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EXHIBIT 10.17
STOCK PURCHASE AGREEMENT
by and among
AVIATION GROUP, INC.
PRIDE AVIATION, INC.,
SUNBELT BUSINESS CAPITAL INCORPORATED,
SUNBELT BUSINESS CAPITAL, L.L.C.
and
ALL OF THE STOCKHOLDERS OF
PRIDE AVIATION, INC. AND
SUNBELT BUSINESS CAPITAL INCORPORATED
dated as of
February 21, 1996
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II THE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Purchase and Sale of Pride Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Purchase and Sale of Sunbelt Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Transfer of Pride's Alexandria Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Conversion of LLC Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III PAYMENT OF CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Pride Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Sunbelt Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Method of Payment of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Effect of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES AS TO PRIDE . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Capitalization of Pride . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Receivables and Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Financial Statements; No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Warranty Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8 Title to Properties; Encumbrances; Condition . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.12 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.18 Employment Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.20 Environmental Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.21 Interests in Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.22 Compensation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.23 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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4.24 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.26 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.27 Government Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.28 Copies of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.29 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.30 Representations by LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V REPRESENTATIONS AND WARRANTIES AS TO SUNBELT . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Capitalization of Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 Copies of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI SECURITIES REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Securities Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Knowledge and Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Investment Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Holding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 LLC Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Existence and Good Standing; Power and Authority . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Broker's or Finder's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Receivables and Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Financial Statements; No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 Warranty Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8 Title to Properties; Encumbrances; Condition . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.9 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.11 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.12 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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7.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.18 Employment Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.20 Environmental Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.21 Interests in Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.22 Compensation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.23 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.24 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.26 Government Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.27 Copies of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.28 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF
PRIDE, SUNBELT, LLC AND THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Truth of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 No Litigation Threatened. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.5 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.6 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX CONDITIONS TO GROUP'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 Truth of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Performance of Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 No Litigation Threatened. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.6 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.7 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.8 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.9 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.10 Alexandria Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.11 Partial Extinguishment of Pride's Indebtedness to LLC. . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X COVENANTS OF PRIDE, SUNBELT, LLC AND
THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.2 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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10.3 Negative Covenants of Pride and the Pride Shareholders . . . . . . . . . . . . . . . . . . . . 34
10.4 Negative Covenants of Sunbelt and LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.5 Exclusive Dealing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6 Review of the Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.8 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XI COVENANTS OF GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1 Cooperation by Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Books and Records; Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XII THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.2 Obligations of Pride, Sunbelt and the Shareholders . . . . . . . . . . . . . . . . . . . . . . 37
12.3 Group's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.2 Remedies Upon Default or Failure to Close. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.3 Effect on Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XIV SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.1 Indemnification of the Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.2 Indemnification of Group by Pride Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 41
14.3 Indemnification of Group by Sunbelt Shareholders . . . . . . . . . . . . . . . . . . . . . . . 41
14.4 Indemnification of Pride . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.5 Demands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.6 Right to Contest and Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.8 Right to Participate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.9 Payment of Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.10 Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.11 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XV LLC AND PRIDE DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.1 Representations Regarding Pride Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.2 Closing Transactions Relating to Pride Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XVI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
16.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
16.2 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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16.3 Entire Agreement; Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.4 Binding Effect and Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.5 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.6 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.7 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.8 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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SCHEDULES
Schedule 2.3 Alexandria Operations
Pride Schedules
Schedule 4.2 Pride Stock
Schedule 4.4 Consents and Approvals
Schedule 4.5 Receivables and Payables
Schedule 4.6 Material Adverse Change
Schedule 4.7 Warranty Claims
Schedule 4.8 Title to Properties
Schedule 4.10 Leases
Schedule 4.11 Contracts
Schedule 4.12 Permits
Schedule 4.13 Litigation
Schedule 4.14 Taxes
Schedule 4.15 Insurance
Schedule 4.16 Intellectual Property
Schedule 4.20 Environmental
Schedule 4.21 Interests in Customers and Suppliers
Schedule 4.22 Employees
Schedule 4.23 Suppliers and Customers
Schedule 4.24 Absence of Changes
Schedule 4.27 Government Contracts
Sunbelt Schedules
Schedule 5.2 Sunbelt Stock
Schedule 5.4 Consents and Approvals
Schedule 5.5 Liabilities
Schedule 5.6 Litigation
Schedule 5.7 Taxes
Group Schedules
Schedule 7.5 Receivables and Payables
Schedule 7.6 No Material Adverse Change
Schedule 7.7 Warranty Claims
Schedule 7.8 Title to Properties
Schedule 7.10 Leases
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Schedule 7.11 Contracts
Schedule 7.12 Permits
Schedule 7.13 Litigation
Schedule 7.14 Taxes
Schedule 7.15 Insurance
Schedule 7.16 Intellectual Property
Schedule 7.20 Environmental
Schedule 7.21 Interests in Customers and Suppliers
Schedule 7.22 Employees
Schedule 7.23 Suppliers and Customers
Schedule 7.24 Absence of Changes
Schedule 7.26 Government Contracts
EXHIBITS
Exhibit A Convertible Note
Exhibit B Pledge Agreement
Exhibit C-1 Employment Agreement - Xxxxxxx
Exhibit C-2 Employment Agreement - Lubomirski
Exhibit D-1 Consulting Agreement - Rice (1 year)
Exhibit D-2 Consulting Agreement - Weed (2 years)
Exhibit E Opinion to be delivered by Xxxxxxxxx & Xxxxxxxxx,
L.L.P.
Exhibit F Opinions to be delivered by Xxxxxxx, Xxxxxxxx &
Xxxxx, Cestia & Xxxxxx and Xxxxxxxxx Xxxxxx, Xx.
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XXXXX XXXXXXXX AGREEMENT
This Stock Purchase Agreement together with the Exhibits and Schedules
referenced herein and attached hereto ("Agreement"), dated as of February 21,
1996, is by and among Aviation Group, Inc., a Texas corporation ("Group"),
Pride Aviation, Inc., an Oklahoma corporation ("Pride"), Xxxxx X. Xxxx, Xxxxx
X. Xxxx (Xxxxx and Xxxxx Xxxx are collectively referred to herein as "Rice"),
Xxx Xxxxxxxx ("Xxxxxxxx"), Xxxx Xxxxxxxxxx ("Lubomirski"), Sunbelt Business
Capital Incorporated, a Florida corporation ("Sunbelt"), Sunbelt Business
Capital, L.L.C., a Louisiana limited liability company ("LLC"), and the
shareholders of Sunbelt listed on Schedule 5.2 to this Agreement (each a
"Sunbelt Shareholder" and collectively the "Sunbelt Shareholders"). (Rice,
Thompson, Lubomirski and Sunbelt are sometimes referred to herein individually
as a "Pride Shareholder" and collectively as the "Pride Shareholders".)
W I T N E S S E T H:
WHEREAS, the Pride Shareholders own all of the issued and outstanding
shares of capital stock of Pride (the "Pride Stock") and the Sunbelt
Shareholders own all of the issued and outstanding shares of capital stock of
Sunbelt (the "Sunbelt Stock"); and
WHEREAS, the Pride Shareholders (other than Sunbelt) desire to sell to
Group, and Group desires to purchase from such Pride Shareholders, the Pride
Stock (other than the Pride Stock owned by Sunbelt), all in accordance with the
terms and conditions set forth herein; and
WHEREAS, the Sunbelt Stockholders desire to sell to Group, and Group
desires to purchase from the Sunbelt Stockholders, the Sunbelt Stock, all in
accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used herein, the following terms have the
meanings set forth below:
"Affiliate": with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person.
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"Agreement": this Stock Purchase Agreement, as amended from time to
time as provided herein, and all exhibits, schedules and ancillary documents
hereto, except where the context clearly indicates otherwise.
"Alexandria Operations": the operations, assets and liabilities of
Pride relating to its business in Alexandria, Louisiana.
"Books and Records": all books, records, books of account, files and
data (including customer and supplier lists), catalogs, brochures, sales
literature, promotional material, certificates and other documents used in or
associated with the conduct of the Business or the ownership of the assets of
Pride, including personnel records and files.
"Business": the aircraft and airline maintenance and service
operations, the headquarters of which are in New Iberia, Louisiana, including
without limitation (i) aircraft stripping and painting services, and (ii)
aircraft light maintenance services, currently conducted by Pride. The
Business shall not include the Alexandria Operations.
"Business Day": any day excluding Saturday, Sunday and any day on
which banks in Houston, Texas are authorized or required by law or other
governmental action to close.
"Claim": as defined in Section 14.5.
"Closing": as defined in Section 12.1.
"Closing Date": as defined in Section 12.1.
"Code": the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Consulting Agreements": the Consulting Agreements, to be executed by
the parties thereto at Closing, in the forms attached as Exhibit D-1 and D-2
hereto, the first between Pride and Rice, containing a non-competition
agreement for five years from the Closing, and the second between Group and
Weed.
"Contract": any written or oral contract, agreement or instrument
relating to the Business, including, without limitation, supply contracts,
customer agreements, any mortgages, leases of personal property, deeds of
trust, notes or guarantees, pledges, liens, or conditional sales agreements to
which the Person referred to is a party or by which any of its assets may be
bound, but excluding Leases and Employee Benefit Plans.
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"Convertible Notes": the 10% convertible secured promissory notes
made by Group in favor of Rice, Xxxxxxxx and each of the Sunbelt Shareholders,
respectively, in the form attached as Exhibit A hereto, to be executed by Group
at the Closing.
"Damages": as defined in Section 14.1.
"Employee Benefit Plans": any employee benefit plans, policies,
programs and arrangements and all related contracts, agreements and other
descriptions thereof with respect to the employee benefits provided to the
employees of Pride prior to the Closing Date.
"Employment Agreements": the two Employment Agreements, in the form
attached as Exhibit C-1 and C-2 hereto, between Group and each of Xxx Xxxxxxx
and Lubomirski, respectively, to be executed by the parties thereto at Closing,
and containing non-competition agreements for three years beyond the
termination thereof.
"Encumbrances": liens, security interests, pledges, proxies,
shareholder agreements, voting agreements or trusts, options, rights of first
refusal, easements, mortgages, deeds of trust, rights-of-way, restrictions,
encroachments, licenses, leases, or any other encumbrances, claims and other
restrictions or limitations on the use or ownership of real or personal
property or irregularities in title thereto.
"Environmental Claim": any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violations, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Environmental Law
(cumulatively and for purposes of this definition, "Environmental Claims"),
including without limitation (i) any and all Environmental Claims by
governmental authorities for enforcement, cleanup, removal, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (ii) any
and all Environmental Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief relating to
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Law": any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law and in each case as
amended and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
Hazardous Materials, the environment or health relating to or arising from
environmental conditions, including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended 42
U.S.C. Section 9601 et seq.; the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Section 5101 et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Air
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Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701
et seq.; and relevant state and local laws.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date
of this Agreement and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
"Exchange Agreement": as defined in the preamble of this Agreement.
"FAA": the Federal Aviation Administration.
"Final Termination Date": as defined in Section 13.1.2.
"GAAP": generally accepted accounting principles consistently applied
(as such term is used in the American Institute of Certified Public Accountants
Professional Standards) as of the date of any applicable financial statement or
calculation.
"Group": as defined in the preamble of this Agreement.
"Group Balance Sheet": as defined in Section 7.6.
"Group Balance Sheet Data": as defined in Section 7.6.
"Group Financial Statements": as defined in Section 7.6.
"Group Indemnitees": as defined in Section 14.2.
"Group Stock": as defined in the preamble of this Agreement.
"Hazardous Materials": any chemicals, materials or substances defined
as or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," "pollutants,"
"regulated substances" or words of similar import under any applicable
Environmental Law, including but not limited to any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, radon gas and urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls.
"Intellectual Property": domestic and foreign patents, patent
applications, registered and unregistered trademarks, service marks, trade
names and logos, registered and unregistered copyrights, computer programs,
data bases, trade secrets, methods, designs, processes, procedures,
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proprietary information and any other intangible property used in or associated
with the conduct of a business and the ownership of any assets of a Person,
including all rights to any such property which is owned by and licensed from
others.
"Inventory": all merchandise, supplies, stock in trade and other such
assets of a Person held for sale or lease in the ordinary course of its
business or to be furnished under contracts of service or held as work in
process or to be used or consumed in its business.
"LEDC": the Louisiana Economic Development Corporation.
"LLC": as defined in the preamble of this Agreement.
"Leases": any and all written and oral contracts, agreements, and
commitments regarding the lease of real property.
"Lubomirski": as defined in the preamble of this Agreement.
"Material Adverse Effect": a material adverse effect, determined in
accordance with GAAP, on the assets, liabilities, business, condition
(financial or otherwise), results of operations or prospects of Pride or
Sunbelt. Without limiting the foregoing, any event or series of events that
constitutes a material adverse financial impact on Pride of $50,000 or more for
any single event or $100,000 or more in the aggregate, shall be deemed to
constitute a Material Adverse Effect.
"Offering": The private offering of securities by Group under the
Placement Agreement.
"Permits": any license, permit, franchise, consent, approval or
authority granted by any Person.
"Permitted Encumbrances": (i) Encumbrances consisting of easements,
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto that do not materially detract from the value
of, or materially impair the use of, such property by Pride in the operation of
the Business, or (ii) Encumbrances for current taxes, assessments or
governmental charges or levies on property not yet due and payable.
"Person": any individual, partnership, joint venture, corporation,
trust, unincorporated organization, government or other department or agency
thereof or any other legally recognized entity.
"Placement Agreement": that certain letter agreement dated November
20, 1995 by and among Group and RAS Securities, Inc., as placement agent, with
respect to a "best efforts" private offering of securities of Group.
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"Pledge Agreements": The Pledge Agreements made by Group in favor of
Rice, Xxxxxxxx and each of the Sunbelt Shareholders, respectively, in the form
attached as Exhibit B hereto, to be executed by Group (or Sunbelt as to the
Sunbelt Shareholders) at the Closing.
"Pride": as defined in the preamble of this Agreement.
"Pride Balance Sheet": as defined in Section 4.6.
"Pride Balance Sheet Date": as defined in Section 4.6.
"Pride Debt": the indebtedness of Pride to LLC evidenced by the Pride
Note.
"Pride Financial Statements": as defined in Section 4.6.
"Pride Indemnitees": as defined in Section 14.4 of this Agreement.
"Pride Loan Documents": the Pride Note, the Loan Agreement dated
February 15, 1993 and the Commercial Security Agreement dated February 15,
1993, all as between Pride and Sunbelt, the Continuing Guaranty dated February
15, 1993 from Rice to Sunbelt, and the Assignment dated January 17, 1996 from
Sunbelt to LLC of all of its rights under such agreements and instruments.
"Pride Note": the promissory note dated May 17, 1993 originally
payable to the order of Sunbelt in the original principal amount of $400,000
and now held by LLC.
"Pride Purchase Price": as defined in Section 3.1.
"Pride Shareholders": as defined in the preamble of this Agreement.
"Pride Stock": as defined in the recitals of this Agreement.
"RAS": RAS Securities, Inc.
"RAS Warrant": the Warrant to Purchase Aviation Group, Inc. Common
Stock to be issued to RAS Securities, Inc., pursuant to the Placement
Agreement.
"Rice": as defined in the preamble of this Agreement.
"Xxxxxxx": as defined in the preamble of this Agreement.
"Schedules": the schedules of the parties in the context and as
referenced throughout this Agreement.
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"Shareholders": the Pride Shareholders and Sunbelt Shareholders.
"Shareholder Indemnitees": as defined in Section 14.1.
"Stock Offering Price": the price per share at which Group offers to
sell its Common Stock in the Offering.
"Sunbelt": as defined in the preamble of this Agreement.
"Sunbelt Purchase Price": as defined in Section 3.2.
"Sunbelt Stock": as defined in the recitals of this Agreement.
"Sunbelt Shareholders": as defined in the preamble of this Agreement.
"Tax": any net income, alternative or add-on minimum tax, advance,
corporation, gross income, gross receipts, sales, use, ad valorem, franchise,
profits, license, value added, withholding, payroll, employment, excise, stamp
or occupation tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty imposed by any
governmental authority with respect thereto, and any liability for such amounts
as a result either of being a member of an affiliated group or of a contractual
obligation to indemnify any other entity.
"Xxxxxxxx": as defined in the preamble of this Agreement.
"Weed": as defined in the preamble of this Agreement.
1.2 Other Terms. Other terms may be defined elsewhere in the text
of this Agreement.
1.3 Other Definitional Provisions.
1.3.1 The words "hereof," "herein" and "hereunder," and
words of similar import, when used in this Agreement, shall refer to
this Agreement as a whole and not any particular provision of this
Agreement.
1.3.2 The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
1.3.3 The terms defined in the neuter or masculine gender
shall include the feminine, neuter and masculine genders, unless the
context clearly indicates otherwise.
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1.3.4 Reference to the "best knowledge" of a Person or
words of similar import shall mean the actual or constructive best
knowledge of such Person after reasonable due diligence by such Person
as to the facts and circumstances addressed.
ARTICLE II
THE TRANSACTIONS
2.1 Purchase and Sale of Pride Stock. Subject to the terms and
conditions of this Agreement, Group agrees to purchase from the Pride
Shareholders (other than Sunbelt), and the Pride Shareholders (other than
Sunbelt) agree to sell, convey, transfer, assign and deliver to Group, the
Pride Stock (other than the Pride Stock owned by Sunbelt), free and clear of
all Encumbrances, on the Closing Date against the receipt by the Pride
Shareholders (other than Sunbelt) of the Pride Purchase Price, as detailed
below.
2.2 Purchase and Sale of Sunbelt Stock. Subject to the terms and
conditions of this Agreement, Group agrees to purchase from the Sunbelt
Shareholders, and the Sunbelt Shareholders agree to sell, convey, transfer,
assign and deliver to Group, the Sunbelt Stock, free and clear of all
Encumbrances, on the Closing Date against the receipt by the Sunbelt
Shareholders of the Sunbelt Purchase Price, as detailed below.
2.3 Transfer of Pride's Alexandria Operations. Rice and Pride
agree to cause the sale, conveyance, transfer, assignment and delivery to Rice
or to any person designated by him, prior to the Closing but no later than
January 20, 1996, of all of the assets and liabilities relating to the
Alexandria Operations in exchange for Rice's cancellation of $200,000 of
Pride's indebtedness to Rice, effective for all purposes as of September 30,
1995. The assets that constitute the Alexandria Operations are listed on
Schedule 2.3. Rice (or the designated assignee) shall assume all liabilities
relating to the Alexandria Operations, including without limitation those
liabilities listed in Schedule 2.3. Rice shall cause Pride to be released from
liability on its lease of facilities at the former England Air Force Base.
Group and its legal counsel shall have the right to review and approve all
documents relating to the foregoing transactions with respect to the Alexandria
Operations, prior to their execution and delivery.
2.4 Conversion of LLC Debt. Contemporaneously with the Closing,
LLC agrees to cancel $168,000 of the outstanding principal amount of the Pride
Debt in exchange for the issuance by Group to LLC of the number of shares of
Group Stock equal to $168,000 divided by the Stock Offering Price. The holders
of such Group Stock will have the same registration rights as the holders of
the Group Stock issued pursuant to the Offering.
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ARTICLE III
PAYMENT OF CONSIDERATION
3.1 Pride Purchase Price. At the Closing, Group shall pay and
deliver to the following Pride Shareholders the following consideration as
payment for the Pride Stock sale contemplated herein (the "Pride Purchase
Price"):
3.1.1 To Rice, cash in the amount of $245,000 and a $507,250
principal amount Convertible Note;
3.1.2 To Xxxxxxxx, cash in the amount of $5,000 and a $10,000
principal amount Convertible Note; and
3.1.3 To Lubomirski, the number of shares of Group Stock
equal to $132,750 divided by the Stock Offering Price.
3.2 Sunbelt Purchase Price. At the Closing, Group shall pay and
deliver to the Sunbelt Shareholders the following consideration as payment for
the Sunbelt Stock sale contemplated herein (the "Sunbelt Purchase Price"): an
aggregate of $250,000 in cash and an aggregate of $350,000 in principal amount
of Convertible Notes. Each item of the Sunbelt Purchase Price shall be
allocated and paid or delivered to the Sunbelt Shareholders in amounts that are
pro rata based on their respective ownership of the Sunbelt Stock.
3.3 Method of Payment of Cash. The cash payments to each of the
Sunbelt Shareholders, Rice and Xxxxxxxx shall be paid by wire transfer of
immediately available funds to an account designated in writing by each of them
to Group not later than three (3) business days prior to the Closing Date. If
such designation is not timely made by a payee, such cash payment to the payee
may be made by Group's check.
3.4 Effect of Payment. Each of the Shareholders agrees that
delivery of the Pride Purchase Price and Sunbelt Purchase Price pursuant to
this Article III shall constitute the complete consideration for the Pride
Stock and Sunbelt Stock and shall be in full satisfaction of all of such
Shareholder's rights (including, without limitation, any associated preemptive
rights) in or to any of the Pride Stock or Sunbelt Stock.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES AS TO PRIDE
Pride, LLC and each of the Pride Shareholders (other than Sunbelt)
hereby represent and warrant, jointly and severally, to Group as follows:
4.1 Existence and Good Standing. Pride is a corporation duly
organized and validly existing under the laws of the State of Oklahoma. Pride
has the power and authority to own, lease and operate its property and to carry
on its business as now being conducted and to own or lease the assets owned or
leased by it. Pride is duly qualified or licensed to do business in each
jurisdiction in which the character or location of the properties owned or
leased by Pride or the nature of the business conducted by Pride makes such
qualification necessary and the absence of which would have a Material Adverse
Effect.
4.2 Capitalization of Pride.
4.2.1 The entire authorized capital stock of Pride consists
of 50,000 shares of common stock, par value $1.00 per share, of which
10,000 shares are issued and outstanding, fully paid and nonassessable
and held beneficially and of record by the Pride Shareholders as set
forth on Schedule 4.2. Except as set forth on Schedule 4.2, such
outstanding shares are owned beneficially and of record by the Pride
Shareholders, free and clear of all Encumbrances and rights of others.
4.2.2 The shares of Pride Stock held beneficially and of
record by the Pride Shareholders represent all of the issued and
outstanding capital stock of Pride. There are no outstanding
subscriptions, options, convertible securities, indebtedness
convertible into equity securities, warrants, calls or rights of any
kind (issued, contracted for, granted by, or binding upon Pride) to
purchase or otherwise acquire any security of or equity interest in
Pride. The Pride Shareholders have full legal right to transfer the
Pride Stock pursuant to the terms of this Agreement and will, upon
delivery of the Pride Stock to Group pursuant to the terms hereof,
transfer to Group good and valid title to the Pride Stock free and
clear of all liens, security interests, claims, charges, Encumbrances,
rights, options to purchase, voting trusts or other voting agreements
and calls and commitments of every kind affecting the Pride Stock.
4.3 Authorization and Validity of Agreement. Pride has full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Pride,
and the consummation of the transactions contemplated hereby, have been duly
authorized and approved by the Board of Directors of Pride and no other action
on the part of Pride is necessary to authorize the execution, delivery and
performance of this Agreement by Pride and the
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consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Pride and is a valid and binding obligation of
Pride enforceable against Pride in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
4.4 Consents and Approvals; No Violations. The execution,
delivery and performance of this Agreement by Pride and the Pride Shareholders
and the consummation by Pride and the Pride Shareholders of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time or both: (i) violate, conflict with, or result in a breach or default
under any provision of the charter or bylaws of Pride; (ii) violate any
statute, ordinance, rule, regulation, order, judgment or decree of any court or
of any governmental or regulatory body, agency or authority applicable to Pride
or by which any of its properties or assets may be bound; (iii) require any
filing by Pride with, or require Pride to obtain any permit, consent or
approval of, or require Pride or the Pride Shareholders to give any notice to,
any governmental or regulatory body, agency or authority or any third party
other than as set forth on Schedule 4.4 attached hereto; or (iv) other than as
set forth on Schedule 4.4 attached hereto, result in a violation or breach by
Pride of, conflict with, constitute (with or without due notice or lapse of
time or both) a default by Pride (or give rise to any right of termination,
cancellation, payment or acceleration) under or result in the creation of any
Encumbrance upon any of the properties or assets of Pride under any of the
terms, conditions, or provisions of any note, bond, mortgage, indenture,
license, franchise, Permit, Contract, Lease, franchise agreement or other
instrument or obligation to which Pride is a party, or by which it or any of
its properties or assets may be bound.
4.5 Receivables and Payables. Schedule 4.5 lists all notes
receivable, notes payable, accounts receivable and accounts payable of Pride.
Except as reflected on Schedule 4.5, all notes receivable and accounts
receivable of Pride are, and such notes and accounts receivable at the Closing
Date will be, (i) bona fide claims against debtors for debts, sales, work
performed or other charges, (ii) to the best knowledge of Pride and the Pride
Shareholders, subject to no defenses, set-offs or counterclaims, and (iii) to
the best knowledge of Pride and the Pride Shareholders, collectible. Except as
reflected on Schedule 4.5, all notes payable and accounts payable of Pride are,
and such notes and accounts payable at the Closing Date will be, bona fide
claims by creditors for debts, sales, work performed, or other expenses
incurred by Pride.
4.6 Financial Statements; No Material Adverse Change. Pride has
heretofore furnished Group or its representatives with the audited financial
statements of Pride as of September 30, 1995, in the form of a balance sheet
(the "Pride Balance Sheet"), and an income statement and statement of cash
flows for the twelve-month period then ended relating to the audited balance
sheet (together with the Balance Sheet, the "Pride Financial Statements"). The
Pride Financial Statements have been prepared in accordance with GAAP and
fairly present in all material respects the financial position of Pride at the
dates thereof and the results of operations and cash flow of Pride for the
period
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indicated. Except as set forth on Schedule 4.6 attached hereto or for changes
that would not have a Material Adverse Effect, since September 30, 1995 (the
"Pride Balance Sheet Date"), there has been no change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations, of Pride.
4.7 Warranty Claims. Except as set forth on Schedule 4.7 attached
hereto, as of the date hereof, there are no warranty claims relating to
products at any time sold or services at any time performed by Pride pending
or, to the best knowledge of Pride and the Pride Shareholders, threatened,
which would have a Material Adverse Effect.
4.8 Title to Properties; Encumbrances; Condition. Except as set
forth on Schedule 4.8 or on any of the other Schedules hereto and except for
properties and assets reflected in the Pride Financial Statements or acquired
since the Pride Balance Sheet Date which have been sold or otherwise disposed
of in the ordinary course of business, Pride owns outright, and has, and shall
at the Closing have, full legal and beneficial title to all of its assets, in
each case subject to no Encumbrances except for Permitted Encumbrances. The
assets of Pride consist of all properties and assets necessary to operate the
Business in the manner it has been operated prior to the date hereof. Except
as set forth on Schedule 4.8, each asset of Pride is in good operating
condition and repair, subject to ordinary wear and tear, and, to the best
knowledge of Pride and the Pride Shareholders, has been maintained in
accordance with the manufacturers' specifications, and each asset is, to the
best knowledge of Pride and the Pride Shareholders, in compliance with all
applicable federal and state laws and regulations. Pride's Inventory consists
of items of a quality and quantity usable or saleable in the regular course of
business of Pride.
4.9 Real Property. Pride owns no real property. All of the
buildings, structures and real property appurtenances leased by Pride or used
in connection with the operation of the Business (the "Pride Operating
Facilities") are in good operating condition, and in a state of good
maintenance and repair, subject to ordinary wear and tear, except where such
condition or maintenance would not have a Material Adverse Effect. The Pride
Operating Facilities have adequate rights of ingress and egress for operation
of the Business in the ordinary course. No condemnation or similar proceeding
is pending or, to the best knowledge of Pride and the Pride Shareholders,
threatened, which would preclude or impair the use of the Pride Operating
Facilities as used in the prior operation of the Business.
4.10 Leases. Schedule 4.10 attached hereto contains an accurate
and complete list of all Leases to which Pride is a party (as lessee or
lessor). Each Lease set forth on Schedule 4.10 is, to the best knowledge of
Pride and the Pride Shareholders, in full force and effect; there is no
existing default under any of such Leases on the part of Pride or, to the best
of Pride's and the Pride Shareholders' knowledge, any other party thereto.
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4.11 Contracts and Commitments. Except as specifically identified
on Schedule 4.11:
4.11.1 Pride is not a party to or bound by any loan, credit
or similar agreement or any indenture, trust agreement or other
instrument relating to any issue of bonds, debentures, notes or other
evidences of indebtedness or creating any lien, encumbrance or charge
on any of Pride's assets;
4.11.2 There are no bonus, pension, profit sharing,
retirement, stock option, stock purchase, deferred compensation,
hospitalization or insurance plans, or vacation or severance pay
plans, or any other plans or arrangements providing benefits to
officers, agents or employees of Pride;
4.11.3 Pride does not have any collective bargaining
agreement with any labor union or association or any employment
contract or other binding agreement relating to the employment of any
of its employees;
4.11.4 Pride is not a party to any joint venture agreement
or other agreement involving the sharing of profits relating to the
Business and/or its assets;
4.11.5 Pride is not a party to any (i) contracts or
commitments for capital expenditures outside the ordinary course of
business or involving obligations on the part of Pride in amounts
inconsistent with those incurred by Pride in the ordinary course of
business in accordance with Pride's prior operation of the Business,
(ii) lease under which personal property is leased to or from Pride
and which is not cancelable by Pride without penalty upon notice of
thirty days or less or pursuant to which rentals payable by or to
Pride, either individually or in the aggregate, substantially exceed
amounts previously incurred by Pride in the ordinary course of
business, (iii) continuing contract for the future purchase of
Inventory or other materials, supplies, machinery or equipment in
excess of the requirements of the Business conducted in the ordinary
course, (iv) other contract or agreement which involves an obligation
on the part of Pride, either individually or in the aggregate, in
excess of amounts previously incurred by Pride in the ordinary course
of business or, (v) agreement not made in the ordinary course of
business;
4.11.6 There are no agreements, notes, mortgages, leases,
franchises, permits, orders, judgments or decrees to which Pride is a
party or by which Pride or any of its assets are bound, which contain
any provision which would (i) be violated or contravened by, (ii)
cause acceleration of any obligation of Pride as a result of, or (iii)
cause or permit the forfeiture of any right or benefit of Pride by
reason of, the execution or performance of this Agreement;
4.11.7 Pride is not party to any Contract limiting the
freedom of Pride to engage in any line of business or to compete with
any Person;
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4.11.8 Pride is not a party to any agreement which involves
$50,000 or more and is not cancelable without penalty within thirty
days; and
4.11.9 There are no persons holding powers of attorney from,
or otherwise authorized to act on behalf of, Pride with respect to the
Business or Pride's assets except for its respective officers and
other management personnel regularly performing their assigned
business functions.
Except as specifically identified on Schedule 4.11, Pride and the
Pride Shareholders have no knowledge that any Contract, Lease, or other
obligation to which Pride is bound, individually or in the aggregate: (i) will
result in a material loss to Pride after the Closing Date; (ii) cannot readily
be performed or fulfilled on time without undue or unusual expenditure of money
or effort by Pride after the Closing Date, or (iii) is not in full force and
effect and under which there exists a default or event of default or event,
occurrence, condition or act which, with the giving of notice, the lapse of
time or the happening of any other event or condition, would become a default
or event of default thereunder, except where such default or event would not
cause a Material Adverse Effect. Also set forth on Schedule 4.11 is a list of
all proposals, except proposals made by Pride's sales people in the ordinary
course of business, submitted by Pride to any third party that, if accepted by
such third party, would require disclosure on Schedule 4.11.
A true copy of each written Contract and Lease as well as all other
documents evidencing any commitment of Pride required to be set forth on any
Schedule hereto has been or will be delivered to Group by Pride no later than
five (5) days after execution of this Agreement.
4.12 Permits. All Permits required in connection with the use,
operation or ownership of Pride's assets and the conduct of the Business as
currently conducted are listed on Schedule 4.12.
4.13 Litigation. Except as set forth on Schedule 4.13, there is no
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or any investigation by) any governmental or
other instrumentality or agency, pending, or, to the best knowledge of Pride
and the Pride Shareholders, threatened, against or affecting Pride or its
properties or rights, and Pride and the Pride Shareholders do not know of any
valid basis for any such action, proceeding or investigation. There are no
such suits, actions, claims, proceedings or investigations pending or to the
best knowledge of Pride and the Pride Shareholders, threatened, seeking to
prevent or challenge the transactions contemplated by this Agreement. Without
exception as to materiality or otherwise, Schedule 4.13 lists all claims, if
any, that have ever been filed with the FAA with respect to Pride and/or the
operation of the Business.
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4.14 Taxes. All federal, state, county, local and other Taxes
which are due or will be due and payable by Pride on or before the Closing Date
have been paid timely, including, without limitation, all estimated Taxes. All
Tax returns and reports required to be filed with all Taxing authorities, and
all deposits required by law to be made with respect to (i) Pride's employees'
withholding taxes, and (ii) the operations of Pride have been timely made.
There are no agreements for the extension of time for the assessment or payment
of any amounts of Tax except as set forth on Schedule 4.14 attached hereto and
Pride has not been requested to enter into any such agreement or waiver.
Except as set forth on Schedule 4.14, no assessments of Tax deficiencies have
been made against Pride and no examination is pending by the Internal Revenue
Service or any other Taxing authority with respect to any of such Tax returns
or reports. The Pride Balance Sheet reflects and includes adequate provisions
determined in accordance with generally accepted accounting principles
consistently applied for the payment in full of any and all Taxes of Pride for
the period covered thereby and all prior periods. Pride is not now nor has it
ever been a party to any Tax allocation or sharing agreement that could result
in any liability to Pride.
4.15 Insurance. Set forth on Schedule 4.15 is a complete list of
insurance policies that Pride maintains with respect to its respective
businesses, properties or employees. Such policies are in full force and
effect and are free from any right of termination on the part of the insurance
carriers. In the judgment of Pride and the Pride Shareholders, such policies,
with respect to their amounts and types of coverage, are adequate to insure
against risks to which Pride and its property and assets are normally exposed
in the operation of the Business, subject to customary deductibles and policy
limits.
4.16 Intellectual Property. Schedule 4.16 sets forth all
Intellectual Property owned by Pride. The operation of the Business as
currently operated requires no rights under Intellectual Property other than
rights under Intellectual Property listed on Schedule 4.16 and rights granted
to Pride pursuant to agreements listed on Schedule 4.16. Except as otherwise
set forth on Schedule 4.16, Pride owns all right, title and interest in the
Intellectual Property. No claim has been made and no litigation is pending or,
to the best knowledge of Pride and the Pride Shareholders, threatened wherein
Pride has been or is accused of infringing or otherwise violating the
intellectual property rights of another, or of breaching a contract conveying
intellectual property rights.
4.17 Compliance with Laws. Pride is in compliance with all
applicable laws, regulations, orders, judgments and decrees applicable to the
Business, except where any noncompliance would not have a Material Adverse
Effect.
4.18 Employment Relations. Pride is not engaged in any unfair
labor practice. Pride has not been notified of any grievance and no arbitration
proceeding arising out of or under any collective bargaining agreement is
pending. No collective bargaining agreement is currently being negotiated by
Pride.
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4.19 Employee Benefit Plans. None of the Employee Benefit Plans
are subject to Title IV of ERISA or the minimum funding obligations of Section
412 of the Code, and Pride and any entity required to be aggregated therewith
pursuant to Section 414(b) or (c) of the Code have no liability under Title IV
of ERISA or under Section 412(f) or 412(n) of the Code.
4.20 Environmental Laws and Regulations. Except as set forth on
Schedule 4.20, (i) Hazardous Materials have not been generated, used, treated
or stored on, or transported to or from, the real property owned, leased or
used by Pride, its authorized agents or its independent contractors (including
suppliers) or any property adjoining such real property, (ii) Hazardous
Materials have not been disposed, discharged, injected, spilled, leaked,
leached, dumped, emitted, escaped, emptied, allowed to seep, placed and the
like, into or upon any land or water or air, or otherwise allowed to enter into
the environment (collectively, "Releases") by Pride, its authorized agents or
its independent contractors (including suppliers) on such real property or any
other property, (iii) Pride is, to the best knowledge of Pride and the Pride
Shareholders, in compliance with all applicable Environmental Laws and the
requirements of any Permits issued under such Environmental Laws with respect
to such real property and to Pride's operations conducted thereon, (iv) there
are no pending or, to the best knowledge of Pride and the Pride Shareholders,
threatened Environmental Claims against Pride or involving such real property,
(v) there are no facts or present or past circumstances, conditions or
occurrences on such real property known to Pride or the Pride Shareholders that
reasonably could be anticipated (A) to form the basis of an Environmental Claim
against Pride or any owner or operator of such real property, or (B) to cause
such real property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such real property under any Environmental
Law, (vi) there are not now and, to the best knowledge of Pride and the
Shareholders, there never have been any underground storage tanks located on
such real property, and (vii) Pride has not in the ordinary course of business
transported, treated, disposed of or stored Hazardous Materials.
4.21 Interests in Customers and Suppliers. Except as set forth on
Schedule 4.21 attached hereto, Pride does not possess, directly or indirectly,
any financial interest in, nor is any Person associated with Pride a director,
officer or employee of, any corporation, firm, association or business
organization which is a supplier, customer, lessor, lessee, or competitor of
Pride.
4.22 Compensation of Employees. Set forth on Schedule 4.22 is a
complete list of all employees of Pride showing (i) such individuals' total
compensation from Pride for the fiscal year ended on the Pride Balance Sheet
Date and (ii) compensation and salary rates for the current fiscal year.
Except as set forth on Schedule 4.22, no employee of Pride has been promised a
bonus or an increase in salary to take effect subsequent to the date hereof.
4.23 Suppliers and Customers. The relationship of Pride with each
of such suppliers and customers as of the date of this Agreement is, to the
best knowledge of Pride and the Pride Shareholders, a good commercial working
relationship, and except as set forth on Schedule 4.23, no significant supplier
or customer has cancelled or otherwise terminated or, to the best knowledge of
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Pride and the Pride Shareholders, threatened to cancel or otherwise terminate
its relationship with Pride since the beginning of the latest full fiscal year
of Pride.
4.24 Absence of Changes. Except as set forth on Schedule 4.24,
since the Balance Sheet Date there has not been any:
4.24.1 sale, assignment, pledge, hypothecation or other
transfer of any of Pride's assets or properties except in the ordinary
course of business as conducted since that date;
4.24.2 any Material Adverse Effect or any condition or
contingency that might reasonably be expected to result in any
Material Adverse Effect;
4.24.3 termination of or material amendment to any Contract
or Lease except as reflected by any applicable Schedule;
4.24.4 increase in compensation payable or paid to, or any
employment, bonus or compensation agreement entered into with, any
officer, director, employee, agent or independent contractor of Pride
other than in the ordinary course of business;
4.24.5 declaration or making, or agreement to declare or
make, any payment of dividends or distributions of any assets of any
kind or purchase, redemption or other acquisition, or agreement to
purchase, redeem or otherwise acquire, directly or indirectly, any of
Pride's outstanding capital stock; or merger, consolidation or
agreement to merge or consolidate with any other entity;
4.24.6 agreement or arrangement creating any preferential
rights to purchase any of Pride's capital stock or assets or requiring
the consent of any party to the transfer or assignment of any of
Pride's capital stock or assets;
4.24.7 other than in the ordinary course of business, a
material change in the amount of all notes and accounts receivable of
Pride or other fees or debts due to Pride or the allowances with
respect thereto, or the payables of Pride to trade accounts and other
creditors by Pride, from that reflected in the Balance Sheet;
4.24.8 other Contract or transaction entered into or agreed
to by Pride other than in the ordinary course of business; or
4.24.9 agreement by Pride to do any of the things described
in the preceding Sections 4.24.1 through 4.24.8, except as
contemplated in this Agreement.
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4.25 Disclosure. This Agreement, the Financial Statements, any
Schedule, Exhibit or certificate attached hereto or delivered by Pride or the
Pride Shareholders in accordance with the terms hereof do not contain any
untrue statement of a material fact the existence of which results or
reasonably could be expected to result in a Material Adverse Effect.
4.26 Broker's or Finder's Fees. No Person acting on behalf of
Pride or the Pride Shareholders is, or will be, entitled to any fee, commission
or broker's or finder's fees in connection with this Agreement or any of the
transactions contemplated hereby.
4.27 Government Contracts. Except as set forth on Schedule 4.27,
Pride does not have any Contracts with any agency of the Government of the
United States or supply any services to any of the military services of the
United States or the Department of Defense or have a facility security
clearance under the Department of Defense Industrial Security Program.
4.28 Copies of Documents. Pride and the Pride Shareholders have
made available for inspection and copying by Group and its advisers, true,
complete and correct copies of all documents referred to in this Article IV or
in any Schedule attached hereto.
4.29 Subsidiaries. Pride has only one subsidiary. Such subsidiary
has no assets or liabilities and has never conducted any business.
4.30 Representations by LLC. To the extent the foregoing
representations and warranties are given by LLC, such representations and
warranties are limited to the best knowledge of LLC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES AS TO SUNBELT
Sunbelt and each of the Sunbelt Shareholders hereby represent and
warrant, jointly and severally, to Group as follows:
5.1 Existence and Good Standing. Sunbelt is a corporation duly
organized and validly existing under the laws of the State of Florida. Sunbelt
has the power and authority to own, lease and operate its property and to carry
on its business as now being conducted and to own or lease the assets owned or
leased by it. Sunbelt is duly qualified or licensed to do business in each
jurisdiction in which the character or location of the properties owned or
leased by Sunbelt or the nature of the business conducted by Sunbelt makes such
qualification necessary and the absence of which would have a Material Adverse
Effect.
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5.2 Capitalization of Sunbelt.
5.2.1 The entire authorized capital stock of Sunbelt consists
of 10,000,000 shares of common stock, par value $.001 per share, of
which 2,101,867 shares are issued and outstanding, fully paid and
nonassessable and held beneficially and of record by the Sunbelt
Shareholders as set forth on Schedule 5.2. Such outstanding shares
are owned beneficially and of record by the Sunbelt Shareholders, free
and clear of all Encumbrances and rights of others. An additional
5,351,867 shares of common stock are issued and held by Sunbelt as
treasury stock.
5.2.2 The shares of Sunbelt Stock held beneficially and of
record by the Sunbelt Shareholders represent all of the issued and
outstanding capital stock of Sunbelt. There are no outstanding
subscriptions, options, convertible securities, indebtedness
convertible into equity securities, warrants, calls or rights of any
kind (issued, contracted for, granted by, or binding upon Sunbelt) to
purchase or otherwise acquire any security of or equity interest in
Sunbelt. The Sunbelt Stock owned by Jesswalt, Inc. is subject to a
voting trust agreement which will be terminated prior to Closing. The
Sunbelt Shareholders have full legal right to transfer the Sunbelt
Stock pursuant to the terms of this Agreement and will, upon delivery
of the Sunbelt Stock to Group pursuant to the terms hereof, transfer
to Group good and valid title to the Sunbelt Stock free and clear of
all liens, security interests, claims, charges, Encumbrances, rights,
options to purchase, voting trusts or other voting agreements and
calls and commitments of every kind affecting the Sunbelt Stock.
5.3 Authorization and Validity of Agreement. Sunbelt has full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Sunbelt
and the consummation of the transactions contemplated hereby, have been duly
authorized and approved by the Board of Directors of Sunbelt and no other
action on the part of Sunbelt is necessary to authorize the execution, delivery
and performance of this Agreement by Sunbelt and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Sunbelt and is a valid and binding obligation of Sunbelt
enforceable against Sunbelt in accordance with its terms, except to the extent
that its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
5.4 Consents and Approvals; No Violations. The execution,
delivery and performance of this Agreement by Sunbelt and the Sunbelt
Shareholders and the consummation by Sunbelt and the Sunbelt Shareholders of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time or both: (i) violate, conflict with, or result in
a breach or default under any provision of the charter or bylaws of Sunbelt;
(ii) violate any statute, ordinance, rule, regulation, order, judgment or
decree of any court or of any governmental or regulatory body, agency or
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authority applicable to Sunbelt or by which any of its properties or assets may
be bound; (iii) require any filing by Sunbelt with, or require Sunbelt to
obtain any Permit of, or require Sunbelt or the Sunbelt Shareholders to give
any notice to, any governmental or regulatory body, agency or authority; or
(iv) other than as set forth on Schedule 5.4 attached hereto, result in a
violation or breach by Sunbelt of, conflict with, constitute (with or without
due notice or lapse of time or both) a default by Sunbelt (or give rise to any
right of termination, cancellation, payment or acceleration) under or result in
the creation of any Encumbrance upon any of the properties or assets of Sunbelt
under any of the terms, conditions, or provisions of any note, bond, mortgage,
indenture, license, franchise, Permit, Contract, Lease, franchise agreement or
other instrument or obligation to which Sunbelt is a party, or by which it or
any of its properties or assets may be bound.
5.5 Assets and Liabilities. The sole asset of Sunbelt is its Pride
Stock as listed on Schedule 4.2. Sunbelt has no liabilities or obligations of
any kind or nature, contingent, matured or otherwise, except as listed on
Schedule 5.5 attached hereto. The primary responsibility for payment of such
listed liabilities has been assumed by LLC prior to the date of this Agreement,
and LLC has agreed to indemnify and hold harmless Sunbelt from any liability or
loss arising from such liabilities. Except as specifically identified on
Schedule 5.5, Sunbelt is not a party to or bound by any agreement, contract or
other instrument of any kind or nature. Since the date of this Agreement,
there has not been any sale, assignment or other transfer of any of Sunbelt's
assets, any Material Adverse Effect to Sunbelt or any contingency or condition
that might reasonably be expected to result in a Material Adverse Effect to
Sunbelt, any acquisition, creation, incurrence or assumption of any other
asset, liability or obligation on the part of Sunbelt, or other Contract or
transaction entered into or agreed to by Sunbelt other than as contemplated
herein.
5.6 Litigation. Except as set forth on Schedule 5.6, there is no
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or any investigation by) any governmental or
other instrumentality or agency, pending, or, to the best knowledge of Sunbelt
and the Sunbelt Shareholders, threatened, against or affecting Sunbelt or its
properties or rights, and Sunbelt and the Sunbelt Shareholders do not know of
any valid basis for any such action, proceeding or investigation. There are no
such suits, actions, claims, proceedings or investigations pending or to the
best knowledge of Sunbelt and the Sunbelt Shareholders, threatened, seeking to
prevent or challenge the transactions contemplated by this Agreement.
5.7 Taxes. All federal, state, county, local and other Taxes
which are due or will be due and payable by Sunbelt on or before the Closing
Date have been paid timely, including, without limitation, all estimated Taxes.
All Tax returns and reports required to be filed with all Taxing authorities,
and all deposits required by law to be made with respect to (i) Sunbelt's
employees' withholding taxes, and (ii) the operations of Sunbelt have been
timely made. There are no agreements for the extension of time for the
assessment or payment of any amounts of Tax except as set forth on Schedule
5.14 attached hereto and Sunbelt has not been requested to enter into any such
agreement or waiver. Except as set forth on Schedule 5.14, no assessments of
Tax deficiencies have been made
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against Sunbelt and no examination is pending by the Internal Revenue Service
or any other Taxing authority with respect to any of such Tax returns or
reports. The Balance Sheet reflects and includes adequate provisions
determined in accordance with generally accepted accounting principles
consistently applied for the payment in full of any and all Taxes of Sunbelt
for the period covered thereby and all prior periods. Sunbelt is not now nor
has it ever been a party to any Tax allocation or sharing agreement that could
result in any liability to Sunbelt.
5.8 Disclosure. This Agreement, any Schedule, Exhibit or
certificate attached hereto or delivered by Sunbelt or the Sunbelt Shareholders
in accordance with the terms hereof do not contain any untrue statement of a
material fact the existence of which results or reasonably could be expected to
result in a Material Adverse Effect.
5.9 Broker's or Finder's Fees. No Person acting on behalf of
Sunbelt or the Sunbelt Shareholders is, or will be, entitled to any fee,
commission or broker's or finder's fees in connection with this Agreement or
any of the transactions contemplated hereby.
5.10 Copies of Documents. Sunbelt and the Sunbelt Shareholders
have made available for inspection and copying by Group and its advisers, true,
complete and correct copies of all documents referred to in this Article V or
in any Schedule attached hereto.
ARTICLE VI
SECURITIES REPRESENTATIONS AND WARRANTIES
Each Shareholder represents and warrants to Group, severally and not
jointly, as follows:
6.1 Authorization and Validity of Agreement. The Shareholder has
full legal capacity to execute and deliver this Agreement, to perform his or
its obligations hereunder and to consummate the transactions contemplated
hereby. Each corporate Shareholder has full corporate power and authority to
make, execute, deliver and perform this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Shareholder and
the consummation of the transactions contemplated hereby, have been duly
authorized and approved by the Shareholder or by its Board of Directors, and no
other action on the part of the Shareholder is necessary to authorize the
execution, delivery and performance of this Agreement by the Shareholder and
the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Shareholder and is a valid and binding
obligation of the Shareholder enforceable against the Shareholder in accordance
with its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
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6.2 Securities Laws. The Shareholder acknowledges that the Group
Stock and the Convertible Notes to be issued by Group hereunder constitute
securities under the Securities Act of 1933, as amended ("Securities Act"), and
the applicable state securities laws (collectively, "Acts") and have not been
registered under the Securities Act or the Acts in reliance on available
exemptions from the registration requirements thereof.
6.3 Accredited Investor. The Shareholder is an "accredited
investor" as that term is defined in Section 501 of Regulation D promulgated
under the Securities Act.
6.4 Knowledge and Experience. The Shareholder has such knowledge
and experience in financial and business matters that such Shareholder is
capable of evaluating the merits and risks of such Shareholder's participation
in the transactions contemplated hereby. The Shareholder has had access to and
an opportunity to inspect all relevant information relating to Group sufficient
to enable the Shareholder to evaluate the merits and risks of the Shareholder's
participation in such transactions. The Shareholder also has had adequate
opportunity to ask questions and receive answers respecting, and to obtain such
additional information as the Shareholder has desired regarding, the business,
financial condition and affairs of Group.
6.5 Investment Purpose. The Shareholder's acquisition of
securities of Group issued hereunder is for the Shareholder's own account, is
for investment purposes, and is without a view to, or for offer or sale for
Group in connection with, any distribution of securities of Group. The
Shareholder is not participating and does not have a participation in any such
distribution or the underwriting of any such distribution.
6.6 Holding Period. The Shareholder understands that the
securities of Group to be issued hereunder must be held for an indefinite
period of time and cannot be sold or transferred unless such securities are
subsequently registered under the Acts or exemptions from the registration
requirements thereof are available.
6.7 Legend. The Shareholder acknowledges that Group will place on
the certificates representing securities to be issued by Group hereunder a
legend stating that such securities have not been registered under the Acts and
setting forth or referring to the restrictions on the transferability and sale
thereof.
6.8 LLC Distribution. Each Sunbelt Shareholder and LLC confirms
and agrees that the foregoing representations and warranties in this Article VI
apply to the Group Stock to be issued by Group to LLC at the Closing and
thereafter to be distributed by LLC to its members, who are the Sunbelt
Shareholders. LLC shall be deemed to be a Shareholder for purposes of the
foregoing representations and warranties and confirms the accuracy of such
representations and warranties as to it, with the exception that it intends to
immediately distribute the Group Stock received by it to its members.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF GROUP
Group hereby represents and warrants to each of the Shareholders as
follows:
7.1 Existence and Good Standing; Power and Authority. Group is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. Group has full corporate power and authority to
make, execute, deliver and perform this Agreement, to perform its respective
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized and approved
by all required corporate action of Group. This Agreement has been duly
executed and delivered by Group and is a valid and binding obligation of Group
enforceable against Group, in accordance with its terms, except to the extent
that its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
7.2 Capitalization. The authorized capital stock of Group
consists of 15,000,000 shares of capital stock, of which 10,000,000 shares are
common stock, par value $0.01 per share, and 5,000,000 are preferred stock, par
value $0.01 per share. Group currently has 1,000,000 shares of common stock
that are issued and outstanding and held by The Xxxxxxx Companies, Inc. Except
as contemplated by the terms of this Agreement and except for the RAS Warrant,
Group has no options, securities, warrants or other equity or debt instruments
convertible or exercisable into any equity interest in Group. When issued and
paid for in accordance with the terms of this Agreement, the shares of Group
Stock to be issued to the Shareholders shall be fully paid and nonassessable.
7.3 No Violations. The execution, delivery and performance of
this Agreement by Group and the consummation by Group of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time or both, (i) violate, conflict with, or result in a breach or default
under any provision of the charter or bylaws of Group; (ii) to the best
knowledge of Group, violate any statute, ordinance, rule, regulation, order,
judgment or decree of any court or of any governmental or regulatory body,
agency or authority applicable to Group or by which any of its properties or
assets may be bound; (iii) to the best knowledge of Group, require any filing
by Group with, or require Group to obtain any permit, consent or approval of,
or require Group to give any notice to, any governmental or regulatory body,
agency or authority or any third party; or (iv) result in a violation or breach
by Group of, conflict with, constitute (with or without due notice or lapse of
time or both) a default by Group (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Encumbrance upon any of the properties or assets of Group pursuant to, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, franchise, permit, agreement, lease, franchise agreement or other
instrument or obligation to which Group is a party, or by which Group or any of
its properties or assets may be
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bound, except in the case of clauses (ii), (iii) and (iv) of this Section 6.3
for such violations, consents, breaches, defaults, terminations and
accelerations which in the aggregate would not have a Material Adverse Effect.
7.4 Broker's or Finder's Fees. Except for RAS, no Person acting
on behalf of Group is, or will be, entitled to any fee, commission or broker's
or finder's fee in connection with this Agreement or any of the transactions
contemplated hereby. Group has agreed to pay certain commissions and expense
allowances to RAS and to issue to RAS the RAS Warrant as payment for the
performance of the services contemplated under the Placement Agreement.
7.5 Receivables and Payables. Schedule 7.5 lists all notes
receivable, notes payable, accounts receivable and accounts payable of Group.
Except as reflected on Schedule 7.5, all notes receivable and accounts
receivable of Group are, and such notes and accounts receivable at the Closing
Date will be, (i) bona fide claims against debtors for debts, sales, work
performed or other charges, (ii) to the best knowledge of Group and the Group
Shareholders, subject to no defenses, set-offs or counterclaims, and (iii) to
the best knowledge of Group and the Group Shareholders, collectible. Except as
reflected on Schedule 7.5, all notes payable and accounts payable of Group are,
and such notes and accounts payable at the Closing Date will be, bona fide
claims by creditors for debts, sales, work performed, other expenses incurred
by Group.
7.6 Financial Statements; No Material Adverse Change. Group has
heretofore furnished Pride or its representatives with the audited financial
statements of Group as of September 30, 1995, in the form of a balance sheet
(the "Group Balance Sheet"), and an income statement and statement of cash
flows for the twelve-month period then ended relating to the audited balance
sheet (together with the Balance Sheet, the "Group Financial Statements"). The
Group Financial Statements have been prepared in accordance with GAAP and
fairly present in all material respects the financial position of Group at the
dates thereof and the results of operations and cash flow of Group for the
period indicated. Except as set forth on Schedule 7.6 attached hereto or for
changes that would not have a Material Adverse Effect, since September 30, 1995
(the "Group Balance Sheet Date"), there has been no change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations, of Group.
7.7 Warranty Claims. Except as set forth on Schedule 7.7 attached
hereto, as of the date hereof, there are no warranty claims relating to
products at any time sold or services at any time performed by Group pending
or, to the best knowledge of Group, threatened, which would have a Material
Adverse Effect.
7.8 Title to Properties; Encumbrances; Condition. Except as set
forth on Schedule 7.8 or on any of the other Schedules hereto and except for
properties and assets reflected in the Group Financial Statements or acquired
since the Group Balance Sheet Date which have been sold or otherwise disposed
of in the ordinary course of business, Group owns outright, and has, and shall
at
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the Closing have, full legal and beneficial title to all of its assets, in each
case subject to no Encumbrances except for Permitted Encumbrances. The assets
of Group consist of all properties and assets necessary to operate the Business
in the manner it has been operated prior to the date hereof. Except as set
forth on Schedule 7.8, each asset of Group is in good operating condition and
repair, subject to ordinary wear and tear, and, to the best knowledge of Group,
has been maintained in accordance with the manufacturers' specifications, and
each asset is, to the best knowledge of Group, in compliance with all
applicable federal and state laws and regulations. Group's Inventory consists
of items of a quality and quantity usable or saleable in the regular course of
business of Group.
7.9 Real Property. Group owns no real property. All of the
buildings, structures and real property appurtenances leased by Group or used
in connection with the operation of its business (the "Group Operating
Facilities") are in good operating condition, and in a state of good
maintenance and repair, subject to ordinary wear and tear, except where such
condition or maintenance would not have a Material Adverse Effect. The Group
Operating Facilities have adequate rights of ingress and egress for operation
of Group's business in the ordinary course. No condemnation or similar
proceeding is pending or, to the best knowledge of Group, threatened, which
would preclude or impair the use of the Group Operating Facilities as used in
the prior operation of its business.
7.10 Leases. Schedule 7.10 attached hereto contains an accurate
and complete list of all Leases to which Group is a party (as lessee or
lessor). Each Lease set forth on Schedule 7.10 is, to the best knowledge of
Group, in full force and effect; there is no existing default under any of such
Leases on the part of Group or, to the best of Group's knowledge, any other
party thereto.
7.11 Contracts and Commitments. Except as specifically identified
on Schedule 7.11:
7.11.1 Group is not a party to or bound by any loan, credit
or similar agreement or any indenture, trust agreement or other
instrument relating to any issue of bonds, debentures, notes or other
evidences of indebtedness or creating any lien, encumbrance or charge
on any of Group's assets;
7.11.2 There are no bonus, pension, profit sharing,
retirement, stock option, stock purchase, deferred compensation,
hospitalization or insurance plans, or vacation or severance pay
plans, or any other plans or arrangements providing benefits to
officers, agents or employees of Group;
7.11.3 Group does not have any collective bargaining
agreement with any labor union or association or any employment
contract or other binding agreement relating to the employment of any
of its employees;
7.11.4 Group is not a party to any joint venture agreement
or other agreement involving the sharing of profits relating to its
business and/or its assets;
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7.11.5 Group is not a party to any (i) contracts or
commitments for capital expenditures outside the ordinary course of
business or involving obligations on the part of Group in amounts
inconsistent with those incurred by Group in the ordinary course of
business in accordance with Group's prior operation of its business,
(ii) lease under which personal property is leased to or from Group
and which is not cancelable by Group without penalty upon notice of
thirty days or less or pursuant to which rentals payable by or to
Group, either individually or in the aggregate, substantially exceed
amounts previously incurred by Group in the ordinary course of
business, (iii) continuing contract for the future purchase of
Inventory or other materials, supplies, machinery or equipment in
excess of the requirements of its business conducted in the ordinary
course, (iv) other contract or agreement which involves an obligation
on the part of Group, either individually or in the aggregate, in
excess of amounts previously incurred by Group in the ordinary course
of business or, (v) agreement not made in the ordinary course of
business;
7.11.6 There are no agreements, notes, mortgages, leases,
franchises, permits, orders, judgments or decrees to which Group is a
party or by which Group or any of its assets are bound, which contain
any provision which would (i) be violated or contravened by, (ii)
cause acceleration of any obligation of Group as a result of, or (iii)
cause or permit the forfeiture of any right or benefit of Group by
reason of, the execution or performance of this Agreement;
7.11.7 Group is not party to any Contract limiting the
freedom of Group to engage in any line of business or to compete with
any Person;
7.11.8 Group is not a party to any agreement which involves
$50,000 or more and is not cancelable without penalty within thirty
days; and
7.11.9 There are no persons holding powers of attorney from,
or otherwise authorized to act on behalf of, Group with respect to its
business or Group's assets except for its respective officers and
other management personnel regularly performing their assigned
business functions.
Except as specifically identified on Schedule 7.11, Group has no
knowledge that any Contract, Lease, or other obligation to which Group is
bound, individually or in the aggregate: (i) will result in a material loss to
Group after the Closing Date; (ii) cannot readily be performed or fulfilled on
time without undue or unusual expenditure of money or effort by Group after the
Closing Date, or (iii) is not in full force and effect and under which there
exists a default or event of default or event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of default
thereunder, except where such default or event would not cause a Material
Adverse Effect. Also set forth on Schedule 7.11 is a list of all proposals,
except proposals made by Group's sales people in the ordinary course of
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business, submitted by Group to any third party that, if accepted by such third
party, would require disclosure on Schedule 7.11.
A true copy of each written Contract and Lease as well as all other
documents evidencing any commitment of Group required to be set forth on any
Schedule hereto has been or will be delivered to Pride by Group no later than
five (5) days after execution of this Agreement.
7.12 Permits. All Permits required in connection with the use,
operation or ownership of Group's assets and the conduct of its business as
currently conducted are listed on Schedule 7.12.
7.13 Litigation. Except as set forth on Schedule 7.13, there is no
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or any investigation by) any governmental or
other instrumentality or agency, pending, or, to the best knowledge of Group,
threatened, against or affecting Group or its properties or rights, and Group
do not know of any valid basis for any such action, proceeding or
investigation. There are no such suits, actions, claims, proceedings or
investigations pending or to the best knowledge of Group, threatened, seeking
to prevent or challenge the transactions contemplated by this Agreement.
Without exception as to materiality or otherwise, Schedule 7.13 lists all
claims, if any, that have ever been filed with the FAA with respect to Group
and/or the operation of the Business.
7.14 Taxes. All federal, state, county, local and other Taxes
which are due or will be due and payable by Group on or before the Closing Date
have been paid timely, including, without limitation, all estimated Taxes. All
Tax returns and reports required to be filed with all Taxing authorities, and
all deposits required by law to be made with respect to (i) Group's employees'
withholding taxes, and (ii) the operations of Group have been timely made.
There are no agreements for the extension of time for the assessment or payment
of any amounts of Tax except as set forth on Schedule 7.14 attached hereto and
Group has not been requested to enter into any such agreement or waiver.
Except as set forth on Schedule 7.14, no assessments of Tax deficiencies have
been made against Group and no examination is pending by the Internal Revenue
Service or any other Taxing authority with respect to any of such Tax returns
or reports. The Group Balance Sheet reflects and includes adequate provisions
determined in accordance with generally accepted accounting principles
consistently applied for the payment in full of any and all Taxes of Group for
the period covered thereby and all prior periods. Group is not now nor has it
ever been a party to any Tax allocation or sharing agreement that could result
in any liability to Group.
7.15 Insurance. Set forth on Schedule 7.15 is a complete list of
insurance policies that Group maintains with respect to its respective
businesses, properties or employees. Such policies are in full force and
effect and are free from any right of termination on the part of the insurance
carriers. In the judgment of Group, such policies, with respect to their
amounts and types of coverage, are adequate to insure against risks to which
Group and its property and assets are normally exposed in the operation of its
business, subject to customary deductibles and policy limits.
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7.16 Intellectual Property. Schedule 7.16 sets forth all
Intellectual Property owned by Group. The operation of its business as
currently operated requires no rights under Intellectual Property other than
rights under Intellectual Property listed on Schedule 7.16 and rights granted
to Group pursuant to agreements listed on Schedule 7.16. Except as otherwise
set forth on Schedule 7.16, Group owns all right, title and interest in the
Intellectual Property. No claim has been made and no litigation is pending or,
to the best knowledge of Group, threatened wherein Group has been or is accused
of infringing or otherwise violating the intellectual property rights of
another, or of breaching a contract conveying intellectual property rights.
7.17 Compliance with Laws. Pride is in compliance with all
applicable laws, regulations, orders, judgments and decrees applicable to its
business, except where any noncompliance would not have a Material Adverse
Effect.
7.18 Employment Relations. Group is not engaged in any unfair
labor practice. Group has not been notified of any grievance and no arbitration
proceeding arising out of or under any collective bargaining agreement is
pending. No collective bargaining agreement is currently being negotiated by
Group.
7.19 Employee Benefit Plans. None of the Employee Benefit Plans
are subject to Title IV of ERISA or the minimum funding obligations of Section
412 of the Code, and Group and any entity required to be aggregated therewith
pursuant to Section 414(b) or (c) of the Code have no liability under Title IV
of ERISA or under Section 412(f) or 412(n) of the Code.
7.20 Environmental Laws and Regulations. Except as set forth on
Schedule 7.20, (i) Hazardous Materials have not been generated, used, treated
or stored on, or transported to or from, the real property owned, leased or
used by Group, its authorized agents or its independent contractors (including
suppliers) or any property adjoining such real property, (ii) Hazardous
Materials have not been disposed, discharged, injected, spilled, leaked,
leached, dumped, emitted, escaped, emptied, allowed to seep, placed and the
like, into or upon any land or water or air, or otherwise allowed to enter into
the environment (collectively, "Releases") by Group, its authorized agents or
its independent contractors (including suppliers) on such real property or any
other property, (iii) Group is, to the best knowledge of Group, in compliance
with all applicable Environmental Laws and the requirements of any Permits
issued under such Environmental Laws with respect to such real property and to
Group's operations conducted thereon, (iv) there are no pending or, to the best
knowledge of Group, threatened Environmental Claims against Group or involving
such real property, (v) there are no facts or present or past circumstances,
conditions or occurrences on such real property known to Group that reasonably
could be anticipated (A) to form the basis of an Environmental Claim against
Group or any owner or operator of such real property, or (B) to cause such real
property to be subject to any restrictions on the ownership, occupancy, use or
transferability of such real property under any Environmental Law, (vi) there
are not now and, to the best knowledge of Group, there never have been any
underground storage tanks located on such real
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property, and (vii) Group has not in the ordinary course of business
transported, treated, disposed of or stored Hazardous Materials.
7.21 Interests in Customers and Suppliers. Except as set forth on
Schedule 7.21 attached hereto, Group does not possess, directly or indirectly,
any financial interest in, nor is any Person associated with Group a director,
officer or employee of, any corporation, firm, association or business
organization which is a supplier, customer, lessor, lessee, or competitor of
Group.
7.22 Compensation of Employees. Set forth on Schedule 7.22 is a
complete list of all employees of Group showing (i) such individuals' total
compensation from Group for the fiscal year ended on the Group Balance Sheet
Date and (ii) compensation and salary rates for the current fiscal year.
Except as set forth on Schedule 7.22, no employee of Group has been promised a
bonus or an increase in salary to take effect subsequent to the date hereof.
7.23 Suppliers and Customers. The relationship of Group with each
of such suppliers and customers as of the date of this Agreement is, to the
best knowledge of Group, a good commercial working relationship, and except as
set forth on Schedule 7.23, no significant supplier or customer has cancelled
or otherwise terminated or, to the best knowledge of Group, threatened to
cancel or otherwise terminate its relationship with Group since the beginning
of the latest full fiscal year of Group.
7.24 Absence of Changes. Except as set forth on Schedule 7.24,
since the Group Balance Sheet Date there has not been any:
7.24.1 sale, assignment, pledge, hypothecation or other
transfer of any of Group's assets or properties except in the ordinary
course of business as conducted since that date;
7.24.2 any Material Adverse Effect or any condition or
contingency that might reasonably be expected to result in any
Material Adverse Effect;
7.24.3 termination of or material amendment to any Contract
or Lease except as reflected by any applicable Schedule;
7.24.4 increase in compensation payable or paid to, or any
employment, bonus or compensation agreement entered into with, any
officer, director, employee, agent or independent contractor of Group
other than in the ordinary course of business;
7.24.5 declaration or making, or agreement to declare or
make, any payment of dividends or distributions of any assets of any
kind or purchase, redemption or other acquisition, or agreement to
purchase, redeem or otherwise acquire, directly or indirectly, any
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of Group's outstanding capital stock; or merger, consolidation or
agreement to merge or consolidate with any other entity;
7.24.6 agreement or arrangement creating any preferential
rights to purchase any of Group's capital stock or assets or requiring
the consent of any party to the transfer or assignment of any of
Group's capital stock or assets;
7.24.7 other than in the ordinary course of business, a
material change in the amount of all notes and accounts receivable of
Group or other fees or debts due to Group or the allowances with
respect thereto, or the payables of Group to trade accounts and other
creditors by Group, from that reflected in the Group Balance Sheet;
7.24.8 other Contract or transaction entered into or agreed
to by Group other than in the ordinary course of business; or
7.24.9 agreement by Group to do any of the things described
in the preceding Sections 7.24.1 through 7.24.8, except as
contemplated in this Agreement.
7.25 Disclosure. This Agreement, the Group Financial Statements,
any Schedule, Exhibit or certificate attached hereto or delivered by Group in
accordance with the terms hereof do not contain any untrue statement of a
material fact the existence of which results or reasonably could be expected to
result in a Material Adverse Effect.
7.26 Government Contracts. Except as set forth on Schedule 7.26,
Group does not have any Contracts with any agency of the Government of the
United States or supply any services to any of the military services of the
United States or the Department of Defense or have a facility security
clearance under the Department of Defense Industrial Security Program.
7.27 Copies of Documents. Group has made available for inspection
and copying by Pride and its advisers, true, complete and correct copies of all
documents referred to in this Article VII or in any Schedule attached hereto.
7.28 Subsidiaries. Group has only two subsidiaries, Tri-Star
Airlines Services, Inc. and Tri-Star Aircraft Services, Inc.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
PRIDE, SUNBELT, LLC AND THE SHAREHOLDERS
The obligations of Sunbelt, Pride, LLC and the Shareholders under this
Agreement to consummate the transactions contemplated hereby shall be subject
to the satisfaction (or waiver by
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Sunbelt, Pride, LLC and the Shareholders) on or prior to the Closing Date of
all of the following conditions:
8.1 Truth of Representations and Warranties. The representations
and warranties of Group contained in this Agreement shall be true and correct
in all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, and Group shall have delivered to Pride and Sunbelt on the
Closing Date a certificate of an authorized officer of Group, dated the Closing
Date, to such effect.
8.2 Performance of Agreements. Each and all of the agreements and
covenants of Group to be performed on or before the Closing Date pursuant to
the terms hereof, including all deliveries and obligations at Closing, shall
have been duly performed in all material respects, and Group shall have
delivered to Pride and Sunbelt a certificate of an authorized officer of Group,
dated the Closing Date, to such effect and evidencing the incumbency of all
officers executing any documents in connection with the Closing.
8.3 No Litigation Threatened. No action or proceedings shall have
been instituted before a court or other governmental body or by any public
authority to restrain or prohibit any of the transactions contemplated hereby,
and Group shall have delivered to Pride and Sunbelt a certificate of an
authorized officer of Group, dated the Closing Date, to such effect to the best
knowledge of such officer.
8.4 Consents. All governmental and third party consents and
approvals necessary to permit the consummation of the transactions contemplated
by this Agreement shall have been received.
8.5 Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Pride and
Sunbelt and their respective counsel, and Pride and Sunbelt shall have received
copies of all such documents and other evidence as they or their respective
counsel may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
8.6 Legal Opinion. Group shall have delivered to Pride and
Sunbelt the opinion of Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel to Group,
addressing the matters set forth in Exhibit E attached hereto, which opinion
shall be acceptable to Pride and Sunbelt and their respective counsel.
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ARTICLE IX
CONDITIONS TO GROUP'S OBLIGATIONS
The obligations of Group under this Agreement to consummate the
transactions contemplated hereby shall be subject to the satisfaction (or
waiver by Group) on or prior to the Closing Date of all of the following
conditions:
9.1 Truth of Representations and Warranties. The representations
and warranties of Pride, Sunbelt and the Shareholders contained herein shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of the Closing Date. The Shareholders, Sunbelt and Pride shall have
delivered to Group on the Closing Date a certificate executed by each of the
Shareholders, an authorized officer of Sunbelt and an authorized officer of
Pride, respectively, dated the Closing Date, to such effect.
9.2 Performance of Agreements. Each and all of the agreements and
covenants of Pride, Sunbelt and the Shareholders to be performed on or before
the Closing Date pursuant to the terms hereof, including all deliveries and
obligations at Closing, shall have been duly performed in all material
respects. The Shareholders, Sunbelt and Pride shall have delivered to Group a
certificate of each of the Shareholders, an authorized officer of Sunbelt and
an authorized officer of Pride, respectively, dated the Closing Date, to such
effect. The certificates of Sunbelt and Pride shall also evidence the
incumbency of all officers of Sunbelt and Pride executing any documents in
connection with the Closing.
9.3 No Litigation Threatened. No action or proceedings shall have
been instituted before a court or other governmental body or by any public
authority to restrain or prohibit any of the transactions contemplated hereby.
The Shareholders, Sunbelt and Pride shall have delivered to Group a certificate
of each of the Shareholders, an authorized officer of Sunbelt and an authorized
officer of Pride, respectively, dated the Closing Date, to such effect to the
best knowledge of such officer.
9.4 Consents. All governmental and third party consents and
approvals necessary to permit the consummation of the transactions contemplated
by this Agreement shall have been received.
9.5 Consents. Each of the consents referred to on Schedules 4.4
and 5.4 attached hereto shall have been obtained. Group shall have received
the approval of its Board of Directors to consummate the transactions
contemplated hereby.
9.6 Due Diligence. Group, through its officers and directors and
its legal and other representatives, shall have concluded a due diligence
review of Pride satisfactory to Group in its sole discretion.
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9.7 Financing. Group shall have received $900,000 of the
financing contemplated under the Placement Agreement and the subscription
escrow for such funds can be broken at the discretion of Group.
9.8 Legal Opinion. Pride, Sunbelt and the Shareholders shall have
delivered to Group the opinions of Cestia & Xxxxxx, counsel to Pride, Schober,
Xxxxxxxx & Xxxxx, counsel to Sunbelt and the Sunbelt Shareholders, and
Xxxxxxxxx Xxxxxx, Xx., counsel to LLC, addressing the matters set forth in
Exhibit F attached hereto, which opinions shall be acceptable to Group and its
counsel.
9.9 Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Group and its
counsel, and Group shall have received copies of all such documents and other
evidence as it or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
9.10 Alexandria Operations. The transfer to and assumption by Rice
(or his designee) from Pride of the Alexandria Operations shall have been
effected in accordance with documentation previously approved by Group.
9.11 Partial Extinguishment of Pride's Indebtedness to LLC. On the
Closing Date, LLC shall extinguish $168,000 of the principal amount of the
Pride Debt as consideration for the issuance by Group to LLC of the number of
shares of Group Stock equal to $168,000 divided by the Stock Offering Price.
ARTICLE X
COVENANTS OF PRIDE, SUNBELT, LLC AND THE SHAREHOLDERS
Pride, Sunbelt, LLC and the Shareholders hereby covenant and agree
with Group as follows:
10.1 Cooperation. Pride, Sunbelt, LLC and the Shareholders shall
use their reasonable best efforts to cooperate with Group to secure all
necessary consents, approvals, authorizations, exemptions and waivers from
third parties as shall be required in order to enable Pride, Sunbelt, LLC and
the Shareholders to effect the transactions contemplated hereby, including
without limitation the assignment and assumption of the Alexandria Operations.
Pride, Sunbelt, LLC and the Shareholders shall otherwise use their reasonable
best efforts to cause the consummation of such transactions in accordance with
the terms and conditions hereof and to cause all conditions contained in this
Agreement over which they have control to be satisfied. Pride, Sunbelt, LLC
and the Shareholders further agree to deliver to Group prompt written notice of
any event or condition known to or discovered by Pride, Sunbelt, LLC or the
Shareholders, which if it existed on the date of this Agreement or on the
Closing Date, would result in any of the representations and warranties of
Pride, Sunbelt, LLC or the Shareholders contained herein being untrue in any
material respect.
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10.2 Conduct of Business. Except as Group may otherwise consent to
in writing, between the date hereof and the Closing Date, Pride and Sunbelt
shall (i) conduct the Business and Sunbelt's business only in the ordinary
course, (ii) use their reasonable efforts to keep available the services of
Pride's employees and maintain Pride's current relationships with licensors,
suppliers, lessors, distributors, customers, clients and others, (iii)
maintain, consistent with past practice and good business judgment, all of
Pride's assets in customary repair, order and condition, ordinary wear and tear
excepted, and insurance upon all of its assets used in the conduct of the
Business in such amounts and of such kinds comparable to that in effect on the
date hereof, to the extent available at current premiums, and (iv) maintain
their Books and Records in the usual, regular and ordinary manner, on a basis
consistent with past practice.
10.3 Negative Covenants of Pride and the Pride Shareholders. From
and after September 30, 1995 and through the Closing Date and except with the
specific prior written consent of Group, Pride and the Shareholders covenant
and agree as follows:
10.3.1 Other than the transfer by Pride of the Alexandria
Operations to Rice, Pride shall not sell, transfer or dispose of any
of its assets other than in the ordinary course of business; provided,
however, that any sale, transfer or disposition of any of its assets
in the ordinary course of business shall not exceed assets valued at
more than $10,000 in the aggregate and shall not be made to any of the
Shareholders.
10.3.2 Pride shall not make any distributions or dividends
of cash or other property to the Shareholders.
10.3.3 Pride shall not make, declare or pay any bonuses to
any of the officers or directors of Pride or Sunbelt or other payments
to such persons not in the ordinary course of business.
10.3.4 Pride shall not grant an Encumbrance (except a
Permitted Encumbrance) on any of the assets of Pride or allow any such
Encumbrance (except a Permitted Encumbrance) to occur or to be
created.
10.3.5 Except in the ordinary course of business, Pride
shall not acquire any tangible properties or assets.
10.3.6 Except in the ordinary course of business, Pride
shall not enter into any employment and/or any independent contractor
agreements relating to services to be rendered in connection with the
Business or any of their assets.
10.3.7 Except in the ordinary course of business, Pride
shall not amend, modify or terminate any of its Contracts, Leases or
other agreements.
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10.3.8 Pride shall not enter into any undertaking with
respect to the operation of its assets or the Business except in the
ordinary course of business and consistent with past practices.
10.3.9 The Shareholders shall not sell, transfer or dispose
of any of the Pride Stock or the Sunbelt Stock or grant or allow an
Encumbrance thereon.
10.4 Negative Covenants of Sunbelt and LLC. From and after the
date hereof and through the Closing Date, and except with the specific prior
written consent of Group, Sunbelt and LLC covenant and agree as follows:
10.4.1 LLC shall not sell, transfer or dispose of the Pride
Note or Pride Loan Documents or any interest therein, grant or permit
to exist an Encumbrance on the Pride Note or Pride Loan Documents or
the proceeds thereof, or amend or modify any of the Pride Note or
Pride Loan Documents.
10.4.2 Sunbelt shall not acquire any tangible or intangible
properties or assets or incur any liabilities or obligations of any
kind or nature.
10.4.3 Sunbelt shall not enter into any agreements or
contracts of any kind or nature.
10.4.4 Sunbelt shall not sell, transfer or dispose of any of
the Pride Stock or grant or allow an Encumbrance thereon.
10.5 Exclusive Dealing. During the period from the date of this
Agreement to February 15, 1996, Pride, Sunbelt and the Shareholders shall not
take any action to, directly or indirectly, encourage, initiate or engage in
discussions or negotiations with, or provide any information to any Person
other than Group, concerning (i) the sale, transfer or disposal of all or any
material part of the assets of Pride or Sunbelt, (ii) a merger of Pride or
Sunbelt, (iii) the sale, transfer or disposal of any of the Pride Stock or
Sunbelt Stock, or (iv) any similar transaction involving Pride, Sunbelt or the
Shareholders (collectively, a "Prohibited Transaction"). Pride, Sunbelt and
the Shareholders shall immediately notify Group of any inquiries or proposals
made by any Person other than Group with respect to a Prohibited Transaction.
Prior to March 1, 1996, Pride, Sunbelt and the Shareholders shall not enter
into any definitive agreements with respect to any Prohibited Transaction.
10.6 Review of the Assets. Pride, Sunbelt and the Shareholders
agree that Group may, prior to the Closing Date, through its representatives,
review (i) the assets and liabilities of Pride and Sunbelt, (ii) the complete
working papers of the certified public accountants of Pride and Sunbelt used in
their preparation of financial statements for Pride and Sunbelt, and (iii) the
Books and Records of Pride and Sunbelt and otherwise review the financial and
legal condition of Pride and Sunbelt as Group or its representatives deem
necessary or advisable to familiarize itself or themselves
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with the Business, Sunbelt's business and related matters; such review shall
not, however, affect the representations and warranties made by Pride and
Sunbelt and the Shareholders hereunder or the remedies of Group for breaches of
those representations and warranties. Such review and inspection shall occur
only during normal business hours upon reasonable notice by Group. Pride and
Sunbelt shall permit Group and its representatives to have, after the execution
of this Agreement, full access to those employees of Pride who can furnish
Group with financial and operating data and other information with respect to
the Business as Group shall from time to time reasonably request.
10.7 Consents. Pride, Sunbelt, LLC and the Shareholders covenant
to obtain as soon as practicable after execution of this Agreement all
governmental and third party consents and approvals necessary to permit the
performance of their respective obligations to consummate the transactions
contemplated by this Agreement.
10.8 Further Assurances. At any time or from time to time after
the Closing Date, Pride, Sunbelt, LLC and the Shareholders shall, at the
reasonable request of Group and at Group's expense, execute and deliver any
further instruments or documents and take all such further action as Group may
reasonably request in order to consummate and make effective the transactions
contemplated by this Agreement.
ARTICLE XI
COVENANTS OF GROUP
Group hereby covenants and agrees with Pride, Sunbelt and the
Shareholders as follows:
11.1 Cooperation by Group. Group will use its reasonable best
efforts, and will cooperate with Pride, Sunbelt and the Shareholders, to secure
all necessary consents, approvals, authorizations, exemptions and waivers from
third parties as shall be required in order to enable Group to effect the
transactions contemplated on its part hereby, and Group will otherwise use its
reasonable best efforts to cause and consummation of such transactions in
accordance with the terms and conditions hereof and to cause all conditions
contained in this Agreement over which it has control to be satisfied.
11.2 Books and Records; Personnel. At all times after the Closing
Date, Group shall allow the Shareholders, upon reasonable advance notice to
Group, access to all Books and Records of Pride and Sunbelt, to the extent
necessary or desirable in anticipation of, or preparation for, existing or
future litigation, tax returns or audits, or reports to or filings with
governmental agencies, during normal working hours at Group's principal place
of business or at any location where such Books and Records are stored, and the
Shareholders shall have the right, at the Shareholders' sole cost, to make
copies of any such Books and Records.
11.3 Further Assurances. At any time or from time to time after
the Closing Date, Group shall, at the request of the Shareholders and at the
Shareholders' expense, execute and deliver any
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further instruments or documents and take all such further action as the
Shareholders may reasonably request in order to consummate and make effective
the transactions contemplated by this Agreement.
11.4 Consents. Group covenants to obtain as soon as practicable
after the execution of this Agreement all governmental and third party consents
and approvals necessary to permit the performance of its obligation to
consummate the transactions contemplated by this Agreement.
ARTICLE XII
THE CLOSING
12.1 Time and Place. The closing of the transactions contemplated
by this Agreement (the "Closing") will take place at 9:00 a.m. at the offices
of Xxxxxxxxx & Xxxxxxxxx, L.L.P. located at 000 X. Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, on or before March 1, 1996, or at such other time, at such
other place or on such other date as the parties hereto may mutually agree.
The date on which the Closing occurs is herein referred to as the "Closing
Date."
12.2 Obligations of Pride, Sunbelt and the Shareholders. At the
Closing, Pride, Sunbelt and the Shareholders, as applicable, shall execute (as
applicable) and deliver to Group, against Group's execution (as applicable) and
delivery of the items specified in Section 12.3, the following:
12.2.1 the Employment Agreements;
12.2.2 the Consulting Agreements;
12.2.3 the Pledge Agreement;
12.2.4 the Pride Stock and the Sunbelt Stock together with
stock powers duly endorsed by the Shareholders;
12.2.5 certified copies of the Articles of Incorporation,
Bylaws and Good Standing and Existence Certificates of Pride and
Sunbelt;
12.2.6 all Books and Records, memoranda, data and other
documents related to the assets of Pride, Sunbelt and the Business,
including all Contracts and Leases of Pride;
12.2.7 the certificates required by Sections 9.1, 9.2 and
9.3;
12.2.8 any consents to assignment of the Contracts and
Leases required by Sections 4.4 and 5.4;
12.2.9 the legal opinion as required by Section 9.8;
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12.2.10 evidence of any necessary governmental or third party
consents or approvals as required by Section 10.7;
12.2.11 resignations of existing directors of Pride and
Sunbelt;
12.2.12 such other instruments, documents and certificates in
form and substance reasonably satisfactory to Group, as Group shall
have reasonably required.
12.3 Group's Obligations. At the Closing, Group shall execute (as
applicable) and deliver to the Shareholders, Sunbelt, LLC and Pride, as
applicable, against execution (as applicable) and delivery by the Shareholders,
as applicable, and Pride of the items specified in Section 12.2, the following:
12.3.1 a wire transfer or bank cashier's or certified check,
as applicable, for the cash portion of the Pride Purchase Price and
Sunbelt Purchase Price, as they may be adjusted, pursuant to Article
III;
12.3.2 certificates representing the shares of Group Stock
to be issued to LLC and Lubomirski in accordance with Sections 2.4 and
3.1.3 hereof;
12.3.3 the Convertible Notes;
12.3.4 the Employment Agreements;
12.3.5 the Consulting Agreements;
12.3.6 the Pledge Agreements;
12.3.7 evidence of any necessary governmental or third party
consents or approvals as required by Section 11.4;
12.3.8 the certificates required by Sections 8.1, 8.2 and
8.3; and
12.3.9 the legal opinion required by Section 8.6.
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ARTICLE XIII
TERMINATION
13.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date as follows:
13.1.1 by the mutual written consent of Group, Pride and
Sunbelt;
13.1.2 unilaterally by Group, on one hand, or by Pride and
Sunbelt, on the other hand, in writing, without liability on the part
of the terminating party on account of such termination (provided the
terminating party is not otherwise in material default or breach of
this Agreement, or has failed or refused to close without
justification hereunder), if the Closing Date shall not have occurred
on or before 5:00 p.m. Central Standard Time on February 15, 1996
("Final Termination Date"); provided, however, that if all necessary
consents and approvals have not been obtained by February 15, 1996,
the Final Termination Date automatically shall be extended to a date
six business days after the date on which all such consents and
approvals have been obtained but in no event later than March 1, 1996;
13.1.3 unilaterally by Group, on one hand, or by Pride and
Sunbelt, on the other hand, in writing, without prejudice to other
rights and remedies which the terminating party may have (provided the
terminating party is not otherwise in material default or breach of
this Agreement, or has failed or refused to close without
justification hereunder), if the other party shall (i) materially fail
to perform its covenants or agreements contained herein required to be
performed prior to the Closing Date, or (ii) materially breach or have
breached any of its representations or warranties contained herein.
13.2 Remedies Upon Default or Failure to Close.
13.2.1 If Group shall default in the performance of its
obligations under this Agreement, and shall for this reason be unable
to consummate this Agreement on the Closing Date in accordance with
the terms hereof, and provided that neither Pride, Sunbelt nor any of
the Shareholders are not then in material default of any of their
respective obligations hereunder, Pride, Sunbelt and the Shareholders
shall be entitled (i) to waive any such default by Group and to
require Group through specific performance (which Group acknowledges
to be an appropriate remedy) to consummate the sale in accordance with
the terms of this Agreement, or (ii) to terminate this Agreement by
written notice to Group; provided, however, that Group shall have a
period of ten (10) days following written notice from Pride, Sunbelt
and the Shareholders to cure any breach of this Agreement, if such
breach is curable. The availability of specific performance shall be
in addition to any other remedies or claims for damages Pride, Sunbelt
or the Shareholders may have at law or in equity for breaches or
defaults by Group of its obligations hereunder.
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13.2.2 If Pride, Sunbelt or any of the Shareholders shall
default in the performance of their respective obligations under this
Agreement and shall for that reason be unable to consummate this
Agreement on the Closing Date in accordance with the terms hereof, and
if Group is not then in material default of any of its obligations
hereunder, Group shall be entitled either (i) to waive any such
defaults by Pride, Sunbelt or the Shareholders and to require Pride,
Sunbelt and the Shareholders through specific performance (which
Pride, Sunbelt and the Shareholders acknowledge to be an appropriate
remedy) to consummate the sale in accordance with the terms of this
Agreement, or (ii) to terminate this Agreement by written notice to
Pride, Sunbelt and the Shareholders; provided, however, that Pride,
Sunbelt and the Shareholders shall have a period of ten (10) days
following written notice from Group to cure any breach of this
Agreement, if such breach is curable. The availability of specific
performance shall be in addition to any other remedies or claims for
damages Group may have at law or in equity for breaches or defaults by
Pride, Sunbelt or the Shareholders of their respective obligations
hereunder.
13.3 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligations of the parties hereunder,
except for (i) the obligations under Section 13.2 hereof and (ii) the
obligations set forth in the next succeeding sentence of this Section 13.3.
Upon any termination of this Agreement, each party hereto will redeliver all
documents, work papers and other materials of any other party relating to the
transactions contemplated hereby, and all copies of such materials, whether so
obtained before or after the execution hereof, to the party furnishing the
same.
ARTICLE XIV
SURVIVAL AND INDEMNIFICATION
14.1 Indemnification of the Shareholders. Group shall indemnify
and hold the Shareholders and their Affiliates (the "Shareholder Indemnitees")
harmless from and against any and all damages, including exemplary damages and
penalties, losses, deficiencies, costs, expenses, obligations, fines,
expenditures, claims and liabilities, including reasonable counsel fees and
reasonable expenses of investigation, defending and prosecuting litigation
(collectively, the "Damages"), suffered by the Shareholder Indemnitees as a
result of, caused by, arising out of, or in any way relating to (i) any
misrepresentation, breach of warranty, or nonfulfillment of any agreement or
covenant on the part of Group under this Agreement or any misrepresentation in
or omission from any list, schedule, certificate, or other instrument furnished
or to be furnished to Pride or the Shareholders by Group pursuant to the terms
of this Agreement, or (ii) any liability or obligation (other than those for
which the Group Indemnitees are being indemnified for under Sections 14.2 and
14.3 hereof) which pertains to the ownership, operation or conduct of the
Business or assets of Pride, other than the Alexandria Operations or the assets
used in the Alexandria Operations, arising from any acts, omissions, events,
conditions or circumstances occurring on or after the Closing Date. Group also
agrees to indemnify
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and hold Rice harmless from and against any Damages arising out of his personal
guaranty of the indebtedness owed by Pride to the LEDC.
14.2 Indemnification of Group by Pride Shareholders. The Pride
Shareholders (except Sunbelt) and LLC, jointly and severally, shall indemnify
and hold Group and its Affiliates (the "Group Indemnitees") harmless from and
against any and all Damages suffered by the Group Indemnitees as a result of,
caused by, arising out of, or in any way relating to (i) any misrepresentation,
breach of warranty, nonfulfillment of any agreement or covenant on the part of
Pride or the Pride Shareholders under this Agreement, or any misrepresentation
in or omission from any list, schedule, certificate or other instrument
furnished or to be furnished to Group by Pride or the Pride Shareholders
pursuant to the terms of this Agreement, or (ii) any liability or obligation
(other than those for which the Shareholder Indemnitees are being indemnified
for under Section 14.1 hereof) which pertains to the ownership, operation or
conduct of the Business or the assets of Pride arising from any acts,
omissions, events, conditions or circumstances occurring before the Closing
Date. Notwithstanding the foregoing, the sole remedy of Group and its
Affiliates against LLC under this Section 14.2 shall be to reduce and offset
the Pride Debt to the extent of the Damages, but in no event more than $70,000
in the aggregate, and LLC shall have no personal liability for payment of such
Damages.
14.3 Indemnification of Group by Sunbelt Shareholders. The Sunbelt
Shareholders, jointly and severally, shall indemnify and hold the Group
Indemnitees harmless from and against any and all Damages suffered by the Group
Indemnitees as a result of, caused by, arising out of, or in any way related to
(i) any misrepresentation, breach of warranty, nonfulfillment of any agreement
or covenant on the part of Sunbelt or the Sunbelt Shareholders under this
Agreement, or any misrepresentation in or omission from any list, schedule,
certificate or other instrument furnished or to be furnished to Group by
Sunbelt or the Sunbelt Shareholders pursuant to the terms of this Agreement,
(ii) any liability or obligation (other than those for which the Shareholder
Indemnitees are being indemnified for under Section 14.1 hereof), which
pertains to the ownership, operation or conduct of the business or assets of
Sunbelt arising from any acts, omissions, events, conditions or circumstances
occurring before the Closing Date, or (iii) any of the liabilities identified
on Schedule 5.5 hereto.
14.4 Indemnification of Pride. Rice shall indemnify and hold Pride
and its Affiliates (the "Pride Indemnitees") harmless from and against any and
all Damages suffered by the Pride Indemnitees as a result of, caused by,
arising out of, or in any way relating to (i) any liability or obligation which
pertains to the ownership, operation or conduct of the Alexandria Operations or
the assets used in the Alexandria Operations, or (ii) any of the liabilities
identified on Schedule 2.3 hereto.
14.5 Demands. Each indemnified party hereunder agrees that
promptly upon its discovery of facts giving rise to a claim for indemnity under
the provisions of this Agreement, including receipt by it of notice of any
demand, assertion, claim, action or proceeding, judicial or otherwise, by any
third party (such third party actions being collectively referred to herein as
the "Claim"), with respect to any matter as to which it claims to be entitled
to indemnity under the provisions of this Agreement,
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it will give prompt notice thereof in writing to the indemnifying party,
together with a statement of such information respecting any of the foregoing
as it shall have. Such notice shall include a formal demand for
indemnification under this Agreement. The indemnifying party shall not be
obligated to indemnify the indemnified party with respect to any Claim if the
indemnified party knowingly failed to notify the indemnifying party thereof in
accordance with the provisions of this Agreement in sufficient time to permit
the indemnifying party or its counsel to defend against such matter and to make
a timely response thereto including, without limitation, any responsive motion
or answer to a complaint, petition, notice or other legal, equitable or
administrative process relating to the Claim, only insofar as such knowing
failure to notify the indemnifying party has actually resulted in prejudice or
damage to the indemnifying party.
14.6 Right to Contest and Defend. The indemnifying party shall be
entitled at its cost and expense to contest and defend by all appropriate legal
proceedings any Claim with respect to which it is called upon to indemnify the
indemnified party under the provisions of this Agreement; provided, that notice
of the intention to contest shall be delivered by the indemnifying party to the
indemnified party within 20 days from the date of receipt by the indemnifying
party of notice by the indemnified party of the assertion of the Claim. Any
such contest may be conducted in the name and on behalf of the indemnifying
party or the indemnified party as may be appropriate. Such contest shall be
conducted by reputable counsel employed by the indemnifying party, but the
indemnified party shall have the right but not the obligation to participate in
such proceedings and to be represented by counsel of its own choosing at its
sole cost and expense. The indemnifying party shall have full authority to
determine all action to be taken with respect thereto; provided, however, that
the indemnifying party will not have the authority to subject the indemnified
party to any obligation whatsoever, other than the performance of purely
ministerial tasks or obligations not involving material expense. If the
indemnifying party does not elect to contest any such Claim, the indemnifying
party shall be bound by the result obtained with respect thereto by the
indemnified party, having used its reasonable best efforts in resolution. At
any time after the commencement of the defense of any Claim, the indemnifying
party may request the indemnified party to agree in writing to the abandonment
of such contest or to the payment or compromise by the indemnified party of the
asserted Claim, whereupon such action shall be taken unless the indemnified
party determines that the contest should be continued, and so notifies the
indemnifying party in writing within 15 days of such request from the
indemnifying party. If the indemnified party determines that the contest
should be continued, the indemnifying party shall be liable hereunder only to
the extent of the amount that the other party to the contested Claim had agreed
unconditionally to accept in payment or compromise as of the time the
indemnifying party made its request therefor to the indemnified party.
14.7 Cooperation. If requested by the indemnifying party, the
indemnified party agrees to cooperate with the indemnifying party and its
counsel in contesting any Claim that the indemnifying party elects to contest
or, if appropriate, in making any counterclaim against the person asserting the
Claim, or any cross-complaint against any person, and the indemnifying party
will reimburse the indemnified party for any expenses incurred by it in so
cooperating. If the indemnifying party has not
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chosen to contest a Claim, the indemnifying party shall cooperate with the
indemnified party and its counsel in contesting any Claim at no cost or expense
to the indemnified party.
14.8 Right to Participate. The indemnified party agrees to afford
the indemnifying party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Claim against the indemnified party or conferences
with representatives of or counsel for such persons.
14.9 Payment of Damages. The indemnifying party shall pay to the
indemnified party in immediately available funds any amounts to which the
indemnified party may become entitled by reason of the provisions of this
Agreement, such payment to be made within five (5) days after any such amounts
are finally determined either by mutual agreement of the parties hereto or
pursuant to the final nonappealable judgment of a court of competent
jurisdiction.
14.10 Right of Offset. Group shall have the right to offset amounts
that may be owed to it under the provisions of this Article XIV by the original
payee of a Convertible Note against the amounts owed by Group to the holder of
the Convertible Note.
14.11 Survival of Representations and Warranties. The
representations and warranties contained in Articles IV, V, VI and VII of this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby for the maximum period
allowed by law.
ARTICLE XV
LLC AND PRIDE DEBT
15.1 Representations Regarding Pride Debt. LLC represents and
warrants that it is the sole legal and beneficial owner of the Pride Debt and
Pride Loan Documents, that Group has previously been provided true and complete
copies of the Pride Loan Documents, that, as of the date of this Agreement, the
outstanding principal balance owing by Pride on the Pride Debt is $333,017.13
and all accrued, unpaid interest has been paid through December 31, 1995 and
that there is no default or event which with notice or passage of time could
constitute a default by Pride of any of its covenants, representations or
warranties in the Pride Loan Documents.
15.2 Closing Transactions Relating to Pride Debt. At the Closing,
LLC and Pride shall execute and deliver appropriate amendments to the Pride
Loan Documents and an amended and restated promissory note in replacement for
the Pride Note to reflect the partial extinguishment of the Pride Debt and
reduced monthly payments based on the original amortization period for the
Pride Note, and to permit the transactions relating to the Alexandria
Operations as described in Section 2.3 to occur. The revised Pride Note will
also reflect the right of offset that Group has under the provisions of 14.2
above.
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ARTICLE XVI
MISCELLANEOUS
16.1 Notices. Any notice, request, instruction, correspondence or
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
If to Pride or the Pride Shareholders, addressed to:
Pride Aviation, Inc.
0000 Xxxxxx Xxxxx
Xxx Xxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxx, Xx.
Xxxxxxx, Xxxxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
If to Sunbelt, LLC or the Sunbelt Shareholders, addressed:
c/o Sunbelt Business Capital Incorporated
000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxx, Xx.
Xxxxxxx, Xxxxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
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If to Group, addressed to:
Aviation Group, Inc.
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxx Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next Business Day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be
confirmed promptly after transmission in writing by certified mail or personal
delivery. Any party may change any address to which Notice is to be given to
it by giving Notice as provided above of such change of address.
16.2 Governing Law. The provisions of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas (excluding any conflicts-of-law rule or principle that might refer
same to the laws of another jurisdiction).
16.3 Entire Agreement; Amendments and Waivers. This Agreement
(including the exhibits and schedules hereto) constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as set forth specifically herein or contemplated
hereby. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The
failure of a party to exercise any right or remedy shall not be deemed or
constitute a waiver of such right or remedy in the future. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (regardless of whether similar), nor shall any
such waiver constitute a continuing waiver unless otherwise expressly provided.
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16.4 Binding Effect and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns; but neither this Agreement nor any
of the rights, benefits or obligations hereunder shall be assigned, by
operation of law or otherwise, by any party hereto without the prior written
consent of the other party. Nothing in this Agreement, express or implied, is
intended to confer upon any person or entity other than the parties hereto and
their respective permitted successors and assigns, any rights, benefits or
obligations hereunder.
16.5 Severability. If any provision of the Agreement is rendered
or declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Group, Pride,
Sunbelt and the Shareholders, as applicable, shall promptly meet and negotiate
substitute provisions for those rendered or declared illegal or unenforceable
so as to preserve as nearly as possible the contemplated economic effects of
the transactions, but all of the remaining provisions of this Agreement shall
remain in full force and effect.
16.6 Headings. The headings of the sections herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
16.7 Execution. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original and all of which shall
constitute one instrument.
16.8 Publicity. Except as otherwise required by applicable laws or
regulations, Pride, Sunbelt, the Shareholders and Group agree to not issue any
press release or make any other public statement, in each case relating to or
connected with or arising out of this Agreement or the matters contained
herein, without obtaining the prior approval of the other parties hereto to the
contents and the manner of presentation and publication thereof.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Stock
Purchase Agreement to be executed on its or his behalf as of the date first
above written.
GROUP:
AVIATION GROUP, INC.
By: /s/ XXX XXXXXXX
--------------------------------------
Xxx Xxxxxxx, President
PRIDE:
PRIDE AVIATION, INC.
By: /s/ XXXXX X. XXXX
--------------------------------------
Xxxxx X. Xxxx, President
SUNBELT:
SUNBELT BUSINESS CAPITAL
INCORPORATED
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx, President
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LLC:
SUNBELT BUSINESS CAPITAL, L.L.C.
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx, Manager
PRIDE SHAREHOLDERS:
/s/ XXXX XXXXXXXXXX
-----------------------------------------
Xxxx Xxxxxxxxxx
/s/ XXXXX X. XXXX
-----------------------------------------
Xxxxx X. Xxxx
/s/ XXXXX X. XXXX
-----------------------------------------
Xxxxx X. Xxxx
-----------------------------------------
Xxx Xxxxxxxx
SUNBELT BUSINESS CAPITAL
INCORPORATED
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx, President
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SUNBELT SHAREHOLDERS:
/s/ XXXXXXX X. XXXX
-----------------------------------------
Xxxxxxx X. Xxxx
/s/ XXXXXXXX XXXXX XXXXXXXX
-----------------------------------------
Xxxxxxxx Xxxxx Xxxxxxxx
/s/ XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
/s/ XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
JESSWALT, INC.
By: /s/ XXXX X. XXXXXXX
--------------------------------------
Xxxx X. Xxxxxxx, President
/s/ XXXXX XXXXX XXXXX
-----------------------------------------
Xxxxx Xxxxx Xxxxx
/s/ XXXX X. XXXXX
-----------------------------------------
Xxxx X. Xxxxx
3650 INVESTMENT CORPORATION, L.C.
By: /s/ XXXXXX XXXX XXXXXXXXX
--------------------------------------
Xxxxxx Xxxx Xxxxxxxxx, President
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/s/ MAY X. XXXXXXX
-----------------------------------------
May X. Xxxxxxx
/s/ XXXXXXX X. XXXXXX
-----------------------------------------
Xxxxxxx X. Xxxxxx
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ADDENDUM
JESSWALT, INC. ADDENDUM TO SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT BY AND
AMONG AVIATION GROUP, INC., PRIDE AVIATION GROUP, INC., SUNBELT BUSINESS
CAPITAL INCORPORATED, SUNBELT BUSINESS CAPITAL, C.C.G. AND ALL OF THE
STOCKHOLDERS OF PRIDE AVIATION, INC. AND SUNBELT BUSINESS CAPITAL INCORPORATED
Jesswalt, Inc. is not an accredited investor. Jesswalt, Inc. has
received advice from a person having knowledge and experience in
matters involving securities investments such that Jesswalt, Inc. is
capable of evaluating the relative risks and merits of this
investment. Jesswalt, Inc. also acknowledges receipt of Aviation
Group, Inc's Confidential Private Offering Memorandum dated January
15, 1996 with respect to its offering of 500,000 shares of common
stock at a price of $3.00 per share.
