Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated June 27, 2002 ("Agreement") between
Signature Flight Support Corporation, a Delaware corporation ("Purchaser"), and
Mercury Air Group, Inc., a Delaware corporation ("Seller").
RECITALS
A. Seller operates a fixed base flight support operation for commercial
and private aircraft at Xxxxxxx Field (the "Facility") located in Bedford,
Massachusetts (the "Xxxxxxx Field"). The business operation operated by Seller
at Xxxxxxx Field is hereinafter referred to as the "Business" and includes the
following services and activities: retail general aviation and commercial
aviation fueling, general aviation aircraft handling and related general
aviation terminal services, fuel farm services, aircraft storage operations, and
GSE and aircraft maintenance.
B. On the terms and subject to the conditions of this Agreement,
Purchaser desires to acquire from Seller, and Seller desires to sell to
Purchaser, substantially all of the assets, properties and Business of Seller at
Xxxxxxx Field.
AGREEMENTS:
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1. Purchased Assets.
1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, Purchaser hereby purchases from Seller, and Seller hereby sells,
conveys, assigns, transfers and delivers to Purchaser, the Purchased Assets. For
purposes hereof, the term "Purchased Assets" means all properties, assets,
rights and interests of every kind and nature, whether real or personal,
tangible or intangible, of Seller as of the Closing Date that are used by Seller
in the Business (excluding only the Excluded Assets defined in Section 1.2),
including, but not limited to, the following:
(a) all prepaid customer deposits, including those identified on
Schedule 1.1(a);
(b) all inventories, parts and related supplies (including fuel
supplies), including those identified on Schedule 1.1(b);
(c) all interests in real estate (including, without limitation,
land, buildings, fixtures and improvements), whether owned in fee,
leased or otherwise described on the Real Estate Schedule attached as
Schedule 1.1(c) which includes
those parcels and improvements associated with the Lease and Agreement between
the Massachusetts Port Authority ("Massport") and Seller dated June 1, 1987, as
amended on November 12, 1996, June 3, 1998, July 1, 1998 and October 25, 2000
and as further supplemented and amended by letters dated February 8, 2001,
August 1, 2001 and August 27, 2001 (such lease agreement, amendments and letters
are collectively referred to herein as the "Lease Agreement"). The parcels and
improvements described under the Lease Agreement are reflected on Exhibit A. All
of the property described in this subsection 1.1(c) shall hereafter be referred
to as the "Real Property Interest".
(d) all interests in plant, machinery and equipment, fixtures, fittings,
furniture, automobiles, trucks, tractors, rolling stock and other vehicles,
tools, spare parts and supplies and other tangible personal property, whether
owned or leased by Seller (including, without limitation, items which have been
fully depreciated or expensed); a complete list of such property owned by
Seller set forth on the Tangible Property Schedule attached as Schedule 1.1(d);
(e) all rights, existing under the Lease Agreement, contracts, equipment
and other leases, hangar and/or office space sub-leases and other aircraft
storage arrangements, licenses, transferable permits, supply and distribution
arrangements, sales and purchase agreements and orders, employment and
consulting agreements, consignment arrangements, work-orders, warranties,
consents, orders, registrations, privileges, franchises, memberships,
certificates and approvals to which it is a party or by which any of the
Purchased Assets or the Business is bound or other similar rights that are
identified and described on the Contracts Schedule attached as Schedule 1.1(e)
(collectively, the "Contracts") other than those rights existing under the
Contracts characterized as "Rejected Contracts and Equipment" (as defined in
Section 1.2(i));
(f) all lists and records that pertaining to past and current customers
(such information may be limited, however, to information that relates directly
to such customers' use of the Facility and need not include fuel pricing and
other information that relates to fuel purchasing activities at other FBO's in
Seller's network), local activity with suppliers and distributors, personnel and
agents and all other books, ledgers, files, documents, correspondence, plats,
architectural plans, drawings and specifications and business records of every
kind and nature of Seller, if any (collectively, the "Seller's Records");
(g) all goodwill as a going concern;
(h) all interest in and to telephone numbers and all listings pertaining
to Seller in all telephone books and other directories; and
(i) to the extent not constituting an Excluded Asset, all other assets
that have been used by Seller in the conduct of the Business, other than assets
that have been sold or otherwise disposed of in the ordinary course of
business.
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1.2 Excluded Assets. Notwithstanding the foregoing, the following assets
of Seller (the "Excluded Assets") are expressly excluded from the purchase and
sale contemplated hereby and, as such, are not included in the Purchased Assets:
(a) all cash on-hand of Seller;
(b) all accounts receivable;
(c) the minute books, capital stock records, articles of
incorporation, by-laws and corporate seal of Seller, together with
annual and other corporate reports filed with the State of Delaware,
Massachusetts and other states in which Seller is qualified to do
business, other documents and correspondence that relate to Seller's
corporate organization and maintenance thereof, and tax returns and
records relating to state and federal income taxes;
(d) all monies to be received by Seller from Purchaser and all other
rights of Seller and its shareholders, under this Agreement;
(e) all prepaid expenses, tax credits and refunds due Seller;
(f) all computer and other related equipment (including T-1 lines)
of Seller whether or not it is integrated into Seller's FBO network;
(g) all software and data on the computers at the Facility (except
for information that relates exclusively to customers' use of the
Facility and not Seller's other facilities);
(h) all Seller specific equipment such as, but not limited to, the
Seller signage and the custom designed point of sale machine;
(i) leased equipment or Contracts that Purchaser has elected not to
accept. The leased equipment and Contracts that Purchaser elects not to
accept (the "Rejected Contracts and Equipment") are shown on the
Rejected Contracts and Equipment Schedule attached as Schedule 1.2(1);
(j) any rights, trademarks, trade names or other intangible property
rights to the name "Mercury Air Group" or any variation thereof;
(k) all rights and interest in Seller's "Benefit Plans" as defined
in Section 3.13;
(1) customer information relating to use of Seller's facilities at
other locations;
(m) all items of real or personal property specifically identified
on Schedule 1.2(m); and
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(n) all prepaid vendor deposits, including those identified on
Schedule 1.2(n);.
1.3 Assumption of Liabilities. Purchaser hereby assumes and agrees to
pay, defend, discharge and perform as and when due only (a) the liabilities and
obligations of Seller for the period beginning after the date hereof under the
Lease Agreement and the Contracts that have been validly assigned to, and
accepted by purchaser and (b) those other liabilities specifically identified on
the Assumed Liabilities Schedule attached as Schedule 1.3 (the "Assumed
Liabilities").
1.4 Excluded Liabilities. Notwithstanding anything to the contrary
contained in this Agreement, Purchaser shall not assume or be liable for any of
the liabilities or obligations of Seller other than the Assumed Liabilities (the
"Excluded Liabilities"), and, for purposes of illustration, all of the following
liabilities or obligations shall be "Excluded Liabilities" for purposes of this
Agreement:
(a) any liabilities or obligations of Seller under this Agreement;
(b) any liabilities or obligations of Seller for expenses or fees
incident to or arising out of the negotiation, preparation, approval or
authorization of this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, all attorneys' and
accountants' fees;
(c) any liabilities or obligations of Seller for indebtedness for
borrowed money, indebtedness secured by liens on its assets or
guarantees of any of the foregoing;
(d) any obligations or liabilities which relate to or arise out of
any of the Seller's (including any ERISA affiliate) Benefit Plans (as
defined in Section 3.13);
(e) any liabilities or obligations of Seller with respect to any
amount of federal, state or local taxes, including interest, penalties
and additions to such taxes, which (i) are imposed on or measured by any
of Seller's income or gross receipts for any period or (ii) arise out of
or in connection with the performance or consummation of the
transactions contemplated by this Agreement;
(f) any liabilities or obligations of Seller by reason of any
violation or alleged violation of any federal, state, local or foreign
law or any requirement of any governmental authority or by reason of any
breach or alleged breach of any Contract, judgment, order or decree
which are attributable either to events on or prior to the date hereof,
regardless of when such violation or breach is asserted or claimed;
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(g) any liabilities or obligations of Seller to Seller's present or
former employees or anyone employed by Seller on or prior to the date
hereof, or any labor organization representing any of them, and which
are attributable either to events on or prior to the date hereof or to
any acts or omissions of Seller prior to, on or after the date hereof,
including without limitation severance pay;
(h) any liabilities or obligations of Seller relating to claims for
personal injury or damage to property based upon or arising out of the
sale and distribution of products, the provision of services or the
operation of any vehicle by Seller; and
(i) any liability for pre-existing environmental conditions on or
relating to the Facility, the Business and the Excluded Business that
are attributable to events occurring on or before the date hereof
(including, without limitation, the Real Property Interest and the
environmental conditions disclosed in Schedule 3.15).
ARTICLE 2
PURCHASE PRICE; HOLD-BACK, ETC.
2.1 Purchase Price. In addition to the assumption of the Assumed
Liabilities, the aggregate purchase price for the Purchased Assets is equal to
the sum of $15,500,000 (the "Purchased Assets Portion of the Purchase Price"),
plus (i) the value of Seller's fuel inventory as determined in the manner set
forth in Section 2.5, and (ii) 90% of the book value of the inventory and parts
listed on Schedule 1.1(b) (the aggregate amount reflected in subsections (i)
and (ii) above being referred to as the "Inventory Portion of the Purchase
Price") (the Purchased Assets Portion of the Purchase Price and the Inventory
Portion of the Purchase Price shall mean, in the aggregate, the "Purchase
Price").
Except as provided in Section 2.5, the Purchase Price, less the
Hold-Back Amount, and plus or minus the apportionment described in Section 2.2,
is being paid to Seller by wire transfer of immediately available funds to an
account or accounts designated by Seller. As described in Section 7.2, the
parties acknowledge that the Inventory Portion of the Purchase Price, together
with any or all of the initial apportionment described in Section 2.2, may be
paid to Seller following the date hereof. For purposes of securing the
indemnification obligation of Seller described in Article 8, $250,000 of the
Purchase Assets Portion of the Purchase Price (the "Hold-Back Amount") is being
deposited in escrow (the "Hold-Back Escrow") to be held by an escrow agent in
accordance with the terms of the escrow agreement attached as Exhibit B (the
"Escrow Agreement"). The Hold-Back Amount (plus interest earned thereon) shall
be paid to Seller, net of any adjustment claims made and/or then pending by
Purchaser under Article 8, six (6) months following the date of this Agreement
in accordance with the terms of the Escrow Agreement.
2.2 Apportionment. The following items have been or will be apportioned
as of 11:59 p.m., on June 26, 2002: (a) real estate and personal property taxes,
sewer rents
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and charges and other state, county and municipal taxes and assessments and
charges affecting the Business; (b) rents (including rents and other concession
fees or payments to Massport disclosed on the Schedules), deposits and other
payments under any of the Contracts or other Assumed Liabilities; and (c)
charges for water, electricity, gas, oil, steam and all other utilities (except
to the extent disposed of by final billing to Seller), all such items prior to
such time being for the account of Seller and all such items after such time
being for the account of Purchaser. The amount of the Purchase Price has been or
will be adjusted accordingly. If any such item could not or was not accurately
apportioned as of the date hereof, such items shall be apportioned or
reapportioned, as the case may be, as soon as practicable after the date hereof
or the date on which the apportionment error is discovered, as applicable.
2.3 Allocation of Purchase Price. The allocation of the Purchase Price
to the Purchased Assets shall be in accordance with their fair market value. If
no agreement is reached within thirty days after the date hereof, Purchaser
shall have the right to refer such matter to a nationally recognized firm of
independent public accountants agreed upon by Purchaser and Seller. The
determination made by such firm shall be conclusive and non-appealable. The fees
and disbursements of such firm shall be borne equally by Purchaser and Seller.
Seller and Purchaser shall timely file a Form 8954 with the Internal Revenue
Service in connection therewith. For purposes of Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code"), Seller and Purchaser agree to
report the transactions contemplated by this Agreement in a manner consistent
with such allocation. In addition, Purchaser and Seller agree to provide each
other with their respective Federal Tax Identification numbers for purposes of
reporting this transaction to the Internal Revenue Service.
2.4 Transaction Taxes. Seller shall be responsible for all sales, use,
transfer, registration, stamp, documentary, recording and similar Taxes (as
defined in Section 3.8(d) hereof) assessed or payable in connection with the
transfer of the Business and the Purchased Assets to Purchaser, including the
transfer fee imposed by Massport. Seller shall be responsible for all income and
gains Taxes payable in connection with the transfer of the Business and the
Purchased Assets to Purchaser.
2.5 Fuel Inventory. With respect to the fuel inventory, Purchaser and
Seller have ascertained and agreed, or will ascertain and agree, upon the
content of the useable and non-obsolete Jet-A fuel, avgas and motor vehicle fuel
inventory which is on hand as of the date hereof and have assigned or will
assign with respect thereto the dollar value for inclusion in the Inventory
Portion of Purchase Price. The value of the fuel inventory items has been or
will be determined based on book value (i.e., the cost which the Seller
purchased such items of inventory from its suppliers).
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ARTICLE 3
SELLER'S REPRESENTATIONS AND WARRANTIES
THE REPRESENTATIONS AND WARRANTIES OF SELLER MADE IN THIS ARTICLE 3 PERTAIN ONLY
TO AND ARE EXPRESSLY LIMITED TO THE FACILITY, THE PURCHASED ASSETS AND THE
BUSINESS AND DO NOT INCLUDE OR ENCOMPASS ANY REFERENCE TO SELLERS' OTHER
OPERATIONS AT OTHER AIRPORT LOCATIONS.
For purposes of this Article 3, any reference to the term "knowledge" or
words to that effect shall mean the actual knowledge of Xxxx Xxxxx, Xxxxx X.
Xxxxxx, Xxxx X. Xxxxxxxxx, Xxxxxx Xxxxxx and Xxxxx Van Der Linden, after
reasonable inquiry. For purposes of this Agreement, including this Article 3,
the term "material" or "materiality" means, as to Seller, an amount,
individually or in the aggregate, exceeding $50,000, or an event or occurrence
with an economic effect reasonably valued at $50,000.
3. Representations and Warranties Regarding Seller. As an inducement to
Purchaser to enter into this Agreement, Seller represents and warrants to
Purchaser (taking into account the information disclosed in the attached
Schedules) that:
3.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. Seller is authorized
and is in good standing as a foreign corporation in the State of Massachusetts.
3.2 Power and Authority. Seller has all requisite corporate power and
authority and all material licenses, permits and other authorizations necessary
to own and operate its properties and to carry on its businesses as now
conducted.
3.3 Authorization: No Breach. The execution, delivery and performance of
this Agreement and the other agreements contemplated hereby and the
transactions contemplated hereby and thereby have been duly and validly
authorized by Seller. No other corporate act or proceeding on the part of the
Seller is necessary to authorize the execution, delivery or performance of this
Agreement, any other agreement contemplated hereby or the consummation of the
transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by Seller and constitutes a valid and binding obligation
of Seller enforceable in accordance with its terms, subject to (a) applicable
laws and principles of equity and (b) as to specific performance and injunctive
relief, principles of equity and the discretion of the courts. Except as
disclosed on Schedule 3.3, the execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated
hereby do not and shall not (a) conflict with or result in any breach of any of
the provisions of, (b) constitute a default under, result in a violation of, or
cause the acceleration of any obligation under, (c) result in the creation of
any lien, security interest, charge or encumbrance upon any of the Purchased
Assets under, or (d) require any authorization, consent, approval, exemption or
other action by or notice to any court or other governmental body under, the
provisions of Seller's certificate of incorporation, by-laws or any contract,
or any law, statute, rule,
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regulation, judgment, order or decree to which Seller is subject or by which
any of the Purchased Assets or the Business is bound.
3.4 Absence of Undisclosed Liabilities. Seller has no material
liabilities or obligations relating to the Business, the Facility or the
Purchase Assets whether accrued, absolute, contingent, unliquidated or
otherwise, whether or not known to Seller, whether due or to become due,
arising out of transactions entered into at or prior to the date hereof, or any
action or inaction at or prior to the date hereof, including, without
limitation, taxes with respect to or based upon transactions or events
occurring on or, before the date hereof, except (a) liabilities and obligations
under the Contracts Schedule (to the extent occurring in the ordinary course
pursuant to the terms of such Contracts and not in connection with any
default(s) thereunder), (b) the Excluded Liabilities, or (c) liabilities
described on Schedule 3.4.
3.5 Financial Statements. Seller has provided to Purchaser true and
complete copies of the following financial statements: (i) audited financial
statements of Seller for and as of the fiscal year ended June 30, 2001, (ii)
unaudited interim financial statements of Seller for and as of the fiscal
quarter ended March 31, 2002; (iii) unaudited income statement for the fiscal
years ended June 30, 2000 and 2001 reflecting the results of operations of the
Business, and (iv) unaudited income statement for reflecting the results of
operations of the Business for the ten-month period from July 1, 2001 through
and including April 31, 2002. Each of the foregoing financial statements is
complete and correct, is in accordance with Seller's books and records, has
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, and presents fairly the financial position, and
the results of operations and cash flows of the Seller as of the dates and for
the periods indicated, subject in the case of such unaudited financial
statements, to the absence of footnotes and normally recurring year-end audit
adjustments which are not material either individually or in the aggregate.
3.6 Title and of Assets and Properties.
(a) The leases described on the Leases Schedule attached as
Schedule 3.6(a) (including the Lease Agreement) are a complete list of
the leases, subleases and other agreements relating to the use or
occupancy by Seller or others of the Real Property Interest. Seller has
delivered to Purchaser complete and accurate copies of each of the
leases and other agreements described on the Leases Schedule. Such
agreements are in full force and effect and Seller holds a valid and
existing leasehold interest under each of such leases for the term set
forth on the Leases Schedule. Seller is not in default under any of such
agreements, and, except as set forth in such agreements, no other party
to such agreements has the right to terminate, accelerate performance
under or otherwise modify any of such leases, including upon the giving
of notice or the passage of time. To Seller's knowledge, no third party
to any such lease is in default under such agreement. No third party has
asserted to Seller a default or noncompliance by Seller.
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(b) Except as set forth on the Existing Encumbrances Schedule
attached as Schedule 3.6(b)(1), Seller owns title, free and clear of all
liens, charges, security interests, encumbrances and claims of others
whatsoever (hereinafter referred to as "Liens"), to all of the Purchased
Assets, except for Liens of current taxes not yet due and payable.
Seller is conveying title to all of the personal property included
within the Purchased Assets (including without limitation the Fuel
Inventory), free and clear of all Liens, other than Liens for current
taxes not yet due and payable which shall be prorated in accordance with
Section 2.2 and rights of lessors to the items leased under the leases
identified on the Permitted Encumbrances Schedule attached hereto as
Schedule 3.6(b)(2) (the "Permitted Encumbrances").
(c) Except as set forth on Schedule 3.6(c), the Purchased Assets
that are characterized as tangible assets are in working order and
currently operational.
(d) The Purchased Assets and the Excluded Assets represent all of
the assets used in the operation of the Business. Except for leased
property subject to an assigned Contract, all of the Purchased Assets
are owned by Seller.
3.7 Tax Matters.
(a) Seller has duly filed, or will file when due, all federal,
state, local and foreign tax information and tax returns and reports
relating to the Business or to the Purchased Assets for all periods up
to and including the date hereof (all such returns being accurate and
complete) and has duly paid, will pay when due, or has made provision
for, all federal, state, local and foreign taxes relating to the
Business or the Purchased Assets which are or become due and payable by
Seller for all periods up to and including the date hereof other than
Taxes identified on the Tax Matters Schedule attached as Schedule 3.7
which are being contested in good faith and by appropriate proceedings
and as to which Seller has set aside on its books adequate reserves,
which may be attributable to the transactions contemplated hereby (which
shall be borne by Seller) or which relate to taxes attributable to
Seller's operations other than the Business.
(b) Except as disclosed on the Tax Matters Schedule attached hereto
as Schedule 3.7, with respect to the Business, all monies required to be
withheld from employees of Seller for income taxes, social security and
unemployment insurance taxes or collected from customers or others as
sales, use or other Taxes have been withheld or collected and paid, when
due, to the appropriate governmental authority, or if such payment is
not yet due, an adequate reserve has been established and is reflected
on Seller's Latest Balance Sheet.
(c) There is no action suit, proceeding, audit, investigation or
claim now, or to Seller's knowledge, threatened or pending regarding any
Taxes relating to the Business or the Purchased Assets.
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(d) As used in this Agreement, the term "Tax" or "Taxes" means net
or gross income, gross receipts, excise, sales, personal or, real
property, payroll, employment, unemployment, franchise, capital, doing
business, net worth, ad valorem, value added, transfer, stamp,
recording, documentary, occupancy, withholding, and any other taxes,
fees, duties, levies, imposts, or similar charges, including interest,
penalties or additions thereto imposed by any taxing authority.
3.8 Contracts and Commitments.
(a) Except as specifically identified in the Contracts Schedule,
Seller, as it relates to the Business or the Facility, is not a party to
any Contract:
(i) relating to a bonus, pension, profit sharing, retirement or
deferred compensation plan or stock purchase, stock option,
hospitalization insurance or similar plan or practice, whether
formal or informal or severance agreements or arrangements;
(ii) with any labor union;
(iii) which limits it from freely engaging in any business
anywhere in the world;
(iv) with an affiliate; or
(v) material to the Business not represented by a writing signed
by the parties to such contract.
(b) Except as specifically disclosed in the Contracts Schedule, with
respect to the Business, (i) no contract or commitment to Seller has
been breached in any material respect or canceled by the other party,
(ii) Seller has in all material respects performed all the obligations
required to be performed by it to the date of this Agreement and is not
in receipt of any claim of default under any material contract or
commitment to which it is a party; and (iii) no event has occurred which
with the passage of time or the giving of notice or both would result in
a material breach or default under any contract of Seller.
3.9 Litigation; Proceedings. Except as set forth in the Litigation
Schedule attached hereto as Schedule 3.9, there is no action, suit, proceeding,
order or investigation pending or, to Seller's knowledge, threatened against or
affecting the Business or Purchased Assets at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
3.10 Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Seller.
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3.11 Governmental Consent, etc. Except for the Massport Consent, no
permit, consent, approval or authorization of, or declaration to or filing with,
any governmental or regulatory authority is required in connection with the
execution, delivery or performance of this Agreement or any other agreement
contemplated hereby by Seller, or the consummation by Seller of any of the
transactions contemplated hereby and thereby.
3.12 Employees. Seller has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
thereof relating to wages, hours, equal opportunity, collective bargaining,
health, safety and the payment of social security and other taxes relating to
the Business. There has been no union organization efforts by the employees of
Seller relating to the Business. The Employee Schedule attached as Schedule 3.12
contains the names, title and current annual salary rates of all employees
relating to the Business and showing separately for each such person the amounts
paid or payable (on an annualized basis) as salary, bonus or other incentive
payments for the current fiscal year.
3.13 Employee Benefit Plans.
(a) The Employee Benefits Schedule attached as Schedule 3.13
contains a list of any employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which Seller and/or any ERISA Affiliate (as defined
below) maintains, to which Seller contributes or ever has contributed,
to which Seller is or ever has been obligated to contribute, or under
which any employee, officer or director of Seller who performs or
performed services either as an employee, officer or director with
regard to the Business, and each other arrangement, program or plan
pursuant to which any benefit is or shall be provided to an employee,
officer or director, including, without limitation, those providing any
form of medical, health and dental benefits, severance pay and benefits
continuation, vacation pay, post retirement welfare, life, accident,
disability, bonus deferred compensation, commission and payroll
practices (collectively, the "Benefit Plans"). Except as set forth on
Schedule 3.13, Seller neither maintains nor has entered into any Benefit
Plan or other document, plan or agreement which contains any change in
control provisions which would cause an increase or acceleration of
benefits or benefit entitlements to employees or former employees of
Seller or their respective beneficiaries. For purposes hereof, an "ERISA
Affiliate" is any trade or business whether or not incorporated that
together with Seller would be deemed a "single employee" within the
meaning of ERISA Section 4001 or affiliated with Seller within the
meaning of Section 414(b), (c), (e), (m) or (o) of the Internal Revenue
Code, of 1986, as amended (the "Code").
(b) All accrued contributions and other payments to be made by
Seller or any ERISA Affiliate to any Benefit Plan through the date of
the Latest Balance Sheet have been made or reserves adequate for such
purposes as of the respective dates of the Latest Balance Sheet have
been set aside therefor and reflected on the Latest Balance Sheet and
all contributions and other payments accruing from and
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after such dates through the date hereof will be made or reserves
adequate for such purposes as of such date shall be set aside therefor.
Neither Seller nor any ERISA Affiliate is in default in performing any
of its contractual obligations under any of the Benefit Plans or any
related trust agreement or insurance contract, and there are no
outstanding liabilities of any Benefit Plan other than liabilities for
benefits to be paid to participants in such Benefit Plan.
(c) Each Benefit Plan is and has been in compliance in all respects
with, and each such Plan is and has been operated in accordance with,
the applicable laws, rules and regulations governing such Benefit Plan,
including, without limitation, the rules and regulations promulgated by
the Department of Labor, the Pension Benefit Guaranty Corporation
("PBGC") and the IRS under ERISA, the Code or any other applicable law.
(d) Except as set forth on Schedule 3.13, no Benefit Plan is or has
been subject to Title IV or Section 412 of the Code. No Benefit Plan is
or has ever been, "a Multiemployer plan" within the meaning of Section
3(37) of ERISA or Section 414(f) of the Code. No condition exists that
presents a risk to Seller or any ERISA Affiliate of incurring a
liability under Title IV of ERISA with respect to any Benefit Plan. The
PBGC has not instituted proceedings to terminate any of the ERISA Plans
and no condition known to Seller exists that presents a risk that such
proceedings shall be instituted. All reporting and disclosure
requirements of ERISA and the Code have been satisfied in all respects
with respect to each of the Benefit Plans.
(e) No prohibited transaction has occurred or with respect to any
Benefit Plan that would result, directly or indirectly, in the
imposition of any excise tax under Section 4975 of the Code; nor has
any reportable event under Section 4043 of ERISA occurred with respect
to any Benefit Plan.
(f) Seller, and any plan maintained by Seller subject to the
continuation coverage requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), have been, and are in
compliance with the continuation of coverage requirements of COBRA.
3.14 Compliance with Laws.
(a) Seller has complied in all material respects with all applicable
laws and regulations of foreign, federal, state and local governments
and all agencies thereof which materially affect the Business or the
Purchased Assets, and no claims have been filed against Seller with
respect to the Business alleging a violation of any such law or
regulation, except as set forth on the Compliance Schedule attached
hereto as Schedule 3.14. Seller holds all of the permits, licenses,
certificates and other authorizations of foreign, federal, state and
local governmental agencies required for the conduct of the Business.
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3.15 Environmental Matters.
(a) As used in this Section 3.15, the following terms shall have the
following meanings:
(i) "Environmental Law(s)" shall mean all applicable foreign,
federal, state, regional, county or local, statutes, laws,
regulations, ordinances, codes, rules, judgments, orders, decrees,
permits, concessions, grants, agreements, licenses or other
requirements or restrictions of law pertaining to protection of the
indoor or outdoor environment, health, safety of persons, management
or use of natural resources, protection or use of surface water and
groundwater, conservation, wildlife, waste management, Hazardous
Materials or pollution (including, without limitation, regulating of
releases and disposal to air, land, water and groundwater) now or
hereafter in effect, and includes, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization
Act of 1986, 42 U.S.C. Sections 9601 et seq., Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of
1986 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
Sections 6901 et seq., Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251 et
seq., Clean Air Act of 1966, as amended, 42 U.S.C. Sections 7401 et
seq., Toxic Substances Control Act of 1976, 15 U.S.C. 2601 et seq.,
Hazardous Materials Transportation Act 49 U.S.C. App. 1801 et seq.,
Occupational Safety and Health Act of 1970, as amended 29 U.S.C.
Sections 651 et seq., Oil Pollution Act of 1990, 33 U.S.C. Sections
2701 et seq., Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Sections 11001 et seq., National Environmental
Policy Act of 1969, 42 U.S.C. Sections 4321 et seq., Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. Sections 300(f) et seq.,
any similar or implementing state law, and all successor statutes,
amendments, rules, orders, directives and regulations promulgated
thereunder.
(ii) "Hazardous Material" shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, byproduct, pollutant,
contaminant, condition, object or material which is or may be
hazardous to human health or safety or the environmental due to its
ignitability, corrosivity, reactivity, explosiveness, toxicity,
carcinogenicity, infectiousness, radioactivity or other harmful or
potentially harmful properties or effects, including, without
limitation, all of those substances, chemicals, compounds, products,
solids, gases, liquids, wastes, byproducts, pollutants,
contaminants, conditions, objects and materials and combination
thereof which are now or hereafter listed or defined as hazardous or
toxic, or are regulated, pursuant to Environmental Laws and
includes, without limitation, asbestos, polychlorinated biphenyls
and petroleum (including crude oil or any fraction thereof).
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(iii) "Release" shall mean any non-de-minimus spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of Hazardous Material into
the indoor or outdoor environment, including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks,
and other receptacles containing or previously containing any
Hazardous Material.
(a) Except as set forth in the Environmental Matters Schedule set
forth on Schedule 3.15, with respect to the Business, the Facility or
the Purchased Assets:
(i) The Purchased Assets and the Business comply in all material
respects with applicable Environmental Laws;
(ii) Seller has timely obtained all permits, licenses,
registrations and other governmental approvals and authorizations
and has timely filed all reports and other documents required by
applicable Environmental Laws relating to the Business and all such
permits, licenses, registrations and other governmental approvals
and authorizations are in full force and effect and Seller is in
compliance therewith;
(iii) Seller has not, and has no knowledge of any person who
has, caused any non-de-minimus Release, threatened Release or
disposal of any Hazardous Material with respect to the Business;
(iv) Seller has received no notice and is not aware of any
violation (whether alleged or proven), claim, demand litigation,
proceeding or governmental investigation (whether pending or, to
Seller's knowledge, threatened) arising from applicable
Environmental Laws relating to the Business, the Facility, the
Purchased Assets or Hazardous Materials which are or were present on
or with respect to the Purchased Assets;
(v) to Seller's knowledge, no lien relating to any applicable
Environmental Law or Hazardous Materials has attached to the
Purchased Assets.
3.16 Airport and Other Re Regulatory Matters. All certificates of public
convenience and necessity, permits, licenses and operating rights issued to
Seller, with respect to the Business or the Facility by any local, state or
foreign regulatory body or authority having or exercising jurisdiction over
common and fixed based operations (collectively "Operating Rights") are set
forth on the Operating Rights Schedule attached hereto as Schedule 3.16. Except
as otherwise set forth on Schedule 3.16, there are no governmental permits,
consents, authorities or approvals required to conduct the Business. Seller has
previously maintained on file with the applicable municipal, regional or state
licensing authority, and observe the terms, of all applicable, fees, tariffs and
schedules.
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3.17 Relationships with Customers. Schedule 3.17 sets forth a list of
the top 20 customers of the Business (measured in total gallons of fuel
purchased for the 12 months preceding the date of this Agreement). Seller has
received no written notice from any such customer that such customer intends to
terminate its relationship with Seller or to materially reduce the amount of
goods and services acquired from with respect to the Business either before or
after the date hereof.
3.18 Disclosure. Neither this Agreement nor any of the schedules,
attachments or exhibits hereto contains any untrue statement of a material fact
or omits a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
ARTICLE 4
PURCHASER'S REPRESENTATIONS AND WARRANTIES
4. Representations and Warranties - Purchaser. As an inducement to
Seller to enter into this Agreement, Purchaser represents and warrants to Seller
that:
4.1 Corporate Organization and Power. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware with
full corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
4.2 Authorization; No Breach. The execution, delivery and performance of
this Agreement and the other agreements contemplated hereby and the
transactions contemplated hereby and thereby have been duly and validly
authorized by Purchaser. No other corporate act or proceeding on the part of
the Purchaser is necessary to authorize the execution, delivery or performance
of this Agreement, any other agreement contemplated hereby or the consummation
of the transactions contemplated hereby or thereby. This Agreement has been
duly executed and delivered by Purchaser and constitutes a valid and binding
obligation of Purchaser enforceable in accordance with its terms, subject to
(a) applicable laws and principles of equity and (b) as to specific performance
and injunctive relief, principles of equity and the discretion of the courts.
The execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby do not and shall not (a)
conflict with or result in any breach of any of the provisions of, (b)
constitute a default under, result in a violation of, or cause the acceleration
of any obligation under, or (c) require any authorization, consent, approval,
exemption or other action by or notice to any court or other governmental body
under, the provisions of Purchaser's certificate of incorporation, by-laws or
any contract, or any law, statute, rule, regulation, judgment, order or decree
to which Purchaser is subject.
4.3 Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement or agreement made by or on behalf of
Purchaser.
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4.4 Litigation. There is no action, suit, proceeding, order or
investigation pending or, to the best of Purchaser's knowledge, threatened
against or affecting Purchaser, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would have a
material adverse affect on Purchasers performance under this Agreement or the
consummation of the transactions contemplated hereby.
4.5 No Forecasts. Purchaser acknowledges that Seller has not provided it
with any financial forecasts with respect to the Business.
ARTICLE 5
ADDITIONAL WARRANTIES OF SELLER
5. In addition to the foregoing representations and warranties of
Seller:
(a) since January 1, 2001, Seller has conducted the Business only in
the usual and ordinary course of business (including placing purchase
orders only for reasonable quantities and at reasonable prices and
accepting customer orders only on reasonable terms);
(b) since January 1, 2001, Seller has kept in full force and effect
its corporate existence and all rights, franchises and intellectual
property relating to or pertaining to the Business;
(c) since January 1, 2001, Seller has maintained the Purchased Assets
in customary repair, order and condition; and in the event there has
occurred any casualty, loss or damage to any of the Purchased Assets
after June 1, 2002 and prior to the date hereof, Seller has either
repaired such assets, replaced such assets with assets of comparable
quality or, if Purchaser agrees, will transfer to Purchaser the proceeds
of any insurance recovery with respect thereto;
(e) since January 1, 2001, Seller has maintained its books, accounts
and records in accordance with past custom and practice;
(f) Seller has obtained all consents and approvals of (including all
third party consents), and delivered all notices, necessary to
consummate the transactions contemplated hereby;
(g) Seller has obtained all governmental filings, authorizations and
approvals that are required of it for the consummation of the
transactions contemplated hereby shall have been duly made and obtained
on terms and conditions satisfactory to Seller, including without
limitation all Regulatory Approvals and the Massport Consent;
(h) there is no action or proceeding before any court or government
body shall be pending or, to Seller's knowledge, threatened which seeks
to prevent
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the carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by
this Agreement or cause such transactions to be rescinded;
(i) Seller has obtained releases of all Liens on the Purchased
Assets, other than Permitted Encumbrances, or, with the approval of
Purchaser, each such lien holder has provided to Purchaser a written
commitment (on terms satisfactory to Purchaser) to release such Liens
upon payment of an amount set forth in such written undertaking (in such
case Purchaser may require that such amounts be paid directly to the
lien holder out of the Purchase Price payment); and
(j) all proceedings taken by Seller in connection with the
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents reasonably
required to effect the transactions contemplated hereby reasonably
requested by Purchaser have been executed and delivered by Seller.
ARTICLE 6
ADDITIONAL WARRANTIES OF PURCHASER
6. In addition to the foregoing representations and warranties of
Purchaser:
(a) all proceedings taken by Purchaser in connection with the
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents reasonably
required to effect the transactions contemplated hereby reasonably
requested by Seller have been executed and delivered by Purchaser;
(b) Purchaser has obtained all governmental filings, authorizations
and approvals that are required of it for the consummation of the
transactions contemplated hereby shall have been duly made and obtained
on terms and conditions satisfactory to Seller, including without
limitation all Regulatory Approvals;
(c) there is no action or proceeding before any court or government
body pending or, to Purchaser's knowledge, threatened which would
prevent the carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by
this Agreement or cause such transactions to be rescinded.
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ARTICLE 7
EFFECTIVENESS OF TRANSACTION
7. Closing Matter.
7.1 Effectiveness. The sale referred to herein shall be effective at
12:01 a.m. on the date hereof.
7.2 Action to Be Taken at the Closing. The sale, conveyance, assignment
and delivery of the Purchased Assets and the payment of the Purchased Assets
Portion of the Purchase Price pursuant to the terms of this Agreement shall
take place on the date hereof, and, simultaneously, the other transactions
contemplated by this Agreement shall take place by the delivery of all of the
closing documents set forth in Section 7.3. Though Purchaser shall endeavor to
cause the Inventory Portion of the Purchase Price to be paid on the date
hereof, the parties acknowledge that such amount, together with any or all of
the initial apportionments described in Section 2.2, may be paid by Purchaser
following the closing of the transactions contemplated hereby, but in any event
within two business days of the date hereof.
7.3 Closing Documents.
(a) Seller has delivered to Purchaser the following documents, duly
executed by Seller where necessary to make them effective:
(i) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order to
effect the transactions contemplated by this Agreement, including
the Massport Consent;
(ii) such instruments of sale, transfer, assignment, conveyance
and delivery (including all vehicle titles), as are required in
order to transfer to Purchaser good and marketable title to the
Purchased Assets, free and clear of all Liens, charges, security
interests and other encumbrances, except for any Permitted
Encumbrances;
(iii) certified copies of the resolutions duly adopted by the
Board of Directors of Seller authorizing the execution, delivery and
performance of this Agreement and each of the other agreements
contemplated hereby, and the consummation of all other transactions
contemplated by this Agreement;
(iv) the Escrow Agreement; and
(vi) such other documents or instruments as Purchaser has
reasonably requested to effect the transactions contemplated hereby.
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(b) Purchaser has delivered to Seller, the following items, duly
executed by Purchaser where necessary to make them effective:
(i) the amount of the Purchased Assets Portion of the Purchase
Price as provided in Section 2.1;
(ii) certified copies of the resolutions duly adopted by
Purchaser's Board of Directors authorizing the execution, delivery
and performance of this Agreement and each of the other agreements
contemplated hereby, and the consummation of all other transactions
contemplated by this Agreement;
(iii) the Escrow Agreement; and
(iv) such instruments of assumption and other documents or
instruments as Seller or its counsel has requested to, effect the
transactions contemplated hereby.
7.4 Nonassignable Contracts. To the extent that the assignment hereunder
by Seller to Purchaser of any Contract is not permitted or is not permitted
without the consent of any other party to the Contract and Purchaser is
otherwise willing to proceed with the closing, this Agreement shall not be
deemed to constitute an assignment of any such Contract if such consent is not
given or if such assignment otherwise would constitute a breach of, or cause a
loss of contractual benefits under, any such Contract, and Purchaser shall
assume no obligations or liabilities thereunder. Seller has advised Purchaser
in writing with respect to any Contract listed on the Contracts Schedule which
it has not receive any required consent. Seller shall cooperate with Purchaser
in connection with any efforts by Purchaser to procure any necessary consents
to the assignment of any such Contracts. Seller shall cooperate with Purchaser
in reaching a mutually agreeable arrangement so that Purchaser may receive the
benefit and assume the obligations under any such non-assigned Contract to the
same extent, as nearly as possible, as if such Contract had been assigned,
including sub-contracting, sub-licensing, or sub-leasing to Purchaser, or under
which Seller would enforce for the benefit of Purchaser, with Purchaser
assuming Seller's obligations, any and all rights of Seller against a third
party thereto.
7.5 Possession. Seller shall cooperate with Purchaser and take such
steps as are reasonably necessary to put Purchaser in actual possession and
operating control of the Purchased Assets and Business.
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ARTICLE 8
INDEMNIFICATION
8. Indemnification.
8.1 Indemnification by Seller. Seller agrees to indemnify Purchaser and
its officers, directors, employees, affiliates, agents and shareholders
(collectively, the "Purchaser Indemnified Parties") and hold them harmless
against any loss, liability, deficiency, damage, expense or cost and hereby
waives and covenants not to bring any claim for contribution against Purchaser
for, all claims and damages (including, without limitation, punitive damages,
liabilities, costs, losses, fines, penalties, demands, cost recovery actions,
lawsuits, administrative proceedings, orders, response action costs, compliance
costs, investigation expenses, consultant fees, attorneys' fees and litigation
expenses) (collectively, "Losses") which arise from or relate to, either
directly or indirectly as a result of:
(a) any misrepresentation in any of the representations or breach of
any of the warranties of Seller contained in this Agreement or in any
exhibits, schedules, certificates or other documents delivered or to be
delivered pursuant to the terms of this Agreement or otherwise
incorporated in this Agreement;
(b) any breach of, or failure to perform, any agreement of Seller
contained in this Agreement including, without limitation, the failure
to comply with the provisions of this Article 8, including Seller's
obligation to retain the Excluded Liabilities;
(c) any "Claims" (as defined in Section 8.3(a) hereof) or threatened
Claims against any of the Purchaser Indemnified Parties arising out of
the actions or inactions of Seller prior to the Closing with respect to
the Purchased Assets or the operation of the Business or any other
business prior to or after the Closing; or
(d) any Excluded Liability.
All of the foregoing items in items (a) - (d) are collectively known as
the "Purchaser Losses."
8.2 Indemnification by Purchaser. Purchaser agrees to indemnify Seller
and its officers, directors, employees, agents, and shareholders (collectively,
the "Seller Indemnified Parties"), and hold them harmless against any Losses
which any of the Seller Indemnified Parties may suffer, sustain or become
subject to as a result of (a) any misrepresentation in any of the
representations or breaches of any of the warranties of Purchaser contained in
this Agreement, (b) any breach of, or failure to perform, any agreement of
Purchaser contained in this Agreement, including assuming the Assumed
Liabilities, (c) any Claims or threatened Claims against any of the Seller
Indemnified
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Parties arising out of actions or inactions of Purchaser subsequent to Closing
with respect to the Purchased Assets or the operation of the Business subsequent
to Closing, or (d) and Assumed Liability (collectively, the "Seller Losses").
8.3 Environmental and Hangar Indemnifications.
(a) Seller's Environmental Indemnification. Seller agrees to
indemnify, defend, and hold harmless Purchaser Indemnified Parties from
all claims (including, without limitation, notices, information
requests, demands, lawsuits, administrative proceedings, orders, cost
recovery actions, contribution actions, enforcement actions) and damages
(including, without limitation, liabilities, costs, losses, fines,
judgments, penalties, punitive damages, compliance costs, response
costs, investigation expenses, consultant fees, attorneys fees and
litigation expenses) (a) arising out of or due to any misrepresentations
in or breach of the representations or warranties of Seller in Section
3.15 (Environmental Matters) hereof, and (b) to the extent they arise
from, either directly or indirectly, conditions that existed or events
that occurred on or prior to the Closing Date and which are caused by or
result from in any way (i) the presence, threatened Release or Release
of Hazardous Materials at, on, from, beneath or about the Purchased
Assets or any real property which is subject to the Real Property
Interest; (ii) the operation or alleged or actual violation of any
Environmental Law by or against Seller or related to the Purchased
Assets or any real property which is subject to the Real Property
Interest; or (iii) the generation, handling, transportation, treatment,
storage or disposal of Hazardous Materials by or on behalf of Seller.
All of the foregoing items shall be included within the definition of
"Purchaser Losses."
Notwithstanding the foregoing, the term "Purchaser Losses" shall not
include, and Seller shall not be required to indemnify, defend, or hold
harmless Purchaser for, those conditions or events that Seller can
establish (1) existed (with regard both to the nature and extent of the
condition) or occurred prior to the date that Seller acquired any
interest in the Purchased Assets or any real property which is subject
to the Real Property Interest, and (2) were not caused or exacerbated by
Seller's acts or omissions.
Additionally, to the extent permissible, Seller hereby sells,
assigns and sets over to Purchaser all of its rights, title and interest
in the remediation and/or indemnification obligations of Raytheon
Aircraft Services, Inc. ("Raytheon") to Seller relating to environmental
matters and conditions with respect to the Real Property Interest,
including but not limited to those set forth in Article VII of the
Second Amendment dated October 31, 1996, to the Asset Purchase Agreement
dated as of April 8, 1996 between Raytheon and Seller (the "Raytheon
Agreements"). Seller acknowledges and agrees that Purchaser, to the
extent permissible by law, may exercise any of the rights and will enjoy
all of the benefits granted to Seller under the Raytheon Agreements.
Seller agrees to reasonably cooperate with Purchaser in the event
Purchaser brings a claim under the Raytheon Agreements and Seller will
undertake all actions reasonably necessary to effectuate
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the assignment of the Raytheon Agreements to Purchaser at no cost or
expense to Seller. In the event that a court of competent jurisdiction
does not recognize Purchaser as the owner or assignee of the Raytheon
Agreements, or otherwise prohibits Purchaser from exercising any of the
rights or enjoying any of the benefits thereunder, Seller agrees to
diligently pursue all reasonable claims that Purchaser elects to cause
Seller to pursue against Raytheon or its affiliates under the Raytheon
Agreements for the benefit of Purchaser. Such claims will be brought and
maintained by Seller at Purchaser's sole cost and expense and under
Purchaser's sole direction and control. Seller shall provide or assign
all monetary awards or settlements, or any other benefits, resulting
from such claims, to Purchaser at no cost or expense to Purchaser.
Notwithstanding anything to the contrary in this Agreement,
Purchaser does not waive and expressly retains all claims and causes of
action it now has, or in the future may have, against Seller under
Environmental Laws, including claims for contribution.
(b) Purchaser's Environmental Indemnification. Purchaser agrees to
indemnify, defend, and hold harmless Seller Indemnified Parties from all
claims (including, without limitation, notices, information requests,
demands, lawsuits, administrative proceedings, orders, cost recovery
actions, contribution actions, enforcement actions) and damages
(including, without limitation, liabilities, costs, losses, fines,
judgments, penalties, punitive damages, compliance costs, response
costs, investigation expenses, consultant fees, attorneys fees and
litigation expenses) arising out of or due to any conditions that come
to exist or events that occur after the Closing Date and which are
caused by or result from in any way (i) the presence, threatened Release
or Release of Hazardous Materials at, on, from, beneath or about the
Purchased Assets or any real property which is subject to the Real
Property Interest; (ii) the operation or alleged or actual violation of
any Environmental Law by or against Purchaser or related to the
Purchased Assets or any real property which is subject to the Real
Property Interest; or (iii) the generation, handling, transportation,
treatment, storage or disposal of Hazardous Materials by or on behalf of
Purchaser. All of the foregoing items shall be included within the
definition of "Seller Losses."
Notwithstanding the foregoing, the term "Seller Losses" shall not
include, and Purchaser shall not be required to indemnify, defend or
hold harmless Seller for, those conditions or events that were not
caused or exacerbated by Purchaser's acts or omissions.
(c) Seller's Indemnification Regarding Hangar Condition. Seller
agrees to indemnify, defend, and hold harmless Purchaser Indemnified
Parties from all claims (including, without limitation, notices,
information requests, demands, lawsuits, administrative proceedings,
orders, cost recovery actions, contribution actions, enforcement
actions) and damages (including, without limitation,
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Liabilities, costs, losses, fines, judgments, penalties, punitive
damages, compliance costs, response costs, investigation expenses,
consultant fees, attorneys fees and litigation expenses) arising out of
or due to expansion of the concrete of the main hangar floor at the
Facility at the juncture to the office floor. The repairs to such hangar
floor shall cause the floor to be structurally sound and functional to
Purchaser's reasonable satisfaction. Assuming no latent structural
deficiencies or defects, such repairs to be performed by Seller, will
include those items set forth in the ICS proposal dated June 25, 2002
(which shall additionally include the 2nd and 4th bullet points under
"Conditions" on page 4 thereof.
Additionally, to the extent permissible, Seller hereby sells,
assigns and sets over to Purchaser all of its rights, title and interest
in any warranty or other similar claim it may have against any third
party (including, but not limited to Xxxxxx Corporation, X. Xxxx &
Associates, Xxxxx/Xxxxx Engineering, SAR Engineering, Inc., ARTEC
Sprinkler Corp. and Xxxx/Okubo Associates, Ltd.) relating to the
construction of the Hangar, including, but not limited to, under those
certain agreements between Seller and (i) Xxxxxx Corporation dated
November 23, 1994, as amended and (ii) DE/EN/CON Construction dated
September 14, 1999 (all such rights against such parties, pursuant to
contract or otherwise, shall be referred to collectively as the
"Warranty Rights"). Seller acknowledges and agrees that Purchaser may
exercise any of the rights and will enjoy all of the benefits granted to
Seller relating to the Warranty Rights. Seller agrees to reasonably
cooperate with Purchaser in the event Purchaser brings a claim under the
Warranty Rights and Seller will undertake all actions reasonably
necessary to effectuate the assignment of the Warranty Rights to
Purchaser. In the event that Purchaser is not recognized as the owner or
assignee of the Warranty Rights, or Purchaser is otherwise unable to
exercise any of the rights or enjoying any of the benefits thereunder,
Seller agrees to diligently pursue all reasonable claims that Purchaser
elects to cause Seller to pursue against the relevant third party in
connection with the Warranty Rights for the benefit of Purchaser. Such
claims will be brought and maintained by Seller at Seller's sole cost
and under Purchaser's direction and control. Seller shall provide or
assign all monetary awards or settlements, or any other benefits,
resulting from such claims, to Purchaser at no cost to Purchaser.
8.4 Method of Asserting Claims. As used herein, an "Indemnified Party"
shall refer to a "Purchaser Indemnified Party" or "Seller Indemnified Party," as
applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party(ies) hereto obligated to indemnify
such Notifying Party's Indemnified Parties.
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(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or
administrative, instituted by any third party, the liabilities for
which, or the costs or expenses of which, are Seller Losses or Purchaser
Losses, as the case may be, (any such third party action or proceeding
being referred to as a "Claim"), the Notifying Party shall give the
Indemnifying Party prompt notice thereof. The failure to give such
notice shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely affected
the Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim;
provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently
contests and defends such Claim. Notice of the intention so to contest
and defend shall be given by the Indemnifying Party to the Notifying
Party within 15 business days after the Notifying Party's notice of such
Claim (but, in all events, at least five business days prior to the date
that an answer to such Claim is due to be filed). Such contest and
defense shall be conducted by reputable attorneys employed by the
Indemnifying Party. The Notifying Party shall be entitled at any time,
at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying
Party is not adequately representing or, because of a conflict of
interest, may not adequately represent, any interest of the Indemnified
Parties), to participate in such contest and defense and to be
represented by attorneys of its or their own choosing. If the Notifying
Party elects to participate in such defense, the Notifying Party shall
cooperate with the Indemnifying Party in the conduct of such defense.
Neither the Notifying Party nor the Indemnifying Party may concede,
settle or compromise any Claim without the consent of the other party,
which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, in the event the Indemnifying Party fails
or is not entitled to contest and defend a claim, the Notifying Party
shall be entitled to contest, defend and settle such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying
Party shall deliver a notice of such claim with reasonable promptness to
the Indemnifying Party. If the Indemnifying Party notifies the Notifying
Party that it does not dispute the claim described in such notice or
fails to notify the Notifying Party within 15 days after delivery of
such notice by the Notifying Party whether the Indemnifying Party
disputes the claim described in such notice, the Loss in the amount
specified in the Notifying Party's notice shall be conclusively deemed a
liability of the Indemnifying Party and the Indemnifying Party shall pay
the amount of such Loss to the Indemnified Party on demand.
8.5 Limits on Indemnification. With respect to any claims arising under
Section 8.1(a) or 8.2(a), the Indemnified Party shall not be entitled to
indemnification until the aggregate Losses, suffered by such party, or its
successors and assigns, exceeds $100,000 (the "Threshold"), whereupon, the
Indemnified Party shall be entitled to indemnification hereunder from the
Indemnifying Party for the aggregate Losses suffered
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from and above the amount of the Threshold. Notwithstanding the foregoing, the
Threshold shall not apply to any claim made by Purchaser pursuant to Section
8.3(c) hereof. Neither party shall be entitled to assert a claim for recovery to
the extent such claim was paid by insurance. In no event shall the aggregate
liabilities of Purchaser or Seller under this Article 8 exceed the amount of the
Purchase Price. Any indemnification hereunder shall be net of any insurance
proceeds realized and any tax benefit attributable to such claim.
8.6 Survival. The representations and warranties set forth in this
Agreement shall survive the Closing Date for a period of sixteen (16) months and
shall not be affected by any examination made for or on behalf of Purchaser or
Seller, the knowledge of any of Purchaser's or any of Seller's officers,
directors, shareholders, employees or agents. Notwithstanding the foregoing, the
representations of Seller pursuant to Section 3.7 (Tax Matters), Section 3.13
(Employee Benefit Plans) and Section 3.15 (Environmental Matters) shall survive
for the applicable statute of limitations. The representations of Seller
pursuant to Section 3.6 (Title of Property and Assets) shall survive
indefinitely.
ARTICLE 9
ADDITIONAL AGREEMENTS
9. Additional Covenants and Agreements.
9.1 Mutual Assistance. Seller will provide Purchaser with such
cooperation and information as Purchaser reasonably may request with respect to
(i) the filing of any Tax return, amended return or claim for refund, (ii) the
determination of a liability for Taxes, or a right to refund of Taxes, or (iii)
the conduct of any audit or other proceeding in respect of Taxes relating to
the Business or the Purchased Assets. Such cooperation and information shall
include providing copies of all relevant Tax reports and returns (together with
accompanying schedules and related work papers), documents relating to rulings
or other determination by taxing authorities, and records concerning the
ownership and tax basis or property, which Seller may possess concerning the
Business or the Purchased Assets. Seller shall make its employees available to
Purchaser on a mutually convenient basis to provide explanation of any documents
or information provided hereunder. Purchaser shall reimburse Seller for any
reasonable out-of-pocket costs (including regular wages, salaries and traveling
expenses) of making employees available, upon receipt of reasonable
documentation of such costs. The Purchaser shall treat all documents or
information obtained under this Section 11.1 as confidential, except as may be
otherwise necessary in connection with the filing of Tax returns, amended
returns, claims for refund, determination of Tax liability or a right to refund,
or in the conduct of any audit or other proceeding in respect to Taxes.
9.2 Press Release and Announcements. No press release related to this
Agreement or the transactions contemplated hereby, or other announcements to the
employees, customers or suppliers of Seller, shall be issued without the joint
approval of
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Purchaser and Seller. Purchaser and Seller shall cooperate to prepare a joint
press release to be issued on or after the date hereof.
9.3 Expenses. Each party shall pay all of its expenses in connection
with the negotiation of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated by this
Agreement and Seller shall pay all costs, including costs of recording all
documents, necessary to place record title in the condition warranted by or
required of Seller by this Agreement.
9.4 Confidentiality. Seller shall maintain the confidentiality of all
information and materials regarding Purchaser and its affiliates, reasonably
designated as confidential by Purchaser. Seller shall maintain, the
confidentiality of all proprietary and other non-public information regarding
the Business and the Purchased Assets and shall turn over to Purchaser all such
materials in their possession. Purchaser shall likewise maintain the
confidentiality of all proprietary and other non-public information regarding
Seller's business other than the Business and the Purchased Assets.
9.5 Remittances. All remittances, mail and other communications relating
to the Purchased Assets, Assumed Liabilities or the Business received by Seller
at any time after the date hereof shall be immediately turned over to Purchaser
by Seller. Seller shall cooperate with Purchaser, and take such actions as
Purchaser reasonably requests, to assure that customers of the Business send
their remittances directly to Purchaser, and to assure that remittances from
customers of the Business which are improperly sent to Seller are not commingled
with Seller's assets and are turned over to Purchaser.
9.6 Waiver of Compliance with Bulk Sales Laws. Purchaser hereby waives
compliance by Seller with the requirements of any so called bulk sales or
transfers laws of any jurisdiction in connection with the sale of the Purchased
Assets to Purchaser; but such waiver shall not affect the obligation of Seller
under Article 8 to indemnify Purchaser and hold Purchaser harmless from and
against any Losses which Purchaser may suffer or sustain or to which Purchaser
may become subject as a result of or in connection with the failure by Seller to
so comply.
9.7 Collection of Accounts Receivable; No Set-off Right.
(a) Seller shall collect all of the accounts receivable due it from
its customers for goods and services provided by Seller at the Facility.
(b) In the event that Purchaser shall receive any remittance from or
on behalf of any account debtor with respect to any account receivable
due Seller, Purchaser shall endorse without recourse such remittance to
the order of Seller and forward same to Seller promptly upon receipt
thereof.
(c) In the event that after the date hereof Seller shall receive any
remittance from or on behalf of any account debtor with respect to the
accounts receivable due Purchaser, Seller shall endorse without recourse
such remittance to
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the order of Purchaser and forward same to Purchaser promptly upon
receipt thereof.
(d) Including with respect to amounts described above in this Section
9.7, neither Purchaser nor Seller shall have any rights of off-set or
set-off against any amounts due the other party that it may collect or
come into its possession.
9.8 Employees of Seller. Seller acknowledges that Purchaser is under no
legal obligation to employ any personnel presently employed by Seller at the
Facility. Purchaser may offer employment to such persons currently employed by
Seller with respect to the Business only as Purchaser in its sole discretion
shall determine. Purchaser shall have, the absolute right to establish all terms
and conditions of employment, including wages, benefits and benefit plans, for
any employees of Seller to whom it chooses to make an offer of employment to be
employed by Purchaser. All such offers of employment shall be on the terms and
conditions established by Purchaser and shall be contingent upon employment
commencing with Purchaser. Seller has terminated the employment of all of its
employees employed at the Facility and agrees not to discourage any such
individuals who are offered employment by Purchaser, including the General
Manager of the Facility, from accepting employment with Purchaser.
9.9 Further Assurances of Seller. At any time and from time to time
after the date hereof, at Purchaser's request and without further consideration,
Seller shall cooperate and execute and deliver such other instruments or sale,
conveyance, transfer, assignment and confirmation and take such further action
as Purchaser may reasonably deem necessary or required in order to effectively
convey, transfer and assign to Purchaser, and to confirm Purchasers title to,
all of the Purchased Assets of Seller, to put Purchaser in actual possession and
operating control thereof and to assist Purchaser in exercising all rights with
respect thereto.
9.10 Non-Compete.
(a) As a significant inducement to Purchaser to enter into and to
perform its obligations under this Agreement, Seller agrees that, for a
period of five years after the date hereof (the "Non-Competition
Period"), it shall not at the Airport (the "Geographical Area") directly
or indirectly, either for itself or himself or any other person own,
manage, control, participate in, permit its name to be used by, consult
with, render services for or otherwise assist in any manner any entity
that owns, invests in, manages, controls or engages in the Business (the
"Restricted Business"), except that the foregoing shall not prohibit
Seller from being a passive owner of not more than 2% of the outstanding
stock of any class of a corporation which is publicly traded, so long as
it or they has no active participation in the business of such
corporation.
(b) If, at the time of enforcement of this Section 9.10, a court
shall hold that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties agree
that the maximum duration, scope or
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area reasonable under such circumstances shall be substituted for the
stated duration, scope or area.
(c) Seller acknowledges that the Business and the Purchased Assets
are unique and recognize and affirm that in the event of a breach of
this Section 9.10 by Seller, money damages would be inadequate and
Purchaser would have no adequate remedy at law. Accordingly, Seller
agrees that Purchaser shall have the right, in addition to any other
rights and remedies existing in its favor, to enforce its rights and the
obligations of Seller under this Section 9.10 not only by an action or
actions for damages but also by an action or actions for specific
performance, injunction and/or other equitable relief, without posting
any bond or security.
ARTICLE 10
MISCELLANEOUS
10. Miscellaneous.
10.1 Amendment and Waiver. This Agreement may be amended, and any
provision of this Agreement may be waived; provided that any such amendment or
waiver shall be binding on a Seller only if such amendment or waiver is set
forth in a writing executed by Seller, respectively, and that any such amendment
or waiver shall be binding upon Purchaser only if such amendment or waiver is
set forth in a writing executed by Purchaser. No course of dealing between or
among any persons having any interest in this Agreement shall be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any person under or by reason of this Agreement.
10.2 Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions, of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered, when
mailed by certified mail, return receipt requested, when sent by telecopy with
confirmation of receipt received, or when delivered by overnight courier with
executed receipt. Notices, demands and communications to Seller or Purchaser
shall, unless another address is specified in writing in accordance herewith, be
sent to the address indicated below:
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Notices to Purchaser:
Signature Flight Support Corporation
Signature Plaza
000 Xxxxx Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. XxXxxxxxxx
Xxxxxxxx & Xxxxxx
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Notices to Seller:
Mercury Air Group, Inc.
0000 XxXxxxxxx Xxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
XxXxxxx & Xxxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxx, Xx. Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
10.3 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assignable by either party
without the prior written consent of the other party.
10.4 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law,
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such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
10.5 No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
person.
10.6 Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and shall not
be deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
10.7 Complete Agreement. This Agreement and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
10.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
10.9 Governing Law. The internal law, not the law of conflicts, of the
State of Delaware govern all questions concerning the construction, validity and
interpretation of this Agreement and the performance of the obligations imposed
by this Agreement.
10.10 Remedies. All remedies of the parties provided herein shall, to
the extent permitted by law, be deemed cumulative and not exclusive of any
thereof or of any other remedies available to the parties, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained herein, and every remedy given herein or by
law to any party hereto may be exercised from time to time and as often as shall
be deemed expedient, by such party. Notwithstanding the foregoing, Purchaser's
or Seller's right to indemnification as provided in Article 8 for the other
party's breach of a representation or warranty contained in this Agreement shall
constitute that party's sole remedy for such breach and such party shall have no
other liability or remedy for such a breach. The indemnification provisions of
Article 8 shall govern for ail such indemnification matters under this
Agreement. Any liability for indemnification under Article 8 shall be determined
without duplication of recovery or multiplier effect by reason of any state of
facts giving rise to such indemnification.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date written above.
"PURCHASER"
SIGNATURE FLIGHT SUPPORT CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. FISH
------------------------------------------
Name: Xxxxx X. Fish, Regional Vice President
"SELLER"
MERCURY AIR GROUP, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXX
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
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