STOCK PURCHASE AGREEMENT
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THIS IS AN AGREEMENT dated as of November 1, 2003 by and between Tiger
Aircraft, LLC, a West Virginia limited liability company ("Tiger") and Aviation
General, Inc., a Delaware corporation ("AGI)
BACKGROUND
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A. AGI proposes to issue and sell to Tiger, which proposes to buy from AGI,
that number of shares of the common stock (the "Stock") of AGI which, after
giving effect to such sale, will result in Tiger's owning 80% of the issued and
outstanding shares of AGI. The shares of Common Stock to be issued and sold
hereunder, as more fully described below, are referred to as the "Purchased
Shares".
B. The proposed sale is intended to provide AGI with capital to be
contributed to its wholly owned subsidiary, Commander Aircraft, Inc., a Delaware
corporation ("Commander"), and is then to be used by Commander to funds its
First Amended Chapter 11 Plan (the "Plan") as filed in certain proceedings (the
"Chapter Proceedings") pending in the United States Bankruptcy Court for the
District of Delaware (the "Court") captioned in Re Commander Aircraft, Inc.,
Case No. 02-13804.
C. Pending confirmation of the Plan, and closing of the transactions
contemplated hereunder, Tiger has agreed to provide to Commander, as debtor in
possession, certain financing (the "DIP Financing"). As of the date hereof, the
Court has approved $300,000 in DIP Financing, all of which has heretofore been
advanced in accordance with the terms of the DIP Financing heretofore approved
by the Court; and authorized certain Additional DIP Financing as hereinafter
described.
D. As a condition of the sale and issuance of Purchased Shares, Tiger has
agreed (i) to make certain additional DIP Financing available, subject to
approval of the Court; and (ii) to revise certain of the terms of the existing
DIP Financing, all subject to necessary court approvals.
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration the mutual receipt and sufficiency of which is
hereby acknowledged by the parties hereto, the parties hereto, intending to be
legally bound, agree as follows:
TERMS
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1. Purchase And Sale Of Stock.
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(a) Upon the basis of the representations and warranties contained
herein and subject to the terms and conditions of this Agreement, at the time of
"Closing" (as hereinafter defined) AGI shall issue and sell to Tiger or its
"Affiliated Nominee" which, for purposes of this Agreement, means an entity that
is under not less than thirty percent (30%) common ownership with Tiger and
which assumes all of Tiger's rights and obligations under this Agreement, and
Tiger or its Affiliated Nominee shall purchase from AGI, that number of shares
of Common Stock which, after giving effect thereto, will equal eighty percent
(80%) of the issued and outstanding shares of Common Stock of AGI (the
"Purchased Shares"), as more fully set forth herein.
(b) The purchase price ("Purchase Price") for the Purchased Shares is
Two Million Eight Hundred Thousand Dollars ($2,800,000.00) to be paid as
follows:
(1) Five Hundred Thousand Dollars ($500,000.00) to be paid on
demand at any time after the Closing, which deferred payment shall be evidenced
by a note (the "Purchase Money Note") to be delivered at Closing which shall be
substantially in the form of Exhibit 1 attached hereto. In the event that Tiger
shall designate an Affiliated Nominee as purchaser of the Purchased Shares at
Closing, both Tiger and its Affiliated Nominee purchaser shall be obligated on
the Purchase Money Note; and
(2) Two Million Three Hundred Thousand Dollars ($2,300,000.00) by
wire transfer of immediately available funds at Closing.
2. Closing. Subject to the terms and conditions of this Agreement, the
closing of the purchase and sale of the Purchased Shares (the "Closing") shall
be at 10:00 AM (local time) at the offices of Xxxxxxx and Associates, Xxx Xxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000, on such date which is the
Effective Date (as defined in the Plan, as the Plan shall be modified as
hereinafter set forth) of the Plan (as hereinafter defined). Such time and date
is sometimes hereinafter referred to as the "Closing Date" or "Closing".
3. Procedure At the Closing. At the Closing:
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(a) AGI shall deliver to Tiger or its Affiliated Nominee purchaser
certificates in respect of the Purchased Shares duly executed by the officers of
AGI in accordance with the Certificate of Incorporation and bylaws of AGI, and
one or more warrants to purchase shares as contemplated by Section 4 (d) of this
Agreement.
(b) Tiger and its Affiliated Nominee purchaser (if any) shall deliver
to AGI the Purchase Money Note and the cash portion of the Purchase Price by
wire transfer of immediately available funds to such accounts as shall have been
designated by AGI for such purposes.
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(c) The parties shall also deliver such instruments, agreements and
other documents as are contemplated by this Agreement.
4. Representations and Warranties Of AGI. In order to induce Tiger to enter
into this Agreement and to consummate the transactions contemplated hereunder,
AGI hereby makes the following representations, warranties, covenants and
agreements:
(a) Organization and Existence. AGI is a corporation duly incorporated
and presently existing in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to carry on its business as
now conducted. The nature of the business of AGI and the character of the
properties owned or leased by it, do not require AGI to qualify to do business
as a foreign corporation in any other state. AGI has delivered to Tiger a true
and correct copy of the Articles of Incorporation (duly certified by the
Secretary of State of Delaware) and By-Laws of AGI (certified by its Secretary).
(b) Subsidiaries or Other Entities. AGI has no investments or
ownership interests in any corporations, partnerships, joint ventures or other
business enterprises except Commander and Strategic Jet Services, Inc. ("SJS"),
of which it owns all of the issued and outstanding shares of capital stock of
all classes.
(c) Capitalization. AGI is authorized to issue (i) 20,000,000 shares
of common stock, $0.50 par value, of which 6,859,330 shares are issued and
outstanding at the time of the execution of this Agreement and (ii) 5,000,000
shares of preferred stock, none of which have been issued or are outstanding,
nor has AGI's Board of Directors taken any action to approve the issuance of any
specific shares of preferred stock. All of the issued and outstanding shares of
common stock of AGI have been duly issued, are validly outstanding, are fully
paid and nonassessable; there are no outstanding subscriptions, options,
warrants or rights to receive, purchase or subscribe to, or securities
convertible into or exchangeable for, any issued or unissued shares of the
capital stock of AGI, except as set forth on Exhibit 4(c). AGI has no liability
for dividends declared but unpaid. At the Closing, and except as set forth on
Exhibit 4(c), there will not be outstanding any subscriptions, options,
agreements or other commitments in respect of the issuance, transfer, sale or
encumbrance of any shares of capital stock of the Company, Commander or SJS in
respect of any securities or instruments convertible into such shares.
(d) Issuance of Purchased Shares. At the time of Closing, there will
be no impediments to the sale and issuance of the Purchased Shares to Tiger or
its Affiliated Nominee. Upon delivery of the Purchased Shares to Tiger or its
Affiliated Nominee, the Purchased Shares (i) shall constitute eighty percent
(80%) of the issued and outstanding shares of capital stock of AGI, and (ii)
shall be duly authorized by all corporate and shareholder action, validly
issued, fully paid and non-assessable. At the Closing there shall also be issued
to Tiger warrants (the "Warrants") to purchase (at a purchase price of $.01 per
share, subject to adjustments as set forth in the warrant) four (4) shares for
each stock option currently outstanding which Warrants shall be exercisable upon
exercise of such stock options at the rate of four (4) Warrants for each share
of AGI common stock issued upon the exercise of any option. The form of the
Warrants to be issued to Tiger or its Affiliated Nominee purchaser at the
Closing is annexed hereto and incorporated herein as Exhibit 4 (d).
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(e) Financial Condition. AGI has furnished to Tiger copies of the
following financial statements of AGI, all of which are true and complete in all
material respects and have been prepared in accordance with generally accepted
accounting principles consistently applied (except to the extent otherwise
reported):
(1) A balance sheet ("Balance Sheet") of AGI as of December 31,
2002 (the "Balance Sheet Date").
(2) Statements of income and retained earnings of AGI for the
twelve (12) months ended December 31, 2002. (Collectively, the Balance Sheet and
statements of income and retained earnings are hereinafter referred to as the
"Financial Statements").
(3) The Financial Statements are complete and correct and in
accordance with the books of account and records of AGI and present fairly the
financial position of AGI's business and the income, stockholders' equity and
cash flow of AGI's business at the dates and for the periods indicated.
(f) Liabilities. As of the Closing, and after consummation of the
Plan, neither AGI nor its assets or properties will be subject to any
liabilities or obligations (accrued, absolute, contingent or otherwise) except
as set forth on the Balance Sheet or described in the notes to the Financial
Statements or set forth in Schedule 4F hereto, and AGI will not be in material
default in respect of any material term or condition of any material
indebtedness or liability.
(g) Tax Matters. All taxes, including, without limitation, withholding
and social security taxes due with respect to AGI's employee, federal and state
income tax liabilities, corporate franchise taxes, sales, use, excise and ad
valorem taxes, due, payable or accrued by AGI on or before the Closing Date have
or will be paid (which shall include payment by Commander pursuant to the plan).
AGI has filed all reports required to be filed by it with all such taxing
authorities.
(h) Litigation. AGI has not received any notices of material default
and is not in material default of (i) any order, writ, injunction or decree of
any court, or any federal, state, municipal or other governmental department,
commission, board, bureau or instrumentality, or (ii) any agreement or
obligation to which AGI is a party or by which AGI is bound or to which AGI or
any of the property of AGI's may be subject, except as set forth on Exhibit
4(h). There are no material outstanding claims, actions, suits, proceedings or
investigations pending or, to the knowledge of AGI, threatened against AGI or
which affect AGI or any of its assets or property, at law or in equity before or
by any federal, state, municipal court or other governmental department,
authority, commission, board, bureau, agency or instrumentality, except as set
forth on Exhibit 4(h).
(i) No Broker's or Agent's Fees. No agent, broker, finder,
representative or other persons or entity acting pursuant to authority of AGI
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will be entitled to any commissions or finder's fee in connection with the
origination, negotiation, execution or performance of the transactions
contemplated under this Agreement.
(j) No Material or Adverse Change. Since the Balance Sheet Date, there
has not been (i) any material adverse change in the financial condition, assets,
liabilities, business or results of operations of AGI, except with respect to
the bankruptcy of Commander and the cessation of operations of SJS; (ii) to the
knowledge of AGI, any threatened or prospective event or condition of any
character whatsoever which could materially and adversely affect the business,
financial condition or results of operations of AGI; (iii) any sale or other
disposition of any of AGI's assets other than in the ordinary course of
business; or (iv) any damage, destruction or loss (whether or not insured)
materially and adversely affecting the property, business or prospects of AGI.
(k) Due Authorization and Absence of Breach. This Agreement and all
other agreements of AGI contemplated hereunder constitute valid and binding
obligations of AGI, enforceable in accordance with their respective terms.
Subject to obtaining any necessary shareholder approval to the amendment of the
Company's certificate of incorporation to increase the number of authorized
shares of the Company, at the Closing, neither the execution and delivery of
this Agreement (or any agreement contemplated hereunder) nor the consummation of
the transactions contemplated hereby will, as of Closing: (i) conflict with or
violate any decree, writ, injunction or order of any court or administrative or
other governmental body which is applicable to, binding upon or enforceable
against AGI or AGI; or (iii) result in any breach of or default (or give rise to
any right of termination, cancellation or acceleration) under any mortgage,
contract, agreement, indenture, will, trust or other instrument which is either
binding upon or enforceable against AGI or AGI or its assets.
(l) Authority to Contract. Subject to AGI receiving shareholder
approval for the amendment of its Certificate of Incorporation to increase the
number of authorized shares of capital stock as aforesaid, AGI has the full
power, right and authority to enter into and perform consummation of the
transactions contemplated by this Agreement will not result in the breach or
termination of any provision of or constitute a default under any lease,
indenture, mortgage, deed of trust or other agreement or instrument of any
order, decree, statute or restriction to which AGI is a party or by which AGI is
bound or to which the outstanding shares of stock of AGI or any of the
properties of AGI is subject.
(m) Accuracy of the Information Furnished by AGI. No representation,
statement or information made or furnished by AGI to Tiger, including those
contained in this Agreement and the various exhibits attached hereto and the
other information and statements referred to herein, contains or shall contain
any untrue statement of any material fact.
5. Representations and Warranties of AGI re Commander. As a further
inducement to Tiger to enter into this Agreement and to consummate the
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transactions contemplated hereunder, AGI hereby makes the following
representations, warranties with respect to Commander.
(a) Organization and Existence. Commander is a corporation duly
incorporated and presently existing in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority to carry on its
business as now conducted. Commander is qualified to do business in the state
of Oklahoma which, by the nature of the business of Commander and the character
of the properties owned or leased by it, is the only state in which Commander is
required to qualify to do business as a foreign corporation. AGI has delivered
to Tiger a true and correct copy of the Articles of Incorporation (duly
certified by the Secretary of State of Delaware) and By-Laws of Commander
(certified by its Secretary).
(b) Subsidiaries or Other Entities. Commander has no investments or
ownership interests in any corporations, partnerships, joint ventures or other
business enterprises.
(c) Capitalization. The authorized capital of Commander consists of
1,000 shares of common stock of which 1,000 shares are currently issued and
outstanding. On the Effective Date, all of the currently issued and outstanding
shares of stock of Commander shall be cancelled pursuant to the Plan, and AGI
shall, pursuant to the Plan, purchase new shares of common stock of Commander,
constituting 100% thereof, pursuant to the terms et forth therein. At the
Closing there will not be outstanding any subscriptions, options, agreements or
other commitments in respect of the issuance or sale of any shares of capital
stock of Commander or in respect of any securities or instruments convertible
into such shares.
(d) Financial Condition.
(1) AGI has furnished to Tiger copies of the bankruptcy
schedules, Plan, claims register, Disclosure Statement (collectively, the
"Bankruptcy Documents") and monthly operating reports of Commander. The
Bankruptcy Documents are true, correct and complete in all material respects.
(2) Subject to the Bankruptcy Court's allowance or disallowance
of claims, the foregoing financial documents are complete and correct and in
accordance with the books of account and records of Commander and present fairly
the financial position of Commander's business and the income, stockholders'
equity and cash flow of Commander's business at the dates and for the periods
indicated.
(e) Assets. Commander has good and marketable title to, and is in
possession of, all of its assets, equipment, vehicles, properties and rights,
including all properties, assets, vehicles and equipment as shown on the Balance
Sheet, free and clear of all liabilities, mortgages, liens, pledges, security
interests, restrictions, conditional sales agreements, title retention
agreements, charges or encumbrances except as shown on the bankruptcy documents.
(f) Liabilities. Except as set forth in the Bankruptcy Documents, or
in any other Exhibit, Certificate or Schedule delivered pursuant this Agreement,
neither Commander nor its assets or properties are subject to any liabilities or
obligations (accrued, absolute, contingent or otherwise) except for liabilities
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incurred in the ordinary course of business after February 1, 1999, and
Commander is not in material default in respect of any material term or
condition of any material indebtedness or liability. The transactions
contemplated by this Agreement do not and will not subject Commander or AGI to
any claim or liability for any obligation, debt or contract other than as
specifically disclosed in this Agreement and the Schedules attached hereto. All
required consents of creditors and customers, if any, have been, or by Closing
will be, obtained for performance of this Agreement.
(g) Material Contracts. Attached hereto as Schedule 5(g) is a list and
brief description, as of the date of this Agreement, of certain leases,
contracts, commitments, agreements and other documents to which Commander is a
party or by which it is bound and which is related to the operation of its
business. Except for contracts and documents listed in Schedule 5(g), Commander
is not a party to or bound by any written or oral (I) contracts not made in the
ordinary course of business; (ii) employment contracts, other than those
terminable at the will of Commander; (iii) contracts with any labor union or
association; (iv) bonus, pension, profit sharing, retirement, hospitalization,
insurance or other plan providing employee benefits; (v) leases with respect to
any property, real or personal, whether as lessor or lessee; (vi) continuing
contracts for the future purchase of materials, supplies or equipment in excess
of the requirements of its business now booked; (vii) contracts or commitment
for capital expenditures; (viii) contracts continuing over a period of more than
six (6) months from its date; or (ix) material contracts necessary to conduct
the operations and business of Commander. A true copy of each contract,
commitment and agreement listed on Schedule 5(g) will be furnished to Tiger
prior to Closing.
(h) Employees - Labor Matters. Attached hereto as Schedule 5(h) is a
complete list of all employees of Commander whose duties are related to the
operation of the business of Commander. AGI warrants there exists no pending or
threatened actions by any employees alleging sex, age, race, or other
discriminatory practices, no current effort to organize these employees into
collective bargaining units, and no collective bargaining agreement is now in
effect. There are no contracts, written or oral, between Commander and any of
its employees except as specifically disclosed in Schedule 5(h).
(i) Insurance. Commander maintains in effect insurance covering its
assets and businesses and any liabilities relating thereto in an amount believed
adequate by AGI, and such insurance coverage shall be maintained by Commander
through the Closing Date. Between the date hereof and the Closing date, AGI
shall cause Commander to furnish to Tiger such information as Tiger shall
reasonably request regarding Commander's insurance. Except as set forth in
Schedule 5(i) attached hereto, there are no pending material property damage or
personal injury claims against Commander or any of its assets.
(j) Licenses and Permits. Commander possesses all licenses and other
required governmental or official approvals, permits or authorizations, if any,
the failure to possess which would have no material adverse effect on the
businesses, financial condition or results of operations of Commander including,
without limitation, all common carrier rights, certificates of public need,
waste material transportation permits, trademarks and trade names necessary to
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carry on its business as now being conducted, without known conflict with valid
licenses, permits, trademarks and trade names of others. All such licenses and
permits are in full force and effect, and no violations are or have been
recorded in respect to any thereof, and no proceeding is pending, or to the
knowledge of AGI threatened, to revoke, suspend or otherwise limit such licenses
or permits. All licenses or permits will survive the closing of the
transactions contemplated by this Agreement.
(k) Tax Matters. Commander has timely filed all federal, state, sales
tax, franchise tax, and other tax returns which are required to be filed by it
and has paid or has made provision for the payment of all taxes which have or
may become due pursuant to said returns. All taxes, including, without
limitation, withholding and social security taxes due with respect to
Commander's employee, federal and state income tax liabilities, corporate
franchise taxes, sales, use, excise and ad valorem taxes, due, payable or
accrued by Commander on or before the Closing Date have or will be paid pursuant
to the Plan. Commander has filed all reports required to be filed by it with all
such taxing authorities.
(l) Litigation. Except as disclosed in Schedule 5(l) attached hereto,
Commander has not received any notices of material default and is not in
material default of (i) any order, writ, injunction or decree of any court, or
any federal, state, municipal or other governmental department, commission,
board, bureau or instrumentality, or (ii) any agreement or obligation to which
Commander is a party or by which Commander is bound or to which Commander or any
of the property of Commander's may be subject. There are no material
outstanding claims, actions, suits, proceedings or investigations pending or, to
the knowledge of AGI or Commander, threatened against Commander or which affect
Commander or any of its assets or property, at law or in equity before or by any
federal, state, municipal court or other governmental department, authority,
commission, board, bureau, agency or instrumentality.
(m) Compliance with Laws. Commander is in compliance in all material
respects with all federal, state and local laws, ordinances, regulations, rules,
and orders applicable to it or its assets including, without limitation, all
laws and regulations relating to the protection of the environment, the safe
conduct of Commander's business, anti-competitive practices, discrimination,
employment, wage and hour practices and health. Commander has not received
notification of any asserted past or present failure to comply with any of such
laws or regulations.
(n) Environmental Matters. There are no claims, actions, suits,
proceedings or investigations relating to any Environmental Law (as hereinafter
defined) pending or threatened against or affecting Commander. Without limiting
the generality of the foregoing: (i) no release of any hazardous substance,
toxic waste or controlled substance has occurred or is occurring as a result of
the business of Commander; (ii) no hazardous substance, medical waste, toxic
waste or controlled substance is currently present at, or has been previously
generated, stored, treated or disposed of at any landfill by Commander or
through the conduct of the business of Commander except deminimis amounts mixed
with household waste; (iii) no underground or partially underground storage tank
has been or is currently located at any facility of Commander; (iv) the
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business, activities and processes heretofore conducted by Commander comply in
all material respects with all applicable Environmental Laws; (v) no facility of
Commander is listed on any list, registry or other compilation of sites that
require, or potentially require, removal, remedial action or any other response
under any Environmental Law as the result of the presence, release or potential
release of any hazardous substance, medical waste, toxic waste, or controlled
substance; (vi) neither AGI nor Commander has received any notice that Commander
is liable or responsible, or potentially liable or responsible, for any costs of
any removal, remedial action or other response under any Environmental Law as
the result of the presence, release or potential release of any hazardous
substance, medical waste, toxic waste, or controlled substance; and (vii) there
is no pending litigation or administrative proceeding (and neither AGI nor
Commander knows or has reason to know of any potential or threatened litigation
or administrative proceeding) in which it is asserted that Commander has
violated or is not in compliance with any material Environmental Law.
"Environmental Law" means all laws, statutes or acts of the United States of
America, the state of Pennsylvania, or any political subdivision thereof, that
relate to the condition of the air, ground or surface water, land or other parts
of the environment, to the release or potential release of any substance or
radiation into the air, ground or surface water, land or parts of the
environment, or to the manufacturer, processing, distribution, use, treatment,
storage, disposal, transport or other handling of substances that might pollute,
contaminate or be hazardous or toxic if present in the air, ground or surface
water, land, or other parts of the environment.
(o) No Broker's or Agent's Fees. No agent, broker, finder,
representative or other person or entity acting pursuant to authority of
Commander will be entitled to any commission or finder's fee in connection with
the origination, negotiation, execution, or performance of the transactions
contemplated under this Agreement.
(p) No Material or Adverse Change. Since the Petition Date, except as
set forth in the bankruptcy filings, there has not been: (i) any material
adverse change in the financial condition, assets, liabilities, business or
results of operations of Commander; (ii) to the knowledge of AGI or Commander,
any threatened or prospective event or condition of any character whatsoever
which could materially and adversely affect the business, financial condition or
results of operations of Commander; (iii) any sale or other disposition of any
of Commander's material assets without court approval other than in the ordinary
course of business; or (iv) any damage, destruction or loss (whether or not
insured) materially and adversely affecting the property, business or prospects
of Commander.
(q) Due Authorization and Absence of Breach. Neither the execution and
delivery of this Agreement (or any agreement contemplated hereunder) nor,
subject to confirmation of the Plan and court approval, the consummation of the
transactions contemplated hereby will: (i) conflict with or violate any
provision of the Articles of Incorporation or By-Laws of Commander; (ii)
conflict with or violate any decree, writ, injunction or order of any court or
administrative or other governmental body which is applicable to, binding upon
or enforceable against Commander or AGI; or (iii) result in any breach of or
default (or give rise to any right of termination, cancellation or acceleration)
under any mortgage, contract, agreement, indenture, will, trust or other
instrument which is either binding upon or enforceable against AGI or Commander
or its assets; provided that the revisions to the DIP Financing contemplated
hereby is subject to the approval of the Court.
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(r) Authority to Contract. Subject to confirmation of the Plan, the
consummation of the transactions contemplated by this Agreement will not result
in the breach or termination of any provision of or constitute a default under
any lease, indenture, mortgage, deed of trust or other agreement or instrument
or any order, decree, statute or restriction to which AGI or Commander is a
party or by which Commander is bound or to which the outstanding shares of stock
of Commander or any of the properties of Commander is subject.
6. REPRESENTATION AND WARRANTIES OF TIGER. In order to induce AGI to enter
into this agreement and to consummate the transactions contemplated hereunder,
Tiger hereby makes the following representations, warranties, covenants and
agreements:
(a) Organization and Existence. Tiger is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of West Virginia and has all the requisite corporate power and authority
to carry on its business as now conducted and to consummate the transactions
contemplated by this Agreement.
(b) Authority to Contract. The execution, delivery and performance of
this Agreement by Tiger has been duly approved by its Members, and no further
action is necessary on the part of Tiger to consummate the transactions
contemplated by this Agreement, assuming due execution of this Agreement by the
Parties.
(c) No Broker's or Agent's Fees. No agent, broker, finder,
representative or other person or entity acting pursuant to the authority of
Tiger will be entitled to any commission or finder's fee in connection with the
origination, negotiation, execution or performance of the transactions
contemplated under this Agreement.
(d) Accuracy of Information Furnished by Tiger. No representation,
statement or information made or furnished by Tiger to AGI in this Agreement, or
in connection with the transactions contemplated hereby contains, or at Closing
shall contain any untrue statement of any material fact or omits or shall omit
any material fact necessary to make the information contained herein true.
(e) Investment Representation. Tiger is purchasing the Purchased
Shares and Warrants for Tiger's own account and not with a view to or for sale
in connection with any distribution of the Purchased Shares or Warrants. Tiger
acknowledges that the Purchased Shares and Warrants have not been registered
under the Securities Act of 1933, as amended, (the "Act") or qualified under the
securities laws of any state or other jurisdiction. Tiger understands that the
Purchased Shares and Warrants are "restricted" under Act and that under such Act
and applicable regulations the Purchased Shares and Warrants may be resold
without registration under the Act only in certain limited circumstances and
that otherwise the Purchased shares and Warrants may have to be held
indefinitely. Tiger, by way of the business and financial experience of Tiger's
officers and advisors, is capable of evaluating the risks and merits of this
investment.
7. ADDITIONAL AGREEMENTS OF AGI. AGI further agrees with Tiger as follows:
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(a) Access to Offices and Records. AGI shall, and shall also cause
Commander to, afford representatives of Tier, from and after the date of
execution of this Agreement, full access, during normal business hours and upon
reasonable notice, to all offices, books, properties, contracts, documents and
records of AGI and Commander and to furnish to Tiger or its representatives all
additional information, including financial or operating information with
respect to the business and affairs of both AGI and Commander that Tiger or its
representatives may reasonably request.
(b) Conduct of Business Pending the Closing. From and after the
execution and delivery of this Agreement and until the Closing date, except as
otherwise provided by the prior written consent or approval of Tiger:
(1) AGI will, and will cause Commander to, conduct their
respective business and operations in the manner in which the same has
heretofore been conducted and AGI will, and will use its best efforts to cause
Commander to: (i) preserve AGI and Commander's respective current business
organization intact; (ii) keep available to Tiger the services of their current
employees and Commander's agents and distributors; and (iii) preserve
Commander's current relationships with customers, suppliers and others having
business dealing with Commander.
(2) AGI will cause Commander to maintain all of its properties in
customary good repair, order and condition, reasonable wear and use excepted,
and will maintain its existing insurance upon all of its properties and with
respect to the conduct of its business in such amounts and of such kinds
comparable to that in effect on the date of this Agreement.
(3) AGI will take action to insure that neither AGI nor Commander
will: (i) pay any bonus or increase the rate of compensation of any of
Commander's employees or enter into any new employment agreement or amend any
existing employment agreement; (ii) make any general increase in the
compensation or rate of compensation payable or to become payable to Commander's
hourly-rated employees; (iii) sell or transfer any of AGI's or Commander's
assets other than with Court approval or in the ordinary course of business;
(iv) obligate itself for capital expenditures other than in the ordinary course
of business and not unusual in amount; or (v) incur any material obligations or
liabilities, which are not in the ordinary course of business, or enter into any
material transaction other than in the ordinary course of business.
(4) AGI shall not, and shall not permit Commander to, issue or
enter into any subscriptions, options, agreements or other commitments in
respect of the issuance, transfer, sale or encumbrance of any shares of capital
stock of any class.
(c) Execution of Further Documents by AGI. From and after the Closing,
upon the reasonable request of Tiger, AGI shall execute, acknowledge and deliver
such documents as may be appropriate to carry out the transactions contemplated
by this Agreement.
(d) Indemnification by AGI.
(1) AGI will indemnify and hold Tiger harmless from and against
any and all damage, loss, cost, deficiency, assessment, liability or other
11
expense (including reasonable attorney's fees, costs of court and litigation
expenses, if any) suffered, incurred or paid by Tiger as a result of:
(A) The untruth, inaccuracy, breach or violation of any
representation, warranty, covenant or other obligation of AGI set forth in or
made in connection with this Agreement; or
(B) The enforcement of Tiger's right to indemnification
under this Agreement.
Tiger shall give written notice to AGI of any claim, action, suit or proceeding
relating to the indemnity herein provided by AGI not later than ten (10) days
after Tiger has received notice thereof. AGI shall have the right, at its
option, to compromise or defend, at its own expense and by its own counsel
(which counsel shall be reasonably satisfactory to Tiger), any such action, suit
or proceeding. Tiger and AGI agree to cooperate in any such defense or
settlement and to give each other full access to all information relevant
thereto.
(2) Except as herein expressly provided, the remedies provided in
paragraph 7(d) hereof shall be cumulative and shall not preclude assertion by
Tiger of any other rights or the seeking of any other remedies available against
AGI at law or in equity.
8. Concerning the DIP Financing.
--------------------------------
(a) The Court has heretofore approved Debtor-in-Possession Financing
("DIP Financing") whereby Tiger was authorized to lend to Commander, and
Commander was authorized to borrow from Tiger, the sum of $300,000, plus
additional amounts at the rate of $50,000 per month beginning October 7, 2003
and continuing each month thereafter until the earlier of the Closing or such
date as this Agreement shall be terminated (the "Additional DIP Financing")(the
DIP Financing and the Additional DIP Financing are sometimes collectively
referred to herein as the "Revised DIP Financing"); which DIP loan is an
administrative claim in the Chapter 11 Proceedings and is secured by those
assets set forth in the various loan documents executed in connection with the
DIP Financing. As of the date hereof, Tiger has advanced the principal sum of
$300,000 in respect of the Revised DIP Financing.
(b) Tiger agrees to advance the Additional DIP Financing to Commander
as needed and reasonably approved by Tiger up to the cumulative amounts
authorized by the Court, not to exceed Fifty thousand Dollars ($50,000) in any
month between the date hereof and the Closing (except that Tiger understands
that Commander may need up to $100,000 during the month of November 2003 in
order to be able to satisfy certain obligations that have been disclosed to
Tiger), subject to the following conditions:
(1) The representations and warranties made by AGI as set forth
herein shall be true and correct as of the date of each request for advance of
the Additional DIP Financing;
(2) Commander shall have provided to Tiger a statement of
proposed uses of funds and such additional information as to sources and uses of
available cash all in such detail as Tiger may request;
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(3) Commander shall have provided to Tiger, at such intervals as
Tiger may specify, statements of receipts and disbursements setting forth in
such detail as Tiger may request the actual sources and uses of cash; and
(4) Commander shall provide such other and additional information
as to its operating and financial condition as Tiger may request from time to
time.
Advances of any amounts of the Revised DIP Financing may, at Tiger's election
and with Commander's approval, be made directly to Commander, or, directly to
Commander's vendors or creditors.
(c) Notwithstanding the terms applicable to the DIP Financing as
previously approved by the Court, Tiger agrees that the principal and accrued
interest on the Revised DIP Financing shall not be called, and demand therefore
shall not be made until the occurrence of the earliest of the following events:
(1) The Effective Date of the Plan and Closing or of any other
Plan which may be confirmed in the Chapter 11 Proceeding;
(2) Dismissal of the Chapter 11 Proceeding; or
(3) Conversion of the Chapter 11 Proceeding to a proceeding under
Chapter 7 of the Bankruptcy Code.
(d) In the event that Tiger breaches its agreement to purchase the
Purchased Shares at the Closing (and provided that all of the conditions
precedent to Tiger's obligation to close have been satisfied), then, as AGI's
and Commander's sole and exclusive remedy for any breach of this Agreement, the
first $430,000 in principal of monies advanced in respect of the Revised DIP
Financing, together with interest accrued thereon (the "Liquidated Damage
Amount"), shall be forgiven, and the Liquidated Damage Amount forgiven shall be
deemed paid to Commander from Tiger's prior advances of the Revised DIP
Financing, all as liquidated damages, and not as a penalty; provided that such
forgiveness of Liquidated Damage Amount of the Revised DIP Financing as
liquidated damages shall not in any manner affect Commander's continuing
obligations in respect of any balance of the Revised DIP Financing in excess of
the Liquidated Damage Amount or Tiger's security therefore. To the extent that
Tiger breaches this Agreement at any time and, at the time of such breach the
principal amount of the Revised DIP Financing shall be less than the Liquidated
Damage Amount then, in such case, Tiger shall be obligated to pay the difference
between the then outstanding balance of the Revised DIP Financing and the
Liquidated Damage Amount to Commander in satisfaction of its obligation under
this Section to pay the entire Liquidated Damage Amount. Except for the
provisions in this Section for payment of the Liquidated Damage Amount, in the
event that Tiger or any Affiliated Nominee shall fail, for any reason or no
reason whatsoever (provided that the conditions precedent to Tiger's obligations
have been fulfilled) to consummate the transactions contemplated hereunder,
then, upon Tiger's delivery to AGI and Commander of appropriate instruments for
the forgiveness of the Liquidated Damage Amount and the forgiveness of the AGI
Advance (as provided in Section 13 hereof), this Agreement shall automatically
terminate and none of the Parties (or their affiliates) shall have any further
13
obligations to the other in respect of the transactions contemplated hereby or
otherwise (except for Commander's continuing obligation with respect to its then
remaining obligations in accordance with the terms and conditions of the Revised
DIP Financing in excess of the Liquidated Damage Amount, which obligations shall
continue unaffected by the provisions of this Section).
9. Conditions To Obligations Of Tiger. The obligations of Tiger to effect
the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
(a) Court Approval
(1) A revised Plan, reflecting the terms and conditions herein
contained, including without limitation an Effective Date of March 31, 2004, or
such earlier date as Tiger, AGI, and Commander may jointly agree upon, but in no
event earlier than the date of the shareholder (of AGI) approval referred to in
Paragraph 13, having been confirmed by the Court and the expiration of any
appeal period and no appeal shall have been taken therefrom (or any appeal
resolved by the Effective Date) ("Confirmation of the Plan").
(b) Validity of AGI's Representations. All representations and
warranties of AGI contained in this agreement or otherwise made in writing
pursuant to this agreement shall have been true and correct at and as of the
date hereof and they shall be true and correct at and as of the Closing Date,
with the same force and effect as though made at and as of the Closing Date.
(c) Pre-Closing Obligations. AGI shall have performed and complied
with all the obligations and conditions required by this Agreement to be
performed or complied with by AGI at or prior to the Closing Date, including the
execution and delivery of all documents and contracts required to be delivered
at or before the Closing Date pursuant to this Agreement.
(d) Opinion of Counsel for AGI. Tiger shall have received a favorable
opinion from counsel for AGI dated the date of the Closing, in form reasonably
satisfactory to counsel for Tiger, to the effect that:
(1) AGI is a corporation, presently existing in good standing
under the laws of the State of Delaware, and it has the corporate power and
authority to carry on its business as now being conducted and to own or hold
under lease, or otherwise, its assets.
(2) This Agreement has been duly executed and delivered by AGI,
and constitutes a valid, enforceable and binding obligation of AGI pursuant to
the terms of this Agreement.
(3) Counsel does not know of any action, suit, investigation or
other legal, administrative or arbitration proceeding pending against AGI or
Commander, or which questions the validity or enforceability of this Agreement
or of any action taken or to be taken pursuant to or in connection with this
Agreement or any agreement contemplated herein.
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(4) The sale and issuance of the Purchased Shares has been
approved by all necessary corporate and shareholder action. The Purchased Shares
are authorized and upon tender of the Purchase Price and delivery of the share
certificates shall have been duly issued and are fully paid and non-assessable.
(5) To the knowledge of such counsel, no consent, authorization,
license, franchise, permit, approval or order of any court or governmental
agency or body, other than those obtained by AGI and delivered to Tiger prior to
or on the date of the opinion, is required for the sale and issuance of the
Purchased Shares by AGI pursuant to this Agreement.
(6) The execution and performance of this Agreement by AGI will
not violate: (i) the Articles of Incorporation or the By-Laws of Commander, or
(ii) any order of any court or other agency of government know to said counsel.
(7) To the knowledge of such counsel (after reasonable
investigation), AGI owns all of the issued and outstanding shares of capital
stock of Commander.
(e) Receipt by AGI of Necessary Consents. All necessary consents or
approvals of third parties to any of the transactions contemplated hereby shall
have been obtained, and satisfactory evidence of such consents or approvals
shall have been delivered to Tiger at Closing.
(f) Resignation of Directors. Tiger shall have received the
resignations of the directors of AGI, Commander and SJS and AGI shall have taken
such actions (or shall have caused such actions to be taken by the current
directors) as may be necessary or appropriate to cause those persons identified
by Tiger to be elected as directors of AGI, Commander and SJS effective as of
the Closing Date as it shall have identified by notice to AGI.
10. CONDITIONS TO OBLIGATIONS OF AGI. The obligations of the AGI to effect
the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
(a) Validity of Tiger's Representations. All representations and
warranties of Tiger contained in this Agreement or otherwise made in writing
pursuant to this Agreement shall have been true and correct at and as of the
date hereof and they shall be true and correct at and as of the Closing Date,
with the same force and effect as though made at and as of the Closing Date.
(b) Pre-Closing Obligations. Tiger shall have performed and complied
with all the obligations and conditions required by this Agreement to be
performed or complied with by AGI at or prior to the Closing Date, including the
execution and delivery of all documents and contracts required to be delivered
at or before the Closing Date pursuant to this Agreements.
(c) Corporate Authority of Tiger. The execution and performance of
this Agreement by Tiger shall have been duly and legally authorized in
accordance with applicable law and in accordance with Tiger's Operating
Agreement
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(d) Opinion of Counsel for Tiger. AGI shall have received a favorable
opinion from counsel for Tiger dated the date of the Closing, in form reasonably
satisfactory to counsel for AGI, to the affect that:
(1) Tiger is a limited liability company, formed and legally
existing in good standing under the laws of the State of West Virginia, and it
has the power and authority to carry on its business as now being conducted and
to carry out the transactions and agreements contemplated hereby.
(2) All Proceedings required to be taken by or on the part of
Tiger in order to authorize it to perform its obligations hereunder have been
duly and properly taken, including any necessary approval or authorization by
the managing member or other members of Tiger.
(3) This agreement has been duly executed and delivered by Tiger
and constitutes a valid, enforceable and binding obligation of Tiger pursuant to
the terms of this Agreement.
(4) Except as otherwise disclosed in this Agreement, said counsel
does not know of any action, suit, investigation or other legal, administrative
or arbitration proceeding which questions the validity or enforceability of this
Agreement or of any action taken or to be taken pursuant to or in connection
with this agreement or any agreement contemplated herein.
(5) The execution and performance of this Agreement by Tiger will
not violate:(I) the Certificate of Formation or Operating Agreement of Tiger;or
(II) any order of any court or other agency of government known to said counsel.
11. Failure of Conditions. Except as provided in section 8(d) hereof, in
the event of a failure or fulfillment of any condition precedent to the
obligations of the other party (other than as the result of the act or the
failure to act of a party), the DIP Financing (to the extent funded) shall
remain a liability owing by Commander to Tiger, secured and with the priority
set forth in the Court's approval. In all other respects, except to the extent
provided in the Plan for the payment of any break-up fee due to Tiger, neither
party shall have further obligation to the other hereunder.
12. Other Provisions.
------------------
(a) Incomplete Exhibits. The parties hereto acknowledge and agree (a)
that many, if not all, of the schedules to be attached to this Agreement will
not have been prepared by the time of execution of this Agreement, and (b) that
consummation of the transactions contemplated by this Agreement are subject to
the completion of such exhibits by AGI (to the extent that an exhibit is to be
completed by AGI, such exhibit must be reasonably acceptable to Tiger) or Tiger
(to the extent than an exhibit is to be completed by Tiger must be reasonably
acceptable to AGI) as the case may be, prior to or at the Closing, pursuant to
the terms of this Agreement.
(b) Survival of Representations and Warranties. The representations,
warranties, obligations and agreements of the parties contained in this
Agreement, or in any writing delivered pursuant to the provisions of this
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Agreement, shall survive the Closing for a period of eighteen (18) months with
the exception of representations and warranties concerning Paragraph 4(k)
hereof, tax Matters and Paragraph 4(n) hereof, Environmental Matters, which will
survive for as long as any claims may be asserted under the applicable periods
of limitation for violations of any tax or environmental law, rule or
regulation.
(c) Waiver or Extension of Conditions. AGI or Tiger may extend the
time for or waive the performance of any of the obligations of the other party,
waive any inaccuracies in the representations or warranties by the other party,
or waive compliance by the other party with any of the covenants or conditions
contained in this Agreement. Any such extension or waiver shall not act as a
waiver or extension of any other provisions of this Agreement.
(d) Notices. Any notice, request or other document shall be in writing
and sent by registered or certified mail, return receipt requested, postage
prepaid and addressed to the party to be notified at the following addresses, or
such other address as such party may hereafter designate by written notice to
all parties, which notice shall be effective as of the date of posting:
If to Tiger:
000 Xxxxx Xxx
Xxxxxxxxxxx, XX 000000
Attention: Xxxxxx X. Xxxxxxx
With a copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Xxxxxxx and Associates
Xxx Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
If to AGI:
0000 Xxxx Xxxxxx Xxxx
XxXxxx, XX 00000
Attention: Xxxx X. Xxxxxx, III, Chairman/CEO
With copies to:
Xxxx X. Xxxxxxx, Esquire
Blank Rome, LLP
Watergate-11th floor
000 Xxx Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
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and:
Xxxxxx X. Press, Esquire
Xxxxx & Press, P.C.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
XxXxxx, XX 00000
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of Delaware without giving
effect to principles of conflicts of laws.
(f) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
(g) Headings. The subject headings of the Sections of this Agreement
are included for the purpose of convenience only and shall not effect the
construction or interpretation of any of its provisions.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
(i) Entire Agreement; Modification. This Agreement (including the
schedules attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding between the parties, and
supersede any prior agreements and understandings relating to the subject matter
hereof. Without limiting the generality of the foregoing, this Agreement
supersedes the letter of July 5, 2003 between AGI and Tiger. This agreement may
be modified or amended by a written instrument executed by all parties hereto.
Tiger hereby waives all rights under the Option referenced in the last sentence
of the second-to-last paragraph of the "Disclosure Statement in Support of
Debtor's First Amended Chapter 11 Pan Dated July 5, 2003 (As revised July 30,
2003)" ("Disclosure Statement").
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13. Shareholder Approval; Expenses. AGI must obtain the approval of its
shareholders to an amendment to its Certificate of Incorporation (and otherwise
to the transactions contemplated hereby) to enable AGI to issue to Tiger the
Purchased Shares and Tiger recognizes that AGI will incur certain costs to do
so, including the cost of an audit, SEC filings, and printing and mailing. Tiger
agrees to lend to AGI the sum of $66,000 for payment of such costs (the "AGI
Advance"). The AGI advance shall be evidence by a promissory note (" the "AGI
Note") which shall be in the form of Exhibit 13 attached hereto. In the event
Tiger thereafter breaches its agreement to purchase the Purchased Shares at the
Closing and provided that all of the conditions precedent to its obligation to
close have been satisfied), the AGI Advance shall be forgiven and neither Tiger
nor AGI shall any further liability to the other hereunder except as provided in
Section 8(d). At Closing, the outstanding balance of the AGI advance shall be
credited against the purchase price for the Purchased Shares.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day of
year first written above.
Tiger Aircraft, LLP
By:/s/ N. Xxxx Xxxxx
------------------------------------------
President & COO
Aviation General, Inc.
By:/s/ Xxxx X. Xxxxxx, III
------------------------------------------
Chairman/CEO
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