[EXECUTION COPY]
AGREEMENT AND PLAN OF MERGER
dated as of
April 14, 1998
among
Q INTERNATIONAL COURIER, INC.
(the "Company")
XXXXXX X. XXXXXXX
(the "Primary Stockholder")
The other stockholders of the Company
listed on the signature pages hereof
(the "Other Stockholders")
AIRNET SYSTEMS, INC.
("AirNet")
and
Q ACQUISITION COMPANY
("Merger Subsidiary")
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger; Effective Time. . . . . . . . . . . . . . . . . . 2
1.02. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03. Effect of the Merger. . . . . . . . . . . . . . . . . . . . . 2
1.04. Conversion of Securities. . . . . . . . . . . . . . . . . . . 3
1.05. Escrows . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.07. Treatment of Stock Options. . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.01. Governing Documents . . . . . . . . . . . . . . . . . . . . . 5
2.02. Directors and Officers. . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 3.01. Corporate Existence and Power . . . . . . . . . . . . . . . . 5
3.02. Organizational Documents. . . . . . . . . . . . . . . . . . . 6
3.03. Corporate Authorization . . . . . . . . . . . . . . . . . . . 6
3.04. Governmental Authorization. . . . . . . . . . . . . . . . . . 6
3.05. Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 6
3.06. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 7
3.07. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.08. Financial Statements. . . . . . . . . . . . . . . . . . . . . 8
3.09. Information Supplied. . . . . . . . . . . . . . . . . . . . . 8
3.10. Absence of Certain Changes. . . . . . . . . . . . . . . . . . 9
3.11. No Undisclosed Liabilities. . . . . . . . . . . . . . . . . .10
3.12. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .10
3.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.15. Trademarks, Patents and Copyrights. . . . . . . . . . . . . .13
3.16. Material Contracts. . . . . . . . . . . . . . . . . . . . . .14
3.17. Compliance with Laws. . . . . . . . . . . . . . . . . . . . .15
3.18. Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . .15
3.19. Pooling; Tax Treatment. . . . . . . . . . . . . . . . . . . .15
3.20. Other Information . . . . . . . . . . . . . . . . . . . . . .16
i
SECTION 3.21. Environmental Compliance. . . . . . . . . . . . . . . . . . .16
3.22. Intercompany Arrangements . . . . . . . . . . . . . . . . . .18
3.23. Satisfaction of Certain Conditions. . . . . . . . . . . . . .18
3.24. Representations . . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF AIRNET AND MERGER SUBSIDIARY
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . . . .18
4.02. Organizational Documents. . . . . . . . . . . . . . . . . . .18
4.03. Corporate Authorization . . . . . . . . . . . . . . . . . . .18
4.04. Governmental Authorization. . . . . . . . . . . . . . . . . .19
4.05. Non-Contravention . . . . . . . . . . . . . . . . . . . . . .19
4.06. Capitalization. . . . . . . . . . . . . . . . . . . . . . . .19
4.07. SEC Filings; AirNet Disclosure Documents;
Financial Statements . . . . . . . . . . . . . . . . . . .20
4.08. Information Supplied. . . . . . . . . . . . . . . . . . . . .21
4.09. Pooling; Tax Treatment. . . . . . . . . . . . . . . . . . . .21
4.10. Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . .21
4.11. Compliance with Laws. . . . . . . . . . . . . . . . . . . . .21
4.12. Environmental Compliance. . . . . . . . . . . . . . . . . . .21
4.13. Trademarks, Patents and Copyrights. . . . . . . . . . . . . .23
4.14. Absence of Certain Changes. . . . . . . . . . . . . . . . . .23
4.15. Satisfaction of Certain Conditions. . . . . . . . . . . . . .23
4.16. Representations . . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. Conduct of the Business of the Company. . . . . . . . . . . .24
5.02. Access to Information; Confidentiality. . . . . . . . . . . .26
5.03. Other Offers. . . . . . . . . . . . . . . . . . . . . . . . .26
5.04. Notices of Certain Events . . . . . . . . . . . . . . . . . .27
5.05. Stockholder Actions . . . . . . . . . . . . . . . . . . . . .27
ARTICLE VI
COVENANTS OF AIRNET AND MERGER SUBSIDIARY
SECTION 6.01. Access to Information; Confidentiality. . . . . . . . . . . .28
6.02. Obligations of Merger Subsidiary. . . . . . . . . . . . . . .29
6.03. Other Offers. . . . . . . . . . . . . . . . . . . . . . . . .29
6.04. Notices of Certain Events . . . . . . . . . . . . . . . . . .29
6.05. Registration Statement; Stockholder Meeting; Proxy Material .30
6.06. Listing of Shares . . . . . . . . . . . . . . . . . . . . . .30
6.07. Director and Officer Indemnification. . . . . . . . . . . . .30
ii
SECTION 6.08. Board of Directors. . . . . . . . . . . . . . . . . . . . . .30
6.09. Rules 144 and 145 . . . . . . . . . . . . . . . . . . . . . .31
6.10. Purchase of Airport Facility. . . . . . . . . . . . . . . . .31
6.11. Release of Guarantees . . . . . . . . . . . . . . . . . . . .31
ARTICLE VII
COVENANTS OF AIRNET,
THE COMPANY AND THE STOCKHOLDERS
SECTION 7.01. Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . .31
7.02. Certain Filings . . . . . . . . . . . . . . . . . . . . . . .31
7.03. Public Announcements. . . . . . . . . . . . . . . . . . . . .32
7.04. Further Assurances. . . . . . . . . . . . . . . . . . . . . .32
7.05. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . .32
7.06. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . .33
7.07. Employee Benefits . . . . . . . . . . . . . . . . . . . . . .34
7.08. Postal Office Litigation. . . . . . . . . . . . . . . . . . .34
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party . . . . . . . . .34
8.02. Conditions to the Obligations of AirNet
and Merger Subsidiary. . . . . . . . . . . . . . . . . . .35
8.03. Conditions to the Obligations of the Company. . . . . . . . .37
ARTICLE IX
TERMINATION
SECTION 9.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . .39
9.02. Effect of Termination . . . . . . . . . . . . . . . . . . . .40
ARTICLE X
SURVIVAL; INDEMNIFICATION
SECTION 10.01. Survival . . . . . . . . . . . . . . . . . . . . . . . . . .40
10.02. Indemnification. . . . . . . . . . . . . . . . . . . . . . .40
10.03. Procedures . . . . . . . . . . . . . . . . . . . . . . . . .41
10.04. Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . .42
10.05. Certain Limitations. . . . . . . . . . . . . . . . . . . . .42
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .43
11.02. Amendments; No Waivers . . . . . . . . . . . . . . . . . . .44
iii
SECTION 11.03. Expenses; Taxes. . . . . . . . . . . . . . . . . . . . . . .44
11.04. Headings . . . . . . . . . . . . . . . . . . . . . . . . . .45
11.05. Severability . . . . . . . . . . . . . . . . . . . . . . . .45
11.06. Entire Agreement; Company Disclosure Schedule. . . . . . . .45
11.07. Successors and Assigns . . . . . . . . . . . . . . . . . . .45
11.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .45
11.09. Counterparts; Effectiveness. . . . . . . . . . . . . . . . .45
iv
INDEX OF DEFINED TERMS
Page
----
4
401(k) Plan Participants . . . . . . . . . . . . . . . . . . . . . . . . . .34
A
Adjusted Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
AirNet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AirNet 1997 Form 10-K. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
AirNet 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
AirNet Acquisition Proposal. . . . . . . . . . . . . . . . . . . . . . . . .29
AirNet Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
AirNet Disclosure Documents. . . . . . . . . . . . . . . . . . . . . . . . .20
AirNet Indemnitee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
AirNet Intellectual Property Rights. . . . . . . . . . . . . . . . . . . . .23
AirNet Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . .23
AirNet Preferred Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .19
AirNet Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . .30
AirNet Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . .26
AirNet Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
AirNet Shareholder Consent . . . . . . . . . . . . . . . . . . . . . . . . .19
AirNet Shareholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . .30
Airport Facility Purchase Agreement. . . . . . . . . . . . . . . . . . . . .31
Applicable Corporate Statutes. . . . . . . . . . . . . . . . . . . . . . . . 1
B
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Benefit Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
C
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company 401(k) Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Company Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . .26
Company Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Indemnitees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Company Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . 9
Company Representatives. . . . . . . . . . . . . . . . . . . . . . . . . . .28
Company Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Subsidiary Securities. . . . . . . . . . . . . . . . . . . . . . . . 8
v
D
DLJ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
E
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Escrow Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
F
Final S Corporation Tax Distribution . . . . . . . . . . . . . . . . . . . .33
Financial Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
G
General Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . . . .40
General Escrow Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
H
Hazardous Substance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
I
Indemnified Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . .13
L
Lease Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
M
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Merger Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
N
New York Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
O
Ohio Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
vi
Other Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
P
Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Preliminary S Corporation Tax Distribution . . . . . . . . . . . . . . . . .33
Primary Stockholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
R
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
S
SBCWDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Specific Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Specific Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Stockholder Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Straddle Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 19
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
T
Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
vii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of April 14, 1998, among Q
INTERNATIONAL COURIER, INC., a New York corporation (the "Company"), XXXXXX
X. XXXXXXX (the "Primary Stockholder"), the OTHER STOCKHOLDERS of the Company
as listed on the signature pages hereof (together with any stockholder of the
Company who subsequently becomes party to this Agreement through joinder, the
"Other Stockholders", and, together with the Primary Stockholder, the
"Stockholders"), AIRNET SYSTEMS, INC., an Ohio corporation ("AirNet"), and Q
ACQUISITION COMPANY, an Ohio corporation and a direct, wholly-owned
subsidiary of AirNet ("Merger Subsidiary").
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the General Corporation Law of the State of Ohio (the
"Ohio Law") and the Business Corporation Law of the State of New York (the
"New York Law" and, collectively with the Ohio Law, the "Applicable Corporate
Statutes"), the Company and AirNet have agreed to effectuate a business
combination transaction pursuant to which Merger Subsidiary will merge with
and into the Company (the "Merger"); and
WHEREAS, the respective Boards of Directors of the Company, AirNet and
Merger Subsidiary have determined that the Merger is fair to and in the best
interests of their respective companies and shareholders and have approved
and adopted this Agreement and have approved the Merger and the other
transactions contemplated hereby and recommended approval and adoption of
this Agreement and approval of the Merger by their respective shareholders;
and
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER; EFFECTIVE TIME. (a) Upon the terms and
subject to the conditions set forth in this Agreement and in accordance with
the Applicable Corporate Statutes, at the Effective Time (as defined herein),
Merger Subsidiary shall be merged with and into the Company, in accordance
with New York Law and Ohio Law, whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation
(the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth in
Article VIII, the Company and Merger Subsidiary will file a certificate of
merger with the Secretary of State of the State of New York and the Secretary
of State of the State of Ohio, in such forms as required by and executed in
accordance with the provisions of, and shall make all other filings or
recordings required by the Applicable Corporate Statutes in connection with
the Merger. The Merger shall become effective at such time as the
certificate of merger is duly filed with the Secretary of State of the State
of New York and with the Secretary of State of the State of Ohio or at such
later time as is specified in the certificate of merger (the "Effective
Time").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be
subject to all of the restrictions, disabilities and duties of the Company
and Merger Subsidiary, all as provided under Ohio Law and New York Law.
SECTION 1.02. CLOSING. Unless this Agreement shall have been
terminated and abandoned pursuant to Section 9.01 and subject to the
satisfaction or, to the extent permitted hereunder, waiver of the conditions
set forth in Article VIII, the consummation of the Merger will take place as
promptly as practicable (and in any event within five business days) after
satisfaction or waiver of the conditions set forth in Article VIII, at the
offices of Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP, 00 Xxxx Xxx Xxxxxx, Xxxxxxxx,
Xxxx, unless another date or place is agreed to in writing by the Company and
AirNet.
SECTION 1.03. EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Ohio Law
and New York Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, except as otherwise provided herein,
all of the property, rights, privileges, powers and franchises of the Company
and Merger Subsidiary shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Subsidiary shall become the
debts, liabilities and duties of the Surviving Corporation.
-2-
SECTION 1.04. CONVERSION OF SECURITIES. (a) At the Effective Time, by
virtue of the Merger and without any action on the part of the Company or any
of the Stockholders, all issued and outstanding shares of capital stock of
the Company immediately prior to the Effective Time shall be converted into
an aggregate of 3,141,356 common shares, $.01 par value, of AirNet (the
"AirNet Common Shares") (the "Merger Consideration"), less (i) 314,136 AirNet
Common Shares to indemnify Buyer with respect to general contingencies (the
"General Escrow Shares") and (ii) 46,091 AirNet Common Shares to indemnify
Buyer with respect to the specific contingencies set forth on Schedule 1.04
of the the disclosure schedule (the "Company Disclosure Schedule") previously
delivered to AirNet by the Company (the "Specific Escrow Shares" and,
together with the General Escrow Shares, the "Escrow Shares"). The holders of
such certificates previously evidencing shares of capital stock of the
Company outstanding prior to the Effective Time shall cease to have any
rights with respect to such shares of capital stock except as otherwise
provided herein or by applicable law. The allocation of the Merger
Consideration among the outstanding shares of capital stock of the Company
shall be determined according to the percentages set forth on Annex A
attached hereto.
(b) Each share of capital stock held by the Company as treasury stock
immediately prior to the Effective Time shall automatically be cancelled and
extinguished without any conversion thereof, and no payment shall be made
with respect thereto.
(c) Each share of capital stock of Merger Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and non-assessable share of common stock, $1.00 par
value, of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
(d) No fractional shares of AirNet Common Shares shall be issued in
the Merger, but in lieu thereof each Stockholder otherwise entitled to a
fractional AirNet Common Share will be entitled to receive from AirNet in
accordance with the provisions of this Section 1.04(d), a cash payment in
lieu of such fractional AirNet Common Share equal to the fair market value of
such fractional AirNet Common Share based on the closing price of the AirNet
Common Shares on the New York Stock Exchange, Inc. ("NYSE") on the last
trading day immediately prior to the Closing Date.
SECTION 1.05. ESCROWS. The parties agree that the General Escrow
Shares and the Specific Escrow Shares shall be deposited in an account (the
"Escrow Account") with Banc One Corporation, as escrow agent (the "Escrow
Agent"), to be held and administered in accordance with the terms and
conditions of an Escrow Agreement substantially in the form attached hereto
as Exhibit 1.05, against which Escrow Account AirNet shall be entitled to
recover any general Losses which may be suffered by AirNet for which AirNet
is entitled to indemnity pursuant to Section 11.02(a), in the case of the
General Escrow Shares, or to recover any Losses arising out of the specific
contingencies set forth on Schedule 1.04, in the case of the Specific Escrow
Shares.
SECTION 1.06. SURRENDER. (a) At the Effective Time, each holder of
shares of capital stock of the Company outstanding immediately prior to the
Effective Time shall be entitled to
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receive the percentage of the Merger Consideration set forth opposite such
holder's name on Annex A attached hereto, less the corresponding percentage
of the Escrow Shares, upon surrender to AirNet of all certificates which
formerly represented all outstanding shares of capital stock of the Company
held by such holder; PROVIDED, that in no event shall the holders of shares
of capital stock of the Company outstanding immediately prior to the
Effective Time be entitled to receive in the aggregate more than 100% of the
Merger Consideration.
(b) After the Effective Time, the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers of
shares of capital stock of the Company on the records of the Company. If,
after the Effective Time, certificates representing shares of capital stock
of the Company are presented to the Surviving Corporation, they shall be
cancelled and exchanged for the Merger Consideration (less the corresponding
Escrow Shares) provided for, and in accordance with the procedures set forth,
in this Article I.
(c) No dividends or other distributions declared or made after the
Effective Time which have a record date after the Effective Time shall be
paid to the holder of any unsurrendered certificates representing shares of
capital stock of the Company with respect to the AirNet Common Shares such
holder is entitled to receive until such certificates shall have been
surrendered to the Surviving Corporation.
SECTION 1.07. TREATMENT OF STOCK OPTIONS. (a) As soon as practicable
following the date of this Agreement, the directors of the Company shall
adopt such resolutions or take such other actions as may be required to
effect the following: adjust the terms of all Company Stock Options, whether
vested or unvested, as necessary to provide that, at the Effective Time, each
Company Stock Option outstanding immediately prior to the Effective Time
shall be amended and converted into an option to acquire, on substantially
the same terms and conditions as were applicable under the Company Stock
Option (including, without limitation, substantially the same vesting and
termination provisions, subject to the terms and conditions of this
Agreement), the number of AirNet Common Shares (rounded to the nearest whole
share) determined by multiplying 249,591 by a fraction the numerator of which
shall be the number of shares of the Company's capital stock subject to such
Company Stock Option and the denominator of which shall be the total number
of shares of the Company's capital stock subject to all Company Stock
Options, at a price per AirNet Common Share equal to (A) the aggregate
exercise price for the shares of capital stock of the Company otherwise
purchasable pursuant to such Company Stock Option divided by (B) the
aggregate number of AirNet Common Shares deemed purchasable pursuant to such
Company Stock Option (each, as so adjusted, an "Adjusted Option"); PROVIDED
that such exercise price shall be rounded up to the nearest whole cent.
(b) Prior to the Effective Time, AirNet, if necessary, shall amend
its existing option plans or, if necessary, adopt an option plan, in either
case, to provide for the issuance of the Adjusted Options at the Effective
Time and by virtue of the Merger, and without the need of any further
corporate action, AirNet shall assume all obligations of the Company with
respect to the Company Stock Options outstanding at the Effective Time.
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(c) As soon as practicable after the Effective Time, AirNet shall
deliver to the holders of Company Stock Options appropriate notices setting
forth such holders' rights with respect to Adjusted Options and, in exchange
for the executed agreements reflecting the Company Stock Options, agreements
evidencing the grants of such Adjusted Options.
(d) A holder of an Adjusted Option may exercise such Adjusted Option
in whole or in part in accordance with its terms by delivering a properly
executed notice of exercise to AirNet, together with the consideration
therefor and any required United States Federal withholding tax information
and payment.
(e) Except as otherwise contemplated by this Section 1.07 and except
to the extent required under the respective terms of the Company Stock
Options, all restrictions or limitations on transfer and vesting with respect
to Company Stock Options, to the extent that such restrictions or limitations
shall not have already lapsed, shall remain in full force and effect with
respect to the Adjusted Options after giving effect to the Merger and the
assumption by AirNet as set forth above.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.01. GOVERNING DOCUMENTS. At the Effective Time of the
Merger, the Certificate of Incorporation and the Bylaws of the Company, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation, except that the
name of the Surviving Corporation shall be changed to "Quick International
Courier, Inc."
SECTION 2.02. DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation, and (ii)
the officers of the Surviving Corporation at the Effective Time shall be the
officers set forth on Schedule 2.02.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to AirNet and Merger Subsidiary that:
SECTION 3.01. CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, and has all requisite corporate powers and all governmental
licenses, authorizations, consents and
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approvals required to own, lease and operate its properties and to carry on
its business as now conducted by the Company. The Company is duly qualified
or licensed to do business as a foreign corporation, and is in good standing,
in each jurisdiction where the character of the property owned or leased by
it or the nature of its activities makes such qualification or licensing
necessary.
SECTION 3.02. ORGANIZATIONAL DOCUMENTS. The Company has heretofore
delivered to AirNet true and complete copies of the Certificate of
Incorporation and Bylaws of the Company, in each case as currently in effect.
The Company is not in violation of any provision of its Certificate of
Incorporation or Bylaws.
SECTION 3.03. CORPORATE AUTHORIZATION. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the corporate
powers of the Company and have been duly authorized by all necessary
corporate action. This Agreement constitutes a valid and binding agreement of
the Company and the Stockholders.
(b) The Directors of the Company, at a meeting duly called and held,
have unanimously (i) determined that this Agreement and the transactions
contemplated hereby are fair to and in the best interests of the Stockholders
and (ii) approved and adopted this Agreement and the transactions
contemplated hereby.
SECTION 3.04. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company and the Stockholders of this Agreement and the
consummation of the transactions contemplated by the Agreement by the Company
require no consent, approval, authorization or permit of, or filing with or
notification to any governmental or regulatory authority, except for (i) the
filing of certificates of merger and/or other appropriate merger documents in
accordance with New York Law and Ohio Law; (ii) compliance with any
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act"); (iii) compliance with any applicable provisions of the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder
(the "Securities Act"), state securities or "blue sky" laws and state
takeover laws; and (iv) compliance with any applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act").
SECTION 3.05. NON-CONTRAVENTION. Except as set forth on Schedule 3.05 of
Company Disclosure Schedule, the execution, delivery and performance by the
Company and the Stockholders of this Agreement and the consummation by the
Company and the Stockholders of the transactions contemplated hereby do not and
will not (i) contravene or conflict with the Certificate of Incorporation or
Bylaws or equivalent organizational documents of Company; (ii) assuming
compliance with the matters referred to in Section 3.04, contravene or conflict
with or constitute a violation of any provision of any law, rule, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company,
any Subsidiary of the Company or any Stockholder; (iii) constitute a default
under or give rise to a right of termination, cancellation or acceleration of
any right or obligation of the Company or any Subsidiary of the Company or to a
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loss of any benefit to which the Company or any Subsidiary of the Company is
entitled under any provision of any material agreement, contract or other
instrument binding upon the Company or any Subsidiary of the Company or any
license, franchise, permit or other similar authorization held by the Company
or any Subsidiary of the Company; or (iv) result in the creation or
imposition of any Lien on any asset of the Company or any Subsidiary of the
Company. "Subsidiary" means with respect to the Company any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by the Company;
PROVIDED, that for purposes hereof the term Subsidiary shall also include all
Affiliates of the Company which are now Subsidiaries and all predecessors of
the Subsidiaries. For purposes of this Agreement, "Affiliate" shall have the
meaning set forth in Rule 405 of Regulation C under the Securities Act.
SECTION 3.06. CAPITALIZATION. The authorized capital stock of the
Company consists of 20,000 shares of common stock, par value $1.00 per share,
and 3,000 shares of Class A common stock, par value $1.00 per share. As of
the date hereof there are outstanding 12,277 shares of common stock, and at
the Effective Time there will be outstanding 12,586 shares of the Company's
common stock. As of the date here there are, and as of the Effective Time
there will be, Company Stock Options to purchase 1,000 shares of Class A
common stock, par value $1.00 per share, of the Company outstanding. All
outstanding shares of capital stock of the Company have been, and at the
Effective Time will be, duly authorized and validly issued and are, and at
the Effective Time will be, fully paid and, except as set forth on Schedule
3.06 of the Company Disclosure Schedule, nonassessable. Except as set forth
in this Section or in Schedule 3.06 of the Company Disclosure Schedule, there
are, and at the Effective Time will be, outstanding: (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities
of the Company convertible into or exchangeable for shares of capital stock
or voting securities of the Company, and (iii) no options or other rights to
acquire from the Company, and no obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items
in clauses (i), (ii) and (iii) being referred to collectively as the "Company
Securities"). Except as set forth on Schedule 3.06 of the Company Disclosure
Schedule, there are, and at the Effective Time will be, no outstanding
obligations of the Company or any Subsidiary of the Company, to repurchase,
redeem or otherwise acquire any Company Securities or make any material
investment in any other Person. Except as set forth on Schedule 3.06 of the
Company Disclosure Schedule, the Company has, and at the Effective Time will
have, no Subsidiaries or Affiliates (other than any executive officer,
director or stockholder of the Company). No Stockholder or other holder of
any Company Securities will, as of the Effective Time, be entitled to any
preemptive rights, registration rights or similar rights in connection with
the transactions contemplated hereby, except as expressly set forth in the
Registration Rights Agreement.
SECTION 3.07. SUBSIDIARIES. (a) Each Subsidiary of the Company is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified or licensed to do business as a
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foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary.
(b) All of the outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including, without limitation, any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i) securities
of the Company or any Subsidiary convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
Subsidiary, and (ii) options or other rights to acquire from the Company or
any Subsidiary, and no other obligation of the Company or any Subsidiary to
issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable for, any capital stock,
voting securities or ownership interests in, any Subsidiary (the items in
clauses (i) and (ii) being referred to collectively as the "Company
Subsidiary Securities"). There are no outstanding obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Company Subsidiary Securities.
SECTION 3.08. FINANCIAL STATEMENTS. The audited consolidated balance
sheet of the Company and its Subsidiaries as of December 31, 1997 (the
"Balance Sheet"), the audited combined balance sheet of the Company and its
Subsidiaries as of December 31, 1996, the audited consolidated income
statement and statement of cash flows of the Company and its Subidiaries for
the twelve months ended December 31, 1997, and the audited combined income
statements and statements of cash flows of the Company and its Subsidiaries
for the six months ended December 31, 1996 and the twelve months ended June
30, 1996 and 1995, respectively, which have previously been provided to
AirNet, fairly present in all material respects, in conformity with generally
accepted accounting principles applied on a consistent basis (except as may
be indicated in the notes thereto), the financial position of the Company and
its Subsidiaries as of the dates thereof and their results of operations and
changes in financial position for the periods then ended. For purposes of
this Agreement, "Balance Sheet Date" means December 31, 1997.
SECTION 3.09. INFORMATION SUPPLIED. The information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i)
the AirNet Proxy Statement (as defined herein) or any amendment or supplement
thereto will not, at the time the AirNet Proxy Statement is first mailed to
the shareholders of AirNet and at the time such shareholders vote on the
issuance of AirNet Common Shares in connection with this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, (ii) the
Registration Statement (as defined herein) or any amendment or supplement
thereto will not, at the time the Registration Statement or any amendment or
supplement thereto becomes effective under the 1933 Act and at the Effective
Time, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any AirNet Disclosure Document
(as defined herein) (other than the AirNet Proxy Statement, the Registration
Statement and any amendments or supplements to either) will not, at the time
of effectiveness of such AirNet Disclosure Document and at the time of any
distribution thereof, contain any untrue statement of a material
-8-
fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.10. ABSENCE OF CERTAIN CHANGES. (a) Since the Balance Sheet
Date, except as contemplated by this Agreement and except as otherwise
disclosed on Schedule 3.10 of the Company Disclosure Schedule, the Company
and its Subsidiaries have conducted their business only in the ordinary
course consistent with past practice and there has not been:
(i) any event, occurrence or development which has had or
reasonably could be expected to have, when aggregated with all
positive developments and disregarding factors affecting the
economy or the courier industry generally, a material adverse
effect on the Company and its Subsidiaries, taken as a whole (a
"Company Material Adverse Effect");
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock of any of the Company or any Subsidiary of the Company, or any
repurchase, redemption or other acquisition by the Company or any
Subsidiary of the Company of any outstanding shares of capital stock
or other securities of, or other ownership interests in, the
Company;
(iii) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(iv) any incurrence, assumption or guarantee by the Company
or any Subsidiary of any indebtedness for borrowed money, other than
the endorsement of checks in the ordinary course of business;
(v) any creation or assumption by the Company or any
Subsidiary of any Lien on any asset in excess of $25,000 other than
in the ordinary course of business consistent with past practices;
(vi) other than loans, advances or capital contributions to
or investments in the Company or any Subsidiary or otherwise in the
ordinary course of business consistent with past practices and other
than loans to Stockholders, any making of any loan, advance or
capital contribution to or investment in any Person;
(vii) other than transactions and commitments in the ordinary
course of business consistent with past practice and those
contemplated by this Agreement, any transaction or legally binding
commitment made, or any contract or agreement entered into, by the
Company or any of its Subsidiaries relating to their respective
assets or business (including the acquisition or disposition of
assets in excess of $25,000) or any relinquishment by the Company
or any of its Subsidiaries of any contract or other right, in
either case, material to the Company and its Subsidiaries, taken as
a whole;
-9-
(viii) any change in any method of accounting or accounting
practice by the Company or any Subsidiary of the Company, except for
any such change required by reason of a concurrent change in generally
accepted accounting principles; or
(ix) any (A) grant of any severance or termination pay to
any director, officer, employee or agent of the Company or any
Subsidiary of the Company in excess of $25,000, (B) entering into of
any employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director,
officer, employee or agent of the Company or any Subsidiary of the
Company, (C) increase in benefits payable under any existing severance
or termination pay policies or employment agreements or (D) increase
in compensation, bonus or other benefits payable to directors,
officers, employees or agents of the Company or its Subsidiaries,
other than in the ordinary course of business consistent with past
practice or, in the case of employment agreements, as contemplated by
Section 8.02(d).
(b) Since the Balance Sheet Date, none of the officers or other key
employees of the Company or any Subsidiary has indicated to the Company that
he or she intends to resign or retire as a result of the transactions
contemplated by this Agreement or otherwise within one year after the
Effective Time.
(c) Set forth on Schedule 3.10(c) of the Company Disclosure Schedule is
a true and complete list as of the date hereof of the top ten customers of
the Company's services. Since the Balance Sheet Date, none of such customers
has ceased using, or materially diminished its use of, the Company's services
nor have any of such customers indicated to the Company that it intends to
cease using, or materially diminish its use of, the Company's services as a
result of the transactions contemplated by this Agreement or otherwise within
one year after the Effective Time.
SECTION 3.11. NO UNDISCLOSED LIABILITIES. As of the Balance Sheet Date,
there were no liabilities of the Company or any Subsidiary due or to become due,
which, in accordance with generally accepted accounting principles, should have
been reflected or shown in the Balance Sheet, that were not so reflected or
shown therein. Except as set forth on Schedule 3.11 to the Company Disclosure
Schedule, there have been no liabilities incurred by the Company, except for
liabilities (a) incurred in the ordinary course of business consistent with past
practices that would not, individually or in the aggregate, have a Company
Material Adverse Effect and (b) incurred outside the ordinary course of business
that do not exceed $25,000 individually or $100,000 in the aggregate.
SECTION 3.12. LITIGATION. Except as set forth on Schedule 3.12 of the
Company Disclosure Schedule, as of the date hereof, there is no claim,
action, suit, investigation or proceeding pending against or, to the
knowledge of the Company, threatened against the Company or any Subsidiary or
any of their respective properties before any court or arbitrator or any
governmental body, agency or official which, individually or in the
aggregate, would
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reasonably be likely to result in an uninsured liability in excess of $25,000
or impair the ability of the Company to consummate the Merger and the
transactions contemplated by this Agreement.
SECTION 3.13. TAXES. Except as set forth on Schedule 3.13 of the
Company Disclosure Schedule, the Company and each of its Subsidiaries have
timely filed all returns, statements, reports and forms (the "Tax Returns")
with respect to all federal, state, local and foreign income, gross income,
gross receipts, gains, premium, sales, use, AD VALOREM, transfer, franchise,
profits, withholding, payroll, employment, excise, severance, stamp,
occupation, license, lease, environmental, customs, duties, property,
windfall profits and all other taxes (including any interest, penalties or
additions to tax with respect thereto, individually, a "Tax" and,
collectively, "Taxes") required to be filed with the appropriate tax
authority through the date hereof, and shall timely file all such Tax Returns
required to be filed on or before the Effective Time. To the knowledge of the
Company, such Tax Returns are and will be true, correct and complete in all
material respects. The Company and its Subsidiaries have paid and discharged
all Taxes due from them, other than such Taxes that are adequately reserved
as shown on the Balance Sheet or that have accrued, or will accrue, in the
ordinary course of business from the Balance Sheet Date through the Effective
Time. Neither the Internal Revenue Service nor any other taxing agency or
authority, domestic or foreign, has asserted, is now asserting or, to the
knowledge of the Company, is threatening to assert against the Company or any
Subsidiary of the Company any deficiency or claim for additional Taxes in
excess of $25,000. There are no unexpired waivers by the Company or any of
its Subsidiaries of any statute of limitations with respect to Taxes. The
accruals and reserves for Taxes reflected in the Balance Sheet are adequate
for the periods covered. The Company and each of its Subsidiaries have
withheld or collected and paid over to the appropriate governmental
authorities or are properly holding for such payment all Taxes required by
law to be withheld or collected. There are no Liens for Taxes upon the assets
of the Company or any of its Subsidiaries, other than Liens for current Taxes
not yet due and payable. Neither the Company nor any of its Subsidiaries has
agreed to make, or is required to make, any adjustment under Section 481(a)
of the Code. Sterling, Inc. is not a party to any agreement, contract,
arrangement or plan that has resulted, or could result, individually or in
the aggregate, in the payment of "excess parachute payments" within the
meaning of Section 280G of the Code. The Company, and each of its
Subsidiaries, other than Sterling, Inc., is, and at all times during its
existence has been, an S corporation and/or a qualified subchapter S
subsidiary within the meaning of Section 1361(a)(1) or Section 1361(b)(3)(B)
of the Code (or the corresponding provisions of preceding law) and is not
subject to the tax imposed on certain built-in gains under Section 1374 of
the Code. Sterling, Inc. has never been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code, other than as a
common parent corporation.
SECTION 3.14. ERISA. (a) Schedule 3.14(a) of the Company Disclosure
Schedule includes a list identifying each "employee benefit plan," as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), which (i) is subject to any provision of ERISA and (ii) is
maintained, administered or contributed to by the Company, any of its
Subsidiaries or any ERISA Affiliate and covers any employee or former
employee of the Company, any of its Subsidiaries or any of their respective
ERISA Affiliates or under which the Company, any of its Subsidiaries or any
of their respective ERISA Affiliates has any liability.
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Copies of such plans (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof have been furnished to
AirNet together with (x) the three most recent annual reports (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan and (y) the most recent actuarial valuation report prepared in
connection with any such plan. Such plans are referred to collectively herein
as the "Employee Plans". For purposes of this Section, "ERISA Affiliate" of
any Person means any other Person which, together with such Person, would be
treated as a single employer under Section 414 of the Code. The only
Employee Plans which individually or collectively would constitute an
"employee pension benefit plan" as defined in Section 3(2) of ERISA (the
"Pension Plans") are identified as such in the list referred to above. The
Company has provided AirNet with complete age, salary, service and related
data as of December 31, 1997 for employees and former employees of the
Company, any of its Subsidiaries and any ERISA Affiliate covered under the
Pension Plans.
(b) No Employee Plan constitutes a "multiemployer plan", as defined in
Section 3(37) of ERISA (a "Multiemployer Plan"), and no Employee Plan is
maintained in connection with any trust described in Section 501(c)(9) of the
Code. None of the Employee Plans is subject to Title IV of ERISA or Section
412 of the Code. To the Company's knowledge, nothing done or omitted to be
done and no transaction or holding of any asset under or in connection with
any Employee Plan has or will make the Company or any of its Subsidiaries or
any officer or director of the Company or any of its Subsidiaries subject to
any liability under Title I of ERISA or liable for any tax pursuant to
Section 4975 of the Code in excess of $25,000.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS
applicable to all period from the inception of such Employee Plan, and each
trust forming a part thereof is exempt from tax pursuant to Section 501(a) of
the Code. The Company has furnished to AirNet copies of the most recent
Internal Revenue Service determination letters with respect to each such
Plan. Each Employee Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including but not limited to ERISA and the
Code, which are applicable to such Plan. Without limiting the generality of
the preceding sentence, each Employee Plan which is a "group health plan," as
defined in Section 5000(b)(1) of the Code, has been administered in
compliance with the provisions of Section 4980B of the Code and Part 6 of
Title I of ERISA.
(d) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company, any of its Subsidiaries or any
Affiliate that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to the terms of Section
162(a)(1) of the Code.
(e) Schedule 3.14(e) of the Company Disclosure Schedule sets forth a
list of each employment, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses,
stock options, stock appreciation or other forms of incentive compensation or
post-retirement
-12-
insurance, compensation or benefits which (i) is not an Employee Plan, (ii)
is entered into, maintained or contributed to, as the case may be, by the
Company, its Subsidiaries or any of their respective Affiliates and (iii)
covers any employee or former employee of the Company, its Subsidiaries or
any of their respective Affiliates. Such contracts, plans and arrangements
as are described above, copies or descriptions of all of which have been
furnished previously to AirNet are referred to collectively herein as the
"Benefit Arrangements." Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations that are applicable to
such Benefit Arrangement.
(f) Neither the Company nor any of its Subsidiaries maintains or
contributes to any Employee Plan or Benefit Arrangement which provides or has
any liability to provide retirement health or medical benefits to any
employee or former employee of the Company or any of its Subsidiaries. No
condition exists that would prevent the Company, any of its Subsidiaries or
any of their respective Affiliates from amending or terminating any Employee
Plan or Benefit Arrangement providing health or medical benefits, including
post-retirement health and medical benefits, in respect of any active
employee or former employee of the Company, or its Subsidiaries other than
limitations imposed under the terms of a collective bargaining agreement.
(g) Except as set forth on Schedule 3.14(g) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to or
subject to any union contract or any employment contract or arrangement
providing for annual future compensation of $50,000 or more with any officer,
consultant, director or employee. There are no labor unions voluntarily
recognized or certified to represent any bargaining unit of employees at the
Company or any of its Subsidiaries. No work stoppage, labor strike or
slowdown against the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened. Neither the Company nor any of its
Subsidiaries is involved in or, to the knowledge of the Company, threatened
with any labor dispute or grievance. To the knowledge of the Company, there
is no organizing effort or representation question at issue with respect to
any employee of the Company or any of its Subsidiaries. No collective
bargaining agreement to which the Company or any of its Subsidiaries is or
may be a party is currently under negotiation or renegotiation and no
existing collective bargaining agreement is due for expiration, renewal or
renegotiation within the one year period after the date hereof.
SECTION 3.15. TRADEMARKS, PATENTS AND COPYRIGHTS. (a) Schedule 3.15(a)
of the Company Disclosure Schedule sets forth a true and complete list, as of
the date hereof, of (i) all patents, patent rights, trademarks, trademark
rights, trade names, registered copyrights, service marks, material trade
secrets, applications for trademarks and for service marks, material know-how
and other material proprietary rights and information used or held for use in
connection with the business of the Company or its Subsidiaries as currently
conducted (collectively, "Intellectual Property Rights") and (ii) all
licenses, commitments and other agreements to which the Company or any
Subsidiary of the Company is a party providing for the license of any
Intellectual Property Rights to or from any other Person.
(b) Except as set forth on Schedule 3.15(b) of the Company Disclosure
Schedule, the Company and its Subsidiaries own or possess adequate licenses or
other rights to use all of the
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Intellectual Property Rights; to the knowledge of the Company there are no
Intellectual Property Rights necessary for use in connection with the
business of the Company or its Subsidiaries as currently conducted which are
not owned or possessed by the Company or its Subsidiaries; and the Company is
not aware of any assertion or claim challenging the validity of any of the
Intellectual Property Rights; and the conduct of the business of the Company
and its Subsidiaries as currently conducted or as heretofore conducted by the
Company or any of the Subsidiaries of the Company, to the knowledge of the
Company, does not conflict in any material way with any patent, patent right,
license, trademark, trademark right, trade name, trade name right, service
xxxx or copyright of any third party. To the knowledge of the Company, there
are no material infringements of any proprietary rights owned by or licensed
by or to the Company or any of the Subsidiaries of the Company.
SECTION 3.16. MATERIAL CONTRACTS. (a) Except for agreements,
contracts, plans, leases, arrangements or commitments (in each case, oral or
written) set forth on Schedule 3.16(a) of the Company Disclosure Schedule, as
of the date hereof, neither the Company nor any of its Subsidiaries is a
party to or subject to:
(a) any lease providing for annual rental payments of $25,000
or more;
(b) any contract for the purchase of materials, supplies,
goods, services, equipment or other assets providing for annual
payments by the Company or any Subsidiary of $25,000 or more;
(c) any sales, distribution or other similar agreement
providing for the sale by the Company or any Subsidiary of
materials, supplies, goods, services, equipment or other assets
that provides for annual payments to the Company or any Subsidiary
of $50,000 or more;
(d) any partnership, joint venture or other similar contract
arrangement or agreement;
(e) any contract relating to indebtedness for borrowed money
or the deferred purchase price of property (whether incurred,
assumed, guaranteed or secured by any asset), except contracts
relating to indebtedness incurred in the ordinary course of
business in an amount not exceeding $25,000;
(f) any license agreement, franchise agreement or agreement
in respect of similar rights granted to or held by the Company or
any of its Subsidiaries requiring annual payments by, or providing
annual revenues to, the Company of $25,000 or more;
(g) any agency, dealer, sales representative or other
similar agreement requiring annual payments by, or providing annual
revenues to, the Company of $25,000 or more;
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(h) any contract or legally binding commitment that
substantially limits the ability of the Company or any of its
Subsidiaries to compete in any line of business or with any Person
or in any area or which would so restrict the Company or any of its
Subsidiaries after the Effective Time; or
(i) any other contract or legally binding commitment not
made in the ordinary course of business that involves annual
expenditures by, or revenues to, to the Company or any of its
Subsidiaries in excess of $25,000.
(b) Each agreement, contract, lease, arrangement and commitment
disclosed on Schedule 3.16(b) of the Company Disclosure Schedule or required
to be disclosed pursuant to this Section is a valid and binding agreement of
the Company or its Subsidiaries and, to the knowledge of the Company, is in
full force and effect, and neither the Company and its Subsidiaries nor, to
the knowledge of the Company, any other party thereto is in default in any
material respect under the terms of any such agreement, contract, plan, lease
arrangement or commitment.
SECTION 3.17. COMPLIANCE WITH LAWS. The Company and each of its
Subsidiaries and Affiliates is in compliance with the applicable provisions
of all laws, rules, statutes, ordinances or regulations that are applicable
to the Company or such Subsidiary or Affiliate, including, but not limited to
the False Claims Act, the Xxxxxx Act, the Private Express Statutes and the
rules and regulations of the United Stated Postal Service. Neither the
Company nor any Subsidiary or Affiliate of the Company has received any
written communication since December 31, 1992, from a governmental body,
agency, official or authority that alleges that the Company or any Subsidiary
or Affiliate of the Company is not in compliance with any law, statute,
ordinance or regulation, other than communications from the United States
Postal Service which are described in reasonable detail on Schedule 3.17 of
the Company Disclosure Schedule.
SECTION 3.18. FINDERS' FEES. No investment banker, broker, finder or
other intermediary (other than Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation ("DLJ")) has been retained by, or authorized to act on behalf of,
any Stockholder, the Company or any of its Subsidiaries and entitled to any
fee or commission in connection with the Merger or the transactions
contemplated by this Agreement. The Company has previously furnished to
AirNet a complete and correct copy of all agreements between DLJ and the
Company (or any Stockholder) pursuant to which such firm would be entitled to
any payment relating to the Merger or the transactions contemplated by this
Agreement.
SECTION 3.19. POOLING; TAX TREATMENT. (a) The Company intends that the
Merger be accounted for under the "pooling of interests" method under the
requirements of Opinion No. 16 (Business Combinations) of the Accounting
Principles Board of the American Institute of Certified Public Accountants
(APB No. 16), as amended by Statements of the Financial Accounting Standards
Board, and the related interpretations of the American Institute of Certified
Public Accountants, the Financial Accounting Standards Board, and the rules
and regulations of the SEC.
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(b) Neither the Company nor any of its Subsidiaries has knowingly
taken or agreed to take any action that would prevent the Merger from
qualifying (i) for "pooling of interests" accounting treatment as described
in (a) above or (ii) as a reorganization within the meaning of Section 368(a)
of the Code.
SECTION 3.20. OTHER INFORMATION. (a) The statements contained in the
documents and certificates furnished or to be furnished by the Company, any
Subsidiary or the Stockholders in connection with satisfying the conditions
to closing set forth in this Agreement, when considered in their entirety, do
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
misleading.
(b) To the Company's knowledge, the financial projections relating to
the Company and its Subsidiaries for the twelve months ended December 31,
1998, which were delivered to AirNet on January 13, 1998, and which are
included in Schedule 3.20(b)(i) of the Company Disclosure Schedule (the
"Financial Projections"), when they were delivered, constituted the Company's
best estimate of the information purported to be shown therein, and, since
such date, with respect only to the projected revenues and income from
operations in such Financial Projections (and disregarding factors affecting
the economy or the courier industry generally), except as set forth on
Schedule 3.20(b)(ii), nothing has come to the attention of the Company to
cause the Company to believe that such projections are incorrect or
misleading in any material respect. Notwithstanding the foregoing, the
Company makes no representation or warranty that the financial results set
forth in the Financial Projections will be achieved by the Company, and
AirNet acknowledges and agrees that actual results may differ and could
differ materially from the information set forth in the Financial Projections.
SECTION 3.21. ENVIRONMENTAL COMPLIANCE. Except as set forth on
Schedule 3.21 of the Company Disclosure Schedule:
(a) No written notice, notification, demand, request for information,
citation, summons, complaint or order has been issued or filed, no penalty
has been assessed and no investigation or review is pending, or to the
knowledge of the Company, threatened by any governmental or other entity, (i)
with respect to any alleged material violation of any law, ordinance, rule,
regulation or order of any governmental entity in connection with the conduct
by the Company or its Subsidiaries of their respective businesses and
relating to a Hazardous Substance (as hereinafter defined) or (ii) with
respect to any alleged failure by the Company or any of it Subsidiaries to
have any permit, certificate, license, approval, registration or
authorization required in connection with the conduct of the business of the
Company or its Subsidiaries relating to a Hazardous Substance or (iii) with
respect to any generation, treatment, storage, recycling, transportation,
disposal or release (including a release as defined in 42 USC Section 9601)
("Release") by the Company or any of its Subsidiaries of any toxic, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons ("Hazardous Substance") used in connection
with the business of the Company or its Subsidiaries.
(b)(i) Neither the Company nor any of its Subsidiaries has, other
than as a generator, handled any Hazardous Substance, on any property now or
previously owned or leased by the
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Company or any of its Subsidiaries; (ii) no asbestos is present at any
property now or previously owned or leased by the Company or any of its
Subsidiaries; (iii) there are no underground storage tanks currently in use
or, to the knowledge of the Company, abandoned by the Company or any of its
Subsidiaries, at any property now or previously owned or leased by the
Company or any of its Subsidiaries which have been used to store or have
contained a Hazardous Substance, (iv) there has been no Release of a
Hazardous Substance with respect to which the Company or any of its
Subsidiaries may reasonably be required to perform investigation or
remediation, other than routine spills and leaks which are addressed in the
ordinary course of business, at, on or under any property now or previously
owned or leased by the Company or any of its Subsidiaries and (v) no
Hazardous Substance is present in a reportable or threshold planning
quantity, where such a quantity has been established by statute, ordinance,
rule, regulation or order, at, on or under any property now or previously
owned by the Company or any of its Subsidiaries; PROVIDED, that with respect
to any property previously owned or leased by the Company or any of its
Subsidiaries, the representations and warranties contained in this Section
3.21(b) shall apply only to the extent that the Company or any of its
Subsidiaries would be responsible or liable, by contract or by law existing
as of the date hereof, for the environmental condition of any such property.
(c) To the knowledge of the Company, neither the Company nor any of
its Subsidiaries has transported or arranged for the transportation (directly
or indirectly) of any Hazardous Substance to any location which is listed or
proposed for listing on the nationwide priorities list established under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA") or on any similar state list.
(d) To the knowledge of the Company, no oral or written notification
of a Release of a Hazardous Substance has been filed by or on behalf of the
Company or any of its Subsidiaries, and no property now or previously owned
or leased by the Company or any of its Subsidiaries is listed, or to the
knowledge of the Company, proposed for listing, on the National Priorities
List promulgated pursuant to CERCLA.
(e) There are no environmental Liens on any asset of the Company or
any of its Subsidiaries and no government actions have been taken or, to the
knowledge of the Company, are in process which could subject any of such
assets to such Liens.
(f) Except to the extent set forth on Schedule 3.21(f) of the Company
Disclosure Schedule, there have been no material environmental
investigations, studies, audits, tests, reviews or other analyses conducted
by or which are in the possession of the Company in relation to any property
or facility now or previously owned or leased by the Company or any of its
Subsidiaries. The parties acknowledge and agree that the delivery of any such
environmental investigation, study, audit, test, review or analysis shall not
relieve the Company or the Shareholders of their obligations hereunder with
respect to the representations and warranties of the Company pursuant to this
Section 3.21.
(g) Anything in this Agreement to the contrary notwithstanding,
Section 3.21 shall constitute the exclusive representation of the Company
with respect to environmental matters.
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SECTION 3.22. INTERCOMPANY ARRANGEMENTS. Except as set forth on
Schedule 3.22 of the Company Disclosure Schedule, neither the Company nor any
Subsidiary owns any note, bond, debenture or other indebtedness, or is
otherwise a creditor, of a Stockholder or any Affiliate of the Company.
Except as set forth in Schedule 3.22 of the Company Disclosure Schedule,
since the Balance Sheet Date there has not been any payment by the Company or
any Subsidiary to any Stockholder or any Affiliate of the Company, charge by
any Stockholder or any of Affiliate of the Company to the Company or any
Subsidiary or other transaction between the Company or any Subsidiary and any
Stockholder or any Affiliate of the Company.
SECTION 3.23. SATISFACTION OF CERTAIN CONDITIONS. As of the date
hereof, the Company knows of no reason why the opinion referred to in Section
8.03(h) hereof cannot be given at the time provided in such sections.
SECTION 3.24. REPRESENTATIONS. The representations and warranties of
the Company contained in this Agreement, disregarding (other than with
respect to Section 3.10(a)(i) hereof) all qualifications and exceptions
contained therein relating to materiality or Company Material Adverse Effect,
are true and correct with only such exceptions as would not in the aggregate
reasonably be expected to have a Company Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF AIRNET AND MERGER SUBSIDIARY
AirNet and Merger Subsidiary, jointly and severally, represent and
warrant to the Company and the Stockholders that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. Each of AirNet and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Ohio, and has all requisite corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to own, lease and operate its properties and to carry on
its business as now conducted. Each of AirNet and Merger Subsidiary is duly
qualified or licensed to do business as a foreign corporation, and is in good
standing, in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification or
licensing necessary. Since the date of its incorporation, Merger Subsidiary
has not engaged in any activities other than in connection with or as
contemplated by this Agreement.
SECTION 4.02. ORGANIZATIONAL DOCUMENTS. AirNet has heretofore
delivered to the Company true and complete copies of the articles of
incorporation and code of regulations of AirNet and Merger Subsidiary, in
each case as currently in effect. Neither AirNet nor Merger Subsidiary is in
violation of any provision of its articles of incorporation or code of
regulations.
SECTION 4.03. CORPORATE AUTHORIZATION. The execution, delivery and
performance by AirNet and Merger Subsidiary of this Agreement and the
consummation by AirNet and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of each of
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AirNet and Merger Subsidiary and have been duly authorized, including, but
not limited to, for purposes of Chapter 1704 of Ohio Law, by all necessary
corporate action (other than the required approval by AirNet's shareholders
of the matters set forth in Sections 8.01(b) (the "AirNet Shareholder
Consent")). This Agreement constitutes a valid and binding agreement of
AirNet and Merger Subsidiary.
SECTION 4.04. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by AirNet and Merger Subsidiary of this Agreement and the
consummation by AirNet and Merger Subsidiary of the transactions contemplated
by the Agreement require no consent, approval, authorization or permit of, or
filing with or notification to any governmental or regulatory authority,
except for (i) the filing of a certificate of merger and/or other appropriate
merger documents in accordance with New York Law and Ohio Law, (ii)
compliance with any applicable requirements of the HSR Act; (iii) compliance
with any applicable requirements of the Securities Act, state securities or
"blue sky" laws and state takeover laws; and (iv) compliance with any
applicable requirements of the Exchange Act.
SECTION 4.05. NON-CONTRAVENTION. The execution, delivery and
performance by AirNet and Merger Subsidiary of this Agreement and the
consummation by AirNet and Merger Subsidiary of the transactions contemplated
hereby, assuming receipt of the AirNet Shareholder Consent, do not and will
not (i) contravene or conflict with the articles of incorporation or code of
regulations of AirNet or Merger Subsidiary; (ii) assuming compliance with the
matters referred to in Section 4.04, contravene or conflict with or
constitute a violation of any provision of law, rule, regulation, judgment,
injunction, order or decree binding upon AirNet, any Subsidiary of AirNet or
Merger Subsidiary; (iii) constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or obligation of
AirNet, any Subsidiary of AirNet or Merger Subsidiary or to a loss of any
benefit to which AirNet, any Subsidiary of AirNet or Merger Subsidiary is
entitled under any material agreement, contract or other instrument binding
upon AirNet, any Subsidiary of AirNet or Merger Subsidiary; or (iv) result in
the creation or imposition of any Lien on any asset of AirNet, any Subsidiary
of AirNet or Merger Subsidiary. "Subsidiary," with respect to AirNet, means
any corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are directly or
indirectly owned by AirNet.
SECTION 4.06. CAPITALIZATION. (a) As of the date hereof, the authorized
capital stock of AirNet consists of 40,000,000 AirNet Common Shares and
10,000,000 preferred shares, $.01 par value (the "AirNet Preferred Shares"). As
of December 31, 1997, there were outstanding 12,489,830 AirNet Common Shares,
263,570 AirNet Common Shares held in treasury, employee stock options to
purchase an aggregate of 651,095 AirNet Common Shares (of which options to
purchase an aggregate of 587,145 shares were exercisable) and no AirNet
Preferred Shares outstanding. All of the outstanding AirNet Common Shares have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in this Section and except for changes since December 31,
1997, resulting from the exercise of employee stock options outstanding on such
date, there are outstanding: (i) no shares of capital stock or other voting
securities of AirNet, (ii) no securities of AirNet convertible into or
exchangeable for shares of capital stock or voting securities of AirNet, and
(iii) no options or other rights to acquire from
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AirNet, and no obligation of AirNet to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of AirNet (the items in clauses (i), (ii) and (iii)
being referred to collectively as the "AirNet Securities"). There are no
outstanding obligations of AirNet or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any AirNet Securities or, except as contemplated
hereby, to register any AirNet Securities for sale pursuant to the Securities
Act.
(b) The authorized capital stock of Merger Subsidiary consists of 100
common shares, without par value. As of the date hereof, there are
outstanding 100 common shares. All of the outstanding common shares of
Merger Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth in this Section, there are
outstanding (i) no shares of capital stock or other voting securities of
Merger Subsidiary, (ii) no securities of Merger Subsidiary convertible into
or exchangeable for shares of capital stock or voting securities of Merger
Subsidiary, and (iii) no options or other rights to acquire from Merger
Subsidiary, and no obligation of Merger Subsidiary to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Merger Subsidiary.
(c) The Merger Consideration, when issued in accordance with this
Agreement, will be duly authorized, validly issued, fully paid and
non-assessable.
SECTION 4.07. SEC FILINGS; AIRNET DISCLOSURE DOCUMENTS; FINANCIAL
STATEMENTS. (a) AirNet has filed all forms, reports and documents required
to be filed by it with the SEC since May 31, 1996, and has heretofore made
available to the Company and the Stockholders, in the form filed with the SEC
(excluding any exhibits thereto, unless otherwise specifically requested by
the Company or the Stockholders), (i) its Annual Report on Form 10-K for the
fiscal year ended September 30, 1996; (ii) its Annual Report on Form 10-K for
the twelve months ended December 31, 1997 (the "AirNet 1997 Form 10-K");
(iii) its Quarterly Reports on Form 10-Q for the fiscal quarters ended
December 31, 1996, and March 31, June 30 and September 30, 1997; (iv) all
proxy statements relating to meetings of AirNet's shareholders (whether
annual or special) held since May 31, 1996; and (v) all other reports,
statements, schedules and registration statements filed with the SEC since
May 31, 1996 (the forms, reports and other documents referred to in clauses
(i) through (v), together with the Registration Statement and AirNet Proxy
Statement, being referred to herein, collectively, as the "AirNet Disclosure
Documents"). The AirNet Disclosure Documents and any other forms, reports or
other documents filed by AirNet with the SEC after the date of this Agreement
but prior to the Effective Time, (x) were prepared, or will be prepared, in
accordance with the Securities Act or the Exchange Act, as the case may be,
and complied, or will comply, in all material respects with the rules and
regulations thereunder and (y) did not at the time they were filed, or will
not at the time they are filed, with the SEC contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished to AirNet by the Company or any Stockholder.
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(b) Each of the consolidated financial statements (including any
notes thereto) contained in the AirNet 1997 Form 10-K was prepared in
accordance with generally accepted accounting principles and fairly presents,
in all material respects, the consolidated financial position, results of
operations and cash flows of AirNet and its consolidated Subsidiaries as at
the respective dates thereof and for the respective periods indicated therein.
SECTION 4.08. INFORMATION SUPPLIED. The information supplied or to be
supplied by AirNet for inclusion or incorporation by reference in the Company
Proxy Statement or any amendment or supplement thereto will not, at the time
the Company Proxy Statement is first mailed to the Stockholders and at the
time such Stockholders vote on the approval and adoption of this Agreement,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.09. POOLING; TAX TREATMENT. (a) AirNet intends that the
Merger be accounted for under the "pooling of interests" method under the
requirements of Opinion No. 16 (Business Combinations) of the Accounting
Principles Board of the American Institute of Certified Public Accountants
(APB No. 16), as amended by Statements of the Financial Accounting Standards
Board, and the related interpretations of the American Institute of Certified
Public Accountants, the Financial Accounting Standards Board, and the rules
and regulations of the SEC.
(b) Neither AirNet nor any of its Subsidiaries has knowingly taken or
agreed to take any action that would prevent the Merger from qualifying (i)
for "pooling of interests" accounting treatment as described in (a) above or
(ii) as a reorganization within the meaning of Section 368(a) of the Code;
PROVIDED, that in connection with the foregoing, AirNet has rescinded its
0000 Xxxxx Xxxxxxxxxx Program prior to the date hereof.
SECTION 4.10. FINDERS' FEES. No investment banker, broker, finder or
other intermediary (other than SBC Warburg Dillon Read Inc. ("SBCWDR")) has
been retained by, or authorized to act on behalf of, AirNet and entitled to
any fee or commission in connection with the Merger or the transactions
contemplated by this Agreement.
SECTION 4.11. COMPLIANCE WITH LAWS. To the knowledge of AirNet, except
to the extent disclosed in the AirNet 1997 Form 10-K, AirNet and each of its
Subsidiaries and Affiliates is in compliance with the applicable provisions
of all laws, rules, statutes, ordinances or regulations that are applicable
to AirNet or such Subsidiary or Affiliate. Neither AirNet nor any Subsidiary
or Affiliate of the Company has received any written communication since
December 31, 1992, from a governmental body, agency, official or authority
that alleges that the Company or any Subsidiary or Affiliate of the Company
is not in compliance with any law, statute, ordinance or regulation.
SECTION 4.12. ENVIRONMENTAL COMPLIANCE. To the knowledge of AirNet,
except to the extent disclosed in the AirNet 1997 Form 10-K:
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(a) No written notice, notification, demand, request for information,
citation, summons, complaint or order has been issued or filed, no penalty
has been assessed and no investigation or review is pending or threatened by
any governmental or other entity, (i) with respect to any alleged material
violation of any law, ordinance, rule, regulation or order of any
governmental entity in connection with the conduct by AirNet or its
Subsidiaries of their respective businesses and relating to a Hazardous
Substance or (ii) with respect to any alleged failure by AirNet or any of it
Subsidiaries to have any permit, certificate, license, approval, registration
or authorization required in connection with the conduct of the business of
AirNet or its Subsidiaries relating to a Hazardous Substance or (iii) with
respect to any generation, treatment, storage, recycling, transportation,
disposal or Release by AirNet or any of its Subsidiaries of any Hazardous
Substance used in connection with the business of AirNet or its Subsidiaries.
(b)(i) Neither AirNet nor any of its Subsidiaries has, other than as a
generator, handled any Hazardous Substance, on any property now or previously
owned or leased by AirNet or any of its Subsidiaries; (ii) no asbestos is
present at any property now or previously owned or leased by AirNet or any of
its Subsidiaries; (iii) there are no underground storage tanks currently in
use or abandoned by AirNet or any of its Subsidiaries, at any property now or
previously owned or leased by AirNet or any of its Subsidiaries which have
been used to store or have contained a Hazardous Substance, (iv) there has
been no Release of a Hazardous Substance with respect to which AirNet or any
of its Subsidiaries may reasonably be required to perform investigation or
remediation, other than routine spills and leaks which are addressed in the
ordinary course of business, at, on or under any property now or previously
owned or leased by AirNet or any of its Subsidiaries and (v) no Hazardous
Substance is present in a reportable or threshold planning quantity, where
such a quantity has been established by statute, ordinance, rule, regulation
or order, at, on or under any property now or previously owned by AirNet or
any of its Subsidiaries; PROVIDED, that with respect to any property
previously owned or leased by AirNet or any of its Subsidiaries, the
representations and warranties contained in this Section 4.12(b) shall apply
only to the extent that AirNet or any of its Subsidiaries would be
responsible or liable, by contract or by law existing as of the date hereof,
for the environmental condition of any such property.
(c) Neither AirNet nor any of its Subsidiaries has transported or
arranged for the transportation (directly or indirectly) of any Hazardous
Substance to any location which is listed or proposed for listing on the
nationwide priorities list established under CERCLA or on any similar state
list.
(d) No oral or written notification of a Release of a Hazardous
Substance has been filed by or on behalf of the Company or any of its
Subsidiaries, and no property now or previously owned or leased by AirNet or
any of its Subsidiaries is listed, or proposed for listing, on the National
Priorities List promulgated pursuant to CERCLA.
(e) There are no environmental Liens on any asset of AirNet or any of
its Subsidiaries and no government actions have been taken or are in process
which could subject any of such assets to such Liens.
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(f) Except to the extent previously provided to the Company, there
have been no material environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or which are in the possession of
AirNet in relation to any property or facility now or previously owned or
leased by AirNet or any of its Subsidiaries.
(g) Anything in this Agreement to the contrary notwithstanding,
Section 4.12 shall constitute the exclusive representation of AirNet with
respect to environmental matters.
SECTION 4.13. TRADEMARKS, PATENTS AND COPYRIGHTS. To the knowledge of
AirNet, except to the extent disclosed in the AirNet 1997 Form 10-K:
(a) AirNet has previously provided the Company a true and complete
list, as of the date hereof, of (i) all Intellectual Property Rights of
AirNet and its Subsidiaries (the "AirNet Intellectual Property Rights") and
(ii) all licenses, commitments and other agreements to which AirNet or any
Subsidiary of AirNet is a party providing for the license of any AirNet
Intellectual Property Rights to or from any other Person.
(b) AirNet and its Subsidiaries own or possess adequate licenses or
other rights to use all of their respective AirNet Intellectual Property
Rights; there are no AirNet Intellectual Property Rights necessary for use in
connection with the business of AirNet or its Subsidiaries as currently
conducted which are not owned or possessed by AirNet or its Subsidiaries; and
AirNet is not aware of any assertion or claim challenging the validity of any
of the AirNet Intellectual Property Rights; and the conduct of the business
of AirNet or its Subsidiaries as currently conducted or as heretofore
conducted by AirNet or any of the Subsidiaries of AirNet does not conflict in
any material way with any patent, patent right, license, trademark, trademark
right, trade name, trade name right, service xxxx or copyright of any third
party. There are no material infringements of any proprietary rights owned by
or licensed by or to AirNet or any of the Subsidiaries of AirNet.
SECTION 4.14. ABSENCE OF CERTAIN CHANGES. Except (i) as disclosed in
the AirNet 1997 Form 10-K and (ii) as disclosed in any publicly available
reports filed by AirNet with the SEC pursuant to the provisions of applicable
securities laws since the filing of the AirNet Form 10-K and furnished or
made available to the Company on or before the date hereof, there has been no
event, occurrence or development which has had, or reasonably could be
expected to have, when aggregated with all positive developments, a material
adverse effect on AirNet and its Subsidiaries, taken as a whole (an "AirNet
Material Adverse Effect").
SECTION 4.15. SATISFACTION OF CERTAIN CONDITIONS. As of the date
hereof, AirNet knows of no reason why the opinions referred to in Section
8.02(h) hereof and in Section 8.02(i) hereof cannot be given at the time
provided in such sections.
SECTION 4.16. REPRESENTATIONS. The representations and warranties of
AirNet contained in this Agreement, disregarding (other than with respect to
Section 4.14 hereof) all qualifications and exceptions contained therein
relating to materiality or AirNet Material Adverse
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Effect, are true and correct with only such exceptions as would not in the
aggregate reasonably be expected to have an AirNet Material Adverse Effect.
ARTICLE V
COVENANTS OF THE COMPANY
The Company and, solely to the extent set forth in Sections 5.03 and
5.05, each Stockholder, severally and not jointly, agrees that:
SECTION 5.01. CONDUCT OF THE BUSINESS OF THE COMPANY. From the date
hereof until the Effective Time unless AirNet shall otherwise have consented
in writing, which consent shall not be unreasonably withheld or delayed, the
Company shall, and shall cause its Subsidiaries to, conduct their business in
the ordinary course consistent with past practice and shall use their
reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, except as
contemplated or required by this Agreement or set forth on Schedule 5.01 of
the Company Disclosure Schedule, the Company shall not, and shall cause its
Subsidiaries not to, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of AirNet, which shall not be
unreasonably delayed or withheld:
(a) adopt or propose any change in its certificate of
incorporation or bylaws or equivalent organizational documents;
(b) merge or consolidate with any other Person or acquire the
business or assets of any other Person for a purchase price in
excess of $100,000;
(c) lease, license or otherwise dispose of any assets or
property (excluding inventory, cash and cash equivalents) in excess
of $25,000 except (i) pursuant to existing contracts or commitments
or (ii) in the ordinary course consistent with past practice in an
aggregate amount not to exceed $100,000;
(d) except to the extent contemplated by this Agreement,
declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any
of their capital stock;
(e) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of their capital
stock;
(f) increase the compensation payable or to become payable to
the Company's or any of its Subsidiaries' executive officers,
directors or employees, except for increases in the ordinary course
of business consistent with past practice, or grant any severance or
termination pay to, or enter into any
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employment or severance agreement with any director or executive
officer, or establish, adopt, enter into or amend in any material
respect or take action to accelerate any rights or benefits under
any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, executive officer or employee;
(g) pay compensation to Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx
Xxxxx and Xxxxxxxxx Xxxxx in excess of an annualized rate of
$720,000 in the aggregate;
(h) create or assume any Lien on any asset having a value in
excess of $25,000 other than in the ordinary course consistent with
past practices;
(i) issue, deliver or sell, or authorize or propose to issue,
deliver or sell, any Company Securities, any Company Subsidiary
Securities or any securities convertible into or exchangeable for,
or any rights, warrants or options to acquire, any Company
Securities or Company Subsidiary Securities other than pursuant to
the exercise of a Company Stock Option;
(j) incur or assume any indebtedness in excess of $25,000 from
any third party for borrowed money or guarantee any such
indebtedness (other than the endorsement of checks in the ordinary
course of business);
(k) make any loans, advances or capital contributions to, or
investments in, any other Person except for (i) loans, advances or
capital contributions to or investments in Subsidiaries of the
Company, (ii) loans or advances to employees in the ordinary course
of business consistent with past practice and in an aggregate amount
not to exceed $25,000, (iii) loans to Stockholders to the extent
permitted by Section 5.05(d) or (iv) investments in securities
consistent with past practices;
(l) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of
the Company or any Subsidiary of the Company, or any plan of
division or share exchange involving the Company or any of its
Subsidiaries;
(m) change any method of accounting or any accounting principle
or practice used by the Company or any Subsidiary of the Company,
except for any such change required by reason of a change in
generally accepted accounting principles or Regulation S-X;
(n) terminate the Company's status as an S corporation within
the meaning of Section 1361(a)(1) of the Code at any time prior to
the Effective Time;
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(o) legally bind the Company or any Subsidiary to do any of the
foregoing; or
(p) take or agree or commit to take any action to willfully
make any representation and warranty of the Company hereunder
inaccurate in any material respect at, or as of any time prior to,
the Effective Time.
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the
date hereof until the Effective Time, the Company shall afford AirNet, its
officers, directors, employees, counsel, financial advisors, auditors and
other authorized representatives (the "AirNet Representatives") reasonable
access to the offices, properties, books and records of the Company and its
Subsidiaries, will furnish to AirNet and the AirNet Representatives such
financial and operating data and other information as such Persons may
reasonably request and will instruct the Company's and its Subsidiaries'
employees, counsel and financial advisors to cooperate with AirNet in its
investigation of the business of the Company; PROVIDED that no investigation
pursuant to this Section shall affect any representation or warranty given by
the Company and the Stockholders to AirNet and Merger Subsidiary hereunder.
(b) All information obtained by AirNet pursuant to this Section shall
be kept confidential in accordance with the confidentiality agreement dated
as of December 24, 1997, between AirNet and the Company.
SECTION 5.03. OTHER OFFERS. From the date hereof until the later of
the termination of this Agreement and the Effective Time, none of the
Company, any Subsidiary or Affiliate of the Company, the Stockholders or any
officer, director, employee or other agent of the Company or any of its
Subsidiaries will, directly or indirectly, (i) take any action to solicit,
initiate or encourage any inquiries or the making or implementation of any
proposal or offer with respect to a merger, acquisition, consolidation or
similar transaction involving, or any purchase of all or any significant
portion of the assets or any equity securities of, the Company or any
Subsidiary of the Company (a "Company Acquisition Proposal"), other than the
transactions contemplated by this Agreement, or (ii) engage in negotiations
with, or disclose any nonpublic information relating to the Company or any
Subsidiary of the Company or afford access to the properties, books or
records of the Company or any Subsidiary of the Company to, any Person that
the Company believes may be considering making, or has made, a Company
Acquisition Proposal. The Company will promptly notify AirNet upon receipt
of any Company Acquisition Proposal or any indication that any Person is
considering making a Company Acquisition Proposal or any request for
nonpublic information relating to the Company or any Subsidiary of the
Company or for access to the properties, books or records of the Company or
any Subsidiary of the Company by any Person that may be considering making,
or has made, a Company Acquisition Proposal and will keep AirNet fully
informed of the status and details of any such Company Acquisition Proposal,
indication or request.
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SECTION 5.04. NOTICES OF CERTAIN EVENTS. The Company shall promptly
notify AirNet:
(a) of any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) of any notice or other communication from any governmental
or regulatory agency or authority in connection with the
transactions contemplated by this Agreement;
(c) upon learning of (x) any representation or warranty
contained in this Agreement becoming untrue or inaccurate in any
material respect or (y) any covenant, condition or agreement
contained in this Agreement failing to be complied with or satisfied
in all material respects when such compliance or satisfaction is
due;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to
AirNet.
SECTION 5.05. STOCKHOLDER ACTIONS. (a) Each Stockholder has voted
all shares of voting capital stock of the Company held or controlled by such
Stockholder in favor of the approval and adoption of this Agreement and the
Merger and has waived any and all rights now or hereafter available to such
Stockholder under New York Law to demand appraisal with respect to any shares
of capital stock of the Company in connection with this Agreement, the Merger
or the other transactions contemplated by this Agreement.
(b) From the date of this Agreement until the Effective Time, each
Stockholder shall not sell any shares of capital stock of the Company or
otherwise transfer any voting rights with respect thereto and shall not,
other than as a director of the Company, make, or in any way participate,
directly or indirectly, in any "solicitation" of proxies (as such terms are
used in the proxy rules under the Exchange Act) or seek to advise or
influence any person or entity to vote against approval and adoption of this
Agreement, the Merger or the other transactions contemplated by this
Agreement.
(c) Following the Effective Time, each Stockholder agrees not to make
any sale, transfer or other disposition of any AirNet Common Shares unless
(i) such sale, transfer or other disposition has been registered under the
Securities Act, (ii) such sale, transfer or other disposition is made in
conformity with the provisions of Section 4(1) of or Rules 144 or 145 under
the Securities Act (as such rule may be amended from time to time), or (iii)
in the opinion of counsel in form and substance reasonably satisfactory to
AirNet, or under a "no-action" letter obtained by such Stockholder from the
staff of the SEC, such sale, transfer or other disposition will not violate
or is otherwise exempt from registration under the Securities Act; PROVIDED,
that in no event will such Stockholder sell, transfer or otherwise dispose of
any shares of capital stock of the Company or any AirNet Common Shares
(whether or not acquired by such Stockholder in the Merger) during the period
commencing 30 days prior to the Effective Time and ending at such
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time as AirNet publishes financial results covering at least 30 days of
combined operations of AirNet and the Surviving Corporation after the Merger.
(d) Each Stockholder who has borrowed money from the Company and/or who
borrows money from the Company between the date hereof and the Effective Time
(each, a "Stockholder Loan") agrees that such Stockholder Loan shall (i) be
reflected in a full recourse note executed by such Stockholder, (ii) bear
interest at the minimum prescribed rate under the regulations of the IRS
necessary to avoid imputed interest and (iii) be due and payable in full on
December 31, 1998; PROVIDED, that if the Effective Time occurs after August
31, 1998 but on or prior to November 30, 1998, such Stockholder Loans shall
be due and payable in full on March 31, 1999, and if the Effective Time
occurs after November 30, 1998, such Stockholder Loans shall be due and
payable in full three months after the Effective Time.
SECTION 5.06. TERMINATION OF DULLES AIRPORT LEASE. The Company shall
negotiate with, and obtain from, Xxxxx Xxxxx an amendment to the Lease dated
as of September 5, 1997, between a Subsidiary of the Company and Xxxxx and
Xxxx X. Xxxxx relating to the property located at 000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx, and providing for early termination of such lease on terms
which are at no cost to AirNet, the Company or their respective Subsidiaries
to AirNet (the "Lease Amendment").
ARTICLE VI
COVENANTS OF AIRNET AND MERGER SUBSIDIARY
AirNet and Merger Subsidiary, jointly and severally, and, solely for
purposes of Section 6.05(c), Xxxxxx X. Xxxxxx, agree that:
SECTION 6.01. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the
date hereof until the Effective Time, AirNet shall afford the Company, its
officers, directors, employees, counsel, financial advisors, auditors and
other authorized representatives (the "Company Representatives") reasonable
access to the offices, properties, books and records of AirNet, its
Subsidiaries and Merger Subsidiary, will furnish to the Company and the
Company Representatives such financial and operating data and other
information as such Persons may reasonably request and will instruct AirNet's
and its Subsidiaries' employees, counsel and financial advisors to cooperate
with the Company in its investigation of the business of AirNet and its
Subsidiaries; PROVIDED that no investigation pursuant to this Section shall
affect any representation or warranty given by AirNet and Merger Subsidiary
to the Company and the Stockholders hereunder.
(b) All information obtained by the Company pursuant to this Section
shall be kept confidential in accordance with the confidentiality agreement
dated as of December 24, 1997, between AirNet and the Company.
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SECTION 6.02. OBLIGATIONS OF MERGER SUBSIDIARY. AirNet will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 6.03. OTHER OFFERS. From the date hereof until the later of
the termination of this Agreement and the Effective Time, none of AirNet, any
Subsidiary of AirNet or Affiliate of AirNet or any officer, director,
employee or other agent of AirNet or any of its Subsidiaries will, subject to
the fiduciary duties of AirNet's Board of Directors, directly or indirectly,
(i) take any action to solicit, initiate or encourage any inquiries or the
making or implementation of any proposal or offer with respect to a
transaction involving the sale of all or a significant portion of the assets
or equity securities of AirNet (an "AirNet Acquisition Proposal"), other than
the transactions contemplated by this Agreement, or (ii) engage in
negotiations with, or disclose any nonpublic information relating to AirNet
or afford access to the properties, books or records of AirNet to, any Person
that AirNet believes may be considering making, or has made, an AirNet
Acquisition Proposal. AirNet will promptly notify the Company upon receipt of
any AirNet Acquisition Proposal or any indication that any Person is
considering making an AirNet Acquisition Proposal or any request for
nonpublic information relating to AirNet or for access to the properties,
books or records of AirNet by any Person that may be considering making, or
has made, an AirNet Acquisition Proposal and will keep the Company fully
informed of the status and details of any such AirNet Acquisition Proposal,
indication or request.
SECTION 6.04. NOTICES OF CERTAIN EVENTS. AirNet shall promptly notify
the Company:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(c) upon learning of (x) any representation or warranty
contained in this Agreement becoming untrue or inaccurate in any
material respect or (y) any covenant, condition or agreement
contained in this Agreement failing to be complied with or
satisfied in all material respects when such compliance or
satisfaction is due; and
(d) any failure of AirNet, any Subsidiary of AirNet or Merger
Subsidiary to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
Company.
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SECTION 6.05. REGISTRATION STATEMENT; STOCKHOLDER MEETING; PROXY
MATERIAL. (a) As promptly as practicable after the execution of this
Agreement, AirNet shall prepare and file a registration statement on Form S-4
covering the AirNet Common Shares and the Adjusted Options to be issued to
the Stockholders in the Merger (the "Registration Statement"), which will
include a proxy statement for a meeting of the AirNet shareholders (the
"AirNet Proxy Statement"). The Company will cooperate with AirNet in
preparing and filing the Registration Statement.
(b) As promptly as practicable after the Registration Statement becomes
effective under all applicable securities laws, AirNet shall cause a meeting
of its shareholders (the "AirNet Shareholder Meeting") to be duly called and
held for the purpose of soliciting the AirNet Shareholder Consent, including,
but not limited to, for purposes of Section 1701.831 of the Ohio Law. The
AirNet Proxy Statement shall include the unanimous recommendation of the
Board of Directors of AirNet in favor of the approval and adoption of this
Agreement and the Merger and the transactions contemplated hereby. AirNet
will (i) mail to its shareholders the AirNet Proxy Statement and all other
proxy materials for such meeting, (ii) will use its reasonable efforts to
obtain the necessary approvals by its shareholders and (iii) will otherwise
comply with all legal requirements applicable to such meeting.
(c) Xxxxxx X. Xxxxxx agrees to vote all shares of voting capital stock
of AirNet then held or controlled by him at the AirNet Stockholder Meeting in
favor of the approval and adoption of this Agreement and the Merger.
SECTION 6.06. LISTING OF SHARES. AirNet shall make application to the
NYSE or such other exchanges as shall be agreed for the listing of the AirNet
Common Shares to be issued in connection with the Merger. AirNet shall use
its reasonable efforts to cause such AirNet Common Shares to be listed on
NYSE, subject to official notice of issuance.
SECTION 6.07. DIRECTOR AND OFFICER INDEMNIFICATION. From and after the
Effective Time, AirNet will cause the Surviving Corporation to indemnify and
hold harmless the present and former officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective Time solely in
their role as officers or directors to the extent provided under the
Company's certificate of incorporation and by-laws, or equivalent
organizational documents, in effect on the date hereof; PROVIDED, that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law, and, PROVIDED, FURTHER, that such indemnification shall
not apply to claims made by or on behalf of any stockholder or former
stockholder of the Company.
SECTION 6.08. BOARD OF DIRECTORS. (a) As soon as practicable after the
Effective Time and subject to their fiduciary duties to the AirNet
shareholders, the Board of Directors of AirNet shall use its reasonable
efforts to cause the shareholders of AirNet to elect Xxxxxx Xxxxxxx to the
Board of Directors of AirNet. For so long as Xxxxxx Xxxxxxx beneficially owns
49% of the issued and outstanding AirNet Common Shares he actually receives,
directly or indirectly, as his portion of the Merger Consideration, the Board
of Directors of AirNet shall continue to use its reasonable efforts to cause
the shareholders of AirNet to elect Xx. Xxxxxxx as a director of AirNet.
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SECTION 6.09. RULES 144 AND 145. With a view to making available to
the Stockholders the benefits of Rules 144 and 145 promulgated under the
Securities Act, and any other similar rules and regulations of the SEC which
may at any time permit the Stockholders to sell or distribute without
registration the AirNet Common Shares received as Merger Consideration
hereunder, AirNet agrees to file with the SEC in a timely manner all reports
and other documents required to be filed by it under the Exchange Act.
SECTION 6.10. PURCHASE OF AIRPORT FACILITY. AirNet agrees to negotiate
in good faith with the Primary Shareholder for the purchase of the Company's
facility located at 000-00 000xx Xxxxxx, Xxxxxxx, Xxx Xxxx for the fair
market value thereof, as determined by Xxxxxxx & Xxxxxxxxx. Such purchase
shall be made pursuant to a purchase agreement (the "Airport Facility
Purchase Agreement") which shall be negotiated in good faith between the
Primary Seller and Buyer and shall contain standard indemnifications
(including, but not limited to, with respect to environmental matters).
SECTION 6.11. RELEASE OF GUARANTEES. On or prior to, but effective as
of, the Effective Date, AirNet shall assume, and agrees to use its reasonable
efforts to obtain the unconditional release and discharge of the Primary
Stockholder's obligations to guarantee the obligations of the Company
pursuant to, the personal guaranties of the Primary Stockholder set forth on
Schedule 3.22 of the Company Disclosure Schedule (the "Personal Guaranties").
To the extent that AirNet is unable to obtain the release of the Primary
Stockholder from all liability pursuant to the Personal Guaranties, AirNet
shall defend, indemnify and hold harmless the Primary Stockholder with
respect to any such liability he may incur pursuant to such Personal
Guaranties.
ARTICLE VII
COVENANTS OF AIRNET, THE
COMPANY AND THE STOCKHOLDERS
The parties hereto agree that:
SECTION 7.01. REASONABLE EFFORTS. Subject to the terms and conditions
of this Agreement, each party will use its 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 under applicable laws and regulations to
consummate the transactions contemplated by this Agreement as promptly as
possible.
SECTION 7.02. CERTAIN FILINGS. The Company and AirNet shall cooperate
with one another (a) in connection with the preparation of the Registration
Statement and the AirNet Proxy Statement (including, but not limited to, the
preparation of any financial statements or pro forma financial statements
required to be included therein), and (b) in determining whether any action
by or in respect of, or filing with, any governmental body, agency or
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any contracts, in
connection with the consummation of the transactions contemplated by this
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Agreement and (c) in seeking any such actions, consents, approvals or waivers
or making any such filings, furnishing information required in connection
therewith or with the Registration Statement or the AirNet Proxy Statement
and seeking to timely obtain any such actions, consents, approvals or
waivers. AirNet and the Company will each use its reasonable efforts to have
the Registration Statement declared effective under the Securities Act as
promptly as practicable after the Registration Statement is filed with the
SEC.
SECTION 7.03. PUBLIC ANNOUNCEMENTS. AirNet and the Company will
consult with each other before issuing any press release or otherwise making
any public statement with respect to this Agreement or any transaction
contemplated herein and, except as may be required by applicable law, the
rules and regulations of the SEC or any listing agreement with any national
securities exchange, AirNet will not issue any such press release or make any
such public statement prior to such consultation, and the Company will not
issue any such press release or make any such public statement without the
prior written consent of AirNet, which shall not be unreasonably withheld or
delayed.
SECTION 7.04. FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Merger Subsidiary, any
other actions and things to vest, perfect or confirm of record or otherwise
in the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company acquired or to
be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger.
SECTION 7.05. TAX MATTERS. (a) The Stockholders shall be solely
responsible for preparing all Tax Returns with respect to the income,
business, assets, operations, activities, status or other matters of the
Company or any of its Subsidiaries for all taxable periods ending at or
before the Effective Time. The Stockholders shall submit a copy of such Tax
Returns to AirNet for its review and approval (which shall not be
unreasonably withheld or delayed) at least 15 days prior to their due date.
Upon such approval, AirNet and the Stockholders shall cause such Tax Returns
to be filed on a timely basis. The Stockholders shall be solely responsible
for and shall pay on a timely basis all Taxes due thereon, except to the
extent that such Taxes payable by the Company or any of its Subsidiaries are
reflected as reserves on the Balance Sheet. Without limiting the generality
of the foregoing, the Stockholders shall be solely responsible for and shall
pay on a timely basis all applicable Taxes arising from consummation of the
transactions contemplated by this Agreement.
(b) AirNet shall be solely responsible for preparing and filing on a
timely basis all Tax Returns with respect to the income, business, assets,
operations, activities, status or other matters of the Company or any of its
Subsidiaries for all taxable periods beginning after the Effective Time.
AirNet shall be solely responsible for and shall pay on a timely basis all
Taxes due thereon.
(c) The Stockholders and AirNet shall jointly prepare all Tax Returns
with respect to the income, business, assets, operations, activities, status
or other matters of the Company or any
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of its Subsidiaries for all taxable periods beginning before and ending after
the Effective Time ("Straddle Periods"). The Stockholders and AirNet shall
allocate any liability for Taxes relating to Straddle Periods on the basis of
an interim closing of the books as of the Effective Time; PROVIDED, HOWEVER,
that the Stockholders shall not be responsible for such Taxes payable by the
Company or any Subsidiary to the extent that such Taxes are reflected as
reserves on the Balance Sheet.
(d) The Stockholders and AirNet agree to furnish to each other, upon
written request, as promptly as practicable, such information and reasonable
assistance relating to the Company or any of its Subsidiaries as is necessary
for the filing of any Tax Return required to be filed after the Effective
Time. The Stockholders and AirNet also agree to cooperate with each other in
the conduct of any audit or other proceeding involving one or more of the
Company, any of its Subsidiaries or any successor corporation. In any such
case, each party shall use its reasonable efforts to cause its financial
advisors, auditors and other authorized representatives to cooperate
therewith.
(e) Notwithstanding anything herein to the contrary, the parties
agree that immediately prior to the Effective Time, the Company shall
distribute to the Stockholders an amount equal to the Preliminary S
Corporation Tax Distribution (as defined below). No later than five days
prior to the Effective Time, the Company shall deliver to AirNet a
certificate specifying a good faith estimate of the Stockholders' aggregate
liability for Taxes attributable to the estimated taxable income of the
Company and its Subsidiaries for the period commencing on January 1, 1998 and
ending at the Effective Time (the "Preliminary S Corporation Tax
Distribution"). As soon as practicable after the Effective Time, but in no
event less than five days prior to the due date (without extensions) of the
Stockholders' Tax Returns in respect of the period described in the previous
sentence, AirNet and the Stockholders shall agree on the Stockholders'
aggregate liability for Taxes attributable to the taxable income of the
Company and its Subsidiaries for such period (the "Final S Corporation Tax
Distribution"). In calculating the Final S Corporation Tax Distribution,
AirNet and the Stockholders shall take into account any previously suspended
losses of the Stockholders (relative to their interest in the Company and its
Subsidiaries) that are available to reduce the Stockholders' liability for
Taxes. The Company shall pay to the Stockholders, or the Stockholders shall
pay to the Company, as appropriate, any difference between the Preliminary S
Corporation Tax Distribution and the Final S Corporation Tax Distribution. In
the event that the Final S Corporation Tax Distribution would change as a
result of a redetermination by a taxing authority, or otherwise, AirNet, the
Company and the Stockholders shall make appropriate adjustments to the Final
S Corporation Tax Distribution in a prompt and reasonable manner.
SECTION 7.06. TAX TREATMENT. None of the Stockholders, the Company,
AirNet or Merger Subsidiary has taken, or will take, any action or omit to
take any action which causes the Merger to fail to qualify as a
reorganization under Section 368(a) of the Code or which otherwise
jeopardizes the status of the Merger as a tax-free reorganization within the
meaning of Section 368(a) of the Code.
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SECTION 7.07. EMPLOYEE BENEFITS. (a) At the Effective Time, each of
the Employee Plans (except any Employee Plan which is subject to the
provisions of Section 401(k) of the Code) and Benefit Arrangements of the
Company shall remain in effect and shall be assumed by the Surviving
Corporation. Any Employee Plan which is subject to the provisions of Section
401(k) of the Code (a "Company 401(k) Plan") shall be terminated by the
Company prior to the Effective Time. With respect to each of the Employee
Plans and Benefit Arrangements of the Company other than a Company 401(k)
Plan, AirNet agrees that, by no later than three years after the Effective
Time, AirNet shall terminate such Employee Plans and Benefit Arrangements of
the Company and shall, in lieu thereof, provide, or shall cause the Surviving
Corporation to provide, employees of the Surviving Corporation, with the same
or substantially similar employee benefit plans and programs, including but
not limited to employee benefit plans, within the meaning of Section 3(3) of
ERISA, as those provided to employees of AirNet with comparable status and
seniority as of the time of such termination.
(b) Notwithstanding the foregoing, as soon as practicable after the
Effective Time, AirNet shall, or shall cause the Surviving Corporation to,
establish or designate, and maintain, a defined contribution plan (the
"AirNet 401(k) Plan") to provide benefits to the employees of the Surviving
Corporation who are participants in a Company 401(k) Plan as of the date of
its termination in accordance with Section 7.07(a) ("401(k) Plan
Participants"). The AirNet 401(k) Plan shall be qualified under Section
401(a) and 401(k) of the Code and shall provide the 401(k) Plan Participants
full credit for service with the Company, its Subsidiaries and their
Affiliates for purposes of eligibility to participate and vesting. The AirNet
401(k) Plan shall also accept rollover contributions and rollovers of any
outstanding account loan balances of the 401(k) Plan Participants from a
Company 401(k) Plan.
SECTION 7.08. POSTAL OFFICE LITIGATION. The parties hereto agree to
cooperate in good faith to resolve the specific contingency set forth as item
number one on Schedule 1.04 within six months after the Effective Time in the
manner most advantageous to the Surviving Corporation and AirNet, including,
but not limited to, the recovery of attorneys' fees by the Surviving
Corporation in connection with the litigation by the United States Postal
Service against the Company.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
respective obligations of the Company, the Stockholders, AirNet and Merger
Subsidiary to consummate the Merger are subject to the satisfaction of the
following conditions, any or all of which may be waived, in whole or in part,
to the extent permitted by this Agreement and by applicable law:
(a) this Agreement and the Merger and the transactions
contemplated thereby shall have been approved by the Stockholders
in accordance with New York Law;
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(b) this Agreement and the Merger and the transactions
contemplated thereby, including the issuance of the AirNet Common
Shares to the Stockholders, shall have been approved by the
shareholders of AirNet in accordance with Ohio Law, including,
but not limited to, Section 1701.831 of Ohio Law, and the rules
and regulations of the NYSE;
(c) the applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated;
(d) the Registration Statement shall have been declared
effective under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending
before or threatened by the SEC;
(e) the AirNet Common Shares to be issued to the
Stockholders in the Merger shall have been approved for listing
on the NYSE, subject to official notice of issuance;
(f) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the
consummation of the Merger; and
(g) other than the filing of certificates of merger and/or
other merger documents in accordance with New York Law and Ohio
Law, all authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, notices or declarations
required to be made, by the Company, AirNet and Merger Subsidiary
prior to the consummation of the Merger shall have been obtained
from, and made with, all required governmental or regulatory
authorities except for such authorizations, consents, waivers,
orders, approvals, filings, notices or declarations the failure
of which to obtain or make would not, at or after the Effective
Time, individually or in the aggregate, have a Company Material
Adverse Effect or an AirNet Material Adverse Effect.
SECTION 8.02. CONDITIONS TO THE OBLIGATIONS OF AIRNET AND MERGER
SUBSIDIARY. The obligations of AirNet and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
this Agreement and by applicable law:
(a) the Company and the Stockholders shall have performed in
all material respects their respective agreements and covenants
required by this Agreement to be performed by them at or prior to
the Effective Time; the representations and warranties of the
Company and the Stockholders contained in this Agreement and in
any certificate or other writing delivered under Article VIII
hereof by the Company or Stockholder pursuant hereto,
disregarding (other than with respect to Section 3.10(a)(i) and
(vii) hereof) any qualifications contained therein regarding
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materiality or Company Material Adverse Effect, shall be true and
correct in all material respects at and as of the Effective Time
as if made at and as of such time, and AirNet shall have received
a certificate signed by the Chief Executive Officer and principal
financial officer of the Company to the foregoing effect;
(b) since the Balance Sheet Date, there shall have been no
change, occurrence or circumstance in the business, results of
operations or condition (financial or otherwise) of the Company
having or reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect, and AirNet shall
have received a certificate of the Chief Executive Officer and
Chief Financial Officer of the Company to such effect;
(c) the Company's income from operations as calculated
jointly by AirNet and the Company for the period beginning on
January 1, 1998 and ending as of (i) the end of the month
immediately preceding the Effective Time (if the Effective Time
occurs on or after the 26th day of a month) or (ii) the end of
the month next preceding the Effective Time (if the Effective
Time occurs before the 26th day of a month) shall exceed 85% of
the projected income from operations through the end of the
relevant month, as set forth on Schedule 8.02(c) of the Company
Disclosure Schedule; PROVIDED, that the following costs and
expenses of the Company shall not be taken into account in
determining income from operations at the end of the relevant
month as set forth on Schedule 8.02(c): the fees and expenses of
DLJ pursuant to the letter agreement set forth on item number 68
on Schedule 3.16(a) of the Company Disclosure Schedule, the legal
fees and expenses of Winthrop, Stimson, Xxxxxx & Xxxxxxx and the
accounting fees and expenses of Ernst & Young (New York), in each
case incurred on behalf of the Company in connection with this
Agreement and the transactions contemplated hereby;
(d) no court, arbitrator or governmental body, agency or
official shall have issued any order, and there shall not be any
statute, rule or regulation, materially restraining or
prohibiting the consummation of the Merger or the effective
operation of the business of the Company after the Effective
Time;
(e) AirNet shall have received executed Employment
Agreements from Xxxxxx Xxxxxxx, Xxxxxxxxx Xxxxx and Xxxxx Xxxxx,
in the forms attached hereto as Annex X-0, Xxxxx X-0 xxx Xxxxx
X-0, respectively, and such agreements shall continue to be in
full force and effect as of the Effective Time;
(f) AirNet shall have received a Lease Amendment executed by
Xxxxx Xxxxx and Xxxx X. Xxxxx and the Subsidiary of the Company
party thereto in the form attached hereto as Annex C, and such
amendment shall continue to be in full force and effect without
subsequent amendment as of the Effective Time;
(g) AirNet shall have received all documents it may
reasonably request relating to the existence of the Company and
its Subsidiaries and the authority of
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the Company to enter into, deliver and perform this Agreement,
all in form and substance reasonably satisfactory to AirNet;
(h) AirNet shall have received a letter, dated as of the
Effective Time, from Ernst & Young LLP (Columbus) regarding its
concurrence with AirNet's conclusion as to the appropriateness of
pooling of interests accounting treatment for the Merger under
Accounting Principles Board Opinion No. 16;
(i) AirNet shall have received a fairness opinion of its
financial advisor, SBCWDR, in form and substance reasonably
satisfactory to AirNet, and dated as of the Effective Time, to
the effect that the Merger is fair from a financial point of view
to the Company as of such date;
(j) This Agreement shall have been signed by each holder of
outstanding shares of the Company's capital stock as of the
Effective Time, either on the signature pages hereof or in a
separate joinder agreement in form and substance reasonably
satisfactory to AirNet; and
(k) The following agreements and instruments shall have been
terminated or cancelled, as the case may be, and AirNet shall
have received evidence of such termination or cancellation in
form and substance reasonably satisfactory to AirNet: (i) the
Amended and Restated Shareholders' Agreement dated as of
September 5, 1997, by and among the Company, Xxxxxx X. Xxxxxxx,
Xxxxxxxxx Xxxxx, Xxxx X. Xxxxxx and Xxxxx Xxxxx; (ii) the
Non-Negotiable 9.0% Convertible Debenture dated as of July 31,
1997 in the principal amount of $822,500 issued to Xxxxx Xxxxxxx
from Xxxxxxxxx Xxxxx; (iii) the Non-Negotiable 9.0% Convertible
Debenture dated as of July 31, 1997 in the principal amount of
$177,500 issued to Xxxxx Xxxxxxx from Xxxx Xxxxxx; (iv) the
Agreement dated as of July 31, 1997 between the Company and
Xxxxxxxxx Xxxxx referred to as item 6. on Schedule 3.14(e) of the
Company Disclosure Schedule; (v) the Agreement dated as of July
31, 1997 between the Company and Xxxx Xxxxxx referred to as item
7. on Schedule 3.14(e) of the Company Disclosure Schedule; and
(vi) the letter agreement dated as of September 5, 1997 between
the Company and Xxxxx Xxxxx referred to as item 19. on Schedule
3.14(e) of the Company Disclosure Schedule.
SECTION 8.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by this Agreement and by
applicable law:
(a) AirNet, Merger Subsidiary and Xx. Xxxxxx shall have
performed in all material respects their respective agreements
and covenants required by this Agreement to be performed by them
at or prior to the Effective Time; the representations and
warranties of AirNet and Merger Subsidiary contained in this
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Agreement and in any certificate or other writing delivered by
AirNet or Merger Subsidiary pursuant hereto, disregarding (except
with respect to Section 4.14) any qualifications contained
therein with respect to materiality or AirNet Material Adverse
Effect, shall be true and correct in all material respects at and
as of the Effective Time as if made at and as of such time, and
the Company shall have received a certificate signed by the Chief
Executive Officer and Chief Financial Officer of AirNet to the
foregoing effect;
(b) since December 31, 1997, there shall have been no
change, occurrence or circumstance in the business, results of
operations or condition (financial or otherwise) of AirNet having
or reasonably likely to have, individually or in the aggregate,
an AirNet Material Adverse Effect, and the Company shall have
received a certificate of the Chief Executive Officer and Chief
Financial Officer of AirNet to such effect;
(c) no court, arbitrator or governmental body, agency or
official shall have issued any order, and there shall not be any
statute, rule or regulation, materially restraining or
prohibiting the consummation of the Merger or the effective
operation of the business of AirNet after the Effective Time;
(d) the Stockholders shall have received a Registration
Rights Agreement in the form attached hereto as Annex D executed
by AirNet;
(e) the Stockholders shall have received Employment
Agreements for Xxxxxx Xxxxxxx, Xxxxxxxxx Xxxxx and Xxxxx Xxxxx,
in the forms attached hereto as Annex X-0, Xxxxx X-0 xxx Xxxxx
X-0, respectively, executed by AirNet, and such agreements shall
continue to be in full force and effect as of the Effective Time;
(f) the Primary Stockholder shall have received the Airport
Facility Purchase Agreement executed by AirNet;
(g) the Company shall have received all documents it may
reasonably request relating to the existence of AirNet and Merger
Subsidiary and the authority of AirNet and Merger Subsidiary to
enter into, deliver and perform this Agreement, all in form and
substance reasonably satisfactory to the Company; and
(h) the Company shall have received a letter, dated as of the
Effective Time, from Ernst & Young LLP (New York) regarding its
concurrence with the Company's conclusion as to the
appropriateness of pooling of interests accounting treatment for
the Merger under Accounting Principles Board Opinion No. 1.
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ARTICLE IX
TERMINATION
SECTION 9.01. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the Stockholders or the
shareholders of AirNet):
(a) by mutual written consent of the Company and AirNet;
(b) by the Company or AirNet if the Merger has not been
consummated by September 30, 1998; PROVIDED, HOWEVER, that the
right to terminate this Agreement pursuant to this Section
9.01(b) shall not be available to any party whose willful
failure to perform any of its obligations under this Agreement
results in the failure of the Merger to be consummated by such
time;
(c) by the Company, if the approval of the shareholders of
AirNet contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at
the AirNet Shareholder Meeting or any adjournment;
(d) by AirNet, if prior to Effective Time, the Directors of
the Company shall have withdrawn, modified or changed their
approval of this Agreement in a manner which adversely impacts
the consummation of the Merger;
(e) by the Company, if prior to the Effective Time, the
Directors of AirNet shall have withdrawn, modified or changed
their approval or recommendation of this Agreement in a manner
which adversely impacts the consummation of the Merger;
(f) by AirNet, upon a breach of any representation,
warranty, covenant or agreement of the Company or the
Stockholders, or if any representation or warranty of the
Company shall become untrue, the effect of which is a Company
Material Adverse Effect, in either case such that the breach or
the condition causing such breach would be incapable of being
cured by September 30, 1998 (or as otherwise extended);
(f) by the Company, upon a breach of any representation,
warranty, covenant or agreement of AirNet and Merger Subsidiary,
or if any representation or warranty of AirNet and Merger
Subsidiary shall become untrue, the effect of which is an AirNet
Material Adverse Effect, in either case such that the breach or
the condition causing such breach would be incapable of being
cured by September 30, 1998 (or as otherwise extended); or
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(g) by the Company or AirNet if there shall be any law or
regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or
decree enjoining AirNet or the Company from consummating the
Merger is entered and such judgment, injunction, order or decree
shall become final and nonappealable.
SECTION 9.02. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that the agreements
contained in Sections 5.02, 6.01 and 11.03 shall survive the termination
hereof; PROVIDED, HOWEVER, that nothing herein shall relieve any party from
liability for the willful breach in any material respect of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE X
SURVIVAL; INDEMNIFICATION
SECTION 10.01. SURVIVAL. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered under Article VIII hereof (the
"General Contingencies") shall survive the Effective Time through the period
ending upon the filing of AirNet's Form 10-K (including the operations of the
Company) for the fiscal year ended December 31, 1998. In addition to, and not
in limitation of, the foregoing, the specific contingencies set forth on
Schedule 1.04 (the "Specific Contingencies") shall survive the Effective Time
until the later of (i) the second anniversary of the Effective Time or (ii)
expiration of the applicable statutory period of limitations (giving effect
to any waiver, mitigation or extension thereof), unless sooner released by
AirNet in writing. Notwithstanding the preceding two sentences, any General
Contingencies in respect of which indemnity may be sought under Section 10.02
shall survive the time at which it would otherwise terminate pursuant to the
preceding sentence, if notice of the specific inaccuracy or breach thereof
giving rise to such right to indemnity shall have been given to the party
against whom such indemnity may be sought prior to such time.
SECTION 10.02. INDEMNIFICATION. (a) Each of the Stockholders hereby,
severally but not jointly, indemnifies AirNet and, effective as of the
Effective Time, without duplication, the Company and their respective
Affiliates (each an "AirNet Indemnitee" against and agree to hold it harmless
from any and all damage, loss, liability and expense (including, without
limitation, reasonable expenses of investigation and reasonable attorneys'
fees and expenses in connection with any action, suit or proceeding)
(collectively, "Loss") incurred or suffered by any AirNet Indemnitee arising
out of the General Contingencies made or to be performed by the Company or
the Stockholders pursuant to this Agreement or arising out of the Specific
Contingencies; PROVIDED that (i) the Stockholders shall not be liable under
this Section 10.02(a) unless the aggregate amount of Losses with respect to
all matters referred to in this Section 10.02(a) (determined without regard
to any materiality qualification (other than with respect to Section
3.10(a)(i) and (vii) hereof and the bring-down certificate described in
Section 8.02(a) with respect
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thereto) contained in any representations, warranty or covenant giving rise
to the claim for indemnity hereunder) exceeds $200,000 (after which point the
Stockholders will be liable under this Section 10.02(a) only for further such
Losses); (ii) any claim for Losses under this Section 10.02(a) shall be in an
aggregate amount equal to or greater than $25,000; and (iii) at and after the
Effective Time, the Stockholders' liability under this Section 10.02(a) shall
be limited to the Escrow Shares.
(b) AirNet and Merger Subsidiary hereby, jointly and severally,
indemnify the Stockholders and, prior to the Effective Time, the Company (the
Stockholders and the Company being hereinafter referred to as the "Company
Indemnitees") against and agrees to hold them harmless from any and all
Losses incurred or suffered by the Stockholders arising out of any General
Contingencies made or to be performed by AirNet or Merger Subsidiary pursuant
to this Agreement, PROVIDED that (i) AirNet shall not be liable under this
Section 10.02(b) unless the aggregate amount of the Stockholders' Losses
exceeds $1,000,000 (after which point AirNet will be liable under this
Section 10.02(b) only for further such Losses); (ii) all Losses shall be
payable by AirNet in additional AirNet Common Shares having a fair market
value (based on the closing price of the AirNet Common Shares on the New York
Stock Exchange) on the date of payment equal to the amount of such Losses;
(iii) any claim for Losses under this Section 10.02(b) shall be in an
aggregate amount equal to or greater than $25,000; and (iv) at and after the
Effective Time, AirNet's maximum liability under this Section 10.02(b) shall
not exceed 10% of the Merger Consideration.
SECTION 10.03. PROCEDURES. (a) The party seeking indemnification under
Section 10.02 (the "Indemnified Party") agrees to give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") of the
Losses for which indemnity may be sought under such Section. Subject to the
rights or duties to any insurer or other third party having liability
therefor, the Indemnifying Party shall have the right within 10 days after
receipt of such notice to assume the control of the defense, compromise or
settlement of any such action, suit or proceeding, including, at its own
expense, employment of counsel on behalf of the Indemnified Party (who shall
be reasonably satisfactory to the Indemnified Party) and at any time
thereafter to exercise on behalf of the Indemnified Party any rights which
may reasonably mitigate any of the foregoing; PROVIDED, that if the
Indemnifying Party shall have exercised its right to assume such control, the
Indemnified Party (i) may, in its sole discretion and at its sole expense,
employ counsel to represent it (in addition to counsel employed by the
Indemnifying Party) in any such matter, and in such event counsel selected by
the Indemnifying Party shall be required to cooperate with such counsel of
the Indemnified Party in such defense, compromise or settlement for the
purpose of informing and sharing information with such Indemnified Party and
(ii) will, at its own expense, make available to the Indemnified Party those
employees of the Indemnifying Party or any Affiliate of the Indemnifying
Party whose assistance, testimony or presence is necessary to assist the
Indemnified Party in evaluation and defending any such action, suit or
proceeding; PROVIDED, FURTHER, that in no event shall the Indemnifying Party,
without the written consent of the Indemnified Party, effect the settlement
or compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action, suit or proceeding (whether or not the
Indemnified Party is an actual or potential party to such action, suit or
proceeding) unless such settlement, compromise or judgment (x) includes the
unconditional release by the parties asserting
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such action, suit or proceeding of the Indemnified Party from all liability
arising out of such action, suit or proceeding and (ii) does not include an
admission of fault, culpability or a failure to act, by or on behalf of any
Indemnified Party.
(b) The Indemnified Party shall cooperate fully in all aspects of any
matter for which indemnity is sought pursuant to this Article X with respect
to an action brought by a third party, including, in such case, by providing
reasonable access to employees and officers (as witnesses or otherwise) and
other information.
SECTION 10.04. EXCLUSIVE REMEDY. AirNet, on behalf of itself and the
AirNet Indemnitees, and the Stockholders each hereby acknowledges and agrees
that the sole and exclusive remedy with respect to any and all claims
relating to, or arising out of, the Merger, this Agreement or the
transactions contemplated hereby shall be pursuant to the indemnification
provisions contained in this Article X.
SECTION 10.05. CERTAIN LIMITATIONS. The liability of the Indemnifying
Party to the Indemnified Party, as applicable, for claims under this
Agreement shall be limited by the following:
(a) The amount of Losses otherwise recoverable under this Article X
shall be reduced to the extent to which any Federal, state, local or foreign
tax liabilities of the Indemnified Party is decreased by reason of any Loss
in respect of which such Indemnified Party shall be entitled to indemnity
under this Agreement.
(b) No Losses shall be recoverable by an Indemnified Party with
respect to any matter which is covered by insurance or another source of
indemnification, to the extent proceeds of such insurance or other third
party indemnitor are paid net of any costs incurred in connection with the
collection thereof, the Indemnified Party hereby agreeing to seek all
reasonable remedies against all applicable insurers or indeminitors prior to
recovering any amounts hereunder.
(c) No Stockholder shall have any liability hereunder if the
Effective Time shall not have occurred. If the Effective Time shall not have
occurred, the maximum aggregate amount recoverable hereunder by all AirNet
Indemnitees from the Company is $1,600,000, and the maximum aggregate amount
recoverable hereunder by all Company Indemnitees from AirNet is $1,600,000.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy, telex or
similar writing) and shall be given,
if to AirNet or Merger Subsidiary, to:
AirNet Systems, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attn.: Xxxx X. Xxx, Executive Vice President,
and Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Xx.
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
if to the Company or the Stockholders, to:
Q International Courier, Inc.
000 Xxxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn.: Xxxxxx Xxxxxxx, President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxxx
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
or such other address or telecopy number as such party may hereafter specify
for the purpose of notice to the other parties hereto. Each such notice,
request or other communication shall be effective (i) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section 11.01 and the appropriate confirmation is received or (ii) if given
by any other means, when delivered at the address specified in this Section.
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SECTION 11.02. AMENDMENTS; NO WAIVERS. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, AirNet, Merger Subsidiary and the holders of a
majority of the outstanding shares of the Company's capital stock or in the
case of a waiver, by the party against whom the waiver is to be effective;
PROVIDED that no such amendment or waiver shall, without the further approval
of such Stockholders, alter or change (i) the amount or kind of consideration
to be received in exchange for any shares of capital stock of the Company
except to the extent provided herein, (ii) any term of the articles of
incorporation of the Surviving Corporation or (iii) any of the terms or
conditions of this Agreement if such alteration or change would materially
adversely affect the holders of any shares of capital stock of the Company
and PROVIDED, FURTHER, that after the adoption of this Agreement by the
shareholders of AirNet, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change (i) the amount or kind
of consideration to be received in exchange for any shares of capital stock
of the Company except to the extent provided herein, (ii) any term of the
articles of incorporation of the Surviving Corporation or (iii) any of the
terms or conditions of this Agreement if such alteration or change would
materially adversely affect the holders of any shares of capital stock of
AirNet.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 11.03. EXPENSES; TAXES. (a) All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense. Notwithstanding the foregoing, all applicable sales, use or
transfer taxes, if any, and all capital gains or income taxes of any of the
Stockholders or the Company, in each case that may be due and payable as a
result of the Merger or the transactions contemplated by this Agreement,
whether levied on the Company, any of the Stockholders, AirNet or Merger
Subsidiary, shall be borne by the Person who is statutorily responsible
therefor.
(b) AirNet agrees to pay the Company in immediately available funds
by wire transfer an amount equal to $1,600,000 promptly, but in no event
later than two business days, after the termination of this Agreement by the
Company pursuant to Section 9.01(c)(i) or Section 9.01(e) as a result of
AirNet having consummated, or agreed in writing to consummate, an AirNet
Acquisition Proposal; PROVIDED, HOWEVER, that AirNet shall not be obligated
to pay such amount if, immediately prior to the time such amount would
otherwise be payable, (i) the condition set forth in Section 8.02(a) would
not have been satisfied, (ii) this Agreement shall have been terminated
pursuant to Section 9.01(a) or (iii) this Agreement was terminated by AirNet
pursuant to Section 9.01(b). Notwithstanding anything to the contrary herein,
the amount payable pursuant to this Section 11.03(b) shall constitute the
Company's and the Stockholders' exclusive remedy for any breach by AirNet of
Section 6.03.
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SECTION 11.04. HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 11.06. ENTIRE AGREEMENT; COMPANY DISCLOSURE SCHEDULE. (a) This
Agreement (together with the exhibits and annexes, the Company Disclosure
Schedule and the other documents delivered pursuant hereto) and the
confidentiality agreement between the Company and AirNet constitute the
entire agreement of the parties and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
(b) Notwithstanding anything to the contrary contained herein or in
the Company Disclosure Schedule, any information disclosed in one schedule of
the Company Disclosure Schedule shall be deemed to be disclosed for purposes
of all schedules of the Company Disclosure Schedule. Certain information set
forth in the Company Disclosure Schedule may be included solely for
informational purposes and may not be required to be disclosed pursuant to
this Agreement. the disclosure of any information in the Company Disclosure
Schedule shall not be deemed to constitute an acknowledgement that such
information is required to be disclosed in connection with the
representations and warranties made by the Company in this Agreement or that
it is material, nor shall such informaton be deemed to establish a standard
for materiality for purposes hereof.
SECTION 11.07. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, PROVIDED that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the written consent of the other parties; PROVIDED,
FURTHER, that AirNet or Merger Subsidiary may assign their respective rights,
but not their obligations, under this Agreement to a wholly-owned Subsidiary
of AirNet.
SECTION 11.08. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Ohio.
SECTION 11.09. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become
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effective when each party hereto shall have received counterparts hereof
signed by all of the other parties hereto.
[signature page to follow]
-46-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THE COMPANY:
Q INTERNATIONAL COURIER, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxx
President and Chief Executive Officer
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxxxxxx Xxxxx
---------------------------------------------
XXXXXXXXX XXXXX
/s/ Xxxxx Xxxxx
---------------------------------------------
XXXXX XXXXX
/s/ Xxxx Xxxxxx
---------------------------------------------
XXXX XXXXXX
/s/ Xx XxXxxxx
---------------------------------------------
XX XXXXXXX
/s/ Xxxxx Xxxxxxx
---------------------------------------------
XXXXX XXXXXXX
-47-
AIRNET:
AIRNET SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
MERGER SUBSIDIARY:
Q ACQUISITION CORPORATION, an Ohio corporation
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
President
Acknowledged & Agreed:
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
-48-
List of Annexes and Exhibit to
Agreement and Plan of Merger,
dated as of April 14, 1998,
among Q International Courier, Inc.,
the stockholders of Q International
Courier, Inc., AirNet Systems, Inc.
and Q Acquisition Company
-------------------------------------
Annex
-----
A Allocation of Merger Consideration*
B-1 Employment Agreement between AirNet
Systems, Inc. and Xxxxxx X. Xxxxxxx
B-2 Employment Agreement between Q
International Courier, Inc. and
Xxxxxxxxx Xxxxx*
B-3 Employment Agreement between Q
International Courier, Inc. and Xxxxx X.
Xxxxx*
C Xxxxxxx Lease Amendment*
D Form of Registration Rights Agreement
Exhibit
-------
1.05 Form of Escrow Agreement
----------------
*These Annexes are not being filed herewith. AirNet Systems, Inc. agrees to
furnish supplementally a copy of any omitted Annex to the Securities and
Exchange Commission upon request.
ANNEX B-1
[EXECUTION COPY]
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated April 14, 1998, by and between AIRNET SYSTEMS,
INC., an Ohio corporation (including for purposes of this Agreement its
subsidiaries and affiliates, including, but not limited to, the Surviving
Corporation, the "Company") and XXXXXX X. XXXXXXX (the "Employee").
W I T N E S S E T H
WHEREAS, the Company, Q Acquisition Company, an Ohio corporation and a
direct, wholly-owned subsidiary of the Company (the "Merger Subsidiary"), and
Q International Courier, Inc., a New York Corporation ("Quick"), have entered
into an Agreement and Plan of Merger dated as of April 14, 1998 (the "Merger
Agreement"), pursuant to which the Merger Subsidiary will merge with and into
Quick as of the Effective Time;
WHEREAS, the Employee is a stockholder and an employee of Quick and has
considerable knowledge of Quick's business, clients and operations;
WHEREAS, the Company desires to employ the Employee to perform certain
management functions for the Company at and after the Effective Time;
WHEREAS, the Company and the Employee desire to enter into an employment
agreement to establish the rights and obligations of the Employee and the
Company in such employment relationship; and
WHEREAS, the Company and the Employee have agreed to enter into this
Agreement as a condition to the execution and consummation of the Merger
Agreement;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the Company and the Employee hereby mutually agree as follows:
1. EMPLOYMENT AND DUTIES. Effective as of the Effective Time, the
Company agrees to employ the Employee, and the Employee agrees to accept
employment with the Company, upon the terms and conditions hereinafter set
forth. The Employee shall serve as (i) an Executive Vice President of the
Company, in charge of sales and marketing, and (ii) President of the
Surviving Corporation. In such capacities, the Employee shall report
directly to the Chief Executive Officer of the Company and shall be
responsible for the duties and responsibilities relating to the marketing and
sales of the Company's services and products, as the Chief Executive Officer
and/or the Board of Directors of the Company shall reasonably determine. In
addition, the Employee shall perform such other duties related to the
business of the Company and consistent with his title and salary as may from
time to time be reasonably requested of him by the Company's Board of
Directors. The Employee shall devote substantially all of his skills, time
and attention solely and exclusively to said positions and in furtherance of
the business and interests of the Company.
2. TERM OF EMPLOYMENT. This Agreement shall be effective upon
execution by both parties. The term of employment shall begin as of the
Effective Time and shall continue through the five-year period ending on the
day before the fifth anniversary date of the Effective Time, subject,
however, to prior termination, as herein provided (the "Term of Employment").
Notwithstanding anything in this Agreement to the contrary, this Agreement
shall terminate without liability by either party hereunder in the event that
the Merger Agreement is terminated prior to the Effective Time pursuant to
the terms thereof.
3. COMPENSATION. Commencing at the Effective Date and extending
through the Term of Employment, the Employee shall receive an annual base
salary of Two Hundred Eighty-Five Thousand Dollars ($285,000) (the "Base
Salary"). The Employee shall also be entitled to participate, on a reasonably
commensurate basis, in any bonus plan currently existing or hereinafter
established by the Compensation Committee of the Board of Directors of the
Company (or any comparable committee of the Board of Directors), applicable
to similarly situated executive officers of the Company (the "Bonus"). The
Company shall pay the Base Salary to the Employee in equal installments in
accordance with the Company's regular payroll practices. The Company shall
pay the Bonus, if any, to the Employee according to the policies established
by the Compensation Committee of the Board of Directors of the Company and
applicable to other executive officers of the Company.
4. FRINGE BENEFITS. The Company shall further provide the Employee
with all health and life insurance coverages, sick leave and disability
programs, tax-qualified retirement plans, paid holidays and vacations,
perquisites, and such other fringe benefits of employment as the Company may
provide from time to time to similarly situated executive officers of the
Company.
5. REIMBURSEMENT. The Company shall reimburse the Employee for all
reasonable expenses incurred by the Employee in performing services
hereunder, including all reasonable expenses of travel and living expenses
while away from home on business or at the request of and in the service of
the Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
6. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF EMPLOYMENT OTHER THAN BY EMPLOYEE. The Employee's
employment hereunder may be terminated by the Company without any breach of
this Agreement only under the following circumstances:
(1) DEATH OR DISABILITY. The Employee's employment hereunder
shall terminate upon his death, and may be terminated by the Company in
the event of his Disability. For purposes of this Agreement, "Disability"
means the inability of the Employee due to illness, accident, or otherwise,
to perform the essential duties required by this Agreement for a period of
at least one hundred twenty (120) days, as determined by an independent
physician selected by the Company and reasonably acceptable to the Employee
(or his legal representative), provided that the Employee does not return
to work on a full-time basis within thirty (30) days after Notice of
Termination is given by the Company pursuant to the provisions of
Paragraphs 6(c) and 6(d)(2). For purposes of
2
the foregoing, the Employee's return to work for periods of less than
thirty (30) days shall not be deemed to interrupt a period of one hundred
twenty (120) days.
(2) CAUSE. The Company may terminate the Employees employment
hereunder for Cause. For purposes of this Agreement, the Company shall
have "Cause" to terminate the Employee's employment hereunder only upon:
(A) The Employee's substantial neglect to perform the
essential duties required by this Agreement up to the reasonable
expectations of the Board of Directors of the Company for thirty (30)
days after reasonable notice of such neglect has been delivered to
the Employee.
(B) Material breach by the Employee of his obligations
under this Agreement or any act or omission by the Employee
constituting gross negligence with respect to the Company and the
continuation of said material violation, act or omission for a period
of thirty (30) days after the delivery of written notice thereof from
the Company.
(C) Indictment of the Employee of a felony or of a
misdemeanor involving dishonesty or fraud, as determined in good faith
by the Board of Directors of the Company.
(D) Indictment of the Employee of any crime involving moral
turpitude, as determined in good faith by the Board of Directors of
the Company.
(E) Commission by the Employee of an act of fraud or bad
faith toward the Company.
(F) Misappropriation by the Employee of any material amount
of funds, property or rights of the Company.
(b) TERMINATION OF EMPLOYMENT BY EMPLOYEE. The Employee may terminate
his employment at any time with one hundred eighty (180) days written notice.
However, the Employee shall be deemed to have terminated his employment for
"Good Reason" only if he terminates his employment by giving Notice of
Termination pursuant to Paragraphs 6(c) and 6(d)(3) within sixty (60) days
after the Employee has actual notice of the occurrence of any of the
following events (provided the Company does not cure such event on a
retroactive basis to the extent possible within thirty (30) days following
its receipt of the Employee's Notice of Termination):
(1) The Employee's title, position, authority or responsibilities
(including reporting responsibilities and authority) are changed in a
materially adverse manner.
(2) The Employee's base salary is materially reduced for any
reason other than in connection with the termination of his employment.
3
(3) For any reason other than in connection with the termination
of the Employee's employment, the Company materially reduces any fringe
benefit provided to the Employee under Paragraph 4 herein below the level
of such fringe benefit provided generally to other similarly situated
executive officers of the Company, unless the Company agrees to fully
compensate the Employee for any such material reduction.
(4) A change in the Employee's principal place of employment
without the Employee's prior consent to outside the five boroughs of the
City of New York.
(5) The Company otherwise materially breaches, or is unable to
perform its obligations under this Agreement.
(c) NOTICE OF TERMINATION. Any termination of the Employee's
employment by the Company hereunder, or by the Employee other than
termination upon the Employee's death, shall be communicated by written
Notice of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" means a notice that shall indicate the specific
termination provision relied upon in this Agreement, and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the specified provision or
provisions.
(d) DATE OF TERMINATION. "Date of Termination" means:
(1) If the Employee's employment is terminated by his death, the
date of his death.
(2) If the Employee's employment is terminated by the Company
as a result of Disability pursuant to Paragraph 6(a)(1), the date that is
thirty (30) days after Notice of Termination is given; PROVIDED the
Employee shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period.
(3) If the Employee terminates his employment for Good Reason
pursuant to Paragraph 6(b), the date that is one hundred eighty (180) days
after Notice of Termination is given (provided that the Company does not
cure such event during the one hundred eighty (180) day period); PROVIDED,
in the sole discretion of the Company, such date may be any earlier date
after Notice of Termination is given.
(4) If the Employee terminates his employment other than for Good
Reason, the date that is one hundred eighty (180) days after Notice of
Termination is given; PROVIDED, in the sole discretion of the Company, such
date may be any earlier date after Notice of Termination is given.
(5) If the Employee's employment is terminated by the Company
either for Cause pursuant to Paragraph 6(a)(2) or other than for Cause,
the date on which the Notice of Termination is given.
4
7. AMOUNTS PAYABLE UPON TERMINATION OF EMPLOYMENT OR DURING DISABILITY.
(a) DEATH. If the Employee's employment is terminated by his death,
the Employee's beneficiary, as designated by the Employee in writing with the
Company prior to his death, shall be entitled to the following payments and
benefits: (i) any Base Salary that is accrued but unpaid, any Bonus that is
accrued but unpaid, any vacation that is accrued but unused, and any business
expenses that are not reimbursed -- all, as of the Date of Termination; and
(ii) any benefit following termination of employment which may be provided
under the fringe benefit plans, policies and programs described in Paragraph
4. In the absence of beneficiary designation by the Employee, or, if the
Employee's designated beneficiary does not survive the Employee, benefits
described in this Paragraph 7(a) shall be paid to the Employee's estate.
(b) DISABILITY.
(1) During any period that the Employee fails to perform his
duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), the Employee shall continue to receive his
Base Salary at the rate then in effect for such period until his employment
is terminated pursuant to Paragraph 6(a)(1); PROVIDED, HOWEVER, that
payments of Base Salary so made to the Employee shall be reduced by the sum
of the amounts, if any, that were payable to the Employee at or before the
time of any such salary payment under any disability benefit plan or plans
of the Company and that were not previously applied to reduce any payment
of Base Salary; and
(2) Upon his termination of employment because of Disability (as
described in Paragraph 6(a)(1)), the Employee shall be entitled to the
payments and benefits described in Paragraph 7(a) as if the Employee had
died on his Date of Termination. In the event of the Employee's death prior
to the time that all payments described in Paragraph 7(a) have been
completed, such payments and benefits shall be paid to the Employee's
beneficiary as designated pursuant to Paragraph 7(a), or, in the absence of
a beneficiary designation or the designated beneficiary does not survive
the Employee, to the Employee's estate.
(c) TERMINATION BY COMPANY WITHOUT CAUSE OR TERMINATION BY EMPLOYEE FOR
GOOD REASON. In the event the Company terminates the Employee's employment
without Cause or the Employee terminates his employment for Good Reason before
the expiration of the Term of Employment, including any extension thereof, the
Employee shall be entitled to the following payments and benefits:
(1) Those described in Paragraph 7(a) as if the Employee had
died on his Date of Termination;
(2) Employee's Base Salary then in effect from and after the
Date of Termination through the date one (1) year after the Date of
Termination (the "Severance Period"), less all applicable payroll
deductions, including deductions for federal, state, local and Social
Security taxes. The payments set forth in this Paragraph 7(c)(2) shall be
paid in accordance with the provisions of Paragraph 3 and shall be deemed
to include all accrued vacation pay and all accrued sick days, such that
the Company shall have no further obligation to provide sick pay or
vacation pay to the Employee; and
5
(3) During the Severance Period, payment of any benefit of
employment which may be provided under the fringe benefit plans, policies
and programs described in Paragraph 4 (other than vacation pay) on the same
basis as if the Employee were still employed by the Company.
(d) TERMINATION BY EMPLOYEE OTHER THAN FOR GOOD REASON OR TERMINATION BY
COMPANY FOR CAUSE. In the event that the Employee terminates his employment
other than for Good Reason or the Company terminates his employment for Cause,
the Employee shall not be entitled to any compensation except as set forth
below:
(1) Any Base Salary or bonus that is accrued but unpaid, any
vacation that is accrued but unused, and any business expenses that are not
reimbursed -- all, as of the Date of Termination; and
(2) Any other rights and benefits (if any) provided under plans
and programs of the Company (excluding any bonus plan or program),
determined in accordance with the applicable terms and provisions of such
plans and programs.
8. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any
incentive, fringe benefit, deferred compensation, or other plan or program
provided by the Company and for which the Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as the Employee may
have under any other agreements with the Company. Amounts that are vested
benefits or that the Employee is otherwise entitled to receive under any plan
or program of the Company at or after the Date of Termination, shall be
payable in accordance with such plan or program.
9. NON-SOLICITATION OF CUSTOMERS AND EMPLOYEES AND COVENANT NOT TO
COMPETE.
(A) Except with the prior written consent of the Company, during the
Term of Employment and for a period of three (3) years immediately following
the termination of the Employee's employment with the Company under this
Agreement, the Employee shall not, directly or indirectly for the benefit of
the Employee or others, either as principal, agent, manager, consultant,
partner, owner (in the case of any publicly traded company, of more than 10%
of the outstanding voting stock of such company), employee, distributor,
dealer, representative, joint venturer, creditor or otherwise, engage in any
work involving any of the following: (i) any activity in the expedited
delivery and distribution industry which competes with any service or product
of the Company at the Date of Termination; (ii) the promotion, solicitation
or attempt to solicit, license or sell, in any geographic area where the
Company or its successor in interest conducts business, of any service or
product in competition with the services or products of the Company at the
Date of Termination; (iii) the solicitation, attempt to solicit, management,
maintenance, sale or license of any service or product in competition with
the services or products of the Company at the Date of Termination to any
business which was a customer of the Company during the one year period
immediately preceding the cessation of the Employee's employment with the
Company; and (iv) the disclosure to any person of the names of any of the
customers of the Company or any other information pertaining to them unless
such information can be obtained from public sources. For the purposes of
this Agreement, the term "customer" means all current
6
customers of the Company as of the Date of Termination and any person who has
been a customer within one year of the Date of Termination.
(B) NON-SOLICITATION OF EMPLOYEES. During the Term of Employment
and for a period of three (3) years immediately following the termination of
the Employee's employment with the Company under this Agreement, the Employee
shall not, either directly or indirectly, do any of the following: (i)
solicit to hire or hire any current or past employee of the Company; (ii)
solicit to hire or hire or employ in any fashion any consultant or other
person used by the Company; or (iii) participate as a shareholder (in the
case of any publicly traded company, owning more than 10% of the outstanding
voting stock of such company), partner, joint venturer, officer, director,
employee, agent, solicitor, distributor, dealer or representative, or have
any direct or indirect financial interest (including without limitation the
interest of a creditor) with any person who solicits to hire or hires any
current or past employee of the Company and who engages in any activity in
the expedited delivery and distribution industry which competes with any
service or product of the Company at the Date of Termination.
(C) The Employee acknowledges that the business of the Company is
international in scope and this international scope is the reason for the
geographic scope and/or duration of the restrictions on competition and
solicitation provided in this Paragraph 9. Satisfaction of the three (3)
year periods described in this Paragraph 9 shall be suspended during the time
of any activity of the Employee prohibited by this Paragraph 9. In the event
a court grants injunctive relief to the Company for a failure of the Employee
to comply with the provisions contained in Paragraph 9 hereof, the
noncompetition period shall commence anew with the date such relief is
granted.
The restrictions provided in this Paragraph 9 may be enforced by the
Company, by an action at law, or in equity, including but not limited to, an
action for injunction and/or an action for damages. The provisions of this
Paragraph 9 constitute an essential element of this Agreement and the Merger
Agreement, without which the Agreement and Merger Agreement would not have
been affected by the Company. The provisions of this Paragraph 9 shall
survive the termination of any other obligations of the Employee under this
Agreement for a period necessary to enforce its provisions. If the scope of
any restriction contained in this Paragraph 9 is too broad to permit
enforcement of such restriction to its fullest extent, then such restriction
shall be enforced to the maximum extent permitted by law and the Employee
hereby consents and agrees that such scope may be judicially modified in any
proceeding brought to enforce such restriction.
10. PROPRIETARY RIGHTS AND PROTECTION OF COMPANY'S BUSINESS.
(A) PROPRIETARY AND CONFIDENTIAL INFORMATION. As used throughout
this Agreement, the term "Proprietary Information" means any information
acquired by the Employee during or as a result of past, present or future
employment by the Company, including information conceived, discovered or
developed by the Employee, which is not in the public domain and which
relates to the business or contemplated businesses of the Company, whether
such information is patentable or unpatentable, copyrightable or
uncopyrightable, which falls into two general categories. The first category
is information which may have intrinsic value and may be considered to be an
asset of the Company (the "Class I Proprietary Information") and the second
category is information relating to matters of a business nature (the "Class
II Proprietary Information"). By way of example, Class I Proprietary
Information would include: inventions, information of a technical
7
nature such as trade secrets, "know-how," innovations, discoveries, formulae,
research projects, software, source codes, object codes, software
architecture, flow charts, software documentation, decision tables, test
data, conversion programs, technical writings and confidential information of
other parties which are provided to the Company by any agreement under which
the Company has obligations to protect the confidentiality of same. Class II
Proprietary Information would include matters of a business nature such as
customer lists, customer and supplier and marketing representative contracts,
customer and supplier and marketing representatives requirements and
preferences, costs, prices or license fees or maintenance fees or other
financial information such as sales, profits, expenses, financial
projections, financial goals, local, state and federal tax returns,
litigation and compensation, personnel data, business plans and market
research. The Employee acknowledges that he will have access to and become
familiar with this Proprietary Information and that such Proprietary
Information is very valuable to the Company. The Employee agrees not to
disclose any of the Proprietary Information directly or indirectly to any
person nor use it in any way, either during the Term of Employment or any
time thereafter. Except as required in the course of his employment pursuant
to this Agreement. All the Proprietary Information shall remain the
exclusive property of the Company; and any Proprietary Information in the
possession of the Employee at the end of the Term of Employment shall be
returned to the Company. Notwithstanding the foregoing, information shall
not be deemed to be Proprietary Information if it: (i) is or becomes known
through no fault of the Employee to a third party; (ii) is learned by the
Employee following his termination of employment; (iii) is or hereafter
becomes a part of the public domain other than through any breach of this
Agreement by the Employee or (iv) is owned directly by the Employee.
The restricted period during which the restrictions of this Paragraph 10
shall bind the Employee shall vary depending upon whether the information is
Class I Proprietary Information or Class II Proprietary Information. The
Employee shall have a perpetual obligation to keep Class I Proprietary
Information confidential, or, in the case of information of other parties,
for so long as the Company has an obligation to keep such information
confidential, and acknowledges that the ownership of Class I Proprietary
Information inures solely to the Company. The Employee shall have an
obligation for three (3) years after the termination of employment to keep
Class II Proprietary Information confidential.
11. ASSIGNMENT AND SURVIVORSHIP OF BENEFITS. Neither party shall have
the right to assign its rights or obligations under this Agreement to any
third party without the prior written consent of the other party hereto,
which shall not be unreasonably delayed or withheld.
12. NOTICES. Any notices given to either party to this Agreement
shall be in writing, and shall be deemed to have been given when delivered
personally or sent by certified mail, postage prepaid, return receipt
requested, when the return receipt is signed, duly addressed to the party
concerned, at the address indicated below or to such changed address as such
party may subsequently give notice of:
8
If to the Company:
AirNet Systems, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxx, Executive Vice President
and Chief Financial Officer
If to the Employee:
Xxxxxx X. Xxxxxxx
Quick International Courier, Inc.
000 Xxxxx Xxxxxx -- 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
13. TAXES. Anything in this Agreement to the contrary notwithstanding,
all payments required to be made hereunder by the Company to the Employee
shall be subject to withholding of such amounts as the Company may reasonably
determine that it should withhold pursuant to any applicable law or
regulations. In lieu of withholding such amounts, in whole or in part,
however, the Company may, in its sole discretion, accept other provision for
payment of taxes, provided that it is satisfied that all requirements of the
law affecting its responsibilities to withhold such taxes have been satisfied.
14. GOVERNING LAW/CAPTIONS/SEVERANCE. This Agreement shall be
construed in accordance with, and pursuant to, the laws of the State of Ohio.
The captions of this Agreement shall not be part of the provisions hereof,
and shall have no force or effect. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. Except as otherwise specifically
provided in this Paragraph 14, the failure of either party to insist in any
instance on the strict performance of any provision of this Agreement or to
exercise any right hereunder shall not constitute a waiver of such provision
or right in any other instance.
15. ENTIRE AGREEMENT/AMENDMENT. This instrument contains the entire
agreement of the parties, relating to the subject matter hereof, and the
parties have made no agreement, representations, or warranties relating to
the subject matter hereof, that are not set forth herein. This Agreement may
be amended at any time by written agreement of both parties, but it shall not
be amended by oral agreement.
16. DEFINITIONS. Capitalized terms used herein without definition
shall have the meanings ascribed thereto in the Merger Agreement.
[signature page to follow]
9
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
AIRNET SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx
10
ANNEX D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of __________,
1998, by and among XXXXXX X. XXXXXXX, XXXXXXXXX XXXXX, XXXX XXXXXX, XXXXX
XXXXX, XXXXX XXXXXXX and XX XXXXXXX (the "Stockholders") and AIRNET SYSTEMS,
INC., an Ohio corporation ("AirNet").
WHEREAS, the parties hereto have entered into an Agreement and Plan of
Merger dated as of April 14, 1998 (the "Merger Agreement"), by and among Q
International Courier, Inc., a New York corporation, the Stockholders, AirNet
and Q Acquisition Company, an Ohio corporation and a direct, wholly-owned
subsidiary of AirNet; and
WHEREAS, pursuant to the Merger Agreement, AirNet has agreed to enter
into this Agreement as a condition to the performance of AirNet and the
Stockholders thereunder.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
have the meanings indicated below or in the referenced sections of this
Agreement:
"Affiliate Securities": Common Shares beneficially owned by any
executive officer, director of other affiliate of AirNet, other than any
Stockholder.
"Common Shares": AirNet's common shares, $.01 par value per share, as
the same may be constituted from time to time.
"Exchange Act": The Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Person": An individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a government entity or any
department, agency, or political subdivision thereof.
"Piggyback Registration": As defined in SECTION 3(a) hereof.
"Registrable Securities": Any Common Shares acquired by a Stockholder
pursuant to the Merger Agreement, together with any additional Common Shares
that a Stockholder may acquire on account of such Common Shares, including
without limitation, as the result of any dividend or other distribution of
Common Shares, any split-up of such Common Shares, or in accordance with a
recapitalization, merger, consolidation or other reorganization with respect
to any such Common
Shares; PROVIDED, that a Registrable Security ceases to be a Registrable
Security when (i) it is registered under the Securities Act and disposed of
in accordance with the registration statement covering it; (ii) it is sold or
transferred in accordance with the requirements of Rule 144 (or similar
provisions then in effect) promulgated by the SEC under the Securities Act
("Rule 144"); or (iii) it becomes eligible to be sold or transferred in
accordance subsection (k) of Rule 144(k).
"Registration Expenses": As defined in SECTION 5 hereof.
"SEC": The United States Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended, and the rules
and regulations thereunder.
"Underwritten registration" or "underwritten offering": A registration
in which securities of AirNet are sold pursuant to a firm commitment
underwriting.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT.
(a) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a
holder of Registrable Securities whenever that Person owns, directly or
beneficially, or has the right to acquire Registrable Securities,
disregarding any legal restrictions upon the exercise of that right.
(b) MAJORITY OF REGISTRABLE SECURITIES. As used in this Agreement, the
term "majority of the Registrable Securities" means 51% or more of the
Registrable Securities being registered unless the context indicates that it
is 51% or more of the Registrable Securities then issued and outstanding.
SECTION 3. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Subject to SECTION 3(g), whenever AirNet
proposes to register any of its securities under the Securities Act (except
for the registration of securities to be offered pursuant to an employee
benefit plan on Form S-8, pursuant to a registration made on Form S-4 or any
successor forms then in effect) and the registration form to be used may be
used for the registration of the Registrable Securities (a "Piggyback
Registration"), it will so notify in writing all holders of Registrable
Securities not later than 30 days prior to the anticipated filing date.
Subject to the provisions of SECTIONS 3(c), 3(d) and 3(g), AirNet will
include in the Piggyback Registration all Registrable Securities, on a pro
rata basis based upon the total number of outstanding Common Shares on a
fully diluted basis, with respect to which AirNet has received written
requests for inclusion within five business days after the applicable
holder's receipt of AirNet's notice. The holders of Registrable Securities
may withdraw all or any part of the Registrable Securities from a Piggyback
Registration at any time before ten business days prior to the effective date
of the Piggyback Registration. AirNet, the holders of Registrable Securities
and any Person who hereafter becomes entitled to register its securities in a
registration initiated by AirNet must sell their securities on the same terms
and conditions.
-2-
(b) PIGGYBACK EXPENSES. AirNet shall pay to, or on behalf of, the
holders of the Registrable Securities included in a Piggyback Registration
all Registration Expenses of those holders (except to the extent prohibited
by applicable state securities laws).
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of AirNet and the managing
underwriter gives AirNet its written opinion that the total number or dollar
amount of securities requested to be included in the registration exceeds the
number or dollar amount of securities that can reasonably be sold, AirNet
will include the securities in the registration in the following order of
priority: first, all securities AirNet proposes to sell; second, up to the
full number or dollar amount of Registrable Securities and Affiliate
Securities requested to be included in the registration (allocated on a pro
rata basis, based upon the total number of outstanding Common Shares on a
fully diluted basis, among the holders of Registrable Securities and the
holders of Affiliate Securities); and third, any other securities (provided
they are of the same class as the securities sold by AirNet) requested to be
included, allocated among the holders of the securities in such proportions
as AirNet and those holders may agree. In the event that the managing
underwriter advises AirNet that an underwriters' over-allotment option is
necessary or advisable, the preceding priority shall apply to the
determination of which securities are to be included in the primary portion
of such registration as well as such over-allotment option.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of AirNet's
securities who hereafter obtain registration rights from AirNet, and the
managing underwriter gives AirNet its written opinion that the dollar amount
or number of securities requested to be included in the registration exceeds
the dollar amount or number of securities that can be sold, AirNet will
include in the registration: (1) to the extent of 50% of the number or
dollar amount of securities other than Registrable Securities or Affiliate
Securities that in the underwriter's opinion can be sold, the securities
requested to be included in the registration, allocated among the holders of
those securities in such proportions as AirNet and those holders may agree;
and (2) to the extent of the balance, the Registrable Securities and
Affiliate Securities requested to be included, allocated pro rata among the
holders of Registrable Securities and Affiliate Securities on a pro rata
basis, based upon the total number of outstanding Common Shares on a fully
diluted basis. If, after including all of the Registrable Securities and
Affiliate Securities that are sought to be registered, the underwriters
determine that there are additional securities that can be sold, then
securities other than Registrable Securities or Affiliate Securities may be
added to the registration. In the event that the managing underwriter advises
AirNet that an underwriters' over-allotment option is necessary or advisable,
the preceding priority shall apply to the determination of which securities
are to be included in the primary portion of such registration as well as
such over-allotment option.
(e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, AirNet will select the investment banker(s) and
manager(s) that will administer the offering and shall enter into a customary
underwriting agreement with the investment banker(s) and manager(s).
-3-
(f) OTHER REGISTRATIONS. AirNet agrees that after filing a
registration statement with respect to Registrable Securities pursuant to
this SECTION 3 that has not been withdrawn or abandoned, AirNet will not
register any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the
Securities Act, whether on its own behalf or at the request of any holder of
those securities until at least 90 days have elapsed from the effective date
of the previous registration. This 90 day hiatus does not apply to
registrations of securities to be issued in connection with employee benefit
plans or to permit exercise or conversions of previously issued options,
warrants, or other convertible securities.
(g) LIMIT ON PIGGYBACK REGISTRATIONS. Notwithstanding anything to the
contrary contained herein, the holders of Registrable Securities shall be
entitled to participate in no more than two Piggyback Registrations
hereunder; PROVIDED, that (i) any Piggyback Registration which has been
withdrawn or abandoned by AirNet or (ii) any Piggyback Registration in which
the Stockholders are not permitted to include the full number of Registrable
Securities requested by such Stockholders to be included therein pursuant to
the terms of this Section 3 shall not count as a Piggyback Registration for
purposes of such limitation.
SECTION 4. RESTRICTIONS ON PUBLIC SALE BY SECURITIES HOLDERS. Each
holder of Registrable Securities whose securities are included in a
registration statement agrees not to make any public sale or distribution of
equity securities of AirNet (except as part of the underwritten registration
or pursuant to registration on Form S-8 or any successor form), including a
sale pursuant to Rule 144, during the seven days prior to and the 90 days
after the effective date of any underwritten Piggyback Registration unless
the managing underwriters agree otherwise.
SECTION 5. REGISTRATION EXPENSES.
(a) All Registration Expenses incident to AirNet's performance of or
compliance with this Agreement shall be paid as provided in this Agreement.
The term "Registration Expenses" includes without limitation all registration
filing fees, professional fees and other expenses of compliance with federal,
state and other securities laws (including fees and disbursements of counsel
for the underwriters in connection with state or other securities law
qualifications and registrations); printing expenses, messenger, telephone
and delivery expenses; reasonable fees and disbursements of counsel for
AirNet and for one counsel for the sellers of the Registrable Securities
(subject to the provisions of SECTION 5(b)); reasonable fees and
disbursements of all independent certified public accountants (including the
expenses of any audit or "comfort" letters required by or incident to
performance of the obligations contemplated by this Agreement); certain fees
and expenses of the underwriters (excluding discounts and commissions); fees
and expenses of any special experts retained by AirNet at the request of the
managing underwriters in connection with the registration; fees and expenses
of other Persons retained by AirNet in connection with the registration; and
the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which similar
securities issued by AirNet are then listed.
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(b) In connection with each registration for which AirNet is required
to pay the Registration Expenses of the holders of Registrable Securities,
AirNet will promptly reimburse those holders for the reasonable fees and
disbursements of one law firm, selected by the holders of a majority of the
Registrable Securities, to serve as counsel to all the holders.
(c) Each holder of securities included in any underwritten Piggyback
Registration will pay any underwriting discounts and commissions allocable to
the holder's securities so included.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. In the event of any registration of
Registrable Securities under the Securities Act pursuant to this Agreement,
to the fullest extent permitted by law, AirNet agrees to indemnify each
holder of Registrable Securities, its officers and directors, and each Person
who controls the holder (within the meaning of the Securities Act and the
Exchange Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or allegedly untrue statement of material fact contained
in any registration statement under which such Registrable Securities were
registered under the Securities Act, any prospectus or preliminary prospectus
contained therein or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except to the extent the untrue statement or omission
resulted from information that the holder furnished in writing to AirNet
expressly for use therein or the holder's failure to deliver information
required to be included therein or by the holder's failure to deliver a copy
of the registration statement or prospectus or any amendments or supplements
thereto which fully correct any untrue statements or omissions in any
registration statement or prospectus previously delivered to any purchaser by
such holder after AirNet has furnished the holder with a sufficient number of
copies of the relevant documents. In connection with a firm or best efforts
underwritten offering, to the extent customarily required by the managing
underwriter, AirNet will indemnify the underwriters, their officers and
directors and each Person who controls the underwriters (within the meaning
of the Securities Act and the Exchange Act), to the extent customary in such
agreements.
(b) INDEMNIFICATION BY HOLDERS OF SECURITIES. In connection with any
registration statement, each participating holder of Registrable Securities
will furnish to AirNet in writing such information and affidavits as AirNet
reasonably requests for use in connection with any registration statement or
prospectus and each holder agrees to indemnify, to the extent permitted by
law, AirNet, its directors and officers, and each Person who controls AirNet
(within the meaning of the Securities Act and the Exchange Act) against any
losses, claims, damages, liabilities, and expenses resulting from any untrue
or allegedly untrue statement of a material fact or any omission or alleged
omission of a material fact concerning such holder required to be stated in
the registration statement or prospectus or any amendment thereof or
supplement thereto necessary to make the statements therein not misleading,
but only to the extent that the untrue statement or omission is contained in
or omitted from any information or affidavit concerning such holder the
holder furnished in writing, or resulting from the holder's failure to
deliver information required to be included therein or, if so required by
applicable law, to deliver a copy of the registration statement or prospectus
or any amendments or supplements
-5-
thereto to any purchaser after AirNet has furnished the holder with a
sufficient number of copies of the relevant documents.
(c) INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification under this Agreement will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in the indemnified party's reasonable
judgment a conflict of interest may exist between the indemnified and
indemnifying parties with respect to the claim, permit the indemnifying party
to assume the defense of the claim with counsel reasonably satisfactory to
the indemnified party. If the indemnifying party does not assume the
defense, the indemnifying party will not be liable for any settlement made
without its consent (but that consent may not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or will enter into
any settlement that does not include as an unconditional term the claimant's
or plaintiff's release of the indemnified party from all liability concerning
the claim or litigation. An indemnifying party who is not entitled to or
elects not to assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel (and local counsel) for all
parties indemnified by the indemnifying party with respect to the claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between the indemnified party and any other indemnified
party with respect to the claim, in which event the indemnifying party shall
be obligated to pay the fees and expenses of additional counsel.
(d) CONTRIBUTION. If the indemnification provided for in Section
6(a) or (b) is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
indemnifying party thereunder shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the (i) relative
benefit and (ii) relative fault of AirNet and the participating holders of
Registrable Securities in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefit of AirNet
and the participating holders of Registrable Securities shall be determined
by reference to the proportion of total proceeds from the offering to which
such person is entitled. The relative fault of AirNet and the participating
holders of Registrable Securities shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by AirNet or by the participating holders of Registrable
Securities and the parties' relative intent and knowledge.
The parties hereto agree that it would not be just and equitable if
contribution pursuant this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding anything herein to the contrary, no participating
holder of Registrable Securities shall be required to contribute any amount
in excess of the amount by which the net proceeds of the offering (before
deducting expenses, if any) received by such participating holder exceeds the
amount of any damages that such participating holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
-6-
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration without (a) agreeing to sell
securities on the basis provided in underwriting arrangements approved by
AirNet (which underwriting arrangements shall not be contrary to this
Agreement) and (b) completing and executing all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
by the underwriting arrangements.
SECTION 8. MISCELLANEOUS.
(a) AMENDMENT. This Agreement may be amended or modified only by a
written agreement executed by AirNet and the holders of a majority of the
Registrable Securities then issued and outstanding.
(b) ATTORNEYS' FEES. In any legal action or proceeding brought to
enforce any provision of this Agreement, the prevailing party shall be
entitled to recover all reasonable expenses, charges, court costs and
attorneys' fees in addition to any other available remedy at law or in
equity.
(c) BENEFIT OF PARTIES; ASSIGNMENT. All of the terms and provisions
of this Agreement shall be binding on and inure to the benefit of the parties
and their respective successors and assigns, including without limitation all
subsequent holders of securities entitled to the benefits of this Agreement
who agree in writing to become bound by the terms of this Agreement;
PROVIDED, HOWEVER, AirNet may not transfer or assign its rights or
obligations under this Agreement; and, without the prior written consent of
AirNet (which shall not be unreasonably withheld or delayed), no Stockholder
may assign his or her rights or obligations under this Agreement.
(d) CAPTIONS. The captions of the sections and subsections of this
Agreement are solely for convenient reference and shall not be deemed to
affect the meaning or interpretation of any provision of this Agreement.
(e) COOPERATION. The parties agree that after execution of this
Agreement they will from time to time, upon the request of any other party
and without further consideration, execute, acknowledge and deliver in proper
form any further instruments and take such other action as any other party
may reasonably require to carry out effectively the intent of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement.
(g) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter of this
Agreement. There are no promises, covenants or undertakings other than those
expressly set forth or provided for in this Agreement.
-7-
(h) GOVERNING LAW. The internal law of the State of Ohio will govern
the interpretation, construction, and enforcement of this Agreement and all
transactions and agreements contemplated hereby, notwithstanding any state's
choice of law rules to the contrary.
(i) NO INCONSISTENT AGREEMENTS. AirNet will not enter into any
agreement with respect to its securities that shall grant to any Person
registration rights that in any way conflict with the rights provided under
this Agreement unless, and only to the extent that, the Stockholders are
granted rights equal to those granted to such other Person.
(j) NOTICES. All notices, requests, demands, or other communications
that are required or may be given pursuant to the terms of this Agreement
shall be in writing and delivery shall be deemed sufficient in all respects
and to have been duly given on the date of service if delivered personally to
the party to whom notice is to be given, or on the third day after mailing if
mailed by first class mail - return receipt requested, postage prepaid, and
properly addressed to the addresses set forth in the Merger Agreement or to
such other address(es) as the respective parties hereto shall from time to
time designate to the other(s) in writing.
(k) SPECIFIC PERFORMANCE. Each of the parties agrees that damages
for a breach of or default under this Agreement would be inadequate and that
in addition to all other remedies available at law or in equity the parties
and their successors and assigns shall be entitled to specific performance or
injunctive relief, or both, in the event of a breach or a threatened breach
of this Agreement.
(l) VALIDITY OF PROVISIONS. Should any part of this Agreement for
any reason be declared by any court of competent jurisdiction to be invalid,
that decision shall not affect the validity of the remaining portion, which
shall continue in full force and effect as if this Agreement had been
executed with the invalid portion eliminated, it being the intent of the
parties that they would have executed the remaining portion of the Agreement
without including any part or portion that may for any reason be declared
invalid.
-8-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
AIRNET SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
President and Chief Executive
Officer
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxxxxxx Xxxxx
---------------------------------------
XXXXXXXXX XXXXX
/s/ Xxxxx Xxxxx
---------------------------------------
XXXXX XXXXX
/s/ Xxxx Xxxxxx
---------------------------------------
XXXX XXXXXX
/s/ Xx XxXxxxx
---------------------------------------
XX XXXXXXX
/s/ Xxxxx Xxxxxxx
---------------------------------------
XXXXX XXXXXXX
-9-
EXHIBIT 1.05
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ____________, 1998, among the Persons
whose names and addresses are set forth on SCHEDULE A hereto (the
"STOCKHOLDERS"), AirNet Systems, Inc., an Ohio corporation ("AIRNET"), and
Banc One Trust Company, NA, as Escrow Agent (the "ESCROW AGENT").
R E C I T A L S
WHEREAS, the Stockholders, AirNet, Q International Courier, Inc., a New
York corporation (the "COMPANY"), and Q Acquisition Company, an Ohio
corporation and wholly-owned subsidiary of AirNet ("MERGER SUBSIDIARY"), are
parties to a Merger Agreement, dated as of April 14, 1998 (the "MERGER
AGREEMENT"), pursuant to which Merger Subsidiary shall be merged with and
into the Company.
WHEREAS, Section 10.02 of the Merger Agreement provides for the
indemnification of AirNet Indemnitees (as defined in the Merger Agreement) from
certain Losses (as defined in the Merger Agreement) that may be incurred by any
of them;
WHEREAS, the Merger Agreement further provides that 314,136 common
shares, $.01 par value, of AirNet (the "AIRNET COMMON SHARES"), shall be
deposited into escrow in order to indemnify the AirNet Indemnitees against
General Contingencies pursuant to Section 10.02 of the Merger Agreement (the
"GENERAL ESCROW SHARES"); and
WHEREAS, the Merger Agreement further provides that 46,091 AirNet Common
Shares shall be deposited into escrow in order to indemnify the AirNet
Indemnitees against Specific Contingencies pursuant to Section 10.02 of the
Merger Agreement (the "SPECIFIC ESCROW SHARES" and, together with the General
Escrow Shares, the "ESCROW SHARES").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree
as follows:
l. APPOINTMENT OF ESCROW AGENT; DEPOSIT OF ESCROW SHARES. The
Stockholders and AirNet hereby appoint the Escrow Agent as the escrow agent
under this Agreement, and the Escrow Agent accepts such appointment according
to the terms and conditions set forth herein. On the date hereof, AirNet
and/or the Stockholders have deposited with the Escrow Agent, and the Escrow
Agent hereby acknowledges receipt of, the General Escrow Shares and the
Specific Escrow Shares. The Escrow Agent shall hold and distribute the Escrow
Shares in accordance with the terms and conditions of this Agreement.
2. DISTRIBUTIONS FROM ESCROW. The Escrow Agent shall hold the
Escrow Shares in escrow in accordance with this Agreement and shall make
distributions of Escrow Shares only as follows or as provided in Sections 3
and 4 below:
(a) Escrow Shares shall be distributed to AirNet in such amounts as are
authorized to be distributed to AirNet pursuant to Section 3 below.
(b) Upon the filing of AirNet's Annual Report on Form 10-K (the "AIRNET
1998 FORM 10-K") for the fiscal year ended December 31, 1998 (which is
anticipated to occur on or about March 31, 1999), the Escrow Agent shall
distribute to each Stockholder that number of General Escrow Shares equal to
the product of (i) such Stockholder's Stockholder Percentage as set forth on
Schedule A hereto and (ii) the entire balance of the General Escrow Shares
then remaining in escrow less the aggregate of the then existing General
Claim Reserves (as defined below) for General Open Claims (as defined below)
and the amount of any claim not constituting a General Open Claim which is
described in a written notice of a claim from AirNet in accordance with
Section 3(a) and actually received by the Escrow Agent prior to the filing of
the AirNet 1998 Form 10-K.
(c) Within two banking days of the Escrow Agent's having been given a
joint written direction with respect to a General Open Claim pursuant to
Section 3(d), (i) the Escrow Agent shall distribute to AirNet that number of
General Escrow Shares set forth in joint written direction for such General
Open Claim and (ii) to the extent authorized in Section 3 below, the Escrow
Agent shall distribute to each Stockholder that number of General Escrow
Share equal to the product of (X) such Stockholder's Stockholder Percentage
and (Y) and the balance of the General Claim Reserve established in respect
of such General Open Claim, the amount of which shall be set forth in the
joint written direction.
(d) At least five business days prior to the six month anniversary of
the Effective Time (as defined in the Merger Agreement) and following
resolution of the Specific Contingency set forth as item number one on
Schedule 1.04 to the Company Disclosure Schedule in accordance with the
provisions of Section 7.08 of the Merger Agreement, AirNet and the
Stockholder Representative shall give the Escrow Agent a joint written
instruction directing the Escrow Agent to distribute the number of Specific
Escrow Shares set forth in such joint written instruction to AirNet and/or
the Stockholders, depending on the resolution of such Specific Contingency in
accordance with such Section 7.08. Within two banking days of the Escrow
Agent's having been given the foregoing joint written direction, the Escrow
Agent shall distribute to AirNet that number of Specific Escrow Shares set
forth in such joint written instruction and/or to each Stockholder that
number of Specific Escrow Shares equal to the product of (i) such
Stockholder's Stockholder Percentage as set forth on Schedule A hereto and
(ii) the total number of Specific Escrow Shares to be delivered to the
Stockholders pursuant to such joint written instruction.
(e) On the second anniversary of the Effective Time (as defined in the
Merger Agreement), the Escrow Agent shall distribute to each Stockholder that
number of Specific Escrow Shares equal to the product of (i) such
Stockholder's Stockholder Percentage as set forth on Schedule A hereto and
(ii) the entire balance of the Specific Escrow Shares then remaining in
2
escrow less the aggregate of the then existing Specific Claim Reserves (as
defined below) for Specific Open Claims (as defined below).
(f) Within two banking days of the Escrow Agent's having been given a
joint written direction with respect to a Specific Open Claim pursuant to
Section 4(d), (i) the Escrow Agent shall distribute to AirNet that number of
Specific Escrow Shares set forth in joint written direction for such Specific
Open Claim and (ii) to the extent authorized in Section 3 below, the Escrow
Agent shall distribute to each Stockholder that number of Specific Escrow
Share equal to the product of (X) such Stockholder's Stockholder Percentage
and (Y) and the balance of the Specific Claim Reserve established in respect
of such Specific Open Claim, the amount of which shall be set forth in the
joint written direction.
(g) Any distribution required to be made hereunder by the Escrow Agent
from the Escrow Shares shall be delivered (i) in accordance with written
instructions given to the Escrow Agent by the party entitled under this
Agreement to receive such distribution (with a copy to the other parties) or
(ii) after the filing of the AirNet 1998 Form 10-K (in respect of the General
Escrow Shares) and after the second anniversary of the Effective Time (in
respect of the Specific Escrow Shares), in accordance with the terms of an
order, judgment or decree ordering the payment of all or any portion of the
Escrow Shares, which order, judgment or decree represents a final
adjudication of the rights of the Stockholders and AirNet with respect to the
payment of all or a portion of an Open Claim by a court of competent
jurisdiction, and that the time for appeal from such order, judgment or
decree has expired without an appeal having been perfected.
3. AIRNET GENERAL CONTINGENCY CLAIMS. The procedure for
distributions from the Escrow Shares with respect to General Contingencies
shall be as follows:
(a) From time to time prior to the filing of the AirNet 1998 Form 10-K,
if AirNet determines that AirNet or any other AirNet Indemnitee is entitled
to indemnification for Losses with respect to General Contingencies under
Section 11.02(a) of the Merger Agreement, AirNet may request a distribution
from the General Escrow Shares on deposit by giving written notice of
AirNet's claim to the Escrow Agent and to the Stockholder Representative (as
defined below), certifying in reasonable detail in such notice the nature of
the claim, the amount thereof if then ascertainable and, if not then
ascertainable, a good faith estimate of the estimated amount thereof, and the
provision(s) in the Merger Agreement on which the claim relating to such
General Contingency is based.
(b) If, within thirty (30) calendar days after actual receipt by the
Escrow Agent of the written notice of a claim from the AirNet in accordance
with Section 3(a), the Escrow Agent has not actually received written
objection to such claim from the Stockholder Representative, the claim stated
in such notice shall be conclusively deemed to be approved by the
Stockholders and the Escrow Agent shall promptly thereafter distribute to
AirNet from the General Escrow Shares on deposit a number of General Escrow
Shares equal to the dollar amount of such claim divided by the Market Price
up to the full number of General Escrow Shares on deposit.
3
(c) If within said thirty (30) calendar days the Escrow Agent shall
have actually received from the Stockholder Representative a written
objection to the claim by AirNet pursuant to Section 3(a) (a copy of which
objection shall in each case be sent to the AirNet by the Stockholder
Representative in accordance with the provisions of Section 12 below), then
such claim shall be deemed to be a "GENERAL OPEN CLAIM" and the Escrow Agent
shall reserve within the General Escrow Shares on deposit a number of General
Escrow Shares equal to the amount of the General Open Claim divided by the
Market Price (which number of General Escrow Shares for each General Open
Claim is referred to herein as a "GENERAL CLAIM RESERVE").
(d) The number of General Escrow Shares constituting the General Claim
Reserve for each General Open Claim shall be distributed by the Escrow Agent
from the General Escrow Shares on deposit to AirNet only in accordance with a
joint written instruction by AirNet and the Stockholder Representative
following resolution of the General Open Claim in accordance with Section
3(e) below, and any portion of the General Claim Reserve for such General
Open Claim not so required to be distributed to AirNet shall be distributed
by the Escrow Agent to the Stockholders in accordance with Section 3(b) above
and such General Reserve shall be reduced to zero; PROVIDED, that if such
General Open Claim is resolved prior to the filing of the AirNet 1998 Form
10-K, the remaining portion of such General Claim Reserve shall not be
distributed to the Stockholders pursuant hereto but rather shall continue to
constitute a part of the Escrow Shares for General Contingencies, and shall
continue to be available for additional claims by AirNet pursuant to the
terms hereof.
(e) If the Stockholder Representative shall raise an objection to a
claim by AirNet relating to General Contingencies within the 30-day period
referred to in Section 3(b) above, the Stockholder Representative and AirNet
shall negotiate in good faith for a further 15-day period to determine
jointly the appropriate amount, if any, of such General Open Claim. If the
Stockholder Representative and AirNet have not made such joint determination
during such 15-day period, then, to extent such General Open Claim remains in
dispute, such General Open Claim shall be submitted to, and settled by,
binding arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA RULES"). The determination of
the arbitrator selected in accordance with the AAA Rules shall be final and
conclusive and, within five business days following resolution of the General
Open Claim pursuant to arbitration, AirNet and the Stockholder Representative
shall submit a joint written instruction to the Escrow Agent as to the
disposition of the General Open Claim that is consistent with the
determination of the arbitrator with respect thereto. The costs, fees and
expenses of the arbitration shall be borne by AirNet and the Stockholders in
reverse proportion to the arbitration decision.
4. AIRNET SPECIFIC CONTINGENCY CLAIMS. The procedure for
distributions from the Escrow Deposit with respect to Specific Contingencies
shall be as follows:
(a) From time to time prior to the second anniversary of the Effective
Time, if AirNet determines that AirNet or any other AirNet Indemnitee is
entitled to indemnification for Losses with respect to a Specific
Contingency under Section 11.02(a) of the Merger Agreement, AirNet may
request a distribution from the Specific Escrow Shares on deposit by giving
written notice of AirNet's claim to the Escrow Agent and to the Stockholder
Representative, certifying in
4
reasonable detail in such notice the nature of the claim, the amount thereof
and the Specific Contingency for which indemnity is being sought.
(b) If, within thirty (30) calendar days after actual receipt by the
Escrow Agent of the written notice of a claim from the AirNet in accordance
with Section 4(a), the Escrow Agent has not actually received written
objection to such claim from the Stockholder Representative, the claim stated
in such notice shall be conclusively deemed to be approved by the
Stockholders and the Escrow Agent shall promptly thereafter distribute to
AirNet from the Specific Escrow Shares on deposit a number of Specific Escrow
Shares equal to the dollar amount of such claim divided by the Market Price
up to the full number of Specific Escrow Shares in the Escrow Deposit.
(c) If within said thirty (30) calendar days the Escrow Agent shall
have actually received from the Stockholder Representative a written
objection to the claim by AirNet pursuant to Section 4(a) (a copy of which
objection shall in each case be sent to the AirNet by the Stockholder
Representative in accordance with the provisions of Section 12 below), then
such claim shall be deemed to be a "SPECIFIC OPEN CLAIM" and the Escrow Agent
shall reserve within the Specific Escrow Shares on deposit a number of
Specific Escrow Shares equal to the amount of the Specific Open Claim divided
by the Market Price (which number of Specific Escrow Shares for each Specific
Open Claim is referred to herein as a "SPECIFIC CLAIM RESERVE").
(d) The number of Specific Escrow Shares constituting the Specific
Claim Reserve for each Specific Open Claim shall be distributed by the Escrow
Agent from the Specific Escrow Shares on deposit to AirNet only in accordance
with a joint written instruction by AirNet and the Stockholder Representative
following resolution of the Specific Open Claim in accordance with Section
4(e) below, and any portion of the Specific Claim Reserve for such Specific
Open Claim not so required to be distributed to AirNet shall be distributed
by the Escrow Agent to the Stockholders in accordance with Section 4(b) above.
(e) If the Stockholder Representative shall raise an objection to a
claim by AirNet relating to a Specific Contingency within the 30-day period
referred to in Section 4(b) above, the Stockholder Representative and AirNet
shall negotiate in good faith for a further 15-day period to determine
jointly the appropriate amount, if any, of such Specific Open Claim. If the
Stockholder Representative and AirNet have not made such joint determination
during such 15-day period, then, to extent such Specific Open Claim remains
in dispute, such Specific Open Claim shall be submitted to, and settled by,
binding arbitration in accordance the AAA Rules. The determination of the
arbitrator selected in accordance with the AAA Rules shall be final and
conclusive and, within five business days following resolution of the
Specific Open Claim pursuant to arbitration, AirNet and the Stockholder
Representative shall submit a joint written instruction to the Escrow Agent
as to the disposition of the Specific Open Claim that is consistent with the
determination of the arbitrator with respect thereto. The costs, fees and
expenses of the arbitration shall be borne by AirNet and the Stockholders in
reverse proportion to the arbitration decision.
5. CONDITIONS TO ESCROW. The Escrow Agent agrees to hold the Escrow
Shares and to perform in accordance with the terms and provisions of this
Agreement. The Stockholders and AirNet agree that the Escrow Agent does not
assume any responsibility for the failure of the
5
Stockholders or the AirNet to perform in accordance with the Merger Agreement
or this Agreement. The acceptance by the Escrow Agent of its responsibilities
hereunder is subject to the following terms and conditions, which the parties
hereto agree shall govern and control with respect to the Escrow Agent's
rights, duties, liabilities and immunities:
(a) The Escrow Agent may conclusively rely, and shall be protected in
acting or refraining from acting upon, any written notice, certification,
request, waiver, consent, receipt or other paper or document furnished to it,
not only as to its due execution and validity and effectiveness of its
provisions but also as to the truth and accuracy of any information therein
contained which the Escrow Agent reasonably believes to be genuine and to
have been signed and presented by the proper party or parties. Should it be
necessary for the Escrow Agent to act upon any instructions, directions,
documents or instruments issued or signed by or on behalf of any corporation,
fiduciary, or individual acting on behalf of another party hereto, it shall
not be necessary for the Escrow Agent to inquire into such corporation's,
fiduciary's or individual's authority, capacity, existence or identity. The
Escrow Agent is also relieved from the necessity of satisfying itself as to
the authority of the persons executing this Agreement in a representative
capacity. It is understood that any references herein to joint instructions
or joint written instructions or words of similar import include any
instructions signed in counterpart.
(b) The Escrow Agent shall not be liable for any error of judgment or
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing
in connection herewith, except for its own gross negligence or willful
misconduct.
(c) The Escrow Agent may consult with, and obtain advice from, legal
counsel including in-house counsel in the event of any question as to any of
the provisions hereof or the duties hereunder, and it shall incur no
liability and shall be fully protected in acting in good faith in accordance
with the opinion and instructions of such counsel. The reasonable costs of
such counsel's services shall be paid to the Escrow Agent in accordance with
Section 8 below.
(d) The Escrow Agent shall have no duties except those which are
expressly set forth herein and it shall not be bound by (i) the Merger
Agreement or any agreement of the other parties hereto (whether or not it has
any knowledge thereof) or by any notice of a claim, or demand with respect
thereto, or (ii) any waiver, modification, amendment, termination or
rescission of this Agreement unless the Escrow Agent agrees thereto in
writing.
(e) The Escrow Agent may resign and be discharged from its duties and
obligations hereunder by giving notice in writing of such resignation
specifying a date (no earlier than 30 days following the date of such notice)
when such resignation will take effect, provided, however, that until a
successor escrow agent is appointed by the Stockholder Representative and by
AirNet and such successor accepts such appointment, the Escrow Agent shall
continue to hold the Escrow Shares and otherwise comply with the terms of
this Agreement; PROVIDED FURTHER that the parties to this Escrow Agreement
agree to use their reasonable efforts to mutually agree on a successor escrow
agent within 30 days after the giving of Escrow Agent's notice and if no such
successor escrow agent shall be appointed within 30 days of the Escrow Agent
providing its notice, the
6
Escrow Agent may, at the expense of the AirNet and the Stockholders, (i)
appoint a successor escrow agent which shall be a national or state-chartered
banking, trust or savings association, (ii) petition any court of competent
jurisdiction for the appointment of a successor escrow agent or (iii) may
deposit the Escrow Shares with the Clerk of the United States District Court
for the Southern District of Ohio, or with the office of the clerk of
registry of any other court of competent jurisdiction, at which time the
Escrow Agent's duties hereunder shall terminate. Any successor escrow agent
shall execute and deliver an instrument accepting such appointment and it
shall, without further acts, be vested with all the estates, properties,
rights, powers and duties of the predecessor escrow agent as if originally
named as escrow agent. The resigning Escrow Agent shall thereupon be
discharged from any further obligations under this Escrow Agreement.
(f) Upon delivery of all of the Escrow Shares pursuant to the terms
of Sections 2, 3 and 4 above or to a successor escrow agent, the Escrow Agent
shall thereafter be discharged from any further obligations hereunder. The
Escrow Agent is hereby authorized, in any and all events, to comply with and
obey any and all final judgments, orders and decrees (not subject to appeal)
of any court of competent jurisdiction which may be filed, entered or issued,
and, if it shall so comply or obey, it shall not be liable to any other
person by reason of such compliance or obedience.
(g) The Escrow Agent shall not have any responsibility or liability
for the completeness, correctness or accuracy of any transactions between the
AirNet, on the one hand, and Stockholders, on the other hand.
(h) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Shares which, in its sole opinion, are in conflict with either other
instructions received by it or any provision of this Agreement, it shall
without liability of any kind, be entitled to hold the Escrow Shares pending
the resolution of such uncertainty to the Escrow Agent's sole satisfaction,
by final judgment of a court or courts of competent jurisdiction or
otherwise, or the Escrow Agent, at its option, may, in final satisfaction of
its duties hereunder, deposit the Escrow Deposit with the Clerk of the United
States District Court for the Southern District of Ohio or with the office of
the clerk of registry of any other court of competent jurisdiction.
6. INDEMNIFICATION. AirNet hereby agrees to indemnify the Escrow
Agent, its directors, officers, agents and employees and any person who
"controls" the Escrow Agent within the meaning of Section 15 of the
Securities Act of 1933 (collectively, the "INDEMNIFIED PARTIES") for and to
hold them harmless against any loss, liability or expense (including, without
limitation, all expenses reasonably incurred in its investigation and defense
and costs and expenses reasonably incurred in enforcing this right of
indemnification) incurred without gross negligence or willful misconduct on
the part of the. Indemnified Parties arising out of or in connection with
this Agreement. The provisions of this Section 6 shall survive the
termination of this Agreement.
7. BANKING DAYS. If any date on which the Escrow Agent is required
to make a delivery pursuant to the provisions hereof is not a banking day,
then the Escrow Agent shall make such investment or delivery on the next
succeeding banking day.
7
8. ESCROW COSTS; NO RIGHT OF SET-OFF. The Escrow Agent shall be
entitled to be paid a fee for its services pursuant to the attached FEE
SCHEDULE and to be reimbursed for its reasonable costs and expenses hereunder
(including reasonable counsel fees), which fees, costs and expenses shall be
paid by AirNet from time to time as such fees, costs and expenses are earned.
Nothing in this Section 8 limits the Escrow Agent's rights against AirNet for
the payment of amounts due the Escrow Agent under Section 6 above or the
Escrow Agent's fees, costs and expenses hereunder.
The Escrow Agent acknowledges and agrees that it is holding the Escrow
Shares in its capacity as escrow agent and that it has no right to apply
amounts constituting the value of the Escrow Shares against any obligations
of (a) the other parties to this Agreement that do not arise under this
Agreement or (b) the Company.
9. DEFINED TERMS. As used in this Agreement, the following terms
have the respective meanings set forth below:
MARKET PRICE: shall mean the closing price of the AirNet Common Shares
on the New York Stock Exchange (or another exchange or quotation system on
which the AirNet Common Shares are listed or included, if such AirNet Common
Shares are not then listed on the New York Stock Exchange) as reported in THE
WALL STREET JOURNAL as of the date which is two business days prior to the
date of determination.
PERSON: shall mean an individual, partnership, joint-stock company,
limited liability company, corporation, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
STOCKHOLDER PERCENTAGE: shall mean, with respect to any Stockholder,
the percentage set forth opposite such Stockholder's name on SCHEDULE A.
10. STOCKHOLDER REPRESENTATIVE. The parties to this Agreement hereby
acknowledge and agree that all instructions, directions or other
communications given by or on behalf of the Stockholders shall be made
pursuant to a writing signed by Xxxxxx Xxxxxxx, as the representative of the
Stockholders (the "STOCKHOLDER REPRESENTATIVE"), and shall be binding upon
each Selling Stockholder. The parties further acknowledge and agree that the
Escrow Agent may rely upon such instructions, directions or other
communications made by the Stockholder Representative as if made by each
Stockholder. The powers conferred upon the Stockholder Representative
hereunder are coupled with an interest and are irrevocable.
11. STATUS OF THE STOCKHOLDERS AS STOCKHOLDERS OF AIRNET. (a) The
Escrow Shares shall be deemed to be beneficially owned by each Stockholder in
accordance with such Stockholder's Stockholder Percentage and the
Stockholders shall be entitled to vote such Escrow Shares and receive
dividends and other distributions with respect to such Escrow Shares, in each
case, unless and until such Escrow Shares are distributed to AirNet pursuant
to the terms of this Agreement; PROVIDED, that, notwithstanding the
foregoing, no Stockholder may sell, distribute, transfer, hypothecate, pledge
or otherwise dispose of any Escrow Shares unless and until such
8
Escrow Shares are actually distributed to such Stockholder by the Escrow
Agent pursuant to the terms hereof. For purposes of the foregoing sentence,
each distribution of Escrow Shares to AirNet pursuant to the terms of this
Agreement shall be deemed to be made by the Stockholders pro rata in
accordance with such Stockholder's Stockholder Percentage.
12. NOTICES.
(a) All communications under this Agreement shall be in writing and
shall be delivered by hand or mailed by overnight courier or by registered
mail or certified mail, postage prepaid:
(i) if to AirNet, 0000 Xxxxxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxx
00000, marked to the attention of Xxxx X. Xxx, or at such other address
as AirNet may have furnished the Stockholder Representative in writing;
with a copy of Vorys, Xxxxx Xxxxxxx and Xxxxx LLP, 00 Xxxx Xxx Xxxxxx,
Xxxxxxxx, Xxxx 00000, marked to the attention of Xxxxxx X. Xxxxxx, Xx.;
(ii) if to the Stockholders, care of the Stockholder
Representative, Q International Courier, Inc., 000 Xxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, or at such other address as the
Stockholder Representative may have furnished to AirNet in writing;
with a copy to Winthrop, Stimson, Xxxxxx & Xxxxxxx, One Battery Park
Plaza, marked for the attention of Xxxxxxx X. Xxxxxxxxx;
(iii) if to the Escrow Agent, care of Corporate Trust Account
Administration, 000 Xxxx Xxxxxxx Xxxx, XX0-0000, Xxxxxxxxxxx, Xxxx
00000, with a copy to Bank One Trust Company, AN, 000 Xxxx Xxxxx
Xxxxxx, 000-0000, Xxxxxxxx, Xxxx 00000, marked to the attention of
Xxxxxxx Xxxxxxx.
(b) Any notice so addressed shall be deemed to be given: if delivered
by hand, on the date of such delivery; if mailed by courier, on the first
business day following the date of such mailing; and if mailed by registered
or certified mail, on the third business day after the date of such mailing.
13. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby and may be amended, modified, supplemented or altered
only by a writing duly executed by the Escrow Agent, AirNet and the
Stockholder Representative, and any prior agreements or understandings,
whether oral or written, are entirely superseded hereby; PROVIDED, HOWEVER,
that no amendment, modification, supplement or alteration of this Agreement
shall affect the Stockholder Percentage of any Stockholder without the
express written consent of the Stockholder affected thereby.
14. ASSIGNS AND ASSIGNMENT. This Agreement shall extend to, shall
inure to the benefit of and shall be binding upon all of the parties hereto
and upon all of their respective successors and permitted assigns.
9
15. NO OTHER THIRD PARTY BENEFICIARIES. Except as otherwise
expressly provided herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person other than the
parties hereto, any rights or remedies under or by reason of this Agreement.
16. NO WAIVER. No failure or delay by an party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof,
and no single or partial exercise thereof shall preclude any right of further
exercise or the exercise of any other right, power or privilege.
17. SEVERABILITY. If any covenant, agreement, provision or term of
this Agreement is held to be invalid for any reason whatsoever, then such
covenant, agreement, provision or term will be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and
will in no way affect the validity or enforceability of any other provision
of this Agreement.
18. GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the domestic laws of the State of Ohio, without giving
effect to any choice of law or conflict provision or rule (whether of the
State of Ohio or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of Ohio to be applied.
19. COUNTERPARTS. This Agreement may be executed by the parties
hereto individually or in any combination, in one or more counterparts, each
of which shall be an original and all of which shall together constitute one
and the same agreement.
[signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
STOCKHOLDERS:
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxxxxxx Xxxxx
----------------------------------------
XXXXXXXXX XXXXX
/s/ Xxxxx Xxxxx
----------------------------------------
XXXXX XXXXX
/s/ Xxxx Xxxxxx
----------------------------------------
XXXX XXXXXX
/s/ Xx XxXxxxx
----------------------------------------
XX XXXXXXX
/s/ Xxxxx Xxxxxxx
----------------------------------------
XXXXX XXXXXXX
AIRNET:
AIRNET SYSTEMS, INC
By:_______________________________
Name:
Title:
ESCROW AGENT
BANC ONE TRUST COMPANY, NA, as Escrow Agent
By:_______________________________
Name:
Title:
11
SCHEDULE A
Stockholder Name Stockholder Percentage
and Address ----------------------
-----------------------
12
