Exhibit 10(w)
ASSET PURCHASE AGREEMENT
BY AND AMONG
VTF CORPORATION
AS PURCHASER
AND
THE FLIGHT INTERNATIONAL GROUP, INC.
FLIGHT INTERNATIONAL, INC.
FLIGHT INTERNATIONAL AVIATION, INC.
FLIGHT INTERNATIONAL SALES AND LEASING, INC.
FLIGHT ALASKA, INC.
AND
FLIGHT INTERNATIONAL OF FLORIDA, INC.
AS SELLERS
DATED AS OF MAY 9, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................................1
ARTICLE II ASSETS ACQUIRED; LIABILITIES ASSUMED.................................................................10
Section 2.1 Purchase and Sale of Assets......................................................................10
Section 2.2 Excluded Assets..................................................................................12
Section 2.3 Assumed Liabilities..............................................................................12
Section 2.4 Excluded Liabilities.............................................................................13
Section 2.5 Contested Obligations............................................................................14
ARTICLE III PURCHASE PRICE AND PAYMENT TERMS....................................................................15
Section 3.1 Purchase of the Asset by Purchaser; Total Purchase Price.........................................15
Section 3.2 Payment of Purchase Price........................................................................15
Section 3.3 Escrow Agreement; Initial Escrow Amount..........................................................15
Section 3.4 Transfer Taxes...................................................................................15
Section 3.5 Allocation of Purchase Price.....................................................................16
ARTICLE IV THE CLOSING..........................................................................................16
Section 4.1 Closing Date.....................................................................................16
Section 4.2 Relinquishment of Control........................................................................16
Section 4.3 Closing Date Deliveries..........................................................................16
Section 4.4 Further Assurances...............................................................................16
Section 4.5 Financing........................................................................................17
ARTICLE V CERTAIN COVENANTS.....................................................................................17
Section 5.1 Access to Books and Records and Personnel........................................................17
Section 5.2 Post-Closing Access..............................................................................17
Section 5.3 Notice of Certain Events.........................................................................18
Section 5.4 Conduct of Business by the Sellers...............................................................18
Section 5.5 Regulatory Matters...............................................................................21
Section 5.6 Updated Financial Information....................................................................22
Section 5.7 Transaction Proposals............................................................................22
Section 5.8 Customers and Suppliers..........................................................................22
Section 5.9 Arrangements with Employees......................................................................23
Section 5.10 Purchaser's Governmental Approvals..............................................................23
Section 5.11 Transfer of Purchased Contracts; Third Party Consents...........................................23
Section 5.12 Provisions Respecting Government Contracts......................................................23
Section 5.13 COBRA...........................................................................................25
Section 5.14 Preparation of the Proxy Statement..............................................................25
Section 5.15 Shareholder Meeting.............................................................................25
Section 5.16 Sellers Representative Agreement................................................................26
Section 5.17 Noncompetition..................................................................................26
Section 5.18 Nondisclosure of Proprietary Data...............................................................27
Section 5.19 Refund Claims and Warranty Claims...............................................................28
Section 5.20 Satisfaction of Warranty and Refund Claims......................................................28
Section 5.21 Change Orders...................................................................................28
Section 5.22 Bulk Sales Law..................................................................................29
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE SELLERS........................................................29
Section 6.1 Organization and Standing of each Seller.........................................................29
Section 6.2 Authorization and Binding Obligation of each Seller..............................................29
Section 6.3 Non-Contravention................................................................................30
Section 6.4 Indebtedness.....................................................................................30
Section 6.5 Ability to Perform Obligations...................................................................30
Section 6.6 Dividends and Other Distributions................................................................30
Section 6.7 Accounting Records...............................................................................30
Section 6.8 Financial Statements; Changes; Contingencies.....................................................31
Section 6.9 The Assets.......................................................................................31
Section 6.10 Accounts Receivable.............................................................................32
Section 6.11 Inventory.......................................................................................32
Section 6.12 Intangible Personal Property....................................................................32
Section 6.13 Real Property...................................................................................34
Section 6.14 Tangible Personal Property......................................................................34
Section 6.15 Necessary Properties............................................................................35
Section 6.16 Insurance.......................................................................................35
Section 6.17 Accounts Payable................................................................................36
Section 6.18 Tax Matters.....................................................................................36
Section 6.19 Litigation......................................................................................37
Section 6.20 Labor Relations.................................................................................38
Section 6.21 Employee Benefits...............................................................................38
Section 6.22 Certain Interests...............................................................................39
Section 6.23 Governmental Approvals; Compliance with Laws....................................................39
Section 6.24 Customers.......................................................................................39
Section 6.25 Suppliers.......................................................................................40
Section 6.26 Environmental Matters...........................................................................40
Section 6.27 Brokers, Finders................................................................................41
Section 6.28 Material Contracts..............................................................................41
Section 6.29 Absence of Undisclosed Changes..................................................................43
Section 6.30 Government Contracts............................................................................43
Section 6.31 Clearances......................................................................................45
Section 6.32 Disclosure; Due Diligence.......................................................................45
Section 6.33 SEC Reports.....................................................................................45
Section 6.34 Information.....................................................................................45
Section 6.35 Customer Warranties and Return Policies.........................................................46
Section 6.36 Products Liability..............................................................................46
Section 6.37 Federal Reserve Board Regulations...............................................................46
Section 6.38 No Controlling Shareholder......................................................................46
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................................47
Section 7.1 Organization and Standing of Purchaser...........................................................47
Section 7.2 Authorization and Binding Obligation of Purchaser................................................47
Section 7.3 Ability to Perform Obligations...................................................................47
Section 7.4 Brokers, Finders.................................................................................47
Section 7.5 U.S. Persons.....................................................................................47
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ARTICLE VIII TERMINATION........................................................................................48
Section 8.1 Termination of Agreement.........................................................................48
Section 8.2 Effect of Termination............................................................................49
Section 8.3 Expenses.........................................................................................49
ARTICLE IX CLOSING CONDITIONS OF PURCHASER......................................................................49
Section 9.1 Representations, Warranties and Covenants of the Sellers.........................................49
Section 9.2 Deliveries to Be Made by the Sellers at the Closing..............................................50
Section 9.3 Shareholder Approval.............................................................................51
Section 9.4 Third Party Consents.............................................................................51
Section 9.5 CAS-MOS Contract.................................................................................51
Section 9.6 Orders; Illegality...............................................................................51
Section 9.7 Absence of Investigations and Proceedings........................................................51
Section 9.8 Governmental Approvals...........................................................................52
Section 9.9 Absence of Certain Changes.......................................................................52
Section 9.10 Financing.......................................................................................52
Section 9.11 Due Diligence...................................................................................52
Section 9.12 Environmental Audits............................................................................52
Section 9.13 Release of Liens................................................................................52
Section 9.14 Employment Agreement............................................................................52
Section 9.15 Non-Competition Agreement.......................................................................53
Section 9.16 Transfer Taxes..................................................................................53
Section 9.17 Maritime Transaction............................................................................53
Section 9.18 Retention of Key Employees......................................................................53
Section 9.19 Escrow Agreement................................................................................53
Section 9.20 Sellers Representative Agreement................................................................53
ARTICLE X CLOSING CONDITIONS OF THE SELLERS.....................................................................53
Section 10.1 Representations, Warranties and Covenants of Purchaser..........................................53
Section 10.2 Deliveries to be Made by Purchaser at the Closing...............................................54
Section 10.3 Shareholder Approval............................................................................54
Section 10.4 Orders; Illegality..............................................................................55
Section 10.5 Escrow Agreement................................................................................55
Section 10.6 Absence of Investigations and Proceedings.......................................................55
Section 10.7 Governmental Approvals..........................................................................55
ARTICLE XI INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................................55
Section 11.1 Indemnification by the Sellers..................................................................55
Section 11.2 Indemnification by Purchaser....................................................................56
Section 11.3 Cooperation.....................................................................................57
Section 11.4 Limitations on Indemnification..................................................................57
Section 11.5 Notice to Indemnifying Party....................................................................57
Section 11.6 Defense by Indemnifying Party...................................................................57
Section 11.7 Survival of Representations and Warranties......................................................58
Section 11.8 Survival of Representations and Covenants of Purchaser..........................................59
ARTICLE XII CONFIDENTIALITY.....................................................................................59
Section 12.1 Confidentiality of the Sellers..................................................................59
Section 12.2 Confidentiality of Purchaser....................................................................60
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ARTICLE XIII MISCELLANEOUS......................................................................................61
Section 13.1 Change Corporate Name...........................................................................61
Section 13.2 Expenses........................................................................................61
Section 13.3 Notices and Other Communications................................................................61
Section 13.4 Counterparts....................................................................................62
Section 13.5 Written Agreement to Govern.....................................................................62
Section 13.6 Assignability...................................................................................62
Section 13.7 No Waiver of Rights.............................................................................62
Section 13.8 Subject Headings................................................................................62
Section 13.9 Further Assurances..............................................................................62
Section 13.10 Schedules and Exhibits.........................................................................63
Section 13.11 Severability...................................................................................63
Section 13.12 Publicity and Reports..........................................................................63
Section 13.13 Parties in Interest; Joint and Several Liability of the Sellers................................64
Section 13.14 Specific Performance...........................................................................64
Section 13.15 GOVERNING LAW; CONSENT TO JURISDICTION.........................................................64
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SCHEDULES AND EXHIBITS
Schedule 1.......................Permitted Encumbrances
Schedule 2.2.....................Excluded Assets
Schedule 2.3.4...................Affiliate Trade Payables
Schedule 3.5.....................Allocation of Purchase Price
Schedule 5.4.....................Conduct of Business
Schedule 6.1.....................Organization
Schedule 6.3.....................Non-Contravention
Schedule 6.4.....................Indebtedness
Schedule 6.8.....................Financial Statements
Schedule 6.10....................Accounts Receivable
Schedule 6.11....................Inventory
Schedule 6.12....................Intangible Personal Property
Schedule 6.13....................Real Property
Schedule 6.14....................Tangible Personal Property
Schedule 6.16....................Insurance
Schedule 6.18....................Tax Matters
Schedule 6.19....................Litigation
Schedule 6.20....................Labor Relations
Schedule 6.21....................Employee Benefits; ERISA
Schedule 6.22....................Certain Interests
Schedule 6.23....................Governmental Approvals; Compliance with Laws
Schedule 6.24....................Customer
Schedule 6.25....................Suppliers
Schedule 6.26 ...................Environmental Matters
Schedule 6.28....................Material Contracts
Schedule 6.29....................Undisclosed Changes
Schedule 6.30....................Government Contracts
Schedule 6.31....................Clearances
Schedule 6.33....................SEC Reports
Schedule 6.35....................Customer Warranties and Return Policies
Schedule 6.36....................Product Liability
Schedule 13.3....................Notice Addresses
Exhibit A........................Form of Escrow Agreement
Exhibit B........................Form of Assignment and Assumption Agreement Sellers' Assumed
Exhibit C........................Sellers' Assumed Indebtedness Schedule
Exhibit D........................Form of Sellers Representative Agreement
Exhibit E........................Form of Affidavit of Non-Foreign Status (Entity)
Exhibit F........................Term Sheet For Xxxxxxx Employment Agreement
Exhibit G........................Term Sheet For Bone Employment and Non-
Competition Agreement
Exhibit H........................Form of Opinion of Purchaser's Counsel
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made this 9th day of May, 2002, by and
among VTF CORPORATION, a Delaware corporation (together with its successors or
assigns, "Purchaser"), THE FLIGHT INTERNATIONAL GROUP, INC., a Georgia
corporation ("FIG"), FLIGHT INTERNATIONAL, INC., a Georgia corporation ("FII"),
FLIGHT INTERNATIONAL AVIATION, INC., a Georgia corporation ("FIA"), FLIGHT
INTERNATIONAL SALES AND LEASING, INC., a Delaware corporation ("FIS"), FLIGHT
ALASKA, INC., a Delaware corporation ("FAI"), and FLIGHT INTERNATIONAL OF
FLORIDA, INC., a Florida corporation ("FIOF", and together with FIG, FII, FIA,
FIS and FAI, each is individually referred to herein as a "Seller" and are
collectively referred to herein as the "Sellers").
RECITALS
1. The Sellers operate in the aerospace and aviation services
industries and individually or collectively (i) perform military training
services for the United States Department of Defense, other government agencies
and foreign countries, (ii) provide training and testing in the aerospace
industry and (iii) operate a fixed base operation at the Newport
News/Williamsburg International Airport, a scheduled cargo and charter passenger
airline throughout Alaska, and aircraft modification, repair and overhaul
centers, together with other activities ancillary or related thereto
(collectively, the "Business").
2. The Sellers desire to sell to Purchaser, and Purchaser desires
to purchase from the Sellers, all of their respective assets related to the
Business, and the Purchaser is willing to assume certain liabilities of the
Sellers in connection therewith.
3. As a condition and inducement to Purchaser's willingness to
enter into this Agreement, concurrently with the execution and delivery of this
Agreement, Purchaser and Xxxxx X. Xxxxxxx are entering into a Voting Agreement,
dated as of the date of this Agreement, pursuant to which Xx. Xxxxxxx has agreed
to vote his shares of FIG capital stock in favor of the proposal to approve the
transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of and subject to the mutual
undertakings and agreements hereinafter set forth, Purchaser and the Sellers
agree as follows:
ARTICLE I
DEFINITIONS
"Adjustment Amount" shall mean the amount by which the Assumed
Indebtedness exceeds $34,800,000; provided that the Adjustment Amount shall be
reduced on a dollar-for-dollar basis by the Maritime Adjustment Amount. If the
Assumed Indebtedness is equal to or less than $34,800,000, the Adjustment Amount
shall be zero.
1
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, directly or indirectly controlled by, or
under direct or indirect common control with, such Person; or if such Person is
a partnership, any general partner of such Person or a Person controlling any
such general partner. For purposes of this definition, "control" (including
"controlled by" and "under common control with") shall mean the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether through the ownership of voting securities or by contract
or otherwise.
"Agreement" shall mean this Asset Purchase Agreement, as the same may
be amended or otherwise modified from time to time in accordance with its terms.
"April 30 Balance Sheet" shall have the meaning set forth in Section
6.8.1.
"Assets" shall have the meaning set forth in Section 2.1.
"Associate" of a Person shall mean: (i) a corporation or organization
(other than the Sellers) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities; (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar capacity; and (iii) any relative or spouse of such Person or any
relative of such spouse.
"Assumed Indebtedness" shall mean the combined Indebtedness of Maritime
and its Subsidiaries and the Sellers assumed or incurred, directly or
indirectly, by Purchaser or one or more of its Subsidiaries on the Closing Date,
as set forth on the Sellers' Assumed Indebtedness Schedule.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
"Audited Financial Statements" shall have the meaning set forth in
Section 6.8.1.
"Base Purchase Price" shall have the meaning set forth in Section 3.1.
"Best Efforts" shall mean the commercially reasonable efforts that a
Person desirous of achieving a result would use in similar circumstances to
insure that such result is achieved as reasonably expeditiously as possible.
"Bone" shall mean Xxxx X. Bone.
"Bone Employment and Non-Competition Agreement" shall have the meaning
set forth in Section 9.15.
"Business" shall have the meaning set forth in the Recitals hereto.
"Closing" shall have the meaning set forth in Section 4.1.
"Closing Date" shall have the meaning set forth in Section 4.1.
2
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Contracts" shall mean all contracts, agreements and legally binding
commitments relating to the Business or the Assets or to which any of the
Sellers is a party or has an interest, whether oral or written, including, but
not limited to, purchase, sale or other commitments, Customer Contracts,
Government Contracts, distributorship, franchise or similar agreements, patent
or trademark licensing agreements (either as licensor or licensee), lease or
sublease agreements (either as lessor or lessee), aircraft leases, equipment
leases, employment agreements (including, but not limited to, agreements entered
into by employees of any of the Sellers relating to the transfer and/or
safeguarding of intellectual property rights), consulting agreements and union
or collective bargaining agreements, guarantees, loan agreements,
non-competition agreements, severance agreements, letters of credit, joint
venture or partnership agreements and supply or requirements contracts.
"Customer Contracts" shall mean all agreements, service contracts,
purchase orders, sales confirmations or similar commitments entered into by any
of the Sellers, which provide for obligations to deliver Services and/or
Products, the rights to be paid for those Services and/or Products and the
obligations and rights that are ancillary to those obligations and rights.
"Customer Lists" shall mean all lists (including name, and to the
extent known to any Seller, current address and telephone number) of Persons
which have purchased Services and/or Products from the Business since January 1,
1999.
"Dollars" or "$" shall mean United States dollars.
"Encumbrance" in respect of any property or assets, shall mean any
encumbrance or title defect of whatever kind or nature, regardless of form,
whether or not registered or registrable and whether or not consensual or
arising by Law, including any lien, mortgage, pledge, security interest,
assignment, lease, option, easement, servitude, right-of-way, conditional sales
contract, encroachment, restrictive covenant, right of first refusal, right of
use or any other right of any kind or nature whatsoever (or any agreement to
grant or furnish any of the foregoing) which affects ownership or possession of,
or title to, or any interest in, or the right to use or occupy such property or
assets.
"Environmental Law" shall mean any Federal, state or local law, rule,
regulation, order, treaty, statute or permit of or issued by any Governmental
Authority, as amended from time to time, relating to the protection of human
health, safety, the environment, natural resources and wildlife, including, but
not limited to those relating to (i) the protection or use of surface water,
groundwater, rivers and other bodies of water; (ii) the protection of ambient
and indoor air quality; (iii) the management, manufacture, possession, presence,
use, generation, transportation, distribution, treatment, storage, disposal,
release, threatened release, abatement, removal, remediation of, or exposure to,
any Hazardous Substance; or (iv) the prevention, mitigation, or remediation of
environmental pollution in any form.
"Environmental Permits" shall have the meaning set forth in Section
6.26.4.
3
"Environmental Reports" shall have the meaning set forth in Section
6.26.9.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any (i) corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Code) as any of the Sellers, (ii) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with any of the Sellers, or (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
any of the Sellers, any corporation described in clause (i) above or any
partnership or trade or business described in clause (ii) above.
"Escrow Agent" shall mean the escrow agent set forth in the Escrow
Agreement.
"Escrow Agreement" shall mean the Escrow Agreement described in Section
3.3 to be entered into by Purchaser, the Representative and the Escrow Agent,
substantially in the form of Exhibit A hereto.
"Escrow Fund" shall mean the Initial Escrow Amount and all interest and
earnings thereon.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 2.4.
"FAI" shall have the meaning set forth in the Preamble hereto.
"FIA" shall have the meaning set forth in the Preamble hereto.
"FIG" shall have the meaning set forth in the Preamble hereto.
"FIG Board Recommendation" shall have the meaning set forth in Section
5.14.
"FII" shall have the meaning set forth in the Preamble hereto.
"Final Proposed Schedules" shall have the meaning set forth in Section
13.10.
"FIOF" shall have the meaning set forth in the Preamble hereto.
"FIS" shall have the meaning set forth in the Preamble hereto.
"GAAP" shall mean United States generally accepted accounting
principles.
"Goodwill" shall have the meaning set forth in Section 2.1.7.
4
"Government Bid" shall have the meaning set forth in Section 6.30.1.
"Government Contract" shall mean any prime contract, subcontract,
teaming agreement or arrangement, joint venture, basic ordering agreement,
letter contract, purchase order, delivery order, Government Bid, change order,
or other contractual commitment of any kind relating to the Business or to which
any of the Sellers is a party or has an interest, including, but not limited to,
any Contract between any Seller and (i) any Governmental Authority, (ii) any
prime contractor of any Governmental Authority, or (iii) any subcontractor with
respect to any contract described in clauses (i) or (ii) above.
"Government Contract Novations" shall mean, with respect to any
Government Contract, an instrument reasonably satisfactory in form and substance
to Purchaser pursuant to which all of each Seller's rights, claims, benefits and
liabilities thereunder shall have been validly conveyed, transferred, assigned
and novated to Purchaser by all parties thereto.
"Governmental Approvals" shall have the meaning set forth in Section
2.1.8.
"Governmental Authority" shall mean any Federal, state, regional,
municipal, or local government, or other political subdivision thereof, U.S. or
foreign, or any entity, authority, agency, court, representative or Person
exercising executive, legislative, judicial, regulatory or administrative
functions on behalf of such governmental entity or subdivision.
"Hazardous Substance" shall mean all substances, wastes, pollutants,
contaminants and materials regulated, or defined or designated as hazardous,
dangerous, or toxic, pursuant to any Environmental Law or any other law, rule,
regulation, order, decree, or ordinance having the force of law, of any
Governmental Authority, including, without limitation, all hazardous substances,
oils, pollutants or contaminants as such terms are defined in the National Oil
and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 and the rules and regulations promulgated thereunder, as the same have
been and may hereafter be amended from time to time.
"Indebtedness" shall mean, with respect to any Person, any obligations
(including, without limitation, principal, accrued interest, reimbursement or
indemnity obligations, prepayment penalties and fees) with respect to
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or representing
capital lease obligations or the balance deferred and unpaid of the purchase
price of any property, except such balance that constitutes a trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit) would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP, together with any guarantee of any item that would
constitute Indebtedness under the foregoing provision. The amount of any
Indebtedness outstanding as of any date shall be the principal amount or accrued
value thereof, plus accrued interest and other obligations, as of such date or,
in the case of any guarantee or other contingent obligation, the maximum
liability that may arise under such guarantee or contingent obligation.
5
"Indemnifiable Claim" shall mean any Loss for or against which any
party is entitled to indemnification under this Agreement.
"Indemnified Party" shall have the meaning set forth in Section 11.5.
"Indemnifying Party" shall have the meaning set forth in Section 11.5.
"Initial Escrow Amount" shall mean $1,000,000, which shall be deposited
by Purchaser with the Escrow Agent on the Closing Date pursuant to Section 3.3.
"Intangible Personal Property" shall have the meaning set forth in
Section 2.1.5.
"Interim Balance Sheet" shall have the meaning set forth in Section
6.8.1.
"Inventory" shall mean all inventories, including, without limitation,
inventories of raw materials, scrap, spare parts, work in progress, materials,
supplies, finished goods and consigned goods, owned by any of the Sellers or in
which any of the Sellers has any interest (including the right to use) or
otherwise relating to the Business, whether located on the premises of any of
the Sellers, in transit to or from such premises, in storage facilities or
otherwise.
"IRS" shall mean the Internal Revenue Service.
"Labor Agreements" shall mean, collectively, (i) all employment
agreements, collective bargaining agreements or other labor agreements to which
any of the Sellers is a party or by which any of the Sellers or any of their
respective properties is bound; (ii) all pension, profit sharing, deferred
compensation, bonus, stock option, stock purchase, savings, retainer,
consulting, retirement, welfare or incentive plans or contracts (including ERISA
Plans) to which any of the Sellers is a party or by which any of the Sellers or
their respective assets or properties is bound; and (iii) all plans or
agreements under which "fringe benefits" (including, but not limited to,
hospitalization plans or programs, medical insurance, vacation plans or
programs, sick plans or programs and related benefits) are afforded to any
employees of any of the Sellers.
"Law" or "Laws" shall mean all constitutions, treaties, laws, statutes,
codes, regulations, rules, ordinances or other binding actions or requirements
of any Governmental Authority, whether domestic, foreign or international.
"Leased Real Property" shall have the meaning set forth in Section
6.13.
"Liabilities and Costs" shall mean all indebtedness, claims,
liabilities, obligations, responsibilities, losses, diminutions in value,
damages, judgments, personal injury, death, punitive damages, economic damages,
treble damages, intentional, willful or wanton injury, damage or threat to the
environment, natural resources or public health or welfare, costs and expenses
(including, without limitation, reasonable attorney, expert, engineering and
consulting fees and costs and any fees and costs associated with any
investigation, feasibility, or remedial action studies), fines, penalties and
monetary sanctions, and interest, whether accrued, absolute or contingent, and
whether or not of a kind required by GAAP to be set forth on a financial
statement or in notes thereto.
6
"Loss" or "Losses" shall mean all damages, awards, judgments, payments,
diminutions in value and other Liabilities and Costs, however suffered or
characterized, all interest thereon, all costs and expenses of investigating any
claim, lawsuit or arbitration and any appeal therefrom, all reasonable
attorneys' fees incurred in connection therewith, whether or not such claim,
lawsuit or arbitration is ultimately defeated and, subject to Article XI hereof,
all amounts paid incident to any compromise or settlement of any such claim,
lawsuit or arbitration.
"Maritime" shall mean Maritime Sales & Leasing, Inc., a Delaware
corporation.
"Maritime Adjustment Amount" shall mean the amount by which the cash
purchase price being paid by Purchaser pursuant to the Maritime Purchase
Agreement is reduced on account of Assumed Indebtedness, as set forth in the
certificate executed by each Seller, Maritime and each shareholder of Maritime
and delivered pursuant to Section 9.2.11.
"Maritime Purchase Agreement" shall have the meaning set forth in
Section 9.17.
"Material Adverse Effect" shall mean any change in or effect that,
either individually or in the aggregate with all other changes or effects, (i)
is or would be materially adverse to (y) the assets, results of operations,
condition (financial or otherwise) or prospects of the Business, taken as a
whole, or (z) the value or utility of the Assets, taken as a whole, or (ii)
would materially impair the ability of Purchaser or the Sellers to consummate
the transactions contemplated by this Agreement.
"Material Contract" shall have the meaning set forth in Section 6.28.1.
"Material Tangible Personal Property" shall have the meaning set forth
in Section 6.14.
"Monthly Financial Statements" shall have the meaning set forth in
Section 5.6.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding five
years was, contributed to by any of the Sellers or an ERISA Affiliate.
"Occurrence" shall have the meaning set forth in Section 6.36.3.
"Order" shall mean any decree, order, judgment, writ, award,
injunction, rule or consent of or by a Governmental Authority.
"Owned Real Property" shall have the meaning set forth in Section 6.13.
"Permitted Encumbrances" shall mean (i) Encumbrances for Taxes on
property not yet due and payable or which are being diligently contested in good
faith and by appropriate proceedings diligently conducted, and for which any of
the Sellers have recorded full and adequate reserves as required by GAAP; (ii)
Encumbrances imposed by Law, such as carrier's, warehousemen's and mechanic's
liens and other similar liens, which arise in the ordinary course of the
Business with respect to obligations not yet due or being diligently contested
in good faith by appropriate proceedings and for which any of the Sellers shall
7
have recorded full and adequate reserves as required by GAAP; (iii) Encumbrances
arising out of pledges or deposits under workmen's compensation laws,
unemployment insurance, old age pensions, or other social security benefits
other than any lien imposed by ERISA; (iv) Encumbrances incurred or deposits
made in the ordinary course of the Business to secure surety bonds, provided
that such Encumbrances shall extend only to cash collateral for such surety
bonds; and (iv) Encumbrances, set forth on Schedule 1.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, bank, unincorporated organization or
government or any department, agency or political subdivision thereof or other
legal entity.
"Plan" shall have the meaning given in ERISA ss.3(3) (other than a
Multiemployer Plan) in respect of which any of the Sellers or any ERISA
Affiliate is, or within the immediately preceding five years was, an "employer"
as defined in Section 3(5) of ERISA.
"Prepaid Items" shall have the meaning set forth in Section 2.1.6.
"Products" shall mean products, technology and services manufactured,
sold, licensed, under development or otherwise exploited or provided by any of
the Sellers, including replacement parts or components sold by any of the
Sellers for other products.
"Projections" shall have the meaning set forth in Section 6.8.1.
"Proxy Statement" shall have the meaning set forth in Section 5.14.1.
"Purchased Contracts" shall have the meaning set forth in Section
2.1.3.
"Purchased Records" shall have the meaning set forth in Section 2.1.4.
"Purchaser" shall have the meaning set forth in the Preamble hereto.
"Purchaser Documents" shall mean all other agreements, instruments,
certificates and other documents to be executed and delivered by or on behalf of
Purchaser in connection with this Agreement.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 11.1.
"Real Property" shall have the meaning set forth in Section 2.1.9.
"Recall" shall have the meaning set forth in 6.36.1.
"Receivables" shall have the meaning set forth in Section 2.1.2.
"Refund Claims" shall have the meaning set forth in Section 5.19.
"Representative" shall mean FIG, as representative of the Sellers under
the Sellers Representative Agreement, or any successor representative or
representatives appointed under the Sellers Representative Agreement.
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"Restrictive Covenants" shall mean the covenants and agreements of the
Sellers contained in Sections 5.17, 5.18 and 12.1.
"Xxxxxxx" shall mean Xxxxx X. Xxxxxxx.
"Xxxxxxx Employment Agreement" shall have the meaning set forth in
Section 9.14.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in Section 6.33.1.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Sellers" shall have the meaning set forth in the Preamble hereto.
"Seller Documents" shall mean all other agreements, instruments,
certificates and other documents to be executed and delivered by or on behalf of
any Seller, Xxxxx X. Xxxxxxx or Xxxx X. Bone in connection with this Agreement.
"Seller Financial Statements" shall have the meaning set forth in
Section 6.8.1.
"Sellers' Assumed Indebtedness Schedule" shall have the meaning set
forth in Section 3.2.1.
"Sellers' Incomplete Schedules" shall have the meaning set forth in
Section 13.10.
"Sellers Indemnified Parties" shall have the meaning set forth in
Section 11.2.
"Sellers' Knowledge" shall mean the knowledge of any officer of any
Seller after reasonable investigation.
"Sellers Representative Agreement" shall have the meaning set forth in
Section 5.16.
"Services" shall mean services provided or sold by any of the Sellers
in the operation of the Business, or which any of the Sellers is a
sub-contractor for, or has sub-contracted to, another Person.
"Shareholder Meeting" shall have the meaning set forth in Section 5.15.
"Subsidiary" or "Subsidiaries" shall mean, with respect to any Person,
any corporation, partnership, joint venture or other legal entity of which such
Person, as the case may be (either alone or together with any other subsidiary),
owns, directly or indirectly, stock or other equity interests the holders of
which are generally entitled to more than 50% of the vote for the election of
the board of directors or other governing body of such corporation or other
legal entity.
"Tangible Personal Property" shall have the meaning set forth in
Section 2.1.1.
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"Taxes" shall have the meaning set forth in Section 2.4.2.
"Tax Returns" shall mean, collectively, all Federal, state, foreign and
local tax reports, returns, information returns and other related documents
required to be filed by any relevant taxing authority.
"Total Purchase Price" shall have the meaning set forth in Section 3.1.
"Transaction Proposal" shall have the meaning set forth in Section 5.7.
"Unaudited Interim Financial Statements" shall have the meaning set
forth in Section 6.8.1.
"U.S. Government" shall mean any Governmental Authority of the Federal
government of the United States of America.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act.
"Warranty Claims" shall have the meaning set forth in Section 5.19.
"Warranty Work" shall have the meaning set forth in Section 5.20.
ARTICLE II
ASSETS ACQUIRED; LIABILITIES ASSUMED
Section 2.1 Purchase and Sale of Assets. Subject to the terms and
conditions set forth in this Agreement and in reliance upon the representations
and warranties of the Sellers and Purchaser herein set forth, at the Closing,
the Sellers shall sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser shall purchase from the Sellers, all of each Seller's right, title and
interest, as of the Closing Date, in and to the Assets. The Assets shall be
conveyed free and clear of all liabilities, obligations and Encumbrances, other
than the Assumed Liabilities and Permitted Encumbrances. For purposes of this
Agreement, the term "Assets" shall mean all of the goodwill, assets, properties
and rights of every nature, kind and description, whether tangible or
intangible, real, personal or mixed, wherever located and whether or not carried
or reflected on the books and records of the Sellers, which are used in, or
which were acquired in connection with, the operation of the Business, excepting
only the Excluded Assets and any of the foregoing which relate exclusively to
the Excluded Assets. The Assets shall include, but not be limited to, the
following:
2.1.1 all furniture, fixtures, equipment, machinery, aircraft, aircraft
engines, aircraft components, electronic warfare equipment, trucks, boats,
automobiles, tools, supplies, spare parts, computer hardware, construction in
progress and other tangible assets which are owned by any of the Sellers or in
which any of the Sellers has an interest or which are used or useful in the
operation of the Business or relate to the Assets, including, without
limitation, any equipment or other tangible assets subject to a lease between
any Seller and any other Seller, and those items described on Schedule 6.14 (the
"Tangible Personal Property");
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2.1.2 all accounts, notes, accounts receivable, contract rights, drafts
and other forms of claims, demands, instruments, receivables and rights to the
payment of money or other forms of consideration, whether for goods sold or
leased, services performed or to be performed, or otherwise, which are owned by
any of the Sellers or in which any of the Sellers has an interest, together with
all guarantees, security agreements and rights and interests securing the same,
including, without limitation, that certain note receivable due April 2005 in
the original principal amount of $600,000 made by Reliance Aerotech Atlantic,
Inc. in favor of FIG (the "Receivables");
2.1.3 all of the rights and benefits accruing under all Contracts,
including all Government Contracts, and all Contracts entered into by any Seller
after the date hereof and until the Closing Date in compliance with the terms of
this Agreement (the "Purchased Contracts");
2.1.4 all operating data, files, general records, Customer Lists,
employee records, correspondence and other written records of each Seller to the
extent relating to the Business or the Assets, wherever located (the "Purchased
Records");
2.1.5 all of the intellectual property rights, marketing rights,
proprietary rights and other intangible properties which are owned by any of the
Sellers or in which any of the Sellers has an interest or which are used or
useful in the operation of the Business or relate to the Assets, including,
without limitation, (i) the rights to the corporate names of the Sellers; (ii)
trademarks, service marks, trade names, and each registration and application
for any of the foregoing; (iii) statutory, common law and registered copyrights,
and each registration and application therefor; (iv) patents and associated
inventions, industrial models, processes and designs, technical information,
know-how and operating, maintenance or other manuals and each registration and
application for any of the foregoing; (v) "software" and associated
documentation; (vi) trade secrets, including related processes or items of
know-how or other technical data; and (vii) those items described on Schedule
6.12 (the "Intangible Personal Property");
2.1.6 all prepaid and deferred items that relate to the Business or the
Assets, including all prepaid rentals and unbilled charges, fees and deposits
(the "Prepaid Items");
2.1.7 all of the goodwill of the Business as a going concern (the
"Goodwill");
2.1.8 all of the Sellers' respective rights to the authorizations,
certificates, consents, clearances, approvals, waivers, carrier licenses,
exceptions, variances, franchises, permissions, permits, filings, publications,
declarations, notices, licenses, rights or other forms of required permission
from, of or with any Governmental Authority, which shall include, without
limitation, each environmental and operating permit and license that is required
for the ownership, use and operation of any facility owned or leased by any of
the Sellers, or the conduct by the Sellers of the Business (the "Governmental
Approvals");
2.1.9 all real property owned or leased by any of the Sellers or in
which any of the Sellers has any interest or estate (including the right to
use), together with all buildings, fixtures, trade fixtures, plant and other
improvements located thereon and attached thereto; all of any Seller's rights
arising out of ownership or use thereof (including air, water, oil and mineral
rights); and all subleases, franchises, licenses, permits, easements and
rights-of-way which are appurtenant thereto (the "Real Property");
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2.1.10 all cash and cash equivalents;
2.1.11 all of the Inventory relating to the Business;
2.1.12 all rights and claims against third parties arising out of,
relating to or in respect of the Business and/or the Assets, including, without
limitation, all causes of action, rights of recovery and rights of set-off of
any kind, all rights under express or implied warranties from suppliers to any
Seller and all other interests in or claims, rebates, refunds or payments from
or against vendors; and
2.1.13 all other properties, tangible or intangible, not otherwise
referred to above, which are owned by any of the Sellers or in which any of the
Sellers has an interest or which are used or useful in the operation of the
Business or relate to the Assets, other than those, if any, which constitute
Excluded Assets or relate exclusively to the Excluded Assets.
Section 2.2 Excluded Assets. Anything to the contrary set forth in
Section 2.1 notwithstanding, the Assets shall exclude: (i) the Total Purchase
Price and each Seller's respective rights under this Agreement and the other
Purchaser Documents; (ii) any shares of capital stock of FII, FIA, FIS, FAI and
FIOF; (iii) the corporate minute books and stock records of FIG, FII, FIA, FIS,
FAI and FIOF; and (iv) the assets described on Schedule 2.2 (collectively
"Excluded Assets").
Section 2.3 Assumed Liabilities. Pursuant to an Assignment and
Assumption Agreement, substantially in the form attached hereto as Exhibit B,
and as further consideration for the purchase and sale of the Assets, Purchaser
shall, from and after the Closing Date, assume, perform, discharge and pay when
due those obligations and liabilities of the Sellers relating to the Business
which are specifically set forth in this Section 2.3, but only to the extent
specifically set forth in this Section 2.3 and subject to any contrary
provisions which may be contained in Section 2.4:
2.3.1 the obligations of the Sellers for Indebtedness reflected on the
Sellers' Assumed Indebtedness Schedule and included in the calculation of the
Adjustment Amount in an amount not to exceed the outstanding principal amount
reflected on the Sellers' Assumed Indebtedness Schedule, together with interest
accruing thereon from and after the Closing, but not to the extent arising out
of any breach or default thereof prior to the Closing;
2.3.2 all unpaid or unperformed obligations or liabilities of each
Seller under the Purchased Contracts assigned to Purchaser hereunder arising
from and after the Closing, but not to the extent arising out of any breach or
default thereof or other activities prior to the Closing;
2.3.3 all unpaid or unperformed obligations or liabilities of each
Seller under the Governmental Approvals assigned to Purchaser hereunder arising
from and after the Closing, but not to the extent arising out of any breach or
default thereof or other activities prior to the Closing;
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2.3.4 all trade payables of the Sellers to third-parties who are not
Affiliates of any Seller or Associates of any Seller and that were incurred in
the ordinary course of the Business, consistent with past practice, or that are
listed on Schedule 2.3.4;
The items listed above in Sections 2.3.1 through 2.3.4 are collectively
referred to as the "Assumed Liabilities".
Section 2.4 Excluded Liabilities. Except to the extent expressly
assumed by Purchaser pursuant to Section 2.3, Purchaser shall not assume or be
liable for any liabilities or obligations of any Seller, whether the same are
direct or indirect, fixed, contingent or otherwise, known or unknown, whether
existing on the Closing Date or arising thereafter as a result of any act,
omission or circumstance taking place prior to the Closing. The liabilities not
specifically assumed by Purchaser pursuant to Section 2.3 hereof shall be
referred to herein collectively as the "Excluded Liabilities." Excluded
Liabilities shall include, but not be limited to, the following:
2.4.1 the obligations and liabilities of each Seller arising under this
Agreement;
2.4.2 the obligations of each Seller for any and all taxes imposed by
any Federal, state, or local, or any foreign taxing authority, including,
without limitation, all income, gross receipts, sales, capital gains, windfall
profits, severance, stamp, use, personal property, use and occupancy, business
occupation, mercantile, ad valorem, value added, transfer, license, withholding,
payroll, employment, excise, real estate, environmental, capital stock,
franchise, alternative or add-on, minimum, estimated or other tax or customs
duty of any kind whatsoever (including interest, penalties and additions to tax
or additional amounts relating to Taxes thereto) (collectively, "Taxes") arising
from the operations of any Seller or the Business prior to Closing. For purposes
of this definition, any interest, penalties, additions to tax or additional
amounts that relate to Taxes for any period, or a portion of any period, ended
on or before the Closing Date shall include any interest, penalties, additions
to tax or additional amounts relating to Taxes for such periods, regardless of
whether such items are incurred, accrued, assessed or similarly charged on,
before or after the Closing Date;
2.4.3 the obligations of any Seller for Taxes imposed by any
Governmental Authority on or arising out of the sale or transfer of the Assets
pursuant to this Agreement;
2.4.4 the obligations of any Seller for fees or expenses incurred in
connection with the negotiation, preparation or approval of this Agreement
and/or the sale of the Assets pursuant hereto, including, without limitation,
the fees and expenses of counsel, independent auditors, brokers, bankers,
investment bankers and other advisers, except as otherwise expressly provided
herein;
2.4.5 all liabilities or obligations of any nature to any past or
present shareholder of any Seller or other Affiliate or Associate of any Seller
or any severance, "parachute" or similar payment to any officer, director,
employee or consultant of any Seller arising by virtue of the transactions
contemplated by this Agreement;
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2.4.6 all liabilities arising from the ownership and operation of the
Business prior to the Closing, including, without limitation, all liabilities in
respect of Indebtedness, unless such Indebtedness is reflected on the Sellers'
Assumed Indebtedness Schedule and included in the calculation of the Adjustment
Amount;
2.4.7 all unpaid or unperformed wages, salaries, payroll taxes, sick
pay, fringe benefits and other employee benefits of any employees of the
Sellers;
2.4.8 all liabilities arising from the operation of any successor
liability Laws, including, without limitation, "bulk sales" statutes, to the
extent that non-compliance therewith or the failure to obtain necessary
clearances would subject Purchaser or the Assets to the claims of any creditors
of any Seller, or would subject any of the Assets to any Encumbrances or other
restrictions;
2.4.9 all liabilities or obligations of any Seller not related to the
operation of the Business;
2.4.10 all liabilities or obligations of each Seller which pertain
solely to the Excluded Assets;
2.4.11 all liabilities or obligations of any Seller in respect of
litigation of any kind or nature arising as a result of any act, omission or
circumstance taking place prior to the Closing, including, without limitation,
any adverse claim, dispute, governmental investigation, suit, action (including,
without limitation, nonjudicial real or personal property foreclosure actions),
arbitration, legal, administrative or other proceeding of any nature, domestic
or foreign, criminal or civil, at law or in equity, by or against or otherwise
affecting any Seller, the Business or the Assets, including, without limitation,
all Liabilities and Costs and other obligations arising in connection with the
litigation set forth on Schedule 6.19;
2.4.12 all liabilities or obligations of any Seller arising in
connection with the adoption, maintenance or termination of any Plan, including,
without limitation, any Plan listed on Schedule 6.21; and
2.4.13 all liabilities or obligations of any Seller relating to the
accrual of employee bonuses or other compensation, or compensation payable as a
result of the transactions contemplated by this Agreement.
Section 2.5 Contested Obligations. Nothing contained in this Agreement
shall require Purchaser to pay or discharge any debts, obligations or
liabilities expressly assumed hereby so long as Purchaser shall in good faith
contest the amount or validity thereof.
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ARTICLE III
PURCHASE PRICE AND PAYMENT TERMS
Section 3.1 Purchase of the Asset by Purchaser; Total Purchase Price.
Subject to the terms and conditions of this Agreement, Purchaser shall purchase
the Assets and assume the Assumed Liabilities from the Sellers and pay to the
Representative, on behalf of the Sellers, the Total Purchase Price. The "Total
Purchase Price" shall consist of $6,500,000 (the "Base Purchase Price"), minus
the Adjustment Amount, if any.
Section 3.2 Payment of Purchase Price.
3.2.1 On the Closing Date, the Sellers shall prepare and deliver to
Purchaser a schedule in the form attached hereto as Exhibit C listing the amount
and detailing each category of Assumed Indebtedness as of the Closing Date (the
"Sellers' Assumed Indebtedness Schedule"). The Sellers' Assumed Indebtedness
Schedule will be prepared and certified by the Chief Executive Officer and the
Chief Financial Officer of each Seller and Maritime and by the shareholders of
Maritime.
3.2.2 At the Closing, Purchaser shall deliver:
(a) to the Representative, on behalf of the Sellers, the Base Purchase
Price, minus the Adjustment Amount, if any, and minus the Initial Escrow Amount,
by wire transfer of immediately available funds in the City of New York to an
account specified by the Representative not later than 5 days prior to the
Closing Date; and
(b) to the Escrow Agent, the Initial Escrow Amount to be held by the
Escrow Agent pursuant to the Escrow Agreement by wire transfer of immediately
available funds in the City of New York to an account specified by the Escrow
Agent.
Section 3.3 Escrow Agreement; Initial Escrow Amount. Purchaser shall
deposit the Initial Escrow Amount in escrow with the Escrow Agent for the
purpose of satisfying any liabilities of the Sellers to the Purchaser
Indemnified Parties pursuant to Article XI whereby the Sellers have agreed to
indemnify the Purchaser Indemnified Parties against certain Losses. The
Purchaser Indemnified Parties shall be entitled to disbursements from the Escrow
Fund in respect of their Indemnifiable Claims in accordance with the procedures
set forth in the Escrow Agreement. The Initial Escrow Amount, less the aggregate
amount of all pending and resolved Indemnifiable Claims of the Purchaser
Indemnified Parties, shall be paid to the Representative, on behalf of the
Sellers, by the Escrow Agent on the business day following the nine-month
anniversary of the Closing Date, in accordance with the provisions of the Escrow
Agreement. The remaining portion of the Escrow Fund shall be disbursed by the
Escrow Agent in accordance with the provisions of the Escrow Agreement.
Section 3.4 Transfer Taxes. All Taxes and other governmental charges
(including, without limitation, charges for or in connection with the recording
of any instrument or document as provided in this Agreement) payable in
connection with the transfer of the Assets or the assumption of Assumed
Liabilities, as contemplated by this Agreement, shall be paid by the Sellers.
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Section 3.5 Allocation of Purchase Price. It is understood that the
total consideration to be received by the Sellers for the transfer of the Assets
to Purchaser and the Restrictive Covenants shall be the Total Purchase Price,
plus Purchaser's assumption of the Assumed Liabilities. Such total
consideration, including the Total Purchase Price, shall be reported on IRS Form
8594 as allocated on Schedule 3.5. Each party hereto further agrees that said
party shall not file any Tax Return (or treat any item or items thereon) nor
make any other statement or submission to the IRS, any comparable state agency,
or any other Governmental Authority, which Tax Return, item, statement or
submission is inconsistent in whole or in part with the foregoing allocation.
ARTICLE IV
THE CLOSING
Section 4.1 Closing Date. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Winston & Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as soon as
practicable, but in no event later than 5 business days, after the satisfaction
or waiver of the conditions set forth in Articles IX and X (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions), or at such other time and
place as the Purchaser and the Sellers may agree. The date of the Closing is
herein referred to as the "Closing Date."
Section 4.2 Relinquishment of Control. At the Closing, the Sellers
shall turn over actual possession and control of all of their respective Assets
to Purchaser by taking such action that may be required or reasonably requested
by Purchaser to effect such transfer of possession and control.
Section 4.3 Closing Date Deliveries. At the Closing, Purchaser and the
Sellers shall deliver or cause to be delivered to each other the deliveries
required by Articles IX and X hereof.
Section 4.4 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties agrees to use its Best Efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper, or advisable under applicable Law to consummate and make
effective the transactions contemplated by this Agreement, including using its
Best Efforts to defend any lawsuits or other legal proceedings, whether judicial
or administrative, whether brought derivatively or on behalf of third parties
(including any Governmental Authority), challenging this Agreement. In addition,
each Seller shall provide such information and assistance as Purchaser shall
reasonably request or require in connection with the financing of the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, each Seller shall use its Best Efforts to cause its accountants,
attorneys, advisors, employees and other representatives to cooperate with
Purchaser in order to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, by executing and
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delivering any xxxx of sales or other documents or applications required by the
Federal Aviation Administration. In case at any time after the Closing Date any
further action is reasonably necessary or desirable to carry out the purposes of
this Agreement, including obtaining any Government Contract Novations, the
proper officers and directors of the Sellers and Purchaser shall take all such
necessary action.
Section 4.5 Financing. Purchaser shall use its Best Efforts to obtain
the financing necessary to permit Purchaser to consummate the transactions
contemplated by this Agreement.
ARTICLE V
CERTAIN COVENANTS
Section 5.1 Access to Books and Records and Personnel. Upon reasonable
prior notice during normal business hours, the Sellers shall at all times prior
to the Closing Date make the facilities, books, accounts, Inventory, equipment,
records (financial and other), technical information and data, Customer Lists,
Contracts and such other documents and information regarding the Business
available for examination, audit and inspection, including access for the
purposes of conducting accounting and environmental audits, by Purchaser and its
officers, employees, financial advisors, financing sources, consultants,
accountants, attorneys and authorized representatives. The Sellers shall furnish
Purchaser as promptly as practicable with such documents or copies thereof, and
other information concerning the Business, including, without limitation, all
pertinent financial and operating data or other periodic financial information,
a complete list of all aircraft, identifying each by manufacturer, model, year,
airframe serial number, FAA tail or N-Number, engine manufacturer and serial
number and propeller serial number, if applicable, and such other required
information requested by Purchaser regarding aircraft owned or operated by any
Seller, and any additional related information as Purchaser shall, from time to
time, reasonably request. In addition, the Sellers shall give Purchaser and its
representatives access at mutually agreed upon times and places to such
officers, managers, employees, accountants, advisors and other non-legal
representatives of the Sellers as Purchaser shall reasonably request. No
investigation by Purchaser shall, however, diminish or obviate in any way, or
affect Purchaser's right to rely upon, any of the representations, warranties,
covenants or agreements of the Sellers contained in this Agreement or any of the
other Seller Documents.
Section 5.2 Post-Closing Access. It is recognized that the Sellers may
need tax, financial or other data after the Closing Date with respect to the
Assets or the Business (or any combination thereof) covering the fiscal periods
prior to the Closing Date for the purpose of preparing Tax Returns for such
periods. Purchaser will render reasonable cooperation and will afford reasonable
access during normal business hours to all books, records, data and personnel
concerning the Assets and the Business with respect to periods prior to and
including the Closing Date to the Sellers and their auditors, accountants,
counsel or other authorized representatives for such purpose.
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Section 5.3 Notice of Certain Events. On or prior to the Closing Date,
each Seller shall promptly notify Purchaser in writing upon any such Seller
becoming aware of the occurrence of any of the following:
5.3.1 the commencement of any proceeding or litigation at law or in
equity or before any Governmental Authority involving any Seller or the
Business;
5.3.2 a violation by any Seller (or notice of potential violation) of
any Environmental Law or other Law that could have an adverse effect on the
Business or the Assets or that could impair the ability of Purchaser or the
Sellers to consummate the transactions contemplated by this Agreement;
5.3.3 the commencement or threat of any actions, suits, claims,
investigations or proceedings against, relating to or involving or otherwise
affecting any party hereto involving at least $50,000;
5.3.4 any fact or circumstance which would make any representation or
warranty set forth herein untrue or inaccurate in any material respect as of the
Closing Date or as of the date of this Agreement;
5.3.5 any condition set forth in this Agreement to be unsatisfied as of
the Closing Date;
5.3.6 any Transaction Proposal, including, without limitation, the
terms proposed and the identity of the offeror;
5.3.7 material damage to any of the Assets in an amount in excess of
$50,000;
5.3.8 any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
5.3.9 any occurrence, event or circumstance affecting or relating to
the Assets or the Business that is outside the ordinary course of the Business
and that involves at least $50,000; or
5.3.10 any event which has had or might reasonably be expected to have
a Material Adverse Effect or which if known as of the date hereof would have
been required to be disclosed to Purchaser;
provided, however, that no such notification shall affect the representations or
warranties of any party or the conditions to any party's obligations hereunder.
Section 5.4 Conduct of Business by the Sellers. Between the date of
this Agreement and the Closing Date, the Sellers shall cause the Business to be
operated only in the ordinary course and consistent with past practice. The
Sellers will use their respective Best Efforts to (i) preserve intact the
Business and the business organization of each Seller, (ii) maintain in effect
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all material licenses, permits, and approvals of Governmental Authorities which
are necessary for the conduct of the Business, (iii) maintain, preserve and keep
the Assets in good condition and repair, normal wear and tear excepted, (iv)
keep available the services of the Sellers' present management and workforce,
and (v) maintain good business relationships with lenders, suppliers, customers,
lessors and others having business dealings with any of the Sellers. Except as
otherwise contemplated by or permitted by this Agreement, or as otherwise
consented to or approved by Purchaser in writing, which consent shall not be
unreasonably withheld, each Seller shall not:
5.4.1 amend its Articles of Incorporation, Bylaws or other
organizational documents or take any corporate or other action if any such
amendment or action would have an adverse effect on the ability of any of the
Sellers to consummate the transactions contemplated by this Agreement or
otherwise adversely affect the Business or the value, utility or transferability
of the Assets;
5.4.2 purchase, redeem or agree to purchase or redeem any shares of its
capital stock, options, warrants or rights to purchase shares of capital stock
or securities of any kind convertible or exchangeable for shares of capital
stock;
5.4.3 except as set forth on Schedule 5.4, increase the compensation or
rate of compensation payable or to become payable to any of the present or
former employees, directors, consultants or officers of any Seller, nor make any
increase in compensation or rate of compensation or benefits payable or to
become payable to employees, directors, consultants or officers of any Seller
who are parties to separation, severance, or employment agreements with any
Seller, nor enter into any separation, severance, "change in control" or similar
agreements with any of its present or former employees, officers, consultants or
directors, nor enter into any written or oral employment agreement;
5.4.4 except as set forth on Schedule 5.4, set aside or pay to any
present or former officer, director, consultant or employee of any Seller any
bonus, profit-sharing, severance, retirement, insurance, death, fringe benefit,
or other extraordinary compensation, nor adopt, amend, fund or commit itself to
fund any employee benefit plan or account related to any Plan with or for the
benefit of any of the present or former employees, consultants, directors or
officers of any Seller;
5.4.5 acquire any business entity or all or substantially all of the
assets of a business entity or make any other investment outside the ordinary
course of the Business;
5.4.6 except as set forth on Schedule 5.4, make any capital
expenditures, the aggregate amount of which are in excess of $50,000, other than
(i) emergency repairs, and (ii) those scheduled in the Sellers' capital
expenditure budget for 2002, a copy of which has been provided to Purchaser;
5.4.7 other than trade payables incurred in the ordinary course of the
Business, create or incur any Indebtedness or other Liabilities and Costs
(absolute or contingent) in excess of $50,000 in the aggregate;
19
5.4.8 make any loan, advance, guaranty or other extension of credit to
any Person or enter into any commitment to make any loan, advance, guaranty or
other extension or credit, other than to any Seller and other than in the
ordinary course of the Business pursuant to existing credit facilities, or enter
into any other transaction with any Affiliate or Associate of any Seller or any
employee of any Seller (other than any such transaction between one or more of
the Sellers);
5.4.9 create or incur any Encumbrance or fail to take action to
discharge any involuntary Encumbrance, against or in respect of any Assets which
have a value, individually or collectively, in excess of $50,000, except for
Permitted Encumbrances;
5.4.10 amend, terminate, fail to renew or renegotiate any Material
Contract in any manner adverse to any Seller or default (or take or omit to take
any action that, with or without the giving of notice or passage of time or
both, would constitute a default) in any of its obligations under any Material
Contract or enter into any new Material Contract or take any action that would
jeopardize the continuance of its lender, supplier or customer relationships;
5.4.11 pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
in excess of $50,000, other than the payment, discharge or satisfaction, in the
ordinary course consistent with past practices of the Business or in accordance
with their terms, of liabilities reflected or reserved against in the Interim
Balance Sheet, or incurred since January 31, 2002 in the ordinary course of the
Business consistent with past practices of the Business and in accordance with
the Seller's representations, warranties and covenants contained in this
Agreement;
5.4.12 directly or indirectly terminate or reduce or commit to
terminate or reduce any bank line of credit or other extension of credit or the
availability of any funds thereunder or under any other agreement or
understanding, other than through the use thereof in the ordinary course of the
Business or as expressly permitted by this Agreement;
5.4.13 institute, settle, or agree to settle any claims, actions, or
proceedings involving an expenditure in excess of $50,000 in the aggregate, or
involving any contingent or non-monetary obligation having value in excess of
$50,000 in the aggregate, before any court or other Governmental Authority;
5.4.14 dispose of or permit to lapse any rights to the use of any
Intangible Personal Property utilized in the Business or disclose any Intangible
Personal Property utilized in the Business that is not a matter of public
knowledge;
5.4.15 fail to maintain such liability, casualty, property, loss, and
other insurance coverage upon the Assets and Products and Services relating to
the Business and with respect to the conduct of the Business, on such terms, in
such amounts, and with such insurance carriers and to such extent and covering
such risks as are maintained on the date hereof;
5.4.16 dispose of any Assets other than the Excluded Assets, except for
dispositions of obsolete or unused property and the sale of Inventory in the
ordinary course of the Business consistent with past practice;
20
5.4.17 compromise or otherwise settle any claims relating to, or adjust
any assertion or claim of a deficiency in, Taxes (or interest thereon or
penalties in connection therewith), or file any appeal from an asserted
deficiency, except in a form previously approved by Purchaser in writing, or
file or amend any Tax Return, in any case before furnishing a copy to Purchaser
and affording Purchaser an opportunity to consult with respect thereto;
5.4.18 make any Tax election or make any change in any method or period
of accounting or in any accounting policy, practice or procedure;
5.4.19 introduce any new method of management or operation;
5.4.20 terminate or fail to renew or preserve any Governmental
Approvals;
5.4.21 fail to use its Best Efforts to collect Receivables and pay
accounts payable in the ordinary course consistent with past practices of the
Business;
5.4.22 declare, issue, make or pay any dividend or other distribution
of assets, whether consisting of money, other personal property, real property
or other thing of value, to its shareholders (other than dividends or
distributions solely to any of the Sellers);
5.4.23 deviate from past practice in the ordinary course of the
Business with respect to maintenance of Inventory;
5.4.24 fail to comply, in all material respects, with all applicable
Laws and Orders, including, without limitation, all Governmental Approvals;
5.4.25 make extraordinary payments to any Person;
5.4.26 except as set forth on Schedule 5.4, enter into any transaction
with any Affiliate or Associate of any Seller;
5.4.27 take any action required to be disclosed in Section 5.3; or
5.4.28 authorize any of, or commit or agree to take any of, the
foregoing actions.
In addition to the foregoing, none of the Sellers shall take any action that
would, or that could reasonably be expected to, result in (i) any of the
representations and warranties of the Sellers set forth in this Agreement
becoming untrue or (ii) any of the conditions to the consummation of the
transactions contemplated by and set forth in this Agreement not being
satisfied.
Section 5.5 Regulatory Matters. Each of the Sellers and Purchaser will
make, or cause to be made, all other necessary governmental and regulatory
filings, as soon as practicable after the date hereof, in order to facilitate
prompt consummation of the transactions contemplated by this Agreement. In
addition, each of the Sellers and Purchaser will use its respective Best
Efforts, and will cooperate fully with each other (i) to comply as promptly as
practicable with all governmental requirements applicable to the transactions
contemplated by this Agreement and (ii) to obtain as promptly as practicable all
21
necessary Governmental Approvals and consents of all third parties necessary for
the consummation of the transactions contemplated by this Agreement. Each of the
Sellers and Purchaser shall use its respective Best Efforts to provide such
information and communications to Governmental Authorities as such Governmental
Authorities may request.
Section 5.6 Updated Financial Information. From the date hereof until
the Closing Date (or the earlier termination of this Agreement), as soon as
internally available and in any event within 25 days after the end of each
calendar month, FIG shall deliver to Purchaser complete copies of monthly
consolidated financial statements of the Sellers (including a balance sheet,
statement of income and statement of cash flows) ("Monthly Financial
Statements") for the preceding month. Each of the Sellers represents and
covenants that, except for normal interim and year-end audit adjustments, the
Monthly Financial Statements referred to in the preceding sentence shall be
prepared in accordance with GAAP consistently applied (except for changes
required by GAAP), and shall fairly present in all material respects the
consolidated financial condition and results of operations of the Sellers and
the Business as of the dates indicated and for the periods then ended.
Section 5.7 Transaction Proposals. From the date hereof until the
Closing Date (or the earlier termination of this Agreement), none of the Sellers
shall authorize or permit its officers, directors, consultants, employees,
shareholders, Affiliates, investment bankers, attorneys, advisors, auditors,
representatives or agents to, directly or indirectly, (i) solicit, initiate or
encourage the submission of inquiries, proposals or offers from any Person or
group of Persons relating to any acquisition or purchase of any assets of, or
any equity interest in, any of the Sellers, or any tender or exchange offer,
merger, consolidation, business combination, recapitalization, restructuring,
spin-off, liquidation, dissolution or similar transaction involving, directly or
indirectly, any of the Sellers, or any of their respective assets, other than
transactions contemplated by this Agreement (each a "Transaction Proposal"),
(ii) participate in any discussions or negotiations regarding any Transaction
Proposal or furnish information about any of the Sellers to any Person except to
(x) lenders and other parties to agreements with any of the Sellers (for the
specific purpose set forth in such agreements, which in no event shall include a
Transaction Proposal) and (y) Purchaser or its representatives, (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to make or enter into a Transaction
Proposal, or (iv) accept, approve or authorize, or enter into any agreement
concerning any Transaction Proposal or dispose of any equity interest in any of
the Sellers. The Sellers shall, as applicable, use their respective Best Efforts
to cause their respective shareholders, Affiliates, agents, officers, directors,
investment bankers, advisors, representatives and Affiliates to abide by the
terms of this Section 5.7. In the event that any of the Sellers receives or
becomes aware of any Transaction Proposal, it shall promptly notify Purchaser in
writing of such communication and keep Purchaser informed of any subsequent
developments in connection therewith.
Section 5.8 Customers and Suppliers. Each Seller shall, promptly
following the request thereof by Purchaser, seek and use its Best Efforts to
arrange such meetings and telephone conferences with all material customers and
suppliers of such Seller as may be necessary and appropriate for Purchaser to
conduct a comprehensive review of such Seller's relations with its customers and
suppliers.
22
Section 5.9 Arrangements with Employees. From the date hereof until the
Closing Date, the Sellers shall use their respective Best Efforts to retain key
employees of the Business and permit Purchaser to approach and negotiate with
any or all employees of the Sellers, including, without limitation, managerial
personnel, in an effort to persuade them to continue in the employ of the
Sellers pending the Closing and thereafter to become employees of Purchaser
following the Closing, to the extent so requested by Purchaser. The Sellers
shall use their respective Best Efforts to assist Purchaser in such
negotiations. Notwithstanding the foregoing, Purchaser shall not assume or be
liable or responsible for any liabilities or obligations (i) arising under the
WARN Act (or any similar Federal, state or local Law), if any, in connection
with the termination of employees by any Seller so long as Purchaser provides
the Sellers with written notice of its intent to terminate such employees at
least 70 days prior to the Closing, (ii) arising out of or resulting from
layoffs of any Seller's employees prior to the Closing and/or upon the
consummation of the transactions contemplated by this Agreement, and (iii)
associated with the termination and severance of all employees of the Sellers
other than employees of the Sellers immediately prior to the Closing employed by
Purchaser following the Closing Date, including any obligation imposed on the
Sellers or Purchaser to provide such employees with continued health, disability
or life insurance or other benefits (whether covered by insurance or not).
Section 5.10 Purchaser's Governmental Approvals. From and after the
date hereof, Purchaser and the Sellers shall cooperate and use their respective
Best Efforts to enable Purchaser to obtain all (and will promptly prepare all
registrations, filings and applications, requests and notices preliminary to
all) Governmental Approvals (including all non-assignable Governmental
Approvals) from the relevant Governmental Authorities needed by Purchaser to own
the Assets and operate the Business after the Closing Date or to consummate the
transactions contemplated by this Agreement. Each party shall bear its own costs
and expenses incurred in connection with the compliance of its obligations under
this Section 5.10.
Section 5.11 Transfer of Purchased Contracts; Third Party Consents. To
the extent that any consent, approval or waiver of a third party with respect to
any Purchased Contract, license, permit or certificate is required in connection
with the transactions contemplated by this Agreement, the Sellers shall use
their respective Best Efforts to obtain such consent, approval or waiver prior
to the Closing Date and in the event that any such consent, approval or waiver
is not obtained (but without limitation of Purchaser's rights under Section
9.4), the Sellers shall cooperate with Purchaser to ensure that Purchaser
obtains the benefits of each such Purchased Contract, license, permit or
certificate. All costs, transfer fees and other expenses incurred by the parties
in the process of obtaining such consents, approvals or waivers, whether
incurred before or after the Closing Date, shall be borne by the Sellers.
Section 5.12 Provisions Respecting Government Contracts.
5.12.1 This Section 5.12 sets forth the procedures that the parties
will use with respect to the assignment of all Government Contracts and any
claim, right or benefit arising thereunder or resulting therefrom.
23
5.12.2 With respect to any Government Contract or any claim, right and
benefit arising thereunder or resulting therefrom, each of the Sellers and
Purchaser will use its Best Efforts to obtain the written consent of the other
parties to such Government Contract for the assignment or novation thereof to
Purchaser, or written confirmation from such parties reasonably satisfactory in
form and substance to Purchaser that such consent is not required. As soon as
practicable following the date hereof, with respect to each Government Contract,
the Seller party thereto shall submit to the other parties thereto documentation
reasonably satisfactory in form and substance to Purchaser and such Seller shall
seek the written waiver or approval of the other contracting party or parties
thereto to the transfer and assignment of all of such Seller's claims, rights,
benefits and liabilities thereunder to Purchaser at the Closing. In this regard,
each Seller and Purchaser shall take all actions required or customary under the
applicable Federal Acquisition Regulations (as supplemented by any individual
agency regulation) and each Seller shall continue to participate fully in, and
cooperate fully with, such efforts following the Closing Date.
5.12.3 If such novation, consent, waiver or confirmation is not
obtained with respect to any such Government Contract, each of the Sellers and
Purchaser will cooperate in an arrangement reasonably satisfactory to Purchaser
and the Sellers under which Purchaser would obtain, to the extent practicable,
the claims, rights and benefits and assume the corresponding obligations
thereunder in accordance with this Agreement, including subcontracting,
sublicensing or subleasing to Purchaser, or under which the Sellers would
enforce for the benefit of Purchaser, with Purchaser assuming and indemnifying
Sellers with respect to the Sellers' obligations, any and all claims, rights and
benefits of the Sellers against a third party thereto. Each Seller will promptly
pay to Purchaser when received all monies received by such Seller in connection
with any such arrangement.
5.12.4 No instrument that any Governmental Authority requires any
Seller or Purchaser to execute in connection with any novation or assignment
contemplated by this Section 5.12 (including, without limitation, a novation
agreement as contemplated by Federal Acquisition Regulation 48 C.F.R. Section
42.1204) shall alter the provisions of this Agreement concerning the allocation
of assets and liabilities between Purchaser and the Sellers. As to any liability
allocated by the provisions of this Agreement to any Seller, the Sellers shall,
jointly and severally, indemnify Purchaser against, and hold Purchaser harmless
from, any claims by any Governmental Authority against Purchaser for
satisfaction of such liabilities pursuant to any such novation instrument. As to
any liability allocated by the provisions of this Agreement to Purchaser,
Purchaser shall indemnify each Seller against, and hold each Seller harmless
from, any claims by any Governmental Authority against such Seller for
satisfaction of such liabilities pursuant to such novation instrument.
24
Section 5.13 COBRA. To the extent required by Law, each Seller shall
have the responsibility for providing health care continuation coverage to any
of its employees terminated on or before the Closing Date, any of its employees
who decline offers of employment by Purchaser following the Closing and to
former employees presently receiving continuation coverage. If any Seller ceases
to maintain any group health plan it shall reimburse Purchaser for costs
incurred by Purchaser in providing continuation coverage to persons described in
the preceding sentence.
Section 5.14 Preparation of the Proxy Statement.
5.14.1 As soon as reasonably practicable following the date of this
Agreement (and, in any event, no later than five (5) business days after the
date hereof), FIG shall prepare a proxy statement relating to a special meeting
of FIG's shareholders to be held in connection with this Agreement and related
transactions (together with any amendments thereof or supplements thereto, in
each case in the form or forms mailed to the FIG's shareholders, the "Proxy
Statement") and, following approval by Purchaser, which shall not be
unreasonably conditioned, withheld or delayed, shall file the Proxy Statement
with the SEC. The Proxy Statement shall include a recommendation of the Board of
Directors of FIG (the "FIG Board Recommendation") that its shareholders vote in
favor of this Agreement and the transactions contemplated hereby. FIG shall use
its Best Efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable after such filing. FIG shall use its Best Efforts to cause the Proxy
Statement to be mailed to FIG's shareholders as promptly as practicable (and, in
any event, within seven (7) business days) after the Proxy Statement is cleared
by the SEC.
5.14.2 If at any time prior to the consummation of the transactions
contemplated by this Agreement any event shall occur that is required by Law to
be set forth in an amendment of or a supplement to the Proxy Statement, FIG
shall prepare and file with the SEC such amendment or supplement as soon
thereafter as is reasonably practicable. Purchaser and FIG shall cooperate with
each other in the preparation of the Proxy Statement, and FIG shall notify
Purchaser of the receipt of any comments of the SEC with respect to the Proxy
Statement and of any requests by the SEC for any amendment or supplement thereto
or for additional requests by the SEC for any amendment or supplement thereto or
for additional information, and shall provide to Purchaser promptly copies of
all correspondence between FIG or any representative of FIG and the SEC with
respect to the Proxy Statement. FIG shall give Purchaser and its counsel the
opportunity to review the Proxy Statement and all responses to requests for
additional information by, and replies to comments of, the SEC before their
being filed with, or sent to, the SEC. Each of FIG and Purchaser shall use its
Best Efforts after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC.
Section 5.15 Shareholder Meeting. Unless an Order has been entered
preventing it from doing so, FIG shall, through its board of directors, take all
action necessary, in accordance with and subject to the Georgia Business
Corporation Code and its Amended and Restated Articles of Incorporation and
Bylaws, to convene a special meeting of its shareholders not earlier than ten
(10) calendar days after the date the Proxy Statement is first mailed to
shareholders, but in no event later than fifty (50) calendar days after the
Proxy Statement is first mailed to shareholders, to consider and vote upon the
adoption and approval of this Agreement and the transactions contemplated hereby
(such special shareholder meeting, the "Shareholder Meeting"). FIG shall include
in the Proxy Statement the FIG Board Recommendation.
25
Section 5.16 Sellers Representative Agreement. Each Seller has executed
the Sellers Representative Agreement, substantially in the form of Exhibit D
(the "Sellers Representative Agreement"), irrevocably appointing the
Representative to act on its behalf in connection with the transactions
contemplated by this Agreement, including, without limitation, the execution and
delivery of all bills of sale, tax certifications and other certificates and
documents to be delivered to Purchaser in connection herewith, and a
fully-executed copy of such Sellers Representative Agreement has been delivered
to Purchaser. Each Seller shall indemnify and hold harmless each other Seller,
the Representative and Purchaser for any actions taken by such Seller that are
in violation of or inconsistent with the terms of the Sellers Representative
Agreement.
Section 5.17 Noncompetition.
5.17.1 Restrictions on Competitive Activities. Each Seller, on behalf
of itself and its Affiliates (including its officers and members of its board of
directors, but excluding Xxxxxxx Xxxxxxxx and C. Xxxxxx Xxxxx, Xx.), agrees that
after the Closing Purchaser shall be entitled to the goodwill and going concern
value of the Business. For these and other reasons and as an inducement to
Purchaser to enter into this Agreement, each Seller agrees that for a period of
three years after the date hereof neither such Seller nor any of its Affiliates
will, directly or indirectly, for its own benefit or as agent for another, carry
on or participate in the ownership, management or control of, or the financing
of, or be employed by, or consult for or otherwise render services to, or allow
its name or reputation to be used in or by any other present or future business
enterprise that competes with Purchaser, anywhere in the world, in the
performance of services for the United States Department of Defense or other
government agencies or that otherwise competes with the Products or Services of
the Business as of the Closing Date in each state of the United States and in
each foreign jurisdiction in which the Business is conducted or the Products or
Services are sold as of the Closing Date. With respect to an Affiliate of any
Seller, the restrictions set forth above may be expanded, limited, qualified or
otherwise modified in any employment agreement, non-competition agreement or any
other agreement entered into by such Affiliate and Purchaser or its Affiliates.
With respect to an Affiliate of any Seller, in the event of a conflict between
the non-competition provisions contained in any such other agreement and this
Agreement, the terms of such other agreement shall control.
5.17.2 Exceptions. Nothing contained herein shall limit the right of a
Seller (or any of its Affiliates) as an investor to hold and make investments in
securities of any corporation or other Person that is registered on a national
securities exchange or admitted to trading privileges thereon or actively traded
on the National Association of Securities Dealers Automated Quotation System or
in a generally recognized over-the-counter market, provided that the equity
interest therein held by such Seller and its Affiliates does not exceed in the
aggregate 5% of the outstanding shares or interests in such corporation or other
Person.
26
5.17.3 Restrictions on Interference with Employees, Customers and
Suppliers. To protect Purchaser against any efforts by any Seller to cause its
(i) employees to terminate their employment with Purchaser, each Seller agrees
that for a period of three years following the Closing Date, such Seller and its
Affiliates will not directly or indirectly (a) induce any employees of the
Business to leave Purchaser's employ or to accept any other employment or
position, or (b) assist any other entity in hiring any such employee, (ii)
customers to terminate their relationship with Purchaser, each Seller agrees
that for a period of three years following the Closing Date, such Seller and its
Affiliates will not directly or indirectly (a) induce any customers of the
Business to cease doing business with Purchaser, or (b) assist any other entity
in selling to such customers, and (iii) suppliers to terminate their
relationship with Purchaser, each Seller agrees that for a period of three years
following the Closing Date, such Seller and its Affiliates will not directly or
indirectly (a) induce any suppliers of the Business to stop supplying Purchaser,
or (b) assist any other entity in using such suppliers. With respect to an
Affiliate of any Seller, the restrictions set forth above may be expanded,
limited, qualified or otherwise modified in any employment agreement,
non-competition agreement or any other agreement entered into by such Affiliate
and Purchaser or its Affiliates. With respect to an Affiliate of any Seller, in
the event of a conflict between the non-interference provisions contained in any
such other agreement and this Agreement, the terms of such other agreement shall
control.
5.17.4 Special Remedies and Enforcement. The Sellers recognize and
agree that a breach by any of them of any of the covenants set forth in Sections
5.17.1, 5.17.2 and 5.17.3 could cause irreparable harm to Purchaser, that
remedies at law in the event of such breach would be inadequate, and that,
accordingly, in the event of any such breach a restraining order or injunction
or both may be issued against them, in addition to any other rights and remedies
which are available. If any provision of Sections 5.17.1, 5.17.2 or 5.17.3 is
more restrictive than permitted by the Laws of the jurisdiction in which
enforcement thereof is sought, such provision shall be limited to the extent
required to permit enforcement under such Laws. Without limiting the generality
of the foregoing, the parties intend that the covenants contained in Sections
5.17.1, 5.17.2 and 5.17.3 shall be construed as a series of separate covenants,
one for each state or jurisdiction referred to therein. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms. If, in
any judicial proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this Section 5.17, then such unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
For purposes of this Section 5.17, the term "Purchaser" shall mean
Purchaser and any of its Affiliates.
Section 5.18 Nondisclosure of Proprietary Data. After the Closing, none
of the Sellers nor any of their Affiliates or representatives shall, at any
time, make use of, divulge or otherwise disclose, directly or indirectly, any
Intangible Personal Property or other proprietary data (including, but not
limited to, any Customer List, Contract, record or financial information)
concerning the Sellers, the Business or the Assets that any Seller or any
Affiliate, Associate or representative of any Seller may have learned as a
shareholder, employee, officer, director or representative of any of the
Sellers. In addition, none of the Sellers nor any of their Affiliates or
27
representatives shall make use of, divulge or otherwise disclose, directly or
indirectly, to Persons other than Purchaser, any confidential information
concerning the Sellers or the Business and which may have been learned in any
such capacity. The provisions of this Section 5.18 shall be in addition to, and
not in lieu of, the terms and provisions of Section 12.1.
Section 5.19 Refund Claims and Warranty Claims. Certain of the Customer
Contracts grant or will grant the customer or another Person a right to reduce
the contract price or receive a refund for Products sold and shipped or Services
performed. Such claims by customers and other Persons under Contracts that
constitute or include the Customer Contracts are referred to in this Agreement
as "Refund Claims." Certain of the Customer Contracts also confer warranty and
similar rights on customers or other Persons. Such claims under such rights are
referred to in this Agreement as "Warranty Claims." Subject to Section 5.20,
from and after the Closing, (a) the Sellers shall have full responsibility for
all Refund Claims, Warranty Claims, product liability claims and other claims
(i) under all Customer Contracts that were or are completed or performed before
the Closing and (ii) with respect to all Products shipped or Services performed
by any Seller before the Closing and (b) Purchaser shall have full
responsibility for all Refund Claims, Warranty Claims, product liability claims
and other claims (i) under all Customer Contracts entered into or performed by
Purchaser on or after the Closing and (ii) with respect to all Products shipped
or Services performed by Purchaser on or after the Closing.
Section 5.20 Satisfaction of Warranty and Refund Claims. Purchaser
shall perform, at its actual cost, as an independent contractor for the Sellers,
all warranty work necessary to satisfy all valid Warranty Claims for which any
Seller is responsible pursuant to Section 5.19 ("Warranty Work"). The Sellers
shall jointly and severally bear the costs of Warranty Work. In addition, the
Sellers shall jointly and severally bear the full amount of any Refund Claims
for which any Seller is responsible pursuant to Section 5.19. Purchaser shall
use its Best Efforts to consult with the Representative prior to honoring any
Refund Claim for which it intends to seek reimbursement from the Representative
or any Seller. The Representative shall be given reasonable access to
Purchaser's relevant records and personnel to enable it to verify the costs of
Warranty Work and the amount of any Refund Claims. Within thirty (30) days of
receipt thereof, the Representative, on behalf of the Sellers, shall pay any
invoice issued by Purchaser in respect of Warranty Claims or Refund Claims.
Purchaser shall perform the Warranty Work competently and in a timely manner and
shall bear full responsibility for any defects or claimed defects in any
Warranty Work. Following the Closing, Purchaser shall, in general, respond to
and deal with customers bringing any Warranty Claims or Refund Claims for which
any Seller is responsible pursuant to Section 5.19 in a manner consistent with
the practices of the Sellers prior to the Closing.
Section 5.21 Change Orders. Notwithstanding Sections 5.19 and 5.20, if
Purchaser authorizes any change orders or amendments to any Contract that affect
the obligations of Purchaser or any Seller under that Contract, the Sellers
shall not be required to participate in or bear any cost respecting any Refund
Claim or Warranty Claim connected with that change order or amendment.
28
Section 5.22 Bulk Sales Law. Prior to and after the Closing Date, the
Sellers shall comply with all bulk sale and other similar Laws applicable to the
transactions contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, hereby represent, warrant and agree
for the benefit of Purchaser as of the date hereof and as of the Closing Date as
follows:
Section 6.1 Organization and Standing of each Seller. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation as set forth on Schedule 6.1 and has
all necessary corporate power and authority to own its properties and assets and
to carry on the Business as the same has been and is currently conducted. Each
Seller is duly qualified to transact business in all jurisdictions where the
nature of its business or the ownership or leasing of its property requires such
qualification, except to the extent the failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect. Each Seller has the
power and authority to hold all material rights, privileges, franchises,
immunities, licenses and permits (governmental and otherwise) and Governmental
Approvals necessary to carry on and conduct the Business as the same has been
and is currently conducted. FII, FIA, FIS, FAI and FIOF are the only
Subsidiaries of FIG that have assets or conduct operations.
Section 6.2 Authorization and Binding Obligation of each Seller. Each
Seller has the necessary corporate power and authority to enter into and perform
this Agreement and each of the other Seller Documents to be delivered by it
pursuant hereto (to the extent a party thereto), subject only to any required
approval by the shareholders of FIG and the terms and conditions hereof. All
corporate or other action on the part of each Seller and the directors,
officers, and shareholders of each Seller necessary for the authorization,
execution and delivery of this Agreement and the other Seller Documents and for
the performance of its respective obligations hereunder and thereunder, as the
case may be, have been taken (other than, as of the date of this Agreement, with
respect to the approval and adoption of this Agreement and the transactions
contemplated hereby, by the holders of shares representing a majority of the
votes entitled to be cast by holders of outstanding shares of common stock of
FIG, which approval and adoption shall have occurred at or prior to the
Closing). This Agreement and the other Seller Documents, and the transactions
contemplated hereby and thereby, have been unanimously approved by the Board of
Directors of each Seller. Each of this Agreement and the other Seller Documents
to be delivered by each Seller pursuant hereto, when executed and delivered,
shall constitute a valid and legally binding obligation of the Seller party
thereto, enforceable against such party in accordance with its terms, except as
may be limited by (i) bankruptcy, insolvency, or other similar laws affecting
the enforcement of creditors' rights generally and (ii) general principles of
equity (whether enforcement is sought at law or in equity). The transactions
contemplated by this Agreement and the other Seller Documents (a) are not
subject to the provisions of Sections 14-2-1111 and 14-2-1132 of the Georgia
Business Corporation Code and (b) are not subject to any other anti-takeover or
similar Law. Xxxxxxx Xxxxxxxx and C. Xxxxxx Xxxxx, Xx. are, and at all times
prior to the Closing will be, "qualified directors" within the meaning Section
14-2-862 of the Georgia Business Corporation Code.
29
Section 6.3 Non-Contravention. Except as set forth on Schedule 6.3,
neither the execution and the delivery by any Seller of this Agreement or the
other Seller Documents (to the extent a party thereto), the performance by the
Sellers of their respective obligations hereunder or thereunder, nor the
performance or consummation by the Sellers of the transactions contemplated
hereby or thereby will (i) violate or conflict with any provision of the
Articles of Incorporation, By-laws or other organizational documents of any
Seller, (ii) violate or conflict with any Law or Order to which any Seller, any
Asset or the Business is subject or bound which violation or conflict could have
an adverse effect (other than a de minimis effect) on the Business or the Assets
or could impair the ability of Purchaser or the Sellers to consummate the
transactions contemplated by this Agreement, (iii) require the approval of or a
filing or registration with any Governmental Authority, (iv) whether after
notice or lapse of time or both, violate, breach or conflict with any provision
of, result in the loss of a material benefit under, or permit the termination or
acceleration of any Material Contract, (v) require any authorization, consent or
approval of, exemption or other action by, or notice to, any party to any
Material Contract or (vi) result in the creation or imposition of any
Encumbrance upon any of the Assets. On or prior to the Closing, the Sellers will
have obtained all consents, waivers and approvals required under the Material
Contracts listed on Schedule 6.3 as a result of the transactions contemplated by
this Agreement, and the same shall be in full force and effect.
Section 6.4 Indebtedness. Schedule 6.4 sets forth the outstanding
Indebtedness of each of the Sellers as of the date hereof. Except as set forth
on Schedule 6.4, none of the Sellers is in conflict with or in default or
violation of (with or without the giving of notice or lapse of time or both) any
of the terms of such Indebtedness nor has any event or condition occurred which
would give the holders of such Indebtedness the right to accelerate the maturity
of or require repayment of such Indebtedness prior to its stated maturity.
Section 6.5 Ability to Perform Obligations. None of the Sellers is a
party to, subject to, or bound by any agreement, Law or Order that could prevent
or materially impair (i) the performance of its obligations under this
Agreement, (ii) the value or utility of any of the Assets to be conveyed
hereunder, (iii) the sale, conveyance, transfer and delivery of, or the right to
sell, convey, transfer and deliver, any of the Assets, or (iv) the carrying on
of, or the right to carry on, the Business as currently constituted and
conducted and as proposed to be conducted.
Section 6.6 Dividends and Other Distributions. Since April 30, 2001,
none of the Sellers has (i) amended its organizational documents, (ii) declared,
set aside, made or paid any dividend or other distribution of assets or
securities, whether consisting of money, property or any other thing of value,
or (iii) purchased or redeemed any shares of its capital stock.
Section 6.7 Accounting Records. The accounting records of the Sellers
that have been furnished to Purchaser accurately and validly reflect, in all
material respects, the consolidated operations and financial position of the
Sellers and the Business for the periods covered thereby.
30
Section 6.8 Financial Statements; Changes; Contingencies.
6.8.1 Financial Statements. Copies of (i) the audited consolidated
balance sheets of the Sellers as of April 30, 2001 (the "April 30 Balance
Sheet") and April 30, 2000 and 1999, and the related consolidated statements of
income and cash flow for the fiscal years ended April 30, 2001, 2000, and 1999,
and the notes thereto (collectively, the "Audited Financial Statements"), and
(ii) unaudited consolidated balance sheet of the Sellers as of January 31, 2002
(the "Interim Balance Sheet") and the related consolidated statements of income
and cash flow for the nine month period then ended, and the notes thereto
(collectively, the "Unaudited Interim Financial Statements" and, together with
the "Audited Financial Statements", the "Seller Financial Statements"), duly
certified by the Chief Financial Officer of FIG, have been furnished to
Purchaser. The Seller Financial Statements include all Assets and operations of
the Business for the periods covered thereby. Except as set forth on Schedule
6.8, the Seller Financial Statements (a) have been prepared in accordance with
GAAP applied on a consistent basis during the periods covered thereby, (b)
fairly and accurately present the consolidated financial position of the Sellers
and the Business as of such dates and the consolidated results of the operations
of the Sellers and the Business for the periods covered thereby, (c) contain and
reflect all necessary adjustments and accruals for a fair and accurate
presentation of the Sellers' and the Business' consolidated financial condition
and the consolidated results of operations of the Sellers and the Business for
the periods covered thereby, (d) contain and reflect adequate provisions for all
reasonably anticipated liabilities for all Taxes, with respect to the periods
covered thereby and all prior periods, and (e) do not reflect items resulting
directly from the transactions contemplated by this Agreement. The projections,
dated April 19, 2002, provided to Purchaser ("Projections") were prepared in
good faith by the Sellers based on reasonable assumptions.
6.8.2 No Material Adverse Changes. Since April 30, 2001, whether or not
in the ordinary course of the Business, there has not been, occurred or arisen:
(i) any change in or event affecting any of the Sellers, the Assets or the
Business that has had or may reasonably be expected to have a Material Adverse
Effect; (ii) any strike or other labor dispute affecting any of the Sellers or
the Business; or (iii) any casualty, loss, damage or destruction (whether or not
covered by insurance) of any material Asset. Since January 31, 2002, there has
not been, occurred or arisen any agreement, condition, action, omission or event
which would be prohibited (or require consent) under Section 5.4 had it existed,
occurred or arisen after the date of this Agreement.
6.8.3 Absence of Undisclosed Liabilities. As of April 30, 2001 and
January 31, 2002, none of the Sellers had any Liabilities and Costs which were
required to be but were not reflected on the April 30 Balance Sheet or the
Interim Balance Sheet, respectively. Since January 31, 2002, none of the Sellers
had any Liabilities and Costs which were required to be but were not reflected
on the Monthly Financial Statements.
Section 6.9 The Assets. All of the Assets used or required in
connection with the operation of the Business are either owned by a Seller or
are used by a Seller pursuant to a valid and enforceable leasehold interest, in
each case free and clear of all Encumbrances other than Permitted Encumbrances
and Encumbrances that will be released as of the Closing. This Agreement will at
the Closing vest good and marketable title to, or the valid and enforceable
right to receive and/or use, each such Asset in Purchaser, free and clear of all
Encumbrances other than Permitted Encumbrances.
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Section 6.10 Accounts Receivable. Except as set forth on Schedule 6.10,
all Receivables accrued on the April 30 Balance Sheet and all Receivables that
have arisen since April 30, 2001 (i) resulted from valid sales in the ordinary
course of the Business of the Sellers and represent fully completed bona fide
transactions that require no further act on the part of the Sellers to make such
Receivables payable by the account debtors; (ii) were, and are, not subject to
any claim, counterclaim, offset or deduction to Sellers' Knowledge; (iii)
represent valid obligations owing to the Sellers by account debtors that are not
Affiliates of the Sellers, which are enforceable in accordance with their
respective terms; (iv) are not more than 60 days' past due; and (v) were, and
are, owned by the Sellers free and clear of all Encumbrances other than
Permitted Encumbrances. This Agreement will at the Closing vest good and
marketable title to the Receivables in Purchaser, free and clear of all
Encumbrances other than Permitted Encumbrances.
Section 6.11 Inventory. All Inventory of the Sellers consists of items
of a quality and quantity useable and saleable in the ordinary course of the
Business without xxxx-down or discount, is of good merchantable quality and is
fit for the particular purpose for which it is intended. The value of obsolete,
damaged or excess Inventory and of Inventory below standard quality has been
written down on the April 30 Balance Sheet or, with respect to Inventory
purchased since April 30, 2001, on the books and records of the Sellers and in
the Interim Financial Statements or the Monthly Financial Statements, to
ascertainable market value, or adequate reserves have been provided therefor, in
accordance with GAAP. All such Inventory is owned by the Sellers free and clear
of all Encumbrances, other than Permitted Encumbrances, and is located on
property owned or leased by a Seller (each such location being listed on
Schedule 6.11) or is in transit to one of such locations. No items included in
such Inventory are held by the Sellers on consignment from others or held by
others on consignment from the Sellers. This Agreement will at the Closing vest
good and marketable title to the Inventory in Purchaser, free and clear of all
Encumbrances other than Permitted Encumbrances.
Section 6.12 Intangible Personal Property. Schedule 6.12 sets forth, as
of the date hereof, (i) a true and accurate identification of each registered
and unregistered fictitious business name, trademark, service xxxx, trade name,
Internet domain name and slogan, and each registration and application for any
of the foregoing, constituting a part of the Intangible Personal Property; (ii)
a true and complete schedule of each statutory, common law and registered
copyright, and each registration and application therefor constituting a part of
the Intangible Personal Property; (iii) a true and complete schedule of each
patent and associated invention, industrial model, process and design, technical
information, know-how and operating, maintenance or other manual and each
registration and application for any of the foregoing, constituting a part of
the Intangible Personal Property; (iv) each item of "software" and associated
documentation constituting a part of the Intangible Personal Property; (v) a
true and complete list, without extensive or revealing descriptions, of each
trade secret constituting a part of the Intangible Personal Property, including
each related process or item of know-how or other technical data, and including
as to each such trade secret, the specific location of each writing, computer
32
program or other tangible medium containing its complete description,
specifications, source codes, charts, procedures, manuals and other descriptive
material relating to it; and (vi) a true and complete list of each material
Contract to which any Seller is a party either as licensee or licensor relating
to any item of the Intangible Personal Property. Except as indicated on Schedule
6.12, the Sellers' transfer to Purchaser of all of their right, title and
interest in and to all items of the Intangible Personal Property will not
adversely affect in any material respect the current value or usefulness thereof
in the possession of Purchaser. Without representation as to title, the Sellers
shall provide to Purchaser, for no additional consideration, the practical
benefits of any Intangible Personal Property that is currently used in the
operation of the Business but is not included in the Assets being conveyed to
Purchaser pursuant to this Agreement. Except as indicated on Schedule 6.12:
6.12.1 one or more of the Sellers is the owner of all right, title and
interest in and to each item of the Intangible Personal Property, free and clear
of all Encumbrances;
6.12.2 all patents, copyrights and other state and Federal
registrations and all applications therefor listed on Schedule 6.12 are valid
and in full force and effect and are not subject to claims of any other Person;
6.12.3 there are no pending claims, actions, judicial or other
adversary proceedings, disputes or disagreements involving any Seller concerning
any item of the Intangible Personal Property, and, to the Sellers' Knowledge, no
such action, proceeding, dispute or disagreement is threatened;
6.12.4 the Sellers have the right and authority to use each item of the
Intangible Personal Property in perpetuity; such use has not and will not
conflict with, infringe upon, or violate any patent or other proprietary right
of any other Person, and none of the Sellers has infringed and are not now
infringing upon any proprietary right belonging to any other Person;
6.12.5 with respect to each trade secret comprising a part of the
Intangible Personal Property, such trade secret is valid and protectible, and
such trade secret's documentation is current, accurate, and sufficient in detail
and content to identify and explain it, and to allow its full and proper use
without reliance on the special knowledge or memory of others; 6.12.6 each
Seller has taken all reasonable security measures to protect the secrecy,
confidentiality and value of its trade secrets; and
6.12.7 all trade secrets of the Sellers are presently valid and
protectible, and are not part of the public knowledge or literature, nor to the
Sellers' Knowledge have they been used, divulged or appropriated for the benefit
of any Person other than the Sellers or to the detriment of the Sellers.
This Agreement will at Closing vest good and marketable title to, or a
valid and enforceable right to receive and/or use, the Intangible Personal
Property in Purchaser, free and clear of all Encumbrances other than Permitted
Encumbrances.
33
Section 6.13 Real Property. Schedule 6.13 contains a true and complete
list and brief description of all Real Property which the Sellers own,
beneficially or of record, use, have the right to use or require in the
operation of the Business. For purposes of this Section (i) "Owned Real
Property" shall mean all Real Property which any Seller owns, beneficially or of
record, as set forth on Schedule 6.13 and (ii) "Leased Real Property" shall mean
all Real Property which any Seller uses or has the right to use pursuant to a
leasehold interest or license, as set forth on Schedule 6.13.
6.13.1 The Sellers have no Owned Real Property.
6.13.2 The Sellers have the right to occupy all Leased Real Property
used in connection with the operation of the Business pursuant to valid and
enforceable lease agreements, true and complete copies of which have been
previously provided to Purchaser and are listed in Schedule 6.13. Each of the
Sellers has complied with the terms of the lease agreements set forth in
Schedule 6.13 to which it is a party, and no event or condition has occurred and
is continuing (without regard to notice or lapse of time, or both) that would
constitute a breach or default of any such lease agreement or give any party
thereto the right to declare a default thereunder. This Agreement will at
Closing vest a valid and enforceable leasehold interest to the Leased Real
Property in Purchaser, free and clear of all Encumbrances other than Permitted
Encumbrances.
6.13.3 The use, operation and maintenance by the Sellers of the Real
Property as currently used, operated and maintained by the Sellers, and the
conduct of the Business as currently conducted by the Sellers, does not violate
and has not violated any local zoning or similar land use laws or any other
applicable Law or Order. The current use of the Real Property is not dependent
on a nonconforming use and is not in violation of any local zoning or similar
land use law or other governmental regulation.
6.13.4 The Real Property is adequately serviced by all utilities
necessary for the effective operations of the Business and has not, during the
last two years, experienced any material interruption in the delivery of
adequate quantities of any utilities (including, without limitation,
electricity, natural gas, potable water, water for cooling or similar purposes
and fuel oil, but excluding any electricity interruption due to storm damage) or
other public services, including, without limitation, sanitary and industrial
sewer services, required by the Sellers in the operation of the Business.
6.13.5 No condemnation or eminent domain proceedings have been
initiated by service of process on any of the Sellers which relate to the Real
Property, and no such proceedings, to the Sellers' Knowledge, have been filed by
any relevant Governmental Authority with respect to the Real Property.
Section 6.14 Tangible Personal Property. Schedule 6.14 sets forth (i) a
description, including the location, of each item of the Tangible Personal
Property owned by any of the Sellers having either a depreciated book value or
estimated fair market value in excess of $50,000, or not owned by any of the
Sellers but in the possession of or used by any Seller in the operation of the
Business and having rental payments therefor or an economic value to the
34
Business in excess of $50,000 per year (the "Material Tangible Personal
Property"); and (ii) a description of the owner of, and any Contract relating to
the use of, each such item of Material Tangible Personal Property not owned by
any Seller and the circumstances under which such property is used. Except as
disclosed on Schedule 6.14:
6.14.1 the Sellers have good and marketable title to or a valid and
enforceable leasehold interest in each item of the Tangible Personal Property,
free and clear of all Encumbrances other than Permitted Encumbrances;
6.14.2 each item of the Tangible Personal Property is in good operating
condition and repair, ordinary wear and tear excepted, usable in the ordinary
course of the Business, and the operation thereof as conducted during the
twelve-month period prior to the date hereof, as presently conducted and as
proposed to be conducted is not in any material respect in violation of any
applicable building code, zoning ordinance or other Law, including, without
limitation, applicable Environmental Laws;
6.14.3 no item of the Tangible Personal Property has been furnished to
any Seller by a customer or other Person other than in connection with a bona
fide sale or lease transaction; and
6.14.4 during the past three years, there has not been any significant
interruption in the operations of the Business.
This Agreement will at Closing vest good and marketable title to, or a
valid and enforceable right to receive and/or use, the Tangible Personal
Property in Purchaser, free and clear of all Encumbrances other than Permitted
Encumbrances.
Section 6.15 Necessary Properties. The Assets include all of the
assets, real properties, tangible personal properties, Contracts, Governmental
Approvals and intangible properties necessary for the conduct of the Business as
conducted during the twelve-month period prior to the date hereof and as
presently conducted.
Section 6.16 Insurance. The Sellers are, and at all times since January
1, 1998 have been, insured with reputable insurers against all risks normally
insured against by companies in similar lines of business, and all of the
insurance policies and bonds maintained by them are in full force and effect.
Schedule 6.16 lists all insurance policies and bonds that are material to the
Sellers or the Business. None of the Sellers is in material default under any
such policy or bond. Schedule 6.16 summarizes all insurance claims made by the
Sellers since January 1, 2000. None of the Sellers has received any notice or
other indication from any insurer or agent of any intent to cancel or not to
renew any of such insurance policies. The Sellers have complied with and
implemented in all material respects all outstanding (i) requirements of and
recommendations of any insurance company that has issued a policy with respect
to any of the material Assets or Business of the Sellers and (ii) requirements
and recommendations of any Governmental Authority with respect to any such
insurance policy.
35
Section 6.17 Accounts Payable. All of the accounts payable reflected on
the April 30 Balance Sheet and all accounts payable that have arisen since April
30, 2001 arose from bona fide purchases of goods and services in the ordinary
course of the Business.
Section 6.18 Tax Matters.
For the purposes of this Section 6.18 and Section 2.4.2, the Sellers
shall be deemed to include any predecessor of the Sellers or any person or
entity from which any Seller incurs a liability for Taxes as a result of
transferee liability or by virtue of the application of IRS Regulation Section
1.1502-6 or otherwise. Except as stated in Schedule 6.18:
6.18.1 The Sellers have duly and timely filed (and prior to the Closing
Date will duly and timely file) all Tax Returns due on or prior to the Closing
in all jurisdictions (whether Federal, state, local or foreign) in which any
such returns were due. All such Tax Returns were prepared in accordance with
applicable Law and were true, complete and correct in all material respects. All
Taxes shown as due and payable on such Tax Returns have been paid, and there is
no current liability for any Taxes due and payable in connection with any such
Tax Returns. All Taxes not yet due and payable have been fully accrued on the
books of the Sellers, and adequate reserves have been established therefor. Any
charges, accruals and reserves for Taxes provided for in the Seller Financial
Statements and Monthly Financial Statements are adequate. There are no existing
Encumbrances for Taxes upon any of the Assets, except for Permitted
Encumbrances. The Sellers have filed a consolidated return for federal tax
purposes on behalf of itself and other members of the affiliated group (within
the meaning of Section 1504 of the Code) of which it is the parent corporation
since at least the date on which it was incorporated. The Sellers have provided
the Purchaser with a copy of all Tax Returns, including, but not limited to, all
consolidated federal Tax Returns filed by the Sellers for their past five
completed fiscal years;
6.18.2 The Sellers have: (i) withheld all required amounts from their
employees, agents, contractors and nonresidents and remitted such amounts to the
proper agencies; (ii) paid all employer contributions and premiums; and (iii)
filed all Federal, state, local and foreign Tax Returns with respect to employee
income tax withholding, and social security and unemployment taxes and premiums,
all in compliance with the withholding tax provisions of the Code and other
applicable Laws;
6.18.3 None of the Assets is tax exempt use property under Code Section
168(h);
6.18.4 None of the Sellers has (nor has any Seller previously had) any
permanent establishment in any foreign country and none of the Sellers engages
(nor has any Seller previously engaged) in a trade or business within the
meaning of the Code relating to the creation of a permanent establishment in any
foreign country;
6.18.5 Neither the Code nor any other provision of Law requires
Purchaser to withhold any portion of the Total Purchase Price;
36
6.18.6 There is no Tax sharing or other Tax-related agreement in effect
among or between the Sellers and any other Person. None of the Sellers is
subject to any partnership, joint venture or other arrangement which is treated
as a partnership for Federal or state income Tax purposes;
6.18.7 Except as set forth on Schedule 6.18, none of the Sellers has
ever been a member of any consolidated, combined or unitary group for Federal,
state, local or foreign Tax purposes;
6.18.8 The Federal income Tax Returns of each Seller have been examined
by the IRS, or have been closed by the applicable statute of limitations, for
all periods through April 30, 1999; the state income Tax Returns of each Seller
have been examined by the relevant agencies or such returns have been closed by
the applicable statute of limitations for all periods through the date set forth
opposite such state as set forth on Schedule 6.18; no deficiencies or
reassessments for any Taxes have been proposed, asserted or assessed against any
Seller by any Federal, state, local or foreign taxing authority;
6.18.9 None of the Sellers has executed or filed with any taxing
authority (whether Federal, state, local or foreign) any agreement or other
document waiving, extending or having the effect of extending the period for
assessment, reassessment or collection of any Taxes, and no power of attorney
granted by any Seller with respect to any Taxes is currently in force;
6.18.10 No Federal, state, local or foreign Tax audits or other
administrative proceedings, discussions or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the Sellers and no additional
issues are being asserted against the Sellers in connection with any existing
audits of the Seller; and
6.18.11 There is no agreement, plan, arrangement or other Contract
covering any employee or former employee of the Sellers that, individually or
collectively, could give rise to the payment by any of the Sellers of any amount
that would not be deductible by reason of Code section 280G.
Section 6.19 Litigation. Schedule 6.19 sets forth an accurate and
complete description of every pending or, to the Sellers' Knowledge, threatened
adverse claim, dispute, governmental investigation, suit, action (including,
without limitation, nonjudicial real or personal property foreclosure actions),
arbitration, legal, administrative or other proceeding of any nature, domestic
or foreign, criminal or civil, at law or in equity, by or against or otherwise
affecting any Seller, the Business, any of the Assets or the transactions
contemplated by this Agreement. The Sellers have delivered to Purchaser true and
complete copies of all relevant court papers and other documents relating to the
matters referred to on Schedule 6.19. Except as disclosed on Schedule 6.19:
6.19.1 no such matter or matters, if decided adversely to any Seller,
could reasonably be expected to result, individually or in the aggregate, in
liability in excess of $50,000 or have an adverse effect on the Business, the
Assets or the transactions contemplated by this Agreement;
37
6.19.2 none of the Sellers is in default with respect to any Order by
which it is bound or to which its property or any Assets is subject and there
exists no Order enjoining or requiring any Seller to take any action of any
kind;
6.19.3 neither the Sellers nor, to the Sellers' Knowledge, any officer
or director of any Seller, has been permanently or temporarily enjoined by any
Order from engaging in or continuing any conduct or practice in connection with
the operation or the management of the Business or the Assets; and
6.19.4 to the Sellers' Knowledge, no basis exists for any claim,
investigation, suit or proceeding which, if decided adversely to any Seller,
could result in liability in excess of $50,000 or have a Material Adverse
Effect.
Section 6.20 Labor Relations. None of the Sellers is a party to or is
subject to any collective bargaining agreement, and there are no strikes or
other labor disputes against the Sellers pending or, to the Sellers' Knowledge,
threatened. The Sellers have complied in all material respects with all Labor
Agreements and all Laws relating to the employment of labor, including those
related to wages, hours, collective bargaining, occupational safety, and the
payment of social security and other payroll related Taxes, and none of the
Sellers has received any notice alleging a failure to comply in any material
respect with any Law or Order relating to the employment of labor. No material
controversies, disputes or proceedings are pending or, to the Sellers'
Knowledge, threatened against any Seller with respect to any of their employees.
As of the date hereof, to the Sellers' Knowledge, there are no activities or
proceedings of any labor union to organize non-unionized employees. All payments
due from any of the Sellers for which any claim may be made against any of the
Sellers on account of wages and employee health and welfare insurance and other
benefits have been paid or accrued as a liability on the financial statements of
the Sellers, except as disclosed on Schedule 6.20. Except as disclosed on
Schedule 6.20, no present or former employee, officer, consultant or director of
any Seller will have as of the Closing Date any claim against any Seller or
Purchaser for any matter, including without limitation (i) overtime pay for work
done through the Closing Date, (ii) wages or salary for work done through the
Closing Date, (iii) vacation time off or pay in lieu of vacation time off for
the period through the Closing Date, (iv) any violation of any Law relating to
minimum wages or maximum hours, workplace conditions, or any other matter, or
(v) injuries or other damages which are not fully covered by the insurance
policies of the Sellers. Except as disclosed on Schedule 6.20, there are no
employment agreements, severance agreements, indemnity agreements, change of
control agreements or similar agreements covering the present or former
employees, officers, directors or consultants of any Seller.
Section 6.21 Employee Benefits.
6.21.1 Neither the Sellers nor any ERISA Affiliate maintains or
contributes to any Plan other than the Plans listed on Schedule 6.21 hereto, and
no ERISA Affiliate maintains or contributes to any Multiemployer Plan.
38
6.21.2 Each Plan which is intended to be qualified under Section 401(a)
of the Code has been determined by the IRS to be so qualified, and each trust
related to any such Plan has been determined to be exempt from Federal income
tax under Section 501(a) of the Code and there has been no event or occurrence
since the date of the most recent favorable determination letter that would
adversely affect the tax-qualification status of any such Plan. Except as
disclosed on Schedule 6.21, neither the Sellers nor any ERISA Affiliate
maintains or contributes to any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA which provides benefits to employees after termination
of employment other than as required by Section 601 of ERISA.
6.21.3 Neither the Sellers nor any ERISA Affiliate has breached, in any
material respect, any of the responsibilities, obligations or duties imposed on
it by ERISA or regulations promulgated thereunder with respect to any Plan.
Neither the Sellers nor any ERISA Affiliate nor any fiduciary of any Plan which
is not a Multiemployer Plan has engaged in a nonexempt "prohibited transaction"
described in Section 406 of ERISA or Section 4975 of the Code.
6.21.4 Neither the Sellers nor any ERISA Affiliate has ever contributed
to a Multiemployer Plan or a Plan subject to Title IV or ERISA or under Section
412 of the Code.
6.21.5 None of the Sellers has incurred any Liabilities and Costs with
respect to post-retirement health care benefits for employees or former
employees of the Business other than as required by Section 601 of ERISA.
Section 6.22 Certain Interests. Except as set forth on Schedule 6.22,
no Affiliate of any Seller nor any officer or director of any Seller nor
Associate of any such Person has any interest in any property or Asset of the
Business. Each of the transactions and agreements set forth on Schedule 6.22
were entered into on an arms-length basis on terms no less favorable to the
applicable Seller then would have been available from an unaffiliated
third-party. Except as set forth on Schedule 6.22 or as otherwise expressly set
forth herein, neither the Purchaser nor any of its Affiliates will have any
liabilities or obligations to any Seller or any Affiliate or Associate of any
Seller following the Closing.
Section 6.23 Governmental Approvals; Compliance with Laws. The Sellers
possess all Governmental Approvals, including, without limitation, all
Environmental Permits, necessary to operate the Business. All such Governmental
Approvals are in full force and effect, the Sellers are in compliance in all
material respects with their requirements, and no proceeding is pending or, to
the Sellers' Knowledge, threatened to revoke or amend any of them. Schedule 6.23
hereto contains a complete list of all material Governmental Approvals held by
the Sellers. The operations of the Business comply in all material respects with
all applicable Laws, including, without limitation, all Environmental Laws and
export control Laws. None of the Sellers is subject to any investigation,
judicial or administrative proceeding, or Order of or by a Governmental
Authority.
39
Section 6.24 Customers. No material customer has decreased materially
or, to the Sellers' Knowledge, threatened or expressed an intention to decrease
materially its purchases of Services or Products from any Seller since January
1, 1999. Since January 1, 1999, to the Sellers' Knowledge, there has been no
termination, cancellation, or limitation of, or any material modification or
change in, the business relationship of the Sellers with any customer. The
consummation of the transactions contemplated hereby will not, to the Sellers'
Knowledge, adversely affect the relationship between the Business and any
material customer.
Section 6.25 Suppliers. No material supplier of materials or services
to any of the Sellers has decreased materially or, to the Sellers' Knowledge,
threatened or expressed an intention to decrease or limit materially, except
upon the request of any of the Sellers, its provision of such materials or
services to any Seller since January 1, 1999. Since January 1, 1999, to the
Sellers' Knowledge, there has not occurred any termination, cancellation, or
limitation of, or any material modification or change in, the business
relationships of the Sellers with any supplier of materials or services. The
consummation of the transactions contemplated hereby will not, to the Sellers'
Knowledge, adversely affect the relationship between the Business and any
material supplier.
Section 6.26 Environmental Matters. For purposes of Section 6.26.1
through 6.26.9, inclusive, the term "Business" shall be deemed to include any
predecessor to the Business and any Persons from which the Business has assumed
liabilities by contract, operation of Law, or otherwise. Except as disclosed on
Schedule 6.26:
6.26.1 The Sellers, and the operation of the Business, are in
compliance in all material respects with all applicable Environmental Laws and
none of the Sellers has received a notice, demand, letter, claim or request for
information indicating that any Seller or the Business is or may be in violation
of or liable under any Environmental Law;
6.26.2 There is no civil, criminal, or administrative action, suit,
demand, claim, notice of violation, investigation, or proceeding pending against
any Seller or otherwise relating to the Assets or the Business or, to the
Sellers' Knowledge, threatened against any Seller, the Assets or the Business
relating in any way to Environmental Laws;
6.26.3 To the Sellers' Knowledge, there are no facts or circumstances
that material capital expenditures will likely be required within five years of
the Closing Date to conduct the Business as it is currently conducted and to
maintain compliance with all current and any currently pending or proposed
Environmental Laws. None of the Sellers has actual or potential liability for
indemnity or similar obligations with respect to any third party under any
Environmental Law;
6.26.4 The Sellers possess all Governmental Approvals required under
applicable Environmental Laws ("Environmental Permits") to operate the Business
in compliance with such Environmental Laws, and all such Environmental Permits
are currently maintained in full force and effect. None of the Sellers has
received notice or other communication, and to the Sellers' Knowledge, there are
no facts or circumstances, that any such Environmental Permits may be suspended,
revoked or modified by any Governmental Authority. Schedule 6.26 contains a true
and complete listing of all material Environmental Permits held by the Sellers;
40
6.26.5 No Hazardous Substances handled during the operation of the
Business have been placed, stored, buried, released, dumped or disposed of on
the properties of the Business or any Seller, nor to the Sellers' Knowledge, at
any offsite location, including any storage, treatment or disposal facility. No
cleanup has occurred at any property owned or operated by any Seller that could
reasonably be expected to result in the assertion or creation of an Encumbrance
on such property by any Governmental Authority with respect thereto, nor has any
such assertion of an Encumbrance been made by any Governmental Authority;
6.26.6 None of the Sellers has received a written notice or other
written communication from any Governmental Authority or other Person seeking
information in connection with, or advising it that it is responsible for, or
potentially responsible for, costs with respect to a release, a threatened
release or a clean-up of Hazardous Substances generated, stored, treated,
disposed of or transported by or for any Seller or the Business;
6.26.7 There is not at, on or in any property owned or operated by any
Seller (i) any friable asbestos-containing material; (ii) any poly-chlorinated
biphenyls or lead-based paint in concentrations that could impose regulatory
obligations on any Seller; or (iii) other than naturally occurring radioactive
materials that are present at the property such as radon, any radioactive
material, including but not limited to, any source, special nuclear or byproduct
material as defined in 42 U.S.C. ss. 2011 et seq., as amended or hereafter
amended;
6.26.8 There are no underground storage tanks or regulated surface
impoundments at, on or in any property operated by any Seller; and
6.26.9 There are no environmental reports, studies, assessments, and
sampling data ("Environmental Reports") within any Seller's possession that have
been issued since January 1, 1997 by or for any Seller, or by any Governmental
Authority, relating to the Business or any of the Assets.
Section 6.27 Brokers, Finders. Neither this Agreement nor the sale and
purchase of the Assets nor any other transactions contemplated by this Agreement
was induced by or procured through or otherwise involved in any way any Person
acting on behalf of or representing any Seller as broker, finder, investment
banker, financial advisor or in any similar capacity.
Section 6.28 Material Contracts.
6.28.1 Schedule 6.28 lists each Purchased Contract to which any of the
Sellers is a party or to which any Seller or any of the Assets is subject or
bound that (a) is a Customer Contract that provides for payments to or
performance by any of the Sellers, individually or collectively, in an amount
equal to or in excess of $50,000 in the aggregate, (b) represents a Contract
upon which any of the Sellers is substantially dependent or the absence of which
could have a Material Adverse Effect, (c) is a supplier, vendor or other
Contract that provides for payments by the Sellers, individually or
collectively, in excess of $50,000 per annum, (d) limits or restricts the
ability of any Seller or, after the Closing, Purchaser or its Affiliates to
compete or otherwise to conduct its business in any manner or place, (e)
provides for a guaranty or indemnity by any Seller in an amount in excess of
$50,000, (f) grants a power of attorney, agency or similar authority to another
41
Person, (g) has an unexpired term as of the date hereof in excess of two years
and cannot be terminated by Purchaser after the Closing in accordance with its
terms upon not more than 30 days' notice without penalty or cost, (h) provides
for the sale of assets or the provision of Services outside the ordinary course
of the Business, (i) grants any preferential right to purchase any Assets having
a value, individually or collectively, in excess of $50,000, (j) relates to a
joint venture, partnership or similar arrangement involving any Seller, the
Business or any Asset, (k) represents a Contract for the employment of any
director, officer, consultant or employee or a Contract, program or policy
providing for benefits or compensation to any director, officer, consultant or
employee, (l) is a Contract to which any Affiliate of any Seller, any officer or
director of any Seller, or any Associate of any such Person, is directly or
indirectly a party, (m) is a Government Contract or (n) governs or evidences any
Indebtedness (each of the Contracts described under clauses (a) through (n)
being a "Material Contract"). True and complete copies of each Material
Contract, including all amendments and supplements thereto, have been furnished
to Purchaser. Except as set forth on Schedule 6.28, each Material Contract is
valid and enforceable; each Seller party thereto has duly performed in all
material respects all of its obligations thereunder to the extent that such
obligations to perform have accrued; and no breach or default, alleged breach or
default, or event which would (with the passage of time, notice or both)
constitute a breach or default thereunder by any Seller or, to the Sellers'
Knowledge, any other party or obligor with respect thereto, has occurred or as a
result of this Agreement or the performance hereof will occur. The consummation
of the transactions contemplated by this Agreement will not (and will not give
any Person a right to) terminate or modify any rights of, or accelerate or
augment any obligation of, any Seller or Purchaser under any Material Contract.
6.28.2 With respect to each Material Contract (a) each Seller party
thereto has complied in all material respects with all requirements of all Laws
or agreements pertaining to such Material Contract; (b) all representations and
certifications executed, acknowledged or set forth in such Material Contract
were complete and correct in all material respects as of the dates they were
made (or deemed made), and each Seller party thereto has complied in all
material respects with all such representations and certifications; (c) neither
any party with whom any Seller has contracted nor any other Person has notified
Seller, either in writing or, to the Sellers' Knowledge, orally, that any Seller
has breached or violated any Law, Order, certification, representation, clause,
provision or requirement pertaining to such Material Contract; (d) none of the
Sellers nor, to the Sellers' Knowledge, any third party has terminated or
threatened to terminate any such Material Contract for any reason and no cure
notice or show cause notice is in effect pertaining to such Material Contract;
and (e) no material cost incurred by any Seller pertaining to such Material
Contract has been formally questioned or challenged or is the subject of any
investigation.
6.28.3 With respect to the Business there exist (i) no outstanding
material disputes against any of the Sellers, either by any party with whom any
of the Sellers has contracted or by any prime contractor, subcontractor, vendor
or other third party, arising under or relating to any Purchased Contract; and
(ii) no material disputes between any of the Sellers and any party with whom any
of the Sellers has contracted, any prime contractor, subcontractor or vendor
arising under or relating to any Purchased Contract. None of the Sellers has any
interest in any pending or potential claim against any party with whom any of
the Sellers has contracted or any prime contractor, subcontractor or vendor
arising under or relating to any Purchased Contract.
42
Section 6.29 Absence of Undisclosed Changes. Since April 30, 2001,
other than as set forth on Schedule 6.29 or in the Interim Financial Statements,
and other than the transactions contemplated by this Agreement, there has not
been any entry by any Seller into any commitment or transaction material to the
Sellers taken as a whole other than in the ordinary course of the Business. In
addition, since April 30, 2001, other than as set forth on Schedule 6.29 or in
the Interim Financial Statements, and other than the transactions contemplated
by this Agreement, (i) none of the Sellers has incurred any Liabilities and
Costs except Liabilities and Costs incurred in the ordinary course of the
Business consistent with the past practices of the Sellers, (ii) the Sellers
have conducted their businesses only in the ordinary course of the Business
consistent with the past practices of the Sellers and have not taken any of the
actions proscribed by Section 5.4 and (iii) there has not been (a) any change by
any Seller in their accounting methods, principles and practices, (b) any
reevaluation by any Seller of any assets (including, without limitation, any
write down of inventory or write-off of accounts receivable) other than as
required by GAAP, (c) any declaration, setting aside or payment of any dividend
or distribution in respect of any capital stock of any Seller or any redemption,
purchase or other acquisition of any of its securities, or (d) any increase in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the rate of compensation payable or to
become payable to any officer or key employee of any Seller.
Section 6.30 Government Contracts.
6.30.1 In addition to the representations and warranties in Section
6.28, with respect to each and every Government Contract referred to in Section
6.28.1 or bid which, if accepted, would result in a Government Contract (a
"Government Bid"): (i) each Seller has complied with all material terms and
conditions of such Government Contract or Government Bid, including all clauses,
provisions and requirements incorporated expressly by reference or by operation
of Law therein; (ii) each Seller has complied with all requirements of all
material Laws or agreements pertaining to such Government Contract or Government
Bid; (iii) all representations and certifications executed, acknowledged or set
forth in or pertaining to such Government Contract or Government Bid were
complete and correct in all material respects as of the dates they were made (or
deemed made), and each Seller has complied in all material respects with all
such representations and certifications; (iv) all Cost or Pricing Data (as
defined in Federal Acquisition Regulation ss. 15.401) and other information
submitted by the Sellers or any Seller's subcontractors in support of the
negotiation of Government Contracts or Government Bids, or modifications
thereto, or in support of requests for payments thereunder, was, as of the date
of price agreement or payment submission current, accurate and complete; (v)
neither the U.S. Government nor any prime contractor, subcontractor or other
Person has notified any Seller, either in writing or, to the Sellers' Knowledge,
orally, that any of the Sellers has breached or violated any Law, Order,
certification, representation, clause, provision or requirement pertaining to
such Government Contract or Government Bid; (vi) the Sellers have not terminated
43
any such Government Contract nor have they been notified by the U.S. Government,
any prime contractor, subcontractor or any other Person that any such Government
Contract has been terminated for any reason and no cure notice or show cause
notice is currently in effect pertaining to any such Government Contract or
Government Bid; (vii) no material cost incurred by any Seller pertaining to such
Government Contract or Government Bid has been formally questioned or
challenged, is the subject of any investigation or has been disallowed by the
U.S. Government; and (viii) no money due to any of the Sellers pertaining to
such Government Contract or Government Bid has been withheld or offset nor has
any claim been made to withhold or offset money, and the Sellers are entitled to
all progress payments received with respect thereto.
6.30.2 (i) None of the Sellers nor, to the Sellers' Knowledge, any of
their respective directors, officers or employees is (or during the last three
years has been) under administrative, civil or criminal investigation,
indictment or information by any Governmental Authority, or any audit or
investigation of any Seller with respect to any alleged irregularity,
misstatement or omission arising under or relating to any Government Contract or
Government Bid; and (ii) during the last three years, none of the Sellers has
conducted or initiated any internal investigation or made a voluntary disclosure
to the U.S. Government with respect to any alleged irregularity, misstatement or
omission arising under or relating to a Government Contract or Government Bid.
There exists no irregularity, misstatement or omission arising under or relating
to any Government Contract or Government Bid that has led to any of the
consequences set forth in clause (i) or (ii) of the immediately preceding
sentence or any other damage, penalty assessment, recoupment of payment or
disallowance of cost.
6.30.3 There exist (i) no outstanding material disputes with any of the
Sellers, either by the U.S. Government or by any prime contractor,
subcontractor, vendor or other third party, arising under or relating to any
Government Contract or Government Bid; and (ii) no material disputes between any
of the Sellers and the U.S. Government under the Contract Disputes Act of 1978
or any other Federal statute or between any of the Sellers and any prime
contractor, subcontractor or vendor arising under or relating to any Government
Contract or Government Bid. None of the Sellers has any interest in any pending
or potential claim against the U.S. Government or any prime contractor,
subcontractor or vendor arising under or relating to any Government Contract or
Government Bid. Schedule 6.30 identifies each Government Contract which is
currently under audit by the U.S. Government or any other Person that is a party
to such Government Contract.
6.30.4 All material test and inspection results provided by any Seller
to the U.S. Government pursuant to any Government Contract or to any other
Person pursuant to a Government Contract or as a part of the delivery to the
U.S. Government or to any other Person pursuant to a Government Contract of any
article designed, engineered or manufactured in the Business, or any Service
provided by any Seller, were complete and correct in all material respects as of
the date so provided. The Sellers have provided all material test and inspection
results to the U.S. Government and each other Person who is required to receive
such information under applicable Law and the terms of the Government Contracts.
44
Section 6.31 Clearances. Except to the extent disclosure is prohibited
by the Industrial Security Manual, or any manual relating to clearances that may
not be disclosed, Schedule 6.31 sets forth listings (including an indication of
the type of clearance) of all facility security clearances held by any Seller
and all personnel security clearances held by any officer, director, employee,
consultant or agent of any of the Sellers. Except as set forth on Schedule 6.31,
there are no facility security clearances or personnel security clearances
required under applicable Law in connection with the operation of the Business.
Section 6.32 Disclosure; Due Diligence. No representation or warranty
made by any Seller contained in this Agreement and in documents delivered to
Purchaser by any Seller, nor any writing, certificate, exhibit, list or other
instrument required to be furnished by any Seller to Purchaser pursuant hereto,
contains or will contain any material untrue statement of fact or omits or will
omit any fact necessary in order to make the statements and information
contained herein or therein not materially misleading.
Section 6.33 SEC Reports.
6.33.1 Except as set forth in Schedule 6.33, FIG has filed with the SEC
all forms, reports, schedules, registration statements, proxy statements and
other documents (as they have been amended since the time of their filing, and
including any documents filed as exhibits thereto, collectively, the "SEC
Reports") required to be filed by FIG with the SEC since May 1, 1999. As of
their respective dates, except as specifically set forth in Schedule 6.33, the
SEC Reports (including, without limitation, any financial statements or
schedules included or incorporated by reference therein) complied in all
material respects with the requirements of the Exchange Act, or the Securities
Act, and the rules and regulations of the SEC promulgated thereunder applicable,
as the case may be, to such SEC Reports. None of FII, FIA, FIS, FAI or FIOF is
required to file any form, report or other document with the SEC.
6.33.2 The Sellers have heretofore furnished to Purchaser a complete
and correct copy of any amendments or modifications which have not yet been
filed with the SEC to agreements, documents or other instruments which
previously had been filed by FIG with the SEC pursuant to the Securities Act and
the rules and regulations promulgated thereunder or the Exchange Act and the
rules and regulations promulgated thereunder.
Section 6.34 Information. None of the information supplied by the
Sellers for inclusion or incorporation by reference in the Proxy Statement will
at the time the Proxy Statement is filed with the SEC or, at the date it or any
amendment or supplement thereto is mailed to shareholders, at the time of the
Shareholder Meeting or on the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
will comply with the provisions of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by the Sellers
with respect to statements made therein based on information supplied by
Purchaser in writing specifically for inclusion in the Proxy Statement.
45
Section 6.35 Customer Warranties and Return Policies. Set forth on
Schedule 6.35 are warranties given and return policies offered by the Sellers to
any customers of the Business, together with an historical summary of all
warranty and return claims made against any Seller since January 1, 1999. There
are not pending or, to the Sellers' Knowledge, threatened, any claims under or
pursuant to any warranty or return policy, whether expressed or implied, on
Services supplied or Products sold prior to the date of this Agreement by any
Seller that are not disclosed or referred to in the Interim Balance Sheet and
which are not fully reserved against.
Section 6.36 Products Liability.
6.36.1 Claims. Except as disclosed on Schedule 6.36 (i) there is no
claim now pending or, to the Sellers' Knowledge, threatened by or before any
Governmental Authority alleging any defect in any Product shipped, sold or
delivered by the Business or alleging, with respect thereto, the failure of any
Seller to warn or any breach by any Seller of any express or implied warranties
or representations, nor is there any valid basis for any such claim; (ii) to the
Sellers' Knowledge, there has not since January 1, 1999 been any product recall
or post-sale warning or similar action (collectively "Recalls") conducted with
respect to any Product shipped, sold or delivered by the Business, or any
investigation by any Governmental Authority concerning whether to undertake or
not undertake any Recalls; and (iii) since January 1, 1997, there have been no
material defects in, failures to warn, or breaches of express or implied
warranties or representations with respect to, any Product shipped, sold or
delivered by any of the Sellers with respect to the Business.
6.36.2 Compliance With Standards. All testing procedures used and
product specifications disclosed to customers by the Sellers comply in all
material respects with all applicable Laws and Orders.
6.36.3 Occurrences. Except as disclosed on Schedule 6.36, there have
been no Occurrences within the last five years. For purposes of this Section
6.36.3, "Occurrence" shall mean any occurrence which is caused or allegedly
caused by any defect in, or failure to warn or any breach of express or implied
warranties or representations with respect to, a Product shipped, sold or
delivered by any of the Sellers with respect to the Business which results or is
alleged to have resulted in injury or death to any Person or damage to or
destruction of property (including damage to or destruction of the Product
itself) or other consequential damages.
Section 6.37 Federal Reserve Board Regulations. None of the Sellers
owns any "margin security," as such term is defined in Regulation U of the Board
of Governors of the Federal Reserve System.
Section 6.38 No Controlling Shareholder. FIG is a "person" and its own
"ultimate parent entity" for purposes of, and as defined under, the HSR Act.
46
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents, warrants and agrees for the benefit of the
Sellers as of the date hereof and as of the Closing Date as follows:
Section 7.1 Organization and Standing of Purchaser. Purchaser is duly
organized, validly existing and in good standing under the laws of the state of
its organization, and has all the power and authority necessary to execute this
Agreement and consummate the transactions contemplated hereby. As of the date of
this Agreement, all of the issued and outstanding capital stock of VTF
Corporation is owned by The Veritas Capital Fund, L.P.
Section 7.2 Authorization and Binding Obligation of Purchaser.
Purchaser has full power and authority to enter into and perform this Agreement
and all other Purchaser Documents. All action on the part of Purchaser and the
directors and officers of Purchaser necessary for the authorization, execution
and delivery of this Agreement and all Purchaser Documents and for the
performance of all of Purchaser's obligations hereunder and thereunder, as the
case may be, have been taken, and each of this Agreement and each of the other
Purchaser Documents to be delivered by it pursuant hereto, when executed and
delivered, shall constitute a valid and legally binding obligation of Purchaser,
enforceable in accordance with their respective terms, except as may be limited
by (i) bankruptcy, insolvency, or other similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity (whether
enforcement is sought at law or in equity).
Section 7.3 Ability to Perform Obligations. Neither the execution and
delivery by Purchaser of this Agreement or the other Purchaser Documents, the
performance by Purchaser of its obligations hereunder or thereunder, nor the
performance or consummation by Purchaser of the transactions contemplated hereby
or thereby will (i) violate or conflict with any provision of the organizational
documents of Purchaser, (ii) violate or conflict with any Law or Order to which
Purchaser is subject or (iii) require the approval of or a filing or
registration with any Governmental Authority, which, in any event, would impair
the ability of Purchaser to perform its obligations under this Agreement.
Section 7.4 Brokers, Finders. Neither this Agreement nor the sale and
purchase of the Assets or any other transaction contemplated by this Agreement
was induced by or procured through or otherwise involved in any way any Person
acting on behalf of or representing Purchaser as broker, finder, investment
banker, financial advisor or in any similar capacity.
Section 7.5 U.S. Persons. Purchaser is controlled by United States
interests and is not subject to foreign ownership, control or interest under
applicable U.S. government contracting guidelines.
47
ARTICLE VIII
TERMINATION
Section 8.1 Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated by Purchaser or the Representative, on behalf of the Sellers, if the
Closing does not occur on or before the close of business on September 30, 2002;
provided that the party seeking to terminate this Agreement pursuant to the
preceding sentence shall not be, on the date of such termination, in breach of
its representations, warranties or covenants under this Agreement. In addition,
this Agreement and the transactions contemplated hereby may be terminated at any
time before the Closing as follows:
8.1.1 Mutual Consent. By mutual consent in writing of Purchaser and the
Representative, on behalf of the Sellers.
8.1.2 Conditions to Purchaser's Performance Not Met. By Purchaser by
written notice to the Sellers if (i) any event occurs or condition exists which
would render impossible the satisfaction of one or more conditions to the
obligations of Purchaser to consummate the transactions contemplated by this
Agreement as set forth in Article IX, (ii) the shareholders of FIG shall not
have duly approved the transactions contemplated by this Agreement on or before
August 31, 2002, (iii) the condition set forth in Section 9.10 shall not have
been satisfied as of September 30, 2002 or (iv) the conditions set forth in
Sections 9.5 or 9.11 are not satisfied.
8.1.3 Conditions to the Sellers' Performance Not Met. By the
Representative, on behalf of the Sellers, by written notice to Purchaser if any
event occurs or condition exists which would render impossible the satisfaction
of one or more conditions to the obligations of the Sellers to consummate the
transactions contemplated by this Agreement as set forth in Article X.
8.1.4 The Sellers' Material Breach. By Purchaser if there has occurred
a material misrepresentation or other material breach by any of the Sellers of
its representations, warranties or covenants set forth herein or in any other
Seller Document; provided, however, that if such breach is susceptible to cure,
the breaching party or parties shall have twenty (20) calendar days after
receipt of written notice (which notice includes a summary description of such
breach) from Purchaser of its intention to terminate this Agreement if such
breach continues in which to cure such breach.
8.1.5 Purchaser's Material Breach. By the Sellers, if there has
occurred a material misrepresentation or other material breach by Purchaser of
its representations, warranties or covenants set forth herein or in any other
Purchaser Document; provided, however, that if such breach is susceptible to
cure, Purchaser shall have twenty (20) calendar days after receipt of written
notice (which notice includes a summary description of such breach) from the
Representative of its intention to terminate this Agreement if such breach
continues in which to cure such breach.
48
8.1.6 Assumed Indebtedness. By Purchaser if the Assumed Indebtedness
minus the Maritime Adjustment Amount exceeds $41,300,000.
8.1.7 Final Proposed Schedules. By Purchaser pursuant to Section 13.10.
Section 8.2 Effect of Termination. In the event that this Agreement
shall be terminated pursuant to Section 8.1, all further obligations of the
parties under this Agreement shall terminate; provided that the obligations of
the parties contained in Sections 8.3 and 13.2 and Articles XI and XII shall
survive any such termination. A termination under Section 8.1 shall not relieve
any party of any liability for a breach of, or for any misrepresentation under,
this Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any such breach or
misrepresentation.
Section 8.3 Expenses. Without limiting the rights and remedies of any
party with respect to a breach of any other party's representations, warranties
or covenants under this Agreement or any other document delivered in connection
herewith, in the event the transactions contemplated by this Agreement shall not
be consummated, the parties hereto shall bear their own respective expenses, as
provided in Section 13.2. Notwithstanding the foregoing, in the event that (i)
all of the conditions to the obligations of Purchaser to consummate the
transactions contemplated by this Agreement, as set forth in Article IX, are
satisfied except the conditions set forth in Section 9.10, (ii) the Sellers have
not breached any of their respective representations, warranties or covenants
under this Agreement and (iii) Purchaser terminates this Agreement pursuant to
Section 8.1.2(iii), Purchaser shall reimburse the Sellers for expenses
reasonably incurred by the Sellers in connection with the transactions
contemplated by this Agreement in an amount not to exceed $200,000.
ARTICLE IX
CLOSING CONDITIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of each of the following conditions, any one or more of which
may be waived (but only in writing) by Purchaser (provided that no such waiver
shall be deemed to have cured any breach of any representation, warranty or
covenant made in this Agreement):
Section 9.1 Representations, Warranties and Covenants of the Sellers.
(i) All of the representations and warranties made by the Sellers in this
Agreement and in the other Seller Documents which they have executed and
delivered in connection with this Agreement, shall be true and correct, in the
case of any representation or warranty contained in Sections 6.2, 6.5, 6.6,
6.27, 6.37 or 6.38 or any representation or warranty that is qualified as to
materiality, in all respects, and in the case of any other representation or
warranty, in all material respects, as of the date hereof and as of the Closing
Date as though made at and as of the Closing Date, except to the extent such
representations and warranties expressly speak as of an earlier date; (ii) the
Sellers shall have performed and complied with all agreements and covenants
required by this Agreement to be performed by them on or prior to the Closing
Date; and (iii) with respect to clauses (i) and (ii), at the Closing there shall
be delivered to Purchaser a certificate signed by the Chief Executive Officer of
each Seller to the foregoing effect.
49
Section 9.2 Deliveries to Be Made by the Sellers at the Closing. At the
Closing, the Sellers shall deliver or cause to be delivered to Purchaser the
following in form and substance reasonably satisfactory to Purchaser:
9.2.1 All bills of sale, note endorsements and other documents and
instruments of sale, assignment, conveyance and transfer as Purchaser or its
counsel may reasonably deem necessary or desirable to sell, assign, convey and
transfer to, and to vest, perfect and confirm in Purchaser good, marketable and
indefeasible title in and to the Assets, including any documents of conveyance
requested by the Federal Aviation Administration;
9.2.2 The Assets;
9.2.3 Copies of resolutions of the board of directors and shareholders
of each Seller authorizing and approving the execution and delivery of this
Agreement and the Seller Documents and the performance by each Seller of its
obligations hereunder and thereunder, certified by the Secretary of such Seller;
9.2.4 An incumbency certificate dated the Closing Date for each Seller
executed by the Secretary of such Seller which shall identify the names and
titles and bear the signatures of the officers of such Seller individually
authorized to execute and deliver this Agreement and the Seller Documents;
9.2.5 A certificate executed by each Seller certifying that all of such
Seller's representations and warranties in this Agreement are true and complete
as of the Closing Date (to the extent required pursuant to Section 9.1) and
confirming that all conditions set forth in this Article IX have been satisfied
and that such Seller has complied with its covenants and other obligations to be
performed on or prior to the Closing Date under this Agreement and the Seller
Documents, to the extent not waived in writing by Purchaser;
9.2.6 An opinion of counsel to the Sellers, dated as of the Closing
Date, in form and substance satisfactory to Purchaser in its sole discretion;
9.2.7 Good standing certificates for each Seller, dated as of a date
within 10 days of the Closing Date, from the jurisdiction of its incorporation
and each other jurisdiction in which it is required to be qualified to do
business, and "bring-down" certificates from each such jurisdiction or any
independent service company dated the Closing Date;
9.2.8 Copies of the charter and by-laws of each Seller, in each case
certified by the Secretary of the such Seller;
9.2.9 An affidavit of non-foreign status from each Seller, in the form
of Exhibit E;
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9.2.10 A certificate executed by each Person to whom any Seller has any
Assumed Indebtedness outstanding as of the Closing Date, certifying the
aggregate amount of such Assumed Indebtedness as of the Closing Date, after
giving effect to the transactions contemplated by this Agreement;
9.2.11 If applicable, a certificate executed by each Seller and
Maritime and each shareholder of Maritime allocating the amount by which the
Assumed Indebtedness exceeds $34,800,000 to the Adjustment Amount and the
Maritime Adjustment Amount, in form and substance satisfactory to Purchaser;
9.2.12 The results of a Uniform Commercial Code, tax and judgment lien
search, conducted as of a recent date, demonstrating that the Assets are not
subject to any Encumbrances other than Permitted Encumbrances;
9.2.13 An opinion of counsel or of a qualified title search company as
listed by the Federal Aviation Administration and published on Advisory Circular
(AC) Form 4050-55, indicating clear title in the Sellers to all aircraft
(including air frames, engines and propellers) listed on Schedule 6.14, other
than Permitted Encumbrances; and
9.2.14 All other documents expressly provided in this Agreement to be
delivered to Purchaser at or before the Closing and not delivered to Purchaser
before the Closing.
Section 9.3 Shareholder Approval. The shareholders of FIG shall have
duly approved the transactions contemplated by this Agreement, pursuant to the
requirements of the FIG's articles of incorporation and applicable law.
Section 9.4 Third Party Consents. There shall have been obtained all
consents, approvals and waivers (other than Government Contract Novations, which
shall be sought after the Closing) from parties to Purchased Contracts and
others that are required in connection with the transactions contemplated by
this Agreement and the Seller Documents, including, without limitation, those
set forth on Schedule 6.3, and the same shall be in full force and effect.
Section 9.5 CAS-MOS Contract. Purchaser shall have been provided with
the terms and conditions associated with the redetermination of billing prices
in accordance with clauses C-24 and C-25 of the Commercial Air Services Military
Operations Support Agreement, dated April 1, 2002 (as amended or modified),
together with all supporting documentation and information regarding such
agreement, and such terms, conditions, documentation and information are
satisfactory to Purchaser in its sole discretion.
Section 9.6 Orders; Illegality. There shall not be in effect any Law or
Order of a Governmental Authority which enjoins, prohibits, makes illegal or
materially restricts or otherwise prevents the consummation of the transactions
contemplated hereby.
Section 9.7 Absence of Investigations and Proceedings. There shall be
no decree, judgment, Order or litigation at law or in equity, no arbitration
proceedings, and no proceeding before or by any Governmental Authority pending,
or to the Sellers' Knowledge, threatened, to which any of the Sellers, Maritime
or Purchaser is or may be a party that could reasonably be expected to adversely
51
affect, in any material respect, the Business or the Assets or which challenges
the transactions contemplated by this Agreement or the Maritime Purchase
Agreement. No proceeding or formal investigation by any Governmental Authority
shall be pending, or, to the Sellers' Knowledge, threatened, with the object of
challenging or preventing consummation of the transactions contemplated by this
Agreement or the Maritime Purchase Agreement and no other proceedings shall be
pending with such object or to collect damages from Purchaser on account
thereof.
Section 9.8 Governmental Approvals. All Governmental Approvals
necessary in connection with the consummation of the transactions contemplated
by this Agreement, including, without limitation, those set forth on Schedule
6.23, shall have been obtained and shall be in full force and effect.
Section 9.9 Absence of Certain Changes. Between the date of this
Agreement and the Closing Date, there shall have been no events, occurrences or
conditions that have had or could reasonably be expected to have a Material
Adverse Effect.
Section 9.10 Financing. Purchaser shall have obtained the financing, on
commercially reasonable terms, necessary to permit Purchaser to consummate the
acquisition of the Assets, the assumption of the Assumed Liabilities and the
transactions contemplated by this Agreement and the Maritime Purchase Agreement.
Section 9.11 Due Diligence. Purchaser shall have made such
investigations of the Sellers, the Assets and the Business as Purchaser in its
sole discretion deems necessary or desirable, including, without limitation,
operational results of the Sellers, and Purchaser in each case shall have
determined that the results of such due diligence, including the results of any
audit conducted by or on behalf of Purchaser, are satisfactory to Purchaser in
its sole discretion.
Section 9.12 Environmental Audits. Purchaser shall have received "Phase
I" environmental assessment reports of the environmental condition of the Real
Property specified by Purchaser which confirm the correctness of the warranties,
representations and covenants of the Company in Section 6.26 hereof and which
disclose no condition which could reasonably be expected to have a Material
Adverse Affect or could subject the Sellers or Purchaser to liability or
remediation costs in excess of $50,000.
Section 9.13 Release of Liens. The Sellers shall have received Uniform
Commercial Code termination statements and mortgage releases sufficient to
release all Encumbrances and security interests (except for Permitted
Encumbrances or Encumbrances relating to Assumed Liabilities) on the Assets
(concurrently with the other transactions occurring at the Closing) and shall
have transmitted the same for filing and/or recordation or delivered such
documents to Purchaser.
Section 9.14 Xxxxxxx Employment Agreement. Xxxxx X. Xxxxxxx shall have
executed and delivered to Purchaser or one or more of its Affiliates an
employment and non-competition agreement (the "Xxxxxxx Employment Agreement"),
between Xxxxxxx and Purchaser or one or more of its Affiliates, containing the
terms set forth in Exhibit F and otherwise in form and substance satisfactory to
Purchaser, Xxxxxxx and the Sellers.
52
Section 9.15 Bone Employment and Non-Competition Agreement. Xxxx X.
Bone shall have executed and delivered to Purchaser or one or more of its
Affiliates an employment and non-competition agreement (the "Bone Employment and
Non-Competition Agreement"), between Bone and Purchaser or one or more of its
Affiliates, containing the terms set forth in Exhibit G and otherwise in form
and substance satisfactory to Purchaser, Bone and the Sellers.
Section 9.16 Transfer Taxes. The Sellers shall have paid or caused to
be paid all Taxes required to be paid in connection with the sale and delivery
to Purchaser of the Assets to the extent due and payable or prior to the
Closing.
Section 9.17 Maritime Transaction. The transactions contemplated by the
Asset Purchase Agreement, dated as of May 9, 2002, by and between Purchaser and
Maritime (the "Maritime Purchase Agreement") shall have been consummated
concurrently with the consummation of the transactions contemplated hereby.
Section 9.18 Retention of Key Employees. Purchaser shall have been
given the opportunity to approach and negotiate with all employees of the
Sellers in an effort to persuade them to become an employee of the Purchaser
following the Closing, and Purchaser, in its sole discretion, shall be satisfied
with the arrangements made to ensure that following the Closing, the Purchaser
will retain the services of the Sellers' key employees.
Section 9.19 Escrow Agreement. The Representative and the Escrow Agent
shall have executed and delivered the Escrow Agreement.
Section 9.20 Sellers Representative Agreement. Each Seller and the
Representative shall have executed and delivered the Sellers Representative
Agreement, and a fully-executed copy thereof shall have been furnished to
Purchaser.
ARTICLE X
CLOSING CONDITIONS OF THE SELLERS
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of each of the following conditions, any one or more of which
may be waived (but only in writing) by the Representative on behalf of the
Sellers (provided that no such waiver shall be deemed to have cured any breach
of any representation, warranty or covenant made in this Agreement):
Section 10.1 Representations, Warranties and Covenants of Purchaser.
(i) All of the representations and warranties made by Purchaser in this
Agreement and in the other Purchaser Documents, or otherwise in connection with
the transactions contemplated hereby, shall be true and correct, in the case of
any representation or warranty that is qualified as to materiality, in all
respects, and in the case of any representation or warranty that is not so
53
qualified, in all material respects, as of the date hereof and as of the Closing
Date as though made at and as of the Closing Date, except to the extent such
representations and warranties expressly speak as of an earlier date; (ii)
Purchaser shall have performed and complied with all agreements and covenants
required by this Agreement to be performed by it on or prior to the Closing
Date; and (iii) with respect to clauses (i) and (ii), at the Closing there shall
be delivered to the Seller a certificate signed by a duly authorized officer of
Purchaser to the foregoing effect.
Section 10.2 Deliveries to be Made by Purchaser at the Closing. At the
Closing, Purchaser shall deliver or cause to be delivered to the Representative,
on behalf of the Sellers, the following:
10.2.1 The portion of the Total Purchase Price due at Closing, as
provided in Sections 3.2 and 3.3;
10.2.2 An opinion of Purchaser's counsel, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit H;
10.2.3 A copy of the resolutions of the Board of Directors or other
governing body of Purchaser authorizing the execution and delivery of this
Agreement, the Purchaser Documents and the performance by Purchaser of its
obligations hereunder and thereunder, certified by the Secretary or any
Assistant Secretary of Purchaser;
10.2.4 A certificate by a duly authorized officer of Purchaser to the
effect that the representations and warranties in this Agreement are true and
complete in all material respects as of the Closing Date and confirming that all
conditions set forth in this Article X have been satisfied and that Purchaser
has complied with its covenants and other obligations to be performed on or
prior to the Closing Date under this Agreement;
10.2.5 An incumbency certificate, dated the Closing Date, for Purchaser
executed by the Secretary or any Assistant Secretary of Purchaser, which shall
identify the name and title and bear the signature of each officer of Purchaser
individually authorized to execute and deliver this Agreement and the Purchaser
Documents;
10.2.6 Good standing certificates for Purchaser, dated as of a date
within 10 days of the Closing Date, from its jurisdiction of organization and
each other jurisdiction in which it is required to be qualified to do business,
and "bring-down" certificates from each such jurisdiction or an independent
service company dated the Closing Date;
10.2.7 All other documents expressly provided in this Agreement to be
delivered to the Sellers at or before the Closing and not delivered to the
Sellers before the Closing.
Section 10.3 Shareholder Approval. The shareholders of FIG shall have
duly approved the transactions contemplated by this Agreement, pursuant to the
requirements of FIG's articles of incorporation and applicable law.
54
Section 10.4 Orders; Illegality. There shall not be in effect any Law
or Order of a Governmental Authority which enjoins, prohibits, makes illegal or
materially restricts or otherwise prevents the consummation of the transactions
contemplated hereby.
Section 10.5 Escrow Agreement. Purchaser and the Escrow Agent shall
have executed and delivered the Escrow Agreement.
Section 10.6 Absence of Investigations and Proceedings. No proceeding
or formal investigation by any Governmental Authority shall be pending, or, to
the best of Purchaser's knowledge, threatened, with the object to challenging or
preventing the consummation of the transactions contemplated by this Agreement.
Section 10.7 Governmental Approvals. All Governmental Approvals
necessary in connection with the consummation of the transactions contemplated
by this Agreement shall have been obtained and shall be in full force and
effect.
ARTICLE XI
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 11.1 Indemnification by the Sellers. The Sellers, jointly and
severally, agree to indemnify and hold harmless Purchaser, its Affiliates and
their respective shareholders, directors, officers, employees, agents,
successors in interest, assigns and representatives (collectively, the
"Purchaser Indemnified Parties") from and against any and all Losses which may
be incurred or suffered by any such party and which, directly or indirectly,
arise out of or result from:
11.1.1 any inaccuracy in or breach of any of the representations and
warranties made by any Seller in or pursuant to this Agreement or in the other
Seller Documents;
11.1.2 any inaccuracy in the Sellers' Assumed Indebtedness Schedule;
11.1.3 the Excluded Liabilities;
11.1.4 any breach or nonperformance of any of the covenants or
agreements made by any Seller in or pursuant to this Agreement or in the other
Seller Documents;
11.1.5 any matter as to which any Seller in other provisions of this
Agreement or in the other Seller Documents has expressly agreed to indemnify
Purchaser;
11.1.6 any third party claim or demand regarding the conduct of the
Business prior to the Closing;
11.1.7 any violation of an applicable Law or Order prior to the Closing
by any Seller, including, without limitation, any Environmental Law;
55
11.1.8 the generation, use, transportation, treatment, storage, release
or disposal, prior to the Closing, of Hazardous Substances by, or at any
property or facility of, any Seller, or at any offsite location, at any time
prior to the Closing;
11.1.9 the presence of Hazardous Substances at any property or facility
of any Seller arising from pre-Closing operations, whether or not discovered,
prior to the Closing;
11.1.10 the failure of the Sellers to pay the costs of any Warranty
Work and the amount of any Warranty Claims or Refund Claims for which any Seller
is responsible pursuant to Sections 5.19 and 5.20;
11.1.11 the invalidity, unenforceability of, or claims of material
breach or default arising under, any Contract based on facts, occurrences or
circumstances arising upon or prior to the Closing; or
11.1.12 any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incurred in enforcing the indemnity provided
by this Section 11.1.
Section 11.2 Indemnification by Purchaser. Purchaser agrees to
indemnify and hold harmless the Sellers from and against any Losses of the
Sellers, their respective Affiliates and their respective shareholders,
directors, officers, employees, agents, successors in interest, assigns and
representatives (collectively, the "Sellers Indemnified Parties") which may be
incurred, directly or indirectly, by any such party as a result of, or based
upon or arising from:
11.2.1 any inaccuracy in or breach of any of the representations and
warranties made by Purchaser in or pursuant to this Agreement or in the other
Purchaser Documents;
11.2.2 the Assumed Liabilities;
11.2.3 any breach or nonperformance of any of the covenants or
agreements made by Purchaser in or pursuant to this Agreement or in the other
Purchaser Documents;
11.2.4 any matter as to which Purchaser in other provisions of this
Agreement or in the other Purchaser Documents has agreed to indemnify the
Sellers;
11.2.5 any third party claim or demand against any Sellers Indemnified
Party regarding the conduct of the Business following the Closing (other than a
claim based on any action taken by any Sellers Indemnified Party following the
Closing as an employee, representative or agent of Purchaser or its Affiliates
or otherwise);
11.2.6 any violation of Law following the Closing by Purchaser (except
for any violation of Law with respect to which the Sellers or any other
Indemnified Party are obligated to provide indemnity under this Agreement); and
56
11.2.7 any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation, legal
fees and expenses, incurred in enforcing the indemnity provided by this Section
11.2.
Section 11.3 Cooperation. The parties shall cooperate in the defense of
all third party claims which may give rise to Indemnifiable Claims hereunder. In
connection with the defense of any claim, each party shall make available to the
party controlling such defense any books, records or other documents within its
control and access to employees that are reasonably requested in the course of
such defense.
Section 11.4 Limitations on Indemnification. The Sellers shall not be
required to indemnify any Purchaser Indemnified Parties under Section 11.1
unless the aggregate of all amounts for which indemnity would otherwise be
payable by the Sellers exceeds $75,000 (except with respect to any inaccuracy in
or breach of the representations and warranties contained in Sections 6.1, 6.2,
6.5, 6.18, 6.27 and 6.38 and except for any indemnity rights pursuant to Section
11.1.2 and 11.1.3, with respect to which this threshold shall not apply), and,
in such event, the Sellers shall be responsible for the entire amount. The
Sellers' indemnity obligations under Section 11.1.1 with respect to any breach
of the representations and warranties under Article VI (except with respect to
any inaccuracy in or breach of the representations and warranties contained in
Sections 6.1, 6.2, 6.3, 6.5, 6.6, 6.8, 6.15, 6.18, 6.19, 6.21, 6.26, 6.27, 6.28,
6.30, 6.35, 6.36 and 6.38) shall be limited, in the aggregate, to $1,000,000.
Purchaser shall not be required to indemnify any other Person under Section 11.2
unless the aggregate of all amounts for which indemnity would otherwise be
payable by Purchaser exceeds $75,000, and in such event, Purchaser shall be
responsible for the entire amount. Purchaser's indemnity obligations under
Section 11.2.1 shall be limited, in the aggregate, to $1,000,000.
Section 11.5 Notice to Indemnifying Party. If any party (the
"Indemnified Party") receives notice of any claim or other commencement of any
action or proceeding with respect to which any other party (or parties) (the
"Indemnifying Party") is obligated to provide indemnification pursuant to
Sections 11.1 or 11.2 or pursuant to any other specific indemnification covenant
contained in this Agreement, the Indemnified Party shall promptly give the
Indemnifying Party written notice thereof which notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom. The
failure of a party to give notice under this Section 11.5 shall not relieve any
party from liability, unless and to the extent the other party has been
materially prejudiced thereby. The Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed) unless a suit shall
have been instituted against it and the Indemnifying Party either (i) shall not
have undertaken the defense of such suit after notification thereof as provided
in Section 11.6 or (ii) is demonstrably unable to undertake the defense of such
suit or satisfy the claims arising thereunder.
Section 11.6 Defense by Indemnifying Party. In connection with any
claim giving rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a Person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding
57
using counsel of its choice (subject to the approval of the Indemnified Party,
which approval may not be unreasonably withheld or delayed) if it (i)
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim and (ii)
demonstrates its ability to undertake the defense of such claim or proceeding
and satisfy any liabilities resulting therefrom. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any such action,
with its counsel and at its own expense; provided, however, that if the
Indemnified Party, in its reasonable discretion, determines that there exists a
conflict of interest between the Indemnifying Party (or any constituent party
thereof) and the Indemnified Party, the Indemnified Party (or such constituent
party thereof) shall have the right to engage separate counsel, the reasonable
costs and expenses of which shall be paid by the Indemnifying Party, but in no
event shall the Indemnifying Party be liable to pay for the costs and expenses
of more than one separate firm of attorneys (in addition to any local counsel).
If the Indemnifying Party does not assume the defense of any such claim or
litigation resulting therefrom, the Indemnified Party may settle or defend
against such claim or litigation, after giving notice of the same to the
Indemnifying Party, on such terms as the Indemnified Party may deem appropriate,
and the Indemnifying Party shall be entitled to participate in (but not control)
the defense of such action, with its counsel and at its own expense. If the
Indemnifying Party thereafter seeks to question the manner in which the
Indemnified Party defended such third-party claim or the amount or nature of any
such settlement, the Indemnifying Party shall have the burden to prove by a
preponderance of the evidence that the Indemnified Party did not defend or
settle such third-party claim in a reasonably prudent manner. Notwithstanding
the foregoing, however, Purchaser shall in all cases be entitled to control of
the defense of any such action if it (i) may result in injunctions or other
equitable remedies in respect of Purchaser or the Business; (ii) may result in
liabilities which, taken with other then-existing claims by Purchaser under this
Article XI, would not be fully indemnified hereunder; or (iii) may have an
adverse impact on the Business or the financial condition of Purchaser including
an effect on the Tax liabilities, earnings or ongoing business relationships of
Purchaser even if the Seller satisfies all indemnification amounts in full.
Section 11.7 Survival of Representations and Warranties.
Notwithstanding any right of Purchaser and the Sellers to fully investigate the
affairs of the other parties hereto and notwithstanding any knowledge of facts
determined or determinable by Purchaser or Sellers pursuant to such
investigation or right of investigation, whether before or after execution and
delivery of this Agreement or the Closing, and notwithstanding any waiver of any
condition to the Closing, Purchaser and the Sellers shall have the right to rely
fully upon the representations, warranties, covenants and agreements of the
other parties hereto contained in this Agreement or in any other Seller
Documents or Purchaser Documents, as applicable. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
or compliance with any covenant or obligation, will not affect the right of
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants and obligations. Except as otherwise
provided herein, each representation, warranty, covenant and agreement of any of
the Sellers contained herein or in any other Seller Document, or in any
instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby, shall survive the execution and delivery of
this Agreement and the Closing and any investigation at any time made by or on
behalf of Purchaser indefinitely. Notwithstanding the foregoing, (i) the
representations and warranties of the Sellers contained in Sections 6.21 and
58
6.26 shall terminate and expire on the second anniversary of the Closing Date,
unless on or prior to such date Purchaser has delivered to the Representative a
written notice of a claim with respect to any such representation or warranty,
(ii) the representations and warranties of the Sellers contained in Sections
6.18 shall terminate and expire on the third anniversary of the Closing Date,
unless on or prior to such date Purchaser has delivered to the Representative a
written notice of a claim with respect to any such representation or warranty,
and (iii) all other representations and warranties contained in Article VI
(other than those contained in Sections 6.1, 6.2, 6.5, 6.27 and 6.38, which
shall survive the execution and delivery of this Agreement and the Closing and
any investigation at any time made by or on behalf of Purchaser indefinitely)
shall terminate and expire on the eighteen month anniversary of the Closing
Date, unless on or prior to such date Purchaser has delivered to the
Representative a written notice of a claim with respect to any such
representation or warranty.
Section 11.8 Survival of Representations and Covenants of Purchaser.
With the sole exception of those covenants which are to be performed by
Purchaser after the Closing (which shall survive until a claim thereon is barred
by the applicable statute of limitations), each representation, warranty,
covenant and agreement of Purchaser contained herein shall survive the execution
and deliver of this Agreement and the Closing and shall thereafter terminate and
expire on the eighteen month anniversary of the Closing Date, unless, on or
before such date, the Representative has delivered to Purchaser a written notice
of claim with respect to such representation, warranty, covenant or agreement.
ARTICLE XII
CONFIDENTIALITY
Section 12.1 Confidentiality of the Sellers. Unless this Agreement
shall have been terminated pursuant to Article VIII, each Seller agrees to, and
agrees to use its Best Efforts to cause its agents, representatives, Affiliates,
employees, officers and directors to: (i) treat and hold as confidential (and
not disclose or provide access to any Person) all Intangible Personal Property
and information relating to product development, price, distributors, Contracts,
Customer Lists, pricing and marketing plans, policies and strategies, details of
client and consultant contracts, operations, methods, product development
techniques, business acquisition plans, new personnel acquisition plans and all
other confidential information with respect to any of the Sellers, the Business
or the Assets, except as may be required by applicable Law, in which event each
Seller agrees to, and agrees to use its Best Efforts to cause its agents,
representatives, Affiliates, employees, officers and directors to, furnish only
that portion of such confidential information which they reasonably believe is
legally required to be provided and exercise their reasonable efforts to obtain
assurances that confidential treatment will be afforded such information; and
(ii) in the event such Seller or any of its agents, representatives, Affiliates,
employees, officers or directors becomes legally compelled to disclose any such
information, provide Purchaser with prompt written notice of such requirement so
that Purchaser may, at the expense of Purchaser, seek a protective order or
other remedy. This Section 12.1 shall not apply to any information that, at the
time of disclosure, is known to the receiving party before disclosure thereof,
is independently developed by the receiving party, is or becomes publicly
59
available through no fault of any Seller or their respective agents,
representatives, Affiliates, employees, officers or directors, is obtained by
the receiving party from a third party not known by the receiving party to be
under any obligation not to disclose such information and which the receiving
party has no reason to believe is not otherwise publicly available (provided,
however, that once any Seller is advised that information obtained under such
circumstance is indeed confidential hereunder, this Section 12.1 shall
thereafter apply to such information) or is reasonably necessary in order for
any Seller to litigate any claim against Purchaser including, but not limited
to, any claim against Purchaser pursuant to this Agreement. Each Seller agrees
and acknowledges that remedies at law for any breach of its obligations under
this Section 12.1 are inadequate and that in addition thereto Purchaser shall be
entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach. Notwithstanding the foregoing, the
Sellers, with the consent of Purchaser (which consent shall not be unreasonably
withheld or delayed), may make such disclosures in connection with defending any
claim brought against any Seller or any of its agents, representatives,
Affiliates, employees, officers and directors by any third person as may be
reasonably necessary in order for such Seller to conduct its defense thereof;
provided, however, that each Seller agrees to, and agrees to cause its agents,
representatives, Affiliates, employees, officers and directors to, exercise
their respective Best Efforts to obtain assurances that confidential treatment
will be afforded such information and to seek a protective order or other remedy
to preserve the confidentiality of such information.
Section 12.2 Confidentiality of Purchaser. During the period starting
at the execution of this Agreement and ending on the earlier of (A) the Closing
Date or (B) the third anniversary of the date of this Agreement, Purchaser
agrees to, and agrees to use its Best Efforts to cause its agents,
representatives, Affiliates, employees, officers and directors to: (i) treat and
hold as confidential (and not disclose or provide access to any Person) all
Intangible Personal Property, and information relating to product development,
price, distributors, Contracts, Customer Lists, pricing and marketing plans,
policies and strategies, details of client and consultant contracts, operations,
methods, product development techniques, business acquisition plans, new
personnel acquisition plans and all other confidential information with respect
to the Sellers, the Assets or the Business, except as may be required by
applicable Law, in which event Purchaser agrees to, and agrees to use its Best
Efforts to cause its agents, representatives, Affiliates, employees, officers
and directors to, furnish only that portion of such confidential information
which Purchaser reasonably believes is legally required to be provided and
exercise its reasonable efforts to obtain assurances that confidential treatment
will be accorded such information; and (ii) in the event that Purchaser or any
such agent, representative, Affiliate, employee, officer or director becomes
legally compelled to disclose any such information, provide the Sellers with
prompt written notice of such requirement so that the Sellers may, at the
expense of the Sellers, seek a protective order or other remedy. This Section
12.2 shall not apply to any information that, at the time of disclosure, is
known to the receiving party before disclosure thereof, is independently
developed by the receiving party, is or becomes publicly available through no
fault of Purchaser or any of its agents, representatives, Affiliates, employees,
officers and directors, or is obtained by the receiving party from a third party
not known by the receiving party to be under any obligation not to disclose such
information and which the receiving party has no reason to believe is not
otherwise publicly available (provided, however, that once Purchaser is advised
that information obtained under such circumstance is indeed confidential
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hereunder, this Section 12.2 shall thereafter apply to such information) or is
reasonably necessary in order for Purchaser to litigate any claim against the
Sellers, including, but not limited to, any claim against the Sellers pursuant
to this Agreement. Purchaser agrees and acknowledges that remedies at law for
any breach of its obligations under this Section 12.2 are inadequate and that in
addition thereto the Sellers shall be entitled to seek equitable relief,
including injunction and specific performance, in the event of any such breach.
Notwithstanding the foregoing, (x) Purchaser may make such disclosure of
confidential information relating to any of the Sellers, the Assets or the
Business to its officers, directors, employees, Affiliates, agents, accountants,
financial advisors, attorneys, financing sources, direct and indirect
shareholders and representatives for bona fide business purposes in connection
with this transaction; provided, however, that Purchaser shall advise such
Persons of the confidentiality and non-disclosure provisions of this Section
12.2 and be responsible for any violation or breach of such provisions by such
Persons, and (y) Purchaser, with the consent of the Sellers (which consent shall
not be unreasonably withheld or delayed), may make such disclosures in
connection with defending any claim brought against Purchaser or any of its
agents, representatives, Affiliates, directors, officers or employees by any
third person as may be reasonably necessary in order for Purchaser to conduct
its defense thereof; provided, however, that Purchaser agrees to, and agrees to
cause its agents, representatives, Affiliates, directors, officers and employees
to, exercise their respective Best Efforts to obtain assurances that
confidential treatment will be afforded such information and to seek a
protective order or other remedy to preserve the confidentiality of such
information.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Change Corporate Name. Each Seller shall execute such
documents and promptly take such action as is necessary to allow Purchaser and
its Affiliates to use and register all trademarks, tradenames, corporate names
and other Intangible Personal Property being conveyed to Purchaser pursuant to
the terms of this Agreement. Within 30 days of the Closing, each Seller shall
change its name so as to not include "Flight International," "Flight
International Aviation," "Flight Alaska" or any other trade names or trademarks
being purchased by Purchaser hereunder.
Section 13.2 Expenses. Except to the limited extent provided in the
last sentence of Section 8.3, the Sellers and Purchaser shall pay their own
expenses incident to the negotiation, preparation and performance of this
Agreement and the transactions contemplated hereby, including, without
limitation, expenses and disbursements of their respective financial advisors,
accountants and counsel. The expenses of the Sellers referred to in this Section
13.2 shall not be Assumed Liabilities.
Section 13.3 Notices and Other Communications. Every notice or other
communication required or contemplated by this Agreement by any party shall be
delivered by personal delivery, postage prepaid return receipt requested
certified mail, or by facsimile, addressed to the party for whom intended as set
forth on Schedule 13.3, or at such other address as the intended recipient
previously shall have designated by written notice to the other parties. Notice
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by certified mail shall be effective on the date it is officially recorded as
delivered to the intended recipient by return receipt or equivalent. All notices
and other communication required or contemplated by this Agreement delivered in
person or sent by facsimile with answer back receipt shall be deemed to have
been delivered to and received by the addressee and shall be effective on the
date of personal delivery or on the date sent if answer back receipt received.
Notice not given in writing shall be effective only if acknowledged in writing
by a duly authorized representative of the party to whom it was given.
Section 13.4 Counterparts. This Agreement may be executed in any number
of counterparts, and each counterpart shall constitute an original instrument,
but all such separate counterparts shall constitute only one and the same
instrument.
Section 13.5 Written Agreement to Govern. This Agreement constitutes
the entire understanding between the parties as to the subject matter hereof,
except as may be explicitly set forth in writing in any agreement, certificate
or document specifically referenced herein, and cancels any and all previous
contracts or agreements between the parties with respect to the subject matter
hereof. This Agreement may not be altered, amended, or modified except by a
written instrument executed by or on behalf of each of the parties hereto. This
Agreement shall become binding only after the same is signed and delivered by or
on behalf of each of the parties hereto.
Section 13.6 Assignability. Neither this Agreement nor any right or
obligation hereunder is assignable in whole or in part, whether by operation of
law or otherwise, by any party without the express written consent of the other
parties hereto and any such attempted assignment shall be void and
unenforceable; provided, however, that Purchaser may transfer or assign this
Agreement or any right or obligation hereunder to any of its Affiliates or any
financing source at any time prior to or after the Closing. This Agreement and
the rights and obligations hereunder shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors or assignees,
and no other Person shall acquire or have any rights under or by virtue of this
Agreement.
Section 13.7 No Waiver of Rights. All waivers hereunder must be made in
writing, and failure of any party at any time to require another party's
performance of any obligation under this Agreement shall not affect the right
subsequently to require performance of that obligation. Any waiver of any breach
of any provision of this Agreement shall not be construed as a waiver of any
continuing or succeeding breach of such provision or a waiver or modification of
any other provision.
Section 13.8 Subject Headings. The subject headings of the Articles and
Sections of this Agreement are included for the purposes of convenience only,
and shall not affect the construction or interpretation of any of the provisions
of this Agreement. All Section references contained herein shall be deemed to
refer to other Sections of this Agreement, unless expressly stated otherwise.
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Section 13.9 Further Assurances. At all times before and after the
Closing, the parties hereto shall each perform such acts, execute and deliver
such instruments and documents and do all such other things consistent with the
terms of this Agreement as may be reasonably necessary to accomplish the
transactions contemplated in this Agreement or to otherwise carry out the
purpose of this Agreement.
Section 13.10 Schedules and Exhibits. The parties acknowledge that the
Schedules to this Agreement have not been prepared or are incomplete as of the
date hereof (such unprepared or incomplete Schedules being the "Sellers'
Incomplete Schedules"). The Sellers shall deliver to Purchaser and its counsel
for their review a complete and accurate version of the Sellers' Incomplete
Schedules (as so revised, the "Final Proposed Schedules") not later than 30 days
after the date of this Agreement. The Sellers shall also provide Purchaser with
copies of any supporting documents and such access to those officers and other
employees of each Seller and to Sellers' legal counsel and other representatives
as may be reasonably requested by Purchaser and its legal counsel in connection
with their review of the Final Proposed Schedules. Purchaser shall have the
right to terminate this Agreement by written notice to the Representative as
described below in the event that Purchaser, in its sole discretion, is not
satisfied with the Final Proposed Schedules. Not later than 10 business days
after the Final Proposed Schedules, certified by an officer of each Seller, and
all such supporting documents and access shall have been provided to and
acknowledged by Purchaser in writing, Purchaser shall either (i) advise the
Representative that the Final Proposed Schedules are acceptable to Purchaser,
whereupon the Final Proposed Schedules shall become the Schedules hereto, or
(ii) advise the Representative that it has determined to terminate this
Agreement pursuant to the provisions of this Section 13.10; provided, however,
that if Purchaser does not respond within the aforementioned 10 business day
period, then Purchaser shall be deemed to have accepted the Final Proposed
Schedules. Purchaser will acknowledge receipt of the Final Proposed Schedules
and all supporting documents and access referred to above in writing promptly
after the same has been furnished to it and its legal counsel. All Schedules and
Exhibits referred to in and attached to this Agreement are incorporated herein
by such reference as if fully set forth in the text hereof. Any capitalized and
undefined terms used in any Schedule attached hereto shall have the same meaning
assigned to such term herein. Notwithstanding the foregoing, Purchaser shall not
be required to review or consider the Final Proposed Schedules until such time
as it has received the final proposed schedules and all supporting documentation
and related information under the Maritime Purchase Agreement so long as
Purchaser has notified the Representative in writing prior to the end of the
aforementioned 10 business day period that it has not received such schedules,
documentation or information.
Section 13.11 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this Agreement should be prohibited or
invalid under applicable Law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 13.12 Publicity and Reports. The Sellers and Purchaser shall
coordinate all publicity relating to the transactions contemplated by this
Agreement and, except to the extent required by Law or applicable stock exchange
rules or required in connection with Purchaser's financing of the transactions
contemplated hereby, no party shall issue any press release, publicity statement
or other public notice relating to this Agreement, or the transactions
63
contemplated by this Agreement, without obtaining the prior consent of the other
parties hereto (which consent shall not be unreasonably withheld or delayed).
Purchaser and the Sellers shall consult with each other with respect to the form
and content of any application or report made to any Governmental Authority
which relates to this Agreement or the transactions contemplated hereby.
Section 13.13 Parties in Interest; Joint and Several Liability of the
Sellers. This Agreement shall be binding upon and inure to the benefit of each
party, and nothing in this Agreement, express or implied, is intended to confer
upon any other Person any rights or remedies of any nature whatsoever under or
by reason of this Agreement except for the provisions of Article XI (which are
intended to be for the benefit of the Persons provided for therein and may be
enforced by such Persons). Nothing in this Agreement is intended to relieve or
discharge the obligations of any third Person to (or to confer any right of
subrogation or action over against) any party to this Agreement. The obligations
of the Sellers under this Agreement shall be joint and several and, unless
expressly stated in this Agreement, all actions to be taken by the Sellers
hereunder shall be taken jointly or through the Representative.
Section 13.14 Specific Performance. The Sellers acknowledge that, in
view of the uniqueness of the Business and the transactions contemplated by this
Agreement, Purchaser would not have an adequate remedy at law for money damages
in the event that this Agreement has not been performed in accordance with its
terms, and therefore agrees that Purchaser shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
Section 13.15 GOVERNING LAW; CONSENT TO JURISDICTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICT PROVISIONS) OF THE STATE
OF NEW YORK. EACH PARTY TO THIS AGREEMENT, ON BEHALF OF ITSELF AND ITS
SUCCESSORS IN INTEREST AND ASSIGNS, HEREBY SUBMITS TO THE JURISDICTION OF THE
FEDERAL AND STATE COURTS LOCATED IN THE CITY OF NEW YORK, NEW YORK, IN
CONNECTION WITH ANY DISPUTE RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first
written above.
PURCHASER:
VTF CORPORATION
By: /s Xxxxxx X. XxXxxx
Name: Xxxxxx X. XxXxxx
Title: President
SELLERS:
THE FLIGHT INTERNATIONAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
FLIGHT INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
FLIGHT INTERNATIONAL AVIATION, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
65
FLIGHT INTERNATIONAL SALES AND
LEASING, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
FLIGHT ALASKA, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
FLIGHT INTERNATIONAL OF FLORIDA, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
