ASSET PURCHASE AGREEMENT
BY AND BETWEEN
HELICOPTER SERVICES, INC.
AS THE SELLER,
AND
AIR METHODS CORPORATION,
AS THE BUYER
DATED JULY 11, 1997
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of July ,
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1997, by and among HELICOPTER SERVICES, INC., a California corporation ("HSI" or
the "Seller"), Xxxxx X. Xxxxx, J. Xxxxxx Xxxxxxxxx, Xxx X. Xxxx, Xxxxx X. Xxxx
and Xxxxxxx X. Xxxxx, the owners of the outstanding shares of HSI (collectively,
the "Shareholders"), and AIR METHODS CORPORATION, a Delaware corporation (the
"Buyer").
R E C I T A L S
A. Seller owns and operates a helicopter maintenance service (the
"Business") and does business under the name "Western Helicopter Service, Inc."
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, on the terms and conditions hereinafter set forth, substantially all the
assets and the Business, as a going concern.
C. Concurrently herewith, the Shareholders are entering into a Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement"), which
provides for the sale by the Shareholders of all of the issued and outstanding
shares of common stock of Mercy Air Services, Inc., a California corporation
("Mercy") to Buyer concurrently with the sale by Seller of substantially all the
assets and the Business of Seller hereunder.
D. Buyer intends to transfer the assets purchased hereunder to Mercy and to
have Mercy operate its business and the business of Seller on a combined basis.
A G R E E M E N T
NOW, THEREFORE, in consideration of the terms, covenants, and
conditions hereinafter set forth, the parties hereto agree as follows:
1. SALE OF ASSETS. On the Closing Date (as hereinafter defined), Buyer
shall purchase from Seller, and Seller shall sell, transfer and assign to Buyer,
free and clear of any and all Liens and Encumbrances (as hereinafter defined),
all of Seller's right, title and interest in and to all of the assets of Seller,
including but not limited to those assets described below (collectively referred
to herein as the "Purchased Assets"); PROVIDED, HOWEVER, that the Purchased
Assets shall not include, and Seller shall retain, the Excluded Assets (as
hereinafter defined in this Section 1).
1.1 EQUIPMENT AND FURNITURE. All of the equipment, furniture,
fixtures and other tangible personal property listed on the fixed asset
depreciation schedule attached hereto as SCHEDULE 1.1, which has been delivered
concurrently herewith by Seller to Buyer (the "FF&E");
1.2 ASSIGNED CONTRACTS. All of the agreements, contracts,
leases, licenses, instruments, commitments and understandings, written or oral,
that are listed (or, in the case of oral agreements or understandings, that are
described) on SCHEDULE 1.2 attached hereto (the "Assigned Contracts"),
including, without limitation, the leases listed on SCHEDULE 1.2 under which
Seller owns or holds any leasehold interest in real property or personal
property, whether tangible or intangible, that is used in or in connection with
the Business (respectively, the "Real Property Leases" and the "Personal
Property Leases");
1.3 INTANGIBLE ASSETS. All of Seller's rights, title and
interests in and to (i) any client or vendor lists, promotion lists and
marketing data and other compilations of names and requirements; (ii) the
telephone numbers and internet addresses and websites used in or for the
Business; (iii) all
processes, formulations, methods, software (including documentation and source
code listings), technology, know-how, formulae, trade secrets and inventions;
and (iv) all patents, copyrights, trade names, trademarks and service marks
(including, but not limited to, the name "Western Helicopter, Inc."), and all
applications therefor, (collectively, the "Intangible Property Rights"), which
are more fully described in SCHEDULE 1.3 and which shall include, without
limitation, all goodwill associated with the foregoing;
1.4 RECEIVABLES. All accounts and notes receivable and other
rights to payment or reimbursement of Seller that have arisen out of the
operations of the Business (the "Receivables") and all schedules, records and
other documentation related thereto, including, without limitation, all notes,
chattel paper, contracts or other documents or instruments evidencing the
payment obligations of the account or note debtors; and
1.5 MONETARY OR OTHER CLAIMS. Any cause of action, claim, suit,
proceeding, judgment or demand, of whatever nature, of or held by Seller against
any third parties arising out of the conduct of its Business prior to the date
hereof, such as, but not limited to, warranty claims on equipment included in
the FF&E, claims against service providers that provided services to the
Business, pending insurance claims and claims against note and account debtors,
but excluding those claims against third parties set forth in SCHEDULE 1.5
hereto ("Excluded Claims");
1.6 LICENSES AND PERMITS. All licenses, permits, certificates of
need, franchises and other governmental permits or licenses needed for or in
connection with the operations of the Business (collectively "Licenses and
Permits"), but only to the extent such Licenses and Permits are transferable
under applicable laws or regulations;
1.7 INVENTORY. All inventories of the Seller, including, without
limitation, repair and replacement parts for helicopters and the helicopter
engine described on SCHEDULE 1.7 hereto (the "Inventory");
1.8 PREPAID ITEMS. Certain prepaid expenses and deposits of
Seller that are shown on the 1996 HSI Balance Sheet.
Seller is retaining and is not selling to Buyer, and Buyer is not
purchasing from Seller, any cash of the Seller, whether on hand or in banks as
shown on the HSI Financial Statements (which amount as of the date of the 1996
HSI Balance Sheet was $41,561), any Receivables owed to the Company by the
Shareholders, Mercy or any other affiliate of the Shareholders, or any of the
other assets listed on SCHEDULE 1.9 hereto (the "Excluded Assets").
2. OBLIGATIONS BEING ASSUMED; LIABILITIES NOT BEING ASSUMED.
2.1 ASSUMED OBLIGATIONS. Buyer hereby agrees to assume only: (i)
accounts payable of the Business other than Retained Liabilities; (ii)
liabilities of Seller that have accrued in the ordinary course of the Business
and consistent with past practices as reflected in the Seller's 1996 Financial
Statements (as hereinafter defined), including any compensation or benefits
payable to employees and independent contractors for services performed for
Seller in the conduct of the Business, including salaries and wages and
vacation, holiday and sick pay accrued to the Closing Date (the "Accrued
Liabilities"); (iii) those liabilities and obligations of the Business
specifically set forth in SCHEDULE 2.1 (the "Scheduled Liabilities"); and (iv)
those executory obligations arising after the Closing Date under the Assigned
Contracts (the "Contractual Obligations"). (The Scheduled Liabilities and
Contractual Obligations shall be referred to herein, collectively, as the
"Assumed Obligations.") The Seller represents and warrants that Seller is not in
default of any of the Assumed Obligations and the Seller agrees that Buyer shall
not be obligated to assume, and Buyer shall not have any liability for or in
connection with, any Assumed Obligation that is in default as of the Closing
Date.
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2.2 LIABILITIES NOT BEING ASSUMED. Except for the Assumed
Obligations, the Seller agrees that Buyer shall not be obligated to assume or
perform and that Buyer is not assuming or performing, and that the Seller shall
be responsible for performing and satisfying, or otherwise discharging, at its
sole expense, and without liability, cost, loss or expense of Buyer, all
liabilities and obligations of Seller, whether known or unknown, fixed or
contingent, certain or uncertain, and whether such liabilities or obligations
have arisen prior hereto or may arise hereafter (the "Retained Liabilities").
The Retained Liabilities shall include, but shall not be limited to, any and all
of the following obligations and liabilities of Seller:
(a) TAXES. All Taxes (as defined in Section 4.18
hereof) that (i) have arisen prior to the Closing or may arise thereafter out
of any business or other operations conducted by Seller, either prior to or
after the Closing Date, in excess of amounts accrued on the Seller's Financial
Statements or disclosed on SCHEDULE 14.7.
(b) LIENS AND ENCUMBRANCES. Any Liens or Encumbrances
on any of the Purchased Assets.
(c) INDEBTEDNESS AND BALANCE SHEET LIABILITIES. Any
(i) obligation of Seller, secured or unsecured, that is for borrowed money,
and (ii) other liabilities of Seller which, in accordance with generally
accepted accounting principles, consistently applied ("GAAP"), would be
required to be reflected on, or set forth in a footnote to, a balance sheet
prepared on an accrual basis, and that are not included in the HSI Financial
Statements or in the Scheduled Liabilities set forth on SCHEDULE 2.1 hereto.
(d) CERTAIN CONTRACTUAL OBLIGATIONS. Any obligations or
liabilities under any employment, consulting, confidentiality or non-competition
agreement, whether written or oral, to which Seller is a party or is subject and
which is not listed on SCHEDULE 2.1, including, without limitation, any
obligations or liabilities that have arisen or may arise under, or by reason of
the termination by Seller of the employment of any of its employees or
independent contractors in anticipation or as a consequence of, or following,
consummation of the transactions contemplated hereby.
(e) RETAINED PAYABLES. Any accounts or notes payable of
Seller to the Shareholders, Mercy or any other affiliate of the Shareholders and
any accounts or notes payable of Seller which are set forth in SCHEDULE 2.2
("Excluded Payables") hereto.
(f) CLAIMS AND LEGAL PROCEEDINGS. Any claims, demands,
actions, suits or legal proceedings that have been asserted or threatened prior
to the Closing against Seller, the Business or the Purchased Assets or which may
be threatened or asserted hereafter against the Purchased Assets, the Business,
or Buyer (hereinafter a "Plaintiff's Action") that arises in any way from or in
connection with (i) the conduct or operation of the Business prior hereto, or
(ii) any other business or non-business activities of Seller conducted prior
hereto or hereafter (collectively "Plaintiffs' Actions"), including, without
limitation the legal actions and proceedings set forth in SCHEDULE 4.15 hereto.
For purposes of this Agreement, Plaintiffs' Actions shall include, without
limitation, any counter or cross-claims asserted against Seller, the Business
or the Purchased Assets, or Buyer, in any legal action or other proceeding
initiated by Seller.
(g) CONTINGENT LIABILITIES. Any liability, deficiency,
cost or expense arising out of the provision of services by any of Seller's
employees or any undischarged obligations or liabilities imposed on Seller
that is not disclosed in the HSI Financial Statements or in the Disclosure
Schedules hereto (other than SCHEDULE 4.15), under, or any failure to have
complied with, any laws, rules or regulations applicable to Seller.
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3. PURCHASE PRICE AND ALLOCATION OF PURCHASE PRICE.
3.1 PURCHASE PRICE. The purchase price for the Purchased Assets
shall consist of a cash payment by Buyer to Seller at the Closing by a wire
transfer of funds to the Seller, in an amount equal to Nine Hundred Fifty-Four
Thousand Three Hundred Seventy-Five Dollars ($954,375).
3.2 PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be
subject to adjustment in the manner and to the extent set forth in SCHEDULE 2.3
of the Stock Purchase Agreement and, by this reference, the provisions of that
Schedule that are applicable to the Purchase Price hereunder are incorporated
herein and made an integral part hereof.
3.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price for the
Purchased Assets shall be allocated among the Purchased Assets as set forth in
EXHIBIT A attached hereto (the "Purchase Price Allocation"). Each of the
parties, when reporting the transactions consummated hereunder in their
respective Tax Returns (as hereinafter defined), shall allocate the Purchase
Price paid or received, as the case may be, in a manner that is consistent with
the Purchase Price Allocation set forth in EXHIBIT A hereto. Additionally, each
of the parties will comply with, and furnish the information required by,
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and
any regulations thereunder.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Subject to the
disclosures and exceptions set forth in the disclosure schedules delivered by
the Seller to the Buyer concurrently herewith (the "Disclosure Schedules"), the
Seller hereby makes the following representations and warranties to Buyer:
4.1 AUTHORITY, NECESSARY ACTIONS; BINDING EFFECT. Seller (i) has
the requisite corporate power and authority to execute and deliver, and to
perform its obligations under, this Agreement and (ii) has taken all corporate
action necessary to authorize the execution and delivery of this Agreement. This
Agreement constitutes a valid and legally binding obligation of Seller and is
enforceable against Seller in accordance with its terms, except, as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights and (ii) general principles of equity
relating to the availability of equitable remedies (regardless of whether such
Agreement is sought to be enforced in a proceeding at law or in equity).
4.2 TITLE TO AND ADEQUACY OF PURCHASED ASSETS.
(a) Except as disclosed on SCHEDULE 4.2 hereto, Seller
has, and on the Closing Date will convey and transfer to Buyer, good, complete
and marketable title to all of the Purchased Assets, free and clear of all
mortgages, security interests, liens, options, pledges, equities, claims,
charges, restrictions, conditions, conditional sale contracts and any other
encumbrances or adverse interests of any kind or nature whatsoever
(collectively, "Liens and Encumbrances"). Except as set forth on SCHEDULE 4.2,
all of the Purchased Assets are in the exclusive possession and control of
Seller and Seller has the unencumbered right to use, and to sell to Buyer in
accordance with the terms and provisions of this Agreement, all of the Purchased
Assets without interference from and free of the rights and claims of others.
(b) The Purchased Assets constitute all the assets,
properties, rights, privileges and interests that are necessary for the Buyer to
operate the Business substantially in the same manner as it has been operated
by Seller since January 1, 1996.
4.3 ORGANIZATION AND STANDING. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and is authorized to do business in each jurisdiction in which the
character of the properties owned by it or the nature of its business makes such
authorization necessary and where the failure to be so qualified has had or is
expected to have a
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Material Adverse Effect on Seller (as defined hereinafter). The Seller has the
requisite corporate power and authority to conduct its business as now conducted
and to own or lease (as the case may be), and to use, the properties and assets
used therein.
4.4 SUBSIDIARIES; INVESTMENTS. The Seller does not own,
directly or indirectly, shares of capital stock of any other corporation or any
equity interest in any other entity or business.
4.5 NO CONFLICTS. Except as set forth in SCHEDULE 4.5, neither
the execution and delivery nor the performance of this Agreement by the Seller,
or of any of the other agreements to be entered into by Seller pursuant to or in
connection with the transactions contemplated by this Agreement, will result in
any of the following: (i) a default or an event that, with notice or lapse of
time, or both, would be a default, breach or violation of the Articles of
Incorporation or Bylaws of the Seller, or any Material Seller Contract (as
defined in Section 4.14 hereof); (ii) the termination of any Material Seller
Contract or the acceleration of the maturity of any material indebtedness of the
Seller; (iii) the creation or imposition of any liens or encumbrances on any of
the material assets of the Seller which have had or are expected to have a
Material Adverse Effect on the Seller; or (iv) a violation or breach of any law,
regulation, writ, injunction or decree of any court or governmental
instrumentality to which the Seller is a party or by which any of its material
properties are bound, where such violation has had or is expected to have a
Material Adverse Effect on Seller.
4.6 FINANCIAL STATEMENTS. The Seller has delivered to Buyer
financial statements of the Seller consisting of unaudited balance sheets, and
related statements of operation, stockholders equity and cash flows, as of and
for the fiscal years ended December 31, 1994, 1995 and 1996 (the "HSI Financial
Statements"). Except as otherwise set forth in the footnotes contained therein
or in SCHEDULE 4.6, Financial Statements were prepared on an accrual basis in
accordance with generally accepted accounting principles consistently applied
("GAAP") and fairly present the financial condition of the Seller as at the
relevant dates thereof and the results of its operations for the respective
periods covered thereby. Except as set forth in SCHEDULE 4.6, the Seller has no
debts, obligations or liabilities, fixed or contingent, of a nature that would
be required, in accordance with GAAP, to be shown on a balance sheet and that
are not shown on the balance sheet as of December 31, 1996 (the "1996 HSI
Balance Sheet") that is included in the Financial Statements for the fiscal year
then ended (the "1996 HSI Financial Statements"), other than liabilities
incurred after December 31, 1996 in the ordinary course of the Seller's business
and consistent with past practice (the "Post-1996 HSI Liabilities").
4.7 UNDISCLOSED LIABILITIES. Except as otherwise set forth in
SCHEDULE 4.7, Seller does not have any debts, obligations, liabilities or
commitments of any nature, whether due or to become due, absolute, fixed or
contingent, or certain or uncertain, that, in accordance with GAAP, should be
disclosed on a balance sheet or the footnotes thereto, but are neither shown on
the 1996 HSI Balance Sheet nor expressly and unambiguously set forth in the
footnotes thereto (the "Undisclosed Liabilities"); PROVIDED, HOWEVER, that the
term "Undisclosed Liabilities" shall not include and SCHEDULE 4.7 need not
disclose liabilities incurred by Seller after December 31, 1996, in the ordinary
course of the Business and consistent with past practice that are not material
in amount and have not had and are not expected to have, individually or in the
aggregate, a Material Adverse Effect on Seller. As to each Undisclosed Liability
set forth on SCHEDULE 4.7, the Seller has provided the following information in
or as an attachment to such SCHEDULE 4.7: (i) a summary description of such
Undisclosed Liability, together with copies of all relevant documentation
relating thereto, the amounts claimed and any other action or relief sought and,
the identity of the claimant and of any other involved party and, if the
Undisclosed Liability is one that may arise from a suit, action or other
proceeding, the court or agency in which such suit, action or other proceeding
is being prosecuted, and (ii) the best estimate of the Seller of the maximum
amount, if any, which could reasonably be expected
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to become payable with respect to any such contingent Undisclosed Liability. For
purposes hereof, if no written estimate is provided, such best estimate shall be
deemed to be zero.
4.8 ABSENCE OF CERTAIN CHANGES. Except as otherwise set forth
on SCHEDULE 4.8, subsequent to December 31, 1996 there has not been:
(a) Any default or breach, or anticipated default or breach
under, or any amendment, termination or revocation or, to the knowledge of the
Seller, any threatened termination or revocation of, any of the Assigned
Contracts;
(b) To the Seller's knowledge, any actual or overtly
threatened amendment, termination or revocation of any license, permit or
franchise held by the Seller which has had or is expected to have a Material
Adverse Effect on Seller;
(c) Any sale or transfer of, or the imposition of any Lien
or Encumbrance on or affecting any of the Purchased Assets reflected on the 1996
HSI Balance Sheet or acquired thereafter, except sales or utilization of
inventory or supplies and obsolete equipment in the ordinary course of business
and consistent with past practices of the Seller and liens for current taxes not
yet due and payable;
(d) Any damage, destruction or loss, whether or not covered
by insurance, of any of the Purchased Assets reflected on the 1996 HSI Balance
Sheet or acquired thereafter in an amount which exceeds $10,000, individually or
in the aggregate and has had or is expected to have a Material Adverse Effect on
Seller; and
(e) The occurrence of any other event or circumstance which
has had or is expected to have a Material Adverse Effect on Seller.
4.9 TANGIBLE ASSETS. SCHEDULE 1.1 contains a list of all
equipment, furniture, fixtures, tools, and other similar tangible personal
property, wherever located, that are owned by the Seller and are used in the
conduct of the Business (the "Tangible Assets"). Except as set forth on SCHEDULE
4.9, the Tangible Assets are in good working order and condition (ordinary wear
and tear excepted).
4.10 INTANGIBLE PERSONAL PROPERTY. SCHEDULE 1.3 is a true and
correct list of all proprietary information and know-how documented in writing,
and any other intellectual property or intangible assets, owned by the Seller or
in which the Seller has rights or licenses, and which are material to the
business of the Seller, including any patents, copyrights, trademarks, service
marks, trade names and all applications therefor. To the knowledge of the
Seller, the Seller has not infringed, and is not now infringing, any patent,
trade name, trademark, service xxxx, copyright or trade secret rights belonging
to any other person, firm or corporation. Except as set forth on SCHEDULE 4.10,
the Seller owns, or holds adequate licenses or other rights to use, all patents,
trademarks, service marks, trade names, copyrights, and trade secrets used in or
necessary for the operation of the Seller's business as now conducted.
4.11 REAL PROPERTIES; LEASES. Except as set forth on SCHEDULE
4.11, the Seller does not own a fee interest in any real property. SCHEDULE 1.2
contains a list of the Real Property Leases and the Personal Property Leases.
True, correct and complete copies of the Real Property Leases and Personal
Property Leases have been delivered to Buyer, together with the names and
addresses of the lessors thereunder. All such Leases are valid and enforceable,
the Seller is not in default thereunder, and to the knowledge of Seller, no
facts or circumstances have occurred which, with the passage of time or the
giving of notice, or both, would constitute a default, under any of the Real
Property Leases or the Personal Property Leases. To the knowledge of the Seller,
(i) all structures and facilities on the real properties listed on SCHEDULE 4.11
are equipped in substantial conformity with laws and governmental regulations
applicable to the Seller, (ii) the zoning of each parcel of real property
permits the presently existing improvements and continuation of the business
presently conducted thereon by the Seller, and (iii) no zoning changes, and no
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condemnation or similar proceedings, are pending or threatened against any of
the real properties listed on SCHEDULE 4.11.
4.12 INVENTORIES. All Inventory are of a quality and quantity
usable in the ordinary course of the Seller's business, except for obsolete
items, damaged items, and materials at below standard quality, which, in the
aggregate, are not material in amount and have been written off or written down
to net realizable value on the books of the Seller.
4.13 MATERIAL SELLER CONTRACTS. SCHEDULE 4.13 hereto contains an
accurate and complete list of each contract, agreement, license or instrument to
which the Seller is a party or is subject and which are Assigned Contracts, the
performance or termination of which would have a Material Adverse Effect on
Seller (the "Material Seller Contracts"). Without limiting the generality of the
foregoing, such list includes all such contracts of the Seller which (i) grant a
security interest in any of the Purchased Assets; or (ii) requires the Seller to
obtain the consent of any third party to, or would be violated by, the
consummation of the transactions contemplated by this Agreement. Correct and
complete copies of all items of the Material Seller Contracts so listed in
SCHEDULE 4.13 have been furnished to Buyer. To the knowledge of the Seller, each
of the Material Seller Contracts is a valid and binding obligation of the Seller
and is enforceable in accordance with its terms. Except as otherwise set forth
in SCHEDULE 4.13, there are (i) no outstanding unresolved defaults by the
Seller, under, or, to the knowledge of the Seller, any such defaults, or claims
of default, by the other party or parties to, any of the Material Seller
Contracts which, individually or in the aggregate, have had or are expected to
have a Material Adverse Effect on Seller, and (ii) no facts or conditions that
have occurred which, with the passage of time or the giving of notice, or both,
would constitute a default by the Seller under any of such Material Seller
Contracts that is expected to have a Material Adverse Effect on Seller. Except
as set forth on SCHEDULE 4.5 or SCHEDULE 4.13, no consent or approval of any
party to any of the Material Seller Contracts is necessary in order to permit
the Seller to consummate the transactions contemplated hereby and to allow Buyer
to acquire the Purchased Assets, without thereby violating any such Material
Seller Contracts.
4.14 COMPLIANCE WITH LAW/PERMITS. Except as set forth in
SCHEDULE 4.14 hereto, to the knowledge of the Seller (i) the Seller is not in
violation or in default of any law, rule, regulation, order, judgment, writ or
decree applicable to the Seller or by which it or any of its properties is bound
or affected, except for any such violations or defaults which have not had and
are not expected to have a Material Adverse Effect on Seller, and (ii) the
Licenses and Permits constitute all permits, licenses, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of the Seller as
it is now being conducted. The Seller is in compliance with the terms of the
Licenses and Permits, except where the failure to so comply has not had and is
not expected to have a Material Adverse Effect on Seller.
4.15 LITIGATION AND PROCEEDINGS. Except as set forth in SCHEDULE
4.15 hereto, there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of the Seller, overtly threatened against the
Seller before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that, if adversely determined
against the Seller, would be expected to have a Material Adverse Effect on
Seller.
4.16 ENVIRONMENTAL AND SAFETY MATTERS. To the knowledge of the
Seller, except as set forth on SCHEDULE 4.16, and, except for any instances of
noncompliance or any violations which have not had and are not expected to have
a Material Adverse Effect on Seller, (i) the Seller is in compliance, in all
material respects, with all federal, state, local and regional statutes, laws,
ordinances, rules, regulations and orders relating to the protection of human
health and safety, natural resources or the environment, including, but not
limited to, air pollution, water pollution, noise control, on-site or off-site
hazardous substance discharge, disposal or recovery, toxic or hazardous
substances, training, information and
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warning provisions relating to toxic or hazardous substances, and employee
safety (collectively, the "Environmental Laws"), and (ii) no notice of violation
of any Environmental Laws or of any permit, license or other authorization
relating thereto has been received, nor is any such notice pending or
threatened. To the knowledge of the Seller, none of the Seller's real
properties, whether owned or leased, is currently listed, or threatened to be
listed, on any state or federal "superfund" list. For the purposes of this
Section 4.16, "toxic or hazardous substances" shall include any material,
substance or waste that, because of its quantity, concentration or physical or
chemical characteristics, is deemed under any federal, state, local or regional
statute, law, ordinance, regulation or order, or by any governmental agency
pursuant thereto, to pose a present or potential hazard to human health or
safety or the environment, including, but not limited to, (i) any material,
waste or substance which is defined as a "hazardous substance" pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. ss. 9601 ET SEQ.), as amended ("CERCLA"), and its related state and
local counterparts, (ii) asbestos and asbestos containing materials and
polychlorinated biphenyls, and (iii) any petroleum hydrocarbon including oil,
gasoline (refined and unrefined) and their respective constituents and any
wastes associated with the exploration, development or production of crude oil,
natural gas or geothermal energy.
4.17 TAXES AND TAX RETURNS.
(a) Except as set forth on SCHEDULE 4.17 (i) the Seller has
duly filed all Tax Returns (as hereinafter defined) which are required by law to
be filed by it and has duly and properly paid, or withheld for payment, when
due, all foreign, federal, state and local Taxes (as hereinafter defined) due or
claimed to be due from the Seller as reflected on any such Tax Return, (ii)
there are no assessments or claims for payment of such Taxes which have not been
paid or accrued for, (iii) there is no foreign, federal or state tax audit of
the Seller now pending or threatened by any taxing authority, (iv) the Seller is
not currently the beneficiary of any extension of time within which to file any
Tax Return, and (v) the Seller has properly withheld and paid, or accrued for
payment, when due, to appropriate state and/or federal authorities, all sales
and use taxes, if any, and all amounts required to be withheld from payments
made to its employees, and also has paid all employment taxes as required under
applicable laws.
(b) Except as set forth in SCHEDULE 4.17, the Seller has not
(i) waived any statute of limitation in respect of any Taxes assessed by any
federal, state, or local taxing authority or agreed to any extension of time
with respect to an assessment of or deficiency in any Tax, (ii) filed a consent
under Section 341(f) of the Code, concerning collapsible corporations, and (iii)
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(c) Except as set forth in SCHEDULE 4.17, the Seller (i) is
not required to file a consolidated or combined state or federal income Tax
Return with any other person or entity and (ii) is not liable for the Taxes of
any person under Treasury Regulation ss. 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract or
otherwise, and (iii) the Seller is not a party to any tax allocation or tax
sharing agreement.
(d) For purposes of this Agreement, (i) the term "Tax" or
"Taxes" means any federal, state or local income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not; and the term "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
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4.18 EMPLOYEES; LABOR AND EMPLOYMENT AGREEMENTS; BENEFIT PLANS.
(a) SCHEDULE 4.18 sets forth the name of each director and
officer of the Company, and of each employee of and consultant to the Company
whose annual cash compensation exceeds $60,000 per year, identifies those
officers or employees which the Company employs and any independent contractor
that the Company has retained under an employment or similar agreement or with
which it has any severance agreement. Copies of any such agreements and a copy
of its employee handbook have been furnished to Buyer.
(b) Except as set forth in SCHEDULE 4.18, (i) the Company is
not a party to or otherwise bound by or subject to any collective bargaining or
other labor, employment, deferred compensation, bonus, retainer, consulting, or
incentive agreement, plan or contract, (ii) there has been no strike or other
work stoppage by, nor, to the knowledge of any of the Sellers, has there been
any union organizing activity among any of the employees of the Company during
the past three (3) years. Except as set forth in SCHEDULE 4.18, to the knowledge
of the Sellers, (i) the Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where any noncompliance has not had and
is not expected to have a Material Adverse Effect on the Company, and (ii) there
is no unfair labor practice complaint pending or threatened against the Company.
(c) SCHEDULE 4.18 hereto also contains a complete list of
the Employee Plans of the Company or any subsidiary thereof (correct copies of
which have been delivered to Buyer). For purposes of this Section 4.18, the term
"Employee Plan" means all plans and programs (including all amendments to and
components of the same, such as a trust with respect to a plan) providing any
remuneration or benefits, other than current cash compensation, to any current
or former employee of the Company or any subsidiary thereof, or to any other
person who provides, or during the past three years provided, services to the
Company, or any subsidiary thereof, whether or not such plan or plans or
programs are subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or are qualified under the Internal Revenue Code of 1986, as
amended (the "Code"). The term Employee Plan includes (i) any employee benefit
plan as defined in Section 3(3) of ERISA; (ii) any pension, retirement, profit
sharing, incentive compensation, stock option, stock bonus, and nonqualified
deferred compensation plan; (iii) any multiemployer plan as defined in Section
3(37) of ERISA; and (iv) any disability, medical, dental, worker's compensation,
or health or life insurance plan or vacation program. Any and all tax returns,
reports, forms or other documents required to be filed by the Company under
applicable federal, state or local law with respect to any of the Employee Plans
listed on SCHEDULE 4.18 have been timely filed and are correct and complete in
all material respects; and any and all amounts due by the Company to any
governmental agency or entity with respect to any of the Employee Plans have
been timely and fully paid. To the Seller's knowledge, there have been no
filings with respect to any Employee Plan with the Pension Benefit Guaranty
Corporation ("PBGC") and, to the knowledge of the Sellers, no liability to the
PBGC has been incurred or is expected with respect to any Employee Plan except
for any accrued insurance premiums which either have been or will be timely paid
by the Company.
(d) Except as set forth in SCHEDULE 4.18, all Employee Plans
were established and are being maintained and operated in compliance, in all
material respects, with applicable laws (including, but not limited to, ERISA
and the Code) and all regulations and interpretations thereunder and in
accordance with their plan documents, except for any noncompliance that has not
had and is not expected to have a Material Adverse Effect on the Company. Each
funded Employee Plan, if any, providing for payment of deferred compensation has
been and is qualified under Section 401 of the Code and the Internal Revenue
Service has issued one or more determination letters with respect thereto
stating that such funded Employee Plan has been and is qualified under Section
401 of the Code and each trust maintained in connection with each such funded
Employee Plan has been and is exempt under Section 501
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of the Code. Except as set forth in SCHEDULE 4.18, there is no unfunded
liability for vested or nonvested benefits under any funded Employee Plan, and
all contributions required to be made to each such funded Employee Plan have
been fully and timely paid. There has been (i) no event or condition which would
constitute a "reportable event" within the meaning of Section 404(3) of ERISA
and the regulations and interpretations thereunder, (ii) no prohibited
transaction as described in Section 406 of ERISA and Section 4975 of the Code
with respect to any Employee Plan, and (iii) no written complaints to or by any
government entity have been filed or to the knowledge of the Sellers have been
overtly threatened with respect to any Employee Plan. Neither the Company nor
any Employee Plan has any material liability to any plan participant,
beneficiary or other person under any provision of ERISA, the Code or any other
applicable law other than the obligation to make contributions which are not yet
due and payable. To the knowledge of any of the Sellers, there is no contract,
agreement or benefit arrangement covering any employee of the Company which
individually or collectively would constitute an "excess parachute payment"
under Section 280G of the Code.
4.19 INSURANCE. SCHEDULE 4.19 contains a listing of all policies
of fire, general liability, worker's compensation, errors and omissions,
malpractice and other types of insurance maintained by or on behalf of the
Seller, to provide insurance protection for the assets and business of the
Seller. Except as set forth in SCHEDULE 4.19 hereto, all of such policies are
now in full force and effect and those policies or other policies covering the
same risks and in substantially the same amounts have been in full force and
effect continuously for the past three (3) years. The Seller has not received
any notice of cancellation or material amendment of any such policies; and, to
the knowledge of the Seller, all material claims thereunder have been filed in a
timely fashion.
4.20 NO BROKER. Except as set forth in SCHEDULE 4.20, the Seller
has not retained an agent, finder or broker in connection with the transactions
contemplated by this Agreement. The Seller shall indemnify, hold harmless and
defend Buyer from all commissions, finder's and other fees and expenses of any
such persons.
4.21 DISCLOSURE. To the knowledge of the Seller, the
representations and warranties of the Seller contained in this Section 4, as
modified by the Disclosure Schedules, are true, complete and correct in all
material respects, and do not contain any statement of a material fact that was
untrue when made or omit any material fact necessary to make the statements
contained therein not misleading in light of the circumstances under which such
statements were made. For purposes of Section 4, the phrases "knowledge" or
"best knowledge" of the Seller, means the actual knowledge of officers or
directors of Seller or actual knowledge of the Shareholders. Although Disclosure
Schedules are intended to qualify or modify the representations and warranties
of the Seller contained in the Subsection of this Section 4 that corresponds, by
number, to the number used to designate such Disclosure Schedule, the
disclosures therein shall also qualify or modify any representation or warranty
in any other Subsection of this Section 4 to which it may also relate and,
therefore, any information in any such Disclosure Schedule need not be repeated
in any other Disclosure Schedule, in order to qualify any of the representations
or warranties to which such other Disclosure Schedule relates.
4.22 MATERIAL ADVERSE EFFECT. The term "Material Adverse
Effect," when used in connection with the Seller in this Section 4, or in
Sections 6, 9 or 10 hereof, means any change, effect or circumstance with
respect to Seller or Seller's Business that is materially adverse to Seller and
Mercy, considered as if they were a single combined entity, other than such
changes, circumstances or effects that: (i) are set forth or described in or
contemplated by the Disclosure Schedules attached hereto, (ii) are set forth or
described in the Financial Statements or the notes thereto, or (iii) that affect
the helicopter maintenance business generally.
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5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer makes the
following representations and warranties as of the date of this Agreement and,
again, as of the Closing Date:
5.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
5.2 CORPORATE POWER; NECESSARY ACTIONS; BINDING EFFECT. Buyer
possesses the requisite corporate power and authority to enter into and perform
its obligations under this Agreement. Buyer has taken all corporate action
necessary to authorize the execution and delivery of, and the performance of its
obligations under, this Agreement. This Agreement constitutes a valid obligation
of Buyer that is legally binding on and enforceable against Buyer in accordance
with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights and
(ii) general principles of equity relating to the availability of equitable
remedies (regardless of whether such Agreement is sought to be enforced in a
proceeding at law or in equity).
5.3 NO CONFLICTS. Neither the execution and delivery nor the
performance of this Agreement will result in any of the following: (i) a default
or an event that, with notice or lapse of time, or both, would constitute a
default, breach or violation of the Certificate of Incorporation or Bylaws of
Buyer, or any contract, lease, license, franchise, promissory note, indenture,
mortgage, deed of trust, security or pledge agreement, or other agreement to
which Buyer is a party and which is material to Buyer (a "Material Buyer
Contract"); (ii) the termination of any Material Buyer Contract or the
acceleration of the maturity of any material indebtedness of Buyer; or (iii) a
violation or breach of any writ, injunction or decree of any court or
governmental instrumentality to which the Buyer is a party or by which any of
its properties is bound or any laws or regulations applicable to Buyer, where
the violation would have a material adverse effect on Buyer.
5.4 BROKER. Buyer has not retained any broker, agent or finder
in connection with the transactions contemplated by this Agreement, and Buyer
shall hold harmless the Seller from any commission, fee or expenses payable to
any such broker, finder or agent by reason of his or her retention by Buyer.
5.5 REPRESENTATIONS AND WARRANTIES. Each representation,
warranty or statement made, or information provided, by Buyer in this Agreement,
or in the Exhibits or Schedules hereto, or in any certificates to be delivered
by Buyer at the Closing is, or when made shall be, true, complete and correct in
all material respects.
6. CONDUCT OF BUSINESS PENDING THE CLOSING. Between the date
hereof and the Closing, and except as otherwise consented to by Buyer in
writing, the Seller covenants, as follows:
6.1 ACCESS. The Seller shall give to Buyer and its
representatives, from and after the date of execution of this Agreement, on
prior request therefor from Buyer or such representatives, such access to the
premises, employees, agents and consultants of the Seller, and such copies of
the HSI Financial statements, books and records, and contracts and leases and
other documentation, so as to enable Buyer to inspect and evaluate all aspects
of the business and operations, assets, operating results, financial condition,
capitalization, ownership, and legal affairs of the Seller. Buyer agrees to
conduct its review, and to cause its representatives to conduct their review, in
a manner designed to minimize any disruption of the operations of the Seller. In
addition, Seller shall (i) permit the Buyer's independent public accountants to
obtain access to the financial books and records of the Seller, and to such
other documentation which such accountants may reasonably request and the Seller
can obtain without unreasonable expense and effort, in connection with an audit,
to be conducted by such accountants, of the HSI Financial Statements to enable
Buyer to satisfy its financial reporting obligations under the Securities
Exchange Act of 1934 that will arise upon consummation of the acquisition by
Buyer of the Purchased Assets pursuant hereto (the "Seller
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Audit"), and (ii) arrange for the Seller's independent public accountants to
provide such assistance as Buyer's accountants may reasonably request in
connection with the Seller Audit.
6.2 CONDUCT OF SELLER'S BUSINESS. From the date of this
Agreement and until the Closing or termination of this Agreement, whichever
first occurs, the Seller shall operate and conduct its business diligently and
only in the ordinary course, consistent with past practices. In furtherance
thereof, unless Buyer's prior consent to do otherwise is obtained (which consent
shall not be unreasonably withheld or delayed), Seller shall:
(a) ORGANIZATION. Use its best efforts to preserve intact
its organization and use its reasonable efforts to retain all of its employees
and the services of all vendors, suppliers, agents and consultants to the
Seller, commensurate with the requirements of the Seller's business;
(b) INSURANCE. Maintain insurance, including liability and
errors and omissions insurance, consistent with past practices and, unless
comparable insurance is substituted therefor or is not generally available to
businesses of the type conducted by the Seller, not take any action to terminate
or modify, or permit the lapse or termination of, the present insurance policies
and coverages of the Seller as set forth in SCHEDULE 4.19 hereto;
(c) LAWSUITS, CLAIMS.
(i) Promptly notify Buyer of any lawsuit or other
legal proceeding that is commenced, or that is threatened, in writing,
against the Seller and that (a) relates to or arises out of the
Seller's business or operations and, if adversely determined against
the Seller, would be expected to have a Material Adverse Effect on
Seller, or (b) relates to any of the Purchased Assets or any of the
transactions contemplated by this Agreement; and
(ii) Not settle any action or proceeding on terms
that are expected to have a Material Adverse Effect on Seller, not
release, settle, compromise or relinquish any claims, causes of action
or rights involving more than $25,000 individually or $50,000 in the
aggregate which the Seller may have against any other persons,
including, without limitation, claims or rights to reimbursement or
payment for services rendered by the Seller;
(d) CERTAIN CHANGES. Not encumber or place any liens or
security interests on any of the Purchased Assets, other than (i) liens or
security interests in existence on the date hereof, (ii) statutory liens to
secure taxes that are not yet due and payable, and (iii) purchase money security
interests in connection with the acquisition of equipment in the ordinary course
of the Seller's business;
(e) CONDITION OF ASSETS. Maintain in good working order and
condition, ordinary wear and tear excepted, all of the Purchased Assets;
(f) AGREEMENTS.
(i) Use its best efforts to observe and perform all
of its obligations in the Material Seller Contracts, the violation of
which would have a Material Adverse Effect on Seller;
(ii) Except as required by any existing contracts
or agreements, not enter into any new agreement that would constitute a
Material Seller Contract or amend any Material Seller Contract, or
incur any new monetary obligation involving more than $25,000
individually or $50,000 in the aggregate, other than monetary
obligations that are incurred in the ordinary course consistent with
past practices;
(iii) Promptly notify Buyer in writing of the
occurrence of any breach or default of any Material Seller Contract;
and
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(iv) Not enter into any transaction with any
shareholder, director or officer, or any person or entity related to or
affiliated with any such person;
(g) CONSENTS; COMPLIANCE WITH LAWS.
(i) Use its best reasonable efforts to obtain and
maintain all consents, assignments or approvals of, and licenses,
permits and franchises and rights to operate granted by, governmental
authorities, the absence or loss of which is expected to have a
Material Adverse Effect on Seller;
(ii) Not take any action which would be expected to
result in a violation of or in the noncompliance with any laws or
regulations applicable to the Seller that would be expected to have a
Material Adverse Effect on Seller; and
(iii) Cooperate with Buyer and render to Buyer such
assistance as Buyer may reasonably request, at Buyer's sole expense, in
obtaining such governmental approvals;
(h) TAXES. Pay, when due, and prior to the imposition or
assessment of any interest, penalties or liens by reason of the nonpayment of,
all Taxes (as defined in Section 4.18 hereof), due or assessed against it,
except for any Taxes being contested in good faith and for which reserves have
been established by the Seller;
(i) DIVIDENDS, ETC. Not:
(i) Except for the dividends listed on SCHEDULE
6.2(I) hereto ("Permitted Dividends"), declare or pay any dividends or
make any distributions with respect to or, redeem any of the shares of
its capital stock;
(ii) Approve or effect any reclassification or
recapitalization of the Seller or the Seller's authorized or
outstanding shares;
(iii) Approve or commence any proceedings for the
liquidation of the Seller; and
(iv) Enter into any agreement to do any of the
foregoing.
7. OBLIGATIONS SURVIVING THE DATE OF THIS AGREEMENT AND THE CLOSING.
7.1 FURTHER ASSURANCES. Each party hereto shall execute and
deliver after the date hereof such instruments and take such other actions as
the other party may reasonably request in order to carry out the intent of this
Agreement or to better evidence or effectuate the transactions contemplated
herein.
7.2 EXPENSES. The Seller and the Buyer shall each pay all of
their respective costs and expenses incurred or to be incurred by them in
negotiating and preparing this Agreement and in carrying out and closing the
transactions contemplated by this Agreement. In addition, Buyer shall pay all of
the fees and disbursements of the Buyer's accountants incurred in connection
with the completion of the Seller's Audit or the determination of the purchase
price adjustments described in Section 3.2, and (ii) the reasonable fees and
disbursements of the Company's accountants in providing any services or
assistance requested of them by the Buyer's accountants in connection with or
for purposes of the Seller Audit or the determination of such purchase price
adjustments.
7.3 TAXES.
(a) The Seller shall pay all Taxes of any kind or nature
arising from the operations of the Business up to the Closing Date. If any Taxes
required under this Section 7.3 to be borne by Seller are assessed against Buyer
or any of the Purchased Assets, Buyer shall notify Seller in writing
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promptly thereafter and Seller shall be entitled to contest, in good faith, such
assessment or charge so long as such assessment does not adversely affect Buyer,
the Business or the Purchased Assets. Notwithstanding the foregoing, Buyer may
(but shall not be obligated to) pay any such Taxes assessed against it or any of
the Purchased Assets, but which are payable by the Seller pursuant hereto, if
the failure to do so, in the judgment of Buyer could result in the imposition of
a Lien or Encumbrance on any of the Purchased Assets or any other assets of
Buyer or would constitute a violation of any agreement to which Buyer is
subject, or if Seller fails to contest such assessment or charge promptly,
diligently and in good faith. If Buyer pays any Taxes which pursuant hereto are
required to be borne by any of the Seller, then, Buyer (as the case may be)
shall be entitled to reimbursement thereof from the Seller on demand, together
with interest thereon, at the maximum rate permitted by law, from the date such
Taxes were paid by Buyer and until fully reimbursed by the Seller.
(b) Sales, use or similar Taxes arising out of the
consummation of the transactions contemplated hereby shall be paid by the Buyer.
7.4 ACCOUNTS AND NOTES RECEIVABLE COLLECTIONS. In the event
Seller receives any payment after the date hereof in respect of any Receivables
included in the Purchased Assets, Seller shall promptly deliver such payment, or
the instrument of payment, with proper endorsements or assignments, to Buyer.
The Seller further agrees to cooperate with Buyer in notifying account and any
note obligors of the transfer of such accounts and notes receivable and
instructing them to make all payments in respect thereof following the date
hereof to Buyer.
8. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
respective representations and warranties of the Seller and the Buyer set forth
in this Agreement or in any of their respective Disclosure Schedules or Closing
Certificates delivered pursuant hereto shall survive the Closing for a period of
one (1) year from the Closing Date, except that the representations and
warranties made by the Seller in Section 4.18, shall survive until the
expiration of the respective statutes of limitation on claims for Taxes due on
or before the Closing Date.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. The
obligations of Buyer to consummate the purchase of the Purchased Assets and to
perform its other obligations under this Agreement shall be subject to the
fulfillment, or waiver by Buyer, at or prior to the Closing Date of each of the
following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made the Seller in this Agreement or in its Disclosure Schedules
hereto shall have been true and correct on the date hereof, and also shall be
true and correct at and as of the Closing Date with the same force and effect as
if made again at and as of that time, except for any breach of any such
representations or warranties that has not had and is not expected to have a
Material Adverse Effect on Seller.
9.2 ABSENCE OF MATERIAL LITIGATION. There shall be (i) no
pending or overtly threatened litigation, whether brought against the Seller,
any of the Shareholders or the Buyer, that seeks to enjoin the consummation of
any of the transactions contemplated by this Agreement, (ii) no order that has
been issued by any court or governmental agency having jurisdiction that
restrains or prohibits the consummation of the purchase and sale of the
Purchased Assets hereunder and no proceedings pending which are reasonably
likely to result in the issuance of such an order; and (iii) no pending or
overtly threatened litigation, which has had or is expected to have a Material
Adverse Effect on Seller.
9.3 PERFORMANCE OF OBLIGATIONS. The Seller shall have performed
and complied, in all material respects, with all of its covenants required by
this Agreement to have been performed at or prior to the Closing, except where
any failure to have so performed or to have so complied has not had and
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is not expected to have a Material Adverse Effect on Seller or materially or
adversely affect the ability of the Buyer to consummate the transactions
contemplated hereby.
9.4 NO MATERIAL ADVERSE CHANGES. Since December 31, 1996, there
shall not have been any change in or other event affecting the business or the
condition (financial or other) or operating results of the Seller that has had
or is expected to have a Material Adverse Effect on the Seller.
9.5 THIRD PARTY APPROVALS AND CONSENTS. Receipt of all approvals
and consents of third parties (governmental or other) needed to have been
obtained by the Closing Date to enable Buyer to consummate the transactions
contemplated in this Agreement and not thereby violate any contracts, writs,
orders, laws or regulations the violation of which would have a Material Adverse
Effect on the Seller.
9.6 CONSUMMATION OF PURCHASE AND SALE OF MERCY COMMON STOCK. The
transactions contemplated by the Stock Purchase Agreement shall have been
consummated concurrently with the Closing of the transactions contemplated by
this Agreement.
9.7 CONFIRMATION FROM BUYER'S ACCOUNTANTS. Receipt by Buyer of
confirmation from its independent public accountants that such accountants
believe that they can complete the Seller Audit in order to enable Buyer to meet
its financial reporting responsibilities with respect to the purchase hereunder
of the Purchased Assets pursuant to the Securities Exchange Act of 1934,
provided that Buyer has made a good faith and diligent effort to obtain such
confirmation by the date hereof.
9.8 CERTIFICATES. Receipt of a certificate executed by the
Seller, dated as of the Closing Date and reasonably satisfactory in form and
substance to Buyer, certifying that (i) each of the representations and
warranties of Seller contained herein was true and correct when made and is true
and correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on the
Closing Date, (ii) Seller has performed and complied in all material respects
with all of its covenants required to have been performed or complied with by it
pursuant hereto on or prior to the Closing Date, except as may have been waived
in writing by Buyer or where the failure to have so complied has not had and is
not expected to have a Material Adverse Effect on the Seller or to materially
and adversely affect the ability of the parties to consummate the purchase and
sale of the Purchased Assets, and (iii) all of the conditions precedent to
Buyer's obligations the satisfaction of which was the responsibility of Seller
have been satisfied, except to the extent waived by Buyer.
9.9 LEGAL OPINION AND ADDITIONAL INSTRUMENTS. Sellers shall have
arranged for and caused (i) the delivery of a legal opinion, substantially in
the form of EXHIBIT B hereto, of Stradling, Yocca, Xxxxxxx & Xxxxx, a
Professional Corporation, special counsel to Seller, to Buyer and (ii) the
Company to have delivered to Buyer a good standing certificate, dated as of a
date that is not more than 10 days prior to the Closing Date, from the Secretary
of State of California and such other or additional instruments, consents,
endorsements and documents as Buyer reasonably deems to be necessary to enable
the transactions contemplated by this Agreement to be consummated as provided in
this Agreement. All other proceedings in connection with this Agreement and the
transactions contemplated hereby, and all documents and instruments incident to
such transactions, shall be reasonably satisfactory in form and substance to
Buyer and its counsel.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER. The obligation
of the Seller to consummate the sale of the Purchased Assets to Buyer shall be
subject to the fulfillment, or the waiver by the Seller, at or prior to the
Closing, of each of the following conditions precedent:
10.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Buyer in this Agreement or in Buyer's Disclosure Schedules
hereto shall have been true and correct on the date hereof, and also at and as
of the Closing Date with the same force and effect, in all material respects, as
if made again at and as of that time.
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10.2 ABSENCE OF MATERIAL LITIGATION. There shall be (i) no
pending or overtly threatened litigation, whether brought against the Seller,
any of the Shareholders or the Buyer that seeks to enjoin the consummation of
any of the transactions contemplated by this Agreement, (ii) no order that has
been issued by any court or governmental agency having jurisdiction that
restrains or prohibits the consummation of the purchase and sale of the
Purchased Assets hereunder or any proceedings pending which are reasonably
likely to result in the issuance of such an order; and (iii) no other pending or
overtly threatened litigation, which has had or is expected to materially and
adversely affect the ability of the parties to consummate the transactions
contemplated hereby.
10.3 PERFORMANCE OF OBLIGATIONS. Buyer shall have performed and
complied, in all material respects, with all of its covenants required by this
Agreement to have been performed by it at or prior to the Closing, except for
any failure of performance or non-compliance that does not and will not
materially and adversely affect the ability of the Seller to consummate the
transactions contemplated hereby.
10.4 THIRD PARTY APPROVALS AND CONSENTS. Receipt of all
approvals and consents of third parties (governmental or other) needed to have
been obtained by the Closing Date to enable the Seller to consummate the
transactions contemplated in this Agreement and not thereby violate any
contracts, writs, orders, laws or regulations the violation of which would have
a Material Adverse Effect on the Seller.
10.5 CONSUMMATION OF PURCHASE AND SALE OF MERCY COMMON STOCK.
The transactions contemplated by the Stock Purchase Agreement shall have been
consummated concurrently with the Closing of the transactions contemplated by
this Agreement.
10.6 CERTIFICATES. Receipt from Buyer of a certificate, dated as
of the date of Closing and signed by the President or the Chief Financial
Officer of Buyer, certifying that (i) each of its representations and warranties
contained herein was true and correct when made and is true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if such representations and warranties had been made on the Closing Date, and
(ii) it has performed and complied in all material respects with all agreements,
obligations, covenants and conditions required to be performed or complied with
by it pursuant hereto on or prior to the Closing Date, except as may be waived
in writing by the Seller or where the failure to have so complied has not had
and is not expected to materially and adversely affect the ability of the
parties to consummate the purchase and sale of the Purchased Assets.
10.7 OPINION OF COUNSEL. Receipt of an opinion dated as of the
Closing Date from Xxxxx, Xxxxxx & Xxxxxx LLP substantially in the form of
EXHIBIT C hereto.
10.8 ADDITIONAL INSTRUMENTS. The Buyer shall have delivered to
Seller certified copies of resolutions duly adopted by its Board of Directors
approving this Agreement and authorizing the Buyer to consummate the
transactions contemplated hereby, and such other or additional instruments,
consents, endorsements and documents as Sellers reasonably deem to be necessary
to enable the transactions contemplated by this Agreement to be consummated as
provided in this Agreement, including good standing certificates, dated not more
than 10 days prior to the Closing Date, evidencing the good standing of Buyer in
the state of its incorporation and, as a foreign corporation qualified to do
business in California. All other proceedings in connection with this Agreement
and the transactions contemplated hereby, and all documents and instruments
incident to such transactions, shall be reasonably satisfactory in form and
substance to Seller and its counsel.
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11. THE CLOSING.
The consummation of the transactions contemplated hereby (the
"Closing") shall take place concurrently with the consummation of the
transactions contemplated by the Mercy Agreement, at the offices of Seller's
counsel at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx. The
term "Closing Date," as used in this Agreement, shall mean the date on which
such Closing takes place.
11.1 CLOSING DELIVERIES OF THE SELLER. At the Closing, the
Seller shall deliver, or cause to be delivered to Buyer, the documents and
instruments set forth on SCHEDULE 11.1 hereof ("Seller's Closing Deliveries"),
in form and substance reasonably satisfactory to Buyer and its counsel,
including, but not limited to, the Xxxx of Sale and Assumption Agreement in the
Form of EXHIBIT D.
11.2 CLOSING DELIVERIES OF BUYER. At the Closing, Buyer shall
deliver, or cause to be delivered, the cash portion of the Purchase Price to
Seller, and to the appropriate Selling Party, the documents and instruments set
forth on SCHEDULE 11.2 hereof ("Buyer's Closing Deliveries"), in form and
substance reasonably satisfactory to such Seller and their counsel.
12. TERMINATION.
12.1 METHODS OF TERMINATION. This Agreement may be terminated
and the transactions herein contemplated may be abandoned at any time prior to
the Closing.
(a) By mutual written consent of Buyer and the Seller; or
(b) By the Buyer, if there has been a material breach by the
Seller of any of its representations, warranties, agreements or covenants set
forth herein, or a failure of any condition to which the obligations of the
Buyer are subject (a "Material Seller Default").
(c) By the Seller, if there has been a material breach by
the Buyer of any of its representations, warranties, agreements or covenants set
forth herein, or a failure of any condition to which the obligations of the
Seller are subject (a "Material Buyer Default").
12.2 PROCEDURE UPON TERMINATION. In the event of termination of
this Agreement by Buyer or Seller or by both Buyer and Seller pursuant to
Section 12.1 hereof, written notice thereof shall forthwith be given to the
other party or parties hereto and the transactions contemplated herein shall be
abandoned without further action by Buyer or the Seller. In addition, if this
Agreement is terminated as provided herein:
(a) Each party will redeliver all documents, workpapers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same.
(b) All information of a confidential nature received by any
party hereto with respect to the business of any other party (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any governmental authority) shall continue to be subject
to the provisions of Section 15 of this Agreement, which provisions shall
survive any such termination.
(c) Upon any termination of this Agreement pursuant to this
Section 12, the respective obligations of the parties hereto under this
Agreement (other than under Paragraphs 12.2(a) and (b) above) shall terminate
and no party shall have any liability whatsoever to any other party hereto by
reason of such termination, irrespective of the cause of such termination,
PROVIDED, HOWEVER, that a termination of this Agreement by Buyer pursuant to
Paragraph 12.1(b) due to a Material Seller Default, or by any of the Seller
pursuant to Paragraph 12.1(c) due to a Material Buyer Default, shall not relieve
the Seller or the Buyer (as the case may be) of their liability hereunder to the
non-defaulting parties; and
-17-
PROVIDED, FURTHER, that (i) if such termination is by Buyer as a result of a
Material Seller Default, then, the Seller shall be liable to Buyer for the
direct damages incurred by Buyer by reason of such Material Seller Default; (ii)
if, notwithstanding a Material Seller Default or a Material Buyer Default, the
Buyer (in the case of a Material Seller Default) or the Seller (in the case of a
Material Buyer Default) closes the transactions contemplated hereby, such action
by the non-defaulting party or parties shall constitute a waiver of such
Material Seller Default or Material Buyer Default (as the case may be); and
(iii) notwithstanding anything to the contrary contained herein, in no event
shall the Seller be liable to Buyer by reason of a material breach of this
Agreement by Seller, and in no event shall Buyer be liable to the Seller by
reason of a material breach of this Agreement by Buyer, for any consequential
damages, special damages or lost profits or lost business opportunities arising
from such breach.
12.3 REMEDIES AND SPECIFIC PERFORMANCE. Seller acknowledges that
a breach of any of its covenants under this Agreement that would constitute a
Material Seller Default would result in damages to Buyer that would be extremely
impracticable to measure. Accordingly, Seller agrees that, in lieu of
termination of this Agreement and (subject to clause (ii) of Paragraph
12.2(c)above) in addition to any other remedies Buyer may have, Buyer may xxx in
equity for specific performance of any such covenants in the event of a breach
thereof and Seller expressly waives the defense that a remedy in damages will be
available.
13. INDEMNIFICATION BY SELLERS. Shareholders acknowledge that following
the Closing, substantially all of the proceeds from the payment of the Purchase
Price to Seller will be used to pay obligations and expenses of Seller and to
make distributions to the Shareholders and that, as a result, Seller will not
have any substantial assets after giving effect to the transactions contemplated
hereby. As a result, to induce Buyer to enter into and to consummate the
transactions contemplated by this Agreement, each Shareholder has agreed that he
will, severally, and not jointly with any of the other Shareholders, indemnify
and hold harmless Buyer and the other members of the Buyer Group (as defined in
Subsection 14.1 of the Stock Purchase Agreement), in the manner, on the terms
and subject to the limitations contained in Section 14 of the Stock Purchase
Agreement, from and against any and all Buyer Liabilities (also as defined in
Subsection 14.1 of the Stock Purchase Agreement) which they or any of them may
incur as a result of any material breach of any of Seller's representations or
warranties contained in this Agreement or in its Disclosure Schedules or any
Closing Certificate it may deliver pursuant to this Agreement. In consideration
therefor, Buyer, on its own behalf and on behalf of the other members of the
Buyer Group, covenants that Seller shall not have any liability to Buyer or any
of the other members of the Buyer Group for any breach of any of its
representations or warranties contained in this Agreement, in its Disclosure
Schedules or any Closing Certificate it may deliver pursuant to this Agreement.
14. SHAREHOLDERS' OBLIGATION. Subject to the satisfaction of the
conditions precedent to the obligations of Seller hereunder, which shall also
constitute conditions precedent to the obligations of the Shareholders
hereunder, the Shareholders shall cause Seller to perform all of its covenants
required by this Agreement to have been performed by Seller at or prior to the
Closing, except for any of such covenants the non-performance of which will not
materially and adversely affect the ability of the Seller to consummate the
transactions contemplated hereby.
15. CONFIDENTIALITY.
15.1 CONFIDENTIALITY COVENANTS. Each party acknowledges that it
may have access to various items of Confidential Information (as hereinafter
defined) of the other, or in the case of Buyer, Confidential Information of the
Seller, in the course of investigations and negotiations prior to Closing. Each
party who receives any Confidential Information (a "Receiving Party") from any
other party hereto, (or in the case of Buyer from the Seller) (the "Disclosing
Party"), may disclose any such Confidential
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Information to such party's employees, attorneys, accountants, financial
advisors or agents or representatives that have a need to know such Information
to facilitate or assist with the consummation of the transactions contemplated
hereby (collectively, "Representatives"). Subject to the foregoing exception,
and the exception hereinafter set forth in Subsection 15.2 below, (i) a
Receiving Party shall keep, and shall cause its Representatives to keep, all
Confidential Information received from a Disclosing Party hereunder strictly
confidential and shall not disclose, and shall cause its Representatives not to
disclose, any such Confidential Information to any third party; and (ii) any
Receiving Party and its Representatives shall not make any uses of Confidential
Information received from a Disclosing Party except to facilitate or assist with
the consummation of the transactions contemplated hereby. Confidential
Information shall include any business, financial, technical or other
information, including, but not limited to, business plans, forecasts, marketing
plans or initiatives, customer, client and vendor lists, training materials
developed by the Disclosing Party, information regarding the identities,
qualifications and compensation being paid to key employees, information
received from customers, vendors or clients with the expectation, whether
explicit or implicit, that such information would be protected from disclosure
or dissemination to third parties, and other information the value of which to
the Disclosing Party is dependent on the non-disclosure of such information.
Confidential Information shall not include information that, although disclosed
or made available by a Disclosing Party or any of its Representatives to a
Receiving Party or any of its Representatives, (i) can be obtained by persons
not subject to confidentiality or use restrictions from public sources,
including periodicals, government and industry publications and other media that
is readily accessible to the public or competitors of the Disclosing Party, (ii)
has been disclosed by the Disclosing Party or any of its Representatives to any
unaffiliated third parties without the imposition of any restrictions or
prohibitions on disclosure or use thereof and has been, as a result, disclosed
by that third party to other third parties, or (iii) information that the
Receiving Party can demonstrate convincingly was in its possession prior to its
disclosure to the Receiving Party by the Disclosing Party or any of its
Representatives, PROVIDED that the Receiving Party had not obtained possession
of such Confidential information from any one that the Receiving Party knew or
should have known was subject to restrictions on its right to disclose such
information to the Receiving Party, either pursuant to an agreement or by reason
of his position or relationship with the Disclosing Party.
15.2 DISCLOSURE PURSUANT TO LEGAL PROCESS. If a Receiving Party
is required by subpoena or other legal process, or by laws applicable to it, to
disclose or produce any Confidential Information belonging to a Disclosing
Party, then, the Receiving Party shall (i) provide the Disclosing Party prompt
notice thereof and copies, if possible, and, if not, a description, of the
Confidential Information requested or required to be produced so that Disclosing
Party may seek an order to quash such subpoena or other legal process or an
appropriate protective order or may elect to waive compliance with the
provisions of this Section 15 as to any portion or all of such Confidential
Information (ii) consult with the Disclosing Party as to the advisability of
taking legally available steps to quash or narrow such request, and (iii)
provide such reasonable cooperation as the Disclosing Party may request in
connection with efforts by the Disclosing Party to quash the subpoena or other
legal process or to obtain a protective order with respect to the Confidential
Information being sought. If, in the absence of a protective order or the
receipt of a waiver hereunder, a Receiving Party is nonetheless, in the opinion
of his legal counsel, compelled to disclose or produce any such Confidential
Information of the Disclosing Party to any tribunal legally authorized to
request and entitled to receive such Confidential Information or to any
government agency with which the Receiving Party is required by law to file any
such Information or otherwise stand liable for contempt or suffer other censure
or penalty or liability, the Disclosing Party may disclose or produce such
Confidential Information to such tribunal or government agency, notwithstanding
the fact that such information may, as a result become available to the public,
without incurring liability hereunder to the Disclosing Party; PROVIDED,
HOWEVER, that the Receiving Party shall give the Disclosing Party written notice
of the Confidential Information to be so disclosed or produced as far in advance
of its disclosure or
-19-
production as is practicable and shall use his best efforts to obtain, to the
greatest extent practicable, an order or other reliable assurance that
confidential treatment will be accorded to such Confidential Information so
required to be disclosed or produced. Notwithstanding the foregoing, the parties
agree that the Buyer may file a report on Form 8-K with the Securities and
Exchange Commission regarding the transactions contemplated by this Agreement
and file as exhibits thereto, the Agreement, the Stock Purchase Agreement and
all schedules and exhibits thereto without requesting confidential treatment for
such documents.
15.3 TERMINATION OF CONFIDENTIALITY OBLIGATIONS. The obligations
of Buyer under this Section 15 shall terminate on the Closing of the
transactions contemplated hereby, but the obligations of the Seller hereunder
shall survive the Closing for a period of five (5) years thereafter with respect
to Confidential Information belonging to Buyer or the Seller. In the event of a
termination of this Agreement, the respective obligations of the Seller with
respect to Confidential Information of Buyer and the obligations of Buyer with
respect to Confidential Information of the Seller shall survive for a period of
five (5) years from the date of such termination.
16. MISCELLANEOUS.
16.1 NOTICES. All notices, requests, demands or other
communications hereunder to any of the parties hereto shall be in writing and
shall be deemed to have been duly given, if delivered in person or mailed,
certified, return-receipt requested, postage prepaid to the respective addresses
of such parties set forth in EXHIBIT E hereto. Any party hereto may from time to
time, by written notice to the other parties, designate a different address,
which shall be substituted for the one specified above for such party. If any
notice or other document is sent by certified or registered mail, return receipt
requested, postage prepaid, properly addressed as aforementioned, the same shall
be deemed served or delivered seventy-two (72) hours after mailing thereof. If
any notice is sent by facsimile machine ("fax") to a party, it will be deemed to
have been delivered on the date the fax thereof is actually received, provided
the original thereof is sent by mail, in the manner set forth above, within
twenty-four (24) hours after the fax is sent.
16.2 WAIVER OF BULK SALE COMPLIANCE. Each party to this
Agreement hereby irrevocably waives compliance with any and all applicable Bulk
Sales laws, in connection with the transactions contemplated by this Agreement.
16.3 ASSIGNMENT. Seller may not assign this Agreement, or assign
its respective rights or delegate its duties hereunder, without the prior
written consent of Buyer. Prior to the Closing, Buyer may not assign this
Agreement, or assign its rights or delegate its duties hereunder, without the
prior written consent of Seller.
16.4 SEVERABILITY. Any provision of this Agreement which is
illegal, invalid or unenforceable shall be ineffective to the extent of such
illegality, invalidity or unenforceability, without affecting in any way the
remaining provisions hereof.
16.5 JOINT PRESS RELEASE. The parties agree to consult with each
other and to cooperate prior to issuing any press release or other public
announcement with respect to the transactions contemplated by this Agreement. No
such press release shall be issued by any party without the prior written
consent of the other party; provided, however, that a party may proceed with
publication of such a release or other public disclosure even if another party
hereto has refused to give its consent thereto, if (i) the release or public
disclosure is, in the reasonable judgment of the releasing party, required for
it to meet, on a timely basis, its obligations under laws or regulations
applicable to it, including under the Federal Securities Laws and (ii) the
releasing party furnishes a copy of such release or public disclosure to the
other party at least twenty-four (24) hours in advance of the release or public
disclosure and provides a reasonable opportunity for the other party to comment
thereon. Notwithstanding the foregoing, the parties
-20-
agree that the Buyer may, immediately upon execution of this Agreement, issue a
press release, in substantially the form that has been delivered to the
Shareholders prior to the date hereof, and file a report on Form 8-K with the
Securities and Exchange Commission regarding the transactions contemplated by
this Agreement and file as exhibits thereto, the press release, the Agreement,
the Stock Purchase Agreement and all schedules and exhibits thereto without
requesting confidential treatment for such documents.
16.6 GOVERNING LAW. This Agreement is deemed to have been made
in the State of California, and its interpretation, its construction and the
remedies for its enforcement or breach are to be applied pursuant to, and in
accordance with, the laws thereof.
16.7 INCORPORATION AND AMENDMENT. This Agreement, the Schedules
and Exhibits hereto and each additional agreement and document referred to
herein constitute the entire Agreement of the parties, superseding and
extinguishing all prior agreements and understandings, representations and
warranties, relating to the subject matter hereof. This Agreement may not be
modified, amended or terminated except by written agreement specifically
referring to this Agreement signed by the parties hereto.
16.8 WAIVER. No waiver of a breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
16.9 INTERPRETATION; HEADINGS. This Agreement, and the other
agreements being entered into by any of the Sellers and the Buyer pursuant
hereto, are the result of arms'-length negotiations between the parties hereto
and no provision hereof or thereof, because of any ambiguity found to be
contained herein, therein or otherwise, shall be construed against a party by
reason of the fact that such party or its legal counsel was the draftsman of
that provision. Unless otherwise indicated elsewhere in this Agreement, (i) the
term "or" shall not be exclusive; (ii) the term "including" shall mean
"including, but not limited to," and (iii) the terms "herein," "hereof,"
"hereto," "hereunder" and other terms similar to such terms shall refer to this
Agreement as a whole and not merely to the specific section, subsection,
paragraph or clause where such terms may appear. The section, subsection and any
paragraph headings contained herein are for purposes of convenience only and are
not intended to define or limit or affect, and shall not be considered in
connection with, the interpretation of any of the terms or provisions of this
Agreement.
16.10 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.11 ARBITRATION. All disputes between the parties hereto shall
be determined solely and exclusively by arbitration in accordance with the rules
then in effect of the American Arbitration Association pertaining to commercial
arbitrations, or any successors hereto ("AAA"), in San Bernardino, California,
unless the parties otherwise agree in writing. The parties shall jointly select
an arbitrator. In the event the parties fail to agree upon an arbitrator within
ten (10) days, then each party shall select an arbitrator and such arbitrators
shall then select a third arbitrator to serve as the sole arbitrator; provided,
that if either party, in such event, fails to select an arbitrator within seven
(7) days, such arbitrator shall be selected by the AAA upon application of
either party. Judgment upon the award of the agreed upon
-21-
arbitrator or the so chosen third arbitrator, as the case may be, shall be
binding and shall be entered into by a court of competent jurisdiction.
IN WITNESS WHEREOF, the undersigned corporations have caused this Asset
Purchase Agreement to be executed by officers thereunto duly authorized on the
date first above stated.
BUYER: SELLER:
AIR METHODS CORPORATION HELICOPTER SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------------- ---------------------------------------
Title: CEO & Chairman Title: President
----------------------------- ------------------------------------
SHAREHOLDERS:
/s/ Xxxxx X. Xxxxx
------------------------------------------
XXXXX X. XXXXX
/s/ J. Xxxxxx Xxxxxxxxx
------------------------------------------
J. XXXXXX XXXXXXXXX
/s/ Xxx X. Xxxx
------------------------------------------
XXX X. XXXX
/s/ Xxxxx X. Xxxx
------------------------------------------
XXXXX X. XXXX
/s/ Xxxxxxx X. Xxxxx
------------------------------------------
XXXXXXX X. XXXXX
-22-
EXHIBITS
EXHIBIT A Allocation of Purchase Price
EXHIBIT B Form of SYC&R Legal Opinion
EXHIBIT C Form of DG & S Legal Opinion
EXHIBIT D Form of Xxxx of Sale and Assumption Agreement
EXHIBIT E Addresses of the Parties for Notice Purposes
SCHEDULES
SCHEDULE 1.1 Equipment, Furniture and Fixtures
SCHEDULE 1.2 Assigned Contracts
SCHEDULE 1.3 Intangible Property Rights
SCHEDULE 1.5 Excluded Claims
SCHEDULE 1.7 Inventory
SCHEDULE 1.9 Excluded Assets
SCHEDULE 2.1 Scheduled Liabilities
SCHEDULE 2.2 Excluded Liabilities
SCHEDULE 4.2 Exceptions to Title
SCHEDULE 4.5 No Conflicts
SCHEDULE 4.6 Financial Statements
SCHEDULE 4.7 Undisclosed Liabilities
SCHEDULE 4.8 Absence of Certain Changes
SCHEDULE 4.9 Condition of Tangible Assets
SCHEDULE 4.10 Intangible Property Rights
SCHEDULE 4.11 Real Property
SCHEDULE 4.13 Material Seller Contracts
SCHEDULE 4.14 Compliance with Laws; Licenses and Permits
SCHEDULE 4.15 Litigation
SCHEDULE 4.16 Environmental Non-Compliance
SCHEDULE 4.17 Taxes
SCHEDULE 4.18 Employment and ERISA Matters
SCHEDULE 4.19 Insurance Policies
SCHEDULE 6.2 Permitted Dividends
SCHEDULE 11.1 Closing Deliveries of Seller
SCHEDULE 11.2 Closing Deliveries of Buyer
-23-
EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
The cash portion of the Purchase Price shall be the net book value of
the assets of the Company based upon the 1996 HSI Balance Sheet subject to the
adjustments set forth below and the adjustments provided for in Section 3.2 of
the agreement.
1. Add the following items on the 1996 HSI Balance Sheet.
Third party receivables $ 96,134*
Inventory 489,980*
Prepaid expenses 17,975*
Contract receivables 10,000*
Deposits 12,030
Notes receivable 76,846*
Equipment and other tangible assets 100,000
Building (Rialto) 383,000
Intangible assets 34,047
Goodwill 139,766
------------
Total $1,359,778
*The Purchase Price will be adjusted for changes in these assets that
will have occurred between December 31, 1996 and the Closing Date and these
amounts will be adjusted correspondingly.
2. Subtract the following items on the 1996 HSI Balance Sheet
from the total determined pursuant to paragraph 1 above:
Allowance for doubtful receivables $45,536
Accounts payable 301,857**
Accrued payroll 22,536
Accrued payroll taxes 21,969
Accrued insurance 9,427
Deposits payable 1,975
-----------
Total $403,300
**Accounts payable shall be adjusted to eliminate any accounts payable
to the Shareholders, Mercy, or any other affiliate of the Shareholders, other
than any lease payables arising under the Rialto, California lease.
EXHIBIT B
July 31, 1997
Air Methods Corporation
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to Helicopter Services, Inc., a California
corporation (the "Company") and Xxxxx X. Xxxxx, J. Xxxxxx Xxxxxxxxx, Xxx X.
Xxxx, Xxxxx X. Xxxx and Xxxxxxx X. Xxxxx (collectively, the "Shareholders"), in
connection with the execution and delivery by the Company and the Shareholders
of that certain Asset Purchase Agreement dated as of July 11, 1997 (the
"Agreement") among the Company, the Shareholders and Air Methods Corporation, a
Delaware corporation (the "Buyer"). This opinion is being delivered pursuant to
Section 9.9 of the Agreement. Unless specifically defined herein or the context
requires otherwise, capitalized terms used herein shall have the meanings
ascribed to them in the Agreement.
In connection with the preparation of this opinion, we have examined
such documents and considered such questions of law as we have deemed necessary
or appropriate. We have assumed that there are no other documents or agreements
among the Company, the Shareholders and the Buyer which would expand or
otherwise modify the respective rights and obligations of the Company, the
Shareholders and the Buyer as set forth in the Agreement and the documents
required or contemplated thereby.
We have assumed the authenticity of all documents submitted to us as
originals, the conformity with originals of all documents submitted to us as
copies, and the genuineness of all signatures (other than signatures of the
Shareholders and officers of the Company). We have also assumed the legal
capacity of all natural persons and that, with respect to all parties to
agreements or instruments relevant hereto (other than the Company and the
Shareholders), such parties had the requisite power and authority to execute,
deliver and perform such agreements or instruments, that such agreements or
instruments have been duly authorized by all requisite action, executed and
delivered by such parties, and that such agreements or instruments are the
valid, binding and enforceable obligations of such parties.
As to questions of fact material to our opinions, we have relied upon
the representations of each party made in the Agreement and the other documents
and certificates delivered in connection therewith, certificates of the
Shareholders, certificates of officers of the Company, and certificates and
advices of public officials.
Whenever a statement herein is qualified by "known to us," "to our
current actual knowledge," or similar phrase, it is intended to indicate that,
during the course of our representation of the Company and the Shareholders, no
information that would give us current actual knowledge of the inaccuracy of
such statement has come to the attention of those
attorneys in this firm who have rendered legal services in connection with the
transaction described in the introductory paragraph hereof. However, except as
otherwise expressly indicated, we have not undertaken any independent
investigation to determine the accuracy of such statement, and any
limited inquiry undertaken by us during the preparation of this
opinion letter should not be regarded as such an investigation; no
inference as to our knowledge of any matters bearing on the accuracy of any
such statement should be drawn from the fact of our representation of
the Company and the Shareholders.
Based upon the foregoing, and subject to the additional assumptions,
exceptions, qualifications and limitations set forth below, we are of the
opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of California. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each other state in which the nature of its activities or of its properties
owned or leased makes such qualification necessary, except to the extent that
failure to so qualify would not have a material adverse effect on the Company.
2. The Company has the corporate power and authority to own its
properties and assets, to carry on its business as presently conducted, and to
enter into the Agreement and the other documents required or contemplated
thereby and perform its respective obligations thereunder.
3. The execution and delivery of the Agreement and the Xxxx of Sale and
Assignment and Assumption Agreement (the Xxxx of Sale"), and the performance by
the Company of its obligations thereunder have been duly authorized by all
necessary corporate action on the part of the Company and the Agreement and Xxxx
of Sale have been duly executed and delivered by the Company and the
Shareholders and by the Company, respectively.
4. The Agreement is a legal, valid and binding obligation of the
Company and the Shareholders enforceable against them in accordance with its
terms, and the Xxxx of Sale is a valid and binding agreement of the Company
enforceable against it in accordance with its terms, except in each case as the
enforceability thereof may be subject to or limited by (a) bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other similar laws
relating to or affecting the rights of creditors, and (b) general equitable
principles, regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law.
5. The execution and delivery of the Agreement and the performance by
the Company and the Shareholders of their respective obligations thereunder and
the execution and delivery of and the performance by the Company of its
obligations under the Xxxx of Sale (a) will not breach or result in a violation
of the Company's Articles of Incorporation or Bylaws, or any judgment, order or
decree of any court or arbitrator, known to us, to which the Company is a party
or is subject, and (b) will not, to our knowledge, constitute a material breach
of or
constitute a material default under, any Material Contract of the Company
listed in Schedule 4.13 of the Agreement.
The foregoing opinions are subject to the following:
(a) We expressly do not comment upon or render any opinion with respect
to any documents referenced in the Agreement, except for the Xxxx of Sale.
(b) The opinions hereinabove set forth are further subject to the
following additional qualifications:
(i) The effect of provisions releasing or indemnifying a party against
liability for its own wrongful or negligent acts, or where indemnification is
contrary to public policy.
(ii) The effect of Section 1698 of the California Civil Code which
provides in part that provisions of any instrument or agreement may only be
waived in writing will not be enforced to the extent that an oral agreement has
been executed modifying provisions of such instrument or agreement.
(iii) We express no opinion regarding the enforceability of the choice
of law provisions of Section 16.5 or of the arbitration provisions of Section
16.10 of the Agreement.
(iv) The unenforceability in certain circumstances of provisions
waiving broadly or vaguely stated rights, statutory or other rights representing
public policy, or unknown future rights and of provisions that rights or
remedies are not exclusive.
(v) The unenforceability under certain circumstances of provisions to
the effect that failure to exercise or delay in exercising any right or remedy
will not operate as a waiver of that right or remedy.
(vi) Limitations on the exercise of certain contractual rights and
remedies if the defaults are not material or the penalties bear no reasonable
relation to the damages suffered by the aggrieved party as a result of the
delinquencies or defaults.
We are members of the Bar of the State of California and, accordingly,
do not purport to be experts on or to be qualified to express any opinion herein
concerning, nor do we express any opinion herein concerning, any laws other than
the laws of the State of California and federal law.
The foregoing opinions are being furnished to you solely for your
benefit and may not be relied upon by any other person without our prior written
consent.
Very truly yours,
EXHIBIT C
July 31, 1997
Xxxxx X. Xxxxx
J. Xxxxxx Xxxxxxxxx
Xxx X. Xxxx
Xxxxx X. Xxxx
Xxxxxxx X. Xxxxx
c/o Mercy Air Service, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Gentlemen:
We have acted as counsel to Air Methods Corporation, a Delaware corporation
("Air Methods"), in connection with its purchase of the stock of Mercy Air
Service, Inc., a California corporation ("Mercy"), pursuant to the Stock
Purchase Agreement, dated as of July 11, 1997 (the "Agreement"), by and among
Air Methods and Xxxxx X. Xxxxx, J. Xxxxxx Xxxxxxxxx, Xxx X. Xxxx, Xxxxx X. Xxxx
and Xxxxxxx X. Xxxxx (collectively referred to as the "Sellers"). This opinion
is rendered pursuant to Section 10.8 of the Agreement and pursuant to Section
10.7 of the Asset Purchase agreement (as defined below). Unless otherwise
indicated, the capitalized terms used but not defined herein shall have the
meanings given to such terms in the Agreement.
In rendering the opinions set forth herein, we have examined the following
documents:
(a) The Agreement together with the exhibits and schedules thereto;
(b) The Asset Purchase Agreement between Helicopter Services, Inc., a
California corporation ("HSI"), and Air Methods, dated as of July 11,
1997 (the "Asset Purchase Agreement");
(c) The Xxxx of Sale and Assumption Agreement, dated the date hereof,
among HSI, Sellers and Air Methods (the "Xxxx of Sale");
c/o Mercy Air Service, Inc.
July 31, 1997
Page 2
(d) The Employment Agreement, dated the date hereof, between Xxxx X. Xxxxx
and Mercy (the "Xxxxx Employment Agreement");
(e) The Employment Agreement between Xxxxx X. Xxxxxxxx and Air Methods and
the Stock Option Agreement between Xxxxx X. Xxxxxxxx and Air Methods
(collectively referred to as the "Dolstein Employment Agreement");
(f) The Consulting and Non-Competition Agreements, dated the date hereof,
between each individual Seller and Mercy (the "Consulting
Agreements");
(g) The Stock Option Agreements, dated the date hereof, between each
individual Seller and Air Methods (the "Stock Option Agreements");
(h) The Notes; and
(i) The Security Agreement.
The Agreement, the Asset Purchase Agreement, the Xxxx of Sale, the Stock Option
Agreements, the Dolstein Employment Agreement, the Notes and the Security
Agreement shall hereinafter be referred to collectively as the "Air Methods
Documents." The Xxxxx Employment Agreement, the Consulting Agreements, and the
Security Agreement shall hereinafter be referred to collectively as the "Mercy
Documents."
In addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the certificate of incorporation and the
bylaws of Air Methods, such certificates of public officials, officers and
representatives of Air Methods and such other persons, and such other documents,
and we have made such examinations of law, as we have deemed necessary or
appropriate to enable us to render the opinions expressed below. In all such
examinations, we have assumed the genuineness of all signatures on original or
certified documents and the conformity to the original or certified documents of
all documents submitted to us as conformed or photostatic copies.
As to certain matters of fact relating to the opinions expressed herein, we
have relied upon a certificate of an officer of Air Methods, a copy of which is
attached as EXHIBIT A hereto, and a certificate of an officer of Mercy, a copy
of which is attached as EXHIBIT B hereto
c/o Mercy Air Service, Inc.
July 31, 1997
Page 3
(the "Certificates"). We have assumed the accuracy of all information furnished
to us in the Certificates and have not independently verified the accuracy of
such information.
For purposes of these opinions, we have assumed that: (i) Mercy is and will
be, after giving effect to the transactions which are the subject of these
opinions, solvent; (ii) there is adequate consideration for the execution and
delivery of the Security Agreement; (iii) Mercy owns the Collateral (as defined
in the Security Agreement), and the value has been given within the meaning of
Section 9-203 of the Uniform Commercial Code ("UCC"); and (iv) Mercy main tains
its records concerning the Collateral and its chief executive office in the
State of California.
The following opinions are limited solely to applicable federal laws of the
United States of America, the laws of the State of Colorado, and the General
Corporation Law of the State of Delaware. While we are not licensed to practice
law in the State of Delaware, we have reviewed applicable provisions of the
General Corporation Law of the State of Delaware as we have deemed appropriate
in connection with the opinions expressed in paragraphs 1 and 2 below. Except as
described, we have neither examined nor do we express any opinion with respect
to Delaware law. With your consent, our opinions regarding the Documents are
given based on the application of the laws of the State of Colorado thereto even
though such Documents state that they are to be governed by the laws of
California. Specifically, with respect to the opinions in paragraphs 4 and 5, we
have assumed, with your consent and without investigation, that the California
UCC is identical to the Colorado UCC.
Based upon the foregoing and subject to the further assumptions,
exceptions, qualifications and limitations set forth herein, we are of the
opinion that:
1. Air Methods is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to own its property and carry on its business as now
conducted.
2. Air Methods has the corporate power and authority to execute, deliver
and perform its obligations under the Documents. The execution and delivery of
the Documents and the consummation by Air Methods of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of Air Methods. Each of the Air Methods Documents has been duly
executed and delivered by Air Methods. Each of the Mercy Documents has been duly
executed and delivered by Mercy.
3. The Air Methods Documents constitute the legal, valid and binding
obligation of Air Methods, enforceable against it in accordance with their
terms. The Mercy
c/o Mercy Air Service, Inc.
July 31, 1997
Page 4
Documents constitute the legal, valid and binding obligation of Mercy,
enforceable against it in accordance with their terms.
4. The provisions of the Security Agreement are sufficient to create a
security interest on behalf of Sellers which has attached to the right, title
and interest of Mercy in those items and types of Collateral in which a security
interest may be created pursuant to Article 9 of the UCC.
5. The UCC-1 Financing Statement relating to the Collateral and listing Air
Methods and Mercy as the debtors and the Collateral Agent (as defined in the
Security Agreement), as agent for the Sellers, as the secured party (the
"Financing Statement"), is in adequate and legally sufficient form for filing
with the Secretary of State of California and sufficiently describes the
Collateral; provided, however, that we render no opinion with respect to such
description to the extent the Financing Statement includes terms which are not
defined in the UCC. Assuming that the Financing Statement is duly filed with the
Secretary of the State of California in accordance with the provisions of
Section 9-403(1) of the UCC, a security interest will be perfected in those
items and types of Collateral in which a security interest can be perfected and
maintained solely by filing financing statements in the Secretary of State's
office in California.
These opinions do not address any event which may occur subsequent to the
date hereof to the extent such event affects the validity or perfection of the
Sellers' security interest in the Collateral. We call your attention to the
necessity of filing continuation statements from time to time under the
applicable provisions of the UCC and to the fact that additional filings may be
required, among other things, upon the change of location of Mercy as provided
in Section 9-103(e) of the UCC or the change of the name or corporate structure
of Mercy as provided in Section 9-402(7) thereof.
The opinions expressed herein as to the validity, binding effect and
enforceability of the Documents and as to perfection of the security interest in
the Collateral are subject to the following limitations: (a) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity); (b) the effect of applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws and court decisions
relating to or affecting creditors' rights generally; (c) we have made no
investigation and express no opinion as to the applicability of any fraudulent
conveyance or similar law; (d) the remedies of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought; (e) the UCC requires that a secured party exercise its rights in
good faith and in a commercially reasonable manner and a court may not strictly
enforce certain covenants therein if it concludes
c/o Mercy Air Service, Inc.
July 31, 1997
Page 5
that such enforcement would be unreasonable under the then existing
circumstances; (f) certain liabilities and duties imposed by Colorado law with
respect to foreclosure of a security interest, including the duty to exercise
reasonable care in the custody and preservation of collateral in a secured
party's possession or control and certain notice requirements, cannot be waived,
disclaimed or varied; (g) public policy considerations may limit the rights to
obtain indemnification or to limit a party's liability for its own negligence or
wrongful acts; (h) we express no opinion as to the enforceability of the choice
of law, severability, waiver or set off provisions contained in the Documents;
(i) to the extent that the Security Agreement purports to authorize the Secured
Parties to purchase any Collateral at a private sale thereof, such provision
would not be enforceable; (j) to the extent that the Security Agreement might be
deemed to provide that the Secured Parties may enter upon and take possession of
the Collateral by force amounting to a breach of the peace or public disturbance
without liability by reason of the manner of such entry and possession, such
provision would not be enforceable, and (k) we express no opinion as to the
enforceability of the provisions of the Security Agreement which purport to
authorize the Collateral Agent to sign and file documents in the name or on
behalf of Mercy without the signatures of the appropriate officers of Mercy.
To the extent the obligations of Air Methods may be dependent upon such
matters, we assume for purposes of these opinions that the Air Methods Documents
are within the capacity and power of, and have been duly authorized, executed
and delivered by the parties thereto other than Air Methods (and with respect to
the Security Agreement, other than Mercy) and constitute the legal, valid and
binding obligation of such parties enforceable against them in accordance with
their terms. To the extent the obligations of Mercy may be dependent upon such
matters, we assume for purposes of these opinions that the Mercy Documents are
within the capacity and power of, and have been duly authorized, executed and
delivered by the parties thereto other than Mercy (and with respect to the
Security Agreement, other than Air Methods) and constitute the legal, valid and
binding obligation of such parties enforceable against them in accordance with
their terms.
The opinions set forth herein are as of the date hereof and we disclaim any
under taking or obligation to advise you of any changes which may hereafter be
brought to our attention. These opinions are rendered only to the persons to
whom this letter is addressed and are solely for their benefit in connection
with the transactions contemplated by the Documents. These opinions may not be
relied upon by the addressees, or any of them, for any other purpose or relied
upon by any person other than such persons for any purpose without our prior
written consent.
Very truly yours,
XXXXX, XXXXXX & XXXXXX LLP
EXHIBIT D
XXXX OF SALE AND ASSUMPTION AGREEMENT
This XXXX OF SALE AND ASSUMPTION AGREEMENT (this "Xxxx of Sale") is
made as of the 31st day of July, by HELICOPTER SERVICES, INC., a California
corporation ("Seller"), Xxxxx X. Xxxxx, J. Xxxxxx Xxxxxxxxx, Xxx X. Xxxx, Xxxxx
X. Xxxx and Xxxxxxx X. Xxxxx, the owners of the outstanding shares of Seller
(collectively, the "Shareholders"), and AIR METHODS CORPORATION, a Delaware
corporation ("Buyer").
R E C I T A L S:
WHEREAS, Seller, the Shareholders and Buyer are parties to that certain
Asset Purchase Agreement dated July 11, 1997 (the "Asset Purchase Agreement"),
pursuant to which Seller has agreed to sell, transfer and convey substantially
all of the Purchased Assets used in its Business to Buyer and Buyer has agreed
to assume the Assumed Obligations (as defined in Section 1 and Section 2.1,
respectively, of the Asset Purchase Agreement); and
WHEREAS, Seller and Buyer desire to evidence the consummation of the
sale of the Purchased Assets, and the assignment of the Assigned Contracts (as
defined in Section 1.2 of the Asset Purchase Agreement) and Buyer's assumption
of the Assumed Obligations.
NOW, THEREFORE, BE IT KNOWN THAT:
1. For the consideration set forth in Section 3 of the Asset Purchase
Agreement, receipt of which is hereby acknowledged by Seller, Seller does hereby
sell, transfer and assign to Buyer, free and clear of any and all Liens and
Encumbrances (as defined in Section 4.2(a) of the Asset Purchase Agreement), all
of Seller's right, title and interest in and to the Purchased Assets. The
Seller's representations and warranties regarding the Purchased Assets,
contained in Section 4 of the Asset Purchase Agreement, are incorporated herein
by this reference.
2. Seller hereby assigns and transfers to Buyer each of the Assigned
Contracts and, subject to the accuracy of the Seller's representations and
warranties pertaining to the Assumed Obligations and the Shareholders'
indemnification obligations under Section 13 of the Asset Purchase Agreement,
Buyer hereby agrees to assume and perform all of the Assumed Obligations,
including the obligations arising on and after the date hereof under the
Assigned Contracts. The Seller's representations and warranties with respect to
the Assumed Obligations contained in the Asset Purchase Agreement are
incorporated herein by this reference and made a part of this Xxxx of Sale.
3. Seller and Buyer hereby agree to execute and deliver such other
instruments and documents as the other party may from time to time hereafter
reasonably request to further evidence the sale, transfer and conveyance to
Buyer of the Purchased Assets and the assignment of Assigned Contracts, or the
assumption by Buyer of the Assumed Obligations, respectively, as provided for in
the Asset Purchase Agreement.
4. Unless otherwise indicated herein, capitalized terms used in this
Xxxx of Sale shall have the meanings ascribed to them in the Asset Purchase
Agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this Xxxx of
Sale to be executed by its duly authorized representative as of the day and year
set forth above.
BUYER: SELLER:
AIR METHODS CORPORATION HELICOPTER SERVICES, INC.
By: By:
------------------------------- -------------------------------------
Title:---------------------------- Title:----------------------------------
SHAREHOLDERS:
------------------------------------------
XXXXX X. XXXXX
------------------------------------------
J. XXXXXX XXXXXXXXX
------------------------------------------
XXX X. XXXX
------------------------------------------
XXXXX X. XXXX
------------------------------------------
XXXXXXX X. XXXXX
-2-
EXHIBIT E
Mailing Addresses of the Parties
Notices to Sellers shall be mailed to:
With a copy to:
Xxx Xxxxxxx
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Notice to Buyer shall be mailed to:
Air Methods Corporation
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Chairman of the Board
SCHEDULE 1.1
Equipment, Furniture and Fixtures
See attached list.
WESTERN HELICOPTER, INC.
TANGIBLE ASSETS
Depreciable Assets - See attached list
Additional assets $48,541 Above Ground 6000 gal Storage Tank
2,411 Engine & Clutch Vehicle #616
4,090 Main Rotor Static Balance Kit
795 Gauge #430
Other Small tools and equipment
HELICOPTER SERVICES, INC., D/B/A WESTERN
DESCRIPTION DATE ACQUIRED NET BOOK VALUE
Aircraft Accessories 08/12/94 $ 4,799
----------------------------------------------------------- ---------------------- ------------------------
TOTAL AIRCRAFT ACCESSORIES 4,799
72 Chevy Truck 08/12/94 660
20 ft. Trailer 08/12/94 165
'76 Fuel Truck 08/12/94 330
'75 Chevy Fuel Truck 08/12/94 660
'54 International Fuel Truck 08/12/94 10,027
Helicopter Trailer 08/12/94 165
1988 GMC - #609A 02/07/95 6,156
1967 Fuel Truck - #607 02/24/95 6,414
1967 Ford Fuel Truck 03/03/95 7,858
Unit #616 Piping 10/25/95 1,147
----------------------------------------------------------- ---------------------- ------------------------
TOTAL VEHICLES $33,582
Repeller Fuel Tanks 08/12/94 $14,994
Buildings/Improve 08/12/94 341,436
Skylight 10/13/94 3,260
Building Sign 10/12/94 396
Building Paint 10/03/94 10,988
Lunchroom Improve 10/19/94 703
Hangar Improvement 09/15/94 1,712
Sliding Door 03/17/95 2,960
Parts Room A/C 07/17/95 2,012
Hangar Insulation 09/29/95 3,677
Roof Insulation 09/08/95 11,378
----------------------------------------------------------- ---------------------- ------------------------
TOTAL BUILDING 393,516
Radios 2,399
----------------------------------------------------------- ---------------------- ------------------------
TOTAL RADIOS 2,399
-2-
DESCRIPTION DATE ACQUIRED NET BOOK VALUE
IBM System 36 08/12/94 $4,296
Printers 08/12/94 53
Xerox Copier 08/12/94 271
Aviation Software 09/16/94 2,904
Mint Computer Upgrade 10/14/94 1,369
4-Presario 850 486DX 08/12/94 1,814
Calm Maintenance PRS 06/11/96 4,305
PC Starion 930 06/18/96 1,646
PC Starion 919 06/18/96 1,430
----------------------------------------------------------- ---------------------- ------------------------
TOTAL DATA PROCESSING $18,088
Shop Equipment 08/12/94 $26,391
Purse Kit 08/12/94 535
Sleeve Holder 08/12/94 320
Heli Tie Wrench 08/12/94 867
Mock Engine 08/12/94 301
Clutch BRG T/3 10/07/94 333
Turnback Asst 10/07/94 535
Turnback Asst 10/12/94 392
Xxxxxxxx Test Kit 10/26/94 1,047
TS/V Wrench 12/24/95 831
Probe Photocell #2359 12/13/95 329
3 H.P. Indus Motor 10/10/95 000
Xxxxx XX S/V 10/16/95 493
Parabolic Flow ADPT 07/27/95 336
Biotek DPWII Pre Mtr 07/27/95 532
Xxxx 222 Bracket 06/05/95 321
Xxxx 412 Bracket 06/05/95 414
Retainer #3039 06/04/95 000
Xxxx Xxx #0000 06/04/95 000
Xxxxxx #0000 06/04/95 334
B/L and #3106 06/04/95 444
Adapter #3003 06/04/95 632
Tool Set #3125-113 06/04/95 783
BRG Supp #3125 06/04/95 267
Plate #3309-101 05/24/95 281
Tool Set #3125-109 05/24/95 000
Xxxxxx #0000 05/24/95 354
B/L Tool #3206-101 05/24/95 559
-3-
DESCRIPTION DATE ACQUIRED NET BOOK VALUE
Restrain #3258-101 05/24/95 614
BRG REN #3366-101 05/24/95 314
Storage Cabinet 05/25/95 356
101 Tool #3008 04/25/95 528
Tool - #3012 04/25/95 396
Tool - #3-24 04/25/95 517
Tool - #3026 04/25/95 656
Tool - #3038-101 04/25/95 1,580
Tool #5202-101 04/25/95 396
Tool #5203 - 101 04/25/95 996
Tool #5252-101 04/25/95 960
Tool #1103033 04/10/95 475
Tool Set 412-006 04/10/95 7,259
Backlash Tool #412-24 04/10/95 3,405
Clamp Assy 412-240 04/10/95 2,111
Thrust Plate #412-24 04/10/95 367
Filler Hose Crt Refl 01/08/96 482
29313100 RADS - AT 04/08/96 1,693
29328201 DAV 04/08/96 1,693
29314102 CADV 04/08/96 1,693
Hydraulic Xxxx 12/17/96 1,134
Hydraulic Xxxx 12/17/96 1,134
Hydraulic Xxxx 6 Ton 12/19/96 1,052
----------------------------------------------------------- ---------------------- ------------------------
TOTAL SHOP EQUIPMENT $ 69,210
Office Furniture 08/12/96 $ 3,359
----------------------------------------------------------- ---------------------- ------------------------
TOTAL OFFICE FURNITURE $ 3,359
Spare Meter 03/04/96 $ 937
----------------------------------------------------------- ---------------------- ------------------------
TOTAL SPARE METER $ 937
NET TOTALS: $525,890
-4-
SCHEDULE 1.2
Assigned Contracts
1. Service Center Agreement with Xxxxxxxxx Aircraft Corp., dated
April 14, 1997.
2. Domestic Service Center Agreement with XxXxxxxxx Xxxxxxx Helicopter
Systems, dated March 20, 1995.
3. Data Base Services Agreement with Inventory Locator Service, Inc., dated
February 17, 1995.
4. Service Rental Agreement with Prudential Overall Supply, dated
September 26, 1996.
5. Advertising Contract with Pacific Xxxx, dated November 21, 1996.
6. Xxxxxxx Assignment of Prime Lease with Xxxxxx X. Xxxxxxx, dated April 17,
1995.
7. Lease Agreement with the County of San Bernardino, dated March 10, 1997.
8. Postage Meter Lease with Pitney Xxxxx.
9. Mail Machine Lease with Pitney Xxxxx.
10. Oral lease agreement with California Tool & Welding for rental of gas
tanks.
11. Chevron Airport Dealer Supply Contract with Chevron U.S.A. Products
Company, dated October 22, 1994.
12. Customer Service Facility Agreement with Xxxx Helicopter Textron, Inc.,
dated January 1, 1994.
13. Lease Agreement with the City of Rialto, dated April 7, 1970 (of which the
lessee's interest has been assigned to the Company).
14. Temporary Engine Lease Agreement with UNC Airwork Corporation, dated
April 18, 1997.
SCHEDULE 1.3
Intangible Assets
The Company's trade name, "Western Helicopter Services" is not registered with
the United States Patent and Trademark Office.
See attached list.
Intangible Personal Property
Accounting Manager's PC S/N KA545FHBME
MS Windows 95 17395-OEM-000 1956-50688
Works for Windows Pre-loaded
MS Encarta Pre-loaded
MS Bookshelf Pre-loaded
MS Golf Pre-loaded
MS Home CD Sampler Pre-loaded
MS Explorapedia Pre-loaded
Quicken Special Edition Pre-loaded
Fax Talk Pre-loaded
Prodigy Pre-loaded
AOL Pre-loaded
Compuserve Pre-loaded
MS Publisher Pre-loaded
PrintMaster Gold Pre-loaded
BosaNova System 36 Emulation B601861
** MS Office 95 Standard
** Calendar Works
Director of Maintenance's PC
MS Windows 95 16395-OEM-001596-43090
Works for Windows Pre-loaded
MS Encarta Pre-loaded
MS Bookshelf Pre-loaded
MS Golf Pre-loaded
MS Home CD Sampler Pre-loaded
MS Explorapedia Pre-loaded
Quicken Special Edition Pre-loaded
Bosa Nova - System 36 Emulation B044961
Fax Talk (Telecommander 2500XL)
Prodigy Pre-loaded
AOL Pre-loaded
Compuserve Pre-loaded
** ImaginNation Network
C.A.L.M. Contract
Avantext A.D.s Subscription
Form Tool Gold T421764 (PERSONAL)
** MS Office 95 Standard
PC Anywhere 32.7.5 See License Agree
MMIR See License Agree
Norton Anti virus See License Agree
(PERSONAL)
** Address Book
** Calendar Works
Print Shop Deluxe Pre-loaded
Xxxx CO-OP Supplier Provided
PC Mail Box Xxxx Supplier Provided
** RADS Com
** Performance Now
** Message Flash
Parts Manager PC S/N A420HHE35130
MS Windows 3.1 DOS 6.2
MS Word 2.0 Pre-loaded
MS Money 2.0 Pre-loaded
MS Publisher Pre-loaded
** QuickLink II Fax
** WinFax Pro 3
Airnet (Aviail Supplier Provided)
** WordPerfect 5.1
** Excel
ILS Contract dated 02/17/95 BosaNova System 36 Emulation B044959 BosaNova
PC File Transfer
Receptionist's PC S/N A420HHE30320
MS Windows 3.1 DOS 6.2 512971966
Tabworks Pre-loaded
AOL Pre-loaded
MS Money 2.0 Pre-loaded
WINFAX Lite Pre-loaded
MS Works 3.0 Pre-loaded
MS Publisher 2.0 Pre-loaded
Compuserve Pre-loaded
** Message Glash ** MS Office Pro 4.3 ** Form Tool Gold ** WINFAX Pro 3.0
Chief Pilot's PC S/N A420HHE35173
Windows 3.1 DOS 6.2 509941088
Tabworks Pre-loaded
AOL Pre-loaded
MS Money 2.0 Pre-loaded
WINFAX Lite Pre-loaded
MS Works 3.0 Pre-loaded
MS Publisher 2.0 Pre-loaded
Compuserve Pre-loaded
** Delorme Street Atlas
** Form Tool Gold
MS Word 2.0 Pre-loaded
** GTE Duats
** Excel 5.0
Flight Operations PC S/N A420HHE30335
Windows 3.1 DOS 6.2 509904324
Tabworks Pre-loaded
AOL Pre-loaded
MS Money 2.0 Pre-loaded
WINFAX Lite Pre-loaded
MS Works 3.0 Pre-loaded
MS Publisher Pre-loaded
Compuserve Pre-loaded
** Delorme Street Atlas
** Formtool Gold
** MS Office
** Quatro Pro 6.0
WESTERN HELICOPTER, INC.
Intangible Personal Property
President's PC LapTop
**Tabworks
**MS Powerpoint
**MS Excel
**MS Word
**MS Works
**Descriptions Now
**Policies Now
**Performance Now
**Formtool - DOS
**Calendar Works
**Data Plus
**PC Anywhere
**Procomm - DOS
**Snap Page
**Address Book
**Print Shop Deluxe
**Way Point Manager
**PC Mail
IBM System 36
Aviation Systems and Programs (ASAP) See Contract
IBM is no longer pursuing the copyright of their System 36
**Cannot locate license information at this time
SCHEDULE 1.5
Excluded Claims
An unrecorded claim for overpaid sales tax was filed with the California State
Board of Equalization on April 17, 1997 in the amount of $29,999.
SCHEDULE 1.7
Inventory
Helicopter engine S/N LE47002AE, Model LTS 101-750-C-1 (this engine is not
reflected in the financial statements of the Company as of December 31, 1996
because it was categorized as an "item-in-transit" on such date).
SCHEDULE 1.9
Excluded Assets
See attached.
Xxx Xxxx'x personal items in his office at 0000 Xxxxx Xxx., Xxxxxxx, XX (Mercy
Air's administrative office)
1. photographs
2. personal paper
3. calculator
4. clock radio
Xxxxx Xxxx'x personal items in his office at 0000 Xxxxx Xxx., Xxxxxxx, XX (Mercy
Air's administrative office)
1. sofa
2. desk and contents
3. credenza and contents
4. 4 drawer file cabinet and its contents
5. 2 drawer file cabinet and its contents
6. calculator
7. chair
8. radio
9. 13 file boxes and contents
10. power strip
11. pictures
12. clock
Xxxxx Xxxxxxxxx'x personal items in his office at 0000 Xxxxx Xxx., Xxxxxxx, XX
(Mercy Air's administrative office)
1. pictures and plaques
2. folding computer table
3. Borland's Quattro Pro program in the Gateway Colorbook that Xxxxx uses
4. various binders and paperwork
5. picture of two (2) Xxxx 222 helicopters flying over Hawaii, and it is
located in the billing office
1
XXXX XXXXX'X PERSONAL INVENTORY
AT
WESTERN HELICOPTERS AND MERCY AIR
1. Pictures and Plaque
2. Tools and Tool Xxx
0. 35mm Camera, Case & Lens
4. Miscellaneous Files
5. Miscellaneous Office Decorations, Small Equipment, Calculator, Spell
Checker, etc.
2
SCHEDULE 2.1
Scheduled Liabilities
None.
SCHEDULE 2.2
Excluded Payables
None.
SCHEDULE 4.2
Exceptions to Title
None.
SCHEDULE 4.5
Conflicts
1. Consent will be required from Chevron U.S.A. Products Company pursuant
to Section 9 of that certain Chevron Airport Dealer Supply Contract,
dated October 22, 1994.
2. Consent will be required from Xxxx Helicopter Textron, Inc. pursuant to
Section 6 of that certain Customer Service Facility Agreement, dated
January 1, 1994.
3. Pursuant to Section 8 of the Lease Agreement with the City of Rialto,
dated April 7, 1970 (of which the lessee's interest has been assigned
to the Company), Air Methods must expressly assume the Company's
obligations thereunder, and the Company must remain primarily liable on
the lease.
Also, consent will be required from the Rialto City Council for
extension of the Lease (see Item 11 of SCHEDULE 4.13 and footnote
thereto).
4. Consent will be required from Xxxxxxxxx Aircraft Corp. pursuant to
Section 6 of that certain Service Center Agreement, dated April 14,
1997.
5. Consent will be required from XxXxxxxxx Xxxxxxx Helicopter Systems
pursuant to Article 16 of that certain Domestic Service Center
Agreement, dated March 20, 1995.
6. Consent will be required from the Federal Aviation Administration for
the transfer of the Company's Repair Station to Air Methods.
7. Consent will be required from Aviation Systems and Programs (ASAP) for
the transfer of the Software License and Support Agreement between ASAP
and the Company dated September 14, 1994.
SCHEDULE 4.6
Financial Statements
None.
SCHEDULE 4.7
Undisclosed Liabilities
None.
SCHEDULE 4.8
Absence of Certain Changes
None.
SCHEDULE 4.9
Condition of Tangible Assets
None.
SCHEDULE 4.10
Intangible Property Rights
The Company is unable to verify whether licenses are in place for certain of its
intangible property, as indicated on SCHEDULE 1.3 and the attachment thereto.
SCHEDULE 4.11
Real Property
The Company owns several buildings at 1640, 1650 and 0000 Xxxx Xxx, Xxxxxx,
Xxxxxxxxxx. The Company uses some of the buildings for its administrative and
maintenance operations. The space not being used by the Company is being leased
out to various tenants.
SCHEDULE 4.13
Material Seller Contracts
1. Xxxxxxx Assignment of Prime Lease dated April 17, 1995.
2. Chevron Airport Dealer Supply Contract, dated October 22, 1994.
3. Customer Service Facility Agreement with Xxxx Helicopter Textron, Inc,
dated January 1, 1994.
4. Lease Agreement with the County of San Bernardino, dated March 10,
1997.
5. Oral lease agreement with California Tool & Welding for lease of gas
tanks.
6. Service Center Agreement with Xxxxxxxxx Aircraft Corp., dated
April 14, 1997.
7. Data Base Services Agreement with Inventory Locator Service, Inc.,
dated February 17, 1995.
8. Service Rental Agreement with Prudential Overall Supply, dated
September 26, 1996.
9. Domestic Service Center Agreement with XxXxxxxxx Xxxxxxx Helicopter
Systems, dated March 20, 1995.
10. Advertising Contract with Pacific Xxxx, dated November 21, 1996.
11. Lease Agreement with the City of Rialto, dated April 7, 1970 (of which
the lessee's interest has been assigned to the Company)./1/
See attached list of Government licenses, franchises and permits.
--------
1 The Company has notified the Airport Manager of the City of Rialto of
its intent to exercise the third 5-yr. renewal option under the Lease
Agreement. Extension of the Lease Agreement will require approval of
the Rialto City Council. The Airport Manager will submit the request to
the City Council at its next scheduled meeting, in approximately two
weeks.
Government licenses, franchises and permits Exp. Date
Federal Government
IRS EIN #33.0624247
FAA Repair Station Certificate #W6HR554Y
State of California
Environmental Protection Agency ID #CAL 000125594 Franchise Tax Board EIN
#000-0000-0 SCAQMD (South Coast Air Quality ManagemenSet A tanks & nozzles
ID #102595 District)
Spray Booth ID #D 85117 07-16-97
Board of Equalization Sales Tax #SREH 99-546780
Board of Equalization Fuel Tax #MJHQ 33-000563
Board of Equalization Underground Tanks #TK HQ 44-036394
Dept. of Motor Vehicles Camer #CA 7104 License #115024 04-30-98
Cal OSHA Air Pressure Tank #A10192SF 00-00-00
Xxxxxx xx Xxx Xxxxxxxxxx
Dept. of Weights & Measures Fuel Meter Certifications #04389 07-01-97
Fire Department Underground Storage Tank #8602260445 05-31-01
8602250094 05-31-98
Haz Mat Handler 0000000000 05-31-98
Haz Waste Generator 8611250315 05-31-98
City of Rialto
Business License 113119 12-31-97
Fire Department Haz Mat #UFC ART 24 A.B.Q. 07-06-97
SCHEDULE 4.14
Compliance with Laws; Licenses and Permits
None.
SCHEDULE 4.15
Litigation
The Company is a defendant in XXXXXXX X. XXXXXXX, ET. AL., a personal injury and
property damage case filed June 20, 1996 in San Bernardino Xxxxxxxx Xxxxx, Xxxx
# XXX 00000.
SCHEDULE 4.16
Environmental Non-Compliance
(i) None.
(ii) The State of California has notified the Company that new underground
fuel tanks will be required by December 31, 1998.
SCHEDULE 4.17
Taxes and Tax Returns
An unrecorded claim for overpaid sales tax was filed with the California State
Board of Equalization on April 17, 1997 in the amount of $29,999.
SCHEDULE 4.18
Employment and ERISA Matters
(a) None.
(b) None.
(c) The Company's employees are covered under Mercy Air Service, Inc.'s
employment plans.
(d) None.
SCHEDULE 4.19
Insurance Policies
The Company is a named insured under the appropriate insurance policies of Mercy
Air Service, Inc.
SCHEDULE 6.2
Permitted Dividends.
None.
SCHEDULE 11.1
Closing Deliveries of Seller
1. Xxxx of Sale and Assumption Agreement
2. Certificate of Good Standing
3. Legal Opinion
4. Third-Party Consents
5. "Bring-Down" Certificate required by Section 9.8 of the Asset Purchase
Agreement
SCHEDULE 11.2
Closing Deliveries of Buyer
1. Purchase Price
2. Xxxx of Sale and Assumption Agreement
3. Good Standing Certificate (Delaware)
4. Good Standing Certificate (California)
5. Legal Opinion
6. "Bring-Down" Certificate required by Section 10.6 of the Asset
Purchase Agreement
SCHEDULE 13.2
Proportionate Share of Each Shareholder
SHAREHOLDER PROPORTIONATE SHARE
Xxxxx X. Xxxxx 20%
J. Xxxxxx Xxxxxxxxx 20%
Xxx X. Xxxx 20%
Xxxxx X. Xxxx 20%
Xxxxxxx X. Xxxxx 20%
