EXHIBIT 2.1
MERGER AGREEMENT
This MERGER AGREEMENT (this "Agreement") is entered into as of February
12, 1998 by and among AVIATION SALES COMPANY, a Delaware corporation ("AVS");
and AVS/CAI MERGER CORP., a Florida corporation and wholly-owned direct
subsidiary of AVS (the "AVS Merger Sub," and together with AVS, the "AVS
Companies"); CARIBE AVIATION, INC., a Florida corporation (the "Company");
AIRCRAFT INTERIOR DESIGN, INC., a Florida corporation and wholly-owned direct
subsidiary of the Company ("Subsidiary") (the Company and the Subsidiary,
together the "Companies"); and XXXXXX XXXXXXX ("X. Xxxxxxx") and XXXXXXX XXXXXXX
("X. Xxxxxxx") who constitute all of the shareholders of the Company (the
"Shareholders"). Certain other capitalized terms used herein are defined in
Article XI and throughout this Agreement.
RECITALS
The Boards of Directors of AVS and the Company have determined that it is
in the best interests of their respective shareholders for AVS to acquire the
Company upon the terms and subject to the conditions set forth in this
Agreement. In order to effectuate the transaction, AVS has organized the AVS
Merger Sub as a wholly-owned subsidiary of AVS, and the parties have agreed,
subject to the terms and conditions set forth in this Agreement, to merge the
AVS Merger Sub with and into the Company so that the Company continues as the
surviving corporation. As a result of the Merger, the Company will become a
wholly-owned subsidiary of AVS, and the Shareholders will be issued certain
shares of common stock of AVS and other consideration.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement and
in accordance with the Florida Business Corporation Act (the "Corporation
Code"), at the Effective Time (as defined below), the AVS Merger Sub will be
merged with and into the Company (the "Merger") pursuant to the Plan of Merger
annexed hereto as EXHIBIT A (the "Plan of Merger"). The terms and conditions of
the Plan of Merger are incorporated herein by reference as if fully set forth
herein. As a result of the Merger, the separate corporate existence of the AVS
Merger Sub shall cease and the Company shall continue as the surviving
corporation ("Surviving Corporation") and a wholly-owned subsidiary of AVS.
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement,
the consummation of the Merger (the "Closing") shall take place not later than
February 28, 1998, subject to satisfaction or waiver of the conditions set forth
in Articles VI and VII, at the offices of Akerman, Senterfitt & Xxxxxx, P.A., in
Miami, Florida, or such other time and place as the parties may otherwise agree.
1.3 AGGREGATE CONSIDERATION; CONVERSION OF SECURITIES.
(a) AGGREGATE CONSIDERATION. For purposes of this Agreement
"Aggregate Consideration" means:
(i) a number of shares (the "Stock Consideration") of
unregistered common stock, par value $.001 per share, of AVS (the
"AVS Common Stock") determined by dividing (x) $7,000,000, MINUS (i)
the amount of Indebtedness (as defined in SECTION 3.10) in excess of
$7,500,000, if any, and (ii) the amount of the Net Equity Shortfall
(as defined below), if any, of the Companies at the Effective Time
(collectively items (i) and (ii) are referred to herein as the "Stock
Consideration Adjustment"); by (y) the average closing price of a
share of AVS Common Stock as reported on The New York Stock Exchange
(the "NYSE") for the ten (10) consecutive trading day period ending
the second trading day immediately prior to the Effective Time, as
reported (absent manifest error in the printing thereof) by the Wall
Street Journal (Eastern Edition) (the "Average Closing Price"). For
purposes of this Agreement, (i) "Net Equity Shortfall" shall mean the
amount, if any, by which the actual net equity balance of the
Companies, on a consolidated basis, as determined in accordance with
GAAP, at the Effective Time is less than the Minimum Net Equity; (ii)
"Minimum Net Equity" shall mean $4,368,295.
(ii) a promissory note made by Aviation Sales Operating
Company, a Delaware corporation ("Operating Company") (the "Note") in
the original principal amount of Five Million Dollars ($5,000,000)
which shall be guaranteed by AVS and which shall be substantially in
the form of Exhibit "B" hereto. The Note shall bear interest at the
rate of 8% per annum, with interest payable quarterly in arrears. The
Note shall specify that the principal of the Note (the "Principal
Payments") shall be payable as follows:
(a) Two and One-Half Million Dollars ($2,500,000) on the
first anniversary of the Effective Date; and
(b) Two and One-Half Million Dollars ($2,500,000) on the
second anniversary of the Effective Date.
(iii) an amount (the "Closing Date Payment") equal to Five
Million Dollars ($5,000,000) payable on the Effective Date.
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The Closing Date Payment and the Principal Payments shall be made in immediately
available funds by wire transfer to the account designated from time to time by
the Shareholder to whom the payment is owed in accordance with SCHEDULE 1.3(C).
(b) At the Effective Time, each share of common stock of AVS Merger
Sub issued and outstanding at the Effective Time shall be converted into one
share of the common stock of the Surviving Corporation.
(c) At the Effective Time by virtue of the Merger and without any
action on the part of the Company, AVS Merger Sub or the Shareholders, all of
the common stock, par value $10.00 per share of the Company ("Company Common
Stock") issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the Aggregate Consideration, which shall be
delivered to the Shareholders in the amounts set forth on SCHEDULE 1.3(C).
1.4 TIMING OF STOCK CONSIDERATION ADJUSTMENT At least two days prior to
the Effective Time, the Company and AVS shall estimate by mutual agreement the
amount of the Stock Consideration Adjustment, if any, as of the Effective Time
for purposes of determining the number of AVS Shares constituting the Stock
Consideration (the "Estimated Value"). As soon as practicable but not later that
45 days after the Effective Time, the Shareholders shall prepare and deliver to
AVS a final balance sheet of the Company as of the Effective Time along with a
determination (the "Determination") of the actual amount of the Stock
Consideration Adjustment as of the Effective Time (the "Actual Value"), which
shall be prepared on a basis consistent with the determination of the Estimated
Value. If, within 30 days after the date on which a Determination is delivered
to AVS, AVS shall not have given written notice to the Shareholders setting
forth in detail any objection of AVS to such Determination, then such
Determination shall be final and binding on the parties hereto. In the event AVS
gives written notice of any objection to such Determination within the 30-day
period, AVS and the Shareholders shall use all reasonable efforts to resolve the
dispute within the 30- day period following the delivery of the written notice.
If the parties are unable to reach an agreement within such 30-day period, the
matter shall be submitted to a firm of independent certified public accountants
(which company shall constitute one of the "Big Six" accounting firms), for
determination of the Actual Value which shall be final and binding upon AVS and
the Shareholders. AVS and the Shareholders shall contribute equally to costs
(including fees and expenses charged by the accounting firm) in connection with
the resolution of any such dispute. If the Actual Value is greater than the
Estimated Value, AVS shall be entitled to set off against the Held Back Shares
(as defined in SECTION 1.6) the difference between the Actual Value and the
Estimated Value (assuming a value per share for purposes of such calculation
equal to the Average Closing Price), which set off shall be deemed to be
Indemnifiable Damages under ARTICLE IX hereof.
1.5 FILING OF ARTICLES OF MERGER. At the time of the Closing, the parties
shall cause the Merger to be consummated by filing duly executed Articles of
Merger (with the completed Plan of Merger annexed thereto) with the Secretary of
State of the State of Florida, in such form as AVS reasonably determines is
required by, and is in accordance with, the relevant provisions of the
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Corporation Code (the date and time of such filing is referred to herein as the
"Effective Date" or "Effective Time").
1.6 ISSUANCE OF AVS SHARES; DELIVERY OF CERTIFICATES. At the Effective
Time, the Shareholders shall deliver the certificates representing all issued
and outstanding shares of common stock of the Company to AVS for cancellation,
and AVS shall issue to the Shareholders the Stock Consideration issuable
pursuant to Section 1.3, registered in the name of the Shareholders and AVS
shall deliver the Stock Consideration in the following manner: (i) AVS shall set
aside and hold in accordance with Article IX certificates for shares of AVS
Common Stock to be issued to X. Xxxxxxx (which such shares shall be part of the
Locked-Up Shares, as defined in Section 5.13) equal to $500,000 at the Average
Closing Price (rounded to the nearest whole share, the "Held Back Shares") and
(ii) AVS shall deliver to the Shareholders certificates evidencing the balance
of the Stock Consideration. The shares of AVS Common Stock issuable by AVS in
the Merger are sometimes referred to herein as the "AVS Shares."
1.7 ACCOUNTING AND TAX TREATMENT. The parties hereto acknowledge and agree
that the transactions contemplated hereby are intended to be treated for tax
purposes as a taxable transaction under Section 1001 of the Code and for
accounting purposes as a purchase.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE AVS COMPANIES
As a material inducement to the Shareholders to enter into this Agreement
and to consummate the transactions contemplated hereby, each of the AVS
Companies makes the following representations and warranties to the
Shareholders:
2.1 CORPORATE STATUS. AVS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. AVS is
duly qualified and in good standing as a foreign corporation in all
jurisdictions where such qualification is required under applicable law, except
where the failure to be so qualified would not have a Material Adverse Effect on
AVS. The AVS Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and the AVS Merger Sub is a
wholly owned subsidiary of AVS.
2.2 CORPORATE POWER AND AUTHORITY. Each of the AVS Companies has the
corporate power and authority to execute and deliver this Agreement, to perform
its respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of the AVS Companies has taken all action necessary to
authorize its execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
each of the AVS Companies and constitutes a legal, valid and binding obligation
of each of the AVS Companies,
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enforceable against each of the AVS Companies in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
2.4 AVS COMMON STOCK. Upon consummation of the Merger and the issuance and
delivery of certificates representing the AVS Shares to the Shareholders, the
AVS Shares will be validly issued, fully paid and non-assessable shares of AVS
Common Stock.
2.5 NO COMMISSIONS. None of the AVS Companies has incurred any obligation
for any finder's or broker's or agent's fees or commissions or similar
compensation in connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As a material inducement to each of the AVS Companies to enter into this
Agreement and to consummate the transactions contemplated hereby, each of the
Shareholders, jointly and severally, makes the following representations and
warranties to AVS:
3.1 CORPORATE STATUS. Each of the Company and its wholly-owned subsidiary,
Aircraft Interior Design, Inc. is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation and has
the requisite power and authority to own or lease its properties and to carry on
its business as now being conducted. Neither of the Companies are legally
qualified to transact business as a foreign corporation in any jurisdiction, and
the nature of its properties and the conduct of its business does not require
such qualification. Each of the Companies has fully complied with all of the
requirements of any statute governing the use and registration of fictitious
names, and has the legal right to use the names under which it operates its
business. There is no pending or threatened proceeding for the dissolution,
liquidation, insolvency or rehabilitation of any of the Companies.
3.2 POWER AND AUTHORITY. Each of the Companies has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Each of the
Companies has taken all action necessary to authorize the execution and delivery
of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby. Each of the Shareholders
represent that they are individuals residing in the State of Florida, and have
the requisite competence and authority to execute and deliver this Agreement, to
perform their respective obligations hereunder and to consummate the
transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
each of the Companies and the Shareholders, and constitutes the legal, valid and
binding obligation of each of
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them, enforceable against them in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
3.4 CAPITALIZATION. As of the date hereof, the Company has (a) 100
authorized shares of Company Common Stock at $10.00 per share par value and no
other shares of any class of capital stock, (b) 100 shares of Company Common
Stock issued and outstanding, and (c) -0- shares of Company Common Stock held in
treasury. As of the date hereof, Subsidiary has (a) 100 authorized shares of
common stock, $5.00 per share par value ("Subsidiary Common Stock") and no other
shares of any class of capital stock, (b) 100 shares of Subsidiary Common Stock
issued and outstanding, and (c) -0- shares of Subsidiary Common Stock held in
treasury. All of the issued and outstanding shares of capital stock of each of
the Companies (i) have been duly authorized and validly issued and are fully
paid and non-assessable, (ii) were issued in compliance with all applicable
state and federal securities laws, and (iii) were not issued in violation of any
preemptive rights, rights of first refusal or similar rights. No preemptive
rights, rights of first refusal or similar rights exist with respect to the
shares of capital stock of each of the Companies and no such rights arise by
virtue of or in connection with the transactions contemplated hereby. There are
no outstanding or authorized rights, options, warrants, convertible securities,
subscription rights, conversion rights, exchange rights or other agreements or
commitments of any kind that could require the Companies to issue or sell any
shares of their respective capital stock (or securities convertible into or
exchangeable for shares of its capital stock). There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to either of the Companies. There are no proxies, voting rights or other
agreements or understandings with respect to the voting or transfer of the
capital stock of either of the Companies.
3.5 SHAREHOLDERS OF EACH OF THE COMPANIES. SCHEDULE 3.5 sets forth, with
respect to each of the Companies, the name, address and federal taxpayer
identification number of, and the number of outstanding shares of each class of
its capital stock owned of record and/or beneficially by, the shareholders of
each of the Companies as of the close of business on the date of this Agreement.
As of the date hereof, (i) the Shareholders are the holders of all issued and
outstanding shares of capital stock of the Company, and own such shares free and
clear of all Liens, restrictions and claims of any kind and (ii) the Company
constitutes the sole holder of all issued and outstanding shares of capital
stock of the Subsidiary, and owns such shares free and clear of all Liens,
restrictions and claims of any kind.
3.6 NO VIOLATION. The execution and delivery of this Agreement by each of
the Companies and the Shareholders, the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement will not (i) contravene any provision of the
articles of incorporation or bylaws of either of the Companies, (ii) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against either of the Companies or the Shareholders, (iii)
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conflict with, result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against each of the Companies or the Shareholders, (iv) result in
or require the creation or imposition of any Lien upon or with respect to any of
the property or assets of each of the Companies, or (v) require the consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person, except any
SEC and other filings required to be made by AVS and any filings required to be
made by the parties under the HSR Act, if any.
3.7 RECORDS OF EACH OF THE COMPANIES. The copies of the articles of
incorporation and bylaws of each of the Companies which were provided to AVS are
true, accurate and complete and reflect all amendments made through the date of
this Agreement. The minute books for each of the Companies made available to AVS
for review were correct and complete in all material respects as of the date of
such review, no further entries have been made through the date of this
Agreement, such minute books contain the true signatures of the persons
purporting to have signed them, and such minute books contain an accurate record
of all material corporate actions of the shareholders and directors (and any
committees thereof) of each of the Companies taken by written consent or at a
meeting since incorporation. All material corporate actions taken by each of the
Companies have been duly authorized or ratified. All accounts, books, ledgers
and official and other records of each of the Companies have been fully,
properly and accurately kept and completed in all material respects, and there
are no material inaccuracies or discrepancies of any kind contained therein. The
stock ledgers of each of the Companies, as previously made available to AVS,
contain accurate and complete records of all issuances, transfers and
cancellations of shares of the capital stock of each of the Companies.
3.8 FINANCIAL STATEMENTS. The Shareholders have delivered to AVS the
consolidated financial statements of the Company (including the Subsidiary),
including the notes thereto, for (i) the years ended September 30, 1996 and
September 30, 1997, audited by Xxxxx & Xxxxx, P.A. ("Xxxxx & Beame"), and (ii)
the period ended December 31, 1997, prepared by the Company, copies of which are
attached to SCHEDULE 3.8 hereto (the "Financial Statements"). The consolidated
balance sheet of the Company dated as of December 31, 1997, included in the
Financial Statements is referred to herein as the "Current Balance Sheet." The
Financial Statements fairly present in all material respects the financial
position of the Company at each of the balance sheet dates and the results of
operations for the periods covered thereby, and have been prepared in accordance
with GAAP consistently applied throughout the periods indicated except, in the
case of interim financial statements, for normal year-end audit adjustments and
the absence of footnotes. The books and records of each of the Companies fully
and fairly reflect in all material respects all of its transactions, properties,
assets and liabilities. There are no extraordinary or material non-recurring
items of income or expense (subject to fluctuations in the ordinary course of
business) during the periods covered by the Financial Statements and the balance
sheets included in the Financial Statements do not reflect any write-up or
revaluation increasing the book value of any assets, except as specifically
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disclosed in the notes thereto. The Financial Statements reflect all adjustments
necessary for a fair presentation of the financial information contained
therein.
3.9 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Since the date of the
Current Balance Sheet, neither of the Companies has (i) issued any capital stock
or other securities; (ii) made any distribution of or with respect to its
capital stock or other securities or purchased or redeemed any of its
securities; (iii) paid any bonus to or increased the rate of compensation of any
of its officers or salaried employees or amended any other terms of employment
of such persons; (iv) sold, leased or transferred any of its properties or
assets other than in the ordinary course of business consistent with past
practice; (v) made or obligated itself to make capital expenditures out of the
ordinary course of business consistent with past practice; (vi) made any payment
in respect of its liabilities other than in the ordinary course of business
consistent with past practice; (vii) incurred any obligations or liabilities
(including any indebtedness) or entered into any transaction or series of
transactions involving in excess of $10,000 in the aggregate out of the ordinary
course of business, except for this Agreement and the transactions contemplated
hereby; (viii) suffered any theft, damage, destruction or casualty loss, not
covered by insurance and for which a timely claim was filed, in excess of
$10,000 in the aggregate; (ix) suffered any extraordinary losses (whether or not
covered by insurance); (x) waived, canceled, compromised or released any rights
having a value in excess of $10,000 in the aggregate; (xi) made or adopted any
change in its accounting practice or policies; (xii) made any adjustment to its
books and records other than in respect of the conduct of its business
activities in the ordinary course consistent with past practice; (xiii) entered
into any transaction with any Affiliate other than intercompany transactions in
the ordinary course of business consistent with past practice; (xiv) entered
into any employment agreement; (xv) terminated, amended or modified in any
material respect any agreement involving an amount in excess of $10,000; (xvi)
imposed any security interest or other Lien on any of its assets other than in
the ordinary course of business consistent with past practice; (xvii) delayed
paying any accounts payable which are due and payable except to the extent being
contested in good faith; (xviii) made or pledged any charitable contribution in
excess of $5,000; (xix) entered into any other transaction or, been subject to
any event which has or may have a Material Adverse Effect on any of the
Companies; or (xx) agreed to do or authorized any of the foregoing.
3.10 LIABILITIES OF EACH OF THE COMPANIES. Neither of the Companies has
any liabilities or obligations, whether accrued, absolute, contingent or
otherwise, except (a) to the extent reflected or taken into account in the
Current Balance Sheet and not heretofore paid or discharged, (b) liabilities
incurred in the ordinary course of business consistent with past practice since
the date of the Current Balance Sheet (none of which relates to breach of
contract, breach of warranty, tort, infringement or violation of law, or which
arose out of any action, suit, claim, governmental investigation or arbitration
proceeding), (c) normal accruals, reclassifications, and audit adjustments which
would be reflected on an audited financial statement and which would not be
material in the aggregate, and (d) liabilities incurred in the ordinary course
of business prior to the date of the Current Balance Sheet which, in accordance
with GAAP consistently applied, were not recorded thereon. For purposes of this
Agreement, "Indebtedness" shall mean the aggregate amount of indebtedness for
borrowed money (including accrued but unpaid interest), whether owed to a bank
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or any other person, remaining payments on capitalized equipment leases and
remaining payments on covenants not to compete.
3.11 LITIGATION. There is no action, suit, or other legal or
administrative proceeding or governmental investigation pending, or to the
knowledge of the Companies and the Shareholders threatened, anticipated or
contemplated against, by or affecting either of the Companies, or any of their
respective properties or assets, or the Shareholders, or which questions the
validity or enforceability of this Agreement or the transactions contemplated
hereby, and there is no basis for any of the foregoing. There are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in any
proceeding to which either of the Companies is or was a party which have not
been complied with in full or which continue to impose any material obligations
on any of the Companies.
3.12 ENVIRONMENTAL MATTERS.
(a) Each of the Companies (as defined in clause (g) below) is and has
at all times been in full compliance in all material respects with all
Environmental Laws (as defined in clause (g) below) governing its business,
operations, properties and assets, including, without limitation: (i) all
requirements relating to the Discharge (as defined in clause (g) below) and
Handling (as defined in clause (g) below) of Hazardous Substances (as defined in
clause (g) below); (ii) all requirements relating to notice, record keeping and
reporting; (iii) all requirements relating to obtaining and maintaining Licenses
(as defined in clause (g) below) for the ownership of its properties and assets
and the operation of its business as presently conducted, including Licenses
relating to the Handling and Discharge of Hazardous Substances; and (iv) all
applicable writs, orders, judgements, injunctions, governmental communications,
decrees, informational requests or demands issued pursuant to, or arising under,
any Environmental Laws.
(b) There are no non-compliance orders, warning letters, notices of
violation (collectively "Notices"), claims, suits, actions, judgments,
penalties, fines, or administrative or judicial investigations or proceedings
(collectively "Proceedings") pending or, to the knowledge of the Companies and
the Shareholders, threatened against or involving either of the Companies, or
their respective businesses, operations, properties or assets, issued by any
Governmental Authority or third party with respect to any Environmental Laws or
Licenses issued to either of the Companies thereunder in connection with,
related to or arising out of the ownership by either of the Companies of their
respective properties or assets or the operation of their respective businesses,
which have not been resolved to the satisfaction of the issuing Governmental
Authority or third party in a manner that would not impose any material
obligation, burden or continuing material liability on AVS or any of the
Companies in the event that the transactions contemplated by this Agreement are
consummated, or which could have a Material Adverse Effect on any of the
Companies, including, without limitation: (i) Notices or Proceedings related to
either of the Companies being a potentially responsible party for a federal or
state environmental cleanup site or for corrective action under any applicable
Environmental Laws; (ii) Notices or Proceedings relating to either of the
Companies being responsible to undertake any response or remedial actions or
clean-up actions of any kind; or
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(iii) Notices or Proceedings related to either of the Companies being liable
under any Environmental Laws for personal injury, property damage, natural
resource damage, or clean up obligations. Additionally, to the knowledge of the
Companies and the Shareholders, there is no basis for any of the foregoing.
(c) Neither of the Companies has Handled or Discharged, nor has it
allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances to, at or upon: (i) any location other than a site lawfully permitted
to receive such Hazardous Substances; (ii) any real property currently or
previously owned or leased by either of the Companies (other than in the
ordinary course of business in full compliance with applicable Environmental
Laws); or (iii) any site which, pursuant to any Environmental Laws, (x) has been
placed on the National Priorities List or its state equivalent, or (y) the
Environmental Protection Agency or the relevant state agency or other
Governmental Authority has notified either of the Companies that such
Governmental Authority has proposed or is proposing to place on the National
Priorities List or its state equivalent. There has not occurred, nor is there
presently occurring, a Discharge, or threatened Discharge, of any Hazardous
Substance on, into or beneath the surface of, or adjacent to, any real property
currently or previously owned or leased by either of the Companies in an amount
requiring a notice or report to be made to a Governmental Authority or in
violation of any applicable Environmental Laws.
(d) SCHEDULE 3.12 identifies the operations and activities, and
locations thereof, which have been conducted or are being conducted by either of
the Companies on any real property currently or previously owned or leased by
each of the Companies which have involved the Handling or Discharge of Hazardous
Substances.
(e) Neither of the Companies use, nor has it used, any Aboveground
Storage Tanks (as defined in clause (g) below) or Underground Storage Tanks (as
defined in clause (g) below), and there are not now nor have there ever been any
Underground Storage Tanks beneath any real property currently or previously
owned or leased by each of the Companies that are required to be registered
under applicable Environmental Laws.
(f) SCHEDULE 3.12 identifies (i) all environmental audits,
assessments or occupational health studies undertaken by each of the Companies
or its agents or undertaken by any Governmental Authority, or any third party,
relating to or affecting each of the Companies or any real property currently or
previously owned or leased by each of the Companies; (ii) the results of any
ground, water, soil, air or asbestos monitoring undertaken by each of the
Companies or its agents or undertaken by any Governmental Authority or any third
party, relating to or affecting each of the Companies or any real property
currently or previously owned or leased by each of the Companies which indicate
the presence of Hazardous Substances at levels requiring a notice or report to
be made to a Governmental Authority or in violation of any applicable
Environmental Laws; (iii) all material written communications between each of
the Companies and any Governmental Authority arising under or related to
Environmental Laws; and (iv) all outstanding citations issued under OSHA, or
similar state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees,
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relating to or affecting either each of the Companies or any real property
currently or previously owned or leased by each of the Companies.
(g) For purposes of this Section 3.12, the following terms shall have
the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 ET SEQ., as amended, of RCRA, or any applicable state or
local statute, law, ordinance, code, rule, regulation, order ruling, or decree
governing Aboveground Storage Tanks.
"Companies" means the Company and any Affiliates of the Company and
Aircraft and any Affiliates of Aircraft.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further be defined
in any Environmental Law, into any medium including, without limitation, ground
water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or local
statutes, laws, rules, regulations, codes, orders, plans, injunctions, decrees,
rulings, and changes or ordinances or judicial or administrative interpretations
thereof, or similar laws of foreign jurisdictions where each of the Companies
conducts business, whether currently in existence or hereafter enacted or
promulgated, any of which govern (or purport to govern) or relate to pollution,
protection of the environment, public health and safety, air emissions, water
discharges, hazardous or toxic substances, solid or hazardous waste or
occupational health and safety, as any of these terms are or may be defined in
such statutes, laws, rules, regulations, codes, orders, plans, injunctions,
decrees, rulings and changes or ordinances, or judicial or administrative
interpretations thereof, including, without limitation: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. ss.9601, ET
SEQ. (collectively "CERCLA"); the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. ss.6901 ET SEQ. (collectively "RCRA");
the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.1801, ET
SEQ.; the Clean Water Act, as emended, 33 U.S.C. ss.1311, ET SEQ.; the Clean Air
Act, as amended (42 U.S.C. ss.7401-7642); the Toxic Substances Control Act, as
amended, 15 U.S.C. ss.2601 ET SEQ.; the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. ss.136-136y ("FIFRA"); the Emergency
Planning and Community Right-to-Know Act of 1986 as amended, 42 U.S.C. ss.11001,
ET SEQ. (Title III of XXXX) ("EPCRA"); and the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. ss.651, ET SEQ. ("OSHA").
"Handle" means any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any of such terms may further be defined in any
Environmental Law, of any Hazardous Substances or Waste.
11
"Hazardous Substances" shall be construed broadly to include any
toxic or hazardous substance, material, or waste, and any other contaminant,
pollutant or constituent thereof, whether liquid, solid, semi-solid, sludge
and/or gaseous, including without limitation, chemicals, compounds, by-products,
pesticides, asbestos containing materials, petroleum or petroleum products, and
polychlorinated biphenyls, the presence of which requires investigation or
remediation under any Environmental Laws or which are or become regulated,
listed or controlled by, under or pursuant to any Environmental Laws, including,
without limitation, RCRA, CERCLA, the Hazardous Materials Transportation Act,
the Toxic Substances Control Act, the Clean Air Act, the Clean Water Act, FIFRA,
EPCRA and OSHA, or any similar state statute, or any future amendments to, or
regulations implementing such statutes, laws, ordinances, codes, rules,
regulations, orders, rulings, or decrees, or which has been or shall be
determined or interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law, regulation,
code, rule, order, or decree.
"Licenses" means all licenses, certificates, permits, approvals and
registrations.
"Underground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 ET SEQ., as amended, of RCRA, or any applicable state or
local statute, law, ordinance, code, rule, regulation, order ruling, or decree
governing Underground Storage Tanks.
3.13 REAL ESTATE
(a) The Companies do not own any real property or any interest
therein.
(b) SCHEDULE 3.13(B) sets forth a list of all leases, licenses or
similar agreements ("Leases") to which any of the Companies is a party (copies
of which have previously been furnished to AVS), in each case setting forth (A)
the lessor and lessee thereof and the date and term of each of the Leases, and
(B) the legal description, including street address, of each property covered
thereby, (the "Leased Premises"). The Leases are in full force and effect and
have not been amended, and no party thereto is in default or breach under any
such Lease. No event has occurred which, with the passage of time or the giving
of notice or both, would cause a material breach of or default under any of such
Leases. There is no breach or anticipated breach by any other party to such
Leases. With respect to each such Leased Premises:
(i) Each of the Companies has valid leasehold interests in the
Leased Premises, free and clear of any Liens, covenants and easements
or title defects of any nature whatsoever;
(ii) The improvements or portions thereof located on the Leased
Premises that are used in the business of each of the Companies are
each in good repair and condition, normal wear and tear excepted, and
are in the aggregate sufficient to satisfy each of the Companies'
current and reasonably anticipated (for the twelve months following
the Effective Date) normal business activities as conducted thereat;
12
(iii) Each of the Leased Premises (a) has such access to public
roads as is sufficient to satisfy the current and reasonably
anticipated (for the twelve months following the Effective Date),
normal transportation requirements of each of the Companies' business
as presently conducted at such parcel; and (b) is served by all
utilities in such quantity and quality as are sufficient to satisfy
the current normal business activities as conducted at such parcel;
and
(iv) Neither of the Companies has received notice of (a) any
condemnation proceeding with respect to any portion of the Leased
Premises or any access thereto, and, to the knowledge of the
Companies and the Shareholders, no such proceeding is contemplated by
any Governmental Authority; or (b) any special assessment which may
affect any of the Leased Premises, and, to the knowledge of the
Companies and the Shareholders, no such special assessment is
contemplated by any Governmental Authority.
3.14 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Each of the Companies has good and marketable title to all of its
Assets (as hereinafter defined), free and clear of any Liens or restrictions on
use. For purposes of this Agreement, the term "Assets" means all of the
properties and assets of each of the Companies, other than the Leased Premises,
whether personal or mixed, tangible or intangible, wherever located.
(b) The Fixed Assets (as hereinafter defined) currently in use or
necessary for the business and operations of each of the Companies are in
reasonably good operating condition, normal wear and tear excepted, and have
been maintained substantially in accordance with all applicable manufacturer's
specifications and warranties. For purposes of this Agreement, the term "Fixed
Assets" means all vehicles, machinery, equipment, tools, supplies, leasehold
improvements, furniture and fixtures used by or located on the premises of each
of the Companies or set forth on the Current Balance Sheet or acquired by each
of the Companies since the date of the Current Balance Sheet.
3.15 COMPLIANCE WITH LAWS.
(a) Each of the Companies is and has been in compliance with all
laws, regulations and orders applicable to it, its business and operations (as
conducted by it now and in the past), the Assets and the Leased Premises and any
other properties and assets (in each case owned or used by it now or in the
past). Neither of the Companies has been cited, fined or otherwise notified of
any asserted past or present failure to comply in any material respect with any
laws, regulations or orders and no proceeding with respect to any such violation
is pending or threatened.
(b) Neither of the Companies, nor any of its employees or agents, has
made any payment of funds in connection with the business of each of the
Companies which is prohibited by
13
law, and no funds have been set aside to be used in connection with the business
of each of the Companies for any payment prohibited by law.
(c) Each of the Companies is and at all times has been in compliance
in all material respects with the terms and provisions of the Immigration Reform
and Control Act of 1986, as amended (the "Immigration Act"). With respect to
each Employee (as defined in 8 C.F.R. 274a.1(f)) of each of the Companies for
whom compliance with the Immigration Act is required, each of the Companies has
on file a true, accurate and complete copy of (i) each Employee's Form I-9
(Employment Eligibility Verification Form) and (ii) all other records, documents
or other papers prepared, procured and/or retained by each of the Companies
pursuant to the Immigration Act. Neither of the Companies has been cited, fined,
served with a Notice of Intent to Fine or with a Cease and Desist Order, nor has
any action or administrative proceeding been initiated or threatened against
each of the Companies, by the Immigration and Naturalization Service by reason
of any actual or alleged failure to comply with the Immigration Act.
(d) Neither of the Companies is subject to any Contract, decree or
injunction in which any of the Companies is a party which restricts the
continued operation of any business of any of the Companies or the expansion
thereof to other geographical areas, customers and suppliers or lines of
business.
3.16 LABOR AND EMPLOYMENT MATTERS. SCHEDULE 3.16 sets forth the name,
address, social security number and current rate of compensation of the
employees of each of the Companies. Neither of Companies is a party to or bound
by any collective bargaining agreement or any other agreement with a labor
union, and there has been no effort by any labor union during the 24 months
prior to the date hereof to organize any employees of either of the Companies
into one or more collective bargaining units. There is no pending or threatened
labor dispute, strike or work stoppage which affects or which may affect the
business of either of the Companies or which may interfere with its continued
operations. Neither of the Companies nor any agent, representative or employee
thereof has within the last 24 months committed any unfair labor practice as
defined in the National Labor Relations Act, as amended, and there is no pending
or threatened charge or complaint against either of the Companies by or with the
National Labor Relations Board or any representative thereof. There has been no
strike, walkout or work stoppage or threat of union activity involving any of
the employees of either of the Companies during the 24 months prior to the date
hereof. Neither of the Shareholders is aware that any executive or key employee
or group of employees has any plans to terminate his, her or their employment
with either of the Companies as a result of the Merger or otherwise. Each of the
Companies has complied with applicable laws, rules and regulations relating to
employment, civil rights and equal employment opportunities, including but not
limited to, the Civil Rights Act of 1964, the Fair Labor Standards Act, and the
Americans with Disabilities Act, as amended.
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3.17 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 3.17 contains a list setting
forth each employee benefit plan or arrangement of the Companies, including but
not limited to, employee pension benefit plans, as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
multi-employer plans, as defined in Section 3(37) of ERISA, employee welfare
benefit plans, as defined in Section 3(1) of ERISA, deferred compensation plans,
stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents, of each of the Companies participate ("Employee
Benefit Plans") (true and accurate copies of which, together with the most
recent annual reports on Form 5500 and summary plan descriptions with respect
thereto, were furnished to AVS).
(b) COMPLIANCE WITH LAW. With respect to each Employee Benefit Plan
(i) each has been administered in all material respects in compliance with its
terms and with all applicable laws, including, but not limited to, ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"); (ii) no actions, suits,
claims or disputes are pending, or, to the knowledge of the Companies and the
Shareholders, threatened; (iii) no audits, inquiries, reviews, proceedings,
claims, or demands are pending with any governmental or regulatory agency; (iv)
there are no facts which, to the knowledge of the Companies and the
Shareholders, could give rise to any material liability in the event of any such
investigation, claim, action, suit, audit, review, or other proceeding; (v) all
material reports, returns, and similar documents required to be filed with any
governmental agency or distributed to any plan participant have been duly or
timely filed or distributed; and (vi) no "prohibited transaction" has occurred
within the meaning of the applicable provisions of ERISA or the Code.
(c) QUALIFIED PLANS. With respect to each Employee Benefit Plan
intended to qualify under Code Section 401(a) or 403(a) (i) the Internal Revenue
Service has issued a favorable determination letter, true and correct copies of
which have been furnished to AVS, that such plans are qualified and exempt from
federal income taxes; (ii) no such determination letter has been revoked nor has
revocation been threatened, nor has any amendment or other action or omission
occurred with respect to any such plan since the date of its most recent
determination letter or application therefor in any respect which would
adversely affect its qualification or materially increase its costs; (iii) no
such plan has been amended in a manner that would require security to be
provided in accordance with Section 401(a)(29) of the Code; (iv) no reportable
event (within the meaning of Section 4043 of ERISA) has occurred, other than one
for which the 30-day notice requirement has been waived; (v) as of the Effective
Date, the present value of all liabilities that would be "benefit liabilities"
under Section 4001(a)(16) of ERISA if benefits described in Code Section
411(d)(6)(B) were included will not exceed the then current fair market value of
the assets of such plan (determined using the actuarial assumptions used for the
most recent actuarial valuation for such plan); (vi) all contributions to, and
payments from and with respect to such plans, which may have been required to be
made in accordance with such plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made; and (vii) all such contributions
to the
15
plans, and all payments under the plans (except those to be made from a trust
qualified under Section 401(a) of the Code) and all payments with respect to the
plans (including, without limitation, PBGC (as defined below) and insurance
premiums) for any period ending before the Effective Date that are not yet, but
will be, required to be made are properly accrued and reflected on the Current
Balance Sheet (other than routine claims for benefits under the terms of such
plans).
(d) MULTIEMPLOYER PLANS. With respect to any multiemployer plan, as
described in Section 4001(a)(3) of ERISA ("MPPA Plan") (i) all contributions
required to be made with respect to employees of each of the Companies have been
timely paid; (ii) neither of the Companies has incurred or is expected to incur,
directly or indirectly, any withdrawal liability under ERISA with respect to any
such plan (whether by reason of the transactions contemplated by the Agreement
or otherwise); (iii) SCHEDULE 3.17 sets forth (A) the withdrawal liability under
ERISA to each MPPA Plan, (B) the date as of which such amount was calculated,
and (C) the method for determining the withdrawal liability; and (iv) no such
plan is (or is expected to be) insolvent or in reorganization and no accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, exists or is expected to exist with respect to any
such plan.
(e) WELFARE PLANS. (i) Neither of the Companies is obligated under
any employee welfare benefit plan as described in Section 3(1) of ERISA
("Welfare Plan") to provide medical or death benefits (other than routine claims
for benefits under the terms of its health insurance plan) with respect to any
employee or former employee of each of the Companies or its predecessors after
termination of employment except as required by COBRA; (ii) each of the
Companies has complied with the notice and continuation coverage requirements of
Section 4980B of the Code and the regulations thereunder with respect to each
Welfare Plan that is, or was during any taxable year for which the statute of
limitations on the assessment of federal income taxes remains, open, by consent
or otherwise, a group health plan within the meaning of Section 5000(b)(1) of
the Code; and (iii) there are no reserves, assets, surplus or prepaid premiums
under any Welfare Plan which is an Employee Benefit Plan. The consummation of
the transactions contemplated by this Agreement will not entitle any individual
to severance pay, and, will not accelerate the time of payment or vesting, or
increase the amount of compensation, due to any individual.
(f) CONTROLLED GROUP LIABILITY. Neither of the Companies nor any
entity that would be aggregated with it under Code Section 414(b), (c), (m) or
(o): (i) has ever terminated or withdrawn from any employee benefit plan under
circumstances resulting (or expected to result) in liability to the Pension
Benefit Guaranty Corporation ("PBGC"), the fund by which the employee benefit
plan is funded, or any employee or beneficiary for whose benefit the plan is or
was maintained (other than routine claims for benefits); (ii) has any assets
subject to (or expected to be subject to) a lien for unpaid contributions to any
employee benefit plan; (iii) has failed to pay premiums to the PBGC when due;
(iv) is subject to (or expected to be subject to) an excise tax under Code
Section 4971; (v) has engaged in any transaction which would give rise to
liability under Section 4069 or Section 4212(c) of ERISA; or (vi) has violated
Code Section 4980B or Section 601 through 608 of ERISA.
16
(g) OTHER LIABILITIES. (i) None of the Employee Benefit Plans
obligates either of the Companies to pay separation, severance, termination or
similar benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change of control" (as such term is
defined in Section 280G of the Code); (ii) all required or discretionary (in
accordance with historical practices) payments, premiums, contributions,
reimbursements, or accruals for all periods ending prior to or as of the
Effective Date shall have been made or properly accrued on the Current Balance
Sheet or will be properly accrued on the books and records of each of the
Companies as of the Effective Date; and (iii) none of the Employee Benefit Plans
has any unfunded liabilities which are not reflected on the Current Balance
Sheet or the books and records of each of the Companies other than for routine
claims under the terms of such plans.
3.18 TAX MATTERS. All Tax Returns required to be filed prior to the date
hereof with respect to each of the Companies or any of its income, properties,
franchises or operations have been timely filed, each such Tax Return has been
prepared in compliance in all material respects with all applicable laws and
regulations, and all such Tax Returns are true and accurate in all respects. All
Taxes due and payable by or with respect to each of the Companies have been paid
and are accrued on the Current Balance Sheet or will be accrued on its books and
records as of the Effective Date subject to customary year end adjustments and
accruals for current year Taxes. Except as set forth in SCHEDULE 3.18 hereto:
(i) with respect to each taxable period of each of the Companies, either such
taxable period has been audited by the relevant taxing authority or the time for
assessing or collecting Taxes with respect to each such taxable period has
closed and such taxable period is not subject to review by any relevant taxing
authority; (ii) no deficiency or proposed adjustment which has not been settled
or otherwise resolved for any amount of Taxes has been asserted or assessed by
any taxing authority against either of the Companies; (iii) neither of the
Companies has consented to extend the time in which any Taxes may be assessed or
collected by any taxing authority; (iv) neither of the Companies has requested
or been granted an extension of the time for filing any Tax Return to a date
later than the Effective Date; (v) there is no action, suit, taxing authority
proceeding, or audit or claim for refund now in progress, pending or, to the
knowledge of the Companies or the Shareholders, threatened against or with
respect to any of the Companies regarding Taxes; (vi) neither of the Companies
has made an election or filed a consent under Section 341(f) of the Code (or any
corresponding provision of state, local or foreign law) on or prior to the
Effective Date; (vii) there are no Liens for Taxes (other than for current Taxes
not yet due and payable and delinquent) upon the assets of any of the Companies;
(viii) neither of the Companies will be required (A) as result of a change in
method of accounting for a taxable period ending on or prior to the Effective
Date, to include any adjustment under Section 481(c) of the Code (or any
corresponding provision of state, local or foreign law) in taxable income for
any taxable period (or portion thereof) beginning after the Effective Date or
(B) as a result of any "closing agreement,"as described in Section 7121 of the
Code (or any corresponding provision of state, local or foreign law), to include
any item of income or exclude any item of deduction from any taxable period (or
portion thereof) beginning after the Effective Date; (ix) neither of the
Companies has been a member of an affiliated group (as defined in Section 1504
of the Code) or filed or been included in a combined, consolidated or unitary
income Tax Return; (x) neither of the Companies is a party to or bound by any
tax allocation or tax sharing agreement or has any current or potential
contractual obligation to indemnify any other
17
Person with respect to Taxes; (xi) there are no material additional Taxes owed
by either of the Companies for any period for which Tax Returns have been filed
in excess of the amounts shown as due and payable thereon; (xii) neither of the
Companies has made any payments, and will not become obligated (under any
contract entered into on or before the Effective Date) to make any payments,
that will be non-deductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign law); (xiii) neither of the Shareholders is
a "foreign person" within the meaning of Section 1445 of the Code; (xiv) no
claim has ever been made by a taxing authority in a jurisdiction where any of
the Companies files Tax Returns that any of the Companies is or may be subject
to Taxes assessed by such jurisdiction; (xv) neither of the Companies has any
permanent establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country; (xvi)
true, correct and complete copies of all income and sales Tax Returns filed by
or with respect to each of the Companies for the past three years have been
furnished or made available to AVS; (xvii) neither of the Companies will be
subject to any Taxes for the period ending at the Effective Date for any period
for which a Tax Return has not been filed imposed pursuant to Section 1374 or
Section 1375 of the Code (or any corresponding provision of state, local or
foreign law); and (xviii) no Florida sales or use tax, Florida non-recurring
intangibles tax, Florida documentary stamp tax or other Florida excise tax (or
comparable tax imposed by the State of Florida) will be payable by any of the
AVS Companies merely by virtue of the transactions contemplated in this
Agreement.
3.19 INSURANCE Each of the Companies is covered by valid, outstanding and
enforceable policies of insurance, set forth on SCHEDULE 3.19, issued to it by
reputable insurers covering its properties, assets and businesses against risks
of the nature normally insured against by corporations in the same or similar
lines of business (the "Insurance Policies"). Such Insurance Policies are in
full force and effect, and all premiums due thereon have been paid. As of the
Effective Time, each of the Insurance Policies will be in full force and effect.
None of the Insurance Policies will lapse or terminate as a result of the
transactions contemplated by this Agreement. Each of the Companies has complied
with the provisions of such Insurance Policies. SCHEDULE 3.19 contains (i) a
complete and correct list of all Insurance Policies and all amendments and
riders thereto (copies of which have been provided to AVS) and (ii) a detailed
description of each pending claim under any of the Insurance Policies for an
amount in excess of $10,000 that relates to loss or damage to the properties,
assets or businesses of each of the Companies. Neither of the Companies has
failed to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder and the Companies and the
Shareholders have no knowledge of any uninsured claims or losses.
3.20 RECEIVABLES. All of the Receivables (as hereinafter defined) are
valid and legally binding, represent bona fide transactions and arose in the
ordinary course of business of each of the Companies. All of the Receivables are
good and collectible receivables, and will be collected in full in accordance
with the terms of such receivables (and in any event within six months following
the Closing), without setoff or counterclaims, subject to the allowance for
doubtful accounts, if any, set forth on the Current Balance Sheet as reasonably
adjusted since the date of the Current Balance Sheet in the ordinary course of
business consistent with past practice. For purposes of this
18
Agreement, the term "Receivables" means all receivables of the Companies,
including all trade account receivables arising from the provision of services,
sale of inventory, notes receivable, and insurance proceeds receivable.
3.21 LICENSES AND PERMITS. Each of the Companies possesses all
aviation-related licenses and required governmental or official approvals,
permits or authorizations, including but not limited to those required to be
issued by the Federal Aviation Administration, Joint Aviation Authorities, Civil
Aviation Administration of China or pursuant to Part 145 of the Federal Aviation
Regulations (collectively, the "Aviation Permits") and, to the knowledge of the
Companies and the Shareholders all other required governmental or official
approvals, permits or authorizations (collectively, with the Aviation Permits,
the "Permits") for its businesses and operations, including with respect to the
operation of each of the Leased Premises, and SCHEDULE 3.21 contains a true and
complete list of all such Permits. All such Permits are valid and in full force
and effect, and each of the Companies is in compliance in all material respects
with the respective requirements thereof and no proceeding is pending or
threatened to revoke or amend any of them. Subject to obtaining any required
governmental consents, none of such Permits is or will be impaired or in any way
affected in any material respect by the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
3.22 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS;
AFFILIATED TRANSACTIONS. The Assets and Leased Premises constitute, in the
aggregate, all of the assets and properties necessary for the conduct of the
business of each of the Companies in the manner in which and to the extent to
which such business is currently being conducted. No current supplier to any of
the Companies of items essential to the conduct of its business has threatened
to terminate its business relationship with it for any reason. Neither of the
Companies has any direct or indirect interest in any customer, supplier or
competitor of any of the Companies, or in any person from whom or to whom any of
the Companies leases real or personal property. No officer, director or
shareholder of any of the Companies, nor any person related by blood or marriage
to any such person, nor any entity in which any such person owns any beneficial
interest, is a party to any Contract or transaction with any of the Companies or
has any interest in any property used by any of the Companies.
3.23 INTELLECTUAL PROPERTY. To the knowledge of the Companies or the
Shareholders, each of the Companies has full legal right, title and interest in
and to all trademarks, service marks, trade names, copyrights, know-how,
patents, trade secrets, proprietary computer software, data bases and
compilations, licenses (including licenses for the use of computer software
programs and technical specifications), and other intellectual property used in
the conduct of its business (the "Intellectual Property"). To the knowledge of
the Companies or the Shareholders, the business of each of the Companies as
presently conducted, and the unrestricted conduct and the unrestricted use and
exploitation of the Intellectual Property, does not infringe or misappropriate
any rights held or asserted by any Person, and no Person is infringing on the
Intellectual Property. No payments are required for the continued use of the
Intellectual Property. None of the Intellectual Property has ever been declared
invalid or unenforceable, or is the subject of any pending or, to the knowledge
of the
19
Companies or the Shareholders, threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding.
3.24 CONTRACTS. SCHEDULE 3.24(A) sets forth a list of each Contract to
which each of the Companies is a party or by which it or its properties and
assets are bound and which is material to its business, assets, properties or
prospects (the "Designated Contracts"), true and correct copies of which have
been provided to AVS. The copy of each Designated Contract furnished to AVS is a
true and complete copy of the document it purports to represent and reflects all
amendments thereto made through the date of this Agreement. Neither of the
Companies has violated any of the terms or conditions of any Designated
Contract, or any term or condition which would permit termination or material
modification of any Designated Contract, and all of the covenants to be
performed by any other party thereto have been performed in all material
respects and there are no claims for breach or indemnification or notice of
default or termination under any Designated Contract, and no event has occurred
which constitutes, or after notice or the passage of time, or both, would
constitute, a material default by either of the Companies under any Designated
Contract, and no such event has occurred which constitutes or would constitute a
material default by any other party. Neither of the Companies is subject to any
material liability or payment resulting from renegotiation of amounts paid it
under any Designated Contract. As used in this Section, Designated Contracts
shall include, without limitation, (a) loan agreements, indentures, mortgages,
pledges, hypothecations, deeds of trust, conditional sale or title retention
agreements, security agreements, equipment financing obligations or guaranties,
or other sources of contingent liability in respect of any indebtedness or
obligations to any other Person, or letters of intent or commitment letters with
respect to same; (b) contracts obligating any of the Companies to provide
products or services for a period of one year or more, excluding standard
maintenance contracts entered into in the ordinary course of business without
material modification from the preprinted forms used by any of the Companies in
the ordinary course of its business; (c) leases of real property, and leases of
personal property not cancelable without penalty on notice of sixty (60) days or
less or calling for payment of an annual gross rental exceeding $10,000; (d)
distribution, sales agency or franchise or similar agreements, or agreements
providing for an independent contractor's services, or letters of intent with
respect to same; (e) employment agreements, management service agreements,
consulting agreements, confidentiality agreements, non-competition agreements,
any other agreements relating to any employee, officer or director of each of
the Companies, and all employee handbooks, policy statements and similar plans;
(f) licenses, assignments or transfers of trademarks, trade names, service
marks, patents, copyrights, trade secrets or know how, or other agreements
regarding proprietary rights or intellectual property; (g) any Contract relating
to pending capital expenditures by each of the Companies; and (h) other material
Contracts or understandings, irrespective of subject matter and whether or not
in writing, not entered into in the ordinary course of business by any of the
Companies and not otherwise disclosed on the Schedules, but shall exclude
Contracts not designated above which do not provide for annual payments by the
Company or the Subsidiary which exceed $25,000.
3.25 ACCURACY OF INFORMATION FURNISHED BY THE SHAREHOLDERS. No
representation, statement or information made or furnished by the Shareholders
to AVS or any of AVS'
20
representatives contained in this Agreement and the various Schedules attached
hereto contains any untrue statement of a material fact or omits any material
fact necessary to make the information contained herein not misleading. The
Shareholders have provided AVS with true, accurate and complete copies of all
documents listed or described in the various Schedules attached hereto.
3.26 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS: SECURITIES DOCUMENTS.
Each of the Shareholders is acquiring the AVS Shares hereunder for his or her
own account for investment and not with a view to, or for the sale in connection
with, any distribution of any of the AVS Shares, except in compliance with
applicable state and federal securities laws. Each of the Shareholders has had
the opportunity to discuss the transactions contemplated hereby with AVS and has
had the opportunity to obtain such information pertaining to the AVS Companies
as has been requested, including but not limited to filings made by AVS with the
SEC under the Exchange Act, including the most recent filing by AVS on Form
10-K, and any filings on Schedule 14A and Forms 10-Q or 8-K since the end of
AVS' last fiscal year end. The Shareholders are "accredited investors" within
the meaning of Regulation D promulgated under the Securities Act, and have such
knowledge and experience in business or financial matters that make them capable
of evaluating the merits and risks of an investment in the AVS Shares.
3.27 BANK ACCOUNTS; BUSINESS LOCATIONS. SCHEDULE 3.27 sets forth all
accounts of each of the Companies with any bank, broker or other depository
institution, and the names of all persons authorized to withdraw funds from each
such account. As of the date hereof, neither of the Companies has an office or
place of business other than as identified on SCHEDULES 3.13(B) and each of the
Companies' principal places of business and chief executive offices are
indicated on SCHEDULE 3.13(B), and, except for equipment leased to customers in
the ordinary course of business, all locations where the equipment, inventory,
chattel paper and books and records of each of the Companies is located as of
the date hereof are fully identified on SCHEDULES 3.13(A) AND 3.13(B).
3.28 NAMES; PRIOR ACQUISITIONS. All names under which each of the
Companies does business as of the date hereof are specified on SCHEDULE 3.28.
Except as set forth on SCHEDULE 3.28, neither of the Companies has changed its
name or used any assumed or fictitious name, or been the surviving entity in a
merger, acquired any business or changed its principal place of business or
chief executive office, within the past three years.
3.29 NO COMMISSIONS. Neither of the Companies nor the Shareholders has
incurred any obligation for any finder's or brokers or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
21
4.1 CONDUCT OF BUSINESS BY EACH OF THE COMPANIES PENDING THE MERGER. Each
of the Companies covenants and agrees that, between the date of this Agreement
and the Effective Time, the business of each of the Companies shall be conducted
only in, and each of the Companies shall not take any action except in, the
ordinary course of business, consistent in all material respects with past
practice. Each of the Companies shall use its best efforts to preserve intact
its business organizations, to keep available the services of their current
officers, employees and consultants, and to preserve their present relationships
with customers, suppliers and other persons with which they have significant
business relations. By way of amplification and not limitation, neither of the
Companies shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do or propose or agree to do any of the following
without the prior written consent of AVS:
(a) amend or otherwise change its articles of incorporation or bylaws
or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or, authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of
its capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest, of it or (ii) any of its assets, tangible or
intangible, except in the ordinary course of business consistent in all material
respects with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or shares of
stock, by merger, consolidation, or acquisition of stock or assets) any interest
in any corporation, partnership or other business organization or division
thereof or any assets, or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or, except in the
ordinary course of business, consistent with past practice, purchase any
property or assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or otherwise
as an accommodation become responsible for, the obligations of any Person,
except endorsement of checks payable to each of the Companies in the ordinary
course of business, or make any loans or advances, or (iii) enter into any
Contract other than in the ordinary course of business, consistent with past
practice;
(f) increase the compensation payable or to become payable to its
officers or employees, or, except as presently bound to do, grant any severance
or termination pay to, or enter into any employment or severance agreement with,
any of its directors, officers or other employees, or establish, adopt, enter
into or amend or take any action to accelerate any rights or benefits which any
collective bargaining, bonus, profit sharing, trust, compensation, stock option,
restricted stock,
22
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(g) take any action other than in the ordinary course of business and
in a manner consistent in all material respects with past practice with respect
to accounting policies or procedures;
(h) make any capital investments in excess of an aggregate of
$25,000;
(i) make any distributions to the Shareholders, other than ordinary
and customary salaries and expense reimbursements;
(j) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unassorted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent in all material respects with past practice of
due and payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date hereof in the
ordinary course of business and consistent in all material respects with past
practice;
(k) increase or decrease in any material respect prices charged to
its customers, except for previously announced price changes, or take any other
action which might reasonably result in any material increase in the loss of
customers through non-renewal or termination of service contracts or other
causes; or
(l) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or warranty
in Article III untrue or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional customary instruments and other documents and shall take such further
actions as may be reasonably necessary or appropriate to effectuate, carry out
and comply with all of the terms of this Agreement and the transactions
contemplated hereby.
5.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause each of the
Companies to comply with all of the respective covenants of each of the
Companies under this Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with the other in
the preparation and filing of all forms, notifications, reports and information,
if any, required or reasonably deemed advisable pursuant to any law, rule or
regulation or the rules of the New York Stock Exchange ("NYSE") (or any exchange
on which the AVS Common Stock may be listed) in connection with
23
the transactions contemplated by this Agreement and to use their respective
commercially reasonably best efforts to agree jointly on a method to overcome
any objections by any Governmental Authority to any such transactions.
5.4 OTHER ACTIONS. Each of the parties hereto shall use its commercially
reasonable best efforts to take, or cause to be taken, all appropriate actions,
and to do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated herein, including, without limitation, using its
commer cially reasonable best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of any Governmental
Authority and parties to Contracts with each of the Companies as are necessary
for the consummation of the transactions contemplated hereby. Each of parties
shall make on a prompt and timely basis all governmental or regulatory
notifications and filings required to be made by it for the consummation of the
transactions contemplated hereby. The parties also agree to use commercially
reasonable best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby.
5.5 HSR ACT. AVS, the Companies and X. Xxxxxxx shall make promptly (unless
they have already made) their respective filings, if any, and thereafter make
any other requested additional filings, under the HSR Act, with respect to the
transactions contemplated hereby, and shall, if requested by AVS, seek early
termination of the applicable waiting period under the HSR Act.
5.6 ACCESS TO INFORMATION. From the date hereof to the Effective Date,
each of the Companies shall (and shall cause its directors, officers, employees,
auditors, counsel and agents to) afford AVS and AVS' officers, employees,
auditors, counsel and agents reasonable access at all reasonable times to its
properties, offices, and other facilities, to its officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may reasonably be requested. The due
diligence investigation made by AVS in connection with the Merger shall not
affect any representation or warranty contained in this Agreement.
5.7 NOTIFICATION OF CERTAIN MATTERS. Each of the Companies and the
Shareholders shall give prompt notice to AVS of the occurrence or non-occurrence
of any event which would likely cause any representation or warranty contained
herein to be untrue or inaccurate, or any covenant, condition, or agreement
contained herein not to be complied with or satisfied.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement or the subject matter or terms hereof, or with
information obtained pursuant to Section 5.6 above, without the prior consent of
the other parties hereto. No press release or other public announcement related
to this Agreement or the transactions contemplated hereby shall be issued by any
party hereto without the prior
24
approval of the other parties, except that AVS may make such public disclosure
which it believes in good faith to be required by law or by the terms of any
listing agreement with or requirements of a securities exchange (in which case
AVS will consult with an officer of the Company prior to making such
disclosure).
5.9 NO OTHER DISCUSSIONS. Until this Agreement is terminated in accordance
with its provisions, each of the Companies, the Shareholders, and their
respective Affiliates, employees, agents and representatives will not (i)
initiate, encourage the initiation by others of discussions or negotiations with
third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of each of the Companies (whether by merger,
consolidation, sale of stock or otherwise) or (ii) enter into any agreement or
commitment (whether or not binding) with respect to any of the foregoing
transactions. Until this Agreement is terminated in accordance with its
provisions, the Company and the Shareholders will immediately notify AVS if any
third party attempts to initiate any solicitation, discussion or negotiation
with respect to any of the foregoing transactions.
5.10 RESTRICTIVE COVENANTS. In order to assure that AVS will realize the
benefits of the Merger, X. Xxxxxxx agrees with AVS that he will not, commencing
upon the Effective Time and:
(a) for a period of six (6) months following the termination of X.
Xxxxxxx'x employment with AVS and its affiliates (the "Initial Period"),
directly or indirectly, alone or as a partner, joint venturer, officer,
director, member, employee, consultant, agent, independent contractor or
shareholder of, or lender to, any company or business, engage in any business in
the aerospace industry directly or indirectly in competition with the business
of AVS, as such business now exists or as it may exist at the time of
termination, anywhere in the United States; provided, however, that, the
beneficial ownership of less than five percent (5%) of the shares of stock of
any other corporation having a class of equity securities actively traded on a
national securities exchange or over-the-counter market shall not be deemed, in
and of itself, to violate the prohibitions of this Section;
(b) for a period of one and one-half (1 1/2) years following the end
of the Initial Period, directly or indirectly, alone or as a partner, joint
venturer, officer, director, member, employee, consultant, agent, independent
contractor or shareholder of, or lender to, any company or business, engage
directly or indirectly in the business of overhauling and repairing rotable
aircraft components or other business of the Companies in direct competition
with the business of the Companies, as such business now exists or as it may
exist at the time of termination, anywhere in the United States; provided,
however, that, the beneficial ownership of less than five percent (5%) of the
shares of stock of any other corporation having a class of equity securities
actively traded on a national securities exchange or over-the-counter market
shall not be deemed, in and of itself, to violate the prohibitions of this
Section;
(c) for a period of two (2) years following the termination of X.
Xxxxxxx'x employment with AVS and its affiliates, directly or indirectly (i)
induce any Person which is a
25
customer of any of the Companies, to patronize any business in the aerospace
industry directly or indirectly in competition with business conducted by any of
the Companies; (ii) canvass, solicit or accept from any Person which is a
customer of any of the Companies, any such competitive business; or (iii)
request or advise any Person which is a customer or supplier of either of the
Companies, to withdraw, curtail or cancel any such customer's or supplier's
business with any of the Companies, or its or their successors;
(d) for a period of two (2) years following the termination of X.
Xxxxxxx'x employment with AVS and its affiliates, directly or indirectly employ,
or knowingly permit any company or business directly or indirectly controlled by
him, to employ, any person who was employed by either of the Companies, AVS or
any Affiliate of any of the Companies or AVS at or within the prior six months,
or in any manner seek to induce any such person to leave his or her employment;
(e) at any time following the Effective Date, directly or indirectly,
in any way outside of his employment with each of the Companies or AVS or any
Affiliate of either of the Companies or AVS utilize, disclose, copy, reproduce
or retain in his possession any of each of the Companies's proprietary rights or
records, including, but not limited to, any of its customer lists.
X. Xxxxxxx agrees and acknowledges that the restrictions contained in this
SECTION 5.10 are reasonable in scope and duration and are necessary to protect
AVS after the Effective Time. If any provision of this SECTION 5.10 as applied
to any party or to any circumstance is adjudged by a court to be invalid or
unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of this Agreement. If any such provision, or any part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced. The parties
agree and acknowledge that the breach of this SECTION 5.10 will cause
irreparable damage to AVS and upon breach of any provision of this SECTION 5.10,
AVS shall be entitled to injunctive relief, specific performance or other
equitable relief; provided, however, that, this shall in no way limit any other
remedies which AVS may have (including, without limitation, the right to seek
monetary damages).
5.11 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. AVS shall be
entitled to have conducted prior to Closing a due diligence review of the
assets, properties, books and records of each of the Companies (including a
review of any such assets, properties, Aviation Permits and records (including
audits and actions) regulated by and relationships with the Federal Aviation
Administration) and an environmental assessment of the Leased Premises
(hereinafter referred to as "Environmental Assessment"). The Environmental
Assessment may include, but not be limited to, a physical examination of the
Leased Premises, and any structures, facilities, or equipment located thereon,
soil samples, ground and surface water samples, storage tank testing, review of
pertinent records, documents, and Licenses of each of the Companies. Each of the
Companies shall provide AVS or its designated agents or consultants with the
access to such property which AVS,
26
its agents or consultants require to conduct the Environmental Assessment. If
the Environmental Assessment identifies environmental conditions which require
remediation or further evaluation under the Environmental Laws or if the results
of the Environmental Assessment or due diligence review are otherwise not
satisfactory to AVS in its sole discretion, then AVS may, prior to the Effective
Date, elect to terminate this Agreement and not to close the transactions
contemplated by this Agreement as its sole and exclusive remedy. AVS' failure or
decision not to conduct any such Environmental Assessment shall not affect any
representation or warranty of the Shareholders under this Agreement.
5.12 TRADING IN AVS COMMON STOCK. Except as otherwise expressly consented
to by AVS, from the date of this Agreement until the Effective Date, neither of
the Companies nor the Shareholders (nor any Affiliates thereof) will directly or
indirectly purchase or sell (including short sales) any shares of AVS Common
Stock in any transactions effected on the NYSE or otherwise, or sell, transfer,
pledge, dispose of or otherwise part with any interest in or with respect to or
in any other manner reduce their investment risk with respect to any shares of
AVS Common Stock to be received pursuant to this Agreement.
5.13 RESTRICTIONS IN AVS COMMON STOCK. The shares of AVS Common Stock to
be issued pursuant to this Agreement will be restricted securities which may not
be sold, transferred or otherwise disposed of except pursuant to an effective
registration statement of AVS filed under the Securities Act of 1933, as amended
(the "Securities Act"), or in accordance with an opinion of counsel in form and
substance satisfactory to AVS that an exception from such registration is
available. X. Xxxxxxx agrees that, at the Effective Time, he shall enter into a
mutually acceptable shareholder lockup agreement with AVS providing that for a
period ending on the second anniversary of the Effective Date, X. Xxxxxxx shall
retain and not sell or otherwise transfer an amount of shares in the aggregate
equal to at least fifty percent (50%) of the AVS Shares (such restricted shares
shall be referred to as the "Locked-Up Shares").
5.14 CERTAIN TAX MATTERS. The parties agree that after the Effective Time,
AVS shall prepare, or cause to be prepared, and file, or cause to be filed, in
accordance with applicable laws and regulations, all Tax Returns (including any
necessary amendments to previously filed Tax Returns) for each of the Companies
for any period ending on or before the Effective Time. AVS shall provide such
Tax Returns to the Shareholders and their accountants for review at least thirty
(30) days prior to their due date (including extensions where applicable). After
the Effective Time, the Shareholders shall provide AVS with such information and
records and access to such of its former officers, directors and agents as may
be reasonably requested by AVS in connection with the preparation of any tax
return or any audit or other proceeding relating to each of the Companies. The
Shareholders agree to advise AVS as to the name and address of their accountants
so that such Tax Returns may be provided.
5.15 SHAREHOLDER VOTE. The Shareholders, in executing this Agreement,
consent as Shareholders of the Company to the Merger and the transactions
contemplated hereby, and waive notice of any meeting in connection therewith,
and hereby release and waive all rights with respect
27
to the transactions contemplated hereby under the articles of incorporation of
the Company and any agreements between the Shareholders and the Company relating
to the sale, purchase or voting of any capital stock of the Company. At Closing,
the Shareholders and the Companies agree that any and all agreements relating to
the sale, purchase or voting of capital stock of each of the Companies shall be
terminated.
5.16 COMPANY COMMON STOCK; STOCK POWERS; RELEASES. At the Closing, the
Shareholders covenant and agree to deliver to AVS: (i) all certificates
evidencing shares of capital stock of the Company held by them; (ii) with
respect to X. Xxxxxxx, ten (10) stock powers executed in blank, with medallion
signature guarantees, for use in connection with the Held Back Shares, and (iii)
a release in such form as is reasonably satisfactory to AVS releasing all claims
of any nature against each of the Companies, if any, and any claims arising out
of the Merger and the transactions contemplated by this Agreement, provided that
such releases shall not cover any rights of the Shareholders against AVS under
this Agreement.
5.17 PAYOFF AMOUNTS Prior to Closing, each of the Companies shall request
and deliver to AVS payoff and estoppel letters from such holders of each of the
Companies' outstanding Indebtedness as designated by AVS, which letters shall
contain payoff amounts, per diem interest, wire transfer instructions and an
agreement to deliver, upon payment in full, UCC-3 termination statements,
satisfactions of mortgage and any original promissory notes or other evidences
of indebtedness marked canceled.
5.18 RESIGNATION. The Shareholders shall resign from their respective
positions as directors, officers and/or employees of each of the Companies at
the Effective Time.
5.19 NEW LEASE. The parties acknowledge that X. Xxxxxxx has exercised an
option to purchase the Leased Premises located at 0000 X.X. 00xx Xxxxxx, Xxxxx,
Xxxxxxx 00000 (the "Company Leased Premises") pursuant to that certain lease
dated April 17, 1989 by and between the Company and New World Partners Joint
Venture (the "Company Lease") and that upon the closing, if any, of the purchase
by X. Xxxxxxx of the Company Leased Premises, the Company Lease shall terminate.
At the time X. Xxxxxxx either directly, or through an Affiliate, acquires
ownership of the Company Leased Premises, X. Xxxxxxx shall, or shall cause his
Affiliate to, if such Affiliate takes title to such property, enter into, as
landlord, and the Company shall enter into, as tenant, a lease in the form of
Exhibit C attached hereto (the "New Lease").
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE AVS COMPANIES
The obligations of the AVS Companies to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions, any or all of which may be waived in whole or in part by the AVS
Companies:
28
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Shareholders contained in
this Agreement shall be true and correct in all material respects at and as of
the Effective Time with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed on any
schedule to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and correct
in all material respects as of such date. The Shareholders and each of the
Companies shall have performed and complied with all of their respective
obligations required by this Agreement to be performed or complied with at or
prior to the Effective Time. The Companies and the Shareholders shall have
delivered to the AVS Companies a certificate, dated as of the Effective Date,
duly signed by the Shareholders and each of the Companies (in the case of each
of the Companies, by its President), certifying that such representations and
warranties are true and correct and that all such obligations have been complied
with and performed.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Effective Time, (i) there shall have been no Material
Adverse Change to any of the Companies, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the services, products or business of any of the Companies, and
(iii) none of the properties and assets of each of the Companies shall have been
damaged by fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage) which damages may have a
Material Adverse Effect thereon, and there shall have been delivered to the AVS
Companies a certificate to that effect, dated the Effective Date and signed by
or on behalf of the Companies and the Shareholders.
6.3 CORPORATE CERTIFICATE. The Company shall have delivered to the AVS
Companies (i) copies of the articles of incorporation and bylaws of each of the
Companies as in effect immediately prior to the Effective Time, (ii) copies of
resolutions adopted by the Board of Directors and Shareholders of each of the
Companies authorizing the transactions contemplated by this Agreement, and (iii)
a certificate of good standing of each of the Companies issued by the Secretary
of State of the State of Florida as of a date not more than ten days prior to
the Effective Date, certified in the case of subsections (i) and (ii) of this
Section as of the Effective Date by the Secretary of each of the Companies as
being true, correct and complete.
6.4 OPINION OF COUNSEL. The AVS Companies shall have received an opinion
dated as of the Effective Date from counsel for each of the Companies and the
Shareholders, in form attached hereto, to the effect that:
(a) Each of the Companies is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and has the
corporate power to carry on the business now conducted by it and to own or lease
the properties now owned or leased by it;
29
(b) Each of the Companies is duly qualified and to do business and is
in good standing in each jurisdiction where the character of its properties
owned or held under lease or held under lease or the nature of its activities
make such qualification necessary;
(c) The Company has obtained all necessary authorizations and
consents of its Boards of Directors and its Shareholders to effect the Merger;
(d) All issued and outstanding shares of capital stock of each of the
Companies are owned as set forth on SCHEDULE 3.5 hereto;
(e) Such counsel does not know of any litigation, proceeding or
investigation then pending or threatened which could reasonably be expected to
result in any Material Adverse Effect on each of the Companies, or which
questions the validity of this Agreement;
(f) Such counsel does not know or have reason to believe that any
event has occurred or state of facts exists which would constitute a breach of
any of the representations and warranties made by the Shareholders pursuant to
Article III of this Agreement;
(g) To the knowledge of such counsel, the execution and delivery of
this Agreement by each of the Companies and the Shareholders, the performance by
each of the Companies and the Shareholders of their respective obligations
hereunder and the consummation by each of them of the transactions contemplated
by this Agreement will not (a) contravene any provision of the Articles of
Incorporation or Bylaws of each of the Companies, (b) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against either of the
Companies or the Shareholders, (c) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
of payment or right to terminate, amend, modify, abandon or accelerate, any
Contract which is applicable to, binding upon or enforceable against either of
the Companies or the Shareholders, (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties or assets
of any of the Companies, (e) give to any individual or entity a right or claim
against either of the Companies or the Shareholders or (f) require the consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person, except any
SEC and other filings required to be made by AVS or any filings required to be
made by the parties under the HSR Act, if any;
(h) This Agreement is a valid and binding obligation of each of the
Companies and the Shareholders, and enforceable against each of them in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally or general equitable principles.
30
6.5 CONSENTS. Each of the Companies and AVS shall have received consents
to the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of each of the Companies from any
Person from whom such consent or waiver is required under any Contract, Permit
or instrument on or prior to the Effective Date, or under the HSR Act or other
law or regulation as of a date not more than five days prior to the Closing or
who, as a result of the transactions contemplated hereby, would have such rights
to terminate or modify such Contract, Permits or instruments, either by the
terms thereof or as a matter of law.
6.6 SECURITIES LAWS. AVS shall have received all necessary consents and
otherwise complied with any state or federal securities laws applicable to the
issuance of the AVS Shares, in connection with the transactions contemplated
hereby.
6.7 CAPITAL STOCK OF EACH OF THE COMPANIES. At the Closing, the
Shareholders shall have delivered to AVS all certificates evidencing the shares
of capital stock of the Company held by them and the Company shall have
delivered to AVS all certificates evidencing the shares of capital stock of the
Subsidiary held by it.
6.8 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the Merger or any other transaction contemplated hereby, and which, in the
reasonable judgment of AVS, makes it inadvisable to proceed with the Merger and
other transactions contemplated hereby.
6.9 BOARD APPROVAL. The Board of Directors of AVS shall have authorized
and approved this Agreement, the Merger and transactions contemplated hereby.
6.10 DUE DILIGENCE REVIEW. AVS shall be satisfied with the results of its
due diligence review and Environmental Assessment pursuant to Section 5.11.
6.11 RELEASES. The Shareholders shall deliver to AVS a release (the
"Release") in such form as is reasonably satisfactory to AVS releasing all
claims of any nature against either of the Companies, if any, and any claims
arising out of the Merger and the transactions contemplated by this Agreement,
provided that such Release shall not cover (i) any rights of the Shareholders
against AVS under this Agreement; (ii) any employment benefits (including
benefits under each of the Companies's employee benefit plans) accrued in the
ordinary course of business consistent with past practice or related rights
under law (such as ERISA); or (iii) rights under the Employment Agreement
referenced below.
6.12 EMPLOYMENT AGREEMENTS. At the Effective Time, (i) X. Xxxxxxx shall
have entered into a two (2) year employment agreement with the Surviving
Corporation in substantially the form attached hereto as SCHEDULE 6.12 and (ii)
such other key employees as determined by AVS shall have entered into employment
agreements with the Surviving Corporation upon terms and conditions mutually
agreeable to such parties.
31
6.13 INDEBTEDNESS; UCC FILINGS. At the Effective Time, the aggregate
amount of Indebtedness of the Companies shall not exceed $7,500,000.
Additionally, a search of the UCC filings with respect to the Companies shall
not disclose any active UCC-1 filings (including, but not limited to, any
filings by City National Bank of Florida) other than filings with respect to the
Indebtedness or the Designated Contracts.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of each of the Company and the Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions, any or all of which may be waived in whole or in part
by each of the Company and the Shareholders:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the AVS Companies contained
in this Agreement shall be true and correct in all material respects at and as
of the Effective Time with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed pursuant
to this Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as of
such date. Each of the AVS Companies shall have performed and complied with all
of its obligations required by this Agreement to be performed or complied with
at or prior to the Effective Time. Each of the AVS Companies shall have
delivered to each of the Companies and the Shareholders a certificate, dated as
of the Effective Date, and signed by an executive officer, certifying that such
representations and warranties are true and correct in all material respects and
that all such obligations have been complied with and performed.
7.2 AVS SHARES. At the Closing, AVS shall have issued all of the AVS
Shares and shall have delivered to the Shareholders (i) certificates
representing the AVS Shares issued to them hereunder, other than the Held Back
Shares, and (ii) with respect to X. Xxxxxxx, copies of stock certificates
representing the Held Back Shares issued to him.
7.3 ADDITIONAL CONSIDERATION. At the Closing, Aviation Sales Operating
Company shall have executed and delivered the Note to X. Xxxxxxx and made the
Closing Date Payment.
7.4 HSR ACT WAITING PERIOD. Any applicable waiting period under the HSR
Act shall have expired or been terminated.
7.5 NO ORDER OR INJUNCTION. No court of competent jurisdiction or other
governmental body shall have issued or entered any order or injunction
restraining or prohibiting the transactions
32
contemplated hereby, which remains in effect at the time of Closing and no
litigation, claim or proceeding shall be pending or threatened which seeks to
restrain, prohibit or invalidate the Merger.
ARTICLE VIII
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with respect
to the AVS Shares issued to them hereunder:
8.1 REGISTRATION RIGHTS FOR AVS SHARES; FILING OF REGISTRATION STATEMENT.
AVS will utilize reasonable best efforts to cause, within ninety (90) days
following the Effective Time, a registration statement to be filed under the
Securities Act or an existing registration statement to be amended for the
purpose of registering the AVS Shares for resale by a Holder thereof (the
"Registration Statement"). For purposes of this Article, a person is deemed to
be a "Holder" of AVS Shares whenever such person is the record owner of AVS
Shares. AVS will use reasonable efforts to have the Registration Statement
become effective and cause the AVS Shares to be registered under the Securities
Act, and registered, qualified or exempted under the state securities laws of
such jurisdictions as any Holder reasonably requests, and will file an
application to list such shares on the NYSE, as soon as is reasonably
practicable.
8.2 EXPENSES OF REGISTRATION. AVS shall pay all expenses incurred by AVS
in connection with the registration, qualification and/or exemption of the AVS
Shares, including any SEC and state securities law registration and filing fees,
printing expenses, fees and disbursements of AVS's counsel and accountants,
transfer agents' and registrars' fees, fees and disbursements of experts used by
AVS in connection with such registration, qualification and/or exemption, and
expenses incidental to any amendment or supplement to the Registration Statement
or prospectuses contained therein. AVS shall not, however, be liable for any
sales, broker's or underwriting commissions or other selling expenses incurred
upon sale by any Holder of any of the AVS Shares.
8.3 FURNISHING OF DOCUMENTS. AVS shall furnish to the Holders such
reasonable number of copies of the Registration Statement, such prospectuses as
are contained in the Registration Statement and such other documents as the
Holders may reasonably request in order to facilitate the offering of the AVS
Shares.
8.4 AMENDMENTS AND SUPPLEMENTS. AVS shall prepare and promptly file with
the SEC and promptly notify the Holders of the filing of such amendments or
supplements to the Registration Statement or prospectuses contained therein as
may be necessary to correct any statements or omissions if, at the time when a
prospectus relating to the AVS Shares is required to be delivered under the
Securities Act, any event shall have occurred as a result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
33
under which they were made, not misleading. AVS shall also advise the Holders
promptly after it shall receive notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceeding for
that purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued. If, after a Registration Statement becomes effective, AVS advises the
Holders that AVS considers it appropriate that the Registration Statement be
amended, the Holders shall suspend any further sales of the AVS Shares until AVS
advises the Holders that the Registration Statement has been amended, in which
case AVS shall cause such amendment to be filed as soon as reasonably practical.
8.5 DURATION. AVS shall maintain the effectiveness of the Registration
Statement until such time as AVS reasonably determines, based on an opinion of
counsel, that the Holders will be eligible to sell all of the AVS Shares then
owned by the Holders without the need for continued registration of the shares,
in the three month period immediately following the termination of the
effectiveness of the Registration Statement. AVS's obligations contained in this
Article VIII shall terminate on the first anniversary of the Effective Date.
8.6 FURTHER INFORMATION. If AVS Shares owned by a Holder are included in
any registration, such Holder shall furnish AVS such information regarding
itself as AVS may reasonably request and as shall be required in connection with
any registration, qualification or compliance referred to in this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT TO INDEMNIFY. X. Xxxxxxx agrees to indemnify and hold AVS
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
reasonable counsel and paralegal fees and expenses) incurred or suffered by AVS
arising out of or resulting from (i) any breach of a representation or warranty
made by the Shareholders in this Agreement, (ii) any breach of the covenants or
agreements made by any of the Companies or the Shareholders in this Agreement,
(iii) any inaccuracy in any certificate delivered by either of the Companies or
the Shareholders pursuant to this Agreement, (iv) any tax liability relating to
any period occurring on or prior to the Effective Time, (v) any regulating and
licensing obligations arising on or prior to the Effective Time, or (vi) any
claims of any third parties arising from or relating to any facts, circumstances
or events occurring on or prior to the Effective Time (collectively,
"Indemnifiable Damages"). Without limiting the generality of the foregoing, with
respect to the measurement of Indemnifiable Damages, subject to the provisions
set forth herein, AVS shall have the right to be put in the same after tax
consolidated financial position as it would have been in had each of the
representations and warranties of the Shareholders hereunder been true and
correct and had the covenants and agreements of each of the Companies and the
Shareholders hereunder been performed in full. Notwithstanding the foregoing, no
claim for Indemnifiable Damages (except for claims arising under clauses (ii)
and (iv) of this Section and
34
claims pursuant to the Stock Consideration Adjustment which shall not be subject
to the Indemnification Threshold (defined below)) shall be asserted by AVS until
the aggregate of all such Indemnifiable Damages exceeds $50,000 (the
"Indemnification Threshold"), in which case AVS shall be entitled to collect all
Indemnifiable Damages from the first dollar of Indemnifiable Damages.
Notwithstanding anything to the contrary contained herein, X. Xxxxxxx shall have
no liability for Indemnifiable Damages.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Shareholders or AVS in this Agreement
or pursuant hereto shall survive for a period of one year after the Effective
Time (except that the representations and warranties in Sections 3.12, 3.15,
3.17 and 3.18 shall survive until the expiration of the applicable statute of
limitations with respect to a breach thereof). No claim for the recovery of
Indemnifiable Damages arising out of a breach of any representation or warranty
may be asserted by AVS against the Shareholders or by the Shareholders against
AVS after such representations and warranties shall thus expire; PROVIDED,
HOWEVER, that claims for Indemnifiable Damages first asserted within the
applicable period shall not thereafter be barred. Notwithstanding any knowledge
of facts determined or determinable by any party by investigation, each party
shall have the right to fully rely on the representations, warranties, covenants
and agreements of the other parties contained in this Agreement or in any
certificate delivered at the Closing pursuant to this Agreement. Each
representation, warranty, covenant and agreement of the parties contained in
this Agreement is independent of each other representation, warranty, covenant
and agreement.
9.3 SECURITY FOR X. XXXXXXX'X INDEMNIFICATION OBLIGATION As security for
the indemnification obligations contained in this Article IX, at the Closing,
AVS shall set aside and hold, and X. Xxxxxxx hereby grants a security interest
in the shares represented by, the certificates representing the Held Back Shares
issued pursuant to this Agreement. AVS may set off against the Held Back Shares
any loss, damage, cost or expense for which the Shareholders may be responsible
pursuant to this Agreement (including without limitation, any Indemnifiable
Damages for which X. Xxxxxxx may be responsible pursuant to this Agreement)
whether or not indemnified pursuant to this Article IX, subject, however, to the
following terms and conditions:
(a) AVS shall give written notice to X. Xxxxxxx of any claim for
Indemnifiable Damages or any other damages hereunder, which notice shall set
forth (i) the amount of Indemnifiable Damages or other loss, damage, cost or
expense which AVS claims to have sustained by reason thereof, and (ii) the basis
of such claim;
(b) Such set off shall be effected on the later to occur on the
expiration of 10 days from the date of such notice or, if such claim is
contested, the date the dispute is resolved, and such set off shall be charged
proportionally against the shares set aside;
(c) For purposes of any set off against the Held Back Shares pursuant
to this Article, the shares of AVS Common Stock shall be valued at the Average
Closing Price.
35
The parties agree that, in the event a claim is contested and not resolved
within fifteen (15) days of such contest, they shall attempt to resolve the
claim through non-binding mediation (for a period not to exceed 60 days) at a
mutually convenient time and place before a certified and court-appointed
mediator mutually agreed upon by the parties.
9.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES. Except with respect
to shares transferred pursuant to the foregoing right of setoff (and in the case
of such shares, until the same are transferred), all Held Back Shares shall be
deemed to be owned by X. Xxxxxxx and X. Xxxxxxx shall be entitled to vote the
same; PROVIDED, HOWEVER, that, there shall also be deposited with AVS subject to
the terms of this Article, all shares of AVS Common Stock issued to X. Xxxxxxx
as a result of any stock dividend or stock split and all cash issuable to X.
Xxxxxxx as a result of any cash dividend, with respect to the Held Back Shares.
All stock and cash issued or paid upon Held Back Shares shall be distributed to
the person or entity entitled to receive such Held Back Shares together with
such Held Back Shares.
9.5 DELIVERY OF HELD BACK SHARES AVS agrees to deliver to X. Xxxxxxx no
later than the second anniversary of the Effective Time any Held Back Shares
then held by it (or proceeds from the Held Back Shares) unless there then
remains unresolved any claim for Indemnifiable Damages or other damages
hereunder (in which case AVS shall deliver any undisputed amount) as to which
notice has been given, in which event any Held Back Shares remaining on deposit
(or proceeds from the sale of Held Back Shares) after such claim shall have been
satisfied shall be returned to the Shareholders promptly after the time of
satisfaction.
9.6 ADJUSTMENT MERGER CONSIDERATION. All payments for Indemnifiable
Damages made pursuant to this Article shall be treated as adjustments to the
consideration granted in the Merger under Section 1.3 hereof.
9.7 NO BAR; WAIVER. If the Held Back Shares are insufficient to set off
any claim for Indemnifiable Damages made hereunder (or have been delivered to X.
Xxxxxxx prior to the making or resolution of such claim), then AVS may take any
action or exercise any remedy available to it by appropriate legal proceedings
to collect the Indemnifiable Damages. The Shareholders hereby waive any rights
to contribution or any similar rights they may have against any of the Companies
as of a result of their agreement to indemnify AVS under this Article IX.
9.8 REMEDIES CUMULATIVE. The remedies provided herein shall be cumulative
and shall not preclude AVS from asserting any other right, or seeking any other
remedies against the Shareholders or each of the Companies.
9.9 DEFENSE OF THIRD PARTY CLAIMS. With respect to each third party claim
for which AVS seeks indemnification under this Article (a "Third Party Claim"),
AVS shall give prompt notice to X. Xxxxxxx of the Third Party Claim, provided
that failure to give such notice promptly shall not relieve or limit the
obligations of X. Xxxxxxx under this SECTION 9.9 unless X. Xxxxxxx has been
materially prejudiced thereby (and such failure to notify X. Xxxxxxx will not
relieve him from any
36
other liability he may have to AVS). If the remedy sought in the Third Party
Claim is solely money damages or if AVS otherwise permits, then X. Xxxxxxx, at
his sole cost and expense, may, upon notice to AVS within fifteen (15) days
after X. Xxxxxxx receives notice of the Third Party Claim, assume the defense of
the Third Party Claim. If X. Xxxxxxx assumes the defense of a Third Party Claim,
then he shall select counsel reasonably satisfactory to AVS to conduct the
defense. X. Xxxxxxx shall not consent to a settlement of, or the entry of any
judgment arising from, any Third Party Claim, unless (i) the settlement or
judgment is solely for money damages and X. Xxxxxxx admits in writing his
liability to hold AVS harmless from and against any losses, damages, expenses
and liabilities arising out of such settlement or judgment or (ii) AVS consents
thereto, which consent shall not be unreasonably withheld. X. Xxxxxxx shall
provide AVS with fifteen (15) days prior notice before he consents to a
settlement of, or the entry of a judgment arising from, any Third Party Claim.
AVS shall be entitled to participate at AVS' own expense in the defense of any
Third Party Claim, the defense of which is assumed by X. Xxxxxxx with his own
counsel and his own expense. With respect to Third Party Claims in which the
remedy sought is not solely money damages and AVS does not permit X. Xxxxxxx to
assume the defense, X. Xxxxxxx shall, upon notice to AVS within fifteen (15)
days after X. Xxxxxxx receives notice of the Third Party Claim, be entitled to
participate in the defense with his own counsel at his own expense. If X.
Xxxxxxx does not assume or participate in the defense of any Third Party Claim
in accordance with the terms of this Section, then X. Xxxxxxx shall be bound by
the results obtained by AVS with respect to the Third Party Claim. The parties
shall cooperate in the defense of any Third Party Claim and the relevant records
of each party shall be made available on a timely basis.
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other disposition
after the Effective Time of the AVS Shares:
10.1 DISPOSITION OF SHARES. The Shareholders represent and warrant that
the shares of AVS Common Stock being acquired by them hereunder are being
acquired and will be acquired for their own respective accounts and will not be
sold or otherwise disposed of, except pursuant to (a) an exemption from the
registration requirements under the Securities Act, which does not require the
filing by AVS with the SEC of any registration statement, offering circular or
other document, in which case, the Shareholders shall first supply to AVS an
opinion of counsel (which counsel and opinions shall be satisfactory to AVS)
that such exception is available, or (b) an effective registration statement
filed by AVS with the SEC under the Securities Act.
10.2 LEGEND. The certificates representing the AVS Shares shall bear the
following legend:
37
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURI TIES ACT
OF 1933, AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES
LAWS OF ANY STATE WITH RESPECT THERETO, OR IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
The Locked-Up Shares shall also bear the legend set forth in the lock-up
agreement.
AVS may, unless a registration statement is in effect covering such shares
or it has received an opinion of counsel reasonably acceptable to it that
registration is not required due to an exemption therefrom, place stop transfer
orders with its transfer agents with respect to such certificates in accordance
with federal securities laws.
ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on
the date hereof.
"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment
agreement, license, instrument, purchase and sales order, commitment,
undertaking, obligation, whether written or oral, express or implied.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
00
"XXX Xxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional
sale or other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code or comparable law or any jurisdiction in
connection with such mortgage, pledge, security interest, encumbrance,
lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects which change (or
effect) individually or in the aggregate, is materially adverse.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association,
joint venture, Governmental Authority or other entity, of whatever nature.
"Register", "registered" and "registration" refer to a registration
of the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration
statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
"Taxes" means all taxes, fees or other assessments, including, but
not limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any
federal, state, local or foreign governmental agency, and any interest or
penalties related thereto.
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
39
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of AVS, Company and the Shareholders at
any time prior to the Closing; or
(b) by AVS by written notice in the event of a material breach by any
of the Companies or the Shareholders of any provision of this Agreement; or
(c) by the Company or the Shareholders by written notice in the event
of a material breach by AVS of any provision of this Agreement; or
(d) by either AVS, the Company or the Shareholders if the Closing
shall not have occurred by March 30, 1998.
12.2 EFFECT OF TERMINATION. Except for the provisions of Article IX
hereof, which shall survive any termination of this Agreement, in the event of
termination of this Agreement pursuant to Section 12.1, this Agreement shall
forthwith become void and of no further force and effect and the parties shall
be released from any and all obligations hereunder; provided, however, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement. The provisions of any Confidentiality Agreement executed by AVS
for the benefit of each of the Companies shall survive any termination of this
Agreement.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid),
40
guaranteed overnight delivery, or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which such
party shall designate in writing to the other party):
(a) IF TO ANY OF THE AVS COMPANIES TO:
Aviation Sales Company
0000 X.X. 00xx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Chairman of the Board, President
and Chief Executive Officer
Telecopy: (000) 000-0000
WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) IF TO EACH OF THE COMPANIES AND/OR THE SHAREHOLDERS TO:
Caribe Aviation, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxx Xxxxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
H. Xxxxx Xxxxxx, Xx., Esq.
Catlin, Saxon, Xxxxxx and Xxxxx, P.A.
1900 Xxxxxx X. XxXxxx Bldg.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Notice shall be deemed given on the date sent if sent by facsimile
transmission and on the date delivered (or the date of refusal of delivery) if
sent by overnight delivery or by certified or registered mail.
41
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto) and other documents delivered at the Closing pursuant
hereto, contains the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter. The
Exhibits and Schedules constitute a part hereof as though set forth in full
above.
13.3 EXPENSES. The parties shall pay their own fees and expenses,
including their own counsel fees, incurred in connection with this Agreement or
any transaction contemplated hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented or waived, except by written instrument executed by all parties. No
failure to exercise, and no delay in exercising, any right, power or privilege
under this Agreement shall operate as a waiver, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude the exercise of any
other right, power or privilege. No waiver of any breach of any provision shall
be deemed to be a waiver of any preceding or succeeding breach of the same or
any other provision, nor shall any waiver be implied from any course of dealing
between the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or equity, that they may have
against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder. This
Agreement may be assigned by AVS to a wholly-owned subsidiary of AVS. Except as
expressly provided herein, the rights and obligations of direct or indirect this
Agreement may not be assigned by each of the Companies, or the Shareholders
without the prior written consent of AVS.
13.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include,""includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
13.8 GOVERNING LAW; SEVERABILITY. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State. If any word, phrase, sentence, clause, section, subsection or provision
of this Agreement as applied to any party or to any circumstance is
42
adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other circumstance or the validity or enforceability of any other
word, phrase, sentence, clause, section, subsection or provision of this
Agreement. If any provision of this Agreement, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby or otherwise, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision,
and/or to delete specific words or phrases, and in its reduced form, such
provision shall then be enforceable and shall be enforced.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents and
warrants to all other parties hereto that (a) before executing this Agreement,
said party has fully informed itself of the terms, contents, conditions and
effects of this Agreement; (b) said party has relied solely and completely upon
its own judgment in executing this Agreement; (c) said party has had the
opportunity to seek and has obtained the advice of counsel before executing this
Agreement; (d) said party has acted voluntarily and of its own free will in
executing this Agreement; (e) said party is not acting under duress, whether
economic or physical, in executing this Agreement; and (f) this Agreement is the
result of arm's length negotiations conducted by and among the parties and their
respective counsel.
[Signatures on following pages]
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
AVIATION SALES COMPANY, a Delaware
corporation
By:_______________________________
Name:_____________________________
Title:____________________________
AVS/CAI MERGER CORP., a Florida corporation
By:_______________________________
Name:_____________________________
Title:____________________________
CARIBE AVIATION, INC., a Florida
corporation
By:_______________________________
Name:_____________________________
Title:____________________________
AIRCRAFT INTERIOR DESIGN, INC., a Florida
corporation
By:_______________________________
Name:_____________________________
Title:____________________________
___________________________________
XXXXXX XXXXXXX, individually
____________________________________
XXXXXXX XXXXXXX, individually
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Plan of Merger
Exhibit B Form of Note
Exhibit C Form of Lease
Schedule 1.3(a) Minimum Net Equity
Schedule 1.3(c) Aggregate Consideration
Schedule 3.4 Capitalization
Schedule 3.5 Shareholders
Schedule 3.8 Financial Statements
Schedule 3.12 Environmental Matters
Schedule 3.13(b) Leased Premises
Schedule 3.16 Employees
Schedule 3.17 Employee Benefit Plans
Schedule 3.18 Tax Matters
Schedule 3.19 Insurance Matters
Schedule 3.21 Permits
Schedule 3.24(a) Designated Contracts
Schedule 3.27 Bank Accounts
Schedule 3.28 Names
Schedule 6.12 Employment Agreement
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