===============================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
MAPLE LEAF AEROSPACE, INC.
AVIALL SERVICES, INC.
AND
AVIALL (CANADA) LTD.
===============================================================================
TABLE OF CONTENTS
PAGE
ARTICLE 1. PURCHASE AND SALE OF THE PURCHASED ASSETS 1
1.1 Purchased Assets 1
1.2 Excluded Assets 2
1.3 Closing 3
ARTICLE 2. ASSUMPTION OF LIABILITIES AND CONTRACTS 3
2.1 Assumed Liabilities 3
2.2 Retained Liabilities 5
ARTICLE 3. PURCHASE PRICE 7
3.1 General 7
3.2 Payment of Purchase Price 8
3.3 Post-Closing Procedure 8
3.4 Allocation of Purchase Price 10
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS 10
4.1 Organization Corporate Power, Good Standing 10
4.2 Corporate Authorization 10
4.3 No Violation 10
4.4 Purchased Assets 11
4.5 [Intentionally omitted] 11
4.6 Financial Information 11
4.7 Accounts Receivable 11
4.8 Inventory 11
4.9 Books and Records 12
4.10 Licenses, Permits and Authorizations 12
4.11 No Undisclosed Liabilities, Etc. 12
4.12 Consents and Approvals of Governmental Authorities 12
4.13 Litigation 12
4.14 Tax Returns 12
4.15 Contracts and Agreements 12
4.16 Compliance with Laws 13
4.17 Environmental Matters 13
4.18 No Material Adverse Change 14
4.19 Title to Assets, Encumbrances 14
4.20 Employees 14
4.21 Labor, Employment Contracts and Employee Benefit Programs 14
4.22 Insurance Policies 15
4.23 Conduct in Ordinary Course of Business 15
4.24 Leases 16
4.25 Proprietary Rights 16
4.26 Disclosure 16
4.27 Schedules and Exhibits 16
4.28 Construction of Certain Provisions 17
4.29 Warranties 17
4.30 Affiliate Transactions 17
i
4.31 Customers and Suppliers 17
4.32 Unlawful Payments and Contributions 17
4.33 Approvals 17
4.34 No Implied Representation 17
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER 18
5.1 Organization, Corporate Power and Good Standing 18
5.2 Corporate Authorization 18
5.3 No Violation 18
5.4 Licenses, Approvals Other Authorizations, Consents,
Reports, etc. 18
5.5 Availability of Financing 18
ARTICLE 6. OTHER COVENANTS 19
6.1 Access and Investigation 19
6.2 Agreement to Obtain Consents and Approvals 19
6.3 Operation of the Business 19
6.4 Negative Covenant 20
6.5 Notification 20
6.6 No Negotiation 20
6.7 Non-Competition Agreement 20
6.8 Further Assurances 20
6.9 Seller's Employees 21
6.10 Systems Transition 21
6.11 Sublease 21
6.12 Financing Arrangements 22
6.13 Records Retention by Purchaser 22
6.14 Records Retention by Sellers; Certain Access 22
6.15 Intracompany Accounts 22
6.16 Insurance 23
6.17 [Intentionally omitted.] 24
6.18 Non-Assignable Warranty 24
6.19 Tax Matters 24
6.20 Employees 25
6.21 401(k) Spinoff 25
6.22 Tri-Star Acquisition 26
6.23 Aerospace Severance Plan 26
ARTICLE 7. CLOSING CONDITIONS 26
7.1 Conditions to Purchaser's Obligation to Close 26
7.1.1 Representations and Warranties of Sellers, Compliance
with Agreement 26
7.1.2 Xxxx of Sale 26
7.1.3 Non-Competition Agreement 26
7.1.4 Assignment and Assumption Agreement 26
7.1.5 Required Contracts 26
7.1.6 [Intentionally omitted] 26
7.1.7 Absence of Material Change 26
7.1.8 Concurrent Closing of Tri-Star Transaction 27
7.1.9 Regulatory Approvals 27
7.1.10 Leases and Other Instruments of Conveyance 27
7.1.11 Consents 27
ii
7.1.12 Resolutions; Incumbency 27
7.1.13 Evidence of No Liens 27
7.1.14 Certificate of Good Standing 27
7.1.15 Certificate of Incorporation; By-Laws 27
7.1.16 Management Information Systems Agreement 28
7.1.17 Sublease 28
7.1.18 No Injunction 28
7.1.19 Availability of Financing 28
7.1.20 Opinions of Counsel 28
7.1.21 Opinion of Delaware Counsel 28
7.1.22 Non-Foreign Status 28
7.1.23 Certificate of Sellers 28
7.2 Conditions to Sellers' Obligation to Close 28
7.2.1 Representations and Warranties of Purchaser;
Compliance with Agreement 28
7.2.2 Purchase Price 29
7.2.3 Assignment and Assumption Agreement 29
7.2.4 Resolutions, Incumbency 29
7.2.5 Certificate of Good Standing 29
7.2.6 Certificate of Incorporation; By-Laws 29
7.2.7 Sublease 29
7.2.8 [Intentionally omitted] 29
7.2.9 Regulatory Approvals 29
7.2.10 No Injunction 29
7.2.11 Leases and Other Instruments of Conveyance 29
7.2.12 Opinion of Counsel 29
7.2.13 Consent of Bank Lenders 29
7.2.14 Fairness Opinion 30
ARTICLE 8 INDEMNIFICATION 30
8.1 Indemnity by Sellers 30
8.2 Indemnity by Purchaser 30
8.3 Procedure and Payment 31
8.4 Other Claims 31
8.5 Subrogation 31
ARTICLE 9. TERMINATION 31
9.1 Termination Date 31
9.2 Termination Fee 31
ARTICLE 10. MISCELLANEOUS 32
10.1 Survival of Representations and Warranties 32
10.2 Disclosure and Confidentiality 32
10.3 Brokers 33
10.4 Construction 33
10.5 Bulk Sales 33
10.6 Amendments 33
10.7 Expenses 33
10.8 Completeness of Agreement 33
10.9 Assignment 33
10.10 Notices 34
iii
10.11 Counterparts 34
10.12 No Benefit to Others 35
10.13 Headings 35
Exhibit A - Defined Terms
Exhibit B - [Intentionally Omitted]
Exhibit C - Form of Non-Competition Agreement
Exhibit D - Form of Employee Waiver and Release
Exhibit E - Form of Management Services Agreement
Exhibit F - Form of Sublease
Exhibit G - Form of Xxxx of Sale
Exhibit H - Form of Assignment and Assumption Agreement (Contract Rights)
Exhibit I - Form of Assignment and Assumption of Leases
Exhibit J - Form of Estoppel Certificate
Exhibit K - Form of Opinion of Counsel - Xxxxxx and Xxxxx, LLP
Exhibit L - Form of Opinion of Counsel - Xxxxx & XxXxxxxx
Exhibit M - Form of Opinion of Counsel - Xxxxxxxx & Xxx PLC
Exhibit N - Form of Bourjeaurd Certificate
Exhibit O- Form of Sellers' Certificate and Release
iv
INDEX OF SCHEDULES
Schedule 1.1(a) - Personal Property to be Purchased
Schedule 1.1(c) - Accounts Receivable to be Purchased
Schedule 1.1(f) - Proprietary Rights
Schedule 1.1(k) - Telephone Numbers
Schedule 1.2(c) - Excluded Inventory
Schedule 1.2(d) - Locations of Sellers' Facilities
Schedule 3.1(b) - March 31 Net Assets Statement
Schedule 3.4 - Allocation of Purchase Price
Schedule 4.1 - Foreign Jurisdictions in which Sellers are Qualified
to Transact Business
Schedule 4.3 - No Violations
Schedule 4.4 - Location of Purchased Assets
Schedule 4.6 - Financial Information
Schedule 4.7 - Accounts Receivable
Schedule 4.8 - Location of Inventory
Schedule 4.10 - Governmental Licenses, Permits and Authorizations
Schedule 4.11 - Undisclosed Liabilities
Schedule 4.12 - Required Filings with Governmental Authorities
Schedule 4.13 - Litigation
Schedule 4.14 - Tax Assessment Statute of Limitations Waivers
Schedule 4.15 - Contracts to be Purchased (with disclosure of assignment
restrictions)
Schedule 4.17 - Environmental Matters
Schedule 4.18 - No Material Adverse Change
Schedule 4.19 - Existing Liens
Schedule 4.20 - Employee and Independent Contractor Information
Schedule 4.21 - Employee Benefit Plans/Labor Matters
Schedule 4.21(g) - Aerospace Severance Plan
Schedule 4.22 - Insurance Policies
Schedule 4.23 - Conduct of Business in Ordinary Course
Schedule 4.24 - Leases
Schedule 4.25 - Proprietary Rights
Schedule 4.29 - Warranties
Schedule 4.30 - Affiliate Transactions
Schedule 4.31 - Significant Customers and Suppliers
Schedule 5.4 - Licenses, Approvals, Authorizations and Consents
Schedule 5.5 - Commitment Letter
Schedule 6.9 - Division Employees
Schedule 6.16 - Insurance
Schedule 7.13 - Permitted Liens
Schedule 7.1.5 - Required Consents
v
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated September 5, 1996,
is by and among AVIALL (CANADA) LTD., an Ontario, Canada corporation ("AVIALL
CANADA"), AVIALL SERVICES INC., a Delaware corporation ("ASI") (ASI and Aviall
Canada being collectively referred to herein as the "SELLERS" and each
individually as a "SELLER"), and MAPLE LEAF AEROSPACE, INC. a Delaware
corporation ("PURCHASER"). Certain capitalized terms used herein shall have the
meanings ascribed to such terms in EXHIBIT A attached hereto or in the sections
of this Agreement referred to therein.
WITNESSETH:
WHEREAS, Aviall Canada is a wholly owned subsidiary of ASI;
WHEREAS, the Aviall Aerospace business unit (the "Division") based in
Dallas, Texas engages in the distribution of aerospace hardware products
primarily to manufacturers of commercial and military aircraft and other
original aviation equipment manufacturers, which distribution involves certain
personnel and assets of ASI in the United States and certain personnel and
assets of Aviall Canada in Canada (the "Business", which term excludes the
distribution of such products by Sellers' Distribution Services business unit);
WHEREAS, Xxxxxxx X. Xxxxxxxxxx ("BOURJEAURD") the President of Purchaser,
currently is an employee of ASI and is the vice president of the Division; and
WHEREAS, Sellers desire to sell to Purchaser certain of the Sellers'
property and assets used in the conduct of the Business and Purchaser wishes to
purchase such property and assets and to assume certain liabilities relating to
the Business and such assets, all upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto hereby agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF THE PURCHASED ASSETS
1.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, on the CLOSING DATE (as defined below), Sellers shall sell,
transfer, assign and deliver to Purchaser, and Purchaser shall purchase and
acquire from Sellers, all of Sellers' right, title and interest in and to all
property and assets, whether owned or leased and other than Excluded Assets,
which are used exclusively or held for use exclusively in connection with the
Business as of the Closing Date (collectively, the "PURCHASED ASSETS")
including, but not limited to, the following:
(a) TANGIBLE PERSONAL PROPERTY, INVENTORY AND SUPPLIES. All
fixtures, vehicles, office furniture, equipment, inventory, operating supplies
located at any of the facilities listed on SCHEDULE 4.24, and other similar
personal property, including without limitation the fixed assets and inventory
of the type listed on SCHEDULE 1.1(a) which Schedule lists the fixed assets and
the inventory of the Division as of July 31, 1996;
1
(b) LEASES; LEASEHOLD IMPROVEMENTS. All real property leases listed
in SCHEDULE 4.24 hereto along with all leasehold improvements thereon:
(c) ACCOUNTS RECEIVABLE. All accounts receivable, notes, or other
evidences of indebtedness (collectively, the "ACCOUNTS RECEIVABLE") which are
reflected on the Closing Date Net Assets Statement (as hereinafter defined)
including, without limitation, those of the type contained on SCHEDULE 1.1(c)
which Schedule lists all of the accounts receivable, notes and other evidences
of indebtedness of the Division as of July 31, 1996, excluding any Intercompany
Receivables which shall be accounted for as set forth in SECTION 6.15 herein:
(d) PREPAID ASSETS, EXPENSES, SECURITY DEPOSITS. All prepaid
assets, expenses, and security deposits, excluding reimbursements for pre-paid
insurance premiums relating to the Division for periods after the Closing Date;
(e) CONTRACT RIGHTS; WARRANTIES. All agreements, contracts and
licenses, outstanding purchase orders, supplier agreements and equipment leases
relating to the Division, including but not limited to those of the type
specified on SCHEDULE 4.15 together with all assignable rights under product
warranties to the extent that Purchaser assumes any liability in respect
thereof;
(f) PROPRIETARY RIGHTS. Any and all trademarks, trademark
registrations and trademark applications listed on Schedule 1.1(f), trade-
names, logos, copyrights, computer software and programs, and other licenses
thereof, know-how, trade secrets, lists of past, present and potential
customers, sales data, sales and advertising materials, scheduling and service
methods, sales and service manuals and all other proprietary, confidential and
other similar information (in whatever form or medium), but excluding the use
of and rights to the name "Aviall," individually or in combination with any
other names and excluding any trademarks, servicemarks or tradenames
incorporating the name "Aviall" (collectively, "PROPRIETARY RIGHTS");
(g) RECORDS. With respect to the Purchased Assets and Assumed
Liabilities only, all original records, files, documents, papers,
certifications, and documents of origin (the "RECORDS");
(h) LICENSES, PERMITS AND APPROVALS. All transferable permits,
franchises, licenses, approvals and authorizations by or of governmental
authorities or third parties required to operate the Business or own the
Purchased Assets;
(i) CLAIMS. All causes of action, claims, rights of recovery and set-
off of every kind pertaining or relating to the Purchased Assets but only to
the extent the related liability, if any, is assumed by Purchaser, including
all insurance, warranty and condemnation proceeds, judgments and awards
received after the Closing Date with respect to damage, destruction or loss of
any Purchased Assets;
(j) GOODWILL. All goodwill associated with the Business, excluding
the use of the name "Aviall" individually or in connection with any other
names:
(k) TELEPHONE NUMBERS. Any of Sellers' assignable rights to the
telephone numbers listed on SCHEDULE 1.1(k), used by the Division; and
(l) OTHER ASSETS. All other assets of Sellers not specifically set
forth in this SECTION 1.1 if such asset is used exclusively or held for use
exclusively in connection with the Business.
1.2 EXCLUDED ASSETS. The following assets ("EXCLUDED ASSETS") shall be
retained by Sellers and shall not be sold and transferred to Purchaser
hereunder:
2
(a) RECORDS. Each Seller's formal corporate records, including its
certificate of incorporation, by-laws, minute books, and other records having
exclusively to do with the corporate organization of such Seller, and such
other business records required in connection with Sellers filing of local,
state, provincial, or federal tax filings or related to Sellers' other past or
present lines of business;
(b) CASH AND CASH EQUIVALENTS. Any and all cash on hand and cash
equivalent assets of Sellers, including rights to tax refunds, insurance
deposits, duty drawbacks, or premiums and rights to return of premiums, in each
case for periods ending on or prior to the Closing Date;
(c) EXCLUDED INVENTORY. The inventory described on SCHEDULE 1.2(c),
which inventory has an aggregate book value of $1,750,000 (the "EXCLUDED
INVENTORY"); it being agreed that any expenses incurred in connection with such
transfer of the Excluded Inventory shall be paid by Sellers and shall not
affect the Purchase Price (as hereinafter defined) and shall not be an Assumed
Liability (as hereinafter defined);
(d) OTHER EXCLUDED ASSETS. All assets of Sellers not specifically
set forth in SECTION 1.1 and any asset described in SECTION 1.1 if such asset
is not used exclusively or held for use exclusively in connection with the
Business or does not arise out of the conduct of Business; it being understood
by the parties hereto that any asset which is used in connection with the
Business and with another business or activity of the Sellers or any of their
Affiliates shall be deemed an Excluded Asset. In connection with the foregoing,
there shall be a rebuttable presumption that any asset which is not located at
Sellers' facilities described in SCHEDULE 1.2(d) on the date hereof or on the
Closing Date shall be deemed an Excluded Asset. It is further understood that
there shall be a rebuttable presumption that any asset which is located at or
any purchased inventory in transit to, such locations (other than the Excluded
Inventory) shall be deemed to be a Purchased Asset, as contemplated by this
Agreement.
1.3 CLOSING. The closing of the sale and purchase of the Purchased Assets
(the "CLOSING") will take place beginning at 9:00 a.m. New York time, on
September 12, 1996. at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx
Xxx., Xxx Xxxx, Xxx Xxxx 00000, or such other time or place as may be mutually
agreed upon. For the purposes hereof, the "CLOSING DATE" shall be deemed to be
11:59 p.m. New York New York time on such date.
ARTICLE 2.
ASSUMPTION OF LIABILITIES AND CONTRACTS
2.1 ASSUMED LIABILITIES. Subject to SECTION 2.2 of this Agreement, at the
Closing, Purchaser shall assume and shall agree to pay, perform and discharge,
the following specific liabilities and obligations of the Business
(collectively, the "ASSUMED LIABILITIES"):
(a) all obligations and liabilities accrued or reserved against on
the Closing Date Net Assets Statement which remain unpaid and/or open on the
Closing Date;
(b) all liabilities and obligations arising from commitments (in the
form of accepted purchase orders, or otherwise) to sell products or services,
or outstanding quotations, proposals or bids, arising from or related to the
Purchased Assets or the Business as of the Closing Date;
(c) all liabilities and obligations arising from commitments (in the
form of issued purchase orders or otherwise), or outstanding quotations,
proposals or bids, to purchase or acquire equipment, products, supplies or
services, arising from the Purchased Assets or the Business prior to or as of
the Closing Date;
3
(d) all liabilities and obligations after the Closing Date under
existing licenses, real property and equipment leases, rental contracts or
other contracts to suppliers, customers, wholesalers, distributors, merchants
or end users arising from or related to the Purchased Assets or the Business as
of or after the Closing Date to which Sellers or the Division is a party and
which are to be assigned to Purchaser hereunder, including without limitation,
the contracts included within SECTION 1.1(e) of this Agreement;
(e) all liabilities and obligations relating to any accrued but
unpaid vacation entitlements of employees of the Division as of the Closing
Date who Purchaser employs as of the Closing Date pursuant to the offer of
employment to be made by Purchaser under SECTION 6.9;
(f) all liabilities and obligations of the Business in respect of
claims asserted after the Closing Date arising from warranties relating to the
sale of products and services by the Division prior to the Closing Date;
(g) any and all liabilities and obligations (including, without
limitation, bodily injury, death and property damages) arising out of or
relating to either (x) a product or equipment failure, or (y) an accident
(including injurious exposure to conditions) which results in bodily injury,
death, property damage or personal injury (an "OCCURRENCE") after the Closing
Date which relates to either (i) the sale of products by Purchaser or Sellers
or any Affiliate of Purchaser or Sellers in respect of the Business made prior
to or after the Closing Date, or (ii) the conduct by Purchaser or Sellers or
any Affiliate of Purchaser or Sellers of the Business prior to or after the
Closing Date, including, without limitation, liability of types customarily
covered by the following types of insurance coverage: (A) aviation liability;
(B) automobile liability; (C) workers compensation, but only if the event
giving rise to the claim occurs after the Closing Date; or (D) general
liability;
(h) all sales, transfer and similar Taxes resulting from the
conveyance of the Purchased Assets hereunder;
(i) any and all liabilities or obligations arising under the lease
of the facility at Irvine, California, formerly used in connection with the
Business;
(j) any and all liabilities or obligations relating to ASI's
obligation to provide continuing health care coverage (COBRA) under Sections
601 through 608 of ERISA or any state or local laws, but only with respect to
employees of the Business that Purchaser employs pursuant to the offer of
employment to be made by Purchaser under Section 6.9; and
(k) any liability of Sellers for the payment of a severance claim
under the Aviall Services, Inc. Severance Pay Plan, dated September 5, 1996
(the "Aerospace Severance Plan"), to a Transferred Employee covered by the
Aerospace Severance Plan who has not executed a waiver in the form of EXHIBIT D
attached hereto (the "WAIVER"). Purchaser's liability under this SECTION 2.1(k)
shall be limited to liability under the Aerospace Severance Plan and Purchaser
shall not assume and shall have no liability to Sellers with respect to
severance liability under any other severance plan or other arrangement or
under any statutory obligations of Sellers.
Without limiting the generality of the foregoing, and notwithstanding any other
provision contained herein to the contrary, Purchaser shall assume and shall
agree to pay, perform and discharge all of the liabilities and obligations
which relate to the Purchased Assets, the Business or the Division or any of
its operations as conducted after the Closing Date, including product, general
tort or environmental liability, or arise out of the conduct of the Business by
Purchaser after the Closing Date, except for, in each case, the Retained
Liabilities and Sellers' obligations under SECTION 8 hereof.
4
2.2 RETAINED LIABILITIES. Except as specified in SECTION 2.1 above,
Purchaser will not assume, and will not pay, discharge, perform or otherwise be
liable for any liabilities, indebtedness or obligations of the Business or any
Seller of any nature whatsoever, whether known or unknown, no matter how or
when they may have arisen or arise. Without limiting the generality of the
foregoing, and notwithstanding any other provision contained herein to the
contrary, the Assumed Liabilities shall not include, and Purchaser shall not be
liable for:
(a) any and all liabilities in respect of Taxes (for periods ending
on or prior to the Closing Date, and whether or not assessed or payable prior
or subsequent thereto) which are imposed, levied, assessed or payable by,
against or attributable to the Division, the Purchased Assets, or Sellers;
(b) any and all liabilities or obligations of the Division or
Sellers in respect of criminal and civil fines, penalties and punitive damages
(including, without limitation, fines and penalties imposed in respect of
withholding, income, sales, payroll, franchise and other Taxes) arising out of
or relating to events occurring or actions taken by the Division or Sellers
prior to the Closing Date;
(c) any and all liabilities or obligations relating to claims made
by employees of the Division (including, without limitation, workers
compensation and employer's liability) relating to incidents or matters
occurring with respect to the Division solely prior to the Closing Date,
including, without limitation, any liability for retroactive premiums or other
adjustments due under any retrospectively rated insurance policies maintained
by Sellers or any of its Affiliates solely with respect thereto; it being
understood that any credit for premiums or other adjustments shall belong to
Sellers and be deemed Excluded Assets;
(d) any and all liabilities or obligations associated with or
relating to any of the Excluded Assets;
(e) any and all liabilities or obligations arising under any
Environmental Laws based upon any conduct, act or omission that occurred prior
to the Closing Date;
(f) any and all liabilities or obligations resulting from Sellers'
or the Division's failure to have obtained all necessary permits, licenses or
other authorizations required for the conduct of the Business prior to the
Closing Date, including, without limitation, permits, licenses or other
authorizations required under Environmental Laws;
(g) any and all liabilities or obligations in respect of accounts
payable and any other trade notes, accounts payable and other payables of the
Division not accrued, disclosed or reserved against on the Closing Date Net
Assets Statement;
(h) any and all liabilities or obligations in respect to or relating
to Intercompany Payables and Intercompany Receivables prior to the Closing Date
between the Business and Sellers, or between the Division and any other
Affiliate or division of Sellers;
(i) any and all liabilities or obligations relating to or arising
out of any contract, agreement or commitment not included in the Purchased
Assets;
(j) any and all obligations or liabilities of the Sellers under or
in connection with this Agreement or any of the transactions contemplated
hereby, including all other liabilities and obligations with respect to which
Sellers are obligated to indemnify Purchaser under this Agreement;
5
(k) any and all liabilities or obligations relating to or arising
out of any dividends, notes or other indebtedness payable by Sellers to any
stockholder, director, officer, employee or Affiliate of the Division or
Sellers or any Affiliate of any such entity or person prior to the Closing
Date;
(l) any and all liabilities or obligations relating to or arising
out of any breach, default or nonperformance by the Division, occurring prior
to the Closing Date, under any of the contracts included within the Purchased
Assets, excluding any liabilities or obligations expressly assumed under
SECTION 2.1 by Purchaser hereunder;
(m) except as assumed by Purchaser pursuant to SECTION 2.1 hereof,
any and all liabilities or obligations relating to or arising out of any
employment agreement, status as an employee of Sellers (whether at-will or
otherwise), or employee personnel policy, or any pension, benefit or
compensation arrangement, including, without limitation any Employee Benefit
Plan (as defined in SECTION 4.21(d)), pension, retirement stock option, stock
purchase, savings, profit sharing, deferred compensation, consultant, bonus,
severance, including severance claims arising by reason of the transactions
contemplated by this Agreement, health, medical, dental, disability, group
insurance or other incentive benefit or welfare contract, plan or arrangement
(whether providing benefits pre or post-retirement) that the Sellers contribute
to, are obligated under, or maintain or have contributed to, have been
obligated under or have otherwise maintained for the benefit of current, former
or retired employees of the Division, Sellers or any ERISA Affiliate, or under
or in connection with which Sellers have any present or future obligation or
liability, not specifically assumed by Purchaser pursuant to SECTION 2.1 of
this Agreement;
(n) any and all claims and obligations for workers' compensation
arising from an event occurring as of or prior to the Closing Date;
(o) except as expressly assumed by Purchaser pursuant to SECTION
2.1(k) hereof, any and all liabilities or obligations relating to or arising
out of any severance payments, allowances or similar benefits to or for any
employees of the Division, or severance or termination charges of any agents or
distributors of the Division, or bonuses or compensation other than regular
wages or salaries payable to any employees, agents or distributors of the
Division, accrued or arising prior to the Closing Date or arising in connection
with this Agreement or the transactions contemplated hereby, or any grievances,
arbitrations, charges or demands of any nature whatsoever arising from any
event, action or omission to act occurring with respect to the Division solely
prior to the Closing Date and involving any employee, agent or distributor
of, or applicant for employment with the Division;
(p) any other obligation or liability (excluding Assumed
Liabilities) of any kind or nature whatsoever (whether absolute or contingent,
known or unknown, recorded or unrecorded) of the Business or Sellers arising
out of events occurring with respect to the Business prior to the Closing Date;
(q) any and all liabilities or obligations relating to Sellers'
obligations to provide continuing health care coverage (COBRA) under Sections
601 through 608 of ERISA or any state or local laws for former or retired
employees of the Division who are not employed by Purchaser subsequent to the
Closing Date; or
(r) any and all liabilities and obligations (including, without
limitation, bodily injury, death and property damages) arising out of or
relating to an Occurrence prior to the Closing Date which relates to either (i)
the sale of products by Sellers or any Affiliate of Sellers in respect of the
Business made prior to the Closing Date, or (ii) the conduct by Sellers or any
Affiliate of Sellers of the Business prior to the Closing Date.
6
All liabilities retained by Sellers under this SECTION 2.2 are referred to
herein collectively as the "Retained Liabilities."
ARTICLE 3.
PURCHASE PRICE
3.1 GENERAL. The purchase price to be paid by Purchaser to ASI, for the
benefit of Sellers, for the Purchased Assets (the "PURCHASE PRICE") shall be
the sum of:
(a) $ 16,250.000, PLUS
(b) an amount equal to any increase in, or LESS an amount equal to
any reduction in, the combined net book value of the Purchased Assets and
Assumed Liabilities (the "NET ASSETS") determined by comparing the statement of
the Net Assets, excluding inventory, as of March 31, 1996, a copy of which is
attached hereto as SCHEDULE 3.1(b) (the "MARCH 31 NET ASSETS STATEMENT"), to a
statement of the Net Assets, excluding inventory, as of the Closing Date,
prepared in accordance with Section 3.3 below (the "CLOSING DATE NET ASSETS
STATEMENT"); PLUS
(c) the cost of any inventory acquired by the Division between April
1, 1996 and the Closing Date (the "ADJUSTMENT PERIOD"); LESS
(d) the cost of any inventory acquired by the Division between
January 1, 1996 and the Closing Date (the "1996 INVENTORY"), which was sold by
the Division during the Adjustment Period; LESS
(e) the amount actually received or to be received by the Division
from the sale during the Adjustment Period of any inventory, other than the
1996 Inventory, included in the March 31 Net Assets Statement.
Notwithstanding anything herein to the contrary, the calculation of the
Purchase Price and the Closing Date Payment (defined below), along with the
preparation of the March 31 Net Assets Statement, the Settlement Date Net
Assets Statement and the Closing Date Net Assets Statement, shall not take any
account of the Excluded Inventory, and the cost of the Excluded Inventory and
any amounts received or to be received by the Sellers from the sale of that
Excluded Inventory shall not be considered in such calculation.
The March 31 Net Assets Statement, the Settlement Date Net Assets
Statement and the Closing Date Net Assets Statement shall each be prepared in
accordance with generally accepted accounting principles, ("GAAP"), applied on
a consistent basis. GAAP will prevail over consistency in all accounting
matters, except that if Sellers consistently applied an accounting practice or
policy that is permissible under GAAP, such practice or policy shall be
applied. The Closing Date Net Asset Statement shall be audited by Price
Waterhouse LLP ("Sellers Accountants"). Seller shall bear the cost and expense
of the audit of the Closing Date Net Asset Statement. Notwithstanding the
foregoing, such statements shall not be based, in whole or in part, on a
physical inventory of the Purchased Assets and in connection with the Closing
Date Net Assets Statement, inventory at March 31, 1996 shall be valued as set
forth in the March 31, 1996 Net Assets Statement. The parties shall treat the
purchase and sale of assets under this Agreement as an "applicable asset
acquisition" within the meaning of Section 1060 of the Code and shall prepare
and timely file Internal Revenue Service Form 8594
7
(and any required exhibits and amendments thereto) in a manner consistent with
the allocation of the Purchase Price under Section 3.4.
3.2 PAYMENT OF PURCHASE PRICE.
(a) SETTLEMENT DATE NET ASSETS STATEMENT. Sellers shall prepare a
statement of the Net Assets as of a date not more than fourteen (14) calendar
days prior to the Closing Date (the "SETTLEMENT DATE"), which shall be referred
to herein as the "SETTLEMENT DATE NET ASSETS STATEMENT," and shall deliver to
Purchaser such Settlement Date Net Assets Statement no less than three (3)
calendar days prior to the Closing Date.
(b) SETTLEMENT DATE INVENTORY CERTIFICATE. No less than three (3)
days prior to the Closing Date, Sellers shall deliver to Purchaser a
certificate executed by Sellers' Controller (the "SETTLEMENT DATE INVENTORY
CERTIFICATE") setting forth the information described in parts (iii), (iv) and
(v) of subparagraph (c) hereof, including the calculation of the adjustments
relating thereto.
(c) CLOSING DATE PAYMENT. At the Closing. Purchaser shall pay to
ASI, for the benefit of Sellers, an amount (the "CLOSING DATE PAYMENT") which
shall be the sum of:
(i) $16,250,000, PLUS
(ii) an amount equal to any increase in, or LESS an amount equal
to any reduction in, the book value of the Net Assets, excluding inventory,
determined by comparing the March 31 Net Assets Statement to the Settlement
Date Net Assets Statement; PLUS
(iii) the cost of any inventory acquired by the Division between
April 1, 1996 and the Settlement Date; LESS
(iv) the cost of any 1996 Inventory which was sold by the
Division between April 1, 1996 and the Settlement Date; LESS
(v) the amount actually received or to be received by the
Division from the sale between April 1, 1996 and the Settlement Date of any
inventory, other than the 1996 Inventory, included in the March 31 Net Assets
Statement.
(d) METHOD OF PAYMENT. The Closing Date Payment shall be made on the
Closing Date by wire transfer of immediately available funds to one or more
accounts to be designated by ASI in writing to Purchaser not less than one (1)
business day prior to the Closing Date.
3.3 POST-CLOSING PROCEDURE.
(a) SELLERS' STATEMENTS AND AUDIT. Within sixty (60) days after the
Closing Date, Sellers shall prepare and deliver to Purchaser the Closing Date
Net Assets Statement prepared in accordance with the provisions of Section 3.1
hereof. At the same time, Sellers shall also deliver to Purchaser a
certificate (the "CLOSING DATE INVENTORY CERTIFICATE") setting forth the
information described in parts (c), (d) and (e) of SECTION 3.1, including the
calculation of the adjustments relating thereto. Sellers shall, at their cost
and expense, use their best efforts to have Sellers' Accountants issue an
accountant's audit report on the Closing Date Net Assets Statement and to
review the Closing Date Inventory Certificate to determine that it was
calculated in accordance with parts (c), (d), and (e) of SECTION 3.1. Purchaser
shall provide to Sellers and Sellers' Accountant access to such of the books
and records of the Division as may reasonably be required for
8
the audit of the Closing Date Net Assets Statement and the review of the
Closing Date Inventory Certificate. Sellers shall cause Sellers' Accountant to
give to Xxxxxx Xxxxxxxx LLP ("PURCHASER'S ACCOUNTANT") access to the
workpapers utilized in the preparation of the Closing Date Net Assets
Statement and the Closing Date Inventory Certificate in accordance with
established professional standards.
(b) RESOLUTION OF PURCHASE PRICE CALCULATION DISPUTES. Purchaser
and Purchaser's Accountant shall have thirty (30) days after delivery to
Purchaser of the Closing Date Net Assets Statement, Closing Date Inventory
Certificate and Sellers' Accountants audit report to review those documents and
to notify Sellers of any disputes Purchaser may have relating thereto, failing
which Purchaser shall be deemed to have irrevocably waived any dispute
regarding those documents. Purchaser's notice to Sellers of any dispute shall
specify in reasonable detail all points of disagreement and demand that a
review of such dispute (a "REVIEW") be conducted. Purchaser and Sellers, each
acting with or without the participation of their respective accountants as it
or they may elect, shall diligently attempt to resolve any such disputes. If
the parties are unable to resolve such disputes within fifteen (15) days of
Sellers' receipt of notice of a Review, the unresolved disputes shall be
referred by the parties to the national office of Ernst and Young, LLP, or if
such firm is unwilling or unable to act, to the national office of Coopers and
Xxxxxxx to act as Arbitrator (the "ARBITRATOR"). In a manner of its own
choosing, the Arbitrator shall, within thirty (30) days after having agreed to
serve, finally determine all unresolved disputes with regard to the Closing
Date Net Assets Statement and the Closing Date Inventory Certificate, and shall
deliver a written notice of its determinations to the parties.
The parties agree that with respect to any issue as to which the parties
cannot agree, if the accounting practice or policy used or taken by Sellers is
permissible under GAAP and has been consistently applied in the preparation of
the March 31, 1996 Net Assets Statement and the Closing Date Net Assets
Statement, then the Arbitrator shall be required to uphold the Sellers'
position. The determinations of the Arbitrator shall be final, conclusive and
legally binding on all parties hereto with respect to the Closing Date Net
Assets Statement and the Closing Date Inventory Certificate, absent fraud or
material misrepresentation. Purchaser and Sellers shall each pay one-half of
the fees and expenses of the Arbitrator. Each party shall pay all other fees
and expenses incurred by it in connection with the activities described in this
paragraph including, without limitation, fees and expenses charged by its legal
counsel and accountants.
(c) POST-CLOSING PAYMENT. Based upon the Closing Date Net Assets
Statement and the Closing Date Inventory Certificate as modified to reflect the
settlement or determination of any disputes, the parties shall calculate the
Purchase Price in accordance with the provision of SECTION 3.1. On the Closing
Audit Payment Date (defined below), if the Purchase Price is greater than the
Closing Date Payment, then Purchaser shall pay to Sellers the amount of such
difference plus interest, and if the Closing Date Payment is greater than the
Purchase Price, then Sellers shall pay to Purchaser the amount of such
difference, plus interest. In any case, on the Closing Audit Payment Date, such
difference shall be paid by wire transfer of immediately available funds to the
account or accounts designated by the party entitled to receive such funds. The
amount of any such difference shall bear interest, at the rate of eight percent
(8%) per annum, from the Closing Date to, but excluding, the date of payment.
In the event any action or proceeding is brought to enforce the payment of such
adjustment amount, the prevailing party in such action shall be entitled to
recover all attorney's fees and other costs incurred in connection with such
action.
For purposes of the payment required to be made pursuant to this SECTION
33(c), "CLOSING AUDIT PAYMENT DATE" shall mean the date which is three (3)
business days after the earliest to occur of (i) thirty (30) days after
Purchaser receives the Closing Date Net Assets Statement, and the Closing Date
Inventory Certificate together with Sellers' Accountant's report thereon if
Sellers shall not have received a notice from Purchaser within such ten-day
period demanding a Review, (ii) the date on which the parties agree on a
resolution of any disputes regarding the Closing Date Net Assets Statement or
the Closing Date Inventory
9
Certificate, or (iii) the date on which the party which is required to make
the payment described in the preceding paragraph receives written notice of
the determinations of the Arbitrator.
3.4 ALLOCATION OF PURCHASE PRICE. The parties agree that for the purposes
of (i) completing and filing IRS Form 8594, and (ii) filing all tax returns and
statements, forms and schedules in connection therewith, all of the Purchase
Price shall be allocated in accordance with SCHEDULE 3.4 attached hereto.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers hereby jointly and severally represent and warrant to
Purchaser as follows:
4.1 ORGANIZATION, CORPORATE POWER, GOOD STANDING. ASI is a corporation
duly incorporated, validly existing, and in good standing under the laws of the
State of Delaware. Aviall Canada is a corporation duly incorporated, validly
existing and in good standing under the laws of the Province of Ontario, Canada
and is not a non-resident of Canada within the meaning of the Income Tax Act
(Canada). Sellers have the corporate power and authority to carry on the
Business as now conducted and to own and operate the Purchased Assets. Each
Seller has the corporate power and authority to execute and deliver this
Agreement and the other agreements contemplated hereby, to perform its
respective obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each Seller is qualified or
licensed to do business as a foreign corporation in each state or province
where such qualification is necessary to conduct the Business, as set forth in
SCHEDULE 4.1 hereto.
4.2 CORPORATE AUTHORIZATION. The execution and delivery of this
Agreement and the other agreements contemplated hereby and the performance by
each Seller of its obligations hereunder and thereunder have been duly
authorized by all necessary corporate action, and no other corporate act on the
part of either Seller, their respective Boards of Directors or their respective
stockholders is necessary to authorize the execution, delivery or performance
by Sellers of this Agreement or any other agreement contemplated hereby or
thereby. This Agreement has been duly executed by each Seller and constitutes,
and the other agreements contemplated hereby, and the instruments and documents
to be delivered by Sellers hereunder, also constitute, the legal, valid and
binding obligations of Sellers and are enforceable against Sellers in
accordance with their respective terms (subject to bankruptcy, reorganization,
insolvency, and other similar laws relating to or affecting the enforcement of
creditors' rights generally and to the availability of equitable remedies).
4.3 NO VIOLATION. Except as set forth on SCHEDULE 43, neither the
execution and delivery of this Agreement nor the performance by Sellers of
their obligations hereunder nor the consummation of the transactions
contemplated hereby (a) will violate, conflict with, result in any breach of,
constitute a default under, or result in the termination or acceleration of,
either Seller's certificate of incorporation or articles of incorporation, as
appropriate, or Bylaws, or any agreement indenture, license, obligation or
instrument to which either Seller is a party by which such Seller, or any of
the Purchased Asset, is bound or affected, the violation, conflict or breach of
which would, individually or in the aggregate, have a Material Adverse Effect;
(b) except as disclosed in SCHEDULE 4.15, would require the consent of any
other party to, or result in the creation or imposition of any Lien upon any of
the Purchased Assets under, any agreement or commitment to which either Seller
is a party or by which either Seller or any of the Purchased Asset is bound; or
(c) will result in a material violation of any law, judgment, decree, order,
regulation or rule of any court or governmental authority to which either of
the Sellers is subject.
10
4.4 PURCHASED ASSETS. Except as set forth in SCHEDULE 4.4, Sellers own
all the assets (whether real, personal, or mixed and whether tangible or
intangible) that they purport to own located in the facilities owned or
operated by the Division or reflected as owned in the books and records of the
Division, including all of the properties and assets reflected in SCHEDULES
1.1(a), 1.1(c), 1.1(f), and 4.15.
4.5 [INTENTIONALLY OMITTED]
4.6 FINANCIAL INFORMATION. Attached hereto as SCHEDULE 3.1(b) is a true
and complete copy of the March 31 Net Assets Statement, which has been
prepared in accordance with the books and records of the Business and in
accordance with GAAP. The March 31 Net Assets Statement fairly presents all
of the assets and liabilities of the Business to be acquired on the date set
forth therein. The March 31 Net Assets Statement does not include or reflect
any Intercompany Payables or Intercompany Receivables. Attached hereto as
Schedule 4.6 is certain unaudited operating information relating to the
Division for each of the twelve month periods ended December 31, 1994, and
December 31, 1995, and for the three month period ended March 31, 1996 (the
"Financial Information"). The Financial Information (i) was derived from the
regularly kept books and records of the Division, (ii) was prepared in all
material respects in accordance with the accounting principles, policies and
practices of the Division consistently applied, excluding inventory
obsolescence and inventory and fixed asset write-downs resulting from the
transactions contemplated hereby, (iii) fairly presents the financial
position of the Division with respect to the line items presented for the
periods indicated, and (iv) was included within the Annual Reports on Form
10-K filed by Aviall, Inc. for its fiscal years ended December 31, 1994 and
December 31, 1995, and in the Quarterly Report on Form 10-Q filed by Aviall,
Inc. for its fiscal quarter ended March 31, 1996, respectively, excluding
inventory and fixed asset write-downs resulting from the transactions
contemplated hereby.
4.7 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 4.7, (i) all
accounts receivable shown on the March 31 Net Assets Statement and all
accounts receivable thereafter created or acquired by Sellers and the
Division in connection with the operation of the Division prior to the
Closing Date, including the accounts receivable to be set forth on the
Closing Date Net Assets Statement, have arisen and will arise in the Ordinary
Course of Business, (ii) other than in the Ordinary Course of Business, no
amount of such accounts receivable are subject to any contra, setoffs,
allowances or discounts of any kind pursuant to any written, or, to Sellers'
Knowledge, other agreements with customers, which, in each case, have not
been adequately reserved for; and (iii) no written or, to Sellers' Knowledge,
other notice has been received from any account debtor that any amounts of
such accounts receivable are subject to any pending or threatened
counterclaims, set-offs, allowances or discounts of any kind, other than in
the Ordinary Course of Business.
4.8 INVENTORY. Except as set forth on SCHEDULE 4.8, all inventory of the
Division, whether or not reflected in the March 31 Net Assets Statement is
located at the addresses set forth on SCHEDULE 4.8, and consists of inventory
received, accepted, and maintained through the Division's quality procedures,
accompanied by documents stating that such products have been certified as
being in accordance with the specifications of the design authority for such
product. Without making any express or implied representation or warranty as
to the amount to be received from the sale of such inventory, the Purchased
Assets include Saleable (as defined) inventory with an aggregate original cost
not less than the net book value of the inventory as set forth on the Closing
Date Net Assets Statement (without any additional reserves taken against such
inventory beyond those reflected on the March 31 Net Assets Statement). Except
as set forth on SCHEDULE 4.8, Sellers possess and at Closing will transfer to
Purchaser all documentation (a) required by law to permit Purchaser to sell or
otherwise transfer substantially all the inventory and (b) necessary for the
certification of substantially all the inventory contained in the Purchased
Assets as required by the contractual obligations of Sellers. All inventory of
the Division as of March 31, 1996 plus all inventories thereafter acquired by
Sellers or the Division on or prior to the Closing Date, less all inventories
sold between April 1, 1996 and the Closing Date, shall be reflected on the
Closing Date Net Assets Statement. Except as set forth on SCHEDULE 4.8, all
11
inventories shown as of March 31, 1996, and not disposed of prior to the
Closing Date and all inventories thereafter acquired by the Sellers or the
Division on or prior to the Closing Date have been acquired by the Division in
the Ordinary Course of Business.
4.9 BOOKS AND RECORDS. The records, files, documents and papers of
Sellers relating to the Business, which have been made available to Purchaser,
are complete and correct and have been maintained in accordance with sound
business practices in all material respects, except for any omission or error
which would not individually or in the aggregate, have a Material Adverse
Effect.
4.10 LICENSES, PERMITS AND AUTHORIZATIONS. Sellers have all approvals,
licenses and permits of all governmental authorities and agencies, necessary
for the conduct of the Business and the ownership and use of the Purchased
Assets, all of which are identified on SCHEDULE 4.10 ("PERMITS"). Sellers are
in material compliance with such Permits. Except as disclosed in SCHEDULE 4.10,
each of the Permit is freely transferable.
4.11 NO UNDISCLOSED LIABILITIES, ETC. Sellers have no debts, liabilities
or obligations of any nature (whether absolute, accrued, contingent or
otherwise) that would have a Material Adverse Effect except as disclosed on
SCHEDULE 4.11.
4.12 CONSENT AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except as
disclosed in SCHEDULE 4.12, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by Sellers in connection with the
execution, delivery and performance of this Agreement by Sellers and the
transactions contemplated hereby.
4.13 LITIGATION. Except as disclosed in SCHEDULE 4.13, there is no
action, proceeding or governmental investigation pending or, to the best
knowledge of Sellers, threatened against either of the Sellers or any
properties or rights of either of the Sellers relating to the Business,
Division or the Purchased Assets, before any court, arbitrator or
administrative or governmental body.
4.14 TAX RETURNS. Sellers have timely filed all tax reports and returns
required to be filed by them, except where the failure to so file will not
individually or in the aggregate have a Material Adverse Effect. Such returns
are complete and correct in all material respects, and all Taxes due and
payable thereon, and all Taxes due and payable before the Closing Date, have
been paid or provided for, except where such failure would not result in a
Material Adverse Effect. To the best knowledge of Sellers, no facts exist or
have existed which would constitute grounds for the assessment of any
additional Tax liability with respect to the Purchased Assets. Except as
disclosed in SCHEDULE 4.14, Sellers have not granted any waiver currently in
effect of the statute of limitations on the assessment of any Taxes or
assessments related to the Purchased Assets or the Business of the Division.
4.15 CONTRACTS AND AGREEMENTS. SCHEDULE 4.15 identifies every agreement,
license, lease and contract which provides for annual payment by either
Seller or any third party greater than $100,000 or which was entered into or
arose not in the Ordinary Course of Business, to which either Seller is a
party that relates to the Business and/or the Purchased Assets (the
"CONTRACTS"), and except as disclosed on SCHEDULE 4.15, all of such Contracts
may be assigned and transferred to Purchaser without the consent, approval,
or waiver of any other party to such Contract or any other third party or
governmental authority. Neither Seller nor, to Sellers' Knowledge, any other
party to any Contract is in default, and no event has occurred which with the
giving of notice or passage of time or both would constitute a default, under
any Contract or obligation owed by either Seller with respect to the Business
or the Purchased Assets, which default would have a Material Adverse Effect,
either individually or together with other defaults, and Sellers have not
received any notices of any breach, default, or termination of any Contract.
Sellers have furnished to Purchaser accurate and complete copies of all of
the Contracts referred to in the first sentence of this Section 4.15.
12
4.16 COMPLIANCE WITH LAWS. The Division and the Purchased Assets are in
compliance with, and the manner in which the Sellers use the Purchased Assets
and conduct the Business of the Division do not violate, any applicable law,
ordinance or regulation of any federal, state or local government or agency
except for violations, if any, that would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect. Neither
Seller has received notice of any such violation or alleged violation from any
governmental agency relating thereto. The parties agree that this
representation does not relate to or cover environmental matters, and that the
Sellers make no representation or warranty with respect to environmental
matters, except as specifically set forth in SECTION 4.17.
4.17 ENVIRONMENTAL MATTERS. Except for such matters as are disclosed on
SCHEDULE 4.17, Sellers have conducted the Business, at all times, in material
compliance with, and have not been and are not currently in violation of or
liable under, any Environmental Law. Except as disclosed on SCHEDULE 4.17,
Sellers have no basis to expect, nor have they received, any order, written
notice, or other communication from (i) any governmental body or private
citizen, or (ii) the current or prior owner or operator of any facilities
utilized in the conduct of the Business (the "Facilities"), including any to
which materials have been delivered and/or transported by the Division for
off-site disposal, treatment or recycling, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual
or potential obligation to undertake or bear the cost of any environmental,
health, and safety liabilities with respect to any of the Facilities or with
respect to any Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by Sellers,
or by any other person in connection with the conduct of the Business for
whose conduct Sellers are responsible under law or contract or with respect
to any Facility from which Hazardous Materials have been transported treated,
stored, handled, transferred, disposed, recycled or received.
Except as disclosed on SCHEDULE 4.17, there are no pending or, to the
knowledge of Sellers, threatened claims, encumbrances, or other restrictions of
a material nature resulting from any environmental, health, and safety
liabilities or arising under or pursuant to any Environmental Law, with respect
to or affecting any of the Facilities in which Sellers have or had an interest.
Except as disclosed on SCHEDULE 4.17, to Sellers' Knowledge, there is no
basis to expect, nor have Sellers received, any citation, directive, inquiry,
notice, order, summons, warning, or other written communication that relates
to any alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any environmental, health, and safety
liabilities with respect to any of the Facilities in which Sellers had an
interest, or with respect to any Facility to which Hazardous Materials
generated, manufactured, refined, transferred, imported, used, or processed
by Sellers, or any other person in connection with the conduct of the
Business for whose conduct Sellers are responsible under law or contract,
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
Except as disclosed on SCHEDULE 4.17, to Sellers' Knowledge, there is no
reasonable basis to expect that, Sellers have environmental, health, and safety
liabilities with respect to the Facilities, or with respect to any property
geologically or hydrologically adjoining the Facilities.
Sellers have made available to Purchaser complete copies and results of
any reports, studies, analyses, tests, or monitoring possessed by or within the
control of Sellers pertaining to Hazardous Materials or hazardous activities
in, on, or under the Facilities, or concerning compliance by Sellers or any
other person for whose conduct Sellers are responsible under law or contract,
with Environmental Laws in respect of the Division and the Purchased Assets.
Such reports and additional materials have been made available for the
convenience of Purchaser and Sellers are not aware of nor liable for any
material omission from or inaccuracy in any such reports or materials and make
no other representation as to any such report or material.
13
4.18 NO MATERIAL ADVERSE CHANGE. Except as disclosed on SCHEDULE 4.8,
since March 31, 1996, there has been no Material Adverse Change. Sellers have
not received any written notice that any customers intend to discontinue or
substantially diminish or change its relationship with the Business on
account of the transaction contemplated hereby or otherwise, other than
Contracts expiring in the Ordinary Course of Business.
4.19 TITLE TO ASSETS, ENCUMBRANCES. The fixed assets included within the
Purchased Assets, other than inventory (the "Fixed Assets"), are in good
condition and repair, normal wear and tear excepted, for the purposes for
which they are used, and none of the Fixed Assets requires any repair or
replacement except for maintenance in the Ordinary Course of Business for
Sellers. Sellers have good and indefeasible title to the Purchased Assets
(including, without limitation, all inventory) and none of such Purchased
Assets is subject to any lien, mortgage, pledge, security interest
encumbrance, hypothecs, adverse claim, right of any third party, or charge of
any kind (collectively, "LIENS"), except as set forth in SCHEDULE 4.19. If
Purchaser obtains the financial systems not being sold hereunder either from
Sellers or from Tri-Star, as the case may be, the Purchased Assets will be
sufficient for the conduct of the Business in substantially the same manner
as conducted prior to Closing.
4.20 EMPLOYEES.
(a) SCHEDULE 4.20 is a true and complete list setting forth (a)
the names, current salaries of, and other compensation payable to, the
employees of the Division, regardless of the amount of annual compensation,
(b) the names and total annual compensation for all independent contractors
who render services on a regular basis to the Division or are currently under
contract to render services to the Division whose current annual compensation
is $10,000 or more, and (c) the names of each employee of the Division who is
party to an employment, confidentiality, non-compete, written agreement, or,
to Sellers' Knowledge, other agreement with a Seller, true and complete
copies of each of which have been provided to Purchaser.
(b) Other than as set forth in SCHEDULE 4.20, the Sellers are not
legally required (i) to pay to any employee of the Division pursuant to any
written, or to Sellers' Knowledge, any oral agreement, any bonus or increase in
compensation, (ii) to change any contract, plan or arrangement for employees of
the Division, or (iii) to create any new contract, plan or arrangement for
employees of the Division.
4.21 LABOR, EMPLOYMENT CONTRACTS AND EMPLOYEE BENEFIT PROGRAMS.
(a) [intentionally omitted]
(b) Neither Seller has any liability or obligation under a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA (as defined
below) in respect of the employees employed in the Division.
(c) The Seller 401(k) Plan (as defined in SECTION 621) is qualified
under Section 401(a) of the Code and nothing has occurred with respect to the
operation of the Seller 401(k) Plan which could cause the loss of such
qualification or the imposition of any liability, penalty or tax under the
Employee Retirement Income Security Act of 1974, as amended, and regulations
thereunder, ("ERISA") or the Code.
(d) SCHEDULE 4.21 sets forth a true and complete list of each
employee benefit plan of Sellers within the meaning of Section 3(3) of ERISA
and each other contact, plan or arrangement providing a benefit for employees
of the Division ("EMPLOYEE BENEFIT PLAN").
(e) At the Closing Date, there will be no contractual restrictions
with the Sellers which would restrict in any way the ability of the Purchaser
to offer employment pursuant to SECTION 6.9.
14
(f) Sellers are not a party to or obligated in connection with the
Division under or with respect to any collective bargaining agreements,
arrangements or contracts with any labor union or other representative of
employees or any employee benefits provided by any such agreement. No
employees of the Division are represented by any labor organization. No labor
organization or group or employees has made a pending demand for recognition
or certification. Except as otherwise listed in SCHEDULE 4.21, no work
stoppage, shutdown, strike, union organizational activity, allegation, charge
or complaint of employment discrimination or other similar occurrence has
occurred with respect to employees of the Sellers engaged in the Business of
the Division during Sellers' past three completed fiscal years, or is pending
or threatened against Sellers; nor do Sellers know any basis for any such
allegation, charge or complaint. Sellers are in compliance and have complied
in all material respects with all applicable laws relating to the employment
of labor within the Division, including provisions thereof relating to wages,
hours, equal opportunity, Worker Adjustment Retraining Notification Act of
1988 and any similar state or local "plant closing" law, collective
bargaining and the payment of Social Security taxes, and any state taxes.
Except as otherwise listed in SCHEDULE 4.21, there are no administrative
charges or court complaints pending or, to the best knowledge of Sellers,
threatened against Sellers with respect to employees of Sellers engaged in
the business of the Division before the U.S. Equal Employment Opportunity
Commission or any state, federal or Canadian court or agency concerning
alleged employment discrimination or any other matter relating to the
employment of labor, within the Division. Except as otherwise listed in
SCHEDULE 4.21, there is no unfair labor practice charge or complaint
threatened or pending against Sellers before the National Labor Relations
Board ("NLRB") or any similar state, local or Canadian body with respect to
employees of Sellers engaged in the business of the Division.
(g) Attached hereto as SCHEDULE 4.21(g) is a true and complete
copy of the Aerospace Severance Plan. The Aerospace Severance Plan is the
only plan or arrangement applicable to the employees of the Division with
respect to severance payments.
4.22 INSURANCE POLICIES. Attached hereto as SCHEDULE 4.22 is a correct
and complete list and description of all insurance policies owned by Sellers
with respect to the Business or the Purchased Assets. Such policies are in
full force and effect, and Sellers are not in default under any of them.
Sellers have not received any notice of (a) cancellation or intent to cancel,
or (b) increase or intent to increase premiums, with respect to such
insurance policies and Sellers are not aware of any basis for any such
action. The policies are sufficient for compliance with all obligations of
Sellers under any Contracts, except to the extent that any non-compliance,
either individually or in the aggregate, would not have a Material Adverse
Effect.
4.23 CONDUCT IN ORDINARY COURSE OF BUSINESS. Except as set forth on
Schedule 4.23 since March 31, 1996, Sellers have conducted the Business only
in the Ordinary Course of Business, have incurred no liabilities with respect
to the Division other than in the Ordinary Course of Business, and there has
been no:
(a) except in the Ordinary Course of Business, payment or increase
by either Seller of any bonuses, salaries, or other compensation to any
employee, or entry into any employment, severance, or similar contract with
any director, officer, or employee engaged exclusively in the Business of the
Division;
(b) adoption of, or increase in the payments to or benefits under,
any Employee Benefit Plan for or with any employees engaged in the Business of
the Division;
(c) damage to or destruction or loss of any asset or property used
in the Business by the Division, whether or not covered by insurance, that has
a Material Adverse Effect on the properties, assets, business, financial
condition, or prospects of the Business of the Division, taken as a whole;
(d) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, loan, credit, guaranty, or similar agreement or any
15
agreement with an Affiliate of a Seller, or (ii) any Contract or transaction
involving a total remaining commitment by or to the Division of at least
$200,000, other than Contracts expiring in the Ordinary Course of Business;
(e) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property used in the
conduct of the Business or mortgage, pledge, or imposition of any Lien or other
encumbrance on any Purchased Asset;
(f) cancellation or waiver of any claims or rights with a value to
the Division in excess of $200,000;
(g) disclosure of confidential or proprietary information except to
a party that is a party to a written agreement protecting such confidential
information;
(h) to Sellers' Knowledge, actual or threatened loss of customers or
key personnel of the Business, other than Xxxxxxx X. Xxxxxxxxxx:
(i) material change in the tax or financial accounting methods used
by Sellers with respect to the Division; or
(j) agreement, whether oral or written, by either Seller to do any
of the foregoing.
4.24 LEASES. All leases of the real and personal property leased by ASI or
any Seller and utilized by the Division, including all such leases with related
parties or Affiliates (if any, which are identified as such), are listed on
SCHEDULE 4.24. ASI enjoys peaceful and undisturbed possession under all such
leases, and all of such leases are valid and in full force and effect. Neither
Seller nor, to Sellers' Knowledge, any other party to any such leases, is in
default, and no event has occurred which with the giving of notice or passage
of time or both would constitute a default, under any such lease, which default
would result in a Material Adverse Effect.
4.25 PROPRIETARY RIGHTS. Sellers have good title to all of the Proprietary
Rights of Sellers, subject to the licenses and matters set forth in SCHEDULE
4.25. The use of the Proprietary Rights by Sellers in connection with the
Division does not infringe on the rights of any person or entity and no person
or entity has asserted any such claim. SCHEDULE 4.25 lists all Proprietary
Rights included in the Purchased Assets and all agreements related thereto
which affect such Proprietary Rights. To Sellers' Knowledge, no person or
entity infringes on the Proprietary Rights.
4.26 DISCLOSURE. This ARTICLE 4 does not contain, and the certificates
to be delivered by each Seller pursuant to SECTION 7.1.1 will not contain,
any untrue statement of a material fact or omit, and such certificates will
not omit, any material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which they were made, not
misleading.
4.27 SCHEDULES AND EXHIBITS. Disclosure of any fact or item in any
Schedule or Exhibit hereto referenced by a particular paragraph or section in
this Agreement shall, should the existence of the fact or item or its
contents be relevant to any other paragraph or section, be deemed to be
disclosed with respect to that other paragraph or section, but only to the
extent that it is apparent from the content of the disclosure that the fact
or item is relevant to such other paragraph or section.
4.28 CONSTRUCTION OF CERTAIN PROVISIONS. It is understood and agreed that
neither the specification of any dollar amount in the representations and
warranties contained in this Agreement nor the inclusion of any specific item
in the Schedules or Exhibits is intended to imply that such amounts, or the
items so included, are
16
or are not material, and neither party shall use the fact of the setting of
such amounts or the fact of the inclusion of any such item in the Schedules
or Exhibits in any dispute or controversy between the parties as to whether
any obligation, item or matter is or is not material for purposes hereof;
PROVIDED, HOWEVER, that the representations and warranties which are
specifically included in this Agreement and which expressly are made with
respect to matters which are material to Sellers or the Business shall not be
affected by the foregoing.
4.29 WARRANTIES. SCHEDULE 4.29 summarizes all claims outstanding, pending
or, to the best knowledge of the Sellers, threatened under or for breach of any
warranty relating to any products sold or distributed by the Division. The
Sellers have made available to Purchaser copies of the product warranties of
products sold or distributed by the Division, all of which, to Sellers'
Knowledge, are assignable to Purchaser.
4.30 AFFILIATE TRANSACTIONS. Except as disclosed on SCHEDULE 4.30, no
Affiliate of a Seller has any agreement with a Seller (other than employment
agreements disclosed on SCHEDULE 4.20) relating to, or any interest in any
property used in or pertaining to, the Division, the Business or the
Purchased Assets (other than ownership of capital stock of a Seller).
4.31 CUSTOMERS AND SUPPLIERS. SCHEDULE 4.31 lists the 10 largest customers
and suppliers of the Division for the 12-month period ended December 31, 1995
and the six month period ending June 30, 1996, and sets forth opposite the name
of each such customer or supplier the approximate percentage of net sales or
purchases by the Division attributable to such customer or supplier for each
such period.
4.32 UNLAWFUL PAYMENTS AND CONTRIBUTIONS. Neither of the Sellers, any
Affiliate thereof, nor any of their respective directors, officers or, any of
their respective employees or agents has, with respect to the Business, (i)
used any funds for any unlawful contribution, endorsement, gift, entertainment
or other unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or any other U.S. or applicable
foreign law relating to improper payments to governmental representatives; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any person or entity.
4.33 APPROVALS. The sale by Sellers of the Purchased Assets requires the
prior written consent of (a) the senior lenders to Aviall, Inc., and (b) the
Royal Bank of Canada (collectively, the "BANK LENDERS"). Sellers have no
reason to believe that any of the Bank Lenders will not consent to the
transactions contemplated hereby.
4.34 NO IMPLIED REPRESENTATION. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
HEREIN, IT IS THE EXPLICIT INTENTION OF EACH PARTY HERETO THAT SELLERS ARE
NOT MAKING ANY REPRESENTATION, OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO,
ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO ANY OF THE PURCHASED
ASSETS; IT BEING UNDERSTOOD THAT EXCEPT FOR SELLERS' REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT, PURCHASER IS ACCEPTING THE PURCHASED
ASSETS ON AN "AS IS" AND "WHERE IS" BASIS.
17
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to each of the Sellers as
follows:
5.1 ORGANIZATION, CORPORATE POWER AND GOOD STANDING. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
execute and deliver this Agreement and the other agreements contemplated
hereby, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. Purchaser is qualified or
licensed to do business as a foreign corporation in the State of Texas and in
each other state or province where such qualification is necessary to conduct
its Business.
5.2 CORPORATE AUTHORIZATION. The execution and delivery of this
Agreement and the other agreements contemplated hereby and the performance by
Purchaser of its obligations hereunder and thereunder have been duly authorized
by all necessary corporate action and no other corporate act on the part of
Purchaser, its Board of Directors or its stockholders is necessary to authorize
the execution, delivery or performance by Purchaser of this Agreement or any
other agreement contemplated hereby or thereby. This Agreement has been duly
executed by Purchaser, and constitutes, and the other agreements contemplated
hereby, and the instruments and documents to be delivered by Purchaser
hereunder, also constitute, the legal, valid and binding obligations of
Purchaser enforceable against the Purchaser in accordance with their respective
terms (subject to bankruptcy, reorganization, insolvency, and other similar
laws relating to or affecting the enforcement of creditors' rights generally
and to the availability of equitable remedies).
5.3 NO VIOLATION. Neither the execution and delivery of this Agreement,
nor the performance by Purchaser of its obligations hereunder nor the
consummation of the transactions contemplated hereby (a) will violate, conflict
with, result in any breach of, constitute a default under, or result in the
termination or acceleration of, the Purchaser's certificate of incorporation,
or Bylaws, or any agreement indenture, license, obligation or instrument to
which Purchaser is a party or by which Purchaser or any of its subsidiaries, is
bound or affected, the violation, conflict or breach of which would,
individually or in the aggregate, have a Material Adverse Effect, (b) would
require the consent of any other party to, or result in the creation or
imposition of any Lien upon any of the assets of the Purchaser under, any
material agreement or commitment to which Purchaser is a party or by which
Purchaser is bound; or (c) will result in a material violation of any law,
judgment, decree, order, regulation or rule of any court or governmental
authority to which Purchaser is subject.
5.4 LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS, REPORTS, ETC.
Except as disclosed on SCHEDULE 5.4, no registrations, filings, declarations,
applications, notices, consents, approvals, authorizations, orders,
qualifications or waivers are required to be made, filed, given or obtained by
Purchaser or any of its subsidiaries with, to or from any person or
governmental authorities and agencies in connection with the execution,
delivery, and performance of this Agreement by Purchaser and the consummation
of the transactions contemplated hereby.
5.5 AVAILABILITY OF FINANCING. Purchaser has no reason to believe that
financing (including equity capital in an amount not less than $22 million)
sufficient to enable Purchaser to consummate the transactions contemplated by
this Agreement (including the acquisition by Purchaser or its Affiliates of
Tri-Star Aerospace, Inc. and its Affiliates ("TRI-STAR")) will not be
available to Purchaser on the Closing Date. Attached hereto as SCHEDULE 5.5
is a copy of a commitment letter (the "Commitment Letter") issued to
Purchaser in connection with obtaining debt financing necessary to consummate
the transactions contemplated by this Agreement. The amount of money to be
loaned to Purchaser pursuant to the Commitment Letter, together with the
18
contemplated equity capital, is sufficient to enable Purchaser to consummate
the transactions contemplated by this Agreement and the acquisition of
Tri-Star and its Affiliates. The Commitment Letter is true and complete and
accurately describes the understanding between the Purchaser and its debt
financing source and has not been modified or amended. Purchaser shall
promptly deliver to Sellers a copy of any amendment or modification of the
Commitment Letter.
ARTICLE 6.
OTHER COVENANTS
6.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and the
Closing Date, Sellers will, subject to SECTION 102(b) hereof, (a) afford
Purchaser and its representatives and prospective lenders and their
representatives (collectively, "PURCHASER'S ADVISORS") reasonable access during
normal business hours to the Division's personnel, properties, contracts, books
and records, and other documents and data, (b) make available and furnish to
Purchaser and Purchaser's Advisors copies of all such contracts, books and
records, and other existing documents and data relating to the Business and the
Division as Purchaser may reasonably request, and (c) make available to
Purchaser and Purchaser's Advisors such additional financial, operating, and
other data and information relating to the Business and the Division as
Purchaser may reasonably request; provided, however, that, to the extent the
parties hereto subsequently agree and upon such terms and conditions as then
specified, subsurface or other environmental testing shall be limited to "Phase
1" environmental tests and prior to any such subsurface or other environmental
testing, Purchaser will provide Sellers with prior written notice and an
opportunity to participate in such testing and will provide copies of all
reports and other results of such investigations and testings to Sellers.
Notwithstanding the foregoing or any other provision of this Agreement, Sellers
shall not deliver nor provide Purchaser, Purchaser's employees, directors,
officer and agents, or any Affiliate with access to any workpapers, letters,
memoranda or other documents relating to the writedown of any inventory or
assets of the Business done prior to April 1, 1996 (the "Writedown Documents").
6.2 AGREEMENT TO OBTAIN CONSENTS AND APPROVALS. Purchaser, on the one
hand, and Sellers, on the other hand, each hereby agree to cooperate with one
another and to use all commercially reasonable efforts to obtain all
governmental and third party consents and approvals to the transfer and
assignment of the Purchased Assets and as otherwise necessary to complete the
transactions contemplated by this Agreement (including all filings, if any,
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT")) and (including taking all actions requested by Purchaser to
cause early termination of any applicable waiting period under the HSR Act);
provided, however, that there shall be no obligation on either Purchaser or
Sellers in order to obtain any such consent to (i) make any payments to third
parties, or (ii) to divest any assets of the Division or Tri-Star.
6.3 OPERATION OF THE BUSINESS. Between the date of this Agreement and
the Closing Date, Sellers will:
(a) except for the transfer of the Excluded Inventory, conduct the
Business only in the Ordinary Course of Business;
(b) use its Best Efforts to preserve intact the current business
organization of the Division, keep available, except in connection with
non-performance or malfeasance, the services of the current officers,
employees, and agents of the Division, and maintain the relations and good
will with suppliers, customers, landlords, creditors, agents, and others
having business relationships with the Division;
19
(c) inform the Purchaser concerning operational matters relating to
the Business of a material nature; and
(d) otherwise respond to reasonable requests of Purchaser requesting
information on the status of the business, operations and finances of the
Division.
6.4 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, neither
Seller will, without the prior written consent of Purchaser, take any
affirmative action, or fail to take any reasonable action within its control,
as a result of which any of the changes or events listed in SECTION 4.23 is
likely to occur.
6.5 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Sellers agree that Sellers will promptly notify Purchaser in writing if
either Seller becomes aware of any fact or condition that causes or constitutes
a breach of any of its representations and warranties hereunder as of the date
of this Agreement, or if Sellers become aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, Purchaser agrees that it will promptly notify Sellers in writing if it
becomes aware of any fact or condition that causes or constitutes a breach of
any of its representations and warranties hereunder as of the date of this
Agreement, or if Purchaser becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, each party hereto will promptly notify the remaining parties hereto of
the occurrence of any breach of any covenant in this SECTION 6 or of the
occurrence of any event that may make the satisfaction of the conditions in
SECTION 7 impossible or unlikely.
6.6 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to its terms, Sellers agree with Purchaser that neither of
the Sellers nor any of their Affiliates or their respective officers, directors
or employees, nor any investment banker, attorney, accountant or other
representative retained by Sellers or any such Affiliate, shall, directly or
indirectly, solicit offers from, negotiate with, or in any manner encourage,
discuss with the offeror, or accept any proposal of any other person relating
to the acquisition of the assets and business of the Division, in whole or in
part whether directly or indirectly, through purchase, merger, consolidation or
otherwise (other than sales of inventory in the Ordinary Course of Business)
subject to the fiduciary duties under applicable corporate law of the
respective Boards of Directors of Sellers. Sellers will promptly notify
Purchaser in the event that any Seller receives any proposal which Sellers
believe in the exercise of their reasonable judgment is bona fide.
6.7 NON-COMPETITION AGREEMENT. At the Closing, Sellers will enter into a
Non-Competition Agreement (the "NON-COMPETITION AGREEMENT") with Purchaser,
substantially in the form attached hereto as EXHIBIT C.
6.8 FURTHER ASSURANCES. Sellers and Purchaser agree that, from time to
time, whether before or after the Closing Date, each of them will, and will
cause their respective Affiliates to, execute and deliver such further
instruments of conveyance and transfer and take such other action as may be
necessary to carry out the purposes and intents hereof. Without limiting the
generality of the foregoing, Purchaser shall extend full cooperation to Sellers
to enable Sellers to obtain and take possession of the Excluded Assets after
the Closing. Neither Sellers or Purchaser shall take any actions which are
inconsistent with the purposes and intentions hereof Sellers shall, from time
to time after the Closing, upon the request of Purchaser, perform, execute and
deliver, or cause to be performed, executed, and delivered, all such further
acts and instruments as may be
20
required for the better assigning, transferring, granting, conveying,
assuring and confirming to Purchaser the Purchased Assets sold to Purchaser
pursuant to this Agreement.
6.9 SELLER'S EMPLOYEES.
(a) Within ten (10) calendar days prior to the Closing Date, but
effective as of the Closing Date, Purchaser shall offer employment on an "at-
will" basis to those of the employees of Sellers exclusively employed in the
Division on the Closing Date who are listed on SCHEDULE 6.9. Such offer shall
state (i) that each such employee shall be compensated at the same base salary
as disclosed in SCHEDULE 4.20, (ii) that each such employee shall be allowed to
participate in the employee benefit plans and arrangements maintained for
similarly situated employees of Tri-Star, and (iii) without limiting or
restricting the foregoing, such other terms and conditions of employment as
determined by Purchaser, in its sole discretion. Purchaser may, in its sole
discretion, elect not to offer employment to up to three (3) of the employees
listed on SCHEDULE 6.9; provided, however, that Purchaser notifies Sellers of
such decision and such employees' names at least three (3) calendar days prior
to the Closing Date. Such employees receiving and accepting Purchaser's offer
of employment pursuant to the terms hereof shall hereinafter be referred to as
"TRANSFERRED EMPLOYEES". With respect to each Transferred Employee, Purchaser
agrees to use reasonable efforts to obtain prior to the Closing Date a Waiver,
in the form of EXHIBIT D attached hereto, of any and all rights and claims to
any severance package or other severance compensation, payments or benefits
under the Aerospace Severance Plan from Sellers as of the Closing Date for
periods of employment prior to the Closing Date (the "SEVERANCE CLAIMS");
PROVIDED, HOWEVER, that if Purchaser does not obtain such Waiver from any such
Transferred Employee, and Purchaser thereafter hires such employee, Purchaser
shall assume all liabilities relating to such Severance Claims as set forth in
Section 2.1(k) and indemnify Sellers with respect thereto as set forth in
Article 8 hereof. Sellers agree to give such reasonable assistance to Purchaser
as may be required to obtain the Waivers and Purchaser agrees to provide
originals of all Waivers so obtained to Sellers at the Closing. If any such
employees are subject to restrictive agreements with Sellers, Sellers agree to
release such employees from the provisions of such restrictive agreements so as
to enable Purchaser to employ these persons. In addition to SCHEDULE 4.20,
Sellers will provide such other information and access to work history records
relating to the Division's employees as Purchaser may reasonably request. For
purposes of Purchaser's vacation plan, each Transferred Employee shall receive
service credit for all service by such employee with Sellers or their
Affiliates and their predecessors. For purposes of Purchaser's medical plan,
Purchaser agrees to waive any limitations regarding pre-existing medical
conditions to the extent so waived in Sellers' medical plan as of the Closing
Date as to Transferred Employees, effective immediately after the Closing Date,
and as to other persons entitled to coverage under the terms of the Purchaser's
medical plan by virtue of their relationship to such employees.
(b) No provision of this Agreement, express or implied, shall create
any rights or remedies of any nature or kind whatsoever in any Transferred
Employee or in his or her beneficiaries and nothing in this Agreement shall in
any way hinder or prevent Purchaser from amending or terminating any pension,
compensation or employee benefit plan or from terminating any Transferred
Employee at any time.
6.10 SYSTEMS TRANSITION. At the Closing, ASI and Purchaser will enter into
a Management Services Agreement (the "MANAGEMENT SERVICES AGREEMENT")
substantially in the form attached hereto as EXHIBIT E, to enable Purchaser to
continue to utilize the information systems operated by Sellers in connection
with the Division, in the manner and for the period provided therein.
6.11 SUBLEASE. At the Closing, ASI and Purchaser will enter into a
sublease agreement (the "SUBLEASE"), for that space at the facility located at
0000 Xxxxxxxxxxx, Xxxxxx, Xxxxx, currently used by Sellers in the conduct of
the Business, which Sublease shall be substantially in the form attached hereto
as EXHIBIT F.
21
6.12 FINANCING ARRANGEMENT. Purchaser shall use its reasonable
commercial efforts to obtain the debt financing and equity capital
contemplated pursuant to Section 5.5 to enable Purchaser to consummate the
transactions contemplated by this Agreement and the acquisition of Tri-Star
and its Affiliates and covenants and agrees to provide debt financing sources
or any equity investors promptly with all information and documentation
necessary in order to consummate such financing. Purchaser shall (a) give
prompt notice to the Sellers of any material development affecting the
ability of the Purchaser to consummate the transactions contemplated by this
Agreement and the acquisition of Tri-Star and its Affiliates, including any
material development or change relating to the Commitment Letter, and (b)
promptly notify the Sellers in writing of any events, facts and occurrences
arising subsequent to the date of this Agreement is signed by the parties
hereto (including any proposed revision or modification to the Commitment
Letter) which could materially and adversely affect the financing or the
consummation of the transactions contemplated hereby and the acquisition of
Tri-Star and its Affiliates, which could result in any breach of any
representation or warranty or any material covenant contained in, or which
could have the effect of making any representation and warranties in this
Agreement false or misleading in any material respect.
6.13 RECORDS RETENTION BY PURCHASER. Purchaser shall not dispose of or
destroy any books or records relating to the Purchased Assets or Sellers'
conduct of the Business that are located or stored at the site of the
Business as of the Closing Date without complying with applicable guidelines
promulgated by the Internal Revenue Service or Revenue Canada, as applicable
and without first offering, by written notice at least 60 days before the
date of intended disposition or destruction, to turn over possession thereof
to Sellers. Purchaser shall allow Sellers access to such books and records,
but only to those books and records and only during the normal working hours
of the facility where they are located or stored, and Sellers shall have the
right at its own expense to make copies of such books and records, provided,
however, that any such access or copying shall be had or done in such a
manner as not to interfere with the normal conduct of Purchaser's business.
6.14 RECORDS RETENTION BY SELLERS; CERTAIN ACCESS. Sellers shall not
dispose of or destroy any books or records relating to the Purchased Assets
or Sellers' conduct of the Business between January 1, 1994 and the Closing
Date (the "Books and Records") without complying with applicable guidelines
promulgated by the Internal Revenue Service or Revenue Canada, as applicable
and without first offering, by written notice at least 60 days before the
date of intended disposition or destruction, to turn over possession thereof
to Purchaser. Sellers shall allow Purchaser access to the Books and Records,
during the normal working hours of the facility where they are located or
stored and upon reasonable notice, and Purchaser shall have the right at its
own expense to make copies of the Books and Records, provided, however, that
any such access or copying shall be had or done in such a manner as not to
interfere with the normal conduct of Sellers' business. Sellers also agree to
allow Purchaser and Purchaser's independent public accountants to have access
to the Books and Records and such other information, excluding the Writedown
Documents, as shall be reasonably necessary for Purchaser to prepare, and for
such independent public accountants to audit such financial statements as may
be required to be presented for the Division as a "predecessor company," in a
registration statement filed by Purchaser or any successor corporation with
the Securities and Exchange Commission under the Securities Act.
6.15 INTRACOMPANY ACCOUNTS. Notwithstanding anything to the contrary set
forth herein all amounts owed or payable by the Business to, or to the
Business by, Sellers or any Affiliate of Sellers, including officers,
stockholders or employees Affiliated with the Division, shall be settled and
paid immediately prior to the Closing Date with no payment made by any party
to this Agreement.
22
6.16 INSURANCE.
(a) For a period of five years following the Closing Date,
Purchaser shall, at its own expense, maintain insurance policies for
worldwide aviation products liability and general liability of types similar
to those currently maintained by Sellers and in amounts as set forth on
Schedule 6.16, it being agreed and understood that Purchaser shall, at its
own expense. increase the amount of its aviation liability insurance to not
less than $20 million within 90 days of Closing. All such policies shall be
endorsed as follows:
(i) To name Sellers, their Affiliates, and each of their
respective directors, officers, employees and agents, and each of their
heirs, executors, successors and assigns (collectively, the "Seller Insured
Parties") as additional insureds or named insureds (with respect to claims
made policies) with respect to claims and actions arising out of or relating
to:
(A) the conduct by Purchaser or Sellers or any Affiliate
of Purchaser or Sellers of the Business at any time prior to or after the
Closing Date, including, without limitation, liability of the types
customarily covered by the following types of insurance coverage (A) aviation
liability; (B) automobile liability; (C) workers' compensation; or (D)
general liability;
(B) the sale of products by Purchaser or Sellers or any
Affiliate of Purchaser or Sellers in respect of the Business made prior to or
after the Closing Date;
(ii) to provide that coverage is primary and without right of
contribution from any insurance that the Seller Insured Parties may now carry
or hereafter choose to carry;
(iii) to provide a severability of interest clause protecting
the Seller Insured Parties as though a separate policy had been issued to
each, but without increasing the overall limit of liability or aggregate:
(iv) to provide that if at any time Purchaser fails to
maintain the insurance as stated herein, then the Seller Insured Parties
shall have the right, but not the duty, to pay premiums in order to maintain
in effect the insurance required hereunder for the benefit of the Seller
Insured Parties; provided, however, that in the event that the Seller Insured
Parties pay such premiums as described above, Purchaser shall immediately
reimburse the Seller Insured Parties by wire transfer of immediately
available funds; and
(v) to provide that the Seller Insured Parties shall receive
sixty (60) days written notice of cancellation or material change in coverage
prior to such cancellation or material change being effective to the Seller
Insured Parties.
Purchaser shall provide, or shall cause to be provided a certificate of
insurance issued to the Seller Insured Parties prior to the Closing Date and
promptly upon each insurance renewal thereafter and upon the increase of the
aviation liability insurance described above, evidencing that the insurance
has been endorsed to include the provisions as required herein and such
certificate shall provide a waiver of subrogation rights of Tri-Star.
(b) For a period of five (5) years following the Closing Date,
Sellers shall, at their own expense, maintain insurance policies for
worldwide aviation products liability and general liability of types similar
to those currently maintained by Purchaser and in the same amounts, as set
forth on Schedule 6.16. All such policies shall be endorsed as follows:
23
(i) To name Purchaser, its Affiliates, and each of their
respective directors, officers, employees and agents, and each of their
heirs, executors, successors and assigns (collectively, the "Purchaser
Insured Parties") as additional insureds or named insureds (with respect to
claims made policies) with respect to claims and actions arising out of or
relating to:
(A) the conduct by Sellers or any Affiliate of Sellers
of the Business at any time prior to the Closing Date, including, without
limitation, liability of the types customarily covered by the following types
of insurance coverage (A) aviation liability; (B) automobile liability; (C)
xxxxxxx'x compensation; or (D) general liability;
(B) the sale of products by Sellers or any Affiliate of
Sellers in respect of the Business made prior to the Closing Date;
(ii) to provide that coverage is primary and without right of
contribution from any insurance that the Seller Insured Parties may now carry
or hereafter choose to carry;
(iii) to provide a severability of interest clause protecting
the Purchaser Insured Parties as though a separate policy had been issued to
each, but without increasing the overall limit of liability or aggregate;
(iv) to provide that if at any time Sellers fail to maintain
the insurance as stated herein, then the Purchaser Insured Parties shall have
the right, but not the duty, to pay premiums in order to maintain in effect
the insurance required hereunder for the benefit of the Purchaser Insured
Parties; provided, however, that in the event that the Purchaser Insured
Parties pay such premiums as described above, Purchaser shall immediately
reimburse the Purchaser Insured Parties by wire transfer of immediately
available finds; and
(v) to provide that the Purchaser Insured Parties shall
receive sixty (60) days written notice of cancellation or material change in
coverage prior to such cancellation or material change being effective to the
Purchaser Insured Parties.
Sellers shall provide, or shall cause to be provided, a certificate of
insurance issued to the Purchaser Insured Parties on the Closing Date and
promptly upon each insurance renewal thereafter, evidencing that the
insurance has been endorsed to include the provisions as required herein.
6.17 [INTENTIONALLY OMITTED.]
6.18 NON-ASSIGNABLE WARRANTY. To the extent any third-party product
warranties are not assignable to, or enforceable by, Purchaser, Seller shall
at Purchaser's expense cooperate with Purchaser and use reasonable commercial
efforts to attempt to enforce any warranty claims thereunder on Purchaser's
behalf but shall not be obligated to file suit to enforce such warranty
claims.
6.19 TAX MATTERS. Sellers and Purchaser shall cooperate fully with each
other and make available or cause to be made available to each other in a
timely fashion such tax data, prior tax returns and filings and other
information as may be reasonably required for the preparation by Purchaser or
Sellers of any tax returns, elections, consent, certificates or other
documents required to be prepared or filed by Purchaser or Sellers and any
audit or other examination by any taxing authority, or judicial or
administrative proceeding relating to liability for Taxes. Purchaser and
Sellers will each retain and make available to the other party during normal
business hours and upon reasonable notice all records and other information
which may be relevant to any such tax return, document, audit or examination,
proceeding or determination, and will each provide the other party with any
final determination of any such audit or examination, proceeding or
determination that affects any
24
amount required to be shown on any tax return of the other party for any
period. Sellers will retain copies of all tax returns supporting work
schedules and other records relating to tax periods or portions thereof
ending prior to or on the Closing Date.
At the Closing, Purchaser and Sellers shall deliver to each other such
properly completed resale exemption certificates and other similar
certificates or instruments as are necessary to claim available exemptions
from the payment of sales, transfer, use or other similar Taxes under
applicable law.
All real and personal property Taxes, state and local ad valorem Taxes
and assessments applicable to the Business or the Purchased Assets shall be
prorated by the parties as of the Closing Date, and all such Taxes applicable
to periods of time prior to the Closing Date shall be the sole obligation
responsibility and expense of Sellers. All such assessments and Taxes
applicable to periods after the Closing Date shall be the sole obligation,
responsibility and expense of Purchaser.
At its election, Purchaser may use the "Alternative Procedure" provided
in Section 5 of Revenue Procedure 84-77 with respect to filing and furnishing
Internal Revenue Service Forms W-2, W-3 and 941 to Transferred Employees for
the 1996 calendar year; PROVIDED, HOWEVER, that Purchaser shall provide
written notice to Sellers of such election at least five (5) calendar days
prior to Closing. Under such "Alternative Procedure", (i) Sellers and
Purchaser each shall report on a predecessor-successor basis as set forth in
such Revenue Procedure, (ii) Sellers shall be relieved from furnishing Forms
W-2 to all Transferred Employees and (iii) Purchaser shall assume the
obligations of Sellers to furnish such Forms W-2 to such Transferred
Employees for the full 1996 calendar year. Purchaser also shall use such
similar procedures and make similar elections under state or local tax laws.
Purchaser shall be responsible for filing and furnishing Internal Revenue
Service Forms W-2, W-3 and 941 for the full 1996 calendar year.
6.20 EMPLOYEES. For a period commencing on the date of this Agreement
and ending two (2) years following the Closing Date, (i) the Sellers shall
not, and shall cause their Affiliates not to, without the prior written
consent of Purchaser, offer employment, to any person currently employed by
the Division and (ii) Purchaser shall not, and shall cause its subsidiaries
not to, without the prior written consent of Sellers, offer employment to any
employee of Sellers not currently employed exclusively in connection with the
Division.
6.21 401(K) SPINOFF. As of the Closing Date, Sellers shall make all
contributions (including employee contributions within the control of Sellers
matching contributions and other employer contributions) provided for under
the Sellers' 401(k) Plan (the "Seller 401(k) Plan") to the Seller 401(k) Plan
attributable to service and compensation through the Closing Date, whether or
not such contributions are due under the terms of the Seller 401(k) Plan,
Sellers shall, to the extent legally permissible, cause a spinoff and
transfer in compliance with Section 414(1) of the Code from the trust for the
Seller 401(k) Plan to a trust established by and for a defined contribution
savings plan qualified under Section 401(a) of the Code maintained or
established by Purchaser ("Purchaser's 401(a) Plan") of an amount in cash
equal to the aggregate account balances, as of the date of such transfer, of
the Transferred Employees (as defined in Section 6.9(a)) who are participants
under the Purchaser's 401(a) Plan as of such transfer date; PROVIDED,
HOWEVER, that Purchaser shall assume no liability for the valuation of the
accounts of the Transferred Employees under the Seller 401(k) Plan. Any such
transfer shall occur as soon as practicable following the later of (i) the
Closing Date, (ii) the designation (or establishment or amendment, if
necessary) of Purchaser's 401(a) Plan, (iii) the receipt by Sellers of a
favorable determination letter issued by the Internal Revenue Service for the
Purchaser's 401(a) Plan or an opinion of counsel of Purchaser reasonably
satisfactory to Sellers opining that the Purchaser's 401(a) Plan is a
qualified plan under Sections 401(a) of the Code, (iv) an opinion of counsel
of Purchaser reasonably satisfactory to Sellers opining that the Purchaser's
401(a) Plan contains all provisions necessary to permit a transfer of assets
in accordance with Section 414(1) of the Code and the regulations thereunder,
from the Seller 401(k) Plan to Purchaser's 401(a) Plan, including, but not
limited to, for example an opinion that Purchaser's
25
401(a) Plan contains all provisions necessary to avoid an impermissible
cutback under Section 411(d)(6) of the Code with respect to the benefits,
rights and features associated with the amounts transferred from the Seller
401(k) Plan, and, if applicable, (v) the expiration of thirty days after both
Purchaser and Sellers have filed Form 5310-A, if necessary, with the Internal
Revenue Service. The Purchaser's 401(a) Plan shall provide that any
Transferred Employee that was eligible to participate under the Seller 401(k)
Plan shall immediately be eligible to participate under the Purchaser's
401(a) Plan.
6.22 TRI-STAR ACQUISITION. Purchaser and its Affiliates shall promptly
notify Sellers of any indications that the Purchaser or one of its Affiliates
may not be able to consummate the acquisition of Tri-Star on the Closing Date.
6.23 AEROSPACE SEVERANCE PLAN. Sellers covenant and agree not to amend
or modify the Aerospace Severance Plan in any respect prior to or after
Closing without the prior written consent of Purchaser.
ARTICLE 7.
CLOSING CONDITIONS
7.1 CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement and
to pay the Purchase Price are subject to the fulfillment on or before the
Closing Date or waiver thereof of each of the following conditions:
7.1.1 REPRESENTATIONS AND WARRANTIES OF SELLERS, COMPLIANCE WITH
AGREEMENT. The representations and warranties of Sellers in this
Agreement shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though all such representations
and warranties had been made as of such date, except for any such
representations and warranties that are expressly made as to time or a
specific date (which need only be true and correct in all material
respects as to such time or date). Sellers shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by them on or before the Closing Date. Each Seller shall
deliver to Purchaser a certificate of an authorized officer and secretary,
dated the Closing Date, to that effect.
7.1.2 XXXX OF SALE. Purchaser shall have received from Sellers a
Xxxx of Sale, executed by Sellers, covering the Purchased Assets in the
form of Exhibit G attached hereto.
7.1.3 NON-COMPETITION AGREEMENT. Purchaser shall have received
from Sellers a Non-Competition Agreement between Sellers and Purchaser,
executed by Sellers, substantially in the form of Exhibit C attached
hereto.
7.1.4 ASSIGNMENT AND ASSUMPTION AGREEMENT. Purchaser shall have
received an Assignment and Assumption Agreement, executed by Sellers,
substantially in the form of Exhibit H attached hereto, with respect to
the Purchased Assets.
7.1.5 REQUIRED CONTRACTS. Sellers shall have assigned to
Purchaser each of the contracts listed on Schedule 7.13 attached hereto
or, alternatively, the Purchaser shall have received satisfactory
assurances that it will be granted a new contract on terms substantially
as favorable, when taken as a whole, as that with the respective Seller,
of each such contract.
26
7.1.6 [Intentionally omitted]
7.1.7 ABSENCE OF MATERIAL CHANGE. There shall have occurred no
Material Adverse Change between the date hereof and the Closing Date.
7.1.8 CONCURRENT CLOSING OF TRI-STAR TRANSACTION. The closing,
concurrently with or immediately following the Closing, of the acquisition
by Purchaser or one or more subsidiaries of Purchaser of Tri-Star pursuant
to that certain Agreement and Plan of Merger between Purchaser and Tri-Star
dated as of August 28, 1996.
7.1.9 REGULATORY APPROVALS. Receipt by Purchaser and Sellers of
all regulatory approvals necessary for consummation of the acquisition of
all of the Purchased Assets without any requirement to divest any assets
of the Division or Tri-Star, including, if applicable, the expiration (or
early termination) of waiting periods under the HSR Act and satisfaction
of all other applicable legal requirements.
7.1.10 LEASES AND OTHER INSTRUMENTS OF CONVEYANCE. With respect
to the leases included in the Purchased Assets Purchaser shall have
received from Sellers an Assignment and Assumption of Leases, executed by
Sellers, substantially in the form of Exhibit I attached hereto, together
with a Landlord's Estoppel Certificate executed by each landlord,
substantially in the form of Exhibit J attached hereto.
7.1.11 CONSENTS. Purchaser shall have received from Sellers copies of
all written consents, required for Sellers to transfer the Purchased
Assets, including specifically the consent of the Bank Lenders to Aviall,
Inc., to the sale of the Purchased Assets. With respect to any contract
listed on Schedule 7.1.5, for which no consent to assignment is
delivered, the Purchaser shall have received the assurances with respect
to the grant of new contracts as contemplated by Section 7.1.5.
7.1.12 RESOLUTIONS; INCUMBENCY. Purchaser shall have received from
Sellers copies of resolutions adopted by the Board of Directors and the
stockholder of each Seller, authorizing the execution and delivery of this
Agreement and each document to be executed by such Seller and the
consummation of the transactions contemplated hereby, in each case
certified by the Secretary or Assistant Secretary of such Seller, together
with customary certifications as to the incumbency of relevant officers
of such party.
7.1.13 EVIDENCE OF NO LIENS. Sellers shall deliver to Purchaser as
of the Closing Date, in form and substance satisfactory to counsel for
Purchaser, Forms UCC-3 or related termination statements, satisfactions
and releases, along with such other documents as Purchaser and its counsel
shall reasonably require to evidence the termination of all Liens related
to the Purchased Assets other than the liens set forth on Schedule 7.1.13.
7.1.14 CERTIFICATE OF GOOD STANDING. Purchaser shall have received
certificates of good standing (or equivalent certificates) with respect to
Sellers issued by the Office of the Secretary of State of Delaware in the
case of ASI and the appropriate governmental authority of the Province of
Ontario, Canada in the case of Aviall Canada, in each case dated not more
than ten (10) days prior to the Closing Date.
7.1.15 CERTIFICATE OF INCORPORATION; BY-LAWS. Purchaser shall have
received copies of the Certificates of Incorporation or equivalent charter
documents of Sellers certified by the Secretary of State of the State of
Delaware in the case of ASI and the appropriate governmental authority of
the
00
Xxxxxxxx xx Xxxxxxx, Xxxxxx in the case of Aviall Canada, and Bylaws
of Sellers, certified by the Secretary or Assistant Secretary of each
Seller.
7.1.16 MANAGEMENT SERVICES AGREEMENT. Purchaser shall have received
from Sellers, the Management Services Agreement, executed by Sellers,
substantially in the form of Exhibit E attached hereto.
7.1.17 SUBLEASE. Purchaser shall have received from Sellers the
Sublease for the location at 0000 Xxxxxxxxxxx, Xxxxxx, Xxxxx, executed by
ASI, substantially in form of Exhibit F attached hereto.
7.1.18 NO INJUNCTION. At the Closing Date there shall be no pending
or threatened litigation by a governmental authority or a third party nor
shall be any injunction, restraining order or decree of any nature of any
court or governmental authority of competent jurisdiction that is in
effect that restrains or prohibits the consummation of the transactions
contemplated by this Agreement.
7.1.19 AVAILABILITY OF FINANCING. Purchaser shall have received
debt financing from one or more banks or other financial institutions on
terms and conditions acceptable to Purchaser which,, after giving effect
to the contemplated equity capital of up to $22 million, is in an amount
sufficient in Purchaser's sole discretion, to consummate the transactions
contemplated under this Agreement and the Tri-Star agreement referred to
in Section 7.1.8 and to provide adequate working capital to operate the
Business and the business of Tri-Star immediately thereafter, it being
understood that debt financing on the terms set forth in the Commitment
Letter shall be deemed to be acceptable to Purchaser.
7.1.20 OPINIONS OF COUNSEL. Purchaser shall have received an
opinion of Xxxxxx and Xxxxx, LLP, counsel for ASI, substantially in the
form attached hereto as Exhibit K and an opinion of Xxxxx & XxXxxxxx,
counsel for Aviall Canada, substantially in the form attached hereto as
Exhibit L.
7.1.21 OPINION OF DELAWARE COUNSEL. Purchaser shall have received
from Morris, Nichols, Arsht & Xxxxxxx, counsel to Aviall, Inc. in
connection with this Agreement and the transactions contemplated hereby,
an opinion dated as of the Closing Date, to the effect that no approval of
the stockholders of Aviall, Inc. is required in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
7.1.22 NON-FOREIGN STATUS. Purchaser shall have received an
affidavit of non-foreign status from ASI pursuant to Treasury Regulation
Sec. 1.1445-2.
7.1.23 CERTIFICATE OF SELLERS. Bourjeaurd shall have received from
Sellers that certain Certificate and Release, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit O.
7.2 CONDITIONS TO SELLERS' OBLIGATION TO CLOSE. The obligations of
Sellers to Co the transactions contemplated by this Agreement are subject to
the fulfillment on or before the Closing Date or waiver thereof of each of
the following conditions:
7.2.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER; COMPLIANCE
WITH AGREEMENT. The representations and warranties of Purchaser in this
Agreement shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though all such representations
and warranties had been made as of such date, except for any such
representations and warranties that are
28
made as to time or a specific date (which need only be true and correct in
all material respects as to such time or date). Purchaser shall have
performed, satisfied and complied in all material respect with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by it on or before the Closing Date.
Purchaser shall deliver to Sellers a certificate of its President and
Secretary, dated the Closing Date, to that effect In addition, Bourjeaurd
will have delivered a certificate to the Sellers substantially in the form
of Exhibit N hereto on the date hereof and an update of such certificate
as of the Closing Date.
7.2.2 PURCHASE PRICE. Sellers shall have received confirmation of
federal funds wire transfer to the account or accounts designated by ASI,
for the benefit of Sellers, of funds in an amount equal to the Purchase
Price.
7.2.3 ASSIGNMENT AND ASSUMPTION AGREEMENT. Sellers shale have
received from Purchaser an Assignment and Assumption Agreement, executed
by Purchaser, with respect to the Assumed Liabilities which Purchaser has
agreed to assume hereunder, substantially in the form of Exhibit H hereto.
7.2.4 RESOLUTIONS, INCUMBENCY. Sellers shall have received from
Purchaser copies of resolutions adopted by the Board of Directors of
Purchaser authorizing the execution and delivery of this Agreement and
each document to be executed by Purchaser and the consummation of the
transactions contemplated hereby, in each case certified by the Secretary
of Purchaser, together with customary certifications as to the incumbency
of relevant officers thereof.
7.2.5 CERTIFICATE OF GOOD STANDING. Sellers shall have received a
Certificate of Good Standing of Purchaser issued by the Office of the
Secretary of State of Delaware dated not more than ten (10) days prior to
the Closing Date.
7.2.6 CERTIFICATE OF INCORPORATION; BY-LAWS. Sellers shall have
received copies of the Certificate of Incorporation of Purchaser certified
by the Secretary of State of the State of Delaware, and Bylaws of Purchaser
certified by the Secretary of Purchaser.
7.2.7 SUBLEASE. Sellers shall have received from Purchaser the
Sublease for the location at 0000 Xxxxxxxxxxx Xxxxxx, Xxxxx, executed by
Purchaser, substantially in form of Exhibit F attached hereto.
7.2.8 [Intentionally omitted]
7.2.9 REGULATORY APPROVALS. Receipt by Purchaser and Sellers of
all regulatory approvals necessary for consummation of the sale of the
Purchased Assets.
7.2.10 NO INJUNCTION. At the Closing Date there shall be no
injunction, restraining order or decree of any nature of any court or
governmental authority of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the transactions contemplated
by this Agreement.
7.2.11 LEASES AND OTHER INSTRUMENTS OF CONVEYANCE. With respect to
the leases included in the Purchased Assets, Sellers shall have received
from Purchaser an Assignment and Assumption of Leases, executed by
Purchaser, substantially in the form of Exhibit 1 attached hereto.
7.2.12 OPINION OF COUNSEL. Sellers shall have received an opinion
of Xxxxxxxx & Xxx, PLC, counsel for Purchaser, substantially in the form
attached hereto as Exhibit M.
29
7.2.13 CONSENT OF BANK LENDERS. Sellers shall have received consent
of the Bank Lenders to the sale of the Purchased Assets.
7.2.14 FAIRNESS OPINION. Sellers shall have received from Xxxxxxx
Xxxxx & Co., Inc., financial advisor to Sellers, its opinion dated as of a
recent date, substantially to the effect that the consideration to be
received by Sellers hereunder in consideration for the Purchased Assets and
Assumed Liabilities as contemplated herein, is fair or reasonable from a
financial point of view, to the stockholders of Aviall, Inc.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNITY BY SELLERS. Without limitation of any other provision of
this Agreement or any other rights and remedies available to Purchaser at law
or in equity, Sellers, jointly and severally, covenant and agree to
indemnify, defend and hold harmless Purchaser and its Affiliates,
stockholders, officers, directors, employees, representatives, successors and
assigns (the "Purchaser Indemnified Parties") from all liabilities, losses,
claims, demands, damages, judgments, interest, penalties, fines, costs and
expenses, whether or not arising out of third-party claims (including without
limitation, diminution in value and consequential damages, reasonable
attorneys' and accountants' fees and expenses) (collectively, "Losses")
actually or allegedly arising out of, in connection with or relating to (i)
any breach of any covenant or agreement of Sellers or any inaccuracy in any
of the representations and warranties of Sellers in this Agreement or in any
certificate delivered by Sellers pursuant to this Agreement: (ii) claims,
lawsuits, actions and proceedings by Sellers' employees, former employees or
applicants to Sellers, or any beneficiary or executor of the estate of any of
the foregoing, relating to employment, except to the extent such claims and
liabilities are an Assumed Liability; (iii) claims, lawsuits, and other
liabilities arising out of Sellers' conduct of the Business of the Division
on or before the Closing Date, to the extent that such losses described in
clauses (i), (ii) and (iii) hereof are not an Assumed Liability and together
with amounts paid under Section 2.1 (f) and (g) exceed $300,000 in the
aggregate; (iv) all uninsured amounts paid or incurred by the Purchaser
Indemnified Patties pursuant to Section 2.1 (g), or any amounts paid to
customers by the Purchaser Indemnified Parties pursuant to Section 2.1(f),
for product warranty losses not paid by the applicable manufacturer but only
to the extent that such Losses, together with all Losses under clauses (i),
(ii), and (iii) exceed $300,000 in the aggregate and relate to products sold
by the Division prior to the Closing Date; or (v) the Excluded Assets or
Retained Liabilities. Purchaser, on behalf of itself and the Purchaser
Indemnified Parties, agrees to use reasonable commercial efforts to pursue
any warranty and/or insurance for claims under Sections 2.1 (f) and (g), but
shall not be obligated prior to seeking any indemnity from Sellers under the
provision of this Article 8 to file suit to enforce such warranty or
insurance claims. It is understood and agreed that Sellers' obligations in
the aggregate under clauses (i), (ii), (iii), (iv) and (v) of this Section
8.1 shall be limited to the amount of the Purchase Price. In addition, with
respect to Section 4.8 hereof, Sellers shall not be deemed to be in breach of
Section 4.8 and shall not indemnify Purchaser under the provisions of this
Article 8 for Sellers failure to possess or transfer to Purchaser
certificates of conformance with respect to any inventory item included
within the Purchased Assets on the Closing Date, unless Purchaser has
attempted to and failed to obtain such certificates of conformance using
reasonable commercial efforts following one hundred twenty (120) days after
Purchaser's written request for certification from the manufacturer of such
inventory item.
8.2 INDEMNITY BY PURCHASER. Without limitation of any other provision
of this Agreement or any other rights and remedies available to Sellers at
law or in equity, Purchaser covenants and agrees to indemnify, defend and
hold harmless Sellers and their Affiliates, stockholders, officers,
directors, employees. representatives, successors and assigns (the "Seller
Indemnified Parties") from all liabilities, losses, claims, demands, damages,
judgments, interest, penalties, fines, costs and expenses whether or not
arising out of third-party claims (including reasonable attorneys' and
accountants' fees and expenses) actually or allegedly arising
30
out of, or in connection with, or relating to (i) any inaccuracy in any of
the representations and warranties of Purchaser in this Agreement or any
certificate delivered by Purchaser pursuant to this Agreement (other than
Exhibit N attached hereto) and (ii) the Assumed Liabilities.
8.3 PROCEDURE AND PAYMENT. If, after the Closing Date either Seller or
Purchaser (the "Indemnitee") shall receive notice of any third-party claim or
alleged third-party claim asserting the existence of any matter of a nature
as to which the Indemnitee has been indemnified against under this Article 8
by the other party hereto (the "Indemnitor"), or if such Indemnitee wishes to
assert the existence of any other matter as to which the Indemnitee has been
indemnified under this Article 8, Indemnitee shall promptly notify Indemnitor
in writing with respect thereto, which notice shall state the facts upon
which the Indemnitee makes such claim for indemnification, together with
reasonable documentation of such claim (the "Notice of Claim"). Such notice
shall be given within ninety (90) days of the date upon which the Indemnitee
becomes aware of the Claim, provided that no failure by an Indemnitee in
giving such Notice of Claim shall reduce or otherwise affect the obligation
of the Indemnitor to indemnify the Indemnitee with respect thereto, except to
the extent that the Indemnitor demonstrates that the defense of such action
is prejudiced by the Indemnitee's failure or delay to give such notice.
Indemnitor shall have the right to defend against any such third-party claim
provided (i) Indemnitor shall, within ten (10) days after the giving of such
Notice by Indemnitee, notify Indemnitee that it disputes such claim, give
reasons therefor, and that Indemnitor will, at its own cost and expense,
defend the same, and (ii) such defense is instituted and continuously
maintained in good faith by Indemnitor. In such event the defense may, if
necessary, be maintained in the name of Indemnitee. Indemnitee may, if it so
elects, designate its own counsel to participate with the counsel selected by
Indemnitor in the conduct of such defense. Indemnitor shall not permit any
lien or execution to attach to the assets of the Indemnitee as a result of
such claim, and the Indemnitor shall provide such bonds or deposits as shall
be necessary to prevent the same. In any event Indemnitee shall be kept fully
advised as to the status of such defense. If Indemnitor shall be given notice
of a claim as aforesaid and shall fail to notify Indemnitee of its election
to defend such claim within the time and as prescribed herein, or after
having so elected to defend such claim shall fail to institute and maintain
such defense in accordance with the foregoing, or if such defense shall be
unsuccessful then, in any such event, the Indemnitor shall fully satisfy and
discharge the claim within ten (10) days after notice from Indemnitee
requesting Indemnitor to do so.
8.4 OTHER CLAIMS. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by
a third party, the party seeking indemnification shall promptly send notice
of such claim to the party from whom indemnification is sought. If the latter
disputes such claim, such dispute shall be resolved by agreement of the
parties.
8.5 SUBROGATION. The rights of any Indemnitor shall be subrogated to
any rights of action which the Indemnitee may have against any other person
with respect to any matter giving rise to a claim for indemnification
hereunder.
ARTICLE 9.
TERMINATION
9.1 TERMINATION DATE. In the event that the Closing has not occurred on
or before September 16, 1996 (the "Termination Date"), the right, duties and
obligations of the parties under this Purchase Agreement other than the
duties and obligations set forth in Section 102 and 10.7 hereof, shall be
terminated (except for a breach occurring prior to termination), unless the
parties agree in writing to extend such date.
9.2 TERMINATION FEE. In the event Sellers do not consummate the
acquisition contemplated hereby because the conditions to the Closing set
forth in Section 7.2.13 or 7.2.14 have not been satisfied, or in the event
Sellers terminate this Agreement pursuant to the exercise of their fiduciary
duties in accordance with
31
Section 6.6, then Sellers shall immediately pay to Purchaser an amount in
cash equal to the total amount of third-party fees and expenses directly
incurred by Purchaser solely in connection with the acquisition contemplated
hereby (including, without limitation, fees and expenses payable to Xxxxxxxx
& Xxx. PLC, Xxxx, Gotshal & Xxxxxx LLP, Xxxxxx Xxxxxxxx LLP, Aon Risk
Services Inc., and Equitable Securities Corporation) not to exceed $350,000
in the aggregate. This fee shall serve as the exclusive remedy to Purchaser
for any failure by Sellers to close the transactions contemplated by this
Agreement as a result of the failure to satisfy the conditions to Closing set
forth in Sections 7.2.13 or 7.2.14 or as a result of termination of this
Agreement by Sellers pursuant to their exercise of their fiduciary duties in
accordance with Section 6.6 or for a breach of Sellers' representation and
warranty in Section 4.33 of this Agreement.
ARTICLE 10.
MISCELLANEOUS
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Unless otherwise stated
herein, each party hereto covenants and agrees that its representations and
warranties contained in this Agreement and in any instrument of sale,
assignment, conveyance and transfer executed and delivered pursuant to this
Agreement shall survive the Closing for a period of eighteen (18) months;
provided, however, that Sellers' representations and warranties in Sections
4.14, 4.17, and 421 (other than subparagraphs (c), (e) and (g) thereunder)
shall continue until the expiration of the applicable statute of limitations
and Sellers' representations and warranties in Sections 42 and 43 and
Purchaser's representations and warranties in Sections 52 and 53 shall
continue indefinitely and without limit.
10.2 DISCLOSURE AND CONFIDENTIALITY.
(a) The parties agree to hold the terms and conditions of this
Agreement and all other agreements contemplated herein, in strict confidence
and not to make any disclosure with respect thereto, publicly or privately,
other than as jointly agreed by the parties. If a party is required to make
any such disclosure by applicable law or stock exchange rules or regulations,
it must first provide to the other party the content of the proposed
disclosure, the reasons that such disclosure is required by law or stock
exchange rules or regulations, and the time and place that the disclosure
will be made; provided that the other party shall have the right to review
and comment on such proposed disclosure statement prior to its release.
(b) Except as reasonably necessary in connection with Purchaser's
efforts to obtain the financing needed to accomplish the transactions
contemplated by this Agreement, or to the extent required by law, Purchaser
shall not disclose or use, and it shall cause its directors, employees,
accountants and other agents and representatives and other person or
organization who is considering providing financing to the Purchaser in
connection with this Agreement and their respective employees, agents,
counsel, accountants and advisors (collectively, the "Representatives"), not
to disclose or use any information with respect to Sellers, the Division, or
its business or assets furnished, or to be furnished by Sellers to Purchaser
or any Representative of Purchaser in connection herewith or otherwise
obtained by Purchaser or any Representative of Purchaser pursuant to this
Agreement (collectively, ("Confidential Information"), at any time or in any
manner other than in connection with its evaluation of the completion of the
transactions contemplated by this Agreement; provided that Purchaser may
disclose Confidential Information to a person or organization which is
considering providing financing to Purchaser in connection with this
Agreement after such person or organization has entered into a
confidentiality agreement with Sellers on substantially the same terms as the
confidentiality agreement dated March 28, 1996 between ASI and Equitable
Securities, financial advisor to Purchaser; and further provided that the
obligation of Purchaser under this Section 10.2(b) shall not apply to any
information which Purchaser can demonstrate (i) is generally available to or
known by the public other than as a result of
32
improper disclosure by Purchaser or (ii) is obtained by Purchaser from a
source other than Seller, provided that the source was not bound by a duty of
confidentiality to Seller or another party with respect to such information.
If this Agreement is terminated pursuant to its terms, Purchaser shall
promptly return to Sellers and shall insure that each of its Representatives
returns to Sellers, any Confidential Information in its or their possession.
In the event of any inconsistency between the provisions of this paragraph
and the terms of the confidentiality agreements between Sellers, on the one
hand, and Purchaser, Equitable Securities or other Representatives, on the
other hand, the terms of such confidentiality agreements shall prevail.
10.3 BROKERS. Each party warrants to the other that it has not employed
or used the services of any broker or finder in connection with the
transaction contemplated by this Agreement except that Purchaser has used the
services of Equitable Securities and Purchaser shall pay all fees and
expenses due to Equitable Securities. Each party agrees to indemnify and hold
the other party harmless from any loss or damage arising from any claim made
by any broker or finder allegedly based on the actions of such indemnifying
party.
10.4 CONSTRUCTION. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without giving effect to
conflicts of law provisions. This Agreement and its subject matter have
substantial contacts with Delaware, and all actions, suits, or other
proceedings with respect to this Agreement shall be brought only in a court
of competent jurisdiction sitting in New Castle County, Delaware or in the
Federal District Court having jurisdiction over that County. In any such
action, suit, or proceeding, such court shall have personal jurisdiction of
all of the parties hereto, and service of process upon them under any
applicable statutes, laws, and rules shall be deemed valid and good.
10.5 BULK SALES. Sellers and Purchaser hereby waive compliance with the
Uniform Commercial Code Bulk Sales Act in effect in the State of Texas, to
the extent in effect or applicable. Sellers jointly and severally covenant
and agree to indemnify, hold harmless and defend Purchaser from, for and
against any liability, damage, loss, deficiency or expense (including
reasonable attorney's fees) which Purchaser may suffer or sustain as a result
of any claims made by creditors of Sellers against Purchaser as a direct
result of a failure of the Sellers to comply with the Uniform Commercial Code
Bulk Sales Acts to the extent in effect in the State of Texas. Sellers and
Purchaser hereby agree to pursue all available exemptions from the bulk sales
laws in effect in Ontario and, to the extent that such exemptions are
unavailable prior to Closing, Sellers and Purchaser hereby waive compliance
with such laws, with it being understood that Sellers shall jointly and
severally indemnify Purchaser for any losses arising as a result of the
non-compliance with such laws, excluding in all events any failure of
Purchaser to pay any Assumed Liability.
10.6 AMENDMENTS. Any provision of this Agreement may be amended or
waived provided that any such amendment or waiver shall only be binding on a
party if set forth in a writing executed by such party.
10.7 EXPENSES. Except as provided in Sections 3.3(b) and 9.2 hereof,
each party hereto shall pay its own fees and expenses incurred in connection
with this transaction.
10.8 COMPLETENESS OF AGREEMENT. This Agreement and the Schedules hereto
and the other documents referred to or provided for herein represent the
entire contract among the parties with respect to the subject matter hereof,
and shall not be modified or affected by any offer, proposal, statement or
representation, oral or written, made by or for any party in connection with
the negotiation of the terms hereof.
10.9 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, personal
representatives, heirs and assigns, but neither the Agreement nor any of the
rights hereunder shall be assigned by any party hereto without the prior
written consent of the other party, provided that Sellers hereby consent to
the assignment by Purchaser of its benefits hereunder to its financing
sources as security for borrowings, to Tri-Star, any Affiliate of Tri-Star or
to any Affiliates of
33
Purchaser including assignment of Purchaser's right to acquire the Canadian
assets to a Canadian Affiliate of Purchaser; subject to the Canadian
Affiliate assuming jointly and severally with the Purchaser all liabilities
and obligations related to the Purchased Assets hereunder and to indemnify
Sellers under the provisions of Article 8 hereof.
10.10 NOTICES. Any notice, request, demand, waiver, consent or other
communication required or permitted hereunder shall be in writing and shall
be deemed given when actually delivered, as follows:
To Purchaser: Maple Leaf Aerospace, Inc.
0000 Xxxxxxxxxx
Xxxxx Xxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, President
With a copy to: Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx I. N. XxXxxxxx, Esq.
With a copy (which
shall not constitute
notice) to: Odyssey Partners, L.P.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
With a copy (which
shall not constitute
notice) to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Simeon Gold, Esq.
To Sellers: Aviall Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
and
Aviall (Canada) Ltd.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
With a copy to: Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
34
or to such other person or address as a party shall furnish the other parties
in writing.
10.11 COUNTERPARTS. This Agreement and any of the ancillary agreements
contemplated hereby may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties hereto and delivered to
the other.
10.12 NO BENEFIT TO OTHERS. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their respective successors, personal representatives,
heirs, and permitted assigns, and they shall not be construed as conferring
any rights on any other persons, including without limitation, any employees
of Sellers.
10.13 HEADINGS. Information set forth in the Schedules hereto is deemed
to have been disclosed for all purposes of this Agreement and is incorporated
herein and made a part of this Agreement the headings contained in this
Agreement are inserted for convenience only and shall not constitute a part
hereof.
* * * * *
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MAPLE LEAF AEROSPACE INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, President
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Xxxxx Xxxxx, Vice President
AVIALL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxx
President
AVIALL (CANADA) LTD.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxx
President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MAPLE LEAF AEROSPACE INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, President
By: /s/ Xxxxx Xxxxx
-------------------------------------------
Xxxxx Xxxxx, Vice President
AVIALL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxx
President
AVIALL (CANADA) LTD.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxx
President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MAPLE LEAF AEROSPACE INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, President
By: /s/ Xxxxx Xxxxx
-------------------------------------------
Xxxxx Xxxxx, Vice President
AVIALL SERVICES, INC.
By:
-------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
AVIALL (CANADA) LTD.
By:
-------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
MAPLE LEAF AEROSPACE, INC.
0000 Xxxxxxxxxx
Xxxxx Xxxx, Xxxxx 00000
September 16, 1996
BY FACSIMILE:
Aviall Services, Inc.
Aviall (Canada) Ltd.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
Reference is made to that certain Asset Purchase Agreement, dated as of
September 5, 1996, by and among Maple Leaf Aerospace, Inc., Aviall Services,
Inc. and Aviall (Canada) Ltd. (the "Agreement"). This letter will confirm
our agreement that the "Termination Date" for purposes of Article IX of the
Agreement has been extended to 11:59 p.m., New York City time, on September
18, 1996.
MAPLE LEAF AEROSPACE, INC.
By: /s/ X. Xxxxx
-------------------------------------------
X. Xxxxx
Vice President
Acknowledged and Agreed
as of September 16, 1996:
AVIALL SERVICES, INC.
AVIALL (CANADA) LTD.
By: /s/ ILLEGIBLE
-------------------------
Name:
Title:
EXHIBIT A
CERTAIN DEFINED TERMS
"ACCOUNTS RECEIVABLE": as defined in Section 1.1.
"ADJUSTMENT PERIOD": as defined in Section 3.1.
"AFFILIATE": with respect to any person, means any other person controlling,
controlled by, or under common control with such first person.
"AGREEMENT": as defined in the first paragraph of this Agreement.
"ASI": as defined in the first paragraph of this Agreement
"ASSUMED LIABILITIES": as defined in Section 2.1.
"AVIALL CANADA": as defined in the first paragraph of this Agreement.
"BEST EFFORTS": means the efforts that a prudent person desirous of achieving
a result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the person subject
to that obligation to take actions that would result in a materially adverse
change in the benefits to such person of this Agreement and the Contemplated
Transaction.
"BOURJEAURD": as defined in the third Whereas clause of this Agreement.
"BUSINESS": as defined in the first Whereas clause of this Agreement.
"CASH EQUIVALENT": those items specified in Section 1.2 or as listed on
Schedule 1.2.
"CODE": means the Internal Revenue Code of 1986 as amended.
"CLOSING": as defined in Section 1.3.
CLOSING DATE": as defined in Section 1.3.
"CONTRACTS": as defined in Section 4.13.
"DIVISION": as defined in the first Whereas clause of this Agreement.
"EMPLOYEE BENEFIT PLAN": as defined in Section 4.21.
"ENVIRONMENTAL LAWS" means all federal, state, provincial local or foreign
laws (including common law), statutes, codes, ordinances, rules, regulations
or other requirement relating to the environment, or natural resources and
any transfer of ownership notification or approval statutes, and includes,
but is not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
37
Purchased Assets, the Assumed Liabilities, condition (financial or
otherwise), operating results, employee or customer relations, business
activities or business prospects of the Division.
"OCCURRENCE". as defined in Section 2.1.
"ORDINARY COURSE OF BUSINESS": an action taken by Sellers or Purchaser, as
the case may be, will be deemed to have been taken in the "Ordinary Course of
Business" only if:
(a) such action is consistent with past practices and is taken in the
ordinary course of normal day-to-day operations;
(b) such action is not required to be authorized by the board of directors
of Sellers or Purchaser, as the case may be, (or by any person or group of
persons exercising similar authority) and is not required to be
specifically authorized by the parent company (if any) of Sellers or
Purchaser, as the case may be.
"1996 INVENTORY": as defined in Section 3.1.
"PREPAID ASSETS": as defined in Section 1.1.
"PROPRIETARY RIGHTS": as defined in Section 1.1.
"PURCHASE PRICE": as defined in Section 3.1.
"PURCHASED ASSETS": as defined in Section 1.1.
"PURCHASER": as defined in the first paragraph of this Agreement.
"RECORDS": as defined in Section 1.1.
"REDEEMED LIABILITIES": as defined in Section 2.2.
"RETAINED LIABILITIES": as defined in Section 2.2.
"SALABLE": means inventory that is not technically obsolete nor broken and
that has the necessary documentation and certificates for sale in the
Ordinary Course of Business.
"SECURITIES ACT": means the Securities Act of 1933, as amended
"SELLER": as defined in the first paragraph of this Agreement.
"SELLER INDEMNIFIED PARTIES": as defined in Section 8.2.
"SELLER INSURED PARTIES": as defined in Section 6.15.1.
"SELLERS": as defined in the first paragraph of this Agreement.
"SELLERS' KNOWLEDGE": shall mean the actual knowledge after due and
reasonable inquiry, including inquiry of Xxxxxxx X. Xxxxxxxxxx, of Sellers or
their respective executive officers or directors.
39