EXHIBIT 2.1
STOCK PURCHASE AND SALE AGREEMENT
This Stock Purchase and Sale Agreement ("Agreement") is made and entered
into by and among the persons named on the signature page who are the owners of
the number of shares specified on Schedule A (the "Shareholders," some of whom
are designated on Schedule A and referred to herein as the "Principal
Shareholders") of Avtech Corporation ("Avtech") and ▇▇▇▇▇▇▇ Aircraft Holdings,
Inc. ("DAH"), based on the following facts:
Shareholders own not less than 90% of the outstanding stock of Avtech (the
"Stock"); and desire to sell the Stock to DAH;
DAH desires to purchase not less than 90% of the Stock from the Shareholders
on the terms and conditions of this Agreement.
Based on the foregoing facts and circumstances, the parties hereby agree as
follows (capitalized terms being used herein as defined where noted in Schedule
B):
1. STOCK TO BE PURCHASED AND SOLD; PURCHASE PRICE.
1.1 PURCHASE AND SALE OF STOCK. At the Closing, DAH shall purchase
from the Shareholders not less than 90% and up to 100% of the Stock for the
amount specified in Section 1.2. Schedule A reflects the percentage of the
aggregate payments to be made pursuant to Sections 1.2.1 and 1.2.2 to each
of the Shareholders.
1.2 PURCHASE PRICE OF THE STOCK.
1.2.1 On the Closing Date, DAH shall make a wire transfer in
same-day funds to the entity agreed upon by the parties as the paying
agent for the Shareholders (the "Paying Agent"), for the account of the
Shareholders and to such account as the Paying Agent specifies, in a sum
equal to the product of multiplying (a) the percentage representing the
pro rata number of shares being sold by the Shareholders to DAH on such
date by (b) $79 million, but subject to the adjustments set forth in
Section 1.2.3.
1.2.2 On the Closing Date, DAH shall make a wire transfer in
same-day funds to the entity agreed upon by the parties as the escrow
agent (the "Escrow Agent"), to be held by the Escrow Agent pursuant to
the terms of the Escrow Agreement executed among such Escrow Agent and
the parties thereto (the "Escrow Agreement"), in a sum equal to the
product of multiplying (a) the percentage representing the pro rata
number of shares being sold by the Shareholders to DAH on such date by
(b) $4 million.
1.2.3 In determining the amount pursuant to Section 1.2.1 and
subject to the pro rata adjustment provided for in Section 1.2.1 in the
event that DAH purchases less than 100% of the Stock, the purchase price
shall be (i) increased by the amount of cash held by Avtech in the
accounts listed on Schedule 2.2.12 (the "Cash") to the extent that such
amount exceeds $650,000 (the "Minimum Amount") or decreased if the amount
is less than the Minimum Amount by the difference between the Cash and
the Minimum Amount at Closing.
(i) to the extent there are any unpaid Shareholder Closing
Expenses on the Closing Date, such expenses shall be paid by the
Paying Agent; to the extent that there are Shareholder Closing
Expenses which have been advanced by Avtech, the aggregate amount of
such expenses shall be reimbursed to Avtech by the Paying Agent on
the Closing Date. The sum of the amounts described in this clause (i)
shall be deducted from the amount distributed by the Paying Agent to
the Shareholders.
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2. REPRESENTATIONS AND WARRANTIES.
2.1 BY DAH. Except as set forth on Schedule 2.1, the representations
and warranties of DAH, contained in this Agreement, including those
contained in this Section 2.1, are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date. DAH
hereby represents and warrants to the Shareholders the following:
2.1.1 ORGANIZATION. DAH is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own, lease and
operate its properties and conduct its business as now being conducted.
2.1.2 AUTHORIZATION. DAH has all requisite corporate power and
authority to enter into this Agreement, perform its obligations hereunder
and consummate the transactions contemplated hereby. All necessary
corporate action has been taken by DAH with respect to the execution and
delivery of this Agreement, the consummation of the transactions
contemplated by this Agreement, constitutes a valid and binding
obligation of DAH, enforceable against DAH, in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance and moratorium laws and other laws of general application
affecting the enforcement of creditors' rights generally.
2.1.3 BROKERS AND FINDERS. Except for Aerospace Equities, Inc.,
neither DAH nor any of its officers, directors or employees, has engaged
any broker or finder or incurred any liability for any brokerage fees,
commissions, finders' fees or similar fees or expenses and no broker or
finder has acted directly or indirectly for DAH in connection with this
Agreement or the transactions contemplated hereby.
2.1.4 COMPLETE DISCLOSURE. No representation or warranty made by
DAH in this Agreement, and no exhibit, schedule or certificate furnished
to the Shareholders by or on behalf of DAH pursuant to this Agreement or
in connection with the transactions contemplated hereby or thereby,
contains or will contain, any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the
statements contained herein and therein not misleading.
2.2 THE SHAREHOLDERS. Except as set forth on Schedule 2.2, the
representations and warranties of the Shareholders, contained in this
Agreement, including those contained in this Section 2.2, are correct and
complete as of the date of this Agreement and will be correct and complete
as of the Closing Date. The Shareholders severally, but not jointly,
represent and warrant to DAH the following:
2.2.1 CORPORATE ORGANIZATION. Avtech is a corporation duly
organized and validly existing under the laws of the State of Washington,
and has all requisite corporate power and authority to own, lease and
operate its properties and conduct its business as now being conducted.
Avtech is duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it or the
property it owns, leases or operates requires it to qualify to do
business as a foreign corporation. Except as set forth on Schedule
2.2.1(a), Avtech has not received any written notice or assertion within
the last three years from any governmental official of any jurisdiction
to the effect that Avtech is required to be qualified or otherwise
authorized to do business therein, in which Avtech has not qualified or
obtained such authorization. Attached as Schedule 2.2.1(b) are complete
and correct copies of Avtech's articles of incorporation and bylaws as in
effect on the date hereof, and Avtech is not in default in the
performance, observation or fulfillment of any provision of either of its
articles of incorporation or bylaws.
2.2.2 CAPITALIZATION AND SECURITY HOLDERS. The authorized capital
stock of Avtech consists solely of 1,500,000 shares of Common Stock, no
par value and options for 150,000 additional
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shares of Common Stock, all of which Avtech anticipates will be exercised
prior to the Closing Date (collectively, the "Avtech Common Shares");
Avtech has issued and outstanding 318,928.9 Avtech Common Shares,
constituting all of the issued and outstanding shares of capital stock of
any class of Avtech as of the date of this Agreement (not including any
Avtech Common Shares attributable to the options which, as of the date of
this Agreement, have not been exercised); all outstanding Avtech Common
Shares have been (or will be upon exercise of the relevant options)
validly issued and are fully paid and non-assessable and free of
preemptive rights; except as set forth on Schedule 2.2.2, there are no
outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, or other commitments or rights of any type relating to
the issuance, sale or transfer by Avtech of any securities of Avtech, nor
are there outstanding any securities which are convertible into or
exchangeable for any shares of capital stock of Avtech; and Avtech has no
obligation of any kind to issue any additional securities. Schedule A
accurately sets forth the names and addresses of, the number of Avtech
Common Shares held at the date of this Agreement of record and/or
beneficially by, and any Avtech Common Shares to be issued, sold or
otherwise transferred at or prior to the Closing Date to, each and every
shareholder of Avtech. All of such Avtech Common Shares are owned free
and clear of all liens, charges, claims, encumbrances, pledges, security
interests, equities and restrictions whatsoever.
2.2.3 AUTHORIZATION OF THE SHAREHOLDERS. Each of the Shareholders
has all requisite power, authority and legal capacity and is competent to
execute and deliver this Agreement, perform its obligations hereunder and
consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of each of the
Shareholders, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance and moratorium laws and other laws of general
application affecting the enforcement of creditors' rights generally.
2.2.4 FINANCIAL STATEMENTS. Attached hereto as Schedule 2.2.4 are
(i) the balance sheets of Avtech as at September 30, 1997, 1996, and 1995
and ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) the related statements of income for the years
ended September 30, 1997, 1996 and 1995 and the six months ended March
31, 1998, and (iii) the related statements of retained earnings and cash
flows for the years ended September 30, 1997, 1996 and 1995 and for the
six months ended March 31, 1998 (all of such documents referred to
collectively as the "Delivered Financial Statements"). The March 31, 1998
Delivered Financial Statements reflect all "year-end" adjustments
presently anticipated. The Delivered Financial Statements (i) are true,
correct and complete in all material respects, (ii) have been prepared
from and are in accordance with the books and records of Avtech, (iii)
have been prepared using an accrual basis method and FIFO inventory cost
flow assumptions, (iv) are in conformity with generally accepted
accounting principles applied on a consistent basis for such periods, and
(v) fairly present the financial position of Avtech as of the dates
stated and the results of operations and cash flows of Avtech for the
periods then ended in accordance with such practices. On the date of this
Agreement, Avtech does not have any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except
as referred to or reflected or provided for in the balance sheets in the
Delivered Financial Statements. Since March 31, 1998, there has been no
material adverse change in the financial condition, operations, business
or prospects taken as a whole of Avtech from that set forth in the March
31, 1998 Delivered Financial Statements. The Shareholders covenant and
agree to deliver to DAH at or prior to the Closing Date, the unqualified
opinion that the financial statements are prepared in accordance with
GAAP and the requirements of Regulation S-X promulgated by the Securities
and Exchange Commission ("Regulation S-X") of an independent accounting
firm reasonably satisfactory to DAH as respects each of the Delivered
Financial Statements (including the March 31, 1998 Delivered Financial
Statements). When such unqualified opinion is delivered, such financial
statements shall be referred to as the "Audited Financial Statements".
When delivered, the
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Audited Financial Statements shall not differ in any material respect
from the Delivered Financial Statements.
2.2.5 ABSENCE OF CERTAIN CHANGES IN EVENTS. Except as set forth on
Schedule 2.2.5, since March 31, 1998, there has not been:
(a) Any material adverse change in the business operations,
assets, properties or rights, prospects or condition (financial or
otherwise) of Avtech or, any occurrence, circumstance, or combination
thereof which reasonably could be expected to result in any such
material adverse change (a "Material Adverse Effect");
(b) Any material increase in amounts payable by Avtech to or for
the benefit of, or committed to be paid by Avtech: (A) to or for the
benefit of (x) any Key Employee or (y) in the aggregate, to persons
who are shareholders, directors, officers, partners, consultants,
agents and employees, in any capacity, of Avtech but who are not Key
Employees or (B) in any benefits granted under any bonus, stock
option, profit sharing, pension, retirement, deferred compensation,
insurance, or other direct or indirect benefit plan, payment or
arrangement made to, for the benefit of, or with (x) any Key Employee
or (y) in the aggregate, all other persons described in this Section
2.2.5(b);
(c) Any transaction entered into or carried out by Avtech other
than in the ordinary and usual course of business;
(d) Any borrowing or agreement to borrow funds; any incurring of
any assumption, guarantee or other obligation or liability,
contingent or otherwise, or any assumption or performance of any loan
or obligation of any other entity, except (i) current liabilities
incurred in the usual and ordinary course of business or (ii)
otherwise, those in an amount not exceeding in the aggregate $50,000
at any one time outstanding;
(e) Any material change made by Avtech in the methods of doing
business, or other than such changes required by GAAP, any change in
the accounting principles or practices of Avtech with respect to the
Delivered Financial Statements or the method of application of such
principles or practices;
(f) Any mortgage, pledge, lien, security interest, hypothecation,
charge or other encumbrance imposed or agreed to be imposed on or
with respect to any of the parcels of real property owned or used by
Avtech in the conduct of its business or in which Avtech otherwise
holds an interest (the "Real Property") or any material mortgage,
pledge, lien, security interest, hypothecation, charge or other
encumbrance imposed or agreed to be imposed on or with respect to any
of the tangible or intangible personal property of Avtech (the
"Personal Property") (the Real Property and the Personal Property are
collectively the "Property");
(g) Any sale, lease or other disposition of or any agreement to
sell, lease or otherwise dispose of any of the properties or assets
of Avtech, other than sales of finished goods in the usual and
ordinary course of business and at Avtech's scheduled prices or the
prices specified in Material Contracts copies of which have
previously been delivered to DAH;
(h) Any purchase of or any agreement to purchase capital assets
for an amount in excess of $50,000 for any one such purchase or
$100,000 for all such purchases made by Avtech or any lease or any
agreement to lease, as lessee, any capital assets with payments over
the term thereof to be made by Avtech exceeding an aggregate of
$50,000 for any one lease or $100,000 in the aggregate;
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(i) Any loan or advance made by Avtech to any individual, firm,
corporation or other entity except for advances not material in
amount made in the usual and ordinary course of business to
employees;
(j) Any modification, waiver, change, amendment, release,
rescission or termination of, or accord and satisfaction with respect
to, any material term, condition or provision of any material
contract, agreement, license or other instrument to which Avtech is a
party, other than any satisfaction by performance in accordance with
the terms thereof in the usual and ordinary course of business;
(k) Any delay or postponement (beyond normal practice) by Avtech
of the payment of accounts payable or other liabilities of Avtech;
(l) Any acceleration (ahead of normal practice) by Avtech in the
collection of accounts receivable; or
(m) Any other event or condition of any character which has had a
Material Adverse Effect or may reasonably be expected to result in a
Material Adverse Effect.
2.2.6 UNDISCLOSED LIABILITIES. Except as disclosed on Schedule
2.2.6, Avtech has no liability or obligation of any nature individually
in the amount of $50,000 or in the aggregate in the amount of $100,000
(whether liquidated, unliquidated, accrued, absolute, known or unknown,
contingent or otherwise and whether due or to become due) except:
(a) those set forth or reflected in the March 31, 1998 Balance
Sheet which have not been paid or discharged since the date thereof;
(b) those arising under agreements or other commitments expressly
identified in any Schedule hereto; and
(c) current liabilities incurred in or as a result of the conduct
of its business in the ordinary and usual course consistent with past
practice since March 31, 1998, which are completely and accurately
reflected on its books and records and which are not inconsistent
with the other representations, warranties and agreements of Avtech
and the Shareholders set forth in this Agreement.
2.2.7 TAXES. Except as set forth on Schedule 2.2.7, Avtech has
filed, when due, all federal, state, local and foreign tax returns and
tax reports. All amounts payable pursuant to such returns by Avtech
through the Closing Date have been paid, or will be timely paid and are
adequately provided for in the Delivered Financial Statements. All such
returns and reports are true and correct and, except as disclosed on
Schedule 2.2.7, none of them has been amended. Schedule 2.2.7 sets forth
the dates and results of any and all audits of any tax returns of Avtech
performed by federal, state, local or foreign taxing authorities; and no
waivers of any statutes of limitation have been made or requested in
connection therewith. No deficiency for any material amount of tax has
been asserted or assessed by any taxing authority against Avtech. All
estimated tax payments have been made except as reserved for in the
Balance Sheet included in the March 31, 1998 Delivered Financial
Statements, there will not be any amount owing by Avtech for taxes,
penalties or interest.
2.2.8 COMPLIANCE WITH LAW.
(a) Avtech is in compliance in all material respects with all
applicable laws, statutes, orders, rules, regulations, policies or
guidelines promulgated, or judgments, decisions or orders entered, by
any federal, state, local or foreign court or governmental authority
or instrumentality relating to Avtech or any of its businesses or
properties.
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(b) Avtech is in compliance in all material respects with all
federal, state and local laws, ordinances, rules and regulations
pertaining to environmental matters, including solid waste disposal,
toxic substances, hazardous substances, hazardous materials,
hazardous waste, toxic chemicals, pollutants, contaminants and air or
water pollution and to the storage, use, handling, transportation,
discharge and disposal (including spills and leaks) of gaseous,
liquid, semi-solid or solid materials. Avtech has not, and no third
party has, disposed or discharged any chemicals, oil or solid wastes
on any part of the Real Property or any other any property owned,
operated, leased or used by Avtech. There are no underground storage
tanks located on any part of the Real Property or any other property
owned, operated, leased or used by Avtech.
(c) Schedule 2.2.8(c) contains a complete and accurate list of
franchises, licenses, permits, consents, authorization, approvals,
and certificates of any regulatory, administrative or other agency or
body held by Avtech (collectively, the "Permits"). Each of the
Permits is currently valid and in full force and effect and the
closing of and the transactions contemplated by this Agreement will
not result in the termination of any Permit. The Permits constitute
all franchises, licenses, permits, consents, authorizations,
approvals and certificates necessary for the conduct of the business
of Avtech. Without limiting the foregoing, no consents,
authorizations, approvals or similar agreements or acquiescence is
required from any issuer or regulator of any Permit to any of the
transactions contemplated hereby, except to the extent listed on
Schedule 3.1.9. Avtech is not in material violation of any of the
Permits and there is no pending or, to the knowledge of the Principal
Shareholders, threatened proceeding which could result in the
revocation or cancellation of, or inability of Avtech to renew, any
Permit.
(d) Except as set forth in Schedule 2.2.8(d), Avtech is not under
investigation with respect to, and has not been charged with or given
notice of, any material violation of any applicable law.
2.2.9 PROPRIETARY RIGHTS. Avtech has all necessary rights, titles and
interests to all patents, patent applications, trademarks, trade names,
service marks, copyrights, trade secrets, inventions, know-how and other
similar rights ("Intellectual Property") which are material to the operation
of the business of Avtech. Avtech conducts its business without conflict or
infringement with any intellectual property claimed or held by others and,
to the best knowledge of the Principal Shareholders, no person has made or
threatened any claim or action alleging such conflict or infringement.
Schedule 2.2.9 sets forth all of the Intellectual Property owned or used by
Avtech, and all registrations thereof with any government office. None of
the Intellectual Property is registered with any governmental or regulatory
authority except as set forth on Schedule 2.2.9. The amount of each of the
royalties and license fees presently paid by or on behalf of Avtech for the
use of any Intellectual Property is listed in Schedule 2.2.9.
2.2.10 RESTRICTIVE DOCUMENTS OR LAWS. With the exception of the
matters listed on Schedule 2.2.10, Avtech is not a party to or bound under
any certificate, mortgage, lien, lease, agreement, contract, instrument,
vote, order, judgment or decree, or any similar restriction not of general
application which materially adversely affects (i) the condition, financial
or otherwise, of Avtech or any part of the Property; (ii) the continued
operation by DAH of the business of Avtech after the Closing Date on
substantially the same basis as said business was theretofore operated; or
(iii) the consummation of the transactions contemplated in this Agreement.
2.2.11 INSURANCE. Schedule 2.2.11 is a true, correct and complete list
of all insurance policies and bonds in force in which Avtech is named as an
insured party, as respects the business of Avtech, or for which Avtech has
been charged or has paid any premiums. Except as disclosed in Schedule
2.2.11, all such policies or bonds are identical in terms, coverage and
exclusions to the policies
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expiring on or about February 18, 1998 as previously delivered to DAH; and
are currently in full force and Avtech has not received any notice from any
such insurer with respect to the cancellation of any such insurance. Avtech
will continue all of such insurance in full force and effect up to and
including the Closing Date. All premiums due and payable on such policies
have been paid. Avtech is not a co-insurer under any term of any insurance
policy.
2.2.12 BANK ACCOUNTS, DEPOSITORIES AND POWERS OF ATTORNEY. Schedule
2.2.12 is a true, correct and complete list of the names and locations of
all banks or other depositories in which Avtech maintains accounts or safe
deposit boxes, and the names of the persons authorized to draw thereon,
borrow therefrom or have access thereto. No person or entity holds a power
of attorney on behalf of Avtech.
2.2.13 REAL PROPERTY. Schedule 2.2.13 contains a complete and accurate
legal description of each parcel of the Real Property. Except as set forth
in Schedule 2.2.13, Avtech has no interests in real property. The Real
Property constitutes all of the real property now used in and necessary for
the conduct of the business of Avtech as presently conducted. Except as set
forth on Schedule 2.2.13, all of the Real Property is held free and clear of
all mortgages, pledges, liens, security interests, encumbrances and
restrictions of any nature whatsoever. No consent is required by the terms
of any agreement relating to Avtech's Real Property, from any person
whatsoever, to effect the transactions contemplated hereby, such that as of
immediately after the Closing Date all of the Real Property will be, free
and clear of all mortgages, pledges, liens, security interest, encumbrances,
restrictions and claims of any nature whatsoever (except to the extent
listed on Schedule 2.2.13). Except as set forth in Schedule 2.2.13, all of
the Real Property, and all real property, buildings and structures located
thereon, is suitable for the purpose or purposes for which it is being used,
and is in such condition and repair as to permit the continued operation of
said businesses. None of the Real Property, buildings or structures is in
need of material maintenance or repairs except for ordinary, routine
maintenance and repairs. There are no material structural defects in the
exterior walls or the interior bearing walls, the foundation or the roof of
any plant, building, garage or other such structure owned, leased or used by
Avtech and the electrical, plumbing and heating systems, and the air
conditioning system, if any, of any such plant, building, garage or
structure are in reasonable operating condition in light of their age and
prior use. The utilities servicing the Real Property are adequate to permit
the continued operation of the business of Avtech and there are no pending
or threatened zoning, condemnation or eminent domain proceedings, building,
utility or other moratoria, or injunctions or court orders which would
materially affect such continued operation. Schedule 2.2.13 lists, and
Avtech has furnished or made available to DAH, copies of all engineering,
geologic and environmental reports prepared by or for Avtech with respect to
the Real Property.
2.2.14 PERSONAL PROPERTY. Except as set forth in Schedule 2.2.14, and
except with respect to personal property leased pursuant to the Personal
Property Leases listed on Schedule 2.2.14, Avtech has good, valid and
marketable title to all of its assets and properties which are Personal
Property of every kind, nature and description, tangible or intangible and
wherever located, including all property and assets which are personal
property shown or reflected on the balance sheet included in the March 31,
1998 Delivered Financial Statements. The Personal Property constitutes all
of the personal property now used in and necessary for the conduct of the
business of Avtech as presently conducted, and is held free and clear of all
mortgages, pledges, liens, security interests, encumbrances and restrictions
of any nature whatsoever. Except as set forth in Schedule 2.2.14, no
financing statement naming Avtech as debtor has been filed in any
jurisdiction, and Avtech is not a party to or bound under any agreement or
legal obligation authorizing any party to file any such financing statement.
Schedule 2.2.14 contains a complete and accurate description of all
machinery, equipment, tooling, parts, furniture, supplies and other tangible
personal property having an individual value of $5,000 or more owned or used
by Avtech. Schedule 2.2.14 contains a complete and accurate description of
all automobiles, trucks and other vehicles owned or used by Avtech. Except
as noted on Schedule 2.2.14
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as unsuitable, all machinery and equipment and tangible personal property
owned or used by Avtech and material to the operation of the business is
suitable for the purpose or purposes for which it is being used, and is in
such condition and repair as to permit the continued operation of said
business. None of such machinery or equipment is in need of material
maintenance or repairs except for ordinary, routine maintenance and repairs.
2.2.15 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 2.2.15,
the operations of Avtech are in compliance with all occupational health and
safety acts and all environmental laws and regulations of all federal, state
and local governmental or regulatory bodies having jurisdiction over Avtech.
Without limiting the generality of the foregoing, and by way of example
only, except as set forth on Schedule 2.2.15:
(a) There has not been, and is not occurring, any Release of any
Hazardous Substance on any real property owned or used by Avtech. For
purposes of this Agreement, the terms "Release" and "Hazardous Substance"
shall have the same meanings as those terms are given in the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601 ET SEQ. ("CERCLA"), except that for purposes
of this Agreement petroleum (including crude oil or any fraction thereof)
shall be deemed a Hazardous Substance.
(b) Avtech has never sent a Hazardous Substance to a site which,
pursuant to CERCLA or any similar state law, (A) has been placed, or is
proposed to be placed, or, may in the future be placed, on the "National
Priorities List" of hazardous waste sites or on any similar list of any
federal, state or local governmental agency, including the Comprehensive
Environmental Response, Compensation and Liability System list for
potential hazardous waste sites, or (B) is subject to a claim, an
administrative order or other request to take "removal" or "remedial"
action (as defined under CERCLA) or to pay for any costs relating to such
site.
(c) Avtech has never been or is currently in violation of any
provision of state or local laws or regulations applicable to the
generation, processing, storage, remediation, or disposal of any
Hazardous Substance or material similarly controlled or regulated by such
laws.
(d) Avtech is not involved in any suit or has received notice of any
claim relating to personal injuries from exposure to Hazardous Substances
or such other controlled or regulated materials.
2.2.16 BROKERS, FINDERS. Except as set forth on Schedule 2.2.16, the
transactions contemplated herein were not submitted to Avtech by any broker
or other person entitled to a commission or finder's fee thereon, and were
not with the consent of Avtech submitted to DAH by any such broker or other
person. Except as set forth on Schedule 2.2.16, neither Avtech nor any of
its officers, directors or employees has engaged any broker or finder or
incurred or taken any action which may give rise to any liability against
itself or the Property for any brokerage fees, commissions, finders fees or
similar fees or expenses and no broker or finder has acted directly or
indirectly for Avtech in connection with this Agreement or the transactions
contemplated hereby. No investment banking, financial advisory or similar
fees have been incurred or are or will be payable by Avtech in connection
with this Agreement or the transactions contemplated hereby; all amounts to
be paid to ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will be paid by the Shareholders.
2.2.17 LEGAL PROCEEDINGS. ETC. Except as set forth on Schedule 2.2.17,
there is no claim, litigation, action, suit or proceeding, administrative or
judicial, filed, pending or, to the best knowledge of any of the
Shareholders, threatened against Avtech or the Shareholders or involving the
Property, this Agreement or the transactions contemplated hereby, at law or
in equity, before any federal, state or local court or regulatory agency, or
other governmental authority, including any unfair labor practice or
grievance, proceedings or claim. To the best knowledge of the Principal
Shareholders, there is no basis upon which such a claim, litigation, action,
suit or proceeding could reasonably be brought or initiated. Except as set
forth in Schedule 2.2.17, neither any of the
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Shareholders nor Avtech is subject to any judgment, order or decree or any
governmental restriction applicable to Avtech, or such Shareholders, which
could reasonably be expected to have a Material Adverse Effect, or which
materially adversely affects the ability of Avtech to conduct business in
any area.
2.2.18 NO CONFLICT OR DEFAULT. Neither the execution and delivery of
this Agreement or any other document or instrument to be executed pursuant
to the terms hereof nor compliance with the terms and provisions hereof or
thereof, including the consummation of the transactions contemplated hereby,
will (a) violate in any material respect any statute, regulation or
ordinance of any governmental authority, or (b) conflict with or result in
the breach of any term, condition or provision of the articles of
incorporation or bylaws of Avtech or of any agreement, deed, contract,
mortgage, indenture, writ, order, decree, legal obligation or instrument
(with respect to the business of Avtech) to which Avtech or any of the
Shareholders is a party or by which Avtech or any of the Shareholders or any
part of the Property is or may be bound, or (c) constitute a material
default (or an event which with the lapse of time or the giving of notice,
or both, would constitute a material default) thereunder, or (d) result in
the creation or imposition of any material lien, charge, encumbrance, or
restriction of any nature whatsoever with respect to any part of the
Property, or (e) give to others any interest or rights, including rights of
termination, acceleration or cancellation in or with respect to any part of
the Property or the business of or any ownership interest in Avtech.
2.2.19 LABOR RELATIONS. Schedule 2.2.19 sets forth all collective
bargaining or other labor agreements to which Avtech is bound or which
otherwise covers employees of Avtech; and the Shareholders have previously
delivered to DAH true, correct and complete copies of each such agreement.
There is no labor strike, dispute, slowdown or stoppage, or any union
organizing campaign, or petition for certification actually pending or, to
the best knowledge of the Principal Shareholders, threatened against or
involving Avtech. Schedule 2.2.19 sets forth all pending grievances and
arbitration proceedings against Avtech arising out of or under a collective
bargaining or other labor agreement. No collective bargaining or other labor
agreement is currently being negotiated by Avtech. Avtech has not
experienced any work stoppage or other material labor difficulty over the
past three years. No such agreement which is binding on Avtech restricts it
from relocating or closing any or all of its operations.
2.2.20 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Schedule 2.2.20, Avtech does not currently
sponsor, maintain or contribute, or has within the past 3 years
sponsored, maintained or contributed to, to any pension, retirement,
profit-sharing, deferred compensation, bonus, stock option or other
incentive plan, or any other employee benefit program, arrangement,
agreement or understanding, or medical, vision, dental or other health
plan, or life insurance or disability plan, or any other employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether or not any such
employee benefit plan is otherwise exempt from the provisions of ERISA,
and whether or not formal or informal, written or oral, and whether or
not legally binding. All such plans are fully funded through the date of
this Agreement or amounts sufficient to fully fund contributions to such
plans through the Closing Date are reserved for in the March 31, 1998
Delivered Financial Statements. All such plans, funds or programs
sponsored, maintained or contributed to by Avtech currently or within the
past 3 years, whether or not listed on Schedule 2.2.20, are hereinafter
referred to as the "Employee Benefit Plans"). For the purpose of this
Section 2.2.20, the term "Avtech" shall include all "affiliates" of
Avtech, whether or not incorporated, as such term is used in Section
407(d)(7) of ERISA.
(b) As of the Closing Date, neither Avtech nor any entity that may be
regarded as under common control with Avtech pursuant to Section 414 of
the Internal Revenue Code of 1986, as
9
amended (the "Code"), shall have incurred any material unsatisfied
liability under Title IV of ERISA or Section 4980 of the Code, nor shall
any such entity have become subject to a lien pursuant to Section 412(n)
of the Code.
(c) Full payment has been made of all material amounts which Avtech
is required, under applicable law or under any Employee Benefit Plan or
any agreement relating to any Employee Benefit Plan to which it is a
party, to have paid as contributions to or benefits under any Employee
Benefit Plan as of the date hereof. To the extent required by generally
accepted accounting principles, Avtech has made adequate provision in the
Delivered Financial Statements for liabilities to meet current
contributions or benefit payments.
(d) Avtech has performed all obligations required to be performed by
it under the Employee Benefit Plans, except for such non-performance as
would not result in a material liability to Avtech. Except as would not
result in material liability to Avtech, Avtech has not engaged in any
transaction with respect to the Employee Benefit Plans which would
subject Avtech or DAH to a material tax, penalty or liability for a
prohibited transaction under Section 406, 407 or 502(i) of ERISA or
Section 4975 of the Code, nor have Avtech's directors, officers,
partners, employees or agents, to the extent they or any of them are
fiduciaries with respect to such Employee Benefit Plans, breached any of
the responsibilities or obligations imposed upon fiduciaries under Title
I of ERISA or, to the knowledge of the Principal Shareholders, taken any
action or failed to take any action which would result in any claim being
made under or by or on behalf of any such Employee Benefit Plans by any
party with standing to make such claim. Avtech will not have any plan or
commitment, whether formal or informal, written or oral, and whether or
not legally binding, to modify or change any Employee Benefit Plan in any
material manner prior to the Closing Date other than changes required to
comply with applicable laws. Avtech and, to the knowledge of the
Principal Shareholders, any "administrator(s)" (as described in Section
3(16)(A) of ERISA) of the Employee Benefits Plans have complied in all
material respects with the applicable requirements of ERISA, the Code and
all other statutes, orders, rules or regulations, specifically including
material compliance with all reporting and disclosure requirements of
Part 1 of Subtitle B of Title I of ERISA and of the Code in a timely and
accurate manner, and no penalties have been or will be imposed, nor is
Avtech, or, to the knowledge of the Principal Shareholders, any
administrator liable for any penalties imposed, under ERISA, the Code or
otherwise with respect to the Employee Benefit Plans or any related
trusts of Avtech, except for such non-compliance and penalties as would
not result in a material liability to Avtech. Avtech is not delinquent in
the payment of any federal, state or local taxes with respect to the
Employee Benefit Plans. There is no pending litigation, arbitration, or
disputed claim, settlement adjudication or proceeding with respect to the
Employee Benefit Plans, and the Principal Shareholders are not aware of
any threatened litigation, arbitration or disputed claim, adjudication
proceeding, or any governmental or other proceeding, or investigation
with respect to the Employee Benefit Plans or with respect to any
fiduciary or administrator thereof (in their capacities as such), or any
party-in-interest within the meaning of Section 3(14) of ERISA thereto
(with respect to their relationship as such). There is no "defined
benefit plan" within the meaning of Section 414(j) of the Code or Section
3(35) of ERISA to which Avtech or any entity that may be regarded as
under common control with Avtech pursuant to Code Section 414 has been a
party or has been required to make any contributions at any time during
the last six (6) years. There is no "multiemployer plan" within the
meaning of Section 3(37) of ERISA to which Avtech or any entity that may
be regarded as under common control with Avtech pursuant to Code Section
414 has been a party or has been required to make any contributions at
any time during the last six (6) years.
(e) The Shareholders have made available or caused to be made
available as of the date of this Agreement to DAH true, accurate and
complete copies of (A) all Employee Benefit Plans
10
and any related trust agreements, custodial agreements, investment
management agreements, insurance contracts or policies, and
administrative service contracts, all as in effect as of the date of this
Agreement, together with all amendments thereto which will become
effective at a later date; (B) the latest Summary Plan Description and
any modifications thereto for each Employee Benefit Plan requiring same
under ERISA; (C) each Form 5500 and/or Form 990 series filing (including
required schedules and financial statements) for the last two fiscal
years for each Employee Benefit Plan required to file such form; and (D)
the most recent determination letter issued by the Internal Revenue
Service with respect to any Employee Benefit Plan. None of Avtech or any
officer, partner, employee, representative or agent of Avtech, has made
any written or oral representations or statements to any current or
former employees, dependents, participants or beneficiaries or other
persons which are inconsistent in any material manner with the provisions
of these documents.
(f) With respect to any of Avtech's employee welfare plans (as
defined in Section 3(1) of ERISA and including those Employee Benefit
Plans which qualify as such) which are "group health plans" under Section
4980B of the Code and Section 607(1) of ERISA and related regulations
(relating to the benefit continuation rights imposed by the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended to date),
there has been timely compliance in all material respects with all
requirements imposed thereunder, as and when applicable to such plans, so
that Avtech has not incurred any (or will not incur any) material loss,
assessment, penalty, loss of federal income tax deduction or other
sanction, arising on account of or in respect of any failure to comply
with any COBRA benefit continuation requirement, which is capable of
being assessed or asserted directly or indirectly against Avtech or any
of its subsidiaries with respect to any such plan. Avtech has no
obligation to provide medical benefits to any former employee, except as
required by applicable law, including, but not limited to, COBRA.
(g) No Employee Benefit Plan maintained by Avtech which is a "welfare
plan" within the meaning of Section 3(1) of ERISA provides benefits to
employees after termination of employment, except as required by
applicable law, including, but not limited to Section 4980B of the Code
and Part 6 of Subtitle B of Title I of ERISA.
(h) The trustee of the Avtech Corporation Employee Stock Ownership
Trust (the "ESOT Trustee" or "ESOT") is not a Shareholder or director,
officer or employee of Avtech and has no financial interest in the
transaction contemplated by this Agreement.
2.2.21 CONTRACTS AND COMMITMENTS. Schedule 2.2.21 is a list of all
contracts, agreements, contract rights, leases, license agreements,
franchise rights and agreements, policies, purchase and sales orders,
quotations and executory commitments, instruments, guaranties,
indemnifications, arrangements, obligations and understandings (written
or oral) to which Avtech is a party, all without any counterclaim set-off
or defense and which involve the payment by or to Avtech in the
individual amount of $50,000 or in the aggregate amount of $100,000 or
more during any year, or are otherwise necessary to the operation of the
business of Avtech as currently conducted (the "Material Contracts").
Each of the Material Contracts is valid and binding, in full force and
effect and enforceable against Avtech in accordance with its respective
provisions. Avtech has not assigned, mortgaged, pledged, encumbered, or
otherwise hypothecated any of its right, title or interest under any
Material Contract, or under any lease of personal property or real
property to which Avtech is a party (herein, a "Lease") whether or not
each Lease constitutes a Material Contract. A correct and complete copy
of each Material Contract and Lease has previously been delivered to DAH.
Avtech is not in violation of, in default in respect of, nor has there
occurred an event or condition which, with the passage of time of giving
of notice (or both) would constitute a violation or default of any
Material Contract; and there are no facts or circumstances known to the
Principal Shareholders which would reasonably indicate that Avtech (or
any other party) will
11
be or may be in violation of or in default in respect of any Material
Contract, subsequent to the date hereof. Without limiting the foregoing,
no consents, authorizations, approvals or similar agreements or
acquiescence is required from any party under any Material Contract or
Lease to any of the transactions contemplated hereby, except to the
extent listed on Schedule 3.1.9 hereof. No notice has been received by
Avtech claiming any such default by Avtech or indicating the desire or
intention of any other party thereto to amend, modify, rescind or
terminate the same.
2.2.22 ACCOUNTS RECEIVABLE. All of the accounts and notes
receivable, investments, deposits and prepaid expenses of Avtech as of
March 31, 1998 are set forth on Schedule 2.2.22. All accounts receivable,
arising between March 31, 1998 and the Closing Date (in each case net of
allowances for doubtful accounts), (a) are or will be valid and
subsisting, (b) represent or will represent sales actually made, (c)
arose or will arise in the ordinary and usual course of the business of
Avtech and (d) to the extent not collected prior to the Closing Date,
will be collectible according to their terms on or before December 31,
1998, all without any counterclaim, set-off or defense.
2.2.23 INVENTORIES. Schedule 2.2.23 completely and accurately lists
all raw materials, supplies, parts, work-in-process, and finished goods
inventory and other inventory owned by Avtech and the accurate cost of
such inventory as of March 31, 1998. Except as set forth in Schedule
2.2.23, and except for amounts which in the aggregate are not material,
all such inventories (i) consist of a quality and quantity usable and
saleable in the ordinary and usual course of business, except for items
of obsolete materials and materials of substandard quality, all of which
have been written off or written down on the books of Avtech to net
realizable value prior to March 31, 1998 and (ii) have been priced at the
lower of cost or market on a FIFO basis. The quantities of all material
portions of each type of inventory (whether raw materials, work-in-
process, or finished goods) are not excessive, but are reasonable and
warranted in the present circumstances of Avtech; and all material
portions of work-in-process and finished goods inventory is free of any
material defect or other deficiency.
2.2.24 BACKLOG. All unfilled orders to purchase goods of Avtech as
of March 31, 1998 are set forth in Schedule 2.2.24 and are firm and
binding commitments (subject to cancellation rights set forth therein) of
the respective purchasers assuming the purchasers have duly authorized
such purchases.
2.2.25 BOOKS OF ACCOUNT: RECORDS. Except as disclosed in Schedule
2.2.25, the general ledgers, books of account and other financial records
of Avtech are complete and correct, have been maintained in accordance
with generally accepted accounting principles and practices and the
matters contained therein are appropriately and accurately reflected in
the Delivered Financial Statements in all material respects.
2.2.26 OFFICERS, PARTNERS. EMPLOYEES AND COMPENSATION. Schedule
2.2.26 lists (i) the GMT, (ii) the AMT, (iii) the "Key Employees" who,
for purposes of this Agreement are ▇▇▇▇▇ ▇▇▇▇▇▇, Test Engineering Group
Leader, ▇▇▇ ▇▇▇▇▇▇, Principal Engineer, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Staff Engineer
and ▇▇▇▇ ▇▇▇▇▇▇, Staff Engineer, and (iv) any Shareholder who is an
employee of Avtech and not included in any of the above groups, together
with the total salary, bonus payments, fringe benefits and perquisites
each received in each of the 3 fiscal years ended September 30, 1997,
changes to the foregoing which have occurred since September 30, 1997,
and the professional background of each Key Employee for the last 5 years
to the best of the knowledge of the Principal Shareholders. There are no
other material forms of compensation paid by Avtech to any of the persons
named in (i) through (iv) above. The provisions for wages and salaries
accrued on the March 31, 1998 Balance Sheet are adequate for salaries and
wages, including accrued vacation pay, for the period up through the date
thereof, and Avtech has accrued on its books and records all obligations
for wages and salaries and other compensation to its employees,
including,
12
but not limited to, vacation pay and sick pay, and all commissions and
other fees payable to agents, salesmen and representatives. Avtech has
filed or will file any and all payroll tax returns due through the
Closing Date and pay or reserve on the Closing Date Balance Sheet all
payroll taxes due for any and all Avtech employees.
Except as set forth on Schedule 2.2.26, Avtech has not become
obligated, directly or indirectly, to any shareholder, director, officer
or partner of Avtech or any member of their families, except for current
liabilities for employment compensation or director's fees. Except as set
forth on Schedule 2.2.26, no shareholder, director, officer, partner,
agent or employee of Avtech holds any position or office with or has any
financial interest, direct or indirect, in any supplier, customer or
account of, or other outside business which has transactions with Avtech.
Neither Avtech, nor any third party, has taken any action with respect to
any shareholder, director, officer, partner, employee or representative
of Avtech to attempt to induce or which would influence any such person
not to become associated with DAH from and after the Closing Date or from
serving DAH in a capacity similar to the capacity presently held. To the
knowledge of the Principal Shareholders, no employee of Avtech has a
present intention to leave the employ of Avtech or has taken any action
directed towards leaving the employ of Avtech. Except as set forth on
Schedule 2.2.26, to the knowledge of the Principal Shareholders, no
former employee of Avtech is currently in or intends to enter into
competition with the business of Avtech.
2.2.27 CREDIT TERMS: PRODUCT WARRANTIES. Adequate reserves have
been made (and are reflected in the Delivered Financial Statements) for
the aggregate amount of losses and expenses incurred by reason of
allowances, customer dissatisfaction or liabilities arising under
Avtech's warranties and guarantees during the three years ended September
30, 1997; and there has been no material adverse change in that
experience since said date. Except as set forth on Schedule 2.2.27, (i)
there have been no recalls of Avtech product, (ii) to the best knowledge
of the Principal Shareholders, there is no Avtech product which is either
defective or likely to experience a failure rate materially greater than
the average for Avtech's products over the three year period ended
September 30, 1997, and (iii) Avtech has conducted all qualification
inspections and quality conformance inspections required by the
specifications for products of Avtech included on qualified products
lists in material compliance with the requirements of such
specifications, and all products shipped have been in material
conformance with such specifications. Except as set forth and explained
on Schedule 2.2.27, there have been no material departures from the
standard terms and conditions of credit, discounts and warranties given
by Avtech to its customers; and all of such standard terms and conditions
are set forth on such schedule.
2.2.28 CONTRACTS WITH AFFILIATES. Any contract, commitment, lease,
permit or other instrument, agreement, understanding or obligation (each
a "Commitment") between Avtech and any affiliate (including each
Shareholder), is the equivalent of an "arms-length" transaction with a
third party, and each such Commitment is described on Schedule 2.2.28
hereto.
2.2.29 GOVERNMENT CONTRACTS. Except as set forth on Schedule
2.2.29, Avtech is not a party to, nor is it bound by, nor does it have
any liability with respect to, any Government Contracts and has not
submitted any bid with respect thereto, which has not expired. For
purposes of this Section 2.2.29, the term "Government" means any agency,
division, subdivision, audit group, or procuring office of the federal
government, including the employees or agents thereof; the term
"Transferor" means Avtech and its subsidiaries, divisions, affiliates,
joint venturers, agents, employees, officers and directors; the term
"Government Contract" means any prime contract, subcontract, basic
ordering agreement, letter contract, purchase order or delivery order of
any kind, including all amendments, modifications and options thereunder
or relating thereto, between Transferor and any of a Government, any
prime contractor of a Government, any subcontractor of such a prime
contractor or any subcontractor of another subcontractor, however far
removed from the prime contractor such subcontractor may be, (A)
currently in force;
13
(B) which, within the three years preceding the date of this Agreement,
expired or were terminated; or (C) for which final payment was received
within the three years preceding the date of this Agreement; and the term
"Bid" means any outstanding quotation, bid or proposal submitted by
Transferor to a Government, any proposed prime contractor of a
Government, or any proposed subcontractor.
2.2.30 EXCLUSIVE SELLING ARRANGEMENTS; STRATEGIC ALLIANCES. Except
as disclosed in Schedule 2.2.30, (i) Avtech has entered into no exclusive
selling arrangements, and (ii) no agreement or understanding has been
entered into, proposed, or regardless of commencement date, is in force
between Avtech and any company which is an arrangement with any other
person which involves equity investment or ownership, a joint venture or
revenue or profit sharing (herein, a "Strategic Alliance"). An
arrangement for a preferred supplier relationship which does not have any
of the characteristics described in the foregoing sentence is not a
Strategic Alliance. No Strategic Alliances have been terminated by Avtech
since April 1, 1998.
2.2.31 PAYMENTS AND EXPENDITURES. Except as set forth in Schedule
2.2.31 since March 31, 1998, Avtech has not (i) made any payment or
incurred any liability on behalf of any Shareholder, (ii) made any
payment to or on behalf of any Shareholder except for the Shareholder's
salary and expense reimbursements made in the ordinary course of
business, or (iii) paid any amount not in the ordinary course of Avtech's
business.
2.2.32 NEW COMPETITIVE PRODUCTS, PRICING, TECHNOLOGICAL
DEVELOPMENTS, COMPETITION. Except as disclosed in Schedule 2.2.32, to the
best knowledge of the Principal Shareholders, there are no (i) products
introduced by others since October 1, 1997 which are competitive with the
products of Avtech, (ii) material reductions in the prices of products of
products competitive with the products of Avtech, (iii) technological
developments announced which would make any of Avtech's products obsolete
or (iv) entries by any new competitor into Avtech's markets, in each case
other than as described in the Confidential Information Memorandum dated
March, 1998 previously delivered to DAH (the "Information Memorandum").
2.2.33 KEY EMPLOYEES. Except as disclosed in Schedule 2.2.26, since
March 31, 1998 no Key Employees have terminated employment with Avtech
and no Key Employees have given notice to Avtech or to any Principal
Shareholder of termination. The Principal Shareholders anticipate that
all Key Employees will continue employment with Avtech after the Closing
Date.
2.2.34 COMPLETE DISCLOSURE. No representation or warranty made by
Avtech or any of the Shareholders in this Agreement, and no exhibit,
schedule or certificate furnished to DAH by or on behalf of Avtech or any
of the Shareholders pursuant to this Agreement or in connection with the
transactions contemplated hereby or thereby, including the Confidential
Informational Memorandum, contains or will contain, any untrue statement
of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein not
misleading.
3. COVENANTS.
3.1 COVENANTS OF THE SHAREHOLDERS.
3.1.1 COVENANT AGAINST DISCLOSURE. Other than in the ordinary
course of business of Avtech and except for professional advisors
(including attorneys, accountants and investment bankers) who agree to
maintain the confidentiality of such information, each of the
Shareholders agree not to (a) disclose to any person, association, firm,
corporation or other entity (other than DAH or those designated in
writing by DAH) in any manner, directly or indirectly, any information or
data relevant to the business of Avtech, whether of a technical or
commercial nature, or (b) use, permit or assist, by acquiescence or
otherwise, any person, association, firm, corporation or other entity
(other than DAH or those designated in writing by DAH) to use, in
14
any manner, directly or indirectly, any such information or data,
excepting only use of such data or information as is at the time
generally known to the public and which did not become generally known
through any breach of any provision of this Section 4.2.2.
3.1.2 [Intentionally Deleted].
3.1.3 INJUNCTIVE RELIEF. Each of the Principal Shareholders
acknowledges and agrees that DAH's remedy at law for any breach of any of
such Shareholders' obligations under Subsections 3.1.1 and 3.1.2 hereof
would be inadequate, and agrees and consents that temporary and permanent
injunctive relief may be granted in a proceeding which may be brought to
enforce any such provision without the necessity of proof of actual
damage. The rights and remedies conferred upon DAH under this Section, or
by any instrument or law, shall be cumulative and may be exercised
singularly or concurrently.
3.1.4 CONDUCT OF BUSINESS OF AVTECH PRIOR TO CLOSING DATE. Each of
the Principal Shareholders agrees that on and after the date hereof and
prior to the Closing Date:
(a) The business and operations, activities and practices of Avtech
shall be conducted only in the ordinary course of business and consistent
with past practice;
(b) No change shall be made in the articles of incorporation or
bylaws of Avtech;
(c) No change shall be made in the number of shares of authorized or
issued capital stock of Avtech, nor shall any option, warrant, call,
right, commitment or agreement of any character be granted or made by
Avtech relating to its equity; except that all of the outstanding options
shall be exercised on or prior to the Closing Date as and in the amounts
set forth in Schedule 2.2.2;
(d) No dividend shall be declared or paid or other distribution
(whether in cash, stock, property or any combination thereof) or payment
declared or made in respect of the Avtech Common Shares by Avtech, nor
shall Avtech purchase, acquire, redeem or split, combine or reclassify
any shares of the capital stock of Avtech;
(e) The Principal Shareholders shall not, directly or indirectly,
solicit or encourage (including by way of furnishing any non-public
information concerning the business, properties or assets of Avtech), or
enter into any negotiations or discussions concerning, any Acquisition
Proposal (as defined below). Any Shareholder will notify DAH promptly by
telephone, and thereafter promptly confirm in writing, if any such
information is requested from, or any Acquisition Proposal is, to the
knowledge of such Shareholder, received by Avtech, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or such Shareholder. As used in this Agreement, "Acquisition Proposal"
shall mean any proposal received by Avtech or any Principal Shareholder
prior to the Closing Date for a merger or other business combination
involving Avtech or for the acquisition of, or the acquisition of a
substantial equity interest in, or a substantial portion of the assets of
Avtech, other than the one contemplated by this Agreement.
(f) Except as set forth in Schedule 3.1.4(f), the Principal
Shareholders will not permit Avtech to:
(A) incur, become subject to, or suffer, or agree to incur,
become subject to or suffer, any obligation or liability (absolute or
contingent) except current liabilities incurred, and obligations
entered into in the ordinary course of business;
(B) discharge or satisfy any lien or encumbrance or pay any
obligation or liability (absolute or contingent) other than
liabilities payable in the ordinary course of business;
(C) mortgage, pledge or subject to lien, charge or any other
encumbrance any of the Property or agree so to do;
15
(D) sell or transfer or agree to sell or transfer any of its
assets, or cancel or agree to cancel any debt or claim, except in
each case in the ordinary course of business;
(E) consent or agree to a waiver of any right of substantial
value;
(F) enter into any transaction other than in the ordinary course
of its business;
(G) increase the rate of compensation payable or to become
payable by it to any Key Employee over the rate being paid to such
Key Employee at March 31, 1998;
(H) terminate any Material Contract, any Lease or any Permit;
(I) through negotiation or otherwise, make any commitment or
incur any liability or obligation of a material nature to any labor
organization;
(J) make or agree to make any accrual or arrangement for or
payment of bonuses or special compensation of any kind to any
Restricted Employee;
(K) make or agree to make any accrual or arrangement for or
payment of bonuses or special compensation of any kind to any
Non-Restricted Employee, other than in the ordinary course of
business and in accordance with Avtech's practice;
(L) directly or indirectly pay or make a commitment to pay any
severance or termination pay to any Key Employee;
(M) directly or indirectly pay or make a commitment to pay any
severance or termination pay to any Non-Restricted Employee, other
than in the ordinary course of business and in accordance with
Avtech's past practice;
(N) introduce any new method of management, operation or
accounting with respect to its business or any of the assets,
properties or rights applicable thereto, other than changes required
by GAAP;
(O) offer or extend more favorable credit terms, discounts or
allowances than were offered or extended regularly on and prior to
March 31, 1998, other than in the ordinary course of business and in
accordance with Avtech's past practice;
(P) make capital expenditures in excess of $100,000 in the
aggregate, or make any commitments for such capital expenditures;
(Q) Enter into any Strategic Alliance; or
(R) Make any material change in the prices, discounts or
allowances for any Avtech product.
(g) Each of the Principal Shareholders will use their respective
reasonable efforts to preserve Avtech's business organization materially
intact, to keep available to Avtech the present service of Avtech's
employees; and to preserve for Avtech the good will of its suppliers,
customers and others with whom business relationships exist;
(h) In light of the provisions of clause (i) of Section 1.2.3, the
Principal Shareholders will take all necessary actions to assure that (i)
Avtech does not accelerate the conversion of other assets to Cash and
(ii) Avtech timely pays all of its obligations; and
(i) None of the Principal Shareholders will take, agree to take or
permit to be taken any action or do or permit to be done, anything in the
conduct of the business of Avtech, or otherwise, which would be contrary
to or in breach of any of the terms or provisions of this Agreement or
which would cause any of the representations or warranties of the
Shareholders contained herein to be or become untrue in any material
respect.
16
3.1.5 INSPECTION OF BOOKS AND RECORDS. From the date of this
Agreement until the Closing Date, the Principal Shareholders shall cause
Avtech to make available to DAH for examination the Property and all
corporate records, minute books, share records, treasury shares, tax
returns, books of account, contract, agreements, commitments, records and
its documents of every character relating to Avtech and its business and
shall permit DAH and its representatives, attorneys, accountants and
agents to have access to and to copy, at DAH's expense, the same at all
reasonable times, so as to allow DAH to confirm compliance with covenants
and satisfaction of conditions hereunder.
3.1.6 FURTHER ASSURANCES. On and after the Closing Date, the
Shareholders shall prepare, execute and deliver, at DAH's expense, such
further instruments of conveyance, sale, assignment or transfer, and
shall take or cause to be taken such other or further action as DAH shall
reasonably request at any time or from time to time in order to perfect,
confirm or evidence in DAH title to all or any part of the Stock or to
consummate, in any other manner, the terms and conditions of this
Agreement.
3.1.7 PRESS RELEASES AND ANNOUNCEMENTS. DAH and the Principal
Shareholders shall not and the Principal Shareholders shall cause Avtech
not to issue any press release or announcement relating to the subject
matter of this Agreement without the prior written approval of the other
parties hereto; PROVIDED, HOWEVER, that DAH may make any public
disclosure it believes in good faith is required by law (in which case he
or it will advise the other parties hereto prior to making the
disclosure).
3.1.8 BANKRUPTCY. No Principal Shareholder shall (i) cause Avtech
to commence any case, proceeding or other action (a) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to either of them or
seeking to adjudicate either of them bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to either of them
or for all of any substantial part of either of their assets, or (b) make
a general assignment for the benefit of its creditors; (ii) commence any
case, proceeding or other action of a nature referred to in clause (i)(a)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed or discharged for
a period of 60 days; (iii) commence any case, proceeding or other action
seeking issuance of a warrant of attachment, execution distraint or
similar process against all or any substantial part of either of their
respective assets which results in the entry of an order for any such
relief; and (iv) neither Avtech nor any Shareholder shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above.
3.1.9 CONSENTS, ETC The Shareholders shall obtain, in form and
substance reasonably satisfactory to DAH, an effective executed consent
from each person from which consent is required as disclosed in Schedule
3.1.9.
3.1.10 CLOSING DATE BALANCE SHEET. The Shareholders will cause a
balance sheet as of the Closing Date to be delivered to DAH within a
reasonable time after the Closing Date (the "Closing Date Balance Sheet")
which shall be true, correct and complete; shall have been prepared from
and in accordance with the books and records of Avtech in conformance
with generally accepted accounting principles applied on a consistent
basis using an accrual basis method and in compliance with Regulation S-X
and audited by an independent accounting firm reasonably acceptable to
DAH; and shall fairly present the financial condition of Avtech as of the
date stated on such Closing Date Balance Sheet in accordance with such
practices.
3.1.11 RELEASE. Each Shareholder does hereby release and discharge
Avtech and its officers, directors and agents (the "Releasees") from any
and all claims, demands and causes of
17
action which such Shareholder has against any of the Releasees arising
from their status as a Shareholder. This release applies to any and all
such claims, demands or causes of action, whether known or unknown,
contingent or matured. The release granted in this Section 3.1.11 shall
become effective concurrent with the Closing. If the transaction
contemplated by this Agreement does not close, this release shall be null
and void.
3.2 COVENANTS OF DAH. DAH covenants that:
3.2.1 LEGAL OPINION. On or prior to the Closing Date, it shall
deliver to the Shareholders, duly and properly executed, the legal
opinion referred to in Section 5.2.1.
3.2.2 PAYMENTS. On or prior to the Closing Date, DAH shall make the
payments to be made pursuant to Section 1.2.1 and Section 1.2.2.
3.2.3 FURTHER ASSURANCES. On and after the Closing Date, DAH shall
prepare, execute and deliver, at its expense, such further instruments of
conveyance, sale, assignment or transfer, and shall take or cause to be
taken such other or further action as the Principal Shareholders shall
reasonably request at any time or from time to time in order to perfect,
confirm or evidence in DAH title to all or any part of the Stock or to
consummate, in any other manner, the terms and conditions of this
Agreement.
3.2.4 CONFIDENTIALITY AGREEMENTS. Between the date of this
Agreement and the Closing Date, DAH shall continue to be bound by its
obligations pursuant to the written confidentiality agreements to which
DAH and Avtech are parties. Nothing contained in this Section 3.2.4 shall
be interpreted to seek to prohibit DAH from any required public
disclosure.
3.2.5 Promptly following the Closing, DAH shall take all necessary
action to terminate the ESOT and shall distribute its assets as soon as
practicable following receipt of a favorable determination letter from
the Internal Revenue Service with respect to the termination of ESOT.
4. INDEMNIFICATION.
4.1 To the extent of the amount deposited with the Escrow Agent
pursuant to Section 1.2.2, the Shareholders hereby indemnify and hold DAH
harmless from any and all claim, loss, damage or expense (including
reasonable attorneys' fees) as a result of any breach of any warranty or
representation made in Sections 2.2.4, 2.2.6, 2.2.7, 2 2.8(b), 2.2.15,
2.2.17 or 2.2.27 of this Agreement by the Shareholders.
4.2 In the event of any breach of any obligation by any of the
Shareholders to DAH based on intentional misrepresentation, concealment or
wilful or wanton disregard of the facts, there shall be no limitation of
dollar amount and such claim for intentional misrepresentation, concealment
or wilful or wanton disregard of the facts shall be with full recourse
against such Shareholder for the full amount of such claim.
4.3 Any claim for indemnification under this Section 4 must be asserted
prior to April 1, 1999.
5. CONDITIONS PRECEDENT TO OBLIGATIONS.
5.1 CONDITIONS TO OBLIGATIONS OF DAH. Each and every obligation of DAH
to be performed at the Closing Date shall be subject to the satisfaction as
of or before the Closing Date of the following conditions (unless waived in
writing by DAH):
5.1.1 CONSENTS. Avtech shall have obtained and delivered to DAH
each of the consents required by Section 3.1.9.
5.1.2 CERTIFICATE. A certificate executed by each of the Principal
Shareholders favorably evidencing as of the Closing Date (a) the accuracy
of the representations and warranties of the
18
Shareholders set forth in this Agreement, (b) the compliance with the
covenants of the Shareholders set forth in this Agreement, and (c) the
absence of any material adverse change in the financial condition,
operations, business or prospects taken as a whole of Avtech from that
set forth in the March 31, 1998 Delivered Financial Statements.
5.1.3 OPINION OF COUNSEL. The Shareholders shall have delivered or
caused to be delivered to DAH an opinion of counsel for the Shareholders,
addressed to DAH and dated the Closing Date, in the form of Exhibit 5.1.3
attached hereto.
5.1.4 DELIVERY OF CERTAIN AGREEMENTS BY SHAREHOLDERS. The persons
listed on Exhibit 5.1.4 shall have executed and delivered Employment
Agreements to DAH in the form of Exhibit 5.1.4 attached hereto. The
Shareholders shall have delivered the Escrow Agreement. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
shall have delivered a Termination of Employment Agreement in the form of
Exhibit 5.1.4.
5.1.5 DELIVERY OF STOCK AND RECEIPT OF PAYMENT. The Shareholders
shall deliver the stock certificates representing not less than 90% of
the outstanding Stock of Avtech duly endorsed for transfer by assignments
separate from certificates, endorsed in blank with signatures guaranteed
by a national bank or member firm of the New York Stock Exchange.
5.1.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. Prior to the Closing, (i) Avtech and the
Shareholders shall each have timely made all filings, submissions and
responses which are required of them, or are in DAH's reasonable judgment
desirable, in connection with the transactions contemplated herein
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and (ii) all waiting periods
applicable under such Act shall have been terminated. Avtech and each of
the Shareholders covenant to timely make all such filings, submissions
and responses, and upon DAH's request if it so elects, to join in any
request for early termination of such waiting periods.
5.1.7 AUDITED FINANCIAL STATEMENTS. The Shareholders shall have
delivered the Audited Financial Statements.
5.1.8 TITLE INSURANCE. At or prior to the Closing Date, the
Shareholders shall deliver to DAH one or more ALTA owner's policies of
title insurance, including such endorsements (including survey, address,
non-encroachment, ingress and zoning endorsements) as DAH may reasonably
request, insuring Avtech's title to all of the Real Property subject only
to such exceptions as (a) do not impair the use by Avtech of such
property in the ordinary course of its business as now conducted, and (b)
are otherwise reasonably acceptable to DAH, and in the amount for each
parcel of the current fair market value of such parcel as established by
the December, 1998 appraisal of the Real Property previously delivered to
DAH.
5.1.9 TRANSITION DOCUMENTATION. Executed originals, in form and
substance reasonably satisfactory to DAH, of (a) signature cards for each
deposit or similar account listed in Schedule 2.2.12, listing such
parties as DAH may direct, (b) the original corporate minute book of
Avtech, and (c) the resignation of each of the members of the Board of
Directors of Avtech effective as of the Closing Date.
5.1.10 HEALTH CARE PLAN. On or prior to the Closing and effective
July 1, 1998, Avtech shall have made arrangements to provide an insured
medical plan to its employees with benefits substantially similar to
Avtech's existing self-insured medical plan.
5.2 CONDITIONS TO OBLIGATIONS OF AVTECH AND THE SHAREHOLDERS. Each and
every obligation of the Shareholders, to be performed on or before the
Closing Date shall be subject to the satisfaction as of or before such time
of the following conditions (unless waived in writing by the Shareholders).
5.2.1 OPINION OF COUNSEL. DAH shall have delivered or caused to be
delivered to the Shareholders an opinion of counsel for DAH, addressed to
the Shareholders and dated the Closing Date, in form of Exhibit 5.2.1
attached hereto.
19
5.2.2 PAYMENT. DAH shall have made the payments required pursuant
to Section 1.2.1 and 1.2.2.
5.2.3 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇. Prior to the Closing Date, (i) DAH shall
have timely made all filings, submissions and responses which it is
required to make, or in DAH's reasonable judgment are desirable, in
connection with the transactions contemplated herein pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and (ii) all waiting periods applicable under such
Act shall have been terminated.
5.2.4 ESOT MATTERS. The ESOT Trustee shall be independent of all
other parties to this Agreement and shall have relied, in making its
decision whether to enter into this Agreement on behalf of the ESOT, on
the written report of an appraiser who is qualified to value the Stock
and is unrelated to Avtech or any of the parties to this Agreement. The
appraiser's report will be delivered in draft not less than one week
prior to the Closing Date and shall be issued and delivered on the
Closing Date, and which will set forth the appraiser's qualifications,
its determination of the value of the Stock as of the Closing Date and
the factors and methodologies used by the appraiser in making the
appraisal. For purposes of this Section, the Trustee shall be considered
independent of all other parties to this Agreement if it is a bank,
within the meaning of Code Section 581, which is not: (1) directly or
indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with any of the other parties to this
Agreement; (2) a partner or employer of any such party; or (3) a
corporation or partnership of which any such party is an officer,
director or partner.
5.2.5 FAIRNESS OPINION. The ESOT Trustee shall have received, in a
form acceptable to the ESOT Trustee, the opinion of the financial advisor
to the ESOT that:
(a) The ESOT is receiving "adequate consideration" (as that term
is defined in the ERISA) for the shares transferred to DAH under the
terms of the "Agreement"; and
(b) The terms of the transaction described in the Agreement, the
Escrow Agreement and Joint Instructions are fair to the ESOT from a
financial point of view.
A full report of the financial advisor's opinion shall be delivered as of
the Closing Date (or as soon as before such Closing Date as practical). Such
report shall document the factors and methodology utilized by the financial
advisor in rendering the opinion. The report shall also set forth the financial
advisor's qualifications to render such an opinion of value and fairness.
6. MISCELLANEOUS PROVISIONS.
6.1 NOTICE. All notices and other communications required or permitted
under this Agreement shall be deemed to have been duly given and made, if in
writing, and (i) if served by personal delivery to the party for whom
intended (which shall include overnight delivery by Federal Express or
similar service), (ii) or 3 business days after being deposited, postage
prepaid, certified or registered mail, return receipt requested, in the
United States mail bearing the address shown in this Agreement for, or such
other address as may be designated by writing hereafter by, such party, or
(iii) if sent by telecopy to the number showing in this Agreement for, or
such other number as may be designated in writing hereafter by, such party
and immediately confirmed by sending a copy of such notice by either method
described in clause (i) or (ii) above.
20
If to Shareholders:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Avtech Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ Coie
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to DAH:
▇▇▇▇▇▇▇ Aircraft Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
Spolin & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
6.2 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, and the documents referred to herein and therein embody the entire
agreement and understanding of the parties hereto with respect to the
subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings, oral or written, relative to said subject
matter.
6.3 BINDING EFFECT; ASSIGNMENT. This Agreement and the rights and
obligations arising hereunder shall inure to the benefit of and be binding
upon Avtech, its DAH, its successors and permitted assigns, and the
Shareholders, their heirs, legal representative and permitted assigns.
Neither this Agreement nor any of the rights, interest or obligations
hereunder shall be transferred or assigned (by operation of law or
otherwise) by any of the parties hereto without the prior written consent of
the other party or parties except that DAH shall have the right to (i)
assign, in whole or in part, its rights hereunder to one or more affiliates
of DAH, which in each case shall be a wholly-owned subsidiary of DAH and
(ii) make a collateral assignment of its rights hereunder to the lenders
under its senior credit facility to secure its obligations thereunder. Any
transfer or assignment of any of the rights, interests or obligations
hereunder in violation of the terms hereof shall be void and of no force or
effect.
6.4 CAPTIONS. This Agreement and Section headings of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement in construing or interpreting any provision hereof.
6.5 WAIVER; CONSENT. This Agreement may not be changed, amended,
terminated, augmented, rescinded or discharged (other than by performance),
in whole or in part, except by a writing executed
21
by the parties hereto, and no waiver of any of the provisions or conditions
of this Agreement or any of the rights of a party hereto shall be effective
or binding unless such waiver shall be in writing and signed by the party
claimed to have given or consented thereto. Except to the extent that a
party hereto may have otherwise agreed in writing, no waiver by that party
of any condition of this Agreement or breach by the other party of any of
its obligations or representations hereunder or thereunder shall be deemed
to be a waiver of any other condition or subsequent or prior breach of the
same or any other obligation or representation by the other party, nor shall
any forbearance by the first party to seek a remedy for any noncompliance or
breach by the other party be deemed to be a waiver by the first party of its
rights and remedies with respect to such noncompliance or breach.
6.6 NO THIRD PARTY BENEFICIARIES. Nothing herein, expressed or
implied, is intended or shall be construed to confer upon or give to any
person, firm, corporation or legal entity, other than the parties hereto,
any rights, remedies or other benefits under or by reason of this Agreement.
6.7 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed simultaneously in multiple counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and
the same instrument. The signature page of this Agreement when transmitted
by facsimile shall be effective execution and delivery of this Agreement.
6.8 GENDER. Whenever the context requires, words used in the singular
shall be construed to mean or include the plural and vie versa, and pronouns
of any gender shall be deemed to include and designate the masculine,
feminine or neuter gender.
6.9 GOVERNING LAW. This Agreement shall in all respects be constructed
in accordance with and governed by the laws of the State of Delaware. Any
and all disputes arising under or in connection with this Agreement or the
transactions contemplated hereby shall be resolved by binding arbitration
before JAMS/Endispute, which arbitration shall be conducted in Seattle,
Washington in accordance with the rules of JAMS/Endispute.
6.10 TRANSACTION EXPENSES. All of the expenses of the Shareholders
incurred in connection with the transactions contemplated by this Agreement,
including but not limited to the fees of counsel, investment bankers, title
insurance premiums, other investment advisors, accountants (including audit
fees relating to the Audited Financial Statements and the Closing Date
Balance Sheet) and consultants (collectively, the "Shareholder Closing
Expenses"), shall be paid for by the Shareholders. None of the Shareholder
Closing Expenses shall be accrued or paid by Avtech or DAH. The Principal
Shareholders represent and warrant that all of the persons engaged in
connection with the transactions contemplated hereby, to whom Shareholder
Closing Expenses may be payable, have no recourse to Avtech, and that
adequate provision has been made for the payment of all unpaid amounts by
the Paying Agent or the Escrow Agent pursuant to Section 1.2.3 hereof.
6.11 CLOSING DATE. The date on which the transaction shall close (the
"Closing Date") shall be June 26, 1998 unless the conditions in Sections
5.1.6 and 5.1.7 have not been completed, in which case, the Closing shall be
3 business days following the completion of each of the conditions specified
in Sections 5.1.6 and 5.1.7; PROVIDED, HOWEVER, that (i) each of the parties
hereto shall use its best efforts to satisfy each of the conditions
precedent to the Closing Date which is satisfied by the delivery of
documents (other than those to be dated on the Closing Date) no later than
June 24, 1998; and (ii) nothing in this language waives any of the other
closing conditions specified in Section 5.
7. TERMINATION. This Agreement may be terminated by the parties and the
contemplated transactions abandoned at any time prior to closing, as follows:
(a) By the written consent of DAH and Shareholders holding a majority of
the Avtech Common Shares;
22
(b) By either DAH or Shareholders holding a majority of the Avtech
Common Shares, upon written notice of all other parties of this Agreement,
at any time after July 31, 1998, if the Closing Date shall not have occurred
by such date; PROVIDED, HOWEVER, that the right to terminate this Agreement
under this paragraph (b) shall not be available to any party which has
intentionally breached this Agreement or whose failure to comply with its
covenants and agreements set forth in this Agreement shall have been the
primary cause of the closing not occurring.
▇▇▇▇▇▇▇ AIRCRAFT HOLDINGS, INC.
-----------------------------------------------
By:
Avtech Corporation Employees Stock
Ownership Trust
-----------------------------------------------
By: Its Trustee
-----------------------------------------------
Name
-----------------------------------------------
Title
-----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jr. University
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ UNITRUST
-----------------------------------------------
By: Its Trustee
-----------------------------------------------
Name
-----------------------------------------------
▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
▇▇▇▇ ▇▇▇▇
23
SCHEDULE A
"SHAREHOLDERS"
NAME NUMBER OF SHARES
---------------------------------------------------------- ----------------------------------
**Avtech Corporation Employees Stock Ownership Trust...... 163,988.30
** ▇▇▇▇ ▇. ▇▇▇▇▇▇......................................... 257.40 plus 20,000 options
** ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇...................................... 134,812.60 plus 90,000 options
** ▇▇▇▇ ▇▇▇▇▇............................................. 20,000 options
** ▇▇▇▇ ▇▇▇▇.............................................. 20,000 options
▇▇▇▇▇▇ ▇▇▇▇▇▇▇............................................ 1,500
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.......................................... 33.70
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jr. University ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ UNITRUST.... 10,000
------------------------
** Designates Principal Shareholder
24
SCHEDULE B
TO STOCK PURCHASE AND SALE AGREEMENT
DEFINITIONS
"Agreement"...................................................................... Preamble
"Avtech"......................................................................... Preamble
"Avtech Common Shares"........................................................... 2.2.2
"Audited Financial Statements"................................................... 2.2.4
"Bid"............................................................................ 2.2.29
"Closing Date"................................................................... 6.11
"Closing Date Balance Sheet"..................................................... 3.1.11
"CERCLA"......................................................................... 2.2.15
"COBRA".......................................................................... 2.2.20
"Commitment"..................................................................... 2.2.28
"DAH"............................................................................ Preamble
"Delivered Financial Statements"................................................. 2.2.4
"Employee Benefit Plan".......................................................... 2.2.20
"ERISA".......................................................................... 2.2.20
"Escrow Agent"................................................................... 1.2.2
"Escrow Agreement"............................................................... 1.2.2
"ESOT"........................................................................... 2.2.20
"ESOT Trustee"................................................................... 2.2.20
"Financial Statements"........................................................... 2.2.4
"Government Contract"............................................................ 2.2.29
"Government"..................................................................... 2.2.29
"Hazardous Substance"............................................................ 2.2.15
"Material Adverse Effect"........................................................ 2.2.5
"Non-Restricted Employees"....................................................... 2.2.5
"Paying Agent"................................................................... 1.2.1
"Permits"........................................................................ 2.2.8
"Principal Shareholders"......................................................... Preamble
"Real Property".................................................................. 2.2.13
"Real Property Leases"........................................................... 2.2.13
"Release"........................................................................ 2.2.15
"Restricted Employee"............................................................ 2.2.5
"Shareholders"................................................................... Preamble
"Shareholder Closing Expenses"................................................... 6.10
"Strategic Alliances"............................................................ 2.2.31
"Transferor"..................................................................... 2.2.29
25
