warrant.
(f) As used in this Agreement, the term "Option Equivalent Stock"
shall mean the result obtained by multiplying the total number of shares subject
to an outstanding employee stock option or outstanding warrant (other than the
Canterbury Warrant) by the Option Ratio (defined below) and rounding the result
to a whole number. For purposes of this Section: (i) the phrase "Option Ratio"
shall mean a fraction (A) the numerator of which shall be the amount calculated
by dividing the Adjusted Purchase Price by the Applicable Number of Shares and
reducing the result by $3.62, and (B) the denominator of which shall be the
Adjusted Purchase Price divided by the Applicable Number of Shares; (ii) the
phrase "Adjusted Purchase Price"
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shall be Purchase Price adjusted: (A) as provided in Section 1.3 of this
Agreement, (B) by decreasing the same by the product of $1.81 times the number
of Series A Preferred Shares outstanding immediately prior to Closing, and (C)
by increasing the same by $3.62 times the total number of shares subject to an
outstanding employee stock option or outstanding warrant (other than the
Canterbury Warrant) immediately prior to Closing; and (iii) the phrase
"Applicable Number of Shares" shall mean the total of each of the following
which is outstanding immediately prior to Closing: (A) each share of Common
Stock, (B) each share of Series A Preferred Stock, and (C) the total number of
shares subject to an outstanding employee stock option or outstanding warrant
(other than the Canterbury Warrant). Option Equivalent Stock shall apply to all
the outstanding employee stock options and warrants of Executive, other than the
Canterbury Warrant.
(g) Any additional Purchase Price paid to the Disbursement Agent
pursuant to Section 1.7 and Section 1.8 of this Agreement shall be distributed
by the Disbursement Agent in accordance with the provisions of Section
1.4(e)(iii) above.
1.5 The Closing. The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place on a business day selected by
Purchaser with written notice to Executive and the Shareholder Representative
that is no sooner than three (3) days and no later than five (5) days after the
day on which the last of the conditions set forth in Sections 6.1 and 6.2 (other
than those conditions which are only capable of being satisfied contemporaneous
with the Closing) is fulfilled or waived or on such other date as the parties
hereto may agree in writing (the "CLOSING DATE"), at 10:00 a.m. (local time) at
such place as the parties hereto shall mutually agree (including Closing by
facsimile transmission exchange of executed documents or signature pages
followed promptly by overnight courier of originals), and will be effective as
of the 12:01 a.m. on the Closing Date ("EFFECTIVE TIME"),
1.6 Conduct of Closing.
(a) At or prior to the Closing, Executive shall deliver to
Purchaser:
(i) The original share certificates representing the Shares
and the original certificate representing the Canterbury
Warrant, all duly endorsed for transfer by the
respective Shareholder or with appropriate stock powers
with respect thereto duly endorsed by the respective
Shareholder;
(ii) The certificates required in Section 6.1 (a) and (b)
hereof;
(iii) The opinion of counsel referred to in Section 6.1(c);
(iv) The Closing Certification duly executed by the Chief
Executive Officer and Chief Financial Officer of
Executive;
(v) The Escrow Agreement duly executed by the Shareholder
Representative, the Disbursement Agent and Executive;
and
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(vi) Any other documents and certificates contemplated by
Article 5 and Article 6 hereof to be delivered by or on
behalf of Executive, the Shareholders or the stock
option and warrant holders.
(b) At or prior to the Closing, Purchaser shall deliver to the
Shareholder Representative:
(i) The certificates referred to in Section 6.2 (a) and (b)
hereof;
(ii) The opinion of counsel referred to in Section 6.2 (c);
(iii) The Escrow Agreement duly executed by Purchaser; and
(iv) Any other documents and certificates contemplated by
Article 5 and Article 6 hereof.
(c) At or prior to the Closing, the Purchaser shall deliver to the
holders of the Funded Indebtedness the amount reflected in the pay-off
statements or the functional equivalents thereof from such holders as necessary
to pay such indebtedness in full.
(d) At or prior to the Closing, the Purchaser shall deliver to the
Escrow Agent the Escrow Funds.
(e) At or prior to the Closing, the Purchaser shall deliver to the
Disbursement Agent the Disbursement Fund.
1.7 Net Working Capital Determination.
(a) As used herein, the term "Net Working Capital" shall mean the
aggregate current assets of Executive and its Subsidiaries on a consolidated
basis (excluding all cash and cash equivalents which would otherwise be included
in current assets) minus the aggregate current liabilities of Executive and its
Subsidiaries on a consolidated basis (excluding the current portion of any
Funded Indebtedness to be paid in connection with the Closing which would
otherwise be included in current liabilities), all as determined in accordance
with generally accepted accounting principles ("GAAP") consistent with past
practice and all as determined as of the Effective Time; provided, however, that
the determination of Net Working Capital shall take into account the adjustments
and changes to current assets and current liabilities resulting from the
cancellation of the employee stock options and the warrants effective upon the
Closing and resulting from the payment of the Funded Indebtedness upon the
Closing hereunder.
(b) As used herein, the term "Base Net Working Capital" shall mean
a negative $2,599,500.
(c) At least ten (10) business days prior to Closing, Executive
shall deliver to Purchaser a reasonable estimate of Net Working Capital as of
the Effective Time, based on a balance sheet as of the last day of the most
recently ended calendar month prior to the Closing Date and containing
reasonable detail and supporting documents showing the derivation of such
estimate. Certain principles, specifications and methodologies for determining
Net Working
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Capital are specified in Schedule 1.7 and shall be used for purposes of
calculating Net Working Capital.
(d) Within ninety (90) days after the Closing, Purchaser shall
deliver to the Shareholder Representative its determination of the actual Net
Working Capital as of the Effective Time (following the same principles,
specifications and methodologies used to determine the estimated Net Working
Capital as set forth in Schedule 1.7). Each party shall have full access to the
financial books and records pertaining to Executive and its Subsidiaries to
confirm or audit the Net Working Capital computations. Should the Shareholder
Representative disagree with Purchaser's determination of Net Working Capital,
the Shareholder Representative shall notify Purchaser within thirty (30) days
after Purchaser's delivery of its determination of Net Working Capital. If the
Shareholder Representative and Purchaser fail to agree within thirty (30) days
after Shareholder Representative's delivery of notice of disagreement on the
amount of Net Working Capital, such disagreement shall be resolved in accordance
with the procedure set forth in Section 1.7(f) which shall be the sole and
exclusive remedy for resolving accounting disputes relative to the determination
of Net Working Capital.
(e) The Purchase Price shall be increased or decreased based on
whether the actual Net Working Capital as of the Effective Time (determined
pursuant to Section 1.7(d)) exceeds or is less than the estimated Net Working
Capital as of such time (determined pursuant to Section 1.7(c) hereof). If the
actual Net Working Capital as of the Effective Time (determined pursuant to
Section 1.7(d)) exceeds the estimated Net Working Capital as of such time
(determined pursuant to Section 1.7(c) hereof), then the Purchase Price shall be
increased by such difference. If the actual Net Working Capital as of the
Effective Time (determined pursuant to Section 1.7(d)) is less than the
estimated Net Working Capital as of such time (determined pursuant to Section
1.7(c) hereof), then the Purchase Price shall be decreased by such shortfall.
Within five (5) business days after the final determination of the actual Net
Working Capital as of the Effective Time, any increase in the Purchase Price
shall be paid in cash by Purchaser to the Disbursement Agent, and any decrease
in the Purchase Price shall be paid in cash to Purchaser out of the Escrow Funds
by the Escrow Agent, or, if such amount is insufficient, from the Shareholders.
(f) In the event that the Shareholder Representative and the
Purchaser are not able to agree on the actual Net Working Capital as of the
Effective Time within thirty (30) days after the Shareholder Representative's
delivery of notice of disagreement, the Shareholder Representative and the
Purchaser shall each have the right to require that such disputed determination
be submitted to Ernst & Young, LLP, or if Ernst & Young, LLP is not available
for any reason or does not maintain its independent status, such other
independent certified public accounting firm as the Shareholder Representative
and the Purchaser may then mutually agree upon in writing (the "ACCOUNTING
FIRM") for computation or verification in accordance with the provisions of this
Agreement. The Accounting Firm shall review the matters in dispute and acting as
arbitrators shall promptly decide the proper amounts of such disputed entries
(which decision shall also include a final calculation of the actual Net Working
Capital as of the Effective Time). The submission of the disputed matter to the
Accounting Firm shall be the exclusive remedy for resolving accounting disputes
relative to the determination of Net Working Capital. The Accounting Firm's
determination shall be binding upon the Shareholder
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Representative and the Purchaser. The Accounting Firm's fees and expenses shall
be borne equally by the Shareholders out of the Escrow Funds and the Purchaser.
1.8 Cash and Cash Equivalents Determination.
(a) At least ten (10) business days prior to Closing, Executive
shall deliver to Purchaser a reasonable estimate of cash and cash equivalents of
Executive and its Subsidiaries as of the Effective Time containing reasonable
detail and supporting documents showing the derivation of such estimate. The
amount of cash and cash equivalents shall be determined in accordance with GAAP,
consistent with past practice.
(b) Within ninety (90) days after the Closing, Purchaser shall
deliver to the Shareholder Representative its determination of the actual cash
and cash equivalents of Executive and its Subsidiaries as of the Effective Time
immediately prior to the consummation of the transaction contemplated by this
Agreement. Each party shall have full access to the financial books and records
pertaining to Executive and its Subsidiaries to confirm or audit the cash and
cash equivalents computations. Should the Shareholder Representative disagree
with Purchaser's determination of cash and cash equivalents, the Shareholder
Representative shall notify Purchaser within thirty (30) days after Purchaser's
delivery of its determination of the actual cash and cash equivalents of
Executive and its Subsidiaries as of the Effective Time. If the Shareholder
Representative and Purchaser fail to agree within thirty (30) days after
Shareholder Representative's delivery of notice of disagreement on the amount of
cash and cash equivalents, such disagreement shall be resolved in accordance
with the procedure set forth in Section 1.8(d) which shall be the sole and
exclusive remedy for resolving accounting disputes relative to the determination
of cash and cash equivalents of Executive and its Subsidiaries as of the
Effective Time.
(c) The Purchase Price shall be increased or decreased based on
whether the actual cash and cash equivalents of Executive and its Subsidiaries
as of the Effective Time (determined pursuant to Section 1.8(b)) exceeds or is
less than the estimated cash and cash equivalents as of such time (determined
pursuant to Section 1.8(a) hereof). If the actual cash and cash equivalents of
Executive and its Subsidiaries as of the Effective Time (determined pursuant to
Section 1.8(b)) exceeds the estimated cash and cash equivalents as of such time
(determined pursuant to Section 1.8(a) hereof), the Purchase Price shall be
increased by such difference. If the actual cash and cash equivalents of
Executive and its Subsidiaries as of the Effective Time (determined pursuant to
Section 1.8(b)) is less than the estimated cash and cash equivalents as of such
time (determined pursuant to Section 1.8(a) hereof), the Purchase Price shall be
decreased by such shortfall. Within five (5) business days after the final
determination of the actual cash and cash equivalents of Executive and its
Subsidiaries as of the Effective Time, any increase in the Purchase Price shall
be paid in cash by Purchaser to the Disbursement Agent, and any decrease in the
Purchase Price shall be paid in cash to Purchaser out of the Escrow Funds by the
Escrow Agent, or, if such amount is insufficient, from the Shareholders.
(d) In the event that the Shareholder Representative and the
Purchaser are not able to agree on the actual cash and cash equivalents of
Executive and its Subsidiaries as of the Effective Time within thirty (30) days
after the Shareholder Representative's delivery of notice of disagreement, the
Shareholder Representative and the Purchaser shall each have the right to
8
require that such disputed determination be submitted to the Accounting Firm (as
determined in accordance with Section 1.7(f)) for computation or verification in
accordance with the provisions of this Agreement. The Accounting ▇▇▇▇ shall
review the matters in dispute and acting as arbitrators shall promptly decide
the proper amounts of such disputed entries (which decision shall also include a
final calculation of the actual cash and cash equivalents of Executive and its
Subsidiaries as of the Effective Time). The submission of the disputed matter to
the Accounting Firm shall be the exclusive remedy for resolving accounting
disputes relative to the determination of the amount of cash and cash
equivalents of Executive and its Subsidiaries as of the Effective Time. The
Accounting Firm's determination shall be binding upon the Shareholder
Representative and the Purchaser. The Accounting Firm's fees and expenses shall
be borne equally by the Shareholders out of the Escrow Funds and the Purchaser.
1.9 Shareholder Representative.
(a) Appointment. By execution and delivery of this Agreement, each
Shareholder, for the heirs, executors, legal representatives, successors and
assigns of each Shareholder, irrevocably constitutes and appoints ABS Capital
Partners, III, LLC (the "SHAREHOLDER REPRESENTATIVE"), as his/her/its true and
lawful agent and attorney-in-fact with full power of substitution to act in the
name, place and stead of such Shareholder with respect to all transactions
contemplated by the terms and provisions of this Agreement, and to act on behalf
of the Shareholders in any dispute, litigation or arbitration involving matters
arising as a result of or under this Agreement, and to take all actions on
behalf of the Shareholders in connection therewith.
(b) Authority. The appointment of the Shareholder Representative
shall be deemed coupled with an interest and shall be irrevocable, and the
Purchaser and any other person may conclusively and absolutely rely, without
inquiry, upon any action of the Shareholder Representative on behalf of the
Shareholders in all matters in which it has been granted authority pursuant to
Section 1.9(a) above. The Shareholder Representative shall act for the
Shareholders in all matters set forth in this Agreement.
(c) Final Decision. All actions, decisions and instructions of the
Shareholder Representative taken, made or given pursuant to the authority
granted to the Shareholder Representative pursuant to Section 1.9(a) above shall
be final, conclusive and binding upon all Shareholders and all actions,
decisions and instructions of the Shareholder Representative taken, made or
given pursuant to the authority granted to such Shareholder Representative
pursuant to Section 1.9(a) shall be conclusive and binding upon all individual
Shareholders. Purchaser, its officers, directors, employees, agents and
affiliates shall be able to rely exclusively on the instructions, decisions and
actions of the Shareholder Representative.
(d) Power of Attorney. The provisions of this Section are
independent and severable, shall constitute an irrevocable power of attorney,
complete with an interest and surviving death or dissolution, granted by each
Shareholder and shall be binding upon the heirs, executors, legal
representatives, successors and assigns of each Shareholder.
9
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER
Each Shareholder, severally and not jointly, represents and warrants to
Purchaser as follows:
2.1 Authority Relative to the Agreement. This Agreement has been duly
and validly executed and delivered by the Shareholder and constitutes a valid,
legal and binding agreement of the Shareholder enforceable in accordance with
its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer
and conveyance, moratorium reorganization, receivership and similar laws
relating to or affecting the enforcement of the rights and remedies of creditors
generally and (ii) principles of equity (regardless of whether considered and
applied in a proceeding in equity or at law). The other agreements to be
executed and delivered by the Shareholder pursuant to this Agreement will be
valid, legal and binding agreements of the Shareholder enforceable in accordance
with their respective terms when so executed and delivered by the Shareholder,
subject to (i) applicable bankruptcy, insolvency, fraudulent transfer and
conveyance, moratorium reorganization, receivership end similar laws relating to
or affecting the enforcement of the rights and remedies of creditors generally
and (ii) principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law).
2.2 Title to Stock. The Shareholder is the unconditional sole legal,
beneficial, record and equitable owner of the number of the Shares set forth
opposite the name of such Shareholder on Exhibit A and, in the case of
Canterbury, the Canterbury Warrant except as noted in Section 9.12. The
Shareholder has not granted and is not a party to any agreement granting
preemptive rights, rights of first refusal or any similar or comparable rights
with respect to the Shares (and, in the case of Canterbury, the Canterbury
Warrant except as noted in Section 9.12), except as have been waived in this
Agreement. The Shareholder is not entering into this Agreement as a trustee of
any trust. At the Closing, each Shareholder will convey to Purchaser good and
valid title to the Shares owned by the Shareholder (and, in the case of
Canterbury, the Canterbury Warrant, free and clear of any and all Claims.
2.3 Shareholder Authorization; Absence of Breach; Consents. The
execution and delivery of this Agreement and the performance of the transactions
contemplated by this Agreement and all other instruments, agreements,
certificates and documents contemplated hereby to which the Shareholder is or
will be a party does not (i) violate any decree or judgment of any court or
governmental authority which may be applicable to the Shareholder; (ii) violate
any law, rule or regulation binding on, or any fiduciary obligation of, the
Shareholder; (iii) violate or conflict with, or result in a breach of, or
constitute a default (or an event which, with or without notice or lapse of time
or both, would constitute a default) under any of the terms, conditions, or
provisions of any material contract or other agreement, including any charter
documents or bylaws if the Shareholder is a corporation, partnership, limited
liability company or other entity, to which the Shareholder is a party, or by
which the Shareholder is bound; (iv) require the consent, approval or
authorization of any person, entity or governmental agency. The Shareholder is
not insolvent and no receiver has been appointed over any part of the
Shareholder's assets.
10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, jointly and severally, hereby represent and warrant to
Purchaser as follows:
3.1 Qualification. Executive and its Subsidiaries are corporations or
limited liability companies duly organized or formed, validly existing and in
good standing under the laws of their respective states of incorporation or
formation as set forth in Schedule 3.1. Executive and its Subsidiaries have all
requisite power and authority to own and operate their businesses as conducted
as of the date hereof (collectively the "BUSINESS") and to own, operate and
lease the properties and assets owned, operated or leased by Executive or its
Subsidiaries and used in the Business. Executive and its Subsidiaries are
licensed or qualified to do business as a foreign corporation and each is in
good standing in each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be qualified
would not be material to Executive or its Subsidiaries as a whole. Executive has
heretofore made available to Purchaser complete and correct copies of the
Certificates of Incorporation, Certificates of Formation, Bylaws and Operating
Agreements or similar constituent documents, as the case may be, of Executive
and its Subsidiaries as currently in effect.
3.2 Authorization. Executive has the full corporate power and authority
to enter into this Agreement and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of Executive. This Agreement has been duly executed and delivered by
Executive and constitutes a valid, legal and binding obligation of Executive
enforceable in accordance with its terms and conditions, subject to (i)
applicable bankruptcy, insolvency, fraudulent transfer and conveyance,
moratorium reorganization, receivership and similar laws relating to or
affecting the enforcement of the rights and remedies of creditors generally and
(ii) principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law).
3.3 No Violations. Except as set forth in Schedule 3.3 or in Schedule
3.4, the execution, delivery and performance of this Agreement by Executive will
not (a) conflict with or result in any breach of any provision of the
Certificates of Incorporation, Certificates of Formation, Bylaws or Operating
Agreements or similar organizational documents of Executive or its Subsidiaries,
(b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
amendment, termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which
Executive or its Subsidiaries are a party or by which any of them is bound or
(c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Executive or its Subsidiaries, or their properties or assets.
Except as set forth in Schedule 3.3 or Schedule 3.4, neither Executive nor any
of its Subsidiaries is or will be required to give any notice or obtain any
consent from any person, corporation, general partnership, limited partnership,
limited liability company, proprietorship, joint venture, trust, association,
union, entity, or other form of business organization or any Governmental Entity
(as defined in Section 3.4 below) (a
11
"PERSON") whatsoever in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby.
3.4 Consents and Approvals. Except as set forth in Schedule 3.4, no
consent, approval, order or authorization of or registration, declaration or
filing with or exemption (collectively, "CONSENTS") by any court, administrative
agency or commission or other governmental authority or instrumentality, whether
local, domestic or foreign (each a "GOVERNMENTAL ENTITY"), is required by or
with respect to Executive or its Subsidiaries or the Shareholders in connection
with the execution and delivery of this Agreement by Executive, or the
consummation of the transactions contemplated hereby, except for the filing of
all required documents by Purchaser and the Shareholders, and the expiration of
all applicable waiting periods, under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR ACT").
3.5 Capitalization.
(a) The authorized capital stock of Executive consists of
30,000,000 shares of Common Stock, $.01 par value per share, of which 1,843,689
shares of the Common Stock are issued and outstanding; and 20,000,000 shares of
Preferred Stock, par value of $.01 per share, of which 18,508,784 have been
designated as Series A Preferred Stock and of which 18,508,784 shares of Series
A Preferred Stock are issued and outstanding. Except as set forth in Schedule
3.5, all of the issued and outstanding shares of Common Stock and Series A
Preferred Stock have been duly authorized and are validly issued, fully paid and
nonassessable and free of preemptive rights, were not issued in violation of the
terms of any agreement or other understanding binding upon Executive or any
other Person and were issued in compliance with applicable federal and state
securities or blue sky laws and regulations. Except for the Shares and the
outstanding employee stock options (the "OPTIONS") and the outstanding warrants
(the "WARRANTS") set forth in Schedule 3.5, which Options and Warrants shall be
exercised or terminated as of the Closing Date, there are not now and will not
be as of the Closing any other shares of capital stock of Executive issued or
outstanding nor, except as described in this Section, any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Executive or its Subsidiaries to issue, transfer, sell,
redeem, repurchase or otherwise acquire any share of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to Executive or any of its
Subsidiaries. Each holder of Options and Warrants (other than the Canterbury
Warrant) marked with an asterisk in Schedule 3.5 has duly executed and delivered
to Executive a cancellation agreement in the form of Exhibit C (each a
"CANCELLATION AGREEMENT").
(b) The Shareholders owning all of the issued and outstanding
capital stock of Executive are shown on Exhibit A. Except as shown in Schedule
3.5, there are no voting trust agreements or other agreements restricting the
voting, dividend rights or disposition of any of the shares of Stock.
3.6 Subsidiaries. Schedule 3.6 contains a complete and accurate list of
each Subsidiary of Executive and sets forth for each such Subsidiary: (a) its
name and jurisdiction of incorporation or organization, (b) its authorized
capital stock or ownership interests and (c) the number of issued and
outstanding shares of capital stock or ownership interests. Executive owns
12
directly or indirectly each of the outstanding shares of capital stock (or other
ownership interests having by their terms ordinary voting power to elect a
majority of directors or others performing similar functions with respect to
such Subsidiary) of each of the Subsidiaries set forth in Schedule 3.6. Each of
the outstanding shares of capital stock (or other ownership interests) of each
of Executive's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock (or other
ownership interests) of each such Subsidiary is owned, directly or indirectly,
by Executive, free and clear of all liens, pledges, security interests, claims,
or other encumbrances, except as set forth in Schedule 3.6. There are not now,
and at Closing there will not be, (a) issued or outstanding (i) any shares of
capital stock or ownership interests of any of Executive's Subsidiaries other
than shares or ownership interests owned by Executive, directly or indirectly,
or (ii) any securities convertible into or exchangeable for, or any options,
warrants, calls, subscriptions or other rights (preemptive or otherwise) to
acquire, any shares of capital stock or ownership interests of any of
Executive's Subsidiaries, or (b) any agreements or contractual commitments
obligating Executive, or restricting Executive's rights, to transfer, sell, or
vote, the capital stock or ownership interests of Executive's Subsidiaries owned
by it, directly or indirectly. For purposes of this Agreement, the definition of
"Subsidiaries" shall mean with respect to any Person, any corporation,
partnership, joint venture or other legal entity of which such Person (either
alone or through or together with any other Subsidiary), owns, directly or
indirectly, at least 50% of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
3.7 Interests in Other Entities. Except as set forth in Schedule 3.7,
neither Executive nor any of its Subsidiaries, directly or indirectly, has any
(a) interest in the outstanding stock or ownership interests of any corporation
or in any partnership, joint venture or other entity, other than the
Subsidiaries, or (b) agreement, understanding, contract or commitment relating
to an interest in any such entity or Executive's or any of its Subsidiaries'
investment therein.
3.8 Compliance with Law. Except as set forth in Schedule 3.8, each of
Executive and its Subsidiaries has complied in all material respects with (or,
in these instances occurring and relating solely to periods prior to the
Effective Date in which Executive or its Subsidiaries has not complied, such
compliance has been achieved, waived or resolved prior to the Effective Time
with no continuing liability or obligation of Executive or any of its
Subsidiaries), and is in compliance in all material respects with, all federal,
state, county, and local laws, regulations, and orders that are applicable to
Executive's and its Subsidiaries' Business, including, but not limited to, the
rules and regulations of the Federal Aviation Administration (the "FAA"), and
the states and municipalities in which Executive and its Subsidiaries are
located, and has timely filed with the proper authorities all material
statements and reports required by the laws, regulations, and orders to which
Executive, its Subsidiaries and their respective Businesses are subject.
3.9 Litigation. Except as described in Schedule 3.9, Executive and its
Subsidiaries have received no notice of any litigation, claim, action, suit,
proceeding or governmental investigation pending and there is no pending, or, to
the Shareholders' Knowledge, threatened litigation, claim, action, suit,
proceeding or governmental investigation against Executive or its Subsidiaries.
Executive and its Subsidiaries are not in violation of any material term of any
judgment decree, injunction or order outstanding against them.
13
3.10 Insurance.
(a) Each of Executive and its Subsidiaries maintains insurance
with respect to the Business, and Executive and its Subsidiaries are in
compliance with all requirements and provisions thereof and have not failed to
give any notice or present any claim under any such policy in a timely fashion
or in the manner or detail required by the policy.
(b) True and correct copies of all insurance policies relating to
such coverage have been made available by Executive to Purchaser. All such
policies are in full force and effect and no notice of cancellation has been
given to or received by Executive or any of its Subsidiaries with respect to any
of its insurance policies and no such policy permitted to lapse, and, except as
set forth in Schedule 3.10, no such policies are subject to any retroactive rate
or audit adjustments or coinsurance arrangements.
3.11 Financial Statements.
(a) Attached hereto as Schedule 3.11 (a) are true and complete
copies of (i) the audited consolidated balance sheets of Executive and its
Subsidiaries as of December 31, 2001, 2002 and 2003 and the related statements
of operations and cash flow for each of the fiscal years in the three
fiscal-year period ending December 31, 2003 and (ii) the unaudited consolidated
balance sheet and statements of income, changes in stockholders' equity and cash
flow of Executive and its Subsidiaries (the "EXECUTIVE BALANCE SHEET") as of and
for the two (2) month period ended February 29, 2004 (the "INTERIM BALANCE SHEET
DATE") for Executive and its Subsidiaries (collectively, including the notes
thereto, the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with the books and records of Executive and its
Subsidiaries and present fairly the financial position and the results of
operations and cash flows of Executive and its Subsidiaries as of the dates or
for the periods set forth therein. The Financial Statements have been prepared
in accordance with GAAP, consistently applied.
(b) Schedule 3.11(b) includes a list of all Funded Indebtedness as
of the date hereof.
3.12 Accounts Receivable. Except as set forth in Schedule 3.12, each of
Executive's and its Subsidiaries' accounts receivable arose, and all accounts
receivable that will be outstanding as of the Closing Date shall have arisen,
from bona fide transactions in the ordinary course of business. The reserve for
accounts receivables set forth in the Executive Balance Sheet have been
established consistently with Executive's and its Subsidiaries' historical
accounting practice.
3.13 Inventory. Except as set forth in Schedule 3.13, Executive's and its
Subsidiaries' inventory consists of items of a quality and quantity usable and
salable in the ordinary course of business. The value of the inventory, which is
obsolete, of below standard quality or in excess of reasonably estimated usage
has been written-off or down and adequate reserves provided therefor. The values
at which Executive and its Subsidiaries' inventories carried in the Financial
Statements reflect the normal inventory valuation policy of Executive and its
Subsidiaries.
3.14 No Undisclosed Liabilities. Except as set forth in Schedule 3.14 or
expressly set forth in any of the other Schedules hereto, Executive and its
Subsidiaries have no liabilities or
14
obligations of any nature (contingent or otherwise) required by GAAP to be
disclosed on the Executive Balance Sheet, except for the liabilities or
obligations reflected or reserved against in the Executive Balance Sheet and for
current liabilities incurred in the ordinary course of business since February
29, 2004.
3.15 Powers of Attorney. Except as set forth in Schedule 3.15, neither
Executive nor any of its Subsidiaries or any of their directors or officers, has
any power of attorney with respect to Executive's and its Subsidiaries' Business
outstanding.
3.16 Contracts.
(a) Schedule 3.16 lists all of the following Contracts
("CONTRACTS") of Executive and each of its Subsidiaries:
(i) each partnership, joint venture or other similar
agreement or arrangement to which Executive or any of
its Subsidiaries is a party;
(ii) each lease of real property to which Executive or one of
its Subsidiaries is a party, including all FBO Leases
(defined below), and each lease of personal property to
which Executive or one of its subsidiaries is a party
that has rent payable after the date hereof in excess of
$100,000;
(iii) each agreement of Executive and its Subsidiaries
relating to indebtedness for borrowed money (whether
incurred, assumed, guaranteed or secured by any asset);
(iv) each contract containing covenants purporting to
materially limit the freedom of Executive or any of its
Subsidiaries to compete in any line of business or in
any geographic area;
(v) each contract that is not for the purchase, sale or
license of goods or services in the ordinary course of
business consistent with past practice;
(vi) each policy of insurance; and
(vii) each agreement which has aggregate expenditure
obligations of $150,000 or more to any Person.
(b) True and complete copies of all such Contracts have been
provided to Purchaser. True and complete copies of the lease or use agreement
with or on behalf of the airport authority relating to each fixed base operation
location of Executive and its Subsidiaries (the "FBO LEASES") are attached to
Schedule 3.16(b)(i). Each of the FBO Leases has a term and renewal period as set
forth in Schedule 3.16(b)(ii). Except as set forth in Schedule 3.16, the
Contracts are in full force and effect, are valid and binding, and enforceable
against Executive and its Subsidiaries, as applicable, and, to the Knowledge of
the Shareholders, the other parties
15
thereto in accordance with their respective terms. Neither Executive nor any of
its Subsidiaries, nor, to the Shareholders' Knowledge, any other party to any
such contract is in default in the performance of, or is not in compliance with,
any material provision of any such contract, including any minimum service
requirements under any FBO Lease and no event has occurred that with the passage
of time or the giving of notice or both would constitute a default by Executive
or any Subsidiary or, to the Shareholders' Knowledge, any other party under any
material provision thereof.
(c) Except as set forth in Schedule 3.16, the consummation of the
transactions contemplated by this Agreement would not give any party to a
Contract listed in Schedule 3.16 the right to terminate or alter the terms of
such contract.
(d) Set forth in Schedule 3.16 is a list of the twenty-five (25)
largest customers of Executive and its Subsidiaries by gallons of fuel purchased
in the 2003 calendar year at each facility where Executive or a Subsidiary has a
fixed base operation. Other than the customers set forth in Schedule 3.16, no
other customer accounted for more than five percent (5%) of the gallons of fuel
purchased by customers of Executive and its Subsidiaries taken as a whole in the
2003 calendar year. None of the customers listed in Schedule 3.16 has given
Executive or its Subsidiaries written notice that such customer intends to cease
or reduce its buying of goods or services from Executive or its Subsidiaries.
(e) Except as disclosed in Schedule 3.16, no material supplier to
or landlord of Executive or any of its Subsidiaries, including any party to the
FBO Leases, or any Governmental Entity has taken, and neither Executive nor any
of its Subsidiaries have received any written notice that, any material supplier
to or landlord of Executive or any of its Subsidiaries, including any party to
any of the FBO Leases, or any Governmental Entity contemplates taking, any steps
to terminate the business relationship of the Executive or any of its
Subsidiaries with such supplier or landlord, including any party to the FBO
Leases.
3.17 Bank Accounts, Etc. Schedule 3.17 sets forth a true, and complete
list of all bank accounts, safe deposit boxes and lock boxes of Executive and
its Subsidiaries including, with respect to each such account and lock box,
identification of all authorized signatories.
3.18 Employees; Employee Benefit Plans.
(a) Schedule 3.18(a) sets forth a complete and correct list of
each person who, as of the date set forth in Schedule 3.18(a), is employed by
Executive or any of its Subsidiaries, including each active employee and each
employee classified as inactive as a result of disability, leave of absence,
layoff, or other absence. With respect to each such person, Schedule 3.18(a)
includes the position, 2003 compensation, and the current wage rate as of the
date specified on the Schedule. Schedule 3.18(a) sets forth a listing of all
bonuses paid to management employees of Executive or any of its Subsidiaries
with respect to calendar year 2003 and all bonuses in excess of $1,000 per
individual paid to other employees of Executive or any of its Subsidiaries with
respect to calendar year 2003.
(b) Schedule 3.18(b) lists all deferred compensation, pension,
profit sharing, stock option, stock purchase, savings, group insurance and
retirement plans, and all vacation pay,
16
severance pay, incentive compensation, consulting, bonus and other employee
benefit or fringe benefit plans or arrangements, including but not limited to
all plans or programs that constitute "employee benefit plans" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by Executive or its Subsidiaries or with respect to which
contributions are made by Executive or its Subsidiaries (including health, life
insurance and other benefit plans maintained for retirees) or with respect to
which Executive or its Subsidiaries have any current or contingent liability
(the "BENEFIT PLANS"). Schedule 3.18(b) identifies all Benefit Plans (if any)
that are "QUALIFIED PLANS". A "Qualified Plan" means those Benefit Plans
intended to qualify under Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "CODE") and any trusts maintained pursuant thereto which are
intended to be exempt from federal income taxation under Section 501 of the
Code.
(c) With respect, as applicable, to Benefit Plans (provided,
however, that for the purposes of Sections 3.18(c)(iii) through (vi), inclusive,
and Section 3.18(g), the term Benefit Plan shall not include the I.A.M. National
Pension Fund listed on Schedule 3.18(b)):
(i) Except as set forth in Schedule 3.18(c)(i), neither
Executive nor any of its Subsidiaries has since January
1, 1999, maintained or contributed to a Qualified Plan
and, except to the extent accrued on the Financial
Statements, Executive and its Subsidiaries have no
unpaid material liability with respect to any Qualified
Plan required by GAAP to be reflected on the Financial
Statements.
(ii) Except as set forth in Schedule 3.18(c)(ii), neither
Executive nor any of its Subsidiaries has since January
1, 1999 sponsored, maintained, contributed to, had any
obligation to sponsor, maintain, contribute to or had
any material liability (whether actual, contingent with
respect to any of its assets, or otherwise) with respect
to any Benefit Plan subject to Section 302 of ERISA or
Section 412 of the Code or Title IV of ERISA. Except as
shown in Schedule 3.18(c)(ii), Executive and its
Subsidiaries neither have nor, since January 1, 1999,
have had any ERISA Affiliates other than each other. For
purposes of this Agreement, "ERISA AFFILIATE" shall mean
any person, trade or business, whether or not
incorporated, which together with such person would be
deemed, at any time from January 1, 1999 through the
Closing Date, to be a single employer pursuant to the
rules set forth in Section 4001 of ERISA or Section
414(b), (c), (m) or (o) of the Code.
(iii) True, correct and complete copies of all of the
following documents with respect to each Benefit Plan
have been provided to Purchaser: (1) all plan documents,
including but not limited to trust agreements, insurance
policies, service agreements and amendments thereto, (2)
the Forms 5500 and any financial statements attached
thereto for the last three plan years for each Benefit
Plan, (3) the last Internal Revenue Service ("IRS")
determination letters that covered the qualification of
each
17
Qualified Plan, and the materials submitted by
Executive to obtain those letters, (4) the most
recent summary plan descriptions and summaries of
material modifications, (5) copies of all
non-discrimination testing reports for the last three
plan years for each Benefit Plan and (6) all other
material employee communications relating to such
Benefit Plans. To the Knowledge of the Shareholders,
no officer, director, agent, representative or
employee of Executive has made any oral or written
representation which is inconsistent in any material
respect with the terms of any written Benefit Plan.
(iv) There are no pending claims or lawsuits by, against,
or relating to any Benefit Plan, and no claims or
lawsuits have been asserted or instituted relating to
any Benefit Plan, against the assets of any trust or
other funding arrangement under any such plan, by or
against Executive or any of its Subsidiaries with
respect to any Benefit Plan or by or against the plan
administrator or any fiduciary of any Benefit Plan,
and the Shareholders do not have Knowledge of any
fact that could form the basis for any such claim
(other than routine claims for benefits) or lawsuit.
(v) Each Benefit Plan has been maintained in all material
respects in accordance with its constituent documents
and with all applicable provisions of the Code, ERISA
and other laws, including federal and state
securities laws. Each Benefit Plan that is a
Qualified Plan meets the requirements of Section
401(a) of the Code.
(vi) Except to the extent that it could not reasonably be
expected to result in a liability to Purchaser,
Executive or any Subsidiary, with respect to each
Benefit Plan, there has occurred no material
non-exempt "prohibited transaction" (within the
meaning of Section 4975 of the Code) or material
transaction prohibited by Section 406 of ERISA or
material breach of any fiduciary duty described in
Section 404 of ERISA and no Benefit Plan held or
holds any stock or other security issued by Executive
or its Subsidiaries.
(vii) Executive and its Subsidiaries do not contribute to
and do not have any actual or contingent liability
with respect to any "multiemployer plan" as defined
in Section 3(37) of ERISA other than the I.A.M.
National Pension Fund, and have not incurred any
withdrawal liability with respect to any such plans
including but not limited to the I.A.M. National
Pension Fund, since January 1, 1999.
(viii) Neither Executive nor any Subsidiary has ever
maintained, contributed to or had any actual or
contingent liability to a "voluntary employees
beneficiary association" as defined on
18
Section 501(c)(9) of the Code or any other "welfare
benefit fund" as defined on Section 419(e) of the
Code and all liability with respect to any self
funded or self insured Benefit Plan has been properly
accrued on the Financial Statements to the extent
required by GAAP.
(ix) No matters are currently pending with respect to any
Benefit Plan under the Employee Plans Compliance
Resolution System maintained by the IRS or any
similar program maintained by any other governmental
entity.
(x) All contributions, premiums or other payments due
under each Benefit Plan or required by applicable law
have been made within the time due and all unpaid
amounts attributable to each Benefit Plan for any
period prior to the Closing Date will be accrued on
the books and records of Executive and its
Subsidiaries in accordance with GAAP.
(d) Except as set forth in Schedule 3.18(d), no employee,
independent contractor, or former employee (or any dependents or beneficiaries
of any such person) of Executive or any of its Subsidiaries is entitled to
receive any benefits, including, without limitation, death or medical benefits
(whether or not insured) beyond retirement or other termination of employment,
other than (1) death or retirement benefits under a Qualified Plan, (2) deferred
compensation benefits accrued as liabilities on the Financial Statements or (3)
continuation coverage mandated under Section 4980B of the Code or other
applicable law.
(e) Except as set forth in Schedule 3.18(e), neither Executive nor
any of its Subsidiaries has declared or paid or will pay any bonus compensation
in contemplation of the transactions contemplated by this Agreement.
(f) Neither Executive nor its Subsidiaries are parties to any
contract, agreement, plan or arrangement requiring them to make payments to any
person that would be a "parachute payment" (within the meaning of Section 280G
of the Code) by reason of the consummation of the transactions contemplated by
this Agreement.
(g) Each Benefit Plan is terminable at the discretion of Executive
or a Subsidiary and without cost to such entity.
(h) To the Knowledge of the Shareholders and subject to the
provisions of the existing labor union agreements listed in Schedule 3.19,
Executive and its Subsidiaries may, without cost, withdraw its employees from
the I.A.M. National Pension Fund. For purposes of this paragraph, withdrawal
liability with respect to such multiemployer plan shall be treated as a cost.
3.19 Labor Matters. Except as set forth in the correspondingly numbered
section of Schedule 3.19, with respect to employees of Executive and its
Subsidiaries:
19
(a) Executive and its Subsidiaries are and have been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation any such laws respecting employment discrimination, workers
compensation, family and medical leave, the Immigration Reform and Control Act,
the Americans with Disabilities Act, and occupational safety and health
requirements, and have not and are not engaged in any unfair labor practice;
(b) There is not now, nor since January 1, 2000 has there been any
unfair labor practice complaint against Executive or any of its Subsidiaries
pending or to the Shareholders' Knowledge, threatened before the National Labor
Relations Board or any other comparable authority;
(c) There is not now, nor since January 1, 2000, has there been,
any labor strike, lock-out, slowdown, or work stoppage actually pending or, to
the Shareholders' Knowledge, threatened against or directly affecting Executive
or any of its Subsidiaries;
(d) No labor representation organization effort exists nor has
there been any such activity since January 1, 2000;
(e) No grievance or any arbitration proceeding arising out of or
under collective bargaining agreements is pending and, to the Shareholders'
Knowledge, no claims therefor exist or have been threatened;
(f) The employees of Executive and its Subsidiaries are not
represented by any labor union, and no collective bargaining agreement is
binding and in force against Executive or any of its Subsidiaries or currently
being negotiated by Executive or any of its Subsidiaries;
(g) Neither Executive nor its Subsidiaries is a party to an
employment agreement and, subject to the provisions of the employment agreements
listed in Schedule 3.18(b) and the labor union agreements listed in Schedule
3.19, the terms of employment of all employees of Executive and each Subsidiary
are such that their employment may be terminated at will with notice given at
any time and without liability for payment of compensation or damages;
(h) Since January 1, 2000, all individuals classified by Executive
and its Subsidiaries as "independent contractors" satisfy and have satisfied the
requirements of law to be so classified and Executive and its Subsidiaries have
fully and accurately reported the compensation paid to such independent
contractors on IRS Forms 1099 when required to do so; and
(i) No employee of Executive or any Subsidiary is currently on
leave as a result of any work related injury or accident or receiving disability
benefits under any Benefit Plan.
20
3.20 Property.
(a) Schedule 3.20 lists all oral or written leases, including the
FBO Leases, subleases, licenses, concession agreements or other use or occupancy
agreements pursuant to which Executive or its Subsidiaries lease to or from any
other party any real property, including all renewals, extensions, modifications
or supplements to any of the foregoing or substitutions for any of the foregoing
(collectively, the "LEASES"), and, if applicable, identifies each of the
municipal airports to which they relate (collectively, the "AIRPORTS").
Executive and its Subsidiaries do not own any real property.
(b) Schedule 3.20 identifies, as of the date reflected thereon all
tangible personal property and assets (other than inventory) owned or leased by
Executive or its Subsidiaries. Except as set forth in Schedule 3.20, each of
Executive and its Subsidiaries has good and marketable title to all, of tangible
and intangible property and assets owned by it, free of liens except for
statutory mechanics' and materialmen's liens and liens for Taxes (as defined in
Section 3.21(b) below) not yet due and payable (such items described therein
bring referred to as "PERMITTED LIENS") of any nature whatsoever. Executive and
its Subsidiaries own or lease all assets and properties that are used in or
necessary to the operation of the Business.
(c) Except as set forth in Schedule 3.20:
(i) All Leases are valid and in full force and effect, and
have not been assigned, modified, supplemented or
amended. Executive has provided Purchaser with true and
complete copies of all of the Leases and all amendments
thereto, and has made available to Purchaser all
material correspondence related thereto. Except as set
forth in Schedule 3.20, Executive's and its
Subsidiaries' interests under the Leases are held free
of all mortgages, liens, charges, claims, restrictions,
pledges, security interests, impositions, covenants,
conditions and other encumbrances.
(ii) Executive and its Subsidiaries have received no notice
of threatened condemnation proceedings, lawsuits or
administrative actions relating to any of the real
property or any other matters which do or may adversely
effect the current use, occupancy or value thereof and
there an no pending or, to the Shareholders' Knowledge,
threatened condemnation proceedings, lawsuits or
administrative actions relating to any of the real
property or any other matters which do or may adversely
effect the current use, occupancy or value thereof.
(iii) All facilities, buildings, improvements and other
structures located on the leased real property and all
present uses and operations of the leased real property
and the structures by Executive and its Subsidiaries,
comply in all material respects to the Knowledge of the
Shareholders with all applicable zoning, land-use,
building, fire, labor, safety, subdivision and other
governmental
21
requirements and all deed or other title covenants or
restrictions applicable thereto. Neither Executive nor
any of its Subsidiaries has received any notice that any
of the leased real property or any of the structures, or
the use, occupancy or operation thereof by Executive or
its Subsidiaries, violate any governmental requirements
or deed or other title, covenants or restrictions,
except for any violations which do not have a material
effect.
(iv) Each of Executive and its Subsidiaries has obtained all
approvals of governmental authorities (including
certificates of use and occupancy, licenses and permits)
required in connection with the construction, ownership,
use, occupation and operation of the leased real
property and the structures thereon, and all equipment
owned or used by Executive or its Subsidiaries. To the
Knowledge of the Shareholders, none of the leased real
property or any of the structures thereon are dependent
upon or benefit from any "nonconforming use" or similar
zoning classification.
(v) Other than in the ordinary course of business, there are
no parties other than Executive or its Subsidiaries in
possession of any of the leased real property or any
portion thereof, and, other than in the ordinary course
of business, there are no leases, subleases, licenses,
concessions or other agreements, written or oral,
granting to any party or parties the right of use or
occupancy of any of the leased real property or any
portion thereof.
(vi) To the Knowledge of the Shareholders, the legal
descriptions for the real property contained in the
Leases adequately describe the leased real property
subject thereto. To the Knowledge of the Shareholders,
all structures on the leased real property are located
within the boundary lines of the leased real property
and no structures, facilities or other improvements on
any parcel adjacent to any of the leased real property
encroach onto any of the leased real property. To the
Knowledge of the Shareholders, all structural,
mechanical and other physical systems related to the
leased real property are in good operating condition and
repair, reasonable wear and tear excepted, in all
material respects.
(vii) Neither Executive nor its Subsidiaries nor their
respective landlords are in default under any of the
Leases, nor are there any state of facts which with
notice, the passage of time or both would constitute a
default by Executive or any of its Subsidiaries under
any of the Leases. Neither Executive nor any of its
Subsidiaries has received any notice of default or claim
of default by any landlord under any of the Leases.
22
(viii) Neither Executive nor any of its Subsidiaries is
required to make any capital expenditure under the
terms of the Leases.
3.21 Taxes.
(a) Executive and its Subsidiaries have timely filed with the
appropriate federal, state, local or foreign governmental authorities (each a
"TAXING AUTHORITY") any and all declarations, returns, reports, estimates,
information returns, schedules, statements or other documents filed or required
to be filed with any Taxing Authority, ("TAX RETURNS") on or before the date
hereof (taking into account any extension of time obtained or allowed for filing
such Tax Returns) (and will file all such Tax Returns required to be filed after
the date hereof through the Closing Date), and such Tax Returns are (or will be)
true, correct and complete in all material respects. Executive and its
Subsidiaries have made available to Purchaser true and complete copies of all
their Tax Returns for all periods ending on or after December 31, 2000, and all
material examination reports issued since such date by Taxing Authorities with
respect to Taxes of Executive and its Subsidiaries and statements of material
Taxes assessed since such date against Executive or its Subsidiaries that were
not shown, but were required to have been shown, on Tax Returns filed by them.
(b) Executive and its Subsidiaries have paid in full all federal,
state and local or foreign income, estimated, payroll, withholding, excise,
sales, use, real and personal property, use and occupancy, business and
occupation, mercantile, transfer, capital stock and franchise or other taxes of
any kind whatsoever (all the foregoing taxes, including interest, additions and
penalties thereon, being hereinafter collectively called ("TAXES") required to
have been paid by Executive and its Subsidiaries (whether or not shown on any
Tax Return).
(c) Except as set forth in Schedule 3.21, Executive and its
Subsidiaries have made adequate provision in the Executive Balance Sheet and
will make adequate provision in the estimated statement of Net Working Capital
described in Section 1.7(c), in accordance with GAAP, for payment of all Taxes
payable by Executive and its Subsidiaries for any taxable period or portion
thereof ending on or before the effective date of such statement, and any Tax
attribute reflected on its Tax Returns is correctly reflected in all material
respects.
(d) Except as set forth in Schedule 3.21, none of Executive or its
Subsidiaries is delinquent in the payment of any Tax or has requested or been
granted any extension of time within which to file any Tax Return which Tax
Return has not since been filed.
(e) Except as set forth in Schedule 3.21, there are no outstanding
requests for rulings or determinations in respect of any Tax or Tax attribute
pending between Executive or any of its Subsidiaries and any Taxing Authority.
(f) None of Executive or its Subsidiaries has granted any
extension or waiver of the statute of limitations period applicable to
assessment or collection of any Tax, which period (after, giving effect to such
extension or waiver) has not expired.
(g) For purposes of filing income Tax Returns and calculating
income Taxes, except as set forth in Schedule 3.21, neither Executive nor its
Subsidiaries have been a member of an affiliated, consolidated, combined or
unitary group other than one of which Executive was
23
the common parent. Except as set forth in Schedule 3.21, Executive and
Subsidiaries are not and have not been a party to any Tax allocation, Tax
sharing or similar agreement or arrangement, have no liability for or with
respect to Taxes of another Person pursuant to Treasury Regulation Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(h) Executive and its Subsidiaries have not received any written
notice of deficiency or assessment from any Taxing Authority with respect to
liabilities for income Taxes or any other Taxes which have not been fully paid
or finally settled. There are no mortgages, pledges, security interests,
encumbrances, liens or charges of any kind with respect to Taxes upon any of the
properties or assets of Executive or its Subsidiaries, other than liens for
Taxes not yet due and payable or that are being contested in good faith.
(i) Except as set forth in Schedule 3.21, there are no ongoing
audits relating to Taxes of Executive or any of its Subsidiaries or examinations
of any Tax Return which includes Executive or any of its Subsidiaries and no
notice of such audit or examination has been received by Executive or any of its
Subsidiaries in respect of any such future audit or examination.
(j) Executive and its Subsidiaries have not entered into nor has
there been entered into on their behalf any closing or similar agreement with
any Taxing Authority, and have not obtained any ruling or determination relating
to Taxes, that remains in effect (including, without limitation, any
requirement, incident to a change in method of accounting, to include an amount
in income for any taxable period ending after the Closing Date pursuant to
Section 481(a) of the Code or any similar provision).
(k) Executive and its Subsidiaries have received no notice of any
claims, actions, suits, proceedings, or investigations, and there are no pending
claims, actions, suits, proceedings, or investigations, with respect to
Executive or any of its Subsidiaries in respect of any Tax or Tax attribute.
(l) All monies which Executive or its Subsidiaries are required by
law to withhold from employees or other third parties have been withheld and
either timely paid to the proper governmental authority or set aside in
accounting for payment when due and accrued in the books of Executive or its
Subsidiaries. Executive and its Subsidiaries have complied with all information
reporting and backup withholding requirements.
(m) Except as set forth in Schedule 3.21, neither Executive nor
any Subsidiary is a party to any contract, agreement, plan or arrangement
covering any employee or former employee of either Executive or any of its
Subsidiaries that, individually or collectively, would obligate Executive or any
of its Subsidiaries to make a payment of any amount (or portion thereof) that
would not be deductible pursuant to Sections 280G, 404 or 162 of the Code;
provided that for purposes of determining compliance with this representation,
payments made after the Closing other than payments made pursuant to contracts,
agreements, plans or arrangements described above that are in effect as of the
time of the Closing shall not be taken into account, and the law in effect as of
the Closing Date shall be applied.
24
(n) Neither Executive nor its Subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by any of them.
(o) Neither Executive nor any of its Subsidiaries is, and has not
been at any time, a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
(p) Neither Executive nor its Subsidiaries have taken any action
not in accordance with past practice that would have the effect of deferring a
measure of Tax from a period (or portion thereof) ending on or before the
Closing Date to a period (or portion thereof) beginning after the Closing Date.
Neither Executive nor its Subsidiaries have any deferred income or Tax Liability
arising out of any transaction, including without limitation, any (i)
intercompany transaction (as defined in Treasury Regulation Section 1.1502-13),
or (ii) the disposal of any property in a transaction accounted for under the
installment method pursuant to Section 453 of the Code, except to the extent
adequately reserved for on the Interim Balance Sheet.
(q) No property owned by Executive or its Subsidiaries is (i)
property required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) "tax-exempt use property" within the meaning of Section 168(h)(1) of the
Code or (iii) is "tax-exempt bond financed property" within the meaning of
Section 168(g) of the Code.
(r) None of Executive or its Subsidiaries have, in the two years
prior to the date of this Agreement, constituted either a "distributing
corporation" or a "controlled corporation" within the meaning of Section
355(a)(1)(A) of the Code in a distribution qualifying (or intended to qualify)
under Section 355 of the Code (or so much of Section 356 as relates to Section
355).
3.22 Environmental Matters.
(a) Except as set forth in Schedule 3.22:
(i) To the Knowledge of the Shareholders, Executive and each
of its Subsidiaries hold, and are in compliance in all
material respects with, all Permits, and with all
applicable federal, state and local laws, regulations,
orders, requirements, and common law relating to
pollution or protection of the environment, health, or
safety (including, without limitation, ambient air,
surface water, groundwater, land, or surface or
subsurface strata) including, without limitation, all
federal, state or local laws, regulations, orders,
requirements, and common law relating to emissions,
discharges, releases or threatened releases of petroleum
and petroleum-derived products, pollutants,
contaminants, chemicals,
25
or industrial, toxic or hazardous substances or wastes
(collectively, "HAZARDOUS SUBSTANCES"), and all federal,
state or local laws, regulations, orders, requirements,
and common law relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Substances
including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901
et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., and the rules and
regulations promulgated thereunder, all as amended and
supplemented from time to time, and together with any
successors thereto (all the foregoing collectively,
"ENVIRONMENTAL LAWS"), and, to the Shareholders'
Knowledge, there are no circumstances that will prevent
such compliance in the future.
(ii) Neither Executive nor any of its Subsidiaries has
received any written request for information, or has
been notified that it is a potentially responsible
party, under the CERCLA, or any similar state law with
respect to any on-site or offsite location.
(iii) No notice, notification, demand, request for
information, citation, summons, complaint or order has
been issued, no complaint has been filed, no penalty has
been assessed, no claim has been made, and no
investigation or review (collectively, "ENVIRONMENTAL
NOTICES") is pending or, to the Shareholders' Knowledge,
threatened by any Governmental Entity or other Person
with respect to any (1) alleged violation by Executive
or any of its Subsidiaries of any Environmental Law or
liability thereunder or (2) alleged failure by Executive
or any of its Subsidiaries to have any required Permit.
(iv) Other than those listed in Schedule 3.22, to the
Knowledge of the Shareholders, there have been no
discharges, emissions, spilling, leaking, pouring,
emptying, or other releases of Hazardous Substances
which are or were reportable by Executive or its
Subsidiaries under any Environmental Law.
(b) Except as set forth in Schedule 3.22, there has been no
investigation, study, audit, test, review or other analysis (including any Phase
I environmental assessments) conducted by, for, or provided to Executive or its
Subsidiaries in relation to any real property or the Business.
(c) Neither Executive nor any of its Subsidiaries is subject to
any judgment, decree, order, or consent agreement relating to compliance with
any Environmental Law, or the cleanup of Hazardous Substances under any
Environmental Law.
26
3.23 Permits.
(a) Executive and each of its Subsidiaries has obtained and holds
in full force, and Schedule 3.23 sets forth a complete and accurate list of, all
licenses, permits, certificates of authority, authorizations, approvals,
registrations, franchises, rights, orders, qualifications and similar rights or
approvals granted or issued by any governmental or regulatory authority relating
to the Business of Executive or any of its Subsidiaries (each, a "PERMIT" and
collectively, "PERMITS") that are necessary or advisable for the operation of
the Business or of any real property or equipment used therein. Executive, its
Subsidiaries and each of their employees, independent contractors or agents is
in compliance with the material terms of any such Permit.
(b) Neither Executive nor any of its Subsidiaries (1) hold any
Permit issued by the FAA or by the U.S. Department of Transportation or (2) own
or lease aircraft or (3) operate aircraft for a third party under a management
agreement or other similar arrangement.
(c) Neither Executive nor any of its Subsidiaries provide aircraft
repair or maintenance services to third parties or operate aircraft for
compensation or hire and the failure to provide aircraft repair or maintenance
service to third parties or to operate aircraft for compensation or hire does
not contravene any provision in any contract, license, permit, order, lease, or
agreement with any party and does not form the basis for termination of any
contract, license, permit, lease or agreement.
(d) Except as set forth in Schedule 3.23, neither the execution,
delivery and performance of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) result in or give to any person any
right of termination, non-renewal, cancellation, acceleration or modification in
or with respect to any such Permit, (ii) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under any such Permit or (iii) result in the creation or
imposition of any adverse claim upon Executive, any of its Subsidiaries or any
of their respective assets under the terms of any Permit.
(e) Except as set forth in Schedule 3.23, there is no order,
notice, rule, or directive, outstanding or, to the Knowledge of Shareholders,
any proposed order, rule notice or directive, issued by any governmental
authority against Executive or any of its Subsidiaries, nor is there now
pending, or to the Knowledge of the Shareholders, threatened, any legal or
regulatory proceeding, which could adversely affect the business or assets of
Executive or any of its Subsidiaries, or any Permit required to be obtained and
maintained by Executive or any of its Subsidiaries.
3.24 Transactions with Affiliates. Except as set forth in Schedule 3.24
since January 1, 2000 there have been no transactions, contracts, understanding
or agreements of any kind between Executive or any of its Subsidiaries and any
of their respective Affiliates (as defined below) which require disclosure in
audited financial statements prepared in accordance with GAAP and were not
disclosed. For purposes of this Agreement, "AFFILIATE" shall mean, with respect
to any Person, a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
first mentioned Person.
27
3.25 Intellectual Property. Schedule 3.25 contains an accurate and
complete list of (a) all patents, patent applications, registered trademarks and
service marks, trademark and service ▇▇▇▇ applications, registered copyrights
and copyright registration applications owned or filed by Executive or any of
its Subsidiaries and (b) all material licenses and other agreements relating to
technology, know-how, software or processes used in or otherwise necessary to
the Business of Executive or any of its Subsidiaries, whether proprietary to
Executive or any of its Subsidiaries or licenses or otherwise authorized to use
by others (the items set forth in clauses (a) and (b) above are collectively
referred to herein as the "INTELLECTUAL PROPERTY"). Except as set forth in
Schedule 3.25, the patents, trademarks and the copyrights that constitute
Intellectual Property are valid, subsisting and enforceable in accordance with
their terms and conditions (subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer and conveyance, moratorium, reorganization, receivership and
similar laws relating to or affecting the enforcement of the rights and remedies
of creditors generally and (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law)), and the patents,
registered trademarks and services marks, and registered copyrights are duly
recorded in the name of Executive or its Subsidiaries. Except as set forth in
Schedule 3.25, no claims have been asserted by any entity or person with respect
to challenging the ownership, validity, enforceability or use of the
Intellectual Property, nor to the Shareholders' Knowledge, is there any valid
grounds for any such bona fide claims. The use or other exploitation of such
Intellectual Property by Executive and its Subsidiaries do not infringe the
rights of any other entity or person. Schedule 3.25 sets forth a true and
complete list of all license agreements between any of Executive or any of its
Subsidiaries and third-parties with respect to the use of the Intellectual
Property. To the extent Executive or any of its Subsidiaries uses any
Intellectual Property owned by a third party, Executive or Subsidiary has a
license with such third party for the use of such Intellectual Property and, to
the Knowledge of the Shareholders, is not in default under any such license.
3.26 Absence of Certain Changes or Events. From December 31, 2003 to the
date hereof, except as disclosed in Schedule 3.26 or in the Financial
Statements, or as otherwise expressly consented to in writing by Purchaser,
Executive's and its Subsidiaries' Business have been operated only in the
ordinary course of business (except as expressly contemplated by this
Agreement), and there has not been any:
(a) Change in the financial condition, assets, liabilities,
prospects, or net worth of Executive or its Subsidiaries, except changes in the
ordinary course of business, none of which, individually or in the aggregate has
been or is reasonably likely to be materially adverse to Executive or its
Subsidiaries;
(b) Sale, assignment or transfer, other than in the ordinary
course of business and consistent with past practice, of any assets of Executive
or any of its Subsidiaries;
(c) Acquisition by merger, consolidation with, purchase of
substantially all of the assets or capital stock of, or any other acquisition of
any material assets or business of, any corporation, partnership, association or
other business organization or division thereof;
(d) Change in accounting methods or practices by Executive or any
of its Subsidiaries, except as required by GAAP;
28
(e) Entry into, or termination, amendment or modification of, any
material contract, agreement, commitment, transaction, license, permit or other
instrument (including, without limitation, any borrowing, capital expenditure,
capital contribution or capital financing).
(f) Increase in salary, bonuses or other compensation payable or
to become payable to, or any advance or loan to any officer or employee of
Executive or its Subsidiaries, except in the ordinary course of business,
consistent with past practice, and neither Executive nor its Subsidiaries have
(i) entered into any Benefit Plan or Benefit Agreement, employment, severance,
or other agreements relating to compensation or fringe benefits or (ii) adopted
or changed any existing Benefit Plan or Benefit Arrangement;
(g) Casualty involving material assets of Executive's or any of
its Subsidiaries' Business, not covered by insurance, in excess of $15,000;
(h) Strike, walkout, labor trouble or any other new or continued
event, development or condition of any character which has or could materially
adversely affect the Business, properties, assets of Executive or its
Subsidiaries;
(i) Declaration, setting aside or payment of a dividend or other
distribution in respect of any of the capital stock of Executive or its
Subsidiaries, or any direct or indirect redemption, purchase or other
acquisition of any capital stock of Executive or its Subsidiaries or any rights
to purchase such capital stock or securities convertible into or exchangeable
for such capital stock;
(j) Cancellation or waiver of any right material to the operation
of Executive's or its Subsidiaries' Business or any cancellation or waiver of
any debts or claims of substantial value or any cancellation or waiver of any
debts or claims against any officer, director or employee of Executive or its
Subsidiaries;
(k) Payment, discharge or satisfaction of any liability or
obligation (whether accrued, absolute, contingent or otherwise) by Executive or
any of its Subsidiaries, other than the payment, discharge or satisfaction, in
the ordinary course of business, of liabilities or obligations shown or
reflected on the Financial Statements or incurred in the ordinary course of
business since the Interim Balance Sheet Date;
(l) Adverse change, or, to the Knowledge of the Shareholders,
threat of any adverse change, in Executive's or any of its Subsidiaries'
relations with, or any loss, or, to the Knowledge of the Shareholders, threat of
loss of, Executive's or any of its Subsidiaries' landlords, suppliers, clients
or customers, including any party to the FBO Leases or any Governmental Entity,
which, individually or in the aggregate, has been or will be materially adverse
to Executive or any of its Subsidiaries as a whole;
(m) Write-offs as uncollectible of any notes or accounts
receivable of Executive or its Subsidiaries or write-downs of the value of any
asset or inventory by Executive other than in immaterial amounts or in the
ordinary course of business consistent with past practice and at a rate no
greater than the during the six months ended on the Interim Balance Sheet Date;
29
(n) Creation, incurrence, assumption or guarantee by Executive or
its Subsidiaries of any obligations or liabilities (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except in the
ordinary course of business, or any creation, incurrence, assumption or
guarantee by Executive or its Subsidiaries of any indebtedness for borrowed
money;
(o) Disposition of or failure to keep in effect any rights in, or
for the use of any patent, trademark, service ▇▇▇▇, trade name or copyright, or
any disclosure to any person not an employee or other disposal of any trade
secret, process or know-how;
(p) Transaction, agreement or event (i) outside the ordinary
course of business for Executive's or any of its Subsidiaries' Business, or (ii)
inconsistent with past practice and which could have a material adverse affect
on Executive, any of its Subsidiaries or the Business; or
(q) Agreement by Executive to do any of the foregoing.
3.27 Brokerage. Executive has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereby.
3.28 Fuel Flowage. True and correct copies of Executive's and its
Subsidiaries' fuel flowage and gross receipt statements as filed with the
relevant Airport authorities for the period from January 1, 2003 through
December 31, 2003, reflecting the gallons of fuel sold by Executive and its
Subsidiaries, and revenues on which Executive and its Subsidiaries paid a
percentage fee, during such period are attached to Schedule 3.28. Such
statements accurately reflect the gallons of fuel sold and revenues earned by
Executive and its Subsidiaries during such period and were prepared in
accordance with Executive's books and records. Executive's and its Subsidiaries'
fuel sales records for each customer who purchased fuel during the period
January 1, 2004 through March 31, 2004 are also attached to Schedule 3.28. Such
fuel sales records accurately reflect the actual number of gallons sold to each
customer of Executive and its Subsidiaries during such period and the actual
prices charged by Executive and its Subsidiaries to each customer during such
period.
ARTICLE 4
REPRESENTATION AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Executive as follows:
4.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 Authorization. Purchaser has the full corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser. This Agreement has
been duly executed and delivered by the Purchaser and constitutes a valid, legal
and binding obligation of Purchaser, enforceable in accordance with its terms
and
30
conditions, subject to (i) applicable bankruptcy, insolvency, fraudulent
transfer and conveyance, moratorium reorganization, receivership and similar
laws relating to or affecting the enforcement of the rights and remedies of
creditors generally and (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law).
4.3 No Violations. The execution, delivery and performance of this
Agreement by Purchaser, and the consummation by Purchaser of the transactions
contemplated hereby, will not (a) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of Purchaser, (b) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of amendment, termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Purchaser is a party or by which it is
bound, or (c) assuming compliance with the HSR Act, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Purchaser, or its
properties or assets.
4.4 Brokerage. Purchaser has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission from Executive or the Shareholders as a result of the transactions
contemplated hereunder.
ARTICLE 5
OTHER OBLIGATIONS
5.1 Conduct of Business Pending Closing. From and after the date hereof
and pending Closing, and unless Purchaser shall otherwise consent or agree in
writing, Executive and the Shareholders covenant and agree that:
(a) Ordinary Course. The Business of Executive and its
Subsidiaries will be conducted only in the ordinary course and consistent with
past practice, including billing and collection practices and payment of
accounts payable.
(b) Preservation of Business. Executive and the Shareholders will
use commercial best efforts to preserve the business organization of Executive
and its Subsidiaries intact, to keep available the services of the present
officers and employees of Executive and its Subsidiaries, and to preserve the
goodwill of the suppliers, customers and others having business relations with
Executive and its Subsidiaries.
(c) Material Transactions. Executive will not, and will not permit
its Subsidiaries to:
(i) amend its certificate of incorporation, bylaws, or other
organizational documents;
(ii) change its authorized or issued capital stock, or other
equity interest or issue any rights or options to
acquire shares of its capital stock or other equity
interest;
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(iii) enter into any contract or commitment the performance
of which may extend beyond the Closing, except those
made in the ordinary course of business, the terms of
which are consistent with past practice and
reasonable in light of current conditions;
(iv) enter into any employment or consulting contract or
arrangement with any person which is not terminable
at will, without penalty or continuing obligation;
(v) incur, create, assume or suffer to exist any
mortgage, pledge, lien, restriction, encumbrance,
tenancy, encroachment, covenant, condition,
right-of-way, easement, claim, security interest,
charge or other matter affecting title on any of its
assets or other property, except Permitted Liens;
(vi) make, change or revoke any Tax election or make any
agreement or settlement with any Taxing Authority;
(vii) incur any debt or other obligation for money
borrowed;
(viii) loan, advance funds or make an investment in or
capital contribution to any person other than
Executive;
(ix) except as expressly contemplated in this Agreement,
take any action or permit to occur any event
described in Section 3.26;
(x) take any action or omit to take any action which will
result in a violation of any applicable law or cause
a breach of any agreements, contracts or commitments;
or
(xi) enter into any agreement, or otherwise commit, to do
any of the foregoing.
It is expressly understood, however, that Executive, at its discretion, may
elect at any time prior to the Closing to resolve its pending claim for
indemnification under the indemnification insurance policy obtained in
connection with the acquisition of Atlantic Aviation Corporation by Executive.
(d) Interim Financial Statements. Executive will deliver to
Purchaser as soon as practicable after the end of each month and the end of each
calendar quarter prior to the Closing Date, commencing with the month ended
March 31, 2004, an unaudited consolidated balance sheet as of such date and
related unaudited consolidated statements of income and cash flows for the
periods then ended for Executive and its Subsidiaries (the "INTERIM FINANCIAL
STATEMENTS"), which Interim Financial Statements shall fairly present Executive
and its Subsidiaries' financial condition, results of operations and cash flows
for the periods then ended in accordance with GAAP. Notwithstanding anything to
the contrary contained in this Agreement or the Confidentiality Agreement, the
Purchaser (and its permitted assigns) shall have the right to use and disclose
the Interim Financial Statements and related documents, together with such
information about Executive and its Subsidiaries as Purchaser (or its permitted
assign)
32
reasonably believes is required or advisable to be included therewith, in
connection with any debt or equity financing to be done by the Purchaser or any
of its Affiliates.
(e) Maintenance of Employees. Executive will use, and cause each
of its Subsidiaries to use, commercially reasonable efforts to retain all
existing employees of Executive and its Subsidiaries and will promptly notify
Purchaser of the termination of employment of any existing employee or the
receipt by Executive or any of its Subsidiaries of notice of termination of
employment of any existing employee.
(f) Insurance. Executive and its Subsidiaries shall maintain and
shall cause its Subsidiaries to maintain in full force and effect the policies
of insurance listed in Schedule 3.16, subject only to variations required by the
ordinary operations of the Business, or else will obtain, prior to the lapse of
any such policy, substantially similar coverage with insurers of recognized
standing and approved in writing by the Purchaser which approval shall not be
unreasonably withheld or delayed. Executive shall promptly advise Purchaser in
writing of any change of insurer or type of coverage in respect of the policies
listed in Schedule 3.16.
5.2 Access, Information and Documents. Executive and its Subsidiaries
will give to Purchaser and to Purchaser's counsel, accountants and other
representatives reasonable access during normal business hours to all of
Executive's and its Subsidiaries' properties, books, Tax Returns, contracts,
commitments, records, officers, personnel, accountants, customers and suppliers
and will furnish to Purchaser all such documents and copies of documents
(certified to be true copies if requested) and all information with respect to
the affairs of Executive and its Subsidiaries as Purchaser may reasonably
request. No investigation or receipt of information by Purchaser pursuant to
this Agreement shall diminish or obviate any of the representations, warranties,
covenants or agreements of Executive under this Agreement or the conditions to
the obligations of Purchaser under this Agreement.
5.3 Acquisition Proposals. From the date hereof through the Closing, the
Shareholders shall not sell or otherwise transfer any of the Shares to any other
person, and neither Executive nor its Subsidiaries, or any of their Affiliates,
officers, directors, employees, representatives or agents, shall, directly or
indirectly, solicit, initiate or participate in any way in discussions or
negotiations with, or provide any information or assistance to, any person or
group of persons (other than Purchaser) concerning any acquisition of an equity
interest in, or in a merger, consolidation, liquidation, dissolution,
disposition of assets (other than in the ordinary course of business and as
specifically permitted pursuant to this Agreement) of Executive or any of its
Subsidiaries, or any disposition of any of the Shares (other than pursuant to
the transactions contemplated by this Agreement), or assist or participate in,
facilitate or encourage any effort or attempt by any other person to do or seek
to do any of the foregoing.
5.4 HSR Filing; Further Assurances.
(a) Each of the parties hereto shall use commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate the transactions
contemplated hereby as soon as practicable. Without limiting the foregoing,
Executive and Purchaser will as promptly as practicable, but in no event later
than ten (10) days following the execution and delivery of this Agreement, file
33
with the Federal Trade Commission and the Department of Justice the notification
and report form, if any, required for the transactions contemplated hereby
pursuant to the HSR Act. Any such notification and report will be in substantial
compliance with the requirements of the HSR Act. Executive and Purchaser shall
furnish to the other such necessary information and reasonable assistance as the
other may request in connection with its preparation of any filing or submission
which is necessary under the HSR Act. Executive and Purchaser shall keep each
other apprised of the status of any communications with, and inquiries or
requests for additional information from, the Federal Trade Commission and
Department of Justice. Purchaser shall be responsible for the payment of all
filing or other fees applicable to the Notification and Report Form filed
pursuant to the HSR Act.
(b) Each party shall promptly give the other party written notice
of the existence or occurrence of any condition which would make any
representation or warranty herein contained of either party untrue as of the
date of this Agreement or any subsequent date as if made on and as of such
subsequent date (except for those representations and warranties which address
matters only as of a particular date) or which might reasonably be expected to
prevent the consummation of the transactions contemplated hereby.
(c) From and after the date hereof, Executive covenants and agrees
to cooperate with the Purchaser and shall use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do or cause to be
done, all things necessary or desirable, including the making of any applicable
disclosures, under applicable law and regulation as the Purchaser may reasonably
request to take or do in connection with any restructuring or equity or debt
financing done by the Purchaser or any of its Affiliates; provided, however,
that Executive shall not be obligated to incur or pay any costs or expenses in
connection with providing such cooperation or taking or doing any such actions
or things.
ARTICLE 6
CONDITIONS TO CLOSING; TERMINATION
6.1 Conditions Precedent to Obligations of Purchaser. The obligations of
Purchaser to proceed with the Closing under this Agreement are subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by Purchaser in Purchaser's sole
discretion):
(a) Bringdown of Representations and Warranties. The
representations and warranties of the Shareholders contained in this Agreement
shall be true and correct in all material respects on and as of the time of
Closing, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such time, and
Purchaser shall have received a certificate to such effect as to the
representations and warranties contained in Article 3 of this Agreement signed
by an officer of Executive and the Shareholder Representative in form reasonably
acceptable to Purchaser.
(b) Performance and Compliance. The Shareholders and Executive
shall have performed, in all material respects, all of the covenants and
complied, with all of the provisions required by this Agreement to be performed
or complied with by them on or before the Closing,
34
and Purchaser shall have received a certificate to such effect signed by an
officer of Executive and the Shareholder Representative in form reasonably
acceptable to Purchaser.
(c) Opinion of Counsel. Purchaser shall have received from counsel
for the Shareholders and Executive an opinion dated the date of the Closing
substantially in the form set forth in Exhibit D.
(d) Satisfactory Instruments. All instruments and documents
reasonably required on the part of the Shareholders or Executive to effectuate
and consummate the transactions contemplated hereby shall be delivered to
Purchaser and shall be in form and substance reasonably satisfactory to
Purchaser and its counsel. Purchaser shall have received the original
certificates representing all of the Shares and the Canterbury Warrant, duly
endorsed in blank or with duly executed stock powers attached, and certificates
of good standing of Executive and each of its Subsidiaries, issued not earlier
than ten (10) days prior to the Closing Date, by the appropriate Governmental
Entity for the jurisdiction of its incorporation or formation.
(e) Required Consents. All required consents and approvals of
third parties, including, without limitation, all governmental departments,
agencies, authorities and commissions to the transactions contemplated hereby
shall have been obtained and no such consent or approval shall have been
conditioned upon the modification in any material respect, cancellation or
termination of any material lease, commitment, agreement, easement, right,
license, permit or authorization of Executive or any of its Subsidiaries or
shall impose on Purchaser, Executive or any of its Subsidiaries any material
condition, provision or requirement not presently imposed upon any of them or
any condition that would be materially more restrictive after the Closing than
the conditions presently imposed on Executive or any of its Subsidiaries, as the
case may be.
(f) HSR. All waiting periods applicable under the HSR Act shall
have expired and no action shall have been taken or threatened by the Federal
Trade Commission or the Department of Justice seeking to prohibit the
transactions contemplated hereby.
(g) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby or which would limit or adversely affect Purchaser's ownership or control
of Executive, any or its Subsidiaries or the Business of Executive or any of its
Subsidiaries, and there shall not have been threatened, nor shall there be
pending, any action or proceeding by or before any court or governmental agency
or other regulatory or administrative agency or commission: (i) challenging any
of the transactions contemplated by this Agreement or seeking monetary relief by
reason of the consummation of such transactions; (ii) by any present or former
owner of any capital stock or equity interest in Executive of any of its
Subsidiaries (whether through a derivative action or otherwise) against
Executive or any of its Subsidiaries or any officer, director or shareholder of
Executive or any of its Subsidiaries in his or her capacity as such; or (iii)
which could reasonably be expected to have a material adverse effect on the
business or condition (financial or otherwise) of Executive or any of its
Subsidiaries.
35
(h) No Material Adverse Change. No material adverse change in its
business, operations, properties, assets, income, cash flow, liabilities,
working capital or condition (financial or otherwise) of Executive and its
Subsidiaries, as a whole, shall have occurred since December 31, 2003.
(i) Stock Options. As of the Closing, all of the Options and
Warrants (other than the Canterbury Warrant) shall have been cancelled pursuant
to Cancellation Agreements for the consideration specified in the Cancellation
Agreements. Simultaneously with the Closing, the holders of such Options and
Warrants shall have paid to Executive the amount of all required withholding
Taxes due as a result of the cancellation of such Options and Warrants.
(j) Convertible Notes. On or before ten (10) days after date of
this Agreement, either (i) Executive and the holder of that certain Subordinated
Convertible Note dated November 7, 2000 in the original principal amount of
$100,000 payable to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and that certain Subordinated Convertible
Note dated November 7, 2000 in the original principal amount of $250,000 payable
to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively, the "CONVERTIBLE NOTES") have entered into
irrevocable agreements for the payment in full of the Convertible Notes prior to
the Effective Time or (ii) the holders of the Convertible Notes have converted
the Convertible Notes in full and executed an agreement by which the holder has
become a party to this Agreement as a Shareholder.
(k) Affiliate Loans. All loans by Executive or any of its
Subsidiaries to any Affiliate, if any, shall have been repaid in full, and there
shall be no outstanding debts or obligations due from any Affiliate of
Executive, Shareholder or holder of Options or Warrants to Executive or any of
its Subsidiaries.
(l) Releases. Each of the Shareholders shall have executed and
delivered to Purchaser a release in substantially the form of Exhibit E to this
Agreement.
(m) Estoppel Letters. Purchaser shall have received duly executed
estoppel letters from the third parties to the FBO Leases addressed to
Purchaser, dated not earlier than thirty (30) days prior to the Closing Date,
stating the following: (i) the copy of the contract with such third party
attached to the estoppel letter is a true, correct and complete copy of such FBO
Lease and represents the entire agreement between the third party and Executive
or its Subsidiary, as the case may be, (ii) to the knowledge of such third party
neither the third party nor Executive or its Subsidiary, as the case may be, is
in breach or default under such FBO Lease, and, to the knowledge of such third
party, no event has occurred which, with notice or the passage of time, or both,
would constitute a breach or default, or permit termination or modification of
such FBO Lease, (iii) the third party has not repudiated any provision of such
FBO Lease, (iv) to the third party's knowledge, there are no disputes or
forbearance programs in effect as to such FBO Lease, (v) if listed in Schedule
6.1(m) or if otherwise required, the consent of the third party to the
transaction contemplated by this Agreement, including any subsequent assignment
of the capital stock of Executive to any Affiliate of Purchaser, and (vi) the
third party's current notice address.
(n) Resignations. Purchaser shall have received the written
resignations, effective as of the Closing Date, of such of the directors and
officers of Executive and its
36
Subsidiaries as are designated by Purchaser to resign, which resignations shall
include releases of liability for the benefit of Executive, its Subsidiaries,
and their respective successors and assigns.
(o) Tax Certificates. Purchaser shall have received: (i) a
properly executed Foreign Investment and Real Property Tax Act of 1980
Notification Letter, which states that Shares do not constitute "United States
real property interests" under Section 897(c) of the Code, for purposes of
satisfying Purchaser's obligations under Treasury Regulation Section
1.1445-2(c)(3) and a form of notice to the IRS in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2), along with written
authorization for Purchaser to deliver such notice to the IRS on behalf of
Executive; and (ii) all clearance certificates or similar types of documents
which may be required by any Taxing Authority in order to relieve the Purchaser
of any obligation to withhold any portion of the Purchase Price or any
transferee liability.
(p) Additional Cancellation Agreements. On or before ten (10) days
after the date of this Agreement, the Shareholders shall have delivered to the
Purchaser Cancellation Agreements in the form of Exhibit C signed by each holder
of a stock option whose name was not marked with an asterisk in Schedule 3.5.
6.2 Conditions Precedent to the Obligations of the Shareholders. The
obligations of the Shareholders to proceed with the Closing hereunder are
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in whole or in part by the Shareholder
Representative in its sole discretion):
(a) Bringdown of Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the time of Closing, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to such time and Purchaser shall have
delivered to the Shareholders a certificate to such effect.
(b) Performance and Compliance. Purchaser shall have performed all
of the covenants and complied, in all material respects, with all the provisions
required by this Agreement to be performed or complied with by it on or before
the Closing, and Purchaser shall have delivered to the Shareholders a
certificate to such effect.
(c) Opinion of Counsel. The Shareholders shall have received from
counsel for Purchaser an opinion dated the date of Closing substantially in the
form set forth in Exhibit F.
(d) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any court or governmental agency or other
regulatory or administrative agency or commission challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by reason
of the consummation of such transactions.
(e) Satisfactory Instruments. All instruments and documents
required on the part of Purchaser to effectuate and consummate the transactions
contemplated hereby shall be delivered to the Shareholders.
37
(f) HSR. All waiting periods applicable under the HSR Act shall
have expired and no action shall have been taken or threatened by the Federal
Trade Commission or the Department of Justice seeking to prohibit the
transactions contemplated hereby.
6.3 Termination.
(a) When Agreement May Be Terminated. This Agreement may be
terminated at any time prior to Closing:
(i) By mutual consent of Purchaser and the Shareholder
Representative;
(ii) By Purchaser if there has been a material
misrepresentation by the Shareholders or a material
breach by the Shareholders of any of their warranties or
covenants, and such breach shall not have been cured
within 10 days after notice thereof has been delivered
by Purchaser to the Shareholder Representative (or in
any event prior to the date of Closing), or if any of
the conditions specified in Section 6.1 hereof shall not
have been fulfilled by the time required and shall not
have been waived by Purchaser;
(iii) By the Shareholder Representative, if there has been a
material misrepresentation by Purchaser, or a material
breach by Purchaser of any of its warranties or
covenants, and such breach shall not have been cured
within 10 days after notice thereof has been delivered
by the Shareholder Representative to Purchaser (or in
any event prior to the date of Closing), or if any of
the conditions specified in Section 6.2 hereof shall not
have been fulfilled by the time required and shall not
have been waived by the Shareholder Representative;
(iv) By Purchaser or the Shareholder Representative if
Closing shall not have occurred prior to August 15,
2004; provided, however, that Purchaser or the
Shareholder Representative may terminate this Agreement
pursuant to this subparagraph (iv) only if Closing shall
not have occurred by such date for a reason other than a
failure by such party to satisfy the conditions to
Closing of the other party set forth in Sections 6.1 or
6.2 hereof, as applicable that are within the control of
such party.
(b) Effect of Termination. In the event of termination of this
Agreement by either the Shareholder Representative or Purchaser, as provided
above, this Agreement shall forthwith terminate; provided, however, that the
obligations of the parties set forth in Sections 7.1 and 8.5 hereof shall
survive such termination; and, provided further, that no such termination will
relieve Purchaser, Executive or the Shareholders from liability for any breach
of any representation or warranty or the failure to perform any covenant or
agreement set forth in this Agreement prior to such termination, and, in the
event of such breach or failure to perform, the
38
parties hereto shall be entitled to exercise any and all remedies available
under law or equity in accordance with this Agreement, subject to the limitation
that, in the event such breach or failure is not the result of a knowingly or
intentional breach or failure by Executive or the Shareholders the maximum
amount of damages that Purchaser may recover as a result of any such breach by
the Shareholders or Executive shall be a total of not more than $2,000,000 and
the Purchaser shall only have recourse against Executive with respect to any
such Damages.
ARTICLE 7
CERTAIN ADDITIONAL COVENANTS
7.1 Costs, Expenses. Except as may be specified elsewhere in this
Agreement, Purchaser shall pay all costs and expenses, including legal fees and
the fees of any broker, relating to or resulting from Purchaser's negotiation,
performance of and compliance with this Agreement by Purchaser. The Shareholders
shall pay all costs and expenses, including legal fees and the fees of any
broker relating to or resulting from the negotiations, performance of, and
compliance with this Agreement by Executive and the Shareholders but only to the
extent that such cost and expense either has not been paid by Executive prior to
the Effective Time or is not included in the calculation of Net Working Capital
pursuant to Section 1.7 of this Agreement. For the purposes of this Section 7.1,
the consulting fee listed in Schedule 3.18(e) shall constitute an expense of the
Shareholders relating to this Agreement.
7.2 Public Announcement. No party hereto shall make or issue, or cause
to be made or issued, any public announcement or written statement concerning
this Agreement or the transactions contemplated hereby without the prior written
consent of the other party, except to the extent required by law or in
accordance with the rules, regulations and orders of any Governmental Entity.
7.3 Mutual Covenants. The parties mutually covenant from the date of
this Agreement to the Closing Date:
(a) to cooperate with each other in determining whether filings
are required to be made or consents required to be obtained in any jurisdiction
in connection with the consummation of the transactions contemplated by this
Agreement and in making or causing to be made any such filings promptly and in
seeking to obtain timely any such consents;
(b) to use all reasonable efforts in good faith to obtain promptly
the satisfaction of the conditions to the Closing of the transactions
contemplated herein, including, without limitation, the obtaining of all
required consents and approvals;
(c) to furnish to the other and to the other's counsel all such
information as may be reasonably required in order to effectuate the foregoing
actions; and
(d) to advise the other party promptly if such party determines
that any condition precedent to its obligations hereunder will not be satisfied
in a timely manner.
7.4 Tax Matters.
39
(a) Purchaser shall be responsible for preparing or causing to be
prepared Tax Returns for Executive and its Subsidiaries that are required to be
filed after the Effective Time.
(b) Notwithstanding any other provision of this Agreement, the
Shareholders shall not be considered to be in breach of any of their
representations or warranties under this Agreement if and to the extent any such
representation or warranty is rendered inaccurate as a result of, and the
Shareholders shall not be obligated to provide indemnification with respect to,
any Taxes or other Damages arising from, either:
(i) the filing of Tax Returns after the Effective Time
prepared in a manner that is not consistent with past
practice of Executive and its Subsidiaries (to the
extent applicable), except to the extent that treating a
specific item in a manner consistent with past practice
would not have sufficient legal support to avoid the
imposition of penalties (assuming that such treatment
were not specifically disclosed or identified in such
Tax Return in a Treasury Form 8275 or similar disclosure
statement);
(ii) the filing, after the Closing, of an amended Tax Return
amending a Tax Return filed by or with respect to
Executive or any of its Subsidiaries prior to the
Effective Time without the consent of the Shareholder
Representative, such consent not to be unreasonably
withheld, or unless such filing is required by
applicable law, or is an appropriate correlative
adjustment to a final determination of a Taxing
Authority relating to another taxable period; or
(iii) any election under Section 338 of the Code (or any
comparable provision of state, local or foreign Tax law)
made with respect to the transactions contemplated by
this Agreement.
(c) In the event that the parties disagree as to (i) whether any
Tax Return has been prepared in a manner consistent with past practice, (ii)
whether preparation of any Tax Return in a manner consistent with past practice
would have insufficient legal support to avoid the imposition of penalties, or
(iii) whether applicable law requires the filing of an amended Tax Return, the
parties shall submit the matter to the Accounting Firm, which shall resolve the
dispute. The Accounting Firm shall, within forty-five (45) days after
submission, make a determination with respect to the dispute and report such
determination to the parties in writing. The determination of the Accounting
Firm shall be conclusive and binding on the parties. The fees and expenses of
the Accounting Firm shall be borne equally by Purchaser and the Shareholders.
7.5 Indemnification of Directors and Officers. Nothing contained herein
shall be deemed or construed to waive, discharge, release or limit in any
respect whatever indemnification rights (including rights to advancement of
expenses) any present or former director, officer or employee of Executive and
its Subsidiaries in office prior to the Effective Time have under the
Certificate of Incorporation and Bylaws of Executive and any such Subsidiary in
effect on the date hereof with respect to all acts or omissions by such persons
in
40
such respective capacity on or prior to the Effective Time; provided, however
that such indemnification rights shall not apply with respect to any liability
with respect to which any such person is obligated as a Shareholder to indemnify
Purchaser under Section 8.2 of this Agreement.
7.6 Shareholder Agreement. Each of the Shareholders and Executive hereby
consents to the transfer of the Shares by the other Shareholders pursuant to the
terms of this Agreement and hereby waives and releases any rights of first
refusal or comparable rights that such Shareholder or Executive may have with
respect to such transfer under that certain Shareholders Agreement, dated as of
March 14, 2000, as amended, by and between Executive and certain shareholders of
Executive.
7.7 Subsequent Transaction. In the event that, within twelve (12) months
of the Closing Date, the Purchaser enters into a binding agreement with an
unaffiliated third party that, as of the date of this Agreement, owns or
operates general aviation fixed base operations, at multiple locations in the
United States pursuant to which the Purchaser, directly or indirectly, will
sell, transfer or convey all the equity ownership interests in Executive or all
or substantially all of the assets of Executive to such unaffiliated third party
(a "SUBSEQUENT TRANSACTION"), then Purchaser shall pay to the Shareholders an
amount equal to fifty percent (50%) of the difference between the aggregate
consideration, including the assumption of any indebtedness for borrowed money,
paid to Purchaser for the Subsequent Transaction and the Purchase Price, net of
fees, costs and expenses (other than taxes), Purchaser incurs or otherwise pays
in connection with the transactions contemplated hereby and the Subsequent
Transaction. If such aggregate consideration for the Subsequent Transaction is
less than the Purchase Price, then no payment shall be due from the Purchaser to
the Shareholders. Such payment, if any, shall be made to the Disbursement Agent
upon the closing of the Subsequent Transaction. For purposes of this Agreement,
any third party that is managed by an entity that is owned or controlled,
directly or indirectly, by Macquarie Bank Limited shall be deemed affiliated
with Purchaser.
7.8 Updating of Disclosure Schedules. The Shareholders shall notify
Purchaser of any changes, additions, or events which cause any material change
in or addition to the Schedules promptly after the Shareholders become aware of
the same by delivery of appropriate updates to all such Schedules to Purchaser.
No notification of a change or addition to a Schedule made pursuant to this
Section 7.8 shall be deemed to cure any breach of any representation or warranty
resulting from such change or addition unless Purchaser specifically agrees
thereto in writing or consummates the Closing under this Agreement after receipt
of such written notification, nor shall any such notification be considered to
constitute or give rise to a waiver by Purchaser of any condition set forth in
this Agreement, unless Purchaser specifically agrees thereto in writing or
consummates the Closing under this Agreement after receipt of such written
notification.
7.9 Atlantic Indemnification Claim. In the event that the pending
indemnification claim by Executive under the indemnification insurance policy
obtained in connection with the acquisition of Atlantic Aviation Corporation is
not settled and paid prior to the Effective Time but is thereafter resolved and
a payment made to Executive as a result thereof, Purchaser shall cause Executive
to pay to the Disbursement Agent fifty percent (50%) of the amount of such
payment after deduction of all out-of-pocket expenses incurred by Executive
after the Effective Time in connection with resolving such claim.
41
7.10 Additional Covenant of Certain Shareholders. Each Shareholder that
is not a natural person covenants and agrees that, for a period of eighteen (18)
months from the Effective Time, such Shareholder shall not dissolve, liquidate
or otherwise distribute its assets without creating and maintaining a reserve
fund for satisfaction of the indemnity obligation of such Shareholder pursuant
to Section 8.2 of this Agreement in an amount equal to the maximum individual
liability of such Shareholder under Section 8.2(b)(iv) of this Agreement
(without consideration of any exception to such limitation); provided, however,
the Shareholder shall not be obligated to maintain such reserve fund, if the
Shareholder provides to Purchaser a guaranty in form satisfactory to Purchaser
of such obligation up to such dollar amount executed by a financially viable
person or entity reasonably satisfactory to Purchaser.
ARTICLE 8
SURVIVAL/INDEMNIFICATION
8.1 Nature and Survival of Representations and Agreements. The
representations, warranties, covenants and agreements of Purchaser, Shareholders
and Executive contained in this Agreement, and all statements contained in this
Agreement or any Exhibit or Schedule hereto or any certificate, financial
statement or report or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall be deemed to
constitute representations, warranties, covenants and agreements of the
respective party delivering the same. All such representations, warranties,
covenants and agreements, including the indemnification obligations for breaches
or failures with respect thereto, other than such representations, warranties,
covenants and agreements specifically identified in the following clause, shall
survive the Closing for a period of eighteen (18) months after the Effective
Time; provided, that, (A) the representations and warranties made in Section 2.2
(Title to Stock) and Section 3.5 (Capitalization), and Section 3.21 (Taxes), (B)
any claims based on fraud, willful misconduct or intentional misrepresentation
and (C) any matter set forth in Schedule 8.2(b)(ii) shall survive the Closing
for a period of (a) sixty (60) days after the expiration of the applicable
federal or state statute of limitations, whichever is longer, or (b) the fifth
(5th) anniversary of the Closing Date, whichever is later, and that the
representations and warranties made in Section 3.18 (Employees; Employee Benefit
Plans) and Section 3.19 (Labor Matters) shall survive for a period of three (3)
years after the Effective Time. Notwithstanding the foregoing, any matter as to
which an indemnification notice (including, without limitation, a notice
relating to a potential or contingent claim) shall have been asserted during the
applicable survival period shall continue in effect with respect to such claim
until such claim shall have been finally resolved or settled.
8.2 Indemnification by Shareholders.
(a) Extent of Indemnity. Subject to the provisions of Section
8.2(b) hereof, the Shareholders hereby agree, jointly and severally, except as
noted below, to indemnify and hold harmless Purchaser, Executive and its
Subsidiaries, and their officers, directors, shareholders, and employees (the
"PURCHASER INDEMNIFIED PARTIES") from and against: any and all Damages (as
defined below) of or to any Purchaser Indemnified Parties arising out of or
resulting from (i) any misrepresentation, breach of warranty or nonfulfillment
of any agreement on the part of the Shareholders or, at or before the Effective
Time, Executive, contained in this Agreement or in any statement or certificate
furnished or to be furnished to Purchaser pursuant hereto, and (ii) any of the
matters disclosed on Schedule 8.2(b)(ii). Provided, however,
42
notwithstanding the foregoing or any other provision of this Agreement to the
contrary, such indemnity and hold harmless obligations of the Shareholders in
favor of the Purchaser Indemnified Parties based on or arising out of a breach
of the representations and warranties of each Shareholder contained in Article 2
of this Agreement shall be several but not joint.
For purposes of this Agreement, "DAMAGES" shall mean any and all losses,
liabilities, claims, demands, damages (including any governmental penalty or
punitive damages), deficiencies, diminution in value, interest, costs and
expenses and any actions, judgments, costs and expenses (including attorneys'
fees and all other reasonable expenses incurred in investigating, preparing or
defending any litigation or proceeding commenced incident to the enforcement of
this Agreement). For purposes of calculating the amount of Damages incurred by a
party arising out of or resulting from, any breach of a representation,
warranty, covenant or agreement by the other party, the references to
materiality (or other correlative terms) shall be disregarded.
(b) Limitations.
(i) Notwithstanding anything else contained herein to the
contrary, the Shareholders' obligation to indemnify
Purchaser pursuant to Section 8.2(a) shall be
Purchaser's sole and exclusive remedy for breaches of
all matters (including breaches of representations and
warranties) relating to this Agreement and shall be
limited in amount as set forth below.
(ii) Subject to the exceptions in Section 8.2(b)(vii),
Purchaser shall not be entitled to indemnification for
any Damages pursuant to Section 8.2(a) hereof unless (x)
in the case of an individual claim, the Damages relating
to such claim exceed Twenty-Five Thousand Dollars
($25,000) (for these purposes, the parties acknowledge
and agree that any claim for Damages arising from a
single event or series of related circumstances or
transactions shall be deemed to be an individual claim)
and (y) the cumulative total of Damages for all claims
asserted pursuant to Section 8.2(a) exceeds One Million
Dollars ($1,000,000) in the aggregate; and in such case
the amount of Damages that may be recovered shall only
be the amount that such Damages exceed One Million
Dollars ($1,000,000); provided, however, that such
cumulative indemnification threshold shall not be
applicable to (A) breaches of the representations or
warranties set forth in Section 3.18 (Employees;
Employee Benefit Plans) and Section 3.21 (Taxes) and (B)
any of the matters listed in Schedule 8.2(b)(ii).
(iii) Subject to the exceptions in Section 8.2(b)(vii),
subject to the separate individual limitations
applicable to each Shareholder as set forth below, and
subject to the several and not joint nature of the
representations and warranties of each Shareholder
contained in Article 2 hereof, the aggregate amount of
Damages recoverable
43
from all Shareholders shall be Twenty Million Dollars
($20,000,000).
(iv) With respect to the amount of Damages that may be
recovered against a Shareholder with respect to each
indemnification claim, (1) the amount of each such claim
against a Shareholder shall be limited to the total
amount of such Damages of such claim multiplied by a
fraction equal to the amount of the Purchase Price less
the amount of the Fund Indebtedness that is distributed
to the Shareholder for the Shares and Option Equivalent
Stock owned by such Shareholder divided by the total
aggregate Purchase Price less the amount of the Fund
Indebtedness distributed to all Shareholders for the
Shares and Option Equivalent Stock and (2), subject to
the exceptions in Section 8.2(b)(vii), the total
aggregate liability of each Shareholder for all
indemnification claims shall be limited to Twenty
Million Dollars ($20,000,000) multiplied by the same
fraction (such percentage and the maximum
indemnification liability of each Shareholder shall be
set forth on the Closing Statement);.
(v) The amount payable by the Shareholders with respect to
any Damages for which they have an indemnification
obligation under this Section 8.2 shall be reduced by
the amount of any insurance proceeds received by
Purchaser Indemnified Parties. Purchaser, Executive and
each of its Subsidiaries shall fully pursue all
potential claims against applicable policies with
respect to Damages before recovering any portion of such
Damages from the Escrow Funds or the Shareholders;
(vi) Any Damages shall be calculated and determined net of
any tax benefit to the Purchaser or Executive resulting
from the indemnifiable event or matter; and
(vii) Notwithstanding the foregoing, the Shareholders shall be
liable for all Damages incurred by the Purchaser
Indemnified Parties arising from: (A) breaches of the
representations or warranties set forth in Section 2.2
(Title to Stock), but only on several and not joint
basis, Section 3.5 (Capitalization) and Section 3.21
(Taxes), and (B) any claims based on fraud, willful
misconduct or intentional misrepresentation without
regard to the cumulative indemnification threshold set
forth in clause (y) of Section 8.2(b)(ii), or the
aggregate limitation on indemnification set forth in
Section 8.2(b)(iii); provided, however, that, in any
such case, the total amount of Damages for which a
Shareholder shall be liable shall be the amount of the
Purchase Price distributed to the Shareholder for the
Shares and Option Equivalent Stock owned by such
Shareholder, and provided, further, however that the
provisions of
44
Subsection (1) of Section 8.2(b)(iv) shall still be
applicable in each such case.
8.3 Indemnification by Purchaser.
(a) Extent of Indemnity. Purchaser hereby agrees to indemnify and
hold harmless the Shareholders and their respective shareholders, partners,
directors, officers and employees from and against any and all damages of or to
the Shareholders arising out of or resulting from any misrepresentation, breach
of warranty or nonfulfillment of any agreement on the part of Purchaser
contained in this Agreement or in any statement or certificate furnished or to
be furnished to Executive pursuant hereto or in connection with the transactions
contemplated hereby.
(b) Limitations. Notwithstanding any provisions of this Section
8.3 to the contrary, the aggregate amount of Damages recoverable by the
Shareholders under this Section 8.3 shall be Twenty Million Dollars
($20,000,000); provided, however, that the Purchaser shall be liable for all
Damages incurred by the Shareholders arising from any claims based on fraud,
willful misconduct or intentional misrepresentation of the Purchaser without
regard to such indemnification Damages limitation.
8.4 Indemnity Procedures.
(a) Third Party Claims. In case any claim, demand or action shall
be brought by any third party including, without limitation, any governmental
authority, against a party entitled to indemnity under Section 8.2 or 8.3 above,
such party shall promptly notify the other party or parties, as the case may be,
from whom indemnity is or may be sought in writing and the indemnifying party or
parties shall assume the defense thereof, including the employment of counsel.
In addition, in case a party hereto shall become aware of any facts which could
reasonably be expected to result in any such claim, demand or action, such party
shall promptly notify the other party or parties who would be obligated to
provide indemnity hereunder with respect to such claim, demand or action, and
such other party or parties shall have the right to take such action as it or
they may deem appropriate to resolve such matter. The indemnifying party shall
have fifteen (15) days from the receipt of notice of a third party claim for
which an indemnified party is seeking indemnification under Section 8.2 or 8.3
above to notify the indemnified party (i) whether or not the indemnifying party
disputes liability to the indemnified party hereunder with respect to Damages
attributable to such third party claim and (ii) whether or not the indemnifying
party desires, at its sole cost and expense, to defend against such third party
claim. In the event that the indemnifying party timely notifies the indemnified
party that the indemnifying party does not dispute its obligation to indemnify
hereunder and desires to defend the indemnified party against such third party
claim and except as hereinafter provided, the indemnifying party shall have the
right to defend by appropriate proceedings, which proceedings shall be promptly
settled or prosecuted by the indemnifying party to a final conclusion; provided
that, unless the indemnified party otherwise agrees in writing, the indemnifying
party may not settle any matter (in whole or in part) unless such settlement
includes a complete and unconditional release of the indemnified party with
respect to claims raised in such proceeding. The indemnified party or parties
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be
45
at the expense of such indemnified party or parties, unless the employment of
such counsel has been specifically authorized by the indemnifying party or
parties. If requested by the indemnifying party, the indemnified party shall
cooperate with the indemnifying party and its counsel and use its best efforts
in contesting any such claim or, if appropriate, in making any counter-claim or
cross-complaint against the party asserting the claim, provided that the
indemnifying party will reimburse the indemnified party for reasonable expenses
incurred in so cooperating upon presentation of receipts or other evidence of
such expense. The indemnifying party and its representatives shall have full and
complete access during reasonable hours to all books, records and files of the
indemnified party expressly related to the defense of any claim undertaken by
the indemnifying party pursuant to this Section 8.4(a); provided, that, the
indemnifying party shall safeguard and maintain the confidentiality of all such
books, records and files. Notwithstanding the foregoing, if at any time, in the
reasonable opinion of the indemnified party, notice of which shall be given in
writing to the indemnifying party, any such third party claim seeks relief which
could have a material adverse effect on any indemnified party, the indemnified
party shall have the right to control or assume (as the case may be) the defense
of any such claim and the amount of any judgment or settlement and the
reasonable costs and expenses of defense shall be included as part of the
indemnification obligations of the indemnifying party hereunder. If the
indemnified party should elect to exercise such right, the indemnifying party
shall have the right to participate in, but not control, the defense of such
claim at the sole cost and expense of the indemnifying party. If the
indemnifying party elects not to defend the indemnified party against such third
party claim, whether by failure of the indemnifying party to give the
indemnified party timely notice as provided above or otherwise, then the
indemnified party, without waiving any rights against the indemnifying party,
may settle or defend against any such claim in the indemnified party's sole
discretion and the indemnified party shall be entitled to recover from the
indemnifying party the amount of any settlement or judgment and, on an ongoing
basis, all costs and expenses of the indemnified party with respect thereto,
including interest from the date such costs and expenses were incurred, subject
to the provisions of Section 8.2 or 8.3, as the case may be.
(b) Other Claims. With respect to any other claim as to which a
party shall seek indemnity from the other party, such party shall promptly
notify the other party from whom indemnity is or may be sought in writing of the
claim. The notice of claim (i) shall state in reasonable detail the nature of
the alleged liability, (ii) shall state the amount of the loss that the party
claims it is entitled to be indemnified including, if appropriate, the estimate
of the potential loss, and (iii) shall further provide a particular statement
explaining the basis of the claim and of the amount or estimate of the loss. The
indemnifying party shall have the right to take such action as it may deem
appropriate to resolve such matter; provided, however, that the indemnified
party shall have the right to participate in such matter. In the event that the
parties are ultimately unable to resolve in good faith the claim or the amount
of the loss, then the parties will arbitrate the claim.
(c) The indemnified party's failure to give reasonably prompt
notice to the indemnifying party of any actual, threatened or possible claim or
demand which may give rise to a right of indemnification hereunder, shall not
relieve the indemnifying party of any liability which it may have to the
indemnified party unless, and solely to the extent that, the failure to give
such notice materially and adversely prejudiced the indemnifying party.
46
8.5 Exclusive Remedy. The indemnification obligations of the
Shareholders and Purchaser contained in this Article 8 shall, if the Closing
occurs, be the sole and exclusive remedy of the parties hereto, their
Affiliates, successors and assigns with respect to any and all claims for
Damages sustained or incurred arising out of or relating to this Agreement or
the transactions contemplated hereby.
8.6 Adjustments to Purchase Price. Amounts payable in respect of the
indemnification obligations under Sections 8.2 and 8.3 hereof shall be treated
by the Shareholders and Purchaser as adjustments to the Purchase Price to the
extent such amounts may be properly so treated for Tax Purposes.
ARTICLE 9
MISCELLANEOUS
9.1 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto, each of which is hereby incorporated herein, set forth all of the
promises, covenants, agreements, conditions, undertakings, representations and
warranties between the parties hereto with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written.
9.2 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered, telefaxed (with confirmation of transmission) or, if
mailed, when mailed by United States first-class, certified or registered mail,
postage prepaid, or by any national overnight delivery service, to the other
party at the following addresses (or at such other address as shall be given in
writing by any party to the other):
(a) if to Purchaser, to:
Macquarie Investment Holdings, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ Bleach, President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
47
(b) If to Executive to:
Executive Air Support, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇▇▇▇▇▇▇ & Price, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Shareholder Representative to:
ABS Capital Partners, III, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇▇▇▇▇ & Price, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇)-▇▇▇-▇▇▇▇
9.3 Successors and Assigns. Purchaser may assign this Agreement in whole
or in part to any of its Subsidiaries, to any Affiliate of Purchaser or
Macquarie Bank Limited or to any person or entity which becomes a successor in
interest (by purchase of assets or stock, or by merger or otherwise) to
Purchaser, although no such assignment shall relieve Purchaser of its
obligations hereunder. Subject to the foregoing, this Agreement, and all rights
and powers granted hereby, will bind and inure to the benefit of the parties
hereto and their respective successors and assigns.
9.4 Arbitration. All disputes under this Agreement may at the election
of the Indemnified Party, be settled by arbitration in Wilmington, Delaware,
pursuant to the rules of the American Arbitration Association (the
"ASSOCIATION") before a panel of three (3) arbitrators. Arbitration may be
commenced at any time by a party hereto giving written notice to all other
parties hereto that such dispute has been referred to arbitration. The party (or
parties) initiating
48
the arbitration shall be entitled to select one arbitrator, the other party (or
parties) shall be entitled to select one arbitrator, and the two arbitrators so
selected shall select the third arbitrator; provided, that, all three of the
arbitrators shall be selected from a list of arbitrators with expertise in
commercial disputes and/or contract interpretation maintained by the
Association. Any award rendered by the arbitrators shall be conclusive and
binding upon the parties hereto; provided, however, that any such award shall be
accompanied by a written opinion of the arbitrators giving the reasons for the
award. This provision for arbitration shall be specifically enforceable by the
parties and the decision of the arbitrator in accordance herewith shall be final
and binding and there shall be no right of appeal therefrom. Each party shall
pay its own expense of arbitration and the expenses of the arbitrators shall be
equally shared; provided, however, that if in the opinion of the arbitrators any
claim made was unreasonable, the arbitrators may assess, as part of their award,
all or any part of the arbitration expenses of the other party (including
reasonable attorneys' fees) and of the arbitrators against the party raising
such unreasonable claim, defense or objection. To the extent that arbitration
may not be legally permitted hereunder or the parties to any dispute hereunder
may not at the time of such dispute mutually agree to submit such dispute to
arbitration any party may commence a civil action in the federal district courts
in Wilmington, Delaware, and the parties agree to submit to the personal
jurisdiction of such court. Each party hereto irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any proceeding brought in the federal district courts in
Wilmington, Delaware, any claim that any proceeding brought in such a court has
been brought in an inconvenient forum, and any right to which it may be entitled
on account of its place of residence or domicile.
9.5 Headings; Interpretation. The headings preceding the text of the
sections and subsections hereof are inserted solely for convenience of reference
and shall not constitute a part of this Agreement, nor shall they affect its
meaning, construction or effect. The parties agree that any rule of law or any
legal decision that would require interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is
expressly waived.
9.6 Knowledge. For purposes of this Agreement, "KNOWLEDGE OF THE
SHAREHOLDERS" "SHAREHOLDERS' KNOWLEDGE" or words of similar import, shall mean
the actual knowledge of the individuals listed in Schedule 9.6 and the knowledge
that such individuals should have acquired in performing their respective duties
as officers and/or employees of Executive and its Subsidiaries, as the case
maybe.
9.7 Further Assurances. Each party shall cooperate and take such action
as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
9.8 Amendment and Waiver. The parties may by mutual agreement amend this
Agreement in any respect, and any party, as to such party, may (a) extend the
time for the performance of any of the obligations of any other party, (b) waive
any inaccuracies in representations by any other party, (c) waive compliance by
any other party with any of the agreements contained herein and performance of
any obligations by such other party, and (d) waive the fulfillment of any
condition that is precedent to the performance by such party of any
49
of its obligations under this Agreement. To be effective, any such amendment or
waiver, must be in writing and be signed by the party against whom enforcement
of the same is sought.
9.9 No Other Beneficiaries. This Agreement is being made and entered
into solely for the benefit of Purchaser and the Shareholders, and neither
Purchaser nor the Shareholders intend hereby to create any rights in favor of
any other person as a third party beneficiary of this Agreement or otherwise.
9.10 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware without regard to its principles of conflict of laws.
9.11 Schedules. References to a Schedule shall include any disclosure
expressly set forth on the face of any other Schedule which a reasonable person
would conclude is, by its terms, applicable to another Schedule, even if not
specifically cross-referenced to such other Schedule; provided, however, that
the representations and warranties of a party set forth in this Agreement shall
not be affected or deemed modified, waived or limited in any respect by the
information contained in any agreement or document listed or referenced in a
Schedule unless the reference on the face of the Schedule expressly indicates
how the agreement or document modifies or limits the scope of a representation
or warranty.
9.12 Additional Matters Regarding Canterbury Warrant. Canterbury hereby
discloses to Purchaser that it has assigned to Argosy Investment Partners, L.P.
("ARGOSY"), a Shareholder, a portion of the Canterbury Warrant representing the
right to acquire 31,553 shares of Common Stock of Executive and retained the
right to acquire the remaining 1,077,801 shares of Common Stock of Executive
subject to the Canterbury Warrant. Canterbury and Argosy have not as of the date
hereof surrendered the original certificate representing the Canterbury Warrant
and requested Executive to issue replacement warrant certificates to effectuate
such assignment. Argosy hereby agrees that Canterbury is authorized to bind its
beneficial interest in the Canterbury Warrant to be sold to the Purchaser as
provided in this Agreement and such assignment of Canterbury contained in this
Agreement shall be fully binding upon and enforceable against Argosy to the
extent of the beneficial interest of Argosy in the Canterbury Warrant. Argosy
hereby makes and hereby agrees that it shall be deemed and considered to have
made for the purposes of Article 2 of this Agreement, the same representations
and warranties as are contained in Section 2.2 of this Agreement with respect to
its beneficial interest in the right to acquire 31,553 shares of Common Stock of
Executive under the Canterbury Warrant that has been assigned to it by
Canterbury.
9.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument. A facsimile of this Agreement may
be executed by one or more parties hereto and an executed copy of this Agreement
may be delivered by one or more parties hereto by facsimile pursuant to which
the signature of or on behalf of such party can be seen, and such execution and
delivery shall be considered valid, binding and effective for all purposes.
[SIGNATURE PAGE FOLLOWS]
50
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
PURCHASER EXECUTIVE
MACQUARIE INVESTMENT HOLDINGS, INC. EXECUTIVE AIR SUPPORT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ Bleach By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------- ----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Its:
----------------------------------------
▇▇▇▇▇▇ Bleach, Executive Director
GUARANTY
Macquarie Bank Limited ("GUARANTOR"), a __________, guarantees the full
and complete performance of all of the payment obligations of the Purchaser to
the Shareholders under and pursuant to the foregoing Stock Purchase Agreement,
dated as of April ____, 2004 (the "PURCHASE AGREEMENT") of whatsoever nature
(collectively, the "GUARANTEED OBLIGATIONS"); provided, that, Guarantor's
liability hereunder shall not exceed, and in no event shall Guarantor be
obligated to expend more than, the Purchase Price pursuant to this Guaranty and
this Guaranty shall terminate on August 31, 2004 or immediately following the
Closing, whichever occurs first, except as to any demand for performance of this
Guaranty which has been made prior to such date as to which this Guaranty shall
remain applicable. In addition, upon payment of the Purchase Price by Purchaser,
this Guaranty shall terminate. The Shareholders may waive, exchange,
subordinate, release, surrender or in any other manner deal with Purchaser
without affecting Guarantor's obligations hereunder. Guarantor waives all
notices, including notice of (i) Shareholders' acceptance of this Guaranty,
Shareholders' intention to act or any Shareholders' action hereunder; (ii) the
existence or creation of or any alteration in any of the Guaranteed Obligations;
(iii) any default by Purchaser; and (iv) the obtaining, enforcing or releasing
of any other guaranty or of any pledge, assignment or security for any of the
Guaranteed Obligations and all other notices related to the Guaranteed
Obligations. Shareholders may proceed against Guarantor without first proceeding
against Purchaser for performance of the Guaranteed Obligations and is not
required to join Purchaser in any such proceeding against Guarantor; provided,
however, as a condition precedent to the commencement of any action against
Guarantor, Shareholders shall first comply with all procedures specified in the
Purchase Agreement with respect to actions taken by the Shareholders against
Purchaser.
EXECUTED as of the 28th day of April, 2004.
Macquarie Bank Limited
/s/ ▇▇▇▇▇▇ Bleach
By:
----------------------------------------
▇▇▇▇▇▇ BLEACH
Name:
--------------------------------------
EXECUTIVE DIRECTOR
Title:
-------------------------------------
[SIGNATURE PAGES OF SHAREHOLDERS FOLLOW]
51
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Shareholder
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Shareholder
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
Argosy Investment Partners, L.P.
By: Argosy Associates, L.P., its general partner
By: Argosy Associates, Inc., its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President,
CD Ventures, LLC, Its General Partner
---------------------------------------------
Shareholder
Name: CD Ventures, V, L.P.
C-6
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
Bermuda Trust (Limited) as Trustee for Trident Private
Equity Fund, L.P.
By: /s/ Illegible
-------------------------------------------------
Shareholder
Name:
-----------------------------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Shareholder
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as
Name:
---------------------------------------
Attorney-in-Fact for
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
C-8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS That I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ have made,
constituted and appointed, and by these presents do make, constitute and
appoint, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (hereinafter "my Attorney"), my true and lawful
attorney for me and in my name and on my behalf generally to do and perform all
matters and things, transact all business, make, execute and acknowledge the
Agreement and Plan of Merger by and between EAS Acquisition, Inc. and Executive
Air Support, Inc. and all other documents and instruments which may be requisite
or proper regarding the sale of my stock in Executive Air Support, Inc., with
the same powers and to all intents and purposes with the same validity as I
could, if personally present, hereby ratifying and confirming whatsoever my
Attorney shall or may do by virtue hereof.
This Power of Attorney shall not be affected by my later disability
or incapacity at law and shall expire on April 30, 2004.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th
day of April, 2004.
WITNESS:
/s/ Illegible /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------- -------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
COMMONWEALTH OF PENNSYLVANIA :
: SS
COUNTY OF ▇▇▇▇▇▇▇ :
On this, the 16th day of April, 2004, before me, the undersigned
officer, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument and
acknowledged that he executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ ▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Notary Public
My Commission Expires:
Notarial Seal
▇▇▇ ▇. ▇▇▇▇▇, Notary Public
West Sadsbury Twp., ▇▇▇▇▇▇▇ County
My Commission Expires Mar. 18, 2006
-------------------------------------------
Member Pennsylvania Association of Notaries
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
CD Venture Partners LLC
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President,
CD Ventures LLC, Its General Partner
--------------------------------------------
Shareholder
Name: CDV Equity Associates, L.P.
C-9
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
ABS Capital Partners III, L.P.
--------------------------------------------------------
Shareholder
Name: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Managing Member of ABS Partners III, L.L.C.
General Partner of ABS Capital Partners, III, L.P.
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Merchants Capital Partners, LP
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Principal
--------------------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Shareholder
Name: ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Authorized Signatory Authorized Signatory
FOR AND ON BEHALF OF BANC OF BERMUDA.
(illegible) LIMITED AS CUSTODIAN FOR
(illegible) INTERNATIONAL GROWTH FUND.
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
Hare & Co.
Signature Guaranteed
Medallion Guaranteed
The Bank of New York
--------------------------------------------
Shareholder
Name: /s/ Illegible
---------------------------------------
(SG510) Executive Vice President
SECURITIES TRANSFER X0809012
AGENTS MEDALLION PROGRAM
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ Illegible
--------------------------------------------
Shareholder
Name: Illegible
---------------------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
PNC VENTURE CORP
BY ▇▇▇▇▇ V DEL PRESTO PARTNER
--------------------------------------------
Shareholder
Name: /s/ Illegible
---------------------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
CANTERBURY MEZZANINE CAPITAL II,
L.P., as Agent and as a Lender,
By: Canterbury Capital II, L.L.C., its general
partner,
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
▇▇▇▇▇ PARTNERS LP
--------------------------------------------
Shareholder
Name: /s/ Illegible
---------------------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, CD Ventures, LLC
----------------------------------------------------
Shareholder
Name: CD Venture Partners V, L.P. its General Partner
AP. 18
-----------------------------------------------
SIGNATURE PAGE OF SHAREHOLDER
IN WITNESS WHEREOF, the undersigned Shareholder has executed this Stock
Purchase Agreement as of the day and year first above written.
BancBoston Capital, Inc.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Shareholder
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Managing Director
Exhibit 10.12
EXECUTION COPY
CLOSING LETTER AGREEMENT
This Closing Letter Agreement is entered into as of July 29, 2004, by and
between North America Capital Holding Company, a Delaware corporation
("Purchaser"), Executive Air Support, Inc., a Delaware corporation
("Executive"), and ABS Capital Partners III, L.P., a Delaware limited
partnership, as the Shareholder Representative under that certain Stock Purchase
Agreement by and between Macquarie Investment Holdings, Inc., a Delaware
corporation, Executive and the stockholders of Executive, dated as of April 28,
2004, as assigned to Purchaser (the "Stock Purchase Agreement").
Now, therefore, in consideration of the mutual promises and agreements set
forth herein, the parties agree as follows:
1. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Stock Purchase Agreement.
2. Executive has paid the Port Authority of New York and New Jersey (the
"Port Authority") the sum of Five Hundred Thousand Dollars ($500,000.00) as the
payment (the "Consent Fee") required by the Port Authority to receive an
estoppel letter in the form provided to the Port Authority and previously
approved by Purchaser, which estoppel letter is a condition precedent to the
Purchaser's obligation to consummate the Closing pursuant to Section 6.1(m) of
the Stock Purchase Agreement. The full amount of such payment is reducing
Executive's cash and cash equivalents as of the Effective Time for purposes of
determining any adjustment to the Purchase Price under Section 1.8 of the Stock
Purchase Agreement. At the Closing, as reflected on the Closing Statement, the
Purchase Price paid by Purchaser is being increased by Two Hundred Fifty
Thousand Dollars ($250,000.00) to reflect the parties' agreement to split the
cost of the Consent Fee. In addition, the Shareholders shall indemnify the
Purchaser Indemnified Parties for one-half (1/2) of any payments(s) required by
the Department of Transportation of the State of New York to receive an estoppel
letter with respect to Executive's operations at Republic Airport, Farmingdale,
New York; provided, that, in no event shall the Shareholders be liable under the
foregoing clause for more than Two Hundred Fifty Thousand Dollars ($250,000.00);
and provided, further, that such indemnification obligation shall not be subject
to the limitations set forth in Section 8.2(b)(ii) of the Stock Purchase
Agreement.
3. The parties acknowledge that it is impractical to obtain pay-off
statements or the functional equivalents thereof from the holders of the Funded
Indebtedness set forth on Exhibit A hereto prior to the Closing as contemplated
by Section 1.3(c) of the Stock Purchase Agreement. Accordingly, the parties
agree that payment of such Funded Indebtedness by the Purchaser to such holders
at or prior to the Closing shall not be a condition precedent to the Closing,
but the Purchase Price shall be reduced by an amount equal to the outstanding
principal of, and accrued interest on, such Funded Indebtedness as of the
Closing Date.
4. In addition to the indemnification obligations set forth in Article 8
of the Stock Purchase Agreement and notwithstanding anything to the contrary set
forth in the Stock Purchase Agreement, the Shareholders shall, jointly and
severally, indemnify and hold harmless the
1
Purchaser Indemnified Parties from and against any and all Damages, except as
expressly limited herein, of or to any Purchaser Indemnified Parties arising out
of or resulting from:
(a) any and all benefits accrued or required to be accrued under the
General Aviation Corporation Retirement Plan (the "GAC 401(k) Plan") as of the
Closing Date, and all other Damages incurred in connection with, resulting from
or arising out of, directly or indirectly (whether or not involving a third
party claim), the GAC 401(k) Plan with respect to acts or omissions prior to the
Effective Time including, but not limited to:
(i) the failure of General Aviation, LLC ("GAC") to adopt timely
either a "GUST" amendment within the meaning of Section 12.03 of Revenue
Procedure 2003-44 or an "EGTRRA good faith amendment" within the meaning of
Section 4.10 of IRS Revenue Procedure 2003-44 for the GAC 401(k) Plan;
(ii) the failure of GAC to file timely with the IRS a Form 5500 with
respect to the GAC 401(k) Plan for the 2002 calendar year; or
(iii) the failure of GAC to have performed an independent financial
audit of the GAC 401(k) Plan for the 2002 calendar year and included such audit
with the Form 5500 with respect to the GAC 401(k) Plan for the 2002 calendar
year, as filed with the IRS; and
(b) the failure of Executive or GAC to have satisfied in full any amounts
specified in the estoppel letter attached hereto as Exhibit B which are finally
determined to be due and owing to the City of New Orleans arising out of or
resulting from operations at the New Orleans International Airport prior to the
Closing;
(c) the termination or surrender of, and the failure of EAS or the
Subsidiaries to have maintained, the FCC licenses listed on Exhibit C hereto;
(d) any action or threatened action by the Town of Babylon regarding
construction of a hanger facility for Talon Air Services, LLC on premises leased
by Flightways of Long Island, Inc., at Republic Airport, Farmingdale, New York;
and
(e) Taxes incurred as a result of the mergers or dissolutions of the
Subsidiaries identified with an asterisk (*) on Schedule 3.1; provided, that,
the loss or diminution of any net operating losses (NOLs) of such Subsidiaries
shall not be deemed to be Damages for these purposes.
Purchaser covenants and agrees to use commercially reasonable efforts to
mitigate "Damages" under this paragraph 4, which efforts shall include causing
Executive to duly pursue all indemnification rights from the former owners of
GAC under the Member Interests Purchase Agreement dated December 17, 2003, as
amended, between Executive and such former owners. The indemnification
obligations set forth in this paragraph 4 shall survive the Closing for a
period of (i) sixty (60) days after the expiration of the applicable federal or
state statute of limitations, whichever is longer, or (ii) five (5) years after
the Closing, whichever is later. The indemnification obligations set forth in
this paragraph 4 shall be subject to the limitations set
2
forth in Section 8.2 of the Stock Purchase Agreement, other than the limitation
set forth in Section 8.2(b)(ii)(y) of the Stock Purchase Agreement which shall
not apply.
5. The parties hereby further amend the Stock Purchase Agreement as
follows:
(a) all references to "ABS Capital Partners, III, LLC" are replaced with
"ABS Capital Partners III, L.P.";
(b) the following paragraph is added as Section 1.9(e):
"Purchaser covenants and agrees to provide the Shareholder Representative
reasonable access to information of and concerning any Claim (provided such
access is not restricted or precluded by law, regulation or any agreement to
which Purchaser is bound, or would otherwise adversely affect Purchaser's
right to assert a legal privilege with respect thereto) and shall cause its
officers and employees to cooperate with the Shareholder Representative in
performing its duties and exercising its rights hereunder. The Shareholder
Representative shall treat all such information as confidential information
and not disclose any such information to anyone (except to the Shareholder
Representative's attorneys, accountants or other advisers, to the arbitrators
appointed to resolve disputes, and on a need-to-know basis to other
individuals who agree to keep such information confidential)."
(c) Section 3.5(a) is amended to change the number disclosed for
Executive's issued and outstanding shares of Common Stock from 1,843,689 to
1,895,684.
6. The parties acknowledge and agree that any post-Closing adjustments
to the Purchase Price based on Executive's and its Subsidiaries' Net Working
Capital and Cash and Cash Equivalents as of the Effective Time shall be
determined in a manner that is consistent with Exhibit D hereto and calculated
as of July 31, 2004; provided, however, such determination shall not take into
account any charges, dividends or distributions, outside the ordinary course of
business, effected by Executive after the Closing.
7. In the event of any conflict between any provision of this Closing
Letter Agreement and any provision of the Stock Purchase Agreement, such
provision of this Closing Letter Agreement shall prevail.
8. This Closing Letter Agreement may be executed by facsimile
transmission and in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same instrument.
This Closing Letter Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware, without giving effect to any
choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
3