EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
TAS HOLDING, INC.
AND
TIMCO AVIATION SERVICES, INC.
DATED AS OF JULY 31, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER..................................................3
Section 1.01. The Merger.............................................3
Section 1.02. Closing................................................3
Section 1.03. Effective Time.........................................3
Section 1.04. Effects of the Merger..................................3
Section 1.05. Certificate of Incorporation; By-laws..................3
Section 1.06. Directors and Officers.................................3
Section 1.07. Conversion of Securities...............................4
Section 1.08. Treatment of Options, Warrants.........................4
Section 1.09. Dissenting Shares......................................5
Section 1.10. Surrender of Shares; Payment; Stock Transfer Books.....6
Section 1.11. Subsequent Actions.....................................8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............9
Section 2.01. Organization and Qualification; Subsidiaries...........9
Section 2.02. Certificate of Incorporation and By-laws...............9
Section 2.03. Capitalization.........................................9
Section 2.04. Authority Relative to the Transactions................10
Section 2.05. No Conflict; Required Filings and Consents............11
Section 2.06. SEC Filings; Financial Statements.....................12
Section 2.07. Absence of Certain Changes or Events..................13
Section 2.08. Absence of Litigation.................................14
Section 2.09. Employee Benefit Plans................................14
Section 2.10. Property; Title to Assets.............................16
Section 2.11. Taxes.................................................17
Section 2.12. Material Contracts....................................18
Section 2.13. Environmental Matters.................................19
Section 2.14. Labor and Employment Matters..........................20
Section 2.15. Permits; Compliance...................................21
Section 2.16. Intellectual Property.................................21
Section 2.17. Insurance.............................................22
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TABLE OF CONTENTS
(continued)
PAGE
Section 2.18. Opinion of Financial Advisor..........................22
Section 2.19. Brokers...............................................23
Section 2.20. Antitakeover Provisions and Rights Agreements.........23
Section 2.21. Investment Companies..................................23
Section 2.22. Transactions With Affiliates..........................23
Section 2.23. Certain Business Practices............................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TAS.....................24
Section 3.01. Corporate Organization................................24
Section 3.02. Authority Relative to the Transactions................24
Section 3.03. No Conflict; Required Filings and Consents............24
Section 3.04. Governmental Consents.................................25
Section 3.05. Financing.............................................25
Section 3.06. Brokers...............................................25
Section 3.07. Interim Operations of TAS.............................25
Section 3.08. Litigation............................................25
Section 3.09. Stock Ownership and Contribution......................25
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER.....................26
Section 4.01. Conduct of Business by the Company Pending the Merger.26
Section 4.02. Advice of Changes; Government Filings.................29
Section 4.03. Tax Matters...........................................30
ARTICLE V ADDITIONAL AGREEMENTS......................................31
Section 5.01. Stockholders' Meeting.................................31
Section 5.02. Approval of TAS.......................................31
Section 5.03. Proxy/Information Statement...........................32
Section 5.04. Merger Without Meeting of Stockholders................33
Section 5.05. Access to Information.................................34
Section 5.06. No Solicitation of Transactions.......................34
Section 5.07. Directors' and Officers' Indemnification; Insurance...38
Section 5.08. Further Action; Reasonable Best Efforts...............39
Section 5.09. Public Announcements..................................40
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TABLE OF CONTENTS
(continued)
PAGE
Section 5.10. Takeover Statute......................................40
Section 5.11. Financing.............................................40
Section 5.12. Disposition of Litigation.............................40
ARTICLE VI CONDITIONS TO THE MERGER...................................41
Section 6.01. Mutual Conditions to the Merger.......................41
Section 6.02. Conditions to Obligations of TAS......................41
Section 6.03. Conditions to Obligations of the Company..............42
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER..........................43
Section 7.01. Termination...........................................43
Section 7.02. Effect of Termination.................................44
Section 7.03. Fees and Expenses.....................................44
Section 7.04. Amendment.............................................46
Section 7.05. Waiver................................................46
ARTICLE VIII GENERAL PROVISIONS.........................................46
Section 8.01. Non-Survival of Representations and Warranties........46
Section 8.02. Company Stock Purchase................................46
Section 8.03. Notices...............................................47
Section 8.04. Certain Definitions...................................48
Section 8.05. Severability..........................................54
Section 8.06. Entire Agreement; Assignment..........................54
Section 8.07. Parties in Interest...................................54
Section 8.08. Specific Performance..................................54
Section 8.09. Governing Law.........................................54
Section 8.10. Waiver of Jury Trial..................................55
Section 8.11. Headings..............................................55
Section 8.12. Counterparts..........................................55
Section 8.13. Interpretation........................................55
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 31, 2006 (this
"Agreement"), is among TAS HOLDING, INC., a Delaware corporation ("TAS"), and
TIMCO AVIATION SERVICES, INC., a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of TAS, a Special Committee (the
"Special Committee") of the Board of Directors of the Company (with authority
delegated by the Board of Directors of the Company, hereinafter the "Company
Board"), and the Company Board have each determined that it is in the best
interests of their respective stockholders to enter into this Agreement
providing for the merger (the "Merger") of TAS with and into the Company in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), upon the terms and subject to the conditions set forth herein;
WHEREAS, the Special Committee has recommended that the Company Board
approve this Agreement and declare its advisability and approve the Merger in
accordance with the DGCL, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Boards of Directors of TAS and the Company Board have each
approved this Agreement and declared its advisability and approved the Merger in
accordance with the DGCL upon the terms and subject to the conditions set forth
herein;
WHEREAS, pursuant to a Restructuring Agreement dated as of April 16,
2006 between the Company, TAS and the TAS Stockholders (the "Restructuring
Agreement") the TAS Stockholders acquired from Monroe Capital Advisors LLC
indebtedness of the Company in the approximate amount of $18.4 million (the
"Monroe Debt") and amended the terms of the Monroe Debt to decrease the interest
rate and fees payable thereunder and to waive certain existing events of default
under the Monroe Debt for the benefit of the Company and advanced to the Company
additional working capital in the amount of $6.0 million thereunder (the "Term C
Loan" and together with the Monroe Debt, the "LJH Debt"), which in turn allowed
the Company to amend the terms of its indebtedness to CIT Group/Business Credit,
Inc. (the "CIT Debt") to resolve certain existing events of default and to
increase the amount of funding available under that facility;
WHEREAS, TAS and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS, capitalized terms not defined in the context in the Section in
which they first appear shall have the meanings set forth in Section 8.03.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, TAS and the Company hereby agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, at the
Effective Time (as defined below), TAS shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of TAS
shall cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
SECTION 1.02 CLOSING.
(a)..LOCATION AND TIME. The closing of the Merger (the "Closing")
shall take place no later than the second Business Day after satisfaction or
waiver (as permitted by this Agreement and applicable Law) of the conditions
(excluding conditions that, by their terms, cannot be satisfied until the
Closing Date) set forth in Article VI (the "Closing Date"), unless another time
or date is agreed to in writing by the parties hereto. The Closing shall be held
at the offices of Xxxxxxxxx & Xxxxxxxx LLP, 000 X. Xxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000, unless another place is agreed to in writing by the parties hereto.
(b) CLOSING DELIVERIES. At the Closing, including any Closing
contemplated by Section 5.04 of this Agreement, the Company and TAS shall make
the following deliveries:
(i) The Company shall deliver to TAS a certificate of the Chief
Executive Officer or Chief Operating Officer and the Chief Financial Officer of
the Company, certifying that:
(A) the representations and warranties of the Company set forth in this
Agreement, disregarding all materiality and Company Material Adverse
Effect qualifiers (except as set forth in Section 2.07(b)), are true
and correct, in each case as of the date of this Agreement and at and
as of the Effective Time, as though made on and as of such date (unless
any such representation or warranty is made only as of a specific date,
in which event as of such specified date), except for failures to be
true and correct which would not, individually or in the aggregate,
have a Company Material Adverse Effect and which result, or would
reasonably be expected to result, in costs or losses to the Company,
together with any costs or losses to the Company referenced in
Subsection (B) next following, aggregating in excess of $5 million, in
each case determined on the basis of cash out-of-pocket costs to the
Company and its Subsidiaries;
(B) the Company has performed in all material respects each of the
obligations, and complied in all material respects with each of the
agreements and covenants, required to be performed by, or complied with
by, it under this Agreement at or prior to the Closing, provided that
each of such obligations, agreements and covenants shall be deemed to
have been performed in all material respects so long as the costs or
losses to the Company arising from any breach of any thereof, or which
would reasonably be expected to result in costs or losses to the
Company, together with costs or losses to the Company referenced in
Subsection (A) above, do not in the aggregate exceed $5 million, in
each case determined on the basis of cash out-of-pocket costs to the
Company and its Subsidiaries; and
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(C) There has not occurred a Closing Material Adverse Effect.
(ii) The Company shall deliver to TAS an executed original copy of
the fairness opinion from Xxxxxxxx Xxxxx Xxxxxx & Xxxxx as described in Section
2.18 that has not been withdrawn.
(iii) The Company shall deliver to TAS an executed original copy of
the opinion of Akerman & Senterfitt LLP, counsel to the Company, as to the
matters addressed in Sections 2.01(a) and (c), 2.03, 2.04 and 2.05, in form and
substance reasonably acceptable to TAS and its counsel.
(iii) TAS shall deliver to the Company a certificate of the Chief
Executive Officer of TAS, certifying that:
(A) the representations and warranties of TAS set forth in this
Agreement, disregarding all materiality and TAS Material Adverse Effect
qualifiers, are true and correct, in each case as of the date of this
Agreement and at and as of the Effective Time, as though made on and as
of such date (unless any such representation or warranty is made only
as of a specific date, in which event as of such specified date),
except for failures to be true and correct which would not,
individually or in the aggregate, reasonably be expected to have a TAS
Material Adverse Effect; and
(B) TAS has performed in all material respects each of the obligations,
and complied in all material respects with each of the agreements and
covenants, required to be performed by or complied with by it under
this Agreement at or prior to the Closing.
SECTION 1.03 EFFECTIVE TIME. At the Closing, the parties shall cause the
Merger to be consummated by filing a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware, in such form as
is required by, and executed in accordance with, the relevant provisions of the
DGCL (the date and time of such filing of the Certificate of Merger (or such
later time as may be agreed by the parties hereto and specified in the
Certificate of Merger) being the "Effective Time").
SECTION 1.04 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, immunities, powers and franchises of the Company and TAS
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of each of the Company and
TAS shall become the debts, liabilities, obligations, restrictions, disabilities
and duties of the Surviving Corporation.
SECTION 1.05 CERTIFICATE OF INCORPORATION; BY-LAWS. At the Effective Time,
the Certificate of Incorporation of the Surviving Corporation shall be amended
in its entirety to read as set forth in EXHIBIT A hereto, until thereafter
amended in accordance with its terms and applicable Law. At the Effective Time,
the By-laws of the Surviving Corporation shall be amended in their entirety to
read as set forth in EXHIBIT B hereto, until thereafter duly amended in
accordance with their terms and applicable Law.
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SECTION 1.06 DIRECTORS AND OFFICERS. The directors of TAS immediately prior
to the Effective Time shall, at the Effective Time, become the directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal.
SECTION 1.07 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of TAS, the Company or the holders
of any of the following securities:
(a) each share of common stock, par value $0.001 per share, of the
Company ("Company Common Stock", and such shares, "Shares") issued and
outstanding immediately prior to the Effective Time (other than any Shares to be
canceled pursuant to Section 1.07(b) and any Dissenting Shares) shall be
canceled and shall be converted automatically into the right to receive $4.00 in
cash, without interest (the "Per Share Merger Consideration");
(b) each Share held in the treasury of the Company and each Share
owned by TAS or its stockholders immediately prior to the Effective Time shall
be canceled without any conversion thereof and no payment or distribution shall
be made with respect thereto; and
(c) each share of common stock, par value $0.001 per share, of TAS
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, par value $0.001 per share, of the
Surviving Corporation ("Surviving Corporation Shares").
SECTION 1.08 TREATMENT OF OPTIONS, WARRANTS
(a) TERMINATION. Between the date of this Agreement and the Effective
Time, the Company shall take all necessary action (which shall be effective as
of the Effective Time) to:
(i) terminate (effective as of the Effective Time) each of the
Company's stock option plans and restricted stock purchase plans, including but
not limited to those included on DISCLOSURE SCHEDULE 2.03, and, to the extent
that it may legally do so, to terminate each stock option agreement and
restricted stock purchase agreement granted otherwise than under such plans,
each as amended through the date of this Agreement (collectively, the "Company
Stock Plans"); and
(ii) cancel, as of the Effective Time, each outstanding option to
purchase Shares of Company Common Stock granted under the Company Stock Plans
(each, a "Company Stock Option") that is outstanding and unexercised, whether or
not vested or exercisable, as of such date (in each case, without the creation
of additional liability to the Company or any of its Subsidiaries) and each
right to purchase Company Stock under any restricted stock purchase plan, to the
extent that it may legally do so.
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(b) TREATMENT OF OUTSTANDING OPTIONS, WARRANTS, CONVERSION RIGHTS.
(i) As of the Effective Time, each holder of a Company Stock Option
that is not cancelled by agreement with the Company on or immediately prior to
the Effective Time pursuant to Section 1.08(a) shall be entitled to receive from
the Surviving Corporation an amount of cash, without interest (the "Option
Consideration"), equal to the product of:
(A) the total number of Shares subject to such Company Stock Option,
multiplied by
(B) the excess, if any, of the Per Share Merger Consideration over the
exercise price per Share of such Company Stock Option (with the aggregate amount
of such payment to the holder to be rounded to the nearest cent), less
applicable withholding taxes, and upon payment of such amount to the holder of a
Company Stock Option, such Company Stock Options will be deemed cancelled and of
no further legal effect; provided that with respect to the 47,083 Shares
issuable pursuant to the LJH Warrant, (as defined in the Company SEC Reports,
the "LJH Warrant"), such payment shall be due upon the conversion of the Company
Convertible Debt into Shares in accordance with the terms of the Company
Convertible Debt and the LJH Warrant.
(ii) As of the Effective Time, each holder of a warrant or other right
to purchase Shares that is not cancelled by agreement with the Company on or
immediately prior to the Effective Time pursuant to Section 1.08(a) (a "Company
Stock Purchase Right") having an exercise or purchase price that is less than
the Per Share Merger Consideration shall be entitled to receive from the
Surviving Corporation an amount of cash, without interest (the "Purchase Right
Consideration"), equal to the product of:
(A) the total number of Shares subject to such Company Stock Purchase
Right, multiplied by
(B) the excess, if any, of the Per Share Merger Consideration over the
exercise price per Share of such Company Stock Purchase Right (with the
aggregate amount of such payment to the holder to be rounded to the nearest
cent), less applicable withholding taxes, and upon payment of such amount to the
holder of a Company Stock Purchase Right, such Company Stock Purchase Right will
be deemed cancelled and of no further legal effect.
(iii) As of the Effective Time, each holder of a Company Stock Option
that is not cancelled by agreement with the Company on or immediately prior to
the Effective Time pursuant to Section 1.08(a) and which has an exercise price
per Share that is equal to or greater than the Per Share Merger Consideration
shall, as of the Effective Time of the Merger, be entitled to an aggregate
payment of $100.00 in cash with respect to all such Company Stock Options held
as of the Effective Time, and all such Company Stock Options shall be deemed
cancelled and of no further force or effect upon such payment.
(iv) The right to receive Shares upon conversion at maturity pursuant
to the Company's 8% Senior Subordinated Convertible PIK Notes due December 31,
2006 issued pursuant to an Indenture, dated as of February 28, 2002, among TIMCO
Aviation Services, Inc., the Trustee and the Subsidiary Guarantors named
therein, as amended, and the Company's 8% Junior Subordinated Convertible PIK
Notes due January 1, 2007, issued pursuant to an Indenture, dated as of
September 20, 2002, among TIMCO, the Trustee and the Subsidiary
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Guarantors named therein, as amended (together, the "Company Convertible Debt"),
will be unchanged by the Merger and will continue to exist pursuant to such
Indentures, such that each right to receive a Share pursuant to such Indentures
prior to the Merger will after the Merger represent the right to receive one
share of common stock, $.001 par value per share, of the Surviving Corporation.
(v) To the extent that the right to receive Shares upon exercise of
any Company Stock Option or Company Stock Purchase Right is not extiguished upon
the effectiveness of the Merger pursuant to this Section 1.08, each right to
receive a Share pursuant to such Company Stock Option or Company Stock Purchase
Right prior to the Merger will, after the Merger, represent the right to receive
one share of common stock, $.001 par value per share, of the Surviving
Corporation.
(c) CONSENTS TO TRANSACTION. The Company agrees to use its
reasonable best efforts to obtain written agreements from each holder of a
Company Stock Option to accept the treatment described in Section 1.08(b) with
respect to such Company Stock Option.
SECTION 1.09 DISSENTING SHARES.
(a) RIGHT. Notwithstanding anything in this Agreement to the contrary,
Shares that are issued and outstanding immediately prior to the Effective Time
and which are held by holders of Shares who have not voted in favor of or
consented to the Merger and who have properly demanded appraisal for such Shares
in accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not
be converted into the right to receive the Per Share Merger Consideration, and
the holders thereof shall be entitled to receive the "fair value" of such Shares
as provided in Section 262 of the DGCL; provided, however, that if, after the
Effective Time, any such stockholder of the Company shall fail to perfect or
shall effectively waive, withdraw, or lose such stockholder's rights under
Section 262 of the DGCL, such stockholder's Shares shall no longer be considered
Dissenting Shares for the purposes of this Agreement and shall thereupon be
deemed to have been converted, at the Effective Time, into the right to receive
the Per Share Merger Consideration without any interest thereon.
(b) NOTICE OF DEMAND. The Company shall give TAS prompt notice of any
notice received by the Company of intent to demand appraisal of any Shares,
withdrawals of such notices and any other instruments served pursuant to Section
262 of the DGCL and received by the Company. TAS shall have the right to
participate in and to direct all negotiations and proceedings with respect to
the exercise of appraisal rights under Section 262 of the DGCL. The Company
shall not, except with the prior written consent of TAS or as otherwise required
by an order, decree, ruling or injunction of a court of competent jurisdiction,
make any payment with respect to any such exercise of appraisal rights or offer
to settle or settle any such rights.
SECTION 1.10 SURRENDER OF SHARES; PAYMENT; STOCK TRANSFER BOOKS.
(a) ESCROW. Pursuant to the Escrow Agreement, dated July 31, 2006, by
and among the Company, TAS and American Bank of Texas (the "Escrow Agent") in
the form attached hereto as EXHIBIT C (the "Escrow Agreement"), TAS has
deposited $10,006,524 in cash of its funds from which the Per Share Merger
Consideration will be paid.
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(b) PAYING AGENT. TAS shall on or before the Effective Time designate
by written notice to the Company a bank or other financial institution to act as
agent (the "Paying Agent"), which Paying Agent shall be reasonably acceptable to
the Company, to receive certificates evidencing Company Common Stock and to
disburse the Per Share Merger Consideration from the funds held pursuant to the
Escrow Agreement and the funds to which holders of Company Stock Options and
Company Stock Purchase Rights shall become entitled pursuant to Section 1.07 or
Section 1.08, as applicable. Until used for that purpose, the funds shall be
invested by the Paying Agent, as jointly directed by TAS and the Company prior
to the Effective Time, in obligations of or guaranteed by the United States of
America or obligations of an agency of the United States of America which are
backed by the full faith and credit of the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by Xxxxx'x Investors
Services Inc. or Standard & Poor's Corporation, or in deposit accounts,
certificates of deposit or banker's acceptances of, repurchase or reverse
repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks, each of which has a combined capital surplus aggregating more
than $500 million (based on the most recent financial statements of the banks
which are then publicly available at the Securities and Exchange Commission (the
"SEC") or otherwise), or in mutual funds investing solely in one or more of the
foregoing; provided that no such investment or losses thereon shall affect the
Per Share Merger Consideration payable to former stockholders of the Company or
the Option Consideration or Purchase Right Consideration payable to former
holders of Company Stock Options or Company Stock Purchase Rights. The Surviving
Corporation shall promptly provide additional funds to the Paying Agent for the
benefit of the former holders of Shares (other than TAS and the TAS
Stockholders) and former holders of Company Stock Options and Company Stock
Purchase Rights in the amount of any such losses to the extent necessary to
satisfy the Surviving Corporation's obligations under this Article I. All
interest accrued on funds held pursuant to the Escrow Agreement and by the
Paying Agent shall be for the benefit of TAS, prior to the Effective Time, and
for the benefit of the Surviving Corporation after the Effective Time, and not
for the benefit of any holder of securities of the Company.
(c) TERMINATION OF AGREEMENT. Upon any termination of this Agreement
in accordance with the provisions of Section 7.01 hereof prior to the Effective
Time, the funds held pursuant to the Escrow Agreement and all accrued interest
thereon will, subject to the disposition of any claim that the Company may make
in writing to TAS in connection with an alleged breach of this Agreement by TAS,
be promptly repaid to the TAS Stockholders as provided in the Escrow Agreement
and the Company will execute such documentation as is required by the Escrow
Agreement or as may be requested by TAS or the Escrow Agent in order to effect
the termination of the escrow and return of such funds.
(d) EXCHANGE OF CERTIFICATES. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each Person who was, at the
Effective Time, a holder of record of Shares entitled to receive the Per Share
Merger Consideration pursuant to Section 1.07(a) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates evidencing such Shares (the "Certificates") shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and instructions
for use in effecting the surrender of the Certificates pursuant to such letter
of transmittal. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
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required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefore the Per Share Merger Consideration for
each Share formerly evidenced by such Certificate, and such Certificate shall
then be canceled. No interest shall accrue or be paid on the Per Share Merger
Consideration payable upon the surrender of any Certificate for the benefit of
the holder of such Certificate. If the payment equal to the Per Share Merger
Consideration is to be made to a Person other than the Person in whose name the
surrendered Certificate is registered on the stock transfer books of the
Company, it shall be a condition of payment that the Certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer and that
the Person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Per Share Merger Consideration to a
Person other than the registered holder of the Certificate surrendered, or shall
have established to the satisfaction of TAS that such taxes either have been
paid or are not applicable. If any holder of Shares is unable to surrender such
holder's Certificates because such Certificates have been lost, stolen,
mutilated or destroyed, such holder may deliver in lieu thereof an affidavit and
indemnity bond in form and substance and with surety reasonably satisfactory to
the Surviving Corporation. Comparable procedures shall be established to
disburse the Option Consideration and the Purchase Right Consideration.
(e) DELIVERY; ESCHEAT. At any time following the six months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to the persons (including, without limitation,
all interest and other income received by the Paying Agent in respect of all
funds made available to it) entitled thereto pursuant to this Agreement, and,
thereafter, such holders shall look solely to the Surviving Corporation (subject
to abandoned property, escheat and other similar laws) with respect to any Per
Share Merger Consideration, Option Consideration or Purchase Right Consideration
that may be payable upon due surrender of the Certificates held by them or
satisfaction of the other requirements set forth in this Agreement.
Notwithstanding the foregoing, neither the Surviving Corporation, TAS nor the
Paying Agent shall be liable to any person for any Per Share Merger
Consideration, Option Consideration or Purchase Right Consideration delivered in
respect of such Share to a public official pursuant to any abandoned property,
escheat or other similar Law. Any such amounts remaining unclaimed two years
after the Effective Time (or such earlier date, immediately prior to such time
when the amounts would otherwise escheat to or become property of any
Governmental Authority) shall become, to the extent permitted by applicable Law,
the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
(f) TRANSFER BOOKS. At the Effective Time, the stock transfer books of
the Company shall be closed and thereafter there shall be no further
registration of transfers of Shares on the records of the Company. From and
after the Effective Time, the holders of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares
except as otherwise provided herein or by applicable Law.
(g) SATISFACTION. All Per Share Merger Consideration paid upon the
surrender for exchange of Certificates, all Option Consideration paid in respect
of Company Stock Options and all Purchase Right Consideration paid in respect of
Company Stock Purchase Rights, in each case in accordance with the terms of this
Article I, shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates,
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Company Stock Options or Company Stock Purchase Rights, as applicable. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article I, except as otherwise provided by Law.
(h) TAX DEDUCTION; WITHHOLDING. Each of the Surviving Corporation, the
Paying Agent or TAS shall be entitled to deduct and withhold from any amounts
otherwise payable hereunder to any Person such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of Federal, state, local or foreign tax Law. To the extent that
amounts are so deducted and withheld, such deducted and withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the Person
in respect of which such deduction and withholding was made.
(i) ADJUSTMENT OF MERGER CONSIDERATION. Notwithstanding anything in
this Agreement to the contrary, but subject to Section 4.01, if, between the
date of this Agreement and the Effective Time, the issued and outstanding Shares
shall have been changed into a different number of shares or a different class
by reason of any stock split, reverse stock split, stock dividend,
reclassification, redenomination, recapitalization, split-up, combination,
exchange of shares or other similar transaction, the Per Share Merger
Consideration, the Option Consideration and the Purchase Right Consideration and
any other dependent items shall be appropriately adjusted to provide to the
holders of Company Common Stock or rights to acquire such Company Common Stock
and the parties hereto the same economic effect as contemplated by this
Agreement prior to such action and as so adjusted shall, from and after the date
of such event, be the Per Share Merger Consideration, the Option Consideration
and the Purchase Right Consideration or other dependent item, subject to further
adjustment in accordance with this sentence.
SECTION 1.11 SUBSEQUENT ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or TAS acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or TAS, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to TAS, except as set forth
on the applicable portion of the disclosure schedule delivered by the Company to
TAS (the "Company Disclosure Schedule"), that
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SECTION 2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) ORGANIZATION. Each of the Company and each Subsidiary of the
Company is a corporation or other form of legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each of the Company and each of its
Subsidiaries is duly qualified or licensed as a foreign corporation or other
form of legal entity to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed or in good
standing that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(b) SUBSIDIARIES. All of the capital stock of, or other equity
interests in, each Subsidiary of the Company are owned by the Company, directly
or through one or more directly or indirectly wholly owned Subsidiaries of the
Company, free and clear of all encumbrances or other restrictions (other than
restrictions under applicable securities laws and pledges of such securities
pursuant to the CIT Debt and LJH Debt). All of the capital stock or other equity
interests in each such Subsidiary are validly issued, fully paid and
nonassessable. The Company does not own or have any right to acquire any
ownership interest in, or debt or equity security of, any Person.
(c) POWER. Each of the Company and each of its Subsidiaries has the
requisite power and authority as a corporation or other legal entity in all
material respects to own, lease and operate its properties and to carry on its
respective businesses as they are now being conducted.
SECTION 2.02 CERTIFICATE OF INCORPORATION AND BY-LAWS. The
Company has heretofore furnished or made available to TAS a complete and correct
copy of the Certificate of Incorporation and the By-laws or equivalent
organizational documents, each as amended to date, of the Company and any of its
Subsidiaries which TAS has requested be delivered to it. All certificates of
incorporation, By-laws or equivalent organizational documents of the Company and
its Subsidiaries are in full force and effect.
SECTION 2.03 CAPITALIZATION.
(a) AUTHORIZED STOCK. The authorized capital stock of the Company
consists of 101,000,000 shares, of which 100,000,000 are designated as Common
Stock and 1,000,000 are designated as Preferred Stock. As of the date of this
Agreement, 21,441,040 Shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable and none are held in treasury.
Except as set forth in SECTION 2.03 of the Company Disclosure Schedule, which
Schedule sets forth the name of the holder of each option, warrant or other
right to purchase capital stock of the Company, the number of Shares that may be
purchased by such holder and the price per Share at which such Shares may be
purchased, there are (i) no options, warrants, agreements, or other arrangements
of any character that are binding on the Company or any of its Subsidiaries that
obligate the Company or any of its Subsidiaries to issue, sell, redeem,
repurchase or exchange any shares of capital stock of, or other equity interests
in, the Company or any of its Subsidiaries or any interest convertible into or
exchangeable or exercisable for any
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such capital stock or other equity interests, (ii) no voting trusts, proxies or
other similar agreements or understandings to which the Company or any of its
Subsidiaries is bound with respect to the voting of any such capital stock or
other equity interests, (iii) no contractual obligations or commitments
restricting the transfer of, or requiring the registration for sale of, any such
capital stock or other equity interests and (iv) no bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which shareholders
of the Company may vote (whether or not dependent on conversion or other
triggering event). The Company Common Stock is not subject to statutory
preemptive rights.
(b) STOCK PLANS. The Company has made available to TAS accurate and
complete copies of all Company Stock Plans pursuant to which the Company has
granted the Company Stock Options that are currently outstanding. All Shares
subject to issuance prior to the Closing as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
SECTION 2.04 AUTHORITY RELATIVE TO THE TRANSACTIONS. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery by the Company of this Agreement and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement and the Merger by the holders of a
majority of the then outstanding shares of Company Common Stock (the "Company
Stockholder Approval"), if necessary, and the filing and recordation of the
certificate of merger as required by the DGCL). The approval and adoption of
this Agreement and the Merger by the holders of a majority of the then
outstanding shares of Company Common Stock and the filing and recordation of the
certificate of merger as required by the DGCL are the only actions required
under the DGCL and applicable Delaware Law to authorize the Merger. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the other parties
thereto, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency (including, without limitation,
all Laws relating to fraudulent transfers), reorganization, moratorium or
similar Laws affecting creditors' rights generally and subject to the effect of
general principles of equity (regardless of whether considered in a proceeding
at Law or in equity). The Company Board, at a meeting duly called and held, and
acting in accordance with the unanimous recommendation of the Special Committee,
has:
(a) determined that this Agreement and the Merger contemplated hereby
as well as the Company Stock Purchase. and any additional agreements entered
into pursuant to the same (collectively, the "Transactions") are fair to, and in
the best interests of, the Company and the holders of Shares (other than TAS and
the TAS Stockholders);
(b) approved, adopted and declared advisable this Agreement and the
Transactions (such approval and adoption having been made in accordance with the
DGCL and the Company's Certificate of Incorporation); and
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(c) resolved, subject to Section 5.06(d), to recommend that the
holders of Shares approve and adopt this Agreement and the Merger (the "Company
Recommendation").
SECTION 2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) NO CONFLICT. The execution and delivery by the Company of this
Agreement do not, and the performance by the Company of this Agreement and the
consummation of the Transactions by the Company do not and will not:
(i) violate the Certificate of Incorporation or By-laws or any
equivalent organizational documents of the Company or any of its Subsidiaries;
(ii) violate any United States or non-United States statute, law,
ordinance, regulation, rule, code, executive order, injunction, judgment, decree
or other order ("Law") applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected; or
(iii) except as set forth on SECTION 2.05 of the Company Disclosure
Schedules, result in any breach of or constitute a default (or an event which,
with notice or lapse of time or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
require consent of or notification to any counterparty under, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any property or asset of any of
them is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or with respect
to agreements for which consents have been obtained.
(b) GOVERNMENT APPROVAL. The execution, delivery, and performance of
this Agreement by the Company and the consummation of the Transactions by the
Company do not and will not require any consent, approval, authorization or
permit of, action by, filing with or notification to, any government, any
instrumentality, subdivision, court, administrative agency or commission or
other authority thereof, or any quasi-governmental or private body exercising
any regulatory, taxing, importing or other governmental or quasi-governmental
authority (a "Governmental Authority"), except for (i) those required under or
in relation to (A) the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), (B) compliance with the applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (C) the DGCL with respect to the filing of the Certificate of Merger and
(D) rules such as may be required under any applicable state securities or blue
sky laws and (ii) such other consents, permits, approvals, orders or
authorizations the failure of which to obtain which would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
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SECTION 2.06 SEC FILINGS; FINANCIAL STATEMENTS.
(a) COMPANY SEC REPORTS. The Company has filed or furnished, as the
case may be, all forms, reports, registration statements and other documents
required to be filed or furnished by it with the SEC since December 31, 2004,
and has heretofore made available to TAS:
(i) its Annual Reports on Form 10-K, as amended, for the fiscal years
ended December 31, 2003, December 31, 2004 and December 31, 2005, respectively;
(ii) its Quarterly Reports on Form 10-Q for the period ended March 31,
2006;
(iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since December 31, 2004; and
(iv) all other forms, reports, registration statements and other
documents filed by the Company with the SEC since December 31, 2004 and prior to
the Effective Time.
(The forms, reports, registration statements and other documents
referred to in clauses (i), (ii), (iii) and (iv) above are collectively referred
to herein as the "Company SEC Reports".) The Company SEC Reports were prepared
in accordance with the applicable requirements of the Exchange Act and the
Securities Act, and the rules and regulations promulgated thereunder. The
Company SEC Reports, as of their respective dates (and, in the case of any
Company SEC Report that is a registration statement, as of the date such
registration statement became effective), did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All Company SEC
Reports, as of their respective dates, complied as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act and the rules and regulations promulgated thereunder. As of the date of this
Agreement, there are no outstanding or unresolved comments in comment letters
received by the Company from the SEC staff with respect to the SEC Reports. None
of the Company's Subsidiaries are reporting companies under the Securities Act
or the Exchange Act.
(b) FINANCIAL STATEMENTS. Each of the audited consolidated financial
statements (including, in each case, any notes thereto) contained in the Company
SEC Reports was prepared in accordance with United States generally accepted
accounting principles in effect as of the date of such financial statements
("GAAP") applied on a consistent basis throughout the periods indicated (except
as may be indicated in the notes thereto) and each fairly presents, in all
material respects, the consolidated financial position, results of operations
and cash flows of the Company and its consolidated Subsidiaries as at the
respective dates thereof and for the respective periods indicated therein. Each
of the unaudited interim consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each fairly
presents, in all material respects, the consolidated financial position, results
of operations and cash flows of the Company and its consolidated Subsidiaries as
at the respective dates thereof and for the respective periods indicated therein
(subject to normal period-end adjustments which, individually or in the
aggregate, were not and will not be material (or, in the case of such interim
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consolidated financial statements for periods ending prior to April 1, 2006, to
the Company's Knowledge were not, individually or in the aggregate, material)).
(c) XXXXXXXX-XXXXX ACT. Since the adoption of the Xxxxxxxx-Xxxxx Act
of 2002 (the "Xxxxxxxx-Xxxxx Act"), the Company has been and is in compliance in
all material respects with the applicable provisions of the Xxxxxxxx-Xxxxx Act
and the related rules and regulations promulgated thereunder and under the
Exchange Act that are applicable to it.
(d) LIABILITIES. Except for any liabilities or obligations disclosed
in the Company SEC Reports and liabilities not disclosed therein but which would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, neither the Company nor any of its Subsidiaries has any
liability or obligation (whether known, unknown, accrued, absolute, contingent
or otherwise):
(i) except to the extent reflected, reserved for or disclosed in the
consolidated balance sheet of the Company and its consolidated subsidiaries as
at December 31, 2005, as set forth in the Company's 2005 10-K; or
(ii) that were incurred in the ordinary course of business consistent
with past practice since December 31, 2005.
SECTION 2.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
2006, except as set forth in SECTION 2.07 of the Company Disclosure Schedule or
in the Company SEC Reports, or as expressly contemplated by this Agreement:
(a) the Company and the Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice;
(b) there has not been any event, circumstance, change or effect that,
individually or in the aggregate, has had, or would reasonably be expected to
have, a Company Material Adverse Effect;
(c) except in the ordinary course of business or as disclosed
hereunder, there has not been any material increase in the compensation payable
or which could become payable by the Company and its Subsidiaries to their
officers or key employees, or any amendment of any compensation and benefit
plans resulting in a material increase in payments thereunder;
(d) there has not been any issuance or agreement to issue shares of
Company Common Stock, other than to the Company's directors pursuant to the
Company's option plan applicable to them;
(e) any material change in financial or tax accounting methods,
principles or practices by the Company or any of its Subsidiaries except insofar
as may have been required by a change in GAAP or Law and have been disclosed in
Company SEC Reports;
(f) any material Tax election by the Company or any of its
Subsidiaries or settlement or compromise by the Company or any of its
Subsidiaries of any material Tax liability or refund; and
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(g) none of the Company or any of its Subsidiaries has taken any
action that, if taken after the date of this Agreement, would constitute a
material breach of, or require a consent under, any of the covenants set forth
in Section 4.01.
SECTION 2.08. ABSENCE OF LITIGATION. Except as set forth in the
Company SEC Reports or in SECTION 2.08 of the Company Disclosure Schedule, there
is no litigation, suit, claim, action, proceeding, arbitration or investigation
(an "Action"), or any judgments, decrees, injunctions, rules or orders of any
Governmental Authority pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, or any property or
asset of the Company or any of its Subsidiaries, except for any of the foregoing
that if decided adversely to the Company or its Subsidiaries would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
SECTION 2.09. EMPLOYEE BENEFIT PLANS.
(a) PLANS. Except as set forth in SECTION 2.09(A) of the Company
Disclosure Schedule, the Company does not have any material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) which are not disclosed in the Company SEC
Reports or any bonus, stock option, stock purchase, restricted stock, phantom
stock or other equity based compensation incentive, deferred compensation,
excess benefit, retiree medical or life insurance, supplemental retirement,
severance, salary continuation, pension, profit sharing, savings, retirement,
disability, insurance, Section 125 "cafeteria" or "flexible" benefit, vacation,
sick leave, employee loan, educational assistance, change in control,
termination or any other similar fringe or employee benefit plans, programs or
arrangements, or any employment, retention, termination, severance or other
contracts or agreements, that cover any of the current or former employees,
officers, or directors of the Company or any of its Subsidiaries and with
respect to which the Company or any of its Subsidiaries has any material
liability or obligation or which are maintained, contributed to or sponsored by
the Company or any of its Subsidiaries (collectively, the "Plans"). Neither the
Company, nor any employer that would be considered a single employer with the
Company under Sections 414(b), (c), (m) or (o) of the Code, contributes, nor
within the six-year period ending on the date hereof has any of them contributed
or been obligated to contribute, to any plan, program or agreement which is a
"multiemployer plan" (as defined in Section 3(37) of ERISA), which is subject to
Section 412 of the Code or Section 302 or Title IV of ERISA, or which is
maintained outside the jurisdiction of the United States. Except as set forth in
SECTION 2.09(A) of the Company Disclosure Schedule, no Plan provides or permits
the provision of, medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former employees of the Company or any
of its Subsidiaries for periods extending beyond their retirement or other
termination of service, except as may be required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and the regulations thereunder
("COBRA") or other applicable Law, and at the sole expense of the employee or
former employee. The Company may amend or terminate any Plan (other than an
employment agreement or any similar agreement that cannot be terminated without
the consent of the other party) at any time without incurring material liability
thereunder, other than in respect of accrued and vested obligations and medical
or welfare claims incurred prior to such amendment or termination. The Company
has no plan, contract or commitment, whether legally binding or not,
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to create any additional employee benefit or compensation plans, policies or
arrangements or, except as may be required by Law, to modify any Plan.
(b) PLAN COMPLIANCE. Each Plan has been maintained, operated and
administered in material compliance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. The Company
and the Subsidiaries have performed, in all material respects, all obligations
required to be performed by them under, are not in any material respect in
default under or in violation of, and to the Company's Knowledge, no other party
is in default or violation of, any Plan, and there are no pending or, to the
Company's Knowledge, threatened claims, lawsuits or arbitrations (other than
routine claims for benefits), relating to any of the Plans, or the assets of any
trust for any Plan. With respect to each Plan, the Company has complied in all
material respects with the applicable health care continuation and notice
provisions of COBRA and the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996, as amended, and the regulations
thereunder ("HIPAA"), including, but not limited to, the applicable requirements
concerning the privacy, security, and/or electronic transmission of health
information. Neither the Company or any of its Subsidiaries nor, to the
Company's Knowledge, any of their respective directors, officers, employees or
agents has, with respect to any Plan, engaged in or been a party to any
"prohibited transaction" (as defined in Section 4975 of the Code or Section 406
of ERISA), which could result in the imposition of either a penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code, in each case applicable to the Company or any of its Subsidiaries or any
Plan.
(c) PAYMENTS. There will be no material payment, accrual of additional
benefits, acceleration of payments or vesting of any benefit under any contract,
agreement, plan or other arrangement, whether or not a Plan, and no employee,
officer or director of the Company or any of the Subsidiaries will become
entitled to any severance, termination pay or similar payments or benefits in
connection with the Transactions (either alone or in combination with any other
event), other than as specifically provided for in this Agreement and set forth
on SECTION 2.09(C) of the Company Disclosure Schedule. No payment, accrual of
additional benefits, acceleration of payments or vesting of any benefit under
this Agreement, any Plan or similar agreement or arrangement between the Company
or any of its Affiliates and any "disqualified individual" (as such term is
defined in Section 280G of the Code) could constitute an "excess parachute
payment" (as such term is defined in Section 280G of the Code) in connection
with the transactions contemplated by this Agreement (either alone or in
combination with any other event) except as set forth on SECTION 2.09(E) of the
Company Disclosure Schedules, and any such payment, accrual or acceleration has
been waived by the "disqualified individual.". No amounts payable under any Plan
or otherwise will fail to be deductible to the Company, the Surviving
Corporation or their Subsidiaries for federal income tax purposes by virtue of
Section 162(m).
(d) CONTRIBUTIONS. All contributions, premiums or payments required to
be made with respect to any Plan have been made on or before their due dates,
with such exceptions as would not have a Company Material Adverse Effect. All
liabilities or expenses of the Company or its Subsidiaries in respect of any
Plan (including workers compensation) which have not been paid, have been
properly accrued on the Company's most recent financial statements in compliance
with GAAP.
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(e) PLAN ACTIONS. Prior to the date of this Agreement, for each
Company Stock Plan, the committee of the Company Board or other body authorized
to administer and interpret such Company Stock Plan has made the determination
and directed, in each case in accordance with the terms of such Company Stock
Plan, that the Company Stock Options shall be treated as set forth in Section
1.08(a) and Section 1.08(b) of this Agreement.
SECTION 2.10. PROPERTY; TITLE TO ASSETS.
(a) OWNED REAL PROPERTY. The Company and its Subsidiaries do not own
any real property or fee simple interest in real property having a value, in the
aggregate, in excess of $5,000,000.
(b) LEASES. SECTION 2.10(B) of the Company Disclosure Schedule lists
each lease, sublease or license for each parcel of real property currently
leased, subleased or licensed by the Company or any of its Subsidiaries (the
"Material Leased Real Property") which requires annual lease payments in excess
of $1 million, true and correct copies of which, together with any assignments,
guaranties and amendments, have been made available to TAS. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, all such current leases, subleases and licenses
relating to Material Leased Real Property are in full force and effect, are
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, any existing default or event of default (or event
which, with notice or lapse of time, or both, would constitute a default) by the
Company or any of its Subsidiaries or, to the Company's Knowledge, by the other
party to such lease, sublease or license.
(c) LIENS. Except as disclosed in SECTION 2.10(A) or 2.10(B) of the
Company Disclosure Schedule, the Company and the Subsidiaries own or have valid
leasehold fee interests in each of their respective properties and assets having
a fair value of more than $1 million, free and clear of all encumbrances except
for defects in title, easements, encroachments, restrictive covenants and
similar encumbrances or impediments that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is a party to any agreement or
option to purchase any real property or interest therein other than options for
renewal of Material Leased Real Property for the benefit of the Company or its
applicable Subsidiary.
(d) ENTIRE INTEREST. Except as set forth in SECTION 2.10(B) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has
vacated or abandoned any portion of the Material Leased Real Property or given
notice to any third party of their intent to do the same.
(e) CONDEMNATION. Except as set forth on SECTION 2.10(E) of the
Company Disclosure Schedule, neither the Company nor any applicable Subsidiary
of the Company has received written notice of an expropriation or condemnation
proceeding pending, threatened or proposed against the Material Leased Real
Property.
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SECTION 2.11. TAXES
(a) TAX RETURNS. The Company and its Subsidiaries have properly
prepared and timely filed (or caused to be timely filed) all material Tax
Returns required to be filed by or with respect to them and have fully and
timely paid and discharged, or adequately provided for in the financial
statements included in the Company SEC Reports, all material Taxes required to
be paid or discharged (whether or not shown on such Tax Returns) and have made
adequate provision for any taxes that are not yet due and payable for all
taxable periods, or portions thereof, ending on or before the date of this
Agreement. Except as set forth in SECTION 2.11(A) of the Company Disclosure
Schedule, all such Tax Returns (including information provided therewith or with
respect thereto) are true, correct and complete in all material respects.
Neither the Company nor any of its Subsidiaries has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax for any taxable period and no request for any such waiver
or extension is currently pending. All amounts of Taxes required to be withheld
by or with respect to the Company or any of its Subsidiaries have been timely
withheld and remitted in all material respects to the applicable Governmental
Authority. The Company and its Subsidiaries have each complied in all material
respects with all Tax information reporting provisions under applicable laws.
Except as set forth in Section 2.11(a) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to any
indemnification, allocation or sharing agreement with respect to Taxes or has
any liability for Taxes of any Person (other than members of the affiliated
group, within the meaning of Section 1504(a) of the Code, filing consolidated
federal income tax returns of which the Company is the common parent) under
Treasury Regulation Section 1.1502-6, Treasury Regulation Section 1.1502-78 or
any similar state, local or foreign Laws, as a transferee or successor, or
otherwise. The Company and its Subsidiaries have made available to TAS correct
and complete copies of all material Tax Returns, examination reports and
statements of deficiencies for taxable periods, or transactions consummated, for
which the applicable statutory periods of limitations have not expired.
(b) AUDITS. There are no pending or, to the Knowledge of the Company,
threatened in writing, audits, examinations, investigations or other proceedings
in respect of any Tax matter of the Company or any of its Subsidiaries. No
Governmental Authority has given notice of its intention to assert any
deficiency or claim for additional Taxes against the Company or any of its
Subsidiaries. All material deficiencies for Taxes asserted or assessed against
the Company or any of its Subsidiaries have been fully and timely paid, settled
or properly reflected in the most recent financial statements contained in the
Company SEC Reports.
(c) TAX LIENS. There are no Tax liens upon any property or assets of
the Company or any of the Subsidiaries except for statutory liens for current
Taxes not yet due and payable and for such liens, which individually or in the
aggregate, would not exceed $500,000.
(d) SECTION 355. Neither the Company nor any of its Subsidiaries has
constituted a "distributing corporation" or a "controlled corporation" (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of shares
qualifying for tax-free treatment under Section 355 of the Code (i) in the two
years prior to the date of this Agreement or (ii) in a distribution that could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement.
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(e) TAX ADJUSTMENTS. Except as set forth in SECTION 2.11(E) of the
Company Disclosure Schedule, there are no adjustments of Taxes of the Company or
any of its Subsidiaries made by the IRS which are required to be reported to any
state, local, or foreign Taxing authorities that have not been so reported.
(f) CLOSING AGREEMENTS. Neither the Company nor any of its
Subsidiaries has executed or entered into a closing agreement under Section 7121
of the Code or any similar provision of state, local or foreign Laws, and
neither the Company nor any of its Subsidiaries is subject to any private letter
ruling of the Internal Revenue Service or comparable ruling of any other taxing
authority.
(g) EMPLOYEE REMUNERATION. There is no Contract, plan or arrangement
covering any Person that, individually or in the aggregate, could give rise to
the payment of any amount that would not be deductible by TAS, the Company or
any of their respective Subsidiaries by reason of Section 162(m) of the Code.
(h) REPORTABLE TRANSACTIONS. Neither the Company nor any of its
Subsidiaries has entered into any transaction that constitutes (i) a "reportable
transaction" within the meaning of Treasury Regulation ss. 1.6011-4(b), (ii) a
"confidential tax shelter" within the meaning of Treasury Regulation ss.
301.6111-2(a)(2) or a "potentially abusive tax shelter" within the meaning of
Treasury Regulation ss. 301.6112-1(b).
SECTION 2.12. MATERIAL CONTRACTS.
(a) LIST OF CONTRACTS: SECTION 2.12(A) of the Company Disclosure
Schedule sets forth a true and complete list of each material contract and
agreement of the following types to which the Company or any of its Subsidiaries
is a party or is bound by, or to which any of the assets of the Company or its
Subsidiaries are subject (such contracts and agreements as are required to be
set forth in SECTION 2.12(A) of the Company Disclosure Schedule and as are
disclosed in the Company SEC Reports being the "Material Contracts"):
(i) all "material contracts" (as such term is defined in Item 601
(b)(10) of Regulation S-K of the SEC) with respect to the Company and its
Subsidiaries that are not disclosed in the Company SEC Reports;
(ii) all material contracts and agreements relating to issuances of
securities of the Company or any of its Subsidiaries (and all letters of intent,
term sheets and draft agreements relating to any such pending transactions);
(iii) all material contracts and agreements relating to indebtedness
for borrowed money or capitalized lease obligations, in each case for which the
Company or any of its Subsidiaries is primarily or secondarily liable, or which
are secured by assets of the Company or any of its Subsidiaries, and in each
case in an amount in excess of $1,000,000 that are not disclosed in the Company
SEC Reports;
(iv) all material contracts and agreements (A) containing any
non-compete covenant or other covenant limiting the right of the Company or any
of its Affiliates (or, after the Effective Time, TAS or its Affiliates) to
engage in any line of business or to make use of any Intellectual
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Property Rights or (B) containing any material exclusive or sole supplier
arrangement, or other exclusive business arrangement, to which the Company or
any of its Affiliates is (or, after the Effective Time, TAS or its Affiliates
would be) subject;
(v) material lease agreements relating to leased facilities of the
Company and its Subsidiaries located in Greensboro, NC, Lake City FL, Oscoda MI,
Macon GA and Pacoima CA;
(vi) material contracts and agreements between any of the Company and
its Subsidiaries and Boeing and Airbus or their Affiliates;
(vii) material contracts and agreements between the Company and its
Subsidiaries and Delta Airlines, Inc., United Air Lines, America West
Airlines/U.S. Airways and Federal Express;
(viii) all other material contracts and agreements providing for
payments by or to the Company or any of its Subsidiaries, or the guarantee
(whether or not contingent) by the Company or any of its Subsidiaries of
obligations of any third party, in excess of $1,000,000 and not made in the
ordinary course of business, or which are otherwise material to the Company or
any of its Subsidiaries or the conduct of its and their respective businesses,
or the absence of which would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(b) VALIDITY; DEFAULT.
(i) Each Material Contract is valid and in full force and effect and
enforceable against the Company or its applicable Subsidiary and against each
other party thereto, in accordance with its terms; and
(ii) (A) neither the execution of this Agreement nor the consummation
of the Merger shall constitute a default under, give rise to cancellation rights
under, or otherwise adversely affect, in each case, in any material respect, any
of the rights of the Company or any of its Subsidiaries under any Material
Contract, and (B) except as would not have, in the aggregate, a Company Material
Adverse Effect, neither the Company nor any of its Subsidiaries nor, to the
Knowledge of the Company, any other party thereto, is in breach of, or default
under, any Material Contract to which it is a party nor, to the Knowledge of the
Company, has any event occurred that, with notice or lapse of time or both,
would constitute such a breach or default, or permit termination, modification
or acceleration of any party's rights under any Material Contract.
The Company has furnished or made available to TAS true and complete
copies of all Material Contracts, including any amendments thereto.
SECTION 2.13. ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Company SEC Reports or in SECTION
2.13(A) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has since January 1, 2003 received any written notice, demand,
letter, claim or request for information alleging violation of or liability
under any Environmental Law on the part of the Company or any of its
Subsidiaries. Except as set forth in SECTION 2.13(A) of the Company Disclosure
Schedule,
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there are no proceedings, actions, orders, decrees, investigations, injunctions
or other claims pending, or to the Knowledge of the Company, threatened,
relating to or otherwise alleging liability under any Environmental Law or
relating to the exposure of any person to hazardous substances.
(b) Except as would not, individually or in the aggregate, reasonably
be expected to result, in a Company Material Adverse Effect:
(i) The Company and each of its Subsidiaries are and have been since
January 1, 2003 in compliance with all applicable Environmental Laws.
(ii) There are no past or present actions, activities, circumstances,
conditions, events or incidents that are reasonably likely to prevent future
compliance with Environmental Laws or that have resulted in liability or are
reasonably likely to result in liability under Environmental Laws.
(iii) Neither the Company nor any of its Subsidiaries has assumed,
either contractually or by operation of law, any liability of any other Person
pursuant to Environmental Laws.
(c) The Company has made available to TAS true, complete and correct
copies and results of any reports, studies, analyses, tests or monitoring in the
possession or control of the Company or any of its Subsidiaries that pertain to
material environmental contamination in, on, beneath or adjacent to any property
currently or formerly owned, operated, occupied or leased by the Company or any
of its Subsidiaries, or regarding the Company's or any of its Subsidiaries'
compliance with applicable Environmental Laws.
SECTION 2.14. LABOR AND EMPLOYMENT MATTERS.
(a) (i) Neither the Company nor any of its Subsidiaries has entered
into, is a party to or is bound by any express or implied collective bargaining
agreements or other agreement, contract, commitment, arrangement or
understanding with any labor union or labor organization, and (ii) no union or
other labor organization campaign is pending, or to the Knowledge of the Company
has since January 1, 2005 been threatened, with respect to the employees of the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is currently, nor has any of them since January 1, 2003 been, the
subject of any strike, dispute, walk-out, work stoppage, slowdown or other
organized labor dispute involving the Company or any of its Subsidiaries, nor,
to the Knowledge of the Company, is any such activity threatened.
(b) Except as would not, in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, (i) each of the Company and each of its
Subsidiaries has complied with all Laws relating to the employment and safety of
labor, including without limitation the National Labor Relations Act and other
provisions relating to wages, hours, benefits, collective bargaining, employment
of minors, withholding, immigration and all applicable occupational safety and
health acts and Laws, (ii) neither the Company nor any of its Subsidiaries has
engaged in any unfair labor practice or discriminated on the basis of race, age,
sex, disability or any other protected category in its employment conditions or
practices with respect to its employees, customers or suppliers, and (iii) no
action, suit, complaint, charge, grievance, arbitration, employee proceeding or
investigation by or before any Governmental Authority brought by or on
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behalf of any employee, prospective employee, former employee, retired employee,
labor organization or other representative of the Company's and its
Subsidiaries' employees is pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries which claim damages in
excess of $250,000, except as disclosed in SECTION 2.14(B) of the Company
Disclosure Schedule. Except as disclosed in SECTION 2.14(B) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or otherwise bound by any consent decree with or citation by any Governmental
Authority relating to the Company's or its Subsidiaries' employees or employment
practices relating to the Company's or its Subsidiaries' employees.
SECTION 2.15. PERMITS; COMPLIANCE. Except as would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect or as disclosed in the Company SEC Reports filed prior to the date
hereof, each of the Company and each its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as now being conducted
(the "Company Permits") and each such Company Permit is valid and in full force
and effect. Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or as disclosed in the
Company SEC Reports, each of the Company and each of its Subsidiaries is, and
has been, in compliance with, and to the Knowledge of the Company is not under
investigation with respect to and has not been threatened to be charged with or
given any notice of any violation of, any applicable Law or the terms and
conditions of any Company Permit.
SECTION 2.16. INTELLECTUAL PROPERTY.
(a) IDENTIFICATION. SECTION 2.16(A) of the Company Disclosure Schedule
sets forth a true, correct and complete list of all U.S. and material foreign
(i) issued Patents and Patent applications, (ii) Trademark registrations and
applications, (iii) Copyright registrations and applications, in each case,
which are owned by the Company.
(b) LICENSES. SECTION 2.16(B) of the Company Disclosure Schedule sets
forth a list of all material licenses of Intellectual Property Rights under
which the Company is either a (i) licensor, or (ii) licensee, distributor or
reseller, the loss of which could have a Company Material Adverse Effect.
(c) VALIDITY AND ENFORCEABILITY. The Company owns or has a valid right
to use, free and clear of all liens, all Intellectual Property Rights necessary,
or used or held for use in connection with the business of the Company,
excepting only such matters as would not, in the aggregate, have a Company
Material Adverse Effect. All such Intellectual Property Rights are subsisting,
valid and enforceable, excepting only such matters as would not, in the
aggregate, have a Company Material Adverse Effect.
(d) RIGHTS. Except for the matters identified in SECTION 2.16(D) of
the Company Disclosure Schedule, (i) none of the Intellectual Property Rights
that are owned or licensed by the Company or any of its Subsidiaries conflicts
with, infringes upon or misappropriates or otherwise violates the Intellectual
Property Rights of any third party, excepting only such matters as would not, in
the aggregate, have a Company Material Adverse Effect, (ii) the Company has
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not been sued, charged in writing with, or named a defendant in, any claim,
suit, action or proceeding involving a claim of infringement of any Intellectual
Property Rights of others, (iii) to the Knowledge of the Company, there is no
threatened claim of infringement by the Company or any of its Subsidiaries of
any Intellectual Property Rights of others, and to the Knowledge of the Company,
there is no continuing infringement by others of the Intellectual Property
Rights of the Company or any of its Subsidiaries. No Intellectual Property
Rights of the Company are subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use thereof by the Company or any of
its Subsidiaries. None of the Company or any of its Subsidiaries has entered
into any agreement to indemnify any other individual or entity against any
charge of infringement of any Intellectual Property Right other than in the
ordinary course of business. Except as set forth in SECTION 2.20(A)(I) of the
Company Disclosure Schedule, there are no Persons authorized or privileged to
use the Intellectual Property Rights under any contract other than such rights
as are granted to customers in the ordinary course of business.
(e) DEFINITIONS. For purposes of this Agreement, "Intellectual
Property Rights" means all U.S. and foreign (i) patents, patent applications,
patent disclosures, and all related continuations, continuations-in-part,
divisionals, reiusses, re-examinations, substitutions, and extensions thereof
("Patents"), (ii) trademarks, service marks, trade names, domain names, logos,
slogans, trade dress, and other similar designations of source or origin,
together with the goodwill symbolized by any of the foregoing ("Trademarks"),
(iii) copyrights and copyrightable subject matter ("Copyrights"), (iv) rights of
publicity (v) Company Software and (vi) any other relevant proprietary
intellectual property rights. For purposes of this Agreement, "Company Software"
means computer software, programs and databases in any form (including Internet
web sites, web content and links, all versions, updates, corrections,
enhancements, and modifications thereof, and all related documentation) (i)
material to the operation of the business of the Company or any of its
Subsidiaries, including all computer software and databases operated by the
Company or any of its Subsidiaries on its web sites or used by the Company or
any of its Subsidiaries in connection with processing customer orders, storing
customer information, or storing or archiving data, but excluding software that
is in general distribution to users of personal computers, and (ii) owned,
manufactured, distributed, sold, licensed or marketed by the Company or any of
its Subsidiaries.
SECTION 2.17. INSURANCE. SECTION 2.17 of the Company Disclosure
Schedule lists all insurance policies, binders and surety and fidelity bonds
relating to the Company or any of its Subsidiaries (including, without
limitation, all policies or binders of casualty, general liability and workers'
compensation insurance), all of which are currently in effect, and the Company
has made available to TAS or its representatives for review documentation
evidencing such policies and binders. All premiums and other amounts due and
payable under each such policy, binder and bond have been paid. Neither the
Company nor any of its Subsidiaries is in default with respect to any material
provision contained in any such policy, binder or bond and neither the Company
nor any of its Subsidiaries has failed to give any notice of or present any
material claim thereunder as required by the terms thereof. The Company has not
received any written notice of cancellation or non-renewal of any such policy,
binder or bond.
SECTION 2.18. OPINION OF FINANCIAL ADVISOR. The Special Committee has
received the opinions of Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc.,
financial advisor to the Special Committee, to the effect that, as of the date
of this Agreement, (i) the Per
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Share Merger Consideration is fair, from a financial point of view, to the
holders of Shares and rights to acquire Shares (other than TAS and the TAS
Stockholders) and (ii) the Stock Conversion Price is fair, from a financial
point of view, to the holders of Shares (other than TAS and the TAS
Stockholders), which opinions will be confirmed in writing and a copy of which
will be (i) delivered to TAS solely for informational purposes after receipt
thereof by the Company and (ii) made available to TAS and the Company for
inclusion in the Proxy/Information Statement or other documents contemplated by
Section 5.03 describing the transactions provided for in this Agreement which
will be distributed to the stockholders of the Company.
SECTION 2.19. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company or any of its Affiliates.
SECTION 2.20. ANTITAKEOVER PROVISIONS AND RIGHTS AGREEMENTS.
(a) ANTITAKEOVER PROVISIONS. The Company has taken all actions
necessary such that no restrictive provision of any "fair price," "moratorium,"
"control share acquisition," "business combination," "stockholder protection,"
"interested shareholder" or other similar anti-takeover statute or regulation
(including, without limitation, Section 203 of the DGCL) or similar restrictive
provision in the Certificate of Incorporation or By-laws or comparable
organizational documents of any of the Company's Subsidiaries is, or at the
Effective Time will be, applicable to the this Agreement or to the transactions
contemplated hereby.
(b) RIGHTS AGREEMENTS. The Company does not have any stockholder
rights plan or similar agreement or arrangement.
SECTION 2.21. INVESTMENT COMPANIES. Neither the Company nor any
Subsidiary of the Company is an "investment company" as defined under the
Investment Company Act of 1940, as amended.
SECTION 2.22. TRANSACTIONS WITH AFFILIATES. All transactions,
agreements, arrangements or understandings between the Company or any of its
Subsidiaries, on the one hand, and the Company's affiliates (other than
wholly-owned subsidiaries of the Company) or other Persons, on the other hand
(an "Affiliate Transaction"), that are required to be disclosed in the Company
SEC Reports in accordance with Item 404 of Schedule S-K under the Securities Act
have been so disclosed. There have been no Affiliate Transactions that are
required to be disclosed under the Exchange Act pursuant to Item 404 of Schedule
S-K under the Securities Act which have not already been disclosed in the SEC
Reports.
SECTION 2.23. CERTAIN BUSINESS PRACTICES. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, neither the Company nor any of its Subsidiaries nor any
director, officer, agent or employee of the Company or any of its Subsidiaries
has (i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or for the business of the
Company or any of its Subsidiaries, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of
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the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TAS
TAS hereby represents and warrants to the Company that:
SECTION 3.01. CORPORATE ORGANIZATION. TAS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. TAS has the requisite corporate power and corporate authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, reasonably be expected to have a TAS
Material Adverse Effect.
SECTION 3.02. AUTHORITY RELATIVE TO THE TRANSACTIONS. TAS has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery by TAS of this Agreement and the consummation by TAS of
the Transactions have been duly and validly authorized by all necessary
corporate action, and, except as provided in this Section 3.02, no other
corporate proceedings on the part of TAS are necessary to authorize this
Agreement or to consummate the Transactions. The approval and adoption of this
Agreement and the Merger by the holders of a majority of the then outstanding
shares of common stock of TAS and the filing and recordation of the Certificate
of Merger as required by the DGCL are the only actions required under the DGCL
and applicable Delaware Law to authorize the Merger. This Agreement has been
duly and validly executed and delivered by TAS and, assuming due authorization,
execution and delivery by the Company, constitutes the legal, valid and binding
obligation of each of TAS, enforceable against TAS in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency (including,
without limitation, all Laws relating to fraudulent transfers), reorganization,
moratorium or similar Laws affecting creditors' rights generally and subject to
the effect of general principles of equity (regardless of whether considered in
a proceeding at Law or in equity). The Board of Directors of TAS, at a meeting
duly called and held prior to the execution of this Agreement, has adopted
resolutions approving and declaring advisable this Agreement and the Merger
(such approval and adoption having been made in accordance with the DGCL and the
Certificate of Incorporation of TAS).
SECTION 3.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The
execution and delivery by TAS of this Agreement does not, and the performance by
TAS of this Agreement and the consummation of the Transactions by TAS will not:
(a) violate the Certificate of Incorporation or By-laws of TAS;
(b) violate any Law applicable to TAS or by which any of its property
or assets is bound or affected, other than any such violation that would not,
individually or in the aggregate, reasonably be expected to have a TAS Material
Adverse Effect; or
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(c) result in any breach of, or constitute a default (or an event
which, with notice or lapse of time or both, would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of TAS pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which TAS is a party or by which TAS or any of its property or
assets is bound or affected, except for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, reasonably be expected to have an TAS Material Adverse Effect.
SECTION 3.04. GOVERNMENTAL CONSENTS. The execution, delivery, and
performance of this Agreement by TAS and the consummation by TAS of the
transactions contemplated hereby do not and will not require any consent,
approval, authorization or permit of, action by, filing with or notification to,
any Governmental Authority, except for (i) those required under or in relation
to (A) the Exchange Act or the Securities Act, (B) compliance with the
applicable requirements of the HSR Act, (C) the DGCL with respect to the filing
of the Certificate of Merger, (D) rules and regulations of the New York Stock
Exchange and (E) such as may be required under any applicable state securities
or blue sky laws and (ii) such other consents, permits, approvals, orders or
authorizations the failure of which to obtain would not, individually or in the
aggregate, reasonably be expected to have a TAS Material Adverse Effect.
SECTION 3.05. FINANCING. TAS will have at the Effective Time, through
cash held in escrow pursuant to the terms of the Escrow Agreement and cash
provided by the TAS Stockholders, the funds necessary to consummate the Merger,
including the payment of the aggregate Per Share Merger Consideration and the
consideration contemplated by Section 1.08 of this Agreement and to pay all
related fees and expenses of TAS.
SECTION 3.06. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of TAS or any
of its Affiliates.
SECTION 3.07. INTERIM OPERATIONS OF TAS. TAS was formed solely for the
purpose of effecting the Merger, has engaged in no other business activities and
has conducted its operations only as contemplated hereby or in connection
therewith.
SECTION 3.08. LITIGATION. There is no action, suit or proceeding
pending or threatened before any Governmental Authority against TAS or any of
its Subsidiaries, and no judgment, decree, injunction, rule, order or similar
action of any Governmental Authority is outstanding against TAS or any of its
Subsidiaries that, in any such case, seeks directly or indirectly to restrain or
prohibit the consummation of the Merger.
SECTION 3.09. STOCK OWNERSHIP AND CONTRIBUTION. LJH, Ltd. ("LJH") is
the beneficial owner of 15,385,812 shares of Company Common Stock (the "LJH
Shares"). Owl Creek Partners, L.P., Owl Creek Partners II, L.P., Owl Creek
Overseas Fund I, Ltd. and Owl Creek Overseas Fund II, Ltd. (together, the "Owl
Creek Entities") are the beneficial owners of an aggregate of 3,722,399 shares
of the Company Common Stock (the "Owl Creek Shares"). LJH and the Owl Creek
Entities are the sole stockholders of TAS (collectively, the "TAS
Stockholders"). Prior to the Effective Time of the Merger, the LJH Shares and
the Owl Creek
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Shares (collectively, the "TAS Shares") will be contributed to TAS and TAS will
be the record holder of the TAS Shares at the Effective Time of the Merger.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
(a) ORDINARY COURSE. The Company agrees that, between the date of this
Agreement and the Effective Time, except as expressly contemplated by any other
provision of this Agreement or as set forth in SECTION 4.01 of the Company
Disclosure Schedule, unless TAS shall otherwise consent in writing (such consent
not to be unreasonably withheld or delayed) it being agreed by TAS that any
action approved or authorized by Xxxx Xxxxxxxx in his capacity as Chief
Executive Officer of the Company will be deemed to have received such consent:
(i) the businesses of the Company and its Subsidiaries shall be
conducted in the ordinary course of business and in a manner consistent with
past practice; and
(ii) the Company shall use commercially reasonable efforts to preserve
intact the business organization of the Company and its Subsidiaries, to keep
available the services of the current officers and employees of the Company and
its Subsidiaries and to preserve the current relationships of the Company and
its Subsidiaries with customers, suppliers and other Persons with which the
Company or any of its Subsidiaries has significant business relations.
(b) REQUIRED CONSENT. Except as expressly contemplated by any other
provision of this Agreement or as set forth in SECTION 4.01 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries shall,
between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of TAS (such consent not to be unreasonably withheld or delayed), it
being agreed by TAS that any action approved or authorized by Xxxx Xxxxxxxx in
his capacity as Chief Executive Officer of the Company will be deemed to have
received such consent:
(i) amend or otherwise change its Certificate of Incorporation or By-laws or
equivalent organizational documents;
(ii) issue, purchase, sell, pledge, dispose of, grant or encumber, or authorize
such issuance, purchase, sale, pledge, disposition, grant, or encumbrance of:
(A) any shares of any class of capital stock or other equity interests
or other securities of the Company or any of its Subsidiaries, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock or other equity interest or other securities
(including, without limitation, any phantom interest), of the Company or any of
its Subsidiaries (except for the issuance of Shares issuable pursuant to
warrants and employee stock options outstanding on the date of this Agreement
and granted under Company Stock Plans in effect on the date of this Agreement);
or
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(B) any material assets of the Company or any of its Subsidiaries
having an aggregate fair value in excess of $1,000,000;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, other than to the Company or to any wholly owned
Subsidiary of the Company;
(iv) repurchase, redeem or otherwise acquire or cause to cease to be
issued and outstanding any capital stock of the Company without the consent of
TAS and the Special Committee;
(v) reclassify, combine, split, subdivide or effect any similar
transaction with respect to, or redeem, or purchase or otherwise acquire,
directly or indirectly, any of its capital stock;
(vi) other than in the ordinary course of business and consistent with
past practice:
(A) acquire (including, without limitation, by merger, consolidation,
or acquisition of stock or assets or any other business combination) any
corporation, partnership, other business organization or any division thereof or
any significant amount of assets; or
(B) issue any debt securities or similar obligations, incur
indebtedness for borrowed money or grant any lien or security interest securing
obligations with respect to indebtedness, or assume, guarantee or endorse, or
otherwise become responsible for, the obligations of any Person other than
pursuant to the CIT Debt; or
(C) make any material loan, advance or capital contribution to, or
investment in, any other Person, other than to the Company or to any wholly
owned Subsidiary of the Company;
(vii) (A) hire any additional employees other than in the ordinary
course of business, except (A) to fill vacancies arising after the date of this
Agreement; or (B) to meet increased demand.
(B) make any offers to any officer or other executive employee (or any
person who following such action, would be an officer or executive employee) of
an employment position other than the employment position he or she currently
holds, except for offers of an employment position made in the ordinary course
of business and consistent with past practice in connection with the promotion
or demotion of any employee of the Company or any of its Subsidiaries who is not
a director or officer of the Company;
(C) increase the compensation payable or to become payable to, or
except as required to comply with applicable Law, adopt, enter into, terminate,
amend or increase the amount or accelerate the payment or vesting of any benefit
or award or amount payable under any Company Stock Plan or other Plan or other
arrangement for the current or future benefit or welfare of, any director,
officer or employee, except for increases in the ordinary course of business and
consistent with past practice in salaries or wages of executive employees of the
Company or any of its Subsidiaries who are not directors or officers of the
Company;
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(D) grant any loan, advance, extensions of credit to current or former
employees or forgiveness or deferral of any loans due from any employee other
than in the ordinary course of business in amounts not to exceed $50,000 in any
individual case and $500,000 in the aggregate;
(E) establish, adopt, enter into, terminate or amend any Plan or
establish, adopt or enter into any plan, agreement, program, policy, trust, fund
or other arrangement that would be a Plan if it were in existence as of the date
of this Agreement for the benefit of any director, officer or employee except as
required by this Agreement or the Transactions contemplated hereby, or as
required by ERISA, the Code or to otherwise comply with applicable Law;
(F) other than bonuses earned through the date hereof and other than
in the ordinary course of business consistent with past practice for employees
other than officers and directors, grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Plan; provided that
there shall be no grant or award to any director, officer or employee of stock
options, restricted stock, stock appreciation rights, or other stock-based
awards, or any removal of existing restrictions in any Company Stock Plan or
other Plan or agreements or awards made thereunder (provided that equity awards
may be transferred in accordance with the applicable plan document or
agreement);
(G) enter into, amend or terminate any employment or severance
agreement with or, except in accordance with the existing obligations of the
Company or any of its Subsidiaries, grant any severance, termination, change in
control or transaction bonus or pay to, any employee, officer or director of the
Company or any of its Subsidiaries, except, with respect to non-officer
employees, in the ordinary course of business;
(H) other than benefits accrued through the date hereof and other than
in the ordinary course of business for employees other than officers or
directors of the Company, pay any benefit not provided for under any Plan;
(viii) enter into, amend or modify in any material respect, or consent
to the termination of, any Material Contract, or amend, waive or modify in any
material respect, fail to renew, or consent to the termination of, the Company's
or any of its Subsidiaries' rights thereunder other than in the ordinary course
of business consistent with past practice;
(ix) fail to make in a timely manner any required filings with the SEC
required under, and in compliance with, the Securities Act or the Exchange Act
or the rules and regulations promulgated thereunder;
(x) change any Tax election, annual tax accounting period, or method
of tax accounting, file amended Tax Returns or claims for Tax refunds by the
Company or its Subsidiaries, enter into a closing agreement relating to Taxes or
any settlement of any Tax claim, audit or assessment;
(xi) make any changes in its accounting methods, principles or
practices currently in effect, except as required by changes in GAAP or by
Regulation S-X under the Exchange Act, in each case as concurred in by its
independent public accountants;
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(xii) file a petition under Chapter 11 of the United States Bankruptcy
Code or adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries;
(xiii) except as required by applicable Law or GAAP, revalue in any
material respect any of its assets, including writing down the value of
inventory in any material manner, or writing-off notices or accounts receivable
in any material manner;
(xiv) pay, discharge, satisfy, settle or compromise any claim,
litigation, liability, obligation (absolute, asserted or unasserted, contingent
or otherwise) or any Action, except for settlements or compromises involving
amounts not exceeding $300,000 in the aggregate, including all fees, costs and
expenses associated therewith;
(xv) enter into any negotiation with respect to, or adopt or amend in
any respect, any collective bargaining agreement;
(xvi) enter into any material agreement or arrangement with any of its
officers, directors, employees or any "affiliate" or "associate" of any of its
officers or directors (as such terms are defined in Rule 405 under the
Securities Act);
(xvii) make, authorize or agree to make any capital expenditures, or
enter into any agreement or agreements providing for payments, except for
capital expenditures not exceeding (i) $2,000,000 in the aggregate, or (ii)
$1,000,000 in respect of any single capital expenditure or series of related
capital expenditures;
(xviii) terminate or fail to renew any Company Permit that is material
to the conduct of the businesses of the Company or any of its Subsidiaries;
(xix) fail to maintain in full force and effect all insurance
(including self-insurance) currently in effect, subject to renewal in the
ordinary course of business consistent with past practice;
(xx) take any action or omit to take any action within its control
that would, or is reasonably likely to, result in any of the conditions to the
Merger set forth in Article VI of this Agreement not being satisfied; or
(xxi) authorize, agree or commit to do any of the foregoing.
SECTION 4.02. ADVICE OF CHANGES; GOVERNMENT FILINGS.
(a) ADVICE OF CHANGES. Each party shall promptly advise the other
orally and in writing of (i) any representation or warranty made by it in this
Agreement (A) to the extent qualified by Material Adverse Effect or other
materiality qualifier becoming untrue or inaccurate and (B) to the extent not
qualified by Material Adverse Effect becoming untrue or inaccurate in any
material respect except that this clause (B) shall be deemed satisfied so long
as such representations or warranties being untrue or inaccurate do not have a
Material Adverse Effect on the Company or TAS, as the case may be, or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement required to be complied with or satisfied by it under
this Agreement. However, no such notification shall affect the
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representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties or the remedies available under
this Agreement.
(b) FILINGS. The Company shall deliver to TAS copies of all reports
and filings made with the SEC before the same are filed. Subject to applicable
Laws relating to the exchange of information, each of the Company and TAS shall
have the right to review in advance, and to the extent practicable each will
consult with the other, with respect to all the information relating to the
other party and each of their respective Subsidiaries, which appears in any
filings, announcements or publications made with, or written materials submitted
to, any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable, it will consult
with the other party with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party apprised of the status of
matters relating to completion of the transactions contemplated hereby.
SECTION 4.03. TAX MATTERS. During the period from the date of this
Agreement to the Effective Time, the Company and its Subsidiaries shall:
(a) prepare and timely file all Tax Returns required to be filed by
them on or before the Closing Date ("Post-Signing Returns") in a manner
consistent with past practice, except as otherwise required by applicable Laws;
(b) consult with TAS with respect to all material Post-Signing Returns
and deliver drafts of such Post-Signing Returns to TAS no later than ten
Business Days prior to the date on which such Post-Signing Returns are required
to be filed;
(c) fully and timely pay all Taxes due and payable in respect of such
Post-Signing Returns that are so filed;
(d) properly reserve (and reflect such reserve in their books and
records and financial statements), for all Taxes payable by them for which no
Post-Signing Return is due prior to the Effective Time in a manner consistent
with past practice;
(e) promptly notify TAS of any Legal Action or audit pending or
threatened against the Company or any of its Subsidiaries in respect of any Tax
matter, including Tax liabilities and refund claims, and not settle or
compromise any such Legal Action or audit without TAS's prior written consent in
excess of $250,000;
(f) not make or revoke any election with regard to Taxes or file any
amended Tax Returns;
(g) not make any change in any Tax or accounting methods or systems of
internal accounting controls (including procedures with respect to the payment
of accounts payable and collection of accounts receivable), except as may be
appropriate to conform to changes in Tax laws or regulatory accounting
requirements or GAAP; and
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(h) terminate all Tax Sharing Agreements to which the Company or any
of its Subsidiaries is a party such that there are no further Liabilities
thereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. STOCKHOLDERS' MEETING. The Company, acting through the
Special Committee, upon the date (the "Meeting Commencement Date") that is the
earlier to occur of (a) receipt of written notice from TAS requesting that the
Company proceed to call and hold a stockholders meeting pursuant to this Section
5.01 and (b) the date that is the earlier of (x) seventy-five (75) days after
the date of the initial Schedule 13E-3 filing with respect to the Merger and (y)
October 30, 2006, and subject to Section 5.04, shall:
(i) in accordance with applicable Law and the Company's Certificate of
Incorporation and By-laws, duly and promptly call, give notice of, convene and
hold, an annual or special meeting of its stockholders for the purpose of
considering and taking action on this Agreement and the Merger (the
"Stockholders' Meeting") no later than ninety (90) days following the Meeting
Commencement Date and without regard to any Change in the Company
Recommendation; and
(ii) (A) subject to Section 5.06(d), include in the Proxy/Information
Statement, and not subsequently withdraw or modify in any manner adverse to TAS,
the unanimous resolution of the Special Committee and the Company Board (1) that
the terms of this Agreement are fair to and in the best interests of the
stockholders of the Company (other than TAS and the TAS Stockholders), (2)
declaring this Agreement to be advisable, and (3) recommending that the
stockholders of the Company vote to approve and adopt this Agreement and the
Merger; and
(B) use its best efforts to obtain the Company Stockholder Approval,
subject to Section 5.06(d), and otherwise comply with all requirements of Law
applicable to the Stockholders' Meeting.
SECTION 5.02. APPROVAL OF TAS.
(a) TAS will, following the execution of this Agreement (and in no
event later than 48 hours from the execution of this Agreement), deliver to the
Company a copy of a written consent and proxy executed by TAS adopting this
Agreement and the Merger in its capacity as a stockholder of the Company with
respect to all shares of Company Common Stock it owns or may hereafter acquire.
(b) TAS shall, at any meeting of the stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed
meeting), however called, pursuant to Section 5.01, (A) when a meeting is held,
appear at such meeting or otherwise cause all TAS Shares owned of record or
beneficially by it to be counted as present thereat for the purpose of
establishing a quorum, (B) vote (or cause to be voted) in person or by proxy all
TAS Shares owned of record or beneficially by it in favor of the adoption of the
Agreement and the approval of the Merger and for any other matters necessary for
consummation of the Transactions and (C)
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vote (or cause to be voted) all TAS Shares owned of record or beneficially by it
against (X) any proposal for any recapitalization, reorganization, liquidation,
merger, sale of assets or other business combinations between the Company and
any other Person (other than the Merger) and (Y) any other action that could
reasonably be expected to impede, interfere with, delay, postpone or adversely
affect the Merger or any of the Transactions.
SECTION 5.03. PROXY/INFORMATION STATEMENT.
(a) FILING. The Company shall file with the SEC, as promptly as
practicable following the calling of a Stockholders' Meeting, if any, a proxy
statement under Section 14 of the Exchange Act and otherwise complying with the
applicable provisions of the Exchange Act and of the rules and regulations
promulgated under the Exchange Act, relating to the Company Stockholders'
Meeting (the "Proxy Statement"). The Company shall cooperate with TAS and the
TAS Stockholders, and assist them as reasonably requested, in filing, with the
SEC, as promptly as practicable following the execution of this Agreement, an
information statement on Schedule 13E-3 under Section 13(e) of the Exchange Act,
and otherwise in complying with the applicable provisions of the Exchange Act
and the rules and regulations promulgated under the Exchange Act, relating to
the Company Stock Purchase, the Merger, and, if applicable, the Stockholders'
Meeting (the "Information Statement," and referred to herein together with the
Proxy Statement as the "Proxy/Information Statement"). TAS and the Company shall
cooperate with each other in the preparation of the Proxy/Information Statement
and in responding to any comments of the SEC with respect to the
Proxy/Information Statement or any requests by the SEC for any amendment or
supplement thereto or for additional information and to cause the
Proxy/Information Statement and all required amendments and supplements thereto
to be mailed to the holders of Shares entitled to vote at the Stockholders'
Meeting or to receive the Information Statement at the earliest practicable
time. Each of TAS and the Company shall promptly inform the other and its
counsel of all communications received from the SEC with respect to the
Proxy/Information Statement and consult together with their respective counsel
regarding all communications proposed to be delivered to the SEC with respect to
the Proxy/Information Statement prior to the delivery thereof, in each case on
as prompt a basis as is practicable
(b) REVIEW. Each of TAS and the Company and its respective counsel
shall have a reasonable opportunity to review and comment on:
(i) the Proxy/Information Statement, including all amendments and
supplements thereto, prior to such documents being filed with the SEC or
disseminated to holders of Shares; and
(ii) all responses to requests for additional information and replies
to comments from the SEC or the staff thereof prior to their being filed with,
or sent to, the SEC. Each of the Company and TAS agrees to use its reasonable
best efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC.
(c) TAS INFORMATION. In accordance with the foregoing, TAS will
furnish such information relating to TAS as may be required by the Exchange Act
to be included in the Proxy/Information Statement. TAS agrees that none of the
information supplied or to be supplied by or on behalf of TAS for inclusion or
incorporation by reference in the Proxy/Information
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Statement will, at the date it is first mailed to the stockholders of the
Company or at the time of the Stockholders' Meeting pursuant to the Proxy
Statement or purchase of securities of the Company pursuant to the Information
Statement, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances in which they are made,
not misleading. Notwithstanding the foregoing, TAS makes no covenant with
respect to the information supplied or to be supplied by or on behalf of the
Company or its Subsidiaries for inclusion or incorporation by reference in the
Proxy/Information Statement.
(d) COMPANY INFORMATION. In accordance with the foregoing, the Company
will furnish such information relating to the Company and its Subsidiaries as
may be required by the Exchange Act to be included in the Proxy/Information
Statement. The Company agrees that none of the information supplied or to be
supplied by or on behalf of the Company or its Subsidiaries for inclusion or
incorporation by reference in the Proxy/Information Statement will, at the date
it is first mailed to the stockholders of the Company or at the time of the
Stockholders' Meeting or purchase of securities of the Company pursuant to the
Information Statement, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances in which they
are made, not misleading. Notwithstanding the foregoing, the Company makes no
covenant with respect to the information supplied or to be supplied by or on
behalf of TAS for inclusion or incorporation by reference in the
Proxy/Information Statement.
SECTION 5.04. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
the foregoing, in the event that TAS shall own at least ninety percent (90%) of
the outstanding Shares at any time prior to the Effective Time (including
without limitation as a result of the Conversion) (the "90% Threshold"), the
parties hereto agree, within two Business Days after TAS attains the 90%
Threshold, to take all necessary and appropriate action to cause the Merger to
become effective, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL. In such event, the consideration
payable in the Merger shall be the Per Share Merger Consideration, the Option
Consideration and the Purchase Right Consideration as provided in Article I
hereof, and all conditions to closing the Merger pursuant to Article VI shall no
longer be applicable to the Merger, it being understood that TAS and the TAS
Stockholders may not acquire any additional Shares unless all required filings
with the SEC by the Company, TAS and its Affiliates shall have been made, and
all related deliveries of documents to the stockholders of the Company and the
passage of notice periods required under the Exchange Act, shall have occurred,
including those contemplated by Sections 14(a) and 13(e) of the Exchange Act and
the rules and regulations thereunder, to the extent applicable. Without limiting
the Company's obligations pursuant to this Section 5.04, the Company shall take
all necessary and appropriate action requested by TAS to enable TAS to give any
notice to the Company stockholders required by Law, including, without
limitation, any notice required by Section 262 of the DGCL.
SECTION 5.05. ACCESS TO INFORMATION.
(a) ACCESS. Subject to applicable Law, from the date of this Agreement
until the Effective Time, the Company shall (and shall cause its Subsidiaries
to):
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(i) provide to TAS and TAS's Representatives access, during normal
business hours and upon reasonable notice by TAS, to the officers, employees,
agents, properties, offices and other facilities of the Company and its
Subsidiaries and to the books and records thereof; and
(ii) furnish to TAS such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects of the
Company as TAS or its Representatives may reasonably request.
(b) NO WAIVER. Except as otherwise expressly provided herein, no
information or knowledge obtained by any party pursuant to this Section 5.05 or
otherwise shall affect or be deemed to modify any representation or warranty
made by any party hereunder.
SECTION 5.06. NO SOLICITATION OF TRANSACTIONS.
(a) ACQUISITION PROPOSALS. The Company shall not, and the Company
shall cause its Subsidiaries, and the Company and the Subsidiaries shall
instruct their respective Representatives, not to, directly or indirectly:
(i) solicit, initiate or knowingly facilitate or encourage any
inquiries for the making of any proposal or offer (including any proposal or
offer to Company stockholders) that constitutes, or would reasonably be expected
to lead to, any Competing Transaction (as defined below) (each such proposal or
offer an "Acquisition Proposal");
(ii) participate in discussions or negotiations with, disclose or
provide any non-public information relating to the Company or its Subsidiaries
to any Person with respect to or in connection with any Acquisition Proposal
(except to notify such Person of the existence and terms of this Section 5.06);
(iii) agree to, approve, endorse or recommend any Competing
Transaction or enter into any letter of intent, agreement in principle, merger
or sale agreement or similar agreement providing for or otherwise relating to
any Competing Transaction;
(iv) grant any waiver or release under any standstill or similar
agreement by any Person who has made an Acquisition Proposal; or
(v) authorize or direct any Representative of the Company or any of
its Subsidiaries to take any such action.
The Company shall, and shall cause its Subsidiaries and instruct its
and their Representatives to, immediately cease and cause to be terminated all
existing discussions or negotiations with any Person conducted heretofore with
respect to any proposal relating to a Competing Transaction. Notwithstanding the
foregoing, actions taken or authorized by Xxxx Xxxxxxxx in relation to any
Acquisition Proposal will not be deemed to violate this Section 5.06.
(b) RESPONSE TO ACQUISITION PROPOSAL. Notwithstanding the foregoing
and anything to the contrary in this Agreement, before the receipt of the
Company Stockholder Approval, the Company Board or Special Committee may furnish
information to, and enter into discussions and negotiations with, a Person who
has made a written Acquisition Proposal, but only if:
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(i) such Acquisition Proposal was made after the date of this
Agreement (it being understood that, subject to compliance with Section 5.06(a),
such an Acquisition Proposal made after the date of this Agreement by a Person
who made an Acquisition Proposal regarding a Competing Transaction prior to the
date of this Agreement shall be considered a new Acquisition Proposal made after
the date of this Agreement) and none of the Company, its Subsidiaries and their
Representatives has violated any of the restrictions set forth in this Section
5.06;
(ii) the Company Board or Special Committee has determined in good
faith after consultation with outside legal counsel (who may be the Company's
regularly engaged outside legal counsel or counsel to the Special Committee) and
a financial advisor that such Acquisition Proposal constitutes, or is reasonably
likely to result in, a Superior Proposal (as defined below);
(iii) prior to taking such action such Person shall have executed a
confidentiality agreement (a copy of which shall promptly be provided to TAS);
(iv) there is provided or made available to TAS, on a substantially
concurrent basis, any non-public information provided or made available to such
Person that was not previously provided or made available to TAS and its
Representatives; and
(v) the Company shall have delivered to TAS a prior written notice
advising TAS that the Company Board or Special Committee, as applicable, intends
to take such action, and shall keep TAS reasonably informed on a current basis
as to the status of and any material developments regarding any such inquiry or
proposal.
(c) NOTICE OF SUPERIOR PROPOSAL. In addition to the obligations of the
Company set forth in Sections 5.06(a) and (b), the Company shall promptly as
practicable (and, in any event, within 24 hours) (i) advise TAS, telephonically
and in writing, of the Company's receipt of any Acquisition Proposal, any
request for information relating to the Company or any of its Subsidiaries or
for access to the officers, employees, agents, business, properties, assets,
books or records of the Company or any of its Subsidiaries by any Person that
has made, or would reasonably be expected to make, an Acquisition Proposal and
(ii) provide TAS, in writing, with the material terms and conditions of any such
Acquisition Proposal, and a copy of such Acquisition Proposal, inquiry or
request and the identity of the Person making the same. The Company shall inform
TAS as promptly as practicable (and, in any event, within 24 hours) of any
change to the material terms of any such Acquisition Proposal. As promptly as
practicable (and, in any event, within 24 hours) after determination by the
Company Board or Special Committee that an Acquisition Proposal constitutes a
Superior Proposal, the Company shall deliver to TAS a written notice (a "Notice
of Superior Proposal") advising it of such determination, specifying the terms
and conditions of such Superior Proposal and the identity of the Person making
such Superior Proposal, and providing TAS with a copy of the Superior Proposal.
Any notice or action required to be taken within 24 hours in this Section 5.06,
will, if the triggering event for such action or notice occurred after 3:00 p.m.
on a Friday, Saturday or Sunday or the day before a holiday, be timely taken or
delivered if acted upon by the earlier to occur of (i) within 24 hours of the
receipt of actual notice thereof by any member of the Special Committee or (ii)
by 5:00 p.m. on the next succeeding Business Day. An Acquisition Proposal
received by Xxxx Xxxxxxxx will not be deemed received by the Company unless and
until he delivers it to counsel for the Special Committee and to a member of the
Special Committee.
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(d) CHANGE IN RECOMMENDATION. If, prior to the Company Stockholder
Approval, the Company Board or the Special Committee determines, in its good
faith judgment and after consulting with outside legal counsel (who may be the
Company's regularly engaged outside legal counsel or counsel to the Special
Committee), that making a Change in the Company Recommendation (as defined
below) is necessary in order for the Company Board to comply with its fiduciary
duties to the Company's stockholders under applicable Law, then the Company
Board or the Special Committee may make a Change in the Company Recommendation
in accordance with this Section 5.06 and following such Change in Company
Recommendation, the Company may terminate this Agreement solely in accordance
with Section 7.01(d). "Change in the Company Recommendation" means the Special
Committee or Company Board's (i) failure to make, withdrawal of, or modification
in a manner adverse to TAS of the Company Recommendation, (ii) failure to
publicly confirm the Company Recommendation within seven days following TAS's
written request, (iii) recommendation or endorsement of a Competing Transaction
or (iv) resolution or public announcement of an intention to do any of the
foregoing. The Company Board may not make a Change in the Company Recommendation
unless (i) at least two Business Days prior to taking such action TAS shall have
received written notice from the Company (an "Adverse Recommendation Notice")
(A) advising that the Company Board intends to make such Change in the Company
Recommendation, (B) if such Change in Company Recommendation is made in response
to a Superior Proposal, advising TAS that the Company Board has received a
Superior Proposal, and (C) if such Change in Company Recommendation is made in
response to a Superior Proposal, containing all information required by Section
5.06(c), together with copies of any written offer or proposal in respect of
such Superior Proposal (it being understood and agreed that any material
amendment to the financial terms or other material terms of such Superior
Proposal shall require a new Adverse Recommendation Notice and a new two (2)
Business Day period) and (ii) during such two Business Day period the Special
Committee shall have negotiated in good faith with TAS concerning any amendments
proposed by TAS to this Agreement and to the transactions contemplated hereby.
Nothing contained in this Agreement shall prohibit the Company, the Company
Board or the Special Committee from disclosing to the Company Stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act, if, in the good faith judgment of the Company Board or the Special
Committee, after consultation with its outside legal and financial advisors,
such disclosure is required in order for the Company Board or the Special
Committee, as applicable, to comply with its fiduciary obligations, or is
otherwise required under applicable Law. Nothing in this Agreement shall
prohibit the Company Board or the Special Committee from making a Change in
Company Recommendation prior to the Company Stockholder Approval if the Company
Board or Special Committee, as applicable, determines in good faith (after
consultation with outside legal counsel) that such action is necessary under
applicable Law in order for the directors to comply with their fiduciary duties
to the Company's stockholders.
(e) DISCUSSIONS PRIOR TO AGREEMENT. The fact that the Company, any of
its Subsidiaries, or any of their Representatives have had discussions or
negotiations with Persons prior to the date of this Agreement regarding a
possible Acquisition Proposal shall not prevent the Company from taking any of
the actions permitted by this Section 5.06 with respect to a new Acquisition
Proposal submitted by any such Person after the date of this Agreement, that was
not solicited in violation of this Section 5.06.
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(f) DEFINITION OF COMPETING TRANSACTION. A "Competing Transaction"
means any of the following (other than the Transactions) involving the Company
or any of its Subsidiaries, other than the Merger or any other Competing
Transaction to which TAS, the TAS Stockholders or any of their Affiliates are a
party:
(i) any merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar transaction
(including any so-called merger-of-equals and whether or not the Company is the
entity surviving any such transaction) involving the Company or any of its
Subsidiaries which results in any person beneficially owning 20% or more of any
class of equity or voting securities of the Company or of any of its
Subsidiaries or 20% or more of the assets of the Company and its Subsidiaries
(directly or indirectly, including by the ownership of equity or voting
securities);
(ii) any sale, lease, exchange, transfer or other disposition
(directly or indirectly, including by the transfer of equity or voting
securities) of 20% or more of the assets of the Company and its Subsidiaries;
(iii) any sale, exchange, transfer or other disposition of equity or
voting securities in which the Company or any of its Subsidiaries participates
and which results in any person beneficially owning 20% or more of any class of
equity or voting securities of the Company or of any of its Subsidiaries; or
(iv) any transaction or series of transactions, including a tender
offer or exchange offer, that, if consummated, would result in any person
beneficially owning more than 20% of any class of equity or voting securities of
the Company or of any of its Subsidiaries.
(g) DEFINITION OF SUPERIOR PROPOSAL. A "Superior Proposal" means an
unsolicited written offer (in its most recently amended or modified terms, if
amended or modified) made in compliance with this Section 5.06 by a Person to
enter into a Competing Transaction, the effect of which would be that a Person
would beneficially own more than twenty percent (20%) of the issued and
outstanding Common Stock, acquire more than twenty percent (20%) of the
Consolidated assets of the Company and its subsidiaries, as applicable, and
which the Company Board or Special Committee determines, in its good faith
judgment (after consulting with its financial advisor and/or legal counsel and
taking into account any amendments proposed by TAS to this Agreement or to the
transactions contemplated hereby) and taking into account all relevant legal,
financial, regulatory and other aspects of the offer that it deems relevant in
such circumstances under the DGCL, to be more favorable to Company stockholders,
from a financial point of view, than the Merger.
SECTION 5.07. DIRECTORS' AND OFFICERS' INDEMNIFICATION; INSURANCE.
(a) INDEMNIFICATION. Without limiting any additional rights that any
employee, officer or director may have under any employment agreement or benefit
Plan or under the Company's Certificate of Incorporation or By-laws, for a
period of six (6) years from the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each present (as of immediately prior to the
Effective Time) and former officer or director of the Company and the Company's
Subsidiaries (the "Indemnified Directors and Officers"), against all claims,
losses, liabilities, damages, judgments, inquiries, fines and reasonable fees,
costs and expenses,
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including, attorneys' fees and disbursements (collectively, "Costs"), incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
occurring or actions taken by them in their capacity as officers or directors at
or prior to the Effective Time (including this Agreement and the transactions
and actions contemplated hereby), or taken by them at the request of the Company
or any Company Subsidiary, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that applicable Law permits a Delaware
corporation to indemnify its officers and directors. Each Indemnified Director
and Officer will be entitled to advancement of expenses incurred in the defense
of any claim, action, suit, proceeding or investigation from the Surviving
Corporation within ten (10) Business Days of receipt by the Surviving
Corporation from the Indemnified Director or Officer of a request therefor and
reasonable documentation thereof; provided that any Person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification. The Surviving
Corporation shall not settle, compromise or consent to the entry of any judgment
in any proceeding or threatened action, suit, proceeding, investigation or claim
(and in which indemnification could be sought by such Indemnified Director or
Officer hereunder), unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Director or Officer from all liability
arising out of such action, suit, proceeding, investigation or claim or such
Indemnified Director or Officer otherwise consents.
(b) MAINTENANCE. The Certificate of Incorporation and By-laws of the
Surviving Corporation shall continue to contain provisions no less favorable
with respect to indemnification, advancement of expenses and exculpation of
former or present directors and officers than are presently set forth in the
Company's Certificate of Incorporation and By-laws, which provisions shall not,
except to the extent required to comply with applicable Law, be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would adversely affect the rights thereunder of any such
individuals.
(c) D&O INSURANCE. Prior to the Effective Time, the Company shall
obtain, and the Surviving Corporation shall maintain for a period of six (6)
years following the Effective Time, directors' and officers' liability insurance
coverage with respect to matters existing or occurring at or prior to the
Effective Time, from an insurance carrier with the same or better credit rating
as the Company's current insurance carrier with respect to directors' and
officers' liability insurance, having terms and conditions and providing
coverage in an amount at least as favorable to the insured parties as the terms
and conditions and amounts of coverage of the Company's existing policies;
provided, that TAS and its Subsidiaries shall not be required by this Section
5.07(c) to pay annual premiums in excess of 200% of the annual premiums paid by
the Company under its directors' and officers' liability policies as in effect
as of the date hereof (the "Maximum Premium"). If the Company's existing
insurance expires, is terminated or canceled during the six (6) year period
following the Effective Time or exceeds the Maximum Premium, the Surviving
Corporation shall obtain as much directors' and officers' liability insurance as
can be obtained for the remainder of such period for an annualized premium not
in excess of the Maximum Premium, on terms and conditions no less advantageous
to the covered parties than the Company's existing directors' and officer's
liability insurance.
(d) EXISTING AGREEMENTS. The Surviving Corporation shall honor and
perform under all indemnification agreements entered into by the Company or any
Company Subsidiary
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identified in SECTION 5.07 of the Company Disclosure Schedule as being subject
to this Section 5.07(d).
(e) SURVIVABILITY. Notwithstanding anything herein to the contrary, if
any claim, action, suit or proceeding or investigation (whether arising before,
at or after the Effective Time) is made against any Indemnified Director or
Officer, on or prior to the sixth anniversary of the Effective Time, the
provisions of this Section 5.07 shall continue in effect until the final
disposition of such claim, action, suit, proceeding or investigation.
(f) HEIRS. This covenant is intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Directors and Officers and
their respective heirs and legal representatives. The indemnification provided
for herein shall not be deemed exclusive of any other rights to which an
Indemnified Director or Officer is entitled, whether pursuant to Law, contract
or otherwise.
(g) SUCCESSORS AND ASSIGNS. In the event that the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets as an
entirety in one or a series of related transactions to any Person(s), then, and
in each such case, proper provision shall be made so that such continuing or
surviving corporation or entity or such Persons(s), as the case may be, shall
assume the obligations set forth in this Section 5.07; provided that the
Surviving Corporation shall not be relieved from such obligation. In addition,
the Surviving Corporation shall not distribute, sell, transfer or otherwise
dispose of any of its assets in a manner that would reasonably be expected to
render the Surviving Corporation unable to satisfy its obligations under this
Section 5.07.
SECTION 5.08. FURTHER ACTION; REASONABLE BEST EFFORTS. Upon the terms
and subject to the conditions of this Agreement:
(a) each of the parties hereto shall make promptly its respective
filings, and thereafter make any other required submissions, under any
applicable foreign, federal or state antitrust, competition or fair trade Laws
with respect to the Transactions; and
(b) the Company shall cooperate with TAS and use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws or otherwise to consummate and make effective the Merger and the
Transactions, including, without limitation, (i) using its reasonable best
efforts to obtain all Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts
with the Company and its Subsidiaries as are necessary for the consummation of
the Transactions and to fulfill the conditions to the Merger and (ii)
cooperating with TAS to respond to and defend against any litigation brought
against the Company, TAS or the TAS Stockholders because of the Merger or the
transactions.
SECTION 5.09. PUBLIC ANNOUNCEMENTS. The initial press release relating
to this Agreement shall be a joint press release the text of which has been
agreed to by each of TAS and the Company. Thereafter, subject to applicable Law,
each of TAS and the Company shall use its reasonable best efforts to consult
with each other before issuing any press release or otherwise
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making any public statements with respect to this Agreement, the Merger, or any
of the other Transactions.
SECTION 5.10. TAKEOVER STATUTE. If any "fair price," "moratorium,"
"control share acquisition," "interested stockholder," "business combination,"
"stockholder protection," "interested shareholder" or other similar
anti-takeover statute or regulation (including, without limitation, Section 203
of the DGCL) or similar restrictive provision of the Certificate of
Incorporation or By-laws or comparable organizational documents of the Company
or any of its Subsidiaries (each a "Takeover Provision") shall become applicable
to the transactions contemplated hereby, the Company and the members of the
Company Board or the Special Committee of the Company, subject to Section
5.06(d), shall grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate the
effects of such Takeover Provision on the transactions contemplated hereby.
SECTION 5.11. FINANCING. The Company agrees to provide, and will cause
its Subsidiaries and its and their respective directors, officers and employees
to provide, all cooperation reasonably necessary in connection with the
arrangement of financing to be consummated contemporaneously with or after the
date hereof in respect of the transactions contemplated by this Agreement,
including participation in meetings, the execution and delivery of any
commitment letters, pledge and security documents, other definitive financing
documents, or other requested certificates or documents (including a certificate
of the chief financial officer of the Company with respect to solvency matters,
to the extent such certification may be accurately made), audited and unaudited
financial statements, comfort letters of accountants and legal opinions as may
be reasonably requested by TAS and taking such other actions as are reasonably
required to be taken by the Company, providing that such cooperation shall not
interfere unreasonably with the business or operations of the Company or its
Subsidiaries.
SECTION 5.12. DISPOSITION OF LITIGATION. In connection with any
litigation which may be brought against the Company or its directors relating to
the transactions contemplated hereby, the Company shall keep TAS, and any
counsel which TAS may retain at its own expense, informed of the status of such
litigation and will provide TAS's counsel the right to participate in the
defense of such litigation to the extent TAS is not otherwise a party thereto,
and the Company shall not enter into any settlement or compromise of any such
stockholder litigation without TAS's prior written consent, which consent shall
not be unreasonably withheld or delayed.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. MUTUAL CONDITIONS TO THE MERGER. The obligations of the
Company and TAS to consummate the Merger shall be subject to the satisfaction or
waiver (where permissible), at or prior to the Closing, of the following
conditions:
(a) the Company shall have obtained the Company Stockholder Approval
to the extent necessary under applicable Law;
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(b) no Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law, rule, regulation, judgment, decree, executive order
or award (an "Order") which is then in effect and has the effect of making the
Merger illegal or otherwise preventing or prohibiting consummation of the
Merger;
(c) any waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired;
(d) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
preventing the consummation of the Merger or the performance by TAS, the TAS
Stockholders or the Company of any covenant or condition required in order to
consummate the Merger, shall be in effect;
and is also subject to the following condition, which may not be waived by the
parties:
(e) all required filings with the SEC by the Company, TAS and its
Affiliates shall have been made, and all related deliveries of documents to the
stockholders of the Company and the passage of notice periods required under the
Exchange Act, shall have occurred, including those contemplated by Sections
14(a) and 13(e) of the Exchange Act and the rules and regulations thereunder, to
the extent applicable.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF TAS. The obligations of TAS
to effect the Merger shall be further subject to the satisfaction or waiver at
or prior to the Effective Time of the following conditions:
(a) the representations and warranties of the Company set forth in
this Agreement, disregarding all materiality and Company Material Adverse Effect
qualifiers (except as set forth in Section 2.07(b)), shall be true and correct,
in each case as of the date of this Agreement and at and as of the Effective
Time, as though made on and as of such date (unless any such representation or
warranty is made only as of a specific date, in which event as of such specified
date), except for failures to be true and correct which would not, individually
or in the aggregate, have a Company Material Adverse Effect and which result, or
would reasonably be expected to result, in costs or losses to the Company,
together with any costs or losses to the Company referenced in Subsection
6.02(b), aggregating in excess of $5 million, in each case determined on the
basis of cash out-of-pocket costs to the Company and its Subsidiaries;
(b) the Company shall have performed in all material respects each of
the obligations, and complied in all material respects with each of the
agreements and covenants, required to be performed by, or complied with by, it
under this Agreement at or prior to the Closing, provided that each of such
obligations, agreements and covenants shall be deemed to have been performed in
all material respects so long as the costs or losses to the Company arising from
any breach of any thereof, or which would reasonably be expected to result in
costs or losses to the Company, together with costs or losses to the Company
referenced in Section 6.02(a), do not in the aggregate exceed $5 million, in
each case determined on the basis of cash out-of-pocket costs to the Company and
its Subsidiaries;
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(c) TAS shall have received a certificate of the Chief Executive
Officer or the Chief Financial Officer of the Company, certifying that the
conditions set forth in Sections 6.02(a), (b) and (d) have been satisfied;
(d) There shall not have occurred a Closing Material Adverse Effect;
(e) If LJH has given notice to the Company of its intention to
exercise its right under Section 1.2(a) of the Conversion Agreement to convert
the Term Loan C into shares of Common Stock, and LJH has otherwise performed its
obligations under this Agreement and the Conversion Agreement, the Company shall
have caused the shares of Common Stock subject to issuance pursuant to the
Conversion Agreement to be issued to the TAS Stockholders;
(f) Xxxx Xxxxxxxx shall not have been removed by the Board from his
positions of Chairman of the Board and Chief Executive Officer of the Company;
(g) the Company shall have obtained a fairness opinion from Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx as described in Section 2.18 that has not been withdrawn;
and
(h) TAS shall have received from Akerman Senterfitt, counsel to the
Company, their opinion as to the matters addressed in Sections 2.01(a) and (c),
2.03, 2.04 and 2.05 in form and substance reasonably acceptable to TAS and its
counsel.
SECTION 6.03. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger shall be further subject to the satisfaction
or waiver at or prior to the Closing of the following conditions:
(a) the representations and warranties of TAS set forth in this
Agreement, disregarding all materiality and TAS Material Adverse Effect
qualifiers, shall be true and correct, in each case as of the date of this
Agreement and at and as of the Effective Time, as though made on and as of such
date (unless any such representation or warranty is made only as of a specific
date, in which event as of such specified date), except for failures to be true
and correct which would not, individually or in the aggregate, reasonably be
expected to have a TAS Material Adverse Effect;
(b) TAS shall have performed in all material respects each of the
obligations, and complied in all material respects with each of the agreements
and covenants, required to be performed by or complied with by it under this
Agreement at or prior to the Closing; and
(c) the Company shall have received certificates of the Chief
Executive Officer or the Chief Financial Officer of TAS, certifying that the
conditions set forth in Sections 6.03(a) and (b) have been satisfied.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may only be terminated and
the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding adoption thereof by the stockholders of the
Company:
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(a) by mutual written consent of TAS and the Company;
(b) by TAS or the Company if any court or other Governmental Authority
of competent jurisdiction shall have issued a final order, decree or ruling or
taken any other final action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action is or shall have become
final and non-appealable;
(c) by either TAS or the Company if the Effective Time shall not have
occurred on or before the later of (i) February 15, 2007 or (ii) one hundred
twenty (120) days after the Meeting Commencement Date (the "Termination Date");
provided that the right to terminate this Agreement pursuant to this Section
7.01(c) shall not be available to the party seeking to terminate if any action
of such party or the failure of such party to perform any of its obligations
under this Agreement required to be performed at or prior to the Effective Time
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before the Termination Date and such action or failure to perform
constitutes a breach of this Agreement;
(d) by the Company (i) if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of TAS contained in
this Agreement such that the conditions set forth in Sections 6.03(a) or 6.03(b)
would not be satisfied and, in either such case, such breach is not capable of
being cured or, if capable of being cured, shall not have been cured prior to
the Termination Date; provided that the Company shall not have the right to
terminate this Agreement pursuant to this Section 7.01(d)(i) if the Company is
then in material breach of any of its covenants or agreements contained in this
Agreement or (ii) if prior to the obtaining of the Company Stockholder Approval
(A) the Company shall have received a Superior Proposal, (B) the Company, the
Company Board and the Special Committee shall have complied in all material
respects with Sections 5.01 and 5.06 (including Section 5.06(d)) and (C) TAS
shall have received payment of the Company Termination Fee and TAS Expenses;
(e) by TAS (i) if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of the Company
contained in this Agreement such that the conditions set forth in Sections
6.02(a) or 6.02(b), would not be satisfied and, in any such case, such breach is
not capable of being cured or, if capable of being cured, shall not have been
cured prior the Termination Date; provided that TAS shall not have the right to
terminate this Agreement pursuant to this Section 7.01(e)(i) if TAS is then in
material breach of any of its covenants or agreements contained in this
Agreement, (ii) if the Company Board shall have made a Change in Company
Recommendation; or (iii) if at any time after the date of this Agreement the
conditions set forth in Sections 6.02(d), (e) or (f) shall not be satisfied and
in any such case (A) such failure shall not be cured by the Company within five
(5) business days following written notice by TAS delivered to the Company
describing in reasonable detail such failure and (B) TAS is not then in material
breach of any of its covenants or agreements contained in this Agreement; or
(f) by the Company if, upon a vote taken thereon at the Stockholders
Meeting or any postponement or adjournment thereof, this Agreement shall not
have been adopted by the holders of at least a majority in combined voting power
of the outstanding Shares.
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SECTION 7.02. EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall forthwith
become void, and there shall be no liability under this Agreement on the part of
any party hereto, except:
(a) as set forth in Section 7.03; and
(b) except as set forth in Section 7.03, nothing herein shall relieve
any party from liability for fraud or for any willful breach of any of its
representations, warranties, covenants or agreements set forth in this Agreement
prior to such termination.
The terms of this Section 7.02, Section 1.10(c), 7.03, and Article VIII, shall
survive any termination of this Agreement.
SECTION 7.03. FEES AND EXPENSES.
(a) GENERALLY. Except as otherwise expressly set forth in this
Agreement, all fees and expenses incurred in connection with the Transactions
shall be paid by the party incurring such expenses, whether or not the Merger is
consummated. "Expenses" includes all reasonable out-of-pocket expenses
(including all fees and expenses of financing sources, counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by or on behalf of a party or its prospective financing
sources in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement.
(b) COMPANY TERMINATION FEE AND TAS EXPENSES.
(i) In the event that this Agreement is terminated by TAS pursuant to
Section 7.01(e)(ii), then the Company shall pay $750,000 (such amount, the
"Company Termination Fee") to TAS or as directed by TAS plus the TAS Expenses to
TAS or as directed by TAS, as promptly as reasonably practicable (and in any
event within five Business Days following such termination), payable by wire
transfer of immediately available funds.
(ii) In the event that (a) this Agreement is terminated (A) by TAS
pursuant to Section 7.01(e)(i) or (B) by TAS or the Company pursuant to Section
7.01(c), then the Company shall reimburse TAS for all Expenses incurred by or on
behalf of TAS and its Affiliates as of the time of such reimbursement (the "TAS
Expenses"), as promptly as reasonably practicable following delivery of
reasonable documentation thereof (and, in any event, within five Business Days
following delivery of such documentation), payable by wire transfer of
immediately available funds, provided that the aggregate amount of TAS Expenses
paid pursuant to this Agreement will not exceed $1,000,000.
(iii) In the event that (a) this Agreement is terminated (A) by TAS
pursuant to Section 7.01(e)(i), and, at any time after the date of this
Agreement and prior to the event giving rise to TAS's right to terminate under
Section 7.01(e)(i), an Acquisition Proposal shall have been publicly disclosed
or otherwise communicated to the Company Board or the Special Committee, or (B)
by TAS or the Company pursuant to Section 7.01(c), and at any time after the
date of this Agreement and prior to the termination of this Agreement, an
Acquisition Proposal shall have been publicly disclosed or otherwise
communicated to the Company Board or the Special Committee and (b) within eight
(8) months after such termination, the Company enters into an
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agreement in respect of any Competing Transaction, which Competing Transaction
is thereafter consummated, then the Company shall pay to TAS the Company
Termination Fee (minus the amount, if any, previously paid pursuant to Section
7.03(b)(ii)) by wire transfer of immediately available funds, on the date of the
consummation of the Competing Transaction; provided that, for purpose of this
Section 7.03(b)(iii), the term "Competing Transaction" shall have the meaning
assigned to such term in Section 5.06(f), except that the references to "20%"
shall be deemed to be references to "50%".
(iv) The payment of the Company Termination Fee and the TAS Expenses
in accordance with this Section 7.03(b) shall constitute the sole and exclusive
remedy of TAS for any and all damages arising under or in connection with any
breach of any representation, warranty, covenant or agreement on the part of the
Company contained in this Agreement. Except as provided in this Section 7.03(b),
in no event shall TAS and its Affiliates or any party acting on behalf of TAS or
its Affiliates, (i) seek to obtain any recovery or judgment in connection with
any breach of any representation, warranty, covenant or agreement on the part of
the Company contained this Agreement or (ii) be entitled to seek or obtain any
other damages of any kind, including, without limitation, consequential,
indirect or punitive damages, in connection with any breach of any
representation, warranty, covenant or agreement on the part of the Company
contained in this Agreement. The parties acknowledge that the Company
Termination Fee and the TAS Expenses together constitute a reasonable estimate
of the damages that will be suffered by reason of any action or omission giving
rise to a right of payment of the Company Termination Fee and/or the TAS
Expenses.
(v) The payment of money damages not to exceed $1,750,000 shall
constitute the sole and exclusive remedy of the Company for any and all damages
arising under or in connection with any breach of any representation, warranty,
covenant or agreement on the part of TAS or its Affiliates contained in or
contemplated by this Agreement. Except as provided in this Section 7.03(b), in
no event shall the Company and its Affiliates or any party acting on behalf of
the Company or its Affiliates, (i) seek to obtain any recovery or judgment in
connection with any breach of any representation, warranty, covenant or
agreement on the part of the TAS and its Affiliates contained or contemplated by
this Agreement or (ii) be entitled to seek or obtain any other damages of any
kind, including, without limitation, consequential, indirect or punitive
damages, in connection with any breach of any representation, warranty, covenant
or agreement on the part of TAS and its Affiliates contained in or contemplated
by this Agreement. The parties acknowledge that the sum of $1,750,000
constitutes a reasonable estimate of maximum amount of damages that will be
suffered by the Company and its Affiliates by reason of any action or omission
of TAS or its Affiliates arising out of or relating to this Agreement.
(c) ACKNOWLEDGEMENT. Each of the Company and TAS acknowledges that the
agreements contained in this Section 7.03 are an integral part of the
transactions contemplated by this Agreement. In the event that the Company shall
fail to pay the Company Termination Fee or TAS Expenses when due, the Company
shall reimburse TAS for all reasonable costs and expenses actually incurred or
accrued by TAS (including reasonable fees and expenses of counsel) in connection
with the collection under and enforcement of this Section 7.03.
SECTION 7.04. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
(subject, in the case of the Company, to the prior recommendation of the Special
Committee) at any time prior to the
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Effective Time. However, after the approval and adoption of this Agreement and
the Transactions by the stockholders of the Company, no amendment of the type
described in the proviso to the second sentence of Section 251(d) of the DGCL
shall be made unless the Company shall have obtained such consents as may be
required by the DGCL. This Agreement may not be amended except by an instrument
in writing signed by each of the parties hereto.
SECTION 7.05. WAIVER. At any time prior to the Effective Time, any
party hereto may:
(a) extend the time for the performance of any obligation or other act
of any other party hereto;
(b) waive any inaccuracy in the representations and warranties of any
other party contained herein or in any document delivered pursuant hereto; and
(c) waive compliance with any agreement of any other party or any
condition to its own obligations contained herein.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement and in any certificate
delivered pursuant hereto shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.01, as the case may be.
SECTION 8.02. COMPANY STOCK PURCHASE. The Company has agreed to issue
to the TAS Stockholders up to 2,400,000 shares of Common Stock pursuant to the
Agreement dated July 31, 2006 between the Company, TAS and the TAS Stockholders
(the "Conversion Agreement") (subject to adjustment as provided therein) at a
price of $2.50 per share (the "Stock Conversion Price"), upon conversion of the
Term C Loan (the "Company Stock Purchase"). The right of the TAS Stockholders to
purchase shares of Common Stock pursuant to the Conversion Agreement is subject
to the condition that all required filings with the SEC by the Company, TAS, the
TAS Stockholders and their respective Affiliates shall have been made, and all
related deliveries of documents to the stockholders of the Company and the
passage of notice periods required under 13(e) of the Exchange Act and the rules
and regulations thereunder shall have occurred. The Company covenants and agrees
to comply with Section 5.03 of this Agreement with respect to such matters
before the SEC, and agrees that any breach of the Conversion Agreement by the
Company shall constitute a breach of this Agreement as well.
SECTION 8.03. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile transmissions between the hours of 9:00 A.M. and 5:00 P.M. in the
recipient party's time zone, or by registered or certified
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mail (postage prepaid, return receipt requested) or recognized overnight courier
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 8.03):
if to TAS: TAS Holding, Inc
c/x Xxxxxxxx, Xxxxxx & Xxxxx, P.C.
First Waco Center
0000 X. Xxxxxx Xxxxx Xxxxx
P. O. Xxx 0000
Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
with a copy to: Xxxxxxxxx & Xxxxxxxx LLP
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx
with a copy to: Xxxxx, Kultgen, Brophy, Xxxxxxxx &
Xxxxxxx, LLP
Central Tower
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
with a copy to: Xxxxxxx Xxxx & Xxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
if to the Company: TIMCO Aviation Services, Inc.
000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No: (000) 000-0000
Attention: Chairman, CEO and CFO
with a copy to: Akerman Senterfitt
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, XX 00000
Telephone No.: (000) 000-0000
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Facsimile No: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
with a copy to: Xxxxxxxx, Xxxxxx & Finger, P.A.
One Xxxxxx Square
P. O. Xxx 000
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
SECTION 8.04. CERTAIN DEFINITIONS.
(a) For purposes of this Agreement:
"Affiliate" of a specified Person means a Person who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such specified Person.
"Business Day" means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are authorized or required
by Law to close in the City of Dallas, Texas.
"Code" means the United States Internal Revenue Code of 1986, as amended
including any successor provisions and transition rules, whether or not
codified.
"Closing Material Adverse Effect" shall mean that (i) Delta Airlines, Inc. shall
have given the Company written notice of its intention to terminate
substantially all of the engineering projects pending at the time of such
notice, including a request for the return of the related deposits or (ii)
United Airlines, Inc. shall have given the Company written notice of its
intention to terminate substantially all of its business that it sends to the
Company's MRO services.
"Company Material Adverse Effect" means any event, circumstance, change or
effect that is materially adverse to the business, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole
provided that none of the following shall constitute or shall be considered in
determining whether there has occurred a Company Material Adverse Effect;
(i) general economic conditions worldwide, in the United States, or in
any nation or region in which the Company or any of its Subsidiaries has a
substantial presence or operations;
(ii) any acts of terrorism not directed at the Company or any outbreak
of war;
(iii) the public announcement by the Parties of this Agreement, the
pendency of the Merger or the other transactions contemplated hereby, or any
action taken which is required by this Agreement or specifically requested by
TAS or its stockholders or consented to by TAS or its stockholders, in each case
including losses of employees or any stockholder litigation arising from or
relating to the Merger;
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(iv) factors generally affecting the industries or markets in which
the Company and its Subsidiaries operate;
(v) changes in Law not specifically directed at the Company or its
Subsidiaries or generally accepted accounting principles or the interpretation
thereof not specifically directed at the Company or its Subsidiaries;
(vi) any failure by the Company to meet any Company or published
securities analyst estimates of revenues or earnings for any period ending on or
after the date of this Agreement and prior to the Closing;
(vii) a decline in the trading price or change in trading volume of
the Company Common Stock.
"Company Required Consents" means all consents, authorizations and
approvals the failure to obtain in connection with the execution and delivery by
the Company of this Agreement and the consummation of the Transactions by the
Company, would, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect.
"Control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, or as trustee or executor, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"Environmental Law" means any Law relating to: (A) the protection,
investigation, remediation, or restoration of the environment or natural
resources, (B) the handling, use, storage, treatment, disposal, release or
threatened release of any hazardous substance, (C) noise, odor, pollution,
contamination, land use, any injury or threat of injury to persons or property,
or (D) the protection of the health and safety of employees or the public.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Knowledge of the Company" and the "Company's Knowledge" and words of similar
import means the actual knowledge (after due inquiry) of Xxxx Xxxxxxxx, Xxx
Xxxxxx, Xxx Xxxx, Xxxxx Xxxxxx or Xxxxxxxxx Xxxxxxxx.
"TAS Material Adverse Effect" means any event, circumstance, change or effect
that, individually or in the aggregate with all other events, circumstances,
changes and effects, is or is reasonably likely to prevent or materially impede,
interfere with, hinder, or delay the consummation by TAS of the transactions
contemplated by this Agreement.
"Person" means an individual, corporation, partnership, limited partnership,
limited liability company, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government.
"Representative" means, with respect to any Person, such the officers,
directors, employees, accountants, auditors, attorneys, consultants, legal
counsel, agents, investment bankers, financial
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advisors and other representatives of such Person and of such Person's
anticipated sources of financing.
"Subsidiary" or "Subsidiaries" when used with respect to any party, shall mean
any corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and one or more of its
subsidiaries.
"Tax Returns" means in respect of any Tax, any return, declaration, report,
election, estimate claim for refund or information return or other statement,
form or disclosure filed or required to be filed with any Governmental Authority
or taxing authority, including any schedule or attachment thereto, and including
any amendment thereof.
"Tax" or "Taxes" shall mean (i) any and all federal, state, provincial, local,
foreign and other taxes, assessments, fees, levies, duties, tariffs, customs,
imposts and other governmental charges of any kind (together with any and all
interest, penalties, assessments additions to tax and additional amounts imposed
with respect thereto) imposed in connection therewith or by any Governmental
Authority or taxing authority, including, without limitation: taxes or other
charges on or with respect to income, capital gains franchise, windfall or other
profits, gross receipts, real or personal property, sales, goods and services
use, capital stock, branch payroll, employment, social security (or similar),
workers' compensation, utility, severance, production, occupation, premium,
unemployment compensation or net worth's-taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; customs duties; tariffs and
similar charges, (ii) any liability for payment of amounts described in clause
(i) whether as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or otherwise
through operation of Law, and (iii) any liability for the payment of amounts
described in clause (i) or (ii) as a result of any tax sharing, tax indemnity or
tax allocation agreement or any other express or implied agreement to indemnify
any other person.
(b) The following terms have the meaning set forth in the Sections set
forth below:
DEFINED TERM LOCATION OF DEFINITION
90% Threshold Section 5.04
Acquisition Proposal Section 5.06(a)(i)
Action Section 2.08
Adverse Recommendation Notice Section 5.06(d)
Affiliate Transaction Section 2.22(a)
Agreement Preamble
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DEFINED TERM LOCATION OF DEFINITION
Assignee Section 5.02(c)
Certificate of Merger Section 1.03
Certificates Section 1.10(d)
Change in the Company Recommendation Section 5.06(d)
CIT Debt Recitals
CIT Financing Agreement Section 6.02(d)
Closing Section 1.02
Closing Date Section 1.02
COBRA Section 2.09(a)
Company Recitals
Company Board Recitals
Company Common Stock Section 1.07(a)
Company Convertible Debt Section 1.08(b)(v)
Company Disclosure Schedule ARTICLE II
Company Permits Section 2.15
Company Recommendation Section 2.04(c)
Company SEC Reports Section 2.06(a)(iv)
Company Software Section 2.16(e)
Company Stock Option Section 1.08(a)(ii)
Company Stock Plans Section 1.08(a)(i)
Company Stock Purchase Section 8.02
Company Stock Purchase Right Section 1.08(b)(ii)
Company Stockholder Approval Section 2.04
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DEFINED TERM LOCATION OF DEFINITION
Company Termination Fee Section 7.03(b)(i)
Competing Transaction Section 5.06(f)
Conversion Agreement Section 8.02
Copyrights Section 2.16(e)
Costs Section 5.07(a)
DGCL Recitals
Dissenting Shares Section 1.09(a)
Effective Time Section 1.03
ERISA Section 2.09(a)
Escrow Agent Section 1.10(a)
Escrow Agreement Section 1.10(a)
Expenses Section 7.03(a)
GAAP Section 2.06(b)
Governmental Authority Section 2.05(b)
HIPAA Section 2.09(b)
HSR Act Section 2.05(b)
Indemnified Directors and Officers Section 5.07(a)
Information Statement Section 5.03(a)
Intellectual Property Rights Section 2.16(e)
Law Section 2.05(a)(ii)
LJH Section 3.09
LJH Shares Section 3.09
LJH Warrant Section 1.08(b)(i)(B)
Material Contracts Section 2.12(a)
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DEFINED TERM LOCATION OF DEFINITION
Material Leased Real Property Section 2.10(b)
Maximum Premium Section 5.07(c)
Meeting Commencement Date Section 5.01
Merger Recitals
Monroe Debt Recitals
Notice of Superior Proposal Section 5.06(c)
Option Consideration Section 1.08(b)
Order Section 6.01(b)
Owl Creek Entities Section 3.09
Owl Creek Shares Section 3.09
Owned Real Property Section 2.10(b)
Patents Section 2.16(e)
Paying Agent Section 1.10(b)
Per Share Merger Consideration Section 1.07(a)
Plans Section 2.09(a)
Post-Signing Returns Section 4.03(a)
Proxy Statement Section 5.03(a)
Proxy/Information Statement Section 5.03(a)
Purchase Right Consideration Section 1.08(b)(ii)
Real Property Section 2.10(c)
Restructuring Agreement Recitals
Xxxxxxxx-Xxxxx Act Section 2.06(c)
SEC Section 1.10(b)
Securities Act Section 2.05(b)
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DEFINED TERM LOCATION OF DEFINITION
Shares Section 1.07(a)
Special Committee Recitals
Stockholders' Meeting Section 5.01(i)
Stock Conversion Price Section 8.02
Superior Proposal Section 5.06(g)
Surviving Corporation Section 1.01
Surviving Corporation Shares Section 1.07(c)
Takeover Provision Section 5.10
TAS Preamble
TAS Expenses Section 7.03(b)(ii)
TAS Shares Section 3.09
TAS Stockholders Section 3.09
Term C Loan Preamble
Termination Date Section 7.01(c)
Trademarks Section 2.16(e)
Transactions Section 2.04(a)
SECTION 8.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent possible.
SECTION 8.06. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including
all exhibits, annexes and schedules hereto, and the Transaction Documents
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior
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agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
SECTION 8.07. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than as provided in Section 7.03(b)(iv) and, following
the Effective Time, Section 5.07 (which is intended to be for the benefit of the
Persons covered thereby and may be enforced by such Persons).
SECTION 8.08. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or equity.
SECTION 8.09. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State, without giving effect
to any other choice of Law or conflict of Law provision or rule (whether of the
State of Delaware or otherwise). The parties hereto hereby:
(a) submit to the exclusive jurisdiction of any such state or federal
court sitting in the State of Delaware for the purpose of any Action arising out
of or relating to this Agreement brought by any party hereto; and
(b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF
THIS AGREEMENT.
SECTION 8.11. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 8.12. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 8.13. INTERPRETATION. The words "hereof", "herein" and
"hereunder" and words of like import used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
captions herein are included for convenience of
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reference only and shall be ignored in the construction or interpretation
hereof. References to Articles and Sections are, unless otherwise indicated,
references to Articles and Sections of this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation", whether or not they are in fact followed by those words or words of
like import. References to any statute are to that statute as amended from time
to time, and to the rules and regulations promulgated thereunder, and, in each
case, to any successor statute, rules or regulations thereto.
IN WITNESS WHEREOF, TAS and the Company have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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TAS HOLDING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
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TIMCO AVIATION SERVICES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXECUTION COPY
CONVERSION, SUPPORT AND RELEASE AGREEMENT
THIS AGREEMENT, dated as of July 31, 2006 (the "Agreement"), is by and
among LJH, Ltd., a Texas limited partnership ("LJH"), Owl Creek I, L.P., Owl
Creek II L.P., Owl Creek Overseas Fund, Ltd. and Owl Creek Overseas Fund II,
Ltd., (together, the "Owl Creek Investors," and together with LJH, the
"Investors"), TIMCO Aviation Services, Inc., a Delaware corporation (the
"Company"), and TAS Holding, Inc., a Delaware corporation ("Newco"), with
respect to the Agreement and Plan of Merger of even date between the Company and
Newco (the "Merger Agreement").
WHEREAS, all of the issued and outstanding capital stock of Newco is
owned by the Investors;
WHEREAS, the TAS Stockholders acquired from Monroe Capital Advisors
LLC indebtedness of the Company in the approximate amount of $18.4 million (the
"Monroe Debt") and amended the terms of the Monroe Debt to decrease the interest
rate and fees payable thereunder and to waive certain existing events of default
under the Monroe Debt for the benefit of the Company and advanced to the Company
additional working capital in the amount of $6.0 million thereunder (the "Term
Loan C") which in turn allowed the Company to amend the terms of its
indebtedness to CIT Group/Business Credit, Inc. (the "CIT Debt") to resolve
certain existing events of default and to increase the amount of funding
available under that facility (the "Debt Restructure");
WHEREAS, pursuant to a Participation Agreement between LJH and the Owl
Creek Investors dated April 10, 2006, they agreed that LJH would own 80.52% of
the Term Loan C, and would receive that percentage of any shares of the Common
Stock, $.001 par value per share, of the Company (the "Company Common Stock")
into which the Term Loan C might be converted, and the Owl Creek Investors would
own 19.48% of the Term Loan C and would receive that percentage of any Company
Common Stock into which the Term Loan C might be converted (respectively, their
"Pro Rata Shares");
WHEREAS, the Company has entered into the Merger Agreement with Newco,
which provides that Newco will merge with and into the Company in a transaction
whereby holders of the Company Common Stock other than the Investors (the
"Public Stockholders") will be entitled to receive a cash amount of $4.00 per
share of Company Common Stock (the "Merger"), on the terms and conditions stated
in the Merger Agreement;
WHEREAS, in connection with the proposed Merger, Newco and the
Investors have required that the Company enter into this Agreement providing for
the Company to issue to the Investors, according to their Pro Rata Shares, up to
2,400,000 shares of Company Common Stock at a price of $2.50 per share (the
"Company Stock Issuance") in exchange for and in satisfaction of up to the
outstanding principal balance of the Term Loan C, subject to the terms and
conditions stated in this Agreement.
NOW, THEREFORE, THE INVESTORS, NEWCO AND THE COMPANY AGREE AS FOLLOWS:
1.1 DEFINED TERMS. Capitalized terms used in this Agreement and not
otherwise defined have the meanings given them in the Merger Agreement.
1.2 CONSIDERATION. In consideration of Newco's entry into the Merger
Agreement and the actions of the Investors in respect thereof, and for so long
as the Merger Agreement remains in effect and has not been terminated, the
Company agrees to issue to the Investors, according to their Pro Rata Shares, up
to 2,400,000 shares of the Company Common Stock at a price of $2.50 per share
($6,000,000 in the aggregate) in exchange for and in full satisfaction of up to
the outstanding principal balance of the Term Loan C (the "Conversion") in
compliance with the following requirements:
(a) PURCHASE AND SALE OF COMMON STOCK. The Company hereby agrees to
issue to the Investors up to 2,400,000 shares of Common Stock (subject to
adjustment as provided below) (the "Base Shares") at a price of $2.50 per share
(the "Base Price") upon the written notice and demand therefor delivered to the
Company by LJH (a "Purchase Notice") and tender of the note evidencing the Term
Loan C, subject to the terms and conditions of this Section 1.2. The closing of
the purchase and sale of shares of Company Common Stock (the "CLOSING") shall
take place on the fifth Business Day following satisfaction or waiver of the
conditions set forth in this Section 1.2, or such other date as is mutually
agreed to by the Company and the Investors. The Closing shall be held at the
offices of offices of Xxxxxxxxx & Xxxxxxxx LLP, 000 X. Xxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, unless another place is agreed to in writing by the parties
hereto At the Closing, the Company shall deliver to the Investors certificates
representing the shares of Company Common Stock that the Investors are
purchasing hereunder and LJH will deliver to the Company its acknowledgement of
the payment of a portion of the $6,000,000 principal amount of the Term Loan C
equal to the aggregate Base Price of the number of Base Shares stated in the
Purchase Notice, after which the accrued unpaid interest on the Term Loan C and
any remaining balance of the Term Loan C will remain outstanding and owed to LJH
in accordance with the terms of the agreements governing the payment of such
amounts with respect to the Term Loan C. The right of the Investors to purchase
shares of Company Common Stock pursuant to this Section 1.2 is subject to the
conditions that: (i) all required filings with the SEC by the Company, the
Investors, Newco and its Affiliates shall have been made, and all related
deliveries of documents to the stockholders of the Company and the passage of
notice periods required under 13(e) of the Exchange Act and the rules and
regulations thereunder shall have occurred; (ii) Newco and the Investors shall
affirm in writing at the time of the purchase that immediately following such
purchase Newco and the Investors will effectuate a merger of Newco into the
Company pursuant to Section 253 of the DGCL in accordance with Section 5.04 of
the Merger Agreement; (iii) Newco and the Investors shall affirm in writing that
all shares of Company Common Stock owned by the Investors and their affiliates
have been transferred to Newco; and (iv) no Adverse Recommendation Notice or
Change in Company Recommendation, in each case in respect of a Superior Proposal
and in accordance with Section 5.06 of the Merger Agreement, shall be in effect.
Notwithstanding the foregoing, in the event the Merger Agreement is terminated
in accordance with Section 7.01 thereof, the Investors and the Company agree
that the Investors shall not be entitled to purchase any shares of Company
Common Stock pursuant to this Section 1.2(a) and the purchase right provided
hereunder shall be null and void and of no further effect.
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(b) REPRESENTATIONS OF COMPANY. The Company represents and warrants to
the Investors that the shares of Company Common Stock purchased under this
Section 1.2, when issued, will be duly and validly issued, fully paid and
nonassessable, and will (i) be free of restrictions on transfer other than
restrictions on transfer under applicable state and federal securities laws and
(ii) not be issued in violation of any preemptive or similar rights of any
stockholder of the Company.
(c) REPRESENTATIONS OF INVESTORS. Each of the Investors, severally and
not jointly, represents and warrants to the Company that (i) such Investor is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act; (ii) Company Common Stock purchased by such Investor
pursuant to this Section 1.2 will be acquired by the Investor for the purpose of
contributing such Company Common Stock to the capital of Newco, and as such is
being purchased for investment for the account of Newco and not with a view to
the resale or distribution of any part thereof or the grant of any participation
therein, and (iii) except as set forth herein, neither such Investor nor Newco
is obligated under any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any
unaffiliated third person, with respect to any of such Company Common Stock, and
neither of them has any present intention of entering into any such contract,
agreement or understanding.
(d) ADJUSTMENT OF SHARE PURCHASE. Provided that Newco and the
Investors collectively own at least 19,108,211 shares of the outstanding Company
Common Stock, to the extent that the issuance of shares of Company Common Stock
contemplated by this Section 1.2 would not result in the Investors and Newco
owning in the aggregate at least ninety and one-tenth percent (90.1%) of the
issued and outstanding Company Common Stock on the date of the Closing of such
purchase, the number of shares of Company Common Stock which the Investors may
purchase under this Section 1.2 will be increased to a number sufficient to
result in such percentage of ownership, at a purchase price of $2.50 per share.
(e) ANTI-DILUTION. In the event of a reorganization, recapitalization,
stock dividend or stock split, or combination or other change in the Company
Common Stock, in order to prevent the dilution or enlargement of the rights
provided in Section 1.2, the Base Price and the number of Base Shares shall be
proportionately adjusted. When any adjustment is required to be made pursuant to
this paragraph (e), the Company shall promptly mail to Newco and the Investors a
certificate setting forth the Base Price and the number of Base Shares after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
1.3 SUPPORT OF MERGER. (a) LJH represents and warrants that it is the
beneficial owner of 15,385,812 shares of Company Common Stock (the "LJH
Shares"). The Owl Creek Investors represent and warrant that they are the
beneficial owners of an aggregate of 3,722,399 shares of the Company Common
Stock (the "Owl Creek Shares"). LJH and the Owl Creek Investors are the sole
stockholders of Newco. Prior to the Effective Time of the Merger, the LJH Shares
and the Owl Creek Shares, together with any shares of Company Common Stock
purchased pursuant to this Agreement (collectively, the "Newco Shares") will be
contributed to Newco and Newco will be the record holder of the Newco Shares at
the Effective Time of the Merger.
(b) The Investors will, and will cause Newco to, upon the execution of
the Merger Agreement, deliver to the Company a copy of a written consent and
proxy (the "Proxy"),
3
executed by each of the Investors and by Newco in the form attached hereto as
Exhibits A-1 and A-2 and covering all shares of Company Common Stock owned or
acquired by any of them, irrevocably adopting the Merger Agreement and the
Merger, including, without limitation, voting in favor of the adoption of the
Merger Agreement by the Investors in their capacity as stockholders of Newco,
voting in favor of the adoption of the Merger Agreement by Newco as a
stockholder of the Company pursuant to Subsection 1.3(d), and by the Investors
in their capacities as stockholders of the Company pursuant to Subsection 1.3(d)
and, if applicable, voting in favor of a merger pursuant to Section 253 of the
DGCL by the Investors in their capacities as stockholders of Newco. The Proxy
will appoint Xxxxxx Xxxxxx and Xxx Xxxxxx, and each of them individually, as
their proxy and attorney in fact in accordance with the DGCL, will be
irrevocable and coupled with an interest, provided that such Proxy will
terminate upon the earlier to occur of the consummation of the Merger or any
termination of the Merger Agreement.
(c) Each of the Investors shall, and shall cause Newco to, at any
meeting of the stockholders of the Company (whether annual or special, and
whether or not an adjourned or postponed meeting), however called, pursuant to
Section 5.01 of the Merger Agreement (A) when a meeting is held, appear at such
meeting or otherwise cause each share of Company Common Stock it owns to be
counted as present thereat for the purpose of establishing a quorum, (B) vote
(or cause to be voted) in person or by proxy all shares of Company Common Stock
it owns in favor of the adoption of the Agreement and the approval of the Merger
and for any other matters necessary for consummation of the Transactions and (C)
vote (or cause to be voted) all shares of Company Common Stock it owns against
(X) any proposal for any recapitalization, reorganization, liquidation, merger,
sale of assets or other business combinations between the Company and any other
Person (other than the Merger) and (Y) any other action that could reasonably be
expected to impede, interfere with, delay, postpone or adversely affect the
Merger or any of the Transactions.
(d) Each of the Investors shall, at any meeting of the stockholders of
Newco (whether annual or special and whether or not an adjourned or postponed
meeting), or in connection with any action of the stockholders of Newco by
written consent, (A) when a meeting is held, appear at such meeting or otherwise
cause each share of Newco's voting capital stock it owns to be counted as
present thereat for the purpose of establishing a quorum, (B) exercise all
voting and related rights of such Investor with respect to each share of Newco's
voting capital stock it owns in favor of the adoption of the Agreement and the
approval of the Merger (whether consummated under Section 251 or Section 253 of
the DGCL) and for any other matters necessary for consummation of the
Transactions, and (C) exercise all voting and related rights of such Investor
with respect to each share of Newco's voting capital stock it owns against any
action that could reasonably be expected to materially impede, interfere with,
delay, postpone or adversely affect the consummation of Merger or any of the
Transactions.
1.4 SUBSEQUENT TRANSACTIONS. (a) Each of the Investors and Newco
agrees with the Company that during the period commencing on the date of this
Agreement and ending on the date that is six months following the termination of
the Merger Agreement (the "Effective Period"), it will not agree with any person
to cause the Company, or take any other action to cause the Company, to merge
with any person pursuant to Section 253 of the DGCL, without the prior consent
of the Special Committee, unless the terms of any such action or transaction
include the payment or delivery to the Public Shareholders of at least the
Agreed Consideration. "Agreed Consideration" means cash in an amount of at least
$4.00 per share of Company Common Stock. The Company agrees that the sale of the
Company Common Stock owned by
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the Investors to a person who agrees to pay the Public Shareholders the same per
share cash consideration as received by the Investors in any subsequent tender
offer or merger, including any merger under Section 253 of the DGCL, will
satisfy the requirements of this Section 1.4, even if such per share
consideration is less than $4.00 per share.
(b) If any of the Investors, Newco or the Company enters into a
Subsequent Transaction, agrees to enter into a Subsequent Transaction, or the
Investors or Newco agree to cause the Company to enter into a Subsequent
Transaction, during the Effective Period, each of the Investors, Newco and the
Company agrees that it will not enter into any binding agreement providing for
such Subsequent Transaction that does not include as one of its terms the
payment or delivery to the Public Shareholders of Agreed Consideration. For
purposes of this Section 1.4, a "Subsequent Transaction" means any of the
following:
(i) any merger, consolidation, share exchange, sale of shares of
Company Common Stock to a person not affiliated with the seller, business
combination, recapitalization, liquidation, dissolution or other similar
transaction (whether or not the Company is the entity surviving any such
transaction) involving the Company or any of its Subsidiaries which results in
any person beneficially owning 50% or more of any class of equity or voting
securities of the Company or of any of its Subsidiaries or 50% or more of the
assets of the Company and its Subsidiaries (directly or indirectly, including by
the ownership of equity or voting securities);
(ii) any sale, lease, exchange, transfer or other disposition
(directly or indirectly, including by the transfer of equity or voting
securities) of 50% or more of the assets of the Company and its Subsidiaries;
(iii) any sale, exchange, transfer or other disposition of equity or
voting securities in which the Company or any of its Subsidiaries participates
and which results in any person beneficially owning 50% or more of any class of
equity or voting securities of the Company or of any of its Subsidiaries; or
(iv) any transaction or series of transactions, including a tender
offer or exchange offer, that, if consummated, would result in any person
beneficially owning more than 50% of any class of equity or voting securities of
the Company or of any of its Subsidiaries. 1.5 WAIVER OF REQUIREMENT, AMENDMENT.
The restrictions set forth in Section 1.4 may be waived, and this Agreement may
only be amended, by the Company if such action is approved by (a) vote of a
majority of the Public Shareholders present in person or by proxy at a duly
called meeting of the Company's stockholders or (b) the affirmative vote of a
majority of the members of the Special Committee.
1.6 RELEASES.
(a) RELEASE BY INVESTORS. Effective upon the consummation of the
Merger, and in consideration of the benefit to be realized by each Investor as a
consequence of the Merger, each Investor, except as set forth below, hereby
releases, relinquishes, acquits, waives and forever discharges the Company, and
each of the Company's affiliates, officers, directors, agents, employees,
representatives, attorneys and/or assigns (collectively the "Company Releasees")
from any and all claims, counterclaims, rights, demands, actions, suits,
requests, proceedings, liabilities or causes of action, whether known or unknown
at the time of this Agreement, that
5
such Investor or any of its affiliates may have, directly or indirectly
(including pursuant to any class action), that arise out of or relate in any way
to such Investor's purchase, acquisition or ownership of shares of Company
Common Stock and which have arisen prior to the date of this Agreement (the
"Investor Released Claims"), including without limitation, to the extent
relevant or applicable, claims that may arise out of or relate in any way to:
(i) the Merger Agreement or Merger, or any actions of the Company Releasees in
connection therewith; (ii) the Investor's status as a stockholder of the
Company, including (x) such Investor's purchase of the senior subordinated
convertible PIK notes due 2006 of the Company, (y) such Investor's tender of
senior subordinated convertible PIK notes due 2006 to the Company in the
Company's January 2005 and August 2005 tender offers in exchange for shares of
the Company Common Stock, and/or (z) such Investor's purchase of shares of
Company Common Stock in the Company's rights offering that closed on November
22, 2005); or (iii) claims arising solely by reason of an Investor's status as a
stockholder of the Company (including without limitation claims for negligence,
gross negligence, fraud, negligent misrepresentation, breach of the duty of
care, breach of the duty of loyalty, breaches of the duties of candor, good
faith or fair dealing, or breaches of any other fiduciary duty). Each Investor
agrees, for itself and on behalf of its affiliates, that it will never initiate,
commence, institute, prosecute or otherwise participate in, either directly or
indirectly, representatively (such as in a class action) or in any other
capacity, any action of any description whatsoever, including both known and
unknown claims, against the Company's Releasees that seek damages or other
relief arising out of or relating to an Investor Released Claim. This Section
1.6(a) does not apply to any claims arising specifically under this Agreement or
the Merger Agreement, any rights or claims arising under any written contract
between one or more of the Investors, any of their affiliates, and any of the
Company or any of its subsidiaries, other than matters that are the subject to
the Investor Released Claims and are expressly released hereunder, or LJH's
rights under the LJH Warrant (as that document is described in the Company's
filings with the U.S. Securities and Exchange Commission. Each of the Company
Releasees other than the Company party to this Agreement, is an express third
party beneficiary of the terms and conditions of this Section 1.6(a).
(b) RELEASE BY COMPANY AND SUBSIDIARIES. Effective upon the
consummation of the Merger, the Company and each of its Subsdiaries who are
signatories to this Agreement hereby release, relinquish, acquit, waive and
forever discharge each Investor, and each of such Investor's officers,
directors, employees, attorneys, representatives (including Xxxx X. Xxxxxxxx in
his capacity as a representative of LJH), affiliates, predecessors, successors,
or assigns (all such Persons being referred to herein as the "Investor Released
Parties") from any and all claims, counterclaims, rights, demands, actions,
suits, requests, proceedings, liabilities or causes of action whether known or
unknown at the time of this Agreement, that any of the Company and its
Subsidiaries may have, directly or indirectly (including pursuant to any class
action), which claims (collectively, the "COMPANY RELEASED CLAIMS") have arisen
prior to the date of this Agreement and arise out of or relate in any way to:
(a) the LJH Debt; (b) the CIT Debt; (c) the Merger Agreement or Merger
(together, the "Transaction Agreements") or any actions of the Investor Released
Parties in connection therewith; (d) any action of LJH, or by any Investor
Released Party on behalf of LJH, in its capacity as a lender to the Company,
with respect to the LJH Debt; or (e) any Investor's status as a stockholder of
the Company, or arising out of any action by an Investor Released Party on
behalf of an Investor in its capacity as a stockholder of the Company (including
without limitation claims for negligence, gross negligence, fraud, negligent
misrepresentation, breach of the duty of care, breach of the duty of loyalty,
breaches of the duties of candor, good faith or fair dealing, or breaches of any
other fiduciary duty). The Company and each of its Subsidiaries, agree, for
themselves and on behalf of each of their
6
affiliates, that they will never initiate, commence, institute, prosecute or
otherwise participate in, either directly or indirectly, representatively (such
as in a class action) or in any other capacity, any action of any description
whatsoever, including both known and unknown claims, against any Investor
Released Party that seeks damages or other relief arising out of or relating to
the Company Released Claims. Notwithstanding the foregoing, nothing contained in
this Section 1.6(b) shall release (i) any right or claim of the Companies
arising under or pursuant to the Merger Agreement, this Agreement, or any other
written contract or written agreement between any Company and any of the
Investor Released Parties related to matters other than the matters that are the
subject of the Company Released Claims that are expressly released hereunder, or
(ii) claims for indemnification by any Investor Released Party who is serving or
has served as an officer or director of one or more of the Company or any
Subsidiary under the laws of the jurisdiction of organization and/or the
Certificate (or Articles) of Incorporation or By-Laws of any of the Company or
such Subsidiary. Each of the Investor Released Parties, other than Investors
party to this Agreement, is an express third party beneficiary of the terms and
conditions of this Section 1.6(b).
1.7 NOTICE. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, sent by facsimile or electronic mail or otherwise
delivered by hand or by messenger addressed:
If to LJH or to Newco, to it at 000 Xxxx Xxxx, Xxxxxxx, XX 00000
attention: Xx. Xxxx Xxxxxx, telecopy: (000) 000-0000, with a copy to Xxxxxxxxx &
Xxxxxxxx, LLP, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000-0000,
attention: Xxxxxxx X. Xxxxxxxxxx, Esq., telecopy (000) 000-0000, or at such
other address as LJH or Newco shall have specified by notice to the other
parties to this Agreement.
If to any of the Owl Creek Investors, to it at 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, attention: Xx. Xxxxxx Xxxxxxx, with a copy to Xxxxxxx
Xxxx & Xxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 , attention: Xxxxx X.
Xxxxxx, Esq., telecopy: (000-000-0000.
If to the Company, to it at TIMCO Aviation Services, Inc., 000 Xxxxx
Xxxx, Xxxxxxxxxx, XX 00000, attention: Chairman, CEO and CFO, with a copy to
Akerman Senterfitt, Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxx, XX 00000,
attention: Xxxxxx X. Xxxxxxxx, telecopy (000) 000-0000, copy to: Xxxxxxxx,
Xxxxxx & Finger, P.A. One Xxxxxx Square, P. O. Xxx 000, Xxxxxxxxxx, XX 00000,
Attention: Xxxx Xxxxxxx, telecopy (000) 000-0000.
All such notices and communications will be deemed effectively given
the earlier of (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile or e-mail (with receipt of
appropriate confirmation), (iv) one business day after being deposited with an
overnight courier service of recognized standing or (v) 72 hours after being
deposited in the U.S. mail, first class with postage prepaid. In the event of
any conflict between the Company's books and records and this Agreement or any
notice delivered hereunder, the Company's books and records will control absent
fraud or error.
1.8 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the personal representatives, successors and assigns
of the respective parties hereto. Each representation, warranty, covenant,
agreement, liability or obligation of an Investor set forth in or arising out of
this Agreement (each being an "Obligation") is agreed by the parties to be the
several and not joint Obligation of that Investor, and no Investor shall have
any
7
responsibility or liability for the actions of any other Investor. The Investors
and Newco shall require as a condition to any sale, transfer assignment or other
disposition of their shares of Company Common Stock that the person obtaining
such Company Common Stock agree to be bound by this Agreement with respect to
such shares, including, without limitation, the granting of a proxy with respect
to such shares.
1.9 GENERAL. The invalidity or unenforceability of any term or
provision hereof shall not affect the validity or enforceability of any other
term or provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. This
Agreement and the other written agreements of the parties referred to herein
constitute the entire understanding of the parties hereto with respect to the
subject matter hereof and thereof and supersede all present and prior
agreements, whether written or oral.
1.10 GOVERNING LAW; JURISDICTION; JURY WAIVER. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that State, without
giving effect to any other choice of Law or conflict of Law provision or rule
(whether of the State of Delaware or otherwise). The parties hereto hereby:
(a) submit to the exclusive jurisdiction of any such state or federal
court sitting in the State of Delaware for the purpose of any Action arising out
of or relating to this Agreement brought by any party hereto; and
(b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
(c) EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT.
1.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. One or more counterparts of this
Agreement or any Exhibit or Schedule hereto may be delivered via facsimile and
such facsimile counterpart shall have the same effect as an original counterpart
hereof.
[Signature pages follow]
8
The undersigned have executed this Agreement as of the date first
above written.
TIMCO AVIATION SERVICES, INC.
By:
-------------------------------------
Name:
Title:
TAS HOLDING, INC.
By:
-------------------------------------
Name:
Title:
LJH, LTD.
By DLH Management, L.L.C., its general partner
By:
-------------------------------------
Xxxx Xxxxxx, President
OWL CREEK I, L.P.
By: Owl Creek Advisors, LLC
its General Partner
By:
-------------------------------------
Name:
Title:
OWL CREEK II, L.P.
By: Owl Creek Advisors, LLC
its General Partner
By:
--------------------------------------
Name:
Title:
OWL CREEK OVERSEAS FUND, LTD.
By:
--------------------------------------
Name:
Title:
9
OWL CREEK OVERSEAS FUND II, LTD.
By:
--------------------------------------
Name:
Title:
OWL CREEK SOCIALLY RESPONSIBLE INVESTMENT
FUND, LTD.
By:
--------------------------------------
Name:
Title:
Subsidiaries executing this Agreement for purposes of Section 1.6(b):
AIRCRAFT INTERIOR DESIGN, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
XXXXX MANUFACTURING COMPANY, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
TIMCO ENGINE CENTER, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
TIMCO ENGINEERED SYSTEMS, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
10
TRIAD INTERNATIONAL MAINTENANCE
CORPORATION
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVIATION SALES DISTRIBUTION
SERVICES COMPANY
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVIATION SALES LEASING COMPANY
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVIATION SALES PROPERTY
MANAGEMENT CORP.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVS/CAI, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVS/M-1, INC.
11
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVS/M-2, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVS/M-3, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
AVSRE, L.P.
By: Aviation Sales Property Management Corp.,
its general partner
By:
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
HYDROSCIENCE, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
TMAS/ASI, INC.
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
12
WHITEHALL CORPORATION
By:
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-Finance
13
EXHIBIT A-1
14
IRREVOCABLE PROXY
TO VOTE STOCK OF
TIMCO AVIATION SERVICES, INC.
AND
TAS HOLDING, INC.
The undersigned stockholder of (1) TIMCO Aviation Services, Inc., a
Delaware corporation (the "COMPANY") and (2) TAS Holding, Inc., a Delaware
corporation ("NEWCO"), hereby irrevocably (to the full extent permitted by the
General Corporation Law of the State of Delaware) appoints Xxxxxx Xxxxxx and Xxx
Xxxxxx, and each of them, as the sole and exclusive attorneys and proxies of the
undersigned, with full power of substitution and resubstitution, to vote and
exercise all voting and related rights (to the full extent that the undersigned
is entitled to do so) with respect to all of the shares of capital stock of the
Company and Newco that now are or hereafter may be owned beneficially and of
record by the undersigned, and any and all other shares or securities of the
Company or Newco issued or issuable in respect thereof on or after the date
hereof (collectively, the "SHARES") in accordance with the terms of this Proxy.
The Shares owned beneficially and of record by the undersigned stockholder as of
the date of this Proxy are listed beneath the undersigned's signature on the
final page of this Proxy. Upon the undersigned's execution of this Proxy, any
and all prior proxies given by the undersigned with respect to any Shares are
hereby revoked and the undersigned agrees not to grant any subsequent proxies
with respect to the Shares until after the Expiration Date (as defined below).
This Proxy shall be effective immediately following the execution and delivery
of the Unanimous Written Consent of the Stockholders of TAS Holding, Inc. to be
executed immediately following the execution of the Merger Agreement (as defined
below).
This Proxy is coupled with an interest, is irrevocable (to the extent
permitted by the General Corporation Law of the State of Delaware), is granted
pursuant to that certain Conversion, Support and Release Agreement of even date
herewith (the "SUPPORT AGREEMENT"), by and among the Company, Newco, LJH, Ltd.,
a Texas limited partnership, Owl Creek I, L.P., Owl Creek II L.P., Owl Creek
Overseas Fund, Ltd. and Owl Creek Overseas Fund II, Ltd. and certain other
parties thereto and is granted in consideration of Newco's and the Company's
willingness to propose and negotiate towards the execution of an agreement and
plan of merger by and between the Company and Newco (the "MERGER AGREEMENT")
providing for the merger of Newco with and into the Company (the "MERGER"). As
used herein, the term "EXPIRATION DATE" shall mean the earliest to occur of (1)
such date and time as the Merger shall become effective in accordance with the
terms and provisions of the Merger Agreement, and (2) the date of termination of
the Merger Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to the General Corporation Law of the State of Delaware), at
every annual, special, adjourned or postponed meeting of the stockholders of the
Company or Newco, as the case may be, and in every written consent in lieu of
such meeting (1) in favor of (X) adoption of the Merger Agreement, (Y) the
approval of the Merger (whether consummated pursuant to Section 251 or (if
applicable) Section 253 of the General Corporation Law of the State of Delaware
and the transactions contemplated thereby and (Z) the adjournment of any meeting
of the stockholders of the Company if the Special Committee of the Board of
Directors of the Company recommends such adjournment; and (2) against (X) any
proposal for any recapitalization, merger, sale of assets or other business
combination (other than the Merger) between the Company and any person or entity
other than Newco, (Y) any other action or agreement that could result in a
breach of
15
any covenant, representation or warranty or any other obligation or agreement of
the Company or Newco under the Merger Agreement or the undersigned under the
Support Agreement or that could result in any of the conditions to the Company's
or Newco's obligations under the Merger Agreement not being fulfilled and (Z)
any other action that could reasonably be expected to impede, interfere with,
delay, postpone or adversely affect the Merger or any of the transactions
contemplated thereby. In addition to the other covenants and agreements of the
undersigned stockholder provided for elsewhere in this Agreement, from the
execution of this Agreement until the Expiration Date, the undersigned
stockholder shall not enter into any agreement, arrangement or understanding
with any person or entity to take any of the actions described in clause (2) of
the foregoing sentence, or the effect of which would be inconsistent with or
violate the provisions and agreements contained in this Proxy. The undersigned
shall, and the attorneys and proxies named herein, and each of them, are hereby
authorized and empowered on behalf of the undersigned to, direct the record
owners (if not the undersigned) of any Shares to take any and all actions and to
execute such documents (including, without limitation, execution of a proxy) to
enable the voting of the Shares pursuant to and in accordance with this Proxy.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
The authority granted to the named attorneys and proxies by this Proxy
is limited to the express subject matter, actions and authority described in
this Proxy. No other or greater authority is to be implied from the granting of
this Proxy. The undersigned stockholder retains the right, power and authority
to exercise all other rights associated with the ownership of the shares of the
Company and Newco subject to the Proxy, including voting rights, that are not
expressly granted to the attorneys and proxies named herein.
This Proxy is irrevocable (to the extent provided in the General
Corporation Law of the State of Delaware).
Dated: July 31, 2006
----------------------------------------------
(Signature of Stockholder)
----------------------------------------------
(Print Name of Stockholder)
Shares owned beneficially and of record:
COMPANY SHARES NUMBER
NEWCO SHARES NUMBER
16
EXHIBIT A-2
17
IRREVOCABLE PROXY
TO VOTE STOCK OF
TIMCO AVIATION SERVICES, INC.
AND
TAS HOLDING, INC.
The undersigned, TAS Holding, Inc., a Delaware corporation ("Newco"),
hereby irrevocably (to the full extent permitted by the General Corporation Law
of the State of Delaware) appoints Xxxxxx Xxxxxx and Xxx Xxxxxx, and each of
them, as the sole and exclusive attorneys and proxies of the undersigned, with
full power of substitution and resubstitution, to vote and exercise all voting
and related rights (to the full extent that the undersigned is entitled to do
so) with respect to all of the shares of capital stock of TIMCO Aviation
Services, Inc., a Delaware corporation (the "Company") and Newco that now are or
hereafter may be owned beneficially and of record by the undersigned, and any
and all other shares or securities of the Company or Newco issued or issuable in
respect thereof on or after the date hereof (collectively, the "SHARES") in
accordance with the terms of this Proxy. The Shares owned beneficially and of
record by the undersigned stockholder as of the date of this Proxy are listed
beneath the undersigned's signature on the final page of this Proxy. Upon the
undersigned's execution of this Proxy, any and all prior proxies given by the
undersigned with respect to any Shares are hereby revoked and the undersigned
agrees not to grant any subsequent proxies with respect to the Shares until
after the Expiration Date (as defined below). This Proxy shall be effective
immediately following the execution and delivery of the Unanimous Written
Consent of the Stockholders of TAS Holding, Inc. to be executed immediately
following the execution of the Merger Agreement (as defined below).
This Proxy is coupled with an interest, is irrevocable (to the extent
permitted by the General Corporation Law of the State of Delaware), is granted
pursuant to that certain Conversion, Support and Release Agreement of even date
herewith (the "SUPPORT AGREEMENT"), by and among the Company, Newco, LJH, Ltd.,
a Texas limited partnership, Owl Creek I, L.P., Owl Creek II L.P., Owl Creek
Overseas Fund, Ltd. and Owl Creek Overseas Fund II, Ltd. and certain other
parties thereto and is granted in consideration of Newco's and the Company's
willingness to propose and negotiate towards the execution of an agreement and
plan of merger by and between the Company and Newco (the "MERGER AGREEMENT")
providing for the merger of Newco with and into the Company (the "MERGER"). As
used herein, the term "EXPIRATION DATE" shall mean the earliest to occur of (1)
such date and time as the Merger shall become effective in accordance with the
terms and provisions of the Merger Agreement, and (2) the date of termination of
the Merger Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to the General Corporation Law of the State of Delaware), at
every annual, special, adjourned or postponed meeting of the stockholders of the
Company or Newco, as the case may be, and in every written consent in lieu of
such meeting (1) in favor of (X) adoption of the Merger Agreement, (Y) the
approval of the Merger (whether consummated pursuant to Section 251 or (if
applicable) Section 253 of the General Corporation Law of the State of Delaware
and the transactions contemplated thereby and (Z) the adjournment of any meeting
of the stockholders of the Company if the Special Committee of the Board of
Directors of the Company recommends such adjournment; and (2) against (X) any
proposal for any recapitalization, merger, sale of assets or other business
combination (other than the Merger) between the Company and any person or entity
other than Newco, (Y) any other action or agreement that could result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company or Newco
18
under the Merger Agreement or the undersigned under the Support Agreement or
that could result in any of the conditions to the Company's or Newco's
obligations under the Merger Agreement not being fulfilled and (Z) any other
action that could reasonably be expected to impede, interfere with, delay,
postpone or adversely affect the Merger or any of the transactions contemplated
thereby. In addition to the other covenants and agreements of the undersigned
stockholder provided for elsewhere in this Agreement, from the execution of this
Agreement until the Expiration Date, the undersigned stockholder shall not enter
into any agreement, arrangement or understanding with any person or entity to
take any of the actions described in clause (2) of the foregoing sentence, or
the effect of which would be inconsistent with or violate the provisions and
agreements contained in this Proxy. The undersigned shall, and the attorneys and
proxies named herein, and each of them, are hereby authorized and empowered on
behalf of the undersigned to, direct the record owners (if not the undersigned)
of any Shares to take any and all actions and to execute such documents
(including, without limitation, execution of a proxy) to enable the voting of
the Shares pursuant to and in accordance with this Proxy.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
The authority granted to the named attorneys and proxies by this Proxy
is limited to the express subject matter, actions and authority described in
this Proxy. No other or greater authority is to be implied from the granting of
this Proxy. The undersigned stockholder retains the right, power and authority
to exercise all other rights associated with the ownership of the shares of the
Company and Newco subject to the Proxy, including voting rights, that are not
expressly granted to the attorneys and proxies named herein.
This Proxy is irrevocable (to the extent provided in the General
Corporation Law of the State of Delaware).
Dated: July 31, 2006
TAS HOLDING, INC.
By:
---------------------------------------
Xxxx Xxxxxxxx, President
Shares owned beneficially and of record:
COMPANY SHARES NUMBER
-------------- ------
Common Stock 0
NEWCO SHARES NUMBER
------------ ------
Common Stock 0
19
ESCROW AGREEMENT
This Escrow Agreement (this "AGREEMENT") is made and entered into
effective as of the 31st day of July 2006 by and among TAS Holding, Inc. a
Delaware corporation ("TAS"), TIMCO Aviation Services, Inc., a Delaware
corporation ("TIMCO"), and American Bank of Texas, as escrow agent (the "ESCROW
AGENT"). TAS and TIMCO are collectively referred to herein as the "PARTIES." Any
references to TAS or TIMCO shall include their successors and assigns.
WHEREAS, pursuant to the terms of the Agreement and Plan of Merger
(the "MERGER AGREEMENT") between TIMCO and TAS dated as of July 31, 2006, TAS is
to merge with and into TIMCO, with TIMCO being the surviving entity, and the
public shareholders of TIMCO will receive cash consideration of $4.00 per share,
and the holders of Company Stock Options, Stock Purchase Rights, Company
Convertible Debt and the LJH Warrant (as such terms are defined in the Merger
Agreement) will receive cash consideration equivalent to $4.00 per share of
Company Common Stock into which such rights are exercisable or convertible (all
such persons having rights to receive cash consideration as a result of the
Merger being referred to herein as "Holders"), or $10,006,524 in the aggregate,
subject to the terms and conditions described in the Merger Agreement (the
"Merger"); and
WHEREAS, TAS is delivering to the Escrow Agent $10,006,524 in cash as
a deposit (the "DEPOSIT AMOUNT") to be applied to pay the cash consideration to
the Holders pursuant to Section 1.10(a) of the Merger Agreement; and
WHEREAS, the Deposit Amount represents funds contributed to the
capital of TAS by its stockholders, LJH, Ltd. ("LJH") and certain affiliated
investment partnerships of Owl Creek Asset Management, L.P. ("Owl Creek"); and
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. "BUSINESS DAY" means any day other than a Saturday,
Sunday or other day on which commercial banks in Denison, Texas or Greensboro,
North Carolina are authorized or required by law to close.
2. INSTRUCTIONS TO ESCROW AGENT. All instructions received by the
Escrow Agent from TAS must be signed by an officer of TAS and of LJH. All
instructions received by the Escrow Agent from TIMCO must be signed by an
officer of TIMCO.
3. APPOINTMENT OF THE ESCROW AGENT. The Escrow Agent is hereby
appointed as escrow agent with respect to the Escrow (as defined below).
4. THE ESCROW. In accordance with the terms of the Merger Agreement,
TAS has deposited with the Escrow Agent the Deposit Amount, consisting of funds
contributed to its capital by LJH and Owl Creek. The Deposit Amount, plus all
interest thereon, shall be held and disposed of in accordance with the terms of
this Agreement (the "Escrow").
5. THE ESCROW AGENT'S DUTIES. The Escrow Agent shall hold the Escrow
in safekeeping and shall deliver the same or any part thereof, only as set forth
in this Agreement.
6. TERMS OF ESCROW. The terms of the Escrow shall extend until all of
the Escrow has been distributed by the Escrow Agent in accordance with SECTION 8
of this Agreement.
7. INVESTMENT OF ESCROW. The Escrow Agent shall invest and reinvest
cash balances in the Escrow each day in such money market or other short-term
investment funds as shall be specified in writing jointly by TAS and by TIMCO,
as evidenced by a resolution of the Special Committee of the Board of Directors
of TIMCO certified to the Escrow Agent by the secretary or assistant secretary
of TIMCO; PROVIDED, HOWEVER, that no investment or reinvestment may be made
except in the following:
(a) direct obligations of the United States of America or obligations
the principal of and the interest on which are unconditionally guaranteed by the
United States of America;
(b) certificates of deposit issued by any bank, bank and trust
company, or national banking association (including the Escrow Agent and its
affiliates), which certificates of deposit are fully insured by the Federal
Deposit Insurance Corporation or a similar governmental agency;
(c) repurchase agreements with any state bank or national banking
association (including the Escrow Agent and its affiliates); or
(d) money market funds maintained by the Escrow Agent that are
composed solely of United States of America Treasury Securities.
Interest or other amounts paid on, or with respect to, invested cash balances in
the Escrow shall be deemed a part of the Escrow, and shall be held and invested
by the Escrow Agent in accordance with the terms of this Agreement.
If the Escrow Agent has not received written instructions from the
Parties at any time that an investment decision must be made, the Escrow Agent
shall invest such cash balances, or any portion thereof as to which no such
written instruction has been received, in investments described in clause (d)
above. Each of the foregoing investments shall be made in the name of the Escrow
Agent. No investment shall be made in any instrument or security that has a
maturity of greater than 30 days. Notwithstanding anything to the contrary
contained herein, the Escrow Agent may, without notice to the Parties, sell or
liquidate any of the foregoing investments at any time if the proceeds thereof
are required for any release of funds permitted or required under this
Agreement, and the Escrow Agent shall not be liable or responsible for any loss,
cost or penalty resulting from any such sale or liquidation. With respect to any
funds received by the Escrow Agent for deposit into the Escrow, or any written
instruction from the Parties received by the Escrow Agent with respect to
investment of any funds in the Escrow after ten o'clock a.m., Central Time, the
Escrow Agent shall not be required to invest such funds or to effect such
investment instruction until the next Business Day.
The Parties recognize and agree that the Escrow Agent will not provide
supervision, recommendations or advice relating to either the investment of
moneys held in the Escrow Account or the purchase, sale, retention or other
disposition of any permitted investment. Interest and other earnings on
permitted investments shall be added to the Escrow Account. Any loss or expense
incurred as a result of an investment will be borne by the Escrow Account.
Although TAS and TIMCO each recognizes that it may obtain a broker confirmation
or written statement containing comparable information at no additional cost,
TAS and TIMCO hereby
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agree that confirmations of permitted investments are not required to be issued
by the Escrow Agent for each month in which a monthly statement is rendered. No
statement need be rendered for the Escrow Account if no activity occurred for
such month.
8. DISTRIBUTION OF THE ESCROW. The Escrow Agent is directed to hold
and distribute the Escrow, as follows:
(a) The Escrow Agent is hereby authorized and directed to release and
deliver the Escrow, as TAS and TIMCO, as evidenced by a resolution of the
Special Committee of the Board of Directors of TIMCO certified to the Escrow
Agent by the secretary or assistant secretary of TIMCO, may jointly direct the
Escrow Agent in writing at any time or from time to time, and, without limiting
the foregoing, TAS and TIMCO agree:
(i) upon the consummation of the Merger, the Escrow Agent shall
release and deliver the Escrow, minus any excess of the Escrow over the Deposit
Amount (the "Escrow Excess Amount"), to the Paying Agent under the Merger
Agreement, who shall be identified to Escrow Agent in a written notice by TAS
and TIMCO, as evidenced by a resolution of the Special Committee of the Board of
Directors of TIMCO certified to the Escrow Agent by the secretary or assistant
secretary of TIMCO, prior to the consummation of the Merger, and thereupon to
release and deliver the Escrow Excess Amount to TIMCO as the surviving
corporation of the Merger. Delivery to the Escrow Agent of a Certificate of
Merger evidencing the merger of TAS, with and into TIMCO, and bearing the seal
of the Secretary of State of the State of Delaware and certified to be in effect
by the Secretary of TIMCO is agreed by TIMCO and TAS to be sufficient evidence
of the consummation of the Merger, and upon receipt thereof, the Escrow Agent is
hereby authorized and directed to release and deliver the Escrow in accordance
with this Section 8(a)(i); and
(ii) if the Merger Agreement is terminated, the Escrow Agent shall
release and deliver to LJH 80.52% of the Escrow and to Owl Creek 19.48% of the
Escrow, solely upon receipt of joint instructions to such effect by TAS and the
Special Committee of the Board of Directors of TIMCO; or
(b) The Escrow Agent is hereby authorized and directed to release and
deliver the Escrow in accordance with, and upon the Escrow Agent's receipt of, a
certified copy of a final judgment or order, unappealed or unappealable, of a
court of competent jurisdiction ordering such release and delivery.
(c) Upon and after the consummation of the Merger, because TAS and
TIMCO will have merged into a single corporation which will continue under the
name of TIMCO, all subsequent instructions and actions required under this
Agreement by either of TAS or TIMCO shall be performed by TIMCO.
9. THE ESCROW AGENT'S AUTHORITY TO ACT.
(a) Subject to the requirements set forth in SECTION 2, the Escrow
Agent may act in accordance with the terms of this Agreement upon any written
notice, request, waiver, consent, certificate, receipt, authorization, power of
attorney or other written or electronic document which the Escrow Agent in good
faith, after reasonable inquiry, believes to be genuine.
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(b) The Escrow Agent shall be deemed to have properly delivered any
item of the Escrow upon (i) delivery by wire transfer to such accounts as the
Escrow Agent may be instructed in writing by the person to whom delivery is to
be made; (ii) delivery in person at the Escrow Agent's offices; or (iii)
delivery in any other manner pursuant to written instructions of the person to
whom delivery is to be made.
(c) In performing its duties under this Agreement, or upon the claimed
failure to perform any of its duties hereunder, the Escrow Agent shall not be
liable to anyone for damages, losses or expenses which may be incurred as a
result of the Escrow Agent so acting or failing to so act; PROVIDED, HOWEVER,
the Escrow Agent shall not be relieved from liability for damages arising out of
its gross negligence or willful misconduct under this Agreement or breach of
this Agreement.
(d) The Escrow Agent is expressly authorized and directed to deliver
to LJH and to Owl Creek copies of all written notices and reports delivered by
Escrow Agent to TAS or TIMCO pursuant to this Agreement, and to respond to
reasonable requests by either of LJH or Owl Creek for information relating to
this Agreement and the Escrow. In the event of any dispute arising under this
Agreement, LJH and Owl Creek are agreed by the Parties to be express third party
beneficiaries of this Agreement and to have the right to appear and participate
in any such litigation as their rights may appear.
10. OTHER AGREEMENTS. The Escrow Agent is not a party to, nor is it
bound by, any other agreement or undertaking among the Parties, it being the
intention of the Parties hereto that the Escrow Agent assents to and shall be
obligated to give attention only to the terms and provisions hereof. Unless
otherwise provided in SECTION 9(A), SECTION 13(A) or SECTION 14, the Escrow
Agent shall have no duty to determine or inquire into the happening or
occurrence of any event or contingency or the performance or failure of
performance of TAS or TIMCO with respect to arrangements or contracts with each
other or with others, the Escrow Agent's sole duty hereunder being to hold the
Escrow and to dispose of and deliver the same in accordance with the terms of
this Agreement.
11. STANDARD OF CARE.
(a) The Escrow Agent undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and no implied covenants
or obligations shall be read into this Agreement against the Escrow Agent.
(b) If the Escrow Agent is required by the terms hereof to determine
the occurrence of any event or contingency, the Escrow Agent shall, in making
such determination, be liable only for its willful misconduct or gross
negligence, as determined in light of all the circumstances, including the time
and facilities available to it in the ordinary conduct of its business. In
determining the occurrence of any such event or contingency the Escrow Agent may
request from TAS, TIMCO or any other person such reasonable additional evidence
as the Escrow Agent in its sole discretion may deem necessary to determine any
fact relating to the occurrence of such event or contingency, and may at any
time inquire of and consult with others, including without limitation, TAS and
TIMCO, and the Escrow Agent shall not be liable for any damages resulting from
its delay in acting hereunder pending its receipt and examination of additional
evidence requested by it.
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(c) Unless otherwise expressly provided in this Agreement, whenever
the Escrow Agent is required by the terms hereof to take action upon the
occurrence of any event or contingency, the time prescribed for such action
shall in all cases be a reasonable time after written notice received by the
Escrow Agent for the happening of such event or contingency.
12. RESIGNATION AND REMOVAL OF THE ESCROW AGENT. The Escrow Agent may
resign from the performance of its duties hereunder at any time by giving 10
days' prior written notice to the Parties. The Escrow Agent may be removed as
Escrow Agent hereunder, with or without cause, by the Parties, acting
collectively, by furnishing collective written instructions to the Escrow Agent,
at any time by the giving of 10 days' prior written notice to the Escrow Agent.
Such resignation or removal shall take effect upon the appointment of a
successor Escrow Agent or upon payment of the Escrow to the registry of court of
competent jurisdiction, as provided herein below. Upon any such notice of
resignation or removal, the Parties shall collectively appoint a successor
Escrow Agent hereunder, which shall be a commercial bank, trust company or other
financial institution with a combined capital and surplus in excess of
$100,000,000. If TAS and TIMCO have not collectively appointed a successor
Escrow Agent within twenty (20) days after the date of notice of the Escrow
Agent's resignation or removal, the Escrow Agent shall deliver the Escrow to the
registry of a court of competent jurisdiction. Upon the acceptance in writing of
any appointment as the Escrow Agent hereunder by a successor Escrow Agent, such
successor Escrow Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties previously vested in the Escrow Agent who
has resigned or has been removed (the "Retiring Escrow Agent"), including
delivery of such funds to the registry of a court of competent jurisdiction.
Upon the effectiveness of the Retiring Escrow Agent's resignation or removal,
the Retiring Escrow Agent shall be discharged from its duties and obligations
under this Agreement, but shall not be discharged from any liability for actions
taken as the Escrow Agent hereunder prior to the effectiveness of such
resignation or removal. After the effectiveness of the Retiring Escrow Agent's
resignation or removal, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Escrow Agent under this Agreement.
13. LIABILITY OF THE ESCROW AGENT.
(a) The Escrow Agent shall have no liability or obligation with
respect to the Escrow, except for the Escrow Agent's willful misconduct or gross
negligence or breach of this Agreement. The Escrow Agent's sole responsibility
shall be for the safekeeping, investment, and disbursement of the Escrow in
accordance with the terms of this Agreement. The Escrow Agent shall have no
implied duties or obligations and shall not be charged with knowledge or notice
of any fact or circumstance not specifically set forth herein. The Escrow Agent
may rely upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein, which the Escrow Agent shall in good faith, after reasonable
inquiry, believe to be genuine, to have been signed or presented by the person
or parties purporting to sign the same and to conform to the provisions of this
Agreement. In no event shall the Escrow Agent be liable for incidental,
indirect, special, consequential or punitive damages. The Escrow Agent shall not
be obligated to take any legal action or commence any proceeding in connection
with the Escrow, any account in which the Escrow is deposited, this Agreement or
the Merger Agreement, or to appear in, prosecute or defend any such legal action
or proceeding. The Escrow Agent may consult legal counsel selected by it in the
event of any dispute or question as to the construction of any of the
5
provisions hereof or of any other agreement or of its duties hereunder, and
shall incur no liability and shall be fully indemnified from any liability
whatsoever in acting in good faith in accordance with the written opinion or
instruction of such counsel provided to each of TAS and TIMCO. The Parties,
jointly and severally, shall promptly pay, upon demand, the reasonable fees and
expenses of any such counsel.
(b) The Escrow Agent is authorized, in its sole discretion, to comply
with orders issued or process entered by a court of competent jurisdiction with
respect to the Escrow without determination by the Escrow Agent of such court's
jurisdiction in the matter. If any portion of the Escrow is at any time
attached, garnished or levied upon under any court order, or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall
be stayed or enjoined by any court order, or in case any order, judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, but in good faith, to rely upon and comply with any such order,
writ, judgment or decree which it is advised by legal counsel selected by it is
binding upon it without the need for appeal or other action; and if the Escrow
Agent complies in good faith with any such order, writ, judgment or decree, it
shall not be liable to any of the parties hereto or to any other person or
entity by reason of such compliance even though such order, writ, judgment or
decree may be subsequently reversed, modified, annulled, set aside or vacated.
(c) The Escrow Agent shall have the right to perform any of its duties
hereunder through agents, attorneys, custodians or nominees.
(d) Any banking association or corporation into which the Escrow Agent
may be merged, converted or with which the Escrow Agent may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Escrow Agent shall be a party, or any banking association or corporation to
which all or substantially all of the corporate trust business of the Escrow
Agent shall be transferred, shall succeed to all the Escrow Agent's rights,
obligations and immunities hereunder without the execution or filing of any
paper or any further act on the part of any parties hereto, anything herein to
the contrary notwithstanding.
14. INDEMNIFICATION OF THE ESCROW AGENT. From and at all times after
the date of this Agreement, the Parties, jointly and severally, shall, to the
fullest extent permitted by law and to the extent provided herein, indemnify and
hold harmless the Escrow Agent and each director, officer, employee, attorney,
agent and affiliate of the Escrow Agent (but excluding Xxxx Xxxxxx, Xxxx
Xxxxxxxx, LJH, Ltd. and TAS) (collectively, the "INDEMNIFIED PARTIES") against
any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorneys' fees, costs and expenses) incurred by
or asserted against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect or consequential, as a result of or arising
from or in any way relating to any claim, demand, suit, action or proceeding
(including any inquiry or investigation) by any person, including without
limitation TAS or TIMCO, whether threatened or initiated, asserting a claim for
any legal or equitable remedy against any Indemnified Parties under any statute
or regulation, including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise, arising from or
in connection with the negotiation, preparation, execution, performance or
failure of performance of this Agreement or any transactions contemplated
herein, whether or not any such Indemnified Party is a party to any such action,
proceeding, suit or the target of any such inquiry or investigation; PROVIDED,
6
HOWEVER, that no Indemnified Party shall have the right to be indemnified
hereunder for any liability finally determined by a court of competent
jurisdiction, subject to no further appeal, to have resulted solely from the
gross negligence or willful misconduct of such Indemnified Party or from the
breach of this Agreement by such Indemnified Party. If any such action or claim
shall be brought or asserted against any Indemnified Party, such Indemnified
Party shall promptly notify the Parties in writing, and the Parties shall assume
the defense thereof, including the employment of counsel and the payment of all
expenses. Such Indemnified Party shall, in its sole discretion, have the right
to employ separate counsel (who may be selected by such Indemnified Party in its
sole discretion) in any such action and to participate in the defense thereof,
and the reasonable fees and expenses of such counsel shall be paid by such
Indemnified Party, except that TAS and/or TIMCO shall be required to pay such
reasonable fees and expenses if (a) TAS and/or TIMCO agree to pay such fees and
expenses, (b) TAS and/or TIMCO shall fail to assume the defense of such action
or proceeding or shall fail to employ counsel reasonably satisfactory to the
Indemnified Party in any such action or proceeding, (c) TAS and TIMCO are
plaintiffs in any such action or proceeding or (d) the named parties to any such
action or proceeding (including any impeded parties) include both the
Indemnified Party and TAS and/or TIMCO, and the Indemnified Party shall have
been advised by counsel that principles of legal ethics prevent one counsel from
representing all of the named parties. The Parties shall be jointly and
severally liable to pay fees and expenses of counsel pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only to
the party so agreeing. All such fees and expenses payable by TAS and/or TIMCO
pursuant to the foregoing sentence shall be paid from time to time as incurred,
both in advance of and after the final disposition of such action or claim. All
of the foregoing losses, damages, costs and expenses of the Indemnified Parties
shall be payable by the Parties, jointly and severally, upon demand by such
Indemnified Party. Notwithstanding the joint and several liability of the
Parties, each of TAS and TIMCO hereby agree to pay one-half of the foregoing
losses, damages, costs and expenses of the Indemnified Parties unless otherwise
ordered by a court of competent jurisdiction. The obligations of the Parties
under this SECTION 14 shall survive any termination of this Agreement and the
resignation or removal of Escrow Agent.
The Parties agree that neither the payment by TAS or TIMCO of any
claim by the Escrow Agent or any Indemnified Party for indemnification hereunder
nor the disbursement of any amounts to the Escrow Agent or any Indemnified Party
from the Escrow in respect of a claim by the Escrow Agent or any Indemnified
Party for indemnification shall impair, limit, modify or affect, as among the
Parties the respective rights and obligations of TAS or TIMCO under the Merger
Agreement.
No expenses or indemnification pursuant to this Agreement may be paid
from the Deposit Amount.
15. TIME OF PERFORMANCE. Under the terms hereof, if the time for
performance of any provision shall fall on a date which is not a Business Day,
the performance thereof on the next succeeding Business Day shall be deemed to
be in full compliance. Whenever time is referred to in this Agreement, it shall
be the time recognized by the Escrow Agent in the ordinary conduct of its normal
business transactions.
16. BANKRUPTCY, ETC. The bankruptcy, insolvency, reorganization or
absence of TAS or TIMCO shall not affect or prevent performance by the Escrow
Agent of its obligations or its right to rely upon instructions received
hereunder.
7
17. REMEDIES OF THE ESCROW AGENT. As additional consideration for and
as an inducement for the Escrow Agent to act hereunder, it is understood and
agreed that in the event of any disagreement between the parties to this
Agreement or in the event any other person or entity claims an interest in the
Escrow or any part thereof, and such disagreement or claim results in adverse
claims and demands being made by them or any of them in connection with or for
any part of the Escrow, the Escrow Agent shall pay the Escrow to the registry of
a court of competent jurisdiction for determination of the rights of TAS and
TIMCO thereto, whereupon the Escrow Agent shall have no further obligation with
respect to the Escrow to either TAS or TIMCO. Anything herein to the contrary
notwithstanding, the Escrow Agent shall not be or become liable to TAS or TIMCO
for the failure of the Escrow Agent to comply with the conflicting or adverse
demands of TAS or TIMCO or of any other persons or entities claiming an interest
in the Escrow or any part thereof.
18. FEES AND EXPENSES.
(a) Each of TAS and TIMCO hereby agree to pay one-half of the fees of
the Escrow Agent for its ordinary services hereunder, as determined in
accordance with, and payable as specified in, the Schedule of Fees set forth in
SCHEDULE 1 attached hereto unless otherwise ordered by a court of competent
jurisdiction. In addition, each of TAS and TIMCO hereby agrees to pay one-half
of the Escrow Agent's reasonable expenses incurred in connection with this
Agreement, including, but not limited to, reasonable legal fees and expenses, in
the event the Escrow Agent deems it necessary to retain counsel after the date
of this Agreement. Such expenses shall be paid to the Escrow Agent within 10
days following receipt by TAS and TIMCO of a written statement setting forth
such expenses.
(b) Each of TAS and TIMCO agrees that in the event any controversy
arises under or in connection with this Agreement or the Escrow, or the Escrow
Agent is made a party to or intervenes in any litigation pertaining to this
Agreement or the Escrow, it will pay to the Escrow Agent one-half of the
reasonable compensation for its extraordinary services and reimburse the Escrow
Agent for one-half of all reasonable costs and expenses associated with such
controversy or litigation, including, but not limited to reasonable legal fees
and expenses unless otherwise ordered by a court of competent jurisdiction. The
Escrow Agent shall give written notice to the Parties prior to incurring any
such fees, costs or expenses, and an estimate of the amount of such fees, costs
and expenses.
(c) Each of TAS and TIMCO warrants and agrees with the Escrow Agent
that, unless otherwise expressly set forth in this Agreement, there is no
security interest in the Escrow or any part thereof; no financing statement
under the Uniform Commercial Code of any jurisdiction is on file in any
jurisdiction claiming a security interest in or describing, whether specifically
or generally, the Escrow or any part thereof; and the Escrow Agent shall have no
responsibility at any time to ascertain whether or not any security interest
exists in the Escrow or any part thereof or to file any financing statement
under the Uniform Commercial Code of any jurisdiction with respect to the Escrow
or any part thereof.
(d) The Escrow Agent waives any right of set off or any other legal
right or claim that it or any assignee may have or assert against the Escrow,
excluding only exceptions that may arise pursuant to this Agreement. No expenses
payable pursuant to Section 18 of this Agreement may be paid from the Deposit
Amount.
8
(e) In the event fees and expenses of the Escrow Agent are to be paid
pursuant to SECTION 14 hereof, it is understood and agreed by both TAS and TIMCO
that such fees and expenses are in addition to those described above.
19. EFFECTIVE DATE. The effective date of this Agreement shall be the
date hereof.
20. TERMINATION AND RESIGNATION. Unless sooner terminated as
hereinafter provided, this Agreement shall terminate without action of any party
when all of the terms hereof shall have been fully performed.
21. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and such counterparts shall constitute and
be one and the same instrument.
22. AMENDMENTS. This Agreement cannot be amended or modified except by
another agreement in writing signed by all the parties hereto or by their
respective successors in interest.
23. HEADINGS. The paragraph headings contained herein are for
convenience of reference only and are not intended to define, limit or describe
the scope or intent of any provision of this agreement.
24. GOVERNING LAW. This Agreement shall be deemed to have been made
and shall be construed and interpreted in accordance with the laws of the State
of Texas without giving effect to the conflict of laws principles thereof.
25. WITHHOLDING. The Escrow Agent shall not be responsible or liable
for determination or payment of any taxes assessed against the Escrow or the
income therefrom nor for the preparation or filing of any tax returns other than
withholding required by statute or treaty. The Parties agree to provide the
Escrow Agent any information necessary to perform any such required withholding,
including IRS Form W-8 or W-9, as applicable, and the Escrow Agent shall be
entitled to rely on such information. The Escrow Agent will establish the
account holding the Escrow under the EIN of TAS; if Escrow Agent is responsible
for tax reporting as set forth in this SECTION 25, it will be rendered under the
aforementioned TIN.
26. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the facsimile numbers
specified below:
if to TAS: TAS Holding, Inc
c/x Xxxxxxxx, Xxxxxx & Xxxxx, P.C.
First Waco Center
0000 X. Xxxxxx Xxxxx Xxxxx
P. O. Xxx 0000
Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
with a copy to: Xxxxxxxxx & Xxxxxxxx LLP
9
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx
with a copy to: Xxxxx, Kultgen, Brophy, Xxxxxxxx &
Xxxxxxx, LLP
Central Tower
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
if to TIMCO: TIMCO Aviation Services, Inc.
000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No: (000) 000-0000
Attention: CEO and CFO
with a copy to: Akerman Senterfitt
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
with a copy to: Xxxxxxxx, Xxxxxx & Finger, P.A.
One Xxxxxx Square
P. O. Xxx 000
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
If to Escrow Agent: American Bank of Texas
000 Xxxx Xxxx
Xxxxxxxx XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (903)
Attention: Xxxxx Xxxxxx
27. REPORTS. At least monthly, within ten days of the end of each
calendar month, the Escrow Agent shall provide each of the Parties, LJH and Owl
Creek with a full accounting of the
10
Escrow, and a report of all transactions regarding the Escrow (including
receipts, investments and disbursements) not previously reported.
28. DEALINGS. The Escrow Agent and any stockholder, director, officer
or employee of the Escrow Agent may buy, sell and deal in any of the securities
of the Parties and become pecuniarily interested in any transaction in which the
Parties may be interested, and contract and lend money to the Parties and
otherwise act as fully and freely as though it were not Escrow Agent under this
Agreement. Nothing herein shall preclude the Escrow Agent from acting in any
other capacity for TAS or TIMCO or for any other entity. The Parties acknowledge
that they are aware that Escrow Agent is owned by LJH or an affiliate.
29. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, provided that (i) Owl Creek is an express third party beneficiary of
this Agreement and (ii) after the effectiveness of the Merger and until such
time as the Deposit Amount is delivered to the Paying Agent, the Holders shall
be express third party beneficiaries of this Agreement. The provisions of this
Agreement for their benefit may be enforced by such express third party
beneficiaries.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first stated above.
TAX IDENTIFICATION NUMBER: PARTIES:
___________ TAS Holding, Inc.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
___________ TIMCO Aviation Services, Inc.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ESCROW AGENT:
American Bank of Texas, as Escrow Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCHEDULE 1
FEE SCHEDULE
An administrative fee of $100 will be payable upon distribution of the
Escrow.
EXECUTION COPY
-----------------------------------------------------
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
TRANSACTION AGREEMENT
BY AND AMONG
LJH, LTD.,
OWL CREEK I, L.P., OWL CREEK II, L.P.,
OWL CREEK OVERSEAS FUND I, LTD.,
OWL CREEK OVERSEAS FUND II, LTD.,
AND OWL CREEK SOCIALLY RESPONSIBLE INVESTMENT FUND, LTD.
AND
TAS HOLDING, INC.
AS OF JULY 31, 2006
-----------------------------------------------------
AMENDMENT NO. 1 TO AMENDED & RESTATED TRANSACTION AGREEMENT
AMENDMENT NO. 1 TO AMENDED AND RESTATED TRANSACTION AGREEMENT, dated
as of July 31, 2006 (the "Agreement"), by and among LJH, Ltd., a Texas limited
partnership ("LJH"), Owl Creek I, L.P., Owl Creek II L.P., each a Delaware
limited partnership, and Owl Creek Overseas Fund, Ltd. and Owl Creek Overseas
Fund II, Ltd. and Owl Creek Socially Responsible Investment Fund, Ltd.
("OCSRIF"), each an an exempted company organized under the laws of the Cayman
Islands (together, the "Owl Creek Investors," and together with LJH, the
"Investors") and TAS Holding, Inc., a Delaware corporation ("Newco"), to amend
the Amended and Restated Transaction Agreement between the Investors and Newco
dated April 20, 2006 (the "Transaction Agreement") on the terms and conditions
set forth herein.
WHEREAS, on April 20, 2006 LJH acquired from Monroe Capital Advisors
LLC indebtedness of TIMCO Aviation Services, Inc. (the "Company") in the
approximate amount of $18.4 million (the "Monroe Debt") and amended the terms of
the Monroe Debt to decrease the interest rate and fees payable thereunder and to
waive certain existing events of default under the Monroe Debt for the benefit
of the Company and advanced to the Company additional working capital in the
amount of $6.0 million thereunder (the "Term Loan C") which in turn allowed the
Company to amend the terms of its indebtedness to CIT Group/Business Credit,
Inc. (the "CIT Debt") to resolve certain existing events of default and to
increase the amount of funding available under that facility (the "Debt
Restructure");
WHEREAS, Newco has entered into an Agreement and Plan of Merger
between Newco and the Company (the "Merger"), whereby Newco would merge with and
into the Company and the remaining stockholders of the Company, other than the
Investors, would receive $4.00 per share in cash (the "Merger Consideration"),
and a related Escrow Agreement between Newco, the Company and American Bank of
Texas, as escrow agent, (the "Escrow Agreement") pursuant to which Newco has
deposited the sum of $10,006,524 received as capital contributions from the
Investors into escrow in order to pay the stockholders of the Company other than
TAS and the Investors the Merger Consideration;
WHEREAS, the Investors, Newco and the Company have entered into a
Conversion, Support and Release Agreement which provides that the Company will
issue to the Investors, on a pro rata basis and on the terms and conditions
stated therein 2,400,000 shares of Common Stock in exchange for and as payment
in full of the outstanding principal amount of the Term Loan C (the "Conversion
Agreement");
WHEREAS, the Investors desire to amend the Transaction Agreement as
set forth herein to reflect the understandings of the parties with respect to
the Merger and related transactions and to add OCSRIF as a party to the
Transaction Agreement.
NOW, THEREFORE, the Investors and Newco agree as follows:
ARTICLE I
AMENDMENT; DEFINITIONS
1.1 AMENDMENT AND RESTATEMENT. Except as expressly amended by this
Agreement, the Transaction Agreement remains in full force and effect.
1.2 DEFINITIONS. Capitalized terms used in this Agreement and not
otherwise defined have the meanings given them in the Transaction Agreement.
ARTICLE II
TRANSACTIONS
2.1 MERGER AND RELATED TRANSACTIONS. The Transaction Agreement is
amended by deleting Section 2.2 and replacing it in its entirety with the
following:
2.2 CAPITALIZATION OF NEWCO; MERGER; CONVERSION.
(a) Upon the execution of the Merger Agreement between Newco
and the Company, LJH and the Owl Creek Investors have funded Newco
with $10,006,524, representing the product of $4.00 multiplied by the
number of issued and outstanding shares of Company Common Stock that
are not owned by the Investors plus the number of shares of Company
Common Stock that are issuable upon the exercise of existing
conversion rights by the holders of the Subordinated Convertible Notes
and holders of warrants, options and stock grant rights identified on
Exhibit A to this Agreement. Of this amount, LJH has contributed the
sum of $8,057,252 (80.52%) in return for the issuance by Newco to LJH
of 20,143,130 shares of Newco Common Stock and the Owl Creek Investors
have contributed the sum of $1,949,272.00 (19.48%) in return for the
issuance by Newco to the Owl Creek Investors of 4,873,180 shares of
Newco Common Stock.
(c) The Investors agree that Newco may, pursuant to the
Merger Agreement, deposit the sum of $10,006,524 in an escrow account
subject to the terms of an Escrow Agreement between Newco and the
Company (the "Escrow Agreement") in the form attached to this
Agreement as Exhibit B, to be disbursed as provided in the Escrow
Agreement and the Merger Agreement. Any modification of the Escrow
Agreement will be subject to the consent of each of the Investors, not
to be unreasonably withheld.
(d) On or before the date that is two business days prior to
the closing contemplated by the Merger Agreement, and subject to the
satisfaction of the conditions to closing set forth in this Agreement
in Section 2.2(f) and in the Merger Agreement, the Investors will
contribute all shares of Company Common Stock owned by them to Newco.
LJH will contribute 15,385,812 shares of Company Common Stock to Newco
in return for the issuance by Newco to LJH of 153,858,120 shares of
Newco Common Stock and the Owl Creek Investors will contribute an
aggregate of 3,722,399 shares of Company
Common Stock to Newco in return for the issuance by Newco to the Owl
Creek Investors of 37,223,990 shares of Newco Common Stock.
(e) On or before the date that is two business days prior to
the closing contemplated by the Merger Agreement, and subject to the
satisfaction of the conditions to closing set forth in this Agreement
in this Section 2.2, LJH will endeavor to cause the Company to
exchange the Term C Loan for 2,400,000 shares of the Company's Common
Stock pursuant to the Conversion Agreement. The Owl Creek Investors
consent and agree to such action by LJH undertaken in accordance with
the Conversion Agreement. The Investors agree to contribute all of the
shares of the Company's Common Stock received upon such exchange to
Newco, of which 1,932,480 (80.52%) shares of Company Common Stock will
be deemed contributed to Newco by LJH in return for the issuance by
Newco to LJH of 19,324,800 shares of Newco Common Stock and 467,520
(19.48%) shares of Company Common Stock will be deemed contributed to
Newco by the Owl Creek Investors in return for the issuance by Newco
to the Owl Creek Investors of 4,675,200 shares of Newco Common Stock.
LJH is authorized to take all reasonably necessary actions on behalf
of the Investors to effect the transactions described in this
Subparagraph (e); provided that before taking such actions LJH will
provide the Owl Creek Investors with reasonable notice of such actions
and a reasonable opportunity to review and consult in taking such
actions.
(f) The closing (the "CLOSING") of each issuance of Newco
Common Stock described in this Section 2.2 shall take place at the
offices of Xxxxxxxxx & Xxxxxxxx LLP, 000 X. Xxxxx, Xxxxx 0000, Xxxxxx
Xxxxx on the dates specified above or at such other place and time as
the Investors may otherwise agree. At each closing, Newco will issue
to each of the Investors certificates for the indicated number of
shares of Newco Common Stock in such denominations as any of them may
specify and each of the parties will execute and deliver such
certifications, receipts and acknowledgements as any of the parties
may reasonably request to evidence such actions.
2.2 SEC FILINGS. The Transaction Agreement is amended by deleting
Section 2.3 and replacing it in its entirety with the following:
2.3 SEC FILINGS. Each of the Investors agrees to file
promptly an amendment to its or their respective Schedule 13D's with
the SEC disclosing their agreement to pursue the transactions
described in this Agreement and to provide each party to this
Agreement with prompt notice of any development which would under
applicable rules require an amendment to their respective Schedule
13D's. The Investors understand that a Schedule 13E-3 filing with the
SEC under Rule 13E-3 (the "Schedule 13e-3 Filing") will be required in
order to consummate the exchange of the Working Capital Infusion for
2,400,000 shares of Company Common Stock and consummate the Merger.
Newco and the Investors agree to make the Schedule 13E-3 Filing as
promptly as practicable after execution of the Merger Agreement but in
no event later than 10 Business Days after the date thereof. No
filings of, or amendment or supplement to, the Schedule 13E-3 Filing
will be made by Newco or the Investors without providing the Investors
a reasonable opportunity to review and comment thereon. Each of the
Investors agrees to promptly provide the information reasonably
required for inclusion in each filing with the SEC
necessary to consummate the transactions contemplated herein, and
represents and warrants to the other parties to this Agreement that
all such information provided solely with respect to such party will
be true and correct in all material respects and will not misstate any
material fact or omit to state any material fact required to be stated
therein, in light of the circumstances in which they were made, in
order that the information provided will not be misleading.
2.3 CONDITIONS TO CLOSING. The Transaction Agreement is amended by
deleting Section 2.4 and replacing it in its entirety with the following:
2.4 CONDITIONS TO CLOSING FOR THE INVESTORS. The Investors'
several obligations to take the actions described in Section 2.2 of
this Agreement on the dates contemplated therein (each such date being
a "Closing Date") are subject to the satisfaction, on or prior to each
such Closing Date, of the conditions set forth below:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by each of the parties herein
shall have been true and correct when made and shall be true and
correct on and as of the applicable Closing Date with the same force
and effect as though made on and as of the Closing Date, except for
any representations and warranties that are made as of a specific date
which shall only be required to be true and correct as of such date.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by each
of the Investors on or prior to the applicable Closing Date shall have
been performed or complied with.
(c) SECRETARY'S CERTIFICATE. The Investors shall have
received copies of resolutions of the Board of Directors of Newco, the
form and substance of which are reasonably satisfactory to the
Investors, authorizing any actions being taken by Newco in connection
with such Closing and certified by the Secretary of Newco.
(d) BOARD OF NEWCO. As of the initial Closing Date, the
Board of Directors of Newco shall be constituted in accordance with
the Stockholders Agreement.
(e) CONSENTS. All consents and approvals to the transactions
contemplated by this Agreement required to be obtained from any third
party shall have been obtained.
(f) LEGALITY. All authorizations, approvals or permits of
any governmental authority or regulatory body that are required in
connection with such action shall have been duly obtained and shall be
in full force and effect.
(g) GENERAL. All instruments and legal and organizational
proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to
the Investors, and the Investors shall have received copies of all
documents, including records of company proceedings and officers'
certificates, which they may have reasonably requested in connection
therewith.
(h) MERGER AGREEMENT. The Merger Agreement shall not have
been terminated and shall continue to be in full force and effect.
2.4 ADDITION OF OWL CREEK SOCIALLY RESPONSIBLE INVESTMENT FUND, LTD.
Effective as of the date of this Agreement, OCSRIF agrees to become a party to
the Transaction Agreement, with all of the rights and obligations of a party
thereunder, and LJH, Newco and the other Owl Creek Investors acknowledge and
agree to OCSRIF becoming a party to the Transaction Agreement.
2.5 REINSTATEMENT OF STOCKHOLDERS AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT. The Investors agree to reinstate the Stockholders Agreement among
Newco and the Investors and the Registration Rights Agreement among Newco and
the Investors, each dated April 10, 2006, to have full legal and binding force
and effect as of the date of this Agreement to govern the ownership of Newco by
the Investors.
2.6 INDEMNIFICATION RELATING TO XXXX-XXXXX-XXXXXX ANTITRUST
IMPROVEMENTS ACT. LJH agrees to indemnify, defend and hold harmless the Owl
Creek Investors from and against any liability that any of them may incur that
arises in connection with or results from the obligations of Xxxx Xxxxxx or LJH
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, or
the regulations thereunder relative to the acquisition or ownership of voting
securities of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
LJH hereby represents and warrants to the Owl Creek Investors, and each of the
Owl Creek Investors, jointly and severally, hereby represents and warrants to
LJH, as follows:
3.1 ORGANIZATION. It is duly organized and validly existing and in
good standing under the laws of its state of organization.
3.2 ORGANIZATIONAL POWER. It has all necessary power and authority to
enter into and perform this Agreement, to own all the properties owned by it and
to carry on the businesses now conducted or presently proposed to be conducted
by it. It has taken all action necessary to authorize this Agreement.
3.3 AUTHORIZATION. All approval and action on the part of such
Investor by its owners and its governing body necessary for the due
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated herein has been or will be taken. This Agreement
is a legal, valid and binding agreement of the Investor, enforceable in
accordance with its terms. The execution, delivery and performance by such
Investor of this Agreement will not result in any violation of or be in conflict
with, or result in a breach of or constitute a default under, any term or
provision of any Legal Requirement to which such Investor is subject, its
organizational documents, or any Contractual Obligation to which such Investor
is a party or by which it is bound.
3.4 LITIGATION. As of the date of this Agreement, no litigation or
proceeding before, or investigation by, any foreign, federal, state or municipal
board or other governmental or administrative agency or any arbitrator is
pending or, to the Investor's knowledge, threatened, against such Investor with
respect to its ownership of Company Common Stock or the transactions
contemplated by this Agreement.
3.5 CONSENTS. No consent, approval, qualification, order or
authorization of, or filing with any governmental authority is required in
connection with such Investor's valid execution, delivery or performance of this
Agreement, except as expressly contemplated herein.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the personal representatives, successors and assigns
of the respective parties hereto. Newco shall not have the right to assign its
rights or obligations hereunder or any interest herein without obtaining the
prior written consent of the Investors and any attempted assignment otherwise
shall be void. The Investors may assign or transfer their rights under this
Agreement to the extent permitted herein and by the other agreements between the
respective parties and the Company. Whether or not any express assignment has
been made in this Agreement, provisions of this Agreement that are for the
Investors' benefit as the holder of any Company Common Stock are also for the
benefit of, and enforceable by, all subsequent holders of the Company Common
Stock.
4.2 GENERAL. The invalidity or unenforceability of any term or
provision hereof shall not affect the validity or enforceability of any other
term or provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. This
Agreement and the other written agreements of the parties referred to herein or
therein constitute the entire understanding of the parties hereto with respect
to the subject matter hereof and thereof and supersede all present and prior
agreements, whether written or oral.
4.3 AMENDMENTS: COUNTERPARTS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Investors. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. One or more
counterparts of this Agreement or any Exhibit or Schedule hereto may be
delivered via facsimile and such facsimile counterpart shall have the same
effect as an original counterpart hereof.
4.4 GOVERNING LAW; JURISDICTION. The laws of the State of Delaware,
without reference to conflict of laws principles, shall govern the validity,
construction and interpretation of this Agreement. Each party to this Agreement
hereby irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions
contemplated hereby may be brought exclusively in the courts of the State of
Delaware and hereby expressly submits to the personal jurisdiction and venue of
such courts for the purposes thereof and expressly waives any claim of improper
venue and any claim that such courts are an inconvenient forum. Each party
hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
provided in accordance with Section 5.2 of the Transaction Agreement, such
service to become effective 10 days after such mailing.
[Signature pages follow]
The undersigned have executed this Amendment No. 1 to Amended and
Restated Transaction Agreement as of the date first above written.
TAS HOLDING, INC.
By:
-------------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
LJH, LTD.
By: DLH Management, L.L.C.,
its general partner
By:____________________________
Xxxx Xxxxxx, President
OWL CREEK I, L.P.
By: Owl Creek Advisors, LLC
its General Partner
By:
-------------------------------------------
Name:
Title:
OWL CREEK II, L.P.
By: Owl Creek Advisors, LLC
its General Partner
By:
-------------------------------------------
Name:
Title:
OWL CREEK OVERSEAS FUND, LTD.
By:
--------------------------------------------
Name:
Title:
OWL CREEK OVERSEAS FUND II, LTD.
By:
--------------------------------------------
Name:
Title:
OWL CREEK SOCIALLY RESPONSIBLE
INVESTMENT FUND, LTD.
By:
--------------------------------------------
Name:
Title:
EXHIBIT A
Summary of Outstanding Common Stock, Options, Warrants, Conversion Rights
of TIMCO Aviation Services, Inc. and TAS Holding, Inc.
------------------------------------------- ---------------- --------------
Shareholders No. of shares Payoff @ $4
------------------------------------------- ---------------- --------------
LJH 15,385,812 0
------------------------------------------- ---------------- --------------
Owl Creek 3,722,399 0
------------------------------------------- ---------------- --------------
Public Shareholders 2,332,829 $9,331,316
------------------------------------------- ---------------- --------------
------------------------------------------- ---------------- --------------
Total shares outstanding 21,441,040
------------------------------------------- ---------------- --------------
------------------------------------------- ---------------- --------------
LJH Warrant 47,125 $188,332
------------------------------------------- ---------------- --------------
New Sr. Conv Notes due 12/31/2006 71,219 $284,876
------------------------------------------ ---------------- --------------
Junior Conv Notes due 1/2/2007 38,738 $154,946
------------------------------------------ ---------------- --------------
In the money options and surplus 11,250 $45,000
------------------------------------------ ---------------- --------------
Subtotal of conversion/warrant rts. 168,332 $673,154
------------------------------------------ ---------------- --------------
Subtotal of purchased shares 2,501,161 $10,004,470
------------------------------------------ ---------------- --------------
Total 21,609,372
------------------------------------------ ---------------- --------------
TAS Holding, Inc. Share Issuances
--------------------------------------- -------------- -------------------------
Shareholders No. of shares Consideration
--------------------------------------- -------------- -------------------------
LJH - exchange of TIMCO shares 153,858,120 15,385,812 TIMCO Shares
--------------------------------------- -------------- -------------------------
Owl Creek - exchange of TIMCO shares 37,223,990 3,722,399 TIMCO Shares
--------------------------------------- -------------- -------------------------
Subtotal 191,082,110 19,108,211 TIMCO Shares
--------------------------------------- -------------- -------------------------
Cash Capital Contribution to Newco
--------------------------------------- -------------- -------------------------
Portion to LJH (80.52%) 20,143,130 $8,057,252
--------------------------------------- -------------- -------------------------
Portion to Owl Creek Investors (19.48%) 4,873,180 $1,949,272
--------------------------------------- -------------- -------------------------
Subtotal 25,016,310 $10,006,524
--------------------------------------- -------------- -------------------------
Exchange of Working Cap. Infusion
--------------------------------------- -------------- -------------------------
Portion to LJH (80.52%) 19,324,800 $4,831,200
--------------------------------------- -------------- -------------------------
Portion to Owl Creek Investors (19.48%) 4,675,200 $1,168,800
--------------------------------------- -------------- -------------------------
Subtotal 24,000,000 $6,000,000
--------------------------------------- -------------- -------------------------
Total Newco Shares 240,098,420
--------------------------------------- -------------- -------------------------
